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EVERTEC, Inc.$27.91($.25)(.89%)

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 EVERTEC Reports Fourth Quarter and Full Year 2016 Results
   Wednesday, February 22, 2017 4:10:00 PM ET

--Announces Pending Acquisition in Chile

EVERTEC, Inc. (EVTC ) ("EVERTEC" or the "Company") today announced results for the fourth quarter and full year ended December 31, 2016.

Fourth Quarter 2016 and Recent Highlights

-- Revenue grew 6% to $101.9 million

-- GAAP Net Income was $16.0 million, or $0.22 per diluted share

-- Adjusted EBITDA grew 2% to $47.6 million

-- Adjusted earnings per share was $0.43, or a 2% decline

-- Completed acquisition of Accuprint in Puerto Rico

-- $18 million returned to shareholders in share repurchases and dividends

-- Acquisition in Chile for a purchase price of approximately $42 million pending Federal Reserve Board approval



Full Year 2016 Highlights

-- Revenue grew 4% to $389.5 million

-- GAAP Net Income was $75.0 million, or $1.01 per diluted share

-- Adjusted EBITDA grew 1% to $187.6 million

-- Adjusted earnings per share grew 5% to $1.67

-- $70 million returned to shareholders in share repurchases and dividends

Mac Schuessler, President and Chief Executive Officer, stated "We are pleased with the achievement of our annual financial goals in a challenging environment in Puerto Rico. We enhanced our focus on customer engagement and infrastructure improvements as well as completed two strategic acquisitions.

Schuessler continued, "Additionally, I am pleased to announce that we signed an agreement for an acquisition in Chile that would expand our geographic footprint, adding talent and complementary solutions in other key markets in South America."

Fourth Quarter 2016 Results

Revenue. Total revenue for the quarter ended December 31, 2016 was $101.9 million, an increase of 6% compared with $95.7 million in the prior year.

Merchant Acquiring, net revenue was $23.1 million, a decrease of 1% compared with $23.4 million in the prior year. Revenue decrease in the quarter was driven primarily by the shift of revenue from the merchant acquiring segment to the payment processing segment, reflecting the second quarter 2016 client contract change.

Payment Processing revenue was $28.8 million, an increase of 4% compared with $27.7 million in the prior year. Revenue results in the quarter reflected increases in transactions processed over the ATH(R) debit network and card processing volumes, increased revenue related to the Processa acquisition, and the previously referenced client contract change from merchant acquiring to payment processing. These increases were partially offset by a project delay and subsequent contract modification that had an approximately $2 million revenue impact on the current quarter.

Business Solutions revenue was $50.0 million, an increase of 12% compared with $44.6 million in the prior year. Business Solutions revenue growth in the quarter reflects increased revenue from completed IT consulting projects, the addition of revenue related to the acquisition of Accuprint, the impact of the annual CPI price increase on the Banco Popular Master Service Agreement and other non-recurring revenue.

Adjusted EBITDA. For the quarter ended December 31, 2016, Adjusted EBITDA was $47.6 million, an increase of 2% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) decreased 200 basis points to 46.7% compared with 48.7% in the prior year. The decrease in Adjusted EBITDA margin was primarily driven by a change in revenue mix, increased investment expense related to Latin America growth initiatives and increased operating taxes.

Net Income. For the quarter ended December 31, 2016, GAAP Net Income was $16.0 million, or $0.22 per diluted share, compared with $21.9 million or $0.29 per diluted share in the prior year. The reduction in GAAP net income primarily reflects debt extinguishment expense related to the refinancing, a software asset write-down, a charge for the resolution of a software maintenance contract matter and an increased tax rate in the current year.

Adjusted Net Income. For the quarter ended December 31, 2016, Adjusted Net Income was $31.3 million, a decrease of 6% compared with $33.2 million in the prior year reflecting an increased tax rate in 2016. Adjusted earnings per diluted share was $0.43, a decrease of 2% compared with $0.44 in the prior year.

Share Repurchase

During the three months ended December 31, 2016, the Company repurchased approximately 0.6 million shares of common stock at an average price of $16.38 per share for a total of $10.3 million. For the full year 2016, the Company repurchased a total of 2.5 million shares of common stock at an average price of $15.95 per share for a total of $39.9 million. As of December 31, 2016, a total of approximately $80 million remained available for future use under the Company’s share repurchase program.

Acquisitions

On December 14, 2016, the Company completed the acquisition of Accuprint for approximately $10 million. Accuprint provides data processing and print services for banks, insurance companies and non-financial companies. The results of this acquisition are reported within the Business Solutions segment.

On February 17, 2017, the Company’s main operating subsidiary, Evertec Group, LLC, entered into an agreement to purchase directly or indirectly 100% of the share capital of EFT Group S.A., a Chilean-based company known commercially as PayGroup at a purchase price of approximately CLP 26,918 million, or approximately US$ 42 million at current exchange rates, subject to customary adjustments. PayGroup is a payment processing and software company serving primarily financial institutions throughout Latin America. The transaction is subject to customary closing conditions, including receipt of US federal bank regulatory approval, and a special provision that allows the selling shareholders to terminate the transaction if US federal bank regulatory approval has not been secured by June 12, 2017, in which case Evertec must pay a penalty of approximately US$2 million. Receipt of US federal bank regulatory approval is dependent on factors outside the control of Evertec. There is no assurance that such approval will be obtained by June 12, 2017 or at all.

2017 Outlook

The Company financial outlook for 2017 is as follows:

-- Total consolidated revenue between $390 and $400 million representing growth of 0 to 3%

-- Adjusted earnings per share guidance of $1.50 to $1.63 representing a range of -10 to -2% as compared to $1.67 in 2016

-- Capital expenditures ranging between $35 and $45 million

-- Effective tax rate ranging between 9.5 to 10.5%

Earnings Conference Call and Audio Webcast The Company will host a conference call to discuss its Fourth quarter 2016 financial results today at 5:00 p.m. ET. Hosting the call will be Mac Schuessler, President and Chief Executive Officer, and Peter Smith, Executive Vice President and Chief Financial Officer. The conference call can be accessed live over the phone by dialing (888) 338-7153 or for international callers by dialing (412) 317-5117. A replay will be available one hour after the end of the conference call and can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the pin number is 10098091. The replay will be available through Wednesday, March 1, 2017. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com . A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website at ir.evertecinc.com and will remain available after the call.

About EVERTEC

EVERTEC, Inc. (EVTC ) is a leading full-service transaction processing business in Latin America, providing a broad range of merchant acquiring, payment processing and business solutions services. The Company manages a system of electronic payment networks that process more than two billion transactions annually, and offers a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, EVERTEC owns and operates the ATH(R) network, one of the leading personal identification number ("PIN") debit networks in Latin America. Based in Puerto Rico, the Company operates in 18 Latin American countries and serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with "mission-critical" technology solutions. For more information, visit www.evertecinc.com.

About Non-GAAP Financial Measures

This earnings release presents EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted earnings per share information. These supplemental measures of the Company’s performance are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). They are not measurements of the Company’s financial performance under GAAP and should not be considered as alternatives to total revenue, net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flows from operating activities, as indicators of operating performance or as measures of the Company’s liquidity. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors the company believes are pertinent to the daily management of the Company’s operations and believe they are frequently used by securities analysts, investors and other interested parties to evaluate companies in the industry. Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements" within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," and "plans" and similar expressions of future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Company’s reliance on its relationship with Popular for a significant portion of revenue; our ability to renew our client contracts on terms favorable to us; the effectiveness of our risk management procedures; our dependence on our processing systems, technology infrastructure, security systems and fraudulent-payment-detection systems, and the risk that our systems may experience breakdowns or fail to prevent security breaches or fraudulent transfers; our ability to develop, install and adopt new technology; a decreased client base due to consolidations in the banking and financial-services industry; the credit risk of our merchant clients, for which we may also be liable; the continuing market position of the ATH(R) network; reduction in consumer confidence leading to decreased consumer spending; the Company’s dependence on credit card associations; regulatory limitations on our activities, including the potential need to seek regulatory approval to consummate transactions, due to our relationship with Popular and our role as a service provider to financial institutions; changes in the regulatory environment and changes in international, legal, tax, political, administrative or economic conditions; the geographical concentration of the Company’s business in Puerto Rico; operating an international business in multiple regions with potential political and economic instability; increased compliance risks associated with operating an international business; operating in countries and counterparties that put us at risk of violating U.S. sanctions laws; our ability to execute our expansion and acquisition strategies; our ability to protect our intellectual property rights; our ability to recruit and retain qualified personnel; our ability to comply with federal, state, and local regulatory requirements; evolving industry standards; the Company’s high level of indebtedness and restrictions contained in the Company’s debt agreements; and the Company’s ability to generate sufficient cash to service the Company’s indebtedness and to generate future profits.

Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings "Forward-Looking Statements" and "Risk Factors" in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

                                                                      
                                                                                                                                                                                                                          EVERTEC, Inc.
                                                                                                                                                                                                   Schedule 1: Unaudited Consolidated Statements of Income and
                                                                                                                                                                                                                      Comprehensive Income
                                                                                                                                                                                                                                                                                        
                                                                                                                                                                          Quarter ended December 31,                                                                                                                                                                       Year ended December 31,
                                                                                                             -----------------------------------------------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands, except per share data)                                                              2016                                                     2015                                                      2016                                                     2015     
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Revenues
Merchant Acquiring, net                                                                                                         $     23,111                                                                                   $     23,370                                                                                    $     91,248                                                                                   $     85,411
Payment Processing                                                                                                                    28,791                                                                                         27,682                                                                                         111,507                                                                                        108,320
Business Solutions                                                                                                 49,987                                                   44,632                                                   186,752                                                  179,797  
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   Total revenues                                                                                                 101,889                                                   95,684                                                   389,507                                                  373,528  
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                            
Operating costs and expenses
                                                                                                                                                                                                                                                                                                                                                                                                            
Cost of revenues, exclusive of depreciation and amortization shown                                                                    48,682                                                                                         42,821                                                                                         175,809                                                                                        167,916
below
Selling, general and administrative expenses                                                                                          12,760                                                                                         10,235                                                                                          46,986                                                                                         37,278
Depreciation and amortization                                                                                      15,067                                                   15,207                                                    59,567                                                   64,974  
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   Total operating costs and expenses                                                                              76,509                                                   68,263                                                   282,362                                                  270,168  
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                            
Income from operations                                                                                             25,380                                                   27,421                                                   107,145                                                  103,360  
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                            
Non-operating income (expenses)
Interest income                                                                                                                          111                                                                                            124                                                                                             377                                                                                            495
Interest expense                                                                                                                      (6,325 )                                                                                       (5,852 )                                                                                       (24,617 )                                                                                      (24,266 )
Earnings (losses) of equity method investment                                                                                              6                                                                                            (49 )                                                                                           (52 )                                                                                          147
Other income, net                                                                                                  (1,203 )                                                                       876                                                       544                                                    2,306  
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
          Total non-operating expenses                                                                             (7,411 )                                                                    (4,901 )                                                                    (23,748 )                                                                   (21,318 )
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Income before income taxes                                                                                                            17,969                                                                                         22,520                                                                                          83,397                                                                                         82,042
Income tax expense                                                                                                  1,955                                                      591                                                     8,271                                                   (3,335 )
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   Net income                                                                                                                         16,014                                                                                         21,929                                                                                          75,126                                                                                         85,377
   Less: Net income attributable to non-controlling interest                                                           41                                                        -                                                        90                                                        -  
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   Net income attributable to EVERTEC, Inc.’s common stockholders                                                                     15,973                                                                                         21,929                                                                                          75,036                                                                                         85,377
Other comprehensive loss, net of tax
   Foreign currency translation adjustments                                                                                             (740 )                                                                                       (1,018 )                                                                                        (3,360 )                                                                                         (545 )
   Gain (loss) on cash flow hedge                                                                                   3,015                                                     (515 )                                                                     (1,449 )                                                                      (515 )
                                                                                                             -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                                            -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   Total comprehensive income                                                                                                   $     18,248                                                                $     20,396                                                                 $     70,227                                                                $     84,317  
                                                                                                             ==================== ========== ====================                                           ==================== ========== ====================                                            ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                            
Net income per common share:
    Basic                                                                                                                       $       0.22                                                                                   $       0.29                                                                                    $       1.01                                                                                   $       1.11
    Diluted                                                                                                                     $       0.22                                                                                   $       0.29                                                                                    $       1.01                                                                                   $       1.11
                                                                                                                                                                                                                                                                                                                                                                                                            
Shares used in computing net income per common share:
    Basic                                                                                                                         73,020,599                                                                                     75,780,036                                                                                      74,132,863                                                                                     77,066,459
    Diluted                                                                                                                       73,563,167                                                                                     75,923,316                                                                                      74,473,369                                                                                     77,181,123
                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                 
                                                                                                                           EVERTEC, Inc.
                                                                                                         Schedule 2: Unaudited Consolidated Balance Sheets
                                                                                                                                                                                            
(Dollar amounts in thousands)                                                                                                        December 31, 2016                                                                           December 31, 2015
                                                                                                                    --------------------------------------------------                                          --------------------------------------------------
Assets
Current Assets:
   Cash                                                                                                                                $  51,920                                                                                   $  28,747
   Restricted cash                                                                                                                         8,112                                                                                      11,818
   Accounts receivable, net                                                                                                               77,803                                                                                      73,715
   Deferred tax asset                                                                                                                          -                                                                                       1,685
   Prepaid expenses and other assets                                                                                   20,430                                                18,758  
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
                                                                                                                                                                                                                 
         Total current assets                                                                                                            158,265                                                                                     134,723
Investment in equity investee                                                                                                             12,252                                                                                      12,264
Property and equipment, net                                                                                                               38,930                                                                                      34,128
Goodwill                                                                                                                                 370,986                                                                                     368,133
Other intangible assets, net                                                                                                             299,119                                                                                     312,059
Long-term deferred tax asset                                                                                                                 805                                                                                           -
Other long-term assets                                                                                                  5,305                                                 2,347  
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
         Total assets                                                                                                                  $ 885,662                                                                $ 863,654  
                                                                                                                    ==================== ======= ====================                                           ==================== ======= ====================
Liabilities and stockholders’ equity
Current Liabilities:
   Accrued liabilities                                                                                                                    34,243                                                                                   $  37,308
   Accounts payable                                                                                                                       40,845                                                                                      21,216
   Unearned income                                                                                                                         4,531                                                                                       2,877
   Income tax payable                                                                                                                      1,755                                                                                       1,350
   Current portion of long-term debt                                                                                                      19,789                                                                                      22,750
   Short-term borrowings                                                                                               28,000                                                17,000  
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
      Total current liabilities                                                                                                          129,163                                                                                     102,501
Long-term debt                                                                                                                           599,667                                                                                     619,297
Long-term deferred tax liability                                                                                                          14,978                                                                                      20,614
Unearned income - long-term                                                                                                               17,303                                                                                      10,939
Other long-term liabilities                                                                                            16,376                                                12,089  
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
         Total liabilities                                                                                            777,487                                               765,440  
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
Commitments and contingencies
Stockholders’ equity
      Preferred stock, par value $0.01; 2,000,000 shares authorized; none                                                                      -                                                                                           -
      issued
      Common stock, par value $0.01; 206,000,000 shares authorized;
      72,635,032 shares
         issued and outstanding at December 31, 2016 (December 31, 2015 -                                                                    726                                                                                         750
         74,988,210)
      Additional paid-in capital                                                                                                               -                                                                                       9,718
      Accumulated earnings                                                                                                               116,341                                                                                      95,328
      Accumulated other comprehensive loss, net of tax                                                                (12,391 )                                                                 (7,582 )
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
         Total EVERTEC, Inc stockholders’ equity                                                                                         104,676                                                                                      98,214
Non-controlling interest                                                                                                3,499                                                     -  
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
         Total equity                                                                                                 108,175                                                98,214  
                                                                                                                    -------------------- ------- --------------------                                           -------------------- ------- --------------------
         Total liabilities and stockholders’ equity                                                                                    $ 885,662                                                                $ 863,654  
                                                                                                                    ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                              
 
                                                                                                                         EVERTEC, Inc.
                                                                                                  Schedule 3: Unaudited Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
                                                                                                                              
                                                                                                                                                                          Years ended December 31,
                                                                                                               -----------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   2016                                                  2015    
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
                                                                                                                                                                                                            
Cash flows from operating activities
Net income                                                                                                                        $  75,126                                                                                   $   85,377
Adjustments to reconcile net income to net cash provided by
operating activities:
   Depreciation and amortization                                                                                                     59,567                                                                                       64,974
   Amortization of debt issue costs and accretion of discount                                                                         4,334                                                                                        3,329
   Loss on extinguishment of debt                                                                                                     1,476                                                                                            -
   Provision for doubtful accounts and sundry losses                                                                                  1,990                                                                                        2,130
   Deferred tax benefit                                                                                                              (4,594 )                                                                                     (3,090 )
   Share-based compensation                                                                                                           6,408                                                                                        5,204
   Loss on disposal of property and equipment and other intangibles                                                                     453                                                                                          143
   Loss on impairment of software                                                                                                     2,277                                                                                            -
   Losses (earnings) of equity method investment                                                                                         52                                                                                         (147 )
   Dividend received from equity method investment                                                                                        -                                                                                            -
   (Increase) decrease in assets:
      Accounts receivable, net                                                                                                       (2,583 )                                                                                     (4,482 )
      Prepaid expenses and other assets                                                                                              (1,426 )                                                                                       (146 )
      Other long-term assets                                                                                                         (1,790 )                                                                                        (70 )
   Increase (decrease) in liabilities:
      Accounts payable and accrued liabilities                                                                                       14,594                                                                                       15,947
      Income tax payable                                                                                                                405                                                                                         (606 )
      Unearned income                                                                                                                 8,018                                                                                        2,207
      Other long-term liabilities                                                                                  3,747                                                 (8,351 )
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
       Total adjustments                                                                                          92,928                                                 77,042  
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
         Net cash provided by operating activities                                                               168,054                                                162,419  
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
                                                                                                                                                                                                            
Cash flows from investing activities
Net decrease (increase) in restricted cash                                                                                            3,705                                                                                       (6,100 )
Additions to software and purchase of customer relationship                                                                         (23,819 )                                                                                    (25,960 )
Acquisitions, net of cash acquired                                                                                                  (15,600 )                                                                                          -
Property and equipment acquired                                                                                                     (18,450 )                                                                                    (21,022 )
Proceeds from sales of property and equipment                                                                         81                                                     14  
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
         Net cash used in investing activities                                                                   (54,083 )                                                                 (53,068 )
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
                                                                                                                                                                                                            
Cash flows from financing activities
Proceeds from issuance of long-term debt                                                                                             75,763                                                                                            -
Debt issuance costs                                                                                                                  (4,830 )                                                                                          -
Net increase (decrease) in short-term borrowings                                                                                     11,000                                                                                       (6,000 )
Repayments of borrowings for purchase of equipment and software                                                                      (2,213 )                                                                                     (1,542 )
Dividends paid                                                                                                                      (29,696 )                                                                                    (30,921 )
Statutory minimum withholding taxes paid on share-based compensation                                                                   (548 )                                                                                       (306 )
Tax windfall benefits on share-based compensation                                                                                         -                                                                                            -
Issuance of common stock                                                                                                                  -                                                                                            -
Repurchase of common stock                                                                                                          (39,946 )                                                                                    (54,949 )
Settlement of stock options                                                                                                               -                                                                                            -
Repayment of long-term debt                                                                                                         (96,741 )                                                                                    (19,000 )
Credit amendment fees                                                                                             (3,587 )                                                                       -  
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
         Net cash used in financing activities                                                                   (90,798 )                                                                (112,718 )
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
                                                                                                                                                                                                            
Net increase (decrease) in cash                                                                                                      23,173                                                                                       (3,367 )
Cash at beginning of the period                                                                                   28,747                                                 32,114  
                                                                                                               -------------------- ------- --------------------                                           -------------------- -------- --------------------
Cash at end of the period                                                                                                         $  51,920                                                                $   28,747  
                                                                                                               ==================== ======= ====================                                           ==================== ======== ====================
                                                                                                                                                                                                                                          
 
                                                                                                                                                                                                       EVERTEC, Inc.
                                                                                                                                                                                  Schedule 4: Unaudited Income from Operations by Segment
                                                                                                                                                                                                                
                                                                                                                                                Quarter ended December 31,                                                                                                                                                               Year ended December 31,
                                                                                       --------------------------------------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)                                                             2016                                                 2015                                                  2016                                                  2015   
                                                                                       -------------------- ------ --------------------                                           -------------------- ------ --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
 Segment income from operations
                                                                                                                                                                                                                                                                                                                                                                          
 Merchant Acquiring, net                                                                                  $  7,111                                                                                   $  8,999                                                                                   $  31,051                                                                                   $  36,466
 Payment Processing                                                                                         12,578                                                                                     14,512                                                                                      52,071                                                                                      55,429
 Business Solutions                                                                      13,495                                               11,786                                                56,794                                                50,200  
                                                                                       -------------------- ------ --------------------                                           -------------------- ------ --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
   Total segment income from operations                                                                     33,184                                                                                     35,297                                                                                     139,916                                                                                     142,095
Merger related depreciation and amortization
  and other unallocated expenses (1)                                                                        (7,804 )                                                                                   (7,876 )                                                                                   (32,771 )                                                                                   (38,735 )
                                                                                                                                                                                                                                                                                                                 
                                                                                       -------------------------------------------------                                          -------------------------------------------------                                          --------------------------------------------------                                          --------------------------------------------------
  Income from operations                                                                                  $ 25,380                                                                $ 27,421                                                                $ 107,145                                                                $ 103,360  
                                                                                       ==================== ====== ====================                                           ==================== ====== ====================                                           ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                       

(1) Primarily represents non-operating depreciation and amortization expenses generated as a result of the Merger and certain non-recurring fees and expenses.

                                                                
                                                                                                                                                                                                            EVERTEC, Inc.
                                                                                                                                                                                  Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results
                                                                                                                                                                                                                                                                                
                                                                                                                                                                    Quarter ended December 31,                                                                                                                                                  Year ended December 31,
                                                                                                       -----------------------------------------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands, except share data)                                                            2016                                                     2015                                 2016                                                     2015     
                                                                                                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                 
Net income                                                                                                                $     16,014                                                                                   $     21,929                                                               $     75,126                                                                                   $     85,377
Income tax expense (benefit)                                                                                                     1,955                                                                                            591                                                                      8,271                                                                                         (3,335 )
Interest expense, net                                                                                                            6,214                                                                                          5,728                                                                     24,240                                                                                         23,771
Depreciation and amortization                                                                                15,067                                                   15,207                               59,567                                                   64,974  
                                                                                                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   EBITDA                                                                                                                       39,250                                                                                         43,455                                                                    167,204                                                                                        170,787
                                                                                                                                                                                                                                                                                                                                                                                 
Software maintenance reimbursement and other costs(1)                                                                                -                                                                                            494                                                                        521                                                                                          1,902
Equity (income) loss(2)                                                                                                             (6 )                                                                                           49                                                                        (19 )                                                                                         (147 )
Compensation and benefits (3)                                                                                                    2,449                                                                                          2,302                                                                     10,482                                                                                         12,237
Transaction, refinancing and other fees (4)                                                                                      5,882                                                                                            324                                                                      7,579                                                                                          1,316
Purchase accounting (5)                                                                                                              -                                                                                              -                                                                          -                                                                                             82
Restatement related expenses (6)                                                                                  -                                                        -                                1,837                                                        -  
                                                                                                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   Adjusted EBITDA                                                                                                              47,575                                                                                         46,624                                                                    187,604                                                                                        186,177
                                                                                                                                                                                                                                                                                                                                                                                 
Operating depreciation and amortization (7)                                                                                     (7,302 )                                                                                       (7,634 )                                                                  (28,468 )                                                                                      (29,301 )
Cash interest expense, net (8)                                                                                                  (5,137 )                                                                                       (4,941 )                                                                  (20,468 )                                                                                      (20,665 )
Income tax expense (9)                                                                                                          (3,748 )                                                                                         (892 )                                                                  (13,752 )                                                                                      (13,211 )
Non-controlling interest (10)                                                                                   (89 )                                                                         -                                 (258 )                                                                         -  
                                                                                                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------                       -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
   Adjusted Net Income                                                                                                    $     31,299                                                                $     33,157                                            $    124,658                                                                $    123,000  
                                                                                                       ==================== ========== ====================                                           ==================== ========== ====================                       ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                 
Net income per common share (GAAP):
   Diluted                                                                                                                $       0.22                                                                                   $       0.29                                                               $       1.01                                                                                   $       1.11
                                                                                                                                                                                                                                                                                                                                                                                 
Adjusted earnings per common share (Non-GAAP):
   Diluted                                                                                                                $       0.43                                                                                   $       0.44                                                               $       1.67                                                                                   $       1.59
                                                                                                                                                                                                                                                                                                                                                                                 
Shares used in computing adjusted earnings per common share:
   Diluted                                                                                                                  73,563,167                                                                                     75,923,316                                                                 74,473,369                                                                                     77,181,123
                                                                                                                                                                                                                                                                                                                                                                                 

1) Predominantly represents reimbursements received for certain software maintenance expenses as part of the Merger.

2) Represents the elimination of non-cash equity earnings from our 19.99% equity investment in CONTADO, net of cash dividends received.

3) Primarily represents share-based compensation and other compensation expense of $1.8 million and $1.5 million for the quarters ended December 31, 2016 and 2015 and severance payments of $0.7 million and $0.2 million for the quarters ended December 31, 2016 and 2015 and share-based compensation and other compensation expense of $6.4 million and $5.3 million for the year ended December 31, 2016 and 2015 and severance payments of $3.7 million and $6.4 million for the year ended December 31, 2016 and 2015.

4) Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, certain fees paid to resolve a software maintenance contract matter, fees associated with the debt refinancing and a software writedown.

5) Represents the elimination of the effects of purchase accounting in connection with certain customer service and software-related arrangements whereby EVERTEC receives reimbursements from Popular.

6) Represents consulting, audit and legal expenses incurred as part of the restatement.

7) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger.

8) Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.

9) Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate.

10) Represents the 35% non-controlling equity interest in Processa, net of amortization for intangibles created as part of the purchase.

                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                   EVERTEC, Inc.
                                                                                                                                                                                                       Schedule 6: Reconciliation of Adjusted Net Income to GAAP Net Income
                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                  Quarter ended December 31,
                                                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands, except share data)                                                                                                                                        2016                                                                                                                                                                                                   2015
                                                                                                             ----------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                GAAP                                               Adjustments                                                                               Non-GAAP                                               GAAP                                               Adjustments                                                                                 Non-GAAP
                                                                                                             ----------                                           -----------                                                                                ---------                                           ----------                                           -----------                                                                            --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Revenues                                                                                                      $ 101,889                                                                                                                                      $ 101,889                                             $ 95,684                                                                                                                                              $ 95,684
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization shown                                               48,682                                               (4,736)                              (1),(3)                                              43,946                                               42,821                                               (1,672)                          (1),(3)                                                         41,149
below
Selling, general and administrative expenses                                                                     12,760                                               (2,119)                      (3),(4),(5),(6)                                              10,641                                               10,235                                               (1,448)                      (3),(4),(5)                                                          8,787
Depreciation and amortization                                                                                    15,067                                               (7,765)                                  (7)                                               7,302                                               15,207                                               (7,573)                              (7)                                                          7,634
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
  Total operating costs and expenses                                                                             76,509                                                                                                                                         61,889                                               68,263                                                                                                                                                57,570
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
Income from operations                                                                                           25,380                                                                                                                                         40,000                                               27,421                                                                                                                                                38,114
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Non-operating income (expenses)
Interest income                                                                                                     111                                                 (111)                                  (8)                                                   -                                                  124                                                 (124)                              (8)                                                              -
Interest expense                                                                                                (6,325)                                                 1,188                                  (8)                                             (5,137)                                              (5,852)                                                   911                              (8)                                                        (4,941)
Earnings of equity method investment                                                                                  6                                                   (6)                                  (2)                                                   -                                                 (49)                                                    49                              (2)                                                              -
Other income, net                                                                                               (1,203)                                                 1,476                                  (4)                                                 273                                                  876                                                                                                                                                   876
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
       Total non-operating expenses                                                                             (7,411)                                                                                                                                        (4,864)                                              (4,901)                                                                                                                                               (4,065)
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
Income before income taxes                                                                                       17,969                                                                                                                                         35,136                                               22,520                                                                                                                                                34,049
Income tax expense                                                                                                1,955                                                 1,793                                  (9)                                               3,748                                                  591                                                   301                              (9)                                                            892
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
  Net income                                                                                                     16,014                                                                                                                                         31,388                                               21,929                                                                                                                                                33,157
  Less: Net income attributable to non-controlling interest                                                          41                                                    48                                 (10)                                                  89                                                    -                                                                                                                                                     -
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
  Net income attributable to EVERTEC, Inc.’s common stockholders’                                                15,973                                                                                                                                         31,299                                               21,929                                                                                                                                                33,157
                                                                                                             ==========                                                                                                                                      =========                                           ==========                                                                                                                                  ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Earnings per common share:
    Diluted                                                                                                      $ 0.22                                                                                                                                         $ 0.43                                               $ 0.29                                                                                                                                                $ 0.44
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Shares used in computing earnings per common share:
    Diluted                                                                                                  73,563,167                                                                                                                                                                                          75,923,316
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                    Year ended December 31,
                                                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands, except per share data)                                                                                                                                    2016                                                                                                                                                                                                   2015
                                                                                                             ----------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                GAAP                                               Adjustments                                                                                Non-GAAP                                              GAAP                                               Adjustments                                                                                 Non-GAAP
                                                                                                             ----------                                           -----------                                                                                ---------                                           ----------                                           -----------                                                                            --------------------
Revenues
  Total revenues                                                                                              $ 389,507                                                                                                                                      $ 389,507                                            $ 373,528                                                                                                                                             $ 373,528
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization shown                                              175,809                                               (8,847)                              (1),(3)                                             166,962                                              167,916                                               (8,789)                          (1),(3)                                                        159,127
below
Selling, general and administrative expenses                                                                     46,986                                              (10,096)                      (3),(4),(5),(6)                                              36,890                                               37,278                                               (6,748)                      (3),(4),(5)                                                         30,530
Depreciation and amortization                                                                                    59,567                                              (31,099)                                  (7)                                              28,468                                               64,974                                              (35,673)                              (7)                                                         29,301
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
  Total operating costs and expenses                                                                            282,362                                                                                                                                        232,320                                              270,168                                                                                                                                               218,958
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
Income from operations                                                                                          107,145                                                                                                                                        157,187                                              103,360                                                                                                                                               154,570
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Non-operating income (expenses)
Interest income                                                                                                     377                                                 (377)                                  (8)                                                   -                                                  495                                                 (495)                              (8)                                                              -
Interest expense                                                                                               (24,617)                                                 4,149                                  (8)                                            (20,468)                                             (24,266)                                                 3,601                              (8)                                                       (20,665)
Earnings of equity method investment                                                                               (52)                                                  (19)                                  (2)                                                (71)                                                  147                                                 (147)                              (2)                                                              -
Other income                                                                                                        544                                                 1,476                                  (4)                                               2,020                                                2,306                                                                                                                                                 2,306
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
       Total non-operating expenses                                                                            (23,748)                                                                                                                                       (18,519)                                             (21,318)                                                                                                                                              (18,359)
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
Income before income taxes                                                                                       83,397                                                                                                                                        138,668                                               82,042                                                                                                                                               136,211
Income tax expense                                                                                                8,271                                                 5,481                                  (9)                                              13,752                                              (3,335)                                                16,546                              (9)                                                         13,211
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
  Net income                                                                                                     75,126                                                                                                                                        124,916                                               85,377                                                                                                                                               123,000
  Less: Net income attributable to non-controlling interest                                                          90                                                   168                                 (10)                                                 258                                                    -                                                                                                                                                     -
                                                                                                             ----------                                                                                                                                      ---------                                           ----------                                                                                                                                  --------------------
  Net income attributable to EVERTEC, Inc.’s common stockholders’                                                75,036                                                                                                                                        124,658                                               85,377                                                                                                                                               123,000
                                                                                                             ==========                                                                                                                                      =========                                           ==========                                                                                                                                  ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Earnings per common share:
   Diluted                                                                                                       $ 1.01                                                                                                                                         $ 1.67                                               $ 1.11                                                                                                                                                $ 1.59
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Shares used in computing earnings per common share:
   Diluted                                                                                                   74,473,369                                                                                                                                                                                          77,181,123
 
------------------------------------------------------------------
 

1) Predominantly represents reimbursements received for certain software maintenance expenses as part of the Merger.

2) Represents the elimination of non-cash equity earnings from our 19.99% equity investment in CONTADO, net of cash dividends received.

3) Primarily represents share-based compensation and other compensation expense of $1.8 million and $1.5 million for the quarters ended December 31, 2016 and 2015 and severance payments of $0.7 million and $0.2 million for the quarters ended December 31, 2016 and 2015 and share-based compensation and other compensation expense of $6.4 million and $5.3 million for the year ended December 31, 2016 and 2015 and severance payments of $3.7 million and $6.4 million for the year ended December 31, 2016 and 2015.

4) Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, certain fees paid to resolve a software maintenance contract matter, fees associated with the debt refinancing and a software writedown.

5) Represents the elimination of the effects of purchase accounting in connection with certain customer service and software-related arrangements whereby EVERTEC receives reimbursements from Popular.

6) Represents consulting, audit and legal expenses incurred as part of the restatement.

7) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger.

8) Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.

9) Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate.

10) Represents the 35% non-controlling equity interest in Processa, net of amortization for intangibles created as part of the purchase.

 
                                                                                                                                           EVERTEC, Inc.
                                                                                                                Schedule 7: Outlook Summary and Reconciliation to Non-GAAP Adjusted
                                                                                                                                        Earnings per Share
                                                                                                                                                  
                                                                                                                                                               2017 Outlook                                                                                                       2016
                                                                                                                                                                                                                                                                                 Actual
                                                                                                               ---------------------------------------------------------------------------------------------------                                                   ---------------------------
(Dollar amounts in millions, except share data)
                                                                                                                                                                                                                                                                      
Revenues                                                                                                                          $   390                          to                                          $   400                                                                  $    390
                                                                                                                                                                                                                                                                      
Earnings per Share (EPS) (GAAP)                                                                                                   $  0.92                          to                                          $  1.06                                                                  $   1.01
                                                                                                                                                                                                                                                                      
Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS:
--------------------------------------------------------------------
Share-based comp, non-cash equity earnings and other (1)                                                                             0.18                                                                         0.18                                                                      0.27
Merger related depreciation and amortization (2)                                                                                     0.41                                                                         0.41                                                                      0.42
Non-cash interest expense (3)                                                                                                        0.05                                                                         0.05                                                                      0.05
Tax effect of non-gaap adjustments (4)                                                                                              (0.06 )                                                                      (0.06 )                                                                   (0.07 )
Non-controlling interest (5)                                                                                     (0.01 )                                                   (0.01 )                                                (0.00 )
                                                                                                               -------------------- ----- ---                                               -------------------- ----- ---                                           -------------------- ------ -
  Total adjustments                                                                                                                  0.58                                                                         0.58                                                                      0.67
                                                                                                                                                                                                                                                                      
Adjusted EPS (Non-GAAP)                                                                                                           $  1.50                          to                                          $  1.63                                                                  $   1.67
Shares used in computing adjusted earnings per share                                                                                                                                                              73.5                                                                      74.5

1) Represents share based compensation, the elimination of non-cash equity earnings from our 19.99% equity investment in CONTADO, and other adjustments to reconcile GAAP EPS to Non-GAAP EPS.

2) Represents depreciation and amortization expenses amounts generated as a result of the Merger.

3) Represents non-cash amortization of the debt issue costs, premium and accretion of discount.

4) Represents income tax expense on non-gaap adjustments using the applicable GAAP tax rate (in an anticipated range of 9.5% to 10.5%).

5) Represents the 35% non-controlling equity interest in Processa, net of amortization for intangibles created as part of the purchase.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170222006553r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170222006553/en/

SOURCE: EVERTEC, Inc.

Investor Contact 
EVERTEC, Inc. 
Kay Sharpton, 787-773-5442 
IR@evertecinc.com


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