Evertec, Inc. Net Income surged on 56.7% and Revenue jumped on 11.5%
02/20/2019 • About Evertec, Inc. (
$EVTC) • By InTwits
Evertec, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Evertec, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $39m in 2018, $21m in 2017, $21m in 2016, $12m in 2015, $3m in 2014
- In the last 5 years the company invested considerably less than D&A: $76m vs. $318m. In 2018 this situation was still the same: CAPEX was 14 while D&A was 63
- The company has highly profitable business model: ROIC is 16.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.5x while industry average is 2.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Evertec, Inc.'s Revenue surged on 11.5%. Revenue growth showed acceleration in 18Q4 - it increased 18.7% YoY. Revenue growth was accelerating on average by 2.2 pp per annum in the last 5 years. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.3 pp from 18.8% to 8.5% in FY2018.
Gross Margin increased on 5.9 pp from 50.7% to 56.6% in 2018. During 2014-2018 Gross Margin bottomed in 2017 at 50.7%. SG&A as a % of Revenue increased slightly on 1.3 pp from 13.8% to 15.1% in 2018. SG&A as a % of Revenue followed a growing trend at 1.1 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. SBC as a % of Revenue followed a growing trend at 0.40 pp per annum in the last 5 years.
Net Income margin increased on 5.5 pp from 13.5% to 19.0% in 2018. The efficient tax rate was 12.7% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Evertec, Inc. had CAPEX/Revenue of 3.1%. The company's CAPEX/Revenue decreased on 2.6 pp from 5.6% in 2015 to 3.1% in 2018. Average CAPEX/Revenue for the last three years was 3.5%.
Accounts receivable as a % of Revenue increased slightly on 1.6 pp from 20.5% to 22.1% in 2018. Accounts payable as a % of Revenue increased on 3.5 pp from 20.5% to 24.0% in 2018.
Return on investment
The company operates at high and attractive ROE (48.5%) while ROIC is a bit lower (16.3%). ROIC increased on 5.0 pp from 11.3% to 16.3% in 2018. ROE increased on 4.3 pp from 44.2% to 48.5% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.5x and Debt / EBITDA is 2.9x. Net Debt / EBITDA dropped on 1.3x from 3.8x to 2.5x in 2018. Debt dropped on 12.6% while cash jumped on 38.8%.
Evertec, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 4.2x. Evertec, Inc. has no short term refinancing risk: cash is higher than short term debt (491.0%).
Average interest expence charged on company's debt was 5.6% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 13.3x and P/E 23.5x.
The company paid 8.1% of Net Income as dividends in 2018. Dividends grew on average at -25.7% per annum in the last 5 years).
Management team
Morgan M Schuessler Jr "Mac" is a the company's CEO. Morgan M Schuessler Jr "Mac" is a founder and has spent 4 years with the company. CEO total compensation was
$4,713,242 in 2018 which included
$678,846 salary and
$20,250 annual bonus. Joaquin Castrillo is a the company's CFO. Joaquin Castrillo has spent 0 years at the company.
1.9% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 2,100 employees. The number of employees didn't change in 2018. Average revenue per employee in 2018 was
$216,128 and it surged on 11.5%.
Financial and operational results
FY ended 12/31/2018
Evertec, Inc. ($EVTC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 361.8 | 373.5 | 389.5 | 407.1 | 453.9 | 11.5% |
| Gross Profit | 204.3 | 205.6 | 213.7 | 206.5 | 256.9 | 24.4% |
| SG&A | 41.3 | 37.3 | 47.0 | 56.2 | 68.7 | 22.4% |
| EBITDA | 163.0 | 168.3 | 166.7 | 150.3 | 188.2 | 25.2% |
| EBIT | 97.0 | 103.4 | 107.1 | 86.1 | 125.1 | 45.4% |
| Interest expence | 25.8 | 24.3 | 24.6 | 29.9 | 30.0 | 0.6% |
| Tax | 8.9 | -3.3 | 8.3 | 4.8 | 12.6 | 163.5% |
| Net Income | 66.2 | 85.4 | 75.0 | 55.1 | 86.3 | 56.7% |
| Stock Based Compensation | 4.6 | 5.2 | 6.4 | 9.6 | 12.6 | 30.6% |
Balance Sheet
|
|---|
| Cash | 32.1 | 28.7 | 51.9 | 50.4 | 70.0 | 38.8% |
| Accounts Receivable | 70.7 | 73.7 | 77.8 | 83.3 | 100.3 | 20.4% |
| Accounts Payable | 17.8 | 21.2 | 40.8 | 41.1 | 47.3 | 14.9% |
| Short Term Debt | 42.0 | 39.8 | 47.8 | 58.5 | 14.3 | -75.6% |
| Long Term Debt | 647.6 | 625.7 | 599.7 | 557.3 | 524.1 | -6.0% |
Cash flow
|
|---|
| Capex | 10.9 | 21.0 | 18.5 | 11.3 | 13.9 | 23.4% |
| Dividends | 31.0 | 31.0 | 30.0 | 22.0 | 7.0 | -68.2% |
| Acquisitions | | | 15.6 | 42.8 | | |
Ratios
|
|---|
| Revenue growth | 1.1% | 3.2% | 4.3% | 4.5% | 11.5% | |
| EBITDA growth | 4.4% | 3.3% | -1.0% | -9.8% | 25.2% | |
|
|---|
| Gross Margin | 56.5% | 55.0% | 54.9% | 50.7% | 56.6% | 5.9% |
| EBITDA Margin | 45.0% | 45.1% | 42.8% | 36.9% | 41.5% | 4.5% |
| EBIT Margin | 26.8% | 27.7% | 27.5% | 21.1% | 27.6% | 6.4% |
| SG&A, % of revenue | 11.4% | 10.0% | 12.1% | 13.8% | 15.1% | 1.3% |
| SBC, % of revenue | 1.3% | 1.4% | 1.6% | 2.4% | 2.8% | 0.4% |
| Net Income Margin | 18.3% | 22.9% | 19.3% | 13.5% | 19.0% | 5.5% |
| CAPEX, % of revenue | 3.0% | 5.6% | 4.7% | 2.8% | 3.1% | 0.3% |
|
|---|
| ROIC | 11.6% | 13.0% | 13.9% | 11.3% | 16.3% | 5.0% |
| ROE | 64.2% | 88.4% | 74.0% | 44.2% | 48.5% | 4.3% |
| Net Debt/EBITDA | 4.0x | 3.8x | 3.6x | 3.8x | 2.5x | -1.3x |
| Interest coverage ratio (ICR) | 3.8x | 4.3x | 4.4x | 2.9x | 4.2x | 1.3x |
| Interest expence / Average debt | 3.7% | 3.6% | 3.7% | 4.7% | 5.6% | 0.9% |
People
|
|---|
| Insider ownership | 1.9% | 1.9% | 1.9% | 1.9% | 1.9% | 0.0% |
| Employees | 1,700 | 1,680 | 1,650 | 2,100 | 2,100 | 0.0% |
| Revenue/Employee, th. $ | 213 | 222 | 236 | 194 | 216 | 11.5% |
Evertec, Inc. ($EVTC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 110 | 113 | 112 | 118 | | 8.9% | 9.5% | 9.0% | 18.7% |
| EBITDA | 49 | 46 | 48 | 44 | | 6.8% | 1.0% | 89.5% | 35.1% |
| Net Income | 23 | 20 | 23 | 20 | | -0.0% | -0.2% | 276.9% | 246.2% |
Balance Sheet
|
|---|
| Cash | 53 | 59 | 91 | 70 | | 2.7% | -36.2% | 88.5% | 38.8% |
| Short Term Debt | 47 | 22 | 23 | 14 | | -0.9% | -76.9% | -70.8% | -75.6% |
| Long Term Debt | 553 | 548 | 542 | 524 | | -7.1% | -3.2% | -3.6% | -6.0% |
Ratios
|
|---|
| Gross Margin | 57.0% | 56.7% | 55.8% | 56.9% | | 0.6% | -1.8% | 16.9% | 7.9% |
| EBITDA Margin | 44.8% | 40.9% | 43.0% | 37.4% | | -0.9% | -3.4% | 18.2% | 4.6% |
| Net Income Margin | 20.9% | 17.7% | 20.5% | 17.1% | | -1.9% | -1.7% | 14.6% | 11.2% |
Peers in Data Processing & Outsourced S
Below you can find Evertec, Inc. benchmarking vs. other companies in Data Processing & Outsourced S industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.7% | 11.8% | 7.4% |
|---|
| Evertec, Inc. ($EVTC) | | 3.2% | 4.3% | 4.5% | 11.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 38.4% | 39.5% | 39.2% | 38.9% | 40.9% |
|---|
| Evertec, Inc. ($EVTC) | 56.5% | 55.0% | 54.9% | 50.7% | 56.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.4% | 21.0% | 21.2% | 20.6% | 19.2% |
|---|
| Evertec, Inc. ($EVTC) | 45.0% | 45.1% | 42.8% | 36.9% | 41.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.1% |
|---|
| Evertec, Inc. ($EVTC) | 3.0% | 5.6% | 4.7% | 2.8% | 3.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 14.1% | 13.0% | 11.1% | 10.6% | 10.2% |
|---|
| Evertec, Inc. ($EVTC) | 11.6% | 13.0% | 13.9% | 11.3% | 16.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.4x | 0.5x | 1.3x | 2.3x | 2.0x |
|---|
| Evertec, Inc. ($EVTC) | 4.0x | 3.8x | 3.6x | 3.8x | 2.5x |
