Alan Cohen - EVP and Head of IR Frank G. D'Angelo - Chairman of the Board Mac Schuessler - President and CEO Juan Jose Roman - CFO.

Brian Keane - Deutsche Bank Tien-tsin Huang - JPMorgan George Nahalos - Credit Suisse Chris Brendler - Stifel Chris Kennedy - William Blair Sara Gubins - Bank of America Jim Schneider - Goldman Sachs John Williams - Topeka Capital.

Good afternoon everyone and welcome to the EVERTEC first quarter 2015 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the call over to, Alan Cohen, Executive Vice President and Head of Investor Relations. Please go ahead..

Thank you and good afternoon everyone. Welcome to the EVERTEC first quarter 2015 earnings call. With me today are Frank G. D'Angelo, Chairman of the Board, Mac Schuessler, our President and Chief Executive Officer and Juan Jose Roman, our Chief Financial Officer. A replay of this call will be available until Wednesday, May 13, 2015.

Access information for the replay is listed in today's financial press release, which is available on our website under the Investor Relations tab. As a reminder, this call may not be taped nor otherwise reproduced without EVERTEC's prior consent. For those listening to the replay, this call was held on May 06, 2015.

Before we begin, I would like to remind everyone that this call may contain forward-looking statement as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements about our expectations for future performance are subject to known and unknown risk and uncertainties.

EVERTEC cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only and we undertake no obligation to update any statements to reflect the events that occur after this call.

Please refer to the company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements.

During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as adjusted EBITDA, adjusted net income and adjusted net income per share. Reconciliations to GAAP measures and certain additional information are also included in today's earnings press release.

I would now like to hand the call over to Frank G. D'Angelo, our Chairman.

Frank?.

Thank you, Alan. For the first quarter of 2015, I took on the role of Interim CEO in addition to my responsibilities as Chairman of the Board of Directors. It was important to us and our company has a leadership in place so as not to get off track or lose focus.

During that quarter Mac Schuessler was a paid consultant reporting directly to me which gave him the opportunity to become familiar with our products, services, operations and management team. Our first quarter was in line with our expectations and was a good indicator that our folks remained on course.

Mac and Juan will expand upon our performance in a few minutes. As previously communicated effective April 1st Mac become EVERTEC’s President and Chief Executive Officer and was added to our Board of Directors. We now have a full side of nine directors, seven of those independent directors.

The Board and look forward to working with Mac as he can take the company forward. It’s my pleasure now to turn the call over Mac to further discuss our operations and financial performance.

Mac?.

Thank you Frank and good afternoon everyone. Thanks for joining us on today’s call. As the new CEO, I’m pleased to be addressing each of you today. Before taking you through our results to the first quarter I’d like to discuss some of my observations shown in the company as well as some initial areas of focus.

We resuming the CEO role I spent time with employees and members of management, listen to our customers here in Puerto Rico and in Central America and met with members of the government to better understand the opportunities and challenges facing our business. Overall in short-term with EVERTEC several things that become appear.

My first observation with the underlying business thesis for EVERTEC resonates very well within the region. My meetings with several bank customers and prospects and like validate a strong desire to do business with EVERTEC.

Across this organization we understand best the common denominator of the 19 countries located so close to one another, the Spanish language and the Latin culture.

Our customers appreciate that we speak their language, it makes it easier and faster for them to develop relationships with our sales people, development requirements with our technical staff and work through with our operations teams. In addition to our Latin characteristics we’re just the right size.

We’re large enough to provide operational stability with small amount to provide agility. Client likes the fact we are large enough to make appropriate investments every year in our business but also small enough that within 24 hours they can talk with the management team and even with the CEO when needed.

Customers also like the fact that [indiscernible] our main focus. When we prioritize our resources every year that help all of our investments we’ll be in the region and not get lost competing with other corporate objectives or geographies. My comments are just what I am thinking and there with our customers saying. The region needs EVERTEC.

My second observation, which actually attract to make with the company before joining is that EVERTEC is fortune enough to have a branded products and services that enable us to participate in most markets, regardless of the maturity of the financial services in payments industries in each country.

We provide services across the value chain for both issuing merchant businesses. And we also drive ATMs and economies that are still cash dependent.

So our product breadth allows us to enter and operate in most markets by providing a product suite that’s most appropriate for the current state of that market and deliver additional products as the market evolves. My third observation is that while one of EVERTEC’s main areas of focus is growing our Latin American foot print.

It’s also clear that Puerto Rico is a key market. We have a superior position on the island. We own and operate the largest ever network in Puerto Rico and one of the largest networks in the region ATH.

As the economy in Puerto Rico continues to face challenges we’ve been able to help customers with our solutions in multiple ways thereby benefiting our company.

For example as banks consolidate we’re able to assist the surviving banks, convert the acquired banks such as [indiscernible] As the government's seeking any solutions to make the tax essential programs with the help of new technology and services because we operate many of their current systems.

We have the most scale expertise in the market and we should leverage that one possible. Puerto Rico is for EVERTEC and although we are closely monitoring economic situation we are now also very focused on maintaining our market share even expanding our share for the opportunities arrive.

My fourth observation is that EVERTEC is still evolving from an IT department of the large organization to becoming a standalone professional services and processing company. This is only natural and somewhat expected that EVERTEC became a publically traded company just two years ago. However we must improve our ability to execute it at every level.

Columbia further is an example, to-date we have clearly underperformed our expectations in that market. We can and will improve our situation in Columbia as over the coming years the opportunity is significant in the Latin America region. One of our first steps is to make ensure we have the right executives focused on the right priorities.

We expect meaningful organic and inorganic growth outside of Puerto Rico and we need leader who is always focused on their effort. I’m pleased to announce that we’ve hired Mariana Lischner Goldvarg as our President for Latin America. She currently serves as the President of Latin America Equifax.

Mariana was born in Argentina and operated across the region for over 25 years. In this new role Marina will be responsible for growing our business throughout Latin America like deepening relationships with our existing customers, signing new customers as well as identifying potential deals in the region.

In addition most of our LatAm operations will report to Marina to ensure that she aligns those operations with the expectations of our customers. I’m confident Marina will positively change our performance in the region.

It should also positively impact our Puerto Rican business as it will enable Miguel Vizcarrondo and Carlos Ramirez to devote their time to growing our market share and protecting our margins here. Another critical priority that needs appropriate executive support is corporate development.

Today we do not have a team or executive solely focused on that effort. So we’ve hired a new Senior Vice President for Corporate Development and Strategy with a background of finance and law and with exposure to LatAm. He will move from New York to Puerto Rico and will officially start on June 1st.

Over the coming month our executive team will be evaluating each area of business to ensure we're executing at the highest level. The specific areas we'll focus on first are our product and platform strategy across each market our sales and account management processes and our IT operations and project delivery.

Based on my customer interactions as we execute with modest one I am confident that we can unlock significantly more opportunities. Starting to the numbers, our first quarter results reflect a good start to the year. Total revenue was $91.3 million an increase of 4.5% compared with the first quarter of last year.

Merchant acquiring revenue was at 4% and payment processing was at 5% and Business Solutions grew 5% as well. We generated adjusted EBITDA of $45.7 million and adjusted net income per share of $0.39. Before turning the call over to Juan, I'll take you through the quarter in more detail. I would like comment on the current situation in Puerto Rico.

Puerto Rico has been in recession for the 8 years. Various periods EVERTEC has been able to utilize its leading market position on the island with benefit. We continue to see healthy trends in the payment industry as the issues that impacted island were not effecting consumer consumption in the same manner as other segments of the economy.

We've also benefited from the continued cash to card trends on the island. As we go monitor these trends to see if there is a significant change of the market's favor in the meantime EVERTEC will continue to focus on serving its key fixations in the market.

Now I'll close on our personal note, this January my family has been integrating into the Puerto Rico community. We have completed our move from Hong Kong to Puerto Rico, purchased a house and enrolled the children in School. I island is officially home and by son and now start every weekend, he thinks he officially live in paradise.

And with that, I will now hand the call over to Juan.

Juan?.

Thank you Mac and good afternoon everyone. As Mac mentioned we have a solid quarter. I will now provide a detailed review of our first quarter results and then conclude by discussing our financial outlook for 2015. Total consolidated revenue was 91.3 million, up 4.5% compared with 87.4 million in the prior year.

By segment merchant acquiring net revenue increased 4% year-over-year to 20.1 million driven primarily by higher spread as well as transaction growth. Grow was partially effected by a slight increasing total sales volume in the quarter.

During the first quarter, we saw a decrease gas station and increase in sale volume of abruptly 19% due to the decrease in oil prices as compared to last year. The decrease impacted our growth by about 1% in the quarter. Payment processing revenue increased 5% in the first quarter to 26.4 million, up from 25.2 million in the prior year period.

Revenue growth in the quarter was driven mainly by an increase in ATH net -- debit network on processing transactions and accounts on file within our card product business. Our payment related businesses outside of Puerto Rico grew 6% year-over-year in the first quarter driven mainly by card product processing.

The lower dilution increase was due to a client on a EVERTEC customer which took the processing of its debit and credit cards in-house and also we did not add the same number of customers as last year.

Business solutions revenue grew 5% to 45.9 million in Q1 driven mainly by higher hardware and software sales versus the first quarter of last year as well as increase in revenue from our core banking solutions.

Revenue growth in the quarter was partially offset by lowering IT consulting revenue due to the natural conclusion of certain projects and the timing of new project runs. Excluding hardware and software sales, business solutions revenue was in line with last year as expected.

Moving to expenses on a GAAP basis, our first quarter total operating expenses increased approximately 2.8% compared with the prior year period. Cost of revenues excluding depreciation and amortization was 39.8 million, up 1.9 million or 5% versus the prior year, reflecting higher cost of sales related to the increase in hardware and software sales.

Selling, general, and administrative expenses for the first quarter were 7.7 million, down approximately 0.4 million or 4% from the corresponding 2014 period, reflecting lower profession service fees and other expenses. Depreciation and amortization expense increased by 0.2 million or 1% compared with the prior year.

Income from operation for the first quarter was 27 million, an increase of 9% compared with the corresponding 2014 period as a result of our increasing revenues, cost containing initiatives and leverage in our business.

Total non-operating expenses were 5.7 million, an increase of 1.2 million from the prior year, mainly due to a 1.7 million decline in other income compared with the 2014 period.

The decline in other income was due to lower foreign exchange gains terrific [indiscernible] company loan with our Costa Rica subsidiary, as well as lower gains on purchases of local currency. We recorded a GAAP income tax expense of $2.2 million in the first quarter.

On a cash basis, our income tax expense was approximately $2.6 million, reflecting amounts paid in March, 2015 related to the 2014 tax return filings in gone brief other than Puerto Rico. As of March 31, 2015, we had approximately $26 million of gross NOLs available to offset future tax payments related to our operations in Puerto Rico.

Adjusted EBITDA for the first quarter was $45.7 million, an increase of 1% from $45.2 million in the corresponding 2014 period. The increase in adjusted EBITDA was driven by revenue growth, partially offset by the previously mentioned $1.7 million decline in other income as compared to 2014.

Adjusted net income in the first quarter was $30.3 million, down 5% from $32 million in the prior year, due mainly to aforementioned decline in other income of $1.7 million and higher cash taxes of $2.6 million. Adjusted net income per diluted share decreased 3% to $0.39 from $0.40. Moving to our balance sheet.

As of March 31, we reported $32.4 million of unrestricted cash and $682.1 million of total short-term borrowings and long-term debt.

During the quarter, we made a mandatory repayment of approximately $4.8 million on borrowings outstanding under our Term A and Term B senior secured credit facilities and paid $3 million on our revolving facilities and paid dividends of $7.8 million.

As of March 31, total liquidity, which includes unrestricted cash and available borrowing capacity under our revolver, was approximately $112 million. For the first quarter, our free cash flow, defined as adjusted EBITDA minus CapEx, cash interest expense, and cash income taxes, was $35.1 million compared with $37 million in the prior year.

The year-over-year decline in our free cash flow reflects higher cash taxes of $2.6 million in the first quarter of 2015, versus the prior year period.

Finally, we repurchased $10 million or 452,000 shares of our common stock in the first quarter of 2015 of the [Indiscernible] authorized shares repurchase program, we had $40 million of A level as of March 31, 2015. Finally, regarding our 2015, financial outlook our guidance remains the same.

We continue to aspect those high consolidated revenue to be between $368 million and $372 million for growth of 2% to 3% and adjusted EBITDA growth to be between 3% and 4% in 2016. In addition, our fully diluted earnings per share guidance of $1.68 to $1.72 remains unchanged. We will now open the call for questions. Operator, please go ahead..

Thank you. [Operator Instructions] Our first question comes from Brian Keane with Deutsche Bank. Please proceed with your question..

How are you guys doing? And, Mac, congratulations on the new post as CEO. I just want to get your perspective, Mac. Maybe you can give us some thoughts going outside of Puerto Rico at some of the opportunities. I know it's an attractive Latin American market.

Maybe you can take it region by region or maybe even country by country for the specific countries and talk about positioning, and how long it will take to gain traction or to grow exponentially in some of the countries outside of Puerto Rico. Thanks..

Okay, great. Right now answer to that question would be premature, one of the reasons we [hired Mariana] complete that assessment with us.

We are in the process now going-country by-country what we believe the opportunity is across the payments landscape, whether it's processing from the issuing side or its merchant acquiring and we were matching that against the products that we have today and the products that are in development, so what I would tell you on that topic specifically is that's work we're doing now and over the coming quarters, I think we'll have a better view of that..

Okay. And then, Juan, my question on the financials, just on the operating margins -- obviously, I think it was the payment segment that had the drag on it negatively.

Going forward does that start to reverse? Or how do we think about modeling the payment positioning?.

Regarding the changes in the purchase segments most of it was in the company allocation into [Indiscernible] on the payment and also we have from projects that impacted during the quarter. All that all as you saw our market is actually increase our operating income increase during the quarter.

We expect to continue that trend so we don’t expect really any major changes. Again was mostly and really increasing certain professional fees within expenses in the payment processing business and allocations between the payment processing under merchant acquiring business. .

Thanks. Our next question comes from Tien-tsin Huang with JPMorgan. Please proceed with your question..

Great, thanks. And Mac, welcome to the call.

First for you, I'm curious -- your intro was helpful -- dust do you foresee any more of the issue of additions or structural investments that need to be made at these early days? I'm asking, can you do what you need to do within the guidance range that's set for 2015?.

To answer the question, first, we’re comfortable with the guidance for this year I’ll tell you a little bit how, to sort of answer your question let me tell you how we’re thinking about the next 6 to 12 months on what I’m focused and maybe that sort of address your question around leadership.

The two additions we’ve had, the two key initiatives for this year I just look on four things, one is, to deliver on the financials, the financial guidance we’re getting for 2015. The second is focus very specifically on corporate development and M&A that’s what we make the new higher.

Well we make these new hire to ensure we’re developing in the pipeline to ensure that we’re doing all of the financial analysis and evolution and also to manage regulatory process there, the legal background and that can help us with that as well.

But focusing on M&A in corporate development is going to do a big piece of what you see is focusing on this year. The third, back to the previous question is Latin growth. We’re already in the process of evaluating country by country.

What we believe the opportunity to be and Marian’s job will be to help us to finish that plan and then execute on it towards the back half of the year in the fourth quarter.

The final thing we're doing is and that sort of alludes a little bit to what Frank discussed on the last call is we’re evaluating our internal processes and capabilities because I want to ensure that right now with LatAm are we focusing on the biggest opportunities. We’re focusing on a lot.

We have a lot of opportunities that we’re chasing but I want to make sure we prioritize and given the size of the company to make sure we’re going after those at the most meaningful result on the top line and the bottom.

And then also we’re looking at our operations to make sure that when we do have deals and new customers that we can move faster because I think that’s another that we can actually accelerate growth and improve how we did business today.

That sort of how we’re thinking about the year and I think we have the two key leaders in placed to help us focus on those four areas..

All right great. That's helpful, Mac. My business question I wanted to ask about on the merchant side, I heard the comment -- higher spreads. That feels relatively new so maybe can you elaborate on what's driving that? And maybe back to Mac again what's your pricing philosophy in general? Thank you..

Hi. This is Juan. Basically what’s driving the change in the margins already the spread, what’s mostly the changing the mix of the retailers. So we have higher volume of transactions in retailers with higher spread and mostly as a result of [indiscernible] which easily has a much lower spread.

This was mostly the mix within the type of retailers or merchants. So it was not really change in the pricing for our retailers.

We didn’t have a change in pricing per se, was mostly basically the mix in the type of businesses that was the right we saw increasing adaptation but even move to other type of retailers would be from spreads and actually it was possibly for us did in the quarter..

And then maybe Mac, to share pricing philosophy really quick and then I’ll jump up the call. Thank you..

That’s a great question. So what I’ll tell you is we have actively look at, if you look at ATH within the network here so we can look at how we price on the network side and then we also one of the largest portfolio in Puerto Rico and have some other businesses.

So I’d say this come done a fairly well job having some reasonable price of initiatives to continue to grow the business. We have recently evaluated that to try and make a decision on other organic ways to grow the business through re-pricing.

There is a whole piece of businesses [popular] contract have a lot of latitude but we definitely -- we are actively taking a look at other organic levers we can pull pricing is one that I've pulled [and not pass] and then also looking at our product strategy a little bit and say if there is some economic revenue we can get off some additional products.

So it’s not just starting new business. It’s not just corporate development. We’re actually looking if there is other organic lever as well. .

Thank you. Our next question comes from George Nahalos with Credit Suisse. Please proceed with your question..

Great, thanks for taking my question. And, Mac, congratulations on the new post. Maybe to kick it off, you mentioned M&A in your comments.

Can you talk a little bit about how the pipeline looks to you? And is it more that you're trying to focus in certain geographies, or a product that you're looking at? And maybe conversely, as you're looking across EVERTEC's business today are there any sub segments, any products or areas that you think perhaps don't make sense for the Company going forward?.

I’ll answer that. The first to say we’re still thinking through that and adding this new addition I think will help us think about it more thoroughly. I do believe the a straight merchant acquiring bank deal is not the only way to grow this business.

If you look at some of the deals that I have been involved in the past easy that it’s a public deal at a global payments that wasn't a bank deal, because it was more of a technology deal even at American Express where we grew the business on a merchant card side through alliances with [Arriva SIP] and Commerce One.

So there are different types of deal, I think we should be very agile with the type of deals we look at. You may not see us do just a merchant acquiring bank deal but I think we need to be very flexible in the different alternatives we pursue which may -- again by change in strategy but that will definitely the strategy we apply going forward.

Specific products and we're still evaluating some of the other product opportunities we have given the line of businesses we're in..

Okay, I appreciate that commentary. And, Juan, just two points of clarification. I think you mentioned payments growth outside of PR was 6%.

Does that compare to the 9% growth from fourth-quarter 2014 or are those numbers not comparable?.

They're..

They're comparable okay.

Did you get out of POS transaction growth this quarter?.

It was 5% during the quarter and actually then depending any numbers actually is consistent is 5% growth. It has been stable during the quarter probably January was a little slow but now we're adding again the 5% to 6% [indiscernible] in terms of POS growth in Puerto Rico..

Thank you. Our next question comes from Chris Brendler with Stifel. Please proceed with your question..

Hi, thanks, good afternoon. On the international side, you were talking about evaluating the opportunities and taking a step back, which I think makes a lot of sense.

But is it fair to say that the old plans of Colombia, Panama, Costa Rica, in particular with processing and acquiring, are no longer the top priorities, and you're taking a wider swath? Or are those still the target countries?.

This is Mac. I would say Costa Rica will always be a priority because we have a significant share and Panama will always be a priority because we have good business there, but we don't have to share we have Costa Rica so this is definitely upside. Colombia what I would say it's still nascent for us as far our capabilities.

I mean the good news is that we now have a satisfied customers in pilot. We plan to add more features over the coming year and if Mariana comes on board, we should figure out how to commercialize it.

I think in Colombia we definitely learn that we need to do a better job on due diligence process so that we understand the market before we start talking publically about this is the market we're going to go into and maybe in the future you'll see we'll talk about markets when we're actually piloting in those markets.

And we also learned we should probably engage customer when we're more ready to pilot not too early in the process, so I think the Colombia still a priority. I think the organization we all learned from implementing that we all wish going faster, but I feel pretty good about -- we'll see some slow growth in Colombia in the too distant future..

For another market?.

This does answer your question. I mean we're currently in Mexico so I think we want to become more aggressive in how we approach Mexico, we're taking a look at can we drive ATMs in Mexico, can we do more issuing services.

So we're looking at the entire region to say we can come up with a more aggressive game plan throughout the region and just be depended on those three markets but that is work that, it's still to be done and frankly when I came in the position Mig Vizcarrondo said, we need to get this business self-contained so that we can come up with a business that operate solely focused on business outside of Puerto Rico..

Right. And the hire there of Marianna, is that in addition to help maintain that focus and maybe take a little bit different attack? Or is she really replacing some of the people who were doing this job before? I just wasn't quite sure if this was a new role or an existing role that's being reseated..

It's a new role so Mariana today, it's a day just report under a bunch of complex businesses report to one person and their recommendation after we discussed with separated. And Mariana the experience she brings as she was Equifax at Citigroup for some time and calling on bank, so the role was very-very relevant to our business.

She also is doing business in countries where we are today and she gets Costa Rica, El Salvador [indiscernible] Mexico, and it surely enough I think she will bring insight into countries where we don't do business. She is Argentinean. She has done business in Chile, Ecuador, Prague Peru and Uruguay.

These are all places where Equifax has businesses today. So she will give -- I think she gives us a perspective at the executive level that will allow us to better understand the entire region..

She brings relationships, as well, with some of these banks?.

Yes..

Thank you. Our next question comes from Chris Kennedy with William Blair. Please proceed with your question..

Hi, guys, thanks for taking the question. Mac, the Company has always had long-term targets of 8% to 9% revenue growth, 10% to 12% adjusted EBITDA growth.

Any thoughts on those?.

Yes, so what I would say is and I said sort of in my opening comments, I have been incredibly pleased -- the past four weeks I have been the official CEO I have my [indiscernible] road, we customers prospect back on the road next week. So I am really getting a good sense of what the market demand is.

And I can tell you I am more excited about the demand for EVERTEC services that I have been in the past so they are the real desire for Latin American businesses among that speak certainly what understands our culture but it's big enough it actually have the technology expertise in the financials regarding that EVERTEC provide.

So that's the caviar that piece is whole block. The way you get an 89% growth is as big much more aggressive on the organic growth looking all of the different labors we talked about sales, pricing, new products and then also doing deals so we've got to do all of those very-very well in order to hit the 89% and at this point I'm optimistic..

Okay, great. And then, Juan, just a clarification on the non-Puerto Rican Payment Processing growth. There was a customer that brought the business in-house and I think your prior guidance called for double-digit growth outside of Puerto Rico.

Can you just talk about the opportunities for that?.

Yes. Including this year we've invested to be back to over the 10% within it will be more closing to high single digit for the remainder of 2015. .

Thank you. Our next question comes from Sara Gubins with Bank of America. Please proceed with your question..

Yes hi, thanks. Good afternoon.

Within the 2015 revenue guidance, are you expecting further gains from hardware and software sales? Or do you see the Business Solutions segment trending towards the flat growth that you saw in the first quarter when we take out the hardware and software sales?.

Yes.

We definitely have a good start in term of hardware and software sales during quarter one but as you know it was bumpy during the year so from our guidance perspective our function is it would be in line with the expectations for the reminder of the year so probably this quarter it was a little higher than our expectation, but again could keep in mind it's bumpy right so next quarter could be lower than expectation so as we said before we see hardware and software more for the full year because in terms of very high in one quarter then very low the next one so terrific good start for sure Q1 so for now we can expect that to be within the range of our guidance for the year..

Okay.

And then given the news of a potential Puerto Rico government shutdown, do you see any risk of either shorter or longer-term cuts to your contract with the government?.

Okay. What right now the administration is making all the efforts to avoid the shutdown [Indiscernible] news are on a daily basis hitting Puerto Rico what's their focus right is to cut spending and trying to avoid a shutdown usually if you think of our shutdown is more of a partial shutdown mostly in non-essential services.

Our exposure will include one of that services mostly the services we provide to them many of them as a reminder our nation we have and around 40% to 50% is founded by the U.S. government and I really consider it critical.

If the government really have their partial shutdown we might see some impact in what we would call part of development areas we provide products and service to support and it would be provided for the shutdown if it is two weeks or whatever it is, the only one point it will be what we might see some delays in collecting our accounts receivable if they shut down from a that are not same store right then we might slowdown the payments.

The directing back on EVERTEC and the product development is usually less than 10% of their revenue we get from the government so it's not material for EVERTEC..

Great. And then just last question for Mac.

As you're going through and thinking and reviewing your strategy for outside of Puerto Rico, what are the things that we should look at and plan to expect to understand what the strategy will be and what timing will look like? I just wanted to get a sense of should we expect something in three months, six months, longer, et cetera?.

So, you mean that's the timing that when you think will be I'll talk more about the different initiatives outside of Puerto Rico..

Yes, and to give us a sense of how you think it will ramp over time and where the opportunities are..

So, I would say early to give you again ramping overtime and sort of giving sort of projections it's premature until we've done the but let me guess something were actively doing right now and as I said it that's why Mariana was hired.

So as she comes in we'll complete that work and of course it will be ever evolving as markets change, as opportunities present themselves so it's never static but we will as she comes in the door go into 2016 with a clear understanding of what we're going to do at Latin America as it may deviate what we do today..

Thank you. Our next questions comes from Jim Schneider with Goldman Sachs. Please proceed with your question..

Good afternoon and thanks for taking my question. And welcome, Mac, to your new role. I was wondering if we can maybe start out on Colombia. You touched on some of the tactical areas of execution that you thought you maybe didn't get right before.

Can you maybe just talk about the broader go-to-market strategy in Colombia and whether you think that's sound in terms of finding local partnerships in the part that you do organically? Do you anticipate any change to that go-to-market strategy or do you think it's just a matter of improving execution?.

So, what I would say on Columbia is it's obvious it's one of the better markets in Latin America to do business. If you look at the ability to do business, if you’re looking at the size of the market nearly it make sense speaking people in Columbia they are same and this is very comfortable.

So it’s an eye sight market, it’s a growing middle class and your option move from cash to credit or the cards. So if you look at the fundamentals of that market it’s very, very attractive to us.

If you take that too we now have a technology capability that we’re -- again we’re still highlighting so it’s little bit in it’s a formative state, what's missing in the middle and what we’re going to work on over the coming months is how do we commercialize that to take advantage of the market.

Well we still have some good relationships in the market. We have a board member who is from Columbia that can help us understand and navigate that market but we still have work to do to connect the capability we have and how we commercialize with the opportunity and again that's something we’ll be working on this year. .

That's helpful, thanks.

And maybe just to follow-up on the M&A commentary, as you look at different opportunities can you maybe comment on the maximum size of deal you might be looking at? And specifically how does that tie into the maximum leverage you're comfortable with withholding?.

So I ask [indiscernible] because I don’t know if there is ever a limit for any type of deal but I’ve seen they’ve given -- anything possible right, depending upon which way the transaction goes but what I’d tell you want to give you a sense of what our capacity is. .

As we mentioned before most of the company we are looking in the past or that we see in the markets are only the 100 and we’re very comfortable. As a reminder we have a revolver of $100 million. I hope we can get in close to [three quarter] of our $75 million.

So we’re pretty comfortable in paying and making out of our cash flow plus the revolver that we own but to Mac’s point right if it is something even [indiscernible] than that then we have to do it in other various other ways to do a transaction. But anything under that is an area we are very comfortable to execute immediately..

Thank you. Our next question comes from John Williams with Topeka Capital. Please proceed with your question..

Hi, good evening. Thanks for taking my question. I just had a couple of questions regarding capital allocation. Before that though just the right level of cash for the business, it seems like quarter to quarter you're in the roughly $25 million to $30 million-ish range on cash.

Is there a particular level that you're comfortable with there or that is the right level going forward? Do you expect to see that increase over time or is this pretty much where it will stick around?.

Quite comfortable with that level, obviously as we grow the business will change. We generate significant capitals every month. So basically what we have been managing during the last years is we take to use as effective as we can our excess cash flows.

So everybody when you look back you will see we have implemented buybacks, we have paid down our revolver when we have used it, and we continue to invest in the company. We invest around 25 to 30 million every year in CapEx.

So we try to be as efficient as possible always one to provide dividend to our shareholders and we are very conscious of keeping that. So maybe [indiscernible] we’re very comfortable with that, again I'll remind you, we really operate the business with the operating cash flow we generate every month..

Okay. You gave me a good segue to the second part of my question which is, going forward, how do you think about balancing the buybacks and the dividend with the debt pay down? I know that, back to deal, when you guys became public, the debt pay down was a much higher focus.

And it seems like in this market perhaps companies are not really rewarded for paying down.

Is that part of your thought process here? And, secondarily, just on the dividend and on the buybacks, for a smaller market cap company, how high a priority is that going to be going forward? Are you going to look more towards debt or are you going to continue with all three of those items? Thanks..

Okay. Regarding the dividend right now we then plans to increase, obviously we do have plans to keep it. Since the rate are so low we have decided to [debit the] capital for our shareholders is injecting the company first [indiscernible] but has been the buyback.

As the rates continue to be low we think that's the best way to return for our shareholders. But obviously we monitor the scenario the interest rate scenario as it change in the [indiscernible] we might then change to start using more of our excess cash flow to pay down debt. However we leverage it very fast it’s quarter one at 3.6 times net debt.

So we have the flexibility just to change once we complete our buyback to pay down but to your point right now we don’t think we need to accelerate because our average debt is around 2.5% and we consider that very low..

[Operator Instructions] There are no further questions in queue at this time. I’d like to turn the call back over to management for closing comments. .

Thank you. I want to thank everyone once again for joining us on today's call. I like forward to personally meeting, answer your view over the coming months and if anyone wants to come to Puerto Rico we love to host you down there. So with that have a great evening..

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation and have a great day..