Alan Cohen – Executive Vice President and Head-Investor Relations Mac Schuessler – President and Chief Executive Officer Juan Jose Roman – Chief Financial Officer.

Brian Keane – Deutsche Bank Stephanie Davis – JP Morgan Jordan Fox – Goldman Sachs Faton Begolli – Bank of America Merrill Lynch Vasu Govil – Morgan Stanley John Williams – Topeka Bob Napoli – William Blair John Davis – Stifel.

Good afternoon everyone and welcome to the EVERTEC Second 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 second quarter 2015 earnings call. With me today are 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, August 12.

Access information for the replay is listed in today’s financial 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 August 5.

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 risks 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 release.

Before turning the call over to Mac, I wanted to let you know that we plan in participating in the upcoming Deutsche Bank Technology Conference on September 16, in Las Vegas. We look forward to seeing many of our investors at the conference. I would now hand over the call to Mac..

Thank you, Alan and good afternoon everyone. Thanks for joining us on today’s call. We’re pleased with our second quarter results and we are on track with our expectations for the year. Total revenue was $93.2 million, an increase of 2% compared with the second quarter of 2014.

We generated adjusted EBITDA of $47.2 million, an increase of 4% and adjusted net income per share of $0.44, an increase of 7%.

Before turning the call over to Juan to take you through the quarter in more detail, I would like to comment on current economic matters in Puerto Rico, provide some insights on our Latin America business and close with some thoughts on our strategies for 2015.

Even with the challenging economy in Puerto Rico, we continue to see revenue growth across all our business segments. Our performance is reflected of our leading market position on the island and the ongoing benefit from cash to card trends that are helping to drive our payments business.

As many of you may be aware, the Puerto Rican government temporarily increased the local sales tax from 7% to 11.5% effective July 1. We worked hand-in-hand with the Puerto Rico Department of the Treasury, Hacienda, to ensure that the tax increase took effect as seamlessly as possible for our merchants.

We undertook an advertising campaign directed towards our merchants to elevate awareness of the tax change and informing them of the steps required to prepare in time. Members of our executive team were in the field visiting our merchants at midnight, the night of the change, validating that that increase took effect as scheduled.

And we're pleased that this change was implemented smoothly. As it relates to our business, the sales tax increase could be a benefit to our revenue in the merchant acquiring segment, since our fees are based on sales volume, which would include the additional 4.5% sales tax increase for approximately half of our merchant sales volume.

Keep in mind that for some categories, the sales tax does not apply including gasoline utilities in supermarkets. That said it’s too early to tell what impact the tax increase can have on overall consumer spending in Puerto Rico over time. So far, in July we have not seen a significant consumer spending change.

Regarding the Puerto Rico debt challenges, we are keeping a close eye on developments. First let me emphasis that we have no credit exposure to any debt issued by the Puerto Rican government it to agencies or public corporations.

To extent that there is any negotiated debt relief, they should further strengthen the government’s ability to pay its operating costs. Second, approximately 10% of our revenues are from the Government of Puerto Rico spanning many different agencies and contracts. Moreover, many of the services we provided to the government are considered essential.

Third, more than 40% of these services are funded by the U.S. federal government. We believe that the services we provide, which could be considered discretionary represent only 1% to 2% of our total revenue. Moving forward, we will seek opportunity to assist the government as it implements efforts to become more efficient.

Now, turning to Latin America, our payments related businesses outside of Puerto Rico grew at a single digit during the quarter, which is not what it should be. We continue to sign new business including our first albeit small bank in Mexico and a major U.S. retailer in Costa Rica.

However, we need to win larger accounts to return to double-digit growth. To that end, our new President Latin America, Mariana Goldvarg, has been traveling extensively over her first two months to our Latin American markets in Columbia, Costa Rica, Panama and Guatemala.

Throughout her travels, Mariana has been meeting with employees, customers, and potential partners to access our opportunities and challenges. She is reviewing the organization, our infrastructure, and our product offerings country by country. Some changes are already underway, but she is still developing a plan for our next stage of growth in LatAm.

Regarding our priorities for 2015, I believe we are making good progress. We are strengthening and aligning the management team to focus on key priorities as evidenced by our addition of the President of LatAm.

We are reigniting our corporate development initiatives, our Senior Vice President of Corporate Development and Strategy started in June and we now have the new process in place to evaluate acquisition opportunities and strategic partnerships.

We are continuing to focus on Puerto Rico and growing market share, which continues to be evident in our results and we are reviewing our key business areas such as our product and platform strategies, sales and account management processes and IT operations and product delivery, which I’ll update you on in the coming quarters.

Lastly, as you saw in our release, our Board of Directors has approved an increase and extension of the company’s current stock repurchase program for a total of $65 million available for future use through September 2016.

I’m pleased that we can be opportunistic in our share repurchases and have the capital flexibility to repurchase shares, pay dividends as well as pursue other business development opportunities as they arise. Juan, the floor is yours..

Thank you, Mac, and good afternoon everyone. I would now provide a detailed review of our second quarter results, comment briefly on our year-to-date performance and then conclude by reviewing our financial outlook for 2015.

Total consolidated revenue for the second quarter of 2015 was $93.2 million, up 2% compared with $91.3 million in the prior year. By segment merchant acquiring net revenue increase 7% year-over-year to $21.2 million driven primarily by sales volume growth.

A portion of the increase is a result of our income tax amnesty established by the Puerto Rico Government to pay past-due taxes during the second quarter of 2015, which represents around 2% of the growth. This growth was offset by lower volume for gas station and utilities led by the continuation of lower oil prices as compared to last year.

While oil prices are slightly higher than the first quarter of 2015, the gas stations and utility sales volume decreased as compared to last year. These decreases impacted our growth by about 1.5% in the quarter. Payment processing revenue increased 1% in the second quarter to $26.8 million, up from $26.6 million in the prior year period.

Revenue growth in the quarter was primarily driven by an increase in our ATH debit network and processing transactions and accounts on file within our card product business. This growth was offset by one-time benefit in the second quarter of 2014 of approximately $700,000 of revenue from the Department of Education program in Puerto Rico.

Excluding this one-time benefit in 2014, payment processing revenue would have been increased 3%. POS transactions in Puerto Rico increased 5% during the quarter as compared to last year.

Business solutions revenue grew 1% to $45.3 million in Q2, driven mainly by our core banking business due to new services and an increase in volume for existing services related to the latest consolidation of banks in Puerto Rico. The increase was partially offset by a decrease in hardware and software sales up $660,000.

Moving to expenses on a GAAP basis, our second quarter total operating expenses were flat compared to the prior year period.

Cost of revenues excluding depreciation and amortization was $40.7 million, up $1.6 million or 4% versus the prior year, reflecting higher compensation expenses due mainly to the share based compensation plan established at the end of the first quarter of 2015.

Selling, general, and administrative expenses for the second quarter were $8.9 million, down approximately $1.5 million or 14% for the corresponding 2014 period.

This decrease reflects lower professional fees mainly as a result of the debt offering in the second quarter of 2014 that was withdrawn offset by higher compensation expenses due mainly to the aforementioned share based compensation plan.

Depreciation and amortization expense decreased by $400,000, or approximately 2% compared with the prior year primarily due to lower equipment and depreciation expense. Income from operations for the second quarter was $27.6 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 $5.2 million, a decrease of $500,000 from the prior year, partially due to lower interest expense of approximately $300,000 as a result of the lower outstanding debt balance.

We recorded a GAAP income tax expense of $2.1 million in the second quarter. On a cash basis, our income tax expense was approximately $1 million. As of June 30, 2015, we had approximately $24 million of gross NOLs available to offset future tax payments related to our operations in Puerto Rico.

Adjusted EBITDA for the second quarter was $47.2 million, an increase of 4% from $45.5 million in the corresponding 2014 period. Adjusted EBITDA margin was 50.6%, an increase of 80 basis points as compared to the second quarter of 2014. The increase was driven by revenue growth as well as cost containing initiatives and leverage in our business.

Adjusted net income in the second quarter was $34.2 million, up 6% from $32.2 million in the prior year. Adjusted net income per diluted share increased 7% to $0.44 from $0.41. Moving to our balance sheet, as of June 30, we reported $38.8 million of unrestricted cash and $661.5 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, paid $16 million on our revolving facilities, and paid dividends of $7.7 million.

As of June 30, total liquidity, which includes unrestricted cash and available borrowing capacity under our revolver, was approximately $135 million. As we pay down debt in the second quarter, our net debt to adjusted EBITDA ratio moved under 3.5 times.

Having reached this level, our Credit Agreement provides for a reduction of 25 basis points in the applicable margins in both our term loans and/or revolver representing approximately $1.6 million annualized interest savings. Such reduction will become effective now in August.

For the second quarter, our free cash flow, defined as adjusted EBITDA minus CapEx, cash interest expense and cash income taxes was $28 million compared with $32 million in the prior year.

The decrease is due to a higher CapEx during the quarter versus the same period last year as a result of the timing of the investment; however we continue to expect total CapEx for the full year to be within our projection of $30 million. Now, I want to briefly touch on our year-to-date results.

Total consolidated revenue was $184.6 million, up 3% compared with $178.8 million in the prior year. Adjusted EBITDA year-to-date was $92.8 million, up 2%, and adjusted diluted earnings per share was $0.83, up 4%. Finally, regarding our 2015 financial outlook. We’re tracking well year-to-date and our guidance remains the same.

We continue to expect total consolidated revenue to be within $368 million and $372 million for growth of 2% to 3% and adjusted EBITDA growth to be between 3% and 4% in 2015. In addition, our adjusted diluted earnings per share guidance of $1.68 to $1.72 remain unchanged. We will now open the call for questions. Operator, please go ahead..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Brian Keane of Deutsche Bank. Please go ahead..

Yes, hi guys.

Mac, what would be the impact EVERTEC from a Puerto Rico default, maybe you can just – I know you talked about it a little bit, but can you just talk about the different angles that default would cause to you guys directly?.

Yes, so when I – first of all we can’t really predict the future, but keep in mind we’re not a creditor to the government or any of the public utilities, most of the business that we do with them are a little bit less than half is funded by the U.S. Government, so that would still be funded and we believe it would still be paid.

The remainder is primarily what we consider mission-critical. So most of our contracts don’t require that we continue to pay them, the mission-critical and we believe that those would be important services for the government to continue.

Like I said earlier, there is a piece, and by mission-critical again we run the Justice Department systems, we run a lot of systems across the island.

There is probably 10% to 20% that you can consider discretionary, the total spend that the government has with us and may be 1% to 2% of our total revenue that could be considered discretionary that they might cut back. We don’t foresee that but that they might cut back and that you could consider potentially at risk.

What I would also say though is as the government experiences these changes, they’re rolling out. As you saw, we help them rollout their new sales tax program across all of our merchants that are talking about a new value-added tax.

So as I look at different ways to create efficiencies in the governments or as they look at new tax regimes those can actually be opportunities. So that’s sort of how we view the risk of the government.

Do you want to add anything Juan?.

Yes, Mac, let me add. In addition to that our accounts receivables have remained the same. So really in terms of collection, we haven’t seen any change as compared to the past, actually have decreased a little bit compared to last year. So, so far I think its key to Mac’s answer is that we don’t have great exposure at all to the government.

So immediately there will be no impact to our business – to our day-to-day..

Brian, we are staying very close to the government. We’re staying close to Hacienda, our customers, I mean, something we’re very actively managing, but that’s sort of our view..

Would you see any impact to consumer volumes?.

No, even – even July actually we have some preliminary numbers, it’s very consistent. So even though the new sales tax, increasing the sales tax was effective July at least in terms of volumes for the first month obviously is just one month, but you have been consistent with what we have been seen the whole year.

So, so far we have not seen any impact on the consumer..

Okay, that’s helpful.

I know international revenue growth was 6% last quarter, it sounds like maybe it was low single-digit this quarter, I didn’t hear the number what international growth grew at?.

For the payment this quarter was 4%..

4%.

And so the softness we saw in payment, does that rebound going forward or should it stay at this low single-digit level one?.

I think we will be – we will expect a little bit better in the second half of the year. We’re implementing certain customers in Q3, but I think it will be something around 5% to 6%. Yes, so even going into the last call, it was getting on board here; it was quickly clear that we needed to change how we’re approaching LatAm.

So that was what we immediately brought in a professional bringing in Mariana early on as part of the strategy. So we’re not pleased [indiscernible] goes from 4 just percent back to 6% back to 9% that’s not where it needs to be from a company perspective. So clearly that’s what Mariana is on board to do but that will take some time..

Okay, all right, thanks for the color..

Our next question comes from Tien-tsin Huang of JP Morgan. Please go ahead..

Hi guys. This is Stephanie Davis on for Tien-tsin. Thanks for taking my question..

You through a soft there..

My first question, [indiscernible] as you guys saw there is an impact on consumer confidence and some volumes are good.

Could you talk a little bit about the current situation with – on the government and any potential impact you’re factoring in from this?.

We actually – Stephanie, this is Juan Jose. We don’t have a direct business some minimum amount of revenue less than $10,000 in a year. So we don’t have any exposure really to public corporation, so it’s just minimum. Our service is more with the central government. And as Mac said, close to half is federally funded.

So even the negotiation and the changes in [indiscernible] we don’t expect – it wouldn’t have any impact on EVERTEC..

Yes, consumer confidence, Juan, there is no impact to that at all either….

You’re certainly right, but as I mentioned in July we saw some preliminary numbers for July already, the number of transactions continue to be consistent to what we saw in Q2. So at least initially we’re not seeing.

And keep in mind they are the expenses, the customer spending in our case don’t include the big tickets like – or constructions that might see a different impact, right. But the day-to-day consumer actually continues to be kind of in line with what we saw in Q2..

Understood.

And are there any pricing leverage that you can pull domestically if volumes due for some reason taking it? How long would it take to kind of push that through?.

Well as a reminder in our merchant business assuming the volumes being the same it might be positive because of the increase in the sales tax and we generate revenue based on the dollar value, right.

So assuming, let’s say this frankly the same volume actually we could – we can see some upside in our revenue just because of the increase in the sales tax..

All right guys, thanks for taking my call..

Thank you..

And our next question comes from Jim Schneider of Goldman Sachs. Please go ahead..

This is Jordan Fox on for Jim. In terms of the Columbia opportunity, I was hoping you could provide an update as it relates to securing a banking partner in that market. And more broadly I guess since the last call, what did you guys learn in terms of evaluating the most appropriate go-to-market strategy there? Thank you..

Sure. So as I said, I’ll speak a little bit first about Mariana moving into our job and how that relates to Columbia. Mariana has spent a lot of time on the road. She has been to Columbia. She has been to Guatemala. She has been to Costa Rica several times that’s for her employee bases.

And she and I actually spent time together in Colombia, in Cartagena, which is where the annual banking conferences and we actually met with the President of our customer there. It is a bank customer, it’s small, but it’s a growing bank.

What I would say is, and I said it earlier on the call, our execution has been a lot to be desired on the execution of bringing up that platform, but we now have a customer up. We’re still building some capabilities and features. And Mariana is building a plan to how to she commercialize that to grow it in Colombia. So there’s still work to be done.

She has already been on the ground. We’ve met with the customer. We’ve determined additional requirements that we need to complete before we can fully launch it, but that is a focus..

Got it, that’s very helpful.

And just given the economic background in Puerto Rico currently, what trends are you seeing in regards to same-store sales, credit versus debit volumes, any other things that you might highlight here?.

Regarding the volume, as I mentioned, we’re seeing the quarter our POS transactions around 5%, July is around 5% again, so it is consistent. If the increase in the sales tax, we’ll have a real impact, we have not seen yet. Obviously it’s just one month, but it’s a good indicator.

So it is consistent if 5% growth, which we have been consistent for the last I think its nine months now. I think we have to keep in mind, so you have to remember that one of our largest customers absorbed one of the other banks on the island, so we’re seeing the benefits out of that.

We have a significant amount of everyday spend and consumers are still spending. So the problem right now that you are reading about in the press is primarily with the government. Consumer spending – the initial indicators are that it’s still holding up.

Now everyone’s question on the call is what happens to consumer confidence long-term, we can't project that, but we can tell you that the early indicators are that there's not an immediate impact based on what you're seeing on television with the government..

Got it and are you seeing any differences as it relates to credit versus debit volumes?.

Not really. No. It's consistent with – no – credit and debit the use of it, the number of transaction is just consistent, nothing really to call out..

Okay, thank you..

And our next question comes from Sara Gubins of Bank of America Merrill Lynch. Please go ahead..

Hi, this is actually Faton Begolli calling in for Sara Gubins. I just want to go back on the Doral question.

So how much of a benefit was Banco Popular's acquisition of Doral assets in the quarter? Was there any one-time project work to call out?.

Not really, so what will happen is that in the implementation, the integration of the bank of Doral into Popular, who assisted Banco Popular with the process. And that is showed up as a part of our IT consulting services, but the reality is that's [indiscernible] into other projects that we have with the bank because the priority was the integration.

So it kind of pushed back most of the work that we were of that priorities right, so the priority was the integration. So what we do expect now that is already integrated is to continue with the projects that were put in whole for a while just to integrate Doral. So no spike really in the quarter at least in term of the special project.

However definitely we start in the month of June, we integrated we start having the accounts in our files, so we start processing for the bank incremental loans related to the acquisition. So we have like let's say one of the three months of the impact of Doral, obviously it will be a positive for the remainder of the year..

Got it, got it. Okay.

And just switching gears a little bit, are you subject to the new 4% professional services tax that is expected to be in place from October 1 to the end of March of last year?.

Yes we are. It will be the way it works is that the business-to-business. There are certain services that we do pay today the sales tax of 11% now, so for the reminder of the B2B that didn’t have before the sales tax, there we will have the 4%. So we will be subject that effective October 1. There – we can see there.

We evaluated our looking into our guidance right to reaffirm our guidance. So even we will see an incremental cost, but because of the year is progressing, we still will be within our – we're very comfortable within our guidance..

Got I, okay.

And my last question is are you seeing any pushback on merchant acquiring fees? Is there a more difficult economic – I am sorry a more difficult pricing environment?.

No. I mean we haven't seen a noticeable change in the pricing environment in Puerto Rico..

Okay. That’s all I had. Thank you..

And our next question comes from Smitti from Morgan Stanley. Please go ahead..

Hi, thanks. This is Vasu Govil for Smitti. First I just wanted to confirm if the EPS guidance includes any accretion from the increased buyback authorization..

Not for this one. When we provide our original guidance, we did consider some of the buyback. So this increase that was just approved today doesn't really change our guidance for the year..

Understood, thanks.

And then just maybe can you talk about the pipeline for potential M&A and JV, partnerships in markets outside of Puerto Rico and particularly on the JV front is that still the primary strategy for international expansion and to the extent that it is can you talk to us about the types of discussions that you are having with potential bank partners and what could be the potential catalyst for some of these banks to actually formalize a partnership with EVERTEC?.

Sure, so I will give an update just generally on how we view of our progress in corporate development. And as I said on the last call we brought in a resource to specifically focus on corporate development strategy. We started a couple months ago and is making very, very good progress.

We’re sort of – we think – I think the corporate development for EVERTEC in sort of four different buckets. One is identifying deals in the marketplace. The second is evaluating those deals going through the rigor of the financial analysis sort of the strategic review that makes sense for our Company.

The third is the negotiation process once we find a target that we like going through the progress that actually win and close the deal and for us as well the fourth pieces to get it processes through the regulators because we founded the Bank Holding Act we also have regulatory requirements in some of these different countries.

What I would tell you is the first two pieces I talked about identifying deals in the marketplace and having a rigor around evaluating possible deals, we’re making very, very good progress. We’re looking at deals in multiple countries. We’re taking – putting this through a process to evaluate those.

There's nothing at this point that I can really declare as a deal we’re ready to do. And when I read that point, I will let you know, but I do think those first two pieces getting a good perspective on the market and having an ability to evaluate deals. We have made significant progress..

Great, Thank you. Thanks for the color..

Our next question comes from John Williams from Topeka. Please go ahead..

Hi, good evening guys. Thanks for taking my questions. I just had a quick question for Mac and it’s a little bit more detailed version of what – a little bit of what you were just talking about. So a lot of the questions we’ve been getting about just the background on what was going on in terms of winning new deals outside Puerto Rico.

The questions are related to this. And so I guess if you could just help us out by giving a little more detail on what was being done before what wasn’t being done before you joined. And what you are doing now like some specifics just around how you approach these different markets.

I know they’re all different, but I think one of the challenges people have an understanding what potential catalysts are going to come in is at least the fact that they don’t necessarily understand the sales cycle and the sales process it would be helpful to get a more detail on that?.

[Indiscernible] much details I can’t right now. I can’t really speak to the past and what the previous sort of regime did. I can tell you when I walked in having a robust view of what deals were available in the marketplace, what assets were attracted even if they were currently on the market that was not readily available.

So having a perspective on the market and deal opportunities is something that we now have. Putting just through an evaluation process figuring out what type of assets would we purchase in Colombia, would we purchased in a Costa Rica and building a thesis on what makes sense for our business in evaluating those that is something we now do.

I can’t really give you a view yet. It would be disingenuous to try and give you a view yet on what acquisitions will look like in these different markets, but over time that sort of the next phase of where we like to be..

Are you finding as you go through the customers will start with one particular product or type of product and then bring that on and then maybe consider adopting other things and other verticals perhaps that you guys are offering or is it really very much dependent on the country that you’re in that particular time?.

It’s dependent on the country. I mean you have to be opportunistic. You may find some markets were all the merchant acquirers are still owned by banks and they don’t have any plan to change that, because they still want to subsidize deploying terminals in the market. So they can get the interchange on the issuing side.

So in that type of case, you would go in and you would try to offer core product services where you actually help them with card issuance manage those card accounts. You may beyond the processors are on the back and for the merchant portfolio, they still want to own it.

And other markets more mature markets typically is where you’ll see a bank willing to sell their merchant portfolios. So we’re still assessing and we’re hearing different noise in the marketplace.

And then you also may say look there may be a completely different way to enter the market recurring payments some type of direct payment systems between the banks of it.

There other sort of alternatives that we would need to evaluate thoroughly before we do something that was very different sort of issuing deal on a prime deal, but it’s going to vary from market to market based upon the maturity of that market. If we treat every market the same and we try and replicate deals that are being done in the U.S.

and LatAm, then I don't think it will make progress. So we are looking at the markets to figure out the maturity level of each and what the most appropriate opportunity would be based on the market..

Okay, that’s helpful. The two deals you mentioned earlier Mac are not material, but to your point it sounds like a little bit of progress in that front and signing up for a couple of smaller deals is it fair to say..

Yes, when it says we are continuing to make progress, but again LatAm growth. I won’t be happy to – its back double-digits, quite frankly..

Thanks. I appreciate the color..

Okay, thank you..

Our next question comes from Bob Napoli of William Blair. Please go ahead..

Good afternoon. Mac, the Company before you got there had some long-term objectives that they had when they went public 89% revenue growth, 10% to 12% EBITDA growth. And I know you just been there few months and I know just starting well below that.

But as what are your thoughts on those as being viable long-term objectives as you get the corporate development machine rolling and ramp up growth outside of Puerto Rico..

Yes, so the only thing from – growth perspective and coupled with this year numbers, as far as future numbers I think as we get closer to 2016 we have a view on that.

As I said on previous calls in order to get the Company's growth where we wanted to be we need to do three things execute on Puerto Rico, which frankly I think we are doing particularly given the environment.

And we continue to be very focused on our biggest customer here, very focused on how we manage the government and very focused how we gain market share with disrupting in the marketplace. The second piece is getting LatAm back to double digits, which is Mariana’s job and the third, is the deal piece. So I do think there's two pieces to your question.

One is the deal pieces is important because its company to the growth rate that everyone desires to getting long-term guidance is not something that would be appropriate today, but in the coming quarters I think we will have a better view on that..

Okay.

And then I missed part of the upfront of the call I had another, but with regards to Mariana, I mean I just did you give any feedback on thoughts now that she's been on board and her thoughts of the opportunities outside of Puerto Rico and your thoughts along having worked with her now for a few months?.

Yes, well. I would say her observations are similar to mine. First off she has spend a lot of time with customers particularly the biggest ones to ensure that their needs are being met because retaining the customers we have is incredibly important.

She spent some time with prospects to understand what opportunities might every for new business and she is sort of assessing her leadership team and the operations that she has today.

I think, she shares my original observations that the opportunity is great, and for a player like EVERTEC but we still have to get ourselves to this transformation from an IT department and professional services Company and that will be a big part of our strategy moving forward.

She is already making some changes internally ensuring that we’re managing the biggest account like I said and that we’re focused on the biggest opportunities. But I think her observations were similar to mine. Now, she is very focused on putting the strategy and the plan in place to get it where it needs to be..

And then last question any thoughts on Cuba as an opportunity?.

No, I would – what I would say is it’s an excellent opportunity. I think it's going to be sometime before it's a material market. It would put us sort of in very much an emerging market. We are learning more their delegations going from Puerto Rico to learn more about the market to spend time with some of the business executives in that country.

And so that is something we will definitely give attention to in the near term..

Great. Thank you..

Thanks, Bob..

And our next question comes from John Davis from Stifel. Please go ahead..

Hi, guys.

Mac maybe you could can start by talking a little bit more about the tax increase, not to beat the dead horse here, but is there any chance that you could see the higher tax rate push more transactions to cash or the great market? I understand the revenue is better, but if you lose transactions could that offset some of it or just thoughts around that that would be great?.

So it's hard to predict. What I would say is the sales tax went from 7% to 11.5%. That wasn't for all categories though so that was not for super markets, gas – gasoline and utilities. So some of the biggest – is on those half of what we process actually is the same – get any increase.

So that's important because those are the day to day right purchases of the consumer. So it is not like [indiscernible] 4.5% increase impact in the whole economy. Obviously, there is an impact. But in the day-to-day which is – by the way one of our strongest areas in the merchant side, which is supermarket gas and utilities. There is no impact at all.

But what I would say generally about the Puerto Rican Government is tax collection is a general area that their focused on because they want more participation in the tax system and they know that there is some avoidance today. And just like all governments around the world, electronified payment is a way to accomplish that.

One of the things Puerto Rico did about five years ago is every time you have a receipt in Puerto Rico; they put a lottery number on it to encourage consumers to request receipt. So they – what I would say is we haven't seen in the July numbers, right.

I understand your concern – it's a concern we should all be aware of, but the Puerto Rican Government is very focused on continuing to try to get transactions electronified, so they can get participation in the tax regime. So it’s a risk, but right now we’re not seeing any negative impact..

Okay, well, that’s helpful.

And then Juan just quick question it looks like the acquiring merchants for the first half of the year were a little bit better while processing was lower is there any meaningful changes to expense allocation or anything else that’s driving kind of the difference in segment margins year-over-year?.

Yes keep in mind Q2 of last year we have a – that’s called a one-time was educational program was around $700,000 for the quarter that we didn’t have this year. And it’s basically all margin, right. So that impacted the operating income for the segment in the quarter that’s mostly the impact.

Beside that really is the mix of the location because of the increase or decrease in the sales volume, right. As you see we have more merchant acquiring revenue, which is very profitable. So it changes a little bit because again some of our locations follow the changes in the revenue..

Okay, that makes sense. Thanks guys..

Okay..

Okay..

[Operator Instructions] Seeing no further questions, I’d like to turn the floor back over to management for any closing comments..

Again I’d like to thank everyone for joining the call I hope to see many of you at the Deutsche Bank Conference in Las Vegas. And for those of you who are unable to make that, we’d love to host you in Puerto Rico particularly as we get into the winter. Thanks again..

And thank you. Today’s conference has now concluded. We thank you all for attending today’s presentation. You may now disconnect..