Good afternoon, everyone, and welcome to the EVERTEC's first Quarter 2019 Earnings Conference Call. Today's conference call is being recorded. At this time, I would like to turn the call over to Kay Sharpton, Vice President of Investor Relations. Please go ahead..

Thank you, and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer; and Joaquin Castrillo, our Chief Financial Officer. A replay of this call will be available until Wednesday, May 7.

Access information for the replay is listed in today's financial release, which is available on our Web site under the Investor Relations section of evertecinc.com. For those listening to the replay, this call was held May 1.

Please note there is a presentation that accompanies this conference call, and it is accessible in the Investor Relations section of the Web site. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements 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 statement.

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 earnings per common share.

Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and supplemental slides. I'll now hand the call over to Mac..

Thanks, Kay. Good afternoon everyone. We are pleased with our results for the first quarter of 2019, which was at the high-end of our expectations. We are executing well and we continue to benefit from Puerto Rico's increased rebuilding and recovery activity.

Beginning on slide four, I'll cover some of the quarter's financial highlights and provide you with an update on our recent developments. Total revenue was $119 million, an increase of 8% compared to 2018.

January and February were elevated relative to last year as the economy was still recovering from the hurricanes that hit Puerto Rico and the Caribbean in September of 2017. We also benefited from revenue related to EBT services for the Government of Puerto Rico.

Adjusted EBITDA was $58 million or 7% growth over the prior year, and adjusted earnings per share was $0.50, an increase of 6% compared to last year. We generated significant operating cash flow and returned approximately $21 million to our shareholders through dividends and share repurchases.

Moving on to progress in Puerto Rico on slide five, first, we were pleased with the strong revenue in Puerto Rico and the Caribbean, which grew approximately 11%, driven by transaction growth of approximately 10%.

We continue to benefit from relief and recovery programs, increased tax payments as well as our continued deployment and value-added solutions for merchants and partners.

Regarding the federal funds flowing into Puerto Rico, the government submitted to the PROMESA Board a revised fiscal plan on March 27, and although it is not certified by the Board at this time, it includes revised timing of federal funds, and offers us a view of the local government expectations.

Although, the total anticipated funds continue to be the same at approximately $82 billion, deployment of such funds is expected to be slower than originally projected by the PROMESA Board certified plan. Based on these new projections, fiscal 2019 estimate of $6.7 billion is now anticipated to be approximately half of the funds received in 2018.

2020 is projected to be higher than 2019 at $8.7 billion. Although, the pace of federal funds is slower than we'd like to see, we continue to believe this will positively impact the island's economy over time.

On a positive note, the Treasury Department in Puerto Rico reported a significant increase in the number of Puerto Rican file their tax returns compared to the previous year. The government expects to close the fiscal year above the previous tax revenue projections.

We believe that these are important steps necessary for the debt restructuring process, and ultimately a driver of long-term economic health on the island.

Moving to slide six, for Latin America update, revenue was up 2% year-over-year and is performing as we anticipated given the impact of the attrition and the uneven license sales in any given quarter.

We recently were informed of another delay in one of our client migrations this year, which will result in client migration at the lower end of our original expectations for the year.

In summary, we are pleased with the strong Q1 2019 financial results, and we'll continue to focus on advancing our strategic initiatives in Latin America and Puerto Rico. We look forward to sharing our progress in the coming quarters. With that, I will now turn the call over to Joaquin..

Thank you, Mac, and good afternoon everyone. I will now provide a review of our first quarter 2019 results. Turning to slide eight, you'll see the consolidated first quarter results for EVERTEC. Total revenue for the first quarter was $118.8 million, up 8% compared to $110.3 million in the prior year.

While it was a somewhat easier comparison to last year, given January and February were still feeling the effects of the hurricane. Our sales volume for the month of March was relatively flat versus prior year.

We benefited in the quarter from one-time revenue of $2.7 million related to the EBT service contract we manage for the Government of Puerto Rico. Lastly, we've also benefited from increased core banking transactions and an increase in network services related to new managed services projects.

Adjusted EBITDA for the quarter was $57.6 million, an increase of 7% from $54 million in the prior year. Adjusted EBITDA margin was 48.5%. And this represents a 40 basis point decrease in our adjusted EBITDA margin compared to the prior year.

The year-over-year decrease in margin primarily reflects the lower corporate and other expenses in the prior year quarter, as one of the elevated average ticket we experienced last year, as a result of disaster risk spending that drove a higher than normal margin.

The margin this year benefited from the EBT one-time revenue, partially offset by higher investment in our technology platforms. Without the EBT benefit, normalized adjusted EBITDA margin would have been approximately 47.3%.

The effective tax rate in the quarter was 12.5% and we continue to anticipate that our full year tax rate will be approximately 13% or slightly below. Adjusted EPS was $0.50 for the quarter and grew 6% compared to the prior year. Moving on to slide nine, and I'll cover our segment results; starting with Merchant Acquiring.

In the first quarter, Merchant Acquiring net revenue increased 11% year-over-year to approximately $26 million. The revenue increase was due to increased volumes driven by lapping the softer results in the first two months last year and the benefits of that extra EBT funding.

In March, we saw flat sales volume that were in part driven by the end of the disaster recovery extra EBT funding that began in March of prior year and ended in early March this year. Adjusting for the impact of EBT funding in the month of March, sales volume growth would have been in the low-to-mid single-digit range.

Lower EBT transactions, however, contributed to a slightly higher net spread. Average ticket declined 4% versus the prior year, as well as sequentially in line with our expectations as spend continues to move toward a more normalized levels.

For April, we have continued to see similar sales volume results to March, which were flat to slightly up as compared to last year levels. Adjusted EBITDA for the segment was $12 million, up 10%.

Adjusted EBITDA margin was 46.1%, down approximately 40 basis points as compared to last year, reflecting the impact on margin of the lower average ticket this quarter. We anticipate a similar margin over the next few quarters. On slide 10, you will see the results of the Payment Services, Puerto Rico and the Caribbean segment.

Revenue for the segment in the first quarter was $32 million, up approximately 18% as compared to last year. Transaction volumes grew approximately 10% and also benefited from the softer comparable in January and February last year.

Additionally, as I mentioned, we benefited from one-time revenue on our EBT services contract and we continue to benefit from new transactional fees for services such as ATH Movil Business and the ATH Movil switching fees that we implemented last year. Adjusted EBITDA for the segment was $21.3 million, increasing 23% as compared to last year.

Adjusted EBITDA margin was 66.4% or approximately 270 basis points as compared to last year, primarily due to the high margin EBT revenue and other new transactional fees. Adjusting for the EBT revenue, margins would have been relatively flat as compared to last year. On slide 11, you will see the results of our Payment Services Latin segment.

Revenue for the segment in the first quarter was $20.8 million or approximately 2% as compared to last year. This growth was primarily driven by inter-company license and service revenue offset by approximately $700,000 of client attrition.

Organic revenue was down in the quarter due to license sale implementations and consulting services to third parties in the prior year that did not recur. As we have mentioned previously, our LatAm revenues through our Chile acquisition, including component of license sales and consulting services that are non-recurring.

And that will result in somewhat uneven revenues throughout the year. We continue to focus on our strategy of shifting from a licensing Movil to a processing Movil, which will eventually result in a more recurring and growing revenue base.

Additionally, we will have some further delays from our client migrations and now expect the full year impact of client migration to be closer to $3 million. Total revenue growth for the full year in LatAm segment is now anticipated to be low-to-mid single-digits.

Adjusted EBITDA for the segment was $8.3 million and adjusted margin was 39.6%, up approximately 530 basis points as compared to last year, driven by the inter-company services and license sale to Puerto Rico. For the full year, we now anticipate the adjusted EBITDA margin to be in the mid '30s due to inter-company services and license revenue.

On slide 12, you'll find the results for the Business Solutions Segment. Business Solutions revenue in the first quarter was up approximately 7% to $51.4 million. Revenue growth in this segment was driven by not lapping softer comparison to last year, as well as new services for both Banco Popular and the Government of Puerto Rico.

For the quarter, adjusted EBITDA was $23 million and adjusted EBITDA margin was 44.9%, down approximately 350 basis points as compared to last year. The decrease in the adjusted EBITDA margin was primarily driven by increased expenses related to infrastructure and other contractual obligation expenses that negatively impacted the quarter.

Moving on to slide 13, you will see a summary of our corporate and other segment. Our first quarter expense was $6.9 million, an increase of 59% over prior year. Corporate and other includes approximately a $2.1 million negative impact related to intercompany eliminations, which were not in the prior year.

Intersegment revenues from Payment Services, Latin America was capitalized in Payment Services, Puerto Rico and Caribbean, as we continue to use our LatAm resources to advance our efforts of shifting our products suite processing model.

Excluding this impact, Corporate and other adjusted EBITDA will be $4.8 million, reflecting an increase of approximately $0.5 million, largely due to lower spending in the prior year related to the lower post hurricane activities and other timing delays.

Of a percentage of total revenue, corporate and other was 5.8% and approximately 190 basis points above prior year primarily due to the negative impact of the inter-company elimination and is now anticipated to be approximately 6% as a percentage of revenue on a full year basis, as we expect a similar impact from inter-company transactions in the coming quarters.

Moving on to our year-to-date cash flow overview on Slide 14, our beginning cash balance was approximately $87 million, including restricted cash of our approximately $17 million. Net cash provided by operating activities was approximately $29 million or a $1 million decrease as compared to prior year.

And this includes the impact of settlement timing and other working capital differences. Capital expenditures year-to-date were approximately $14 million, and we continue to anticipate capital expenditures in a range of $40 million to $45 million.

Next, we paid approximately $4 million in scheduled debt payments and $6 million in withholding taxes on share-based compensation, offset by use of our revolver, resulting in a total net debt increase of approximately $6 million. We also paid cash dividends this quarter of approximately $4 million.

And we repurchased approximately $17.5 million of common stock for a total of $21 million return for shareholders year-to-date. We have approximately $45 million available for future use under the company's share repurchase program through December 31st, 2020.

And we recently announced another $0.05 dividend to be paid on June 7th, 2019 to shareholders of record as of May 6th. Our ending cash balance as of March 31st was $87 million, and this included approximately $13 million of restricted cash. Moving to slide 15, you will find a summary of our debt as of March 31, 2019.

Our quarter ending net debt position was approximately $484 million comprised of the $73 million of unrestricted cash and approximately $557 million of total short-term borrowings and long-term debt. Our weighted average interest rate was approximately 5.2%.

Our net debt to trailing 12 month adjusted EBITDA was 2.3 times, reflecting the credit agreement terms, which limits the cash applied to the net debt calculation to $60 million. As of March 31st, total liquidity was $156 million. This balance exclude restricted cash and includes the available borrowing capacity under our revolver.

Moving to slide 16, I will now provide an update on our 2019 guidance. We are raising the lower end of our revenue outlook and maintaining the high end of our revenue range for the year resulting in a range of $469 million to $476 million, representing a range of 3% to 5% over last year.

The increase in the revenue range reflects our Q1 results on the higher end of our original expectations and our continued cautious outlook for the remainder of the year, particularly in light of the uncertainty around the disbursement of relief funding on the revised plan of the local government, which assumes a slower pace of disbursement in the funding originally expected for fiscal year 2019 and lower overall funding when compared to the previous year 2018.

Regarding overall margin, we continue to anticipate that our adjusted EBITDA margin will be approximately 47% for the year.

Our operating depreciation came in slightly above our earlier forecast and our interest costs are now anticipated to be slightly below our original expectations due to the most recent Fed indications on rate hikes for the remainder of the year.

Our adjusted earnings per common share outlook has been increased to $1.84 to $1.92, which represents a range of 0% to 4% as compared to another $1.84 in 2019.

And this change reflects the Q1 results as well as the benefit on share count from share repurchases made in Q1 as well as a benefit from the lower interest expense forecast for the remainder of the year. In summary, it was a good quarter for EVERTEC and we're pleased to reflect these changes in our outlook for 2019.

I look forward to meeting you and seeing you over the coming months. We will now open the call for questions. Operator, please go ahead and open the line..

Joaquin, before we open the line, I'd like to comment on a recent development in the local media today.

Yesterday, the special claims committee of the Financial Oversight and Management Board in order of Puerto Rico's Financial Oversight Board filed more than 200 lawsuits seeking to recover payments received from the Puerto Rican government as the statute of limitation deadline expires tomorrow, May 2.

The Oversight Board released a statement clarifying that these legal actions, "Do not necessarily imply that any individuals and entities committed any wrongdoing. And if a vendor demonstrates the proper basis for the payments the Oversight Board will dismiss the claim".

So, EVERTEC was one of those more then 200 parties that were subject to a lawsuit, however, the complaint has various causes of action all of which we feel confident, we can properly defend. And we believe we should obtain a small -- I mean, obtained a dismissal on all the accounts.

So I did want to address that before we go into the Q&A in case anyone saw that in the media today. It has been in the Puerto Rican press. So with that, we will turn over the call to any questions that you may have..

Thank you. [Operator Instructions] Our first question today comes from Jim Schneider with Goldman Sachs. Please go ahead..

Good afternoon, and thanks for taking my question. I was wondering if you could maybe comment on, first of all, just the pipeline of any new kind of partnerships or deals that you see throughout Latin America in your business development efforts? I apologize if I missed that, but I just wanted to get an update on that..

Yes, Jim, this is Mac. Thanks for the question. We talked a lot on our call kicking the year off that we really do see these markets opening, and we've seen some clear regulatory and competitive shifts in the markets.

We are still very focused on partnering with different financial institutions across the region, but we're not going to comment on those until we sign a specific contract, but we do have a healthy pipeline, both on the sales front and we are constantly looking at M&A as well, but we didn't have anything specifically to announce on this call..

Very well, and then maybe as a follow-up, can you maybe just kind of comment on what you're seeing in terms of solutions wins on the Business Solutions side, I think you've commented before on some of the knock-on effects of the hurricane relief efforts and how that's benefiting you from a local government perspective and also just elsewhere in terms of other contracts? So, can you maybe comment on kind of how you'd expect those contracts to trend and whether you expect kind of an steady improvement in that line item over the course of the year?.

Yes, I'll talk qualitatively, just like we talked about in the last call, I mean in the last call we talked about we signed an extension with Santander in Puerto Rico, which is one of our largest customers in the segment.

We also signed a deal with the Department of Education due to consulting, the call wasn't that long ago between the Q4 and the Q1 call is a pretty typically shorter period of time.

We are still finding that there are opportunities and Business Solutions, as we continue to perform well, we execute well in this market and we are in the best provider in many the areas in that segment, again, nothing to announce on this call, but we are still seeing and demand for our services. Joaquin, I don't know if -- I mean, I think that's….

No, I think that covers it..

Great, thank you very much..

Thanks, Jim..

Our next question comes from Vasu Govil with KBW. Please go ahead..

Hi, thanks for taking my question and nice quarter..

Thank you..

Just first question, I guess, the one-time revenue benefit that you called out for the quarter, was that already contemplated in the guidance?.

Hi, Vasu. So yes, we did have that as part of our higher end of the range when we guided on the last call. Obviously, we weren't sure if we were going to close out one of the engagements with the government. And well, yes, we have included as part of our higher end of the range..

Got it. And then I guess just a question on how are you feeling about the rest of the year, I know you called out certain changes that the government is sort of proposed in the new fiscal plan, but versus where we were back in Feb, are you feeling better, worse, the same about the rest of the year? Any commentary there would be helpful..

I think we're feeling confident in the guidance that we put out. And based on what we said, we are increasing the lower end of the range, which is positive given the performance that we had in Q1.

However, we continue to be cautious, just given the information out there and in terms of what the government expects from fed relief funding and what we see here on the island, but we continue to work through our initiatives in both Merchant Acquiring and Payment to try and come up with new fees or incremental revenues.

And in Business Solutions, we continue to as Mac alluded to, look for opportunities to continue assisting the government and getting additional ground in helping them with their strategies and obviously with Popular as well..

That's helpful. And then I guess, lastly, I know you don't provide quarterly guidance, but because we have this EBT benefits that are going away starting next quarter, I was hoping you could help us, with just the quarterly cadence on revenue growth by segment..

Revenue? I think you answered the question at the beginning. We can't give quarterly guidance, because of the way the business, but that -- we would love to be able to, but given the way that our business operates, it's very, very difficult, but that was a great attempt….

Anything particular that we should be like careful while we model, because of the EBT program by the way….

No, I'd say, is the cadence will look very similar to what we've had in the past. We do expect Q2 to be slightly softer, but other than that, we do expect quarterly cadence to be similar to previous years..

Thank you very much, guys..

Thanks, Vasu..

Our next question comes from George Mihalos with Cowen. Please go ahead..

Hey guys, thanks for taking my question. Not sure if I missed this, but the commentary on sort of some of the more flattish recent trends in merchant acquiring, is the expectation that, that business will grow sort of low-single digits over the remainder of the year sort of the last three quarters.

And was there any sort of Easter impact that would be worth calling out there?.

So in terms of the Easter, last year Easter kind of had one of the days in Puerto Rico, which is a Good Friday fell in March and then Sunday fell in April, so we kind of had a split in how the Easter weekend impact the business.

This time around we have that in April, so we don't really see anything particular to call out related to that specific holiday this time around. As it relates to sales volume, obviously, when we compared to the previous year, we had the EBT funding throughout the rest of 2019 as a comparable.

So it will impact in sales volume growth or transactional growth for the remainder of the year, and I would say that reaction is reasonable given what we're seeing. And what we continue to, as I mentioned before, look for different ways of implementing other fees or increases in inter-sectional fees to -- and offset some of that.

The other thing I'll mention is EBT was coming in at a lower spread. That volume that we had in the previous year which was mainly going to supermarkets, et cetera, was coming in on our spread. So the fact that now the portfolio is kind of shifting back even a more normalized levels, pre-hurricane, it will result in a slight increase in the spread..

Okay, that's very helpful. And then, Mac, I think on the last call you talked about regulation and the like in some of the LatAm geographies. Opening up some markets for you maybe creating some more conversation or opportunities, any update there that you can provide that has maybe changed the last couple of months..

No, I what would say is we talked on the last call, you recall very well that in Argentina Prisma was sold to Advent, and so those banks are going to probably be looking for alternatives overtime, Or at least finally, there is an opportunity to pitch those customers, in Chile we talked about Santander, Chile has been very vocal about, they're not going to continue to process with TransBank, so we are seeing interest in different markets across Latin America and alternatives, and it is more than we've seen in the past.

We don't have an update as to any wins, but we are very, very focused on making the best of those opportunities during the year..

Very helpful, thank you..

Thanks, George..

Our next question comes from Bryan Keane with Deutsche Bank. Please go ahead..

Hi guys, this is Korey Marcello on for Bryan Keane. Just two quick questions, on the Business Solutions side that continues to perform very well, but the margins are little soft.

Can you just give us some update on kind of how you're thinking about margins going forward in that business?.

Sure, Korey, the margins that we saw in the current quarter as we mentioned, obviously, we continue to invest in technology, and we saw -- and from that will obviously impact that margin. Also some of the business that we bring in from the government is usually at a slightly lower margin than our overall segment.

But in terms of what we saw in Q1, we did have a good growth year-over-year. Some of the transactional services that we're providing weren't 100% in the first two years of last year given that and some of those services -- the two months of prior year, they were still impacted by the hurricane.

And obviously, we are seeing that in the year-over-year growth, and we don't expect that level of growth in the next three quarters, we expect that to come down a little bit and end up in the mid-to-low single-digits for the whole year..

Got it. That's clear. And then I guess on Latin America, you guys obviously you're expecting kind of the low-end on the attrition impact for the year.

But does that change or has anything that has changed in terms of the conversions change from a timing perspective on how that what kind of impact, I think previously you guys were talking about it being pretty steady state throughout the quarters, and I think it was 700,000 this quarter, so, just curious how that kind of plays out through the year.

Thanks, guys..

The attrition..

Yes, we were still expecting it to be relatively consistent throughout the year Korey at this point..

Thanks, guys..

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

Thank you, and good afternoon.

Question on the growth in Latin America and Payments and growth outside of Puerto Rico generally, how is the performance of PayGroup? How is Colombia doing? What are the thoughts about, I mean are you -- do you have visibility on making that a steady double-digit type of organic growth business outside of Puerto Rico?.

Yes, Bob, this is Mac. So what I would say, we continue to be very pleased with the acquisition of PayGroup. As we talked about the last call, I mean from '15 to the end of last year, we've doubled the business, some of it through acquisition, some of it organically and grown EBITDA evens more so.

We are finding that is these markets open, the products that we haven't PayGroup that are running throughout the region typically in a license model in multiple banks, whether it's the breast product or it's the merchant processing product or issuing product is being very, very well received.

So we continue to be happy with the performance of the current business, but we are very optimistic on the solution that we have and that it's unique, and that given we have a presence in some of these markets, we have a unique advantage as they open up. So our optimism has not changed since the last call..

And then, Colombia, you made a small acquisition there a few years ago, obviously, a big market and any chance of -- what's the outlook for making that a much bigger market for EVERTEC?.

Yes, we talked about -- so Colombia is a market of focus for us, because we have that investment, because it's one of the larger markets in the region. The move -- the trends we've seen in some of the other markets have been more significant as far as the market opening. We're still hopeful that Colombia will as well.

When we -- and we're still making investments there. So we're happy with the acquisition. But frankly, Chile and Argentina and some of the other markets appear to be moving a bit more quickly. But there's still noise in that market. There are two, Redeban and Credibanco, and there's still noise about banks looking for alternatives.

I would anticipate some of the other markets may move more quickly than some of the other markets that we're in..

Lastly, can you give an update on pvot and ATH Movil how those are progressing?.

Yes, sure. In terms of ATH Movil, as we've said before, but we don't necessarily break that out given that it's a specific product. What I can see that we continue to see a growth year-over-year. And obviously, we continue to monetize the fees related to ATH Movil P2P, which we put in place in the second half of last year.

And but in terms of usage, we continue to see very good usage. And we've actually seen also -- we continue to see the ATH Movil business side continuing to also gain some ground in terms of businesses continuing to register and volume going through the platform..

And I would say too, I mean, even just today actually went with the team sort of the product road map. We are very focused on investing in that platform to make sure that we're getting as many people to use ATH Movil Business instead of the P2P because we can make more money on that.

And we're also very focused on rolling out other products and functions and features to increase the utility, but also find other sources of revenue. So no update significant past the last call, but we're very focused on it and pleased with its performance..

And the pvot [ph] or pvot?.

Yes. With pvot, well, we continue to obviously also gain some ground, as we mentioned, in 30 days. So we continue to focus on functionality and continuing to add features to cater to the different clients that we are trying to sell these to. And it's very positive and continuous to move very well.

We continue to be very excited as to how we're competing with the product against some of the ISOs that are here in the island, and it continues to be a point of focus into the future..

With a healthy pipeline..

Correct, a very healthy pipeline..

Thank you. Appreciate it..

Thanks, Bob..

Our next question comes from John Davis with Raymond James. Please go ahead..

Good afternoon, guys. First Joaquin, I just wanted to touch on the funding assumptions kind of baked in the guidance, obviously, I think there are half of last year and probably half what people thought was the beginning of this year, but doesn't seem to have an impact on your guidance kind of flowing through the beat in the first quarter.

So it is safe to assume that you guys are playing it safe and are assuming that there will be very little to know federal aid this year.

And so therefore even those come in slower than expected, could be upside or just help us think about what level of aid you guys are expecting, the government has our estimate, but kind of what do you have baked on the guide for kind of last three quarters there?.

Look, when we went out with guidance on the beginning of the year, obviously, we kind of call this out in terms of timing and what we're seeing here in the island and just anecdotally, and in the news and what fundings actually coming in, and that's why we are able to stay with our higher end of the range.

And today, obviously, we had a good first quarter.

What we are expecting throughout the remainder of the year, I can't get into specifics of the amount of aid that we have considerable, what I can say that we're comfortable that what the expectation the government has and what we're seeing here internally, and we're confident what we were putting out there in terms of how we are expecting to perform..

Okay. And then, Mac, maybe I think the balance sheet is in the best shape it's ever been as a public company.

Maybe just what's the M&A environment like out there, are you seeing -- are there deals coming up? What's the pricing environment look for maybe any commentary on things you think would make sense? It just seems like it's definitely part of your strategy going forward, and just curious what the M&A environment looks like in Latin America..

Yes, John, I would agree that we're very, very happy with our balance sheet. And as you can see in the quarter, we actually get pretty well on the share repurchase program. Again, M&A, we still see opportunities and we're actively looking at those opportunities. We've always said in the past that the sizable transactions are far and few between.

The big one was the material, which I think at valuation of about $1.4 billion, but we still are looking at opportunities. We would love to continue to bolt-on additional products that they're symbiotic. And we're very focused on product type of investment right now.

And then potentially unlocking new market, but we do feel like that we have a great product set today, that we can use in our markets, but it's still a very important part of our focus..

Okay. And then just lastly, any potential opportunity to take to the -- or ATH Movil and expand that outside of Puerto Rico and it was still early days for pvot, but ATH Movil has been fairly successful.

Any -- can you take that in other LatAm markets where you already exist today, or is that something that's pretty much just going to be in Puerto Rico..

I mean, it's a very, very different product. What I would say with pvot is it definitely is a product that we think can help us in other markets, because when you go across Latin America, particularly the markets we're most focused on, so sort of ex-Brazil, that type of product is incredible.

So we think it is a differentiator for us, when we pitch to banks across South America and Central America. So that would be core to our thesis that we can export that. On ATH and ATH Movil, it's a bit different in that it's a network product.

So we love the technology, we love our strategy and we think that's one of the big reasons we've been successful, but it also the product that requires debit network and sort of a high level of bank participation to get the scale and adoption you need.

So, we have clients that are interested, we have banks that are interested, but it's a much more complicated product export. So pvot is probably the one that's more likely we'd be able to export outside of Puerto Rico in the coming years..

Okay, any impacts on early the improvement in attrition and Puerto Rico from pvot, any type of early signpost without giving too many details on how the product launches gone in Puerto Rico?.

Yes, I mean, we saw a very healthy pipeline. We found that, again, in this market, we don't have a lot of those type of solutions. We have one or two that we compete against and we've had some competitive takeaways from those. But the early indication is novel for merchants on the island.

Right now, we've rolled it out to mostly small retailers, because that's the functionality and the features that we have, as we build out broader capabilities for different verticals. So restaurants or for different capabilities, we think we can expand it more fully.

Again, the big benefit we believe that we have with this type of product is, one, is the local consultation service that we can provide, because these are sort of -- most of these merchants are very small. They tend to be bakers or musicians and really helping them automate their business and install the technology is complicated. We do it in person.

And the second thing is ability to integrate into local networks and local capabilities. So we are still very optimistic on the product..

Okay. All right. Thanks, guys..

Thank you..

[Operator Instructions] As there are no further questions in the queue, this concludes our question-and-answer session. I would like to turn the conference back over to Mac Schuessler for any closing remarks..

So, I want to thank everyone for joining the call, and thanks again for your support. Joaquin and Kay look forward to seeing you guys on the road as we attend different conferences across the country. Thank you..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..