Q1 2022 Evertec Inc Earnings Call
Good afternoon, everyone and welcome to ever tax first quarter 2022 earnings conference call.
Today's conference call is being recorded and at this time I would now like turn the conference over to Kevin Hunt 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 <unk>, Our Chief Financial Officer.
Before we begin I would like to remind everyone that this call may contain forward looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report.
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 related supplemental slides, which are available in the Investor Relations section of our company website at Www Dot every check <unk> dot com.
I'll now hand over the call to Mac.
Thanks, Kevin and good afternoon, everyone.
We achieved strong results in the first quarter driven by payment volume growth what are we doing.
We also continue to make progress towards closing the popular transaction and the BB or acquisition.
Both announced on our last earnings call.
On today's call I will start with some highlights from the quarter and then we'll turn it over to Mark who will provide further detail on our first quarter results as well as an update our expectations for the rest of the year, which includes an increase in our guidance.
Beginning on slide four total revenue was $150 million.
An increase of eight 8% compared to the first quarter.
Adjusted EBITDA was $75 million.
An increase of 9% and.
And adjusted earnings per share.
An increase of 13% from the prior year quarter.
We generated significant operating cash flows of $70 million and we returned approximately $25 million to our shareholders through dividends and the execution of share repurchases.
Additionally, liquidity remains strong with just $3 million.
At March 31.
Moving on to our Puerto Rico update on slide five weeks.
We experienced strong transactional growth and this drove a 14% increase in overall sales volumes in merchant acquiring.
We benefited from a full quarter contribution of first bank's merchant portfolio this year compared to last year.
Recall that we expanded and extended our relationship with firsthand a year ago.
After their consolidation.
And payments, Puerto Rico continued to benefit from our digital payment channels, Ath, <unk> and ath business as well as a 9% increase in the U S transactions process.
Our business solutions segment benefited from the printing deal signed a year ago and began generating revenues in the second half.
Finally, the quarter also benefited from the 5% CPI clause in our current MSA with popular.
Positive Lee impacted because their business solutions segment and to a lesser extent the payment Puerto Rico segment.
As a part of the popular transaction, we have agreed to provide popular with 5% credit from services provided through the closing date.
He will provide more detail around that in a few minutes.
We are also pleased to announce that we will be launching a place to pay platform in Puerto Rico during the second quarter.
I used to pay will replace our existing payment gateway in Puerto Rico with a better product offering that includes enhanced functionality for clients and the small.
The sector looking to accept electronic payments, including me.
Yes.
We believe the introduction of this gateway in our main market will put us in a much better position to capitalize on the growth of E Commerce retail and continue to drive growth.
Yes.
Finally, a few comments on the macro environment in Puerto Rico.
Her participation rate has continued to decline in 2022 to 44, 5% the highest rate since 2000.
The overall economic activity index was at three 5% year over year.
Reaching the highest level since 2016.
Finally, travelling tourism continue to recover with airline passengers in hotel guests, all either approaching or surpassing pre COVID-19 levels.
We will continue to execute on our strategic objectives think advantage of the stronger or weaker.
All right.
Turning now to Latin America.
We achieved another strong quarter and revenue up 15% compared to the prior year.
Lacking organic growth, including the contribution from the wins, we have announced in the past year.
Recently celebrated the one year anniversary as we get into the relationship.
Over 60000 merchants and digitally.
And I am pleased to announce that to get that relationship in Maryland, which we announced last quarter is already in a pilot with the first transaction occurring in friends and family.
Yes.
Next let's turn to slide seven and cover a few additional items.
We continue to expect a midyear close for the popular transaction announced last week.
Teams on both sides are working diligently.
As for the BV our acquisition, we are waiting on regulatory approval and continue to expect closing around mid year, which will allow us to reflect benefits from the acquisition in the second half of the year.
Before I turn it over to Joaquin I want to emphasize that our values are what drivers and everything.
I'd like to take a moment to highlight our continued commitment.
Hum quality diverse.
We are incredibly proud that for the fourth year in a row, we have been named to Bloomberg's gender equality index.
Among the leading global companies valued industry this commitment.
I would also like to bring to your attention and your ESG section of our website launched earlier this month, which articulate our values are embedded in everything we do.
With that I will now turn it over to Joaquin in that loan.
Results.
Thank you Mac and good luck.
Afternoon, everyone.
Turning to slide nine you will see the consolidated first quarter results or Eric.
Total revenue for the first quarter was $150 2 million up approximately 8% compared to $139 5 million in the prior year.
First quarter results in Puerto Rico reflected strong payment revenue growth of our merchant acquiring segment benefited from 14% sales volume.
Payment, Puerto Rico segment benefited from 9% growth intersections process.
This growth of our digital payment channels.
Ath mobile.
As Mike noted, we also benefited from a full quarter of revenue from the printing contract last year emission solutions.
Well, the 5% CPI increase under our MSA.
You know America continues to grow and the team as we benefit from organic growth including investments.
To contribute anymore.
Adjusted EBITDA for the quarter was $75 4 million.
Increase of approximately 9% from $68 9 million in the prior year.
Adjusted EBITDA margin was 52% and approximated 80 basis point increase compared to the prior year.
The increase in margin reflects a year over year benefit of approximately $3 1 million from foreign currency remeasurement of assets and liabilities denominated in U S dollars.
Adjusted net income for the quarter was $50 8 million, an increase of approximately 13% as compared to the prior year, primarily reflecting the higher adjusted EBITDA lower cash interest paid partially offset by higher operating depreciation and amortization.
Our adjusted effective tax rate in the quarter was 14, 6% slightly lower than the prior year quarter, reflecting some discrete tax items that impact in the quarter, while we continue to expect the tax rate.
Year to range from 13% to 14%.
Adjusted EPS was <unk> 70 cents for the quarter.
An increase of approximately 13% compared to the prior year.
Moving on to Slide 10, I will now cover our segment results, starting with merchant acquiring and.
In the first quarter merchant acquiring net revenue increased approximately 15% year over year to $35 6 million driven by an increase in sales volume of 14%.
Higher average ticket in the prior year.
The higher spread virtual section.
The higher volume was driven mainly by a full quarter contribution from the first five expanded relationship.
A one month contribution in the prior year.
Additionally, the average ticket remains high and we saw year over year increase in category impacted by inflation, such as gas utilities supermarkets, which are in Florida verticals in our portfolio.
The growth in some of these verticals and increase in Morgan virtual card volume online to pre pandemic levels will continue to put some pressure on our overall spread going.
Adjusted EBITDA for the segment was $17 1 million.
Approximately 10%.
EBITDA margin was 47, 9% down approximately 230 basis points compared to last year, reflecting higher operating costs from the full quarter and the first month or so and that relationship.
On the other operating expenses.
On Slide 11, you will see the results for payment services, Puerto Rico on the Caribbean segment.
Revenue for this segment in the first quarter was $40 million approximately 8% driven by strong Pos processing and continued digital payments growth.
Each model any each visit.
Transactions were up 9% from the prior year as we continue to see a move towards normalization in terms of the card present transactions.
<unk> also continues to benefit from increases in transaction processing or more enduring revenue recognized for services provided to the payment services Latin America segment as we can.
To support long term growth with some of our assets and portfolio.
Adjusted EBITDA for this segment was $23 8 million.
Ultimately, 14% compared to last year.
Adjusted EBITDA margin was 59, 4% up approximately 210 basis points as compared to last year, primarily due to the higher transactional revenue, which is highly scalable.
Partially offset by higher operating expenses, including costs related to equipment maintenance.
On Slide 12, you will see the results for our payment services segment.
Revenue for this segment in the first quarter was $28 8 million.
<unk> and 15% vessel.
Yeah.
The increase was driven by organic transaction growth as we continue to benefit from the secular trends of cash to card conversion in the countries in which we operate and the client wins, we have been discussing over the past few quarters and they have now started to contribute in a more meaningful way.
Adjusted EBITDA for the segment was 12 4 million.
And adjusted EBITDA margin was 43, 2%.
Approximately 310 basis points as compared to last year.
This improvement in margin is driven primarily by the $3 $1 million year over year benefit currency Remeasurement of U S dollar based assets.
Which represented approximately 760 basis point positive impact from this segment.
Normalizing for the effect of re measurement margin would have been approximately 31% a decline over prior year.
This margin decline was expected as we continue to invest in our payment products in the region localizing and adding functionality to scale over time.
In addition, we've increased head count in Latin America, as we continue to actively leverage our Latin America, So identified labor arbitrage to support our retail operations, including Puerto Rico.
On Slide 13, you will find the results for the business solutions segment.
This is solutions revenue for the first quarter was up approximately 3% to $62 6 million.
The revenue increase in the quarter benefited from the 5% CPI escalator in our current MSA.
On the incremental volume, resulting from the pricing both last year and that went into production in the second half of 2021.
Partially offsetting this increase will be hardware sale recognized in the prior year quarter.
And so we just provided marine department of litigation in the prior year that did not recur.
As a reminder.
Above all our transactions close as well.
We'll provide popular with a credit amounting to the CPI benefit generated in the fourth quarter of 2021, I will not recognize any CPI for services within our business solutions segment.
September 32022.
For the quarter adjusted EBITDA was $29 6 million and adjusted EBITDA margin was approximately 47%.
Approximately 160 basis points as compared to last year.
Yeah, just that EBITDA margin decrease was primarily driven by higher software and hardware maintenance costs.
Moving on to Slide 14, you will see a summary of corporate and other.
Our first quarter adjusted EBITDA was a negative $7 5 million a decrease of approximately 6% compared to the prior year.
Our adjusted EBITDA as a percentage of total revenue was 5%.
That would be flat when compared to the prior year, our legal team effectively managed corporate costs.
Moving onto our cash flow overview.
Slide 15.
<unk> cash balance was approximately 286 million, including restricted cash of approximately $20 million.
Net cash provided by operating activities, while approximately $70 million.
Nearly $36 million increased compared to prior year as we effectively manage our working capital.
Capital expenditures were approximately $14 million.
With most of the spend related to software development and hardware refresh.
And can you do anticipate approximately $60 million of Capex for the full year.
2022.
We paid approximately $5 million in long term debt payments.
$6 million in withholding taxes on share based on.
A $1 million of other debt pay downs, which resulted in total net debt decrease of approximately $11 million.
We paid cash dividends of 4 million and repurchased approximately 522000 shares of common stock for a total of approximately $21 million.
We have approximately $149 million available for future use under the company's recently expanded share repurchase program.
Lastly, we.
We had negative impact of approximately $2 million from foreign currency exchange on the cash balance our ending cash balance as of March 31 was $304 million.
Included approximately 20 million of restricted cash.
Moving to slide 16.
You will find a summary of our debt as of March 31 2022.
Our quarter ending net debt position was approximately $179 million comprised of approximately $284 million of unrestricted cash and approximately 463 million of total short term borrowings and long term debt.
Our weighted average interest rate was four 7%.
Net debt to trailing 12 months adjusted EBITDA was approximately one three times.
As of March 31, total liquidity was approximately $403 million.
This balance excludes restricted cash and includes the available borrowing capacity under our revolver.
Moving to slide 17.
I will now provide you with an update on our 2022 outlook. While we are pleased with the upsides consensus expectations in the first quarter. It is important to understand that a significant portion of the earnings upside was related to the CPI adjustment and very currency related that I've mentioned earlier as part of the public transactions once it closes.
We provide them with a credit for the equivalent of the CPI impact potential tumor first during 'twenty, one almost up recognizing CPI through September 30 of 2022.
We are at this time evaluating the accounting considerations as to how the spreads will be reflected in our results and the potential impact you can have two earnings. However, the guidance range for the remainder of the year taking into consideration some of these potential effects.
With foreign currency, and a $3 $4 million benefit reflected this quarter will reverse in any periods, depending on how the currency in the regions.
Operator behave in relation to the U S dollar.
That said, we're encouraged by the solid volume trends across our business segments, and our progress with new relationships and this provides us comfort to increase our revenue and earnings targets for 2022.
I expect revenue to be in a range of 597 million to $605 million.
Representing growth of 1% to 3%.
This is all from our prior target range of $591 million to $600 million.
We expect EBITDA margin for the full year to be between 45% to 46%.
Slightly from our prior expectations of 44 and a half.
Five 5%.
We are increasing our adjusted earnings per share outlook to a.
A range of $2 52 to $2 66 from $2 47 to $2 56 and.
This represents a year over year decline of 8% and 5% as compared to the $2 74 adjusted earnings per share in 2021.
On a GAAP basis earnings per share is anticipated to be between $1 87 to $1 95, excluding the impact of potential one time effects from the popular transaction.
Regarding the back half of the year.
I will reiterate some of the key points from our call last quarter.
First.
We continue to have some closings of older transaction by midyear and we also continued to Russell <unk>, our acquisition will close on provide a modest revenue contribution in the second half.
For the full year, we continue to expect low to mid single digit growth in merchant acquiring.
Mid single digit growth in payments, Puerto Rico and the Caribbean.
Mid teens growth in payments Latin America, any mid to high single digit reset in business solutions.
What's the mobile transaction closes we will experience a reset in margins in the merchant acquiring segment in both the egg and multi revenue margin reset in mission solutions and this is factored into our full year revenue guidance.
Guidance has been provided.
As I mentioned previously are.
non-GAAP effective tax rate was higher in Q1.
Still anticipate the full year to be in a range of 13% to 14%.
Guidance also includes the benefit of the share repurchases in Q1, and an approximate $4 6 million reduction in share count related to the popular transaction.
In summary, we are pleased with our results in Q1, we look forward bookings senior person upcoming conferences later in the coming months.
Operator, Please go ahead and open the right permissions.
Well now begin the question and answer session.
If you'd like to join the question queue Press Star then one to join.
If you are using a speaker phone it may be necessary to pick up your handset before pressing any keys.
To remove yourself from the question queue Press Star then two.
We will pause momentarily to assemble the roster.
Okay.
And our first question comes from Vasu <unk> with <unk>. Please go ahead.
Hi, Thank you for taking my question.
I guess is the first question I had was on inflation, maybe you could talk a little bit about your mix of revenue that's Brad ways towards this transaction based and how we should expect the impact of inflation just flowing through the P&L.
Thank you.
Hey, Ross this is joaquin sure. So look obviously part of our revenue merchant acquiring specifically has some inflation natural hedge because our sales volume gets impacted by the increasing customer prices from a transaction perspective.
We continue to see very strong transactional growth and then in Latin America, our business solutions segment.
Apart from our pulpwood, our contract where we have some CPI escalators that we've discussed and that will change one once we close this transaction we have different pricing levers that we've exercised in the past and that we can continue to use going forward, what I would say, though.
Is that from an expense perspective, we continue to also look for ways to manage inflation and we kind of mentioned a little bit of this on the prepared remarks also how we continue to look for ways to maximize our footprint in Latin America by looking for areas, where we identify labor arbitrage on moving some of the jobs.
Are there to support some of the operations in Puerto Rico on some of our other countries and also working with our suppliers in terms of longer term contracts for.
Stable CPI increases et cetera, so it's something that we're continuously working on and that we have several levers to work with.
But I do think this is Mac.
As Joaquin mentioned about a fourth of our revenue is that that was subject to the 5% CPI, which we're not going to receive the benefit out as part of the extension with a bank. He did mention the remainder of the revenue some of it benefits from inflation, because we havent higher average ticket and higher volumes, we may have CPI conditions in other contracts and we have the ability.
<unk> to adjust pricing as necessary.
If we need to make up some room there.
Super helpful and I guess my follow up question could you comment a little bit on the M&A pipeline I know the leap up in a new well.
Announced that what did it gives them some more flexibility.
<unk> been noticed in the market then are you seeing any momentum as a result of that.
Sure Simon Great question I mean, we are very as we said on the on.
The last call this deal and the extension gives US a couple of things one great recurring cash flow that is predictable. So that we can finance the deal if we'd like to secondly.
In the event that there is a regulatory requirement once we close that we won't have to get the same type of regulatory approval. We are very focused on capital allocation.
This year and into next year as you noticed we were more aggressive than we had been in the past on the buyback we did announced ABR. So we're hoping to close that as well and we're very focused on looking at M&A and I would say, we're looking at M&A as we have in the past but.
We're even having.
A more thorough analysis internally on what's the art of the possible now that we have.
The extensions with the bank and we're going to get rid of the regulatory.
Approval process are part of it.
Excellent and if I may sneak in a third one.
Matt just on Latin America, maybe you could give us an update on where you.
You were seeing the most incremental potential opportunities could be for you. Obviously, you Santander, Chile, and Mark got Mercado Libre honest doors have been really great wins for you and they're scaling now.
You think about like where you have one of these opportunities like where are you with respect to that sure.
Sure So I mean.
We're definitely focused on the countries that we've invested in and announced I mean, we're very pleased that Santander, Chile now that we have centered Eric way, we are in a phase now where we've processed our first transactions. So we will continue to focus on Chile now Airways, we've discussed Mexico is a very important country.
We announced <unk> popular Mexicana, we've announced Mercado Libre. So we'll continue to be very focused on Mexico. Additionally, we have been in Colombia for a while we've seen more opportunities outside of Colombia again, we posted the deal in Mexico, Chile, an hour away, but we're intensely focused on Columbia again, and we're looking at localizing.
Some of our newer products and Colombia this year as well.
Great. Thank you for the color.
Thanks Betsy.
The next question comes from Jamie Friedman with Susquehanna. Please go ahead.
Hi.
Good results here I hate to start with a financial type detailed question, but.
The FX impact was so significant on the margins on the segment level I heard some of your comments there what can what is contemplated in terms of FX in the annual <unk>, 45% to 46%.
EBITDA margin guide.
We are not contemplating any incremental impact from foreign currency Jamie.
So we're pretty much just flowing through what we had in Q1.
Again, I mean, we did benefit from some moves in Costa Rica, and Chile that worked to our benefit.
Some of those currencies got pretty evaluated.
We're expecting actually somewhat come back, but we still expect that to flow through for the rest of the year.
Okay.
And then.
What what was it that changed.
Do I have to go back to my Q4 notes, but what was it that changed or outperformed guard was time difference.
In terms of where the quarter.
And now the year is landing relative to what you had anticipated 90 days ago.
Well I would say that.
We obviously don't give quarterly guidance right and last call. We gave a full year guide and we gave some highlights as to how the Buffalo deal will impact mostly a second half of the year. What I would say is that if we look at some of our payments segments, we saw slightly better performance than what we expected.
And then in our beta solutions segment, where we're benefiting still from the CPI <unk>.
Both Mark and I mentioned in the prepared remarks that as soon as we close we'll we'll most probably.
Go back as a credit.
Right, Okay, and then if I could just sneak in one more.
Mac.
You know what that metric didn't give oh, yeah labor participation.
I think that was.
Last quarter I think was the first time I've heard you talk about that so.
I realize it sounds like it's the highest that it's been in a long long long time, the 44%, but what what are we.
Do with that like how do you think about that for example, simply.
In terms of your.
The anticipated growth rates.
Sure I mean look so it's hard to extrapolate directly the metrics I mean, so last call as we set up for the year. We tried to give you some metrics on what's going on in Puerto Rico.
And as you remember.
The.
Labor participation rate is up it was up at $44 two when we had the last call now we.
Published number 44, and a half to show you how active the economy as we also talked about on the last call that bank deposits with businesses and individuals were up by $17 $4 billion.
So what we're trying to demonstrate and give you.
Statistics that are not always readily available to the sell side sort of the health.
The Puerto Rican economy, so it's hard to extrapolate it directly into how we would model our business, but if you look at the available cash to individuals and businesses on the island. If you look at the number of jobs that have been created and so money going back into the economy.
It's better than it's been in years, and we were just trying to make the point on this call that in December of 2021, the labor participation rate was $44. Two and then the last number that we recently received its at $44 five so it continued to increase even after the last call.
Yeah, It's smart alright, thanks for sharing now dropped back in the queue.
Alright, Thanks, Jamie.
The next question comes from Bob Napoli with William Blair. Please go ahead.
Thank you and good afternoon, everyone.
Bob.
So I guess can you comment on how payment volume has trended through the quarter and into April and.
Have you seen any rebound in the tourism part of your business and can you remind me what I think it was like 5% of revenue tied to tourism or something like that but just any color on how payments volumes have trended through the quarter into April .
And then on the tourism side.
So what I would say first on the on the latter part of the question Jamie I'm, sorry, Bob the 5% is impact of tourism to Puerto Rico GDP.
Tactically to ever we have a very small.
A portion of our portfolio that's directly tied to tourism.
However, as you know theres a lot of indirect spend that we do benefit from in terms of restaurants retail and.
Where we do see that coming having said that I will say, though.
Spread perspective.
I mentioned this in the prepared remarks.
Tourism is definitely up travel lease up in some cases, even above pre pandemic levels and that's driving a higher portion of international cards coming into Puerto Rico.
That pay cross border fees on that for that reason, our slightly more expensive to us than some of the trends that we saw in the previous year went out of the volume was being driven by domestic cards that have a slightly higher yields. So that's why we mentioned that even though thats great for the economy and it's bringing some volume.
It does put some pressure on our spreads.
Spread.
In terms of volume tendencies, I would say that.
We mentioned this as well we had a very good Q1, sorry January and February because we had yet to anniversary. The first bank expanded relationship I think when we moved into March we were in the mid to high single digit sales volume growth.
And something that we did expect moving into April we're now getting into much tougher comps because of when the fed funds got disbursed last year, so going into April we're looking at flattish to slightly down sales.
Sales volume, but mainly because of that we are looking at April our main months that were the highest sales volume months for us in the previous year, so pretty tough comps and that's part of the guidance that we gave last quarter I'm part of the guidance that we've incorporated in this most recent update.
Thank you can you give any more color on the <unk> acquisition, I know $60 million, but what can you give any color on any of the revenue with the growth metrics.
For that acquisition and strategically why you're excited about it.
So Bob we cant really give you any details on I mean, we haven't closed.
Not have any details on that.
The financial attributes of the acquisition, but as we said on the last call. This really gets us deeper into.
Chile by providing with some large customers more integration into how they run their payments business and providing more services to some of the large customers and it also now gives us into Peru.
Because we now have.
A couple of major clients at Peru, and so its our first.
This in that country, which we're pretty excited about.
Thank you and then just lastly.
Any metrics you can give on Chile, and the fact that they kind of the size of that business the growth of that business.
Our revenue growth rate, but do you think you can do over the next couple of years there.
No.
We've said before we are incredibly excited about Chile. This was our first.
Major new wins since we had acquired pay group our hope with Chile is that we can replicate.
Smaller extent, why we haven't put a ratio and that we have multiple products across multiple clients. So we do believe it's one of the I mean, it's one of the countries. We're most excited about.
Okay. Thank you.
Thanks, Bob.
The next question comes from John Davis with Raymond James. Please go ahead.
Hey, good afternoon, guys well came on just on the margin real quick is it fair to say that all of the margin upside in the quarter and therefore, the upgraded guide for the full year is that all FX related or just if we exclude FX.
Should we think about margins the same way as you guys guided at the end of the year or just any color there would be helpful.
Yeah. That's that's that's pretty much on point, John we need how long would that benefit from FX and as we said.
The CPI, which again, we gave a full year guide.
Or we guide on a full year basis, so that we do have a slightly.
Benefit there also from CPI that that will get kind of washed away once we close the transaction.
Okay.
Yes, but that's contemplated the full year guide right, what we need to get washed away. The transaction that's correct that's correct.
And then just any update on kind of relief funding I know.
Last quarter or before it seem like we're.
Finally, starting five years later to see some real funding flow into Puerto Rico. Just just curious there seems like macro conditions have improved pretty nicely in Puerto Rico, but curious if there's anything to do with funding or any kind of update there.
Well honestly some of the macroeconomic conditions that we've mentioned.
Necessarily tied to the funding per se I would say that Mike.
Mike mentioned is these are trends now that I think are being driven a little bit by by some of the relief that got into Puerto Rico on how that momentum has kept going.
From a funding specific perspective, I would say.
And you can look at the banks I've mentioned this there is a little bit of more movement in activity, especially on the HUD kind of reconstruction side of things.
I would say that the aim.
The electric authority has also mentioned very recently that they have almost a 180 projects in front of FEMA.
If you remember one of the biggest allocation soft phones are related to the rebuilding of the electric grid in Puerto Rico. So the fact that now there's op.
Private company managing some of this is starting to get reflected in terms of how they they're moving some of these projects through the bureaucratic process and the fact that those aren't in front of FEMA is encouraging but again I mean in the last.
Let's say 45 days since our last call not not a significant update in terms of of anything I can point you to directly in terms of the funding that's coming through.
Okay, and then last one just switching on the balance sheet for a second.
Okay, and correct me, if I'm wrong, but all the debt appears to be floating do you guys have any swaps kind of against that and any thoughts on kind of locking in rates.
They appear to be headed higher.
Any thoughts there.
Yes, we actually John we do have a swap it's about 50, 152% of our total debt that is fixed.
So.
Obviously, the past year, if you look at our balance sheet.
In a liability position given the significantly lower rates and now we rates coming out of the box.
We are not swap has come in so that's why you see our weighted average.
Interest expense kind of staying pretty level.
Okay, and then one last one for Mack.
You guys, a little bit more aggressive with the buyback.
Last quarter, but the leverage is still down.
Close to a turn.
I guess two asked earlier, but are.
Are you.
Potentially able to be more aggressive in M&A perspective because of the.
Lack of requirement to get kind of bank holding company approval.
Do deals is that are you viewed more favorably by targets because there are less worried about that but just curious kind of what the activity looks like especially now as we get to kind of on the other side of Covid at least hopefully.
Sure Yeah, so what I mean.
It's a great question. This is part of the reason we did the transaction with popular and like I talked about the fact that to your point, we've got a great balance sheet right. Now we have not only does it look good now, but we've got great cash flows into the future because of these extensions.
And it does.
Once we close change the regulatory environment for us. So we will be very very focused on capital allocation.
Through the remainder of this year into next year and you know our priorities are organic growth, which we've invested in and demonstrates that we can get a payback with the wins we posted.
Focused on M&A in this given we've got the best balance sheet. We've ever had we can look at different size targets and given that we're going to get rid of the regulatory hurdle. We can look at different types of M&A and then after that we will definitely continue to.
Execute on our buyback plan.
Okay. Thanks.
Thanks, guys right.
Alright, thank you.
Again, if you'd like to ask a question press Star then one to join the queue.
The next question comes from James Faucette with Morgan Stanley . Please go ahead.
Hey, guys. This is actually Jeff Goldstein on for James within your merchant acquiring guidance for for this year, how should we think about what's embedded for volumes and spread I know you mentioned, 14% volume and Q1 and a higher ticket as well, but how should we think about that for the rest of the year.
I mean, what I would tell you is in sales.
Sales volume this quarter are driven in part by by the fact that we didn't have first bank. So that really drove higher sales volume in the first two months.
I think I gave some color now on kind of what April looks like kind of flattish to slightly down mainly because of the tough comps. That's something that we would expect a start to get back to that kind of low to mid single digit type growth in the second half of the year.
And as we said we expect overall overall revenue to be in the low to mid single digits for the full year from a spread perspective look we had a slightly better.
This first quarter than what we expected in part because of a higher average ticket and when we kind of break that down we can see that some of the verticals that are more impacted by inflation or keeping that average ticket.
Which which has helped that spread I'm talking about kind of gas stations utilities as we move forward, we need to kind of see how that how that average ticket continues to behave based on how inflation continues to impact the economy, but as we said in the prepared remarks, we have some other.
Things kind of putting some pressure on that spread which is the mix of cards between domestic and international transactions and also credit versus debit, which is something that we discussed in the previous year with the pandemic, we saw huge shift towards debit.
Much higher percentage of our total transactions at what we saw pre pandemic.
That has also starting to normalize and that should also put a bit of pressure on the spreads.
Yes.
Okay. That's helpful color and then can you provide an update on place to pay.
I know you mentioned launching in Puerto Rico, but maybe the number of merchants you have on that platform any plans to further the geographic reach of that product just how should we think about the ongoing opportunity there.
Yeah, let's play space. This is Mac place to pay we're incredibly excited about we are going.
Going into production in Chile, and Puerto Rico.
In Q2, so we're very excited about the product and once we localize it in several countries that we will truly have original gateway, we have plans to look at localizing to other countries.
For the back half of the year and as we do that we'll announce that on these calls.
Perfect. Thank you.
Thank you.
We have no further questions. So this concludes our question and answer session I'll turn it back over to Mac schuessler for any closing remarks.
Thank you I want to thank everybody for joining the call and we look forward to seeing you. This summer at several investor events.
Late night.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.