Q4 2024 Evertec Inc Earnings Call
Operator: Good afternoon, everyone, and welcome to Evertec's 4th Quarter 2024 Earnings Conference Call. Today's conference call is being recorded. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad.
Good afternoon, everyone and welcome to ever Teck's fourth quarter 2024 earnings Conference call Today's conference Call's being recorded should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.
Beatrice Brown-Signs: I would now like to turn the conference over to Beatrice Brown-Signs of Investor Relations. Please go ahead. Thank you and good afternoon.
Speaker Change: I would now like to turn the conference over to Beatrice Brownstein of Investor Relations. Please go ahead.
Thank you and good afternoon.
Beatrice Brown-Signs: With me today are Max Schuessler, our President and Chief Executive Officer, and Joaquin Castrillo, 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 for common shares.
Speaker Change: With me today are Mac, schuessler, our president and Chief Executive Officer, and watching Bethany, Our Chief Financial Officer.
Speaker Change: Before we begin I would like to remind everyone that this call may contain forward looking statement and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report.
Speaker Change: During today's call management will provide certain information that will constitute non-GAAP financial measure under SEC seasonal.
Speaker Change: Such as adjusted EBITDA, adjusted net income and adjusted earnings per common share.
Beatrice Brown-Signs: 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.evertecinc.com.
Speaker Change: 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 ever check Dot Com I will now hand, the call over to Matt.
Max Schuessler: I will now hand the call over to Max. Thanks Beatrice, and thanks to everyone for joining us today. I'm pleased to announce a strong finish to 2024, a very significant year for Evertec on multiple fronts. We delivered another year of record revenue, with great execution across all our core markets. We successfully integrated Syncia, the largest acquisition in Evertec's history, and have started to see growth re-accelerate, an important area of focus for us as well. We continue to execute our acquisition strategy with two tuck-in deals closed in the fourth quarter. Grandada, which we discussed on our third quarter call, and Newbody, announced today.
Matt: Thanks, Patrick and thanks to everyone for joining us today I'm pleased to announce the strong finish to 2020 for a very significant year for average exit multiple fronts. We delivered another year of record revenue with great execution across all our core markets. We successfully integrated the largest acquisition in <unk> history, and it started to see growth.
Matt: Reaccelerate and important area of focus for us in 'twenty 'twenty four we continue to execute our acquisition strategy with two tuck in deals close in the fourth quarter Grin data, which we discussed on our third quarter call and nobody announced today. Additionally, we developed a robust business pipeline in Latin America, the strongest in years and I am pleased to report that we have begun converting these opportunities.
Max Schuessler: Additionally, we developed a robust business pipeline in Latin America, the strongest in years, and I'm pleased to report that we have begun converting these opportunities into important business opportunities. Moreover, we initiated cost efficiency measures that resulted in margins exceeding our expectations for 2020.
Matt: And the important business wins. Moreover, we initiated cost efficiency measures that resulted in margins exceeding our expectations for 2024.
Max Schuessler: These achievements set the stage for 2025, where our focus will remain on organic revenue growth, margin optimization, and capital allocation.
Matt: These achievements set the stage for 2025, where our focus will remain on organic revenue growth margin optimization and capital allocation.
Max Schuessler: On today's call, I will provide a brief summary of our 2024 financial results, a discussion on the Puerto Rico environment, and an update on LaTAM.
Matt: On today's call I'll provide a brief summary of our 2024 financial results a discussion on the Puerto Rico environment and an update on Latam.
Max Schuessler: I will then turn the call over to Joaquin, who will provide some additional details on our Q4 and full year results, as well as our outlook for 2025. Starting on slide four are some highlights from our 2024 results. Revenue for the year was $845.5 million, a 22% increase over prior year. We achieved strong growth across all our segments. Merchant acquiring grew by 11% due to pricing initiatives and increased sales volume. Payments to Puerto Rico grew 6% driven by higher transaction volumes and continued strong performance from ATH Mobile. And business solutions revenue grew by 7% as we recognized revenue from key projects that went into production throughout the year.
Speaker Change: I will then turn the call over to <unk>, who will provide some additional details on our Q4 and full year results as well as our outlook for 2025.
Speaker Change: Starting on slide four for some highlights from our 2024 results revenue for the year was $845 $5 million or 22% increase over prior year, we achieved strong growth across all of our segments merchant acquiring grew by 11% due to pricing initiatives and increased sales volume.
Speaker Change: Puerto Rico grew 6% driven by higher transaction volumes and continued strong performance from Ath <unk> and.
Speaker Change: Business solutions revenue grew by 7% as we recognized revenue from key projects that went into production throughout the year.
Max Schuessler: LATAM revenue increased by 62% year-over-year due to the full-year contribution of CINCIA, continuous organic growth across the region, and the contribution from GRANDADA in the fourth quarter. We continue to make progress on our goal of diversifying our revenue mix outside of Puerto Rico, with LATAM making up approximately 33% of our total revenue in 2024 compared to 10% in 2015. Adjusted EBITDA was $340.2 million, up approximately 17% year-over-year, and adjusted EBITDA margin was 40.2% for the year. This reflects a focus on efficiency and expense management aimed at improving our profitability and offsetting the 10% discount for Popular that will come into effect in the fourth quarter of 2025.
Speaker Change: <unk> revenue increased by 62% year over year due to the full year contribution of <unk> continue.
Speaker Change: Continuous organic growth across the region and the contribution from brand data in the fourth quarter. We continued to make progress on our goal of diversifying our revenue mix outside of Puerto Rico, with Latam, making up approximately 33% of our total revenue in 2024 compared to 10% in 2015.
Speaker Change: Adjusted EBITDA was $342 million up approximately 17% year over year and adjusted EBIT margin was 42% for the year different.
Speaker Change: This reflects our focus on efficiency and expense management aimed at improving our profitability and offsetting that Emerson popular that will come into effect in the fourth quarter of 2025.
Max Schuessler: Adjusted EPS of $3.28 was up 16% year-over-year, driven by strong adjusted EBITDA growth, lower tax expense, and a lower share count than benefited from the ASR completed in 2024. These benefits were partially offset by higher interest expense associated with debt raised per single year. For the full year, we generated approximately $260 million in operating cash flows, and we returned approximately $95 million to shareholders to share purchases and dividends. At December 31, 2024, we had approximately $138 million still remaining on our repurchase program to be used through December 31, 2025. Our liquidity remained strong at approximately $468 million as of December 31.
Speaker Change: EPS of $3 28 was up 16% year over year, driven by strong adjusted EBITDA growth lower tax expense and a lower share count benefited from the ASR completed in 2000 and before these benefits were partially offset by higher interest expense associated with debt raised for Cynthia.
Speaker Change: For the full year, we generated approximately $260 million in operating cash flows and we returned approximately $95 million to shareholders through share purchases and dividends at December 31, 2024, we had approximately $138 million still remaining on our repurchase program to be used through December 31, 2025, our liquidity remains strong.
Speaker Change: Approximately $468 million as of December 31.
Max Schuessler: Let me now provide an update on Puerto Rico beginning with slide five. Overall conditions in Puerto Rico remain stable, while the economic activity index in 2024 decreased slightly. It remains healthy and above pre-pandemic levels. Total employment has remained at its highest levels since 2009 and the labor force participation rate has remained above the previous seven-year average. Both commercial and individual bank deposit levels continue to exhibit elevated liquidity. Although there has been a slight decrease from the peak levels observed in 2021, overall liquidity remains significantly higher compared to pre-pandemic levels.
Speaker Change: Let me now provide an update on Puerto Rico, beginning with slide five.
Speaker Change: Overall conditions in Puerto Rico remained stable, while the economic activity index in 2024 decreased slightly but remains healthy and above pre pandemic levels.
Speaker Change: Total employment has remained at its highest levels since 2009, and the labor force participation rate has remained above the previous seven year average, but commercial and individual bank deposit levels continue to exhibit elevated liquidity. Although there has been a slight decrease from the peak levels observed in 2021 overall liquidity remained significantly higher compared to prepay.
Speaker Change: Technical hurdles.
Max Schuessler: Additionally, passenger traffic in the San Juan airport grew approximately 9% year-over-year.
Speaker Change: Additionally, passenger traffic and the San Juan Airport grew approximately 9% year over year.
Max Schuessler: On slide 6, from a federal funds perspective, there's still a significant amount of reconstruction funds that have yet to be received, including incremental funds pledged during 2024, mainly for energy, municipalities, and housing.
Speaker Change: Slide six from a federal funds perspective, there's still a significant amount of reconstruction funds that have yet to be received including incremental funds pledged during 2024, mainly for energy municipalities and housing.
Max Schuessler: Of the $48.4 billion pledged, approximately 23% has been received, with the electric grid reconstruction funds continuing to be the In 2024, Puerto Rico received approximately $7 billion in reconstruction funds, and a similar amount is expected for 2025. To summarize, while we do not expect major macro tailwinds, we do believe economic conditions should continue to be supportive for Evertec in Puerto Rico as we move through 2025.
Speaker Change: $48 4 million pledged approximately 23% has been received with the electric grid reconstruction funds continuing to be the largest portion of pending to be disbursed in.
Speaker Change: In 2020 for Puerto Rico received approximately $7 million to reconstruction funds and a similar amount as expected for 2025.
Speaker Change: To summarize while we do not expect major macro tailwind, we do believe economic conditions should continue to be supportive for AMETEK in Puerto Rico as we move through 2025.
Max Schuessler: Turning to LATAM on slide 7, revenue is up 62% year-over-year, mainly as a result of the CINCIA acquisition, which would close in November of 2023, and the double-digit organic growth outside of Brazil. We also benefited from the grand data tuck-in deal announced last quarter and from one month of newbie.
Speaker Change: Turning to Latam on slide seven revenue was up 62% year over year, mainly as a result of the <unk> acquisition, which we closed in November of 2023, and the double digit organic growth outside of Brazil.
Speaker Change: We also benefited from the Grand added tuck in deal announced last quarter and from one month of <unk>, a small company. We acquired in December as we continue to execute on our capital deployment strategy focused on growth and diversification.
Max Schuessler: A small company acquired in December as we continue to execute on our capital deployment strategy focused on growth and diversification. Nubity is a managed service provider based in Mexico. It provides ancillary services in the cloud to customers in several Latin countries. We believe Nubity provides a significant cross-sell opportunity to other regions, including Puerto Rico, where Nubity will allow us to provide better service offerings that will build and strengthen our existing customer relationship.
Speaker Change: But he is a managed service provider based in Mexico. It provides similar ARY services in the cloud the customers at several Muslim countries. We believe nobody provides a significant cross sell opportunities to other regions, including Puerto Rico, where nobody will allow us to provide better service offerings that were built and strengthen our existing customer relationships.
Max Schuessler: Now, let me provide an update. We are pleased to report that we have observed a re-acceleration in growth and remain optimistic about the opportunities in Brazil. Notable improvements in customer engagement, positive feedback on our platform modernization and contract repricing adjustments are encouraging indicators for 2025 and beyond.
Speaker Change: Now let me provide an update on thank you. We're pleased to report that we have observed a reacceleration in growth and remain optimistic about the opportunities in Brazil.
Speaker Change: No improvements in customer engagement positive feedback on our modern platform modernization and contract re pricing adjustments are encouraging indicators for 2025 and beyond.
Max Schuessler: Our work at CINCIA is ongoing, and we will continue to prioritize efforts to accelerate growth in Brazil. Outside of Brazil, we have begun converting our strongest pipeline in years into actual successes.
Speaker Change: Our work is ongoing and we will continue to prioritize efforts to accelerate growth in Brazil.
Speaker Change: Outside of Brazil, we began converting our strongest pipeline heaters into actual successes. We're pleased to announce that we've signed a deal with a group out of all one of the largest financial groups in Colombia, we will provide acquiring processing and risk monitoring services to two banks within the financial group we.
Max Schuessler: We are pleased to announce that we have signed a deal with Grupo Aval, one of the largest financial groups in Colombia. We will provide acquiring, processing, and risk monitoring services to two banks within the financial group.
Max Schuessler: We continue to work diligently on converting more pipeline opportunities into wins and expect these efforts to contribute to organic growth, primarily in 2026 and beyond.
Speaker Change: We continue to work diligently converting more pipeline opportunities into wins and expect these efforts to contribute to organic growth primarily in 2026 and beyond.
Max Schuessler: Before turning over to Joaquin, I want to thank the team for our success in 2024 and the plans that have been put in place for 2025. I look forward to updating all of you throughout the year on our progress.
Speaker Change: Before turning over to Joaquin I want to thank the team for our success in 2024 and the plans that have been put in place for 2025.
Speaker Change: Look forward to updating all of you throughout the year on our progress with that I will now turn the call over to Joaquin.
Joaquin Castrillo: With that, I will now turn the call over to Joaquin. Thank you, Mark, and good afternoon, everyone.
Joaquin: Thank you Mac and good afternoon, everyone.
Joaquin Castrillo: Turning to slide 9, I will first review the fourth quarter and full year results for Evertec. Total revenue for the quarter was $216.4 million, up approximately 11% compared to the prior year, reflecting organic growth across all of the company segments, a full quarter contribution from Zinkia as the deal closed in November of the previous year, and the effect of the two token acquisitions completed in the fourth quarter. In Puerto Rico, we benefited from higher transaction volumes, continued growth from ATH Mobile Business, and higher spread in MAB. On a constant currency basis, revenue growth would have been approximately 14.5%.
Joaquin: Turning to slide nine I will first review the fourth quarter.
Joaquin: Your results Forever thick total revenue for the quarter was $216 4 million.
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Joaquin: 11% compared to the prior year, reflecting organic growth across all of the company's segments, a full quarter contribution from zinc yet as the deal closed in November of the previous year and the effect of the two tuck in acquisitions completed in the fourth quarter.
Joaquin: Recall, we benefited from higher transactional volumes continued growth from Ath mobile business and higher spreads in there maybe.
Joaquin: On a constant currency basis revenue growth would have been approximately 14, 5%.
Joaquin Castrillo: Adjusted EBITDA for the quarter rose to $88.6 million, up 24% from last year, with a margin of 40.9%, an increase of 410 basis points. This growth resulted from strong revenue and a positive impact on operating expenses from efficiency initiatives aimed at offsetting the 10% discount on popular services starting in October 2025. Adjusted net income was $56 million, an increase of approximately 37% year-over-year, driven primarily by the growth in adjusted EBITDA and a lower adjusted effective tax rate. The Adjusted Effective Stocks Rate for the quarter was 5.1%. Adjusted EPS was $0.87, an increase of approximately 40% from the prior year, driven by the higher adjusted net income and the benefit from a reduced share count from repurchases completed throughout the year.
Joaquin: Adjusted EBITDA for the quarter rose to $88 6 million up 24% from last year with a margin of 49% an increase of 410 basis points.
Joaquin: This growth resulted from strong revenue and the positive impact on operating expenses from efficiency initiatives aimed at offsetting the 10% discount on pump when our services starting in October 2025.
Joaquin: Adjusted net income was 56 million an increase of approximately 37% year over year, driven primarily by the growth in adjusted EBITDA and a lower adjusted effective tax rate.
Joaquin: Yeah, just that effective tax rate for the quarter was five 1%.
Joaquin: Adjusted EPS was <unk> 87 cents, an increase of approximately 40% from the prior year driven by the higher adjusted net income and the benefit from a reduced share count from repurchases completed throughout the year.
Joaquin Castrillo: For the full year, total revenue was $845.5 million, an increase of approximately 22% from the previous year. This growth reflects strong performance across all segments, driven by higher transaction volumes, improved spreads, and the contribution from projects that have gone into production. Additionally, our Latin America segment benefited from a full year contribution of SYNC. On a constant currency basis, revenue growth was approximately 23.5%. Adjusted EBITDA was $340.2 million, an increase of approximately 17% with an EBITDA margin of 40.2%, a decrease of approximately 180 basis points from the previous year. The reduction in margin is primarily due to the inclusion of Cintia, which has margins below our corporate average, and the impact of the $6.3 million one-time revenue recognized from GetNet Chile in 2023 compared to the $2.4 million recognized in the current year, both of which were 100% accretive to market.
Joaquin: For the full year total revenue was $845 5 million an increase of approximately 22% from the previous year.
Joaquin: This growth reflects strong performance across all segments, driven by higher transaction volumes improved spreads and the contribution from projects that have gone into production. Additionally.
Joaquin: Additionally, our Latin America segment benefited from a full year contribution of zinc.
Joaquin: On a constant currency basis revenue growth was approximately 23, 5%.
Joaquin: Adjusted EBITDA was $340 2 million, an increase of approximately 17% with an EBITDA margin of 42% a decrease of approximately 180 basis points from the previous year.
Joaquin: The reduction in margin is primarily due to the inclusion of <unk>, which has margins below our corporate average and the impact of the $6 3 million onetime revenue recognized from getting it Chile in 2023 compared to the $2 4 million recognized in the current year, both of which were 100% accretive to margin.
Joaquin Castrillo: Adjusted net income was $213.2 million, an increase of approximately 15% from the prior year.
Joaquin: Adjusted net income was $213 2 million, an increase of approximately 15% from the prior year.
Joaquin Castrillo: An adjusted EPS of $3.28 increased approximately 16% from prior year.
Joaquin: And adjusted EPS of $3.28 increased approximately 16% from prior year.
Joaquin Castrillo: Moving to slide 10, I will now cover our first quarter results by segment beginning with Merchant Acquired. Net revenue increased approximately 16% year-over-year to 46.6 million driven by an improved spread and an increase in sales volume even as these volumes are offset by a reduction in the price of gas which is down over prior year for the second consecutive quarter. We also had higher non-transactional fees driven by terminal rent as our mix has shifted towards more profitable terminals and a positive number of net new merchants in our portfolio.
Joaquin: Moving to slide 10, I will now cover our first quarter results by segment, beginning with merchant acquiring.
Joaquin: Net revenue increased approximately 16% year over year to $46 6 million drew.
Joaquin: Driven by an improved spread and an increase in sales volume even if these volumes are offset by a reduction in the price of gas, which is down over prior year for the second consecutive quarter.
Joaquin: We also had higher non transactional fees driven by terminal right.
Joaquin: Our mix has shifted towards more profitable terminals on a positive number of net new merchants in our portfolios.
Joaquin Castrillo: Adjusted EBITDA for the segment was $19.9 million, with an adjusted EBITDA margin of 42.7%, reflecting an increase of approximately 680 basis points from the previous year. The margin increase is attributed to top-line growth driven by improvements in spread and non-transactional fees, such as terminal rent and decline fees, all of which positively impact margins. This favorable effect on the margin was partially offset by higher transaction processing costs, resulting from a lower average ticket.
Joaquin: Adjusted EBITDA for this segment was $19 9 million with an adjusted EBITDA margin of 42, 7%, reflecting an increase of approximately 680 basis points from the previous year.
Joaquin: The margin increase is attributed to top line growth driven by improvements in spread and non transactional fees such as terminal rent on decline fees, all of which positively impact margins.
Joaquin: This favorable effect on the margin was partially offset by higher transaction processing costs, resulting from a lower average ticket.
Joaquin Castrillo: At this point, we have already seen that January numbers are in line with expectations and aligned to our full year guidance in 2025.
Joaquin: At this point, we have already seen degenerate numbers are in line with expectations and aligned to our full year guidance in 2020 five.
Joaquin Castrillo: On slide 11 are the results for the Payment Services Puerto Rico and Caribbean segment. Revenue in the quarter was $54.8 million, an increase of approximately 4% from the prior year. The revenue increase was driven by 4% transaction growth and mid-team's revenue growth from ATH mobile business.
Joaquin: On slide 11 are the results for the payment services, Puerto Rico and Caribbean segments.
Joaquin: Our revenue in the quarter was $54 8 million, an increase of approximately 4% from the prior year.
Joaquin: The revenue increase was driven by four per central sexual world and mid teens revenue growth from Ath mobile basically.
Joaquin Castrillo: Partially offset by lower services provided to the LATAM segment, mainly as a result of lower transactions being processed in Mexico as a result of the MELIA. Adjusted EBITDA was $31.3 million, up approximately 2% from the prior year, and adjusted EBITDA margin was 57.2%, down approximately 170 basis points over the prior year. The decreasing margin was due primarily to higher operating expenses in part driven by higher POS retirement costs.
Partially offset by lower services provided to L. A M segment, mainly as a result of lower transactions being processed in Mexico as a result of them early attrition.
Joaquin: Adjusted EBITDA was $31 3 million or approximately 2% from the prior year and adjusted EBITDA margin was 57, 2% down approximately 170 basis points over the prior year. The decrease in margin was due primarily to higher operating expenses in part driven by higher B U S retirement.
Joaquin: Calls.
Joaquin Castrillo: Slide 12 are the results for Latin America Payment and Solutions. Revenue in the quarter was $77.9 million, up approximately 18% year-over-year.
Joaquin: On slide 12 by the results for Latino America payment solutions.
Joaquin: Revenue in the quarter was $77 9 million or approximately 18% year over year.
Joaquin Castrillo: Recall that the fourth quarter of 2023 included just two months of CINCIA versus the full three months this year, and we also benefited from partial quarter contributions from both Grandada and Nubita. The quarter also benefited from organic growth across the region and from the $600,000 adjustment related to the GetNet-Chile relationship as volumes came in better than expected. Currency was also a more significant headwind than expected in the quarter, negatively impacting segment growth by 9.6 percentage points, mainly driven by the devaluation of the Brazilian currency.
Joaquin: Recall that the fourth quarter of Tony twenty-three included just two months of <unk> versus the full three months. This year and we also benefited from partial quarter contributions from growth from both granddaughter nobody.
Joaquin: The quarter also benefited from organic growth across the region and from the 600000 dollar adjustment related to getting that Sheila relationship as volumes came in better than expected.
Joaquin: Currency was also a more significant headwind unexpected in the quarter negatively impacting segment growth by nine six percentage points, mainly driven by the devaluation of the Brazilian currency.
Joaquin Castrillo: Adjusted EBITDA was $25.1 million, an increase of approximately 38% from prior year with an adjusted EBITDA margin of 32.3%, up approximately 460 basis points. The margin was affected by the 100% Margin Accuracy Get Net Adjustment, a positive impact from the lower mailing contribution due to it being a low margin business, higher software development capitalization in the quarter, and realized gains from foreign currency.
Joaquin: Adjusted EBITDA was $25 1 million, an increase of approximately 38% from prior year with an adjusted EBITDA margin of 32, 3%.
Joaquin: Approximately 460 basis points the margin was affected by the 100% margin accretive getting that adjustment a positive impact from the lower mainly contribution due to it being a low margin business higher software development capitalization in the quarter.
Joaquin: Realized gains from foreign currency.
Joaquin Castrillo: Moving to slide 13. The results for our Business Solutions segment resulted in revenue of $62.4 million, representing an increase of approximately 8% from the previous year. The increase is attributed to revenue recognized from projects that went into production throughout the year.
Joaquin: Moving to slide 13.
Joaquin: The results for our business solutions segment resulted in revenue of $62 4 million, representing an increase of approximately 8% from the previous year.
Joaquin: The increase was attributed to revenue recognized from projects that went into production throughout the year.
Joaquin Castrillo: The quarter also saw a slight benefit from the CPI escalator that started on October 1st of 1.5% for services provided to Banco Popular. As a reminder, starting on October 1st, 2025, our CPI escalator with Popular will permit us to increase pricing annually when CPI exceeds 2% up to a maximum increase of 2%.
Joaquin: The quarter also saw a slight benefit from the CPI escalator they'll started on October 1st a one and a half per cent for services provided to Banco popular.
Joaquin: As a reminder, starting on October 1st 2025, or CPI escalator with popular will permit us to increase pricing annually when CPI exceeds 2% up to a maximum increase of 2%.
Joaquin Castrillo: Adjusted EBITDA was $24.4 million, up approximately 22% from a year ago and adjusted EBITDA margin was up approximately 440 basis points from the prior year to 39%. The improved margin was primarily due to higher revenue and lower expenses as the prior year included certain provisions for operational losses that did not recur.
Joaquin: Adjusted EBITDA was $24 4 million or by Brooks of at least 22% from a year ago and adjusted EBITDA margin was approximately 440 basis points from the prior year to 39%.
Joaquin: The improved margin was primarily due to the higher revenue and lower expenses as the prior year included certain provisions for operational losses that did not recur.
Joaquin Castrillo: Moving to slide 14, you will see a summary of our corporate and other expenses.
Joaquin: Moving to slide 14, you will see summary of our corporate and other expenses.
Joaquin Castrillo: Corporate and other was $12.2 million in the quarter, or 5.6% of total revenue, slightly above our expectation, but lower than prior year due to specific corporate initiatives executed in the prior year quarter.
Joaquin: Corporate and other.
Joaquin: It was $12 2 million in the quarter or five 6% of total revenue slightly above our expectations, but lower than prior year due to specific corporate initiatives executed in the prior year quarter.
Joaquin Castrillo: Moving on to our cash flow overview for 2024 on slide 15, we continue to effectively manage our working capital resulting in net cash from operating activities of $260 million. Capital expenditures were $88.4 million for the year as we capitalized software development projects, executed the refresh of key hardware, while also continuously investing in our products and enhancing our information security capabilities. We spent approximately $34 million on the Grandada and Nubiti acquisitions, paid down approximately $34.5 million in debt, and returned approximately $95 million to shareholders through share repurchases and dividends.
Joaquin: Moving onto our cash flow overview for 'twenty 'twenty four or slide 15, we continue to effectively manage our working capital, resulting in net cash from operating activities of $260 million.
Joaquin: Capital expenditures were $88 4 million for the year as we capitalized software development projects executed their refresh of key hardware, while also continuously investing in our products and enhancing our information security capabilities.
Joaquin: We spent approximately 34 million on the granddaughter annuity acquisitions paid down approximately $34 5 million in debt and returned approximately 95 million to shareholders through share repurchases and dividends we.
Joaquin Castrillo: We did not repurchase any shares during the fourth quarter, and at year-end, we had approximately $138 million available for future use under the company's share repurchase program through December 31, 2025. Our ending cash balance for 2024 was $314.6 million, a decrease of approximately $29 million from the year ended 2023. Moving to slide 16, our net debt position at year-end was $706.8 million, comprised of $980.5 million in total long and short-term debt, offset by $273.6 million of unrestricted cash. Our weighted average interest rate was approximately 6.45%, a decrease of 100 basis points from 2023, driven primarily by the successful repricing of our TLB throughout 2024, which collectively reduced the spread on our term loan by 75 basis points.
We did not repurchase any shares during the fourth quarter.
Joaquin: And.
Joaquin: We had approximately $138 million available for future use under the company's share repurchase program through December 31st 2025.
Joaquin: Our ending cash balance for 2024 was $314 6 million a decrease of approximately 29 million from the year ended 2023.
Joaquin: Moving to slide 16, our net debt position at year end was $706 8 million comprised of $985 million in total.
Joaquin: Long and short term debt offset by $273 6 million of unrestricted gosh.
Joaquin: Our weighted average interest rate was approximately 6.45% a decrease of 100 basis points from 2023, driven primarily by the successful repricing of our T O b throughout 'twenty, 'twenty, four which collectively reduced the spread on our term loan by 75 basis points.
Joaquin Castrillo: Our net debt to trailing 12-month adjusted EBITDA was approximately 2.06 times, down from 2.24 times a year ago, and at the lower end of our leverage range of 2 to 3 times.
Joaquin: Our net debt to trailing 12 months adjusted EBITDA was approximately 2.06 times down from two to four times, a year ago and at the lower end of our leverage range of two to three times.
Joaquin Castrillo: As of December 31st, our total liquidity, which excludes restricted cash and includes borrowing capacity, was $467.5 million, down approximately $22 million from a year ago.
Joaquin: As of December 31st our total liquidity, which excludes restricted gosh and includes borrowing capacity was 467 5 million down approximately 22 million from a year ago.
Joaquin Castrillo: Now I'll turn to slide 17 for commentary on our 2025 outlook. For 2025, we expect revenue to be between $889 to $899 million, or growth of 5.1% to 6.3%. However, these growth figures include approximately 40 basis points of foreign currency headwinds, resulting from the strengthening of the U.S. dollar against the LATAM currencies we do business in.
Joaquin: Now I will turn to slide 17 for commentary on our 2025 outlook.
Joaquin: For 2025, we expect revenue to be between 889 to 899 million or growth of five 1% to six 3%. However, these growth figures include approximately 40 basis points of foreign currency headwinds, resulting from the strengthening of the U S. Dollar I guess they'd laugh.
Joaquin: Currencies, we do business in.
Joaquin Castrillo: On a constant currency basis, we expect revenues for 2025 to grow between 5.5% to 6.7%.
Joaquin: On a constant currency basis, we expect revenues for 2020 five to grow between five 5% to six 7%.
Joaquin Castrillo: Adjusted EPS is expected to grow between 1.8% and 5.2% from the $3.28 reported for 2024, or between 2.6% and 6% on a constant currency basis. This assumes an adjusted dividend margin of 39.5% to 40.5% and an effective tax rate of 6 to 7%.
Joaquin: Adjusted EPS is expected to grow between one 8% and five 2% from from the $3.28 reported for 'twenty 'twenty four or between two 6% and 6% on a constant currency basis.
Joaquin: Does that assumes an adjusted EBITDA margin of 39, 5% to 45%.
Joaquin: And an effective tax rate of 6% to 7%.
Joaquin Castrillo: I will now walk you through some key underlying assumptions that we considered in arriving at the outlook, beginning with revenue expectations for our business sector. For Merchant Acquiring, we anticipate mid-single-digit growth in 2025 supported by a stable Puerto Rico economy contributing to sales volume growth, along with additional benefits from our ongoing pricing actions. However, we are not expecting The same tailwinds we had in 2024 from more substantial pricing increases, as we are close or have already anniversaried most of these, resulting in a smaller impact moving into 2025. In payments Puerto Rico and Caribbean, we expect low single-digit growth resulting from continued transaction growth and continued growth from ATH Mobile, but offset by lower processing services being offered to the LATAM segment mainly due to the loss of many transactions.
Joaquin: I will now walk you through some key underlying assumptions that we considered in arriving at the outlook beginning with revenue expectations for our business segments.
Joaquin: For merchant acquiring we anticipate mid single digit growth in 2020 five supported by stable, Puerto Rico economy contributing to sales volume growth along with additional benefits from our ongoing pricing actions. However, we are not expecting.
Joaquin: The same tailwind we had in 2024 for more substantial pricing increases as we are close or have already anniversaried most of east, resulting in a smaller impact moving into 2020 five.
Joaquin: I mean payments, Puerto Rico, and Caribbean, we expect low single digit growth, resulting from continued transactional growth and continued growth from ath mobile, but offset by lower processing services being offered to the Latam segment, mainly due to the loss of mainly drove sections.
Joaquin Castrillo: For payments in Latin America, we expect constant currency growth to be in the low double digits with several offsetting factors to consider. As I highlighted on our third quarter results call, we are expecting some client attrition in 2025, most notably Mercado Libre. We expect the acquisitions that we have recently announced and the acceleration from Brazil to offset most of this client churn, resulting in low double-digit growth for the year on a constant currency basis.
Joaquin: Or payments Latino America, we expect constant currency growth to be in the low double digits with several offsetting factors to consider.
Joaquin: As I highlighted on our third quarter results call. We are expecting some client attrition in 2025, most notably mogul anyway.
Joaquin: We expect the acquisitions that we have recently announced on the acceleration from Brasil to offset most of this client churn, resulting in low double digit growth for the year on a constant currency basis.
Joaquin Castrillo: Finally, in business solutions, we expect revenue growth of low single digits for the full year. Now turning to overall margin, last quarter we walked you through the impact of the 10% discount on certain MSA services beginning on October 2025. As a reminder, this will begin to impact our revenue and adjusted EBITDA in the fourth quarter of 2025. by approximately $4 million, with a full annual run rate of $18 million expected in our 2026 fiscal year and mostly impacting our business solutions segment. Last quarter, we also spoke about our commitment to execute cost efficiencies across our business segments to offset the headwind from the discount.
Joaquin: Finally in business solutions, we expect revenue growth of low single digits for the full year.
Joaquin: Now turning to overall margin last quarter, we walked you through the impact of the 10% discount.
Joaquin: Certainly it May say services beginning on October 2025, as a reminder, this will begin to impact our revenue.
Joaquin: That EBITDA in the fourth quarter of 2025.
Joaquin: By approximately 4 million with a full annual run rate of 18 million unexpected in our 2020 six fiscal year and mostly impacting our business solutions segment last quarter. We also spoke about our commitment to execute cost efficiencies across our business segments to offset the headwind from the difficult.
Joaquin Castrillo: Those initiatives have already started. They even had a slight impact on our Q4 results and continue to progress as planned. We expect to see a gradual improvement in overall margins over the next few quarters, then a reset lower in the fourth quarter as the effect of the 10% discount takes effect, netting out to the 39.5 to 40.5 margin expected for the full year. In terms of other items, we expect interest expense for the year to be lower than 2024 due to the impact from the term loan repricing mentioned before and debt paydowns. And as a reminder, we continue to have interest rate swap agreements in place that fix $550 million or approximately 58% of our outstanding debt.
Joaquin: Those initiatives have already started they even had a slight impact on our Q4 results and continued to progress as planned we expect to see a gradual improvement in overall margins over the next few quarters, then a reset lower in the fourth quarter of the effect of the 10% discount thinks he takes effect netting out to the $39 five to $40.
Joaquin: Five margin expected for the full year.
Joaquin: In terms of other items, we expect interest expense for the year to be lower than 2024 due to the impact from the term loan repricing mentioned before and debt Paydowns and as a reminder, we continue to have interest rates swap agreements in place that fixed 550 million or approximately 58% of our outstanding debt.
Joaquin Castrillo: We expect an adjusted tax rate of 6 to 7 percent, which is higher than prior year due to a higher expected contribution from LATAM and a lower expected interest expense, which has been a key input to keeping our overall effective tax rate low throughout 2024.
Joaquin: We expect an adjusted tax rate of 6% to 7%, which is higher than prior year due to a higher expected contribution from Latam and a lower expected interest expense, which has been a key input to keeping our overall effective tax rate low throughout 2020 four.
Joaquin Castrillo: From a capital deployment perspective, our priority continues to be deploying capital for growth through M&A. However, we will continue investing in our business and products and have a CapEx target of approximately $85 million for 2025. We expect to continue to return cash to shareholders via dividends and, when appropriate, share buybacks.
Joaquin: From a capital deployment perspective, our priority continues to be deploying capital for growth through M&A. However, we will continue investing in our business our products and how about capex target of approximately $85 million for 2025.
Joaquin: We expect to continue to return cash to shareholders via dividends and when appropriate share buybacks.
Joaquin Castrillo: In summary, we are pleased with our fourth quarter and full year results in 2024. We believe Evertec is well positioned to deliver strong top-line growth in 2025 and beyond.
Joaquin: In summary, we are pleased with our fourth quarter and full year, resulting in 'twenty 'twenty four we believe everything is well positioned to deliver strong top line growth in 2025 and beyond we look forward to updating you on our progress in the coming year and hope to see some of you that called for instance over the next few months with that operator. Please open the line for questions.
Joaquin Castrillo: We look forward to updating you on our progress in the coming year and hope to see some of you at conferences over the next few months.
Operator: With that, Operator, please open the line for questions. We will now begin the question and answer session.
Joaquin: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question.
Operator: To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.
Joaquin: Please press Star then two at this time, we will pause momentarily to assemble our roster.
Nate Benson: The first question comes from Nate Benson with Deutsche Bank. Please go ahead. Hi, guys. Nice results. Thanks for the question.
Joaquin: The first question comes from Nate fencing with Deutsche Bank. Please go ahead.
Nate: Hi, guys nice results. Thanks for the question. So walking appreciate you walking through the 2025 guide by segment Super helpful. Preempted. Some of my questions. There I think maybe the related question is you know as we seek to better understand the normalized growth profiles of each of your segments have you given any thought to giving.
Nate Benson: So, Joaquin, appreciate you walking through the 2025 guide by segment. Super helpful, preempted some of my questions there. I think maybe the related question is, you know, as we seek to better understand the normalized growth profiles of each of your segments, have you given any thought to giving some sort of midterm guide to help investors better understand the business? I'm just asking because I think it might be helpful to put a line in the sand to help underwrite future growth, particularly you've gone through so many changes, incorporating Syngia, now the two additional acquisitions, we have the MSA later in the year.
Nate: Some sort of midterm guide to help investors better understand the business I'm I'm, just asking because I think it might be helpful to put a line in the sand to help underwrite future growth, particularly as you've gone through so many changes incorporating Cynthia I know the two additional acquisitions, we have the MSA later in the year. So just any thoughts on that and how we can help underwrite future growth beyond coupons.
Nate Benson: So just any thoughts on that and how we can help sort of underwrite future growth beyond.
Joaquin Castrillo: Hey Nate. So this is Joaquin. So right now I think we're focused on giving really guidance for 2025. At your point I think we have some moving pieces here and we're trying to be very clear on kind of what are the areas of focus as we move into 2025. So that will be the kind of the guide of our focus for the time being. Okay, understood. Yeah, yeah. No, I agree that it was definitely clear on the outlook for 2025, so I appreciate that.
Nate: So this is looking okay. So right now I think we're focused on giving really guidance for 25 and to your point I think where we have some moving pieces here and we're trying to be very clear on kind of what are the areas of focus as we move into 2020 five.
Nate: So that will be the kind of the guidance that we're focused on for the time being.
Nate: Yeah.
Nate: Okay understood.
Nate: I agree that it was definitely clear on the outlook for 25, so I appreciate that.
Nate Benson: The follow-up is on Synkia, so I haven't had the chance to try to do the math on the implied growth in 4Q, but I think at the time of the acquisition, Synkia is growing low double digits.
Nate: But the follow up is on the T cell and haven't had the chance to try to do the math on the implied growth in <unk>, but I think you know at the time of the acquisition thinking is growing low double digits, obviously decelerated through 'twenty 'twenty four but it sounded like from Max comments that it started to reaccelerate in <unk>.
Nate Benson: It obviously decelerated through 2024, but it sounded like from Mac's comments that it started to re-accelerate in 4Q.
Nate Benson: I know you've talked about some of the initiatives you've done to sort of work on re-accelerating even further in 2025, so maybe just some more color and more granular updates on how you expect the Synkia business to perform, particularly given everything that's going on with the Brazilian economy and sort of how confident you are in your ability to get Synkia back to that kind of normalized low double-digit growth maybe later this year or in 2022.
Nate: You've talked about some of the initiatives you've done to sort of work on re accelerating even further in 2025. So maybe just some more color in a more granular updates on how you expect the CPE business perform particularly given everything that's going on with the Brazilian economy and sort of how confident you are in your ability to get thinking back to that kind of look normalized low double digit Roe.
Nate: With maybe later this year or 26.
Max Schuessler: Hey, Nate, this is Mac. Yeah, so look, we just had our board meeting last week at St. Kitts at the board to get close to the management team and better understand the market there, and we're all pretty excited. As you noted, it sort of decelerated as we started to close the acquisition, and then it decelerated last year. We were very focused at the beginning of the year, making sure we had the right leaders in place, and then focusing on, again, they had acquired 24 companies over a 10-year period, and we knew going in there were going to be some things that we could do to optimize the business.
Mac: Hey, Nate this is Mac.
Mac: Yeah. So look we just had our board meeting last week and I think he is or the board to get close to the management team and better understand the market there and we're all pretty excited as you noted it's sort of decelerated as we started to close the acquisition and then it decelerated last year, we were very focused at the beginning of the year, making sure. We have the right leaders in place and then focusing on again.
Mac: Our 24 companies over 10 year period, and we knew going in that we're going to be some things that we could do to optimize the business. So we were very focused early on the year.
Max Schuessler: So we were very focused early on the year. Number one is upgrading their technology so that we could upsell to new platforms, and we've had success this year doing that with some of our key clients. Renegotiating some of our contracts. Some of these contracts were not volume-based, so now we've renegotiated, upped pricing, and now we have volume-based contracts in place, and then also focusing on margin optimization, so making sure that we kind of move the margins north by making some efficiencies. We've said, look, we've been very focused on getting closer to customers. They had sort of lost sight of getting close to their customers, performing well so that they could cross sell and upsell.
Mac: Number one is upgrading their technology, so that we could upsell to new platforms and we've had success. This year doing that with some of our key clients renegotiating some of our contracts. Some of these contracts were not volume based so now we've renegotiated our pricing and how we have volume based contracts.
Mac: And then also focusing on margin optimization, and making sure that we kind of move the margins.
Mac: You know north by making some some efficiencies.
Mac: We said look we've been very focused on getting closer to customers they sort of lost sight.
Mac: Close to their customers performing well so that they can cross sell and up sell and we feel like they have a good cadence down so as we said with our prepared remarks.
Nate Benson: And we feel like they have a good cadence now. So as we said, with our prepared remarks, it is definitely accelerate. The growth is accelerating off of last year. We're very optimistic. And it's one of the reasons that we have double digit growth expectations for the entire LATAM system. Thanks, Mike. Appreciate it.
Mac: It is definitely accelerate the growth is accelerating off of last year, and we're very optimistic and it's one of the reasons that we have double digit growth expectations for the entire Latam segment. This year.
Mac: Thanks, Mike appreciate it.
Mac: Yep.
Chris Kennedy: The next question comes from Chris Kennedy with William Blair, please go ahead. Good afternoon, thanks for taking the question. Just to follow up on Cynkia, can you provide an update on bringing some of Evertec's processing business into Brazil? How's that going? What I would say, Chris, thanks for the question, we really, really focused the beginning of last year on taking their existing businesses and trying to make them better perform on the existing six verticals that they have, the four verticals and the service and the digital business. And we're seeing re-acceleration there. We have had some small successes on the payment side, and we're optimistic that going into this year and going into the next year, that'll be sort of a renewed area of focus as well.
Speaker Change: The next question comes from Chris Kennedy with William Blair. Please go ahead.
Chris Kennedy: Hey, good afternoon. Thanks for taking the question just a follow up on <unk> can you provide an update on bringing some of ever tax processing business into Brazil, how's that going.
Speaker Change: Yeah, what I would say Chris thanks.
Speaker Change: Thanks for that question, we really really focused the beginning of last year.
Speaker Change: Taking their existing businesses and trying to make them better perform on the existing six verticals, where they had before the four verticals and the service from the digital business and we are seeing Reacceleration here, we have had some small successes on the payment side.
Speaker Change: And we're optimistic that going into this year and going into the next year that'll be sort of a renewed area of focus as well, but we've really focused on the businesses that you have and had the management team sort of head down on that but we are seeing interest in the payments products as well.
Chris Kennedy: But we've really focused on the businesses that you have and had the management team sort of head down on that. But we are seeing interest in the payments products. Got it understood.
Speaker Change: Got it understood and it sounds like you're.
Chris Kennedy: And it sounds like you're very confident in your ability to navigate the 10% discount. It's slated for October, given all of your efficiencies and cost initiatives.
Speaker Change: Confident in your ability to navigate the 10% discount.
Speaker Change: And slated for October given all of your efficiencies and cost initiatives.
Max Schuessler: Absolutely, I mean, one of the things that the team, you know, early last year, even even as last year started, we put this initiative in place to take a look at how do we get cost to accommodate that I mean, we hadn't run the company for over a decade, we really haven't taken a hard look at our cost to the extent that we have, we were really focused on stabilizing in our business, we're doing the popular making these acquisitions. So we had a very, very big effort with Joaquin and Alberta, who now run strategy for us at looking across the organization to find those efficiencies.
Speaker Change: Absolutely I mean, one of the things that the team.
Speaker Change: Early last year, even even as last year started we put this initiative in place to take a look at how do we got cost to accommodate that I mean, we haven't run the company for over a decade, and we really haven't taken.
Speaker Change: A hard look at our cost to the extent that we have we were really focused on stabilizing our business with you in the parking lot, making these acquisitions. So we had a very very big effort.
Speaker Change: With Joaquin in Nevada, and our own strategy for us and looking across the organization to find those efficiencies. So they've already kicked in and that's why you saw great margins at the end of 'twenty four and we've got a good start to this year on our margins as well. So we're incredibly well prepared for the difficult that we'll provide at the end of the 25 for the bank.
Max Schuessler: So they've already kicked in. And that's why you saw great margins at the end of 24. And we've got a good start to this year on our margins as well. So we're incredibly well prepared for the discount that we'll provide at the end of 25 for the bank.
Chris Kennedy: Great. Thanks for taking the questions.
Speaker Change: Great. Thanks for taking the questions.
Speaker Change: Yes.
Jamie Freedman: The next question comes from Jamie Freedman with Susquehanna. Please go ahead. Hi.
Speaker Change: The next question comes from Jamie Friedman with Susquehanna. Please go ahead.
Speaker Change: Hi.
Jamie Freedman: Congratulations on a strong finish to 24. I had two questions. I'll just ask them up front.
Speaker Change: Congratulations on a strong finish to 'twenty four.
Speaker Change: I had two questions I'll, just ask them upfront so Mac.
Jamie Freedman: Now that you got like a third or more of the revenue coming from LATAM going 60%, I'm just curious how transferable is the skill set and technical competence that you have taken from Puerto Rico into LATAM?
Speaker Change: Now that you've got like a third or more of the revenue coming from black cab grow at 60% I'm, just curious what sort of trance what what what.
Speaker Change: How transferable is.
Speaker Change: The skill set and Technip.
Speaker Change: Technical.
Speaker Change: Competence that you have taken from Puerto Rico into Latam, What do you know now that you didn't know before you started that's the first one just high level and then working with regard to the I think it was chilly get that.
Jamie Freedman: What do you know now that you didn't know before you started? That's the first one, high level.
Jamie Freedman: And then, Joaquin, with regard to the, I think it was Chile, getting that Payments the 600,000 one that sounded like was high margin.
Speaker Change: Payments for 600001 that sounds like it was high margin could you just remind us what that's about like how that works in Missouri thresholds or because it's quite lucrative when it does happen. Thank you both.
Jamie Freedman: Could you just remind us what that's about like how that works? And is it thresholds or it's quite lucrative when it does happen.
Max Schuessler: Thank you both Hey, yeah, great question. This is Mac. So what I would say is our knowledge and expertise has made a big difference in what you've seen over the last 10 years. I mean, you've seen our team. Mike Viscarondo has managed ATH for a very long time. You've seen the knowledge he's had allow us to even actually grow our market share in Puerto Rico with ATH, with new innovation, and we continue to do more business with the major banks there. And then you look outside of Puerto Rico. I mean, we bought new platforms. So we just now announced on this call Group of All, which is one of the largest banks in Colombia, $75 billion in assets.
Matt: Hey, Yeah. Great question. This is Matt So what I would tell you is our knowledge and expertise has made a big difference in what <unk> seen over the last 10 years I mean, you've seen our team like this corrado has managed a T H for very long time.
Matt: Analogies had allow us to actually grow our market share in Puerto Rico with a T H with new innovation and we continue to do more business with it with the major banks here and then you look outside of Puerto Rico, I mean, we bought new platforms.
Matt: So we just announced on this coker ball, which is one of the largest banks in Colombia $75 billion in assets.
Max Schuessler: They've been a customer in the past, but this is a significant deal for us in Colombia. In fact, our largest deal in Colombia since I've been CEO. So a lot of that payments knowledge has been transferable. And then throughout the region as we've acquired platforms, we've been able to deploy those. So GetNet in Chile uses the same platform they use in Uruguay. We're using our issuing platform, and we're using that platform as well now in Costa Rica. Our issuing platform we are now using in Mexico. We also will now use that in other countries as well.
Matt: They've been a customer in the past, but this is a significant deal for us in Colombia in fact, our largest don't Colombia.
Matt: I've been CEO, so a lot of that payments knowledge has been transferable and then throughout the region as we've acquired platforms, we've been able to deploy those so in Chile.
Matt: Kelly uses the same platform that uses Uruguay, we are using our issuing platform and we're using that platform as well now in Costa Rica, our issuing platform. We are now using in.
Matt: Mexico also our will now use that and other countries as well. So we have been able to use the expertise for Puerto Rico. Throughout this journey. We've also been able to leverage these platforms in those technologies across the region and we hope to do that with some of these Brazilian technologies that we have so.
Max Schuessler: So we have been able to use the expertise from Puerto Rico throughout this journey. We've also been able to leverage these platforms and these technologies across the region. And we hope to do that with some of these Brazilian.
Max Schuessler: So, and the other thing that we talked about on this call a little bit as well, we talked about Grandada on the last call, now we also have Nubity. So Nubity is a great company out of Mexico, the majority of their business is in this country, which again, Mexico, we want to continue to invest here, but Nubity now has new skills to help sort of modernize our infrastructure and the infrastructure of our clients by helping them migrate to the cloud and manage their applications in a more modern way. So we've been able to leverage the existing skills and the acquired skills throughout this.
Matt: And the other thing that we talked about on this call a little bit as well, we talked about grind out on the last call. Now. We also have new body. So nobody is a great company out of Mexico. The majority of their businesses in this country, which again, Mexico, we want to continue to divest here, but nobody now has new skills to help.
Matt: Sort of modernize their infrastructure in the infrastructure of our clients by helping them migrate to the cloud.
And manage their applications in a more modern way so we've been able to leverage the existing skills in the acquired skills throughout this journey.
Matt: Okay.
Joaquin Castrillo: And then I guess I'll take the second part of the question, Jamie. The deal that we have with GetNet had some minimums originally. Actually, that deal ended now in December. So we're entering into a new phase of that relationship where we will no longer have these sorts of...
Jamie Friedman: And then I guess I'll take the second part of the question Jamie.
Matt: The the deal that we have to win the space you get net adds.
Matt: So many of them are historically actually that deal came and it now in December so we're entering into a new phase of that relationship where we will no longer have these sorts of.
Joaquin Castrillo: I'll call it catch-ups or one-time events and we will now move to a price per transaction so as transactionality flows in we'll charge that in that in that same cadence so we won't see these let's say blips every once in a while.
Speaker Change: Oh got it got shops, or one time event and we will now move to a price per transaction sorts around section I'll leave the floor Zane will charge that in that in that same cadence and so we won't see these let's say blips every once in a while.
Operator: Okay, thank you both. Again, if you have a question, please press star then 1.
Matt: Okay. Thank you both.
Speaker Change: Yeah.
Speaker Change: Again, if you have a question. Please press Star then one.
John Davis: The next question comes from John Davis with Raymond James. Please go ahead. Hey, good afternoon, guys. Obviously, really strong results in merchant this year, you know, up 11%, 16% in the fourth quarter.
Speaker Change: The next question comes from John Davis with Raymond James. Please go ahead.
John Davis: Hey, good afternoon, guys, obviously really strong results and merchant this year up 11% and 16% in the fourth quarter was hoping you could help us a little bit on what the contribution from pricing was just so we calibrate our models as we as we look at 25 I know you gave some color, but I would really like to understand.
Joaquin Castrillo: Joaquin, hoping you could help us a little bit on what the contribution from pricing was, just so we calibrate our models as we look at 25. I know you gave us some color, but we'd really like to, you know, understand how much pricing was in there. And then also just double-checking, there's nothing from an inorganic perspective that's in the merchant side. So number one, no, there's no inorganic effect within the growth rates. I would say that in the fourth quarter, if we look at kind of what we've done throughout the year, it's been pretty split a kind of a third pricing, a third volume and probably a 30 non-transactional type fees.
John Davis: Understand how much pricing was in there and then also just double checking theres nothing from an inorganic perspective, that's in the merchant segment.
John Davis: So number one no there's no inorganic effect, we've seen their growth rates.
I would say that in the fourth quarter. If we look at kind of what we've done throughout the year, it's been pretty split a kind of a third pricing a third one to all of them are probably up 30, non transactional fees I think that when we look at Q4. It is more skewed towards pricing volume because as I said, we had some offsetting effects from kind of lower prices on gas which is a.
Joaquin Castrillo: I think that when we look at Q4, it is more skewed towards pricing than volume because as I said, we had some offsetting effects from kind of lower price of gas, which is an important part of the portfolio. As we move into 2025, as I said in Canada Outlook We'll still have some tailwind in the beginning of the year from some of those pricing initiatives as we continue to anniversary them, and then as we start to kind of get out of Q1, we're expecting kind of that mix to kind of come back to half and half or a third, a third, a third in terms of the contribution to growth going into 2025.
John Davis: I think what I'm part of the portfolio.
John Davis: We do 25 as I said in kind of the outlook will still have some tailwind in the beginning of the year from some of those pricing any studies that we have continued to anniversary them aim and then as we start to kind of get out of Q1.
John Davis: We're expecting kind of that mix to kind of come back to half on half or a third a third a third in terms of their contribution to growth going into 2020 five.
Joaquin Castrillo: Okay.
Max Schuessler: And then, Mac, just on capital allocation, balance sheet's in great shape back down towards the lower end of, you know, your kind of midterm leverage range. It feels like the deal pace has picked up a little bit. So, we just love to hear your comments on the state of the M&A market in Latin America, what you're seeing, you know, have prices rationalized, you've seen more opportunities, should we expect this kind of quicker pace of M&A versus historically, you know, over the last, call it decades since you've been there. Yeah, so I mean, look, we think you deal with the biggest donor history.
Speaker Change: Okay, and then Mark just on capital allocation balance sheet is in great shape back down towards the lower end of your kind of midterm leverage range. It feels like the deal pace has picked up a little bit. So would just love your comments on the state of the M&A market.
Speaker Change: In Latin America, what you're seeing you know have prices rationalize you've seen more opportunities.
Speaker Change: That's kind of.
Speaker Change: Quicker pace of M&A versus historically, you know over the last call it decades since you've been there.
Speaker Change: Yeah, So I mean.
Speaker Change: Look.
Speaker Change: Thank you deal with the biggest deal in our history. So as a team we were very focused on that and myself personally I spent a lot of time in Brazil, and that's so you know.
Max Schuessler: So as a team, we were very focused on that. And myself personally, I spent a lot of time in Brazil. And that's so, you know. Once we sort of started working on that deal, closing that deal, integrating that deal, that was a significant amount of focus and we wanted to get that right. As we saw, and we gained more confidence in that deal, we got closed on Grandada and Nubity. What I would say is we have a pretty good M&A pipeline. We're still very focused on diversifying the company, growing through good, smart deals. And so we will continue to engage in M&A, probably more the size of the ones we've recently announced or the ones we've done historically.
Speaker Change: Once we sort of started working on that deal closing that deal and integrating their deal that was a significant amount of focus and we wanted to get that right as we saw and we gain more confidence in that deal. We you know we got closed on green Dot annuity, but I would tell you is we have a pretty good M&A pipeline.
Speaker Change: We're still very focused on diversifying the company growing through good smart deals.
Speaker Change: And so we will continue to engage in M&A, probably more of the size of the ones. We've recently announced are the ones we've done historically.
Max Schuessler: But we're very focused on M&A. and we have a good time.
Speaker Change: But we are.
Speaker Change: We're very focused on M&A.
Speaker Change: And there we are.
Speaker Change: Have a good time.
John Davis: All right. Appreciate it. Thanks, guys.
Speaker Change: Alright appreciate the color thanks, guys.
Speaker Change: Yeah.
Operator: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mac schuessler for any closing remarks.
Max Schuessler: I would like to turn the conference back over to Max Schuessler for any closing remarks. Thank you. Again, I want to thank my colleagues for a successful year in 2024 and for putting great plans in place for 2025. I want to thank each of you for joining our call, and we look forward to seeing you in the coming weeks at various conferences. Thank you.
Speaker Change: Thank you again I want to thank my colleagues for a successful year in 2024 and for putting great plans in place between 25 I want to thank each of you for joining our call and we look forward to seeing you in the coming weeks at various conferences. Thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. © BF-WATCH TV 2021
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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