UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023 or


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 001-35872

EVERTEC, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


Puerto Rico		66-0783622
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

Cupey Center Building,	Road 176, Kilometer 1.3,
San Juan,	Puerto Rico	00926
(Address of principal executive offices)		(Zip Code)

(787) 759-9999

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	EVTC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

At October ~~27, 2022,~~20, 2023, there were ~~65,202,196~~64,630,922 outstanding shares of common stock of EVERTEC, Inc.

Table of Contents

TABLE OF CONTENTS


		Page
Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022	1
	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022	23
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022	34
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022	56
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	41
Part II. OTHER INFORMATION		42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity in Securities, ~~and~~ Use of Proceeds , and Issuer Purchases of Equity Securities	4243
Item 3.	Defaults Upon Senior Securities	4243
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	4344
Item 6.	Exhibits	4445
SIGNATURES		4546

Table of Contents

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). ~~Such statements can be identified by the use of forward-looking terminology~~

Words such as “believes,” “expects,” ~~“may,”~~"anticipates," "intends," "projects," “estimates,” ~~“will,” “should,”~~and “plans” and similar expressions of future or ~~“anticipates”~~conditional verbs such as "will," "should," "would," "may," and "could" or the ~~negative thereof~~negatives of theses terms or ~~other~~ variations ~~thereon~~of them or ~~comparable~~similar terminology ~~or by discussions of strategy.~~are generally forward-looking in nature and not historical facts. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may ~~differ~~vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact our business and could impact our business in the future are:

•our reliance on our relationship with Popular, Inc. (“Popular”) for a significant portion of our revenues pursuant to our second amended and restated Master Services Agreement (“MSA”) with them, and as it may impact our ability to grow our ~~merchant acquiring~~ business;

•our ability to renew our client contracts on terms favorable to us, including but not limited to the current term and any extension of the MSA with Popular;

•our dependence on our processing systems, technology infrastructure, security systems and fraudulent payment detection systems, as well as on our personnel and certain third parties with whom we do business, and the risks to our business if our systems are hacked or otherwise compromised;

•our ability to develop, install and adopt new software, technology and computing systems;

•a decreased client base due to consolidations ~~and~~and/or failures in the financial services industry;

•the credit risk of our merchant clients, for which we may also be liable;

•the continuing market position of the ATH network;

•a reduction in consumer confidence, whether as a result of a global economic downturn or otherwise, which leads to a decrease in consumer spending;

•our dependence on credit card associations, including any adverse changes in credit card association or network rules or fees;

•changes in the regulatory environment and changes in macroeconomic, market, international, legal, tax, political, or administrative conditions, including inflation or the risk of recession;

•the geographical concentration of our business in Puerto Rico, including our business with the government of Puerto Rico and its instrumentalities, which are facing severe political and fiscal challenges;

•additional adverse changes in the general economic conditions in Puerto Rico, whether as a result of the government’s debt crisis or otherwise, including the continued migration of Puerto Ricans to the U.S. mainland, which could negatively affect our customer base, general consumer spending, our cost of operations and our ability to hire and retain qualified employees;

•operating an international business in Latin America and the Caribbean, in jurisdictions with potential political and economic instability;

•the impact of foreign exchange rates on operations;

•our ability to protect our intellectual property rights against infringement and to defend ourselves against claims of infringement brought by third parties;

•our ability to comply with U.S. federal, state, local and foreign regulatory requirements;

•evolving industry standards and adverse changes in global economic, political and other conditions;

•our level of indebtedness and the impact of rising interest rates, restrictions contained in our debt agreements, including the secured credit facilities, as well as debt that could be incurred in the future;

•our ability to prevent a cybersecurity attack or breach to our information security;

•the possibility that we could lose our preferential tax rate in Puerto Rico;

•failure to satisfy one or more conditions to closing of the Sinqia Transaction (as defined below);

•our inability to integrate Sinqia (as defined below) successfully into the Company or to achieve expected accretion to our earnings per common share;

Table of Contents

•any loss of personnel or customers in connection with the Transaction;

•any cost and other terms of new debt financing incurred in connection with the Transaction; and

•any possibility of future catastrophic hurricanes, earthquakes and other potential natural disasters affecting our main markets in Latin America and the ~~Caribbean;~~

•~~uncertainty related to the effect of the discontinuation of the London Interbank Offered Rate;~~

•~~the elimination of Popular's ownership of our common stock; and~~

~~Table of Contents~~

•the other factors set forth under "Part 1, Item 1A. Risk Factors," in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission (the "SEC") on February 25, 2022, as updated by Part II, Item 1A. “Risk Factors” in this Report.Caribbean.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under ~~“Part~~Part 1, Item 1A. ~~Risk~~"Risk Factors,” in our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2021~~2022 filed with the ~~SEC~~Securities and Exchange Commission (the “SEC”) on February ~~25, 2022,~~24, 2023, as updated by Part II, Item 1A. ~~“Risk~~“Risk Factors” in this Report, and ~~as updated~~ in ~~our subsequent filings with the SEC, and in “Item~~Part I, Item 2.“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this ~~Report. These forward-looking statements speak only~~Report, as ofmay be updated in our subsequent filings with the ~~date of this Report, and we do not undertake any~~SEC. The Company undertakes no obligation to release publicly ~~release~~ any revisions to ~~these~~any forward-looking statements, to ~~reflect~~report events or ~~circumstances after the date of this Report or~~ to ~~reflect~~report the occurrence of unanticipated ~~events.~~events unless it is required to do so by law.

WHERE YOU CAN FIND MORE INFORMATION

All reports we file with the SEC are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available for download through our website at www.evertecinc.com as soon as reasonably practicable after filing such material with the SEC.

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Balance Sheets

(In thousands, except ~~for~~ share information)

Table of Contents


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	224,971	$	266,351	Cash and cash equivalents	$	177,821	$	185,274
Restricted cash	Restricted cash	18,705		19,566		Restricted cash	20,607		18,428
Accounts receivable, net	Accounts receivable, net	112,293		113,285		Accounts receivable, net	115,779		111,493
Settlement assets						Settlement assets	34,771		31,542
Prepaid expenses and other assets	Prepaid expenses and other assets	40,992		37,148		Prepaid expenses and other assets	53,373		42,392

Total current assets	Total current assets	396,961		436,350		Total current assets	402,351		389,129
Debt securities available-for-sale, at fair value	Debt securities available-for-sale, at fair value	2,198		3,041		Debt securities available-for-sale, at fair value	2,079		2,203
Equity securities, at fair value						Equity securities, at fair value	25,992		—
Investment in equity investee	Investment in equity investee	14,071		12,054		Investment in equity investee	20,011		14,661
Property and equipment, net	Property and equipment, net	49,928		48,533		Property and equipment, net	56,957		56,387

Operating lease right-of-use asset	Operating lease right-of-use asset	17,799		21,229		Operating lease right-of-use asset	12,523		15,918
Goodwill	Goodwill	417,819		393,318		Goodwill	434,496		423,392
Other intangible assets, net	Other intangible assets, net	196,316		213,288		Other intangible assets, net	220,240		200,320
Deferred tax asset	Deferred tax asset	5,414		6,910		Deferred tax asset	18,280		5,701
Derivative asset						Derivative asset	11,492		7,440
Net investment in leases	Net investment in leases	14		107		Net investment in leases	—		14
Derivative asset		7,070		—
Other long-term assets	Other long-term assets	13,378		9,926		Other long-term assets	17,039		16,578
Total assets	Total assets	$	1,120,968	$	1,144,756	Total assets	$	1,221,460	$	1,131,743
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accrued liabilities	Accrued liabilities	$	82,798	$	74,540	Accrued liabilities	$	91,310	$	80,666
Accounts payable	Accounts payable	33,489		28,484		Accounts payable	52,403		29,730
Contract liability	Contract liability	17,051		17,398		Contract liability	14,428		15,226
Income tax payable	Income tax payable	10,757		7,132		Income tax payable	958		9,406
Current portion of long-term debt	Current portion of long-term debt	28,813		19,750		Current portion of long-term debt	20,750		20,750

Short-term borrowings						Short-term borrowings	6,000		20,000

Current portion of operating lease liability	Current portion of operating lease liability	6,007		5,580		Current portion of operating lease liability	5,979		5,936
Settlement liabilities						Settlement liabilities	27,684		26,696
Foreign currency swap liability						Foreign currency swap liability	29,225		—
Total current liabilities	Total current liabilities	178,915		152,884		Total current liabilities	248,737		208,410
Long-term debt	Long-term debt	426,691		444,785		Long-term debt	374,656		389,498
Deferred tax liability	Deferred tax liability	7,998		2,369		Deferred tax liability	10,828		10,111
Contract liability - long term	Contract liability - long term	34,726		36,258		Contract liability - long term	34,062		34,068
Operating lease liability - long-term	Operating lease liability - long-term	13,320		16,456		Operating lease liability - long-term	7,045		10,788
Derivative liability		—		13,392

Other long-term liabilities	Other long-term liabilities	4,063		8,344		Other long-term liabilities	9,783		4,120
Total liabilities	Total liabilities	665,713		674,488		Total liabilities	685,111		656,995
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 15)						Commitments and contingencies (Note 15)
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued	Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued	—		—		Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued	—		—
Common stock, par value $0.01; 206,000,000 shares authorized; 65,588,270 shares issued and outstanding as of September 30, 2022 (December 31, 2021 - 71,969,856)		655		719
Common stock, par value $0.01; 206,000,000 shares authorized; 64,630,922 shares issued and outstanding as of September 30, 2023 (December 31, 2022 - 64,847,233)						Common stock, par value $0.01; 206,000,000 shares authorized; 64,630,922 shares issued and outstanding as of September 30, 2023 (December 31, 2022 - 64,847,233)	646		648
Additional paid-in capital	Additional paid-in capital	—		7,565		Additional paid-in capital	4,403		—
Accumulated earnings	Accumulated earnings	480,740		506,051		Accumulated earnings	530,714		487,349
Accumulated other comprehensive loss, net of tax	Accumulated other comprehensive loss, net of tax	(29,586)		(48,123)		Accumulated other comprehensive loss, net of tax	(3,352)		(16,486)
Total EVERTEC, Inc. stockholders’ equity	Total EVERTEC, Inc. stockholders’ equity	451,809		466,212		Total EVERTEC, Inc. stockholders’ equity	532,411		471,511
Non-controlling interest	Non-controlling interest	3,446		4,056		Non-controlling interest	3,938		3,237
Total equity	Total equity	455,255		470,268		Total equity	536,349		474,748
Total liabilities and equity	Total liabilities and equity	$	1,120,968	$	1,144,756	Total liabilities and equity	$	1,221,460	$	1,131,743

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share information)

Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021

Revenues (affiliates Note 16) $ 145,803 $ 145,883 $ 456,622 $ 434,559
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization 76,272 62,995 215,244 182,180
Selling, general and administrative expenses 26,001 17,126 66,436 49,980
Depreciation and amortization 19,712 18,745 58,432 56,091
Total operating costs and expenses 121,985 98,866 340,112 288,251
Income from operations 23,818 47,017 116,510 146,308
Non-operating income (expenses)
Interest income 807 504 2,279 1,343
Interest expense (6,763) (5,684) (18,242) (17,248)
Earnings of equity method investment 688 411 2,120 1,307
(Loss) gain on foreign currency remeasurement (7,779) (304) (6,858) 652
Gain on sale of a business 135,642 — 135,642 —
Other income (expenses) 374 450 1,621 2,067
Total non-operating income (expenses) 122,969 (4,623) 116,562 (11,879)
Income before income taxes 146,787 42,394 233,072 134,429
Income tax expense 9,048 7,134 22,911 14,474
Net income 137,739 35,260 210,161 119,955
Less: Net loss attributable to non-controlling interest (75) (54) (140) (59)
Net income attributable to EVERTEC, Inc.’s common stockholders 137,814 35,314 210,301 120,014
Other comprehensive income (loss), net of tax of $716, $382, $1,442 and $817
Foreign currency translation adjustments 4,125 (6,942) (210) (7,823)
Gain on cash flow hedges 5,762 1,537 18,824 6,814
Unrealized (loss) gain on change in fair value of debt securities available-for-sale $ (21) $ 8 $ (77) $ 97
Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders $ 147,680 $ 29,917 $ 228,838 $ 119,102
Net income per common share - basic attributable to EVERTEC, Inc.’s common stockholders $ 2.08 $ 0.49 $ 3.01 $ 1.66
Net income per common share - diluted attributable to EVERTEC, Inc.’s common stockholders $ 2.06 $ 0.48 $ 2.98 $ 1.65


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022

Revenues (affiliates Note 16)	$	173,198	$	145,803	$	500,088	$	456,622





Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization	81,280		76,272		238,149		215,244
Selling, general and administrative expenses	30,437		26,001		83,834		66,436
Depreciation and amortization	21,919		19,712		63,680		58,432
Total operating costs and expenses	133,636		121,985		385,663		340,112
Income from operations	39,562		23,818		114,425		116,510
Non-operating income (expenses)
Interest income	1,926		807		5,162		2,279
Interest expense	(5,709)		(6,763)		(16,992)		(18,242)
Loss on foreign currency remeasurement	(2,806)		(7,779)		(7,337)		(6,858)
Loss on foreign currency swap	(29,225)		—		(29,225)		—
Earnings of equity method investment	1,197		688		3,828		2,120
Gain on sale of business	—		135,642		—		135,642
Other income, net	153		374		2,754		1,621
Total non-operating (expenses) income	(34,464)		122,969		(41,810)		116,562
Income before income taxes	5,098		146,787		72,615		233,072
Income tax (benefit) expense	(4,858)		9,048		4,546		22,911
Net income	9,956		137,739		68,069		210,161
Less: Net loss attributable to non-controlling interest	(80)		(75)		(174)		(140)
Net income attributable to EVERTEC, Inc.’s common stockholders	10,036		137,814		68,243		210,301
Other comprehensive income (loss), net of tax of $329, $716, $18 and $1,442
Foreign currency translation adjustments	(11,332)		4,125		9,426		(210)
Gain on cash flow hedges	3,468		5,762		3,739		18,824
Unrealized loss on change in fair value of debt securities available-for-sale	(11)		$	(21)	$	(31)	$	(77)
Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders	$	2,161	$	147,680	$	81,377	$	228,838
Net income per common share - basic attributable to EVERTEC, Inc.’s common stockholders	$	0.16	$	2.08	$	1.05	$	3.01
Net income per common share - diluted attributable to EVERTEC, Inc.’s common stockholders	$	0.15	$	2.06	$	1.04	$	2.98

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share information)

Number of
Shares of
Common
Stock Common
Stock Additional
Paid-in
Capital Accumulated
Earnings Accumulated
Other
Comprehensive
Loss Non-Controlling
Interest Total
Stockholders’
Equity
Balance at December 31, 2021 71,969,856 $ 719 $ 7,565 $ 506,051 $ (48,123) $ 4,056 $ 470,268
Share-based compensation recognized — — 4,279 — — — 4,279
Repurchase of common stock (521,643) (5) (6,193) (14,981) — — (21,179)
Restricted stock units delivered 251,085 3 (5,651) — — — (5,648)
Net income (loss) — — — 38,898 — (32) 38,866
Cash dividends declared on common stock, $0.05 per share — — — (3,598) — — (3,598)
Other comprehensive income — — — — 11,912 248 12,160
Balance at March 31, 2022 71,699,298 $ 717 $ — $ 526,370 $ (36,211) $ 4,272 $ 495,148
Share-based compensation recognized — — 5,165 — — — 5,165
Repurchase of common stock
(357,114) (4) (3,466) (10,566) — — (14,036)
Restricted stock units delivered 25,149 — (28) — — — (28)
Net income (loss) — — — 33,589 — (33) 33,556
Cash dividends declared on common stock, $0.05 per share — — — (3,579) — — (3,579)
Other comprehensive income (loss) — — — — (3,241) (384) (3,625)
Balance at June 30, 2022 71,367,333 $ 713 $ 1,671 $ 545,814 $ (39,452) $ 3,855 $ 512,601
Share-based compensation recognized — — 5,296 — — — 5,296
Repurchase of common stock
(1,190,388) (12) (6,958) (30,347) — — (37,317)
Restricted stock units delivered 485 — (9) — — — (9)
Net income (loss) — — — 137,814 — (75) 137,739
Cash dividends declared on common stock, $0.05 per share — — — (3,338) — — (3,338)
Other comprehensive income (loss) — — — — 9,866 (334) 9,532
Common stock received in exchange of the sale of a Business (4,589,160) (46) — (169,203) — — (169,249)
Balance at September 30, 2022 65,588,270 $ 655 $ — $ 480,740 $ (29,586) $ 3,446 $ 455,255


	Number of Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive (Loss) Income		Non-Controlling Interest		Total Stockholders’ Equity
Balance at December 31, 2022	64,847,233	$	648	$	—	$	487,349	$	(16,486)	$	3,237	$	474,748
Share-based compensation recognized	—	—		5,557		—		—		—		5,557
Repurchase of common stock	(187,976)	(1)		—		(6,268)		—		—		(6,269)
Restricted stock units delivered	419,205	4		(5,557)		(321)		—		—		(5,874)
Net income	—	—		—		30,052		—		11		30,063
Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,249)		—		—		(3,249)
Other comprehensive income	—	—		—		—		16,040		125		16,165

Balance at March 31, 2023	65,078,462	$	651	$	—	$	507,563	$	(446)	$	3,373	$	511,141
Share-based compensation recognized	—	—		6,499		—		—		—		$	6,499
Repurchase of common stock	(268,398)	(3)		(6,418)		(3,100)		—		—		(9,521)
Restricted stock units delivered	29,045	—		(81)		—		—		—		(81)
Net income	—	—		—		28,155		—		(105)		28,050
Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,254)		—		—		(3,254)
Other comprehensive income	—	—		—		—		4,969		339		5,308

Balance at June 30, 2023	64,839,109	$	648	$	—	$	529,364	$	4,523	$	3,607	$	538,142
Share-based compensation recognized	—	—		6,756		—		—		—		$	6,756
Repurchase of common stock	(208,564)	(2)		(2,031)		(5,775)		—		—		(7,808)
Restricted stock units delivered	377	—		(322)		321		—		—		(1)
Net income	—	—		—		10,036		—		(80)		9,956
Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,232)		—		—		(3,232)
Other comprehensive (loss) income	—	—		—		—		(7,875)		411		(7,464)
Balance at September 30, 2023	64,630,922	$	646	$	4,403	$	530,714	$	(3,352)	$	3,938	$	536,349

Table of Contents


		Number of Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity			Number of Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at December 31, 2020		72,137,678	$	721	$	5,340	$	379,934	$	(48,254)	$	4,688	$	342,429
Balance at December 31, 2021															Balance at December 31, 2021	71,969,856	$	719	$	7,565	$	506,051	$	(48,123)	$	4,056	$	470,268
Share-based compensation recognized															Share-based compensation recognized	—	—		4,279		—		—		—		4,279
Repurchase of common stock															Repurchase of common stock	(521,643)	(5)		(6,193)		(14,981)		—		—		(21,179)
Restricted stock units delivered															Restricted stock units delivered	251,085	3		(5,651)		—		—		—		(5,648)
Net income (loss)															Net income (loss)	—	—		—		38,898		—		(32)		38,866
Cash dividends declared on common stock, $0.05 per share															Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,598)		—		—		(3,598)
Other comprehensive income															Other comprehensive income	—	—		—		—		11,912		248		12,160

Balance at March 31, 2022															Balance at March 31, 2022	71,699,298	$	717	$	—	$	526,370	$	(36,211)	$	4,272	$	495,148
Share-based compensation recognized	Share-based compensation recognized	—	—		3,380		—		—		—		3,380		Share-based compensation recognized	—	—		5,165		—		—		—		5,165
Repurchase of common stock	Repurchase of common stock	(382,974)	(4)		(1,290)		(12,974)		—		—		(14,268)		Repurchase of common stock	(357,114)	(4)		(3,466)		(10,566)		—		—		(14,036)
Restricted stock units delivered	Restricted stock units delivered	411,739	4		(7,430)		(1,302)		—		—		(8,728)		Restricted stock units delivered	25,149	—		(28)		—		—		—		(28)
Net income	Net income	—	—		—		35,503		—		101		35,604		Net income	—	—		—		33,589		—		(33)		33,556
Cash dividends declared on common stock, $0.05 per share	Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,605)		—		—		(3,605)		Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,579)		—		—		(3,579)
Other comprehensive income (loss)		—	—		—		—		1,576		(381)		1,195
Other comprehensive loss															Other comprehensive loss	—	—		—		—		(3,241)		(384)		(3,625)

Balance at March 31, 2021		72,166,443	$	721	$	—	$	397,556	$	(46,678)	$	4,408	$	356,007
Balance at June 30, 2022															Balance at June 30, 2022	71,367,333	713		1,671		545,814		(39,452)		3,855		512,601
Share-based compensation recognized	Share-based compensation recognized	—	—		3,855		—		—		—		3,855		Share-based compensation recognized	—	—		5,296		—		—		—		5,296
Repurchase of common stock	Repurchase of common stock	(231,314)	(2)		(3,790)		(6,328)		—		—		(10,120)		Repurchase of common stock	(1,190,388)	(12)		(6,958)		(30,347)		—		—		(37,317)
Restricted stock units delivered	Restricted stock units delivered	34,727	—		(65)		—		—		—		(65)		Restricted stock units delivered	485	—		(9)		—		—		—		(9)
Net income (loss)		—	—		—		49,197		—		(106)		49,091
Net income															Net income	—	—		—		137,814		—		(75)		137,739
Cash dividends declared on common stock, $0.05 per share	Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,608)		—		—		(3,608)		Cash dividends declared on common stock, $0.05 per share	—	—		—		(3,338)		—		—		(3,338)
Other comprehensive income (loss)		—	—		—		—		2,909		(25)		2,884
Balance at June 30, 2021		71,969,856	$	719	$	—	$	436,817	$	(43,769)	$	4,277	$	398,044
Share-based compensation recognized		—	—		3,708		—		—		—		3,708
Other comprehensive loss															Other comprehensive loss	—	—		—		—		9,866		(334)		9,532
Common stock received in exchange of the sale of a Business															Common stock received in exchange of the sale of a Business	(4,589,160)	(46)		—		(169,203)		—		—		(169,249)
Balance at September 30, 2022															Balance at September 30, 2022	65,588,270	655		—		480,740		(29,586)		3,446		455,255

Net income (loss)		—	—		—		35,314		—		(54)		35,260
Cash dividends declared on common stock, $0.05 per share		—	—		—		(3,598)		—		—		(3,598)
Other comprehensive loss		—	—		—		—		(5,397)		(87)		(5,484)
Balance at September 30, 2021		71,969,856	719		3,708		468,533		(49,166)		4,136		427,930

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

~~Table of Contents~~


		Nine months ended September 30,					Nine months ended September 30,
		2022		2021			2023	2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	210,161	$	119,955	Net income	68,069	$	210,161
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	58,432		56,091		Depreciation and amortization	63,680	58,432
Amortization of debt issue costs and accretion of discount	Amortization of debt issue costs and accretion of discount	1,187		1,423		Amortization of debt issue costs and accretion of discount	1,795	1,187
Operating lease amortization	Operating lease amortization	4,576		4,443		Operating lease amortization	4,619	4,576
Provision for expected credit losses and sundry losses		3,363		1,428
Unrealized loss on foreign currency hedge						Unrealized loss on foreign currency hedge	29,225	—
Unrealized gain on change in fair value of equity securities						Unrealized gain on change in fair value of equity securities	(104)	—
(Release) provision for expected credit losses and sundry losses						(Release) provision for expected credit losses and sundry losses	(305)	3,363
Deferred tax benefit	Deferred tax benefit	(1,699)		(1,119)		Deferred tax benefit	(16,491)	(1,699)
Share-based compensation	Share-based compensation	14,740		10,943		Share-based compensation	18,812	14,740

Gain on sale of a business	Gain on sale of a business	(135,642)		—		Gain on sale of a business	—	(135,642)
Gain from sale of assets		—		(778)
Loss on disposition of property and equipment and impairment of software		4,691		1,168
Loss on disposition of property and equipment						Loss on disposition of property and equipment	789	4,691
Earnings of equity method investment	Earnings of equity method investment	(2,120)		(1,307)		Earnings of equity method investment	(3,828)	(2,120)
Dividend received from equity method investment	Dividend received from equity method investment	2,053		1,183		Dividend received from equity method investment	3,497	2,053
Loss (gain) on valuation of foreign currency		6,858		(652)
(Increase) decrease in assets:

Loss on foreign currency remeasurement						Loss on foreign currency remeasurement	7,337	6,858
Decrease (increase) in assets:						Decrease (increase) in assets:
Accounts receivable, net	Accounts receivable, net	3,503		(593)		Accounts receivable, net	(4,590)	3,503

Prepaid expenses and other assets	Prepaid expenses and other assets	(3,417)		(3,070)		Prepaid expenses and other assets	(11,181)	(3,417)
Other long-term assets	Other long-term assets	(4,389)		(339)		Other long-term assets	(1,013)	(4,389)
Increase (decrease) in liabilities:
(Decrease) increase in liabilities:						(Decrease) increase in liabilities:
Accrued liabilities and accounts payable	Accrued liabilities and accounts payable	468		(773)		Accrued liabilities and accounts payable	17,387	468

Income tax payable	Income tax payable	2,921		(2,685)		Income tax payable	(9,108)	2,921

Contract liability	Contract liability	1,344		(2,654)		Contract liability	(1,146)	1,344
Operating lease liabilities	Operating lease liabilities	(4,450)		(4,107)		Operating lease liabilities	(3,739)	(4,450)
Other long-term liabilities	Other long-term liabilities	(3,571)		(2,702)		Other long-term liabilities	(247)	(3,571)
Total adjustments	Total adjustments	(51,152)		55,900		Total adjustments	95,389	(51,152)
Net cash provided by operating activities	Net cash provided by operating activities	159,009		175,855		Net cash provided by operating activities	163,458	159,009
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities

Additions to software	Additions to software	(28,287)		(31,004)		Additions to software	(34,193)	(28,287)
Acquisition of customer relationships		(10,607)		(14,750)
Acquisitions, net of cash acquired		(44,369)		—
Acquisition of customer relationship						Acquisition of customer relationship	—	(10,607)
Property and equipment acquired	Property and equipment acquired	(16,313)		(12,388)		Property and equipment acquired	(16,429)	(16,313)
Proceeds from sales of property and equipment	Proceeds from sales of property and equipment	77		805		Proceeds from sales of property and equipment	23	77
Acquisition of available-for-sale debt securities						Acquisition of available-for-sale debt securities	(962)	(254)
Purchase of equity securities						Purchase of equity securities	(26,505)	—
Investment in equity investee						Investment in equity investee	(5,500)	—
Purchase of certificates of deposit	Purchase of certificates of deposit	(7,264)		—		Purchase of certificates of deposit	—	(7,264)
Proceeds from maturities of available-for-sale debt securities	Proceeds from maturities of available-for-sale debt securities	1,015		—		Proceeds from maturities of available-for-sale debt securities	1,048	1,015
Acquisition of available-for-sale debt securities		(254)		(2,968)
Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(22,915)	(44,369)
Net cash used in investing activities	Net cash used in investing activities	(106,002)		(60,305)		Net cash used in investing activities	(105,433)	(106,002)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Statutory withholding taxes paid on share-based compensation		(5,685)		(8,793)
Withholding taxes paid on share-based compensation						Withholding taxes paid on share-based compensation	(5,956)	(5,685)

Net decrease in short-term borrowings						Net decrease in short-term borrowings	(14,000)	—
Repayment of short-term borrowings for purchase of equipment and software	Repayment of short-term borrowings for purchase of equipment and software	(901)		(1,603)		Repayment of short-term borrowings for purchase of equipment and software	—	(901)
Dividends paid	Dividends paid	(10,515)		(10,811)		Dividends paid	(9,735)	(10,515)

Repurchase of common stock	Repurchase of common stock	(72,532)		(24,388)		Repurchase of common stock	(23,598)	(72,532)
Repayment of long-term debt	Repayment of long-term debt	(9,875)		(28,482)		Repayment of long-term debt	(15,563)	(9,875)
Net cash used in financing activities	Net cash used in financing activities	(99,508)		(74,077)		Net cash used in financing activities	(68,852)	(99,508)
Effect of foreign exchange rate on cash, cash equivalents and restricted cash	Effect of foreign exchange rate on cash, cash equivalents and restricted cash	4,260		215		Effect of foreign exchange rate on cash, cash equivalents and restricted cash	10,716	4,260
Net (decrease) increase in cash, cash equivalents and restricted cash		(42,241)		41,688
Cash, cash equivalents and restricted cash at beginning of the period		285,917		221,105
Cash, cash equivalents and restricted cash at end of the period		$	243,676	$	262,793
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents		$	224,971	$	244,129
Restricted cash		18,705		18,664
Cash, cash equivalents and restricted cash		$	243,676	$	262,793
Supplemental disclosure of cash flow information:
Cash paid for interest		$	18,523	$	16,289
Cash paid for income taxes		24,386		19,468
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(111)	(42,241)
Cash, cash equivalents, restricted cash and cash included in settlement assets at beginning of the period						Cash, cash equivalents, restricted cash and cash included in settlement assets at beginning of the period	215,657	285,917

Table of Contents

~~Supplemental disclosure of non-cash activities:~~

~~Payable due to vendor related to equipment and software acquired~~

—

~~739~~

~~Non-cash investing activities~~

~~Software exchanged for common stock~~

~~18,761~~

—

~~Goodwill exchanged for common stock~~

~~5,813~~

—

~~CDs transferred in the acquisition of a business~~

~~7,169~~

—

~~Non-cash financing and investing activities~~

~~Common stock received and retired for sale of a business~~

~~169,249~~

—


Cash, cash equivalents, restricted cash, and cash included in settlement assets at end of the period	$	215,546	$	243,676


Reconciliation of cash, cash equivalents, restricted cash and cash included in settlement assets
Cash and cash equivalents	$	177,821	$	216,357
Restricted cash	20,607		18,705
Cash and cash equivalents included in settlement assets	17,118		8,614
Cash, cash equivalents, restricted cash and cash included in settlement assets	$	215,546	$	243,676
Supplemental disclosure of cash flow information:
Cash paid for interest	$	16,737	$	18,523
Cash paid for income taxes	$	29,692	$	24,386




Supplemental disclosure of non-cash activities:

Payable due to vendor related to equipment and software acquired	$	4,207	$	—
Non-cash investing activities
Software exchanged for common stock	—		18,761
Goodwill exchanged for common stock	—		5,813
CDs transferred in the acquisition of a business	—		7,169
Non-cash financing activities
Payable due to vendor related to licenses acquired	7,911		—
Non-cash financing and investing activities
Common stock received and retired for sale of a business	—		169,249

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

Note 1 – The Company and Basis of Presentation

The Company

EVERTEC, Inc. and its subsidiaries (collectively the “Company” or “EVERTEC”) is a leading full-service transaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring, payment processing and business process management services. The Company provides services across 26 countries in the region. EVERTEC owns and operates the ATH network, which we believe is one of the leading personal identification number ~~("PIN"~~(“PIN”) debit ~~and automated teller machine ("ATM")~~ networks in ~~the Caribbean and~~ Latin America. In addition, EVERTEC provides a comprehensive suite of services for core ~~bank~~banking, cash processing and ~~cash processing~~fulfillment in Puerto Rico and technology outsourcing and payment transactions fraud monitoring in all the regions the Company serves. EVERTEC serves a broad and diversified customer base of leading financial institutions, merchants, corporations, and government agencies with solutions that are essential to their ~~operations.~~operations, enabling them to issue, process and accept transactions securely.

Basis of Presentation

The unaudited condensed consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the accompanying unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted from these statements pursuant to the rules and regulations of the Securities and Exchange Commission and, accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Company for the year ended December 31, ~~2021,~~2022, included in the Company’s 2022 Annual Report on Form ~~10-K for the year ended December 31, 2021.~~10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, prepared in accordance with GAAP, contain all adjustments necessary for a fair presentation. Intercompany accounts and transactions are eliminated in consolidation. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Settlement Assets and Liabilities

Settlement assets and liabilities result from timing differences in the Company’s settlement processes with merchants, financial institutions, and credit card associations related to merchant and card transaction processing. The amounts are generally collected or paid the following business day. Settlement assets represent cash received or amounts receivable from agents, payment networks, bank partners, merchants or direct consumers. Settlement liabilities represent amounts payable to merchants and payees. Settlement assets were historically presented within cash and accounts receivable, while Settlement liabilities were presented within accrued liabilities and accounts payable.

Note 2 – ~~Recent Accounting Pronouncements~~

~~Recently adopted accounting pronouncements~~

~~In October 2021, the FASB issued ASU 2021-08 to update ASC 805,~~Business ~~Combinations,~~ to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company selected to early adopt this guidance for its most recent business combination.

~~Note 3 – Business Acquisitions and Dispositions~~Acquisition

Acquisition of a Business

On ~~July 1, 2022, EVERTEC's main operating subsidiary, EVERTEC Group~~February 16, 2023, the Company closed on the acquisition of 100% of ~~the share capital of BBR SpA ("BBR"~~Paysmart Pagamentos Eletronicos Ltda (“paySmart”)~~, a payment solutions~~. Headquartered in Porto Alegre, Brazil, paySmart provides issuer processing services and ~~business technology company with operations~~BIN Sponsorship services for prepaid programs under domestic and international schemes in ~~Chile and Peru, by entering into a share~~Brazil. The aggregate purchase agreement (Contrato de Compraventa de Acciones), between EVERTEC Group and IG Capital, Cuatro R, Rivers and Brela ( collectively, the "Sellers"). As consideration for the purchase, the Company transferred to the sellers upon closing cash that amounted to $45.9price was $130 million ~~and certificates of deposits that amounted to $7.3~~Brazilian reais, approximately USD$25 million. The ~~BBR~~ acquisition ~~increases the Company's payment solution offerings, provides access to larger merchants in Chile and~~ expands the Company's ~~physical presence into Peru.~~footprint in Brazil and compliments the current product offering in the country.

The Company accounted for this transaction as a business combination. The following table details the preliminary fair value of assets acquired and liabilities assumed from the ~~BBR~~paySmart acquisition:

Table of Contents


	Preliminary Assets/Liabilities (at fair value)
( In thousands)
Cash and cash equivalents	$	~~1,551~~2,037
Accounts receivable, net	~~2,969~~451
Prepaid expenses and other assets			58
Property and equipment, net	3107
Operating lease right-of-use asset	76182
Goodwill	~~33,247~~9,735
Settlement assets	52,593
Other intangible assets, net	~~24,850~~15,174
~~Deferred tax asset~~	~~267~~
Total assets acquired	~~62,963~~80,337
Accounts payable	~~1,039~~278
~~Contract liability~~Settlement liabilities	~~1,136~~50,368
Operating lease liability	85185
Income tax payable	298
Deferred tax liability	~~7,614~~4,253
Total liabilities assumed	$	~~9,874~~55,382

~~Table of Contents~~

The following table details the major groups of intangible assets acquired and the weighted average amortization period for these assets:


		Amount		Weighted-average life		Amount		Weighted-average life
(Dollar amounts in thousands)	(Dollar amounts in thousands)				(Dollar amounts in thousands)

Customer relationships	Customer relationships	$	22,500	15	Customer relationships	$	10,239	20
Trademark	Trademark	1,250		5	Trademark	1,299		5
Software packages	Software packages	1,100		5	Software packages	3,636		5
Total	Total	$	24,850	14	Total	$	15,174	15

Refer to Note 66- Goodwill and Other Intangible Assets for detail of goodwill allocated by reportable segments. The goodwill is primarily attributed to anticipated synergies. ~~None~~Currently, none of the goodwill is deductible for income tax purposes.

Revenues and earnings from the BBR acquisition were not material for either the three or nine months ended September 30, 2022. Pro forma results of operations have not been presented because the effect of this business combination is not material to the consolidated financial condition and results of operations.

~~Sale of a Business~~

On July 1, 2022, the Company closed on a definitive agreement with Banco Popular de Puerto Rico and its parent, Popular, to sell software and prepaid assets and transfer certain employees in connection with those assets (the "Business"). As consideration for the sale of the Business, Popular delivered 4.6 million shares of Evertec common stock held by Popular with a value of $169.2 million at close (the "Popular Transaction"). Additionally, management concluded that $15.4 million included in the Company's contract liability should be treated as consideration for the sale therefore, total consideration for the sale of the Business amounted to $184.7 million. The Company also modified and extended the main commercial agreements with Popular, including a 10-year extension of the Merchant Acquiring Independent Sales Organization Agreement, a 5-year extension of the ATH Network Participation Agreement and a 3-year extension of the MSA. The MSA modifications, among other things, includes the elimination of the exclusivity requirement which was the basis for a non-compete intangible asset recorded in 2010 as part of the original MSA that was amortized over a 15 year period. The Company also entered into new contracts and transition services agreements concurrently with the close of the Popular Transaction with terms between 3 months and 36 months.

Given the elimination of the exclusivity clause discussed above, the Company determined that the balance of the non-compete intangible asset on July 1, 2022 of $12.3 million, should be written off as a component of the gain on sale of a business. The Company also concluded that certain provisions in the new contracts and transition services agreements with Popular were not at fair value, therefore requiring that a portion of the gain be allocated to these contracts. The Company recorded a contract liability based on relative fair value of $11.7 million in connection with this conclusion.

~~The following table details the consideration for the sale of the business, major classes of assets and liabilities included in the business sale and the gain on sale of a business:~~

~~July 1, 2022~~

~~(In thousands)~~

~~Common stock received in exchange for the sale of a business~~

~~169,249~~

~~Contract liability representing consideration for the sale of a business~~

~~15,426~~

~~Total consideration for the sale of a business~~

~~184,675~~

~~Goodwill~~

~~(5,813)~~

~~Other intangible assets, net~~

~~(31,011)~~

~~Prepaid expenses and other assets~~

~~(497)~~

~~Contract liability~~

~~(11,712)~~

~~Gain on sale of a business~~

~~135,642~~

~~Table of Contents~~

Note 43 – Debt Securities

The amortized cost, gross unrealized gains and losses recorded in OCI and estimated fair value of debt securities available-for-sale by contractual maturity as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:


		September 30, 2022						September 30, 2023
(In thousands)	(In thousands)			Gross unrealized					(In thousands)			Gross unrealized
		Amortized cost		Gains	Losses	Fair Value				Amortized cost		Gains		Losses		Fair Value
Costa Rica Government Obligations	Costa Rica Government Obligations								Costa Rica Government Obligations
After 1 to 5 years	After 1 to 5 years	$	2,219	—	(21)	$	2,198		After 1 to 5 years	$	2,090	$	—	$	(11)	$	2,079


		December 31, 2021								December 31, 2022
(In thousands)	(In thousands)			Gross unrealized							(In thousands)			Gross unrealized
		Amortized cost		Gains		Losses		Fair Value				Amortized cost		Gains		Losses		Fair Value
Costa Rica Government Obligations	Costa Rica Government Obligations										Costa Rica Government Obligations
After 1 to 5 years	After 1 to 5 years	$	2,963	$	78	$	—	$	3,041		After 1 to 5 years	$	2,194	$	9	$	—	$	2,203

~~Debt securities~~

Table of Contents

Costa Rica Government Obligations are held by a trust in the Costa Rica National Bank as a collateral requirement for settlement activities. The Company may substitute securities as needed but must maintain certain levels of collateral based on transaction volumes.

For ~~both~~ the ~~three and~~ nine months period ended September 30, ~~2022,~~2023, the Company purchased ~~$0.3~~$1.0 million in debt securities that were classified as ~~available-for-sale. No~~available-for-sale and $0.3 million for the corresponding period in 2022. Debt securities amounting to $1.0 million and $1.0 million matured during the nine months period ended September 30, 2023 and 2022, respectively, while no debt securities were sold during the ~~nine months ended September 30, 2022, while $1.0 million matured during the~~ same ~~period.~~ periods.

A provision for credit losses was not required for the periods presented above. Refer to Note 8 for disclosure requirements related to the fair value hierarchy.

Note 4 – Investment in Equity Investee

In the third quarter of 2023, the Company, through its wholly owned subsidiary EVERTEC Costa Rica, S.A. (“EVERTEC CR”), entered into an agreement with a corporate partner to jointly develop and provide payment services in the Latin America region. The services will be provided through a newly formed entity which both entities will contribute capital to form. The Company has concluded that the newly formed entity is a joint venture not controlled by the Company and will therefore account for the entity as an equity investee. The Company has committed capital contributions in the amount of $13.5 million, consisting of cash payments amounting to $7.5 million, nonfinancial assets consisting of $3.5 million in development of intellectual property, and $2.5 million in processing cost credits. At September 30, 2023, the Company had contributed $5.5 million in cash from the committed amounts, which represented 9.91% ownership in the joint venture.

Note 5 – Property and Equipment, net

Property and equipment, net consists of the following:


(In thousands)		Useful life in years	September 30, 2022		December 31, 2021
(Dollar amounts in thousands)							(Dollar amounts in thousands)	Useful life in years	September 30, 2023		December 31, 2022
Buildings	Buildings	30	$	1,387	$	1,359	Buildings	30	$	1,620	$	1,456
Data processing equipment	Data processing equipment	3 - 5	151,545		141,359		Data processing equipment	3 - 5	178,367		162,761
Furniture and equipment	Furniture and equipment	3 - 20	8,742		7,718		Furniture and equipment	3 - 20	9,869		9,154
Leasehold improvements	Leasehold improvements	5 -10	3,572		3,277		Leasehold improvements	5 -10	4,208		3,660
			165,246		153,713				194,064		177,031
Less - accumulated depreciation and amortization	Less - accumulated depreciation and amortization		(116,531)		(106,365)		Less - accumulated depreciation and amortization		(138,525)		(121,919)
Depreciable assets, net	Depreciable assets, net		48,715		47,348		Depreciable assets, net		55,539		55,112
Land	Land		1,213		1,185		Land		1,418		1,275
Property and equipment, net	Property and equipment, net		$	49,928	$	48,533	Property and equipment, net		$	56,957	$	56,387

Depreciation and amortization expense related to property and equipment for the three and nine months ended September 30, ~~2022~~2023 amounted to $5.4 million and $15.9 million, respectively, compared to $4.6 million and $13.9 million ~~respectively, compared to $4.2 million and $13.0 million~~ for the corresponding periods in ~~2021.~~

~~During the nine months ended September 30, 2021, the Company recorded a loss on the disposition of damaged POS devices amounting to $0.5 million through cost of revenues.~~2022.

~~Table of Contents~~

Note 6 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill, allocated by operating segments, were as follows (see Note 17):


(In thousands)	(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total		(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Balance at December 31, 2021		$	160,972	$	48,402	$	138,121	$	45,823	$	393,318
Balance at December 31, 2022												Balance at December 31, 2022	$	160,972	$	84,289	$	138,121	$	40,010	$	423,392

Goodwill attributable to acquisition	Goodwill attributable to acquisition	—		33,247		—		—		33,247		Goodwill attributable to acquisition	—		9,735		—		—		9,735
Goodwill attributable to the sale of a business		—		—		—		(5,813)		(5,813)
Foreign currency translation adjustments	Foreign currency translation adjustments	—		(2,933)		—		—		(2,933)		Foreign currency translation adjustments	—		1,369		—		—		1,369
Balance at September 30, 2022		$	160,972	$	78,716	$	138,121	$	40,010	$	417,819
Balance at September 30, 2023												Balance at September 30, 2023	$	160,972	$	95,393	$	138,121	$	40,010	$	434,496

Table of Contents

Goodwill is tested for impairment on an annual basis as of August 31, or more often if events or changes in circumstances indicate there may be impairment. The Company may test for goodwill impairment using a qualitative or a quantitative analysis. In a qualitative analysis, the Company assesses whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount. In the quantitative analysis, the Company compares the estimated fair value of the reporting units to their carrying values, including goodwill. No impairment losses were recognized based on the quantitative assessment performed as of August 31, 2023. For the corresponding period in 2022 the qualitative analysis was followed and no impairment losses were recognized. Refer to Note 2 - Business Acquisition, for further details of goodwill acquired in the ~~periods ended September 30, 2022 or 2021.~~first quarter of 2023.

The carrying amount of other intangible assets at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 was as follows:

September 30, 2022
(In thousands) Useful life in years Gross
amount Accumulated
amortization Net carrying
amount
Customer relationships 8 - 15 $ 390,221 $ (295,170) $ 95,051
Trademarks 1 - 15 43,025 (37,638) $ 5,387
Software packages 3 - 10 332,767 (236,889) $ 95,878
Other intangible assets, net $ 766,013 $ (569,697) $ 196,316


			December 31, 2021								September 30, 2023
(Dollar amounts in thousands)	(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount		(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	Customer relationships	8 - 14	$	357,991	$	(272,732)	$	85,259	Customer relationships	8 - 20	$	403,108	$	(327,813)	$	75,295
Trademarks	Trademarks	2 - 15	41,901		(36,684)		5,217		Trademarks	1 - 15	44,495		(39,333)		$	5,162
Software packages	Software packages	3 - 10	326,320		(217,643)		108,677		Software packages	3 - 10	405,429		(265,646)		$	139,783
Non-compete agreement		15	56,539		(42,404)		14,135

Other intangible assets, net	Other intangible assets, net		$	782,751	$	(569,463)	$	213,288	Other intangible assets, net		$	853,032	$	(632,792)	$	220,240

In the second quarter of 2022, the Company acquired a customer relationship in Puerto Rico for $10.6 million that is being amortized over five years. Revenues and expenses in connection with this customer relationship are included as part of the Payment Services - Puerto Rico & Caribbean segment. As part of the BBR acquisition, the Company added a customer relationship amounting to $22.5 million, a trademark of $1.3 million, and software of $1.1 million, refer to Note 3- Business Acquisitions and Dispositions for further details. On July 1, 2022, in connection with the closing of the Popular Transaction, the remaining balance of the Non-compete agreement of $12.3 million was written off against the transaction gain. The Company no longer has non-compete intangibles on its Balance Sheets as of September 30, 2022. Refer to Note 3- Business Acquisitions and Dispositions for further details.


		December 31, 2022
(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization		Net carrying amount
Customer relationships	8 - 15	$	392,737	$	(303,733)	$	89,004
Trademarks	1 - 15	43,195		(37,998)		5,197
Software packages	3 - 10	349,474		(243,355)		106,119

Other intangible assets, net		$	785,406	$	(585,086)	$	200,320

Amortization expense related to other intangibles for the three and nine months ended September 30, ~~2022~~2023 amounted to $16.6 million and $47.8 million, respectively, compared to $15.2 million and $44.5 million ~~respectively, compared to $14.5 million and $43.0 million~~ for the corresponding periods in ~~2021, respectively.~~2022. During the nine months ended September 30, 2022, the Company recorded an impairment loss through cost of revenues of $4.1 million for a multi-year software development for which a reduction in future cash flows was projected. ~~During the nine months ended September 30, 2021, the Company recorded an~~The impairment charge ~~through cost of revenues~~

~~Table of Contents~~

~~amounting to $0.6 million for a software solution that will no longer be used. Both impairment charges~~ affected the ~~Company’s~~Company's Payment Services –- Puerto Rico & Caribbean segment.

The estimated amortization expense of the other intangible balances outstanding at September 30, ~~2022~~2023, for the next five years is as follows:


(Dollar amounts in thousands)
Remaining 2022		$	14,156
2023		53,108
(In thousands)				(In thousands)
Remaining 2023				Remaining 2023	$	16,411
2024	2024	41,611		2024	55,249
2025	2025	16,218		2025	28,644
2026	2026	11,300		2026	19,267
2027				2027	14,522

Note 7 – Debt and Short-Term Borrowings

~~Total debt~~Debt at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 was as follows:

(In thousands) September 30, 2022 December 31, 2021
2023 Term A Loan bearing interest at a variable interest rate (LIBOR plus applicable margin(1)(2))
$ 162,930 $ 170,875
2024 Term B Loan bearing interest at a variable interest rate (LIBOR plus applicable margin(1)(3))
292,574 293,660
Note payable due January 1, 2022(1)
— 758
Total debt $ 455,504 $ 465,293


(In thousands)	September 30, 2023		December 31, 2022
2027 Term A Loan bearing interest at a variable interest rate (SOFR plus applicable margin(1)(2))	$	395,406	$	410,248
Revolving credit facility(2)	6,000		20,000
Note payable due on September 1, 2030(1)	7,911		$	—

(1)Net of unaccreted discount and unamortized debt issue costs, as applicable.

~~(2)Applicable margin~~Table of ~~1.75% at September 30, 2022 and December 31, 2021.~~Contents

~~(3)~~(2)Subject to a minimum rate ("~~LIBOR~~SOFR floor") of 0% plus applicable margin of ~~3.50%~~1.50% at September 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Secured Credit Facilities

On ~~November 27, 2018,~~December 1, 2022, EVERTEC and EVERTEC Group, ~~LLC ("EVERTEC Group") (collectively, the “Borrower”)~~ entered into a credit agreement with a syndicate of lenders and Truist Bank, as administrative agent and collateral agent, providing for ~~the secured credit facilities, consisting of~~(i) a ~~$220.0~~$415.0 million term loan A facility ~~that matures on November 27, 2023~~ (the ~~“2023 Term A Loan"~~“Term Loan Facility”), and (ii) a ~~$325.0 million term loan B facility that matures on November 27, 2024 (the “2024 Term B Loan”), and a $125.0~~$200.0 million revolving credit facility (the “Revolving Facility”, and together with the Term Loan Facility, the “2022 Credit Facilities”) ~~that matures~~. The 2022 Credit Facilities mature on November 27, 2023, with a syndicate of lenders and Bank of America, N.A. (“Bank of America”), as administrative agent, collateral agent, swingline lender and line of credit issuer (collectively the “2018 Credit Agreement”).December 1, 2027.

~~The 2018 Credit Agreement requires mandatory repayment of outstanding principal balances based on a percentage of excess cash flow, provided that no such payment shall be due if~~At September 30, 2023, the leverage ratio is below 1.75x or the resulting amount of the excess cash flow multiplied by the applicable percentage is less than $10 million. On March 8, 2021, in connection with this mandatory repayment clause, the Company repaid $17.8 million, as a result of excess cash flow calculation performed for the year ended December 31, 2020. No mandatory repayment was required in 2022 in connection with the excess cash flow calculation performed for the year ended December 31, 2021 as the leverage ratio was below 1.75x.

~~The~~ unpaid principal balance atof the Term Loan Facility was $399.4 million. At September 30, ~~2022 of~~2023, there was $6.0 million outstanding on the ~~2023 Term A Loan~~Revolving Facility and the ~~2024 Term B Loan was $163.4 million and $294.2 million, respectively. The~~ additional borrowing capacity ~~under our Revolving Facility at September 30, 2022~~ was ~~$119.1 million.~~$188.0 million, considering letters of credit issued. The Company issues letters of credit against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

Notes Payable

In ~~December 2019,~~September 2023, EVERTEC Group entered into ~~two~~a non-interest bearing financing ~~agreements~~agreement amounting to ~~$2.4~~$10.1 million to purchase software and maintenance which ~~were fully repaid in January 2022.~~the Company recorded on a discounted basis using an implied interest of 6.9%. As of ~~December 31, 2021,~~September 30, 2023, the outstanding principal balance of the ~~notes~~note payable on a discounted basis was ~~$0.8~~$7.9 million. ~~These notes were~~The current portion of the note is included in accounts payable and the long-term portion is included in other long-term liabilities on the Company's unaudited condensed consolidated balance ~~sheets.~~

~~Table of Contents~~

sheet.

Interest Rate ~~Swap~~Swaps

As of September 30, ~~2022,~~2023, the Company has antwo interest rate swap ~~agreement,~~agreements, entered into in December 2018 and May 2023, which ~~converts~~convert a portion of the interest rate payments on the Company's ~~2024~~ Term B Loan Facility from variable to fixed:

Swap Agreement

Effective date

Maturity Date

Notional Amount

Variable Rate

Fixed Rate

2018 Swap

April 2020

November 2024

$250 million

1-month ~~LIBOR~~SOFR

~~2.89%~~2.929%

2023 Swap

November 2024

December 2027

$250 million

1-month SOFR

3.375%

~~The Company has accounted for this agreement as a cash flow hedge.~~

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the carrying amount of the ~~derivative~~derivatives included on the Company's unaudited condensed consolidated balance sheets was ~~an asset of $7.1~~$11.5 million and ~~a liability $13.4~~$7.4 million, respectively. The fair value of ~~this derivative is~~these derivatives are estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 89 for disclosure of ~~losses~~gains recorded on cash flow hedging activities.

During the three and nine months ended September 30, ~~2022,~~2023, the Company reclassified gains of $1.6 million and $4.0 million, respectively, from accumulated other comprehensive income into interest expense compared to losses of $0.4 million and $3.5 million, respectively, ~~from accumulated other comprehensive loss into interest expense compared to $1.8 million and $5.3 million~~ for the corresponding periods in ~~2021.~~2022. Based on current ~~LIBOR~~SOFR rates, the Company expects to reclassify gains of ~~$3.4~~$6.2 million from accumulated other comprehensive ~~loss~~income into interest expense over the next 12 months.

The cash flow hedge is considered highly effective.

Note 8 – Financial Instruments and Fair Value Measurements

Recurring Fair Value Measurements

Debt Securities Available for Sale

The fair value of debt securities is estimated based on observable inputs, therefore classified as a Level 2 asset within the fair value hierarchy. The fair value of ~~debt securities~~the Costa Rica Government Obligations was ~~$2.2~~$2.1 million and ~~$3.0~~$2.2 million as of September 30, ~~2022~~2023 and December 31, ~~2021 respectively.~~2022.

Derivative Instruments

The fair value of the Company's interest rate swaps are estimated using Level 2 inputs under the fair value hierarchy. These derivatives were in an asset position with a balance of $11.5 million and $7.4 million as of September 30, 2023 and December 31, 2022, respectively.

Table of Contents

The fair value of the foreign currency swap entered into during the third quarter of 2023 to fix the acquisition price of the Sinqia transaction described in Note 18, Subsequent events, is estimated using Level 2 inputs under the fair value hierarchy. This derivative was in ~~an asset~~a liability position ~~with a balance~~ of ~~$7.1~~$29.2 million as of September 30, ~~2022 and in a liability position with a balance of $13.4 million as of December 31, 2021.~~2023.

~~Debt~~Equity Securities

During the third quarter of 2023, the Company purchased 4.8 million shares of Sinqia, S.A., a public company traded in B3, the Brazilian stock exchange. The shares were purchased in the open market for $26.5 million and ~~Short-Term Borrowings~~at September 30, 2023 the fair value of the equity securities, classified as a Level 1 input, amounted to $26.0 million. For both the three and nine month periods ended September 30, 2023, the Company recognized unrealized gains of $0.1 million in the unaudited condensed consolidated statement of income and translation losses of $0.6 million through other comprehensive income (loss).

The following table presents the carrying value, as applicable, and estimated fair value for financial instruments at September 30, 2023 and December 31, 2022:


	September 30, 2023				December 31, 2022
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Costa Rica government obligations	$	2,079	$	2,079	$	2,203	$	2,203
Equity securities	$	25,992	$	25,992	$	—	$	—
Interest rate swaps	11,492		11,492		7,440		7,440
Financial liabilities:


Term Loan Facility	395,406		397,840		410,248		413,494
Foreign currency hedge liability	29,225		29,225		—		—

The fair ~~values~~value of the term ~~loans~~loan at September 30, ~~2022~~2023 and December 31, ~~2021 were~~2022 was obtained using prices provided by third party service providers. Their pricing is based on various inputs such as market quotes, recent trading activity in a non-active market or imputed prices. These inputs are considered Level 3 inputs under the fair value hierarchy. Also, the pricing may include the use of an algorithm that could take into account movements in the general high yield market, among other variants. The secured term ~~loans are~~loan is not accounted for at fair value in the balance ~~sheets.~~sheet.

~~Table of Contents~~

~~The following table presents the carrying value, as applicable, and estimated fair value for financial instruments at September 30, 2022 and December 31, 2021:~~

September 30, 2022 December 31, 2021
(In thousands) Carrying
Amount Fair
Value Carrying
Amount Fair
Value
Financial assets:
Costa Rica government obligations 2,198 2,198 3,041 3,041
Interest rate swap 7,070 7,070 — —
Financial liabilities:
2023 Term A Loan 162,930 161,730 170,875 168,610
2024 Term B Loan 292,574 291,400 293,660 294,735
Interest rate swap — — 13,392 13,392

Note 9 – Equity

Accumulated Other Comprehensive ~~Loss~~Income (Loss)

The following table provides a summary of the changes in the balances of accumulated other comprehensive ~~loss~~income (loss) for the nine months ended September 30, ~~2022:~~2023:

(In thousands) Foreign Currency
Translation
Adjustments Cash Flow Hedges Unrealized Gains (losses) on Debt Securities AFS Total
Balance - December 31, 2021, net of tax $ (35,971) $ (12,261) 109 (48,123)
Other comprehensive (loss) income before reclassifications (210) 15,320 (77) 15,033
Effective portion reclassified to net income — 3,504 — 3,504
Balance - September 30, 2022, net of tax $ (36,181) $ 6,563 $ 32 $ (29,586)


(In thousands)	Foreign Currency Translation Adjustments		Cash Flow Hedges		Unrealized Gains (losses) on Debt Securities AFS		Total
Balance - December 31, 2022, net of tax	$	(23,481)	$	6,954	41		(16,486)
Other comprehensive income (loss) before reclassifications	9,426		7,691		(31)		17,086
Effective portion reclassified to net income	$	—	$	(3,952)	—		(3,952)
Balance - September 30, 2023, net of tax	$	(14,055)	$	10,693	$	10	$	(3,352)

Note 10 – Share-based Compensation

Long-term Incentive Plan ("LTIP")

During the three months ended March 31, ~~2020,~~ 2021, 2022 and ~~2022,~~2023, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors ("Board") approved grants of restricted stock units (“RSUs”) to executives and certain employees pursuant to the ~~2020 LTIP,~~ 2021 LTIP, 2022 LTIP and ~~2022~~2023 LTIP, respectively, all under the terms of the Company's ~~2013~~2022 Equity Incentive Plan.

~~On May 20, 2022 (the “Effective Date”),~~ Under the Company's shareholders approved the Company's 2022 Equity Incentive Plan (the "2022 Plan") which replaced the Company's 2013 Equity Incentive Plan. All shares remaining available for grant under the 2013 Plan as of the Effective Date plus any shares of common stock ofLTIPs, the Company ~~covered by outstanding~~granted RSUs to eligible participants as time-based awards ~~under the 2013 Plan as~~and/or performance-based awards.

Table of the Effective Date that again become available for grant pursuant to the terms of the 2022 Plan as of the Effective Date, to the extent the shares underlying such awards are not issued because they are forfeited or settled or terminate without distribution of shares of common stock of the Company became available for issuance under the 2022 Plan on the Effective Date pursuant to the terms of the 2022 Plan.Contents

The vesting of the RSUs is dependent upon service and/or performance conditions as defined in the award agreements. Employees that received time-based awards with service conditions are entitled to receive a specific number of shares of the Company’s common stock on the vesting date if the employee provides services to the Company through the vesting date. Time-based awards vest over a period of three years in substantially equal installments commencing on the grant date and ending on ~~February 27 of each year for the 2020 LTIP,~~ March 2 of each year for the 2021 LTIP, ~~and~~ February 25 of each year for the 2022 LTIP and February 24 of each year for the 2023 LTIP. In 2022 and 2023, the Company also granted time-based awards with a three year service vesting period which will cliff vest on February 25, ~~2025.~~2025 and February 24, 2026, respectively.

For the performance-based awards under the ~~2020 LTIP,~~ 2021 LTIP, 2022 LTIP, and ~~2022~~2023 LTIP, the Compensation Committee established adjusted earnings before income taxes, depreciation and amortization ("Adjusted EBITDA") as the primary performance

~~Table of Contents~~

measure while maintaining focus on total shareholder return through the use of a market-based total shareholder return ("TSR") performance modifier. The Adjusted EBITDA measure is based on annual targets and can ~~produce~~result in a payout between 0% and 200%., depending on the performance level. The TSR modifier adjusts the shares earned based on the ~~core~~ Adjusted EBITDA performance upwards or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to the companies in the Russell 2000 Index. The Adjusted EBITDA performance measure will be calculated for the one-year period commencing on January 1 of the year of the grant and ending on December 31 of the same year, relative to the goals set by the Compensation Committee for this same period. The shares earned will be subject to an additional two-year service vesting period and will vest on ~~February 27, 2023 for the 2020 LTIP,~~ March 2, 2024 for the 2021 LTIP, ~~and~~ February 25, 2025 for the 2022 LTIP, and February 24, 2026 for the 2023 LTIP. Unless otherwise specified in the award agreement, or in an employment agreement, awards are forfeited if the employee voluntarily ceases to be employed by the Company prior to vesting.

The following table summarizes nonvested RSUs activity for the nine months ended September 30, ~~2022:~~2023:


Nonvested RSUs	Nonvested RSUs	Shares	Weighted-average grant date fair value		Nonvested RSUs	Shares	Weighted-average grant date fair value
Nonvested at December 31, 2021		1,086,329	$	34.73
Nonvested at December 31, 2022					Nonvested at December 31, 2022	1,363,780	$	38.96
Granted	Granted	709,302	41.90		Granted	778,656	37.51
Vested	Vested	(421,764)	33.02		Vested	(608,800)	36.92
Forfeited	Forfeited	(8,546)	37.10		Forfeited	(15,080)	40.52
Nonvested at September 30, 2022		1,365,321	$	38.97
Nonvested at September 30, 2023					Nonvested at September 30, 2023	1,518,556	$	40.13

For the three and nine months ended September 30, ~~2022,~~2023, the Company recognized $6.7 million and $18.8 million of share-based compensation expense, compared with $5.3 million and $14.7 million ~~of share-based compensation expense, respectively, compared with $3.7 million and $10.9 million~~ for the corresponding ~~periods~~period in ~~2021.~~2022.

As of September 30, ~~2022,~~2023, the maximum unrecognized ~~expense~~cost for RSUs was ~~$32.0~~$36.7 million. The cost is expected to be recognized over a weighted average period of ~~2.0~~1.8 years.

Note 11 – Revenues

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into primary geographical markets, nature of the products and services, and timing of transfer of goods and services. The Company's operating segments are determined by the nature of the products and services the Company provides and the primary geographical markets in which the Company operates. Revenue disaggregated by segment is discussed in Note 17, Segment Information.

In the following tables, revenue for each segment, excluding intersegment revenues, is disaggregated by timing of revenue

recognition for the periods indicated.

Three months ended September 30, 2022
(In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Total
Timing of revenue recognition
Products and services transferred at a point in time $ 89 $ 973 $ — $ 3,790 $ 4,852
Products and services transferred over time 29,456 29,068 36,911 45,516 140,951
$ 29,545 $ 30,041 $ 36,911 $ 49,306 $ 145,803

1715

Table of Contents


		Three months ended September 30, 2021											Three Months Ended September 30, 2023
(In thousands)	(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total		(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition	Timing of revenue recognition											Timing of revenue recognition
Products and services transferred at a point in time	Products and services transferred at a point in time	$	30	$	449	$	—	$	446	$	925	Products and services transferred at a point in time	$	107	$	581	$	—	$	2,396	$	3,084
Products and services transferred over time	Products and services transferred over time	25,712		23,807		37,606		57,833		144,958		Products and services transferred over time	34,302		41,128		40,557		54,127		$	170,114
		$	25,742	$	24,256	$	37,606	$	58,279	$	145,883		$	34,409	$	41,709	$	40,557	$	56,523	$	173,198


		Nine months ended September 30, 2022											Three Months Ended September 30, 2022
(In thousands)	(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total		(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition	Timing of revenue recognition											Timing of revenue recognition
Products and services transferred at a point in time	Products and services transferred at a point in time	$	244	$	1,405	$	—	$	7,956	$	9,605	Products and services transferred at a point in time	$	89	$	973	$	—	$	3,790	$	4,852
Products and services transferred over time	Products and services transferred over time	86,045		81,229		111,079		168,664		447,017		Products and services transferred over time	29,456		29,068		36,911		45,516		$	140,951
		$	86,289	$	82,634	$	111,079	$	176,620	$	456,622		$	29,545	$	30,041	$	36,911	$	49,306	$	145,803

Nine months ended September 30, 2021
(In thousands) Payment Services - Puerto Rico & Caribbean Payment Services - Latin America Merchant Acquiring, net Business Solutions Total
Timing of revenue recognition
Products and services transferred at a point in time $ 119 $ 1,633 $ — $ 4,048 $ 5,800
Products and services transferred over time 76,642 69,919 106,808 175,390 428,759
$ 76,761 $ 71,552 $ 106,808 $ 179,438 $ 434,559



	Nine months ended September 30, 2023
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	345	$	1,834	$	—	$	6,053	$	8,232
Products and services transferred over time	100,651		105,917		122,152		163,136		$	491,856
	$	100,996	$	107,751	$	122,152	$	169,189	$	500,088



	Nine months ended September 30, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	244	$	1,405	$	—	$	7,956	$	9,605
Products and services transferred over time	86,045		81,229		111,079		168,664		$	447,017
	$	86,289	$	82,634	$	111,079	$	176,620	$	456,622

Table of Contents

Revenue concentration with a single customer, Popular, as a percentage of total revenues for the quarters ended September 30, 2023 and 2022 was approximately 34% and 35%, respectively. For the nine months ended September 30, 2023 and September 30, 2022 this percentage was approximately 36% and 40%, respectively.

Contract Balances

The following table provides information about contract assets from contracts with customers.


(In thousands)	(In thousands)	September 30, 2022		December 31, 2021		(In thousands)	September 30, 2023		December 31, 2022
Balance at beginning of period	Balance at beginning of period	$	1,715	$	2,796	Balance at beginning of period	$	4,749	$	1,715
Services transferred to customers	Services transferred to customers	7,246		5,374		Services transferred to customers	17,827		9,313
Transfers to accounts receivable	Transfers to accounts receivable	(3,861)		(6,455)		Transfers to accounts receivable	(12,244)		(6,279)
Balance at end of period	Balance at end of period	$	5,100	$	1,715	Balance at end of period	$	10,332	$	4,749

The current portion of contract assets is recorded as part of prepaid expenses and other assets, and the long-term portion is included in other long-term assets in the unaudited condensed consolidated balance sheets.

Accounts receivable, net ~~as of~~at September 30, ~~2022~~2023 amounted to ~~$112.3~~$115.8 million. Contract liability and contract liability - long term at September 30, ~~2022~~2023 amounted to ~~$17.1~~$14.4 million and ~~$34.7~~$34.1 million, respectively, and may arise when consideration is received or due in advance from customers prior to performance. The contract liability is mainly comprised of upfront fees for implementation or set up activities, including fees charged in pre-production periods in connection with hosting ~~services,~~services. The Company regularly reviews its estimates for variable consideration on the transaction price and recognizes changes in estimates on a cumulative catch-up basis as

~~Table of Contents~~

~~well as amounts related to contracts entered into concurrently with~~ if the ~~close~~most current estimate of the ~~Popular Transaction~~transaction price adjusted for variable consideration had been known as ~~described~~of the inception of the contract. During the three and nine months ended September 30, 2023, the Company recognized revenue of $4.2 million and $12.9 million, respectively, that was included in ~~Note 3- Business Acquisitions and Dispositions. Contract liabilities may also arise when consideration is received or due in advance from customers prior to performance.~~the contract liability at December 31, 2022. During the three and nine months ended September 30, 2022, the Company recognized revenue of $17.0 million and $29.0 million, respectively, that was included in the contract liability at December 31, 2021. ~~During the three and nine months ended September 30, 2021, the Company recognized revenue of $5.3 million and $20.7 million that was included in the contract liability at December 31, 2020.~~

Transaction price allocated to the remaining performance obligations

The estimated aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at September 30, ~~2022~~2023 is ~~$1,061.8~~$907.6 million, which is expected to be recognized over the next 1 to 6 years. This amount consists of minimums on certain master services agreements, professional service fees for implementation or set up activities related to managed services and maintenance services typically recognized over the life of the contract, and professional service fees for customizations or development of on-premise licensing agreements, which are recognized over time based on inputs relative to the total expected inputs to satisfy a performance obligation.

Note 12 – Current Expected Credit Losses

Allowance for Current Expected Credit Losses

Trade receivables from contracts with customers are financial assets analyzed by the Company under the expected credit loss model. To measure expected credit losses, trade receivables are grouped based on shared risk characteristics (i.e., the relevant industry sector and customer's geographical location) and days past due (i.e., delinquency status), while considering the following:

•Customers in the same geographical location share similar risk characteristics associated with the macroeconomic environment of their country.

•The Company has two main industry sectors: private and governmental. The private pool is comprised mainly of leading financial institutions, merchants and corporations, while the governmental pool is comprised of government agencies. The governmental customers possess different risk characteristics than private customers because although all invoices are due 30 days after issuance, governmental customers usually pay within 60 to 90 days after issuance (i.e., approximately 30 to 60 more days than private customers).

•The expected credit loss rate is likely to increase as receivables move to older aging buckets. The Company used the following aging categories to estimate the risk of delinquency status: (i) 0 days past due; (ii) 1-30 days past due; (iii) 31-60 days past due; (iv) 61-90 days past due; and (v) over 90 days past due.

Table of Contents

The credit losses of the Company’s trade receivables have been low historically and most balances are collected within one year. Therefore, the Company determined that the expected loss rates should be calculated using the historical loss rates adjusted by macroeconomic factors. The historical rates are calculated for each of the aging categories used for pooling trade receivables. To determine the collected portion of each bucket, the collection time of each trade receivable is identified, to estimate the proportion of outstanding balances per aging bucket that ultimately will not be collected. This is used to determine the expectation of losses based on the history of uncollected trade receivables once the specific past due period is surpassed. The historical rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the receivables by applying a country risk premium as the forward-looking macroeconomic factor. Specific reserves are established for certain customers for which collection is doubtful.

Rollforward of the Allowance for Expected Current Credit Losses

The following table provides information about the allowance for expected current credit losses on trade receivables.


(In thousands)	(In thousands)	September 30, 2022		December 31, 2021		(In thousands)	September 30, 2023		December 31, 2022
Balance at beginning of period	Balance at beginning of period	$	2,523	$	2,401	Balance at beginning of period	$	2,159	$	2,523
Current period provision for expected credit losses	Current period provision for expected credit losses	649		819		Current period provision for expected credit losses	956		754
Write-offs	Write-offs	(135)		(698)		Write-offs	(197)		(1,268)
Recoveries of amounts previously written-off	Recoveries of amounts previously written-off	150		1		Recoveries of amounts previously written-off	17		150
Balance at end of period	Balance at end of period	$	3,187	$	2,523	Balance at end of period	$	2,935	$	2,159

~~Table of Contents~~

The Company does not have a delinquency threshold for writing-off trade receivables. The Company has a formal process for the review and approval of write-offs.

Impairment losses on trade receivables are presented as net impairment losses within cost of revenue, exclusive of depreciation and amortization in the unaudited condensed consolidated statements of income and comprehensive income. Subsequent recoveries of amounts previously written-off, when applicable, are credited against the allowance for expected current credit losses within accounts receivable, net on the unaudited condensed consolidated balance sheets.

Note 13 – Income Tax

The components of income tax expense for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, consisted of the following:


		Three months ended September,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
(In thousands)	(In thousands)	2022		2021		2022		2021		(In thousands)	2023		2022		2023		2022

Current tax provision	Current tax provision	$	9,537	$	7,306	$	24,610	$	15,593	Current tax provision	$	8,166	$	9,537	$	21,037	$	24,610
Deferred tax benefit	Deferred tax benefit	(489)		(172)		(1,699)		(1,119)		Deferred tax benefit	(13,024)		(489)		(16,491)		(1,699)
Income tax expense		$	9,048	$	7,134	$	22,911	$	14,474
Income tax (benefit) expense										Income tax (benefit) expense	$	(4,858)	$	9,048	$	4,546	$	22,911

The Company conducts operations in Puerto Rico, the United States, and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the government of Puerto Rico as well as foreign jurisdictions. The following table presents the components of income tax expense for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, and its segregation based on location of operations:

Three months ended September 30, Nine months ended September 30,
(In thousands) 2022 2021 2022 2021
Current tax provision (benefit)
Puerto Rico $ 6,318 $ 2,328 $ 11,809 $ 3,363
United States 44 57 107 132
Foreign countries 3,175 4,921 12,694 12,098
Total current tax provision $ 9,537 $ 7,306 $ 24,610 $ 15,593
Deferred tax (benefit) provision
Puerto Rico $ 719 $ (258) $ (321) $ (778)
United States 54 116 9 (71)
Foreign countries (1,262) (30) (1,387) (270)
Total deferred tax benefit $ (489) $ (172) $ (1,699) $ (1,119)

Table of Contents


	Three months ended September 30,				Nine months ended September 30,
(In thousands)	2023		2022		2023		2022

Current tax provision
Puerto Rico	$	1,851	$	6,318	$	5,626	$	11,809
United States	80		44		138		107
Foreign countries	6,235		3,175		15,273		12,694
Total current tax provision	$	8,166	$	9,537	$	21,037	$	24,610
Deferred tax benefit
Puerto Rico	$	(11,169)	$	719	$	(11,593)	$	(321)
United States	34		54		38		9
Foreign countries	(1,889)		(1,262)		(4,936)		(1,387)
Total deferred tax benefit	$	(13,024)	$	(489)	$	(16,491)	$	(1,699)

Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements.

As of September 30, ~~2022,~~2023, the Company ~~has $113.3~~had $130.6 million of unremitted earnings from foreign subsidiaries, compared to ~~$99.1~~$115.5 million as of December 31, ~~2021.~~2022. The Company has not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested.

As of September 30, ~~2022,~~2023, the gross deferred tax asset amounted to ~~$18.6~~$29.9 million and the gross deferred tax liability amounted to ~~$19.4~~$20.0 million, compared to ~~$22.3~~$17.9 million and ~~$16.3~~$20.7 million, respectively, as of December 31, ~~2021.~~2022. As of September 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, there is a valuation allowance against the gross deferred tax asset of approximately ~~$1.8~~$2.4 million and ~~$1.4~~$1.6 million, respectively.

During the quarter ended September 30, 2022, the Company released $3.6 million of the previously recorded Puerto Rico liability for uncertain tax positions related to the net operating loss created by transaction costs from mergers and acquisitions as a result of the expiration of the statute of limitations.

Income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

~~Table of Contents~~


		Nine months ended September 30,					Nine months ended September 30,
(In thousands)	(In thousands)	2022		2021		(In thousands)	2023		2022
Computed income tax at statutory rates	Computed income tax at statutory rates	$	87,402	$	50,411	Computed income tax at statutory rates	$	27,231	$	87,402
Differences in tax rates due to multiple jurisdictions	Differences in tax rates due to multiple jurisdictions	2,612		1,789		Differences in tax rates due to multiple jurisdictions	3,034		2,612
Effect of income subject to tax-exemption grant	Effect of income subject to tax-exemption grant	(26,262)		(35,121)		Effect of income subject to tax-exemption grant	(24,697)		(26,262)
Effect of the gain on sale of a business	Effect of the gain on sale of a business	(39,645)		—		Effect of the gain on sale of a business	—		(39,645)
Unrecognized tax (benefit) expense		(3,472)		(3,475)
Unrecognized tax expense						Unrecognized tax expense	103		(3,472)
Excess tax benefits on share-based compensation	Excess tax benefits on share-based compensation	169		(1,027)		Excess tax benefits on share-based compensation	11		169
Tax credits for research and development activities						Tax credits for research and development activities	(884)		—

Other, net	Other, net	2,107		1,897		Other, net	(252)		2,107
Income tax expense	Income tax expense	$	22,911	$	14,474	Income tax expense	$	4,546	$	22,911

Note 14 – Net Income Per Common Share

The reconciliation of the numerator and denominator of the income per common share is as follows:

Three months ended September 30, Nine months ended September 30,
(In thousands, except per share information) 2022 2021 2022 2021
Net income available to EVERTEC, Inc.’s common shareholders $ 137,814 $ 35,314 $ 210,301 $ 120,014
Weighted average common shares outstanding 66,398,547 71,969,856 69,906,483 72,082,082
Weighted average potential dilutive common shares (1)
647,262 906,397 682,432 735,625
Weighted average common shares outstanding - assuming dilution 67,045,809 72,876,253 70,588,915 72,817,707
Net income per common share - basic $ 2.08 $ 0.49 $ 3.01 $ 1.66
Net income per common share - diluted $ 2.06 $ 0.48 $ 2.98 $ 1.65

Table of Contents


	Three Months Ended September 30,				Nine months ended September 30,
(In thousands, except per share information)	2023		2022		2023		2022
Net income available to EVERTEC, Inc.’s common shareholders	$	10,036	$	137,814	$	68,243	$	210,301
Weighted average common shares outstanding	64,648,542		66,398,547		64,886,551		69,906,483
Weighted average potential dilutive common shares (1)	1,130,717		647,262		819,045		682,432
Weighted average common shares outstanding - assuming dilution	65,779,259		67,045,809		65,705,596		70,588,915
Net income per common share - basic	$	0.16	$	2.08	$	1.05	$	3.01
Net income per common share - diluted	$	0.15	$	2.06	$	1.04	$	2.98

(1)Potential common shares consist of common stock issuable under RSUs awards using the treasury stock method.

On February ~~15, 2022,~~16, 2023, April ~~21, 2022~~20, 2023 and July ~~28, 2022,~~20, 2023, respectively the Company's Board declared quarterly cash dividends of $0.05 per share of common stock, which was paid on March ~~25, 2022,~~17, 2023, June ~~3, 2022~~2, 2023 and September ~~2, 2022,~~1, 2023, respectively to stockholders' of record on February ~~25, 2022,~~28, 2023, May ~~2, 2022~~1, 2023 and ~~August 8, 2022,~~July 31, 2023, respectively.

Note 15 – Commitments and Contingencies

EVERTEC is a defendant in a number of legal proceedings arising in the ordinary course of business. Based on the opinion of legal counsel and other factors, management believes that the final disposition of these matters will not have a material adverse effect on the business, results of operations, financial condition, or cash flows of the Company. The Company has identified certain claims ~~as a result of~~in which a loss may be incurred, but in the aggregate the loss would be insignificant. For other claims regarding proceedings that are in an initial phase, the Company is unable to estimate the range of possible loss, if any, but at this time believes that any loss related to such claims will not be material.

Note 16 – Related Party Transactions

In connection with closing of the Popular Transaction on July 1, 2022, the Company terminated the existing stockholder agreement with Popular, which granted Popular certain benefits as a shareholder of the Company. In addition, on August 15, 2022, through a secondary offering, Popular sold its remaining shares of common stock of Evertec and as of that date no longer holds any shares of ~~Evertec~~EVERTEC common stock. ~~Evertec~~EVERTEC is no longer considered a subsidiary of Popular under the Bank Holding Company Act of 1956, as amended (the ~~"Bank~~“Bank Holding Company ~~Act"~~Act”). Given both the termination of the stockholder agreement and that Popular is no longer a shareholder of EVERTEC, management concluded that Popular is no longer a related party as of August 15, 2022.

The following table presents the Company’s transactions with Popular ~~while they were deemed a related party during 2022 and~~ for the three and nine months ended September 30, ~~2021:~~2022 while they were deemed a related party:

~~Table of Contents~~


		Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,		Nine months ended September 30,
(In thousands)	(In thousands)	2022 (1)		2021		2022 (1)		2021		(In thousands)	2022 (1)		2022 (1)
Total revenues	Total revenues	$	22,782	$	60,091	$	153,335	$	182,344	Total revenues	$	22,782	$	153,335
Cost of revenues	Cost of revenues	$	653	$	624	$	2,386	$	2,242	Cost of revenues	$	653	$	2,386
Operating lease cost and other fees	Operating lease cost and other fees	$	807	$	1,958	$	4,433	$	5,482	Operating lease cost and other fees	$	807	$	4,433
Interest earned from affiliate	Interest earned from affiliate									Interest earned from affiliate
Interest income	Interest income	$	231	$	184	$	1,011	$	422	Interest income	$	231	$	1,011

(1)Amounts presented through August 15, 2022.

The Company continues to have revenue concentration with Popular, revenues as a percentage of total revenues were 35% and 40% for the three and nine months ended September 30, 2022, respectively and 41% and 42%, for the comparable periods in 2021, respectively. Accounts receivable from Popular as of September 30, 2022 amounted to $36.4 million.

~~As of the December 31, 2021, EVERTEC had the following balances arising from transactions with related parties:~~


~~(In thousands)~~	~~December 31, 2021~~
~~Cash and restricted cash deposits in affiliated bank~~	$	~~187,602~~
~~Other due to/from affiliate~~
~~Accounts receivable~~	$	~~38,120~~
~~Prepaid expenses and other assets~~	$	~~1,763~~
~~Operating lease right-of-use assets~~	$	~~13,533~~
~~Other long-term assets~~	$	~~2,853~~
~~Accounts payable~~	$	~~5,601~~
~~Contract liabilities~~	$	~~40,982~~
~~Operating lease liabilities~~	$	~~14,019~~

Note 17 – Segment Information

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America (collectively "Payment Services segments"), Merchant Acquiring, and Business Solutions.

Table of Contents

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS") transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial ~~institutions and digital payment services to the government of Puerto Rico)~~institutions), ATH Movil (person-to-person) and ATH Business (person-to-merchant) digital transactions and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file.

~~Table of Contents~~

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network of ATMs and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as licensed software solutions for risk and fraud management and card payment processing. For network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from transaction switching, ~~and~~ processing fees, and the leasing of POS ~~devices and network fees.~~devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network hosting and management, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e., savings or checking accounts, loans, etc.), server capacity usage or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring.

In addition to the four operating segments described above, management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented within the “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and Other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•marketing,

•corporate finance and accounting,

•human resources,

•legal,

•risk management functions,

•internal audit,

•corporate debt related costs,

•non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,

•intersegment revenues and expenses, and

•other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

Table of Contents

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. Effective for the quarter ended March 31, 2023, the Company modified the manner in which it calculates and reports Adjusted EBITDA presented to the CODM for assessing segment performance to exclude the impact of non-cash unrealized gains and losses from foreign currency remeasurement. Adjusted EBITDA is defined as EBITDA further adjusted to exclude ~~unusual~~certain non-cash unrealized items and ~~other adjustments.~~unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with ASC Topic 280, Segment Reporting,, given that it is reported to the CODM for purposes of allocating resources. The Company has recast prior periods to conform with the modified definition of Adjusted EBITDA. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and Adjusted EBITDA. As such, segment assets are not disclosed in the notes to the ~~accompanying~~ unaudited condensed consolidated financial statements.

~~Table of Contents~~

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated:


		Three months ended September 30, 2022													Three Months Ended September 30, 2023
(In thousands)	(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total		(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total

Revenues	Revenues	$	44,592	$	33,741	$	36,911	$	49,306	$	(18,747)	$	145,803	Revenues	$	51,600	$	46,155	$	40,557	$	56,522	$	(21,636)	$	173,198
Operating costs and expenses	Operating costs and expenses	$	26,960	$	28,513	$	25,261	$	38,522	$	2,729	$	121,985	Operating costs and expenses	28,402		38,608		26,997		40,643		(1,014)		133,636
Depreciation and amortization	Depreciation and amortization	$	5,116	$	4,104	$	1,045	$	3,745	$	5,702	$	19,712	Depreciation and amortization	6,203		4,898		1,078		4,478		5,262		21,919
Non-operating income (expenses)	Non-operating income (expenses)	$	385	$	(7,094)	$	348	$	136,218	$	(932)	$	128,925	Non-operating income (expenses)	110		(2,148)		—		69		(28,712)		(30,681)
EBITDA	EBITDA	23,133		2,238		13,043		150,747		(16,706)		172,455		EBITDA	29,511		10,297		14,638		20,426		(44,072)		30,800
Compensation and benefits (2)	Compensation and benefits (2)	1,557		972		498		503		2,141		$	5,671	Compensation and benefits (2)	663		859		662		696		4,090		6,970
Transaction, refinancing and other fees (3)	Transaction, refinancing and other fees (3)	330		—		325		(134,974)		8,567		$	(125,752)	Transaction, refinancing and other fees (3)	269		3,451		—		—		34,363		38,083
(Gain) loss on foreign currency remeasurement (4)														(Gain) loss on foreign currency remeasurement (4)	(87)		2,885		—		—		8		2,806
Adjusted EBITDA	Adjusted EBITDA	$	25,020	$	3,210	$	13,866	$	16,276	$	(5,998)	$	52,374	Adjusted EBITDA	$	30,356	$	17,492	$	15,300	$	21,122	$	(5,611)	$	78,659

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $13.5 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $4.4 million from Payment Services- Latin America to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $3.7 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation and severance payments.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, the foreign currency swap loss and the elimination of unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of dividends received.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

Table of Contents


	Three Months Ended September 30, 2022
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total

Revenues	$	44,592	$	33,741	$	36,911	$	49,306	$	(18,747)	$	145,803
Operating costs and expenses	26,960		28,513		25,261		38,522		2,729		121,985
Depreciation and amortization	5,116		4,104		1,045		3,745		5,702		19,712
Non-operating income (expenses)	385		(7,094)		348		136,218		(932)		128,925
EBITDA	23,133		2,238		13,043		150,747		(16,706)		172,455
Compensation and benefits (2)	1,557		972		498		503		2,141		5,671
Transaction, refinancing and other fees (3)	330		—		325		(134,974)		8,581		(125,738)
Loss on foreign currency remeasurement (4)	68		7,725		—		—		(14)		7,779
Adjusted EBITDA	$	25,088	$	10,935	$	13,866	$	16,276	$	(5,998)	$	60,167

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $12.3 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $3.7 million from Payment ~~Services-~~Services - Latin America to both Payment ~~Services-~~Services - Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $2.8 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation and severance payments.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, the gain from the Popular transaction and the elimination of ~~non-cash~~unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of dividends received.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.


		Three months ended September 30, 2021													Nine months ended September 30, 2023
(In thousands)	(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total		(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total

Revenues	Revenues	$	38,773	$	26,792	$	37,606	$	58,134	$	(15,422)	$	145,883	Revenues	$	150,824	$	120,548	$	122,152	$	169,188	$	(62,624)	$	500,088
Operating costs and expenses	Operating costs and expenses	21,420		22,209		19,922		37,412		(2,097)		98,866		Operating costs and expenses	85,019		101,586		81,302		118,653		(897)		385,663
Depreciation and amortization	Depreciation and amortization	3,989		2,809		1,010		4,691		6,246		18,745		Depreciation and amortization	18,178		13,002		3,357		13,436		15,707		63,680
Non-operating income (expenses)	Non-operating income (expenses)	203		1,844		281		551		(2,322)		557		Non-operating income (expenses)	590		(3,643)		308		667		(27,902)		(29,980)
EBITDA	EBITDA	21,545		9,236		18,975		25,964		(9,401)		66,319		EBITDA	84,573		28,321		44,515		64,638		(73,922)		148,125
Compensation and benefits (2)	Compensation and benefits (2)	260		755		255		70		2,153		3,493		Compensation and benefits (2)	2,033		2,510		2,054		2,226		12,693		21,516
Transaction, refinancing and other fees (3)	Transaction, refinancing and other fees (3)	—		—		—		—		(42)		(42)		Transaction, refinancing and other fees (3)	850		3,704		—		—		38,741		43,295
(Gain) loss on foreign currency remeasurement (4)														(Gain) loss on foreign currency remeasurement (4)	(41)		7,372		—		—		6		7,337
Adjusted EBITDA	Adjusted EBITDA	$	21,805	$	9,991	$	19,230	$	26,034	$	(7,290)	$	69,770	Adjusted EBITDA	$	87,415	$	41,907	$	46,569	$	66,864	$	(22,482)	$	220,273

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the ~~$10.8~~$39.9 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, ~~and~~ intercompany software developments and transaction processing of ~~$2.4~~$12.8 million from Payment Services- Latin America to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of ~~$2.2~~$9.9 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based ~~compensation.~~compensation and severance payments.

(3)Primarily represents fees and expenses associated with corporate transactions as defined in the ~~2018~~ Credit Agreement, the foreign currency swap loss and the elimination of ~~non-cash~~unrealized equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A, net of dividends received.

(4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

2423

Table of Contents


		Nine months ended September 30, 2022													Nine months ended September 30, 2022
(In thousands)	(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total		(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Corporate and Other (1)		Total

Revenues	Revenues	$	130,678	$	93,308	$	111,079	$	176,620	$	(55,063)	$	456,622	Revenues	$	130,678	$	93,308	$	111,079	$	176,620	$	(55,063)	$	456,622
Operating costs and expenses	Operating costs and expenses	76,920		77,132		68,288		117,747		25		340,112		Operating costs and expenses	76,920		77,132		68,288		117,747		25		340,112
Depreciation and amortization	Depreciation and amortization	15,062		9,628		3,104		12,787		17,851		58,432		Depreciation and amortization	15,062		9,628		3,104		12,787		17,851		58,432
Non-operating income (expenses)	Non-operating income (expenses)	928		(3,365)		980		137,542		(3,560)		132,525		Non-operating income (expenses)	928		(3,365)		980		137,542		(3,560)		132,525
EBITDA	EBITDA	69,748		22,439		46,875		209,202		(40,797)		307,467		EBITDA	69,748		22,439		46,875		209,202		(40,797)		307,467
Compensation and benefits (2)	Compensation and benefits (2)	2,569		2,758		1,284		1,503		7,241		15,355		Compensation and benefits (2)	2,569		2,758		1,284		1,503		7,241		15,355
Transaction, refinancing and other fees (3)	Transaction, refinancing and other fees (3)	330		—		325		(134,990)		12,647		(121,688)		Transaction, refinancing and other fees (3)	330		—		325		(134,990)		11,615		(122,720)
Loss on foreign currency remeasurement (4)														Loss on foreign currency remeasurement (4)	230		5,596		—		—		1,032		6,858
Adjusted EBITDA	Adjusted EBITDA	$	72,647	$	25,197	$	48,484	$	75,715	$	(20,909)	$	201,134	Adjusted EBITDA	$	72,877	$	30,793	$	48,484	$	75,715	$	(20,909)	$	206,960

(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $36.5 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, ~~and~~ intercompany software developments and transaction processing of $10.7 million from Payment ~~Services -~~Services- Latin America to both Payment ~~Services -~~Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $7.9 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

(2)Primarily represents share-based compensation and severance payments.

Nine months ended September 30, 2021
(In thousands) Payment
Services -
Puerto Rico & Caribbean Payment
Services -
Latin America Merchant
Acquiring, net Business
Solutions
Corporate and Other (1)
Total
Revenues $ 113,626 $ 77,641 $ 106,808 $ 179,438 $ (42,954)

$ 434,559
Operating costs and expenses 61,270 63,020 55,762 110,276 (2,077)

$ 288,251
Depreciation and amortization 11,813 8,695 2,631 14,085 18,867 $ 56,091
Non-operating income (expenses) 618 5,348 835 2,494 (5,269) $ 4,026
EBITDA 64,787 28,664 54,512 85,741 (27,279) 206,425
Compensation and benefits (2)
781 2,321 781 1,193 6,204 $ 11,280
Transaction, refinancing and other fees (3)
660 — — (647) 1,202 $ 1,215
Adjusted EBITDA $ 66,228 $ 30,985 $ 55,293 $ 86,287 $ (19,873) $ 218,920

~~(1)~~(4)~~Corporate~~Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $31.2 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $6.6 million from Payment Services - Latin America to both Payment Services - Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $5.1 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.

~~(2)Primarily represents share-based compensation and severance payments.~~

~~(3)Primarily represents fees and expenses associated with corporate transactions as defined~~liabilities denominated in the 2018 Credit Agreement and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A. net dividends received, a software impairment charge and a gain from the sale of the asset.non-functional currencies.

~~Table of Contents~~

The reconciliation of ~~EBITDA to~~ consolidated net income to EBITDA is as follows:


		Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
(In thousands)	(In thousands)	2022		2021		2022		2021		(In thousands)	2023		2022		2023		2022
Total EBITDA		$	172,455	$	66,319	$	307,467	$	206,425
Less:
Income tax expense		9,048		7,134		22,911		14,474
Net Income										Net Income	$	9,956	$	137,739	$	68,069	$	210,161
Add:										Add:
Income tax (benefit) expense										Income tax (benefit) expense	(4,858)		9,048		4,546		22,911
Interest expense, net	Interest expense, net	5,956		5,180		15,963		15,905		Interest expense, net	3,783		5,956		11,830		15,963
Depreciation and amortization	Depreciation and amortization	19,712		18,745		58,432		56,091		Depreciation and amortization	21,919		19,712		63,680		58,432
Net income		$	137,739	$	35,260	$	210,161	$	119,955
Total EBITDA										Total EBITDA	$	30,800	$	172,455	$	148,125	$	307,467

Note 18 – Subsequent Events

On October ~~20, 2022,~~19, 2023, the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. The dividend will be paid on December ~~2, 2022~~1, 2023 to stockholders of record as of the close of business on ~~November 1, 2022.~~October 30, 2023. The Board anticipates declaring this dividend in future quarters on a regular basis; however future declarations of dividends are subject to the Board’s approval and may be adjusted as business needs or market conditions change.

On July 20, 2023, the Company entered into a Merger Agreement and Other Covenants (the “Merger Agreement”), by and among Evertec Brasil Informática S.A, a wholly-owned subsidiary of Evertec (“Evertec BR”), Sinqia S.A., a publicly held company incorporated and existing in accordance with the laws of the Federative Republic of Brazil (“Sinqia”), and certain other Key Shareholders (as defined therein), as shareholders of Sinqia. The Board and the board of directors of Sinqia (the “Sinqia Board”) have unanimously approved the Merger Agreement. Pursuant to and on the terms and subject to the conditions set forth in the Merger Agreement, a business combination of Evertec BR and Sinqia (the "Sinqia Transaction") will be carried out through a merger of all shares issued by Sinqia into Evertec BR pursuant to provisions of the Brazilian Corporations Law and other applicable Brazilian laws and regulations (the “Merger of Shares”), and as a result of such Merger of Shares, Sinqia will become a wholly-owned subsidiary of Evertec BR.

Table of Contents

On September 14, 2023, the Merger Transaction received Sinqia shareholder approval, a closing condition in the Merger Agreement. The Sinqia Transaction is expected to close in the fourth quarter of 2023 and is subject to the satisfaction or waiver of customary closing conditions. Evertec intends to finance the Sinqia Transaction with cash on hand and committed financing of $600 million.

On September 12, 2023, the Company formally registered a Brazilian Depositary Receipts ("BDR") program with the Brazilian securities and exchange commission ("BDR Program"), in order to have securities backed by Evertec shares trading in the B3, the Brazilian stock exchange. The BDR Program has not been funded, no Evertec common stock underlying such BDRs has been issued, and no BDRs are actively trading on the B3. On October 24, 2023, the Company submitted to the NYSE a supplemental application review form requesting to reserve 1,168,555 shares of common stock, with a par value of $0.01 underlying 1,168,555 BDRs which will be issued as consideration pursuant to the Merger Agreement. October 27, 2023, the reserve was approved by the NYSE.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) covers: (i) the results of operations for the three and nine months ended ~~months ended~~ September 30, ~~2022~~2023 and ~~2021~~2022 and (ii) the financial condition as of September 30, ~~2022.~~2023. You should read the following discussion and analysis in conjunction with the audited consolidated financial statements (the “Audited Consolidated Financial Statements”) and related notes for the ~~fiscal~~ year ended December 31, ~~2021,~~2022, included in the Company’s Annual Report on Form 10-K ~~("2021 Form 10-K")~~ as filed with the SEC on February ~~25, 2022~~24, 2023 and with the unaudited condensed consolidated financial statements (the “Unaudited Condensed Consolidated Financial Statements”) and related notes appearing elsewhere herein. This MD&A contains forward-looking statements ~~based upon current expectations~~ that involve risks and uncertainties. Our actual results may differ from those indicated in the forward-looking ~~statements as a result of various factors, including those set forth in the section titled "Risk Factors" in our 2021 Form 10-K, as may be updated from time to time in our other filings with the SEC.~~statements. See “Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions associated with these statements.

Except as otherwise indicated or unless the context otherwise requires, (a) the terms “EVERTEC,” “we,” “us,” “our,” “our Company” and “the Company” refer to EVERTEC, Inc. and its subsidiaries on a consolidated basis, (b) the term “Holdings” refers to EVERTEC Intermediate Holdings, LLC, but not any of its subsidiaries and (c) the term “EVERTEC Group” refers to EVERTEC Group, LLC and its predecessor entities and their subsidiaries on a consolidated basis. EVERTEC Inc.’s subsidiaries include Holdings, EVERTEC Group, EVERTEC Dominicana, SAS, Evertec Chile Holdings SpA (formerly known as Tecnopago SpA), Evertec Chile SpA (formerly known as EFT Group SpA), Evertec Chile Global SpA (formerly known as EFT Global Services SpA), Evertec Chile Servicios Profesionales SpA (formerly known as EFT Servicios Profesionales SpA), EFT Group S.A., Tecnopago España SL, Paytrue S.A., Caleidon, S.A., Evertec Brasil Informática Ltda. (formerly known as Paytrue Solutions Informática Ltda.), EVERTEC Panamá, S.A., EVERTEC Costa Rica, S.A. (“EVERTEC CR”), EVERTEC Guatemala, S.A., Evertec Colombia, SAS (formerly known as Processa, SAS), EVERTEC USA, LLC, Evertec Placetopay, SAS (formerly known as EGM Ingeniería sin Fronteras, S.A.S. ("PlacetoPay")), BBR, SpA, BBR Perú, S.A.C., Paysmart Pagamentos Eletronicos Ltda and EVERTEC México Servicios de Procesamiento, S.A. de C.V. Neither EVERTEC nor Holdings conducts any operations other than with respect to its indirect or direct ownership of EVERTEC Group.

Executive Summary

EVERTEC is a leading full-service transaction-processing business in Latin America, Puerto Rico, and the Caribbean, ~~and Latin America,~~ providing a broad range of merchant acquiring, payment services and business process management services. ~~We believe that~~According to the September 2022 Nilson Report, we are one of the largest merchant acquirers in Latin America based on total number of transactions and we believe we are the largest merchant acquirer in the Caribbean. We serve 26 countries out of 12 offices, including our headquarters in Puerto Rico. We own and operate the ATH network, which we believe is one of the leading personal identification number ~~("PIN"~~(“PIN”) debit ~~and automated teller machine ("ATM")~~ networks in ~~the Caribbean and~~ Latin America. We ~~manage~~process over six billion transactions annually through a system of electronic payment networks in Puerto Rico and ~~offer~~Latin America and a comprehensive suite of services for core banking, cash processing, and fulfillment in Puerto ~~Rico, that process over three billion transactions annually.~~Rico. Additionally, we offer technology outsourcing inand payment transactions fraud monitoring to all the regions we serve. We serve a diversified customer base of leading financial institutions, merchants, corporations, and government agencies with “mission-critical” technology solutions that enable them to issue, process and accept transactions securely. We believe our business is well-positioned to continue to expand across the fast-growing Latin American region.

We are differentiated, in part, by our diversified business model, which enables us to provide our varied customer base with a broad range of transaction-processing services from a single source across numerous channels and geographic markets. We believe this capability provides several competitive advantages that will enable us to continue to penetrate our existing customer base with complementary new services, win new customers, develop new sales channels, and enter new markets. We believe these competitive advantages include:

•Our ability to provide competitive products;

•Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors;

•Our ability to ~~leverage proprietary IP that enables us to be nimble and flexible when it comes to client and country requirements;~~

•~~Our ability to put forth Spanish speaking developers in front of our Spanish speaking customers making communication much more effective and integrations more efficient;~~

•~~Our ability to~~ serve customers with disparate operations ~~across~~in several geographies with technology solutions that enable them to manage their business as one enterprise; and

•Our ability to capture and analyze data across the transaction-processing value chain and use that data to provide value-added services that are differentiated from those offered by pure-play vendors that serve only one portion of the transaction-processing value chain (such as only merchant acquiring or payment services).

~~Table of Contents~~

Our broad suite of services spans the entire ~~transaction-processing~~transaction processing value chain and includes a range of front-end customer-facing solutions such as the electronic capture and authorization of transactions at the point-of-sale for both card present transactions and card not present transactions, as well as back-end support services such as the clearing and settlement of

Table of Contents

transactions and account reconciliation for card issuers. These include: (i) merchant acquiring services, which enable point of sales (“POS”) and e-commerce merchants to accept and process electronic methods of payment such as debit, credit, prepaid and electronic benefit transfer (“EBT”) cards; (ii) payment processing services, which enable financial institutions and other issuers to manage, support and facilitate the processing for credit, debit, prepaid, automated teller machines (“ATM”) and EBT card programs; and (iii) business process management solutions, which provide “mission-critical” technology solutions such as core bank processing, as well as IT outsourcing and cash management services to financial institutions, corporations and governments. We provide these services through scalable, end-to-end technology platforms that we manage and operate in-house and that generate significant operating efficiencies that enable us to maximize profitability.

We sell and distribute our services primarily through a proprietary direct sales force with established customer relationships. We continue to pursue ~~both organic and inorganic opportunities such as acquisitions,~~ joint ventures and merchant acquiring alliances. We benefit from an attractive business model, the hallmarks of which are recurring revenue, scalability, significant operating margins and moderate capital expenditure requirements. Our revenue is predominantly recurring in nature because of the mission-critical and embedded nature of the services we provide. In addition, we generally ~~negotiate~~enter into multi-year contracts with our customers. We believe our business model should enable us to continue to grow our business organically in the primary markets we serve without significant incremental capital expenditures.

Relationship with Popular

On September 30, 2010, EVERTEC Group entered into a 15-year MSA, and several related agreements with Popular. ~~Under the terms of the MSA, Popular agreed to use Evertec services on an ongoing exclusive basis for the duration of the agreement.~~ On July 1, 2022, we modified and extended the main commercial agreements with Popular, ~~which had initial terms ending in 2025,~~ including a 10-year extension of the Merchant Acquiring Independent Sales Organization Agreement (as amended, the “A"A&R ISO ~~Agreement”~~Agreement"), a 5-year extension of the ATH Network Participation Agreement and a 3-year extension of the MSA (the "A&R ~~MSA~~ISO Agreement"). The A&R ISO Agreement, which ~~sets~~defines our merchant acquiring relationship with Popular, now includes revenue sharing provisions with Popular. The MSA modifications also include the elimination of the exclusivity requirement, the inclusion of annual MSA minimums through September 30, 2028, a 10% ~~fee~~ discount on certain MSA services beginning in October of 2025 and adjustments to the ~~existing~~ CPI pricing escalator clause. On the same date, we also sold to Popular certain assets in exchange for 4.6 million shares of ~~Evertec~~EVERTEC common stock owned by ~~Popular. As part of this transaction,~~ Popular ~~agreed to take certain actions after closing to ensure that Evertec was no longer deemed a “subsidiary” of Popular for purposes of~~(collectively with the ~~Bank Holding Company Act by 90 days following~~contract amendments, the ~~closing, including selling its shares of Evertec common stock in the open market and, if necessary, converting certain Evertec common stock into non-voting stock to reduce its voting interest to 4.5%~~"Popular Transaction"). On August 15, 2022, through a secondary offering, Popular sold its remaining shares of ~~Evertec common stock and as of this date no longer holds any shares of Evertec~~EVERTEC common stock. ~~Evertec~~EVERTEC is no longer ~~considered~~deemed a subsidiary of Popular under the Bank Holding Company Act.

~~Results of Operations~~

~~Comparison of~~ Popular continues to be the ~~three~~Company's largest customer and for the nine months ended September 30, ~~2022 and 2021~~

Three months ended September 30,
In thousands 2022 2021 Variance
Revenues $ 145,803 $ 145,883 $ (80) — %
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization 76,272 62,995 13,277 21 %
Selling, general and administrative expenses 26,001 17,126 8,875 52 %
Depreciation and amortization 19,712 18,745 967 5 %
Total operating costs and expenses 121,985 98,866 23,119 23 %
Income from operations $ 23,818 $ 47,017 $ (23,199) (49) %
2023 approximately 36% of our revenues were generated from this relationship.

2023 Developments

Pursuant to and on the terms and subject to the conditions set forth in the Merger Agreement,a business combination of Evertec BR and Sinqia will be carried out through a merger of all shares issued by Sinqia into Evertec BR pursuant to provisions of the Brazilian Corporations Law (the “Merger of Shares”), and as a result of such Merger of Shares, Sinqia will become a wholly-owned subsidiary of Evertec BR.

At the effective time of the Merger of Shares, each common share of Sinqia (the “Sinqia Common Shares”), issued and outstanding immediately prior to the Merger of Shares will be exchanged for (a) one class A mandatorily redeemable preferred share issued by Evertec BR (“Evertec BR New Class A Shares”), and (b) one class B mandatorily redeemable preferred share issued by Evertec BR (“Evertec BR New Class B Shares” and, jointly with Evertec BR New Class A Shares, the “Evertec BR New Shares”). Immediately upon implementation of the Merger of Shares, all Evertec BR New Shares delivered to the then shareholders of Sinqia will be automatically redeemed and canceled (the “Redemption”, and together with the Merger of Shares, the “Transaction”), and each then shareholder of Sinqia will be entitled to receive, for each Evertec BR New Class A Share held, (i) twenty-four Reais and forty-seven cents (R$ 24.47), increased by a customary daily “ticking fee” of up to one Reais (R$1.00) per share depending on the timing of the closing and subject to other customary adjustments as set forth in the Merger Agreement, and (ii) Brazilian Depositary Receipts representing 0.014354 underlying share of common stock, par value $0.01 per share, of Evertec. The Transaction is expected to close in the fourth quarter of 2023 and is subject to the satisfaction or waiver of customary closing conditions.

2827

Table of Contents

~~Revenues~~Evertec also obtained financing commitments for the purpose of financing the Transaction and paying related fees and expenses with debt financing in an aggregate principal amount of $600 million (as such amount may be increased). The obligations of the lenders to provide debt financing under the related debt commitment letter are subject to customary terms and conditions.

~~Total revenues for~~On September 14, 2023, the ~~quarter ended September 30, 2022 were $145.8 million, relatively flat when compared with the prior year quarter. Revenue in Puerto Rico was negatively impacted by the close~~Transaction received Sinqia shareholder approval, satisfying one of the ~~Popular Transaction, including the $6.9 million one-time credit granted upon closing. Revenues~~closing conditions in the quarter were also negatively impacted by Hurricane Fiona, primarily the Company's Merchant Acquiring segment. These negative impacts were partially offset by the continued growth of the Company's digital solutions, specifically, ATH Movil Business, increased transaction volumes and one-time hardware and software sales. Additionally, the quarter benefited from revenue generated from the small acquisition completed in the second quarter. Latin America revenue reflected organic growth and revenue contribution from the BBR acquisition completed at the beginning of the quarter.Merger Agreement.

~~Cost~~On September 12, 2023, the Company formally registered a Brazilian Depositary Receipts ("BDR") program with the Brazilian securities and exchange commission ("BDR Program"), in order to have securities backed by Evertec shares trading in the B3, the Brazilian stock exchange. The BDR Program has not been funded, no Evertec common stock underlying such BDRs has been issued, and no BDRs are actively trading on the B3. On October 24, 2023, the Company submitted to the NYSE a supplemental application review form requesting to reserve 1,168,555 shares of ~~Revenues~~common stock, with a par value of $0.01 underlying 1,168,555 BDRs which will be issued as consideration pursuant to the Merger Agreement. October 27, 2023, the reserve was approved by the NYSE.

~~Cost of revenues for the three months ended September 30, 2022 amounted~~This complementary acquisition is expected to $76.3 million, an increase of $13.3 million or 21% when compared to the same period in the prior year. The increase in cost of revenues was primarily driven by an increase in cost of sales mainly due to the new revenue sharing agreement with Popular resulting from the Popular Transaction and costs incurred for hardware sales, an increase in personnel costs, mainly due to increased headcount in Latin America including the added headcount from the BBR acquisition, and an increase in printing supplies which have been impacted by the inflationary environment.

~~Selling, General and Administrative~~

Selling, general and administrative expenses for the three months ended September 30, 2022 amounted to $26.0 million, an increase of $8.9 million or 52% when compared to the same period in the prior year driven by an increase in professional fees related to corporate transactions, including the Popular Transaction related costs.

~~Depreciation and Amortization~~

Depreciation and amortization expense for the three months ended September 30, 2022 amounted to $19.7 million, an increase of $1.0 million or 5% when compared to the same period in the prior year. Increased expense during the three months is driven by the amortization of intangible assets created in connection with acquisitions completed in 2022.

~~Non-Operating Expenses~~

Three months ended September 30,
In thousands 2022 2021 Variance
Interest income $ 807 $ 504 $ 303 60 %
Interest expense (6,763) (5,684) (1,079) (19) %
Earnings of equity method investment 688 411 277 67 %
Loss on foreign currency remeasurement (7,779) (304) (7,475) 2,459 %
Gain on sale of a business 135,642 — 135,642 — %
Other income (expenses) 374 450 (76) (17) %
Total non-operating income (expenses) $ 122,969 $ (4,623) $ 127,592 2,760 %

Non-operating income for the three months ended September 30, 2022 amounted to $123.0 million, an increase of $127.6 million when compared to the same period in the prior year, as it includes the gain from the Popular Transaction of $135.6 million. Non-operating expenses in the quarter also reflect a $7.8 million loss from the remeasurement of assets and liabilities denominated in US dollars, as well as a $1.1 million increase in interest expense due to rising interest rates.

~~Income Tax Expense~~

Three months ended September 30,
In thousands 2022 2021 Variance
Income tax expense $ 9,048 $ 7,134 $ 1,914 27 %

~~Table of Contents~~

Income tax expense for the three months ended September 30, 2022 amounted to $9.0 million, an increase of $1.9 million when compared to the same period in the prior year. The effective tax rate for the period was 6.2%, compared with 16.8% in the 2021 period. The decrease in the effective tax rate was primarily driven by the impact of the Popular Transaction which was taxed at a preferential tax rate and the impact from the reversal of a potential liability for uncertain tax positions as a result of the expiration of the statute of limitation, partially offset by the impact of higher revenues in higher taxed jurisdictions, a shift in the mix of business in Puerto Rico and higher withholding taxes.

~~Comparison of the nine months ended September 30, 2022 and 2021~~

Nine months ended September 30,
In thousands 2022 2021 Variance
Revenues $ 456,622 $ 434,559 $ 22,063 5 %
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization 215,244 182,180 33,064 18 %
Selling, general and administrative expenses 66,436 49,980 16,456 33 %
Depreciation and amortization 58,432 56,091 2,341 4 %
Total operating costs and expenses 340,112 288,251 51,861 18 %
Income from operations $ 116,510 $ 146,308 $ (29,798) (20) %

~~Revenues~~

Total revenues for the nine months ended September 30, 2022 were $456.6 million, an increase of $22.1 million compared to $434.6 million in the prior year. Revenue in Puerto Rico benefited from increased payment transaction volumes in addition to continued growth inenhance the Company's ~~digital solutions, ATH Movil Business, as well as~~growth strategy, diversify the Company’s business, expand the Company’s addressable markets, increase the Company’s product offering, and drive revenue generated from an acquisition completed in the second quarter. Revenue also benefited from the printing contract entered into in June 2021, one-time software sales, partially offset by the impacts from the Popular Transaction, including the $6.9 million one-time credit granted upon closing of the Popular Transaction. Latin America revenue reflected organic growth and the revenue contribution from the BBR acquisition.

~~Cost of Revenues~~

Cost of revenues for the nine months ended September 30, 2022 amounted to $215.2 million, an increase of $33.1 million or 18% when compared to the same period in the prior year. The increase in cost of revenues includes a $4.1 million impairment loss related to a multi-year software development recorded during the second quarter, as well as an increase in personnel costs, mainly due to increased headcount in Latin America including the added headcount from the BBR acquisition, higher equipment expenses for cloud services as utilization continues to grow, an increase in printing supply expense and an increase in cost of sales due to the same factors explained above for the quarter.

~~Selling, General and Administrative~~

Selling, general and administrative expenses for the nine months ended September 30, 2022 amounted to $66.4 million, an increase by $16.5 million or 33% when compared to the same period in the prior year. The increase is driven by the same factors explained above for the quarter.

~~Depreciation and Amortization~~

Depreciation and amortization expense for the nine months ended September 30, 2022 amounted to $58.4 million, an increase of $2.3 million or 5% when compared to the same period in the prior year, mainly due to the same factors explained above for the quarter.

~~Table of Contents~~

~~Non-Operating Expenses~~

Nine months ended September 30,
In thousands 2022 2021 Variance
Interest income $ 2,279 $ 1,343 $ 936 70 %
Interest expense (18,242) (17,248) (994) (6) %
Earnings of equity method investment 2,120 1,307 813 62 %
(Loss) gain on foreign currency remeasurement (6,858) 652 (7,510) (1,152) %
Gain on sale of a business 135,642 — 135,642 — %
Other income (expenses) 1,621 2,067 (446) (22) %
Total non-operating income (expenses) $ 116,562 $ (11,879) $ 128,441 1,081 %

Non-operating income for the nine months ended September 30, 2022 increased by $128.4 million to $116.6 million when compared to the same period in the prior year, primarily driven by the same factors explained above for the quarter, partially offset by a $0.9 million increase in interest income coupled with a $0.8 million increase in earnings from the Company's equity method investment.

~~Income Tax Expense~~

Nine months ended September 30,
In thousands 2022 2021 Variance
Income tax expense $ 22,911 $ 14,474 $ 8,437 58 %

Income tax expense for the nine months ended September 30, 2022 amounted to $22.9 million, an increase of $8.4 million when compared to the same period in the prior year. The effective tax rate for the period was 9.8%, compared with 10.8% in the 2021 period. The decrease in the effective tax rate was driven by the same factors explained above for the quarter.

synergies over time.

Factors and Trends Affecting the Results of Our Operations

The ongoing migration from cash and paper methods of payment to electronic payments continues to benefit the transaction- processing industry globally. We believe that the penetration of electronic payments in the markets in which we operate is significantly lower relative to the U.S. market, which, together with the ongoing shift from cash and paper methods of payment to electronic payments will continue to generate growth opportunities for our business. For example, currently the adoption of banking products, including electronic payments, in the Latin America and Caribbean region is lower relative to the mature U.S. and European markets. We believe that the unbanked and underbanked population in our markets will continue to shrink, and therefore drive incremental penetration and growth of electronic payments in Puerto Rico and other Latin America regions. We also benefit from the outsourcing of technology systems and processes trend for financial institutions and government. Many medium- and small-size institutions in the Latin American markets in which we operate have outdated ~~computer~~ systems and updating these IT legacy systems is financially and logistically challenging, which presents a business opportunity for us.

In recent years, consumer preference has accelerated its shift away from cash and paper payment methods, noting increased demand for omni-channel payment services that facilitate cashless and contactless transactions. The markets in which we operate, particularly Latin America and the Caribbean, continue to grow and consumer preference is driving an increase for electronic payments usage. Latin America is one of the fastest-growing mobile markets globally, with a growing base of tech-savvy customers that demonstrate a preference for credit cards, digital wallets, contactless payments, and other value-added offerings. The region's FinTech sector is driving change via new contactless payment technology, ~~that are~~which is becoming a popular ~~alternatives~~alternative to cash payments. We continue to believe that the attractive characteristics of our markets and our position across multiple services and sectors will continue to drive growth and profitability in our businesses.

~~On July 1, 2022, we closed~~Our payment businesses also generally experience moderate increased activity during the ~~previously announced Popular Transaction,~~traditional holiday shopping periods and around other nationally recognized holidays, which includes extensions and amendments to the main commercial agreements with Banco Popular. The extension of the A&R ISO Agreement includes a revenue sharing provision which will be treated as an expense and has resulted, and we expect will continue to result in a decline to the Merchant Acquiring Segment Adjusted EBITDA and margin. The extension of the MSA includes a reduction in the CPI cap from 5% to 1.5%, as well as a retroactive one-time credit for the 5% CPI price increase applied to certain services since October

~~Table of Contents~~

1, 2021 through closing, both of which negatively impacted our results of operations, and we expect will continue to negatively impact revenue and consequently, margin of our Business Solutions Segment and, to a lesser extent, the Payment Services – Puerto Rico Segment. Additionally, as part of the amendments to the MSA, there will be contractual revenue minimums through 2028. As part of the Popular Transaction, we also sold certain assets from our Business Solutions Segment to Banco Popular, which has resulted, and we expect will continue to result in a reduction in revenue and margin for this segment.follow consumer spending patterns.

Finally, our financial condition and results of operations are, in part, dependent on the economic and general conditions of the geographies in which we operate. Rising interest rates, inflationary ~~pressure~~pressures, foreign currency fluctuations and economic uncertainty in the markets in which we operate may affect consumer confidence, which could result in a decrease in consumer spending and an impact to our financial results.

Table of Contents

Results of Operations

Comparison of the three months ended September 30, 2023 and 2022


	Three months ended September 30,
In thousands	2023		2022		Variance

Revenues	$	173,198	$	145,803	$	27,395	19	%
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization	81,280		76,272		5,008		7	%
Selling, general and administrative expenses	30,437		26,001		4,436		17	%
Depreciation and amortization	21,919		19,712		2,207		11	%
Total operating costs and expenses	133,636		121,985		11,651		10	%
Income from operations	$	39,562	$	23,818	$	15,744	66	%

Revenues

Total revenue for the quarter ended September 30, 2023 was $173.2 million, an increase of 19% compared with $145.8 million in the same period in the prior year, reflecting growth across all of the Company's segments. Merchant acquiring revenue growth was a result of an increase in sales volume and spread, and the continued benefit from pricing initiatives. Payment processing revenues in Puerto Rico continue to reflect an increase in transaction volumes as well as continued growth in ATH Movil revenues, primarily ATH Business. Payment processing LATAM revenue benefited from a $6.3 million catch-up adjustment related to the Company's processing contract with Getnet Chile as the Company now estimates that minimums on the contract will be surpassed. LATAM revenues also benefited from continued organic growth across regions and the contribution from the paySmart acquisition completed in the first quarter of 2023. Business solutions revenue increased mainly due to the impact in the prior year of the $6.9 million one-time credit granted to Popular upon closing of the Popular Transaction in the third quarter of 2022 as well as an increase in hardware and software sales.

Cost of Revenues

Cost of revenues for the three months ended September 30, 2023 amounted to $81.3 million, an increase of $5.0 million or 7% when compared to the same period in the prior year. The increase during the three month period was primarily driven by an increase in personnel costs, mainly due to increased headcount in Latin America including the added headcount from the paySmart acquisition, professional fees and cloud services. These increases were partially offset by recoveries of previously recorded operational losses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2023 amounted to $30.4 million, an increase of $4.4 million or 17% when compared to the same period in the prior year. This increase was mainly driven by an increase in personnel costs as well as an increase in professional fees related to corporate development initiatives.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended September 30, 2023 amounted to $21.9 million, an increase of $2.2 million or 11% when compared to the same period in the prior year. This increase was primarily driven by an increase in amortization of intangible assets created in connection with the paySmart acquisition, as well as an increase in software amortization for internally developed software.

Table of Contents

Non-Operating Expenses


	Three months ended September 30,
In thousands	2023		2022		Variance

Interest income	$	1,926	$	807	$	1,119	139	%
Interest expense	(5,709)		(6,763)		1,054		16	%
Loss on foreign currency remeasurement	(2,806)		(7,779)		4,973		64	%
Loss on foreign currency swap	(29,225)		—		(29,225)		—	%
Earnings of equity method investment	1,197		688		509		74	%
Gain on sale of business	—		135,642		(135,642)		(100)	%
Other income	153		374		(221)		(59)	%
Total non-operating (expenses) income	$	(34,464)	$	122,969	$	(157,433)	128	%

Non-operating expenses for the three months ended September 30, 2023 amounted to $34.5 million of expense compared to income of $123.0 million the comparable period in the prior year. The negative variance was mainly related to the gain on sale of a business of $135.6 million included in the prior year quarter as a result of closing the Popular Transaction and the unrealized loss on foreign currency swap of $29.2 million in the current year quarter. Partially offsetting these decreases was a foreign currency remeasurement loss of $2.8 million in the current quarter compared to a loss of $7.8 million in the prior year quarter and an increase in interest income of $1.1 million and a decrease in interest expense of $1.1 million.

Income Tax Expense


	Three months ended September 30,
In thousands	2023		2022		Variance
Income tax (benefit) expense	$	(4,858)	$	9,048	$	(13,906)	(154)	%

Income tax benefit for the three months ended September 30, 2023 amounted to $4.9 million, a decrease of $13.9 million when compared to the income tax expense in same period in the prior year. The effective tax rate for the period was (95.3)%, compared with 6.2% in the comparable 2022 period. The change in the effective tax rate primarily reflects the impact from the unrealized loss on foreign currency swap of $29.2 million in the current year quarter, which created a deferred tax benefit of $10.9 million, treated as a discrete item, partially offset by the impact of higher revenues in higher taxed jurisdictions, a shift in the mix of business in Puerto Rico and higher withholding taxes. Effective tax rate was also impacted during prior year by the Popular Transaction which was taxed at a preferential tax rate and the reversal of a potential liability for uncertain tax positions as a result of the expiration of the statue of limitation.

Comparison of the nine months ended September 30, 2023 and 2022


	Nine months ended September 30,
In thousands	2023		2022		Variance

Revenues	$	500,088	$	456,622	$	43,466	10	%
Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization	238,149		215,244		22,905		11	%
Selling, general and administrative expenses	83,834		66,436		17,398		26	%
Depreciation and amortization	63,680		58,432		5,248		9	%
Total operating costs and expenses	385,663		340,112		45,551		13	%
Income from operations	$	114,425	$	116,510	$	(2,085)	(2)	%

Revenues

Total revenues for the nine months ended September 30, 2023 was $500.1 million, an increase of 10% compared with $456.6 million in the same period in the prior year. The revenue increase was primarily driven by growth in the Company's payment

Table of Contents

segments, both Puerto Rico and Latin America. Merchant acquiring revenue reflected a higher sales volumes and spread which is mainly due to the continued benefit from pricing initiatives, shift in the card mix, and an increase in sales volumes. Payment processing growth in Puerto Rico was driven by the same factors explained above for the quarter. Payment Services Latin America revenue growth was driven by the same factors explained above for the quarter and revenue contribution from the BBR acquisition completed in the third quarter of 2022. These increases were partially offset by the impact to Business Solutions from the one-time CPI credit that impacted last year results and the assets sold as part of the Popular Transaction in the third quarter of 2022.

Cost of Revenues

Cost of revenues for nine months ended September 30, 2023 amounted to $238.1 million, an increase of $22.9 million or 11% when compared to the same period in the prior year. The increase during the nine month period was primarily driven by the same factors explained above for the quarter along with the revenue sharing agreement with Banco Popular, an increase in personnel costs, mainly due to increased headcount in Latin America including the added headcount from the BBR acquisition and an increase in printing supplies expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for nine months ended September 30, 2023 amounted to $83.8 million, an increase of $17.4 million or 26% when compared to the same period in the prior year due to the same reasons explained for the quarter.

Depreciation and Amortization

Depreciation and amortization expense for the nine months ended September 30, 2023 amounted to $63.7 million, an increase of $5.2 million or 9% when compared to the same period in the prior year. This increase was primarily driven by the same factors explained above for the quarter as well as amortization expense for intangibles created as part of the BBR acquisition.

Non-Operating Expenses


	Nine months ended September 30,
In thousands	2023		2022		Variance

Interest income	$	5,162	$	2,279	$	2,883	127	%
Interest expense	(16,992)		(18,242)		1,250		7	%
Loss on foreign currency remeasurement	(7,337)		(6,858)		(479)		7	%
Loss on foreign currency swap	(29,225)		—		(29,225)		—	%
Earnings of equity method investment	3,828		2,120		1,708		81	%
Gain on sale of business	—		135,642		(135,642)		(100)	%
Other income	2,754		1,621		1,133		70	%
Total non-operating (expenses) income	$	(41,810)	$	116,562	$	(158,372)	136	%

Non-operating (expenses) income for the nine months ended September 30, 2023 amounted to expenses of $41.8 million compared with income of $116.6 million in the same period in the prior year. The negative variance was mainly related to the gain on sale of a business of $135.6 million recorded in the prior year period upon closing of the Popular Transaction and the unrealized loss on foreign currency swap of $29.2 million in the current year, partially offset by an increase of $2.9 million in interest income, $1.3 million decrease in interest expense, $1.7 million increase in earnings from the Company's equity method investment in Contado and $1.1 million increase in other income primarily related to realized gains from foreign currency transactions.

Income Tax Expense


	Nine months ended September 30,
In thousands	2023		2022		Variance
Income tax expense	$	4,546	$	22,911	$	(18,365)	(80)	%

Table of Contents

Income tax expense for the nine months ended September 30, 2023 amounted to $4.5 million, a decrease of $18.4 million when compared to the same period in the prior year. The effective tax rate for the period was 6.3%, compared with 9.8% in the comparable 2022 period. The decrease in the effective tax rate is driven by the same factors explained above for the quarter, coupled with a benefit of a discrete item in Puerto Rico recorded during the quarter ended March 31, 2023.

Segment Results of Operations

~~Table of Contents~~

~~“Corporate~~ “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and Other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•marketing,

•corporate finance and accounting,

Table of Contents

•human resources,

•legal,

•risk management functions,

•internal audit,

•corporate debt related costs,

•non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,

•intersegment revenues and expenses, and

•other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment ~~level.~~level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. Effective for the quarter ended March 31, 2023, the Company modified the manner in which it calculates and reports Adjusted EBITDA presented to the CODM for assessing segment performance to exclude the impact of non-cash unrealized gains and losses from foreign currency remeasurement. Adjusted EBITDA is defined as EBITDA further adjusted to exclude ~~unusual~~certain non-cash unrealized items and ~~other adjustments.~~unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from non-cash unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with ASC Topic 280, Segment Reporting, given that it is reported to the CODM for purposes of allocating resources. The Company has recast prior periods to conform with the modified definition of Adjusted EBITDA. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and ~~adjusted~~Adjusted EBITDA. As such, segment assets are not disclosed in the notes to the ~~accompanying~~ unaudited condensed consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated below.

Comparison of the three months ended September 30, ~~2022~~2023 and ~~2021~~2022

Payment Services - Puerto Rico & Caribbean


		Three months ended September 30,						Three months ended September 30,
In thousands	In thousands	2022			2021				In thousands	2023		2022
Revenues	Revenues	$	44,592		$	38,773			Revenues	$51,600		$44,592
Adjusted EBITDA	Adjusted EBITDA	$	25,020		$	21,805			Adjusted EBITDA	30,356		25,088
Adjusted EBITDA Margin	Adjusted EBITDA Margin	56.1		%	56.2		%		Adjusted EBITDA Margin	58.8	%	56.3	%

Payment Services - Puerto Rico & Caribbean segment revenues for the three months ended September 30, ~~2022~~2023 increased by ~~$5.8~~$7.0 million to ~~$44.6~~$51.6 million when compared to the same period in the prior year. The increase in revenues was primarily driven by an increase in ~~transaction volumes for~~ POS ~~processing, the ongoing~~transactions and continued strong digital payments growth from ATH Movil, ~~and~~primarily the ATH Business, ~~and an increase in issuing services. The revenue increase also includes the impact of the small acquisition completed in the second quarter. The segment continues to benefit from~~as well as increases in transaction processing and monitoring ~~revenue recognized for~~ services provided to the ~~Payment Services -~~ Latin America ~~Segment. These positive impacts were partially offset by the one-time credit granted to Popular.~~segment. Adjusted EBITDA increased by ~~$3.2~~$5.3 million to ~~$25.0~~$30.4 million driven by the increase in revenues and the net effect of operational losses recovered during the quarter partially offset by higher ~~operating expenses.~~professional services.

~~Table of Contents~~

Payment Services - Latin America

Three months ended September 30,
In thousands 2022 2021
Revenues $ 33,741 $ 26,792
Adjusted EBITDA $ 3,210 $ 9,991
Adjusted EBITDA Margin 9.5 % 37.3 %


	Three months ended September 30,
In thousands	2023		2022
Revenues	$46,155		$33,741
Adjusted EBITDA	17,492		10,935
Adjusted EBITDA Margin	37.9	%	32.4	%

Payment Services - Latin America segment revenues for the three months ended September 30, ~~2022~~2023 increased by ~~$6.9~~$12.4 million to ~~$33.7~~$46.2 million when compared to the same period in the prior year. Revenues benefited from a catch-up adjustment related to the processing contract with GetNet Chile of approximately $6.3 million, as the Company now estimates minimums on the contract will be exceeded. The increase was also driven ~~mainly~~ by organic growth ~~in all regions~~ as well as revenue generated from the ~~BBR~~paySmart acquisition completed atin the ~~beginning~~first quarter of 2023. Adjusted EBITDA increased by $6.6 million when compared to the ~~quarter. Furthermore, revenues benefited~~same

Table of Contents

period in the prior year driven by anthe increase in ~~intercompany software developments and transaction processing revenue recognized for services provided to the Payment Services - Puerto Rico & Caribbean segment. Adjusted EBITDA decreased~~revenues partially offset by ~~$6.8 million primarily due to a $7.8 million loss from foreign currency remeasurement of assets and liabilities denominated in US dollars and an increase in~~higher personnel costs, ~~mainly due to higher headcount,~~driven by the added employees from the acquisition, as well as ~~increases~~an increase in ~~fees for~~ transaction processing and monitoring ~~services~~expenses charged from ~~the Payment Services -~~Payments Puerto Rico ~~& Caribbean segment as more transactions are processed in our centralized platforms.~~segment.

Merchant Acquiring


		Three months ended September 30,						Three months ended September 30,
In thousands	In thousands	2022			2021				In thousands	2023		2022
Revenues	Revenues	$	36,911		$	37,606			Revenues	$40,557		$36,911
Adjusted EBITDA	Adjusted EBITDA	$	13,866		$	19,230			Adjusted EBITDA	15,300		13,866
Adjusted EBITDA Margin	Adjusted EBITDA Margin	37.6		%	51.1		%		Adjusted EBITDA Margin	37.7	%	37.6	%

Merchant Acquiring segment revenues for the three months ended September 30, ~~2022 decreased~~2023 increased by ~~$0.7~~$3.6 million to $40.6 million when compared to the same period in the prior year. The revenue increase was primarily driven by a combination of increased sales volume, an increase in overall spread and the continued benefit of certain pricing initiatives. The prior year quarter was impacted by Hurricane Fiona, which disrupted spending patterns in the last two weeks of the quarter. Adjusted EBITDA increased by $1.4 million as compared to the prior year quarter benefited from COVID related federal stimulus and the current year quarter reflects a shift in the mix of sales volume impacting our spread per transaction as well as the negative impact from Hurricane Fiona estimated to be approximately $1.0 million,period. This increase was mainly driven by higher revenues, partially offset by ~~certain pricing initiatives implemented in the second quarter. Adjusted EBITDA decreased by $5.4 million driven by lower revenues, in addition to~~ higher operating expenses, mainly higher processing costs driven by higher number of transactions processed by the ~~revenue sharing agreement with Popular as well as increased transaction processing costs resulting from lower average ticket per transaction.~~Payment Services Puerto Rico segment.

Business Solutions


		Three months ended September 30,						Three months ended September 30,
In thousands	In thousands	2022			2021				In thousands	2023		2022
Revenues	Revenues	$	49,306		$	58,134			Revenues	$56,522		$49,306
Adjusted EBITDA	Adjusted EBITDA	$	16,276		$	26,034			Adjusted EBITDA	21,122		16,276
Adjusted EBITDA Margin	Adjusted EBITDA Margin	33.0		%	44.8		%		Adjusted EBITDA Margin	37.4	%	33.0	%

Business Solutions segment revenues for the three months ended September 30, ~~2022 decreased~~2023 increased by ~~$8.8~~$7.2 million to ~~$49.3~~$56.5 million as compared to the prior year period. This increase was primarily driven by the impact ~~from~~in the ~~Popular Transaction, specifically,~~prior year of the $6.9 million one-time credit granted to Popular upon closing amounting to $6.3 million and the impact from the sale of assets to Popular which the Company estimates at $30 million annually. These negative impacts were partially offset by revenue generated from projects completed in connection with closing of the Popular ~~Transaction. Adjusted EBITDA decreased by $9.8 million to $16.3 million driven by~~Transaction in the ~~decrease in revenues~~third quarter of 2022, as well as an increase in ~~cost of sales~~hardware and software sales. Adjusted EBITDA increased by $4.8 million to $21.1 million as compared to the prior year period. This increase was primarily driven by the higher revenues partially offset by higher operating expenses, ~~mainly cloud services~~including higher equipment and ~~printing supplies, the latter of which has been impacted by the inflationary environment.~~infrastructure expenses.

~~Table of Contents~~

Comparison of the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022

Payment Services - Puerto Rico & Caribbean


		Nine months ended September 30,						Nine months ended September 30,
In thousands	In thousands	2022			2021				In thousands	2023		2022
Revenues	Revenues	$	130,678		$	113,626			Revenues	$150,824		$130,678
Adjusted EBITDA	Adjusted EBITDA	$	72,647		$	66,228			Adjusted EBITDA	87,415		72,877
Adjusted EBITDA Margin	Adjusted EBITDA Margin	55.6		%	58.3		%		Adjusted EBITDA Margin	58.0	%	55.8	%

Payment Services - Puerto Rico & Caribbean segment revenues for the nine months ended September 30, ~~2022~~2023 increased by ~~$17.1~~$20.1 million to ~~$130.7~~$150.8 million when compared to the same period in the prior year. The increase in revenues was primarily driven by ~~an increase~~the same drivers as in ~~transaction volumes, mainly POS processing,~~ the ~~continued strong digital payments growth from ATH Movil Business, higher issuing services and~~quarter, as well as revenue contribution from issuing services provided to health care companies and revenue from the small acquisition completed in the ~~current year. Segment revenue also benefited from an increase in transaction processing and monitoring revenue recognized for services provided to the Payment Services - Latin America Segment.~~second quarter of 2022. Adjusted EBITDA increased by ~~$6.4~~$14.5 million to ~~$72.6 million~~$87.4 million. The increase was primarily driven by the increase in revenues and the positive net effect of previously recorded operational losses, partially offset by higher operating expenses, including ~~the $4.1 million impairment charge discussed in Cost of Revenues above, an increase in cloud services,~~ higher ~~personnel costs and the impact from the one-time credit granted upon closing of the Popular Transaction.~~professional fees.

Payment Services - Latin America

Nine months ended September 30,
In thousands 2022 2021
Revenues $ 93,308 $ 77,641
Adjusted EBITDA $ 25,197 $ 30,985
Adjusted EBITDA Margin 27.0 % 39.9 %

Table of Contents


	Nine months ended September 30,
In thousands	2023		2022
Revenues	$120,548		$93,308
Adjusted EBITDA	41,907		30,793
Adjusted EBITDA Margin	34.8	%	33.0	%

Payment Services - Latin America segment revenues for the nine months ended September 30, ~~2022~~2023 increased by ~~$15.7~~$27.2 million to ~~$93.3~~$120.5 million ~~driven mainly by organic growth including~~when compared to the same period in the prior year. This increase was primarily due to the same factors explained above for the quarter, as well as revenue generated ~~by new client contracts signed in prior years, the contribution~~ from the BBR acquisition ~~and higher revenues recognized for services provided to~~completed in the ~~Payment Services - Puerto Rico & Caribbean and Business Solutions segments.~~third quarter of 2022. Adjusted EBITDA ~~decreased~~increased by ~~$5.8~~$11.1 million when compared to the same period in the prior year ~~primarily due to~~driven by the ~~same factors explained above for~~increase in revenues partially offset by higher personnel costs, the ~~quarter.~~negative impact from foreign currency remeasurement, an increase in professional services fees and an increase in transaction processing and monitoring expenses charged from Payments Puerto Rico segment.

Merchant Acquiring


		Nine months ended September 30,						Nine months ended September 30,
In thousands	In thousands	2022			2021				In thousands	2023		2022
Revenues	Revenues	$	111,079		$	106,808			Revenues	$122,152		$111,079
Adjusted EBITDA	Adjusted EBITDA	$	48,484		$	55,293			Adjusted EBITDA	46,569		48,484
Adjusted EBITDA Margin	Adjusted EBITDA Margin	43.6		%	51.8		%		Adjusted EBITDA Margin	38.1	%	43.6	%

Merchant Acquiring segment revenues for the nine months ended September 30, ~~2022~~2023 increased by ~~$4.3~~$11.1 million to ~~$111.1~~$122.2 million ~~mainly as a result of~~when compared to the same period in the prior year. The revenue increase was primarily driven by an increase in sales volume ~~driven by nine months of contribution~~mainly due to new higher volume merchants and incremental sales volume in existing merchants, higher non-transactional fees, higher spread and the continued benefit from ~~the FirstBank expanded relationship compared to 7 months in the prior year,~~pricing initiatives as well as the benefit of pricing initiatives implemented throughout the year partially offset by the benefits to prior year from COVID related federal stimulus, the impact from Hurricane Fiona as well as changesa shift in the mix of ~~volume~~credit cards spend towards ~~lower margin merchants.~~premium cards. Adjusted EBITDA decreased by ~~$6.8~~$1.9 million as compared to the ~~increase in revenues was entirely offset~~prior year period, mainly driven by ~~an increase in~~higher operating expenses, ~~driven by the impact of~~including the revenue sharing agreement with Popular ~~that~~which began ~~on July 1,~~during the third quarter of 2022, ~~and~~ higher ~~transaction~~ processing costs ~~as a result~~from the Payment Services Puerto Rico segment and the effect of a ~~lower~~declining average ticket.

~~Table of Contents~~

Business Solutions


		Nine months ended September 30,						Nine months ended September 30,
In thousands	In thousands	2022			2021				In thousands	2023		2022
Revenues	Revenues	$	176,620		$	179,438			Revenues	$169,188		$176,620
Adjusted EBITDA	Adjusted EBITDA	$	75,715		$	86,287			Adjusted EBITDA	66,864		75,715
Adjusted EBITDA Margin	Adjusted EBITDA Margin	42.9		%	48.1		%		Adjusted EBITDA Margin	39.5	%	42.9	%

Business Solutions segment revenues for the nine months ended September 30, ~~2022~~2023 decreased by ~~$2.8~~$7.4 million to ~~$176.6~~$169.2 million as compared to the prior year period. This decrease was primarily due to the ~~same factors explained above for the quarter. Partially offsetting these negative impacts was the benefit from higher transactions and account volumes, contribution~~impact from the ~~printing contract that began generating revenue~~assets sold as part of the Popular Transaction completed in ~~June~~the third quarter of ~~2021, and~~2022, which were of higher margins, partially offset by the one-time ~~software and hardware sales.~~credit granted to Popular upon closing of the Popular Transaction. Adjusted EBITDA decreased by ~~$10.6~~$8.9 million to ~~$75.7~~$66.9 million as ~~a result~~compared to the prior year period. This decrease was driven by the impact of the ~~decrease in revenue,~~assets sold to Popular as part of the ~~impact from the sale~~Popular transaction, which were of higher margin assets included in the Popular Transaction and an increase in cost of sales in connection with hardware sales completed during the year and operating expenses, mainly printing supplies expense that has been impacted by the inflationary environment.

margins.

Liquidity and Capital Resources

As of September 30, 2023, there are no material changes to our primary short-term and long-term requirements for liquidity and capital as disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 24, 2023. Our principal source of liquidity is cash generated from operations, and our primary liquidity requirements are the funding of working capital needs, capital expenditures, acquisitions, ~~debt service,~~ dividend payments, share repurchases and ~~share repurchases.~~debt service. We also have a ~~$125.0~~$200.0 million Revolving Facility, of which ~~$119.1~~$188.0 million was available for borrowing as of September 30, ~~2022.~~2023. The Company issues letters of credit against our Revolving Facility which reduce our availability of funds to be drawn. The Company has also obtained financing commitments for the purpose of financing the Sinqia acquisition and paying related fees and expenses with debt financing in an aggregate principal amount of $600 million (as such amount may be increased). The

Table of Contents

obligations of the lenders to provide debt financing under the related debt commitment letter are subject to customary terms and conditions.

As of September 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$225.0~~$177.8 million, of which ~~$111.5~~$133.7 million resides in our subsidiaries located outside of Puerto Rico for purposes of (i) funding the respective subsidiary’s current business operations and (ii) funding potential future investment outside of Puerto Rico. We intend to indefinitely reinvest these funds outside of Puerto Rico, and based on our liquidity forecast, we will not need to repatriate this cash to fund the Puerto Rico operations or to meet debt-service obligations. However, if in the future we determine that we no longer need to maintain cash balances within our foreign subsidiaries, we may elect to distribute such cash to the Company in Puerto Rico. Distributions from the foreign subsidiaries to Puerto Rico may be subject to tax withholding and other tax consequences. Additionally, our credit agreement imposes certain restrictions on the distribution of dividends from subsidiaries.

Based on our current level of operations, we believe our cash flows from operations and the available secured Revolving Facility will be adequate to meet our liquidity needs for the next twelve months. However, our ability to fund future operating expenses, dividend payments, capital expenditures, mergers and acquisitions, and our ability to make scheduled payments of interest, to pay principal on or refinance our indebtedness and to satisfy any other of our present or future debt obligations will depend on our future operating performance, which may be affected by general economic, financial and other factors beyond our control.


		Nine months ended September 30,					Nine months ended September 30,
(In thousands)	(In thousands)	2022		2021		(In thousands)	2023		2022

Cash provided by operating activities	Cash provided by operating activities	$	159,009	$	175,855	Cash provided by operating activities	$	163,458	$	159,009
Cash used in investing activities	Cash used in investing activities	(106,002)		(60,305)		Cash used in investing activities	(105,433)		(106,002)
Cash used in financing activities	Cash used in financing activities	(99,508)		(74,077)		Cash used in financing activities	(68,852)		(99,508)
Effect of foreign exchange rate on cash, cash equivalents and restricted cash	Effect of foreign exchange rate on cash, cash equivalents and restricted cash	4,260		215		Effect of foreign exchange rate on cash, cash equivalents and restricted cash	10,716		4,260
(Decrease) increase in cash, cash equivalents and restricted cash		$	(42,241)	$	41,688
Increase in cash, cash equivalents and restricted cash						Increase in cash, cash equivalents and restricted cash	$	(111)	$	(42,241)

Net cash provided by operating activities for the nine months ended September 30, ~~2022~~2023 was ~~$159.0~~$163.5 million compared to ~~$175.9~~$159.0 million for the same period in the prior year. The $16.8 million decrease in cash provided by operating activities is primarily driven by the effects from the sale of a business to Popular and the one-time credit granted to them upon closing, partially offset byyear, an increase ~~in collections from accounts receivable and less cash used to pay down accounts payable and accrued liabilities~~of $4.4 million as the Company continues to effectively manage working ~~capital .~~capital.

Net cash used in investing activities for the nine months ended September 30, ~~2022~~2023 was ~~$106.0~~$105.4 million compared to ~~$60.3~~$106.0 million for the same period in the prior year. ~~The $45.7~~Net cash used in investing activities for the nine months ended September 30, 2023 was primarily composed of the purchase of equity securities in connection with the Sinqia transaction amounting to $26.5 million, ~~increase is driven by~~ the ~~BBR~~paySmart acquisition, which closed ~~on July 1, 2022~~in the first quarter of 2023 for ~~$44.4~~$22.9 million, capital contributions for investments in equity investee of $5.5 million and ~~a $7.3 million purchase~~an increase in software additions of ~~certificates of deposit, which were transferred upon closing of the BBR~~

~~Table of Contents~~

acquisition, partially offset by lower capital expenditures of $1.2 million, proceeds from the maturity of available-for-sale debt securities of $1.0 million, as well as a decrease in acquisitions of customer relationships given that the prior year acquisition amounted to $14.8 million while the acquisition in the current year amounted to $10.6$5.9 million.

Net cash used in financing activities for the nine months ended September 30, ~~2022~~2023 was ~~$99.5~~$68.9 million compared to ~~$74.1~~$99.5 million for the same period in the prior year. The ~~$25.4 million increase was mainly attributed to an increase in~~net cash used ~~to repurchase shares~~in financing activities for the nine months ended September 30, 2023 was primarily composed of ~~our~~purchases of common stock ~~of $48.1~~amounting to $23.6 million partially offset by ~~a decrease of $18.6 million in~~ cash used to pay down ~~long-term debt as in~~ the prior year, in connection with the mandatory repayment clause, the Company repaid $17.8 million, as a result of excess cash flow calculation performed, while no mandatory repayment was required in the current year, and a $3.1 million decrease in withholding taxes paid on share-based compensation.Revolving Facility for $14.0 million.

Capital Resources

Our principal capital expenditures are for hardware and computer software (purchased and internally developed) and additions to our property and equipment. During the nine months ended September 30, 2023 and 2022, we invested approximately $50.6 million and ~~2021,~~$44.6 million in our capital resources, respectively. In addition, during the nine month period ended September 30, 2023, the Company ~~invested approximately $44.6~~acquired a business for $22.9 million, net of cash acquired, equity securities amounting to $26.5 million and ~~$43.4 million, respectively. Additionally~~investment in equity investee of $5.5 million. During the nine month period ended September 30, 2022, the Company acquired a business for $44.4 million, net of cash, ~~acquired,~~ as well as $7.3 million in certificates of deposit in connection with this business acquisition in 2022. The Company also acquired customer relationships amounting to $10.6 ~~million and $14.8 million during the nine months ended September 30, 2022 and 2021, respectively. In 2021 acquired $3.0 million in available-for-sale debt securities.~~million. Generally, we fund capital expenditures with cash flow generated from operations and, if necessary, borrowings under our Revolving ~~Facility.~~Facility and a committed financing of $600 million in connection with the Sinqia transaction. Refer to Note 18 of the unaudited condensed consolidated financial statements for disclosure of the transaction.

Dividend Payments

Table of Contents

On February ~~15, 2022,~~16, 2023, April ~~21, 2022~~20, 2023, and July ~~28, 2022,~~20, 2023, respectively the Board declared quarterly cash dividends of $0.05 per share of common stock, which were paid on March ~~25, 2022,~~17, 2023, June ~~3, 2022~~2, 2023 and September ~~2, 2022,~~1, 2023, respectively, to stockholders of record as of the close of business on February ~~25, 2022,~~28, 2023, May ~~2, 2022~~1, 2023 and ~~August 8, 2022,~~July 31,2023, respectively.

On October ~~20, 2022,~~19, 2023, our Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. The dividend will be paid on December ~~2, 2022~~1, 2023 to stockholders of record as of the close of business on ~~November 1, 2022.~~October 30, 2023. The Board anticipates declaring this dividend in future quarters on a regular basis; however future declarations of dividends are subject to the Board’s approval and may be adjusted as business needs or market conditions change.

Financial Obligations

Secured Credit Facilities

On ~~November 27, 2018,~~December 1, 2022, EVERTEC and EVERTEC Group, ~~(“Borrower”)~~ entered into a credit agreement with a syndicate of lenders and Truist Bank, as administrative agent and collateral agent, providing for ~~the secured credit facilities, consisting of~~(i) a ~~$220.0~~$415.0 million term loan A facility ~~that matures on November 27, 2023~~ (the ~~“2023 Term A Loan”~~“Term Loan Facility”), and (ii) a ~~$325.0 million term loan B facility that matures on November 27, 2024 (the “2024 Term B Loan”), and a $125.0~~$200.0 million revolving credit facility (the “Revolving Facility”, and together with the Term Loan Facility, the “2022 Credit Facilities”) ~~that matures~~. The 2022 Credit Facilities mature on November 27, 2023, with a syndicate of lenders and Bank of America, N.A. (“Bank of America”), as administrative agent, collateral agent, swingline lender and line of credit issuer (collectively the “2018 Credit Agreement”).December 1, 2027.

~~The 2018 Credit Agreement requires mandatory repayment of outstanding principal balances based on a percentage of excess cash flow, provided that no such payment shall be due if~~At September 30, 2023, the resulting amount of the excess cash flow multiplied by the applicable percentage is less than $10 million or if the leverage ratio is below 1.75x. On March 8, 2021, in connection with this mandatory repayment clause, the Company repaid $17.8 million, as a result of excess cash flow calculation performed for the year ended December 31, 2020. No mandatory repayment was required in the first quarter of 2022 in connection with the excess cash flow calculation performed for the year ended December 31, 2021 as the leverage ratio was below 1.75x.

~~The~~ unpaid principal balance atof the Term Loan Facility was $399.4 million. At September 30, ~~2022 of~~2023, there was $6.0 million outstanding on the ~~2023 Term A Loan~~Revolving Facility and the ~~2024 Term B Loan was $163.4 million and $294.2 million, respectively. The~~ additional borrowing capacity ~~under our Revolving Facility at September 30, 2022~~ was ~~$119.1~~$188.0 million. The Company issues letters of credit against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

~~Table of Contents~~

Notes Payable

In ~~December 2019,~~September 2023, EVERTEC Group entered into ~~two~~a non-interest bearing financing ~~agreements~~agreement amounting to ~~$2.4~~$10.1 million to purchase software and ~~maintenance, which were fully repaid in January 2022.~~maintenance. As of ~~December 31, 2021,~~September 30, 2023, the outstanding principal balance of the ~~notes~~note payable was ~~$0.8~~$7.9 million. ~~These~~The current portion of these notes ~~were~~is included in accounts payable and the long-term portion is included in other long-term liabilities in the Company's unaudited condensed consolidated balance ~~sheets.~~

sheet.

Interest Rate Swaps

Swap Agreement

Effective date

Maturity Date

Notional Amount

Variable Rate

Fixed Rate

2018 Swap

April 2020

November 2024

$250 million

1-month ~~LIBOR~~SOFR

~~2.89%~~2.929%

2023 Swap

November 2024

December 2027

$250 million

1-month SOFR

3.375%

~~The Company has accounted for this agreement as a cash flow hedge.~~

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the carrying amount of the ~~derivative~~derivatives included on the Company's unaudited condensed consolidated balance sheets was ~~an asset of $7.1~~$11.5 million and ~~a liability of $13.4~~$7.4 million, respectively. The fair value of ~~this derivative is~~these derivatives are estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 7 of the unaudited condensed consolidated financial statements for disclosure of ~~losses~~gains recorded on cash flow hedging activities.

During the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the Company reclassified ~~losses~~gains of ~~$0.4~~$1.6 million and ~~$3.5~~$4.0 million, respectively, from accumulated other comprehensive loss into interest expense compared to ~~$1.8~~losses of $0.4 million and ~~$5.3~~$3.5 million, respectively, for the corresponding periods in ~~2021.~~2022. Based on current ~~LIBOR~~SOFR rates, the Company expects to reclassify gains of ~~$3.4~~$6.2 million from accumulated other comprehensive loss into interest expense over the next 12 months.

The cash flow ~~hedge is~~hedges are considered highly effective.

Covenant Compliance

As of September 30, ~~2022,~~2023, our secured leverage ratio was ~~1.41~~0.90 to 1.00, as determined in accordance with the ~~2018~~ Credit Agreement. As of the date of filing of this ~~Report,~~Form 10-Q, no event has occurred that constitutes an Event of Default or Default under our ~~2018~~ Credit Agreement.

Table of Contents

Net Income Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share (Non-GAAP Measures)

We define “EBITDA” as earnings before interest, taxes, depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted to exclude ~~unusual~~certain non-cash unrealized items and ~~other adjustments described below.~~unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from non-cash unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Adjusted EBITDA by segment is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with ASC Topic 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. We define “Adjusted Net Income” as ~~net~~Adjusted EBITDA less: operating depreciation and amortization expense, defined as GAAP depreciation and amortization less amortization of intangibles related to acquisitions such as customer relationships, trademarks; cash interest expense defined as GAAP interest expense, less GAAP interest income adjusted to exclude ~~unusual items~~non-cash amortization of debt issue costs, premium and ~~other adjustments described below.~~accretion of discount; income tax expense which is calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for uncertain tax position releases, tax true-ups, windfall from share-based compensation, non-cash unrealized gains and losses from foreign currency remeasurement, among others; and non-controlling interest which is the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase. We define “Adjusted Earnings per common share” as Adjusted Net Income divided by diluted shares outstanding.

We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of ourselves and other companies in our industry. In addition, our presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the senior secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the secured leverage ratio. We use Adjusted Net Income to measure our overall profitability because we believe better reflects our comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of merger and acquisition activity. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future we may incur expenses such as those excluded in calculating them. Further, our presentation of these measures should not be construed as an inference that our future operating results will not be affected by unusual or nonrecurring items.

~~Table~~ These measures have certain limitations in that they do not include the impact of ~~Contents~~

certain expenses that are reflected in our condensed consolidated statements of operations that are necessary to run our business. Other companies, including other companies in our industry, may not use these measures or may calculate these measures differently than as presented herein, limiting their usefulness as comparative measures.

Some of the limitations of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted earnings per common share are as follows:

•they do not reflect cash outlays for capital expenditures or future contractual commitments;

•they do not reflect changes in, or cash requirements for, working capital;

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements;

•in the case of EBITDA and Adjusted EBITDA, they do not reflect interest expense, or the cash requirements necessary to service interest, or principal payments, on indebtedness;

•in the case of EBITDA and Adjusted EBITDA, they do not reflect income tax expense or the cash necessary to pay income taxes; and

•other companies, including other companies in our industry, may not use EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings per common share or may calculate EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share differently than as presented in this Report, limiting their usefulness as a comparative measure.

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share are not measurements of liquidity or financial performance under GAAP. You should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share as alternatives to cash flows from operating activities or any other performance measures determined in accordance with GAAP, as an indicator of cash flows, as a measure of liquidity or as an alternative to operating or net income determined in accordance with GAAP.

Table of Contents

A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share is provided below:


		Three months ended September 30,				Nine months ended September 30,			Twelve months ended				Three months ended September 30,				Nine months ended September 30,				Twelve months ended
(In thousands, except per share information)	(In thousands, except per share information)	2022		2021			2022		2021		September 30, 2022			(In thousands, except per share information)	2023		2022		2023		2022		September 30, 2023
Net income	Net income	$	137,739	$	35,260		$	210,161	$	119,955	$	251,349		Net income	$	9,956	$	137,739	$	68,069	$	210,161	$	96,777
Income tax expense		9,048		7,134			22,911		14,474		28,999
Income tax (benefit) expense														Income tax (benefit) expense	(4,858)		9,048		4,546		22,911		10,618
Interest expense, net	Interest expense, net	5,956		5,180			15,963		15,905		20,979			Interest expense, net	3,783		5,956		11,830		15,963		17,518
Depreciation and amortization	Depreciation and amortization	19,712		18,745			58,432		56,091		77,411			Depreciation and amortization	21,919		19,712		63,680		58,432		83,866
EBITDA	EBITDA	172,455		66,319			307,467		206,425		378,738			EBITDA	30,800		172,455		148,125		307,467		208,779

Equity income (loss) (1)		1,159		(411)			(273)		10		(678)
Equity income (1)														Equity income (1)	1,834		1,159		(797)		(273)		(1,645)
Compensation and benefits (2)	Compensation and benefits (2)	5,671		3,493			15,355		11,280		19,219			Compensation and benefits (2)	6,970		5,671		21,516		15,355		26,496
Transaction, refinancing and other fees (3)	Transaction, refinancing and other fees (3)	(126,911)		369			(121,415)		1,205		(120,247)			Transaction, refinancing and other fees (3)	36,249		(126,897)		44,092		(122,447)		47,665

Loss on foreign currency remeasurement (4)														Loss on foreign currency remeasurement (4)	2,806		7,779		7,337		6,858		8,124
Adjusted EBITDA	Adjusted EBITDA	52,374		69,770			201,134		218,920		277,032			Adjusted EBITDA	78,659		60,167		220,273		206,960		289,419
Operating depreciation and amortization (4)		(10,748)		(10,779)			(33,156)		(32,385)		(44,209)
Cash interest expense, net (5)		(5,645)		(4,926)			(15,132)		(14,946)		(19,990)
Income tax expense (6)		(8,908)		(9,125)			(27,910)		(24,416)		(35,178)
Non-controlling interest (7)		47		17			58		(55)		(48)
Operating depreciation and amortization (5)														Operating depreciation and amortization (5)	(13,061)		(10,748)		(38,265)		(33,156)		(49,527)
Cash interest expense, net (6)														Cash interest expense, net (6)	(3,755)		(5,645)		(11,575)		(15,132)		(17,451)
Income tax expense (7)														Income tax expense (7)	(9,447)		(8,184)		(25,855)		(27,067)		(34,416)
Non-controlling interest (8)														Non-controlling interest (8)	50		47		96		58		72
Adjusted net income	Adjusted net income	$	27,120	$	44,957		$	124,994	$	147,118	$	177,607		Adjusted net income	$	52,446	$	35,637	$	144,674	$	131,663	$	188,097
Net income per common share (GAAP):	Net income per common share (GAAP):													Net income per common share (GAAP):
Diluted	Diluted	$	2.06	$	0.48		$	2.98	$	1.65				Diluted	$	0.15	$	2.06	$	1.04	$	2.98
Adjusted Earnings per common share (Non-GAAP):	Adjusted Earnings per common share (Non-GAAP):													Adjusted Earnings per common share (Non-GAAP):
Diluted	Diluted	$	0.40	$	0.62		$	1.77	$	2.02				Diluted	$	0.80	$	0.53	$	2.20	$	1.87
Shares used in computing adjusted earnings per common share:	Shares used in computing adjusted earnings per common share:													Shares used in computing adjusted earnings per common share:
Diluted	Diluted	67,045,809		72,876,253			70,588,915		72,817,707					Diluted	65,779,259		67,045,809		65,705,596		70,588,915

~~Table of Contents~~

1)Represents the elimination of non-cash equity earnings from our 19.99% equity investment in Dominican Republic, Consorcio de Tarjetas Dominicanas S.A. ("CONTADO"), net of cash dividends received.

2)Primarily represents share-based compensation and severance payments.

3)Represents fees and expenses associated with corporate transactions as defined in the ~~2018~~ Credit Agreement, the gain from the Popular ~~transaction, a software impairment charge~~Transaction and ~~a gain from sale of assets.~~the foreign currency swap loss.

4)Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies.

5)Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity.

5)6)Represents interest expense, less interest income, as they appear on the condensed consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.

6)7)Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discrete items.

7)8)Represents the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase.

~~Seasonality~~

Our payment businesses generally experience moderate increased activity during the traditional holiday shopping periods and around other nationally recognized holidays, which follow consumer spending patterns.

Effect of Inflation

While it is difficult to accurately measure the impact of inflation on our results of operations and financial condition, we believe the effects of inflation on our historical results of operations and financial condition have been immaterial. General inflation in the geographies in which we operate has risen to levels that have not been experienced in recent years, however, inflation has historically had a minimal net effect on our operating results given that overall inflation has been offset by sales and cost reduction actions.

Table of Contents

Rising prices for input costs, including wages and benefits, occupancy and general administrative costs, could potentially have a negative impact on our results of operations and financial condition which may not be readily recoverable from our customers.

In addition, inflation has driven a rising interest rate environment, which has had an adverse effect on our cost of funding, as well as led to enhanced volatility on foreign currency exchange rates. While we proactively try to mitigate these rising costs, we may not be able to fully offset these impacts and these could result in negative effect on our results of ~~operations.~~

operation. Thus, we cannot assure you that our results of operations and financial condition will not be materially impacted by inflation in the future.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make estimates and assumptions about future events and apply judgments that affect the reported amounts of certain assets and liabilities, and in some instances, the reported amounts of revenues and expenses during the period. We base our assumptions, estimates, and judgments on historical experience, current events, and other factors that management believes to be relevant at the time our condensed consolidated financial statements are prepared. However, because future events are inherently uncertain and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. For a description of the Company’s critical accounting estimates, refer to “Part II-Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 24, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks arising from our normal business activities. These market risks principally involve the possibility of changes in interest rates that will adversely affect the value of our financial assets and liabilities or future cash flows and ~~earnings.~~earnings, foreign exchange risk that may result in unfavorable foreign currency translation adjustments and inflation. Market risk is the potential loss arising from adverse changes in market rates and prices. The following analysis provides quantitative information regarding these risks.

Interest Rate Risks

Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control.

We issued floating-rate debt which is subject to fluctuations in interest rates. Our secured credit facilities accrue interest at variable rates and ~~only the 2024 Term B Loan is~~are subject to a floor or a minimum rate. A hypothetical 100 basis point increase in interest rates over our ~~floor(s)~~floor on our debt balances outstanding as of September 30, ~~2022,~~2023, under the secured credit facilities, would increase our annual interest expense by approximately ~~$2.1~~$1.6 million. The impact on future interest expense as a result of future changes in interest rates will depend largely on the gross amount of our borrowings at that time.

As of September 30, ~~2022,~~2023, the Company has antwo interest rate swap agreement, entered into in December 2018 and December 2022, respectively, which ~~converts~~convert a portion of our outstanding variable rate debt to fixed.

The interest rate swap exposes us to credit risk in the event that the counterparty to the swap agreement does not or cannot meet its obligations. The notional amount is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The loss would be limited to the amount that would have been received, if any, over the remaining life of the swap. The counterparty to the swap is a major US based financial institution and we expect the counterparty to be able to perform its obligations under the swap. We use derivative financial instruments for hedging purposes only and not for trading or speculative ~~purposes~~purposes.

See Note 7 of the Unaudited Condensed Consolidated Financial Statements for additional information related to the secured credit facilities.

~~Table of Contents~~

Foreign Exchange Risk

We conduct business in certain countries in Latin America for which we have determined that the functional currency is other than the US dollar. Given this, our operating results are exposed to volatility due to fluctuations in exchange rates for the

Table of Contents

countries' functional currencies. Non-functional currency transactions are remeasured into the functional currency which results in a foreign exchange gain or loss recorded through Other income (expenses). For the three and nine ~~month periods~~months ended September 30, ~~2022 and 202,~~2023, the Company recognized non-cash unrealized foreign currency remeasurement losses of $2.8 million and $7.3 million, respectively, compared to losses of $7.8 million and $6.9 million, ~~and gains of $0.7 million, respectively.~~respectively for the same periods in 2022. For subsidiaries whose ~~local~~functional currency is ~~their functional currency,~~other than the U.S. dollar, their assets and liabilities are translated into U.S. dollars at exchange rates at the balance sheet date, and revenues and expenses are translated using average exchange rates in effect during the period. The resulting foreign currency translation adjustments are reported in accumulated other comprehensive ~~loss~~income (loss) in the ~~unaudited~~ condensed consolidated balance sheets. As of September 30, ~~2022,~~2023, the Company had ~~$36.2~~$14.1 million in an unfavorable foreign currency translation adjustment as part of accumulated other comprehensive ~~loss~~income (loss) compared with an unfavorable foreign currency translation adjustment of ~~$36.0~~$23.5 million as of December 31, ~~2021.~~2022.

During the quarter ended September 30, 2023, the Company entered into a foreign currency swap to fix the acquisition price for Sinqia, S.A. in US dollars. At September 30, 2023, the foreign currency swap was in a loss position of $29.2 million.

See Note 8 of the unaudited condensed consolidated financial statements for additional information related to the foreign currency swap.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, ~~under~~with the ~~direction~~participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated, as of the end of the period covered by this Report on Form 10-Q, disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, ~~2022,~~2023, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a -15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are defendants in various lawsuits or arbitration proceedings arising in the ordinary course of business. Management believes, based on the opinion of legal counsel and other factors, that the aggregated liabilities, if any, arising from such actions will not have a material adverse effect on the financial condition, results of operations and the cash flows of the Company.

Item 1A. Risk Factors

Other than the risk ~~factor~~factors set forth below, there have been no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February ~~25, 2022.~~24, 2023. For a discussion of the potential risks and uncertainties related to us, see "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

The risks described below and those described in our Annual Report on Form 10-K for the year ended December 31, ~~2021 filed with the SEC on February 25,~~ 2022 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.

~~Banco Popular,~~Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our ~~largest customer, is controlled by Popular,~~business, dilute shareholder value, and ~~the elimination of Popular's ownership of our common stock could~~ adversely affect ~~us.~~our business, financial condition and results of operations.

We may in the future seek to acquire or invest in businesses, joint ventures, products and platform capabilities, or technologies that we believe could complement or expand our products and platform capabilities, enhance our technical capabilities, or otherwise offer growth opportunities. For example, in July 2023, we entered into the ~~year ended December 31, 2021, approximately 42%~~Merger Agreement, pursuant to which, among other things, upon closing Sinqia will become a wholly-owned subsidiary of Evertec BR. Any such acquisition or investment may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable opportunities, whether or not the transactions are completed, and may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products and platform capabilities, personnel, or operations of the acquired companies, particularly if we are unable to retain the key personnel of the acquired company, their software is not easily adapted to work with our existing platforms, or we have difficulty retaining customer, vendors and other relationships of any acquired business due to changes in ownership, management, or otherwise. These transactions may also disrupt our business, divert our resources, and require significant management attention that would otherwise be available for development of our ~~revenue was attributable~~existing businesses. Any such transactions that we are able to ~~Banco Popular, a wholly owned subsidiary of Popular. Prior~~complete may not result in any synergies or other benefits we had expected to ~~closing the Popular Transaction on July 1, 2022, Popular owned approximately 17.5%~~achieve, which could result in substantial impairment charges.

In addition, we may not be able to find and identify desirable acquisition targets or business opportunities or be successful in entering into agreements with any particular strategic partner. We expect that certain of our ~~common stock~~competitors, many of which have greater resources than we do, will compete with us in acquiring complementary businesses or products. This competition could increase prices for potential acquisitions that we believe are attractive. Also, acquisitions are often subject to various regulatory approvals. If we fail to receive the appropriate regulatory approvals, we may not be able to consummate an acquisition that we believe is in our best interests and historically had substantial influence over our policies and management. In connection with the closing of the Popular Transaction, Popular delivered 4.6 million shares of Evertec common stock that were owned by Popularmay incur significant costs. These transactions could also result in exchange for certain assets of EVERTEC Group, and the Company also modified and extended its main commercial agreements with Banco Popular. Furthermore, effective as of July 1, 2022, the stockholders agreement dated April 17, 2012 with Popular, which had granted them certain benefits as a shareholder of the Company, was terminated. On August 15, 2022, through a secondary offering, Popular sold its remaining shares of Evertec common stock and as of this date no longer holds any sharestransaction fees, dilutive issuances of our ~~common stock. Evertec is no longer deemed~~equity securities, incurrence of debt or contingent liabilities, and fluctuations in quarterly results and expenses. Further, if the resulting business from such a ~~subsidiary~~transaction fails to meet our expectations, our business, financial condition and results of ~~Popular under~~operations may be adversely affected, or we may be exposed to unknown risks or liabilities.

We may acquire businesses located primarily or entirely outside the ~~Bank Holding Company Act.~~United States which could increase our current exposure to international operations located in the Caribbean and Latin America including currency exchange fluctuations, regulatory and organizational complexity, and varying economic, climatic and geopolitical circumstances.

The ~~elimination~~failure to complete the Transaction or ultimately realize the benefits may adversely affect our business and our stock price.

Consummation of ~~Popular's holdings~~the Transaction is subject to the satisfaction or waiver of ~~our common stock~~customary closing conditions, including, (i) the absence of any court order or regulatory injunction with the effect of preventing or otherwise preventing the consummation of the Transaction, (ii) the accuracy of the representations and warranties of each party, (iii) compliance by each party in all material respects with its obligations and commitments under the Merger Agreement and the ~~modification~~Voting Agreement (as defined in the Merger Agreement), (iv) obtaining the registration of the BDR Level I program sponsored by Evertec with the Comissão de Valores Mobiliários - CVM, the Brazilian Securities Commission and the admission of the BDRs for trade on B3

Table of Contents

S.A. - Brasil, Bolsa, Balcão (“B3”), (v) Evertec notifying Sinqia that it has completed its funding efforts for the closing, (vi) Sinqia obtaining the consent or waiver for the non-acceleration of the maturity date or prepayment of the two certain issuances of debentures of Sinqia as a result of the Transaction, (vii) the acceleration and cancellation of Sinqia’s stock option plans, (viii) the approval of the Protocolo e Justificação de Incorporação de Ações de Emissão da Sinqia S.A. pela Evertec Brasil Informática S.A., as required pursuant to ~~commercial arrangements with Banco Popular~~Articles 224 and 225 of the Brazilian Corporation Law (the “Protocol”) by the Sinqia Board and the execution of the Protocol by Evertec BR’s management and Sinqia’s management, and subsequent calling of the Sinqia general shareholder’s meeting (“Sinqia’s GSM”), (ix) the necessary corporate approvals by Evertec and Evertec BR, including Evertec approving the Transaction and Evertec BR’s general shareholders’ meeting approving the Protocol, the ratification of the engagement of the appraisal company that shall prepare the appraisal report of Sinqia at economic value, to be prepared for purposes of the Merger of Shares (as defined in the Merger Agreement) (the “Appraisal Report”), the Appraisal Report, the Merger of Shares, the capital increase of Evertec BR due to the Merger of Shares and consequent issuance of the Evertec BR New Shares and amendment to the bylaws of Evertec BR, the Redemption (as defined in the Merger Agreement), and authorization for the management of Evertec BR to adopt all measures necessary to perform the resolutions taken, (x) the necessary corporate approvals by Sinqia, including Sinqia’s GSM approving the Protocol, the Merger of Shares, the authorization for Sinqia’s management to subscribe to Evertec BR New Shares on the Closing Date, the waiver of Evertec BR’s obligation to be listed in the Novo Mercado special segment of B3 due to the Transaction, as required by Article 46, Sole Paragraph, of the Novo Mercado Ruling, and the authorization for Sinqia’s management to adopt all measures necessary to perform the resolutions taken and (xi) the absence of any Material Adverse Change (as defined in the Merger Agreement). There can be no assurance that these or other closing conditions will be satisfied in a timely manner or at all. Any delay in completing the Transaction could cause us not to realize some or all of the anticipated benefits when expected, if at all. If the Transaction is not completed, our stock price could decline to the extent it reflects an assumption that we will complete the acquisition. Furthermore, if the Transaction is not completed, we may ~~negatively impact~~suffer other consequences that could adversely affect our business, ~~relationship with Banco Popular and could have a material adverse effect on our business, financial condition,~~ results of operations and ~~cash flows,~~stock price, including incurring significant acquisition costs that we would be unable to recover, negative publicity and a negative impression of us in the investment community.

Although we expect benefits to result from the Transaction, including future accretive impact to our earnings per common share and potential for revenue synergies, there can be no assurance that we will actually realize any of them, or realize them within the anticipated timeframe. Achieving these benefits will depend, in part, on our ability to integrate Sinqia’s business successfully and efficiently. The challenges involved in this integration will likely be complex and time consuming. If we do not successfully manage these issues and the other challenges inherent in integrating an acquired business, then we may not achieve the anticipated benefits, of the Transaction within our anticipated timeframe or at all and our revenue, expenses, operating results, financial condition and stock price could be materially adversely ~~affect~~affected. The successful integration of the ~~trading price~~Sinqia business will require significant management attention both before and after the completion of the Transaction, and may divert the attention of management from our ~~common stock.~~

business and operational issues.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

The following table summarizes repurchases ~~of shares~~ of the Company’s common stock in the three month period ended September 30, ~~2022:~~2023:

Period Total number of shares purchased Average price paid per share
Total number of shares purchased as part of a publicly announced program (1)
Approximate dollar value of shares that may yet be purchased under the program
8/1/2022-8/31/2022 803,341 31.12
9/1/2022-9/30/2022 387,038 31.83 387,038
1,190,379 31.35 387,038 102,467,677


Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of a publicly announced program (1)	Approximate dollar value of shares that may yet be purchased under the program

7/1/2023-7/31/2023	208,498	37.44	208,498
8/1/2023-8/31/2023	66	38.99	66
	208,564	37.44	208,564	149,997,425

(1) On ~~February 24, 2022,~~July 20, 2023, the Company announced that its Board approved an increase to the current stock

repurchase program, authorizing the purchase of up to an aggregate of $150 million ~~shares~~ of the Company’s common stock ~~under~~and an extension to the expiration of the program ~~which expires on~~to December 31, ~~2023.~~2024. Under the repurchase program, the Company may repurchase shares in the open market, through accelerated share repurchase programs, Rule 10b5-1 plans, or in privately negotiated transactions, subject to business opportunities and other factors.

Item 3. Defaults Upon Senior Securities

None.

~~Table of Contents~~

Item 4. Mine Safety Disclosures

Table of Contents

Not applicable.

Item 5. Other Information

a.None.

b.None.

c.On August 30, 2023, the Company's President and Chief Executive Officer, Morgan M. Schuessler, adopted a “Rule 10b5-1 trading arrangement” (as defined in Item 408(a) of Regulation S-K) that provides for the sale of up to 84,467 shares of the Company's common stock and which has a plan end date of October 4, 2024. No other director or “officer” (as defined in Rule 16a-1(f) of the Exchange Act) of the Company have adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K during the three month period ended September 30, 2023.

4344

Table of Contents

Item 6. Exhibits















10.1*2.1#			~~Amendment No.1~~Merger Agreement and Other Covenants, dated July 20, 2023 (incorporated by reference to ~~Asset Purchase Agreement by and among~~Exhibit 2.1 of EVERTEC, Inc.~~, Evertec Group, LLC, Popular, Inc. and Banco Popular de Puerto Rico, dated as of~~’s Current Report on Form 8-K filed on July ~~1, 2022.~~21, 2023, File No. 001-35872).
~~10.2~~10.1			~~Second Amended~~Voting Agreement and ~~Restated Master Service Agreement,~~Other Covenants, dated ~~as of~~ July ~~1, 2022, among Popular, Inc., Banco Popular de Puerto Rico and Evertec Group, LLC and its subsidiaries~~20, 2023 (incorporated by reference to Exhibit 10.1 of EVERTEC, Inc.’s Current Report on Form 8-K filed on July ~~1, 2022, File No. 001-35872).~~
~~10.3~~			Second Amended and Restated Independent Sales Organization Sponsorship and Services Agreement, dated as of July 1, 2022, between Evertec Group, LLC and Banco Popular de Puerto Rico (incorporated by reference to Exhibit 10.2 of EVERTEC, Inc.’s Current Report on Form 8-K filed on July 1, 2022,21, 2023, File No. 001-35872).
31.1*			CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**			CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**			CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS XBRL**			Inline Instance document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL**			Inline Taxonomy Extension Schema
101.CAL XBRL**			Inline Taxonomy Extension Calculation Linkbase
101.DEF XBRL**			Inline Taxonomy Extension Definition Linkbase
101.LAB XBRL**			Inline Taxonomy Extension Label Linkbase
101.PRE XBRL**			Inline Taxonomy Extension Presentation Linkbase
104**			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

~~+ This~~# Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit ~~is a management contract or a compensatory plan or arrangement.~~will be furnished to the Securities and Exchange Commission upon request.

4445

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	EVERTEC, Inc. (Registrant)

Date: ~~November 4, 2022~~October 27, 2023	By:	/s/ Morgan Schuessler
		Morgan Schuessler Chief Executive Officer (Principal Executive Officer)

Date: ~~November 4, 2022~~October 27, 2023	By:	/s/ Joaquin A. Castrillo-Salgado
		Joaquin A. Castrillo-Salgado Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

4546


Note 1 - The Company and Basis of Presentation			89
Note 2 - ~~Recent~~ A ~~ccounting~~ P ~~ronouncements~~Business Acquisition			9
Note 3 - ~~Business Acquisitions and Dispositions~~Debt Securities			910
Note 4 - ~~Debt Securities~~Investment in Equity Investee			1211
Note 5 - Property and Equipment, net			1211
Note 6 - Goodwill and Other Intangible Assets			1211
Note 7 - Debt and Short-Term Borrowings			1412
Note 8 - Financial Instruments and Fair Value Measurements			1513
Note 9 - Equity			1614
Note 10 - Share-based Compensation			1614
Note 11 - Revenues			1715
Note 12 - Current Expected Credit Losses			1917
Note 13 - Income Tax			2018
Note 14 - Net Income per Common Share			2119
Note 15 - Commitments and Contingencies			2120
Note 16 - Related Party Transactions			2120
Note 17 - Segment Information			2220
Note 18 - Subsequent Events			2624



	Nine months ended September 30, 2021
(In thousands)	Payment Services - Puerto Rico & Caribbean		Payment Services - Latin America		Merchant Acquiring, net		Business Solutions		Total
Timing of revenue recognition
Products and services transferred at a point in time	$	119	$	1,633	$	—	$	4,048	$	5,800
Products and services transferred over time	76,642		69,919		106,808		175,390		428,759
	$	76,761	$	71,552	$	106,808	$	179,438	$	434,559