Second Quarter 2023 Earnings Conference Call
Non-GAAP Reconciliation Summary
The non-GAAP measures referenced in this earnings release are supplemental measures of the Company's performance and are not required by, or presented
in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). They are not measurements of the Company's financial
performance under GAAP and should not be considered as alternatives to total revenue, net income or any other performance measures derived in accordance
with GAAP or as alternatives to cash flows from operating activities, as indicators of operating performance or as measures of the Company's liquidity. In addition
to GAAP measures, management uses these non-GAAP measures to focus on the factors the Company believes are pertinent to the daily management of the
Company's operations and believes that they are also frequently used by analysts, investors and other stakeholders to evaluate companies in our industry.
These measures have certain limitations in that they do not include the impact of 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. Reconciliations of the non-GAAP measures to the most
directly comparable GAAP measure are included at the end of this presentation. These non-GAAP measures include EBITDA, Adjusted EBITDA, Adjusted Net
Income and Adjusted Earnings per common share, each as defined below.
EBITDA is defined as earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash items and 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. This measure
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 the Company's segments, is presented in conformity with Accounting Standards Codification 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. The Company's presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the secured
credit facilities in testing EVERTEC Group's compliance with covenants therein such as the secured leverage ratio.
Adjusted Net Income is defined as 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 non-cash amortization of debt issue costs, premium and 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, 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.
Adjusted Earnings per common share is defined as Adjusted Net Income divided by diluted shares outstanding.
The Company uses Adjusted Net Income to measure the Company's overall profitability because the Company believes it better reflects the 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 the
Company may incur expenses such as those excluded in calculating them.
18
evertecView entire presentation