EVERTEC : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from Evertec, Inc.

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 month period ended March 31, 2026 and 2025 and (ii) the financial condition as of March 31, 2026. 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 year ended December 31, 2025, included in the Company's Annual Report on Form 10-K as filed with the SEC on March 2, 2026 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 that involve risks and uncertainties. Our actual results may differ from those indicated in the forward-looking 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 and, (b) 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 EVERTEC Group; EVERTEC Intermediate Holdings, LLC; EVERTEC Dominicana, SAS; Evertec Chile Holdings SpA; Evertec Chile SpA; Evertec Chile Global SpA; Evertec Chile Servicios Profesionales SpA; Paytrue S.A.; Caleidon; S.A.; Evertec Brasil Solutions Informática S.A. ("EVERTEC BR"); EVERTEC Panamá, S.A.; EVERTEC Costa Rica, S.A. ("EVERTEC CR"); Zunify Payments Ltda; EVERTEC Guatemala, S.A.; Evertec Colombia, SAS;, EVERTEC USA, LLC; OPG Technology Corp.; Evertec Placetopay, SAS ("PlacetoPay"); BBR Chile, SpA and BBR Perú, S.A.C.,(collectively "BBR"); Paysmart Pagamentos Eletronicos Ltda, Issuer Holding Ltda. and Issuer Instituição de Pagamentos Ltda (collectively "paySmart"); EVERTEC México Servicios de Procesamiento, S.A. de C.V.; Sinqia S.A.,Torq. Inovação Digital Ltda, Sinqia Tecnologia Ltda., Homie do Brasil Informática S.A., Rosk Software S.A., Lote 45 Participações S.A., and Compliasset S.A. (collectively "Sinqia"); Grandata, Inc., Grandata Mexico, S.A. de C.V., Grandata USA, Inc. and Big Data Analytics SA (collectively "Grandata"); and Nubity S.R.L., Nubity Inc. Nubity Cloud, S.A.P.I. de C.V. (collectively "Nubity") and Tecnobank Tecnologia Bancária S.A. ("Tecnobank"). Neither EVERTEC nor EVERTEC Intermediate Holdings, LLC conducts any operations other than with respect to its indirect or direct ownership of EVERTEC Group. Overview EVERTEC is a leading full-service transaction-processing business and financial technology provider in Latin America, Puerto Rico and the Caribbean, providing a broad range of merchant acquiring, payment services and business solutions. We believe we are one of the largest merchant acquirers in Latin America based on total number of transactions and we also believe we are the largest merchant acquirer in the Caribbean. We serve 26 countries out of 24 offices, including our headquarters in Puerto Rico. We own and operate the ATH network, which we believe is one of the leading debit networks in Latin America. We process over ten billion transactions annually through a system of electronic payment networks in Puerto Rico and Latin America and provide a comprehensive suite of services for core banking, cash processing, fulfillment in Puerto Rico and a "one stop shop" set of products for the financial sector in Latin America, which include solutions such as core banking, investments, asset management, pension funds and consortium. Additionally, we offer managed services, managed security services and payment transactions fraud monitoring to all the regions where we do business. 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 America 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, gain 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 serve customers with disparate operations 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 only payment services). Our broad suite of services spans the entire payment 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 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 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 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. 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 continue to 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, 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 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 ongoing migration to digital payment methods continues to benefit the transaction-processing industry globally. Technologies such as contactless payments, QR codes, tap to pay, mobile commerce, "e-wallets" and advanced and smart POS devices continue to drive the shift away from cash and other traditional payment methods. The Company has benefited from an increase in transaction volumes for these types of payment solutions. As consumers and merchants increase demand for contactless and mobility-based solutions, the Company has continued to innovate and invest, expanding the footprint and functionality of digital solutions such as Placetopay, our e-commerce gateway platform, our wallet ATH Movil and ATH Business, and Paystudio our issuing and acquiring processing platform. Additionally, aligned with this trend, the Company has also developed software to take advantage of Brazil's fastest instant money transfer system, Pix. We believe that the ongoing shift to digital payments will continue to generate substantial growth opportunities for our business. Our payment businesses also generally experience moderate increased activity during the traditional holiday shopping periods and around other nationally recognized holidays, which 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 pressures, foreign currency fluctuations, new or increased tariffs or the imposition of other trade barriers 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. Relationship with Popular On September 30, 2010, EVERTEC Group entered into a 15-year Master Service Agreement ("MSA"), and several related agreements with Popular. On July 1, 2022, we modified and extended the main commercial agreements with Popular, including obtaining 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 (as amended, the "A&R ISO Agreement"). The A&R ISO Agreement, which 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% discount on certain MSA services which began in October of 2025 and adjustments to the CPI pricing escalator clause. On the same date, we also sold to Popular certain assets in exchange for 4.6 million shares of EVERTEC common stock owned by Popular (collectively with the contract amendments, the "Popular Transaction"). On August 15, 2022, through a secondary offering, Popular sold its remaining shares of EVERTEC common stock. EVERTEC is no longer deemed a subsidiary of Popular under the Bank Holding Company Act. Popular continues to be the Company's largest customer and for the three months ended March 31, 2026 approximately 26% of our revenues were generated from this relationship. Results of Operations Comparison of the three months ended March 31, 2026 and 2025 Three months ended March 31, In thousands 2026 2025 Variance Revenues $ 247,923 $ 228,792 $ 19,131 8 % Operating costs and expenses Cost of revenues, exclusive of depreciation and amortization 118,245 114,609 3,636 3 % Selling, general and administrative expenses 47,846 36,210 11,636 32 % Depreciation and amortization 37,263 28,473 8,790 31 % Total operating costs and expenses 203,354 179,292 24,062 13 % Income from operations $ 44,569 $ 49,500 $ (4,931) (10) % Revenues Total revenue for the three months ended March 31, 2026 was $247.9 million, an increase of 8% compared with $228.8 million in the prior year period, as a result of organic growth across all of the Company's segments and the contribution from the acquisition completed in the fourth quarter of 2025. Merchant acquiring revenue benefited from higher sales volume and higher non-transactional revenues, partially offset by a slight decrease in spread. Payments Puerto Rico revenue benefited from transaction growth and continued strength in ATH Movil, primarily ATH Business. Latin America revenues are being positively impacted by the contribution from the Tecnobank acquisition completed in the fourth quarter of 2025 and continued organic growth across the region. Revenue also benefited from foreign currency exchange rate fluctuations, primarily in Brazil. Business Solutions revenue decreased as a result of the 10% discount to Popular that came into effect in the fourth quarter of 2025, and non-recurring hardware and software sales executed in the prior year. Cost of Revenues Cost of revenues, exclusive of depreciation and amortization, for the three months ended March 31, 2026 amounted to $118.2 million, an increase of $3.6 million or 3% when compared to the same period in the prior year. This increase was driven by the increase in revenue, primarily driven by higher personnel costs and cloud expenses. Selling, General and Administrative Expenses Selling, general and administrative expenses for the three months ended March 31, 2026 amounted to $47.8 million, an increase of $11.6 million or 32% when compared to the same period in the prior year. This increase was mainly driven by higher professional fees and cash payment of contingent considerations related to prior acquisitions. Depreciation and Amortization Depreciation and amortization expense for the three months ended March 31, 2026 amounted to $37.3 million, an increase of $8.8 million or 31% when compared to the same period in the prior year. The increase was primarily driven by the amortization of intangible assets recognized in the acquisition completed in the fourth quarter of the prior year. Non-Operating Expenses Three months ended March 31, In thousands 2026 2025 Variance Interest income $ 3,860 $ 3,251 $ 609 19 % Interest expense (17,357) (16,988) (369) 2 % Loss on foreign currency remeasurement (3,726) (833) (2,893) 347 % Earnings from equity investees 1,446 2,077 (631) (30) % Other income, net 187 220 (33) (15) % Total non-operating expenses $ (15,590) $ (12,273) $ (3,317) 27 % Non-operating expenses for the three months ended March 31, 2026 increased by $3.3 million to $15.6 million when compared to the same period in the prior year. The increase was mainly related to increase in foreign currency remeasurement loss of $2.9 million mainly due to foreign currency fluctuations, an increase in interest expense of $0.4 million driven by the increase in the outstanding debt balance, a decrease in earnings from equity method investments of $0.6 million offset by an increase in interest income of $0.6 million. Income Tax Expense Three months ended March 31, In thousands 2026 2025 Variance Income tax expense $ 4,232 $ 4,136 $ 96 2 % Income tax expense for the three months ended March 31, 2026 amounted to $4.2 million, compared to $4.1 million in the prior period. The effective tax rate for the period was 14.6%, compared with 11.1% in the prior year period. The increase in the effective tax rate was primarily driven by the geographic mix of taxable income, including a larger proportion of income generated in higher tax rate foreign jurisdictions, as compared with Puerto Rico. Segment Results of Operations The Company has four operating and reportable segments: Payment Services - Puerto Rico & Caribbean, Latin America Payments and Solutions, Merchant Acquiring, and Business Solutions based upon organization of the Company by the nature of products and services provided to customers and geography. 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 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), 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. The Latin America Payments and Solutions segment payment 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, 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. Solutions revenues consist of (a) licensing, support and maintenance ("subscription"), implementation and customization of software used to provide financial products in areas such as core banking, credit, investments, payments, foreign exchange, mutual funds, pension funds and consortium, in addition to software used to execute processes such as digital onboarding, digital signature, digital collection, and other digital transaction -related processes, including vehicle financing contract registration; and (b) outsourcing of mission critical IT services. Revenues are based on monthly fixed fees and, in several cases, variable fees based on usage. 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, managed services and managed security services, 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. The Company's Chief Operating Decision Maker ("CODM") is the President and Chief Executive Officer ("CEO"). The CODM uses revenue and Segment Adjusted EBITDA to evaluate segment performance and allocate resources, and regularly reviews performance at the segment level against budget and forecast when making decisions about the allocation of resources to each segment. Segment Adjusted EBITDA reviewed by the CODM is calculated as EBITDA further adjusted to exclude certain non-cash unrealized 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 non-cash unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. Segment Adjusted EBITDA is presented in conformity with ASC Topic 280, Segment Reporting , given that it is used by the CODM for purposes of evaluating performance and allocating resources. Expense information that is regularly provided to the CODM on a consolidated financial statement basis include personnel costs, professional fees, equipment expenses and cost of sales, adjusted primarily for the impact of share-based compensation, restructuring related expenses, and fees and expenses from corporate transactions such as M&A activity and financing. The Company does not report assets or other balance sheet information to the CODM on a segment basis as the Company's CODM does not assess performance, make strategic decisions, or allocate resources based on this information. No segment expense information is regularly provided to the CODM and therefore the Company does not report significant segment expenses. The following tables set forth information about the Company's operations by its four reportable segments for the periods indicated below. Comparison of the three months ended March 31, 2026 and 2025 Payment Services - Puerto Rico & Caribbean Three months ended March 31, In thousands 2026 2025 Revenues $ 58,445 $ 55,157 Segment Adjusted EBITDA 34,740 31,438 Segment Adjusted EBITDA Margin 59.4 % 57.0 % Payment Services - Puerto Rico & Caribbean segment revenues for the three months ended March 31, 2026 increased by $3.3 million to $58.4 million when compared to the same period in the prior year. The increase in revenues was primarily driven by transaction growth, the continued strength in ATH Movil, primarily ATH Business, as well as higher revenue from services provided to the Latin America Payments and Solutions segment. Segment Adjusted EBITDA increased by $3.3 million to $34.7 million, driven by revenue growth. Latin America Payments and Solutions Three months ended March 31, In thousands 2026 2025 Revenues $ 110,330 $ 83,775 Segment Adjusted EBITDA 32,800 24,895 Segment Adjusted EBITDA Margin 29.7 % 29.7 % Latin America Payments and Solutions segment revenues for the three months ended March 31, 2026 increased by $26.6 million to $110.3 million when compared to the same period in the prior year, driven by the contribution from the Tecnobank acquisition completed in the fourth quarter of 2025, the strong performance in Brazil and the continued organic growth across the region. Revenue also benefited from the foreign currency exchange rate fluctuation, primarily in Brazil. Segment Adjusted EBITDA increased by $7.9 million to $32.8 million, primarily driven by the increase in revenue, as Adjusted EBITDA margin remained consistent with the prior year. Merchant Acquiring Three months ended March 31, In thousands 2026 2025 Revenues $ 48,405 $ 47,649 Segment Adjusted EBITDA 19,518 20,359 Segment Adjusted EBITDA Margin 40.3 % 42.7 % Merchant Acquiring segment revenues for the three months ended March 31, 2026 increased by $0.8 million to $48.4 million when compared to the same period in the prior year. The revenue increase was primarily driven by the positive impact from sales volume growth and higher non-transactional revenues, partially offset by a slight decrease in spread. Segment Adjusted EBITDA decreased by $0.8 million to $19.5 million driven by higher processing costs from the Payments Puerto Rico segment. Business Solutions Three months ended March 31, In thousands 2026 2025 Revenues $ 59,538 $ 65,564 Segment Adjusted EBITDA 21,637 22,211 Segment Adjusted EBITDA Margin 36.3 % 33.9 % Business Solutions segment revenues for the three months ended March 31, 2026 decreased by $6.0 million to $59.5 million as compared to the prior year period. This decrease was primarily driven by the 10% discount to Popular that came into effect in the fourth quarter of 2025 as well as the impact from the non-recurring hardware and software sales executed during the prior year. Segment Adjusted EBITDA decreased by $0.6 million to $21.6 million as compared to the prior period primarily driven by the 10% discount to Popular partially offset by lower programming and infrastructure expenses. Liquidity and Capital Resources As of March 31, 2026, there were no material changes to our primary short-term and long-term requirements for liquidity and capital resources 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, 2025, filed with the SEC on March 2, 2026. O ur principal source of liquidity is cash generated from operations, and our primary liquidity requirements are the funding of working capital needs, capital expenditures, acquisitions, dividend payments, share repurchases and debt service. We also have a $200.0 million Revolving Facility, of which $169.4 million was available for borrowing as of March 31, 2026. The Company issues letters of credit against our Revolving Facility which reduce our availability of funds to be drawn. As of March 31, 2026, we had cash and cash equivalents of $290.9 million, of which $247.8 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 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. Our primary use of cash is for operating expenses, working capital requirements, capital expenditures, acquisitions, dividend payments, share repurchases, debt service, and other transactions as opportunities present themselves. Based on our current level of operations, we believe our existing cash flows from operations and the available secured Revolving Facility will be adequate to meet our liquidity needs for at least the next twelve months from the date of this Report. 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. Three months ended March 31, (In thousands) 2026 2025 Cash provided by operating activities $ 31,210 $ 37,643 Cash used in investing activities (23,177) (22,324) Cash used in financing activities (33,717) (27,545) Effect of foreign exchange rate on cash, cash equivalents and restricted cash 6,008 5,195 Net decrease in cash, cash equivalents and restricted cash $ (19,676) $ (7,031) Net cash provided by operating activities for the three months ended March 31, 2026 was $31.2 million compared to $37.6 million for the same period in the prior year, driven by working capital requirements. Net cash used in investing activities for the three months ended March 31, 2026 was $23.2 million compared to $22.3 million for the same period in the prior year and a result of an increase of $0.5 million in additions to software and the purchase of $0.5 million in available-for-sale debt securities during the period. Net cash used in financing activities for the three months ended March 31, 2026 was $33.7 million compared to $27.5 million for the same period in the prior year. The increase in cash used in financing activities was primarily driven by an increase in share repurchases of $20.0 million, an increase in settlement activities of $3.4 million and an increase in other financing activities of $2.0 million. Increases were partially offset by a decrease of $1.3 million in withholding taxes paid on share-based compensation, cash drawn from the Revolving Facility of $15.0 million and a decrease of $2.8 million related to the payment of the remaining non-controlling interest in Brazil. 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 three months ended March 31, 2026 and 2025, we invested approximately $22.7 million and $22.3 million in our capital resources, respectively. Generally, we fund capital expenditures with cash generated from operations and, if necessary, borrowings under our Revolving Facility. Dividend Payments On February 19, 2026, the Company's Board declared quarterly cash dividends of $0.05 per share of common stock, which was paid on March 6, 2026 to stockholders' of record on March 2, 2026 . On April 30, 2026, our Board declared a regular quarterly cash dividend of $0.05 per share on the Company's outstanding shares of common stock. The dividend is expected to be paid on June 5, 2026 to stockholders of record as of the close of business on May 11, 2026. 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 December 1, 2022, EVERTEC and EVERTEC Group, entered into a credit agreement with a syndicate of lenders and Truist Bank, as administrative agent and collateral agent, providing for a $415.0 million term loan A facility (the "TLA Facility") that matures on December 1, 2027, and a $200.0 million revolving credit facility (the "Revolving Facility") that matures on December 1, 2027 (the "Credit Agreement"). Under the Revolving Facility the Company may request up to $20.0 million as part of the swingline, which consists of short-term borrowings, that allows the Company to obtain same-day, short-duration advances to address immediate liquidity needs. On October 30, 2023, EVERTEC and EVERTEC Group entered into a first amendment to the Credit Agreement with a syndicate of lenders and Truist, as administrative agent and collateral agent, providing for (i) additional term A loans in the amount of $60.0 million and a new tranche of term loan B commitments in the amount of $600.0 million maturing October 30, 2030 (the "TLB Facility"). On May 16, 2024, November 26, 2024 and August 12, 2025, EVERTEC and EVERTEC Group entered into second, third and fourth amendments to its Credit Agreement, each providing for a pricing reduction to its TLB Facility. On November 25, 2025, EVERTEC and EVERTEC Group entered into the fifth amendment to its Credit Agreement which provides for an additional $150.0 million under its TLB facility. Unless otherwise indicated, the terms and conditions detailed below apply to both TLA Facility and TLB Facility (together, the "Term Loan Facilities"). At March 31, 2026, the unpaid principal balance of the TLA Facility and TLB Facility were $399.8 million and $690.0 million, respectively. At March 31,2026, the outstanding balance of the Revolving Facility was $25.0 million and the additional borrowing capacity for the Revolving Facility at March 31, 2026 was $169.4 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. Deferred Consideration from Business Combinations As part of the Company's merger and acquisition activities, the Company may enter into agreements by which a portion of the purchase price is financed directly by the seller. At March 31, 2026 and December 31, 2025, the unpaid principal balance of these agreements amounted to $2.3 million and $6.2 million, respectively. Obligations bear interest at rates ranging from 8.2% to 12.9% with maturities ranging from January 2027 through March 2027. The remaining portion of the deferred consideration is included in accounts payable on the Company's unaudited condensed consolidated balance sheet. Note Payable In September 2023, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $10.1 million to purchase software and maintenance which the Company recorded on a discounted basis using an implied interest of 6.9%. As of March 31, 2026, the outstanding principal balance of the note payable on a discounted basis was $5.5 million. 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 sheet. Interest Rate Swaps As of March 31, 2026, the Company has three interest rate swap agreements which convert a portion of the interest rate payments on the Company's Facilities from variable to fixed. The interest rate swaps are used to hedge the market risk from changes in interest rates corresponding with the Company's variable rate debt. The interest rate swaps are designated as cash flow hedges and are considered highly effective. Cash flows from the interest rate swaps are included in the accrued liabilities and accounts payable line item in the Company's unaudited condensed consolidated statements of cash flows. Changes in the fair value of the interest rate swaps are recognized in other comprehensive income (loss) until the gains or losses are reclassified to earnings. Gains or losses reclassified to earnings are presented within interest expense in the accompanying condensed consolidated statements of income and comprehensive income (loss). Swap Agreement Effective date Maturity Date Notional Amount Variable Rate Fixed Rate 2023 Swap November 2024 December 2027 $250 million 1-month SOFR 3.375% 2024 Swap March 2024 October 2027 $150 million 1-month SOFR 4.182% 2024 Swap March 2024 October 2027 $150 million 1-month SOFR 4.172% At March 31, 2026, the carrying amount of the derivatives included on the Company's unaudited condensed consolidated balance sheet was an asset $1.0 million and a liability of $2.5 million. At December 31, 2025, the carrying amount of the derivatives was a liability of $5.2 million. The fair value of these derivatives are estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 8 - Equity for disclosure of gains (losses) recorded on cash flow hedging activities. During the three month period ended March 31, 2026, the Company reclassified gains of $0.2 million, from accumulated other comprehensive income (loss) into interest expense compared to gains of $0.7 million for the corresponding period in 2025. Based on expected SOFR rates, the Company expects to reclassify losses of $0.8 million from accumulated other comprehensive loss into interest expense over the next 12 months. Covenant Compliance As of March 31, 2026, the total secured net leverage ratio was 2.15 to 1.00. As of the date of filing of this Report, no event has occurred that constitutes an Event of Default or Default. In this Report, we refer to the term "Adjusted EBITDA" to mean EBITDA as so defined and calculated in a substantially consistent manner for purposes of determining compliance with the total secured net leverage ratio based on the financial information for the last twelve months at the end of each quarter. Net Income Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share (Non-GAAP Measures) The non-GAAP measures referenced in this Report 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 below. 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, multi-year non-recurring gains recognized in connection with the sale of tax credits, 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. Segment Adjusted EBITDA which is the measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance, is presented in conformity with Accounting Standards Codification 280, Segment Reporting , and for this reason 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. See Note 15 - Segment Information for further information. 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 EBITDA Margin is defined as Adjusted EBITDA as a percentage of total revenues. 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 and premiums 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 positions, tax true-ups, windfall from share-based compensation, unrealized gains and losses from foreign currency remeasurement, among others; and non-controlling interests, 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. A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share is provided below: Three months ended March 31, Twelve months ended (In thousands, except per share information) 2026 2025 March 31, 2026 Net income $ 24,747 $ 33,091 $ 136,216 Income tax expense 4,232 4,136 9,911 Interest expense, net 13,497 13,737 53,003 Depreciation and amortization 37,263 28,473 130,876 EBITDA 79,739 79,437 330,006 Equity income (1) (1,446) (2,077) (989) Compensation and benefits (2) 13,298 11,620 37,711 Transaction, refinancing and other (3) 1,729 (374) 11,961 Loss on foreign currency remeasurement (4) 3,726 833 2,301 Adjusted EBITDA 97,046 89,439 380,990 Operating depreciation and amortization (5) (18,904) (16,620) (71,073) Cash interest expense, net (6) (12,217) (12,964) (49,950) Income tax expense (7) (7,164) (3,197) (20,366) Non-controlling interest (8) (2,712) (398) (6,611) Adjusted net income $ 56,049 $ 56,260 $ 232,990 Net income per common share (GAAP): Diluted $ 0.38 $ 0.50 Adjusted Earnings per common share (Non-GAAP): Diluted $ 0.90 $ 0.87 Shares used in computing adjusted earnings per common share: Diluted 62,578,904 64,836,582 1) Represents the elimination of non-cash equity earnings from equity investments, net of dividends received. 2) Primarily represents share-based compensation and severance payments. 3) Primarily represents fees and expenses associated with transactions as defined in the Credit Agreement and other non-recurring expenses. 4) Represents non-cash unrealized losses and (gains) 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. 6) Represents interest expense, less interest income, as they appear on the unaudited condensed consolidated statements of income and comprehensive income (loss), adjusted to exclude non-cash amortization of the debt issue costs and premiums, and accretion of discount. 7) Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discrete items. 8) Represents the non-controlling equity interests, net of amortization for intangibles created as part of the purchase. 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, 2025 filed with the SEC on March 2, 2026.

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