EVERTEC Stock

Ladies and gentlemen, thank you for standing by. My name is Elaine, and I will be your conference operator for today. At this time, I would like to welcome everyone to Evertec's second quarter 2026 earnings. [Operator Instructions] I will now turn the call over to Lili Arteaga.

Thank you, and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer, and [ Karla Cruz-Jusino ], Chief Financial Officer. Before we begin, I would like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with the cautionary statements contained in our earnings release and the company's most recent periodic SEC report. During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as constant currency revenue, adjusted EBITDA, adjusted net income, and adjusted earnings per common share. Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the investor relations section of our company's website at www.evertecinc.com. I will now hand the call over to Mac.

Thanks, Lili, and good afternoon, everyone. Before we begin, I'd like to officially welcome Lili Arteaga to Evertec. For those of you who have not yet had the opportunity to connect with her, we're excited to have Lili leading our investor relations function and look forward to working with her as we continue to strengthen our engagement with investors and the analyst community. With that, let me turn to our second quarter performance. Our results reflect solid execution across the business and progress on our long-term strategy. Starting on slide 4, our priorities remain clear and consistent.

We continue to strengthen Evertec's position as a leading financial technology and transaction processing company across Latin America and the Caribbean through a balanced approach of organic growth, strategic acquisitions, and disciplined capital allocation. We remain focused on deepening client relationships, expanding our capabilities, and increasing our presence in attractive markets across the region. The momentum we are seeing across the business, together with strategic investments and actions we have taken over the past several years, reinforces our confidence in our ability to deliver sustainable growth and long-term value for our shareholders. Before turning to our quarterly performance, I would like to address the cybersecurity incident we disclosed in June. We responded immediately, activated our incident response protocols, engaging external cybersecurity experts, and working closely with affected clients and authorities. Based on our response efforts and findings to date, we believe our incident response procedures operated as intended. Importantly, the incident did not disrupt our operations or our ability to serve our clients.

While our remediation measures are ongoing, we are focused on supporting those affected, strengthening our environment, and maintaining the security and resilience of the critical infrastructure we operate. With that, let me turn to our second quarter performance. I will begin on slide 5 with an update on organic growth, which continues to be an important driver of value creation. During the quarter, we announced a strategic agreement with Transbank, Chile's leading payment solutions provider and one of the largest acquirers in Latin America. Under this multi-year agreement, which has an initial term of at least 5 years, Evertec will operate the transactional processing environment, and selected technology platforms and services. The engagement represents one of the most significant commercial wins in our history. And on the revenue opportunity, this agreement deepens our strategic relevance in one of Latin America's most important markets and creates a foundation for continued growth with a key client over time.

It also demonstrates the strength of our technology capabilities and the success of the investments we have made to build a scaled, trusted payment and technology platform across the region. We are also building momentum in Mexico. Recently, we signed a contract with Clip, one of Mexico's leading financial ecosystem providers, serving nearly 1 million merchants. This agreement presents an early milestone in our acquiring services business in the country and serves as a strong proof point of our ability to compete and win in Mexico, one of the region's most important payments markets. We are also continuing to leverage capabilities across our platform to expand into new customer segments and use cases in Puerto Rico. Earlier this year, we signed agreements with Metropistas, a toll road operator and subsidiary of Abertis Infraestructuras, to support both card-present and card-not-present transactions. These relationships highlight our ability to bring together capabilities across the organization, including solutions acquired through prior strategic investments, such as PlacetoPay.

Transbank, Clip, Metropistas, and other recent wins demonstrate our ability to secure important organic growth opportunities and expand and fortify our presence across Latin America and the Caribbean. Turning to M&A, our approach remains disciplined and consistent. We continue to focus on businesses with scalable technology, strong market positions, recurring revenue streams, and opportunities to create value through integration, cross-selling, and expanded client relationships. Turning to slide 6, during the quarter, we completed the acquisition of Dimensa. Strategically, Dimensa strengthens our software capabilities for financial institutions, expands our addressable market, and increases our relevance within the Brazilian financial services ecosystem. While the integration remains in its early stages, we are encouraged by the progress made since closing. Our teams are working closely together and we remain focused on executing our integration plans, capturing commercial opportunities, and delivering value through expanded client relationships, cross-selling initiatives, and operational efficiencies.

We believe Dimensa can contribute meaningfully over time through an expanded product portfolio, increased scale, and broader customer reach. Turning now to slide 7, we also completed the acquisition of BBChain, a provider of blockchain infrastructure, tokenization, digital custody, and digital asset solutions for financial institutions in Brazil. BBChain strategically expands our platform beyond traditional payments and banking technology into next-generation digital financial infrastructure. Beyond its financial contribution, although modest from a near-term revenue perspective, the acquisition broadens our ability to serve financial institutions across investment funds, fixed income lending, and digital assets, and reinforces our commitment to innovation. It creates opportunities to extend these capabilities to clients across Latin America over time. Together, our recent acquisitions of Sinqia, Tecnobank, Dimensa, and BBChain represent an important step in our strategy to build a larger, more diversified financial technology platform. By expanding our portfolio and broadening the range of solutions we can deliver, these businesses enhance our ability to serve clients across multiple product areas while creating additional opportunities for growth over time.

Before turning to our quarterly results, I would like to briefly touch on our AI initiatives on slide 8. Earlier this year, we introduced the governance framework and strategic approach that are guiding our adoption of AI across the organization. Since then, we have continued to advance those initiatives with a focus on three priorities: driving greater efficiency, fostering innovation, and further enhancing the service we deliver to our clients. We are employing AI across a broad range of use cases, including accelerating software development, improving incident management and service quality, enhancing fraud detection and risk monitoring capabilities, and supporting the development of new client-facing solutions. Several of these initiatives are already generating encouraging results through improved productivity, enhanced quality, and faster delivery. While our efforts today remain focused on operational efficiency and execution excellence, we also see longer-term opportunities to enhance existing solutions, expand capabilities, and develop new offerings that create additional value for our clients. We believe AI will become an increasingly important enabler of how we operate, innovate, and serve our clients. Over time, we expect these capabilities to create opportunities to enhance both revenue growth and profitability.

As these initiatives continue to mature, we expect to gain greater visibility into their impact and anticipate starting to incorporate these benefits into our financial outlook starting in 2027. Now turning to slide 9, I'll cover key highlights from our second quarter results. Revenue for the quarter was approximately $275 million, an increase of 20% compared to the prior year. Growth was driven by continued organic performance, contributions from recent acquisitions, and favorable foreign currency movements, reflecting the benefits of our balanced growth strategy and increasingly diversified business model. On a constant currency basis, revenue grew approximately 16% year-over-year. Adjusted EBITDA for the quarter was approximately $109 million, up 18% year-over-year, while adjusted EBITDA margin was 39.8%. This performance reflects the scalability of our business model and our ability to translate revenue growth into earnings while continuing to invest in strategic initiatives that support the business in the long term.

EPS increased to $1.05 from $0.89 in the prior year. The increase was driven primarily by higher earnings and also benefited from the reduced share count resulting from share repurchase activity over the past several quarters. From a capital allocation perspective, we continue to execute against all three pillars of our strategy during the quarter. We invested in organic growth initiatives and completed the acquisition of Dimensa while continuing to return capital to shareholders through our quarterly dividends and share repurchase program. During the quarter, we repurchased approximately 2 million shares for a total of $47 million and paid $3 million in dividends. At quarter end, approximately $83 million remained under our share repurchase authorization, and last week, the board replenished this authorization to $150 million. Our liquidity remained strong at approximately $420 million at quarter end, providing financial flexibility to invest in growth, support ongoing integration activities, and allocate capital toward the opportunities we believe will generate the highest long-term returns for shareholders.

Let me now provide an update on Puerto Rico, now beginning on slide 10. Our Puerto Rico business delivered another strong quarter and continues to provide a resilient foundation for Evertec. Merchant acquiring revenue grew 11% year-over-year, reflecting strong organic growth driven primarily by higher sales volume, non-transactional revenues, and an improvement in spread. Payment services revenue increased 8% year-over-year, driven by higher POS transaction volumes, the continued momentum in ATH Móvil, particularly ATH Móvil Business, and a non-recurring volume-based benefit recognized during the quarter. As expected, business solutions reflected the previously discussed reset in year-over-year comparisons, resulting from the 10% contractual discount provided to Popular. More broadly, economic conditions in Puerto Rico remain favorable. Employment trends remain positive, while consumer spending and tourism activity continue to provide a stable backdrop for our business.

During the quarter, the Puerto Rico government also authorized a $554 million tax relief program. This environment continues to support Puerto Rico's role as a stable source of recurring cash flow and earnings for the company. Turning to slide 11, Latin America once again was a meaningful contributor to growth. Revenue increased 52% year-over-year on a reported basis, benefiting from the contribution of recent acquisitions and continued organic growth across the region. Brazil has also benefited from the favorable foreign currency movements, which contributed approximately $9 million during the quarter. On a constant currency basis, our Latin America business grew 42% compared to the prior year. In summary, we're pleased with our second quarter performance and the continued progress we're making in executing our strategic priorities. Transbank, Clip, Metropistas, and other recent wins demonstrate our ability to win important organic growth opportunities and expand and fortify our presence across Latin America and the Caribbean, while Dimensa and BBChain broaden our capabilities and strengthen our platform offering. Collectively, we are building a larger, more diversified financial technology infrastructure. At the same time, our disciplined capital allocation framework allows us to invest in strategic initiatives while continuing to return capital to shareholders.

With that, I will turn the call over to [ Karla Cruz-Jusino ].

Thank you, Mac, and good afternoon, everyone. Turning to slide 13, I'll begin by reviewing Evertec's second quarter results. Total revenue for the quarter was $275 million, an increase of approximately 20% compared to the prior year quarter. Driven by organic growth across most of our segments, contributions from our recent Tecnobank and Dimensa acquisitions, and favorable foreign currency movements primarily in Brazil. On a constant currency basis, growth was approximately 16%. Adjusted EBITDA increased 18% year-over-year to $109 million, driven by the strong revenue growth. Adjusted EBITDA margin was 39.8% compared to 40.3% in the prior year.

The modest decline primarily reflects the increasing contribution from Latin America, where we are capturing growth opportunities in markets with a different margin profile. Adjusted net income increased 12% year-over-year to $65 million, reflecting strong adjusted EBITDA performance. This was partially offset by a higher adjusted effective tax rate, higher depreciation and amortization expense, and the non-controlling interest associated with the Tecnobank acquisition completed in the fourth quarter of 2025. The higher adjusted effective tax rate primarily reflects the greater proportion of taxable income generated in higher tax jurisdictions. Adjusted EPS was $1.05, an increase of 18% from the prior year, reflecting adjusted net income growth and the benefit of a lower share count resulting from repurchases completed during the current and prior periods. Before I turn to the discussion by segment, I would like to address several non-recurring items that were reflected in our GAAP results this quarter. First, there were a number of acquisition-related impacts primarily associated with the Dimensa and Tecnobank acquisitions. These included higher depreciation and amortization expenses related to acquired technology, tangible assets, and increased interest expense resulting from the financing used to complete those acquisitions.

Also, GAAP tax expense was impacted by discrete tax items, including taxes associated with a dividend distribution from a foreign subsidiary that was used to partially fund the Dimensa acquisition. Second, we recorded impairment charges associated with our decision to exit our participation in a JV focused on developing payment services solutions in Latin America. This decision reflects our disciplined approach to capital allocation and our continued focus on deploying capital toward opportunities that are most closely aligned with our long-term strategic priorities. And finally, we incurred costs related to the response and remediation of the cyber incident disclosed in June. While these non-recurring items affected our reported results, our underlying operating performance remained strong, as reflected in our revenue growth, adjusted earnings, and the increased full-year outlook. With that, merchant acquiring revenue grew to $42 million, driven by broad-based growth across multiple revenue drivers. Sales volume and transactions grew approximately 7% and 6% respectively, reflecting both the onboarding of new high-volume merchants, as well as growth within our existing customer base.

Revenue growth also benefited from a favorable transaction mix, which contributed to higher spread, as well as pricing initiatives implemented during the current and prior year that drove higher non-transactional revenues. Results also reflected healthy consumer spending trends in Puerto Rico, including the benefit of the tax relief initiatives implemented by the Puerto Rico government during the quarter. Importantly, growth was driven by both volume expansion and spread improvement, reflecting the health of our merchant acquiring business and the effectiveness of our pricing initiatives. Adjusted EBITDA for the segment was $22 million, with an adjusted EBITDA margin of 41.7%, down approximately 60 basis points from the prior year. The decline primarily reflects higher processing costs associated with CPI-related increases within our Payments Puerto Rico segment. Overall results continue to reflect stable demand and healthy underlying transaction activity. Turning to slide 15, payment services revenue increased 8% year-over-year to $61 million. Growth was driven by continued momentum across our payment solutions, including ATH Móvil, particularly ATH Móvil Business, which continued to deliver double-digit growth in both volumes and transactions.

We also benefited from approximately 12% year-over-year growth in POS transactions, reflecting healthy consumer activity across Puerto Rico, as well as from the non-recurring volume-based benefit recognized during the quarter. Adjusted EBITDA increased 12% year-over-year to $37 million, while adjusted EBITDA margin expanded approximately 210 basis points to 60.6%. Margin expansion was driven by the favorable contribution of the non-recurring volume-based benefit, which was highly accretive during the quarter. More broadly, the segment continues to benefit from growing transactions and volume activity and the scalability of our platforms, positioning us well for long-term growth opportunities. Turning to slide 16, Latin America Payments and Solutions was once again the largest contributor to our revenue and EBITDA growth during the quarter. Revenue increased 52% year-over-year to $131 million. Approximately $9 million of this growth was attributable to foreign currency movements, primarily reflecting the appreciation of the Brazilian real compared to the prior year.

On a constant currency basis, revenue grew approximately 42%. Growth was driven by the contributions from the Dimensa and Tecnobank acquisitions, including Tecnobank's expansion into two additional states in Brazil. Our underlying organic performance was supported by business outsourcing services, licensing and platform revenues, and higher transaction volume across our digital solutions in Brazil. We also saw continued strength in payment, software, and data solutions throughout the region and increased services provided to Puerto Rico. On a reported basis, adjusted EBITDA increased 70% year-over-year to $40 million, while adjusted EBITDA margin expanded approximately 320 basis points to 30.3%. Margin expansion was in part driven by the contribution from Tecnobank, which carries a higher margin profile, partially offset by the inclusion of Dimensa, which currently operates at lower margins than our existing Latin America business. The results do not yet reflect the benefit of future synergy opportunities that we expect to realize over time. On a constant currency basis, adjusted EBITDA was $38 million and the margin was 31.5%. Overall, our results continue to demonstrate the benefits of our Latin America strategy, including our ability to scale capabilities across markets, deepen client relationships, and expand our presence in attractive growth segments.

Moving to slide 17 are the results of our business solutions segment. Revenue for the quarter was $59 million, a decrease of 9% year-over-year. As expected, the decline was primarily attributable to the 10% discount to Popular that became effective in October of last year. Adjusted EBITDA was $23 million, a decrease of 13% from the prior year, reflecting the impact of the 10% discount to Popular. Adjusted EBITDA margin contracted approximately 200 basis points to 38.3%, also reflecting the impact of the discount, partially offset by the non-recurrence of project-related expenses recorded in the prior year. Overall, segment performance was in line with our expectations and reflects the underlying stability of the business despite the anticipated impact of the Popular pricing reset. Turning to slide 18, we have a summary of our corporate and other expenses.

Adjusted EBITDA was negative $12 million for the quarter, representing 4.2% of total revenue. Turning to slide 19, I will now review our cash flow performance. Through the second quarter, we generated $91 million of net cash from operating activities, reflecting continued focus on working capital management and cash conversion. During the period, we deployed capital across multiple priorities, including acquiring Dimensa for approximately $199 million and $73 million returned to shareholders through dividends and share repurchases. Net debt increased by approximately $152 million, primarily reflecting financing activities related to the Dimensa acquisition during the quarter. We ended the quarter with $261 million of unrestricted cash, excluding cash in settlement assets, compared to $306 million at year-end 2025. Turning to slide 20, our net debt position at quarter end was approximately $1 billion, comprised of $1.3 billion in total loan and short-term debt, offset by $261 million of unrestricted cash. Our weighted average interest rate was approximately 6%, a decrease of approximately 57 basis points year-over-year, reflecting the benefit of debt repricing actions executed during the prior year, as well as lower interest rates.

Net debt to trailing 12 months adjusted EBITDA was approximately 2.55 times compared to 1.95 times a year ago, remaining within our targeted leverage range of 2 to 3 times. This reflects the successful funding of the Dimensa acquisition while maintaining significant financial flexibility. As of June 30th, total liquidity, which excludes restricted cash and includes available borrowing capacity, was approximately $420 million. Overall, our balance sheet remains strong and well-positioned to support both our strategic growth initiatives and ongoing capital return priorities. Turning now to our outlook for 2026 on slide 21. Based on our second quarter performance and our confidence in our ability to continue delivering strong results, we are increasing our full-year expectations. For 2026, we now expect reported revenue to be in the range of $1.085 billion to $1.095 billion, representing growth of 16.4% to 17.5% year-over-year.

The increase in our outlook reflects continued strength across merchant acquiring and Latin America payments and solutions, modestly higher expectations for Dimensa, and the benefit of foreign exchange, partially offset by slightly lower expected revenues in business solutions. Specifically, this outlook includes approximately 200 basis points of foreign currency tailwinds, driven primarily by the appreciation of the Brazilian real, relative to the 2025 monthly average exchange rate used in our constant currency calculations. Importantly, a significant portion of this benefit was already realized in the first half of the year and is therefore reflected in our year-to-date results. On a constant currency basis, we now expect revenue growth for 2026 to be between 14.5% to 15.6%, compared to our prior outlook of 13.8% to 15%. Starting with the legacy business, we remain encouraged by the trends we see across our portfolio. Transaction activity remains healthy, particularly across our acquiring and payment businesses, and execution continues to be strong across the organization. These trends, combined with the continued momentum in Latin America, support our confidence in our Puerto Rico businesses, which continues to perform at or modestly above the assumptions embedded in our original outlook.

At the segment level for merchant acquiring, we now expect high single-digit growth in 2026, supported by continued transactional and volume growth, as well as the benefit of the implementation of key merchant relationships. Between payments Puerto Rico and Caribbean, we continue to expect mid-single-digit growth driven by continued strength in ATH Móvil and POS volumes, including processing services provided to the Latin America segment, partially offset by the impact of the Popular discount. For Latin America payments and solutions, we now expect revenue growth within the low 40s on a reported basis and mid to high 30s on a constant currency basis, reflecting continued execution across the region and the contributions from Dimensa and Tecnobank. Finally, in business solutions, we now expect revenues to decline in the mid-single digits. The revised outlook reflects the anticipated impact of the Popular contract discount as well as delays in certain new business wins. As a reminder, the Popular discount anniversary occurs in the fourth quarter, after which the associated headwind will no longer impact the year-over-year comparison. Overall, the increase in our outlook reflects the strength of our diversified business model, continued execution of our growth strategy, and the contribution from our recent acquisitions.

Our outlook continues to assume an adjusted EBITDA margin of 39% to 40%, despite the increasing contribution from Latin America and the addition of Dimensa, which currently operates at a lower margin profile. We continue to expect margins to remain within this range, supported by a favorable business mix and disciplined cost management activities across a broader business. Adjusted EPS is now expected to grow between 8.8% and 11.7% from the $3.62 reported for 2025, or between 7.2% and 10% on a constant currency basis. The increase in our outlook reflects stronger operating performance and the benefit from the share repurchases made during the quarter. From an earnings perspective, our updated guidance continues to assume that Dimensa will be EPS neutral to slightly accretive in 2026. This assumption remains unchanged and reflects the balance between operating contributions, integration timing, and associated financing costs. While stronger operating performance across the business is driving our increased outlook, we continue to expect certain items below adjusted EBITDA to limit the full translation into earnings growth, including higher interest expense, increased depreciation and amortization expense, higher non-controlling interest related to Tecnobank, and a shift in our tax profile resulting from the greater contribution from Latin America.

We continue to expect our effective tax rate to remain within a range of approximately 11% to 12% for the full year. Capital expenditures are still expected to be $90 million. In addition, we expect to continue returning capital to shareholders through dividends and, when appropriate, share repurchases. Overall, our increased 2026 outlook reflects stronger-than-expected performance across merchant acquiring in Latin America, continued progress integrating our recent acquisitions, and favorable underlying business trends. In summary, we delivered a strong second quarter, raised our full-year outlook, and remain well-positioned to execute on our strategic priorities. We continue to see meaningful opportunities to drive growth and create long-term value for shareholders. Operator, please open the line for questions.

Thank you. We will now begin the question and answer session. [Operator Instructions] Your first question comes from the line of Vasu Govil from KBW. Your line is now open. Please go ahead.

Maybe, Mac, first one for you. Congrats on the win with Transbank in Chile. That's a pretty big one. Obviously, investors are interested in understanding how meaningful this relationship could be economically, the timing of when it could start contributing, and how this agreement is similar or different from the Santander relationship you had. So maybe if you could just elaborate on that, that would be super helpful.

Yes, so first, I mean, look, it's one of the most important commercial contracts we have, besides Popular. So it's a milestone for us and it gives us significant presence in Chile and continues to validate our technology and our capabilities. We're already in the process going through the implementation, and it'll be a migration of their existing merchant base. So once it is implemented, it'll ramp very quickly because it is a migration. It's a conversion versus just start with 1 merchant and then add the next. We expect it to start impacting the second half of 2027, but really fully ramp in 2028. So we're incredibly excited with that and also with Clip.

We also announced that we're doing a deal with Clip in Mexico, which is not as large as this deal, but from a reputational perspective, we're working with them. They have MiClip, which is their e-wallet. And we're using our acquiring switching technology to help enable that. And so we're pretty excited about that as well because it is a marquee account in Mexico.

Great. Thank you for that color. And then maybe a quick one for you, [ Karla Cruz-Jusino ]. I heard the tax relief initiatives that helped merchant acquiring in Puerto Rico. Was that a one-time tailwind or is that a benefit that you're expecting will continue? And then I think you also mentioned pricing as a tailwind. Could you remind us if this is a new round of pricing actions or some residual benefit from the prior repricing actions? Just any color on that would be helpful.

Yes, so starting with the tax relief, that is a benefit that we do not necessarily anticipate to recur throughout the second half of the year. It was very specific to a tax relief effort that was approved by the local government specifically for the 2025 tax year. And then from a pricing initiative perspective, that is mainly attributed to two main pricing efforts that we executed, one of them being executed in the second half of 2025, and then the second one more recently, specifically now in Q2.

So, we should expect the benefit to sort of last with us for another 4 quarters?

Correct. For the one that was implemented in Q2, definitely we will see that benefit throughout the rest of the year.

Great. Thanks. I'll hop back in queue.

Your next question comes from the line of Jamie Friedman from Susquehanna. Your line is now open.

Congratulations on the strong results. I also wanted to ask about Transbank, Mac. Actually, to step back, I want to ask about Chile more broadly. My recollection is that it was a national scheme that had been privatized in Chile. If I got that wrong, I apologize. If you could give us the cliff notes on where the banking system is in Chile and how that's evolving and if Transbank is participating in that. Thank you.

Sure. No, good question. So Transbank was originally a monopoly that all of the banks in Chile used to actually create the merchant acquiring business to support the issuing business. Transbank actually owned the merchant contracts and then each of the banks had equity ownership in Transbank. One of the first big banks to peel away and leave Transbank was Santander. And that was a deal that we announced some time ago, which is a similar deal. It's a processing deal that we do for Santander.

And that was, at the time, that was a huge deal for us. And then Banco de Chile has also decided to leave Transbank because they want to build and own their own merchant portfolio. And again, Banco de Chile selected us as well, and we announced that maybe a year or so ago. Now, Transbank is the remaining company, and there are many banks that still use Transbank for their merchant acquiring business. The banks still own Transbank, so it's still owned by all of the banks and it is still the largest merchant acquirer in Chile. And given the success that we've worked with the two largest banks that we've worked with, Transbank has now decided that we have the right technology for them as well.

Wow, okay, now I get it. That is very cool. If you look across LATAM more generally, are there other countries that still have that sort of schema, or is this unusual down there? Meaning like a national charter, or can you templatize this elsewhere?

Yes. So, I mean, look, it is. In many countries, there's actually two providers. One was typically the legacy Mastercard provider and one was Visa, and they were owned by the banks. And now both of those, like there are two in Colombia, and both of those now do Visa and Mastercard. So there still are legacy monopoly or duopoly businesses across the region. And ultimately, if we can demonstrate our capabilities in some of these other countries, it could open up those opportunities as well.

All right, I'll drop back in the queue. Thank you.

Your next question comes from the line of Chris Kennedy from William Blair. Your line is now open. Please go ahead.

Mac, it's great to hear about the win with Clip in Mexico. Can you just give us an update on Evertec's position in Mexico and the opportunity in that market?

Yes, so first, I mean, Mexico is the second largest market in the region, following Brazil, and it's significantly larger than any of the other markets. Given the size of the market, we're still very, very small, but this is really one of the first, you know, we have some issuing capabilities that we rolled out with clients in the market. This is really the first client that we've had that is meaningful where we're providing switching services, which is part of our processing capabilities. So number one, it's allowing us to localize that solution more broadly. And secondly, from a reputational perspective, I think it'll give us even further credibility in the market and frankly outside, because Clip is one of the most well-known fintechs in all of Latin America.

Understood. And thank you for that. And then [ Karla Cruz-Jusino ], you mentioned the different margin profile for the LATAM business. Can you talk about the long-term opportunity for margin expansion within that segment?

Yes, we've discussed in the past, right, and we actually adjusted our guidance in the last call to reduce it, to incorporate the lower margin profile from the acquisition of Dimensa. We also mentioned, and I'll highlight it again, that we do anticipate being able to incorporate certain synergies that are expected to be more meaningful as we enter 2027. And that is a great opportunity for us to, let's say, bring those margins back to a more stable profile compared to what we used to be before some of these acquisitions.

Okay. Thank you. Appreciate it.

Your next question comes from the line of [ Madison Sykes ] from Raymond James. Your line is now open. Please go ahead.

I wanted to start on Dimensa. I know it's only been a quarter here, but maybe just touch on how the integration is going. And, Mac, I know you were pretty optimistic around the potential synergies there. So just as you've had a quarter with the business, maybe just touch on where you see some of the potential for near-term synergies as it relates to that.

Yes, so what I would say is from a forecast perspective, it's actually meeting, slightly exceeding our original expectations. As far as synergies, the thesis still holds, and we're in the process of working through the synergies, realizing those. Those are already in the guidance for 2026 and they'll have a good impact in 2027. But we're pleased with the deal and even with meeting with customers. They're excited that Evertec is now an owner of the asset and they'd like to see us do similar things we did with Sinqia, right? Improve the customer experience and also invest in the product platforms, and so we're pretty excited about the combination of those businesses.

Okay, awesome. And then I wanted to follow up on the merchant acquiring business as well. So revenue growth accelerated back into the double digits. You talked about some of the tailwinds you experienced, but I believe you also mentioned 7% and 6% volume and transaction growth, if I heard correctly. So I guess just a two-part question. One, is it fair to say that that potentially accelerated modestly just given the revenue results? And then secondly and more broadly, can you just touch on what's driving the strong volume and transaction growth and maybe how sustainable you think that is in the second half? Thanks.

Yes, so correct. We did see 7% growth in volume transactions in the quarter. That definitely accelerated compared to what we ended Q2. The main drivers of that volume growth is the organic growth that we've seen in that segment, recent client wins that we have been able to sign and implement in the recent quarters. We also saw a positive impact from gas prices increasing. That one, we call it out because we didn't necessarily see a negative impact in the rest of the vertical. So we were able to see a resilient consumer spend pattern into the Puerto Rico economy, regardless of that, let's say, increasing gas prices. And then the third one would be the tax incentive that we called out.

That one, we do not necessarily expect it to recur in the near future for the second half of the year. And that's part of why we raised or confirmed the expectation for merchant acquiring to grow in high single digits, is that we do continue to anticipate further contributions from a growth perspective coming from new merchants, some of them announced by Mac in his presentation.

Okay, awesome. And just to clarify, so the metric that you gave was 7% volume transaction growth, correct?

Yes. Correct.

Okay, awesome. Thank you so much for taking the questions. I appreciate it.

Your next question comes from the line of [ Nate Vinson ] from Deutsche Bank. Your line is now open. Please go ahead.

I wanted to ask about the BBChain acquisition. Sounds pretty interesting. Was hoping for a little bit more on the strategic rationale there. Maybe you could talk about what you're hearing from your clients on demand for digital assets in Latin America or maybe across your other regions as well. So what specific feedback were you receiving that led you to pursue that acquisition and how do you expect to fold BBChain's offerings into the rest of the company?

Yes, no, look, we just closed on Friday and we're pretty excited. It's a very small, small deal, but the capabilities and the technology that they have, we're very excited about. If you think about our business specifically in Brazil, we provide the ledger and the technology for many of our clients to manage assets, whether it's pension funds, whether it's the consortium business, whether it's the funds business. And as those asset classes become digitized, right? Through tokenization, through blockchain, through different technologies. We now have the technology to help our clients do that, whether it's some type of government agency trying to issue bonds, whether it's equities, but as there's this move in Brazil, which there is, the Brazilian government is working on projects specifically to look at can they digitize bonds. We're one of the technology solutions that are part of those initiatives as they evolve. So it's still early stage, but I would say BBChain is already experimenting with the government, experimenting with some of our clients, our financial service companies in Brazil. And this allows us to extend that we have the platform to manage those assets, now we have the technology to help them digitize those assets.

Yes, super interesting. And then [ Karla Cruz-Jusino ], maybe one for you. I know you called out the lapping of the Popular headwinds. Just wondering, as we set our model and think about growth in the third quarter versus the fourth quarter, are there any other grow-over impacts or factors that we need to incorporate into our numbers? I think last year there was a Bad Bunny residency that may have helped some numbers in Q3. So just wondering that factor or anything else we should keep in mind as we set our models.

From a business solutions perspective, you're right. The discount is going to be overlapping now in Q4, so that's a good time consideration from a, let's say, Q3 versus Q4 perspective. On the rest of the business, aside from what you just called out, also the Bad Bunny residency that did benefit Q3 of last year. We don't necessarily have anything to call out. But in LATAM, we do anniversary also the Tecnobank acquisition in the fourth quarter. So that's also an important consideration there in that segment.

That concludes our question and answer session. I will now turn the call back over to Mac Schuessler for closing remarks.

First, thanks to everybody for joining us today for the call. Thank you to my colleagues for a record quarter and for some great both organic and inorganic wins. I look forward to seeing you in future conferences or in future calls. Have a good day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good afternoon, everyone, and welcome to EVERTEC's First Quarter 2026 Earnings Conference Call. Today's conference call is being recorded.

At this time, I would like to turn the call over to Loyda Montes Santiago of Investor Relations. Please go ahead.

Thank you, and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer; and Karla Cruz-Jusino, Chief Financial Officer.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report. During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules. Such as constant currency revenue, adjusted EBITDA, adjusted net income and adjusted earnings per common share. Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the Investor Relations section of our company's website at www.evertecinc.com.

I will now hand over the call to Mac.

Thanks, Loyda, and good afternoon, everyone. I'm pleased to announce strong first quarter results that demonstrate continued execution against our strategic priorities and momentum across our core markets.

Today, I'll begin with an overview of our M&A framework and how it is translating into value creation across our portfolio, including the closing of the Dimensa acquisition and an update on Sinqia and Tecnobank. Each of these reflects a different phase of the same strategy, acquiring, integrating and scaling high-quality assets. I'll then review our Q1 performance before turning the call over to Karla for a more detailed discussion of our financial results.

Let me start by outlining how we think about M&A. Our framework is a disciplined approach built around a clearly defined set of criteria. First, we focus on scalable assets with transferable capabilities, which allow us to drive efficient growth while minimizing incremental cost and simplifying integration.

Second, client overlap and regional footprint are also key considerations. We look to expand our services with the right financial institutions and retailers while leveraging the attractive growth characteristics of businesses with core operations across Latin America.

Finally, we prioritize high-quality revenue and strong underlying economics, emphasizing profitable business models supported by recurring or volume-based revenue with clear opportunities for accelerating growth and expanding margin over time.

Consistent with that framework, I'm pleased to announce that we have successfully closed our previously announced acquisition of Dimensa. Strategically, this acquisition represents an important step forward, positioning us amongst the largest financial SaaS providers in the market. Dimensa adds a meaningful set of new client relationships, strengthens existing key partnerships and significantly expands our opportunities within the region as we continue to build a comprehensive one-stop shop portfolio of services. This acquisition simultaneously supports growth and efficiency, reinforcing our leadership in existing markets while expanding our presence into new segments.

From a financial perspective, Dimensa is expected to be neutral to slightly accretive in 2026, reflecting integration timing and financing costs. We anticipate realizing synergies beginning in 2027, which should further enhance the earnings contribution over time. On a pro forma basis and inclusive of the synergies, the acquisition multiple compares favorably with EVERTEC's current valuation. Given we are only days into the acquisition, our near-term focus is integration execution and building momentum through 2026 and beyond as we expect Dimensa to become an increasingly important contributor to our growth as we move forward.

Turning to Sinqia. Integration priorities remain focused on operational discipline, product rationalization and go-to-market effectiveness. The commercial pipeline remains balanced between new customer wins and cross-sell opportunities, supported by our expanded product offering and modernization of existing platforms and the complementary acquisitions we have completed across Brazil. While the competitive environment remains active, our scale, local expertise and increasingly integrated offering continue to differentiate us. As we look ahead, our focus remains on driving operational efficiency and positioning the business for sustained margin improvement over time.

Lastly, Tecnobank continues to validate our M&A strategy in Brazil, strengthening our local scale and capabilities while demonstrating our ability to integrate founder-led platforms and position them for sustainable growth, reinforcing confidence in our ability to execute strategic acquisitions in the region.

Now turning to Slide 7. I'll cover some highlights from our first quarter results. Revenue for the quarter was approximately $247.9 million, an increase of 8% compared to the prior year, driven in part by the full contribution from the Tecnobank acquisition as well as organic growth across most of the company's segments. On a constant currency basis, revenue also reflected the continued stability in the underlying business momentum with approximately 5% year-over-year growth.

Adjusted EBITDA for the quarter was approximately $97 million, up 9% year-over-year. Adjusted EBITDA margin was 39.1%, consistent with the prior year despite headwinds from the 10% discount to Popular and unfavorable foreign exchange dynamics. This performance reflects our continued focus on disciplined cost management and operational efficiency.

Adjusted EPS was approximately $0.90, an increase of 3% from the prior year, driven by strong adjusted EBITDA growth and the lower share count, reflecting the impact of the share repurchases completed during the current and prior year.

From a capital allocation perspective, during the quarter, we paid approximately $3.1 million in dividends and repurchased approximately 700,000 shares for a total of $20 million. We exited the quarter with approximately $130 million remaining on our share repurchase program, providing us flexibility going forward. Our liquidity remains strong at approximately $460 million as of March 31, allowing us to execute on the Dimensa acquisition.

Let me now provide an update on Puerto Rico beginning on Slide 8. Merchant Acquiring revenue grew 2% year-over-year, driven by higher sales volume despite a modest decline in spread that was consistent with our expectations. Payment Services Puerto Rico grew 6% year-over-year, driven by transaction growth and continued strength in ATH Movil, primarily ATH Movil Business.

Business Solutions revenue declined approximately $6 million or 9% year-over-year, primarily reflecting the 10% discount to Popular as well as a onetime hardware and software sale executed during the prior year period.

Overall, economic conditions in Puerto Rico continues to remain stable with positive trends in total employment and strong tourism performance. The unemployment rate remained at 5.6%, while consumer spending continued to demonstrate strength and stability.

Turning to Slide 9. In Latin America, revenue increased 32% year-over-year on a reported basis. Tecnobank delivered a strong full quarter contribution in Q1, supporting revenue and EBITDA growth in Latin America and reinforcing the reacceleration we have been seeing in Brazil. We also benefited from the continued organic growth across the region, including contribution from recent client wins. Results also benefited from a $6.8 million foreign exchange tailwind, primarily in Brazil. On a constant currency basis, our Latin America business grew 24% compared to the prior year.

In summary, we're pleased with our first quarter performance and the continued progress across our strategic initiatives. Our diversification into Latin America continues to drive growth. Our Puerto Rico business remains resilient, and our disciplined M&A strategy continues to deliver tangible results. We remain focused on sustainable organic growth, disciplined capital allocation and long-term value creation.

With that, I will now turn the call over to Karla, who will provide more details on our Q1 results and discuss our updated outlook for the remainder of 2026.

Thank you, Mac, and good afternoon, everyone. Turning to Slide 11. I'll begin with a review of EVERTEC's first quarter results. Total revenue for the quarter was $247.9 million, an increase of approximately 8% compared to the prior year, driven by organic growth across most of our segments and the contribution from Tecnobank, which closed on October 1 of last year. On a constant currency basis, revenue growth would have been approximately 5%, with reported results this quarter benefiting from favorable foreign currency fluctuations, primarily in Brazil.

Adjusted EBITDA for the quarter increased to $97 million, up 9% year-over-year with a 39.1% margin, consistent with the prior year despite several known headwinds during the period. These headwinds included the full impact of the 10% discount to Popular as well as higher-than-anticipated unfavorable foreign exchange dynamics particularly in countries where our contracts are denominated in U.S. dollars, while our expenses are in the local currency, including Uruguay and Costa Rica.

Our ability to maintain margin stability in this environment reflects continued execution against our cost discipline initiatives and a strong focus on operational efficiency across the organization. We continue to actively manage expenses while supporting growth initiatives, which have allowed us to absorb these headwinds and deliver consistent profitability.

Adjusted net income was $56 million, broadly consistent with the $56.3 million in the prior year, reflecting strong adjusted EBITDA performance. This resulted in solid bottom line stability despite the anticipated increase in the adjusted effective tax rate to 10.9% for the quarter, driven by the continued growth in our Latin America operations, which are subject to higher statutory tax rates.

Results also reflect a higher operating depreciation and amortization as well as the impact of the 25% noncontrolling interest from the Tecnobank acquisition.

Adjusted EPS was $0.90, an increase of approximately 3% from the prior year, reflecting adjusted net income results and the benefit of a lower share count from repurchases completed during the current and prior periods.

Moving to Slide 12. I will now cover our first quarter results by segment, beginning with Merchant Acquiring. Net revenue increased approximately 2% year-over-year to $48.4 million. Sales volume and transactions both grew approximately 4% with growth driven by new high-volume merchants as well as from existing customers. As expected, we did see a modest decline in spread, reflecting a change in the mix consistent with more recent trends, which was partially offset by higher non-transactional revenues from pricing initiatives implemented in the third quarter of prior year.

Adjusted EBITDA for the segment was $19.5 million with an adjusted EBITDA margin of 40.3%, down approximately 240 basis points from the prior year. The margin decline was primarily driven by higher processing costs related to CPI increases in our Payment Puerto Rico segment. Overall performance continues to demonstrate stable demand and healthy underlying transaction activity.

On Slide 13 are the results for the Payment Services Puerto Rico and Caribbean segment. Revenue for the quarter was $58.4 million, an increase of approximately 6% year-over-year. Growth was driven by the continued strong performance in ATH Movil, particularly ATH Movil Business, which delivered double-digit growth in both volumes and transactions. We also saw solid growth in POS transactions, which increased approximately 8% year-over-year, supporting the overall segment performance.

Results also benefited from higher services provided to our Latin America segment, reflecting organic growth and new client activity. These were partially offset by the 10% discount to Popular.

Adjusted EBITDA was $34.7 million, an increase of approximately 11% from the prior year, with an adjusted EBITDA margin of 59.4%, an increase of approximately 240 basis points. Margin expansion was driven by incremental revenues, including increased volumes across Merchant Acquiring and Latin America. Overall, the segment delivered strong year-over-year growth and continued to demonstrate its ability to scale.

Turning to Slide 14, I'll cover our results for Latin America Payments and Solutions, which was the largest contributor to revenue and EBITDA growth during the quarter. Revenue for the quarter was $110.3 million, an increase of approximately 32% year-over-year. Currency tailwinds in the quarter benefited segment growth by approximately $6.8 million or 8%, mainly driven by the appreciation of the Brazilian real.

On a constant currency basis, revenue growth for the segment would have been approximately 24%. Growth was driven by the full quarter contribution from the Tecnobank acquisition, continued strength in Brazil, solid performance from Grandata and overall organic growth across the region. These were partially offset by the attrition impact from the MELI relationship, which will anniversary in the second quarter and pricing actions to extend key client contracts.

On a reported basis, adjusted EBITDA was $32.8 million, an increase of approximately 32% from the prior year, with an adjusted EBITDA margin of 29.7%, aligned with prior year. Adjusted EBITDA benefited from strong revenue growth, but was partially offset by foreign currency headwinds from the higher-than-anticipated appreciation in markets such as Uruguay and Chile. Overall results reflect strong execution across the region, positioning the segment well for the remainder of the year.

Moving to Slide 15 are the results for our Business Solutions segment. Revenue for the quarter was $59.5 million, representing a decrease of approximately 9% from the prior year. This decline was in line with our expectations and was primarily attributable to the 10% discount to Popular that began in October of prior year as well as a nonrecurring hardware and software sale completed during the prior year quarter.

Adjusted EBITDA was $21.6 million, slightly below the prior year, reflecting the impact of the 10% discount to Popular. Adjusted EBITDA margin increased approximately 240 basis points to 36.3%, mainly driven by lower expenses associated with the prior year onetime hardware and software sales, which came in at lower margins as well as lower operating costs tied to nonrecurring projects executed in the prior year quarter and cost-saving initiatives implemented within the segment. Overall, segment profitability remained resilient with margin expansion reflecting disciplined cost management and the absence of prior year onetime items.

Moving to Slide 16, you will see a summary of our corporate and other expenses. Adjusted EBITDA was negative $11.7 million for the quarter, representing 4.7% of total revenue, slightly below our expectations.

Moving to Slide 17. I'll now review our cash flow performance. We continue to effectively manage our working capital, generating net cash from operating activities of $31.2 million during the quarter. Capital expenditures were $22.7 million for the quarter, reflecting ongoing investments to continue modernizing our platforms and enhancing our information security capabilities.

During the first quarter, we paid down approximately $6 million in debt and returned approximately $23.1 million to shareholders through share repurchases and dividends. We repurchased 683,000 shares for $20 million during the quarter. And as of March 31, we had approximately $130 million remaining under our authorized share repurchase program available through December 31, 2027. Our ending cash balance for the quarter, excluding cash and settlement assets, was $314.5 million, a decrease of approximately $17.3 million compared to year-end 2025.

Turning to Slide 18. Our net debt position at quarter end was $826.2 million, comprised of $1.1 billion in total long and short-term debt, offset by $290.9 million of unrestricted cash. Our weighted average interest rate was approximately 6%, a decrease of approximately 55 basis points year-over-year, reflecting the benefit from debt repricing actions executed during the prior year and lower interest rates.

Our net debt trailing 12 months adjusted EBITDA was approximately 2.15x compared to 2.04x a year ago, remaining at the lower end of our target leverage range of 2 to 3x. This continues to reflect our disciplined approach to capital allocation and balance sheet management.

As of March 31 and prior to closing the Dimensa acquisition, our total liquidity, which excludes restricted cash and includes available borrowing capacity, was $460.3 million, slightly above the prior year.

Turning now to our outlook for 2026 on Slide 19. Based on our first quarter performance and the closing of the Dimensa acquisition, we are increasing our full year expectations. For 2026, we now expect reported revenue to be in the range of $1.073 billion to $1.085 billion, representing growth of 15.1% to 15.4% year-over-year. This outlook includes approximately 135 basis points of foreign currency tailwinds, driven primarily by the current appreciation of the Brazilian real relatively to the 2025 monthly average exchange rate.

On a constant currency basis, we now expect revenues for 2026 to grow between 13.8% to 15%, an increase from our prior constant currency range of 8.7% to 10%. This outlook reflects 2 primary factors: the inclusion of Dimensa following its closing and the continued solid performance across our existing businesses, which remains largely in line with the assumptions we previously shared.

Starting with the legacy business, we continue to have a positive outlook supported by sustained momentum across payments, resilient performance in Puerto Rico and continued growth across key Latin American markets. We are seeing consistent execution against our commercial and operational priorities, driven by a strong pipeline and disciplined cost management. As a result, our underlying assumptions for the core business remains intact and in several areas are tracking modestly ahead of our initial expectations.

With respect to Dimensa, the updated outlook reflects the incremental revenue contribution from the acquisition. Dimensa strengthens our position in Latin America and aligns closely with our long-term strategic priorities. While the business currently operates at a modestly lower margin profile than our Latin America segment average, it has scale and strategic adjacencies that we expect to enhance our growth profile over time. For 2026, we are not assuming any synergies as we expect the majority of cost and scale benefits to begin materializing in 2027 and beyond.

At the segment level, for Merchant Acquiring, we continue to expect mid-single-digit growth in 2026, supported by stable transaction activities, sales volume and the implementation of key merchants.

In Payments Puerto Rico and Caribbean, we also continue to expect mid-single-digit growth driven by continued strength in ATH Movil and POS volumes, including processing services provided to the Latin America segment, partially offset by the impact of the Popular discount.

For Latin America Payments and Solutions, we now expect revenue to grow in the high 30s on a reported basis and mid-30s on a constant currency basis.

Finally, in Business Solutions, we continue to expect revenue to decline in the low to mid-single digit, reflecting the anticipated reset following the Popular discount.

Adjusted EPS is now expected to grow between 6.6% and 9.9% from the $3.62 reported for 2025 or between 5.2% and 8.6% on a constant currency basis. This outlook assumes an adjusted EBITDA margin of 39% to 40%. The updated range reflects the higher anticipated contribution from Latin America while continuing to incorporate the operating discipline and cost initiatives we have discussed in prior quarters.

From an earnings perspective, our updated guidance assumes that Dimensa will be EPS neutral to slightly accretive in 2026, reflecting the balance between operating contributions, incremental interest expense and integration timing. Below the line, our outlook reflects the post-transaction capital structure, financing costs and related tax considerations. We continue to expect our effective tax rate to remain within a range of approximately 11% to 12% for the full year. Capital expenditures are also expected to remain at approximately $90 million. In addition, we expect to continue returning capital to shareholders through dividends and when appropriate, share repurchases.

Overall, our increased 2026 outlook reflects confidence in the performance of our existing business and the strategic and financial contribution of Dimensa. While our focus in 2026 remains on integration and execution, we continue to see meaningful long-term value creation opportunities.

In summary, we delivered a solid first quarter, increased our full year outlook and remain well positioned to execute against our priorities for 2026, supported by a strong balance sheet, disciplined capital allocation and continued focus on execution.

With that, operator, please open the line for questions.

[Operator Instructions] And the first question comes from Madison Suhr with Raymond James.

I just wanted to start here on the updated outlook. I appreciate the color on the expected EPS impact from Dimensa. But just as we think about the $40 million raise to the midpoint of revenue, can you give us a more detailed sense of how much of that is driven by the deal versus some of those other factors you talked about?

Madison, thanks for the question. This is Mac. Look, we're not -- we don't break that out, as you know, historically, but let me give you a little bit of color on Dimensa just since you asked. Look, we're incredibly excited about the deal because this year, it will be neutral to accretive. And our leverage ratio will still be 2.4 or less. And in 2026, we have no synergies baked in. So what you're seeing in the guide does include synergies, which we think we'll realize in '27 and '28, which make the deal even more valuable.

Look, it's mostly 95% of its recurring revenue, and it gets us into 2 verticals we're not in today, insurance and risk. And then it also helps us double down on funds and banks. So we think there are a lot of synergies not only on the expense side, but also on the revenue side. But we can't really break out the specifics on the numbers for the deal.

Okay. I appreciate that, and I appreciate the extra color. And then just a quick follow-up here on the corporate revenue headwind. So it grew pretty meaningfully year-over-year. Can you just provide some color on what drove this in the quarter? And then to the extent you can give any expectations, is this kind of the right run rate you're thinking about for the year? Or do you expect it to kind of step down as we progress throughout the year?

Yes. Corporate revenue is impacted by, obviously, intercompany transactions, which we have called out as part of some of the growth on some of our segments. So that is the expected run rate as we think about the next couple of quarters.

And the next question comes from Jamie Friedman with Susquehanna.

I'm sorry for the background noise. But I just want to know, Mac, in terms of your prepared remarks and the observation on Slide 4 about the transferability of the acquired assets. Could you elaborate on that, in particular, the transferability? Like in which use cases have you had the most success so far in transferring the assets either regionally or other verticals?

Yes. So what I would say is -- I mean, there's a couple of pieces to this. One is Sinqia specifically. A lot of what we've done in Brazil is with Sinqia is primarily focused on the current market. We do have some products that we've exported, but it's been limited. PayStudio is the platform. Place2Pay is a platform. RiskCenter is a platform that we've localized throughout the region. That's what Santander is running on. That's what Banco de Chile is running on Grupo Aval and even BCR now in Costa Rica. So those are some of the platforms we've regionalized.

What I would say in Brazil, we've done a good job of leveraging the platforms across -- from a cross-sell perspective. So if you look at this deal right now, so as I said earlier, they have 4 verticals. 2 of those verticals we were not in. So they're in the insurance business. They have about 65% of the market. So a lot of the -- and with the insurance companies, they're dealing with the brokers, they're dealing with the underwriters, they're dealing with the consumers. And then they also have a risk management product for financial institutions. So we're able to cross-sell back and forth our products to their insurance and risk customers and vice versa.

On the fund side, we have a similar product, but we have very different customers. So we have the midsized banks, and they have the larger banks. And you talk about sort of being able to transfer capabilities, we think we can take LOTE45, which is one of our products that we acquired with Sinqia, and we can bolt it on to the Dimensa product. So that's where we can take these products in Brazil and bolt them together because Dimensa has a set of clients we don't have and then we have a capability they don't have, so we can sort of broaden the value proposition.

So in that concept of transferability and platforms we can leverage across deals, we have those that we can leverage across the region, which are a lot of the payment products. And then within Brazil, we can combine some of these products that we have between Sinqia and Dimensa and Tecnobank and then there's huge transferable sort of Rolodexes and integrations we can do to make these products work together.

That's a great answer. And then I want to ask about at a higher level about the prospects of inflation, maybe for Mac or for Karla. Some of the other payments companies are talking about it. So could you share your perspective on how inflation impacts the business, whether it's wage inflation or gas inflation? Or any commentary at a high level on inflation would be helpful.

I mean, look, there are multiple impacts like anybody's business. The good thing is that some of our businesses, some of the payments businesses are actually tied to the size of the ticket. So if there is inflation in some of our merchant acquiring businesses, we actually get the lift in that, right? So we actually see incremental revenue. And then also some of our contracts, particularly with the bank are tied to CPI. The way that interacts and plays is there's a formula. But in some ways, we benefit from inflation. But just like any other business, when there inflation and it has impacts to our costs, those are costs we have to absorb.

I do think we've demonstrated when we have significant cost increases across our base, whether it's the $18 million discount we had to pass to Popular or inflation in general, we've done a good job of managing it and keeping it at our margins at about the 40% level.

And the next question comes from Vasu Govil with KBW.

Mac, maybe first, a high-level one for you on AI. Just given the market's focus on potential for AI to reshape software economics, I'm curious how you think about that potential risk and if you're seeing sort of an appetite among financial institutions in Latin America to embed AI into their own workflows. Just curious how that might affect you.

Yes. Great question, Vasu. Thanks. So what I would say is we are pretty bullish on AI generally, not just around software development, but around the enterprise generally. I'll sort of walk you through how we think about it. I mean this year, we've been very focused on appropriate governance and experimentation to see where we think the biggest benefits are. And there's sort of 3 areas we think we're going to see a big impact. And that's not baked into '26 guidance. I think that's going to impact us in the future years.

Number one is efficiency. We think that we can -- it will change our cost structure, and we can be much more efficient in certain areas. The second is in growth, right? The ability to add new features to improve our products so that we can grow faster. And the third is in quality, right? So the ability to have better quality and better assets because artificial intelligence is helping how we manage service.

I'll give you 2 examples because we've done -- what we've done is experimentation across the organization, and I personally have done some deep dives to understand the impacts to not just software development, but to all of the functions across the company. And what we're finding right now is there's a lot of benefit accruing at the individual level, right, because different departments are experimenting, but we're not seeing it sort of aggregate at the corporate level, and that will be our focus in '27 and '28.

Two examples. One is incident management. I talked about quality, our Place2Pay product, which is our online gateway, is using artificial intelligence to manage incidents. So if there's a system problem or there's an issue with the system, we can resolve the issue 5 to 8x faster using artificial intelligence. So that's better quality for our customers. It keeps our systems up and running in a more durable way. So we see real quality improvement. I mean everybody talks about chatbot and customer service. That's the obvious piece, but incident management is something that people don't typically think about.

On the growth perspective, and our RiskCenter product, which is the product that people use to monitor fraud, we're actually using artificial intelligence to make it easier for our users to interact with the software so that they don't have to know all the different formulas and ways to actually build logic, right, because they use rules and logic to help determine if the transaction is fraudulent, but they can use artificial intelligence with just normal language to create those rules and to create rules more quickly.

And what we're seeing is when we do that, they're seeing 40% less alerts. That means they're not seeing false positives. And then they're actually seeing a 20% increase in fraud detection because the tools are easier to use, artificial intelligence is flagging fraud more quickly. So we're seeing real use cases, Vasu, across all those areas. So we do think that it's going to help us from a margin perspective, but we also think it's going to help us grow faster, and it's also going to improve our quality of delivering and maintaining our services.

That's helpful. And it doesn't sound like you think it's a big threat in terms of banks using AI themselves to disrupt some of the software products you might be offering today.

No. I mean, look, we -- I mean, I understand that theory with some software companies and technology companies, but we're processing financial transactions where there's reconciliation involved, the settlement between financial institutions, their risk management products. So we think the products that we provide, we'll be able to provide them more quickly and more cost effectively. But we actually think it's a catalyst and a tailwind for our business. We don't think it's something that's going to -- I personally don't see it as negative. I see it as quite the opposite.

That's very helpful color. And if I may ask a follow-up on the Banco de today partnership. I think last quarter, you had mentioned it's now operational. Just how is that tracking relative to your internal expectations? And how long before it ramps up to its full run rate? How should we think about the revenue potential, I guess, relative to the Santander relationship in today?

Great question. So what I would say is we've announced a couple of deals that we've talked about on the previous calls, and those are going as expected. Any sort of benefits we see in '26 are already baked into the guidance. But all of the projects that we've announced as far as new clients are going as anticipated.

And the next question comes from Nate Svensson with Deutsche Bank.

I'm going to ask a follow-up on Dimensa, and I totally get you don't break out the inorganic contribution. So maybe I wanted to ask a different way about some of the historical performance. I think if you look at the disclosures from the former owner of Dimensa, they have given some numbers for 2025 and 2024 in Brazilian real.

I just wanted to confirm whether there is any sort of accounting considerations with net to gross revenue or anything like that we need to keep in mind when looking at the historicals. And then also, if you look at the 2024 to 2025 growth rate that they had disclosed was pretty healthy. I don't know if you know if that's all organic. I think Dimensa in the past had maybe benefited from some inorganic tuck-ins. So maybe a better sense of how Dimensa had been performing and leaving aside what exactly is baked into the guide for 2026.

Yes. So what I would say about Dimensa is very similar to Sinqia. Some of their growth was M&A. So when you look at their historical numbers, it includes some M&A. And they did have some softness in their business a couple of years ago, just like we did because of the general circumstances in Brazil, sort of the -- after Lula one, people were much more cautious about IT spend. And they also had some legacy platforms that were outdated.

What we believe -- because I think the important thing is going forward, right, we think, number one, there's some cost synergies that are pretty meaningful that we will take out in 2027. Again, that's not even included in '26. And number two, we do think that we've talked to clients and they're actually excited about us acquiring this asset because they want us to do with Dimensa, what we've done with Sinqia. And that's modernizing the platforms so that they can grow with the business. And they're looking forward to doing -- sort of having multiple relationships with a vendor like Sinqia.

Like I said earlier, we think there are a lot of cross-sell opportunities. Dimensa has some of the biggest banks in the funds business. We can bolt-on 45 to actually provide other capabilities using some of our other products. So we think the revenue synergies and the growth tailwind that we'll have by combining these products, modernizing them and cross-selling are pretty compelling for the deal.

Got it. Helpful, especially the 2024 softness of Dimensa very similar to what you're seeing at Sinqia. So that makes a ton of sense.

I guess the other maybe higher level one, just on capital allocation, right? So you've done a bunch of acquisitions here. Leverage is still in a healthy spot. But when you look at sort of where the stock is trading and valuation and the, I guess, the $130 million or so you still have on the repurchase authorization. How are we -- or how should we think about the prioritization of leaning into that share buyback authorization, more buybacks versus paying down debt versus other opportunities out there to continue building out the business, especially in Latin America? Are there prospects sort of potential attractive deals that you're looking at? Just how should we think about the priority of each of those in '26?

Great question. Look, I mean, a couple of things. One is we just bought Dimensa, right, and we just bought Tecnobank. So we're very focused on integrating those, and that is a key priority for us. As you know, if you follow the story, I mean, we're now close to a little over 45%, closer to 46% of our revenues outside of Puerto Rico, and a lot of that has been M&A. So we will continue to focus on M&A. We continue to have a healthy pipeline. But right now, we're focused on Dimensa, Tecnobank. And then we believe that the stock is, as you can tell by our previous buyback is we're opportunistic. We do understand the stock price is low compared to where it's been over the last year or 2. And so we will continue to balance that as we look at capital allocation. But right now, we're going to focus on the deals we have and continue to consider buying stock.

And the next question comes from Chris Kennedy with William Blair.

You provided some good updates on the economy in Puerto Rico. Any comments or observations on some of the markets outside of Puerto Rico that you can talk about given the macro uncertainties?

Yes. So we wouldn't have anything specific to call out. What we would say is we still are confident in '26. And even with some of the things that are going on in the different markets, we don't see anything that we would specifically call out.

Okay. Understood. And then, Mac, last call, you talked about one of the biggest pipelines for the company. Just -- can you just talk about kind of how the conversion of the pipeline is progressing?

Yes. No, great question. So I mean, we talked about we still -- so we're flipping now to the organic side. Like I said, we posted some pretty big deals, right, Banco de Chile, Grupo Aval, Financiera Oh! was one of the other deals we've talked about. We still have a very healthy organic pipeline, and we're optimistic this year that we'll continue to have wins that we can announce throughout the year.

And that does conclude the question-and-answer session. I would like to turn the floor to management for any closing comments.

I want to thank everybody for joining the call tonight. Again, we look forward to seeing you at conferences and speaking to you individually over the coming quarter. Everybody, have a good night. Thank you.

Thank you. That concludes today's conference. Thank you for attending today's presentation. You may now disconnect your lines.

Good afternoon, everyone, and welcome to EVERTEC's Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's conference call is being recorded. And at this time, I'd like to turn the floor over to Loyda Montes Santiago of Investor Relations. Please go ahead.

Thank you, and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer, and Karla Cruz-Jusino, Chief Financial Officer. Before we begin, I would like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report.

During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules. Such as constant currency revenue, adjusted EBITDA, adjusted net income and adjusted earnings per common share.

Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the Investor Relations section of our company's website at www.evertecinc.com. I will now hand over the call to Mac.

Thanks, Loyda, and good afternoon, everyone. I'm pleased to announce a strong finish to 2025 for EVERTEC, delivering another year of record revenue with solid execution across our core markets. We continue to execute on our strategy to grow organically, expand our capabilities through M&A and strengthen our position in the payments and financial services market.

In the fourth quarter, we closed the previously announced acquisition of Tecnobank. And earlier this month, we also announced our plans to further advance our product offering and customer base in Brazil with the acquisition of Dimensa. We are also now in production with Banco de Chile, providing acquiring, processing and risk monitoring services.

These achievements position us well for 2026 with a continued focus on sustainable organic growth, disciplined capital allocation and long-term value creation through differentiated products and successful integrations. For 2026, we are also proud that more than 40% of our revenues will now be generated outside of Puerto Rico, while maintaining overall corporate margins and absorbing the 10% MSA discount to Popular.

On today's call, I'll provide a brief summary of our 2025 results, including updates on our Puerto Rico and Latin America businesses. recent M&A activity and some comments on AI. I will then turn the call over to Karla, who will provide more details on our Q4 and full year results as well as our outlook for 2026.

Starting with Slide 4, I'll highlight our full year 2025 performance. Revenue for the year was approximately $932 million, a 10% increase over the prior year, 11% on a constant currency basis, reflecting strong execution across all segments. Latin America Payments & Solutions grew 22% year-over-year, benefiting from the full year contribution of the 2 acquisitions closed in the fourth quarter of 2024 as well as the results from Tecnobank during the fourth quarter of 2025. Excluding M&A and the approximately $6 million of foreign currency headwinds, year-over-year growth was in the double digits, reflecting better-than-expected performance in Brazil. Merchant Acquiring revenue grew 5% year-over-year, benefiting from higher sales volume. Payment Services Puerto Rico grew 4% year-over-year, reflecting strong performance from ATH Móvil business and higher transaction volumes.

Business Solutions revenue grew 3% year-over-year, reflecting higher network and consulting services as well as the benefit from projects completed in the current and prior year, partially offset by the 10% discount to Popular that became effective in the fourth quarter. Adjusted EBITDA was $373.4 million, up approximately 10% year-over-year with an adjusted EBITDA margin of 40.1% for the year.

Adjusted EPS increased 10% year-over-year to $3.62, driven by strong adjusted EBITDA growth and lower interest expense, partially offset by higher tax expense. For the full year, we generated approximately $227 million in operating cash flows and returned approximately $82 million to shareholders through share repurchases and dividends, with $66 million repurchases completed during the fourth quarter, taking advantage of the attractive share price.

Our liquidity remains strong at approximately $490 million as of December 31. I would like to note that our Board of Directors approved a refresh of our share repurchase program, authorizing the company to repurchase up to an aggregate of $150 million of shares of its common stock through December 31, 2027. Let me now provide an update on Puerto Rico beginning on Slide 5.

Conditions remain favorable with positive trends in employment and tourism and healthy sales volume and transaction growth driven by merchant acquiring and ATH Movil. Unemployment remains near historic lows and consumer spending continues to demonstrate strength. Turning to LATAM on Slide 6. Revenue was up 22% year-over-year, driven by organic growth and reacceleration in Brazil as well as contribution from recent acquisitions, including Tecnobank, which closed early in the fourth quarter.

On a constant currency basis, revenue increased by 24% compared to the prior year. As an update on Sinqia and our growth opportunities in Brazil, in 2025, we continue to see reacceleration of growth driven by improved customer engagement, positive feedback on our platform modernization efforts and the impact of contract repricing actions.

These initiatives strengthened performance during the current year and position us well as we enter 2026 with meaningful opportunities to continue delivering strong organic growth through deeper penetration of our client base, continued modernization of our platforms and the scalability benefits of the investments we have already made.

Consistent with delivering on our Brazil strategy, we recently announced the acquisition of Dimensa, a B2B technology provider servicing financial institutions in Brazil, which is expected to close in the second quarter. This acquisition strengthens our product offering and expands our addressable market in the region. We expect Dimensa to become an important contributor to growth as we move through 2026 and beyond.

We're also entering 2026 with one of the strongest pipelines we have seen in recent years and have already begun converting that pipeline into wins, including Banco de Chile and Grupo Aval in Colombia, which we have announced over the last quarters. As we move through 2026 and beyond, we expect continued pipeline conversion to be an increasingly important driver of organic growth across Latin America.

Moving on to Slide 7. I want to comment on how EVERTEC is positioning itself in an AI-driven landscape where innovation is accelerating. Our strategy is anchored in a governance framework with a clear focus on data security, responsible AI and centralized oversight through regional centers of excellence. This framework enables us to scale AI deliberately while protecting our customers, our brand and our long-term value creation.

We are already embedding AI across multiple EVERTEC products, particularly in risk management, fraud monitoring and credit decisioning. Through brand data, we offer AI-native proprietary credit scoring models that leverage telco data to help lenders assess credit risk more effectively, particularly in underbanked markets.

Furthermore, we are working to embed AI assistant to enable self-servicing capabilities that help users resolve issues more effectively. Operationally, AI is beginning to drive productivity gains across software development, quality assurance and internal process, enabling faster delivery without incremental headcount.

In 2025, we operationalized AI across our delivery process, and we are already seeing a reduction in core engineering task times and API development efforts. Quality assurance, AI automation has also started to shorten validation cycles and reduce review time. These improvements will continue to enhance reliability and allow us to scale delivery and capacity more efficiently as we move into 2026. Support of our centers of excellence and broad-based employee upskilling, which reached over 4,500 employees in 2025, we're ensuring that AI investments are prioritized, governed and aligned with business objectives.

Before turning it over to Karla, I want to thank our entire team for their continued execution in 2025. Organic growth in LATAM remains strong and strategic M&A continues to support our diversification into high-growth markets. I look forward to updating you on our progress throughout 2026. With that, I will now turn the call over to Karla, who will cover the fourth quarter and full year results in more detail and discuss our outlook for 2026.

Thank you, Mac, and good afternoon, everyone. Turning to Slide 9. I'll begin by reviewing the fourth quarter and full year results for EVERTEC. Total revenue for the quarter was $244.8 million, an increase of approximately 13% compared to the prior year driven by the continued momentum in Latin America, including a full quarter contribution from Tecnobank at the acquisition closed October 1.

In Puerto Rico, results benefited from higher transaction volumes, continued growth in APH Movil iness and increased sales volumes in merchant acquiring. On a constant currency basis, revenue growth would have been approximately 11.4% as reported results this quarter benefited from favorable FX, primarily driven by the strengthening of the Brazilian real.

Adjusted EBITDA for the quarter increased to $98.8 million, up 11.5% year-over-year with a 40.3% margin, representing a modest 50 basis points decline, consistent with our expectations. EBITDA growth was driven by revenue outperformance, including the contribution from recent M&A and the reacceleration of the Brazilian market.

Results also benefited from a $7.1 million gain related to research and development tax credits and the previously announced cost initiatives. Adjusted net income was $59.5 million, an increase of approximately 6% year-over-year, reflecting the higher adjusted EBITDA and lower cash interest, mainly driven by the repricing of our TLB during 2025 and lower interest rates.

These were partially offset by incremental debt and the net income attributable to the noncontrolling interest related to Tecnobank. The adjusted effective tax rate for the quarter was 8.1% and adjusted EPS was $0.93, an increase of approximately 7% from the prior year, driven by earnings growth and the benefit of a lower share count from repurchases completed in the fourth quarter.

For the full year, total revenue was $931.8 million, an increase of approximately 10% compared to the prior year or 11% on a constant currency basis. Growth was driven by strong performance across all segments. In Latin America, on a constant currency basis and excluding all M&A, the business delivered double-digit organic growth for the year.

This highlights the strength of our business and continued momentum across the region. In Puerto Rico, performance remained solid, supported by strength across both POS transactions and ATH Movil business as well as increased sales volumes in Merchant Acquiring.

Business Solutions also reflected year-over-year growth despite the 10% discount that impacted Q4, demonstrating resilience and a solid underlying base for our Puerto Rico business as we enter 2026. Adjusted EBITDA for the year was $373.4 million, an increase of approximately 10% with an EBITDA margin of 40.1%, consistent with the previous year, even as Latin America becomes a bigger part of our overall business and coming at lower margins.

Adjusted net income increased approximately 9% year-over-year to $233.2 million and adjusted EPS was $3.62, an increase of approximately 10% compared to the prior year. Moving to Slide 10. I will now cover our fourth quarter results by segment, beginning with Merchant Acquiring. Net revenue increased approximately 3% year-over-year to $48.2 million. Sales volume was up 3% and transactions grew 4% with growth driven by new merchant wins and existing customers.

There was a slight decrease in our spread, reflecting a change in the card mix. Results also benefited from higher nontransactional revenues driven by pricing initiatives implemented during Q3. Adjusted EBITDA for the segment was $19.4 million with an adjusted EBITDA margin of 40.2%, representing a decline of approximately 250 basis points from the prior year.

The margin decrease is attributed to increased processing costs driven by the higher transactions. As we enter 2026, we continue to see healthy transaction trends and stable demand across the merchant acquiring business. On Slide 11 are the results for the Payment Services Puerto Rico and Caribbean segment. Revenue for the quarter was $56.4 million, an increase of approximately 3% year-over-year.

Specifically ATH Movil business was a key contributor, delivering double-digit growth in both volumes and transactions. POS transactions also increased year-over-year by approximately 7%, supporting the overall segment performance. Results were partially offset by lower services provided to the Latin America segment, primarily driven by lower transactions processed and a slight negative impact from the Banco-Popular discount.

Adjusted EBITDA was $30.3 million, down approximately 3% from the prior year, and adjusted EBITDA margin was 53.7%, representing a decline of approximately 350 basis points. The margin decrease was driven primarily by higher operating expenses in part by increased cloud costs and higher POS repairs costs.

On Slide 12 are the results for the Latin American Payments & Solutions segment, the largest contributor to revenue and EBITDA growth during the quarter. Revenue for the quarter was $109.3 million, an increase of approximately 40% year-over-year. The fourth quarter benefited from a full quarter contribution from the Tecnobank acquisition as well as contributions from Grandata and [ Nuvve ] that anniversaried during the quarter.

Results also reflected double-digit organic growth across the region, driven in part by the reacceleration in Brazil, where disciplined execution on modernization initiatives, favorable contract repricing tailwinds and a strong pipeline supported growth. Currency tailwinds in the quarter positively impacted segment growth by approximately 4 percentage points, mainly driven by the appreciation of the Brazilian currency.

On a constant currency basis, revenue growth for the segment would have been approximately 36%. Adjusted EBITDA was $34.9 million, an increase of approximately 39% from the prior year with an adjusted EBITDA margin of 32%, a decline of approximately 30 basis points.

The margin decrease was mainly driven by the Getnet adjustment recorded in the prior year that was 100% accretive to margin. Moving to Slide 13 are the results for our Business Solutions segment. Revenue for the quarter was $58.3 million, representing a decrease of approximately 7% from the prior year. This decline was in line with our expectations and was primarily attributable to the 10% discount to Popular that began in October, partially offset by the benefit from the CPI, which is capped at 1.5% for 2025.

As a reminder, beginning on October 2026, the CPI escalator will now allow increases above 2% capped at a maximum of 2%. Adjusted EBITDA was $20.6 million, a decrease of approximately 15% from the prior year, and adjusted EBITDA margin declined approximately 370 basis points to 35.3%. The decrease in EBITDA margin was mainly driven by lower revenues resulting from the 10% discount to Popular as overall expenses remained consistent with prior year.

Moving to Slide 14, you will see a summary of our corporate and other expenses. Adjusted EBITDA was negative $6.5 million for the quarter, representing 2.7% of total revenue. This was an improvement from the prior year, driven in part by the $7.1 million gain related to research and development tax credits recognized during the quarter. Moving to Slide 15. I'll now review our cash flow performance for 2025. We continue to effectively manage our working capital, resulting in net cash from operating activities of $227 million. Capital expenditures were $91.5 million for the year, reflecting investments to modernize our platforms and ongoing product innovation, refresh of key hardware and continued enhancements to our information security capabilities.

During the year, we also deployed approximately $144 million toward the Tecnobank acquisition, paid down approximately $23.9 million in debt and returned approximately $82 million to shareholders through share repurchases and dividends. We repurchased 2.2 million shares during the fourth quarter for $65.6 million. And at year-end, we had approximately $85 million available for future use under the company's share repurchase program, which has now been increased to $150 million and extended through December 31, 2027.

Our ending cash balance for 2025 was $348.1 million, an increase of approximately $33.5 million from the prior year. Moving to Slide 16. Our net debt position at year-end was $806 million, comprised of $1.1 billion in total long and short-term debt offset by $306 million of unrestricted cash. Our weighted average interest rate was approximately 5.86% a decrease of approximately 60 basis points from 2024, reflecting the positive impact from our debt repricing actions and lower interest rates. Our net debt to trailing 12 months adjusted EBITDA was approximately 2.08x, generally in line with the 2.06x a year ago and at a lower end of our leverage range of 2 to 3x, inclusive of the Tecnobank acquisition executed during the fourth quarter, reflecting our disciplined approach to capital allocation and balance sheet management.

As of December 31, our total liquidity, which excludes restricted cash and includes available borrowing capacity, was at $490.4 million, up approximately $23 million from the prior year. Now turning to Slide 17. I'll provide an overview of our 2026 outlook. For 2026, we expect reported revenue to be in the range of $1.024 billion to $1.036 billion, representing growth of 9.9% to 11.2% year-over-year.

This outlook includes approximately 120 basis points of foreign currency tailwinds resulting mainly from the current appreciation of the Brazilian real compared to the average rate for 2025. On a constant currency basis, we expect revenues for 2026 to grow between 8.7% to 10%. Adjusted EPS is expected to grow between 6.1% and 9.4% from the $3.62 reported for 2025 or between 4.7% and 8% on a constant currency basis. This outlook assumes an adjusted EBITDA margin of 39.5% to 40.5% and an effective tax rate of 11% to 12%. Let me now walk you through some of the key assumptions underlying our outlook, beginning with revenue expectations by segment.

For Merchant Acquiring, we anticipate mid-single-digit growth in 2026, supported by stable transactions and sales volume trends and anticipated implementation of key merchants expected to contribute more meaningful in the second half of the year and to a lesser extent, the benefits from the recently implemented pricing initiatives. In Payments Puerto Rico and Caribbean, we expect mid-single-digit growth in 2026, supported by continued momentum in ATH Móvil, including ATH Móvil business as well as ongoing POS transaction growth across our merchant base.

While the slight impact from the Banco- Popular discount will continue to impact year-over-year comparisons, that headwind is now fully reflected in our expectations. And we expect underlying volume growth to drive overall revenue expansion in this segment. We remain encouraged by transaction trends entering the year and the continued adoption of digital payment solutions across Puerto Rico.

For Latin America Payments & Solutions, we expect growth to be in the mid-20s in 2026, low 20s on a constant currency basis. We expect incremental growth from key client implementation and the continued pipeline conversion as we build on the strong demand environment and customer wins we have seen over the last several quarters.

As we progress through the year, we expect the implementations currently underway and our client pipeline to become more meaningful contributors in the second half. We also anticipate that Brazil will remain a key driver of growth during 2026, including the benefit from 9 additional months of Tecnobank.

Finally, in Business Solutions, we expect revenue to decline in the low to mid-single digits, reflecting the anticipated reset following the 10% discount to Popular, which is now fully embedded in our run rate. This impact is expected to be partially offset by the CPI escalator for Popular services and ongoing demand for network and consulting services. While near-term growth will be constrained by the reset, we believe the segment is positioned to benefit from a more normalized comparison as we exit the year.

As we think about the cadence of 2026, we expect the first half of the year to be aligned with how we exited the fourth quarter, reflecting the momentum already in the business and a steady underlying demand, as we move into the second half of the year, we expect client wins and implementations that are currently in progress to become a more meaningful driver of growth, particularly across Latin America.

This second half acceleration reflects the strength of our pipeline and conversion capabilities, reinforcing our confidence in the full year outlook. Turning to margins. To offset the impact of the 10% Popular discount and the lower margin contribution from Latin American organic growth, we remain focused on executing on the targeted cost initiatives previously announced, while business mix will continue to be a factor in 2026, we expect these actions to support margin stability as we balance profitability with our continued investments in growth.

Interest expense is projected to be overall aligned with the prior year, supported by successful debt repricing and lower interest rates, offset by incremental debt related to the Tecnobank acquisition. Lastly, with respect to taxes, we expect an adjusted effective tax rate of 11% to 12% in 2026. This reflects a higher contribution from Latin America, which has a higher tax profile.

From a capital deployment perspective, our priorities remain consistent, deploying capital for growth through M&A while continuing to invest in our business and products with a targeted CapEx of approximately $90 million for 2026. We also expect to continue returning cash to shareholders via dividends and when appropriate, share repurchases.

Before moving on, I want to clarify that our 2026 outlook does not contemplate any contribution from the Dimensa acquisition as the transaction has not yet closed. We expect to update our guidance during the earnings call following the close of the transaction.

In summary, we delivered a strong fourth quarter and a full year in 2025, driven by solid execution across our segments, continued momentum in Latin America and disciplined cost management. As we enter 2026, we believe EVERTEC is well positioned to deliver sustainable growth.

Our outlook reflects the strength of our business consistent organic trends in Latin America, a stable operating environment in Puerto Rico and a more normalized base in Business Solutions. With a strong balance sheet and liquidity and a proven ability to execute across diverse markets, we are confident in our ability to create long-term value for our shareholders. We appreciate the continued support, and we look forward to updating you on our progress throughout 2026. With that, operator, please open the line for questions.

[Operator Instructions]. Our first question today comes from Madison Suhr from Raymond James. Please go ahead with your question.

Nice results here. I wanted to start on the pipeline commentary in Latin America. You mentioned it's a key driver for organic growth. So I was hoping you could provide some additional color maybe just on the size of the pipeline relative to the last few quarters, if you're seeing an acceleration in sales activity?

And then does this pipeline support kind of this double-digit organic growth you're seeing in 2026? Or do you think you're still kind of reliant on new sales driving some of that growth as well for this upcoming year?

Madison, this is Mac. So what I would say is, look, the pipeline is healthy, and we've seen it throughout the year. So if you look at Chile, initially Chile, the big client we had was Getnet Santander. But we were able to sign Banco de Chile. And now that's now live and operational, which is one of the best banks in Chile. So you've seen these big wins of selling them and now implementing them.

We also talk about Grupo Aval, which is one of the biggest banks in Colombia. So now it's not just Chile, we're seeing it in other countries. So Grupo Aval we're in the process of implementing, so that should have an impact this year as well. We have additional opportunities in the pipeline. So we only talk about those when we signed the deal and we've implemented it. So we'll talk more about that in the future, but we booked some pretty meaningful deals this year that will have an impact in -- I mean, in last year, that will have an impact in '26, and we expect that cadence to continue given the pipeline that we have.

Okay. Great. And then I did want to ask on Dimensa here. What made this kind of an attractive takeout for you guys? And obviously, it closes here expected in the second quarter. But what's kind of the plan once once you guys take control of that asset? Do you see potential cross-sell opportunity? Or just any color on what made this an attractive asset and the plan once you guys acquire it?

Sure. So look, I mean, the one thing we're very excited about is the success of Sinqia. We made that acquisition about 2, 2.5 years ago, and we've really seen the growth reaccelerate. So we're pleased with what Claudio and the team have done there to get the growth that they're getting today. And it's been a great asset to roll up additional acquisitions. We did it with Tecnobank, and now we're excited about Dimensa.

The thing about Dimensa is it's a JV between TOTVS, which is one of the big tech companies out of Brazil and B3, which is the exchange. So it's 2 very reputable companies that have built this JV. And we're excited because it has everything that you described.

One is it gets us into a new vertical with insurance. It also lets us have additional products and double down on some of the verticals we're in and significant cross-sell opportunities both ways. They have 15,000 clients. We have our role to clients. So it's a new vertical. We see cross-sell opportunities and potentially some cost synergies as well.

Okay. Great. Thank you guys.

And our next question comes from Cris Kennedy from William Blair. Please go ahead with your questions.

Yes, good afternoon. Thanks for taking the question. Just a follow-up on the last one. I mean, M&A activity has picked up recently. Should we expect that type of pace to continue as we go forward here?

Hey, Cris, so I mean, what I would say is, as you know, you followed the story for a while. We're pretty excited because this year, we'll have over 40% of our revenues outside of Puerto Rico. So it creates a nice growth formula for the company as you look at how that segment grows compared to our Puerto Rican businesses. So the M&A and the organic growth has created sort of the new EVERTEC when it comes to a formulaic perspective around growth.

Demensa is meaningful. We're going to really focus on integrating that once we make that acquisition, just like we did Sinqia. But we'll continue to invest in M&A because we think there are good opportunities. The larger our presence we have in the region, the more it makes sense to buy stuff because we can identify it and then we have even more synergies around those types of deals. So we'll continue to look at that. It's -- we're going to have a low leverage ratio, so we still have capacity. So we'll continue to look at deals. But just like we did with Sinqia, our focus this year will really be integrating Dimensa.

Understood. Thanks for that. And then just as a follow-up, ATH Movil continues to be very strong. Can you just help us size that business? Thank you.

Yes. So I mean, as you know, we don't break out a lot of different metrics, but ATH Movil has been a fantastic growth opportunity for us within the Payments Puerto Rico segment. And it continues to be one of the most preferred payment methods on the island. But we don't have a lot of statistics to break out on this call. I don't know, Karla, do you want to add anything?

No, I'll just add that it continues to grow good, including double-digit growth this quarter, and it's a great product that we have rolled out in the island to your point, Mac.

Look, it's a moat for -- the great thing about the banks here are ATH and ATH Movil give them a unique advantage against issuers from the mainland because these are futures you have to be a Puerto Rican bank to participate, and it creates differentiation for our local banks.

Great. Thanks for taking the questions.

[Operator Instructions]. Our next question comes from Lara Rosenstein from Susquehanna.

Hi, guys. Thank you for taking the question. I was wondering, could you please elaborate on your perspective on macro trends in Puerto Rico and how you expect this to trend in 2026?

Karla, do you want to?

Yes. We continue to see very stable macroeconomic environment here in the island. It has been reflected throughout the growth that we've seen this year or this past year in 2025, and it continues to reflect well as we see January results coming in.

Thank you very much.

Thank you.

[Operator Instructions]. And it's ing no additional questions, we'll end today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.

This is Mac. I want to thank my colleagues for a successful 2025. We look forward to executing well in 2026, and I look forward to seeing the investors and the analysts in the coming weeks and coming months. Thanks again for your confidence. Have a good night.

And with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

Good day, and welcome to the EVERTEC's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Loyda Montes Santiago, Finance, Property and Investor Relations Senior Manager. Please go ahead.

Thank you, and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer; Joaquin Castrillo, our Chief Operating Officer; and Karla Cruz-Jusino, Chief Financial Officer. Before we begin, I would like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report. During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as constant currency revenue, adjusted EBITDA, adjusted net income and adjusted earnings per common share.

Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the Investor Relations section of our company's website at www.evertecinc.com. I will now hand over the call to Mac.

Thanks, Loyda, and good afternoon, everyone. Before we dive in, I'd like to have a moment to recognize Loyda as our new internal point of contact for Investor Relations. In the third quarter, EVERTEC delivered another strong quarter of organic revenue growth and further advanced our presence and capabilities in Brazil by closing on the previously announced Tecnobank acquisition. On today's call, I'll provide an update of the cybersecurity incident we identified in August, give a brief summary of our third quarter results, including an update on our Puerto Rico and LatAm businesses, followed by our updated outlook for 2025.

Before we dive in, I'd like to address an important leadership transition that took effect on November 1. I'm pleased to announce that Joaquin Castrillo has been promoted to Chief Operating Officer. In this extended capacity, he will be responsible for the revenue and management across all EVERTEC's commercial areas. During his tenure as CFO, Joaquin was instrumental in establishing strong relationships with the investment community and his strategic vision has been invaluable to the company's growth trajectory. As he transitions to the role of Chief Operating Officer, Joaquin brings with him a proven track record of financial stewardship and a deep understanding of EVERTEC's business, ensuring continued momentum and seamless continuity in the company's leadership team.

Succeeding Joaquin as CFO is Karla Cruz-Jusino, who has been promoted from Chief Accounting Officer. Karla has been a keystone to our finance and accounting organization for 6 years, and I'm confident that her track record, strategic vision and dedication to EVERTEC's mission position her to guide the company's financial strategy through its next phase of growth. Overall, these internal promotions reflect the strength and depth of our finance organization and ensure seamless continuity in our leadership. With the transition noted, let me give a brief update on the cybersecurity incident we identified in August. As stated previously, we detected unauthorized activity in Sinqia's PIX environment in the Brazilian Central Bank or BCB. For context, PIX is a real-time payment system in Brazil governed by the Central Bank, and Sinqia has services that enable financial institutions to access this payment system.

Once the unauthorized activity was detected, our teams reacted promptly and in accordance with our cyber incident protocols, we were able to contain the situation. The team worked closely with both our clients and the BCB, reviewed and implemented key security enhancements to our systems and obtained approval from the BCB that allowed our systems to be now up and running for several weeks. Additionally, our financial institution clients have now confirmed that the vast majority of the funds have been recovered, significantly limiting the original exposure. Now that our investigation has nearly concluded, we can confirm that this incident was isolated to the PIX real-time payment system in Brazil and did not impact any other EVERTEC products or services or geographies.

Our Q3 results for GAAP purposes reflect the impact from costs incurred throughout the incident as well as an estimate of potential claims related to client losses from funds yet to be recovered as we continue to work with our clients and our cybersecurity insurance provider. Moving now to our third quarter results. I'm pleased to announce solid revenue performance. We delivered healthy growth over the prior year and exceeded our internal expectations as we continue to execute at a high level across all regions and business segments. Beginning on Slide 5, I'll start by covering a few highlights from our third quarter results.

Revenue for the third quarter was $228.6 million, an 8% increase over the prior year, while constant currency revenue was approximately $227.9 million, representing growth of 8% as we again saw growth across all of our segments. Adjusted EBITDA increased to $92.6 million, up approximately 6% year-over-year, and adjusted EBITDA margin was 40.5% for the quarter. Adjusted EPS of $0.92 was up 7% year-over-year, driven by the strong adjusted EBITDA growth and lower interest expense, partially offset by higher tax expense. Through the first 9 months of the year, we have generated operating cash flow of approximately $157 million and returned cash to shareholders through $9.6 million in dividends and $3.7 million in share repurchases. Our liquidity remains strong at approximately $518.6 million as of September 30. Let me now provide an update on Puerto Rico, beginning on Slide 6.

Merchant Acquiring revenue grew 3% year-over-year, driven by higher sales volume. Payment Services in Puerto Rico grew 5% year-over-year, driven by strong performance in ATH Móvil, primarily ATH Business as well as POS transaction growth. Business Solutions revenue grew 1%, primarily driven by projects completed during the quarter. Economic conditions in Puerto Rico remained favorable through the end of the third quarter with positive trends in total employment, strong tourism performance and other key economic indicators. The unemployment rate held steady at 5.6%, near historic lows, while consumer spending continued to demonstrate strength and stability.

Moving to Latin America on Slide 7. Revenue increased 19% year-over-year or 18% on a constant currency basis as we continue to see strong organic growth across the region, fueled by the reacceleration in Brazil and the contribution from the Grandata and Nubity acquisitions. Our pipeline in LatAm remains robust and as anticipated, is now beginning to drive key wins. I'm excited to announce that we have signed a deal to provide acquiring processing and risk monitoring services to Banco de Chile, one of the largest financial institutions in Chile, known for its retail and corporate banking services and extensive national presence.

With this win, we now have 2 of the largest banks in Chile on our acquiring platform, validating our strategy of investing in dynamic markets and positioning EVERTEC as one of the top processors in the country. I'm also excited to announce that we have signed a deal with Financiera Oh, a leading financial services company in Peru, known for its innovative credit solutions and strong retail presence. We will provide issuing processing of debit, credit and fraud monitoring solutions. This is a key win that also positions EVERTEC with a marquee name in the very attractive Peruvian market. On the M&A front, I would like to acknowledge the closing of a controlling stake in Tecnobank in October.

This acquisition strengthens our financial technology capabilities in Brazil and opens new avenues for growth and scale. And I would like to personally extend a warm welcome to the entire Tecnobank team. In summary, we delivered another quarter of strong results across both Puerto Rico and Latin America. More importantly, the key wins announced in the previously mentioned win of Grupo Aval in Colombia demonstrate our ability to win in key markets where the opportunity for EVERTEC continues to be immense. The combination of strong organic growth in LatAm and the contribution from M&A will continue to drive our diversification into growth markets that will lead to a faster-growing EVERTEC over time. These are exciting times for our company. With that, I will now turn the call over to Joaquin to provide deeper commentary around our third quarter results, followed by Karla, who will discuss our improved outlook for the remainder of 2025.

Thank you, Mac, and good afternoon, everyone. Turning to Slide 9. I'll start with a review of our third quarter results. Total revenue for the quarter was $228.6 million, up approximately 8% compared to the prior year quarter, reflecting strong organic growth across all of the company segments, continued momentum in LatAm and the contribution from acquisitions completed in the fourth quarter of 2024. Revenue also grew 8% in the quarter on a constant currency basis with a minor tailwind primarily attributable to the Brazilian real. Adjusted EBITDA for the quarter was $92.6 million, up approximately 6% from last year, representing a margin of 40.5%, a decrease of 80 basis points from a year ago, but in line with our expectations.

Adjusted EBITDA benefited from strong revenue, the M&A contribution and Brazilian market reacceleration in LatAm as well as benefits from previously announced cost initiatives. Adjusted net income was $59.8 million, an increase of approximately 8% year-over-year, driven by growth in adjusted EBITDA and lower cash interest expense, reflecting the positive impact of repricing our debt. These were partially offset by higher tax expense. As expected, our effective tax rate has been increasing slightly as we find ways to lower our interest expense, which drives certain tax efficiencies as well as the growing contribution from our LatAm operations, which are subject to higher statutory tax rates. Adjusted EPS was $0.92, an increase of approximately 7% from the prior year, driven by the higher adjusted net income.

Moving to Slide 10. I will now cover our third quarter results by segment, beginning with Merchant Acquiring. Net revenue increased approximately 3% year-over-year to $46.8 million as we benefited from strong sales volume and transaction growth throughout the quarter. Both were positively impacted by new merchant relationships and the impact from the Bad Bunny residency, which resulted in key verticals within the portfolio seeing increased volumes. We also benefited from tax return payments during the third quarter as we got closer to extension deadlines. The positive impact from volumes was partially offset by a slight decrease in spread as we saw a shift towards more card-present transactions.

Adjusted EBITDA for the segment was $18.6 million with an adjusted EBITDA margin of 39.8%, a decrease of approximately 30 basis points as we experienced a lower average ticket that drove higher processing costs. On Slide 11 are the results for the Payment Services, Puerto Rico and Caribbean segment. Revenue in the quarter was $55.2 million, an increase of approximately 5% from the prior year. The revenue increase was primarily driven by another quarter of strong performance in ATH Móvil with mid-teens growth driven specifically by ATH Business, where we continue to sign up new merchants driving higher sales volume and transactions.

POS transaction growth was 7%, aligned with the same factors that drove sales volume growth in our Merchant segment, such as the Bad Bunny residency. Adjusted EBITDA was $29.9 million, up approximately 5% from the prior year, and adjusted EBITDA margin was 54.1%, an increase of approximately 40 basis points from the prior year. The increase in margin is driven mainly by revenue growth and operational efficiencies related to POS repairs. On Slide 12 are the results for Latin America Payments & Solutions. Revenue in the quarter was $90.4 million, up approximately 19% year-over-year or approximately 18% on a constant currency basis. We delivered double-digit organic growth across the region, in part driven by the reacceleration in Brazil, where we continue to execute on our modernization initiatives, the favorable impact of contract repricing tailwinds and a strong pipeline.

Chile continues to deliver strong growth, including the contribution from the Getnet Chile contract. The segment also benefited from Grandata and Nubity, the 2 acquisitions we completed in the fourth quarter of last year, both of which continue to perform as expected or better. These positive impacts were partially offset by the MELI attrition and a $1.8 million onetime Getnet impact recognized prior year. Adjusted EBITDA was $24.4 million, an increase of approximately 18% from the prior year with an adjusted EBITDA margin of 27%, a modest decrease of approximately 30 basis points.

The margin decrease is mainly related to the recognition in prior year of the onetime Getnet revenue that was highly accretive to margin. Moving to Slide 13. Our Business Solutions segment revenue increased approximately 1% to $61.7 million. The increase is due primarily to projects completed during the quarter and higher hardware sales, partially offset by a onetime credit related to a managed services contract. Adjusted EBITDA was $25.1 million, a decrease of approximately 2% from a year ago, and adjusted EBITDA margin was down approximately 100 basis points from the prior year to 40.7%. Margin is down year-over-year primarily due to the onetime credit and the lower margin from hardware sales.

Moving to Slide 14, you will see a summary of our corporate and other expenses. Adjusted EBITDA was a negative $5.4 million in the quarter or 2.4% of total revenue, which is slightly lower than expected and lower than prior year as we continue to realize more of the benefits from expense management initiatives that we have been executing throughout the year. Moving on to our cash flow overview for the first 9 months of 2025 on Slide 15. Net cash from operating activities year-to-date was $157 million. Capital expenditures were $67.9 million through the third quarter, tracking in line with our plan of $85 million for the whole year. We paid down approximately $22.4 million in debt, paid approximately $8.9 million in withholding taxes on share-based compensation and returned approximately $13.3 million to shareholders through share repurchases and dividends.

Our ending cash balance, excluding cash and settlement assets, was approximately $499.7 million, an increase of $201.5 million from the year ended 2024. This cash balance includes approximately $150 million of cash from our revolver that was used on October 1, 2025 to close on the acquisition of the controlling stake in Tecnobank. Moving to Slide 16. Our net debt position at quarter end was $631.8 million, which includes $1.1 billion in total long and short-term debt, offset by $474.7 million of unrestricted cash. Our weighted average interest rate was approximately 6.24%, a decrease of approximately 47 basis points from the third quarter of 2024. Our net debt to trailing 12-month adjusted EBITDA was approximately 1.8x, down from 2.2x a year ago and slightly below the lower end of our leverage target range of 2 to 3x.

As of September 30, our total liquidity, which excludes restricted cash and includes borrowing capacity, was $518.6 million, up approximately $50 million from a year ago. Now I'd like to turn the call over to Karla, who will offer updated 2025 guidance, discuss key modeling points to consider and provide some preliminary thoughts on our outlook for 2026.

Thanks, Joaquin, and good afternoon, everyone. Turning to Slide 18. I'll start with commentary on our updated 2025 outlook. We now expect revenues to be between $921 million and $927 million, representing growth of 8.9% to 9.6%. The updated outlook includes a Q3 overperformance and improved foreign currency expectation in Q4 and the acquisition of Tecnobank. On a constant currency basis, we now expect growth of 10% to 11% year-over-year, above our prior constant currency range of 7.8% to 8.7%. Adjusted EPS is now expected to grow between 8.5% and 10.4% from the $3.28 reported for 2024 and higher than our previous assumption of 4.8% to 7% growth. We now expect our adjusted EBITDA margin to be approximately 40%, and we continue to expect the adjusted effective tax rate to range from 6% to 7%.

I will now walk you through the key underlying assumptions considered in our outlook, starting with revenue expectations across our business segments. We continue to anticipate mid-single-digit growth in Merchant Acquiring for 2025 as we expect a Q4 outlook in line with Q3 performance. In Payments Puerto Rico and Caribbean, we now expect mid-single-digit growth as we benefit from the continued momentum in ATH Móvil, partially offset by lower processing services to LatAm segment and the impact from the popular discount that began in October. For Latin America Payments and Solutions, we now expect high teens growth driven by strong organic momentum across the region and the contribution from the Tecnobank acquisition completed at the beginning of the fourth quarter partially offset by the headwind of foreign currency mainly in Brazil.

On a constant currency basis, growth is not expected to be in the low 20s. As a reminder, we will anniversary both the Grandata and Nubity acquisitions in Q4. Finally, in Business Solutions, we continue to expect low single-digit revenue growth, primarily reflecting the 10% discount to Popular that became effective in October, impacting approximately $18 million annually estimated to be $4 million in Q4. Turning to overall margin. We anticipate approximately 40% for the full year. As we start to shift focus to 2026, while we are not providing guidance, I would like to share key items intended to help you frame your modeling assumptions and provide clarity on the strategic priorities driving our outlook for next year.

Beginning with Puerto Rico, the 10% discount on selected MSA services with Banco Popular became effective in October 2025. As we head into 2026, this discount represents an estimated headwind of approximately $14 million, impacting mostly our Business Solutions segment with a more modest impact on our Payments Puerto Rico segment. Additionally, the CPI for September was announced at 3%. And as a reminder, this is capped at 1.5% for our MSA agreement and 2.5% for our ATH processing agreement with Popular. Beginning on October 2026, the CPI escalator will now allow increases above 2%, capped at a maximum of 2%. Specifically, as we look at our segments, while the Merchant Acquiring segment benefited from pricing initiatives through the first half of 2025, these tailwinds are expected to normalize in 2026.

Additionally, the boost in transaction volumes linked to the Bad Bunny residency will create a modest headwind. Despite these factors, we remain optimistic about the segment's trajectory and are anticipating implementing key merchants that should continue to drive positive growth in 2026. For our Payments Puerto Rico, we expect a slight impact from the 10% discount to Popular to be offset by the continued strength in ATH Móvil and anticipated growth in POS transactions. In Latin America, we expect continued momentum in 2026, supported by a mix of organic growth and strategic M&A, including Tecnobank. Additionally, while we are very excited about the key wins [indiscernible], these are not expected to have a meaningful contribution to 2026 as these will be either ramping up or under implementation for most of the year.

Finally, in Business Solutions, we expect a top line reset driven by the incremental $14 million impact as a result of the 10% discount to Popular that began in October, partially offset by the CPI impact already mentioned. Moving to margins. To offset the impact of the 10% popular discount and the lower margin contribution from Latin American organic growth, we remain focused on executing targeted cost efficiencies initiatives across our business segments. Interest expense is projected to decline year-over-year, supported by successful debt repricing and lower SOFR rates.

However, this benefit will be partially offset by incremental debt related to the Tecnobank acquisition. Lastly, regarding taxes, we expect a higher adjusted tax rate reflected increased EBITDA contributions from LATAM and a reduction in interest expense, a key driver of tax efficiency in 2025. In summary, we delivered a strong third quarter and are well positioned to deliver strong top line growth in 2026. We remain focused on executing our strategic priorities and cost initiatives to support long-term value creation. We look forward to sharing more updates on our progress in early 2026. On behalf of Mac, Joaquin and myself, we appreciate your continued support, and I hope to connect with many of you at upcoming conferences over the next few months. Operator, please go ahead and open the line for questions.

[Operator Instructions]. Your first question comes from Jamie Friedman from Susquehanna.

Congratulations, Joaquin and Karla, on your respective promotions. And I hope we continue to work together in the future, Joaquin, I learned a lot from you over the years. So Mac, maybe I'll ask, first of all, in terms of LatAm, up 19% year-over-year. This growth seems quite durable. You're signing incremental deals, Banco Chile, et cetera. So any perspective that you could share now as to what you're finding relative to when you began the expansion in LatAm? Is it -- are you resonating? Are you gaining the mind share that you had anticipated? And what's so far surprised you down there?

Yes. So I mean, if I look at long term over the course of the company, I think what we've been able to do is build products through acquisitions so that they're now some of the best products in the region. So if you look at the deals we just announced, Banco de Chile is using our acquiring platform, which is now our second big deal in Chile. If you look in Peru, we now have this deal where they're using our issuing platform. So I think what we've done is we've built these products now that we're scaling across the region. And as you'll see, we're getting good margins. The other piece, I think, that's pretty important was the Sinqia deal. We got that deal. It's now growing at a rate that we're very happy with now that we've integrated.

And it also gives us the ability to make other acquisitions like Tecnobank. So those are the 2 big things that I think we've seen is our products are now scalable across the region. We're winning business to demonstrate that. And now we have sort of a cornerstone of our strategy to continue to invest in Brazil through the Sinqia acquisition and the infrastructure we have there. We're super excited about the future, as Karla talked about 2026 and the continued growth that we think we'll see in LatAm.

And also about that, Karla, you were talking about the -- return of COAs. I remember that was a theme earlier in the company's history. It sounds like that's coming back. So what typically can be the contribution from those sorts of cost of living adjustments in a typical year?

Jamie, I don't think that we couldn't hear you clearly.

You're talking about the cost of living adjustments. You're talking about the CPI adjustments on [indiscernible] contract.

CPI, what I'm trying to say, CPI, yes.

Yes. No, I got it. So yes, yes. So do you want to talk about the CPI adjustments?

Yes, we did call out that the CPI in this for September was announced at 3%, and it's now currently capped at 1.5% for our MSA agreement with Popular and at 2.5% for ATH processing agreement. Now beginning in 2026, we have mentioned in the past that, that escalator will permit an increase in the CPI above 2%, but now capped at 2%.

[Operator Instructions]. Your next question comes from Marc Feldman from William Blair.

I'll echo my congratulations to both Joaquin and Karla. I guess, first off, could you talk about potential cross-sell opportunities between Tecnobank and Sinqia's, given Sinqia's presence in the consortium model in Brazil?

Yes. So look, as we tuck in assets to the Sinqia acquisition, it's exciting to have an organization and management team that can manage these investments. Tecnobank has cross-sell opportunities because we do business with a lot of the financial institutions and the financial institutions are primarily -- and the consortiums are primarily the customers of Tecnobank. So there's tremendous cross-sell opportunities where Tecnobank customers can use other products that we already have and vice versa. So there's some Sinqia customers that don't use Tecnobank today. It's a great business on a stand-alone basis, but the cross-sell opportunities, we think are relevant.

Great. Appreciate that. And then I guess just one more. I know the situation is dynamic, but with the government shutdown and your benefits business and then also the Puerto Rican economy in general, can you talk about any trends that you've seen thus far and what we should be considering for the fourth quarter?

Sure. So this is Joaquin. Look, so far, no direct impact. Obviously, we're monitoring it closely just like everybody is because the Puerto Rico economy does rely on certain federal funds. One of the biggest impacts could potentially be around the NAP and SNAP programs. A big portion of the Puerto Rico collection does rely on welfare. Having said that, we know that at least through November, that has been funded. So we do have a little bit of runway here to continue to monitor before it starts to have any impact.

Your next question comes from John Davis from Raymond James.

I'll add my congrats to Joaquin and Karla. Mac, just big picture here, the security incident within Sinqia. Just curious, I understand it's kind of been ring-fenced at this point, but have you seen any adverse impact on business momentum, pipeline, anything like that? I'd just be curious kind of on the state of the momentum at Sinqia more broadly as well.

Yes. At this point, we haven't seen an impact to the commercial business. It was primarily just 2 banks that were impacted. And those 2 banks, we've been able to work through all the issues with those guys. We also think that we can now demonstrate -- I also want to say just -- I don't know that everyone has perspective. This happened to multiple technology companies. So there were criminals trying to take advantage of the PIX system through multiple companies in Brazil. So if you pull the press, this didn't happen to just us. It was several. What I would say is that we believe now that we've really been able to harden our systems that we've been able to demonstrate we have better systems, and we're going to work to make this an advantage versus a disadvantage. But we haven't seen any negative commercial impact at this point.

Okay. Great. And then Joaquin or Karla, just margins more broadly, I think they're down about 80 basis points year-over-year in the third quarter. I think that's before the changes, the contract changes in [ BPPR ]. But just curious, I heard like average ticket was called out. But more broadly, were those -- I know you guys don't guide margins by quarter, but was that largely in line with your expectations or anything that surprised you on the margin front in the third quarter specifically?

Yes. I mean, look, when we look at it on a year-over-year basis, John, remember, and we called it out, we had a big one-timer last year in LatAm that was highly margin accretive. But if you look at the sequential growth of our margin, it is aligned to our expectations, right? We had said we were going to start at kind of 39s, grow to like mid-40s and then come back down, right? And that's the trajectory that's been reflected. In the case specifically of merchant acquiring, yes, we did have a slight decline in margin, which is coming because yes, the average ticket is coming down. We have a lot more transactionality than necessarily sales volume, although we did have very good sales volume as well. So I think it's just the nature of how that business moved this past quarter. We need to continue to monitor both trends as it relates to merchant acquiring specifically going into the next quarter.

Okay. And then last one, Mac. Just on capital allocation, balance sheet is in good shape. I know the Tecnobank deal just closed. But just curious, appetite, you thinking kind of more tuck-in deals, thoughts on potentially buying back stock with the pullback frankly across the whole space. Just curious on updated thoughts with where the stock is trading and also kind of appetite on the M&A side.

Sure. So I mean, what I would say is, look, after -- into the next quarter, we'll be above -- a little bit above 2, right, Karla?

Correct.

So I mean, we'll be between 2 and 3, but on the lower end of sort of what's tolerable. We do recognize where our stock price is, and we are sort of evaluating the pipeline. We still have a good pipeline. And every quarter, we'll take a look at capital allocation and try and make the right decision. But as you know, it's something we're very, very focused on, and we'll balance where the stock price is, but also the M&A opportunities that we have.

Mac, I would add there that we do have $150 million available still under our share repurchase program, and that ends in 2026. So this is another point.

[Operator Instructions]. There are no further questions at this time. I'll now hand the conference back to management for any closing remarks.

Again, I want to thank everybody for joining the call. Again, I want to congratulate all of my colleagues on the call with me, and we look forward to seeing you in the future at investor events. Have a good night.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.