EVERTEC Enters Into Accelerated Share Repurchase Agreement

Rhea-AI Summary

Evertec, Inc. (EVTC) announces an Accelerated Share Repurchase agreement with Bank of America, N.A. to repurchase $70 million of its common stock. The company's Board of Directors also approved an increase in share repurchase authorization to $220 million, extending the expiration date to December 31, 2025.

Insights

Financial Analyst

The Accelerated Share Repurchase (ASR) agreement by EVERTEC represents a significant financial move, indicating the company's confidence in its own stock and a commitment to returning value to shareholders. By repurchasing $70 million of its common stock, the company is effectively signaling to the market that it believes the stock is undervalued or that it is an optimal use of its cash reserves. The immediate impact of such a transaction typically includes a reduction in the number of shares outstanding, which can lead to an increase in earnings per share (EPS) and potentially boost the stock price, all else being equal.

Moreover, the increase of the share repurchase authorization to $220 million and the extension of the program until the end of 2025 provide a longer-term view of the company's capital allocation strategy. This extended time frame for repurchases offers flexibility to the company in managing its capital structure and responding to market conditions. However, it is important to note that while share repurchases can be beneficial, they also reduce the cash available for other investments or debt reduction, which could be a concern if the company faces financial difficulties in the future.

Market Research Analyst

In the context of EVERTEC's industry, which involves payment processing and financial technology, a robust share repurchase program could be interpreted as a strategic move to strengthen its competitive position. It is essential to consider the company's growth prospects and operational performance when evaluating the impact of the ASR. If EVERTEC is generating strong free cash flow and maintaining a solid balance sheet, the repurchase could be seen as a prudent use of excess capital, especially in an industry where scale and market perception can be critical.

It is also relevant to assess the market's reaction to share repurchase announcements, as they can be a reflection of investor sentiment regarding the company's future performance. A positive market response can attract more investors, while a neutral or negative reaction might indicate skepticism about the company's growth potential or the effectiveness of the repurchase program as a means of creating shareholder value.

Economist

From an economic standpoint, share repurchase programs like EVERTEC's can be influenced by macroeconomic factors such as interest rates, inflation and overall market conditions. In a low-interest-rate environment, companies may find it more attractive to return capital to shareholders through buybacks rather than investing in low-yield assets. Conversely, during periods of high inflation or economic uncertainty, companies might prioritize liquidity and financial flexibility over share repurchases.

The decision to engage in an ASR and expand the repurchase authorization also reflects the company's expectations about the economy and its sector. A bullish outlook could justify the allocation of substantial funds for repurchases, while a bearish perspective might lead to a more conservative approach. The timing and execution of these repurchases will be crucial, as buying back shares at or near market peaks could be less advantageous than repurchasing during market dips.

Increases Share Repurchase Authorization

SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today announced that it has entered into an Accelerated Share Repurchase (ASR) agreement with Bank of America, N.A. by which the Company will repurchase $70 million of its common stock. The ASR is expected to be completed by the third quarter of 2024.

Additionally, the Company's Board of Directors approved an increase to the share repurchase authorization to an aggregate $220 million and an extension to the expiration date to December 31, 2025. The ASR was executed under this increase. Prior to this amendment, the share repurchase program had approximately $137 million remaining. The Company may repurchase shares in the open market, through accelerated share repurchase programs, 10b5-1 plans, or in privately negotiated transactions, subject to business opportunities and other factors.

About EVERTEC

EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processor and financial technology provider in Latin America, Puerto Rico and the Caribbean, providing a broad range of merchant acquiring, payment services and business process management services. Evertec owns and operates the ATH® network, one of the leading personal identification number (“PIN”) debit networks in Latin America. In addition, the Company manages a system of electronic payment networks and offers a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico, that process approximately six billion transactions annually. The Company also offers financial technology outsourcing in all the regions it serves. Based in Puerto Rico, the Company operates in 26 Latin American countries and serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240305107089/en/

Investor

Beatriz Brown-Sáenz

(787) 773-5442

IR@evertecinc.com

Source: EVERTEC

FAQ

What is the recent announcement made by Evertec, Inc. (EVTC)?

Evertec, Inc. (EVTC) announced an Accelerated Share Repurchase agreement with Bank of America, N.A. to repurchase $70 million of its common stock.

How much is the increase in Evertec, Inc.'s (EVTC) share repurchase authorization?

Evertec, Inc. (EVTC) increased its share repurchase authorization to an aggregate $220 million.

When is the expected completion date for the Accelerated Share Repurchase agreement by Evertec, Inc. (EVTC)?

The ASR agreement by Evertec, Inc. (EVTC) is expected to be completed by the third quarter of 2024.

How much was remaining in Evertec, Inc.'s (EVTC) share repurchase program before the recent amendment?

Prior to the recent amendment, Evertec, Inc.'s (EVTC) share repurchase program had approximately $137 million remaining.

What are the methods through which Evertec, Inc. (EVTC) may repurchase shares?

Evertec, Inc. (EVTC) may repurchase shares in the open market, through accelerated share repurchase programs, 10b5-1 plans, or in privately negotiated transactions.