Good afternoon, everyone, and welcome to the EVERTEC Incorporated Second Quarter 2014 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Luis Cabrera, Senior Vice President, Treasury, Investors Relations and Corporate Development. Please go ahead sir.

Thank you, operator. Good afternoon everyone. Welcome to EVERTEC’s second quarter 2014 earnings call. I’m Luis Cabrera, Senior Vice President, Head of Investor Relations for EVERTEC. With me today is Peter Harrington, our President and CEO; Juan José Román, Executive Vice President and Chief Financial Officer. A replay of this call will be available until Wednesday, August 13, 2014. Access information for the replay is listed in today’s financial press release, which is available on our website under the Investor Relations tab. As a reminder, this call may not be taped or otherwise reproduce without EVERTEC’s prior consent. Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements about our expectations for future performance are subject to known and unknown risks and uncertainties. EVERTEC cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflects our current expectations only and we undertake no obligations to update any statements to reflect our events that appear after this call. Please refer to the company’s most recent Annual Report on Form 10-K filed with the SEC for factors that could cause our actual results to differ materially from any forward-looking statements. During today’s call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as, adjusted EBITDA, adjusted net income, adjusted net income per share. Reconciliations to GAAP measures and certain additional information are also included in today’s earnings press release. With that, we’ll begin by turning the call over to Peter Harrington, our President and CEO. Peter?

Thanks, Luis, and good afternoon, everyone. Thanks for joining us on today’s call. We had another good quarter, highlighted by Merchant Acquiring and Payment Processing revenue growth of 9% year-over-year; adjusted EBITDA margin expansion of 130 basis points to 50%; and adjusted earnings per share growth of 17% to $0.41. Revenue growth in our Payments business outside of Puerto Rico remained strong in the second quarter, increasing 10% compared with Q2 of last year. We continued to see good growth in all of our non-Puerto Rican markets, driven by demand for our current product and POS processing solutions. Within Puerto Rico, transaction growth was solid despite the ongoing economic headwinds, as POS processing transactions were up 7% on a year-over-year basis. As our result for the first half of 2014 indicates, demand for our Payment Services remains solid across our entire Latin American footprint and our new business pipeline continues to build into the second half of the year. Looking forward, our outlook for our Payments businesses remains positive based on our leading market position, our demonstrated ability to gain share in all of our markets and the ongoing secular cash to card conversion trend, which is driving consistent growth of electronic payments across our entire market footprint. I want to share with you a few new business developments in Payments, which show that we continue to successfully execute on our growth plan. First, we are now on the final steps of acquiring the principal member license for VISA Colombia. This means we can sponsor any financial institution that is not a direct VISA member to issue VISA branded cards or acquire VISA transactions under the EVERTEC license. While having this license allows us to be a direct acquirer of VISA transactions, as we’ve stated in the past, this is…

Thank you. (Operator Instructions) And our first question will come from Jim Schneider with Goldman Sachs. Jim Schneider – Goldman Sachs: Good afternoon. Thanks for taking my question. I guess, I understand that the hardware and software is relatively immaterial to your EBITDA contribution, so you’re keeping your earnings guidance unchanged, but can you give us a little bit of color around the hardware and software bookings in the pipeline? Whether you think that any of that business is pushing out to the back half of the year, so you’ve been conservative on the full year outlook, or do you think that most of this may not happen at all in 2014 and may just get pushed into 2015 or cancelled altogether?

I would say that we probably see at this point that more of it will get pushed to 2015 from 2014. We do have opportunities that we will execute on in the second half of the year, but given some of the projects that we expected in ‘14, that clearly won’t happen until 2015. But I think you need to understand that a lot of its hardware and software comes from current customers, where we already have a recurring revenue stream and maybe where we’ve had a contract and they are now upgrading to newer versions of hardware and software. And so we will continue to generate the recurring revenue. It’s just that refresh that is now probably been pushed to 2015. Jim Schneider – Goldman Sachs: Okay, that’s helpful. Thanks. And then, I was wondering if you could give us any update on your partnerships for processing in Colombia in terms of the two customers that you’ve already signed up. When should we expect to start to see revenue materialize from those customers?

Yes, nothing has changed there. We are implementing, and we expect to see the first revenue by year-end, in the fourth quarter. So we are very much in the midst of going through the implementation process, but nothing has changed from the last quarter. We expect to bring that first customer online by end of the year. Jim Schneider – Goldman Sachs: That’s helpful. Thank you so much.

(Operator Instructions) And our next question will come from Tien-tsin Huang. Go ahead sir. Tien-tsin Huang – JP Morgan: Great, thank you. Just following up on that. Just on the hardware and software sales. Is it broad-based, or is it really, Popular, that’s driving some of that? And I’m curious maybe just on Popular, how their spend is tracking versus plan. I noticed they paid back TARPs. So just wonder to get an update there?

I would say that the hardware shortfall is less Popular and more the government, when you look at what we had expected in 2014. Popular’s revenue, give or take, is roughly flat and in line with where we expected it. Tien-tsin Huang – JP Morgan: Okay. So no big change there. Fair enough. That’s good to know. And then Peter, just on the – I think in the past, you’ve talked a little bit about, sort of, new deals and bookings and backlog. I know you don’t give us hard numbers there, but can you just compare for us, sort of, year-to-date how bookings, backlog compares to this year versus last year?

I would say it’s right in line. We’ve signed a couple of new customers in the second quarter. So right now based on what I am seeing, we should have a year that looks a lot like 2013 as far as new customer sales on the payment side. We don’t really track because of the nature of the Business Solution side, sum up all the smaller deals that we do in the network and BPO business. But on the Payment side, we’re in line with where we were last year. Tien-tsin Huang – JP Morgan: Okay. That’s good to know. And then just last one for me. It just sounds like Puerto Rico is pretty stable, that’s good, but there has been a lot rumblings of different changes regulatory-wise in different parts of Latin America. I know you’re not big in Mexico, I know the VAT tax change is there, but anything to call out that maybe good or bad relative to when we last got together with respect to regulation situation around payments? Thanks.

No, I don’t see anything around the payment side. I think clearly there has been, again considerable amount of noise related to Puerto Rico. And I think that what we’re seeing is probably some of the impact of that is, the pushing out of some of these projects to refresh the hardware and software, but as you saw in the numbers, we don’t see it on the payment side of the business. We’re still seeing consumption just as we have, and as I’ve been telling every quarter, we’ve been running at 7% to 8% year-over-year growth and that continues. And to be honest with you, we’re seeing the same thing already in the beginning of this third quarter. So that trend, I don’t see any impact to it. Tien-tsin Huang – JP Morgan: That’s good. That’s consistent. Ironically, actually a little better than the actual performance sounds like this quarter in the U.S. So that is ironic. Anyway, appreciate that.

Thanks Tien-tsin.

And our next question will come from George Mihalos from Credit Suisse. George Mihalos – Credit Suisse: Great. Thanks for taking my question. Just to build on the prior question from Tien-tsin. Peter, any update with regard to signing another merchant alliance obviously outside of Columbia? I thought they were seeing perhaps something else in the pipeline that could be imminent?

Yes, it is – I don’t have any news for you, George. We’re still – it’s out there. I think we’ve gone to a point where we’re waiting on them. I think they’ve got probably some stuff they are working through internally, but we still feel good about it. It’s just – I don’t have any real update for you. We’re still there. George Mihalos – Credit Suisse: Okay. And you don’t…

But I think the positive on the Colombia thing is now, as I told you before, I had to wait to get this before I can actually go have conversations, so now I’m in a position where we can start focusing on that to find our partner in Colombia. George Mihalos – Credit Suisse: Okay, great. And does that – is your sense of that’s not, at this point, going to materially weigh on how you were thinking about 2015 growth, the push out of the merchant alliance?

No. George Mihalos – Credit Suisse: Okay, great. And just last question from me. I think you had mentioned that revenue growth outside of Puerto Rico was, sort of, low-double-digit, call it, about 10%. Did that decelerate a bit from what you saw in 2Q?

No. I think – well it did from, if you kind of – on a real basis, I think we grew 16% in the first quarter. George Mihalos – Credit Suisse: Okay.

But as we’ve said before, it’s not really deceleration. It’s that, if you look back at what we published in the third and the fourth quarter of last year, it goes up and down a little bit, because as you can imagine, it has to do with the size of the customers I put on. And so if I put on big customers last year and smaller customers this year in the quarter, then obviously the number is affected. But I wouldn’t read anything more than that. This is how it’s going. You will see some quarters, it will be in the low-teens. Some quarters, it will be in the mid-teens. I think that’s what you’ll see. George Mihalos – Credit Suisse: Okay, great.

We still think it will run around, somewhere around 15% give or take year-over-year. George Mihalos – Credit Suisse: Okay, thank you.

And our next question will come from Bryan Keane with Deutsche Bank. Bryan Keane – Deutsche Bank: Yes, hi guys. Just wanted to follow-up on that. On the international growth, is there areas of strength versus areas of weakness that you can talk about that you saw in the quarter?

No, not really. We don’t give it out – we don’t give the market-by-market. I would just tell you that we continue to sign business in a number of the markets we’re in. So we’re seeing growth in sales in all of our markets, like we did last year. And we’re seeing the growth – it’s driven again. I mean a lot of this is driven by two things, the sales we have last year and the cash to card conversion. And we’re seeing that pretty uniform across the markets. Bryan Keane – Deutsche Bank: Okay. And then just to follow-up on Business Solutions. What does the revenue guidance for the year now come out to be for Business Solutions? And then, do we expect a rebound in the first quarter of ‘15 or is the visibility still unclear when that rebound will be in Business Solutions? Juan José Román: For the rest of the year, Business Solutions maybe in the second half will be around 4% growth versus last year. Yes, well, we still have not look into 2016, but the reality is, we expect to be better than 2014 mostly because of the impact really this year on hardware and software will be lower, but we expect to be more normalized year starting Q1 of next year. Bryan Keane – Deutsche Bank: Okay. All right, that’s helpful. Thanks. That’s all I had.

And our next question will come from Faton Begolli from Bank of America Merrill Lynch. Faton Begolli – Bank of America Merrill Lynch: Yes, thanks for taking my questions. So most of them have been answered already, but just once again, so what – the current Puerto Rico situation, how is that effecting EVERTEC specifically, and what are you hearing from clients? Thanks.

Well again, if you look from an EVERTEC perspective, that separated, like we’ve said on the Payments side, we’ve seen really no impact, and that we continue to see growth in the payment transactions. And again we have probably more visibility to this than anybody. And we’re seeing just very consistent growth year-over-year on the Payment side of the business and you see that in the numbers. On the Business Solutions side, we have seen no impact of Popular at this point. So Popular is behaving exactly from a revenue perspective for EVERTEC as we had expected really to behave and in line with what is done last year. So we don’t see any negative impact to Popular. It makes up the majority of the revenue in Business Solutions. We do think there is a lot of uncertainty in the government side. And I think you’re seeing that in some of these projects that are not being upgraded as quickly as we had expected them to be. I’ll be honest, we think it’s just timing. We think they’re going to have to upgrade at some point. It’s just – they’re trying to balance the budget for the first time in 22 years. I think that probably has more playing it than anything else. Faton Begolli – Bank of America Merrill Lynch: I see, all right. Thank you. So just to clarify again, the Business Solutions’ weakness was mainly due to government. Is that right or…

Well, it was mainly due to hardware and software, but in the hardware and software, it was predominantly government contracts. Faton Begolli – Bank of America Merrill Lynch: I see, okay. And then for Merchant Acquiring and Payment Processing, is it okay to assume that you’re expecting high-single-digit growth for the second half?

Yes. Faton Begolli – Bank of America Merrill Lynch: Okay. That’s all I had. Thank you.

Up next, we have Chris Brendler with Stifel. Chris Brendler – Stifel Nicolaus: Hi, thanks. Good evening guys. I just wanted to ask a follow-up on the international expansion front, the strategy and the plans to find an acquiring partner either in Colombia or other markets like Costa Rica or Benelux [ph]. No real update sounds like from you guys at this point. I just wanted to know, just sort of take your temperature on how you feel about the multiyear outlook, it’s not that you’re trying to get discouraged about or it’s just simply that you needed to take...

No. Chris Brendler – Stifel Nicolaus: Longer and maybe by markets, how are things trending from, sort of, the sample of potentially getting something done in calendar 2014?

Yes. I think as we’ve said before, this is a new experience for the partners that we’re talking to. This is not a common practice in our footprint. We’re the ones trying to leave this in the market. And so yes, we clearly have learned that it will take longer than we had originally expected, but I am not any more – I’m no more confident than I was before. Colombia is a different story. We really couldn’t move in Colombia until we had access to licenses. And now we feel very good about Colombia because we have finally gotten the VISA license, which gives us the ability now to actually go into the markets. Now as we’ve said in the script, we could go in as EVERTEC, but that’s not the strategy that we have been pursuing or will pursue. We want the partner with the financial institution. Chris Brendler – Stifel Nicolaus: Okay, great. And then, back to Puerto Rico for a second. It sounds like it’s remarkably stable. Any inflections in terms of just consumer spending and spending on cards? Is it sort of 7% rate. It’s been very consistent for the last several quarters. Is there any movement either way on that front?

I don’t – it has been so consistent that there is nothing that we see that tells us that that’s going to change. Now, we have gone through a lot of noise as you know here over the last, give or take what, six, nine months, it hasn’t changed. So the consumer confidence in the market hasn’t – if anything has had, absolutely no impact. I think this is very isolated. There has been a lot of noise, but it’s not about the consumer, it’s about the government. It’s not really about – because we would see it, believe me, we would see it before anybody else are. Chris Brendler – Stifel Nicolaus: Okay, great. Thanks so much.

Up next, we have Bob Napoli from William Blair. Bob Napoli – William Blair & Co: Hi guys, good afternoon.

Hi Bob. Bob Napoli – William Blair & Co: Any chance we could get the hardware and software sales number for 2013? I think last quarter it made just such a huge difference in margins that it would be great if you broke that out. What did you have in full year ‘13 and what do you have year-to-date in ‘14?

Let us look at that, I don’t have that in front of me, but me or Juan will get back to you on that, Bob. Bob Napoli – William Blair & Co: Okay. Juan José Román: We will, but again I just want to remind, last year was around 3%, 3.5% give and take. This year obviously would run even lower than that. So that will give you good a sense what the number is. It’s really not… Bob Napoli – William Blair & Co: 3% of total revenue, Juan? Juan José Román: Of total revenues. Bob Napoli – William Blair & Co: Okay. Juan José Román: Around that. Bob Napoli – William Blair & Co: Okay. Thank you. And then just in the non-Puerto Rico growth. As you look at expecting that to continue in mid-double-digits, what markets are you getting are the most and where are you getting the majority of that growth today, and where do you expect to be getting it over the next couple of years?

Obviously it comes from the bigger markets that we operate in today, okay. Bob Napoli – William Blair & Co: Panama or is that…

Well, what I’m saying is the – if you look at our footprint today, Bob, right. Bob Napoli – William Blair & Co: Yes.

So our bigger markets would be Panama, it would be Costa Rica, it would be the Dominican Republic. Those are our bigger markets in our current footprint, right. And that’s where obviously the bigger banks are and we’re seeing the majority of the transactions, right. Bob Napoli – William Blair & Co: Yes.

But we’re seeing growth in El Salvador, we’re seeing growth in Guatemala and Belize [ph] and a number of other markets. If you look in the grand scheme, those are fairly smaller markets. The future obviously is that the growth will come from places like Colombia, I mean that’s where the growth – the majority of the growth will come from as we go forward. Bob Napoli – William Blair & Co: Okay.

So that story really hasn’t changed much, Bob. Bob Napoli – William Blair & Co: Any different thoughts on return of capital and share buybacks? And you’re generating a lot of capital paying down debt. How much longer do you want to pay down debt? I know you’d love to do an acquisition to buy a portfolio, or it doesn’t sound like you’re that close to anything material on that front. So what are your thoughts as far as share repurchases? Juan José Román: Yes, for in order to happen a change, we continue focus obviously investing in the company. In terms of our debt repayment, as I said today, we continue paying down our revolver. You should expect that we will continue so. We expect to pay all of it during this year. And we will continue doing the mandatory debt repayment, right. After that, we will have the discussion with our board to evaluate what other alternative we will do including the buyback. As we said, we buyback last year was very positive for our shareholders. So it’s a consideration for us to discuss with our board. But short-term, as I said, you would see us paying down fully our revolver. Bob Napoli – William Blair & Co: And then from an M&A perspective, Peter, you’re not really seeing any material opportunities at this point?

Not for 2014, no. Bob Napoli – William Blair & Co: Okay, great. Thank you very much.

At this time, we have one question remaining in the queue. (Operator Instructions) We’ll take our next question from Smitti Srethapramote from Morgan Stanley. Smitti Srethapramote – Morgan Stanley: Yes. Hi, Peter and Juan.

How are you doing? Smitti Srethapramote – Morgan Stanley: Good, thank you. Just a follow-up question on the international expansion plans, especially on the merchant acquiring alliance front. Just wondering, do you think it would be possible to accelerate the timeframe of signing some of these alliances if you were to contribute some of your own capital to JV?

No, I don’t think so because I would be happy to do that today. It isn’t that we’re reluctant to commit capital. As we just said, that would be my first use of capital before I would even pay down the revolver and do a buyback. My first use of capital would always be to invest in the business. So now it’s not – that isn’t going to help the process. We’re more than happy to do that today. Smitti Srethapramote – Morgan Stanley: And then maybe just a follow-up on the international front. A while back you guys talked about introducing new products, like Dynamic Currency Conversion and such. Can you give us an update in terms of what’s in the pipeline for new products and new geographies that you are likely to enter outside the merchant acquiring alliance front?

There is no substantial product offering that I would highlight to you today. We’re always adding functionality to the platform, but there is nothing that stands out like Dynamic Currency Conversion or ATH, the person-to-person payment product that we launched. There isn’t anything today that’s imminent that I would bring to the – that I would put on the table to you. Smitti Srethapramote – Morgan Stanley: Okay, thank you.

And it appears there are no further questions at this time. Mr. Harrington, I’d like to turn the conference back to you for any additional or closing remarks.

Thank you, operator. In summary, we had a solid second quarter. We continue to add business from new and existing customers. We continued to invest to support long-term growth, and we’re driving greater profitability by leveraging our attractive business model. I want to thank you for your support and I look forward to speaking with you again on our third quarter earnings call. Operator, you may now end the call.

This does conclude today’s conference. Thank you for your participation.