Good afternoon everyone and welcome to the EVERTEC’s First Quarter 2017 Earnings Conference Call. Today's conference call is being recorded. At this time, I would like to turn the call over to Kay Sharpton, Vice President of Investor Relations. Please go ahead.

Thank you and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer and Peter Smith, our Chief Financial Officer. A replay of this call will be available until Wednesday, May 10. Access information for the replay is listed in today’s financial release, which is available on our website under the Investor Relations section of evertecinc.com. For those listening to the replay this call was held on May 3. Please note, there is a presentation that accompanies this conference call, and it is accessible in the Investor Relations section of our website. Before we begin, I would like to remind everyone that this call may contain forward-looking statements as 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 reflect our current expectations only, and we undertake no obligation to update any statements to reflect the events that occur after this call. Please refer to the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission 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, and adjusted earnings per share. Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides. I’ll now hand the call over to Mac.

Thanks, Kay and good afternoon everyone. Thanks for joining us on today’s call. We are pleased with our results for the first quarter of 2017 as we delivered above our financial expectations in challenging macro environment in Puerto Rico. I'll cover some of the quarter's highlights and provide you with an update on recent developments. Beginning on Slide 4, we have a summary of the quarter results. Total revenue was over $101 million, an increase of 6% compared to 2016, which was stronger than we anticipated, primarily due to increased transaction volumes. We delivered adjusted earnings per share of $0.45, an increase of 10% over last year. We generated significant cash flow and returned approximately $11 million to our shareholders this year, and almost $4 million in stock buybacks and $7 million in dividends. Now I'd like to give you some more specific update on Q1 on Slide 5. First, we were pleased with the strong revenue in the quarter. Puerto Rico overall revenue grew optimally 4% and we continued to experience resilient transaction growth. Payment Processing transactions grew more than 10%, but this growth was partially offset by average ticket declines, as well as merchant mix shifts. In this regard we benefited from increased gas prices, increased government payments and general payments growth from the continued cash-to-card conversion on the island. Additionally we are encouraged that we have seen a consistent increase in electronic transactions since legislation requiring electronic payment acceptance was passed last June. In the quarter we also were able to test a commercial offering of our ATH Movil product and the response has been positive. We expect to launch this solution in the second half of 2017. As for business solutions we are pleased with the integration of Accuprint, as we have effectively leveraged our existing…

Thank you Mac. And good afternoon everyone. I’ll now provide a review of our first quarter 2017 results. Turning to Slide 8, you'll see the first quarter 2017 revenue for the total company and our segment revenue details. Total revenue for the first quarter of 2017 was $101.3 million, up 6% compared to $95.5 million in the prior year with approximately half of the growth coming from our acquisitions Accuprint and Processa. With respect to the segment mix, merchant acquiring net revenue decreased 2% year-over-year to approximately $22.5 million driven primarily by the Q2 contract change for Oriental Bank from Merchant Acquiring segment to the Payment Processing segment. Excluding approximately 6% impact that this contract change Merchant Acquiring would have increased approximately 4%. Revenue growth was impacted positively by the transaction growth driven by the ongoing cash-to-card conversion trend, government payments and increased gas volumes. We experienced a further decline in the average ticket as we believe the ongoing economic uncertainty has influenced consumer behavior. The impact of an unfavorable merchant mix continues to reduce the overall net revenue contributions, but this impact was less than prior quarter’s. Payment Processing revenue in the first quarter was $30 million, up approximately 12% as compared to last year. Revenue growth was driven primarily by increases in ATH debit network and card processing volume. The additional two months of Processa revenue increased point of sale through rental revenue and the contribution of the Oriental contract change that referenced. Additionally, we benefited from approximately $0.6 million of nonrecurring revenue in Latin America. In the quarter transaction growth in Puerto Rico was resilient, growing over 10% year-over-year with a stronger back half of the quarter. We also benefited from the calendar shifts of Easter to April this year and this was partly offset by the…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from James Schneider with Goldman Sachs. Please go ahead.

Hi this is actually Lara Fourman stepping in for Jim today. My first question was just on the title 3. If you could just talk about kind of range of headlines and the range of scenarios more positive or negative outcome for EVERTEC and how to think about the solutions business based on the headlines we might see.

Yes thanks for the question, this is Mac. We can't really speculate on the process with title 3, but what we can tell you as we said in the past that we provide mission-critical services to the government and as of today, we feel like our receivables are still connectable and we're very focused on continuing the services. And again, this is going to be a long process with the government but we think there is opportunity even more overtime, but our position has not changed given the type of pre announcement. Peter you just want to…

No I think that best summarizes it quite well, we’re focused on delivering good services that we do to the government, they have acknowledged our services that's essential and our conversation directly and also publicly, and we’re just going to follow the process and we expect a favorable outcome as Mac articulated.

But I would repeat like we said earlier the fact there now is Executive Director on place, the fact that the PROMESA process is working provides again a way for the Puerto Rico to deal fiscal situation.

Hey and then my other question was just on the guidance, I think you guys raised guidance by $4 million. And then when you were talking about the client delays, you expect the headwind to be $4 million less. But I think that trends were also coming in stronger this quarter so if can kind of just reconcile how much of balance rises from migrations or delays migrations or how much was from better trend?

This is Mac. Let met get Peter to answer that question.

Yes so as you correctly indicated, $4 million was the net change if you take the midpoint of the range of the attrition change that we made in our guidance. And indeed, we had a strong quarter. We just thought and given in totality of our projections for the year that the guide we did was appropriate Accordingly, the fundamental assumptions for the rest of the year, which include a drop-off in the volume due to the measures we anticipate remain in place and are essentially the same.

Thanks.

Our next question is from John Davis with Stifel Nicolaus. Please go ahead.

Hi good afternoon guys. Just quickly on the attrition delay Mac or sorry, Peter, how much of the $4 million was in the first quarter versus the rest of the year?

Hi John, the first quarter was essentially the same as last quarter. So we had a $0.5 million, and then what we expect the attrition to hit us twice as hard in the second half of the year, that's our current projection.

Okay. And then maybe just talk a little bit at a high-level I appreciate all the detail on the margin guidance and the margin improvement year-over-year. But I think the margin came in somewhat better than, I think, most people had expected. Maybe just talk about longer term puts and takes. The margin has been coming down pretty precipitously for the last few quarters and a nice balance here. Just help us think about the longer-term margin profile company as a whole?

Sure. We're encouraged by the quarter obviously as we indicated when we bring on volume on our existing platforms, particularly here in Puerto Rico we generate operating leverage that drives higher margin, that's what was reflected in the first quarter. As we've indicated in our annual guidance, we do have some expenditures that we need to make forward information security compliance, which are going to have a bit of a drag on the margin as the year unfolds. And then as we mentioned on the last call, the attrition is from the very high-margin platform in Latin America and so that's why we expect it to go down. Obviously, if the trends here continue and are better than the austerity that we project, we would produce a higher margin. As of now, guidance you can do the math, but effectively it's at the higher range of our existing 46% to 47%.

Okay. And then, maybe, Mac, any comments on the regulatory process for PayGroup as planned as scheduled, anything there you can share?

Yes we really don't have an update. What I would say is we're still optimistic that it's going to close and focused on working with FIS, but no update. And we're looking forward to getting approval and closing the deal, that's our expectation.

Okay, that’s it from me. Thanks guys.

Alright thanks John.

Our next question is from Vasundhara Govil with Morgan Stanley. Please go ahead.

Hi thanks for taking my question. Solid results here. I guess just first on Puerto Rico, you guys have been seeing elevated transaction growth for a few quarters now, and mostly from a revenue perspective, it's getting offset by lower ticket sizes and the merchant mix. I mean, at some point I would imagine that ticket size and the merchant mix kind of laps and you start to see better revenue growth. When would that occur if the transaction growth remains where it is?

Hi Vasu, well this quarter, in fact, we saw a bit of improvement on the mix of – and the average ticket continue to decline as we indicated in the prepared remarks, we believe some of that to be based on consumer behavior just given the economic stress on the island right now. With respect to the improvement, we did see a slight improvement as I indicated on the mix side of things. So we hope that continues and gradually as the economy goes forward we would see the plateauing of the average ticket, and then we will be able to produce at the higher net revenue contribution.

Got it. Thanks for that. And then just on departure of Mariana Goldvarg, I thought I got you said you have an Interim President in place. Is there more prominent succession plan there?

Well, so Miguel Arocho has been with the company for 25 years, most recently he ran ops for LatAm, he’s got technology background and a client relationship background, so we’re very confident at him as an Interim and he may end up being a long-term choice. But right now, we're going to put in the for a while and then consider other alternatives.

Great, thank you very much.

[Operator Instructions] Our next question comes from George Mihalos with Cowen. Please go ahead.

Hey guys nice results to start the year. Just wanted to ask on the mid-teens organic growth in Latin America. If you can maybe provide a little bit more color as to what you're seeing and if there's any sort of geography that may be specifically within there is worth calling out?

Hi George, this business is predominantly our Central American business and those were strong results. We did highlight in our remarks that we had approximately $600,000 from nonrecurring items. So the 15% includes those amounts not as high single digits, which is in line with our expectations. Right now, we are anticipating losses, but as we have indicated there’s strong organic trends in terms of just growth in transactions in those markets.

Are you seeing any better, any differently about your ability maybe to keep some of the de-converting clients on to the platform. I know you said as of now, the de-conversions are still in place, but just wondering if just wondering if you feel any differently thing about your prospects there. Thank you.

Hi George, this is Mac. So what I would say is the delay is good news to us, not only to the health side of team, but it also gives us more time to try and retain those customers. I mean, that's something we will be continuing to be focused on going to gone as we said on previous calls. And again, we're focused on continuing to call our existing customers continue to win new business, keep some of these clients. And with PayGroup, we think that will give us additional opportunities to look at the products we can settle in. So specific to these customers, we will be very focused on trying to keep them.

Thank you guys.

Thanks George. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mac Schuessler for any closing remarks. I apologize it looks like we have a follow-up question from Vasu Govil from Morgan Stanley.

Hi thanks. I just wanted to quickly also ask, I think last quarter you guys talked new sales sort of lagging expectations and you were making investments there. Wondering you can give us any update on trends that you're seeing in new sales growth. And also are there any metrics that you could share with us that would help provide some visibility how your sales are trending?

We don’t provide new sales metrics, although we would point you to mid-teen growth in the quarter which is what we consider success if we can repeat that in the future. Like I said earlier, we're very focused on trying to win new business and we continue to focus on our pipeline, cross-selling new products to our existing customers and as George pointed out, continue to try and win – I mean, keep the customers until they're leaving. So that's what our focus is and we hope that will continue to deliver the types of results we have this quarter.

Great, thanks very much.

So with that again I just say thanks to everyone, for joining us call. We look forward to visiting with many of you over the coming months. And I hope you have a good night. Operator you can close the call