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Segment Information
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Segment Information Segment InformationThe Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America, Merchant Acquiring, and Business Solutions.
The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale (“POS”) transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions and digital payment services to the government of Puerto Rico), ATH Movil (person-to-person) and ATH Business (person-to-merchant) digital transactions and EBT (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services. For EBT services, revenues are primarily derived from the number of beneficiaries on file.


The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network of ATMs and other card networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financial institutions), as well as licensed software solutions for risk and fraud management and card payment processing. For network and processing services, revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from transaction switching and processing fees, and the leasing of POS devices and network fees. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiring segment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment, net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee is generally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or the transaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bank processing, network hosting and management, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bank processing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e., savings or checking accounts, loans, etc.) or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and these resale transactions are generally non-recurring.

In addition to the four operating segments described above, Management identified certain functional cost areas that operate independently and do not constitute businesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore, these areas are aggregated and presented as “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and Other category consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses that are not included in the operating segments. The overhead and leveraged costs relate to activities such as:

•marketing,
•corporate finance and accounting,
•human resources,
•legal,
•risk management functions,
•internal audit,
•corporate debt related costs,
•non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,
•intersegment revenues and expenses, and
•other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level.

The Chief Operating Decision Maker (“CODM”) reviews the operating segments separate financial information to assess performance and to allocate resources. Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted EBITDA. Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. Adjusted EBITDA, as it relates to operating segments, is presented in conformity with ASC Topic 280, Segment Reporting, given that it is reported to the CODM for purposes of allocating resources. Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment evaluation is driven by revenues and Adjusted EBITDA. As such, segment assets are not disclosed in the notes to the accompanying consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated:
December 31, 2022
(In thousands)Payment
Services -
Puerto Rico & Caribbean		Payment
Services -
Latin America		Merchant
Acquiring, net		Business
Solutions
Corporate and Other (1)
Total
Revenues$178,481 $128,221 $151,085 $235,299 $(74,677)

$618,409 
Operating costs and expenses103,773 106,693 94,976 156,915 (1,348)461,009 
Depreciation and amortization20,379 14,121 4,160 17,027 22,931 78,618 
Non-operating income (expenses)1,258 (3,318)1,372 138,033 (5,242)132,103 
EBITDA96,345 32,331 61,641 233,444 (55,640)368,121 
Compensation and benefits (2)
3,357 3,598 1,641 2,114 9,625 20,335 
Transaction, refinancing, and other fees (3)
1,078 145 325 (134,990)14,493 (118,949)
Adjusted EBITDA$100,780 $36,074 $63,607 $100,568 $(31,522)$269,507 
(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment revenue eliminations predominantly reflect the $49.5 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software developments and transaction processing of $14.5 million from Payment Services- Latin America to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $10.7 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.
(2)Primarily represents share-based compensation and severance payments.
(3)Primarily represents fees and expenses associated with corporate transactions as defined in the 2022 Credit Agreement, the gain from the Popular transaction and the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of dividends received.
December 31, 2021
(In thousands)Payment
Services -
Puerto Rico & Caribbean		Payment
Services -
Latin America		Merchant
Acquiring, net		Business
Solutions
Corporate and Other (1)
Total
Revenues$155,392 $105,963 $143,965 $243,807 $(59,331)$589,796 
Operating costs and expenses84,742 86,152 75,795 150,433 (3,840)393,282 
Depreciation and amortization16,085 11,395 3,583 18,930 25,077 75,070 
Non-operating income (expenses)842 8,216 1,107 3,056 (7,109)6,112 
EBITDA87,577 39,422 72,860 115,360 (37,523)277,696 
Compensation and benefits (2)
1,702 3,080 1,012 1,775 7,575 15,144 
Transaction, refinancing, and other fees (3)
660 — — (647)1,965 1,978 
Adjusted EBITDA$89,939 $42,502 $73,872 $116,488 $(27,983)$294,818 
(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $42.4 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring, intercompany software developments and transaction processing of $9.2 million from Payment Services- Latin America to both Payment Services- Puerto Rico & Caribbean and Business Solutions, and transaction processing and monitoring fees of $7.6 million from Payment Services - Puerto Rico & Caribbean to Payment Services - Latin America.
(2)Primarily represents share-based compensation and severance payments.
(3)Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of dividends received, a software impairment charge and a gain from sale of assets.

December 31, 2020
(In thousands)Payment
Services -
Puerto Rico & Caribbean		Payment
Services -
Latin America		Merchant
Acquiring, net		Business
Solutions
Corporate and Other (1)
Total
Revenues$124,771 $84,641 $109,788 $234,965 $(43,577)$510,588 
Operating costs and expenses72,968 73,030 58,163 141,446 23,589 

369,196 
Depreciation and amortization13,455 11,299 1,905 17,551 27,308 71,518 
Non-operating income (expenses)202 6,934 650 1,938 (3,691)6,033 
EBITDA65,460 29,844 54,180 113,008 (43,549)218,943 
Compensation and benefits (2)
987 2,934 926 1,794 7,742 14,383 
Transaction, refinancing, exit activity and other fees (3)
500 — — — 6,641 7,141 
Adjusted EBITDA$66,947 $32,778 $55,106 $114,802 $(29,166)$240,467 
(1)Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the $34.6 million processing fee from Payments Services - Puerto Rico & Caribbean to Merchant Acquiring and intercompany software sale and developments of $9.0 million from Payment Services-Latin America to Payment Services-Puerto Rico & Caribbean.
(2)Primarily represents share-based compensation.
(3)Primarily represents fees and expenses associated with corporate transactions as defined in the 2018 Credit Agreement, an impairment charge and elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A.
The reconciliation of EBITDA to consolidated net income is as follows:
 Years ended December 31,
(In thousands)202220212020
Total EBITDA$368,121 $277,696 $218,943 
Less:
Income tax expense28,983 20,562 19,002 
Interest expense, net21,651 20,921 23,572 
Depreciation and amortization78,618 75,070 71,518 
Net Income$238,869 $161,143 $104,851 
 
The geographic segment information below is classified based on the geographic location of the Company’s subsidiaries:
 Years ended December 31,
(In thousands)202220212020
Revenues (1)
Puerto Rico$481,676 $473,647 $418,151 
Caribbean22,969 18,917 14,873 
Latin America113,764 97,232 77,564 
Total Revenues$618,409 $589,796 $510,588 
(1)Revenues are based on subsidiaries’ country of domicile.
Major customers
The Company continues to have revenue concentration with Popular, revenues as a percentage of total revenues, were 39%, 42% and 44%, for the years ended December 31, 2022, 2021 and 2020, respectively. Accounts receivable from Popular as of December 31, 2022 amounted to $41.6 million.
The Company’s next largest customer, the Government of Puerto Rico, consolidating all individual agencies and public corporations, represented 7%, 6%, and 8% of the Company’s total revenues for the years ended December 31, 2022, 2021 and 2020, respectively.