Good afternoon and welcome to the EVERTEC Third Quarter 2021 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Kevin Hunt of Investor Relations. Please go ahead.

Thank you and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer and Joaquin Castrillo, our 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 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 website at www.evertecinc.com. I will now hand over the call to Mac.

Thank you and good afternoon everyone. Thank you for joining us on our third quarter 2021 earnings call. We are pleased to announce another strong quarter of financial results as we continue to benefit from strong sales volumes across our markets. In Puerto Rico, the continued effect from federal funds, increased digital usage, and a return to some pre-COVID seasonality drove strong transaction volumes. In Latin America, we are seeing strong growth driven by both recent implementations as well as organic growth from existing clients. Beginning on Slide 4, our total revenue for the third quarter was $146 million, an increase of approximately 7% compared to the third quarter of 2020. Adjusted EBITDA was $70 million, roughly the same as the prior year, and our adjusted earnings per share was $0.62, a decrease of 5% year-over-year, in line with our expectations despite a higher than expected adjusted effective tax rate. We generated significant year-to-date operating cash flow of $176 million and we returned approximately $35 million to our shareholders through dividends and share repurchases. Our liquidity remained strong at $363 million as of September 30. Moving on to our update for Puerto Rico on Slide 5, we saw continued strong volume and revenue growth in the third quarter. The ongoing effect from the inflow of federal stimulus and EBITDA funds earlier in the year was a major driver of growth, as was a pickup in back-to-school spending in August, a sign that we are returning to pre-COVID spending patterns. Merchant Acquiring sales volume growth was approximately 23% year-over-year and average ticket is coming down on a year-over-year basis but remained above pre-pandemic levels. We remain pleased with the growth of ATH Móvil, which was up 24% for the quarter, as we continue to see a shift in preference to digital payment methods. Turning to the operating environment in Puerto Rico, vaccination rates continue to increase, with over 70% of the population now fully vaccinated, the highest level in a U.S. state or territory as reported by the CDC. Hospitalization rates are down over 80% from Delta variant peaks back in August and this is moving us closer to a more normal environment with the government continuing to loosen restrictions. The third quarter also had the highest hotel occupancy rates since the beginning of the pandemic, and we saw the first cruise ship dock in Puerto Rico since March of 2020. Now turning to Latin America on Slide 6, we continue to see strong double-digit growth in Latin America as we are still benefiting from recent implementations as well as organic growth from existing clients in several countries. We are pleased to announce our recent contract with Caja Popular Mexicana for our issuing, a deal that we have been working on for some time and then just recently received regulatory approval. CPM is the largest savings and loan cooperative in Mexico with 479 branches and over 3 million members, representing about 35% market share. They have been focused on increasing nontraditional payment methods in Mexico, including ATM, point-of-sale terminals, and digital payments, and to that end, recently launched several credit card products that they will be rolling out to their members using our issuing platform, PayStudio. Our Santander relationship in Chile continues to progress ahead of our expectations. When the bank launched its POS business back in March, they set a goal of bringing 20,000 customers onboard by the end of 2021. They are already above 37,000 customers and have set a new goal of reaching 50,000 by year-end. We have also successfully localized our gateway, PlacetoPay, in Chile. These are good examples of the kind of growth opportunities that exist when previously closed markets open up for competition. While vaccination rates and reopenings continue to vary country to country, we have seen encouraging progress in Chile and Uruguay and expect to continue to see a decrease in cases across the region as the vaccines become widely available. Turning to our people, over 95% of EVERTEC employees at our Puerto Rico headquarters have now been vaccinated, and we reopened our Puerto Rico offices on a hybrid model on October 12. We expect offices in other regions will follow in the coming months based on the conditions in each country. We remain committed to our scholarship program in Puerto Rico and across Latin America. Now in its seventh year, we awarded 177 scholarships to students across Puerto Rico and Latin America, an increase of 10% from the prior year. We were once again able to maintain a 50-50 gender ratio, providing equal opportunities for both men and women. We are proud to have awarded over $870,000 in scholarships over the past 7 years and look forward to continuing to support education for STEM careers in both Puerto Rico and Latin America. In summary, we delivered strong third quarter results. We are once again raising our 2021 outlook with a higher expected revenue range and an EPS range that has narrowed to the upper end of our prior expectations. While we will certainly monitor the impacts of the different COVID-19 variants across our markets and remain cautious in certain countries, at this point, we have a positive view towards the future. I will now hand the call over to Joaquin to review our results and guidance in more detail.

Thank you, Mac and good afternoon everyone. Turning to Slide 8, you will see the consolidated third quarter results for EVERTEC. Total revenue for the third quarter was $145.9 million, up approximately 7% compared to the prior year. As Mac mentioned, our Q3 results reflect increased transaction volumes in Puerto Rico, mainly impacted by the inflow of COVID-related federal stimulus earlier in the year and double-digit growth in Lat Am as we continue to see more transactions from our recent business implementations and organic growth from existing clients. Adjusted EBITDA for the quarter was $69.8 million, down slightly from the $70 million reported in the prior year. Adjusted EBITDA margin was 47.8%, down 350 basis points from a year ago. The decline in margin reflects the year-over-year comparison against the onetime Department of Education contract and a $2 million benefit from non-operating income due to foreign currency gains related to balance sheet remeasurement, both of which positively impacted last year’s margin. Adjusted net income for the quarter was $45 million, a decrease of 5% as compared to the prior year. The decline in adjusted net income was primarily due to higher operating, depreciation and amortization, and a higher adjusted effective tax rate. This was partially offset by lower cash interest expense. Our adjusted effective tax rate in the quarter was 16.9%, reflecting a discrete foreign tax impact this quarter. We now expect our full-year tax rate to be approximately 14%. And adjusted EPS was $0.62 for the quarter, a decrease of 5% compared to the prior year. Moving on to Slide 9, I will now cover our segment results, starting with Merchant Acquiring. In the third quarter, Merchant Acquiring net revenue increased approximately 23% year-over-year to $37.6 million, driven by both higher sales volume and revenue generated from the expanded relationship with FirstBank at the beginning of the year. Sales volume in the quarter increased approximately 22% year-over-year and with a strong month of August, as we noted a return to more normal back-to-school activity versus COVID lockdowns a year ago. The inflow of both pandemic-related federal funds and EBT funds remained growth drivers in the quarter, even though enhanced unemployment benefits ended in the month of September. Partially offsetting our revenue growth in Q3 was a reduced spread, primarily due to a lower average ticket and a more normalized product mix between credit and debit and local versus international transactions. Average ticket, although down year-over-year, continues to be above pre-pandemic levels, and we continue to expect a gradual decrease going forward as consumption patterns normalize. Adjusted EBITDA for the segment was $19.2 million, up approximately 21%, driven by the higher revenues in the quarter. Adjusted EBITDA margin was approximately 51%, a decrease of approximately 70 basis points as compared to last year as the revenue upside was offset by increased operating expenses, mainly due to the higher volume of transactions processed. Turning to Slide 10, you will see the results for the Payment Services Puerto Rico and the Caribbean segment. Revenue for the segment in the third quarter was $38.8 million, up approximately 16%, driven by increased transactional revenue from our ATH network and processing business on ATH Móvil. POS transactions increased approximately 16% year-over-year and ATH Móvil revenues increased approximately 24% when compared to prior year as we continue to see the adoption of digital channels. During the quarter, we also saw increased revenues of $2.2 million as a result of more services being provided to the Lat Am segment in support of the newly implemented platforms. We expect these intercompany revenues to gradually increase as transactions in Latin America increase. Adjusted EBITDA for the segment was $21.8 million, up approximately 18% as compared to last year, and adjusted EBITDA margin was approximately 56%, an increase of approximately 70 basis points. The margin increase was primarily due to the strong revenue growth, partially offset by an increase in technology services. On Slide 11, you will see the results for our Payment Services Latin America segment. Revenue for the segment in the third quarter was $26.8 million, up approximately 26% as compared to last year. This increase was driven, in part, by recent business implementations and expanded relationships we have highlighted in the past, like Santander Chile, as Mac discussed. We also saw strong organic growth from existing customers, mostly in Costa Rica and Panama, as well as strong growth from our payment gateway, PlacetoPay, as we continue to localize in more of our existing countries. Adjusted EBITDA for the segment was $10 million, up 5% year-over-year. While adjusted EBITDA margin was 37.3%, down 760 basis points as compared to last year. The decrease in margin was mainly driven by the favorable impact in the prior year of the remeasurement of assets and liabilities denominated in U.S. dollars. On Slide 12, you will find the results for the Business Solutions segment. Business Solutions revenue for the third quarter was down approximately 8% to $58.1 million. Most of this decline is due to the benefit to prior year from the onetime Department of Education contract, which contributed approximately $4.4 million, as well as a decrease in cash and item processing revenue. For the quarter, adjusted EBITDA was $26 million, a decrease of approximately 21%. And adjusted EBITDA margin was 44.8%, a decline of approximately 760 basis points as compared to last year. The adjusted EBITDA margin decline was due primarily to the Department of Education contract, which was a significant contribution to margin prior year. Moving on to Slide 13, you will see a summary of Corporate and Other. Our third quarter adjusted EBITDA was a negative $7.3 million, 6% higher than the prior year. Adjusted EBITDA as a percentage of total revenue was 5%, the same as the prior year. Moving on to our cash flow overview on Slide 14, our beginning cash balance was approximately $221 million, including restricted cash of approximately $18 million. For the 9-month period, net cash provided by operating activities was approximately $176 million, a nearly $55 million increase compared to the prior year. Capital expenditures were approximately $43 million, driven by higher hardware obsolescence spend as well as our continuous focus on innovation through internally developed software. We continue to expect approximately $60 million of CapEx for the full year. We also recorded approximately $15 million for the extension and expansion of our relationship with FirstBank and purchased approximately $3 million in debt securities, both during the first quarter. We paid approximately $28 million in long-term debt payments, $9 million in withholding taxes on share-based compensation and $2 million of other debt paydowns, which resulted in a total net debt decrease of approximately $39 million. Year-to-date, we have paid cash dividends of approximately $11 million and repurchased approximately $24 million of common stock for a total of approximately $35 million returned to our shareholders. We have approximately $76 million available for future use under the company’s share repurchase program. Our ending cash balance as of September 30 was $263 million, and this included approximately $19 million of restricted cash. Additionally, we recently announced another $0.05 dividend to be paid on December 3, 2021, to shareholders of record as of November 1, 2021. Moving to Slide 15, you’ll find a summary of our debt as of September 30, 2021. Our quarter-ending net debt position was approximately $228 million, reflecting approximately $472 million of total short-term borrowings and long-term debt and approximately $244 million of unrestricted cash. Our weighted average interest rate was 4.5%. Our net debt to trailing 12-month adjusted EBITDA was approximately 1.46x. As of September 30, total liquidity was approximately $363 million. This balance excludes restricted cash and includes the available borrowing capacity under our revolver. Moving to Slide 16, I will now provide an update on our 2021 guidance, adjusted primarily due to our Q3 results. We now expect revenue to be in a range of $574 million to $583 million, representing growth of 12% to 14% over last year and compared to $570 million to $579 million, previously estimated. Regarding the overall margin, we continue to anticipate that our adjusted EBITDA margin will be between 49% and 50% for the full year. We expect incremental expenses through the remainder of the year as we continue executing on specific initiatives around product and operational improvements as well as other investments around innovation. Our adjusted earnings per common share outlook have been increased on the lower end to $2.61 to $2.66 or a growth range of 26% to 28%, as compared to the adjusted earnings per share of $2.07 in 2020. Now turning to 2022, while we are not prepared to give guidance, I would like to comment on a few items that are notable. First, the level of federal fund inflow into Puerto Rico during 2021 as a result of the pandemic was significant and provided an important accelerator for our Merchant Acquiring and Payment Processing Puerto Rico segments, which will then be a headwind going into 2022, and we expect a limited benefit from the remaining funds. Although we are optimistic about the progress being made on the disaster recovery funds from Hurricane Maria, we do not expect to see the same level of impact. Second, in the Merchant Acquiring segment, our expanded relationship with FirstBank contributed to the growth this year. We will anniversary this transaction during the first quarter of next year. In LatAm, we benefited from significant wins on multiyear projects that went into production in the beginning of the year, some of which had important minimums that contributed to this year’s growth, and these project minimums will not have the same impact going into 2022. That said, we have continued to announce important wins that will contribute more and more over time as volume growth. Lastly, the CPI index for September was announced earlier this month and was 5.2%. As a reminder, our MSA with Banca Popular caps our annual increase to 5%. This will be the highest increase we have applied since becoming a public company. As previously disclosed, the MSA with Popular includes a provision that allows for the review of fees to ensure these are market, which Popular has challenged in the past and may challenge in the future. However, we have generally been able to effectively resolve these situations with the bank. In summary, we generated strong third quarter results and remain positive about the future, which led us to again raise our full-year 2021 guidance and we look forward to giving more detail on our 2022 expectations on our next call.

Hi, thank you for taking my questions.

I'm sorry, one moment. You may go ahead.

Hi, thank you for taking my questions. Mac and Joaquin, just a high-level question for you guys. I know you don’t provide long-term revenue or earnings growth targets because the macro situation in Puerto Rico has usually been very uncertain, but it seems the macro environment is now more stable. You may have some tailwinds from the federal stimulus funds coming in. The pace of digitization has accelerated globally, including in most of your end markets. With that backdrop, how should we think about sort of the growth algorithm for EVERTEC over the next say 3 to 5 years? If you could provide any color in terms of how you think about that internally? And then as a follow-up, Joaquin, if you could just talk about the fourth-quarter revenue guide, how are you expecting some of the trends across the segment? Because obviously, in the third quarter, you saw some pretty strong growth in the Merchant Acquiring segment and in the Payment Services LatAm segment, should some of those trends continue into the fourth quarter? Thank you.

Hey, Vasu, thanks and thanks for the question. So, on the first question, I will take a stab at it and then I will hand it over to Joaquin to give his comments and then to answer the second question. On the first question, as you pointed out, we don’t give long-term guidance and we will give – we do give annual guidance, and we’ll give guidance for 2022 on our next call. But I do want to point out, as you mentioned, the company, some of the dynamics of the company and the markets that we operate have improved over the past years. Number one, in Puerto Rico, we have seen stabilization in the economy, both from the federal funds coming through from Maria and also because of the pandemic. And in that environment, we’ve been able to capture additional market share as the larger banks, the international banks have left the island. Both Popular and Oriental have benefitted from that – I mean, I am sorry, FirstBank and Oriental have benefited from that recently. Those are all our customers, the local banks. So we do feel like that, in the short term, in the next few years, we do have a great environment in Puerto Rico in which we can operate, continue to increase our market share and hopefully have a stable – more stable economy than we’ve seen here in the past. Secondly, if you look at Latin America, when I arrived at the company 7 years ago, these markets were closed. Primarily, they were operated by monopolies and duopolies for payments. We’ve been fortunate that the markets have opened, and we now have a great set of products where we own the intellectual property. We have a rolodex of customers that continues to increase when we added Santander Chile, Mercado Libre, Alelo. Now with Caja Popular Mexicana, we believe that our LatAm business should grow at a good pace compared to the past as well. So we won’t give you numbers and we won’t give long-term guidance, Vasu. We will give you 2022 guidance on our next call. But to your point, the markets have stabilized. In the case of Latin America, it has now opened and I believe we have executed well to take care of those – to take advantage of those opportunities. Joaquin?

Yes. In terms of the second piece of the question, Vasu, what I would say is when we look at the different segments for Q4 and other trends that we saw in Q3 in terms of how the segments grew will sustain in general. I would say that NAV for the Merchant Acquiring segment, we still expect to see kind of high-teens to low 20s in terms of growth in the fourth quarter. And in Latin America, we are also expecting kind of high-teens, low-20s in terms of growth. Business solutions, as we have kind of communicated in the past, when there is a lack of any specific project that goes into production, we are expecting that to usually be in the low to mid single-digits. So that kind of breaks down, obviously, thinking about the range that we just provided in the script kind of where we expect those segments to be.

Great. Thank you very much. That was super helpful.

Thanks, Vasu.

Hey, guys. Thanks for taking my questions. Just wanted to talk a little bit about the volume and transaction growth, obviously, you guys spoke a little bit about the spike you saw in October. Can you give us a sense of kind of how the volumes or transactions trended into kind of the September, October timeframe?

I think you meant August, Korey, with the back-to-school. So we did see that kind of come back. And obviously, in Puerto Rico with the vaccination rates and the enrollment kind of going back to normal and kids going back to schools, it’s something that we sort of expected, but to see that actually get reflected again was something positive. I would say that October, we continue to see strong volume when we compare that against the prior year. I would say that’s similar to what we saw coming off of the most of September. So as I just mentioned on Vasu’s question, I mean, we’re expecting Merchant Acquiring to be in the high teens, low 20s overall. So that’s based on strong volumes still in Q4.

Got it. That’s helpful. And then ATH Móvil, I think kind of slowed to 24%. You mentioned in the quarter, I believe growth was 60% last quarter. And I know there is tougher comps there, but can you give us a sense of what you think kind of the right normalized growth rate is for that business coming out of the pandemic?

Let me – we won’t sort of – again, we will give the 2022 guidance next call. What I would say is, during the pandemic, as we’ve said, we saw significant increase as people moved to digital payments. And we’re encouraged that we now continue to see that trend continuing. And then now that people have adopted to the technology, they are using it more frequently. We are seeing a good velocity of adoption. So we do expect it to grow meaningfully in the future. But to your point, the comps of the past are hard.

No, I appreciate that, guys. And just maybe if I could sneak one more in, on Santander, I think you mentioned they upped the guidance to 50,000 merchants in Chile. At what point do we kind of move past the minimums and start to see incremental benefit from that? Thanks, guys.

What I would say, Korey, at this point, we are still within the minimums, and we have some way to go. But overall, for us, and obviously, for Santander, it’s encouraging to see the types of opportunities that exist out there when we penetrate some of these markets that weren’t necessarily open in the past. So we’re going to continue to be excited about the progress that they are making in terms of continuing to put clients on the platform.

And I think for us, as a company, I mean, not only naming these marquee brands as our customers but now performing and exceeding their expectations, and they talk about that publicly, is good for our pipeline in the future. So it’s not only the impact of the financial results on that specific contract, but it’s also building a reputation that not only do we win business, but we exceed our customers’ expectations.

Thanks, guys.

Thank you and good afternoon. Mac and Joaquin, so the CPM win, the issuer processing in Mexico, can you give a little color on just that business, the issuer processing business and the size of the business kind of geographically, I mean – and maybe a pipeline that you have in that business?

Yes. So it’s on our issuing business. And Bob, we issue both – we assist our customers issuing both debit and credit cards. We had announced previously that, in Mexico, we were doing Mercado Libre debit cards. This is credit cards Caja Popular Mexicana, which we’re excited about because they have 3 million customers, almost 500 branches. They are the largest of their kind in the country. So they are already in the market with the product working. We’re moving slowly to make sure that we can work out any kinks. But they have already announced it publicly that this is operating, the product is in the market, and this is a significant win for us in Mexico.

And maybe, I mean, do you have more pipeline in Mexico? Or is that – maybe just some color on the momentum in that business.

Yes. So what I would say, generally, I mean, where we see our pipeline from an organic perspective is around issuing and around acquiring processing services. We have – those are the two biggest lines, and we are seeing demand throughout the region and interest. And like I said on the previous comment with Santander Chile, the good news is not only are we announcing wins, but I think people are impressed by the fact that we are exceeding our customers’ expectations based on their own announcements. I mean the Santander Chile numbers we’re giving you are numbers that they have announced publicly. But yes, I would say, Bob, our organic pipeline is healthy. It’s been healthier than it’s ever been.

Great. And then – so you have liquidity getting close to $400 million of liquidity. You certainly broadened out the markets that you’re serving in Latin America. There seems to be a lot of opportunity in Latin America. From an M&A perspective, what are you focused on? You have a pipeline. And what – where do you see the biggest opportunities to add to your business inorganically?

Yes. So our thesis on M&A has not changed significantly. We are working in pipeline in Latin America, and we’re still focused solely on Latin America, and we’re looking at opportunities every month. So we’re still actively looking at M&A. And like I said, we will announce something when we have it, but there are still opportunities in Latin America that we’re evaluating.

And then I guess, lastly, just on your product development or your product road map, where are you investing internally? What product expansions could we expect to see over the next year or 2?

Yes. So I think we talked a little bit about this in 2019 that we – at the end of 2019, early 2019, we talked about we were going to invest in creating a processing model for our business. Because we have just bought PayGroup, we wanted to localize and turn it into a processing business for the acquiring and issuing. And we named the countries: Chile, Colombia, Mexico, Costa Rica. Those are the investments that we’ve made in the past, and we continue to make investments in that platform in those countries and looking at new countries as well. We’ve also invested heavily in PlacetoPay. So we recently – right before the pandemic, we closed on PlacetoPay, which is our e-commerce gateway. We have localized that now in Costa Rica, in Puerto Rico now. It was already operating in Colombia, and so – and we’ve localized it in Chile as well. So we focused on our e-commerce gateway because we believe that, as everyone else, e-commerce and digital transactions are important, and that gateway is our primary and our lead product. And then we’ve also made investments, Bob, as you know, around ATH Móvil, and that’s paid off very, very well, and it’s become a significant part of our P&L.

The only thing I would add is PayStudio, Bob, which is actually a platform that you referred to with CPM, which is both issuing and acquiring. And that goes to what Mac mentioned in terms of taking product and becoming a processor. As we’ve localized that platform and now as we put clients on it, we continue to get feedback in terms of functionality products that we’re really taking advantage of and kind of putting into a platform across the different countries that we’re in. So I would say that those are the three main areas where we’re investing.

And when we announced these wins, Mercado Libre, when we announced Santander Chile, CPM, all of these are from the PayGroup acquisition, which is now the PayStudio product and the investments we’ve made and now that we’re getting a payback by announcing these wins.

I would add, Bob, as I said in my remarks, right, as we continue to enhance these products, we’re also making some investments that are going to hit our OpEx around just efficiencies in the operation and efficiencies around just product development. And that’s part of what I mentioned in the remarks around guidance for the fourth quarter.

Great. Thank you. Appreciate it.

Thanks, Bob.

Hi, good afternoon, guys. Thanks for taking my question. Just wanted to ask one, as it relates to the Merchant Acquiring business, I know you talked about some unemployment benefits ending. I’m just curious, have you seen any sort of change in trend in volumes as you sort of exited September and moved into October? Just curious what you are seeing on the ground there?

What I would say, George, is, I mean, when we look at it year-over-year, it continues to be strong across, I would say, pretty much all verticals. And when we see – again, Q3 still had enhanced unemployment that really started to end in the second half of September. So the third quarter still saw some of that kind of push of funds coming through. I would say, sequentially, as we’ve said in the past, there is somewhat of a slowdown that we are tracking that applies to some of the different takes within Merchant Acquiring in terms of the average ticket also starting to come down to a more normal level. It’s still high when we look at what it was pre-pandemic. But as we move away from some of the significant funding that we saw early Q2, on a sequential basis, there is a slight slowdown.

Okay, thank you.

Thanks, George.

Hi, good afternoon, guys. Maybe just to start, wanted to hone in a little bit on LatAm. We’re seeing really strong growth there. I think you guys have highlighted that as kind of a growth area for – what’s going right? I think you guys can continue to kind of exceed our estimates for growth in that geography but just want to understand what’s going on. A lot of your, I guess, larger competitors have called out LatAm as an area for growth, just want to understand kind of what’s going right and what’s driving that growth?

What’s driving our growth, correct?

Correct.

Okay, because you mentioned our competitors. So yes, what I would say is over the last 3 or 4 years, as I mentioned a little bit earlier in my comments, previously, these markets were closed. EVERTEC was in a position, again, 5, 6 years ago, where we really needed to improve our products, our services. And once we did that, the markets would need to open. So what I would say what is going well for EVERTEC is, one, we’re the beneficiary of these markets now opening, I mean, starting with Prisma getting sold to Advent, and the Santander deal that we did in Chile. These markets are now opening, so it’s a great opportunity for anybody who’s willing to invest in Latin America. So that thesis is now playing out from a market opportunity perspective. What’s going well now is our ability to sell and win business. Because, if you remember, 7 years ago, when we get on these calls and talk about how is the pipeline, how are the sales opportunities, it was much more difficult. But now that we have clients that are already using our products, seeing that we’re winning business, seeing that we’re implementing business, I would say the sales pipeline and the execution on winning business is going well. And then the implementations, I mean I can tell you to move into a country like – to Chile and to build that from scratch and be the first one to do it, I was incredibly proud of how we executed, the same with Mercado Libre, the ability to implement in Mexico with the largest e-commerce player in all of Latin America, and now with Caja Popular Mexicana. So what I would say is, again, back to interest from different players in the market around a technology partner that can help them with issuing products and a technology partner that can help them with processing. As you’ve noticed, in Chile, some of the banks still want to own their own book of business, so they want to own the merchant contracts. Some don’t. And so we’ve been able to partner with both types. So I would say across the issuing and acquiring services, our ability to win business and people seeing our dedication to the region and our ability to implement that business is what has allowed us to get to double-digit growth this year in Latin America, and that’s all organic. I also believe that with PlacetoPay, we’ve done a good job integrating that acquisition as we’ve learned with other acquisitions, and we’ve been able to localize that product more quickly in additional markets given our experience that we have with PayGroup. But that’s what I think is going well. It’s very symbiotic timing that the markets are now opening. There is real interest with the entrance of fin-techs, with regulators wanting more options in the market and our ability to execute on those opportunities.

Okay. That’s very helpful color. And then maybe just switching to the balance sheet, obviously, leverage is under 1.5x now. Just you guys have generated a lot of free cash flow year-to-date, and I think would have returned the $35 million or so to shareholders. So just maybe, first, kind of remind us of what your comfort level is from a leverage perspective. Also, are there any opportunities with leverage where it is to refinance the balance sheet to bring down the cost of your debt, which I think is still about 4.5%? And then finally, just a little bit surprised to see kind of no buyback, should we read into that, that there is potential M&A on the horizon, price sensitivity? Just curious there, because I think if you look at your free cash flow year-to-date and what you’re returning to shareholders, there is kind of a big discrepancy, and 1.5x leverage is pretty low. So, just curious, thoughts from here, potential to do anything on the balance sheet and maybe refi that debt at a lower rate?

Hey, John, Joaquin here. So look, we’ve said before our kind of target range on leverage is 2 to 3x. We’re now, as you said, under that, and we’ve been under that now for a couple of quarters, in part, because of the good performance we’ve had from an EBITDA perspective. And what I would say is that we’re always looking at our capital structure and trying to make that more efficient. Having said that, when we look at the strategy for capital deployment and as Mac said before that, that hasn’t really changed, I mean our key focus here is M&A. And as Mac said, we have a pipeline. We’re looking at targets every quarter. And from a buyback perspective, consistent also with the strategy, we really look at those from an opportunistic perspective. And we don’t have a formal repurchase program or target that we’re trying to hit. And we did buy back some shares in Q1 and Q2. We did have a lower quarter this time around, but our main priority continues to be deploying capital for growth. We have also increased our CapEx. So we continue to invest in our own products which has given us results in Latin America. And that’s kind of where we are at this point, even though we have a strong balance sheet.

Okay. Alright, that’s it for me. Thanks, guys.

We will now begin the question-and-answer session. Our first question comes from James Faucette with Morgan Stanley. You may now go ahead.

Thank you very much and thanks for taking time this afternoon with us. Wanted to ask, you kind of outlined some of the things that have benefited you this year, like stimulus, etcetera. And obviously, that abates and that kind of thing. I’m wondering, though, on the flip side, as you also highlighted, is that we have tourism starting to pick back up and the like. How should we think about what you’re like planning assumptions are for when we can kind of get back to 2019 levels? And just trying to think through like the different components of the puts and takes, particularly going into next year?

You hit on one of them, which is obviously getting back a normalized economy in terms of the different factors that move is Puerto Rico, tourism being one of them. But I’ll just remind you on tourism, in and of itself, is less than 10% in terms of Puerto Rico GDP. It’s actually closer to 5% to 8%. And look, right now, we still see, as we said in our remarks, some tailwind from the stimulus that is still left out there, but not to the extent that we saw this previous year. We continue to track all of the recovery funding, which, at this point, even though we are optimistic that we will see that come through next year, we will definitely provide more detail. That is definitely an important part of our model and our assumptions as we go into 2022 and then just how Puerto Rico continues to recover economically. We are in a better backdrop than we’ve been in some time from a macro environment, but we need to see how this all starts to normalize once stimulus isn’t there.

And as far as some of the packages you’re looking at, to be clear, those are still being contemplated or they have already been signed off on, and you’re just kind of waiting for distribution and details there.

In most cases, a lot of money has already been allocated, but it hasn’t been distributed. Actually, recently, the new private company that is managing out of the transmission here in Puerto Rico for the public electric authority announced close to $600 million in projects that are being awarded. So we’re starting to see some movement in the right direction that is actually getting announced. But in the context of the amount that we saw that we’re seeing in the fiscal Board plan, which are in the billions, there is still some way to go. And again, some of the right things have been said in the last few quarters, both from the federal administration and the local government, as to the process with some of these funds. But as we’ve also said, we expect that to be more in 2022. So as we get closer to our next call and actually discuss the details of our 2022 guidance, we hope that we can go into a little bit more detail as to what our expectations are.

Great. And sorry, just lastly, back on the acquisitions front, clearly, you guys are seeing a good flow of potential deals. Are there a few things that you can categorize for us as to what have been inhibitors to date or kind of what you would expect or would like to see happen to get more of those across the finish line?

I mean, I can just describe generally. Sometimes, assets don’t trade because there may be multiple shareholders that are in the country, and it’s very difficult for them to get the shareholders aligned if they are financial institutions. It could be valuation expectations. I mean we actually thought when the pandemic originally started that it could be an opportunity. That never really happened, and valuations have gotten fairly frothy since then. If you look at our historical acquisitions, we have been able to pay a multiple that has allowed us to realize benefit very quickly. And so those have been two of the bigger barriers, but we still are looking at acquisitions around the region. And as Joaquin said, look our first investment is investing in ourselves. We love to invest in our products. And we’re incredibly excited that, 7 years later, we have great products that are winning great business. Second is buying companies, which we’ve done and integrated those fairly well and then the other levers of deploying our capital. But M&A is still something we’re focused on. And we want a deal as much as anyone else. But we will only do the right deals, and we will announce when we have it.

That’s great. Thanks for the detail, everybody.

I just want to thank everyone for joining us this afternoon and we look forward to seeing you from time to time in conferences over the next quarter. Thank you.

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