EVERTEC, Inc. (NYSE:EVTC) Q4 2023 Earnings Call Transcript

EVERTEC, Inc. (NYSE:EVTC) Q4 2023 Earnings Call Transcript February 28, 2024

EVERTEC, Inc. misses on earnings expectations. Reported EPS is $0.62 EPS, expectations were $0.65. EVTC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, everyone, and welcome to EVERTEC’s Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Today’s conference call is being recorded. At this time, I would like to turn the call over to Beatriz Brown-Saenz of Investor Relations. Please go ahead.

Beatriz Brown-Saenz: 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 the call over to Mac.

Mac Schuessler: Thanks, Beatriz, and good afternoon, everyone. We are pleased to announce another record year of results, as revenue continues to benefit from strong organic growth across most markets, complemented by the contribution from acquisitions, including the Sinqia deal that closed during the fourth quarter. I’ll begin today’s call with a brief summary of our 2023 financial results, followed by a discussion on the Puerto Rico environment, an update on Brazil, and finally, some comments about our focus for Sinqia in 2024. I will then turn the call over to Joaquin, who will provide some additional details on our Q4 and full year results as well as our outlook for 2024. Beginning on Slide 4, let’s start with some highlights from our full year 2023 results.

We delivered a record $695 million in revenue, a 12% increase over the prior year. And while some of the growth was driven by the closing of Sinqia, revenue excluding the acquisition also exceeded our expectations. Our LATAM revenue was up nearly 45% with growth in the high teens excluding M&A. Increased sales and transaction volumes benefited both our Payments Puerto Rico and Caribbean segment and our Merchant Acquiring segment. Payments Puerto Rico revenue grew approximately 14% year-over-year, reflecting continued strong digital payments growth, primarily from ATH Movil Business, while Merchant Acquiring grew approximately 7% on a year-over-year basis benefiting from sales volume growth and pricing initiatives. The Business Solutions segment was down modestly year-over-year as expected, mainly due to the impact in the first half of 2023 from the Popular transaction completed in 2022.

Adjusted EBITDA for the year was $292 million, up approximately 6% when compared with the prior year, driven by the revenue increase partially offset by the full year effect of the Popular transaction and an increase in operating expenses. Adjusted EPS for the year was $2.82, up 11% year-over-year and in line with our expectations. In 2023, we continued to generate significant operating cash flow, $224 million for the year and we returned significant cash to our shareholders, approximately $13 million through dividends and $36 million through share repurchases, including approximately $12.5 million in the fourth quarter. Additionally, our liquidity remains strong at $490 million as of December 31. Turning to Slide 5. The Puerto Rico macro environment continues to be supportive for EVERTEC as we look 2024.

Overall conditions in Puerto Rico remained stable with the Economic Activity Index increasing 6% over the past two years, reaching its highest level in a decade. The labor participation rate is at the highest rate since 2010, well above the average of the past seven years and the number of employed is at the highest level since 2009. Additionally, arrivals to the International Airport in San Juan are above pre-COVID-19 levels, positively impacting tourism on the island. Commercial and individual bank deposits remain elevated, similar to pandemic levels as the higher labor participation has contributed to offset the lack of incremental stimulus funds. On prior calls, we have spoken about the various sources of federal stimulus coming into Puerto Rico.

Turning to Slide 6. The latest data we have seen indicates that COVID stimulus was approximately 49% of Puerto Rico’s GDP. The highest ratio when compared to any individual state in the US. Additionally, there is still a significant amount of reconstruction funds that have yet to be received. At the $33.7 billion pledged, only about $8.6 billion or approximately 26% has been received, with the electric grid reconstruction funds being the largest portion pending to be disbursed. As you can see on Slide 7, in 2024, approximately $8 billion in federal funds are expected, consistent with what was received in 2023. Disaster relief remains the biggest anticipated source of funds. This fund inflow should largely benefit the construction sector. Lastly, on Slide 8, I would like to highlight the manufacturing sector in Puerto Rico as this segment has seen a boost in recent years.

On the slide, we highlight some major investments coming from international companies based in Germany, India and the US. These companies have either expanded operations or moved entire operations into Puerto Rico. And these investments should strengthen and broaden the economic base on the island going forward. To summarize, given what we have discussed, we believe economic condition should continue to be supportive for EVERTEC in Puerto Rico as we move through 2024. Turning to Brazil on Slide 9. As in Puerto Rico, we expect the macro environment in Brazil to be supportive of EVERTEC in 2024. The Brazilian economy was expected to slow substantially entering 2023, but instead exceeded the expectations of economists. GDP growth of 2.9% was well above expectations entering the year, both inflation and interest rates moderated more than expected, and the unemployment rate also came down.

Looking forward to 2024, the Brazilian unemployment rate is expected to remain steady at around 8%, with continued moderation in interest rates from 11.8% to 9% and inflation from 4.5% to 3.8%. On Slide 10, let me make some brief comments about PIX. PIX was launched by Brazil Central Government in 2020 and today over 85% of the bank population have registered for PIX. Given no transaction costs for consumers, PIX has a lower average ticket, making it very attractive for P2P use. Since launch, PIX has been the fastest-growing payment method in Brazil. Today, PIX transactions exceed both credit and debit transactions. Sinqia and paySmart have been involved in PIX via partner relationships. The combination of EVERTEC and Sinqia provides a more competitive offering where with the paySmart upgraded license, we can rely less on partners to deliver a better commercial offering.

This is a good example of the scale, benefits and synergy we can achieve with our increased presence in LATAM. Turning to Slide 11. On November 1, we closed on the acquisition Sinqia in Brazil. We have now been working for the past four months as an official part of EVERTEC and we remain confident that Sinqia will be a big part of EVERTEC’s success going forward. I would like to start by highlighting five areas that will be a focus for us in 2024 as we continue to integrate Sinqia into EVERTEC. The first area of focus is increasing our engagement level with our customers by prioritizing their needs and building deeper relationships. We work hard at EVERTEC to make sure that all our customers are satisfied with the service we provide and feel a high level of engagement with us, and we are committed to getting to know every Sinqia customer to make sure we are meeting their expectations and providing the highest level of service at every level.

The second area will be technology modernization. Sinqia has completed a number of acquisitions in recent years which have added a significant number of platforms in each of the verticals with different levels of advancement. We’re committed to building a strong product roadmap by modernizing product offerings while also consulting platforms over time to meet our customer needs. The third area of focus is revenue synergies, leveraging increased engagement with our customers and our product portfolio to cross-sells. We highlighted this as a major opportunity when we announced the deal, and we remain committed to finding ways to export Sinqia products to other parts of LATAM while bringing EVERTEC products to Brazil. Our fourth area of focus is M&A.

Sinqia has a distinct team with unique knowledge of the Brazilian market, which we will leverage to continue exploring inorganic growth opportunities. Finally, we will focus on margin optimization. Some of our client contracts have not been revisited in years, providing the opportunity for us to pursue pricing initiatives. At the same time, we will look for cost efficiencies. We believe these are areas that will provide benefits on a multi-year basis. Finally, on Slide 12, we continue to sign new wins and extensions that should keep our strong organic momentum going in 2024 and beyond. We were able to renew our Getnet Chile acquiring relationship through 2027 and expanded our business with them to now include ATMs in Chile. We also renewed our relationship with Compensar, our largest customer in Bogota, and we brought on Sears as a new client in Mexico to our issuing platform.

Let me conclude by highlighting capital allocation as a continued area of focus in 2024 as we continue to strive to provide the best returns to shareholders. With that in mind, we announced an accelerated repurchase program by which we aim to repurchase $70 million in shares, demonstrating our commitment to a balanced capital allocation approach. With that, I will now turn the call over to Joaquin.

Joaquin Castrillo: Thank you, Mac, and good afternoon, everyone. Turning to Slide 14, I’ll first review the fourth quarter and full year results for EVERTEC. Total revenue for the quarter was $194.6 million, up approximately 20% compared to the prior year reflecting strong growth in our Latin America segment that benefited in the last two months of the year from the Sinqia acquisition as well as continued strong organic growth. In Puerto Rico, we also benefited from higher POS transaction volumes and continued growth from ATH Movil Business. Adjusted EBITDA for the quarter was $71.7 million, an increase of approximately 4% from the prior year. An adjusted EBITDA margin was 36.8%, down approximately 590 basis points from the prior year, partially as a result of the Sinqia acquisition, which, as expected is coming in at lower overall margins.

The quarter also reflected an overall increase in operating expenses, including specific corporate initiatives that were expected to impact Q4. Adjusted net income was $40.8 million, a decrease of approximately 6% year-over-year driven by higher interest expense resulting from the increased debt raised to finance the Sinqia acquisition, higher operating depreciation and amortization partially offset by a lower adjusted effective tax rate. The adjusted effective tax rate for the quarter was approximately 7.2%. Adjusted EPS was $0.62, a decrease of approximately 6% from the prior year for the same reasons pointed out impacting adjusted net income and to a lesser extent the impact from the incremental shares issued to complete the Sinqia acquisition.

For the full year, total revenue was $694.7 million, an increase of approximately 12% from the prior year and above our initial expectations. Throughout the year, we benefited in Puerto Rico from overall strong volumes, higher spread, pricing initiatives and continued growth of ATH Movil Business, partially offset by the impact from the Popular transaction during the first half of the year. In Latin America, we saw strong organic growth from new and existing customers as well as revenue contribution from the acquisitions completed in 2022 and 2023. Adjusted EBITDA was $292 million, an increase of approximately 6% with an EBITDA margin of 42%, an approximate 260 basis point decrease from the prior year. The decrease in margin primarily reflects the expected impact from the Popular transaction due to the sale of higher margin assets in prior year and the effect of a full year of the revenue sharing agreement, as well as the effect of the Sinqia acquisition which is contributing at a lower margin.

Adjusted net income was $185.5 million, an increase of approximately 6% from the prior year, and adjusted EPS of $2.82 increased approximately 11%. Adjusted EPS benefited from the lower share count that reflects the impact from share repurchases and the shares received as part of the Popular transaction. Moving to Slide 15, I will now cover our fourth quarter results by segment. Beginning with Merchant Acquiring. Net revenue increased by approximately 1% year-over-year to $40.2 million, in part due to a tough comparable period last year which is very strong. The quarter saw sales volume growth in the low-single-digits with deterioration in the overall spread as we anniversary pricing initiatives implemented last year managed through a lower average ticket and a card mix that led to a lower overall spread.

As we look at January results, these reflect sales volume growth and spread that align more to what we saw in previous quarters. Adjusted EBITDA for the segment was $14.4 million and adjusted EBITDA margin was 35.9%, down approximately 190 basis points from the prior year. The margin decrease was primarily due to higher operating expenses, namely higher processing costs driven by lower average tickets. On Slide 16, are the results for the Payment Services – Puerto Rico & Caribbean segment. Revenue in the quarter was $52.4 million, an increase of approximately 10% from the prior year. The revenue increase was driven by approximately 7% growth in overall transactions processed and at ATH Movil Business which continues to drive growth in the segment.

The quarter also benefited from an increase in revenue for services provided to the LATAM segment, mainly due to a higher volume of transactions processed. Adjusted EBITDA was $30.9 million, up approximately 10% from the prior year and adjusted EBITDA margin was 58.9%, up approximately 40 basis points over the prior year. The increase in margin was due primarily to the increase in revenue and the scalability of this segment. On Slide 17, are the results for the Latin America Payments and Solutions segment. Revenue in the quarter was $66 million, up approximately 89% year-over-year. The biggest driver of the increase was the addition of Sinqia beginning on November 1. Recall that we had not included any contribution from Sinqia in our guidance and we are pleased with the performance of Sinqia in the quarter.

The paySmart acquisition in Brazil completed during the first quarter also contributed to growth. Organic growth remained strong across the region with contribution from existing customers like Getnet Chile and others still driving double-digit organic growth for the quarter. Adjusted EBITDA was $18.3 million, up approximately 55% from the prior year with adjusted EBITDA margin of 27.7%, down approximately 620 basis points from the prior year, primarily due to the inclusion of Sinqia which contributes at a lower margin compared to the segment average. Margin was also negatively impacted by the paySmart acquisition, which similar to Sinqia, came in at lower margins and an increase in operating expenses. Turning to Slide 18, you will see results for our Business Solutions segment.

Revenue was $57.8 million, a decrease of approximately 2% from the prior year. The revenue decline was primarily driven by a decrease in core banking services as the prior year included revenue generated from the transition services agreement with Popular post-closing the transaction. Adjusted EBITDA was $20 million, down approximately 19% from a year ago and adjusted EBITDA margin was down approximately 770 basis points from the prior year to 34.6%, below our expectations for the quarter. The lower margin was due primarily to lower-than-expected revenue, higher operating expenses and higher equipment costs. We expect margins to come back to more normalized levels as we move into 2024. Moving to Slide 19, you will see a summary of our Corporate and Other expenses.

Corporate and Other expense was $11.8 million in the quarter, or 6.1% of total revenue, up $1.2 million from the prior year, in part due to specific corporate initiatives executed throughout the quarter. Moving on to our cash flow overview for 2023 on Slide 20. Net cash from operating activities was $224.3 million. Capital expenditures were $85 million for the year and above our original expectations as we took advantage of attractive offers in the fourth quarter to refresh key hardware and software and take care of regulatory investments. We spent $417.6 million on two acquisitions, paySmart and Sinqia, and took on $640.5 million of new net debt related to the Sinqia deal. We paid down approximately $188 million in debt and returned approximately $49 million to shareholders through share repurchases and dividends.

We repurchased approximately 345,000 shares for $12.5 million during the fourth quarter, and at year-end, we had approximately $137 million available for future use under the company’s share repurchase program. Our ending cash balance for 2023 was $318.7 million, an increase of approximately $115 million from year-end 2022. Moving to Slide 21, our net debt position at year-end was $707 million comprised of $1 billion in total long- and short-term debt, offset by $296 million of unrestricted cash. Our weighted average interest rate was approximately 7.45%, an increase from prior year and prior quarter, driven by our newly issued term loan B, which has a higher cost of debt at SOFR plus 350 basis points, and the increase in our term loan A cost of debt.

Given our move up the pricing grid as a result of a higher leverage ratio, our net debt to trailing 12 month adjusted EBITDA was approximately 2.24 times, up from 0.99 times a year ago, but still well within our target range of 2 times to 3 times. As of December 31, our total liquidity, which excludes restricted cash and includes borrowing capacity, was $489.6 million, up $118.4 million from a year ago. Now I’ll turn to Slide 22 for commentary on our 2024 outlook. For 2024, we expect our revenue to be in a range of $844 million to $854 million or a growth of approximately 21.5% to 23% year-over-year. Adjusted EPS is expected to be in a range of $2.82 to $2.94, or flat to 4% growth compared to the $2.82 reported for 2023. This range assumes an adjusted EBITDA margin of 38.5% to 39.5% and an effective tax rate of 7% to 8%.

I will now walk you through some key underlying assumptions that we considered in arriving at the outlook, beginning with revenue expectations for our business segments. For Merchant Acquiring, we expect low- to mid-single-digit growth in 2024 as we expect a stable Puerto Rico economy to contribute to sales volume growth, the revenue share with Popular to result in incremental referrals and the execution of strategic pricing actions in segments where we have pricing power. We however do expect these to be partially offset by a continued normalization of the average ticket. In Payments Puerto Rico and the Caribbean, we expect mid-single-digit growth also resulting from a stable Puerto Rico economy that will support continued strong transaction growth, in part resulting from a declining average ticket and continued growth contribution from ATH Movil.

For Payments and Solutions in Latin America, we expect growth to be in the low- to mid-70s, driven primarily from a full year of Sinqia. I would also call out a couple of expected headwinds to consider, the first being the revenue adjustment from Getnet in Q3 of approximately $6.3 million that will present a tough comparable for the third quarter of 2024. We are now also expecting Mercado Libre to begin migrating their issuing volume to their new internal platform, creating a headwind going into the second half of the year. Mercado Libre continues to leverage our Place to Pay and Sinqia products and we will continue to work together on the development of new initiatives across the region. As it relates to margin, we expect margin to be in the mid-20s as Sinqia becomes a much larger piece of the segment at a lower contribution margin, and we don’t benefit from the effect of the Getnet adjustment in the third quarter of 2023 which was 100% margin accretive.

Finally, in Business Solutions, we expect revenue growth of low-single-digits for the full year, including the impact of CPI for Popular services at 1.5%. In general, considering the headwinds previously discussed, we still expect overall revenues to ramp up throughout the year. Now turning to overall margin, our expectations for adjusted EBITDA margin, including Sinqia is 38.5% to 39.5%. We expect our Puerto Rico businesses will continue to drive margins relatively consistent with prior year. Latin America will now represent close to 40% of our total business and as we have said previously, as we become more and more successful in Latin America at lower margins, this will put pressure on our EVERTEC consolidated margin. In terms of other items, we expect interest expense for the year to increase significantly when compared to 2023 as a result of the new debt raised to finance the Sinqia transaction.

As a reminder, we continue to have an interest rate swap agreement in place which fixes $250 million or approximately 25% of our outstanding debt. Operating depreciation and amortization is also expected to increase consistent with recent trends as we have continued to invest in our business through CapEx and also with the addition of Sinqia. We expect an adjusted tax rate of 7% to 8%, which is lower than prior years as we benefit from a tax shield created by the incremental debt and also benefit from the effect of goodwill amortization at the Sinqia level, which is helping us drive a lower adjusted effective tax rate locally and at a consolidated level. From a capital deployment perspective, our priority continues to be deploying capital for growth through M&A.

However, we will continue to invest in our business and products and have a CapEx target of approximately $80 million for 2024, including Sinqia. Additionally, given our leverage ratio, liquidity position and our expectation to buy back the shares we issued as part of the Sinqia acquisition, as Mac already mentioned, we will be entering into a $70 million ASR in the coming weeks, the impact of which has already been included as part of our guidance. In summary, we are pleased with our fourth quarter and full year results in 2023, especially as we executed on the closing of the largest acquisition in EVERTEC’s history and are focused on delivering on the five areas Mac walked through. We believe EVERTEC is well-positioned for growth in 2024 and beyond.

We look forward to updating you on our progress in the coming year and hope to see some of you at conferences over the next few months. With that, operator, please open the line for questions.

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Q&A Session

Operator: Yes. Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Nate Svensson with Deutsche Bank.

Nate Svensson: Hi, guys. Thanks for the question. Wanted to ask a couple on Sinqia. So I know when you announced the deal, Sinqia had been growing at a mid-teens CAGR and looking at some of their filings, it looks like that growth had decelerated to something like high-single-digits the last time they reported. So maybe you can give an update on how Sinqia growth ended up in the back half of the year and then what growth you have embedded into your 2024 guidance. And then if that growth is below the historical 15% CAGR, what do you need to do to return to that historical level of growth and sort of what’s the timeline there?

Joaquin Castrillo: Hey, Nate. So this is Joaquin. So I’d start saying we’re not going to break out Sinqia specifically. We certainly have an expectation that our LATAM segment as a whole continues to grow double-digits. Sinqia has certainly been growing at that pace historically. And as Mac said, we have certain initiatives that we’re focusing on throughout 2024, some of which include revenue synergies that should continue to put us in the same pace that we were before.

Mac Schuessler: [indiscernible] Nate.

Joaquin Castrillo: Nate?

Mac Schuessler: [indiscernible].

Operator: Give me — maybe he stepped away from the phone. The next question comes from Chris Kennedy with William Blair.

Chris Kennedy: Good afternoon. Thanks for taking the question. Just an update on Sinqia. Can you talk about the expected accretion of that business in year one and as you think about year two and three going forward?

Mac Schuessler: Hey, Chris, this is Mac. Thanks for joining. So what I would say is this year in 2024, it’s probably more neutral than accretive. As we’ve gotten into the business, we’re incredibly optimistic and excited, as I’ve spent a lot of time, they’re spending time with customers. I’ve met some of the largest customers of the business. They’re an important partner for most of the Brazilian institutions because they’re a large enough company to be able to invest in some of the best products in the market. But they also adapt to local regulations, which is important to the banks and to the consortiums and to the pension plans. We’re very focused this year on, as Joaquin was saying, ensuring that we focus on getting closer to the customers.

They’ve spent a lot of time rolling up assets. They were dealing with a transaction with EVERTEC. I’ve spent a lot of time there, really pushed the team there to get close to the customers and make sure we’re cross-selling the existing Sinqia products into the customers, looking at new payments products. We’ve already started talking to them about our payments products, but making sure we’re getting close to the customers so we get the growth rate that we want and that we can get the business to continue to grow. Secondly is we’re focused on margin optimization, as I said. So we’re taking a look at a lot of these contracts are very old and they haven’t gone through a repricing initiative, making sure they’re more at market, that they’re charging for all the services that they now deliver.

And we’re also looking at cost optimization as it looks at efficiencies like can this organization be more efficient now that they have all these acquisitions. So, like I said, we’re very, very excited about the acquisition. We’re very close now to the operation doing for Sinqia what we’ve done for EVERTEC, so that we can grow the LATAM segment double-digits and so that we can — as you’ve noticed in the past, we’ve been very focused on our margins as we’ve acquired new assets. Most of the assets we’ve acquired in the past had a lower margin than the segment, and then we brought those to the segment margin over some period of time. So that’s the focus this year around those five different areas.

Chris Kennedy: Great. Thank you for that. And then just to follow up, any update on the size of ATH Movil, if you could talk about that? Thanks for taking the questions.

Joaquin Castrillo: Yes, Chris. I mean, ATH Movil continues to grow very well, continues to be a very important source of growth for us in the Payments Puerto Rico segment. I think in the past we’ve said it’s been in the low-single-digits. That continues to be the case. And obviously now with Sinqia coming in and our top line being a much bigger number going forward, that will obviously impact what ATH Movil represents to overall EVERTEC.

Chris Kennedy: Great. Thank you.

Mac Schuessler: Thanks, Chris.

Operator: Thank you. [Operator Instructions] And the next question comes from John Davis with Raymond James.

John Davis: Hey, good afternoon, guys. I just want to follow up on Chris’ question there a little bit. Mac, you went from neutral to accretive to neutral. So just curious, kind of what caused that modest downtick? Is it slower? Just more investment needed, slower revenue growth than you expected? Just curious. Again, I know it’s slight, but just curious kind of what that downtick is driven by.

Mac Schuessler: Yes. No, sure. So, I mean, look, when we announced the deal, we said this was neutral to accretive year one. It’s closer to neutral. I’ll tell you a couple of things. One is they did, as Deutsche mentioned, they did decelerate a bit towards the back half of last year because they were focused on the transaction and different things. So now we’re trying to get them to reaccelerate, and that’s sort of in our guidance for this year. Secondly is we do believe there’s some opportunity to sort of improve some of the margins, but we didn’t want to do that out of the gate, right? So we do think that there is some opportunity to reprice part of the business. We do think that there’s some opportunity to be more cost-efficient.

But we don’t want to go into a new part of the company and announce that to employees and customers and make that our first focus because that’ll alienate both of those constituencies. So we’re really focused initially on getting to know customers, where they want us to invest. We do need to modernize some of the platforms, so we’ll build a multi-year plan to do that. But that’s sort of the reason for it’s more neutral this year. But what I can tell you is having met with the customers, I’m incredibly excited about their desire to do more business with Sinqia as we invest and our ability to sell our payments products to their nearly 1,000 customers.

John Davis: Okay. No, that’s helpful. And then Joaquin, I understand you guys don’t want to give too many details on the Sinqia contribution, but they were a public company. So just running some quick math, it looks like if you exclude the Getnet contribution in 2023, the midpoint of the rev guide is about 2% organic growth. And I think Mac, you talked about earlier, the economy and the picture in Puerto Rico is kind of looking up. So just curious, kind of how we square 2% organic revenue growth with healthy kind of Puerto Rico macro. And you guys have historically been conservative and I appreciate it’s February and you’re given a full year guide, but just anything else to kind of call out as you kind of thought about the top line outlook on an organic basis in 2024.

Joaquin Castrillo: Hey, John. I mean, I’m trying to follow some of that math that you’re doing, but in theory, if you were to exclude the Getnet impact from the prior year, we should be in the low- to mid-single-digit range, right?

John Davis: Okay.

Joaquin Castrillo: I’d like to kind of understand that a little bit better from you, but that’s a little bit different from what we’re seeing.

John Davis: Okay. Maybe my Sinqia contribution embedded in the guide is just a little bit higher. Mac just commented that decelerated a little bit. So maybe that’s the delta between 2% and kind of closer to mid-singles. But that’s super helpful, Joaquin. And then finally, just on the tax rate, nice positive surprise there, taxes being lower. Is that sustainable? Like, how should we think about the tax rate going forward? You’re not looking necessarily for 2025 guidance by any means, but just is this something that is kind of one-time in nature this year or something? How do we just think about the tax rate going forward, I guess?

Joaquin Castrillo: No, I mean, look, I think that obviously, we’re not going to give multi-year guidance here. Some of the factors that are driving this, we understand we can sustain. But that’s something that, as the year goes on, we’ll be in a much better position to kind of discuss. For this year, we’ve given, obviously, a guidance that’s significantly lower than what we’ve done in the past. And that’s for very specific reasons that we tried to convey as part of the prepared remarks, one being, obviously part of the tax shield that we’re getting from some of the interest expense and then some of the benefits that we’re getting at the Sinqia level.

John Davis: Okay. No, appreciate it. Thanks for the color, guys.

Operator: Thank you. And this concludes our question-and-answer session. I would like to turn the conference back over to Mac Schuessler for any closing comments.

Mac Schuessler: Again, we want to thank you for joining the call today. We want to thank our colleagues for a successful year in 2023 and look forward to reporting our results in 2024 and seeing many of you at upcoming conferences. Thanks and good night.

Operator: Thank you. The conference has now concluded. Thanks you for attending today’s presentation. And you may now disconnect.