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

EVERTEC, Inc. (NYSE:EVTC) Q4 2024 Earnings Call Transcript February 26, 2025

EVERTEC, Inc. beats earnings expectations. Reported EPS is $0.87, expectations were $0.74.

Operator: Good afternoon, everyone and welcome to EVERTEC’s Fourth Quarter 2024 Earnings Conference Call. Today’s conference call is being recorded. [Operator Instructions]. I would now like to turn the conference 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 reports. 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.

Morgan Schuessler: Thanks, Beatriz, and thanks to everyone for joining us today. I’m pleased to announce a strong finish to 2024, a very significant year for EVERTEC on multiple fronts. We delivered another year of record revenue with great execution across all our core markets. We successfully integrated Sinqia, the largest acquisition in EVERTEC’s history and have started to see growth reaccelerate an important area of focus for us in 2024. We continue to execute our acquisition strategy with two tuck-in deals closed in the fourth quarter, Grandata, which we discussed on our third quarter call and Nubity announced today. Additionally, we developed a robust business pipeline in Latin America, the strongest in years, and I’m pleased to report that we have begun converting these opportunities into important business wins.

Moreover, we initiated cost efficiency measures that resulted in margins exceeding our expectations for 2024. These achievements set the stage for 2025, where our focus will remain on organic revenue growth, margin optimization and capital allocation. On today’s call, I will provide a brief summary of our 2024 financial results, a discussion on the Puerto Rico environment and an update on LATAM. 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 2025. Starting on Slide 4 are some highlights from our 2024 results. Revenue for the year was $845.5 million, a 22% increase over prior year. We achieved strong growth across all our segments. Merchant Acquiring grew by 11% due to pricing initiatives and increased sales volume.

Payments Puerto Rico grew 6%, driven by higher transaction volumes and continued strong performance from ATH Movil. And Business Solutions revenue grew by 7% as we recognized revenue from key projects that went into production throughout the year. LATAM revenue increased by 62% year-over-year due to the full year contribution of Sinqia, continuous organic growth across the region and the contribution from Grandata in the fourth quarter. We continue to make progress on our goal of diversifying our revenue mix outside of Puerto Rico, with LATAM making up approximately 33% of our total revenue in 2024 compared to 10% in 2015. Adjusted EBITDA was $340.2 million, up approximately 17% year-over-year, and adjusted EBITDA margin was 40.2% for the year.

This reflects a focus on efficiency and expense management aimed at improving our profitability and offsetting the 10% discount to Popular that will come into effect in the fourth quarter of 2025. Adjusted EPS of $3.28 was up 16% year-over-year, driven by strong adjusted EBITDA growth, lower tax expense, and a lower share count that benefited from the ASR completed in 2024. These benefits were partially offset by higher interest expense associated with the debt raise for Sinqia. For the full year, we generated approximately $260 million in operating cash flows, and we returned approximately $95 million to shareholders through share repurchases and dividends. At December 31, 2024, we had approximately $138 million still remaining on our repurchase program to be used through December 31, 2025.

Our liquidity remains strong at approximately $468 million as of December 31. Let me now provide an update on Puerto Rico beginning on Slide 5. Overall conditions in Puerto Rico remained stable, while the economic activity index in 2024 decreased slightly. It remains healthy and above pre-pandemic levels. Total employment has remained at its highest levels since 2009, and the labor force participation rate has remained above the previous seven-year average. Both commercial and individual bank deposit levels continue to exhibit elevated liquidity. Although there has been a slight decrease from the peak levels observed in 2021, overall liquidity remains significantly higher compared to pre-pandemic levels. Additionally, passenger traffic in the San Juan Airport grew approximately 9% year-over-year.

On Slide 6, from a federal funds perspective, there’s still a significant amount of reconstruction funds that have yet to be received, including incremental funds pledged during 2024, mainly for energy, municipalities and housing. Of the $48.4 billion pledged, approximately 23% has been received with the electric grid reconstruction funds continuing to be the largest portion pending to be dispersed. In 2024, Puerto Rico received approximately $7 billion in reconstruction funds and a similar amount is expected for 2025. To summarize, while we do not expect major macro tailwinds, we do believe economic conditions should continue to be supportive for EVERTEC in Puerto Rico as we move through 2025. Turning to LATAM on Slide 7. Revenue was up 62% year-over-year, mainly as a result of the Sinqia acquisition, which we closed in November of 2023 and the double-digit organic growth outside of Brazil.

We also benefited from the Grandata tuck-in deal announced last quarter and from one month of Nubity, a small company we acquired in December as we continue to execute on our capital deployment strategy focused on growth and diversification. Nubity is a managed service provider based in Mexico that provides ancillary services in the cloud to customers in several LATAM countries. We believe Nubity provides a significant cross-sell opportunity into other regions, including Puerto Rico, where Nubity will allow us to provide better service offerings that will build and strengthen our existing customer relationships. Now let me provide an update on Sinqia. We are pleased to report that we have observed a reacceleration in growth and remain optimistic about the opportunities in Brazil.

Notable improvements in customer engagement, positive feedback on our platform modernization and contract repricing adjustments are encouraging indicators for 2025 and beyond. Our work at Sinqia is ongoing, and we will continue to prioritize efforts to accelerate growth in Brazil. Outside of Brazil, we’ve begun converting our strongest pipeline in years into actual successes. We are pleased to announce that we have signed a deal with Grupo Aval, one of the largest financial groups in Colombia. We will provide acquiring processing and risk monitoring services to two banks within the financial group. We continue to work diligently on converting more pipeline and opportunities into wins and expect these efforts to contribute to organic growth, primarily in 2026 and beyond.

Before turning over to Joaquin, I want to thank the team for our success in 2024 and the plans that have been put in place for 2025. I look forward to updating all of you throughout the year on our progress. With that, I will now turn the call over to Joaquin.

Joaquin Castrillo: Thank you, Mac, and good afternoon everyone. Turning to Slide 9. I will first review the fourth quarter and full year results for EVERTEC. Total revenue for the quarter was $216.4 million, up approximately 11% compared to the prior year, reflecting organic growth across all of the company segments, a full quarter contribution from Sinqia as the deal closed in November of the previous year and the effect of the two tuck-in acquisitions completed in the fourth quarter. In Puerto Rico, we benefited from higher transaction volumes, continued growth from ATH Movil business and higher spreads in MAB. On a constant currency basis, revenue growth would have been approximately 14.5%. Adjusted EBITDA for the quarter rose to $88.6 million, up 24% from last year with a margin of 40.9%, an increase of 410 basis points.

This growth resulted from strong revenue and the positive impact on operating expenses from efficiency initiatives aimed at offsetting the 10% discount on Popular services starting in October 2025. Adjusted net income was $56 million, an increase of approximately 37% year-over-year, driven primarily by the growth in adjusted EBITDA and a lower adjusted effective tax rate. The adjusted effective tax rate for the quarter was 5.1%. Adjusted EPS was $0.87, an increase of approximately 40% from the prior year, driven by the higher adjusted net income and the benefit from a reduced share count from repurchases completed throughout the year. For the full year, total revenue was $845.5 million, an increase of approximately 22% from the previous year.

This growth reflects strong performance across all segments, driven by higher transaction volumes, improved spreads and the contribution from projects that have gone into production. Additionally, our Latin America segment benefited from a full year contribution of Sinqia. On a constant currency basis, revenue growth was approximately 23.5%. Adjusted EBITDA was $340.2 million, an increase of approximately 17% with an EBITDA margin of 40.2%, a decrease of approximately 180 basis points from the previous year. The reduction in margin is primarily due to the inclusion of Sinqia, which has margins below our corporate average and the impact of the $6.3 million one-time revenue recognized from GetNet Chile in 2023 compared to the $2.4 million recognized in the current year, both of which were 100% accretive to margin.

Adjusted net income was $213.2 million, an increase of approximately 15% from the prior year and adjusted EPS of $3.28 increased approximately 16% from prior year. Moving to Slide 10. I will now cover our fourth quarter results by segment, beginning with Merchant Acquiring. Net revenue increased approximately 16% year-over-year to $46.6 million, driven by an improved spread and an increase in sales volume, even as these volumes are offset by a reduction in the price of gas, which is down over prior year for the second consecutive quarter. We also had higher non-transactional fees driven by terminal rent as our mix has shifted towards more profitable terminals and a positive number of net new merchants in our portfolios. Adjusted EBITDA for the segment was $19.9 million with an adjusted EBITDA margin of 42.7%, reflecting an increase of approximately 680 basis points from the previous year.

The margin increase is attributed to top line growth driven by improvements in spread and nontransactional fees such as terminal rent and decline fees, all of which positively impact margins. This favorable effect on the margin was partially offset by higher transaction processing costs resulting from a lower average ticket. At this point, we have already seen that January numbers are in line with expectations and aligned to our full year guidance in 2025. On Slide 11 are the results for the Payment Services Puerto Rico and Caribbean segment. Revenue in the quarter was $54.8 million, an increase of approximately 4% from the prior year. The revenue increase was driven by 4% transaction growth and mid-teens revenue growth from ATH Movil business, partially offset by lower services provided to the LATAM segment, mainly as a result of lower transactions being processed in Mexico as a result of the MELI attrition.

Adjusted EBITDA was $31.3 million, up approximately 2% from the prior year, and adjusted EBITDA margin was 57.2%, down approximately 170 basis points over the prior year. The decrease in margin was due primarily to higher operating expenses, in part driven by higher POS retirement costs. On Slide 12 are the results for Latin America Payment & Solutions. Revenue in the quarter was $77.9 million, up approximately 18% year-over-year. Recall that the fourth quarter of 2023 included just two months of Sinqia versus the full three months this year, and we also benefited from partial quarter contributions from both Grandata and Nubity. The quarter also benefited from organic growth across the region and from the $600,000 adjustment related to the GetNet Chile relationship as volumes came in better than expected.

Currency was also a more significant headwind than expected in the quarter, negatively impacting segment growth by 9.6 percentage points, mainly driven by the devaluation of the Brazilian currency. Adjusted EBITDA was $25.1 million, an increase of approximately 38% from prior year with an adjusted EBITDA margin of 32.3%, up approximately 460 basis points. The margin was affected by the 100% margin accretive GetNet adjustment, a positive impact from the lower MELI contribution due to it being a low-margin business, higher software development capitalization in the quarter and realized gains from foreign currency. Moving to Slide 13. The results for our Business Solutions segment resulted in revenue of $62.4 million, representing an increase of approximately 8% from the previous year.

The increase is attributed to revenue recognized from projects that went into production throughout the year. The quarter also saw a slight benefit from the CPI escalator that started on October 1 of 1.5% for services provided to Banco Popular. As a reminder, starting on October 1, 2025, our CPI escalator with Popular will permit us to increase pricing annually when CPI exceeds 2% up to a maximum increase of 2%. Adjusted EBITDA was $24.4 million, up approximately 22% from a year ago, and adjusted EBITDA margin was up approximately 440 basis points from the prior year to 39%. The improved margin was primarily due to the higher revenue and lower expenses as the prior year included certain provisions for operational losses that did not recur. Moving to Slide 14, you will see a summary of our corporate and other expenses.

Corporate and other was $12.2 million in the quarter or 5.6% of total revenue, slightly above our expectation, but lower than prior year due to specific corporate initiatives executed in the prior year quarter. Moving on to our cash flow overview for 2024 on Slide 15. We continue to effectively manage our working capital, resulting in net cash from operating activities of $260 million. Capital expenditures were $88.4 million for the year as we capitalized software development projects, executed the refresh of key hardware while also continuously investing in our products and enhancing our information security capabilities. We spent approximately $34 million on the Grandata and Nubity acquisitions, paid down approximately $34.5 million in debt and returned approximately $95 million to shareholders through share repurchases and dividends.

We did not repurchase any shares during the fourth quarter and at year-end, we had approximately $138 million available for future use under the company’s share repurchase program through December 31, 2025. Our ending cash balance for 2024 was $314.6 million, a decrease of approximately $29 million from the year ended 2023. Moving to Slide 16. Our net debt position at year-end was $706.8 million, comprised of $980.5 million in total long and short-term debt, offset by $273.6 million of unrestricted cash. Our weighted average interest rate was approximately 6.45%, a decrease of 100 basis points from 2023, driven primarily by the successful repricing of our TLB throughout 2024, which collectively reduced the spread on our term loan by 75 basis points.

Our net debt to trailing 12 months adjusted EBITDA was approximately 2.06x, down from 2.24x a year ago and at the lower end of our leverage range of 2x to 3x. As of December 31, our total liquidity, which excludes restricted cash and includes borrowing capacity was $467.5 million, down approximately $22 million from a year ago. Now I’ll turn to Slide 17 for commentary on our 2025 outlook. For 2025, we expect revenue to be between $889 million to $899 million or growth of 5.1% to 6.3%. However, these growth figures include approximately 40 basis points of foreign currency headwinds resulting from the strengthening of the U.S. dollar against the LATAM currencies we do business in. On a constant currency basis, we expect revenues for 2025 to grow between 5.5% to 6.7%.

Adjusted EPS is expected to grow between 1.8% and 5.2% from the $3.28 reported for 2024 or between 2.6% and 6% on a constant currency basis. This assumes an adjusted EBITDA margin of 39.5% to 40.5% and an effective tax rate of 6% to 7%. 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 anticipate mid-single digit growth in 2025, supported by a stable Puerto Rico economy contributing to sales volume growth, along with additional benefits from our ongoing pricing actions. However, we are not expecting the same tailwinds we had in 2024 from more substantial pricing increases as we are close or have already anniversaried most of these, resulting in a smaller impact moving into 2025.

In Payments Puerto Rico and Caribbean, we expect low-single digit growth, resulting from continued transaction growth and continued growth from ATH Movil, but offset by lower processing services being offered to the LATAM segment, mainly due to the loss of MELI transactions. For Payments Latin America, we expect constant currency growth to be in the low-double digits with several offsetting factors to consider. As I highlighted on our third quarter results call, we are expecting some client attrition in 2025, most notably Mercado Libre. We expect the acquisitions that we have recently announced and the acceleration from Brazil to offset most of this client churn, resulting in low-double digit growth for the year on a constant currency basis.

Finally, in Business Solutions, we expect revenue growth of low-single digits for the full-year. Now turning to overall margin. Last quarter, we walked you through the impact of the 10% discount on certain MSA services beginning on October 2025. As a reminder, this will begin to impact our revenue and adjusted EBITDA in the fourth quarter of 2025 by approximately $4 million with a full annual run rate of $18 million expected in our 2026 fiscal year and mostly impacting our Business Solutions segment. Last quarter, we also spoke about our commitment to execute cost efficiencies across our business segments to offset the headwind from the discount. Those initiatives have already started. They even had a slight impact on our Q4 results and continue to progress as planned.

We expect to see a gradual improvement in overall margins over the next few quarters than a reset lower in the fourth quarter as the effect of the 10% discount tax effect, netting out to the 39.5% to 40.5% margin expected for the full-year. In terms of other items, we expect interest expense for the year to be lower than 2024 due to the impact from the term loan repricing mentioned before and debt paydowns. And as a reminder, we continue to have interest rate swap agreements in place that fix $550 million or approximately 58% of our outstanding debt. We expect an adjusted tax rate of 6% to 7%, which is higher than prior year due to a higher expected contribution from LATAM and a lower expected interest expense, which has been a key input to keeping our overall effective tax rate low throughout 2024.

From a capital deployment perspective, our priority continues to be deploying capital for growth through M&A. However, we will continue investing in our business and products and have a CapEx target of approximately $85 million for 2025. We expect to continue to return cash to shareholders via dividends and when appropriate, share buybacks. In summary, we are pleased with our fourth quarter and full-year results in 2024. We believe EVERTEC is well positioned to deliver strong top line growth in 2025 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.

Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Nate Svensson with Deutsche Bank. Please go ahead.

Nate Svensson: Hi guys. Nice results. Thanks for the question. So Joaquin, I appreciate you walking through the 2025 guide by segment. Super helpful, preempted some of my questions there. I think maybe the related question is, as we seek to better understand the normalized growth profiles of each of your segments, have you given any thought to giving some sort of midterm guide to help investors better understand the business? I’m just asking because I think it might be helpful to put a line in the sand to help underwrite future growth, particularly you’ve gone through so many changes incorporating Sinqia and other two additional acquisitions. We have the MSA later in the year. So just any thoughts on that and how we can help sort of underwrite future growth beyond ’25?

Joaquin Castrillo: Hi, Nate, this is Joaquin. So right now, I think we’re focused on giving really guidance for 2025. And to your point, I think we’re — we have some moving pieces here, and we’re trying to be very clear on kind of what are the areas of focus as we move into 2025. So that will be the kind of the guidance that we’re focused on for the time being.

Nate Svensson: Okay. Understood. Yes. No, I agree that it was definitely clear on the outlook for ’25. So I appreciate that. The follow-up is on Sinqia. So I haven’t had the chance to try to do the math on the implied growth in 4Q. But I think at the time of the acquisition, Sinqia is growing low-double digits. You had obviously decelerated through 2024, but it sounded like from Mac’s comments that it started to reaccelerate in 4Q. And I know you’ve talked about some of the initiatives you’ve done to sort of work on reaccelerating even further in 2025. So maybe just some more color and more granular updates on how you expect the Sinqia business to perform, particularly given everything that’s going on with the Brazilian economy and sort of how confident you are in your ability to get Sinqia back to that kind of normalized low-double digit growth maybe later this year or in ’26?

Morgan Schuessler: Hey, Nate, this is Mac. Yes. So look, we just had our Board meeting last week, Sinqia, so the Board could get close to the management team and better understand the market there, and we’re all pretty excited. As you noted, it sort of decelerated as we started to close the acquisition and then it decelerated last year. We were very focused at the beginning of the year, making sure we have the right leaders in place and then focusing on — again, they had acquired 24 companies over a 10-year period. And we knew going in, there were going to be some things that we could do to optimize the business. So we were very focused early on the year. Number one is upgrading their technology so that we could upsell to new platforms, and we’ve had success this year doing that with some of our key clients, renegotiating some of our contracts.

Some of these contracts were not volume-based. So now we’ve renegotiated up pricing and now we have volume-based contracts in place, and then also focusing on margin optimization. So making sure that we kind of move the margins north by making some efficiencies. We’ve said, look, we’ve been very focused on getting closer to customers. They had sort of lost sight of getting close to the customers performing well so that they could cross-sell and upsell, and we feel like they have a good cadence now. So as we said in our prepared remarks, it is definitely — the growth is accelerating off of last year. We’re very optimistic, and it’s one of the reasons that we have double-digit growth expectations for the entire LATAM segment this year.

Nate Svensson: Thanks, Mac. Appreciate it.

Morgan Schuessler: Yep.

Operator: The next question comes from Cris Kennedy with William Blair. Please go ahead.

Cris Kennedy: Good afternoon. Thanks for taking the question. Just a follow-up on Sinqia. Can you provide an update on bringing some of EVERTEC’s processing business into Brazil? How is that going?

Morgan Schuessler: Yes. What I would say, Chris, thanks for the question. We really, really focused at the beginning of last year on taking their existing businesses and trying to make them better perform on the existing six verticals that they have, the four verticals and the service from the digital business. And we’re seeing reacceleration there. We have had some small successes on the payment side, and we’re optimistic that going into this year and going into the next year, that will be sort of a renewed area of focus as well. But we’ve really focused on the businesses they have and have the management team sort of head down on that. But we are seeing interest in the payments products as well.

Cris Kennedy: Got it. Understood. And it sounds like you’re very confident in your ability to navigate the 10% discount slated for October given all of your efficiencies and cost initiatives?

Morgan Schuessler: Absolutely. I mean one of the things that the team early last year, even as last year started, we put this initiative in place to take a look at how do we cut costs to accommodate that. I mean we hadn’t — I’ve run the company for over a decade, and we really haven’t taken a hard look at our cost to the extent that we have. We were really focused on stabilizing our business, renewing with Popular, making these acquisitions. So we had a very, very big effort with Joaquin and Alberto, who now run strategy for us and looking across the organization to find those efficiencies. So they’ve already kicked in, and that’s why you saw great margins at the end of ’24, and we’ve got a good start to this year on our margins as well. So we’re incredibly well prepared for the discount that we’ll provide at the end of ’25 for the bank.

Cris Kennedy: Great. Thanks for taking the questions.

Morgan Schuessler: Yep.

Operator: The next question comes from Jamie Friedman with Susquehanna. Please go ahead.

James Friedman: Hi, congratulations on a strong finish to ’24. I had two questions. I’ll just ask them upfront. So Mac, now that you got like a third or more of the revenue coming from LATAM growing 60%. I’m just curious what sort of — what — how transferable is the skill set and technical competence that you have taken from Puerto Rico into LATAM? What do you know now that you didn’t know before you started? That’s the first one, high level. And then, Joaquin, with regard to the — I think it was Chile GetNet payments, the $600,000 one that sounded like was high margin. Could you just remind us what that’s about, like how that works? And is it thresholds or it is quite lucrative when it does happen? Thank you both.

Morgan Schuessler: Hey, yes, great question. This is Mac. So what I would say is our knowledge and expertise has made a big difference in what you’ve seen over the last 10 years. I mean you’ve seen our team, Mike Vizcarrondo has managed ATH for a very long time. You’ve seen the knowledge he’s had allow us to even actually grow our market share in Puerto Rico with ATH with new innovation, and we continue to do more business with the major banks there. And then you look outside of Puerto Rico. I mean, we bought new platforms. So we just announced someone’s called Grupo Aval, which is one of the largest banks in Colombia, $75 billion in assets. They’ve been a customer in the past, but this is a significant deal for us in Colombia.

In fact, our largest deal in Colombia since I’ve been CEO. So a lot of that payments knowledge has been transferable. And then throughout the region, as we’ve acquired platforms, we’ve been able to deploy those. So GetNet and Chile uses the same platform they use in Uruguay. We’re using our issuing platform. And we’re using that platform as well now in Costa Rica. Our issuing platform, we are now using in Mexico. We also or will now use that in other countries as well. So we have been able to use the expertise from Puerto Rico throughout this journey. We’ve also been able to leverage these platforms and these technologies across the region. And we hope to do that with some of these Brazilian technologies that we have. So — and the other thing that we talked about on this call a little bit as well, we talked about Grandata on the last call.

Now we also have Nubity. So Nubity is a great company out of Mexico. The majority of their business is in this country, which, again, Mexico, we want to continue to invest here. But Nubity now has new skills to help sort of modernize our infrastructure and the infrastructure of our clients by helping them migrate to the cloud and manage their applications in a more modern way. So we’ve been able to leverage the existing skills and the acquired skills throughout this journey.

Joaquin Castrillo: And then I guess I’ll take the second part of the question, Jamie. The deal that we have with GetNet had some [indiscernible]. Actually, that deal ended now in December. So we’re entering into a new phase of that relationship where we will no longer have these sorts of, I’ll call it catch-ups or one-time events. We will now move to a price per transaction. So as transactionality flows in, we’ll charge that in that same cadence. So we won’t see these, let’s say, blips every once in a while.

James Friedman: Okay. Thank you both.

Operator: [Operator Instructions]. The next question comes from John Davis with Raymond James. Please go ahead.

John Davis: Hey, good afternoon guys. Obviously, really strong results in Merchant this year, up 11% and 16% in the fourth quarter. Joaquin, hoping you could help us a little bit on what the contribution from pricing was just so we calibrate our models as we look at ’25. I know you gave us some color, but I would really like to understand how much pricing was in there? And then also just double checking, there’s nothing from an inorganic perspective that’s in the Merchant segment.

Joaquin Castrillo: So number one, no, there’s no inorganic effect within the growth rates. I would say that in the fourth quarter, if we look at kind of what we’ve done throughout the year, it’s been pretty split, kind of a third pricing, a third volume and probably a third in non-transactional type fees. I think that when we look at Q4, it is more skewed towards pricing than volume because as I said, we had some offsetting effects from kind of lower price of gas, which is an important part of the portfolio. As we move into 2025, as I said in kind of the outlook, we’ll still have some tailwind in the beginning of the year from some of those pricing initiatives as we continue to anniversary them and then as we start to kind of get out of Q1, we’re expecting kind of that mix to kind of come back to half and half or a third, a third, a third in terms of the contribution to growth going into 2025.

John Davis: Okay. And then, Mac, just on capital allocation. Balance sheet is in great shape, back down towards the lower end of your kind of midterm leverage range. It feels like the deal pace has picked up a little bit. So I would just love your comments on the state of the M&A market in Latin America, what you’re seeing? Have prices rationalized? You’re seeing more opportunities? Should we expect this kind of quicker pace of M&A versus historically over the last, call it, decade since you’ve been there?

Morgan Schuessler: Yes. So I mean, look, the Sinqia deal was the biggest deal on our history. So as a team, we are very focused on that and myself personally, I spent a lot of time in Brazil. And that’s — so once we sort of started working on that deal, closing that deal, integrating that deal, that was a significant amount of focus, and we want to get that right. As we saw and we gain more confidence in that deal, we got closed on Grandata and Nubity. What I would say is we have a pretty good M&A pipeline. We’re still very focused on diversifying the company, growing through good, smart deals. And so we will continue to engage in M&A, probably more of the size of the ones we’ve recently announced or the ones we’ve done historically, but we’re very focused on M&A. And we have a good pipeline.

John Davis: All right. Appreciate the color. Thanks guys.

Morgan Schuessler: Yep.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mac Schuessler for any closing remarks.

Morgan Schuessler: Thank you. Again, I want to thank my colleagues for a successful year in 2024 and for putting great plans in place for 2025. I want to thank each of you for joining our call, and we look forward to seeing you in the coming weeks at various conferences. Thank you.

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