Evertec Inc (EVTC) Q4 2020 Earnings Call Transcript

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Evertec Inc (EVTC 1.72%)
Q4 2020 Earnings Call
Mar 1, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, everyone, and welcome to the EVERTEC's Fourth Quarter and Full-Year 2020 Earnings Conference Call. Today's conference call is being recorded.

At this time, I would like to turn the call over to Kay Sharpton, Vice President of Investor Relations. Please go ahead.

Kay Sharpton -- Vice President, Investor Relations

Thank you, and good morning. With me today on the call are Mac Schuessler, our President and Chief Executive Officer; and Joaquin Castrillo, our Chief Financial Officer. A replay of this call will be available until Monday, March 8. Access information for the replay is listed in today's financial release, which is available on our website under the Investor Relations section of evertecinc.com. For those listening to the replay, this call was held on March 1. Please note, there is a presentation that accompanies this conference call and its accessible in the Investor Relations section of our website.

Before I begin, I'd like to remind everyone that this call may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements about our expectations for future performance are subject to known and unknown risks and uncertainties. EVERTEC cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only and we undertake no obligation to update any statements to reflect the events that occur after this call. Please refer to the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements.

During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as adjusted EBITDA, adjusted net income and adjusted earnings per common share. Reconciliation to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides.

I'll now hand the call over to Mac.

Morgan M. Schuessler -- President and Chief Executive Officer

Thanks, Kay, and good morning, everyone. Our record fourth quarter and full-year 2020 results are a testament to the resiliency of our business and our team in a challenging environment. Also, we were able to continue executing our strategy, creating an even stronger business entering 2021. I'll first cover some of the quarter highlights, as well as discuss a few recent developments and then update you on our strategies for growth in 2021 and beyond.

Beginning on Slide 4, we have a summary of our 2020 results. Total revenue for the year was approximately $511 million, up 5% compared to 2019, which exceeded the top end of our initial expectations for the year. We generated adjusted EBITDA of $240 million, an increase of 6%. We also delivered adjusted earnings per share of $2.07, an increase of 6% as well. Our Company generated significant operating cash flow of $199 million. Our liquidity, as of December 31, 2020, was a strong $320 million and we returned approximately $22 million to our shareholders with over $7 million in stock buybacks and $14 million in dividends. Truly impressive results and my thanks go to all the EVERTEC team members on a job well done in the most unusual pandemic year.

Now, I'd like to give you more updates on our businesses, beginning with Puerto Rico on Slide 5. First, we anticipate the benefit from the recent consolidation in the banking industry in Puerto Rico, specifically the integration of FirstBank that sits in there. We expect this will positively impact our 2021 Merchant segment growth rate. We also believe we will continue to benefit from the current trend of digital transactions as we localized PlacetoPay and focus on ATH Movil product features. We made further progress throughout the fourth quarter implemented QR codes for contactless payments, which are now available in more than 10% of our merchants. This continues to strengthen our ATH brand and drives consumers to embrace digital transactions, which escalated during the pandemic. Additionally, during the first half of the year, we plan to launch a new mobile app for electronic benefit, or EBT users, that provides access to their balances on their EBT cards and notification of their next deposits. This new mobile app will further complement our EBT services to the government, a response to the needs of the consumer.

Regarding the overall Puerto Rico economic environment and pandemic impacts, there haven't been any significant changes in restrictions. Similar to most places, certain social distancing measures continue to be in place, the most important being a maximum capacity requirement at 30% for restaurants and other businesses. As it relates to the economic environment, unemployment levels have improved since the beginning of the pandemic, but continue to be significantly higher than prior year.

Other economic indicators, such as FEMA [Phonetic] sales and retail sales have reflected positive variances against the prior year, which hopefully continue to drive growth into early 2021. The federal stimulus payments that were received between Q2 and Q3, continue to support an increase in sales volumes in Q4, driven by high average ticket, although transactions were down as compared to the prior year. Sequentially, we have seen some decline in average ticket as the benefits from unemployment payment and other stimulus begin to lag [Phonetic]. The new $600 stimulus payment began rolling out in late January and early February and we are anticipating this to benefit in the first quarter. Additionally, I am delighted to say that the vaccine rollout in Puerto Rico is progressing with over 10% of the island having received their first dose today.

Lastly, in January, the federal government announced that FEMA will award $3.7 billion to help rebuild Puerto Rico's water and wastewater treatment plants. This award, along with the $13 billion announced in September to rebuild the electric grid, will be beneficial to the long-term health of the economy.

Moving on to Latin America on Slide 6. We achieved a number of significant implementations in the quarter and in early 2021. I'm delighted to announce that we launched Mastercard debit card processing with MercadoLibre in Mexico. MercadoLibre owns the leading online payment solution in Latin America, Mercado Pago, and is one of those valuable companies out of Latin America known for their online marketplaces. This is testament to our growing reputation with leading banks, financial institutions, as well as technology players in Latin America. Additionally, I am pleased to announce that the Citibanamex, collection platform, and Santander Chile payment processing service are both in production. Furthermore, Santander received formal regulatory approval from the Government of Chile, which is a significant milestone for the country's payment system.

Regarding other wins, we have been awarded the formal bid for Banco Popular of Costa Rica. While the contract will be finalized in the coming weeks, we are pleased to continue building on this relationship. It is an important renewal of current services we provide, as well as the potential expansion of the relationship with some additional services. Lastly, we renewed contracts with both Banco Itau and Banco Estado both in Chile. These new wins, renewals and implementations represent an important reputational advancement for EVERTEC in Latin America. Growth from these new services, with current and new customers, will be important in 2021 and beyond, particularly as these markets continue to evolve.

With respect to the economic environment in Latin American markets, COVID-19 continues to create challenges for the region. LatAm revenue in Q4 was flat year-over-year as we continue to see the impact of the pandemic and previously discussed attrition. Vaccine distribution has just begun in February, which will likely further delay the recovery.

Moving to Slide 7, I want to update you on our perspective regarding industry tailwinds, as well as our growth strategies in 2021 and beyond. There continues to be a significant opportunity for growth across Puerto Rico and Latin America given the dominant position of cash transactions and the low penetration of card volumes. In mature markets like the US and the UK, cash transactions are estimated to be approximately 15% of total transactions. In Puerto Rico and Latin American markets, cash use is more than 50%. We believe the positive trends in cash to digital payment conversion, driven by an increasing online presence and smartphone usage, should fuel growth for many years to come. Additionally, as countries move away from the controlling monopolies or duopolies, there will be increasing opportunity to participate in this growth trajectory. While some payment markets like Colombia have evolved more slowly than we anticipated, and our investments maybe lower there in the coming year, we would anticipate Chile, Uruguay, Costa Rica and Mexico to be more robust in 2021.

Turning to Slide 8, to take advantage of this digital transformation in our markets and to advance our growth strategy further, we made progress in 2020 by accelerating innovations, such as the QR code, which is shifting more of our consumers to contactless payment transactions and further solidifying our ATH brand presence. We are also seeing faster adoption of our new gateway product as we expand into other geographies. Innovation will remain at the forefront of our strategy given the rapid evolution of the payments industry. We remain committed to cross-selling our products for existing clients, as well as new clients. In 2021, shifting our risk center and payments products from a licensing model to a processing model will allow us to grow with the payment transaction trends and expand our recurring revenue in the region going forward.

Lastly, acquisitions will continue to be important to our growth whether in Puerto Rico or in Latin America. Our multi-product solutions, strong local presence and our financial capacity allow us to be uniquely positioned to become the partner of choice.

Moving to Slide 9, we are also proud of being included for the third consecutive year in the Bloomberg Gender-Equality Index, which distinguishes companies committed to transparency in gender reporting and advancing women's equality. At EVERTEC, one of our core commitments is to diversity and the development of our employees. In 2020, we surveyed our employees and has the highest participation rates and scores for employee engagement in years. While there is still work to do, we believe that our employees are the key ingredient for successful innovation and a high-performing workforce. I want to thank all of our dedicated team members for their commitment throughout 2020 and for building a strong foundation for growth into 2021 and beyond.

With that, I will now turn the call over to Joaquin.

Joaquin Castrillo -- Chief Financial Officer

Thank you, Mac, and good morning, everyone. I'll begin with a review of our consolidated fourth quarter and full-year 2020 results and then review each segment in greater detail.

Turning to Slide 11. Total revenue for the fourth quarter of 2020 was $134.2 million, up 6% compared to $127.2 million in the prior year, driven by higher sales volume, positive impact from growth in ATH Movil and ATH Movil Business, new services and project implementation. Adjusted EBITDA for the quarter was $63.9 million, an increase of 16% from $55.3 million in the prior year. Adjusted EBITDA margin was 47.6% and this represents a 410 basis point increase in our adjusted EBITDA margin compared to the prior year. The increase in margin was primarily driven by revenue growth and the positive impact of foreign currency exchange related to balance sheet remeasurement. Adjusted net income in the quarter was $42.8 million, an increase of 23% as compared to the prior year, and $0.59 on a per share basis, an increase of 23%. The increase primarily reflects the increased adjusted EBITDA and includes the impact of higher operating depreciation offset by lower interest expense and a lower effective tax rate in the quarter.

For the full-year, total revenue was $510.6 million and was up 5% year-over-year. Revenue was favorably impacted by higher sales volume and higher spreads in our Merchant Acquiring business. Higher ATH Movil and ATH Movil Business transactions, as well as the benefit of $4.4 million from the Puerto Rico Department of Education, an increase as related to COVID-19-specific services. Adjusted EBITDA was $240.5 million, an increase of 6% with an adjusted EBITDA margin of 47.1%, up 70 basis points as compared to prior year. Adjusted net income was $151.4 million, up 5% and adjusted earnings per common share was $2.07, up approximately 6% year-over-year. Our full-year non-GAAP tax rate was 15.2%, an increase from 12.3% in prior year mainly due to the mix of business.

Moving on to Slide 12, I'll now cover our segment results, starting with Merchant Acquiring. In the fourth quarter, net revenue increased 8% year-over-year to approximately $29.3 million. The revenue increase was due to increased sales volume, as well as increased spread, driven by higher average ticket that was up 17% as we continue to benefit from the tailwinds from the unemployment benefits and stimulus programs that began earlier in the year. Through Q4, we continue to see the mix of cards skewed more toward debit pre-pandemic, as well as a lot net international cards because of less inbound travel, both of which contributed to the improved spread and higher revenue. Although we continue to see higher average ticket year-over-year, it continues to drift lower than the level we saw in Q3 as the impact from the stimulus programs ease and pent-up demand began to normalize. Adjusted EBITDA for the segment was $14.6 million and adjusted EBITDA margin was 49.7%, up approximately 650 basis points when compared to last year. This increase was primarily driven by higher net revenue and the positive impact to operating expenses from overall lower transaction volume, resulting in lower transaction processing cost, which is the highest expense driver for the segment.

For the full-year, Merchant Acquiring was up approximately 3% year-over-year at a $109.8 million, reflecting the growth over last year's results, primarily due to the same reasons mentioned in the quarter. Adjusted EBITDA for the full-year was $55.1 million, an increase of 17% and adjusted EBITDA margin was 50.2%, up 590 basis points as compared to last year, primarily due to the impact of the higher average ticket and higher spread.

On Slide 13, the results for the Payment Services Puerto Rico and the Caribbean segment. Revenue in the fourth quarter was $34.1 million, up approximately 5% as compared to last year. We continue to benefit from the shift toward digital transactions reflected through growth in ATH Movil and ATH Movil Business with revenues up over 160% and contributing an incremental $2.3 million, as well as the impact from other new services, partially offset by declines in both POS and ATM transactions of 6% and 8%, respectively. This decline in PR transaction aligns with the higher average ticket we have been experiencing in our Merchant Acquiring segment. Adjusted EBITDA for the segment was point $19.1 million, up 3% and adjusted EBITDA margin was 56%, down approximately 110 basis points. Adjusted EBITDA margin was down due to increased operating expenses, including COVID-related expenses.

For the full-year, the segment revenue decreased 1% to $124.8 million in part driven by lower POS and ATM transaction volumes, our consumer behavior changes through the pandemic resulted in higher average tickets and more digital transactions, and one-time revenue last year related to an EBT project, partially offset by ATH Movil and ATH Movil Business increases, which benefited from the push to digital cost by the pandemic. Adjusted EBITDA for the full-year was $66.9 million, down 15% and adjusted EBITDA margin was 53.7%, down 890 basis points as compared to last year, primarily due to decreased revenue are in largely fixed expenses in this segment, as well as the impact of last year's high margin EBT project previously mentioned.

On Slide 14, you will find the results for Payment Services Latin America. Revenue in the fourth quarter was $22 million, approximately flat as compared to last year, driven primarily by anticipated client attrition of $1 million, and negative FX impacting year-over-year growth of $0.7 million, partially offset by the revenue gains related to the PlacetoPay acquisition. Adjusted EBITDA for this segment was $8.9 million and adjusted EBITDA margin was 40.6%, up as compared to last year, due primarily to positive FX impact resulting from the remeasurement impact of US dollar balances in the quarter of $1.9 million as compared to negative impact in Q4 of 2019 of $0.4 million. Adjusting for the positive FX impact, margin would have been approximately 32% and generally consistent with our expectations.

For the full-year, the segment revenue was $84.6 million and flat to prior year driven by the same impact that I mentioned in the quarter. Additionally, as we make progress on transitioning our platforms to a processing model, we are selling fewer licenses. While this was a headwind to growth in 2020, this transition will allow us to benefit from the transactional growth anticipated in the Latin American markets that Mac mentioned. Throughout 2021, we will continue progressing on this product transition in several geographies, as well as begin to reap the benefits from the new processing-type contracts, such as Santander. Adjusted EBITDA for the full-year was $32.8 million and adjusted EBITDA margin was 38.7%, up 240 basis points as compared to last year. Adjusting for the positive FX impact from remeasurement, the normalized margin for the year would have been approximately 34%.

Moving to Slide 15. Business Solutions revenue in the fourth quarter increased 6% to $60.5 million. We benefited from the CPI increase that began in October 2020, we continue to benefit from COVID-related services for the permanent labor, new services for Popular, as well as positive impact from projects that were completed in the quarter. Adjusted EBITDA for the segment was $30.3 million and adjusted EBITDA margin was approximately 50%, up 630 basis points as compared to last year due to revenue mix shift toward higher-margin revenue and lower operating expenses as we completed several projects.

For the year, Business Solutions grew 8% to $235 million, driven by the one-time project for the Department of Education of $4.4 million, positive impact from COVID-related services, as well as new services on project implemented for Popular. Full-year adjusted EBITDA for this segment was $114.8 million, up 18% and adjusted EBITDA margin was 48.9%, up 390 basis points year-over-year. Excluding the impact from the Department of Education project, which was recognized net of expenses and other one-time benefits, margin would have been more closely aligned with prior year.

Moving to Slide 16, you will see a summary of our corporate expense. Our fourth quarter corporate and other expense was $9 million, a year-over-year increase of 26%. This increase primarily reflects higher expenses related to the timing of several corporate initiatives, partially offset by lower travel as compared to last year.

For the full-year, corporate and other expense was $29.2 million and as a percent of revenue, approximately flat with prior year at 5.7%.

Moving on for year-to-date cash flow overview on Slide 17. Net cash provided by operating activities was approximately $199 million, or a $19 million increase as compared to prior year as we continue to efficiently manage our working capital. Capital expenditures were approximately $49 million and included a higher spend down normal toward innovation and other new product implementation, including the localization and transition of our LatAm platforms to a processing model. We repaid approximately $31 million of our long-term debt, $8 million in withholding taxes on share-based compensation, $2 million in other debt pay downs and $2 million of FX impact, which resulted in a total net debt decrease of approximately $38 million. And finally, we paid cash dividends to stockholders of over $14 million and repurchased over $7 million in common stock for a total of approximately $22 million returned to our shareholders for the year. We have approximately $100 million available for future use under the Company's share repurchase program. Our ending cash balance as of December 31 was $221 million, which includes approximately $18 million in restricted cash.

Moving to Slide 18. Our year ending net debt position was approximately $298 million comprised of the $203 million of unrestricted cash and approximately $501 million of total short-term borrowings and long-term debt. Our weighted average interest rate was approximately 4.4%. Our net debt-to-trailing 12-month adjusted EBITDA was approximately 1.8 times, reflecting a $60 million cap on cash in accordance with our credit facility.

As of December 31, total liquidity, which excludes restricted cash and includes the available borrowing capacity was $320 million. As a reminder, the terms of our credit agreement include an excess cash flow feature that applied to cash generated over a certain level to be paid against our loan. This payment will be made before the end of the first quarter and is contingent on the debtholders' acceptance.

Moving to Slide 19, I will now provide you with our 2021 outlook, as well as some comments on Q1. We expect revenue to be in a range of $533 million to $544 million, representing growth of 4% to 7%. Our adjusted earnings per share outlook of $2.15 to $2.23, represent a range of 4% to 8% as compared to the adjusted earnings per share in 2020 of $2.07. On a GAAP basis, earnings per share is anticipated to be between $1.58 to $1.66.

I will now highlight some of the key underlying assumptions and uncertainties that we have analyzed and planned for. We would expect to see a strong first half revenue growth given the tailwinds from stimulus programs, as well as from -- comparing to COVID impacted months last year. The back half is anticipated to be flat to down given the strong performance in last year's second half driven by high levels of stimulus funds, as well as benefits from COVID-related services, as well as the impact of one-time revenue, such as the Department of Education project and other multi-year projects completed in the prior year.

The Merchant segments will likely generate a double-digit increase for the year as we continue to benefit from increased sales volumes in part driven by recent stimulus programs along with the benefits from banking consolidation that Mac mentioned. Payments Puerto Rico is anticipated to be high-single-digit revenue growth and also first half weighted as ATH Movil and ATH Movil Business continue to fuel growth, driven by the trends in digital payments. LatAm will see low- to mid-teens growth given the contribution from new contracts such as Santander, Citibanamex and others. However, COVID impacts and lower software license sales, as we transition to a processing model, will be partial headwinds. Business Solutions will likely be flat- to low-single digits growth with a first half positive and back half negative largely due to the one-time revenue I mentioned earlier.

Regarding corporate expenses, we are managing these well and would expect these to approximate 5% of total revenue, which is down both in dollars and as a percent of revenue from the last several years.

Regarding our first quarter, January revenue grew approximately 8% and based on the trend to this point, our best sense is that the first quarter revenue will be mid- to high-single digits revenue growth, with an uptick in the second half of March as we lapped the beginning of the COVID lockdown. All these trends are considering our guidance and combined, we believe will generate adjusted EBITDA margin in a range of 46% to 47%, similar to last year, with some headwind from the normalization of the average ticket and the high-margin benefit of the Department of Education contract last year. Further, this year, our non-operating income does not include any potential impact from FX remeasurement, which was favorable approximately $5 million to last year.

Our operating depreciation and amortization is anticipated to increase to approximately $44 million, up $4 million to $5 million, primarily reflecting our increased capex spend on resulting depreciation related to multi-year projects that went into production last year and early in 2021.

Our non-GAAP effective tax rate is anticipated to be approximately 13%, down slightly given a more normalized mix of business as compared to 2020. This guidance assumes approximately flat average diluted shares of 73.1 million without any share buybacks included.

Our capital expenditures for 2021 are expected to be approximately $50 million and reflects our ongoing investment in technology, localization of our products in Latin America and continued investment in transitioning our licensing model in LatAm to a processing model. Our capital allocation strategy remains unchanged, we will continue to focus on growth investments internally, as well as through M&A. While the timing of M&A is uncertain and we currently have a higher-than-normal cash balance, we are constantly focused on evaluating our best use of cash. We plan to continue our dividends to shareholders and if excess cash is available, we will repurchase shares under our recently renewed and increased share repurchase program.

In summary, we executed well during 2020 and delivered strong cash generation. As we continue to focus on our innovations and opportunities in Puerto Rico and expanding our LatAm business, we look forward to updating you on our progress in the coming year.

We will now open the call for questions. Operator, please go ahead and open the line.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question comes from George Mihalos with Cowen. Please go ahead.

Allison Jordan -- Cowen and Company -- Analyst

Good morning. This is Allison on for George. Thank you for taking my questions. To start, I was curious if you can provide color on the pipeline for additional deals in Latin America. And whether there is a preference for JVs or more processing partnerships like we saw in Chile?

Morgan M. Schuessler -- President and Chief Executive Officer

Yeah. So this is, Mac. Thanks for the question. I mean, if you look at what we announced over the last year and this quarter specifically, we have announced more deals organically in Latin America than we have in the Company. And if you look at how lucky and guided for the year to get double-digit growth in LatAm, that's all organic, we feel pretty good about the pipeline that we closed with and implemented. So, if you look at it, we implemented Citibanamex, we implemented Santander Chile, we also announced MercadoLibre. It's the first time we've talked about those guys as one of our partners now, which is one of the most valuable companies in Latin America and probably one of the best technology company. So, I think we don't comment on deals before we sign them or close them, but we feel very good about the pipeline. And to demonstrate that, we've looked back at what we've closed over the last year, year and a half.

Allison Jordan -- Cowen and Company -- Analyst

That's great color, and great progress. Thank you for that update. And then last one for me. I caught the total revenue performance of 8% in January. I was wondering if you can provide color, specifically on the trends you saw in both the Merchant Acquiring and Payment Services businesses in Puerto Rico quarter-to-date versus the 8% and 5% we saw in 4Q.

Joaquin Castrillo -- Chief Financial Officer

Sure. I mean, look, if we think about January, there was an additional push of stimulus impacting the island, right? So, sales volume was up compared to what we saw coming off of Q4, which is positive. However, as I said before or in the prepared remarks, the average ticket does continue to come down sequentially and we have seen a kind of inbound travel starting to come back slowly but surely and that will impact spread and that's something that we also saw in the month of January.

As it relates to transactions, ATH Movil and ATH Movil Business, as we said, also in the guidance, that we are expecting that to be strong in the first half and we saw that in January, just because of kind of [Phonetic] the tailwind of the shift to digital and transactions are coming back as well slowly, still kind of flattish to the prior year, but positive.

Allison Jordan -- Cowen and Company -- Analyst

Great. Thank you for taking my questions and congrats on the results.

Morgan M. Schuessler -- President and Chief Executive Officer

Thank you.

Joaquin Castrillo -- Chief Financial Officer

Thank you.

Operator

The next question is from Bob Napoli with William Blair. Please go ahead.

Robert Napoli -- William Blair & Company -- Analyst

Hi. Thank you. Just, I guess, your -- congratulations on a good year in a tough environment. Really nice job. The balance sheet now you have been really strong position and I know you don't have any buybacks in your guidance. And so, is it -- I mean, do you have -- what is the capital strategy from here? And do you have a significant pipeline of M&A and then so maybe a little bit of color around that strategy as opposed to returning capital? Because, I mean, obviously, you've done a nice job with the balance sheet.

Morgan M. Schuessler -- President and Chief Executive Officer

Sure. Yeah. Thanks, Bob. So what I would say is, look, 2020 was sort of a year where everyone is very conservative and cautious. We were very, very focused on continuing to invest in our products and our employees during a very difficult year, which is we learned that from Hurricane Maria. We do feel like -- coming into 2021, we have a little bit more confidence in what this year will look like. We are focused on being appropriate with the capital allocation and making sure that we pull all the levers this year.

On the pipeline from an M&A perspective, what I would tell you is, as you know Bob, we never talk about deals until we have one. But we will continue to focus on those deals. If you look at the portfolio companies we've acquired over the last five years, it's really created what we now have -- it's created some good business in Puerto Rico like the relationship we have with FirstBank and it's also created great assets in Latin America, where we now, for the first time and a long time, are seeing double-digit organic growth in Latin America. So, we will continue to focus on now investing in that business organically, but also we're continuing to look at M&A opportunities.

Robert Napoli -- William Blair & Company -- Analyst

Would you likely do larger M&A transactions than you have in the past given the expansion of the business and the strengthening of the balance sheet?

Morgan M. Schuessler -- President and Chief Executive Officer

We would be opportunistic to look at any type of transaction available. I mean, there are a couple of different types we see in the region, Bob, some are small tuck-ins, like we've done in the past. And we've been pleased that we've been able to get -- purchase those at a reasonable valuation and then integrate those and really leverage those products to grow the Company. There is also the monopolies and duopolies across the region, which sometimes are talked about, will those sell like Prisma sold in Argentina? So we will look at everything, but we'll make sure that the numbers make sense and then it makes sense strategically for the Company. But we're trying the visibility to as much slow as we can.

Robert Napoli -- William Blair & Company -- Analyst

And then just last question. The charts that you show, I mean, it's obvious, the cash in the markets that you serve is very high, which should give you secular growth for a very long time. But with the -- is it -- would -- the organic growth rate of this business seems like it should be accelerating over the next few years, given the cash in the markets. So what are your thoughts around the acceleration of the top line revenue growth? And shouldn't earnings grow faster than revenue, A, given the cash flow and B, given that this is a good scale business that usually leads to higher margins over the long-term?

Morgan M. Schuessler -- President and Chief Executive Officer

Yeah. It's a great question. So, Bob, first one I would say is, we really spent some time this year reaffirming our strategy by taking a deep dive on each of the markets we do business in, so that we could understand the opportunity and also sort of the competition in the product set. And that -- part of that output is what you see on the industry tailwind. So you're correct, we think the tailwinds in Latin America are great because there's still a lot of cash, because there is still an opportunity for new entrants as the markets continue to open and people look for alternatives. And as more people move from bank -- unbankers [Phonetic] to bank or some type of financial services and they move to more digital technology. So we think the tailwinds for Latin America are fantastic.

When you think about the growth of the Company, if you dissect the revenue guidance for this year, we are seeing acceleration in growth organically in Latin America, specifically, to where we do have the double-digit growth. We do have to look -- and even in MAB. So our Merchant business in Puerto Rico, we anticipate double-digit growth. So we are seeing that, but we do -- and then Payments LatAm is going to be high-single, right? So we are seeing an acceleration of our growth...

Joaquin Castrillo -- Chief Financial Officer

No, for LatAm, mid-teens.

Morgan M. Schuessler -- President and Chief Executive Officer

Teens, sorry. I'm sorry, Payments LatAm mid-teens. Payments Puerto Rico is high-single. So we are seeing the acceleration in our growth rate, particularly in LatAm as you point to, and we are going to be very focused on managing our expenses, as Joaquin told you, our corporate expenses are actually going to be lower this year. But we are going to make sure we invest in the business, so that as the market opportunities arise, we're able to capture those with great products, great service and stability. So, we do have to balance those. But we do think, to your point, Bob, the tailwinds are great, and we are seeing that acceleration in our LatAm business is starting to pay off.

Robert Napoli -- William Blair & Company -- Analyst

Okay. Thank you. Appreciate it.

Morgan M. Schuessler -- President and Chief Executive Officer

Thanks, Bob.

Operator

The next question is from Vasu Govil with KBW. Please go ahead.

Vasundhara Govil -- Keefe, Bruyette & Woods, Inc. -- Analyst

Hi. Thank you for taking my question and congratulations to both of you for a great year amid adversity [Phonetic]. So, I guess, my first question was just on, any color that you could provide us on what percentage of margins are still inactive as the recovery is taking shape. If you are seeing sort of the sales improvement be pretty broad-based or being driven by a certain verticals or industries?

Joaquin Castrillo -- Chief Financial Officer

So, hi, Vasu. Actually, the number of inactive merchants is pretty much come all the way back to pre-pandemic levels. And, obviously, there is different puts and takes in terms of verticals, but when we see it on a general basis, verticals maybe 1% of where we were at the beginning of the pandemic and that kind of moves up and down kind of from month-to-month in terms of the verticals. So, I mean, nothing really to comment specifically.

Vasundhara Govil -- Keefe, Bruyette & Woods, Inc. -- Analyst

Got it. That's helpful color. And then my next question was on Business Solutions. Historically, this business we've [Phonetic] seen a low-single-digit grower and now you've had three years sort of mid- to high-single-digit growth. So, what -- is there sort of a change in the way you're thinking about the sustainable growth of this segment long-term, if you could just sort of give us some color there, Mac and Joaquin?

Joaquin Castrillo -- Chief Financial Officer

So, I mean, if you look back to the past two years specifically, right, and even if you look at just 2020, we've had several very specific, either projects or situations that have helped us drive that segment at a faster pace of growth. So, if you think this year we have the Department of Education [Phonetic] contract, we also, because of our relationship with the government and the relationship with Banco Popular, we're there to support them in terms of COVID, either in helping them get to their workforce being completely remote, or in the case of the government with printing and sending checks, processing checks related to all of the unemployment in benefit and stimulus that was coming through. So, I would say, that was a big driver of why that segment kind of outperformed what we expect at the beginning this year.

And if you look at the prior year, we saw Popular kind of acquire reliable, so the banking consolidation also helped us when we look at 2019 in terms of kind of speeding up the growth in that segment. But looking forward, I think, again, our sales process is longer, the projects are longer, it takes time for us to put something in place and then implement as the revenue come through. So, that's what we're going back to this kind of flattish to low-single-digit growth for 2021.

Vasundhara Govil -- Keefe, Bruyette & Woods, Inc. -- Analyst

Got it. And the last one, if I may. You've seen really strong growth in this ATH Movil product. Is there anything you can do to capitalize this and sort of take it outside of Puerto Rico? Just any thoughts there?

Morgan M. Schuessler -- President and Chief Executive Officer

Okay. When I look outside of Puerto Rico, we've really expanded the products. We got the risk management product, we now have issuing capabilities that we talked about, most recently in Mexico, we have acquiring capabilities that we're launching in Chile, we also have the payment -- the builder election [Phonetic] platform that we do in Mexico. We're also renewing some contracts in Chile. So, we definitely have a much broader set of products than we've historically had, which has helped us grow the business. I think when you look at ATH, it's not a product that we've sold outside of Puerto Rico to any substantial extent. It is something that we continue to present to customers. But to this point, we haven't found a lot of opportunity, but that may change in the future as people look for sort of digital apps, but it's not something that we've sold recently in the region.

Vasundhara Govil -- Keefe, Bruyette & Woods, Inc. -- Analyst

Got it. Thank you very much for the color.

Operator

The next question is from Jamie Friedman with Susquehanna. Please go ahead.

James Friedman -- Susquehanna Financial Group -- Analyst

Hi, Mac. Hi, Joaquin. Hi, Kay. Good numbers here. Congratulations. I just wanted to ask first. Is it possible looking to help quantify the term to processing conversion impact? Mac you had discussed it in your prepared remarks and you did as well, Joaquin. So, any quantification there?

Joaquin Castrillo -- Chief Financial Officer

Can you clarify, Jamie? Are you -- do you mean in LatAm when we move from licensing to processing? Is that what you are referring to?

James Friedman -- Susquehanna Financial Group -- Analyst

From licensing to processing, yes, and in LatAm, right?

Morgan M. Schuessler -- President and Chief Executive Officer

How do we quantify?

Joaquin Castrillo -- Chief Financial Officer

Yeah. I mean, look, licensing in our LatAm business specifically around the product that we're selling now was probably in the 15% to 20% of the business. So, that's why we're -- as we have decided, right, to move all of those products to processing, we've pretty much stopped selling licenses in those regions where we're localizing the platform. So, we have that portion of our business that's kind of flattish growth, mainly because we've been so focused in bringing these platforms up and bringing clients like Santander into production.

In the case of Santander, I mean, we've been localizing and talking about this now for over a year, so it does take some time to localize and get all of the specific regulatory requirements within each country set. But if you think of about what Mac kind of went through, we have Santander up and running in Chile, we have MercadoLibre in Mexico. We renewed Banco Popular in Costa Rica. So, I mean -- and even though that's from the platform, it just shows that we've -- we now have the platform up and running in these two regions, and we continue to focus in Colombia and in Costa Rica to do the same.

Morgan M. Schuessler -- President and Chief Executive Officer

Yeah. I think the important piece is that transition is sort of multi-year and then, not only is there some incremental expense, but there is also a learning curve. And if you look at the new technology that we're deploying across the region, we have now moved to a processing model with many of the software solutions that we have, maybe just one or two countries. So we've now gained the expertise and moving into localizing these platforms, gain the expertise of implementing in a processing mode. So, that's what we're pretty comfortable about is that, we now have that experience with the software in different countries. So -- and that investment was made from the last year and going into this year.

Now, when we continue to localize an existing platform in a new country, there will be some step -- there will be some additional incremental expense, but it should be less as we continue to deploy the software and it should be more cost and time effective as we move forward. But what we can tell you is, we believe the opportunities exist and we're excited that financial institutions, retailers and, as we demonstrated in this call, with MercadoLibre, technology companies are looking for partners.

James Friedman -- Susquehanna Financial Group -- Analyst

And about that Mac, and that's a great horse to back. Is that a source -- the MercadoLibre, is that a sole-sourced relationship in Mexico? How is that going to work?

Morgan M. Schuessler -- President and Chief Executive Officer

Yeah. So the relationship with MercadoLibre -- so just for everyone that background, MercadoLibre is one of the largest e-commerce country -- companies in Latin America. It's headquartered out of Argentina, large Mexican business, large businesses in Brazil and across the region. They are now partnering with us on issuing in Mexico for their debit card product, which is a new product for them in the market and we have a direct relationship with MercadoLibre. It's -- the product is held under Mercado Pago, is their payments brand, but that is something we haven't talked about in the past and we're pretty excited about the specific opportunity, but also the long-term potential relationship that we can have with MercadoLibre.

James Friedman -- Susquehanna Financial Group -- Analyst

Got it. I'll jump back in the queue. Thank you.

Morgan M. Schuessler -- President and Chief Executive Officer

Thanks.

Operator

The next question is from James Faucette with Morgan Stanley. Please go ahead.

James Faucette -- Morgan Stanley -- Analyst

Hi. Good morning. Just want to build on Jamie's question on MercadoLibre. And was that specific partnership and issuance that you're doing? How do you think about the potential for expansion of other services with MercadoLibre? Like, where would you think there could be opportunity, etc? And what does it speak to in terms of similar type opportunities, maybe with other partners throughout the region?

Morgan M. Schuessler -- President and Chief Executive Officer

Sure. So, again, the MercadoLibre relationship today is debit processing in Mexico. So, we provide other services in Mexico that we would love to sell to MercadoLibre. They also are expanding across the region. So, if we do well on this product and if we perform well, we do believe there will be additional opportunities. And as we spoke about earlier, we are seeing this demand across Latin America. What's happened in the United States, where you have so many different types of alternatives for online payments, online marketplaces. That's just now evolving in Latin America. And given that we have technology that's developed in the region by Spanish-speaking programmers, this really puts us in a very good position to be a partner of choice. So, we do hope that be successful relationships, not only will help us broaden the relationships with these existing clients, but we are calling cards the new client.

James Faucette -- Morgan Stanley -- Analyst

And then when you look at the low- to mid-teens growth in Latin America and that's certainly a huge promising. At the same time, we realize that there are some -- still some attrition headwinds, can you talk about the environment broadly in the market both in terms of COVID, but maybe more generally your ability to enter into the market or expand footprint where you already have presence?

Morgan M. Schuessler -- President and Chief Executive Officer

Yeah. So as we talked about earlier, we really, in 2020, focused on continuing to support our employees and support our customers and that trying to accelerate development. And that was incredibly important to us and we think that our partners notice. So, if you look in Chile, we believe that Santander Chile is the one of the first institutions to go out with an acquiring product because of our relationship. They received regulatory approval for the product. So, we think that we've demonstrated an ability to continue to invest, to continue to deliver even under difficult circumstances. So, we think the opportunities are continuing.

I do think Latin America is -- and it's a fact they are a little bit behind on vaccine. So, they may have some continued impact in 2021, but it has not slowed our implementation of clients significantly. I mean, of course, we had some delays. But, again, with Citibanamex, with Santander Chile, with MercadoLibre, we're in production, right? And we were able to do that through the pandemic.

Joaquin Castrillo -- Chief Financial Officer

And I would just add that, even though, right, as Mac said, the vaccine rollout is behind where maybe the US is and the impact to some of the economics is expected to be tough or a bit more severe, right, just because of the ability of the government to support the economy, we have seen another positive. So, in Colombia, for example, the way that the government is rolling out the benefits has also driven people to open bank accounts. So, the government and the way that they are pushing out stimulus is also helping some of these underlying factors that help in terms of driving growth in digital payment. So bankerization in Colombia, I think they added more accounts in the last six months of 2020 than they did all of 2019. So that kind of thing is kind of the silver lining in-between all the COVID impact.

James Faucette -- Morgan Stanley -- Analyst

That's great color. Thank you very much.

Operator

The next question is from Matt O'Neill with Goldman Sachs. Please go ahead.

Matthew O'Neill -- Goldman Sachs -- Analyst

Yeah. Hi. Good morning, gentlemen. Thanks for taking my question. I was just wondering if we get a little bit of an update on the MSA with Banco Popular and I was particularly curious about kind of the ongoing dialogue there, in other words, kind of the last third of the 15-year relationship as far as things like investments do you guys make on an ongoing basis in the core processing services. And any kind of requests or desires that you guys are collectively working on from there into the equation just as we start thinking about getting closer to the inevitable renegotiation phase on that contract? Thanks.

Morgan M. Schuessler -- President and Chief Executive Officer

Sure. Good question. So, as we've said, I mean, we've talked about this in the past. We're very focused on being a partner that people want to do business with, not have to do business with. We've been very focused on improving SLAs with the bank. We've been very focused on improving our products and making sure that we're closely aligned. We just had our employee town hall at the end of the year. And every year, I give employees the top five headlines that I want to see in the press about our Company so that every employee can relate to that. And this year, last year, one of those is that Banco Popular chooses us as a partner of choice. So we're very, very focused on that. Very focused on making sure we continue to improve our services, our quality, and making sure that we're constantly engaging with the bank because we know long-term that contract is very, very important for EVERTEC.

Matthew O'Neill -- Goldman Sachs -- Analyst

Got it. And, I guess, just drilling into the core processing itself. I mean, from when that agreement was initially signed back in 2010, decade later, there has been a lot of innovation, moving from more of a license to outsource model and the industry more private cloud, open API-based solutions from larger kind of outsource core providing processors in the US for example. And so, I was just kind of curious, what's the kind of state of that business today and where are they. Where is it in this kind of evolutionary path?

Morgan M. Schuessler -- President and Chief Executive Officer

The state of core banking?

Matthew O'Neill -- Goldman Sachs -- Analyst

Of the -- yeah. Of EVERTEC core processing services that are being provided to Banco Popular?

Morgan M. Schuessler -- President and Chief Executive Officer

Yeah. So, if you look at what we've done across our different products, if you look at ATH and the QR codes that we've delivered, we're also building APIs with our ATH product. So it's easier for them to implement those types of products. So, we're continually trying to evaluate what's the best service we can provide, and what are those investments we need to make long-term. We'll continue to evaluate this year, are there places we need to invest more, like MSP/MSSP providing a sort of a hosted service offering that, not only Popular, but other clients, is something that we're looking at this year. Is that a business that we should invest in? So we'll continue this year to evaluate where we want to invest, just like we have done with our payments business.

Matthew O'Neill -- Goldman Sachs -- Analyst

Got it. That's helpful. I think just a last one to round out here. It looks like the original MSA was signed on September 30 of 2010. Is that when -- is that like the 15-year sort of expiration would be September 30 of 2025 or point of renewal presumably?

Joaquin Castrillo -- Chief Financial Officer

That's correct.

Matthew O'Neill -- Goldman Sachs -- Analyst

Okay. Thanks so much. I'll hop back in the queue.

Operator

The next question is from John Davis with Raymond James. Please go ahead.

Matthew Schwarz -- Raymond James -- Analyst

Hey. It's Matt Schwarz on for JD. Thanks for taking my questions. Thank you for the detail on the full-year guidance. Two quick clarifications. Is the next round of stimulus that looks like will pass in near future in the full-year guide? And then any update on hurricane relief funding and how much is embedded in the guide? Thanks.

Joaquin Castrillo -- Chief Financial Officer

Hi. So, in terms of additional stimulus, we have included some incremental stimulus as part of the high side of our guidance. And what I would say is right-wing to see what actually gets passed in the senate. And then we also need to see how some of that factors have benefited us through 2020, like the average ticket, the shift between domestic cards and international cards, now that people are getting back to native [Phonetic] and probably travel will start to pick up, those are a couple of things that helped us in 2020 that we need to see if they continue into 2021, as it relates to the profitability of, for example, the Merchant Acquiring business. But we have included some incremental stimulus as per the high side. I'd say that the range pretty much reflects kind of the opportunities and risks that we have some visibility, too, at this point.

In terms of the hurricane funding, I think it's positive everything that we're seeing in the news, the new administration is being proactive in kind of releasing funding to Puerto Rico. Everything that has been previously approved under the previous administration based on the most recent reports had auto strings attached to it and that's why so little of that funding was actually used or dispersed by the Puerto Rico government. So, I think it's definitely encouraging. We need to now see how quickly this moves because there is still kind of a bureaucratic process, but definitely positive in light of what we're seeing in the past.

Matthew Schwarz -- Raymond James -- Analyst

Okay, great. Thanks for that. And then you mentioned 10% of merchants now have contactless enabled. Where do you see this trajectory going? Are there any major milestones you have in mind in increasing that percent to have contactless? Thanks.

Morgan M. Schuessler -- President and Chief Executive Officer

Yes. I mean, look, we rolled that out fairly quickly and to get to 10% penetration was a focus of the Company and also a focus to get a certain number of merchants out. So, we feel pretty good about the progress today.

Matthew Schwarz -- Raymond James -- Analyst

Right. Great. Thanks, guys.

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 M. Schuessler -- President and Chief Executive Officer

Thank you. So, again, I want to thank all of my colleagues. In a challenging year, we continue to deliver and we feel like that we've, not only made sure that our customers are taken care of our employees and our communities, and we're incredibly proud of what we've accomplished. And we look forward to speaking with many of you over the coming year at different conferences. So, thank you.

Operator

[Operator Closing Remarks]

Duration: 55 minutes

Call participants:

Kay Sharpton -- Vice President, Investor Relations

Morgan M. Schuessler -- President and Chief Executive Officer

Joaquin Castrillo -- Chief Financial Officer

Allison Jordan -- Cowen and Company -- Analyst

Robert Napoli -- William Blair & Company -- Analyst

Vasundhara Govil -- Keefe, Bruyette & Woods, Inc. -- Analyst

James Friedman -- Susquehanna Financial Group -- Analyst

James Faucette -- Morgan Stanley -- Analyst

Matthew O'Neill -- Goldman Sachs -- Analyst

Matthew Schwarz -- Raymond James -- Analyst

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