EVERTEC, Inc.

Thank you, operator. Good afternoon, everyone.

Welcome to EVERTEC First Quarter 2013 Earnings Call. I'm Luis Cabrera, Senior Vice President, Treasurer and Head of Investors Relations for EVERTEC.

With me today is Peter Harrington, our President and Chief Executive Officer; and Juan Jose Román, Executive Vice President and Chief Financial Officer.

A replay of this call will be available until Monday, May 13, 2013. Asset information for the replay is listed in today's financial press release, which is available on our website under the Investors Relations tab.

As a reminder, this call may not be taped or otherwise reproduced without EVERTEC's prior consent. For those listening to the replay, this call was held and recorded on May 6, 2013.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they are 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 statement to reflect the events that occur after this call.

Please refer to the final prospectus form of our initial public offering filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statement.

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

With that, we'll begin by turning the call over to Peter Harrington, our President and Chief Executive Officer. Peter?

Thank you, Luis, and good afternoon, everyone. Thank you for joining us for our first quarter 2013 earnings conference call and our first release following our initial public offering.

The first quarter of 2013 was a great start to the year with EVERTEC delivering another quarter of strong operating performance. As you are aware, we successfully completed our initial public offering on April 17, and I want to thank the entire EVERTEC team for their hard work and dedication throughout that process.

I also want to thank and welcome our new shareholders.

And now I am delighted to provide you with our business highlights for the first quarter and talk about some of recent events that we are particularly proud of. First, we reported adjusted net income of $27.5 million, reflecting growth of 37% as compared to our corresponding 2012 period.

Second, we reported adjusted EBITDA growth of 8% and a 110 basis point improvement in our adjusted EBITDA margin, highlighting our significant operating leverage and effective cost control initiatives.

And third, we continue to grow revenues in our Payment Processing businesses outside of Puerto Rico in the double digits. EVERTEC's total revenues increased 6% on a year-over-year basis, driven primarily by our Payment Processing and Business Solutions segments.

First, the successful completion of our initial public offering; and as well, the closing of our debt financing transaction that extended our debt maturity profile, increased our liquidity and importantly reduced our annual interest expense by approximately $30 million per year. Juan Jose Román, our Chief Financial Officer, will review these results in greater detail later in the discussion.

But before turning the call over to Juan, since this is our first quarterly earnings call with public equity investors, it would be helpful to provide a brief overview of EVERTEC and our strategy for long-term profitable growth.

EVERTEC is the leading transaction processor in Latin America with a strategic presence in 19 countries. We provide services today through 3 business lines.

First, we provide Merchant Acquiring services to merchants of all sizes that enable them to accept all types of electronic payment. We are the leader in this business in Central America and the Caribbean, and we are the sixth largest in all of Latin America.

Second, we provide Payment Processing services such as card issuing processing and POS processing to financial institutions. We're also on the ATH network, which is the leading ATM and PIN debit network in the region.

And third, we provide a range of mission-critical outsourced technology solutions to a broad range of financial institutions, corporations and government customers.

We believe this diversified business model is one of our key competitive advantages. Rather than just provide a single service such as Merchant Acquiring or Payment Processing, we offer end-to-end technology solutions and have the ability to provide our customers with a more complete suite of services as compared to anyone else in the region.

Accordingly, our business model enables us to penetrate customers from a number of entry points, realize significant cross-sell opportunities, enter new markets and, importantly, help our customers differentiate their products and services in their markets.

emerging markets and electronic payment. These powerful forces have and will continue to positively impact our business regardless of the broader economic environment.

We like to call this growth by breathing.

Second, we will continue to penetrate and gain share in our core business, which includes signing new customers, cross-selling products to existing customers and entering and expanding into new verticals.

Third, we will continue to expand in a thoughtful way into new geographies, like we did in Colombia in 2012. We will also partner with current customers as they expand into new markets by providing them a consistent product offering across the markets they operate in.

Fourth, we will leverage our assets and capabilities to drive innovation, develop new products and push for their adoption. And finally, we will execute on a variety of corporate development initiatives.

For example, in Merchant Acquiring, we are actively developing alliances and pursuing joint ventures. And we will also continue to selectively pursue strategic acquisitions that enable us to enter new markets and expand our current distribution channel.

In summary, we are very excited by the breadth of opportunities that our diversified business model and best-in-class technology platform provides us, and we further -- to allow us to further expand in Latin America and continue to drive long-term shareholder value creation. And now I'll turn the call over to Juan, who will discuss our financial results in greater detail.

Thank you, Peter, and good afternoon, everyone. As Peter described earlier, EVERTEC generated strong financial and operating results in the first quarter ended March 31, 2013.

Now starting with our revenues on a consolidated basis, total revenue for the quarter increased $4.9 million or 6% to $87.3 million compared to $82.5 million in the first quarter of 2012.

Looking at the underlying segments, our Merchant Acquiring business net revenues declined modestly by 1% to $17.5 million, in line with our expectations. When normalized for the one-time impact of Durbin, our Merchant Acquiring segment revenues in Q1 2013 grew at 8% as compared to the prior year period.

The Payment Processing segment revenues increased by 5% to $24.1 million. Revenue growth was driven primarily by growth in transactions processed and accounts on file.

And finally, the Business Solutions segment revenues increased by 9% to $45.8 million. Revenue growth in the Business Solutions segment was driven primarily by an increasing demand for our network and core banking products and services.

Now moving to the expense side of our income statement. Our cost of revenues, excluding depreciation and amortization, were $40.5 million for the first quarter, representing an increase of $2.8 million as compared to the corresponding 2012 period.

The growth in our cost of revenue was primarily due to a $2.4 million impact from higher product sales within our Business Solutions segment.

Total selling, general and administrative expenses were $8.9 million for the quarter, representing a decrease of approximately $100,000 as compared to the corresponding 2012 period. The decline in our selling, general and administrative expense was primarily due to the effectiveness of our cost control initiatives.

Total nonoperating expenses for the quarter were $14.9 million, representing an increase of $1.6 million or 12% as compared to the corresponding 2012 period. The increase was primarily due to a $4.1 million increase in interest expense related to the issuance of additional debt in May 2012 in connection with our shareholder dividend, partially offset by a decrease in other expenses of $2.3 million.

Other expenses during the first quarter of 2012 included a $2.2 million nonrecurring employee severance payment.

Income tax expense was approximately $50,000 for the quarter ended March 31, 2013, compared to approximately $1.1 million in the corresponding 2012 period. The lower income tax expense in 2013 as compared to 2012 primarily reflects the impact of the tax grant received by EVERTEC during the fourth quarter of 2012.

Adjusted EBITDA for the quarter ended March 31, 2013, was $41.8 million, an increase of $3.2 million or 8% as compared to $38.5 million in the corresponding 2012 period. The increasing adjusted EBITDA was primarily driven by the formation growth in revenues and significant operating leverage in our business.

Adjusted EBITDA margin improved by approximately 110 basis points to 47.8% from 46.7% in the corresponding 2012 period. Adjusted net income was $27.5 million or $0.36 per diluted share for the quarter ended March 31, 2013, representing an increase of $7.4 million or 37% from $20.1 million in the corresponding 2012 period.

The increase in adjusted net income was primarily driven by the same factors impacting adjusted EBITDA and lower pro forma cash interest expense as a result of the refinancing we completed in April.

Please note that for comparability purposes, the adjusted net income and adjusted net income per diluted share calculation, as seen on a pro forma basis, the company completed the formation debt refinancing on January 1, 2013. Please reference to the reconciliation tables provided in today's earnings release for additional information.

EVERTEC continues to enjoy its strong balance sheet. As of March 31, 2013, we reported $34.1 million of unrestricted cash and $743.4 million of total short-term borrowings and long-term debt, which represents total net debt of $709.3 million.

During the quarter, we repaid approximately $40 million of borrowings outstanding on our revolver credit facilities. And as of March 31, 2013, our revolver was undrawn with $50 million in available capacity.

Our total liquidity as of March 31, 2013, which includes unrestricted cash and available borrowing capacity under our revolver was approximately $84.1 million. As Peter mentioned, we successfully completed our initial public offering of 28.8 million shares in April.

The offering was comprised of approximately 6.3 million primary shares and 22.5 million secondary shares sold by certain stockholders. As part of the offering, we received net primary proceeds of $117.4 million, which were used to deleverage our balance sheet and pay transaction-related fees and expenses.

Comparing with our IPO, we also successfully completed the refinancing of our debt capital structure that closed on April 17. In connection with this refinancing, we entered into $800 million senior secured credit facilities comprised of a $100 million revolving credit facility, which was undrawn at close, a $300 million term loan A, and a $400 million term loan B.

At the end of April, our debt was approximately $680 -- our net debt was approximately $685 million, and our total liquidity was approximately $120 million.

Going forward, it is important to note the 2 significant impacts this refinancing has on our business and financials. First, we will benefit from a significant reduction in our interest expense.

On a pro forma basis, our annualized interest expense will be approximately $23 million, which represents a reduction of approximately $30 million or 55% as compared to our capital structure as of March 31, 2013.

Second, we will benefit from an increasing liquidity via the increase in the size of our revolving credit facility from $50 million to $100 million. This incremental financial flexibility supports our ability to further capitalize on both organic and inorganic investment opportunities as we continue to grow our business in Latin America.

Additionally, as a consequence of the improvement in our credit metrics over the last several years and deleveraging in connection with our initial public offering, we also received a recent upgrade of our credit rating from both Standard & Poor's and Moody's. Our current corporate family ratings are now BB- from S&P and B1 from Moody's.

Before turning to our medium-term outlook, I would like to briefly review our tax structure and benefits of the 15-year tax grant we received from the government of Puerto Rico in Q4 2012. Among other benefits, the tax grant provides for a preferential income tax rate of 4% on our data processing activities in Puerto Rico, which represented approximately 75% of our taxable income for the fiscal year 2012.

Consequently, we expect our medium-term blended tax rate to be approximately 10%, and we are excited by the structural enhancements to our free cash flow profile that this tax grant provides.

Going forward, we expect our results to remain strong. Over the last 3 years, our revenue has grown at a compounded annual rate of approximately 7%.

Over the medium term, we expect revenue growth to improve as we continue to expand into Latin America and benefit from the increasing contribution of our fast-growing payment business.

For 2013, revenue is expected to grow between 6% to 7%, which reflect baseline normalized growth consistent with our medium-term expectation of 8% to 9%, offset by the comparative growth impact of the Durbin Amendment in our Merchant Acquiring segment that we mentioned earlier on the call.

Over the medium term, we expect adjusted EBITDA growth will continue to exceed our revenue growth and grow in the double digits. Similarly, as a result of the aforementioned one-time Durbin Amendment impact in our Merchant Acquiring segment, we expect adjusted EBITDA growth in 2013 of approximately 8% to 10%.

Over the medium term, we expect adjusted net income to grow at a faster rate than adjusted EBITDA in the mid-teens as we continue to benefit from the deleveraging balance sheet, modest capital investment requirements and a favorable tax position.

Operator, we will now open up the call for questions.

I guess I'll start by asking if the Merchant Acquiring -- just maybe can you just remind us or discuss how you calculate the 8% growth adjusting for Durbin? What's the methodology there to arrive at that?

Sure, Tien-Tsin. Just a reminder, right, the comparison we're doing is from first quarter 2012 over -- 2013 over 2012.

And as you probably remember, the Durbin went into effect in the fourth quarter of 2011. In connection with that, we benefited from an increase in our net margin or spread as a result of the reduction in the interchange fees.

And this extraordinary benefit was reflected obviously in our Q1 2012 revenues. As we've talked about -- to the investors on the roadshow, over the course of 2012, we've made a strategic decision to pass some of that increased benefit onto our merchants in return for long-term contracts, and we did that.

And certainly on top of that, there was some Durbin-related volume effects as well. And so when you normalize the extraordinary event that we had in 2012 and we subtract that from 2013, that's how we get to the 8% growth.

On top of that, you got to remember that in 2013, we had one less day than we did in 2012 because of the leap year, and you can see that it's almost a 1% difference year-over-year.

Got it, got it. That makes sense.

Good to know. It's consistent with what we had modeled as well.

Just on the same -- stick with Merchant Acquiring. Oriental, BBVA conversion, can you update us on that, too?

Where do we stand? Any surprises?

No, no. As we expect, we're making progress.

They are going through the transition of BBVA into Oriental. They expect to finish that in the fourth quarter, but we -- I think if we will start to see some of the volume specifically from new merchants signed between now and then, but we don't expect the transition of the current business until probably the fourth quarter.

Understood, understood. Okay, last one just in Business Solutions, good growth there.

Any sort of unusual projects to call out that may have influenced the first quarter result?

Yes, no problem. Yes, I mean, as we've said, there are parts of the Business Solution business that is not cyclical.

It's kind of project-related or kind of one-time related. And yes, certainly, we were able to finish a project in the first quarter of 2012 that we had not expected until later in the year, and that's why you're seeing the growth in the first quarter.

We expect the growth of the Business Solutions to be consistent with what we thought, which is somewhere in the low to mid-single digits on a yearly basis. So really just more timing.

I guess let me start with merchant services as well. Is it possible to give us a little more granularity on the drivers or at least how should we think about the -- even the pricing, right, as you're facing tougher comps?

Was it mostly the fact that transaction growth was just not enough to offset the tougher pricing comps? Or was it the pricing maybe came down somewhat as you gave some pricing up for longer contracts?

Yes, I think it's more that. That we made the decision when we got this kind of extraordinary benefit in 2012, that we thought it was in our best interest to pass some of that along to our merchants in return for long-term contracts.

And so that's probably the way you should look at it. Now to kind of get to the next question, we expect this to finish up in the second quarter of 2013, and then to go on to kind of normal, a normal growth scenario after that.

Okay, that's helpful. And as we think about the expansion outside of Puerto Rico, can you maybe give us a range of how pricing tends to look, and these are the countries that you're expanding to?

I guess the opportunity in Colombia looks pretty clean as well. So how would pricing, for example, in Colombia and other parts of Latin America compare to what you get in Puerto Rico?

Very comparative. Certainly, I would say that the pricing that we see in Latin America kind of in general is much more favorable than you would see in the more mature markets.

And so there's not -- I'll be honest, there's not a lot of difference between how we price in Puerto Rico and what we see in the other Latin American countries. So it's pretty -- there's a little variation but not much.

For the most part, it's similar pricing across all the markets.

Got it. One last one for us.

On Business Solutions, maybe it will be helpful for all of us if you tell us, maybe give us an example on how you think this fits well into your expansion strategy? How can you use the fact that you have all 3 segments, specifically Business Solutions because maybe that's a little bit less clear to us, how can that -- how can you use that as a competitive advantage to try to expand outside of Puerto Rico?

Well yes. As we've demonstrated for a number of years here in Puerto Rico, the customers that we deal with are predominantly kind of tier 2 and tier 3 financial institutions, and they're looking for a number of solutions.

And where we differentiate ourselves from our competitors is our ability to bring to the table more than just the payment product, whether it be POS or ATM, but we will actually run the network for that. And what we've seen in a lot of the markets is that they're looking for this kind of value-added service that we can provide by bringing to them, say running the network as well as doing the processing or maybe we're getting -- there's a lot of interest today, for example, in cloud computing and how we can bring cloud computing and hosting to the table, as well as the payment-related businesses.

This is Allison in for George. I know you mentioned earlier that you were able to grow revenues outside of Puerto Rico by double digits.

But can you give us a little more detail on the growth rate sourced from Puerto Rico compared to the other geographies you are in?

Well, I would just say we're not going to give you the specific numbers. I would just say that we are -- we're certainly growing in the double digits, and not just in one market like I said before.

We're growing across all of the markets. We're seeing steady growth, driven primarily by the cash-to-card conversion.

So as we see more electronic payments grow in these markets, we're benefiting from that. But I would just tell you that the growth in the double digits we're seeing in all of the core markets we operate in today.

Great. And then just maybe one more.

You spoke about the pricing you're seeing in Colombia, but can you give us an update about the general progress you're making there and maybe when you think it'll be a meaningful contributor to overall revenues?

We signed our first customer there as we said. We expected to begin to see revenue by year end, so I would say 2014 is when it will make a significant contribution from a revenue perspective.

I guess back to the question now of the business outside of Puerto Rico. Are you going to provide us with the percentage of revenue on a going-forward basis, I mean, just to keep us posted on the progress that you're making there?

I think that's the last question, I think that double-digit is kind of a wide range. It would be helpful for us to be able to narrow that down somehow.

Yes. And to be honest with you, we're still looking at a number of things that we'll provide on an ongoing basis, that is certainly one of them.

So I would say as we go through that process, that is certainly one of the ones we're looking at providing more specific information on an ongoing basis, but we're not prepared today to do that.

Okay. And then you mentioned looking at strategic acquisitions.

I know this hasn't been a big push for you in the past. But what is it specifically that you think you'd be looking for?

Is it product? Is it distribution or is there something else?

And I guess on a going-forward basis, do you anticipate this will be a bigger part of your strategy?

It certainly will be a part of the strategy as we go forward. But again, what I want you to take away is what we're first and foremost looking at is how do we continue to grow organically in the markets that we're in.

We think there's still plenty, more than enough opportunity for us to do that. So when we look at acquisitions, we look at it in kind of 3 ways.

First and foremost, we're very focused on the Merchant Acquiring business and looking at both alliances and in joint ventures to get into the Merchant Acquiring businesses in the markets we're already in and being able to leverage those relationships that we've built over the years. So that's kind of first.

Outside of that, we look for 2 things. If there was an acquisition that would help us gain a bigger footprint or a faster footprint in a brand-new market, then we certainly would look at that.

And then finally, we look at it from a distribution channel perspective. Again because of the wide range of products and services that we offer, what would be most interesting to us is an opportunity that provided a considerable distribution channel that we could then leverage to sell our products and services through.

That's kind of how we focus on.

Your cost of revenue is up as a percent of revenue. And I know that you talked about that being related to Business Solutions.

As that growth rate slows for the rest of the year, would you expect to see some leverage in that line item?

Yes, this is Juan Jose. Yes, this one is mostly related to the increase in the Business Solutions product sales.

So going forward for this year, we do -- we're still seeing the benefit of the cost saving initiative we implemented there in 2012. The 2013 really reflect that benefit with the effectiveness of our costs.

So going forward, it will be -- for this year, it will be kind of very low digits for this year.

Okay. I'm sorry, low digit improvement or...

The increase -- I'm sorry. The increase in the cost -- total cost is really low digit.

Again, we'll see this year specifically basically to be flat our total cost because of the cost-saving initiative we implemented last year.

Got it, okay. And then could you give us any details on margin trends by segment?

And will you plan to provide those going forward?

No, we don't report by segment. We do provide the information overall consolidated.

Okay. So anything worth highlighting then in margins by segment?

No. Well, our margins, we do expect them to continue to improve, to grow, as has been in the past.

As we mentioned, partially the result of our continuing increase in our payment businesses and our growth outside Puerto Rico. As we mentioned, we have significant benefit from our infrastructure.

This is Ashish Sabadra calling on behalf of Bryan Keane. Quick question on the operational metrics, volume and Merchant Acquiring and transactions.

I was wondering if you're planning to provide those numbers and -- or if you could provide color on how did they come compared to your plans?

I'll take the second part. I mean, it was very much in line with our expectations for the first quarter.

As I've said before, we are looking at a number of things for what we may report in the future. At this time, we're not providing those types of KPIs.

But much like the growth rates outside of Puerto Rico in the payments business, that's one of the things we're certainly looking at to be able to report on in the future.

Okay. A quick question on the prospect pipeline.

I was just wondering if you would provide some color on the prospect pipeline in terms of the sales initiatives that you're working on, how those are panning out and the demand?

Yes. I mean, we're very, very, very happy with the pipeline we have today.

And that's why we're very comfortable with the guidance that Juan gave you for 2013. But again, you got to keep in mind that in a lot of these, especially in the payments businesses, we're basically selling at this point for next year because of the implementation timeframe that you're probably familiar with.

So we're already -- we're very, very happy about where we are in that pipeline, more so probably for 2014 than 2013.

And a couple of quick modeling questions. Just share count by quarters going forward.

And the tax rate, I understand your tax rate also, you have some NOLs that you can take benefit of on fiscal year '13. So the expected tax rate for fiscal year '13 and share count by quarter, if you can provide that.

Yes. Total shares as of May will be 79,000,716.

Regarding our tax rate, as I mentioned, the effective tax rate will be around 10%, 10%, 11%. For 2013 specifically, as you mentioned, we do have NOLs, so you should expect that we will not pay taxes in Puerto Rico, only taxes outside Puerto Rico.

That will be between $2 million to $3 million. So the NOL will cover any tax expense in Puerto Rico.

So no cash tax in Puerto Rico, only $2 million to $3 million in Costa Rica.

Peter, I was wondering if you could maybe lay out a target for, over the next few years, for the mix of revenue you'd like to have in Puerto Rico versus outside of Puerto Rico, if you have a target or to lay out just kind of generally where you would hope to get to over the next few years?

Well, as we said, the fastest-growing businesses we have are the payment businesses. And the fastest-growing of those is clearly the payment business outside of Puerto Rico.

So I think you can expect that the mix of revenue will move to predominantly payment over the Business Solutions side of the house. And that will continue to accelerate as we grow outside of Puerto Rico.

Long term, I mean, I'd love to get to something that looks more like 40% payment and 60% -- 40% outside of Puerto Rico and 60% inside of Puerto Rico. Kind of the 3- to 5-year goal would be in that range to move to that direction.

Okay. And I guess just a question on CapEx.

What is your expectation for CapEx in 2013? I don't know if you can break it out between maintenance CapEx and growth CapEx, or I guess not sure how else you look at it, if you could.

Yes. We save about $25 million per year CapEx expenditure.

And we see that again in those 2 areas. About $20 million of it is what we call maintenance, and that is to upgrade the technology on an ongoing basis, continue to invest in the infrastructure that we operate.

And then the other $5 million a year would be growth. And that would be -- think of that as directly related to a new revenue stream, whether that's the development of a new product that will drive new revenue or whether that's implementation for customers that will drive revenue from that customer.

But it's related specifically to revenue streams.

Okay. And the $20 million, is there -- are there any specific projects that you're working on of note [indiscernible]

No. Every year, we kind of -- we go through a process.

Last year, we upgraded the mainframe technology and infrastructure. And there is usually one big project a year, but it's not that it takes up half of the CapEx.

It's just larger than any other. So think of it more as that we just will continue to spend on an ongoing basis to upgrade, whether it's the POS devices, whether it's the server environment, whether it's the mainframe or the midrange environment.

We'll continue to upgrade so that we are using the latest technology to provide our services.

Great. And then just on the -- Juan, on the T&A in the quarter, $8.9 million, is there anything in the first quarter?

Is that a run rate or -- I mean, are there payroll taxes or anything unusual that, that number is in that number, that $8.9 million?

There are some costs related to the one-time transactions that occurred outside of this organization and going forward again, the refinance in Q1, so that actually we adjusted -- when you look at our adjusted EBITDA as we announced in today's press release, you will see that we're adjusting that. So yes, it includes some one-time costs for this quarter.

On a going forward basis, it will be less. So just to give you a specific in this quarter, we're adjusting EBITDA close to $1.8 million related to those transaction fees, which is mostly professional fees.

Okay. And then last question.

You had a very good signing year last year of new business, and I wondered how that flows into the 2013 numbers. Have we started to see that in the first quarter?

I know you have a long -- the implementation takes a few quarters, and I was wondering if you could talk about how that's going to flow into '13.

Yes, it doesn't flow in evenly, Bob, right? So it all depends on not only the signing of it last year but, obviously, the implementation timeframe.

And sometimes it takes a little longer and sometimes it takes a little shorter, so it won't be even. I would say that you're going to see more of that revenue in the later part of 2013 than the earlier part.

Just had a couple of quick questions. Just I wanted to confirm on the share count.

That's the fully diluted number, right, the 80 million you mentioned, Juan?

Yes.

Okay. That's a little lower than the 85 million that includes everything, it sounds like.

Yes, we have lots -- fully diluted will be around 84 million shares.

84 million, okay. So that's the 5 million incremental that you talked about a couple of weeks back?

Yes.

Okay, that's helpful. So just in terms of your expectations, it seems like on the Business Solutions side, that's the business you have the highest expectations for near term just based on your commentary.

What gets you more constructive on the other 2? It sounds like a little bit of easing on Durbin and the acquiring side.

But what on the transaction processing side just philosophically makes you feel better about that business and the growth?

Well, on the transaction processing, I think because of the continued growth we're seeing outside of Puerto Rico, and with again, as mentioned earlier, with the signings we had last year, those were almost all in the payment-related businesses. So we -- based on what we got accomplished last year, we feel very comfortable that, that business will continue to outperform, say, the Business Solutions side of the business from a revenue perspective.

So we're very comfortable with the guidance that Juan gave you because the payments businesses are, have and will continue to grow faster.

Okay. Just one other one if I can.

On the transaction fees and refi costs, you guys had talked about a much bigger number, I think it was like $60 million to $65 million that you expect it to be in both the GAAP and the come back out of the adjusted numbers. Obviously, that seems to have slipped.

Should we expect that number to have moved into 2Q, that roughly $60 million or $65 million number?

Yes. It will be in Q2 because of the inflection number, yes, in Q2.

The make-whole premium was around $40 million, so it will be -- actually $42 million have to do with the make-whole premium that we pay outside of the refinancing. And yes, you will see that in Q2.

And so on a GAAP basis, as we think about where that'll hit, that'll hit the other income expense line amount and your adjusting it?

Yes.

$42 million, you said. Okay, that's helpful and I appreciate it.

$42 million and also the breakup of the contract with our sponsors also, the termination of the consulting agreement also will be in Q2. That was $16.7 million.

So that gets you pretty much back towards that $60 million number that you talked about?

Yes.