Table of Contents

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF1934

For the quarterly period ended September 30, 2019 or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF1934

For the transition period from to

COMMISSION FILE NUMBER 001-35872

EVERTEC, Inc.(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Puerto Rico 66-0783622(State or other jurisdiction of

incorporation or organization) (I.R.S. employer

identification number)

Cupey Center Building, Road 176, Kilometer 1.3, San Juan, Puerto Rico 00926

(Address of principal executive offices) (Zip Code)

(787) 759-9999(Registrant’s telephone number, including area code)

Not applicable(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registeredCommon Stock, $0.01 par value per share EVTC New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit suchfiles). Yes ☒ No ☐

Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerginggrowth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

At October 25, 2019, there were 71,925,843 outstanding shares of common stock of EVERTEC, Inc.

Table of Contents

TABLE OF CONTENTS

PagePart I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 1

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September30, 2019 and 2018 2

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30,2019 and 2018 3

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 5 Notes to Unaudited Condensed Consolidated Financial Statements 6Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24Item 3. Quantitative and Qualitative Disclosures about Market Risk 37Item 4. Controls and Procedures 37Part II. OTHER INFORMATION 39Item 1. Legal Proceedings 39Item 1A. Risk Factors 39Item 2. Unregistered Sales of Equity in Securities and Use of Proceeds 39Item 3. Defaults Upon Senior Securities 39Item 4. Mine Safety Disclosures 39Item 5. Other Information 39Item 6. Exhibits 40SIGNATURES 41

All reports we file with the Securities and Exchange Commission ("SEC") are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR)System on the SEC’s website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available throughour website at www.evertecinc.com as soon as reasonably practicable after filing such material with the SEC.

Table of Contents

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of, and subject to the protection of, the Private SecuritiesLitigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “estimates,”“will,” “should,” “plans” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Readers arecautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actualresults may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact our businessand could impact our business in the future are:

• our reliance on our relationship with Popular, Inc. (“Popular”) for a significant portion of our revenues pursuant to our master services agreementwith them, and to grow our merchant acquiring business;

• as a regulated institution, the likelihood we will be required to obtain regulatory approval before engaging in certain new activities or businesses,whether organically or by acquisition, and our potential inability to obtain such approval on a timely basis or at all, which may make transactionsmore expensive or impossible to complete, or make us less attractive to potential sellers;

• our ability to renew our client contracts on terms favorable to us, including our contract with Popular, and any significant concessions we may haveto grant to Popular with respect to pricing or other key terms in anticipation of the negotiation of the extension of the MSA, both in respect of thecurrent term and any extension of the MSA;

• our dependence on our processing systems, technology infrastructure, security systems and fraudulent payment detection systems, as well as on ourpersonnel and certain third parties with whom we do business, and the risks to our business if our systems are hacked or otherwise compromised;

• our ability to develop, install and adopt new software, technology and computing systems;• a decreased client base due to consolidations and failures in the financial services industry;• the credit risk of our merchant clients, for which we may also be liable;• the continuing market position of the ATH network;• a reduction in consumer confidence, whether as a result of a global economic downturn or otherwise, which leads to a decrease in consumer

spending;• our dependence on credit card associations, including any adverse changes in credit card association or network rules or fees;• changes in the regulatory environment and changes in international, legal, tax, political, administrative or economic conditions;• the geographical concentration of our business in Puerto Rico, including our business with the government of Puerto Rico and its instrumentalities,

which are facing severe political and fiscal challenges;• additional adverse changes in the general economic conditions in Puerto Rico, whether as a result of the government’s debt crisis or otherwise,

including the continued migration of Puerto Ricans to the U.S. mainland, which could negatively affect our customer base, general consumerspending, our cost of operations and our ability to hire and retain qualified employees;

• a protracted federal government shutdown may affect our financial performance;• operating an international business in Latin America and the Caribbean, in jurisdictions with potential political and economic instability;• our ability to execute our geographic expansion and acquisition strategies, including challenges in successfully acquiring new businesses and

integrating and growing acquired businesses;• our ability to protect our intellectual property rights against infringement and to defend ourselves against claims of infringement brought by third

parties;• our ability to recruit and retain the qualified personnel necessary to operate our business;• our ability to comply with U.S. federal, state, local and foreign regulatory requirements;• evolving industry standards and adverse changes in global economic, political and other conditions;• our high level of indebtedness and restrictions contained in our debt agreements, including the senior secured credit facilities, as well as debt that

could be incurred in the future;• our ability to prevent a cybersecurity attack or breach in our information security;• our ability to generate sufficient cash to service our indebtedness and to generate future profits;• our ability to refinance our debt;• the possibility that we could lose our preferential tax rate in Puerto Rico;• the risk that the counterparty to our interest rate swap agreements fail to satisfy its obligations under the agreement;

Table of Contents

• uncertainty of the pending debt restructuring process under Title III of the Puerto Rico Oversight, Management and Economic Stability Act(“PROMESA”), as well as actions taken by the Puerto Rico government or by the PROMESA Board to address the fiscal crisis in Puerto Rico;

• the aftermath of Hurricanes Irma and Maria and their continued impact on the economies of Puerto Rico and the Caribbean;• the possibility of future catastrophic hurricanes affecting Puerto Rico and/or the Caribbean, as well as other potential natural disasters; and• the nature, timing and amount of any restatement.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by theforward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under “Item 1A. RiskFactors,” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report. These forward-looking statements speak only as of the date of this Report, and we do not undertake any obligation to publicly release any revisions to these forward-lookingstatements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Balance Sheets(Dollar amounts in thousands, except for share information)

September 30, 2019 December 31, 2018

AssetsCurrent Assets:

Cash and cash equivalents $ 102,535 $ 69,973Restricted cash 13,399 16,773Accounts receivable, net 92,195 100,323Prepaid expenses and other assets 36,405 29,124

Total current assets 244,534 216,193Investment in equity investee 12,257 12,149Property and equipment, net 43,179 36,763Operating lease right-of-use asset 30,920 —Goodwill 395,848 394,644Other intangible assets, net 244,672 259,269Deferred tax asset 2,020 1,917Net investment in lease 780 1,060Other long-term assets 5,856 5,297

Total assets $ 980,066 $ 927,292

Liabilities and stockholders’ equityCurrent Liabilities:

Accrued liabilities $ 64,226 $ 57,006Accounts payable 24,966 47,272Unearned income 14,596 11,527Income tax payable 4,595 6,650Current portion of long-term debt 14,250 14,250Current portion of operating lease liability 5,704 —

Total current liabilities 128,337 136,705Long-term debt 514,217 524,056Deferred tax liability 4,565 9,950Unearned income - long term 29,722 26,075Operating lease liability - long-term 25,686 —Other long-term liabilities 28,283 14,900

Total liabilities 730,810 711,686Commitments and contingencies (Note 12)Stockholders’ equity

Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued — —Common stock, par value $0.01; 206,000,000 shares authorized; 71,947,563 sharesissued and outstanding at September 30, 2019 (December 31, 2018 - 72,378,710) 719 723Additional paid-in capital 3,058 5,783Accumulated earnings 274,518 228,742Accumulated other comprehensive loss, net of tax (33,094) (23,789)

Total EVERTEC, Inc. stockholders’ equity 245,201 211,459Non-controlling interest 4,055 4,147

Total equity 249,256 215,606

Total liabilities and equity $ 980,066 $ 927,292

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Income and Comprehensive Income(Dollar amounts in thousands, except per share information)

Three months ended September 30, Nine months ended September 30,

2019 2018 2019 2018

Revenues (affiliates Note 13) $ 118,804 $ 112,017 $ 360,188 $ 335,638 Operating costs and expenses Cost of revenues, exclusive of depreciation and amortization shown below 51,878 49,464 154,498 146,015Selling, general and administrative expenses 15,152 14,404 45,355 45,684Depreciation and amortization 16,972 15,788 50,440 47,383

Total operating costs and expenses 84,002 79,656 250,293 239,082Income from operations 34,802 32,361 109,895 96,556Non-operating income (expenses) Interest income 348 205 864 526Interest expense (7,267) (7,557) (22,191) (22,901)Earnings of equity method investment 371 238 726 612Other income (expenses) 252 1,130 (619) 1,878

Total non-operating expenses (6,296) (5,984) (21,220) (19,885)Income before income taxes 28,506 26,377 88,675 76,671Income tax expense 3,720 3,302 10,018 10,349

Net income 24,786 23,075 78,657 66,322Less: Net income attributable to non-controlling interest 32 78 201 251Net income attributable to EVERTEC, Inc.’s common stockholders 24,754 22,997 78,456 66,071

Other comprehensive income (loss), net of tax of $(278), $180, $(1,279) and$348

Foreign currency translation adjustments (576) (4,325) 3,714 (6,225)(Loss) gain on cash flow hedges (2,922) 219 (13,019) 2,109Total comprehensive income attributable to EVERTEC, Inc.’scommon stockholders $ 21,256 $ 18,891 $ 69,151 $ 61,955

Net income per common share - basic attributable to EVERTEC, Inc.’scommon stockholders $ 0.34 $ 0.32 $ 1.09 $ 0.91Net income per common share - diluted attributable to EVERTEC, Inc.’scommon stockholders $ 0.34 $ 0.31 $ 1.07 $ 0.89

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity(Dollar amounts in thousands, except share information)

Number of Shares of Common

Stock Common

Stock

Additional Paid-in Capital

Accumulated Earnings

Accumulated Other

Comprehensive Loss

Non-Controlling Interest

Total Stockholders’

EquityBalance at December 31, 2018 72,378,710 $ 723 $ 5,783 $ 228,742 $ (23,789) $ 4,147 $ 215,606

Share-based compensation recognized — — 3,279 — — — 3,279

Repurchase of common stock (618,573) (6) (3,129) (14,351) — — (17,486)Restricted stock units delivered, netof cashless 507,308 5 (5,933) — — — (5,928)

Net income — — — 26,644 — 90 26,734Cash dividends declared on commonstock, $0.05 per share — — — (3,617) — — (3,617)

Other comprehensive loss — — — — (2,090) — (2,090)

Balance at March 31, 2019 72,267,445 722 — 237,418 (25,879) 4,237 216,498

Share-based compensation recognized — — 3,436 — — — 3,436

Repurchase of common stock (368,293) (4) (3,201) (7,505) — — (10,710)Restricted stock units delivered, netof cashless 38,364 1 (235) — — — (234)

Net income — — — 27,058 — 79 27,137Cash dividends declared on commonstock, $0.05 per share — — — (3,610) — — (3,610)

Other comprehensive loss — — — — (3,717) — (3,717)

Balance at June 30, 2019 71,937,516 719 — 253,361 (29,596) 4,316 228,800

Share-based compensation recognized — — 3,453 — — — 3,453

Repurchase of common stock (8,120) — (253) — — — (253)Restricted stock units delivered, net of

cashless 18,167 — (142) — — — (142)

Net income — — — 24,754 — 32 24,786Cash dividends declared on common

stock, $0.05 per share — — — (3,597) — — (3,597)

Other comprehensive loss — — — — (3,498) (293) (3,791)

Balance at September 30, 2019 71,947,563 $ 719 $ 3,058 $ 274,518 $ (33,094) $ 4,055 $ 249,256

3

Table of Contents

Number of Shares of Common

Stock Common

Stock

Additional Paid-in Capital

Accumulated Earnings

Accumulated Other

Comprehensive Loss

Non-Controlling Interest

Total Stockholders’

EquityBalance at December 31, 2017 72,393,933 $ 723 $ 5,350 $ 148,887 $ (10,848) $ 3,864 $ 147,976

Cumulative adjustment fromimplementation of ASC 606 — — — 858 — (16) 842Share-based compensationrecognized — — 3,637 — — — 3,637Restricted stock units delivered, netof cashless 35,208 1 (205) — — — (204)

Net income — — — 23,022 — 92 23,114

Other comprehensive income — — — — 3,910 — 3,910

Balance at March 31, 2018 72,429,141 724 8,782 172,767 (6,938) 3,940 179,275Share-based compensationrecognized — — 3,685 — — — 3,685Restricted stock units delivered, netof cashless 287,997 3 (1,813) — — — (1,810)

Net income — — — 20,052 — 81 20,133

Other comprehensive loss — — — — (3,920) — (3,920)

Balance at June 30, 2018 72,717,138 727 10,654 192,819 (10,858) 4,021 197,363

Share-based compensation recognized — — 2,370 — — — 2,370Restricted stock units delivered, net of

cashless 23,139 — (114) — — — (114)

Net income — — — 22,997 — 78 23,075Cash dividends declared on common

stock (3,636) (3,636)

Other comprehensive loss — — — — (4,106) — (4,106)

Balance at September 30, 2018 72,740,277 $ 727 $ 12,910 $ 212,180 $ (14,964) $ 4,099 $ 214,952

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Table of Contents

EVERTEC, Inc. Unaudited Condensed Consolidated Statements of Cash Flows(Dollar amounts in thousands)

Nine months ended September 30,

2019 2018

Cash flows from operating activities Net income $ 78,657 $ 66,322Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 50,440 47,383Amortization of debt issue costs and accretion of discount 1,256 3,410Operating lease amortization 3,966 —Provision for doubtful accounts and sundry losses 3,224 1,065Deferred tax benefit (4,197) (2,734)Share-based compensation 10,168 9,692Loss on disposition of property and equipment and other intangibles 691 12Earnings of equity method investment (726) (612)Dividend received from equity method investment 485 390(Increase) decrease in assets:

Accounts receivable, net 6,475 (64)Prepaid expenses and other assets (7,268) (4,462)Other long-term assets (1,450) (280)

Increase (decrease) in liabilities: Accounts payable and accrued liabilities (6,834) (3,674)Income tax payable (2,080) 4,278Unearned income 6,718 7,655Operating lease liabilities (4,825) —Other long-term liabilities 1,467 62

Total adjustments 57,510 62,121Net cash provided by operating activities 136,167 128,443

Cash flows from investing activities Additions to software (27,969) (15,385)Property and equipment acquired (21,994) (9,620)Proceeds from sales of property and equipment 101 15

Net cash used in investing activities (49,862) (24,990)Cash flows from financing activities Statutory withholding taxes paid on share-based compensation (6,304) (2,128)Net decrease in short-term borrowings — (12,000)Repayment of short-term borrowings for purchase of equipment and software (852) (686)Dividends paid (10,824) (3,636)Repurchase of common stock (28,449) —Repayment of long-term debt (10,688) (41,374)

Net cash used in financing activities (57,117) (59,824)Net increase in cash, cash equivalents and restricted cash 29,188 43,629Cash, cash equivalents and restricted cash at beginning of the period 86,746 60,367

Cash, cash equivalents and restricted cash at end of the period $ 115,934 $ 103,996

Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 102,535 $ 91,310Restricted cash 13,399 12,686

Cash, cash equivalents and restricted cash $ 115,934 $ 103,996

Supplemental disclosure of cash flow information: Cash paid for interest $ 21,668 $ 19,923Cash paid for income taxes 12,535 7,150Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases 5,266 —Supplemental disclosure of non-cash activities:

Payable due to vendor related to equipment and software acquired 2,707 330The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Table of Contents

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 – The Company and Basis of Presentation 7Note 2 - Recent Accounting Pronouncements 7Note 3 - Property and Equipment, Net 8Note 4 - Goodwill and Other Intangible Assets 8Note 5 - Debt and Short-Term Borrowings 9Note 6 - Financial Instruments and Fair Value Measurements 11Note 7 - Equity 12Note 8 - Share-based Compensation 12Note 9 - Revenues 12Note 10 - Income Tax 15Note 11 - Net Income per Common Share 16Note 12 - Commitments and Contingencies 17Note 13 - Related Party Transactions 19Note 14 - Segment Information 19Note 15 - Subsequent Events 23

6

Table of Contents

Note 1 – The Company and Basis of Presentation

The Company

EVERTEC, Inc. (formerly known as Carib Latam Holdings, Inc.) and its subsidiaries (collectively the “Company,” or “EVERTEC”) is a leading full-servicetransaction processing business in Latin America and the Caribbean. The Company is based in Puerto Rico and provides a broad range of merchant acquiring,payment processing and business process management. The Company provides services across 26 countries in the region. EVERTEC owns and operates the ATHnetwork, one of the leading debit networks in Latin America. In addition, EVERTEC provides a comprehensive suite of services for core bank processing and cashprocessing in Puerto Rico and technology outsourcing in all the regions the Company serves. EVERTEC serves a broad and diversified customer base of leadingfinancial institutions, merchants, corporations and government agencies with solutions that are essential to their operations, enabling them to issue, process andaccept transactions securely. EVERTEC's common stock is listed under the ticker symbol "EVTC" on the New York Stock Exchange.

Basis of Presentation

The unaudited condensed consolidated financial statements of EVERTEC have been prepared in accordance with accounting principles generally accepted in theUnited States of America (“GAAP”). The preparation of the accompanying unaudited condensed consolidated financial statements requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actualresults could differ from these estimates.

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted fromthese statements pursuant to the rules and regulations of the SEC and, accordingly, these condensed consolidated financial statements should be read in conjunctionwith the Audited Consolidated Financial Statements of the Company for the year ended December 31, 2018, included in the Company’s Annual Report on Form10-K. In the opinion of management, the accompanying condensed consolidated financial statements, prepared in accordance with GAAP, contain all adjustmentsnecessary for a fair presentation. Intercompany accounts and transactions are eliminated in consolidation.

Note 2 – Recent Accounting Pronouncements

Accounting pronouncements issued prior to 2019 and not yet adopted

In June 2016, November 2018, April 2019 and May 2019, the Financial Accounting Standards Board ("FASB") issued updated guidance for the measurement ofcredit losses on financial instruments, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses andrequires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The main objective of these updates is toprovide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extendcredit held by a reporting entity at each reporting date. The updates affect trade receivables, debt securities, net investment in leases, and most other financial assetsthat represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In addition, the updated guidance alsoclarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. The updates provide an option toirrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The standards will be effective for the Company beginningJanuary 1, 2020. The Company will adopt the updated guidance using a modified retrospective approach through a cumulative-effect adjustment to retainedearnings as of the effective date to align the credit loss methodology with the new standard. The Company is in the process of implementing its new credit lossmodel and updating its processes and controls in preparation for the adoption of the updated guidance. Based on the initial assessment, the updates are expected tohave an impact on trade receivables, and other assets that represent rights to receive cash. However, the Company does not expect this standard to have a materialeffect on the consolidated financial statements.

In August 2018, the FASB issued an updated disclosure framework for fair value measurements. The amendments in the issued update remove, modify and adddisclosure requirements on fair value measurements in Topic 820 Fair Value Measurements. The amendments in this update are effective to all entities for thefiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain amendments in the update should be applied prospectivelyfor only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to allperiods presented. Early adoption is permitted upon issuance of this update. An entity is permitted to early adopt any removed or modified disclosures uponissuance of this update and delay adoption of the additional disclosures until their effective date. Mainly given that the Company does not currently have any assetsor liabilities classified as level 3 in the fair

7

Table of Contents

value hierarchy, the adoption of this update is not expected to have an impact on the disclosures currently included in the notes to the condensed consolidatedfinancial statements.

In August 2018, the FASB issued updated guidance for customer’s accounting for implementation, set-up and other upfront costs incurred in a cloud computingarrangement that is a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred to develop or obtaininternal-use software. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2019, with earlyadoption permitted, and interim periods within those fiscal years. The amendments in this update should be applied either retrospectively or prospectively to allimplementation costs incurred after the date of adoption. The Company will adopt the update effective January 1, 2020 and will apply the guidance in this updateto all implementation costs prospectively.

In October 2018, the FASB issued updated guidance to improve related party guidance for variable interest entities. The updated guidance requires entities toconsider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entiretywhen determining whether a decision-making fee is a variable interest. The amendments in this update are effective for public business entities for fiscal years, andinterim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. These amendments should be applied retrospectivelywith a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company will adopt this guidance effective January1, 2020. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial statements.

In November 2018, the FASB issued updated guidance to clarify the interaction between the guidance for collaborative arrangements and the updated revenuerecognition guidance. The amendments in this update, among other things, provide guidance on how to assess whether certain collaborative arrangementtransactions should be accounted for under Topic 606. The amendments in this update are effective for public business entities for fiscal years, and interim periodswithin those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company will adopt this guidance effective January 1, 2020 withno impact on its consolidated financial statements. Future contracts will be evaluated under the updated guidance once effective.

Note 3 – Property and Equipment, net

Property and equipment, net consists of the following:

(Dollar amounts in thousands) Useful life

in years September 30, 2019 December 31, 2018

Buildings 30 $ 1,481 $ 1,440Data processing equipment 3 - 5 119,386 110,673Furniture and equipment 3 - 20 6,780 7,761Leasehold improvements 5 -10 2,782 2,625 130,429 122,499Less - accumulated depreciation and amortization (88,561) (86,990)

Depreciable assets, net 41,868 35,509Land 1,311 1,254

Property and equipment, net $ 43,179 $ 36,763

Depreciation and amortization expense related to property and equipment for the three and nine months ended September 30, 2019 amounted to $4.1 million and$12.4 million, respectively, compared to $3.7 million and $10.9 million, for the same periods in 2018, respectively.

8

Table of Contents

Note 4 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill, allocated by operating segments, were as follows (See Note 14):

(In thousands)

Payment Services -

Puerto Rico &Caribbean

Payment Services -

Latin America Merchant

Acquiring, net Business Solutions Total

Balance at December 31, 2018 $ 160,972 $ 49,728 $ 138,121 $ 45,823 $ 394,644Foreign currency translation adjustments — 1,204 — — 1,204

Balance at September 30, 2019 $ 160,972 $ 50,932 $ 138,121 $ 45,823 $ 395,848

Goodwill is tested for impairment on an annual basis as of August 31, or more often if events or changes in circumstances indicate there may be impairment. TheCompany may test for goodwill impairment using a qualitative or a quantitative analysis. In the quantitative analysis, the Company compares the estimated fairvalue of the reporting units to their carrying values, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reportingunit is not considered impaired. If the fair value does not exceed the carrying value, an impairment loss equaling the excess amount is recorded, limited to therecorded balance of goodwill. No impairment losses were recognized as of September 30, 2019.

The carrying amount of other intangible assets at September 30, 2019 and December 31, 2018 was as follows:

September 30, 2019

(Dollar amounts in thousands) Useful life in years Gross

amount Accumulated amortization

Net carrying amount

Customer relationships 8 - 14 $ 343,174 $ (213,989) $ 129,185Trademark 2 - 15 41,596 (31,565) 10,031Software packages 3 - 10 247,650 (164,810) 82,840Non-compete agreement 15 56,539 (33,923) 22,616

Other intangible assets, net $ 688,959 $ (444,287) $ 244,672

December 31, 2018

(Dollar amounts in thousands) Useful life in years Gross amount

Accumulated amortization

Net carrying amount

Customer relationships 8 - 14 $ 342,738 $ (194,570) $ 148,168Trademark 2 - 15 41,357 (28,888) 12,469Software packages 3 - 10 224,855 (151,666) 73,189Non-compete agreement 15 56,539 (31,096) 25,443

Other intangible assets, net $ 665,489 $ (406,220) $ 259,269

For the three and nine months ended September 30, 2019, the Company recorded amortization expense related to other intangibles of $12.9 million and $38.0million, respectively, compared to $11.9 million and $36.4 million for the corresponding 2018 periods.

The estimated amortization expense of the balances outstanding at September 30, 2019 for the next five years is as follows:

(Dollar amounts in thousands)Remaining 2019 $ 12,6882020 45,9522021 40,9652022 36,2242023 33,950

9

Table of Contents

Note 5 – Debt and Short-Term Borrowings

Total debt at September 30, 2019 and December 31, 2018 follows:

(In thousands) September 30, 2019 December 31, 2018

Secured Credit Facility (2023 Term A) due on November 27, 2023 paying interest at a variableinterest rate (LIBOR plus applicable margin(1)(2))

$ 209,892 $ 217,791

Senior Secured Credit Facility (2024 Term B) due on November 27, 2024 paying interest at avariable interest rate (LIBOR plus applicable margin(2)(3))

318,575 320,515Senior Secured Revolving Credit Facility(1) — —Note Payable due on April 30, 2021(2) 207 300Note Payable due on December 28, 2019 2,500 —

Total debt $ 531,174 $ 538,606

(1) Applicable margin of 2.00% at September 30, 2019 and 2.25% at December 31, 2018.(2) Net of unaccreted discount and unamortized debt issue costs, as applicable.(3) Subject to a minimum rate ("LIBOR floor") of 0% plus applicable margin of 3.50% at September 30, 2019 and December 31, 2018.

2018 Secured Credit Facilities

On November 27, 2018, EVERTEC and EVERTEC Group (“Borrower”) entered into a credit agreement governing the secured credit facilities, consisting of a$220.0 million term loan A facility that matures on November 27, 2023 (“2023 Term A”), a $325.0 million term loan B facility that matures on November 27,2024 (“2024 Term B”) and a $125.0 million revolving credit facility (the “Revolving Facility”) that matures on November 27, 2023, with a syndicate of lendersand Bank of America, N.A. (“Bank of America”), as administrative agent, collateral agent, swingline lender and line of credit issuer (collectively the “2018 CreditAgreement”).

The unpaid principal balance at September 30, 2019 of the 2023 Term A Loan and the 2024 Term B Loan was $211.8 million and $322.6 million, respectively.The additional borrowing capacity for the Revolving Facility at September 30, 2019 was $116.9 million. The Company issues letters of credit against theRevolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

Notes payable

In May 2016, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $0.7 million to purchase software. As of September 30,2019 and December 31, 2018, the outstanding principal balance of the note payable was $0.2 million and $0.3 million, respectively. The current portion of thisnote is recorded as part of accounts payable and the long-term portion is included in other long-term liabilities.

In January 2019, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $10.0 million to purchase data processing equipment andmaintenance. As of September 30, 2019, the outstanding principal balance of the note payable was $2.5 million, recorded as part of accounts payable.

Interest Rate Swaps

At September 30, 2019, the Company has two interest rate swap agreements, entered in December 2015 and December 2018, which convert a portion of theinterest rate payments on the Company's 2024 Term B Loan from variable to fixed:

Swap Agreement Effective date Maturity Date Notional Amount Variable Rate Fixed Rate

2015 Swap January 2017 April 2020 $200 million 1-month LIBOR 1.9225%2018 Swap April 2020 November 2024 $250 million 1-month LIBOR 2.89%

The Company has accounted for these transactions as cash flow hedges.

10

Table of Contents

At September 30, 2019 and December 31, 2018, the carrying amount of the derivatives on the Company’s consolidated balance sheets is as follows:

(In thousands) September 30, 2019 December 31, 2018

Other long-term assets $ — $ 1,683Other long-term liabilities $ 16,687 $ 4,059

During the three and nine months ended September 30, 2019, the Company reclassified gains of $0.2 million and $0.7 million, respectively, from accumulatedother comprehensive loss into income through interest expense. Based on current LIBOR rates, the Company expects to reclassify losses of $1.1 million fromaccumulated other comprehensive loss into income through interest expense over the next 12 months. Refer to Note 6 for tabular disclosure of the fair value ofderivatives and to Note 7 for tabular disclosure of losses recorded on cash flow hedging activities.

The cash flow hedges are considered highly effective.

Note 6 – Financial Instruments and Fair Value Measurements

Recurring Fair Value Measurements

Fair value measurement provisions establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use ofunobservable inputs when measuring fair value. These provisions describe three levels of input that may be used to measure fair value:

Level 1: Inputs are unadjusted, quoted prices for identical assets or liabilities in an active market at the measurement date.Level 2: Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the

measurement date.Level 3: Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the

measurement date.

The Company uses observable inputs when available. Fair value is based upon quoted market prices when available. If market prices are not available, theCompany may employ models that mostly use market-based inputs including yield curves, interest rates, volatilities, and credit curves, among others. TheCompany limits valuation adjustments to those deemed necessary to ensure that the financial instrument’s fair value adequately represents the price that would bereceived or paid in the marketplace. Valuation adjustments may include consideration of counterparty credit quality and liquidity as well as other criteria. Theestimated fair value amounts are subjective in nature and may involve uncertainties and matters of significant judgment for certain financial instruments. Changesin the underlying assumptions used in estimating fair value could affect the results. The fair value measurement levels are not indicative of risk of investment.

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. Fair value estimates are made at a specific point in time based on the type of financial instrument and relevant marketinformation. Many of these estimates involve various assumptions and may vary significantly from amounts that could be realized in actual transactions. Thefollowing table summarizes the fair value measurement by level at September 30, 2019 and December 31, 2018 for assets and liabilities measured at fair value on arecurring basis:

(In thousands) Level 1 Level 2 Level 3 Total

September 30, 2019 Financial liability:

Interest rate swap $ — $ 16,687 $ — $ 16,687December 31, 2018 Financial asset:

Interest rate swap $ — $ 1,683 $ — $ 1,683Financial liability:

Interest rate swap — 4,059 — 4,059

11

Table of Contents

The following table presents the carrying value, as applicable, and estimated fair values for financial instruments at September 30, 2019 and December 31, 2018:

September 30, 2019 December 31, 2018

(In thousands) Carrying Amount

Fair Value

Carrying Amount

Fair Value

Financial assets: Interest rate swap $ — $ — $ 1,683 $ 1,683

Financial liabilities: Interest rate swap 16,687 16,687 4,059 4,059

2023 Term A 209,892 209,103 217,791 218,6252024 Term B 318,575 324,579 320,515 319,517

The fair values of the term loans at September 30, 2019 and December 31, 2018 were obtained using the prices provided by third party service providers. Theirpricing is based on various inputs such as: market quotes, recent trading activity in a non-active market or imputed prices. Also, the pricing may include the use ofan algorithm that could take into account movement in the general high yield market, among other variants.

The secured term loans, which are not measured at fair value in the balance sheets, would be categorized as Level 3 in the fair value hierarchy.

Note 7 – Equity

Accumulated Other Comprehensive Loss

The following table provides a summary of the changes in the balances of accumulated other comprehensive loss for the nine months period ended September 30,2019:

(In thousands)

Foreign Currency Translation Adjustments Cash Flow Hedges Total

Balance - December 31, 2018, net of tax $ (21,626) $ (2,163) $ (23,789)Other comprehensive income (loss) before reclassifications 3,714 (12,305) (8,591)Effective portion reclassified to Net Income — (714) (714)

Balance - September 30, 2019, net of tax $ (17,912) $ (15,182) $ (33,094)

Note 8 – Share-based Compensation

Long-term Incentive Plan ("LTIP")

In the first quarter of 2017, 2018 and 2019, the Compensation Committee of the Company's Board of Directors ("Board") approved grants of restricted stock units(“RSUs”) to executives and certain employees pursuant to the 2017 LTIP, 2018 LTIP and 2019 LTIP, respectively, all under the terms of our 2013 EquityIncentive Plan. Under the LTIPs, the Company granted restricted stock units to eligible participants as time-based awards and/or performance-based awards.

The vesting of the RSUs is dependent upon service, market, and/or performance conditions as defined in the grants. Employees that received time-based awardswith service conditions are entitled to receive a specific number of shares of the Company’s common stock on the vesting date if the employee is providingservices to the Company on the vesting date. Time-based awards vest over a period of three years in substantially equal installments commencing on the grant dateand ending on February 24 of each year for the 2017 LTIP, February 28 of each year for the 2018 LTIP, and February 22 of each year for the 2019 LTIP.

For the performance-based awards under the 2017 LTIP, 2018 LTIP, and 2019 LTIP, the Compensation Committee established adjusted earnings before incometaxes, depreciation and amortization ("Adjusted EBITDA") as the primary performance measure while maintaining focus on total shareholder return through theuse of a market-based total shareholder return ("TSR") performance modifier. The TSR modifier adjusts the shares earned based on the core Adjusted EBITDAperformance upwards

12

Table of Contents

or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to the companies in the Russell 2000Index. The Adjusted EBITDA performance measure will be calculated for the one-year period commencing on January 1 of the year of the grant and ending onDecember 31 of the same year, relative to the goals set by the Compensation Committee for this same period. The shares earned will be subject to an additionaltwo-year service vesting period.

Performance and market-based awards vest at the end of the performance period that commenced on February 24, 2017 for the 2017 LTIP, February 28, 2018 forthe 2018 LTIP, and February 22, 2019 for the 2019 LTIP. The periods end on February 24, 2020 for the 2017 LTIP, February 28, 2021 for the 2018 LTIP, andFebruary 22, 2022 for the 2019 LTIP. Unless otherwise specified in the award agreement, or in an employment agreement, awards are forfeited if the employeevoluntarily ceases to be employed by the Company prior to vesting.

The following table summarizes nonvested restricted shares and RSUs activity for the nine months ended September 30, 2019:

Nonvested restricted shares and RSUs Shares Weighted-average

grant date fair value

Nonvested at December 31, 2018 2,036,163 $ 15.09Forfeited (18,775) 17.14Vested (687,198) 28.68Granted 373,286 29.46

Nonvested at September 30, 2019 1,703,476 $ 18.47

For the three and nine months ended September 30, 2019, the Company recognized $3.5 million and $10.2 million of share based compensation expense,respectively, compared with $2.4 million and $9.7 million, respectively for the same period in 2018.

As of September 30, 2019, the maximum unrecognized cost for restricted stock and RSUs was $16.7 million. The cost is expected to be recognized over aweighted average period of 1.7 years.

Note 9 - Revenues

Summary of Revenue Recognition Accounting Policy

The Company's revenue recognition policy follows the guidance from Accounting Standards Codification ("ASC") 606 Revenue from Contracts with Customers,which provides guidance on the recognition, presentation and disclosure of revenue in consolidated financial statements.

Revenue is measured on the consideration specified in a contract with a customer. Once the Company determines a contract's performance obligations and thetransaction price, including an estimate of any variable consideration, the Company allocates the transaction price to each performance obligation in the contractusing a stand-alone selling price. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product or service to acustomer. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

At contract inception, the Company assesses the goods and service promised in the contract with a customer and identifies a performance obligation for eachpromise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Companyconsiders all the goods or services promised in the contract regardless of whether they are explicitly stated or implied. Payment for the Company's contracts withcustomers are typically due in full within 30 days of invoice date.

Disaggregation of revenue

The Company disaggregates revenue from contracts with customers into primary geographical markets, nature of the products and services, and timing of transferof goods and services. The Company's operating segments are determined by the nature of the products and services the Company provides and the primarygeographical markets in which the Company operates. Revenue disaggregated by segment is discussed in Note 14, Segment Information.

In the following tables, revenue is disaggregated by timing of revenue recognition for the periods indicated.

13

Table of Contents

Three months ended September 30, 2019

(In thousands)

Payment Services -Puerto Rico &

Caribbean Payment Services -

Latin America Merchant

Acquiring, net Business Solutions Total

Timing of revenue recognition Products and services transferred at a point in time $ 43 $ 228 $ — $ 2,939 $ 3,210Products and services transferred over time 20,299 18,853 26,436 50,006 115,594

$ 20,342 $ 19,081 $ 26,436 $ 52,945 $ 118,804

Three months ended September 30, 2018

(In thousands)

Payment Services -Puerto Rico &

Caribbean Payment Services -

Latin America Merchant

Acquiring, net Business Solutions Total

Timing of revenue recognition Products and services transferred at a point in time $ 114 $ 15 $ — $ 1,652 $ 1,781Products and services transferred over time 19,679 18,892 24,486 47,179 110,236

$ 19,793 $ 18,907 $ 24,486 $ 48,831 $ 112,017

Nine months ended September 30, 2019

(In thousands)

Payment Services -Puerto Rico &

Caribbean Payment Services -

Latin America Merchant

Acquiring, net Business Solutions Total

Timing of revenue recognition Products and services transferred at a point in time $ 2,835 $ 419 $ — $ 6,590 $ 9,844Products and services transferred over time 60,957 57,282 79,203 152,902 350,344

$ 63,792 $ 57,701 $ 79,203 $ 159,492 $ 360,188

Nine months ended September 30, 2018

(In thousands)

Payment Services -Puerto Rico &

Caribbean Payment Services -

Latin America Merchant

Acquiring, net Business Solutions Total

Timing of revenue recognition Products and services transferred at a point in time $ 307 $ 444 $ — $ 3,861 $ 4,612Products and services transferred over time 56,983 58,090 73,829 142,124 331,026

$ 57,290 $ 58,534 $ 73,829 $ 145,985 $ 335,638

Contract balances

The following table provides information about contract assets from contracts with customers.

14

Table of Contents

(In thousands) September 30, 2019

December 31, 2018 $ 996Services transferred to customers 544Transfers to accounts receivable (416)

September 30, 2019 $ 1,124

The current portion of contract assets is recorded as part of prepaid expenses and other assets and the long-term portion is included in other long-term assets.

Accounts receivable, net at September 30, 2019 amounted to $92.2 million. Unearned income and Unearned income - Long term, which refer to contract liabilities,at September 30, 2019 amounted to $14.6 million and $29.7 million, respectively, and generally arise when consideration is received or due in advance fromcustomers prior to performance. Unearned income is mainly related to upfront fees for implementation or set up activities, including fees charged in pre-productionperiods in connection with managed services. During the three and nine months ended September 30, 2019, the Company recognized revenue of $1.8 million and$13.1 million, respectively, that were included in unearned income at December 31, 2018. During the three and nine months ended September 30, 2018, theCompany recognized revenue of $1.2 million and $6.9 million, respectively, that were included in unearned income at December 31, 2017.

The estimated aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at September 30, 2019 is$261.7 million. This amount primarily consists of professional service fees for implementation or set up activities related to managed services and maintenanceservices, typically recognized over the life of the contract, which vary from 2 to 5 years. It also includes professional service fees for customizations ordevelopment of on-premise licensing agreements, which are recognized over time based on inputs relative to the total expected inputs to satisfy a performanceobligation.

15

Table of Contents

Note 10 – Income Tax

The components of income tax expense for the three and nine months ended September 30, 2019 and 2018, respectively, consisted of the following:

Three months ended

September 30, Nine months ended

September 30,

(In thousands) 2019 2018 2019 2018

Current tax provision $ 6,096 $ 4,923 $ 14,215 $ 13,083Deferred tax benefit (2,376) (1,621) (4,197) (2,734)

Income tax expense $ 3,720 $ 3,302 $ 10,018 $ 10,349

The Company conducts operations in Puerto Rico and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid tothe Puerto Rico government as well as foreign jurisdictions. The following table presents the components of income tax expense for the three and nine monthsended September 30, 2019 and 2018, and its segregation based on location of operations:

Three months ended September 30, Nine months ended September 30,

(In thousands) 2019 2018 2019 2018

Current tax provision (benefit) Puerto Rico $ 2,117 $ 2,208 $ 5,433 $ 6,063United States 187 (31) 202 142Foreign countries 3,792 2,746 8,580 6,878

Total current tax provision $ 6,096 $ 4,923 $ 14,215 $ 13,083

Deferred tax benefit Puerto Rico $ (1,583) $ (1,026) $ (3,178) $ (2,059)United States (169) (11) (168) (109)Foreign countries (624) (584) (851) (566)

Total deferred tax benefit $ (2,376) $ (1,621) $ (4,197) $ (2,734)

Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented inEVERTEC’s consolidated financial statements.

As of September 30, 2019, the Company has $58.5 million of unremitted earnings from foreign subsidiaries. The Company has not recognized a deferred taxliability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested.

As of September 30, 2019, the gross deferred tax asset amounted to $14.1 million and the gross deferred tax liability amounted to $16.7 million, compared to $10.8million and $18.8 million, respectively, as of December 31, 2018.

16

Table of Contents

Note 11 – Net Income Per Common Share

The reconciliation of the numerator and denominator of the income per common share is as follows:

Three months ended September 30, Nine months ended September 30,

(Dollar amounts in thousands, except per share information) 2019 2018 2019 2018

Net income attributable to EVERTEC, Inc.’s common stockholders $ 24,754 $ 22,997 $ 78,456 $ 66,071Less: non-forfeitable dividends on restricted stock 2 2 2 2

Net income available to EVERTEC, Inc.’s common shareholders $ 24,752 $ 22,995 $ 78,454 $ 66,069

Weighted average common shares outstanding 71,942,403 72,721,414 72,148,312 72,590,679Weighted average potential dilutive common shares (1) 1,372,301 1,935,686 1,382,553 1,532,752

Weighted average common shares outstanding - assuming dilution 73,314,704 74,657,100 73,530,865 74,123,431

Net income per common share - basic $ 0.34 $ 0.32 $ 1.09 $ 0.91

Net income per common share - diluted $ 0.34 $ 0.31 $ 1.07 $ 0.89

(1) Potential common shares consist of common stock issuable under the assumed release of restricted stock awards using the treasury stock method.

On February 15, 2019, April 25, 2019 and July 25, 2019, the Board declared a quarterly cash dividends of $0.05 per share of common stock, which were paid onMarch 22, 2019, June 7, 2019 and September 6, 2019, respectively, to stockholders of record as of the close of business on February 26, 2019, May 6, 2019 andAugust 5, 2019, respectively.

Note 12 – Commitments and Contingencies

EVERTEC is a defendant in a number of legal proceedings arising in the ordinary course of business. Based on the opinion of legal counsel and other factors,Management believes that the final disposition of these matters will not have a material adverse effect on the business, results of operations, financial condition, orcash flows of the Company. The Company has identified certain claims as a result of which a loss may be incurred, but in the aggregate the loss would beinsignificant. For other claims regarding proceedings that are in an initial phase, the Company is unable to estimate the range of possible loss, if any, but at thistime believes that any loss related to such claims will not be material.

Leases

The Company’s leases accounting policy follows the guidance from Accounting Standards Codification (“ASC”) 842, Leases, which provides guidance on therecognition, presentation and disclosure of leases in condensed consolidated financial statements.

The Company determines if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets,operating lease payable, and operating lease liabilities in the condensed consolidated balance sheet. Finance leases are included in property and equipment, accruedliabilities, and other long-term liabilities in the condensed consolidated balance sheet.

ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As mostof the Company’s leases do not provide an implicit rate, Management used the Company’s collateralized incremental borrowing rate (“IBR”) based on theinformation available at commencement date in determining the present value of future payments. The lease terms may include options to extend or terminate thelease when it is reasonably certain that the option will be exercised. We monitor events or changes in circumstances that change the timing or amount of futurelease payments which results in the remeasurement of a lease liability, with a corresponding adjustment to the ROU asset. The lease payment terms may includefixed payment terms and variable payments. Fixed payment terms and variable payments that depend on an index (i.e., Consumer Price Index or “CPI”) or rate areconsidered in the determination of the operating lease liabilities. While lease liabilities are not remeasured because of changes to the CPI, changes are treated asvariable lease payments and recognized in the period in which the obligation for those payments was incurred. Variable payments that do not depend on an indexor rate are not included in the lease liabilities determination. Rather, these payments are recognized as variable lease expense when incurred. Variable leasepayments are included within operating costs and

17

Table of Contents

expenses in the condensed consolidated statement of income and comprehensive income. For operating leases, lease expense for minimum lease payments isrecognized on a straight-line basis over the lease term. For finance leases, lease expense is composed of interest expense and amortization expense. The leaseliability of these leases is measured using the interest rate method. The ROU asset from financing leases are amortized on a straight-line basis, as part of Propertyand Equipment, net.

The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. The Company elected the practicalexpedient of not separating lease and related non-lease components for all classes of underlying assets (i.e., building and equipment). The Company also elected asan accounting policy to not recognize lease liabilities and ROU assets for any future short-term leases (i.e., leases with a lease term of 12 months or less).

The Company has operating leases for certain office facilities, buildings, telecommunications and other equipment; and finance leases for certain equipment. TheCompany’s lease contracts have remaining terms ranging from 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, andsome which may include the option to terminate the lease within 1 year.

At September 30, 2019, equipment leases classified as finance leases, which are included within Property and Equipment, net, were $0.7 million, net ofaccumulated depreciation.

Total lease cost for the three and nine months ended September 30, 2019, was as follows:

Three months ended Nine months ended

September 30, 2019 September 30, 2019

(in thousands) Operating lease cost $ 1,907 $ 5,833Finance lease cost — —

Amortization of right-of-use assets 63 196Interest on lease liabilities 5 20

Variable lease cost 700 2,117

$ 2,675 $ 8,166

Other information related to leases, at September 30, 2019, was as follows:

(In thousands) Right-of-use assets obtained in exchange for operating lease obligations: $ 273Weighted average remaining lease term, in years

Operating leases 6.0Finance leases 1.0

Weighted Average Discount Rate Operating leases 4.5%Finance leases 4.2%

18

Table of Contents

Future minimum lease payments under leases at September 30, 2019 were as follows:

(In thousands) Operating Leases Finance Leases

Remaining 2019 $ 1,698 $ 992020 6,492 3112021 5,680 322022 5,419 —2023 5,385 —Thereafter 11,184 —

Total future minimum lease payments 35,858 442Less: imputed interest (4,468) (25)

$ 31,390 $ 417

Reported as of September 30, 2019 Accrued liabilities $ — $ 349Operating lease payable 5,704 —Operating lease liabilities - long term 25,686 —Other long-term liabilities — 68

$ 31,390 $ 417

Note 13 – Related Party Transactions

The following table presents the Company’s transactions with related parties for the three and nine months ended September 30, 2019 and 2018:

Three months ended September 30, Nine months ended September 30,

(Dollar amounts in thousands) 2019 2018 2019 2018

Total revenues (1)(2) $ 52,702 $ 47,216 $ 154,022 $ 139,954Cost of revenues $ 1,719 $ 840 $ 3,580 $ 2,192Operating lease cost and other fees $ 1,959 $ 2,016 $ 6,177 $ 5,984Interest earned from affiliate

Interest income $ 43 $ 37 $ 98 $ 101

(1) Popular revenues as a percentage of total revenues were 44%, 42%, 43%, and 41% for each of the periods presented above, respectively.(2) Includes revenues generated from investee accounted for under the equity method of $0.3 million, $0.3 million, $0.8 million and $1.0 million for each the

periods presented above, respectively.

At September 30, 2019 and December 31, 2018, EVERTEC had the following balances arising from transactions with related parties:

(Dollar amounts in thousands) September 30, 2019 December 31, 2018

Cash and restricted cash deposits in affiliated bank $ 47,442 $ 29,136Other due/to from affiliate

Accounts receivable $ 35,054 $ 25,714Prepaid expenses and other assets $ 2,504 $ 2,796Operating lease right-of use assets $ 21,474 $ —Other long-term assets $ 76 $ 166Accounts payable $ 2,006 $ 6,344Unearned income $ 32,177 $ 25,401Operating lease liabilities $ 21,688 $ —

19

Table of Contents

Note 14 – Segment Information

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America, Merchant Acquiring, andBusiness Solutions.

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and othercard networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS")transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit cardprocessing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billingproducts for merchants, businesses and financial institutions) and EBT (which principally consist of services to the government of Puerto Rico for the delivery ofbenefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues arederived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarilydependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services.For EBT services, revenues are primarily derived from the number of beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network and other card networks to financialinstitutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management andmonitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement andfraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financialinstitutions), as well as licensed software solutions for risk and fraud management and card payment processing. For ATH debit network and processing services,revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processingfees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions andauthorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiringsegment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment,net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee isgenerally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or thetransaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bankprocessing, network managed services, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bankprocessing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e. savings orchecking accounts, loans, etc.) or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generallyvolume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and theseresale transactions are generally non-recurring.

In addition to the four operating segments described above, Management identified certain functional cost areas that operate independently and do not constitutebusinesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore,these areas are aggregated and presented as “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and othercategory consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses thatare not included in the operating segments. The overhead and leveraged costs relate to activities such as:

• marketing,• corporate finance and accounting,• human resources,• legal,• risk management functions,• internal audit,• corporate debt related costs,

20

Table of Contents

• non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,• intersegment revenues and expenses, and• other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources.Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted Earnings before Interest, Taxes, Depreciation andAmortization ("Adjusted EBITDA"). Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. AdjustedEBITDA, as it relates to operating segments, is presented in conformity with Accounting Standards Codification Topic 280, "Segment Reporting" given that it isreported to the CODM for purposes of allocating resources. Segment asset disclosure is not used by the CODM as a measure of segment performance since thesegment evaluation is driven by revenues and adjusted EBITDA performance. As such, segment assets are not disclosed in the notes to the accompanyingcondensed consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated:

Three months ended September 30, 2019

(In thousands)

Payment Services -

Puerto Rico &Caribbean

Payment Services -

Latin America Merchant

Acquiring, net Business Solutions

Corporate andOther (1) Total

Revenues $ 30,411 $ 20,596 $ 26,436 $ 52,945 $ (11,584) $ 118,804Operating costs and expenses 15,821 11,943 15,978 32,259 8,001 84,002Depreciation and amortization 3,093 2,650 457 3,780 6,992 16,972Non-operating income (expenses) 410 (3,824) 8 67 3,962 623EBITDA 18,093 7,479 10,923 24,533 (8,631) 52,397

Compensation and benefits (2) 284 109 285 549 2,228 3,455

Transaction, refinancing and otherfees (3)

— — — — (372) (372)

Adjusted EBITDA $ 18,377 $ 7,588 $ 11,208 $ 25,082 $ (6,775) $ 55,480

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminationspredominantly reflect the $10.0 million processing fee from the Payments Services - Puerto Rico & Caribbean segment to the Merchant Acquiring segment and intercompany softwaresale and developments of $1.6 million from the Payment Services - Latin America segment charged to the Payment Services - Puerto Rico & Caribbean segment. Corporate and Otherwas impacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico &Caribbean segment; excluding this impact, Corporate and Other Adjusted EBITDA would be $5.2 million.

(2) Primarily represents share-based compensation.(3) Primarily represents the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.

21

Table of Contents

Three months ended September 30, 2018

(In thousands)

Payment Services -

Puerto Rico &Caribbean

Payment Services -

Latin America Merchant

Acquiring, net Business Solutions

Corporate andOther (1) Total

Revenues $ 28,951 $ 18,907 $ 24,486 $ 48,831 $ (9,158) $ 112,017Operating costs and expenses 13,021 18,890 14,160 30,983 2,602 79,656Depreciation and amortization 2,505 2,337 427 3,398 7,121 15,788Non-operating income (expenses) 602 3,834 — 12 (3,080) 1,368EBITDA 19,037 6,188 10,753 21,258 (7,719) 49,517

Compensation and benefits (2) 207 363 196 485 1,117 2,368

Transaction, refinancing and otherfees (3)

— — (1) 1 215 215

Adjusted EBITDA $ 19,244 $ 6,551 $ 10,948 $ 21,744 $ (6,387) $ 52,100

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminationspredominantly reflect the $9.2 million processing fee from the Payments Services - Puerto Rico & Caribbean segment to the Merchant Acquiring segment.

(2) Primarily represents share-based compensation.(3) Primarily the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received and fees and

expenses associated with corporate transactions as defined in the Credit Agreement.

Nine months ended September 30, 2019

(In thousands)

Payment Services -

Puerto Rico &Caribbean

Payment Services -

LatinAmerica

Merchant Acquiring, net

Business Solutions

Corporate andOther (1) Total

Revenues $ 92,910 $ 62,533 $ 79,203 $ 159,492 $ (33,950) $ 360,188Operating costs and expenses 43,666 47,170 45,926 101,128 12,403 250,293Depreciation and amortization 8,476 7,393 1,348 12,113 21,110 50,440Non-operating income (expenses) 1,461 411 39 287 (2,091) 107EBITDA 59,181 23,167 34,664 70,764 (27,334) 160,442

Compensation and benefits (2) 778 448 760 1,632 6,774 10,392

Transaction, refinancing and otherfees (3)

— 2 — — 37 39

Adjusted EBITDA $ 59,959 $ 23,617 $ 35,424 $ 72,396 $ (20,523) $ 170,873

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminationspredominantly reflect the $29.0 million processing fee from the Payments Services - Puerto Rico & Caribbean segment to the Merchant Acquiring segment, intercompany software saleand developments of $4.9 million from the Payment Services - Latin America segment charged to the Payment Services - Puerto Rico & Caribbean segment. Corporate and Other wasimpacted by the intersegment elimination of revenue recognized in the Payment Services - Latin America segment and capitalized in the Payment Services - Puerto Rico & Caribbeansegment; excluding this impact, Corporate and Other Adjusted EBITDA would be $15.6 million.

(2) Primarily represents share-based compensation, other compensation expense and severance payments.(3) Primarily represents the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received and

fees and expenses associated with corporate transactions as defined in the Credit Agreement.

22

Table of Contents

Nine months ended September 30, 2018

(In thousands)

Payment Services -

Puerto Rico &Caribbean

Payment Services -

LatinAmerica

Merchant Acquiring, net

Business Solutions

Corporate andOther (1) Total

Revenues $ 84,162 $ 58,534 $ 73,829 $ 145,985 $ (26,872) $ 335,638Operating costs and expenses 39,084 55,357 41,413 90,349 12,879 239,082Depreciation and amortization 7,230 7,035 1,268 10,437 21,413 47,383Non-operating income (expenses) 1,969 7,048 8 378 (6,913) 2,490EBITDA 54,277 17,260 33,692 66,451 (25,251) 146,429

Compensation and benefits (2) 885 1,080 746 1,609 6,350 10,670

Transaction, refinancing andother fees (3)

(250) — — 1 2,986 2,737

Adjusted EBITDA $ 54,912 $ 18,340 $ 34,438 $ 68,061 $ (15,915) $ 159,836

(1) Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminationspredominantly reflect the $26.9 million processing fee from the Payments Services - Puerto Rico & Caribbean segment to the Merchant Acquiring segment.

(2) Primarily represents share-based compensation, other compensation expense and severance payments.(3) Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement and the elimination of non-cash equity earnings from our 19.99%

equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cash dividends received.

The reconciliation of EBITDA to consolidated net income is as follows:

Three months ended September 30, Nine months ended September 30,

(In thousands) 2019 2018 2019 2018Total EBITDA $ 52,397 $ 49,517 $ 160,442 $ 146,429

Less: Income tax expense 3,720 3,302 10,018 10,349Interest expense, net 6,919 7,352 21,327 22,375Depreciation and amortization 16,972 15,788 50,440 47,383

Net Income $ 24,786 $ 23,075 $ 78,657 $ 66,322

Note 15 – Subsequent Events

On October 23, 2019, the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. Thedividend will be paid on December 6, 2019 to stockholders of record as of the close of business on November 4, 2019. The Board anticipates declaring thisdividend in future quarters on a regular basis; however future declarations of dividends are subject to the Board’s approval and may be adjusted as business needsor market conditions change.

23

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) covers: (i) the results of operations for the three and nine months ended September 30, 2019and 2018 and (ii) the financial condition as of September 30, 2019. You should read the following discussion and analysis in conjunction with the auditedconsolidated financial statements (the “Audited Consolidated Financial Statements”) and related notes for the fiscal year ended December 31, 2018, included inthe Company’s Annual Report on Form 10-K and with the unaudited condensed consolidated financial statements (the “Unaudited Condensed ConsolidatedFinancial Statements”) and related notes appearing elsewhere herein. This MD&A contains forward-looking statements that involve risks and uncertainties. Ouractual results may differ from those indicated in the forward-looking statements. See “Forward-Looking Statements” for a discussion of the risks, uncertaintiesand assumptions associated with these statements.

Except as otherwise indicated or unless the context otherwise requires, (a) the terms “EVERTEC,” “we,” “us,” “our,” “our Company” and “the Company” referto EVERTEC, Inc. and its subsidiaries on a consolidated basis, (b) the term “Holdings” refers to EVERTEC Intermediate Holdings, LLC, but not any of itssubsidiaries and (c) the term “EVERTEC Group” refers to EVERTEC Group, LLC and its predecessor entities and their subsidiaries on a consolidated basis,including the operations of its predecessor entities prior to the Merger (as defined below). EVERTEC Inc.’s subsidiaries include Holdings, EVERTEC Group,EVERTEC Dominicana, SAS, Evertec Chile Holdings SpA (formerly known as Tecnopago SpA), Evertec Chile SpA (formerly known as EFT Group SpA), EvertecChile Global SpA (formerly known as EFT Global Services SpA), Evertec Chile Servicios Profesionales SpA (formerly known as EFT Servicios Profesionales SpA),, EFT Group S.A., Tecnopago España SL, Paytrue S.A., Caleidon, S.A., Evertec Brasil Solutions Informática Ltda. (formerly known as Paytrue SolutionsInformática Ltda.), EVERTEC Panamá, S.A., EVERTEC Costa Rica, S.A. (“EVERTEC CR”), EVERTEC Guatemala, S.A., Evertec Colombia, SAS (formerly knownas Processa, SAS), EVERTEC USA, LLC and EVERTEC México Servicios de Procesamiento, S.A. de C.V. Neither EVERTEC nor Holdings conducts anyoperations other than with respect to its indirect or direct ownership of EVERTEC Group. Executive Summary

EVERTEC is a leading full-service transaction processing business in Latin America and the Caribbean, providing a broad range of merchant acquiring, paymentservices and business process management services. According to the August 2018 Nilson Report, we are one of the largest merchant acquirers in Latin Americabased on total number of transactions and we believe we are the largest merchant acquirer in the Caribbean and Central America. We serve 26 countries in theregion from our base in Puerto Rico. We manage a system of electronic payment networks that process more than two billion transactions annually, and offer acomprehensive suite of services for core bank processing and cash processing in Puerto Rico and technology outsourcing in all the regions we serve. In addition,we own and operate the ATH network, one of the leading debit networks in Latin America. We serve a diversified customer base of leading financial institutions,merchants, corporations and government agencies with “mission-critical” technology solutions that enable them to issue, process and accept transactions securely.We believe our business is well-positioned to continue to expand across the fast-growing Latin American region.

We are differentiated, in part, by our diversified business model, which enables us to provide our varied customer base with a broad range of transaction-processing services from a single source across numerous channels and geographic markets. We believe this capability provides several competitive advantagesthat will enable us to continue to penetrate our existing customer base with complementary new services, win new customers, develop new sales channels and enternew markets. We believe these competitive advantages include:

• Our ability to provide competitive products;• Our ability to provide in one package a range of services that traditionally had to be sourced from different vendors;• Our ability to serve customers with disparate operations in several geographies with technology solutions that enable them to manage their business as

one enterprise; and• Our ability to capture and analyze data across the transaction processing value chain and use that data to provide value-added services that are

differentiated from those offered by pure-play vendors that serve only one portion of the transaction processing value chain (such as only merchantacquiring or payment services).

Our broad suite of services spans the entire transaction processing value chain and includes a range of front-end customer-facing solutions such as the electroniccapture and authorization of transactions at the point-of-sale, as well as back-end support services such as the clearing and settlement of transactions and accountreconciliation for card issuers. These include: (i) merchant acquiring services, which enable point of sales (“POS”) and e-commerce merchants to accept andprocess electronic methods of payment such as debit, credit, prepaid and electronic benefit transfer (“EBT”) cards; (ii) payment processing

24

Table of Contents

services, which enable financial institutions and other issuers to manage, support and facilitate the processing of credit, debit, prepaid, automated teller machines(“ATM”) and EBT card programs; and (iii) business process management solutions, which provide “mission-critical” technology solutions such as core bankprocessing, as well as IT outsourcing and cash management services to financial institutions, corporations and governments. We provide these services throughscalable, end-to-end technology platforms that we manage and operate in-house and that generate significant operating efficiencies that enable us to maximizeprofitability.

We sell and distribute our services primarily through a proprietary direct sales force with established customer relationships. We continue to pursue joint venturesand merchant acquiring alliances. We benefit from an attractive business model, the hallmarks of which are recurring revenue, scalability, significant operatingmargins and moderate capital expenditure requirements. Our revenue is predominantly recurring in nature because of the mission-critical and embedded nature ofthe services we provide. In addition, we generally negotiate multi-year contracts with our customers. We believe our business model should enable us to continueto grow our business organically in the primary markets we serve without significant incremental capital expenditures.

Corporate Background

EVERTEC, Inc. ("EVERTEC", formerly known as Carib Latam Holdings, Inc.) is a Puerto Rico corporation organized in April 2012. Our main operatingsubsidiary, EVERTEC Group, LLC (formerly known as EVERTEC, LLC and EVERTEC, Inc., hereinafter “EVERTEC Group”), was organized in Puerto Rico in1988. EVERTEC Group was formerly a wholly-owned subsidiary of Popular. On September 30, 2010, pursuant to an Agreement and Plan of Merger (as amended,the “Merger Agreement”), AP Carib Holdings, Ltd. (“Apollo”), an affiliate of Apollo Global Management LLC, acquired a 51% indirect ownership interest inEVERTEC Group as part of a merger (the “Merger”) and EVERTEC Group became a wholly-owned subsidiary of Holdings.

On April 17, 2012, EVERTEC Group was converted from a Puerto Rico corporation to a Puerto Rico limited liability company (the “Conversion”) for the purposeof improving its consolidated tax efficiency by taking advantage of changes to the Puerto Rico Internal Revenue Code, as amended (the “PR Code”), that permitlimited liability companies to be treated as partnerships that are pass-through entities for Puerto Rico tax purposes. Concurrent with the Conversion, Holdings,which is our direct subsidiary, was also converted from a Puerto Rico corporation to a Puerto Rico limited liability company. Prior to these conversions,EVERTEC, Inc. was formed in order to act as the new parent company of Holdings and its subsidiaries, including EVERTEC Group. The transactions describedabove in this paragraph are collectively referred to as the “Reorganization.”

Separation from and Key Relationship with Popular

Prior to the Merger on September 30, 2010, EVERTEC Group was 100% owned by Popular, the largest financial institution in the Caribbean, and operatedsubstantially as an independent entity within Popular. After the consummation of the Merger, Popular retained an indirect ownership interest in EVERTEC Groupand is our largest customer. In connection with, and upon consummation of the Merger, EVERTEC Group entered into a 15-year Master Services Agreement (the“MSA”), and several related agreements with Popular. Under the terms of the MSA, Popular agreed to continue to use EVERTEC services on an ongoing andexclusive basis, for the duration of the agreement, on commercial terms consistent with those of our historical relationship. The anticipated negotiation of the MSAextension may result in Popular obtaining significant concessions from us with respect to pricing and other key terms, both in respect of the current term and anyextension of the MSA, particularly as we approach 2025. Additionally, Popular granted us a right of first refusal on the development of certain new financialtechnology products and services for the duration of the MSA.

Factors and Trends Affecting the Results of Our Operations

The ongoing migration from cash and paper methods of payment to electronic payments continues to benefit the transaction-processing industry globally. Webelieve that the penetration of electronic payments in the markets in which we operate is significantly lower relative to the U.S. market, and that this ongoing shiftwill continue to generate substantial growth opportunities for our business. For example, currently the adoption of banking products, including electronicpayments, in the Latin American and Caribbean regions is lower relative to the mature U.S. and European markets. We believe that the unbanked and underbankedpopulation in our markets will continue to shrink, and therefore drive incremental penetration and growth of electronic payments in Puerto Rico and other LatinAmerican regions. We also benefit from the trend of financial institutions and government agencies outsourcing technology systems and processes. Many medium-and small-size institutions in the Latin American markets in which we operate have outdated computer systems and updating these IT legacy systems is financiallyand logistically challenging, which presents a business opportunity for us.

25

Table of Contents

Finally, our financial condition and results of operations are, in part, dependent on the economic and general conditions of the geographies in which we operate.

On June 30, 2016, the U.S. President signed into law PROMESA. PROMESA establishes a fiscal oversight and the Oversight Board comprised of seven votingmembers appointed by the President. The Oversight Board has broad budgetary and financial powers over Puerto Rico’s budget, laws, financial plans andregulations, including the power to approve restructuring agreements with creditors, file petitions for restructuring and reform the electronic system for the taxcollection. The Oversight Board will have ultimate authority in preparing the Puerto Rico government’s budget and any issuance of future debt by the governmentand its instrumentalities. In addition, PROMESA imposes an automatic stay on all litigation against Puerto Rico and its instrumentalities, as well as any otherjudicial or administrative actions or proceedings to enforce or collect claims against the Puerto Rico government. On May 1, 2017, the automatic stayexpired. Promptly after the expiration of the stay, creditors of the Puerto Rico government filed various lawsuits involving defaults on more than $70 billion ofbonds issued by Puerto Rico, having failed to reach a negotiated settlement on such defaults with the Puerto Rico government during the period of the automaticstay. On May 3, 2017, the Oversight Board filed a voluntary petition of relief on behalf of the Commonwealth pursuant to Title III of PROMESA for therestructuring of the Commonwealth’s debt. Subsequently, the Oversight Board filed voluntary petitions of relief pursuant to Title III of PROMESA on behalfcertain public corporations and instrumentalities. Title III is an in-court debt restructuring proceeding similar to protections afforded debtors under Chapter 11 ofthe United States Code (the “Bankruptcy Code”); the Bankruptcy Code is not available to the Commonwealth or its instrumentalities.

As the solution to the Puerto Rican government’s debt crisis remains unclear, we continue to carefully monitor our receivables with the government as well asmonitor general economic trends to understand the impact the crisis has on the economy of Puerto Rico and our card payment volumes. To date our receivableswith the Puerto Rican government and overall payment transaction volumes have not been significantly affected by the debt crisis, however we remain cautious.

Furthermore, as to the macroeconomic trends described above, Management currently estimates that we will continue to experience a revenue attrition in LatinAmerica of approximately $2 million to $3 million for previously disclosed migrations anticipated in 2019. The clients' decisions, which were made prior to 2015,for these anticipated migrations were driven by a variety of historical factors, most importantly customer service experience. Management believes that thesecustomer decisions are unlikely to change, however timing is subject to change based on customer's conversion schedules.

In addition, we are currently negotiating with Popular in connection with a disagreement with respect to certain pricing terms under the MSA. Both parties arenegotiating to find a mutually agreeable resolution. If we are unable to reach an agreement, the parties may pursue the dispute resolution mechanism under theMSA.

Results of Operations

Comparison of the three months ended September 30, 2019 and 2018

Three months ended September 30,

In thousands 2019 2018 Variance 2019 vs. 2018

Revenues $ 118,804 $ 112,017 $ 6,787 6%Operating costs and expenses Cost of revenues, exclusive of depreciation and amortization shownbelow 51,878 49,464 2,414 5%Selling, general and administrative expenses 15,152 14,404 748 5%Depreciation and amortization 16,972 15,788 1,184 7%Total operating costs and expenses 84,002 79,656 4,346 5%

Income from operations $ 34,802 $ 32,361 $ 2,441 8%

Revenues

Total revenues in the third quarter of 2019 increased by $6.8 million or 6% to $118.8 million when compared with the prior year period. Revenue increase in thequarter reflected growth across all segments and included benefits from value added solutions, new managed services and other pricing actions. Additionally,increased revenue was driven by the completion of projects for approximately $2.0 million.

26

Table of Contents

Cost of revenues

Cost of revenues amounted to $51.9 million, an increase of $2.4 million or 5% when compared with the prior year period. The increase is primarily related to anincrease in professional fees driven by programming fees coupled with a slight increase in equipment expenses. These increases were partially offset by a decreasein salaries and compensation mainly driven by deferred salaries in connection with internal software developments, decreased communications expense and lowerbad debt expense.

Selling, general and administrative

Selling, general and administrative expenses in the third quarter of 2019 increased by $0.7 million or 5% when compared with the same quarter in 2018. Theincrease is primarily related to an increase in salaries and compensation as the prior year includes a significant reversal in share-based compensation expense inconnection with a former executive's forfeiture for unvested RSUs, partially offset by lower professional fees and other operating expenses.

Depreciation and amortization

Depreciation and amortization expense amounted to $17.0 million, an increase of $1.2 million or 7% when compared with the prior year period. The increase isrelated to both higher depreciation and amortization and includes impact from development projects going into production and purchases of data processingequipment.

Non-operating income (expenses)

Three months ended September 30,

In thousands 2019 2018 Variance 2019 vs. 2018

Interest income $ 348 $ 205 $ 143 70 %Interest expense (7,267) (7,557) 290 (4)%Earnings of equity method investment 371 238 133 56 %Other income (expenses) 252 1,130 (878) (78)%

Total non-operating expenses $ (6,296) $ (5,984) $ (312) 5 %

Non-operating expenses increased by $0.3 million to $6.3 million when compared with the prior year period. The increase is mainly related to a $0.9 milliondecrease in Other income (expenses) due to higher foreign exchange losses relative to the same quarter in 2018.

Income tax expense

Three months ended September 30,

In thousands 2019 2018 Variance 2019 vs. 2018Income tax expense $ 3,720 $ 3,302 $ 418 13%

Income tax expense amounted to $3.7 million, an increase of $0.4 million when compared with the prior year quarterly period. The effective tax rate for the quarterwas 13.0%, compared with 12.5% in the 2018 period. The increase in effective tax rate is primarily driven by an increase in foreign taxes in connection with theincreased intercompany transactions. This increase was partially offset by a decrease in Puerto Rico taxes due to a shift in fully taxable operations to partiallytaxable operations and a tax benefit recorded during the period related to a decrease in effective tax rate for certain activities.

27

Table of Contents

Comparison of the nine months ended September 30, 2019 and 2018

Nine months ended September 30,

In thousands 2019 2018 Variance 2019 vs. 2018

Revenues $ 360,188 $ 335,638 $ 24,550 7 %Operating costs and expenses Cost of revenues, exclusive of depreciation and amortization shownbelow 154,498 146,015 8,483 6 %Selling, general and administrative expenses 45,355 45,684 (329) (1)%Depreciation and amortization 50,440 47,383 3,057 6 %Total operating costs and expenses 250,293 239,082 11,211 5 %

Income from operations $ 109,895 $ 96,556 $ 13,339 14 %

Revenues

Total revenues for the nine months ended September 30, 2019 amounted to $360.2 million, an increase of $24.6 million or 7%. Revenue benefited from the impactof a higher net spread driven by pricing actions, elevated sales volumes in Puerto Rico, higher core banking transactions and an increase in fees generated bynetwork services related to new managed services projects. Additionally, revenue growth was impacted by one-time revenue related to an electronic benefitscontract of approximately $2.7 million and revenue from hardware sales and the completion of several projects of approximately $4.5 million.

Cost of revenues

Cost of revenues amounted to $154.5 million, an increase of $8.5 million or 6% when compared with the prior year period. The increase is primarily related to anincrease in cost of sales associated with the increased hardware sales coupled with higher professional fees and equipment expenses, partially offset by a decreasein salaries and compensation for the same reason explained above for the quarter.

Selling, general and administrative

Selling, general and administrative expenses in the nine months ended September 30, 2019 decreased by $0.3 million or 1% to $45.4 million when compared withthe same period in 2018. The decrease is mainly driven by lower professional services as the prior year included fees in connection with due diligence for apotential transaction that the Company decided not to pursue, almost entirely offset by an increase in salaries and compensation.

Depreciation and amortization

Depreciation and amortization expense amounted to $50.4 million, an increase of $3.1 million when compared with the prior year. The increase is due to the samereasons explained above for the quarter.

Non-operating income (expenses)

Nine months ended September 30,

In thousands 2019 2018 Variance 2019 vs. 2018

Interest income $ 864 $ 526 $ 338 64 %Interest expense (22,191) (22,901) $ 710 (3)%Earnings of equity method investment 726 612 $ 114 19 %Other (expenses) income (619) 1,878 $ (2,497) (133)%

Total non-operating expenses $ (21,220) $ (19,885) $ (1,335) 7 %

28

Table of Contents

Non-operating expenses increased by $1.3 million to $21.2 million when compared with the prior year period. The increase is driven by a decrease in Other income(expenses) of $2.5 million due to an increase in foreign exchange losses, partially offset by a decrease in interest expense as a result of improved rates from thedebt refinancing completed in the fourth quarter of the prior year.

Income tax expense

Nine months ended September 30,

In thousands 2019 2018 Variance 2019 vs. 2018Income tax expense $ 10,018 $ 10,349 $ (331) (3)%

Income tax expense amounted to $10.0 million for the nine months ended September 30, 2019, a decrease of $0.3 million when compared with the prior yearperiod. The effective tax rate for the period was 11.3% compared with 13.5% in the prior year. The decrease in the effective tax rate is a result of a decrease inPuerto Rico taxes for the same reasons explained above for the quarter coupled with a discrete item in LATAM, partially offset by an increase in foreign taxes forintercompany transactions.

Segment Results of Operations

The Company operates in four business segments: Payment Services - Puerto Rico & Caribbean, Payment Services - Latin America, Merchant Acquiring, andBusiness Solutions.

The Payment Services - Puerto Rico & Caribbean segment revenues are comprised of revenues related to providing access to the ATH debit network and othercard networks to financial institutions, including related services such as authorization, processing, management and recording of ATM and point of sale ("POS")transactions, and ATM management and monitoring. The segment revenues also include revenues from card processing services (such as credit and debit cardprocessing, authorization and settlement and fraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billingproducts for merchants, businesses and financial institutions) and EBT (which principally consist of services to the government of Puerto Rico for the delivery ofbenefits to participants). For ATH debit network and processing services, revenues are primarily driven by the number of transactions processed. Revenues arederived primarily from network fees, transaction switching and processing fees, and the leasing of POS devices. For card issuer processing, revenues are primarilydependent upon the number of cardholder accounts on file, transactions and authorizations processed, the number of cards embossed and other processing services.For EBT services, revenues are primarily derived from the number of beneficiaries on file.

The Payment Services - Latin America segment revenues consist of revenues related to providing access to the ATH network and other card networks to financialinstitutions, including related services such as authorization, processing, management and recording of ATM and POS transactions, and ATM management andmonitoring. The segment revenues also include revenues from card processing services (such as credit and debit card processing, authorization and settlement andfraud monitoring and control to debit or credit issuers), payment processing services (such as payment and billing products for merchants, businesses and financialinstitutions), as well as licensed software solutions for risk and fraud management and card payment processing. For ATH debit network and processing services,revenues are primarily driven by the number of transactions processed. Revenues are derived primarily from network fees, transaction switching and processingfees, and the leasing of POS devices. For card issuer processing, revenues are primarily dependent upon the number of cardholder accounts on file, transactions andauthorizations processed, the number of cards embossed, and other processing services.

The Merchant Acquiring segment consists of revenues from services that allow merchants to accept electronic methods of payment. In the Merchant Acquiringsegment, revenues include a discount fee and membership fees charged to merchants, debit network fees and rental fees from POS devices and other equipment,net of credit card interchange and assessment fees charged by credit cards associations (such as VISA or MasterCard) or payment networks. The discount fee isgenerally a percentage of the transaction value. EVERTEC also charges merchants for other services that are unrelated to the number of transactions or thetransaction value.

The Business Solutions segment consists of revenues from a full suite of business process management solutions in various product areas such as core bankprocessing, network managed services, IT professional services, business process outsourcing, item processing, cash processing, and fulfillment. Core bankprocessing and network services revenues are derived in part from a recurrent fixed fee and from fees based on the number of accounts on file (i.e. savings orchecking accounts, loans, etc.) or computer resources utilized. Revenues from other processing services within the Business Solutions segment are generally

29

Table of Contents

volume-based and depend on factors such as the number of accounts processed. In addition, EVERTEC is a reseller of hardware and software products and theseresale transactions are generally non-recurring.

In addition to the four operating segments described above, Management identified certain functional cost areas that operate independently and do not constitutebusinesses in themselves. These areas could neither be concluded as operating segments nor could they be combined with any other operating segments. Therefore,these areas are aggregated and presented as “Corporate and Other” category in the financial statements alongside the operating segments. The Corporate and othercategory consists of corporate overhead expenses, intersegment eliminations, certain leveraged activities and other non-operating and miscellaneous expenses thatare not included in the operating segments. The overhead and leveraged costs relate to activities such as:

• marketing,• corporate finance and accounting,• human resources,• legal,• risk management functions,• internal audit,• corporate debt related costs,• non-operating depreciation and amortization expenses generated as a result of merger and acquisition activity,• intersegment revenues and expenses, and• other non-recurring fees and expenses that are not considered when management evaluates financial performance at a segment level

The Chief Operating Decision Maker ("CODM") reviews the operating segments separate financial information to assess performance and to allocate resources.Management evaluates the operating results of each of its operating segments based upon revenues and Adjusted Earnings before Interest, Taxes, Depreciation andAmortization ("Adjusted EBITDA"). Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. AdjustedEBITDA, as it relates to operating segments, is presented in conformity with Accounting Standards Codification Topic 280, "Segment Reporting" given that it isreported to the CODM for purposes of allocating resources. Segment asset disclosure is not used by the CODM as a measure of segment performance since thesegment evaluation is driven by revenues and adjusted EBITDA performance. As such, segment assets are not disclosed in the notes to the accompanyingcondensed consolidated financial statements.

The following tables set forth information about the Company’s operations by its four business segments for the periods indicated below.

Comparison of the three months ended September 30, 2019 and 2018

Payment Services - Puerto Rico & Caribbean

Three months ended September 30,

In thousands 2019 2018Revenues $30,411 $28,951Adjusted EBITDA 18,377 19,244

Payment Services - Puerto Rico & Caribbean segment revenue increased by $1.5 million to $30.4 million when compared with the 2018 period. The increase inrevenues was driven by higher transaction volumes for POS and ATM coupled with new transaction fees, partially offset by delays in the renewal of a governmentcontract. Adjusted EBITDA decreased by $0.9 million to $18.4 million primarily due to an increase in operating expenses, mainly professional services andprogramming expenses, that entirely offset the increase in revenue and a decrease in bad debt expenses recorded in the prior year period.

30

Table of Contents

Payment Services - Latin America

Three months ended September 30,

In thousands 2019 2018Revenues $20,596 $18,907Adjusted EBITDA 7,588 6,551

Payment Services - Latin America segment revenue increased $1.7 million to $20.6 million driven mainly by higher intercompany software sale and developmentrevenues from the Payment Services - Latin America segment to the Payment Services Puerto Rico & Caribbean segment, partially offset by anticipated clientattrition. Adjusted EBITDA increased $1.0 million when compared to the prior year period primarily due to the revenue associated to intercompany services andlicense sales, partially offset by the impact of foreign exchange losses.

Merchant Acquiring

Three months ended September 30,

In thousands 2019 2018Revenues $26,436 $24,486Adjusted EBITDA 11,208 10,948

Merchant Acquiring segment revenue increased to $26.4 million driven primarily by pricing actions impacting both spread and transactional revenue, partiallyoffset by a lower average ticket and sales volume. Adjusted EBITDA increased $0.3 million as a result of the increased revenues, partially offset by higher internalprocessing costs due to an increase in transactions.

Business Solutions

Three months ended September 30,

In thousands 2019 2018Revenues $52,945 $48,831Adjusted EBITDA 25,082 21,744

Business Solutions segment revenue increased $4.1 million to $52.9 million. Revenue growth in the segment was driven by new services for both Popular and theGovernment of Puerto Rico and other projects completed in the quarter representing revenue of $2.0 million. Adjusted EBITDA increased $3.3 million to $25.1million when compared with the prior year as a result of the higher revenues partially offset by an increase in operating expenses.

Comparison of the nine months ended September 30, 2019 and 2018

Payment Services - Puerto Rico & Caribbean

Nine months ended September 30,

In thousands 2019 2018Revenues $92,910 $84,162Adjusted EBITDA 59,959 54,912

Payment Services - Puerto Rico & Caribbean revenues increased by $8.7 million to $92.9 million. The increase in revenues was driven by the same reasonsexplained above for the quarter coupled with one-time revenue related to an electronic benefits contract of approximately $2.7 million. Adjusted EBITDAincreased by $5.0 million mainly as a result of the increase in revenues, partially offset by higher operating expenses.

31

Table of Contents

Payment Services - Latin America

Nine months ended September 30,

In thousands 2019 2018Revenues $62,533 $58,534Adjusted EBITDA 23,617 18,340

Payment services - Latin America revenue increased $4.0 million to $62.5 million driven by higher intercompany software sale and development revenues from thePayment Services - Latin America segment to the Payment Services Puerto Rico & Caribbean segment, partially offset by one-time sales and revenue fromcompleted implementations in the prior year that did not recur and by the impact from client attrition. Adjusted EBITDA increased $5.3 million when compared tothe prior year period due to higher revenue associated to intercompany services and licenses sold to Payment Services - Puerto Rico & Caribbean segment, coupledwith a decrease in operating expenses.Merchant Acquiring

Nine months ended September 30,

In thousands 2019 2018Revenues $79,203 $73,829Adjusted EBITDA 35,424 34,438

Merchant acquiring revenues increased $5.4 million to $79.2 million when compared with the prior year period, driven by the same reasons above explained forthe quarter coupled with electronic benefit disaster relief recovery funding that ended in March 2019. Increases in transactional fees contributed to higher netspreads versus the same period in the previous year. Adjusted EBITDA increased $1.0 million reflecting the increased revenues, partially offset by highertransaction processing charges and a lower average ticket.

Business Solutions

Nine months ended September 30,

In thousands 2019 2018Revenues $159,492 $145,985Adjusted EBITDA 72,396 68,061

Business solutions revenue increased by $13.5 million to $159.5 million when compared with the prior year mainly driven by the same reasons as in the quarterdescribed above. These revenue increases were coupled with revenue from incremental managed services from the Government of Puerto Rico. Adjusted EBITDAincreased $4.3 million as a result of the increase in revenue, partially offset by higher costs of sales and costs incurred related to support and maintenance hours forBusiness Solutions applications. Additionally, the Company incurred in higher maintenance expenses related to infrastructure supporting the Business Solutionssegment as we continue to replace obsolete assets.

Liquidity and Capital Resources

Our principal source of liquidity is cash generated from operations, and our primary liquidity requirements are the funding of capital expenditures, working capitalneeds and acquisitions. We also have a $125.0 million Revolving Facility, of which $116.9 million was available as of September 30, 2019. The Company issuesletters of credit against our Revolving Facility which reduce our availability of funds to be drawn.

At September 30, 2019, we had cash and cash equivalents of $102.5 million, of which $55.9 million resides in our subsidiaries located outside of Puerto Rico forpurposes of (i) funding the respective subsidiary’s current business operations and (ii) funding potential future investment outside of Puerto Rico. We intend toindefinitely reinvest these funds outside of Puerto Rico, and based on our liquidity forecast, we will not need to repatriate this cash to fund the Puerto Ricooperations or to meet debt-service obligations. However, if in the future we determine that we no longer need to maintain cash balances within our foreignsubsidiaries, we may elect to distribute such cash to the Company in Puerto Rico. Distributions from the foreign

32

Table of Contents

subsidiaries to Puerto Rico may be subject to tax withholding and other tax consequences. Additionally, our credit agreement imposes certain restrictions on thedistribution of dividends from subsidiaries.

Our primary use of cash is for operating expenses, working capital requirements, capital expenditures, dividend payments, share repurchases, debt service,acquisitions and other transactions as opportunities present themselves.

Based on our current level of operations, we believe our cash flows from operations and the available secured Revolving Credit Facility will be adequate to meetour liquidity needs for the next twelve months. However, our ability to fund future operating expenses, dividend payments, capital expenditures, mergers andacquisitions, and our ability to make scheduled payments of interest, to pay principal on or refinance our indebtedness and to satisfy any other of our present orfuture debt obligations will depend on our future operating performance, which may be affected by general economic, financial and other factors beyond ourcontrol.

Nine months ended September 30,

(In thousands) 2019 2018

Cash provided by operating activities $ 136,167 $ 128,443Cash used in investing activities (49,862) (24,990)Cash used in financing activities (57,117) (59,824)

Increase in cash, cash equivalents and restricted cash $ 29,188 $ 43,629

Net cash provided by operating activities for the nine months ended September 30, 2019 was $136.2 million compared with cash provided by operating activitiesof $128.4 million for the corresponding 2018 period. The $7.7 million increase in cash provided by operating activities is primarily driven by higher net incomecoupled with more cash received from accounts receivable.

Net cash used in investing activities for the nine months ended September 30, 2019 was $49.9 million compared with $25.0 million for the corresponding period in2018. The $24.9 million increase is attributable to increases in capital expenditures.

Net cash used in financing activities for the nine months ended September 30, 2019 was $57.1 million compared with $59.8 million for the corresponding 2018period. The $2.7 million decrease was mainly related to a $12.0 million paydown in the prior year on the Revolving Facility, coupled with a $30.7 million decreasein cash used to paydown long-term debt. This decrease was partially offset by cash dividends paid amounting to $10.8 million and cash used for repurchases ofcommon stock of $28.4 million, compared with $3.6 million in dividends paid in the prior year and no cash used for stock repurchases, and a $4.2 million increasein cash used for payment of statutory withholding taxes for share-based compensation.

Capital Resources

Our principal capital expenditures are for hardware and computer software (purchased and internally developed) and additions to property and equipment. Weinvested approximately $50.0 million and $25.0 million for the nine months ended September 30, 2019 and 2018, respectively. Capital expenditures are expectedto be funded by cash flow from operations and, if necessary, borrowings under our Revolving Facility. We expect capital expenditures to be in a range of $50million to $55 million in 2019.

Dividend Payments

On February 15, 2019 , April 25, 2019 and July 25, 2019, the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstandingshares of common stock, which was paid on March 22, 2019, June 7, 2019 and September 6, 2019, respectively, to stockholders of record as of the close ofbusiness on February 26, 2019, May 6, 2019 and August 5, 2019, respectively.

On October 23, 2019, the Board declared a regular quarterly cash dividend of $0.05 per share on the Company’s outstanding shares of common stock. Thedividend will be paid on December 6, 2019, to stockholders of record as of the close of business on November 4, 2019. Any declaration and payment of futuredividends to holders of our common stock will be at the discretion of our Board and will depend on many factors, including our financial condition, earnings,available cash, business opportunities, legal requirements, restrictions in our debt agreements and other contracts, capital requirements, level of indebtedness andother factors that our Board deems relevant.

33

Table of Contents

Financial Obligations

Secured Credit Facilities

On November 27, 2018, EVERTEC and EVERTEC Group (“Borrower”) entered into a credit agreement governing the secured credit facilities, consisting of a$220.0 million term loan A facility that matures on November 27, 2023 "2023 Term A"), a $325.0 million term loan B facility that matures on November 27, 2024("2024 Term B") and a $125.0 million revolving credit facility (the "Revolving Facility") that matures on November 27, 2023, with a syndicate of lenders andBank of America, N.A. (“Bank of America”), as administrative agent, collateral agent, swingline lender and line of credit issuer (collectively the “2018 CreditAgreement”).

The unpaid principal balance at September 30, 2019 of the 2023 Term A Loan and the 2024 Term B Loan was $211.8 million and $322.6 million, respectively.The additional borrowing capacity for the Revolving Facility at September 30, 2019 was $116.9 million. The Company issues letters of credit against theRevolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

Notes payable

In May 2016, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $0.7 million to purchase software. As of September 30,2019 and December 31, 2018, the outstanding principal balance of the note payable was $0.2 million and $0.3 million, respectively. The current portion of thisnote is recorded as part of accounts payable and the long-term portion is included in other long-term liabilities.

In January 2019, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $10.0 million to purchase data processing equipment andmaintenance. As of September 30, 2019, the outstanding principal balance of the note payable was $2.5 million, recorded as part of accounts payable.

Interest Rate Swaps

At September 30, 2019, the Company has the following interest rate swap agreements converting a portion of the interest rate exposure on the Company's Term BLoan from variable to fixed:

Swap Agreement Effective date Maturity Date Notional Amount Variable Rate Fixed Rate

2015 Swap January 2017 April 2020 $200 million 1-month LIBOR 1.9225%2018 Swap April 2020 November 2024 $250 million 1-month LIBOR 2.89%

The Company has accounted for these transactions as cash flow hedges.

At September 30, 2019 and December 31, 2018, the carrying amount of the derivatives on the Company’s balance sheets is as follows:

(In thousands) September 30, 2019 December 31, 2018

Other long-term assets $ — $ 1,683Other long-term liabilities $ 16,687 $ 4,059

During the nine months ended September 30, 2019, the Company reclassified gains of $0.7 million from accumulated other comprehensive loss into incomethrough interest expense. Based on current LIBOR rates, the Company expects to reclassify gains of $1.1 million from accumulated other comprehensive loss intoincome through interest expense over the next 12 months. Refer to Note 6 for tabular disclosure of the fair value of derivatives and to Note 7 for tabular disclosureof losses recorded on cash flow hedging activities.

The cash flow hedge is considered highly effective.

Covenant Compliance

34

Table of Contents

As of September 30, 2019, the secured leverage ratio was 2.12 to 1.00. As of the date of filing of this Form 10-Q, no event has occurred that constitutes an Event ofDefault or Default.

Net Income Reconciliation to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share (Non-GAAP Measures)

We define “EBITDA” as earnings before interest, taxes, depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted to excludeunusual items and other adjustments described below. Adjusted EBITDA by segment is reported to the chief operating decision maker for purposes of makingdecisions about allocating resources to the segments and assessing their performance. For this reason Adjusted EBITDA, as it relates to our segments, is presentedin conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under theSecurities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. We define “Adjusted Net Income” as net income adjusted to excludeunusual items and other adjustments described below. We define “Adjusted Earnings per common share” as Adjusted Net Income divided by diluted sharesoutstanding.

We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance and believe they are frequently usedby securities analysts, investors and other interested parties in the evaluation of ourselves and other companies in our industry. In addition, our presentation ofAdjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the senior secured credit facilities in testing EVERTECGroup’s compliance with covenants therein such as the senior secured leverage ratio. We use Adjusted Net Income to measure our overall profitability because webelieve better reflects our comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result ofthe Merger. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that inthe future we may incur expenses such as those excluded in calculating them. Further, our presentation of these measures should not be construed as an inferencethat our future operating results will not be affected by unusual or nonrecurring items.

Some of the limitations of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted earnings per common share are as follows:

• they do not reflect cash outlays for capital expenditures or future contractual commitments;• they do not reflect changes in, or cash requirements for, working capital;• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and

EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements;• in the case of EBITDA and Adjusted EBITDA, they do not reflect interest expense, or the cash requirements necessary to service interest, or principal

payments, on indebtedness;• in the case of EBITDA and Adjusted EBITDA, they do not reflect income tax expense or the cash necessary to pay income taxes; and• other companies, including other companies in our industry, may not use EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings per

common share or may calculate EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share differently than aspresented in this Report, limiting their usefulness as a comparative measure.

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share are not measurements of liquidity or financial performance underGAAP. You should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share as alternatives to cash flows fromoperating activities or any other performance measures determined in accordance with GAAP, as an indicator of cash flows, as a measure of liquidity or as analternative to operating or net income determined in accordance with GAAP.

A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share is provided below:

35

Table of Contents

Three months ended September 30, Nine months ended September 30, Twelve months

ended

(Dollar amounts in thousands, except per share information) 2019 2018 2019 2018 September 30, 2019

Net income $ 24,786 $ 23,075 $ 78,657 $ 66,322 $ 98,904Income tax expense 3,720 3,302 10,018 10,349 12,265Interest expense, net 6,919 7,352 21,327 22,375 28,209Depreciation and amortization 16,972 15,788 50,440 47,383 66,124

EBITDA 52,397 49,517 160,442 146,429 205,502Equity income (1) (372) (238) (241) (179) (321)Compensation and benefits (2) 3,455 2,368 10,392 10,670 13,381Transaction, refinancing and other fees (3) — 453 280 2,916 4,934

Adjusted EBITDA 55,480 52,100 170,873 159,836 223,496Operating depreciation and amortization (4) (8,673) (7,365) (25,516) (21,909) (32,815)Cash interest expense, net (5) (6,644) (6,473) (20,774) (19,396) (27,481)Income tax expense (6) (5,509) (4,558) (15,454) (15,492) (19,476)Non-controlling interest (7) (63) (121) (287) (385) (374)

Adjusted net income $ 34,591 $ 33,583 $ 108,842 $ 102,654 $ 143,350

Net income per common share (GAAP): Diluted $ 0.34 $ 0.31 $ 1.07 $ 0.89

Adjusted Earnings per common share (Non-GAAP): Diluted $ 0.47 $ 0.45 $ 1.48 $ 1.38

Shares used in computing adjusted earnings percommon share:

Diluted 73,314,704 74,657,100 73,530,865 74,123,431

1) Represents the elimination of non-cash equity earnings from our 19.99% equity investment in Consorcio de Tarjetas Dominicanas S.A., net of cashdividends received.

2) Primarily represents share-based compensation of $3.5 million and $2.4 million for the quarters ended September 30, 2019 and 2018, respectively.Primarily represents share-based compensation and other compensation expense of $10.2 million and $9.7 million for the nine months ended September30, 2019 and 2018 and severance payments of $0.2 million and $1.0 million for the same periods, respectively.

3) Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, recorded as part of selling, general andadministrative expenses and cost of revenues.

4) Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity.5) Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to

exclude non-cash amortization of the debt issue costs, premium and accretion of discount.6) Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discreet items.7) Represents the 35% non-controlling equity interest in Evertec Colombia, net of amortization for intangibles created as part of the purchase.

Off Balance Sheet Arrangements

In the ordinary course of business the Company may enter into commercial commitments. With the exception of the letters of credit issued against the RevolvingFacility which reduce the additional borrowing capacity of the Revolving Facility, as of September 30, 2019, the Company did not have any off balance sheetitems.

Seasonality

Our payment businesses generally experience moderate increased activity during the traditional holiday shopping periods and around other nationally recognizedholidays, which follow consumer spending patterns.

36

Table of Contents

Effect of Inflation

While inflationary increases in certain input costs, such as occupancy, labor and benefits, and general administrative costs, have an impact on our operating results,inflation has had minimal net effect on our operating results during the last three years as overall inflation has been offset by increased selling process and costreduction actions. We cannot assure you, however, that we will not be affected by general inflation in the future.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks arising from our normal business activities. These market risks principally involve the possibility of changes in interest rates thatwill adversely affect the value of our financial assets and liabilities or future cash flows and earnings. Market risk is the potential loss arising from adverse changesin market rates and prices.

Interest rate risks

We issued floating-rate debt which is subject to fluctuations in interest rates. Our secured credit facilities accrue interest at variable rates and only the 2024 Term Bis subject to a floor or a minimum rate. A 100 basis point increase in interest rates over our floor(s) on our debt balances outstanding as of September 30, 2019,under the secured credit facilities, would increase our annual interest expense by approximately $3.3 million. The impact on future interest expense as a result offuture changes in interest rates will depend largely on the gross amount of our borrowings at that time.

In December 2015 and December 2018, we entered into interest rate swap agreements which convert a portion of our outstanding variable rate debt to fixed.

The interest rate swap exposes us to credit risk in the event that the counterparty to the swap agreement does not or cannot meet its obligations. The notionalamount is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The loss would be limited to the amount thatwould have been received, if any, over the remaining life of the swap. The counterparty to the swap is a major US based financial institution and we expect thecounterparty to be able to perform its obligations under the swap. We use derivative financial instruments for hedging purposes only and not for trading orspeculative purposes

See Note 5 of the Unaudited Condensed Consolidated Financial Statements for additional information related to the senior secured credit facilities.

Foreign exchange risk

We conduct business in certain countries in Latin America. Some of this business is conducted in the countries’ local currencies. The resulting foreign currencytranslation adjustments, from operations for which the functional currency is other than the U.S. dollar, are reported in accumulated other comprehensive loss inthe unaudited condensed consolidated balance sheets, except for highly inflationary environments in which the effects would be included in other operating incomein the condensed consolidated statements of income and comprehensive income. At September 30, 2019, the Company had $17.9 million in an unfavorable foreigncurrency translation adjustment as part of accumulated other comprehensive loss compared with an unfavorable foreign currency translation adjustment of $21.6million at December 31, 2018.

37

Table of Contents

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company, under the direction of the Chief Executive Officer and the Chief Financial Officer, has established disclosure controls and procedures as defined inRule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the Chief Executive Officer and ChiefFinancial Officer have concluded that as of September 30, 2019, the Company’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a -15(f) and 15d-15(f) under theExchange Act) that occurred during the fiscal quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, theCompany’s internal control over financial reporting.

38

Table of Contents

PART II. OTHER INFORMATIONItem 1. Legal Proceedings

We are defendants in various lawsuits or arbitration proceedings arising in the ordinary course of business. Management believes, based on the opinion of legalcounsel and other factors, that the aggregated liabilities, if any, arising from such actions will not have a material adverse effect on the financial condition, resultsof operations and the cash flows of the Company.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed under Item 1A. of the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2018.

The risks described in our Annual Report on Form 10-K for the year ended December 31, 2018 are not the only risks facing us. Additional risks and uncertaintiesnot currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes repurchases of the Company’s common stock in the three months period ended September 30, 2019:

Total number of

shares Average price paid Total number of shares

purchased as part of a publicly Approximate dollar value of

shares that may yet be purchased

Period purchased per share announced program (1) under the program

7/1/2019-7/31/2019 8,020 $ 30.920 8,020 9/1/2019-9/30/2019 100 30.970 100

Total 8,120 $ 30.920 8,120 $ 33,898,048

(1) On February 17, 2016, the Company announced that its Board of Directors approved an increase and extension to the current stock repurchase program,

authorizing the purchase of up to $120 million of the Company’s common stock and extended the expiration to December 31, 2017. On November 2, 2017,the Company's Board of Directors approved an extension to the expiration date of the current stock repurchase program to December 31, 2020.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

39

Table of Contents

Item 6. Exhibits

10.1* Form of Indemnification Agreement by and among EVERTEC, Inc. and its directors.31.1* CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2* CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1** CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2** CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL**Instance document - the instance document does not appear in the Interactive Data File because itsXBRL tags are embedded within the Inline XBRL document.

101.SCH XBRL** Taxonomy Extension Schema101.CAL XBRL** Taxonomy Extension Calculation Linkbase101.DEF XBRL** Taxonomy Extension Definition Linkbase101.LAB XBRL** Taxonomy Extension Label Linkbase101.PRE XBRL** Taxonomy Extension Presentation Linkbase

* Filed herewith.** Furnished herewith.+ This exhibit is a management contract or a compensatory plan or arrangement.

40

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersignedhereunto duly authorized.

EVERTEC, Inc.(Registrant)

Date: October 31, 2019 By: /s/ Morgan Schuessler

Morgan Schuessler Chief Executive Officer

Date: October 31, 2019 By: /s/ Joaquin A. Castrillo-Salgado

Joaquin A. Castrillo-SalgadoChief Financial Officer (Principal Financial and Accounting Officer)

41

EXHIBIT 10.1

DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT

THIS DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of this [__] day of October, 2019 (the “EffectiveDate”), by and between EVERTEC, Inc., a Puerto Rico corporation (the “Company”), and the indemnitee named on the signature page hereto (the “Indemnitee”).

RECITALS

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals to act as directors and officers;

WHEREAS, the Company understands that, in order to attract and retain desirable directors and officers, the Company must provide such persons with adequateprotection through indemnification against risks, expenses, claims and actions against them arising out of their service to, and activities on behalf of, the Company;

WHEREAS, the Company’s certificate of incorporation and bylaws each require that the Company indemnify the Company’s directors and officers to the fullestextent authorized by the General Corporations Law of the Commonwealth of Puerto Rico of 2009, as amended (“General Corporations Law”), under which theCompany is incorporated, and such certificate of incorporation and bylaws expressly provide that the indemnification provided therein is not exclusive andcontemplate that the Company may enter into separate agreements with its directors, officers and other persons to set forth specific indemnification provisions;

WHEREAS, in light of the fact that the certificate of incorporation and bylaws of the Company are subject to change and do not contain all the provisions andprotections set forth in this Agreement, the Company has determined that the Indemnitee and other directors and officers of the Company may not be willing toserve or continue to serve in such capacities without additional protection;

WHEREAS, the Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company, as the case may be, andhas proffered this Agreement to the Indemnitee as an additional inducement to serve in such capacity; and

WHEREAS, the Indemnitee is willing to serve, or to continue to serve, as a director or officer of the Company, as the case may be, if the Indemnitee is furnishedthe indemnity provided for herein by the Company.

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, and for other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the Company and the Indemnitee do hereby covenant and agree as follows:

1. Definitions.

(a) “Change in Control” means, and shall be deemed to have occurred if, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”)), other than (x) a trustee or other fiduciary holding securities under an employee benefit plan ofthe Company acting in such capacity or (y) a corporation owned directly or indirectly by the stockholders of the Company in substantially the sameproportions as their ownership of stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly orindirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s thenoutstanding voting stock, (ii) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), (x)individuals who at the beginning of such period constitute the Board of Directors of the Company (the “Board”) and (y) any new director nominated by aPrincipal Stockholder pursuant to the Stockholder Agreement, cease for any reason to constitute a majority thereof, (iii) the stockholders of the Companyapprove a merger or consolidation of the Company with any other corporation other than a merger or consolidation that would result in the voting stock ofthe Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting stock ofthe surviving entity) at least fifty percent (50%) of the total voting power represented by the voting stock of the Company or such surviving

1

entity outstanding immediately after such merger or consolidation or with the power to elect at least a majority of the board of directors or othergoverning body of the surviving entity, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreementfor the sale or disposition by the Company (in one transaction or a series of related transactions) of all or substantially all of the Company’s assets.

(b) “Corporate Status” describes the status of a person who is serving or has served (i) as a director or officer of the Company, (ii) as a Company employee ina fiduciary capacity with respect to an employee benefit plan of the Company or (iii) as a director or officer of any other Entity at the request of theCompany. For purposes of subsection (iii) of this Section (b), a director or officer of the Company who is serving or has served as a director or officer of aSubsidiary shall be deemed to be serving at the request of the Company.

(c) “Disinterested Director” means a director of the Company who (i) is not and was not a party to the Proceeding in respect of which indemnification issought by the Indemnitee and (ii) is determined to be “disinterested” under applicable Puerto Rico law.

(d) “Entity” shall mean any corporation, partnership (general or limited), limited liability company, joint venture, trust, employee benefit plan, company,foundation, non-profit entity, association, organization or other legal entity, other than the Company.

(e) “Expenses” shall be construed broadly to mean all direct and indirect fees of any type or nature whatsoever, costs and expenses incurred in connectionwith any Proceeding, including, without limitation, all attorneys’ fees and costs, disbursements and retainers (including, without limitation, any fees,disbursements and retainers incurred by the Indemnitee pursuant to Section 11 hereof), fees and disbursements of experts, witnesses, private investigatorsand professional advisors (including, without limitation, accountants and investment bankers), court costs, filing fees, transcript costs, fees of experts,travel expenses, duplicating, imaging, printing and binding costs, telephone and fax transmission charges, computer legal research costs, postage, deliveryservice fees, secretarial services, fees and expenses of third party vendors; the premium, security for, and other costs associated with any bond (includingsupersedeas or appeal bonds, injunction bonds, cost bonds, appraisal bonds or their equivalents), in each case incurred in connection with prosecuting,defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding (including,without limitation, any judicial or arbitration Proceeding brought to enforce the Indemnitee’s rights under, or to recover damages for breach of, thisAgreement), as well as all other “expenses” within the meaning of that term as used in Section 4.08 (14 L.P.R.A. § 3568) of the General CorporationsLaw, any federal, state, local, Commonwealth or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments underthis Agreement, Employment Retirement Income Security Act of 1974 (ERISA) excise taxes and penalties, and all other disbursements or expenses oftypes customarily and reasonably incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparingto be a witness in, or otherwise participating in, actions, suits, or proceedings similar to or of the same type as the Proceeding with respect to which suchdisbursements or expenses were incurred. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding.

(f) “Indemnifiable Expenses,” “Indemnifiable Liabilities” and “Indemnifiable Amounts” shall have the meanings ascribed to those terms in Section 3(a)hereof.

(g) “Independent Counsel” means a law firm, or a person admitted to practice law in any State of the United States or the Commonwealth of Puerto Rico, thatis experienced in matters of corporation law and neither presently is, nor in the past three years has been, retained to represent: (i) the Company or theIndemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of otherindemnities under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.Notwithstanding the foregoing, the term “Independent Counsel” shall not include any law firm or person who, under the applicable standards ofprofessional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine theIndemnitee’s rights under this Agreement.

2

(h) “Liabilities” shall be broadly construed to mean, without limitation, all judgments, damages, liabilities, losses, penalties, taxes, fines and amounts paid insettlement, in each case, of any type whatsoever, in connection with a Proceeding. References herein to “fines” shall include any excise tax assessed withrespect to any employee benefit plan.

(i) “Partial Rights Transferee” shall have the meaning set forth in the Stockholder Agreement.

(j) “Principal Stockholder” shall have the meaning set forth in the Stockholder Agreement.

(k) “Proceeding” shall be construed broadly to mean, without limitation, any threatened, pending or completed claim, government, regulatory and self-regulatory action, suit, arbitration, mediation, alternate dispute resolution process, investigation (including any internal investigation), inquiry,administrative hearing, appeal, or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise andwhether of a civil (including intentional or unintentional tort claims), criminal, administrative, arbitrative or investigative nature, whether formal orinformal, including a proceeding initiated by the Indemnitee pursuant to Section 11 of this Agreement to enforce the Indemnitee’s rights hereunder.

(l) “Stockholder Agreement” shall mean that certain Stockholder Agreement, dated as of April 17, 2012, as amended or supplemented from time to time inaccordance with its terms.

(m) “Subsidiary” shall mean any Entity of which the Company owns (either directly or indirectly) either (i) a general partner, managing member or othersimilar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such Entity, or (B) 50% or more of the outstandingvoting capital stock or other voting equity interests of such Entity.

(n) References herein to a director of any other Entity shall include, in the case of any Entity that is not managed by a board of directors, such other position,such as manager or trustee or member of the board of managers or other governing body of such Entity, that entails responsibility for the management anddirection of such Entity’s affairs, including, without limitation, the general partner of any partnership (general or limited) and the manager, managingmember or board of managers of any limited liability company.

2. Services by the Indemnitee. In consideration of the Company’s covenants and commitments hereunder, the Indemnitee agrees to serve or continue to serve aseither a director on the Board of Directors of the Company or as an officer, as applicable, so long as the Indemnitee is duly elected or appointed and until hisor her successor has been duly elected and qualified or until his or her earlier death, disability, resignation, termination or other removal.

3. Agreement to Indemnify. The Company agrees to indemnify the Indemnitee to the fullest extent permitted, and in the manner permitted, by the GeneralCorporations Law or other applicable law as in effect as of the date hereof or as such laws may, from time to time, be amended (but only if amended in a waythat broadens the right to indemnification and advancement of expenses) as follows:

(a) Indemnification for Third Party Proceedings. Subject to the exceptions contained in Section 4(a) hereof, if the Indemnitee was or is a party to, threatenedto be made a party to or otherwise involved in any capacity in any Proceeding (other than an action initiated by the Company or initiated to protect theinterests of the Company) by reason of the Indemnitee’s Corporate Status, the Indemnitee shall be indemnified by the Company against all Expenses andLiabilities incurred in a reasonable manner whether paid by the Indemnitee or on the Indemnitee’s behalf in connection with such a Proceeding (suchExpenses and Liabilities are referred to herein as “Indemnifiable Expenses” and “Indemnifiable Liabilities,” respectively, and collectively as“Indemnifiable Amounts”). In addition, the Indemnitee’s Corporate Status may allow for indemnification under certain agreements containing indemnityprovisions with another Entity or protections under the organization documents of such other Entity. In those instances, the Company shall remain whollyliable for making any indemnification payments for all Indemnifiable Amounts notwithstanding the payment obligation of such amounts by a third partyto the Indemnitee.

(b) Indemnification in Derivative Actions and Direct Actions by the Company. Subject to the exceptions contained in Section 4(b) hereof, if the Indemniteewas or is a party to, threatened to be made a party to or otherwise involved in

3

any capacity in any Proceeding initiated by the Company or initiated to protect the interests of the Company to procure a judgment in its favor by reasonof the Indemnitee’s Corporate Status, the Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses. In addition, theIndemnitee’s Corporate Status may allow for indemnification under certain agreements containing indemnity provisions with another Entity or protectionsunder the organization documents of such other Entity. In those instances, the Company shall remain wholly liable for making any indemnificationpayments for all Indemnifiable Expenses notwithstanding the payment obligation of such amounts by a third party to the Indemnitee.

(c) Other Indemnification Rights. Notwithstanding anything to the contrary contained in this Agreement, the Company hereby acknowledges that anIndemnitee may have certain rights to indemnification, insurance and/or advancement of expenses provided by one or more Entities who employ suchIndemnitee or of which such Indemnitee is a partner or member or with such Entity’s respective affiliated investment funds, managed funds andmanagement companies, if applicable, or such Entity’s respective affiliates (collectively, the “Secondary Indemnitors”). The Company hereby agrees (i)that it is the indemnitor of first resort—meaning that, its obligations under this Agreement are primary and any obligation of the Secondary Indemnitors toadvance expenses and provide indemnification for the same expenses and liabilities incurred by any such Indemnitee are secondary, (ii) that it shall berequired to advance the full amount of Indemnifiable Expenses incurred by any such Indemnitee and shall be liable for the full amount of anyIndemnifiable Amounts to the extent legally permitted and as required by this Agreement, the certificate of incorporation, the bylaws or any otheragreement between the Company and such Indemnitee, without regard to any rights that such Indemnitee may have against the Secondary Indemnitorsand (iii) that it irrevocably waives, relinquishes and releases the Secondary Indemnitors from any and all claims that it has or may have against theSecondary Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that noadvancement or payment by the Secondary Indemnitors shall affect the foregoing and that the Secondary Indemnitors shall be subrogated to the extent ofsuch advancement or payment to all of the rights of recovery of any such Indemnitee against the Company. The Company and each Indemnitee agree thatSecondary Indemnitors are express third-party beneficiaries of this Section 3(c). In furtherance and not in limitation of the foregoing, in the event that aSecondary Indemnitor (other than the Company or any of its Subsidiaries) pays, forwards or otherwise satisfies any Indemnifiable Amounts to theIndemnitee, such amounts shall be promptly reimbursed by the Company to such payor to the extent that such Indemnifiable Amounts were required to bepaid by the Company to the Indemnitee pursuant to the terms of this Agreement.

(d) Employee Benefit Plans. For the avoidance of doubt, the indemnification rights and obligations contained herein shall extend to any Proceeding in whichthe Indemnitee was of is a party to, was or is threatened to be made a party to or was or is otherwise involved in any capacity in by reason of Indemnitee’sCorporate Status as a fiduciary capacity with respect to an employee benefit plan. In connection therewith, if the Indemnitee has acted in good faith and ina manner which appeared to be consistent with the best interests of the participants and beneficiaries of an employee benefit plan and not opposed thereto,the Indemnitee shall be deemed to have acted in a manner not opposed to the best interests of the Company.

4. Exceptions to Indemnification. The Indemnitee shall be entitled to indemnification under Section 3(a) and Section 3(b) hereof in all circumstances other thanthe following:

(a) Exceptions to Indemnification for Third Party Proceedings. If indemnification is requested under Section 3(a) and there has been a final non-appealablejudgment by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen,(i) the Indemnitee failed to act (x) in good faith and (y) in a manner the Indemnitee deemed to be reasonable and consistent with the best interests of theCompany and not opposed thereto or (ii) with respect to any criminal action or proceeding, the Indemnitee had reasonable cause to believe that theIndemnitee’s conduct was unlawful, the Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder.

(b) Exceptions to Indemnification in Derivative Actions and Direct Actions by the Company. If indemnification is requested under Section 3(b) and (i) therehas been a final non-appealable judgment by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which theclaim for indemnification has arisen, the Indemnitee failed to act (x) in good faith and (y) in a manner the Indemnitee deemed to be reasonable andconsistent with the best

4

interests of the Company and not opposed thereto, the Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder; or (ii) there hasbeen a final non-appealable judgment by a court of competent jurisdiction that the Indemnitee is liable to the Company with respect to any claim, issue ormatter involved in the Proceeding out of which the claim for indemnification has arisen, then no Indemnifiable Expenses shall be paid with respect tosuch claim, issue or matter unless, and only to the extent that, the court of competent jurisdiction in which such Proceeding was brought shall determineupon application that, despite the adjudication of liability, but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitledto indemnity for such Indemnifiable Expenses which such court shall deem proper.

5. Procedure for Payment of Indemnifiable Amounts.

(a) Subject to Section 9, the Indemnitee shall submit to the Company a written request specifying in reasonable detail the Indemnifiable Amounts for whichthe Indemnitee seeks payment under Section 3, Section 6, or Section 7 hereof and a short description of the basis for the claim. The Company shall paysuch Indemnifiable Amounts to the Indemnitee within sixty (60) calendar days of receipt of the request. At the request of the Company, the Indemniteeshall furnish such documentation and information as are reasonably available to the Indemnitee and necessary to establish that the Indemnitee is entitledto indemnification hereunder.

(b) Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 5(a) hereof, if required by applicable law and to theextent not otherwise provided pursuant to the terms of this Agreement, a determination with respect to the Indemnitee’s entitlement to indemnificationshall be made in the specific case as follows: (i) if a Change in Control shall have occurred and if so requested in writing by the Indemnitee, byIndependent Counsel in a written opinion to the Board; or (ii) if a Change in Control shall not have occurred (or if a Change in Control shall haveoccurred but the Indemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in subpart (i) of this Section5(b)), (A) by a majority vote of the disinterested directors, even though less than a quorum of the Board, or (B) by a committee of disinterested directorsdesignated by majority vote of the disinterested directors, even though less than a quorum of the Board, (C) if there are no such disinterested directors, orif such disinterested directors so direct, by Independent Counsel in a written opinion to the Board, (D) if requested by any Principal Stockholder or PartialRights Transferee, by Independent Counsel in a written opinion to the Board, or (E) if a quorum of disinterested directors so directs, by the Company’sstockholders in accordance with applicable law. Notice in writing of any determination as to the Indemnitee’s entitlement to indemnification shall bedelivered to the Indemnitee promptly after such determination is made, and if such determination of entitlement to indemnification has been made byIndependent Counsel in a written opinion to the Board, then such notice shall be accompanied by a copy of such written opinion. If it is determined thatthe Indemnitee is entitled to indemnification, then payment to the Indemnitee of all amounts to which the Indemnitee is determined to be entitled (otherthan sums that were already advanced) shall be made within sixty (60) calendar days after such determination. If it is determined that the Indemnitee isnot entitled to indemnification, then the written notice to the Indemnitee (or, if such determination has been made by Independent Counsel in a writtenopinion, the copy of such written opinion delivered to the Indemnitee) shall disclose the basis upon which such determination is based. The Indemniteeshall cooperate with the person, persons, or entity making the determination with respect to the Indemnitee’s entitlement to indemnification, includingproviding to such person, persons, or entity upon reasonable advance request any documentation or information that is not privileged or otherwiseprotected from disclosure and that is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent theIndemnitee is entitled to indemnification.

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof, the Independent Counselshall be selected as provided in this Section 5(c). If a Change in Control shall not have occurred (or if a Change in Control shall have occurred but theIndemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in subpart (i) of Section 5(b)), then theIndependent Counsel shall be selected by the Board, and the Company shall give written notice to the Indemnitee advising the Indemnitee of the identityof the Independent Counsel so selected. If a Change in Control shall have occurred and the Indemnitee shall have requested that indemnification bedetermined by Independent Counsel, then the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that suchselection be made by the Board, in which case the preceding sentence shall apply), and the Indemnitee shall give written notice to the Company advisingit of the identity of the Independent Counsel so selected. In either case, the Indemnitee or the Company, as applicable, may,

5

within thirty (30) calendar days after such written notice of selection has been given, deliver to the Company or to the Indemnitee, as the case may be, awritten objection to such selection; provided, however, that such objection may be asserted only on the ground that the law firm or person so selected doesnot meet the requirements of “Independent Counsel” as defined in Section 1 hereof, and the objection shall set forth the basis of such assertion. Absent aproper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the law firmor person so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction in theCommonwealth of Puerto Rico has determined that such objection is without merit. If the determination of entitlement to indemnification is to be madeby Independent Counsel pursuant to Section 5(b) hereof and, following the expiration of sixty (60) calendar days after submission by the Indemnitee of awritten request for indemnification pursuant to Section 5(a) hereof, Independent Counsel shall not have been selected, or an objection thereto has beenmade and not withdrawn, then either the Company or the Indemnitee may petition a court of competent jurisdiction in the Commonwealth of Puerto Ricofor resolution of any objection that shall have been made by the Company or the Indemnitee to the other’s selection of Independent Counsel and/or forappointment as Independent Counsel of a law firm or person selected by such court (or selected by such person as the court shall designate), and the lawfirm or person with respect to whom all objections are so resolved or the law firm or person so appointed shall act as Independent Counsel under Section5(b) hereof. Upon the due commencement of any Proceeding pursuant to Section 11(e) hereof, Independent Counsel shall be discharged and relieved ofany further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). If the determination of entitlementto indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof, then the Company agrees to pay the reasonable fees andexpenses of such Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all expenses, claims,liabilities, and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

6. Indemnification for Expenses if the Indemnitee is Wholly or Partly Successful. Notwithstanding anything contained in this Agreement to the contrary, tothe extent that the Indemnitee is or was, or is or was threatened to be made, by reason of the Indemnitee’s Corporate Status, a party to any Proceeding and theIndemnitee is successful (on the merits or otherwise) in defending all claims, issues and matters in such Proceeding, the Indemnitee shall be indemnifiedagainst all Indemnifiable Expenses incurred by the Indemnitee or on the Indemnitee’s behalf in connection with the defense of such Proceeding. If theIndemnitee is successful (on the merits or otherwise) in defending one or more but less than all claims, issues or matters in such Proceeding, the Companyshall indemnify, hold harmless and exonerate the Indemnitee for that portion of the Expenses reasonably incurred in connection with defending those claims,issues or matters with respect to which the Indemnitee was successful in defending. For purposes of this Agreement, the termination of any claim, issue ormatter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.Notwithstanding any of the foregoing, nothing herein shall be construed to limit the Indemnitee’s right to indemnification which he or she would otherwise beentitled to in accordance with Section 3 and Section 4 hereof, regardless of the Indemnitee’s success in a Proceeding.

7. Indemnification for Expenses as a Witness. Anything in this Agreement to the contrary notwithstanding, to the fullest extent permitted by applicable law, tothe extent that the Indemnitee, by reason of the Indemnitee’s Corporate Status, is or was, or is or was threatened to be made, a witness in any Proceeding towhich the Indemnitee is not a party, the Indemnitee shall be indemnified against all Indemnifiable Expenses incurred by the Indemnitee or on the Indemnitee’sbehalf in connection therewith. To the extent permitted by applicable law, the Indemnitee shall be entitled to indemnification for Expenses incurred inconnection with being or threatened to be made a witness, as provided in this Section 7, regardless of whether the Indemnitee met the standards of conduct setforth in Sections 4(a) and 4(b) hereof.

8. Agreement to Advance Expenses; Conditions. The Company shall pay to the Indemnitee all Indemnifiable Expenses incurred by or on behalf of theIndemnitee in connection with any Proceeding to which the Indemnitee was or is a party or was or is otherwise involved or was or is threatened to be made aparty to or was or is otherwise involved in any capacity in any Proceeding by reason of the Indemnitee’s Corporate Status, including a Proceeding by or in theright of the Company, in advance of the final disposition of such Proceeding. The Indemnitee hereby undertakes to repay the amount of IndemnifiableExpenses paid to the Indemnitee if it shall ultimately be determined by final judicial decision of a court of competent jurisdiction, from which decision there isno further right to appeal, that the Indemnitee is not entitled under this Agreement to, or is prohibited by applicable law from, indemnification with respect tosuch Indemnifiable Expenses. Any advances and undertakings to repay pursuant to this Section 8 shall be unsecured and interest free. Subject to the second

6

sentence of this Section 8, the Indemnitee shall be entitled to advancement of Indemnifiable Expenses as provided in this Section 8 prior to the final resolutionof any Proceeding and determination by or on behalf of the Company of whether the Indemnitee has not met the standards of conduct set forth in Sections 4(a)and 4(b) hereof.

9. Procedure for Advance Payment of Expenses. The Indemnitee shall submit to the Company a written request specifying in reasonable detail theIndemnifiable Expenses for which the Indemnitee seeks an advancement under Section 8 hereof, together with documentation reasonably evidencing that theIndemnitee has incurred such Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8 hereof shall be made no later than sixty (60)calendar days after the Company’s receipt of such request.

10. Burden of Proof; Defenses; and Presumptions.

(a) In any Proceeding pursuant to Section 11 hereof brought by the Indemnitee to enforce rights to indemnification or to an advancement of IndemnifiableExpenses hereunder, or in any Proceeding brought by the Company to recover an advancement of Indemnifiable Expenses (whether pursuant to the termsof an undertaking or otherwise), the burden shall be on the Company to prove that the Indemnitee is not entitled to be indemnified, or to such anadvancement of Indemnifiable Expenses, as the case may be.

(b) It shall be a defense in any Proceeding pursuant to Section 11 hereof to enforce rights to indemnification under Section 3(a) or Section 3(b) hereof (butnot in any Proceeding pursuant to Section 11 hereof to enforce a right to an advancement of Indemnifiable Expenses under Sections 8 and 9 hereof) thatthe Indemnitee has not met the standards of conduct set forth in Section 4(a) or Section 4(b) hereof, as the case may be, but the burden of proving suchdefense shall be on the Company. With respect to any Proceeding pursuant to Section 11 hereof brought by the Indemnitee to enforce a right toindemnification hereunder, or any Proceeding brought by the Company to recover an advancement of Indemnifiable Expenses (whether pursuant to theterms of an undertaking or otherwise), neither (i) the failure of the Company (including by its directors or Independent Counsel) to have made adetermination prior to the commencement of such Proceeding that indemnification is proper in the circumstances because the Indemnitee has met theapplicable standards of conduct, nor (ii) an actual determination by the Company (including by its directors or Independent Counsel) that the Indemniteehas not met such applicable standards of conduct, shall create a presumption that the Indemnitee has not met the applicable standards of conduct or, in thecase of a Proceeding pursuant to Section 11 hereof brought by the Indemnitee seeking to enforce a right to indemnification, be a defense to suchProceeding.

(c) The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, in and ofitself, adversely affect the right of the Indemnitee to indemnification hereunder or create a presumption that the Indemnitee did not act in good faith and ina manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding,shall not create a presumption that the Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

(d) For purposes of any determination of good faith, the Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s action is reasonably basedon the records or books of account of the Company or other Entity, including financial statements, or on information supplied to the Indemnitee by theofficers of the Company or other Entity in the course of their duties, or on the advice of legal counsel for the Company or other Entity or on informationor records given or reports made to the Company or other Entity by an independent certified public accountant or by an appraiser or other expert selectedby the Company or other Entity. The provisions of this Section 10(d) shall not be deemed to be exclusive or to limit in any way the other circumstances inwhich the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

(e) The knowledge and/or actions, or failure to act, of any other director, officer, agent, or employee of the Company or of another Entity shall not beimputed to the Indemnitee for purposes of determining the Indemnitee’s right to indemnification or advancement of Indemnifiable Expenses under thisAgreement.

7

11. Remedies of the Indemnitees.

(a) Right to Petition Court. In the event that the Indemnitee makes a request for payment of Indemnifiable Amounts under Section 3 or Section 5 hereof or arequest for an advancement of Indemnifiable Expenses under Sections 8 or 9 hereof and the Company fails to make such payment or advancement in atimely manner in accordance with the terms of this Agreement, the Indemnitee may petition a court to enforce the Company’s obligations under thisAgreement.

(b) Expenses. The Company agrees to reimburse the Indemnitee in full for any Expenses actually incurred in a reasonable manner by the Indemnitee inconnection with investigating, preparing for, litigating, defending or settling any action brought by the Indemnitee under Section 11(a) hereof; provided,however, that to the extent the Indemnitee is unsuccessful on the merits in such action then the Company shall have no obligation to reimburse theIndemnitee under this Section 11(b).

(c) Validity of Agreement. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 11(a)hereof, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shallstipulate in court that the Company is bound by all the provisions of this Agreement.

(d) Failure to Act Not a Defense. The failure of the Company (including its Board or any committee thereof, Independent Counsel, or stockholders) to make adetermination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under thisAgreement shall not be a defense in any action brought under Section 11(a) hereof, and shall not create a presumption that such payment or advancementis not permissible.

(e) Entitlement to Indemnification; Independent Counsel. In the event that (i) a determination is made pursuant to Section 5 hereof that the Indemnitee is notentitled to indemnification under this Agreement, (ii) if the determination of entitlement to indemnification is not to be made by Independent Counselpursuant to Section 5(b) hereof, no determination of entitlement to indemnification shall have been made pursuant to Section 5(b) hereof within sixty (60)calendar days after receipt by the Company of the Indemnitee’s written request for indemnification, (iii) if the determination of entitlement toindemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof, no determination of entitlement to indemnification shall have beenmade pursuant to Section 5(b) hereof within (A) eighty (80) calendar days after receipt by the Company of the Indemnitee’s written request forindemnification or (B) if an objection to the selection of such Independent Counsel has been made and substantiated and not withdrawn, seventy (70)calendar days after a court of competent jurisdiction in the Commonwealth of Puerto Rico (or such person appointed by such court to make suchdetermination) has determined or appointed the person to act as Independent Counsel pursuant to Section 5(b) hereof, (iv) payment of IndemnifiedAmounts payable pursuant to Section 6 or Section 7 hereof is not made within sixty (60) calendar days after receipt by the Company of a written requesttherefor, or (v) payment of Indemnified Amounts payable pursuant to Section 6 or Section 7 hereof is not made within sixty (60) calendar days after adetermination has been made pursuant to Section 5(b) hereof that the Indemnitee is entitled to indemnification, then in each instance described in clauses(i) through (v), the Indemnitee shall be entitled to seek an adjudication by a court of competent jurisdiction in the Commonwealth of Puerto Rico of theIndemnitee’s entitlement to such indemnification or advancement of Indemnifiable Expenses.

(f) Not Prejudiced by Adverse Determination. In the event that a determination shall have been made pursuant to Section 5(b) hereof that the Indemnitee isnot entitled to indemnification, any Proceeding commenced pursuant to this Section 11 shall be conducted in all respects as a de novo trial, or arbitration,on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination.

12. Settlement of Proceedings.

(a) The Indemnitee agrees that it will not settle, compromise or consent to the entry of any judgment as to the Indemnitee in any pending or threatenedProceeding (whether or not the Indemnitee is an actual or potential party to such Proceeding) in which Indemnitee has sought indemnification hereunderwithout the Company’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed unless such settlement,compromise or consent respecting

8

such Proceeding includes an unconditional release of the Company and does not (i) require or impose any injunctive or other non-monetary remedy on theCompany or its affiliates, (ii) require or impose an admission or consent as to any wrongdoing by the Company or its affiliates, or (iii) otherwise result ina direct or indirect payment by or monetary cost to the Company or its affiliates.

(b) The Company agrees that it will not settle, compromise or consent to the entry of any judgment as to the Indemnitee in any pending or threatenedProceeding (whether or not the Indemnitee is an actual or potential party to such Proceeding) in which the Indemnitee has sought indemnificationhereunder without the Indemnitee’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed unless suchsettlement, compromise or consent includes an unconditional release of the Indemnitee and does not (i) require or impose any injunctive or other non-monetary remedy on the Indemnitee, (ii) require or impose an admission or consent as to any wrongdoing by the Indemnitee or (iii) otherwise result in adirect or indirect payment by or monetary cost to the Indemnitee personally (as opposed to a payment to be made or cost to be paid by the Company onthe Indemnitee’s behalf).

13. Notice by the Indemnitee. The Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint,

indictment, information, or other document relating to any Proceeding which could reasonably be expected to result in the payment of Indemnifiable Amountsor the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify the Indemnitee fromthe right to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses.

14. Representations and Warranties of the Company. The Company hereby represents and warrants to the Indemnitee as follows:

(a) Authority. The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, deliveryand performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.

(b) Enforceability. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid andbinding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited byequitable principles and applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rightsgenerally.

(c) No Conflicts. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, does not, and the Company’sperformance of its obligations under the Agreement will not, violate the Company’s certificate of incorporation, bylaws, other agreements to which theCompany is a party to or applicable law.

(d) Insurance. The Company shall, if commercially reasonable, obtain and maintain a policy or policies of insurance with reputable insurance companiesproviding the Company’s directors and officers with coverage for losses from wrongful acts, or to ensure the Company’s performance of itsindemnification obligations under this Agreement. The Company shall use its best efforts to cause the Indemnitee, at the Company’s expense, to becovered by such insurance policies or policies providing liability insurance for directors or officers of the Company or of any Subsidiary, if any, inaccordance with its or their terms to the same extent as provided to any then-current director or officer of the Company or any Subsidiary under suchpolicy or policies.

15. Contract Rights Not Exclusive; Subrogation. The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided bythis Agreement shall be in addition to, but not exclusive of, any other rights that the Indemnitee may have at any time under applicable law, the Company’sbylaws or certificate of incorporation, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action inthe Indemnitee’s official capacity and as to action in any other capacity as a result of the Indemnitee’s serving in a Corporate Status. No right or remedy hereinconferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other rightand remedy, given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, orotherwise, shall not prevent the concurrent assertion or employment of any other right or remedy. In the event of any payment to or on behalf of theIndemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the

9

Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessaryto enable the Company to bring suit to enforce such rights.

16. Successors. This Agreement (a) shall be binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of thebusiness, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) shallinure to the benefit of the heirs, personal representatives, executors and administrators of the Indemnitee. This Agreement shall continue for the benefit of theIndemnitee and such heirs, personal representatives, executors and administrators after the Indemnitee has ceased to have Corporate Status.

17. Change in Law. To the extent that a change in Puerto Rico law (whether by statute or judicial decision) shall permit broader indemnification or advancementof expenses than is provided under the terms of the bylaws of the Company and this Agreement, the Indemnitee shall be entitled to such broaderindemnification and advancements, and this Agreement shall be deemed to be amended to such extent, but only to the extent such amendment permits theIndemnitee to broader indemnification and advancement rights other than Puerto Rico law permitted prior to the adoption of such amendment.

18. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, butif any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, inwhole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clausevalid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

19. Modifications and Waiver. Except as provided in Section 17 hereof with respect to changes in Puerto Rico law which broaden the right of the Indemnitee tobe indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of theparties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement(whether or not similar), nor shall such waiver constitute a continuing waiver. No failure or delay of any party in exercising any right or remedy hereundershall operate as a waiver thereof, and no single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce suchright or power, or any course of conduct, shall preclude any other or further exercise thereof or the exercise of any other right or power.

20. General Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a)when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid,on the third business day after the date on which it is so mailed:

If to the Indemnitee, to the address specified by the Indemnitee, from time to time.

If to the Company, to:

Evertec, Inc.Road 176, Kilometer 1.3 CupeySan Juan, Puerto Rico 00926Attention: General Counsel

or to such other address as may have been furnished in the same manner by any party to the others.

21. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee forany reason whatsoever other than any of those set forth in Section 4 hereof, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amountincurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection withany claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances ofsuch Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a

10

result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employeesand agents) and Indemnitee in connection with such event(s) and/or transaction(s).

22. Governing Law. This Agreement shall be exclusively governed by and construed and enforced under the laws of the Commonwealth of Puerto Rico withoutgiving effect to the provisions thereof relating to conflicts of law of such state.

23. Consent to Jurisdiction.

(a) Each of the Company and the Indemnitee hereby irrevocably and unconditionally (i) agrees and consents to the exclusive jurisdiction of the courts of thestate and federal courts of the State of Delaware and the Commonwealth of Puerto Rico (each, a “Chosen Court”) for all purposes in connection with anyaction, suit, or proceeding that arises out of or relates to this Agreement and agrees that any such action instituted under this Agreement shall be broughtonly in one of the Chosen Courts; (ii) consents to submit to the exclusive jurisdiction of the Chosen Courts for purposes of any action or proceedingarising out of or in connection with this Agreement; (iii) waives any objection to the laying of venue of any such action or proceeding in any of theChosen Courts; and (iv) waives, and agrees not to plead or to make, any claim that any such action or proceeding brought in any of the Chosen Courts hasbeen brought in an improper or otherwise inconvenient forum.

(b) Each of the Company and the Indemnitee hereby consents to service of any summons and complaint and any other process that may be served in anyaction, suit, or proceeding arising out of or relating to this Agreement in any of the Chosen Courts by mailing by certified or registered mail, with postageprepaid, copies of such process to such party at its address for receiving notice pursuant to Section 20 hereof. Nothing herein shall preclude service ofprocess by any other means permitted by applicable law.

24. Counterparts. This Agreement may be executed in one or more counterparts (including by PDF or facsimile), each of which shall for all purposes be deemedto be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence theexistence of this Agreement.

25. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or toaffect the construction hereof.

26. Effective Date. The provisions of this Agreement shall cover claims, actions, suits or proceedings whether now pending or hereafter commenced and shall beretroactive to cover acts or omissions or alleged acts or omissions which have taken place between the date when the Indemnitee was duly elected or appointedas a director or officer of the Company and the Effective Date of this Agreement.

27. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior andcontemporaneous agreements, understandings and negotiations, written and oral, between the parties with respect to the subject matter of this Agreement,provided, however, that this Agreement is supplement to and in furtherance of the Company’s certificate of incorporation, bylaws, the General CorporationsLaw and any other applicable law, and shall not be deemed a substitute therefor, and does not diminish or abrogate any rights of the Indemnitee thereunder.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

EVERTEC, INC.

______________________________________Morgan M. SchuesslerPresident & Chief Executive Officer

INDEMNITEE

______________________________________[•]Director

11

EXHIBIT 31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Morgan Schuessler, certify that:

1. I have reviewed this report on Form 10-Q of EVERTEC, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control overfinancial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.

Date: October 31, 2019 /s/ Morgan Schuessler Morgan Schuessler Chief Executive Officer

EXHIBIT 31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Joaquin A. Castrillo-Salgado, certify that:

1. I have reviewed this report on Form 10-Q of EVERTEC, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control overfinancial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.

Date: October 31, 2019 /s/ Joaquin A. Castrillo-Salgado Joaquin A. Castrillo-Salgado Chief Financial Officer

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 , the undersigned officer of EVERTEC, Inc. (the“Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of section13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial conditionand results of operations of the Company.

Date: October 31, 2019 /s/ Morgan Schuessler Morgan Schuessler Chief Executive Officer

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. 1350As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of EVERTEC, Inc. (the “Company”),does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of section13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial conditionand results of operations of the Company.

Date: October 31, 2019 /s/ Joaquin A. Castrillo-Salgado Joaquin A. Castrillo-Salgado Chief Financial Officer