Evertec Inc (EVTC) 2013 Q3 法說會逐字稿

Good day, everyone, and welcome to the Evertec Third Quarter 2013 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Luis Cabrera, SVP and head of IR. Please go ahead, sir.

Thank you, Operator. Good afternoon, everyone. Welcome to Evertec's third quarter 2013 earnings call. I'm Luis Cabrera, SVP, Treasurer, Head of Investors Relations and Corporate Development. With me today is Peter Harrington, our President and CEO, Juan Jose Roman, EVP and CFO.

A supplemental slide presentation that accompanies this call and webcast can be found on our Investors Relation website at ir.evertecinc.com, and will remain available after the call. A replay of this call will be available until Wednesday, November 13. Access information for the replay is listed in today's financial press release, which is available on our website under the Investors Relations tab. As a reminder, this call may not be taped or otherwise reproduced without Evertec prior consent. For those listening to the replay, this call was held and recorded on November 6, 2013.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are about our expectations for future performance and subject to known and unknown risk and uncertainties. Evertec cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statements to reflect events that occur after this call. Please refer to the Company's most recent prospectus on Form 424B4 filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements.

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

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

Thank you, Luis, and thanks, everyone, for joining us today. I am pleased to report another solid quarter of growth and continued execution of our expansion strategy.

Consistent with our expectations, we had strong revenue growth during the quarter in our merchant acquiring and payment processing segments, with merchant acquiring revenue up 8% and payment processing revenue up 6%. Adjusted EBITDA grew 14% during the quarter, and our adjusted net income grew a very strong 86%.

Overall, our solid results for the third quarter reflect the continued secular growth in the payment markets in which we operate, as well as the successful execution of our growth strategy. I am pleased with the progress we are making in further penetrating and gaining share in Latin America, as well as the focused effort of our management team on managing cost and driving productivity. This has resulted in a 430 basis point expansion in our adjusted EBITDA margin for the quarter.

As you also saw this afternoon, our Board of Directors declared a $0.10 regular quarterly dividend per common share. The dividend is payable on December 6 to shareholders of record as of November 18. As mentioned last quarter, our decision to initiate a regular quarterly dividend program is a reflection of our significant cash flow generation, strong balance sheet, and the ability to sustain predictable, long-term growth with low incremental capital requirements. Going forward, we remain committed to the proven return of capital to shareholders and to continue dynamically to evaluate the best uses of our excess cash in the context of our strategic objectives.

On the corporate development front, I would like to spend a moment discussing four new business wins and developments that we are particularly excited about and that are consistent with the growth strategy we have discussed with you before. First, we signed a deal with the government of the US Virgin Islands to provide processing and data center services to the Bureau of Information Technology. This new business win is our first significant deal, expanding our business solutions services outside of Puerto Rico and underscores the multiple levers we have to drive expansion.

Second, we recently signed a significant contract with the largest hospital management company in Puerto Rico, which operates 12 hospitals on the island. We will provide licensing and hosting services for their payroll and HR applications.

Third, we signed four new Latin American bank issuers to provide processing services, including our first customer in Jamaica. And lastly, we have completed the application for a visa principal member license for Colombia. The receipt of this license will allow us to provide merchant acquiring services, expanding the breadth of services we can provide our valued customers and allowing us to capitalize on an attractive growth opportunity. Colombia could represent a $500 million merchant acquiring market and would be the largest market we have entered to date. We believe that the approval of the license will be granted in the very near future.

During the third quarter, we also completed a 23 million share secondary offering from Apollo and Popular, which increased our free float and will hopefully improve the liquidity of our public shares, going forward. I would like to thank our existing shareholders who increased their stake for their continued support, and welcome to our new shareholders.

Given the recent spotlight put on the Puerto Rican economy in the press and a number of questions we've received from both analysts and investors, I thought it would be helpful to also spend a moment on the local economy and our business on the island. First, I would like to note that the Puerto Rican economy has been challenged for the last seven years. This is not new news. But, as many of you already know, Evertec has been able to consistently grow every year in this economic environment.

Second, several indicators suggest that the Puerto Rican economy is no worse today than it has been. Real GNP, retail sales and unemployment are all on better spots today than they have been over the past many years. Furthermore, the new government administration has put in a number of initiatives to address the current fiscal situation. Though it's early, we believe these can have a positive impact over the medium-term.

Third, Evertec's point-of-sale processing transactions in Puerto Rico have grown in the 6% to 7% range year-to-date versus the same period last year. Growth in Q3 was actually higher than that, and we believe this trend will continue through the end of the year. This indicator is better evidence of the continued solid growth in the market, because today we process over 70% of the card-based transactions on the island. Let me remind you that we have provided some additional information on our website.

Before I turn it over to Juan, who will take you through our financial results in more detail, I would like to welcome Eduardo Camargo to our senior management team. As you saw in our press release, Eduardo has been appointed as Chief Information Officer of Evertec and will be responsible for managing our information technology organization and infrastructure. Eduardo's career spans over 30 years in Latin American financial services and payment industry, and he will be a tremendous asset to us, going forward. We welcome Eduardo to the team.

With that, I'll turn it over to Juan.

Thank you, Peter, and good afternoon, everyone. As Peter mentioned, Evertec continued to deliver solid financial performance during the third quarter. We had consistent and strong revenue growth in our merchant acquiring and payment processing segments and generated adjusted EBITDA growth of 14%. Our adjusted EBITDA margin increased by approximately 430 basis points to 49.7%, which underscores the positive impact of our productivity initiative, as well as the scalability of our leading technology platform. This revenue and adjusted EBITDA growth, combined with the positive impact of our debt refinancing, lead to a very strong adjusted net income and adjusted EPS growth.

I will now spend some time going through our financial results in more detail, starting with our revenues. On a consolidated basis, total revenue for the third quarter increased 4% to $87.4 million, up from $83.8 million in the third quarter of 2012. Looking at the underlying segments, merchant acquiring net revenue grew 8% to $18.2 million, driven primarily by higher transaction and sales volumes. This 8% increase is consistent with the normalized growth we experienced during the first half of this year and reflect the continued secular growth of payments in our business.

Now on to payment processing. Payment processing revenue increased 6% this quarter to $24.7 million from $23.3 million in the prior year period. [Revenues] growth in the quarter was driven primarily by an increasing transaction process and accounts on file. Finally, business solution revenue increased 2% to $43.7 million. As we expected, business solution revenue growth moderated this quarter from the first half rate of approximately 8% due to the intra-year timing of project completion and product sales. We have discussed the potential impact of project-based timing in this segment before. Over a full-year period, we continue to expect business solution to grow in the low to mid single digits on a percentage basis.

Moving to expenses, on a GAAP basis, our total operating expenses were flat for the third quarter as compared to prior year. For the third quarter, cost of revenues, excluding depreciation and amortization, was $39.1 million, a decrease of $1.8 million, or 4% from the corresponding 2012 period. The decline in our cost of revenues was primarily due to a reduction in professional fees, lower operating cash taxes as a result of our 15-year tax grant, and the intra-year timing of project completions and product sales within our business solutions segment.

Total selling, general and administrative expenses for the quarter were $8.8 million, up $1.5 million, or 21% from the corresponding 2012 period. The increasing selling, general and administrative expense was primarily due to $1.6 million of one-time expenses related to the secondary offering of common stock we completed in September, partially offset by a declining operating taxes as a result of our tax grant, as well as the elimination of management fees associated with our consulting agreements with Popular and Apollo that were unwound at the time of our IPO in April.

Income from operations for the three month ended September 30, 2013, was $21.9 million, representing an increase of $4 million, or 22% as compared to the corresponding 2012 period. The increasing income from operation was driven by the [formation] factor impacting our revenues and operating costs and expenses.

Total non-operating expenses were $5.7 million, a decrease of $8.7 million from the corresponding 2012 period. The decrease in non-operating expenses was primarily driven by an interest expense reduction of $8.4 million as a result of our debt refinancing. We recorded an income tax expense of approximately $1.4 million in the third quarter and, on a cash basis, our income tax expense was approximately $400,000. As of September 30, 2013, we had approximately $100 million of NOLs available to offset future tax payments related to our operations in Puerto Rico.

Adjusted EBITDA for the quarter was $43.4 million, up $5.4 million, or 14% from $38 million in the corresponding 2012 period. The increase in adjusted EBITDA was primarily driven by revenue growth and the impact of our productivity initiatives.

Adjusted EBITDA margin improved by approximately 430 basis points to 49.7% from 45.4% in the corresponding 2012 period. Adjusted net income was $29.5 million, up 86% from $15.9 million in the prior year. The increase in adjusted net income was primarily due to the same factors impacted adjusted EBITDA and lower cash interest expense as a result of the debt refinancing we completed in April of this year. Adjusted net income per diluted share increased 71% to $0.36 from $0.21 in the prior year.

Moving to our balance sheet, as of September 30, we reported $28 million of unrestricted cash and $695.3 million of total short-term borrowings and long-term debt, which represents total net debt of $667.3 million. During the quarter, we made a mandatory repayment of approximately $4.8 million on borrowings outstanding under our term [A] and 10 [term B] senior secured credit facilities. As of September 30, total liquidity, which includes unrestricted cash and available borrowing capacity under our revolver, was approximately $128 million.

We continue to generate significant levels of free cash flows. Year-to-date, our free cash flow, defined as adjusted EBITDA minus CapEx, cash interest expense and cash income taxes, was approximately $93 million, up 16% from $80.1 million for the nine month ended September 30, 2012. We have converted approximately 72% of our adjusted EBITDA to free cash flows year-to-date versus 68% for the same time period in 2012.

Now, I will discuss with you our expectations for the remainder of the year. In Q4, we expect our merchant acquiring business to continue to grow in the high single digit range on a year-over-year basis. We also expect the payment processing business to continue to grow in the mid-single digit range. Based on the timing of certain projects, we expect our business solutions segment revenue to be similar to last year.

On a full year basis, there are a few timing-related factors we expect to impact our results, including the accounting-related treatment of certain IT consulting projects, longer-than-expected implementation times for new contracts, (inaudible) delay in the funding of a federal government program.

Regarding the accounting treatment of certain IT consulting projects during this year we have had a higher than anticipated proportion of hosting-related projects within our IT consulting business. Based on accounting guidelines, revenue generated in connection with hosting contracts are amortized over the life of the contract. You can see the accruals of these revenues on our balance sheet as unearned income.

As you will note, we have had a $2.6 million increase in unearned income in the beginning of this year, which will be realized in future periods over the life of the contracts, and this will continue in Q4. While this had an impact in 2013, we're pleased to expand these customer hosting relationships and enhance our recurring revenue stream, going forward.

The second factor impacting our revenues this years is longer than expected implementation times for certain new contracts. We have had some services that began later in the year than expected and some delayed from Q4 into early 2014. This is all timing related, and will begin to benefit us early in 2014 and beyond.

And lastly, the third factor impacting our revenue this year was [aforementioned] delay of a federally funded US government program that we provide processing services for. We have processed for this program since 2008, and this is the first year in which it has, unfortunately, been delayed. Just recently, however, we learned that funding was approved by the US federal government, and the [governor] of Puerto Rico has already begun preparation in order to begin this program in early 2014.

Based on our performance year-to-date, the timing related factor I just discuss and the insight we have into the remainder of the year, our guidance for full year 2013 is for revenues to come out between $357 million and $359 million, adjusted EBITDA between $177 million and $179 million, and for our fully diluted EPS to come in between $1.47 and $1.49.

In summary, our business fundamental are strong. We're particularly pleased with the continued strong performance in our merchant acquiring and payment processing businesses. We continue to successfully execute our growth strategy, and we see significant opportunities to grow and expand our business and penetrate and gain share in Latin America.

With that, Operator, we will now open the call for questions.

(Operator instructions.) Bryan Keane, Deutsche Bank.

Hi, this is Ashish Sabadra on behalf of Bryan Keane. It's good to see that improvement in revenues in payment processing, as well as merchant acquiring. Just -- the question was, based on your guidance, you're guiding more like 3% to 4.5% growth for the fourth quarter, and I understand a lot of it is due to weakness due to business solution and the timing.

But, just on the merchant acquiring, considering that you have this alliance and also easier comps to the prior year, should we expect the revenue growth to improve in merchant acquiring, or are you -- yes, so the question was more around the revenue growth in merchant acquiring. Should we expect that to improve considering easier comps, as well as BBVA ramping up?

Yes. Yes, we do expect for Q4 in relation to our (inaudible) business, as you noted. We also completed the implementation of the Oriental BBVA in early October, so yes, we expect a strong merchant acquiring growth in Q4 not only because of that, but also keep in mind that it is a holiday season in Q4, and there is a [natural] seasonality to that business, as well as some of our payment processing businesses.

So, yes, it will be a strong Q4, as we said, high single digit, and that includes some of the impact of completing the migration of the BBVA merchants into Oriental Bank.

Okay, thanks for the color. Just on the Puerto Rico -- again, thanks for the color on the call -- two quick questions. I was wondering if you could just provide some color around what percentage of the revenue is generated from Puerto Rican government contracts. And another question would be is there any risk to your tax agreement with the Puerto Rican government in case of the government decides to raise taxes or any other adverse event?

Yes. The first part of the question is around 10% similar to last year. It has not changed significantly. But, keep in mind that most of those services are mission-critical for the government of Puerto Rico, like the [child] support, like the [running] benefit transfers, and even some of those are actually funded by the federal government.

In the second -- to the second part of your question regarding our [tax grant], no, we're very comfortable with our tax [grant]. It's a contract between the governor of Puerto Rico and Evertec. And you have to keep in mind, that includes our compromise to keep employment in Puerto Rico a significant investment for the 15 year of that contract that we're committed to do.

So, it's a benefit obviously from the tax perspective, but, on the other hand, we're committed to invest in Puerto Rico and create employment in Puerto Rico. So, historically in the last four years, I can tell you they have never changed a grant to any company. And keep in mind that many other blue chip companies in Puerto Rico have similar tax [grant]. So, we feel very comfortable, and they have never really have done that in the history.

That's great. That's great. One final question for me on the international front. There has been some great progress on that front. I was wondering if it's possible to quantify the benefit, the revenue benefit, from the first three strategic initiatives or the business development? And also, just talk about the pipeline for new business development initiatives in the international market. Thanks.

Okay. On the initiatives, when you look at the first two, which are in our business solutions segment, those are certainly in the low single digits of millions that they will generate in revenue to the Company. So, we feel very good about that. To us, it's more important actually that we now -- we've now proven that we can take some of those products and services that we have traditionally sold in Puerto Rico and now be able to leverage that and sell those outside of the market, which is what excites us the most about that.

Certainly the four banks are in line with what we've done in the past. We signed a number of banks last year. We signed a number of banks this year. These banks will obviously not get implemented until third, fourth quarter at the earliest of next year. It's a normal cycle.

And finally, the Colombia is the one we're very excited about, because it's a very big market, and we're just -- we're kind of guessing the number of about $500 million. But clearly, it's a market that is at least five to 10 times bigger from an acceptance perspective than the Puerto Rican market is. And so now, if we get this license and with the customer relationships we now have in Colombia, we believe we can start to actually enter the acquiring market in that country, and that, with a market the size of Colombia, we think over the next couple of years, we could take certainly a 5% to 10% market share, is what our goal is.

Sorry, thanks. Thanks a lot for the color.

Tien-Tsin Huang, JPMorgan.

Great, thanks. Just to follow up on that last couple points, just the timing of when some of these -- the business developments might flow in, I caught the four banks coming in the second half of the year. How about the two business solutions deals? When could we expect that to cut over?

Well, the first one we will get some in the -- late in the fourth quarter and some in early 2014. The second one will take some time to roll that out to all 12 hospitals, so we'll see the majority of it in 2014.

Good. And then, the acquiring -- Colombia acquiring, assuming you'd get the license, what should we expect from that point forward? I mean, do you need distribution deals, or do you have some things lined up whereby we can actually see you going to market and trying to secure contracts?

Yes, it'd be the latter. So, we've got some relationships there that we think we can leverage to begin sometime in 2014, the merchant acquiring business in Colombia. Now, granted, we'd be starting it up against the incumbents that are in the market because most of the banks there operate under the old companies like [ReadyBond]. But, we think we can get the business started in 2014.

Okay. Okay, good. And then, just business solutions, it sounds like that's the bulk of the revision here in the guide. And my question here is just Popular -- I caught everything, Juan, you mentioned in terms of explaining it, but just how that surprises from Popular in terms of discretionary spend, things like that, any other things that could surprise us?

No, not really. For example, the one is related to the [federal] revenues, it's mostly -- and as you can imagine, [there are] many project we host for Popular and other institutions certain services, right? So, when they upgrade, we always leave [half a] number of hours that we can provide services for.

So, depending on what [they requests] us to do for them, so if for example they request an upgrade for an application that we do hosting, then those hours actually have to defer to more -- maybe more [than the] surprises was that the proportion of these type of requests this year from Popular and others, but mostly Popular, of course, are related to applications that we host for them.

Last year, for example, and we were expecting this year to do kind of the same as we did last year in term of non-hosting related. That [makes is what] change. We thought that Q4 we will dedicate more time to those services that we actually can book immediately the revenue, but now, when we look at the pipeline, we will still have a significant amount of hours from Popular that are hosting related.

So, it's not really that they are not providing the hours. We actually have a significant pipeline. But, the impact really is that their request is more related to hosting-related project, and we're deferring that. But, it's a bad and a good, right, because then, once we complete the project, we will start recognizing that [unearn] into revenue in future years every month for the term of the hosting contract.

Right, right, so it'll be a little bit more visible in recurring.

Yes. Yes.

If you don't mind, I'll ask one more, then I'll let others ask. Just on the acquiring, back to acquiring, pricing yield up 8% this quarter. The acquiring piece, sounds like the volume from your prepared remarks, Peter, was running sort of six to seven. So, are yields getting better, or is the difference just BBVA ramping, and others? Thank you.

Yes, it's more -- it's not really a drastic change in that it's more -- we started to ramp up on some of the Oriental stuff that we finished near the end of the third quarter, so we saw some benefit from that. But, basically, I mean, the business is operating as it has. Again, it's been more the mix, Tien-Tsin, and the mix is at higher margins, right? It's we have a bigger percentage of the local players than we had expected.

I see. Great. Thanks for the feedback.

George Mihalos, Credit Suisse.

Hey, guys, thanks for taking my questions. I think, if I'm not mistaken, on the 2Q call, you broke out the growth rate from non-Puerto Rico -- non-Puerto Rican geographies. Can you update that for us for the third quarter?

That was, again -- it was, again, in the low double digits in the third quarter.

Low double digits? Okay. And then, just long-term, I know you spoke about a couple of push-outs, a government contract, and then some accounting. But, as you think of your revenue growth targets longer term, has anything changed from kind of the seven-plus organic that you're targeting longer-term?

No.

Okay, that's helpful. And then, last question from me again, on the push-out of the contract due to funding, how much of an impact has that had, or do you expect that to have, in the fourth quarter? And have you noticed any other sort of slowdown in October from the government shutdown? Thank you.

No, that was probably the only thing we noticed, is that it represents, give or take, about $1 million.

Okay, great. Thank you.

And as Juan said, it's a program we've been executing since 2008, and we're guessing it was the shutdown, because it's normally granted around the first of October, and it's been -- it just got pushed out to the early part of '14.

Sara Gubins, BofA Merrill Lynch.

Hi, thanks, good afternoon. Just a variation of the last question about your expectations for longer-term growth. I'm wondering if any of the factors that you talked about change your expectation of how long it'll take you to get to double-digit adjusted EBITDA growth. And I don't know if you're ready to comment about next year at all, but if you think that those factors might make it more difficult to do double-digit EBITDA growth on an adjusted basis next year.

No, Sara. No, basically, it's just as we mentioned. It's a couple of delays in certain specific projects in business solutions. We continue to see a very strong merchant acquiring and payment processing growth. Keep in mind that the payment side also includes our [goals outside] Puerto Rico, so we expect that to continue. That's why, as Peter mentioned, we have not seen any change in our medium- to long-term view of the growth of the Company.

So, I think it's very specific, very particular for the Q4 in those projects. However, our pipeline continue to be there. It's very strong. As Peter said, we just sign up another four banks during this quarter. We keep moving [into our] strategy into Colombia. So, no, we're comfortable that we will continue and we will execute in our medium-term goals.

Great. And then, could you talk about the pipeline for acquisitions outside of Puerto Rico?

Like we've said before, right now we're more focused on merchant alliances and joint ventures. We're still very, very comfortable that the stuff that we're working on, that we will be able to close one of those, if not two of those, in the near future. So, we've been more focused on that. We still have a number of conversations on the acquisition side, but there is nothing at this point that it's worth bringing up.

Okay. And then, just last question, I think you've signed up about 16 new banking clients last year. Do you have a comparable number for where you are year-to-date on new bank clients?

We're probably somewhere in the nine to 10 range, is what I would say. I don't have the number in front of me, but it's about nine or 10 year-to-date.

Thank you.

Bob Napoli, William Blair.

Thank you. Just on -- a little more on Colombia, I mean, you have signed a client that you had come on board this year that I think was about $5 million of revenue, but it may not come on board till the next year. Could you give maybe a little more color on what you have, the clients you have signed in Colombia, and maybe a pipeline in that market?

Yes. We have that customer that's signed. We're going to be doing card processing and ATM processing for that customer, okay, debit card processing. So, that's done. We're in the implementation cycle with them. We expect them to come online in early 2014. That's what we said before. We have an active pipeline, and in fact I will be in Colombia in early December for a major kickoff with a number of potential customers in the market.

So, we're comfortable that we now have an active pipeline and that we've got -- once we bring that first customer up, we think we'll really start to get some traction. We think certainly, when we're granted this license, that will only help us gain more traction in the market.

And that customer, what type of revenue, Peter, do you expect out of that customer?

Long-term, we expect the first customer to generate around $5 million per annum. That's about the right number. We won't see that in 2014, but probably in 2015 and beyond. That's the number that we're looking at that, based on the volumes that they have projected to us, okay, that's what we see.

And then, the non-Puerto Rico growth rate, do you see visibility on getting that number up to the 20% range in 2014?

No, I think we believe a more accurate number would be in the mid to high teens. That's what we think we're going to see on a year-over-year basis.

Okay. And then, the pipeline of new business, can you give kind of a broad feel of where -- geographically where the pipeline is? And how does that pipeline today compare to where you were, say, a year ago?

I would say it's not much different than where we were a year ago. I would say that where we sold probably more customers in Panama over the last two years, we've well penetrated that market now, as we've said before. So, obviously, the opportunities aren't as numerous as they were a couple years ago, so we're still very focused in the Dominican. As you could see, we just signed our first customer in Jamaica, Mexico, Colombia, Guatemala, Costa Rica. So, we're actively -- got a pipeline in all of those markets.

Okay, great. Thank you very much.

(Operator instructions.) Smitti Srethapramote, Morgan Stanley.

Yes, just a quick follow-up on the Colombia license application, just wondering how long do you expect the process to take.

We think we'll have the approval by end of year, and so we believe we can start to leverage that license in 2014. So, we're at the end of the process. We're just waiting for approval at this point.

And on Puerto Rico specifically, there was a lot of worries about government bond ratings and whatnot starting in late August, early September. And given some of your peers in the mainland US noted that there was a slowdown in spending in the month of September, early October, I was just wondering if you saw any slowdown at all in the Puerto Rican market in the last month of the quarter and beginning of Q4.

No. I would tell you, like, that's why we tried to give you some sense of that number, that in the third quarter, we actually saw -- looking at just POS transactions that we processed, because we believe that based on the size -- the percentage of the market that we process transactions, that to us, the best indicator for you guys to look at our business is how are those transactions growing year-over-year.

And like we said, they grew 6% to 7% kind of on a year-over-year basis, and the reality is it was more like about 7.5% in the third quarter. So, they actually did better in the third quarter than we had seen in the first two quarters. So, from that -- now, that's driven more by, again, that cash to card conversion than it is by retail sales, as we said in the past, and that continues to happen.

Thank you.

And there are no other questions at this time. I'd like to turn the conference back to Peter Harrington, CEO, for closing remarks.

Okay. Thank you, Operator. Thank you again for taking the time with us today. I just wanted to let you know that we remain very excited about our strong pipeline of new business opportunities as we head into 2014 and are confident in our ability to execute on one or more strategic alliance in the merchant acquiring business. We thank you for your support, and we look forward to discussing the year-end results and to providing more insights into our plans and developments for 2014 on our next quarterly conference call. Operator, you may now end the call.

Thank you, everyone. That does conclude today's conference. We thank you for your participation.