Alan Cohen - Executive Vice President and Head of IR Frank G. D'Angelo - Chairman of the Board and Interim Chief Executive Officer Juan Jose Roman - Chief Financial Officer, Executive Vice President

George Nahalos - Credit Suisse Bob Napoli - William Blair Brian Keane - Deutsche Bank Tien-tsin Huang - JPMorgan Jim Schneider - Goldman Sachs Chris Brendler - Stifel Faton Begolli - Bank of America Merrill Lynch

Thank you operator and good afternoon everyone. Welcome to the EVERTEC fourth quarter and full year 2014 earnings call.

With me today are Frank G. D'Angelo, our Chairman of the Board and interim Chief Executive Officer and Juan Jose Roman, our Chief Financial Officer and Executive Vice President.

A replay of this call will be available until Wednesday, February 25, 2015. Access information for the replay is listed in today's financial press release, which is available on our website under the Investor Relations tab.

As a reminder, this call may not be taped nor otherwise reproduced without EVERTEC's prior consent. For those listening to the replay, this call was held on February 18, 2015.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements about our expectations for future performance are subject to known and unknown 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 the events that occur after this call.

Please refer to the company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements. During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as adjusted EBITDA, adjusted net income and adjusted net income per share.

Reconciliations to GAAP measures and certain additional information are also included in today's earnings press release. With that, we will begin by turning the call over to Frank G.

D'Angelo, our Chairman of the Board and Interim Chief Executive Officer.

Thank you Alan and thanks everyone for joining us today. I would like to open by discussing recent additions to EVERTEC's Board of Directors as well as recent management changes and why we are optimistic about the future of the company.

During the past six months, three new independent directors have been appointed to the Board of Directors of EVERTEC. Olga Botero, who resides in Bogota joined us in September.

Olga's extensive experience within the IT industry and specific knowledge of payment systems combined with her relationship in the Colombian market benefit the company going forward. Tom Swidarski, who became a member of our Board in December, is a seasoned senior executive with deep industry knowledge.

As a former CEO and President of Diebold, Tom has significant international operating and management experience. Our newest Board member is Brian Smith, President of The Latin America Group of The Coca-Cola Company.

Brian held the Coca-Cola business in Central America, South America, the Caribbean and Mexico, his home base. As EVERTEC continue its expansion throughout Latin America, Brian's experience and knowledge of the region will be most valuable.

I am very pleased to welcome these three recent additions to the EVERTEC Board. Also, Jorge Junquera, who is a member of our Board, retired as Vice Chairman and Special Assistant to Chief Executive of Popular on February 5.

On his retirement, Jorge became an independent member of our Board, resulting in us having a total of seven independent Board members as of April 1. In November, we announced that Mac Schuessler was appointed President and Chief Executive Officer of EVERTEC and a member of our Board of Directors.

Mac will assume these roles on April 1 and I will be serving as Interim CEO until that date. We are pleased to have Mac our incoming CEO.

Mac is a 20-year veteran of the payments and financial services industry. Prior to joining EVERTEC, he was President of Global Payments' International business, overseeing the company's operations in 23 countries throughout Europe and Asia.

His strong leadership and operational understanding and a successful track record of entering new markets and growing existing markets make him the right choice to lead EVERTEC during the next stage of our evolution. On a personal note, Mac has already moved to Puerto Rico with his family and established permanent residence in the Commonwealth.

Throughout 2014, EVERTEC continued to provide innovative payment solutions to its customers. As of the fourth quarter of last year, we are now piloting in Colombia a single card solution that can handle debit, credit and prepaid card account processing as well as merchant acquiring.

We feel this innovative offering will be attractive in the markets we serve as it simplifies and integrates the IT operations of current and potential customers and provides financial institutions with strong competitive advantage. We also launched ATH Móvil, a mobile application which allows consumers to transfer money real-time, peer-to-peer.

The number of users exceeded our initial projections confirming that consumers are seeking faster and simpler payment solutions. And for a major customer, we launched Touch ID for ebanking sign-on, in which the customer uses his or her fingerprint as personal identification.

EVERTEC is committed to the development of innovative payment solutions for its customers and their end-users. In 2014, EVERTEC invested approximately $30 million in capital expenditures, including new product development and infrastructure improvements.

Touching briefly on the Puerto Rico economy. The economy in Puerto Rico, our largest market, continues to be a challenge.

While the government and private sector seeks solutions to reverse the trend, it is clear that it will take more time for the economy to turn around. All this being said, the recent price relief at the gas pump and on consumers electricity bills may improve discretionary spend in the coming quarters.

Just to note, almost all of the electricity in Puerto Rico is generated by oil. Outside of Puerto Rico, we continued to see opportunity for expansion as clients look to outsource their payment processing and merchant acquiring.

Our breadth of products and services enables us to work with new customers while also allowing us to cross sell into existing customers. Turning to our financial results for the full year 2014.

We delivered revenue of $361 million and adjusted net income per diluted share was $1.55. While we were able to grow our EPS by 11% in the year, we saw only a 1% increase in the topline, primarily due to lower than expected resale of hardware and licensed software sales in our business solutions segment.

We are not satisfied with these results. We feel we can deliver stronger revenue growth in the future.

Management and the Board are committed to improving EVERTEC's execution in all areas of our company. In the past 18 months, the company has repurchased $100 million worth of its stock and today, we also announced a regular quarterly dividend of $0.10 per share for the first quarter of 2015.

In 2014 EVERTEC returned over $57 million to its shareholders in the form of dividend payments and stock buybacks. The Board continuously reviews the company's uses of capital and will evaluate the best uses of our excess cash in the context of our strategic objectives.

In summary, we continue to see opportunities for expansion across all of our businesses and markets and we are well positioned to take advantage of those opportunities entering 2015. Demand in the market remains strong and we expect to continue winning share and driving growth.

The addition of Mac as our new President and CEO in April is an important step in executing on our strategies. Juan Jose will now take you through our fourth quarter and full year 2014 financial results in some detail as well as discuss our 2015 guidance.

Juan, the floor is yours.

Thank you Frank and good afternoon everyone. I will now provide a detailed review of our fourth quarter and full year financial and operating results and then conclude by discussing our financial outlook for 2015.

Beginning with the fourth quarter, total consolidated revenue was $93.5 million, in line with the fourth quarter of last year, mostly impacted by $2.5 million of lower hardware and software sales. Excluding the hardware and software sales, our consolidated revenue growth in the fourth quarter was 3% year-over-year.

Merchant acquiring net revenue increased 5% year-over-year to $20.8 million driven by transaction growth. Payment processing revenue for the fourth quarter increased 5% to $27.7 million, up from $26.4 million in the prior year period.

Revenue growth in the quarter was driven mainly by an increase in ATH network and POS processing transactions, and accounts on file within our card product business. Our payment related businesses outside of Puerto Rico grew 9% year-over-year in the fourth quarter driven mainly by card product processing.

Business solutions revenue decreased 5% to $45 million. The decrease in business solutions revenue was mainly due to a $2.5 million year-over-year decline in hardware and software sales, and the natural conclusion of IT consulting projects in the fourth quarter and timing of new project runs.

This was partially offset by increased revenue from our core banking solutions. Moving to expenses.

On a GAAP basis, our fourth quarter total operating expenses increased approximately 9% compared with the prior year period. Cost of revenues excluding depreciation and amortization was $40.7 million, slightly lower than prior year period, reflecting lower cost of sales related to lower hardware and software sales, partially offset by higher operating expenses.

Selling, general, and administrative expenses for the fourth quarter were $15.6 million, up $7.3 million or 88% from the corresponding 2013 period. This increase was primarily due to $7.4 million of nonrecurring costs related to our CEO succession and acceleration of the vesting of certain stock options.

Depreciation and amortization expense decreased by $0.8 million or 4% compared with the prior year. The decrease resulted from lower amortization of software packages that became fully depreciated.

Income from operations for the fourth quarter was $20.6 million, a decrease of 23% compared with the corresponding 2013 period, impacted by the aforementioned nonrecurring expenses of $7.4 million. Total non-operating expenses were $5.7 million, an increase of $0.8 million from the prior year, mainly due to a $1.1 million decline in other income compared with the 2013 period.

We recorded a GAAP income tax expense of $2.4 million in the fourth quarter. On a cash basis, our income tax expense was approximately $0.3 million, which was in line with our expectations.

As of December 31, 2014, we had approximately $29 million of gross NOLs available to offset future tax payments related to our operations in Puerto Rico. Adjusted EBITDA for the fourth quarter was $47.5 million, a decrease of $1.6 million or 3% from $49.1 million in the corresponding 2013 period.

The decrease in adjusted EBITDA was primarily due to a $1.1 million decline in other income and $0.6 million lower dividends received from investees as compared to 2013. Adjusted net income in the fourth quarter was $34.4 million, down 3% from $35.4 million in the prior year, due mainly to aforementioned decline in other income and dividends received.

Adjusted net income per diluted share increased 2% to $0.44 from $0.43 in the prior year, reflecting lower average shares outstanding as a result of our share repurchase program. Moving to our balance sheet.

As of December 31, we reported $32.1 million of unrestricted cash and $689.6 million of total short-term borrowings and long-term debt. During the quarter, we made a mandatory repayment of approximately $4.8 million on borrowings outstanding under our Term A and Term B senior secured credit facilities and paid dividends of $7.8 million.

As of December 31, total liquidity, which includes unrestricted cash and available borrowing capacity under our revolver, was approximately $109 million. For the fourth quarter, our free cash flow, defined as adjusted EBITDA minus CapEx, cash interest expense, and cash income taxes, was $32.5 million compared with $31.6 million in the prior year representing an increase of $0.9 million or 3%.

Turning to our financial result for the full year 2014. As Frank mentioned, total consolidated revenue was $361.1 million, up 1% compared with 2013, impacted primarily by lower than expected hardware and software sales.

Merchant acquiring revenue was $79.1 million, up 7% from the prior year, driven mainly by an increase in transaction volumes. Payment processing revenue was $105.4 million in 2014, up 5% from 2013 mainly driven by an increase in our ATH network and POS processing transactions and accounts on file within our card product business.

Business solutions revenue was $176.6 million, down 4% from last year mainly due to a $10.3 million year-over-year decline in the hardware and software sales, partially offset by increased revenue from core banking solutions. Excluding hardware and software sales, business solution would have increased 2%.

Adjusted EBITDA for 2014 was $182.8 million, up 3% from 2013 results driven by topline growth, continued leverage in the business and our focus on cost control initiatives. Adjusted net income was $130 million, up 7% from 2013 and adjusted net income per diluted share was $1.65, up 11% year-over-year.

For full year 2014, our free cash flow was approximately $134 million, up 7% from $125 million in 2013. Finally, we repurchased $26.2 million or 1.2 million shares of our stock in the fourth quarter of 2014.

Now I will review our financial outlook for 2015. We currently expect total consolidated revenue between $368 million and $372 million for a growth of 2% to 3% in 2015.

This expectation is based on the following factors: A continued challenging economy in Puerto Rico, our main market; lower growth of our payment businesses in Puerto Rico; and new customers’ implementation in 2015; and cross selling to existing customers. We do not consider any corporate development initiatives, such as M&A, joint venture, or alliances in our 2015 revenue forecast.

We expect our adjusted EBITDA growth rate will be between 3% and 4% in 2015, driven by revenue growth, a continuation of our cost control discipline and operating leverage in our payment businesses. Finally, we expect our fully diluted earnings per share to come in between $1.68 and $1.72 in 2015, representing growth of 2% to 4%.

Our fully diluted earnings per share outlook assumes operating depreciation and amortization of approximately $31 million, up $1.5 million versus 2014, cash interest expense of approximately $23 million, up $1 million versus prior year, and cash income tax of approximately $5 million, up $4 million versus last year. We expect fully diluted weighted average shares outstanding to be approximately 76.5 million.

We expect our 2015 effective tax rate on a GAAP basis to be between 10% and 12%. With that, operator, we will now open up the call for questions.

Great. Thanks for taking my question.

Maybe just for starters, as we look at the outlook, the 2% to 3% growth on the topline, Juan Jose, what are you baking in for international growth of 9% you saw this quarter versus what you are expecting in Puerto Rico? And then somewhat related to that, the EBITDA growth that you are guiding to, looks like you are talking about 100 basis points ahead of the revenue growth.

That's a little bit lower than what we are used to seeing in terms of a delta or the longer-term target you guys have put out in the past. Can you talk a little bit about how we should be thinking about EBITDA growth versus revenue growth over the long term?

Is the plus 100 the way we should be thinking about it going forward?

Hi George. Yes, our guidance considers, basically as we mentioned, is economic challenges in Puerto Rico.

So we see a little bit of a lower growth in our payment businesses for 2015 as compared to this year. Our payment businesses for 2015 have been impacted by lower EBIT revenue.

The last, if you remember, probably of the BBVA [ph] oriental implementation and the expiration of the [indiscernible] educational program that we recognized in the last few years. In the case of the business solution, there are some headwinds there, mostly as we see lower revenue in item processing, as people move more to electronic payments out of paper.

So we have got a little bit, outside Puerto Rico, we expect to be below double digit growth for next year in our payments outside of Puerto Rico. So, we are consistent with this year.

For the full year, our growth was 11.5%, 2014 versus 2013. To your point, EBITDA, this year we grew for the full year 100 basis points.

We are expecting the same for 2015. It doesn't mean we want to call out that also this year 2015 we are considering certain OpEx expenses related to our expansion to Columbia.

We estimate around $1 million, $1.2 million. So, there is some impact of that in our EBITDA during this year.

So, that's basically how we have put together and how we view our guidance for this year. As we continue our growth now going forward more years from now, we do expect to continue our growth in more margins and the EBITDA to continue to outpace our revenue growth, mostly driven by growth in our payment businesses.

We continue to expect our payment businesses to accelerate faster than our business solution, as has been the case for the last few years.

Okay. Should the business solutions business grow next year?

I mean, the comps are relatively easy there. And then just one other question, in the past, you guys had provided us with POS transaction volume in Puerto Rico.

I think it was about 5% last quarter or third-quarter. Can you update that number for us, please?

Yes. So it was the same in the fourth quarter.

It was around 5%. So it was in line with Q3 growth.

Okay. Great.

And just last question for me. Looking at deals outside of Puerto Rico, can you talk a little bit about how your pipeline looks there and have there been delays, given some of the management changes that you have had recently?

Yes. Hi.

This is Frank here. The pipeline outside of Puerto Rico is fairly strong.

We are not extremely happy with it, but it's stronger as we go forward. Changes in management really has nothing to do with our pipeline or direction that we are taking.

Our strategy remains the same, and we are pretty positive about our direction going forward outside of Puerto Rico.

Okay. Thank you.

Good afternoon. I guess with the hiring of Mac, I guess the revenue growth since your IPO has not been what anybody expected, and I am sure what management expected outside Puerto Rico or inside Puerto Rico, and Mac is coming in with experience in other markets.

What are you expecting from him? What should be the revenue growth of this business?

And is he going to be able to hit the ground running given that he is a really familiar with other markets versus the Latin American market?

Why Mac? Sounds like a McDonald's commercial.

We did a pretty extensive search. We hired a top-notch search firm.

We had quite a few finalists that we interviewed. We did multiple interviews with each of the finalists.

All directors interviewed all the finalists. We wanted somebody who was very senior-level, somebody that understood payments, somebody that had the right set of characteristics in terms of being growth oriented, being aggressive, had management scale in the background.

I think if I remember the numbers right, Mac ran a $750 million business with 1,700 employees. Comparable to EVERTEC in terms of scale and scope, EVERTEC is more profitable on a percentage basis than his previous unit, but he ran 23 countries in Europe.

He opened new markets and he knows how to grow new markets. So we felt Mac was the right candidate.

We had other candidates that were considered and all pretty strong people. We just felt Mac was the best one to fit our personality, our communication style, our openness in terms of communicating with each other, and he is very growth oriented, which is one of the things that was a very top point in the Board's interview process.

Okay. Good.

Bob, what was the other part of your question?

Well, I just mean, I guess what should the revenue growth rate of this company be? I mean revenue growth has been very disappointing.

Puerto Rico has been in recession forever. It's not new that Puerto Rico is in recession.

I am not sure that it's worse or better. But what should the growth rate of this business be and how do you get there?ss

I think we excited a little bit for this year. By the way, I can tell you as to what we discussed before is mostly we have been slower the process of doing expansion outside of Puerto Rico.

To Frank's point, that has not changed. But of Mac joining us with his experience in markets outside of the U.S., so that is continue to be the key strategy for EVERTEC.

We are resetting a little bit during 2015, but the target is to accelerate our topline growth to enable that we have to these costs in the past. To achieve that and as in our prior discussions, is not only the organic growth but also doing alliances, JV or M&A and continue to be part of our strategy.

So I think that's what you will see that we will continue to pursue that we continue to pursue that path. We continue to see significant opportunities outside Puerto Rico and Latin America.

So not only we will continue to see significantly higher organic growth as compared to Puerto Rico, but again it was key and part of our test is really to add to our organic growth, acquisitions or alliances that has not happened, has taken longer than we were expecting. However that case has not changed.

We continue looking forward. We are very active looking for opportunities outside Puerto Rico.

And on top of that, we are very focused in expanding in Colombia.

Great. Thank you very much.

Just a follow-up to that, from our side. Colombia is of our key markets where we are paying a reasonable amount of attention to.

We are going to spend more money in Columbia establishing our footprint there. We also have lot of focus in Mexico as one of our key opportunities mainly in certain market segments and we are going to expand our footprint in the Caribbean.

Hi. Just a question about the guidance.

If I look at the fourth quarter revenue growth rate of 1%, the guidance for 2015 says 2% to 3%. So just trying to figure out what's going to improve and to accelerate as we get into next year?

Where is that visibility coming from? And how conservative are you being since you guys have had some issues hitting revenue guidance in the past?

First, we put together a forecast for next year that we are comfortable that we will achieve. But I think key to remember that Q4 of this year has lower hardware and software that actually decreased our revenue for the quarter.

We are not expecting that for 2015. So most of that drag during 2014 was caused principally by the hardware and software sales and we do not expect that occurring for next year.

So that gives us a much better comfort to achieve our numbers for next year. In addition to that, we have visibility for some of our projects.

As you know, around 85% of our revenue is recurring revenue. And that has not changed and will not change for next year.

We do recognize the challenges in Puerto Rico. That's why we put together forecast 2% to 3%, but again as you take out the hardware and software impact during 2014, our revenue grew around 3% to 4%.

So the 2% and 3% actually consider the economic situation in Puerto Rico. So even with that, our business has been resilient, really, during the last few years even though the economy been negative.

So that's why we feel comfortable with the guidance that we put forward. Again, it doesn't consider any significant transactions.

Those, obviously, will happen during the year, we will talk about in out next calls.

Okay and just an update on some of those JV and alliances. I know there are not any in the guidance, but are we any closer to signing anything versus not having the CEO on board are those things pushed out even further?

This is Frank D'Angelo again. Really not having the CEO on board, really was irrelevant to any of the activities that we are discussing and we are actually no closer to signing any other JVs.

Okay and then just finally on capital allocation. What are the Board's thoughts on buying back stock here versus M&As?

Especially given the stock price has been depressed for awhile? Just how do you think about allocating capital?

Yes. As we mentioned today, we did repurchase approximately $26 million of our stock in Q4.

And as a reminder we still have around $50 million on the given program approved by our Board. But as we have discussed in the past, we will continue to invest in the growth of our business which includes strategic M&A, the joint venture and alliances that we have discussed before.

We will continue making our mandatory debt repayment, of course. And as you know, we have a quarterly dividend in place.

So the best use of the free cash flow after or beyond our core objective is something we will continue discussing with the Board. But keep in mind, we still have $50 million in our program available and as we disclosed when it was approved we still have nine months to deliver on doing the buyback.

So our priority will be, obviously we see long-term value, growing the company and doing acquisitions or alliances, but at the same time, we will balance that with the continuation of our buyback program.

Okay. Thanks for taking my questions.

You are welcome.

Great. Thanks.

First question for Frank, regarding Mac. Just I caught the answer that you gave to Bob on why Mac, but what can we expect him to do differently, I guess is my question?

Is it borrowing from a global payments playbook with pricing and inorganic growth that maybe attracted you to Mac over some of the other candidates? Just trying to better understand what he might do differently.

Well, based on Mac's background, he has strength and knowledge in a lot of key areas. Every CEO would do things differently.

Sure.

I think Mac is in the process of has learning the rest of our businesses and looking at where the opportunities are. I think you will see Mac more aggressive on the sales front.

I think you will see Mac more aggressive on expansion outside of Puerto Rico. He is a pretty solid aggressive individual and knows the business.

He knows how to motivate people. We aren't satisfied with our performance outside of Puerto Rico.

We are definitely focused on paying attention to that this year. The Board and Mac.

Understood. No, I appreciate that candid answer, which leads to my follow-up which is, given that and like with the global payments playbook with the JVs and inorganic growth has worked, but there could be a cost to that as well as you sort of alluded to perhaps with the sales front.

Does this guidance contemplate those kinds of changes that might occur? I am just curious what was factored in, because I fully appreciate the challenge of giving guidance before he comes aboard, but just trying to understand how firm these numbers are.

Hi, Tien-tsin Huang. This is Juan.

Our guidance basically considers what we are expecting in terms of growth in transactions. Obviously we always look for opportunities in terms of pricing.

So it's part of regular process looking for areas where we can be more aggressive. But h guidance really most of it is organic growth looking for or mostly concentrating in volume growth and transaction growth.

That include, obviously, the customers we signed last year. We signed around 12 to 15 new customers last year that we will be working in implementing this year.

So this year consider implementation of those customers throughout the year. The organic growth that we continue to see outside Puerto Rico, but also in Puerto Rico, we will not have the drag that we had last year in hardware and software, as we discussed.

So most of it, I can tell you is just cross selling to existing customers new products. As Frank mentioned today, we have couples getting out of the door.

So all basically built up into our numbers to get to our growth.

Okay. Fair enough.

Maybe two quick housekeeping questions and then I will jump off. Just the CEO succession cost, the $0.07 in the fourth quarter, was that contemplated in guidance?

And then finally just, did you give the growth rate in payments in January? I think you said 5% for the fourth quarter, but can you give us a sense of what January looks like just because that should reflect the lower gas prices?

Thank you.

I don't have yet the final number for January. We don't expect any surprise really in January.

I think it will be consistent. So far so good.

We are not seeing really any significant changes as compared to the last two quarters. But we didn't understand the first part of your question about CEO?

The succession cost that drove the higher SG&A in the quarter, was that contemplated in your prior guidance?

No, it was not. No, in the last year, you said 2014?

Yes. Sorry, the fourth quarter.

I apologize.

We adjusted some EBITDA but no, it was not.

Okay. All right --

[indiscernible] has been recognized in Q4. So it would not impact 2015.

Understood. So X-ing that out is good expense in the quarter.

Thank you.

Okay.

Good afternoon. Thanks for taking my question.

Maybe one more, if I could try differently on Mac's priorities when he takes the helm in April. Could you maybe give us any color on what you have asked him to concentrate first, second and third?

Maybe asking it a little bit differently from the previous questions?

Yes. This is Frank.

Mac is working as a consultant to me during this period and we have had multiple discussions. Mac has been learning the management team, looking at our operations.

I think the biggest focus Mac is going to have is in two areas. The first area is going to be our sales channel and how we go to market and our go-to-market strategy and how we structure our sales channel.

I think the second one is going to be a little bit more in the operational excellence area in terms of solid delivery to our customers in a cost-effective manner. We feel there is some opportunity in there for us to do better, both on the cost side and on the performance side.

I think another area of his focus is going to be on JVs and partnerships. If you notice, we have added some fairly diverse people to our Board.

We have added Brain Smith, who can help us throughout Mexico, Central America, South America and the Caribbean. And Olga who has a tremendous number of contacts in the Columbia marketplace.

So I think he will be more focused on JVs and partnerships as we go forward with Mac's leadership and bringing them closure.

That's helpful color. Thanks.

And then maybe as a follow-up, for a while there in 2014 the merchant acquiring revenue growth was outpacing the payment processing growth for a while and that's no longer the case as of Q4. Understand the visibility is limited and you mentioned a number of moving parts in the color commentary, but can you maybe discuss what the underlying assumptions are in terms of any relative growth difference between payment processing and merchant acquiring for 2015?

Yes. Last year really, we lapsed the implementation of BBVA with Oriental.

It was in the third quarter of last year. So we started the implementation in Q4 of 2013.

-- I am sorry, we completed in the third quarter of 2013. So we lapsed a full year in the third quarter of this year.

That's why you saw the first three quarters of 2014 faster than Q4. Our guidance considers basically 2015 more in line with the Q4 for merchant acquiring.

So that's basically how we look more for next year in the merchant business more in line with Q4 because we are taking out or we will not have paying back the BVVA implementation.

Understood and then just a final last one for me. It sounds like your guidance basically implies that business solutions is no longer going to be a drag, meaning it's going to be flattish for the year.

Is that roughly right?

You are right. It will be low single digit.

But, yes, you are right. We are expecting it to be drag this year.

Great. Thank you.

Hi. Thanks.

Good afternoon. I would just like to get a little more color, if you could, on the Colombian market.

You made some progress in 2014 across the thing. It sounds like you are investing more this year.

Can you just give us a little more color on what you are investing in? And is there a meaningful revenue contribution in 2015 from your expansion efforts so far?

Yes. Colombia, as I mentioned, is our focus.

As Frank mentioned, some of the investment is, we will add more people in the street. We will contemplate looking for opportunities really to sell in Colombia.

We put together our platform to start servicing Columbia. There are some related expenses to that, just to have that fully implemented, not only for debit but for credit and prepaid.

We are completing that process just to be able to process any time both, debit card or prepayment or credit card. So that's part of what we have been investing in Colombia during this year.

In terms of our revenue, we will expect to start seeing revenue during this year. So far it is going to be a small amount.

So it's nothing that will change our guidance for 2015. But we are putting the bases really in Columbia to start seeing an accelerated growth starting 2016.

Okay. Great.

Juan, thanks. And does that mean and I may have missed it, is your guidance for revenue in 2015, are we moving in the path of say in, 9% or so growth outside of Puerto Rico?

It would be low double digit during next year. That's what we are expecting right now for 2015 as compared to 2014.

Okay and then one last question for me, just on Puerto Rico. It sounds like trends from third quarter to fourth quarter were relatively stable, good benefit from lower energy prices.

What about the proposal for a VAT tax? I think you talked about in the past.

There hasn't been as direct proposals to tax the consumer through the spending. Is this something that it could actually have an impact on your business?

Can you talk about that perspective and the likelihood?

Yes. Well, it is really too early to know right now the impact.

The proposed project just got to the legislature. And now it is in discussing and amendment process.

So we expect probably two or three weeks of discussion. As you can imagine, everyone is interested in having a say in the project.

In general, what they propose is to establish a value added tax. So it will increase the consumption taxes, however at the same time, they are expecting to reduce tax rates to both individual and corporations.

So it's hard really to guess or to understand what the impact will be. What the government really is trying to do is to bring taxes from the shallow economy that if we have this cost in the [indiscernible], it's a very big year in Puerto Rico.

So we are basically looking into the project as we speak and looking to the amendments to the project. But it is hard really to assess at this moment because usually and we suspect that it probably will suffer major changes to what has been proposed.

Okay. Great.

Thanks so much.

Hi. This is actually Faton Begolli, calling in for Sara Gubins.

So your 2015 revenue guidance expects business solutions of low single-digits, merchant acquiring more in line with fourth quarter. Could you quantify what you expect for payment processing in 2015?

It would be more or less the same to last quarter last year. I think both together, it will be around that 2% or 5% what we see last quarter.

And again, low single digit for business solution.

Okay. Thank you for that.

Could you also, switching gears a little bit, go into more detail on the current consumer sentiment in Puerto Rico?

Yes. Well, it is hard to guess, right.

If we look at the data, even the data issued by the government of Puerto Rico, the official data, retail sales continued to be up. They are positive.

Has been positive since June 30. And this is retail sales excluding auto and cement sales.

Except for over 2014, where we saw an additive, which actually we also saw that in our numbers. But all-in-all, when you look at the retail sales, it has been possibly the whole year, same with sales tax collection.

However, when you look at the GDP, the economic activity index, it has been negative. So it's kind of hard really to guess what exactly is going on.

I think the consumer sentiment will go up and down. That's what we are seeing during a month, their transaction go through the roof.

Others really very slow or flat. We explained this part of the whole discussion as we discussed in the previous quarter.

First of all, PREPA or the electrical authority now is a new tax. So there has been a lot of noise in the market.

But we are seeing, at the end of the quarter, it is kind of, we have consistent growth but on a monthly basis, we see some up and down and acting again is the sentiment really varies as to the different project or what's going on in the press here in Puerto Rico.

I see. Okay, all right.

Thank you for that. So my last question is just, is there any foreign exchange impact worth calling out?

No. As a reminder, around 97% of our revenue is in U.S.

dollars. So in terms of our collection, is minimum exposure that we have.

Okay. That's all I had.

Thank you.

I just wanted to follow-up on the hardware/software sales. It would be helpful and I have asked that before, if you would break that out since it is so dramatically different margin and some companies in this space do tend to break that revenue piece out because of the different margin characteristics?

And then just a question, what percentage of your revenue today is from the Puerto Rican government? And is that where you are seeing some softness in the hardware/software sales?

And what do you expect the government revenue to grow? Or is it down year-over-year?

Or do you expect it to be down?

Yes. Firstly, you are right.

Some of the impact in hardware and software ahs been related to government accounts, different agencies. Regarding the government, it is around 10%, 11%.

I think it will be probably the same, slightly lower for next year. We are not expecting that really to change.

In general, the services we provide excluding hardware and software mission critical services, we don't see that changing, more or less. It should be more or less the same as last year.

We might see some hardware and software during the year related to some of the refresh. They have been postponed, right, as discussed during 2014.

But I don't think that will change dramatically. I think, in any case, it will be slightly lower as a percentage for 2015.

Okay and then coming into this quarter you had expected an acceleration in non-Puerto Rico revenue growth. Granted, it wasn't down but it was flat at 9% and you are forecasting low double- digit.

Why did you not get the acceleration you expected in the fourth quarter? And what gives you the confidence that it's going to accelerate somewhat from the fourth quarter levels next year?

In part, what we see, it has to do with implementation of the new customers, right. The timing impact a little bit our growth from quarter-to-quarter.

For next year, we consider basically the different customers that we signed in 2014 that we do expect to implement during 2015. So that's part of what added or consider when we look at next year.

So that's mostly what we are expecting just to implement some of the sales that we did during 2014. Q4, what we saw, basically we continued to see acceleration in our card products double digits.

But we saw a little bit of a slowdown, was more in the ATM that was high single digit during the quarter. But again, that goes over 10%, lower.

So ATM not necessarily go always double digit. But that's basically what we saw here of a slowdown in the ATM processing.

But again, card products continue to grow double digits.

And then in your guidance for next year, the hardware/software sales you expect to be flat as part of your?

Slightly higher than 2014. 2014 is normally low.

So in no way we are projecting this to be even close to 2013 or not even close yet to the average in previous years. So slightly higher, but not much.

What was it in 2014?

It was around $4 million, $4.5 million.

What was it in 2013?

It was $14.5 million.

Okay. Thank you.