Euronet Worldwide, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Euronet's worldwide third quarter 2022 earnings call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone keypad. At this time, I would like to turn the conference over to Mr. Scott Clausen, General Counsel. Sir, please begin.

Thank you. Good morning, everyone, and welcome to URNS Quarterly Results Conference Call for our third quarter 2022. On this call, we have Mike Brown, our chairman and CEO, and Rick Weller, our CFO. Before we begin, I need to call your attention to the forward-looking statements disclaimer on the second slide of the PowerPoint presentation we'll be making today. Statements made on this call that concern Uranet or its management's intentions, expectations, or predictions of future performance are forward-looking statements. Uranet's actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors that are listed on the second slide of our presentation. Except as may be required by law, Uranet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any updates. In addition, the PowerPoint presentation includes a reconciliation of the non-GAAP financial measures we'll be using during the call to their most comparable GAAP measures. Now we'll turn the call over to our CFO, Rick Weller.

Thank you, Scott, and thank you to everyone who's joining us this morning. I will begin my comments on slide five. On a consolidated basis, we produced revenue of $931 million, operating income of $168 million, and adjusted EBITDA of $212 million. We delivered adjusted EPS of $2.74, a 55% increase from $1.77 in the third quarter of last year. These strong double-digit improvements in all metrics were driven by double-digit constant currency growth from all three segments, including a strong rebound in domestic and international cash withdrawal transactions in the EFT segment, as the strong demand for travel continued following the lifting of COVID restrictions across the globe. Next slide, please. Slide six. presents our balance sheet compared to the prior quarter. As you can see, we ended the quarter with $967 million in unrestricted cash and $1.7 billion in debt. The decrease in cash is largely from the repayment of debt and the impact of foreign currency fluctuations on cash, partially replenished by cash generated from operations of $157 million. Next slide, please. And slide seven now. Here we present our results on an as-reported basis for the quarter. I'd like to point out that since we last spoke to you in July, we continue to see a strengthening of the U.S. dollar against most of the significant currencies where we do business. Similar to last quarter, many of the currencies in our most significant markets declined in the 10% to 20% range versus the U.S. dollar compared to the prior year. To normalize the impact of these currency fluctuations, we have presented our results on a constant currency basis on the next slide. Slide 8. The strong improvements in EFT revenue, operating income, and adjusted EBITDA were the result of increased domestic and international withdrawal transactions driven by improving trends from the easing of COVID restrictions across the globe, together with the addition of good performance from the acquisition of the Piraeus Bank merchant acquiring business in March of this year. On a year-over-year basis, revenue and gross profit per transaction also expanded as a result of improving international transactions, which generate more revenue per transaction than domestic transactions. ePay revenue grew 18%, operating income grew 29%, and adjusted EBITDA grew 24%, driven by continued expansion in mobile and digital branded payments, together with continued growth of the digital distribution channels. Also included in these third quarter results is a significant benefit from the loyalty reward programs offered by certain large retailers, which were recognized in the third quarter of this year, while similar programs were largely recognized in the earlier quarters of 2021. Revenue and gross profit per transaction were consistent on a year-over-year basis. Money transfer revenue, operating income, and adjusted EBITDA grew 11%, 23%, and 29%, respectively. This growth was the result of 14% growth in U.S. outbound transactions, 12% growth in international-oriented originated money transfers, and of which transfers initiated largely in Europe grew 10% and transfers initiated in the Middle East and Asia grew 23%. In addition to these impressive growth rates, XE transactions grew 21%, partially offset by a 13% decline in the U.S. domestic business. These growth rates include 40% growth in the direct-to-consumer digital transactions. Revenue and gross profit per transaction, as well as our average send amounts, were largely consistent on a year-over-year basis. And, as you can see across all segments, this third quarter posted margin expansion both year-over-year and sequentially. Moreover, I'd like to note that we have not yet seen any significant pressure from inflation in revenue or gross profit in any of our segments. We have only seen moderate impacts on higher SG&A expenses, primarily salaries. We continue to be watchful about how inflation may impact our business going forward. However, to date, the business has shown great resilience in light of the current inflationary conditions. Regarding FX pressure, I mentioned earlier that we have seen currency declines in the 10% to 20% range on a year-over-year basis. For that matter, these similar declines relate to the 2019 FX rates as well. The pressure continued, certainly intensified during this quarter, with currencies weakening against the U.S. dollar anywhere from 5 to 13 percent, with some of the more significant declines coming at the end of the quarter. Despite the impact of these FX rate changes since we provided guidance in late July, we continue to expect our full year 2022 adjusted EPS to be in the $6.30 to $6.40 range given current FX rates. As I conclude my comments, I'd like to reiterate that we are extremely pleased that each of our segments produce double digit constant currency growth across revenue, operating income, and adjusted EBITDA in the third quarter. This is a true testament to the resilience of our business, driven by our geographic and product diversity, as well as our best in class technology platforms. Taking into account the full FX impact on next year's results, including the accelerated FX declines we've seen in the latter part of the third quarter, We believe that this momentum will still allow us to produce mid to upper teens earnings growth rates for the full year 2023. For perspective, if we were to apply current FX rates to our 2019 earnings, we would see that they would have been approximately 11% lower. Accordingly, Next year's earnings growth would reflect a nearly 20% earnings growth over 2019 earnings with comparable FX rates. Moreover, increases in interest rates will have another 5% to 6% impact next year compared to 2019 earnings. Accordingly, if you adjust for FX and interest rates, you can see that our underlying business is robust and continues to grow very nicely. This gives us confidence in our expectation that we can continue our long history of compounded double-digit earnings growth well into next year and beyond. With that, I'll turn it over to Mike.