Euronet Worldwide, Inc.

Greetings and welcome to the Euronet Worldwide 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Clausen. General Counsel for Uranet Worldwide. Thank you. Mr. Clausen, you may begin.

Thank you. Good morning, everyone, and welcome to Uranet's fourth quarter and full year 2023 earnings conference call. On the 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're making today. Statements made on this call that concern URNF or its management's intentions, expectations, or predictions of future performance are forward-looking statements. URNF's actual results may vary materially from those anticipated in these forward-looking statements as the result of a number of factors that are listed on the second slide of our presentation. Except as may be required by law, URNF does not intend to update these forward-looking statements and undertakes no duty to any person to provide an update. You should avoid placing undue reliance on these forward-looking statements. In addition, the PowerPoint presentation includes the reconciliation of the non-GAAP financial measures we'll be using during the call to their most comparable GAAP measures. Now I'll turn the call over to our CFO, Rick Weller.

Thank you, Scott. Good morning, and I would like to thank everyone for joining us today. I will begin my comments on slide five. For the fourth quarter, we produced revenue of $957 million, operating income of $97 million, adjusted operating income of $100 million, and adjusted EBITDA of $147 million. These results were made possible by contributions from all three segments. Adjusted EPS was $1.88 per share compared to $1.39 in the fourth quarter of 2022, and ahead of the $1.75 guidance we provided for the quarter. We exceeded our guidance by better than expected performance across the business, good expense management, lower than expected tax rates, and improved FX rates against the U.S. dollar. I would also like to call out that adjusted operating income, adjusted EBITDA, and adjusted EPS excluded a $2.5 million non-cash purchase accounting charge. Next slide, please. Slide six shows our results on an as-reported basis. On a year-over-year basis, we saw our most significant currencies increase at mid-single to low double-digit rates, with a few exceptions, like the Egyptian pound, which declined 26%, and the Pakistan rupee, which declined 21%. To normalize the impacts of these currency changes, we have presented our results adjusted for currency on the next slide. Here on slide seven, we show our results adjusted for currency fluctuations. Before I jump into each segment, I want to reflect on the strength of our three segments, which produced another record consolidated revenue quarter and strong earnings growth across all three segments. EFT revenue grew 9% while adjusted operating income grew 53% and adjusted EBITDA grew 21%. This strong growth was the result of an increase in international withdrawal transactions combined with the continued strong performance from our merchant acquiring business where profits have doubled over the past two years. EFT margins improved year-over-year due to an increase in high-value cross-border transactions. E-pay revenue grew 7%, while adjusted operating income and adjusted EBITDA each grew 3% year-over-year. This increase is primarily from continued growth in the core E-pay business, including strong growth in digital channels, partially offset by fewer promotional campaigns from our retail partners in the fourth quarter compared with the prior year. Excluding promotional activity, our ePay business revenue for the fourth quarter grew 8% and the operating income and adjusted EBITDA each grew 12% compared to the fourth quarter of 22. highlighting the continued strength of our core ePay business. ePay margins came in a bit due to the mix of higher value promotional transactions in the fourth quarter of last year. Money transfer, fourth quarter revenue, adjusted operating income, and adjusted EBITDA grew 7%, 27%, and 20% respectively. This growth was the result of 8% growth in U.S. outbound transactions, 10% growth in international originated money transfers, which includes 7% growth from Americas outside the U.S., 8% growth in transfers initiated largely in Europe, 20% growth in transfers initiated in the Middle East and Asia, and 17% growth in XE transactions, partially offset by a 13% decline in intra-US business. These transaction growth rates include 20% growth in direct-to-consumer digital transactions, adjusted operating income, and adjusted EBITDA growth, also included effective expense management, producing the best operating margin in the past three years. Money transfer margins continued their improvement trends as driven by revenue growth and attentive expense management. In conclusion, we are pleased to see growth across all segments, together with generally improving profit margins. Our fourth quarter growth trajectory and margin results position us nicely for a robust launch of 2024. With that, let's go to slide eight to make a few comments about the balance sheet. Here on slide eight, we present our year-end balance sheet compared to the prior quarter. As you can see, we ended the fourth quarter with more than $1.2 billion in unrestricted cash and debt of approximately $1.9 billion. The increase in unrestricted cash and cash equivalents is mainly due to cash generated from operations of 98 million, the return of 75 million in cash from our ATMs following the peak travel season, and working capital fluctuations partially offset by $54 million in share repurchases and the issuance of a $60 million convertible note receivable. The increase in debt was largely due to borrowing on the revolving credit facility to facilitate payments across several currencies over the year end. These borrowings were largely repaid immediately following year end. Now let's go to slide 10 for a few comments on the full year. For the full year 2023, we delivered record annual consolidated revenue of $3.7 billion, adjusted operating income of $432 million, and adjusted EBITDA of $619 million. Adjusted EPS for the full year was $7.46, a 15% increase compared to the $6.51 for 2022. The full year results are largely in line with the fourth quarter, so I won't go through all the details again. However, I think it bears repeating that we are extremely pleased with the full year record revenue and adjusted earnings per share. driven by contributions from all three segments. As we reflect on 23, we are pleased with the resilience of all three segments. In EFT, we saw transactions improve in the fourth quarter and even exceed travel trends. And our merchant acquiring business, acquired in 2022, continued to exceed expectations. For ePay, We produced continued growth in our core business, especially in digital channels with more focus on expansion of our own products. In money transfer, we closed the year with another quarter of double-digit operating margin and continued to expand both our physical and digital networks. We are also continuing to build momentum in our digital initiatives as we sign more REN and dandelion deals. As we explained in the third quarter, we expect our 2024 adjusted EPS growth to be in the 10% to 15% range. And while we feel confident with that range, you can rest assured that we are working hard to deliver earnings above the range. It has been another great year for Uranet. And with that, I'll turn it over to Mike. Slide 15, please.