Euronet Worldwide, Inc.

Greetings, and welcome to the Euronet Worldwide First Quarter 2024 earnings 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 11 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Carlson, General Counsel for Euronet Worldwide. Thank you. Mr. Carlson, you may begin.

Thank you. Good morning, everyone, and welcome to Euronet's first quarter 2024 earnings conference call. On the call today, 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 will be making today. Statements made on this call that concern YourNet or its management's intentions, expectations, or predictions of future performance are forward-looking statements. YourNet's actual results may vary materially from those anticipated in these forward-looking statements as a result of a number of factors that are listed on the second slide of our presentation. 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 I'll turn the call over to our CFO, Rick Weller.

Thank you, Scott. Good morning, and thank you to everyone joining us today. I will begin my comments on slide five. For the first quarter, we delivered revenue of $857 million adjusted operating income of $63 million, adjusted EBITDA of $109 million, a record first quarter across all three metrics. These results were made possible by contributions from each of the segments, but with a particularly strong earnings contribution from the EFT segment due to an increase in international transactions, growth of our merchant services business, and strategic investments in new markets that delivered double digit growth over the prior year. We're very pleased that the business delivered a record breaking first quarter adjusted EPS of $1.28, a 47% increase over the prior year of 87 cents. We were able to deliver this strong earnings growth due to our continued focus on expanding the business in new and existing markets, adding more products and continued investments in our industry-leading technology across all three segments. Moreover, we are pleased that we were able to deliver results which exceeded analyst expectations, consensus expectations, for both revenue and adjusted EPS in the first quarter following our change from quarterly to annual adjusted EPS guidance. And before someone says the favorable earnings all came from taxes, I would like to point out that approximately 4.5 million or approximately 10 cents per share benefit was realized from the resolution of tax matters and 3 million or approximately 5 cents per share from the recovery of a duty fee paid last year. Excluding these benefits from the $1.28 per share, pro forma adjusted EPS of $1.13 nicely exceeded consensus estimates. The pro forma $1.13 per share represents a 30% growth over the first quarter last year. This favorable pro forma $1.13 per share compared to Bloomberg's posting of consensus adjusted EPS of approximately $1.04 was the result of more revenue and stronger margins. Needless to say, this strong start to the first part of the year strengthens our confidence in the 10 to 15% annual adjusted EPS growth guidance range we provided for 2024. Nothing like starting the year with the wind at your back. Slide six presents a summary of our balance sheet compared to the prior quarter. As you can see, we ended the quarter with a relatively small increase in net debt, which was the combined result of the generation of cash from operations, the use of cash for the Infintium acquisition, and more cash placed in the ATMs to meet seasonal demand. And overall, our net debt leverage remains relatively conservative at about one times EBITDA. Turning to the next slide, slide seven, our results, we present our results on an as reported basis. On a comparative basis, FX translation didn't produce a lot of net differences year over year, but let's go to slide eight and talk about our results on a constant currency basis. I'm on slide eight now. Building on the momentum from last year, we are pleased to start 2024 with good consolidated revenue and strong earnings results. all segments played a role in the quarter. Starting with our EFT segment, revenue grew 12%, adjusted operating income grew 220%, and adjusted EBITDA grew 54% when compared to prior year. This notable growth was fueled by the rise in both domestic and international cash withdrawal transactions, double-digit growth in our merchant services business, and further expansion into new markets. Operating margins expanded nicely due to revenue growth complemented by effective cost management and the de-installation of loss-making ATMs in the fourth and first quarters. ePay continued its constant currency revenue growth at 8% with consistent revenue and profit per transaction driven by continued growth in both digital media and mobile sectors together with its push to expand in new markets. To that end, investments in product and geographical expansion have had a tempering effect on earnings growth where we can see EBITDA and adjusted and operating income come down by about 2% to 3%. The ePay team is investing resources to develop and promote new products and solutions to supplement the core ePay business for sustainable growth in the future. Given ePay's past success in achieving growth while transforming the product mix from a predominantly mobile-only business to a mix of branded payment content, I expect ePay's strategy of introducing its own products and solutions while also expanding geographically and growing the core business to restore ePay's business to the earnings growth trajectory it has historically delivered. Money transfer revenue, operating income, and adjusted EBITDA grew by 7, 17, and 10% respectively. The 7% growth in revenue was primarily driven by nearly double-digit growth in cross-border transactions, offset by a decrease in intra-US transactions. direct-to-consumer digital transactions increased by 23%, reflecting strong consumer demand for digital products. Money transfers revenue and gross profit per transaction were very stable and consistent with the prior year. In addition to the good revenue growth, the money transfer team further improved its operating margins by approximately 60 bps over last year through scale and effective cost management. In summary, these meet and beat first quarter results further strengthen our confidence in the 10 to 15% earnings growth expectation we have for 2024. You might say, With a strong first quarter, why not increase your 10% to 15% range? As we previously said, we want the investment community to be confident in our long-term earnings growth. Remember, we found that the S&P 500 was getting twice the valuation as Uranet, yet delivering half the earnings. we will consistently be aiming for earnings in excess of the range. But we want you to have confidence in the consistency of our long-range growth expectations, similar to our historical growth performance. So by retaining our growth range of 10 to 15 percent, it doesn't mean that we're expecting deceleration. It means we want you to be confident in our delivery of long-term earnings growth. With that said, I'll turn it over to Mike.