Euronet Worldwide, Inc.

Greetings and welcome to the Euronet Worldwide Fourth Quarter 2024 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 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 withdraw 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. Adam Goddard, General Counsel for Euronet Worldwide. Thank you, Mr. Goddard. You may begin.

Thank you. Good morning, everyone, and welcome to Euronet's fourth quarter 2024 earnings conference call. On today's call, we have Mike Brown, our Chairman and CEO, and Rick Weller, our CFO. Before we begin, I'd like 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 Euronet or its management's intentions, expectations, or predictions of future performance are forward-looking statements. Euronet's actual results may vary materially from those anticipated in these forward-looking statements as a result of a number of factors, including those 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 the most comparable GAAP measures. At this time, I'll turn the call over to our CFO, Rick Muller.

Thanks, Adam. Welcome, everyone. Today, I will provide some brief comments about our fourth quarter 24, as well as the full year 24. With that, I'll begin my comments for the fourth quarter on slide five. We delivered a record fourth quarter on all key financial metrics. We delivered revenue of a billion dollars, operating income of 123 million, and adjusted EBITDA of 166 million. Leading the way was EFT with double-digit constant currency growth across all financial metrics. Money transfer delivered constant currency fourth quarter revenue growth of 9%, adjusted operating income growth of 12%, and adjusted EBITDA growth of 9% compared to the prior year fourth quarter. ePay delivered double-digit constant currency growth of 10% to 12% across all financial metrics. Our adjusted EPS was up 10% compared to the prior year, fourth quarter, and exceeded consensus analyst estimates of a range of $2.02 to $2.06, depending on which consensus source you used. I'd like to also point out that while the $2.08 adjusted EPS is an excellent finish for the year, it would have been about 3 to 4 cents higher if not for the decline in FX rates throughout the quarter. Moreover, the fourth quarter, we continued our track record of producing strong free cash flows, producing nearly $65 million. In the quarter, we took the opportunity to repurchase about a half a million shares, half a million of our shares. Given the timing of the repurchases, there was only a marginal benefit, about a half a cent or less than one quarter of a percent to our fourth quarter adjusted EPS. But as you know and we know, these repurchases will improve earnings per share by a percent for all future periods. Next slide, please. Slide six shows our results on a reported basis. On a year-over-year basis, the currency headwind impact was modest with differences in the major currencies in the low single digits. To normalize the impacts of these currency changes, we presented our results adjusted for currency on the next slide. On slide seven, it shows our results adjusted for currency fluctuations. EFT revenue grew 13%, operating income grew 35%, and adjusted EBITDA grew 19%. Revenue, adjusted operating income, and adjusted EBITDA growth in the fourth quarter, 24, was driven by some continued extension of the travel season in Europe, which shifted tourism-related revenue from the third quarter to the fourth quarter. Growth in the merchant services business growth from new market expansion, and attentive cost management. Revenue and operating margins benefited from rate increases related to interchange and domestic and international access fees in certain existing markets. Epay revenue grew 10% operating income and EBITDA each 12%. Epay's double-digit growth was driven by continued growth in the core ePay business, including strong growth in digital branded content together with promotional campaigns. Money transfer grew 9%, revenue grew 9%, operating income 12%, and adjusted EBITDA 9%. Revenue, operating income, and adjusted EBITDA was the result of 14% growth in the U.S. outbound transactions 11% growth in international originated money transfers, and 8% growth in XE transactions, partially offset by a 14% decline in intra-US business. These transaction growth rates included 33% growth in our direct to consumer digital transactions. Overall, we are very pleased that we have delivered double-digit growth across all consolidated financial metrics. Moreover, these double-digit growth rates produced operating margin expansions across all three segments. To use an old automotive maxim, we're hitting on all cylinders. Our fourth quarter momentum, growth trajectory, and margin results nicely position us for a very good 2025. With that, I'll go to slide eight and make a few comments about our balance sheet. Slide eight presents a summary of our balance sheet compared to the prior quarter end. As you can see, we ended the quarter with 1.3 billion in unrestricted cash and debt of 1.9 billion. The net decrease in unrestricted cash and cash equivalents is the net result of working capital fluctuations, share repurchases, repayment of short-term borrowings, and cash generated from operations. This net decrease in debt was due to repayment of short-term borrowings. Availability under the company's revolving credit facility was approximately $1.3 billion at year end. compared to $670 million at the end of September. The additional availability under the revolving credit facility was the result of an increase and extension of our credit facility in December from $1.25 billion to $1.9 billion. The increase in our facility includes a 10 basis point reduction in our borrowing costs and highlights the strength of our banking partnerships and provides additional capital flexibility to continue to grow the business. As many of you know, we have a March 15th put date on our $525 million convertible bonds. The indenture requires us to issue a notice next week informing the market of this put date. so you will likely see a procedural 8K related to the repurchase notice. We anticipate that given where the bonds are trading and our current share price, that the bondholders will exercise their put option. We are fortunate to have a strong balance sheet, a good cash position, capacity on our revolver, and the option to issue another convertible bond among other alternatives. We are watching the market and have the flexibility to be opportunistic to make the best capital decision for the company. I'll go to slide 10 now. As you know, we set adjusted earnings per share guidance range for 2024 at 10 to 15%. And we said that we would be working hard to be at the high end or above that range. Well, we did exactly what we said by delivering above the high end of the range, rounding down to 15% growth year over year. For the full year 24, We delivered record results across all financial metrics, including consolidated revenue of $4 billion, adjusted operating income of $500 million, and adjusted EBITDA of almost $700 million. Additionally, if you look more closely at the details behind the $8.61 adjusted EPS, you will see that we benefited from share repurchases. you will equally see that interest expense and income tax expense increased year over year. And further yet, you will see that the increase in interest and taxes was offset by the benefit from share repurchases, essentially boiling down the 15% increase in adjusted EPS attributable to the 16% increase in operating income. That's real earnings from real operating growth. I'd say that's a high quality of earnings growth story. 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 operating profits from all three segments, and we saw gross margins and operating margins expand year over year. Before I wrap up, I want to provide a bit more analysis around our adjusted EPS guidance. We expected our 25 adjusted EPS growth for the full year to be in the 12 to 16 percent range. We are currently forecasting in the first quarter a tax charge of approximately 20 to 25 cents per share attributable to state income tax expense related to the non-recurring first quarter repurchase of the company's convertible bonds. This charge has been considered in our full year guidance, but will be recorded in the first quarter, essentially front-loading the tax which obviously will make the first quarter look a little unusual. Further to this point, again, fully considered in our guidance range, this additional tax will push our full year effective tax rate to the upper 20s. Excluding this one time non-recurring tax item, you will see that our annual effective tax rate is generally expected to be similar to this past year. It has been another great year at Uranet, and with that, I'll turn it over to Mike.