Priority Technology Holdings, Inc.

Good day, and thank you for standing by, and welcome to the Priority Technology Holdings Second Quarter 2021 Earnings Call. At this time, our participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. And I would now like to hand the conference over to Dave Faupel. Please go ahead.

Good morning, and thank you for joining us. With me on the call today are Tom Priori, Chairman and Chief Executive Officer of Priority Technology Holdings, and Mike Volkamer, our Chief Financial Officer. Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements, which involves a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. The company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise. We've provided detailed discussion of the various risk factors in our SEC filings, and we encourage you to review these filings. Additionally, we may refer to non-GAAP measures, including but not limited to EBITDA and adjusted EBITDA during the call. Reconciliations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our press release and SEC filings available in the investor section of our website. With that, I would like to now turn the call over to our Chairman and CEO, Tom Priori.

Thank you, Dave. And thanks to everyone for joining us for our second quarter earnings call. I would like to begin this morning's call by providing a brief overview of our strong growth in the second quarter and how we are positioning priority for success for the remainder of 2021 and over the long term. Following Mike's financial review of our quarterly results and the continued improvement in our balance sheet, we'll offer some perspective on our positioning for the future of digital commerce. There are a few quick highlights I'd like to share up front. As we outlined in our earnings release, the growth trajectory we established through the pandemic last year and the first quarter of 2021 has continued to accelerate the second quarter. In the first half of 2021, we exceeded our forecast across key financial metrics, including revenue, gross profit, and adjusted EBITDA. Comparing our second quarter 2021 results, With the second quarter of 2020, when adjusted for the exclusion of the rent payments business that we monetized in September 2020 and non-recurring costs incurred in both comparative quarters, revenue of $125 million increased 42.1%, gross profit increased 35% to $35.2 million, and adjusted EBITDA increased 54.9% to $21 million. Importantly, each of these key metrics accelerated from Q1 2021 levels of $113.3 million, $31.4 million, and $18 million respectively. Our outstanding results were driven by a 54% increase in total bank card volume to $13.9 billion for the quarter and approximately 8.5% year-over-year merchant growth in the consumer segment. Granted, these growth rates are compared to second quarter of 2021 to the COVID impacted second quarter of 2020. However, volumes also accelerated from Q1 2021. Compared with the first quarter of 2021, we experienced a 17% increase in total bank card volume from $11.9 billion to the previously referenced $13.9 billion. and a sequential quarter merchant growth of 2%. During the second quarter, we outperformed our consumer segment revenue plan by 8% and our commercial payment segment revenue plan by 16%, leading to adjusted EBITDA exceeding plan by 10%. Given the meaningful outperformance through the first quarter of 2021, which Mike will highlight in more depth, we'll be increasing our guidance for full year 2021 revenue to range between $480 to $500 million, a growth rate of 22% to 28% versus 2020, and adjusted EBITDA, a non-GAAP measure, to range between $82 to $86 million, a growth rate of 32% to 39% above 2020 levels. These comparisons exclude the rent payments business from 2020. We believe we should be able to exceed this guidance if our current pipeline trends hold. Our strong financial results are magnified by our dramatically improved balance sheet we delivered through the Aries Capital Management Perpetual Preferred Investment and the refinancing of our term loan debt facility we announced in April. The financial flexibility we created allowed us to execute two tuck-in acquisitions during this second quarter that will further enhance our strong acquiring distribution channels and brings our total net leverage down from 5.44 times EBITDA at March 31, 2021, to 3.43 times EBITDA as of June 30, 2021. With regards to our pending FinCERA acquisition, the financing for closing is locked down as we noted in our Q1 call. We expect that the necessary regulatory approvals for the transfer of the money transmission licenses will be received and we will close the transaction in the third quarter as anticipated. It is noteworthy When accounting for our combination with Fincera on a pro forma basis for the first half of 2021, our business would produce revenue of $275 million, gross profit of $104.6 million, a gross profit margin of 38%, and adjusted EBITDA of $67.9 million. Our present momentum combined with very straightforward vendor contract savings available when combining the platforms indicates that 2021 combined pro forma adjusted EBITDA in a 140 million neighborhood is well within reach. At this point, I'd like to pause and hand the call over to Mike, who will provide further insight into our performance during the quarter, current trends in each business segment, and the improvement of our balance sheet and liquidity. Mike?