Usio, Inc.

Good afternoon, everyone, and welcome to the UZO earnings conference call for the first quarter of fiscal 2023. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star then two. All participants on this call are advised that the audio of the conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay will be available shortly after the end of the call through May 17th, 2023. I would now like to turn the conference over to Paul Manley, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and thank you, everyone, for joining our call today. Welcome to UCO's first quarter fiscal 2023 conference call. The earnings relief, which we issued today after the market closed, is available on our website at uco.com under the Investor Relations tab. On this call today are Louis Hoke, our Chairman and CEO, Tom Jewell, Senior Vice President and Chief Financial Officer, Greg Carter, Executive Vice President of Payment Acceptance, and Houston Frost, Senior Vice President of Prepaid Services. Let me remind our listeners that certain statements made during the call today constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities and Litigation Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties are described in our earnings press release and in our filings with the SEC. The forward-looking statements today are made of the date of this call, and we do not undertake any obligation to update these forward-looking statements. Management will provide prepared remarks now, and then we'll have a question and answer session. But let me lead off with the highlights from this afternoon's release. I am pleased to report another quarter of record results with first quarter revenue of 18% and our 11th consecutive quarter of revenue growth and beating analyst estimates. We also reported a quarter of positive adjusted EBITDA, which improved by nearly 1.4 million from the same quarter of 2022. Adjusted EBITDA is a non-GAAP financial measure, and our earnings release includes a reconciliation of adjusted EBITDA to GAAP operating income. We continue to be an excellent financial condition to support our growth objectives for the year. Last quarter, we told you that we are entering fiscal 2023 with strong momentum, thanks to a strong 2022 with revenue growth that has already accelerated compared to that last year. And with many new exciting pipeline opportunities, we have established a firm foundation to meet our 2023 financial guidance. Now, I will turn the call over to Louis.

Thank you, Paul. and welcome, everyone. As Paul noted, I'm pleased to report another record quarter driven by continued card and output solutions growth. Also contributing to our strong quarter was record prepaid performance from the strength of residual revenues from expiring card programs. This spoilage will continue throughout 2023 and into 2024. Once again, our results demonstrated the benefits of our diversified business strategy, diversified in the markets that we serve and the payment channels that we offer. Two programs I'd like to highlight that have us excited are MoviePass and LA County. Both have the potential to be transformative. Due to LA County being extremely pleased with our performance to date, They're expanding their engagement with us. Our success has also drawn the attention of other large counties across the country with similar programs. MoviePass is continuing to see positive momentum as well as is scheduled to launch to their service nationwide in the summer. While both programs contributed to our first quarter performance with LA County's revenues benefiting multiple UCO business units, we expect them to be a part of our future growth story, with reports of MoviePass' recent partnership with Walmart being a pleasant surprise. As you can see from our ACH results, we're comparing against strong volume from Voyager in the first half of last year. However, our relationship with Voyager is essentially been completely wound down to their bankruptcy. Adjusting for Voyager, ACH would have shown year-over-year growth in the first quarter, and we expect outright ACH growth in the second half of the year. Our output solutions business grew 26% in the quarter and $1 million sequentially, and it was all organics. We believe that output solutions can continue to deliver strong growth by focusing on programs that offer attractive reoccurring revenue characteristics like printing and distributing statements, as well as selling more integrated disbursement solutions through check printing that is required for our consumer choice disbursement platform. In particular, I think, there is a tremendous opportunity in expanding our electronic bill presentment and payment capabilities. And we are working on strategies to more aggressively pursue these opportunities. Now that our prepaid incentive programs sold in previous years are coming to expiration, we are now earning enhanced breakage and spoilage. This has been beneficial to our overall effort to improve profitability. In the first quarter, margins were up over 300 basis points, while SG&A was up less than $100,000 compared to the first quarter a year ago. This enabled us to sustain positive adjusted EBITDA, generate strong cash flow, and reach positive gap earnings per share. Since we primarily serve recession-resistant markets, we're not overly concerned about any economic slowdown. In fact, if the economy slows, many of our businesses could generate even better growth. Our pipeline across all segments continues to be the strongest in the company's history. We have large opportunities in prepaid, L.A. County type of opportunities with other municipalities and output solutions, and new pay fact deals such as recently announced integration with Microsoft's Business Central platform, which have great revenue potential. This is one of the best quarters in UCO's history, not only from record financial performance, but also because of the success of penetrating new markets, and building new relationships across all of our businesses. This is going to be an extremely exciting year in which we believe we will achieve our top-line guidance and expand our foundation in these rapidly growing markets for even greater success in the future. And now I'd like to turn the call over to Houston Frost.