Hello and welcome to the Usio fourth quarter and fiscal year-end 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note, today's event is being recorded. Now I would like to turn the conference over to your host, Paul Manley. Please go ahead, sir. Thank you, operator, and thank you, everyone, for joining our call today. Welcome to Usio's fourth quarter and fiscal 2023 conference call. The earnings release, which we issued today after the market closed, is available on our website at usio.com under the Investor Relations tab. On this call today are Louis Hoch, our Chairman and CEO; Greg Carter, Executive Vice President of Payment and Acceptance; and Houston Frost, Chief Product Officer. Michael White, Senior Vice President and Chief Accounting Officer, will also be available for the Q&A. 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 Litigation Reform 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 made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements. During today's call, we will refer to Non-GAAP financial measures such as Adjusted EBITDA. Our earnings release includes a reconciliation of Adjusted EBITDA to GAAP operating income. Management will provide prepared remarks, then we'll open the call to your questions. So let me start with some of the highlights from this afternoon's release. I am pleased to report another quarter of strong growth with quarterly revenue up for the 13th consecutive quarter, as well as another quarter of positive Adjusted EBITDA. This led to record revenues for the year, our seventh consecutive year of revenue growth. As a result, we met both our top and bottom line guidance for the year, with revenues ahead 19% and adjusted EBITDA coming in at $2.4 million. For the year, revenue in each of our businesses and gross margins expanded despite a decrease in the fourth quarter due to the reduction in New York City breakage margins. We have previously articulated our focus on growing gross profits, potentially at the expense of tighter margins. Total selling, general, and administrative expenses grew at half the rate of revenues for the year, and in the fourth quarter, actually ticked down from the third quarter as we had anticipated. We don't foresee any big increases in 2024. Our goal is to continue to improve operating leverage, in part by maintaining this tight control on overhead. Cash flow is also strong as cash increased by $1.5 million over the course of the year. This included $1.7 million of interest income as a result of our improved cash management strategy and is also after expending $600,000 on share repurchases. In total, we bought back 400,000 shares in 2023, demonstrating our belief in the business and that our stock represented a great use of capital. The team will go through each of their impressive performances separately, but on the whole, it was another strong financial performance led by a more than doubling in prepaid, another year of double-digit Output Solutions growth, and continued strong performance by PayFac within our card business. ACH also bounced back, growing over the second half of the year despite the challenging comps of a year ago. ACH was able to generate a full year with full-year growth. As our most profitable business, we look forward to continued growth from ACH in 2024. A common theme you'll hear today will be the increasing recognition Usio is achieving in our markets. It's been hard-earned, but we have put in the time and the effort and delivered on our promises. This is building both awareness and credibility, which has enabled us to expand our market opportunities, which in turn has led to the strongest pipeline in the company's history. This includes some potentially game-changing large opportunities. As our businesses achieve scale, this is leading to a greater proportion of our revenues that are recurring in nature, a solid formula for sustainable growth. Now I would like to turn the call over to Greg Carter. Thank you, Paul, and good afternoon, everyone. Card revenues were up again in the quarter, leading to a record for the year. Card growth was once again led by PayFac, where processing volumes were up 17%, transaction volumes were up 35%, and revenues were up 25%. So PayFac continues its strong growth. However, the full effect is being somewhat masked by attrition in our legacy Singular ISO portfolio. We had purchased Singular primarily for their payment technology. Once that technology was developed into our PayFac solution, we essentially stopped selling into the ISO channel. Right now, the two portfolios are about equal in size, but as PayFac continues to grow and become a larger proportion of our card portfolio, total card revenue growth will accelerate. All of our card efforts are, therefore, completely behind PayFac. First, as our portfolio grows, the number of merchants onboarded continues to climb and now exceeds 100 per month. As these merchants grow in the aggregate, the amount of their processing volume correspondingly increases. Each year, we are layering additional processing volume on top of the prior year's volume. This is essentially a built-in growth engine as we've experienced very little attrition in our PayFac portfolio. But new implementations are the key to faster growth. In the fourth quarter, we completed two significant new implementations, each of which went extremely well. After a long period of blood, sweat, and tears, I'm becoming increasingly excited with the success of our organic business development efforts. This has led to a number of new agreements that should begin implementation and start to generate volume later this year. PayFac adoption is a phased process, and each ISV is different. I am confident we will have implemented many more new relationships, all of which we'll be processing with Usio before the year is out. This includes an ISV that serves one of the country's largest national franchise owners. There is no doubt that our increased credibility, as Paul's mentioned, is getting us opportunities with these larger ISVs. Having many referenceable ISVs eager and willing to attest to the outstanding performance of our electronic payments platform is opening up new and larger doors. While this activity has kept us busy, I continue to be heavily involved expanding our business development efforts. One of our newer initiatives is with software developers. We have a salesperson dedicated to developing relationships in this industry, where we will be encouraging and incenting them to integrate our payments technology into the software platform as it's being developed. Thus, when the ISV goes to sell the software, we become the incumbent electronic payment channel. Cross-selling with output solution has also been successful as we get adopted as the electronic payments processing platform for the toll roads, parking authorities, and other entities where output is distributing statements. We also remain active on the conference circuit, where our steady performance at these events is leading to increased recognition. And we continue to refine and improve our basic marketing strategy, where we just hosted one of our most well-attended webinars. I've talked about the spade and shovel work we've been undertaking since I've arrived at Usio. It may not have been glamorous, but it has produced significant growth in our PayFac business. Now we are gaining recognition, establishing more relationships, and expanding into adjacent markets, which is resulting in continuing opportunities in our traditional ISV markets, as well as helping us move up market to larger opportunities. Now I would like to turn the call over to Houston Frost, Chief Product Officer, to talk about our prepaid business. Thank you, Greg, and thank you to everyone participating in our call this afternoon. Card issuing had a strong finish to a record year. For the second consecutive quarter, card loads exceeded 100 million, bringing loads for the year to a record 371 million. We are seeing strong momentum in card load volumes continuing into the new year. As we often mention, card loads are an important forward-looking metric as they are the precursor to the interchange and transaction fee revenue generated in subsequent quarters. They also can be used in rough projections of inactivity fees and breakage that can be assessed on certain card accounts, generally beginning 1two months or more following the loads. Because of the inconsistency inherent in revenue stemming from the large New York City and other limited-duration pandemic-related programs, we believe this run of record load volumes is more indicative and informative of the underlying strength of our Card Issuing business. Card load volumes are coming from not only an increasingly diverse group of clients and program types, but from the growth of long-term clients that started out small and are now substantial. ClassWallet, MobileMoney, and others are good examples. As these organizations grow and their programs expand, our Card Issuing business follows. In contrast to the volatility that can arise from the addition and discontinuation of large limited-duration programs, these clients are more representative of Card Issuing's current focus. So while our total 2024 revenues will be down, if you exclude large programs, I expect our core business to deliver another year of attractive growth with continued growth and load volumes. We are building a solid foundation to support our future growth. I would also like to quickly recognize the diversity of markets we serve and solutions we offer. These include corporate expense cards, promotional, and funds disbursement programs serving the private, public, and nonprofit markets. In fact, private entities now comprise a majority of our top clients. Mobile Money is a great example, and with our help, they are launching a new instant-issue, general-purpose reloadable card program, providing their clients and customers with new features and increased flexibility. As part of our industry diversification strategy, we have also continued efforts to expand in the healthcare market. We just signed an innovative company that enables employers to make tax-advantaged contributions to employees that have their own individual health benefit plans. These plans are known as Individual Coverage Health Reimbursement Arrangements, ICHRA. The new client facilitates payments from the employer to the member accounts and from the members' accounts to the insurance carriers via their ICHRA Complete payment platform. We continue to build our reputation and credibility in the markets we serve. We've mentioned previously our first state program with a California agency. This is a great reference account for us and could open up larger opportunities this year. And of course, we continue to be a market leader in our support of numerous guaranteed income programs across the country. We will have some difficult quarterly revenue comparisons in 2024, but we expect our load volumes and transactions will continue to increase this year, and we couldn't be more positive and excited about the future of the card issuing division at Usio. All good things ahead. With that, I'd like to turn the call over to our Chairman and Chief Executive Officer, Louis Hoch. Thank you, Houston, and welcome, everyone. As you've heard from our team, it was a solid finish to what was another year of record revenue, and it was our seventh consecutive year of revenue growth. We met our guidance for the year, growing revenues 19% and increasing Adjusted EBITDA by $3 million as we continually evolve our model to improve leverage, drive more top-line growth to the bottom line. That will be a major theme for 2024. With much of the heavy lifting behind us, we are achieving scale in many of our businesses so that we can focus on driving more of the growth to the bottom line. That is demonstrated in our 2024 guidance. Again, results reflect our diversified business strategy, diversified in the markets we serve and the payment channels we offer. What many investors may not realize is that much of our revenue is recurring in nature through regular streams of card and ACH payments and prepaid usage. As we add accounts, we build a solid foundation of recurring revenue on which to grow further. Let me quickly go through a couple of our business lines. Output Solutions had a great year despite a mild slowdown in the fourth quarter precipitated by capacity constraints. That business will now shift over into the first quarter of this year. To address this constraint in the fourth quarter, we invested in new equipment that will enable Output Solutions to increase capacity by over 50%. This new technology not only expands our capacity, but it adds new capabilities such as piece-level validation that will get us into new markets such as healthcare and other larger jobs. These markets demand an unsurpassed level of uncompromising precision, which we will now be able to deliver. In addition, this new technology includes a portal that will allow customers to view their jobs in real time, what has been distributed to whom and when. That is the kind of white-glove service which we are known. While this equipment opens up vast new markets, we are simultaneously evolving our solutions to meet emerging new demands. In particular, in the fourth quarter, we delivered more electronic documents than paper documents, which led to a year where electronic documents delivered exceeded paper. That is a watershed moment and puts us at the forefront of industry transformation. Relative to print, electronic delivery is growing faster and offers more attractive margins. To support this growth, Output has hired a seasoned director of operations who will be tasked with improving productivity and efficiency to ensure we maintain best-in-class customer service as well. Further expand margins. But the business still depends on getting our wide portfolio of capabilities into market. And there, we continue to be successful. We've added programs to distribute and collect fees and fines on many state toll road systems, parking services such as Los Angeles County and Miami-Dade County, and other local government fees. We've landed contracts to print and mail voter registration cards, and we continue to dominate the Texas rural utility market. These are solid base hits that provide recurring revenue year after year and which form a solid foundation onto which we can layer additional programs. In ACH, after a year of tough comps, the fourth quarter was the second quarter we grew the business. As a result, ACH revenues were up for the year. In 2024, we expect our ACH business to once again outpace the growth of the industry, in part as we continue to strengthen our offering, including integration of real-time payments and FedNow, on which we're already live. We view real-time payments as a complementary offering to ACH, and as such, they represent a new strategic opportunity to capitalize on constantly evolving markets. Paul took you through most of the key financial metrics, but let me add a few additional comments. First, I want to note our strong financial position and almost $2 million increase in cash over the course of the past year. Second, I want to note that we used $600,000 to repurchase shares in 2023, nearly 400,000 of which was in the fourth quarter. This demonstrates our conviction in our ability to continue to generate cash, including another $2 million or more in interest income in 2024. Our confidence in our strategy and our belief that our stock is significantly undervalued. Finally, I want to note that we met our financial guidance in 2023, growing revenues 19% compared to a year that included a significant portion of revenues from an industry we no longer serve, and despite the expiration of one of our largest single-use card programs. Beneath the surface, we strengthen our company with the majority of our revenues coming from recurring revenues and new business arising from our growing recognition throughout the industries we serve. This year could see a major breakthrough. Our pipeline is the strongest it's ever been, including several large deals that are looming on the immediate horizon. We've worked hard to nurture these relationships, and we are becoming increasingly confident that we will be rewarded with new accounts with significant volume. We have a very large and growing portfolio of existing accounts, which offer a measure of stability we've never previously enjoyed. We have layered new business on top of this growing foundation for seven straight years. Consequently, I'm pleased to establish our 2024 guidance. We expect revenue to be up between 10%-12% for 2024 and adjusted EBITDA to be approximately $4 million-$4.5 million. In addition, we believe we will generate positive GAAP EPS in fiscal 2024. Keep in mind that we believe we can achieve this growth despite the expiration of one of our largest-ever single-use card programs that contributed over $10 million in revenue and significant EBITDA in 2023. With that, I will turn the call back to the operator to conduct our question-and-answer session. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. Our first question comes from Scott Buck with H.C. Wainwright. Please go ahead. Thanks for taking my questions. Louis, I was hoping we could dig in a little deeper on the guide, and I'm trying to understand what your visibility is for the year in terms of what of the 10%-12% growth may already be baked into current contracts versus what you have to go out and earn between now and year-end. Well, our first hurdle this year is to replace the breakage revenue that we had last year that will not be at the same level this year. We're doing that through other business units expanding through both organic growth within the current base and some new clients. As we said on our call or opening notes, our pipeline is very, very rich. We have four what we call kind of mega deals, which are $5 million or more in annual recurring revenue. We'll have more news out about some of those clients as we close those accounts. This year we're focusing on enhancing our operating leverage that will increase more adjusted EBITDA growth and actually yield earnings per share this year. So this year of EBITDA for us. Great. That's helpful. And then on the PayFac capacity increase, what of that has already spoken for? I mean, what kind of demand are you seeing there? And I know you bumped it 50% or so. What kind of runway does that give you before you need to start thinking about capacity again? Yeah. I don't think you meant PayFac. You meant our Output Solutions. Yeah. Output Solutions. Sorry. Excuse me. Yeah. So in the fourth quarter, we didn't complete all the work that we could have completed because we were installing new machinery, so that actually got pushed into this first quarter. So for, jeez, the six months before, almost all the year, we're operating at 100% capacity at Usio output. So we purchased some new devices, new machines that increased our capacity 50%. So we're able to complete a week's worth of our normal work in two and a half days now. And we're already seeing benefits from that. And so we're able to take on more work from existing clients. And some of our clients are large enough that they work with not just one output not just Output Solutions, but they have other print providers. And we may be the preferred one so we can go back and get more volume from them now. All right. That's helpful. And the $200 million or so on the prepaid program that you guys have gotten over the last two quarters, what of that has been dispersed to cards versus what you're holding in your accounts currently? Well, that $200 million would be either on cards or that money would be in our bank account. It hasn't been loaded yet. If you look on our balance sheets that were reported, it'll tell you the exact number of what's sitting in our bank accounts that hasn't been loaded. What's that number, Michael? $32 million. $32 million. I can't tell you off the top of my head how much is on cards. It's probably around $50 million. It's approximately the same. Just real quick, Michael, the card load figure, that is the dollar loaded to cards, not funds waiting to be loaded to cards. Is that accurate? I'm pretty sure that figure is card load and does not include funds waiting to be loaded. $32 million, Houston, is what's sitting in our bank account waiting to be loaded as of the end of last year. There's roughly about $40 million on cards right now. Okay. Thanks. All right. Perfect, guys. I appreciate the clarification there. That's it for me. Appreciate the time, guys, and congrats on the results. Thanks, Scott. The next question comes from Jon Hickman with Ladenburg Thalmann. Please go ahead. Hello. This is Jon Hickman. How are you guys today? Hi, Jon. A couple of questions. Could you specify how much of the New York breakage you did recognize in Q4 and then some sense of what that might be going forward? I don't think we released that number. I know that we're still going to have some breakage till the end of the second quarter of this year, but the significant drop-off occurred in Q4. Okay. Okay. And then could you comment on the settlement between Visa and Mastercard about what they can charge retailers and stuff? How does that work into your card, into the interchange fees that you guys are going to get? Yeah. So I assume you're talking about the recent news, but that case has been pending for, I don't know, 5 years, something like that. Yeah. It seems like they've settled it today. Yeah. And to be honest, I'm not well-versed on that. What's important to understand is we set our prices. So even if Visa or Mastercard have to lower rates, we do not. And so in most cases, when things like this happen with interchange, it just increases our margins. But I'll go back and review it. And I'm not sure if they changed anything with interchange rates because of this. Okay. And then I have just one more question. So you've mentioned that you have four really big PayFac opportunities. I assume that none of those are in your guidance for the year. Is that true? Well, we assume some new growth from accounts in PayFac. I mean, we ended the year with a number of accounts. I'm sure Greg can quote the number that have already been sold and that are in implementation. So we're going to get some growth there. We were also seeing organic growth from the existing accounts. But what we're really excited about this year, something that we haven't had in the past, is that we have four accounts that we consider our mega accounts, and they really moved the needle. And we should have some news describing at least one of them shortly. Yeah. But my question is, have you put those in your guidance for the year or not? No. Those four, just specifically those four. Yeah. They're not. But we did do some increased sales in our guidance. Yeah. No, I get that. I just want to know about those specific four. Yeah. No, that's why we're saying it really moved the needle for us as we close these. Okay. Thank you. That's it for me. Thanks, Juan. The next question comes from Gary Prestopino with Barrington Research. Please go ahead. Good afternoon, everyone. A couple of questions here. Greg, you went through some metrics on processing volume, transaction growth, and revenue growth. I just want to make sure and this was for PayFac, I assume. So could you just repeat that? Was that a Q4 number, or was that a year number? That's a 2023 number, and that was for PayFac only. Okay. So what was the processing volume up? 17%. Okay. Transactions were up 35%, and revenue was up 25%? Correct. Okay. And as I just go through my notes here, at this point, both portfolios are equal in size in terms of revenue generation or just in terms of, what, processing, merchants, whatever? Revenue. Okay. So for this year, as PayFac grows, we should see PayFac starting to become a bigger part of the business and possibly see some acceleration in the revenue generated from card? That's correct. Okay. And then I just want to understand this, Houston, with this card load. Well, first of all, I want to understand, you had about $10 million of breakage revenue that occurred in 2023, the bulk of which will not be repeated. Is that correct? That factor is, yeah. There's probably $2 million or less remaining that will come out very slowly through the remainder of the year. But now, there's going to be breakage and inactivity fees assessed to other programs. So we're really only referring to New York City with those numbers. So I'll pause there and see if I answered your question. No, that's fine. What I'm trying to understand is, I mean, if there was $10 million of breakage, you basically doubled your revenues. I mean, was that at such an extremely low de minimis margin to the business? The overall margin on that $10 million or $12 million was over 30% kind of on average. So there was a little bit of a steering system that occurred there. So different quarters had different margins, but it was approximately 35% overall. But some quarters were higher margin, and then there was some tiering that occurred. So you're saying it had a 35% gross margin? On average for all the breakage on that particular program during 2023. Okay. So then in looking forward to what you're doing for this year, you got $371 million loaded on the cards, right? Is that correct as I'm going through my notes? That's 2023 numbers. Right. Okay. So that's loaded on the cards with the expectations that that should be spent. So is that coming in at a much higher margin? Because, I mean, you're losing $10 million of revenues at 35% margins. I mean, is this new business that you're putting on the books at much higher margins than that 35%? I'm just trying to get to how you get to where you want to be. Well, a couple of things. One is, yes, specifically referring to breakage, our margins will be higher on smaller programs. But the other thing to recognize here is that breakage is going to become a less significant component of our revenue generation. So what we're seeing is a substantial increase in corporate expense volume, which has higher interchange for us and much larger margin on that interchange. We're seeing some more custom programs where they're direct client fees. And so that has a certain gross margin associated with it. And then, again, to reiterate, the most important thing to realize is that card load volumes will go up from 2023 to 2024. So you're going to see acceleration really beginning in Q2, but then even more so Q3, Q4. But we're going to have a lot more dollars running through the card. While the breakage component of the revenue is going to go down, we're going to be generating more revenue on interchange, transactional fees, as well as client fees. Okay. That's very helpful. Thank you. Yeah. No problem. This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.