Ladies and gentlemen, this is the conference operator. Thank you for standing by. The call will begin in a few moments. Again, this is the conference operator. Thank you for standing by. The call will begin in a few moments. Thank you. Hello, and welcome to Usio's Second Quarter Fiscal 2025 earnings conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. 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 second quarter fiscal 2025 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 with me today are Louis Hoch, our Chairman and CEO, Greg Carter, Executive Vice President, Payment Acceptance and Chief Revenue Officer, Michael White, Senior Vice President, Chief Accounting Officer, and Jerry Uffner, Head of Card Issuing. Houston Frost, our Chief Protocols Officer, will also be available during the question-and-answer session. Let me remind our listeners that certain statements made during the call today are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended and as more fully discussed in our press release and in our filings with the SEC. Let me start off today's call with some highlights from this afternoon's release. We are very pleased to report solid results across our key performance metrics, including continued strong growth in processing volume and a significant improvement in margins. It is important to note that we have been working diligently to improve the leverage in our model, and it is encouraging to see those efforts rewarded by two of our strategic imperatives as we reported another quarter of both positive adjusted EBITDA and cash flow at our current level of total revenues. While total revenues were down slightly, we generated especially robust growth in our most profitable business, ACH, where revenues were up over 30% for the second consecutive quarter. Card issuing and output were nominally down in the quarter, though up for the year to date. On a total company basis, revenues were impacted by weakness in Card Issuing, as well as a decrease in interest income. This is a unique situation that has transpired at Card Issuing, where one of our good accounts lost one of their better downstream customers through a corporate takeover, which happened suddenly and was a surprise to both our client and us. For the quarter, total payment dollars processed were up 15% to $1.9 billion, led by ACH, where dollars processed were up 19%. Card also maintained its strong momentum, with total dollars processed up 9%, but more importantly, Payfac volume up 17%. Volume in Card Issuing were down for the quarter, primarily due to the aforementioned lost account. Bottom line, most of our processing volumes remain on a healthy growth trajectory, indicative of our success in the market. During the second quarter, gross margins widened 185 basis points to 25.8%. This is a function of both mix, especially the strong growth of our highly profitable ACH business, efficiency and productivity improvements, as well as some one-time items. A key to achieving our profitability objectives is to enhance margins. As a result of the margin improvement, our gross profits increased $350,000 to $5.1 million. Selling, general and administrative expenses were temporarily elevated in the second quarter due to a number of discrete non-recurring items, including an increase in insurance costs, marketing expenses, and compensation. Except for insurance costs, all these expenses are expected to decrease in future quarters, and we expect to implement additional cost reductions over the coming quarters. Again, we are committed to improving operating leverage. Bottom line, it was another profitable quarter as measured by adjusted EBITDA, which came in at just over $500,000. Cash generation remains a strength at Usio. Our quarter-end cash position is net of several large cash outlays, including a large insurance renewal and $350,000 used to repurchase our shares. We are confident we will continue to generate strong cash flow over the balance of the year with a corresponding increase in our liquidity. Finally, with the aggressive rollout of Usio ONE that started in the first half of the year, we are beginning to see improvement in new account signings. Greg and Louis will elaborate more on this. In the second quarter, we made further strides, refining our operating model and implementing an aggressive new marketing strategy that better leverages our technology and experience. Results were consistent with these efforts to grow in the near term, while also heavily investing our time and energy in building a better business, all with an eye on achieving consistent profitability over the long term. We are excited to drive even better bottom-line results through a more concerted growth effort over the second half of 2025 and into next year. Due to prolonged customer cost implementation delays at two large national accounts, we are adjusting our revenue guidance expectations to 5%- 12% growth this year, with continued positive adjusted EBITDA. One of the large national accounts is a multi-location building materials supplier, which has started to process payments with [Usio], but only at limited store locations. At this time, I'd like to turn the call over to Greg Carter. Thank you, Paul, and good afternoon, everyone. Let me begin with an update on our Usio ONE initiative. Recall that Usio ONE is being implemented as a means to capture a greater share of our customers' electronic payment and printing volume. In order for this strategy to succeed, we need to make our client-facing business development team well-versed in our various product offerings, from ACH to Payfac to Output Solutions and prepaid. Historically, each business had its own sales and marketing resources focused almost exclusively on their products. One of the first things we are doing is immersing our team in our vast capabilities so they can become proficient in all of our businesses. This effort to educate our team is progressing, and in the quarter, we had several existing clients add a second or third Usio p roduct line, and it was for many different industries such as healthcare, financial services, and association management. We expect performance to improve as the team's knowledge improves. Now, turning to second quarter card results, we had another quarter of good growth in many of our key performance indicators, with transactions up 69% and dollar volume up 9%. All of the growth is in our Payfac portfolio, where dollars processed were up 17% and revenue was up 10%. We now have 20 new ISVs currently in various stages of implementation, which is up from 17 last quarter. This includes a new large enterprise merchant with the potential to generate $100 million of annual processing volume, and that account is just starting to ramp. Along with the increase in active implementations, conversion rates are also improving. New business is benefiting from a number of new different initiatives. This includes our land expand strategy to increase penetration of existing ISVs to the success of custom programs such as filtered spend. Consequently, I will once again confidently reiterate my expectation that card will grow nicely in 2025. While we have many balls in the air, as with all the Usio businesses, one of our priorities is to continue to aggressively implement actions to both reduce costs and improve productivity to improve profitability. As I mentioned last quarter, I'm excited to be leading our new Usio ONE initiative in our re-energized card business. My new role has given me a better appreciation for the sophistication of our technology and the depth and breadth of the talent that is putting it into action. We're basically a recurring revenue business, and with a strong portfolio of existing clients, the numerous initiatives and opportunities being worked, the new implementations that are just beginning to ramp, I believe we have all the ingredients for a strong second half of the year. Now, I'd like to turn the call over to Louis. Thank you, Greg, and welcome everyone. Let me begin by saying that I'm encouraged by our performance over the first half of the year. We've been tackling many initiatives, and I want to commend the team for their outstanding effort. One initiative that particularly stands out is Usio ONE, which I believe will help accelerate our growth both in the near and long term. At the same time, I believe some of the new technological innovations we have, or will soon be introducing, combined with a favorable M&A market, all have the potential to change our growth trajectory. Now, my thoughts on the quarter. ACH and complementary services sustained its strong growth, with revenues up 32% in the second quarter. All of the underlying metrics were equally impressive, with electronic check transaction volume up 33%, electronic check dollars processed up 19%, and return check transactions processed up 32%. Our penless debit business virtually doubled in the quarter, and other ancillary products such as RCC are also incrementally adding to our growth. ACH has also been the beneficiary of Usio ONE's early successes, where a substantial card processing client has now become a Usio ACH user as well. We were thrilled to see that in July, ACH experienced our highest volumes for any month of this year. It's very exciting. Output Solutions had another quarter of steady performance. Total mail pieces processed and delivered in Q2 exceeded 5.4 million pieces, and electronic only documents delivered exceeded 20 million. Transactions, pieces processed, mailed were up 3%, while electronic documents processed and delivered were down very slightly from a year ago. One thing I should note is the price that we charge to process a document electronically is less than the comparable price we charge to print and mail the same document. Consequently, the underlying business can grow, but it may not be reflected in corresponding increased revenues. However, since electronic document processing is more profitable than print and mail, this transition to a greater proportion of electronic document processing should boost margins. While revenues may not be growing as rapid, profitability is, and improved profitability is a strategic corporate initiative at Usio. While new account activity in the June quarter was steady, in July, Output Solutions already closed more new business than all of Q2, including a contract to handle both the print and mailing of utility bills for the city of Pasadena, Texas, and deliver and manage their electronic bill delivery and payment platform. Output Solutions also seems to be the business that is least initially getting the most out of Usio ONE. They have closed deals with both existing card issuing healthcare and financial service clients. They are seeking a rebound in ad hoc work, which can be a meaningful portion of a client's revenue, but which has recently been soft. A return to more typical ad hoc requests will be another tailwind to Output Solutions' growth. Output Solutions historically had a very successful check printing business, printing checks for companies like T-Mobile, AIG, Verizon, and Spectrum. It is one of the reasons why our customer choice product has been growing. We believe there are opportunities for growth in heavily check-dependent use cases, such as bankruptcy and government distributions. For that reason, we are quadrupling our check printing capacity this year. Finally, thanks to both the better margins on electronic documents, automation, and efficiency enhancements, profits at Output Solutions are on the rise. Card Issuing continues to make progress in fine-tuning the organization to reduce costs and improve productivity so that anticipated acceleration in revenue growth can be translated into even greater profitability. Despite the decrease in revenue in the quarter, Card Issuing margins and adjusted EBITDA were much improved year over year. In addition to the concentrated effort to improve leverage, Card Issuing profitability is benefiting from initiatives to generate more revenue and margins from existing clients. However, these efforts were overshadowed by one of our clients' unfortunate loss of their large account multi-location amusement park. Since this client's account's business typically peaks in the summer, we will see this effect spill over into the third quarter. Fortunately, we are quickly backfilling these lost revenues. Card Issuing closed 15 new agreements in Q2 that are currently in some stage of implementation, and now we have a total of 20 client partners beginning to scale. The expected card loads from this group of clients could be significant. In addition, in the second quarter, we made upgrades to our customer choice product. This quarter, wearable prepaid product will be live and available. We are initially targeting large incentive and promotional markets. We expect to release our payroll product this quarter, while our merchant funding offers in partnership with Mastercard should launch by the end of the year. At the corporate level, we recently tested our biometric merchant payment system and tied a token generated from a human iris with a payment wallet and successfully initiated payments. We're hoping to have a promotional demonstration video of this new technology available for you later this year. While it's still in the early stages, our work on this cutting-edge system, as well as the introduction of functioning wearables, is representative of our innovative use of technology that ar e at heart of what is Usio. I'm pleased with the ongoing evolution of our diversified business strategy. For one, it keeps us effectively insulated from the risks associated with a macro economy. Now, with Usio ONE, we're building a single platform to host and integrate all of our businesses, making it easier to do business with us as well as to better leverage our technology and resources. We have set out to improve profitability, and with another quarter of positive adjusted EBITDA, we are demonstrating that we have now sized the organization to consistently achieve this objective. In the near term, this is building our liquidity, and we've been using this to create value through consistent stock repurchases and internal investments. With the recent pickup with industry acquisition activity, it also provides us with the resources to act quickly on opportunities that meet our stringent acquisition criteria. All in our focus, we are creating a more efficient business that is able to leverage top-line growth into even better bottom line. We appreciate your support as we continue to build value for our shareholders. With that, I'd like to turn the call back to the operator and conduct our question- and- answer session. Thank you. At this time, we will conduct the question and answer session. If you would like to ask a question, please press star and one on your phone now, and you will be placed into the queue in the order received. Once again, to ask a question, please press star and one on your phone now. Our first question comes from Barry Sine of Litchfield Hills Research. Hey, good afternoon, gentlemen. Can you hear me? Hi, Barry. I want to zero in on a sentence in your release saying there are now more new programs in implementation than at any time in history. I'm hoping you could maybe expand on that and quantify it a little bit. How many programs? What does that compare to one quarter or a year ago? What does that mean in terms of dollar volume? What products are you seeing the strength in? It sounds like you're talking about overall for the whole company. Specifically, that sentence was about Card Issuing programs that are in implementation, which is [20], right? Yes. We don't have the dollars associated with those programs. Okay. On the Usio ONE initiative, could you talk about, you know, maybe give a sense of new programs across the board and how much of that is more than one product? The first big win that we announced last quarter was a check processing deal for a Card Issuing client. We also had a large ACH deal for a Card Issuing client and are working on a few more. We think that we can get a lot of our clients on at least two of our products. Not all of our clients will have the need for four, but we have a lot of clients that are just on one. That creates a lot of opportunities to cross-sell. My last question, the cash balance is obviously still very strong. You made a comment about M&A activity. I'm not sure if you're seeing a change in the environment of opportunities, and perhaps you're trying to signal it's more likely we might see you spend on acquisitions. At the same time, an alternative possible use of that is share buybacks. You know, with the cut in the guidance, the stock is a little weak in the aftermarket. You've got a great opportunity to step up your buyback activity. Where might we expect to see you utilize some of that cash on the books for the rest of this year? Regarding stock buybacks, we've been buying back every quarter in recent quarters. We'll continue that activity. M&A activity is definitely more active now than it has been in previous years. We're seeing more deals that fit our criteria, and a handful of deals that would be able to fund with our cash on hand. On the criteria, does that also mean the valuation levels that you're seeing for deals? You guys have been pretty focused in terms of what you are or what you're not willing to pay. Are you seeing deals that are in your valuation range? Definitely. To reiterate our criteria, the first point is that an acquisition has to have some type of strategic value to us. That could be people, technology, or industry vertical. It could be simply software that we're thinking of building that we can buy faster than we can build it ourselves. Secondly, we've got to be able to buy it right. Buying it right means paying what we're valued at, the multiples or less. Third, which was previously the biggest hurdle, is whatever we're buying needs to be able to take care of itself. We don't want to try to fix anybody else's problems and remove our focus on our organic growth opportunities that we have. Okay. Those are my questions. Thank you very much. Thank you. Our next question comes from Scott Buck of H.C. Wainwright. Hi. Good afternoon, guys. Thanks for taking my question. Louis, I'm curious, the improvement in gross margins in the quarter, what should we be attributing to just mix versus maybe some efficiency gains or improvements that you guys have made in the business itself? The answer is yes to all, but the biggest gain is obviously the huge gains in ACH that we're experiencing. Also, the amazing ramp that we're experiencing on the penless debit, which is higher margins. Also, a lot of electronic documents being presented by Usio Output has increased their margins. You know, our focus on keeping expenses tight. That's helpful. On OpEx, some of the adjustments you guys are making or cuts, could you get a little more granular on what you guys are looking at and what potential savings could be on a quarterly basis or an annual basis? Yeah. Are you talking about what we adjusted out of cash? On OpEx, it sounds like you guys are making some cuts. Yeah. We're experiencing savings in SG&A and in our Output division due to new machinery efficiencies. It's faster. We need less people. We are focusing on efficiencies within our Card Issuing division, which has caused us not to have to hire more. In some cases, when people retire or they leave, we're not even replacing those people because of the efficiencies. We've got the increased volumes, right? In some cases, we've gone back to bank sponsors and other partners in our ecosystem and negotiated better deals because we have a lot of volume now in a lot of places. Perfect. That's helpful. Just the last one from me, how should we think about the difference between the low end and the high end of the new guide? Do you control any of that, or does that really just come down to timing of implementations, which are largely your customers' timeline? You know, the one thing we could do, Barry, that accelerates this company that we haven't figured out is to get our customers to implement quickly after we execute an agreement with them. The perfect example is the reason why this quarter is flat is because we had a large, you know, a building supply, multi-retail location in the United States that was supposed to go live early in the second quarter. It just recently went live, but it's going very slow implementing each one of the stores. I mean, we lost three months, maybe even greater on that one deal. We have another one that's very similar that's got a lot of merchants that are already signed up, already implemented, but they haven't started pushing traffic through us. We thought that would occur earlier. If both of those accounts turn up very quick, then we'll be at the high end. I f they don't, we're going to be at the low end. Great. I appreciate that caller. If I can squeeze one more in, given what we saw in the job, the revisions to the recent jobs report the last few months, the conversation on the strength of the economy has kind of crept back into my conversations, at least. Can you remind us, is there any retail exposure or any meaningful retail exposure, Louis, or you know, I'm just trying to understand how susceptible you may be to a more broad slowdown in the economy? It is part of our strategy not to be in retail. Even this building supplies company that we're working with is B2B, right? They're selling to contractors primarily. It's not like a Home Depot type of model. We think that will be fine. It could be affected by construction if construction stays where it's at or gets worse. We kind of take that jobs report with a grain of sand and focus more on GDP. Again, we're in the diverse markets. Even when things tend to go bad in the economy, in most cases, that benefits us because the government's hand o ut more money, people take more loans, and both of those are big segments for us. Perfect. I appreciate the added caller, guys. Thank you very much. Thank you. As a reminder, if you would like to ask a question, please press star, then one on your telephone keypad. Our next question comes from Jon Hickman of Ladenburg Thalmann. Hello. Can you hear me okay? Hi, John. Hi. I have two questions. First of all, can you elaborate on the amount of the loss of the amusement park? What did that cost you in the quarter revenue-wise? Yeah, approximately $2 million in the quarter of revenue. Okay. On the operating expense side, out of those one-time items, insurance, and other things, it was like maybe $400,000 or so, kind of above what Q1 was. Out of that amount, how much should we carry going forward that's going to, you know, either come off of Q2's number? I would say about a fourth of that increase is my [question]. I'm sorry. I didn't understand your response. This is Michael. I would say about a quarter of that increase carried over. Okay. Thank you. That's helpful. That's it for me. Appreciate it. Thanks, John. Okay.