Thank you for joining us, and welcome to the Priority Technology Holdings First Quarter 2020 Earnings Call. I will now pass the conference to your speaker for today, Mr. Chris Kettmann. Please go ahead, sir.

Good morning, and thank you for joining us. With me today are Tom Priore, Chairman and Chief Executive Officer of Priority Technology Holdings; and Mike Vollkommer, 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 as defined in the Private Securities Litigation Reform Act of 1995 regarding future expectations about the company's business, management's plans for future operations or similar matters, which are subject to certain risks and uncertainties. The company's actual results could differ materially due to several important factors, many of which are beyond the company's control, including those risks and uncertainties described in the current report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2020. Any forward-looking statements we make today are only as of today's date and we undertake no obligation to publicly update or review any forward-looking statements. Additionally, we may refer to non-GAAP measures, including EBITDA, adjusted EBITDA and earn-out adjusted EBITDA during the call. Please refer to our public filings and disclosures, including those referenced in our press announcing this call for definitions of our non-GAAP measures and the reconciliation of these measures to net income. We have also provided an accompanying presentation with today's call that will help us more clearly articulate our results and go-forward strategy. With that, I would now like to turn the call over to our Chairman and CEO, Tom Priore.

Thank you, Chris, and thanks to everyone for joining us for our first quarter earnings call. Since our last discussion on March 31, the COVID-19 pandemic has worsened globally, and we continue to empathize with those affected by it, as well as those on the front lines fighting against it. Given the current situation, we will keep a format similar to our fourth quarter call. I will give a brief overview of our strong Q1 results, especially considering the COVID-related impact in March, and then I will hand it over to Mike, who will provide more detailed insights on the performance of each business segment for the quarter and our cost control initiatives. After Mike's comments, I will discuss how COVID-19 is affecting our business and the steps we are taking to tackle this challenge. As highlighted in our earnings release, we reported outstanding first quarter results, demonstrating continued growth across all our businesses. For the first time in a year, our strong year-over-year results were not overshadowed by the pause in our e-commerce subscription business, which began in October 2018 and lasted through 2019, underscoring the robust strength of our business segments. Consolidated first quarter revenue reached $97 million, representing a 10.6% increase from the same quarter last year, driven by excellent results in Consumer Payments, remarkable growth in the Integrated Partners business, and consistent performance in Commercial Payments. Gross profit for the first quarter rose 11% year-over-year to $30.6 million, while adjusted EBITDA of $15.8 million increased nearly 27% compared to Q1 2019. The total merchant processing dollar volume of $11.5 billion was up 4% over the first quarter of 2019, and this volume was trending at a 13% increase until February. We achieved these strong results despite the negative effects of COVID-19 during March. Now, I would like to invite Mike Vollkommer to share further insights on our first quarter results, focusing on business segment performance. Mike?

Thank you, Tom, and good morning. As I begin, I'd first like to express my hope that each of you and your families are staying safe and healthy. I'll briefly review the consolidated first quarter results and provide commentary on our business segment performance. All comparisons will be between first quarter 2020 and first quarter 2019, unless I state otherwise. Consolidated revenue of $96.9 million increased 10.6% from $87.6 million. Consolidated gross profit of $30.6 million increased 11% from $27.5 million. Our gross profit is an important metric for Priority and represents consolidated revenue less cost of services. The consolidated gross profit margin was 31.5%, an 11 basis point increase from 31.4%. Consolidated income from operations of $3.6 million increased $2.6 million from $1 million in the prior year. The $3 million increase in gross profit and a $0.9 million decline in salaries and SG&A were partially offset by a $1.3 million increase in depreciation and amortization. Adjusted EBITDA of $15.8 million increased 26.8% from $12.5 million. The table on Page 11 of our press release provides details of adjusted EBITDA, and a description of these details can be found on Page 2 of the press release. Total processing dollar volume was $11.5 billion, an increase of 4% from $11.1 billion. Of that total, merchant bankcard processing dollar volume was $10.6 billion, an increase of 2.6% from $10.3 billion. Now let's break this down within reportable segments. Consumer Payments revenue was $86 million, an 8.9% increase of $7 million. Merchant bankcard volume in this segment was $10.4 billion, a 1.7% increase from $10.2 billion. And merchant bankcard transactions of $119.4 million declined 1.2% from $120.9 million. However, the average ticket of $86.97 grew 3% from $84.47. The Consumer Payments income from operations was $7.2 million compared with $7.7 million. Gross profit increased $0.3 million, depreciation and amortization increased $0.8 million and other operating expenses increased by $100,000. Gross profit margin was temporarily impacted by a shift in mix to the comparable quarter of last year. Commercial Payments revenue was $6.4 million, a decline of $0.3 million. This was comprised of revenue from CPX of $1.6 million, which increased 31.4%, and revenue from Managed Services of $4.8 million, which decreased $700,000. The Managed Services decline was driven by lower incentive revenues and retirement of a previous program. Commercial Payments income from operations was $0.8 million compared with a loss from operations of $0.5 million. Gross profit increased $0.6 million. While depreciation and amortization was relatively flat, other operating expenses decreased $0.6 million. This first quarter 2020 performance reflects the benefits of operational initiatives and administrative cost savings actions that we implemented as we were entering 2020. Integrated Partners revenue was $4.5 million, a 129% increase of $2.6 million. This is largely comprised of revenue from PRET of $4 million, a 154% increase of $2.4 million. PayRight and Hospitality grew 14% and 254%, respectively. Integrated Partners income from operations was $0.4 million, compared with a loss from operations of $0.2 million. Gross profit increased $2.1 million, depreciation and amortization increased $0.6 million and other operating expenses increased $0.9 million. The depreciation and amortization is primarily related to the assets acquired from YapStone in March of 2019. Other operating expenses included $0.9 million of temporary transition services from YapStone related to integration of that asset acquisition. So Integrated Partners adjusted income from operations in the first quarter of 2020, excluding these temporary transition services, was $1.3 million compared with a loss from operations of $0.2 million in the first quarter of 2019. Corporate expense was $4.7 million compared with $6.1 million in the first quarter of 2019. Nonrecurring expenses were $0.5 million in the first quarter of 2020 and $1.2 million in the first quarter of 2019. So excluding these nonoperating expenses, corporate expense was $4.2 million and $4.9 million in the first quarter of 2020 and 2019, respectively. Now I'll review our overall liquidity position. At March 31, we had $499.4 million of outstanding debt, which included $15 million outstanding under a $25 million revolving credit facility. And we had $2.9 million of unrestricted cash on the balance sheet. This put the March 31 total net leverage ratio at approximately 7.67:1, with $64.7 million of annualized consolidated adjusted EBITDA as determined under the definition within the loan agreements. On April 3, we repaid $2.5 million of the revolving credit borrowings. So we currently have $12.5 million outstanding under that $25 million credit facility. Mid-April, we implemented several actions to reduce expenses and preserve cash in order to mitigate the financial impact of COVID-19, including the furlough of 47 employees, reduction of 21 full-time contractors, freezing of new hires and postponement of certain capital expenditures. These actions, along with reduced SG&A spending, are expected to reduce planned annual run rate cash expenses by $10 million to $11 million. Also, the postponement of certain capital expenditures is expected to save an additional $3 million of cash through year-end. And if necessary, a further postponement could increase that cash savings by an additional $2 million. Now we're confident in our ability to take these actions to reduce costs and save cash without impacting our ability to service our customers or capitalize on new business opportunities. We successfully navigated the challenging environment in late March and April. And in a moment, Tom will provide a summary of our April performance. We are very closely monitoring our daily business trends. In May, we have seen a positive directional move as shelter in place has begun to lift. However, the uncertain economic landscape resulting from the COVID-19 pandemic makes it difficult to predict. In that regard, we're prepared to take further actions, if necessary, to mitigate any trends that are negative to the range of our current internal forecasts. Before turning the call back to Tom, I'd like to address where we stand on providing 2020 guidance. During our call in March, we said we will take a wait-and-see approach with regard to providing financial expectations for the year. But we have been proactive throughout the pandemic to limit risk and capitalize on opportunities. There continues to be considerable uncertainty regarding the impact of the virus on the economy as a whole. As more stay-at-home orders are lifted and states open up, we expect to gain further insight into the new normal as well as the depth of the damage COVID-19 has inflicted on the overall U.S. economy. So with this in mind, we are not yet prepared to provide 2020 guidance on this call. However, we currently expect to provide full-year expectations during our second quarter earnings call.

Thanks, Mike. I'd now like to share more detail about the most recent trends we've been seeing in the business, particularly as the COVID-19 pandemic rages on. Continuing the positive first quarter momentum, but also reflective of the impact of COVID, in the month of April, we processed roughly $2.7 billion in volume, which was down 34% from April 2019 and roughly 27% from March's volume total. Despite the drop in volume, new merchant boards in April were solid with 4,486 approved newly boarded merchants, which is largely in line with our historic trend of 4,500 to 5,000 per month. The drop in volume was meaningfully offset by the outstanding performance in our higher-margin product subscription segments and a positive shift in our consumer segmental vertical mix, leading to a smaller 12.7% decline in consolidated revenue and a 9.8% decline in consolidated gross profit in April 2020 as compared to April 2019. We were able to further mitigate the impact of volume declines by reducing operating expenses by 16.9%, resulting in an anticipated $500,000 EBITDA increase in April versus the comparable April 2019 period. This consistency reflects the strength of our diverse sales channels, which added 28 new reselling partners since January 1, and the value of our Integrated Partner offerings, namely e-Tab, our order ahead and curbside pickup platform that enables contactless e-commerce for hospitality and a host of new industry segments, Priority PayRight's digital health care payments offering, RentPayment.com, and Landlord Station serving property managers, and our MX B2B and CPX-automated payables solutions. I'll speak to each of these segments in more detail shortly. There are a number of key operating considerations that have helped us maintain our momentum since Q1 ended, despite the consistent headwinds presented by the coronavirus. As you may recall, Priority's infrastructure is fully virtualized on our vortex cloud and has been previously put to the test under remote operating conditions. Following shelter-in-place orders in mid-March, this technology and the exceptional know-how of our people allowed each of our employees to work remotely as if they were at their desks, ensuring their health and safety, along with a seamless processing experience for our customers. Furthermore, our shared services operating model has enabled us to position client service, implementation, risk and underwriting personnel to their greatest utility in order to advance the business goals of our partners. Since the pandemic took hold, we moved quickly to accelerate the delivery of our solutions to merchants that needed digital storefront and payment platforms to sustain their business in the new normal. In a country in which most people have been ordered to stay at home, there is no one available to process checks or collections at rental properties, landscaping, construction, and other field services businesses. Hospitality venues, liquor stores, and convenience stores and a host of other business types are only able to fulfill pick up or contactless delivery orders that can quickly overwhelm staff trying to operate via phone. And in these circumstances, we were able to step in and fill the void by providing easy-to-implement solutions within a safe and scalable transaction environment that is low friction for both buyer and seller. We believe that the conditions influencing behavior in the current environment likely signal a significant change in how businesses will need to prepare to operate in the future. Increased use of technology to support contactless e-commerce and integrated software with digital collection tools to support health care revenue cycle, rent collections and accounts payables for businesses of all types is likely to flourish as these businesses adapt to be prepared for when uncertain and unpredictable circumstances, like those today, arise. While the pandemic has been a catalyst to accelerate this evolution, it will be hard-pressed to imagine a world that fully reverts to a pre-COVID environment for SMB payment solutions. Now with regards to the specific performance metrics, since the beginning of the year, through the end of April, Priority's RentPayments business has seen 27 new property management companies enroll, representing over 37,000 new units to our platform. To highlight the opportunity that comes from this group, at an average rent of $1,000 per month, every 25,000 units represents $300 million in annualized processing bonds. The combination of these new account sales, additional units added from existing property management companies, and tenant activation due to COVID has already resulted in an increase of over 144,000 net new active users on the RentPayments platform. We're optimistic that this trend can grow further as we continue to pursue enterprise clients, and our direct sales and reseller community extends Landlord Station to mid-market and smaller local landlords. Our order ahead technology, e-Tab suite, is seeing a similar growth trajectory as order ahead and curbside pickup becomes part of the normal course operations for many businesses. Following Q4 2019's 252% year-over-year increase in boarding activity and 55% increase in processing volume, Q1 2020 experienced even more growth in adoption as the rate of new merchant boarding improved by 125% and volume grew an additional 35% versus Q4 2019. This trend extended through April where volume increased 135% from March. We believe this growth will continue. In fact, thus far, in the first 6 weeks of Q2, total volume is up 75%, transaction count is up 40% and live accounts are up 43% versus the entirety of Q1 as new venues have been added in May, further increasing sales volumes and building a healthy pipeline of businesses in implementation to go live. Interestingly, e-Tab's order ahead technology continues to be used to meet customer needs for curbside pickup by businesses outside the hospitality sector. Examples include food wholesalers, country clubs, liquor and convenience stores. Similarly, on the health care front, we're working with many doctors' offices that are inundated with patients and are looking for ways to serve them in unique ways while mitigating disruption in the operation of their practice. Priority PayRight has been meeting this need, further building on its growth over the past several quarters. Consistent with our integrated verticals, PayRight processing volumes increased 33% in Q1 2020, posting a 156% increase versus the prior year period. This growth trend has continued with April volumes improving by 83% versus April 2019. Last, we've seen impressive performance from our Commercial Payments assets, B2B acquiring and CPX. In Q1, total gross card volume grew by 57.9% versus Q1 2019. CPX issuing volumes grew 303% in Q1 2020 over the comparable 2019 period and despite the Q1 headwinds from the COVID pandemic, continued its upward trajectory, increasing 6.8% versus Q4 2019. Meanwhile, Q1 2020 B2B acquiring volumes posted a resilient 4% improvement versus the comparable 2019 period. In fact, B2B acquiring volumes continue to accelerate in April, posting a 12.4% increase over March despite the deepening shelter-in-place conditions. Importantly, the Commercial Payments division renewed meaningful contracts with Mastercard and MineralTree during the quarter, and Citibank has agreed to implement a special interchange program with Priority CPX powering their network of B2B supplier payments beginning in Q2 2020. Simply stated, Q1 and April processing volumes and sales successes are certainly encouraging, particularly when viewed through the lens of the present economic environment. It's our belief that they represent the resilience of our operations, the value of our MX platform and product offerings, and importantly, the unique construct of our distribution partnerships that efficiently monetize merchant networks. As an advocate of the independent resellers and vertically focused ISVs and business networks throughout the U.S., we have largely been lumped in with market averages. Going forward, we expect that the variable cost structure of our distribution channels and its geographic and industry diversification and our defensively positioned high-growth B2B and vertical payment software businesses will continue to be a differentiator, positioning us as a leading consolidation platform in the evolving payments landscape in the years ahead. Before wrapping up, I thought it would be helpful to read back to you some commentary from our second-quarter earnings call back in August of 2019. At the time, we said the Federal Reserve's recent interest rate reduction for the first time in 10 years is obviously intended to counteract an anticipated slowdown. We've been preparing for this eventual slowdown and future ones like it by adding defensive assets to our portfolio, including health care and real estate, where the trend to electronic payments is still in the early stages and volumes will continue to grow fast regardless of the macroeconomic environment. We have and will continue to target growth in countercyclical assets such as our Commercial Payments initiatives, where businesses look for revenue sources in down markets and cash acceleration has greater value. If I leave you with one key takeaway from this call, it is that Priority is managing its business several quarters ahead by building a platform to maintain impeccable stability and long-term compound growth through varying economic cycles. While we obviously could not have predicted that a global pandemic would be the catalyst for an economic slowdown, we believe our preparation for such an outcome underscores our attention to generating long-term shareholder value. Despite 33 million layoffs since mid-March, small businesses shutting down, and many areas of economic activity grinding to a halt, we have continued to perform and generate positive results. More importantly, the actions we took to build defensive and countercyclical payment operating assets have positioned the business for success over the long term. Our April performance proves this point as each business segment outside of Consumer Payments had improved EBITDA performance in April 2020 as compared to April 2019 and recent pre-COVID periods. In conclusion, we're pleased with our first quarter results, especially when considering the impact of COVID-19, and we're encouraged by the resiliency we have seen thus far in Q2. We'll remain laser-focused on our cost structure and capitalizing on tactical organic and transactional growth opportunities as the impact of the coronavirus is felt.

Your first question comes from Brian Kinstlinger.

A couple of questions. You guys highlighted the order ahead and curbside pickup demand increasing, which I think we all recognize the value and need for that. How are you, as a company, attacking the market to attract and onboard new customers in light of this trend?

Well, we have both a direct sales initiative that is focused on this segment, and we've put marketing dollars behind it to attack markets where we think we can be particularly successful. They tend to be secondary markets in the U.S. that haven't been picked over by some of the larger aggregators in that space, like Seamless and Grubhub. And then we have a very diverse reseller network that is working closely with our product team, our internal product team to move that product out to our existing hospitality venues and really, frankly, a host of businesses that are in our portfolio that need the functionality. So the combination of our direct sales initiatives and working with our existing resellers has been the focus. That diverse reselling network across the country, where we have 800 active resellers, is a powerful one that we can move on quickly. So it's certainly not only helped us to drive the product results, but as you might imagine, as a reselling partner to have someone like Priority in your corner to help sustain your business and attract new merchants and also provide solutions to your existing merchant base, that only strengthens our relationship. It's one of the reasons why we've had such success with new resellers coming our way during this period as well because our peer group just really doesn't have this type of offering.

Great. And then with consumer purchasing transitioning to e-commerce certainly in place of hardlines, can you talk about how your business is positioned to benefit from this trend? And then if it's relevant, would you be able to share what percentage of your processing volumes are card not present maybe either in 2019 or first quarter '20?

Yes, certainly. Looking back at the period before COVID, it's clear that the hospitality sector significantly affected on-premise payments, so it may not provide the best comparison. During that pre-COVID period, we were approximately 65% card present and 35% card not present on an annualized basis. We've noticed an increase in card not present transactions, and we aimed to enhance our e-commerce business in 2020 as well. Therefore, we anticipate that the mix will continue to shift towards a higher percentage of card not present transactions. This change is driven by the ongoing trend of more purchases moving online and the launch of our e-commerce subscription service, which has been growing rapidly. Out of the 4,480 new boards I mentioned in April, nearly 600 were specifically focused on e-commerce, indicating a significant uptick from the boarding trend we experienced in the fourth quarter of 2019, which was about 150 to 200.

Your next question comes from the line of Clare Galbo.

Just to start, I was wondering if you could talk a little bit more about the contract renewals with Mastercard and MineralTree, maybe just what kind of opportunity that represents.

Yes, sure. So Mastercard has been a long-standing partner on the Commercial Payment side. We've maintained a contract with them for a number of years. They recently renewed it. We provide supplier enrollment functionality to their issuing banks. And that contract will be north of $1 million in EBITDA contribution. That's an increase of about 25%. That doesn't include potential incentives that could add another $300,000 to $400,000 to that contract. The MineralTree is an automated payables technology that we've been integrated with for a year or so, and actually now 2 years. It's a great vote of confidence that they continue to build out their platform on our payments engine. The one we're probably most excited about, candidly, is the Citibank supplier network. That represents billions of volume. We've not included that in any of our projections. But as we get our arms around the growth within that, we'll start to put that into our expectations. As I think everyone can appreciate, being one of the largest money center banks in the world, that supplier network is massive and extends globally.

Okay. Great. I just wanted to ask how active you expect to be maybe on the acquisition front this year, especially in light of the COVID-19 situation. Have you been seeing valuations come down at all?

We have an active pipeline that we have been working in 2019 that remained in place. Right now, I think it's going to be a minute to sort out what the impact of COVID is on some of the businesses that we had in our pipeline. So I don't know that I would have a comment generally about valuation. I would submit that we feel very constructive about our business and its performance relative to the broader peer group of payments. So I'll say on a relative basis, we feel like we should be in a good position. And then how we can potentially capitalize on that from a transaction standpoint is going to be situational. It was probably a month or two out before I would feel comfortable kind of making further conclusive comments on that.

Okay. And just one last question. Maybe could you just talk a little bit about the consumer finance business you launched in the Integrated Partners segment?

Yes. Yes, sure. I mean, look, this is new. So we're not looking at it as a meaningful contributor in sort of the coming quarters. But we think this is a very meaningful opportunity in the conversion of nonelectronic payments to electronic. This is going to be focused on segments like auto loans or large ticket purchases by consumers. To finance those, we have a partnership with a company that we really like their technology quite a bit called Payix. The thing that we find unique about it is most of the platforms out there of consumer payments really provide an online payment portal. It's a bit different in that it's an application that consumers can use to not only make payment but also interact with the loan servicer through chat functions on their phone. Particularly when the biggest challenge in consumer finance is it's not the folks that are paying regularly; it's those that maybe need a couple of weeks deferment or need to pay weekly. The research has shown that most people will engage via text. Look, they don’t want to be under pressure. They're looking to pay for their auto loan or what have you; that car is important. So it's a way to interact that is very efficient for collection, number one. We think it's a more modern way the market's headed. We're excited about getting that product out to market and distributing it to a broader audience in lending. The last comment I would make is where the risk often is in these segments with regulators is aggressive collection. When you're able to track all of that activity over chat, it allows you to intervene early if you see folks that may be taking aggressive tactics and correct that behavior. In light of complaints, it allows tracking of all that dialogue. You're able to go back to the FTC or the CFPB with evidence that these aren't aggressive collection techniques. We really like that technology, not only as a compliance and check, so we can manage risk in that portfolio, which frankly, on the regulatory side, is more meaningful than financial risk, but do it in a modern way that we think will drive large-scale adoption among consumers. So I know that's a little down in the weeds, but we spent a lot of time thinking about this segment because we think it can be substantial going forward in the years ahead, and we want to get it right.

We have a question from Brian, but he has withdrawn it. There are no further questions at this time.

All right. Well, thank you, operator. With that, certainly, I want to thank everyone for their attendance this morning. And I just want to express that we hope everyone just continues to stay safe in this environment. We look forward to sharing further details of our performance in the second quarter as that continues to evolve. So thank you, everyone, very much. Have a great day.

This concludes today's conference. You may now disconnect.