Good morning, and welcome to the International Money Express, Inc. Fourth Quarter and Full Year 2022 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, this event is being recorded. I would like to turn the conference over to Mike Gallentine, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to our quarterly earnings call. I would like to remind everyone that today's call includes forward-looking statements, including our 2023 guidance, and actual results may differ materially from expectations. For additional information on International Money Express, which we refer to as Intermex or the company, please see our SEC filings, including the risk factors described therein. All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events. Please refer to Slide 2 of our presentation for a description of certain forward-looking statements. The company undertakes no obligation to update such information, except as required by applicable law. On this conference call, we discuss certain non-GAAP financial measures. Information required by Regulation G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slides, our earnings press release and our annual report on Form 10-K, including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. These can be obtained in the Investors section of our website at intermexonline.com. Presenting on today's call is our Chairman, Chief Executive Officer and President, Bob Lisy; and Chief Financial Officer, Andras Bende. Also on the call today are Chris Hunt, Acting Chief Operating Officer; Joseph Aguilar, President-Latin America; Randy Nilsen, Chief Revenue Officer; and Marcelo Theodoro, Chief Digital Officer. Let me now turn the call over to Bob.

Good morning, everyone. Welcome and thank you for your interest in Intermex. With yet another year of exceptional performance behind us, we are proud to have established Intermex as the public market's fastest growing omnichannel remittance company. The number of industrious and hardworking Latin American immigrants working in the U.S. that rely on Intermex to transfer money to support their families and loved ones back home continues to grow. With our state-of-the-art proprietary technology and our carefully chosen, highly productive network of retail agents, Intermex stands apart from its peers by delivering a value-added service for our consumers and a value-added partnership for thousands of retailers across the country. Our unique customer-focused omnichannel business model drives sustained long-term growth and value for the company and its shareholders. Looking at the fourth quarter, we finished another strong year on a high note. We delivered double-digit growth without interruption. Additionally, we produced online digital growth of 80% in transactions in Q4. We continue to efficiently develop our offering with a focus on unit economics and sustainable profitability. On Slide 3 for the quarter, we generated revenues of $154 million, up 21%. Net income of $13 million, down slightly; adjusted net income of $18 million, up 10% and adjusted EBITDA of $29 million, up 22%. And for the year, revenues of $547 million, up 19%; net income of $57 million, up 22%; adjusted net income of $70 million, up 22% and adjusted EBITDA of $105 million, up 21%. During the quarter, we also set a single day record with almost 250,000 wire transfers on December 23, as customers in large numbers turned to Intermex to send money home for the Christmas holidays. We believe this supports our belief that when remittances absolutely need to arrive without a hitch, senders have the greatest trust in their Intermex brand. We appreciate the confidence our customers and retail partners have in us and we recognize the important role we serve. Intermex is outperforming the industry because of the focus we place on the fundamentals of our business. Our unique approach to retail expansion as well as our metric-based model provides for profitable growth well above the market. We concentrate on growing transactions at margins that make sense, enabling us to deliver world-class service through our expanding network of retail partners and our online digital products where we are making efficient and productive investments in people, innovative new digital products and scalable technologies. Driven by our capital-light model, we consistently achieve operating efficiencies that enable us to generate significant cash to perpetuate growth and make investments that create value for our shareholders. It has been and continues to be a historic and unparalleled track record of success. On Slide 4, our share of the fast-growing market where we compete has increased significantly throughout the year, including during the fourth quarter. In the top four Latin American markets of Mexico, Guatemala, El Salvador and Honduras, we increased our market share by 90 basis points to 22%. On Slide 5, including the Dominican Republic, these five markets represent 87% of all money sent to the region from the U.S. Subsequent to the La Nacional acquisition, we have a 21% share in these critical markets. Our integration of La Nacional’s U.S.-based operations contributed to our market share by adding more U.S.-based retail locations and capitalizing on La Nacional's strength as a superior brand to the Dominican Republic. Since completing the U.S. portion of the transaction in November, we have been working to optimize La Nacional's agent footprint and reduce the number of underperforming locations. We're in the latter stages of formalizing a plan to improve operating efficiencies and margins. As we transition the business model to one more consistent with the Intermex approach. As for the Europe portion of the acquisition, we continue to make progress with the regulatory approval process. We anticipate regulatory approval in the coming weeks and expect to close the transaction in the second quarter. As we have become more familiar with the European business, we are even more optimistic about the growth potential in the future. In anticipation of completing this transaction, we have begun an executive search for the leader to serve as President of our European division. We believe it is a promising market ripe with opportunity for Intermex both at retail and in the online digital area. Aside from retail, which we believe has the opportunity to be many times larger than it is today, we see a great opportunity relating to online digital. European remittance customers are more likely to be banked for a number of reasons. We believe we have an opportunity to accelerate our online digital growth in Europe. We feel we can efficiently build a digital presence that is transportable throughout the EU and we are looking forward to getting it underway. In the U.S., our digital business is benefiting from increased consumer acceptance of our mobile app. Our application has gone from an app store rating of 2.7 to 4.7 over the last several months since we upgraded our user experience. Our strong brand equity in the Latin American community is a large asset driving digital transactions profitably. On Slide 6, our digital transactions increased 84% in the fourth quarter. Currently, 28% of all transactions are either sent or received digitally, which is a 480 basis points increase from last year. We continue to maintain positive margins and keep a close eye on the unit economics of our digital offering. Our mobile app has been a success enabling Intermex customers to prioritize fee, speed of delivery or exchange rate to suit their needs. The app combines the best features of choice and ease of use. Importantly, as with retail, our mobile app is supported by our best-in-class customer service. Everything we do is enabled by the rock-solid foundation we have created in the U.S. with a large ecosystem of retail agents. This part of our strategic growth story gives Intermex a true competitive advantage. We have created an extensive, highly productive group of retail agents that have chosen to partner with Intermex because of the value-add we offer to both them and their consumers. What we have established in the marketplace is hard to replicate and presents a significant moat around the business to ward off potential competitors. We continue to expand our retail network through carefully chosen high-performing and profitable agent additions. Our expanding business includes same-store organic growth from our existing agents and the growth we generate by carefully targeting and recruiting the best retailers to serve our consumers. We focus our recruiting efforts in opportunity geographies across the U.S. with the largest population of Latin American foreign-born individuals. While we continue to grow our agent base in the Eastern states, much of the development efforts are focused on the Western U.S. where the opportunity is much more significant. We take great care in the selection of top-notch retailers and neighborhoods that are convenient to where our consumers live and work. We often remind people that to fully understand our retail business and growth potential, you need to consider the profile of the typical Intermex customer. Most are either paid in cash or by pay per check and are unbanked. Traditional retail banks are often not conveniently located and do not always welcome these consumers with the same cost-effective convenience, service and cultural fit that our agent network can provide. Intermex offers and delivers a time-tested solution that works for our consumers and for our agent partners. It truly sets Intermex apart and positions us well for success and sustained growth. One other update on our technology before I turn the call over to Andras to go over the numbers. Software and hardware upgrades that we initiated during the second half of 2022 are progressing nicely. We are on track to complete the enterprise-wide project during the third quarter of 2023. These upgrades will position Intermex for a rapid rollout of new digital and card products and improved consumer experience at thousands of retail locations, along with enhanced and upgraded AML capabilities. Agents often choose Intermex because of our technology and the new hardware and software we have launched will further simplify the process for our neighborhood retail agents. They will be able to complete money transfers even more efficiently than they did before, solidifying our position as their partner of choice. For the consumer, it means faster counter service and an enhanced customer service experience. Intermex continues to grow at a sector-leading pace. We had an outstanding 2022 and are anticipating continued exceptional performance in 2023. This will be fueled by the strength of our growing network of retail agents and our upgraded and much improved online digital application. Both areas will be supported by our best-in-class customer service. We will continue to make financially sound and metrically smart decisions as we continue to invest in people and technology that will deliver the best products and service in the industry. Here’s Andras to go over the numbers.

Thank you, Bob, and good morning everyone. I’ll provide some context for the fourth quarter and full year 2022 results, followed by a review of the guidance for 2023 that we provided this morning in the press release. The competitive advantage we’ve created for ourselves combined with highly efficient management of our growing lines of business continues to drive strong operating results. As Bob mentioned, we’re making intelligent investments in people, innovative new products and scalable technologies that position the company for sustainable double-digit growth that our shareholders have come to expect. We continue to execute on our omni-channel strategy, expanding our ecosystem of productive and profitable network retail agents, while rapidly growing what we feel is a best-in-class digital offering. On Slide 7, building on the strength of our retail business, the number of unique active customers grew 31% during the fourth quarter. These customers generated a record $14 million remittance transactions, 23% more than a year ago. Contributing to this growth in total remittances was an 84% increase in digitally originated transactions as robust customer acceptance of our mobile app continued. These numbers reflect double-digit growth in our core business and the contribution of two months of activity from La Nacional, which is a thread that runs through our fourth quarter results. On Slide 8, the strength of our business fundamentals drove a 19% increase in total principal transferred to $6 billion for the three-month period. For the full year, total principal transferred increased 21% to $21 billion. The average remittance amount was down 4% for the quarter at $421 per transaction. Intermex’s core business average trend was down only slightly, but the broader trend was fueled by La Nacional as transaction amounts to the Dominican Republic are on average lower than the majority of the Intermex core business. On Slide 9, looking at the top line, agent and customer growth contributed to the 21% year-over-year increase in revenue, reaching $154 million during the fourth quarter. Full year revenue was up 19% to $547 million. While achieving these consistently strong results, we continue to efficiently manage banking and payer fees while structuring smart retail incentives, so Intermex and our agent partners both win. Additionally, we’re thoughtfully pacing spending around our app and online offerings to match or stay ahead of consumer acceptance. We’re successfully growing the digital business efficiently and profitably with transactions up over 80% year-on-year in the fourth quarter. Our tight pulse on consumer behavior positions us well to invest in new digital products and services when the unit economics are there to support it. On Slide 10, it was a very good fourth quarter and core growth in the business was strong. However, over $2 million in deal related costs and higher interest expense had a net income down slightly at $13.1 million. It's important to mention that despite these headwinds, our GAAP EPS was still positive by about 6% due to our opportunistic activity this year on the buyback front. Net income for the full year finished at $57 million, up 22%. On Slide 11, excluding certain intangibles like share-based compensation, transaction related expenses, amortization of intangibles, and the tax benefits related to these items, adjusted net income was $18 million, up 10% for the fourth quarter, but again, like on the previous slide, from an adjusted EPS perspective, we were up over 15%. For the full year, adjusted net income was $70 million, an increase of 22% for the full year. On Slide 12, adjusted EBITDA increased over 22% to $29 million for the quarter and it was up over 21% to $105 million for the year. Both measures benefit from strong revenue growth, operating efficiencies, and an exceptional focus on cost management, which is part of the Intermex DNA and rare among companies growing adjusted EBITDA at over 20%. On Slide 13, turning to the balance sheet and cash. Intermex is an efficient operator and strong generator of cash. The company ended the fourth quarter and the year with almost $150 million in cash and an undrawn revolver position of $74 million. Our total revolver capacity is $150 million, which we utilize on peak weekends and since the quarter ended on a Saturday, we had about half of it drawn at the time. Had we closed on a Thursday, for example, that revolver would’ve been undrawn. Our internal measure, which removes working capital cyclicality, net free cash generated remains strong with over $60 million generated for the year. During the fourth quarter, we repurchased 465,000 shares for just under $10 million at an average price of $21.48 per share, and we see the opportunistic buyback program as an excellent use of capital. Based on the success of our program to date and the inherent value management and the Board see in Intermex stock, the Board has recently approved an additional $100 million for share repurchases. Including 2023 activity, the company has repurchased over 3 million shares for about $65 million. This includes the original $40 million authorization in 2021 and amounts we purchased directly from a significant shareholder in the third quarter of 2022. On Slide 14, turning to guidance for 2023. We will now guide for both the full year and the current quarter. For 2023, we expect the following: Revenue to be in the $667 million to $688.5 million range, an increase of 22% to 26%; net income of $66.5 million to $69 million, an increase of 16% to 20%; and adjusted EBITDA in the $120 million to $124.5 million range, an increase of 14% to 18%. For the quarter, we expect the following: Revenue to be in the $140.9 million to $145.5 million range, an increase of 23% to 27%; net income of $11.6 million to $11.7 million, a decrease of 1% to flat; and adjusted EBITDA in the $22.5 million to $22.8 million range, an increase of 9% to 10%. This guidance takes into account the full impact of La Nacional, the U.S. business that closed in the fourth quarter, and the international business, which we expect to close in the second quarter. In summary, we continue to execute as a company and feel well positioned to deliver another strong year for our shareholders.

We will now begin the question-and-answer session. Our first question will come from Mike Grondahl with Northland Securities. You may now go ahead.

Hey guys. Two questions. The first one, just any update on the sales force and kind of your outlook for agent growth. And then secondly, can you talk a little bit about pricing trends that you’re seeing and what kind of pricing is embedded in your 2023 guidance?

Yes. I’ll take the first part of that. In terms of pricing, we have seen, particularly in the fourth quarter, more aggressive behavior by the small competitors and maybe one or two of the larger public companies relative to pricing at retail. We have not, if you would look at our numbers, we haven’t had any real decline in terms of our revenue per transaction or gross margin. As usual, we haven’t really responded to that in a broad fashion. We’re doing it very strategically. We’ve seen that kind of come and go many times throughout the years. The industry that I’ve been around for many, many years sees small competitors get aggressive with prices in certain regions of the country. The challenge is to hold that line, because you’ll end up driving prices down permanently. So, we’ve seen some of that. As we look towards 2023, we see a small reduction in revenue per a little bit relative to the FX gain. The fee itself, however, remains generally stable. So we don’t see a big degradation. There will be markets where we need to be more aggressive, particularly markets in – very, very aggressive locations in the West, like California. We continue to see aggressive behavior there along with the whole West Coast. As for the sales force, I’ll ask Randy to chime in, but we’re almost at full capacity with our district managers. I think yesterday, we reviewed that we had one position open. We are adding a number of people known as rovers, which are regional sales executives that are going out and doing nothing but adding new retail locations strategically, particularly weighted towards the Western states, because that’s where we’re underrepresented in terms of agents per foreign-born individual and wires per foreign-born individual. So, we’ll be working against that. As we’ve talked about, that’s sort of a crop, if you will, and the seeds that we plant today will manifest themselves beginning later in the year, but will be really impactful in 2024 as those folks get up and running. Randy, anything to add to that?

Yes. Hi, Mike. Just really quickly, as Bob mentioned, we’re in the process of rolling out new hardware and software to our agents. As we got into the thick of things in the back half of last year, it caused us to really take a look at our agent base and the productivity of our agent base, specifically the new agents we had brought on over the course of the year. We realized that we got a little bit away from the focus that we like to have in terms of high-quality agents. So we have taken a hard look at the number of agents we’re bringing on versus the quality of agents we’re bringing on. You’ll see, hopefully, our plan is to bring on higher quality agents throughout the course of 2023 and we may even churn some of the lower producing agents out of our network simply because we don’t want to be putting the cost of new equipment and software if we’re not going to get the return out of that investment.

Got it. That’s helpful guys. Thank you.

Next question will come from David Scharf with JMP. You may now go ahead.

Great, thanks. Good morning and thanks for taking my questions. Hey, I wanted to follow up on Mike’s question regarding sales force and specifically agent growth. I know in years past, you’ve kind of shied away from providing an agent count number. You’ve spoken more broadly about the opportunity in various regions. But it is kind of one of the most tangible ways for investors to visualize those seeds that you’re planting as you noted, Bob. Can you provide us with a framework for thinking about the growth in the footprint that’s embedded in your guidance or the growth in the productivity per agent that’s embedded in your guidance based on the comments about refocusing on agent productivity?

Yes. I think the first piece of it is that we need to drive same-store sales. We’ve got a base of agents and, for instance, if you could drive same-store sales with the core of agents in the middle teens, for instance. Now I’m not saying it’s there today, but it has been during our highest growth times. That’s going to drive and provide the base. You’re always going to get more growth from same-store than you are from new. Growth from new agents comes in their second year, which by definition is same-store growth. Our average retailer averages well over 400 transactions a month. You could calculate from our transactions to estimate how many retailers we have. That number is something we’d like to drive to well over 500 per month. Now, the mix of that means you’re bringing in new retailers that are kind of early stage and may only be producing 50 or 100 wires at the beginning or even 200 wires, and that mix brings you down a bit. But the driving force will be the performance from existing agents and that rifle shot approach. We think we could easily double our agent network in places like California, and we’re putting the resources there to be able to do that. We know we’re going to have 10 or 12 people selling there, which in the past we’ve had maybe as many as only six or seven or eight. So we’re increasing resources and driving more agents. But at the end of the day, as Randy said, we’re also going to be looking at productivity. It’s not so much about the number we add, but the productivity of them. 80% of our growth will come from same-store and the remainder from new agents.

Got it, got it. Understood. And I know in years past you used to have some slides that actually broke out the percentage of your agents that were one to three, maybe three to five years old and over five, given that they had different growth trajectories. Any more granularity into that just visually, I think provides a healthy window into how much organic...

Yes, I understand. We’ll take a look at that. I think part of our challenge is that we’re competing against many companies that are not public and have access to a lot of data. We look at the other public companies and what they’re sharing, and we sometimes may overshare. That can make us a target for competitors. So we don’t want to overshare, we want to give the market as much as we can and give our competitors as little as possible, right? So that’s the fine line we walk.

Absolutely. Understood. Hey, one follow-up regarding the buyback $100 million is a formidable figure. I’m just curious what is the analysis that goes into coming up with such a figure versus $75 million or $125 million? Is it covenant restricted based on how much of net income you’re allowed to buy back based on your loan agreements? Is it based on an internal formula as a multiple or percentage of free cash flow over certain periods of time? Just a little color on kind of how that $100 million figure was derived.

Yes, David, this is Andras. I’d say we’ve proven that the buybacks have been a good use of capital. I think the program that we’re buying under, we don’t plan to change much in the short-term. But we did think having an allocation of a substantial figure like $100 million gives us the opportunity to rethink how we think about capital allocation. We wanted a number that allowed us to run with the current program for a while and also allowed for the flexibility if we wanted to rethink capital allocation for the company.

Understood. Great. Thank you.

Our next question will come from Alex Markgraff with KeyBanc Capital Markets. You may now go ahead.

Hey, everyone. Thanks for taking my question. I actually had a couple. First, just on the principal send amount. I appreciate the kind of breakout between core Intermex and La Nacional. I guess just curious in the 2023 guide, maybe just a bit more detail as to what’s embedded in your assumptions around principal send amounts?

Yes, I would say, for the… we’re planning relatively flat. For the Intermex send amounts, I’ll just tell you where we ended for the fourth quarter. The Intermex average send was $434 million and La Nacional was right around $300 million. We plan for those to be relatively flat. The good thing about Mexico is that Mexico is actually growing a bit, so that could help us a little, but we’re not going to bank on that because in general, send amounts for most geographies are not increasing.

Okay, thanks. I appreciate the detail there. And then just one more around the guidance. If you consider the midpoint of revenue and adjusted EBITDA and the margin implied there, I think it’s maybe 100 basis points of compression from 2022. Just kind of curious, I assume a lot of that’s related to La Nacional. Any sort of commentary in terms of organic margin expansion?

Yes, that’s... I think you got it Alex. And I think that to – I know we’ll get the question in the call back, so it’s better to address it here. Within our guide for the year, we’ve got revenue for La Nacional and this is for four quarters of the U.S. business and three quarters of the European business, revenue about $85 million, EBITDA about $4 million, and then net income about $2.5 million. You’ll see in our K, which we’ve released previously, we’re going to update the number in the K to say that we expect that business once fully integrated, which is going to take a little time, to generate about $80 million to $90 million in revenue, with the same 9% and 11% EBITDA margins that we had mentioned in previous K. It’s going to take a little while for us to work that up, but we’re optimistic and excited to get started.

Okay. That’s great. Yes, that was my follow-up. So just to clarify on that last point around some of the optimization that’s going on. It sounds like there is, within the guide you provided today, some conservatism or potential revisions as you kind of optimize the integration. Is that a fair summary?

Yes, that’s fair.

Yes, I think – this is Bob. If the integration goes along faster, then that’ll certainly happen. I want to make clear that what we have with La Nacional is exactly what we expected. We knew that it was a business that had a lot of upside potential in the U.S. and that it had to be right-sized. It had a lot of things that were being invested in that were probably in their minds great for the future but were not necessarily consistent with how we saw the business evolving. We’ve already started to cut some of those expenses, and you’ll see some of that even affect the revenue year-over-year. So, the revenue for the U.S. business could go down year-over-year, but the EBITDA will increase significantly. The European business is really the trump card; I mean, that’s a solid business that, from everything we understand, is currently making a small amount of money but has an opportunity to grow. The European business, which we haven’t talked much about, provides us with a bigger opportunity in the online business than we have in the U.S. Our core strength in the U.S. is in countries where the digital online business is not as big as it might be in other countries. The destinations from the U.S. are much more retail-oriented. In Europe, the countries that receive money tend to conduct more of their business digitally. There are also many more individuals there that are employed and receive their transactions through bank accounts. So, we’re excited about that. There were many facets to the La Nacional acquisition and investment that we saw. It’s in stages, and what you see today is the unrefined piece of the business. There are other opportunities regarding right sizing and the prospects in Europe and online that will be integrated with La Nacional over time.

Great. Thank you both for all the commentary. Appreciate it.

Our last question will be a follow-up from Mike Grondahl with Northland Securities. You may now go ahead.

Hey, thanks guys for taking the follow-up. My question was just about the software and kind of hardware upgrade that you mentioned in Q3 of this year. One, I’m curious about the cost of that upgrade. And two, Bob, what are the two biggest benefits we should watch for or think about related to it?

Well, I think there are a number. First, putting new equipment in agent locations where much of the equipment is old and obsolete is a really big plus. Improving the software quality is also a big plus. Now that’s just from an aesthetics perspective and optics. It makes it easier for agent locations to process checks and rollout our General Purpose Reloadable cards at retail. It also enables us to enhance our other online activities. It improves our AML capabilities, which is important. Additionally, it ensures that the already quality service we have at retail not only stays at the speed it’s at, but can operate even faster despite increasing regulatory requirements. This does a lot to keep us at the forefront of the highest quality of hardware and software at retail locations with the fastest processing, high reliability, and ease of use, which dovetails nicely with our world-class customer service. That makes us very appealing for our retailers. I’ll turn it over to Chris for further technical details.

I think the biggest advantage we have is that as we think about our omnichannel strategy, being able to go to market with new products and building out this new software on the new architecture and platform allows for scalability. We have many ways to interact with consumers not only in retail but also to tie that into our broader strategy. So, we’re very excited about it and are already seeing positive numbers from agencies using it.

Got it. Okay. Hey, thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Bob Lisy for any closing remarks.

Yes. Thank you all for joining us, and we look forward to talking to you all soon. Have a great day.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.