Good day, and thank you for standing by. Welcome to the International Money Express Inc. First Quarter 2024 Earnings Conference Call. Please be advised that today's conference call is being recorded. I would now like to hand the call over to your speaker today, Alex Sadowski, Investor Relations Coordinator. Please go ahead.

Good morning, and welcome to the Intermex First Quarter 2024 Earnings Call. I would like to remind everyone that today's call includes forward-looking statements, including our 2024 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 will 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 slide, our earnings press release, and our annual report on Form 10-K and quarterly reports on Form 10-Q, including a 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, as well as other members of the senior leadership team. Let me now turn the call over to Bob.

Good morning, shareholders, analysts, partners, and media representatives. Thank you for joining us today. It's our pleasure to report that International Money Express has not only delivered a strong start to 2024, but has also achieved record-breaking performance. The company's revenue of $150.4 million and adjusted EBITDA of $25.4 million are our first-quarter milestones. EPS have surged to new first-quarter records of $0.35 and $0.43, respectively, surpassing market expectations and demonstrating our exceptional operational efficiency. Despite slower-than-expected market growth, particularly in Mexico, we have navigated some top-line headwinds to deliver exceptional results and double-digit earnings growth. We delivered results within all guidance ranges and exceeded expectations on multiple metrics, demonstrating our exceptional market command, strategic agility, and unwavering commitment to financial discipline. This quarter, we have continued to set records across various metrics, including revenue highs in 10 countries, showcasing the effectiveness of our global strategies and the strength of our market presence. The integration of the national business has been a standout success with a 4x increase in EBITDA, which speaks volumes about the strategic parts of that acquisition. We completed 2023 having generated $62 million in free cash, the highest annual amount ever for us, primarily driven by our retail operations where significant growth opportunities remain. This success has further underscored the payback received from leveraging the cash and investing in our digital technologies, highlighting our efficient financial management and strategic initiatives. Our digital channels, the cornerstone of our growth strategy, have reached all-time high user engagement and profitability levels. This success reflects our disciplined approach to growth, focused on sustainable profitability through strategic and mindful investments in our technology and marketing efforts. We continue to expand and strengthen our digital offering through our strategic partnerships, particularly within our Wires as a Service platform. The successful rollout of new partnerships this quarter has not only enhanced our capabilities but also set the stage for sustained future growth. The European market remains a key focus for expansion, where we anticipate our advanced digital solutions will be especially effective in driving the growth of our business. International Money Express is a fintech company at the forefront of the omnichannel remittance model, which defines our approach to offering versatile financial services. This model is anchored by our highly profitable retail network, the backbone of our operations, and a rapidly expanding digital sector poised for substantial growth. Our omnichannel strategy ensures the seamless integration of traditional retail transactions with cutting-edge digital solutions, providing comprehensive coverage across various customer touchpoints. At the core of our identity is our surgical approach to growth in everything we do. At retail, we focus on specific agents and geographies to maximize profitability. This strategic targeting allows Intermex to navigate markets more efficiently and profitably while delivering exceptional growth. Our ability to price services efficiently down to the ZIP code level showcases our sophisticated operational capabilities, enabling us to tailor our offering precisely to market demands. Our retail operations are noted for their cost efficiency and effectiveness, allowing us to strategically nurture our digital ventures. This balance helps avoid unnecessary expenditures, safeguarding the company capital by fostering substantial business growth. As the gold standard in quality service, we leverage cutting-edge proprietary technology to deliver exceptional value-added services. These services enhance our relationship with a highly productive network for retail agents, typically locally owned businesses, providing them with tools and solutions typically beyond their reach. This distinctive operational infrastructure sets us apart in the marketplace and makes our business model difficult for competitors to replicate. By blending the strengths of both traditional retail and digital technologies, Intermex uniquely captures diverse market opportunities driving our future growth. The first quarter of 2024 has been transformative, underscored by significant strategic breakthroughs and substantial operational advancements. Our current entry into the European market is anchored at the retail level, laying the groundwork for what we expect will be a significant expansion. While our advanced digital platform has yet to be deployed in this market, they represent a key opportunity for future revenue growth and are poised to transform the financial services we provide as we expand our digital reach. Our enhanced partnership with Visa is set to expand our digital footprint and enrich our digital services offering, aligned with our goals for extensive market penetration and superior customer service. This expansion into at least a dozen new markets signifies a major stride in our commitment to broadening our reach and enhancing our technological capabilities. Domestically, the recent expansion of our outside sales force by 11 new positions demonstrates our commitment to strategic growth and enhancement of our market presence. These roles, while still in the early stages of impact, symbolize our fulfillment of the promise made to our stakeholders, setting the stage for substantial future contributions as the team members ramp up. The full operational capacity of the inside sales team, which now represents a tripling of our overall inside sales force, is revitalizing our sales approach. This significant expansion is a strategic enhancement of our capabilities, poised to elevate customer service levels and transaction volume as their integration experience progresses. As we move into the second quarter, we do so with a reorganized sales team led by new and upgraded management. This expansion is further bolstered by the launch of our new bill payment services, equipping us with additional tools to enhance our market engagement and service delivery. While our growth does not solely depend on market conditions, any renewed vibrancy in the remittance market will further amplify the impact of our enhanced sales force, boosting our future growth prospects. This quarter, we faced a series of economic and market-specific challenges, particularly in Mexico, where market growth did not meet our expectations of 3.5%. Despite these headwinds, our strategic preparation and adaptive business model enabled us to not just cope but to excel, achieving robust earnings results across the board. Our success demonstrates our deep understanding of market dynamics and our ability to swiftly adjust our strategies to maintain momentum and deliver profitability. We have managed to achieve our key financial targets through diligent management and a proactive approach to market fluctuations. I'll now hand it over to our CFO, Andras Bende, who will delve into the details of our financial performance and the significant strides we have made this quarter.

Thanks, Bob. In this first quarter of 2024, Intermex has not only continued its trajectory of robust financial performance but has also set several new records, which underscores the strength and resilience of our diversified business model. Our first quarter revenue reached $150.4 million, a 3.5% increase year-over-year despite softer-than-anticipated market growth in Mexico. The customer base on the Internet platform continued to expand, up 3% to 4.2 million customers, showcasing our strong brand loyalty and the successful enhancement of our customer engagement strategies. Our digital channels have seen exceptional growth and enhanced profitability with revenue up by almost 60% compared to the same period last year. This strong trend reflects our focused efforts on expanding our digital footprint and enhancing user engagement through innovative offerings. Our measured approach to digital, underscored by a thoughtful investment, is allowing us to really monetize the successful adoption of our services. Adjusted EBITDA reached a first-quarter record of $25.4 million, representing a 5.5% increase, while the EBITDA margin improved to 16.9%, up 30 basis points from 1Q last year. Also worth mentioning, we achieved this improvement in EBITDA margin despite the consolidation of the eye transfer business, an inherently lower margin business, which is not consolidated until the second quarter of 2023. These figures illustrate not only our profitability but also our ability to optimize and scale our operations efficiently. Net income and adjusted net income both achieved new first-quarter records, reflecting our disciplined financial management and strategic planning. Our growth in earnings per share is particularly noteworthy, with diluted EPS up 12.9% to $0.35 per share and adjusted diluted EPS also increasing by 13.2% to $0.43 per share. Our tax rate remained stable at 28.3%, close to where we were a year ago and a bit better than the fourth quarter. Our earnings performance highlights our commitment to delivering shareholder value and the nimble nature of the Internet business model, allowing us to quickly lean into efficiency in the face of market softness. On the operational front, interest expense rose to $2.7 million. This is driven by a higher rate environment but also higher usage of our revolving credit facility during the weekends. Versus a year ago, we have deployed much cash that would have otherwise sat idle during the week towards stock buybacks, investment in technology, M&A, primarily the closure of the i Transfer acquisition, and investment in our new headquarters facility. Depreciation rose by 26.7% due to our new headquarters and ongoing investments in our technology infrastructure, while amortization expenses saw a decrease of 12%, down to $1 million for the quarter. As it pertains to cash, our business model remains highly efficient and continues to generate a lot of cash. When you look at our free cash generated measure for 1Q, remember, this is our internal measure that attempts to exclude balance sheet cyclicality. It's a little unusual in 1Q. The lower number is mostly driven by the investments in the headquarters building, along with the priming of several technology investments. Excluding those items, our free cash generated metric continues to grow. As per usage of free cash, our commitment to returning value to shareholders is evidenced by a record buyback of shares totaling over 949,000 shares for the quarter. As our financial results indicate, the quarter saw significant efforts in cost management, particularly in terms of SG&A expenses, where we've implemented strategic measures to protect earnings and margins. This drive for efficiency is what we're good at and is core to our DNA. As part of our strategic plan to further optimize the Lonato business, in the second quarter, we launched a strategic restructuring initiative aimed at maximizing the efficiency of our offshore support entities. We'll complete the project by the end of 2024 and expect to generate over $2 million in recurring annualized savings. With this program, we anticipate a roughly $2.4 million restructuring charge in the second quarter. This move underscores our continued commitment to operational excellence in every area of the company. As we continue our journey in 2024, our financial strategy remains focused on leveraging our strong cash generation to invest in growth initiatives while maintaining rigorous cost control and financial discipline. Our balanced approach ensures that we remain well positioned to meet our financial goals and continue delivering exceptional value to our shareholders. Looking ahead, the outlook for our company is promising. Our ongoing investments in technology and strategic market expansion are laying a strong foundation for our long-term success. We're eager to enhance our service offerings, expand into new markets, and deliver exceptional value to our customers and shareholders. Additionally, we have realized and expect to continue to realize synergies through our recent acquisitions, particularly with Leeson as we streamline their operations and ramp up their sales. Aside from the cost impact of the approximately $2.4 million restructuring charge on GAAP EPS, the rest of our full-year guidance will remain unchanged. We are optimistic about our ability to deliver earnings within the ranges we guided to, though we recognize revenue may trend towards the low end of our guidance should a soft market in Mexico persist. So for the full year 2024, we anticipate revenue of $681 million to $701.8 million, fully diluted GAAP EPS of $1.77 to $1.92, adjusted EBITDA of $124 million to $127.7 million, and adjusted diluted EPS of $2.13 to $2.31. And for the second quarter, we anticipate revenue of $171.5 million to $176.8 million, fully diluted GAAP EPS of $0.41 to $0.45 per share; adjusted EBITDA of $31.7 million to $32.7 million, and adjusted diluted EPS of $0.54 to $0.58 per share.

In conclusion, the first quarter of 2024 has been extraordinarily successful for International Money Express. We have exceeded many of our strategic and financial goals, setting a solid foundation for continued success and growth. We appreciate your steadfast support and trust in our strategic vision. We look forward to sharing our continued progress and achievements. We are now ready to take your questions and provide further insights into our performance, strategic initiatives, and optimistic outlook for the future. We welcome your inquiries and are eager to discuss our future plans and projections.

Our first question will be from Gas Gala of Manas Crespi, Hart & Company.

Can we talk about the growth assumption for the year in Mexico? And maybe what you're seeing from maybe strengthening USD versus the Mexican peso? Also, just general touch on what you're seeing for your remitter customers in terms of their health in terms of jobs, wages, all that.

There's been a reasonable amount of volatility in the Mexico growth numbers. So we try to look at the trend line. The most recent month, the numbers had dipped overall marketplace to negative numbers to a minus 3 that those most recent month as final as March. So the previous month before that was a positive 3%. I don't think there was a 6% swing in 1 month. Sometimes that's just the way the months kind of fall and how the Mexico banking system reports them. But we do expect, I think, the market to get a little bit better as the year goes on, but we're not really having that in our projections. As we talked about, if the market rallies and comes back a little stronger then the things that we're doing related to our increased investment in sales, particularly at retail right now, where we still believe there's a lot of life, and also what we're doing with the partnerships related to digital, we think that the numbers will be stronger if the Mexico market comes back. It's difficult to know because there's a lot of really complicated factors. A lot of it has to do with today, we believe the strength in the peso, as you noted. It's hard to figure out or the weakness in the dollar, whichever way you want to look at it, hard to really get a sense about how long that will go forward. What I can tell you is I think it's a highly resilient set of workers that are resourceful because they're here to work, they're here to send money back home, their whole purpose for being here is that. And so even when we had COVID back in 2020, we found a movement from workers even if they were in the service industry to move to industries that were still able to work, whether we're car washes or whatever, we didn't see really a huge downturn in the overall market that was sustained even in that period. So I don't think that there's jeopardy in terms of related to the viability of the core careers for our customers. The most affected area is probably housing starts, which affects a segment of our workers, but we're very heavily into the agricultural component, particularly in certain areas in the West and even in the Midwest. And those areas are going to be stable, that there's nothing changes relative to our agriculture related to the economy. The service industry housing starts get affected there a little bit. But I think we don't think there's huge instability related to a decline in the number of customers. Our customer base is still growing. We just think that Mexico, for one, has been on such a trade in terms of growth for so long, such a really great track of growth that's inevitable to have a little bit of plateauing or even a slowing, but we don't expect it to last a long time, but we don't have any resurgence in our plan for the second half of the year.

Great. I appreciate that color. And pivoting a little bit, can we talk about the performance of your agent vintages? Maybe talk about those that are still ramping in terms of that wires per month per agent versus those already at scale? And just a clarification, how are we doing versus that top 5 countries market share that you used to share? I'm not sure I saw it in the slides.

Today, our top 5 market share has been influenced by several factors. Firstly, the acquisition of Le National has had a significant impact in some countries while less so in others. Furthermore, it is challenging to distinguish between digital and retail metrics. Based on the data we have, we believe we are outperforming the market and gaining share in both areas. However, our current weighting does not align with the market distribution, especially concerning digital, which is growing more rapidly compared to our stronger presence in retail. As we continue to expand our digital segment, which is outpacing retail, our weighting will adjust, and market share figures will reflect that change. Therefore, we do not think that the current numbers are a true representation of our performance relative to the market, considering the acquisition and the shifts between retail and digital. We don’t find these figures to be particularly useful in gauging our market position at this moment.

Got you. And on the performance of agent vintages, if you don't mind, some color there, like the ones that are still ramping up in terms of wires per month.

You mentioned that our business consists of three components: same-store sales, churn from agents who were with us last year and are no longer, and new store sales. Each of these components plays a role in our overall sales. Currently, our new agents are performing better than before, exceeding the average per agent. There is significant potential for growth, which is why we are increasing our sales efforts to onboard more new agents. Typically, a successful agent generates between 150 to 200 wires per month, but they can be successful at even lower levels. Most are reaching that success within two to three months. We are adding 11 people to our sales team to focus on areas like Texas and California, where we see greater opportunities in underserved ZIP codes. There are places where we already operate, but we could significantly increase our output. To address this, we need to establish more quality retailers in those areas. This is the focus of expanding our team, with the additional sales reps alleviating some pressure from the outside team, allowing them to concentrate on adding new locations. The potential for growth remains strong, and while we haven't disclosed specific numbers, it’s essential to have a balance of same-store and new store performance while minimizing churn. All these elements are currently healthy for our business. We need to add more retailers in western states, which will continue to be a long-term focus for the next five to seven years. This gradual approach is necessary as we require thousands of additional retailers in those regions to align with the population demands.

And our next question will be coming from Alex Markgraff of KBCM.

Actually, 2 questions. First, on Slide 13, just looking at this gross profit per transaction and digital. Just curious if you could sort of expand when we look at the Intermex bar, what has sort of allowed for that expansion there?

We expect some growth in our gross margin due to initiatives aimed at cost reduction. As we continue to grow and make more investments in marketing, we may see changes in the long term. In the short term, we anticipate some expansion as well.

Yes, let me elaborate on that. We've found that some competitors and leaders in the digital marketplace have relatively high margins after entry-level transactions. We have managed to be competitive while achieving even better margins. Additionally, we have increased our gross margins by lowering some costs associated with those margins. This includes adjustments in pricing and reductions in certain costs before reaching that gross margin number, thanks to the efforts of Marcelo and Chris Hunt, who are focused on our digital initiatives. We believe we are in a strong position now because our unit economics are robust, allowing us to be agile and potentially take lower margins for growth purposes, optimizing the price-quantity balance. Previously, a few years ago, we faced challenges not only with digital customer acquisition costs but also with unit economics. We have overcome those challenges now. Our technology quality matches top competitors, and we have unit economics that are both sensible and profitable, giving us flexibility. Our final focus is to effectively manage customer acquisition costs to attract more users to our platform, ensuring they enjoy a quality app while we maintain favorable unit economics.

Yes, that's great, Bob. And then just a quick follow-up on the Felix Pago partnership. Just sort of if you would speak to the rationale there, maybe if there's any sort of indication of how the economics look of that type of transaction. I don't know if there's any sort of commercial agreement details that you're willing or able to share. But just any sort of extra color around that would be helpful.

The rationale is to expand our Wires as a Service solutions without the cost and the challenge to acquire new consumers. So we can leverage our platform, we can leverage our license, and we can leverage our expertise. But Pelepas is the one who is really making the large investments to acquire consumers. It is a great combination of our strength versus the innovation, which doesn't block us from having a similar solution in the future. However, in the short term, we can significantly increase the bottom line by leveraging a platform that exists.

One of the things I would add is pursuant to our omnichannel strategy, one of the things that's unique about Philippe was obviously the interface being in WhatsApp primarily. And that's a channel that a lot of our Latin consumers like to use and are very comfortable with. So it also gives us expansion into meeting our consumer needs where they would like to send wires as well. So strategically, overall, it also plays into the omnichannel strategy.

Our next question will be coming from Mike Grondahl of Northland Securities.

A couple of questions. First off, just on the recent expansion in the outside sales force and inside sales force. How is that going kind of compared to internal plan, productivity and growth that you're getting from that new investment?

These initiatives do take time to develop, so I'll begin with the inside sales team. We previously had a team of around 13 people supporting our outside sales efforts, focusing primarily on same-store locations. Their role was to engage with these stores and ensure smooth operations as we compete against our rivals, especially during weekends when we might need to adjust pricing or take other actions to increase our same-store wires. We determined that, with a modest investment in our offshore team in Guatemala, we could significantly expand our reach. Many of our offshore team members are just as bilingual as those in Miami. We added 24 new team members, which tripled our reach. Now we can communicate with more agents and, on Friday afternoons, analyze in real-time any struggles we face and identify opportunities in different countries and regions, guiding our nearly 40-person team on where to focus our calls and efforts to increase wires. This strategy is performing very well. However, we are still in the ramp-up phase, having made the decision to invest late last year and fully staffing the team only early in 2024. Although we are still at the start of this initiative, we are pleased with the activity. On Fridays, the status meetings evolve into a strategy session where we can pinpoint opportunities and allocate resources that many competitors don’t utilize. Regarding the outside efforts, we are creatively placing personnel in key markets. We have restructured territories based on opportunities and are increasing our presence in markets like Chicago, where we previously had only two sales reps. Given the potential for foreign bonds, which we track with key performance indicators, we see significant opportunities. We are assigning someone specifically in Chicago to engage with agent retailers and are rolling out similar strategies in other regions. Many of these roles are still being filled, and we expect to see their impact as the year progresses. We are optimistic about these developments. We have recalibrated our sales efforts, revisiting a successful model that helped Intermex grow its Latin American business rapidly and effectively. We are returning to the strategies that transformed us from a small regional player to a market leader, and I anticipate significant results as we enter the second half of the year.

And then earlier in the year, you said that your '24 guidance assumed like 3.5% industry growth U.S. to Mexico, is that 3.5% still kind of embedded in the 2024 guidance?

I would say for now, it's still close to that. We bumped it down a little bit. Fortunately, from an earnings perspective, you've done a great job on costs, so we're able to make up a lot to get through to EBITDA and EPS. But I'd say it's near what we had communicated before. We do think we have coming up in the second half of the year, we do have some softness that we think we're going to be able to get some uplift in terms of grow-over that was more execution-related that we think we've remedied. So we think we've still got a good shot to deliver.

Got it. And then, Andras, did you break out with the acquisition of Lonato and i Transfers? I don't know, the last 4, 5 quarters, we've gotten a core or an organic growth number in addition to the revenue growth number you guys reported at 3.5%. Do you have the organic number?

Yes. I think since we've had them in the portfolio long enough, we're moving away from the breakout of those separate units.

Okay. And then maybe lastly, guys, any comments on April and how that month went?

I think we can say that we've seen a slight resurgence in our growth numbers, which we anticipated as we've returned to fundamentals in a way we haven't in years, and we're noticing a positive shift. It's too soon to declare victory or to say that we're fully aligned for a resurgence since it will take time. However, the numbers are encouraging from a year-over-year transactional perspective, especially considering the market trends, with February at plus 3% and March at minus 3%. If this trend continues into February, we've significantly outperformed the market positively as we approach April. We're very optimistic, but there’s more to monitor. I also want to clarify that we've never relied solely on market conditions, as Andras has made clear. The current numbers reflect market conditions, and we're not immune to them. However, this company was established from 2009 to 2014 when the market saw no growth, and we still believe our approach in retail, alongside our unique consumer acquisition strategy, allows us to grow faster than the market. The early results in April suggest this may be the case, but we need to track this trend over a few months before confirming its success. Nonetheless, we remain encouraged.

And our next question will be coming from Rufus Hone of BMO.

Just coming back to the detail you gave on Slide 13 on the gross profit per transaction in digital. Any way you could sort of frame what percentage of digital transactions are those Intermex branded? And what percentage are unbranded? Just trying to get a sense of the blended gross profit per digital transaction.

Intermex branded transactions account for about 40% to 45% of the total. The other $55 million is a combination of different partners that we have.

And by the way, when you say unbranded, I don't want to correct that, but I just want to make sure that we have all the data. They are co-branded. They require that. We still are co-branding with the partner on those. Exclusively branded as the 45%.

And do you think you can keep driving that gross profit per transaction up over time? I guess what gives you confidence about that trajectory?

I think that the key isn't really driving gross margin up. It's now leveraging what is a really strong gross margin to drive more wires. We want to make sure that we're reflective of the marketplace, which we believe in Latin America is more like an 80-20 today, meaning 80% retail and 20% digital, and we want to move that number there. Now we don't want to sacrifice or give back gross margin. But as I spoke earlier, the key to this was first the stake out of place where gross margin was very healthy and then we can start to move from there and decide how we create programs, how we create repeat usage that leverages the high gross margin to drive even higher growth. So I think that will be the place you see us go. I don't think you'll see us try to get from a $5 margin to a $5.50 or a $5.25 even it's more about trying to drive a much higher growth rate that will drive the business overall now that we're in a very healthy position with gross margin.

And I'm showing no further questions at this time. I would now like to turn the call back to Bob for closing remarks.

Thank you all for joining us. We look forward to talking to you soon, and have a great day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.