Earnings Labs

International Money Express, Inc. (IMXI)

Q1 2020 Earnings Call· Sat, May 2, 2020

$15.93

+0.06%

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Transcript

Operator

Operator

Good afternoon and welcome to International Money Express Incorporated First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sloan Bohlen, Investor Relations. Please go ahead.

Sloan Bohlen

Analyst

Good evening. Before we begin, let me remind you that this conference call includes forward-looking statements, including our outlook for fiscal 2020. Actual results may differ materially from expectations. For additional information on Intermex, please refer to the company’s SEC filings including the risk factors described therein. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today. I refer you to Slide 2 of our presentation for a description of certain forward-looking statements. We will undertake no obligation to update such information except as required by applicable law. In this conference call, we will also have a discussion of certain non-GAAP financial measures. Information required by Regulation G of the Exchange Act with respect to such non-GAAP financial measures is included in the presentation slides for this call, which can be obtained at the Investor Relations section of our website at intermexonline.com. We also refer you to Slides 14 through 18 of this presentation for a reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. I am joined on the call by Chairman and Chief Executive Officer, Bob Lisy; and Chief Financial Officer, Tony Lauro. Let me now turn the call over to Bob.

Bob Lisy

Analyst

Good evening and thank you to our analysts and investors for your participation in tonight’s earnings call. Clearly, this is a unique time for all of us. And as a result, we have altered the usual sequence of our remarks to focus more time on COVID-19 and how Intermex is proactively responding to the crisis. Before I begin our formal remarks, I would like to offer my thanks to all of our hardworking employees, agents and of course, our loyal customers. I take a lot of pride in the hard work and talent that exists at Intermex and those traits have never been more obvious than over the past month and it continues today. With that, let’s turn to Slide #3 with the company’s response to COVID-19. In a very compressed timeframe, we have ensured the safety of all of our employees in both our corporate offices and our call centers with social distancing procedures and remote access tools. We did all of this without missing a beat. As you likely know, our business has been deemed an essential service in most states and municipalities. As we noted earlier this month, 95% of our locations remain open and transaction volumes have remained quite strong to-date. Additionally, the majority of our retailers are in the food or food-related businesses, so they are deemed essential on that criteria as well. Now, what high level trends have we seen in the business since the onset of COVID-19? Initially, because of the volatility in the Mexican peso, we saw an uptick in the number of wires, but an even more pronounced increase in the average amount sent. The transaction flow has begun to normalize, but at a greater level than we would have initially anticipated with brick-and-mortar transactions down approximately only 10% year-over-year in…

Tony Lauro

Analyst

Thanks, Bob and good evening to our analysts and investors on today’s call. To continue Bob’s point about the house of brick, I would like to provide a little more detail on our liquidity and cash generation than we have in the past. On Slide 6, you will see that we added $7.3 million of free cash generated in the quarter, up $2.5 million or 52% from the first quarter a year ago. These figures reflect a conversion of adjusted EBITDA to free cash of 55% after taxes, investments and debt servicing. Our business model, which combines strong margins and variable cost structure, where 80% of our costs vary with transaction volume, has positioned us well to weather this crisis. Turning to Slide 7, let’s look at the efficiency of our adjusted EBITDA conversion to free cash. In Q1 of this year, we converted 55% of our adjusted EBITDA to free cash, of which we’re extremely proud. This represents growth of over 10 percentage points to the conversion rate from the same period last year. We feel that our profitability and free cash generation are differentiators that will serve us well in the quarters and years ahead. Turning now to Slide 8, I will quickly walk through our first quarter results, as Bob touched on a number of these metrics already. First, on the top half of the page, we grew transactions by nearly 14% over last year on volume growth of over 17%, again an uptick in year-over-year growth compared with what we saw last quarter. Turning to the bottom half of the page, you can see that our revenue growth year-over-year was 13%. Despite a favorable mix shift towards Mexico transactions, revenue grew slightly more slowly than transactions. This was driven in large part because of the extreme…

Operator

Operator

[Operator Instructions] Our first question comes from Mark Palmer with BTIG. Please go ahead.

Mark Palmer

Analyst

Yes, thank you. Thanks very much, gentlemen. You touched during your remarks on the fact that some payers had said that smaller competitors had been facing liquidity shortfalls. Could you speak a little bit more broadly on what you are seeing in the competitive environment, particularly among those smaller independent players who make up a lot of the market and whether you are seeing other signs of weakness that could potentially translate into share gains?

Bob Lisy

Analyst

Yes, Mark. Hi, this is Bob. I will begin to answer that and then give you some of the top line and then maybe turn it over to Randy for some additional color, Randy Nilsen, our Chief Revenue Officer. So we have seen quite a bit. I mean, there has been one competitor that actually shutdown over entire weekend, Easter weekend. I won’t name their name at this time, but it’s a relatively middle sized competitor. We have seen other people shutdown parts of the country. What happens in those cases is, is that it’s a good sign of a liquidity problem even ones other than the ones we hear from the payers. They are really not having enough pesos that they were able to fund in time at the time that they were buying the pesos for that day and not willing to take the risk with the volatility that’s going on. So we have seen that on a sort of intermittent basis with at least three different competitors. We also heard from as I said a number of providers, payers in Mexico and in Guatemala with certain providers, certain money transfer companies, not being able to pay their wires and then having to hold off on paying wires until they were able to fund. For those of you that are sort of maybe not as aware of how the market works, on a Friday, any company is really going to have to buy the number of pesos that they are going to need for Friday, Saturday, Sunday and they are going to fund that in advance. And for us, it’s tens of millions of dollars. For the small guys, even it could be $10 million or more. And as these days get where margins get thinner or where…

Randall Nilsen

Analyst

Yes, if I may please. Thanks Bob. Hi, Mark. Bob has done a really nice job explaining how the market works on the weekends. And we in the sales team, we hear from time to time and even more so during March that companies have slowed down or that their service is unavailable, but it’s all basically rumors. But I was just thinking as Bob was talking, 5 or 6 companies, we have had salespeople from 5 or 6 companies contact us in the past couple of weeks looking for employment that have been confirming that their companies have had downsizing events. And that confirms the rumors we have heard in the marketplace with respect to some of what Bob has just illustrated. And what that does for us on the sales team, Mark, to kind of answer your question, does it open up opportunities for us, every time we hear the events like the one Bob referenced where a competitor was down for about 2.5 days over Easter weekend, it gives us the opportunity to go to all of the retailers that share our service with that company and send a strong reminder that they want to be offering a service that they can have confidence in the leader. That gives us another opportunity to go to retailers, where we may not have our service today, but a competitor may and talk to them about the same messaging. So, our sales team has been very, very active over the past several weeks on a competitive front, contacting retailers that we don’t do business with as well as our own retailers over the phone, stressing all of the solutions that we bring them and reinforcing doing business with the leader that they can have confidence in. So, we do think it’s going to open up some great opportunities for us moving forward. Thank you.

Mark Palmer

Analyst

Thank you. And just one quick housekeeping question for Tony is what was the company’s cash balance and revolver availability as of the quarter-end?

Tony Lauro

Analyst

Yes, so, hi, Mark. When you say cash balance, I assume you mean our free cash that’s available outside of working capital.

Mark Palmer

Analyst

That’s correct, yes.

Tony Lauro

Analyst

In which case, yes, so we had about $36 million available, and based on the day that we closed, our $35 million revolver was all available as well. But we feel like even towards peak needs of working capital, we’re still sitting at about $35 million, $36 million of free cash.

Mark Palmer

Analyst

Very good. Thanks very much.

Operator

Operator

The next question is from David Scharf with JMP Securities. Please go ahead.

David Scharf

Analyst

Hi, good afternoon. Thanks for taking my questions, and I know Florida has been in the news quite a bit lately, so hopefully everybody is staying safe down there. A couple things, Bob. One, I just wanted to briefly touch base on the agents. It looks like the 95% figure you cited, I mean that’s tremendously positive. I think when we think about a lot of these small businesses, even if they’re in food services and essential; that they would be more struggling. It sounds like you have a high degree of comfort level with the kind of relative health of the agent base. Are you aware of whether or not any of them are applying for PPP loans or have you had any – or have your salespeople in the regular course of just contact with them have any sense that any are sort of more struggling around the brink, or do you feel like that 90% to 95% figure is going to hold up over the next couple quarters?

Bob Lisy

Analyst

Well, you asked a lot of questions here. I think during any downturn, there’s always the possibility that the agent network, which are mostly small businesses, has a chance for some of those businesses not to make it and that brings in a whole other piece which relates to agent defaults and all that. And we think we’ve got a great handle on that. We don’t see – at this point see a lot of agents that look they’re struggling to that degree. I mean relative to the money transfer business, as we’ve said and we disclosed, our April numbers are better than 90%. And when you look at most parts of the country, it’s disproportionate, as you can imagine in a place like New York or the Northeast, where it’s been decimated by COVID, it’s a much deeper cut into our transaction volume. So many areas of the country are operating at pretty close to 100%, if not at 100%. So those agents are – I don’t want to say unaffected, but in many cases they’re unaffected. I mean they’re not unaffected in terms of the impact of COVID being out and being a pandemic. But from the standpoint of their business, have been somewhat unaffected. We have heard, and Randy might comment on that, we’ve heard of the agents that have even asked our advice or could we help them out in applying for a small business loan, and we’ve done what we could to help with that. I think there will be agents that will apply and many of them that will get it. But I think again, I think we feel like it’s a pretty solid base. We have been really surprised and delighted at really the level of agents that are still up and active.…

David Scharf

Analyst

Got it. No, I mean I think resilient is the appropriate word. Hey, I am wondering as a follow-up, when Randy shared the anecdote about 5 or 6 salespeople from smaller competitors reaching out to you guys, it got me thinking. As you think about the sales strategy, with all of the uncertainty that the pandemic has introduced and all of the operational considerations that kind of forces you to refocus on; has it altered how you’re viewing sort of the 2020 sales plan in terms of trying to open up new agents in new states or are you putting your foot on the brake a little bit or are you still…

Bob Lisy

Analyst

Let me begin with an answer, and then again, I’ll let Randy give more detail. First, it’s not just the small guys. Remember, MoneyGram early on, I mean early, early on before I think any of us knew the impact, put a 20% pay cut across their whole organization. And when you start talking about salespeople, I mean if we cut our salespeople pay by 20%, we’d have half of them out on the street ready to leave, because they’re very price-sensitive. That’s salespeople. So I mean it’s not just the small guys. It’s been MoneyGram as well. The second piece of that is, is Randy will talk to it, but we’re still putting up agents. And we think that whereas – and we’re doing it remotely. We’re shipping it out. We have a coming that ships the PCs out. We can do the training and the activation, all of that remotely without going out. We also know that there’s going to be come states that we’re probably within the next week or two, going to be able to start putting our salespeople back on the street, because those states restrictions are peeling back, and we’re going to equip them to work safely with all the PPE that they need to be able to do that, and with certain protocols. And we’ll be back out in the field in those areas. But lastly, I think the thing that’s most important is that this is a great opportunity for strong companies. This is a great opportunity for companies that have built these houses of brick like we have built, which is a company that has the kind of margins built in, that have not been built on sort of fluffy sales, if you will, right? They have been built on sustainable…

Randall Nilsen

Analyst

Yes, two quick comments. Thanks Bob. Hi, Dave. I do want to say that the number we told you, the 95%, in fairness that’s a little bit fluid, right? Even in your neck of the woods, in the Bay area, we had some agents that went down initially maybe for a week or two. And then they called and said, we are missing out on business. We need to get reactivated. We need to get back in the game. And they’ve been up now for a couple of weeks. And then maybe in another part of the country, we see someone else for a few days or a couple of weeks, temporarily suspend themselves. So it hasn’t like a big group of agents just have been shut down during this entire time period. The other thing I do want to stress, Bob’s right on. We have really taken advantage of this opportunity to try to fine-tune our selling skills. And every day our sales team are calling their agents over the phone and they’re prospecting over the phone. And they’re taking every advantage, like I mentioned a few minutes ago, to call these retailers who are offering an inferior service to ours and to make them aware of everything we can bring to them. So Bob is right, we have got regions of the country that will hit their activation goal in April in spite of doing it 100% virtually. And we’ve got a lot of pent-up prospects that we can’t wait to get out to as soon as we hit the streets again. So you know, again, if it’s only these few weeks that have impacted us, we feel really good about coming out and hitting full stride here midyear.

David Scharf

Analyst

Great. Thanks, Randy.

Randall Nilsen

Analyst

Sure.

Operator

Operator

The next question is from Mike Grondahl with Northland Securities. Please go ahead.

Mike Grondahl

Analyst

Yes, thanks guys, and congratulations on the quarter. Any update on the – I think it was 10 to 12 salespeople you hired last fall, how are they progressing?

Bob Lisy

Analyst

Sure, Randy, why don’t you just go ahead and talk about that directly?

Randall Nilsen

Analyst

Sure, sure. So, hi, Mike, how are you?

Mike Grondahl

Analyst

Good. Randy, thanks.

Randall Nilsen

Analyst

We did make – gosh, I think you’re right. I think about 8 or 10 people at the end of the year, beginning of this year. Two were sales leaders that are doing a really nice job for us. We really like the way they’ve come in and made an impact. And we do a very good job, I think, as we’ve shared with you before. We literally track, here’s the business that each sales representative inherited and here’s what they’ve done with it week one, week two, month one, month two; and really track that from the very beginning. In fact, there are lists our sales managers earlier this week, reviewing that new hire performance plan and again, some of the new folks have been a little bit impacted, because they started in January. They went through some orientation in February, and then they didn’t get a full month in, in March on the street building up their prospect bank. And they of course had to be doing it virtually in April. But we like the talent we’ve brought in and we’ve seen an immediate turnaround in some markets, but we like what we see in really every market right now. And we have a couple vacant positions right now, but we’re still interviewing for them. We have every intention to fill those once we find the right candidate, and continue to add where we need to add.

Mike Grondahl

Analyst

Got it. And then one more quick, there was a mention about some volatility, FX volatility in March in Mexico and some cancellations. Did that affect – I couldn’t tell if that was industry, smaller players, or if you guys even had a little bit of that activity?

Bob Lisy

Analyst

Yes, Mike what happened – this is Bob – what happens is, is that it’s a simple thing. Let’s say that the sender on a Sunday decides to send money and he sends it and at that day he’s quoted a peso rate of 24 pesos per dollar. And on Monday there’s bad news, and the peso plummets and it goes to 26 pesos a dollar. And at that point, his beneficiary, the receiver on the other end, hasn’t picked up the money yet. He goes in and he decides that he’s going cancel the wire and replace it. So those kinds of cancellations will cause there to be some losses, if you will, when people trade and re-trade a wire. It happens in these cases of volatility, and it’s kind of baked into the number. But it will be part of the ways that you might see FX not be quite as big of gains as you normally would see. I think the other thing that happens that’s not really cancellation-oriented is that when the peso is continually trading down, it does allow people that are short of funds a little bit better opportunity to lean into it, because they might be able to buy those pesos tomorrow at just as good or a better rate than they did the day before. So we talked before about the fact that a declining peso over time can sometimes favor people that are shorter of funds. But in this case, the volatility kind of crosses some of that out, because it’s hard to predict. We had days in March where the peso went from 24 to 26, and other days when it went back from 26 to 23 in day, or something like that, maybe not specifically. So you can’t really take a bet on either side of that and believe that either way is going to – it was just very hard to pick which direction the peso was going. So I think some of that was just baked in. And in some cases, we had to end up cancelling wires and then reissuing them at a better FX rate, which in the end can end up costing us money to do that. And that’s baked into that FX gain.

Mike Grondahl

Analyst

Got it. Okay. Hey, thank you guys.

Operator

Operator

The next question is from George Mihalos with Cowen. Please go ahead.

Unidentified Analyst

Analyst

Hi, guys. This is Phillip on for George. Thanks for taking my question. I wanted to know if you could discuss a little bit about your customer segments, specifically ones that are focusing on restaurant and hospitality and what kind of stress you’re seeing in those customer areas?

Bob Lisy

Analyst

We’re really not seeing a great stress in those areas in the sense that – let’s first talk about the Mexican component of our business, which is the largest, is probably mostly focused in the areas of agriculture, and in construction and then sometimes food processing. And those areas have all been very much deemed essential businesses. And that’s why the Mexican component, which as you well know is a big share of our business, has been really strong. Guatemala would be similar to that. I think there’s other groups and some Mexicans and others, but particularly more other countries that might be more involved in the restaurant business. But in those cases, in a lot of cases even in that, these are delivery people. They’re not typically chefs. We’re not typically talking about bartenders. We might be talking about busboys, in that case that there’s some sensitivity. But the thing about our consumer is, is that the numbers play out. Let’s just talk about the numbers. I mean, you know, we continue to hold a strong growth number. We continue to hold a strong growth number through April. And our customers are resilient. They are people that will move quickly from one job to another. If they’re working a restaurant, they will go off and start delivering food, or they’ll go to a car wash or whatever happens to be open to find work. As we said in the earnings release in the earlier part that our customers will move from one project to another, because they’ve gone through such hardships to get here and their work really is essential work for everyone back in their family. The other thing that I think that’s really important for us is that we’ve always been a business that’s been more focused in agriculture, in the rural areas than we’ve been a city-based business. We do a lot of business in – more business in agricultural areas than we do in metro areas, like New York or in LA. So because of the result of that, where the virus has not been as rampant, our business has held up really, really well. So we feel pretty strongly about it, and it continues to hold up as we said, quite well through April.

Unidentified Analyst

Analyst

Great, appreciate that color. And then for a follow-up, can you just talk about what kind of flexibility you have in the non-service expense line? It looks like it trended down a little bit year-over-year even with strong revenue growth. So if you could just help contextualize that for us, that would be great?

Tony Lauro

Analyst

Yes, sure. Bob, do you want to take that?

Bob Lisy

Analyst

Yes, sure. So first you just need to think about in our entire cost structure, about 80% of our costs are variable with transactions. So that remaining 20% is kind of split between salaries and other operating expenses, if you will. The flexibility we have, and some of it is – the flexibility we have in the situation, there are some costs that just naturally are going to come down, like T&E for example. Obviously you’re going to take a little bit of a hit to your hiring plans during a time like this. You can’t get people in to interview and those sorts of things. And some of that is just timing and will come back. We have flexibility in other things like advertising, which is in there. But by and large, it’s going to be in your hiring and it’s going to be in things like travel and expense. But more importantly, I think the big takeaway here is going to be that we’re getting great leverage out of the fact that 80% of our costs are variable. So when we get a volume decline, we don’t see a big impact to our unit profitability on a fully-loaded basis.

Tony Lauro

Analyst

Yes, I think one of the things you have to remember is, is that versus maybe one of the other public companies that reported recently, I mean they had a 1% revenue growth and a 20% EBITDA decline. We’ve proven ourselves to be great operators, because we had a 13% revenue growth and a 20% EBITDA growth. So I mean still with a positive revenue growth, some others have already struggled and we have already proven that we are typically leveraging our revenue growth to a much better EBITDA growth. So we are very, very good at that, and have been good at that over time. And right now, we don’t see a necessity to do a lot of that, because we’re still holding quite strong in the disruption with our team to be able to start to think about the things that something like MoneyGram has done, which has cut salaries 20% across, we think that that would be more destructive to our business than it would be productive, because it sort of feeds on itself. I mean that’s part of the reason the business is holding up well into the 90s in terms of year-over-year, even through this pandemic in terms of April.

Unidentified Analyst

Analyst

Great. Really appreciate on that. Thank you.

Operator

Operator

The next question is from Timothy Chiodo with Credit Suisse. Please go ahead.

Timothy Chiodo

Analyst

Alright, thanks a lot guys. Good afternoon. I wanted to dig into the online, the strength that you called out in terms of the volume surge. I want to talk about the extent to which you think there could be some lasting behavioral change there, and maybe a little bit about the types of customers that are using the online platform. Is it an existing customer switching over? Is it a new incremental customer? Is it a banked or an unbanked customer? Are they sending to someone in Mexico that is banked or unbanked? Just maybe break down that a little bit so we can get a better sense of how this might last in the future.

Bob Lisy

Analyst

Yes, let’s talk about a few of things. And I’ll start maybe with the back part of it. The first thing is that most people in Mexico, the studies that are out there, say that the majority of people in Mexico are unbanked, somewhere between, anywhere between 65% to 75% of people in Mexico are unbanked. So in most cases, they’re going to be sending to an unbanked customer, just statistically. And given in most cases that people that are more likely to banked in Mexico are probably not the ones that have crossed the border to wash our cars or pick our oranges, that probably they’re sending more likely to unbanked customers. We have percentages of bank transactions even in our brick-and-mortar business. And we don’t disclose those versus our over-the-counter. And some of them do go into bank accounts. The percentage of people that would be banked that would be online sending the wire would be 100%. I mean you need to have a debit card, a credit card or a checking account to be able to send money. There’s no other way to do it, and that’s been the obstacle for the online business for the most part for everyone. The technology has never been an obstacle or at least hasn’t been for years and years. Mostly everybody, if you went out into the fields in Central California, and all the guys picking the vegetables and fruits and you look, every one of them on their hip has got a smartphone, either an Android or an iPhone. The issue has been a bank account. And it’s been a lot of issues that we’ve gone through, and I can go through in detail. It might bore people again to do that, but the proximity of the banks, the…

Joseph Aguilar

Analyst

No, I think you covered most of it, Bob. But I think we do see the opportunity here continuing to impact us. And also we see customers who haven’t tried us now are taking the opportunity during this process or during this event to try our service and are liking the service. So we’re pleased about that and we’re pleased that customers are reaching out to Intermex and attempting to use our service and using the service. So that reflects I think the year-over-year growth that we’re seeing in this product.

Bob Lisy

Analyst

Just adding to that, we think [indiscernible] later in the year that this will become a more material part of our business and we’ll disclose probably a little bit more information as we go on the online. Today it’s growing very quickly and it’s quickly becoming a material piece. But I wouldn’t yet call it a material piece. But we’re quite excited about its growth and we think that the pandemic has given us an opportunity to kind of – to focus on it a little bit more and see if we can move that needle along a little better and a little faster.

Timothy Chiodo

Analyst

Okay, that’s great. Thank you. I fully follow you on the unbanked mix that you started off with there, same page. And what I was really getting at was there was a mix of new customers versus existing, and I think you covered that quite well. So thanks a lot.

Bob Lisy

Analyst

Okay, thank you.

Operator

Operator

The next question is from Josh Beck with KeyBanc. Please go ahead.

Josh Beck

Analyst

Thanks for taking the question. I am glad to hear that everyone is doing well. I am just wondering macro-wise, obviously there’s been a lot of traditional linkages that have been completely flipped upside down. Just as we go into the middle of the year and the back half of the year, are there any one or maybe set of macro indicators, whether it’s unemployment or immigration flows that you will be tracking closely to kind of gauge what could happen to the remittance market?

Bob Lisy

Analyst

I think it’s really – I mean no one can gauge anything about the second half of the year. I mean it’s very difficult to gauge. I think what we’ve seen is that we’re going to operate and function a lot better than the market does, and the market has held up quite well. But I don’t think anyone can predict the greater marketplace at this point. I think we’d be stretching and making something up to tell you that we could in the face of a pandemic that we haven’t even started to restart the economy that we could tell you what the second half of the year is going to look like in terms of overall money transfer business remittances to Latin America. What we can say is we think we’re going to continue to be at the very top of that and outperform the marketplace, as we’ve continued to do since we have been a public company.

Josh Beck

Analyst

Okay, that’s helpful. And then obviously there some nice strength within Q1 certainly it sounds like in the middle of March. I mean was there anything I guess versus your internal plan that stood out in terms of just how things materialized?

Bob Lisy

Analyst

I think that Q1 we began to get back to some of our fundamentals and we had talked about that, that we had seen some deep discounting from small providers and whereas the marketplace in some cases was anxious for us respond in ways that would have made us maybe grow revenue a little bit quicker, but be less profitable; we decided not to take that path. And as a result, we saw first quarter volumes growth coming in at 13%, because we put in place plans to be able to go and attack against those small providers that had come after us. And I think it was taking hold. As a matter of fact, we think that had the virus not hit and the pandemic not hit when it did, we think that our 13% would have been slightly stronger. I’m not going to say it was a lot stronger, since it was only two or three weeks. But we think we probably would have come in at maybe 14.5% growth or whatever for the quarter. It doesn’t matter. That didn’t happen now. But it really is the execution against those plans, against those small providers that were really coming in and undercutting with price. And we have some things that we have been doing and we are not going to talk about them in detail, but has been winning us business while sustaining our margins. And it’s been working quite well, and we think it will continue to work quite well. What we don’t want to do is get into a situation where we become part of the sort of the circling the drain, if you will, where the small guy gives a deep discount and we discount to that level or a little bit more, and he’s…

Josh Beck

Analyst

Great. Thanks for all the color.

Operator

Operator

The next question is from Drew Kootman with Cantor Fitzgerald. Please go ahead.

Drew Kootman

Analyst

Hi, good afternoon. Thanks for taking my question. So I just wanted to touch on the negative 10% for transactions in April that you mentioned. Have you seen it accelerating through the month or is it starting to stabilize, just any color that you’ve seen over the last 30 days?

Bob Lisy

Analyst

Yes, I mean actually it’s probably getting stronger as the month has gone on. But you know, it could be a wave. There are ups and downs. But I think we saw earlier in the month some more softness than we’re seeing now. And lately we’ve been approaching many days 100% year-over-year. So we’re pretty happy with where things are going, and we think as some of these states – again, it’s not a prediction. It’s not a guidance. But we think as some of these states really start to restart up that have been shut down either partially or completely, I think we’re going to start to see their transaction volumes pick up again a little bit more than where they are.

Drew Kootman

Analyst

Great. And then just given how strong margins were this quarter, just if you could touch on what you expect moving forward throughout this year and then even longer term?

Tony Lauro

Analyst

Margins in terms of our – are you talking about our EBITDA margins, I am sorry.

Drew Kootman

Analyst

Yes.

Bob Lisy

Analyst

Okay, yes, I mean we’ve already talked about it, and I’ll let Tony get more into detail on this. But we’ve always talked about that we don’t see our EBITDA margins getting a lot stronger. We got them. We’ve done it and been stronger from time to time, as necessity has presented itself, meaning in these times where of a pandemic or whatever, and we’re able to be quite early on and understanding what’s going on and manage our fixed costs really well. But over time, we really need to be able to continue to invest in the tremendous opportunities that we have out West. And we know that as we invest out West that the margins typically there are lower than they are in the East. We still have a huge upside in California, Texas and the entire Western part of the United States, and even part of the Midwest and the Northeast. And we have great opportunities still in terms of our card product and in terms of our online. So as we invest in the business, we don’t expect our EBITDA margins to get a lot bigger. We expect to be able to invest in those to perpetuate margins similar to that or in that area for a long period of time, over time by investing into building new product lines and also building new profit centers that will originate those brick-and-mortar wires. You know, California still remains a huge opportunity for us. Texas still remains a huge opportunity. And as those things happen, we’re not necessarily going to increase our EBITDA margins, whereas we’re going to increase the top line, increase the absolute number of dollars of EBITDA, but the margins may not go up a lot. But I’ll have Tony kind of comment maybe in more detail on that.

Tony Lauro

Analyst

Yes, the only thing – I think Bob said it pretty comprehensively. The only thing I would add for you there is that some of this depends on our volume mix to Mexico and Guatemala versus countries that don’t have a foreign exchange gain component. And as through the fourth quarter, we saw our mix moving away from Mexico. And now here in the first quarter we’ve seen it moving back towards. So we can’t say today how that’s going to play out for the rest of the year. But that dynamic is an important part of what’s going on. But I still think it’s exactly right what Bob said as far as we don’t – any excess adjusted margin we would expect to invest back into our future growth.

Drew Kootman

Analyst

Thank you

Operator

Operator

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

Bob Lisy

Analyst

Yes. Thank you all for your time today on the call, and thank you for your questions. We look forward to talking to you all soon, and hope you all stay well, and best wishes from all of us to hopefully we’ll all be through these difficult times soon and back to normal days, where we’ll towards even rosier days in terms of the business world. So thank you again for your time. We’ll talk to you soon. Take care.

Operator

Operator

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