Greetings, and welcome to the International Money Express, Inc. First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Mike Gallentine, Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to our quarterly earnings call. This conference call includes forward-looking statements, including our 2021 guidance. Actual results may differ materially from expectations. For additional information on International Money Express Inc., which we refer to as Intermex or the company, 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.

Good morning and thank you for joining us today. This morning we have some exceptional results to share with you, and we look forward to answering your questions, following our prepared remarks. As you saw in our press release, we issued this morning, Intermex generated another set of impressive quarterly results. Let me highlight some of them on slide three. Net income was $9 million, 58% increase compared with the prior year period. Adjusted net income was $11, an increase of 40% over the prior year period. Adjusted EBITDA increased 27% to $17 million and revenues grew 22% to $95 million. Since we have become a public company less than three years ago, revenue has increased 52% going from $247 million to $374 million. Adjusted EBITDA has increased 78% from 40% to $71 million. Net income has gone from a loss of $12 million to a gain of $40 million, an increase of $52 million. Additionally, Intermex's now obtained or exceeded its quarterly EBITDA target in 11 out of 11 quarters since becoming a public company. Driving these outstanding results is our strong operating foundation that is delivered world-class customer service for our customers and agent retailers. The company has pursued a unique hybrid focus strategy. We focus on partnering with agents that are found in the very best locations and that share our business philosophy, placing the consumer first and as a result, providing the utmost in customer service.

Thanks, Bob and good morning to all the analysts, investors and customers that have joined us. Turning now to slide seven, let's walk through a really strong first quarter in more detailed. As Bob mentioned, this was another double-digit growth quarter across really every one of our key metrics. In the quarter, revenues were up 22.4% over the prior year quarter and finished at $94.6 million, driven by a combination of factors. The company was up 14% in customers alone, so we continue to competently take share. Total remittances were up 19.3%, which allowed us to capture a significant tailwind from average remittance amounts up right around 10%. In the quarter, the company delivered net income of $9 million, an increase of 57.8% versus the prior year period, which translates to an adjusted net income of $10.6 million, which you can see on page eight, an increase of 40% versus the prior year. The revenue growth I mentioned was a big driver, however, lower depreciation, amortization and interest expense were all big contributors as well.

Thank you. We will now be conducting a question-and-answer session. Our first question is come from the line of David Scharf with JMP Securities. Please proceed with your question.

Thank you. Good morning, everybody. First off, Bob, just a little more -- maybe granularity or insight into the geographic mix expansion. Appreciate the transaction growth rate provided by your markets. But can you just remind us, particularly given how quickly are emerging markets have been growing, what percentage of the revenue mix is coming from the core versus emerging?

Yeah. We haven't disclosed the percentage of the core versus the emerging. But the emerging is now -- it just continues to grow in the high 30% to 40% or more. And there are some quite large markets there. I mean, Dominican Republic, for instance, as an opportunity is amongst the top three or four markets in Latin America. So, would easily fit in size wise with El Salvador, Honduras and market to that size. It is becoming a significant share of our transactions, hundreds of thousands, but we don't disclose the exact makeup percentage versus the core markets.

Okay. Understood. And I think you kind of partially answered, maybe sort of the follow-up in this same topic, which is -- maybe from the outside, looking at the company, if there are any particular countries in the emerging markets that we should be paying particular attention to in terms of …?

Yeah. What I would see, David, is that our growth is still and will remain very much driven by Mexico and Guatemala. They've been really, really strong. Those are the largest markets in Latin America. They happen to be the most profitable markets in terms of gross margin per transaction. And we feel there's still tremendous headway there even though our market shares in both of those markets have risen quite a bit over time. We also think there's a lot of growth opportunities still in El Salvador and Honduras. The reason we call out that second group is, not long ago, markets like Honduras and El Salvador, which are now many times bigger than the Dominican Republic, where the size of the Dominican Republic in terms of our transactions. Also Columbia is a really big opportunity. Ecuador, Peru, Nicaragua, those are all opportunities for us that can grow into being in -- not the Mexico, Guatemala size, but those are all countries that can grow into that group to be close to the Honduras and El Salvador size, which we today include in our core markets, Salvador and Honduras.

Got it. Got it. And just one question, perhaps it's on -- digital related. But I want to make sure I understand or appreciate -- how to interpret some of the metrics and specifically you had mentioned, it's still a very, very small portion of transactions at retail are initiated with a debit card, which suggests these centers are largely non-bank, paying with cash and therefore, would not be candidates for sending digitally. On the receipt -- which -- clearly understand that. But on the receive side, is there any significance to the metric of 20% being deposited?

I think there's a few things we'd like to signal by that -- by those facts. I mean, one is, is that, we talked about that. We believe that many of the competitors out there, particularly those that are pure play digital, are missing a huge part of the market. And we're happy they're doing that, because we're spending the time picking up all those transactions and continuing to gobble up market share. So that's really working for us. And we're happy about that. We also believe that some of our biggest competitors, the leaders, people think of as the leaders in the market, public companies have abandoned their retail everence. And most of their focus is that online. And we think that that is sort of lopsided today, particularly related to Latin America when so much of the business is driven through retail. What we're trying to demonstrate through all of that is we provide the consumer the options. You can go online, but we're not going to push the consumer online. If they're comfortable and happy with retail, you can go to retail. And in many of our retailers, you can use cash for a transaction, or you can actually use a debit card. Most other companies don't accept a debit card to retail. So, we're able to do that. We're also depositing a lot of our transaction for consumers who can send money over-the-counter to their loved ones and be paid out in cash or can be deposited in bank accounts. So, we work really closely with some of our largest payers to incentivize consumers to do that. And so, all of that building this, letting the consumer do what they want to do and giving them choices. You're going to see our digital business be a small part of our business until it's not time for it to be. When the market demands are there, when the market stops having that an expensive proposition, more expensive than it is to bring in a wire, then we'll drive more towards that business. We'll continue to grow it, but we'll grow it in the context that -- in January, we grew -- for instance, our Mexico business grew 14% principle amount to Mexico, mostly given that we're at retail. So that's the us, is there's a huge amount of headroom still at the retail level. And we'll continue to be aggressive there while growing our online, while growing these other options card at retail, while growing bank deposits. All of those are just other options for the consumer.

Got it. Thank you very much.

Thank you. Our next question is come from the line of Mark Palmer with BTIG. Please proceed with your question.

Yes. Good morning. The principle amounts during the quarter were quite large once again. And just wanting to get your perspective on, what is accounting for these sizeable principal amounts, which would seem to occur early in the pandemic in terms of their emergence and what is your thinking about the persistence of the larger principal amounts? Is this something that's part of a new normal, or is this something that's likely to moderate going forward?

Well, we see it having been pretty consistent now, well into April. We're just talking here before the call, just how much larger principles amounts have been through even the current time. We think it was originally sort of had its origination when the people here, particularly the Mexican consumers were still working, because they were in a lot of the businesses that are really critical, like farming, agriculture, food processing, construction, and they were still working in the needs back home or larger. So, they were sending larger amounts back home and average principal amounts. We feel like that it's continued though, and it's hard to really put an exact finger on it. I mean, part of it's been -- we think that one of the largest components of the sending community are those people that are working in construction and housing starts have been really good. There's been this stimulus money, which we don't -- not sure much of a trickles, or it goes directly rather to our consumers, but may trickle to them, through people putting on -- doing the landscaping in the yard or building a deck on their back -- back of their house or something like that. But we don't have an exact understanding of that. And that's part of the reason Mark, what you see that. Even though we came in really, really strong at first quarter that we didn't change our guidance because we're kind of -- in our numbers is the assumption that they become more normalized. We have seen in the past though, this sort of plateaued of average principal amounts where there's been an instance, maybe a change in presidential election or something happened in Mexico where there's a spike in principal amounts and they don't continue to go up, but they relatively plateau, become something new or that the new normal number. And we can't predict whether that's going to be the case or not. And that's why we've been really cautious as we look at the final three quarters of the year before we really raised our guidance. We're kind of baking in -- principle amounts coming back to normal. If they don't, then we're going to have a very, very strong last three quarters of the year.

Thank you. And looking at your cash flow, we are modeling that free cash flow is going to be -- continued to be very strong for quite some time. If you can talk a bit about capital allocation, what your thoughts are right now. I know in past calls you've discussed the very lofty multiples that are being demanded by potential digital targets. What is your thinking about other avenues for M&A, picking up chains of stores, things of that nature, and other means through which you would allocate some of that cash? And thank you.

Yeah, I'll take the first part. This is Andras Bende on capital allocation. Just from our overall cash flow, I think, our preference is certainly -- something in the M&A space to allocate, but I think we're not going to -- we're approaching it from a position of strength. We're not going to make the first mistake and then pay too much. And it's very easy to pay too much in the current environment. And so, that would probably be our first or definitely be our first route if we found the right property. And I'll let Bob talk about properties of interest to us in a moment. I think after that we could entertain a moderate sized buyback could at some point in time, if the M&A front does not pan out for us. But I think those are the two at the top of the list. But again, those are things that -- as the situation, the environment evolves, those could change in terms of priority. But let me let Bob talk a little bit more about M&A properties that we might consider.

Yeah. So, thanks Andras. So, Mark, I think there's three categories of things we might consider and really a digital acquisition probably is not one of them, not at least the way we think about digital remittances. There really aren't most of them. They're valuations -- most are private. Their valuations would be bigger than our market cap, and probably wouldn't make the best marriages. Some of the ones that are out there sort of floundering that are relatively small their businesses, actually, as much as we say, ours is really small, their business might be smaller than ours. It's not profitable. And we would just be simply paying a lot of money for the privilege of investing in their business and growing it the same way we can't our. So, I think putting digital aside, there'd be three areas that we might consider acquisitions. And I think we have discussions going on really early in preliminarily in all of these areas. One would be sort of niche markets in the U.S. outbound. These could be countries that today we don't service, that could be even in the Caribbean, or that we don't serve as to the level that some really niche provider does service today. And that's really easy folding for us, because we don't have to think about overlap. We don't have to think about places where we lose wires because we're in the same retailer. So, those are really easy to do. They typically would be retail oriented. They may have a little bit of an online component, but typically retail oriented. The second point that we might look in the U.S. would be related sort of businesses that would be adjacent to remittances. This could be things that are like B2B or B2C payments. We've had…

Thank you.

You are welcome.

Thank you. Our next question is come from the line of Timothy Chiodo with Credit Suisse. Please proceed with your question.

Great. Good morning. Thanks for taking the question. I wanted to talk about agent location runway. So, certainly, there's a long runway in some of your core states and of course, additional states as well. Maybe you could just give us an update there in terms of how much remains, how you're attacking it, and how that could support further share gains ahead?

Yeah, I'll open it up and then I'll ask Randall Nilsen, our Chief Revenue Officer, if he wants to add a little bit of color at the end of that. There's a tremendous opportunity west of the Mississippi. In the Eastern United States, I would say that we are the dominant number one player to Latin America. Most likely I can't speak that fact, but that's how we feel. There's markets there where Mexico and Guatemala, where we might have 25% to 30% share, states that are like that. On the west of the Mississippi, we have a really great business. The number one state for us in terms of total wires, it's California. It's bigger today than our whole business was 10 years ago. But there's such a -- such an opportunity in the west in states like California, still in Texas, even in states like Arizona and Nevada, Utah, Colorado, our average level of what we call penetration, which isn't really market share, it's a little different, but it's certainly indicative of how well we've conquered the west versus east. It's probably about a fifth as much as we are in the east. So, we could grow there many times over. We don't really even think about it in terms of equaling. The same kind of market penetration in the west as we have in the east, not at least from the outset, but we think about that business in the west, which is a big part of our overall business, could easily be more than doubled in the next several years. We think there's a huge opportunity still for us in a lot of those states, a lot of it's driven by Mexico, Guatemala, El Salvador, Honduras, but some markets in west are quite diverse. Some markets like Texas and others have wires going to Africa, for instance. There's a population, almost every Latin group in the LA area, in San Francisco, quite diverse markets. They can offer even opportunities for us to send money to even countries today that we don't serve. So, we think there's a huge amount of opportunity. We have about a third to a fourth, as many retailers per foreign borns in the west as we do in east. So again, a lot of work to be hitting the right zip codes with our distribution, into capturing wires away from competitors and driving that business. Randy, you want to?

Sure. Yeah. Thank you, Bob. So, just to add a little bit more color to that, we are looking as we continually do as zip codes, as Bob said, housing foreign borns, we'd look at it by U.S. zip code by state, by our selling district. So, we know in each sales district, what their top zip codes are in terms of underperforming zip codes or underserved zip codes or unserved zip code. So, we'll prioritize those zip codes based on opportunity. And Bob's exactly right. We've taken a very sophisticated look at the state of California, and we know exactly the number of zip codes that are unserved. We've got sales team members pointed to those zip codes. We know the zip codes that were underserved in, and we've got sales team members pointed to those zip codes. We've also looked at the zip codes by country. We've taken our top nine countries that we serve outbound to. And we know by zip code, which is -- which zip codes house the most Mexican foreign borns, Guatemalan foreign borns, et cetera. We know what our level of penetration is in each of those zip codes, how many zip codes were unserved in. And we're got sales plan pointing our team members to those zip codes as well. So, we think it's a fairly sophisticated look at growing our business. And it's exactly where we're headed the remainder of this year.

And just, just to add to that, just how it kind of ties back to -- we've talked about principal amounts and if the business continues to stay where it is. And part of that, when we talk about that, Hey, don't look for us to have better EBITDA margin so be an investment, part of that will be an investment in more people out there in the field, particularly in the western states to drive that zip code penetration that are going to drive wires, not only immediately, but going forward. So, we'll be investing more and more into the retail side, as well as investing in our online and new products. But we feel like the retail side is really the cash driver with many, many, many more years of cash to drive for us. And the more that we invest in that, we just think that provides us with minimal resources to invest into our other lines of business.

Great. Thank you. Plenty of great detail there. Really appreciate you addressing that.

You are welcome.

Thank you. Our last question for this morning will come from Mike Grondahl with Northland Securities. Please proceed with your questions.

Yeah. Hey, guys. Thanks and congrats on the progress. Two questions. One, you sort of laid out the runway for agent expansion, but could you talk a little bit, and I know you don't give numbers, but maybe the last six months kind of the new agents you've signed up, just has it been above trend line, below trend line? And then secondly, could you just talk about productivity of the salesforce?

Yeah, I'll start that off. And again, I'll let -- Randy will add a little more detail. I think that one of the things we're proud of is even during the pandemic, we were very resourceful, and Randy and the sales team were able to even add new retail locations, which I don't think hardly any of our competitors were doing. Not only did we service -- and I'm talking to you in the worst days when people couldn't be out in the field, we actually added retailers remotely. We talked to them over the phone and we'd shipped the PC, and we train them without actually physically being in their facility, but that did have a slowing effect on us. And until we got into third quarter of last year, we were -- it's slowed down in terms of the retailers were adding, but that also created a big pent-up demand. And I think our, our salesforce had a lot of stuff to go out and actually execute against. And we really picked up the pace in terms of adding new retailers third and fourth quarter and into first court. So, we think that that will continue. And our average sales rep has been highly productive. We can -- we don't talk about that because in terms of what our expectations are in terms of new retailers, generally because it's just too much competitive information out there, but it has picked up. We are adding many more retailers. And remember, as we always talk about that, the big influx of transactions from our new retailers happened in year two and three. When you put up a retailer, on the average they're usually getting to X number of wires in three months, but that number of wires doubles in year two and then grows more getting year three. And that's part of that whole overall where we talked about that -- having that very, very high transaction per retailer performance. So, not only we're adding retailers, but they're highly productive as normal. And they're going to -- we talked about the correct zip codes, where we have opportunities, which are going to drive transactions.

Yeah. Thanks, Bob. Good morning, Mike. Just a little bit more color on that. Bob's right. Of course, as we went into the pandemic last March, we -- our sales team, although active, wasn't as active as they would have been had they been out selling in-person in the streets. And remember we kept them working out of their home offices for a couple of months. So, as we got back into full swing working in the field, Q3 Q4 last year, fair to say that agent activation levels increased by about 25% over Q1 and Q2 last year. As we circle around to Q1 this year, we actually activated about 50% more agents this quarter -- this year than first quarter last year. One more, I think, dynamic that may be helpful to you as, this was -- Q1 of this year, we were asked fully staffed as we've ever been. So, more feet on the street and activating more agents per sales rep than previously as well. So, we really liked the way that our sales team are activating new agents now. We are -- to Bob's point, we're going to have a pretty good grow over the rest of this year. One other factor, we've changed the compensation plan as we typically do each year. And this year, there is greater emphasis on new agent productivity. We'll be commissioning our sales reps a little bit more tied to their new agents being more productive. So, hopefully that helps.

Yeah. It does. Thanks, guys.

Yeah. Thanks.

Thank you. There are no further questions at this time. I would like to turn the call back over to Bob Lisy for any closing remarks.

Thank you all for your attention on the call. We appreciate the interest in the company, and we look forward to talking to you all very soon. Have a great day.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.