Greetings, and welcome to International Money Express First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mike Gallentine, Vice President of Investor Relations. Thank you, sir.

Good morning, and welcome to our quarterly earnings call. I would like to remind everybody that today's call includes forward-looking statements, including our updated 2022 guidance and actual results may differ materially from expectations. For additional information on International Money Express, which we refer to as Intermex or the company, please see our SEC filings, including the risk factors described therein. All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events. Please refer to Slide 2 of our presentation for a description of certain forward-looking statements. The company undertakes no obligation to update such information except as required by applicable law. On this conference call, we discuss certain non-GAAP financial measures. Information required by Reg G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slides, our earnings press release and our annual report on Form 10-K, including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. These can be obtained in the Investors section of our website at intermexonline.com. Presenting on today's call will be our Chairman, Chief Executive Officer and President, Bob Lisy; and Chief Financial Officer, Andras Bende. Also on the call today are Joseph Aguilar, Chief Operating Officer; Randy Nilsen, Chief Revenue Officer; and Chris Hunt, Chief Information Officer. Let me now turn the call over to Bob.

Good morning all, and thank you for joining us. We appreciate your time and value your interest in Intermex. 2022 is off to an outstanding start for our company. The strength of our first quarter operating results is a demonstration of the powerful connection we have built with our customers through our unique omni-channel suite of money transfer services. The people who rely on Intermex, know they can send money home to Latin America and other areas of the world quickly, safely and efficiently. They know they can complete their money transfers by a variety of methods, whether it is through our versatile mobile application or in person from one of our thousands of conveniently located retail locations across the U.S. and Canada. As you see on Slide 3, Intermex continues to achieve unprecedented double-digit growth quarter-after-quarter, year-after-year. We are growing by these key measures and metrics uninterrupted by economic ups and downs global pandemics, or geopolitical upheaval. Andras will go into greater detail on these impressive quarter results in a bit later on the call. Moving to Slide 4. We are perfectly positioned to outperform in our sector capitalizing on double-digit average annual growth rate in total remittances to Latin America and are steadily increasing share of that business both digitally and via our retail network. We are a leading money transfer service in four of the top five Latin American markets, including Mexico, Guatemala, El Salvador and Honduras. These key markets comprise 75% of the money sent to Latin America. With the anticipated completion of the La Nacional acquisition, we will be a market leader in the top five receiving markets in LatAm. More on La Nacional in a bit. Our addressable market includes 24 million people born in Latin America or the Caribbean who live in the…

Thanks, Bob, and good morning, everyone. Our record of consistently strong operating results continued uncheck during the first quarter as we fully capitalize on our competitive advantage as an innovator and leader in FinTech and remittances. As shown on Slide 9, year-over-year revenues for the period were up a strong 21%, driven by solid growth in nearly all of our key operating metrics including agent growth, customer growth and growth in overall transactions. GAAP net income for the quarter was $11.7 million, up 30% compared with the prior year. On an adjusted basis, net income increased 26% year-over-year. Our strong top line was the key driver but we also did a nice job being efficient from many angles during the quarter, managing down the pace of expense growth, particularly on salaries, bank fees and efficient use of a much better price credit line. We remain focused on effective expense management and economically positive investments in people, products and support. Importantly, growth in digitally originated transactions was also a contributor. On Slide 10, digitally initiated transactions during the period increased a very strong 105% from the same three-month period last year, helped by the rollout of our new mobile app. We're committed to drive high growth in digital transactions and to guarantee that we can complete money transfers, however our customers want and with great customer experience each way. I want to emphasize that seamlessly facilitating digital money transfers is an increasingly important component of our omnichannel suite of remittance services. That said we're getting more clarity as time passes on unit economics, driving digital expansion in our industry. Our approach will be to resist the temptation to overspend in digital customer acquisition. We choose instead to prudently scale digital spend in line with the customer preference we observed across our…

Thank you, sir. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from David Scharf of JMP Securities. Please, go ahead.

Great. Good morning, everyone. Thanks for taking my questions. Bob, I wonder if you can kind of take a step back and -- you may have addressed this at the Investor Day a few months ago, but given how strong the market share gains have been, if you can maybe just bring us up to speed on what you're seeing competitively. We obviously tend to hear a lot about the big global players, MoneyGram and Western Union, which you really don't compete with much, or the all-digital entrants like a Remitly and Wise. But as far as the companies that often have a terminal behind the checkout counter, at many of the agents you're located in, like a Sigue or Transfer Max [ph], Ria. Can you talk a little bit about; A, whether there's anything we ought to be aware of that's occurring at some of these primary competitors, either strength or weakness? And broadly speaking, what kind of price movements you're seeing out of them lately? Thank you.

Well, I think, I would start out with, first of all, that the market or at least a lot of the investment community has a misconception about how strongly retail continues to grow. There's more dollars being added in absolute dollars in retail year-over-year this quarter, last quarter, next quarter, then there is a digital. So, first of all, there's a vibrant retail market. The marketplace has been misled by some of the public players, other than us, who have continued to contract, because they've thrown in the towel, they haven't necessarily been able to compete with retail. So they've sort of channeled their efforts and channeled the emphasis and the attention of the investment community on digital. That's great. We do too. We want to do digital. It's going to be a big part of our business. That's why we consider ourselves to be omnichannel. But there's still a strong, strong market in retail. And so, first of all, don't think about the market of retail as this melting ice cube or contracting. It's growing. It's bigger in absolute terms year-over-year, bigger in absolute dollars in growth than is happening at digital, particularly when we talk about Latin America. Now, you've seen the numbers from some of the other public companies and you see that they do, although, we don't compete directly with some of them, because they're more in big boxes, they still are contributing share back to the market. They're growing slower than the market. So that is still a factor. And then, when you get to retail, we've done a great job through what we've always done. There's not a big change. What we've always done is, we've been a value-added provider that is process transactions faster with the best technology at retail, answers the customer service line in four seconds, has the best banking relationships and carefully orchestrates the addition of every retailer zip code by zip code. So it doesn't matter to us much what the competition does. Competition will come and go. Competition will flurry up and discount heavily. Competition will -- and we cannot be influenced by that too strongly. It's not that we're living in a bubble, but we have to stay focused on our mission, which is a value-added provider, very targeted to where our consumers need our services and that continues to play out in a very strong market, overall, with double-digit growth, whereas still the retail market is much stronger than people think, whereas the -- we're in that market, the key public companies have struggled. There are still some of the small guys that are doing well. I would say, there's probably some small guys that are growing pretty well, because the market is growing well. I think, we're doing better than any of them in terms of percentage of growth and certainly, in market share. But it's a strong market at retail, still. Don't be misled by the numbers you might see from other public companies.

Got it. No, it’s helpful. And maybe, just as a follow-up, switching gears on the product front. I know a payroll card getting a GPR card in the hands of employers that can pay your senders on to that card has been in the works for a number of years. It sounded like a couple of months ago you said that you were really, sort of, gaining some traction, at least in terms of sort of the role -- executing on the rollout. Can you provide just an update on what your expectations are for that product?

Yes. I mean -- and I'll let -- Randy will comment more on it, Randy Nilsen. But we continue to move forward with the product. We think it's a -- it's got great utility for both the employer who may be faced with writing checks, sometimes even paying people in cash, very cumbersome, taking them into town and to maybe cash their checks, because these are a lot of times Visa workers. And also for the workers themselves, that now have options, we're one of the only companies that take a card, debit card at retail. So where we're putting up these kinds of employers with the card, we're making sure also that our retailers take a card to retail, so that our consumer, who may still, even though they're now neobanks, might still choose to go into a retail setting, still have that choice. So we think it's going well. There's a lot of retailers to go to and there's mostly retail, I mean, not retailers, but a lot of employers to go to. Most of them -- those employers are not people that employ 10,000 or 100,000 people. So it's a numbers game and it's a matter of having people out there, just like we did at retail and building that network of employers. So, Randy, I don't know if there's anything you'd add to that?

Sure. I would just add that, Bob is exactly right. We're in those early stages of building out the infrastructure. This past quarter we added more employers to our network than any other previous quarter. Fourth quarter of last year was the second highest month in terms of adding employers to our network of employers who offer the card to their employees. So as we build out the number of employers that offer our card to their employees and use it as the payroll vehicle, it of course, puts more hands -- more cards in the hands of employees as they use the card for their purchases we start generating revenue. So we're learning a lot. We've made some great contacts with industry leaders. Our reputation is very -- is being very well-received. Employers are hearing more about us. They like the one-two punch that we bring not only as a payroll vehicle for them that's more efficient and less expensive than what they've used with paper checks, but also the convenience of money transfer offering to their employees. So it's going really, really well. And secondly it's important to understand that the GPR card, the General Purpose Reloadable card is now being tested at our corporate stores with the anticipation of rolling that out to our retailers here soon.

Great. Thank you very much guys.

Yeah. Thanks.

Thank you. The next question is from Mark Palmer of BTIG. Please go ahead.

Yes, good morning, and congratulations on a great quarter. In the first months and for that matter quarters after the COVID outbreak, it became apparent that principal sizes on transactions were above normal. And there was some thought that that might normalize over time. But we continue to see principal sizes be larger than what we had seen prior to the pandemic. Just wanted to get your updated thoughts on what may be driving this, the sustainability of it and how it relates to what's going on, on the ground with your customers?

Yeah. We're seeing again continued principal amounts that would have been higher than what we would have seen in the past. But yet now as we get into months, even years of this, we start to look at it as potentially a new normal amount. In the past when principal amounts have gone up, they usually have not come back down. They plateaued and from there they stay at that level. So I don't know that we're expecting them to come back down. We've done some work in terms of projections from a conservative perspective, what if they do but we don't necessarily think they do. They will. I think when you look at the overall economics of the United States today is a really high inflationary time, right? So everything is costing more and people are probably also our workers are making more. If they work for a landscape, or if they work for whomever they work for and because there are just more money in the system. I think initially we thought that part of it was the stability of our workforce, because they were mostly essential workers and that there was a lot more hardship in places like Mexico and Guatemala where the economy had not come back as quickly. But now as this continues to sustain itself, we look at it as probably a new normal. And again we've kind of allowed for if it doesn't stay there, how we adjust to that. But we're not expecting a big pullback in terms of principal. Now ultimately what happens is we're getting to a place now where we're beginning to lap the higher principal amounts, meaning that when we look at them it's not like now that the principal amount will be up several percentage points from last year, it will be more even if you sustain it, because beginning the lap periods where we had a high principal amount last year. But again we're pretty comfortable with it today based on what we're seeing. And we've always been versus the market higher principal amount provider. There's a lot of reasons for that I think. Some of them are pricing-wise, some of them are security-wise, but we expect -- we would expect stability in where those are today. But we have also from a conservative perspective, from a budgeting perspective have planned for the possibility of them returning down a few percentage points back to where they were pre-pandemic.

Thank you. And just one more question. We saw, of course, the increase in your guidance for adjusted EBITDA reflecting the efficiencies that you're realizing. At the same time you reiterated on the top line, everything seems to be very strong in terms of the company's operating performance. Was the reiteration simply conservatism based on macroeconomic factors and whatnot? And are you feeling relative to the range, are you feeling better about the top end of that range as a consequence of the quarter?

Yeah. No I would say -- I'll answer the second question first. I think that we've edged a little closer towards the top end of the range based on the first quarter's performance. But overall with the efficiency we think we really can count on. I mean, how we did with agency commissions, how we did on processing costs, how we've managed the OpEx and the hiring within the business. Those are a lot more maybe in our control. Though I'd say we still feel good about revenue. And after another quarter is under our belt, we will look at it again.

Yeah. And I think your first question can tie back to that a little bit Mark is that with the principal piece right not being certain that's part of our conservatism, because that is a big part of that revenue growth. So it's a little bit conservative at this point, but we think that's the right thing to do. We're very certain about the bottom line as we continue. We've always been really efficient over here and we continue to have those efficiencies. I don't want the marketplace to think that that in any way would be indicative of a less of an investment in the business, because we've been investing heavily been adding folks particularly in areas that can contribute to our new businesses like our online business, like our card business. So we continue to invest there. But because a percentage growth of now our business is big enough that a percentage growth in revenue of 20% really goes a long way towards being able to add additional people and invest in the business and still drive and leverage that bottom line. That's what we've been able to do. But to Andras' point I think we'll revisit it after this quarter and see where we stand. But right now after just one quarter, we chose to be -- to stand on the revenue piece and move up the EBITDA and net income base right now.

Very good. Thank you.

Thank you very much. [Operator Instructions] Our next question is from Michael Grondahl of Northland Securities. Please go ahead.

Hey, guys. Good morning. First question is maybe just digging a little bit deeper on inflation gas prices. You talked a little bit about average send, but maybe specifically did you see anything softer March April versus maybe the prior months?

There's been some choppiness in the growth, and we can't talk about April now, but when we talk about the first quarter. There's been -- there was some choppiness. We felt most of that was related to some of the policies put in place by the main bank in Mexico, by the Fed in Mexico, where they tried to stabilize the peso a little bit. And when that happened, we saw a slowdown. People kind of waiting, right, because the peso -- when we talk about, when the peso becomes weak people think it's on sale. Well, when the other thing happens, I think there's -- the peso has strengthened, people will hold back a little bit. So, we saw a little bit of choppiness at different points in the quarter. But we didn't -- we're not seeing anything that's happening abruptly related to inflation yet, I wouldn't expect to, because inflation has been something that's been going on for more than a year now, right? It's been gradually building. And so I think we're seeing that in all aspects of life today, so in terms of economically. So, that the -- really the only impact that we can really draw is that monetary policy that was set by the Fed in Mexico with stabilizing the peso.

Got it. And then secondly, I think your agent growth, I know you don't disclose the number of agents, but your agent growth am I correct in thinking at 10% that growth has accelerated a little bit over the last year or two. And could you kind of comment just kind of on your outlook 10% growth something you can do in 2020, or kind of how do you feel about agent growth going forward?

Well remember, what we talked about in the release that we did earlier, the earnings release was 10%. Our agents are up 10% year-over-year. So, it doesn't mean, we're adding 10% more agents in the quarter. It means that, if we had 1,000 agents last year in first quarter now we have 1,100, right? So we're adding about 10%. Puts and takes agents that -- leave agents that are added, we have about 10% more agents than we did last year. The pace at which we're adding though and I'll have Randy comment a little bit on that, it has accelerated. We've invested a lot more in particularly the Western states. We have more salespeople that are freelancers out there adding retailers. And that's been a mission of ours as you know and now with the resources to be able to do and we've been executing against it. So, we will expect to be adding more retailers as time goes on throughout this year.

Yeah. Mike, it's Randy. You'll recall that a quarter or two ago we mentioned that we were adding really about 20% more folks that are out just helping us add new locations activating new locations. And they -- we started hiring that team group of folks in fourth quarter last year. We've seen some of them ramping up in terms of getting their stride. But the past two quarters, you're exactly right we have seen more agent activations than previously in our history. And we anticipate that will continue throughout this year for sure.

Got it. And maybe lastly guys, La Nacional, the acquisition, can you disclose what trailing revenues were or 2021 revenues? I know you're not disclosing the price you're paying for it, but just what revenues they did last year?

Yeah. Mike, we're not disclosing that at this point. The only thing we're disclosing is the market share that it's going to help us achieve in the Dominican Republic, which is 20-plus. So, not at this time.

And keep in mind, this is again in a cash purchase, cash sitting on the balance sheet, that's not being used today that's going to be used to really productive use. We think La Nacional is going to be a big opportunity for us in that. It's a fifth country that we'll have one of the leading shares in. So now you have Mexico Guatemala, El Salvador Honduras and Dominican Republic in aggregate that will be a 21 share or better. And those are 83% of all the money leaving the US to Latin America goes to those five countries. Secondly, I think it gives us a really strong concentration in the Northeast, which has been strong for us. But their retail locations, retail locations that they personally own versus agent, third party agents, are not a good thing unless they're highly productive. Well they have a lot of really highly productive branch locations that are really going to be lynchpins for us in a lot of ways in the Northeast. And then lastly, it opens up the European corridor for us. And I think that, there's an opportunity in Europe once you have a European license, it's portable throughout the European Union. Today they're in Spain, Italy and Germany, but we think there's opportunity in other countries. And we also think that Europe may have even a bigger opportunity because of the corridors in which it sends to. I mean because of the nature of the stability and the banking status of the consumer sending bigger online potential. So that European corridor, that we open up with the I-Transfer business, could give us an opportunity to even do more business from an online perspective than it may even at retail. So, we think there's a lot of really valuable things that it brings. It's a little bit of a diamond in the rough. It's a business that we think has got with our sort of leveraging of that business the way we have done other things in creating the sort of the efficiencies we have in our business has the opportunity to add tremendous value over time for our shareholders.

Sounds very strategic. Thank you.

You’re welcome.

Thank you very much. The next question is from Alex Markgraff of KeyBanc Capital Markets. Please go ahead.

Hey, guys. Nice to speak with you, and thanks for all the commentary this morning. Macro uncertainty is certainly top of mind for a lot of investors. Can you speak a bit about the resiliency of the remittance market and recessionary period? If you just look at industry data, it suggests a relatively defensive subsector of financial services. We just appreciate any thoughts you have there. And then, related to that, Bob I think you spoke to this a bit, but just curious kind of on what you're watching from a macro data point perspective to gauge the health of your unique customer base.

Well, we've seen -- I came to Intermex and began in the middle of a recession, one of the biggest downturns in 2008. Residual of that was coming into 2009, and we've been able to continue to grow the business throughout all of that. Remittances, is a pretty resilient business generally. It had a few down years, but it kind of held its own. It didn't have big downturns during the recession. Remember, a lot of the people that we service are doing things like picking crops in California. That's not something that there's going to be less of. If there's a recession people still eat oranges, and radishes, and strawberries and all the other things. They also are people that work in other essential businesses that continue to be relatively strong. One of the fact – one of the things that we always look at, because we consider the agricultural component very stable in our industry is construction and housing starts. So when that starts to get a little weaker, we'll see the industry get a bit weaker and it requires a little more diligence on our part a little bit different strategy on our part to continue to grow during the downturns. We're not seeing that at this point. As you know, I'm sure, there's a pretty strong housing market today. And those people that are also staying in their homes are doing a lot of home renovations things like that, that have been really helping, I think in booing our consumers our ultimate consumers by getting more work. We look at the macro factors. I know, this isn't going to sit well with Wall Street, but I think macro factors are kind of for people who can't compete. Like, we find a way to drive wires no…

Great, I appreciate the thorough thoughts there. Maybe just last question for me. Can you guys maybe just provide a quick update on some of the newer inbound and outbound markets being Africa, Asia and Canada? I think you're maybe two to three years in on each of those just kind of curious, how you would describe customer behavior go-to-market success in those regions? Are there any more pieces to put in place here, or do you feel like that those regions are kind of fully built out other than maybe adding agent locations?

Sure. Sure. This is Randy. The markets that you're referring to really are in the very infancy stages for us and we haven't built out any retail locations around Asia, or the – well the Filipino or the Vietnamese market. We're really just partnering online with those offerings at this point in time. Africa, we've seen some – the entire industry has seen some challenges to Africa over the last 1.5 years. The Central Bank of Nigeria made some changes that has really impacted the way consumers are sending money to Nigeria now. So we're working through that. We're working through a license in Nigeria that will make us more competitive. But for the time being, the Asia opportunity continues to be online and we're working through the Africa opportunity.

Great. Thank you.

Thank you very much. Ladies and gentlemen, our last question is from Tim Chiodo of Credit Suisse. Please go ahead.

Great. Thank you and good morning. One of the topics, I wanted to cover have been addressed quite well, but I just want to double down on slide 12, which is the emerging market's contribution to growth. So really strong growth in transactions in Q1, and on top of a tough comp. And you just mentioned, some of the prospects ahead for the Dominican Republic and also gave some context around some of the other emerging markets. But maybe you could just recap for everyone, again, just the overall share in those markets relative to your core markets just to demonstrate, how much runway there is there? And if you're able to execute on the same track record that you've done in the core markets that's a bright prospect ahead?

So I just want to make sure, I understand your question. The question being, what are the other market opportunities if they were to attain the same kind of market share that we have in our core?

Sure. I mean, that's surely a part of it. Maybe if you could just talk about what your share is in those markets in aggregate relative to the core, which would be suggest of the runway?

Yeah. I mean, well, first of all, let's keep in mind that, you're not going to win in Latin America by sending lots of wires to Bolivia, okay? We can talk about Bolivia. We can talk about countries like that Argentina, but they're a tiny fragment of the business. That's why we talked about that, 83% of the business is driven by those countries that we talk about; Mexico Guatemala El Salvador Honduras and then Dominican Republic. Colombia would be the next biggest. And when Colombia market share which today we're relatively small at single digits. But Colombia, we have some initiatives working. In Colombia, if you added back to the mix you're getting close to 90% of the money probably high 80%, 88% of all the money sent to Latin America. So that's where you'll see a lot of our focus. After that there's Ecuador, there's Peru, Nicaragua, but you probably have three or four other countries that are really going to get you pretty close to 100%. There aren't a lot of people coming from certain countries to the U.S. to work and send money back home. So, we're doing this very strategically. And we haven't left anything out in a way because we just left it out. We did it because it was the best application of our resources to drive the business. Today if we could spend $1 to go get a wire the best place we could spend $1 to get a wire is still Mexico. There's no market like Mexico. There's no place in the world that sends $40 billion plus from one country to another, at a margin that's for us not for a lot of the small guys but really, really hefty and two time as big as some of the low-end…

Excellent. Thank you for all that context and points that taken on the relative sizing.

Thank you, Tim.

Thank you very much. Ladies and gentlemen, that concludes our question-and-answer session. And I would like to hand the conference back to Mr. Bob Lisy, for the closing comments.

Thank you, all again for joining us and for the great questions. We appreciate your interest in the company and your support. And we'll speak to you all very soon. Have a great day.

Thank you very much sir. Ladies and gentlemen, that then concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.