International Money Express, Inc. (NASDAQ:IMXI) Q1 2024 Earnings Call Transcript

International Money Express, Inc. (NASDAQ:IMXI) Q1 2024 Earnings Call Transcript May 8, 2024

International Money Express, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and thank you for standing by. Welcome to the International Money Express, Inc. First Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. After speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference call is being recorded. I would now like to hand the call over to your speaker today Alex Sadowski, Investor Relations Coordinator. Please go ahead.

Alex Sadowski: Good morning, and welcome to the Intermex first quarter 2024 earnings call. I would like to remind everyone that today’s call includes forward-looking statements, including our 2024 guidance, and actual results may differ materially from expectations. For additional information on International Money Express, which we refer to as Intermex or the Company, please see our SEC filings, including the risk factors described therein. All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events. Please refer to Slide 2 of our presentation for a description of certain forward-looking statements. The company undertakes no obligation to update such information except as required by applicable law.

On this conference call, we discuss certain non-GAAP financial measures. Information required by Regulation G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slide, our earnings press release, and our annual report on Form 10-K, and quarterly reports on Form 10-Q including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. These can be obtained in the Investors section of our website at intermexonline.com. Presenting on today’s call is our Chairman, Chief Executive Officer and President, Bob Lisy; and Chief Financial Officer, Andras Bende; as well as other members of the senior leadership team. Let me now turn the call over to Bob.

Bob Lisy: Good morning shareholders, analysts, partners and media representatives. Thank you for joining us today. It’s our pleasure to report that International Money Express has not only delivered a strong start to 2024, but has also achieved record breaking performance, the company’s revenue of $150.4 million and adjusted EBITDA of $25.4 million, our first quarter milestones. EPS and adjusted EPS have surged to new first quarter records of $0.35 and $0.43 respectively surpassing market expectations and demonstrating our exceptional operational efficiency. Despite slower than expected market growth, particularly in Mexico, we definitely navigated some top line headwinds to deliver exceptional results and double digit earnings growth.

We delivered results within all guidance ranges and exceeded expectations on multiple metrics, demonstrating our exceptional market demand, strategic agility, and unwavering commitment to financial discipline. This quarter, we have continued to set records across various metrics, including revenue highs in ten countries, which showcases the effectiveness of our global strategies and the strength of our market presence. The integration of La Nacional business has been a standout success with a four times increase in EBITDA, which speaks volumes about the strategic merits of that acquisition. We completed 2023 having generated $62 million in free cash, the highest annual amount ever for us, primarily driven by our retail operations where significant growth opportunities remain.

This success has further underscored the payback received from leveraging the cash and investing in our digital technologies, highlighting our efficient financial management and strategic initiatives. Our digital channels, cornerstone of our growth strategy, have reached all-time high user engagement and profitability levels. This success reflects our disciplined approach to growth focused on sustainable profitability through strategic and mindful investments in our technology and marketing efforts. We continue to expand and strengthen our digital offering through our strategic partnerships, particularly within our wires as a service platform. The successful rollout of new partnerships this quarter has not only enhanced our capabilities, but also set the stage for sustained future growth.

The burgeoning European market remains a key focus for expansion, where we anticipate our advanced digital solutions will be especially effective in driving growth of our business. International Money Express is the fintech company at the forefront of the omnichannel remittance model, which defines our approach to offering versatile financial services. This model is anchored by our highly profitable retail network, the backbone of our operations, and a rapidly expanding digital sector poised for substantial growth. Our omnichannel strategy ensures seamless integration of traditional retail transactions with cutting edge digital solutions, providing comprehensive coverage across various customer touch points. At the core of our identity is our surgical approach to growth in everything we do.

At retail, we focused on specific agents and geographies to maximize profitability. This strategic targeting allows Intermex to navigate markets more efficiently and profitably while delivering exceptional growth. Our ability to price services efficiently down to the zip code level showcases our sophisticated operational capabilities, enabling us to tailor our offering precisely to market demands. Our retail operations are noted for their cost efficiency and effectiveness, allowing us to strategically nurture our digital ventures. This balance helps avoid unnecessary expenditures, safeguarding the company capital while fostering substantial business growth. As the gold standard and quality service, we leverage cutting edge proprietary technology to deliver exceptional value-added services.

These services enhanced our relationship with a highly productive network of retail agents, usually locally-owned businesses, providing them with tools and solutions typically beyond their reach. This distinctive operational infrastructure sets us apart in the marketplace, makes our business model difficult for competitors to replicate. By blending the strengths of both traditional retail and digital technologies, Intermex uniquely captures diverse market opportunities, driving our future growth. This strategic equilibrium not only expands our service capabilities, but also solidifies our position as a leader in the financial technology landscape. The first quarter of 2024 has been transformative for IMXI, underscored by significant strategic breakthroughs and substantial operational advancements.

Our current entry into the European market is anchored at the retail level, layering the groundwork for what we expect will be a significant expansion. While our advanced digital platforms have yet to be deployed in this market, they represent a key opportunity for future revenue growth and are poised to transform financial services we provide as we extend our digital reach. Our enhanced partnership with Visa is set to expand our digital footprint and enrich our digital services offering aligned with our goals for extensive market penetration and superior customer service. This expansion into at least a dozen new markets signifies a major stride in our commitment to broadening our reach and enhancing our technological capabilities. Domestically, the recent expansion of our outside sales force by eleven new positions demonstrates our commitment to strategic growth and enhancement of our market presence.

These roles, while still in the early stages of impact, symbolize our fulfillment of the promise made to our stakeholders, setting the stage for substantial future contributions as the team members ramp up the. Full operational capacity of the upside inside sales team, which now represents a tripling of our overall inside sales force, is revitalizing our sales approach. This significant expansion is a strategic enhancement of our capabilities, poised to elevate customer service levels and transaction volume as their integration experience progress. As we move into the second quarter, we do so with a reorganized sales team led by new and upgraded management. This expansion is further bolstered by the launch of our new bill payment services, equipping us with additional tools to enhance our market engagement and service delivery.

While our growth does not solely depend on market conditions, any renewed vibrancy and remittance market would further amplify the impact of our enhanced sales force, boosting our future growth prospects. This quarter, we faced a series of economic and market specific challenges, particularly in Mexico, where market growth did not meet our expectations of 3.5%. Despite these headwinds, our strategic preparation and adaptive business model enabled us to not just cope, but to excel, achieving robust earnings results across the board. Our success demonstrates our deep understanding of market dynamics and our ability to swiftly adjust our strategies to maintain momentum and deliver profitability. We have managed to achieve our key financial targets through diligent management and proactive approach to market fluctuations.

I’ll now hand it over to our CFO, Andras Bende, who will delve into the details of our financial performance and the significant strides we have made this quarter.

Andras Bende: Thanks, Bob. In this first quarter of 2024, Intermex has not only continued its trajectory of robust financial performance, but has also set several new records, which underscores the strength and resilience of our diversified business model. Our first quarter revenue reached $150.4 million, a 3.5% increase year-over-year despite softer than anticipated market growth in Mexico. The customer base on the Intermex platform continued to expand up 3% to 4.2 million customers, showcasing our strong brand loyalty and the successful enhancement of our customer engagement strategies. Our digital channels have seen exceptional growth and enhanced profitability with revenue up by almost 60% compared to the same period last year.

This strong trend reflects our focused efforts on expanding our digital footprint and enhancing user engagement through innovative offerings. Our measured approach to digital, underscored by a thoughtful investment, is allowing us to really monetize the successful adoption of our services. Adjusted EBITDA reached the first quarter record of $25.4 million, representing a 5.5% increase, while the EBITDA margin improved to 16.9%, up 30 basis points from 1Q last year. Also worth mentioning, we achieved this improvement in EBITDA margin despite the consolidation of the i-Transfer business, an inherently lower margin business, which is not consolidated until the second quarter of 2023. These figures illustrate not only our profitability, but also our ability to optimize and scale our operations efficiently.

Net income and adjusted net income both achieved new first quarter records, reflecting our disciplined financial management and strategic planning. Our growth in earnings per share is particularly noteworthy with diluted EPS of 12.9% to $0.35 per share and adjusted diluted EPS also increasing by 13.2% to $0.43 per share. Our tax rate remains stable at 28.3%, close to where we were one year ago and a bit better than the fourth quarter. Our earnings performance highlights our commitment to delivering shareholder value and the nimble nature of the Intermex business model, allowing us to quickly lean into efficiency in the face of market softness. On the operational front, interest expense rose to $2.7 million. This is driven by a higher rate environment, but also higher usage of our revolving credit facility during the weekends.

Versus one year ago, we have deployed a lot of cash that would have otherwise sat idle during the week towards stock buybacks, investment in technology, M&A, mainly the closure of the i-Transfer acquisition and investment in our new headquarters facility. Depreciation rose by 26.7% due to our new headquarters and ongoing investments in our technology infrastructure, while amortization expenses saw a decrease of 12%, down to $1 million for the quarter. As it pertains to cash, our business model remains highly efficient and continues to generate a lot of cash. When you look at our free cash generated measure for 1Q, remember, this is our internal measure that attempts to exclude balance sheet cyclicality. It’s a little unusual in 1Q. The lower number is mostly driven by the investment in the headquarters building along with the timing of several technology investments.

Excluding those items, our free cash generated metric continues to grow. As per usage of free cash, our commitment to returning value to shareholders was evidenced by a record buyback of shares totaling over 949,000 shares for the quarter. As our financial results indicate, the quarter saw significant efforts in cost management, particularly in terms of SG&A expenses where we’ve implemented strategic measures to protect earnings and margins. This drive for efficiency is what we’re good at and core to Intermex DNA. As part of our strategic plan to further optimize the La Nacional business in the second quarter we launched a strategic restructuring initiative aimed at maximizing the efficiency of our offshore support entities. We’ll complete the project by the end of 2024 and expect to generate over $2 million recurring annualized savings.

With this program, we anticipate a roughly $2.4 million restructuring charge in the second quarter. This move underscores our continued commitment to operational excellence in every area of the company. As we continue our journey in 2024, our financial strategy remains focused on leveraging our strong cash generation to invest in growth initiatives while maintaining rigorous cost control and financial discipline. Our balanced approach ensures that we remain well positioned to meet our financial goals and continue delivering exceptional value to our shareholders. Looking ahead, the outlook for our company is promising. Our ongoing investments in technology and strategic market expansion are laying a strong foundation for our long-term success.

We’re eager to enhance our service offerings, expand into new markets and deliver exceptional value to our customers and shareholders. Additionally, we have realized and expect to continue to realize synergies through our recent acquisitions, particularly with La Nacional, as we streamline their operations and ramp up their sales. Aside from the cost impact of the approximately $2.4 million restructuring charge on GAAP EPS, the rest of our full year guidance will remain unchanged. We’re optimistic about our ability to deliver earnings within the ranges we guided to, though we recognize revenue may be toward the low end of our guide should a soft market in Mexico persist. So for the full year 2024, we anticipate revenue of $681 million to $701.8 million, fully diluted GAAP EPS of $1.77 to $1.92, adjusted EBITDA of $124 million to $127.7 million, and adjusted diluted EPS of $2.13 to $2.31.

And for the second quarter we anticipate revenue of $171.5 million to $176.8 million, fully diluted GAAP EPS of $0.41 to $0.45 per share, adjusted EBITDA of $31.7 million to $32.7 million and adjusted diluted EPS of $0.54 to $0.58 per share. In conclusion, the first quarter of 2024 has been extraordinarily successful for International Money Express. We have exceeded many of our strategic and financial goals, setting a solid foundation for continued success and growth. We appreciate your steadfast support and trust in our strategic vision. We look forward to sharing our continued progress and achievements. We are now ready to take your questions and provide further insights into our performance, strategic initiatives and optimistic outlook for the future.

We welcome your inquiries and are eager to discuss our future plans and projections.

See also

15 Best Places to Retire in New York and

Hidden Gems: Unveiling the 10 Stocks on Hedge Funds' Radar.

To continue reading the Q&A session, please click here.