Good day, and welcome to the International Money Express Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Alex Sadowski, Investor Relations Coordinator. Please go ahead, sir.

Good morning, and welcome to our quarterly 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 two 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, 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. Also on the call today are Chris Hunt, Chief Operating Officer; Joseph Aguilar, President, Latin America; Randy Nilsen, EVP of Retail Sales; Marcelo Theodoro, Chief Digital Officer; Beth Erickson, Chief Human Resources Officer; Andrew Kugbei, EVP, Finance and Business Intelligence; and Karim Baroni, Director of Financial Analysis. Let me now turn the call over to Bob.

Good morning. Intermex is proud to announce fourth quarter earnings that are a testament to who we are as a company. On Page 3, you can see that in the quarter we delivered revenue of just under $172 million, up 11.2% year-over-year, and diluted GAAP EPS of $0.49, up 40% year-over-year. Furthermore, adjusted EBITDA was up 14.5% to $33.3 million, and adjusted diluted EPS of 21.7% to $0.56. We continue to deliver solid earnings and cash generation for our shareholders in every environment, and our fourth quarter results fully demonstrate that. We believe our omnichannel strategy is most efficient way to serve the varying needs of the consumer in this market. Intermex continues to offer our best-in-class service and loyalty offerings through both our Retail and our Digital products. This is an advantage that no other provider can claim. Our Retail network required years of careful precision effort to build and as a result is very difficult to replicate. Our technological advantage makes transacting fast and convenient for both Digital and Retail consumers. These critical factors have made our model highly profitable and drives exceptional generation of cash. How we deliver our products and service to the market is even more important. At Retail, Intermex has taken and will continue to take a highly refined rifle-shot approach while building our network of retail agents. This strategy enabled the company to deliver products and services to consumers through the highest-performing retail agent network in the industry. All this occurs while maximizing agent retail performance that drives ROI and profitability. We are most interested in connecting with consumers in markets where our value-added approach resonates the strongest. This is when and where Intermex is able to best differentiate our value-added service where we can in turn capture margin and where we ultimately…

Thanks, Bob, and good morning, everyone. On Slide 6, you can see both unique customers and transactions up double digits year-over-year. Most importantly, we grew this business at healthy margins, which you'll see reflected in the coming pages. On Slide 7, the strong trend in profitable digital growth continued. Transactions were up 42% at the best margins we've seen for our digital product. We're confident in our product, our digital partnerships, and the team that's bringing it all to market. Also worth mentioning is the growth on the Digital Receive side. Those transactions terminating by electronic payout methods like bank accounts, mobile wallets, et cetera are a key factor in that almost 18% year-over-year growth you can see to the right. These transactions are typically very cost-efficient ways for us to deliver a wire, so this trend is also a nice margin tailwind for us. On Slide 8, we present a picture of our volume growth in the Average Principal Sent. On face value, it appears that the Average Principal is down year-over-year to $406 a transaction in Q4, that is mostly driven by the inclusion of La Nacional and iTransfer, where the send amounts are structurally lower. Principal amounts, excluding those businesses, were essentially flat for the quarter. On the next page, you can see revenue growth, up 11.2% for the quarter and 20.5% for the year. As Bob mentioned earlier, revenue was at the lower end of our guidance, as we were not immune to the slowdown in send to Mexico. However, as you see next on Page 10, our strategy to grow transactions in the core while preserving margins, coupled with a rigorous cost agenda, yielded strong earnings results. You can see net income up almost 34% for the quarter and diluted EPS up 40%. As we…

[Operator Instructions] Our first question comes from David Scharf with Citizens JMP. Please proceed.

Great. Good morning, and thanks for taking my questions. Bob, can you provide a little more, I guess, background and geographic context for the sales force expansion since it's such a dramatic increase, particularly the internal team? Is this bolstering up efforts in the western regions? Those zip codes, I know you've long been targeting or I thought you said something about offshore. Can you just provide some more background on kind of how we ought to view this in a broader kind of multi-year context of kind of what you think your footprint will look like?

Yeah. The inside team has been primarily located in Miami, with a few folks out in California to be more productive relative to time zones. And we had 12 folks that were directly responsible for contacting agents by telephone. Those were separate and apart but supporting our efforts at retails with our outside sales team. We recognized that our reach could be benefitted by having more folks available. And what we did is, created 24 positions in Guatemala with people that are fully bilingual, that will be augmenting those 12 folks, and then work in teams of three people, one in the US, two in Guatemala, that will have a set of agents, approximately 12 different teams. So, each team will have about one-twelfth of our existing agents. And what they'll be doing is calling those agents and looking at opportunities where we might have a decline in wires, where it's a slow startup with a new agent. Our experience is that contact drives many more wires, and the payback is really even good if the US team, but the fact that it's much more efficient cost wise to do this in Guatemala, we're able to triple our reach from the inside perspective without anywhere near tripling the cost of that function. Now, additionally to that, we've had 40 district sales managers in the US that have been separating or accounting for our existing business and going out after a new business. Those will be augmented by a 15% increase. So, we've tripled the size of the inside, and then a 15% increase of the folks out there in the US at retail that will be visiting our existing agents will have the primary responsibility for adding new agents in the vacant zip codes where we have opportunities. We've coupled this with a approach that is looking at different offerings that will be more attractive to both the agent and to the consumer in certain zip codes where today we haven't penetrated. And as we talked about and signaled in the text, that these are opportunities where we're not giving away any margin, where even if we're taking a lower margin, be more aggressive, it's all found transactions because we have not penetrated those zip codes in the past. So, it represents a total remake of what we're doing from an aggressive perspective in the west, but also a remake relative to supporting our existing base and becoming more aggressive at retail. So, we think that it'll pay large dividends in the next 12 to 24 months, and we'll see an ascension of our rate of growth of further separation from our rate of growth over the market rate of growth in that period of time.

Got it. Understood. Maybe as a follow up along that thought of increasing the internal sales force focus on monitoring existing agents, it looks like a lot of the forward guidance is impacted by what you're witnessing in Mexico. I mean, notwithstanding some of the movement in some of the Bronco to Mexico data. I know kind of one of the largest global player I know on their call had mentioned they had returned to gaining share in Mexico after a long time and you've talked about pricing pressures in that corridor in past calls. Is there -- are you -- do you feel like you're maintaining share in US to Mexico at sort of your mature agents?

Yeah, I mean, we think there are two things going on. We think we're gaining share at retail and we're gaining share at digital. The challenge for us is today our business is not weighted the same way as the market. So we're not having 20% of our business to Mexico go digital. And that's the faster growth piece in the business. I think we believe we're growing just as well as the digital pieces and just as well as the retail pieces. But our percentages are more like 95% retail today and 5% digital. So that weighting causes our growth to maybe look not as good as it does. We think, again, we're beating and exceeding at retail and beating and exceeding at digital. And we think this program where we're adding -- not only adding the folks to target, but also the fact that we'll be taking a look at what we're willing to offer the agent and the consumer at retail in these underserved or unserved areas. It's going to make a lot of difference and will make a further separation between us and market share. Us in the market growth, which will gain further market share for us.

Understood. And I thought just a quick follow up for Andras. I guess, salary benefit, the largest OpEx after agent charges, I guess it was $72 million last year, there may be somewhat La Nacional noise, but as we think about the increase in sales headcount, I don't know if it's all variable and commission-based, but is there a kind of good figure we ought to think about for an annualized figure in salary and benefit this year? It seems like that would be the line item moving the most.

Yeah, I think it's relatively small, these additions. I mean we -- in terms of our salary movement year-over-year, you're going to see an aggregate for the business 4% to 5%. So, we've really dialed back on that. So that impact of these ads is relatively small, and taking into account all the other areas where we're dialing back costs as much as we can, it's not really going to push through to be a visible impact.

Got it. Great. Thanks so much.

Our next question comes from Mike Grondahl with Northland Securities.

Hey, good morning, guys. Did you guys call out the revenue number from La Nacional and iTransfers? I'm trying to just back into an organic growth rate in 4Q.

Yeah, sure, Mike, because we're all on the main call together. La Nacional in Q4 was about $18 million. iTransfer in Q4 was about $5 million. Which means your organic growth in the core was about little under 5.5%.

Got it. And then last quarter, you guys kind of talked about, I'll call it, four growth drivers that you were sort of strategically heading towards or implementing. One was sort of targeted counteroffers, one was new agents, one was some overall selected pricing actions, and I think kind of new market strategies. Could you handicap like which one of those four you're ahead on? Maybe which ones you're kind of behind on? Just let us know how each of those four are going?

Yeah, I think the most important and the one that we're doing the best in is the targeted offerings. So that's what we mentioned in the text was that that program is going quite well, and we've executed well against it. We've brought in tens of thousands of wires on that program, which we're essentially paying a little bit of commission up front, let's say, to an agent, and then we're reducing the amount of payment that the agent gets over time. So it doesn't have a huge impact on our commission that the agent gets or our gross margin over time, but it's more of an upfront payment to bring back wires that we haven't had in the past. That has done quite well, and I think we're executing and continuing to execute against that. The second one with new agents, we continue to drive growth for our new agents, and that's going well as well. Targeting that growth in specific zip codes is the thing that we're going to spend more time on. And that will be sort of a targeted along with new agents, which will be this sort of new price offering where we'll be a little bit more aggressive with both the agent and the consumer. But again, I want to highlight and make sure, I underscore, that does not mean we're going to where we have four plus million wires, and we have it at x margin, we're not going and discounting there. We're being aggressive with price where we're not, where we're not getting wires, where we have a small level of market penetration, where we might not be serving in the zip code at all, and we feel both of those strategies are going well. The overall -- actually, our overall approach…

Got it. In terms of the buyback, did I hear correctly, you guys had been kind of programmatically buying at $10 million a quarter starting 1Q '24? That's going to uptick to $20 million a quarter?

That's right, Mike. And we'll also be active in terms of block purchases if they're going to benefit the shareholder as well. But we feel that we'll have an underlying $20 million that we'll be able to pick up each quarter. We have some price parameters built into that as well. So it's not at all cost but I feel pretty good about being able to pick up $20 million worth a quarter and then blocks on top of that.

Got it. And just lastly, are you able to put like a revenue range or in terms of growth, what Mexico is acting as a headwind for '24, like, five points of revenue growth, four points, seven points. What do you see that headwind as roughly as compared to, like, '23?

Yeah, I think right now, we see that that the Mexico growth in fourth quarter as an industry was only at 3.5%. And our assumptions in the plan we presented assumed that kind of growth sustaining itself throughout 2024. So we're not dependent on that coming back at all if the market starts to come back. Just to put in perspective, in Q2 of 2020, which was the height of COVID, the market grew at 3.6%, And in Q4 of 2023, it grew at 3.5%. So, it actually grew a tenth of a percent slower than it did during COVID in Q4, and we kind of projected that through '24. Our upside is these investments that we're making in sales from a growth perspective that are totally been assimilated into our cost structure because we've done a lot of zero-based budgeting as well, that's eliminated some, I think, unjustified, or inefficient costs, right, that we've now put back into the sales perspective. We think that our target and our aspiration is to separate ourselves further from that growth number, but our assumptions are based on Mexico staying around 3%, or 4% growth as an industry through '24.

Got it. Hey, thank you.

Our next question comes from Chris Vang with UBS.

Hi. Thanks for taking our question. My first question is about the Visa Direct opportunities. It's relatively new. Understand, it's kind of nascent and you talked about that enabling you to go into important markets such as India and Philippines and a couple others to call it out at the last call and potentially some more this year. So, the first part, maybe, can you talk about -- a little bit about the potential opportunities and the expansion plans this year, and what are your kind of longer-term outlook from the Visa Direct partnership? And then the second part is, how much of that Visa Direct opportunities for new markets have you baked into the plan this year for 2024 guidance?

Hi, it's Marcelo here. I'm going to cover the first question. So we see a huge opportunity in this partnership because it makes the company move from a multi-country, multi-region approach to a global approach. So, there are important corridors that we are going to embrace, like India or Philippines as you said. Those are huge markets that we believe we can address at a lower cost and a great experience as Bob mentioned before. We did incorporate that to our projections to 2024. But of course, it's increasing number throughout the year due to our current focus on Latin America. So, it's a new target audience that we have to embrace. We see some traction already, but it's a midterm exercise that we're going step-by-step.

Yeah. And I would just jump in, Chris. This is Andras. I think the overall contribution that from an overall company perspective is still quite small what was baked in 2024. I think we could see it as an option if it really pops. But right now, the contribution from the overall materiality of the plan is quite small at the moment.

All right, thanks a lot to both of you. That's very helpful. And the second part, I just wanted to ask a little bit about the fourth quarter performance. I guess, outside of the Mexico market, what were some of the trends you saw in the market and how the performance in, I guess, the rest of the Latam regions compared to what you had expected going to the quarter? Thank you.

I think we've seen the broader market, and certainly not only Mexico, but Guatemala and other key countries for us, slow down relative to growth, not as acutely as Mexico has. But we also see some really strong growth where we've executed well in certain countries and have at times been on the borderline of triple-digit growth to countries like Nicaragua and others, where we've been growing very quickly. So, I think the overall market has slowed a bit to virtually just about every country in Latin America. But we've been able to grow well outside the size of the market in certain markets like Nicaragua, I believe Ecuador, Colombia, we're growing much faster than the market in those areas. Dominican Republic, we're seeing that there's some slowing in that market. We think that's a market that's moving a little faster to digital. Dominican people in the US tend to be more likely banked, and if they're more likely banked, they have more options, meaning that they have the option to go to digital easier and more fluidly than somebody who's maybe an undocumented member of the workforce from Mexico, or Honduras or Guatemala. So those are -- that's how I would sum up the overall trends.

Right. Thank you so much. That's very helpful. Let's come back to the queue.

Our next question comes from Sam Salvas with Needham. Please proceed.

Great. Thanks, guys, for taking the questions. I'm hopping on for Mayank today. I was wondering if you guys could provide some insight into some of the pricing dynamics you saw in the fourth quarter. I know earlier in the year, and I think it was in the third quarter, you guys mentioned some pricing pressures stemming from competitors. So, could you guys just talk about what you saw in the fourth quarter and maybe how you guys are thinking about pricing in 2024?

Yeah, what we saw is that we've actually been able to extend our margins in fourth quarter and increase them by being more efficient and slicing it a little bit thinner. Previously, we made bigger movements with price related to the whole market, and now our price movements are related to places where there's an incremental upside in terms of wires. What we're very careful about is that we don't want to be discounting where we have wires in house where people are perfectly happy with the pricing, and those wires are already wires we're going to get. Now, as we look at '24, the big opportunity for us is certain areas of the country where there still remains. For instance, southwest, we have a million foreign borns living in zip codes in California that we haven't tapped into at all. As big as our California business is, in which it's several million wires a year, we haven't tapped into those zip codes at all. We also have another set of zip codes that have about 1.7 million people where we've tapped into very slightly. And so those are the places where you'll see a different pricing perspective, a different pricing action. We'll be much more aggressive there, but that doesn't degrade at all our current margins. Our current margins are going to stay relatively stable. Those margins will be ones that will come in at a lower gross margin per transaction but will be incremental transactions. So the overall average might come down a bit, but nothing will be done to degrade the core business.

Got it. Okay, that's super helpful. And then just a quick follow-up. Could you guys talk more about some of the momentum you're seeing in the iTransfer business and any expectations or any goals you guys have for the upcoming year?

Yeah, I would say that we built a plan that we feel comfortable can be in the mid-teens if we're operating the business similar to how it's operating today, but a little bit more efficiently. I think what we're trying to do is create more of a big bang plan, which if we get off to the right start, we'll be investing quite a bit in the front end I think in the second half of the year. Italy in particular is a really interesting opportunity. I think structurally, the margins are better in Italy, and I think our penetration there in what's really big economy shows a lot of opportunity. But we're doing well in Spain as well. I mean, I think they were -- I think they've restarted their growth trends in Spain as well. I think that geography is a little bit trickier because the margins aren't as good. But again, I think that mid-teens is the baseline and only upside from there.

Awesome. Thanks, guys. Appreciate it.

What I'd add to that is that today we're generally just in two countries in Europe continent. We have one store in Germany. It's a huge market opportunity. We think there's opportunities for us with our European license not only to expand further in Germany in the middle run but also in France. And we're also looking at opportunities in the UK to get started there. So I think you'll see us be much more active in Europe. We think Europe is a great opportunity at retail, but because of the nature of the consumer there, we believe that our digital opportunity will catch on even faster because more consumers are already ready to do digital wires. They have bank accounts, they're paid on the books, on the payroll card. And so we're looking forward to getting our digital app up and going in Europe and then also our expansion as we grow through other key countries like Germany, France, and ultimately UK.

Yeah, makes sense. All right. Thanks, guys.

[Operator Instructions] Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to the speakers for any closing remarks.

Thank you all for tuning in. Look forward to talking to you all soon. Thanks again. Have a great day.

The conference has now concluded. Thank you for attending to this presentation. You may now disconnect.