International Money Express, Inc.

Greetings, and welcome to the International Money Express Inc. fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mike Gallanty, Vice President of Investor Relations. 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. We should not rely on our forward-looking statements as predictions of future events. All forward-looking statements on this call are based on assumptions and beliefs as of today. Please refer to slide two of our presentation for a description of certain forward-looking statements. We undertake no obligation to update such information except as required by applicable law. On this conference call, we discussed certain non-GAAP financial measures. Information required by Reg G under the Securities and Exchange Act with respect to such non-GAAP financial measures is included in the presentation slides for this call, in 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 on our website at intermexonline.com. Presenting on today's call will be our Chairman, Chief Executive Officer and President, Bob Lissy, and Chief Financial Officer, Andres Bendi. Also on the call today is Joseph Aguilar, Chief Operating Officer, and Randy Nielsen, Chief Revenue Officer. We now turn the call over to Bob.

Good morning and thank you for joining us today. We have a lot of great information to share with you and we look forward to answering your questions following our prepared remarks. The past year has been an unprecedented period of challenge and change and a set of events that none of us ever imagined experiencing. While people and organizations are tested through this kind of once-in-a-lifetime experience, much can be learned about the quality, stability, and resiliency of those people and organizations. I'm proud to say that I have never been more appreciative of or grateful for our agents, consumers, and employees than during the challenges of the past 12 months. In large majority of cases, our agents continue to be open for business throughout the pandemic to serve their communities and the needs of our mutual customers. Our customers, many of whom deemed essential workers, continue to work every day, in many cases risking their health in the process to provide for critical and essential needs of their families in their home countries. During this time, our employees stayed focused on what we could accomplish through innovative and modified work practices while supporting our retailers and delivering continued excellence and service to our customers. Simply said, when COVID-19 arrived, the strong foundation on which our company has been built, along with our nimbleness to pivot quickly, delivered industry-leading growth throughout this extremely challenging and unprecedented time. We take our responsibility of providing a critical service to millions of hardworking individuals who sacrifice so much to provide for their families very seriously. We provide a critical service that millions of people rely upon to provide for basic needs such as food, shelter, and medical care for their loved ones back home. Our agents are carefully screened as we're seeking retailers who share a passion to deliver for our customers. Once the agent becomes part of the Internex team, they are treated with respect and dignity. They're viewed as our partners. We support them in every way possible to provide the best service for our mutual customers and serve their communities with pride. We do this by providing our agents with solutions for their business through state-of-the-art equipment, technology, and world-class service. Our customers are at the center of all we do, and we aim to provide industry-leading service on every transaction. We achieve this by providing the best customer-payer network and service experience in the industry. Lastly at Intermex, we value our employees and we have created an environment in which they can and will excel. We ensure that they have the tools and support to continue to perform their jobs at an exceptional level, even during these trying times. We feel we have created a strong bond with our employees. We are not forced to rely on layoffs or pay cuts during 2020, as some of our competitors did. We recognize that there likely would be a service shortfall related to our competitors. Instead of contracting during the pandemic, we quickly adjusted our efforts to enable us to continue to aggregate market share by mobilizing our sales team to expand their reach with our retail network remotely. As a result, we continue to grow revenue and remittances throughout the year. This business philosophy is the foundation the company is built upon, and I believe it's what enabled Intermax to have such a record year and exceptional fourth quarter while others struggled. Let me highlight on slide three some of the full-year 2020 metrics the company achieved. Net income grew 72% to $34 million. Since 2018, net income has increased by 350%. Adjusted net income grew by 30% to $42 million. We increased adjusted EBITDA by 19% to $68 million in 2020. And over the last three years, it has increased by 105%. We grew revenues 12% to $357 million despite the effects of the pandemic, especially in second quarter. Since 2018, we have increased revenues by 66%. These results were driven by our hybrid strategy of continuing to grow our targeted high-quality, high-volume agent network, along with making disciplined, cost-effective investments in new products. These investments include our digital apps, card products, and expanding our send and receive markets. Throughout, we continue to provide the highest quality of service in the industry. Our results in fourth quarter were even more spectacular on slide four. Net income was $10 million, an 80% increase compared with prior year period. Adjusted net income of $12 million, an increase of 54% over the prior year period. Adjusted EBITDA increased 32% to 19 million, and revenues grew 19% to 99 million. These totals in revenue, net income, adjusted EBITDA, and adjusted net income are all quarterly records for us. This is an amazing performance given today's environment. On the next slide, you will see that our peer-leading financial performance has been fueled by our strong growth in transactions, both in our core markets as well as our emerging markets. In fourth quarter of 2020, we produced the best quarter ever for remittances, producing 9 million net transactions. an increase of 18% over fourth quarter 2019. Transactions in some of our emerging markets such as the Dominican Republic, Ecuador, Nicaragua, Brazil, Kenya, and Ghana are growing much faster than our overall business. Total, our less developed markets increased transactions by 33% compared to fourth quarter 2019. This strong growth in remittances in our emerging markets is also evident as seen on the chart. While our growth slowed in second quarter in the height of the pandemic, these markets are now growing as fast as they were pre-pandemic, and they're growing at almost twice the rate of the overall company. On slide six, the strong multi-year growth in transactions had led to a significant increase in market share. In our core markets of Mexico, Guatemala, Honduras, El Salvador, and El Salvador, which are 75% of the entire Latin American market, we increased our share by 100 basis points from 2019 to 2020. We now have a 19.4 market share in these core markets. In fourth quarter of 2020, in the same four markets, Intermex achieved a monumental 20% market share for the first time. Since the end of 2018, Intermex increased its market share by 210 basis points in these core markets. If we go back a few more years, the company has more than doubled its market share in these key markets, validating our differentiated strategy and world-class execution. This long track record of transaction and market share increases translates into revenue and EBITDA growth. So far in 2021, we have continued where we left off last year. We are experiencing continued strength in remittances with January and February running 19% above 2020 levels. On the next slide, more recently, we have continued to experience strong growth in our mobile app with transactions increasing 125% versus the prior year. Additionally, the number of overall wires that were deposited directly into bank accounts increased 50%, and that now represents 20% of overall wires. We have increased our focus on our investment in the digital offering in the fourth quarter of 2020 and have continued to build out our digital organization. We expect our new and enhanced app will be completed by the end of second quarter 2021. Andrus will highlight some of the additional investments they were anticipated making related to the digital opportunity that we see developing in the coming years. In 2020, the company continued to modify its capital structure. On slide eight, the company completed a follow-on offering in conjunction with certain original shareholders selling 5.7 million shares. In 2019, the company completed a secondary offering where certain shareholders sold over 6 million shares of their stock. Also in 2019, the company purchased or converted into shares of common stock all of the outstanding warrants which were part of the original capital structure. As a result of these transactions, no single shareholder owns more than 10% of the company. There's no risk of potential dilution for warrants being executed. Additionally, on slide nine, in 2020, two board members retired An independent lead director was appointed, and the company completed the process that started in 2019 to transition to an independent board. All of these actions diversified the company's ownership structure, reduced a perceived stock overhang, and improved the average daily trading volume, and strengthened our corporate governance. In closing, the underlying appeal of our business model with highly productive localized agent network and superior service quality enables the company to consistently deliver strong financial performance in challenging times and in good economic times. Our model also provides a high degree of predictability in the business and generates market share increases, double-digit compounded revenue, adjusted EBITDA, and net income growth. This enables us to reinvest in attractive growth opportunities To provide additional future returns, we remain confident that our philosophy and dedication to profitability and sustainable growth will continue to drive a significant competitive advantage for Intermax. With that, let me turn the call over to Andrew Spendi.