Currency Exchange International, Corp.

Good morning, ladies and gentlemen, and welcome to the Currency Exchange International 2022 Q4 and year-end financial results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, January 24th, 2023. I would now like to turn the conference over to Mr. Bill Matulis, Investor Relations Manager at CXI. Please go ahead, sir.

Thank you, Michelle. Good morning, everyone. Welcome to the Currency Exchange International Conference call to discuss the financial results for the fourth quarter and full year of 2022. With us today are President and CEO Randolph Pinna, Group Chief Financial Officer Gerhard Barnard, and Chief Financial Officer of Exchange Bank of Canada, Alan Stratton. Alan will begin with his brief comments on EBC's fourth quarter performance, followed by Gerhard who will provide an overview of CXI's overall financial results and his latest perspective on the company's operations. Randolph will then provide his commentary on CXI's strategic initiatives, sales efforts, and business activities, after which we'll open it up for your questions. Today's conference call is open to shareholders, prospective shareholders, members of the investment community, including the media. For those of you who may happen to leave the call before its conclusion, please be advised that this conference call will be recorded and then uploaded to CXI's investor relations website page. along with the financial statements and MD&A. Please note this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. Please refer to our financial statements and MD&A reports for more information about these factors that could cause these different results and the assumptions that we have made. With that, I'll turn the call over to Alan. Alan, please go ahead.

Thank you, Bill. Firstly, I'll state that we are very pleased with the performance of the bank in Q4 as it continued to generate both growth in revenue and profitability. Q4 revenue of $5.6 million was $3.2 million, or 137% higher than it was back in Q4 of 2021. This growth was driven both by the payment segment and the banknote segment. Our payments revenue grew 72% on a functional currency basis from Q4 2021. And that growth has been driven primarily from the acquisition of approximately 300 new payments clients over the course of the fiscal year by our growing sales team. We offer both spot and forward exchange contracts to companies across a broad range of industries. and as two-thirds of Canada's gross domestic product is derived from importing and exporting, there is a large market for foreign exchange services in the country. The banknote segment has continued to grow in step with the recovery in international travel and tourism. On October 1st, the federal government removed the vaccination requirement for travelers entering Canada, eliminating the last travel restriction related to COVID-19 in the country. However, there do remain certain countries, including the United States, that maintain a vaccination requirement for foreign nationals upon entering the country. Despite that, the demand for US dollars in Canada grew significantly in Q4 as travel to the US increased. Statistics Canada reported that Canadian travelers increased their travel spending abroad by $2.2 billion in calendar Q3, most of which was in the United States. A significant portion of the growth in bank notes is due to expansion of trade with foreign financial institutions, enabled by EBC's participation in the Federal Reserve Bank of New York's Foreign Bank International Cash Services program. September 2022 marked our first full year operating in that program and we have seen successive quarterly growth in volumes. It does take longer to onboard new foreign clients than a domestic one as we conduct due diligence around the risks associated with money laundering and terrorist financing for both countries and institutions. However, once a client is onboarded, our experience has been that they increase their volumes over time as we build experience. Our focus is on building long-term relationships with these institutions as we anticipate they will provide a predictable volume of trade over time. The focus is on clients with regular activity and large value trades as the cost for processing and shipping scale down as weight and value increases. As a result, the proportion of the variable costs relative to revenue is higher than our domestic business, which means that we need higher volumes to generate the economies of scale and operating leverage. According to the Federal Reserve, there is approximately, at the end of 2021, $2.1 trillion in U.S. currency in circulation double from what it was 10 years ago. This means that the addressable market for US dollars continues to grow, which provides a significant opportunity for EBC in the years ahead. For fiscal 2022, the bank generated $17.2 million in revenue, an increase of 9.8 million or 131% over the prior year. This revenue growth allowed the bank to generate its first full year of profitability And as a result, we were also able to recognize $1.2 million in deferred tax assets that were related to losses the bank had generated in previous years. In our view, 2022 marks the year that EBC has become financially sustainable, which should also make it easier to secure a line of credit with a major financial institution. I'll close by saying I am excited about the prospects for the bank and to being able to contribute to executing against its growth strategy in a prudential manner. I would now like to turn it over to Gerard Barnard to discuss the group's performance.