Currency Exchange International, Corp.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Currency Exchange International 2023 Q1 Financial Results Conference Call. At this time, all lines are in 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. A reminder that this call is being recorded today, Thursday, March the 16th, 2023. I would now like to turn the conference over to Bill Matulis, Investor Relations Manager with 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 first quarter of the 2023 fiscal year. Thanks for joining us. 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 first quarter performance, followed by Gerhard will provide an overview of CXI's financial results and his latest perspectives 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 media. For those of you who may happen to leave our 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 in MD&A. Please note that 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 the 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, and good morning, everyone. It's my pleasure to provide you with a brief update on Exchange Bank of Canada's financial performance in Q1. The bank generated revenue of $4.9 million in Q1 2023, a 50% increase over Q1 2022. In the bank's functional currency, the Canadian dollar revenue in Q1 was $6.6 million versus $4.5 million in Q1 2022. I'll be referring to the bank's results in Canadian dollars herein to avoid the confusion that can be caused by the impact of foreign currency translation. The payment segment represented 34% of revenue in Q1 and grew by 83% over the prior year. That growth was generated primarily through new clients acquired over the past year. Total volumes were up by 70% from $840 million to $1.4 billion. The bank generated 82% of its revenue from spot FX trades in Q1, up from 74% in the prior year. Turning over to the bank note segment, the bank generated 4.4 million Canadian in revenue, an increase of 34% over the prior year. Domestic clients accounted for 59% of our revenue, an increase of 48% over the prior year. And this was largely driven by the improvement in demand for international travel as the prior year was impacted by the Omicron variant of the COVID-19 virus. The top three currencies in demand were the U.S. dollar, Mexican peso, and the euro. Banknote revenue from international clients increased 19% year over year. While ABC completed its first trade with a new client during the first quarter, most of the increase was with existing clients that saw fit to increase their volumes with us. The U.S. dollar accounts for 98% of the bank's revenue with international clients. The bank's operating leverage was flat in Q1 relative to the prior year at 14%. Fixed and semi-fixed operating expenses increased by 26%, primarily driven by increased personnel costs as the bank's employee population grew from 58 at the end of Q1 2022 to 82 at the end of Q1 2023. Variable costs grew by 57%, driven by shipping and third-party processing fees. As a result of the continued impact of inflation on these costs, we have recently made some adjustments to pricing with some clients and are currently reviewing it with others. The bank generated a net income margin of 5%, which was an increase from 3.5% in the prior year. Overall, we are pleased with the bank's performance in the quarter and its progress against its strategic plans. I'll now turn it over to Gerard Bernard to discuss the group's financial performance. Gerard?

Thank you, Alan, and thank you, everyone, for joining us on today's call. I will now present an overview of the group's results for the first quarter ending the 31st of January, 2023. For the consolidated CXI group, these results are presented in U.S. dollars, on days otherwise noted. So, for the first quarter of 2023, CXI demonstrated strong year-over-year growth as a group and continued to see increased demand for international travel and a return to more traditional seasonality and travel patterns, which historically has translated into the first quarter being the weakest quarter and the third quarter being the strongest quarter as it relates to banknote revenue. Management anticipates this pattern will reoccur in 2023. supported by continued year-over-year growth as international travel is expected to recover to pre-pandemic levels during this year. The group continues to focus on executing against the strategic plan in which significant investments are being made in three areas. Our people, CXI and EBCF, have nearly 360 full-time and part-time employees. Infrastructure. We opened our 38 branch location in the Mills and Jersey Gardens in New Jersey, and opened two new airport locations in the new Terminal 8 at JFK. FX Online is now in 39 states, with Arizona being the latest addition. And thirdly, technology platforms. Next week, the new accounting system is going live in a few weeks. Ariba, the new treasury management system, has nearly completed phase one. And Alesa, and AML compliance continuous record monitoring and fraud detection software is making good implementation progress. All of these initiatives' investment will support more efficient future growth. I can personally tell you that our teams are super excited and ready to start harnessing the operational efficiencies and benefits these technological platforms will bring. The first quarter also marked the successful transition to our new organizational structure that took effect on November 1, 2022. We have the right team and systems to achieve our vision of being the preferred financial solutions provider for foreign exchange services. Let's look at the group's consolidated performance for the three months ended January 31, 2023. The group generated a 32% increase in revenue for the three-month period ended January 31st, 2023 of 16.5 million relative to the same period in the previous year, previous period. The period, the prior year was impacted by COVID-19, notably in Canada where travel advisories and restrictions reduced demand for international travel. Since travel restrictions were progressively eased over the course of 2022, there has been an improvement in the demand for international travel. The group's top five currencies by revenue for the three-month period ended January 31, 2023, with the U.S. dollar, Canadian dollar, euro, Mexican peso, and British pound sterling. South American and Asian currencies have been slow to recover, but with Japan and more recently China relaxing travel restrictions on foreign nationals, these markets are expected to see increased travel demand in 2023. The revenue increase over the comparable period in the prior year also reflects the acquisition of new customers in both banknote and payment product lines, as well as growth in trade in foreign financial institutions by Exchange Bank of Canada. The group recorded net operating income of $2.7 million, which was lower than the net operating income in the same period in the prior year, as some costs increased substantially, including shipping at nearly 75% or $900,000, and stock-based compensation at nearly $500,000, which was linked to the higher stock price in addition to the group's investments in near accounting and treasury management systems with a cost of nearly $200,000 for the quarter. The group generated 1.6 million in net income during the three-month period in the January 31st, 2023. Now, when comparing the three-month period in the January 31st, 2023 to the same three-month period January 31st, 2022, the following is notable. Payments revenue increased by 60% to 3.5 million from 2.2 million in the same period in 2022. The group processed nearly 28,500 payment transactions representing 3.1 billion in volume in the three-month period ended January 31st, 2023. This compares to around 23,500 transactions or 2.3 billion of volume in the three-month period ended 31st of January, 2022. Payments revenue represents a 21% share of revenue an increase from the 17% share in the preceding three-month period ending January 31, 2022. This reflects the successful execution of the group's strategic initiative to develop scale in international payments and to acquire new client relations in both the United States and Canada. Now, banknotes revenue. from 10.3 million in the same period in 2022. The growth is attributed to three main drivers. Firstly, consumer demand for foreign currencies has significantly improved as restrictions on international travel have eased over the past year. Between November 2022 and January 2023, so sort of that three-month period, approximately 190 million travelers passed through TSA checkpoints in the United States airports approximately 103% of pre-pandemic levels. Now, this is an increase of 21% from the same time last year. Secondly, the group was successful at increasing its market share as indicated by the increase in new wholesale clients and developing its direct-to-consumer footprint through new locations, including agents and its FX online platform. The group has increased its penetration in the global bank note trade, partially driven by EBC's participation in the Foreign Bank International Cash Services Program with the Federal Reserve Bank of New York. The revenue growth has been consistent in both the Canadian and United States markets and across all channels on a year-over-year basis. Operating expenses increased 47% to $13.7 million compared to $9.5 million for the three-month period ended January 31, 2022. Now, variable costs, including postage and shipping, sales permission, incentive compensation, bank fees, and third-party technology fees increased 45% to $3.6 million, compared to $2.5 million, largely due to increase in transaction volume. There has also been a significant rise in shipping fees due to a higher mix of international banknote trade, as well as inflation, including fuel cell charges. The group recovers some of the shipping costs through fees that it charges to its clients. In some cases, it is built into the commission, and the group has implemented some price increases to compensate for higher shipping costs, as Alan has also mentioned. Salaries and benefits increased 42% to $7.7 million from $5.5 in the previous year, 300,000, or roughly 14%, relates to the increase in variable compensation relating to sales commission and performance incentives. And the remaining 86% variance is partially related to incremental growth in headcount, which increased to 363 in the three-month period in the January 21st of January 2023, from 270 in the comparative period. It is also driven by inflation in base salaries and wages as the group implemented broad-based increases in 2022 to maintain its competitiveness in the labor market due to inflationary environments, whereas wages were largely frozen in early 2022 due to ongoing impact of the pandemic. Postage and shipping increased nearly 900,000 And approximately half of this increase is due to higher volumes in shipment. The balance is due to the product mix, as international banknote trade involves air freight and third-party processing fees. Inflation, driven in part by high fuel costs, has also been a contributing factor. The increase in legal and professional fees of roughly $400,000 is primarily attributing to consulting costs relating to the implementation of Oracle NetSuite, ELISA, as I mentioned, a regulatory compliance system in EPC, increased legal fees, inflationary increases on accounting-related services, and an increased advertising expense supporting the FX online channel. Stock-based compensation increased nearly $500,000 and includes the amortization related to the vesting of issued and outstanding stock options. Restricted stock units and deferred stock units award. Net of revaluation of the liability of the vested portion during the period. The increase reflects the increased market value of the stock price as of January 31st, 2023. Now, in addition, there was issued an additional tranche of PSUs and RSU awards on November 1, 2022, and included and this included an expense amount equal to the portions of these awards that are based on during the three-month period ended 31st of January, 2023. Losses and shortages increased 250,000 to about 440,000, and this is primarily related to shipment loss in transit that the group self-insures, reflecting significant shipment and volume increases over the year. It also reflects provisions for certain exotic currencies held in inventory. CXI Primary Overnight Shopping has finally identified and eliminated a processing issue in one of their hubs. The increase of other general administrative expenses is attributable to higher license and fee costs in part due to operating in more states. It's also reflective of higher utilities, office supplies, and other administrative expenses as the group added two additional branches. Interest expense is primarily related to an increase in borrowings to fund short-term working capital needs and primarily foreign currency inventory to support high banknote volumes. On January 31, 2023, the group had $24 million in outstanding lines of credit with $27 million available. the interest rate charged on one of these credit lines increased significantly in the current period. The group recorded an income tax benefit amount of $2,500 in the first three-month period in the January 31, 2023, in comparison to an income tax expense of nearly half a million in the prior year. The effective tax rate is negative 5% and is lower than the steady tax rate of 26% due to the application of a tax loss carried forward amount at EBC and the recognition of a future income tax benefit associated with prior period losses taken at the end of the fiscal year. Partially offset by certain permanent differences between taxable income and accounting income. Now let's look at the balance sheet. The group's capital base has grown to $71 million in net equity in addition to the growth in its credit facility with its primary lender to $40 million from $20 million. This securely positions the group to support its strategic platform from a liquidity position. The combination of this solid capital base and debt capacity provides sufficient liquidity to continue to meet its financial obligations and ensures that CXI is well-positioned to support its strategic initiatives that include organic and inorganic acquisition of new clients in both the banknote and payment product lines. Given the unpredictable nature of demand and the significant increase in volumes, the group held higher inventory balances of certain currencies during the last quarter to mitigate the risk of running out. We're also reviewing inventory and consignment lines relative to demand and reducing levels of currency that don't need turnover thresholds. Thus, we anticipate that our average levels, inventory levels, will decline, although we are susceptible to IT, especially as our rate in international banknotes continue to grow. There has been growth in holding account balances as a result of growth in business volumes, and those are offset by funds in bank accounts. I would like to conclude my discussion reiterating the group's continued focus on executing against its strategic plan, with a particular focus in 2023 on making significant investments in our people, infrastructure, and technology platforms to be in a position to create an even brighter future for the group and its stakeholders. At this time, I would like to turn the call over to Randall Pinner, our CEO, to provide his perspective.

Good morning. Thank you, Harar. Thank you, Alan, for the detailed analysis of our performance. I would like to welcome everybody today to the call and thank you for being here, especially those out west. I know it's quite early there, so thank you. To begin with, before I go into discussing our business, I would like to start off just at a very high level to address some comments and calls I've received around the banking crisis that's currently consuming a lot of attention now in the U.S. about the failure of two banks. Those two banks were not customers of CXI, although the banking crisis is of concern to everyone. And so we have done a thorough look at all of our banking partners, relationships, customers, and we confirm that there is no material worry for us about the potential failure of additional banks. We maintain in most of our accounts less than the FDIC insurance. On wire payments, we do require prepayment for any sizable wire. And the accounts that do have larger balances are the major banks or the larger banks, which are good customers of ours, that are currently backfitting from this fear that's hitting everyone. And so we feel very solid and safe in this situation and want to put your worries at ease that we are very aware our risk office as well as our front line are both active in ensuring that there is no risk to CXI and its shareholders. Now, to begin with, as I like to always do, I'd like to talk about CXI's biggest assets. which is besides the biggest asset is our people, which Gerard has done a good job explaining that we've built a great team of experienced management, both at EBC and CXI. But besides our people, our biggest asset is clearly Exchange Bank of Canada. At a very high level, I'm very happy to see that we're consistently profitable month after month, and we continue to expect growth in the bank. In fact, the management team, including the chairman, feel that the bank has potential to become one day bigger than CXI itself, and we all appreciate such a goal. The areas in which it will allow it to grow to become such a large entity is both domestic in Canada as well as internationally. Domestically, we have not lost focus, and we continue to pursue additional foreign exchange relationships with Canadian financial institutions. Another focus with those same Canadian institutions is is to expand our U.S. dollar distribution using the Federal Reserve's relationship we have. And that is of demand, both currently and in the future, as banks see the need for increased liquidity for U.S. dollars. Additionally, in Canada, we have been very successful. You've noticed the payment growth continuing, and we will be hiring additional three or four FX bankers to expand our corporate relationships with multinational companies or domestic companies doing business internationally in Canada. That has been a successful, profitable business, and we will continue to invest in people to expand our customer base. I'm proud to have over 1,000 active corporations throughout Canada dealing with our bank regularly each week or definitely each month. And then the biggest area of potential growth for our bank is internationally. we will continue to focus on expanding with good banks in good countries south of the United States border as well as in Europe and Eastern Europe with countries like Italy, Poland, and Czech Republic being in Argus. Moving on to CXI, our consumer division continues to do quite well in expanding. It is expanding its retail stores. You've heard about our newest location in New Jersey right near New York. We expect to have one or two more stores this year, usually in our key markets such as Florida, New York area, California, and possibly Hawaii. Also, we are expanding our online store, which continues to do well. It is profitable and is expanding state by state as we receive either a license or an exemption from a license for being able to cash cross-border for home delivery. We right now have access to over 75% of the U.S. population, and we do hope to expand that further. Lastly, on the consumer area, our agents' relationships have continued to be very profitable and allow us additional growth with less investment as a traditional store. You will see us add a couple more new airports this year, as well as select border locations with possible locations like Duty Free. Moving to CXI's wholesale business, of course, our banknote business continues to be the largest part of CXI. Both our vaults are prepared for the summer that we have, which has already started now with spring break. We expect volumes to continue to grow. As Gerard had mentioned, countries removing restrictions has had a noticeable effect. We have been welcoming more Chinese and more people going to China. But also this year, it is expected that the United States government will finally relinquish its requirement for non-vaccinated international visitors to return here. While that is only maybe 20% of the world population, that still represents a sizable opportunity for new customers coming from places like England and Asia back to the United States that currently are still restricted from coming. So we anticipate our consumer division in all three areas of its own stores, our online store, and our agent stores to continue to see growth throughout the year. On the wire business, our integrations with companies like Fiserv and Jack Henry has proven to be very successful. We are continuing to invest into the technology and the cost to integrate with other partners. and we see that as allowing the payment business to continue to grow at the nice levels it has been. And we have a good, strong, experienced team, both in IT as well as in sales and implementation, to continue to onboard customers both for banknotes and wires, utilizing an integration into a core operating system. Lastly, CXI2 has an international expansion plan, which sees it adding new customers in the Caribbean area of the island's as well as select other countries. And I'd like to end with something that Harar did mention and is the most exciting part. I have to give a big hats off to our board, especially to Joanne Broussard, who pushed through what was a very difficult thing to do, which was to do this organizational restructuring. By having Wade Bracey lead this DXI wholesale business, Matt Shillow leading our entire consumer unit, and James Devenish leading our bank, has freed me up to do what I like to do, which is establish long-term strategic relationships for our group. This org structure has been successful, allowing Wade to focus on ensuring preparedness for hopefully the business summer ever, and Matthew to see us grow our own stores as our agent stores, and the bank to continue to grow both domestically and internationally. More importantly, it's allowed me to meet some great potential partners acquisitions or merger partners. I've been meeting several people that we have an interest in, and so far the feeling has been mutual, and it will continue to focus on efficiency and execution of our strategic plan. So I thank you again for your time and your support, and I'd like to open up the floor to any questions that you may have for Gerard, Alan, or I. Thank you.

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star, followed by the number one on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star, then the number two. And if you are using a speakerphone, please lift the handset before pressing any keys. We do ask that callers limit themselves to two questions, and reach you if you have any more. Please stand by for your first question. Your first question will come from Robin Cornwell at Catalyst Research. Please go ahead.

Thank you and good morning. I really appreciate the detail on the EBC revenue, which is really my question to Alan. so of the 4.9 million in u.s dollars i believe the payment is 3.5 million of that which leaves i believe the international fx and banknote business unaccounted for is can you give me any insight as to the kind of revenue and and also I guess because EBC is being so successful in building its revenues, are you at some point going to separate out the financials for EBC?

Good questions, Robin. I appreciate that. Your first one in regards to the share of revenue, I just want to clarify that the payment segment represented about a third of the bank's revenue. And so it was two-thirds banknotes, one-third payments, the payments being the FX piece that I spoke about. So that would be about two and a quarter million Canadian in the quarter.

So the payment is one-third. The payment was $3.5 million. How do I reconcile that?

Well, no, you're talking about the payments revenue for the group, I think, at 3.5%.

Yes.

So there's payments revenue at both Canada and the United States.

Okay, I missed that. Okay. So you said the payments? Could you run by me the breakdown again?

Yeah, for the bank, one-third of the bank's revenue comes from the payment segment. Okay, great. Balance from the bank notes. It's a good question about the financials, but we do actually report into OSFI, and so the bank's financials performance is available quarterly through the OSFI website. However, we do have upcoming new disclosure requirements under the new guidelines coming forward in Q2 2021. And so we'll be looking at putting some additional information in the public realm as well there.

Correct. Okay. Terrific. Well, thank you. And my second question is for Randolph, and I guess it's back to the old question of are there any potential acquisitions that you see?

That's why – hey, Robin. That's why I ended with the fact that I am having more time to get to know some of the owners of the businesses they've successfully grown in their markets, and I am in discussions. We don't have anything imminent to report on in the next month or so, but we are in serious talks with a couple of potential targets. Again, we like to call it a merger where we're merging together. It's not a murder. We're planning on stealing a book and eliminating people. We actually see the value of getting good talent, some technology, and, of course, a book. Our M&A strategy is to have accretive transactions. We're not looking to buy a bleeding business. We are looking for established businesses. businesses as the last few we've done that have been all successful. That is the same recipe that we are looking for. But there is nothing to announce as of today, Raman. Until we sign a letter of intent, we would not bring that to the public market.

Okay, thank you. And if there was an acquisition of any size, would you consider issuing your stock?

That is always a consideration of if and when you would issue new shares. As a major shareholder and still with access to lines of credit as well as possibly a term loan to support an acquisition, our primary funding would likely come from cash we have in-house as well as utilizing our credit facilities prior to doing a strategic, you know, besides issuing some stocks, But if there was a strategic large transaction that requires both the mixture of equity and debt, that is not ruling out. So our M&A does not prohibit us from making a transaction utilizing both stock and debt. In fact, one or two of the owners actually prefer that mixture of some equity as well as cash. because they, too, want to stay in the game. And that's why I made the comment about merger versus murder, because our philosophy as we build looking at, let's say, exchange banks and out west possibly where we don't have an office, we're just in Montreal and in Ontario, Toronto, and so we would look to keep those people. But, yes, we would if needed. But our preference right now would be to use our cash because we do have cash and we're generating more cash each month, as well as the debt facilities we have, as well as some banks have even offered to finance a five-year note to support, let's say, a five-year payback type of transaction. But again, right now, Robin, we don't have anything ready to announce, but it is part of our overall plan. And if we could let some other people get questions, because we're running low on time, since I like to talk too much. Thanks very much. Thank you, Robin.

Your next question will come from Jim Byrne at Acumen Capital. Please go ahead.

Good morning, guys. Just a couple from me. Maybe just a few of the expense items you could elaborate on. Alan, I know you mentioned the shipping costs obviously increased dramatically I appreciate there's a good portion of that is variable, but you mentioned some price increases, maybe just kind of flesh that out a little bit and how quickly do you think you can kind of recoup some of those expenses and bring those back maybe to a more normal historical level and then actually on the actual losses and shortages That number kind of keeps creeping up. I know there was an issue last year on one of the carriers. Maybe just remind us of how that's going to be resolved here for 2023.

Good questions, Jim. I think the shipping and postage actually, I'll let Harar speak to that because there's actually, we have a program coming in on stream in regards to that.

Yeah, so good question on post-eating shipping increase. Part of our challenge is, or part of our challenge was resolved with one of our, as I mentioned, overnight shippers that addressed an issue in one of their hubs, so that's very positive. We had discussions between Wade and this specific vendor here in our offices, so able to move that process forward and then What CXI and EBC is planning on doing is getting an in-depth understanding of postage and shipping. We're appointing a data scientist that he or her main focus will be really understanding packages, shipment, cost, value, cost per shipment. Your second part of the question is how quickly will we be able to realize some of those increases. It is in motion. you know, obviously it's a discussion and a negotiation between various parties, and that's ongoing thanks to our sales team.

If I could add, Jim.

Yeah, sorry. If I could just jump in and add, Jim, the two topics were the cost themselves, which as we've, Gerard said, we have someone now appointed to to really stand on top of this. And when there's a refund due because they didn't deliver on time or they lost a package, we will be getting that money back. But it's on a going forward. So when you say recoup, that's not the right word. It's going forward. We will be reducing the cost proportionately. One method that wasn't mentioned that I wanted to mention is that we have been successful with one of our largest bank clients realizing that their contract with the overnight shipper was literally like half the price we pay. And so we were able with cooperation of the bank and the shipper and ourselves utilizing our technology because it makes it so you can print out the labels straight away when you do the transaction. We did move that over and recognize a significant increase or in this case decrease in the cost to us. And so the hence of net increases to our profitability of the customer. We are now working with a couple of other very large client banks that have that same type of scenario. And so that's another method we are working. But both the finance side looking at it and the customer relations side are both addressing it because it is the biggest cost of doing business with our clients. And as far as the losses, the actual thefts, again, that had been an issue last year. It was still this year. But there were several law organizations involved besides the actual legal departments that of the banks that were involved as well as the shipping company. And we feel that finally has been identified and stopped. And so we do not anticipate nearly as much loss activity. To offset that as well, which has increased some of the costs, is we did move our high volume company owned stores to armored cars as opposed to the overnight model. which does have insurance, and there's no losses there. So we have been addressing both the cost of the shipping as well as the losses from it very aggressively, and we hope to have this under control. So hopefully that answered your question, Jim.

Yeah, no, that's great. Very good color. And then I guess when you mentioned, Randolph, Eastern Europe, Maybe just give us an idea of that scale and potential growth rates there, whether that's relative to the expansion that you've done so far in the Caribbean or anything like that. Maybe just give us an idea of market potential for CXI over there.

Well, the sky's really the limit in the sense that there are so many banks around the world, and the U.S. dollar still remains to be the world's reserve currency. In FATF countries, which are very established countries like Canada, U.S., and Germany and so forth, the cash is mostly used for travel. But when you go into some of the non-FATF countries, you will see that especially in Central and South America, for example, which is closest to our world, and now with the Federal Reserve allowing us to process through Federal Reserve's office in Miami, it really has enabled us to get more customers. But in those countries, cash, especially US dollars, is used as a commercial means of trade. And so if the neighbor wants to sell the other neighbor the motorcycle or the used car for $20,000, they pay that in cash. So there's a very high demand for US dollar cash usage for both international travel as well as commercial transactions. And hence, the volumes we're recognizing in these markets are much higher. Our biggest handicap, if you will, is our bank is small. And we've actually done our largest cash trade I've ever done in my career just in the last quarter of $54 million in one trade. And the bank had to get special approval due to the size of the bank and the fact that the size of that transaction was bigger than the asset size of the bank. And so the credit facility... and the need to build credit with these potential trading partners is our biggest roadblock. But luckily, the need for a second vendor over the primary world leader of distributing dollars, they all have an interest to establish that relationship. And so we are trading in clips of $10, maybe even $20 million. The margins are very, very tight, and we don't give guidance, Jim, so I can't unfortunately say, oh, I expect to make X million this year on it. But if you look at, let's say, our competitor who's based in the UK, how much their business grew from when they, before they had the Fed license into when they got it, you will notice literally double digit million dollar growth. And so there is huge potential. But we are being very cautious. Our board requires to approve every new country. We are going in all these, if they're not FATF, we require a due diligence visit prior to the start of what we call the first time trade. And so we are being very conservative as a good Canadian bank should do. And we are taking it slow and steady so that we don't have a surprise or an embarrassing loss. And so it is part of our strategic plan, as you've heard us talk about, and it will continue to be a driver of growth at Exchange Bank of Canada.

All right. Appreciate it. Thanks, Randall. Thank you.

Ladies and gentlemen, once again, if you would like to ask a question, please press star 1 at this time. Your next question will come from Dilip Badlani at SKM. Please go ahead.

Hi, Randolph. Hi, Gerard. Thanks for the time. I was just curious on the line of credit, the increase in the quarter, is that just the timing or was that something we had to draw?

That was mostly timing. Hi, can you hear me?

Yes, I can hear you perfectly. That was just timing. Got it. So what is our true net cash level at the end of the quarter?

That's always a very interesting question, and everybody probes us on exactly what that is. And it's challenging to give you a straight answer because it depends on the volumes and the need for our cash, as Randolph explained, in the volume growth. Randolph, would you like to sort of share more of a range? I know you and I have discussed that range a little bit.

And, Philip, your question is what is the free cash at the end of the quarter that would be available to utilize for an acquisition or something like that? Is that what you're asking?

You know, because our balance sheet is obviously confusing depending on the day of the week that the quarter ends. And so, you know, we have cash, and then we have cash that's in transit, and we have lines of credit, which, again, you know, is related to working capital. So I was just trying to understand what is the actual net cash of the company. Exactly. Like you said, if you wanted to make an acquisition, if you wanted to pay a dividend, what would be the cash level of the company?

Well, again, it is a difficult question to ask because at this quarter end, we could easily say $10 to $20 million. But if you were to ask me in July or August of this year, our operations unit would say we need every penny we have because we're tapping up to the ends of our lines. But I would be comfortable to say in surplus cash, we would probably have somewhere in the range of 10 to 20 million and hopefully growing each month. But again, we are looking at utilization of that in both our business and as well as in just running our day-to-day business.

And Dylan, also, as you rightly pointed out, the establishment of creative facilities is one of our priorities as well.

Yes, perfect. Okay.

I was just trying to understand. Congrats on a quarter and strong revenue growth. Just wanted to get a gauge of how much cash we're throwing off.

Also important to take into consideration, as Randolph mentioned, the seasonality of the business, Q1 versus the middle of summer, which hopefully gives you a very good indication that Q1 might be in the higher end, and then when you move into the summer and the busier months, you might go closer to the lowering.

Right. Perfect.

There are no further questions. Thank you. My apologies. We do have another question from Peter Rabover at Artco. Please go ahead.

Hey, guys. Hey, I just wanted to follow up on the previous question. I guess maybe another way to ask this with the increase in the credit line, would you be comfortable at some point financing all of your working capital cash through the credit line going forward?

Peter, we talked about this before, and this has come up several times around the idea of actually getting, let's say, a $50 million loan. facility with a bank to finance the $50 million that we usually keep overnight in foreign currencies in our inventories. And that leverage has been considered. It will continue to be considered. Obviously, with the interest rates going up now, it becomes more expensive. And since as of this minute, we don't have a need for the $50 million in cash unless we were acquiring a business for $50 million. But again, that's where banks have expressed even a bigger comfort with using these round numbers of $50 million, a $50 million five-year note to support a $50 million acquisition with the five times earnings or payback. We will continue to always look at the best financing and liquidity position of the company. As of now, we feel it's more efficient to utilize our own cash, but we will continue to explore that.

And, Peter, maybe to complement Randolph's point is we are always in talks with Tier 1 banks to discuss these kind of arrangements, as he mentioned. So it's not that we're resting on our laurels. It is important for us to continue to explore those options.

Okay, great. I mean, I appreciate the call. Thanks so much, guys.

Thank you, Peter.

There are no further questions at this time, so I will turn the conference back to Randolph Pinna for any closing remarks.

Thank you. And again, thank you, everybody. We're excited about the year ahead, the years ahead, and we appreciate all of your support of CXI Group and will remain available for any questions should something pop up afterwards. please reach out to Bill or Gerard or Alan or I, and if we can answer the questions, we're happy to have a call. So thanks again and have a good week. Thank you very much.

Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank you all for participating and ask that you please disconnect your lines.