Currency Exchange International, Corp.

Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q1 2024 Financial Results Conference call. At this time, note that all phone lines are in the listen-only mode. Following the presentation, we will conduct a question and answer session. And out of considerations for other callers on the line, we ask that you please limit yourself to two questions and get back in the queue. And if at any time you require immediate assistance, please press star zero for the operator. Also note that the call is being recorded on Thursday, March 14, 2024. And I would like to turn the conference over to Bill Metoulas, Investor Relations Manager. Please go ahead, sir.

Thank you, operator. And good morning, everyone. Welcome to the Currency Exchange International Conference call to discuss the financial results for the first quarter of the 2024 fiscal year. Thanks for joining us. With us today are President and CEO Randolph Finna and Group CFO Gerhard Barnard. Gerhard will provide an overview of CXI's 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. And 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 and 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 Gerhard. Gerhard, go ahead.

Thank you, Bill, and thank you, everyone, for joining today's call. I will present a more condensed overview of the results of the consolidated CXI group for the first quarter ending January 31, 2024, to allow more time for questions at the end as requested. These results are presented in U.S. dollars, and my overview will also include some Part-time employees as at January 31st, 24. An increase from 363 from the prior year. And in infrastructure. During the quarter, we added an additional four airport agent locations. We now have 49 in total. And non-airport agent locations are at a total of 231. Our first quarter transaction locations is around 18,500. reflecting an increase compared to the same quarter in 2023 of about 16,500. Technology platforms remains a strategic focus with Gariba, our treasury management system, and Alissa's AML-compliant software making good implementation progress. Our IT team continues to explore ways we can leverage the power of the cloud computing to enhance integration capabilities, improve scalability, performance, and resilience. All of these initiatives and investments support the more efficient future growth of the group. On November 29th, 2023, the group announced its notice of intention to make a normal course issuer bid, NCIB, or share buyback, and to purchase for cancellation a maximum amount of 322,169 common shares, representing 5% of the companies issued and outstanding common shares. During February of 2024, the company bought back its daily maximum allotment of shares for a total of 20,200 shares. Let's look at the consolidated performance for the three months ended January 31st, 2024, compared to the previous three months ending January 31st, 2023. The company generated revenue of 18.1 million, a 7% increase from the same period last year, primarily driven by an increase in activity from travel, resumption towards pre-COVID-19 levels. New customer acquisition in both the banknotes and payment products lines, partially offset by a decline in trade with foreign financial institutions by Exchange Bank of Canada, reflecting reduced demands in USD volumes compared to the same period last year. This 7% growth in revenues of $1.2 million was largely due to growth in the retail market of around $972,000. Revenue in the United States increased by 2.5 million, or 22%, over the same period, while in Canada declined by 1.3 million, or 25%. Corresponding with the revenue growth, operating expenses increased by 1.7 million or 12%, mostly attributable to an increase in salaries and benefits. The company recorded net operating income of 2.2 million in the three-month period ended January 1, 2024, 18% lower than the same period in the prior year. Overall, the company generated 1.3 million in net earnings before income tax during the three months ended January 31st, 2024, which is 20% lower than the $1.6 million of the prior period. It should be noted that the company incurred an income tax expense of about $416,000 in the first quarter of 2024 compared to an income tax benefit of roughly $2,000 for the same period last year. This income tax benefits was the result of utilizing a benefit related to non-capital operating losses incurred in prior years by Exchange Bank of Canada. The top five currencies by revenue remains the United States dollar, Euro, Canadian dollar, Mexican peso, and British pound sterling. Revenue by product line for the three months ended January 31st, 2024, compared to the previous three months ending January 31st, 2023, will now be discussed in more detail. Let's focus on banknotes. Revenue in the banknotes product line increased by 1.34 million, or 10%, due to strong demand from increased travel levels in addition to larger demand on exotic currencies. This was evident by the continued growth in customer demand for foreign currencies as international travel continued to strengthen in both the U.S. and Canada. Between November 2023 and January 24, approximately 201 million travelers passed through TSA checkpoints in the United States airports, on par to pre-pandemic levels. This is an increase of about 5% from the same time last year. Direct-to-consumer banknotes revenues increased by close to a million dollars or 19%. The company's market share has continued to grow via its direct-to-consumer footprint through new locations including agents and its online platform. The growth was attributed to growth in the company-owned retail locations as locations have matured over time and drove higher volumes. The opening of additional airport locations, which further expanded the reach to travelers and increased geographical reach, of the FX online platform with its continued expansion and the addition of the state of Alabama, making it the 41st state that the online FX platform supports. That means the group is now serving close to 90% of the US population. Direct-to-consumer revenues represented 34% of the total revenue in the current three-month period. compared to roughly 30% in the same period in 2023. Now banknotes as a wholesale banknote revenue, which increased 370,000 or roughly 5% from new customer acquisitions in the domestic wholesale banknotes space volumes also increased. Also banknote revenue represented 45% of the total revenue of the current three-month period compared to 47% in the same period last year. Relative to the most comparable period prior to the pandemic, the three-month period ending January 31st, 2020, Banknote's revenue has increased by close to 60%, reflecting the impact of our market penetration. Now let's go over to our other main product line, payments. Revenue in the payments product line decreased 120,000 or 3%. The growth in customer acquisition in United States resulted in a notable growth of roughly 33% for this period. Volumes in Canada resulted in a 33% decline in revenue, causing an overall 3% reduction in this product line when consolidated. The company processed nearly 35,600 payment transactions representing 2.99 billion in volume in the three-month period ended January 31st, 2024. And this compares to 28,500 transactions on 3.1 billion of volume in the same period in 2023. with the majority of the growth relating to United States. Payments represents 21% of total revenue. Now let's break it down by geographic location, comparing the three months ended January 31st, 2024 to the three months ended January 31st, 2023. I'll start with the United States. revenues grew by 22%, led mainly by growth in the wholesale banknotes of about a million dollars or 21%, and 972,000 or 19% in direct-to-consumer banknotes. Payments grew about 600,000 or 33%. The growth in wholesale and direct-to-consumer banknotes revenues were largely impacted by new customer acquisition and an increase in transaction as travel to and from the United States continued to increase. Whereas in the payment product line, the growth was primarily a result of new customer acquisition and activity growth by certain key customers locally in the United States. Revenues in the U.S. represented 78% of total revenues by geographic location in the current three-month period compared to 69% in the same period in 2023. Now let's focus on Canada. Revenues declined by 25%, mainly due to a decline in transacted volumes for US dollars with international clients. However, domestic banknote revenue maintained levels from the same period last year. Revenues in the banknote product line declined by about 600,000 or 19% while the payments product line declined about 700,000 or 33% compared to the same period last year. The decline in payments was impacted by the reduced transaction volumes from key clients in addition to unfavorable foreign exchange movements that impacted trends locally in transaction volumes. Revenues in Canada represented a 22% share of total revenues by geographic location in the current three-month period compared to 31% in the same period in 2023. Operating expenses increased 12% for the three-month period ended January 31st, 2024 compared to the previous three months ending January 31st. Let's dive into some of the expenses. Variable cost within operating expenses. mostly represented by posting and shipping, sales commission, incentive compensation, and bank fees, have remained consistent with the prior year and totaled 3.88 million. The ratio comparing total operating expenses to total revenue for the three-month period in the 31st of January 2024 was 88% compared to 84% for the prior period. Salaries and benefits increased 19%, mostly driven by incremental growth in headcount as the company opened new branch locations, increased staff and IT, business intelligence to further strengthen the talent needed to deliver on the strategic initiatives and growth, in addition to partial increases in cost driven by inflation in base salaries and healthcare costs. Postage and shipping decreased when compared to the same period last year, despite a 10% growth in banknotes volume. This cost decline reflects management's continued initiatives to control the increase in shipping prices, which were adopted during the second half of 2024. The favorable variance in losses and shortages, a decrease of nearly $300,000, or 65%, was primarily due to a decrease in lost shipments and as a result of management's initiatives and continued focus on working with our clients and vendors on this challenge. Information technology expenses included non-capital expenditure on software and related service contracts that do not meet the capitalization criteria. Additional costs were incurred to develop and automate systems that integrates with other companies' core banking systems and enables us to process image cash letters in addition to certain security system costs that the company incurred in the normal course of business. Foreign exchange gains reflected reduced volatility for the period as a result of foreign exchange hedging and risk management strategies. Let's look at the balance sheet for the first quarter ending January 31st, 2024. The group had total available unused lines of credit of roughly $46 million, compared to $27.5 million as of January 31, 2023. The group supports EBC through its revolving line of credit, and as of January 31, the intercompany loan balance payable by EBC to CXI was roughly $14 million, an increase from $10.6 million at year-end. This intercompany loan is eliminated upon consolidation. The average outstanding borrowings by the company amounted to 5.5 million compared to more than 20 million during the same period last year, which leads to the significant reduction in interest expenses. The average interest rate on borrowings was 8.6% for the current period versus 6.6 for the same period last year. The group's capital base has grown to 80.5 million with an EBITDA margin of 13% for the first quarter of 2024 compared to 17% for the first quarter in 2023. The group's continued focus on capital allocation and the normal course issuer bid or share buyback confirms both management and the board's belief that the underlying value of Currency Exchange International may not be reflected in the market price of its common shares from time to time. At this time, I will turn the call over to Randolph Pinna, our CEO, to provide his perspective. Thank you, Randolph.

Thank you, Gerard, and thank you all for joining the call, especially those out west who I know are up quite early. Today, I'd like to focus on both the costs and the revenues of our business, starting with CXI. The bright future is ahead of us with payments. We continue to see the integrations while we see the cost of enabling our systems to be able to integrate with the clients that we have in our pipeline. The focus is not only just on foreign exchange. We are right now setting up to get a part of the Fed direct with the Federal Reserve so that we can do both international payments and domestic payments. As I said, the pipeline's quite full. We have talent that is experienced in this area, and it's led by Chris Johnson, the VP of Sales for CXI, who's been with the company about 17 years and has done very well in execution on his plan. As we all see, the banknote business continues to be the core of CXI. Our pipeline is very full in the banknote sector. While many of us think that credit cards and tap and go are eating at the banknote business, Cash usage continues to go up as reported quarterly by the federal governments in the top five countries we monitor, such as the US, Canada, Australia, England, and Mexico. That cash usage is evident to us both in our growth as well as the travel demands we are seeing both in the consumer and the wholesale market. Speaking of wholesale, our pipeline is quite full with banks. Even though we service a majority U.S. banks, our two competitors, the other massive banks that we compete against, still have a good hold as well. And we continue to work away at getting this business. We do anticipate adding some significant size banks in the next six months. And our pipeline, as I said, is full and our implementation and team to support it is ready. And now our systems are there. While we continue to grow, our managing director, Wade Gracie, is focused on all elements, not only being able to service our clients in the top service that we're known for, but also doing so in an improved method. He has developed an improved shipping process and packaging and shipping process, as well as negotiating a reduced shipping cost, as Gerard has highlighted. You can see the effect of these new processes and pricing from our vendors. This process improvement has been well received by our staff because it's made things easier for them as well as our customers because our service levels continue to be very strong. Just as important as our wholesale division, as you see, the consumer unit led by Matt Shulo, who's been working with me for probably 25 years, is going very well. The consumer unit, as I think you know, has three components to it. It has our company-owned stores. We're very proud that in the next month or so, we'll be opening our newest store in Buckhead, Atlanta, Georgia, which is a very big market. And the previous operator who went out of business during the pandemic did very, very well there. And we anticipate to also have a good opening and a quick start of profitability at that store. Typically, a new store takes six months to a year. And as Gerard pointed out in his commentary, some of our other stores we've opened are now at contributing levels and giving us regular return on our capital deployed there. So we do anticipate to open this new store as well as the rest of the year, probably one or two more stores at least. in our core markets like New York, maybe even Boston, California, Florida, or Hawaii. So we will continue to focus on growing our company-owned stores. To complement our stores, we are, as Harad pointed out, adding new states to our online store. We now represent over, well over 90% of the whole U.S. population that we can deliver to your home and office if you're not able to go to one of our stores or one of our customer bank branches. So our online store has a very good marketing plan, been led by Ryan Graham, who's been working with our group for probably over a dozen or more years. And he is our VP of marketing. He's done very well in utilizing online technologies to really grow the web footprint that we have. So we do anticipate continued growth in our online store. Most importantly is our agent relationships. As Harard pointed out, we're continuing to add agent locations in quality places like new airports where the agent is the local operator ensuring that the staff maximizes the opportunity while CXI as its wholesaler and basically the support engine providing the software, the brand, the cash there, and the overhead's overall support to the location, that formula between the local operator and CXI as the wholesale agent provider has been very successful. And that remains a top focus, and we anticipate to continue to grow that agent relationship significantly. So now I do wanna talk about EBC. As you saw, the US business was quite healthy and EBC was the complete opposite where we did have a significant decline due to competition and international effects. Ever since the banks have failed over here in the States, we had an extreme tightening of credit because our bank is quite small. And as a result, volumes have significantly been reduced. We are just now finalized. Everything's been agreed with our trust company. And we are now in the final stages of operationalizing this trust account, which was set up for each individual bank client. And that trust account will then provide the comfort the credit departments of these international banks need to resume the old levels that we were doing, as well as we have pretty full pipeline. We have three already ready to go, just waiting on this account. So we do anticipate a resumption of international revenues to start going back up quite quickly. Without international, we still have, of course, Canada. Our Canada expansion plan, as you saw, the domestic banknote business is still remaining well, and we have a pipeline of several other nice, noticeable financial institutions and other types of cash customers. in the pipeline, and we do have a director of our domestic banknotes expansion, and him and I have been working closely together to ensure the execution of our domestic plan, which is not just focused on banknotes, even though that too is a core focus of EBC, but also growing our payments business. We do add probably 25, 30 new corporates each month directly, But what we've recognized with the CXI in the U.S. is their strategy called OPOP, which is one provider, one platform, is being adopted now and well received by existing banknote clients that have recognized that our payment system can do both Canadian dollar domestic payments as well as international payments. And such integration, while having a little bit of cost upfront, does reap the reward of a regular flow of international FX payments and fee income from any domestic payments. So our domestic expansion plan is very strong. Our international expansion plan is strong. Once we have our trust account fully operationalized, we can resume the growth of international banknote expansion. I do also want to point out that Katie Davis, who's been with our group for quite a while, She's very experienced. She's been our treasurer, which has been managing the cash positions and all the FX for both Exchange Bank of Canada as well as CXI, has been named and is continuing to remain in the role as EBC's interim CFO. Knowing the cost growth while we've had revenue drop is a focus, an extreme focus for Katie and in her role. And luckily, we have a great team of treasurers behind Katie. So she does have the capacity and time to focus in leading EBC's, you know, this expansion of the business while James Devenish, the managing director, focuses on growing and executing on our domestic and international sales plans. She is very focused on the expense control and potentially reductions. So in conclusion, at the board level, the board and I are very focused on executing on our strategic plan. In June, we do have a refreshing of this strategic plan. And within that, our primary focus is the return on capital deployed and the execution of our overall plan, which includes mergers and acquisitions and identifying the strategic opportunities that are available, both in CXI's wholesale business, CXI's consumer business, as well as EBC's growth. So the board and I understand the need for expense control while focusing on growing the overall business, both in bank notes and payments. So with that being said, I'd like to open up the floor, if I will, to the operator and take any questions you may have. Thank you.

Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. And should you wish to withdraw from the question queue, you will need to press star followed by two. And as mentioned, out of considerations for other callers on the line today, we ask that you please limit yourself to two questions and then return to the queue. Please go ahead and press star one now if you have any questions. And your first question will be from Robin Cornwell at Catalyst Research. Please go ahead.

Hi, good morning. I guess the first question is not necessarily a simple one, but Gerhard, the salaries and benefits, I know the first quarter was a big increase over the same period last year, but as the year progressed last year, the salaries started to level off a bit. Can we foresee that during the rest of this year that the level will not flatten off, but grow less aggressively over last year?

Robin, thank you for the question, and it's a good one. As I pointed out, we were at 409 people, permanent and temporary, at the end of October 31st, at the year end, October 2023. We are right now at 406 in total, and it is our aim to continue to ensure that we don't grow our staff faster than our revenue growth. So between Randolph, myself and Gertuna, our VP of HR, we have a hiring committee and every new employee that joins the group has to be presented at that quick discussion that we have on it. So yes, that is a continued focus of us and our eyes on it. Obviously, in salaries and wages, there's various other items. As Randolph just pointed out to me, there's DSUs, RSUs. There's some severance payments in there. So certain of those costs are not directly related to our employees. They're related to benefits that links directly to those individuals.

Okay. Yes, that's important. And just a comment that it's good to see the – postage and shipping costs the way they are. Very impressive. I hope that's a result of your repricing. My next question, Randolph, is it's great to see that the trust agreements are getting in place. You mentioned that you have three almost ready to go. How many would you anticipate that you have to put in place to get the business going again?

Well, the three we have will significantly increase the business alone, but we probably have seven more behind that. that are not, I mean, the three we have have literally, we swapped paper, everything's pretty much ready to go. And then we have some that are just behind that, that we're in those final stages of negotiation, and then the onboarding will quickly happen thereafter. But the three that we have are quite high volume potential customers, and we will anticipate good volumes straight away. So The second quarter that we're already halfway through, you may not see that lift just yet because the operationalizing will probably take another few weeks to a month or so, and then you always do a first-time trade test, which is a small transaction, and then they start going up from there. So we would anticipate the second half of the year to really for the evidence of this to happen We are focused with the existing customers that have accepted CX size corporate guarantee in getting them comfortable to increase the volumes as well as, you know, working to grow in markets where we have, where the credit issue is not as much of an issue. But that typically opens up an area which is known as non-FATF, That topic does have some speed bumps along the way with our board being extremely cautious, and we have developed an enhanced due diligence program to provide the comfort that is needed, knowing that this trading with the client directly back to the Federal Reserve can happen sooner than later. And therefore, we are actively working on it because revenue growth at EBC is one of our top and my top focuses. Does that answer your question?

Yes. Thank you, Randolph. That's terrific. And that's it for me. Thank you.

Thank you. Once again, ladies and gentlemen, please press star 1 if you have any questions. And next will be Peter Rabover at Artco Capital. Please go ahead, Peter.

Hey, Randolph. Good morning. Hey, just, you know, Randolph, you mentioned you had a bunch of strategic things that you're discussing, and I really appreciate the focus on the return on capital and the thinking. So I'm just kind of curious if you could talk you know, as much as you can, talk about the strategic opportunities that could increase the returns on capital to the company. And, you know, and I know there's just a lot of moving parts, and so any color you can share would be appreciated.

Well, I can't share too much detail because we don't have any executed agreements as of yet. But the strategic, you know, it could be, like I said, an acquisition. or just a significant major expansion with certain types of customers. For example, at the wholesale unit at CXI, we've recognized an opportunity with one of the top largest banks in the U.S. acquiring one of the failed banks, which was one of our customers. And luckily, that business – are you still there, Peter? Because my screen just flashed like it's turning. Okay, sorry. Yeah, my screen. My screen looks like it is rebooting. Sorry. So anyways, wholesale business, we do have an opportunity to win a top US bank, because that bank has recognized that we've done a very good job servicing now their new part of their whole massive group. And so there's that opportunity in the consumer area. We are, as I said, continuing to look at opportunities, how we can add additional agent locations that are national providers and so forth. And even at Exchange Bank, looking more on the domestic processing and so forth. But as far as a specific transaction, like an acquisition or so, I can't do that. There are NDAs. that restrict any discussion whatsoever. But I can confirm that at each part of our company, the wholesale unit, the consumer unit, and even at Exchange Bank, we are looking at continuing to do transactions that are accretive to our shareholders.

Do you, you know, it's been about a year since the bank failed, and I'm sure there was kind of a freeze in the, you know, the financial space. for a while, what's your view on, you know, more transactions coming across your table or you see, is it more active? Is there more opportunities now, less? And, you know, and what do you think the constraints to your execution are? Is it price? Is it size? You know, just any call you can give me, I'd appreciate it. Thank you.

Yes, yeah, yeah. So luckily the realization in the payments business that, you know, the margins are shrinking, which we're seeing ourselves. That's part of the reduction in our volume. The owners of their good, what I'll call boutique shops in their select marketplaces have come to the realization that the heated up overpriced that some of the acquisitions you've seen in the past with payment companies, so there is that. But the hurdle is still the same thing. An owner feels their business is probably just as valuable as their kid. And hence, there's that mismatch in price. And so we will not acquire a business unless the return is accretive to us. And as you know, our share price is actually depressed, in my opinion, and therefore restricts the amount we would be willing to pay. But we do are taking a longer term view. We normally would look four or five years out. And so it does enable us to be as far as we are. But I can't go into any specifics. But doing a deal, as you can imagine, with a private person, trying to convert them in part of a public company is kind of like dating. It's a courting process. And so there is a lot of due diligence needed on both sides and a level of comfort that needs to happen there. So that's about as much as I could say on that, Peter.

Yeah, yeah. Of course. Thank you for the call. I appreciate it. And then kind of last question, maybe one more. But I know you said, maybe I missed it, but you said, Gerard said the gross debt, the debt was $5.5 million. What was the gross cash for the quarter? I guess net cash. And then of that, you know, as you're getting, as there's a lot of moving parts, how much of that cash do you think you need to run the business on an average basis, I guess?

I'll let Harar answer that. Yeah, thank you for that question, Peter. I know it is on everybody's mind. Challenges for us always determining how much cash do we need to run the business, and that depends on seasonal demand, that depends on volumes that we are predicting or trying to predict, as well as unpredictable volumes of people trading X million Mexican pesos in a week that wasn't necessarily there last week or last year. So you look at our revenue growth, and I take that into account and say that puts a strain on our current available cash that we have. So as I've said many times before, it really depends on where we are in our current cycles. It's always a moving target and a moving number for us.

Okay, but what were the growth and net numbers for the quarter?

Peter, it would vary. I would say it's probably in the $5 to $10 million range, depending on how we look at our vaults and cash kept in the vaults and the continued optimization of those stock or banknote stock in our vaults.

Sorry, I think I just asked for the exact number of what was the, you know, one, what was the quarter end cash position?

Of surplus cash, I can't give you an exact number, and we had exactly this because of timing differences and also Q2 anticipated demand.

I think he wanted the total. You wanted to know the total cash we had at quarter end.

Yeah, that's all. That's on the balance sheet. I think it's $80 or $90 million. $90 million?

Is that what you said?

Why don't you look? We'll go to the next question person, and then we'll come back to you, Peter.

I didn't see the filing in the website, so that's why I asked this morning. But anyway, okay, we can go to it.

Yeah, well, he'll pull it up on the screen here. We'll give you that number. I thought you were asking for the surplus cash, and that does vary.

But I wanted the context first, and there wasn't filings this morning, so that's why, at least not on your website. So that's why I had asked now, and that wasn't in the press release. But anyway, I'll let the next caller ask the question. Thanks. Thank you, Peter.

Once again, as a reminder, ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touch-tone phone. And at this time, it appears we have no other questions. Please proceed.

Oh, I do apologize. Okay.

Yeah. Well, let me real quick just answer Peter's question. Peter, the total cash at the end of the quarter, this last quarter, was $105 million.

U.S. dollars.

Yeah.

And, Peter, all our documents got filed last night on the various portals, so CDAR.com. We are also updating our websites with all of these documents as well today. Yeah. Okay.

Go ahead. You said there's another caller?

Yes, sir. We do have another question from Dale Brock at TH&C Investments. Please go ahead.

Good morning, guys. Two quick questions. Thank you. First one, how are things going on the southern border as far as integration with duty-free and also with respect to the AAA clubs. And the second one is how are things going with the system integrations that you mentioned in the annual letter at Exchange Bank similar to what you did with CXI? Thanks. Looking forward to seeing you next week.

Likewise. I'll answer the sales question, and Harad can answer the financial question. The duty-free company, we have a good relationship with them. It is slow. Again, shipping cost is a focus, and so that's part of this renegotiation or expansion with them. We are working through that, so that's going slower than expected, but they continue to trade with us on the northern border. However, we are working trying to update our agreement to cover this, the southern border. And so the shipping topic is the one thing that's been slow because we are focused on containing that cost and possibly sharing those costs with the operator. The AAA locations, we continue to open. This is part of the driving factor of why we add new states licenses because not only does it support our own online store, but AAA is an agent of us and therefore it is required. So I don't have the exact statistic of which new clubs we just added in the last month or so, but I can tell you that we continue on this national expansion plan. I know Ohio was one of the new big ones that we had added, I believe in the last quarter or two, but the AAA relationship remains a strong driver as you're seeing in our consumer division numbers continues to grow. And so they are part of that. So our own stores are growing, our online store growing, and the agents like AAA and hopefully soon Duty Free will continue to fuel that growth.

Yale, would you just repeat your second question? I didn't hear that clearly.

Yeah, so in the annual report that you all released, it mentioned that you're working on The system integration with the big providers like Jack Henry and Fiserv, and there's another one, and doing the same thing with Exchange Bank of Canada. So my question is, how is the implementation of that progressing? Because that's a big piece, I think, of the payment. So if you could give some more color on that, that'd be great. Thanks.

Yeah, I guess that I can answer that one, Yale, because The Fiserv and Jack Henry and all that, that's a CXI thing, and that has been successful. That same integration capability exists. However, those software providers are mostly focused in the U.S., so that same type of implementation is what's being worked on now for Canada, but it's not with a Fiserv. It's bank-specific, and we do have a bank in Ontario. as well as a potential bank out west that are in discussion with us. But it is a slower process, but it is part of this OPOP Canada plan where we do want to integrate. We do have a fintech provider that has a domestic payment platform based in Quebec that does have customers nationwide that does domestic payments, and we are – Right now, probably in the third month of the integration and our systems together. And so within a quarter, we should have a new bucket of customers because they're turning on their international capability, which will be powered by Exchange Bank of Canada. The good news is the integrations are much cheaper and faster because we've already done them in the States. So our APIs are all built. We have our sandbox where they... Two tech teams work together to test it and integrate and make sure it's ready to go live. And so it is underway.

So, Yale, I think to complement that is in the U.S., it's with FISA, Jack Henry and larger organizations. In Canada, it's directly with financial institutions. So you will go directly to X bank or Z credit union and tie into their core systems.

No, very good. I guess since I've asked those, I guess one more if you could just comment on in general without releasing anything specific, the nature of the kinds of acquisitions in terms of are you looking at cloud currency providers on the payment side? Is there any color that you can provide in terms of criteria that you're thinking about?

Well, we're not restricted just payments. Cash would be a consideration if there's such an opportunity, which there could be. And the criteria is we would not acquire a business that is a dream that's losing money now, but yet can do something in three years. We would only be acquiring a business that would be accretive, as I said, that they have a book, a revenue profitable business. We have the same type of thing, and we're recognizing on the back end, the back office could be sharing the compliance and risk costs and so forth. And so we have, and as far as a target size, we, you know, we're not trying to buy something bigger than ourselves, you know, unless there was such an event where we could. So we're looking more at the tuck-in types or bigger, but nothing too large because we do, you know, would need to finance that with debt, which we have some banks that have expressed interest in helping us with that. So these are, you know, bite size or little bigger opportunities that we see.

Okay, very good. Thank you. Randolph and Gerard. We'll see you next week.

I'll see you next week. Thanks, Yale.

Thanks, Yale. Okay. All right. Bye-bye.

Thank you. Next question will be from Paul Farrell at Mayborn Partners. Please go ahead.

Thank you. Thank you for taking my questions. Hello. This is Paul Farrell. Just two quick questions. I may have missed it, but what was the amount of the share repurchase during the quarter, and what's your strategy in terms of becoming more aggressive there?

So, Paul, we purchased for cancellation 20,200 shares in the month of February, and we have approval to continue with a maximum of 5%, which is roughly 322,000 shares. We continuously discuss this with our board. and progress down a structured path.

And we're restricted. There's only so much we can buy per day, right?

1,325 per day.

Okay. Thank you. I appreciate that. I may have missed that in the commentary earlier. My second question is, most companies have a working capital line, a revolving credit line to finance the seasonal and unexpected swings in working capital. Your product is cash. So is there an impediment to having a revolving credit type setup to fund the seasonal swings and the unexpected spikes in your working capital, i.e. cash needs, so that you actually can kind of figure out how much excess cash you have available?

Well, two things. We're continuously trying to predict trades, volumes, and transactions of travelers and obviously customers. Our challenge and something that benefits us right now is we see continuous growth in those sections. On a practical level, if client A does a large cash transaction of pesos US in a week from now, and it wasn't necessarily anticipated or predicted, you can understand that that has a drain on our available free cash or available cash. We do have facilities in place whereby we can fund that working capital, and as I mentioned, those lines are mostly undrawn.

What is the total?

Total undrawn is $46 million. $46.6 million unused lines of credit. But as I also mentioned, Paul, if you look at it, we also, CXI is also funding an intercompany loan balance between the holding company and its subsidiary, Exchange Bank of Canada, of roughly $12 to $17 million on a daily basis. So there is some need for that facility just to create working capital in Exchange Bank of Canada as well.

Okay, thank you.

Thank you. And at this time, we have no other questions. Please proceed.

Okay. Well, thank you everybody for joining. As you know, Harar and I are available to have one-on-one calls as well. We can't disclose anything further than what was released in our press release and what was discussed today, but we're happy to clarify if there's any question around that you didn't understand today. So please reach out to Bill Matoulas to a coordinated time. I am on the road traveling internationally starting tomorrow for a few days, but I will be in Toronto at the annual shareholder meeting. We are doing a reception for an hour after that. There will be quite a few board members. We invite you to come to our annual shareholder meeting there on Bay Street and watch our presentation and then, of course, interact with myself's board members, Harard, and anyone else. We'll have some of our other top executives there as well. So we look forward to hopefully seeing you next week. And I thank all of you for your participation in Currency Exchange International. And thank you.

Thank you very much. Have a good day.

Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Have a good day.