Currency Exchange International, Corp.

Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q4 year and 2025 financial results. At this time, all lines are in the listen on the mode. Following the presentation, we will conduct a question and answer session. In fact, any time during this call, require immediate assistance. Please press star zero for the operator. Also know that this call is being recorded on Thursday, January 22nd, 2026. And I would like to turn the conference over to Bill Matoulas, Investor Relations. Please go ahead, sir.

Thank you, Sylvie. Good morning, everyone. Welcome to the Currency Exchange International Conference call to discuss the financial results for the fourth quarter and 2025 fiscal year. Thanks for joining us. With us today are President and CEO Randolph Pena and Group CFO Gerhard Barnard. Gerhard will provide an overview of CXI's financial results, his latest perspective on the company's operations, and 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 financial statements and the 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, please go ahead.

Good morning, Bo, and thank you, everyone, for joining today's call. My overview of the company's performance, CXI, will also include the results of the discontinued operations of Exchange Bank of Canada, or EBC. These results are presented in US dollars. As a reminder, on February 18, 2025, the group announced its decision to discontinue the operations of its wholly-owned subsidiary, Exchange Bank of Canada. Now, EBC ceased operations as of October 31, 2025. And on December the 19th, EDC issued its year-end audited financial statements to its regulators. EDC is formally applied to OSFI to recommend approval from the Minister of Finance for the discontinuance from the Bank Act. Following final regulatory approval, management and the directors will liquidate the remaining assets and liabilities and distribute EDC's net assets to CXI, its sole shareholder. Management anticipates that all required regulatory approvals for discontinuance will be granted during the second fiscal quarter of 2026. Now, starting the second quarter of 2025 and following the board's decision to discontinue the bank's operations, the group updated its financial statements presentation to present continuing and discontinuing operations separately. in accordance with IFRS accounting standards. Therefore, included in the group's financial statements are the results of the U.S. or United States operations, that's CXI, which is under continuing operations, and the results of Exchange Bank of Canada, EBC, under discontinued operations. Before we go into the detail of the various results, I'd like to note that the group measures and evaluates its performance using several financial metrics and measures, some of which do not have standardized meanings under general accepted accounting principles, or GAAP, and may not be comparable to other companies. We call these measures non-GAAP financial measures and or adjusted results. Management believes that these measures are more reflective of its operating results and provide a better understanding of management's perspective on the performance of the company. These measures enhance the comparability of our financial performance for the current period with the corresponding period in 2024. Management included a full reconciliation of the key performance and non-GAAP financial measures in the NDNA. Take it to page 2425. When we refer to reported results, we refer to the results as reported in the financial statement based on IFRS, the audited results. Whether we refer to adjusted results, such as adjusted net income, we refer to performance non-GAAP measures. Now, the group reported net income of $10.3 million for the year ended October 31, 2025, an increase of $7.8 million, or 317% over the prior year with yearly revenue growth of 5%. This 2025 reported net income reflected $14 million of net income from continuing operations, that's CXI, and a net loss of roughly $3.7 million from discontinued operations, Exchange Bank of Canada. Reported unadjusted results for the continuing operations included non-recurring items, Restructuring charges, roughly $300,000, $400,000 related to the closure of CSI Miami-Bolt, and about $200,000 related to the discontinued operations in Canada. Now, it is important to note that the reported results of the prior year, 2024, included non-reoccurring items related to the discontinued operations and represented impairment losses, regulatory compliance charges, other tax items, and that totaled $7.7 million. Now, excluding restructuring and non-recurring charges, adjusted net income from continuing operations increased to $14.5 million, a 10% increase, and the group's adjusted net income increased to $10.8 million, an increase of 6%. The group suggested IDC earnings per share increased to 1.177 cents or $1.77, which is a 14% increase over the prior year. Now, certain operating expenses and personnel costs previously shared with EDC were fully assumed by CXI during the year. The annualized estimate of these costs, we called it stranded costs, was initially approximately $3 million after tax. However, it is now expected that the actual figure will be closer to 90% of this original estimate once the full 12-month period has been completed. With that, here is a summary of our current fourth quarter's results compared to the same quarter in 2024. Revenue grew to 19.8 million, up by 1.4 million, or 8%. Operating expenses? increased to roughly $13 million, up by $743,000, or 6%. So revenue up 8%, expenses up 6%. Reported EBITDA grew to $6.4 million, roughly 4%. And adjusted EBITDA grew to $6.8 million, by close to three quarters of a million, or 10% over last year. Adjusted group net income grew to $3.3 million, or by close to half a million, or 19%, as a result of restructuring charges related to the closure of the Miami vault and charges related to EBC discontinued, which were partially offset by a recovery related to the judgment by the Federal Court of Canada, which reduced EBC's administrative monetary penalty by $1 million, or 1.4 million Canadian. as agreed by both parties. Revenue growth was driven by 31% growth in the payments product line. 17% of CXI's total revenue is now from payments. And a 4% growth in the banknotes revenue. 83% of CXI's total revenue is in the banknotes product line, primarily through direct-to-consumer channels. Now, payments grew $800,000 or 31% of, and that's roughly 17% of the total revenue. This growth was supported by a 40% increase in business trading volume and almost $2.1 billion due to the increased activity from existing financial institution customers and the onboarding of new customers. So that trading volume literally up 40% in this quarter. Also, banknotes' revenue remained fairly flat year over year, presented roughly 40% of our revenue. Trading volumes declined slightly due to the impact of the U.S. federal government shutdown in October 2025, impacting several airports across the nation, as well as a slowdown in inbound international travelers, especially from Canada. This slowdown of inbound international travelers has been substantially offset by an increase in outbound travel by U.S. citizens to Europe and Asia. Now let's look at direct-to-consumer banknotes revenue growth of roughly $600,000, or 8%, and BTC represents 43% of our total revenue, with growth mainly in the online FX platform, due to the increased demand for exotic foreign currencies. During the current quarter, CXI added South Carolina to the states, in which CXI's online ethics platform operates. Added more than 51 new non-airport agents in several locations and opened a new company-owned branch in New York. Now, the following is a highlight of the operating expenses from continuing operations for the fourth quarter of 2025 compared to the prior year's fourth quarter. As I mentioned, CXI's operating expenses increased by roughly three quarters of a million, or 6%. Variable costs, postage, shipping, bank charges, sales commission, and incentive compensation total 3.4 million, an 8% increase, mostly attributable to shipping costs and bank share discharges, partially offset by a decrease in variable compensation costs. Salaries and benefits remain fairly flat, compared to the previous quarter, primarily due to general inflationary adjustments. This increase was partially offset by a reduction in headcount resulting from the closure of the Miami vault. Now, bank service charges are related to processing payments and banknote transactions, with the majority arising from the payments product line. They were at 40% increase in volume. Here in the current quarter, CXI fully transitions its check clearing and payment processing activities away from EBC, eliminating the use of EBC's correspondent bank for such transactions. As a result, 100% of CXI's bank fees for the current quarter were reported in continuing operations. Now, in the same period last year, bank charges incurred through EBC's correspondent banking relations were reported under discontinued operations. So you can see a bit of a of a change there and where we reported it. This transition accounted for roughly $150,000 of the variance reported above. And you'll see the variance in the financial statements and the growth in that cost. The remaining difference was primarily attributed to the 40% significant increase in payment transaction volume and the associated processing cost compared to the prior year. Publicity efforts grew mainly, and we spent a lot of money on growing this marketing and publicity, mainly because of CXI's strategic emphasis on target marketing initiatives, comprehensive campaigns, retail investments, and the development of our customer referral programs to align with our corporate objectives, partially supporting the growth of the direct-to-consumer business line. Online FX DTC marketing campaigns, We're on Instagram and social media, really making sure we get the word out. Restructuring impairment charges represented the closure of CXI's Miami vault, and that was roughly $400,000, and impairment charges of assets related to some of our company-owned branches of close to $270,000. Now, interest revenue generated from excess cash holdings is noteworthy. at the end of October 31st, 2025. CXI maintained nearly $25 million in AAA-rated money market funds, compared to zero in the prior year. This was supplemented by interest earned on other investment-bearing bank accounts in the ordinary course of business. The increase in interest income reflects a substantial rise in available excess cash attributable to the decreased working capital requirements as a result of EBC discontinuance and a well-executed exit plan. Income tax expense in the current quarter reflected an effective tax rate of roughly 18%, where the majority of the decrease below the statutory rate was reflected or related to the tax benefits from a large amount of stock options exercised during the current quarter and accounted for roughly 9% of this effective tax rate. Now, let's look at the year. Summarizing the results of the group for the year, 12 months ended October 31st, 2025, compared to 2024. Revenue grew to 72.5 million, up by about 3.5 million, or 5%. And expenses only grew by 3%, or 1.2 million, to a total of 48.5 million. that gave us net income from continuing operations that grew to $14 million, or close to a million bucks, $800,000, or 6%. Now, reported EBITDA grew to $23.3 million, up $1.6 million, or 7%. And adjusted EBITDA grew 10% to $24 million, compared to the previous year, up by $2.2 million. Now, it's important to note that adjusted reported group net income, as I said, grew to $10.8 million. That's an increase of $600,000, or 6%, as CXI's restructuring charges related to the closure of Miami, as well as some legal and advisory fees, were adjusted as non-recurring items. This is for the year now. Now, looking at the group's results, EBC's adjusted Adjustments almost netted out with the recovery from the Canadian Federal Court's judgment reducing EDC's administrative monetary penalty, resulting in a benefit of $1 million U.S., together with a net gain related to the lease terminations of roughly $360,000. These benefits were partially offset by severance costs, non-recurring legal and advisory charges of $650,000, as reported in net gains. the continued operation results. Now, let's look at continued operations consolidated performance for the year compared to the prior year. For the year, the revenue growth was driven by 19% growth in payments product line and a 3% growth in banknotes revenue, primarily through, as mentioned for the quarter as well, the DTC channels that we have. Now, payments revenue grew an impressive 19% of 2 million. As I mentioned, it's now 17% of our total revenue. The growth was supported on a yearly basis by a 31% increase in trading volumes. For the quarter, that was 40%. For the year, we're at 31% increase in trading volumes, primarily from new customers and a slight increase in volume from existing customers to almost $6.7 billion, up from $5.1 billion a year ago. Very proud of the team there. Also, Banknotes revenue maintained relatively flat year over year, representing 42% of the total yearly revenue. Revenue growth came from both existing and new domestic financial institution customers, with declining volume from monetary services businesses and international financial institutions. International travel levels were generally lower than last year, offset by an increase, as mentioned in the outbound U.S. travel to popular destinations in Europe, Asia, and Mexico. Consumer demand for euros and Mexican pesos drove growth, while the Canadian dollar volumes remained lower. DTC, direct-to-consumer banknotes revenue, grew by 1.1 million, or 4%, and that represents 41% of our yearly revenue, with growth mainly from our online ethics platform due to the increased demand for exotic currencies and the addition of three new states during the year. At October 31st, 2025, CXI had 39 company-owned branch locations and operated in 50 airport agents, three more locations compared to last year, And we had 468 non-airport agent locations, almost 245 more locations than the prior year. The following is a highlight of our operating expenses for the continuing operations for the year. CSI operating expenses increased by 1.2 million or 3% year over year. Now, that's an important number because variable cost, postage shipping, bank charges, sales commission, incentive compensation total 11.8 million, only a 1% decrease due to a slight decline in payroll compensation cost. The ratio comparing total operating expenses to revenue for the current year improved to 67% compared to 69% last month. Now, stock-based compensation declined due to a 5% decline in share price throughout the year. in comparison to last year, where the share price grew roughly 25%, which in turn reflected the increase in debt expense last year. Foreign exchange gains for the current year were primarily driven by the U.S. dollar's depreciation against major currencies during the second quarter and the first half of the third quarter. The euro and British dollar strengthened notably against the dollar, while the Mexican peso recovered early year weakness, contributing to the favorable revaluation of bank notes holdings. Gains on Euro and a basket of currencies exceeded losses on Mexican peso inventory for the year. Foreign exchange losses in the same period in the prior year were largely driven by the weakening of the Mexican peso against the US dollar, compounded by higher overall hedging cost. Now let's look at discontinued operations related to Exchange Bank of Canada where the bank had a net loss of 1.1 million in the fourth quarter of 2025 compared to the loss of roughly 6.1 million in the same period last year. For the year, the bank added a net loss. The bank had a net loss of 3.7 million compared to a net loss of 10.7 million for the same period in the prior year. That's where all those adjustments and write-ups happens. Diluted loss per share from discontinued operations was a loss of 18 cents for the fourth quarter and a loss of 61 cents for the year, compared to 97 cents and 170 cents for the same three and 12-month periods in the prior year. Once final regulatory approval has been obtained, the Board of Directors, as I said, plan to liquidate the remaining assets and liabilities of EVC and distribute those net assets to CXI, its sole shareholder. As of October 31st, the net assets directly associated with the disposal group, EDC, were approximately 5 million US dollars. Now let's review the balance sheet at year end. Due to the company's business being subjected to seasonality, CXI uses a 12-month training net income amount to calculate ROE. which has been relatively consistent at 13% over the last 12 months. That includes the discontinued operations results. CXIs had net working capital of $73 million and a total equity of $85 million and 100% available unused line of credit amounting to $40 million. As indicated on page 22 of the year-end financial statements, CXI reported a cash balance of $95.5 million. Additionally, approximately $5 million, as I mentioned, is held in EDC, resulting in a total cash position slightly exceeding $100 million. Now, it is important to note that cash serves as CXI's primary product. It is our widgets, primarily used for transactional activities within the banknote segment. CXI had 53.2 million cash held in the form of banknote inventory in transit in vaults, tools, and on consignment locations at year-end. CXI maintains cyclical banknote inventories with optimal levels ranging from 50 million to 70 million, depending on the travel season. Now, cash deposited in bank accounts totaled $42.2 million. This total, 42.2, includes the 25 million of excess cash designated for investment purposes. So that's the 25 that we had at the end of the year in AAA-rated money market funds. The remaining balance of this 42 is comprised of minimum cash reserves maintained by CXI in bank accounts with select banking partners to support our bank-made settlement operations, as well as operating cash balances corresponding with customer holding accounts. Maximizing shareholder returns through share buybacks under the normal course issuer of it, NCIB, or share buyback, continues to be a primary objective. Over the past year, CXI acquired and canceled 312,300 common shares at prevailing market prices on the TXX, totaling $4.75 million. On November 26, 2025, the TSX accepted CXI's notice of intention to make another NCIB and an automatic share purchase plan to purchase for cancellation a maximum of 360,000 common shares, representing 10% of the company's public float as of November 18, 2025. As of yesterday, CXI purchased or cancellation, approximately 170,000 common shares. Now, at this time, I will turn the call over to Randolph Finner, our CEO, to provide his perspective. Thank you, Randolph.