International Money Express(IMXI) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties, including those related to the proposed acquisition by The Western Union Company - The report contains forward-looking statements, including those concerning the proposed acquisition by The Western Union Company, and is subject to various risks and uncertainties[9][10] Part I - Financial Information This section presents the company's unaudited condensed consolidated financial statements and management's analysis of financial condition and operations Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, statements of changes in stockholders' equity, and cash flow statements, along with detailed notes explaining the company's business, accounting policies, acquisitions, revenues, and other financial components for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | $518,015 | $462,377 | +$55,638 | | Cash and cash equivalents | $174,723 | $130,503 | +$44,220 | | Accounts receivable, net | $141,651 | $107,077 | +$34,574 | | Total Liabilities | $375,762 | $327,453 | +$48,309 | | Wire transfers and money orders payable, net | $144,196 | $85,044 | +$59,152 | | Total Stockholders' Equity | $142,253 | $134,924 | +$7,329 | Condensed Consolidated Statements of Income and Comprehensive Income This statement details the company's financial performance, including revenues, expenses, and net income, for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Total Revenues | $161,133 | $171,531 | -6.1% | $305,443 | $321,943 | -5.1% | | Wire transfer and money order fees, net | $132,970 | $145,837 | -8.8% | $253,137 | $272,758 | -7.2% | | Foreign exchange gain, net | $23,681 | $22,800 | +3.9% | $43,862 | $43,146 | +1.7% | | Other income | $4,482 | $2,894 | +55.2% | $8,444 | $6,039 | +40.0% | | Total Operating Expenses | $141,672 | $148,627 | -4.7% | $271,907 | $279,453 | -2.7% | | Operating Income | $19,461 | $22,904 | -15.0% | $33,536 | $42,490 | -21.1% | | Net Income | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Basic EPS | $0.37 | $0.43 | -14.0% | $0.62 | $0.79 | -21.5% | | Diluted EPS | $0.37 | $0.42 | -11.9% | $0.62 | $0.78 | -20.5% | Condensed Consolidated Statements of Changes in Stockholders' Equity This statement outlines changes in the company's equity components, including retained earnings and treasury stock, for the periods presented | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total Stockholders' Equity | $142,253 | $134,924 | +$7,329 | | Retained Earnings | $276,246 | $257,470 | +$18,776 | | Additional Paid-in Capital | $82,895 | $79,592 | +$3,303 | | Treasury Stock, at cost | $(217,030) | $(200,696) | -$16,334 | - The company acquired 1,348,214 shares of treasury stock for $16.3 million during the six months ended June 30, 2025[18] Condensed Consolidated Statements of Cash Flows This statement reports the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by operating activities | $81,184 | $28,666 | +$52,518 | | Net cash used in investing activities | $(10,033) | $(20,150) | +$10,117 | | Net cash used in financing activities | $(29,767) | $(14,066) | -$15,701 | | Net increase (decrease) in cash and cash equivalents | $44,220 | $(5,994) | +$50,214 | | Cash and cash equivalents, end of period | $174,723 | $233,209 | -$58,486 | - Net cash provided by operating activities increased by $52.5 million, primarily due to a $58.8 million change in working capital[235] - Net cash used in financing activities included $12.5 million of net repayments under the revolving credit facility and $16.3 million for common stock repurchases[237] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, clarifying accounting policies, significant transactions, and financial components Note 1 – Business and Accounting Policies This note describes the company's business operations as a money transmitter and outlines its significant accounting policies and the proposed merger details - The Company operates as a money transmitter from the U.S., Canada, Spain, Italy, UK, and Germany to Mexico, Guatemala, other Latin American countries, Europe, Africa, and Asia[22] - On August 10, 2025, the Company entered into a Merger Agreement with The Western Union Company, under which each share of common stock will be converted into the right to receive $16.00 in cash[26] - Consummation of the Merger is subject to stockholder approval, regulatory clearances (including Hart-Scott-Rodino Act and money transmitter licenses), and other customary closing conditions[27] - A substantial portion of the company's paying agents are concentrated in a few large banks, financial institutions, and retail chains in Latin American countries[29] Note 2 – Acquisitions This note details the company's acquisition activities, including the purchase of a UK money services entity and related restructuring costs - On July 2, 2024, the Company acquired a UK money services entity for approximately $1.4 million in cash, gaining access to outbound remittance services from the UK[34][35] - The acquisition resulted in $1.2 million in goodwill, representing the value of the assembled workforce and expected synergies[35][36] - Restructuring costs for the six months ended June 30, 2025, were approximately $0.3 million, primarily for workforce reduction[37] Transaction Costs (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Transaction Costs | $2,224 | $26 | $3,393 | $36 | Note 3 – Revenues This note provides a breakdown of the company's revenue streams, including wire transfer fees, foreign exchange gains, and other income, along with changes in loyalty programs Revenue Category (in thousands) | Revenue Category (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------ | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Wire transfer and money order fees, net | $132,970 | $145,837 | -8.8% | $253,137 | $272,758 | -7.2% | | Foreign exchange gain, net | $23,681 | $22,800 | +3.9% | $43,862 | $43,146 | +1.7% | | Other income | $4,482 | $2,894 | +55.2% | $8,444 | $6,039 | +40.0% | | Total revenues | $161,133 | $171,531 | -6.1% | $305,443 | $321,943 | -5.1% | - The loyalty program was terminated effective February 1, 2025, with points redeemable until July 31, 2025[40] - The Company acts as principal for most revenues, reporting on a gross basis, but acts as an agent for remittance-as-a-service relationships with digital partners[42] Note 4 – Accounts Receivable and Agent Advances Receivable, Net of Allowance This note details the composition of accounts receivable and agent advances, including the allowance for credit losses and collateralization Accounts Receivable and Agent Advances Receivable (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Accounts receivable, net | $141,651 | $107,077 | +$34,574 | | Allowance for credit losses (total) | $5,509 | $3,836 | +$1,673 | | Provision for credit losses (6 months) | $3,924 | $3,371 | +$553 | | Agent advances receivable, net | $4,083 | $4,285 | -$202 | - Agent advances receivable of $4.4 million at June 30, 2025, are collateralized by personal guarantees and business assets[45] Note 5 – Prepaid Expenses and Other Assets This note outlines the company's prepaid expenses, other assets, right-of-use assets, and exposure from funds held by seized banking entities Prepaid Expenses and Other Assets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Prepaid expenses and other current assets | $11,098 | $10,998 | +$100 | | Other assets | $29,628 | $32,198 | -$2,570 | | Right-of-use assets, net | $16,558 | $18,511 | -$1,953 | | Funds held by seized banking entities, net of allowance | $1,699 | $1,539 | +$160 | - The Company has approximately $5.9 million exposure from deposits held with a closed Mexican financial institution and maintains a $4.2 million valuation allowance as of June 30, 2025[48] Note 6 – Goodwill and Intangible Assets This note provides details on the company's goodwill and intangible assets, including their composition, amortization, and impairment assessment Goodwill and Intangible Assets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Goodwill | $55,195 | $55,195 | $0 | | Intangible assets, net | $26,905 | $26,847 | +$58 | | Amortization expense (6 months) | $2,257 | N/A | N/A | - Intangible assets include agent relationships, trade names (Intermex, La Nacional, Amigo Paisano, I-Transfer), and developed technology, amortized over up to 15 years[49] - No impairment charges were recognized for goodwill or intangible assets during the three and six months ended June 30, 2025[49] Note 7 – Leases This note details the company's lease liabilities and right-of-use assets, including weighted-average lease terms and discount rates Leases (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Right-of-use assets | $16,558 | $18,511 | -$1,953 | | Total Lease liabilities | $22,642 | $25,050 | -$2,408 | | Operating lease cost (6 months) | $3,493 | $3,524 | -$31 | - Weighted-average remaining lease term is 6.5 years, and the weighted-average discount rate is 6.35% as of June 30, 2025[56] Note 8 – Wire Transfers and Money Orders Payable, Net This note details the company's obligations for wire transfers and money orders payable, including customer voided wires subject to unclaimed property laws Wire Transfers and Money Orders Payable (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Wire transfers and money orders payable, net | $144,196 | $85,044 | +$59,152 | | Wire transfers payable, net | $77,746 | $22,437 | +$55,309 | | Customer voided wires payable | $35,034 | $32,583 | +$2,451 | | Money orders payable | $31,416 | $30,024 | +$1,392 | - Customer voided wires payable are considered unclaimed property, subject to state laws with abandonment periods ranging from three to seven years[58] Note 9 – Accrued and Other Liabilities This note outlines the company's accrued and other liabilities, including commissions payable and deferred revenue from the loyalty program Accrued and Other Liabilities (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Accrued and other liabilities | $45,023 | $47,434 | -$2,411 | | Commissions payable to sending agents | $17,795 | $18,080 | -$285 | | Deferred revenue loyalty program | $543 | $2,692 | -$2,149 | | Accrued transaction costs | $316 | $1,600 | -$1,284 | - Deferred revenue from the loyalty program decreased significantly due to its termination effective February 1, 2025, with points expiring by July 31, 2025[40][59] Note 10 – Debt This note details the company's debt, primarily from its revolving credit facility, including outstanding amounts, available capacity, interest rates, and covenants Debt (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Debt, net | $144,132 | $156,623 | -$12,491 | | Revolving credit facility | $144,114 | $156,600 | -$12,486 | - The Company has a $425.0 million multi-currency revolving credit facility, with $144.1 million outstanding and $380.9 million available as of June 30, 2025[62][220] - The effective interest rate for the revolving credit facility was 2.74% for the six months ended June 30, 2025[66][223] - The credit agreement includes covenants requiring a quarterly minimum interest coverage ratio of 3.00:1.00 and a maximum consolidated leverage ratio of 3.50:1.00, with which the company was in compliance as of June 30, 2025[69][226][227] Note 11 – Fair Value Measurements This note explains the company's fair value measurements for financial and non-financial assets, including the use of Level 3 inputs for non-recurring valuations - Financial assets and liabilities are carried at amortized cost, with carrying amounts generally representative of fair values due to short turnover or market-approximating interest rates[73][74] - Non-financial assets (goodwill and intangible assets) are measured at fair value on a nonrecurring basis using Level 3 inputs, including forecasted revenues, agent turnover, technology obsolescence, and market rates[72] Note 12 – Share-Based Compensation This note details the company's share-based compensation plans, including authorized shares, expense recognition, and unrecognized compensation - The A&R 2020 Plan increased authorized shares for issuance by 2.5 million, with 3.2 million shares remaining available for future awards as of June 30, 2025[77] Share-based Compensation (in thousands) | Share-based Compensation (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Stock Options Expense | $0 | $42.4 | $0 | $86.8 | | RSUs Expense | $1,000 | $900 | $2,300 | $1,900 | | RSAs Expense | $500 | $400 | $1,000 | $800 | | PSUs Expense | $600 | $1,000 | $900 | $1,700 | | Total Share-based Compensation (6 months) | N/A | N/A | $4,245 | $4,545 | - Unrecognized compensation expense related to RSUs, RSAs, and PSUs is approximately $19.7 million, expected to be recognized over a weighted-average period of 1.9 years[82][85][89][134] Note 13 – Equity This note provides information on the company's equity, including the stock repurchase program and significant share repurchases - The stock repurchase program was increased by an additional $63.8 million on August 26, 2024, with $48.3 million available for future repurchases as of June 30, 2025[91][92][229][230] - During the six months ended June 30, 2025, the Company repurchased 1,348,214 shares for $16.3 million[92][230] - A privately-negotiated transaction on March 12, 2025, involved purchasing 100,000 shares for $1.3 million from a related party[92][231] Note 14 – Earnings Per Share This note presents the company's basic and diluted earnings per share, along with the weighted-average common shares outstanding and factors affecting EPS Earnings Per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net Income (in thousands) | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Basic EPS | $0.37 | $0.43 | -14.0% | $0.62 | $0.79 | -21.5% | | Diluted EPS | $0.37 | $0.42 | -11.9% | $0.62 | $0.78 | -20.5% | | Weighted-average common shares outstanding – basic | 29,843,687 | 32,698,951 | -8.8% | 30,213,762 | 33,187,196 | -8.9% | | Weighted-average common shares outstanding – diluted | 29,912,615 | 33,090,806 | -9.7% | 30,370,069 | 33,639,811 | -9.7% | - The decrease in EPS reflects lower net income, partially offset by a reduced share count due to stock repurchases (880,152 shares for 3 months, 476,934 shares for 6 months)[97][164][203] Note 15 – Income Taxes This note details the company's income tax provision, statutory tax rates, valuation allowances on deferred tax assets, and the impact of recent tax legislation Income Taxes (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Income before income taxes | $16,368 | $19,809 | -17.3% | $27,743 | $36,693 | -24.5% | | Income tax provision | $5,361 | $5,776 | -7.2% | $8,967 | $10,554 | -15.0% | | U.S statutory tax rate | 21% | 21% | 0% | 21% | 21% | 0% | - A valuation allowance is recorded on deferred tax assets for Canadian, Spanish, Italian, German, Dutch, and British net operating loss carryforwards due to a history of taxable losses in these foreign subsidiaries[99] - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, and the Company is evaluating its impact on consolidated financial statements[101] Note 16 – Segment Reporting This note clarifies that the company operates as a single reportable segment, focusing on global omnichannel money remittance services - The Company operates as one operating and reportable segment, focusing on global omnichannel money remittance services, primarily from the U.S. to LAC corridor[102] - Robert Lisy, Chairman, CEO, and President, is the CODM and uses consolidated financial results, including Net Income, for key operating decisions[103] Note 17 – Commitments and Contingencies This note addresses the company's legal proceedings, claims, and compliance with licensing laws, asserting no material adverse effects are expected - Management believes that current legal proceedings and claims will not have a material adverse effect on the Company's results of operations or financial condition[106][108] - The Company's subsidiaries comply with applicable licensing laws requiring minimum tangible net worth and liquid assets to cover wire transfers and money orders payable[109] Note 18 – Subsequent Events This note discloses material events occurring after the reporting period, including the proposed merger with Western Union and new legislation - No material subsequent events were identified through August 11, 2025, other than the proposed merger with Western Union and the enactment of the OBBBA[110] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed analysis of the Company's financial performance, condition, and operational results for the three and six months ended June 30, 2025, compared to the prior year. It covers key factors affecting the business, including the proposed merger with Western Union, restructuring efforts, market trends, and a comprehensive review of revenues, expenses, and non-GAAP financial measures. It also discusses liquidity, capital resources, and critical accounting estimates Overview This overview describes the company's core business as a global money remittance provider and highlights key trends in transaction volumes and principal amounts sent - The Company is a global omnichannel money remittance service provider, primarily focused on the U.S. to LAC corridor, with services to over 60 countries[112] - Revenue is generated from consumer fees, which are shared with agents, and foreign exchange gains from currency exchange spreads[113] - For the six months ended June 30, 2025, principal amount sent decreased by 0.8% to $11.8 billion, and total remittances processed decreased by 6.3% to 26.9 million[114] - The decrease in volume is attributed to a contraction in the remittance market, especially the Mexico corridor, and a change in consumer behavior towards fewer, higher-value transactions[114] Proposed Merger with The Western Union Company This section details the proposed acquisition by Western Union, including the per-share cash consideration, closing conditions, and potential termination fees - On August 10, 2025, the Company agreed to be acquired by Western Union for $16.00 cash per share[117] - The merger is subject to stockholder approval, regulatory clearances (Hart-Scott-Rodino Act, money transmitter licenses), and other closing conditions[117] Termination Fees | Termination Scenario | Termination Fee | | :------------------- | :-------------- | | Antitrust-related Restraint or failure to obtain antitrust approvals | $27,300,000 | | Company enters Superior Proposal or Adverse Recommendation Change | $19,800,000 | Restructuring Costs This section outlines the company's restructuring efforts, primarily workforce reduction, and the expected annual cost savings from these initiatives - Restructuring costs for the six months ended June 30, 2025, were approximately $0.3 million, mainly for workforce reduction in foreign operations and La Nacional[119] - The restructuring plan aims to reorganize the workforce, streamline operations, and integrate technology, expecting to reduce compensation and facilities expenses by approximately $2.0 million annually, primarily in 2026[119][121] Key Factors and Trends Affecting our Business This section discusses critical external and internal factors influencing the business, including merger-related risks, market competition, regulatory changes, and digital investment strategies - The proposed merger with Western Union introduces risks of business disruption, management distraction, and potential failure to close[122] - Key external factors include changes in immigration laws, new technology/competitors (digital platforms), tax law changes (remittance taxes from 2026), economic factors (inflation, recession), and foreign exchange rate volatility[124] - The Company is making significant investments in digital market penetration, customer acquisition, and enhanced digital offerings, which are expected to provide mid- to long-term financial benefits but may adversely affect short-term operating results[125] - The money remittance market is highly competitive, with competition from large providers (Western Union, MoneyGram, Remitly, Euronet) and smaller niche players, primarily based on value, service, and technology[126] How We Assess the Performance of Our Business This section explains the key performance indicators and non-GAAP financial measures used by management to evaluate the company's operational and financial performance - Key performance indicators include revenues, service charges from agents and banks, salaries and benefits, other selling, general and administrative expenses, and net income[131] - Non-GAAP financial measures (Adjusted Net Income, Adjusted EPS, Adjusted EBITDA) are used to evaluate performance by excluding items not indicative of core operating results, such as non-cash compensation and amortization of intangibles[131][165][172] Results of Operations This section provides a comparative analysis of the company's financial results for the three and six months ended June 30, 2025 and 2024 Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 This subsection analyzes the company's financial performance for the three-month period, highlighting changes in revenues, expenses, and net income Financial Performance (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | | Total Revenues | $161,133 | $171,531 | -6.1% | | Wire transfer and money order fees, net | $132,970 | $145,837 | -8.8% | | Foreign exchange gain, net | $23,681 | $22,800 | +3.9% | | Other income | $4,482 | $2,894 | +55.2% | | Service charges from agents and banks | $102,257 | $113,369 | -9.8% | | Salaries and benefits | $18,525 | $16,893 | +9.5% | | Other selling, general and administrative expenses | $12,354 | $10,481 | +18.1% | | Restructuring costs | $0 | $2,711 | -100% | | Transaction costs | $2,224 | $26 | +8453.8% | | Depreciation and amortization | $4,454 | $3,371 | +32.1% | | Net Income | $11,007 | $14,033 | -21.6% | | Diluted EPS | $0.37 | $0.42 | -11.9% | - The decrease in wire transfer fees was due to lower transaction volume in the Mexico corridor and a shift to higher average principal sent per transaction[147][148] - Other selling, general and administrative expenses increased due to higher advertising for digital channels ($1.1 million) and a legal contingency settlement gain in 2024 ($0.6 million)[154][157] Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 This subsection analyzes the company's financial performance for the six-month period, detailing changes in revenues, operating expenses, and net income Financial Performance (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | | Total Revenues | $305,443 | $321,943 | -5.1% | | Wire transfer and money order fees, net | $253,137 | $272,758 | -7.2% | | Foreign exchange gain, net | $43,862 | $43,146 | +1.7% | | Other income | $8,444 | $6,039 | +40.0% | | Service charges from agents and banks | $196,045 | $211,303 | -7.2% | | Salaries and benefits | $36,813 | $34,999 | +5.1% | | Other selling, general and administrative expenses | $23,343 | $20,434 | +14.2% | | Provision for credit losses | $3,924 | $3,371 | +16.4% | | Restructuring costs | $306 | $2,711 | -88.7% | | Transaction costs | $3,393 | $36 | +9325% | | Depreciation and amortization | $8,083 | $6,599 | +22.5% | | Net Income | $18,776 | $26,139 | -28.0% | | Diluted EPS | $0.62 | $0.78 | -20.5% | - The decrease in wire transfer fees was due to a contraction in the remittance market, particularly the Mexico corridor, and a change in consumer behavior of sending a lower number of money transfers at a higher average principal sent per transaction[187] - Other selling, general and administrative expenses increased due to higher advertising for digital channels ($1.8 million), increased IT-related expenses ($0.7 million), and a legal contingency settlement gain in 2024 ($0.6 million)[197] Non-GAAP Financial Measures This section reconciles and explains the company's non-GAAP financial measures, including Adjusted Net Income, Adjusted EPS, and Adjusted EBITDA Adjusted Net Income and Adjusted Earnings per Share This subsection presents the company's Adjusted Net Income and Adjusted EPS, excluding non-cash and non-core items for a clearer view of operating performance Adjusted Net Income and Adjusted Earnings per Share (in thousands, except per share) | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net Income | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Adjusted Net Income | $15,249 | $18,095 | -15.7% | $26,177 | $32,772 | -20.1% | | Adjusted Basic EPS | $0.51 | $0.55 | -7.3% | $0.87 | $0.99 | -12.1% | | Adjusted Diluted EPS | $0.51 | $0.55 | -7.3% | $0.86 | $0.97 | -11.3% | - Adjusted Net Income and Adjusted EPS exclude non-cash amortization of intangibles, non-cash compensation costs, restructuring costs, transaction costs, and other non-core items[172][177][206][207] Adjusted EBITDA This subsection defines and presents Adjusted EBITDA, a non-GAAP measure used to assess the company's operational profitability before certain non-operating and non-cash expenses Adjusted EBITDA (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net Income | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Adjusted EBITDA | $28,788 | $31,052 | -7.3% | $50,406 | $56,466 | -10.8% | - Adjusted EBITDA is defined as net income before depreciation and amortization, interest expense, income taxes, and adjusted for non-cash share-based compensation, restructuring costs, transaction costs, and other non-recurring items[182][214][215] Liquidity and Capital Resources This section discusses the company's sources of liquidity, cash flow activities, and capital resources, including its revolving credit facility and merger-related restrictions - Principal liquidity sources are cash from operations and borrowings under the $425.0 million revolving credit facility, with $380.9 million available as of June 30, 2025[217][219][220] - Net cash provided by operating activities increased by $52.5 million to $81.2 million for the six months ended June 30, 2025, primarily due to a $58.8 million change in working capital[235] - Net cash used in financing activities included $12.5 million of net repayments under the revolving credit facility and $16.3 million for common stock repurchases during the six months ended June 30, 2025[237] - The Merger Agreement imposes restrictions on assuming additional debt, issuing equity, repurchasing equity, and making certain capital expenditures[233] Critical Accounting Estimates This section identifies the company's critical accounting estimates, such as allowance for credit losses, goodwill, intangible assets, and income taxes - Critical accounting estimates include Allowance for Credit Losses, Goodwill and Intangible Assets, and Income Taxes[243] - No material changes to critical accounting estimates occurred during the three and six months ended June 30, 2025[240] Recent Accounting Pronouncements This section outlines recent accounting pronouncements and the company's ongoing evaluation of their potential impact on financial statements - The Company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures, effective 2025), ASU 2024-03 (Expense Disaggregation, effective 2026), and ASU 2025-05 (Credit Losses for Accounts Receivable, effective 2025)[30][31][32][241] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details the Company's exposure to market risks, including foreign currency risk, interest rate risk, and credit risk. It outlines how these risks are managed and their potential impact on financial performance, providing specific data on currency exchange rates, debt interest rates, and credit loss provisions Foreign Currency Risk This section describes the company's exposure to foreign currency fluctuations and its strategies for managing this risk, including the impact of exchange rate changes on revenues - Foreign currency risk is managed through business structure and active risk management, with tom and spot transactions settled within two business days[244] - Revenues from foreign subsidiaries account for approximately 3% of consolidated revenues, so a 10% change in foreign currency rates would have a de minimis impact on overall operating results[247] - Long-term appreciation of the Mexican peso or Guatemalan quetzal against the U.S. dollar could negatively affect revenues and profit margins[248] Currency Exchange Rates | Currency Pair | Spot Rate (June 30, 2025) | Average Rate (6 Months Ended June 30, 2025) | Spot Rate (Dec 31, 2024) | Average Rate (6 Months Ended June 30, 2024) | | :-------------------------- | :------------------------ | :------------------------------------------ | :----------------------- | :------------------------------------------ | | U.S. dollar/Mexican Peso | 18.80 | 19.95 | 20.75 | 17.10 | | U.S. dollar/Guatemalan Quetzal | 7.67 | 7.68 | 7.68 | 7.77 | | U.S. dollar/Canadian Dollar | 1.37 | 1.41 | 1.44 | 1.36 | | U.S. dollar/Dominican Peso | 59.47 | 60.89 | 61.10 | 58.85 | | U.S. dollar/Euro | 0.85 | 0.92 | 0.96 | 0.93 | | U.S. dollar/British Pound Sterling | 0.73 | 0.77 | 0.80 | — | Interest Rate Risk This section explains the company's exposure to interest rate fluctuations, particularly on its variable-rate revolving credit facility, and quantifies the potential impact of rate changes - The Company's revolving credit facility has variable interest rates (SOFR, EURIBOR, SONIA), exposing it to interest rate risk[249] - A hypothetical 1% increase in interest rates on the $144.1 million outstanding debt as of June 30, 2025, would increase annual cash interest expense by approximately $1.4 million[250] Credit Risk This section details the company's credit risk exposure from cash balances and receivables, along with its management strategies and the provision for credit losses - The Company is exposed to credit risk from uninsured cash balances in U.S. and foreign banks, and from receivables with sending agents and digital partners[251][252] - Credit risk is managed by diversifying cash balances among financial institutions and conducting credit reviews for agents[251][252] Provision for Credit Losses (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | | Provision for credit losses | $3,900 | $3,400 | +14.7% | | % of Total Revenues | 1.3% | 1.1% | +0.2% | - The increase in provision for credit losses is primarily due to higher outstanding accounts receivable from sending agents[253] Item 4. Controls and Procedures This section addresses the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting. Management concluded that disclosure controls were effective as of June 30, 2025, with no material changes to internal control during the quarter Evaluation of Disclosure Controls and Procedures This subsection presents management's conclusion on the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[256] - Disclosure controls are designed to provide reasonable, not absolute, assurance that objectives are met[255] Changes in Internal Control Over Financial Reporting This subsection reports on any material changes in the company's internal control over financial reporting during the most recent fiscal quarter - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[257] Part II - Other Information This section provides additional information not covered in Part I, including legal proceedings, updated risk factors, equity security sales, and other disclosures Item 1. Legal Proceedings The Company is involved in various legal claims and litigation as part of its ordinary course of business. Management believes these actions will not have a material adverse effect on the Company's business, financial condition, or results of operations - The Company is involved in ordinary course legal proceedings, but management does not expect a material adverse effect on its business or financial condition[259] Item 1A. Risk Factors This section updates the risk factors from the previous annual report, highlighting new risks primarily related to the proposed merger with Western Union. These include potential business disruptions, uncertainty for stakeholders, diversion of management attention, significant transaction costs, and the possibility of the merger not being consummated, which could lead to termination fees and adverse impacts on the business - No material changes to principal risk factors from the 2024 Form 10-K, except for new risks related to the proposed merger with Western Union[261] - Risks related to the proposed merger include business disruptions, uncertainty for customers/agents/employees, management distraction, significant transaction costs, and the potential for the merger to not be completed, which could result in termination fees[262][263][264][265] - Securities class action and derivative lawsuits related to the merger could result in substantial costs and delay or prevent its completion[266] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter ended June 30, 2025, the Company repurchased 981,610 shares of common stock, with 980,341 shares under its publicly announced repurchase program. Approximately $48.3 million remains available under the program, but repurchase activity has been suspended due to restrictive covenants in the proposed Merger Agreement Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased under the Program | | :---------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------- | :------------------------------------------------------------- | | April 1 through April 30 | 330,367 | $12.18 | 329,642 | $55,510,523 | | May 1 through May 31 | 344,317 | $11.37 | 344,136 | $51,596,312 | | June 1 through June 30 | 306,926 | $10.75 | 306,563 | $48,299,973 | | Total (Q2 2025) | 981,610 | $11.43 (avg) | 980,341 | N/A | - As of June 30, 2025, $48.3 million remained available for future share repurchases under the program[267] - The Company has suspended repurchase activity under the program due to restrictive covenants in the Merger Agreement[267] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[268] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[269] Item 5. Other Information During the quarter ended June 30, 2025, no officer or director adopted or terminated any Rule 10b5-1 trading plan or non-Rule 10b5-1 trading arrangement - No officer or director adopted or terminated any Rule 10b5-1 trading plan or non-Rule 10b5-1 trading arrangement during Q2 2025[270] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents - The report includes certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents as exhibits[272] Signatures The report is duly signed on August 11, 2025, by Robert Lisy, Chief Executive Officer and President, and Andras Bende, Chief Financial Officer - The report was signed on August 11, 2025, by Robert Lisy (CEO and President) and Andras Bende (CFO)[278]