International Money Express(IMXI) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section provides the unaudited financial statements and management's discussion of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q1 2022, highlighting a 21.2% revenue increase to $114.7 million and a 29.8% net income increase to $11.7 million, along with detailed accounting notes Condensed Consolidated Financial Statements The company's financial position strengthened as of March 31, 2022, with total assets increasing to $349.7 million, driving net income up to $11.7 million, and improving cash flow from operations to a $33.3 million inflow | Financial Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Total current assets | $265,220 | $263,545 | | Total assets | $349,688 | $340,536 | | Liabilities & Equity | | | | Total current liabilities | $113,732 | $116,859 | | Total liabilities | $196,954 | $197,496 | | Total stockholders' equity | $152,734 | $143,040 | | Income Statement Item | Three Months Ended Mar 31, 2022 (in thousands) | Three Months Ended Mar 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total revenues | $114,666 | $94,577 | | Operating income | $17,111 | $13,490 | | Net income | $11,654 | $8,977 | | Earnings per share (Basic and Diluted) | $0.30 | $0.23 | | Cash Flow Activity | Three Months Ended Mar 31, 2022 (in thousands) | Three Months Ended Mar 31, 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $33,284 | $(32,406) | | Net cash used in investing activities | $(4,316) | $(1,930) | | Net cash (used in) provided by financing activities | $(4,434) | $14,519 | | Net increase (decrease) in cash | $24,763 | $(19,820) | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, the company's money transmission business, the acquisition of La Nacional, adoption of ASC 842, debt structure, and a $40 million stock repurchase program - The company operates as a money transmitter from the U.S. and Canada to Latin America, Africa, and Asia through a network of agents and company-operated stores[22] - On March 16, 2022, the company entered into a definitive agreement to acquire Envios de Valores La Nacional Corp. and LAN Holdings, Corp., with the transaction expected to close in Q3 2022[28] - The company adopted the new lease accounting standard, ASC 842, on January 1, 2022, resulting in the recognition of approximately $5.6 million in right-of-use assets and lease liabilities[29][44] - In August 2021, the Board approved a $40.0 million stock repurchase program, under which the company purchased 224,388 shares for an aggregate price of $3.6 million during Q1 2022[80][81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 financial performance, highlighting strong growth in remittances and principal amount sent, along with analysis of revenue, expenses, non-GAAP measures, and liquidity Overview and Key Factors This section provides an overview of the company's money remittance business, key Q1 2022 performance metrics, the pending La Nacional acquisition, and significant influencing factors - The company is a leading omnichannel money remittance service primarily focused on the U.S. to Latin America and the Caribbean (LAC) corridor, with expansion to Africa and Asia[94] | Performance Metric | Q1 2022 | YoY Change | | :--- | :--- | :--- | | Principal Amount Sent | $4.4 billion | +29.6% | | Total Remittances Processed | 10.0 million | +19.7% | | Agent Network Growth (in Q1) | N/A | +2.1% | - On March 16, 2022, the company agreed to acquire Envios de Valores La Nacional Corp. and LAN Holdings, Corp., expanding its presence in the U.S., Canada, and Europe[101] Results of Operations For the three months ended March 31, 2022, total revenues increased by 21.2% to $114.7 million, driven by a 21.1% increase in wire transfer fees and a 20.1% increase in foreign exchange gains, leading to a 29.8% rise in net income - Total revenues for Q1 2022 increased by 21.2% year-over-year, from $94.6 million to $114.7 million[126] - Wire transfer and money order fees, net, grew by 21.1% to $98.0 million, primarily due to a 19.7% increase in transaction volume[127] - Net income for Q1 2022 was $11.7 million, a 29.8% increase from $9.0 million in Q1 2021[135] Non-GAAP Financial Measures The company uses Adjusted Net Income, Adjusted Earnings per Share, and Adjusted EBITDA to evaluate performance, with Adjusted EBITDA growing 23.0% to $20.7 million in Q1 2022 | Reconciliation to Adjusted Net Income (in thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income | $11,654 | $8,977 | | Share-based compensation | $1,268 | $896 | | Amortization of intangibles | $972 | $1,262 | | Other charges and expenses | $141 | $117 | | Income tax benefit related to adjustments | $(667) | $(619) | | Adjusted Net Income | $13,368 | $10,633 | | Reconciliation to Adjusted EBITDA (in thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income | $11,654 | $8,977 | | Interest expense | $952 | $1,339 | | Income tax provision | $4,505 | $3,174 | | Depreciation and amortization | $2,183 | $2,335 | | EBITDA | $19,294 | $15,825 | | Share-based compensation | $1,268 | $896 | | Other charges and expenses | $141 | $117 | | Adjusted EBITDA | $20,703 | $16,838 | Liquidity and Capital Resources The company's primary liquidity sources are cash from operations and its revolving credit facility, with total debt at $84.2 million and significant available borrowing capacity, supported by a $33.3 million net cash inflow from operating activities in Q1 2022 - The company's Amended and Restated Credit Agreement provides for a $150.0 million revolving credit facility and an $87.5 million term loan facility[157] - As of March 31, 2022, total debt was $84.2 million, with an additional $220.0 million available for borrowing[158] - Under its stock repurchase program, the company purchased 224,388 shares for $3.6 million in Q1 2022, with $30.8 million remaining available for future repurchases[167] - Net cash provided by operating activities was $33.3 million for Q1 2022, compared to net cash used of $32.4 million in Q1 2021, an increase of $65.7 million[170] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risks, primarily from foreign currency fluctuations, interest rate changes on its variable-rate debt, and credit risk related to receivables and uninsured cash balances - The company faces foreign currency risk from transactions settled in local currencies, primarily Mexican pesos and Guatemalan quetzales, with open spot foreign exchange contracts amounting to approximately $5.4 million as of March 31, 2022[182] - The company is exposed to interest rate risk on its $84.2 million of variable-rate debt, where a hypothetical 1% increase in interest rates would raise annual cash interest expense by approximately $0.8 million[188] - Credit risk exposure stems from receivable balances from sending agents and uninsured cash balances in foreign banks, with the provision for credit losses being $0.4 million for Q1 2022[189][190][191] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[195] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[196] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and other required disclosures Item 1. Legal Proceedings The company is subject to various legal claims in the ordinary course of business but does not expect them to have a material adverse effect on its financial condition or results of operations - The company is subject to various legal claims in the ordinary course of business but does not expect them to have a material and adverse effect on its business or financial condition[198] Item 1A. Risk Factors There have been no material changes to the principal risk factors affecting the company from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[200] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides details on the company's common stock repurchases during the first quarter of 2022, under a publicly announced program authorizing up to $40.0 million in repurchases | Period (2022) | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | January | 93,013 | $16.13 | 93,013 | | February | 89,949 | $15.88 | 89,739 | | March | 58,853 | $16.90 | 41,636 | | Total | 241,815 | | 224,388 | - The stock repurchase program, approved in August 2021, authorizes the company to purchase up to $40.0 million of its outstanding common stock and has no expiration date[204] Other Items (3, 4, 5, 6) The report indicates no defaults upon senior securities (Item 3), mine safety disclosures are not applicable (Item 4), and no other information to report (Item 5), with Item 6 listing the exhibits filed with the Form 10-Q - Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) are reported as 'None' or 'Not applicable'[202][203][204] - Item 6 lists the exhibits filed with the report, including Sarbanes-Oxley certifications and Inline XBRL documents[205]