International Money Express(IMXI) - 2022 Q2 - Quarterly Report

PART 1 - FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited financial statements for H1 2022 detail asset and equity growth, revenue and net income increases, and key accounting policies including lease standards and debt facilities Condensed Consolidated Balance Sheets As of June 30, 2022, total assets and stockholders' equity increased, driven by accounts receivable and retained earnings, while liabilities remained stable Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $114,600 | $132,474 | | Accounts receivable, net | $97,154 | $67,317 | | Total current assets | $274,258 | $263,545 | | Total assets | $358,621 | $340,536 | | Liabilities & Equity | | | | Total current liabilities | $116,927 | $116,859 | | Debt, net (long-term) | $77,270 | $79,211 | | Total liabilities | $198,423 | $197,496 | | Retained earnings | $109,441 | $81,803 | | Treasury stock, at cost | ($19,194) | ($5,566) | | Total stockholders' equity | $160,198 | $143,040 | Condensed Consolidated Statements of Income and Comprehensive Income For Q2 and H1 2022, the company reported significant year-over-year increases in total revenues, operating income, net income, and diluted EPS Statement of Income Highlights (in thousands, except EPS) | Metric | Q2 2022 | Q2 2021 | YoY Change | H1 2022 | H1 2021 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenues | $136,935 | $116,747 | +17.3% | $251,600 | $211,323 | +19.1% | | Operating income | $23,207 | $19,284 | +20.3% | $40,318 | $32,775 | +23.0% | | Net income | $15,984 | $13,227 | +20.8% | $27,638 | $22,204 | +24.5% | | Diluted EPS | $0.41 | $0.34 | +20.6% | $0.71 | $0.57 | +24.6% | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased in H1 2022, primarily driven by net income and share-based compensation, partially offset by treasury stock acquisitions - Key drivers of the change in stockholders' equity for the first six months of 2022 were net income of $27.6 million and share-based compensation of $2.9 million[22] - The company acquired $13.6 million of treasury stock in the first six months of 2022, reducing stockholders' equity[22] Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly decreased in H1 2022 due to working capital changes, while investing and financing activities primarily involved asset purchases and share repurchases Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,560 | $70,290 | | Net cash used in investing activities | ($6,867) | ($3,181) | | Net cash used in financing activities | ($15,612) | ($2,348) | | Net (decrease) increase in cash | ($17,874) | $64,809 | - Financing activities in H1 2022 included $13.6 million for repurchases of common stock and $2.2 million for repayments of the term loan facility[23] Notes to Condensed Consolidated Financial Statements The notes provide details on business operations, accounting policies, a pending acquisition, lease accounting adoption, debt facilities, and the ongoing stock repurchase program - On March 16, 2022, the Company entered into a definitive agreement to acquire Envios de Valores La Nacional Corp. and LAN Holdings, Corp. for approximately $50.0 million in cash, with up to an additional $3.0 million in contingent consideration[31] - The company adopted the new lease accounting standard, ASC 842, on January 1, 2022, resulting in the recording of right-of-use assets and lease liabilities of approximately $5.6 million[32][46] - In August 2021, the Board approved a $40.0 million stock repurchase program. During the six months ended June 30, 2022, the company purchased 727,901 shares for $13.6 million, with $20.8 million remaining available for future repurchases[81][82] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong H1 2022 performance driven by agent network growth and transaction volume, highlighting the pending La Nacional acquisition, increased Adjusted EBITDA, and robust liquidity Overview The company, a leading money remittance service, reported significant growth in principal amount sent and remittances processed in H1 2022, alongside a pending strategic acquisition - For the six months ended June 30, 2022, the principal amount sent increased by approximately 25.4% to $9.7 billion, and total remittances processed increased by 18.8% to 21.9 million compared to H1 2021[98] - The company's agent network grew by approximately 6.4% in the first six months of 2022[98] - The acquisition of La Nacional is expected to contribute approximately $70.0 million to $80.0 million a year in revenues with an Adjusted EBITDA margin of 9% to 11% once fully integrated[103] Results of Operations The company achieved substantial year-over-year growth in revenues, net income, and Adjusted EBITDA for both Q2 and H1 2022, driven by increased transaction volume Q2 2022 vs Q2 2021 Performance (in thousands) | Metric | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $136,935 | $116,747 | +17.3% | | Operating Income | $23,207 | $19,284 | +20.3% | | Net Income | $15,984 | $13,227 | +20.8% | | Adjusted EBITDA | $27,656 | $23,179 | +19.3% | H1 2022 vs H1 2021 Performance (in thousands) | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $251,600 | $211,323 | +19.1% | | Operating Income | $40,318 | $32,775 | +23.0% | | Net Income | $27,638 | $22,204 | +24.5% | | Adjusted EBITDA | $48,359 | $40,017 | +20.8% | - The increase in wire transfer fees for Q2 2022 was primarily due to an 18.1% increase in transaction volume, driven by a 10.8% growth in the agent network from June 2021 to June 2022[129] Liquidity and Capital Resources The company maintains strong liquidity through credit facilities, actively manages its debt, and continues its share repurchase program, despite a significant decrease in operating cash flow due to working capital changes - The company has an Amended and Restated Credit Agreement providing for a $150.0 million revolving credit facility and an $87.5 million term loan facility[178] - As of June 30, 2022, total debt was $83.1 million, with no outstanding borrowings on the revolving credit facility and $220.0 million of additional borrowing capacity available[179] - During H1 2022, the company purchased 727,901 shares for $13.6 million under its repurchase program, with $20.8 million remaining available for future repurchases[188] - Net cash from operating activities decreased to $4.6 million in H1 2022 from $70.3 million in H1 2021, mainly due to a $72.8 million change in working capital related to timing of transmittals and prefunding of payers[191][193] Quantitative and Qualitative Disclosures about Market Risk The company manages exposure to foreign currency risk, interest rate risk on variable-rate debt, and credit risk from agent receivables through various strategies - The company has foreign currency exposure from open tom and spot foreign exchange contracts for Mexican pesos and Guatemalan quetzales, amounting to approximately $39.5 million at June 30, 2022[203] - The company is exposed to interest rate risk on its $83.1 million of outstanding variable-rate debt. A hypothetical 1% increase in interest rates would increase annual cash interest expense by approximately $0.8 million[209] - Credit risk exposure includes receivable balances from sending agents. The provision for credit losses was $1.5 million for H1 2022 (0.6% of total revenues), an increase from $0.7 million in H1 2021 (0.3% of total revenues)[211][212] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[216] - No material changes to the company's internal control over financial reporting occurred during the most recently completed fiscal quarter[217] PART II - OTHER INFORMATION Legal Proceedings The company is subject to various claims and litigation in the ordinary course of business but does not believe any of these will have a material adverse effect on its financial condition or results of operations - The company states that it does not expect any legal proceedings, individually or in the aggregate, to have a material and adverse effect on its business, financial condition, and results of operations[219] Risk Factors There have been no material changes to the principal risk factors from those disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes to the company's principal risks were reported from the risk factors previously disclosed in the 2021 Form 10-K[221] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2022, the company repurchased a significant number of shares under its authorized program, with a remaining balance available for future purchases Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Shares Purchased | Shares Purchased as Part of Program | Value Remaining in Program | | :--- | :--- | :--- | :--- | | April 2022 | 446 | — | $30,805,733 | | May 2022 | 288,864 | 218,604 | $26,497,541 | | June 2022 | 284,909 | 284,909 | $20,805,743 | | Total Q2 | 574,219 | 503,513 | $20,805,743 | - The stock repurchase program, approved in August 2021, authorizes up to $40.0 million in share purchases and has no expiration date[225] Defaults Upon Senior Securities None - The company reported no defaults upon senior securities[223] Mine Safety Disclosures Not applicable - This item is not applicable to the company[224] Other Information None - The company reported no other information for this item[225] Exhibits This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications from the CEO and CFO, and Inline XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Section 302 and Section 1350 of the Sarbanes-Oxley Act, along with XBRL-related documents[226]