International Money Express, Inc. Q2 FY2023 earnings call

• Solid quarter of growth with sustained track record and profitable integration of acquisitions. • Market slowdown in Latin America/Caribbean led to pricing discounting; evaluating and modifying pricing to maximize profitability. • Reassessed market share to include top 5 Latin American/Caribbean countries, with Intermex's estimated market share at 21.7% in Q2 2023. • Restructured US sales force with sixth region and 10 new sales districts to target unserved markets. • Progress in integrating La Nacional US business and capitalizing on Europe opportunities with i-Transfer, which has growth potential. • Digital business grew 63% in Q2; payroll and GPR cards in large markets with distribution advantage, positioned for growth in 2024+.

Revenue increased 23.5% to $169.2 million. Net income was $15.4 million, a decrease of 3.5%, while EPS increased 2.4% to $0.42 a share. Adjusted net income was $18.4 million, up 0.6% and adjusted EPS increased 6.4% to $0.50 per share. EBITDA increased 11.7% to $30.9 million. The number of unique active customers increased by 41.1% to 4.2 million, generating 15.1 million remittance transactions, a 26.7% increase year-over-year. Digitally originated transactions grew 63%. Total principal transfer grew 19.5% to $6.4 billion. The La Nacional acquisition and i-Transfer business had specific growth metrics, with i-Transfer revenue up ~14% and EBITDA up ~70% in Q2.

• Full year 2023 guidance: Revenue $644.9M - $673M, diluted GAAP EPS $1.56 - $1.63, adjusted diluted EPS $1.87 - $1.94, adjusted EBITDA $114.8M - $119.8M. • Third quarter 2023 guidance: Revenue $165.7M - $176.8M, GAAP diluted EPS $0.40 - $0.43, adjusted diluted EPS $0.49 - $0.52, adjusted EBITDA $30M - $32M. • Will record ~$600k restructuring charge in Q3, generating ~$1.5M annualized savings starting Sept.

• Market slowdown in Latin America/Caribbean leading to increased price discounting. • Competitive pressures from discounters in the marketplace. • Macro factors like peso strength impacting principal amounts. • Operational issues such as an agent absconding for Mother's Day and settlement of a long-standing HR litigation in California.

Q: Could you talk a little bit more about the US sales force? It sounded like you restructured it. You created a sixth region and I think you said added 10 districts. What about just the number of salespeople? Kind of how has that trended? And how do you think that's sort of feeding the agent pipeline that you mentioned?

A: Bob Lisy explained they added a sixth region and created additional sales districts to have more focus on distinct geographies, spending time on markets with low market share and huge upside, and being more aggressive in retail to gain wires while maintaining margins.

Q: I just wanted to get a better sense of when the market began to slow down incrementally from the time you gave guidance back in May. Like what really changed? Is it more just pure macro, or is there something else going on in the market beyond just the macro pressures?

A: Bob Lisy said the market grew at 12% last quarter and 8% to Mexico in Q2, with some sporadic slowing, and Andras Bende discussed factors like market slowdown, pricing dynamics, and unhelpful items converging in Q2.

Q: Maybe just to follow-up a little more on the competitive dynamic right now. Bob, you called out a couple of private discounters. But taking a step back and maybe compared to prior cycles, like you say, the steps and flows in terms of price competition. Are the pricing moves by competitors. Would you describe them as fairly broad-based among most of the remittance providers you encounter in your stores, or is it concentrated within a couple of discounters?

A: Bob Lisy stated the pricing moves are fairly broad-based among competitors, with some large publics and other public companies being aggressive, and Intermex holding the line with strong margins and headroom.

Q: I have a question on the new Florida immigration law, so specifically the Senate Bill 1718, which was past in May and came into impact on July the 1. Have you seen any impact so far in the first month of implementation? And what are your expectations for any potential impact or any potential offset to that?

A: Bob Lisy said there were short-term protests but it's too early to tell, and not expecting long-term big impact as labor needs will likely continue to drive remittances.