International Money Express, Inc. Q4 FY2023 earnings call

Bullet points:

• Intermex's omnichannel strategy is efficient, with Retail and Digital offerings. Retail network is hard to replicate, and Digital has high user satisfaction with a 4.8/5 rating.
• Acquired La Nacional in Q4 2023, which has meaningful presence in US to Dominican Republic market. I-Transfer in Europe grew 17% in Q4.
• Expanded outside sales force by adding 6 new positions to the 40-member team and tripled the inside sales team from 12 to 36, strategically positioning offshore to boost market penetration and same store sales.
• Focus on untapped and underdeveloped markets, using refined strategies for Retail and Digital to drive profitable growth.

In the fourth quarter, Intermex delivered revenue of just under $172 million, up 11.2% year-over-year. Diluted GAAP EPS was $0.49, up 40% YOY. Adjusted EBITDA was up 14.5% to $33.3 million. Digital transactions were up 43% for the quarter, with strong margins, and the Digital Receive side saw almost 18% YOY growth. The Average Principal Sent was affected by the inclusion of La Nacional and iTransfer, but excluding those, principal amounts were flat. The I-Transfer business in Europe grew at 17% in Q4. The La Nacional acquisition brought a meaningful presence in the US to Dominican Republic market, and Intermex captured a 21.4% share in the top five markets to Latin America in 2023.

Bullet points:

• Full year 2024 guidance: Revenue $681 million to $701.8 million, fully diluted GAAP EPS $1.81 to $1.96, adjusted EBITDA $124 million to $127.7 million, adjusted diluted EPS $2.13 to $2.31.
• First quarter 2024 guidance: Revenue $150.4 million to $155 million, fully diluted GAAP EPS $0.32 to $0.35, adjusted EBITDA $24.4 million to $25.1 million, adjusted diluted EPS $0.39 to $0.42.
• Guidance takes into account step down in Mexico market growth, but expects to beat market growth in retail and digital, maintain strong margins, pivot to leaner operating model, and use strong liquidity for aggressive share buybacks.

Bullet points:

• Slowdown in market growth for Mexico, a key corridor in Latin America, which could impact revenue and growth expectations.
• Pricing pressures in certain corridors, which may affect margins if not managed properly.
• Dependence on specific markets and segments, where underperformance could impact overall results.

Q: David Scharf asked about background and geographic context for sales force expansion and multi-year footprint.

A: Bob Lisy explained the inside sales team expansion, with 24 positions in Guatemala, tripling the inside team to boost agent contact and market penetration.

Q: David Scharf followed up on maintaining share in US to Mexico at mature agents.

A: Bob Lisy stated Intermex is gaining share at retail and digital, with the growth program targeting underserved areas to further separate from market share.

Q: Mike Grondahl asked about salary and benefit impact of sales headcount increase.

A: Andras Bende said the aggregate impact on salary and benefits is relatively small, with a 4%-5% year-over-year increase.

Q: Mike Grondahl asked about buyback uptick.

A: Bob Lisy confirmed the buyback program will uptick to $20 million per quarter and include block purchases if beneficial to shareholders.

Q: Chris Vang asked about Visa Direct opportunities and expansion plans.

A: Marcelo Theodoro mentioned huge opportunities in partnerships like India and Philippines, with traction already seen but a midterm approach. Andras Bende added the contribution from Visa Direct to 2024 plan is currently small.

Q: Chris Vang asked about Latam regions performance outside Mexico.

A: Bob Lisy said broader market in Latin America has slowed, but some countries like Nicaragua are growing much faster than the market.

Q: Sam Salvas asked about pricing dynamics in Q4 and 2024.

A: Bob Lisy said Intermex extended margins in Q4 by being efficient, with aggressive pricing in underserved zip codes without degrading core margins.

Q: Sam Salvas asked about iTransfer business and goals.

A: Andras Bende said mid-teens growth is the baseline for iTransfer, with opportunities in Italy, Spain, and other European countries like Germany, France, and UK.