Q2 2024 Currency Exchange International Corp Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q2 2024 Financial Results Conference Call. At this time, all lines are in listen-only mode.

Operator: Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q2 2024 Financial Results Conference Call. At this time, all lines are enlist and only mode.

Good morning, ladies and gentlemen, and welcome to the currency Exchange International Q2, 'twenty 'twenty four financial results Conference call.

Speaker Change: Time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time. During this call you required immediate assistance. Please press star zero for the operator. This call is being recorded on Thursday June 13, 2024, I would now like turn the conference over to Bill Mitchell Us Investor Relations.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, June 13, 2024. I would now like to turn the conference over to Bill Matulis, Investor Relations Manager. Please go ahead.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator.

Operator: This call is be recorded on Thursday, June 13, 2024.

Operator: I would now like to the conference over to Bill Mitoulas, Investor Relations Manager. Please go ahead.

Speaker Change: Since manager. Please go ahead.

Bill Matulis: Thank you, operator. Good morning, everyone. Welcome to the Currency Exchange International conference call to discuss the financial results for the second quarter of the 2024 fiscal year. Thanks for joining us.

Bill Mitoulas: Thank you, operator.

Bill Mitchell: Thank you operator, and good morning, everyone.

Bill Mitoulas: Good morning, everyone. Welcome to the Currency Exchange International conference call. To discuss the financial results for the second quarter of the 2024 fiscal year. Thanks for joining us.

Bill Matulis: With us today are President and CEO Randolph Pena, Group CFO Gerhard Barnhart, and Group Treasurer and Interim CFO of EBC, Katie Davis. Gerhard will provide an overview of CXI's financial results and his latest perspective on the company's operations. Randolph will then provide his commentary on CXI's strategic initiatives, sales efforts, and business activities, after which we'll open it up to your questions. Today's conference call is open to shareholders, prospective shareholders, members of the investment community, including the media.

Speaker Change: Welcome to the currency Exchange International conference call to discuss the financial results for the second quarter of.

Speaker Change: 2020 for fiscal year, thanks for joining us.

Bill Mitoulas: With us today, our President, CEO Randolph Pinna, Group CFO Gerhard Barnard, and Group Treasurer at the German CFO of EVC Katie Davis. Gerhard will provide an overview of CXI financial results and his latest perspective on the company's operations. Randolph will then provide his commentary on CXI strategic initiatives, sales efforts, and business activities, after which we'll open it up to your questions.

Speaker Change: With us today are president and CEO Randall spin off.

Gerhard Barnhart: Group CFO Gerhard Barnhart.

Speaker Change: Group Treasurer.

Speaker Change: Germs fearful of a B C J D Davis.

Speaker Change: Gerhard will provide an overview of financial results that this latest perspective on the company's operations.

Speaker Change: Randolph will then provide his commentary on our strategic initiatives sales efforts and business activities after which we'll open it up to your questions.

Bill Mitoulas: Today, the conference call is open to shareholders, prospective shareholders, members of the investment community, including the media. But those of you may happen to leave our call before its conclusion. Please be advised that this conference call will be recorded. And then uploaded to CXI's Investor Relations website page along with financial statements in MDNA.

Speaker Change: Today's conference call is open to shareholders' perspective shareholders.

Speaker Change: Members of the investment community, including the media.

Bill Matulis: For those of you who may happen to leave our call before its conclusion, please be advised that this conference call will be recorded and then uploaded to CXI's Investor Relations website page, along with the financial statements and MD&A. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. Please refer to our financial statements and MD&A reports for more information about the factors that could cause these different results and the assumptions that we have made.

Speaker Change: But those of you may have to lever called before its conclusion. Please be advised that this conference call will be recorded and then uploaded to see Exxon's Investor Relations website, along with the financial statements and MD&A.

Bill Mitoulas: Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. Please refer to our financial statements in MDNA reports for more information about the factors that could cause these different results and the assumptions that we have made.

Speaker Change: Please note that this conference call will include forward looking information, which is based on a number of assumptions and actual results could differ materially. Please refer to our financial statements and MD&A reports for more information about the factors that could cause these different results and the assumptions that we've made.

Bill Mitoulas: What they ought to turn the call over to Gerhard. Gerhard, please go ahead.

Bill Matulis: With that, I'll turn the call over to Gerhard. Gerhard, please go ahead.

With that I'll turn the call over to Gary Hart Gerhard. Please go ahead.

Gerhard Barnhart: Thank you, Bill, and thank you everyone for joining today's call. I will present a more condensed overview of the results of the consolidated CXI group for the second quarter ending April 30, 2024, to allow more time for questions at the end, as requested. These results are presented in U.S. dollars, and my overview will also incorporate the results of our wholly owned subsidiary, Exchange Bank of Canada, where the most significant financial event of the quarter was management's reversal of the deferred tax asset allowance of its wholly-owned subsidiary, Exchange Bank of Canada, and recognizing the expense of about US$1.4 million in the income statement due to continuous challenges.

Gerhard Barnard: Thank you, Vol. And thank you, everyone, for joining today's call. I will present a more condensed overview of the results of the consolidated CXI Group for the second quarter ending April 30, 2024.

Speaker Change: Thank you Bo and thank you everyone for joining today's call.

Speaker Change: I will present, a more condensed overview of the results of the consolidated <unk> for the second quarter ending April 30 of 2024 to allow more time for questions at the end as requested.

Gerhard Barnard: To allow more time for questions at the end, as requested. These results are presented in US dollars. And my overview will also incorporate the results of our wholly owned subsidiary Exchange Bank of Canada, where the most significant financial event of the quarter was management's reversal after the third tax asset allowance of its wholly owned subsidiary Exchange Bank of Canada, and recognizing the expense of about $1.4 million in the income statement due to continuous challenges. The group continues to focus on executing against its strategic plan, and with significant investments being made in our people, CXI and EBC combined at 391 full-time and part-time employees, a decrease from 400 and 6 of the previous quarter.

Speaker Change: These results are presented in U S dollars and my overview will also incorporate the results of our wholly owned subsidiary Exchange Bank of Canada, where.

Speaker Change: Were the most significant financial event of the quarter was management's reversal of the deferred tax asset allowance of its wholly owned subsidiaries exchange bank of Canada, and recognizing the expense of about $1 $4 million in the income statement due to continuous challenges.

Speaker Change: Yes.

Gerhard Barnhart: The Group continues to focus on executing against its strategic plan and with significant investments being made in our people. CXI and EBC combined have 391 full-time and part-time employees, a decrease from 406 in the previous quarter. We continue to invest in technology platforms, which remains a huge focus for us. NetSuite has proven to provide our executive team with real-time data to better manage the group's operations. At Disney Cariba, our treasury management system and Alyssa's AML-compliant software is heading towards the final stages of implementation and operationalization by the end of the fiscal year. Our IT team continues to leverage the power of cloud computing to enhance integration capabilities, improve scalability, performance, and resilience.

Speaker Change: The group continues to focus on executing against its strategic plan and with significant investments being made in our people see it shine ABC combined have standard 91, full time and part time employees.

Speaker Change: The decrease from 406 of the previous quarter.

Gerhard Barnard: The continued to invest in technology platforms, which remains a huge focus for us. Next week, this proven to provide our executive team with real-time data to better manage the group's operations. Additionally, Caribbean, our Treasury Management System, and a less as AML compliance software, is heading towards the final stages of implementation and operationalization by the end of the fiscal year. Our IT team continues to leverage the power of the cloud computing to enhance integration capabilities, briefs kind of quality, performance, and resilience. These initiatives and investments, among others, support more efficient future growth for the group.

Speaker Change: We need to invest in technology platforms, which remains a huge focus for us Mitsui just proven to provide our executive team with real time data to better manage the group's operations.

Speaker Change: Additionally, kariba, our Treasury management system and that lets us AML compliance software is heading towards the final stages of implementation and upper realization by the end of the fiscal year. Our team continues to leverage the power of the cloud computing.

Speaker Change: Enhanced integration capabilities scalability performance and resilience. These.

Gerhard Barnhart: These initiatives and investments, among others, support more efficient future growth for the Group. On November 29, 2023, the Group announced its notice of intention to make a normal course issuer bid, NCID, or share buyback and to purchase for cancellation a maximum amount of 322,000 common shares, representing 5% of the companies issued outstanding common shares. At the end of the second quarter, the company bought back 52,100 shares at an average price of roughly 24.5 Canadian dollars for a total investment of 1.3 million Canadian dollars.

Speaker Change: These initiatives and investments among others support more efficient future growth for the group.

Gerhard Barnard: On November 29, 2023, the group announced its notice of intention to make a normal course issue of it in CID or share buy-back and to purchase for cancellation the maximum amount of 322,000 common shares representing 5% of the company's issued and outstanding common shares. At the end of the second quarter, the company both back 52,100 shares and an average price of roughly $24.5 Canadian for a total investment of $1.3 million Canadian dollars. Now let's look at the consolidated performance for the three months in that April 31, 2024, compared to the previous three months in that April 30, 2023.

Speaker Change: On November 29 2023.

Speaker Change: The group announced that notice of intention to make a normal course issuer bid in CIB or share buyback and the purchase for cancellation. The maximum amount of 322000 common shares representing 5% of the company's issued and outstanding common shares at the end of the second quarter the comp.

Speaker Change: <unk> bought back 52100 shares at an average price up roughly 24 and a half Canadian dollars for a total investment of $1 3 million Canadian dollars.

Gerhard Barnhart: Now let's look at the consolidated performance for the three months ended April 31st, 2024 compared to the previous three months ended April 30th, 2023. The company reported half a million dollars of net income, which is 1.7 million or 77% lower than the same period last year. But when we take into account the $1.4 million of deferred tax expense recognized related to Exchange Bank of Canada during this period, it is important to note that the adjusted net income was $1.9 million, a decrease of only $300,000, or 14%, compared to the same period last year.

Speaker Change: Now, let's look at the consolidated performance for the three months.

Speaker Change: In the April 31st 2024 compared to the previous three months ended April 32023.

Gerhard Barnard: The company reported half a million of net income, which is 1.7 million or 77% lower than the same period last year. But when we take into account the 1.4 million of the third tax expense recognized related to the Exchange Bank of Canada during this period, it is important to note that the adjusted net income was 1.9 million, a decrease of only 300,000 or 14% compared to the same period last year. Adjusted net income in the United States grew about 400,000 or 15%, whereas the adjusted income in Canada declined by 700,000. The group's adjusted return on equity for the current period was 12% compared to 19% for the same period last year, driven by slower revenue growth in Canada during the current period.

Speaker Change: The company reported half a million dollars of net income.

Speaker Change: Which is $1 7 million or 77% lower than the same period last year.

But when we take into account the $1 4 million of deferred tax expense recognized related to exchange bank of Canada. During this period. It is important to note that the adjusted net income was one 9 million a decrease of only 300000 or 14% compared to the same period last year.

Speaker Change: <unk>.

Speaker Change: Adjusted net income in the United States grew.

Speaker Change: Grew about 400% thousand dollars or 15%, whereas suggest Nathan income in Canada declined by 700000.

Gerhard Barnhart: Adjusted Net Income in the United States grew by about $400,000, or 15%, whereas just netted income in Canada declined by 700,000. The group's adjusted return on equity for the current period was 12% compared to 19% for the same period last year, driven by slower revenue growth in Canada during the current period. The company generated $20 million, a 7% increase from the same period last year, and noticeably new customer acquisitions in both the banknotes and the payments product line compared to the first quarter of 2024.

Speaker Change: The groups adjusted return on equity for the current period was 12% compared to 19% for the same period last year.

Speaker Change: Driven by slower revenue growth in Canada during the current period.

Gerhard Barnard: The company generated 20 million, a 7% increase from the same period last year, and noticed the new customer acquisitions in both the back notes and the payments product lines. Compared to the first quarter of 2024, revenue increased by 2 million or 11%, which is consistent with the cyclical growth patterns where revenue increased for the first quarter to the second quarter in 2023 by about 1.8 million or close to 11%. The top five currencies are the Euro, US dollar, Canadian dollar, British pound sterling, and Mexican peso. This 7% year-over-year growth in revenue, or 1.4 million, was primarily due to the growth in the US payments business of about 900,000.

Speaker Change: The company generated $20 million is 7%.

Speaker Change: Increased from the same period last year and notice and noticed the new customer acquisitions in both the banknotes.

Speaker Change: And the payments product lines.

Speaker Change: Through the first quarter of 'twenty 'twenty four.

Gerhard Barnhart: Revenue increased by 2 million, or 11 percent, which is consistent with the cyclical growth pattern where revenues increased for the first quarter to the second quarter in 2023 by about 1.8 million or close to 11 percent. The top 5 currencies are the Euro, US Dollar, Canadian Dollar, British Pound Sterling, and Mexican Peso.

Speaker Change: Revenue increased by $2 million or 11%, which is consistent with the cyclical growth factors.

Speaker Change: Where revenues increased for the first quarter to the second quarter.

Speaker Change: In 2023 by about $1 8 million or close to 11%.

Speaker Change: The top five currencies are the Euro U S dollar Canadian dollar British pound Sterling and Mexican peso.

Gerhard Barnhart: The 7% year-over-year growth in revenue, or 1.4 million dollars, was primarily due to the growth in the U.S. payments business of about $900,000, followed by growth in the direct-to-consumer bank business of $315,000. Revenue in the United States increased by 1.4 million, or 10 percent, over the year while Canada remained fairly flat. Operating expenses increased by 1.3 million, or 9 percent, primarily attributable to an increase in salaries and benefits.

Speaker Change: The 7% year over year growth in revenues were $1 4 million was primarily due to the growth in the U S payments business of about $900000.

Gerhard Barnard: Followed by growth in the direct to consumer backed business of 315,000. Revenue in the United States increased by 1.4 million, or 10%, over the year, while Canada remained fairly flat. Operating expenses increased by 1.3 million or 9%, primarily attributable to an increase in salaries and benefits. The company recorded net operating income of $3.8 million in the three months period ended April 30, 2024, or 2% higher than the same period in the prior year. Iberal margin for the current period was 19%, compared to roughly 20-21% in the same period last year.

Speaker Change: Followed followed by growth in the direct to consumer business of 315000 <unk>.

Speaker Change: Revenue in the United States increased by $1 4 million or 10% over the year, while Canada remained steady.

Speaker Change: <unk> expenses increased by $1 3 million or 9%.

Primarily attributable to an increase in salaries and benefits.

Gerhard Barnhart: The company recorded net operating income of $3.8 million in the three-month period ended April 30, 2024, or 2% higher than the same period in the prior year. EBITDA margin for the current period was 19% compared to roughly 20-21% in the same period last year. The following is a highlight of the Revenue by Product line for the three months ended April 30th, 2024, compared to the same period in 2023. Let's focus on bank

Speaker Change: The company recorded net operating income of $3 8 million in the three months period ended April 32024, or 2% higher than the same period in the prior year.

Speaker Change: EBITDA margin for the current period was 19% compared to roughly 20%, 21% in the same period last year.

Gerhard Barnard: The following is a highlight of the revenue-quite product line. For the three months ended April 30, 2024, compared to the same period in 2023. Let's focus on bank notes. Ravenew in the bank notes product line increased about half a million or 3% due to the continued growth in demand for travel currencies from increased travel levels. Between February 2024 and April 2024, approximately 215 million travelers passed through the TSA checkpoints in the United States airports. This is an increase of almost 8% compared to the same period. Direct-to-consumer bank notes revenue increased 310,000, or 5%. This growth was a tribute goal to increases in volumes in branch locations as newly opened locations continue to mature over the time and drive higher volumes in addition to the geographical reach of the FX online platform, which is recently entered the state of Ohio in the fourth quarter of 2023.

Speaker Change: The following is a highlight of the revenue by product line for.

Speaker Change: For the three months ended April 32024, compared to the same period 2023.

Speaker Change: Let's focus on banknotes revenue in the banknotes product line increased about half a million or 3% due to the continued growth in demand for travel currencies from increased travel labels.

Gerhard Barnhart: Revenue in the Banknotes product line increased about half a million, or 3%, due to the continued growth in demand for travel currencies from increased travel levels. Between February 2024 and April 2024, approximately 215 million travelers pass through the TSA checkpoints in the United States airports.

Speaker Change: Between February 2024, and April 2020 for approximately 215 million travelers.

Speaker Change: Pass through the TSA checkpoints in the United States airports. This is an increase of almost 8% comp.

Gerhard Barnhart: This is an increase of almost eight percent compared to the same period. Direct-to-consumer banknote revenues increased by 310,000, or 5%. This growth is attributable to increases in volumes in branch locations as newly opened locations continue to mature over time and drive higher volumes in addition to the geographical reach of the FX online platform, which recently entered the state of Ohio in the fourth quarter of 2023, the state of Alabama in the first quarter of 2024, as well as the state of Wisconsin in the current quarter, which represents an opportunity for the company to offer its online services to almost 91% of the United States population.

Speaker Change: Compared to the same period.

Speaker Change: Direct to consumer Bank notes revenues increased 310000 or 5%.

Speaker Change: This gross growth was attributable to increases in volumes in branch locations as newly opened locations continues to mature over the time and drive higher volumes. In addition to the geographical reach of the ethics line platform, which has recently entered the state of Ohio in the fourth quarter.

Speaker Change: Of 2023.

Gerhard Barnard: The state of Alabama in the first quarter of 2024, as well as the state of Wisconsin in the current quarter, which represents an opportunity for the company to offer its online services to almost 91% of the United States population. Also, bank notes increased by about 190,000 or 2%, despite the decline in transacted U.S. dollar volumes with international clients in Canada. Relative to the three-month period in the January 31, 2024, bank notes revenue increased by about 1.2 million or 14%, which coincides with the typical seasonal increase in tourism in North America.

Speaker Change: The state of Alabama in the first quarter of 2024 as well as the state of Wisconsin in the current quarter.

Which represents an opportunity for the company to offer its online services to almost 91% of the United States population.

Gerhard Barnhart: Wholesale banknotes increased by about 190,000, or 2%, despite the decline in transacted U.S. dollar volumes with international clients in Canada. Relative to the three-month period ending January 31st, 2024, wholesale banknote revenue increased by about 1.2 million, or 14 percent, which coincides with the typical seasonal increase in tourism in North America. The focus on payment.

Speaker Change: Also banknotes increased by about 190000 or two.

Speaker Change: <unk>, 2% despite the decline in transacted through a dollar volumes with international clients in Canada.

Speaker Change: Relative to the three months period ended January 31, 2024, or <unk> revenue increased by about $1 2 million or 14%, which coincides with the typical seasonal increase in tourism in North America.

Gerhard Barnard: The focus on payments revenue and the payments product line increased 30%. Primarily driven by new customer acquisitions and increased activities from existing financial institution customers in the United States as a direct result of the company's continued investment in integration with core banking platforms. The payments product line in the United States grew 53%, whereas Canada remained fairly flat compared to the same period last year. The company processed roughly 37,000 payment transactions representing 3.4 billion in volume for the three-month period in the April 30, 2024, and this compares to roughly 30,500 transactions and 2.6 billion of volume in the same period in 2023.

Speaker Change: Our focus on payments.

Gerhard Barnhart: Revenues and the payments product line increased 30%, primarily driven by new customer acquisitions and increased activities from existing financial institution customers in the United States as a direct result of the company's continued investment in integration with core banking platforms. The payments product line in the United States grew 53 percent, whereas Canada remained fairly flat compared to the same period last year. The company processed roughly 37,000 payment transactions, representing 3.4 billion in volume for the three month period ended April 30th, 2024. This compares to roughly 30 and a half thousand transactions and 2.6 billion in volume for the same period in 2023.

Speaker Change: Revenues in the payments product line increased 30%.

Speaker Change: Primarily driven by new customer acquisitions and increased activities from existing financial institution customers in the United States as direct result of the company's continued investment in integration with core banking platforms. The payments product line in the United States grew 53%.

Speaker Change: Whereas Canada remained fairly flat compared to the same period last year.

Speaker Change: The company processed roughly 37000 payment transactions, representing $3 4 billion in volume.

Speaker Change: The three months period ended April 32024, and this compares to roughly 30000 transactions and $2 6 billion of volume in the same period in 2023.

Gerhard Barnard: I would like to discuss revenue by geographic location. for the three months April 30th, 2024, compared to the same three months in 2023. In the United States, revenues grew by 10% during the three months period, led by $910,000 or 53% growth in payments, and roughly 310,000 or 5% growth in payments, with the remainder of the growth related to also payments. Payments growth was primarily the result of the company's investment in integrations, with core banking platforms that allowed onboarding of new financial institution customers during the period, in addition to increased activity from existing customers. Now, banknotes revenue, including direct-to-consumer, were largely impacted by new customer acquisition, increased transactions, and demand for travel currencies, and certain exotic currencies complemented by growth across most of the branch locations and through the company's effects online effects platform.

Gerhard Barnhart: I would like to discuss revenue by geographic location, for the three months, April 30th, 2024, compared to the same three months, in 2023. In the United States, revenues grew by 10% during the three-month period, led by $910,000 or 53% growth in payments, and roughly $310,000 or 5% growth in banks, with the remainder of the growth related to Wholesale Bank. Payments growth was primarily the result of the company's investment in integrations with core banking platforms that allowed onboarding of new financial institution customers during the period in addition to increased activity from existing customers.

Speaker Change: Now I would like to discuss revenue by geographic location.

Speaker Change: For the three months April Citi 2024, compared to the same three months.

Speaker Change: In 2023.

In the United States revenues grew by 10% during the three months period.

Speaker Change: Led by $910000 or 53% growth in payments and.

Speaker Change: And roughly 310000 or 5% growth in banknotes.

Speaker Change: Remainder of the growth related to wholesale bank.

Speaker Change: Payments growth was primarily as a result of the company's investment in integrations with core banking platforms that allowed on boarding of new financial institution customers. During that period. In addition to increased activity from existing customers.

Gerhard Barnhart: Now banknotes revenue, including direct-to-consumer, was largely impacted by new customer acquisition, increased transactions, and demand for travel currencies and exotic and certain exotic currencies complemented by growth across most of the branch locations and through the company's FX, online FX platform. Revenues in the United States represented 81% of total revenues by geographic location in the current three-month period, compared to roughly 80% in the previous period. Now in Canada

Speaker Change: Now back to Avenue, including direct to consumer.

Speaker Change: Consumer were largely impacted by new customer acquisition increased transactions and demand for travel currencies and exotic and certain exotic currencies complemented by growth across most of the branch locations and through the companies FX online FX platform <unk>.

Gerhard Barnard: Revenue in the United States represented 81% of total revenues by geographic location in the current three-month period, compared to roughly 80% in the previous period. Now, in Canada, revenues were flat during the three-month period in the 30 April 2024. Growth in domestic effects banknotes was offset by decline in transacted volumes for US dollars with international clients. Payments volume had a 10% growth based on volumes with marginal increases in certain existing clients' transactional volumes in addition to new relationships. Overall, revenues in Canada represented 19% year after total revenue. Now, operating expenses increased 9% for the three months in the April 30, 2024, compared to the previous period ending April 30, 2023.

Speaker Change: Revenues in the United States represented 81% of total revenues by geographic location and the current three month period.

Speaker Change: Compared to roughly 80% in the.

Speaker Change: Previous period.

Speaker Change: Now in Canada.

Gerhard Barnhart: Revenues were flat during the three-month period ended 30 April 2024; growth in domestic FX bank notes was offset by a decline in transacted volumes for US dollars with international clients. Payments volume had a 10% growth based on volumes with marginal increases in certain existing clients' transactional volumes in addition to new relationships. Overall, revenues in Canada represented 19% of the total revenue.

Speaker Change: Revenues were flat during the three months period ended 30 April 2024.

Speaker Change: Growth in domestic FX Bank notes was offset by a decline in transacted volumes for U S dollars with international clients.

<unk> volume had a 10% growth based on volumes with marginal increases in certain existing clients is transactional volumes. In addition to new relationships overall revenues in Canada represented 19% year. After total revenue now.

Gerhard Barnhart: Now operating expenses increased 9% for the three months ended April 30th, 2024, compared to the previous period ending April 30, 2023. The U.S. had expense growth of 9%, and Canada had 12%. Income tax expense for the current period included $1.4 million related to the deferred tax expense, as mentioned earlier, specifically related to the unused loss carry forwards in its wholly owned subsidiary, Exchange Bank of Canada, which the company has reassessed its recoverability and accordingly reduced the deferred tax benefit amount and increased its deferred tax expense by the same amount. Salaries and wages increased when compared to the prior year, mostly driven by higher average headcount in addition to a partial increase in costs driven by inflation in base salaries and healthcare costs.

Our operating expenses increased 9% percent for the three months ended April 30 of 2024.

Speaker Change: Compared to the previous period, ending April 30 of 2023.

Gerhard Barnard: The US had expense growth of 9% and Canada of 12%. Income tax expense for the current period included the 1.4 million related to the third tax expense as mentioned earlier, specifically related to the unused lost carry forwards in its only own subsidiary Exchange Bank of Canada, which the company has reassessed its recoverability and accordingly reduced the third tax benefit amount and increased its the third tax expense by the same amount. Sellers in wages increased when compared to the prior year, mostly driven by higher average headcount and addition to partial increase in cost driven by inflation in base salaries and health care cost.

Speaker Change: The U S that expense growth of 9% and Canada of 12%.

Speaker Change: Income tax expense for the current period included the $1 4 million related to the deferred tax expense as mentioned earlier.

Speaker Change: Specifically to the unused loss carry forwards and its wholly owned subsidiary exchange Bank of Canada, which the company has reassessed its recoverability and accordingly reduced the deferred tax benefit amount and increased its deferred tax expense by the same amount.

Speaker Change: Salaries and wages increased when compared to the prior year, mostly driven by higher average head count. In addition to partial increase in cost driven by inflation in base salaries.

Speaker Change: And health care cost.

Gerhard Barnard: Post-eaching shipping continues to decrease; it had a 24% decrease when compared to the same period last year, despite the growth in banknotes volumes. This decline reflects this decline, reflects cost management initiatives, influenced by the company, which were adopted during the second half of 2023. The increased cost in information technology expenses during the second quarter were associated with the company's continued development of its technology solutions to support and streamline its business and customer service delivery, including expansion in the payments product line and integration with core banking platforms, security systems, and technology solutions. Now, foreign exchange gains in losses were presented at the rate result after considering hedging and risk management strategies designed to reduce the inherent risk in the company's exposure to foreign exchange, thereby minimizing volatility and earnings.

Gerhard Barnhart: Postage and shipping continues to decrease; it had a 24% decrease when compared to the same period last year despite the growth in banknote volume. This decline reflects cost management initiatives implemented by the company which were adopted during the second half of 2023. The increased cost of information technology expenses during the second quarter was associated with the company's continued development of its technology solutions to support and streamline its business and customer service delivery, including expansion in the payments product line and integration with core banking platforms. Security Systems and Technology Solutions

Speaker Change: Posted some shipping continues to decrease it added 24% decrease when compared to the same period last year. Despite the growth in bank notes volumes.

Speaker Change: This decline reflects this decline reflects cost management initiatives implemented by the company.

Speaker Change: Which were adopted during the second half of 2023.

The increased cost in information technology expenses during the second quarter were associated with the Companys continued development of its technology solutions to support and streamline its business and customer service delivery.

Speaker Change: Including expansion and the payments product line and integration with core banking platforms security systems and technology solutions.

Gerhard Barnhart: Now, foreign exchange gains and losses were presented as the net result after considering hedging and risk management strategies designed to reduce the inherent risk in the company's exposure to foreign exchange, thereby minimizing volatility in earnings. The Mexican peso was a driver of foreign exchange losses in the three-month period ended 30th April 2024, representing roughly two-thirds of the losses during that period. Interest expense has significantly declined in the period compared to the same period last year, as a result of a notable decline in average borrowings utilizing short-term working capital needs during the current period directly due to a reduction in U.S. dollar activity internationally at ABC.

Speaker Change: Now foreign exchange gains and losses represented the net result, after considering hedging and risk management strategies designed to reduce the inherent risk in the companys exposure to foreign exchange.

Speaker Change: Thereby minimizing volatility in earnings.

Gerhard Barnard: The Mexican Pacer was a driver of foreign exchange losses in the three-month period in the 30th of April 2024, representing roughly two-thirds of the losses during that period. Interest expenses significantly declined in the period compared to the same period last year, as a result of a notable decline in average borrowings, utilizing offshore term working capital needs during the current period, directly due to the reduction in US dollar activity internationally at AV at EVC.

Speaker Change: Mexico peso was a driver of foreign exchange losses in the three months period ended city as of April 2024, representing roughly two thirds of the losses during that period.

Speaker Change: Interest expense has significantly declined in the period compared to the same period last year.

Speaker Change: As a result of a notable decline in average borrowings utilizing of short term working capital needs during the current period.

Speaker Change: Iraqi due to the reduction in the U S dollar activity internationally at AB at EDC.

Gerhard Barnhart: Let's look at the consolidated performance for the six months ended April 30th compared to the previous six months. The company reported $1.36 million of net income during the six-month period ended April 30th, 2024, 2.5 million or 65% lower than the same period last. Please note Adjusted Net Income was $2.8 million, a decrease of $1.05 million or 27% compared to the same period last. Adjusted net income comprised reported net income adjusted for the deferred tax expense related to Canada as previously discussed.

Gerhard Barnard: Let's look at the consolidated performance for the six months in the April 30th compared to the previous six months. The company reported 1.36 million of net income during the six months period, and that April 30th 2024, 2.5 million or 65% lower than the same period last year. Please note, adjusted net income was 2.8 million, a decrease of 1.05 million or 27% compared to the same period last year. The adjusted net income from comprised reported net income adjusted for the deferred tax expense related to Canada as previously discussed. Adjusted net income in the United States grew by 1.1 million or 28% compared to the same period last year, where Canada declined by 2.1 million.

Speaker Change: Let's look at the consolidated performance for the six months ended April 30, as compared to the previous six months.

Speaker Change: The company reported $1 $36 million of net income during the six months period.

Speaker Change: Ended April <unk>, 2000, $24 million to $5 million or 65% lower than the same period last year.

Speaker Change: Please note adjusted net income was $2 8 million, a decrease of $1.05 million or 27% compared to the same period last year adjusted.

Speaker Change: Adjusted net income comprised reported net income adjusted for the deferred tax expense related to Canada as previously discussed.

Speaker Change: Adjusted net income in the United States grew by $1 1 million or 28% compared to the same period last year.

Speaker Change: Canada declined by $2 1 billion.

Gerhard Barnard: The company generated revenue of 38.2 million for the six months period in the April 30th, 2024, a 7% increase that was mostly due to the growth and directed consumer bank notes of 1.3 million and the growth in the US payments business of about 800,000. Operating expenses increased by 3 million or 10%. Primarily, a tribute of all to an increase in salaries and benefits. The company recorded net operating income of 6.1 million in the six months period in the April 30th, 2024, 6% lower than the same period in the prior year. If a doubt for the current period was 16%, compared to 19%, that's even our margin.

Gerhard Barnhart: Adjusted net income in the United States grew by 1.1 million, or 28% compared to the same period last year, where Canada declined by 2.1 million. The company generated revenue of $38.2 million for the six-month period ended April 30th, 2024, a 7% increase that was mostly due to the growth in direct-to-consumer banknotes of 1.3 million and the growth in the U.S. payments business of about 800,000. Operating expenses increased by $3 million or 10%, primarily attributable to an increase in salaries and benefits.

Speaker Change: The company generated revenue of $38 2 million for the six months period ended April 30 of 2024, 7% increase that was mostly due to the growth.

Direct to consumer Bank notes.

Speaker Change: Of $1 3 million and the growth in the U S payments business of about 800000.

Speaker Change: Operating expenses increased by $3 million or 10%.

Speaker Change: Primarily attributable to an increase in salaries and benefits the.

Speaker Change: The company recorded net operating income of $6 1 million.

Gerhard Barnhart: The company recorded net operating income of $6.1 million in the six-month period ended April 30th, 2024, 6% lower than the same period in the prior year. EBITDA for the current period was 16% compared to 19%, and that's its EBITDA margin. Revenue by product line for the six-month period ended April 30, 2024 compared to the previous six-month period. Revenue in the banknotes product line increased 1.85 million, or 6%, with direct-to-consumer banknotes revenue increasing 1.3 million, or 11%.

Speaker Change: In the six months period ended April 30 of 2024, 6% lower than the same period the prior year.

Speaker Change: EBITDA for the current period was 16% compared to 19% that's EBITDA margin.

Gerhard Barnard: Revenue by product line for the six months period ended April 30th, 2024, compared to the previous six months period. Bank notes, revenue and bank notes product line increased 1.85 million or 6% with direct to consumer bank notes revenue increasing 1.3 million or 11%. Now payments, revenue product line increased by 11 percent, driven by new customer acquisitions and increased activity from existing financial institution customers in the United States. A direct result of the company's continued investment in integration with core banking platforms, which resulted in a 42 percent increase in the US region for this period. Canada declined by 21 percent as a result of reduced volumes.

Speaker Change: Revenue by product line for the six months period ended April 30 of 2024 compared to the previous six months period banknotes revenue in banknotes product line increased 185 million or 6% with direct to consumer bank notes revenue, increasing $1 3 million or <unk>.

Speaker Change: 11%.

Gerhard Barnhart: Now payments, revenue, and product line increased by 11%, driven by new customer acquisitions and increased activity from existing financial institution customers in the United States. This was a direct result of the company's continued investment in integration with core banking platforms, which resulted in a 42% increase in the US region for this period. Canada declined by 21% as a result of reduced volumes. Revenue by geographic location for the six-month period ended April 30, 2024, compared to the same period in 2023.

Speaker Change: Now payments revenue product line increased by 11% driven by new customer acquisitions and increased activity from existing financial institution customers in the United States are direct results of the company's continued investment in integration with core banking platforms, which resulted in.

Speaker Change: A 42% increase in the U S region for this period, Canada.

Speaker Change: Canada declined by 21% as a result of reduced volumes.

Gerhard Barnard: Revenue by geographic location for the six months period in the April 30, 2024, compared to the same period in 2023. Revenue in the United States grew by 15 percent during the six months period, led by 1.5 million or a 42 percent growth in payments and 1.3 million or an 11 percent growth in direct to consumer banknotes, with the remainder of the growth related to wholesale banknotes of 1.2 million or 10 percent. Revenue in Canada declined by 15 percent due to reduced transaction volumes from certain key clients in the payments product line and lower transacted volumes in US dollars with international clients.

Speaker Change: Revenue by geographic location for the six months period ended April 30 of 2024 compared to the same period in 2023.

Gerhard Barnhart: Revenues in the United States grew by 15% during the six-month period, led by 1.5 million, or a 42% growth in payments, and 1.3 million, or an 11% growth, in direct-to-consumer banking, with the remainder of the growth related to wholesale banknotes of 1.2 million or 10%. Revenues in Canada declined by 15 percent due to reduced transaction volumes from certain key clients in the payments product line and lower transacted volumes in U.S. dollars with international clients.

Speaker Change: Revenues in the United States grew by 15% during the six months period led by $1 5 million or 42% growth in payments.

Speaker Change: One $3 million or an 11% growth.

Speaker Change: In direct to consumer bank notes with the remainder of the growth related to wholesale bank notes of $1 2 million 14% Rev.

Speaker Change: Revenues in Canada declined by 15%.

Due to reduced transaction volumes from certain key clients and the payments product line and lower transacted volumes in U S dollars with international clients.

Gerhard Barnard: Revenue in the payments product line decreased about 750,000 or 21 percent, while the banknotes product line decreased about 635,000 or 11 percent compared to the same period last year. Operating expenses increased 10 percent for the six months in the April 30, 2024, compared to the previous six months period of 2023. This increase is higher than the 7 percent growth in revenue, primarily due to slower revenue growth in Canada. Variable expenses with an operating expenses represented by postage in shipping, sales commission, incentive compensation, and bank fees totalled 9.2 million compared to 9.8 million. In the previous six months period, the decline of 6 percent was primarily driven by decrease in posting in shipping.

Gerhard Barnhart: Revenue in the payments product line decreased about 750,000 or 21 percent, while Banknote's product line decreased about 635,000 or 11% compared to the same period last year. However, operating expenses increased 10% for the six months ended April 30, 2024 compared to the previous six-month period of 2023. This increase is higher than the 7% growth in revenue, primarily due to slower revenue growth in Canada. Variable Expenses within Operating Expenses represented by Postage and Shipping, Sales Commission, Incentive Compensation, and Bank Fees totaled $9.2 million compared to $9.8 million in the previous six-month period.

Speaker Change: Revenue in the payments product lines at least decreased about 750, <unk> out 15000, or 21%, while banknotes product line decreased about 635000 or 11% compared to the same period last year.

Speaker Change: Operating expenses increased 10% for the six months ended April 30 of 2024 compared to the previous six months period of 2023.

Speaker Change: This increase is higher than the 7% growth in revenue, primarily due to slower revenue growth in Canada.

Speaker Change: Variable expenses within the operating expenses represented by postage and shipping sales commission incentive compensation and bank fees totaled $9 2 million compared to nine 8 million in the previous six months period.

Gerhard Barnhart: The decline of 6% was primarily driven by a decrease in posting and shipping. The Ratio Comparing Total Operating Expenses to Total Revenue was 84% compared to 82% in the previous period. As mentioned, postage and shipping had a 17% decrease as a result of cost management initiatives implemented by the company. Losses and shortages represented shipment losses in transit that the company self-insured. The favorable variance in losses and shortages was primarily due to a significant decrease in lost shipments and as a result of cost management initiatives that the company implemented to manage its shipments.

Speaker Change: The decline of 6% was primarily driven by a decrease in posting in shipping.

Gerhard Barnard: The ratio comparing total operating expenses to total revenue was 84 percent compared to 82 percent in the previous period. As mentioned, postage in shipping at a 17 percent decrease and result of cost management initiatives implemented by the company. Losses and shortages were presented; shipment loss in transit that the company self ensures. The favorable variance in losses and shortages was primarily due to a significant decrease in loss shipments and as a result of cost management initiatives that the company implemented to manage its shipments. The variance in foreign currency exchange gains in losses was due to volatility in certain currencies, with the Mexican peso being the main driver of foreign exchange losses in the six months period in the April 30, 2024.

The ratio comparing total operating expenses to total revenue.

Speaker Change: 84% compared to 82% in the previous period.

Speaker Change: As mentioned both seats and shipping at a 17% decrease as a result of cost management initiatives implemented by the company.

Speaker Change: Losses in shortages represented shipment loss.

Speaker Change: In transit that the company self insures.

Speaker Change: Favorable variance in losses, and shortages was primarily due to a significant decrease in loss shipments.

Speaker Change: And as a result of cost management initiatives that the company make company implemented to manage shipments.

Gerhard Barnhart: The variance in foreign currency exchange gains and losses was due to volatility in certain currencies, with the Mexican peso being the main driver of foreign exchange losses and, for the six-month period ended April 30, 2024, representing roughly $210,000, completely offsetting net gains in other currency exposures in this category for the period, whereas the Euro represented a $500,000 gain in the same period last year.

Speaker Change: The variance in foreign currency exchange gains and losses was due to volatility in certain currencies with the Mexican peso being the main driver of foreign exchange losses in the six months period ended April 32024.

Gerhard Barnard: Representing roughly $210,000. Completely offsetting net gains in other currency exposures in this category for the period, whereas the euro represented a $500,000 gain in the same period last year.

Speaker Change: Representing roughly $210000.

Speaker Change: Completely offsetting net gains in other currency exposures in this category for the period.

Speaker Change: With this whereas the euro represented a $500000 gain in the same period last year.

Gerhard Barnhart: Now let's review the balance sheet for the second quarter. As of April 30, 2024, the company had a capital base of $80 million and $5 million drawn on its line of credit, with $45.3 million in borrowing capacity. This compares to $14.9 million drawn and $35.7 million of borrowing capacity for the same period last year. Average outstanding borrowings of the company amounted to $5.9 million during the six-month period ended April 30, 2024, compared to $12.8 million during the same period last year, which led to a significant reduction in cost of arms.

Gerhard Barnard: Now let's review the balance sheet for the second quarter. As of April 30, 2024, the company had a capital base of $80 million and $5 million drawn on its line of credit, with $45.3 million in borrowing capacity. This compares to $14.9 million drawn and $35.7 million of borrowing capacity same period last year. The average outstanding borrowings of the company amounted to $5.9 million during the six-month period, ended April 30, 2024, compared to $12.8 million during the same period last year, which led to a significant reduction in cost of borrowing. The average interest rate of borrowing was 8.7% for the current period compared to 7.2% for the previous period.

Speaker Change: Now, let's review the balance sheet for the second quarter.

Speaker Change: As of April 32024, the company added capital base of $80 million.

Speaker Change: And $5 million drawn on its line of credit.

Speaker Change: It was $45 3 million in borrowing capacity.

Speaker Change: This compares to $14 $9 million drawn and city five $7 million of borrowing capacity same period last year the.

Speaker Change: The average outstanding borrowings of the company amounted to $5 9 million during the six months period.

Speaker Change: Entered April 30 of 2024 compared to $12 8 million during the same period last year, which led to a significant reduction in cost of borrowing.

Speaker Change: The average interest rate of borrowing was eight 7%.

Speaker Change: For the current period compared to 7.2% for the previous period.

Gerhard Barnhart: The average interest rate of borrowing was 8.7% for the current period compared to 7.2% for the previous. The group continues to focus on capital allocation, and the normal course issuer bid, NCIB, or share buyback, confirms both management and the board's belief that the underlying value of Currency Exchange International may not be reflected in the market price of its common shares from time to time. Now, at this time, I will turn the call over to Randolph Benner, our CEO, to provide his perspective.

Gerhard Barnard: The group continues to focus on capital allocation and the normal course issue of it in CIB or share buyback, concerns both management and the board's belief that the underlying value of currency exchange international may not be reflected in the market price of its common shares from time to time.

Speaker Change: <unk> continues to focus on capital allocation and the normal course issuer bid in CIB or share buyback conference both management and the board's belief that the underlying value of currency exchange International may not be reflected in the market price of its common shares from time to time.

Randolph Pinna: Now, at this time, I will turn the call over to Randolph Penner, our CEO, to provide his perspective. Thank you. Thank you, Harard, and thank you everyone that's on the call. Appreciate your time.

Randall panel: Now at this time I will turn the call over to Randall panel, our CEO to provide east perspective.

Randolph Pena: Thank you. Thank you, Herard, and thank you, everyone that's on the call. I appreciate your time.

Randall panel: Thank you. Thank you <unk> and thank you everyone. That's on the call appreciate your time.

Randolph Pena: I wanted to just start off with the big event of deferred tax assets. We did, but management chose to reverse this to follow the guidance of accounting standards for taxes. We still do remain optimistic about Exchange Bank of Canada, and we are very focused on turning the bank around so that it can be a contributor of income as opposed to taking away from CXI's successful growth. In EBC, when analyzing it, as you've heard, the Mexican peso has been the biggest challenge, not only in the FX gains or losses of hedging, but it really affected in the first half of the year. The Mexican peso appreciated probably the most significantly since I've been doing currency exchange for over 30 years against the U.S. dollar.

Randolph Pinna: I wanted to just start off with the big event of the deferred tax asset. We did management did choose to reverse this to follow the guidance of accounting standards for taxes. We still do remain optimistic for Exchange Bank of Canada, and we are very focused on turning the bank around so that it can be a contributor of income as opposed to taking away from CXI's successful growth. In the EBC, when analyzing it, as you've heard, the Mexican peso has been the biggest challenge, not only in the FX gains or losses of hedging, but it really has affected, in the first half of the year, the Mexican peso appreciated probably the most significantly since I've been doing currency exchange over 30 years against the US dollars.

Randall panel: I wanted to just start off with the the big event of the deferred tax asset. We did management did choose to reverse this to follow the guidance of accounting standards for taxes, we still do remain optimistic or exchange bank of Canada.

Randall panel: And we are very focused on turning the bank around so that it can be a contributor of income as opposed to taking away from <unk> successful growth.

Randall panel: And the EDC when analyzing it as you've heard the Mexican peso has been the biggest challenge not only in the FX gains or losses of hedging, but really has affected in the first half of the year the Mexican peso appreciated.

Randall panel: The most significantly since I've been doing currency exchange over 30 years against the US dollars now the recent election has reversed that so we're optimistic that the demand for U S dollars selling to EDC will resume and we have started to see that activity now with the weaker peso.

Randolph Pena: Now, the recent election has reversed that, so we're optimistic that the demand for U.S. dollar selling to EBC will resume, and we have started to see that activity now with the weaker peso versus the USD. The pipeline is quite full at EDC, both on the banknote side and on the payment side. On the payment side, I'm very proud to announce that we have done an integration with a fintech company that will enable us to add another 300 active corporate payments for international payment activity.

Randolph Pinna: Now the recent election has reversed that, so we're optimistic that the demand for US dollars selling to EBC will resume, and we have started to see that activity now with the weaker peso versus the USD. The pipeline is quite full at EBC, both on the bank note side and on the payment side.

Randall panel: The U S D.

Randall panel: The pipeline is quite full at <unk>.

Randall panel: We see both on the bank note side and on the payment side on the payment side I'm very proud to announce that we've done in integration with a Fintech company.

Randolph Pinna: On the payment side, I'm very proud to announce that we've done an integration with a FinTech company that will enable us to add another 300 active corporate payments for international payment activities. Our payment team, the banks, what we call FX Relationship Bankers, are continued to focus and adding new clients as you may have heard. On the bank note side, we have both a strong pipeline in Canada as well as internationally. Domestically, we have several new financial institutions, one of which is already onboarded and should begin trading shortly with mostly US dollars and possibly additional foreign currencies.

Randall panel: That will enable us to add another 300 active corporate payments or international payment activity.

Randolph Pena: Our payment team, what we call FX Relationship Bankers, is continuing to focus on adding new clients, as you may have heard. On the banknotes side, we have both a strong pipeline in Canada as well as internationally. Domestically, we have several new financial institutions, one of which is already onboarded and should begin trading shortly with mostly US dollars and possibly additional foreign currencies. Internationally, we have added two new banks in Brazil, as I was for the first time in Sao Paulo, and personally welcomed the two new customers, as well as a new customer that's just being onboarded now in Europe.

Randall panel: Our payment team the band of what we call FX relationship bankers are continued to focus on adding new clients as you may have heard.

Randall panel: On the bank note side, we have both a strong pipeline in Canada as well as internationally domestically, we have several new financial institutions.

Randall panel: One of which is already on boarded and should begin tradings shortly with mostly U S dollars and possibly additional foreign currencies internationally. We have added two new banks in Brazil as I was for the first time in some Paolo and personally welcome the two new customers as well as a new customer.

Randolph Pinna: Internationally, we have added two new banks in Brazil as I was for the first time in São Paulo and personally welcomed the two new customers as well as a new customer that's just being onboarded now in Europe, and we have a very strong pipeline both in Central and South America and in the broader European zone.

Randall panel: That's just being onboard now in Europe, and we have a very strong pipeline, both in central and South America and in the proper Europeans zone.

Randolph Pena: And we have a very strong pipeline, both in Central and South America and in the broader European zone. But more importantly, I wanted to focus on CXI's very strong growth for the half-year. Overall banknotes continue to be up 10%, as you heard from Harar. That is both in the wholesale category as well as in the direct-to-consumer category. While we've added a few new clients in the financial institution space in America, we are seeing increased trading both at all the bank branches as well as our retail stores. We are adding additional retail stores, with our newest store opening now in Buckhead, Atlanta. The next one thereafter will be in the Boston area.

Randolph Pinna: More importantly, I want to focus on CXI's very strong growth for the half year. Overall, bank notes continue to be up 10% as you heard from Herrard; that is both in the wholesale category as well as in the direct-to-consumer category. While we've added a few new clients in the financial institution space in America, we are seeing increased trading both at all the bank branches as well as our retail stores.

Speaker Change: More importantly, I want us to focus on <unk> very strong growth for the half year overall bank notes continue to be up 10% as you heard from her art that is both in the wholesale category as well as in the direct to consumer categories. While we ask we've added a few new clients in the financial institution space in <unk>.

Erika: Erika, but we are seeing increased trading both.

Erika: At all of the bank branches as well as our retail stores, we are adding additional these tail stores with our newest store opening now at in Buckhead Atlanta and the next one thereafter, we will be in the Boston area, both should be open and cart and contributing or this busy summer season that we anticipate.

Randolph Pinna: We are adding additional retail stores, with our newest store opening now in Buckhead, Atlanta, and the next one thereafter will be in the Boston area. Both should be open and part and contributing for this busy summer season that we anticipate.

Randolph Pinna: As you saw, the biggest rower was our payments business. Chris Johnson, our head of sales for the US, has been very successful with his team adding new financial institutions, primarily as you've heard, through integrations into core or select software systems that are now allows for a straight-through process using us as the one provider and their platform as the one platform.

Randolph Pena: Both should be open and contributing for this busy summer season that we anticipate. As you saw, the biggest grower was our payments business. Chris Johnson, our head of sales for the US, has been very successful with his team adding new financial institutions, primarily, as you've heard, through integrations into core or select software systems that now allow for a straight-through process using us as the one provider and their platform as the one platform.

Erika: As you saw the biggest grower was our payments business.

Erika: Chris Johnson, our head of sales for the U S has been very successful with his team, adding new financial institutions, primarily as you've heard through integrations into core or select software systems that are now allows for a straight through process using us as the one provider and their platform as the one.

Erika: Platform.

Randolph Pinna: We also have some activity in the M&A space, nothing signed, but we, Herrard and I, are active in exploring good strategic opportunities for CXI and our groups. The primary focus of these considerations is in banknotes, not in payments.

Randolph Pena: We also have some activity in the M&A space, nothing signed, but Harard and I are active in exploring good strategic opportunities for CXI and our group. The primary focus of these considerations is on banknotes, not in payments.

We also have some activity in the M&A space nothing signed but we have heard and I are active in exploring strategic opportunities for <unk> and our group the primary focus of these.

Erika: Considerations is in bank notes not in payments.

Randolph Pena: And we, overall, we want to just remind the shareholders that now we are entering this quarter, the third quarter, in our busy summer season. Activity has been strong, both domestically in Canada and in the US, and we are seeing international as well. I wanted to keep this conversation short so that we can open it up for questions, and I turn it over to you, operator, to allow the questions to flow so Harad and I can answer them if we can. Thank you.

Randolph Pinna: And overall, we want to just remind the shareholders that now we are entered in this quarter, the third quarter, in our busy summer season. Activity has been strong both domestically in Canada and in the US, and we are seeing internationally as well.

Erika: And overall, we want to just remind the shareholders that now we are entered in this quarter or the third quarter and our busy summer season activity has been strong both domestically in Canada and in the U S and we are seeing internationally as well.

Randolph Pinna: I wanted to keep this conversation short so that we can open it up for questions, and I turn it over operator to allow the questions to flow. So, Herrard and I can answer them if we can. Thank you.

Speaker Change: Wanted to keep this conversation short so that we can open it up for questions and I'll turn it over operator to allow the questions. The flow. So her art and I can answer them. If we can thank you.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the. Please limit yourself to two questions. If you are using a speakerphone, please lift the handset before pressing any key. Your first question comes from Robin Cornwell with Catalyst Research.

Speaker Change: Thank you ladies and gentlemen, let me begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone, you'll hear a prompt that your hand has been raised should you wish to decline from the polling process. Please press star followed by the two please.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question? Please press star followed by the one on your touch-tone phone. You will hear prompt that your hand has been raised.

Operator: Should you wish to decline from the pulling process? Please press star followed by the two. Please limit yourself to two questions.

Please limit yourself to two questions.

Operator: If you are using a speaker phone, please let the hands up before pressing any keys.

Speaker Change: If you are using a speaker phone please lift the handset before pressing pressing any keith.

Robin Cornwell: Your first question comes from Robin Cornwell with Catalyst Research. Your line is now Ann. Hi, good morning. Congratulations on the good quarter. I wanted to start if I could just Randolph on the FX accounts using the your trust structure. Are you specifically able to have been able to start transacting in larger volumes with some of the European clients? The trust agreements are all in place. Unfortunately, we have yet to have an active customer use it because of the three-way agreement, and then the client being overseas, it has taken longer for legal on the other side to approve of the structure.

Speaker Change: Your first question comes from Robin Cornwell with catalyst Research. Your line is now open.

Operator: Your line is now open.

Robin Cornwell: Hi, good morning, and congratulations on a good quarter. I wanted to start, if I could, just Randolph, on the ethics accounts using your trust structure. Are you specifically able to, or have you been able to, start transacting in larger volumes with some of the European clients?

Hi, good morning.

Robin Cornwell: Congratulations on a good quarter.

Robin Cornwell: Hi, I wanted to start if I could just.

Speaker Change: Randolph Tony.

Speaker Change: FX accounts using <unk>.

Trust structure are you there.

Speaker Change: Pacifically April have been able to.

Speaker Change: Start.

Speaker Change: Transacting in a larger.

Speaker Change: Volumes.

Speaker Change: Some of the European clients.

Randolph Pena: The trust agreements are all in place, but unfortunately, we have yet to have an active customer use it because of the three-way agreement and then the client being overseas. It has taken longer for legal on the other side to approve of the structure. We do anticipate a financial institution using it first in Mexico, while the overseas customers that have been considering it in Europe and Asia continue to get comfortable with the relationship with our trust company and the flows of funds.

Speaker Change: The trust.

Speaker Change: But agreements are in place. Unfortunately, we have yet to have an active customer use it because of the three way agreement and then the client being overseas.

Speaker Change: They have.

Speaker Change: <unk> has taken longer for legal on the other side to approve of the structure, we do anticipate a financial institution using it actually first in Mexico.

Randolph Pinna: We do anticipate a financial institution using it actually first in Mexico, while the overseas customers that have been considering it in Europe and Asia continue to get comfortable with the relationship with our trust company and the flows of funds. No, we have not had any usage of it. However, it is in place, it is ready to be used and should allow for higher volumes in the second half of the year once the legal and risk departments of these financial institutions get comfort within their own lawyers and their part of the world, as well as one is validating everything with a New York lawyer to confirm that they're comfortable from a legal and risk perspective.

While the overseas customers that have been considering it in Europe and Asia continue to.

Speaker Change: Get comfortable with the relationship with our Trust company and the flows of funds. So no. We have not had any usage of it. However, it is in place. It is ready to be used and should allow for higher volumes in the second half of the year once the legal and <unk>.

Randolph Pena: No, we have not had any usage of it yet. However, it is in place. It is ready to be used and should allow for higher volumes in the second half of the year once the legal and risk departments of these financial institutions get comfortable with their own lawyers in their part of the world, as well as one is validating everything with a New York lawyer to confirm that they're comfortable from a legal and risk perspective.

Departments of these financial institutions get comfort within their own lawyers in there as part of the world as well as one is validating everything with a new York lawyer to confirm.

Speaker Change: That they are comfortable from a legal and risk perspective.

Robin Cornwell: Okay, thank you.

Robin Cornwell: Okay. Thank you. And now, my other question is on payments. Revenue in the U.S. was very strong. Could you – I know you mentioned using your banking platforms, allowing for new financial institutions and customers, but maybe you could expand a little bit about how this is actually working. Is it like relationships like Jack Murray, et cetera, that are clicking in, or are there other dynamics that I am trying to understand?

Speaker Change: Okay. Thank you.

Randolph Pinna: Now, my other question is on the payments. The revenue in the US was very strong. Could you, I know you mentioned using your banking platforms, allowing for new financial institutions and customers, but maybe you could expand a little bit about how this is actually working. Is it like relationships like the Jack Marie etc. that are picking in or is there other dynamics that I'm trying to understand? Yes, thanks for the question. So, Robin, yes, the integrations with select software providers like Jack Henry, for example, as since you mentioned that one, is enabling existing clients of CXI or new clients of CXI to have a straight-through process with us and that integration. So you understand it, they have their one platform where they're checking accounts and savings accounts at that bank, have the money, and they get the bells and whistles and all the sophistication of our core software system through the integration.

Speaker Change: My other question.

Speaker Change: Payments revenue in the U S.

Speaker Change: So it was very strong.

Speaker Change: Could you.

Speaker Change: You mentioned the.

Speaker Change: Using your.

Speaker Change: Banking platforms.

Speaker Change: Allowing for a new financial institutions and customers.

Speaker Change: Maybe you could expand a little bit about.

Speaker Change: Hi, This is actually working is it.

Speaker Change: Relationships like the marine et cetera.

Speaker Change: Or is there other dynamics.

Speaker Change: Alright.

Speaker Change: I'm trying to understand.

Randolph Pena: Yes, thanks for the question. So Robin, the integrations with select software providers like Jack Henry, for example, since you mentioned that one, are enabling existing clients of CXI or new clients of CXI to have a straight-through process with us. And that integration, so you understand it, is they have their one platform where their checking accounts and savings accounts at that bank have the money, and they get the bells and whistles and all the sophistication of our core software system through the integration.

Speaker Change: Yes, yes. Thanks for the question so Robin yes, the integrations with.

Speaker Change: Our select software providers like us.

Speaker Change: Jack Henry for example is since you mentioned that one.

Speaker Change: Is enabling existing clients of of CX side or new clients of CSI to have a straight through process with us and that integration. So you understand it is they have their one platform where their checking accounts and savings accounts at that bank have the money.

Speaker Change: They get the bells and whistles and all of the sophistication of our core software system through the integration so by choosing us as their processor they get the benefits of our enhanced payment system and that is allowing again existing customers that use us for bank notes that now say Oh Theyre now integrated with my core I can do.

Randolph Pena: So by choosing us as their processor, they get the benefits of our enhanced payment system. And that is allowing, again, existing customers that use us for banknotes to now say, oh, they're now integrated with my core. I can do my payments through them as well instead of with the big banks. And so that's enabling existing and new clients to come on board for payments. And one thing I forgot to mention in my first speech was that Canada is now doing that.

Randolph Pinna: So, by choosing us as their processor, they get the benefits of our enhanced payment system, and that is allowing, again, existing customers that use us for bank notes, then now say, oh, they're now integrated with my core, I can do my payments through there as well, instead of with the big bags. And so, that's enabling existing and new clients to come on board for payments. and one thing I forgot to mention in my first speech was Canada is now doing that I mentioned about the FinTech where we are also working with a financial institution to do an integration there.

Speaker Change: My payments through there as well instead of with the big banks.

Speaker Change: And so that's enabling existing and new clients to come onboard for payments.

Speaker Change: And one thing I forgot to mention in my when.

Speaker Change: When my first speech was Canada is now doing that I mentioned about the Fintech, but we are also working with a financial institution to do an integration. There. So we are this we call we nicknamed it the old pop strategy again, one platform one provider.

Randolph Pena: I mentioned fintech, but we are also working with a financial institution to do an integration there. So we nicknamed this the OPOP strategy, again, one platform, one provider. And we are following that initiative in Canada. I'm not sure if that answers your question, but basically, it enables the bank to use their core system and click and get the benefit of our system because we're pre-integrated and allows, therefore, them to easily debit an account, credit our account, and we move the money. Did that answer your question, Robin?

Randolph Pinna: So we are this, we call, we nicknamed this O-POP strategy. Again, one platform, one provider, and we are following that initiative in Canada, but I'm not sure if that answered your question. But basically, it enables the bank to use their core system and click and but get the benefit of our system because we're pre-integrated and allows therefore them to easily debit an account, credit our account, and we move the money. Did that answer your question, Robin? Yes, thank you, and I guess a little bit more leading question is, what can you foresee the growth where it might go from here?

Speaker Change: And we are following that initiative in Canada, but.

Speaker Change: Im not sure if that answered your question, but basically it enables the bank to use their core system.

Speaker Change: Click and but you get the benefit of our system, because we're pre integrated and allows us therefore them to easily debit and account credit our account and we move the money does that answer your question Robert.

Robin Cornwell: Yes, thank you, and I guess a little bit more leading question is what can you foresee the growth where it's going from here, which was a very strong revenue increase; what do you see going forward?

Robert: Yes, Thank you and I guess, a little bit more of a leading question as well.

Robert: Can you foresee the growth.

Robert: Okay.

Robert: Where it might go from here.

Randolph Pinna: That was a very strong revenue increase. What do you see going forward? Well, as the pie gets bigger, it's harder to do 40% growth each quarter thereafter. But yes, we do anticipate additional significant growth in the CXI for sure, as well as once we have some additional integrations in Canada, we'll see growth and payments there as well. We are also focused on some larger institutions which could really move the needle because the first batch of customers that we've been using, having to use our system and the integrations have been more smaller to, you know, the small regional type of banks, and we're moving upstream to some of the bigger banks that recognize the value of the system.

Speaker Change: Very strong.

Speaker Change: Revenue increased what do you see going forward.

Randolph Pena: Well, as the pie gets bigger, it's harder to do 40% growth each quarter thereafter. But yes, we do anticipate additional significant growth in CXI for sure, as well as once we have some additional integrations in Canada, we'll see growth in payments there as well. We are also focused on some larger institutions, which could really move the needle because the first batch of customers that we've been having use our system, and the integrations have been more smaller with the small regional type of banks. And we're moving upstream to some of the bigger banks that recognize the value of the system. And again, the system is just one element.

Speaker Change: Well as the pie gets bigger it's harder to do 40% growth each quarter thereafter, but yes, we do anticipate additional significant growth in CSI for sure as well as once we have some.

Speaker Change: Additional integrations in Canada, we will see growth in payments there as well. We are also focused on some larger institutions, which could really move the needle because the first batch of customers that we've been having to use our system and the integrations have been more smaller to.

Speaker Change: The smaller regional type of banks, and we're moving upstream to some of the bigger base.

Speaker Change: That recognize the value of the system and again the system is just one element people use us because of our service and our laser focus on.

Randolph Pinna: And again, the system is just one element. People use us because of our service and our laser focus on ensuring straight-through process and execution of all payments, and any follow-up should there be any hiccup along the way. And so our reputation as a solid FX specialist provider is enabling our team to get some bigger banks, and hence we do anticipate continued growth in the payments base in both the US and in Canada.

Randolph Pena: People use us because of our service and our laser focus on ensuring a straight through process and execution of all payments, and any follow up should there be any hiccup along the way. And so our reputation as a solid FX specialist provider is enabling our team to get some bigger banks. And hence, we do anticipate continued growth in the payment space in both the US and in Canada.

Speaker Change: Ensure a straight through process and execution of all payments and any follow up should there be any hiccup, along the way and so our reputation as a solid FX specialist provider is enabling our team to get some bigger banks and hence we do anticipate continued growth in the payment space in both.

Speaker Change: The U S and in Canada.

Robin Cornwell: Terrific. Thank you. That's all for me.

Robin Cornwell: Terrific, thank you. That's all from me.

Speaker Change: Terrific. Thank you that's all for me.

Operator: Your next question.

Operator: Your next question. I'm sorry, if you would like to ask a question, please press star 1. There are no further questions at this time. Please proceed.

Speaker Change: Your next question.

Speaker Change: Sure.

Operator: I'm sorry. If you would like to ask a question, please press star one.

Speaker Change: I'm sorry, if you would like to ask a question. Please press star one.

Randolph Pinna: Starting off for the questions at this time, please proceed. Well, thank you again. As you know, we are happy to do, you know, earnings calls, you know, one-on-one type of calls. Should there be something that comes up that we haven't discussed today, as long as we're able to discuss it, we'll be happy to. We do have additional meetings, so I know Bill Matulis will be getting a lot of calls asking for maybe that meeting.

Speaker Change: There are no further questions at this time. Please proceed.

Randolph Pena: Well, thank you again. As you know, we are happy to do earnings calls, you know, the one-on-one type of call. Should there be something that comes up that we haven't discussed today, as long as we're able to discuss it, we'll be happy to do so. We do have additional meetings, so I know Bill Matulis will be getting a lot of calls asking for that meeting. Harar and I will not be available for a call until after next Wednesday.

Speaker Change: Well, thank you again.

Speaker Change: As you know we are happy to do.

Speaker Change: Earnings call one on one type of calls should there be something that comes up that we havent discussed today as long as we're able to discuss it we'll be happy to we do have additional meetings. So I know bill <unk>, who will be getting a lot of calls asking for maybe that meeting.

Randolph Pinna: We, Herard and I, will not be available for a call until after next Wednesday, but we do invite you to set up a one-on-one type of call with Herard and/or myself. So I thank all of you for your support and look forward to talking or meeting you again soon. Thank you.

Speaker Change: Robert and I will not be available for a call until after next Wednesday, but.

Randolph Pena: But we do invite you to set up a one-on-one type call with Harar and or myself. So I thank all of you for your support and look forward to talking to or meeting you again soon. Thank you.

Speaker Change: But we do invite you to set up a one on one type of call with her art and or myself. So I. Thank all of you for your support.

Speaker Change: And look forward to talking or meeting you again soon thank you.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in that. That you please disconnect your line.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Put us in the sub room, please. Thank you for watching.

Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.

Operator: Put us in the sub room, please. ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶

Operator: Put us in the sub room, please. Thank you for watching!

Speaker Change: Put us in the room please.

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Operator: Transcription by ESO. Translation by — Transcription by ESO. Translation by — [inaudible] Thank you for watching.

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