Q3 2024 Currency Exchange International Corp Earnings Call
Operator: Good morning, ladies and gentlemen, and welcome.
Good morning, ladies and gentlemen, and welcome currency Exchange International's third quarter 2024 financial results Conference call. At this time all lines are in a listen only mode.
Operator: Currency Exchange International 3rd quarter, 2024, Pinna's results conference call. At this time, all lines are in a lesson-only mode.
Operator: Following the presentation, we will conduct a questioning insert session. Instructions will be provided at that time for you to do up for a question. If anyone has any difficulties hearing the conference, please press 4-0 for operator assistance at any time.
Speaker Change: All of them in your presentation, we will conduct a question and answer session.
Speaker Change: Instructions will be provided at that time or you took it up for a question. If anyone has any difficulties hearing the conference. Please press star zero for operator assistance at any time I would now like to turn the conference over to Bill Mitchell.
Bill Mitoulas: I would now like to turn a conference over to Bill Mitoulas, Investor Relations Manager. Please go ahead.
Bill Mitchell: Investor Relations manager. Please go ahead.
Bill Mitoulas: Thank you, operator.
Bill Mitchell: Thank you operator, good morning, everyone.
Bill Mitoulas: Good morning, everyone. Welcome to the Currency Exchange International conference call to discuss the financial results for the 3rd quarter of the fiscal 2024 year. Thanks for joining us.
Speaker Change: Welcome to the carriage you exchange International conference call to discuss the financial results for the third quarter of fiscal 2024 years.
Speaker Change: Thanks for joining us.
Bill Mitoulas: With us today, our President, CEO Randolph Pinna, and Group CFO Gerhard Barnard. Gerhard will provide an overview of CXI's financial results and his latest respective 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 for your questions. Ladies, conference call is open to shareholders, prospective shareholders, members of the investment community, including the media.
Speaker Change: It's been an interim president and CEO Randolph pent up and group CFO Gerhard Barnhard.
Speaker Change: Gerhard will provide an overview of the senior tranche.
Gerhard Barnhard: Financial results in its latest perspective on the company's operations.
Randolph: Randolph will then provide his commentary on <unk> strategic initiatives sales efforts and business activities.
Speaker Change: After which we'll open it up for your questions.
Speaker Change: Today's conference call is open to shareholders perspective shareholders members of the investment community, including the media.
Bill Mitoulas: 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 MDNA. Please note 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 MDNA reports for more information about the factors that could cause these different results and the assumptions that we have made.
Speaker Change: 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 see exact investor Relations website page along with the gradual statements and M D.
Speaker Change: Please note. This conference call will include forward looking information.
Speaker Change: Which is based on a number of assumptions and actual results could differ materially.
Speaker Change: 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: With that, I'll turn the call over to Gerhard.
Speaker Change: With that I'll turn the call over to Gerhard Gerhard. Please go ahead.
Gerhard Barnard: Gerhard, please go ahead.
Gerhard Barnard: Thank you, Bill, and thank you everyone for joining today's call. These results are presented in UAS dollars.
Thank you Bill and thank you everyone for joining today's call.
Olivia: These results are presented in U S dollars. My Olivia will also incorporate the results of our wholly owned subsidiary exchange Bank of Canada.
Gerhard Barnard: My overview will also incorporate the results of our only-owned subsidiary, Exchange Bank of Canada. The group continues to focus on executing against its strategic plan, in which investments are being made in our people through in-house training, mentorship programs, and coaching initiatives. CXI and EBC combined have 384 full-time and part-time employees at July 31, 2024, a decrease from 391 ending April 30, 2024. As our technology platforms continue to remain a strategic focus, and they'll continue, the enhancement and additional system implementations are creating planned operational efficiencies. Kyriva, Outragement Management System, and Elisa AML Compliance Software are unscheduled for operationalization by the end of this fiscal year.
Olivia: The group continues to focus on executing against its strategic plan.
Speaker Change: In which in basements are being made in our people through training mentorship programs and coaching initiatives.
Speaker Change: I N E B C combined.
Speaker Change: So 884 full time and part time employees as at July 31, 2024.
Speaker Change: A decrease from 391 ending April <unk> 2024.
Speaker Change: Our technology platforms continued to remain a strategic focus and their continued enhancement and additional system implementations.
Speaker Change: Creating plant operational efficiencies.
Speaker Change: Guy Rebuy Treasury management system, and Elisa email compliance software are unscheduled for operational education.
The end of this fiscal year.
Gerhard Barnard: Our IT team continues to leverage the power of the cloud to enhance integration capabilities, improve scalability, performance, and resilience. These initiatives and investments, among others, support the more efficient future growth of the country.
Speaker Change: Our team continues to leverage the power of the cloud to enhance integration capabilities improve scalability performance and resilience.
Speaker Change: The initiatives and investments among others support the more efficient future growth of the group.
Gerhard Barnard: On November 29th, 2023, the group announced its notice of intention to make a formal course, a normal course issued with NCIB or shared by buyback and to purchase for cancellation a maximum amount of 322,169 common shares representing 5% of the company's issued and outstanding common shares. At the end of the third quarter, the company bought back roughly 96,000 shares for a total investment of $1.8 million U.S. dollars and nearly $2.4 million Canadian dollars.
Speaker Change: On November 29, 2023, the group announced its notice of intention to make a formal course in normal course issuer bid in CIB or share buyback and to purchase for cancellation and maximum amount of 322169 common shares.
Speaker Change: I think 5% of the company's issued and outstanding common shares at.
Speaker Change: At the end of the third quarter the company bought back.
Speaker Change: Roughly 96000 shares.
Speaker Change: For a total investment of one 8 million U S dollars and nearly $2 4 million Canadian dollars.
Gerhard Barnard: Let's look at the consolidated performance for the three months ending July 31st, 2024, compared to the previous three months ending July 31st, 2023. The company reported 3.9 million of net income, which is slightly lower than the 4 million for the same period last year. Net income in the United States grew 576,000 or 13% to 5.14 million, whereas net losses from Canada further declined by 700,000 to a current quarterly loss of 1.2 million. The group should turn on equity ROE, for the current period was 9%, compared to 17% for the same period last year. The company generated revenue of 24 million, a 2% increase from the same period last year, with noticeable new customer acquisitions in both the bank notes and payments product lines.
Speaker Change: Let's look at the consolidated performance for the three months ended July 31st 2024 compared to the previous three months ending July 31 2023.
Speaker Change: The company reported $3 9 million of net income, which is slightly lower than the $4 million.
Speaker Change: For the same period last year.
Speaker Change: Net income in the United States grew 576000 or 13%.
Speaker Change: 514 million.
Whereas net losses from Canada further declined by 700000 to a current quarterly loss of $1 2 million.
Speaker Change: The group's return on equity for the.
Speaker Change: Current period was 9% compared to 717% for the same period last year.
Speaker Change: The company generated revenue of 24 million.
Speaker Change: A 2% increase from the same period last year with no physical new customer acquisitions in both the bank notes and payments product lines.
Gerhard Barnard: Now comparing the third quarter of 2024 to the second quarter of 2024, revenue increased by 3.9 million or 19%, which is consistent with the typical gross patterns. The top five currencies by revenue were U.S. dollars, euros, Canadian dollars, British pound sterling, and Mexican pesos. The 2% year-over-year gross in revenue price was primarily due to growth in also bank notes of $365,000, followed by growth in the payments product line of $197,000, whereas direct to consumer or DTC declined by $155,000. Now revenue in the United States increased 661,000 or 3% over last year, while in Canada declined 255,000 or 6%.
Speaker Change: Now comparing the third quarter of 2024 through the second quarter of 2020 for wave.
Speaker Change: Revenue increased by three 9 million or 19%.
Speaker Change: Which is consistent with the typical gross bookings.
Speaker Change: The top five currencies by waving your where U S dollars euros Canadian dollar British pound Sterling and Mexican pesos.
The 2% year over year growth in revenue was primarily due to growth in our wholesale bank notes of $365000 followed by growth in the payments product line of 197000.
Speaker Change: Direct to consumer or DTC declined by 165000.
Speaker Change: Revenue in United States increased 661000% to 3% over last year.
Speaker Change: While in Canada declined 255000 or 6%.
Gerhard Barnard: Operating expenses increased slightly by about 100,000, or only 1%. The company recorded net operating income of 6.75 million in the three months period in the July 31st, 2024, 5% higher than the same period last year. Even our margin for the current period was 29%, compared to 28% for the same period last year.
Speaker Change: Operating expenses increased slightly by about 100000 or only 1%.
Speaker Change: Company recorded net operating income of $6 $75 million in the three months period ended July 31, 2024, 5% higher than the same period last year.
Speaker Change: EBITDA margin for the current period was 29% compared to 28 for the same period last year.
Gerhard Barnard: The following is a highlight on revenue by product line for the three months in July 31st, 2024, compared to the previous three months July 31st, 2023, and I'd like to start off with banks. Revenue in the banknotes product line increased by about 210,000, or 1%. Between May 2024 and July 2024, approximately 246 million travelers passed through TSI checkpoints in the United States Air Force, 15 million or 6% more compared to pre-COVID levels. Also, banknotes revenue increased 365,000 or 3% as the company continued to grow its also banknotes domestic product line with new customer acquisitions and growth in volumes from existing relationships in both Canada and the United States.
Speaker Change: The following is a highlight on revenue by product line for the three months in July 31, 2024 compared to the previous three months July 31, 2023, and I'd like to start off with banknotes wave.
Speaker Change: Revenue in the banknotes product line increased by about 210000% to 1%.
Speaker Change: Between May 2024, and July 2020 for approximately 246 million travelers batched through TSA checkpoints in the United States airports 15 million or 6% more compared to pre COVID-19 levels.
Speaker Change: Wholesale bank notes revenue increased 365000.
Speaker Change: Four 3% as the company continues to grow its wholesale bank notes.
Speaker Change: Domestic product line with new customer acquisitions and growth in volumes from existing relationships in both Canada and the United States.
Gerhard Barnard: The company was able to achieve efficiencies in operating cost, associated with also banknotes, including shipping cost. Relative to the three-month period ended April 30, 2024, wholesale banknotes revenue increased 2.4 million or 26%, which coincides with the typical seasonal increase in tourism in North America. Overall, wholesale banknotes revenue accounted for 49% of the total revenue in the current three months period, consistent with the prior period in 2023. Direct to consumer banknotes revenue increased $150,000, or 2%. The company maintains its market share and growth level despite the tapering of demand in investment currencies. During the third quarter, demand for travel currencies grew from last year, and revenue from the company's ethics online or online ethics platform led the growth in revenue for the period.
Speaker Change: The company was able to achieve efficiencies and operating cost.
Speaker Change: Associated with the wholesale bank notes, including shipping cost.
Speaker Change: Relative to the three months period ended April 32024 wholesale bank note revenue increased two 4 million or 26%, which coincides with the typical seasonal increase in tourism in North America overall.
Speaker Change: Overall wholesale bank notes waiting you accounted for 49% of the total Nathan you in the current three months period consistent with the prior period in 2023.
Speaker Change: Direct to consumer bank net revenue increased $150000 or 2%.
Speaker Change: The company maintains its market share and gross level, despite the tapering of demand any basement currencies.
Speaker Change: During the third quarter demand for travel currencies grew from last year.
Speaker Change: And revenue from the company's ethics online online ethics platform led to growth in revenue for the period.
Gerhard Barnard: Overall, direct to consumer remain the growing business segment with its diversified delivery channels between company-owned branch locations through agents, relationships, and using the company's online ethics platform, where the company successfully added the stage of Maryland and Iowa to its network during the third quarter, which represents an opportunity for the company to offer its online services to almost 93% of the United States population. Direct to consumer revenue represents 34% of the total revenue in the current three-month period compared to 35% in the previous period.
Speaker Change: Overall direct to consumer remained the growing business segment with its diversified delivery channels between company owned branch locations to agents relationships and using the company's online ethics platform with the company successfully added the state of Maryland and Iowa.
Speaker Change:
Speaker Change: Which nicked with during the third quarter, which represents an opportunity for the company.
Speaker Change: Oh for its online services.
Speaker Change: Almost 93% of the United States population.
Speaker Change: Direct to consumer revenue represents 34% of the total revenues in the current three months period compared to 35 in the previous period now.
Gerhard Barnard: Now let's look at payments. Revenue in the payments product line increased 5% in this three-month period in July 31, 2024, compared to last year's. In the United States, the payments revenue grew 27%. Now that's in the last three months, whereas in Canada, the client by 22%. Growth in the United States was finally driven by new customer acquisitions and increased activity from existing financial institutions. A direct result of the company's continued investment in integrations with core banking platforms. In Canada, the decrease year over year was driven by the economic impact of inflation ratios in Canada. The company processed nearly 40,000 payments.
Speaker Change: Now, let's look at payments.
Speaker Change: Revenue in the payments product line increased 5% in this three months period ended July 31st 2024 compared to last year's.
Speaker Change: In the United States the payments revenue grew 27% now that's in the last three months, whereas in Canada declined by 22%.
Speaker Change: Growth in the United States was primarily rate driven.
Speaker Change: By new customer acquisitions and increased activity from existing financial institutions. A direct result of the company's continued investment in integrations with core banking platforms.
Speaker Change: In Canada, the decrease year over year was driven by the economic impact of inflationary pressures in Canada.
Speaker Change: Company proceeds nearly 40000 payments.
Gerhard Barnard: Representing $3.38 billion in volume in the three months period, and this compares to roughly $32,700 transactions on $2.6 billion in the same period last year. Now payments represent roughly 16, 17% of the total revenue.
Speaker Change: Representing 338 billion in volume three months period, and this compares to roughly 32700 transactions on $2 6 billion in the same period last year.
Speaker Change: Now payments represents roughly 16, 17%.
Speaker Change: The total revenue.
Gerhard Barnard: Now let's look at revenue by geographic location for the three-month period. In the United States, revenue grew by 3% during the three-month period as compared to the same period last year. Primarily led by the growth in payments, which increased by about 580,000 or 27%. And also bank notes, which increased by 235,000 or 3%. Despite a decrease in direct to consumer bank notes, as I mentioned, of roughly 155,000 to 2%. Revenue in the United States accounted for 83% of the total revenue by geographic location; may compare to 82% in the prior period.
Speaker Change: Now, let's look at revenue by geographic location for the three months period in the United States.
Speaker Change: Revenue grew by 3% during the three months period as compared to the same period last year, primarily led by the growth in payments, which increased by about 580000 or 27%.
Speaker Change: And the wholesale bank notes, which increased by two out of 35000 or 3%.
Speaker Change: Despite a decrease in direct to consumer bank notes as I mentioned of roughly 155000% to 2%.
Speaker Change: Revenue in the United States accounted for 83% of the total revenue by geographic location may compared to 82% in the prior period.
Gerhard Barnard: Let's look at Canada. Revenue in Canada declined 6% in the third quarter compared to the same period last year. Growth in the domestic bank notes revenue was offset by a notable decline in transacted volumes and revenue from international bank notes clients. Overall, revenue in the bank notes product line increased by 127,000, or 5%. And revenue in the payments product line decreased or declined about 382,000, or 22%. Overall, revenue in Canada represented a 17% of the total revenue by geographic locations in the current three months compared to roughly 18% in the prior period. Now, operating expenses increased nearly 1% for the three months period ending July 31, 2024.
Speaker Change: It's a good candidate.
Speaker Change: Revenue in Canada declined 6% in the third quarter compared to the same period last year.
Speaker Change: Growth in domestic bank notes.
Speaker Change: Revenue was offset by a notable decline in transact that volumes and revenue from the National Bank clients overall.
Overall revenue in the back notes product line increased by 127005% and revenue the payments product line decreased.
Speaker Change: About 382022%.
Speaker Change: Overall revenue in Canada represented a 17% after.
Speaker Change: Total revenue by geographic location and the current three months compared to roughly <unk> 18 in the prior period.
Speaker Change: Now operating expenses increased nearly 1%.
Speaker Change: Three months period ended July 31, 2024 for.
Gerhard Barnard: For the UAs, there's been no increase in operating expenses. As a matter of fact, it was a slight decline of about 150,000 dollars. Income tax expense for the current period is related to the United States region. It primarily represents taxable income growth and is subject to certain temporary and permanent adjustments to taxable income. The Mexican Pacer was the largest contributors to net foreign exchange losses for the theme of the period in it. 31st of July, 2024, while it was the largest driver of gains in the same period last year.
Speaker Change: For the UAS, there's been no increase in operating expenses as a matter of fact, there was a slight decline of about $150000 in <unk>.
Speaker Change: Tax expense for the current period is related to United States region.
Speaker Change: It primarily represents taxable income grows and is subject to certain temporary and permanent adjustments to taxable income.
Speaker Change: The Mexican peso whats the largest contributors to net foreign exchange losses for the same month period ended 30 <unk> of July 2024, while it was the largest driver of games in the same period last year.
Gerhard Barnard: Let's look at the consolidated performance quickly for the total nine months year to date in the July 31st, compared to the prior nine months. Overall, the company reported 5.3 million of net income during the nine-month period in the July 31st, 2024. 2.6 million for 33% lower than the same period last year. Adjusted net income was 6.7 million, a decrease of 1.2 or 15% compared to the same period last year. Now, adjusted net income for the United States, through by 1.6 million, 20% compared to the same period last year. here. Whereas in Canada, the adjusted net loss increased by 2.8 million.
Let's look at the consolidated performance quickly for that total nine months year to date ended July 31st.
Impaired to the prior nine months.
Speaker Change: Overall, the company reported $5 3 million of net income during the nine month period.
Speaker Change: Ended July 31, 2020, 426 million or 33% lower than the same period last year.
Speaker Change: Adjusted net income was $6 7 million, a decrease of 1.2 or 15% compared to the same period last year.
Now adjusted net income for the United States grew by one 6 billion, 20% compared to the same period last year.
Speaker Change: As in Canada, the adjusted net loss increased by $2 8 million now this adjusted loss comprised of.
Gerhard Barnard: Now this adjusted loss comprised of the reported net loss adjusted for the reversal of the 3rd tax benefit allowance of 1.43 million in Canada during the current period. The company generated rate in your 62.2 million for the nine months period, a 5% increase from the same period last year. The revenue increase was driven by strengthening international travel and new customer acquisitions, and both banknotes and payment product lines in the United States. Fortunately, offset my decline in trades with foreign financial institutions in Canada.
Speaker Change: Reported net loss adjusted for the reversal of the deferred tax benefit allowance of $1 $43 million in Canada.
Speaker Change: The current period.
Speaker Change: The company generated revenue of $62 2 million for the nine months period.
A 5% increase from the same period last year.
The revenue increase was driven by strengthening international travel.
Speaker Change: And new customer acquisitions, and both bank notes and payment product lines in the United States, partially offset by declining trades with foreign financial institutions in Canada.
Gerhard Barnard: A quick review by product line for the nine months. Banknotes, revenue and banknotes, product line increased roughly 2.1 million or 4%. In payments, the product line increased by 9% with a 37% increase in the United States and a 22% decline in Canada as a result of reduced funds and slower economic conditions. Payments revenue represented 19% of total revenue in the current nine months period compared to 18% in the previous period.
Speaker Change: A quick review by product line for the nine months banknotes revenue in banknotes product line increased to roughly $2 1 million or 4%.
Speaker Change: In payments the product line increased by 9% with a 37% increase in the United States and a 22% decline in Canada and as a result for abuse volumes and slower economic conditions.
Speaker Change: <unk> revenue represented 19% of total revenue in the current nine months period compared to 18% in the previous period.
Gerhard Barnard: Now, if you look at revenue by geographic location for the nine months, in the United States, revenue grew by 10%. As a result of strong growth in both product lines, revenue growth in the payment product line was 2.1 million, or 37%, for the nine months. The growth in the banknotes product line was 1.4 million, or 7%. Where in wholesale banknotes, it was 1.1 million or 6% in direct to consumer. Revenue in the United States accounted for 81% of total revenue by geographic location in the nine months, compared to roughly 77% in the prior period of 2023.
Now if you look at revenue by geographic location for the nine months in the United States.
Speaker Change: Revenue grew by 10%.
Speaker Change: As a result of strong growth in both product lines.
Speaker Change: Revenue growth in the payment product line was $3 1 billion or 37% for the nine months.
Speaker Change: The growth in the bank notes product line was $1 4 million or 7%.
Speaker Change: We're in wholesale bank notes it was $1 1 billion.
Speaker Change: Or 6% in direct to consumer.
Speaker Change: Revenue United States accounted for 81% of total revenue by geographic location and the nine months compared to roughly 77% in the.
Speaker Change: Prior.
Speaker Change: Areas of 2023.
Gerhard Barnard: In Canada, revenue declined by 12% for the same period last year due to reduced transactional volumes from certain key clients in the payments product line, lower transacted volumes in UA's dollar with international clients, and a decline in domestic banknotes revenue compared to the same period last year. Revenue in Canada represented 19% of the total revenue by geographic location in the current nine months period, which is a reduction from the previous 23%. Now operating expenses increased 7% for the nine months period. This 7% is slightly higher than the 5% growth in revenue, primarily due to slower revenue growth in Canada.
Speaker Change: In Canada revenue declined by 12% for the same period last year due to reduced transactional volumes from certain key clients in the payments product line lower transacted volumes in U S dollar with international clients and a decline in domestic bank notes revenue compared to the same period last year.
Speaker Change: Revenue in Canada represented 19% of the total revenue by geographic location and the current nine months period, which is a reduction from the previous 23%.
Speaker Change: Now operating expenses increased 7% for the nine months period. This.
This 7% is slightly higher than the 5% growth in revenue primarily due to slower revenue growth in Canada, having said that.
Gerhard Barnard: Having said that, variable cost within operating expenses represented by posting and shipping, sales commissions, incentive compensation, and bank fees totaled 14.4 million and was lower compared to the 15.6 million in the same nine-month period in 2023. This represents a 7% decrease from last year and was primarily driven by a decrease in postage and shipping expense. The ratio of comparing total operating expenses to total revenue for the 9-month period was 79% compared to 78% in the previous 9 months. Post-eaching shipping at a 19% decrease, when compared to the same period last year, despite the growth in banknotes' volumes.
Speaker Change: Variable costs within operating expenses represented by posting in shipping.
Speaker Change: Sales commissions and incentive compensation and bank fees totaled $14 4 million and was lower compared to the $15 6 million in the same nine months period in 2023.
Speaker Change: This represents a 7% decrease from last year and was primarily driven by a decrease in postage and shipping expenses the.
Speaker Change: The ratio comparing total operating expenses to total revenue for the nine months period was 79% compared to 78% in the previous nine months.
Speaker Change: Both states and shipping at a 19% decrease when compared to the same period last year. Despite the growth in bank notes values.
Gerhard Barnard: Losses and shortages primarily represented the loss and transit shipments that the company sells in shares. The Mexican Pacer was the largest driver of foreign exchange losses for the 9-month period in the July 31st, 2024, while the gains in the same period last year represented natural gains from the company's unhaged foreign currency inventory. Interest explains that significantly declined in the current period compared to the same period last year because of a notable decline in average borrowings utilized from funding short-term capital needs during the current period.
Speaker Change: Laughter and shortages, primarily represented the lost loved and lost.
Speaker Change: <unk> shipments that the company's self insurers.
Speaker Change: The Mexican peso was the largest driver of foreign exchange losses for the nine months period ended July 31, 2024, while the gains in the same period last year and represent that natural gains from the Companys unhedged foreign currency inventory.
Speaker Change: Interest expense at significantly declined in the current period compared to the same period last year because of a notable decline in average borrowings utilized from funding short term.
Speaker Change: Capital needs during the current period.
Gerhard Barnard: Let's review the balance sheet as at July 31st, 2024. The company had a capital base of $83 million and $5 million line $5 million drawn on its line of credit with $45 million in borrowing capacity. This compares to $14.6 million drawn and $35.5 million of borrowing capacity for the same 9 months a year ago. The average outstanding borrowings by the company amounted to $6.3 million during the 9-month period compared to roughly $14.8 million in the same period last year. The average interest rate on borrowings was 8.7% versus 7.3% in the last period.
Speaker Change: Let's review the balance sheet.
Speaker Change: At July 31, 2020 for the company at the capital base of $83 million.
Speaker Change: And 5 million nine $5 million drawn on its line of credit with $45 million in borrowing capacity.
Speaker Change: This compares to $14 6 million June and 35, and a half million of borrowing capacity for the same nine months a year ago.
Speaker Change: The average outstanding borrowings by the company amounted to $6 3 million during the nine month period.
Speaker Change: Fair to roughly $14 8 million in the same period last year.
Speaker Change: The average interest rates on borrowings was eight 7%.
Speaker Change: Versus seven three in the last period.
Gerhard Barnard: During the 3rd quarter, the group continued its focus on capital allocations with enhanced modeling, revised capital plan, and the normal course issue about NCID or share buyback that comes in flow of management and the board's belief that the underlying value of currency exchange in the national may not be reflected in the market price of its common shares from time to time.
Speaker Change: During the third quarter. The group continued its focus on capital allocations with enhanced modeling kind of revised capital plan and the normal course issuer bid in CIB or share buyback that consume the management and the board's belief that the underlying value of currency exchange international may not be reflected in the mark.
Speaker Change: Price of its common shares from time to time.
Randolph Pinna: And at this time, I would like to turn the call over to Randall Peno, our CEO, to provide his perspective.
Speaker Change: And at this time I would like to turn the call over to Randall Benno, our CEO to provide his perspective. Thank you.
Randolph Pinna: Thank you.
Randolph Pinna: Good morning. Thank you, Herrard. Thank you, everybody, for joining this early morning call. I would like to start, as I always do, focusing on Exchange Bank of Canada or wholly on subsidiary. As you can clearly see, the top focus for Herrard, myself, and the entire management team at the bank is to bring the bank to profitability as quickly as possible. While containing costs are, of course, one part of that puzzle. The biggest is to resume our revenue growth. We will continue to focus on our international expansion. I'm very excited to know that next week we're having our first time trade with a new client based in London, England.
Randall Benno: Good morning. Thank you her art. Thank you everybody for joining this early morning call I would like to start as I always do focusing on exchange bank of Canada or a wholly owned subsidiary as you can clearly see the top focus for her art and myself and the entire management.
Randall Benno: Team at the bank is to bring the bank to profitability as quickly as possible while containing costs are of course, one part of that puzzle that Vegas has to resume our revenue growth. We will continue to focus on our international expansion I'm very excited to know that next week, we're having our first time trade.
Randall Benno: With the new client based in London, England.
Randolph Pinna: We also have two other sizeable banks in the pipeline that should be starting in the next month or so. So we do anticipate a resumption in increased international revenues, as a result of our physics program with the Federal Reserve and our ability to source pesos and other currencies for global distribution. In fact, at countries. That's where our current focus is for our international expansion. Most importantly, and thankfully, our business in Canada continues to remain our most consistent revenue driver: our financial institutions that are across Canada. We have a very large client in Quebec and another one based in Vancouver that have operations nationally.
Randall Benno: We also have two other sizable banks in the pipeline that should be starting in the next month or so so we do anticipate a resumption and increased international revenues.
Randall Benno: As a result of our <unk> program with the Federal reserve and our ability to source pesos in other currencies for global distribution.
In fact as countries, that's where our current focus is for our international expansion, most importantly, and thankfully our business in Canada continues to remain our most consistent revenue driver are financial institutions that are cross Canada, we have a very large client and claw back another one based in there.
Randall Benno: Coover that are have operations nationally that business is very strong our money service business as our other financial institutions are continuing to be strong and have always been a strong revenue driver ever since even previous to being exchange bank currency exchange Canada.
Randolph Pinna: That business is very strong. Our money service businesses, our other financial institutions are continuing to be strong and have always been a strong revenue driver ever since even previous to being Exchange Bank, Currency Exchange Canada and still now is Exchange Bank. It continues to be a revenue consistent source, and we are continuing to focus on growing our relationships. We have a new Toronto-based financial institution that is starting to do business with us, and we hope to expand that on a national scale. Of course, payments is a focus to see the payment decline in Canada while we recognize the impressive payment revenue increases in the CXI.
Speaker Change: And still now is exchange bank. It continues to be a revenue consistent source and we are continuing to focus on growing our relationships. We have a new a Toronto based financial institution that is starting to do business with us and we hope to expand that on a national scale.
Speaker Change: Of course payments is a focus to see the payment decline in Canada, while we recognize the impressive payment revenue increases in the <unk> side, we noticed the largest differences because Canada has been mostly focused on international corporate corporations based in Canada doing business.
Randolph Pinna: We noticed the largest differences because Canada has been mostly focused on international corporates, corporations based in Canada doing business internationally, and we are now shifting as well to the OAPOP strategy, one provider, one platform, which is utilizing our wire hub for doing transactions for financial institutions. We have two financial institutions, one in Ontario, one based in British Columbia, that are both in advanced talks about utilizing our wire hub for executing on international payments and even one of the two for domestic payments.
Speaker Change: Nationally.
We are now shifting as well to the.
Speaker Change: Oh pop strategy, one provider one platform, which is utilizing our wire hub for doing transactions for financial institutions, we have too.
Speaker Change: Financial institutions, one in Ontario, one based in British Columbia that are both in advanced talks about utilizing our wire hub for executing on international payments and even one of the two for domestic payments.
Randolph Pinna: I will move to CXI because this is the real core engine of the company, and as you saw, the payments business in the US over the last nine months has grown 37 percent. This is directly a result of our working with financial institutions utilizing our OAPOP strategy of integrating into core general ledger systems or into core wire hubs that exist in other banks, and then most importantly, is our own wire hub. A lot of the smaller to mid-size banks look forward to utilizing the system they already have in place for cash and checks for doing foreign currency currencies to utilize for all wires.
Speaker Change: I'll move to C side, because this is the real core engine of the company and as you saw the payments business in the U S. Over the last nine months has grown 37% and that is directly a result of our working with financial institutions use lot utilizing our own pop strategy of integrating.
Speaker Change: In the core general ledger systems or in the core wire hubs that exist in other banks and then most importantly is our own wire hub a lot of the smaller to mid size banks.
Speaker Change: Look forward to.
Speaker Change: Utilizing the system they already have in place for cash and checks were doing foreign currency currencies.
Speaker Change: To utilize for all wires, we have had.
Randolph Pinna: We have begun our integration with the Federal Reserve here in the US to be a part of the FedNow and FedLine, which allows us to enable our clients here in the US to process both foreign currency wires, which we do ourselves, and also domestic wires across the US utilizing the Federal Reserve's payment rails called FedLine. This wire hub is enabling us to create new revenues as software as a service, where we will be charging fees for the amount of users, the number of locations, and depending on the integration support, we will be getting income. I'm proud to know that we have three banks already lined up to be our first three to start utilizing the wire hub fully for both international and domestic wires, and so this shift, both in the US and now with their interested bank in Canada, will indicate that we will be getting revenues from domestic activity and not be dependent on the fluctuations of moving to our consumer unit. You continue to see good revenues from our online store.
We have begun our integration with the federal reserve here in the U S to be a part of the fed now and third line, which allows us to enable our clients here in the U S too.
Speaker Change: Process, both foreign currency wires, which we do ourselves and also domestic oh wires across the U S. Utilizing the federal reserve's payment rails called said lie. This wire hub is undergoing is enabling us to create new revenues as software as a service where we will be.
Charging fees for the amount of users the number of locations and depending on the integration support.
Speaker Change: We will be getting income I'm proud to know that we have three banks already lined up to be our first three to start utilizing the wire hub fully for both international and domestic wires and so this shift both in the U S and now with this interested bank in Canada.
Speaker Change: Indicate that we'll be getting revenues from domestic activity and not be dependent on the fluctuations of the international.
Speaker Change: Moving to our consumer unit you continue to see good revenues from our online store I was very proud to see two new states being added in and we're getting close to having all 51 day and.
Randolph Pinna: I was very proud to see two new states being added, and we're getting close to having all 50 one day. And we will continue to use our same rule that we won't suffer the cost of getting a license in another state until we have enough business case in that state with agents like the AAA relationship we have nationally to enable us to add additional states. But that is a focus to be able to service 100% of the U.S. population as opposed to the 93% we currently can service across state lines. We will continue to carefully add select new company-owned stores.
Speaker Change: And we will continue to use our same rule that we won't.
Speaker Change: <unk> the cost of getting a license in another state until we have enough.
Speaker Change: Business case in that state with agents like the AAA relationship we have nationally.
Speaker Change: To enable us to add additional states, but that is a focus to be able to service a 100% of the U S population as opposed to the 93%. We currently can service across state lines.
We will continue to carefully add select new company owned stores I think you may have heard about the two that we one just opened in the Boston area in the Burlington Mall and we also have one opening in the largest mall in Georgia that had been delayed due to permitting challenges.
Randolph Pinna: I think you may have heard about the two that we won just opened in the Boston area in the Burlington Mall. And we also have one opening in the largest mall in Georgia. That had been delayed due to permitting challenges, but the store is scheduled to open, and it is the largest mall operated by a previous competitor that went out of business for 22 years, and it is indicated to be a very good location. And in the next year, we will be ideally opening one or two more stores in key markets, usually in our key states of Florida, California, New York, and possibly Hawaii.
Speaker Change: But the store is scheduled to open and it is the largest mall operated by a previous competitor that went out of business for 22 years and it is indicated to be a very good location in the next year, we will be ideally opening one or two more stores in key markets usually in our key states.
Speaker Change: Florida, California, New York, and possibly Hawaii.
Randolph Pinna: However, we haven't ruled out any other states that we may not currently operate in as a potential area. Our biggest focus on the consumer unit is our agent relationships. They have proven to be very profitable for us, as it is a win-win-win situation, as the agents provide the location and hence pay the rent expense. And just as importantly, they provide the staff who are doing other services for travelers or visitors. And this enables them to get new revenues by expanding the product line, utilizing an expert like CXI and its proprietary technology CFIX so that they can offer currency exchange services, and we do a revenue share.
Speaker Change: However, we haven't ruled out any other states that we may not currently operate in as a potential area.
Speaker Change: Our biggest focus on the consumer unit as our agent relationships. They have proven to be very profitable for us as it is a win win win situation as the agents provide the location and hence pay the rent expense and just as importantly, they provide the staff who are doing other services for travelers or visitors and.
Speaker Change: This enables them to get new revenues by expanding the product line utilizing an expert like CSI and its proprietary technology <unk> effects. So that they can offer currency exchange services and we do a revenue share and it's a win win win because the customer now has a new location.
Randolph Pinna: And it is a win-win-win because the customer now has a new location that they are used to frequently or is on their way, and they can now do a currency exchange as opposed to detouring to find one of our currency desks or one of our customer bank branches.
Speaker Change: They're used to frequently or is on their way and they can now do a currency exchange as opposed to <unk> to find one of our currency desk or one of our customer bank branches. So our consumer unit led by our our online store and our agent growth will continue to see growth in the next years.
Randolph Pinna: So our consumer unit led by our online store and our agent growth will continue to see growth in the next years.
Randolph Pinna: Lastly, our wholesale business. This is a mature market where we are servicing financial institutions. We still have the two usual megabank competitors in that space, but we are very focused on growing our wholesale bank note business. The most notable thing you will see is our managing director, Wade Bracey, who has been a leader of all of our MDs. He has been very aggressively proactive to reducing costs and increasing service capabilities, and how he is reducing those costs is through a reduction of shipping. We have opened; I was just last week in our new facility in Louisville, Kentucky, which was the main hub of the other competitor that went out of business.
Speaker Change: Lastly, our wholesale business. This is a mature market, where we're servicing financial institutions. We still have the two usual mega bank competitors in that space, but we are very focused on growing our wholesale bank note business. The most notable thing you'll see is our managing director weighed bracey, who who has been a leader.
Speaker Change: All of our M D.
Speaker Change: Has been very aggressively proactive to reducing costs and increasing service capabilities and how he is reducing those costs is through a reduction of shipping. We have opened I was just last week in our new facility in Louisville, Kentucky, which was the main hub of the other competitor that went out of business and the <unk>.
Randolph Pinna: And the advantage of Louisville it is a central distribution point to the US, and it has noticeably reduced our shipping costs, and just as importantly, of course for me in our whole company is customer service, and it has expanded our cutoff time, which are two main facilities in L.A. and Miami have a 5 p.m. Eastern Time cutoff time, and now that is expanded to 9 p.m. because we are at the hub of the shipper, the overnight shipper that we are utilizing getting the better pricing. So that facility will enable us to provide better services at a reduced cost.
Speaker Change: Vantage of Louisville, It is a central distribution point to the U S and it has noticeably reduced our shipping cost and just as importantly of course for me and our whole company is customer service and it has expanded our cutoff time, which our two main facilities in L. A and Miami have a five P.
Speaker Change: Eastern time cutoff time and.
Speaker Change: And now that it's expanded to nine P M.
Speaker Change: Because we are at the hub of the.
Speaker Change: The shipper the overnight shipper that we are utilizing getting the better pricing. So that facility will enable us to provide better services at a reduced cost we.
Randolph Pinna: We are really excited about that facility; we are keeping both the Miami and Los Angeles facilities as they are uniquely positioned: Miami for the South American and Caribbean area, and Los Angeles due to its close connectivity to Asia. One of the banks that we are looking to work with is in Singapore, and that will allow us to use our L.A. facility if they are able to help. So again, the wholesale business continues to be a core part of our group, and we look forward to it expanding as well.
Speaker Change: We are really excited about that facility, we are keeping both the Miami and Los Angeles facilities as they are uniquely positioned Miami for the South American and Caribbean area, and Los Angeles due to its close connectivity to Asia as one of the banks that we're looking to work with us in Singapore.
Poor and that will allow us to use our L. A facility if they are able to help.
So again the wholesale business continues to be a core part of our group and we look forward to it expanding as well lastly, her art and I are also focused on mergers and acquisitions I know there's questions about that we have been looking we've decided to pass on one or two opportunities.
Randolph Pinna: Lastly, Harad and I are also focused on mergers and acquisitions. I know there are questions about that. We have been looking; we have decided to pass on one or two opportunities. However, there are one or two that are quite attractive, and we are continuing to explore that opportunity. Nothing has been signed, so there is no specific news at this stage. I just wanted to let you know, besides our businesses and each of their units planning to grow at a high level, the board and our executives here are looking at strategic opportunities to really significantly grow our group.
Speaker Change: However, there are one or two that are quite attractive and we are continuing to explore that opportunity. Nothing has been signed so there's no specific news at this stage I just wanted to let you know besides our businesses in each of their units are planning to grow at a high level the board and our <unk>.
Speaker Change: <unk> here are looking at strategic opportunities to really significantly grow our group. So that's the end of my update for you and I welcome any questions that you may have so I'll turn it back over to the operator to allow the calls to Roland and I do ask that you just keep it to two.
Randolph Pinna: So that is the end of my update for you, and I welcome any questions that you may have. So I will turn it back over to the operator to allow the calls to roll in. And I do ask that you just keep it to two, just because I think one or two times we have run out of time, and I try to get everybody's call answered.
Speaker Change: Just because I think one or two times, we've run out of time and I tried to get everybody's call answered.
Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchstone phone. Questions will be taken in the order received.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one and then you touched on.
Speaker Change: Questions will be taken in the order received should you wish to cancel your request. Please press star followed by the channel.
Operator: So, do you wish to cancel your request? Please press the star followed by the two.
Operator: If you are using a speaker phone, please lift the answer, be quite pressing any piece. We advise you to limit your questions to two questions only. Once again, that a star or one should do wish to ask a question.
Speaker Change: Using a speaker phone please lift the one set of Gulf crossing anesthesia.
Speaker Change: Thank you to limit your questions to two questions only once again that is star one should you wish to ask a question.
Robin Cornwell: Your first question is from Robin Cornwell from Catalyst Research.
Speaker Change: Your first question is from Robin Cornwell from catalyst research. Please ask your question.
Robin Cornwell: Please ask your question. Hi, good morning. I was a little confused on the Canadian revenue decline.
Speaker Change: Hi, good morning.
Robin Cornwell: I was a little confused on the Canadian.
The revenue decline.
Randolph Pinna: Could you expand a little bit on the payments revenue as to how is negatively impacted by inflation? And maybe you could expand and just discuss a little bit about the trust agreements. And I know you mentioned that they are starting to work, but maybe you could just expand on the progress you could make.
Robin Cornwell: Could you expand a little bit on the payments revenue as to how it was negatively impacted by inflation.
Speaker Change: Maybe you could.
Robin Cornwell: And and.
Speaker Change: Just discuss a little bit about the trust agreements and I know you mentioned that.
Robin Cornwell: It.
Robin Cornwell: Turning to work, but maybe you could just expand on.
Speaker Change: On the progress you've made.
Randolph Pinna: Robin, on the payments, what we recognize, not just ourselves, other providers of international wires are all experiencing, is a decline in margin. The thin text of the world have been pushing all the banks and providers like ourselves to lower spreads. And, of course, we instead of losing the customer all together, we are capitulating and lowering our spreads to compete with that. So, while you might have noticed the volume, the number dollar volume we processed was actually up. The profit on that is down. And that is clearly a result of the automation of payment processing globally and how that is pushing all; you can see it with the big banks.
Okay. So robin on the payments, what we've recognized not just ourselves other providers.
Speaker Change: Providers of international wires are all experiencing.
Speaker Change: Is a decline in margin.
The syntax of the world have been pushing all the banks and providers like ourselves to lower.
Speaker Change: Our spreads.
Speaker Change: And of course, we instead of losing the customer altogether were capitulating and lowering our spreads to to compete with that so while you might have noticed the volume the number of dollar volume. We processed was actually up the profit on that is down and that is clearly a result of the.
Speaker Change: Automation of payment processing globally, and how that is pushing all as you can see it with the big banks all of the wire.
Randolph Pinna: All of the wire margin, the spread on foreign exchange, tighter. And that can be overcome through increased customer service relationships or better, as our focus is to integrating into other automated payment flows so that when you're using online to online, there's less manual labor behind the scenes, and that enables us to profit from a lower spread exchange.
Wire margin the spread on foreign exchange tighter and that can be overcome.
Speaker Change: Through increased customer service relationships or better is our focus is to integrating into other automated payment flows so that when you're using online to online and.
Speaker Change: And Theres less manual labor behind the scenes and that enables us to profit from a lower spread exchange. So I'm not sure if that answered it the inflation and all of that there are things are costing more so we have seen.
Randolph Pinna: So, I'm not sure if that answered it. The inflation and all of that, there are things that are costing more. So, we have seen a hesitancy for people to buy as much product as typically foreign wires when they're buying product for them to sell. Like, we have a wine distributor to restaurants based in Quebec. And I'm just using that as an example, but they're buying less inventory, partly because they're seeing less sales, but also just as a caution to trying to wait till some of the pricing, this inflationary increase that we saw in the last few years, hopefully subsides.
Speaker Change: A.
Speaker Change: Hesitancy for people to buy as much product as typically afford and wires when they are buying product for them to sell like we have a wine distributor.
Speaker Change: Distributor two restaurants are based in Quebec, and I'm, just using that as an example, but they are buying less inventory, partly because they are seeing less sales, but also just as a caution to trying to wait until some of the pricing. This inflationary increase that we saw in the last few years hopefully subsides.
Randolph Pinna: And they can buy wine later; might be cheaper than if they buy cases right now.
Speaker Change: And they can buy wine later might be cheaper than if they buy cases right now so that that answers that as far as the.
Randolph Pinna: So, that answers that. As far as the second question on the international and the trust agreement that we established with the multi-billion dollar trust company, while that's in place and ready to work, it has not taken off due to its new instrument. Most banks that deal, again, we're focused strictly on fatif countries, which means these are the main big countries of the world, and of course, we're focused on the big, big banks of those main big countries, and they are typically are used to dealing with our big, our tribal, the big bank here in the US, and they don't ever have to worry about credit.
Speaker Change: The second question on on the International and the Trust agreement that we established with the multibillion dollar Trust company, while that's in place and ready to work and it has not taken off due to its a new instrument most of banks that deal and again, we're focused strictly.
Speaker Change: On fabric countries, which means these are the main big countries of the world and of course, we're focused on the big Big banks of those main big countries and they are typically are used to dealing with our big archrival the big bank here in the U S and.
Speaker Change: And they don't ever have to worry about credit and so when they look at our little Baby Bank.
Randolph Pinna: And so, when they look at our little baby bank, they expect of bankers' guarantee, and the bankers' guarantee is much more expensive than this trust account. So, the one large bank that we had thought would be doing business with us has passed on that. And we are working with a partner bank, which is a customer of our FedEx program that is comfortable with our group's credit, as they've accepted the CXI group, you know, guarantee for its subsidiary. We have working with a three-way relationship there that they will be providing euros since their euro base. We will provide the dollars, but they're accepting the credit risk for the entire transaction, so we were working around it.
Speaker Change: They expect a bankers guarantee and the bankers guarantee is more much more expensive than this trust account. So the one large bank that.
Speaker Change: We had thought would be doing business with us has passed on that and we are working with a partner bank, which is a customer of our Fedex program that is comfortable with our group's credit as they've accepted the CSI group.
Speaker Change: Guaranteed for its subsidiary.
Speaker Change: We have working with a three way relationship there that they will be providing euro since they are euro based we will provide the dollars, but they're accepting the credit risk for for the entire transaction. So we were working around it we do have a bank south of the border that is already trading with us in there.
Randolph Pinna: We do have a bank south of the border that is already trading with us, and they're utilizing, they've engaged a US lawyer to confirm the comfort of this trust account, and it is hopeful that they will be the first customer to break the ice on this trust account and expand their business, because their activity is 5 million or less is what they're comfortable with, although they prefer to trade 10 to 20 million at a clip. And so, this trust account is still on the table as a solution to their credit concerns. So, that's the update on the international expansion utilizing the trust account.
Speaker Change: Using utilizing they've engaged a U S lawyer to confirm the comfort of.
Speaker Change: This trust account and it is hopeful that they will be.
Speaker Change: The the first customer to break the ice on this trust account and expand their business because they activity is $5 million or less is what theyre comfortable with although they prefer to trade $10 million to $20 million at a clip and so this trust account is still on the table as a solution to their.
Robin Cornwell: Their credit concerns so that's the update on the international expansion utilizing the trust account did that answer your two questions Robin.
Robin Cornwell: Did that answer your two questions, Robin? Yes, thank you.
Robin Cornwell: Yes. Thank you if I could I just extend our one into the E. B C B C as reported.
Robin Cornwell: Could I just extend one into the EBC? EBC's reported a couple of reporters, first and second, 30 big losses. Can you just discuss that for a minute? And perhaps what the third quarter looks like? So this is our third quarter call, so we continue to have losses.
Speaker Change: A couple of quarters, our first and second.
Robin Cornwell: Fairly big losses.
Robin Cornwell: Can you just disc.
Robin Cornwell: Discuss that for a minute.
And perhaps what the third quarter looks like.
Speaker Change: So we just we this is our third quarter call. So we can tell me sort of higher losses.
Randolph Pinna: That's why I started to call my speech about the top focus for the board, and in the executives here is the profitability of Exchange Bank of Canada, and our current strategic plan is to grow the international, because we have been doing a lot of work on that, and it's coming to fruition. We have a very good customer in the UK that's starting soon, that will quickly start ramping back up the revenues, because that's been the biggest decline year over year, is from that bounce back from the pandemic. We saw a lot of activity, the bounce back year, as we called it, that was our record year in 22, and so now you're seeing the decline, because it's being stabilizing.
That's why I started the call my speech about the top focus for the board and the executives here is the profitability of <unk>.
Speaker Change: Exchange Bank of Canada, and our current strategic plan is to grow the international because we are we have been doing a lot of work on that and it's coming to fruition, we have a very.
Speaker Change: Good customer in the U K that starting soon that will quicker.
Quickly start ramping back up the revenues because that's been the biggest decline year over year as well from.
From that bounce back from the pandemic, we saw a lot of activity.
Speaker Change: Uh huh.
Speaker Change: The bounce back years, we called it that that was a record year in 'twenty two and.
And so now you're seeing the declines because it would be stabilizing we will now be seeing increased revenues from international again are our core market of Canada has thankfully been very consistent.
Randolph Pinna: We will now be seeing increased revenues from international. Again, our core market of Canada has thankfully been very consistent all throughout, except during the pandemic itself, and we are in advanced discussions with two new banks for both payments and bank notes, and we do see the opportunity with additional bank note customers in Canada, so that's going to be continuing to drive our focus on profitability, and then again, the payments utilizing our wire hub has enabled us to get a market that we haven't gotten before in Canada where we're processing banks in Canada's wires, or in not just banks, credit unions.
Speaker Change: All the throughout except during the pandemic itself.
Speaker Change: And we are in advanced discussions with two new banks for both payments and bank notes and we do see the opportunity with additional bank no customers in Canada. So that's going to be continuing to drive our our focus on profitability and then again the payments utilizing our wire hub has enabled us to.
Speaker Change: To get a market that we haven't gotten before in Canada, where we're processing banks in Canada's wires or and not just banks credit unions.
Randolph Pinna: And so we are very focused on growing our revenues.
Speaker Change: And so we are very focused on growing our revenues you've seen a reduction in payroll. So there we have tightened the belt Oh aware possible and so it is a top focus for her art and I to get the bank profitable all while we look at other opportunities to <unk>.
Randolph Pinna: You've seen a reduction in payroll so that we have tight in the belt, where possible, and so it is the top focus for Herard and I to get the bank profitable, all while we look at other opportunities to service other companies or institutions. Okay, thank you very much. Thank you for the questions.
Service other companies or institutions.
Okay. Thank you very much.
Speaker Change: Thank you for the questions.
Operator: Thank you, once again, that is Thor.
Speaker Change: Thank you once again that is star one change you guys to ask a question. Your next question is from Steven Ramsey from University Keybanc. Please ask your question.
Operator: One should you wish to ask a question.
Stephen Ranzini: Your next question is from Stephen Renzini from University Bank. Please ask your question. Good morning, Herard. Thanks for another great quarter. I have a question on your US listing, right? There's three different levels at OTC Markets that you could have, and currently you're at the lowest level, which is the pink tier, right? And as a Cedar, filer in Canada, your piggyback qualified under SEC Rule 12g3-2b to be on the OTCQB or OTCQX exchange. Now, all investment bankers tell me spending the money for OTCQX really isn't an official role, but OTCQB, I think, is a much better arrangement on multiple levels than being on pink.
Steven Ramsey: Good morning, Ralph on her.
Steven Ramsey: Thanks for another great.
Quarter.
I have a question.
Speaker Change: On your U S listening right, there's there's three different levels at OTC market.
Speaker Change: You could have.
Speaker Change: And currently you're at the lowest level, which is the pink here right.
Speaker Change: And as a SEDAR farther in Canada.
Speaker Change: Piggyback qualified under FCC rule 12, G III desk to be to be.
Speaker Change: On the OTC QB or OTC Q ex exchange now.
All the investment bankers tell me spending the money for OTC queue ask really isn't it.
Speaker Change: Artificial wall, but OTC QB I think it's that much.
Speaker Change: Better arrangements.
Speaker Change: Oh multiple.
Speaker Change: If the levels than being on tank and it's not it's not very expensive at all.
Stephen Ranzini: And it's not very expensive at all. I think our bank only company pays. Exchange. I think there are some definite benefits of being there. Have you guys ever considered upgrading your U.S.?
Speaker Change: Our bank.
Speaker Change: Bank holding company pays.
Speaker Change: Right.
Speaker Change: Dollars a year it would be on the OTC QB exchange rank, but I think there's some I think there are some definite benefits of being there have you guys ever considered upgrading your U S listing.
Stephen Ranzini: listing to OTCQV?
Speaker Change: To OTC QB.
Randolph Pinna: Thank you, Stephen. I was not aware of that personally, but so at a high level we have considered getting SEC registered and listing either on NASDAQ or New York. But we have ruled out that our focus is profitability; that increased revenues and net income for shareholders will be the number one driver of why our stock will go up. I clearly recognize having a larger market audience of potential shareholders helps.
Speaker Change: Thank you, Steve and I were I was not aware of that personally but.
Speaker Change: So at a high level, we have considered getting FCC registered and lifting either NASDAQ or New York, but we have ruled out that our focus is.
Speaker Change: As profitability that increased revenues and net income for shareholders will be the number one driver of why our stock will go up I clearly recognize having a larger a market audience of potential shareholders helped so harare I'd.
Randolph Pinna: So Gerhard, I see him taking notes here; we'll be looking into that upgrade. But we've chosen to avoid the SEC. Our group has what I would almost say too many regulators, but we have plenty of regulators that we can all agree on, that. And therefore, we just don't want another regulator, another set of lawyers to assist us with an SEC filing. We've been very pleased with the Ontario Securities Commission. We've been very pleased with the Toronto Stock Exchange. And of course, because we do have U.S. Shareholders, we did the entry level over the counter. But if there is, we're a nominal fee and still avoiding an SEC registration, we would absolutely explore that.
Speaker Change: I'd see him taking notes here will be looking into you know that upgrade but we've chosen to avoid the.
Speaker Change: The FCC our group has.
Speaker Change: What I would almost say too many regulators, but we have plenty of regulators that we can all agree on that and and therefore, we just don't want another regulator in another.
Speaker Change: Set of lawyers to assist us with an SEC filing we're been very pleased with the Ontario Securities Commission, we've been very pleased with the Toronto stock exchange and of course, because we do have U S. Shareholders. We did the I guess the entry level.
Speaker Change: Over the counter.
But if there is for a nominal fee and still avoiding an FCC registration.
Speaker Change: We would absolutely explore that so thank you for that input and we can maybe you can take it offline if her art.
Randolph Pinna: So thank you for that input.
Randolph Pinna: And we can maybe even take it offline if Gerhard, you and I want to have a call just to discuss it further. But there's no resistance to paying a little more to get a bigger audience. But we structurally are still against, unless there's a major acquisition in the U.S. And we're going to have to raise some new capital. Then, at that point, we have a business case to contemplate doing a listing in the U.S. and raising capital there. But right now, we feel we have surplus capital. We have borrowing capacity. So the transactions at hand that we may consider would not be listing.
Speaker Change: You and I want to have a call just do discuss it further but there is no resistance to paying a little more to get a bigger audience, but we structurally are still against unless there's a major acquisition in the U S and we're gonna have to raise some new capital then at that point, we have a business case to contemplate doing.
Speaker Change: A listing in the U S.
Speaker Change: And raising.
Speaker Change: Capital there, but right now we feel we have surplus capital.
Speaker Change: We have borrowing capacity so the transactions at hand that we may consider we would not be listing. However, we've chosen to avoid the FCC at this time, just because we don't want the additional cost and expense and another regulator.
Randolph Pinna: However, we've chosen to avoid the FCC at this time just because we don't want the additional cost and expense in another regulator to work with. So I hope that answered your question, but I appreciate that insight. Thank you, Stephen.
Speaker Change: To to.
Speaker Change: It worked with so so I hope that answered your question, but I appreciate that.
Speaker Change: Insight.
Speaker Change: Thank you Stephen I'll reach out.
Stephen Ranzini: I'll reach out. Yeah, no, I agree 100% with your conclusion that SEC registration at this time does not make sense. Our own analysis, and again, the investment banks' advice to us is that it only makes sense for a financial company like yours or ours to be fully to see registered when we have a market cap necessary to reach into becoming a member of the Russell 2000 Index. And the cutoff there right now. last year. This current year, they cut off $159 million a market cap, so you're not there yet, right? But, you know, once, once you were there, I'm having higher profitability and make a lot of sense because you'd have about 10% of your outstanding shares snatched up by index funds, which would be, you know, uplift in the share price for sure, right?
Stephen: Yeah, No I agree 100% with your conclusion that SEC registration at this time does not make sense.
Speaker Change: You know our own analysis and again the investment bank's advice to us.
Stephen: Is.
Speaker Change: It only makes sense for a financial company like yours or ours to be.
Speaker Change: It forced to see registered when we have a market cap necessary to reach into becoming a member of the Russell 2000 index.
Speaker Change: And they cut off there right now.
Curt: This is Curt you the cut off for $159 million of market cap. So you.
Speaker Change: You are not there yet right, but you know once once you where they're having.
Having a higher profitability.
Speaker Change: And it makes a lot of sense because.
Speaker Change: We have about 10% of your outstanding shares snatched up by index funds, which would be you know.
Speaker Change: Uplift in the share price for sure right, if your shareholders loyal and stick with you through the transition.
Stephen Ranzini: If your shareholder's loyal and stick with you through that transition, and, you know, frankly, that's our intermediate term goal ourselves is to get the profitability up so that, you know, we could be includeable in the Russell and then get SEC registered, right? Because it's a transformative moment for your company in a positive way for the shareholders.
Speaker Change: Frankly, that's our intermediate term goal ourselves just to get the profitability up so that we could be incredible and the Russell and then get FCC registered right because it's.
Speaker Change: It's a transformative moment for your company in a positive way for the shareholders.
Stephen Ranzini: So I do have a second question. You know, you guys have a buyback program authorized by the Toronto Stock Exchange, 5% of your shares, but most recently quarter, you didn't buy back any stock. Is there a reason why you're not buying back stock at this time, even though you've got the authorization in place?
Speaker Change: So I do have a second question.
Speaker Change: You guys have a.
Speaker Change: Our buyback.
Speaker Change: Program authorized by the Toronto stock exchange.
Speaker Change: 5% of your shares.
Speaker Change: Most recent quarter you didn't buyback any stock because there is there a reason why you're not buying back stock at this time, even though you've got the authorization in place.
Gerhard Barnard: I'll let Herard buy. There's a restriction on how much you can buy per day. So I don't know, Herard, do you want to add into that?
Speaker Change: I'll, let her art, whereby there's a restriction on how much you can buy per day.
Speaker Change: So I don't know her or do you want to add to that.
Gerhard Barnard: Steven, we did buy shares back in Q3. We continue to buy shares pretty much on a daily basis. We have a maximum, a lot of daily purchase allotment of 1,325 shares. So if you look at our, I think it's 95,780 shares that we've purchased so far, and if I recall, we were probably in the 65, 70,000 at the end of Q2. So we are doing that on a daily basis. If shares are available to the maximum of 1,325.
Speaker Change: Stephen We are we did buy shares back in in Q3, we continued to buy shares pretty much on a daily basis, we have a maximum of lump it daily.
Speaker Change: Purchased allotment of 1325 shares since we looked at our I think its 95780 shares that we purchased so far.
Speaker Change: And if I recall, we were probably in the.
Speaker Change: In the 65 70000.
At the end of Q2. So we are doing we are doing that on a daily basis.
Speaker Change: And if shares are available to the maximum of 1325.
Stephen Ranzini: So, on that, wouldn't it make sense to mention the buyback program in each quarterly press release? Because I think shareholders look very favorably on companies that are buying in shares on a continuous basis. Your press release does not highlight that.
Speaker Change #100: So on that wouldn't it make sense to mention the buyback program in each quarterly.
Speaker Change #100: Press release, because you know I think our shareholders look very favorably and companies that are buying in shares.
Speaker Change #101: The two newest basis right like your press release does not highlight that.
Speaker Change #101: Right.
Speaker Change #102: It is strictly a definitely a good idea.
Gerhard Barnard: I do know that it is in our Indian age, so there is eyes on that, but you know what point taken? It can definitely be highlighted a bit more if I'll disclose your committee. See, that's it. Thank you for that point.
Speaker Change #103: I do know that it is in our MD&A. So.
Speaker Change #102: Okay.
It is on that but you know what point taken it can definitely be a highlight that a bit more.
Speaker Change #104: If the snow Yosemite see that's it thank you for that point.
Stephen Ranzini: Great.
Stephen Ranzini: Thanks for both answers.
Great and thanks for both managers and yeah. If you wanted to talk about our OTC.
Stephen Ranzini: Yeah, if you want to talk about OTCQB listing off one, I'm always available to you. You know how to get a hold of the man. Happy to talk about our own very positive experiences there and how that can benefit the company and the shareholders.
Speaker Change #105: OTC QB listing offline always available to you know how to get a hold of them and happy to talk about our own very positive experiences there and how that can benefit the company and the shareholders.
Randolph Pinna: Thank you. And Stephen, just to clarify, we bought roughly 43,500 shares in this quarter, but what I'm also gathering is, you know, we'll make sure that the quarter of quarter gets a bit more attention.
Speaker Change #105: Thank you and Stephen just to clarify we bought roughly 43 and a half thousand shares in this quarter.
Speaker Change #106: But what I'm also gathering as we will make sure that the quarter over quarter is as it gets a bit more attention.
Stephen Ranzini: Thank you for your question. Thank you again for a great job; another good quarter as you're progressing with the company.
Thank you for your question.
Speaker Change #107: Thank you. Thanks. Thank you again for a great job of another another good quarter as Youre progressing with the company.
Operator: Thank you.
Speaker Change #107: Thank you.
Speaker Change #109: Thank you there are no further questions at this time. Please proceed.
Operator: There are no further questions at this time.
Operator: Please proceed. Thank you, everybody, for your call.
Speaker Change #110: Okay, well. Thank you everybody for your call should there be a question that we are able to answer please reach out to Harare, bill or myself will be happy to schedule.
Randolph Pinna: Should there be a question that we are able to answer? Please reach out to Herard of Bill or myself. We'll be happy to schedule an individual call with you.
Speaker Change #109: And individual call with you.
Operator: We appreciate your support of the Currency Exchange International Group and look forward to our next call or the next meeting. Thank you. Thank you, everyone. Thank you.
Speaker Change #109: We appreciate your support of the currency Exchange International Group and look forward to our next call or the next meeting.
Speaker Change #109: You.
Speaker Change #109: Thank you everyone.
Speaker Change #111: Thank you.
Operator: Ladies and gentlemen, the conference has now ended. Thank you all for joining me all this connector lines.
Speaker Change #112: Ladies and gentleman. The conference has now ended thank you all for joining you may all disconnect your lines.
Operator: Can you put us in the sub room, please? Operator.
Can you put us in sub room police.
Speaker Change #112: Operator.
Speaker Change #112: Okay.
Speaker Change #112: Okay.
No.
Speaker Change #112: Yes.
Speaker Change #112: [music].
Speaker Change #112: Yeah.
Speaker Change #112: Yeah.
Speaker Change #112: [music].
Speaker Change #112: Yeah.
Speaker Change #112: Yeah.
Speaker Change #112: [music].