Q2 2025 Currency Exchange International Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to the currency Exchange International Q2, 2025 financial results Conference call. At this time and note that all participants are in a listen only mode. Following the presentation. We will conduct a question and answer session and if at any time. During this call you require me to this.
Operator: Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q2 2025 Financial Results Conference Call. At this time, note that all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session, and if at any time during this call you require media assistance, please press star zero for the operator.
Please press star zero for the operator.
Operator: Also note that this call is being recorded on June 12, 2025.
Also note that this call is being recorded on June 12, 2025, and I would like to turn the conference over to Bill to todays Investor Relations. Please go ahead Sir.
Bill Mitoulas: And I would like to turn the conference over to Bill Mitoulas, Investor Relations. Please go ahead, sir. Thank you, Sylvia.
Bill: Thank you Sylvia 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 2025 fiscal year. Thanks for joining.
Bill: Welcome to the currency Exchange International conference call to discuss the financial results.
Bill: The second quarter of 2020 for fiscal year <unk>.
Bill: Joining us.
Bill Mitoulas: With us today are President and CEO Randolph Pinna and Group CFO Gerhard Barnard. Gerhard will provide an overview of CXI's financial results and his latest perspective on the company's operations.
Speaker Change: With us today are president and CEO, Randall and group CFO Gerhard Garner.
Speaker Change: Yeah.
Speaker Change: With that overview, let's see.
Actual results.
Speaker Change: The latest perspective on the company's operations.
Bill Mitoulas: 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.
Speaker Change: Randolph will then provide his commentary on <unk> strategic initiatives sales efforts and business activities after which we'll open it up for your questions.
Bill Mitoulas: Today's conference call is open to shareholders, prospective shareholders, members of the investment community, including the media. 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 MP&A. Please note that this conference call will include forward-looking information, which is based on a number of assumptions and actual results for different materials. Please refer to our financial statements, MD&A reports for more information about the factors that could cause these different results and the assumptions that we have made.
Speaker Change: Today's conference call is open to shareholders prospective shareholders members of the investment community, including the media.
Speaker Change: Those of you may happen at LIBOR called report's conclusion.
Speaker Change: Please be advised that this conference call will be recorded and then uploaded to see Exxon's Investor Relations website page along with the financial statements.
Speaker Change: Right.
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.
Speaker Change: Please refer to our financial statements MD&A report.
Speaker Change: More information about the factors that could cause.
Speaker Change: These different results and the assumptions that we have right.
Gerhard Barnard: With that, I'll turn the call over to Gerhard. Gerhard, please go ahead. Thank you, Bill, and thank you, everyone, for joining today's call.
Speaker Change: With that I'll turn the call over again.
Speaker Change: Please go ahead.
Speaker Change: Thank you Bill and thank you for joining today's call.
Gerhard Barnard: These results are presented in US dollars, and my overview of the company, CXI, will also incorporate the results of the discontinued operations of Currency Exchange International.
Speaker Change: These results are presented in U S dollars and my overview of the company I will also incorporate the results of the discontinued operations currency exchange International.
Gerhard Barnard: As a reminder, On February 18th, 2025, the group announced it's the season to seize the operations of its wholly owned subsidiary, Exchange Bank of Canada. The plan aims for the bank to seize all customer activity by August 2025 in preparation for administrative and financial statement audits required and an application to the Minister of Finance in Canada to discontinue Exchange Bank of Canada from the Bank Tax. This voluntary discontinuance is expected to be completed in the fourth quarter of 2025, subject to the receipt of all necessary regulatory approval. Financial information on the bank's discontinuance is based on our current, monthly, updated information available, as well as certain projected information based on various assumptions regarding revenue, expenses, currency movements, and client behavior, to name a few.
Speaker Change: As a reminder.
Speaker Change: On February 18th 2025.
Speaker Change: Group announced its decision to cease the operations on for Tony.
Speaker Change: Italy Exchange Bank of Canada.
Speaker Change: Glenn aims for the bank to cease all customer activity by August 2025.
Speaker Change: Paper ratio for administrative and financial statement audits required.
Speaker Change: And then applications to the minister of Finance in Canada.
Speaker Change: Discontinued exchange Bank of Canada from the bank.
Speaker Change: That's partly just couldn't do it.
Speaker Change: It is expected to be completed in the fourth quarter of 2025.
Speaker Change: Subject to the receipt of all necessary regulatory approvals.
Speaker Change: Financial information on the banks discontinued.
Speaker Change: It's based on our current monthly updated information available as well as certain projected inflammation based on various assumptions regarding revenue basis currency movements and blank behavior to name a few.
Gerhard Barnard: Any projected financial information, as well as any information on the continued and discontinued operations mentioned in this call, as well as forward-looking information, involves known and unknown risks, uncertainties, and other factors that may cause the company's actual results, performance, or achievements to be materially different from any of its future information. As a result of the board's decision to discontinue EBC's operations, the company assessed the requirements of IFRS 5, non-current assets held for sale and discontinued operations, and concluded that the Canadian business component related to EBC should be presented as discontinued operations starting this quarter, that's the second quarter.
Speaker Change: And he predicted financing inflammation as well as information on it.
Speaker Change: Continued and discontinued operations nation in the school as well as forward looking information.
Speaker Change: Both known and unknown risks uncertainties and other factors that may cause the company's actual results performance or achievements to be materially different from any of its Steve here.
Speaker Change: Inflammation.
Speaker Change: As a result of the board's decision to discontinued operations.
Speaker Change: Operations.
Speaker Change: Company is safe.
Speaker Change: Wyman I have raised five non current assets held for sale and discontinued operation and concluded that the Canadian business component related to a b C should be presented as discontinued operations starting this quarter, that's the second quarter.
Gerhard Barnard: According to IFRS 5, the company presented the associated assets and liabilities within a disposal group on a consolidated interim Financial State. as at April 30th, 2025. Also, the results of discontinued operations are presented as a separate line item. in a condensed interim consolidated statement of income and comprehensive income net of tax. This classification resulted in presenting the company's results of operations for continuing and discontinued operations separately. Now it is important to note that all results of continuing operations have been revised to exclude EBC's results and all associated intercompany transactions as per IFRS 5. The impact of EBC's results of operations is briefly discussed separately under discontinued operations as a segment in the interim financial statement.
Speaker Change: Two I have right sized the company presented the associated assets and liabilities, which in a disposal group on the consolidated income.
Speaker Change: Financial statements.
Speaker Change: As at April 30 is 23.
Speaker Change: Also the results of discontinued operations are presented as a separate line item in.
Speaker Change: In the condensed consolidated statements of income and comprehensive income.
Speaker Change: All specs.
Speaker Change: This classification resulted in.
Speaker Change: Presenting the Companys results of operations for continuing.
Speaker Change: And discontinued operations.
Speaker Change: Britain.
Speaker Change: Now it is important to note that all results of continuing operations.
Speaker Change: Been revised.
Speaker Change: To exclude <unk> results and all associated intercompany transactions Asper I agree it's fine.
Speaker Change: The impact of EDC its results of operations as briefly discussed separately.
Speaker Change: In the discontinued operations as the statement in.
Speaker Change: In the final interim financial statements.
Gerhard Barnard: Accordingly, the United States operations represent continuous operations of the company and the Canadian operations present discontinued operations of the company. In the second quarter, we reported $2.7 million of net income from continuing operations. and a net loss of $0.7 million from Exchange Bank of Canada, our discontinued operation. These results include restructuring charges related to discontinued operations in Canada, representing legal and advisory fees of about $200,000, free tax. and certain one-time charges of roughly $100,000 pre-tax. Now excluding these items, the group's adjusted net income increased by 18% to $2.3 million compared to $2 million in the prior year.
Speaker Change: Accordingly, the United States operations represent continuous operations of the company.
Speaker Change: The Canadian operations briefing discontinued operations of the company.
Speaker Change: In the second quarter, we reported $2 7 million of make income from continuing operations.
Speaker Change: And a net loss of <unk> 7 billion from exchange Bank of Canada, our discontinued operations.
Speaker Change: These results include restructuring charges related to discontinued operations in Canada, representing legal and advisory fees of about $200000 pretax.
Speaker Change: And certain one time charges of roughly $100000 pretax.
Speaker Change: Now excluding these items the group's adjusted net income increased by 18%.
Speaker Change: $2 3 million compared to six 2 million in the prior year.
Gerhard Barnard: Adjusted diluted earnings per share of 36 cents was 24% higher than the prior year. Management anticipates that certain operating expenses and personnel costs that are currently shared with EBC will be 100% owned by CXI. subsequent to the exit of EBC from Canada and that the current annualized estimated costs is approximately three million dollars of the total. This estimate is subject to change throughout EBC's discontinuous process. Now let's look at the consolidated performance for the three months in the April 30th, 2025 compared to the prior year.
Speaker Change: Adjusted diluted earnings per share of 36 things.
Speaker Change: 94% higher than the prior year.
Speaker Change: Management anticipates that certain operating expenses and personnel costs.
Speaker Change: There are currently shared with you we.
Speaker Change: We'll be 100% owned by <unk>.
Speaker Change: Subsequent to the exit of EDC Chromecast.
Speaker Change: And that's the current annualized.
Speaker Change: We estimate it.
Speaker Change: Cost is approximately $3 million after tax this estimate is subject to change throughout <unk>.
Speaker Change: Continuous dosing.
Speaker Change: Now, let's look at the consolidated performance for the three months ended.
Speaker Change: April 30, <unk> compared to the prior year.
Speaker Change: Before I before I go into details I'd like to note that the company measures and evaluates its performance using a number of financial metrics and measures.
Gerhard Barnard: Before I go into details, I'd like to note that the company measures and evaluates its performance using a number of financial metrics and measures. some of which do not have standardized means under General Accepted Accounting Principles or GAAP. and may not be comparable to other companies. Now we call these measures non-GAAP financial measures and or adjusted results. The company's management believes that these measures are more reflective of its operating results and provides a better understanding of management's perspective on the performance. These measures enhance the comparability of our financial performance for the current period with the corresponding period in 2024.
Speaker Change: Some of which do not have standardized meanings under generally accepted accounting principles or GAAP.
Speaker Change: And may not be comparable to other companies.
Speaker Change: Now we call these measures non-GAAP financial measures and or adjusted results.
Speaker Change: Company's management believes that these measures are more reflective of its operating results and provides a better understanding of management's perspective.
Speaker Change: On the performance these measures enhance the comparability of our financial performance for the current period with the corresponding period in 2000.
Speaker Change: Therefore.
Gerhard Barnard: Management included the full reconciliation of the key performance and non-GAAP measures in the Indian economy. when we refer to reported results. We refer to the results as reported in the financial statement based on IFRA's International Financial Reporting Standards. when we refer to adjusted results. such as Adjusted Make Income, we refer to Performance Non-Gap Measures. The company generated revenue from continuing operations of roughly $16 million for the three-month period ended April 30, 2025. a 3% decrease from the prior period score. The revenue decrease was driven by a decline in the banknotes product line, despite a 5% growth in the payments product line.
Speaker Change: Management included the full reconciliation.
Speaker Change: The key performance and non-GAAP measures in the MD&A.
Speaker Change: When we refer to reported results were.
Speaker Change: We refer to the results as reported in the financial statement based on international financial reporting standards.
Speaker Change: When we refer to adjusted results.
Speaker Change: That's as adjusted make Luca we referred to performance non-GAAP measures.
Speaker Change: The company generated revenues from continuing operations.
Speaker Change: Roughly 16 million for the three months period ended April 23 April 30 of 2025.
Speaker Change: 3% decrease from the prior period's quarter.
Speaker Change: The revenue decrease was driven by a decline in the bank notes product line.
Speaker Change: A 5% growth in the payments product line.
Gerhard Barnard: The decline in banknotes revenue was due to a decline in demand of foreign currency. and travel activity tapered during the current. Between February 2025 and April 2025, approximately 214 million travelers passed through DSA checkpoints in the United States airports, compared to roughly 216 million in the same period last Operating expenses decreased 1.2 million or 10 percent. The company reported operating income of roughly $5.1 million in the current quarter, 16% higher than the $4.4 million reported last year, despite the decline in revenue. Now this is primarily due to the favorable impact of a weaker U.S. dollar on the revaluation of foreign currency banknotes only.
Simon: Simon banknotes waiting what's due to a decline in demand of foreign currency.
Simon: As travel activity taper during the current quarter.
Speaker Change: Between February 25 in April 25.
Speaker Change: Approximately 214 million travelers fast food TSA checkpoint in the United States airports compares to roughly $260 million in the same period last year.
Speaker Change: Operating expenses decreased $1 2 million or 14%.
Speaker Change: The company reported operating income of roughly $5 1 million in the current quarter, 16% higher than the $4 4 million reported last year. Despite the decline in revenues now.
Speaker Change: Now this is primarily due to the favorable impact of a weaker U S. Dollar on the revaluation of foreign currency banknotes holdings.
Gerhard Barnard: which resulted in $780,000 foreign currency exchange gain in the current quarter compared to a foreign currency exchange loss of roughly $513,000 in the prior quarter. The group's net income, including the results from discontinued operations, which is Exchange Bank of Canada, amounted to $2 million in the current quarter compared to net income of $506,000 in the prior period's quarter. as last year's results were negatively impacted by a deferred tax charge of $1.4 million that was reported in EBC, which has been classified as discontinuous operation. Adjusted EBITDA for the current quarter was $5.1 million, an increase of 15% compared to the prior quarter's $4.5 million.
Speaker Change: Which resulted in 780000 foreign currency exchange gain in the current quarter compared to a foreign currency exchange loss of roughly 513000 in the prior year quarter.
Speaker Change: The group's net income, including the results from discontinued operations, which is exchange bank of Canada.
Speaker Change: Amounted to $2 million in the current quarter compared to net income of $506000.
Speaker Change: Prior period quarter.
Speaker Change: As last year's results were negatively impacted by a deferred tax charge of $1 4 million that was reported in EPC, which has been classified as discontinued operations.
Speaker Change: Adjusted EBITDA for the current quarter was $5 1 million and.
Speaker Change: An increase of 15% compared to the prior quarter's four five.
Speaker Change: The following is a highlight of revenue by product line from continuing operations for the three months ended April 30 of 2025 compared to the previous three months ending.
Gerhard Barnard: The following is a highlight of the Revenue by Product line from Continuing Operations. for the three months ended April 30th, 2025, compared to the previous three months ending April 30th, 2024. Now banknotes revenue had a 5% decline in combined wholesale and direct-to-consumer in the second quarter compared to the prior period due to a decrease in consumer demand for foreign currencies as the quarter started slower. followed by a gradual improvement towards the end of the quarter. The company experienced growth in domestic financial institution customers while they were reclining money services bedroom. The business trading volumes on Wholesale Banknotes Revenue was $653 million for the current three-month period, compared to roughly $714 million in the prior period.
Speaker Change: Ending April 30 of 2024.
Speaker Change: Now banknotes way then you're at a 5% decline in combined wholesale and direct to consumer in the second quarter compared to the prior period due to a decrease in consumer demand for foreign currencies as the quarter started slower.
Speaker Change: Others by a gradual improvement towards the end of the call.
Speaker Change: The company experienced growth in domestic financial institution customers, while they were to decline in money services business.
Speaker Change: The business trading volumes on the wholesale bank notes way than you were $653 million for the current three month period compared to roughly 714 million in the prior period.
Gerhard Barnard: Overall, wholesale banknotes accounted for 41% of total ratings compared to 42% in the prior period. Direct-to-consumer banknotes revenue decreased roughly 380,000 or 6% Despite the slight growth achieved through the online ethics platform, driven by travel currencies, revenue generated via the other two delivery channels. tapered slightly during the quarter. During the current quarter, the company added the state of Mississippi to its network and the online FX platform can now service 46 states, including the District of Columbia. four additional states compared to the same period last year. Business trading volumes on total direct-to-consumer banknotes revenue was about $90 million for the current three-month period compared to $94 million for the prior period.
Speaker Change: Overall wholesale banknotes accounted for 41% of total revenue compared to 42% in the prior period.
Speaker Change: Direct to consumer banknotes.
Speaker Change: Decreased roughly 386%.
Speaker Change: Despite the slight growth achieved through the online ethics back home.
Speaker Change: Riven by travel currencies revenue generated yet the other two delivery channels.
Speaker Change: Slightly during the quarter.
Speaker Change: Do you mean in the current quarter the company at the state of Mississippi to its network and the online ethics platform can now serve its 46 states.
Speaker Change: <unk> the district of Columbia.
Speaker Change: Four additional states compared to the same period last year.
Speaker Change: Business trading volumes on <unk>.
Speaker Change: Total direct to consumer banknotes wave of new was about 19 million for the current period compared to 94 million for the prior period.
Gerhard Barnard: Direct-to-consumer revenue represents 42%. in the current and prior quarter. Payments revenue. Revenue in the payments product line increased $135,000 or 5% in the three-month period compared to the prior period, supported by a 13% increase in trading volume activity from existing financial institution customers. and the onboarding of new customers. business trading volumes on payment revenue were $1.4 billion for the current quarter compared to $1.27 billion in the prior quarter. And payments make up roughly 16-17% of our total revenue in the group.
Speaker Change: Direct to consumer revenue represents 42%.
Speaker Change: In the current and prior quarter.
Speaker Change: Payments revenue revenue in the payments product line.
Speaker Change: Increased 135000.
Speaker Change: Four 5% in the three months period.
Speaker Change: Sales to the prior period supported by a 13% increase in <unk>.
Speaker Change: Trading volume activity from existing financial institution customers.
Speaker Change: And the Onboarding of new customers.
Speaker Change: Business trading volumes on payments revenue were $1 4 billion for the current quarter compared to 127 billion in the prior year period.
Speaker Change: And payments make up roughly 16, 17%.
Speaker Change: Our total revenue in the group.
Gerhard Barnard: Now the following is a highlight of the operating expenses for continuing operations. for the three months April 2025 compared to the previous three months of last year. As stated above, and throughout this talk, All results of continuing operations have been revised to exclude EBC's results. and all associated intercompany transactions. During the three-month period ended April 30, 2025, the company's operating expenses decreased by $1.2 million or 10% compared to the same three-month period in the prior year. The ratio comparing total operating expenses to total revenue for the three-month period improves to 68% compared to 73%. for the three-month period ended 2024 primarily due to the large foreign exchange gains realized during the current Salaries and benefit expenses increased when compared to the prior period quarter, mostly driven by growth in headcounts, in our new vault and louver, and the company-owned branch locations, in addition to general inflationary increases in salaries and benefits.
Speaker Change: The following is a highlight of the operating expenses for continuing operations for the three months April <unk> 25, compared to the previous three months of last year.
Speaker Change: As stated above and throughout this document.
Speaker Change: All results of continuing operations have been revised to exclude <unk> results.
Speaker Change: And all the associated intercompany transactions.
Speaker Change: During the three months period ended April 30.
Speaker Change: At 2025.
Speaker Change: The Companys operating expenses decreased by $1 $2 million of 14%.
Speaker Change: Back to the same three months period in the prior year.
Speaker Change: The ratio comparing total operating expenses to total revenue for the three months period.
Speaker Change: Improved to 68% compared with 73%.
Speaker Change: For the three months period, maybe for Brian.
Speaker Change: Primarily due to the large foreign exchange gains realized during the current quarter.
Speaker Change: Salaries and benefit expenses increased when compared to the prior period quarter, mostly driven by growth it counts.
Hugo Google: Hugo Google.
Hugo Google: And the company own branch locations. In addition to general inflation increases.
Hugo Google: And benefits.
Gerhard Barnard: Marketing and publicity class costs increased over a hundred percent. primarily due to the company's expanded focus on marketing initiatives, campaigns, retail investments and establishing customer loyalty programs that support corporate goals with a focus on the direct-to-consumer business growth. Bank services charges represent bank charges associated with payments and banknotes, transactions, but primarily driven by the payments product. It is important to note that the CXI processes certain payments through. ABC's Correspondent Bank and gets a charge back allocated via intercompany allocation. Stock-based compensation includes a non-cash amortization expense related to the vesting of the company's equity-based stock options, in addition to cash-based awards of RSUs and VAs.
Hugo Google: Marketing and publicity Clos cost increased over 100%.
Hugo Google: Primarily due to the company's expanded focus on marketing and sugar.
Hugo Google: Spain's retailing basements, and establishing customer loyalty programs that support corporate goals with a focus on the direct to consumer business growth.
Hugo Google: Bank services charges represent backyard, just associated with payments and banknotes transactions.
Hugo Google: Primarily driven by the payments product.
Hugo Google: It is important to note that the <unk>.
Hugo Google: Proceeds assistant payments through.
Hugo Google: EDC correspondent bank and Gateway chargeback allocated via intercompany allocations.
Hugo Google: Stock based compensation includes a non cash amortization expense related to the phasing of the company's equity based stock option. In addition to cash based awards of Rfps and be with us.
Gerhard Barnard: The liability from BSU's and RSU's awards is adjusted to reflect the closing price at the end of each quarter. During the current quarter, there was a net expense of roughly $65,000 related to outstanding DSUs and RSUs. due to the impact of the decline in the stock market. This compares to expense of $285,000 for DSGs and RSUs in the prior course. Losses and shortages typically represent shipment loss. in transit that the company self-insures, in addition to several other losses that occurred in the normal course of slavery. In the current quarter, the company has many losses in shipment.
Hugo Google: The liability from the issues in Auryxia rewards is adjusted to reflect the closing price at the end of each quarter.
Hugo Google: Given the current quarter there was a net expense of rock from $65000 related to outstanding diesels in Rfps.
Hugo Google: Due to the impact of the decline in the stock price.
Hugo Google: This compares to expense.
Hugo Google: 285004, DSP is in Rfps in the prior quarter.
Hugo Google: Losses in shortages typically represent shipment loss.
Hugo Google: Any trends that that the company cellphone shares in addition to several other losses.
Hugo Google: The normal course of statements.
Hugo Google: The current quarter the company had many losses in shipments.
Hugo Google: Better in addition to some insurance recovery announced related to shipments so lots of some shortages are constantly decreasing.
Gerhard Barnard: better in addition to some insurance recovery announced related to shutdowns. So our losses and shortages are constantly decreasing. Foreign exchange gains or losses represent the net result of foreign currency exchange transactions. 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 currency. Net foreign exchange gains for the current quarter of $780,000 were primarily attributed to the impact of a weaker US dollar against the company's foreign currency banknote holding compared to the prior year's quarter, where the company had 513,000 lost. and Fine Currency Law.
Hugo Google: Foreign exchange gains or losses represents the net result of foreign currency exchange transactions after.
Hugo Google: After considering hedging and risk management strategy.
Hugo Google: <unk> seen the inland risk in the company's exposure to foreign exchange.
Hugo Google: Thereby minimizing volatility in earnings.
Hugo Google: Net foreign exchange gains for the current quarter of 780000.
Hugo Google: Primarily attributed to the impact of a weaker U S dollar against the company's foreign currency banknote holdings.
Hugo Google: Compared to the prior year's quarter, we had a company at 513000 loss.
Hugo Google: Foreign currency losses.
Gerhard Barnard: The company's hedging strategy is designed to mitigate downside risk while allowing the potential gains when foreign currencies strengthen against the U.S. dollar. The euro was the last largest contributor to the next foreign currency gains for the three-month period ended. to the April 2025. And the prior period was impacted by losses realized primarily on the company's banknote holdings in Mexican pesos and exotic currency. Interest on lease liabilities reflect additional interest incurred for the corporate headquarters. as well as the Louvre vault that opened in the second half of last year. Interest expense decreased as a result of a decline in average borrowing.
Hugo Google: The company's hedging strategy is designed to mitigate downside risk, while allowing the potential gains.
Hugo Google: Foreign currency strengthened against the U S product.
Hugo Google: The Euro was the last largest contributor to the net foreign currency gain.
Hugo Google: The three months period ended.
Hugo Google: April 25.
Hugo Google: In the prior period was impacted by losses realized primarily on the company's bank notes holdings in Mexican pesos and exotic currencies.
Hugo Google: Interest on lease liabilities reflect additional interest incurred for the corporate headquarters.
Hugo Google: As well as the new hotel opened in the second half of last year.
Hugo Google: Interest expense decreased.
Hugo Google: As a result of a decline in average borrowings.
Hugo Google: The company used the majority of its borrowing to fund <unk> operations, which started to taper during the current period.
Gerhard Barnard: The company used the majority of its borrowing to fund EBC's operations, which started to taper during the current period. The average outstanding borrowings by the company amounted to close to $580,000 during the second quarter, compared to $1.3 million during the prior quarters, with the average interest rate on borrowing being 6.7% compared to about 7.7% in the prior year. Now, income tax expense in the current quarter is related to continuing operations in the United States. It primarily reflects an average and effective tax rate of 31%, where the majority of the increased expenses above the statute here, was related to stock price compensation that was impacted by the climb in the share price as mentioned before.
Hugo Google: Average outstanding borrowings by the company amounted to close to 580000 during the second quarter compare.
Hugo Google: Compared to $1 3 million during the prior quarters with the average interest rate on borrowings being.
Hugo Google: Six 7% compared to about seven seven in the prior year.
Hugo Google: Now income tax expense in the current quarter is related to continuing operations in the United States.
Hugo Google: This primarily reflects an average and effective tax rate of 31% with a majority of the increased expenses above the statutory rate was related to stock based compensation that was impacted by a decline in the share price.
Hugo Google: Patients before.
Gerhard Barnard: Summary of the results of continuing operations for the six-month period. Now, as stated above, in the document... All earnings from continuing operations have been advised to exclude EBC's results as well as associated intercompany transactions. Revenue for the six-month period. increased 816,000 or 3% from the prior period last year. The revenue increase over the comparable period was driven by a growth in both product lines in the United States during the first quarter of the year and was primarily due to the addition of new customers and an increased demand for exotic currency. The 3% growth in revenue was primarily driven by the payments problem.
Hugo Google: Summary of the results of continuing operations for the six months period.
Hugo Google: Now as stated above.
Hugo Google: In the document.
Hugo Google: Earnings from continuing operations by execute EDC for the adults as well as associated intercompany transactions.
Hugo Google: Revenue for the six months period.
Hugo Google: Increased 816000 or 3% from the prior period.
Hugo Google: Last year.
Hugo Google: The revenue increase over the comparable period was driven by growth in both.
Hugo Google: <unk> lives in the United States during the first quarter of the year and were primarily due to the addition of new customers and an increased demand for exotic currencies.
Hugo Google: The 3% growth in revenue.
Hugo Google: Primarily driven by the payments product.
Gerhard Barnard: which has 550,000 or 11% growth, followed by a 1% growth in our banknotes revenue. And this is for the six months, so here today. Wholesale and direct-to-consumer banknotes businesses increased $185,000 and $82,000, while operating expenses decreased $445,000 or 2%. The company reported net operating income of $8.95 million during the current six-month period, which is 16% higher than the $77.7 million reported last year, primarily due to the growth in revenue and foreign currency gains realized in the current six-month period, compared to the prior year's six-month period. with a company at Foreign Exchange. gains of $500,000. and comparing that to the prior period.
Hugo Google: At $550000 or 11% growth followed by a 1% growth in our banknotes waiving it and this is for the six months so year to date.
Hugo Google: Almost kind of a direct to consumer banknotes business increased 185000, 2000, while operating expenses decreased 445000 or 2%.
Hugo Google: The company reported net operating income of $8 9 million, giving the current six months period.
Hugo Google: Which is 16% items into 77.
Hugo Google: 7 million reported last year, primarily due to the growth in revenue.
Hugo Google: And foreign currency gains realized in the current six months period compared to that Brian in your six months with the company at foreign exchange.
Hugo Google: Gains of $500000.
Hugo Google: And comparing that to the prior periods.
Gerhard Barnard: and Foreign Exchange Laws of the United States of America. $85,000. The company reported the net income from continuing operations of $4.4 million for the current six months compared to $4.8 million for the same period last year. The group's net income, including the results from discontinued operations, amounted to $2.8 million for the current six-month period, compared to $1.36 million for the same period last year. as last year's results were negatively impacted by the third tax charge of $1.4 million that was reported in EBC, as I mentioned, which is now being classified as discontinued operations. Based on adjusted results, the net income grew 583,000 or 21% compared to the same period last year to $3.37 million in the current six-month period compared to $2.8 million in the prior period.
Hugo Google: Foreign exchange loss of 108.
Hugo Google: 85000.
Hugo Google: The company reported a net income.
Hugo Google: From continuing operations of $4 4 million for the current six months compared to $4 eight.
Hugo Google: For the same period last year.
Hugo Google: The group's net income, including the results from discontinued operations at.
Hugo Google: The amount of $52 8 million for the current six month period compared to 136 million for the same period last year.
Hugo Google: As last year's results were negatively impacted by a deferred tax charge of one 4 million that's what's reported in <unk>.
Hugo Google: As I mentioned, we've just now being classified as discontinued operations.
Hugo Google: Based on adjusted results.
Hugo Google: The net income grew 583021%.
Hugo Google: Compared to the same period last year.
Speaker Change: $337 million in the current six months period compared to $2 8 million in the prior year, so really that 21% growth.
Gerhard Barnard: So really that 21% growth in the year-to-date numbers on the adjusted results.
Speaker Change: The year to date numbers on the adjusted results.
Gerhard Barnard: Now, the following is a highlight of the revenue byproduct line for continuing operation. both in Laos. Banknotes revenue. Revenue in banknotes grew in both the wholesale and direct-to-consumer and increased by 267,000 or 1%. in the current six-month period compared to the prior period due to stronger consumer demand for foreign currencies in the first quarter of the year, which tapered a bit during the second quarter. Wholesale banknotes revenue increased by 185,000, or 1%, as business trading volumes on wholesale banknotes revenue were $1.2 billion for the current three-month period, compared to $1.3 billion in the prior period.
Speaker Change: Now the following as a highlight of their revenue.
Speaker Change: Byproduct line for continuing operations.
Speaker Change: Over the last six months.
Speaker Change: Banknotes revenue.
Hugo Google: Whaler healing backwards.
Hugo Google: In both the wholesale and direct to consumer and increased by 600 by 267, 1%.
Hugo Google: In the current six months period compared to the prior period due to stronger consumer demand for foreign currency in the first quarter of the year, which tapers a bit during the second quarter.
Hugo Google: Also banknotes revenue increased by 185000 or 1%.
Hugo Google: Trading volumes.
Hugo Google: <unk> banknote grading.
Hugo Google: $1 2 billion for the current three month period compared to $1 3 billion in the prior period, while the company had growth in domestic financial institution customers. There was a decline in managed services businesses as I mentioned overall wholesale bank notes accounted for roughly 41% of the time.
Gerhard Barnard: While the company had growth in domestic financial institution customers, there was a decline in money services spending. As I mentioned, overall wholesale banknotes accounted to roughly 41% of the total rating. Direct-to-consumer banknotes revenue, maintained levels, work at 82% or 1% increase in the current six-month period compared to the prior period as the company maintains its market share through its diversified delivery channels, including online ethics platform, company-owned branches, and agent relations. Payments revenue product line increased roughly 550,000 or 11% during the six-month period compared to the prior period, supported by a 25% increase in training volume activity from existing financial institution customers and the additional onboarding of new customers.
Hugo Google: Zero rating.
Hugo Google: Directly direct to consumer banking Thats revenue maintained enables.
Hugo Google: <unk>.
Hugo Google: At 82% or 1% increase in the current six months period compared to the prior year period as the company maintains its market shares through its diversified delivery channels.
Hugo Google: <unk> online ethics platform company owned branches.
Hugo Google: Agent relationships.
Hugo Google: Payments revenue product line increased roughly 550000 or 11% during the six months period compared to the prior period supported by a 25% increase in trading volume activity from existing financial institution customers and additional onboarding.
Hugo Google: New customers.
Hugo Google: Now the operating expenses during the six months.
Gerhard Barnard: Now, the operating expenses during the six months decreased 445,000 or 2% compared to the same period last year. The Ratio Comparing Total Operating Expenses to Total Revenue. improved to 71% compared to 75% in the previous period. As we mentioned, stock price compensation during the current period, there was an expense reversal in the amount of $110,000 related to the outstanding BSUs and RSE rewards as a result of a decline in the stock price. This compares to an expense of $846,000. producing and RSU awards during the same period last year.
Hugo Google: Decreased 445000, or 2% compared to the same period last year.
Hugo Google: The ratio of bearings total operating expenses to total revenue.
Hugo Google: Improved to 71% compared to 75% in the previous period.
Hugo Google: As we mentioned stock based compensation during the current period.
Hugo Google: Listen expense reversal in the amount of 110000 related to the outstanding issues in our heater awards as a result of a decline in stock price. This compares to an expense of $846000.
Hugo Google: Where do you see as an RFP rewards during the same period last year.
Gerhard Barnard: Now let's briefly look at discontinued operations of Current Health Exchange Bank of Canada. They had a net loss of $692,000 in the second quarter compared to a net loss of $2.2 million for the same period in the prior period. For the six months ending April 25, discontinued operations had a net loss of $1.6 million compared to a net loss of $3.4 million for the same period in the prior year. Diluted and adjusted, diluted adjusted loss per share from discontinued operations was a loss of $0.09 for the second quarter and a loss of $0.18 for the six months ending April 2025.
Hugo Google: Now, let's briefly look at discontinued operations of current exchange Bank of Canada.
Hugo Google: They didn't make lost.
Hugo Google: 692000 in the second quarter compared to a net loss of $2 2 million for the same period in the prior period.
Hugo Google: For the six months ending April 25 discontinued operations had a net loss of $1 6 million compared to a net loss of $3 4 million for the same period in the prior year Baidu.
Hugo Google: Diluted and adjusted diluted adjusted loss per share from discontinued operations was a loss of nine things for the second quarter and a loss of 18 <unk> for the six months ending April 2025.
Gerhard Barnard: We're dealing with balance sheets. as at April 30th, 2025. Management views return on equity as a useful measure of return on capital in base. Due to the seasonality involved in the company's business, the company uses a trading 12-month net income to calculate ROE, which is inconsistent. at around 12% over the last 12 months. On April 30, 2025, the company had a strong financial position with net working capital of $60 million and total equity of $81 million. and add a 100% available unused line of credit amounting to $40 million.
Hugo Google: Where do you think that balance sheet.
Hugo Google: And as at April 30 of 'twenty funds.
Hugo Google: Management fees to return on equity is a useful measure of return on capital is basically due.
Hugo Google: Due to the seasonality involved in the company's business. The company uses its trailing.
Hugo Google: Wealth management net income to calculate.
Hugo Google: Which has been consistent.
Hugo Google: At around 12% over the last 12 months.
Hugo Google: On April 30 of 'twenty five the company had a strong financial position with net working capital of six 2 million and total equity of $81 million.
Hugo Google: And at 100% available unused line of greatest amounting to $14 billion.
Hugo Google: Our November 28 2024.
Gerhard Barnard: On November 28, 2024, the TSX accepted the company's notice of intention to make another NCIB or share buyback and automated Securities Purchase Planning, ASPP. to purchase for cancellation a maximum amount of 316,646 common shares of the company, representing 5% of the company's issued and outstanding common shares. Purchases under this NCID or share buyback commenced on December 2, 2024 and will terminate on December 1, 2025. or such earlier date in the event that the maximum number of shares sold in the NCIB has been recorded.
Hugo Google: He is ex except that the company's notice of intention.
Hugo Google: Another <unk> or share buyback.
Hugo Google: Okay.
Hugo Google: Securities purchase planning.
Hugo Google: H E B.
Hugo Google: To purchase for cancellation and maximum amount of 316646 common shares of the company, representing 5% of the company issued and outstanding common shares.
Hugo Google: Purchases under this NCI or share buyback coming on commenced under the same with the second 'twenty 'twenty four and.
Hugo Google: And we will terminate on December one 2025.
Hugo Google: All such earlier baked in do you think that the Mexican numbers up shares sold in the NCI VSP repurchase.
Gerhard Barnard: Now, during the six-month period in April 30, 2025, the company purchased four cancellations. 80,500 common shares at market prices trading on the TSX for a total of $1.2 million. These shares were immediately cancelled and removed from trade.
Hugo Google: Now during the six months period ended April 32035.
Hugo Google: The company purchased for cancellation.
Hugo Google: 80500 common shares at market prices dragging on the TSA.
Hugo Google: For a total of $1 $2 million in shares.
Hugo Google: Media to cancel and then leased from <unk>.
Randolph Pinna: At this time, I would like to hand the call over to Randolph Pinna, our CEO, for his presentation. Thank you, Gerhard. Good morning, everybody. I will try to keep this quick and give you an update from the CEO's desk here. As you know, a big focus is made on our exit from Canada by discontinuing Exchange Bank of Canada. I'm proud to report that our discontinuance plan is on schedule. We have been operating favorable to budget. We have successfully reached favorable terms with all employees so that they either have jobs or have been comfortable with our discontinuance.
Randall: At this time I would like to hand, the call over to Randall.
Randall: Our CEO for his perspective.
Randall: Thank you <unk>.
Randall: Good morning, everybody I will try to keep this quick and give you an update from the Ceo's desk here.
Randall: As you know a big focus is made on our exit from Canada by Discontinuing Exchange Bank of Canada, I'm proud to report that our discontinuance plan is on schedule.
Randall: We have been operating favorable to budget, we have successfully reached.
Randall: Favorable terms with all employees.
Randall: So that they have either have jobs or or have been.
Randall: Comfortable with our our discontinuance and so we're very proud.
Randolph Pinna: And so we're very proud that all relationships with the employees are continuing to be strong. We are very focused on off-boarding all of our customers. The majority of our customers have stopped as of May 30th.
Randall: All relationships with the employees are continuing to be strong.
Randall: We are very focused on onboarding all of our customers. The majority of our customers have stopped as of.
Randall: On may 30th.
Randolph Pinna: We do have a handful of domestic clients that, due to our service obligations, will continue to transact with Exchange Bank of Canada until August 30th, at which time all operations of Exchange Bank of Canada will cease, and the last few months of our fiscal year will be focused on the formal discontinuance that we hope to receive from the Finance Minister's Of course, with this in mind, my focus as CEO is not only to ensure the proper discontinuance and exit from Canada, but more importantly, is the focus on CXI's overall strategy and the organizational structure of CXI to ensure significant growth, profitable growth for the years ahead.
Randall: Do have a handful of domestic clients that due to our service obligations will continue to transact with exchange Bank of Canada until August 30th at which time all operations of exchange Bank of Canada will cease in the last few months of our fiscal year will be focused on.
Randall: The formal discontinuous that we hope to receive from the finance Minister's office.
Speaker Change: Of course with this in mind my focus as CEO is not only to ensure the proper discontinuance and exit from Canada, but more importantly is the focus on <unk> overall strategy and the organizational structure of <unk> sites to ensure significant growth.
Randall: Profitable growth for the years ahead.
Randall: Our strategy session was quite robust this year, knowing that we no longer have our federal reserve relationship our bank subsidiary and no longer have the intercompany trading transfer pricing at all of the complications of running a multinational organization.
Randolph Pinna: Our strategy session was quite robust this year, knowing that we no longer have our Federal Reserve relationship, our bank subsidiary, and no longer have the intercompany trading, transfer pricing, and all of the complications of running a multinational organization. Now that CXI and its continuing operations is 100% focused on its businesses that it has in the U.S. and its relationships, we have an updated strategic plan that is being presented to the Board of Directors this month for feedback and final approval in September as usually done. Our strategy has not changed in the sense that payments and banknotes are our core focuses of the business.
Randall: CSI <unk> continuing operations is 100% focus on its business is that it has in the U S and its relationships.
Randall: We have that.
Randall: An updated strategic plan that is being presented to the board of directors. This month for feedback and final approval in September as usually done.
Randall: Our our.
Randall: The strategy has not changed in the sense that payments and bank notes are our core focuses of the business the payments business being the smaller part much smaller part of the business is still a high growth area. We see we are focused on continuing to add new customers and that is through just raw New addition of customers.
Randolph Pinna: The payments business, being the smaller part, much smaller part of the business, is still a high growth area we see. We are focused on continuing to add new customers, and that is through just raw new addition of customers, as well as the integrations with trading systems, wire platforms, allowing for new customers to have the one provider, one platform relationship that we seek to establish with many financial institutions in the U.S. and I'm happy to see that continuing to grow and we have a full pipeline in our payments category for additional payment revenues.
Randall: Well as the integrations with.
Randall: Trading systems wire platforms, allowing for new customers to have the one provider one platform.
Randall: Relationship that we seek to establish with many financial institutions in the U S.
Randall: And I'm happy to see that continuing to grow and we have a full pipeline in our payments.
Randall: <unk> for additional payment revenues. Additionally, we're very proud to announce that we do have three.
Randolph Pinna: Additionally, we're very proud to announce that we do have three clients already on our domestic payment platform utilizing the Federal Reserve Direct program. The Fed Direct allows us to provide the software connecting the smaller to their Federal Reserve relationship in an automated fashion so that CXI receives software as a service income while not processing the physical domestic payments. Now that our pilot is concluded, we are focused on selectively growing our payment business both with international payments as a core focus as well as the domestic opportunity should financial institutions utilize us for both.
Randall: Clients already on our domestic.
Randall: Our payment platform utilizing the federal reserve direct program the fed direct allows us to <unk>.
Randall: Survived the software connecting the smaller banks to their federal reserve.
Randall: Our relationship in an automated fashion so that.
Randall: <unk> received software as a service income while not processing the physical domestic payments now that our pilot is concluded we are focused on selectively growing our payments business. Both with international payments is a core focus as well as the domestic opt.
Randall: <unk> should financial institutions utilize us for boats.
Randolph Pinna: The largest part of our business is our banknote business, and that is continuing to remain as a top focus of CXI. The expansion in Louisville has been very successful, and the managing director, Wade Gracie, has done an excellent job with automation and preparation for the potential significant growth that could be ahead for CXI and banknotes. Excuse me. The Louisville facility is strategically located near one of our primary shipping vendors, which has allowed us to expand our cutoff time due to them accepting packages up until 9 p.m., as opposed to previously our cutoff time was 4 p.m.
Speaker Change: The largest part of our business is our banknote business and that is continuing to remain as a top focus of CX side. The expansion in Louisville has been very successful in the managing director weighed Gracie has been done an excellent job with automation in preparation for the potential significant growth that could.
Randall: Be ahead for CSI and data.
Randall: Excuse me the Louisville facility.
Randall: <unk> is strategically located near our one of our primary shipping vendors, which has allowed us to expand our cutoff time due to that makes setting packages up to nine P. M. As opposed to previously our cutoff time was four P. M.
Randolph Pinna: And therefore, this advantage is quite helpful, especially with customers on the West Coast or Hawaii, allowing for better processing, better customer service to the client. Not only has this facility allowed for better processing times, it has utilizing recycling machines which accepts currency in, processes it and re-allows it to go out through the ATM machine. This efficiency has been very noticeable and therefore will allow us to continue to add business without having to add as many humans as we grow. The pipeline for the banknote product is still quite full. We do have additional new client opportunities in front of us, both in the wholesale banknote business as well as the direct-to-consumer business.
Randall: And therefore this is Dan.
Randall: Vantage is.
Randall: Is quite.
Randall: Helpful, especially with customers on the west coast, or Hawaii, allowing for better processing better customer service to the clients.
Randall: Not only has this facility allows for better processing times. It has utilizing recycling machines, which accepts currency in processes and then re allows it to go out through the ATM machine. The sufficiency is has been very noticeable and therefore will it.
Randall: Now us to continue to add business without having to add as many humans as we grow.
Speaker Change: The pipeline for the banknote product is still quite full we do have additional new client opportunities in front of us both in the.
Speaker Change: Our wholesale bank business as well as the direct to consumer business. The direct to consumer business. As you know has three elements to it the online store as her art mentioned it continues to allow us to reach more of the population 46 states representing over 92% of the whole U S pop.
Randolph Pinna: The direct-to-consumer business, as you know, has three elements to it. The online store, as Gerhard mentioned, continues to allow us to reach more of the population, 46 states, representing over 92% of the whole U.S. population. So the online FX program allows us to have a home delivery service or to their home or office, should they choose that. The direct consumer business also has the agent program. We do see opportunity for significant growth through the agent program through online and physical stores. And this is a great way to grow as we don't have the cost of rent, payroll, buildouts, and all of those that go along with physical stores.
Speaker Change: <unk>. So the online FX program allows us to have a home delivery service or to their home or office should they choose that instead.
Speaker Change: The direct to consumer business also has the agent program, we do see opportunity for significant growth through the agent program through online and physical stores.
Speaker Change: And this is a great way to grow as we don't have the cost of rent payroll build outs and all of those that go along with physical stores, even stores, even still the physical stores do allow for full revenues as opposed to the agent program is a shared revenue model. So we are selectively continuing to.
Randolph Pinna: Even still, the physical stores do allow for full revenues as opposed to the agent program is a shared revenue model. So we are selectively continuing to grow our retail network with key markets, which are Florida, California, Hawaii, and New York, as well as select other states based on the dynamics of those cities that we intend to enter. So you will see us continuing to selectively add a couple stores a year in our physical growth. So between the wholesale business and the direct-to-consumer business, we do feel that we can continue to grow our banknote business in spite of the decline that we're seeing on inbound travel due to the political tariffs and other noise in the market.
Speaker Change: ROE are our retail network with key markets, which are Florida, California, Hawaii, and New York as well as select other stage based on the dynamics of those cities that we intend to enter so you will see us continuing to selectively add a couple of stores.
Speaker Change: A year.
Speaker Change: Core growth so between the wholesale business and the direct to consumer business. We do feel that we can continue to grow our banknote business. In spite of the decline that we're seeing on inbound travel due to the political tariffs and the other noise in the market.
Randolph Pinna: Lastly, the executive team and I are always reviewing opportunities for mergers and acquisitions. We do not have anything to announce now, but I do confirm that it remains a priority for Gerhard and I, both in the bank notes and payment space. Again, nothing to announce, but we continue to have interest in strategic opportunity.
Speaker Change: Lastly.
Speaker Change: The executive team and I are always reviewing opportunities for mergers or not.
Speaker Change: Acquisitions, we do not have anything to announce now, but I do confirm that that it remains a priority for her art Eni.
Speaker Change: Both in the bank notes and payment space again, nothing to announce but we continue to have interest in strategic opportunities. So that concludes my update and I would like to turn it over to do to ask questions I do since we've we spent a quite a time on our little update to you.
Randolph Pinna: So, that concludes my update, and I would like to turn it over to you to ask questions. I do, since we've spent quite a time on our little update to you, we do ask that you just have your one question, maybe a little tag-on to it, but no more than two questions. And if you could recue, that would be great if you have more questions.
Speaker Change: We do ask that you just have your one question, maybe a little tag onto it but no more than two questions. And then you can re queue that would be great. If you have more.
Speaker Change: Questions. Thank you very much and I'll open up the lines operator.
Operator: Thank you very much, and I'll open up the lines operator. Thank you, sir. Ladies and gentlemen, if you do have any questions, please press star followed by one on your touch-tone phone. You will hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by two. And if using a speakerphone, you will need to lift the handset first before pressing any keys. And as stated, we do ask that you please limit yourself to one question, one follow-up, in consideration of other callers on the line.
Speaker Change: Sir ladies and gentlemen, if you do have any questions. Please press star followed by one on your Touchtone phone.
Speaker Change: A prompt that your hand have been raised and should you wish to decline from the polling process. Please press star followed by two and using a speakerphone you will need to lift the handset first before pressing any keys and that stated we do ask that you. Please limit yourself to one question one follow up and consideration of other callers on the line.
Operator: Thank you.
Robin Cornwell: And your first question will be from Robin Cornwell at Catalyst Research. Please go ahead, Robin. Thank you. I guess my first question is really on the $3 million expense. that you discussed is, is, Gerhard, is that going forward so we, and, and obviously you probably expect that $3 million to be finished by the end of this fiscal year. Can you just expand on that? Yes, Robin, thank you for the question. So that's three million after tax. is expenses that we anticipate to continue after exiting Canada. So they will remain with DXI. And that would typically be personnel costs, that would be bank charges, that would be certain shared costs between us and Exchange Bank of Canada.
Speaker Change: Thank you.
Speaker Change: And your first question will be from Robin Cornwell of catalyst research. Please go ahead Robyn.
Robin Cornwell: Thank you and good morning.
Speaker Change: I guess my first question.
Speaker Change: Really on the $3 million expenses.
Speaker Change: That.
Speaker Change: You discussed is is characterized as that goes.
Speaker Change: Forward so.
Speaker Change: And obviously, you probably expect that $3 million.
Speaker Change: Finished by the end of this fiscal year.
Speaker Change: Can you just expand on that.
Speaker Change: Yes, Robyn. Thank you for the question so that's $3 million after tax.
Speaker Change: <unk> expenses, what we anticipate to continue after exiting Canada.
Speaker Change: So they will remain with <unk>.
Speaker Change: Okay, and Thats with 50, Tce's personnel costs that would be bank charges that could be certain shared costs between us and exchange bank of Canada.
Speaker Change: Okay. So that is like a permanent expense going forward.
Gerhard Barnard: Okay, so that is like a permanent expense going forward? That is a permanent expense. And you know, not to that value. That is currently just our current approximation of what we see that lies ahead. But management is aggressively working to reduce those expenses. They're in personnel, they're in licensing, and in software expenses. And Robin, I think the important point to mention here as well is there is no continuation of EBC losses in the group results going forward either. Right, so the expenses will be pretty much... going forward. They're already in your numbers for the first half.
Speaker Change: That is a permanent expense and not.
Speaker Change: Not not to that value that is currently just our current <unk>.
Speaker Change: <unk> of what we see that line.
Speaker Change: Management has graciously working to reduce those expenses.
Speaker Change: Personnel agreements licensing.
Speaker Change: And software expenses.
Speaker Change: And Robert I crunchy important points to mention here as well as there is no continuation of <unk> losses in the group results going forward Island.
Speaker Change: Alright, so so.
Speaker Change: Expenses will be.
Speaker Change: Pretty much going toward.
Speaker Change: Already in your numbers for the first half is that correct.
Gerhard Barnard: Is that correct? Thank you. on an annualized, consolidated basis. Those expenses are obviously... consolidated into the group net results. But when you look at continued and discontinued operations, because intercompany transactions are excluded, they are not viewed or part of continuing operations or discontinued operations. Each one of these entities kept their own expenses for this quarter. So we highlighted the fact that there is. transfer pricing that will now be cancelled if we had a person in CXI that worked 40% for EBC and we keep that person in CXI, we have to now pick up that additional 40%.
Speaker Change: Thanks Rich.
Speaker Change: Yes.
Speaker Change: On an annualized consolidated basis.
Speaker Change: Those expenses are obviously.
Speaker Change: Yes.
Speaker Change: Consolidated into the group named whistle.
Speaker Change: But when you look at continued and discontinued operations because intercompany transactions are excluded as they are not.
Speaker Change: Viewed all part of continuing operations or discontinued operations each one of these entities.
Speaker Change: Their own expenses for this quarter.
Speaker Change: So we highlighted the fact that there is.
Speaker Change: Transfer pricing basketball now will be canceled.
Speaker Change: If we had a person in key ex <unk> was 40% for <unk> and we keep that person in <unk>, we actually now pick up that additional 40%.
Speaker Change: Okay, because you will no longer be there.
Robin Cornwell: Okay. Because it will no longer be. All right. Thank you for that. I appreciate it.
Speaker Change: Alright, Thank you for that I appreciate it.
Speaker Change: My next question is.
Randolph Pinna: My next question is for Randolph. Randolph, you mentioned the inbound traffic slowing down, tariff impact, etc. What about the outbound traffic? Have you seen, or, and you're coming into your seasonally stronger period. Do you sense or see outbound traffic stronger or weaker? We have not, while it is noticeable that there are countries like Canada and select countries in Europe that seem to be what I'll call protesting with their feet by not, by choosing to go to a different country instead of America this year, the outbound continues to be a strong business and we have not seen much change.
Randolph: But randolph.
Randolph: <unk> you mentioned the inbound traffic.
Randolph: Slowing down tariffs impact et cetera.
Randolph: About the outbound traffic have you seen or and you are coming into your seasonally stronger periods.
Randolph: Do you sense.
Speaker Change: C outbound traffic stronger or weaker.
Randolph: We have not well it is noticeable that there are countries like Canada and select countries in Europe.
Randolph: Seem to be what I'll call protesting with their feet by not by choosing to go to a different country. Instead of America. This year. The outbound continues to be a strong business and we have not seen.
Randolph: <unk> changed it is.
Randolph Pinna: It is, as you see in the numbers, it's relatively flat, it's a little up due to the dollar has weakened partly, but mostly it has been these recession fears and so forth. But the outbound business is still strong business and we do see growth in that business. Our online FX store continues to show growth and with our heightened investment in marketing for the online product and our overall cash product, we do feel that the outbound business will continue to be a strong area of revenue and we feel the inbound is a temporary hiatus as a lot of people are still coming in spite of their willing, their want to not come, but a lot of people are.
Randolph: As you see in the numbers, it's relatively flat, there's a little up.
Randolph: Due to the dollar has weakened partly but mostly it has been these recession fears.
Randolph: And so forth.
Randolph: Outbound business.
Randolph: There is still a strong business and we do see growth in that business are online FX store continues to show growth and with our heightened investment in marketing towards the online product and our overall cash products. We do feel that the the outbound business will continue to be as strong.
Randolph: The area of revenue and we feel the inbound is a temporary hiatus as a lot of people are still coming in spite of their willing.
Randolph: Want to not come but there are a lot of people are so we do not feel that the.
Randolph Pinna: So we do not feel that the bank note business is going to be so difficult, but we did see a softening in that. But the outbound is still pretty steady. Okay, great. Thank you. I'll break you. Thank you.
Randolph: Business is going to be.
Randolph: So difficult, but we did see a softening in that but the outbound is still pretty steady.
Randolph: Okay, great. Thank you I'll re queue.
Robert: Thank you Robert.
Robert: Thank you.
Operator: Once again, ladies and gentlemen, if you do have any questions, please press star followed by one on your touchtone phone.
Robert: Once again, ladies and gentlemen, if you do have any questions. Please press star followed by one on you touched on top.
Speaker Change: Next we will hear from Jason Szymanski Chapter 12 capital. Please go ahead Jason.
Jason Sinensky: Next, we will hear from Jason Sinensky at Chapter 12 Capital. Please go ahead, Jason. Good morning, Chase. Hello, Jason.
Speaker Change: Good morning, Jason.
Speaker Change: Hello, Jason.
Speaker Change: Please on mute your line Jason.
Gerhard Barnard: Please unmute your line, Jason. Oh, sorry about that. Bye, guys. Good morning. I just wanted to clarify on the 3 million, Gerhard, so is that, are you saying that there will be... 3 million of incremental costs to go against, like, the continuing operations, or are you saying that there's 3 million of costs, some of which are currently being absorbed by CXI, but the portion that was being absorbed by EBC will now have to be fully absorbed by CXI, if you understand the distinction I'm making? Yeah, that's correct, Jason. So, like, my payroll was spread out between EBC and CXI.
Speaker Change: Oh, sorry about that hi, guys. Good morning.
Speaker Change: Just wanted to clarify on the $3 million or so is that are you, saying that there will be.
Speaker Change: 3 million of incremental cost to go against like the continuing operations or are you, saying that there's 3 million of costs some of which are currently being absorbed by CSI.
Speaker Change: But the portion that was being absorbed by EBT will now have to be fully absorbed by CSI. If you understand the distinction I'm, making.
Speaker Change: Yes, that's correct Jason.
Speaker Change: Mike payroll was spread out between <unk>.
Speaker Change: <unk> of course, the majority was that CSI, but some of it was paid by ABC and now that ABC is not won't be in existence, we won't have the revenues and thankfully we won't have any more of their losses.
Gerhard Barnard: Of course, the majority was at CXI, but some of it was paid by EBC, and now that EBC is not, won't be in existence, we won't have the revenues, and thankfully, we won't have any more of their losses. There is this, you know, cost, roughly, of 3 million that the organization will have, but we anticipate to absorb that relatively quick with the continued growth of the business. As Harard mentioned in his comment, so if you had someone that was 30% devoted to EBC, that person, we have chosen not to let go, and hence, we have the capacity to continue to grow without adding new people.
Speaker Change: There is this.
Speaker Change: Cost of roughly a $3 million at the organization will.
Speaker Change: But we anticipate to absorb that relatively quick with the continued growth of the business as <unk> mentioned in his comments. So if you had someone that was 30% devoted to EDC that person.
Speaker Change: Chosen not to let go.
Speaker Change: And hence we have the capacity to continue to grow without adding new people. So so I'd like to think that we will absorb that relatively quickly in the fiscal 2006 year, but go ahead of her art, if you want to add to that.
Jason Sinensky: So, I'd like to think that we will absorb that relatively quickly in the fiscal 26th year, but go ahead, Harard, if you want to add to that. Jason, did that answer your question? Well, let me just clarify one more time, just to make sure. So, for the first six months of the year, you reported about $4.4 million of net income from continuing operation. So if I take that, like, am I to take that $3 million number divided in half and say that, you know, pro forma, instead of reporting $4.4 million of net income from continuing operations, you'll report $2.9 million for the first six months of the year?
Jason Szymanski: Jason did that answer your question.
Speaker Change: Let me just clarify one more time just to make sure. So for the for the first six months of the year you reported about $4 4 million of net income from continuing operations.
Speaker Change: So if I take that like M. I could take that 3 million number divided in half and say that.
Speaker Change: Pro forma instead of reporting $4 4 million of net income from continuing operations Youll report $2 9 million.
Speaker Change: For the first six months of the year or is or is the impact less than one and a half million you know sort of last year.
Gerhard Barnard: Or is the impact less than $1.5 million, you know, sort of, for the half? The impact will be less than one and a half million as we continue to manage those expenses down, but if you take continuing operations, which excludes any intercompany transactions or transfers or balances, you are correct. You have to look at that number deducted from continuing operations. to get your continuing operations number. However, as we mentioned, that on a consolidated group basis right now when you have continued and discontinued, that 3 million is. neutralized or eliminated, if I can call it that, on the 2025 number.
Speaker Change: The impact.
Speaker Change: Will be less than one and a half million dollars. Hence we continue to manage those expenses down, but eastern states, continuing operations, which excludes any intercompany transactions or transfers or balances.
Speaker Change: You are correct you have to look at that number deducted from continuing operations.
Speaker Change: To get to your continuing operations number however, as we mentioned.
Speaker Change: Yes.
Speaker Change: On a consolidated group basis right now when you have continued and discontinued.
Speaker Change: That's $3 million.
Speaker Change: Neutralized or eliminated if I can call it that on the 2025 numbers.
Jason Sinensky: but for 26, yes. Management is, as you know, actively managing the costs everywhere. If you look at how we dealt with shipping, bank charges, and we're very focused on getting those costs as low as possible. Thanks for that. I think I've got it.
Speaker Change: But for 26, yes.
Speaker Change: My name is has been there.
Speaker Change: Actively managing the costs every day, if you look at how we dealt with shipping bank charges.
Speaker Change: And we're very focused on getting those costs.
Speaker Change: Lowest possible.
Speaker Change: Okay. Thanks for that I think I've got it and I might just follow up offline to confirm maybe if I could just throw one more quick one in the.
Jason Sinensky: I might just follow up offline to confirm.
Jason Sinensky: Maybe if I could just throw one more quick one in. The networking capital went down quite a bit, or even just the cash went down quite a bit quarter over quarter, and I think that's because of the classification of EBC to discontinued operations. But maybe, Gerhard, if you can just elaborate on the decline in networking capital and whether there's any working capital that you expect to recover from EBC. as you wind down the Yeah, I think you're spot on there, Jason. As we mentioned in our quarter one, we are aggressively and actively working on exiting Canada.
Speaker Change: Net working capital went down quite a bit or even just the cash went down quite a bit.
Speaker Change: Quarter over quarter, and I think that's because of the classification of BBC to discontinued operations, but maybe her art. If you can just elaborate on the decline in net working capital.
Speaker Change: And whether theres any working capital that you expect to recover from EDC.
Speaker Change: As you wind down the operations there.
Speaker Change: Yes.
Speaker Change: Thank you spot on there Jason.
Speaker Change: As we mentioned in our quarter. One we are a great swiftly and actively working on exiting Canada and there is.
Gerhard Barnard: And there is a potential of repatriating some of our capital from EBC over to CXI on discontinuance of Exchange Bank of Canada at the end of the process. Okay, all right, thanks guys. So if you, yeah, if you just, and Jason, as you said, we can elaborate a bit more, but the interesting thing now is looking at everything in continued and discontinued. So if you think of that same question you asked for continuing operations, our working capital year over year for continuing increased from roughly $35 to $60 million, because the number you see now on the balance sheet is continuing operations or CXI only.
Speaker Change: At potential of repatriating some of our capital from EDC over to <unk>.
Speaker Change: On the discontinuance of.
Speaker Change: Exchange Bank of Canada.
Speaker Change: Osteoporosis.
Speaker Change: Okay Alright.
Speaker Change: Great. Thanks, guys.
Speaker Change: Yes.
Speaker Change: And Jason as you say, we can elaborate a bit more but.
Speaker Change: The interesting thing now is looking at everything.
Speaker Change: And continued and discontinued so if you think of that same question you asked for continuing operations, our working capital year over year for continuing increase from roughly $55 million to $60 million.
Speaker Change: Of course, the number you see now on the balance sheet is.
Speaker Change: Can you in the operations or <unk>.
Speaker Change: And I know that that's for the first quarter, which can be a bit.
Gerhard Barnard: And I know that for the first quarter, which can be a bit more challenging to understand when you look at the balance sheet, the whole EBC is actually now consolidated into three lines on the Statement of Financial Positions. So, EBC has now literally only included an asset output distribution to shareholders. liabilities directly associated with the asset outflow distribution to shareholder and that AOCL. So every other number in all the financial statements are continuing operations or CXI. And that's the beauty of this IFRS 5 continuing discontinuing. You show the readers how the business will continue without the discontinued operation.
Speaker Change: More challenging to understand when you look at the balance sheet the whole <unk> team.
Speaker Change: It's actually now.
Speaker Change: Consolidated into three lines on the statement of financial position. So EDC. It's now literally only included in assets held for distribution to shareholders.
Speaker Change: Liability side lately associated with asset outflow distributions to shareholder.
Speaker Change: And that Aoc al. So every other number in all the financial statements are continuing operations or <unk> and that's the beauty of this iPhone five continuing and discontinuing you showed the readers how the business will continue with the discontinued operation.
Gerhard Barnard: Happy to take it offline and explain what I can in the financials a bit more, Jason. Thanks for the question. Okay. Thanks for it. Thank you.
Speaker Change: Happy to take it offline and explain what I came in.
Speaker Change: In the financials a bit more Jason thanks for the question Okay. Thanks Mark.
Speaker Change: Thank you and at this time gentlemen, it appears we have no other questions registered please proceed.
Randolph Pinna: And at this time, gentlemen, it appears we have no other questions registered. Please proceed. Okay. Well, thank you, everybody, for your time this morning. I know some of you are out west, so it's quite early, so thank you for making the time. As Gerhard has already indicated to someone on the call, we will be happy to have one-on-one calls to answer what was covered and disclosed in the MD&A and our financials. And we welcome any questions or feedback from anyone here. And again, I appreciate your support of CXI and look forward to talking to you again.
Speaker Change: Okay, well. Thank you everybody for your time this morning.
Speaker Change: Some of your out west so it's quite early so thank you for making the time.
Speaker Change: As.
Speaker Change: Her ARD has already indicated to someone on the call we will be happy to have.
Speaker Change: One on one calls to answer what was covered and disclosed in the MD&A and our financials and we welcome any questions or feedback from anyone here and again I. Appreciate your support of CSI and look forward to talking to you again. Thank you.
Operator: Thank you.
Speaker Change: Thank you ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines have a good day.
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Speaker Change: Sure.
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Speaker Change: Okay.
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