Currency Exchange International (CXI), a leading provider of foreign exchange services, reported a marginal decrease in net income to $3.9 million for the third quarter ending July 31, 2024, compared to $4 million in the same period last year.
The company's total revenue increased by 2% year-over-year to $24 million, primarily driven by new customer acquisitions in the U.S. market. Despite a loss in Canadian operations, U.S. net income saw a 13% rise to $5.14 million, contributing significantly to the overall performance.
Key Takeaways
- Net income for Q3 slightly down to $3.9 million from $4 million year-over-year.
- Total revenue rose by 2% to $24 million, with U.S. operations contributing 83%.
- U.S. net income increased by 13%, while Canadian operations incurred a $1.2 million loss.
- CXI announced a share buyback plan to repurchase up to 322,169 common shares.
- For the nine-month period, net income decreased by 33%, with total revenue up 5%.
Company Outlook
- CXI is focusing on profitability for the Exchange Bank of Canada and expanding international revenues.
- The integration with the Federal Reserve's payment system is expected to improve payments infrastructure.
- Growth in the online consumer unit and new store openings are planned.
- Management is actively exploring mergers and acquisitions opportunities.
Bearish Highlights
- Operating expenses increased by 7%, outpacing revenue growth.
- Revenue from Canada dropped by 12%, with decreased transactional volumes.
- Payment margins declined due to competitive pressures from fintech firms.
- Establishment of a trust agreement has not gained traction due to market hesitance.
Bullish Highlights
- Revenue growth in the U.S. for the nine-month period was 10%.
- Banknotes and payments sectors in the U.S. saw increases of 4% and 9%, respectively.
- Variable costs decreased, primarily from reduced postage and shipping expenses.
- The company is considering an upgrade from OTC Pink to OTCQB to enhance market presence.
Misses
- Net income for the nine-month period ending July 31, 2024, was down by 33% from the previous year.
- Foreign exchange losses were primarily driven by the performance of the Mexican peso.
Q&A Highlights
- CEO Randolph Pinna discussed the share buyback program, with recent purchases restricted to a daily maximum of 1,325 shares.
- Approximately 43,500 shares were bought back in Q3, with a total of about 95,780 shares repurchased.
- Stephen Ranzini noted that SEC registration is not currently advisable due to market capitalization constraints.
Currency Exchange International (CXI) emphasized its commitment to enhancing shareholder value during its Third Quarter 2024 Financial Results Conference Call. The company's strategic initiatives, including technology improvements and a focus on capital allocation, demonstrate its dedication to overcoming current challenges and seizing growth opportunities in the global market.
InvestingPro Insights
Currency Exchange International (CXI) has shown resilience in a challenging market, as reflected in the latest financial metrics. With a market capitalization of $118.12 million, the company is positioned as a modest player in the foreign exchange service industry. The Price to Earnings (P/E) ratio, which stands at 15.42, suggests that investors are recognizing the earnings power of CXI relative to its current share price. Notably, the adjusted P/E ratio for the last twelve months as of Q3 2024 is slightly higher at 16.09, indicating a slight increase in investor expectations for future earnings.
InvestingPro Tips highlight that CXI's revenue growth of 8.19% in the last twelve months as of Q3 2024, combined with a gross profit margin of 42.49%, showcases the company's ability to translate sales into profits efficiently. Moreover, the company's strong operational performance is underscored by an operating income margin of 18.46% for the same period, which is a testament to its effective cost management and operational efficiency.
The InvestingPro platform offers 15 additional tips for investors looking to delve deeper into CXI's financial health and strategic positioning. For those interested in a comprehensive analysis, these tips could provide valuable insights into CXI's potential for long-term growth and profitability.
InvestingPro Data also reveals that CXI's stock has experienced a 13.74% price total return over the past year, indicating a positive investor sentiment. The company's shares are trading close to their 52-week high, at 96.48% of the peak value, suggesting a strong market confidence in the stock's performance. As CXI continues to navigate through the competitive landscape, these metrics could be crucial for investors considering the company's stock for their portfolios.
Full transcript - Kinarus Therapeutics Holding AG (CURN) Q3 2024:
Operator: Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Third Quarter 2024 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Bill Mitoulas, Investor Relations Manager. Please go ahead.
Bill Mitoulas: Thank you, operator, and good morning, everyone. Welcome to the Currency Exchange International conference call to discuss the financial results for the third quarter of the fiscal 2024 year. Thanks for joining us. 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. 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. 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 MD&A. Please note that this conference call will include forward-looking information, which is based on a number of assumptions and actual results could differ materially. Please refer to our financial statements and MD&A reports for more information about the factors that could cause these different results and the assumptions that we have made. With that I'll turn the call over to Gerhard. Gerhard, please go ahead.
Gerhard Barnard: Thank you, Bill, and thank you, everyone for joining today's call. These results are presented in US dollars. My overview will also incorporate the results of our wholly 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 as at July 31st, 2024, a decrease from 391 ending April 30th, 2024. As our technology platforms continue to remain a strategic focus and their continued enhancement and additional system implementations are creating planned operational efficiencies. Kyriba, our Treasury Management System and Alessa AML compliance software are on schedule for operationalization by the end of this fiscal year. 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 group. On November 29th, 2023, the group announced its notice of intention to make a formal course, a normal course issuer bid in CID or share 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 US$1.8 million and nearly CAD2.4 million. Let's look at the consolidated performance for the three months ended 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's return 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 banknotes and payments product lines. 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 cyclical growth patterns. The top five currencies by revenue were US dollars, euros, Canadian dollar, British pound sterling and Mexican pesos. The 2% year-over-year growth in revenue price was primarily due to growth in wholesale banknotes 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 United States increased $661,000 or 3% over last year while in Canada declined $255,000 or 6%. Operating expenses increased slightly by about $100,000 or only 1%. The company recorded net operating income of $6.75 million in the three-month period ended July 31st, 2024, 5% higher than the same period last year. EBITDA margin for the current period was 29% compared to 28% for the same period last year. The following is a highlight on revenue by product line, for the three months ended July 31st, 2024 compared to the previous three months, July 31st, 2023. And I'd like to start off with banknotes. 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 TSA checkpoints in the United States Airports, 15 million or 6% more compared to pre-COVID levels. Wholesale banknotes revenue increased $365,000 or 3% as the company continued to grow its wholesale banknotes domestic product line with new customer acquisitions and growth in volumes from existing relationships in both Canada and the United States. The company was able to achieve efficiencies in operating costs associated with wholesale banknotes including shipping costs. Relative to the three month period ended April 30th, 2024, wholesale banknote revenue increased $2.4 million or 26%, which coincides with a typical seasonal increase in tourism in North America. Overall, wholesale banknotes revenue accounted for 49% of the total revenue in the current three-month 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 FX online or online FX platform led to growth in revenue for the period. Overall, direct to consumer remained a growing business segment with its diversified delivery channels between company owned branch locations through agents, relationships and using the company's online FX platform where the company successfully added the state 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. Now let's look at payments. Revenue in the payments product line increased 5% in this three month period ended July 31st, 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 declined by 22%. Growth in the United States was primarily 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 inflationary pressures in Canada. The company processed nearly 40,000 payments, representing $3.38 billion in volume in the three month period and this compares to roughly 32,700 transactions on $2.6 billion in the same period last year. Now payments represents roughly 16%, 17% of the total revenue. 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 in wholesale banknotes, which increased by $235,000 or 3% despite a decrease in direct to consumer banknotes, as I mentioned, of roughly $155,000 or 2%. Revenue in the United States accounted for 83% of the total revenue by geographic location when compared to 82% in the prior period. Let's look at Canada. Revenue in Canada declined 6% in the third quarter compared to the same period last year. Growth in domestic banknotes revenue was offset by a notable decline in transacted volumes and revenue from international banknotes clients. Overall, revenue in the banknotes 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 location in the current three months compared to roughly 18% in the prior period. Now operating expenses increased nearly 1% for the three months period ended July 31st, 2024. For the US, there has been no increase in operating expenses. As a matter of fact, there was a slight decline of about $150,000. Income tax expense for the current period is related to United States region. It primarily represents taxable income growth and is subject to certain temporary and permanent adjustments to taxable income. The Mexican peso was the largest contributor to net foreign exchange losses for the three month period ended 31st of July 2024, while it was the largest driver of gains in the same period last year. Let's look at the consolidated performance quickly for the total nine months year-to-date ended July 31st compared to the prior nine months. Overall, the company reported $5.3 million of net income during the nine-month period ended July 31st, 2024, $2.6 million or 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 grew by $1.6 million or 20% compared to the same period last year, whereas in Canada, the adjusted net loss increased by $2.8 million. Now this adjusted loss comprised of the reported net loss adjusted for the reversal of the deferred tax benefit allowance of $1.43 million in Canada during the current period. The company generated revenue of $62.2 million for the nine-month period, a 5% increase from the same period last year. The revenue increase was driven by strengthening international travel and new customer acquisitions in both banknotes and payment product lines in the United States, partially offset by a decline in trades with foreign financial institutions in Canada. A quick review by product line for the nine months. Banknotes, revenue in 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 volumes and slower economic conditions. Payments revenue represented 19% of total revenue in the current nine months period compared to 18% in the previous period. 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. 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 US 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-month period, which is a reduction from the previous 23%. Now operating expenses increased 7% for the nine month period. This 7% is slightly higher than the 5% growth in revenue, primarily due to slower revenue growth in Canada. Having said that, variable costs 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 expenses. The ratio comparing total operating expenses to total revenue for the nine month period was 79% compared to 78% in the previous nine months. Postage and shipping had a 19% decrease when compared to the same period last year despite the growth in banknote volumes. Losses and shortages primarily represented the lost in - lost transit shipments that the company sells to insurance. The Mexican peso was the largest driver of foreign exchange losses for the nine month period ended July 31st, 2024, while the gains in the same period last year represented natural gains from the company's unhedged foreign currency inventory. Interest expense had 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. Let's review the balance sheet. As at July 31st, 2024, the company had a capital base of $83 million and $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 nine months a year ago. The average outstanding borrowings by the company amounted to $6.3 million during the nine 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. During the third quarter, the group continued its focus on capital allocations with enhanced modeling, a revised capital plan and the normal course issuer bid NCIB or share buyback that concern both management and the board's belief that the underlying value of currency exchange international may not be reflected in the market price of its common shares from time to time. And at this time, I would like to turn the call over to Randolph Pinna, our CEO, to provide his perspective. Thank you.
Randolph Pinna: Good morning. Thank you, Gerhard. Thank you, everybody, for joining this early morning call. I would like to start, as I always do, focusing on Exchange Bank of Canada, our wholly owned subsidiary. As you can clearly see, the top focus for Gerhard, 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. We also have 2 other sizable 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 FBICS program with the Federal Reserve and our ability to source pesos and other currencies for global distribution in FATF 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 are -- have operations nationally. That business is very strong. Our money service businesses or 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 as 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, we noticed the largest difference is 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 OPOP 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. I'll 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% and that is directly a result of our working with financial institutions, utilizing our OPOP 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 midsized banks look forward to utilizing the system they already have in place for cash and checks for doing foreign currencies to utilize for all wires. 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 this interested bank in Canada will indicate that we'll be getting revenues from domestic activity and not be dependent on the fluctuations of international. 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 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 US 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 (NYSE:BURL) 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. 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. 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 their product line, utilizing an expert like CXI and its proprietary technology CXIFX 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 that they're 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 desk or one of our customer bank branches. So our consumer unit led by our online store and our agent growth will continue to see growth in the next years. 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 banknote business. The most notable thing you'll see is our Managing Director, Wade Bracy, who has been a leader of all of our MDs has been very aggressively proactive to reducing costs and increasing service capabilities and how he's 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 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 and our whole company is customer service and it has expanded our cutoff time, which are two main facilities in LA and Miami have a 5 PM Eastern Time cutoff time and now that's expanded to 9 PM 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. 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 is in Singapore and that will allow us to use our LA 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, Gerhard 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. 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 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. 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 roll in. And I do ask that you just keep it to two just because I think one or two times we've run out of time and I try to get everybody's call answered. Thank you.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question is from Robin Cornwell from Catalyst Research. Please ask your question.
Robin Cornwell: Hi. Good morning. I was a little confused on the Canadian revenue decline. 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 it they're starting to work, but maybe you could just expand on the progress you've made.
Randolph Pinna: Okay. So Robin, on the payments, what we've recognized, not just ourselves, other providers of international wires are all experiencing is a decline in margin. The Fintechs 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 altogether, we're capitulating and lowering our spreads too 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 automation of payment processing globally and how that is pushing all and you can see it with the big banks. 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. 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 a hesitancy for people to buy as much product as typically a 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 subside and they can buy wine later might be cheaper than if they buy cases right now. So that answers that. As far as the second question on the international and the trust agreement that we established with the multibillion dollar trust company, well, that's in place and ready to work. It has not taken off due to its a new instrument. Most of banks that deal these and again we're focused strictly on FATF 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 arch rival, the big bank here in the US. And they don't ever have to worry about credit. And so when they look at our little baby bank, they expect a 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 FBICS program that is comfortable with our group's credit as they've accepted the CXI group guarantee for its subsidiary. We have working with a three way relationship there that they will be providing euro since they're euro-based. We will provide the dollars, but they're accepting the credit risk for the entire transaction. So we're working around it. 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 the activity is $5 million or less is what they're 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 credit concerns. So that's the update on the international expansion, utilizing the trust account. Did that answer your two questions, Robin?
Robin Cornwell: Yes. Thank you. Could I just extend one into the EBC. EBC has reported a couple of quarters, first and second, fairly big losses. Can you just discuss that for a minute? And perhaps what the third quarter looks like?
Randolph Pinna: So we just, this is our third quarter call, so we continue to have losses. That's why I started the call, my speech about the top focus for the Board and 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 in 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 been stabilizing. 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 banknotes and we do see the opportunity with additional banknote 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 and not just banks, credit unions. And so we are very focused on growing our revenues. You've seen a reduction in payroll so that we have tightened the belt where possible. And so it is a top focus for Gerhard and I to get the bank profitable. All while we look at other opportunities to service other companies or institutions.
Robin Cornwell: Okay. Thank you very much.
Randolph Pinna: Thank you for the question.
Operator: Thank you. [Operator Instructions] Your next question is from Stephen Ranzini from University Bank. Please ask your question.
Stephen Ranzini: Good morning, Randolph and Gerhard. 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 SEDAR filer in Canada, your piggyback qualified under SEC rule 12g3-2(b) to be on the OTCQB or OTCQX Exchange. Now all the investment bankers tell me spending the money for OTCQX really isn't beneficial at all, but OTCQB, I think, is a much better arrangement on multiple levels than being on Pink and it's not very expensive at all. I think our bank holding company pays million dollars a year to be on the OTCQB Exchange, right? But I think there's some definite benefits of being there. Have you guys ever considered upgrading your US listing to OTCQB?
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 help. 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 US shareholders, we did the, I guess, the entry level over the counter. But if there is for a nominal fee and still avoiding an SEC registration, we would absolutely explore that. So thank you for that input. 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 US 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 US 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, we would not be listing. However, we've chosen to avoid the SEC 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. I'll reach out.
Stephen Ranzini: Yes. 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 advise to us is that it only makes sense for a financial company like yours or ours to be full SEC registered when we have the market cap necessary to reach into becoming a member of the Russell 2000 Index. And the cutoff there right now last this current year, the cutoff is $159 million of market cap. So you're not there yet, right? But once you were there, having higher profitability, it makes a lot of sense because you'd have about 10% of your outstanding shares snatched up by index funds, which would be uplift in the share price for sure, right? If your shareholder is loyal and stick with you through that transition. And frankly, that's our intermediate term goal ourselves is to get the profitability up so that we could be includable 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. So I do have a second question. You guys have a buyback program authorized by the Toronto Stock Exchange, 5% of your shares, but most recent 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?
Randolph Pinna: I'll let Gerhard. There's a restriction on how much you can buy per day. So I don't know. Gerhard, do you want to add into that?
Gerhard Barnard: Stephen, we did buy shares back in Q3. We continue to buy shares pretty much on a daily basis. We have a maximum allotted daily purchase allotment of 1,325 shares. So if you look at our, I think, it's 95,780 shares that we purchased so far. And if I recall, we were probably in the 65,000, 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.
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, right. Like your press release does not highlight that and it could, right?
Gerhard Barnard: It definitely could. I do know that it is in our MD&A. So there is eyes on that. But you know what point taken, it can definitely be highlighted a bit more if our disclosure committee see that fit. Thank you for that point.
Stephen Ranzini: Great. And thanks for both answers. And, yes, if you want to talk about OTCQB listing offline, always available to you, you know how to get a hold of me and happy to talk about our own very positive experiences there and how that can benefit the company and the shareholders?
Gerhard Barnard: Thank you. And, Stephen, just to clarify, we bought roughly 43,500 shares in this quarter. But what I'm also gathering is we'll make sure that the quarter-over-quarter is a bit gets a bit more attention. Thank you for your questions.
Randolph Pinna: Thank you.
Stephen Ranzini: Great. Thank you again for a great job. Another good quarter as you're progressing with the company.
Randolph Pinna: Thank you.
Operator: Thank you. There are no further questions at this time. Please proceed.
Randolph Pinna: Okay. Well, thank you, everybody, for your call. Should there be a question that we are able to answer, please reach out to Gerhard, Bill or myself. We'll be happy to schedule an individual call with you. We appreciate your support of the Currency Exchange International Group and look forward to our next call or the next meeting. Thank you.
Gerhard Barnard: Thank you, everyone.
Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.
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