Currency Exchange
International, Corp.
(the “Company”)
(TSX:CXI; OTCBB:CURN), announces
its financial results and management's discussion and analysis
(“
MD&A”) for the three months and year ended
October 31, 2020 (all figures are in U.S. dollars except where
otherwise indicated). The complete financial statements and
MD&A can be found on the Company's SEDAR profile at
www.sedar.com.
On March 11, 2020 the World Health Organization
(“WHO”) officially declared COVID-19, the disease caused by a novel
coronavirus, a pandemic. Measures enacted to curtail COVID-19
by various governments have significantly impacted travel and
tourism, and therefore the demand for foreign currencies. The
Company has experienced a material decline in revenue as a result.
While the Company continues to operate, it is not possible to
reliably estimate the duration and severity of these consequences
as well as their impact on the financial position and results of
future periods.
Randolph Pinna, CEO of the Company, stated
“Despite the many challenges that the coronavirus pandemic has
presented to the business, including an unprecedented curtailment
in banknote demand due to international travel restrictions, it has
galvanized management to execute on its diversification strategy.
We are ever-more confident in the future of Exchange Bank of
Canada, as it enters the ‘scale-up’ phase in the corporate payments
space. The acquisition that was completed in the third quarter was
a key catalyst in this respect, and we are gaining momentum with
the addition of new salespeople in the first quarter of 2021. In
the U.S., we have been adding to our wholesale customer base of
financial institutions throughout the entire year. They are
attracted to our proprietary platform that integrates with their
systems, and our multi-product offering. The market for banknotes
is consolidating, and this will provide CXI with the ability to
grow its revenue more quickly as activity returns. We have
maintained strong liquidity throughout this period, and are
well-positioned to execute our diversification strategy while also
capitalizing on our already significant share of the banknote
market as travel restrictions abate. I want to acknowledge the
loyalty and great effort from our employees in a very challenging
time.”
Corporate and Operational Highlights for
2020:
- Management
completed a new three-year, strategic plan in October that focuses
on growing its payments business and expansion in banknote markets
globally. The plan was developed with the objective of returning to
profitability despite conservative assumptions around an eventual
recovery in its core banknote business. As part of the strategy,
the Company chose to permanently close 11 of its retail locations,
that in conjunction with other initiatives, including a
consolidation in senior management, resulted in $1.1M in charges
for restructuring and impairment in the fourth quarter.
- The Company
incurred a loss provision of $1.7M in fiscal 2020 related to a
customer that went bankrupt during the year. This is an unusual
event as the Company has a strong repayment history with its
customer base. Notwithstanding that, additional measures were
implemented to reduce its credit exposure and to prevent a loss
outside of the Company’s risk appetite from recurring.
- On July 29th,
the Company’s subsidiary, Exchange Bank of Canada, completed its
purchase of the assets of Denarius Financial Group, a successful
corporate payments business operating in the province of Quebec.
EBC acquired approximately 450 new customer relationships in the
transaction that added $0.3M in revenue for the year-ended October
31, 2020.
- The Company
continues to be well-capitalized with $58M in net equity at the end
of the fiscal year, and $48M in net current assets, most of which
is in cash. The Company has sufficient liquidity to carry out its
strategic plan, and is well-positioned to capitalize on
opportunities.
Financial Highlights for the Three-month Period Ended
October 31, 2020 compared to the Three-month Period Ended October
31, 2019:
- Revenue
decreased 57% or $6.5 million to $4.9 million for the three-month
period ended October 31, 2020, as the ongoing pandemic caused a
decline in the banknotes segment of 64%, partially offset by an
increase in the payments segment of 52%;
- A net operating
loss of $1.9 million in the three-month period ended October 31,
2020 compared to $0.8 million in net operating income for the
three-month period ended October 31, 2019. Operating expenses
declined by 29%, as cost reduction efforts mitigated a significant
amount of the revenue decline. Normalizing for the adoption of IFRS
16 on November 1, 2019, the net operating loss on a comparable
basis would have been $2.4 million in the three-month period ended
October 31, 2020;
- Other expenses
included $1.1M in restructuring and impairment charges, and $0.7M
for a loss provision related to a customer’s bankruptcy, partially
offset by $0.3M in income for government grants for the three-month
period ended October 31, 2020;
- A net loss of
$2.3 million in the three-month period ended October 31, 2020
compared to a net profit of $1.8 million for the three-month period
ended October 31, 2019; and
- A net loss per
share of ($0.35) on a basic and fully diluted basis for the
three-month period ended October 31, 2020, compared to earnings per
share of $0.28 in the three-month period ended October 31,
2019.
Financial
Highlights for
the financial year
Ended October 31, 2020
compared to the
financial year Ended October 31, 2019:
- Revenue decreased 40% or $16.8
million to $25.0 million for the year ended October 31, 2020, as
demand for banknotes was significantly impacted by the steep
decline in travel due to the pandemic, leading to a 45% decrease in
the banknote segment, more than offsetting growth in the payments
segment of 29%;
- A net operating loss of $4.0
million in the year ended October 31, 2020 compared to $6.2 million
net operating income for the year ended October 31, 2019;
- A net loss of $8.5 million in the
year ended October 31, 2020 compared to net income of $2.9 million
for the year ended October 31, 2019; and
- A net loss per share of $1.33 on a
basic and fully diluted basis for the year ended October 31, 2020,
compared to earnings per share of $0.46 in the year ended October
31, 2019.
As demonstrated in the table below, seasonality
is reflected in the timing of when foreign currencies are in
greater or lower demand. In a normal operating year there is
seasonality to the Company's operations with higher revenues
generated from March until September and lower revenues from
October to February. This coincides with peak tourism seasons in
North America when there are generally more travelers entering and
leaving the United States and Canada. The coronavirus pandemic has
significantly impacted the ability for people to travel, and
therefore the three-month periods ending April 30, 2020, July 31,
2020, and October 31, 2020 are not indicative of typical
seasonality.
Selected
Financial Data
Three-months ending |
Revenue |
Net operating income (loss) |
Net income (loss) |
Total assets |
Total equity |
Earnings (loss) per share (diluted) |
|
$ |
$ |
$ |
$ |
$ |
$ |
10/31/2020 |
4,935,917 |
(1,852,195) |
(3,465,632) |
85,758,517 |
58,229,735 |
(0.54) |
7/31/2020 |
3,879,873 |
(1,993,117) |
(2,274,719) |
96,105,961 |
61,462,798 |
(0.35) |
4/30/2020 |
6,323,344 |
(2,316,356) |
(2,942,948) |
99,263,039 |
62,965,874 |
(0.43) |
1/31/2020 |
9,874,289 |
1,162,930 |
159,274 |
108,319,219 |
66,323,630 |
0.02 |
10/31/2019 |
11,469,079 |
1,863,442 |
769,393 |
82,729,714 |
66,329,035 |
0.13 |
7/31/2019 |
12,402,484 |
2,935,899 |
1,820,768 |
81,719,233 |
65,447,949 |
0.28 |
4/30/2019 |
9,460,809 |
1,081,292 |
507,370 |
82,267,884 |
63,022,825 |
0.08 |
1/31/2019 |
8,451,671 |
271,410 |
(172,811) |
82,045,951 |
62,678,990 |
(0.03) |
10/31/2018 |
10,270,234 |
1,724,576 |
995,967 |
73,267,274 |
62,721,937 |
0.17 |
Conference Call
The Company plans to host a conference call on January
28, 2021 at 8:30
AM (EST). To participate in or
listen to the call, please dial the appropriate number:
- Toll Free: 1-855-336-7594
- Conference ID
number: 7280618
About Currency Exchange International,
Corp.
The Company is in the business of providing a
range of foreign exchange technology and processing services in
North America. Primary products and services include the exchange
of foreign currencies, wire transfer payments, Global EFTs,
purchase and sale of foreign bank drafts and international
travelers’ cheques, and foreign cheque clearing. Related services
include the licensing of proprietary FX software applications
delivered on its web-based interface, www.ceifx.com (“CEIFX”), and
licensing retail foreign currency operations to select companies in
agreed locations.
The Company’s wholly-owned Canadian subsidiary,
Exchange Bank of Canada, based in Toronto, Canada, provides foreign
exchange and international payment services to financial
institutions and select corporate clients in Canada through the use
of its proprietary software – www.ebcfx.com.
Contact InformationFor further information
please contact: Bill MitoulasInvestor Relations(416) 479-9547Email:
bill.mitoulas@ceifx.comWebsite: www.ceifx.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This press release includes forward-looking
information within the meaning of applicable securities laws. This
forward-looking information includes, or may be based upon,
estimates, forecasts and statements as to management’s expectations
with respect to, among other things, demand and market outlook for
wholesale and retail foreign currency exchange products and
services, proposed entry into the Canadian financial services
industry, future growth, the timing and scale of future business
plans, results of operations, performance, and business prospects
and opportunities. Forward-looking statements are identified by the
use of terms and phrases such as “anticipate”, “believe”, “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “predict”,
“preliminary”, “project”, “will”, “would”, and similar terms and
phrases, including references to assumptions.
Forward-looking information is based on the
opinions and estimates of management at the date such information
is provided, and on information available to management at such
time. Forward-looking information involves significant risks,
uncertainties and assumptions that could cause the Company’s actual
results, performance or achievements to differ materially from the
results discussed or implied in such forward-looking information.
Actual results may differ materially from results indicated in
forward-looking information due to a number of factors including,
without limitation, the competitive nature of the foreign exchange
industry, the impact of COVID-19 coronavirus on factors relevant to
the Company’s business, currency exchange risks, the need for the
Company to manage its planned growth, the effects of product
development and the need for continued technological change,
protection of the Company’s proprietary rights, the effect of
government regulation and compliance on the Company and the
industry in which it operates, network security risks, the ability
of the Company to maintain properly working systems, theft and risk
of physical harm to personnel, reliance on key management
personnel, global economic deterioration negatively impacting
tourism, volatile securities markets impacting security pricing in
a manner unrelated to operating performance and impeding access to
capital or increasing the cost of capital as well as the factors
identified throughout this press release and in the section
entitled “Risks and Uncertainties” of the Company’s Management’s
Discussion and Analysis for the nine-month period ended July 31,
2020. The forward-looking information contained in this press
release represents management’s expectations as of the date hereof
(or as of the date such information is otherwise stated to be
presented), and is subject to change after such date. The Company
disclaims any intention or obligation to update or revise any
forward-looking information whether as a result of new information,
future events or otherwise, except as required under applicable
securities laws.
The Toronto Stock Exchange does not accept
responsibility for the adequacy or accuracy of this press release.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained in
this press release.
Currency Exchange (TSX:CXI)
Historical Stock Chart
From Sep 2024 to Oct 2024
Currency Exchange (TSX:CXI)
Historical Stock Chart
From Oct 2023 to Oct 2024