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, 2021 (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,
“2021 was a transformational year for CXI. We executed well against
each pillar of our strategy. Our corporate payments segment has
exceeded our growth expectations, and we are very pleased with the
acquisition that was completed on July 29, 2020. We have also grown
our presence in the international marketplace for banknotes, and
Exchange Bank of Canada’s new relationship with the Federal Reserve
will enable further growth in that space. These two pillars are
designed to diversify our reliance on the domestic trade in foreign
currencies, which is largely dependent on international travel.
However, we continue to increase our penetration in the domestic
market that is helping to mitigate the reduction in consumer
demand. As a result of our efforts, CXI is much better positioned
to achieve a return to profitability in spite of the challenges
caused by the ongoing pandemic. I am very proud of the significant
effort put in by our dedicated employees at CXI as we navigated a
very challenging period.”
Corporate and Operational Highlights for
the year ended October 31, 2021:
- During the year
ended October 31, 2021, the Company added 1,220 new customer
relationships comprising 2,421 locations, of which 708
relationships representing 1,837 locations were added in the United
States and 512 relationships representing 584 locations were added
in Canada. In addition, 296 clients acquired pursuant to the
business acquisition completed on July 29, 2020 as announced on
June 30, 2020, have transacted during the year.
- The Company made
significant progress in its objective to return to profitability,
driving positive operating cash flow for the year and positive
operating leverage in the second half of the year, and limiting
capital erosion by accessing government subsidies designed to
protect jobs in companies that have been significantly impacted by
the COVID-19 pandemic.
- Customer
acquisition drove growth in the international payments segment in
Canada, as Exchange Bank of Canada transacted with 699 clients in
the year, up from 247 in the prior year.
- The Company
entered into an agreement to integrate its proprietary CXIFX
platform with Jack Henry’s core banking platform. The technological
integration is largely complete, and it has entered the testing
phase with select clients. Once complete, the integration will
increase the Company’s addressable market by approximately 1,100
financial institutions in the United States.
- Through its
subsidiary, Exchange Bank of Canada, began transacting with the
Federal Reserve Bank of New York (FRBNY) as a participant in its
foreign bank international cash services program, that was
announced on August 16, 2021.
Financial Highlights for the Three-month Period Ended
October 31, 2021 compared to the Three-month Period Ended October
31, 2020:
- Revenue
increased 102% or $5.0 million to $10.0 million for the three-month
period ended October 31, 2021 as compared to $4.9 million in the
three-months ending October 31, 2020. The Banknote segment
accounted for $7.9 million of the revenue, an increase of 104% over
the prior year. The Payments segment represented $2.1 million of
the revenue, an increase of 93% over the prior year;
- The Company
generated net operating income of $0.8 million for the three-month
period ended October 31, 2021 as compared to a net operating loss
of $1.8 million in the same period in the prior year;
- The Company
recognized $3.5 million in government grant assistance in the
three-month period ended October 31, 2021, an increase of $3.2
million from the same period in the prior year. The increase was
attributable to the employee retention credit in the United States
that subsidizes employee wages and healthcare premiums. The
majority of the credit relates to the period from January 1, 2021
through September 30, 2021;
- A net income of
$1.6 million in the three-month period ended October 31, 2021
compared to a net loss of $3.3 million for the three-month period
ended October 31, 2020;
- Earnings per
share of $0.25 on a basic and fully diluted basis for the
three-month period ended October 31, 2021, compared to net loss per
share of ($0.51) in the three-month period ended October 31, 2020;
and
Financial Highlights for the fiscal year Ended October
31, 2021 compared to the fiscal year Ended October 31,
2020:
- The Company grew
its revenue 21% in 2021 to $30.3 million, up from $25.0 million in
the year ended October 31, 2020. Payments accounted for $4.0
million of the growth, with that segment representing a 24% share
of revenue;
- A marginal net
operating loss of $50 thousand in the year ended October 31, 2021
compared to a net operating loss of $4.0 million for the year ended
October 31, 2020. This reflects revenue growth outpacing operating
expense growth at a rate of 4.7:1;
- Other income and
expenses in year ended October 31, 2021 included $4.2 million in
government grants, as the Company recognized $3.4 million for the
employee retention credit in the United States and $0.8 million for
wage and rent subsidies in Canada;
- A net loss of
$1.1 million in the year ended October 31, 2021 compared to a net
loss of $8.5 million for the year ended October 31, 2020;
- A net loss per
share of ($0.18) on a basic and fully diluted basis for the year
ended October 31, 2021, compared to net loss per share of ($1.33)
in the year ended October 31, 2020.
- The Company
generated positive cash flow from operating activities, excluding
the impact of working capital changes and including the repayment
of lease liabilities of $2.7 million in the year ending October 31,
2021 versus negative operating cash flow of $5.8 million in the
prior year.
- The Company has
strong liquidity and capital positions, with $90.7 million in
current assets and $58.0 million in net equity at October 31,
2021.
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, October 31, 2020, January 31, 2021, April 30, 2021, July 31,
2021, and October 31, 2021 are not indicative of typical
seasonality.
Selected
Financial Data
Three-monthsending |
Revenue |
|
Net
operatingincome (loss) |
Net
income(loss) |
Total assets |
|
Total equity |
|
Earnings(loss)
pershare(diluted) |
|
$ |
|
$ |
$ |
$ |
|
$ |
|
$ |
10/31/2021 |
9,967,107 |
|
776,345 |
|
1,634,364 |
|
102,525,187 |
|
58,015,799 |
|
0.25 |
|
7/31/2021 |
8,633,413 |
|
1,047,889 |
|
(120,246 |
) |
92,962,398 |
|
56,319,701 |
|
(0.02 |
) |
4/30/2021 |
6,573,570 |
|
558,010 |
) |
(924,691 |
) |
79,856,635 |
|
56,520,124 |
|
(0.14 |
) |
1/31/2021 |
5,089,429 |
|
(1,315,151 |
) |
(1,721,104 |
) |
82,354,069 |
|
57,039,436 |
|
(0.27 |
) |
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 |
|
Conference Call
The Company plans to host a conference call on Friday,
January 28, 2022 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: 7154614
About Currency Exchange International,
Corp.
Currency Exchange International is in the
business of providing comprehensive foreign exchange technology and
processing services for banks, credit unions, businesses, and
consumers in the United States and select clients globally. Primary
products and services include the exchange of foreign currencies,
wire transfer payments, Global EFTs, and foreign cheque clearing.
Wholesale customers are served through its proprietary FX software
applications delivered on its web-based interface, www.cxifx.com
(“CXIFX”), its related APIs with core banking platforms, and
through personal relationship managers. Consumers are served
through Company-owned retail branches, agent retail branches, and
its e-commerce platform order.ceifx.com (“OnlineFX”).
The Company’s wholly-owned Canadian subsidiary,
Exchange Bank of Canada, based in Toronto, Canada, provides foreign
exchange and international payment services in Canada and select
international foreign jurisdictions. Customers are served through
the use of its proprietary software, www.ebcfx.com (“EBCFX”),
related APIs to core banking platforms, and personal relationship
managers.
Contact InformationFor further information
please contact: Bill MitoulasInvestor Relations(416) 479-9547Email:
bill.mitoulas@cxifx.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 Year Ended October 31, 2021. 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.
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