Currency Exchange International, Corp. (CXI) Earnings Call Transcript & Summary

Okay. It's 12:00. Let's give it 1 minute, if you don't mind, because I can see there's some more people joining, logging in. So we'll just give it 1 minute to allow for connection. Okay. It's a little after 12. So good afternoon, ladies and gentlemen, and I want to welcome you to the annual general and special meeting of the shareholders of Currency Exchange International. As most of you know, I'm Randolph Pinna, the Chairman of the Board, the President and the Chief Executive Officer of the company. Along with me today, unfortunately, you can't see them, because of distancing, this room is empty, but digitally connected, our CFO, Stephen Fitzpatrick; as well as most of the senior, if not all of the senior, management team and some more as well as all of our directors have confirmed that they are on Zoom or one had to dial-in since they didn't have Zoom connection. But they're all with me today. So thank you all for joining us. Before proceeding with the formal business of the meeting, I'd like to thank you for attending this meeting, either online or video conference. As you know, we also have the office at KPMG open for anyone that was not able to get in online or call. And I don't believe anybody has showed up there. But I thank Tony and Computershare, Mark, for being there to have the physical portion. We are in unprecedented times, as you know, from the COVID-19 global pandemic, and we will do our best to ensure that all of you shareholders have an equal opportunity to participate in the meeting. Accordingly, this year, as I said, the meeting of the shareholders of the company has been conducted in part by digital and teleconference. And most of our directors are on this call either by phone or Zoom, as I've said. Today, we have the following items of formal business to address at today's meeting. We'll -- we are presenting the financial statements of the corporation of the year ended October 31, 2019, and the report of the auditors thereon. We are here to appoint Grant Thornton as the auditors of the corporation for the ensuing year and to authorize the directors of the corporation to fix their remuneration. We, lastly, are looking for approval of the resolution to ratify and approve the grant to certain employees of the corporation a total of 228,754 options to acquire common shares of the corporation at an exercise price of $17.36 per common share of the corporation. And to transact such any other business that may properly come before the meeting or any adjournments or postponements thereof. Once the formal business of the meeting has been completed, I will provide an update on the current business activities of the organization, following which there will be an opportunity to ask questions. Now I remind those attending online that to participate in the question period following the conclusion of the presentation, please click the raise your icon -- raise your hand icon. It's located down at the bottom in the center of the screen. And if you don't want to do that, you can also submit a question by clicking on the Q&A button or the check box during the webcast. For those of you that have just phoned in with a telephone, we will be unmuting the lines here shortly, and we ask kindly, please, do mute your line, so we don't have background noise since we do have people dialing in from all over the United States, Canada and even over in Europe. So the first thing is, I would like to now call the meeting to order. In accordance with the bylaws of the corporation, I shall preside as the chairman of this meeting. Ivy Lumia will act as the recording secretary of the meeting; and Mark Manalo of Computershare Trust Company of Canada will be the scrutineer of the meeting. Now I want to note, I'm going to speak a little slower than I usually do, which is rare for me. If you've been to our other ones when we had them in person, I usually went a little faster. But because of the digital interaction, I do want to allow for, one, making sure I clearly get the words out; and two, for people to have an opportunity to raise their hand or submit a question. So the notice of meeting is the first thing. The corporation is utilizing the Notice-and-Access Mechanism under National Instrument 54-101, Communication with Beneficial Owners of Securities of Reporting Issuer, and National Instrument 51-102, Continuous Disclosure Obligations. The secretary has advised me that copies of the following documents have been delivered where required and posted electronically as follows: the notice of the meeting, the form of proxy, the management information circular, the request form, financial statements for the year ended October 31, 2019 and the auditor's report thereon and management's discussion and analysis. And in particular, such documents have also been made available to each director, the company's auditors and each shareholder of record as of February 14, 2020, the record date of this meeting online as follows: company SEDAR profile at sedar.com and at envisionreports.com. An affidavit of mailing of the documentation required to be mailed under the Notice-and-Access Provisions has been provided by Computershare Trust Company of Canada to the company, and I direct that the affidavit be annexed to the minutes of this meeting. Accordingly, unless there is an objection, I will dispense with the reading of the notice of meeting. The scrutineer has provided me with the preliminary report regarding shareholder attendance and representations at this meeting. The scrutineer report shows that who's present, there's 42 shareholders today holding 4,853,937 common shares of CXI stock. Accordingly, I declare that the requisite quorum of the shareholders is present, and I declare that the meeting is duly and properly constituted for the transaction of business today. I direct that the scrutineer complete -- scrutineers' complete report on attendance be annexed to the minutes of the meeting. Votes on the matters before this meeting by proxy have been submitted already by shareholders. So now there are several matters that must be dealt with during this formal part of the meeting. In order to expedite these matters, I have requested that certain persons make and second the formal motions, and I will call on these persons at the appropriate time. Shareholders may make comments specific to these motions prior to the vote, but should hold any comments on general matters until the question period to be had at the following of my presentation. So first is the presentation of the financial statements and auditor's report. As the first item, the company's audited financial statements for the year ended October 31, 2019, and the auditor's report thereon are hereby placed before this meeting. The audited financial statements, along with the related management discussion and analysis, has been mailed to each shareholder of the company, and I do not propose to read them to this meeting. Okay. We will now -- appointment of auditor. We will now proceed with the appointment of the auditors of the company. I have been advised by the scrutineer that the proxies deposited for the meeting have been overwhelmingly voted for the appointment of Grant Thornton as auditors of the company. I would ask for Chitwant Kohli to make the following resolution: be it hereby resolved that Grant Thornton LLP, chartered accountants, be and they are hereby appointed as auditors of the company to hold office until the close of the next annual meeting of shareholders or until their successors are appointed at such remuneration as may be fixed by the directors and the directors be, and they are hereby authorized to fix such remuneration.

I so move.

Thank you, Chitwant. May I please have this motion seconded?

I second the motion.

Thank you, Khatuna. I will now call for a vote on the motion. [Voting]

I ask that Stephen Fitzpatrick, who is participating from Toronto, who is named the appointee of the shareholders voting by proxy, confirm that all shareholders present in person or by proxy have raised their hands to signify votes in favor.

I so confirm.

Thank you, Stephen. If there are not -- if there are any contrary, please now click raise your hand or put a chat in the chat box or speak up now. I declare that the resolution appointing the auditors of the company for the ensuing year and authorizing the directors to fix their remuneration has been carried. Thank you. Next up is the election of directors. We will now proceed with the election of directors of the company for the ensuing year. The number of directors to be elected at the meeting is 9. The Governance Committee nominates the following persons as specified in the management information circular delivered with the notice of meeting, namely myself, Randolph Pinna, Joseph August, Chirag Bhavsar, Johanne Brossard, Chitwant Kohli, Mark Mickleborough, Stacey Mowbray, Jim Sardo and Daryl Yeo to be elected to serve as directors of the company to hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of this company. Are there any further nominations? I'll take a break. It seems there are no further nominations, so therefore, I will proceed. I hereby declare the nominations closed. I have been advised by the scrutineer that the proxies deposited for the meeting have been overwhelmingly voted for the election of each of these directors. So with the consent of those shareholders in attendance at this meeting, can I have 1 motion for the election of the entire slate of directors nominated to stand for election in the management information circular provided to the shareholders of CXI in advance of this annual meeting of shareholders? I would ask Chitwant to move the following resolution: be it hereby resolved that the 9 persons nominated by management be elected as directors of the company to hold office until the close of the next annual meeting of shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the company.

I so move.

Thank you. May I please have this seconded?

I second the resolution.

Thank you, Khatuna. I will now call for a vote on this motion. [Voting]

I do ask that Stephen Fitzpatrick, who is participating from Toronto, who is named the appointee of shareholders voting by proxy, confirm that all shareholders present in person or by proxy have raised their hands to signify votes in favor.

I so confirm.

Thank you. If there are nothing to the contrary, please -- if there are to the contrary, sorry, please click the raise your hand button or put a question in the chat or speak up now. I declare that the resolution to elect the 9 directors to hold office of the company until the close of the next annual meeting of shareholders or until their successors are duly elected or appointed has been carried. The last scheduled topic was the ratification of an option grant. We will now proceed with this discussion. On October 23, 2019, the Board of the company has approved the grant to certain of its employees a total of to 228,754 nontransferable options to acquire common shares of the company at an exercise price of $17.36 with a term of 5 years and vesting in thirds annually, starting with the first anniversary of the grant. These employee options were granted on terms identical to the terms of the stock option that are granted under the company's incentive stock option plan dated April 28, 2011, as amended again on October 30, 2014, and lastly, on October 18, 2017. To preserve the ability to issue incentive stock options under the stock option plan in the future and, therefore, enhance business flexibility of the company, the Board of the company has determined that the employee options approved for grant on October 23, 2019, are to be granted outside of the stock option plan and subject to ratification by shareholders of the company. Accordingly, the shareholders of the company are asked to vote at the meeting on the option grant ratification resolution. The votes attaching to the recipients of the options approved for grant on our October 23, 2019, will be excluded from votes cast on the option grant ratification resolution. I have been advised by the scrutineer that the proxies deposited for the meeting have been overwhelmingly voted for the approval of the option grant ratification resolution. I would ask that Chitwant, again, move the following resolution: be it hereby resolved that the grant of the total of 228,754 options -- to acquire up to 228,754 common shares of the corporation at the exercise price of $17.36 per common share of the corporation granted to certain employees of the corporation for the term of 5 years and vesting in thirds annually, starting with the first anniversary of the grant as described in the management information circular dated February 14, 2020, be and are hereby ratified and approved, and any director or officer of the corporation is hereby authorized and directed to do all acts and things and to execute and deliver all documents required as in the opinion of such director or officer may be necessary or appropriate in order to give effect to this resolution.

I so move.

Thank you, Chitwant. May I have the motion seconded, please?

I second the motion.

Thank you, again, Khatuna. I will now call for a vote on the motion. [Voting]

I ask that Stephen Fitzpatrick, who is participating from Toronto, who is named the appointee of shareholders voting by proxy, confirm that all shareholders present in person or by proxy have raised their hands to signify votes in favor.

I so confirm.

Thank you, Stephen. Are there any votes to the contrary? Please click raise your hand button or in the chat or speak up, please. We'll wait a second. Since there's nothing to the contrary, I declare that this resolution approving the option grant ratification has been carried. Is there any other formal business to come before the -- properly before this meeting? Please, again, raise your hand, speak up or put something in chat. I'll wait a second to allow for such. I have not received any texts saying to the contrary. So we will then terminate this meeting. This concludes the formal business brought before the meeting. I wish to thank you for attending. I would now ask for a motion that this meeting be formally terminated.

I move that this meeting be terminated.

Thank you, Chitwant. May I have it seconded?

I second the motion.

Thank you, Khatuna. I will now call for a vote on this motion. Stephen? [Voting]

I can confirm.

Thank you. Are there any to the contrary of closing the formal part of this business meeting? There is none, I hereby declare the motion carried, and the meeting is now terminated. So we will now go into a presentation by myself. We're going to put on the screen some slides. And then after I do this presentation, would you please -- then we can open up the room and have a business chat, answer any questions you have. Okay. So let's go ahead and get started. We're going to go through these slides and then do a question-and-answer period and discuss the business. Next slide, please. If I say something here that's too forward-looking, this is your legal disclaimer. Next. Okay. The first thing, which is probably on all of our minds, especially everybody that's working in this company and all of our shareholders as well as our landlords, everybody is anxiously watching what's happening in this world. And instead of reading everything on here, I will let you read some of it while I talk. But most importantly, the Executive Committee met early on. At the end of February, we realized that this was smelling like something is going to be bad. So early -- right at the beginning of March, the Executive Committee met, all 10 members of the Executive Committee met, and we decided to create a subcommittee, the COVID-19 Committee. And it's represented by 6 of our top executives, 1 for HR, Khatuna; Chief Risk Officer; the Head of IT; the 2 Chief Operating Officers, 1 for each business; and then the Marketing Vice President, who is in charge of communications to all customers and everybody else. So that subcommittee meets regularly. It's been meeting, I think, almost daily. And they developed, what they call, work streams, or what I call the 5 buckets. But basically, each topic, the work stream was around the areas that should be considered. So the first work stream, as you can imagine, is the safety and security of all the employees not only in our business but the employees we interact with, so everybody that we have touch points with, that was our #1 priority. So as you can see, we got sanitizer and all kinds of stuff. The other thing is, I've been in Orlando for longer than I think I have for 1 straight period in a while. So we've restricted travel, including my own. And of course, the governments have made that even easier because now it's required that you don't travel unless it's really mandatory. So between the social distancing, the sanitizing, the extra -- having our building cleaning people come in much more, and we've done a very focused job on ensuring as best as possible safety. This office is -- we have a big office here, and it's empty. I'm the only one on this floor. Our operation -- our check operations department on the first floor does have 2 employees there that are still processing checks. And again, we've addressed all of the concerns around that. The biggest thing that Jay and Matt, our 2 Chief Operating Officers, implemented was the vault changes. All other employees have been enabled through virtual private networks of the ability to work at home. In Toronto, we even recreated the sales trading desk, so that our Chief Trader is able to have his 6 or 8 screens and everything that he does in the main office in Toronto, he has that in his home. He luckily had a room that was able -- we were able to convert. So we've done all the necessary work around keeping track of our employees. The vault, what they did, since we can't move the vault to people's homes, we have split the valve into 2 shifts, an A shift and a B shift. And so the A shift works 1 full week and then goes home for a week and the B shift comes in the following week. And this allows for -- in case there were, and heaven forbid, but one of our employees -- and by -- and as of now, none of our employees have been exposed or have this virus. But so if one of those employees were to get sick in the team A, then team B would come in. And again, now with Montreal, for example, in Canada, and LA versus Miami, we do have redundancy. And so, so far, again, as I said, everybody is so -- is healthy, and we are handling our flow, utilizing this work-at-home model and the split shift model in areas we can't work at home. The next work stream, again, is around the business itself. So some of these changes we've talked about are around employee safety, but it's also around, what's called, business continuity planning where we've enacted processes in place to allow us to ensure the business is running well. From the financial aspect, which is another workflow, we have been working with state, city and federal governments on how to assist employees. Like in retail here in the states, all of the 46 retail locations as of now have been closed, not by our own selves, but by the landlords, which, of course, required all stores in the malls to close. And hence, these people are now -- have been laid off on a short term, hoping the malls will reopen in April as promised. But should there be a cash shortfall for these employees, we're working with state and local people around that. I can continue to go on about all the other work streams and all the elements. The other work streams' communication, we've been giving communications to employees. I've been doing a weekly town hall with all employees utilizing a Zoom system like this to keep everybody up-to-date, to answer the questions, to appease fears. And as we go through this, as it says at the bottom of that screen, we are very well capitalized. I personally have been through SARS, 9/11, the swine flu, the foot, mouth. We've been through a lot of these pandemic-type situations. The 9/11 was the worst that I had seen. Unfortunately, this one seems worse than that. But we have an experienced management team and our -- and we have quickly implemented changes both from physical and health point of view to ensure safety for everyone we work with as well as to minimize the economic damage to our business as a company. And we are very focused on that. We're happy that the government of Ontario, Canada, provided a complete list of essential businesses. And there's 2 areas that clearly show that our group, especially Exchange Bank of Canada, is deemed an essential service. And so we are allowed, even though Toronto is on mandatory stay at home instructions, essential providers, such as banking, providing cash into the marketplace, is truly essential. As a lot of vendors are gone, removing credit since credit is a scary thing right now for people giving credit, they've gone to cash requirement. If you want to restock your shelves, you've got to pay me in cash for those eggs, for example. The business owners are able to convert, say -- let's say, some of their own saving foreign currencies into local cash. That same applies here in the states. Unfortunately, some of the governments and the markets, states that provided it just said essential or not, but we've clearly outlined why we're essential, and we are still allowed to operate. So even though our retail stores are closed, our transacting locations have been open. Now even our bank branches are closing temporarily, going to an appointment model only. But the vaults are still operating, the phones are still being answered, checks are still being processed. And thank goodness, we invested into wire payments because our payments are still moving for the time being until it slows down economically. Next slide, please. And I apologize for -- if I went too deep into the COVID, but I wanted to give you a good breadth of how involved. And I only touched on the surface. All of our teams are very focused on this COVID-19 in every aspect of their work. Here's our team. I'm still very proud to say that most of that -- people on that list have worked with myself and Matt and Khatuna and they're people that have all been working with me for 15, 20 years. Most of them are like that, but we do have some new folks. I want to welcome Alan Stratton, our Vice President of Finance, who's right underneath Stephen. And Stephen, as you know, is an experienced CFO and has done a great job as we've grown and now there's M&A opportunities and so forth. We really needed a strong second in line behind Stephen, so that he could focus with Katelyn on the overall financial elements, freeing -- giving Stephen a little more time to focus on the macro picture and the overall strategy and opportunity that present themselves. Since our last meeting last year, I'm sure you're aware that Daryl Yeo and Stacey Mowbray, our new directors. I think Johann might have been here last year, but Johann is relatively new. Those are all our directors. On the right, lower right, those are all the people in our what's called the second line of defense, where they're compliance, risk and so forth. So we have a great team of people. We're very well positioned, and I'm very proud of the group we have, especially our directors who have been doing a lot of work in the last year because of all the opportunities ahead of us. It is -- it should be noted that at the end of this meeting, since today, we've elected those directors for the next year, we will close this annual meeting, and our directors will have a short Board meeting where in which we confirm the committees. As you know, besides the Board of Directors of EBC and the Board of Directors of CXI, which are the same members, we have a Risk Committee, a Finance Committee and an Audit Committee -- sorry, yes -- no Governance. So finance and audit are the same. So it's the Risk Committee, the Governance Committee and the Finance Audit Committee. Each of those have chairs. And then, of course, there's chairmans of the board. And so it is expected, and it will be discussed and deliberated if needed. But it is expected that today, it will be formally made known, and we will probably do a press release around this that Chitwant Kohli will become formally the Chairman of Exchange Bank of Canada. And Chirag Bhavsar will no longer be lead independent director, he will become Chairman of the Board of CXI group. I will remain as a director in this whole role of President and Chief Executive Officer. This role change is -- at CXI is in good -- is in practice with good standing, best-in-class, where there is a separation between the Chairman and the CEO. It will truly allow me to focus as CEO of the group. And it will allow Chirag to be Chairman of the Board of Directors. So we're expecting this to be positive, and we think this is a positive development at the Board level. Thank you. Next page. The business has not changed much since last year in the sense that we're still -- our overall plan as we focus on our service, which is cash. It's still -- right now, unfortunately, represents 90% of our revenues in the last year. Payments, which is, as you know, where we spend lots of hard-earned dollars and costs in building out our payment platform. So now payments does represent 10% of our business. And in the payments world is check clearing, which is another important part of our international payments business is foreign -- check clearing of the foreign items. This is all done through our software, cxifx.com; in Canada, ebcfx.com, wherein which we fulfill all of our transactions using our leading software, which handles all the compliance, which I'll talk about later, it's done through there. Our #1 distribution point, our customer if you will, are large and national regional banks, smaller banks. There's things in America called bankers' banks. And we have relationships with banks across the U.S. and Canada, which includes financial institutions, such as credit unions. In America only, we do own 46 company stores, and then we have another 50-or-so agent locations, one of which you'll hear about today, Duty Free, actually added another 30, but it's 1 agent with 30 retail stores. Thank you. Next. Okay. Here's the software, which I always like to talk about because this is our secret sauce or the -- it's the Coca-Cola recipe. It's the key reason to determine why large major banks in the U.S. especially have chosen CXI to be their processor is because their branches use this software, which requires -- the software requires complete compliance with all laws, and it provides excellent reporting. So it eliminates the risk of banks doing -- having a teller in some branch somewhere doing something wrong. It covers all of transactions, the buying, the selling, the checks, the wires, the admin allows us to control permissions. At the core of it is why our regulators on both sides of the Board like it is we developed at the heart of this software structure is the Compliance Verification System, CVS. It has live-stop. It has all the watch list built in, so that if something goes against that watch list, it stops the transaction. We either ask additional information or keep it stopped. It tracks branch hopping activities. It is really good. Some of the list that it goes against is the FinCEN list, the OFAC list in America, the Canada Consolidated List, it even checks the INTERPOL list, et cetera. It is very flexible, customizable. There's switches we can turn auto notifications on/off. It is our key differentiator of our competitor. It's an asset that's not clearly represented on our balance sheet. However, it's one of our most valuable assets in the organization. Next. So here are the stats. We had a busy year. We did almost $5 billion, which would be -- is a major -- it's a record for us. It's interesting to know a stat that is cool as we think about new things we can enhance going forward. We transacted in 2019 440,000 unique customer transactions. So either Americans leaving or foreigners coming, we did -- we exchanged money with that many new faces. And we're building an e-mail database that allows us to improve our marketing based on that. Now we're asking for e-mails and people are providing that, so they can get their receipt there. So there's a lot of great things in our retail business. It's still a big part of our U.S. business. Bigger, of course, is our wholesale relationships. These are larger bulk transactions, smaller, what we call, decentralized banks have -- will be one-off transactions. But a lot of those numbers -- those trade numbers you see actually represent 14 currencies trade. Overall, that was an 8% increase in total volume. Next. Here's the stats laid out. Our assets continue to grow. Our revenues continue to grow. Our volume continues to grow. And then unfortunately, as we saw in the last 2, 3 years, our expenses continue to grow. But we -- if you've noticed in the last 2 quarters, we've really got a grip on that, and we're focused to continue that trend. I know this virus will -- is making it a lot harder. But we are still very focused on the efficiency of the business. Next. So I've already said this is what we're doing. Our payments, our notes, our retail stores, but these are the products that are offered in them. So from last year, if you were here a year ago at this meeting, we did not have forwards. CXI started with offering forwards because if you're doing international wire transfers, someone says, "I don't need the money today. I need to pay it when the tractor arrives from Italy in 2 months. But I want to lock in on the euro now," That's a forward contract. We did a pilot in CXI. The pilot proved successful. We rolled it out at CXI. We introduced a pilot at Exchange Bank of Canada. Exchange Bank of Canada just recently concluded its pilot, and the Board has graduated the forward contracts as an official product of the bank. The Board is keeping quarterly updates getting from management. So it's still a Board-level topic. We're starting to increase our efforts on licensing our software where when people are slow like this, not trading much, we would still get income from our software. That's been well received. Our global EFT is a product where instead of wiring through SWIFT, I think you've heard me talk about this before, it allows us to use the EFT system in Canada, the ACH system in America, the SEPA system in the eurozone, ABAX in England, so we can do an overnight credit, which is a lot cheaper than doing a wire through SWIFT. And our check image item is another. The foreign check clearing, we have a remote image capture, which allows U.S. financial institutions to clear checks digitally instead of -- we used to be stamp it and ship it to Toronto. Now they scan it, which the scanning does the stamping. And we have a digital, an X9 file that gets transferred to our clearing wholesale bank in Toronto. So those are our product lines. Here are some of the highlights of the year. I won't read every line, but some of the big ones. Again, we continue to grow our retail locations. We -- as you know, on my last call, we have stopped adding new company-owned location, except for the one that's going to open in Manhattan that we've already signed, which is at Ground Zero, we think it's going to be a slam dunk in normal times. We have totally merged eZforex into our business line. The big win besides it being accretive, it's already contributing to earnings, is they had 10 years' experience of currency price protection, which is a product that they had on their wholesale side, we're going to pilot it in our own retail stores first. And should it prove successful, as we see it will, we will then open it up as an opportunity for retail banks to offer our currency price protection service to their customers. Duty Free America is the new way we hope to grow our retail footprint is by getting good retail businesses with retail locations and devoting a team to them. So we have a team, starting with a strong relationship manager, that's devoted to this customer relationship, supported by our retail operation regional managers and our assistant vice presidents of retail there. We've all taken this as if they are our own stores but we don't pay rent and payroll. So, it's a win-win. It's a revenue share, so it's a win-win model, and that's proving very successful. Montreal is a vault, I think, you know from previous calls, has been open. We've done a lot in the U.S., especially now, like now the malls are closed, our online FX is actually having more activity because if you do want to still get currency, you can order it online, deliver it to your home. So that pilot was graduated and is now fully available in the states we're licensed in because online FX is considered money transmission, even though it's currency, but it's not shipping you cash, that's money transmission. So we are not licensed in all 50 states to ship cash. So the states that we have our payment license, covers our cash shipping because it's like a payment. We also integrated into Fiserv wire exchange that had a hefty cover charge, I'd like to call it to get in, but that is now already paying -- I think it's paid for itself because we did get 3 or 4 banks as we anticipated. It was a slower ramp-up because they -- people just have other things to do. But we finally got several. And then pipeline for that is growing and growing. And so that integration proved successful, and you'll see in the forward stuff later that we're looking at our next integration to another system like that. Our -- we've enhanced our software capabilities. So besides the CFX, as we nicknamed it, or ebcfx.com, we do have an FX now, which is focused just for payments for corporations. It allows for multicurrency accounts and what we call holding accounts where someone could receive a euro, hold it and then send a euro out. We've done -- I told you about the forwards. We've expanded customers, accepting -- this is the CXI only or at least mostly. CXI has taken some more customers in the Caribbean, in Brazil and Chile. We've -- every country we go into, the Board requires a formal Board approval. We'll talk about our change management initiative process in a bit. But everything that we -- where we've taken customer, it's been fully vetted, risk assessed. We actually do a site visit to ensure what we think we're getting in business with, is the customer is really there? I told you about the remote image capture. So that's -- I think we've covered that page. Okay. Next. This slide is something that I just always think is cool. It shows that we're up to a -- now that's at the end of this period. So we're now over 20,000 transacting locations in normal times. Unfortunately, our 46 stores are closed and probably half of those 20,000 branches are closed temporarily. But in normal times, we have a great distribution channel. So should we add a product like a CPP or when we added gold or something, we have network of people that can possibly buy. Next. So here's the retail discussion. Again, we are not opening new company-owned locations unless they fall under our normal requirement, which is, it must be a good location at a very reasonable price. We also felt we've reached our max. We've hit all of the major markets. Philadelphia was the last major market we didn't have retail in. And so the future going forward is looking at relationships like this. So Duty Free is a good example. But other ones that we've been in talking with is Walmart. They have super centers where there's money desk in a Walmart supercenter. And we feel that Walmart should be accepting Canadian dollars, if you're on the U.S. side. If you're in Canada, they should be accepting U.S. dollars on the Canadian side of the border. And pesos down in Texas, for example, in California. Public supermarkets is another one. We feel that these agent relationships can really prove us getting another 100 transacting locations without the rent payroll. Again, Duty Free is a great example of a win and that shows that this does work. And then, of course, the other thing we're doing in retail, we're adding cross-selling. We've been successful in selling some gold coins and bullions. The pickup and delivery is the online FX where we can ship to your house. And again, the newest thing that's not ready yet but it's in the R&D is the CPP, Currency Price Protection. The next slide is something I wanted to put up here, if you would, Paul. It just gives you a visual, set of all these words. This is an example of Duty Free America. Again, it's being led by an experienced person with the company about 5-6 years. We have a dedicated relationship manager. So they're on the big level about promotion, marketing, things like that. But it's supported from an operational point of view from our regional managers, like we have one out west in California, managing the west half of the United States of these customers. And on the right-hand side, we have someone in New York managing the Eastern side. This is just Phase I. I love the picture at the top. You couldn't buy that bill -- you couldn't buy billboard space like that, where you're at the border, we send currency exchange right there, the upper right. And they are -- they -- until Trump closed the border, they were doing great. And in fact, as this thing started in February and even halfway through March, they were doing well because the Canadians kept driving because nobody could fly anywhere. They were busy. But unfortunately, they have slowed down. We've reduced their inventory levels accordingly. Okay, next. I won't talk about them anymore. So what are our priorities going forward? So it's not listed there, but #1, as you can imagine, is the COVID Committee, led by the Executive Committee, led by myself has a top focus to best manage this situation. While there's a lot of negative around it, weirdly enough, there's been a lot of positive. Our pipeline is busting at the seams because some people are closing their doors forever. And so it has opened opportunity. Also in March, which is only going to be in March, but in March, while our selling has dropped very significantly, not totally, believe it or not, but the incoming has been tremendous because people are lowering inventories, banks are selling off surplus currencies they don't want to have. So our inbound has been extreme right now. So March has not yet felt that. But our #1 priority is the COVID and navigating what we hope to be a 3- to 4-month slowdown before it starts going back up. But back to the day job is we are continuing to expand our U.S. dollar banknotes processing. We've had high -- now more than ever there's been high demand for local currency. In Canada, Exchange Bank is pumping out Canadian dollars as it takes in all this foreign currency. So -- again, so people can have cash to pay their employees to pay them in cash, et cetera. So there's a huge demand for local currencies being bigger in the U.S., we have a huge demand for the U.S. dollar. And in Canada, though, again, we distribute lots of U.S. dollars as well, and there's been a big demand for that. And we see that as an opportunity for expansion. I think you got on my last call that the Federal Reserve process -- Exchange Bank is going through this process, the Federal Reserve Bank of New York has, so that EBC can source U.S. dollars directly from the Federal Reserve. It was one of the original plans of Exchange Bank of Canada. It's taken a lot longer for us to get where we are here than we had hoped, but we wanted to make sure the bank was fully operational, functionally ready to go through this process with the Fed. Last year, we felt that way, and it's progressing quite nicely this year. And we're optimistic it will continue to do so. I already talked about the landscape is changing quite significantly in the marketplace, both in U.S. and Canada. In fact, around the world. But -- and our market is North America. There's a lot of opportunities and our pipeline is very, very full. And nicely, a lot of these people are moving quicker than normal in signing contracts and going through the onboarding process. We've lowered -- we're, again, navigating the COVID-19. We've lowered currencies in the vault. We're expanding our online accessibility, our home delivery. And I've already told you, the pipeline's full. So that's for banknotes. For payments, again, continuing to grow our existing client base. We're doing that through cross-sellings. We still have lots of banks that have yet to sign up for using our checks or our wires. So our financial institution sales team is focused on that. I told you about the FX forwards, and we're trying to enhance our offering. The integrations is clearly a focus going forward. We're not the only one realizing this, but there's a couple other niche systems like WireXchange that have a large following that do payments like domestic payments. And if we're able to tap in and offer international payments into that same workflow, it makes it very easy for those businesses. And for us, it allows us to go get 100 new customers instead of one by one. Integrating into core banking platforms is another -- it's more -- it's a savings from -- a lot of financial institutions don't like the 1, 2 or they do it on CFX, and then they got to go to their core operating system to do the debit/credit. We've already done a little bit of this with 1 or 2 banks, but this is also a focus is that we're we going to tie into the core system so that it's a file transfer. When you do the wire on one system, it immediately hits the GL on the other. What's nice about that is it really ties us in sticky with the customers. And it's reduced. It allows for straight through process, STP, and it eliminates errors and allows for everything to be faster. HR is a huge thing. We -- until just this month, we were in the tightest labor market in the United States that I've ever seen in my 30 years running a business like this. And so one of our focus has always been -- is ensuring that we have the right people, and we continue to train them, that we are recruiting the right people if we need a new area and then succession planning; like we are looking at the key people and who would be next in line to take that? And what can we do now to make sure if and when that transition were to have to happen? What can we do now to get them trained and prepared? So we look at people that are 1-year ready, 2-year ready, 3-year ready. And then we say, well, we really think this is the person for that role. That role is not going to be ready for 2, 3 years, so that's perfect. So let's train them over the next 2, 3 years, develop them, so that they can be ready for that. But that is a focus and will be a focus because I can talk, as you know, I can keep talking, but the people that are actually doing all the work for us, owners, is our team. And we have a great team, but we are going to continue to develop that team through continuing education and cross-training. We are expanding our corporate payment licensing. I think we're at 23 states right now. We've decided not to go nuts and try to get all 50 just because we want to and think it's cool. While it does seem cool to have all 50 states, we require now from the salespeople a business case for every state they want to get a license in. So we're not up to take an extreme one. We're not licensed in Alaska. And so if one customer says, "I want to do business with you," and we've sized it up and it's $20,000, and we look and say, well, the licensing fees, to maintain a license there because there's audits and all kinds of stuff, it goes to what's called a Business Development Committee Stephen Fitzpatrick put in place a few months back, if not longer, what's called the BDC, where any new business opportunity has to come before the Business Development Committee and be approved by that committee, which I sit on as well. It's chaired by Stephen. And if it stacks up, then they get the green light to keep negotiating while we start the process of getting a license. So our payment licensing will be predicated by business we know because when we got our license in Colorado, we had our first audit. And we get, I think, 1 transaction, it was clear that we should have done this before. We went out and got a license in Colorado. We are keeping our license in Colorado. Again, now that we have this online delivery, it allows us to shift to Colorado since our store at Denver is closed temporarily. So the licenses do have more value than just payments. Thank you. Next. So at a group level, at the Board level, what's going on? We're always focused on compliance and risk, governance, all of that. We're focused on efficiency. We see our top line growing and us shareholders, being one of them, frustrated by seeing that the expense line just grew right along with it. And so we are very focused on efficiency improvements. Wade Bracy, who I think most of you may know, has been with -- working with me for a well over a dozen years, probably 15 years. He was our CFO. When we came to Canada and became publicly traded, he was most recently our treasurer. I pulled him from treasury and put him in charge of process improvement. He's the Vice President of this improvement exercise. He's the best person. He knows technology very well. He knows the finances very well. He knows the operations very well. And he's done an instrumental job already where he's bringing, showing us how we can save FTEs on an ongoing basis as well as because of the automation, and he's utilizing -- it eliminates the room for error. It's a top focus of mine. The acquisition in Montreal has been going on a long time, most of which for good reason. And -- but we feel we're very ready now. And so that is a top personal focus of mine that we feel this is a great transaction. The business, luckily, and I've been in touch with the owner, is still running well. The CEO, who we can't wait to have on board to lead our Québec region, is a strong operator, and he kept his business -- it was doing a little better than we thought it would in its first year. And so we're very excited about this opportunity, and we'll stay focused on delivering everything needed to wrap it up and bring them into our Montréal office. And at a high level, we're going to continue to diversify our revenue streams. Being so dependent on cash reminds us how it would be nice to have more payment revenue, how it would be nice to have some software income, and so we are ensuring that we will continue to diversify our revenue so that our biggest threat, which is cash, dependency on cash, can be lessened by a nice pipeline of payment revenues and other revenues. So here's the stats. There's only 6.4 million shares. I own a little over 1.3 million. So it's a tightly held. There is a -- it's still a pretty illiquid stock. But the main thing is to note, we have USD 71 million in cash. And if you do the math and when we're currently trading at Canadian, convert that into cash, you'll notice that this -- we're at -- and I would think, a very low, low level of turn price. Part really why because our last year return on equity is at 4.4%, it's disappointing, we see that. So better utilization of our assets is key. Closing on a transaction that's accretive would be a great use of our assets. And so deploying our assets in the best way we can. And making proper investment is what we intend to do with our surplus cash. Next. I kind of hit on this already as I've been talking, but this is our focus, continuing to get new bank clients, any type of finance. Again, we're getting a lot more from credit unions now. New verticals, which are just areas like I was talking about, Publix or Walmart, a new retail delivery channel. Cruise ships has come up, but that's on a back burner. And then this retail partner program I talked about with Duty Free is also there. Cross-sell. We've got a load of customers already on both sides of the border. If we can sell more to those existing customers, that is a focus of our sales team. I've already talked about the new clients we're trying to get. There are -- especially now because of this crazy economic environment, there are some amazing M&A opportunities, which must be done very carefully because we don't know what -- the past doesn't mean what the future is going to look like, however, there are opportunities. The Board does have a very focused M&A strategy, and it has us looking at opportunities, but it's very clear that we don't act until we go through the change management initiative, the BDC, the exec co and then ultimately to the Board. Again, expansion of our forwards, the ability for people to -- that are needing -- they need to lock in a forward, so they can hedge their balance sheet if something that -- a receivable that they may have coming in or a payable that's due later. And then the APIs, as I mentioned about the integrations with other core systems is key. And then all while we're doing all that, we want to maintain our costs, keep our professional fees as low as possible, but we do realize that a lot of those professional fees are money very well spent. And we will continue to remain focused on efficiency. And that's the end of the presentation. I don't -- I think we've got a good handful of people on the line, so let's not all speak up at once. But I do welcome any questions from the floor. No questions? Okay. Is there -- did Paul -- did anybody -- I didn't look at my text. Has anybody texted anything?

Randolph, it's Stephen. We did get some questions a few minutes ago, early on at about noon, mainly focused on dealing with the current crisis, which you talked about. The first question was wanting us to touch on expense reduction initiatives and the burn rate inside -- in the company while we're going through this.

Okay. And I've got to be delicate because these meetings -- this meeting is around the 2019 annual year. Since we've already press released the first quarter, I can speak to that. I've given you a feeling that, March, there's been no burn because the incoming is very strong. April, there will probably be some red. But what we've done, and again, because there's a jarred topic here, it's a very delicate topic. But in retail, we've addressed that and as far as I've expected. So this is something I could talk to. The -- luckily, I can confirm that the -- since the mall is shut the opportunity to have my business there, it is our opinion that we are not obligated to pay rent if the mall is closed. So if the malls stay closed in the month of April, then the rent for that month, we feel, is not owed. In our first discussions, of course, we don't want to start picking fights and taking a legalistic approach to this topic. But luckily, the mall operators and owners, as we presented our plan, they are happy to know that we have a plan, that we're reacting quickly and that our plan is that they reopen them all and we reopen there. We do like the reduced hours in these turbulent times. We're hopeful by the summer that all the people that didn't get a good spring break, and I know a bunch of families with kids that, personally, they didn't. And so everybody is hopeful that this summer, we can do that big family trip. So we're hoping that, that it will bounce back, like it did after 9/11, which was a ghost town for 2 to 3 months, and then we had gangbusters for the next 3 months after that. We're hopeful for that. There's a lot of pessimists that are not thinking it's going to happen. But we're planning on reopening. But our intent is to reduce rent expense, reduced payroll expense. We're trying to not fire people that, that we don't want to lose. There are some people that were due to retire, let's say, or there are some people that we feel we couldn't -- we might be able to live without in a slower 2020 fiscal year. And so we do have a plan around reducing payroll. Shipping will reduce by itself because there's less shipping going on. And so we're very systematically going line-by-line and looking in every area that we can reduce costs. And so we've already done modeling of worst-case scenarios where it's going to be, we're-going-to-be-closed-the-whole-year type thing up to, what I'll call, best scenario, which is we're getting back to business in a May -- I mean May, June, it starts getting better. We've all agreed that April is toast. And May -- again, I'm more optimistic. I think you are going to start -- May is typically a very -- it's really a busy month for CXI. We're hoping that May will be better than April, of course. So we're not sure, but we have that optimistic case, mid-case and worst-case scenario modeling. And the worst case is obviously the worst one. But we are very well capitalized to weather this storm this year, even if it goes into next year. And our focus is to not just bleed to death and hold on tight to everybody. If we see by July or August, it's not getting better, then we might have to do a wave 2, as I called it. But we have a plan, and we -- I'm one of the biggest share -- I think I am still the biggest shareholder. And so this is the money bleeding out of my pocket as an owner just as well. But we are not going to be stupid and fire everybody so we don't bleed, and then when it bounces back and then we're scrambling to hire everybody back, so we are very loyal to our employees. We're being very careful. We've been very communicative to everybody. And I'm personally -- let's say, I've already said that if we do need to go, as we did in 9/11, where we do start asking people to work 5 days, but we're only going to pay it for 3 or 4. I am going to be the first to raise my hand and cut my pay 20% to 40% to -- as leading by example. So we're not there yet. We -- luckily, our payments business is still -- is actually growing. It's -- all the investment, that wave has been strong. And as of today, it's still there. Checks are still flowing and currency is actually still flowing. It's slow right now on the inbound side, but we're still selling out. It's nothing like it used to be, but the banknote business has not died. Ironically, things like the exotics are more popular again. And so I don't know if that over answered your question or I stepped over the line, but I want to give you a feel that this is top of mind for me and our management team. Thank you for the question.

So Randolph, the questions are filtering through me. So I'll play a moderator here.

Yes. And I know if you were in the room, you'd kick me if I say -- if I start saying something I shouldn't.

That's right, I would. But I'm not. So...

No, I know. So just say, hey...

Okay. I'll give you a breather for the second question. It has to do with -- the question is about our approach to hedging, all the market volatility and under what circumstances could we see mark-to-market losses on our banknote holdings? What I can say is that a year ago, we changed our whole approach to hedging. We introduced FX options, purchased options in addition to forwards, which has reduced the volatility significantly in our hedging with our banknotes. So the option strategy is really designed to anticipate a worst-case scenario. That's the way we approach it. So that's positioning us pretty well. To get through this current market volatility and uncertainty, we are holding fairly well at this point with our hedging programs.

These questions are working very well.

So...

which I have done.

So that's the answer to that question around hedging. We're using options. Someone has unmic-ed -- unmuted themselves. The next question, Randolph -- actually, there are questions from 2 people around the impact and potential opportunity for CXI with recent issues surrounding one of our competitors, and really, talk whether it's retail or wholesale? What types of opportunities might those present for CXI?

Good question. And there's -- besides that one, there's others that are throwing in the towel. Yes. And Robin, it's you that needs to be on mute. Sorry, Robin. So the question is what opportunities does it provide? It provides opportunities in retail, taking on stores where owners are saying, "I'm closing the doors. I'm not going to weather the storm." And so since our retail, we don't really want to buy and get into more leases. Those -- while there's lots of those opportunities, we're very scrutinous of those, although just this week, a very good location came up, but we're not interested right now. But there are those. We will look at those. Again, we have some very strong retailers that are going to weather the storm, that we will be trying to connect our good customers to those retail opportunities that are coming to us. So they will hopefully take that retail opportunity, so us as a wholesaler will get the benefit of our current good customer taking that location. And I'm thinking of one that's in Tampa that's keen to open up more. And so I'll throw 1 or 2 of these opportunities that way. And if that works great for them, but we are still very focused on keeping our costs controlled, and we don't want to get into new leases. On the wholesale side, that pipeline is the fullest I've ever seen it in my life. And that's like an understatement. We have a lot of opportunities. They're not landed. They're not something we're press releasing yet, but there's some good ones that, if we do land, would actually be sizable to actually warrant a press release. And so -- but again, it's a full pipeline. So that's -- it can get any further than that, just to say that we -- that tons of -- one of the largest companies in the world really shrinking, if not falling away totally. Their biggest customers are now looking, well, who is next in line? And CXI has grown to be the second largest nonbank foreign exchange provider in the U.S. by far. We were close to the heels of the largest, which also on a worldwide basis, was the largest worldwide operator. And so now we're next in line, and so that has opened up opportunities in many fashions, retail, wholesale, and of course, M&A by the whole business. But we're doing that very, very carefully. We are very conservative of our -- keeping our strong balance sheet. And so we'll only look at these opportunities if they pass the change management process, the business development process and if it's big enough where it goes to the Board. I hope that answered that question or those questions.

I think so. There's one last question. It's -- have you -- because you already updated the Montreal situation, how do you consider a share repurchase program as the shares are trading at the company's cash value?

Yes. The Board has considered that. I can't really say much more right now, I don't think. So -- but the answer is, yes, the Board has considered that before. And so the value of our stock is always in mind of our -- of all of management and the Board. I remind you, the Board of Directors' responsibility is to the company, not to the owners. And so the Board, of course, is -- #1 focus is the preservation of cash to allow the CXI group to efficiently utilize, to maximize that cash. While right -- today, we're all saying, "We're glad we have plenty of cash to get -- weather the storm for both of our businesses that we -- us owners own." So that's nice, but we have more cash than that, actually. And so yes, when you say, "Well, if you're going to do an M&A, I want to buy a business. What are you looking for when you look at your own business?" Well, that checks all the boxes as well. So that's where that topic comes to the Board. And so yes, the Board has thought of this. And the Board's #1 focus is to the business and ensuring that the business has the capital to continue to grow and maximize the returns for the business, which, in turn, will maximize the return for us owners. I hope that answered that question.

Thanks, Randolph. So there aren't any other questions that we received in writing by e-mail. So we can see if anybody has anything based on anything you've said.

I don't see any more texts from anybody that was going to text me a question. You want to, Paul, open up all the lines again. And anybody that's on their phone, you're welcome to open it up and just scream out a question. Or again, I'd love the one meeting where we were in KPMG, we all sit around that big Board room, and it felt like we were just having a Board meeting, and we were just chatting about the business. I'm welcome to do that. This is the first time I've ever in my life done a digital annual meeting. And so we don't have the luxury of, after the annual meeting, walking off in a corner. Normally, we would have some cookies to stack on and we could chat. So I do invite you to have a chat with us. Anybody want to raise your hand if you want to submit something digitally since if you're not on the phone? I'll wait another second, and if we don't hear anything, then we'll wrap it up. I'll look one more time.

I think you're good, Randolph.

Okay. I have no further questions either. So again, I want to thank everybody, all of you shareholders that are here. I want to thank all of you, management, the Board, all the employees of the organization that may have attended as well. We really value everybody's health. We're all in this together. And the key is all of us together continue to stay focused on our goal of getting past this. Safety for all people, and then right there next to that is safety for the business. And I'm confident that we will get through this and will actually emerge as being probably one of the strongest foreign exchange shops on this side of the ocean. And I thank you from the bottom of my heart. I appreciate it. Thank you.