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

Good afternoon, ladies and gentlemen. Before proceeding with the formal business of the meeting, thank you for attending today. I would also like to thank those joining us via webcast. Once the formal business of the meeting has been completed, management will provide an update on the business, after which there will be an opportunity to ask questions. Please reserve your questions until that time. We have the following items of formal business to address at today's meeting. Presentation of the financial statements of the corporation for the year ended October 31, 2023, and the report of the auditors; appointment of Grant Thornton LLP as the auditors of the corporation for the ensuing year; and to authorize the directors of the corporation to fix the remuneration; election of the directors of the corporation for the ensuing year; and transacting such other business as may properly come before the meeting or any adjournments or postponements thereof. Thank you, ladies and gentlemen. I would now like to turn the meeting over to Chirag Bhavsar, Chair of the Board of Directors of the corporation. All yours.

Thank you, Margaret. Good afternoon, ladies and gentlemen. Welcome to the Annual General Meeting and Shareholders of Currency Exchange International. I'm Chirag Bhavsar, the Chair of the Board of Directors, and I will act as Chair of this meeting. Before proceeding with the business of the meeting, I'd like to introduce CXI's Board of Directors, and I ask when I call your name, please stand: Joe August, Mark Mickleborough, Jim Sardo, Chitwant Kohli, Stacey Mowbray and Daryl Yeo. Unfortunately, Carol Poulsen could not be here in person this year. Also joining here are several members of the CXI's management team. Since there are so many of them, instead of calling each one of them one by one, I'll ask them all to stand at once. Okay. I will now call the meeting to order. In accordance with the bylaws of the corporation, I shall preside as Chair of this meeting. With the consent of the meeting, I shall ask Margaret Kingerski, the secretary of the corporation to act as secretary of the meeting. With the consent of the meeting, I shall ask Arlene Ariano and Anup Das of Computershare Trust Company of Canada, the corporation's registrar and transfer agent, to act as scrutineers to the report of the shareholders present in person and the number of shares represented in person or by proxy at this meeting and at any adjournment to compute the votes on the polls taken or ballots cast at this meeting or any adjournment and in each case to report to me as Chair. The scrutineers provided me with the preliminary report regarding shareholder attendance and representation at this meeting. The scrutineer reports that they are present at this meeting in person or by proxy 51 shareholders holding 3,498,453 common shares. Accordingly, I declare that the requisite quorum of shareholders is present, and I declare that the meeting is duly and properly constituted for the transaction of business. I direct that the scrutineers' complete report on attendance to be annexed to the minutes of the meeting. The notice calling this meeting and accompanying management information circular, form of proxy and the consolidated financial statements of the corporation, together with the auditors' report on the financial statements, have been mailed to all shareholders of the corporation. The corporation utilized a 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. Additional copies of such materials are available at this meeting and also on sedarplus.com, and visionreports.com, and on the corporation's website. An affidavit of mailing and the documentation required to be mailed under the notice of access provision has been provided by Computershare Trust Company of Canada to the corporation, and I direct that this appetite be annexed to the minutes of the meeting. Accordingly, unless there is an objection, I'll dispense with the reading of the notice of the meeting.

Technical difficulty.

Technical difficulty. I propose to conduct a vote by show of hand on the resolution put to the meeting, for the election of directors and the appointment of auditor. In order to expedite the business of the meeting, I've requested that certain persons make and second the formal motions, and I'll 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 held following the presentation. The financial statements of the corporation as of October 31, 2023, together with report of the auditors thereon, have been mailed to all shareholders of the corporation. It is not proposed to ask the shareholders to approve the financial statements, which have been presented before the meeting. However, after management's remarks of the operations of the corporation and after any formal business of the meeting, there will be a question-and-answer session. We will now proceed with the appointment of the auditors of the corporation. I've been advised by the scrutineers that the proxies deposited for the meeting have been overwhelmingly voted for the appointment of Grant Thornton LLP as auditors of the company. I would ask Khatuna Bezhitashvili to move the following resolution.

I so move.

May I have motion seconded?

Mr. Chairman, my name is Barbara Kingorc, and I second that motion.

I will now call for a vote on the motion. All those for the motion, please raise your hands now. And against? I declare the motion carried. We'll now proceed with the election of directors of the corporation for the ensuing year. The number of directors to be elected at the meeting is 9. I now declare that the meeting open for nomination for the election of directors for the ensuing year or until their successors are elected or appointed. I now ask James Devenish to move the motion nominating the persons that specified in the management information circular deliver with the notice of the meeting.

My name is James Devenish. I nominate Joe August, Chirag Bhavsar, Chitwant Kohli, Mark Mickleborough, Stacey Mowbray, Randolph Pinna, Carol Poulsen, James Sardo and Daryl Yeo as directors of the corporation for the ensuing year or until their successors are elected or appointed.

I now ask [ Amit Amal ] to second the motion.

My name is Amar Gamal, and I second the motion.

Are there any further nominations? Since there are no further nominations, I hereby declare the nominations closed. I ask Paul [indiscernible] to move the resolution elected those nominated as directors of the corporation.

My name is Paul [indiscernible]. I move the following resolution. You hereby be 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 corporation.

I now ask that Greg Piaget to second the motion.

My name is Greg Piaget, and I second the motion.

I will now call for a vote on the motion. All those for the motion, please raise your hand now. Any against? I declare the motion carried. Is there any other formal business that may be properly brought before this meeting? If not, that concludes the formal business brought before the meeting. I wish to thank you for attending, and I'll ask for a motion that this meeting be terminated.

I move that this meeting be terminated.

Thank you, Khatuna. Need to second.

I second that motion.

Any to the contrary? I hereby declare the motion carried and the meeting terminated. I would now like to ask Randolph Pinna, President and CEO, to address the meeting regarding the performance of the corporation.

Thank you, Chirag. And Bill is going to drive the slide deck, so I can just talk. Microphone, as they say, I talk too loud already. So [indiscernible] yes. So to begin with, a lot of you are longtime shareholders. Some of you are newer shareholders, and I want to thank all of you for being here and introduce the team that we've had. As you know, a lot of these directors have been on our Board for some time. And we have some new people want them out west and was not able to make it. But we have an experienced Board of Directors -- new Board of Directors, and we have a very experienced management team both from an operational point of view as well as what they call in banking in second line of defense, which is the risk and compliance governance and so forth. So very proud to have a great team of people with a low turnover. So as you know, our primary business is foreign exchange. That includes banknotes, international payments and check processing. Why banks and corporations utilize our group is because of our software. Well, our service is very good. Number one is actually the software capabilities because of its integration with live databases around the world, stopping risk and compliance issues, such as right now, if you type in the name of a certain person and they're on a watch list somewhere else in the world, it will actually check it live. 21 different lists, and it makes us have a competitive advantage over our other -- over the other providers. Our processing center is run by people here in Toronto as well as in Florida, wherein which we actually facilitate all the foreign exchange transactions. How we get to our customers, of course, is through our software, but we have 2 models. Our core business both in Canada and the U.S. is in a wholesale distribution model, where we go to a financial institution or corporation and enable that company to provide the services of foreign exchange, again, in a safer manner, in a fast manner, and of course, supported by an experienced management team. We do only in the U.S. have a direct-to-consumer business. And that's where people don't need to go to their bank. They could actually come to our own branch offices. We're now up to 42 branches, a company -- we call company-owned stores, where we have our own leases, our own staff, and we keep 100% of revenue that's generated. We also do have an agent program where we utilize their location, let them pay the rent, let them pay the staff within revenue model, where we share that. And of course, the online system where we don't have a store, it's online and you could actually place an order and get those built to 90% of the U.S. population where we can deliver to your home and office. As I was starting to tell you that some of the advantages of us is our software, our online capabilities. We have a great supporting teams. And again, financial institutions have ducked large, some of the biggest banks in the world, for a small company like ourselves because of our software and its integration to all the interpol and all the different lists, as I said 21 of them. We developed when we recreated Paul as part of this development team. I've been with the company for, what, 17 years now. And we developed our proprietary compliance verification system, CVS, at the heart of it is what's called Livestock. Livestock is checking list, putting it against the rules that the client puts in, which is maybe above the government rules. The government rules, of course, are embedded in the systems, has keeping them in line with the law with certain potent of financial institutions, but they are foreign-owned banks that operate in the U.S. They prescribe its own rules from their home country on top of the U.S. rules. And so the CVS system will have all those rules. And then when a transaction happens that exceeds it, it will stop the transaction line, not allowing it to go forward, and therefore, may ask for additional information. Exchange Bank of Canada is our wholly owned subsidiary here, and we're going to talk further about Exchange Bank, but that allows our total infrastructure there. We've embedded a lot of risk and compliance within our group because of our bank, and it has enabled us to win major contracts from like large institutions because they get the comfort of being a bank group. As we said, I've told you we're plies in 41 states. We can reach over 90% of the U.S. population. We've integrated into companies like Fiserv, Jack, Astra, where in which the financial institution namely can use their core system without having to toggle on our system and do get the benefits of our software through their system and has been very successful on our payment growth especially. And I told you about our company stores. We're I think now up to 42 of them. But we have our own company stores at key areas. We're in all 10 of the markets of the highest amount of inbound and outbound U.S. turns going out and orders coming in, such as places like Philadelphia, New York, Chicago, L.A., Miami, et cetera. We had a great good year. Our assets continue to grow. Our equity is growing. Our revenue is growing. You can see it broken down by our 2 business lines, the banknotes and payments revenue. And there's our EBITDA. We have -- as I said, we have a great leadership team here. You can see these graphs show and illustrate the continued growth that we're focused on for delivery return for our shareholders. These are additional statistics on our shareholder equity, stock prices, company locations, airport locations and wholesale customer relationships. Quarter-by-quarter statistics, we continue to grow our network with expansion of our wholesale customers as well as our retail locations. We have new locations coming in. The airports have been a really big success for us with the addition of these agent relationships where they're paying the rent, they're dealing with the government because an airport authority is like a heavy regulator. They're very tough to deal with. So we stayed away from that. We did test in one market in Orlando, our headquarters, where we have our own direct relationship. And I can attest that there deals with the government because they are kind of like the government. So our expansion with additional airports will be focused on agents. We tested that model. We have renewed our lease there because it is our home base, and it is making a little profit. But the work is not worth further expansion. So our primary customers, ICE, International Currency Exchange, which is dominant here in Canada, has all of the Canadian airports, is the recommended that model going forward. A new entrant, which has been a customer of ours on the Change group, which is Las Vegas Airport. So we are in support of that. So -- but it's an interesting statistic to give you today is that right now, with the exception of the CIBC, 1, may be 2 booths at the Toronto Pearson Airport, so take that out, and ICEs in Toronto as well. Every airport in North America, U.S. and Canada uses CXI, either through our agent program or through the wholesale program where we wholesale ICE. So with ICE exchanges, but in Vancouver that is actually those pesos came from us where we source that from Mexico to deliver to their locations to sell these customers. So that is a real focus of our business. Again, some more statistics on our financials here. This is our strategic plan. Every year, our management team gets together early. We've already started the process. We've been engaged in the last few years, an expert on strategic consulting. And between Gerhard, myself and the senior executive team, including some in management, we really survey ourselves and what we feel is the strategic direction we should go. We compound that with feedback from the market, looking at the industry, looking at the trend, emerging trends and so forth. And we present to the Board in June our proposed strategic plan for the next 3 years. Of course, the Board questions gives us what they call up here in Canada office. It gives us challenge as far as whether this is good valid direction to go? Are these numbers correct? Is this the right use of our capital? Because our focus has become clearer and clearer on our use of capital and the return on the capital being deployed. We continue to see that these 4 areas of revenue growth, and of course, the fifth down here at the bottom, ensuring you have the corporate infrastructure of people and systems to support that growth, continues to be our plan. Again, this year, we're looking at all the fintechs coming up and the fear that money cash is going away. Although luckily for our cash business, cash usage has resumed. It's increased. It had been going down. And then since the pandemic, well, the first year, everybody was afraid of getting COVID from money. That was one year that went down. Since then, it's been going up and have been reported by 5 major markets we look at, which is the U.S., Canada, U.K., Mexico and Australia. And so cash continues to be our primary focus at both CXI and Exchange Bank. Our preferred delivery model is right here. That's our sweet spot. We service over 22,000 banking centers in the U.S., and we service several larger institutions here in Canada. And we have just opened a new relationship with a big right around our corner here. And we are going to be expanding our cash services with additional banks both in the U.S. and Canada banks. Internationally, our focus is with Exchange Bank. As you know -- or most of you should know, we have a unique advantage. We are the only Canadian bank, and it flows be a way to say like [indiscernible] Bank, the biggest bank in Canada doesn't get their money from the U.S. government? No. They get it from their subsidiary, right? They have a bank in Los Angeles, no. because you have to be approved by the U.S. Federal Reserve banking system to be a distributor of dollars around the world because the Fed is very cognizant of where all of their dollars that they print. And we're, of course, well, they're coming back where they have -- the license is called the full Foreign Bank International Cash Services program. There's only 3 banks authorized to do that currently. And our bank, Exchange Bank of Canada, has that unique advantage. It's an asset that you don't see on our books. But that allows us to sell dollars on behalf of the U.S. Federal Reserve globally. And we see a lot of growth opportunity for Exchange Bank of Canada in that marketplace. Our payments business was initiated as a diversification of the fear that cash could go away one day. And so we continue to do that. Exchange Bank of Canada goes corporate by corporate, and we have recognized looking at CXI who doesn't go corporate by corporate. CXI goes bank to bank to bank who have the book of corporation and enables those banks, especially to small to midsize when they don't have the infrastructure, to do international wires with the safety and security of our software and benefit -- and allow them to compete with the Bank of Americas and the Wells Fargos of the world by using that. So that business by integrating into their core advisors and the Jack Henrys has enabled the U.S. bank. So now Canada and Exchange Bank is focusing on doing the same with smaller to mid-sized financial institutions here in Canada. We'll never win this Scotiabank or RBC payment customer. However, the smaller banks, even the new one that just opened up an [indiscernible] Canadian Western Bank, could be a bank that we could actually do business with utilizing that integration to that core banking system, enabling that to improve upon its capabilities on international. And then our consumer business, it's been a very successful part of our company. It represents about 1/3 of our total revenues and profitability, and it has 3 pieces to it: as I said, the stores, we have our agents, and we have our online business. In the start of this last fiscal year, were -- allowing me to continue to focus on the overall group strategic direction and strategic transformational opportunities that exist, we appointed 3 managing directors, 2 of which have worked with me for close to 20 years. In fact, Matt Schillo has worked with me for over 25 years. But Matt is now running the consumer unit. Wade Bracy, who would have been here, but they -- unfortunately, his daughters had appendicitis, and so he wasn't able to make it today. And Jay Devenish, who's been with 4 -- over 4 years is now our managing -- has been our Managing Director in the last year of Exchange Bank of Canada, allowing me to just get focused. And that goes to this corporate infrastructure, ensuring we have the right executive team and the right systems to continue to grow, enable us to double or even triple the company. So again, this one provider, one platform has been extremely successful for us in the states. We continue -- while I [indiscernible], they are comfortable with me of openly telling people. We have also integrated with probably 5 other systems that are proprietor to the financial institution. And that allows them to have their one provider, which is us, CXI, utilizing their one platform, which is theirs. Even though their platform is using our platform, but it's integrated from the usage -- from the day-to-day usage, that has been the secret sauce for our continued growth in payments and in banknotes. So starting to tell you about the FBICS program. We are continuing to grow that business. It's on another slide, but we just today will luckily have our executed agreement with the trust company that now has enabled us to get customers that have been afraid to do this. Ever since the bank failures in the U.S., credit tightened heavily and we saw volumes drop. And you recognize it from the banner year, we had before and this year, we saw that our international revenues have gone down a bit because our banks overseas recognized that the Exchange Bank is assets are like $25 million. So in the trade side typically on the bulk shipment is $30 million. So the trade feeds the size of the bank, and that's tightening now. We have 4 banks already ready to go. They've even been onboarded, waiting for this multibillion-dollar trust company to stand as part of this transaction, providing that credit comfort that they needed. So we'll continue to focus on the sales and trading with these banks, establishing central bank relationships, just like we have a Central Bank relationship with Federal Reserve Mexico, Europe and select other countries are on our list to continue to grow our international global banknote business. Consumer, I already explained this to you. These are airport locations. This is top 1 JFK, with Fort Lauderdale just came on. Pittsburgh just came -- I mean, sorry, Philadelphia is new, that's the one that just came on. And we're continuing to grow that through the agent relationships. And the beauty there is we're not paying any rent or payroll. And if you're looking forward, a lot of these locations, they just came on about 2, 3 months ago. A lot of these are not in any annual numbers. So we're talking about 2023 numbers. There's a lot of stuff that just came on. I guess that's why Philadelphia is not up here because it just came on. That's a very -- someone to hear from Philadelphia. They know that's a very big international airport. And so looking forward, we will have new revenues to continue to allow us to keep up the good double-digit growth that our group has been doing. We will continue to selectively add our own stores. We're very cautious about our stores selection. We don't like high rent. We don't like a ton of payroll 7 days a week. However, you do get to keep the whole margin. You don't share the spread, the fee income, which is typically a $5 handling fee. It's 100% ours. The bad news is you got to pay the rent every month, but we are continuing to add locations. Our newest location will be opening next month in Buckhead, Atlanta, if you know that area, which is an upscale part of Atlanta, Georgia, a new major market for us. And so we will selectively expand. We're looking at places like Boston, more in New York, which is another great market. We'll continue to be selective our approval of this. And when the unit -- its consumer unit proposes, it has to actually present the business case to the executive team and get sign off from the executives and myself before we continue to grow that. The online that is easy to expand because it's online. So where you invest into that is through integrations to travel companies that book travel and want to co-sell foreign currency change transaction to do some revenue share there. In advertising, our investments with Facebook and other online platforms has proven, and we've continued to invest into that business. So we see this as a huge part of our company going forward. And it's a diversification to the bank unit. So if all the banks merge and there's only one bank, we didn't have that, we'd be in trouble. So by having our own network, distribution to consumers is definitely a part of our strategic vision. These are what some of these stores look like. This is our only company-owned airport location. I'm proud of that one. It's the first time that I actually used a tough -- it's being nice in sales, basically, we're gelling at them and saying, you're at Orlando airport, you don't have a Currency Exchange. So we finally made a deal. The reason they [indiscernible] Currency Exchange is they wanted too much, and we made a deal. Again, it makes a little money. It's not hugely profitable. We're not going to continue to try to chase airports because we have a great airport operator that we are very -- have a great relationship with. And we will be encouraging them to continue to grow. And the new entrant exchange group from overseas has just opened in Vegas. They actually are just literally opened up in last week. And so we will see some of the continued growth in airports. But the company-owned stores are typically in shopping malls. This is one of our newest ones. It hasn't even been opened but a couple of months there in the Philadelphia area. This is how the store looks. It's branded with our brand. It conforms to the mall needs of not having too much signage. And so we've been successful. These are some more -- the agent models vis-à-vis locations there. And surprisingly, they are paid like -- we didn't buy that bus. They -- but that little bus is cool because it's how they -- if you've been to New York, it's a big airport. They actually -- literally will drive to the gates that are leaving. And then they have another one that drives down to arrivals and stuff like that. So the local airport operator -- and that's why we love the agent is because it's run locally and they know how to maximize those locations. And JFK continues to expand. We're now in Terminal 4, Terminal 8, Terminal 7. So they do the build out. Of course, our marketing department improves of the usage of our signage and display. I think, of course, the airport has to approve too. But it's been very successful, and we will continue to focus on this type of growth for the future. Back to the payments here at Exchange Bank. We are going to continue to focus on our software. We have our EBC FX. I told you about how we're going to be doing integration with some of the domestic financial institutions here in Canada as well. Same reason why they like our system. They like the fact that we're a bank processor. And it will continue to allow Exchange Bank to grow. This has been a big focus and hence gains last year. We had a hell of a lot of costs with consultants and implementation costs and so forth. But I'm very proud that Gerhard has implemented Oracle NetSuite, which has been an eye opener for the management team. We now have live data. We don't even like -- I would like to call it a report. We called it the dashboard because -- it's like in your car, you can see where you stand live. And he's very proud, and we all are now getting very good at using it to get live data of what's happening every day. And we literally get a daily stat showing how much money we made, where it came from. You could drill down to each store. You can drill down by currency. It's quite awesome. We are continuing to implement our updated treasury management system called [indiscernible]. Similar to NetSuite, it allows for more automation and more real-time data to help us manage the foreign exchange risk that does exist by having buying positions, selling positions and owning foreign currency, which needs to be marked to market every day because our auditors that we just reported -- or elected may just report every day of mark-to-market on all of our foreign currency positions. And this [indiscernible] system will automate that even further. So that's being finished this year as well. So there will be a little more part in implementation this year. However, the heaviest lift getting the -- going from the old system, which was the GL system we had from day 1 of this group to, just recently, now that is a heavy lift. And there was, as you saw, some charges where we had to write off some unreconciled items. Now we have a clean sheet going forward, and we're operating on that system that we feel for our company. Already told you about the 3 managing directors structure. I love that. It doesn't mean I have less work to do. It actually allowed me to focus on what I'd like to do, which is identifying opportunities, transformational transactions that can really potentially double the company if we're or I am successful in creating that transaction. And we are focused both at CXI and Exchange Bank on opportunities to improve the return for our shareholders. So there's our historical stock price, 6.4 million outstanding. I personally own 1.3 million, a little more than that actually. And so we are a tightly held company. Some shareholders say there's very little activity in the trading of that, but we are a public company. We have -- there is 50% probably institutions, 28% is management, and then there's individuals that own us, and that makes up our overall growth. We're flushed with cash. In sets of net [indiscernible] we have over, I think, about $40-plus million in credit facility, which will allow us to flex up like this summer. We're expecting a very busy summer again, touch when I think COVID happen again or anything like that. If you've been traveling like I have, you'll know it still is extremely busy. I just flew back from my personal trip, packed plane, airport, both in Toronto, both where I left from or passing. So it's an indication that we will have a very strong year this year. We're now ready with the systems, the people and the structure in place. Here we go. So I just -- it's a recap of what we've done. Most of you know, but some of you may not know, we have recognized as one of our uses of capital. We feel it is wise for us, the current value of our stock in our opinion is under the intrinsic value of the company. And we are continuing to try to buy as much stock as we've got the improvement. And it's been well received. There were some shareholders that would call on potential shareholders. Why haven't you bought your stock? You've got cash. And so the Board has approved that we are authorized to continue to buy back our stock. And the amount of stock is limited to what has been approved by the Toronto Stock Exchange. Then recap here. I'm not a good read off the page. I'll let you read if you want, but I'm here really to answer your questions. And that, I think, concludes my presentation on CXI, what we're doing and kind of where we're going. So I do welcome a very open conversation. One year we were here, it was one of the funniest times. It was roughly the same amount of people that they put us in the boardroom that had a huge round table. We all sat around the table, and we all started talking business. And so even though you're all facing me, I still open it up to good or bad, at least open up anything that's on your mind because we're all owners of this company. And I believe we're all focused on the growth going forward and the return that, that will generate. So any questions? Yes, Jason?

I guess on the retail business with the agent model. The agent model [indiscernible] over the years as those changes may be occurred when we get well passed COVID. Like do you anticipate any changes to the rent structure you might have in your company-owned branches or in the agent relationships? Like are those guys coming up for renewal with the airport to be more competitive? How do you see those pieces sort of moving?

It's a good question. And so we typically negotiate in advance normally in a 4-year lease, and we normally over 3% to 4% of raise price increases. Luckily, and I'm -- it's a small market in the banknotes world. So I talk to our competitors, and they talk to us. They say, "Why are you so cheap? We always charge 10%, 12%. And yours growing at 6% to 7%." And we listen to each other. I may or may not listen do what their at we should raise our prices, which is something we, every year, do an annual price increase to do that. So we do have reasonable 3%, 4% price increases on that. But the whole industry now is trying to do this revenue share model with the landlords that like airports because it works. The reason with how an agent started with the airport at JFK, all said, "We are now opening our vendor who's been here 20 years." The U.K. name just how respectful call it out. But they're not here anymore, and we are accepting proposals. And I told them, "Well, don't expect one from us. I'd like to my [indiscernible]. How do we know why, but we want another bit that we won't give you one because if you want us to it, I'm not going to pay you rent." I said, "There has to be a revenue share. If you have the model that I envision, your operator will probably still be there. But they went out of the business because all the landlords like you kept charging [indiscernible] the JFK minimum rent requirement pre-COVID was $5 million a year to operate at the airport. That's why they charge 13%, 15% in exchange rate because they got to cover the rent. And I said, "If you want to model that I think will be very successful and will enable the long term, we never have this issue to have to get it if the COVID happens again, everybody feels the pain. They won't put the company out of business." And so it's a revenue share between the airport, the retailer and ourselves. And yes, we're still charging 13%, 14% because the airport wants a bit of. I got a call after that first year from them in November saying we have the best, most profitable year at JFK ever from Currency Exchange. Now yes, it was also exacerbated by the value packs huge as we all saw in our financials. And I just told, say, remember that [ in pay ] because it's that your his client or time, shorter months because there's less days of profitability. And I said that overall, this is a model that's sustainable. Our directors said, "We should variabilize our business as best we can. So we can go up and down with the wave of the world as opposed to when it's great, we're making more and then when it's bad, we're actually ramp." And so that model is a focus of our group, so that's why we're really having this agent model. So will they try to say: "I want another percent or so forth?" And the answer, "Well, do you want to charge another 1% to the consumer?" And so it's for a collaborative approach. I don't know if that answered your question, but it is the strategy and the conversation we're having with landlords saying, do you want the service? They all do, [ malls like it, the airport based in an international -- that was how I got it the way it's with -- you're like the biggest international. Miami and Orlando are the biggest spots. You don't even have it. And so they want -- and malls really like it because it brings cash into the store, brings people to the mall and then like -- especially the foreigners. Now they could exchange a GBP 1,000 pounds, they got USD 1,500 about, or USD 1,300. And -- but then they go, "Oh, honey, look at the earrings. We're on vacation." And so they love that. So I don't think that the profitability of our consumer unit will be hurt at all. And I think that model is the right model for the long term.

Is there a clip of renewals [ deviating ] next year [ or leasings stay put ]?

Well, they've been popping up as they go. So when -- so like JFK was first. I don't think because they -- normally airports do like 5-year leases. So I don't -- for the next couple of years, I don't see any deviation. Or like in Philadelphia just started, right? San Francisco, believe it or not, just started. And Atlanta went with ICE. And so both of those are ICE's newest locations where they're wholesale. So for us, it's not for us to be into that because they took care of it. They've sorted it out with the landlord, and we are just a wholesaler. And we do, do reasonable price increases each year because, guess what, every one of these guys, the management want to raise it every year. And so that's just the natural evolution that is inflation, costs will go up slightly over time. I think that answered the question? Thanks. Good question. Any questions? Jason has been a shareholder for several years, probably 10 now or greater.

[indiscernible]

Yes. So we appreciate the long standing shareholders. Maybe someone newer maybe have a question, please feel free to -- good or bad, if you -- and say, what the hell are doing in here?

Yes. Okay. We Scott. I'm a newer shareholder, was here last year. But anyways, with regard to cost, I mean you're probably sick of answering the cost question, but let's go. So in the first quarter, in the quarter you most recently announced, your losses and charges were, let's say, quite a bit less. Were they where you want them? Obviously, you want them at 0. But were they, let's say, at budget? Or what do we expect going forward?

So we had in the year previous, ahead of the boom time. And then the overnight shipper caught on to all of our -- caught on to what's in these boxes, and there was a ring of people. Literally, it was in a group of [ these hoodlums ] that were stealing. Luckily for -- no, no, no. Thank you. I don't want to call out their name. But there's only 2 major overnight shipments because we do, unless there's a big shipment that is harbor. Otherwise, it comes in a box. And they had this ring in their hub. And luckily, we were able to put an end to it totally and [ captured ] because the different polices, the state police, the federal police and then their own security all caught on because they were taking the currency and exchanging it with our customer bank. And we were able to get the whole trail all the way down. So -- and they didn't want to just do a one-off. They wanted to bust the whole ring. So it took a while, which was painful for us. Another large financial institution that -- it's small to their business, and they have this -- it's their overall group. But they had worse losses than us. And then that has stopped. We do budget for losses every quarter. Another thing is we deviated, we were 100% with that [ one ] that had the problem. And we have switched to another, not just because of the diversification and trying to spread it out, so it's not as clear. It was also because they gave us a much better price. And so that's why you've noticed our shipping, our volumes continued to go up at our shipping level out. But yes, we anticipate that, that loss level is more like the norm. We actually budget a little more for that, that we had such a loss history. So it was an improvement big time. And then the other thing that we had last year that we didn't have this year was we had to clean up the GL. Because when we were on the old system, there was items that we were still chasing, trying to get. Well, you owe us -- -- we shipped you GBP 5,000. Your clients didn't credit our account, whatever it might have been. So we just instead of [ them owing ], the customer may be having them stop the service all together. We took it on the chin and just ate that. So that Gerhard wanted clean books going forward, reconciled daily-type thing. And so that's a good point you noted. Yes, it's now at a reasonable level. We hope for none. I still -- when someone takes GBP 5,000 pounds, I want to know who held it. And so we will not rest on our laurels because, oh, it's within our tolerance. Any theft will not be tolerated. If there was somebody in our group, they will be fired immediately.

But you'd say at or below volume for the last...

Correct.

And our floor manager, to also point...

Yes, that was another thing. We hired someone that actually within our retail unit that knew the business very well. Strangely, he's from Hawaii and he wanted to come to the mainland anyways. And he's a great guy, and he's working with Dennis who runs our risk office. Dennis is right here, our Chief Risk officer. We've empowered him to have a resource to really track any product capability and most important, stop potential issues [ solving for ]. And it needs to help with that. For the amount of money we had to lose in the last year or 2, you could pay for that [ guy three times in a lifetime ]. Good question. Thank you. Any other questions? It's just the conversation I love. Yes, sir? Yes, you're next. Adam, yes?

Can we talk about the Canadian payments business?

Yes.

Maybe some of the puts and takes there, with performance and how you're kind of thinking about that segment moving forward?

Yes. Well, that's been a big focus of ours. We recognize the competition. Either these are taken to customers, which we saw this last quarter as well as to keep those other customers we [ had to press ] our margins. So that has hurt us, and that hurt our overall group because Exchange Bank continues to lose money. So that is a focus of ours. We have put in a team, like an action plan around how we're going to diversify the revenues to cover the cost [ of these ] turning into profitability soon. And so I start out telling through the presentation. The main thing we're doing different is instead of dialing customer by customer, we're going to the banks themselves. Sure, we get less margin, but if we can get a group of corporates and not have the credit risk -- because we did experience a loss from fraud that we [ side rule ] -- the bad thing about payment, transaction sizes are big. And if it's a fraud, then it's a big hit. And so that [ all compiled ] so we're diversifying into the integration of the financial institutions. There may have a [ brief round of ] impact in Montreal that will allow us to be more efficient in taking on more customers. So that business is under review. And we're not closing it down or anything like that, but it is a focus of ours. The banknote business is continuing to grow, and we -- now with our cost of capital in place, the international revenues will be very noticeable in the next few months. It will take about a month or 2 to operationalize the actual trust account. Each new financial institution not only has to be onboarded by us, but the trust company has to [ go through ] and actually onboard because they set up a trust account per client. Of course, that's how they make their money. And we will see that EBC should go into the green sooner than later. Basically, we're very focused on that. And the payments part of EBC is the one area that is sticking out like a sore thumb for all the lines.

Just one quick follow-up. In terms of the trust companies or the trust accounts, how should we think about the timing of that and how that starts to work its way through the business and reflect in the financials, et cetera?

Good question. So again, it's going to take probably up to 2 months at the most to operationalize. We are ready with 4 banks. I think all 4, but if not then they're in their final stages. I know a couple of them are already approved. So it's just now the trust account getting set up. And so within 2 months, you'll see revenue -- new revenue come again. On the existing customers it will be back because once we show them this, they will get comfortable and resume the higher volumes they used to be. Thank you. Perfect.

Again, thank you for -- and the Board and the management team for being good stewards of capital. As a shareholder, I very much appreciate it. I have a few. So...

Fire away.

All right. First one, I saw, I think there's a partnership that was just announced with the Golf Group in -- I believe, in the U.K. And on that -- along those lines, are there other partnership opportunities, be it with national vendors, maybe Travelocity bookings or anything along those lines, that the company is working on to extend leadership in the foreign exchange area? I would think that there's a ton of potential opportunities. We've talked about a little bit but...

Correct. So there's a software technology. I'm not sure if I'm allowed to say their name, but they are an online integrator [ connect ]. So we connected and the other -- I'm going to use the name that -- I'm not authorized to say it, but XP, but that's not who it is as far as it's by using that as an example, a global travel site online started -- integrated into that -- this hub. And we integrate with that hub, which is currently underway. And that connects the 2 together at me integrating to Expedia, which would take a long time and connect the 2 together. And then when that travel company sells an international ticket to Costa Rica or to Rome, it will pop up. Do need euros for there? We -- it will come straight into us. It is like our online FX, where we have to debit their credit card, get their information and we ship it to the home where we make a profit, and we owe back a little piece to the cut the bill ] and attract what we've pre-agreed with the other side of what they get. And so that's how we will continue to see our online growth billing. And yes, that's already that -- we actually employ a full-time person to chase all the connections that are already existing because the hub can always -- that all these companies comes fit what you would want. And now -- yes, you still need to deal with them to say, "Hey, offer this, do this -- turn this on [ so to speak ]. And so yes, we continue to focus on capturing more market share.

Okay. Second, division for data and the cloud. And so I'm just wondering, how are you -- where -- what would your assessment be today with where the company is in terms of using cloud technology and your data? And maybe share with us your vision for the future on that.

How much time do you have? Yes. So as Randolph mentioned, we're very excited to have NetSuite in place and continuing with [ Kariba ]. We're also spending a lot of time in our data strategy team to work with Snowflake, which is a big -- which will assist us a lot in understanding where our data is. For me, I would say vision is to really, as Randolph mentioned, understand the day-to-day operations. And the example I use is Amazon. They basically asked the previous CEO, how do you actually keep your hands wrapped around the company? And he said, "Well, I look at 343 different dashboards that updates continuously on what's happening in the company." So I think part of our dream is to get to that with Tableau. But before you get to that with Tableau, right now, for instance, we have an income statement that can update in 20 minutes whenever we need it to pull from all the source systems. We have [ Annette ] and her team and [ FD&A ] updating all the various comments. And we can pull income statements from each one of these product lines that we have [ to roll ] through. That's what big -- that's what this data set is going to deliver to us. And now you think across CXI and you go EBC FX, CXI FX, we look at the various data sources that we have. And once we start linking that, Tableau has the ability to link a website or a data source or a NetSuite. From a financial point of view, we also look at NetSuite add-ons. So we have NetSuite Budget and Planning. We just finished our forecast for the first time ever in a very short time period, where we can now distribute directly out of NetSuite, the actuals, forecast the future 9 months, pull all that back into the NetSuite model and see exactly where our financial position is. So the better data we have, like garbage in, garbage out, we all understand that concept. But the cleaner our data is, the better it is, the faster we can update it. I think one of the stats that I found very interesting that I saw the other day is we have ran up to, I think, 160-something million lines into Snowflake at this point in time. And Paul can complement that, but there's probably a lot more to come. So we deal with a lot of data, and we have to take data, make it information like an income statement. It's good piece of information. But intelligence is the next level, the so-what question that everybody looks at. You see A. So what? What does it mean? How does it trend? What's the history? Can you click on a number, get data? That's what we're after.

Which means to do that, we need to go -- I think that's part of your question. Are we going to go 100% into the web -- I mean into the cloud and get rid of our colocation facilities, which we have in Mississauga and in the states, we have that. So yes, we're migrating that. What are we, 40%?

Yes, about there.

We're about 40%, hopefully soon, 50%. But our goal is, over the next year, 2 at the most, to get 100% in the cloud, and we could actually shut down the co-location facility. And there's a lot of advantage hit. There's a little cost to it, but it eliminates all the support to the colocation facilities. The beauty is -- like Amazon Web Services is probably where we'll continue to stay in their cloud, allows you to rent extra servers during your peak period and then not have to pay for those servers in slow periods and so forth. So we do have this data migration plan that enables what everything Gerhard talked about. So that is our vision of our executive team.

So as a follow on that, how are you thinking about using -- obviously, the buzzword or the -- is it AI with all of the data...

We just had a consulting firm. Of course, they're wanting to show us why they can hold our hand on this journey. But Paul just presented to our Board of Directors yesterday the -- our vision with what we're currently at. So Paul, do you want to go ahead? We'll put you up.

Yes. I mean, I think it goes along with the same theme, getting the data together, getting it into the cloud systems. You're enabling those massive tech companies like Snowflake, like AWS, to build at such a rapid rate. They build the AI functions for you. They are innovating so quickly. And as long as you're getting your data into those platforms, you're opening up all of the doors in terms of technical innovation. And then AI is definitely one of them we're looking at.

Yes, the generative AI.

Yes, generative AI. Certainly, the hot topic. All of these providers are building those capabilities into their platforms and attracting your data to them.

And so I can give you a live -- what we're doing currently right now is we just implemented finally, which I know a lot of companies have had live chat for a while. But as an extension of our direct-to-consumer unit, you can now text us and have us respond. And the AI has now been picking up on all the common questions and the common answers. And before a human has to intervene, very often, the client will actually be able to get an answer like what are your store hours and so forth. They get that without even a human being involved. And we've recognized that's enabling us to reach more consumers. So we still do have our call center, and we still do have a live chat agent. And they've been enabled to actually turn that inquiry into a sale, say, "Oh, you want to get this euros. Or you're going to Costa Rica. I'll make sure it's ready. You're going to our new store in Buckhead, Atlanta, and we place what's called an online assist. And our online assist, which already does this, sends a confirmation. You have just ordered this. Your currency is ready for pickup. And then it turns into it. And Matt, who's running the consumer unit, was very proud to show our conversion rate is going up from just an inquiry to actually real sales and showed me the numbers. And so you will continue to see significant growth. That's an example of how we are selectively using AI to improve our service, and most importantly, make more money by giving that good service and keeping the customer sticky to us.

So the can you imagine if we can actually run this G&A, we can start predicting volumes, currencies, locations with all the data we have.

And then it taps into...

It's not lost on us. It's just you have to get your proper database in place, get Snowflake in place and then start. If the data isn't good, there's no use dreaming of intelligence. So we're building process.

Thank you. [indiscernible] How are you thinking about [indiscernible]? [Audio Gap]

Do that. However, now that we have clear dashboard, and we see the highest return on our capital -- the highest return on capital deployed is at our core business, and we do it very well, the banknotes. I would now just go back and say, "Oh, I would love to buy, let's say, a competitor and take them out and -- because that's our core business and it adds the efficiency of scale because -- now with our vaulting system and then the automation, which we haven't talked about, it's not AI, it's just machine processing improvements on ATM-type processing is enabling us to -- that we can literally double our cash volume without having to double the amount of tellers in the vault there because of the cash, what's called recycling machines where you can feed an incoming package that goes into the machine, sorts it and then takes -- that machine will ship -- put out the cash. And it's basically keeping us from needing to hire a whole bunch of tellers and our new deal with our overnight shippers, enabling us to have longer cutoffs. So we are ready -- we're poised to continue to capture market share in the banknote space both in the U.S. and Canada.

Maybe to complement that, if you think of payments, we also think of the OFAC strategy there. As Randolph has taken us through, if you look in Canada, that is a very interesting new line of business or a new stream of business that we're focusing on. And Chris Johnson and his team with Wade's leadership has also done some marvelous work in the U.S. on the payments growth that we see there. So there's definitely a new business line, and there's also continued growth in the U.S. So always split payments [ and to ] corporate payments upsell, see sort of OFAC strategy down north and then take the OFAC...

[indiscernible].

And I'm using to Canadian and then take the OFAC strategy and say how do you actually take that strategy and run it through both the U.S. and Canada.

Yes. So what you say is we're not -- we're focused on improving and continuing to grow that payment business, but we're not going to double down on trying to buy a bunch of payment companies, especially because they've been all way too expensive. We're focused on growing our core business because that is the highest return. It's what we do best. It's what I know the most -- and so that is our primary focus at CXI is to continue to dominate. My long-term goal is to be that the government comes in the U.S. and says you -- everybody, every airport, every bank exchanges cash with you, we got to break you up. You're a monopoly. So I know that's just beer talk. But if that answers the question of the vision is we see that the cash business is our highest return, and we are the strongest in that. So we should do what we do best. But it doesn't mean, okay, we're out of the payment. That's something that we have to say, how can we improve what we got. Good question, Hal.

Thank you for your...

No, my pleasure. Any other questions? Those are great questions. Yes, Steve?

Currently, you're in 41 states in the United States. And you did -- sorry, you just added, I think it was Alabama -- oh, sorry. I'm behind one. Wisconsin is the latest, okay. So have you applied for the other 8 licenses? Or are you just doing it sequentially?

Every state I require -- because we had a head of sales at one time that had us get a license in Colorado. Now we're using it. But literally 2 years into the license, the state came to do their audit, and we reported 0 activity. And then they said, "Well, we're going to take the license away, if you want to." So we have a business case for each state. It's driven by the online requests that we have to deny because we don't ship to Alaska, not yet. But we keep track of these type of requests. And then, of course, what agent locations. So it's no mystery that AAA has made a corporate decision to switch to us. If you understand the AAA structure, it's a bunch of small AAAs that make up the whole AAA. And so when that club, as they call it, is -- now says we want to start offering the Currency Exchange in Alaska, so -- but that's not the state that we have, but I'm using that as an example. We haven't gone there because until we have a business case -- because it's all about the return. I have been criticized about chasing every shiny object. So now -- and so now I'm very focused on returns from that shiny object before I go chase it. And so no, they're not all there. But there are, I think, 3 more states. So we will be at 50 before you know it. But it's case by case by case, and it's about the return on capital deployed.

And I just wanted to make a comment on the prior question. We see in our business that the response time to a customer inquiry is critical to converting that inquiry into a sale. So I really encourage you, like this chatbot and other things that you can do, whatever you can do to shorten that cycle down because consumers have a very short level of patience before they go on to the next provider.

Absolutely. So we were just discussing today in the Board of how we're going to improve the number of clicks on our online system because there's a cash distributor. But they're not a Currency Exchange. They sell cash [ for like park ], they get collectible currencies and stuff. And they do tremendous business. I was talking to them because I want to [ buy from it ]. It's quite -- very successful. And he would explain the reason he's so successful is, one, it's in the marketing. Got it. And then how quickly -- oh, it's hot, let's buy it. Boom. I mean, literally, like he could sell a transaction 3-, 4-clicks, whereas ours is like 10. And so we are going to be improving our user interface to make it faster, easier and more appealing. But yes, and that's just -- that's why we did the live chat. That's why our call center now is not just saying, "Yes, go to the mall, they've got it for you." We're letting -- "Oh, let me take your information. I'll make sure it's ready for you." That way, when they go to the mall. They come in pace. Here, I ordered it, I've already paid. And they're like, oh, Stacy has already boxed up. Well, here you go. It's fast and easy. And so we are focused on that, yes. It's a journey, not a destination. We got to continue to improve and improve and improve. And that's the message that we're trying to deliver, is that we are focused on our core strengths. Good question, Steve. Thank you. Any other questions? Yes, sir?

With this direct-to-consumer, U.S.A. has a lot of growth there in the last quarter. How do you think about within that market overall, the growth rate between online and in-person? And then in online specifically, what does that competitive landscape look like?

Online, some of the banks have online. And that is -- there's not a ton of people you can't -- like here in Canada, a couple of the banks do it as well. But in Canada, we don't do it. So in the U.S., our focus is that online -- and I was explaining about how they're -- we're tying into this hub that allows us to integrate with other online retailers. So we have our own plan in how to improve marketing and use -- improve the user interface and so forth for the marketing and growing that business. And on the retail stores, sure, there's not another Manhattan. But -- however, we recognized Manhattan is a great market for us, and we could consider another location. So we selectively grow their retail stores, ensure availability. That's another thing because if they come to your store and you don't have those [ tie-bots ], then you miss a transaction. But even are dealing with that, thanks for being here, we deliver it to your home, no cost. And we're going to waive that normal $5 fee because you didn't have it like you wanted. So we have a plan on how to continue to grow both our company stores. Again, agent stores, we now have a dedicated agent sales process where we're trying to go to national retailers like one of the big marts in the U.S. that has a whole money service business, that currently can do a Western Union or Moneygram payment and so forth. And we're trying to enable those national retailers that are open 7 days a week, that are on the U.S.-Canadian border or on the U.S.-Mexican border and enabling foreign exchange in new areas of agents. So every part of our consumer business from our own company stores to our agents and to our online, each of those business units have their own marketing plan and strategy to continue to improve.

The other thing we also do is we've determined there's a direct correlation, as you can imagine, between the marketing spend and a certain growth in revenue. So we've discussed with our Board, and we have tripled the marketing spend in that specific product of ours. With the new NetSuite that we have in place, and thanks to the good work of 1 of 2 teams that we have, we're also able to determine per currency what our margin and what our profit per currency is. So we can constantly look at those currencies that we trade, whether they're exotics or travel currencies, and determine whether we're still relevant, we still priced according to the rest of the market and then make the necessary adjustments.

Or as we saw on currency, every other competitor was 4% higher. So we saw an opportunity to raise our margin without -- while still being better than the competition, but we could get more margin. And so that's that clearer dashboard that our management team has. Did that answer the question about the consumer study?

Just one follow-up.

Sure. Keep going.

Is this a market that's in the process of moving from in-person to online? Did that happen 10, 20 years ago? Did the shipping thing was still...

So you would be surprised that the online business has been growing year after year. However, the in-person business is growing, too. So we feel we're capturing market share from going to your like sleepy bag or a lot of -- like for Americas going outbound. They just -- they take dollars. Dollars are good around the world. And we're educating that, no, it's better to get off the plane and have your colones in Costa Rica. And sure, they will take your dollars, but then you get hosed because you don't know what the h*** the exchange rate is over there. And so we think both of those businesses will continue to grow. And while -- since I've been in this business, I've been doing currency exchange now for over 30 years. I've been hearing the credit cards are going to put you out of the business. And the fact is, you know what, just like paper was supposed to be gone and there's still paper around and -- no, it's not cash is -- I know the old saying is cash is king. Our new marketing theme we might roll out called cash is queen because the Queen is on all the main currencies we exchange. And so I don't see the cash business declining. But it does go up in waves based on tourism, inflation, all the factors that make the good years versus the bad years. Does that answer the question?

Yes.

Great. These are great questions. Thank you. Any others? Well, I think that concludes our presentation. Are we doing any social here? Or is it...

Yes. It's in the next room.

Okay. So there's some snacks and some beer and stuff and sodas over there. So you're welcome to socialize. And then at 5:30 some of us are going in our Board. But please, the Board's here, they're going to stay for a little while. I know most -- some of the Board won't be going to our thing, but I'm having another social, our social right here in the building for our executive team to hang out with -- and some of our shareholders are coming as well. So thank you very much for your attendance, your support of CXI. And please join me with a -- for a beer or glass of wine.