International Money Express, Inc. (IMXI) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Rayna Kumar. I lead payment processors and IT services equity research here at UBS. I am joined by CFO of International Money Express, Andras Bende. Thanks for joining us today.

Thank you.

So to start off the conversation, Andres, can you spend a few minutes just talking about what makes Intermex special and how you differentiate among competitors?

Sure, sure. A quick background on the company. I'll just rewind through time. Started in the '90, small private company, small opportunities to disintermediate bank transfers primarily to Colombia. So that's what the business concept came from and then quickly grew to start to serve more and more of Latin America over time. I think historically, it was -- and also ran with a model of as many retailers as possible sending to Latin America as what the company wanted. And really, that strategy changed in about 2009 under a change in leadership to be a very focused strategy, which is one of the differentiators now. So not as much focused on ubiquity, not as much focused on being as many retail transmitters as possible and focused on ones that were efficient and had high wire sense, particularly to Mexico and Guatemala, which are 2 of the most profitable channels coming from the U.S. So that was the change in focus in 2009. Went from 4,000 retailers down to 2,000, much more profitable retailers and started growing from that base ever since. The company went public in 2018. And that growth of that agent base has been -- and focused on productivity versus ubiquity is a big differentiator for us, focus on the most profitable countries outbound from the U.S. being Mexico and Guatemala has been a big differentiator for us. And now we're somewhere to -- we don't disclose, but somewhere between 5,000 and 10,000 retailers. Aside from that focus on productivity and profitability, we very much believe that the model that's going to win in the future is going to be one that's multichannel, omnichannel. So we have the ability today to send a wire, however, an individual will choose. If they want to go to a retailer and send a wire in cash to Mexico or anywhere in Latin America, they can do that. They can do it with a credit card or a debit card at a retailer. They can do it via the phone, via the website or via the phone and send to ATMs, mobile wallets, directly to bank accounts, cash over the counter. So every way that customers want to send, we want to be able to accommodate that. I think we think online is a really important part of the story in the future. However, retail, particularly in the segment, that the corridors that we serve in Latin America, is very, very important and very profitable and has a really -- I don't want us the word tail because that's signing the right word. It's going to be around for a very, very long time. And so we want to play in all channels. And when it makes sense at some point to allocate even more capital to the digital capture side, we'll have all the indicators to let us know when we need to do that. And in the meantime, we're just going to continue to offer every way to send money that folks want it work. We're about a 21% share to Latin America, in particular, the 4 biggest countries, Mexico, Guatemala, Salvador and Honduras, but we send really to all of Latin America. And those big 4 that I mentioned are about 75% all remains is still Latin America. So it's key to win in those, and that's what we're doing.

Great. And on that point, how much of your business is online versus brick-and-mortar? And maybe if you can give us an idea of the funding mix, how much is the count versus credit card, debit and cash to the extent...

Yes, just in terms of the -- there's different definitions of the industry in the history of what's online. I think many of our competitors define it as one point of the transaction is cashless. So for instance, whether it's digital capture on your phone or direct deposit into a bank account on the other side, we'll define that as digital. I think that maybe the one that's the most interest is what the digital sending side is. Because if you encountered all of those for us, if you say digital send, captured directly in bank accounts, mobile wallets, whatever may be sent with credit card, all of that's in in 23-plus percent of our transaction. But if you just talk about the digital capture, which I think is a little bit more interest, we're in the single digits, growing very fast. So last quarter, we were up over 70% year-over-year in transactions, that continues to grow. We're going to grow it even more. But it's still a relatively small contributor to our business overall, but retail engine that we've built which is very profitable, continues to grow and grow.

Great. If anyone has any questions for Andras, feel free to type it into the chat, and I will be happy to read those questions out. Otherwise, I'll continue to go on with my question list. So Andras, how many agent locations do you have now? And over time, where do you think that could go? And does that target include expanding outside of Latin America?

Yes. I mentioned before, we're between 5,000 and 10,000 agents. We don't give the specific number for competitive reasons. But as of the third quarter, we built that base of about 13% year-over-year. So it's growing quite significantly. And I think the biggest opportunity for us -- we'll talk more about other geography in a moment. But I think the biggest single organic opportunity for us is the Western United States, everything to the left of the Mississippi, right? So you're Texas, you're California, you're Colorados, Arizonas, that's a huge opportunity for us. We're very well penetrated in the East. We don't talk about it specifically, but we have certain states where to Latin America, we're 30-plus percent of the market share. And now that's kind of an exception in certain states. But if you compare the East on aggregate to the West or to the other way around. If we were able to penetrate the West as well as we've penetrate the East, it's no problem for us to double the size of the company. So historically, you've grown up in the Southeast of the U.S. and grown in the East. If we put that same attention and focus on the West, it's a tremendous opportunity for us. And we've expanded our front-end sales force the ones are actually out and selling by probably about 15-plus percent recently, just to focus on the West and upgrade our leadership out there. The same solution set to our agents works the formula is the same. We just needed to dedicate the attention and focus of people. And we've hired kind of above our complement that we plan to hire this year because we had some really nice tailwinds to bring on board -- were really stacked sales force to focus on the part of the country that will make a huge difference for us. Now make no mistake, California is our biggest state. We have a lot of penetration out there. We have a lot of presence out there already. But if you compare it to their success that we've had in the East, which have a lot of room that we can grow.

It makes a lot of sense. So the macroeconomic backdrop, a lot of things going on. We have rising inflation. We have a new COVID variant. We have supply chain issues. If you could take those 3 and tell us how they impact to your business, that would be really helpful?

Sure. I'll summarize first the economic backdrop for the company, at a summary level, is really, really, really strong. I think in the second quarter of 2020 when the shutdown is hit, which is really the only quarter that we really felt the pinch from it, we are still able to grow revenue and we're still able to grow EBITDA year-over-year. And then in the third quarter, we were almost out of it completely. In the fourth quarter, you've even noticed the difference. I think what -- if you think about where our primary consumer works that is -- they're heavily represented in agriculture, which, obviously, a central business always really remains pretty robust. Construction, the company does really well when housing starts and construction, there's a lot of activity on that front and that has continued to expand dramatically. And the services side, even though we'll put a little less represented there. But even the services like you could think of hospitality, that took some impact in 2020, it's a very nimble workforce that our consumers of ours, and we're able to kind of find other employment in the services or move to other industries and continue to be employed. So that general robust economy in the U.S. and the U.S. being able to stimulate its economy, coupled with the fact that Latin America was kind of asymmetric we hit by COVID. There's a lot that's been written about the economic challenges back home for many of these workers were significant. So we're proud to sit in a spot where workers who work in a support, loved ones and families had the means to share with their families. And we sat in the middle and at the same time, benefited from being able to serve that need. So the backdrop for us has been really strong. The other one that I mentioned is you talked about inflation and supply chain, where I don't think we're as much affected. Sure, from an inflation perspective, rising wages, we see a little -- we see more in kind of our lower comp employees. So workers that are in our warehouse that are kind of sending digital equipment to and from agents. You've had to kind of take some additional salaries there, so we could compete with other lower-paying opportunities. However, net-net, I think we're benefiting tremendously because wages out there, particularly at the level of consumer that we serve are all rising, whether they're workers that are documented or undocumented and I think that, that's something that's very sustainable, right? So as those rise and more of the help wanted signs that you see that are out there cause wages to rise and work opportunistic to be out there, that kind of plays right into the hands of the consumers that we serve. And so net-net, I think it's still -- it's very positive for us. And I think that will endure long beyond any possible benefit that we would have seen from stimulus in past periods.

How about, I guess, have the other side of inflation, just more inflation dollar weakens, does that impact really the sense to Latin America and other countries for you?

Yes. Well, I mean, more inflation means higher rates, right? So ultimately means higher rates here. So what typically happens then as the dollar strengthens versus, let's just say, the pace of, because that's our single biggest country in Mexico. When the dollar strengthens, more of our consumers send more, right, because their dollar here is worth more in Mexico than it was 3 months ago, for instance. So that's something that I think -- aside from that general need of families that I mentioned before, that weakening of the peso or strengthening of the dollar in relation to those 2 currencies has stimulated workers to send more when they send. And the larger amounts they send, the more that we're able to capitalize on the spread and FX when we kind of sell the FX to the consumers in the end versus what we purchased the peso.

Got it. That makes sense. So the remittance market is becoming more and more competitive. So you have competition from, I would say, 3 large brick and cash-to-cash when you transfer firms. You also have new digital entrants. And what could you call out on your technology that really gives you a competitive advantage over some of this aggressive competition?

Yes. Well, I mean if you're speaking, there's -- I mean let me talk about more broadly competitively how we compete versus just the technology, which is a point of it, an important point of it. But let me just talk about like this is -- for example, how we grow, when we go into -- we look at the ZIP codes that have a high percentage of foreign bonds and where our company is underrepresented, okay? And then we'll actually go out there, sales force boots the ground, find out where wires are being, where they're being sent? What are the retailers that are in the neighborhoods where our consumers work and live and where are the wires? And what we'll do is we'll find an agent that we think will make sense potentially as an agent for us. And we'll sit and ask them, we know you do a lot of wires, tell us a little bit about your pain points? And inevitably, we hear things like, oh, after work, I have to drive 10 miles to those certain town to deposit in the bank. And say, okay, we have banking relationships that with Wells Fargo, with U.S. Bank, with Bank of America. In fact, there's one write-down on the corner, we can assist in opening a join-owned account with you all, and that -- we could make that it should go away for you. What else is the pain point? We hear the speed of the competition of technology is okay and sometimes I have issues with their technology and we'll say, well, our -- you can send a wire with us in about 20 seconds, if you use the loyalty card about 15 seconds. It's very simple, easy-to-use interface. And in addition, if -- do you have other problems in your technology? Yes, we have problems, it's down every now and then so we have a -- you're going to be able to call our customer service group and catch us with a real live person in technology in 5 to 10 seconds, but you have a general issue with the wire about 5 seconds. And we'll ask retailers that you ever get caught with wires that get hung up or they don't arrive in time, the agents actually get pulled into solving these problems for the customers. So the service element is another one, which is a really big differentiator for us. Because we don't believe it's a commodity. We don't believe that consumers are not price sensitive at all, but folks are sending it to -- for rent. They're sending it for medicine or for groceries, they want to make sure that it send it with someone who can get it there. And if there's any issue with getting there that they're going to get a live person to talk through and work through the issue. So those are the things that, at a retail level, I think, really differentiate us for the retail partners who are tremendously important to us. And for the individual senders, obviously, the -- sorry, another one what I mentioned with the retailers, that speed of technology of 20 to 15 seconds that doesn't sound like -- it doesn't sound like a long period of time or it doesn't sound like it would make that much of a difference versus somebody else sending it. But when you have a -- when you have a store at the end of the day, that's lined up 10 people deep doing things other than just sending wires, you don't want to purchase grocery through the weekend or whatever it means an extra couple of seconds makes a big difference to retailer. But anyway, that's from the -- how we differentiate with the retailer, how we differentiate with the consumer, obviously, the speed of technology and the reliability and the service elements are something that's really, really big to us. And we want to be known as if you need to send a wire and it needs to get there, you're going to want to use Intermex. You're going to pay a little bit more, we don't want to lead with price, but we're okay with that.

Got it. That makes a lot of sense. So just -- this time point of pricing, on cross-border pricing, any changes during the holiday season that you've made or you've seen competitors do? And maybe if you can give us an early outlook of how you think cross-border pricing looks for -- into 2022?

When you say cross-border pricing, help me a little bit with that. You just mean that the general price of the wire?

Yes. like just overall pricing. I know you have -- of course, you have a number of cross-border corridors, but overall pricing down, neutral up, how would you characterize it now and, I guess, into next year?

Yes. I think we've seen -- there's 2 elements of -- again, we'll talk about Mexico is the biggest corridor, but 2 elements of the pricing, which are key. One is, let's say if somebody is going to send a wire at retail. It's going to cost them $10 from a -- on an average send, let's say, average spend is about $400, won't use $400 from a simple example. They're going to spend a fee of $10, and that's how constant for pretty much ages. Where you see some price for us, it's held constant for a long time. We haven't seen any pressure on that and half of that fee we share with the retailer. Where you see some differentiation as what we're charging from an FX perspective. On average to Mexico, we're making around 60 basis points spread on the principal that we're sending based on what we've purchased the peso for versus what we're selling at. And that's where sometimes we'll see a little bit of competitive pressure. I mean, there are other players in there that in the industry who want to lead with price. And we don't, but we can't be too far from the competition. So sometimes you see that 60 flex down a little bit. And we saw that a little bit in the third quarter. But I think when we -- so you could see our FX revenues as a percentage of our total revenues went down a little bit versus previous quarters. But I think when we studied it, and I think we understood that there's probably a lot more in our control than what we did control in the third quarter. So we feel pretty good about that holding up well. I think over time, the trend has been a bit of attrition on the FX line. But again, not anything that we don't think we can stay competitive and make a lot of money still do it.

Got it. And just on contract renewals with your agents, are you seeing any -- are you seeing any pressure there out of pricing standpoint?

No, because we -- when we're looking at potential retailers, like we really spent a lot of time with the retailers. We feel that our service is going to -- our service and our holistic offering is going to resonate. And if a retailer is really in it for as many wires as they can send as possible and getting as higher percentage of the fee as possible. Remember, I said we -- that $10 fee that about half of it goes to retailer. If a retailer is overly focused on, I want -- I don't want $5, I want $7, that's just not -- it's not what we -- that's not a retail that we'll pursue. So we've got our retailers very, very carefully. And we're engaged with ones that want to be with us in the long run and share in the sense of value of the overall proposition, including customer service, speed of technology, et cetera.

Got it. So...

We don't have any appetite to play. We don't have an appetite to start the race to the bottom. I mean a lot of those that you mentioned, who will share more of the fee or for lower FX, there's a little bit of a spiral when you get into, what we call, the discounting world, and we're just going to find retailers. We've had no problem finding with retailers that line up with our values. I mean being able to grow about 13% year-over-year in the third quarter, proves that out. So we're just going to be very careful in how we select them.

Got it. So on your retail strategy, I've heard you speak about this in the past about going after ZIP codes that are underserved by Intermex and by your competitors. And maybe if you can expand a little bit about that strategy, how it's going and what kinds of returns are you seeing by expanding your retailer presence into some of these underserved ZIP codes?

Yes. It's going very well, what's built the company, hence the reason we had 26% revenues year-over-year. It's that same strategy has proven very effective. We don't -- When we talk about underserved ZIP codes, we really talked about underserved in reference to ourselves, not as much where are the competitors not and where do we need to be, not as much of our focus. Like we literally look for where the competition is, and then we look to go take share because we think we can offer a better product and a better service, and that's what we've been successful doing. So when we talk about being underrepresented, it's underrepresented as Intermex, not underrepresented in terms of people transferring, right? And we also think part of the success is, I think some of our competitors will speak at great length, have lost a bit of the focus of -- are they all digital and all in on digital only or how much do they want to be in retail. And that -- we think there's a bit of that lack of focus in some of our competitors, which is just fine with us. I mean it's going to be able to continue to capture retail. I mean if you think about it. Once we take on a retailer, they're spending about 125 wires a month, and on average, they'll ramp up to 400 wires a month, but they start at 125. Our investment all-in, technology, letting the retailer from a compliance standpoint, helping set up bank accounts, all of that is really not much more between $2,000 and $3,000. So that payback once you're at $125 a month -- 125 wires a month at about a $5 margin to Mexico that -- it pays itself back very, very quickly. So being in the retail space is a really good spot to be in and the profits that we're generating from the retail space are -- and the amount of cash that we're generating is going to allow us to really play in any channel. It's going to allow us to continue to invest in digital. We're going to have a great app that's going to be out in January. We think it's going to be the best in the industry. And once that's out there, we're going to have -- we're going to be a great capital position to invest in the marketing from that standpoint and pull more users going the digital side. So that's where we talk about omnichannel is for us, no doubt, the way to play forward. So we're going to watch how our consumers evolve, and we're going to allocate capital where it's going to best interest to shareholders.

Maybe talk a little bit about the time line on your digital strategy? So when your app is released, is it going to be for all of the markets that you currently serve? Or is it -- are you going to roll out different corridors slowly? And how is that pricing going to be different if it is going to be different versus at your retail locations?

It will go to all of the markets that we currently serve. And from a pricing standpoint, we think there's still a bit of industry discovery on the pricing side in the digital front end. I think the tricky thing about the digital front end is the acquisition cost of a customer right now. Certainly, to our markets is probably between $70 and $100 to actually bring someone through to down of the app and start transacting. If your margin on those -- on that customer is about $4 a wire and sending 8 wires a year, and you really need to be sure that you've -- that customer has locked-in and that's a long-term customer, that's going to pay back that investment that you made to bring them through. And that's why we're very careful with how much we'll be investing in that channel. I think we'll make sure that we have a presence there. We're making sure we have a great app there. And we'll make sure we're investing to bring folks through to know the app and use the app and realize that it's one of the best-in-class. But if it's still -- with those economics, if it's costing you $70 or $100 to bring a customer through it. What it probably tells you that the broader customer base is probably going to take some time in this market to warm the digital. And so being early or too early or too big early is something that we don't want to be. And you mentioned on the pricing side, there's a little bit of on the digital. So I think a bit of pricing discovery still. I think part of it driven by the uncertainty around the customer acquisition cost. But the economics of it for us is probably -- again, I'll keep using the Mexico example is probably a little less than a retail wire. So instead of around $5 a transaction, gross margin for us you're probably going to see something around $4-ish. But again, I think the industry is still a little bit flexing on that. So that in a month or 2, that could look a little bit different. I think we think it's an important part of our future, and we're going to be there and we're going to invest in it. but I think it's equally as important to be everywhere that your customers want to send. And it's not expensive for us to be everywhere that our customers want to send because we've got partners.

Got it. So the shifting focus to the payout side of your business. So you have several options today for consumer migrating from cash to mobile wallets. How do you view this side of the business evolving over time as more consumers want to get pay out, maybe not from cash, but on their mobile wallets?

Yes. I mean we're seeing that part of our business grow. I think maybe we're seeing 20 -- around 20-ish percent going direct-to-bank accounts for mobile wallets or even to ATMs, which is not cashless, but digitally, it got there. It's not going to involve a person counting out cash. But we're seeing that more evolve south of the border. And that's actually -- it's a good thing for us. The -- it's -- every time that we have to pay out with one of our paid partners, banks or retailers in the Latin America, there's a fee. There's a payer fee, which kind of works into the overall economics of the transaction. If it's going directly to a bank account, that fee is usually much, much lower from one of our paid partners because it's much -- they're not handling cash, counting on cash, whatever it means. So that's actually really a nice little tailwind to the profitability of the transactions. Usually, if it's paid out in cash over-the-counter to Mexico, it's $2.25 or $2.30 of fee that will pay to the payer, if it's -- if it's direct to a bank account, it is a fraction of that.

Got it. That makes sense. So yes, so you're not paying an agent fee if the acquisition is like account to account. So on a gross margin basis, I would assume that it's a higher margin than for a cash transaction. But however on like the EBITDA line, is it also more profitable on EBIT or EBITDA, a digital transaction?

If you're talking digital -- on digital both ends like digital send and a digital receive, it's probably a little closer to the kind of pure retail profitability of $5 a transaction. If it's digital send to a cash of counter received, it's going to come down a little more because you're going to have -- you're going to be paying for that service on the other end. But what's the kind of unique discovery to a lot of folks who start to study our industry is many of the all-digital players like the Zooms or the remittance are using the same payer networks that we are, for instance, in Mexico. Many of them are sending from the digital, but actually paying out over the counter at a retailer like Elektra in Mexico, for instance. Now many do go direct to bank accounts, too, but that's -- the amount of purely cashless on one end to purely cash is on the other end is not as big as you might think, because I think there's a conception that these all digital players are always paying into mobile wallets or bank accounts, and it's not always the case.

Okay. So we have a question coming in from the audience. Can you elaborate on what drives the cost of acquisition for those digital customers? Is that around doing background checks?

No, that's not the main part of the cost. The main part of the cost is the marketing, right, to get the presence on Facebook or a Latin American-specific site to get people interested to click and ultimately download the app and go and send the wires. If you think about your average -- your total spend versus how many folks on the end, you get pulled through who actually do a transaction, right? So just think about it as marketing spend. It's your total marketing spend to get out there to find and identify customers and bring them through, the whole cost of screening of customers is quite low. I mean you have your automated OFAC checks and background checks to make sure we're not dealing with the bad actor, but those costs comparatively are much lower than just kind of getting the Intermex name out in avenues that consumers may click all the way through and send a wire.

Great. Okay. Another one coming from the audience. What are your top 3 areas of investment in 2022?

Sure. I think the -- a really large one, as I mentioned to you, was our expansion in the West. We're doing from a sales force in the West, a presence in the West. That's going to be a lot of what we're focused on next year. I think we've got a -- on the digital side, I think we will invest -- we'll finish with the app in January, and we will invest more in digital marketing than we have, right? We'll invest millions in digital marketing to get out there and pull those customers through at that 70% to 100% -- $70 to $100 a customer, which we feel we'll be able to work that down over time as we have more and more presence. So that would be 2. And I think the -- the third one I said -- I haven't talked too much about is, we have a card product right now, which is a really neat complement to what we do, where we have many, many employers of our consumers out there will go and pay their workforce in cheques. And we see many of these cheques actually get endorsed through our payment network back to us by our agents, but we actually can go to these employers and say, "Hey, look, instead of paying your employees in cheques, which is kind of clumsy cumbersome, they might want to get paid that way, we have a payroll part." And payroll card will automatically allow them to be banked, it's safer for them as many of them otherwise would be carrying cash. And also, we know many of these consumers send money and send funds back home. It's an Intermex branded card, we can actually set up direct transactions so that the part of their pay can go and be remitted back to home country. So it's a really neat product. So that payroll card, we're building up a significant sales force to go out and sell that. And also, we have a general purpose reloadable card. So a card that you'd see -- we'll be able to see it many, many of our retailers and then the folks who come in and deal a lot in cash, want to go and get a card, a card that's reloadable, we'll be out there and we'll be selling that card within many of our existing retailers and also retailers outside the Intermex network. So the West investment in digital and the card are 3 big things that are our radar screen next year.

How large are the card opportunities? Is the revenue model largely collecting interchange?

That interchange in fees. So combination of both of this loading fee, transaction fees. If you can get the penetration of cards in the system, and we're confident that we can, it's a really nice complement and a nice profitable segment of our business to have.

Okay. Here's another one from the audience. Do you plan on playing in the domestic money transfer landscape?

No, I don't, we wouldn't say that's so much in our plans. So sending one spot to another spot within the U.S., I don't think we're that keen on the economics of it. Never say never if we didn't see a real kind of an opportunity that we couldn't turn down. But right now, that's not in our plans.

Got it. Anything on the regulation front in the U.S. or globally that we should be aware of that could potentially impact your business, positive or negative?

No. I mean, I think we always have our eye on evolving compliance legislation because we just can't have a miss in that space. It's part of BSA and AML inside out experts part of our DNA. It's part of the reason we have so many banking relationships that we do, that not all the players out there have. It's a differentiator for us, our history in compliance and having having excelled in that area. So we're always paying attention to what could evolve on that front, but there's nothing that kind of -- that we see that kind of gives us pause on that front. We always get asked questions about what if immigration legislation changes? And you'd be surprised how that's really not -- it's really not impactful for us. I think the typical profile of a client who is a consumer for us is somebody who's come over to the U.S. to work for a period of years, send money home and then go back to a better economic situation back home after X number of years, however, they choose to do that. So our consumer is not somebody who's typically looking to be permanent here in the U.S., certainly not folks who are kind of coming to the border with families. So it's -- those immigration laws don't -- it's typically somebody who wants to work in the U.S., wants to earn more in the U.S. and go back to a better economic opportunity back home. So surprisingly, the immigration laws were a little bit more insulated than I think people would think. Of course, if they loosen up, it probably only helps us. But it's not something that we hold our breath on at all.

Okay. And just to expand on that, how much does Intermex spend on compliance each year? And do you see actual compliance costs rising?

Yes. We actually -- it's not the top of investors' interest, but we've actually invested several more million in compliance this year than we ever had in the past. And that's without ever having had an issue. I think we just realized that growing at the rate at the pace that we're growing. We want to have our stuff up to speed. We want to have stronger leadership -- on the strongest leadership we can on the compliance front and also have better technology to make sure that we're weeding out anything that's that's moving to the system. So well and I could give you the total compliance cost, I will say it added several million of this year and doing that in an environment where we haven't had a miss. We're not responding to a crisis, we're doing to stay ahead because we know if we stay ahead and we remain without fault, it's a differentiator for us.

Can you talk about your capital allocation priorities and are there -- what types of assets are you most interested on an acquisition standpoint? How do valuations look to you from...

Sure. I think -- well, I'll just preface it with. We bring down about 55% -- 50%, 55% of our EBITDA actually would bring down to cash. So it's a really nice cash-generating business model. I think the best thing that we can do with that cash is put it back into the business to do things like I talked about. So grow in the West as a company, where our return on equity is 42% plus, right? So investing in ourselves as a business but not over extending ourselves is kind of paramount to what we do. But beyond that, what to do with capital beyond the core business? From an M&A standpoint, I think the opportunities that we like the most are the ones in our wheelhouse that we have really high confidence that we'll be able to create value for the shareholders. So for instance, a country within Latin America, which we already serve which were probably underpenetrated, right, like where we want to have more of a presence. There are some specialty players that go specifically to certain countries or go have more of a presence in certain countries. That's a great acquisition for us because we know exactly the space we're getting into. We know we'll be able to create shareholder value with it or going to other parts of Latin America from parts of the U.S. that we're that we're a little bit underpenetrated. So I kind of call those opportunity 1a and 1b, they're both great for us. After that, I think that there's a lot that we look at from the adjacency space whether adjacency space, particularly in financial services that could benefit from our customer base, could benefit from our distribution network of agents, could benefit from our technology. And that's kind of a big bucket, but we do spend quite some time looking there as well. And if it was the right set of synergies and we get comfortable that we could create shareholder value, we do something in that space. The only thing I would say is that we're not going to do it -- we're not going to overpay. We're not going to overlever. There's a lot of that going on right now. So the acquisition is it's a contact sport, and we're busy and continue to be active, but we're certainly going to be on the conservative side with capital and ensure that we're putting their space in a position that investors are going to benefit. Third thing is just the concept of returning capital to shareholders. We announced a buyback in the third quarter. It wasn't super active. I think our belief is that we can do both a meaningful acquisition and a meaningful buyback. But we want to just -- it's going to have to have a little patience with us, right? Because if you're active on the acquisition front, you want to make sure you don't use too much dry power. But I think our belief is in time we will be successful, be having significant M&A and also -- or meaningful M&A and also a meaningful buyback. Just we're going to have to prove it out.

Great. And we have another one from the audience. Do you foresee Intermex offering the capability to transfer crypto currency?

Yes. I think on crypto, they -- we're not -- we'll continue to study it. I think we have a little bit of a challenge to find a used case in the consumer base that we serve. It doesn't mean that we won't continue to pay attention and see if the landscape changes and move accordingly. But if you think about less than 50% of -- I keep using Mexico's example. It's our biggest market. So I'll just keep using it as an example for a moment. But we are everywhere in Latin America. The -- less than 50% of the of the population in Mexico is banked. Those who come over to the U.S. to work are much less likely to come from that banked portion of the population. Also, as I mentioned, the profile is typically several years working here to go back to the U.S. So even if they had all the documents to open a bank account, there's not that sense of permanence here. In addition, banks aren't offering great deals to folks who are depositing $700 on a Friday and drop down to nothing on the Thursday of the next week. So not a great -- because there's a lot that already inhibits our customer base from being fully banked within this country. To go from not banked to banked to crypto is -- you're moving several levels there. And I think that we're still quite a ways away from that being embraced. We're in a spot where many of -- a great deal of our clients not embracing the banks to get them to go to the next step to embrace crypto is a pretty big leap, right? I've been a CFO for a bank, I mean bank is in my whole life. I have healthy skepticism crypto. It doesn't mean I'm not paying attention. It doesn't mean I'm not going to see if it can be an advantage to the company. But just psychologically, I think there are more barriers there than maybe given credit for.

Great. Well, Andras, 1:45 p.m. Eastern time here, so we'll end here. Thank you so much for joining me today. And everyone else, have a great day.

Thanks, everybody.