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What changed in International Money Express, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of International Money Express, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+360 added−360 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-15)

Top changes in International Money Express, Inc.'s 2023 10-K

360 paragraphs added · 360 removed · 286 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

75 edited+11 added−14 removed69 unchanged
Biggest changeOur competitors include a small number of large money remittance providers, financial institutions and banks as well as a large number of small niche money remittance service providers that serve select regions. We compete with larger companies, such as The Western Union Company (“Western Union”), MoneyGram International, Inc. (“MoneyGram”), Remitly Global, Inc. (“Remitly”) and Euronet Worldwide Inc.
Biggest changeWe compete with larger companies, such as The Western Union Company (“Western Union”), MoneyGram International, Inc. (“MoneyGram”), Remitly Global, Inc. (“Remitly”) and Euronet Worldwide Inc. (“Euronet”), and a number of other smaller competitors. We generally compete for money remittance agents on the basis of value, service, quality, technical and operational differences, commission, and marketing efforts.
Our remittances to LAC countries are primarily generated in the United States by consumers with roots in Latin American and Caribbean countries, many of whom do not have an existing relationship with a traditional full-service financial institution capable of providing the services we offer. We provide these consumers with flexibility and convenience to help them meet their financial needs.
Our remittances to LAC countries are primarily generated in the United States by consumers with roots in Latin American and Caribbean countries, many of whom do not have an existing relationship with a traditional full-service financial institution capable of providing the services we offer. We provide these consumers with flexibility and convenience to help them meet their financial needs.
We believe many consumers who use our services may have access to traditional banking services, but prefer to use our services based on reliability, convenience and value.
We believe many consumers who use our services may have access to traditional banking services, but prefer to use our services based on reliability, convenience and value.
We use various trademarks and service marks in our business, including, but not limited, to Intermex, International Money Express, IntermexDirect, CheckDirect, La Nacional and Pago Express, some of which are registered in the United States and other countries. In addition, we rely on trade secret protection to protect certain proprietary rights in our information technology.
We use various trademarks and service marks in our business, including, but not limited, to Intermex, International Money Express, IntermexDirect, CheckDirect, La Nacional and Pago Express, some of which are registered in the United States and other countries. In addition, we rely on trade secret protection to protect certain proprietary rights in our information technology, trademarks, and licenses.
The countries in which we operate may require one or more of the following: • reporting of large cash transactions and suspicious activity; 6 Index • transaction screening against government watch-lists, including the sanctions list maintained by OFAC; • prohibition of transactions in, to or from certain countries, governments, individuals and entities; • limitations on amounts that may be transferred by a consumer or from a jurisdiction at any one time or over specified periods of time, which require aggregation over multiple transactions; • consumer information gathering and reporting requirements; • consumer disclosure requirements, including language requirements and foreign currency restrictions; • notification requirements as to the identity of contracting agents, governmental approval of contracting agents or requirements and limitations on contract terms with our agents; and • registration or licensing of us or our agents with a state or federal agency in the United States or with the central bank or other proper authority in a foreign country.
The countries in which we operate may require one or more of the following: • reporting of large cash transactions and suspicious activity; • transaction screening against government watch-lists, including the sanctions list maintained by OFAC; • prohibition of transactions in, to or from certain countries, governments, individuals and entities; • limitations on amounts that may be transferred by a consumer or from a jurisdiction at any one time or over specified periods of time, which require aggregation over multiple transactions; • consumer information gathering and reporting requirements; • consumer disclosure requirements, including language requirements and foreign currency restrictions; • notification requirements as to the identity of contracting agents, governmental approval of contracting agents or requirements and limitations on contract terms with our agents; and • registration or licensing of us or our agents with a state or federal agency in the United States or with the central bank or other proper authority in a foreign country.
We provide our money remittance services utilizing our internally developed proprietary software systems, which we believe enhance the productivity of our network of sending agents, enabling them to quickly, reliably and cost-effectively process remittance transactions. Our proprietary software systems were designed to incorporate real-time compliance functionality, which improves our regulatory compliance and helps to minimize fraud.
We provide our money remittance services utilizing our internally developed proprietary software systems and applications, which we believe enhance the productivity of our network of sending agents, enabling them to quickly, reliably and cost-effectively process remittance transactions. Our proprietary software systems were designed to incorporate real-time compliance functionality, which improves our regulatory compliance and helps to minimize fraud.
Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”), the Consumer Financial Protection Bureau (“CFPB”), the Department of Banking and Finance of the State of Florida and the equivalent regulatory authorities in all of the other states, the District of Columbia and the Commonwealth of Puerto Rico, in which we hold an operating money transmission license.
Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”), the Consumer Financial Protection Bureau (“CFPB”), the Department of Banking and Finance of the State of Florida and the equivalent regulatory authorities in all of the states, the District of Columbia and the Commonwealth of Puerto Rico, in which we hold an operating money transmission license.
We are also subject to a wide range of regulations in the United States and other countries, including: minimum capital or capital adequacy requirements; anti-money laundering laws and regulations; financial services regulations; currency control regulations; anti-bribery laws; money transfer and payment instrument licensing laws; escheatment laws; privacy, data protection and information security laws, such as the Gramm-Leach-Bliley Act (“GLBA”); and consumer disclosure and consumer protection laws, such as the California Consumer Privacy Act (“CCPA”).
We are also subject to a wide range of regulations in the United States and other countries in which we operate, including: minimum capital or capital adequacy requirements; anti-money laundering laws and regulations; financial services regulations; currency control regulations; anti-bribery laws; money transfer and payment instrument licensing laws; escheatment laws; privacy, data protection and information security laws, such as the Gramm-Leach-Bliley Act (“GLBA”); and consumer disclosure and consumer protection laws, such as the California Consumer Privacy Act (“CCPA”).
We believe that there is significant room to grow our business in underserved geographic regions in the LAC corridor where there is demand from customers and agents for our value-added approach to money remittances. Specifically, we are targeting future growth opportunities via new corridors from the United States to other non-Spanish speaking regions, including the Caribbean and other continents.
We believe that there is significant room to grow our business in underserved geographic regions in the LAC corridor where there is demand from consumers and agents for our value-added approach to money remittances. Specifically, we are targeting future growth opportunities via new corridors from the United States to other non-Spanish speaking regions, including the Caribbean and other continents.
Lisy has more than 30 years 9 Index of experience in the retail financial services and electronic payment processing industry in various positions, including three years as the Chief Marketing and Sales Officer of Vigo Remittance Corp., a money transfer and bill payments service in the United States and internationally, and over seven years at Western Union in various sales, marketing and operational positions of increasing responsibility.
Lisy has more than 30 years of experience in the retail financial services and electronic payment processing industry in various positions, including three years as the Chief Marketing and Sales Officer of Vigo Remittance Corp., a money transfer and bill payments service in the United States and internationally, and over seven years at Western Union in various sales, marketing and operational positions of increasing responsibility.
We have developed a platform that has the capacity to handle traffic well in excess of the number of transactions we currently process. Our money remittance platform has proven reliable, with our 2022 downtime being less than 0.05%. • Highly selective sending agent recruitment process designed to identify productive long-term partners.
We have developed a platform that has the capacity to handle traffic well in excess of the number of transactions we currently process. Our money remittance platform has proven reliable, with our 2023 downtime being less than 0.05%. • Highly selective sending agent recruitment process designed to identify productive long-term partners.
In the United States, we are subject to various federal privacy laws, including the Gramm-Leach-Bliley Act, which requires that financial institutions provide consumers with privacy notices and have in place policies and procedures regarding the safeguarding of personal information. We are also subject to privacy and data breach laws of various states. 7 Index Consumer Protection .
In the United States, we are subject to various federal privacy laws, including the Gramm-Leach-Bliley Act, which requires that financial institutions provide consumers with privacy notices and have in place policies and procedures regarding the safeguarding of personal information. We are also subject to privacy and data breach laws of various states. Consumer Protection .
Anti-Money Laundering, Counter-Terrorism Financing and Sanctions Compliance Our money remittance services are subject to anti-money laundering laws and regulations of the United States, including the Bank Secrecy Act (“BSA”), as amended by the USA PATRIOT Act of 2001, as well as state laws and regulations and the anti-money laundering laws and regulations in many of the countries in which we operate.
Anti-Money Laundering, Counter-Terrorism Financing and Sanctions Compliance 7 Index Our money remittance services are subject to anti-money laundering laws and regulations of the United States, including the Bank Secrecy Act (“BSA”), as amended by the USA PATRIOT Act of 2001, as well as state laws and regulations and the anti-money laundering laws and regulations in many of the countries in which we operate.
We strategically target sending agents for our network only after a metric-based analysis of potential productivity and a thorough vetting process. In our sending agent selection process, we focus on geographic locations that we believe are likely to have high customer volume and demand for our services.
We strategically target sending agents for our network only after a metric-based analysis of potential productivity and a thorough vetting process. In our sending agent selection process, we focus on geographic locations that we believe are likely to have high customer volume and demand for our 3 Index services.
By closely monitoring individual sending agent performance and money remittance trends, we can offer our sending agents real-time technical support and marketing assistance to help increase their productivity and remittance volume. 2 Index • Strong relationships with major banks and financial institutions.
By closely monitoring individual sending agent performance and money remittance trends, we can offer our sending agents real-time technical support and marketing assistance to help increase their productivity and remittance volume. • Strong relationships with major banks and financial institutions.
We maintain strong relationships with a number of other national and regional banking and financial institutions in the United States, Canada and Latin America. For example, we have maintained a long-term relationship with Wells Fargo, Bank of America and US Bank, among others.
We maintain strong relationships with a number of other national and regional banking and financial institutions in the United States, Canada, Spain, Italy and Latin America. For example, we have maintained a long-term relationship with Wells Fargo, Bank of America and US Bank, among others.
Applicable statutory abandonment periods range from three to seven years. We have an ongoing program designed to comply with escheatment laws as they apply to our business. Data Privacy and Cybersecurity .
Applicable statutory abandonment periods range from three to seven years. We have an ongoing program designed to comply with escheatment laws as they apply to our business. 8 Index Data Privacy and Cybersecurity .
Our services are accessible in person through over 100,000 independent sending and paying agents and 117 Company-operated stores, as well as online and via Internet-enabled mobile devices.
Our services are accessible in person through over 100,000 independent sending and paying agents and 122 Company-operated stores, as well as online and via Internet-enabled mobile devices.
In addition, we have benefited from our long relationship with US Bank, which manages our main operating account, and from strong relationships with PNC Global Transfer, Wells Fargo, Bank of America and KeyBank as our primary banks for exchange rate management with respect to the foreign currencies.
In addition, we have benefited from our long relationship with US Bank, which manages our main operating account, and from strong relationships with PNC Global Transfer, Wells Fargo and Bank of America, which serve as our primary banks for exchange rate management with respect to the foreign currencies in which we transact.
Due to increasing regulatory scrutiny of banks and financial institutions, we believe that new banking relationships may be difficult to develop for new, start-up competitors in the industry, hence creating a barrier to entry to new competition and making our existing relationships a competitive advantage. • Powerful brand with strong consumer awareness and loyalty in the LAC corridor.
Due to increasing regulatory scrutiny of banks and financial institutions, we believe that new banking relationships may be difficult to develop for new, start-up competitors in the industry, hence creating a barrier to entry to new competition and making our existing relationships a competitive advantage. • Powerful brand with strong consumer awareness and loyalty in the corridors we operate.
Our incentives are primarily measurable and performance-based, and are designed to align compensation to our business strategy and goals. We have enhanced our onboarding process and plan to further enhance learning and development programs to drive quicker integration, development and higher productivity of new employees, as well as the ongoing development of team members to ensure robust recruitment and retention.
Our incentives are primarily measurable and performance-based, and are designed to align compensation to our business strategy and goals. We have enhanced our onboarding process and plan to further improve training and development programs to drive quicker integration, development and higher productivity of new employees, as well as the ongoing development of team members to ensure robust recruitment and retention.
In addition to our money remittance software, digital platform and mobile application, we continue to develop programs and defenses against cyber-attacks. We are fully aligned with the National Institute of Standards and Technology cybersecurity framework, which is a voluntary framework that most companies in the financial services industry follow.
In addition to our money remittance software, digital platforms and mobile applications, we continue to develop programs and defenses against cyber-attacks. We are fully aligned with the National Institute of Standards and Technology cybersecurity framework, which is a voluntary framework that most companies in the financial services industry follow.
Remittances paid in local currencies that are not pegged to the U.S. dollar can also generate revenue if we are successful in our daily management of currency exchange spreads.
Remittances paid in local currencies that are not pegged to the U.S. dollar, Canadian dollar or Euro can also generate revenue if we are successful in our daily management of currency exchange spreads.
We have developed a regulatory compliance department, under the direction of our Chief Compliance Officer, whose foremost responsibility is to monitor transactions, detect suspicious activity, maintain financial records and train our employees and agents. An independent third-party consulting firm periodically reviews our policies and procedures to ensure the efficacy of our anti-money laundering and regulatory compliance programs.
We have developed a regulatory compliance department, under the direction of our Chief Compliance Officer, whose foremost responsibility is to monitor transactions, detect suspicious activity, maintain financial records and train our employees and agents. Independent third-party consulting firms periodically review our policies and procedures to ensure the efficacy of our anti-money laundering and regulatory compliance programs.
A load balancing configuration between tier-1 datacenters, in addition to failover redundancy, provides uptime performance. Our technology platform has experienced limited downtime, with our 2022 downtime being less than 0.05%. Our Transaction Processing Engine (“TPE”) allows us to process money remittances reliably and quickly by leveraging a proprietary rules engine to apply granular-level product feature customization.
A load balancing configuration between tier-1 datacenters, in addition to failover redundancy, provides uptime performance. Our technology platforms have experienced limited downtime, with our 2023 downtime being less than 0.05%. Our Transaction Processing Engine (“TPE”) allows us to process money remittances reliably and quickly by leveraging a proprietary rules engine to apply granular-level product feature customization.
According to the latest available data published by the World Bank, the LAC corridor continues to be the most rapidly growing remittance corridor in the world. • Highly scalable, proprietary software platform.
According to the latest available data published by the World Bank, the LAC corridor continues to be one of the most rapidly growing remittance corridors in the world. • Highly scalable, proprietary software platform.
We utilize our proprietary technology to deliver convenient, reliable and value-added services to consumers through a broad network of sending and paying agents. The two largest remittance corridors we serve are United States to Mexico and United States to Guatemala.
We utilize our proprietary technology to deliver convenient, reliable and value-added services to consumers through a broad network of sending and paying agents. The three largest remittance corridors we serve are United States to Mexico, United States to Guatemala, and United States to the Dominican Republic.
We continually monitor fraud risk, perform credit reviews before adding agents to our network and conduct periodic credit risk analyses of agents and certain other parties that we transact with directly. For the fiscal year ended December 31, 2022, our provision for credit losses was equal to 0.5% of our total revenues.
We continually monitor fraud risk, perform credit reviews before adding agents to our network and conduct periodic credit risk analyses of agents and certain other parties that we transact with directly. For the year ended December 31, 2023, our provision for credit losses was equal to 0.8% of our total revenues.
We benefit from our strong and long-term relationships with a number of large banks and financial institutions. We maintain strong relationships with a number of other national and regional banking 4 Index and financial institutions in the United States, Canada and Latin America.
We benefit from our strong and long-term relationships with 5 Index a number of large banks and financial institutions. We maintain strong relationships with a number of other national and regional banking and financial institutions in the United States, Canada, Spain, Italy and Latin America.
This is based on the objectives of the business and how our chief operating decision maker, the CEO and President, monitors operating performance and allocates resources. Operations and Services Money remittance services to LAC countries, primarily Mexico and Guatemala, are the primary source of our revenue.
This is based on the objectives of the business and how our chief operating decision maker, the CEO and President, monitors operating performance and allocates resources. Operations and Services Money remittance services to LAC countries, primarily Mexico, Guatemala, El Salvador, Honduras and the Dominican Republic, are the primary source of our revenue.
Information Technology Currently, all of our money processing software is proprietary and has been developed primarily by our internal software development team. Our money processing software acts as a point of sale for our money remittance transactions and incorporates real-time compliance functionality, which improves our regulatory compliance and helps to minimize fraud.
Information Technology Currently, all of our money processing software used in the United States and Canada is proprietary and has been developed primarily by our internal software development team. Our money processing software acts as a point of sale for our money remittance transactions and incorporates real-time compliance functionality, which improves our regulatory compliance and helps to minimize fraud.
Our money remittance services enable consumers to send funds through our broad network of locations in the United States and Canada that are primarily operated by third-party businesses, as well as through our Company-operated stores located in the United States.
Our money remittance services enable consumers to send funds through our broad network of locations in the United States, Canada, Spain, Italy and Germany that are primarily operated by third-party businesses, as well as through our Company-operated stores, located in those jurisdictions.
In all of our independent sending agent locations the agent provides the physical infrastructure and staff required to complete the remittances, while we provide the central operating functions, such as transaction processing, settlement, marketing support, compliance training and support, and customer 5 Index relationship management. We also maintain 117 Company-operated stores in the United States.
In all of our independent sending agent 6 Index locations the agent provides the physical infrastructure and staff required to complete the remittances, while we provide the central operating functions, such as transaction processing, settlement, marketing support, compliance training and support, and customer relationship management. We also maintain 122 Company-operated stores in the United States, Canada, Spain, Italy and Germany.
Unlike many of our competitors, who we believe prioritize global reach over growth and profitability, we are focused on a few geographical regions in which there is a concentration of a significant portion of the world’s money remittance volume. We believe the LAC corridor provides an attractive operating environment with significant opportunity for future growth.
Unlike many of our competitors, who we believe prioritize global reach over growth and profitability, we are focused on certain geographical regions in which there is a concentration of a significant portion of the world’s money remittance volume. We believe the LAC, Africa and Asia corridors provide an attractive operating environment with significant opportunity for future growth.
We believe we are a leading money remittance provider from the United States to the LAC corridor, processing 21.0% of the aggregate volume of remittances to Mexico according to the latest available data published by the Central Bank of Mexico in 2022 and 29.3% of the aggregate volume of remittances to Guatemala according to the latest available data published by the Central Bank of Guatemala in 2022.
We believe we are a leading money remittance provider from the United States to the LAC corridor, processing 20.8% of the aggregate volume of remittances to Mexico according to the latest available data published by the Central Bank of Mexico in 2023 and 29.7% of the aggregate volume of remittances to Guatemala according to the latest available data published by the Central Bank of Guatemala in 2023.
Our Growth Strategy We believe we are well positioned to drive continued growth by executing on the following core strategies either organically or through acquisitions of other entities: • Expand our market share in our largest corridors . The two largest remittance corridors we serve are the United States to Mexico and United States to Guatemala.
Our Growth Strategy We believe we are well positioned to drive continued growth by executing on the following core strategies either organically or through acquisitions of other entities: • Expand our market share in our largest corridors .
Our money processing software is critical to our operations while our back-office software is critical for settling our transactions. Also, our money remittance platform enables consumers to send funds through the Internet via Intermexonline.com and on their Internet-enabled mobile devices and our enhanced digital mobile money remittance application provides consumers with safe, easy-to-use features for remitting funds.
Our money processing software is critical to our operations while our back-office software is critical for settling our transactions. Also, our money remittance platforms enable consumers to send funds through the Internet via Intermexonline.com, online.i-transfer.es and on consumers' Internet-enabled mobile devices and our enhanced digital mobile money remittance application provides consumers with safe, easy-to-use features for remitting funds.
Our current liquidity sources as well as our ability to generate free cash are mitigating factors in our liquidity management strategy. Our indebtedness bears interest at variable rates, which exposes us to interest rate risk as a result of fluctuations on market interest rate benchmarks.
Our current liquidity sources as well as our ability to generate free cash are mitigating factors in our liquidity management strategy. Our indebtedness bears interest at variable rates, which exposes us to interest rate risk as a result of fluctuations on market interest rate benchmarks. Seasonality 9 Index We do not experience meaningful seasonality in our business.
We value diversity and inclusion and strive to create a work environment where everyone feels valued and devoted to their work. As of December 31, 2022, 98.5% of our U.S. team members identified themselves as racially or ethnically diverse. Also, 63.9% of our U.S. team identified themselves as female.
We value diversity and inclusion and strive to create a work environment where everyone feels valued and devoted to their work. As of December 31, 2023, approximately 95% of our U.S. team members identified themselves as racially or ethnically diverse. Also, approximately 60% of our U.S. team identified themselves as female.
Our remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, are available in all 50 states in the U.S., Washington D.C., Puerto Rico and 13 provinces in Canada, where consumers can send money to beneficiaries in 16 LAC countries, eight countries in Africa and two countries in Asia.
Our remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, are available in all 50 states in the U.S., Washington D.C., Puerto Rico and 13 provinces in Canada, as well as in certain locations in Spain, Italy and Germany, where consumers can send money to beneficiaries in more than 60 countries in LAC, Africa and Asia.
Bende held several international Chief Financial Officer and Controller roles at GE Capital from 2005 to 2017. Mr. Bende is a graduate of GE’s Financial Management Program and the GE Corporate Audit Staff and holds a bachelor’s degree in financial management from Clemson University. Randall Nilsen has served as the Chief Revenue Officer of International Money Express, Inc. since 2018.
Bende held several international Chief Financial Officer and Controller roles at GE Capital from 2005 to 2017. Mr. Bende is a graduate of GE’s Financial Management Program and the GE Corporate Audit Staff and holds a bachelor’s degree in financial management from Clemson University. Joseph Aguilar joined International Money Express, Inc. in September 2019 as Chief Operating Officer.
Information about our Executive Officers Set forth below is certain information regarding the Company’s current executive officers as of March 6, 2023: Name Age Position Robert Lisy 65 Chief Executive Officer, President and Chairman of the Board of Directors Andras Bende 48 Chief Financial Officer Joseph Aguilar 61 President and General Manager - Latin America Randall Nilsen 60 Chief Revenue Officer Ernesto Luciano 49 General Counsel and Chief Legal Officer Christopher Hunt 47 Acting Chief Operating Officer Robert Lisy has served as a director of International Money Express, Inc. since 2018.
Information about our Executive Officers Set forth below is certain information regarding the Company’s current executive officers as of February 27 , 2023 : Name Age Position Robert Lisy 66 Chief Executive Officer, President and Chairman of the Board of Directors 10 Index Andras Bende 49 Chief Financial Officer Joseph Aguilar 62 President and General Manager - Latin America Christopher Hunt 48 Chief Operating Officer Robert Lisy has served as a director of International Money Express, Inc. since 2018.
Another significant trend impacting the money remittance industry is increasing regulation on banks, making it difficult for money remittance companies to have strong banking relationships. Regulations in the United States and elsewhere focus, in part, on cybersecurity and consumer protection.
Another significant trend impacting the money remittance industry is increasing regulation on money remittance providers, banks, and other financial institutions, making it difficult for money remittance companies to develop and maintain strong banking relationships and for sending agents to open operating bank accounts. Regulations in the United States and elsewhere focus, in part, on cybersecurity, anti-money laundering and consumer protection.
In recent years, we expanded our services to allow remittances to Africa and Asia from the United States and also began offering sending services from Canada to Latin America and Africa. Our acquisition of La Nacional further strengthens our presence in Latin America. • Continue to grow online and mobile remittance channels.
In recent years, we expanded our services to allow remittances to Africa and Asia from the United States and also began offering sending services from Canada to Latin America and Africa.
According to the latest available data in the World Bank Remittance Matrix, the United States to Mexico remittance continues to be one of the largest in the world. We aim to continue to expand our market share in those states where we are currently well-established and poised for continued profitable growth within those markets via targeted regional penetration.
We aim to continue to expand our market share in those states where we are currently well-established and poised for continued profitable growth within those markets via targeted regional penetration.
Worldwide political and economic conditions continue to exhibit instability, as evidenced by high unemployment rates in key Latin American markets, restricted lending activity, higher inflation, volatility in foreign currencies and low consumer confidence, some of which reflect residual effects of the COVID-19 pandemic and supply chain disruptions, among other economic and market factors.
Political, social and economic conditions in key Latin American markets, from which we derive a significant portion of our revenue, continue to exhibit instability, as evidenced by higher interest rates, high unemployment rates, restricted lending activity, higher inflation, volatility in foreign currencies and low consumer confidence, among other economic and market factors.
Prior to joining Intermex, Mr. Aguilar was a senior executive at Sigue Corporation, a money transfer company; starting in 2005 as the Chief Auditor, where he established the Internal Audit function for its U.S. and Mexico Operations. Following several successful audit cycles, he was promoted to Chief Operating Officer, responsible for all operations and technology functions of the global organization.
Effective January 2023, Mr. Aguilar was appointed President and General Manager - Latin America. Prior to joining Intermex, Mr. Aguilar was a senior executive at Sigue Corporation, a money transfer company; starting in 2005 as the Chief Auditor, where he established the Internal Audit function for its U.S. and Mexico Operations.
Money remittance services to LAC countries, mainly Mexico and Guatemala, are the primary source of our revenue. These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location.
These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location.
Our money remittance services are also available on the Internet via Intermexonline.com, enabling consumers to send money twenty-four hours a day conveniently from their computer or Internet-enabled mobile device.
We hold promotional events for our sending agents to help familiarize them with the Intermex brand and to incentivize the agents to promote our services to consumers. Our money remittance services are also available on the Internet via Intermexonline.com and online.i-transfer.es, enabling consumers to send money twenty-four hours a day conveniently from their computer or Internet-enabled mobile device.
Risk Management At times, we are exposed to credit risk related to receivable balances from sending agents in the money remittance process if agents do not timely make payments to us.
Management believes it is not exposed to any significant credit risk regarding these accounts as it performs periodic reviews of the creditworthiness of the financial institutions the Company uses. At times, we are exposed to credit risk related to receivable balances from sending agents in the money remittance process if agents do not timely make payments to us.
Consumers are able to select a variety of sending methods, including cash pickup at thousands of locations, direct deposit into bank accounts, debit cards, mobile wallets, and home delivery in selected markets.
Also, our enhanced digital mobile money remittance applications provide consumers with safe, easy-to-use features for remitting funds with a debit or credit card, or ACH transfer. Consumers are able to select a variety of sending methods, including cash pickup at thousands of locations, direct deposit into bank accounts, debit cards, mobile wallets, and home delivery in selected markets.
We generate money remittance revenue from fees paid by consumers (i.e., the senders of funds), which we share with our sending agents in the originating country and our paying agents in the destination country. Remittances paid in local currencies that are not pegged to the U.S. dollar also earn revenue through our daily management of currency exchange spreads.
We generate money remittance revenue from fees paid by consumers (i.e., the senders of funds), which we share with our sending agents in the originating country and our paying agents in the destination country.
We compete for money remittance customers on the basis of trust, convenience, service, efficiency of outlets, value, 8 Index technology and brand recognition. We believe that our ongoing investments in new products and services will help us to remain competitive in our evolving business environment, given the increasing competition from digital platform providers.
We believe that our ongoing investments in new products and services will help us to remain competitive in our evolving business environment, given the increasing competition from digital platform providers.
In recent years, we expanded our services to allow remittances to Africa and Asia from the United States and also began offering sending services from Canada to Latin America and Africa. We utilize our proprietary technology to deliver convenient, reliable and value-added services to consumers through a broad network of sending and paying agents.
In recent years, we expanded our services to allow remittances to Africa and Asia from the United States and also began offering sending services from Canada to Latin America and Africa. Also, through the acquisition of LAN Holdings, Corp.
In most countries, either we or our agents are required to obtain licenses or to register with a government authority in order to offer money transfer services. Almost all states in the United States, the District of Columbia and Puerto Rico, as well as certain provinces in Canada, require us to be licensed to conduct business within their jurisdictions.
Almost all states in the United States, the District of Columbia and Puerto Rico, as well as certain provinces in Canada and certain countries in Europe, require us to be licensed to conduct business within their jurisdictions.
(“Euronet”), and a number of other smaller competitors. We generally compete for money remittance agents on the basis of value, service, quality, technical and operational differences, commission, and marketing efforts. As a philosophy, we sell credible solutions to agents, not discounts or higher commissions as is typical for the industry.
As a philosophy, we sell credible solutions to agents, not discounts or higher commissions as is typical for the industry. We compete for money remittance customers on the basis of trust, convenience, service, efficiency of outlets, value, technology and brand recognition.
Our money remittance platform currently enables consumers to send funds from the United States to the LAC corridor and Africa through the Internet via Intermexonline.com and on their Internet-enabled mobile devices. We have and continue to make significant investments in enhancing our digital mobile money remittance applications to provide consumers with safe, easy-to-use features for remitting funds.
We have and continue to make significant investments in enhancing our digital mobile money remittance applications to provide consumers with safe, easy-to-use features for remitting funds.
In 2022, we processed approximately 47.8 million remittances, representing over 19.2% growth in transactions as compared to 2021. Our Competitive Strengths • Primary focus on the LAC corridor.
In 2023, we processed approximately 58.7 million remittances, representing over 22.8% growth in transactions as compared to 2022, also reflecting the effect of the acquisitions noted above. Our Competitive Strengths • Primary focus on profitable corridors.
Seasonality We do not experience meaningful seasonality in our business. We may experience, however, increased transaction volume around certain holidays, such as Mother’s Day and the December holidays. Competition The market for money remittance services is very competitive.
We may experience, however, increased transaction volume around certain holidays, such as Mother’s Day and the December holidays. Competition The market for money remittance services is very competitive. Our competitors include a small number of large money remittance providers, financial institutions and banks as well as a large number of small niche money remittance service providers that serve select regions.
Each of our sending agents and our paying agents are primarily operated by third-party businesses where our money remittance services are offered. Additionally, we operate a number of retail locations in the United States, which we refer to as Company-operated stores and where our money remittance services are available.
Additionally, we operate a number of retail locations in the United States, Canada, Spain, Italy and Germany, which we refer to as Company-operated stores and where our money remittance services are available. We also operate subsidiary payer networks in Mexico under the Pago Express brand and in Guatemala under the Intermex brand.
In 2014, Mr. Aguilar was promoted to President of SGS, Ltd. UK, the International Division of Sigue Corporation, with responsibility for all aspects of the business in the EU, Eastern Europe, Africa, Asia and South Asia. Prior to his roles at Sigue Corporation, Mr. Aguilar held senior roles at BBVA Bancomer, California Commerce Bank and Dai-Ichi Kangyo Bank of California.
Following several successful audit cycles, he was promoted to Chief Operating Officer, responsible for all operations and technology functions of the global organization. In 2014, Mr. Aguilar was promoted to President of SGS, Ltd. UK, the International Division of Sigue Corporation, with responsibility for all aspects of the business in the EU, Eastern Europe, Africa, Asia and South Asia.
We believe we can leverage this capacity to sell business-to-business solutions to third parties, such as banks and major retailers. 3 Index Segments Our business is organized around one reportable segment that provides money remittance services primarily between the U.S. and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 117 Company-operated stores throughout the U.S. and Canada.
We believe these online channels not only expand our potential customer base as digital transaction capabilities become more relevant to LAC corridor consumers, but also generate growth from secular and demographic trends as consumers continue to migrate to conducting financial transactions online. 4 Index Segments Our business is organized around one reportable segment that provides money remittance services primarily between the U.S. and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 122 Company-operated stores throughout the U.S., Canada, Spain, Italy and Germany.
Regulations require money remittance providers, banks and other financial institutions to develop systems to prevent, detect, monitor and report certain transactions. In coming periods, we expect these and future regulatory requirements will continue to result in changes to certain of our business and administrative practices and may result in increased costs.
In coming periods, we expect these and future regulatory requirements, as well as investigatory and enforcement activities by law enforcement agencies, will continue to result in changes to certain of our business and administrative practices and may result in increased costs.
Additionally, our product and service portfolio include online payment options, pre-paid debit cards and direct deposit payroll cards, which may present different cost, demand, regulatory and risk profiles relative to our core money remittance business. In March 2022, we entered into an agreement to acquire La Nacional and LAN Holdings, money remittance companies serving more than 70 countries.
Additionally, our product and service portfolio include online payment options, pre-paid debit cards and direct deposit payroll cards, which may present different cost, demand, regulatory and risk profiles relative to our core money remittance business. Money remittance services to LAC countries, mainly Mexico, Guatemala, El Salvador, Honduras and the Dominican Republic, are the primary source of our revenue.
Our payers in LAC countries are referred to as paying agents, and generally consist of large banks and financial institutions or large retail chains. Grupo Elektra, S.A.B. de C.V. (“Elektra”) is our largest paying agent and processes a significant portion of remittances in the LAC corridor.
Grupo Elektra, S.A.B. de C.V. (“Elektra”) is our largest paying agent and processes a significant portion of remittances in the LAC corridor. Each of our sending agents and our paying agents are primarily operated by third-party businesses where our money remittance services are offered.
Hunt was the Chief Technology Officer of Bankers Healthcare Group, a financial services company (“Bankers”), from 2013 to 2021. Prior to his role at Bankers, Mr. Hunt worked at several companies where he held a variety of IT positions with increasing responsibility for all aspects of overall IT strategy, product development, compliance and cybersecurity. Mr.
Hunt was appointed Chief Operating Officer. Prior to joining the Company, Mr. Hunt was the Chief Technology Officer of Bankers Healthcare Group, a financial services company (“Bankers”), from 2013 to 2021. Prior to his role at Bankers, Mr.
At sending agent locations, consumers may initiate a transaction directly with an agent, or through a direct-dialed telephone conversation from the agent location to our call centers. Many of our sending agents operate in locations that are open outside of traditional banking hours, including nights and weekends.
These networks contribute payer locations that reach some of the most remote areas in those countries, providing increased convenience to consumers in the United States, Canada, Mexico and Guatemala. At sending agent locations, consumers may initiate a transaction directly with an agent, or through a direct-dialed telephone conversation from the agent location to our call centers.
In select countries, the designated recipient may also receive the remitted funds via a deposit directly to the recipient’s bank account, mobile device account or prepaid card. Our locations in the United States and Canada, also referred to as our sending agents, tend to be individual establishments, such as multi-service stores, grocery stores, convenience stores, bodegas and other retail locations.
Our locations in the United States, Canada, Spain and Italy, also referred to as our sending agents, tend to be individual establishments, such as multi-service stores, grocery stores, convenience stores, bodegas and other retail locations. Our payers in LAC countries are referred to as paying agents, and generally consist of large banks and financial institutions or large retail chains.
In 2023, we intend to continue to promote greater community involvement through philanthropic and volunteer efforts, with a focus on diversity, community improvement, and STEM programs. Since 2020, the well-being and health of our employees has remained one of our top priorities, especially in light of the COVID-19 pandemic.
In 2024, we intend to continue to promote greater community involvement through philanthropic and volunteer efforts, with a focus on diversity, community improvement, and STEM programs. As of December 31, 2023, we had 534 employees in the United States, all of whom are full-time.
According to the latest information available from the World Bank Remittance Matrix, the United States to Mexico remittance corridor was the largest in the world in 2021.
According to the latest information available from the World Bank Remittance Matrix, the United States to Mexico remittance corridor was one of the largest in the world in 2023. Furthermore, remittances volume to low and middle income countries grew approximately 3.8% during 2023 according to the latest Migrations and Development Brief report from the World Bank.
Hunt earned a bachelor’s degree in Business Administration with a major in Decision Information Sciences from the University of Florida in Gainesville, Florida. 10 Index
Hunt worked at several companies where he held a variety of IT positions with increasing responsibility for all aspects of overall IT strategy, product development, compliance and cybersecurity. Mr. Hunt earned a bachelor’s degree in Business Administration with a major in Decision Information Sciences from the University of Florida in Gainesville, Florida. 11 Index
Although our internet-based money transmission services have grown significantly in 2022, they still do not constitute a material percentage of the Company’s overall business. Also, our enhanced digital mobile money remittance application provides consumers with safe, easy-to-use features for remitting funds with a debit or credit card, or ACH transfer.
Although our internet-based money transmission services grew significantly in 2023, they still do not constitute a material percentage of the Company’s overall business.
Our sending agents understand the markets that they serve and coordinate with our sales and marketing teams to develop business plans for those markets. We hold promotional events for our sending agents to help familiarize them with the Intermex brand and to incent the agents to promote our services to consumers.
Many of our sending agents operate in locations that are open outside of traditional banking hours, including nights and weekends. Our sending agents understand the markets that they serve and coordinate with our sales and marketing teams to develop business plans for those markets.
Luciano holds a bachelor’s degree from the State University of New York at Albany and a Juris Doctor (J.D.) from the New England School of Law in Boston, Massachusetts. Christopher Hunt joined International Money Express, Inc. in March 2021 as Chief Information Officer. Effective January 2023, Mr. Hunt was appointed Acting Chief Operating Officer. Prior to joining the Company, Mr.
Prior to his roles at Sigue Corporation, Mr. Aguilar held senior roles at BBVA Bancomer, California Commerce Bank and Dai-Ichi Kangyo Bank of California. Mr. Aguilar holds a bachelor’s degree in English from University of California at Santa Barbara. Christopher Hunt joined International Money Express, Inc. in March 2021 as Chief Information Officer. Effective April 20, 2023, Mr.
The majority of our money remittance transactions are generated through our agent network of retail locations and Company-operated stores where the transaction is processed and payment is collected by our sending agent. Those funds become available for pickup by the beneficiary at the designated receiving destination, usually within minutes, at any Intermex payer location.
Remittances paid in local currencies that are not pegged to the U.S. dollar, Canadian dollar or Euro also earn revenue through our daily management of currency exchange spreads. The majority of our money remittance transactions are generated through our agent network of retail locations and Company-operated stores where the transaction is processed and payment is collected by our sending agent.
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In November 2022, we completed the acquisition of La Nacional and we expect to complete the acquisition of LAN Holdings in the second quarter of 2023 subject to the satisfaction of customary closing conditions, including pending regulatory approvals. The acquisition of La Nacional strengthens the Company’s presence in the Dominican Republic and other key markets in Latin America.
Added
(“LAN Holdings”), which was completed in the second quarter of 2023, we now provide remittance services from Spain, Italy and Germany to Africa, Asia and Latin America. We utilize our proprietary technology to deliver convenient, reliable and value-added services to consumers through a broad network of sending and paying agents.
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In addition, our services are offered digitally through Intermexonline.com and via Internet-enabled mobile devices. Since January 1, 2022 through December 31, 2022, we have grown our agent network by approximately 27.3% and increased our principal amount sent by more than 21.2% to $21.0 billion.
Added
In addition, our services are offered digitally through Intermexonline.com, online.i-transfer.es and via Internet-enabled mobile devices. For the year ended December 31, 2023, we grew our agent network by approximately 16.4% primarily due to agents added as a result of the acquisition of LAN Holdings, partially offset by the termination of low volume and unproductive sending agents.
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We believe these channels not only expand our potential customer base as digital transaction capabilities become more relevant to LAC corridor consumers but also benefit from secular and demographic trends as consumers continue to migrate to conducting financial transactions online. • Leverage our technology in the business-to-business market. We believe that our money remittance platform has significant excess capacity.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLisy, we have a number of key executives who have a significant impact on our business. The unexpected loss of key personnel may adversely affect the operations and profitability of the Company. Our success also depends to a large extent upon our ability to attract and retain key employees. Qualified individuals with experience in our industry are in high demand.
Biggest changeOur success also depends to a large extent upon our ability to attract and retain key employees. Qualified individuals with experience in our industry are in high demand. Our IT personnel have designed and implemented key portions of our proprietary software and are crucial to the success of our business.
Failure to comply with existing or future data privacy and cybersecurity laws, regulations and requirements, including by reason of inadvertent disclosure of personal information, could result in significant adverse consequences, including reputational harm, civil litigation, regulatory enforcement, costs of remediation, increased expenses for security systems and personnel, harm to our consumers and harm to our agents.
Failure to comply with existing or future data privacy and cybersecurity laws, regulations, and requirements, including by reason of inadvertent disclosure of personal information, could result in significant adverse consequences, including reputational harm, civil litigation, regulatory enforcement, costs of remediation, increased expenses for security systems and personnel, or harm to our consumers and harm to our agents.
Our indebtedness, which bears interest at variable rates, could have important consequences to our investors, including, but not limited to: • increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; • requiring the dedication of a substantial portion of our cash flow from operations to servicing debt, including from increased interest rates; • limiting our flexibility in planning for, or reacting to, changes in our business and the competitive environment; and • limiting our ability to borrow additional funds and increasing the cost of any such borrowing.
Our indebtedness, which bears interest at variable rates, could have important consequences to our business and operations, including, but not limited to: • increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; • requiring the dedication of a substantial portion of our cash flow from operations to servicing debt, including from increased interest rates; • limiting our flexibility in planning for, or reacting to, changes in our business and the competitive environment; and • limiting our ability to borrow additional funds and increasing the cost of any such borrowing.
Our ability to grow in international markets and our future results could be adversely affected by a number of factors, including: • changes in geopolitical and economic conditions and potential instability in certain regions; • restrictions on money transfers to, from and between certain countries; • inability to recruit and retain paying agents and consumers for new corridors; • currency exchange controls, new currency adoptions and repatriation issues; • changes in regulatory requirements or in foreign policy, including the adoption of domestic or foreign laws, regulations and interpretations detrimental to our business; • possible increased costs and additional regulatory burdens imposed on our business; • the implementation of U.S. sanctions, resulting in bank closures in certain countries and the ultimate freezing of our assets; • burdens of complying with a wide variety of laws and regulations; • possible fraud or theft losses, and lack of compliance by international representatives in foreign legal jurisdictions where collection and legal enforcement may be difficult or costly; • inability to maintain or improve our software and technology systems; • reduced protection of our intellectual property rights; • unfavorable tax rules or trade barriers; and • inability to secure, train or monitor international agents.
Our ability to grow in international markets and our future results could be adversely affected by a number of factors, including: • changes in geopolitical and economic conditions and potential instability in certain regions; • restrictions on money transfers to, from and between certain countries; • inability to recruit and retain paying agents and consumers for new corridors; • currency exchange controls, new currency adoptions and repatriation issues; • changes in regulatory requirements or in foreign policy, including the adoption of domestic or foreign laws, regulations and interpretations detrimental to our business; • possible increased costs and additional regulatory burdens imposed on our business; • the implementation of U.S. sanctions, resulting in bank closures in certain countries and the ultimate freezing of our assets; • burdens of complying with a wide variety of laws and regulations; 13 Index • possible fraud or theft losses, and lack of compliance by international representatives in foreign legal jurisdictions where collection and legal enforcement may be difficult or costly; • inability to maintain or improve our software and technology systems; • reduced protection of our intellectual property rights; • unfavorable tax rules or trade barriers; and • inability to secure, train or monitor international agents.
Acquisitions often involve additional or increased risks including, for example: • managing the complex process of integrating the acquired company’s employees, products and services, technology and other assets in an effort to realize the projected value of the acquired company and the projected synergies of the acquisition; • realizing the anticipated financial benefits from these acquisitions and where necessary, improving controls of these acquired businesses (including internal control over financial reporting and disclosure controls and procedures); • retaining existing customers and attracting new customers; • maintaining good relations with agents of acquired companies; • managing geographically separated organizations, systems and facilities; • managing multi-jurisdictional operating, tax and financing structures or any inefficiencies; • integrating personnel with diverse business backgrounds and organizational cultures; • integrating the acquired systems and technologies into our Company; • complying with regulatory requirements, including those particular to the industry and jurisdiction of the acquired business, and the need to improve regulatory compliance systems and controls; • obtaining and enforcing intellectual property rights in some foreign countries; • entering new markets with the services of the acquired businesses; and • general economic and political conditions, including legal and other barriers to cross-border investment in general, or by United States companies in particular.
Acquisitions often involve additional or increased risks including, for example: • managing the complex process of integrating the acquired company’s employees, products and services, technology and other assets in an effort to realize the projected value of the acquired company and the projected synergies of the acquisition; • realizing the anticipated financial benefits from these acquisitions and where necessary, improving controls of these acquired businesses (including internal control over financial reporting and disclosure controls and procedures); • retaining existing customers and attracting new customers; • maintaining good relations with agents of acquired companies; • managing geographically separated organizations, systems and facilities; • managing multi-jurisdictional operating, tax and financing structures or any inefficiencies; • integrating personnel with diverse business backgrounds and organizational cultures; 15 Index • integrating the acquired systems and technologies into our Company; • complying with regulatory requirements, including those particular to the industry and jurisdiction of the acquired business, and the need to improve regulatory compliance systems and controls; • obtaining and enforcing intellectual property rights in some foreign countries; • entering new markets with the services of the acquired businesses; and • general economic, social and political conditions, including legal and other barriers to cross-border investment in general, or by United States companies in particular.
Any delay or inability to pay money remittances or make related settlements with our agents could adversely impact our business, financial condition and results of operations. • In the event of a major bank failure, we could face major risks to the recovery of our bank deposits used for the purpose of settling with our agents.
Any delay or inability to pay money remittances or make related settlements with our agents could adversely impact our business, financial condition and results of operations. • In the event of a bank failure, we could face risks to the recovery of our bank deposits used for the purpose of settling with our agents.
Our employees, agents and consumers in a particular country or region in the world may be negatively affected as a result of a variety of diversions, including: geopolitical events, such as war, the threat of war, or terrorist activity; natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and sea level rise); power shortages or outages; major public health issues, including pandemics (such as COVID-19); and significant local, national or global events capturing the attention of a large part of the population.
Our employees, agents and consumers in a particular country or region in the world may be negatively affected as a result of a variety of diversions, including: geopolitical events, such as war, the threat of war, or terrorist activity; natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and sea level rise); power shortages or outages; major public health issues, including pandemics; and significant local, national or global events capturing the attention of a large part of the population.
Consequently, actions or events in LAC countries that are beyond our control could restrict our ability to operate there or otherwise adversely affect the profitability of those operations.
Consequently, actions or events in LAC or other countries that are beyond our control could restrict our ability to operate there or otherwise adversely affect the profitability of those operations.
An interruption of our access to capital could impair our ability to conduct business if our regulatory capital falls below requirements. Our Amended and Restated Credit Agreement contains covenants that may impair our ability to conduct business.
An interruption of our access to capital could impair our ability to conduct business if our regulatory capital falls below requirements. Our Amended and Restated Credit Agreement contains covenants that may limit our ability to conduct business.
The outcome of class action lawsuits, regulatory actions and investigations and other litigation is difficult to assess or quantify but may include substantial fines and expenses, as well as the revocation of required licenses or registrations or the loss of approved status, which could have a material and adverse effect on our business, financial position and results of operations or consumers’ confidence in our business.
The outcome of class action lawsuits, regulatory actions and investigations and other litigation is difficult to assess or quantify but may include substantial fines and expenses, as well as the revocation of required licenses or registrations or the loss of approved status, which could have a material and adverse effect on our business, financial condition and results of operations or consumers’ confidence in our business.
Our board of directors may take into account 22 Index general and economic conditions, our financial condition, and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant.
Our board of directors may take into account general and economic conditions, our financial condition, and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant.
Although expansion of our business into new geographic or product markets may increase our aggregate revenues, such new geographic or product markets may be more expensive to operate in and may require us to receive lower payment per wire or remittance than that which we currently experience in our core geographic markets of Mexico and Guatemala or other more established product markets due to, among other things: • increased compliance and regulatory costs requiring us to dedicate more expense, time and resources to comply with such regulatory requirements; • potentially higher operational expenses, such as higher agent fees, taxes, fees, technology costs, support costs or other charges and expenses associated with engaging in the money transfer business in different jurisdictions or as a result of new product offerings; • reduced pricing models due to more intense competition with entities that may have more experience and resources as well as more established relationships with relevant customers, regulators and industry participants; • potentially reduced demand for remittance services; and • difficulty building and maintaining a network of sending and paying agents in a particular geographic area or with respect to a particular product offering.
Although expansion of our business into new geographic or product markets may increase our aggregate revenues, such new geographic or product markets may be more expensive to operate in and may require us to receive lower payment per wire or remittance than that which we currently experience in our core geographic markets of Mexico, Guatemala, El Salvador, Honduras and the Dominican Republic or other more established product markets due to, among other things: • increased compliance and regulatory costs requiring us to dedicate more expense, time and resources to comply with such regulatory requirements; • potentially higher operational expenses, such as higher agent fees, taxes, fees, technology costs, support costs or other charges and expenses associated with engaging in the money transfer business in different jurisdictions or as a result of new product offerings; • reduced pricing models due to more intense competition with entities that may have more experience and resources as well as more established relationships with relevant customers, regulators and industry participants; • potentially reduced demand for remittance services; and • difficulty building and maintaining a network of sending and paying agents in a particular geographic area or with respect to a particular product offering.
In those markets where we have applied for trademark registrations, failure to secure those registrations could adversely affect our ability to enforce and defend our trademark rights. Our business would be harmed if we were unable to adequately protect our brands and the value of our brands was to decrease as a result.
In those markets where we have applied for trademark registrations, failure to secure those registrations could adversely 22 Index affect our ability to enforce and defend our trademark rights. Our business would be harmed if we were unable to adequately protect our brands and the value of our brands was to decrease as a result.
This may result in reduced job opportunities for consumers in the United States or other countries that are important to our business, which could adversely affect our business, financial condition and results of operations. In addition, increases in employment opportunities may lag other elements of any economic recovery.
This may result in reduced job opportunities for consumers in the United States or other countries in which we operate or that are important to our business, which could adversely affect our business, financial condition and results of operations. In addition, increases in employment opportunities may lag other elements of any economic recovery.
These factors include: • the quality of our services and our customer experience, and our ability to meet evolving consumer needs and preferences; 12 Index • failure of our agents to deliver services in accordance with our requirements; • reputational concerns resulting from actual or perceived events, including those related to fraud, consumer protection, money laundering, corruption or other matters; • changes or proposed changes in laws or regulations, or regulator or judicial interpretation thereof, that have the effect of making it more difficult or less desirable to transfer money using consumer money remittance service providers, including additional customer due diligence, identification, reporting, and recordkeeping requirements; • actions by federal, state or foreign regulators that interfere with our ability to remit consumers’ money reliably; for example, attempts to seize money remittance funds, imposition of tariffs or limits on our ability to, or that prohibit us from, remitting money in the corridors in which we operate; • federal, state or foreign legal requirements, including those that require us to provide consumer or transaction data, and other requirements or to a greater extent than is currently required; • any interruption or downtime in our systems, including those caused by fire, natural disaster, power loss, telecommunications failure, terrorism, vendor failure, unauthorized entry and computer viruses or disruptions in our workforce; and • any attack or breach of our computer systems or other data storage facilities resulting in a compromise of personal data.
These factors include: • the quality of our services and our customer experience, and our ability to meet evolving consumer needs and preferences; • failure of our agents to deliver services in accordance with our requirements; • reputational concerns resulting from actual or perceived events, including those related to fraud, consumer protection, cybersecurity incidents, money laundering, corruption or other matters; • changes or proposed changes in laws or regulations, or regulator or judicial interpretation thereof, that have the effect of making it more difficult or less desirable to transfer money using consumer money remittance service providers, including additional customer due diligence, identification, reporting, and recordkeeping requirements; • actions by federal, state or foreign regulators that interfere with our ability to remit consumers’ money reliably; for example, attempts to seize money remittance funds, imposition of tariffs or limits on our ability to, or that prohibit us from, remitting money in the corridors in which we operate; • federal, state or foreign legal requirements, including those that require us to provide consumer or transaction data, and other requirements or to a greater extent than is currently required; • any interruption or downtime in our systems, including those caused by fire, natural disaster, power loss, telecommunications failure, terrorism, vendor failure, cybersecurity breaches, such as unauthorized entry and computer viruses or disruptions in our workforce; and 14 Index • any attack or breach of our computer systems or other data storage facilities resulting in a compromise of personal data.
Should our existing relationship banks decide to not offer depository services to companies engaged in processing money remittance transactions, or to retail agents that collect and remit cash from end consumers, our ability to complete money remittances, and to administer and collect fees from money remittance transactions, could be adversely affected.
Should our existing relationship banks decide to not offer depository services to companies engaged in processing money remittance transactions, or to retail 18 Index agents that collect and remit cash from end consumers, our ability to complete money remittances, and to administer and collect fees from money remittance transactions, could be adversely affected.
If exchange control restrictions, taxes or limitations are imposed or 20 Index tightened, our ability to receive dividends or other payments from affected jurisdictions could be reduced, which could have an adverse effect on our business, financial condition and results of operations.
If exchange control restrictions, taxes or limitations are imposed or tightened, our ability to receive dividends or other payments from affected jurisdictions could be reduced, which could have an adverse effect on our business, financial condition and results of operations.
For example, Virginia passed the Consumer Data Protection Act, Colorado passed the Colorado Privacy Act, and Utah passed the Consumer Privacy Act, all of which become effective in 2023. Additionally, several states and localities have enacted measures related to the use of artificial intelligence and machine learning in products and services.
For example, Virginia passed the Consumer Data Protection Act, Colorado passed the Colorado Privacy Act, and Utah passed the Consumer Privacy Act, all of which became effective in 2023. Additionally, several states and localities have enacted measures related to the use of artificial intelligence and machine learning in products and services.
If we are unable to adequately protect our brands and the intellectual property rights related to our existing and any new or enhanced services, or if we infringe on the rights of others, our business, financial condition and results of operations could be adversely affected.
Risks Relating to Our Intellectual Property If we are unable to adequately protect our brands and the intellectual property rights related to our existing and any new or enhanced services, or if we infringe on the rights of others, our business, financial condition and results of operations could be adversely affected.
The processes and systems we employ may be subject to patent protection by other parties, and any claims could adversely affect our business and results of operations. 21 Index In certain countries, including the United States, patent laws permit the protection of processes and systems.
The processes and systems we employ may be subject to patent protection by other parties, and any claims could adversely affect our business and results of operations. In certain countries, including the United States, patent laws permit the protection of processes and systems.
Additionally, consumers tend to be employed in industries such as construction, information technology, manufacturing, agriculture, hospitality and certain service industries that tend to be cyclical and are more significantly affected by weak economic conditions than other industries.
Additionally, consumers tend to be employed in industries such as construction, information technology, manufacturing, agriculture, hospitality and certain service industries that tend to be cyclical and are more significantly affected by weak 12 Index economic conditions than other industries.
In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, 14 Index which could further complicate compliance efforts.
In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.
Our future growth will depend, in part, on our ability to continue to develop and successfully introduce new and enhanced methods of providing money remittance services that keep pace with competitive introductions, technological changes, and the demands and preferences of our agents, consumers and the financial institutions with which we conduct our business.
Our future growth will depend, in part, on our ability to continue to develop and successfully introduce new and enhanced methods of providing money remittance services, including the introduction of new digital platforms, that keep pace with competitive introductions, technological changes, and the demands and preferences of our agents, consumers and the financial institutions with which we conduct our business.
A public health epidemic or pandemic, such as the COVID-19 pandemic, can have a material adverse effect on the demand for our money remittance services to the extent it impacts the markets in which we operate, and poses the risk that we or our employees, network of agents and consumers and their beneficiaries may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns requested or mandated by governmental authorities, or that such epidemic may otherwise interrupt or impair business activities.
A public health epidemic or pandemic can have a material adverse effect on the demand for our money remittance services to the extent it adversely affects the markets in which we operate, and poses the risk that we or our employees, network of agents and consumers and their beneficiaries may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns requested or mandated by governmental authorities, or that such epidemic may otherwise interrupt or impair business activities.
If general market and economic conditions in the United States or other countries important to our business were to deteriorate, our business, financial condition and results of operations could be adversely impacted. Our agents may have reduced sales or business as a result of weak economic conditions.
If general market and economic conditions in the United States or other countries in which we operate or are important to our business were to deteriorate, our business, financial condition and results of operations could be adversely impacted. Our agents may have reduced sales or business as a result of weak economic conditions.
A substantial portion of our paying agents are concentrated in a few large banks and financial institutions and large retail chains.
A significant portion of our paying agents are concentrated in a few large banks and financial institutions or large retail chains. A substantial portion of our paying agents are concentrated in a few large banks and financial institutions and large retail chains.
Elektra, our largest paying agent by volume, accounted for approximately 24% of Intermex’s total remittance volume in fiscal year 2022. The loss of Elektra as one of our paying agents could have a material adverse impact on our business and results of operations.
Elektra, our largest paying agent by volume, accounted for approximately 25% of Intermex’s total remittance volume in fiscal year 2023. The loss of Elektra as one of our paying agents could have a material adverse impact on our business and results of operations.
In addition, we are exposed to new political, economic and other uncertainties as a result of the geographic expansion to Africa and Asia, any of which could adversely impact our business, financial condition and results of operations.
We are also exposed to new political, economic and other uncertainties as a result of the geographic expansion to Europe, Africa, and Asia, any of which could adversely impact our business, financial condition and results of operations.
Risks Relating to Our Securities Because we have no current plans to pay cash dividends on our common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.
Risks Relating to Our Securities Because we have no current plans to pay cash dividends on our common stock for the foreseeable future, stockholders may not receive any return on investment unless they sell our common stock for a price greater than that which was paid for it.
We derive a substantial portion of our revenue from our money remittance transactions from the United States to the LAC corridor, particularly Mexico and Guatemala, and we are exposed to certain political, economic and other uncertainties not encountered in U.S. operations.
We derive a substantial portion of our revenue from our money remittance transactions from the United States to the LAC corridor, particularly Mexico, Guatemala, El Salvador, Honduras and the Dominican Republic, and we are exposed to certain political, economic and other uncertainties not encountered in U.S. operations.
As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.
As a result, stockholders may not receive any return on an investment in our common stock unless they sell our common stock for a price greater than that which was paid for it.
The inability to timely complete money transfers could adversely affect our business. If consumer confidence in our business or in consumer money remittance providers generally deteriorates, our business, financial condition and results of operations could be adversely affected. Our business is built on consumer confidence in our brands and our ability to provide convenient, reliable and value-added money remittance services.
If consumer confidence in our business, brands or in consumer money remittance providers generally deteriorates, our business, financial condition and results of operations could be adversely affected. Our business is built on consumer confidence in our brands and our ability to provide convenient, reliable and value-added money remittance services.
We face certain risks in the event of a sustained deterioration of domestic or international financial market liquidity, as well as in the event of sustained deterioration in the liquidity, or failure, of our clearing, cash management and custodial financial institutions.
We face certain risks in the event of a sustained deterioration of domestic or international financial market liquidity, as well as in the event of sustained deterioration in the liquidity, or failure, of the clearing, cash management and custodial financial institutions with which we do business.
If we lose key sending agents, our business with key sending agents is reduced or we are unable to maintain our sending agent network under terms consistent with those currently in place, our business, financial condition and results of operations could be adversely affected. Most of our revenue is earned through our sending agent network.
Risks Relating to Our Business and Industry If we lose key sending agents, our business with key sending agents is reduced or we are unable to maintain our sending agent network under terms consistent with those currently in place, our business, financial condition and results of operations could be adversely affected.
We are also subject to regulatory oversight and enforcement by FinCEN. Any determination that we have violated the anti-money-laundering laws could have an adverse effect on our business, financial condition and results of operations. The Dodd-Frank Act increases the regulation and oversight of the financial services industry. The Dodd-Frank Act requires enforcement by various governmental agencies, including the CFPB.
We are also subject to regulatory oversight and enforcement by FinCEN. Any determination that we or our agents have violated the anti-money-laundering laws could have an adverse effect on our business, financial condition and results of operations. The Dodd-Frank Act increases the regulation and oversight of the financial services industry.
Users of our services also may encourage, promote, facilitate or instruct others to engage in illegal activities. If the measures we have taken are too restrictive and inadvertently screen proper transactions, this could diminish our customer experience which could harm our business.
Users of our services also may encourage, promote, facilitate or instruct others to engage in illegal activities. If the measures we have taken are too restrictive it could diminish our customer experience which could harm our business.
Sending agents are the persons who interact with consumers and provide them with our money remittance services. If sending agents decide to leave our network, our revenue and profits could be adversely affected.
Most of our revenue is earned through our sending agent network. Sending agents are the persons who interact with consumers and provide them with our money remittance services. If sending agents decide to leave our network, our revenue and profits could be adversely affected.
Our share price may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future.
We may be subject to securities litigation, which is expensive and could divert management’s attention. Our share price may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future.
The legislation and implementation of regulations associated with the Dodd-Frank Act have increased our costs of compliance and required changes in the way we and our agents conduct business. In addition, we are subject to periodic examination by the CFPB.
The legislation and implementation of regulations associated with the Dodd-Frank Act have increased our costs of compliance and required changes in the way we and our agents conduct business. In addition, we are subject to periodic examination by the CFPB. These examinations may require us to change the way we conduct business or increase the costs of compliance.
In addition, our ability to pay dividends is limited by covenants of our existing and outstanding indebtedness and may be limited by covenants of any future indebtedness we or our subsidiaries incur.
In addition, our ability to pay dividends is limited by our ability to comply with restrictions in our existing credit facilities and may be limited by covenants of any future indebtedness we or our subsidiaries incur.
Strategic transactions that are not successfully completed or managed effectively, or our failure to effectively manage the risks associated with such transactions, could result in adverse effects on our business, financial condition and results of operations. Current and future data privacy and cybersecurity laws and regulations could adversely affect our business, financial condition and results of operations.
Strategic transactions that are not successfully completed or managed effectively, or our failure to effectively manage the risks associated with such transactions, could result in adverse effects on our business, financial condition and results of operations.
Subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program costs, liability and reputational damage. As a MSB, we are subject to reporting, recordkeeping and anti-money laundering provisions in the United States as well as many other jurisdictions.
Many of these laws are constantly evolving, unclear and inconsistent across various jurisdictions, making compliance challenging. Subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program costs, liability and reputational damage. As a MSB, we are subject to reporting, recordkeeping and anti-money laundering provisions in the United States as well as many other jurisdictions.
We process remittances to Latin America, Africa and Asia from the United States and from Canada to Latin America and Africa. Additionally, we have expanded our product and service portfolio to include online payment options, pre-paid debit cards and direct deposit payroll cards, which may present different cost, demand, regulatory and risk profiles relative to our core remittance business.
Additionally, we have expanded our product and service portfolio to include online payment options, pre-paid debit cards and direct deposit payroll cards, which may present different cost, demand, regulatory and risk profiles relative to our core remittance business.
Our charter provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the DGCL or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine.
Our charter designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. 24 Index Our charter provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the DGCL or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine.
Changes in tax legislation by U.S. federal, state and local governments could impact our effective tax rates. If statutory tax rates are increased, our results of operations and cash flows could be adversely affected.
Changes in tax laws in the countries we operate could adversely affect our results of operations. Changes in tax legislation by U.S. federal, state and local governments as well as foreign jurisdictions could impact our effective tax rates. If statutory tax rates are increased, our results of operations and cash flows could be adversely affected.
Major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions, could adversely affect our business, financial condition and results of operations.
Bank failures, sustained financial market illiquidity, or illiquidity at the clearing, cash management and custodial financial institutions with which we do business, could adversely affect our business, financial condition and results of operations.
Sending agents also may generate fewer transactions or reduce locations for reasons unrelated to our relationship with them, including increased competition in their business, general economic conditions, regulatory costs or other reasons.
Sending agents also may generate fewer transactions or reduce locations for reasons unrelated to our relationship with them, including increased competition in their business, general economic conditions, regulatory costs or other reasons. In addition, larger sending agents may demand additional financial concessions, which could increase competitive pressure.
The costs of compliance with, and other burdens imposed by, the CCPA and similar laws may limit the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business.
The costs of compliance with, and other burdens imposed by, the CCPA and similar laws may limit the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business. In addition, the California Privacy Rights Act of 2020 (CPRA), effective January 1, 2023, expanded the CCPA.
For such amounts, we must file claims for reimbursement from the states. Any violation by us of the laws and regulations set forth above could lead to significant settlements, fines or penalties and could limit our ability to conduct business in some jurisdictions.
Any violation by us or our agents of the laws and regulations set forth above could lead to significant settlements, fines or penalties and could limit our ability to conduct business in some jurisdictions.
Our litigation exposure may also be increased by the CFPB’s authority to limit or ban pre-dispute arbitration clauses. We may also be liable for failure of our agents to comply with the Dodd-Frank Act.
The CFPB’s authority to change regulations adopted in the past by other regulators could increase our compliance costs and litigation exposure. Our litigation exposure may also be increased by the CFPB’s authority to limit or ban pre-dispute arbitration clauses. We may also be liable for failure of our agents to comply with the Dodd-Frank Act.
In addition, improper activities, lawsuits or investigations involving our agents may adversely impact our business, financial condition and results of operations or reputation even if we are not directly involved. We could be adversely affected by violations of the FCPA or other similar anti-corruption laws.
In addition, improper activities, lawsuits or investigations involving our agents may adversely impact our business, financial condition and results of operations or reputation even if we are not directly involved.
We had approximately $156.9 million of indebtedness as of December 31, 2022, consisting of $80.9 million in outstanding borrowings under the term loan facility and $76.0 million in outstanding borrowings under our revolving credit facility.
We had approximately $189.5 million of indebtedness as of December 31, 2023, consisting of $75.5 million in outstanding borrowings under the term loan facility and $114.0 million in outstanding borrowings under our revolving credit facility.
We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases such as the global COVID-19 pandemic.
We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases.
We are subject to the laws of various states in the United States which from time to time take inconsistent or conflicting positions regarding the requirements to escheat property to a particular state, making compliance challenging. In some instances, we escheat items to states pursuant to statutory requirements and then subsequently pay those items to consumers.
In addition, we are subject to escheatment laws in the United States. We are subject to the laws of various states in the United States which from time to time take inconsistent or conflicting positions regarding the requirements to escheat property to a particular state, making compliance challenging.
Our operations around the world, particularly in LAC countries and Africa, are subject to anti-corruption laws and regulations, including restrictions imposed by the U.S. FCPA.
We could be adversely affected by violations of the FCPA or other similar anti-corruption laws. 21 Index Our operations around the world, particularly in LAC countries and Africa, are subject to anti-corruption laws and regulations, including restrictions imposed by the U.S. FCPA.
We also are the subject from time to time of litigation related to our business. Regulatory and judicial proceedings and potential adverse developments in connection with ongoing litigation may adversely affect our business, financial condition and results of operations. There also may be adverse publicity associated with lawsuits and investigations that could decrease agent and consumer acceptance of our services.
We also are the subject from time to time of litigation related to other aspects of our business. Regulatory and judicial proceedings and potential adverse developments in connection with ongoing litigation may adversely affect our business, financial condition and results of operations.
We have been, and in the future may be, subject to allegations and complaints that individuals or entities have used our money remittance services for fraud-induced money transfers, as well as certain money laundering activities, which may result in fines, penalties, judgments, settlements and litigation expenses.
Litigation or investigations involving us or our agents could result in material settlements, fines or penalties. We have been and from time to time are subject to allegations and complaints that individuals or entities have used our money remittance services for fraud-induced money transfers, as well as certain money laundering activities.
Because of the current concentration of our major banking relationships, if we lose such a banking relationship, which could be the result of many factors including, but not limited to, changes in regulation, our business, financial condition and results of operations could be adversely affected. 16 Index A significant portion of our paying agents are concentrated in a few large banks and financial institutions or large retail chains.
Because of the current concentration of our major banking relationships, if we lose such a banking relationship, which could be the result of many factors including, but not limited to, changes in regulation or the requirements imposed by banks and other financial institutions with respect to anti-money laundering, our business, financial condition and results of operations could be adversely affected.
In addition, it is anticipated that the California Privacy Rights Act of 2020 (CPRA), effective January 1, 2023, will expand the CCPA. For example, the CPRA establishes a new California Privacy Protection Agency to implement and enforce the CPRA, which could increase the risk of an enforcement action. Other states have also enacted data privacy laws.
For example, the CPRA establishes a new California Privacy Protection Agency to implement and enforce the CPRA, which could increase the risk of an enforcement action. Other states have also enacted data privacy laws.
We operate in parts of the world that are perceived as having higher incidence of corruption and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
We operate in parts of the world that are perceived as having higher incidence of corruption and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices. Because of the scope and nature of our operations, we experience a higher risk associated with compliance with the FCPA and similar anti-corruption laws than many other companies.
Additionally, our business has been in the past, and may be in the future, the subject of class action lawsuits, regulatory actions and investigations and other general litigation.
There also may be adverse publicity associated with lawsuits and investigations that could decrease agent and consumer acceptance of our services. Additionally, our business has been in the past, and may be in the future, the subject of class action lawsuits, regulatory actions and investigations and other general litigation.
There can be no assurance that the models and approaches we use to assess and monitor the creditworthiness of our sending agents and these financial institutions will be sufficiently predictive, and we may be unable to detect and take steps to timely mitigate an increased credit risk. 17 Index In the event of a sending agent bankruptcy, we would generally be in the position of creditor, possibly with limited security or financial guarantees of performance, and we would therefore be at risk of a reduced recovery.
There can be no assurance that the models and approaches we use to assess and monitor the creditworthiness of our sending agents and these financial institutions will be sufficiently predictive, and we may be unable to detect and take steps to timely mitigate an increased credit risk.
Failure to successfully complete or manage strategic transactions can adversely affect our business. We regularly review our businesses strategy and evaluate potential acquisitions, joint ventures, divestitures, and other strategic transactions.
Failure to successfully complete, manage or integrate strategic transactions can adversely affect our business, financial condition and results of operations. We regularly review our businesses strategy and evaluate potential acquisitions, joint ventures, divestitures, and other strategic transactions. We have acquired and may acquire businesses both inside and outside the United States.
Under our A&R Credit Agreement, upon the occurrence of an event of default, we will be unable to continue to borrow funds under the A&R Credit Agreement for so long as an event of default is not remedied or waived.
See the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Intermex—Liquidity and Capital Resources” for more information. 23 Index Under our A&R Credit Agreement, upon the occurrence of an event of default, we will be unable to continue to borrow funds under the A&R Credit Agreement for so long as an event of default is not remedied or waived.
Under the FCPA and other similar anti-corruption laws, we may be held liable for actions taken by our employees or agents.
These interactions and contracts create a risk of payments or offers of payments by one of our employees or agents that could be in violation of the FCPA or other similar anti-corruption laws. Under the FCPA and other similar anti-corruption laws, we may be held liable for actions taken by our employees or agents.
Additionally, we are subject to anti-money laundering laws in the other countries in which we operate. We are also subject to financial services regulations, money transfer licensing regulations, consumer protection laws, currency control regulations, escheat laws, privacy and data protection laws and anti-bribery laws. Many of these laws are constantly evolving, unclear and inconsistent across various jurisdictions, making compliance challenging.
Additionally, 19 Index we are subject to anti-money laundering laws in the other countries and jurisdictions in which we operate and hold licenses including Europe, Mexico and Guatemala. We are also subject to financial services regulations, money transfer licensing regulations, consumer protection laws, currency control regulations, escheat laws, privacy and data protection laws and anti-bribery laws.
In addition, larger sending agents may demand additional financial concessions, which could increase competitive pressure. 11 Index We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations could be adversely affected.
We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations could be adversely affected.
There is no assurance that we have identified, assessed and appropriately addressed all risks affecting our business operations. Additional risks and uncertainties could adversely affect our business and our results. If any of the following risks actually occur, our business, consolidated financial condition or results of operations could be negatively affected, and the market price for our shares could decline.
If any of the following risks actually occur, our business, consolidated financial condition or results of operations could be negatively affected, and the market price for our shares could decline.
Any change in our risk profile stemming from this or any of our other business initiatives could result in increased compliance costs and litigation exposure, which could adversely impact our business, financial condition and results of operations. Changes in U.S. tax laws could adversely affect our results of operations.
Any change in our risk profile stemming from this or any of our other business initiatives could result in increased compliance costs and litigation exposure, which could adversely impact our business, financial condition and results of operations. The use of third-party vendors and service providers is subject to regulatory review and scrutiny.
If we fail to successfully develop and timely introduce new and enhanced services or if we make substantial investments in an unsuccessful new service or infrastructure change, our business, financial condition and results of operations could be adversely affected.
If we are unable to effectively manage the technology associated with our business, we could experience increased costs, reductions in system availability, and loss of agents or consumers. 17 Index If we fail to successfully develop and timely introduce new and enhanced services, including the introduction of new digital platforms, or if we make substantial investments in an unsuccessful new service or infrastructure change, our business, financial condition and results of operations could be adversely affected.
Retaining our chief executive officer and other key executives and recruiting and retaining qualified personnel is important to our continued success, and any inability to attract and retain such personnel could harm our operations. Our ability to successfully operate our business will depend upon the efforts of certain key personnel.
Significant credit losses could have a material and adverse effect on our business, financial condition and results of operations. Retaining our chief executive officer and other key executives and recruiting and retaining qualified personnel is important to our continued success, and any inability to attract and retain such personnel could harm our operations.
A breach of security in the systems on which we rely could adversely affect our reputation, business, financial condition and results of operations. We rely on a variety of technologies to provide security for our systems.
A cybersecurity incident or breach of security in the information systems on which we rely could adversely affect our reputation, business, financial condition, and results of operations. Due to the nature of our business, we face constant exposure to continually evolving cybersecurity risks and other technological risks.
Conversely, if widely varying regulations come into existence worldwide, we may have difficulty adjusting our services, fees, foreign exchange spreads and other important aspects of our business, with the same effect. Litigation or investigations involving us or our agents could result in material settlements, fines or penalties.
Conversely, if widely varying regulations come into existence worldwide, we may have difficulty adjusting our services, fees, foreign exchange spreads and other important aspects of our business, with the same effect. 20 Index Current and future data privacy and cybersecurity laws and regulations could adversely affect our business, financial condition, and results of operations.
Our IT personnel have designed and implemented key portions of our proprietary software and are crucial to the success of our business. In addition, legal or enforcement actions against compliance and other personnel in the money remittance industry may affect our ability to attract and retain key employees and directors.
In addition, legal or enforcement actions against compliance and other personnel in the money remittance industry may affect our ability to attract and retain key employees and directors. The lack of management continuity or the loss of one or more members of our executive management team could harm our business and future development.
We could be subject to fines or other penalties if we are found to have violated the Dodd-Frank Act’s prohibition against unfair, deceptive or abusive acts or practices. The CFPB’s authority to change regulations adopted in the past by other regulators could increase our compliance costs and litigation exposure.
The Dodd-Frank Act requires enforcement by various governmental agencies, including the CFPB. We could be subject to fines or other penalties if we are found to have violated the Dodd-Frank Act’s prohibition against unfair, deceptive or abusive acts or practices.
The development and implementation of our strategy has depended in large part on our Chief Executive Officer, President and Chairman of the Board of Directors, Robert Lisy. The retention of Mr. Lisy is important to our continued success, and we expect him to remain with the Company for the foreseeable future. In addition to Mr.
Our ability to successfully operate our business will depend upon the efforts of certain key personnel. The development and implementation of our strategy has depended in large part on our Chief Executive Officer, President and Chairman of the Board of Directors, Robert Lisy. The retention of Mr.
The lack of management continuity or the loss of one or more members of our executive management team could harm our business and future development. A failure to recruit and retain key personnel including operating, marketing, financial and technical personnel, could also have a material and adverse impact on our business, financial condition and results of operations.
A failure to recruit and retain key personnel including operating, marketing, financial and technical personnel, could also have a material and adverse impact on our business, financial condition and results of operations. Regulatory and Legal Risks We and our agents are subject to numerous U.S. and international laws and regulations.
There can also be no assurance that the actual future results, performance, benefits or achievements that we expect from our strategies, systems, initiatives or products will occur. Risks Relating to Our Business and Industry Our financial condition, results of operations, business and cash flow may be negatively affected by a public health crises, such as the coronavirus (COVID-19) pandemic.
There can also be no assurance that the actual future results, performance, benefits or achievements that we expect from our strategies, systems, initiatives or products will occur.
Furthermore, detecting, investigating and resolving actual or alleged violations of the FCPA and other similar anti-corruption laws is expensive and can consume significant time and attention of our senior management. We conduct money remittance transactions through agents in regions that are politically volatile or, in a limited number of cases, may be subject to certain OFAC restrictions.
Furthermore, detecting, investigating and resolving actual or alleged violations of the FCPA and other similar anti-corruption laws is expensive and can consume significant time and attention of our senior management. New business initiatives, such as modifications to our current product offerings or the introduction of new products, may modify our risk profile from a regulatory perspective.
Because of the scope and nature of our operations, we experience a higher risk associated with compliance with the FCPA and similar anti-corruption laws than many other companies. 19 Index Our employees and agents interact with government officials on our behalf, including as necessary to obtain licenses and other regulatory approvals necessary to operate our business, employ expatriates and resolve tax disputes.
Our employees and agents interact with government officials on our behalf, including as necessary to obtain licenses and other regulatory approvals necessary to operate our business, employ expatriates and resolve tax disputes. We also have a number of contracts with third-party paying agents that are owned or controlled by non-U.S. governments.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our leased corporate offices are located in Miami, Florida. We lease five other facilities in Miami, Florida, Denver, Colorado and New York, New York. In addition, as of December 31, 2022, we lease 116 Company-operated stores throughout the United States. Substantially all our facilities are leased.
Biggest changeITEM 2. PROPERTIES Our leased corporate offices are located in Miami, Florida. We lease four other facilities in the United States, located in Miami, Florida and New York, New York and two facilities internationally, located in Madrid, Spain and Milan, Italy.
We have two international customer service centers located in Guatemala City, Guatemala and Puebla, Mexico where our employees answer operational questions from agents and customers. Our facilities are used for operational, sales and administrative purposes in support of our business, and are all currently being utilized as intended.
Our main international customer service centers are located in Guatemala City, Guatemala, Aguascalientes, Mexico, and Puebla, Mexico where our employees answer operational questions from agents and customers. Our facilities are used for operational, sales and administrative purposes in support of our business, and are all currently being utilized as intended.
In December 2022, we entered into a lease agreement, which expires in 2033, for our new headquarters to accommodate our growing workforce. We expect to complete the move to the new headquarters in the second half of 2023 following the completion of leasehold improvements.
In December 2022, we entered into a lease agreement, which expires in 2033, for our new headquarters to accommodate our growing workforce. We completed the move to the new headquarters in February 2024.
Added
In addition, as of December 31, 2023, we lease 107 Company-operated stores throughout the United States, one Company-operated store in Canada and 12 Company-operated stores throughout Spain, Italy and Germany. Substantially all our facilities are leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeReference is made to Note 18 – Commitments and Contingencies in the Consolidated Financial Statements of International Money Express, Inc. contained elsewhere in this Annual Report on Form 10–K for information regarding certain legal proceedings to which we are a party, which information is incorporated by reference herein. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 24 Index PART II
Biggest changeReference is made to Note 18 – Commitments and Contingencies in the Consolidated Financial Statements of International Money Express, Inc. contained elsewhere in this Annual Report on Form 10–K for information regarding certain legal proceedings to which we are a party, which information is incorporated by reference herein. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 26 Index PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRepurchases of Equity Securities of the Issuer The following table provides information about repurchases of our common stock during the quarter ended December 31, 2022: Period Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (b) Approximate Dollar Value of Shares that May Yet be Purchased under the Program (c) October 1 through October 31 441 $ 26.65 — $ 18,253,402 November 1 through November 30 178,559 $ 20.81 174,585 $ 14,620,077 December 1 through December 31 290,544 $ 21.91 290,544 $ 8,253,419 Total 469,544 465,129 (a) Includes 174,585 and 290,544 shares purchased in November and December 2022, respectively, under the Repurchase Program (as defined below) and 441 and 3,974 shares withheld for income tax purposes in October and November 2022, respectively, in connection with shares issued under compensation and benefit programs.
Biggest changeThe following table provides information about repurchases of our common stock during the quarter ended December 31, 2023: Period Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (b) Approximate Dollar Value of Shares that May Yet be Purchased under the Program October 1 through October 31 193,400 $ 16.60 193,341 $ 77,464,691 November 1 through November 30 172,720 $ 19.82 169,907 $ 74,097,603 December 1 through December 31 1,058,277 $ 20.38 159,636 $ 70,681,122 Total 1,424,397 522,884 (a) Includes (i) 59, (ii) 2,813 and (iii) 128,238 shares withheld for income tax purposes in October 2023, November 2023 and December 2023, respectively, in connection with shares issued under compensation and benefit programs.
Any payment of future dividends will be at the discretion of the Company’s Board of Directors and will depend upon, among other factors, the Company’s earnings, financial condition, current and anticipated capital requirements, plans for expansion, level of indebtedness and contractual restrictions. The payment of future cash dividends, if any, would be made only from assets legally available.
Any payment of future dividends will be at the discretion of the Company’s Board of Directors and will depend upon, among other factors, the Company’s earnings, financial condition, current and anticipated capital and liquidity requirements, plans for expansion, level of indebtedness and contractual restrictions. The payment of future cash dividends, if any, would be made only from assets legally available.
The graph assumes the value of the investment in our common stock and each index was $100 on July 27, 2018 and that all dividends were reinvested. The graph plots the value of the initial $100 investment at quarterly intervals for the fiscal years shown.
The graph assumes the value of the investment in our common stock and each index was $100 on December 31, 2018 and that all dividends were reinvested. The graph plots the value of the initial $100 investment at quarterly intervals for the fiscal years shown.
NOTE: Corporate Performance Graph with peer group uses peer group only performance (excludes only Intermex) The graph is furnished and shall not be deemed “filed” with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
The graph is furnished and shall not be deemed “filed” with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for (1) the Company’s common stock, (2) the NASDAQ US Benchmark TR Index and (3) our Peer Group, for the period from July 27, 2018 (the first day our common stock was separately traded) through December 31, 2022.
The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for (1) the Company’s common stock, (2) the NASDAQ US Benchmark TR Index and (3) our Peer Group, for the period from December 31, 2018 through December 31, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for the Company’s Common Stock Our common stock trades on the Nasdaq Capital Market under the symbol “IMXI”. As of March 8, 2023, there were 64 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for the Company’s Common Stock Our common stock trades on the Nasdaq Capital Market under the symbol “IMXI”. As of February 23, 2024, there were 61 holders of record of our common stock.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG INTERNATIONAL MONEY EXPRESS, INC., NASDAQ INDEX AND PEER GROUP INDEX NOTE: Index Data: Copyright NASDAQ OMX, Inc. Used with permission. All rights reserved.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG INTERNATIONAL MONEY EXPRESS, INC., NASDAQ INDEX AND PEER GROUP INDEX NOTE: Index Data: Copyright NASDAQ OMX, Inc. Used with permission. All rights reserved. NOTE: Corporate Performance Graph with peer group uses peer group only performance (excludes only Intermex).
(b) On August 18, 2021, the Company’s Board of Directors approved a stock repurchase program (the “Repurchase Program”) that authorizes the Company to purchase up to $40.0 million of its outstanding shares. The Repurchase Program does not have an expiration date.
(b) On August 18, 2021, the Company’s Board of Directors approved a stock repurchase program that authorizes the Company to purchase up to $40.0 million of outstanding shares of the Company’s common stock and which authorization was increased on March 3, 2023 to an additional $100 million of the Company's outstanding shares (the “Repurchase Program”).
Removed
For the year ended December 31, 2022, the Company revised its Peer Group to include other public companies that have increased their participation in the digital money remittance industry segment.
Added
Recent Sales of Unregistered Securities None. Repurchases of Equity Securities of the Issuer The Company’s share Repurchase Program (as defined below) provides for the repurchase, from time to time, of shares of Company common stock in open market transactions or in privately negotiated transactions in accordance with applicable securities laws.
Removed
(c) On March 3, 2023 the Board of Directors approved an increase to the Repurchase Program that authorizes the Company to purchase an additional $100.0 million of its outstanding shares. 25 Index ITEM 6. [RESERVED] 26 Index
Added
The timing and the amount of any repurchases is determined based on market conditions, legal requirements, cash flow and liquidity needs and other factors.
Added
In addition, on December 4, 2023 the Company repurchased 100,000 shares at a price of $20.57 per share in a privately negotiated transaction outside of the Repurchase Program. In addition, on December 12, 2023, the Company repurchased 670,403 shares at a price of $19.78 per share in a privately negotiated transaction outside of the Repurchase Program.
Added
The Repurchase Program does not have an expiration date. 27 Index ITEM 6. [RESERVED] 28 Index

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeKey Factors and Trends Affecting our Business Various trends and other factors have affected and may continue to affect our business, financial condition and operating results, including, but not limited to: • the Company’s ability to successfully execute, manage, integrate and obtain the anticipated financial benefits of key acquisitions and mergers, including the completed acquisition of La Nacional and pending acquisition of LAN Holdings; • economic factors such as inflation, the level of economic activity, recession risks and labor market conditions, as well as rising interest rates; • public health conditions, including the COVID-19 pandemic, responses thereto and the economic and market effects thereof; • competition in the markets in which we operate; 28 Index • volatility in foreign exchange rates that could affect the volume of consumer remittance activity and/or affect our foreign exchange related gains and losses; • our ability to maintain favorable banking and agent relationships necessary to conduct our business; • credit risks from our agents and the financial institutions with which we do business; • bank failures, sustained financial illiquidity, or illiquidity at our clearing, cash management or custodial financial institutions; • new technology or competitors that disrupt the current ecosystem, including the introduction of new digital platforms; • cyber-attacks or disruptions to our information technology, computer network systems, data centers and phone apps; • our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements; • our success in developing and introducing new products, services and infrastructure; • consumer confidence in our brand and in consumer money transfers generally; • our ability to maintain compliance with applicable regulatory requirements; • international political factors, political stability, tariffs, border taxes or restrictions on remittances or transfers out of the United States and Canada; • currency restrictions and volatility in countries in which we operate or plan to operate; • consumer fraud and other risks relating to the authenticity of customers’ orders; • changes in immigration laws and their enforcement; • our ability to protect our brands and intellectual property rights; • weakness in U.S. or international economic conditions; • changes in tax laws; and • our ability to recruit and retain key personnel.
Biggest changeKey Factors and Trends Affecting our Business Various trends and other factors have affected and may continue to affect our business, financial condition and operating results, including, but not limited to: • loss of, or reduction in business with, key sending agents; • our ability to effectively compete in the markets in which we operate; • economic factors such as inflation, the level of economic activity, recession risks and labor market conditions, as well as rising interest rates; • international political factors, political instability, tariffs, border taxes or restrictions on remittances or transfers from the outbound countries in which we operate or plan to operate; • volatility in foreign exchange rates that could affect the volume of consumer remittance activity and/or affect our foreign exchange related gains and losses; • public health conditions, responses thereto and the economic and market effects thereof; • consumer confidence in our brands and in consumer money transfers generally; • expansion into new geographic markets or product markets; • the Company’s ability to successfully execute, manage, integrate and obtain the anticipated financial benefits of key acquisitions and mergers; • the ability of our risk management and compliance policies, procedures and systems to mitigate risk related to transaction monitoring; • consumer fraud and other risks relating to the authenticity of customers’ orders or the improper or illegal use of our services by consumers; • cybersecurity-attacks or disruptions to our information technology, computer network systems, data centers and mobile device apps; • new technology or competitors that disrupt the current money transfer and payment ecosystem, including the introduction of new digital platforms; • our success in developing and introducing new products, services and infrastructure; 30 Index • our ability to maintain favorable banking and paying agent relationships necessary to conduct our business; • bank failures, sustained financial illiquidity, or illiquidity at the clearing, cash management or custodial financial institutions with which we do business; • changes to banking industry regulation and practice; • credit risks from our agents and the financial institutions with which we do business; • our ability to recruit and retain key personnel; • our ability to maintain compliance with applicable laws and regulatory requirements including those intended to prevent use of our money remittance services for criminal activity, those related to data and cyber-security protection, and those related to new business initiatives; • enforcement actions and private litigation under regulations applicable to the money remittance services; • changes in immigration laws and their enforcement; • changes in tax laws in the countries we operate; • our ability to protect our brands and intellectual property rights; • our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements; • the use of third-party vendors and service providers; and • weakness in U.S. or international economic conditions.
Transaction Costs We incurred transaction costs associated with the acquisitions of La Nacional and LAN Holdings. These costs included all internal and external costs directly related to the transaction, consisting primarily of legal, consulting, accounting and advisory fees and certain incentive bonuses. Due to their significance, they are presented separately in our consolidated statements of income and comprehensive income.
Transaction Costs We incurred transaction costs primarily associated with the acquisitions of La Nacional and LAN Holdings. These costs included all internal and external costs directly related to the transaction, consisting primarily of legal, consulting, accounting and advisory fees and certain incentive bonuses. Due to their significance, they are presented separately in our consolidated statements of income and comprehensive income.
In addition, the Company is required to make mandatory prepayments annually from excess cash flow if the Company’s consolidated leverage ratio (as calculated under the Credit Agreement) is greater than or equal to 3.0, and the remainder of any such excess cash flow is contributed to the available amount which may be used for a variety of purposes, including investments and distributions.
In addition, the Company is required to make mandatory prepayments annually from excess cash flow if the Company’s consolidated leverage ratio (as calculated under the A&R Credit Agreement) is greater than or equal to 3.0, and the remainder of any such excess cash flow is contributed to the available amount which may be used for a variety of purposes, including investments and distributions.
Current conditions considered include pre-defined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses.
Current conditions include pre-defined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses.
The Credit Agreement generally restricts the ability of the Company to make certain restricted payments, including the repurchase of shares of its common stock, provided that the Company may make restricted payments, among others, (i) without limitation so long as the Consolidated Leverage Ratio (as defined in the Credit Agreement), as of the then most recently completed four fiscal quarters of the Company, after giving pro forma effect to such restricted payments, is 2.25 to 1.00 or less, (ii) that do not exceed, in the aggregate during any fiscal year, the greater of (x) $23.8 million and (y) 25.0% of Consolidated EBITDA (as defined in the Credit Agreement) for the then most recently completed four fiscal quarters of the Company, and (iii) to repurchase Company common stock from current or former employees in an aggregate amount of up to $10.0 million per calendar year.
The A&R Credit Agreement generally restricts the ability of the Company to make certain restricted payments, including the repurchase of shares of its common stock, provided that the Company may make restricted payments, among others, (i) without limitation so long as the Consolidated Leverage Ratio (as defined in the A&R Credit Agreement), as of the then most recently completed four fiscal quarters of the Company, after giving pro forma effect to such restricted payments, is 2.25:1.00 or less, (ii) that do not exceed, in the aggregate during any fiscal year, the greater of (x) $23.8 million and (y) 25.00% of Consolidated EBITDA (as defined in the A&R Credit Agreement) for the then most recently completed four fiscal quarters of the Company and (iii) to repurchase Company common stock from current or former employees in an aggregate amount of up to $10.0 million per calendar year.
A portion of these expenses relate to our Company-operated stores; however, the majority relate to the overall business and compliance requirements of a regulated publicly traded financial services company. Selling expenses include expenses such as advertising and promotion, shipping, supplies and other expenses associated with serving and increasing our network of agents.
A portion of these expenses relate to our Company-operated stores; however, the majority relate to the overall business and compliance requirements of a regulated publicly traded financial services company. Selling expenses include expenses such as advertising and promotion, shipping, supplies and other expenses associated with serving and increasing our network of sending agents.
Liquidity and Capital Resources We consider liquidity in terms of cash position, cash flows from operations and their sufficiency to fund business operations, including working capital needs, debt service, acquisitions, capital expenditures, contractual obligations and other commitments.
Liquidity and Capital Resources We consider liquidity in terms of cash and cash equivalents position, cash flows from operations and their sufficiency to fund business operations, including working capital needs, debt service, acquisitions, capital expenditures, contractual obligations and other commitments.
In connection with these reviews, and in light of regulatory complexity and heightened attention of governmental and regulatory authorities related to cybersecurity and compliance activities, we have made, and continue to make, enhancements to our processes and systems designed to detect and prevent cyber-attacks, consumer fraud, money laundering, terrorist financing and other illicit activities, along with enhancements to improve consumer protection, including the Dodd-Frank Act and similar regulations outside the United States.
In connection with these reviews, and in light of regulatory complexity and heightened attention of governmental and regulatory authorities related to cybersecurity and compliance activities, we have made, and continue to make, enhancements to our processes and systems designed to detect and prevent cyber-attacks, consumer fraud, money laundering, terrorist financing, human trafficking and other illicit activities, along with enhancements to improve consumer protection, including the Dodd-Frank Act and similar regulations outside the United States.
We have encountered and continue to expect to encounter increasing competition as new electronic platforms emerge that enable consumers to send and receive money through a variety of channels, but we do not expect adoption rates to be as significant in the near 29 Index term for the consumer segment we serve.
We have encountered and continue to expect to encounter increasing competition as new electronic platforms emerge that enable consumers to send and receive money through a variety of channels, but we do not expect adoption rates to be as significant in the near 31 Index term for the consumer segment we serve.
The Credit Agreement also contains covenants that limit the Company’s and its subsidiaries’ ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.
The A&R Credit Agreement also contains covenants that limit the Company’s and its subsidiaries’ ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.
Loans (other than Term Loans, as defined in the Credit Agreement), may also bear interest at the base rate plus an applicable margin ranging between 1.50% and 2.00% based upon the Company’s consolidated leverage ratio, as so calculated.
Loans (other than Term Loans, as defined in the A&R Credit Agreement), may also bear interest at the base rate plus an applicable margin ranging between 1.50% and 2.00% based upon the Company’s consolidated leverage ratio, as so calculated.
Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA are non-GAAP financial measures and should not be considered as an alternative to operating income, net income or earnings per share as a measure of operating performance or cash flows or 34 Index as a measure of liquidity.
Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA are non-GAAP financial measures and should not be considered as an alternative to operating income, net income or earnings per share as a measure of operating performance or cash flows or as a measure of liquidity.
The term loans under the Credit Agreement may be prepaid at any time without premium or penalty. Revolving loans may be borrowed, repaid and reborrowed from time to time in accordance with the terms and conditions of the Credit Agreement.
The term loans under the A&R Credit Agreement may be prepaid at any time without premium or penalty. Revolving loans may be borrowed, repaid and reborrowed from time to time in accordance with the terms and conditions of the A&R Credit Agreement.
For purposes of the annual impairment test, management initially performs a qualitative assessment, which includes consideration of the economic, industry and market conditions in addition to our overall financial performance and the performance of these assets.
For purposes of the annual assessment, management initially performs a qualitative assessment, which includes consideration of the economic, industry and market conditions in addition to our overall financial performance and the performance of these assets.
Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted future net cash flows expected to be generated by the asset.
Upon such an occurrence, recoverability of assets to be 43 Index held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted future net cash flows expected to be generated by the asset.
The Company is also required to repay the loans upon receipt of net proceeds from certain casualty events, upon the disposition of certain property and upon incurrence of indebtedness not permitted by the Credit Agreement.
The Company is also required to repay the loans upon receipt of net proceeds from certain casualty events, upon the disposition of certain property and upon incurrence of indebtedness not permitted by the A&R Credit Agreement.
Our services are accessible in person through over 100,000 independent sending and paying agents and 117 Company-operated stores, as well as online and via Internet-enabled mobile devices.
Our services are accessible in person through over 100,000 independent sending and paying agents and 122 Company-operated stores, as well as online and via Internet-enabled mobile devices.
The Credit Agreement contains financial covenants that require the Company to maintain a quarterly minimum fixed charge coverage ratio of 1.25:1.00 and a quarterly maximum consolidated leverage ratio of 3.25:1.00. As of December 31, 2022, we were in compliance with the covenants of the Credit Agreement.
The A&R Credit Agreement contains financial covenants that require the Company to maintain a quarterly minimum fixed charge coverage ratio of 1.25:1.00 and a quarterly maximum consolidated leverage ratio of 3.25:1.00. As of December 31, 2023, we were in compliance with the covenants of the A&R Credit Agreement.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 7, 2022, which is available free of charge on the SEC’s website at www.sec.gov and at www.intermexonline.com, by clicking “Investors” located at the bottom of the page.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 15, 2023, which is available free of charge on the SEC’s website at www.sec.gov and at www.intermexonline.com, by clicking “Investors” located at the bottom of the page.
After consideration of all evidence, both positive and negative, management has determined that no valuation allowance is required at December 31, 2022 on the Company’s U.S. federal or state deferred tax assets; however, a valuation allowance has been recorded as of December 31, 2022 on deferred tax assets associated with Canadian net operating loss carryforwards.
After consideration of all evidence, both positive and negative, management has determined that no valuation allowance is required at December 31, 2023 on the Company’s U.S. federal or state deferred tax assets; however, a valuation allowance has been recorded as of December 31, 2023 on deferred tax assets associated with foreign net operating loss carryforwards.
The principal amount of the term loan facility under the Credit Agreement must be repaid in consecutive quarterly installments of 5.0% in years 1 and 2, 7.5% in year 3, and 10.0% in years 4 and 5, in each case on the last day of each quarter, commencing in September 2021 with a final balloon payment at maturity.
The principal amount of the term loan facility under the A&R Credit Agreement must be repaid in consecutive quarterly installments of 5.0% in years 1 and 2, 7.5% in year 3, and 10.0% in years 4 and 5, in each case on the last day of each quarter, which commenced in September 2021 with a final balloon payment at maturity.
A discussion of changes in our results of operations and cash flows from fiscal 2021 to fiscal 2020 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
Results of Operations A discussion of changes in our results of operations and cash flows from fiscal year 2022 to fiscal year 2021 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
Remittances paid in local currencies that are not pegged to the U.S. dollar can also generate revenue if we are successful in our daily management of currency exchange spreads.
Remittances paid in local currencies that are not pegged to the U.S. dollar, Canadian dollar or Euro can also generate revenue if we are successful in our daily management of currency exchange spreads.
The Company evaluates amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company evaluates long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Segments Our business is organized around one reportable segment that provides money transmittal services between the United States and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 117 Company-operated stores throughout the United States and Canada.
Segments Our business is organized around one reportable segment that provides money transmittal services primarily between the United States and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 122 Company-operated stores throughout the United States, Canada, Spain, Italy and Germany.
Share-based compensation is primarily recognized as an expense on a straight-line basis over the requisite service period; unrecognized compensation expense related to stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and performance stock units (“PSUs”) of approximately $10.2 million is expected to be recognized over a weighted-average period of 1.66 years.
Share-based compensation is primarily recognized as an expense on a straight-line basis over the requisite service period; unrecognized compensation expense related to stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and performance stock units (“PSUs”) of approximately $11.9 million is expected to be recognized over a weighted-average period of 1.8 years.
We maintain a strong cash balance position and have access to committed funding sources, which we have used only on a limited and ordinary course basis during the year ended December 31, 2022.
We maintain a strong cash and cash equivalents balance position and have access to committed funding sources, which we have used only on an ordinary course basis during the year ended December 31, 2023.
Adjusted Net Income and Adjusted Earnings per Share Adjusted Net Income is defined as net income adjusted to add back certain charges and expenses, such as non-cash amortization of intangible assets resulting from business acquisition transactions, which will recur in future periods until these assets have been fully amortized, non-cash compensation costs, litigation settlements and other items set forth in the table below, as these charges and expenses are not considered a part of our core business operations and are not an indicator of ongoing, future company performance.
Adjusted Net Income and Adjusted Earnings per Share Adjusted Net Income is defined as net income adjusted to add back certain charges and expenses, such as non-cash amortization of intangible assets resulting from business acquisition transactions, non-cash compensation costs and other items set forth in the table below, as these charges and expenses are not considered a part of our core business operations and are not an indicator of ongoing, future company performance.
Our money remittance services enable consumers to send funds through our broad network of locations in the United States and Canada that are primarily operated by third-party businesses, as well as through our Company-operated stores located in the United States.
Our money remittance services enable consumers to send funds through our broad network of locations in the United States, Canada, Spain, Italy and Germany, which are primarily operated by third-party businesses, as well as by Company-operated stores located in those jurisdictions.
See Note 3 to the consolidated financial statements. 30 Index Depreciation and Amortization Depreciation and amortization largely consists of depreciation of computer equipment and amortization of software that supports our technology platform. In addition, it includes amortization of intangible assets primarily related to our agent relationships, trade names and developed technology.
For additional information on these acquisitions, see Note 3 to the consolidated financial statements. Depreciation and Amortization 32 Index Depreciation and amortization largely consists of depreciation of computer equipment and amortization of software that supports our technology platform. In addition, it includes amortization of intangible assets primarily related to our agent relationships, trade names and developed technology.
The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. The effective interest rates for the year ended December 31, 2022 for the term loan facility and revolving credit facility were 4.87% and 1.04%, respectively.
The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. The effective interest rates for the year ended December 31, 2023 for the term loan facility and revolving credit facility were 8.33% and 1.92%, respectively.
The following table presents the reconciliation of GAAP Earnings per Share, our closest GAAP measure, to Adjusted Earnings per Share: Year Ended December 31, 2022 2021 Basic Diluted Basic Diluted GAAP Earnings per Share $ 1.52 $ 1.48 $ 1.22 $ 1.20 Adjusted for: Share-based compensation $ 0.19 $ 0.18 $ 0.12 $ 0.12 Loss on bank closure $ 0.04 $ 0.04 $ 0.05 $ 0.05 Transaction costs $ 0.08 $ 0.08 $ 0.03 $ 0.03 Other charges and expenses $ 0.03 $ 0.03 $ 0.04 $ 0.04 Amortization of intangibles $ 0.11 $ 0.11 $ 0.13 $ 0.13 Income tax benefit related to adjustments $ (0.12) $ (0.11) $ (0.10) $ (0.10) Adjusted Earnings per Share $ 1.85 $ 1.81 $ 1.49 $ 1.47 36 Index The table above may contain slight summation differences due to rounding.
The following table presents the reconciliation of GAAP Earnings per Share, our closest GAAP measure, to Adjusted Earnings per Share: Year Ended December 31, 2023 2022 Basic Diluted Basic Diluted GAAP Earnings per Share $ 1.67 $ 1.63 $ 1.52 $ 1.48 Adjusted for: Share-based compensation $ 0.23 $ 0.22 $ 0.19 $ 0.18 Restructuring costs $ 0.03 $ 0.03 $ — $ — Transaction costs $ 0.01 $ 0.01 $ 0.08 $ 0.08 Loss on bank closure $ — $ — $ 0.04 $ 0.04 Other charges and expenses $ 0.05 $ 0.05 $ 0.03 $ 0.03 Amortization of intangibles $ 0.13 $ 0.13 $ 0.11 $ 0.11 Income tax benefit related to adjustments $ (0.14) $ (0.13) $ (0.12) $ (0.11) Adjusted Earnings per Share $ 1.99 $ 1.95 $ 1.85 $ 1.81 The table above may contain slight summation differences due to rounding.
Net Income We reported net income of $57.3 million for the year ended December 31, 2022 compared to net income of $46.8 million for the year ended December 31, 2021, which resulted in an increase of $10.5 million due to the same factors discussed above.
Net Income We reported net income of $59.5 million for the year ended December 31, 2023 compared to net income of $57.3 million for the year ended December 31, 2022, which resulted in an increase of $2.2 million due to the same factors discussed above.
Accounts receivable that are more than 90 days past due are charged off against the allowance for credit losses. The Company is not party to any off-balance sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard. Goodwill and Intangible Assets Goodwill and intangible assets result primarily from business combination acquisitions.
Accounts receivable that are more than 90 days past due are charged off against the allowance for credit losses. The Company is not party to any off-balance sheet arrangements that would require an allowance for credit losses. Goodwill and Intangible Assets Goodwill and intangible assets result primarily from business acquisition transactions.
Adjusted Earnings per Share - Diluted (previously defined and used as described above) for the year ended December 31, 2022 was $1.81, representing an increase of $0.34, or 23.1%, compared to $1.47 for the year ended December 31, 2021.
Adjusted Earnings per Share - Diluted (previously defined and used as described above) for the year ended December 31, 2023 was $1.95, representing an increase of $0.14, or 7.7%, compared to $1.81 for the year ended December 31, 2022.
Adjusted Earnings per Share - Basic and Diluted is calculated by dividing Adjusted Net Income by GAAP weighted-average common shares outstanding (basic and diluted). Adjusted Net Income for the year ended December 31, 2022 was $69.9 million, representing an increase of $12.4 million, or 21.6%, from Adjusted Net Income of $57.5 million for the year ended December 31, 2021.
Adjusted Earnings per Share - Basic and Diluted is calculated by dividing Adjusted Net Income by GAAP weighted-average common shares outstanding (basic and diluted). Adjusted Net Income for the year ended December 31, 2023 was $71.0 million, representing an increase of $1.1 million, or 1.6%, from Adjusted Net Income of $69.9 million for the year ended December 31, 2022.
Investing Activities Net cash used in investing activities was $12.5 million for the year ended December 31, 2022, an increase of $1.8 million from $10.8 million for the year ended December 31, 2021.
Investing Activities Net cash used in investing activities was $18.3 million for the year ended December 31, 2023, an increase of $5.8 million from $12.5 million for the year ended December 31, 2022.
Our remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, are available in all 50 states in the U.S., Washington D.C., Puerto Rico and 13 provinces in Canada, where consumers can send money to beneficiaries in 16 LAC countries, eight countries in Africa and two countries in Asia.
Our remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, are available in all 50 states in the U.S., Washington D.C., Puerto Rico and 13 provinces in Canada, as well as in certain locations in Spain, Italy and Germany, where consumers can send money to beneficiaries in more than 60 countries in LAC, Africa and Asia.
Adjusted Earnings per Share - Basic (previously defined and used as described above) for the year ended December 31, 2022 was $1.85, representing an increase of $0.36, or 24.2%, compared to $1.49 for the year ended December 31, 2021.
Adjusted Earnings per Share - Basic (previously defined and used as described above) for the year ended December 31, 2023 was $1.99, representing an increase of $0.14, or 7.6%, compared to $1.85 for the year ended December 31, 2022.
Service charges from agents and banks — Service charges from agents and banks were $364.8 million for the year ended December 31, 2022 compared to $307.5 million for the year ended December 31, 2021. The increase of $57.3 million, or 18.7%, was primarily due to the increase in transaction volume described above.
Service charges from agents and banks — Service charges from agents and banks were $430.9 million for the year ended December 31, 2023 compared to $364.8 million for the year ended December 31, 2022. The increase of $66.1 million, or 18.1%, was primarily due to the increase in transaction volume described above.
Non-Operating Expenses Interest expense — Interest expense was $5.6 million for the year ended December 31, 2022, an increase of $1.1 million, or 24.1%, from $4.5 million for the year ended December 31, 2021.
Non-Operating Expenses Interest expense — Interest expense was $10.4 million for the year ended December 31, 2023, an increase of $4.8 million, or 85.7%, from $5.6 million for the year ended December 31, 2022.
(f) Represents the current and deferred tax impact of the taxable adjustments to Net Income using the Company’s blended federal and state tax rate for each period. Relevant tax-deductible adjustments include all adjustments to Net Income.
(f) Represents the amortization of intangible assets that resulted from business acquisition transactions. (g) Represents the current and deferred tax impact of the taxable adjustments to Net Income using the Company’s blended federal and state tax rate for each period. Relevant tax-deductible adjustments include all adjustments to Net Income.
Salaries and benefits — Salaries and benefits were $52.2 million for the year ended December 31, 2022, an increase of $9.1 million, or 21.3%, from $43.1 million for the year ended December 31, 2021.
Salaries and benefits — Salaries and benefits were $71.1 million for the year ended December 31, 2023, an increase of $18.9 million, or 36.2%, from $52.2 million for the year ended December 31, 2022.
The provision amounted to $1.6 million and $2.0 million for the years ended December 31, 2022 and 2021, respectively. Transaction Costs — Transaction Costs of $3.0 million and $1.0 million for the years ended December 31, 2022 and 2021, respectively, relate primarily to financial advisory fees as well as other professional fees and legal fees incurred in connection with acquisitions.
Transaction Costs — Transaction Costs of $0.4 million and $3.0 million for the years ended December 31, 2023 and 2022, respectively, relate primarily to financial advisory fees as well as other professional fees and legal fees incurred in connection with business acquisition transactions.
Earnings Per Share Earnings per Share - Basic for the year ended December 31, 2022 was $1.52, representing an increase of $0.30, or 24.6%, compared to $1.22 for the year ended December 31, 2021.
Earnings Per Share Earnings per Share - Basic for the year ended December 31, 2023 was $1.67, representing an increase of $0.15, or 9.9%, compared to $1.52 for the year ended December 31, 2022.
This increase in cash used was due to the acquisition of La Nacional through a cash transaction which resulted in $0.1 million of cash used, net of cash acquired.
This increase in cash used was primarily due to the acquisition of LAN Holdings through a cash transaction, which resulted in $5.5 million of cash used, net of cash acquired.
Income tax provision — Income tax provision was $19.9 million for the year ended December 31, 2022, an increase of $3.4 million, or 21.1%, from an income tax provision of $16.5 million for the year ended December 31, 2021.
Income tax provision — Income tax provision was $25.5 million for the year ended December 31, 2023, an increase of $5.6 million, or 28.1%, from an income tax provision of $19.9 million for the year ended December 31, 2022.
Operating Expenses Operating expenses for the above periods are presented below: Year Ended December 31, ($ in thousands) 2022 % of Revenues 2021 % of Revenues Operating expenses: Service charges from agents and banks $ 364,804 67 % $ 307,458 67 % Salaries and benefits 52,224 10 % 43,065 9 % Other selling, general and administrative expenses 34,394 6 % 30,334 7 % Transaction costs 3,005 1 % 1,006 NM Depreciation and amortization 9,470 2 % 9,491 2 % Total operating expenses $ 463,897 85 % $ 391,354 85 % NM - Amounts rounds to less than 1%.
Operating Expenses Operating expenses for the above periods are presented below: Year Ended December 31, ($ in thousands) 2023 % of Revenues 2022 % of Revenues Operating expenses: Service charges from agents and banks $ 430,865 65 % $ 364,804 67 % Salaries and benefits 71,090 11 % 52,224 10 % Other selling, general and administrative expenses 47,979 7 % 34,394 6 % Transaction costs 445 NM 3,005 1 % Depreciation and amortization 12,866 2 % 9,470 2 % Total operating expenses $ 563,245 86 % $ 463,897 85 % NM - Amounts rounds to less than 1%.
Non-GAAP Financial Measures We use Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA to evaluate our performance, both internally and as compared with our peers, because these measures exclude certain items that may not be indicative of our core operating results, as well as items that can vary widely among companies within our industry.
The increase in both basic and diluted EPS largely reflect the increased net income discussed above and the effect of a reduced share count as a result of the stock repurchases. 36 Index Non-GAAP Financial Measures We use Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA to evaluate our performance, both internally and as compared with our peers, because these measures exclude certain items that may not be indicative of our core operating results, as well as items that can vary widely among companies within our industry.
Cash Flows The following table summarizes the changes to our cash flows for the periods presented: Year Ended December 31, (in thousands) 2022 2021 2020 Statement of Cash Flows Data: Net cash provided by (used in) operating activities $ 15,174 $ 78,098 $ (880) Net cash used in investing activities (12,529) (10,773) (4,062) Net cash provided by (used in) financing activities 14,058 (9,616) (6,160) Effect of exchange rate changes on cash and cash equivalents 316 (142) (108) Net increase (decrease) in cash and cash equivalents 17,019 57,567 (11,210) Cash and cash equivalents, beginning of the year $ 132,474 $ 74,907 $ 86,117 Cash and cash equivalents, end of the year $ 149,493 $ 132,474 $ 74,907 Operating Activities Net cash provided by operating activities was $15.2 million for the year ended December 31, 2022, a decrease of $62.9 million from net cash provided by operating activities of $78.1 million for the year ended December 31, 2021.
Cash Flows The following table summarizes the changes to our cash flows for the periods presented: Year Ended December 31, (in thousands) 2023 2022 2021 Statement of Cash Flows Data: Net cash provided by operating activities $ 143,525 $ 15,174 $ 78,098 Net cash used in investing activities (18,280) (12,529) (10,773) Net cash (used in) provided by financing activities (37,120) 14,058 (9,616) Effect of exchange rate changes on cash and cash equivalents 1,585 316 (142) Net increase in cash and cash equivalents 89,710 17,019 57,567 Cash and cash equivalents, beginning of the year $ 149,493 $ 132,474 $ 74,907 Cash and cash equivalents, end of the year $ 239,203 $ 149,493 $ 132,474 Operating Activities Net cash provided by operating activities was $143.5 million for the year ended December 31, 2023, an increase of $128.3 million from net cash provided by operating activities of $15.2 million for the year ended December 31, 2022.
The increase in Adjusted Net Income was primarily due to the increase in net income discussed above and the impact of certain adjusting items detailed in the table below.
The increase in Adjusted Net Income was primarily due to the increase in net income discussed above partially offset by the lower net effect of the adjusting items detailed in the table below.
The proceeds of the term loan were used to refinance the existing term loan under the Company’s previous credit agreement, and the revolving credit facility is available for working capital, general corporate purposes and to pay fees and expenses in connection with this transaction. The maturity date of the Credit Agreement is June 24, 2026.
The proceeds of the term loan were used to refinance the existing term loan under the Company’s previous credit agreement, and the revolving credit facility is available for general corporate purposes to support the Company's growth and to fund working capital needs. The maturity date of the A&R Credit Agreement is June 24, 2026.
Financing Activities Net cash provided by financing activities was $14.1 million for the year ended December 31, 2022, which primarily consisted of $4.4 million in scheduled quarterly payments due on the term loan facility, $53.7 million of repurchases of common stock and $5.4 million of payments for stock-based awards for shares withheld in connection with stock-based compensation arrangements and related payments to taxing authorities, offset by $76.0 million of borrowings, net under the revolving credit facility and $1.7 million in proceeds from issuance of stock as a result of the exercise of options. 40 Index Net cash used in financing activities was $9.6 million for the year ended December 31, 2021, which primarily consisted of a $44.2 million debt repayment, including $4.1.million in scheduled quarterly payments due on the term loan facility, and $2.9 million of debt origination costs in connection with the refinancing of the existing debt under the Company ’ s previous credit agreement, $5.6 million of repurchases of common stock and $0.8 million of payments for stock-based awards for shares withheld in connection with stock-based compensation arrangements and related payments to taxing authorities, offset by $40.2 million borrowings in connection with the refinancing of the Company ’ s previous credit agreement and $3.8 million in proceeds from issuance of stock as a result of the exercise of options.
Net cash provided by financing activities was $14.1 million for the year ended December 31, 2022, which primarily consisted of $4.4 million in scheduled quarterly payments due on the term loan facility, $53.7 million of repurchases of common stock and $5.4 million of net payments for shares withheld in connection with stock-based compensation arrangements and related payments to taxing authorities, offset by $76.0 million of borrowings, net under the revolving credit facility that varies primarily due to timing of prefunding of payers primarily for weekends and $1.7 million in proceeds from issuance of stock as a result of the exercise of options.
Other selling, general and administrative expenses — Other selling, general and administrative expenses of $34.4 million for the year ended December 31, 2022 increased by $4.1 million, or 13.4%, from $30.3 million for the year ended December 31, 2021.
Other selling, general and administrative expenses — Other selling, general and administrative expenses of $48.0 million for the year ended December 31, 2023 increased by $13.6 million, or 39.5%, from $34.4 million for the year ended December 31, 2022.
In addition, the Company invested funds in higher purchases of property and equipment as a result of our continued growth of sending agents, as well as, upgrading equipment of existing agents during the year ended December 31, 2022.
In addition, the Company invested funds in purchases of property and equipment as a result of our continued growth of sending agents and commitment to improve our proprietary software during the year ended December 31, 2023.
The following table presents the reconciliation of Net Income, our closest GAAP measure, to Adjusted Net Income: 35 Index Year Ended December 31, (in thousands, except for share data) 2022 2021 Net Income $ 57,331 $ 46,843 Adjusted for: Share-based compensation (a) 7,118 4,601 Loss on bank closure (b) 1,583 2,000 Transaction costs (c) 3,005 1,006 Other charges and expenses (d) 1,141 1,705 Amortization of intangibles (e) 4,102 5,052 Income tax benefit related to adjustments (f) (4,376) (3,738) Adjusted Net Income $ 69,904 $ 57,469 Adjusted Earnings per share Basic $ 1.85 $ 1.49 Diluted $ 1.81 $ 1.47 Weighted-average common shares outstanding Basic 37,733,047 38,474,040 Diluted 38,625,390 39,103,450 (a) Represents share-based compensation relating to equity awards granted to employees and independent directors of the Company.
The following table presents the reconciliation of Net Income, our closest GAAP measure, to Adjusted Net Income: 37 Index Year Ended December 31, (in thousands, except for share data) 2023 2022 Net Income $ 59,515 $ 57,331 Adjusted for: Share-based compensation (a) 8,111 7,118 Restructuring costs (b) 1,214 — Transaction costs (c) 445 3,005 Loss on bank closure (d) — 1,583 Other charges and expenses (e) 1,850 1,141 Amortization of intangibles (f) 4,740 4,102 Income tax benefit related to adjustments (g) (4,914) (4,376) Adjusted Net Income $ 70,961 $ 69,904 Adjusted Earnings per share Basic $ 1.99 $ 1.85 Diluted $ 1.95 $ 1.81 Weighted-average common shares outstanding Basic 35,604,582 37,733,047 Diluted 36,429,714 38,625,390 (a) Represents shared-based compensation relating to equity awards granted primarily to employees and independent directors of the Company.
This is based on the objectives of the business and how our chief operating decision maker, the CEO and President, monitors operating performance and allocates resources. 31 Index Results of Operations The following table summarizes key components of our results of operations for the periods indicated: Year Ended December 31, (in thousands, except for share data) 2022 2021 2020 Revenues: Wire transfer and money order fees, net $ 469,162 $ 393,241 $ 307,909 Foreign exchange gain, net 72,920 62,832 46,763 Other income 4,723 3,133 2,537 Total revenues 546,805 459,206 357,209 Operating expenses: Service charges from agents and banks 364,804 307,458 238,597 Salaries and benefits 52,224 43,065 32,831 Other selling, general and administrative expenses 34,394 30,334 22,086 Transaction costs 3,005 1,006 — Depreciation and amortization 9,470 9,491 10,828 Total operating expenses 463,897 391,354 304,342 Operating income 82,908 67,852 52,867 Interest expense 5,629 4,537 6,566 Income before income taxes 77,279 63,315 46,301 Income tax provision 19,948 16,472 12,517 Net income $ 57,331 $ 46,843 $ 33,784 Earnings per common share: Basic $ 1.52 $ 1.22 $ 0.89 Diluted $ 1.48 $ 1.20 $ 0.88 Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Revenues Revenues for the above periods are presented below: Year Ended December 31, ($ in thousands) 2022 % of Revenues 2021 % of Revenues Revenues: Wire transfer and money order fees, net $ 469,162 86 % $ 393,241 85 % Foreign exchange gain, net 72,920 13 % 62,832 14 % Other income 4,723 1 % 3,133 1 % Total revenues $ 546,805 100 % $ 459,206 100 % Wire transfer and money order fees, net of $469.2 million, for the year ended December 31, 2022 increased by $76.0 million, or 19.3%, from $393.2 million for the year ended December 31, 2021.
The following table summarizes key components of our results of operations for the periods indicated: 33 Index Year Ended December 31, (in thousands, except for share data) 2023 2022 2021 Revenues: Wire transfer and money order fees, net $ 561,540 $ 469,162 $ 393,241 Foreign exchange gain, net 87,908 72,920 62,832 Other income 9,287 4,723 3,133 Total revenues 658,735 546,805 459,206 Operating expenses: Service charges from agents and banks 430,865 364,804 307,458 Salaries and benefits 71,090 52,224 43,065 Other selling, general and administrative expenses 47,979 34,394 30,334 Transaction costs 445 3,005 1,006 Depreciation and amortization 12,866 9,470 9,491 Total operating expenses 563,245 463,897 391,354 Operating income 95,490 82,908 67,852 Interest expense 10,426 5,629 4,537 Income before income taxes 85,064 77,279 63,315 Income tax provision 25,549 19,948 16,472 Net income $ 59,515 $ 57,331 $ 46,843 Earnings per common share: Basic $ 1.67 $ 1.52 $ 1.22 Diluted $ 1.63 $ 1.48 $ 1.20 Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Revenues Revenues for the above periods are presented below: Year Ended December 31, ($ in thousands) 2023 % of Revenues 2022 % of Revenues Revenues: Wire transfer and money order fees, net $ 561,540 86 % $ 469,162 86 % Foreign exchange gain, net 87,908 13 % 72,920 13 % Other income 9,287 1 % 4,723 1 % Total revenues $ 658,735 100 % $ 546,805 100 % Wire transfer and money order fees, net of $561.5 million, for the year ended December 31, 2023 increased by $92.3 million, or 19.7%, from $469.2 million for the year ended December 31, 2022.
Worldwide political and economic conditions continue to exhibit instability, as evidenced by high unemployment rates in key Latin American markets, restricted lending activity, higher inflation, volatility in foreign currencies and low consumer confidence, some of which reflect the residual effects of the COVID-19 pandemic, supply chain disruptions, among other economic and market factors.
Political, social and economic conditions in key Latin American markets continue to exhibit instability, as evidenced by higher interest rates, high unemployment rates, restricted lending activity, higher inflation, volatility in foreign currencies and low consumer confidence, among other economic and market factors.
Transaction costs for the year ended December 31, 2022 related to the La Nacional and LAN Holdings acquisitions, while transaction costs for the year ended December 31, 2021 relate to costs incurred in connection with potential acquisitions during that period, including La Nacional and LAN Holdings.
Transaction costs for the year ended December 31, 2023 primarily related to the LAN Holdings acquisition, while transaction costs for the year ended December 31, 2022 related to costs incurred in connection with both the La Nacional and LAN Holdings acquisitions.
The following table presents the reconciliation of Net Income, our closest GAAP measure, to Adjusted EBITDA: 37 Index Year Ended December 31, (in thousands) 2022 2021 Net Income $ 57,331 $ 46,843 Adjusted for: Interest expense 5,629 4,537 Income tax provision 19,948 16,472 Depreciation and amortization 9,470 9,491 EBITDA 92,378 77,343 Share-based compensation (a) 7,118 4,601 Loss on bank closure (b) 1,583 2,000 Transaction costs (c) 3,005 1,006 Other charges and expenses (d) 1,141 1,705 Adjusted EBITDA $ 105,225 $ 86,655 (a) Represents share-based compensation relating to equity awards granted to employees and independent directors of the Company.
The following table presents the reconciliation of Net Income, our closest GAAP measure, to Adjusted EBITDA: 39 Index Year Ended December 31, (in thousands) 2023 2022 Net Income $ 59,515 $ 57,331 Adjusted for: Interest expense 10,426 5,629 Income tax provision 25,549 19,948 Depreciation and amortization 12,866 9,470 EBITDA 108,356 92,378 Share-based compensation (a) 8,111 7,118 Restructuring costs (b) 1,214 — Transaction costs (c) 445 3,005 Loss on bank closure (d) — 1,583 Other charges and expenses (e) 1,850 1,141 Adjusted EBITDA $ 119,976 $ 105,225 (a) Represents shared-based compensation relating to equity awards granted primarily to employees and independent directors of the Company.
We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.
To help us assess our performance with these key indicators, we primarily use Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA as non-GAAP financial measures. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.
(b) Represents losses related to the closure of a financial institution in Mexico during 2021. (c) Represents primarily, financial advisory fees and other professional fees and legal fees related to business acquisition transactions.
(b) Represents primarily severance, write-off of fixed assets and professional fees related to the restructuring of La Nacional. (c) Represents primarily financial advisory, professional and legal fees related to business acquisition transactions. (d) Represents losses related to the closure of a financial institution in Mexico during 2021. (e) Represents primarily loss on disposal of fixed assets.
(b) Represents losses related to the closure of a financial institution in Mexico during 2021. (c) Represents primarily financial advisory fees and other professional fees and legal fees related to business acquisition transactions.
(b) Represents primarily severance, write-off of fixed assets and professional fees related to the restructuring of La Nacional. (c) Represents primarily financial advisory, professional and legal fees related to business acquisition transactions. (d) Represents losses related to the closure of a financial institution in Mexico during 2021. (e) Represents primarily loss on disposal of fixed assets.
At the election of the Company, interest on the term loan facility and revolving loans under the Credit Agreement may be determined by reference to SOFR plus an index adjustment of 0.10% and an applicable margin ranging between 2.50% and 3.00% based upon the Company’s consolidated leverage ratio, as calculated pursuant to the terms of the Credit Agreement.
There were $176.0 million of additional borrowings available under these facilities as of December 31, 2023. 40 Index At the election of the Company, interest on the term loan facility and revolving loans under the A&R Credit Agreement may be determined by reference to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) plus an index adjustment of 0.10% and an applicable margin ranging between 2.50% and 3.00% based upon the Company’s consolidated leverage ratio, as calculated pursuant to the terms of the A&R Credit Agreement.
Therefore, we believe that our projected cash flows generated from operations, together with borrowings under our revolving credit facility are sufficient to fund our principal debt payments, interest expense, our working capital needs and our expected capital expenditures for at least the next twelve months.
Therefore, we believe that our current cash and cash equivalents position, as well as projected cash flows generated from operations, together with borrowings under our revolving credit facility are sufficient to fund the principal and interest payments on our debt, lease expenses, our working capital needs, our business acquisitions and our expected capital expenditures in the long-term.
These increases were partially offset by: • $1.4 million - in lower advertising and promotion expenses, primarily as a result of higher co-branding investment by some of our paying agents during 2022; 33 Index • $0.8 million - refund of state business and occupancy tax from the state of Washington; • $0.6 million - lower loss on disposal of assets, as the year ended December 31, 2021 included a $1.0 million impairment charge that did not reoccur in the year ended December 31, 2022; and • $0.4 million - related to a lower provision recorded on deposits frozen at certain closed financial institutions in Mexico in 2022 compared to fiscal year 2021.
These increases were partially offset by: • $0.7 million - in lower advertising and promotion expenses, primarily as a result of lower investment in advertising during 2023 and higher co-branding investment by some of our paying agents during 2022; and • $1.6 million - related to a provision recorded on deposits frozen at certain closed financial institutions in Mexico in 2022 that did not recur in 2023.
Money remittance services to LAC countries, mainly Mexico and Guatemala, are the primary source of our revenue. These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location.
These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location.
The decrease of $62.9 million is primarily a result of $78.3 million related to changes in working capital, which varies due to timing of money transmissions and payments, offset by additional cash generated by our improved operating results for the year ended December 31, 2022, which reflected the further growth of our business.
The increase of $128.3 million is primarily a result of $116.4 million related to changes in working capital, which varies due to timing of remittance of consumer funds by sending agents, transmittal orders and payments, as well as prefunding of payers primarily for weekends, and additional cash generated by our improved operating results for the year ended December 31, 2023, which reflected the further growth of our business.
The key indicators of the financial condition and operating performance of our business are revenues, service charges from agents and banks, salaries and benefits, other selling, general and administrative expenses and net income. To help us assess our performance with these key indicators, we primarily use Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA as non-GAAP financial measures.
How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are revenues, service charges from agents and banks, salaries and benefits, other selling, general and administrative expenses and net income.
The Credit Agreement provides for a $150.0 million revolving credit facility, an $87.5 million term loan facility and an uncommitted incremental facility, which may be utilized for additional revolving or term loans, of up to $70.0 million. The Credit Agreement also provides for the issuance of letters of credit, which would reduce availability under the revolving credit facility.
Credit Agreement We maintain an Amended and Restated Credit Agreement (as amended, the “A&R Credit Agreement”) with a group of banking institutions. The A&R Credit Agreement provides for a $220.0 million revolving credit facility, an $87.5 million term loan facility and an uncommitted incremental facility, which may be utilized for additional revolving or term loans, of up to $70.0 million.
The increase was primarily due to higher market interest rates paid under our A&R Credit Agreement (as described below), as well as higher drawings under our revolving credit facility primarily during the fourth quarter of 2022.
The increase was primarily due to higher market interest rates paid under our A&R Credit Agreement, as well as higher and more frequent draws under our revolving credit facility during the year ended December 31, 2023.
Intangible assets include agent relationships, trade names, developed technology and other intangibles, all with finite lives. Our agent relationships, trade names and developed technology are currently amortized utilizing an accelerated method over their estimated useful lives. Other intangible assets are amortized straight-line over a useful life of 10 years.
The Company’s agent relationships, trade names and developed technology are amortized utilizing an accelerated method over their estimated useful lives of up to 15 years. Other intangible assets are amortized on a straight-line basis over a useful life of up to 10 years. The Company reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described below.
Income Taxes The Company is subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions and our foreign subsidiaries are subject to taxes by local tax authorities.
Fair value is determined based on discounted cash flows, appraised values or management’s estimates, depending upon the nature of the assets. Income Taxes The Company is subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions and our foreign subsidiaries are subject to taxes by local tax authorities.
Operating Expenses Service Charges from Agents and Banks Service charges primarily consist of agent commissions and bank fees. Service charges vary based on agent commission percentages and the amount of fees charged by the banks. Sending agents earn a commission on each transaction they process of approximately 50% of the transaction fee.
Service charges vary based on agent commission percentages and the amount of fees charged by the banks. Sending agents earn a commission on each transaction they process of approximately 50% of the transaction fee. Service charges may increase if banks or payer organizations increase their fee structure or sending agents use higher fee methods to remit funds to us.
In recent years, we expanded our services to allow remittances to Africa and Asia from the United States and also began offering sending services from Canada to Latin America and Africa. We utilize our proprietary technology to deliver convenient, reliable and value-added services to consumers through a broad network of sending and paying agents.
We utilize our proprietary technology to deliver convenient, reliable and value-added services to consumers through a broad network of sending and paying agents.
This is mainly due to $0.9 million less amortization related to trade names, developed technology and agent relationships during the year ended December 31, 2022 as these intangibles are being amortized on an accelerated basis, which declines over time, offset by an increase in depreciation of $0.9 million associated primarily with additional computer equipment to support our growing business and agent network.
These increases were partially offset by a decrease of approximately $1.0 million in amortization related to our Intermex trade name, developed technology and agent relationships during the year ended December 31, 2023, as these intangibles are being amortized on an accelerated basis, which declines over time.
Upon the acquisition, the purchase price is first allocated to identifiable assets and liabilities, including the trade name and other intangibles, with any remaining purchase price recorded as goodwill. Goodwill is not amortized; however, it is assessed for impairment at least annually, at the beginning of the fourth quarter, or more frequently if triggering events occur.
Goodwill is not amortized; however, it is assessed for impairment at least annually, at the beginning of the fourth quarter, or more frequently if triggering events occur.
Our sales team, located throughout the United States and Canada, is focused on supporting and growing our sending agent network.
Corporate employees include management, customer service, compliance, information technology, operations, finance, legal and human resources. Our sales team, located throughout the United States, Canada, Spain and Italy, is focused on supporting and growing our sending agent network.
This increase was primarily due to a 19.2% increase in transaction 32 Index volume compared to the year ended December 31, 2021, largely due to the continued growth in our agent network, which increased by 6.0% from December 2021 to December 2022, excluding the agents added as part of La Nacional acquisition.
This increase was primarily due to a 22.8% increase in transaction volume compared to the year ended December 31, 2022, largely due to the continued growth in our agent network that expanded as a result of the La Nacional and LAN Holdings acquisitions, which network increased on a net basis by 16.4% when compared to December 31, 34 Index 2022.
The increase was primarily the result of: • $2.1 million - higher IT related expenses incurred to sustain our business expansion and to improve our technology environment; • $1.8 million - higher facilities and rent expenses for scheduled maintenance and contracted lease rate increases to support our business growth as well as related operating expenses in connection with the 80 corporate stores acquired through La Nacional; • $1.0 million - increase in provision for credit losses due to higher net write-offs of accounts receivable during the year ended December 31, 2022 compared to the same period in 2021, primarily as a result of sending agents that were not able to pay in accordance with the original terms and are, accordingly, subject to our normal collection procedures; • $1.0 million - higher travel costs, primarily of our sales force, to support or business growth and expansion; • $0.9 million - higher audit related and professional fees to support our internal audit and compliance functions; • $0.4 million - higher shipping costs due to deployment of equipment for new and existing agents.
The increase was primarily the result of: • $6.3 million - higher facilities and rent expenses for scheduled maintenance and contracted lease rate increases to support our business growth and expenses related to the company-operated stores and other facilities added as a result of the La Nacional and LAN Holdings acquisitions; • $2.8 million - higher IT related expenses incurred to sustain our business expansion and to improve our technology environment; • $2.4 million - increase in provision for credit losses due to higher net write-offs of accounts receivable during the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily as a result of sending agents that were not able to pay in accordance with the original terms and are, accordingly, subject to our normal collection procedures; 35 Index • $1.0 million - higher loss on disposal of assets primarily due to replacement of equipment used by our agent network and write-off of equipment assigned to sending agents closed during the year ended December 31, 2023, as well as $0.3 million in computer equipment write offs related to the restructuring of La Nacional under the Plan; • $0.6 million - higher professional and legal fees to support our expanded operations in the United States and Europe; • $0.5 million - higher property and other indirect taxes due to the acquisition of LAN Holdings; • $0.3 million - higher state license & bond insurance due to the acquisition of La Nacional; and • $0.8 million - refund of state business and occupancy tax from the state of Washington in 2022 that did not recur in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe spot and average exchange rates for Mexico, Guatemala and Canada currencies to U.S. dollar are as follows: 2022 2021 2020 Spot (1) Average (2) Spot (1) Average (2) Spot (1) Average (2) U.S. dollar/Mexico Peso 19.40 20.09 20.50 20.27 19.89 21.47 U.S. dollar/Guatemala Quetzal 7.85 7.73 7.71 7.73 7.79 7.71 U.S. dollar/Canadian Dollar 1.36 1.30 1.28 1.25 1.28 1.34 (1) Spot exchange rates are as of December 31, 2022, 2021 and 2020. 42 Index (2) Average exchange rates are for the years ended December 31, 2022, 2021 and 2020.
Biggest changeThe spot and average exchange rates for the currencies used by our subsidiaries to U.S. dollar are as follows: 2023 2022 2021 Spot (1) Average (2) Spot (1) Average (2) Spot (1) Average (2) U.S. dollar/Mexico peso 16.89 17.72 19.40 20.09 20.50 20.27 U.S. dollar/Guatemala quetzal 7.81 7.82 7.85 7.73 7.71 7.73 U.S. dollar/Canadian dollar 1.32 1.35 1.36 1.30 1.28 1.25 U.S. dollar/Dominican peso (3) 58.04 55.76 — — — — U.S. dollar/Euro (3) 0.91 0.92 — — — — 44 Index (1) Spot exchange rates are as of December 31, 2023, 2022 and 2021.
Our provision for credit losses was approximately $2.6 million for the year ended December 31, 2022 (0.5% of total revenues), $1.5 million for the year ended December 31, 2021 (0.3% of total revenues) and $1.8 million for the year ended December 31, 2020 (0.5% of total revenues).
Our provision for credit losses was approximately $5.0 million for the year ended December 31, 2023 (0.8% of total revenues), $2.6 million for the year ended December 31, 2022 (0.5% of total revenues) and $1.5 million for the year ended December 31, 2021 (0.3% of total revenues).
Long-term sustained appreciation of the Mexican peso or Guatemalan quetzal as compared to the U.S. dollar could affect our margins. Interest Rate Risk As discussed above, interest under the Credit Agreement is variable based on certain benchmark rates, including SOFR.
Long-term sustained appreciation of the Mexican peso or Guatemalan quetzal as compared to the U.S. dollar could affect our gross profit and margin. Interest Rate Risk As discussed above, interest under the Credit Agreement is variable based on certain benchmark rates, including SOFR.
In addition, included in wire transfers and money orders payable, net in our consolidated balance sheets as of December 31, 2022 and 2021, there are $39.3 million and $17.8 million, respectively, of wire transfers payable denominated in foreign currencies, primarily in Mexican pesos and Guatemalan quetzales.
In addition, included in wire transfers and money orders payable, net in our consolidated balance sheets as of December 31, 2023 and 2022, there are $40.7 million and $39.3 million, respectively, of wire transfers payable denominated in foreign currencies, primarily in Mexican pesos and Guatemalan quetzales.
Also, included in prepaid wires, net in our consolidated balance sheets as of December 31, 2022 and 2021, there are $82.3 million and $39.7 million, respectively, of prepaid wires denominated in foreign currencies, primarily in Mexican pesos and Guatemalan quetzales.
Also, included in prepaid wires, net in our consolidated balance sheets as of December 31, 2023 and 2022, there are $17.8 million and $82.3 million, respectively, of prepaid wires denominated in foreign currencies, primarily in Mexican pesos and Guatemalan quetzales.
This foreign currency risk is related primarily to our operations in our foreign subsidiaries. Revenues from our foreign subsidiaries represent less than 1% of our consolidated revenues for the year ended December 31, 2022. Therefore, a 10% increase or decrease in these currency rates against the U.S. Dollar would result in a de minimis change to our overall operating results.
This foreign currency risk is related primarily to our operations in our foreign subsidiaries. Revenues from our foreign subsidiaries represents approximately 2% of our consolidated revenues for the year ended December 31, 2023. Therefore, a 10% increase or decrease in these currency rates against the U.S. Dollar would result in a de minimis change to our overall operating results.
The Company had open tom and spot foreign exchange contracts for Mexican pesos and Guatemalan quetzales amounting to approximately $41.3 million and $48.6 million at December 31, 2022 and 2021, respectively.
The Company had open tom and spot foreign exchange contracts for Mexican pesos and Guatemalan quetzales amounting to approximately $56.9 million and $41.3 million at December 31, 2023 and 2022, respectively.
During the year ended December 31, 2022 the Federal Reserve raised the fed funds rate from 0.25% to 4.50% as a countermeasure to control inflation in the United States. As a consequence, other benchmark interest rates such as SOFR and previously LIBOR increased as well. These increases have resulted in the Company incurring higher interest expense.
During the year ended December 31, 2023, the Federal Reserve continued raising the fed funds rate from 4.50% to 5.50% as a countermeasure to control inflation in the United States. As a consequence, other benchmark interest rates such as SOFR increased as well. These increases have resulted in the Company incurring higher interest expense.
The increase in our provision for credit losses in the year ended December 31, 2022 is due to higher write-offs of accounts receivable in 2022 compared to 2021 primarily as a result of sending agents that were not able to pay in accordance with the original terms and are, accordingly, subject to our normal collection procedures. 43 Index
The increase in our provision for credit losses in the year ended December 31, 2023 is due to a combination of higher write-offs of accounts receivable in 2023 compared to 2022 primarily as a result of sending agents that were not able to pay in accordance with the original terms and are, accordingly, subject to our normal collection procedures and higher outstanding balances of accounts receivable primarily related to the acquisition of La Nacional and LAN Holdings. 45 Index
We perform a credit review before each agent signing and conduct ongoing analyses of sending agents and certain other parties we transact with directly. As of December 31, 2022, we also had $2.8 million outstanding of agent advances receivable from sending agents.
We are also exposed to credit risk related to receivable balances from sending agents. We perform a credit review before each agent signing and conduct ongoing analyses of sending agents and certain other parties we transact with directly. As of December 31, 2023, we also had $4.6 million outstanding of agent advances receivable from sending agents.
A hypothetical 1% increase or decrease in the interest rate on our indebtedness as of December 31, 2022 would have increased or decreased annual cash interest expense on our term loan facility and revolving credit facility by approximately $0.8 million each. Credit Risk We maintain certain cash balances in various U.S. banks, which at times, may exceed federally insured limits.
A hypothetical 1% increase or decrease in the interest rate on our indebtedness as of December 31, 2023 would have increased or decreased annual cash interest expense on our term loan facility and revolving credit facility by approximately $0.8 million and $1.1 million per annum, respectively.
To manage our exposure to credit risk with respect to cash balances and other credit risk exposure resulting from our relationships with banks and financial institutions, we regularly review cash concentrations, and we attempt to diversify our cash balances among global financial institutions. We are also exposed to credit risk related to receivable balances from sending agents.
During the year ended December 31, 2023, we did not incur any losses on these uninsured accounts. To manage our exposure to credit risk with respect to cash balances and other credit risk exposure resulting from our relationships with banks and financial institutions, we regularly review cash concentrations, and we attempt to diversify our cash balances among global financial institutions.
We have not incurred any losses on these accounts. In addition, we maintain various bank accounts in Mexico, Guatemala and Canada, which are not insured.
Credit Risk We maintain certain cash balances in various U.S. banks, which at times, may exceed federally insured limits. We have not incurred any losses on these accounts. In addition, we maintain cash in various bank accounts in Mexico, Guatemala, Canada, the Dominican Republic, Spain and Italy and overnight deposit accounts in Mexico, which may not be fully insured.
Most of the agent advances receivable are collateralized by personal guarantees from the sending agents and by assets from their businesses.
During the year ended December 31, 2023, the Company funded advances of approximately $3.2 million to agents that deliver highly accretive transaction volume and margin growth. Most of the agent advances receivable are collateralized by personal guarantees from the sending agents and by assets from their businesses and have a term of up to three years.
As of December 31, 2022, we had $80.9 million and $76.0 million in outstanding borrowings under the term loan facility and revolving credit facility, respectively.
The Company expects that the Federal Reserve will continue to monitor inflation indicators and will maintain the fed funds rate at the current level before considering any potential decreases in 2024. As of December 31, 2023, we had $75.5 million and $114.0 million in outstanding borrowings under the term loan facility and revolving credit facility, respectively.
Removed
The Company expects that the Federal Reserve will continue raising the fed funds rate during 2023, which will continue exposing the Company to higher interest rate risk as benchmark interest rates such as SOFR will continue increasing as well.
Added
(2) Average exchange rates are for the years ended December 31, 2023, 2022 and 2021. (3) We commenced operations in the Dominican Republic and Europe in connection with the LAN Acquisition in April 2023 and, therefore, no information is provided prior to 2023.
Removed
During the year ended December 31, 2022, we did not incur any losses on these uninsured accounts with the exception of a $1.6 million provision we recorded in the third quarter of 2022 as a result of the closure of a financial institution in Mexico during the third quarter of 2021 (See Part II, Item 8, Financial Statements and Supplementary Data, Note 6 “Prepaid Expenses and Other Assets” for further discussion).

Other IMXI 10-K year-over-year comparisons