International Money Express, Inc. — FY 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual summary, not a standalone fourth-quarter report.
Business context
Intermex provides omnichannel money-transfer services, primarily from the United States to Latin America and the Caribbean, especially Mexico and Guatemala. It serves customers through more than 100,000 agent locations, 36 company-operated stores, and digital channels. The company reported one operating segment.
Financial and operating performance
| Metric | FY 2021 | FY 2020 | Change |
|---|---|---|---|
| Revenue | $459.2 million | $357.2 million | +28.6% |
| Operating income | $67.9 million | $52.9 million | +28.3% |
| Net income | $46.8 million | $33.8 million | +38.7% |
| Diluted EPS | $1.20 | $0.88 | +36.4% |
| Adjusted EBITDA (non-GAAP) | $86.7 million | $68.4 million | +26.7% |
| Operating cash flow | $78.1 million | $(0.9) million | Improved $79.0 million |
- Wire-transfer and money-order fees, net, rose 27.7% to $393.2 million; net foreign-exchange gain increased 34.4% to $62.8 million. Management attributed growth mainly to 25.4% more transactions, network expansion, higher average amounts sent, and peso volatility. Average price per transaction was described as stable.
- Operating margin was approximately 14.8%, in line with 2020; net margin increased to approximately 10.2% from 9.5%. Service charges from agents and banks remained about 67% of revenue.
- Cash and cash equivalents were $132.5 million at year-end, versus $74.9 million a year earlier. Current assets were $263.5 million and current liabilities $116.9 million. Operating cash flow benefited in part from a $65.7 million working-capital change; timing of money transmissions and payments can cause substantial variation.
- Year-end term-loan borrowings were $85.3 million gross of debt costs; there were no revolver borrowings. The company reported $220 million of additional borrowing availability. It was in compliance with credit-agreement covenants at year-end.
- Investing cash outflow was $10.8 million, principally for property, equipment, and agent-network growth. Financing cash outflow was $9.6 million and included scheduled debt payments and $5.6 million of share repurchases.
Material changes and unusual items
- The company refinanced its debt in June 2021, extending maturity to June 24, 2026 and establishing a $150 million revolving facility, an $87.5 million term loan, and an uncommitted incremental facility of up to $70 million.
- Other SG&A increased 41.9% to $31.3 million. Notable items included a $2.0 million loss provision related to a Mexican financial-institution closure, $1.0 million of software-development write-offs, and $1.0 million of professional and legal fees for potential acquisitions.
- The Mexican institution held approximately $5.1 million of company deposits at closure; Intermex recorded a $2.0 million valuation allowance. Recovery timing and amount remained uncertain.
- The board authorized a $40 million repurchase program in August 2021. Intermex repurchased 341,522 shares for $5.6 million during the year, leaving $34.4 million available at year-end.
- The company’s $3.25 million TCPA class-action settlement fund was paid in 2020. Management said other ordinary-course claims were not estimable and no reserve was recorded for them.
Outlook, commentary, and risks
- No specific revenue, earnings, or cash-flow guidance is provided in the filing. Management expects cash from operations, together with revolver access, to fund debt service, working capital, and expected capital expenditures for at least the next 12 months.
- Management described the business as resilient during economic instability and reported 32.7% transaction growth in emerging markets. Growth priorities include expanding core corridors, entering new corridors, developing digital channels, and pursuing business-to-business technology opportunities.
- Key risks include intense competition, dependence on agents and banking relationships, and concentration in paying agents: Elektra processed approximately 22% of 2021 remittance volume. Foreign-exchange volatility, sustained appreciation of the peso or quetzal, agent and bank credit exposure, cybersecurity, fraud, and extensive regulatory requirements could affect results.
- COVID-19 restrictions did not materially adversely affect 2021 financial results, according to the company, but future impacts remained uncertain. Variable-rate debt also exposes the company to higher interest costs; management estimated a 1% rate move would change annual cash interest by approximately $0.9 million.
- The financial statements received an unqualified audit opinion. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not provide an internal-control attestation because of the company’s emerging-growth-company exemption.
Important facts for investors to verify
- Whether transaction growth and fee and foreign-exchange revenue trends continued after FY 2021, and how much growth depended on volume versus exchange spreads.
- Recovery prospects and timing for the approximately $5.1 million deposit exposure at the closed Mexican institution, beyond the recorded $2.0 million allowance.
- Current debt balances, borrowing availability, interest-rate benchmark transition, and headroom under leverage and fixed-charge covenants.
- Ongoing dependence on Elektra and a limited group of major banks, agents, and financial institutions.
- Actual results against the company’s growth plans, including digital-channel adoption, emerging-market profitability, and any acquisitions or related costs.