SEC Filing | International Money Express

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imxi-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-37986


INTERNATIONAL MONEY EXPRESS, INC.
(Exact name of registrant as specified in its charter)


Delaware						47-4219082
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

9480 South Dixie Highway Miami, Florida						33156
(Address of Principal Executive Offices)						(Zip Code)


(305) 671-8000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock ($0.0001 par value)	IMXI	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


☐	Large accelerated filer	☒	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of November 2, 2023, there were 34,867,023 shares of the registrant’s common stock, $0.0001 par value per share, outstanding. The registrant has no other class of common stock outstanding.

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INTERNATIONAL MONEY EXPRESS, INC.

INDEX TO FINANCIAL STATEMENTS


		Page

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		3

PART 1 - FINANCIAL INFORMATION

Item 1.	Financial Statements	4

	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4

	Condensed Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44

Item 4.	Controls and Procedures	47

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	49

SIGNATURES		50

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act, as amended, which reflect our current views with respect to certain events that are not historical facts but could have an effect on our future performance, including but without limitation, statements regarding our plans, objectives, financial performance, business strategies, projected results of operations, and expectations for the business of the Company.

These statements may include and be identified by words or phrases such as, without limitation, “would,” “will,” “should,” “expects,” “believes,” “anticipates,” “continues,” “could,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “forecasts,” “intends,” “assumes,” “estimates,” “approximately,” “shall,” “our planning assumptions,” “future outlook,” “currently,” “target,” “guidance,” and similar expressions (including the negative and plural forms of such words and phrases). These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments, projections about our business and our industry, and macroeconomic conditions, and are subject to various risks, uncertainties, estimates, contingencies and other factors, many of which are outside our control, that could cause actual results to differ materially from those expected or implied by such forward-looking statements and could materially adversely affect our business, financial condition, results of operations, cash flows and liquidity. Factors that could cause or contribute to such differences include, but are not limited to, the following:

•changes in applicable laws or regulations;

•factors relating to our business, operations and financial performance, including:

◦the Company’s ability to successfully execute, manage, integrate and obtain the anticipated financial benefits of key acquisitions and mergers;

◦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, responses thereto and the economic and market effects thereof;

◦competition in the markets in which we 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;

◦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 mobile devices 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 brands 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 outbound countries in which we operate;

◦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 in the countries in which we operate;

◦our ability to recruit and retain key personnel; and

•other economic, business and/or competitive factors, risks and uncertainties, including those described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in our Annual Report on Form 10-K for the year ended December 31, 2022.

All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERNATIONAL MONEY EXPRESS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)


	September 30, 2023		December 31, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	222,447	$	149,493
Accounts receivable, net	163,007		129,808
Prepaid wires, net	84,147		90,386
Prepaid expenses and other current assets	12,730		12,749
Total current assets	482,331		382,436

Property and equipment, net	28,967		28,160
Goodwill	53,814		49,774
Intangible assets, net	19,358		19,826
Other assets	35,121		31,876
Total assets	$	619,591	$	512,072

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt, net	$	6,616	$	4,975
Accounts payable	33,283		25,686
Wire transfers and money orders payable, net	159,858		112,251
Accrued and other liabilities	44,270		41,855
Total current liabilities	244,027		184,767
Long-term liabilities:
Debt, net	193,137		150,235
Lease liabilities, net	22,465		23,272
Deferred tax liability, net	2,324		3,892
Total long-term liabilities	217,926		177,399

Commitments and contingencies, see Note 16

Stockholders’ equity:
Common stock $0.0001 par value; 230,000,000 shares authorized, 39,626,532 and 39,453,236 shares issued and 35,069,785 and 36,630,970 shares outstanding as of September 30, 2023 and December 31, 2022, respectively.	4		4
Additional paid-in capital	76,404		70,210
Retained earnings	181,150		139,134
Accumulated other comprehensive income (loss)	1		(142)
Treasury stock, at cost; 4,556,747 and 2,822,266 shares as of September 30, 2023 and December 31, 2022, respectively.	(99,921)		(59,300)
Total stockholders’ equity	157,638		149,906
Total liabilities and stockholders’ equity	$	619,591	$	512,072

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Index

INTERNATIONAL MONEY EXPRESS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except for share data, unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues:
Wire transfer and money order fees, net	$	147,387	$	120,718	$	416,355	$	336,340
Foreign exchange gain, net	22,688		18,851		64,239		52,719
Other income	2,362		1,198		6,358		3,309
Total revenues	172,437		140,767		486,952		392,368

Operating expenses:
Service charges from agents and banks	112,871		93,658		319,983		262,717
Salaries and benefits	18,607		13,853		52,415		36,911
Other selling, general and administrative expenses	13,235		10,232		37,210		24,964
Depreciation and amortization	3,472		2,278		9,511		6,712
Total operating expenses	148,185		120,021		419,119		331,304

Operating income	24,252		20,746		67,833		61,064

Interest expense	2,801		1,466		7,643		3,530

Income before income taxes	21,451		19,280		60,190		57,534

Income tax provision	6,619		2,654		18,174		13,270

Net income	14,832		16,626		42,016		44,264

Other comprehensive income (loss)	(214)		(150)		142		(139)

Comprehensive income	$	14,618	$	16,476	$	42,158	$	44,125

Earnings per common share:
Basic	$	0.42	$	0.44	$	1.17	$	1.16
Diluted	$	0.41	$	0.43	$	1.14	$	1.14

Weighted-average common shares outstanding:
Basic	35,320,809		37,390,632		35,930,234		37,999,709
Diluted	36,082,163		38,425,868		36,767,680		38,907,283

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Index

INTERNATIONAL MONEY EXPRESS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except for share data, unaudited)


	Three Months Ended September 30, 2023
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance, June 30, 2023	39,571,073	$	4	(4,054,847)	$	(89,815)	$	74,103	$	166,318	$	215	$	150,825
Net income	—	—		—	—		—		14,832		—		14,832
Issuance of common stock:
Exercise of stock options, net of shares withheld for taxes	11,250	—		—	—		134		—		—		134
Restricted stock units and awards, net of shares withheld for taxes	43,388	—		—	—		(107)		—		—		(107)
Fully vested shares	821	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		2,274		—		—		2,274
Adjustment from foreign currency translation, net	—	—		—	—		—		—		(214)		(214)
Acquisition of treasury stock, at cost	—	—		(501,900)	(10,106)		—		—		—		(10,106)
Balance, September 30, 2023	39,626,532	$	4	(4,556,747)	$	(99,921)	$	76,404	$	181,150	$	1	$	157,638


	Three Months Ended September 30, 2022
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance, June 30, 2022	39,011,042	$	4	(1,069,423)	$	(19,194)	$	70,012	$	109,441	$	(65)	$	160,198
Net income	—	—			—		—		16,626		—		16,626
Issuance of common stock:
Exercise of stock options, net of shares withheld for taxes	377,589	—		—	—		(4,162)		—		—		(4,162)
Restricted stock units and awards, net of shares withheld for taxes	27,664	—		—	—		(18)		—		—		(18)
Fully vested shares	782	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		2,625		—		—		2,625
Adjustment from foreign currency translation, net	—	—		—	—		—		—		(150)		(150)
Acquisition of treasury stock, at cost	—	—		(1,287,714)	(30,106)		—		—		—		(30,106)
Balance, September 30, 2022	39,417,077	$	4	(2,357,137)	$	(49,300)	$	68,457	$	126,067	$	(215)	$	145,013

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Index

INTERNATIONAL MONEY EXPRESS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)

(in thousands, except for share data, unaudited)


	Nine Months Ended September 30, 2023
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	39,453,236	$	4	(2,822,266)	$	(59,300)	$	70,210	$	139,134	$	(142)	$	149,906
Net income	—	—		—	—		—		42,016		—		42,016
Issuance of common stock:
Exercise of stock options, net of shares withheld for taxes	78,500	—		—	—		956		—		—		956
Restricted stock units and awards, net of shares withheld for taxes	92,368	—		—	—		(979)		—		—		(979)
Fully vested shares	2,428	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		6,217		—		—		6,217
Adjustment from foreign currency translation, net	—	—		—	—		—		—		142		142
Acquisition of treasury stock, at cost	—	—		(1,734,481)	(40,621)		—		—		—		(40,621)
Balance, September 30, 2023	39,626,532	$	4	(4,556,747)	$	(99,921)	$	76,404	$	181,150	$	1	$	157,638


	Nine Months Ended September 30, 2022
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2021	38,820,222	$	4	(341,522)	$	(5,566)	$	66,875	$	81,803	$	(76)	$	143,040
Net income	—	—		—	—		—		44,264		—		44,264
Issuance of common stock:
Exercise of stock options, net of shares withheld for taxes	451,304	—		—	—		(3,675)		—		—		(3,675)
Restricted stock units and awards, net of shares withheld for taxes	142,991	—		—	—		(301)		—		—		(301)
Fully vested shares	2,560	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		5,558		—		—		5,558
Adjustment from foreign currency translation, net	—	—		—	—		—		—		(139)		(139)
Acquisition of treasury stock, at cost	—	—		(2,015,615)	(43,734)		—		—		—		(43,734)
Balance, September 30, 2022	39,417,077	$	4	(2,357,137)	$	(49,300)	$	68,457	$	126,067	$	(215)	$	145,013

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Index

INTERNATIONAL MONEY EXPRESS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income	$	42,016	$	44,264
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	9,511		6,712
Share-based compensation	6,217		5,558
Provision for credit losses	3,770		2,022
Fair value of contingent consideration	(121)		—
Debt origination costs amortization	829		752
Deferred income tax benefit, net	(959)		(1,376)
Non-cash lease expense	5,965		1,631
Loss on disposal of property and equipment	1,479		633
Total adjustments	26,691		15,932
Changes in operating assets and liabilities:
Accounts receivable, net	(36,190)		(34,864)
Prepaid wires, net	12,037		(47,099)
Prepaid expenses and other assets	(3,353)		(828)
Wire transfers and money orders payable, net	39,740		18,158
Lease liabilities	(5,424)		(2,013)
Accounts payable and accrued and other liabilities	6,923		(3,398)
Net cash provided by (used in) operating activities	82,440		(9,848)

Cash flows from investing activities:
Purchases of property and equipment	(7,711)		(9,155)
Cash used in business acquisition, net of cash and cash equivalents acquired	(5,477)		—
Acquisition of agent locations	—		(225)
Net cash used in investing activities	(13,188)		(9,380)

Cash flows from financing activities:
Repayments of term loan facility	(3,828)		(3,281)
Borrowings under revolving credit facility, net	48,000		43,000

Debt origination costs	(701)		—
Proceeds from exercise of stock options	956		1,374
Payments for stock awards	(979)		(5,349)
Repurchases of common stock	(40,621)		(43,734)
Net cash provided by (used in) financing activities	2,827		(7,990)

Effect of exchange rate changes on cash and cash equivalents	875		(204)

Net increase (decrease) in cash and cash equivalents	72,954		(27,422)

Cash and cash equivalents, beginning of period	149,493		132,474

Cash and cash equivalents, end of period	$	222,447	$	105,052

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INTERNATIONAL MONEY EXPRESS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(in thousands, unaudited)


	Nine Months Ended September 30,
	2023		2022
Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,737	$	2,773
Cash paid for income taxes	$	18,981	$	19,692

Supplemental disclosure of non-cash investing activities:
Lease liabilities arising from obtaining right-of-use assets	$	5,325	$	6,033
Right-of-use asset adjustments due to lease modifications	$	—	$	1,124
Contingent consideration liability	$	600	$	—
Settlement of receivable balance from LAN Holdings	$	2,534	$	—

Supplemental disclosure of non-cash financing activities:
Issuance of common stock for cashless exercise of options	$	—	$	9,175

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INTERNATIONAL MONEY EXPRESS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – BUSINESS AND ACCOUNTING POLICIES

International Money Express, Inc. (the “Company” or “us” or “we”) operates as a money transmitter between the United States of America (“United States” or “U.S.”), Canada, Spain, Italy and Germany to Mexico, Guatemala and other countries in Latin America, Africa, Asia and Europe through a network of authorized agents located in various unaffiliated retail establishments and 124 Company-operated stores throughout the United States, Canada, Spain, Italy and Germany.

The condensed consolidated financial statements of the Company include International Money Express, Inc. and its majority-owned subsidiaries. The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements.

The Company’s interim condensed consolidated financial statements and related notes are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in these interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire year. Certain information and footnote disclosures required by GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

In March 2022, the Company entered into a definitive purchase agreement to acquire Envios de Valores La Nacional Corp. (“La Nacional”) and LAN Holdings, Corp. (“LAN Holdings”), which either directly or indirectly operate as money remittance companies in the United States, Canada and certain countries in Europe. The acquisition of La Nacional was closed effective November 1, 2022 and the acquisition of LAN Holdings was closed effective April 5, 2023. Refer to Note 2 for additional information on these acquisitions.

Concentrations

The Company maintains certain of its cash balances in various U.S. banks, which at times, may exceed federally insured limits. The Company has not incurred any losses on these accounts. In addition, the Company maintains various bank accounts in Mexico, Guatemala, Canada and certain countries in Europe, which may not be fully insured. During the three and nine months ended September 30, 2023, the Company has not incurred any losses on these uninsured foreign bank accounts.

In addition, a substantial portion of our paying agents are concentrated in a few large banks and financial institutions and large retail chains in Latin American countries.

Accounting Pronouncements

The FASB issued guidance, ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to apply Topic 606: Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities in a business combination. This guidance improves comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The Company adopted this guidance on January 1, 2023 prospectively for business combinations that occur after the adoption date. The adoption of this accounting standard did not have a material impact on the Company’s condensed consolidated financial statements.

NOTE 2 – ACQUISITIONS

Envios de Valores La Nacional Corp.

On November 1, 2022, the Company completed the acquisition of 100% of the voting interest of La Nacional (the “La Nacional Acquisition”) and on April 5, 2023, the Company completed the acquisition of 100% of the voting interest of LAN Holdings (the “LAN Acquisition”) (the “LAN Acquisition,” and together with the La Nacional Acquisition, the “Acquisitions”). See “LAN Holdings, Corp.” section below.

The Company paid cash consideration of $39.7 million upon consummation of the La Nacional Acquisition (subject to customary purchase price adjustments) and could be required to pay up to $2.4 million in contingent consideration in 2023 as a result of La Nacional achieving certain transaction volume and financial targets during 2023. The contingent consideration fair value as of September 30, 2023 and

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December 31, 2022 was approximately $1.2 million and $1.3 million, respectively. During the nine months ended September 30, 2023, the Company recorded a fair value adjustment of $0.1 million (none in the three months ended September 30, 2023) based on the expected achievement of the financial targets.

The following table summarizes the fair values of consideration transferred and identifiable net assets acquired in the La Nacional Acquisition on November 1, 2022, the measurement period adjustments in the nine months ended September 30, 2023 and the fair values of consideration transferred and identifiable net assets acquired as of September 30, 2023.


	November 1, 2022 (As initially reported)		Measurement Period Adjustments		September 30, 2023 (As Adjusted)
Assets acquired:
Cash and cash equivalents	$	39,569	$	—	$	39,569
Accounts receivable	16,504		—		16,504
Prepaid wires	571		—		571
Prepaid expenses and other current assets	1,219		430		1,649
Property and equipment	4,077		—		4,077
Intangible assets	8,450		—		8,450
Other assets	13,659		—		13,659
Total identifiable assets acquired	$	84,049	$	430	$	84,479

Liabilities assumed:
Accounts payable	$	(1,260)	$	—	$	(1,260)
Wire transfers and money orders payable	(35,595)		—		(35,595)
Accrued and other liabilities	(3,651)		366		(3,285)
Lease liabilities	(13,067)		—		(13,067)
Deferred tax liability	(2,969)		700		(2,269)
Total liabilities assumed	$	(56,542)	$	1,066	$	(55,476)

Net identifiable assets acquired	$	27,507	$	1,496	$	29,003
Consideration transferred	$	41,021	$	—	$	41,021
Goodwill	$	13,514	$	(1,496)	$	12,018

Restructuring costs

During the third quarter of 2023, the Company implemented a Restructuring Plan (the "Plan") for La Nacional. The objectives were to reorganize the workforce, streamline operational processes as well as develop efficiencies within the Company. The Plan contemplated a reduction of La Nacional's workforce due to closing of operations, and surrendering of money transmitter licenses in certain states, termination of selected sending agents, centralization of functions at the consolidated Company level and closing of certain facilities.

For the three months ended September 30, 2023, the Company incurred $1.1 million in expenses related to the Plan. These expenses include approximately $0.8 million in severance payments and related benefits included in salaries and benefits in the condensed consolidated statement of income and comprehensive income, $0.3 million in computer equipment write-offs, $38 thousand for the early termination of a lease agreement and $31 thousand in legal fees related to the surrender of money transmitter licenses within states where La Nacional will no longer operate, which are included in other selling, general and administrative expenses in the condensed consolidated statement of income and comprehensive income.

The Company has paid out the above charges during the three months ended September 30, 2023 and does not have a liability recorded as of September 30, 2023.

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LAN Holdings, Corp.

On April 5, 2023, the Company completed the acquisition of 100% of the voting interest of LAN Holdings. LAN Holdings provides the Company the opportunity to enter into markets in which it did not have a presence previously, such as the ability to provide outbound remittance services from Spain, Italy, and Germany.

The total consideration transferred by the Company in connection with the LAN Acquisition was $13.4 million, which included $10.3 million in cash, subject to customary purchase price adjustments. The Company will also pay an additional $0.6 million in cash as a result of LAN Holdings’ achievement of certain operational milestones during 2023, which the parties have agreed have been achieved; accordingly, the earn-out will be paid under the terms of the definitive purchase agreement. Prior to the acquisition, the Company maintained a receivable balance of approximately $2.5 million related to money transfers paid by the Company on behalf of LAN Holdings. Upon the closing of the LAN Acquisition, the receivable balance was effectively settled and, therefore, included in the determination of the total consideration transferred. The LAN Acquisition was funded with cash on hand.

The following table summarizes the fair values of consideration transferred and identifiable net assets acquired in the LAN Acquisition on April 5, 2023, the measurement period adjustments in the nine months ended September 30, 2023 and the fair values of consideration transferred and identifiable net assets acquired as of September 30, 2023.


	April 5, 2023 (As initially reported)	Measurement Period Adjustments	September 30, 2023 (As Adjusted)
Assets acquired:
Cash and cash equivalents	4,721	—	4,721
Accounts receivable	3,643	—	3,643
Prepaid wires	4,613	—	4,613
Prepaid expenses and other current assets	353	—	353
Property and equipment	351	—	351
Intangible assets	3,200	—	3,200
Other assets	877	—	877
Total identifiable assets acquired	17,758	—	17,758

Liabilities assumed:
Accounts payable	(1,010)	—	(1,010)
Wire transfers and money orders payable	(6,645)	—	(6,645)
Accrued and other liabilities	(747)	(689)	(1,436)
Lease liabilities	(758)	—	(758)
Deferred tax liability	(91)	—	(91)
Total liabilities assumed	(9,251)	(689)	(9,940)

Net identifiable assets acquired	8,507	(689)	7,818
Consideration transferred	13,354	—	13,354
Goodwill	4,847	689	5,536

The goodwill balance for the LAN Acquisition represents the estimated values of the Company’s geographic presence in key markets, assembled workforce, management team’s industry-specific knowledge and synergies expected to be achieved from the combined operations of LAN Holdings and the Company. Goodwill resulting from the LAN Acquisition is not deductible for tax purposes.

Amortizing intangible assets related to the LAN Acquisition are primarily composed of agent relationships, a trade name and non-competition agreements, which had weighted average lives of approximately 15 years, 10 years and 5 years, respectively, and are based on LAN Holdings’ operational history and established relationships with, and the nature of, its customers. The weighted average life of amortizing intangible assets for LAN Acquisition was 14.95 years in the aggregate. These intangible assets are amortized utilizing an accelerated method over their estimated useful lives, which is a manner consistent with the pattern in which the related benefits are expected to be consumed. The acquisition date fair value of the agent relationships, trade name and non-competition agreement intangibles was $2.9 million, $0.3 million and $10.0 thousand, respectively.

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The agent relationships intangible represents the network of independent sending agents. This intangible was valued using the excess earnings method, which was based on the Company’s forecasts and historical activity at agent locations in order to develop a turnover rate and expected economic useful life. Assuming a year-over-year location turnover rate of 20.0%, this resulted in an expected useful life for this intangible of 15 years.

Trade name refers to the I-Transfer name, branded on all agent locations and recognized in the market. This fair value was determined using the relief-from-royalty method, which is based on the Company’s expected revenues and a royalty rate estimated using comparable market data. The Company determined it was appropriate to assign a finite useful life of 10 years to the trade name to provide better matching of the amortization expense during the period of expected benefits.

The definitive purchase agreement to acquire La Nacional and LAN Holdings entered into by the Company includes non-competition provisions agreed to by the former owner and two key members of management of La Nacional. The fair value of these intangibles was valued using the “with and without” method, which estimated the value of an asset based on the difference in the value of the business’s cash flows “with” and “without” that asset. The Company assigned useful lives of up to 5 years for these intangibles, which matches the contractual term of the non-competition agreements.

The LAN Holdings results of operations have been included in the Company's results of operations from the date of its acquisition. The Company’s condensed consolidated statement of income and comprehensive income includes $6.1 million and $0.1 million of revenue and net loss for the three months ended September 30, 2023, and $10.9 million and $0.1 million of revenue and net loss for the nine months ended September 30, 2023, respectively, from LAN Holdings.

Transaction Costs

Transaction costs include all internal and external costs directly related to the Company’s acquisition activity, consisting primarily of legal, consulting, accounting and financial advisory fees. Transaction costs for the three and nine months ended September 30, 2023 amounted to $13.0 thousand and $0.4 million, respectively, and are included in other selling, general and administrative expenses on the condensed consolidated statement of income and comprehensive income. Transaction costs for the three and nine months ended September 30, 2022 amounted to $0.3 million and $0.5 million respectively.

Supplemental Pro Forma Financial Information

For the three and nine months ended September 30, 2023 and 2022, unaudited supplemental pro forma revenue and net income is shown below.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Total revenues	$	172,437	$	144,463	$	492,379	$	403,453
Net income	$	14,980	$	16,690	$	42,357	$	44,455

These unaudited pro forma financial results include the results of operations of LAN Holdings as if it had been consolidated as of January 1, 2022, the beginning of the year prior to its acquisition, and are provided for illustrative purposes only. These unaudited pro forma financial results do not purport to be indicative of the actual results that would have been achieved by the combined companies for the periods indicated, or of the results that may be achieved by the combined companies in the future. The Company’s unaudited pro forma financial results were prepared by adding the unaudited historical results of the acquired business to the historical results of the Company, and then adjusting those combined results for transaction costs of $13.0 thousand and $0.4 million for the three and nine months ended September 30, 2023, respectively, and the incremental depreciation and amortization expense related to the property and equipment and intangible assets acquired. Transaction costs were included in the pro forma results for the three and nine months ended September 30, 2022 but removed from the pro forma results for the three and nine months ended September 30, 2023. These unaudited pro forma financial results do not include adjustments to reflect other cost savings or synergies that may have resulted from this acquisition. Future results may vary significantly due to future events and other factors, many of which are beyond the Company’s control.

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NOTE 3 – REVENUES

The Company recognized revenues from contracts with customers for the three and nine months ended September 30, 2023 and 2022, as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Wire transfer and money order fees	$	148,157	$	121,218	$	418,416	$	337,757
Discounts and promotions	(770)		(500)		(2,061)		(1,417)
Wire transfer and money order fees, net	147,387		120,718		416,355		336,340
Foreign exchange gain, net	22,688		18,851		64,239		52,719
Other income	2,362		1,198		6,358		3,309
Total revenues	$	172,437	$	140,767	$	486,952	$	392,368

There are no significant initial costs incurred to obtain contracts with customers, although the Company has a loyalty program under which customers in the United States earn one point for each wire transfer completed. Points can be redeemed for a discounted wire transaction fee or a foreign exchange rate that is more favorable to the customer. The customer benefits vary by country, and the earned points expire if the customer has not initiated and completed an eligible wire transfer transaction within the immediately preceding 180-day period. In addition, earned points will expire 30 days after the end of the program. Because the loyalty program benefits represent a future performance obligation, a portion of the initial consideration is recorded as deferred revenue loyalty program (see Note 9) and a corresponding loyalty program expense is recorded as contra revenue. Revenue from this performance obligation is recognized upon customers redeeming points or upon expiration of any points outstanding.

Except for the loyalty program discussed above, our revenues include only one performance obligation, which is to collect the consumer’s money and make funds available for payment, generally on the same day, to a designated recipient in the currency requested.

The Company also offers several other services, including money orders and check cashing through its sending agents, for which revenue is derived from a fee per transaction. For substantially all of the Company’s revenues, the Company acts as principal in the transaction and reports revenue on a gross basis because the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss and has the ability to establish transaction prices.

Wire transfers and money order fees include money order fees of $0.5 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $1.7 million and $1.2 million for the nine months ended September 30, 2023 and 2022, respectively.

NOTE 4 – ACCOUNTS RECEIVABLE AND AGENT ADVANCES RECEIVABLE, NET OF ALLOWANCE

Accounts Receivable

Accounts receivable represents primarily outstanding balances from sending agents for pending wire transfers or money orders from consumers. The outstanding balance of accounts receivable, net of allowance for credit losses, consists of the following (in thousands):


	September 30, 2023		December 31, 2022
Accounts receivable	$	165,645	$	132,363
Allowance for credit losses	(2,638)		(2,555)
Accounts receivable, net	$	163,007	$	129,808

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Agent Advances Receivable

Agent advances receivable, net of allowance for credit losses, from sending agents is as follows (in thousands):


	September 30, 2023		December 31, 2022
Agent advances receivable, current	$	1,730	$	1,373
Allowance for credit losses	(92)		(62)
Net current	$	1,638	$	1,311

Agent advances receivable, long-term	$	2,640	$	1,423
Allowance for credit losses	(101)		(31)
Net long-term	$	2,539	$	1,392

The net current portion of agent advances receivable is included in prepaid expenses and other current assets, and the net long-term portion is included in other assets in the condensed consolidated balance sheets (see Note 5). Some agent advances receivable have interest rates ranging from 0% to 10.0% per annum. The Company had an immaterial amount of accrued interest receivable as of September 30, 2023 and December 31, 2022, which was included in the allowance for credit losses calculation. At September 30, 2023 and December 31, 2022, there were $4.4 million and $2.8 million, respectively, of agent advances receivable collateralized by personal guarantees from sending agents and assets from their businesses in case of a default by the agent.

The maturities of agent advances receivable at September 30, 2023 are as follows (in thousands):


	Unpaid Advance Balance
Under 1 year	$	1,730
Between 1 and 2 years	2,105
More than 2 years	535
Total	$	4,370

Allowance for Credit Losses

The changes in the allowance for credit losses related to accounts receivable and agent advances receivable are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Beginning balance	$	2,690	$	2,442	$	2,648	$	2,249
Provision	1,830		525		3,770		2,022
Charge-offs	(1,760)		(700)		(4,194)		(2,202)
Recoveries	190		117		726		315
Other	(119)		—		(119)		—
Ending Balance	$	2,831	$	2,384	$	2,831	$	2,384

The allowance for credit losses allocated by financial instrument category is as follows (in thousands):


	September 30, 2023		December 31, 2022
Accounts receivable	$	2,638	$	2,555
Agent advances receivable	193		93
Allowance for credit losses	$	2,831	$	2,648

Index

NOTE 5 – PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other current assets consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Prepaid insurance	$	1,421	$	1,578
Prepaid fees and services	1,879		1,986
Agent incentives advances	1,307		1,014
Agent advances receivable, net of allowance	1,638		1,311

Tenant allowance	2,815		3,753
Prepaid income taxes	2,618		2,130
Prepaid expenses and current assets - other	1,052		977
	$	12,730	$	12,749

Other assets consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Revolving line origination fees	$	1,820	$	1,578
Agent incentives advances	2,585		1,062
Agent advances receivable, net of allowance	2,539		1,392
Right-of-use assets, net	23,222		24,768
Funds held by seized banking entities, net of allowance	1,833		1,646
Other assets	3,122		1,430
	$	35,121	$	31,876

Prior to 2022, local banking regulators in Mexico resolved to close and liquidate a local financial institution, citing a lack of compliance with minimum capital requirements. The Company has approximately $5.2 million of exposure from deposits it held with this bank when it was closed. In accordance with the banking regulations in Mexico, large depositors such as the Company will be paid once the assets of the financial institution are liquidated. Currently, it is difficult to predict the length of the liquidation process or if the proceeds from the asset liquidation will be sufficient to recover any of the Company's funds on deposit. The Company maintains a valuation allowance of approximately $3.6 million in connection with the balance of deposits held by the financial institution as a result of its closure.

NOTE 6 – GOODWILL AND INTANGIBLE ASSETS

Goodwill and the majority of intangible assets on the condensed consolidated balance sheets of the Company were recognized from business acquisitions. Intangible assets on the condensed consolidated balance sheets of the Company consist of agent relationships, trade names, developed technology and other intangible assets. Agent relationships, trade names and developed technology are amortized over their estimated useful lives of up to 15 years using an accelerated method that correlates with the projected realization of the benefit. The agent relationships intangible represents the network of independent sending agents; trade names refers to the Intermex, La Nacional and I-Transfer names, branded on all applicable agent locations and well recognized in the market; and developed technology includes the state-of-the-art system that the Company has continued to develop and improve over the past 20 years. Other intangible assets relate to the acquisition of Company-operated stores, which are amortized on a straight line basis over 10 years, and non-competition agreements, which are amortized over the length of the agreement, typically 5 years. The determination of our intangible fair values includes several assumptions that are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties, and no impairment charges were determined necessary to be recognized during the three and nine months ended September 30, 2023.

Index

The following table presents the changes in goodwill and intangible assets (in thousands):


	Goodwill		Intangibles
Balance at December 31, 2022	$	49,774	$	19,826
Measurement period adjustment (Refer to Note 2)	(807)		—
Acquisition of LAN Holdings	4,847		3,200
Amortization expense	—		(3,668)
Balance at September 30, 2023	$	53,814	$	19,358

Amortization expense related to intangible assets for the remainder of 2023 and thereafter is as follows (in thousands):


2023	$	1,215
2024	3,965
2025	3,156
2026	2,521
2027	2,023
Thereafter	6,478
	$	19,358

NOTE 7 – LEASES

To conduct certain of our operations, the Company is a party to leases for office space, warehouses and Company-operated store locations. In December 2022, the Company entered into a lease agreement, which expires in 2033, for its new headquarters to accommodate its growing workforce. The Company expects to complete the move to the new headquarters at the end of 2023 following the completion of leasehold improvements. The new lease agreement provides for the Company to receive a tenant allowance amounting to approximately $3.8 million through the construction period and the Company will commence making monthly lease payments on November 1, 2024. Such tenant allowance has been recorded within prepaid expenses and other current assets in the condensed consolidated balance sheet.

The presentation of right-of-use assets and lease liabilities in the condensed consolidated balance sheet is as follows (in thousands):


Leases	Classification	September 30, 2023		December 31, 2022
Assets
Right-of-use assets	Other assets(1)	$	23,222	$	24,768
Total leased assets		$	23,222	$	24,768

Liabilities
Current
Operating	Accrued and other liabilities	$	5,155	$	5,258
Noncurrent
Operating	Lease liabilities	22,465		23,272
Total Lease liabilities		$	27,620	$	28,530

(1) Operating right-of-use assets are recorded net of accumulated amortization of $8.9 million and $5.6 million as of September 30, 2023 and December 31, 2022, respectively.

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Lease expense for the three and nine months ended September 30, 2023 and 2022, was as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
Lease Cost	Classification	2023		2022		2023		2022
Operating lease cost	Other selling, general and administrative expenses	$	1,891	$	632	$	5,965	$	1,631

As of September 30, 2023 and December 31, 2022, the Company’s weighted-average remaining lease terms on its operating leases is 6.5 and 6.6 years, and the Company’s weighted-average discount rate is 5.95% and 5.67%, respectively, which is the Company’s incremental borrowing rate. The Company used its incremental borrowing rate for all leases, as none of the Company’s lease agreements provide a readily determinable implicit rate.

Lease Payments

Future minimum lease payments for assets under non-cancelable operating lease agreements with original terms of more than one year for the remainder of 2023 and thereafter are as follows (in thousands):


2023	$	1,565
2024	5,892
2025	6,327
2026	4,933
2027	3,610
Thereafter	14,977
Total lease payments	37,304
Less: Imputed interest	(9,684)
Present value of lease liabilities	$	27,620

NOTE 8 – WIRE TRANSFERS AND MONEY ORDERS PAYABLE, NET

Wire transfers and money orders payable, net consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Wire transfers payable, net	$	99,706	$	55,572
Customer voided wires payable	29,575		27,236
Money orders payable	30,577		29,443
	$	159,858	$	112,251

Customer voided wires payable consist primarily of wire transfers that were not completed because the recipient did not collect the funds within 30 days and the sender has not claimed the funds and, therefore, are considered unclaimed property. Unclaimed property laws of each state in the United States in which we operate, the District of Columbia, and Puerto Rico require us to track certain information for all of our money remittances and payment instruments and, if the funds underlying such remittances and instruments are unclaimed at the end of an applicable statutory abandonment period, require us to remit the proceeds of the unclaimed property to the appropriate jurisdiction. Applicable statutory abandonment periods range from three to seven years.

Index

NOTE 9 – ACCRUED AND OTHER LIABILITIES

Accrued and other liabilities consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Commissions payable to sending agents	$	19,981	$	19,141
Accrued salaries and benefits	4,157		5,578
Accrued bank charges	1,350		1,644
Accrued other professional fees	1,606		1,169
Accrued taxes	2,038		1,329
Lease liabilities, current portion	5,155		5,258
Contingent consideration liability	1,800		1,321
Deferred revenue loyalty program	4,667		4,212

Other	3,516		2,203
	$	44,270	$	41,855

The following table shows the changes in the deferred revenue loyalty program liability (in thousands):


Balance, December 31, 2022	$	4,212
Revenue deferred during the period	2,391
Revenue recognized during the period	(1,936)
Balance, September 30, 2023	$	4,667

NOTE 10 – DEBT

Debt consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Revolving credit facility	$	124,000	$	76,000
Term loan facility	77,109		80,938
	201,109		156,938
Less: Current portion of long-term debt (1)	(6,616)		(4,975)
Less: Debt origination costs	(1,356)		(1,728)
	$	193,137	$	150,235

(1)Current portion of long-term debt is net of debt origination costs of approximately $0.5 million both at September 30, 2023 and December 31, 2022, respectively.

The Company and certain of its domestic subsidiaries as borrowers and the other guarantors from time to time party thereto (collectively, the “Loan Parties”) entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with a group of banking institutions. The A&R Credit Agreement amended and restated in its entirety the Company’s previous credit agreement. The A&R Credit Agreement provided 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 A&R Credit Agreement also provides for the issuance of letters of credit, which would reduce availability under the revolving credit facility. The proceeds of the term loan were used to refinance the existing term loan facility 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 A&R Credit Agreement is June 24, 2026.

On November 11, 2022, the Loan Parties entered into a First Amendment Agreement (the “First Amendment”) to the A&R Credit Agreement. The Amendment replaces LIBOR as a benchmark interest rate for loans under the A&R Credit Agreement with the secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”), and amends all applicable provisions of the A&R Credit Agreement with respect to such replacement of LIBOR as the benchmark interest rate. Except as amended by the First Amendment, the A&R Credit Agreement remains in full force and effect.

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Effective as of April 18, 2023, the Company amended its A&R Credit Agreement to increase the revolving credit commitments available thereunder from an aggregate of $150.0 million to $220.0 million. The credit commitments are available for general corporate purposes to support the Company’s growth and to fund working capital needs and will be subject to the same interest rate and other terms applicable to the outstanding revolving credit commitments under the A&R Credit Agreement. In addition, as amended, the A&R Credit Agreement provides the Company with a refreshed uncommitted incremental facility which may be utilized for new revolving credit facilities or term loans in an aggregate amount of up to $70.0 million. The amendment was accounted for as a debt modification. The balance of the unamortized debt origination costs in connection with the A&R Credit Agreement and the additional debt origination costs of approximately $0.7 million incurred in connection with this amendment will be amortized over the remaining life of the A&R Credit Agreement using the straight-line method, as it is not significantly different than the effective interest method. Debt origination costs paid to third parties in connection with the amendment were expensed as incurred during the second quarter of 2023.

The unamortized portion of debt origination costs totaled approximately $3.2 million and $3.3 million at September 30, 2023 and December 31, 2022, respectively. Amortization of debt origination costs is included as a component of interest expense in the condensed consolidated statements of income and comprehensive income and amounted to approximately $0.3 million and $0.2 million for the three months ended September 30, 2023 and 2022, and $0.8 million for both the nine months ended September 30, 2023 and 2022, respectively.

At the election of the Company, interest on the term loan facility and revolving loans under the A&R Credit Agreement, as amended, 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 A&R Credit Agreement. 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. 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 nine months ended September 30, 2023 for the term loan facility and revolving credit facility were 8.21% and 1.90%, respectively, and 4.18% and 0.80% for the nine months ended September 30, 2022, respectively.

Interest is payable (x)(i) generally on the last day of each interest period selected for SOFR loans, but in any event, not less frequently than every three months, and (ii) on the last business day of each quarter for base rate loans and (y) at final 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. 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. 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. 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.

The A&R Credit Agreement, as amended, 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 and 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. 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.

The obligations under the A&R Credit Agreement are guaranteed by the Company and certain domestic subsidiaries of the Company and secured by liens on substantially all of the assets of the Loan Parties, subject to certain exclusions and limitations.

NOTE 11 – FAIR VALUE MEASUREMENTS

The Company determines fair value in accordance with the provisions of FASB guidance, Fair Value Measurements and Disclosures, which defines fair value as an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-level fair value hierarchy that prioritizes the inputs used to measure fair value was established. There are three levels of inputs used to measure fair value and for disclosure purposes. Level 1 relates to quoted market prices for identical assets

Index

or liabilities in active markets. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s non-financial assets measured at fair value on a nonrecurring basis include goodwill and intangible assets. The determination of our intangible fair values includes several assumptions and inputs (Level 3) that are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties. All other financial assets and liabilities are carried at amortized cost.

The Company’s cash and cash equivalents balances are representative of their fair values as these balances are comprised of deposits available on demand or overnight. The carrying amounts of accounts receivable, prepaid wires, accounts payable and wire transfers and money orders payable are representative of their fair values because of the short turnover of these instruments.

The Company’s financial liabilities include its revolving credit facility and term loan facility. The fair value of the term loan facility, which approximates book value, is estimated by discounting the future cash flows using a current market interest rate. The estimated fair value of the revolving credit facility would approximate face value given the payment schedule and interest rate structure, which approximates current market interest rates.

NOTE 12 – SHARE-BASED COMPENSATION

International Money Express, Inc. Omnibus Equity Compensation Plans

The International Money Express, Inc. 2020 Omnibus Equity Compensation Plan (the “2020 Plan”) provides for the granting of stock-based incentive awards, including stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and performance stock units (“PSUs”) to employees, service providers and independent directors of the Company. There are 3.7 million shares of the Company’s common stock approved for issuance under the 2020 Plan, which includes 0.4 million shares that were previously subject to awards granted under the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan (the “2018 Plan” and together with the 2020 Plan, the “Plans”). Although awards remain outstanding under the 2018 Plan, which was terminated effective June 26, 2020, no additional awards may be granted under the 2018 Plan. As of September 30, 2023, 2.1 million shares remained available for future awards under the 2020 Plan.

Stock Options

Share-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The stock options issued under the Plans have 10-year terms and generally vest in four equal annual installments beginning one year after the date of the grant. The Company recognized compensation expense for stock options of approximately $0.1 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $0.4 million and $1.2 million for the nine months ended September 30, 2023 and 2022, respectively, which are included in salaries and benefits in the condensed consolidated statements of income and comprehensive income. As of September 30, 2023, unrecognized compensation expense related to stock options of approximately $0.2 million is expected to be recognized over a weighted-average period of 0.8 years.

A summary of stock option activity under the Plans during the nine months ended September 30, 2023 is presented below:


	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2022	711,050	$	11.56	6.26	$	4.28
Granted	—	$	—		$	—
Exercised	(78,500)	$	12.18		$	5.03
Forfeited	(11,250)	$	14.07		$	6.54
Outstanding at September 30, 2023	621,300	$	11.43	5.45	$	4.15

Exercisable at September 30, 2023	575,050	$	11.30	5.36	$	4.03

Restricted Stock Units

The RSUs granted under the Plans to the Company’s employees or service providers generally vest in four equal annual installments beginning one year after the date set forth in the applicable grant agreement, while RSUs issued to the Company’s independent directors vest on the one-year anniversary from the grant date. The Company recognized compensation expense for RSUs of approximately $0.8

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million and $0.5 million for the three months ended September 30, 2023 and 2022, respectively, and $2.1 million and $1.3 million for the nine months ended September 30, 2023 and 2022, respectively, which are included in salaries and benefits in the condensed consolidated statements of income and comprehensive income. As of September 30, 2023, unrecognized compensation expense related to RSUs of approximately $6.1 million is expected to be recognized over a weighted-average period of 1.9 years.

A summary of RSU activity during the nine months ended September 30, 2023 is presented below:


	Number of RSUs	Weighted-Average Grant Price
Outstanding (nonvested) at December 31, 2022	316,902	$	16.58
Granted(1)	202,208	$	24.75
Vested	(119,750)	$	17.52
Forfeited	(39,532)	$	19.65
Outstanding (nonvested) at September 30, 2023	359,828	$	20.53

(1) The aggregate fair value of all RSUs granted during the nine months ended September 30, 2023 was approximately $5.0 million.

Share Awards

The Lead Independent Director and Chairs of the Committees of the Board of Directors are granted, in aggregate, $80.5 thousand in awards of fully vested shares of the Company’s common stock, payable on a quarterly basis at the end of each quarter in payment of fees earned in such capacities. During the three and nine months ended September 30, 2023, 821 and 2,428 fully vested shares, respectively, were granted to the Lead Independent Director and Chairs of the Committees of the Board of Directors. The Company recognized compensation expense for the share awards of $20.1 thousand for both the three months ended September 30, 2023 and 2022, respectively, and $60.4 thousand and $52.1 thousand for the nine months ended September 30, 2023 and 2022, respectively, which are recorded and included in salaries and benefits in the condensed consolidated statements of income and comprehensive income.

Restricted Stock Awards

The RSAs issued under the Plans to the Company’s employees generally vest in four equal annual installments beginning one year after the date set forth in the applicable grant agreement. The Company recognized compensation expense for RSAs granted of $0.3 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and $0.9 million and $0.5 million for the nine months ended September 30, 2023 and 2022, respectively, which are included in salaries and benefits in the condensed consolidated statements of income and comprehensive income. As of September 30, 2023, there was $3.1 million of unrecognized compensation expense related to RSAs, which is expected to be recognized over a weighted-average period of 1.9 years.

A summary of RSA activity during the nine months ended September 30, 2023 is presented below:


	Number of RSAs	Weighted-Average Grant Price
Outstanding (nonvested) at December 31, 2022	159,562	$	15.28
Granted(1)	80,402	$	25.68
Vested	(47,984)	$	15.68
Forfeited	—	$	—
Outstanding (nonvested) at September 30, 2023	191,980	$	19.53

(1) The aggregate fair value of all RSAs granted during the nine months ended September 30, 2023 was approximately $2.1 million.

Performance Stock Units

PSUs granted to the Company’s employees generally vest subject to attainment of performance criteria during the service period established by the Compensation Committee. Each PSU represents the right to receive one share of common stock, and the actual number of shares issuable upon vesting is determined based upon performance compared to financial performance targets. The PSUs vest based on the achievement of certain revenue or adjusted earnings per share parameters for a period of up to three years combined with a service period of three years. Compensation cost is recognized over the requisite service period when it is probable that the performance condition will be satisfied. During the third quarter of 2022, the Company reassessed the probability of vesting for PSU awards and determined that it was probable that a higher performance target will be achieved. Therefore, the Company recognized a cumulative catch-up adjustment of approximately $1.1 million as additional compensation expense for the three months ended September 30, 2022 (none in 2023). On

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February 28, 2023, the Compensation Committee determined that the higher performance target was achieved and approved the incremental grant of PSUs.

The Company recognized compensation expense for PSUs of $1.0 million and $1.8 million for the three months ended September 30, 2023 and 2022, respectively, and $2.8 million and $2.5 million for the nine months ended September 30, 2023 and 2022, respectively, which are included in salaries and benefits in the condensed consolidated statements of income and comprehensive income. As of September 30, 2023, there was $4.7 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of 1.8 years.

A summary of PSU activity during the nine months ended September 30, 2023 is presented below:


	Number of PSUs	Weighted-Average Remaining Contractual Term (Years)	Weighted-Average Grant Price
Outstanding (nonvested) at December 31, 2022	300,871	8.63	$	17.30
Granted(1)	318,386		$	19.49
Vested	—		$	—
Forfeited	—		$	—
Outstanding (nonvested) at September 30, 2023	619,257	8.12	$	18.43

(1) The aggregate fair value of all PSUs granted during the nine months ended September 30, 2023 was approximately $6.2 million.

NOTE 13 – EQUITY

Prior to 2022, 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 outstanding shares of the Company’s common stock. 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. Under the Repurchase Program, the Company is authorized to repurchase shares from time to time in accordance with applicable laws, both on the open market and in privately negotiated transactions and may include the use of derivative contracts or structured share repurchase agreements. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of the Company’s common stock and the nature of other investment opportunities. The Repurchase Program may be limited, suspended or discontinued at any time without prior notice. The Repurchase Program does not have an expiration date. The A&R Credit Agreement, as amended, permits the Company to make restricted payments (including share repurchases, among others), (i) without limitation so long as the Consolidated Leverage Ratio (as defined in the A&R Credit Agreement, as amended), 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.

The Company accounts for purchases of treasury stock under the cost method. Any direct costs incurred to acquire treasury stock are considered stock issue costs and added to the cost of the treasury stock. During the three and nine months ended September 30, 2023, the Company purchased 501,900 shares and 1,734,481 shares for an aggregate purchase price of $10.1 million and $40.6 million, respectively. During the three and nine months ended September 30, 2022, the Company purchased 1,287,714 shares and 2,015,615 shares for an aggregate purchase price of $30.1 million and $43.7 million, respectively. As of September 30, 2023, there was $80.7 million available for future share repurchases under the Repurchase Program.

NOTE 14 – EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income for the period by the weighted-average number of common shares outstanding for the period. In computing dilutive earnings per share, basic earnings per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including common stock options, RSUs, RSAs and PSUs. Shares of treasury stock are not considered outstanding and therefore are excluded from the weighted-average number of common shares outstanding calculation.

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Below are basic and diluted earnings per share for the periods indicated (in thousands, except for share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Net income for basic and diluted earnings per common share	$	14,832	$	16,626	$	42,016	$	44,264

Shares:
Weighted-average common shares outstanding – basic	35,320,809		37,390,632		35,930,234		37,999,709
Effect of dilutive securities:
RSUs	81,436		136,602		114,702		103,526
Stock options	259,121		559,556		308,061		607,535
RSAs	48,898		270,203