Earnings call transcript: Currency Exchange Int Q2 2025 sees income rise

Currency Exchange International (CXI) reported its Q2 2025 earnings, highlighting a significant increase in adjusted net income despite a dip in revenue. The company achieved a net income from continuing operations of $2.7 million, with adjusted diluted earnings per share rising 24% year-over-year to 36 cents. Revenue from continuing operations decreased by 3% to $16 million. The stock saw a modest increase, rising 0.78% to $20.49. According to InvestingPro analysis, the company is currently trading at a high earnings multiple with a P/E ratio of 44, though Fair Value calculations suggest potential upside.

Key Takeaways

• Adjusted net income increased by 18% to $2.3 million.
• Revenue from continuing operations fell by 3%.
• Payments product line grew by 5%, with strategic expansion in online FX platforms.
• Discontinuation of Canadian operations expected by August 2025.
• Stock price rose by 0.78% post-earnings announcement.

Company Performance

Currency Exchange International demonstrated resilience in Q2 2025, with a notable rise in adjusted net income despite a slight decline in revenue. The company’s focus on expanding its payments and banknote businesses contributed to its performance, while ongoing challenges in the travel sector impacted revenue. The strategic decision to discontinue operations in Canada is expected to streamline operations and reduce costs.

Financial Highlights

• Revenue: $16 million, a 3% decrease from the previous year.
• Adjusted diluted earnings per share: 36 cents, a 24% increase year-over-year.
• Operating income: $5.1 million, a 16% increase.
• Net income from continuing operations: $2.7 million.
• Net loss from discontinued operations: $0.7 million.

Outlook & Guidance

The company remains focused on its core businesses of payments and banknotes, with plans to finalize a strategic plan by September. It anticipates growth opportunities in both domestic and international payments and plans selective expansion of its retail stores. The discontinuation of the Exchange Bank of Canada is expected to incur ongoing expenses of $3 million after-tax.

Executive Commentary

Randolph Penna, CEO, emphasized the company’s strategic focus: "Our strategy has not changed in the sense that payments and banknotes are our core focuses of the business." CFO Gerhard Barnard noted, "Management is aggressively working to reduce those expenses," referring to the costs associated with exiting the Canadian market.

Risks and Challenges

• Continued decline in traveler traffic could impact banknote revenue.
• Potential challenges in managing the transition post-Canada exit.
• Competitive pressures in the payments sector.
• Macroeconomic factors affecting consumer spending and exchange rates.

Currency Exchange International’s Q2 2025 performance underscores its strategic focus on core business areas, even as it navigates revenue challenges and operational shifts. With a market capitalization of $92.31 million and an overall Financial Health Score of "GOOD" from InvestingPro, the market’s positive response reflects confidence in the company’s long-term strategy and growth potential. The company maintains a conservative debt profile with a debt-to-equity ratio of just 0.09, positioning it well for future growth opportunities.

Full transcript - Currency Exchange International Corp (CXI) Q2 2025:

Sylvain, Conference Call Operator: Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q2 twenty twenty five Financial Results Conference Call. At this time, note that all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Also note that this call is being recorded on 06/12/2025. And I would like to turn the conference over to Bill Matulos, Investor Relations.

Please go ahead, sir.

Bill Matulos, Investor Relations, Currency Exchange International: Thank you, Sylvain. Good morning, everyone. Welcome to the Currency Exchange International conference call to discuss the financial results for the second quarter of the twenty twenty five fiscal year. Thanks for joining us. With us today are President and CEO, Randolph Penna and Group CFO, Gerhard Barnard.

Gerhard will provide an overview of CXI’s financial results and his latest perspective on the company’s operations. Randolph will then provide his commentary on CXI’s strategic initiatives, sales efforts and business activities, after which we’ll open it up for your questions. Today’s conference call is open to shareholders, prospective shareholders, members of the investment community, including the media. For those of you who may happen to leave our call before its conclusion, please be advised that this conference call will be recorded and then uploaded to CXI’s Investor Relations website page along with the financial statements and MD and A. Please note that this conference call will include forward looking information, which is based on a number of assumptions and actual results to differ materially.

Please refer to our financial statements and MD and A reports for more information about the factors that could cause these different results and the assumptions that we have made. With that, I’ll turn the call over to Gerhard. Gerhard, please go ahead. Thank you, Bill, and thank you, everyone, for joining today’s call. These results are presented in U.

S. Dollars, and my overview of the company, TXI, will also incorporate results of the discontinued operations of Currency Exchange International. As a reminder, on 02/18/2025, the group announced its decision to cease the operations of its wholly owned subsidiary, Exchange Bank of Canada. The plan aims for the bank to cease all customer activity by August 2025 in preparation for administrative and financial statement orders required and an application to the Minister of Finance in Canada to discontinue Exchange Bank of Canada from the bank act. This policy discontinued continuance is expected to be completed in the fourth quarter of twenty twenty five subject to the receipt of all necessary regulatory approval.

Financial information on the bank’s discontinued is based on our current monthly updated information available as well as certain projected information based on various assumptions regarding revenue, expenses, currency movements, and client behavior, to name a few. Any projected financial information as well as any information on the continued and discontinued operations mentioned in this call, as well as forward looking information, involve known and unknown risks, uncertainties, and other factors that may cause the company’s actual results, performance, or achievements to be materially different from any of its future information. As a result of the board’s decision to discontinue EBT’s operations, the company has faced the requirements of IFRS five, noncurrent assets held for sale and discontinued operations, and concluded that the Canadian business component related to EBT should be presented as discontinued operations starting this quarter, that’s the second quarter. According to IFRS five, the company presented the associated assets and liabilities within a disposal group on the consolidated interim financial statement as at 04/30/2025. Also, the results of discontinued operations are presented as a separate line item in the condensed interim consolidated statement of income and comprehensive income, net of tax.

This classification resulted in presenting the company’s results of operations for continuing and discontinued operations separately. Now it is important to note that all results of continuing operations have been revised to exclude EDC’s results and all associated intercompany transactions as per IFRS five. The impact of EDC’s results of operations is briefly discussed separately under discontinued operations and the statement in the final interim financial statement. Accordingly, The United States operations represent continuous operations of the company, and the Canadian operations present discontinued operations of the company. In the second quarter, we reported 2,700,000.0 of net income from continuing operations and a net loss of 700,000.0 from Exchange Bank of Canada, our discontinued operations.

These results include restructuring charges related to discontinued operations in Canada, representing legal and advisory fees of about $200,000, pretax, and certain onetime charges of roughly a $100,000 pretax. Now excluding these items, the group’s adjusted net income increased by 18% to 2,300,000 compared to 2,000,000 in the prior year. Adjusted diluted earnings per share of 36¢ was 24% higher than the prior year. Management anticipates that certain operating expenses and personnel costs that are currently shared with EDC will be 100% borne by CXI subsequent to the exit of EDC from Canada. And at the current annualized estimated cost is approximately $3,000,000 after tax.

This estimate is subject to change throughout EDC’s discontinuous process. Now let’s look at the consolidated performance for the three months ended 04/30/2025 compared to the prior year. Before I’d like before I go into details, I’d like to note that the company measures and evaluates its performance using a number of financial metrics and measures, some of which do not have standardized means under general accepted accounting principles or GAAP and may not be comparable to other companies. Now we call these measures non GAAP financial measures and or adjusted results. The company’s management believes that these measures are more reflective of its operating results and provides a better understanding of management’s perspective on the performance.

These measures enhance the comparability of our financial performance for the current period with the corresponding period in 2024. Management included the full reconciliation of the key performance and non GAAP measures in the MD and A. When we refer to reported results, we refer to the results as reported in the financial statements based on IFRS international financial reporting standard. When we refer to adjusted results, such as adjusted net income, we refer to performance non GAAP measures. The company generated revenue from continuing operations of roughly 16,000,000 for the three month period ended April 2020 04/30/2025, a 3% decrease from the prior period’s quarter.

The revenue decrease was driven by a decline in the banknotes product line despite a 5% growth in the payments product line. The decline in banknote revenue was due to a decline in demand of foreign currency as travel activity favored during the current quarter. Between February 2025 and April 25, approximately 214,000,000 travelers passed through TSA checkpoints in The United States airport compared to roughly 216,000,000 in the same period last year. Operating expenses decreased 1,200,000 or 10%. The company reported operating income of roughly 5,100,000.0 in the current quarter, 16% higher than the 4,400,000.0 reported last year despite the decline in revenues.

Now this is primarily due to the favorable impact of a weaker US Dollar on the revaluation of foreign currency banknote holding, which resulted in 780,000 foreign currency exchange gain in the current quarter compared to the foreign currency exchange loss of roughly 513,000 in the prior quarter. The group’s net income, the results from discontinued operations, which is the Exchange Bank of Canada, amounted to 2,000,000 in the current quarter compared to net income of 506,000 in the prior period quarter. As last year’s results were negatively impacted by the tax charge of 1,400,000.0 that was reported in EBC, which has been classified as discontinued operations. Adjusted EBITDA for the current quarter was 5,100,000.0, an increase of 15% compared to the prior quarter’s 4,500,000.0. The following is the highlight of revenue by product line from continuing operations for the three months ended 04/30/2025 compared to the previous three months ending 04/30/2024.

Now banknote revenue had a 5% decline in combined wholesale and direct to consumer in the second quarter compared to the prior period due to a decrease in consumer demand for foreign currencies as the quarter started slower, followed by a gradual improvement towards the end of the quarter. The company experienced growth in domestic financial institution customers, while there was a decline in money services businesses. The business trading volume on a wholesale banknote revenue was 653,000,000 for the current three month period compared to roughly 4 714,000,000 in the prior period. Overall, wholesale bank notes accounted for 41% of total revenues compared to 42% in the prior period. Direct to consumer bank notes revenue decreased roughly 380,000 or 6%.

Despite the slight growth achieved through the online interest platform, driven by travel currencies, revenue generated via the other two delivery channels favored slightly during the quarter. During the current quarter, the company added the state of Mississippi to its network and the online FX platform can now service 46 states, including the District Of Columbia. Four additional states compared to the same period last year. Business trading volume on total direct to consumer bank notes revenue was about 90,000,000 for the current three month period compared to 94,000,000 for the prior period. Direct to consumer revenue represents 42% in the current and prior quarter.

Payment revenue. Revenue in the payment product line increased increased a $135,000 or 5% in the three month period compared to the prior period, supported by a 13% increase in trading volume activity from existing financial institution customers and the onboarding of new customers. Business trading volumes on payment revenue were 1,400,000,000.0 for the current quarter compared to 1,270,000,000.00 in the prior period, and payments make up roughly 17% of our total revenue in the group. Now the following is the highlight of the operating expenses for continuing operations for the three months April 2025 compared to the previous three months of last year. As stated above and throughout this document, all results of continuing operations have been revised to exclude EBC’s results and all associated intercompany transactions.

During the three month period ended April 2025, the company’s operating expenses decreased by $1,200,000 or 10% compared to the same three month period in the prior year. The ratio comparing total operating expenses to total revenue for the three month period improved to 68% compared to 73% for the three month period in the 2024, primarily due to the large foreign exchange gains realized during the current quarter. Salaries and benefits expenses increased when compared to the prior period quarter, mostly driven by growth in headcount, in our new bulk in Louisville, and the company owned branch locations in addition to general inflationary increases in salaries and benefits. Marketing and publicity costs cost increased over a 100%, primarily due to the company’s expanded focus on marketing initiatives, campaigns, retail investments, and establishing customer loyalty programs that support corporate goals with a focus on the direct to consumer business growth. Bank services charges represent back charges associated with payments and bank transactions, but primarily driven by the payments product.

It is important to note that the CXI process the certain payments through EBC’s correspondent bank and get the charge back allocated to our EPUB company allocation. Stock based compensation includes a noncash amortization expense related to the basing of the company’s equity based stock option in addition to cash based rewards of RSUs and DSUs. The liability from DSUs and RSU rewards is adjusted to reflect the closing price at the end of each quarter. During the current quarter, there was a net expense of roughly $65,000 related to outstanding DSUs and RSUs due to the impact of the decline in the stock price. This compares to the expense of 285,000 for DSUs and RSUs in the prior quarter.

Losses and shortages typically represent shipment loss in transit that the company self insured in addition to several other losses incurred in the normal course of business. In the current quarter, the company has managed losses and shipments better in addition to some insurance recovery announced related to shipment in several losses and shortages are constantly decreasing. Foreign exchange gains or losses represents the net result of foreign currency exchange transactions after considering hedging and risk management strategy designed to reduce the inherent risk in the company’s exposure to foreign exchange, thereby minimizing volatility in earnings. Next foreign exchange gains for the current quarter of 780,000 were primarily attributed to the impact of a weaker US dollar against the company’s foreign currency banknote holdings compared to the prior year’s quarter where the company had 513,000 loss on foreign currency losses. The company’s hedging strategy is designed to mitigate downside risk while allowing the potential gains when foreign currency strengthens against the US dollar.

The euro was the last largest contributor to the next foreign currency gain for the three month period ended thirty April twenty twenty five, and the prior period was impacted by losses realized primarily on the company’s banknote holdings in Mexican pesos and its foreign currency. Interest on lease liabilities reflect additional interest incurred for the corporate headquarters as well as the legal vault that opened in the second half of last year. Interest expense decreased as a result of a decline in average borrowing. The company used the majority of its borrowing to fund BDC’s operation, which started to take for during the current period. The average outstanding borrowings by the company amounted to close to 580,000 during the second quarter compared to 1,300,000.0 during the prior quarters, with the average interest rate on borrowing being 6.7 percent compared to about 7.7 in the prior Now income tax expense in the current quarter is related to continuing operations in The United States.

It primarily reflects an average an effective tax rate of 31%, where the majority of the increased expenses above the statutory rate was related to stock based compensation that was impacted by the client in the share price as mentioned before. Summary of the results of continuing operations for the six month period. Now as stated above, in the document, all earnings from continuing operations have been advised to exclude EDC’s results as well as associated intercompany transactions. Revenue for the six month period increased 816,000 or 3% from the prior period last year. The revenue increase over the comparable period was driven by growth in both product lines in The United States during the first quarter of the year and was primarily due to the addition of new customers and an increased demand for a solid currency.

The 3% growth in revenue was primarily driven by the famous product line, which had 550,000 or 11% growth, followed by a 1% growth in our banknote revenue. And this is for the six months, so year to date. Wholesale and direct to consumer banknote businesses increased 267,000, while operating expenses decreased 445,000 or 2%. The company reported net operating income of 8,950,000.00 during the current six month period, which is 16% higher than the 77,700,000.0 reported last year, primarily due to the growth of revenue and foreign currency gains realized in the current six month period compared to the prior year six months where the company had foreign exchange gains of $500,000 and comparing that to the prior period exchange foreign exchange loss of 185,000. The company reported the net income from continuing operations of 4,400,000 for the current six months compared to 4,800,000.0 for the same period last year.

The group’s net income, including the results from discontinued operations, amounted to 2,800,000.0 for the current six month period compared to 1,360,000.00 for the same period last year. As last year’s results were negatively impacted by the per tax charge of 1,400,000.0 that was reported in EBC. As I mentioned, we just now being classified as discontinued operations. Based on adjusted results, the net income grew 583,000 or 21% compared to the same period last year to 3,370,000.00 in the current six month period compared to 2,800,000.0 in the prior year. So really that 21% growth in the year to date numbers on the adjusted results.

Now the following is the highlight of the revenue by product line for continuing operations for the last six months. Banknote revenue, revenue in banknote grew in both the wholesale and direct to consumer and increased by 600 by 267,000 or 1% in the current six month period compared to the prior period due to stronger consumer demand for foreign currency in the first quarter of the year, which piper the best during the second quarter. Also, banknote revenue increased by a 185,000 or 1% as business trading volume on also banknote revenue were 1,200,000,000.0 for the current three month period compared to 1,300,000,000.0 in the prior year. While the company had growth in domestic financial institution customer, there was a decline in money services businesses. As I mentioned, overall, our wholesale bank notes accounted to roughly 41% of the total revenue.

Direct to direct to consumer bank notes revenue maintained level with 82% or 1% increase in the current six month period compared to the prior period as the company maintains its market share through its diversified delivery channel, including online access platform, company owned branches, and agent relationship. Payments revenue product line increased roughly 550,000 or 11% during the six month period compared to the prior period, supported by a 25% increase in training volume activity from existing financial institution customers and the additional onboarding of new customers. Now the operating expenses during the six months increased 445,000 or 2% compared to the same period last year. The ratio comparing total operating expenses to total revenue improved to 71 compared to 75% in the previous period. As we mentioned, stock based compensation during the current period, there was an expense reversal in the amount of 110,000 related to the outstanding duties and RSU rewards as a result of a decline in stock price.

This compares to an expense of 846,000 for duties and RSU rewards during the same period last year. Now let’s briefly look at discontinued operation of Current Health Exchange Bank of Canada. They had a net loss of 692,000 in the second quarter compared to a net loss of 2,200,000.0 for the same period in the prior period. For the six months ending April 25, discontinued operations had a net loss of 1,600,000.0 compared to a net loss of 3,400,000.0 for the same period in the prior year. Diluted and adjusted diluted adjusted loss per share from discontinued operations was a loss of 9¢ for the second quarter and a loss of 18¢ for the six months ending April 2025.

Reviewing the balance sheet as at 04/30/2025, management views return on equity as a useful measure of return on capital investment. Due to the seasonality involved in the company’s business, the company uses its trading twelve months net income to calculate ROE, which has been consistent at around 12% over the last twelve months. On 04/30/2025, the company had a strong financial position with net working capital of 60,000,000 and total equity of 81,000,000 and at a 100% available unused line of credit amounting to $40,000,000. On 11/28/2024, the TSX accepted the company’s notice of intention to make another NCIB or share buyback and automated security purchase planning, ASPP, to purchase for cancellation a maximum amount of 316,646 common shares of the company, representing 5% of the company’s issued and outstanding common shares. Purchases under this NCIB or share buyback, comments on commenced on December 2024 and will terminate on 12/03/2025.

All such earlier date in the event that the maximum numbers of shares sold in the NCIB has been returned. Now during the six month period ended 04/30/2025, the company purchased four cancellation 80,500 common shares at market prices trading on the TSX for a total of $1,200,000. These shares were immediately canceled and then moved from trading. At this time, I would like to hand the call over to Randall Pillar, our CEO, for his perspective.

Randolph Penna, President and CEO, Currency Exchange International: Thank you, Gerard. Good morning, everybody. I will try to keep this quick and give you an update from the CEO’s desk here. As you know, a big focus is made on our exit from Canada by discontinuing Exchange Bank of Canada. I’m proud to report that our discontinuing plan is on schedule.

We have been operating favorable to budget. We have successfully reached favorable terms with all employees so that they either have jobs or or have been comfortable with our our discontinuance. And so we’re very proud that that all relationships with the employees are continuing to be strong. We are very focused on off boarding all of our customers. The majority of our customers have stock as of May 30.

We do have a handful of domestic clients that due to our service obligations will continue to transact with Exchange Bank of Canada until August 30, and at which time, all operations of Exchange Bank of Canada will cease. And the last few months of our fiscal year, we focused on the formal discontinuance that we hope to receive from the finance minister’s office. Of course, with this in mind, my focus as CEO is not only to ensure the proper discontinuance and exit from Canada, but more importantly is the focus on CXI’s overall strategy and the organizational structure of CXI to ensure significant growth profitable growth for the years ahead. Our strategy session was quite robust this year, knowing that we no longer have our Federal Reserve relationship, our bank subsidiary, and and no longer have the intercompany trading transfer pricing and all of the complications of running a multinational organization. Now that CSI and its continuing operations is a 100% focused on its businesses that it has in The US and its relationships, We have that an updated strategic plan that is being presented to the board of directors this month for for feedback and final approval in September as usually done.

Our our strict strategy has not changed in the sense that payments and banknotes are our core focuses of the business. The payments business being the smaller part much smaller part of the business is still a high growth area we see. We are focused on continuing to add new customers, and that is through just raw new addition of customers as well as the integrations with trading systems via our platform, allowing for new customers to have the one provider, one platform relationship that we seek to establish with many financial institutions in The US. And I’m happy to see that continuing to grow, and we have a full pipeline in our payments category for additional payments revenues. Additionally, we’re very proud to announce that we do have three clients already on our domestic payment platform, utilizing the Federal Reserve Direct program.

The Fed Direct allows us to provide the software connecting the smaller banks to their Federal Reserve relationship in an automated fashion so that CSI received software as a service income while not processing the physical domestic payments. Now that our pilot is concluded, we are focused on selectively growing our payment business, both with international payments as a core focus as well as the domestic opportunity should financial institutions utilize us for both. The largest part of our business is our banknote business, and that is continuing to remain as a top focus of CXI. The expansion in Louisville has been very successful, and the managing director, Wade Gracy, has been done an excellent job with automation and preparation for the potential significant growth that could be ahead for CSI and make those excuse me. The Louisville facility is is strategically located near our one of our primary shipping vendors, which has allowed us to expand our cutoff time due to them accepting packages up till 9PM as opposed to previously our cutoff time was 4PM.

And therefore, this advantage is is quite helpful, especially with customers on the West Coast or Hawaii, allowing for better processing, better customer service to the clients. Not only has this facility allowed for better processing times, it has utilizing recycling machines, which accepts currency and processes and then reallows it to go out through the ATM machine. This efficiency is it has been very noticeable and, therefore, will allow us to continue to add business without having to add as many humans as we grow. The pipeline for the banknote product is still quite full. We we do have additional new client opportunities in front of us, both in the wholesale banknote business as well as the direct to consumer business.

The direct to consumer business, as you know, has three elements to it. The online store, as Harar mentioned, it continues to allow us to reach more of the population, 46 states representing over 92% of the whole US population. So the online FX program allows us to have a home delivery service or to their home or office should they choose that instead. The the direct to consumer business also has the agent program. We do see opportunity for significant growth through the agent program through online and physical stores, And this is a great way to grow as we don’t have the cost of rent, payroll, build outs, and all of those that go along with physical stores.

Even stores even still, the physical stores do allow for full revenues as opposed to the agent program is a shared revenue model. So we are selectively continuing to grow our our, retail network with key markets, which are Florida, California, Hawaii, and New York, as well as select other states based on the dynamic dynamics of those cities that we intend to enter. So you will see us continuing to selectively add a couple stores a year in our physical growth. So between the wholesale business and the direct to consumer business, we do feel that we can continue to grow our banknote business in spite of the decline that we’re seeing on inbound travel due to the political tariffs and and other noise in the market. Lastly, the the executive team and I are always reviewing opportunities for mergers and acquisitions.

We do not have anything to announce now, but I do confirm that that it remains a priority for Herard and I both in the banknotes and payment space. Again, nothing to announce, but we continue to have interest in strategic opportunities. So that concludes my update, and I would like to turn it over to you to ask questions. I do since we’ve we’ve spent quite a time on our little update to you, we do ask that you just have your one question, maybe a little tag on to it, but no more than two questions. And if you could requeue, that would be great if you have more questions.

Thank you very much, and I’ll open up the the lines operator. Thank you, sir. Ladies and gentlemen, if you

Sylvain, Conference Call Operator: do have any questions, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by 2. And your question will be from Robin Cornwell at Catalyst Research.

Please go ahead, Robin.

Randolph Penna, President and CEO, Currency Exchange International: Thank you, and good morning. I guess my question is really on the 3,000,000 expenses that you discussed. Is is is that going forward? So we and and, obviously, you probably expect that 3,000,000 be finished by the end of this fiscal year.

Bill Matulos, Investor Relations, Currency Exchange International: Can you just expand on that? Yes, Robin. Thank you for the question. So that 3,000,000 after tax is expensive that we anticipate to continue after exiting Canada. So they will remain with the EXIM.

Okay. And that would typically be personnel costs, that would be bank charges, that would be certain shared costs between us and Exchange Bank of Canada.

Randolph Penna, President and CEO, Currency Exchange International: Okay. So that is, like, a permanent expense going forward, sir?

Bill Matulos, Investor Relations, Currency Exchange International: That is a permanent expense. And, you know, not not to that value. That is currently just our current approximation of what we see that lies ahead. But management is aggressively working to reduce those expenses. They’re in personnel, they’re in licensing, and and and software expenses.

And, Robin, I appreciate important points to mention here as well as there is no continuation of EBC losses in the group results going forward either.

Randolph Penna, President and CEO, Currency Exchange International: Right. So so the expenses will be pretty much going for they’re already in your numbers for the half. Is that correct? Is it like, on an annualized basis?

Bill Matulos, Investor Relations, Currency Exchange International: On an annualized consolidated basis, those expenses are obviously consolidated into the group net results. But when you look at continued and discontinued operations, because intercompany transactions are excluded, they are not viewed for part of continuing operations or discontinued operations. Each one of these entities gets their own expenses for this quarter. So we we highlighted the fact that there is transfer pricing that will now be canceled if if we had a person in TXI that worked 40% for EDC, and we keep that person in TXI, we have to now pick up that additional 40%. Okay.

Because we will no longer be there.

Randolph Penna, President and CEO, Currency Exchange International: Alright. Thank you for that. I appreciate it. My next question is for Randolph. Randolph, you mentioned the inbound traffic slowing down, tariff impact, etcetera.

What about the outbound traffic? Have you seen or and you’re coming into your seasonally stronger period. Do you sense or see outbound traffic stronger or weaker? We have not allowed it is noticeable that there are countries like Canada and select countries in Europe that seem to be, what I’ll call, protesting with their feet by not by choosing to go to a different country instead of America this year. The outbound continues to be a strong business, and we have not seen much change.

It is as you see in the numbers, it’s relatively flat. It’s a little up due to the the dollar has weakened partly, but mostly it has been these recession fears and so But the outbound business is is is still strong business, and we do see growth in that business. Our online FX store continues to show growth. And with our heightened investment in marketing for the online product and our overall cash products, We do feel that the the outbound business will continue to be a strong area of revenue, and we feel the inbound is a temporary hiatus as a lot of people are still coming in spite of of their willing their wants to not come, but a lot of people are. So we do not feel that the banknote business is going to be, you know, so difficult, but we did see a softening in that.

But the outbound is still pretty steady. Okay. Great. Thank you. I’ll requeue.

Thank you, Robin.

Sylvain, Conference Call Operator: Thank you. Once again, ladies and gentlemen, if you do have any questions, please press followed by one on your touch tone phone. Next, we will hear from Jason Sunenski at Chapter twelve Capital. Please go ahead, Jason.

Randolph Penna, President and CEO, Currency Exchange International: Good morning, Jason.

Bill Matulos, Investor Relations, Currency Exchange International: Hello, Jason.

Sylvain, Conference Call Operator: Please unmute your line, Jason.

Randolph Penna, President and CEO, Currency Exchange International: Oh, sorry about that. I I got it. Good morning. Just wanted to clarify on the 3,000,000, Herar. So is that are are you saying that there will be 3,000,000 of incremental costs to go against, like, the continuing operations?

Or are you saying that there’s 3,000,000 of costs, some of which are currently being absorbed by CSI, but the portion that was being absorbed by EBT will now have to be fully absorbed by CSI, if you understand the distinction I’m making. That’s correct, Jason. So, like, my payroll was spread out between EBC and CXI. Of course, the majority was at CXI, but some of it was paid by EBC. And now that EBC is not won’t be in existence, we won’t have the revenues, and, thankfully, we won’t have any more of their losses.

There is this, you know, cost of roughly a 3,000,000 that the organization will have, but we we anticipate to absorb that relatively quick with the continued growth of the business. As Harar mentioned in his comments, so if you had someone that was 30% devoted to EBC, that person, have chosen not to let go. And hence, we have the capacity to continue to grow without adding new people. So so I’d like to think that we will absorb that relatively quickly in the in the fiscal twenty sixth year. But go ahead, Gerard, if you wanna add to that.

Bill Matulos, Investor Relations, Currency Exchange International: Jason, does that answer your question?

Randolph Penna, President and CEO, Currency Exchange International: Well, I I basically let me just clarify one more time just to make sure. So for the for the six months of the year, you reported about 4,400,000.0 of net income from continuing operations. So if I take that like, am I to take that 3,000,000 number divided in half and say that, you know, pro form a instead of reporting 4,400,000.0 of net income from continuing operations, you’ll report 2,900,000.0 for the six months of the year, or is or is it even less than 1 and

Bill Matulos, Investor Relations, Currency Exchange International: a half million, you know, sort of the half year? The the impact will be less than 1 and a half million as we continue to manage those expenses down. But if you say continuing operations, which excludes any intercompany transactions or transfers or balances, you are correct. You have to look at that number, deduct it from continuing operations, and to get your continuing operations number. However, as we mentioned, that on a consolidated group basis, right now, when you have continued and discontinued, those that 3,000,000 is neutralized or eliminated, if I can call it that, on the 2025 numbers.

But for ’26, yes. Management is has been actively managing the costs everywhere. If you look at how we dealt with shipping, bank charges, and we’re very focused on getting those costs as low as possible.

Randolph Penna, President and CEO, Currency Exchange International: Okay. Thanks for that. I I think I’ve got it. I might just follow-up offline to confirm. Maybe if I could just throw one more quick one in.

The the net working capital went down quite a bit or even just the cash went down quite a bit quarter over quarter. And I I think that’s because of the classification of EBC to discontinued operations. But maybe, Gerard, if you can just elaborate on the decline in in net working capital and whether there’s any working capital that you expect to recover from EBC as you wind down the operations there.

Bill Matulos, Investor Relations, Currency Exchange International: Yeah. I I think you’re spot on there, Jason. I do do as we mentioned in our quarter one, we are aggressively and actively working on exiting Canada, and there is a potential of repatriating some of our capital from EDC over to CSI on on a con discontinuance of Exchange Bank of Canada at the end of the process. Okay. Alright.

Thanks, guys. So if you yeah. If you just and and, Jason, as you said, we can elaborate a bit more, but the interesting thing now is looking at everything in continuous and discontinued. So if you think of that same question you have for continuing operations, our working capital year over year for continuing increased from roughly 55 to 60,000,000. Because the number you see now on the balance sheet is continuing operations or CXI only.

And I know that that for the first quarter, this this can be a bit more challenging to understand when you look at the balance sheet. The whole EDC is actually now consolidated into three lines on the statement of financial position. So EDC is now literally only included an asset held for distribution to shareholder, liabilities directly associated with the asset held for distribution to shareholder, and that AOCL. So every other number in all the financial statements are continuing operations or TXI. And that’s the beauty of this this I apologize continuing, discontinuing.

You show the readers how the business will continue without the discontinued operation. Happy to take it offline and explain what I can in the financials a bit more, Jason. Thanks for the question.

Randolph Penna, President and CEO, Currency Exchange International: Okay. Thanks for it.

Sylvain, Conference Call Operator: Thank you. And at this time, gentlemen, it appears we have no other questions registered. Please proceed.

Randolph Penna, President and CEO, Currency Exchange International: Okay. Well, thank you everybody for your time this morning. Know some of you are out West, so it’s quite early. So thank you for for making the time. As as Gerard has already indicated to someone on the call, we will be happy to have, you know, one on one call to answer what was covered and disclosed in the MD and A and our financials, and we welcome any questions or feedback from anyone here.

And, again, I appreciate your support of CXI and look forward to talking to you again. Thank you.

Sylvain, Conference Call Operator: Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Have a good day.

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