Currency Exchange International Corp
TSX:CXI
Earnings Call Analysis
Q1-2024 Analysis
Currency Exchange International Corp
The company faced a mixed financial quarter, characterized by both challenges and strategic cost controls. Revenue streams saw some decline, particularly the payments product line which dropped by approximately $700,000, or 33%, due to decreased transaction volumes from key clients and adverse foreign exchange movements. Geographic revenue contributions shifted, with Canada's share falling from 31% to 22%. Operating expenses, on the other hand, increased by 12%, with variable costs maintaining stability and totaled $3.88 million. Notably, salaries and benefits rose by 19% due to both headcount growth and inflationary pressures. Despite an increase in banknote volume by 10%, postage and shipping costs were reduced by 4%, indicating effective cost containment efforts by management. Losses and shortages also improved significantly, with a 65% decrease thanks to focused managerial initiatives.
The group demonstrated capital resilience with total available unused lines of credit reaching roughly $46 million, up from $27.5 million in the previous year. During this period, average outstanding borrowings reduced to $5.5 million from over $20 million, leading to a marked decrease in interest expenses despite a higher average interest rate of 8.6% compared to 6.6%. The EBITDA margin for the first quarter of 2024, however, contracted to 13% from last year's 17%. Additionally, management's decision to implement a Normal Course Issuer Bid (share buyback) underscores their belief that the company's market value does not fully reflect its intrinsic value.
Looking forward, CEO Randolph Pina highlighted growth initiatives, such as integrating systems for both international and domestic payments and expanding banknote operations. The company remains focused on growing its own stores, enhancing its online store, and leveraging agency relationships to fuel overall growth, as reflected by the punter presence in key sectors. The potential for system integration in Canada mirrors successful U.S. efforts, albeit with direct collaborations with financial institutions rather than third-party software providers. The focus is now on establishing these Canadian integrations to harness new customer segments.
Questions during the call indicated analyst interest in understanding the company's cash management in relation to unpredictable volume fluctuations. The quarter-end cash position was clarified as $105 million, excluding the variance in surplus cash due to seasonal and predicted transactions demands. Executive discussions focused on the complexities of maintaining sufficient cash reserves, necessitated by unforeseen trades, indicative of a business model where the primary product is cash itself. The company also has facilities in place to support working capital during peak demand periods, with $46.6 million in undrawn credit lines available.
The company is actively seeking acquisition opportunities that are not only accretive to earnings but also align with their operational strengths in cash services and payment systems. Ideally, these acquisitions would be of manageable size and enhance existing capabilities without necessitating substantial debt financing. During the quarter, 20,200 shares were repurchased for cancellation, and dialogue with the Board remains ongoing to potentially increase buyback activity within regulatory daily purchase limits.
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Good morning, ladies and gentlemen, and welcome to the Currency Exchange International Q1 2024 Financial Results Conference Call. [Operator Instructions] Also note that the call is being recorded on Thursday, March 14, 2024.And I would like to turn the conference over to Bill Mitoulas, Investor Relations Manager. Please go ahead, sir.
Thank you, operator, and good morning, everyone. Welcome to the Currency Exchange International conference call to discuss the financial results for the first quarter of the 2024 fiscal year. Thanks for joining us. With us today are President and CEO, Randolph Pinna; 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. And 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&A. Please note that this conference call will include forward-looking information which is based on a number of assumptions and actual results could differ materially. Please refer to our financial statements and MD&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, go ahead.
Thank you, Bill. And thank you everyone for joining today's call. I will present a more condensed overview of the results of the consolidated CXI Group for the first quarter ending January 31, 2024, to allow more time for questions at the end, as requested. These results are presented in U.S. dollars and my overview will also include some results of Exchange Bank of Canada. The group continued to focus on executing against its strategic plan in which significant investments are being made in our people. CXI and EBC combined to have 406 full-time and part-time employees as at January 31, 2024, an increase from 363 from the prior year, and in infrastructure, during the quarter, we added an additional 4 airport agent locations. We now have 49 in total, and non-airport agent locations are at a total of 231. Our first quarter transaction locations is around 18,500, reflecting an increase compared to the same quarter in 2023 of about 16,500.Technology platforms remains a strategic focus with Kyriba, our treasury management system; and Alessa's AML compliance software making good implementation progress. Our IT team continues to explore ways we can leverage the power of the cloud computing to enhance integration capabilities, improve scalability, performance, and resilience. All of these initiatives and investments support the more efficient future growth of the group.On November 29, 2023, the group announced its Notice of Intention to make a Normal Course Issuer Bid, NCIB, or share buyback, and to purchase for cancellation a maximum amount of 322,169 common shares, representing 5% of the company's issued and outstanding common shares. During February of 2024, the company bought back its daily maximum allotment of shares for a total of 20,200 shares.Let's look at the consolidated performance for the 3 months ended January 31, 2024, compared to the previous 3 months ending January 31, 2023. The company generated revenue of $18.1 million, a 7% increase from the same period last year, primarily driven by an increase in activity from travel resumption towards pre-COVID-19 levels. New customer acquisition in both the banknotes and payment products lines, partially offset by a decline in trade with foreign financial institutions by Exchange Bank of Canada, reflecting reduced demands in USD volumes compared to the same period last year. This 7% growth in revenues of $1.2 million was largely due to growth in the retail market of around $972,000. Revenue in the United States increased by $2.5 million, or 22%, over the same period, while in Canada declined by $1.3 million, or 25%.Corresponding with the revenue growth, operating expenses increased by $1.7 million, or 12%, mostly attributable to an increase in salaries and benefits. The company recorded net operating income of $2.2 million in the 3-month period ended January 1 (sic) [ January 31], 2024, 18% lower than the same period in the prior year. Overall, the company generated $1.3 million in net earnings before income tax during the 3 months ended January 31, 2024, which is 20% lower than the $1.6 million of the prior period. It should be noted that the company incurred an income tax expense of about $416,000 in the first quarter of 2024, compared to an income tax benefit of roughly $2,000 for the same period last year. This income tax benefit was the result of utilizing a benefit related to noncapital operating losses incurred in prior years by Exchange Bank of Canada. The top 5 currencies by revenue remains the United States dollar, euro, Canadian dollar, Mexican peso, and British pound sterling. Revenue by product line for the 3 months ended January 31, 2024, compared to the previous 3 months ending January 31, 2023, will now be discussed in more detail.Let's focus on banknotes revenue. Revenue in the banknotes product line increased by $1.34 million, or 10%, due to strong demand from increased travel levels in addition to larger demand on exotic currencies. This was evident by the continued growth in customer demand for foreign currencies as international travel continued to strengthen in both the U.S. and Canada. Between November 2023 and January '24, approximately 201 million travelers passed through TSA checkpoints in the United States airports, on par to pre-pandemic levels. This is an increase of about 5% from the same time last year. Direct-to-consumer banknotes revenues increased by close to $1 million, or 19%. The company's market share has continued to grow via its direct-to-consumer footprint through new locations, including agents and its online platform. The growth was attributed to growth in the company-owned retail locations as locations have matured over time and drove higher volumes, the opening of additional airport locations, which further expanded the reach to travelers and increased geographical reach of the FX online platform with its continued expansion and the addition of the state of Alabama, making it the 41st state that the online FX platform supports. That means the group is now serving close to 90% of the U.S. population. Direct-to-consumer revenues represented 34% of the total revenue in the current 3-month period, compared to roughly 30% in the same period in 2023.Now, banknotes, as a wholesale banknotes revenue, which increased $370,000, or roughly 5% from new customer acquisitions. In the domestic wholesale banknotes space, volumes also increased. Wholesale banknote revenue represented 45% of the total revenue of the current 3-month period, compared to 47% in the same period last year, relative to the most comparable period prior to the pandemic. The 3-month period ending January 31, 2020, banknotes revenue has increased by close to 60%, reflecting the impact of our market penetration.Now let's go over to our other main product line, payments. Revenue in the payments product line decreased $120,000, or 3%. The growth in customer acquisition in United States resulted in a notable growth of roughly 33% for this period. Volumes in Canada resulted in a 33% decline in revenue, causing an overall 3% reduction in this product line when consolidated. The company processed nearly 35,600 payment transactions, representing $2.99 billion in volume in the 3-month period ended January 31, 2024, and this compares to 28,500 transactions on $3.1 billion of volume in the same period in 2023, with the majority of the growth relating to United States. Payments represents 21% of total revenue.Now let's break it down by geographic location, comparing the 3 months ended January 31,, 2024, to the 3 months ended January 31, 2023. I'll start with the United States. Revenues grew by 22%, led mainly by growth in the wholesale banknotes of about $1 million, or 21%, and $972,000, or 19%, in direct-to-consumer banknotes. Payments grew at about $600,000, or 33%. The growth in wholesale and direct-to-consumer banknotes revenues were largely impacted by new customer acquisition and an increase in transactions as travel to and from the United States continued to increase, whereas in the payment product line the growth was primarily result of new customer acquisition and activity growth by certain key customers locally in the United States. Revenues in the U.S. represented 78% of total revenues by geographic location in the current 3-month period, compared to 69% in the same period in 2023.Now let's focus on Canada. Revenues declined by 25%, mainly due to a decline in transacted volumes for U.S. dollars with international clients. However, domestic banknote revenue maintained levels from the same period last year. Revenues in the banknote product line declined by about $600,000, or 19%, while the payments product line declined about $700,000, or 33%, compared to the same period last year. The decline in payments was impacted by the reduced transaction volumes from key clients, in addition to unfavorable foreign exchange movements that impacted trends locally in transaction volumes. Revenues in Canada represented a 22% share of total revenues by geographic location in the current 3-month period, compared to 31% in the same period in 2023. Operating expenses increased 12% for the 3-month period ended January 31, 2024, compared to the previous 3 months ending January 31. Let's dive into some of the expenses.Variable costs within operating expenses, mostly represented by postage and shipping, sales commission, incentive compensation, and bank fees, have remained consistent with the prior year and totaled $3.88 million. The ratio comparing total operating expenses to total revenue for the 3-month period ended January 31, 2024, was 88% compared to 84% for the prior period. Salaries and benefits increased 19%, mostly driven by incremental growth in headcount as the company opened new branch locations, increased staff and IT, business intelligence to further strengthen the talent needed to deliver on the strategic initiatives and growth, in addition to partial increases in cost driven by inflation in base salaries and healthcare costs. Postage and shipping decreased 4% when compared to the same period last year, despite a 10% growth in banknotes volume. This cost decline reflects management's continued initiatives to control the increase in shipping prices, which were adopted during the second half of 2024 (sic) [ 2023 ].The favorable variance in losses and shortages, a decrease of nearly $300,000, or 65%, was primarily due to a decrease in lost shipments and as a result of management's initiatives and continued focus on working with our clients and vendors on this challenge. Information technology expenses included noncapital expenditure on software and related service contracts that do not meet the capitalization criteria. Additional costs were incurred to develop and automate systems that integrates with other companies' core banking systems and enables us to process image cash letters, in addition to certain security system costs that the company incurred in the normal course of business. Foreign exchange gains reflected reduced volatility for the period as a result of foreign exchange hedging and risk management strategies.Let's look at the balance sheet for the first quarter ending January 31, 2024. The group had total available unused lines of credit of roughly $46 million, compared to $27.5 million as at January 31, 2023. The group supports EBC through its revolving line of credit and as of January 31, the intercompany loan balance payable by EBC to CXI was roughly $14 million and increased from $10.6 million at year-end. This intercompany loan is eliminated upon consolidation. The average outstanding borrowings by the company amounted to $5.5 million compared to more than $20 million during the same period last year, which led to the significant reduction in interest expenses. The average interest rate on borrowings was 8.6% for the current period versus 6.6% for the same period last year. The group's capital base has grown to $80.5 million, with an EBITDA margin of 13% for the first quarter of 2024 compared to 17% for the first quarter in 2023. The group's continued focus on capital allocation and the Normal Course Issuer Bid or share buyback confirms both management and the Board's belief that the underlying value of Currency Exchange International may not be reflected in the market price of its common shares from time to time.At this time, I will turn the call over to Randolph Pina, our CEO, to provide his perspective. Thank you, Randolph.
Thank you, Gerhard, and thank you all for joining the call, especially those out west who I know are up quite early. Today, I'd like to focus on both the costs and the revenues of our business, starting with CXI. The bright future is ahead of us with payments. We continue to see the integrations while we see the costs of enabling our systems to be able to integrate with the clients that we have in our pipeline. The focus is not only just on foreign exchange. We are right now setting up to get a part of Fed Direct (sic) [ FedLine Direct ] with the Federal Reserve so that we can do both international payments and domestic payments. As I said, the pipeline is quite full. We have talent that is experienced in this area, and it's led by Chris Johnson, the VP of Sales for CXI, who's been with the company about 17 years and has done very well in execution on his plan.As we all see, the banknote business continues to be the core of CXI. Our pipeline is very full in the banknote sector. While many of us think that credit cards and tap-and-go are eating at the banknote business, cash usage continues to go up as reported quarterly by the federal governments in the top 5 countries we monitor, such as U.S., Canada, Australia, England, and Mexico. That cash usage is evident to us both in our growth as well as the travel demands we are seeing both in the consumer and the wholesale market. Speaking of wholesale, our pipeline is quite full with banks. Even though we service a majority of U.S. banks, our two competitors, the other massive banks that we compete against, still have a good hold as well, and we continue to work away at getting this business. We do anticipate adding some significant size banks in the next 6 months, and our pipeline, as I said, is full and our implementation and team to support it is ready, and now our systems are there.While we continue to grow, our Managing Director, Wade Bracy, is focused on all elements, not only being able to service our clients in the top service that we're known for, but also doing so in an improved method. He has developed an improved shipping process and packaging and shipping process, as well as negotiating a reduced shipping cost. As Gerhard has highlighted, you can see the effect of these new processes and pricing from our vendors. This process improvement has been well received by our staff because it's made things easier for them as well as our customers because our service levels continue to be very strong.Just as important as our wholesale division, as you see, the consumer unit, led by Matt Schillo, who's been working with me for probably 25 years, is going very well. The consumer unit, as I think you know, has three components to it. It has our company-owned stores. We're very proud that in the next month or so we'll be opening our newest store in Buckhead, Atlanta, Georgia, which is a very big market. And the previous operator who went out of business during the pandemic did very, very well there. And we anticipate to also have a good opening and a quick start of profitability at that store. Typically, a new store takes 6 months to a year. And as Gerhard pointed out in his commentary, some of our other stores we've opened are now at contributing levels and giving us regular return on our capital deployed there. So we do anticipate to open this new store as well as the rest of the year, probably one or two more stores, at least, in our core markets like New York, maybe even Boston, California, Florida, or Hawaii. So we will continue to focus on growing our company-owned stores.To complement our stores, we are, as Gerhard pointed out, adding new states to our online store. We now represent well over 90% of the whole U.S. population that we can deliver to your home and office if you're not able to go to one of our stores or one of our customer branches. So our online store has a very good marketing plan. It's been led by Ryan Graham, who's been working with our group for probably over a dozen or more years, and he is our VP of Marketing. He's done very well in utilizing online technologies to really grow the web footprint that we have. So we do anticipate continued growth in our online store.Most importantly is our agent relationships. As Gerhard pointed out, we're continuing to add agent locations in quality places like new airports where the agent is the local operator, ensuring that the staff maximizes the opportunity, while CXI, as its wholesaler and basically the support engine, providing the software, the brand, the cash there and the overall support to the location. That formula between the local operator and CXI as the wholesale agent provider has been very successful and that remains a top focus, and we anticipate to continue to grow that agent relationship significantly.So now I do want to talk about EBC. As you saw, the U.S. business was quite healthy and EBC was the complete opposite where we did have a significant decline due to competition and international effects. Ever since the banks have failed over here in the states, we had an extreme tightening of credit because our bank is quite small, and as a result, volumes have significantly been reduced. We are just now finalized, everything's been agreed with our trust company, and we are now in the final stages of operationalizing this trust account, which was set up for each individual bank client, and that trust account will then provide the comfort the credit departments of these international banks need to resume the old levels that we were doing as well as we have pretty full pipeline. We have three already ready to go, just waiting on this account. So we do anticipate a resumption of international revenues to start going back up quite quickly.Without international, we still have, of course, Canada. Our Canada expansion plan, as you saw, the domestic banknote business is still remaining well, and we have a pipeline of several other nice noticeable financial institutions and other types of cash customers in the pipeline. And we do have a director of our domestic banknotes expansion. And him and I have been working closely together to ensure the execution of our domestic plan, which is not just focused on banknotes, even though that too is a core focus of EBC, but also growing our payments business. We do add probably 25, 30 new corporates each month directly, but what we've recognized with the CXI in the U.S. is their strategy called OPOP, which is One Provider One Platform, is being adopted now and well received by existing banknote clients that have recognized that our payment system can do both Canadian dollar domestic payments as well as international payments. And such integration, while having a little bit of cost upfront, does reap the reward of a regular flow of international FX payments and fee income from any domestic payments. So our domestic expansion plan is very strong. Our international expansion plan is strong. Once we have our trust account fully operationalized, we can resume the growth of international banknote expansion.I do also want to point out that Katie Davis, who's been with our group for quite a while, she's very experienced. She's been our Treasurer, which has been managing the cash positions and all the FX for both Exchange Bank of Canada as well as CXI, has been named and is continuing to remain in the role as EBC's Interim CFO. Knowing the cost of growth while we've had revenue drop is an extreme focus for Katie in her role. And luckily we have a great team of treasurers behind Katie, so she does have the capacity and time to focus and leading EBC's this expansion of the business, while James Devenish, the Managing Director, focuses on growing and executing on our domestic and international sales plans, she is very focused on the expense control and potentially reduction.So, in conclusion, at the Board level, the Board and I are very focused on executing on our strategic plan. In June, we do have a refreshing of this strategic plan. And within that our primary focus is the return on capital deployed and the execution of our overall plan, which includes mergers and acquisitions, and identifying the strategic opportunities that are available, both in CXI's wholesale business, CXI's consumer business, as well as EBC's growth. So the Board and I understand the need for expense control while focusing on growing the overall business, both in banknotes and payments.So with that being said, I'd like to open up the floor, if I will, to the operator and take any questions you may have. Thank you.
[Operator Instructions] And your first question will be from Robin Cornwell at Catalyst Research.
I guess the first question is not necessarily a simple one, but Gerhard, the salaries and benefits, I know the first quarter was a big increase over the same period last year, but as the year progressed last year, the salaries started to level off a bit. Can we foresee that during the rest of this year that the level will not flatten off, but grow less aggressively over last year?
Robin, thank you for the question and it's a good one. As I pointed out, we were at 409 people, permanent and temporary, at the end of October 31 -- at the year-end, October 2023. We are right now at 406 in total. And it is our aim to continue to ensure that we don't grow our staff faster than our revenue growth. So between Randolph, myself, and Khatuna, our VP of HR, we have a hiring committee, and every new employee that joins the group has to be presented at that quick discussion that we have on it. So, yes, that is a continued focus of us, and our eye is on it. Obviously, in salaries and wages [ there's ] various other items. As Randolph just pointed out to me, there's DSUs, RSUs, there's some severance payments in there. So certain of those costs are not directly related to our employees, they're related to benefits that links directly to those individuals.
Okay, yes, that's important. And just a comment that it's good to see the postage and shipping costs the way they are. Very impressive. I hope that's a result of your repricing. My next question, Randolph, is it's great to see that the trust agreements are getting in place. You mentioned that you have three almost ready to go. How many would you anticipate that you have to put in place to get the business going again?
Well, the three we have will significantly increase the business alone, but we probably have seven more behind that, that are not -- the three we have, have literally we swapped paper, everything's pretty much ready to go. And then we have some that are just behind that, that we're in those final stages of negotiation, and then the onboarding will quickly happen thereafter. But the three that we have are quite high-volume potential customers, and we will anticipate good volumes straight away. So the second quarter that we've already halfway through, you may not see that lift just yet because the operationalizing will probably take another few weeks to a month or so. And then you always do a first-time trade test, which is a small transaction, and then they start going up from there. So we would anticipate the second half of the year for the evidence of this to happen. We are focused with the existing customers that have accepted CXI's corporate guarantee in getting them comfortable to increase the volumes as well as working to grow in markets where we have. Where the credit issue is not as much of an issue. But that typically opens up an area which is known as non-FATF. That topic does have some speed bumps along the way, with our Board being extremely cautious. And we have developed an enhanced due diligence program to provide the comfort that is needed knowing that this trading with the client directly back to the Federal Reserve can happen sooner than later. And therefore, we are actively working on it because revenue growth at EBC is one of our top and my top focuses. Does that answer your question, Robin?
Yes, Randolph. That's terrific.
[Operator Instructions] And next will be Peter Rabover at Artko Capital.
Randolph, you mentioned you had a bunch of strategic things that you're discussing, and I really appreciate the focus on the return on capital and the thinking. So I'm just curious if you could, as much as you can, talk about the strategic opportunities that could increase the returns on capital to the company. And I know there's just a lot of moving parts and so any color you can share would be appreciated.
Well, I can't share too much detail because we don't have any executed agreements as of yet. But the strategic, it could be, like I said, an acquisition, or just a significant major expansion with certain types of customers. For example, at the wholesale unit at CXI, we've recognized an opportunity with one of the top largest banks in the U.S. acquiring one of the failed banks, which was one of our customers. And luckily that business -- are you still there, Peter, because my screen...?
Yes.
Okay, sorry. My screen looked like it was rebooting. Sorry. So anyways, as wholesale business, we do have an opportunity to win a top U.S. bank, because that bank has recognized that we've done a very good job servicing now their new part of their whole massive group. And so there's that opportunity. In the consumer area, we are, as I said, continuing to look at opportunities, how we can add additional agent locations that are national providers and so forth, even at Exchange Bank, looking more on the domestic processing and so forth. But as far as a specific transaction like an acquisition or so, I can't do that. There are NDAs that restrict any discussion whatsoever. But I can confirm that at each part of our company, the wholesale unit, the consumer unit, and even at Exchange Bank, we are looking at continuing to do transactions that are accretive to our shareholders.
It's been about a year since the banks failed, and I'm sure there was a freeze in the financial space for a while. What's your view on more transactions coming across your table? Or do you see, is it more active, is there more opportunities now, less, and what do you think the constraints to your execution are? Is it price? Is it size? Any color you can give me, I'd appreciate it.
Yes. Luckily, the realization in the payments business that the margins are shrinking, which we're seeing ourselves. That's part of the reduction in our volume. The owners of their, what I'll call, boutique shops in their select marketplaces have come to the realization that the heated up, overpriced, that some of the acquisitions you've seen in the past with payment companies, so there is that. But the hurdle is still the same thing. An owner feels their business is probably just as valuable as their kid, and hence there's that mismatch in price. And so we will not acquire a business unless the return is accretive to us. And as you know, our share price is actually depressed, in my opinion, and undervalued. And therefore, that restricts the amount we would be willing to pay there. But we do are taking a longer-term view. We normally would look 4, 5 years out. And so it does enable us to be as far as we are. But I can't go into any specifics, but doing a deal, as you can imagine, with a private person, trying to convert them in part of a public company is like dating. It's a courting process. And so there is a lot of due diligence needed on both sides and a level of comfort that needs to happen. So that's about as much as I can say on that, Peter.
Yes, of course. Appreciate it. And then last question, maybe there'd be one more. But I know you said, maybe I missed it, but Gerhard said the debt was $5.5 million. What was the gross cash for the quarter? I guess net cash. And then of that, as there's a lot of moving parts, how much of that cash do you think you need to run the business on an average basis I guess?
I'll let Gerhard answer that.
Peter, I know it is on everybody's mind. Challenge is for us always determining how much cash do we need to run the business? And that depends on seasonal demand, that depends on volumes that we are predicting or trying to predict, as well as unpredictable volumes of people trading X million Mexican pesos in a week that wasn't necessarily there last week or last year. So you look at our revenue growth, and I take that into account and say that puts a strain on our current available cash that we have. So, as I've said many times before, it really depends on where we are in our current cycle. It's always a moving target and a moving number for us.
Okay, but what were the gross and net numbers for the quarter?
Peter, it would vary. I would say, it's probably in the $5 million to $10 million range, depending on how we look at our vaults and cash kept in the vaults and the continued optimization of those stock or banknote stock in our vaults.
Sorry, I think I just asked for the exact number of what was the quarter-end cash position?
Surplus cash? I can't give you an exact number in we had exactly this because of timing differences and also Q2 anticipated demand.
I think he wanted to know the total cash we had at quarter end.
Yes. That's all.
That's on the balance sheet. I think it's $80 million or $90 million.
$90 million? Is that what you said?
Why don't you look, we'll go to the next question person, and then put it back to you, Peter.
I didn't see the filing in the website, so that's why I asked this morning. But anyway, okay.
Well, Gerhard, he'll pull it up on the screen here. We'll give you that number. I thought you were asking for the surplus cash, and that does vary.
But I wanted the context first, and there wasn't filings this morning, at least not on your website. So that's why I asked now. And that wasn't in the press release. But anyway, I'll let the next caller ask the question.
[Operator Instructions] And at this time it appears we have no other questions. Please proceed.
Okay. Yes. Well, let me real quick just answer Peter's question. Peter, the total cash at the end of the quarter this last quarter was $105 million.
And Peter, all our documents got filed last night on the various portals. So sedar.com. And we are also updating our websites with all of these documents as well today.
Okay, go ahead. You said there's another caller.
Yes, sir, we do have another question from Yale Bock at Y H & C Investments.
Two quick questions. First one, how are things going on the southern border as far as integration with Duty Free and also with respect to the AAA clubs? And the second one is how are things going with the system integrations that you mentioned in the Annual Letter at Exchange Bank, similar to what you did with CXI? Looking forward to seeing you next week.
Likewise. I'll answer the sales question and Gerhard can answer the financial question. The Duty Free company, we have a good relationship with them. It is slow. Again, shipping costs is a focus, and so that's part of this renegotiation or expansion with them. We are working through that. So that's going slower than expected, but they continue to trade with us on the northern border. However, we are trying to update our agreement to cover the southern border. And so the shipping topic is the one thing that's been slow because we are focused on containing that cost and possibly sharing those costs with the operator.The AAA locations we continue to open. This is part of the driving factor of why we add new states licenses, because not only does it support our own online store, but AAA is an agent of us, and therefore it is required. So I don't have the exact statistic of which new clubs we just added in the last month or so, but I can tell you that we continue on this national expansion plan. I know Ohio was one of the new big ones that we had added, I believe, in the last quarter or two, but the AAA relationship remains a strong driver as you're seeing in our consumer division numbers continues to grow. And so they are part of that. So our own stores are growing, our online store growing, and the agents, like AAA, and hopefully soon Duty Free, will continue to fuel that growth.
Yale, would you just repeat your second question? I didn't hear that clearly.
Yes. So in the Annual Report that you all released, it mentioned that you're working on the system integration with the big providers like Jack Henry and Fiserv. And there's another one and doing the same thing with Exchange Bank of Canada. So my question is, how is the implementation of that progressing? Because that's a big piece, I think, of the payments. So if you could give some more color on that, that'd be great.
Yes, I guess I can answer that one, Yale, because the Fiserv and Jack Henry and all that, that's a CXI thing and that has been successful. That same integration capability exists. However, those software providers are mostly focused in the U.S. So that same type of implementation is what's being worked on now for Canada, but it's not with a Fiserv. It's bank specific, and we do have a bank in Ontario as well as a potential bank out west that are in discussion with us. But it is a slower process. But it is part of this OPOP Canada plan where we do want to integrate. We do have a fintech provider that has a domestic payment platform based in Quebec that does have customers nationwide that does domestic payments. And we are right now probably in the third month of the integration and our systems together. And so within a quarter, we should have a new bucket of customers because they're turning on their international capability, which will be powered by Exchange Bank of Canada. The good news is the integrations are much cheaper and faster because we've already done them in the states, so our APIs are all built. We have our sandbox where the two tech teams work together to test it and integrate and make sure it's ready to go live. And so it is underway.
So, Yale, I think to complement that is, in the U.S., it's with Fiserv, Jack Henry, and larger organizations. In Canada, it's directly with financial institutions. So you will go directly to X bank or Z credit union and tie into their core systems.
No, very good. I guess, since I've asked those, I guess one more, if you could just comment on, in general, without releasing anything specific, the nature of the kinds of acquisitions in terms of, are you looking at cloud currency providers on the payment side? Is there any color that you can provide in terms of criteria that you're thinking about?
Well, we're not restricted to just payments. Cash would be consideration if there's such an opportunity, which there could be. And the criteria is we would not acquire a business that is a dream, that's losing money now, but yet can do something in three years. We would only be acquiring a business that would be accretive, as I said, that they have a book, a revenue, profitable business. We have the same type of thing. And we're recognizing on the back end, the back office could be sharing the compliance and risk costs and so forth. And as far as a target size, we're not trying to buy something bigger than ourselves unless there was such an event where we could. So we're looking more at the tuck-in types or bigger, but nothing too large, because we would need to finance that with debt, which we have some banks that have expressed interest in helping us with that. So these are bite size or a little bigger opportunities that we see.
Okay, very good. Randolph and Gerhard, we'll see you next week.
I'll see you next week.
Thank you. Next question will be from Paul Farrell at Mayborn Partners.
This is Paul Farrell. Just two quick questions. I may have missed it, but what was the amount of the share repurchase during the quarter, and what's your strategy in terms of becoming more aggressive there?
So, Paul, we purchased for cancellation 20,200 shares in the month of February, and we have approval to continue with a maximum of 5%, which is roughly 322,000 shares. We continuously discuss this with our Board and progress down a structured path.
And we're restricted. There's only so much we can buy per day, right?
1,325 per day.
Okay. I appreciate that. I may have missed that in the commentary earlier. My second question is, most companies have a working capital line, a revolving credit line to finance the seasonal and unexpected swings in working capital. Your product is cash. So is there an impediment to having a revolving credit type set up to fund the seasonal swings and the unexpected spikes in your working capital, i.e. cash needs, so that you actually can figure out how much excess cash you have available?
Well, two things. We really hope that -- we're continuously trying to predict trades, volumes, and transactions of travelers and obviously customers. Our challenge and something that benefits us right now is we see continuous growth in those sections. So on a practical level, if Client A does a large cash transaction of pesos-U.S. in a week from now, and it wasn't necessarily anticipated or predicted, you can understand that has a drain on our available free cash or our available cash. We do have facilities in place whereby we can fund that working capital. And as I mentioned, those lines are mostly undrawn.
What is the total?
Total undrawn is $46.6 million unused lines of credit. But as I also mentioned, Paul, if you look at it, CXI is also funding an intercompany loan balance between the holding company and its subsidiary, Exchange Bank of Canada, of roughly $12 million to $17 million on a daily basis. So there is some need for that facility just to create working capital in Exchange Bank of Canada as well.
Thank you. And at this time, we have no other questions. Please proceed.
Okay. Well, thank you, everybody, for joining. As you know, Gerhard and I are available to have one-on-one calls as well. We can't disclose anything further than what was released in our press release and what was discussed today, but we're happy to clarify if there's any question around that you didn't understand today. So please reach out to Bill Mitoulas to coordinate a time. I am on the road, traveling internationally starting tomorrow for a few days, but I will be in Toronto at the Annual Shareholder Meeting. We are doing a reception for an hour. After that, there will be quite a few Board members. We invite you to come to our Annual Shareholder Meeting there on Bay Street and watch our presentation. And then, of course, interact with myself, Board members, Gerhard, and anyone else. We'll have some of our other top executives there as well. So we look forward to hopefully seeing you next week. And I thank all of you for your participation in Currency Exchange International. And thank you.
Thank you very much. Have a good day.
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.