Currency Exchange International Corp

TSX:CXI

Earnings Call Transcript

[Operator]

Good morning. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Currency Exchange International, CXI, Q2 2019 Financial Results Conference Call. [Operator Instructions] Thank you.I would now like to turn the call over to Bill Mitoulas. Please go ahead, sir.

[Bill Mitoulas, Investor Relations Manager]

Thank you, Stephanie, and good morning, everyone. Welcome to Currency Exchange International's second quarter conference call to discuss the financial results for the 3 and 6 months' period ended April 30, 2019. Thank you for joining us. With us today are President and CEO Randolph Pinna; and Chief Financial Officer Stephen Fitzpatrick. Stephen will begin with a brief commentary on the quarter's financial results, followed by his latest perspective on the company's financial performance. Randolph will then comment on the bank operations, sales 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 are 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 we have made.With that, I'll turn it over to Stephen.

[Stephen Fitzpatrick, Chief Financial Officer]

Thanks, Bill. And thanks, everyone, for joining today's call. So as Bill said, I'll give you a brief overview of the results from the most recent completed quarter. And just as a reminder, these results are presented in U.S. dollars, unless we say otherwise.As we've stated in the past, the currency exchange business is typically very seasonal, and it coincides with the peak spring and summer travel seasons in North America. So the first and second quarters are usually our slow quarters, with the third and fourth quarters being much stronger. So the trend of -- and the trend of a slower first half of the year continued for us and over the first 6 months of 2019, and it's reflected in the results that were released yesterday.After what we would call and consider a disappointing first quarter, the second quarter showed a marked improvement from a $0.05 per share loss in the first quarter to an $0.08 per share profit. This was the same level as of last year, but it was accomplished despite ongoing challenges in our bank subsidiary and some of the headwinds that we're facing in our retail business.The core banknotes and retail business remains strong with 13% growth in wholesale revenues year-to-date, and we continue to add clients and locations. Payments revenues grew 70% and grew to 4% of total revenue compared to about 2% a year ago. Banknotes pricing, we've been looking at that and doing our best to get a little higher spreads while operating expenses continue to rise. In Q2, year-over-year revenues and EBITDA were affected by a significant drop in so-called exotics currencies, contributing only $790,000 to Q2 revenues compared to $1.3 million a year ago in the second quarter, which is a 40% or $515,000 decrease.Year-to-date, exotics revenues are $1.1 million, below the previous year. Excluding the effect of those currencies, the exotics, which do tend to fluctuate significantly, revenues increased 12% year-to-date and 14% compared to the second quarter of last year. It's -- the decline in exotics revenue is partially offset by an increase in other currency volumes in retail compared to the second quarter of 2018. So the results for Q2 2019 and year-to-date 2019 are really more comparable against the same period in 2017, where we also experienced a net loss in the first quarter and did not significantly benefit from the upside of exotics revenues as we're experiencing this year.Our revenues increased 6% compared to Q2 2018 to $9.5 million from $8.9 million, and year-to-date, revenues -- overall revenues are 4% over the previous year. Total trade volumes in dollar terms increased by nearly 25% over both Q2 2018 and year-to-date, which is attributable to growth in wholesale volumes, the high volume of existing clients, particularly in EBC. It's also related to growth in payments volumes, growth in check volumes.Q2 revenue growth was slower than we had expected, particularly in the retail business and, like I said a few minutes ago, driven by the decline in exotics revenues and the delay in achieving our budgeted revenue levels from new stores. Core revenues, and by that I mean nonexotic-related revenues in the retail business, remained strong with overall growth in volumes year-over-year in major and minor currencies excluding exotics albeit at somewhat lower profit margins.In 2019, we've added 1 new branch location, bringing the company's total network to 44 across the U.S. We are unlikely to add the usual 3 to 4 locations that we do per year in 2019 at no more than -- we're not expecting to add any more than 2 in total. Year-over-year, we continued to see -- CXI continued to see an increase in the number of customer transactions, which resulted from the addition of the 4 new branches over the past year, 375 new customer relationships, representing almost 1,100 new transacting locations, which represents a 9% increase in transactional activity. In the notes to the financial statements, you will see that we've disclosed payments revenue separately. They're below the 10% threshold for mandatory disclosure, but we thought it would be helpful to disclose them since the payments business is core to our strategy and it's important for you as investors to see that, that revenue stream is growing.In addition to falling short on revenues in terms of our plan, we also had higher expenses, largely due to the investments we're making to grow our business and establish the bank in Canada, and Randolph will expand on that in a few minutes. However, I think it's important to point out that the rate of expense growth has slowed from the pace in 2018. 2019 year-to-date expenses have increased 15% year-over-year whereas a year ago at this point, expenses were up 25% year-over-year. And even more encouraging comparing quarter to quarter, expenses grew 8% year-over-year in Q2 2019 whereas in the same quarter in 2018, they had grown 35% over the prior year.So this pace and this trend will restore positive operating leverage. Our degree of -- our operating leverage, the percent change in EBITDA in relation to the change in revenues, decreased significantly year-over-year. However, compared against the same quarter, it did improve. There was an improvement. It's still negative, but it was cut in half from minus 90% to minus 46%.While revenues tend to be lower in the first half of the year, we typically incur indirect operating expenses evenly over the fiscal year. So compared to Q2 2018, combination of business growth and the investment in strategic initiatives led to higher salary costs as we hired for nearly 40 -- nearly 50 new positions over the year, over the last 12 months. To support strategic initiatives, legal and professional fees increased 4% over the previous year, but we have been managing that expense line much more tightly this year and it's -- I can tell you it's well below budget.And there were also increases in rent related to the new retail location, the full year effect of the branches we opened last year in new bought locations in Montréal -- a new location, I should say, as well as postage and shipping costs, which is partly attributable to higher transactional activity. As I mentioned, our volumes -- our transactions are up 9%, overall volumes are up 25%. There's a higher frequency of inbound and outbound shipments with -- because of an increase in high-value, bulk shipments. And just in general, the costs from our delivery companies have increased, [ our Amica covenants ] have increased. So it's part of doing business, and we do build that into our pricing model.Overall, CXI has continued to progress against its strategic objectives in the second quarter. In January 2019, we opened the Montréal processing center on time and on budget, and we have made progress -- we progressed in formalizing our processes and logistics to get increased processing activity there in the second half of the year.The completion of our acquisition, which Randolph will also address, is still delayed. We have continued to focus our attention on alternatives to try and build revenue in the bank and build profitability. And the revenues in the bank were up significantly in the first half of the year.The ratio of operating expenses to total revenue for the 6-month period was 92% compared to 83% a year ago and -- but this is impacted by the increase in revenues from exotics in fiscal 2018. Conversely, they declined this year. In 2019 -- Q3 2019, we feel it's more in line with the operating expenses to total revenue in Q2 and Q3 2018 at 89% versus 87%, and it's improved overall. In a sense that in Q1, that ratio was 97%. It's traditionally higher during the winter months and decreases as the fiscal year progresses due to the cyclical nature of the business.Overall, as a result of these challenges and these results, net operating income or the EBITDA decreased in Q2 2019, decreased by $34,000 from the prior year but it actually was flat year-over-year.Diluted earnings per share year-to-date decreased to $0.05 from $0.13 a year ago, dragged down by the Q1 results, as I mentioned earlier. And I'll just reiterate, the first 2 quarters are traditionally the weakest period for CXI as reflected in over the last 3 years, 2017, 2018, 2019. And the core -- but the core banknote business and retail business remained strong. Payments revenues are continuing to increase both -- in both our core elements of CXI's strategy. We're focusing on opportunities to increase revenues in the bank and from our retail stores, and the sales pipeline remains strong in both entities.Finally, in terms of our balance sheet, we continue to remain financially strong and well capitalized with over $60 million in cash as of April 30, 2019. Total assets at $82 million versus $84 million a year ago. Accounts receivable decreased $3 million since April -- compared to April 30, 2018. However, this is a fluid number, and it relates to timing. All significant items in accounts receivable at April 30, 2019, were subsequently received in May. We carried $2.6 million in short-term debt at year-end through our line of credit, which is a significant decrease compared to $12 million a year ago.So at this point, that concludes my remarks. And Randolph, I'll turn it over to you.

[Randolph W. Pinna, Chairman, CEO & President]

Thank you, Stephen. And good morning, everybody. Thanks for joining us this morning. As usual, I would always like to start with Exchange Bank of Canada. Our wholly owned Schedule 1 Bank did lose the group $1.1 million for the first half of the year. That is disappointing, and we are focused on reversing that trend. However, for the year, we do intend that the bank will lose money and possibly a little more as we continue to build out the structure, a solid foundation for significant growth in Canada.We have not needed to hire too many other people at the bank. We have -- as Stephen commented, we've hired quite a few over the last year. We have invested more in the areas of risk and compliance, and we will identify a person to help me lead the bank with a focus on sales. And this is the only additional costs that we see coming into the bank. Again, we have hired a good team of people. We have a strong compliance, risk network, and we do have a good operating team that has supported our growth.You can see the efforts of the bank because revenues are up 27%, which is both from cash business and payment business. Part of those costs that you see are the starting of the Montréal vault, which currently is not making money because we have just -- as Stephen said, we've built it out, it's on schedule, and it's now fully operational, and we are in final stages of negotiation with some other business that will come in and turn the Montréal facility profitable. So we feel that the growth of the bank is going to continue while the costs of the bank will stabilize and, hopefully, eventually go down relative to the revenues.We do have over 100 active payment clients. That has been our focus. And we are building out the structure, the onboarding, the compliance monitoring, everything to allow us to go and add another 400 payment customers to bring to 500. We have aspirations in 2020 to bring that over to 1,000 payment customers in the new year. And we do have some very big opportunities ahead. Our pipeline is quite full. And we now at Exchange Bank of Canada are ready for the growth proposed between the cash business growing and the payments business.We have a full suite of products from our 4 cash offering on our software as well as our remote image capture, which is clearing checks digitally, has been very positive and well received, and our payments business.Our treasury management system, which I think you remember me talking about before, has been expanded to now having a customer portal that allows our active corporate payments to see their positions, their trades and do everything straight through process. So all of this infrastructure has been built. We've seen the costs. We're seeing the red ink from it. However, we are focused at a Board level to ensure the bank is properly structured, from not only just the front-office operations, from the middle office, back office as well as all of the compliance and risk monitoring to ensure that we onboard good-quality customers and that their activities are profitable and in line with all expectations.Exchange Bank of Canada is also a wholesale bank to CXI. So in the U.S., the remote image capture service has been well received, and those Canadian items are being cleared through Exchange Bank's correspondent network. And this has been very positive for both the bank and for CXI. As you know with CXI, the financial institutions, banks and credit unions are the core customer base. I'm very proud of the fact that we continue to add prestigious name banks that have chosen to outsource some or all of their international activities from cash to check processing to wire transfers to CXI. We now have over 18,000 transacting locations. That is very good, especially when our strategy shows that we can add other products to be available through our network, which will allow us to get more revenues from existing customers, hence allowing for that positive operating leverage.So the CXI similarity just to EBC, also has that same product suite of cash, remote image capture for clearing checks, payments, and most recently we are now doing forwards at CXI, which has had a couple of customers, and this is an area in which we do see growth with CXI and eventually at Exchange Bank of Canada.We also are proud of our integration. We are soon to announce the details around it, but the integration with Fiserv's WireXchange system has been tested and has just gone live this month or is going live within the next day if it hasn't already. I believe it is already live. We are just finalizing all of the details around the marketing and ready to take some of our existing customers that are on the Fiserv system and have them using us for -- using the WireXchange through -- the WireXchange program.We also had done an integration with a company called Juniper Payments, which is more in the credit union space, but it's the same sort of integration that allows a straight-through process, so the bank or the credit union utilizes the core operating systems. Without having to toggle over to our software, they can, in their system, be able to initiate a wire, debit clients' accounts, and we are credited on the other end. Again, that straight-through process allows for the efficiency that our group is striving for.So as you can tell, we are very focused on growing our payment business. So besides financial institutions, we are focused on growing our corporate payment business, and we have retained a seasoned executive that I actually worked with at Bank of Ireland years ago to help us with the corporate payment initiative. We have a marketing plan and a pipeline generating a lead generation process, where we're getting a lot of active, warm leads to close and grow the corporate payment business. The pipeline does remain full. And we are focused on the costs. While our shipping costs have gone up, some of those costs were related to some of the start-ups of these 1,100 new locations. And unfortunately, some of it is due to the fact that the shippers, they're not just one, because we've shopped them against others, all the shipping companies, both armored and overnight express, have raised their prices. We are in final negotiation, again, to bring those costs down since our volume has gone up, and we are very focused on stabilizing that as well as utilizing other alternative methods, such as increasing inventory on consignment, which reduces the need to ship as frequently as well as try to utilize how the bank's internal messenger systems for low dollar values to allow the bank to assist in distributing the notes to the other branches.Going forward, we are not only planning to grow our cash business, our payment business through financial institutions, our payments business through corporate relationships, we're also looking at other geographies. We have decided to take a few select, well-established financial institutions from the islands to deal with our Miami facility. One of those is actually -- it might be related to a Canadian financial institution. And so this will be a new territory that will help us continue to grow the banknote business. There's other segments that we're looking as well, as well as other products that are going to bring in fee income, including some software licensing fees. We currently now have 5 financial institutions paying us a regular monthly fee for utilizing our software for domestic activities because we do have an integration with the Fed advantage system, which is the Federal Reserve's online wire portal. And because of this integration, we are now seeing that there is a demand for our software without having to do any actual financial transactions, more of the tech side of our fintech business.So between adding geographies, expanding our corporate business, adding additional products and fee-generating services, we feel quite confident that our network of 18,000 branches will provide our shareholders the rewards that we've been working hard to get. While we don't do any forward-looking statements, I can confirm that May has taken off, as it always does, which is the start of our busy summer season. We are in June. We haven't closed the books in May, but I've been very actively watching all of the retail activities, our wholesale relationship transacting locations, and we are quite comfortable knowing that the season is back. If you've been at the airports or read any of the news, you see it is -- the economies not only in North America, but around the world are quite strong. And so we have every reason to believe that we will have a strong second half of the year, and we look forward to the years ahead since our group is now established, ready for significant growth.So with that being said, I would like to open it up to listen to some of your questions and provide you those answers. Thank you, Stephanie.

[Operator]

[Operator Instructions] Your first question is from the line of Robin Cornwell with Catalyst Research.

[Robin Cornwell, President and Founder]

One quick question, I guess, is, was there -- to Stephen, was there any extraordinary expenses in the quarter? You've obviously had very positive progress on your expenses.

[Stephen Fitzpatrick, Chief Financial Officer]

Were there any sort of outliers? Is that what you mean?

[Robin Cornwell, President and Founder]

Yes, something -- onetime.

[Stephen Fitzpatrick, Chief Financial Officer]

No...

[Randolph W. Pinna, Chairman, CEO & President]

That's right. When you say onetime, there's costs just setting up 1,100 new locations, but we intend each quarter, hopefully, add [ another ] location. So at a certain point where we, let's say, capture as much of the market as we feel we want, those costs will stop because the setup costs do exist, not only in shipping, which is the most obvious, because we try to ship everything there instead of bringing it personally, but there is travel, training and setup costs.

[Robin Cornwell, President and Founder]

No, I was thinking more like severance and things like that.

[Stephen Fitzpatrick, Chief Financial Officer]

No, not as -- there were in the first -- in the first quarter, but in the second quarter, there was nothing out of the ordinary.

[Robin Cornwell, President and Founder]

Okay. That's good. Randolph, I'm not quite sure, where do you see acquisitions stand right now? I know you're waiting for regulatory approval.

[Randolph W. Pinna, Chairman, CEO & President]

Yes, we are working through the -- ensuring that the bank is ready to onboard additional 400 active clients, and that is a focus that we have at the group. On the compliance, the onboarding, we are actually looking at an automated onboarding process to assist in that, not only just for this potential acquisition, but also for the fact that we now have a plan to bring a lot of warm leads and hence, hopefully, close those leads and bring our payment -- our corporate business significantly up. And so to build out that, we've had to bring in a few extra compliance folks in. Some are on a contract basis just to ensure that we are prepared for quadrupling our current customer base, and some will be staying on long term. And so we are working through that process, Robin. We are just as anxious as the other shareholders to ensure that the bank is well structured because we are building the foundation of what we feel will be Canada's next great bank being a wholesale bank, not trying to compete with retail [ TDs ] of the world. We are a wholesale B2B bank, and this is our core focus. And to do that, to ensure that solid foundation, we at the Board have chosen to take -- to do it right and ensure the bank is ready. So I'm not sure if that answers your question you wanted, but that's where we're focused.

[Robin Cornwell, President and Founder]

Okay. So the time line -- sorry, go ahead.

[Randolph W. Pinna, Chairman, CEO & President]

No, no -- yes, the time line we -- I don't have a time line. We are working through that process, and I don't want to venture to guess and say it's 2 months or anything like that. It's really -- it's in process, and we are working very diligently to ensure that we are ready, and I think at that time everything should be moving forward.

[Robin Cornwell, President and Founder]

Okay. Thank you for the additional comments on where you're going, your new projects. Now just on that topic. You have, as we know, initiated several major capital projects over the last 2 years like -- especially the bank charter and your payment system, including, I guess, upgrading your -- all your information systems, CEIFX, et cetera. Now as these -- these projects have been largely expensed over this period of time. And I guess my question is, what new initiatives are you considering that may impact the expenses over the next 2 years, excluding the acquisition?

[Randolph W. Pinna, Chairman, CEO & President]

There is not any significant expenditures like we are growing the ATM, the FX ATM business that is, in our strategy plan, but the machines are like $15,000 each. The cash that goes in them is $10,000 or $15,000. So we don't see any significant cost because that would be capitalized and our expansion with accepting some customers in the islands. You might have some travel costs to set up these customers, but these are large, bulk, wholesale banknote customers. Primarily, there may be some check clearing as well. But -- so there's not -- that's what I'll call normal. The heavy lifting of the TMS system and, as you call it, the other capital projects, are now mostly expensed and, therefore, we are positioned to gain the revenues and leverage without those expenses going forward.

[Stephen Fitzpatrick, Chief Financial Officer]

The only thing I would add, Robin, is that some of the initiatives that we're starting into are actually -- they would require working capital as opposed to expenses just to support those volumes. So we may have to carry a little more inventory in order to earn...

[Randolph W. Pinna, Chairman, CEO & President]

Leverage.

[Stephen Fitzpatrick, Chief Financial Officer]

Yes.

[Randolph W. Pinna, Chairman, CEO & President]

We recognize our cash in inventory is not the best return, and equity financing of that is not as attractive as debt financing because our rates are quite good from the banks that they've offered us. And so that allows us to utilize that cash, as Stephen said, to expand our business and take advantage of some of the good opportunities that we have in front of us.

[Operator]

Your next question is from the line of Nick Corcoran with Acumen Capital.

[Nick Corcoran, Equity Research Analyst]

You just said that there would be fewer locations, Stephen but you're guiding to about 2 locations. Can you just speak to the driver that's making the year-over-year change lower?

[Randolph W. Pinna, Chairman, CEO & President]

Well, retail -- we are not changing our focus on retail, which has always been, as you know, Nick, is that we look for quality locations at reasonable rents, and that's hard to do because of the economy being so strong, the landlords are demanding more rent. In fact, as Stephen said, our rents are up because of new stores, but also because our landlords have raised rents in some of our existing stores. So the 2 other locations that are planned this year are in New York and one -- and possibly in Hawaii. And those are 2 high-volume foreign currency active locations. And again, we've established reasonable rents with those landlords. We just don't have another great location at a reasonable rent.If you've been in the downtown Toronto core recently, you notice a retail competitor, Calforex, has opened a flagship store at the Eaton Center. And the rent, we don't know for sure, but it's guesstimated to be about $30,000 to $40,000 a month. We are not in that business. We're not in the business of paying airport authorities. We've been invited to bid on a very popular airport, but the annual minimum rent guarantee was $2 million. Well, because the numbers are public because it's an airport authority, you can see the current operator is making money there, but this is not the retail business we're in. So we are evaluating our retail business to ensure we're maximizing that, considering other products to be sold such as metals or other products, so that we can get more out of those locations. So this year, we are comfortable with a total of 3 at max, and it's not even sure that the third location will open in this fiscal year or it will be in November, meaning, our next fiscal year.So we're not losing focus. We are staying, in fact, very focused on ensuring only taking profitable retail stores at reasonable rents in good markets, which are core to us, which is typically Florida, California, New York and Hawaii is a very -- if you've been there, you know that it's a very international state. And so that's why -- it's basically -- that's what we've got this year, and we're comfortable with that. Retail, in total, as you read all the news and all the closures and even Victoria's Secret and all these popular retail brands are starting to downsize in malls, which is reducing some of the foot traffic. So we are cautious of our expansion in retail, and we will stay focused on our philosophy of getting good spots at reasonable prices. Otherwise, we won't go in.

[Nick Corcoran, Equity Research Analyst]

That's very good. And then just moving on to -- moving on to the exotic currencies. What do you think is driving this year-over-year decrease? And do you think [ '20 is going to be an outlier ] in terms of the total volume of exotic currencies that you did?

[Randolph W. Pinna, Chairman, CEO & President]

Yes, it could be because it's -- when it surprised us back in the heyday, so to speak, we felt it was very clear and fair to give the market awareness of the fact that these exotic currencies are an outlier -- as Stephen called, it's not our core -- the euros and the Swiss francs and the Canadian and sterling and all of that is our core, which is regular business travel or leisure travel. The exotics has been very speculative. So while I don't have confirmation that the drop in exotics coincides with what has been going way up, which is also very speculative, is items like Bitcoin, these cryptocurrencies or blockchain currencies have been very popular in the last 3 years. So to me, when I fly in a plane, I look down at 30,000 feet, I see our own exotic currencies, which were paper, mostly Iraqi dinars, Vietnamese dong, and maybe Indonesian rupiah. We've seen that drop all while I see all in the news constantly about the cryptocurrencies becoming more popular. So I think that has an effect on that. Whether we will see it continue to go down to nothing, I doubt, but I don't see it ever getting back to the heyday area like it was before.

[Nick Corcoran, Equity Research Analyst]

Agreed. And then the last question for me is on shipping costs with the Montréal vault. How should we think about that as the vault ramps up?

[Randolph W. Pinna, Chairman, CEO & President]

Yes, that will help the bank reduce some of the shipping costs. There was some delays with our shipping vendors, and one of the directions, I believe it was on the outbound side that we've worked out now. And so we have yet, in the first half of the year, to see the benefit. In fact, you saw the opposite, which was increased activity at higher shipping costs. But the Montréal vault will absolutely help stabilize the shipping costs with the bank because now that the facility is fully built-out for inbound, outbound, and we are expanding on our note -- our local area Québec facility as far as being able to do not same day but almost that type of quick turnaround, will allow us to keep the service levels very high and stabilize the shipping costs. So that will help.

[Nick Corcoran, Equity Research Analyst]

And do you expect that to occur in Q3 or maybe drag into Q4?

[Randolph W. Pinna, Chairman, CEO & President]

No, no, it's starting now. It's already -- it's underway. I don't know if it's fully -- we finished migrating all the Québec relationships from Toronto, but it is - it's underway now.

[Stephen Fitzpatrick, Chief Financial Officer]

You'll see it fully in the fourth quarter because by then it'll be fully done, right?

[Randolph W. Pinna, Chairman, CEO & President]

That's correct. Yes. But it is correct that since May is already behind us, and we're still not done migrating everything from Toronto, that's Québec to Québec, but we are doing that as we speak, as this is -- we are very focused on containing the costs while we continue to grow the revenues.

[Operator]

[Operator Instructions] Your next question is from Chris Martino with Laurentian Bank Securities.

[Christopher Martino, Analyst of Research]

Just with respect to the 4 underperforming retail locations. What has been the cause of delay in the ramp-up? And has there been any improvement since the last quarter?

[Stephen Fitzpatrick, Chief Financial Officer]

I'm not sure we said there were 4 underperforming, but...

[Randolph W. Pinna, Chairman, CEO & President]

That's about right.

[Christopher Martino, Analyst of Research]

I think I read that from the last quarter.

[Stephen Fitzpatrick, Chief Financial Officer]

Yes, I think it's partly -- it's just there's a slower -- we're trying a slower ramp-up than what we've seen in the past in some of these locations because of some of the reasons that Randolph is talking about, and this is in the new ones...

[Randolph W. Pinna, Chairman, CEO & President]

So I can speak to, like, for example, the one in Connecticut, that is not an inbound tourist market. So when you're -- the goal of that store is to sell currencies to the rich -- to the median income, and that market there is about USD 90,000. And so you're building a local customer base, which just does take longer. Whereas, for example, if and when we open in Hawaii, the buses of Japanese tourists that get dropped off at the location we hope to be in, it's a quick getting up to profitability faster, and then that's why actually the 2 that we are going to open this year are in those markets where they're fast to get to profitability. Some of the stores we've opened take a little longer, and we are reviewing our profits of marketing and getting the awareness out to the local community, and so we are working on that. But it's true that not only is the bank bringing us down, there's a couple of stores that we've invested into, which we planned and budgeted to lose money for a while and a couple of them are taking a little longer than expected. But all of the locations, the 44 stores we have, we feel are strategic to our retail network in the United States.

[Christopher Martino, Analyst of Research]

Okay. So it's really just 2 stores, and it has more to do with the regional dynamics rather than anything operating?

[Randolph W. Pinna, Chairman, CEO & President]

Correct. I mean there is this what I -- what I've nicknamed the Trump effect, we do feel there's some decline in some of the inbound tourist activity, which is compounding this delay because there's a few less tariffs coming into areas like that. But long term, these are good locations.

[Christopher Martino, Analyst of Research]

Got it. Okay. And have you had any customers putting transactions through the new Fiserv link yet? Or is that still sort of in the end of the integration process?

[Randolph W. Pinna, Chairman, CEO & President]

No, no, we're done with the integration, and we're just working through. Luckily, we have a couple of existing customers on banknotes and check processing, but they have not used us for wires because we were not connected to their core. But that's in process now. I was just meeting with our Vice President of Sales, Chris Johnson, yesterday, and he's confirmed that everything is on schedule, and we may even do a release about it because we're very excited. And once we're fully ready to announce to the world that it's going, we will be probably sending out a notice about that. But it is -- as of today, I think it's ready, it's live. So no, I don't have that customer on yet but we're -- because still have to get them to sign our wire forms because they've got to agree to settle with us the process as agreed, but we're in that final steps. It's days away.

[Christopher Martino, Analyst of Research]

Okay. And then similar to Fiserv and Juniper, are there a number of other platforms you intend to integrate with that could bring more volume? Or are you kind of done there?

[Randolph W. Pinna, Chairman, CEO & President]

Well, the integration costs in Fiserv, as you recall from the first quarter, had a large what I'd call, cover charge, to enter the party. We are looking at them. We just say we're up to 3 now integrations. Pathfinder was announced last year, very small one, which is a Chicago-based bank software company that we've integrated with. And then we have the Juniper and WireXchange. There are 2 others that are much -- they're competitors to Fiserv's WireXchange that we're looking at and looking at what those costs are. But as Robin had asked, is there that type of costs coming forward, and as of right now, we don't think that. There's some IT costs related, but both of the other entities don't have that large cover charge like Fiserv does. But yes, we believe our payment strategy is predicated on using an API to allow for a straight-through process and that connectivity. But we -- most of that can be done in-house with the existing IT team, and it just makes us each month juggle our IT priorities because we do have an IT priority list of internal work that we do for -- at proving automation internally and becoming more efficient as well as the tug of war between that work versus getting a customer set up or getting an integration with another platform. And so all of that is in our plan, and we prioritize each month accordingly.

[Operator]

[Operator Instructions] There are no additional questions at this time.

[Randolph W. Pinna, Chairman, CEO & President]

Thank you, Stephanie, and thank you, everybody, for coming, especially those out West, which I know it's early. So we appreciate you taking the time. If there was a question that comes later, feel free to reach out to Bill, Stephen or I. We're happy to answer it if we can. And we appreciate your support. Thank you all.

[Operator]

Thank you. This concludes today's conference. You may now disconnect.