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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
Commission File No. 001-37986
INTERNATIONAL MONEY EXPRESS, INC.
(Exact name of registrant as specified in its charter)
Delaware47-4219082
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
9480 South Dixie Highway
Miami, Florida
33156
(Address of Principal Executive Offices)(Zip Code)
(305) 671-8000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock ($0.0001 par value)IMXI
Nasdaq Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

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

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

Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

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

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

As of April 27, 2022, there were 38,442,585 shares of the registrant’s common stock, $0.0001 par value per share, outstanding. The registrant has no other class of common stock outstanding.



INTERNATIONAL MONEY EXPRESS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
PART 1 - FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II - OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act, as amended, which reflect our current views with respect to certain events that are not historical facts but could have an effect on our future performance, including but without limitation, statements regarding our plans, objectives, financial performance, business strategies, projected results of operations, and expectations for the business of the Company.
These statements may include and be identified by words or phrases such as, without limitation, “would,” “will,” “should,” “expects,” “believes,” “anticipates,” “continues,” “could,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “forecasts,” “intends,” “assumes,” “estimates,” “approximately,” “shall,” “our planning assumptions,” “future outlook,” “currently,” “target,” “guidance,” and similar expressions (including the negative and plural forms of such words and phrases). These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments, projections about our business and our industry, and macroeconomic conditions, and are subject to various risks, uncertainties, estimates, contingencies and other factors, many of which are outside our control, that could cause actual results to differ materially from those expected or implied by such forward-looking statements and could materially adversely affect our business, financial condition, results of operation, cash flows and liquidity. Factors that could cause or contribute to such differences include, but are not limited to, the following:
changes in applicable laws or regulations;
factors relating to our business, operations and financial performance, including:
our ability to successfully execute, manage and integrate key acquisitions and mergers, including the acquisition of Envios de Valores La Nacional Corp. and LAN Holdings, Corp.;
public health conditions, responses thereto and the economic and market effects thereof;
competition in the markets in which we operate;
volatility in foreign exchange rates that could affect the volume of consumer remittance activity and/or affect our foreign exchange related gains and losses;
our ability to maintain favorable agent relationships;
credit risks from our agents and the financial institutions with which we do business;
bank failures, sustained financial illiquidity, or financial institution illiquidity;
new technology or competitors, such as digital platforms;
cyber-attacks or disruptions to our information technology, computer network systems, data centers and phone apps;
our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements;
our success in developing and introducing new products, services and infrastructure;
consumer confidence in our brand and in consumer money transfers generally;
our ability to maintain compliance with applicable regulatory requirements;
international political factors, political stability, tariffs, border taxes or restrictions on remittances or transfers;
currency restrictions and volatility in countries in which we operate or plan to operate;
consumer fraud and other risks relating to the authenticity of customers’ orders;
changes in immigration laws and their enforcement;
our ability to protect intellectual property rights;
our ability to recruit and retain key personnel; and
other economic, business and/or competitive factors, risks and uncertainties, including those described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in our Annual Report on Form 10-K for the year ended December 31, 2021.
All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
3

PART 1 – FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
March 31, 2022December 31, 2021
ASSETS(unaudited)
Current assets:
Cash$157,237 $132,474 
Accounts receivable, net86,435 67,317 
Prepaid wires, net15,264 56,766 
Prepaid expenses and other current assets6,284 6,988 
Total current assets265,220 263,545 
Property and equipment, net20,918 17,905 
Goodwill36,260 36,260 
Intangible assets, net14,390 15,392 
Other assets12,900 7,434 
Total assets$349,688 $340,536 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt, net$3,882 $3,882 
Accounts payable17,219 23,151 
Wire transfers and money orders payable, net59,694 56,066 
Accrued and other liabilities32,937 33,760 
Total current liabilities113,732 116,859 
Long-term liabilities:
Debt, net78,240 79,211 
Lease liabilities, net3,505 — 
Deferred tax liability, net1,477 1,426 
Total long-term liabilities83,222 80,637 
Commitments and contingencies, see Note 15
Stockholders’ equity:
Common stock $0.0001 par value; 230,000,000 shares authorized, 38,885,736 and 38,820,222 shares issued and
   38,319,826 and 38,478,700 shares outstanding as of March 31, 2022 and December 31, 2021, respectively.
4 4 
Additional paid-in capital68,431 66,875 
Retained earnings93,457 81,803 
Accumulated other comprehensive income (loss)36 (76)
Treasury stock, at cost; 565,910 and 341,522 shares as of March 31, 2022 and December 31, 2021, respectively.
(9,194)(5,566)
Total stockholders’ equity152,734 143,040 
Total liabilities and stockholders’ equity$349,688 $340,536 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands, except for share data, unaudited)
Three Months Ended March 31,
20222021
Revenues:
Wire transfer and money order fees, net$98,000 $80,912 
Foreign exchange gain, net15,674 13,049 
Other income992 616 
Total revenues114,666 94,577 
Operating expenses:
Service charges from agents and banks76,993 63,372 
Salaries and benefits11,310 9,875 
Other selling, general and administrative expenses
7,069 5,505 
Depreciation and amortization2,183 2,335 
Total operating expenses97,555 81,087 
Operating income17,111 13,490 
Interest expense952 1,339 
Income before income taxes16,159 12,151 
Income tax provision4,505 3,174 
Net income11,654 8,977 
Other comprehensive income (loss)112 (4)
Comprehensive income$11,766 $8,973 
Earnings per common share:
Basic and diluted$0.30 $0.23 
Weighted-average common shares outstanding:
Basic38,362,014 38,239,130 
Diluted39,077,665 38,846,906 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except for share data, unaudited)
Three Months Ended March 31, 2022
Common StockTreasury StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmountSharesAmount
Balance, December 31, 202138,820,222$4 (341,522)$(5,566)$66,875 $81,803 $(76)$143,040 
Net income— — — 11,654 — 11,654 
Issuance of common stock:
Exercise of stock options43,725— — 561 — — 561 
Restricted stock units and awards, net of shares withheld for taxes20,787— — (273)— — (273)
Fully vested shares1,002— — — — — — 
Share-based compensation— — 1,268 — — 1,268 
Adjustment from foreign currency translation, net— — — — 112 112 
Acquisition of treasury stock, at cost— (224,388)(3,628)— — — (3,628)
Balance, March 31, 202238,885,736$4 (565,910)$(9,194)$68,431 $93,457 $36 $152,734 
Three Months Ended March 31, 2021
Common StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 202038,217,125$4 $59,310 $34,960 $(13)$94,261 
Net income— — 8,977 — 8,977 
Issuance of common stock:
Exercise of stock options144,632— 1,434 — — 1,434 
Restricted stock units and awards1,031— — — — — 
Share-based compensation— 896 — — 896 
Adjustment from foreign currency translation, net
— — — (4)(4)
Balance, March 31, 202138,362,788$4 $61,640 $43,937 $(17)$105,564 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net income$11,654 $8,977 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization2,183 2,335 
Share-based compensation1,268 896 
Provision for credit losses442 162 
Debt origination costs amortization253 200 
Deferred income tax provision (benefit), net51 (144)
Non-cash lease expense468 — 
Loss on disposal of property and equipment140 65 
Total adjustments4,805 3,514 
Changes in operating assets and liabilities:
Accounts receivable, net(19,546)(11,938)
Prepaid wires, net41,879 (36,163)
Prepaid expenses and other assets360 (59)
Wire transfers and money orders payable, net3,232 548 
Lease liabilities(580)— 
Accounts payable and accrued and other liabilities(8,520)2,715 
Net cash provided by (used in) operating activities33,284 (32,406)
Cash flows from investing activities:
Purchases of property and equipment(4,316)(1,930)
Net cash used in investing activities(4,316)(1,930)
Cash flows from financing activities:
Repayments of term loan facility(1,094)(1,915)
Borrowings under revolving credit facility, net 15,000 
Proceeds from exercise of stock options561 1,434 
Payments for stock awards(273) 
Repurchases of common stock(3,628) 
Net cash (used in) provided by financing activities(4,434)14,519 
Effect of exchange rate changes on cash229 (3)
Net increase (decrease) in cash24,763 (19,820)
Cash, beginning of period132,474 74,907 
Cash, end of period$157,237 $55,087 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands, unaudited)
Three Months Ended March 31,
20222021
Supplemental disclosure of cash flow information:
Cash paid for interest$698 $1,138 
Cash paid for income taxes$2,804 $75 
Non-cash lease liabilities arising from obtaining right-of-use assets
$5,613 $— 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – BUSINESS AND ACCOUNTING POLICIES
International Money Express, Inc. (the “Company” or “us” or “we”) operates as a money transmitter between the United States of America (“United States” or “U.S.”) and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 36 Company-operated stores throughout the United States and Canada.

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). Although the worst effects of the pandemic appear to have subsided in the United States, the pandemic has had and continues to have a significant effect on economic conditions in the United States, and continues to cause significant uncertainties in the U.S. and global economies, particularly as a result of new variants of COVID-19, which appear to be causing an increase in COVID-19 cases in certain places around the world. Public health officials and medical professionals have warned that COVID-19 resurgences may continue to occur due to a variety of factors, including the extent of economic activity, social interaction, vaccination rates and the emergence of potent variants. It is unclear if and when resurgences will occur or how long any resurgence will last, how severe it will be, and what safety measures governments and businesses will impose in response.

The extent to which the COVID-19 pandemic affects our business, operations and financial results depends, and will continue to depend, on numerous evolving factors that we may not be able to accurately predict. Although the Company’s operations continued effectively despite social distancing and other measures taken in response to the pandemic, the ultimate impact of the COVID-19 pandemic on our financial condition, results of operations and cash flows is dependent on future developments, including the duration or resurgence of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, particularly the level of unemployment of our consumers, inflation (including changes in wages) and governmental efforts to restrain inflation, interest rate levels and foreign exchange volatility, all of which remain uncertain and cannot be predicted at this time. If the global response to contain and remedy the COVID-19 pandemic escalates further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive, or if an escalation in the global response to contain the COVID-19 pandemic is required or is unsuccessful, the Company could experience a material adverse effect on its financial condition, results of operations and cash flows.

The condensed consolidated financial statements of the Company include Intermex Holdings, Inc. (“Holdings”), its wholly-owned indirect subsidiary, Intermex Wire Transfer, LLC (“LLC”), Intermex Wire Transfers de Guatemala, S.A. (“Intermex Guatemala”) - 100% owned by LLC, Intermex Wire Transfer de Mexico, S.A. and Intermex Transfers de Mexico, S.A. (“Intermex Mexico”) - 98% owned by LLC and 2% directly owned by Holdings, Intermex Wire Transfer Corp. - 100% owned by LLC, Intermex Wire Transfer II, LLC - 100% owned by LLC and Canada International Transfers Corp. - 100% owned by LLC.

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements.

The Company’s interim condensed consolidated financial statements and related notes are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in these interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire year. Certain information and footnote disclosures required by GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

On March 16, 2022, the Company entered into a definitive purchase agreement to acquire Envios de Valores La Nacional Corp. and LAN Holdings, Corp., which either directly or indirectly operate as money remittance companies in the United States, Canada and certain countries in Europe. The transaction is subject to customary regulatory approvals and is expected to close in the third quarter of 2022.

Accounting Pronouncements

On January 1, 2022, the Company adopted the new accounting guidance, Leases (Topic 842) (“ASC 842”), which required the Company to record assets and liabilities on the balance sheet for lease-related rights and obligations and disclose key information about its leasing arrangements. The guidance requires that a lessee recognizes a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term on the balance sheet. Leases will be classified as financing or operating, with classification affecting the pattern of expense recognition in the condensed consolidated statements of income and comprehensive income. Refer to Note 6 for additional information on the adoption of this standard and related disclosures.
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The FASB issued guidance, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, regarding the measurement of credit losses for certain financial instruments. The new standard replaces the incurred loss model with a current expected credit loss (“CECL”) model. The CECL model is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company is required to adopt the new guidance on December 31, 2022. The Company is currently evaluating the impact this guidance will have on the condensed consolidated financial statements.

NOTE 2 – REVENUES
The Company recognized revenues from contracts with customers for the three months ended March 31, 2022 and 2021, as follows (in thousands):
Three Months Ended March 31,
20222021
Wire transfer and money order fees$98,404 $81,216 
Discounts and promotions(404)(304)
Wire transfer and money order fees, net98,000 80,912 
Foreign exchange gain, net15,674 13,049 
Other income992 616 
Total revenues$114,666 $94,577 

There are no significant initial costs incurred to obtain contracts with customers, although the Company has a loyalty program under which customers earn one point for each wire transfer completed. Points can be redeemed for a discounted wire transaction fee or a foreign exchange rate that is more favorable to the customer. The customer benefits vary by country, and the earned points expire if the customer has not initiated and completed an eligible wire transfer transaction within the immediately preceding 180-day period. In addition, earned points will expire 30 days after the end of the program. Because the loyalty program benefits represent a future performance obligation, a portion of the initial consideration is recorded as deferred revenue loyalty program (see Note 8) and a corresponding loyalty program expense is recorded as contra revenue. Revenue from this performance obligation is recognized upon customers redeeming points or upon expiration of any points outstanding.
Except for the loyalty program discussed above, our revenues include only one performance obligation, which is to collect the consumer’s money and make funds available for payment, generally on the same day, to a designated recipient in the currency requested.

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

NOTE 3 – ACCOUNTS RECEIVABLE AND AGENT ADVANCES RECEIVABLE, NET OF ALLOWANCE
Accounts Receivable

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

March 31, 2022December 31, 2021
Accounts receivable$88,628 $69,498 
Allowance for credit losses(2,193)(2,181)
Accounts receivable, net$86,435 $67,317 


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Agent Advances Receivable

The Company had agent advances receivable, net of allowance for credit losses, from sending agents as follows (in thousands):

March 31, 2022December 31, 2021
Agent advances receivable, current$889 $791 
Allowance for credit losses(41)(55)
Net current$848 $736 
Agent advances receivable, long-term$1,031 $656 
Allowance for credit losses(22)(13)
Net long-term$1,009 $643 

The net current portion of agent advances receivable is included in prepaid expenses and other current assets (see Note 4), and the net long-term portion is included in other assets in the condensed consolidated balance sheets. Agent advances receivable have interest rates ranging from 0% to 15.5% per annum. At March 31, 2022 and December 31, 2021, there were $1.9 million and $1.4 million, respectively, of agent advances receivable collateralized by personal guarantees from sending agents and assets from their businesses in case of a default by the agent.

The maturities of agent advances receivable at March 31, 2022 are as follows (in thousands):
Unpaid Advance Balance
Under 1 year$889 
Between 1 and 2 years891 
Between 2 and 3 years140 
Total$1,920 

Allowance for Credit Losses

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

Three Months Ended March 31,
20222021
Beginning balance$2,249 $2,042 
Provision442 162 
Charge-offs(532)(265)
Recoveries97 119 
Ending Balance$2,256 $2,058 

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

March 31, 2022December 31, 2021
Accounts receivable$2,193 $2,181 
Agent advances receivable63 68 
Allowance for credit losses$2,256 $2,249 

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NOTE 4 – PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other current assets consisted of the following (in thousands):

March 31, 2022December 31, 2021
Prepaid insurance$610 $923 
Prepaid fees and services2,209 1,930 
Agent advances receivable, net of allowance848 736 
Assets pending settlement500 331 
Prepaid income taxes409 1,563 
Prepaid expenses and current assets - other1,708 1,505 
$6,284 $6,988 

Other assets consisted of the following (in thousands):

March 31, 2022December 31, 2021
Revolving line origination fees$1,902 $2,032 
Agent incentives advances948 1,010 
Agent advances receivable, net of allowance1,009 643 
Right-of-use assets, net5,145 — 
Funds held by seized banking entities, net of allowance3,210 3,114 
Other assets686 635 
$12,900 $7,434 

During September 2021, local banking regulators in Mexico resolved to close and liquidate a local financial institution, citing a lack of compliance with minimum capital requirements. The Company has approximately $5.1 million of exposure from deposits it held with this bank when it was closed. In accordance with the banking regulations in Mexico, large depositors such as the Company will be paid once the assets of the financial institution are liquidated. Currently, it is difficult to predict the length of the liquidation process or if the proceeds from the asset liquidation will be sufficient to recover a portion or all of its funds on deposit. Consequently, the Company maintains a valuation allowance of approximately $2.0 million in connection with the balance of deposits held by the financial institution as a result of its closure.

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS
Goodwill and the majority of intangible assets on the condensed consolidated balance sheets of the Company were recognized from a prior acquisition. Intangible assets on the condensed consolidated balance sheets of the Company consist of agent relationships, trade name, developed technology and other intangible assets. Agent relationships, trade name and developed technology are all amortized over 15 years using an accelerated method that correlates with the projected realization of the benefit. The agent relationships intangible represents the network of independent sending agents; trade name refers to the Intermex name, branded on all agent locations and well recognized in the market; and developed technology includes the state-of-the-art system that the Company has continued to develop and improve over the past 20 years. Other intangible assets relate to the acquisition of Company-operated stores, which are amortized on a straight line basis over 10 years. The determination of our intangible fair values includes several assumptions that are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties, and no impairment charges were determined necessary to be recognized during the three months ended March 31, 2022.

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

GoodwillIntangibles
Balance at December 31, 2021$36,260 $15,392 
Amortization expense (1,002)
Balance at March 31, 2022$36,260 $14,390 


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Amortization expense related to intangible assets for the next five years and thereafter is as follows (in thousands):

2022$3,008 
20233,002 
20242,282 
20251,730 
20261,310 
Thereafter3,058 
$14,390 

NOTE 6 – LEASES
To conduct certain of our operations, the Company is a party to leases for office space, warehouses and Company-operated store locations. Our leases have remaining terms of up to 9.4 years, some of which include options to renew and extend the lease. We presently intend to exercise certain of the extension options available to us and for purposes of computing the right-of-use assets and lease liabilities required by ASC 842, we have incorporated the options to renew that are reasonably certain of exercise by us.

The Company adopted ASC 842, including related amendments, effective January 1, 2022, using the modified retrospective approach and used the effective date as the date of initial application; therefore comparative periods were not adjusted. The Company determined that all of its leasing arrangements are classified as operating leases. The Company elected to apply the practical expedients to (i) not reassess its prior conclusions about lease identification, lease classification and initial direct costs and (ii) use hindsight in determining the lease term. In addition, the Company elected not to separate lease and non-lease components for all arrangements where the Company is a lessee. Adoption of the new standard resulted in the recording of additional right-of-use assets and lease liabilities of approximately $5.6 million as of January 1, 2022. The adoption of ASC 842 did not materially impact the Company’s consolidated net income and had no impact on cash flows. Additionally, there was no cumulative effect of adoption recognized on retained earnings in the condensed consolidated statement of changes in stockholders’ equity.

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

LeasesClassification
March 31, 2022
Assets
Right-of-use assets
Other assets(1)
5,145 
Total leased assets5,145 
Liabilities
Current
OperatingAccrued and other liabilities1,534 
Noncurrent
OperatingLease liabilities3,505 
Total Lease liabilities5,039 
(1) Operating right of-use assets are recorded net of accumulated amortization of $0.5 million as of March 31, 2022.

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Lease expense for the three months ended March 31, 2022, was as follows (in thousands):

Three Months Ended
Lease CostClassificationMarch 31, 2022
Operating lease costOther selling, general and administrative expenses$468 

Rent expense for the three months ended March 31, 2021 was $0.6 million.

As of March 31, 2022, the Company’s weighted average remaining lease terms on its operating leases is 4.0 years and the Company’s weighted average discount rate is 2.59%, which is the Company’s incremental borrowing rate. The Company used its incremental borrowing rate for all leases, as none of the Company’s lease agreements provide a readily determinable implicit rate.

Lease Payments

Future minimum lease payments for assets under non-cancelable operating lease agreements with original terms of more than one year for the remainder of 2022 and thereafter are as follows (in thousands):

2022$1,174 
2023$1,359 
2024$1,225 
2025$1,031 
2026$265 
Thereafter$296 
Total lease payments$5,350 
Less: Imputed interest$(311)
Present value of lease liabilities$5,039 

NOTE 7 – WIRE TRANSFERS AND MONEY ORDERS PAYABLE, NET
Wire transfers and money orders payable, net consisted of the following (in thousands):

March 31, 2022December 31, 2021
Wire transfers payable, net$23,040 $20,744 
Customer voided wires payable17,505 16,895 
Money orders payable19,149 18,427 
$59,694 $56,066 

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

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NOTE 8 – ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities consisted of the following (in thousands):

March 31, 2022December 31, 2021
Commissions payable to sending agents$15,798 $16,303 
Accrued salaries and benefits2,704 4,892 
Accrued bank charges1,345 1,371 
Accrued legal fees109 422 
Accrued other professional fees1,509 1,619 
Accrued taxes5,322 4,908 
Lease liabilities, current portion1,534 — 
Deferred revenue loyalty program3,556 3,391 
Other1,060 854 
$32,937 $33,760 

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

Balance, December 31, 2021$3,391 
Revenue deferred during the period612 
Revenue recognized during the period(447)
Balance, March 31, 2022$3,556 

NOTE 9 – DEBT
Debt consisted of the following (in thousands):

March 31, 2022December 31, 2021
Term loan facility$84,219 $85,313 
84,219 85,313 
Less: Current portion of long-term debt (1)
(3,882)(3,882)
Less: Debt origination costs(2,097)(2,220)
$78,240 $79,211 
(1)Current portion of long-term debt is net of debt origination costs of approximately $0.5 million both at March 31, 2022 and December 31, 2021.

On June 24, 2021, the Company and certain of its domestic subsidiaries as borrowers and the other guarantors from time to time party thereto (collectively, the “Loan Parties”) entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with a group of banking institutions. The A&R Credit Agreement amended and restated in its entirety the Company’s previous credit agreement. The A&R Credit Agreement provides for a $150.0 million revolving credit facility, an $87.5 million term loan facility and an uncommitted incremental facility, which may be utilized for additional revolving or term loans, of up to $70.0 million. The A&R Credit Agreement also provides for the issuance of letters of credit, which would reduce availability under the revolving credit facility. The proceeds of the term loan were used to refinance the existing term loan facility under the Company’s previous credit agreement, and the revolving credit facility is available for working capital, general corporate purposes and to pay fees and expenses in connection with this transaction. The maturity date of the A&R Credit Agreement is June 24, 2026.

This refinancing was accounted for as a debt modification. The balance of the unamortized debt origination costs of $1.8 million under the Company’s previous credit agreement, the origination costs paid to the Loan Parties of $1.0 million in connection with the term loan facility of the A&R Credit Agreement and debt origination costs paid to the Loan Parties and third-party costs of $1.8 million incurred in connection with the revolving credit facility of the A&R Credit Agreement will be associated with the new arrangement, and therefore, they will be amortized over the remaining life of the A&R Credit Agreement using the straight-line method, as it is not significantly different than the effective interest method. Debt origination costs paid to third parties related to a portion of the term loan facility in connection with the A&R Credit Agreement were expensed as incurred during the second quarter of 2021.

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The unamortized portion of debt origination costs totaled approximately $4.0 million and $4.5 million at March 31, 2022 and December 31, 2021, respectively. Amortization of debt origination costs is included as a component of interest expense in the condensed consolidated statements of income and comprehensive income and amounted to approximately $0.3 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively.

At the election of the Company, interest on the term loan facility and revolving credit facility under the A&R Credit Agreement is determined by reference to either LIBOR (subject to replacement) or a “base rate”, in each case plus an applicable margin ranging between 2.50% and 3.00% per annum for LIBOR loans and between 1.50% and 2.00% per annum for base rate loans depending on the level of our consolidated leverage ratio, as calculated pursuant to the terms of the A&R Credit Agreement. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. The effective interest rates for the three months ended March 31, 2022 for the term loan facility and revolving credit facility were 3.26% and 0.72%, respectively.

Interest is payable (x)(i) generally on the last day of each interest period selected for LIBOR loans, but in any event, not less frequently than every three months, and (ii) on the last business day of each quarter for base rate loans and (y) at final maturity. The principal amount of the term loan facility under the A&R Credit Agreement must be repaid in consecutive quarterly installments of 5.0% in years 1 and 2, 7.5% in year 3, and 10.0% in years 4 and 5, in each case on the last day of each quarter, commencing in September 2021 with a final balloon payment at maturity. The term loans under the A&R Credit Agreement may be prepaid at any time without premium or penalty. Revolving loans may be borrowed, repaid and reborrowed from time to time in accordance with the terms and conditions of the A&R Credit Agreement. The Company is also required to repay the loans upon receipt of net proceeds from certain casualty events, upon the disposition of certain property and upon incurrence of indebtedness not permitted by the A&R Credit Agreement. In addition, the Company is required to make mandatory prepayments annually from excess cash flow if the Company’s consolidated leverage ratio (as calculated under the A&R Credit Agreement) is greater than or equal to 3.0, and the remainder of any such excess cash flow is contributed to the available amount which may be used for a variety of purposes, including investments and distributions.

The A&R Credit Agreement contains financial covenants that require the Company to maintain a quarterly minimum fixed charge coverage ratio of 1.25:1.00 and a quarterly maximum consolidated leverage ratio of 3.25:1.00. The A&R Credit Agreement also contains covenants that limit the Company’s and its subsidiaries’ ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.

In addition, the A&R Credit Agreement generally restricts the payment of dividends or cash distributions by the Company with certain exceptions, including the following: i) to repurchase the Company’s common stock from current or former employees in an aggregate amount of up to $10.0 million per calendar year, and ii) other restricted payments in an aggregate amount not to exceed $40.0 million plus the Available Amount (as defined in the A&R Credit Agreement).

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

NOTE 10 – FAIR VALUE MEASUREMENTS
The Company determines fair value in accordance with the provisions of FASB guidance, Fair Value Measurements and Disclosures, which defines fair value as an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-level fair value hierarchy that prioritizes the inputs used to measure fair value was established. There are three levels of inputs used to measure fair value and for disclosure purposes. Level 1 relates to quoted market prices for identical assets or liabilities in active markets. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s non-financial assets measured at fair value on a nonrecurring basis include goodwill and intangible assets. All other financial assets and liabilities are carried at amortized cost.

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

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

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NOTE 11 – SHARE-BASED COMPENSATION
International Money Express, Inc. Omnibus Equity Compensation Plans

The International Money Express, Inc. 2020 Omnibus Equity Compensation Plan (the “2020 Plan”) provides for the granting of stock-based incentive awards, including stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and performance stock units (“PSUs”) to employees and independent directors of the Company. There are 3.7 million shares of the Company’s common stock approved for issuance under the 2020 Plan, which includes 0.4 million shares that were previously subject to awards granted under the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan (the “2018 Plan” and together with the 2020 Plan, the “Plans”). Although awards remain outstanding under the 2018 Plan, which was terminated effective June 26, 2020, no additional awards may be granted under the 2018 Plan. As of March 31, 2022, 2.5 million shares remained available for future awards under the 2020 Plan.

Stock Options

The value of each option grant is estimated on the grant date using the Black-Scholes option pricing model (“BSM”). The option pricing model requires the input of subjective assumptions, including the grant date fair value of our common stock, expected volatility, risk-free interest rates, expected term and expected dividend yield. To determine the grant date fair value of the Company’s common stock, we use the closing market price of our common stock at the grant date. We also use an expected volatility based on the historical volatility of the Company’s common stock and the “simplified” method for calculating the expected life of our stock options as the options are “plain vanilla” and we do not have any significant historical post-vesting activity. We have elected to account for forfeitures as they occur. The risk-free interest rates are obtained from publicly available U.S. Treasury yield curve rates.

Share-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The stock options issued under the Plans have 10-year terms and generally vest in four equal annual installments beginning one year after the date of the grant. The Company recognized compensation expense for stock options of approximately $0.6 million for each of the three months ended March 31, 2022 and 2021, which are included in salaries and benefits in the condensed consolidated statements of income and comprehensive income. As of March 31, 2022, unrecognized compensation expense related to stock options of approximately $2.2 million is expected to be recognized over a weighted-average period of 1.3 years.

A summary of stock option activity under the Plans during the three months ended March 31, 2022 is presented below:

Number of
Options
Weighted-Average
Exercise Price
Weighted-Average
Remaining Contractual
Term (Years)
Weighted-Average
Grant Date
Fair Value
Outstanding at December 31, 20211,898,687 $11.24 7.11$4.17 
Granted $ $ 
Exercised(43,725)$12.83 $5.00 
Forfeited(26,250)$15.15 $7.08 
Outstanding at March 31, 20221,828,712 $11.15 6.82$4.11 
Exercisable at March 31, 20221,019,236 $10.68 6.59$3.78 

Restricted Stock Units

The RSUs granted under the Plans to the Company’s employees generally vest in four equal annual installments beginning one year after the date of the grant, while RSUs issued to the Company’s independent directors vest on the one-year anniversary from the grant date. The Company recognized compensation expense for RSUs of approximately $0.4 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively, which are included in salaries and benefits in the condensed consolidated statements of income and
17

comprehensive income. As of March 31, 2022, unrecognized compensation expense related to RSUs of approximately $4.8 million is expected to be recognized over a weighted-average period of 2.2 years.

A summary of RSU activity during the three months ended March 31, 2022 is presented below:

Number of RSUsWeighted-Average
Grant Price
Outstanding (nonvested) at December 31, 2021231,934 $14.99 
Granted162,519 $16.06 
Vested(38,134)$14.39 
Forfeited(13,347)$15.36 
Outstanding (nonvested) at March 31, 2022342,972 $15.55 

Share Awards

The Lead Independent Director and Chairs of the Committees of the Board of Directors are granted, in aggregate, $64.0 thousand in awards of fully vested shares of the Company’s common stock, payable on a quarterly basis at the end of each quarter in payment of fees earned in such capacities. During the three months ended March 31, 2022 and 2021, 1,002 and 1,031 fully vested shares, respectively, were granted to the Lead Independent Director and Chairs of the Committees of the Board of Directors resulting in compensation expense of $16.0 thousand for each period, recorded in the condensed consolidated statements of income and comprehensive income.

Restricted Stock Awards

The RSAs issued under the Plans to the Company’s employees generally vest in four equal annual installments beginning one year after the date of grant. The Company recognized compensation expense for RSAs granted of $109 thousand and $23 thousand for the three months ended March 31, 2022 and 2021, respectively, which are included in salaries and benefits in the condensed consolidated statements of income and comprehensive income. As of March 31, 2022, there was $2.4 million of unrecognized compensation expense related to RSAs, which is expected to be recognized over a weighted-average period of 2.3 years.


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A summary of RSA activity during the three months ended March 31, 2022 is presented below:

Number of RSAsWeighted-Average
Grant Price
Outstanding (nonvested) at December 31, 202188,215 $14.17 
Granted93,400 $16.06 
Vested(22,053)$14.17 
Forfeited $ 
Outstanding (nonvested) at March 31, 2022159,562 $15.28 

Performance Stock Units

PSUs granted to the Company’s employees generally vest subject to attainment of performance criteria during the service period established by the Compensation Committee. Each PSU represents the right to receive one share of common stock, and the actual number of shares issuable upon vesting is determined based upon performance compared to financial performance targets. The PSUs vest based on the achievement of certain revenue parameters for a period of two years combined with a service period of three years. Compensation cost is recognized over the requisite service period when it is probable that the performance condition will be satisfied. The Company recognized compensation expense for PSUs of $234 thousand and $64 thousand for the three months ended March 31, 2022 and 2021, respectively, which are included in salaries and benefits in the condensed consolidated statements of income and comprehensive income. As of March 31, 2022, there was $4.3 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of 2.4 years.

A summary of PSU activity during the three months ended March 31, 2022 is presented below:

Number of PSUsWeighted-Average
Remaining Contractual
Term (Years)
Weighted-Average
Grant Price
Outstanding (nonvested) at December 31, 2021171,500 9.17$14.17 
Granted131,224 $21.45 
Vested $ 
Forfeited $ 
Outstanding (nonvested) at March 31, 2022302,724 9.38$17.33 

NOTE 12 – EQUITY
In August 2021, the Company’s Board of Directors approved a stock repurchase program (the “Repurchase Program”) that authorizes the Company to purchase up to $40.0 million of outstanding shares of the Company’s common stock. Under the Repurchase Program, the Company is authorized to repurchase shares from time to time in accordance with applicable laws, both on the open market and in privately negotiated transactions and may include the use of derivative contracts or structured share repurchase agreements. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of the Company’s common stock and the nature of other investment opportunities. The Repurchase Program may be limited, suspended or discontinued at any time without prior notice. The Repurchase Program does not have an expiration date. Under the terms of the A&R Credit Agreement, the Company has restrictions that limit the maximum amount of repurchases to (i) $40.0 million in the aggregate (plus the Available Amount as defined in the A&R Credit Agreement) and (ii) $10.0 million annually for shares held by any current or former officer, director, employee or consultant (or any spouses, ex-spouses or estates of the foregoing) of the Company or its subsidiaries.

The Company accounts for purchases of treasury stock under the cost method. Any direct costs incurred to acquire treasury stock are considered stock issue costs and added to the cost of the treasury stock. During the three months ended March 31, 2022, the Company purchased 224,388 shares for an aggregate purchase price of $3.6 million. As of March 31, 2022, the remaining amount available for future share repurchases under the Repurchase Program was $30.8 million.

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NOTE 13 – EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income for the period by the weighted average number of common shares outstanding for the period. In computing dilutive earnings per share, basic earnings per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including common stock options, RSUs, RSAs and PSUs.

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

Three Months Ended March 31,
20222021
Net income for basic and diluted earnings per common share$11,654 $8,977 
Shares:
Weighted-average common shares outstanding – basic38,362,014 38,239,130 
Effect of dilutive securities:
RSUs62,058 26,242 
Stock options549,941 573,770 
RSAs25,935 2,574 
PSUs77,717 5,190 
Weighted-average common shares outstanding – diluted39,077,665 38,846,906 
Earnings per common share – basic and diluted$0.30 $0.23 

As of March 31, 2022, there were 304.0 thousand stock options, 55.6 thousand RSUs, 33.2 thousand RSAs and 13.1 thousand PSUs excluded from the diluted earnings per share calculation because, under the treasury stock method, the inclusion of these would be anti-dilutive.

As of March 31, 2021, there were 0.6 million stock options excluded from the diluted earnings per share calculation because, under the treasury stock method, the inclusion of these would be anti-dilutive.

As discussed in Note 12, during the third quarter of 2022, the Company’s Board of Directors authorized the Repurchase Program, under which the Company repurchased 224,388 shares of treasury stock for $3.6 million in the three months ended March 31, 2022. The effect of these repurchases on the Company’s weighted average shares outstanding for the three months ended March 31, 2022 was a reduction of 135,259 shares due to the timing of the repurchases.

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NOTE 14 – INCOME TAXES
A reconciliation between the income tax provision at the U.S. statutory tax rate and the Company’s income tax provision on the condensed consolidated statements of income and comprehensive income is below (in thousands, except for tax rates):

Three Months Ended
March 31,
20222021
Income before income taxes$16,159 $12,151 
U.S statutory tax rate21 %21 %
Income tax expense at statutory rate3,393 2,552 
State tax expense, net of federal984 678 
Foreign tax rates different from U.S. statutory rate
12 17 
Non-deductible expenses137 62 
Other(21)(135)
Total tax provision$4,505 $3,174 

Effective income tax rates for interim periods are based upon our current estimated annual rate. The Company’s effective income tax rate varies based upon an estimate of taxable earnings as well as on the mix of taxable earnings in the various states and countries in which we operate. Changes in the annual allocation and apportionment of the Company’s activity among these jurisdictions results in changes to the effective rate utilized to measure the Company’s deferred tax assets and liabilities.

Our income tax provision includes the expected benefit of all deferred tax assets, including our net operating loss carryforwards. With few exceptions, our net operating loss carryforwards will expire from 2029 through 2041. After consideration of all evidence, both positive and negative, management has determined that no valuation allowance is required at March 31, 2022 on the Company’s U.S. federal or state deferred tax assets; however, a valuation allowance has been recorded as of March 31, 2022 on deferred tax assets associated with Canadian net operating loss carryforwards.

As presented in the income tax reconciliation above, the tax provision recognized on the condensed consolidated statements of income and comprehensive income was impacted by state taxes, foreign tax rates applicable to the Company’s foreign subsidiaries that are higher or lower than the U.S. statutory rate, as well as, non-deductible officer compensation and share-based compensation tax benefits.

NOTE 15 – COMMITMENTS AND CONTINGENCIES
Contingencies and Legal Proceedings

The Company is subject to legal proceedings and claims that have arisen in the ordinary course of its business and have not been finally adjudicated. Although there can be no assurance as to the ultimate disposition of these matters, it is the opinion of the Company’s management, based upon the information available at this time and the stage of the proceedings, that it is not possible to determine the probability of loss or estimate of damages, and therefore, the Company has not established a reserve for any of these proceedings.

The Company operates in all 50 states in the United States, two U.S. territories and three other countries. Money transmitters and their agents are under regulation by state and federal laws. Violations may result in civil or criminal penalties or a prohibition from providing money transfer services in a particular jurisdiction. It is the opinion of the Company’s management, based on information available at this time, that the expected outcome of regulatory examinations will not have a material adverse effect on either the results of operations or financial condition of the Company.

Regulatory Requirements

Pursuant to applicable licensing laws, certain domestic subsidiaries of the Company are required to maintain minimum tangible net worth and liquid assets (eligible securities) to cover the amount outstanding of wire transfers and money orders payable. As of March 31, 2022, the Company’s subsidiaries were in compliance with these two requirements.


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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related Notes included in this Quarterly Report on Form 10-Q, as well as our Audited Consolidated Financial Statements and related Notes and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2021. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Quarterly Report on Form 10-Q, including “Risk Factors,” which are incorporated in the MD&A by reference. See “Special Note Regarding Forward-Looking Statements” for additional factors relating to such statements, and see “Risk Factors” in the documents that we have filed with or furnished to the SEC for a discussion of certain risk factors applicable to our business, financial condition and results of operations. Past operating results are not necessarily indicative of operating results in any future periods.

Overview
We are a leading omnichannel money remittance service company focused primarily on the United States of America (“United States” or “U.S.”) to Latin America and the Caribbean (“LAC”) corridor, which includes Mexico, Central and South America and the Caribbean. In recent years, we expanded our services to allow remittances to Africa and Asia from the United States and from Canada to Latin America and Africa. We utilize our proprietary technology to deliver convenient, reliable and value-added services to our customers through a broad network of sending and paying agents. Our remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, are available in all 50 states in the U.S., Washington D.C., Puerto Rico and 13 provinces in Canada, where consumers can send money to beneficiaries in 17 LAC countries, eight countries in Africa and two countries in Asia. Our services are accessible in person through over 100,000 independent sending and paying agents and 36 Company-operated stores, as well as online and via Internet-enabled mobile devices. Additionally, our product and service portfolio include online payment options, pre-paid debit cards and direct deposit payroll cards, which may present different cost, demand, regulatory and risk profiles relative to our core money remittance business.

Money remittance services to LAC countries, mainly Mexico and Guatemala, are the primary source of our revenue. These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location. Our remittances to LAC countries are primarily generated in the United States by consumers with roots in Latin American and Caribbean countries, many of whom do not have an existing relationship with a traditional full-service financial institution capable of providing the services we offer. We provide these consumers with flexibility and convenience to help them meet their financial needs. We believe many of our consumers who use our services may have access to traditional banking services, but prefer to use our services based on reliability, convenience and value. We generate money remittance revenue from fees paid by our consumers (i.e., the senders of funds), which we share with our sending agents in the originating country and our paying agents in the destination country. Remittances paid in local currencies that are not pegged to the U.S. dollar can also generate revenue if we are successful in our daily management of currency exchange spreads.

Our money remittance services enable consumers to send funds through our broad network of locations in the United States and Canada that are primarily operated by third-party businesses, as well as through our Company-operated stores. Transactions are processed and payment is collected by our agent (“sending agent(s)”) and those funds become available for pickup by the beneficiary at the designated destination, usually within minutes, at any Intermex payer location (“paying agent(s)”). We refer to our sending agents and our paying agents collectively as agents. In addition, our services are offered digitally through Intermexonline.com and via Internet-enabled mobile devices. For the three months ended March 31, 2022, we have grown our agent network by approximately 2.1%. For the three months ended March 31, 2022, principal amount sent increased by approximately 29.6% to $4.4 billion, as compared to the same period in 2021 and total remittances processed were approximately 10.0 million, representing an increase of approximately 19.7%, as compared to the same period in 2021.

COVID-19 Update
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The pandemic has had and continues to have a significant effect on economic conditions in the United States of America (“United States” or “U.S.”), as the efforts of federal, state, local and foreign governments to react to the public health crisis with mitigation measures have created and continue to cause significant uncertainties in the U.S. and global economy, particularly as new variants of COVID-19 appear to be causing an increase in COVID-19 cases in certain places around the world. The extent to which the COVID-19 pandemic affects our business, operations and financial results depends, and will continue to depend, on numerous evolving factors that we may not be able to accurately predict such as the reduction or reimposition by government and health authorities of restrictions and progress in and effectiveness of vaccination efforts in the United States or in the countries in which we operate and conduct business.

In response to the pandemic, our top priority continues being to take appropriate actions to protect the health and safety of our employees. We have adjusted standard operating procedures within our business operations to ensure continued worker safety, and are continually monitoring evolving health guidelines and responding to changes as appropriate. These procedures include reconfiguring facilities to reduce employee density, expanded and more frequent cleaning within facilities, implementation of appropriate and mandated distancing programs, employee temperature monitoring, frequent testing and requiring use of certain personal protective equipment at our call centers in Mexico and Guatemala. As of March 31, 2022, all of our facilities are open and operating with adjustments to ensure compliance with social distancing and facial covering recommendations and requirements established by state and local regulations.

Notwithstanding the operational challenges created by the pandemic, our business continues to function and, to date, our customer service has not been adversely affected in any material respect. Nevertheless, the COVID-19 pandemic continues to pose the risk that we or our employees, sending and paying agents, as well as consumers and their beneficiaries, are or may become further restricted from conducting business activities, partially or completely, for an indefinite period of time, including due to shutdowns requested or mandated by governmental authorities or imposed by our management, or that the pandemic may otherwise interrupt or impair business activities.

Although certain measures that restrict the normal course of operations of businesses and consumers were still in place for the three months ended March 31, 2022, such measures did not have a material adverse effect on the Company’s financial condition, results of operations and cash flows for the three months ended March 31, 2022. Notwithstanding the foregoing, the Company’s business is dependent upon the willingness and ability of its employees, network of agents and consumers to conduct money transfer services and the ultimate effects of the economic disruption caused by the pandemic and responses thereto. Although the Company’s operations continued effectively despite social distancing and other measures taken in response to the pandemic, the ultimate impact of the COVID-19 pandemic on our financial condition, results of operations and cash flows is subject to future developments, including the duration of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, particularly the level of unemployment of our customers, inflation (including changes in wages) and governmental efforts to restrain inflation, interest rate levels and foreign exchange volatility, all of which remain uncertain and cannot be predicted at this time. If the global response to contain and remedy the COVID-19 pandemic escalates further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive, the Company could experience a material adverse effect on its financial condition, results of operations and cash flows.

Acquisition of La Nacional and LAN Holdings
On March 16, 2022, the Company entered into a definitive purchase agreement to acquire Envios de Valores La Nacional Corp. (“La Nacional”) and LAN Holdings, Corp. (“LAN Holdings”), which either directly or indirectly operate as money remittance companies in the United States, Canada and certain countries in Europe. The transaction is subject to customary regulatory approvals and is expected to close in the third quarter of 2022.

Key Factors and Trends Affecting our Business
Various trends and other factors have affected and may continue to affect our business, financial condition and operating results, including, but not limited to:

public health conditions, including the COVID-19 pandemic, responses thereto and the economic and market effects thereof;

the Company’s ability to successfully execute, manage and integrate key acquisitions and mergers, including the acquisition of La Nacional and LAN Holdings;

competition in the markets in which we operate;

volatility in foreign exchange rates that could affect the volume of consumer remittance activity and/or affect our foreign exchange related gains and losses;

our ability to maintain favorable banking and agent relationships necessary to conduct our business;

credit risks from our agents and the financial institutions with which we do business;

bank failures, sustained financial illiquidity, or illiquidity at our clearing, cash management or custodial financial institutions;

new technology or competitors that disrupt the current ecosystem, including by introducing digital platforms;

cyber-attacks or disruptions to our information technology, computer network systems, data centers and phone apps;

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our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements;

our success in developing and introducing new products, services and infrastructure;

consumer confidence in our brand and in consumer money transfers generally;

our ability to maintain compliance with applicable regulatory requirements;

international political factors, political stability, tariffs, border taxes or restrictions on remittances or transfers of money out of the United States and Canada;

currency restrictions and volatility in countries in which we operate or plan to operate;

consumer fraud and other risks relating to the authenticity of customers’ orders;

changes in immigration laws and their enforcement;

our ability to protect our brand and intellectual property rights;

weakness in U.S. or international economic conditions;

changes in tax laws; and

our ability to recruit and retain key personnel.

Latin American political and economic conditions continue to exhibit instability, as evidenced by high unemployment rates in key markets, currency reserves, currency controls, restricted lending activity, weak currencies and low consumer confidence, some of which reflect the impact of the COVID-19 pandemic, among other factors. Specifically, continued political and economic unrest in Mexico, Guatemala and some countries in South America contributed to volatility. Our business has generally been resilient during times of economic instability as money remittances are essential to many recipients, with the funds used by the receiving parties for their daily needs; however, long-term sustained appreciation of the Mexican peso or Guatemalan quetzal as compared to the U.S. dollar could negatively affect our revenues and profitability.

Money remittance businesses have continued to be subject to strict legal and regulatory requirements, and we continue to focus on and regularly review our compliance programs. In connection with these reviews, and in light of regulatory complexity and heightened attention of governmental and regulatory authorities related to cybersecurity and compliance activities, we have made, and continue to make, enhancements to our processes and systems designed to detect and prevent cyber-attacks, consumer fraud, money laundering, terrorist financing and other illicit activities, along with enhancements to improve consumer protection, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and similar regulations outside the United States. In coming periods, we expect these and future regulatory requirements will continue to result in changes to certain of our business practices and may result in increased costs.

We maintain a compliance department, the responsibility of which is to monitor transactions, detect and report suspicious activity, maintain appropriate records and train our employees and agents. An independent third-party periodically reviews our policies and procedures and performs independent testing to assess the effectiveness of our anti-money laundering and Bank Secrecy Act compliance program. We also maintain a regulatory affairs and licensing department, under the direction of our Chief Operating Officer, whose responsibility is to manage regulatory affairs and licensing.

The market for money remittance services is very competitive. Our competitors include a small number of large money remittance providers, financial institutions, banks and a large number of small niche money remittance service providers that serve select regions. We compete with larger companies, such as Western Union, MoneyGram and Euronet, and a number of other smaller MSB entities. We generally compete for money remittance agents on the basis of value, service, quality, technical and operational differences, commission structure and marketing efforts. As a philosophy, we sell credible solutions to our sending agents, not discounts or higher commissions, as is typical for the industry. We compete for money remittance customers on the basis of trust, convenience, service, efficiency of outlets, value, technology and brand recognition.

We have encountered and continue to expect to encounter increasing competition as new electronic platforms emerge that enable consumers to send and receive money through a variety of channels, but we do not expect adoption rates to be as significant in the near term for the consumer segment we serve. Regardless, we continue to innovate in the industry by differentiating our money remittance business through programs to foster loyalty among agents as well as consumers and have expanded our channels through which our services are accessed to include online and mobile offerings which are experiencing consumer adoption.

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We qualify as an “emerging growth company” pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), enacted on April 5, 2012. An “emerging growth company” can take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These provisions include:

an exemption from the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act in the assessment of the emerging growth company’s internal control over financial reporting;

an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; and

an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or communication of Critical Audit Matters (“CAMs”) in the auditor’s report. A CAM is defined as any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements; and (2) involves especially challenging, subjective, or complex auditor judgment.

We will remain an “emerging growth company” until the earlier of (1) the earliest of the last day of the fiscal year (a) following January 19, 2022, the fifth anniversary of us becoming a publicly-traded company, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. As of June 30, 2021, the market value of our common stock that is held by non-affiliates approximated $488.5 million.

How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are revenues, service charges from agents and banks, salaries and benefits, other selling, general and administrative expenses and net income. To help us assess our performance with these key indicators, we use Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA as non-GAAP financial measures. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements. See the “Adjusted Net Income and Adjusted Earnings per Share” and “Adjusted EBITDA” sections below for reconciliations of these non-GAAP financial measures to net income and earnings per share, our closest GAAP measures.

Revenues
Transaction volume is the primary generator of revenue in our business. Revenue on transactions is derived primarily from transaction fees paid by consumers to transfer money. Revenues per transaction vary based upon send and receive locations and the amount sent. In certain transactions involving different send and receive currencies, we generate foreign exchange gains based on the difference between the set exchange rate charged by us to the sender and the rate available to us in the wholesale foreign exchange market.

Operating Expenses
Service Charges from Agents and Banks

Service charges primarily consist of agent commissions and bank fees. Service charges vary based on agent commission percentages and the amount of fees charged by the banks. Sending agents earn a commission on each transaction they process of approximately 50% of the transaction fee. Service charges may increase if banks or payer organizations increase their fee structure or sending agents use higher fee methods to remit funds to us. Service charges also vary based on the method the consumer selects to send the transfer and the payer organization that facilitates the transaction.

Salaries and Benefits

Salaries and benefits include cash and share-based compensation associated with our corporate employees and sales team as well as employees at our Company-operated stores. Corporate employees include management, customer service, compliance, information technology, operations, finance, legal and human resources. Our sales team, located throughout the United States and Canada, is focused on supporting and growing our sending agent network. Share-based compensation is recognized as an expense on a straight-line basis over the requisite service period; unrecognized compensation expense related to stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and performance stock units (“PSUs”) of approximately $13.7 million is expected to be recognized over a weighted-average period of 2.11 years.


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Other Selling, General and Administrative

General and administrative expenses primarily consist of fixed overhead expenses associated with our operations, such as information technology, telecommunications, rent, insurance, professional services, non-income taxes, facilities maintenance and other similar types of operating expenses. A portion of these expenses relate to our Company-operated stores; however, the majority relate to the overall business and compliance requirements of a regulated publicly traded financial services company. Selling expenses include expenses such as advertising and promotion, provision for credit losses and expenses associated with increasing our network of agents. These expenses are expected to continue to increase at a slower pace than the increase in our revenues.

Depreciation and Amortization

Depreciation and amortization largely consists of depreciation of computer equipment and amortization of software that supports our technology platform. In addition, it includes amortization of intangible assets primarily related to our agent relationships, trade name and developed technology.

Non-Operating Expenses
Interest Expense

Interest expense consists primarily of interest associated with our debt, which consists of a term loan facility and a revolving credit facility. The effective average interest rates for the three months ended March 31, 2022 for the term loan facility and revolving credit facility, were 3.26% and 0.72%, respectively. Interest on the term loan and revolving credit facilities is determined by reference to either LIBOR (subject to replacement) or a “base rate”, in each case plus an applicable margin, under the A&R Credit Agreement, of between 2.50% and 3.00% per annum for LIBOR loans and between 1.50% and 2.00% per annum for base rate loans depending on the level of our consolidated leverage ratio, as calculated pursuant to the terms of the A&R Credit Agreement. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum.

Income tax provision

Our income tax provision includes the expected benefit of all deferred tax assets, including our net operating loss carryforwards. Our income tax provision reflects the effects of state taxes, non-deductible expenses, share-based compensation expense, and foreign tax rates applicable to the Company’s foreign subsidiaries that are higher or lower than the U.S. statutory rate.

Net Income
Net income is determined by subtracting operating and non-operating expenses from revenues.

Earnings per Share
Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding for each period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares and common share equivalents outstanding for each period. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of RSUs, RSAs and PSUs have vested, using the treasury stock method. Shares of treasury stock are not considered outstanding and therefore are excluded from the weighted average number of common shares outstanding calculation.

Segments
Our business is organized around one reportable segment that provides money transmittal services between the United States and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 36 Company-operated stores throughout the United States and Canada. This is based on the objectives of the business and how our chief operating decision maker, the CEO and President, monitors operating performance and allocates resources.

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Results of Operations
The following table summarizes key components of our results of operations for the periods indicated:

Three Months Ended March 31,
(in thousands, except for share data)20222021
Revenues:
Wire transfer and money order fees, net$98,000 $80,912 
Foreign exchange gain, net15,674 13,049 
Other income992 616 
Total revenues114,666 94,577 
Operating expenses:
Service charges from agents and banks76,993 63,372 
Salaries and benefits11,310 9,875 
Other selling, general and administrative expenses7,069 5,505 
Depreciation and amortization2,183 2,335 
Total operating expenses97,555 81,087 
Operating income17,111 13,490 
Interest expense952 1,339 
Income before income taxes16,159 12,151 
Income tax provision4,505 3,174 
Net income$11,654 $8,977 
Earnings per common share:
Basic and Diluted$0.30 $0.23 

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021
Revenues
Revenues for the above periods are presented below:

($ in thousands)Three Months Ended March 31, 2022% of
Revenues
Three Months Ended March 31, 2021% of
Revenues
Revenues:
Wire transfer and money order fees, net$98,000 85 %$80,912 85 %
Foreign exchange gain, net15,674 14 %13,049 14 %
Other income992 %616 %
Total revenues$114,666 100 %$94,577 100 %

Wire transfer and money order fees, net of $98.0 million for the three months ended March 31, 2022 increased by $17.1 million, or 21.1%, from $80.9 million for the three months ended March 31, 2021. The increase was primarily due to a 19.7% increase in transaction volume in the first quarter of 2022 compared to the first quarter of 2021, largely due to the continued growth in our agent network, which increased by 10.1% from March 2021 to March 2022.

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Revenues from foreign exchange gain, net of $15.7 million for the three months ended March 31, 2022 increased by $2.7 million, or 20.1%, from $13.0 million for the three months ended March 31, 2021. This increase was primarily due to higher transaction volume achieved by growth in our agent network and a higher average amount sent by our consumers, as well as, increased foreign exchange volatility in the Mexican peso during the quarter ended March 31, 2022.

Operating Expenses
Operating expenses for the above periods are presented below:

($ in thousands)Three Months Ended March 31, 2022% of
Revenues
Three Months Ended March 31, 2021% of
Revenues
Operating expenses:
Service charges from agents and banks$76,993 67 %$63,372 67 %
Salaries and benefits11,310 10 %9,875 10 %
Other selling, general and administrative expenses7,069 %5,505 %
Depreciation and amortization2,183 %2,335 %
Total operating expenses$97,555 85 %$81,087 86 %

Service charges from agents and banks — Service charges from agents and banks were $77.0 million for the three months ended March 31, 2022 compared to $63.4 million for the three months ended March 31, 2021. The increase of $13.6 million, or 21.5%, was primarily due to the increase in transaction volume described above.

Salaries and benefits — Salaries and benefits of $11.3 million for the three months ended March 31, 2022 increased by $1.4 million, or 14.5%, from $9.9 million for the three months ended March 31, 2021. The increase is primarily due to $1.5 million spent in talent acquisition and retention, as well as, increased wages and bonuses to recognize performance and to support the continued growth of our business and a $0.4 million increase in share-based compensation as a result of new awards granted throughout 2022, offset by a $0.5 million decrease in commission expense for our sales representatives.

Other selling, general and administrative expenses — Other selling, general and administrative expenses of $7.1 million for the three months ended March 31, 2022 increased by $1.6 million, or 28.4%, from $5.5 million for the three months ended March 31, 2021.

The increase was primarily the result of:

$0.6 million - higher travel and other operating expenses to support our business growth, some of which expenses were reduced in the prior period due to the COVID-19 pandemic;
$0.7 million - higher IT related expenses incurred to sustain our business expansion and to improve our technology environment; and
$0.3 million - increase in provision for credit losses due to higher net write-offs of accounts receivable in the three months ended March 31, 2022 compared to the same period in 2021, primarily as a result of sending agents that were not able to pay in accordance with the original terms and are, accordingly, subject to our normal collection procedures.

These increases were partially offset by:

$0.1 million - decrease in advertising and promotion expenses, which were higher in 2021 as we increased our marketing activities subsequent to the reopening of business and lifting of restrictions as a result of the COVID-19 pandemic;

Depreciation and amortization — Depreciation and amortization of $2.2 million for the three months ended March 31, 2022 decreased by $0.1 million from $2.3 million for the three months ended March 31, 2021. This decrease is mainly due to approximately $0.3 million less amortization related to our trade name, developed technology and agent relationships during the first quarter of 2022, as these intangibles are being amortized on an accelerated basis, which declines over time. This decrease was partially offset by an increase in depreciation associated primarily with additional computer equipment acquired to support our growing business and sending agent network.

Non-Operating Expenses
Interest expense — Interest expense of $1.0 million for the three months ended March 31, 2022 decreased by $0.3 million, or 28.9%, from $1.3 million for the three months ended March 31, 2021. The decrease was primarily due to lower market interest rates paid under the credit agreement (as described below) and lower drawings under our revolving credit facility.
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Income tax provision — Income tax provision was $4.5 million for the three months ended March 31, 2022, which represents an increase of $1.3 million from an income tax provision of $3.2 million for the three months ended March 31, 2021. The increase in the income tax provision was mainly attributable to higher taxable income resulting from higher revenues from our growth.

Net Income
We reported net income of $11.7 million for the three months ended March 31, 2022 compared to net income of $9.0 million for the three months ended March 31, 2021, which resulted in an increase of $2.7 million, or 29.8%, due to the same factors discussed above. 

Non-GAAP Financial Measures
We use Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA to evaluate our performance, both internally and as compared with our peers, because these measures exclude certain items that may not be indicative of our core operating results, as well as items that can vary widely among companies within our industry. For example, non-cash share-based compensation costs can be subject to volatility from changes in the market price per share of our common stock or variations in the value and number of shares granted, and amortization of intangible assets is subject to business acquisition activities, which vary from period to period.

We present these non-GAAP financial measures because we believe they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Furthermore, we believe they are helpful in highlighting trends in our operating results by focusing on our core operating results and are useful to evaluate our performance in conjunction with our GAAP financial measures. Adjusted Net Income, Adjusted Earnings per Share and Adjusted EBITDA are non-GAAP financial measures and should not be considered as an alternative to operating income, net income or earnings per share as a measure of operating performance or cash flows or as a measure of liquidity. Non-GAAP financial measures are not necessarily calculated the same way by different companies and should not be considered a substitute for or superior to GAAP measures.

Adjusted EBITDA is one of the primary metrics used by management to evaluate the financial performance of our business because it excludes, among other things, the effects of certain transactions that are outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the jurisdictions in which we operate and capital investments.

In particular, Adjusted EBITDA is subject to certain limitations, including the following:

Adjusted EBITDA does not reflect interest expense, or the amounts necessary to service interest or principal payments on our debt;

Adjusted EBITDA does not reflect income tax provision (benefit), and because the payment of taxes is part of our operations, tax provision is a necessary element of our costs and ability to operate;

Although depreciation and amortization are eliminated in the calculation of Adjusted EBITDA, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any costs of such replacements;

Adjusted EBITDA does not reflect the non-cash component of share-based compensation;

Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations; and

other companies in our industry may calculate Adjusted EBITDA or similarly titled measures differently than we do, limiting its usefulness as a comparative measure.

We adjust for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, as well as our other non-GAAP financial measures, only as supplemental information.

Adjusted Net Income and Adjusted Earnings per Share

Adjusted Net Income is defined as net income adjusted to add back certain charges and expenses, such as non-cash amortization of intangible assets resulting from business acquisition transactions, which will recur in future periods until these assets have been fully amortized, non-cash share-based compensation costs, litigation settlements and other items set forth in the table below, as these charges and expenses are not considered a part of our core business operations and are not an indicator of ongoing, future company performance.

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