Welcome everyone. This is Mike Grondahl, Senior Research Analyst with Northland Securities. Today we have Intermex, ticker IMXI, CEO Bob and CFO Tony Lauro on the call. Intermex announced this AM, May 2020 transactions were up. Yes, that they were up 7.3% year-over-year. This is up from a decrease in April, and much better than some of the public peers that were down 35%, 21%, and 19% in April. As a reminder, the format for the call today will be an overview update from Bob and Tony, followed by questions moderated by me. If you do have a question, shoot me an email or your sales rep and I'll be happy to add to the list. With that, Bob, you're up.
Great. Thank you, Mike. Thank you everybody for joining us on the call. I'm going to make just a brief statement because I know we want to get to the questions and have this be interactive. I'm very happy to have the opportunity to speak to all of you on the call. If we turn to page three of our presentation, I think all of you have it available online, I'm just going to touch on a few things, I want to talk about our positioning amid the COVID-19. You've heard us talk a lot about having built a house of brick, I want to just touch on just what that means and how that's come into play.
Mike gave us a great lead-in to talk about the fact that our transactions where they started out when the COVID crisis began to hit, sort of the middle of March. We saw a big drop-off in transactions. March was a tough month, particularly as the second half happened. We saw that downturn soften as we got into April. We saw what was a slightly negative number year-over-year in April turn to a positive number in May. We think that has a lot to do with not necessarily all that we did when COVID hit, but all that we've done for years and years in Intermex to make it and build it as a house built of brick.
You've heard us talk a lot about the profitability and sustainability of our growth, but it goes back to the fact that we've built an agent network, just to remind you, where our average retailer does between 350 and 400 transactions per month. That's because of the careful selection process we do with our retailers. We haven't built a retail network that's been built of large retail chains that may be unproductive and not be in the right zip codes. We've taken a very rifle shot approach by triangulating the right retailers in the right places. As a result of that, it's been able to hold our transaction volume because we have the best retailers, ones that are also profitable, that stayed in business or in the right locations.
That being that house of brick and the way we've gone about business and focused on profitable and sustainable growth. In the past, we could have grown faster at times at the top line, but we would have sacrificed the strength and sustainability of that growth, and we would have been less profitable. Because of that's created this superior liquidity situation for us for a company our size, and great deal of free cash flow. Like we've talked about, we expect so far through COVID-19, we've continued to be cash flow positive by great measure in April. We were very cash flow positive in first quarter, and we have significant cash reserves along with access to debt. We're in a really great liquidity position with continuing to throw off free cash. We expect free cash in the second quarter to be significant.
We also have an experienced and talented leadership team. We have in our midst, Tony, who's our CFO, who's on the call with us today certainly has a long time of background in the financial services and particularly in payments. In addition to Tony, we have Randy Nilsen, who's been around the money transfer business with companies like Western Union and Sigue for decades, who runs our sales in all of our revenue business, and recently added Joseph Aguilar, who's been around for decades as well, and tremendous amount of experience with a number of money remittance companies, most namely Sigue, where he ran their whole European operations and the president of that business. We continue to have this industry-leading customer service and reliability. Why is that even more important than a COVID time? This is a time of a lot of volatility.
It's a time where some of the small providers have difficulties in providing the cash needs that they have for the wires they're paying out overseas and south of the border. As a result of that, consumers want reliability, they want customer service, and particularly in a time of crisis when it's so critically important that the money gets to their loved ones. They really want to make sure they deal with a company that has the strongest customer service and is the most reliable. As we've always talked about, where people have thought possibly that this is a commodity business, we feel that we've proven over the years that it can be a value add.
We've been the one company out there that continually has not been a discounter, typically been a company that would prided itself on bringing additional value to the consumer with the quality of our customer service and our reliability and our deliverability. That's resulted in, if you turn to page four, it's resulted in the ability for us, even in Q1, where, as Mike said, the public companies all struggle to not only grow our revenue by 13%, we were on a little bit better track than that before COVID-19 hit. Also to have adjusted EBITDA growth of 22.3% and a very strong growth in our net income, as you can see, from $3.2 million to $5.7 million in our adjusted net income, all the way up to $7.6 million.
Really strong performance in first quarter, particularly as we look at that in light of the other public companies in our sector. That's began to even spill over into better performance as we get into relative to the industry in Q2. If we turn to slide five, we just want to give you a little taste of what's going on with our transactions. April of 2020, we originally thought that we'd be down about 10%. Certainly, that was based on the way we were exiting March, but we were able to even reduce that rate of decline to 7.2% in April year-over-year. As you can see, our volume growth was equal to, so transactions on the average were about the same size while transactions declined only 7.2%. Thankfully, we've seen May even get stronger.
We're seeing a continued trend where March was a little weaker, April got stronger, and now May, a growth of actually 7.3% in transactions, in volume, actually up 8.7%. The average transaction, a little larger than it was last year. We're now back to a point where about 95% of our agents or more are up and sending wires on a continual basis. We had a large share of our agents up through all of the crisis, but areas like the Northeast, which were suffering a bigger downturn year-over-year than any other areas because of the way COVID-19 hit them, are now back to producing positive numbers year-over-year. Additionally, we're back to having almost all of our corporate stores reopened. We took that as a precaution because of our employees working those stores as they're direct employees of Intermex.
Now as the states and municipalities have released those areas as not being under the quarantine, we've begun to open them and I think remain with only about five or six of our 33 stores to still open. We're operating at very much full strength, and we have no reason to believe that the trend that we're seeing in May will not continue, and we won't continue to be able to show growth year-over-year, even as we continue the recovery through the COVID-19 crisis. With that, I'll turn it back to Michael for questions. We'll go from there.
Thanks, Bob. Hey, I'll start off with really the most obvious for me. It is just why do you think IMXI outperformed the competition so much in April and May? What are you doing different? What do you see as the reason?
Well, again, Mike, as I said, it's not necessarily all the things we're doing differently today, but what we've done differently for years. For instance, our network's been built in a rifle shot way. We have very little superfluous agent retailers. Every one of them has been carefully selected, handpicked to meet the needs within a specific zip code where we understand down to that zip code, the population and the needs of that zip code. We triangulate to find our market share within each and every zip code, and we add our agents carefully related to that. As a result of that, we're less dependent on, as some of the major providers in our industry that are public companies that are in chain accounts, Western Union and MoneyGram, are related much more based in chain accounts which are some good locations and some bad locations.
Ours are handpicked one by one. In addition to that, we've always had a focus that we're less urban-oriented where COVID has been very, very strong and more rural-oriented than a lot of our competitors. We've always done a great deal of business related to people working in the agricultural fields, also in processing. Most of those fields have been really critical businesses that have remained almost full go. One of the other areas of business that's remained very high in terms of its workforce has been construction. That's also remained at a very high level of employment. Been fortunate for that because of the way we've built the network. Additionally, I think versus the small guys, this comes a time when the money being sent becomes very, very important because remember, we're not the only guys suffering from COVID.
There are people in Mexico, Guatemala, El Salvador, and other countries. We've had intermittent shutdowns of those countries' banking systems where there just aren't wires going for a day or two, and then there's a big purge of wires that go very quickly. It's very critical money. It's very urgent money. When that happens, we always find ourselves, because of our reliability and our quality of our service, some of the smaller competitors that might not have the funds to operate within that choppiness of the demand because it could be big one day and low the next day, and their cash flow and their cash availability doesn't allow them to pre-fund the wires in a way to be able to guarantee the quality of service. We always find consumers migrating more to us.
We know that there's some of the smaller guys in the industry are suffering these days. Some of them that have shut down for a day or two because they just, I suppose, we don't know, didn't have the cash to be able to fund wires. Others that have lost some of their distribution to certain large payers south of the border. All of those things have combined for us to be able to continue to grab share at the brick-and-mortar side of the business. While I say that our online business is still a small, our digital business is still a small share of our business, we've also had tremendous growth in online over the last few months.
Sure. Speaking of that online business, one, could you kind of describe your online business? Two, what have you kind of seen there?
Well, we've seen tremendous growth from February to March. We doubled our business online. We're seeing people migrating. It still is a small share. Remember for us, different than some of the other public companies that are servicing countries that might be more inclined to send wires online. We're focused primarily in Latin America, now in Africa. Africa is a little bit bigger of a digital sending country. Countries like Mexico, Guatemala, El Salvador, and Honduras are countries that still primarily the money is originating from brick-and-mortar locations. For us, online is growing, but it's not going to be as big a piece of our business as quickly as others. We talked about that in the past about the level of penetration related to banking with our consumers. We continue to grow that business. We continue to grow it basically organically.
We're not in the process of trying to convert people from our brick-and-mortar to our online. We're providing consumers with choices and those that migrate. As you might know, we also have a card product that we're out and developing, and which actually creates a banking opportunity for some of our consumers that previously might have not been banked. Once they're banked, they will have the opportunity to go online and send wires that they otherwise could not. It also provides them with the opportunity at retail. Many of our retailers today, we have a product we call Card Direct or a way to take wires where you can actually use a debit card at retail as well. We're certainly tuned into the consumer's banking, and we're actually even facilitating that consumer to become banked.
We also recognize today that, particularly in our core markets, that the brick-and-mortar side of the business continues to be quite strong. As you can see from our May performance, growing volume by 8.7% in a market that's obviously going through the pandemic.
Can we think of or online as a percent of transactions, sort of 5%, 7%? Is that an okay place to think about it?
It's smaller than that, and we don't disclose it. I will say it's smaller than that, but it's growing very quickly. You'll also see it growing even faster in absolute terms over the next coming months and years. Where we've had tremendous percentage growth, you'll see that become a bigger and bigger percentage. What we saw in April is that it actually, as small as it is, was a very large share of our growth when we looked at, I'm sorry, in May. We're seeing it representing a large share of the overall 7.3% growth, very disproportionate to the size of the business. Again, it still remains small, smaller than that five to seven number, but I think you'll see it growing very quickly. We have initiatives right now today that we're working on to build our digital business.
We're building a complete arm within our IT group to make our digital product as much of a value-added proposition to the consumer as our current brick-and-mortar is, which differentiates us. What the big part about our brick-and-mortar is, we've talked about many times, is our technology sets us apart in speed of operation from the competitors at brick-and-mortar. In the back end of that, our customer service is of such high quality that consumers are drawn to us. We believe we have that same quality of customer service on the back end that we continue to vest in our digital business to make that as equal to the quality and speed and ease of use that we have in our brick-and-mortar business.
We've built within our IT group a vertical of people that are focused on nothing but new products and invested money, which you see in these continued 23% growth. We're doing that organically. We expect that to continue to grow and actually speed up in growth, but it's still small today as a percent.
Got it. That's fair. Then one more before I switch over to Tony. Your Mexico concentration, 55%, give or take a little bit, Guatemala 20%. How big an impact is that having on your pace of recovery? Are those two, would you consider them a tailwind, kind of a neutral effect? Kind of what are you seeing in those markets?
Well, we don't know yet how May has grown, right? In April, we know we outperformed the market, and we know we very much outperformed the brick-and-mortar market because when you look now at the numbers from Mexico, you're going to have to start to look at it with a discerning eye and realize that even though it's a small percentage, that the online business is growing faster than the brick-and-mortar. We're taking a larger share of it overall. We grew our share in April to Mexico. We grew our share into Guatemala. The difference is that Mexico was just a slightly negative number in April. Only, I think, negative 2 percentage . Where Guatemala was in the high teens in terms of negative year-over-year. Mexico has held up the best of any Latin American country in terms of year-over-year growth.
We think that it makes sense when you think about it because the Mexican population is very heavily working in agriculture and construction, those being two of the very strongest areas. Guatemalan business, there's a lot of heavy Guatemalan business in the northeast, for instance, in the cities, that was very much affected by COVID. Whereas Mexico, some of the strong areas are very agricultural and also very construction oriented. I don't mean large high rises, but home construction, home improvement, and things like that. Mexico's actually been a blessing for us, our concentration in Mexico, because it may have been the strongest country in the world, probably the most, certainly the strongest country, U.S. to Latin America, without a doubt. Our concentration there has been a positive for us.
We've done much better, we think, we know we've done better than the market. We think we've done even much better than the brick-and-mortar providers at Retail to Mexico. We've done better at all other countries, but that concentration has worked in our favor. You were kind of asking about the peso. April and May were without any really large swings or volatilities in the peso. The quetzal is not widely traded. That's the Guatemalan currency. There usually doesn't ever wide swings in that currency. The Mexico peso, it really stopped in early April. There was a lot of volatility, bigger in terms of swings than we had ever seen in late March, and that was some of the difficulty of late March.
That hasn't been happening as we got into early part of April and certainly throughout most of April and May. It's been a relatively stable peso versus the U.S. dollar.
Got it. Can I say your large exposure to Mexico and Guatemala, they're acting as a little bit of a tailwind? It'd be fair to conclude that. Is that fair in your view?
Well, it is in Mexico, not in Guatemala. Guatemala was, the country was negative for April. Almost was in high teens. I think it was 18% or 19% negative year-over-year. Not with Guatemala. Guatemala certainly dragged our number growth down, and we don't have the main numbers yet. Mexico clearly was a good thing. I wouldn't call it a tailwind, but good fortune to have our concentration in Mexico. We also saw that the mix shifts happened a little bit more. From a profitability perspective, since Mexico grew faster than the other countries, our percentage of Mexico went up a little bit in April and May. That's a good thing because those are more profitable transactions for us anyway versus the others.
Great. Hey, Tony, a question for you. I get asked every once in a while how people should think about a steady state transaction of revenue growth at IMXI. You've had a couple huge years, 2017 at 30%, 2018, 27%, 2019, 17%. Clearly COVID is ratcheting 2020 down a little bit lower. On a core basis, how do you describe IMXI? Like what type of growth company?
Yeah. Let me go back to our guidance, which we suspended as the COVID-19 pandemic kicked in. We were guiding to revenue growth of anywhere between 6.5% and about 11%, and we were guiding to EBITDA growth for the year of 7.5% to, say, 14.5%. That was on the heels of a fourth quarter, if you recall, when we were witnessing transaction growth across the industry to Mexico slowing down precipitously, where it had been kind of in the 8%-11% every year, and it was down into low single digits. We didn't understand why it was happening. Our competitors didn't understand why it was happening, we kind of baked it into our plan. In the first quarter, we exceeded our plan on every metric.
The high end of our revenue guidance was 11%. We came in at 13%. The high end of our EBITDA guidance was 14.5%. We came in at 23%. A chunk of that was the Mexico market rebounded. It got back into normal. We also, I think, continued to take share and we were enjoying strong margins there as well. On a steady state, we were on track to exceed our plan. The crisis kicked in and you've seen through April and May the health of our portfolio and our ability to continue to grow and take share. I'm not willing to guide as to what our growth will be, but I would say, pandemic aside, we were on track to beat the high end of our ranges on pretty much every metric.
It seems like the Mexico market, granted it is not that many data points, but it seems like the Mexico market has rebounded from the baseline on which we built our plan, if that is helpful.
Got it. The question wasn't necessarily targeted at 2020, but let me ask it a different way. I'm just looking out one to several years. Would you guys be disappointed if transactions and revenue growth are sub 10%?
Yes.
Okay, good. That's what I'm trying to get at.
Not only disappointed but surprised because we think that we grew transactions in February, just to give you an idea. Again, it was a 29-day month versus a 28, but we grew transactions. It doesn't always shape up that you just get the extra day. We grew at 20%. We were back to 20% growth and almost 20% growth on the top line. Revenue was a little lower in terms of growth. Then COVID hit. We would expect that COVID has actually made us stronger because we differentiated ourselves on the high end. I think it's going to thin out the herd a little bit in terms of some of the small independent guys that are private. We see them struggling, some of them now. There is still a big share of the business that's in the small guys. They're struggling.
We would expect to come out of this much stronger and be able to take a lot more share. Additionally, I want to make sure we don't paint ourselves as a one-trick pony, because you will see us becoming more and more aggressive in the online business. You'll see us become really aggressive, or you might see a combination that we might do in terms of not necessarily online, but we're always looking at things that will provide, I think, more digital opportunities for our business, right? Whether we'll continue to emphasize those in-house or we might acquire someone.
Certainly, we've talked before about the fact that we've got a lot of dry powder related to free cash, access to cash, and the only thing that would keep us is from something that we want to make sure is accretive for our shareholders, and that will be a quality acquisition. I want to make sure that putting that aside, whether it does it or not, this isn't just about what happens. These last few months has really put a charge into our online business. Again, it's not huge, and it's not huge as a percentage of our business, but it's growing very quickly and we're putting much more emphasis both on the quality of that product, the emphasis in marketing it, and the emphasis of driving those transactions.
That's going to become a part of our overall growth, a bigger part of it, but we also expect to be even stronger as a percentage of market share with the brick-and-mortar stuff coming out of COVID, as we are during COVID.
Got it. Bob, could you talk a little bit more on the competitive front and maybe just start with, you said the smaller players are having a much more choppy, challenging time with it. Can you take share there? Can you capitalize on that?
I think we are because I think what's happening is we grew faster in April than the market to May, and faster really to all of our countries. In some cases, not dramatically faster, but when we get the information from our payers, we understand that the size of the brick-and-mortar market, we all know, is shrinking. It's not shrinking as fast as some people think, but we are taking share, clearly, because whereas the market might have been -2% in April to Mexico, the brick-and-mortar business might have been -8% or -10% because of that share that the online business is taking. We're taking share clearly, not only from the small guys, but I think that maybe some of the bigger people that are losing share based on their numbers, but I don't know that for sure.
We're more likely from the niche guys, because as we talked about before, we're not in the institutional retailers as Western Union and MoneyGram are, and in some cases, even Ria, which has had agreements with Walmart and others. We're typically in the ones and twos. That's been the strength of our business as well, because it takes a long time to build it, but it takes a long time to dismantle it. When you build it one by one, you can pick the very best retailers. From our perspective, we think the competitive environment. Here's why it's hard for the small guys.
Embedded in a number where Mexico might only be down 2% in April, could be days where because something goes on where it's choppy, there could be a day where it's a little bit more of a demand, and those guys may not have the ability to pre-fund over a long weekend, like Easter, or a long weekend like Memorial Day, all of the money they need to buy the pesos or even quetzals in advance. As a result of that, they have to sort of manage through that choppiness and either slow down their sales because they don't want to sell more than they have, or sell pesos or quetzals they don't have, and risk that when someone goes to pick them up before they can buy them on Monday with the funds that will come in on Monday, that that person gets turned away.
We've talked about that in the past. That's an environment that continues with the small guys at retail. Not everybody, not everybody all the time, but what it affects more than anything is a retailer. Your odds of being a consumer and maybe not having your wire paid is small. If you're a retailer doing 500 wires with a small provider and they only have 2% of their wires not paid on time, guess what? You have 10 people in your lobby that are dissatisfied. 10 people who might take you an hour a piece to reconcile and cancel. That's a lot of work on the retailer. The retailers, in times of turmoil, in times of volatility, in times of uncertainty, times of urgency, are going to push more transactions to the most reliable, least risky, those companies that cause them the least amount of problems.
That's why we take share during these times.
Any smaller players gone under, or are they just having these issues?
Yeah. Unless it was really official, I wouldn't name that as something that strong. There is one small guy that went under in Chicago. The name is not even worth mentioning. Very small, localized, regional player. We are seeing, we know for sure of a good size, middle-sized player who was down for a whole weekend. We also know of a really good size, one of the bigger private companies that lost one of the largest payers in Mexico, at least for a period of time. I don't know. I believe they still are not paying through there. We're not going to discuss names, but we know that there clearly is an impact that's being felt through the crisis.
Those kinds of volatility, those interruptions of service that are really blatant like that, or even the little ones where it's just three or four guys today didn't get their wire paid, causes the agent retailer. Even more so, the agent retailer that's exposed to all the transactions to move those transactions to us. Remember, in almost every case, we're alongside other competitors. When they falter, it's really easy for the retailer to move those wires to us and for us to get those wires. That's the purpose why we've always talked about exclusivity is not important, productivity is.
Got it. Hey, Tony, any thoughts on your customers benefiting from government stimulus or how we should think about an unemployment rate and money transfers?
Yeah. From a stimulus perspective, I think there's been very little impact, as I'm sure you guys all know. The stimulus program would've helped the subset of our customers that are either U.S. citizens or legal permanent residents. Even our customers that are over on H-2A visas, temporary work visas, weren't eligible for the stimulus checks much less the subset of our customers that are here and undocumented regardless of whether or not they're paying taxes. I don't think to date you've seen any benefit really to large chunks of our customer base, meaning the remittance volume hasn't held up because of Stimulus Checks. Looking forward, we're continuing to see things improve as opposed to fall off, even though unemployment claims continue to soar.
I think all of it is more of a testament to the fact that our customer largely works in essential services, as Bob mentioned. Things like agriculture and construction and mining and transportation, food production. There's the subset that is in hospitality and other services that certainly are hit. I think disproportionately, our customers are not in those fields.
Got it. Bob, historically, you guys have concentrated on adding the right agents, penetrating existing agents versus just adding a bunch of agents to have a high agent count. How did that strategy play out in 2019? What are the priorities for 2020?
Well, it continues to be the same. We ratchet up always our expectations because we've invested more in sales. As we've talked about before on other calls where we've had some vacant sales positions, we've done a much better job of keeping those jobs filled. Everything is the same relative to our approach, and it's a triangulated approach to finding zip codes where we aren't or where we're underperforming and targeting the proper number of retailers in the right locations and interviewing and finding the best potential retail locations. What's different is, prior to COVID-19, there was a bigger emphasis on it as we added people to our sales team. During most of the pandemic, our sales team was operating from their homes and doing everything telephonically, mostly dealing with existing retailers.
In addition to that, we also spent time being able to add new retailers, even though we weren't there in person, but it slowed us down. We had some regions that were still able to add their targeted number of new retailers. Other regions that weren't, as you can imagine, more difficult to do it by completing the wholesale delivery of the equipment and doing a training while being remote from the retail location. We expect now our sales force is back out. We think there's a pent-up demand of requests for retailers, and we also think that we're at much fuller capacity now and as we continue to keep ourselves well-staffed in the sales group. We expect to be adding retailers with the same quality with a little bit more frequency at a higher level as we go forward through the rest of the year.
Got it. It's my understanding, you guys aren't the highest commission payer out there. The pitch to the agent has always been your service and uptime and reliability. Anything to add to that?
Yeah. I think the biggest thing that's been with our retailers is, first of all, we're not, and we will make concessions to become more competitive, but we're never dealing upon the commission as the primary source of how we make ourselves competitive at retail. Typically, we're paying a split with the retailer that's about 50% of the principal amount. The FX amount is something that is ours. In that scenario, there are companies that will pay 60% and sometimes even 70% commission. Imagine when our technology delivers and completes a transaction in 20 seconds at retail, and some of those companies take a minute. Imagine a busy store now on a Friday with 30 or 40 people waiting to send a wire or also waiting, maybe it's a Taqueria or it's a deli and they're waiting to get their lunch.
Imagine that 30 people with our system can be out in 10 minutes, 20 seconds per transaction, with a competitor, it's 30 minutes. The wait to get your lunch, the wait to get your transaction goes from 30 minutes to 10 minutes. That speed is there. The ease of use, the user comfort level, and how quickly you can use the system is also very important. It's easy for them to train in multiple users. Our system, because the way it works is much easier to use and its reliability is there. It's up most of the time, so it doesn't need to be dialed into the web. It's not a web-based system. That also enables us to have a better quality of service. We've talked about in the past, we have better banking relationships.
We have the ability to process payments that are check-related through a process that we do call Check Direct. There's a number of things we do for our agents that are value added to their business that make it easier for them to send transactions. The commission piece becomes less important because ultimately they're going to make more money with us. We, on the average, do a lot more wires than the competition does. It takes less time to process those wires. For the right agent retailer that's a smart, astute businessperson, the individual price per transaction they get paid is not going to be a detriment. Some people it will be, and those are probably not the right retailers for us because they don't share our vision of quality.
Got it. Tony, for you, kind of a two-part question. How are you thinking about margins and free cash flow? Related to that, there's kind of a question, Mexico is your most profitable market. As you add new markets at lower margins, can you maintain your existing margins? Just help people think through that.
Sure. To be clear, I'm going to talk about EBITDA margins. As it comes to free cash, as Bob said, we've been fortunate. We've thrown off free cash throughout this, even at the lowest point in the second half of March, we'll continue to do so. We are nowhere near any sort of cash flow breakeven. Without guiding on EBITDA, I would say I would expect that our free cash generation as a % of EBITDA will continue to hold in the ranges that we've seen over the last several quarters. Continues to be robust, continues to be strong. As it relates to EBITDA margins, in the first quarter, we had a solid 17.1%, which is kind of in the range of where we had been historically.
Again, recall we built a plan with the expectation that Mexico was going to decrease in mix at a pretty accelerated rate. We will see, as we've seen Mexico hold up, pre-pandemic it bounced back to where it was the past several years, and then as the pandemic hit, it held up better than other markets we remit to. I still expect the guidance is the same on EBITDA margins, and that is as we ramp up other countries, we will see a slight decline in our gross margin. The leverage that we're getting on our fixed cost base will make it so that our EBITDA margins stay stable to maybe slightly growing over the foreseeable future. We're feeling good about it. It could be slightly growing, but our intent is to plow any excess back into new product development and growth of new corridors.
Got it. Thank you. Hey, Bob, for you, clearly this week we also saw a rumor in the market with Western Union potentially making an offer or interested in MoneyGram. Any thoughts on that or opportunities it may or may not create for IMXI?
From a relative basis, Western Union-MoneyGram combination would certainly create the largest player in the world for Latin America. There's no doubt about that. From an absolute basis, I believe it would be good for us because I think Western Union and MoneyGram together will be smaller than the sum of the parts. It's difficult to put two businesses together this size where there isn't a lot of overlap. Not so much with Western Union and MoneyGram, but certainly with Western Union's product, Vigo, and MoneyGram are in some of the same retailers. Our experience is when a combination happens between two providers and a retailer has both of them, they'll send one of them out and they'll bring in another competitor.
We also think that there's probably going to be some monopoly questions about Western Union-MoneyGram related to certain markets, particularly the domestic business in the U.S., where together they're going to probably have 90%, at least 80% market share related to the brick-and-mortar business. You might talk about Zelle and others, but there still is a segment of captured consumers that are not banked that rely on that business, and they would really be owners of that completely. I think there's a lot of complications, and as they work through those distractions, I think that there'll be a lot more opportunity for companies like us to take share. Clearly, from a relative basis, they're going to be the biggest guys around to all those countries.
From a standpoint of the two together where let's say separately, and I'm guessing here, but separately, let's say Western Union's 20% share to Mexico and MoneyGram's 17%, they're not going to be 37% together. My guess would be they'll be closer to 30% together. There's seven points that gets thrown on the ground. For everybody to fight for. We think we'll be right in line, right at the front to get a share of those wires that will be there because of the difficulty in putting two large companies together like this.
Got it. Thanks for the insight there. Earlier you'd mentioned about some digital opportunities for your customers. Can you expand on that a little bit? Was that like an additional product, or what did you mean?
Well, I meant two things. We're committed to the digital business. We're investing in it already a great deal. Joseph, who we brought in, Joseph Aguilar, our COO, is focused on that business a great deal. We're in the process of bringing in a leader to lead that division, that will be the vice president of the division. As I've said, we're building a digital group within our IT group, where we're bringing in a significant number of people to focus exclusively on the technology to bring that up. One of the differences for us in retail has been the quality of our technology versus the competition and the value add that we have. We're committed to doing the same thing on the front end on the digital.
On the back end, either in digital and brick and mortar, our customer service is legitimately one of the best, if not the best. All of that. Now, having said that, we remain also interested if there are any kind of digital-oriented opportunities out there. We're always looking because as we've talked about, that we have dry powder with not only cash in the bank, but generating free cash and access to cash, in terms of our borrowing limits, that we're continuing to look at potential acquisitions. If one of those were available to us in the online business, digital business, or in other more digitalized businesses, that could be B2B, we'll continue to develop that. We're not reliant upon that. We're continuing to develop in-house the quality of our business regardless.
Got it. Any update on Canada or Africa or the white label program?
Yeah, Africa's growing very well. We're continuing to add countries to our service area. Canada's growing, but right now we're staying in the English-speaking areas, which is for us right now, Ontario. We haven't gone to Quebec province yet because we're not prepared to be able to have the French-speaking customer service and collection and all the things we need to do as by law there. That's continuing to grow as well. We've probably got two or three companies right now that we can add to our online business in terms of white label processing. They're all doing well. They're all still fledgling businesses that we don't report on separately, though.
Got it. Anything else that I've missed? What are you most excited about for the rest of 2020?
I think it'll be very interesting to see as we continue to come out of the COVID-19 crisis and as we continue to go through unpredictable times. We always have found that the challenging times have had us emerge from that with bigger share growth in our market share than they have even in good times. We're really excited about that. We think because we are so strong as a relatively small company, we're not holding our cash reserves or cash flow up to a Western Union, but relative to the small guys we compete with every day, we think we're in a great position through tough times to continue to take share as they become more and more stressed through down economic times, through the COVID-19 crisis. We think there's a great opportunity to take share. That's with the brick and mortar business.
We're very encouraged at the speed of growth in our digital business. For us to grow that business and double it in just a couple of months, and it's tens of thousands of wires. It's not tiny, but it's just not at the level you said, and we're not disclosing it this time, not 5%-7%. It's growing very quickly, and we expect it to continue to grow. When we package that up with our processing business, that's going to be a significant amount of our business is going to be digital as we emerge in the second half. By the end of the year, or sometime certainly in 2021, we'll start to disclose more information on our digital business as a percentage of our business as it becomes more material. We're really excited about that.
We're really excited about the opportunity related to our card, our prepaid and payroll card. We think there are great opportunities with check makers that are currently paying in checks and sometimes in cash to be able to load those up on cards and then facilitates those consumers to be able to use their card at either retail through our Card Direct product or online. We're really excited about all those things, and we also think that it could be a market that's not in our exact wheelhouse, but in other areas that are adjacent to us that would strengthen and create new verticals for us. Could be a time in the second half of the year for us to be serious at looking at some acquisitions.
We can't predict that anything will happen, but we think there'll be some things out there that will be of interest and we'll take a really good look at that could create a great level of diversity in our business and also create some exciting verticals that today we might not be in or not in as deeply as we might be in after an acquisition.
Could you give an example of something that would help you diversify or a new vertical?
I think-
What would be on the wish list?
I think B2B payments would be great. I think anything in B2B payments is a great place, right? We're not really in that today. We can build that ourselves, but it might make more sense with someone who's got a model that's working and a technology that's working to acquire that and to leverage that. Particularly as they're in a number of limited numbers of states. Our licensing throughout all the states, our banking arrangements, our cross-border, if they need to do any cross-border, all of those things, our sales organization, all of that may lead to greater success for them and a new vertical for us. I think we're always excited about digital-oriented B2B, the B2B payment world.
I think about the B2B, not necessarily companies even the size of Intermex paying their providers, but think about companies that use a lot of private contractors, companies like that. There's a great B2B business environment out there available, I think there's people that are tapping into it that could provide great opportunities for us to build a vertical with them with their business.
Got it. Well, guys, I really appreciate the update. Congratulations on April and now as of this morning, May transaction growth. I think that does wonders to just sort of separate you guys from the industry and highlight that growth. We'll hope June continues that trend. That should be a good thing and set you up for the second half well. Thanks again and look forward to catching up soon.
Thanks, Mike.
Thank you.
Thank you, everyone.