Currency Exchange International CURN
August 19, 2022 - 10:39am EST by
2022 2023
Price: 13.50 EPS 1.17 1.43
Shares Out. (in M): 6 P/E 11.5 9.5
Market Cap (in $M): 87 P/FCF 0 0
Net Debt (in $M): -83 EBIT 0 0
TEV (in $M): 4 TEV/EBIT 0 0

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  • Micro Cap
  • Canada
  • payments
  • Large Net Cash Position
  • Ft. Knox baby


Currency Exchange International ( and CURN OTC) has been written up several times before by VIC users (in 2021, 2020 and 2014) but the share price has yet to move substantially even as the fundamentals of the business begin to inflect. Trading volume is low so the idea is probably only relevant for small funds and PAs.

The basics of prior VIC write-ups remain central to our thesis: limited downside at $13 a share (CURN OTC) with CXI’s net cash worth $12.75 per share, net working capital less debt worth $9 per share and significant upside potential for its original business as travel returns post pandemic. 

CXI’s market cap is 11.5x our estimate for FY2022 earnings and 5.1x EBITDA. Its 9.5x estimates of FY2023 earnings and 4.2x EBITDA. Revenue in 2022H1 was up 124% YoY and this summer’s return of international travel will finally show how much CXI has expanded its revenue capacity during the pandemic. 

The stock is clearly cheap and we believe one of the reasons for that is the slow secular decline or at least stagnation of exchanging cash for foreign notes ahead of travel. This can be true and the stock can still work as the ramp at CXI’s two other business lines offset its original retail exchange business.

The big value driver we see in the future that we want to expand on in this write-up is its new business wholesaling dollar notes internationally. After getting approved for the Foreign Bank International Cash Services (FBICS) through the NY FED in Aug of last year, CXI has finally put the compliance and risk management processes in place that will allow the business to really pick up in the current quarter and coming years.  

Wholesaling dollar notes will add a third major revenue driver for CXI, and maybe more importantly, one that will be countercyclical to economic growth and travel. CXI is one of two foreign banks to gain access to FBICS. Bank of America is the main US domestic bank which competes to deliver dollar banknotes worldwide to central banks and large overseas financial institutions. We try to put some estimates on the market size of this opportunity below and show how gaining access to FBICS transformed CXI’s main competitor in 2020.

The original business is basically levered to international travel which was crushed by Covid, forcing the company to cut costs and layoff staff. International travel has been slowly resuming causing the huge yoy revenue / profit jump in the first half of the year, which is set to continue for Q3 and Q4, the peak seasonal quarters for CXI. April 2022 international travel to and from the US was 71% of April 2019 but about double April 2021. And US resident outbound air travel in June was 92% of June 2019. 

In addition to the recovery of travel, CXI’s core retail currency exchange business is benefiting from bankruptcy of main competitor Travelex, which CXI has capitalized on by taking over many of its airport locations. (We put some numbers to Travelex’s North America exit below and the new airport business). At the same time the company continues to grow its payments business (focus of mm202’s write up).

We won’t rehash all of CXI’s business as it’s been thoroughly covered before. Basics: 

North America is CXI’s main market. It has ~36 currency exchange stores/kiosks inside of malls and banks after closing 12 underperforming locations during Covid and opening 3 and another ~22 locations in airports run under a partner model. It also ships foreign bank notes to consumers who order online and to banks which seem to mostly make them available to travelers. CXI is now licensed to ship banknotes ordered online to 37 states (all the big ones) and has been steadily growing the number of banks it does business with (in Q2 had 18,852 transacting locations up from 14,787 at end 2020). 

Core travel FX business, Travelex shutdown, Airports & travel comeback

After Travelex closed down North America operations (210 stores & kiosks, airport focus), CXI has taken over many of their airport stalls in a commission split arrangement. Travelex exit has left CXI as the only major retail FX provider in US and Canada. To get a sense of the hole left in the market that could be available for CXI to fill we looked at Travelex’s historical North America business. 

Travelex did $115mm in NA revenue in 2018, mostly from retail airport currency exchange. While Travelex was in the administration process, their new management forecast it could do $5m of EBITDA from NA in the year to May 2022, and $6.5m of EBITDA in year to May 2023. Ultimately they exited the NA business. 

So Travelex has handed the US airport market to CXI. But instead of taking on the huge rent and employee expenses, CXI has partnered with other operators in a revenue share relationship where CXI supplies the banknotes, software, licensing and compliance requirements. Some of the airport locations are also run under the CXI brand, making them essentially franchises. 

At CXI self-run stores, they take ~6.5% of currency transaction value, which they’ve been able to raise as competitors close shop. Management says they take about 3.5% of transaction value in the airport revenue share deals (according to MM202 comments in their write-up), which flows heavily to bottom line without any of the overhead costs.

CXI now has about 22 kiosks at 7 airports, up from 0 pre-pandemic. At JFK, Travelex had 7 FX kiosks; CXI has taken them all over under the agent model. They also have Newark, Chicago, Charlotte, Portland, Minneapolis, Raleigh, Pittsburgh and are slowly expanding their count as travel returns. Management has said the only other airport operator left in the market is actually their customer. 

We have used that 3.5% of transaction value assumption to get a ballpark estimate of what its new airport FX business could add to CXI’s topline in FY 2023, when we expect international travel to return to levels approaching pre-covid times. 

Starting from the total value of money exchanged at San Francisco airport in 2019 ($44m) and the airport’s total international traveler count that year (14,790,686) we get $2.97 being exchanged per traveler. Assume a 20% decline in cash usage post covid and its $2.38 per traveler. CXI would take 3.5% of that so $.08 per traveler. Here is the revenue that will bring in at the 7 airports CXI has so far at 2019 intl traveler levels:

JFK - 34,300,000 intl travelers - $ 2,857,041

PIT - 256,694 intl travelers - $21,381

MSP - 3,230,699 intl travelers - $269,103

RDU - 500,000 intl travelers - $41,648

EWR - 14,300,000 intl travelers - $ 1,191,128

CLT - 4,235,984.47 intl travelers - $352,839

PDX - 100,000 intl travelers - $ 8,330

So total additional revenue of $4.7m at 50% EBITDA margins would be additional $2.4m of EBTIDA in FY2023 from its new airport business. Many of the new airport locations have been added in the past six months and we expect CXI will continue to add locations, including possibly SFO which is currently soliciting bids for its FX exchange concession which has been empty since Travelex exit. The SFO commissioners discussion around it shows the promise of demand being around for a long time, but also makes clear the overall market is in slow decline:

“Commissioner Natoli asked if the decline rate of use pre-pandemic is an independent trend or if there are any concerns that passengers will not use the service when international travel returns. Ms. Nashir said they are still getting requests for foreign currency even though international traffic is lower. She thinks there will continue to be a need. The peak was in 2016 and started to decline. She believes it is still a viable business. People like to have small cash when they arrive at the country they are traveling to.”

US govt statistics show May 2022 monthly arrivals to the US were 64% of May 2019. Total US citizen outbound travel in April was 79% of April 2019 (includes land crossings), outbound air travel in May, June was 88% and 92% of 2019, clearly trending in right direction which will be captured in CXI Q3 report (quarter runs May-July).   

In Q2 the banknotes business did $10.2m of revenue, not far off CXI peak quarterly revenue of $11.8m in 2019Q3, though some of that was almost certainly FBICS and new airport business, which are not broken out. Summer is peak international air travel season and the banknote business in Q3 has historically jumped 30-35% over Q2. Randolph (CEO) in June indicated it was starting out that way again this year.

CXI has also been opening up FX exchange inside of Duty Free shops in airports and at Northern and Southern US borders, though hard to say how much this is contributing to banknotes. 


Payments have grown steadily during pandemic, helping to offset loss of banknote business. CXI has been integrating with Jack Henry, Fiserv and other banking software, making it easy to grow customer base of small and mid-sized banks doing international wires. 

Our understanding is CXI inserts itself into the payment and FX chain when banks are doing international wire transfers on behalf of clients. So a wire from a small US / Canadian bank could move from CXI, be converted to rupees and sent on to a bank in India, which then sends on to destination Indian bank, with each of the four banks involved taking a small cut of the transaction or adding their own wire fees. 

CXI has been successful with growing their transacting client count for payments (600 counterparties in 2021) and it’s a service they can cross-sell to banks already using them for banknotes. They’ve spent a lot of time and effort building backend software to make it an easy cross-sell.

Business is doing $9.6mm of LTM revenue and we expect it can continue to grow 20% - 30% yoy for several years. Our main worry is the international B2B payments business is highly competitive and groups like Wise are beginning to disrupt traditional bank workflow that CXI is imbedding itself into. CXI cites outside research to estimate total traditional bank payments market grew 10% yoy in 2020.

Foreign banknotes & Moneycorp

Supplying wholesale banknotes abroad will add a third revenue driver, and most importantly, our research indicates the market is counter-cyclical to economic growth and travel. In August 2021, the NY Fed approved CXI subsidiary Exchange Bank of Canada’s application to join its Foreign Bank International Cash Services (FBICS) after a ~five year wait. CXI is now one of two foreign banks with direct access to wholesale bank notes from the Fed. The other is Moneycorp, which has transformed its business after gaining FBICS access in 2019. 

This wholesale business used to be dominated by Bank of America and foreign banks like CXI paid 10 to 15 basis points to BofA to buy notes through them. From interviews, including the Moneycorp US CEO from the Tegus database, it seems BofA is getting more cautious with supplying US banknotes abroad. It could be for compliance reasons. US banks have direct access to wholesale notes from the Fed but historically other US banks seem to have left the business to BofA. Could be it’s too small for big international US banks to get involved with, we’re not sure. 

Despite what we would infer from daily life, US dollar currency in circulation continues to grow, averaging 8% yoy since financial crisis, according to Fed data. Fed researchers estimate about 70% of those dollars are shipped abroad based on their confidential access to wholesale banknote shipment data. People and companies abroad hoard more dollars during times of uncertainty, increasing shipment demand. It’s comparable to buying treasuries. 

Papers from Fed researchers say “demand for U.S. currency abroad stems from its use as a safe asset” and “elevated local and global uncertainty boosts demand of residents of the affected countries for U.S. banknotes”. Dollarized economies like Argentina in the past have been huge demand sources – politicians there are talking about returning to dollarization. Basically times like the current uncertainty should be the best time for wholesaling dollar bills internationally.

A portion of the dollar notes are also probably used in illicit activities. Most of the currency going abroad are $100s. For this reason, the EU cancelled its 500 note in 2019. End customers are central banks and large foreign banks. During the first year of Covid in 2020, the total value of US currency added to circulation more than doubled from 2019. 

Using the Fed researchers’ assumptions and projected US currency growth we can get ballpark estimates for the size of wholesale banknote market and what it could add to CXI’s topline. About $130bn dollars could be shipped abroad in 2023 (estimated $197bn in 2020). If CXI can get 10% of the market at an average markup of 12 basis points per deal, it could add $15.6m a year in revenue. We expect the business will have about 40% EBITDA margins as it does for competitor Moneycorp. For purposes of modeling FBICS contribution to CXI’s FY2023 we are assuming ramp will be slow and company will get 7% of market in 2023, adding $10.9m of revenue. See linked spreadsheet for details: 

Moneycorp was accepted into FBICS right before Covid, benefitting from huge Covid caused demand for US dollar notes and BofA’s retreat/fumbling of the business. (According to Moneycorp US CEO, the Fed even helps with marketing by providing anyone who comes calling for dollars with the names of wholesalers.)

It’s clear that Moneycorp got lucky with their timing and their management seems more aggressive than CXI’s, but it’s worth reviewing how transformative FBICS has been for them. Their HK subsidiary, which carries out its wholesale of US dollar notes, makes public its financials in the UK. Entirely from access to FBICS, its revenue in 2020 doubled to HKD310m($40m) from HKD154m and operating profit jumped from HKD37m in 2019 to HKD118m($15m) in 2020 with EBITDA of $15.4m. Moneycorp PR from this May suggests that in 2021 FBICS business EBITDA nearly doubled to $27.2m. 

Moneycorp CEO previously said they see international wholesale of banknotes as a £250m annual market opportunity, which seems in the ballpark of our estimates from currency growth above. 

CXI doesn’t break out FBICS international wholesale revenue from its other banknotes business so it’s hard to tell how much FBICS has contributed so far since gaining access to program in 2021Q4. Q1 and Q2 numbers suggest some transactions. From what management has said it seems like they’ve to date supplied wholesale dollar notes to safe, reliable longtime partner banks, probably mostly in Canada, and are just beginning to really ramp up the business. 

In June Randolph said they’ve worked out their compliance / onboarding procedures and would now be “pursuing new clients as we seek to increase market share” with several banks in the pipeline. 

They are also hiring a new salesperson to lead the FBICS business, which is a good sign. But their focus to start on low risk countries will probably mean we ramp much slower than Moneycorp.

The fed research paper suggests December could possibly be peak month for banknotes business, which if correct, may even out seasonality of travel business (Jan, Feb and September trough months for FBICS). 


Linked google sheet has CXI PnL and our very simple forecasts for FY2022 and FY2023. At $13.5 per share, it’s a 11.5x PE on FY2022 and 9.5x PE on FY2023. 

For FY2022 revenue we expect:

Original business: $38m Airports: $3m FBICS: $5.5m Payments: $11.6m

For FY2023 we expect:

Original business: $41.8m Airports: $4.7m FBICS: $10.9m Payments: $13.6m

As others have pointed out, CXI has $25m+ of excess cash which could be freed up with better capital allocation. The cash is their inventory but could be financed, leaving it free for M&A or returning to shareholders. Randolph said they are hiring a new CFO for the group business, which is probably a good idea even if it will increase costs.


The main risk here is the secular move away from cash, especially for travel. That will happen slowly but we believe most Americans/Canadians traveling to a new country will still probably want some local currency in their pocket for the foreseeable future. Banks becoming more generous with fees they charge for using overseas ATMs could gradually cut the number of people doing fx exchange at kiosks.

Randolph holds a 21% stake in the business so we don’t believe he will dilute shareholders. But he clearly manages the business conservatively (which was fortunate when Covid came along) but will likely mean CXI will be slower to capitalize on FBICS. 

We are less worried on the macro risks of inflation or global recession. On inflation, CXI topline could grow in line as exchanged amounts rise but also clear rising salary, shipping, fuel costs etc are already hitting bottom line.

Global recession unlikely to have anywhere near the impact on CXI as Covid did. During the financial crisis, international arrivals to the US rose 3% yoy in 2008 and fell 5% yoy in 2009, US citizen outbound travel fell 1% yoy in 2008 and fell 4% yoy in 2009. In contrast, arrivals crashed 76% yoy in 2020 and outbound fell 66% yoy. Global recession could be good for FBICS business.





70% assumption based on Fed researchers’ adjusted commercial shipment volumes / total currency in circulation from Figure 11B. CXI previously paid wholesale banks 10-15 basis points for dollar bills. Link to papers here:

Moneycorp financials & PR: 


I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.



Q3 results in September show what new banknotes / airports business is capable of with greater return of international travel this summer


Management puts in place a plan for excess cash


FBICS business gets going


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