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MoneyGram International Reports Second Quarter 2014 Financial Results

Stocks in this article: MGI

  • Self-service money transfer transaction growth accelerates to 60%
  • Renewed two top agent contracts: CVS pharmacy and Canada Post
  • Recognized $22.4 million gain from securities settlements

DALLAS, TX August 1, 2014 (GLOBE NEWSWIRE) -- MoneyGram (NASDAQ:MGI), a leading money transfer company, today reported financial results for its second quarter ending June 30, 2014.

Money Transfer Highlights

  • Money transfer revenue increased to $328.3 million, representing growth of 3 percent over the prior year on a reported basis and 1 percent in constant currency.
  • Money transfer transactions increased 4 percent over the prior year, led by:
    • 15 percent growth in U.S. outbound sends, including 21 percent growth in U.S. to Mexico
    • 10 percent growth in sends originated outside of the U.S.
    • 15 percent decline in U.S.-to-U.S. sends
  • Global agent locations increased to 345,000, an addition of 6,000 locations from the end of the first quarter, and a 6 percent increase over the prior year.
  • In mid-April, Walmart introduced a competing U.S.-to-U.S. white-label product which negatively impacted MoneyGram transaction volume and revenue. For the quarter, the Company reported a 31 percent decline in U.S.-to-U.S. transactions originated at Walmart and a 33 percent decline in revenue versus the prior year. U.S. outbound transactions originated at Walmart remained strong. As a result, revenue from Walmart including bill pay and money orders represented 23 percent of total company revenue for the quarter.
  • Excluding U.S.-to-U.S. transactions originated at Walmart:
    • Money transfer revenue increased 10 percent on a reported basis and 9 percent on a constant currency basis
    • Money transfer transactions increased 13 percent
    • U.S.-to-U.S. sends increased 17 percent
  • The Company's money transfer and bill pay agreement with Canada Post was extended until 2020. The Post operates the largest retail network in Canada with over 6,000 locations offering MoneyGram services.
  • A multi-year agreement began with Grupo Monge, a top Central America retailer in 6 countries providing consumers convenient access to money transfers 7 days a week.
  • Services opened with Oman International Exchange, a leading currency exchange business. Oman has one of the highest immigrant population percentages in the world at 28 percent.
  • A multi-year renewal agreement with CVS pharmacy was signed to continue money transfer services at their 7,500 locations.

Self-Service Highlights

  • Self-service money transfer transactions grew 60 percent and represented 10 percent of money transfer transactions, while revenue from self-service grew 42 percent over the prior year and represented 8 percent of money transfer revenue.
  • MoneyGram Online money transfer and bill payment transaction volume increased 41 percent and revenue was up 31 percent over the prior year.
  • Account deposit services were launched to send funds into accounts at all banks in Mexico and top banks in Honduras, El Salvador and Guatemala.
  • An online virtual agency with Topengo, an online French phone top-up provider, was initiated offering MoneyGram money transfers to over 100,000 of their unique monthly visitors.
  • A contract was extended with 7-Eleven in Australia to provide money transfer services through self-service kiosks 24 hours a day, 7 days a week at more than 500 stores. MoneyGram is the only funds transfer provider in Australia to offer money transfer services through a kiosk.

Financial Highlights

  • Total revenue was $372.4 million, an increase over the prior year of 2 percent on a reported basis and 1 percent in constant currency. Total year-to-date revenue grew 5 percent on a constant currency basis.
  • The Company reported EBITDA of $69.8 million, and pre-tax income of $32.1 million which reflects a $22.4 million gain from securities settlements. Results also were impacted by:
    • $7.4 million of expenses related to the compliance enhancement program
    • $6.7 million of expenses related to reorganization and restructuring costs
    • $5.3 million of stock-based and contingent performance compensation expense
    • $1.0 million of expenses related to the Walmart Participation Agreement and capital transaction costs
    • $0.2 million of legal expenses related to certain matters
    • $0.1 million of expenses related to direct monitor costs.
  • Adjusted EBITDA for the second quarter was $68.1 million, down 3 percent on a reported basis and 6 percent on a constant currency basis. Year-to-date Adjusted EBITDA growth was flat on a constant currency basis.
  • In the quarter, Adjusted EBITDA margin was 18.3 percent, down from 19.3 percent in the prior year as a result of a decrease in U.S.-to-U.S. revenue and an increase in agent-related and marketing expenses.
  • Diluted earnings per common share was $0.40, up 48 percent year over year. Adjusted diluted earnings per share was $0.28 down from $0.32 in the prior year.
  • Adjusted free cash flow for the quarter was $30.2 million which does not include the additional positive cash flow generated from the $22.4 million securities settlements.
  • In July, the Company's Board of Directors reaffirmed its outstanding share repurchase authorization of 5.2 million shares, and repurchases may be made periodically with excess cash.

"MoneyGram faced significant headwinds in the quarter particularly in our U.S.-to-U.S. business. While our growth is not at our historically high levels, we did continue to see particularly strong performance in our U.S. outbound business, self-service channels and emerging markets. We also continued to strengthen our core money transfer business through key agent signings. With the renewal of CVS and Canada Post, we have now secured seven of our top ten send agents until the second quarter of 2017, with several through 2020," said Pamela H. Patsley, MoneyGram's chairman and CEO. "We were also pleased to resolve additional legacy matters in the quarter, recognizing a significant cash gain. These settlements, along with our consistent cash flow, will be strategically reinvested in the business, including through a newly-reaffirmed share repurchase authorization. We are committed to building long-term shareholder value."

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