MoneyGram International Inc.
) reported first-quarter 2013 earnings per share of 27 cents,
modestly higher than the Zacks Consensus Estimate of 24 cents and
the year-ago quarter earnings of 23 cents.
Operating net income in the reported quarter excluded negative
impacts of recent debt financing of 39 cents per share,
restructuring and reorganization costs of 3 cents per share and
stock-based compensation of 3 cent a share.
Including these adjustments, reported net loss surged to $12.6
million or 18 cents per share against net income of $10.3 million
or 14 cents per share in the year-ago quarter.
Higher money transfer transaction volumes, higher fee and
other revenue drove the top line, while lower interest expenses
helped the bottom line and free cash flow. However, lower
investment income along with higher operating and commission
expenses reduced margins.
Total operating expenses climbed 5% year over year to $296.2
million, whereas total commission expense increased 8.7% year
over year to $154.4 million. Subsequently, operating income
increased to $44.3 million from $35.9 million in the year-ago
quarter. However, interest expense dipped 2.8% from the prior
year to $17.4 million.
MoneyGram's total revenue for the quarter was $340.5 million,
up 7% from the year-ago period. However, it lagged the Zacks
Consensus Estimate of $342 million. While fee and other revenues
increased 7.2% year over year to $337.7 million, investment
revenue stood at $2.8 million, down 12.5% from the year-ago
Global Funds Transfer
segment, MoneyGram's revenues grew 8.2% year over year to $320.4
million. Money transfer transaction volume increased 11%, while
money transfer fee and other revenue grew 10% on both year over
year and a constant currency basis to $294.4 million, showcasing
double-digits growth for the 8
Self-service and new channel money transfer revenues surged
31%, representing 6% of money transfer revenues. Moreover,
MoneyGram Online money transfer and bill payment transaction
volume grew 50%, while revenues jumped 23% over the prior-year
Further, global agent locations increased 17% over the
prior-year quarter to 321,000. Bill payment transaction volume
dipped 1% year over year, whereas, fee and other revenues
declined 6% to $26 million from the prior-year quarter. As a
result, operating margin improved to 12.9% from 11.2% in the
year-ago quarter, whereas adjusted operating margin edged up to
14.5% from 14.1% in the year-ago quarter.
Total money transfer transactions originating outside the U.S.
escalated 13% from the prior-year quarter. Transaction volume to
Mexico increased 23% year over year, significantly improving for
consecutive quarter. Additionally, MoneyGram's transactions
originating in the U.S. increased 7% year over year, while U.S.
outbound transaction increased 13% over the prior-year
Financial Paper Products
segment, MoneyGram's total revenue fell 8.3% year over year to
$19.9 million, reflecting lower fee and other revenues.
Subsequently, operating margin dipped to 34.7% from 41.5% in the
year-ago quarter, although commission expenses remained flat.
Additionally, adjusted operating margin plunged to 37.7% from
45.6% in the year-ago quarter.
As of Mar 31, 2013, MoneyGram had cash and cash equivalents of
$2.43 billion (down from $2.68 billion at 2012-end), net
receivables of $1.17 billion (down from $1.21 billion) and
available-for-sale investments of $56.2 million (down from $63.5
The company exited the reported quarter with $849.2 million of
outstanding debt (up from $809.9 million at 2012-end), and assets
in excess of payment service obligations of $219.7 million (down
from $227.9 million).
Free cash flow increased 15.9% to $32.8 million from $28.3
million in the year-ago quarter. The upside was primarily driven
by strong money transfer results as well as lower interest
payments and capital expenditures, partially offset by higher
Management reiterated the 2013 guidance and expects total
revenue to grow 6%-9%, on a constant currency basis, while
adjusted EBITDA growth is projected in the band of 3%-6%.
Meanwhile, MoneyGram aims to continue achieving double-digits
growth in money transfer transactions and increase free cash flow
Apart from MoneyGram, other performers in the financial sector
CBOE Holdings Inc.
), all of which carry a Zacks Rank #2 (Buy).
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