MoneyGram International Inc.
) reported first-quarter 2012 earnings per share of 22 cents, a
couple of cents higher than the Zacks Consensus Estimate. However,
the reported earnings soared from year-ago quarter's loss of 21
cents a share.
Operating net income in the reported quarter excluded legal
expenses of $3.6 million or 3 cents per share, restructuring and
reorganization costs of $5.8 million or 5 cents per share and
stock-based compensation costs of $3.5 million.
Nonetheless, including these expenses, reported net income
available to common shareholders improved to $10.3 million or 14
cents per share from a net loss of $21.7 million or $2.08 per share
in the year-ago quarter. Excluding preferred dividend and other
payouts, the company had reported net income of $14.0 million in
the year-ago quarter.
Higher money transfer transaction volumes and higher fee and
other revenue drove the top line, while absence of preferred
dividend payouts, disciplined expense management, lower interest
expenses helped the bottom line and margins' expansion. However,
these were mostly offset by lower investment income along with
higher tax and other expenses.
Total operating expenses climbed 7.6% year over year to $282.2
million. However, interest expense decreased by 13.1% from the
prior year to $17.9 million as a result of continued delevering
activities and the refinancing initiated in May 2011. Subsequently,
operating income ascended 13.2% year over year to $35.9
MoneyGram's total revenue for the quarter was $318.1 million, up
8.2% from the year-ago period and exceeded the Zacks Consensus
Estimate of $315 million. While fee and other revenue increased
8.6% year over year to $314.9 million, investment revenue plummeted
20% to $3.2 million.
MoneyGram has also been gaining traction with the raised
momentum in self-service and new channel revenue that jumped 61%
during the reported quarter and represented 4.8% of money transfer
revenue. Additionally, MoneyGram Online delivered strong revenue
and transaction growth, both in excess of 30%, primarily helped by
the recent launch of MoneyGram Online in the U.K.
Global Funds Transfer
segment, MoneyGram's revenue rose 9.7% year over year to $296.1
million. Money transfer transaction volume increased 15%, while
money transfer fee and other revenue grew 12%year over year to
$268.3 million and 13% on a constant currency basis.
Besides, global agent locations reached 275,000, an increase of
18% over the prior-year quarter. However, bill payment transaction
volume dipped 5% year over year, whereas, fee and other revenue
declined 8.3% to $27.6 million from the prior-year quarter.
Nevertheless, operating margin improved to 11.2% from 9.8% in the
year-ago quarter, while adjusted operating margin also escalated to
15.1% from 12.2% in the year-ago quarter.
Total money transfer transactions originating outside the U.S.
escalated 17% from the prior-year quarter. Transaction volume to
Mexico increased 19% year over year, significantly improving for
the tenth-consecutive quarter. Besides, MoneyGram's transactions
originating in the U.S. increased 15% year over year, while U.S.
outbound transaction growth increased 12% over the prior-year
Financial Paper Products
segment, MoneyGram's total revenue declined 9.2% year over year to
$21.7 million, reflecting reduced investment, money order and
official check revenues. Conversely, operating margin improved to
41.5% from 35.1% in the year-ago quarter. Even adjusted operating
margin escalated to 47.4% from 39.1% in the year-ago quarter, based
on low commission expenses.
As of March 31, 2012, MoneyGram had cash and cash equivalents of
$2.55 billion (down from $2.57 billion at 2011-end), net
receivables of $1.21 billion (down from $1.22 billion) and
available-for-sale investments of $93.1 million (down from $102.8
The company ended the reported quarter with $814.3 million of
outstanding debt (marginally down from $814.6 million at 2011-end),
while assets in excess of payment service obligations of $223.6
million (up from $211.7 million). Free cash flow rose to $28.2
million from $25.4 million in the year-ago quarter, primarily
driven by strong revenue growth and lower interest expense.
For 2012, management reiterated its expectation of total revenue
growth of 7-9%, while adjusted EBITDA growth is forecasted in the
band of 9-11%. This is consistent with the company's long-term
During the reported quarter, MoneyGram expanded its agreement
with Grupo Elektra and added 1,800 locations in Mexico, completed a
3-year expansion of services with over 10,000 locations across the
Bank of China network and added over 1,000 locations in the Indian
Subcontinent with Thomas Cook, India Post, and UAE Exchange. The
company also strengthened its ties with
) and fortified its footprint in Venezuela.
Moreover, the company also broadened its network by adding about
1,000 locations in the Russia and CIS through National Bank of
Uzbekistan and Sberbank Ukraine. Further, MoneyGram strengthened
its position in Bulgaria as it began the roll-out of 1,000 PO
Bulgaria locations, while also renewed and expanded its
relationship with Speedway SuperAmerica, a convenience store chain
with approximately 1,375 locations, to now include the company's
self-service MoneyGram Xpress money transfer product.
Earlier this week, MoneyGram's peer
Western Union Co.
) reported first quarter earnings of 40 cents per share, in line
with the Zacks Consensus Estimate. Earnings increased 14% on a
year-over-year basis, mainly on the back of strong margin
improvement in the Global Business Payments unit and lower share
MoneyGram carries a Zacks #3 Rank, which translates into a Hold
recommendation over the short term. Additionally, over the
medium-to-long term, we maintain a Neutral rating.
FISERV INC (
): Free Stock Analysis Report
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): Free Stock Analysis Report
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): Free Stock Analysis Report
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