MoneyGram International Inc.
) reported second-quarter 2012 earnings per share of 23 cents, in
line with the Zacks Consensus Estimate. However, the reported
earnings soared from year-ago quarter's loss of $1.37 a share.
Operating net income in the reported quarter excluded negative
impacts of certain accruals and legal expenses of $39.7 million or
54 cents per share, restructuring and reorganization costs of $4.4
million or 4 cents per share and stock-based compensation of $1.6
Including these expenses, reported net loss available to common
shareholders improved to $25.1 million or 35 cents per share
against a net loss of $438.3 million or $10.97 per share in the
Higher money transfer transaction volumes and higher fee and
other revenue drove the top line, while absence of preferred
dividend payouts, lower interest expenses helped the bottom line
and margins' expansion. However, these were mostly offset by lower
investment income along with higher operating, commissions and tax
Total operating expenses escalated 18.6% year over year to
$327.0 million, whereas total commission expense rose 8.2% year
over year to $146.8 million. Subsequently, operating income
plummeted to $3.1 million from $34.3 million in the year-ago
However, interest expense decreased by 23.1% from the prior year
to $17.6 million as a result of continued delevering activities and
the refinancing initiated in May 2011.
MoneyGram's total revenue for the quarter was $330.1 million, up
6.5% from the year-ago period and was at par with the Zacks
Consensus Estimate. While fee and other revenue increased 7.4% year
over year to $326.7 million, investment revenue plunged 42.4% to
MoneyGram has also been gaining traction with the raised
momentum in self-service and new channel revenue that jumped 57%
during the reported quarter and represented 5% of money transfer
revenue. Additionally, MoneyGram Online delivered strong revenue
and transaction growth, both in excess of 37%, primarily helped by
the recent launch of MoneyGram Online in the U.K.
Global Funds Transfer
segment, MoneyGram's revenue rose 8.6% year over year to $308.3
million. Money transfer transaction volume increased 13%, while
money transfer fee and other revenue grew 10% year over year to
$282.0 million and 13% on a constant currency basis.
Further, global agent locations increased 16% over the
prior-year quarter to 284,000, primarily driven by growth in India,
Africa and Spain. Bill payment transaction volume dipped 3% year
over year, whereas, fee and other revenue declined 6% to $26.0
million from the prior-year quarter.
However, excluding the effect of divestiture in the fourth
quarter of 2011, bill payment transaction volumes improved by 7%
year over year and fee and other revenue increased slightly. The
increase was led by new vertical expansion, new billers and growing
As a result, operating margin improved to 12.5% from 9.1% in the
year-ago quarter, while adjusted operating margin also escalated to
14.3% from 11.9% in the year-ago quarter.
Total money transfer transactions originating outside the U.S.
escalated 18% from the prior-year quarter. Transaction volume to
Mexico increased 19% year over year, significantly improving for
the eleventh-consecutive quarter. Additionally, MoneyGram's
transactions originating in the U.S. increased 10% year over year,
while U.S. outbound transaction growth increased 11% over the
Financial Paper Products
segment, MoneyGram's total revenue declined 16.0% year over year to
$21.5 million, reflecting reduced investment, money order and
official check revenues. Conversely, operating margin improved to
37.5% from 36.4% in the year-ago quarter, based on low commission
expenses. However, adjusted operating margin dipped to 39.8% from
40.8% in the year-ago quarter.
As of June 30, 2012, MoneyGram had cash and cash equivalents of
$2.55 billion (down from $2.57 billion at 2011-end), net
receivables of $1.27 billion (up from $1.22 billion) and
available-for-sale investments of $85.3 million (down from $102.8
The company ended the reported quarter with $810.4 million of
outstanding debt (marginally down from $814.6 million at 2011-end),
and assets in excess of payment service obligations of $268.6
million (up from $211.7 million). Free cash flow rose to $38.7
million from $22.9 million in the year-ago quarter, primarily
driven by strong revenue growth and lower interest expense and
Management reiterated its 2012 guidance and expects total
revenue to grow 7-9%, while adjusted EBITDA growth is forecasted in
the band of 9-11%. Including the impact of declining euro against
the U.S. dollar, reported EBITDA is projected within 7-9%. This is
consistent with the company's long-term goals.
During the reported quarter, MoneyGram launched bill payment
top-up capabilities from the U.S. for mobile phone plans in several
countries including Brazil, Panama and Paraguay. The company also
strengthened its ties with Buffalo Community Bank and fortified its
footprint in South Sudan.
Moreover, the company also broadened its network by adding about
1,000 locations in the Spain and strengthened its position as it
began the roll-out of the largest retailer of Portugal -
Continente. Further, the company added 650 locations through four
banks in Pakistan and an additional 3,000 locations in India
through State Bank of India and India Post.
MoneyGram also partnered with First California Bank to improve
its prepaid card services, while consistently building out its
network in Africa including ARB Apex in Ghana and Ecobank in
Earlier this week, MoneyGram's peer
Western Union Co.
) reported second quarter operating earnings of 46 cents per share,
up 2.2% year over year and 3 cents ahead of the Zacks Consensus
Estimate. While consumer-to-consumer revenue segment remained flat,
all other business segment witnessed modest growth
MoneyGram carries a Zacks #3 Rank, which translates into a Hold
rating over the short term. Additionally, we maintain a Neutral
recommendation over the long term.
MONEYGRAM INTL (MGI): Free Stock Analysis
WESTERN UNION (WU): Free Stock Analysis Report
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