MoneyGram International Inc.
) reported third-quarter 2013 earnings per share of 31 cents,
missing the Zacks Consensus Estimate by a penny but improved 3.3%
year over year.
The year-ago quarter incurred $1.07 cents per share from
reorganization and restructuring costs and legal expenses.
Including this, earnings of 31 cents rebounded from a loss of 77
cents incurred in the year ago quarter.
The year over year improvement came on the back of growth in
money transfer and transaction volume and a solid expense
management. Moreover, all the operating segments performed well
to add to the improvement.
MoneyGram's total revenue for the quarter was $383 million,
reflecting double-digit year-over-year growth of 13.1% and an
improvement of 12% on a constant currency basis. It also
outperformed the Zacks Consensus Estimate of $370 million. Fee
and other revenues increased 11.9% year over year to $375.8
million, whereas investment revenues improved 148.3% to $7.2
MoneyGram's total operating expenses dipped 8.5% year over year
to $334.9 million, while total commission expense increased 17.3%
to $178.7 million. Subsequently, operating income stood at $48.1
million, compared to an operating loss of $27.3 million in the
year-ago quarter. Meanwhile, interest expense decreased 39% from
the prior year to $10 million, reflecting the efficiency from the
recent debt refinancing.
Global Funds Transfer
segment, MoneyGram's revenues grew 13% year over year to $359.5
million. Money transfer transaction volume increased 14%, driven
by higher U.S. outbound sends, growth in sends originated outside
the U.S. and higher U.S.-to-U.S. transactions. Money transfer
revenue surged 15% year over year and 14% on a constant currency
basis to $333.7 million showcasing double-digit growth for the
10th consecutive quarter.
Self-service and new channel money transfer revenues surged 35%,
representing 6% of money transfer revenues. Moreover, MoneyGram
Online money transfer and bill payment transaction volume jumped
46%, while revenues grew 30% over the prior-year quarter.
Further, global agent locations increased 14% over the prior-year
quarter to 334,000. Bill payment transaction volume dipped 1%
year over year, whereas revenues declined 3% to $26.5 million. As
a result, operating margin dipped to 11.3% from 12.4% in the
year-ago quarter owing to higher commission and compliance
expenses. Even adjusted operating margin deteriorated to 12% from
14.2% in the year-ago quarter.
Total money transfer transactions originating outside the U.S.
escalated 14% from the prior-year quarter. Transaction volume to
Mexico increased 34% year over year. Additionally, MoneyGram's
transactions originating in the U.S. increased 8% year over year,
while U.S. outbound transaction increased 20% over the prior-year
Financial Paper Products
segment, MoneyGram's total revenue increased 15% year over year
to $23.3 million, reflecting an increase in investment revenue.
Subsequently, operating margin increased to 45.1% from 36.9% in
the year-ago quarter, despite a 25% fall in the commission
expenses to $0.3 million. Additionally, adjusted operating margin
increased to 46.4% from 39.4% in the year-ago quarter.
As of Sep 30, 2013, MoneyGram had cash and cash equivalents of
$2.2 billion (down from $2.68 billion at 2012-end), net
receivables of $959.7 million (down from $1.21 billion at year
end 2012) and available-for-sale investments of $50.7 million
(down from $63.5 million at 2012-end).
As of Sep 30, 2012, MoneyGram had debt obligations worth $845
million (up from $809.9 million at 2012-end), while assets in
excess of payment service obligations were $309.7 million (up
from $227.9 million at year end 2012).
Free cash flow increased 92.3% year over year to $47.3 million.
The upside was primarily driven by strong improvement in top line
and Earnings before interest, tax, depreciation and amortization
(EBITDA), efficient expense management, and decline in agent
signing bonuses and debt interest payments.
MoneyGram's management reaffirmed the 2013 guidance and expects
total revenue to grow 7-10% on a constant currency basis.
Adjusted EBITDA growth was also reaffirmed in the band of 3-6%.
MoneyGram missed our earnings expectation, but surpassed the
year-ago numbers. However, top line fared well on both counts.
Higher money transfer transaction volumes, higher fee and other
revenues drove the top line, whereas lower operating and interest
expenses supported the bottom line and free cash flow. Strong
free cash flow helped MoneyGram to undertake product launches and
acquisitions that poise the company for long term growth.
Further, MoneyGram has entered into agreements with a number of
players from various industries to expand its network. Of
particular importance in this regard are the contracts with the
Mexican drugstore chain Farmacias Guadalajara, Italian provider
of postal, financial, insurance and mobile telephony solutions
Poste Italiane and U.K.'s independent foreign exchange broker
MoneyCorp, to name a few. All such global expansion initiatives
position MoneyGram to capitalize on the opportunities provided by
various industries and enhance company growth going forward.
MoneyGram currently carries a Zacks Rank #1 (Strong Buy).
Others in the Financial Sector
American Express Co.
) also known as AmEx, reported its third-quarter 2013 operating
earnings per share of $1.25. The result comfortably surpassed
both the Zacks Consensus Estimate of $1.22 and the year-ago
quarter earnings of $1.09 a share.
Among other players in the financial sector
FleetCor Technologies Inc
Portfolio Recovery Associates Inc.
), both carrying a Zacks Rank #2 (Buy) are scheduled to release
their third quarter results shortly.
AMER EXPRESS CO (AXP): Free Stock Analysis
FLEETCOR TECH (FLT): Free Stock Analysis
MONEYGRAM INTL (MGI): Free Stock Analysis
PORTFOLIO RCVRY (PRAA): Free Stock Analysis
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