Moneygram International, Inc. (MGI)

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MoneyGram International, Inc. (MGI)

Bank of America Merrill Lynch Leveraged Finance Conference

December 5, 2012, 10:10 AM ET


Larry Angelilli – Treasurer

Eric Dutcher - Director of Investor Relations




Investor presentation, with us we have Larry Angelilli, Treasurer and also Eric Dutcher, Director of Investor Relations. We’ll do a brief presentation either followed by Q&A or please feel free to ask Q&A as we go along especially if your schedules don’t permit, so please feel free.

Larry Angelilli

Thanks for joining us on the meeting on the last day. Just a little history, one of the things that I wanted to do today is since we are a relatively new name, we have some bonds that are in the term of remarket that are traded privately. So, we’ve got a little history here and a little bit about the company and then as Sam said we can keep this pretty informal, if you have questions as I am going along let’s do it that way. We are headquartered in Dallas. We had revenue of $1.25 billion last year. One of the things about the company is that the money transfer is now 83% of our revenue that is a change from our past where we had a significant part of our revenue as part of the investment income and also we are a big player in the cashier’s check and money order business, but now the strategy of the company really is to be a global player in the money transfer market.

We are 29% public and we are 70% owned by two private equity funds Thomas H. Lee Partners and Goldman Sachs. Last year was a very or this year I guess has been a very significant year for the company. As many of you may know, we settled with the U.S. Department of Justice recently on a fraud and scam claim that was made for a activity that was done between 2002 and the end of 2008, that was the legacy company prior to our current management and also our current strategy, but the investigation related to that era and we settled with the government for a $100 million payable over the next 3 months.

We also announced that we have an agreement with Walmart, we extended our agreement with Walmart under basically the same terms. Walmart is our largest customer and we have extended it through March 2016 and it has annual renewal options in it as well. Bank of America is one of the largest check cashing and it is actually up on and small loan business. We expanded our relationship and renewed it with them. We announced our agreement with PayPal where we will be initiating service with PayPal where you can use cash to increase your PayPal account and then ultimately where you can withdraw from PayPal using the MoneyGram network and receive cash which is a technology that they currently do not have today.

We entered into agreement with Gemalto, this is entering the mobile space where we can receive transfers on to your mobile wallet through the MoneyGram network and then we established an agreement with Payment Center which was a major entry for us into the emerging and growing Russian market. From an interim quarterly perspective, where our revenues for the year-to-date third quarter $986.8 million up 7% from last year. Our EBITDA was influenced by the settlement that we made with the government, if you factor that out and what we call adjusted EBITDA we had $207 million in EBITDA or adjusted EBITDA year-to-date of 5% from last year, free cash flow $91.5 million year-to-date.

This is one of the most important aspects of the company is the growth of the agent network. There is really two people in the space that provides the same service, Western Union and MoneyGram provide what is known as a [ph] will call service where you can send money and receive money anywhere in the world within 10 minutes in any location within that country, that is unique to this industry and so the importance of your agent network is paramount because convenience is one of the most important factors when you are doing a transfer that is done within this short of time period. We got up to 293,000 agent locations in the world in the third quarter, up 15% from last year, that is the basis for which growth will be predicated. The ability to send money and receive money on a global basis on a convenient basis is where our growth is common, it is really the engine for revenue and cash flow in the future. You can also see that it is paying dividends where our transaction volume is also up 13%, this is in global recession we are attaining double digit growth in our transaction. You can also see that sends originated outside the United States which is the fastest growing and most important growth area for the company was 18%.

When you think about this market, Western Union has been a global player since almost the created this business where MoneyGram until several years ago was really primarily a domestic player that sent money around the world from the United States. Today, almost two thirds of our transactions don’t touch the U.S. dollar or either sent from the United States to a foreign country or never even touch the United States and as you can see sends originated outside the United States was 18% growth rate, so far this year, year-over-year growth and that has translated into revenue growth of 8% and actually our money transfer and other constant currency growth were negatively impacted by the decline in the Euro when we look at things from a nonconstant currency basis, if you take in the constant currency basis, we had a 11% growth.

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