MGI

Moneygram International, Inc. (MGI)

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MoneyGram International, Inc. (MGI)

JPMorgan Global Technology, Media and Telecom Conference Call

May 14, 2013 2:10 pm ET

Executives

Pamela H. Patsley – Chairman and Chief Executive Officer

W. Alexander Holmes – Executive Vice President and Chief Financial Officer

Analysts

Tien-tsin Huang – JPMorgan Securities LLC

Presentation

Operator

Tien-tsin Huang – JPMorgan Securities LLC

My name is Tien-tsin Huang. I cover Computer Services & IT Consulting. And so, trying to advertise the iPad app again, please if you have questions, we can go through this as a question portal, I have this in front of me. So if you have any questions for this session or the future, please do say questions that way.

So next up the dial, we’ve got MoneyGram, it’s been a – the money transfer service provider, taking share in a lot of the core markets. Very happy to have Pam Patsley, Chairman and CEO of the company, also Alex Holmes, CFO is here. Same format, I’ll do fireside chat, and then definitely give the audience a chance to ask questions.

But maybe I’ll just kick it off, and just ask you the big inventory question about what you’re seeing on the ground in terms of macro trends. What’s strong, what’s weaker than expected? Then maybe we can dig into the business further from there.

Pamela H. Patsley

Sure, thanks, Tien-tsin and great to be with every one today. I think from the macro trend, we are generally encouraged by what we see, certainly not a decelerating economy anywhere, modestly improving in a lot of places. we’d say Europe is probably where we still see the most softness. Europe is weak from an employment and as we’ve talked a lot of people try and put, our associate money transfers successor volume with maybe construction start or different things like that, I think world over the best measure is really just employment. And so on that aspect, Europe remains weak. But the industry and the World Bank numbers are very good. They continue to project solid mid single-digit growth, 6%, 7%. MoneyGram has continued to outgrow almost, if not, always by 2x the industry. And so on all those aspects, we are very encouraged.

Tien-tsin Huang – JPMorgan Securities LLC

So who you’re taking share from to grow above market? You’ve been doing this obviously for sometime.

Pamela H. Patsley

Yeah.

Tien-tsin Huang – JPMorgan Securities LLC

I think your network has been expanding quite rapidly, but what would you rank in terms of the biggest factors for your share gains?

Pamela H. Patsley

Well, I always like to think it’s focused at the heart of it and good executions. But we are in an interesting and dynamic industry. So you start with an industry that’s growing mid single-digit and you start with the fact that MoneyGram is the second largest in the industry and yet has only 5% market share, and the largest has 15%. so between and one and two player, you are just right at 20%, 21%. We’re getting close to 6% at MoneyGram. So highly fragmented, lots of white space from informal channels, fragmented in terms of regionally niche players, very quarter specific, it might just be southern California to certain states of Mexico or a city in Mexico, just one region of Spain to maybe Ecuador, and then you have some regional players around the world and then banks. And I would say we are taking share from all the market also grows.

Tien-tsin Huang – JPMorgan Securities LLC

Right. So speaking about the market growth, in general, in the World Bank data that you threw out there, can you just quickly comment on migration trends, and I might get this question a lot, we’ve been in the industry a long time especially with the First Data when you have Western Union, we saw the growth in the double-digits comfortably, migration was very positive. Where are we now with migration trends, especially with this whole nationalism theme and austerity plans you mentioned in Europe, what’s going on now?

Pamela H. Patsley

I think you can have all those kind of policy discussions. I don’t know if you want to say they are in the periphery, they are in the background or whatever. But the facts are Europe, in particular, since you call that out, has an aging population, a very low birth rate. And to maintain their GDP, let alone grow it, they have to have a robust guest worker program. And what has really been fascinating about our industry, I love the inside glimpse we get and just how resilient our consumer is. As we all know, Spain has been suffering probably with leading edge of those in Europe with some of the worst unemployment.

And we have seen over the last few years where Spain to Romania three or four or five years ago was so robust, we are seeing a lot more Romania to Spain most interesting, so family member sending back home. We are seeing the Romanians move to Germany, to the UK. So our consumer moves around when it is incumbent on them to provide for work for their family and quite honestly we even see that in the U.S. families maybe not following the wage earner if they can get jobs in North or South Dakota or in Canada in the oil fields and they need send money home to the Midwest to wherever.

Tien-tsin Huang – JPMorgan Securities LLC

Read the rest of this transcript for free on seekingalpha.com