MoneyGram International Reports First Quarter 2013 Financial Results
10th consecutive quarter of double-digit money transfer transaction growth
- Money transfer revenue increased 10 percent over the prior year on both a reported and constant currency basis.
-
Money transfer transaction volume increased 11 percent over the prior
year, led by:
-
13 percent growth in U.S. outbound sends on the strength of
U.S.-to-
Mexico sends, which grew 23 percent - 13 percent growth in sends originated outside of the U.S.
- 7 percent growth in U.S.-to-U.S. transactions.
-
13 percent growth in U.S. outbound sends on the strength of
U.S.-to-
- Global agent locations increased 17 percent over the prior year to 321,000.
- Self-service and new channel money transfer revenue grew 31 percent in the quarter, representing 6 percent of money transfer revenue.
- MoneyGram Online money transfer and bill payment transaction volume was up 50 percent and revenue increased 23 percent over the prior year.
-
The Company reported EBITDA of
$19.6 million , which was impacted by:-
$3.2 million of reorganization and restructuring costs -
$3.1 million of stock-based and contingent performance compensation -
$1.1 million of legal expenses related to certain ongoing matters.
-
-
Adjusted EBITDA for the first quarter increased 6 percent to
$72.3 million from$68.4 million in the prior year. In the quarter, adjusted EBITDA margin was 21.2 percent, down from 21.5 percent compared to the same period last year due to a decline in the Financial Paper Products business and lower investment revenue. -
The Company retired its 13.25% second lien Goldman Sachs notes and
refinanced its credit facility during the quarter. As a result, the
Company incurred a pre-tax debt extinguishment charge of
$45.3 million , which resulted in a net loss of$12.6 million . The Company expects to realize annual cash interest savings of approximately$28 million as a result of the refinancing. -
Diluted loss per common share was
$(0.18) , including a negative$0.39 per share impact from the recent debt refinancing, a negative$0.03 per share impact from reorganization and restructuring costs, and a negative$0.03 per share impact from stock-based and contingent performance compensation.
"We are proud to have achieved our tenth consecutive quarter of
double-digit money transfer transaction growth and eighth consecutive
quarter of double-digit money transfer constant currency revenue growth.
The completion of our debt refinancing in the quarter was a true
milestone strengthening our balance sheet and significantly improving
our free cash flow," said
Balance Sheet and Free Cash Flow Items
Market Developments
-
Expanded an agreement with Northgate Gonzalez Markets, a 36-location
supermarket that serves the Hispanic community in southern
California , displacing a niche brand withMoneyGram . -
Signed a strategic partnership with Ukash, a
UK -based e-payments company formed in 2001, enabling customers to initiateMoneyGram money transfers from their websites. Today, Ukash operates across more than 55 countries. -
Renewed and expanded the Company's relationship with
India Post , the largest postal network in the world. -
Signed Correos Chile,
MoneyGram's first post office in theLatin America region. -
Added money transfer and bill payment services and extended the
long-term relationship with
Circle K , the nation's second-largest convenience store chain with 2,900 company-owned stores. -
Launched mobile and ATM money transfer services with
First National Bank (FNB), one of the largest banks inSouth Africa , giving FNB account holders the convenient option of sending and receiving money transfers through their mobile devices and the bank's vast ATM network. -
Network expansion activities during the quarter:
-
Continued to expand network locations in the
Dominican Republic with the signing of Banco Leon, increasingMoneyGram's network to over 850 locations in the country. - Activated nearly 6,000 locations with Payment Center, further expanding into the Russian retail sector.
-
Entered into an agreement with ITG, a well-established exchange
company in
Kuwait . -
Signed Autotrans Andesmar, one of the leading bus companies in
Argentina with 120 locations. -
Activated approximately 1,100 locations in the Indian Subcontinent
with
Supreme Securities andUAE Exchange. -
Opened the first MoneyGram-owned store in
Sweden . -
Expanded the Company's relationship with SM Supermalls in
the Philippines by adding send capabilities to the receive services previously provided.
-
Continued to expand network locations in the
Global Funds Transfer Segment Results
Total revenue for the Global Funds Transfer segment was
During the quarter, money transfer transaction volume increased 11
percent, continuing the Company's double-digit growth trend. Money
Transfer revenue increased to
Money transfer transactions originating outside of the U.S. increased a
robust 13 percent over the prior year. U.S.-to-U.S. money transfer
transaction volume increased 7 percent over the prior year, and U.S.
Outbound transaction volume growth was 13 percent for the quarter led by
U.S.-to-
Bill payment transaction volume decreased 3 percent, while revenue
decreased 6 percent to
Financial Paper Products Segment Results
Total revenue in the Financial Paper Products segment decreased 8
percent to
Outlook
For fiscal year 2013, management continues to estimate constant currency revenue growth of 6 percent to 9 percent and constant currency adjusted EBITDA growth of 3 percent to 6 percent.
Non-GAAP Measures
In addition to results presented in accordance with GAAP, this press release and related tables include certain non-GAAP financial measures, including a presentation of EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization), Adjusted EBITDA (EBITDA adjusted for significant items), Adjusted EBITDA Margin and Free Cash Flow (Adjusted EBITDA less cash interest expense, cash tax expense, cash payments for capital expenditures and agent signing bonuses), and constant currency measures. In addition, we also present Adjusted Operating Income and Adjusted Operating Margin for our two reporting segments. The following tables include a full reconciliation of these non-GAAP financial measures to the related GAAP financial measures.
We believe that these non-GAAP financial measures provide useful
information to investors because they are an indicator of the strength
and performance of ongoing business operations, including our ability to
service debt and fund capital expenditures, acquisitions and operations.
These calculations are commonly used as a basis for investors, analysts
and credit rating agencies to evaluate and compare the operating
performance and value of companies within our industry. In addition, the
Company's debt agreements require compliance with financial measures
based on EBITDA and Adjusted EBITDA. Finally, EBITDA, Adjusted EBITDA,
Adjusted EBITDA Margin, Free Cash Flow, and constant currency figures
are financial measures used by management in reviewing results of
operations, forecasting, assessing cash flow and capital, allocating
resources or establishing employee incentive programs. Although
Description of Tables
Table One — Consolidated Statements of Operations
Table Two —
Segment Results
Table Three — Segment Reconciliations
Table
Four — EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow
Table
Five — Consolidated Balance Sheets
Table Six — Assets in Excess of
Payment Service Obligations
Table Seven — Constant Currency Measures
Conference Call
About
Forward Looking Statements
This release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including
statements with respect to, among other things, the financial condition,
results of operations, plans, objectives, future performance and
business of
TABLE ONE | ||||||||||||
|
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended
|
2013 vs | |||||||||||
(Amounts in millions, except per share data) | 2013 | 2012 | 2012 | |||||||||
REVENUE | ||||||||||||
Fee and other revenue | $ | 337.7 | $ | 314.9 | $ | 22.8 | ||||||
Investment revenue | 2.8 | 3.2 | (0.4 | ) | ||||||||
Total revenue | 340.5 | 318.1 | 22.4 | |||||||||
OPERATING EXPENSES | ||||||||||||
Fee and other commissions expense | 154.3 | 141.9 | 12.4 | |||||||||
Investment commissions expense | 0.1 | 0.1 | — | |||||||||
Total commissions expense | 154.4 | 142.0 | 12.4 | |||||||||
Compensation and benefits | 65.5 | 59.1 | 6.4 | |||||||||
Transaction and operations support | 51.5 | 58.2 | (6.7 | ) | ||||||||
Occupancy, equipment and supplies | 13.0 | 12.2 | 0.8 | |||||||||
Depreciation and amortization | 11.8 | 10.7 | 1.1 | |||||||||
Total operating expenses | 296.2 | 282.2 | 14.0 | |||||||||
OPERATING INCOME | 44.3 | 35.9 | 8.4 | |||||||||
OTHER EXPENSE | ||||||||||||
Interest expense | 17.4 | 17.9 | (0.5 | ) | ||||||||
Debt extinguishment costs | 45.3 | — | 45.3 | |||||||||
Total other expense | 62.7 | 17.9 | 44.8 | |||||||||
(Loss) income before income taxes | (18.4 | ) | 18.0 | (36.4 | ) | |||||||
Income tax (benefit) expense | (5.8 | ) | 7.7 | (13.5 | ) | |||||||
NET (LOSS) INCOME | $ | (12.6 | ) | $ | 10.3 | $ | (22.9 | ) | ||||
(Loss) earnings per common share: | ||||||||||||
Basic | $ | (0.18 | ) | $ | 0.14 | $ | (0.32 | ) | ||||
Diluted | $ | (0.18 | ) | $ | 0.14 | $ | (0.32 | ) | ||||
Shares used in computing (loss) earnings per share: | ||||||||||||
Basic (1) | 71.5 | 71.5 | — | |||||||||
Diluted (1) | 71.5 | 71.6 | (0.1 | ) | ||||||||
(1) Includes common stock equivalents of 13.7 million
for the three months ended |
||||||||||||
Shares related to stock options | 4.6 | 4.8 | ||||||||||
Shares related to restricted stock and restricted stock units | 0.8 | 0.3 |
TABLE TWO | ||||||||||||
|
||||||||||||
SEGMENT RESULTS | ||||||||||||
(Unaudited) | ||||||||||||
Global Funds Transfer | ||||||||||||
Three Months Ended
|
2013 vs | |||||||||||
(Amounts in millions) | 2013 | 2012 | 2012 | |||||||||
Money transfer revenue: | ||||||||||||
Fee and other revenue | $ | 294.3 | $ | 268.3 | $ | 26.0 | ||||||
Investment revenue | 0.1 | 0.2 | (0.1 | ) | ||||||||
Bill payment revenue: | ||||||||||||
Fee and other revenue | 26.0 | 27.6 | (1.6 | ) | ||||||||
Investment revenue | — | — | — | |||||||||
Total revenue | 320.4 | 296.1 | 24.3 | |||||||||
Commissions expense | 153.9 | 141.5 | 12.4 | |||||||||
Operating income | $ | 41.4 | $ | 33.3 | $ | 8.1 | ||||||
Operating margin | 12.9 | % | 11.2 | % | ||||||||
Financial Paper Products | ||||||||||||
Three Months Ended |
2013 vs | |||||||||||
(Amounts in millions) | 2013 | 2012 | 2012 | |||||||||
Money order revenue: | ||||||||||||
Fee and other revenue | $ | 13.2 | $ | 14.4 | $ | (1.2 | ) | |||||
Investment revenue | 0.5 | 0.5 | — | |||||||||
Official check revenue: | ||||||||||||
Fee and other revenue | 4.1 | 4.7 | (0.6 | ) | ||||||||
Investment revenue | 2.1 | 2.1 | — | |||||||||
Total revenue | 19.9 | 21.7 | (1.8 | ) | ||||||||
Commissions expense | 0.5 | 0.5 | — | |||||||||
Operating income | $ | 6.9 | $ | 9.0 | $ | (2.1 | ) | |||||
Operating margin | 34.7 | % | 41.5 | % |
TABLE THREE | ||||||||||||
|
||||||||||||
SEGMENT RECONCILIATIONS | ||||||||||||
(Unaudited) | ||||||||||||
Global Funds Transfer | ||||||||||||
Three Months Ended |
2013 vs | |||||||||||
(Amounts in millions) | 2013 | 2012 | 2012 | |||||||||
Revenue (as reported) | $ | 320.4 | $ | 296.1 | $ | 24.3 | ||||||
Adjusted operating income | $ | 46.6 | $ | 41.8 | $ | 4.8 | ||||||
Reorganization and restructuring costs | (3.0 | ) | (5.3 | ) | 2.3 | |||||||
Stock-based compensation expense | (2.2 | ) | (3.2 | ) | 1.0 | |||||||
Total adjustments | (5.2 | ) | (8.5 | ) | 3.3 | |||||||
Operating income (as reported) | $ | 41.4 | $ | 33.3 | $ | 8.1 | ||||||
Adjusted operating margin | 14.5 | % | 14.1 | % | ||||||||
Total adjustments | (1.6 | )% | (2.9 | )% | ||||||||
Operating margin (as reported) | 12.9 | % | 11.2 | % | ||||||||
Financial Paper Products | ||||||||||||
Three Months Ended |
2013 vs | |||||||||||
(Amounts in millions) | 2013 | 2012 | 2012 | |||||||||
Revenue (as reported) | $ | 19.9 | $ | 21.7 | $ | (1.8 | ) | |||||
Adjusted operating income | $ | 7.5 | $ | 9.9 | $ | (2.4 | ) | |||||
Reorganization and restructuring costs | (0.3 | ) | (0.5 | ) | 0.2 | |||||||
Stock-based compensation expense | (0.3 | ) | (0.4 | ) | 0.1 | |||||||
Total adjustments | (0.6 | ) | (0.9 | ) | 0.3 | |||||||
Operating income (as reported) | $ | 6.9 | $ | 9.0 | $ | (2.1 | ) | |||||
Adjusted operating margin | 37.7 | % | 45.6 | % | ||||||||
Total adjustments | (3.0 | )% | (4.1 | )% | ||||||||
Operating margin (as reported) | 34.7 | % | 41.5 | % |
TABLE FOUR | ||||||||||||
|
||||||||||||
EBITDA, ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN AND FREE CASH FLOW | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended |
2013 vs | |||||||||||
(Amounts in millions) | 2013 | 2012 | 2012 | |||||||||
(Loss) income before income taxes | $ | (18.4 | ) | $ | 18.0 | $ | (36.4 | ) | ||||
Interest expense | 17.4 | 17.9 | (0.5 | ) | ||||||||
Depreciation and amortization | 11.8 | 10.7 | 1.1 | |||||||||
Amortization of agent signing bonuses | 8.8 | 8.4 | 0.4 | |||||||||
EBITDA | 19.6 | 55.0 | (35.4 | ) | ||||||||
Significant items impacting EBITDA: | ||||||||||||
Severance and related costs (1) | — | 0.5 | (0.5 | ) | ||||||||
Reorganization and restructuring costs | 3.2 | 5.8 | (2.6 | ) | ||||||||
Debt extinguishment (2) | 45.3 | — | 45.3 | |||||||||
Stock-based and contingent performance compensation (3) | 3.1 | 3.5 | (0.4 | ) | ||||||||
Legal expenses (4) | 1.1 | 3.6 | (2.5 | ) | ||||||||
Adjusted EBITDA | $ | 72.3 | $ | 68.4 | $ | 3.9 | ||||||
Adjusted EBITDA margin (5) | 21.2 | % | 21.5 | % | (0.3 | )% | ||||||
Foreign currency impact | — | |||||||||||
Adjusted EBITDA, constant currency adjusted | $ | 72.3 | ||||||||||
Prior year Adjusted EBITDA, as reported | $ | 68.4 | ||||||||||
Adjusted EBITDA growth, as reported | 6 | % | ||||||||||
Adjusted EBITDA growth, constant currency adjusted | 6 | % | ||||||||||
Adjusted EBITDA | $ | 72.3 | $ | 68.4 | $ | 3.9 | ||||||
Cash interest expense | (15.6 | ) | (16.5 | ) | 0.9 | |||||||
Cash tax expense | (0.1 | ) | (0.1 | ) | — | |||||||
Cash payments for capital expenditures | (15.2 | ) | (18.6 | ) | 3.4 | |||||||
Cash payments for agent signing bonuses | (8.6 | ) | (4.9 | ) | (3.7 | ) | ||||||
Free |
$ | 32.8 | $ | 28.3 | $ | 4.5 | ||||||
(1) Severance and related costs from executive terminations. | ||||||||||||
(2) Debt extinguishment costs upon the termination of the 2011 Credit Agreement and second lien notes in connection with the 2013 Credit Agreement. | ||||||||||||
(3) Stock-based compensation and one-time contingent performance awards payable after three years based on achievement of revenue growth targets. | ||||||||||||
(4) Legal expenses are primarily in connection with the
settlement related to the |
||||||||||||
(5) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue. |
TABLE FIVE | ||||||||
|
||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
(Amounts in millions, except per share data) |
|
|
||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | — | $ | — | ||||
Cash and cash equivalents (substantially restricted) | 2,430.2 | 2,683.2 | ||||||
Receivables, net (substantially restricted) | 1,170.4 | 1,206.5 | ||||||
Short-term investments (substantially restricted) | 501.9 | 450.1 | ||||||
Available-for-sale investments (substantially restricted) | 56.2 | 63.5 | ||||||
Property and equipment, net | 127.4 | 127.9 | ||||||
Goodwill | 428.7 | 428.7 | ||||||
Other assets | 177.2 | 190.7 | ||||||
Total assets | $ | 4,892.0 | $ | 5,150.6 | ||||
LIABILITIES | ||||||||
Payment service obligations | $ | 3,939.0 | $ | 4,175.4 | ||||
Debt | 849.2 | 809.9 | ||||||
Pension and other postretirement benefits | 126.1 | 126.8 | ||||||
Accounts payable and other liabilities | 149.4 | 199.9 | ||||||
Total liabilities | 5,063.7 | 5,312.0 | ||||||
STOCKHOLDERS' DEFICIT | ||||||||
Participating Convertible Preferred Stock - Series D, |
281.9 | 281.9 | ||||||
Common Stock, |
0.6 | 0.6 | ||||||
Additional paid-in capital | 1,003.7 | 1,001.0 | ||||||
Retained loss | (1,278.5 | ) | (1,265.9 | ) | ||||
Accumulated other comprehensive loss | (52.7 | ) | (52.3 | ) | ||||
Treasury stock: 4,407,038 shares at |
(126.7 | ) | (126.7 | ) | ||||
Total stockholders' deficit | (171.7 | ) | (161.4 | ) | ||||
Total liabilities and stockholders' deficit | $ | 4,892.0 | $ | 5,150.6 |
TABLE SIX | ||||||||||||||||
|
||||||||||||||||
ASSETS IN EXCESS OF PAYMENT SERVICE OBLIGATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(Amounts in millions) |
2013 |
2012 |
2012 |
2012 |
||||||||||||
Cash and cash equivalents | $ | 2,430.2 | $ | 2,683.2 | $ | 2,539.8 | $ | 2,548.3 | ||||||||
Receivables, net | 1,170.4 | 1,206.5 | 1,330.0 | 1,266.9 | ||||||||||||
Short-term investments | 501.9 | 450.1 | 524.4 | 524.1 | ||||||||||||
Available-for-sale investments | 56.2 | 63.5 | 79.9 | 85.3 | ||||||||||||
4,158.7 | 4,403.3 | 4,474.1 | 4,424.6 | |||||||||||||
Payment service obligations | (3,939.0 | ) | (4,175.4 | ) | (4,208.0 | ) | (4,156.0 | ) | ||||||||
Assets in excess of payment service obligations | $ | 219.7 | $ | 227.9 | $ | 266.1 | $ | 268.6 |
TABLE SEVEN | ||||
|
||||
CONSTANT CURRENCY MEASURES | ||||
(Unaudited) | ||||
Three Months Ended |
||||
(Amounts in millions) | 2013 | |||
Total revenue, as reported (GAAP) | $ | 340.5 | ||
Foreign currency impact | (0.1 | ) | ||
Total revenue, constant currency adjusted | $ | 340.4 | ||
Prior period total revenue, as reported (GAAP) | $ | 318.1 | ||
Total revenue growth, as reported (GAAP) | 7 | % | ||
Total revenue growth, constant currency adjusted | 7 | % | ||
Three Months Ended |
||||
(Amounts in millions) | 2013 | |||
Money transfer revenue, as reported (GAAP) | $ | 294.4 | ||
Foreign currency impact | (0.1 | ) | ||
Money transfer revenue, constant currency adjusted | $ | 294.3 | ||
Prior period money transfer revenue, as reported (GAAP) | $ | 268.5 | ||
Money transfer revenue growth, as reported (GAAP) | 10 | % | ||
Money transfer revenue change, constant currency adjusted | 10 | % |
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