MoneyGram International Reports Fourth Quarter and Full-Year 2021 Results
Fourth Quarter Business Highlights
"Our strong fourth quarter results represent a great finish to a remarkable year. Results were driven by the continued execution of our digital-first strategy, a record-breaking holiday season for our digital business, and resilience of our retail partners in many markets," said Alex Holmes MoneyGram Chairman and CEO. "2021 was a record year for the company as we achieved a number of strategic milestones, including significantly improving our capital structure, launching new product capabilities and innovative partnerships, and growing the digital business to an impressive
Money Transfer highlights for the quarter include the following:
• Total Money Transfer revenue was |
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◦ Total Money Transfer transactions grew 5% compared to the prior year and increased 16% compared to the fourth quarter of 2019 |
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◦ Total Money Transfer transactions and volume hit record highs for the fourth quarter of 2021 and new records for full-year 2021 |
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• MGO continued its strong financial performance in the fourth quarter, a record quarter for revenue, transactions and volume |
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◦ Total MGO Money Transfer revenue increased to |
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◦ Year-over-year, MGO cross-border online revenue continued to grow at an accelerated pace increasing 36% with transactions growing 36% |
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◦ Active cross-border customer growth continued its strong momentum increasing 28% year-over-year |
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◦ In six countries, MGO transactions now represent over 50% of their respective country's total money transfer transactions |
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• Total digital, which includes MGO, digital partners and digital receives, continued its robust performance reporting year-over-year transaction growth of 29% in the fourth quarter |
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◦ Digital revenue reached an all-time high of |
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◦ Digital partnership transactions delivered a solid 21% year-over-year growth rate |
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◦ Transactions received into accounts, cards and mobile wallets increased 48% year-over-year |
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• Digital transactions accounted for 35% of all money transfer transactions at the end of the fourth quarter |
Fourth Quarter Financial Results, Year-Over-Year
• Total revenue of $324.6 million was a slight increase on a reported basis or an increase of 1% on a constant currency basis |
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◦ Money transfer revenue was |
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◦ Investment revenue was |
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• Gross Profit was |
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• Total operating expenses were |
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◦ Transaction and Operations Support expenses increased |
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▪ The absence of the |
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▪ A |
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◦ Compensation and Benefits was |
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• Operating Income was |
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• Net Income of |
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• Diluted earnings per share was |
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• Diluted adjusted earnings per share was |
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• Adjusted EBITDA decreased 6% to |
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◦ Adjusted EBITDA, excluding the |
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• Adjusted Free Cash Flow was |
Full-Year Financial Results, Year-Over-Year
• Total revenue of |
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◦ Money transfer revenue was |
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◦ Investment revenue was |
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• Gross Profit was |
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• Total operating expenses were |
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◦ Transaction and Operations Support expenses increased |
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▪ The absence of the |
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▪ The absence of the |
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▪ A |
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◦ Compensation and Benefits was |
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• Operating Income was |
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• Net loss of |
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• Diluted loss per share was |
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• Diluted adjusted earnings per share was |
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• Adjusted EBITDA decreased 8% to |
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◦ Adjusted EBITDA, excluding the |
Holmes concluded, "Our disciplined focus on customer acquisition, cross-border payments innovation, and customer experience enhancements are reflected in the results and remain fundamental to our growth strategy in the exciting year ahead."
Balance Sheet and Liquidity
• Cash and cash equivalents were |
• Fourth quarter interest expense was |
• Capital expenditures were |
Recent Updates
As recently announced,
The transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including approval by
About
Forward-Looking Statements
This communication contains forward-looking statements which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect
These risks and uncertainties include, but are not limited to:
- the impact of the COVID-19 pandemic or future pandemics on our business, including the potential work stoppages, lockdowns, shelter-in-place, or restricted movement guidelines, service delays and lower consumer and commercial activity;
- our ability to compete effectively;
- our ability to maintain key agent or biller relationships, or a reduction in business or transaction volume from these relationships, including with our largest agent, Walmart, through its introduction of additional competing white label money transfer products or otherwise;
- our ability to continue to grow our Digital Channel, including through our direct-to-consumer digital business, MoneyGram Online;
- a security or privacy breach in systems, networks or databases on which we rely;
- current and proposed regulations addressing consumer privacy and data use and security;
- our ability to manage fraud risks from consumers or agents;
- the ability of us and our agents to comply with
U.S. and international laws and regulations; - litigation and regulatory proceedings involving us or our agents and other commercial relationships, which could result in material settlements, fines or penalties, revocation of required licenses or registrations, termination of contracts, other administrative actions or lawsuits and negative publicity;
- disruptions to our computer systems and data centers and our ability to effectively operate and adapt our technology;
- the ability of us and our agents to maintain adequate banking relationships;
- our ability to successfully develop and timely introduce new and enhanced products and services and our investments in new products, services or infrastructure changes;
- our high degree of leverage and substantial debt service obligations, significant debt covenant requirements and our ability to comply with such requirements;
- our below investment-grade credit rating;
- our ability to maintain sufficient capital;
- weakness in economic conditions, in both the
U.S. and global markets; - the financial health of certain European countries or the secession of a country from the
European Union ; - a significant change, material slow down or complete disruption of international migration patterns;
- our ability to manage risks associated with our international sales and operations, including exchange rates among currencies;
- our offering of money transfer services through agents in regions that are politically volatile or, in a limited number of cases, that may be subject to certain OFAC restrictions;
- major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions;
- changes in tax laws or unfavorable outcomes of tax positions we take, or a failure by us to establish adequate reserves for tax events;
- our ability to manage credit risks from our agents and official check financial institution customers;
- our ability to adequately protect our brand and intellectual property rights and to avoid infringing on the rights of others;
- our ability to manage risks related to the operation of retail locations and the acquisition or start-up of businesses;
- any restructuring actions and cost reduction initiatives that we undertake may not deliver the expected results and these actions may adversely affect our business;
- our capital structure;
- risks relating to the proposed Merger (as defined in the form 8-K filed on
February 15, 2022 ), including the possibility that the consummation of the Merger could be delayed or not completed, and the effect of announcement or pendency of the Merger on our business; and - the risks and uncertainties described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of
MoneyGram's public period reports filed with theU.S. Securities and Exchange Commission (theSEC ), includingMoneyGram's annual report on Form 10-K for the year endedDecember 31, 2020 , and subsequent quarterly reports on Form 10-Q.
Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in
Non-GAAP Measures
In addition to results presented in accordance with accounting principles generally accepted in
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. These calculations are commonly used as a basis for investors, analysts and other interested parties to evaluate and compare the operating performance and value of companies within our industry. Finally, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Free Cash Flow, constant currency, diluted adjusted income (loss) per share and adjusted net income (loss) figures are financial and performance measures used by management in reviewing results of operations, forecasting, allocating resources or establishing employee incentive programs. Although
Description of Tables
Table One |
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Condensed Consolidated Statements of Operations |
Table Two |
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Segment Results |
Table Three |
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Reconciliation of Certain Non-GAAP Measures to Relevant GAAP Measures - |
Table Four |
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Reconciliation of Certain Non-GAAP Measures to Relevant GAAP Measures - |
Table Five |
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Condensed Consolidated Balance Sheets |
Table Six |
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Condensed Consolidated Statements of Cash Flows |
CONTACTS |
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Investor Relations: |
Media Relations: |
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214-979-1400 |
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TABLE ONE |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Unaudited) |
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(Amounts in millions, except percentages and per share data) |
Three Months Ended |
2021 vs |
Year Ended |
2021 vs |
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2021 |
2020 |
2020 |
2021 |
2020 |
2020 |
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REVENUE |
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Fee and other revenue |
$ 322.7 |
$ 320.7 |
$ 2.0 |
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$ 78.6 |
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Investment revenue |
1.9 |
2.6 |
(0.7) |
7.8 |
20.0 |
(12.2) |
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Total revenue |
324.6 |
323.3 |
1.3 |
1,283.6 |
1,217.2 |
66.4 |
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Total revenue change, as reported |
—% |
—% |
5% |
(5)% |
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Total revenue change, constant currency |
1% |
(2)% |
4% |
(6)% |
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COST OF REVENUE |
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Commissions and other fee expense |
156.9 |
157.7 |
(0.8) |
622.7 |
603.6 |
19.1 |
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Investment commissions expense |
0.2 |
0.2 |
— |
0.9 |
3.6 |
(2.7) |
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Direct transaction expense |
13.5 |
13.3 |
0.2 |
60.5 |
45.8 |
14.7 |
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Total cost of revenue |
170.6 |
171.2 |
(0.6) |
684.1 |
653.0 |
31.1 |
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GROSS PROFIT |
154.0 |
152.1 |
1.9 |
599.5 |
564.2 |
35.3 |
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OPERATING EXPENSES |
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Compensation and benefits |
52.8 |
60.9 |
(8.1) |
227.8 |
223.8 |
4.0 |
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Transaction and operations support (1) |
56.3 |
28.0 |
28.3 |
179.1 |
111.6 |
67.5 |
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Occupancy, equipment and supplies |
14.8 |
16.7 |
(1.9) |
61.9 |
61.4 |
0.5 |
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Depreciation and amortization |
13.5 |
15.2 |
(1.7) |
57.0 |
64.4 |
(7.4) |
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Total operating expenses |
137.4 |
120.8 |
16.6 |
525.8 |
461.2 |
64.6 |
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OPERATING INCOME |
16.6 |
31.3 |
(14.7) |
73.7 |
103.0 |
(29.3) |
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Other expenses |
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Interest expense |
11.7 |
22.9 |
(11.2) |
69.5 |
92.4 |
(22.9) |
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Loss on early extinguishment of debt |
0.2 |
— |
0.2 |
44.1 |
— |
44.1 |
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Other non-operating expense |
0.9 |
1.1 |
(0.2) |
3.7 |
4.5 |
(0.8) |
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Total other expenses |
12.8 |
24.0 |
(11.2) |
117.3 |
96.9 |
20.4 |
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Income (loss) before income taxes |
3.8 |
7.3 |
(3.5) |
(43.6) |
6.1 |
(49.7) |
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Income tax (benefit) expense |
(0.4) |
— |
(0.4) |
(5.7) |
14.0 |
(19.7) |
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NET INCOME (LOSS) |
$ 4.2 |
$ 7.3 |
$ (3.1) |
$ (37.9) |
$ (7.9) |
$ (30.0) |
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EARNINGS (LOSS) PER COMMON SHARE |
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Basic |
$ 0.04 |
$ 0.09 |
$ (0.05) |
$ (0.42) |
$ (0.10) |
$ (0.32) |
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Diluted |
$ 0.04 |
$ 0.08 |
$ (0.04) |
$ (0.42) |
$ (0.10) |
$ (0.32) |
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Weighted-average outstanding common shares and equivalents used in computing (loss) earnings per share |
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Basic |
95.6 |
77.9 |
17.7 |
89.7 |
77.8 |
11.9 |
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Diluted |
99.6 |
88.8 |
10.8 |
89.7 |
77.8 |
11.9 |
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(1) The year ended |
TABLE TWO |
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SEGMENT RESULTS |
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(Unaudited) |
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Global Funds Transfer |
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(Amounts in millions, except percentages) |
Three Months Ended |
2021 vs |
Year Ended |
2021 vs |
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2021 |
2020 |
2020 |
2021 |
2020 |
2020 |
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Money transfer revenue |
$ 301.9 |
$ 298.1 |
$ 3.8 |
$ 1,188.3 |
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$ 83.6 |
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Bill payment revenue |
9.4 |
11.0 |
(1.6) |
40.5 |
46.2 |
(5.7) |
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Total revenue |
$ 311.3 |
$ 309.1 |
$ 2.2 |
$ 1,228.8 |
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$ 77.9 |
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Cost of revenue |
$ 170.4 |
$ 171.0 |
$ (0.6) |
$ 683.2 |
$ 649.3 |
$ 33.9 |
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Gross profit |
$ 140.9 |
$ 138.1 |
$ 2.8 |
$ 545.6 |
$ 501.6 |
$ 44.0 |
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Money transfer revenue change, as reported |
1% |
4% |
8% |
(2)% |
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Money transfer revenue change, constant currency |
2% |
2% |
6% |
(2)% |
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Financial Paper Products |
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(Amounts in millions, except percentages) |
Three Months Ended |
2021 vs |
Year Ended |
2021 vs |
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2021 |
2020 |
2020 |
2021 |
2020 |
2020 |
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Money order revenue |
$ 9.9 |
$ 10.1 |
$ (0.2) |
$ 40.9 |
$ 43.4 |
$ (2.5) |
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Official check revenue |
3.4 |
4.1 |
(0.7) |
13.9 |
22.9 |
(9.0) |
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Total revenue |
$ 13.3 |
$ 14.2 |
$ (0.9) |
$ 54.8 |
$ 66.3 |
$ (11.5) |
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Investment commissions expense |
$ 0.2 |
$ 0.3 |
$ (0.1) |
$ 0.9 |
$ 3.7 |
$ (2.8) |
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Gross profit (1) |
$ 13.1 |
$ 13.9 |
$ (0.8) |
$ 53.9 |
$ 62.6 |
$ (8.7) |
(1) In periods of extremely low interest rates, it is possible for commissions to be close to zero, resulting in abnormally high gross margin. |
TABLE THREE |
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RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO RELEVANT GAAP MEASURES |
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EBITDA, ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN AND ADJUSTED FREE CASH FLOW |
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(Unaudited) |
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(Amounts in millions, except percentages) |
Three Months Ended |
2021 vs |
Year Ended |
2021 vs |
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2021 |
2020 |
2020 |
2021 |
2020 |
2020 |
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(Loss) income before income taxes |
$ 3.8 |
$ 7.3 |
$ (3.5) |
$ (43.6) |
$ 6.1 |
$ (49.7) |
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Interest expense |
11.7 |
22.9 |
(11.2) |
69.5 |
92.4 |
(22.9) |
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Depreciation and amortization |
13.5 |
15.2 |
(1.7) |
57.0 |
64.4 |
(7.4) |
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Signing bonus amortization |
13.6 |
14.8 |
(1.2) |
56.4 |
54.5 |
1.9 |
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EBITDA |
42.6 |
60.2 |
(17.6) |
139.3 |
217.4 |
(78.1) |
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Significant items impacting EBITDA: |
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Legal and contingent matters |
14.0 |
— |
14.0 |
14.1 |
0.6 |
13.5 |
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Stock-based, contingent and incentive compensation |
2.4 |
1.5 |
0.9 |
7.3 |
6.6 |
0.7 |
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Restructuring and reorganization costs |
1.1 |
— |
1.1 |
9.4 |
1.0 |
8.4 |
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Compliance enhancement program |
0.7 |
0.7 |
— |
2.9 |
4.4 |
(1.5) |
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Direct monitor costs |
— |
2.1 |
(2.1) |
4.9 |
11.0 |
(6.1) |
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Loss on early extinguishment of debt |
0.2 |
— |
0.2 |
44.1 |
— |
44.1 |
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Severance and related costs |
— |
0.1 |
(0.1) |
0.2 |
0.3 |
(0.1) |
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Adjusted EBITDA |
$ 61.0 |
$ 64.6 |
$ (3.6) |
$ 222.2 |
$ 241.3 |
$ (19.1) |
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Adjusted EBITDA margin (1) |
18.8% |
20.0% |
(1.2)% |
17.3% |
19.8% |
(2.5)% |
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Adjusted EBITDA change, as reported |
(6)% |
(8)% |
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Adjusted EBITDA change, constant currency adjusted |
(4)% |
(12)% |
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Adjusted EBITDA |
$ 61.0 |
$ 64.6 |
$ (3.6) |
$ 222.2 |
$ 241.3 |
$ (19.1) |
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Cash payments for interest |
(5.2) |
(19.9) |
14.7 |
(51.8) |
(77.5) |
25.7 |
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Cash (payments) refunds for taxes, net |
(5.2) |
(1.5) |
(3.7) |
(5.7) |
1.8 |
(7.5) |
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Cash payments for capital expenditures |
(10.0) |
(10.2) |
0.2 |
(41.4) |
(40.8) |
(0.6) |
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Cash payments for agent signing bonuses |
(9.8) |
(13.7) |
3.9 |
(36.0) |
(58.7) |
22.7 |
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Adjusted Free Cash Flow |
$ 30.8 |
$ 19.3 |
$ 11.5 |
$ 87.3 |
$ 66.1 |
$ 21.2 |
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(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue. |
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TABLE FOUR |
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RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO RELEVANT GAAP MEASURES |
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ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS |
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(Unaudited) |
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Three Months Ended |
Year Ended |
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(Amounts in millions, except per share data) |
2021 |
2020 |
2021 |
2020 |
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Net income (loss) |
$ 4.2 |
$ 7.3 |
$ (37.9) |
$ (7.9) |
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Total adjustments (1) |
18.4 |
4.4 |
82.9 |
23.9 |
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Tax impacts of adjustments (2) |
(1.0) |
(1.0) |
(15.9) |
(5.5) |
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Valuation allowance (3) |
0.2 |
— |
1.2 |
11.3 |
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Adjusted net income |
$ 21.8 |
$ 10.7 |
$ 30.3 |
$ 21.8 |
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Diluted earnings (loss) per common share |
$ 0.04 |
$ 0.08 |
$ (0.42) |
$ (0.10) |
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Diluted adjustments per common share |
0.18 |
0.04 |
0.76 |
0.38 |
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Diluted adjusted earnings per common share |
$ 0.22 |
$ 0.12 |
$ 0.34 |
$ 0.28 |
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Diluted weighted-average outstanding common shares and equivalents |
99.6 |
88.8 |
89.7 |
77.8 |
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(1) See summary of adjustments in Table Three - EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Free Cash Flow. |
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(2) Tax rates used to calculate the tax expense impact are based on the nature and jurisdiction of each adjustment. |
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(3) Valuation allowance recorded for deferred tax assets existing at the beginning of the year. |
TABLE FIVE |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Unaudited) |
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(Amounts in millions, except share data) |
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ASSETS |
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Cash and cash equivalents |
$ 155.2 |
$ 196.1 |
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Settlement assets |
3,591.4 |
3,702.9 |
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Property and equipment, net |
133.9 |
148.1 |
||
|
442.2 |
442.2 |
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Right-of-use assets |
52.6 |
55.1 |
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Other assets |
101.2 |
129.7 |
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Total assets |
$ 4,476.5 |
$ 4,674.1 |
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LIABILITIES |
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Payment service obligations |
$ 3,591.4 |
$ 3,702.9 |
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Debt, net |
786.7 |
857.8 |
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Pension and other postretirement benefits |
67.1 |
74.5 |
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Lease liabilities |
56.3 |
59.1 |
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Accounts payable and other liabilities |
160.0 |
216.8 |
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Total liabilities |
4,661.5 |
4,911.1 |
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STOCKHOLDERS' DEFICIT |
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Common stock, |
0.9 |
0.7 |
||
Additional paid-in capital |
1,400.3 |
1,296.0 |
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Retained loss |
(1,513.4) |
(1,475.3) |
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Accumulated other comprehensive loss |
(62.8) |
(58.4) |
||
|
(10.0) |
— |
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Total stockholders' deficit |
(185.0) |
(237.0) |
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Total liabilities and stockholders' deficit |
$ 4,476.5 |
$ 4,674.1 |
TABLE SIX |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(Unaudited) |
||||
Year Ended |
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(Amounts in millions) |
2021 |
2020(1) |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
$ (37.9) |
$ (7.9) |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
75.0 |
104.7 |
||
Net cash provided by operating activities |
37.1 |
96.8 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Payments for capital expenditures |
(41.4) |
(40.8) |
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Proceeds from available-for-sale investments |
0.8 |
0.7 |
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Purchases of interest-bearing investments |
(768.0) |
(541.6) |
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Proceeds from interest-bearing investments |
766.6 |
537.1 |
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Purchase of equity investments |
(5.0) |
— |
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Sale of equity investments |
2.5 |
— |
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Net cash (used in) provided by investing activities |
(44.5) |
(44.6) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Transaction costs for issuance and amendment of debt |
(6.6) |
— |
||
Proceeds from issuance of debt |
807.8 |
— |
||
Principal payments on debt |
(905.9) |
(6.5) |
||
Prepayment call premium |
(16.5) |
— |
||
Proceeds from revolving credit facility |
— |
23.0 |
||
Payments on revolving credit facility |
— |
(23.0) |
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Change in receivables, net |
124.6 |
(109.5) |
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Change in payment service obligations |
(111.5) |
465.9 |
||
Net proceeds from stock issuance |
97.1 |
— |
||
Stock repurchases |
(6.2) |
— |
||
Payments to tax authorities for stock-based compensation |
(3.8) |
(0.7) |
||
Net cash (used in) provided by financing activities |
(21.0) |
349.2 |
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NET CHANGE IN CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS |
(28.4) |
401.4 |
||
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS—Beginning of year |
2,079.3 |
1,677.9 |
||
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS—End of year |
$ 2,050.9 |
$ 2,079.3 |
(1) The Company restated its Consolidated Statements of Cash Flows presentation to include settlement cash and cash equivalents as a component of total cash and cash equivalents. |
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