MoneyGram International (NYSE:MGI) reported today that in the first quarter of 2009 net income was $11.8 million, global agent network expanded 18 percent year over year and money transfer and bill payment transaction volume increased 4 percent year over year.
The company also announced that it ended the quarter with unrestricted assets of $420.8 million, up from $391.0 million at Dec. 31, 2008.
"MoneyGram remains focused on profitably growing the business through expanded distribution and product innovation," said Pamela H. Patsley, MoneyGram International executive chairman. "During the quarter, we increased our presence in key markets with the signing of M. Lhuillier in the Philippines, which added 1,200 agent locations in the country, and through an important win with Bank of China in Beijing. We also recently announced that we will begin offering MoneyGram services through two key agents in India, Punjab National Bank and Allahabad Bank, which will add nearly 6,000 locations in this important market. In addition, our agreements with NetSpend and Visa are just two examples of our continued efforts to expand our product offerings. Through these agreements, MoneyGram now offers prepaid load capabilities in our 40,000 agent locations across the United States."
First-quarter 2009 total revenue of $279.9 million compares with total revenue of $17.1 million, which includes $307.3 million of net securities losses, in the first quarter of 2008. Total fee and other revenue increased to $268.1 million in the current quarter from $262.8 million in the first quarter of 2008, driven by money transfer fee and other revenue of $242.1 million in the first quarter 2009 versus $236.9 million in the prior period.
Net income of $11.8 million for the first quarter of 2009 compares with a net loss of $360.9 million for the same period in 2008, which included $307.3 million of net securities losses and a $57.0 million loss on swaps related to commissions payable in the official check business as a result of the Company's restructuring initiatives.
EBITDA (earnings before interest, taxes, depreciation and amortization, and amortization of agent signing bonuses) was $62.3 million and Adjusted EBITDA (EBITDA adjusted for net securities gains and severance-related costs) was $65.9 million in the first quarter of 2009 compared with Adjusted EBITDA of $69.5 million in the comparable period last year. The first quarter of 2009 Adjusted EBITDA includes $11.3 million of net investment revenue compared with $21.7 million in the comparable period last year. This decline in net investment revenue is a result of our planned realignment of the investment portfolio and the lower interest rate environment.
Anthony Ryan, MoneyGram International president and chief executive officer, said, "While MoneyGram continues to deliver growth in our core money transfer business, our rate of growth has slowed, reflecting the challenges of the current economic environment. In 2009, we are focused on increasing our market share profitably through strategic network expansion and by offering a compelling value to our consumers across the globe. We will continue to deploy our capital prudently and look for operating efficiencies as we seek to create long-term shareholder value."
Global Funds Transfer Results
Total revenue for the Global Funds Transfer segment increased to $259.7 million in the first quarter of 2009 from $219.0 million in the comparable period last year, which included $44.4 million of net securities losses. Money transfer fee and other revenue including bill payment increased 2 percent, or when adjusted for the change in the value of the euro, increased 5 percent. The segment reported first quarter operating income of $36.7 million and an operating margin of 14.1 percent.
Money transfer transactions including bill payment originated in the United States and Canada increased 5 percent in the first quarter of 2009, while transactions originated internationally (outside of North America) increased 2 percent from the prior year. The continued economic pressures in Spain had a significant impact on our international transaction growth. Excluding Spain, international transactions increased 12 percent from the prior year.
In the first quarter, MoneyGram's transaction volume to Mexico decreased by 2 percent, outperforming the declining industry-wide remittance volume into Mexico as measured by Banco de Mexico, which was down 4 percent during the quarter.
Payment Systems Results
First quarter 2009 net revenue in the Payment Systems segment of $17.9 million includes net investment revenue of $8.4 million. This compares with a net loss of $299.6 million in the first quarter of 2008, which reflects $262.9 million in net securities losses and a $57.0 million loss on swaps. The segment reported operating income of $7.3 million in the first quarter of 2009.
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 and Adjusted EBITDA. The following tables include a full reconciliation of these non-GAAP financial measures to the related GAAP financial measures.
MoneyGram believes these non-GAAP financial measures provide information useful to investors in understanding the underlying operations of the Company and its business and performance trends, as well as in facilitating comparisons with other companies in the money transfer industry. Specifically, MoneyGram believes the exclusion of net securities gains (losses) and valuation loss on embedded derivatives permits evaluation and comparison of results for ongoing business operations. This adjusted view is used by management to internally assess the Company's performance at both a consolidated and segment level, forecast results and allocate resources. Management does not find the GAAP financial measures particularly relevant or useful in evaluating the operating performance of our segments as they do not represent future period recurring costs or are costs outside of the Company's control at this time.
We believe that EBITDA and Adjusted EBITDA provide useful information to investors because they are an indicator of the strength and performance of ongoing business operations, including our ability to fund capital expenditures, acquisitions and operations and to service debt. 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 and Adjusted EBITDA are financial measures used by management in reviewing results of operations, forecasting, assessing cash flow and capital, allocating resources and establishing employee incentive programs.
Although MoneyGram believes the above non-GAAP financial measures enhance investors' understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP financial measures.