MoneyGram International (NYSE:MGI), a leading global payment services company, today reported financial results for the third quarter of 2010.
* Money transfer transaction volume increased 9 percent driven by 16 percent growth in non-U.S. sends in the current quarter versus prior year.
* Money transfer fee and other revenue was flat in the third quarter of 2010 versus prior year. On a constant currency basis, money transfer fee and other revenue increased 2 percent versus prior year. The difference between transaction growth and constant currency revenue growth is due to lower revenue per transaction primarily related to the continuation of the $50 price band in the United States.
* Global agent locations increased 11 percent over the prior year quarter to 207,000.
* Total revenue in the third quarter declined 4 percent to $292.9 million, compared with $304.5 million in the same period last year. Total fee and other revenue declined 2 percent to $288.5 million, from $294.9 million in the same period last year. Total revenue in 2010 reflects investment revenue and net securities gains that were $5.2 million less than third quarter 2009.
* Net income for the quarter was $10.0 million and EBITDA was $57.3 million. Both net income and EBITDA were impacted by $7.2 million of stock-based compensation, $1.8 million of legal accruals primarily related to various shareholder litigation matters, and $1.6 million of restructuring and reorganization costs. Net income was also impacted by a $1.6 million write off of deferred financing costs and debt discount related to a $30.0 million debt prepayment in the quarter.
* Adjusted EBITDA for the quarter was $68.0 million versus $66.6 million in the prior year. Third quarter 2010 Adjusted EBITDA reflects lower net investment revenue of $2.3 million compared with the same period in 2009. Adjusted EBITDA margin was 23.2 percent in the third quarter of 2010, compared with 22.1 percent in the same period last year.
"MoneyGram delivered solid financial performance in the third quarter," said Pamela H. Patsley, MoneyGram chairman and chief executive officer. "We saw continued strength in our core money transfer business, made important investments in our global brand, and increased our capabilities through expanded relationships around the world. Additionally, we increased margin across the business through efficiency gains and expense management initiatives and improved our capital structure by paying down an additional $30 million in outstanding debt."
Balance Sheet Items
During the quarter, MoneyGram prepaid $30 million on its Senior Tranche B Loan under its Senior Facility. Including this payment, the Company has paid down $277 million, or 28 percent, of its debt since Jan.1, 2009. The Company ended the quarter with $716.3 million in outstanding debt principal and assets in excess of payment service obligations of $290.4 million.
The Company continued its focus on enhancing its product offerings and expanding its agent network. MoneyGram recently:
* Announced a long-term sponsorship agreement with the International Cricket Council (ICC), providing MoneyGram a presence at all the major ICC cricket tournaments around the world during 2011-2015. MoneyGram will be a local partner sponsor for the 2011 ICC World Cup, which takes place in Bangladesh, India and Sri Lanka from Feb. 19 to April 2, 2011.
* Teamed with Univision to become a reload partner, enabling Univision MasterCard® Prepaid cardholders the ability to load their cards at any MoneyGram agent location in the U.S.
* Renewed a multi-year contract extension with the United Kingdom Post Office (UKPO) to continue providing MoneyGram money transfer services in the UKPO's 12,000 convenient branch locations throughout the U.K.
* Announced a global alliance with Ceridian Stored Value Solutions, a premier provider of global prepaid services, to develop MoneyGram's in-lane prepaid money transfer product that will be available in up to 40 countries around the world.
* Expanded our presence in the Arabian Gulf region through an agreement with BFC Group Holdings, to provide money transfer services in Bahrain and Kuwait through its subsidiaries Bahrain Financing Company and Bahrain Exchange Company.
* Added Vijaya Bank in India, bringing MoneyGram's money transfer services to nearly 1,200 branch locations in India. Further expanded our presence in this key remittance country with the rollout of an additional 1,800 locations through existing agents Punjab National Bank, State Bank of Hyderabad and United Bank of India. This brings our total locations in India to more than 26,000.
* Announced an agreement with BillingTree, a leading on-demand payment processor, to provide same-day, cash payment services at MoneyGram's agent locations nationwide under the brand name BillingTree PaynCash.
* Continued our expansion with Bank of China with the roll out of MoneyGram's services at nearly 1,400 Bank of China branch locations in Jiangsu and Zhejiang provinces.
Global Funds Transfer Segment Results
Total revenue for the Global Funds Transfer segment decreased 1 percent to $266.2 million in the third quarter of 2010 compared with $268.1 million in the third quarter of 2009. The segment reported operating income of $36.5 million and an operating margin of 13.7 percent in the third quarter of 2010. Adjusted operating margin was 16.0 percent in the quarter.
Money transfer transaction volume increased 9 percent, with fee and other revenue flat at $235.0 million in the third quarter of 2010 and 2009. On a constant currency basis, money transfer fee and other revenue improved 2 percent. The difference between transaction growth and constant currency revenue growth is due to lower revenue per transaction primarily related to the continuation of the $50 price band in the United States.
In the third quarter, money transfer transactions originating outside of the United States increased 16 percent over the prior year. Excluding Spain, transactions originating outside of the United States increased a very strong 19 percent over the prior year. Transactions sent from Spain were flat compared with the same period last year. Money transfer transactions originating in the United States, excluding transactions sent to Mexico, increased 7 percent. Third quarter transaction volume to Mexico returned to positive growth, increasing 1 percent in the quarter. Intra-U.S. transaction growth increased 9 percent.
Bill payment transaction volume increased 1 percent, while fee and other revenue decreased 6 percent to $31.2 million in the third quarter of 2010 from $33.1 million in the third quarter of 2009. The difference between transaction and revenue growth is primarily related to transaction mix as we continue to grow in new emerging verticals that generate lower revenue per transaction compared with the traditional business.
Financial Paper Products Segment Results
Total revenue in the Financial Paper Products segment declined 15 percent to $26.0 million in the third quarter of 2010 from $30.6 million in the third quarter of 2009. Operating income decreased 13 percent to $7.5 million in the third quarter of 2010 from $8.6 million in the third quarter of 2009. Operating margin in the third quarter of 2010 was 28.8 percent. Adjusted operating margin was 32.8 percent in the quarter.