MoneyGram International Inc. (MGI) reported second quarter loss per share of 30 cents, a penny higher than the Zacks Consensus Estimate of a loss of 29 cents, but substantially lower than the loss of 60 cents reported in the year-ago quarter.
Results included stock-based compensation costs of $7.2 million, $1.6 million of restructuring and reorganization costs, $1.8 million in legal accruals and a $1.6 million write-off of deferred financing and debt discount. Reported net loss was $24.6 million as compared to a net loss of $49.2 million in the year-ago quarter.
Total expenses decreased 21.9% to $151.9 million against $194.4 million in the year-ago quarter. Higher money transfer transaction volumes and decreased operating expenses were offset by poor top line on lower revenue per transaction and continued moderation in Mexico and Spain.
MoneyGram’s total revenue for the quarter was $292.9 million, down 3.8% from $304.5 million in the year-ago period and was also below the Zacks Consensus Estimate of $298 million. Fee and other revenue declined 2.2% year over year to $288.5 million, while investment revenue decreased 35.9% to $4.4 million as compared with $6.5 million in the prior year period. Net securities gain/loss was nil against net securities gains of $2.7 million in the year-ago quarter.
Segment Results
In the Global Funds Transfer segment, MoneyGram’s revenue dipped by 1% to $266.2 million versus $268.1 million in the year-ago period. Money transfer transaction volume increased 9%, while money transfer fee and other revenue remained flat at $235.0 million from the prior-year period.
On a constant currency basis, money transfer fee and other revenue increased 2% on a year over year basis. Bill payment transaction volume increased 1% year over year, whereas, fee and other revenue declined 6% to $31.2 million from $33.1 million in the prior-year quarter. Operating margin increased to 13.7% from 4.3% in the year-ago quarter. Global agent locations reached 207,000, an increase of 11% over the prior-year quarter.
Total money transfer transactions originating outside the U.S. increased 16% from the prior year. Although, transaction growth in Spain and Mexico has shown some improvement, its yet to boost MoneyGram’s non-U.S. transactions significantly. Excluding Spain, transactions originating outside US saw a healthy growth of 19% from the prior year.
Transaction volume to Mexico increased 1% year over year while that in Spain was flat in the reported quarter. In addition, excluding transactions sent to Mexico, MoneyGram’s transactions originating in the U.S. increased 7% year over year. Intra-U.S. transaction growth increased 9% over prior-year period.
In the Financial Paper Products segment, MoneyGram’s total revenue declined 15% year over year to $26 million, while operating margin dipped to 28.8% from 32.8% in the year-ago quarter.
Liquidity
As on September 30, 2010, MoneyGram had cash and cash equivalents of $3.29 billion, net receivables of $1.08 billion and investments of $189.1 million. MoneyGram ended the quarter with $716.3 million in outstanding debt and assets in excess of payment service obligations of $290.4 million.
MoneyGram made an optional prepayment of $30 million during the reported quarter for its tranche B term loan under the senior secured credit facility, thereby lowering its total outstanding debt by 28% to $277 million (repaying $187 million in 2009) ever since January 2009.
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