MoneyGram International Inc. (MGI) reported first quarter loss per share of 26 cents, modestly lower than the Zacks Consensus Estimate of a loss of 31 cents but higher than the loss of 20 cents reported in the year-ago quarter. Results included stock-based compensation costs of $6.9 million that was partially offset by $2.4 million of net securities gains. Reported net loss was $10.8 million compared to a net loss of $11.8 million in the year-ago quarter.
Total expenses increased 3.2% to $153.2 million as against $148.5 million in the year-ago quarter. Higher money transfer transaction volumes were offset by increased operating expenses, declining bill payment transaction volumes and continued weakness in Mexico and Spain.
MoneyGram’s total revenue for the quarter was $288.9 million, up 3% from $279.9 million in the year-ago period. Fee and other revenue increased 5% year-over-year to $280.9 million, while investment revenue decreased to $5.6 million compared with $11.7 million in the prior year. Net securities gains increased dramatically to $2.4 million compared with $0.06 million in the year-ago quarter.
Segment Results
In the Global Funds Transfer segment, MoneyGram’s revenue rose by 5% to $256.7 million versus $244.4 million in the year-ago period. Money transfer transaction volume excluding bill payment increased 6%, while money transfer fee and other revenue increased 7% to $222.7 million versus $208.2 million in the prior-year period.
On a constant currency basis, money transfer fee and other revenue excluding bill payment increased 4% on a year-over-year basis. Bill payment transaction volume decreased 3% with fee and other revenue declining 7% to $33.8 million from $36.2 million in the prior-year quarter. Operating margin declined to 10.8% from 15.1% in the year-ago quarter. Global agent locations reached 198,000, an increase of 10% over the prior-year quarter.
The economic downturn in Spain continues to impact MoneyGram’s non-U.S. transaction growth. Excluding Spain, transactions originating outside US saw a healthy growth of 16% from the prior year. Transaction volume to Mexico decreased 11% year-over-year in the reported quarter. However, excluding transactions destined for Mexico, transactions originating in the US increased 6% year-over-year.
In the Financial Paper Products segment, MoneyGram’s total revenue declined 7.2% to $28.4 million from $30.6 million in the prior-year quarter. However, the operating margin grew to 31.3% from 23.8% in the year-ago quarter.
Liquidity
As on Mar 31, 2010, MoneyGram had cash and cash equivalents of $3.68 billion, net receivables of $960 million and investments of $258.2 million.
MoneyGram ended the quarter with $806.3 million in outstanding debt and assets in excess of payment service obligations of $324.2 million. In Apr 2010, MoneyGram made an optional prepayment of $30 million on its tranche B term loan under the senior secured credit facility, thereby lowering its total outstanding debt by 22% to $217 million (repaying $187 million in 2009) ever since its Mar 2008 recapitalization.
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