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MoneyGram International (MGI) Q1 Earnings, Revenues Top

MoneyGram International Inc. MGI reported first-quarter earnings of 17 cents per share, which surpassed the Zacks Consensus Estimate of 11 cents by 54.6%. The bottom line also increased 54.6% from 11 cents in the prior-year quarter.

MoneyGram’s total revenue for the reported quarter was $358 million, up 10% on a constant currency basis and 8% on a reported basis. Fees and other revenues increased 8.3% to $354.7 million, while investment revenues surged 27.6% to $3.7 million. The top line also narrowly surpassed the Zacks Consensus Estimate of $353 million by 1.4%. The company’s adjusted EBITDA came in at $69.8 million, up 28% on a reported basis and 29% on constant currency basis.

Total operating expenses inched up 1.9% year over year to $335.3 million.

Segment Details

In the Global Funds Transfer segment, money transfer transactions grew 7% year on year. Money transfer revenues increased 10% on a reported currency basis and 12% on a constant currency basis to $316.2 million. Non-U.S. revenues surged 16% on the back of solid performance in Africa and Europe. The U.S. Outbound revenues increased 11% driven by sends to Latin America and Africa. Revenues from U.S. Outbound and Non-U.S. sends, which account for 87% of total money transfer revenues, grew 15% year over year on a constant currency basis.

Digital money transfer transactions, which increased 23% year on year, represented 15% of the total money transfer transactions. Digital money transfer revenues, which grew 31% year on year, accounted for 12% of the total money transfer revenues. The results were driven by higher customer adoption of MoneyGram’s kiosks and moneygram.com, mobile solutions and account deposit services.

The Financial Paper Products segment reported total revenue of $18.1 million, down 1% year over year, due to a 3% decline in money order revenues. Nonetheless, the downside was partially offset by an increase in official check revenues. Adjusted operating margin deteriorated to 24.9% from 29.5% in the year-ago quarter.

Liquidity

As of Mar 31,2016 MoneyGram had cash and cash equivalents of $141.5 million, down 14% from $164.5 million at year-end 2015 and total assets of $4.3 billion, down 4.4% from $4.5 billion. The company exited the first quarter with $940.8 million of outstanding debt, down 0.2% from $942.6 million at year-end 2015.

Adjusted free cash flow was $31.6 million in the quarter, comparing favorably with cash outflow of $34.3 million.

Full-year 2016 Outlook

MoneyGram reiterated its 2016 outlook for constant currency revenue growth between 8% and 10%. It increased its full-year constant currency adjusted EBITDA growth projection to 9–11% based on the robust first-quarter performance.

Zacks Rank and Performance of Other Players in the Sector

Currently, MoneyGram carries a Zacks Rank #3 (Hold). The bottom line at American Express Co. AXP, MasterCard MA and Visa Inc V beat their respective Zacks Consensus Estimate for the quarter ending as of Mar 31, 2016.

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MONEYGRAM INTL (MGI): Free Stock Analysis Report
 
AMER EXPRESS CO (AXP): Free Stock Analysis Report
 
MASTERCARD INC (MA): Free Stock Analysis Report
 
VISA INC-A (V): Free Stock Analysis Report
 
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