Digital revenue reached an all-time high of $92 million reaching 44% of money transfer transactions at the end of the second quarter
Digital transactions increased 36% over the prior year
DALLAS, Aug. 5, 2022 /PRNewswire/ -- MoneyGram International, Inc. (NASDAQ: MGI) today reported financial results for its second quarter ended June 30, 2022.
"Against the backdrop of an increasingly uncertain macro-economic environment, we delivered 5% year-over-year revenue growth in the second quarter on a constant currency basis. Results for the quarter were driven by record digital revenue, partially offset by continued softness in the walk-in retail business in certain markets," said Alex Holmes MoneyGram Chairman and CEO. "As we look ahead to the second half of the year, we anticipate consumers globally will face challenges as the impact of rising inflation places more pressure on their disposable incomes. However, our services also rise in importance during challenging times. We remain confident in the dedication and loyalty of our customers to their families abroad, as we look to further support them by investing in our digital platforms and customer experience initiatives."
Money Transfer highlights for the quarter include the following: | |
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Second Quarter 2022 Financial Results, Year-Over-Year | |
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Balance Sheet and Liquidity | |
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As announced yesterday, Brian Johnson, who currently serves as Head of Corporate Finance and Global Treasurer, has been named Chief Financial Officer, effective September 1, 2022. He succeeds Larry Angelilli, who has been appointed Executive Vice Chairman of MoneyGram, effective on the same date. In this role, Angelilli will help ensure an orderly transition of the CFO role and assist on external relations and other strategic matters.
MoneyGram also announced that Anna Greenwald, who currently serves as Chief Readiness Officer, has been appointed Chief Operating Officer, effective immediately. In addition to her existing responsibilities, which include oversight of global go-to-market, product, customer care, agent network oversight and engagement and global regulatory exam readiness, Greenwald will also assume responsibility for the global IT organization.
MoneyGram and Madison Dearborn Partners, LLC ("MDP") continue to make progress toward completing the closing conditions of the previously announced merger transaction. To date, money transmitter regulators in 32 U.S. states and territories have provided their approval or non-objection of the transaction. All supplemental U.S. state filings have been submitted. The required pre-transaction notifications and applications to international money transmitter regulators have been made or are on track to be filed shortly, and the parties continue to engage with the regulators.
As previously disclosed, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired and MoneyGram stockholders have overwhelmingly approved the transaction. The parties have submitted all applicable foreign antitrust and Foreign Direct Investment filings.
The transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including receipt of certain regulatory approvals.
MoneyGram International, Inc. (NASDAQ: MGI), a global leader in the evolution of digital P2P payments, delivers innovative financial solutions to connect the world's communities. With a purpose-driven strategy to mobilize the movement of money, a strong culture of fintech innovation, and leading customer-centric capabilities, MoneyGram has grown to serve over 150 million people in the last five years. The Company leverages its modern, mobile, and API-driven platform and collaborates with the world's top brands to serve consumers through its direct-to-consumer digital channel, global retail network, and embedded finance business for enterprise customers. MoneyGram is also a leader in pioneering cross-border payment innovation and blockchain-enabled settlement. For more information, please visit ir.moneygram.com, follow @MoneyGram on social media, and explore the website and mobile app through moneygram.com.
This communication contains forward-looking statements which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect MoneyGram's current beliefs, expectations or intentions regarding future events and speak only as of the date they are made. Words such as "may," "might," "will," "could," "should," "would," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "forecast," "outlook," "continue," "currently," and similar expressions are intended to identify such forward-looking statements. The statements in this communication that are not historical statements are forward-looking statements within the meaning of the federal securities laws. Specific forward-looking statements include, among others, statements regarding the Company's projected results of operations and specific factors expected to impact the Company's results of operations. Forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict and many of which are beyond MoneyGram's control, which could cause actual results to differ materially from the results expressed or implied by the statements.
These risks and uncertainties include, but are not limited to:
Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in MoneyGram's SEC filings. MoneyGram's SEC filings may be obtained by contacting MoneyGram, through MoneyGram's web site at ir.moneygram.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System ("EDGAR") at www.sec.gov. MoneyGram undertakes no obligation to publicly update or revise any forward-looking statement.
In addition to results presented in accordance with accounting principles generally accepted in the United States (GAAP), this news release and related tables include certain non-GAAP financial measures, including a presentation of EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization), Adjusted EBITDA (EBITDA adjusted for certain significant items), Adjusted EBITDA margin, Adjusted Free Cash Flow (Adjusted EBITDA less cash interest, cash taxes and cash payments for capital expenditures and agent signing bonuses), constant currency measures (which assume that amounts denominated in foreign currencies are translated to the U.S. dollar at rates consistent with those in the prior year), diluted adjusted income (loss) per share and adjusted net income. In addition, we present gross profit for our two reporting segments. The following tables include a full reconciliation of non-GAAP financial measures to the related GAAP financial measures. The equivalent GAAP financial measures for projected results are not provided, and projected results do not reflect the potential impact of certain non-GAAP adjustments, which include (but in future periods, may not be limited to) stock-based, contingent and incentive compensation costs; compliance enhancement program costs; direct monitor costs; legal and contingent matter costs; restructuring and reorganization costs; currency changes; and the tax effect of such items. We cannot reliably predict or estimate if and when these types of costs, adjustments or changes may occur or their impact to our financial statements. Accordingly, a reconciliation of the non-GAAP financial measures to the equivalent GAAP financial measures for projected results is not available.
We believe that these non-GAAP financial measures provide useful information to investors because they are an indicator of the strength and performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and other interested parties to evaluate and compare the operating performance and value of companies within our industry. Finally, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Free Cash Flow, constant currency, diluted adjusted income (loss) per share and adjusted net income (loss) figures are financial and performance measures used by management in reviewing results of operations, forecasting, allocating resources or 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 in isolation or as substitutes for the accompanying GAAP financial measures.
Description of Tables | ||
Table One | - | Condensed Consolidated Statements of Operations |
Table Two | - | Segment Results |
Table Three | - | Reconciliation of Certain Non-GAAP Measures to Relevant GAAP Measures - EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Free Cash Flow |
Table Four | - | Reconciliation of Certain Non-GAAP Measures to Relevant GAAP Measures - Adjusted Net Income and Adjusted Diluted EPS |
Table Five | - | Condensed Consolidated Balance Sheets |
Table Six | - | Condensed Consolidated Statements of Cash Flows |
CONTACTS | ||
Investor Relations: | Media Relations: | |
214-979-1400 | Sydney Schoolfield | |
TABLE ONE | ||||||||
MONEYGRAM INTERNATIONAL, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
(Amounts in millions, except percentages and per share data) | Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | |||||
REVENUE | ||||||||
Fee and other revenue | $ 324.5 | $ 327.3 | $ 630.0 | $ 635.4 | ||||
Investment revenue | 5.1 | 2.0 | 7.2 | 4.0 | ||||
Total revenue | 329.6 | 329.3 | 637.2 | 639.4 | ||||
Total revenue change, constant currency | 5 % | 13 % | 3 % | 8 % | ||||
COST OF REVENUE | ||||||||
Commissions and other fee expense | 156.5 | 161.3 | 305.2 | 311.2 | ||||
Investment commissions expense | 2.4 | 0.2 | 2.8 | 0.4 | ||||
Direct transaction expense | 13.8 | 16.2 | 26.1 | 31.4 | ||||
Total cost of revenue | 172.7 | 177.7 | 334.1 | 343.0 | ||||
GROSS PROFIT | 156.9 | 151.6 | 303.1 | 296.4 | ||||
OPERATING EXPENSES | ||||||||
Compensation and benefits | 59.3 | 59.0 | 115.8 | 121.2 | ||||
Transaction and operations support | 53.3 | 40.3 | 98.4 | 83.7 | ||||
Occupancy, equipment and supplies | 15.1 | 16.3 | 29.6 | 31.8 | ||||
Depreciation and amortization | 12.1 | 14.1 | 24.3 | 29.4 | ||||
Total operating expenses | 139.8 | 129.7 | 268.1 | 266.1 | ||||
OPERATING INCOME | 17.1 | 21.9 | 35.0 | 30.3 | ||||
Other expenses | ||||||||
Interest expense | 12.1 | 22.5 | 23.0 | 44.8 | ||||
Loss on early extinguishment of debt | ? | 10.3 | ? | 10.3 | ||||
Other non-operating expense | 1.1 | 0.8 | 2.0 | 1.8 | ||||
Total other expenses | 13.2 | 33.6 | 25.0 | 56.9 | ||||
Income (loss) before income taxes | 3.9 | (11.7) | 10.0 | (26.6) | ||||
Income tax expense (benefit) | 0.8 | (0.6) | 1.8 | (0.1) | ||||
NET INCOME (LOSS) | $ 3.1 | $ (11.1) | $ 8.2 | $ (26.5) | ||||
EARNINGS (LOSS) PER COMMON SHARE | ||||||||
Basic | $ 0.03 | $ (0.13) | $ 0.09 | $ (0.32) | ||||
Diluted | $ 0.03 | $ (0.13) | $ 0.08 | $ (0.32) | ||||
Weighted-average outstanding common shares and | ||||||||
Basic | 96.6 | 87.2 | 96.2 | 83.4 | ||||
Diluted | 100.2 | 87.2 | 100.0 | 83.4 | ||||
TABLE TWO | ||||||||
MONEYGRAM INTERNATIONAL, INC. | ||||||||
SEGMENT RESULTS | ||||||||
(Unaudited) | ||||||||
Global Funds Transfer | ||||||||
(Amounts in millions, except percentages) | Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Money transfer revenue | $ 302.5 | $ 304.9 | $ 586.8 | $ 590.3 | ||||
Bill payment revenue | 9.6 | 10.4 | 18.9 | 21.2 | ||||
Total revenue | 312.1 | 315.3 | 605.7 | 611.5 | ||||
Cost of revenue | 170.2 | 177.5 | 331.2 | 342.6 | ||||
Gross profit | $ 141.9 | $ 137.8 | $ 274.5 | $ 268.9 | ||||
Money transfer revenue change, constant currency | 4 % | 16 % | 3 % | 12 % | ||||
Financial Paper Products | ||||||||
(Amounts in millions, except percentages) | Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Money order revenue | $ 10.6 | $ 10.6 | $ 21.1 | $ 21.0 | ||||
Official check revenue | 6.9 | 3.4 | 10.4 | 6.9 | ||||
Total revenue | 17.5 | 14.0 | 31.5 | 27.9 | ||||
Investment commissions expense | 2.5 | 0.2 | 2.9 | 0.4 | ||||
Gross profit (1) | $ 15.0 | $ 13.8 | $ 28.6 | $ 27.5 | ||||
(1) In periods of extremely low interest rates, it is possible for commissions to be close to zero, resulting in abnormally high gross margin. |
TABLE THREE | ||||||||
MONEYGRAM INTERNATIONAL, INC. | ||||||||
RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO RELEVANT GAAP MEASURES | ||||||||
EBITDA, ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN AND ADJUSTED FREE CASH FLOW | ||||||||
(Unaudited) | ||||||||
(Amounts in millions, except percentages) | Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Income (loss) before income taxes | $ 3.9 | $ (11.7) | $ 10.0 | $ (26.6) | ||||
Interest expense | 12.1 | 22.5 | 23.0 | 44.8 | ||||
Depreciation and amortization | 12.1 | 14.1 | 24.3 | 29.4 | ||||
Signing bonus amortization | 13.5 | 14.7 | 27.4 | 29.0 | ||||
EBITDA | 41.6 | 39.6 | 84.7 | 76.6 | ||||
Significant items impacting EBITDA: | ||||||||
Stock-based, contingent, incentive compensation and other | 5.4 | 1.5 | 8.2 | 3.3 | ||||
Merger-related costs | 1.1 | ? | 4.8 | ? | ||||
Severance and related costs | 1.0 | ? | 1.0 | 0.2 | ||||
Legal and contingent matters | 0.7 | (0.1) | 1.3 | ? | ||||
Restructuring and reorganization costs | 0.3 | 2.2 | (1.0) | 8.1 | ||||
Direct monitor costs | (0.1) | 1.1 | ? | 4.9 | ||||
Loss on early extinguishment of debt | ? | 10.3 | ? | 10.3 | ||||
Compliance enhancement program | ? | 0.2 | ? | 1.3 | ||||
Adjusted EBITDA | $ 50.0 | $ 54.8 | $ 99.0 | $ 104.7 | ||||
Adjusted EBITDA margin (1) | 15.2 % | 16.6 % | 15.5 % | 16.4 % | ||||
Adjusted EBITDA change, constant currency adjusted | (3) % | (12) % | (1) % | (11) % | ||||
Adjusted EBITDA | $ 50.0 | $ 54.8 | $ 99.0 | $ 104.7 | ||||
Cash payments for interest | (5.9) | (27.1) | (22.5) | (39.0) | ||||
Cash (payments) refunds for taxes, net | (3.0) | (1.5) | (6.3) | 1.2 | ||||
Cash payments for capital expenditures | (12.1) | (10.0) | (22.4) | (21.2) | ||||
Cash payments for agent signing bonuses | (6.9) | (9.7) | (21.6) | (22.7) | ||||
Adjusted Free Cash Flow | $ 22.1 | $ 6.5 | $ 26.2 | $ 23.0 | ||||
(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue. | ||||||||
TABLE FOUR | ||||||||
MONEYGRAM INTERNATIONAL, INC. | ||||||||
RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO RELEVANT GAAP MEASURES | ||||||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS | ||||||||
(Unaudited) | ||||||||
Three Months Ended | Six Months Ended | |||||||
(Amounts in millions, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||
Net income (loss) | $ 3.1 | $ (11.1) | $ 8.2 | $ (26.5) | ||||
Total adjustments (1) | 8.4 | 15.2 | 14.3 | 28.1 | ||||
Tax impacts of adjustments (2) | (1.9) | (3.5) | (3.3) | (6.5) | ||||
Valuation allowance (3) | (0.4) | ? | (1.1) | 1.0 | ||||
Adjusted net income | $ 9.2 | $ 0.6 | $ 18.1 | $ (3.9) | ||||
Diluted earnings (loss) per common share | $ 0.03 | $ (0.13) | $ 0.08 | $ (0.32) | ||||
Diluted adjustments per common share | 0.06 | 0.14 | 0.10 | 0.27 | ||||
Diluted adjusted earnings (loss) per common share | $ 0.09 | $ 0.01 | $ 0.18 | $ (0.05) | ||||
Diluted weighted-average outstanding common shares and equivalents | 100.2 | 87.2 | 100.0 | 83.4 | ||||
(1) See summary of adjustments in Table Three - EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Free Cash Flow. | ||||||||
(2) Tax rates used to calculate the tax expense impact are based on the nature and jurisdiction of each adjustment. | ||||||||
(3) Valuation allowance recorded for deferred tax assets existing at the beginning of the year. |
TABLE FIVE | ||||
MONEYGRAM INTERNATIONAL, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Unaudited) | ||||
(Amounts in millions, except share data) | June 30, 2022 | December 31, 2021 | ||
ASSETS | ||||
Cash and cash equivalents | $ 117.4 | $ 155.2 | ||
Settlement assets | 3,654.1 | 3,591.4 | ||
Property and equipment, net | 131.0 | 133.9 | ||
Goodwill | 442.2 | 442.2 | ||
Right-of-use assets | 47.1 | 52.6 | ||
Other assets | 112.9 | 101.2 | ||
Total assets | $ 4,504.7 | $ 4,476.5 | ||
LIABILITIES | ||||
Payment service obligations | $ 3,654.1 | $ 3,591.4 | ||
Debt, net | 786.0 | 786.7 | ||
Pension and other postretirement benefits | 65.3 | 67.1 | ||
Lease liabilities | 50.2 | 56.3 | ||
Accounts payable and other liabilities | 134.0 | 160.0 | ||
Total liabilities | 4,689.6 | 4,661.5 | ||
STOCKHOLDERS' DEFICIT | ||||
Common stock, $0.01 par value, 162,500,000 shares authorized, | 1.0 | 0.9 | ||
Additional paid-in capital | 1,408.3 | 1,400.3 | ||
Retained loss | (1,505.3) | (1,513.4) | ||
Accumulated other comprehensive loss | (72.3) | (62.8) | ||
Treasury stock: 2,199,997 and 1,579,029 shares at June 30, 2022 and | (16.6) | (10.0) | ||
Total stockholders' deficit | (184.9) | (185.0) | ||
Total liabilities and stockholders' deficit | $ 4,504.7 | $ 4,476.5 |
TABLE SIX | ||||
MONEYGRAM INTERNATIONAL, INC. | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(Unaudited) | ||||
Six Months Ended | ||||
(Amounts in millions) | 2022 | 2021 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income (loss) | $ 8.2 | $ (26.5) | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | (11.3) | (18.4) | ||
Net cash used in operating activities | (3.1) | (44.9) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Payments for capital expenditures | (22.4) | (21.2) | ||
Proceeds from available-for-sale investments | 0.3 | 0.5 | ||
Purchases of interest-bearing investments | (369.1) | (210.8) | ||
Proceeds from interest-bearing investments | 368.0 | 209.4 | ||
Purchase of equity investments | (4.0) | ? | ||
Net cash used in investing activities | (27.2) | (22.1) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Principal payments on debt | (2.0) | (103.2) | ||
Prepayment call premium | ? | (4.0) | ||
Change in receivables, net | (350.4) | (31.8) | ||
Change in payment service obligations | 62.7 | (95.7) | ||
Net proceeds from stock issuance | ? | 97.6 | ||
Payments to tax authorities for stock-based compensation | (6.6) | (3.6) | ||
Net cash used in financing activities | (296.3) | (140.7) | ||
NET CHANGE IN CASH AND CASH EQUIVALENTS AND SETTLEMENT | (326.6) | (207.7) | ||
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH | 2,050.9 | 2,079.3 | ||
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH | $ 1,724.3 | $ 1,871.6 | ||
SOURCE MoneyGram
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