Exhibit 99.1
MoneyGram International Announces Third Quarter Results;
Increases Guidance for 2005;
Money Transfer Volume Grows 39 percent in Third Quarter
MINNEAPOLIS--(BUSINESS WIRE)--Oct. 19, 2005--MoneyGram International, Inc.
(NYSE:MGI):
($ in millions) Q3 Q3 %
Except per share data 2005 2004 Change
----------------------
Revenue $246.4 $216.2 14.0
Commissions Expense 119.8 104.3 14.9
Net Revenue 126.6 111.8 13.2
Expenses 87.7 78.4 11.9
Income from Continuing Operations $28.8 $24.5 17.5
Income from Discontinued Operations, net of tax $0.7 $0.0 NM
Net Income $29.5 $24.5 20.5
Earnings per Diluted Share
Income from Continuing Operations $0.33 $0.28 17.9
Income from Discontinued Operations, net of
tax $0.01 $0.00 NM
------- -------
Earnings per Diluted Share $0.34 $0.28 21.4
Operating Margin 15.8% 15.5%
NM - Not Meaningful
MoneyGram International, Inc. (NYSE:MGI), today announced third quarter
2005 income from continuing operations of $28.8 million, or $0.33 per diluted
share, compared to $24.5 million, or $0.28 per diluted share in the third
quarter 2004. Third quarter 2004 earnings from continuing operations included
net securities gains of $10.9 million and write-offs of $5.2 million, which in
the aggregate totaled $0.04 per diluted share.
Third quarter 2005 results reflect:
-- Global Funds Transfer segment revenue growth of 22 percent in
the third quarter 2005. The growth was driven by money
transfer transaction volume growth of 39 percent and money
transfer revenue growth of 29 percent.
-- Net investment margin of 1.82 percent, as shown in Table One,
including income of $3.9 million from limited partnership
interests, or $0.03 per diluted share after tax.
-- Fee and other revenue of $156.4 million, up 22 percent from
the third quarter of 2004 driven primarily from the growth in
money transfer volume.
-- An after tax gain from discontinued operations of $0.7 million
or $0.01 per diluted share related to a partial resolution of
contingencies from the sale of Game Financial.
Philip Milne, president and chief executive officer said, "Our commitment
to providing affordable, reliable and convenient payment products and services
to our consumers and business partners continued to drive results in the third
quarter. This is evident in the strong growth of money transfer transaction
volume."
Segment Highlights
MoneyGram operates in two business segments, Global Funds Transfer and
Payment Systems.
Global Funds Transfer
($ in millions)
Q3 Q3 %
2005 2004 Change
----------------------
Revenue $167.5 $137.7 21.6%
Commissions Expense 63.7 51.6 23.5%
Net Revenue 103.8 86.1 20.5%
Operating Income $35.2 $27.4 28.6%
Operating Margin 21.0% 19.9%
For the Global Funds Transfer segment, which consists of money transfer
(including urgent bill payment) and retail money orders, revenue increased 21.6
percent to $167.5 million and operating income increased 28.6 percent to $35.2
million in the third quarter of 2005. Both revenue and operating income improved
as a result of money transfer volume growth. Operating margin in the third
quarter of 2005 was 21.0 percent compared to 19.9 percent in the third quarter
2004. The increase in margin was due to the leveraging of expenses through
volume growth in money transfer.
Money transfer transaction volume grew 39 percent and money transfer
revenue (see Table Four) grew 29 percent to $132.8 million compared to the third
quarter of 2004. Money transfer revenue growth rates are lower than volume
growth rates due to targeted pricing initiatives. Money order transaction volume
was down slightly, following a trend of declining use of paper-based payment
instruments.
As of September 30, MoneyGram has approximately 84,000 money transfer agent
locations around the world, an increase of 13 percent over the prior year third
quarter.
Payment Systems
($ in millions)
Q3 Q3 %
2005 2004 Change
---------------------
Revenue $78.9 $78.5 0.5%
Commissions Expense 56.1 52.7 6.4%
Net Revenue 22.8 25.8 (11.5%)
Operating Income $7.7 $9.4 (18.2%)
Operating Margin 9.8% 12.0%
The Payment Systems segment includes PrimeLink/Official Check outsourcing
services, financial money orders and controlled disbursement processing
services. Payment Systems revenue was relatively flat in the third quarter 2005
compared to 2004. 2005 revenue reflects growth in investment income due to
higher yields and $3.1 million of income from limited partnership interests of
the total $3.9 million. These benefits were fully offset by a decline in net
securities gains of $10.0 million from the third quarter 2004. Operating income
was $7.7 million for the third quarter of 2005 versus $9.4 million in the third
quarter of 2004. Operating income for the third quarter of 2004 included $8.7
million in net securities gains partially offset by $2.1 million of write-offs,
for a net benefit to the operating margin of 8.4 percentage points. The net
benefit to the third quarter 2005 operating margin due to the income from
limited partnership interests net of securities losses of $1.3 million was 2.3
percentage points.
Share Repurchase
The company's Board of Directors increased its share buyback authorization
by 5 million to 7 million shares, effective August 19, 2005. The company bought
back 683,300 shares at an average price of $20.62 per share during the quarter
for a total of 2.5 million shares purchased under the authorizations. There are
approximately 4.5 million shares remaining under our authorizations.
Hurricane Katrina
During the third quarter, MoneyGram International donated $125,000 to the
Red Cross for Hurricane Katrina rescue efforts. In addition, MoneyGram and its
agents offered a no-fee service for donations sent to the Red Cross and worked
with the Wal-Mart Foundation to deliver assistance to Wal-Mart associates in
critical need in the aftermath of the hurricane. The effects of the recent
hurricanes did not materially affect the operations of the company.
2005 Outlook
Diluted earnings per share from continuing operations for the full year
2005 is expected to be in the range of $1.22 - $1.25, up from previous guidance
of $1.11 - $1.15. This translates to a range of $0.27 - $0.30 for the fourth
quarter. The full year estimate includes the $2.2 million termination fee from a
customer due to an early contract termination in the Payment Systems segment
received in the first quarter of the year, approximately $12 million in cash
flows on previously impaired investments for the full year and the $3.9 million
of income from limited partnership interests in the third quarter of 2005. Also
affecting the guidance are the following items:
-- Net revenue (total revenue less total commissions) is expected
to be in the range of $490 million to $500 million, up from
previous guidance of $465 million to $485 million.
-- Net investment margin for the full year is expected to be in
the range of 175 to 185 basis points up from previous guidance
of 150 to 165 basis points. This guidance includes the effect
of cash flows on previously impaired investments and the third
quarter income from limited partnership interests.
-- Investment portfolio balances are expected to average $6.6
billion for the year, declining from $6.8 billion in 2004 due
to consolidation of client financial institutions, up slightly
from previous guidance of $6.5 billion.
-- The adoption of Statement of Financial Accounting Standards
No. 123R, Share-Based Payment (expensing of stock options) as
of January 1, 2005.
-- Income from continuing operations before taxes is expected to
increase by 57 to 62 percent from $89.0 million in income from
operations before taxes in 2004 compared to previous guidance
of 42 to 48 percent.
This guidance is dependent on a variety of factors, including those listed
below under Cautionary Information Regarding Forward-Looking Statements. From
time to time, events may occur which can result in unanticipated income or
losses. Our outlook does not reflect such events.
Presentation of 2004 Financial Statements
MoneyGram International, Inc. was spun off from Viad Corp on June 30, 2004.
MoneyGram is considered the divesting entity and treated as the accounting
successor to Viad for financial reporting purposes in accordance with the EITF
No. 02-11, "Accounting for Reverse Spinoffs." MoneyGram results in 2004 include
one-time debt tender and redemption expenses of $20.7 million, which amounts to
$0.22 per diluted share, related to the spin-off in the second quarter 2004. The
historical results of MoneyGram through June 30, 2004, include Viad Corp as
discontinued operations. In addition, the historical financials include the
income and gain from discontinued operations of Game Financial.
Description of Tables
Table One - Net Investment Revenue Analysis
Table Two - Consolidated Statements of Income
Table Three - Segment Information
Table Four - Money Transfer Revenue
Table Five - Unrestricted Assets
Conference Call and Webcast
MoneyGram International will have a conference call today at 5:00 p.m. EDT,
4:00 p.m. CDT to discuss third quarter results. Phil Milne, chief executive
officer, and Dave Parrin, chief financial officer, will speak on the call. The
conference call can be accessed by calling (800) 599-9816 in the U.S. The
participant passcode is 24566846. The conference call will also be webcast
through the company's website at www.moneygram.com. A replay of the conference
call and webcast will be available one hour after the call concludes through
5:00 p.m. EDT on November 2, 2005. The replay of the call is available at (888)
286-8010 in the U.S., or (617) 801-6888 internationally, passcode 61476491. The
Internet audio cast replay will be available at www.moneygram.com.
About MoneyGram International, Inc.
MoneyGram International, Inc. is a leading global payment services company
and S&P MidCap 400 company. The company's major products and services include
global money transfers, money orders and payment processing solutions for
financial institutions and retail customers. MoneyGram is a New York Stock
Exchange listed company, with over $825 million in revenue in 2004 and global
money transfer agent locations in 170 countries. For more information, visit the
company's website at www.moneygram.com.
Cautionary Information Regarding Forward-Looking Statements
The statements contained in this press release regarding the business of
MoneyGram International, Inc. that are not historical facts are forward-looking
statements and are made under the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and are subject to uncertainty and changes in
circumstances due to a number of factors, including, but not limited to: (a)
fluctuations in interest rates that may materially affect revenue derived from
investment of funds received from the sale of payment instruments; (b) material
changes in the market value of securities we hold; (c) material changes in our
need for and the availability of liquid assets; (d) successful management of the
credit and fraud risks of retail agents, and the credit risk related to our
investment portfolio; (e) continued growth rates approximating recent levels for
consumer money transfer transactions and other payment product markets; (f)
renewal of material retail agent and financial institution customer contracts,
or loss of business from significant agents or customers; (g) technological and
competitive changes in the payment services industry; (h) timely and successful
implementation of new and/or improved technology, delivery methods, and product
offerings including pre-paid debit/stored value cards and new bill payment
services; (i) changes in laws, regulations or other industry practices and
standards which may require significant systems redevelopment, reduce the market
for or value of the company's products or services or render products or
services less profitable or obsolete; (j) continued political stability in
countries in which MoneyGram has material agent relationships; (k) material
lawsuits or investigations; (l) catastrophic events that could materially
adversely impact operating facilities, communication systems and technology of
MoneyGram, its clearing banks or major customers, or that may have a material
adverse impact on current economic conditions or levels of consumer spending;
(m) material breach of security of any of our systems; (n) our ability to comply
with the requirements of Sarbanes-Oxley Section 404 regarding the effectiveness
of internal controls; and (o) other factors more fully discussed in MoneyGram's
filings with the Securities and Exchange Commission. Actual results may differ
materially from historical and anticipated results. These forward-looking
statements speak only as of the date on which such statements are made, and
MoneyGram undertakes no obligation to update such statements to reflect events
or circumstances arising after such date.
TABLE ONE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NET INVESTMENT REVENUE ANALYSIS
(Unaudited)
Three Months Ended
September 30 2005 vs
2005 2004 2004
---------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $91,634 $77,276 $14,358
Investment commissions expense
(1) (60,889) (56,712) (4,177)
---------------------------------
Net investment revenue $30,745 $20,564 $10,181
=================================
Average balances:
Cash equivalents and investments $6,707,017 $6,714,587 ($7,570)
Payment service obligations (2) 5,255,146 5,315,246 (60,100)
Average yields earned and rates paid
(3):
Investment yield 5.42% 4.58% 0.84%
Investment commission rate 4.60% 4.24% 0.36%
Net investment margin 1.82% 1.22% 0.60%
Nine Months Ended
September 30 2005 vs
2005 2004 2004
---------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $272,188 $231,510 $40,678
Investment commissions expense
(1) (177,656) (160,164) (17,492)
---------------------------------
Net investment revenue $94,532 $71,346 $23,186
=================================
Average balances:
Cash equivalents and investments $6,750,129 $6,729,216 $20,913
Payment service obligations (2) 5,297,765 5,328,344 (30,579)
Average yields earned and rates paid
(3):
Investment yield 5.39% 4.60% 0.79%
Investment commission rate 4.48% 4.02% 0.46%
Net investment margin 1.87% 1.42% 0.45%
(1) Investment commissions expense reported includes payments made to financial
institution customers based on short-term interest rate indices on outstanding
balances of official checks sold by that financial institution, as well as costs
associated with swaps and the sale of receivables program.
(2) Commissions are paid to financial institution customers based upon average
outstanding balances generated by the sale of official checks only. The average
balance in the table reflects only the payment service obligations for which
commissions are paid and does not include the average balance of the sold
receivables ($387.9 million and $400.2 million for the third quarter of 2005 and
2004, respectively, and $397.3 million and $408.2 million for the nine months
ended September 30, 2005 and 2004, respectively) as these are not recorded in
the Consolidated Balance Sheets.
(3) Average yields/rates are calculated by dividing the applicable amount shown
in the "Components of net investment revenue" section by the applicable amount
shown in the "Average balances" section divided by the number of days in the
period presented and multiplied by the number of days in the year. The "Net
investment margin" is calculated by dividing "Net investment revenue" by the
"Cash Equivalents and Investments" average balance divided by the number of days
in the period presented and multiplied by the number of days in the year.
TABLE TWO
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
--------- --------- --------- ---------
(Dollars in thousands, except share and
per share data)
REVENUE:
Fee and other revenue $156,375 $128,000 $444,173 $363,706
Investment revenue 91,634 77,276 272,188 231,510
Net securities gains and
losses (1,624) 10,877 (2,060) 12,078
--------- --------- --------- ---------
Total revenue 246,385 216,153 714,301 607,294
Fee commissions expense 58,940 47,593 167,344 132,021
Investment commissions
expense 60,889 56,712 177,656 160,164
--------- --------- --------- ---------
Total commissions
expense 119,829 104,305 345,000 292,185
--------- --------- --------- ---------
Net revenue 126,556 111,848 369,301 315,109
EXPENSES:
Compensation and benefits 35,180 29,320 97,745 95,709
Transaction and operations
support 34,547 33,383 106,733 89,069
Depreciation and
amortization 8,102 7,439 23,187 22,058
Occupancy, equipment and
supplies 8,156 7,012 25,106 22,727
Interest expense 1,697 1,234 5,694 4,361
Debt tender and redemption
costs - - - 20,661
--------- --------- --------- ---------
Total expenses 87,682 78,388 258,465 254,585
--------- --------- --------- ---------
Income from continuing
operations before income
taxes 38,874 33,460 110,836 60,524
Income tax expense 10,076 8,945 28,185 17,365
--------- --------- --------- ---------
Income (loss) from continuing
operations 28,798 24,515 82,651 43,159
Income (loss) and gain from
discontinued operations, net
of tax 740 - 740 21,282
--------- --------- --------- ---------
NET INCOME (LOSS) $29,538 $24,515 $83,391 $64,441
========= ========= ========= =========
Basic earnings (loss) per
share
Income (loss) from continuing
operations $0.34 $0.28 $0.97 $0.50
Income (loss) from
discontinued operations, net
of tax 0.01 - 0.01 0.24
--------- --------- --------- ---------
Earnings (loss) per common
share $0.35 $0.28 $0.98 $0.74
========= ========= ========= =========
Average outstanding common
shares 84,883 87,262 84,748 86,968
========= ========= ========= =========
Diluted earnings (loss) per
share
Income (loss) from continuing
operations $0.33 $0.28 $0.96 $0.50
Income (loss) from
discontinued operations, net
of tax 0.01 - 0.01 0.24
--------- --------- --------- ---------
Earnings (loss) per common
share $0.34 $0.28 $0.97 $0.74
========= ========= ========= =========
Average outstanding and
potentially dilutive common
shares 86,019 87,588 85,924 87,400
========= ========= ========= =========
TABLE THREE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
2005
-----------------------------
First Second Third
Quarter Quarter Quarter
-----------------------------
(Dollars in thousands)
Revenue:
Global Funds
Transfer $147,146 $159,742 $167,497
Payment Systems 80,769 80,258 78,888
-----------------------------
227,915 240,000 246,385
Operating income:
Global Funds
Transfer 26,429 29,682 35,230
Payment Systems 13,240 11,428 7,717
-----------------------------
39,669 41,110 42,947
Interest expense 1,389 2,608 1,697
Other unallocated
expenses 2,623 2,197 2,376
-----------------------------
Income from
continuing
operations before
income taxes $35,657 $36,305 $38,874
=============================
Operating Margin:
Global Funds
Transfer 18.0% 18.6% 21.0%
Payment Systems 16.4% 14.2% 9.8%
2004
-------------------------------------------------
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
-------------------------------------------------
(Dollars in thousands)
Revenue:
Global Funds
Transfer $120,969 $128,165 $137,688 $145,243 $532,065
Payment Systems 70,352 71,655 78,465 73,993 294,465
-------------------------------------------------
191,321 199,820 216,153 219,236 826,530
Operating income:
Global Funds
Transfer 20,978 24,777 27,393 29,458 102,606
Payment Systems 9,190 5,848 9,429 2,696 27,163
-------------------------------------------------
30,168 30,625 36,822 32,154 129,769
Debt tender and
redemption costs - 20,661 - - 20,661
Interest expense 1,222 1,905 1,234 1,214 5,575
Other unallocated
expenses 4,899 5,042 2,129 2,443 14,513
-------------------------------------------------
Income from
continuing
operations before
income taxes $24,047 $3,017 $33,459 $28,497 $89,020
=================================================
Operating Margin:
Global Funds
Transfer 17.3% 19.3% 19.9% 20.3% 19.3%
Payment Systems 13.1% 8.2% 12.0% 3.6% 9.2%
TABLE FOUR
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
MONEY TRANSFER REVENUE
(Unaudited)
Money Transfer Revenue (including Urgent Bill Payment)
---------------------------------------------------------------
Quarter Ended
March 31 June 30 September 30 December 31 Total Year
---------------------------------------------------------------
(Dollars in thousands)
2003 $69,836 $75,840 $80,895 $83,338 $309,909
2004 86,198 95,174 102,764 111,234 395,370
2005 111,296 124,545 132,802
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
September 30 December 31 September 30
2005 2004 2004
------------ ----------- ------------
(Dollars in thousands)
Cash and cash equivalents $999,089 $927,042 $788,687
Receivables 1,401,978 771,966 844,956
Investments 6,172,557 6,335,493 6,279,016
------------ ----------- ------------
8,573,624 8,034,501 7,912,659
Amounts restricted to cover
payment service obligations (8,220,504) (7,640,581) (7,532,691)
------------ ----------- ------------
Unrestricted assets (1) $353,120 $393,920 $379,968
============ =========== ============
(1) We have unrestricted cash and cash equivalents, receivables and investments
to the extent those assets exceed all payment service obligations. These amounts
are generally available; however, management considers these amounts as
providing additional assurance that regulatory requirements are maintained
during the normal fluctuations in the value of investments.
CONTACT: MoneyGram International, Inc., Minneapolis
Investor Relations:
Tim Gallaher, 952-591-3840
ir@moneygram.com