Exhibit 99.1
MoneyGram International Announces Fourth Quarter and Full Year 2005 Results;
Money Transfer Volume Grows 39 Percent in Fourth Quarter
MINNEAPOLIS--(BUSINESS WIRE)--Jan. 25, 2006--MoneyGram International, Inc.
(NYSE:MGI):
($ in millions) except Full Full
per share data Q4 Q4 % Year Year %
2005 2004 Change 2005 2004 Change
Revenue $256.9 $219.2 17.2% $971.2 $826.5 17.5%
Commissions Expense 125.5 111.3 12.7% 470.5 403.5 16.6%
Net Revenue 131.5 107.9 21.8% 500.8 423.1 18.4%
Expenses 95.9 79.5 20.7% 354.4 334.0 6.1%
Income from Continuing
Operations $29.6 $22.0 34.5% $112.2 $65.1 72.3%
Income from
Discontinued
Operations, net of
tax $0.0 $0.0 NM $0.7 $21.3 NM
Net Income $29.6 $22.0 34.5% $112.9 $86.4 30.7%
Earnings per diluted
share
Income from
Continuing
Operations $0.34 $0.25 36% $1.30 $0.75 73%
Income from
Discontinued
Operations $0.00 $0.0 NM $0.01 $0.24 NM
Net Income $0.34 $0.25 36% $1.31 $0.99 32%
Operating Margin 13.8% 13.0% NM 15.1% 10.8% NM
NM = Not Meaningful
MoneyGram International, Inc. (NYSE:MGI), today announced fourth quarter
2005 income from continuing operations of $29.6 million, or $0.34 per diluted
share, compared to $22.0 million, or $0.25 per diluted share in the fourth
quarter of 2004.
Fourth quarter 2005 results reflect:
-- Global Funds Transfer segment revenue growth of 21 percent compared to
the fourth quarter of 2004. The growth was driven by money transfer
transaction volume growth of 39 percent and money transfer revenue
growth of 25 percent.
-- Net investment margin of 2.04 percent, as shown in Table One,
including cash flows of $600,000 from previously impaired securities
and income of $2.3 million from limited partnership interests, or
$0.02 per diluted share after tax, combined.
-- Fee and other revenue of $162.8 million, up 19 percent from the fourth
quarter of 2004, driven primarily by growth in money transfer
transaction volume.
-- Increased provision for uncollectible agent receivables related to a
specific agent of $4.7 million pretax or $0.03 per diluted share after
tax.
-- Income tax expense of $6.0 million for an effective rate of 17%. The
provision for income taxes was reduced by $3.5 million due to net
favorable changes in estimates to previously estimated tax amounts.
For the full year 2005, income from continuing operations was $112.2
million, or $1.30 per share, compared to income from continuing operations of
$65.1 million, or $0.75 per share in 2004. The company previously provided full
year guidance for income from continuing operations of $1.22 to $1.25.
Significant items affecting income from continuing operations (after tax)
for the full year 2005 include:
- ----------------------------------------------------------------------
Full Year 2005
-----------------------
After tax
impact on Earnings
income from per
continuing diluted
$ in millions except for earnings per share operations share
- ----------------------------------------------------------------------
Cash flows from previously impaired
securities $7.9 $0.09
Income from limited partnership interests 3.9 0.04
Payment Systems contract termination fee
received 1.4 0.02
Legal settlement (1.4) (0.02)
Provision for uncollectible agent
receivables related to a specific agent (3.0) (0.03)
Write-off of unamortized deferred financing
costs (0.6) (0.01)
Changes in tax estimates and reserve
reversals 5.6 0.06
----------- -----------
Total $13.8 $0.16
- ----------------------------------------------------------------------
Philip Milne, president and chief executive officer said, "We finished this
year very strongly and I'd like to thank all of the MoneyGram team for their
outstanding efforts this year. The performance in our money transfer business
drove consistent earnings growth throughout the year and continues to reflect
our marketing and advertising efforts around simplified pricing and our global
brand."
Segment Highlights
MoneyGram operates in two reportable business segments, Global Funds
Transfer and Payment Systems.
Global Funds Transfer
($ in millions)
Q4 Q4 % FY FY %
2005 2004 Change 2005 2004 Change
-----------------------------------------------
Revenue $175.2 $145.2 20.6% $649.6 $532.1 22.1%
Commissions Expense 68.6 55.9 22.7% 249.8 199.8 25.0%
Net Revenue 106.7 89.4 19.4% 399.8 332.2 20.3%
Operating Income $30.3 $29.5 3.0% $121.7 $102.6 18.6%
Operating Margin 17.3% 20.3% 18.7% 19.3%
For the Global Funds Transfer segment, which consists of money transfer
(including urgent bill payment) and retail money orders, revenue increased
nearly 21 percent to $175.2 million and operating income increased 3 percent to
$30.3 million in the fourth quarter of 2005 compared to the fourth quarter 2004.
Revenue improved as a result of growth in money transfer transaction volume and
investment revenue from higher yields on the money order portfolio. Operating
income increased compared to the fourth quarter 2004 due to the growth in money
transfer transaction volume and investment revenue offset in part by increases
in marketing expense supporting the money transfer business and the provision
for uncollectible agent receivables. Operating margin in the fourth quarter of
2005 was 17.3 percent compared to 20.3 percent in the fourth quarter of 2004.
The decrease in margin was due to the increased marketing expense and the
increase in the provision for uncollectible agent receivables.
Money transfer transaction volume grew 39 percent and money transfer
revenue (see Table Four) grew 25 percent to $139.1 million compared to the
fourth quarter of 2004. Money transfer revenue growth rates are lower than
volume growth rates due to targeted pricing initiatives, strong domestic
originated growth and lower euro exchange rates compared to fourth quarter 2004.
The money transfer agent network grew 16 percent to 89,000 agent locations from
the fourth quarter of 2004. Money order transaction volume was down 4 percent,
following a trend of declining use of paper-based payment instruments.
For the full year 2005, the Global Funds Transfer segment revenue was
$649.6 million and operating income was $121.7 million, up 22 percent and 19
percent, respectively, from 2004. Both revenue and operating income improved
primarily as a result of growth in the money transfer transaction volume.
Operating margin for the full year 2005 was 18.7 percent, down from 19.3 percent
in 2004 due to the increased marketing initiatives implemented in 2005 and the
increase in the provision for uncollectible agent receivables related to a
specific agent.
Payment Systems
($ in millions)
Q4 Q4 % FY FY %
2005 2004 Change 2005 2004 Change
- ----------------------------------------------------------------------
Revenue $81.7 $74.0 10.4% $321.6 $294.5 9.2%
Commissions Expense 56.9 55.4 2.7% 220.7 203.7 8.4%
Net Revenue 24.8 18.6 33.4% 100.9 90.8 11.1%
Operating Income $10.0 $2.7 271.7% $42.4 $27.2 56.1%
Operating Margin 12.3% 3.6% 13.2% 9.2%
The Payment Systems segment includes PrimeLink/Official Check outsourcing
services, financial money orders and controlled disbursement processing
services. Payment Systems revenue increased 10 percent to $81.7 million in the
fourth quarter of 2005 from $74.0 million in the fourth quarter of 2004 due to
growth in investment revenue from higher yields, $1.8 million of income from
limited partnership interests and $0.5 million of income from cash flows from
previously impaired securities. Operating income for the segment was $10.0
million in the fourth quarter of 2005, up from $2.7 million in the fourth
quarter of 2004 due to increased net investment revenue in part from the income
from limited partnership interests and cash flows from previously impaired
securities. Operating margin for the fourth quarter of 2005 was 12.3 percent, up
from 3.6 percent in the fourth quarter of 2004. The benefit to the operating
margin in the fourth quarter of 2005 from the income from limited partnership
interests and cash flows from previously impaired securities was 2.6 percentage
points.
For the full year 2005, Payment Systems segment revenue was $321.6 million
and operating income was $42.4 million, up 9 percent and 56 percent compared to
2004. The increase in revenue and operating income in 2005 compared to 2004 was
due to higher yields on the portfolio, $10.1 million of cash flow from
previously impaired securities, $5.0 million of income from limited partnership
interests and a $2.2 million customer termination fee received. Operating income
for the full year 2004 included $8.7 million in net securities gains partially
offset by $2.1 million of write-offs of intangible assets in the third quarter.
Operating margin for the full year 2005 was 13.2 percent in comparison to 9.2
percent in 2004. The benefit to the 2005 operating margin of the cash flows from
previously impaired securities, income from limited partnership interests and
customer termination fee was 4.9 percentage points. The net benefit to the 2004
operating margin of the net securities gains and write-offs was 2.0 percentage
points.
Share Repurchase
During the fourth quarter, MoneyGram International bought back 586,000
shares at an average price of $25.77 per share. For the fiscal year 2005, the
company bought back nearly 2.3 million shares at an average price of $21.97 per
share. MoneyGram International has 4.0 million shares remaining under its
current share buyback authorization.
2006 Outlook
The company is offering the following guidance for full year 2006:
-- Net revenue (total revenue less total commissions) is expected to be
in the range of $535 million to $560 million.
-- Net investment margin is expected to be in the range of 155 to 165
basis points. Average portfolio balances are expected to be in the
range of $6.3 - $6.6 billion for the year.
-- Income from continuing operations before taxes is expected to be in
the range of $147 million to $155 million.
-- Earnings per diluted share is expected to be in the range of $1.25 to
$1.30.
-- The company previously adopted SFAS 123R, Share-Based Payment
(expensing of stock options) on January 1, 2005.
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. The 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 fourth quarter and full year 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 888-396-2298 in the U.S.
The participant passcode is 16806805. 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 Feb. 8, 2006. The replay of the call is available at
888-286-8010 for U.S. callers or 617-801-6888 for international callers,
passcode 77014252. 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 $970 million in revenue in 2005 and
approximately 89,000 global money transfer agent locations in 170 countries and
territories. 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 products; (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, investigations, fines or penalties; (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
December 31 2005 vs
2005 2004 2004
-----------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $95,801 $84,473 $11,328
Investment commissions expense
(1) (61,607) (59,748) (1,859)
-----------------------------------
Net investment revenue $34,194 $24,725 $9,469
===================================
Average balances:
Cash equivalents and
investments $6,656,771 $6,900,848 ($244,077)
Payment service obligations (2) 5,180,754 5,498,039 (317,285)
Average yields earned and rates
paid (3):
Investment yield 5.71% 4.87% 0.84%
Investment commission rate 4.72% 4.32% 0.40%
Net investment margin 2.04% 1.43% 0.61%
Total Year 2005 vs
2005 2004 2004
-----------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $367,989 $315,983 $52,006
Investment commissions expense
(1) (239,263) (219,912) (19,351)
-----------------------------------
Net investment revenue $128,726 $96,071 $32,655
===================================
Average balances:
Cash equivalents and
investments $6,726,790 $6,772,124 ($45,334)
Payment service obligations (2) 5,268,512 5,370,768 (102,256)
Average yields earned and rates
paid (3):
Investment yield 5.47% 4.67% 0.80%
Investment commission rate 4.54% 4.09% 0.45%
Net investment margin 1.91% 1.42% 0.49%
(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 ($367.8 million
and $393.7 million for the fourth quarter of 2005 and 2004,
respectively, and $389.8 million and $404.6 million for 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
December 31 Total Year
2005 2004 2005 2004
---------- ---------- ---------- ----------
(Dollars in thousands, except share and per
share data)
REVENUE:
Fee and other revenue $162,784 $137,234 $606,956 $500,940
Investment revenue 95,801 84,473 367,989 315,983
Net securities gains and
losses (1,649) (2,471) (3,709) 9,607
---------- ---------- ---------- ----------
Total revenue 256,936 219,236 971,236 826,530
Fee commissions expense 63,865 51,540 231,209 183,561
Investment commissions
expense 61,607 59,748 239,263 219,912
---------- ---------- ---------- ----------
Total commissions
expense 125,472 111,288 470,472 403,473
---------- ---------- ---------- ----------
Net revenue 131,464 107,948 500,764 423,057
EXPENSES:
Compensation and
benefits 34,970 30,931 132,715 126,641
Transaction and
operations support 43,306 31,696 150,038 120,767
Depreciation and
amortization 9,278 7,509 32,465 29,567
Occupancy, equipment and
supplies 6,457 8,101 31,562 30,828
Interest expense 1,914 1,214 7,608 5,573
Debt tender and
redemption costs - - - 20,661
---------- ---------- ---------- ----------
Total expenses 95,925 79,451 354,388 334,037
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes 35,539 28,497 146,376 89,020
Income tax expense 5,984 6,526 34,170 23,891
---------- ---------- ---------- ----------
Income from continuing
operations 29,555 21,971 112,206 65,129
Income and gain from
discontinued operations,
net of tax - 740 21,283
---------- ---------- ---------- ----------
NET INCOME $29,555 $21,971 $112,946 $86,412
========== ========== ========== ==========
Basic earnings per share
Income from continuing
operations $0.35 $0.25 $1.32 $0.75
Income from discontinued
operations, net of tax - - 0.01 0.24
---------- ---------- ---------- ----------
Earnings per common share $0.35 $0.25 $1.33 $0.99
========== ========== ========== ==========
Average outstanding common
shares 84,461 86,761 84,675 86,916
========== ========== ========== ==========
Diluted earnings per share
Income from continuing
operations $0.34 $0.25 $1.30 $0.75
Income from discontinued
operations, net of tax - - 0.01 0.24
---------- ---------- ---------- ----------
Earnings per common share $0.34 $0.25 $1.31 $0.99
========== ========== ========== ==========
Average outstanding and
potentially dilutive
common shares 86,046 87,117 85,970 87,330
========== ========== ========== ==========
TABLE THREE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
2005
-------------------------------------------------
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
-------------------------------------------------
(Dollars in thousands)
Revenue:
Global Funds
Transfer $147,146 $159,742 $167,497 $175,232 $649,617
Payment Systems 80,769 80,258 78,888 81,704 321,619
-------------------------------------------------
227,915 240,000 246,385 256,936 971,236
Operating income:
Global Funds
Transfer 26,429 29,682 35,230 30,336 121,677
Payment Systems 13,240 11,428 7,717 10,021 42,406
-------------------------------------------------
39,669 41,110 42,947 40,357 164,083
Interest expense 1,389 2,608 1,697 1,914 7,608
Other unallocated
expenses 2,623 2,197 2,376 2,903 10,099
-------------------------------------------------
Income from
continuing
operations before
income taxes $35,657 $36,305 $38,874 $35,539 $146,376
=================================================
Operating Margin:
Global Funds
Transfer 18.0% 18.6% 21.0% 17.3% 18.7%
Payment Systems 16.4% 14.2% 9.8% 12.3% 13.2%
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 111,296 124,545 132,802 139,083 507,726
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
December 31 December 31
2005 2004
----------- -----------
(Dollars in thousands)
Cash and cash equivalents $866,391 $927,042
Receivables 1,325,622 771,966
Investments 6,233,333 6,335,493
----------- -----------
8,425,346 8,034,501
Amounts restricted to cover payment service
obligations (8,059,309) (7,640,581)
----------- -----------
Unrestricted assets (1) $366,037 $393,920
=========== ===========
(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