Exhibit 99.1
MoneyGram International Announces First Quarter 2006 Results; Money Transfer
Volume Grows 46 percent in First Quarter; Increases Guidance for 2006
MINNEAPOLIS--(BUSINESS WIRE)--April 19, 2006--MoneyGram
International, Inc. (NYSE:MGI):
($ in millions) except per share data Q1 Q1 %
2006 2005 Change
Revenue $263.7 $227.9 15.7%
Commissions Expense 126.3 110.1 14.6%
Net Revenue 137.4 117.8 16.7%
Expenses 91.7 82.1 11.7%
Net Income $30.9 $27.8 11.3%
Diluted earnings per share $0.36 $0.32 11.3%
Operating Margin 17.3% 15.6%
MoneyGram International, Inc. (NYSE:MGI), today announced first
quarter 2006 net income of $30.9 million, or $0.36 per diluted share,
compared to $27.8 million, or $0.32 per diluted share in the first
quarter of 2005. The company also increased full year 2006 earnings
guidance to $1.36 to $1.41 per diluted share, up from previous
guidance of $1.25 to $1.30.
First quarter 2006 results reflect:
-- Global Funds Transfer segment revenue growth of 24 percent
compared to the first quarter of 2005. The growth was driven
by money transfer transaction volume growth of 46 percent and
money transfer revenue growth of 30 percent.
-- Fee and other revenue of $169.1 million, up 22 percent from
the first quarter of 2005, driven primarily by growth in money
transfer transaction volume.
-- Net investment margin of 2.31 percent, as shown in Table One.
Net investment margin was higher than anticipated due to $3.8
million of pretax cash flow recoveries on previously impaired
investments and income from limited partnership interests. In
total, these items amounted to $0.03 per diluted share.
For comparative purposes, the first quarter of 2006 and 2005
included the following significant items (after tax):
- ----------------------------------------------------------------------
Q1 2006 Q1 2005
---------- ----------
($ in millions) except for per share data Net income Net income
impact impact
- ----------------------------------------------------------------------
Cash flows from previously impaired investments
and income from limited partnership interests $2.4 $3.3
Payment Systems contract termination fee
received 0.0 1.4
Legal settlements 0.0 (1.4)
Tax reserve reversals 0.0 2.1
---------- ----------
Total $2.4 $5.4
Total diluted earnings per share impact $0.03 $0.06
- ----------------------------------------------------------------------
Philip Milne, president and chief executive officer said, "I am
very pleased with the results from the first quarter. The growth in
our money transfer business continued to be robust. Also, we enhanced
our global money transfer agent relationships with the re-signing of
Poste Italiane and the United Kingdom Post Office and the announced
agreement to acquire Money Express, our Super Agent in Italy."
Segment Highlights
MoneyGram operates in two reportable business segments, Global
Funds Transfer and Payment Systems.
Global Funds Transfer
($ in millions)
Q1 Q1 %
2006 2005 Change
----------------------------
Revenue $183.0 $147.1 24.4%
Commissions Expense 72.1 56.8 27.0%
Net Revenue 110.8 90.3 22.7%
Operating Income $39.9 $26.4 51.0%
Operating Margin 21.8% 18.0%
For the Global Funds Transfer segment, which consists of money
transfer (including urgent bill payment) and retail money orders,
revenue increased 24 percent to $183.0 million, reflecting the growth
in money transfer transaction volume and investment revenue from
higher yields on the money order portfolio. Operating income increased
51 percent to $39.9 million in the first quarter of 2006 compared to
the first quarter of 2005 primarily for the same reasons that revenue
increased. Operating margin in the first quarter of 2006 was 21.8
percent compared to 18.0 percent in the first quarter of 2005. The net
benefit to first quarter 2006 operating income from the cash flow
recoveries on previously impaired investments and income from limited
partnership interests was $0.9 million for a positive 40 basis points
to the operating margin. First quarter 2005 operating income was lower
by $1.1 million due to the net effect of legal settlements partially
offset by cash flow recoveries on previously impaired investments for
a negative 90 basis points to the operating margin.
Money transfer transaction volume grew 46 percent and money
transfer revenue (see Table Four) grew 30 percent to $145.0 million
compared to the first quarter of 2005. Money transfer volume growth
rates continued to outpace revenue growth rates due to strong domestic
originated growth driven by our simplified pricing initiative, and
lower euro exchange rates compared to the first quarter of 2005. The
money transfer agent network grew 16 percent to 92,000 agent locations
from the first quarter of 2005. Money order transaction volume was
down approximately four percent, following the trend of declining use
of paper-based payment instruments.
Payment Systems
($ in millions)
Q1 Q1 %
2006 2005 Change
- ----------------------------------------------------------------------
Revenue $80.7 $80.8 (0.1%)
Commissions Expense 54.1 53.3 1.5%
Net Revenue 26.6 27.4 (3.2%)
Operating Income $10.3 $13.2 (22.0%)
Operating Margin 12.8% 16.4%
The Payment Systems segment includes PrimeLink/Official Check
outsourcing services, financial money orders and controlled
disbursement processing services. Payment Systems revenue was flat at
$80.7 million in the first quarter of 2006 compared to the first
quarter of 2005. Revenue included cash flow recoveries from previously
impaired investments and income from limited partnership interests
(2006 - $2.9 million; 2005 - $4.2 million) and a $2.2 million early
contract termination fee in 2005. Operating income for the segment was
$10.3 million in the first quarter of 2006, compared to $13.2 million
in the first quarter of 2005 due to higher cash flow recoveries on
previously impaired investments and the early termination payment
received in the first quarter of 2005. Operating margin for the first
quarter of 2006 was 12.8 percent, down from 16.4 percent in the first
quarter of 2005. The benefit to the operating margin in the first
quarter of 2006 from the cash flow recoveries from previously impaired
investments and the income from limited partnership interests was 320
basis points. The benefit to the operating margin in the first quarter
of 2005 from the cash flow recoveries from previously impaired
investments and the early termination payment received was 720 basis
points.
Share Repurchase
During the first quarter of 2006, MoneyGram International
purchased 483,900 shares at an average price of $27.97 per share. The
company has 3.5 million shares remaining under its current share
buyback authorization.
2006 Outlook
Earnings per diluted share is expected to be in the range of $1.36
to $1.41, up from previous guidance of $1.25 to $1.30. The revised
full year estimates include approximately $11.6 million pretax income
or $0.08 per diluted share from actual and anticipated cash flows on
previously impaired investments and income from limited partnership
interests.
-- Net revenue (total revenue less total commissions) is expected
to be in the range of $565 million to $590 million, up from
previous guidance of $535 million to $560 million.
-- Net investment margin is expected to be in the range of 195 to
205 basis points up from previous guidance of 155 to 165 basis
points. The new guidance includes the effect of actual and
anticipated cash flows on previously impaired investments and
income from limited partnership interests. 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 $165 million to $173 million, up from
previous guidance of $147 million to $155 million.
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.
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 first 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
888-396-2298 in the U.S. The participant passcode is 15088243. 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
April 26, 2006. The replay of the call will be available at
888-286-8010 for U.S. callers or 617-801-6888 for international
callers, passcode 22626790. 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 92,000 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) loss of key
retail agents in our Global Funds Transfer segment; (b) loss of large
financial institution customers in our Payment Systems segment; (c)
ability to successfully develop and timely introduce new and enhanced
products and services, and to protect the intellectual property rights
related to our existing and any new or enhanced products and services;
(d) litigation or investigations that could result in material
settlements, fines or penalties; (e) failure to continue to compete
effectively; (f) ability to manage risks relating to U.S. federal and
state regulatory requirements that could result in material
settlements, fines or penalties, or changes in our business
operations; (g) imposition of additional regulatory requirements in
any of the foreign countries in which we operate; (h) ability to
manage credit and fraud risks from our retail agents; (i) ability to
manage credit risk related to our investment portfolio and our use of
derivatives; (j) fluctuations in interest rates; (k) material changes
in the market value of securities we hold; (l) unexpected liquidity
needs; (m) ability to maintain efficient, secure and uninterrupted
operation of our computer network systems and data centers; (n)
ability to process and settle transactions accurately and efficiently;
(o) ability to manage risks associated with our international sales
and operations; (p) possible delay or prevention of an acquisition of
our company which could inhibit a stockholder's ability to receive a
premium on their investment from a possible sale of our company due to
provisions contained in our charter documents, our rights plan and
Delaware law; and (q) 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
March 31 2006 vs
2006 2005 2005
--------------------------------
(Dollars in thousands)
Components of net investment revenue:
Investment revenue $94,960 $89,502 $5,458
Investment commissions expense (1) (58,789) (57,953) (836)
--------------------------------
Net investment revenue $36,171 $31,549 $4,622
================================
Average balances:
Cash equivalents and investments $6,343,281 $6,703,839 ($360,558)
Payment service obligations (2) 4,792,925 5,240,596 (447,671)
Average yields earned and rates paid
(3):
Investment yield 6.07% 5.41% 0.66%
Investment commission rate 4.97% 4.48% 0.49%
Net investment margin 2.31% 1.91% 0.40%
(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 ($393.0 million
and $407.8 million for the first quarter of 2006 and 2005,
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
March 31
2006 2005
-------------- --------------
(Dollars in thousands, except
share and per share data)
REVENUE:
Fee and other revenue $169,132 $138,519
Investment revenue 94,960 89,502
Net securities gains and losses (420) (106)
-------------- --------------
Total revenue 263,672 227,915
Fee commissions expense 67,484 52,188
Investment commissions expense 58,789 57,953
-------------- --------------
Total commissions expense 126,273 110,141
-------------- --------------
Net revenue 137,399 117,774
EXPENSES:
Compensation and benefits 40,627 29,274
Transaction and operations support 32,087 35,644
Depreciation and amortization 8,432 7,436
Occupancy, equipment and supplies 8,618 8,374
Interest expense 1,947 1,389
-------------- --------------
Total expenses 91,711 82,117
-------------- --------------
Income from continuing operations before
income taxes 45,688 35,657
Income tax expense 14,753 7,868
-------------- --------------
Income from continuing operations 30,935 27,789
Income and gain from discontinued
operations, net of tax - -
-------------- --------------
NET INCOME $30,935 $27,789
============== ==============
Basic earnings per share
Income from continuing operations $0.37 $0.33
Income from discontinued operations, net
of tax - -
-------------- --------------
Earnings per common share $0.37 $0.33
============== ==============
Average outstanding common shares 84,369 84,576
============== ==============
Diluted earnings per share
Income from continuing operations $0.36 $0.32
Income from discontinued operations, net
of tax - -
-------------- --------------
Earnings per common share $0.36 $0.32
============== ==============
Average outstanding and potentially
dilutive common shares 85,925 86,023
============== ==============
TABLE THREE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
2006
---------------------------------------------
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
---------------------------------------------
(Dollars in thousands)
Revenue:
Global Funds Transfer $182,987
Payment Systems 80,685
---------
263,672
Operating income:
Global Funds Transfer 39,907
Payment Systems 10,323
---------
50,230
Interest expense 1,947
Other unallocated
expenses 2,595
---------
Income from continuing
operations before
income taxes $45,688
=========
Operating Margin:
Global Funds Transfer 21.8%
Payment Systems 12.8%
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%
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
2006 144,987
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
March 31 December 31
2006 2005
------------- ------------
(Dollars in thousands)
Cash and cash equivalents $894,010 $866,391
Receivables 1,282,693 1,325,622
Investments 6,060,111 6,233,333
------------- ------------
8,236,814 8,425,346
Amounts restricted to cover payment service
obligations (7,912,720) (8,059,309)
------------- ------------
Unrestricted assets (1) $324,094 $366,037
============= ============
(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