Exhibit 99.1
MoneyGram International Announces Second Quarter Financial Results;
Money Transfer Volume Grows 42 percent in Second Quarter
MINNEAPOLIS--(BUSINESS WIRE)--July 19, 2006--MoneyGram
International, Inc. (NYSE:MGI):
- ----------------------------------------------------------------------
($ in millions) Q2 Q2 %
2006 2005 Change
------------------------
Revenue $292.9 $240.0 22.0%
Commissions Expense 138.7 115.0 20.5%
-------- --------
Net Revenue 154.3 125.0 23.4%
Expenses 102.4 88.7 15.5%
Net Income $36.7 $26.1 40.8%
Earnings per Diluted Share $0.42 $0.30 40.0%
Operating Margin 17.7% 15.1% N/A
- ----------------------------------------------------------------------
MoneyGram International, Inc. (NYSE:MGI), today announced second
quarter 2006 net income of $36.7 million, or $0.42 per diluted share,
compared to net income of $26.1 million, or $0.30 per diluted share in
the second quarter 2005.
Second quarter 2006 results reflect:
-- Global Funds Transfer segment revenue growth of over 26
percent compared to the second quarter 2005, driven by 42
percent growth of money transfer transaction volume and 30
percent growth of money transfer revenue.
-- Fee and other revenue of $186.8 million, up 25 percent from
the second quarter of 2005 driven by the growth in money
transfer transaction volume.
-- Net investment margin of 2.71 percent, as shown in Table One,
including $8.6 million, or $0.06 per diluted share after tax,
of cash flows from previously impaired investments and income
from limited partnership interests.
For comparative purposes, the second quarter of 2006 and 2005
included the following significant items (after tax):
- ----------------------------------------------------------------------
($ in millions) except for per share data Q2 2006 Q2 2005
- ----------------------------------------------------------------------
Cash flows from previously impaired investments
and income from limited partnership interests $5.4 $3.6
Write-off of deferred financing costs 0.0 (0.6)
--------- ---------
Total net income impact $5.4 $3.0
========= =========
Total diluted earnings per share impact $0.06 $0.04
========= =========
- ----------------------------------------------------------------------
Philip Milne, president and chief executive officer said, "Our
money transfer volume continued to drive financial results in the
second quarter and consumers clearly identify our brand with
convenient, reliable and affordable money transfer services. Also, we
were pleased to close on our acquisition of Money Express and
establish MoneyGram Italy, which is operating our business in Italy."
Segment Highlights
MoneyGram operates in two reportable business segments, Global
Funds Transfer and Payment Systems.
Global Funds Transfer
($ in millions)
Q2 Q2 %
2006 2005 Change
------------------------------
Revenue $202.0 $159.7 26.5%
Commissions Expense 80.3 60.6 32.5%
Net Revenue 121.7 99.1 22.8%
Operating Income $40.8 $29.7 37.5%
Operating Margin 20.2% 18.6%
For the Global Funds Transfer segment, which consists of money
transfer (including urgent bill payment) and retail money orders,
revenue increased over 26 percent to $202.0 million and operating
income over 37 percent to $40.8 million in the second quarter of 2006
compared to the same period last year. Revenue and operating income
improved primarily as a result of money transfer volume growth and a
higher yield on the investment portfolio related to the money order
business. Operating margin in the second quarter 2006 was 20.2 percent
compared to 18.6 percent in the second quarter 2005. The increase in
margin was in the money order business due to higher yields on the
portfolio and lower agent provision for loss.
Money transfer transaction volume grew 42 percent and money
transfer revenue (see Table Four) grew 30 percent to $161.9 million
compared to second quarter of 2005. Money transfer revenue growth
rates are lower than volume growth rates primarily due to targeted
pricing initiatives. The money transfer agent network grew 19 percent
from the second quarter of 2005 to approximately 96,000 agent
locations. Money order transaction volume was down approximately 3
percent, following a trend of declining use of paper-based payment
instruments.
Payment Systems
($ in millions)
Q2 Q2 %
2006 2005 Change
------------------------------
Revenue $90.9 $80.3 13.2%
Commissions Expense 58.3 54.4 7.2%
Net Revenue 32.6 25.9 25.9%
Operating Income $16.2 $11.4 41.8%
Operating Margin 17.8% 14.2%
The Payment Systems segment includes PrimeLink/Official Check
outsourcing services, money orders sold by financial institutions and
controlled disbursement processing services. Payment Systems revenue
increased 13 percent to $90.9 million in the second quarter of 2006
compared to the second quarter of 2005. Revenue increased due to
higher short-term interest rates and cash flows from previously
impaired investments and income from limited partnership interests
(2006 - $6.7 million; 2005 - $4.6 million). Operating income for the
segment was $16.2 million in the second quarter of 2006, compared to
$11.4 million in the second quarter of 2005 due to the higher cash
flows from previously impaired investments and income from limited
partnership interests and higher net investment revenue from
increasing short-term rates and repricing initiatives slightly offset
by lower investable balances. Operating margin for the second quarter
of 2006 was up 3.6 percentage points versus the second quarter of last
year for the same reasons as the increase in operating income.
Share Repurchase
During the second quarter of 2006, MoneyGram International
purchased 470,150 shares at an average price of $32.33 per share. The
company has 3.0 million shares remaining under its current share
buyback authorization.
2006 Outlook
Our guidance for the rest of 2006 is being changed slightly to
reflect the increase in cash flows from previously impaired
investments and income from limited partnership interests. Earnings
per diluted share is expected to be in the range of $1.37 to $1.42, up
from previous guidance of $1.36 to $1.41. The revised full year
estimate includes approximately $12.4 million pretax income or $0.09
per diluted share from actual and anticipated cash flows from
previously impaired investments and income from limited partnership
interests, up from our previous estimate of $11.6 million pretax
income or $0.08 per diluted share.
-- Net revenue (total revenue less total commissions) is expected
to be in the range of $565 million to $590 million, unchanged
from previous guidance.
-- Net investment margin is expected to be in the range of 205 to
215 basis points up from previous guidance of 195 basis points
to 205 basis points. The guidance includes the effect of
actual and anticipated cash flows from previously impaired
investments and income from limited partnership interests.
Average portfolio balances are expected to be in the range of
$6.2 billion to $6.5 billion for the year down from previous
guidance of $6.3 billion to $6.6 billion.
-- Income from continuing operations before taxes is expected to
be in the range of $166 million to $174 million, up slightly
from previous guidance of $165 million to $173 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. Our 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 second 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
(866) 383-8008 in the U.S. The participant passcode is 51586226. 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
August 2, 2006. The replay of the call is available at (888) 286-8010
in the U.S., or (617) 801-6888 internationally, passcode 21692835. 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 96,000 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 June 30 2006 vs
2006 2005 2005
--------------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $106,516 $91,052 $15,464
Investment commissions
expense (1) (63,036) (58,813) (4,223)
--------------------------------------
Net investment revenue $43,480 $32,239 $11,241
======================================
Average balances:
Cash equivalents and
investments $6,430,475 $6,839,545 ($409,070)
Payment service obligations
(2) 4,904,676 5,397,552 (492,876)
Average yields earned and rates
paid (3):
Investment yield 6.64% 5.34% 1.30%
Investment commission rate 5.16% 4.37% 0.79%
Net investment margin 2.71% 1.89% 0.82%
Six months ended June 30 2006 vs
2006 2005 2005
--------------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $201,476 $180,554 $20,922
Investment commissions
expense (1) (121,825) (116,767) (5,058)
--------------------------------------
Net investment revenue $79,651 $63,787 $15,864
======================================
Average balances:
Cash equivalents and
investments $6,386,878 $6,771,692 ($384,814)
Payment service obligations
(2) 4,848,801 5,319,074 (470,273)
Average yields earned and rates
paid (3):
Investment yield 6.36% 5.38% 0.98%
Investment commission rate 5.07% 4.43% 0.64%
Net investment margin 2.51% 1.90% 0.61%
(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 ($374.8 million
and $396.0 million for the second quarter of 2006 and 2005,
respectively, and $383.8 million and $402.1 million for the six months
ended June 30, 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 Six months ended
June 30 June 30
2006 2005 2006 2005
--------- --------- --------- ---------
(Dollars in thousands,
except per share data)
REVENUE:
Fee and other revenue $186,837 $149,278 $355,968 $287,798
Investment revenue 106,516 91,052 201,476 180,554
Net securities gains and
losses (440) (330) (859) (436)
--------- --------- --------- ---------
Total revenue 292,913 240,000 556,585 467,916
Fee commissions expense 75,619 56,217 143,103 108,405
Investment commissions expense 63,036 58,813 121,825 116,767
--------- --------- --------- ---------
Total commissions
expense 138,655 115,030 264,928 225,172
--------- --------- --------- ---------
Net revenue 154,258 124,970 291,657 242,744
EXPENSES:
Compensation and benefits 43,093 33,292 83,721 62,565
Transaction and operations
support 39,210 36,541 71,296 72,185
Depreciation and amortization 9,345 7,648 17,777 15,085
Occupancy, equipment and
supplies 8,817 8,576 17,434 16,950
Interest expense 1,975 2,608 3,922 3,997
--------- --------- --------- ---------
Total expenses 102,440 88,665 194,150 170,782
--------- --------- --------- ---------
Income before income taxes 51,818 36,305 97,507 71,962
Income tax expense 15,112 10,242 29,865 18,109
--------- --------- --------- ---------
NET INCOME $36,706 $26,063 $67,642 $53,853
========= ========= ========= =========
Basic earnings per share
Earnings per common share $0.43 $0.31 $0.80 $0.64
========= ========= ========= =========
Average outstanding common
shares 84,727 84,784 84,552 84,681
========= ========= ========= =========
Diluted earnings per share
Earnings per common share $0.42 $0.30 $0.78 $0.63
========= ========= ========= =========
Average outstanding and
potentially dilutive common
shares 86,483 85,629 86,329 85,745
========= ========= ========= =========
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 $202,038
Payment Systems 80,685 90,875
------------------
263,672 292,913
Operating income:
Global Funds Transfer 39,907 40,801
Payment Systems 10,323 16,207
------------------
50,230 57,008
Interest expense 1,947 1,975
Other unallocated
expenses 2,595 3,215
------------------
Income before income
taxes $45,688 $51,818
==================
Operating Margin:
Global Funds Transfer 21.8% 20.2%
Payment Systems 12.8% 17.8%
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 144,987 161,917
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
June 30 December 31
2006 2005
------------- ------------
(Dollars in thousands)
Cash and cash equivalents $728,335 $866,391
Receivables 1,564,950 1,325,622
Investments 6,143,388 6,233,333
------------- ------------
8,436,673 8,425,346
Amounts restricted to cover payment service
obligations (8,142,462) (8,059,309)
------------- ------------
Unrestricted assets (1) $294,211 $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