EXHIBIT 99.1
MoneyGram International Announces Second Quarter 2007 Results
Money Transfer Volume Up 29 percent
MINNEAPOLIS--(BUSINESS WIRE)--July 18, 2007--MoneyGram
International, Inc. (NYSE:MGI):
($ in millions) except per share data Q2 Q2 %
2007 2006 Change
Revenue $333.3 $292.9 13.8%
Commissions Expense 165.6 138.7 19.4%
Net Revenue 167.7 154.3 8.7%
Expenses 119.8 102.4 16.9%
Net Income $32.4 $36.7 (11.8%)
Earnings per diluted share $0.38 $0.42 (9.5%)
Operating Margin 14.4% 17.7%
MoneyGram International, Inc. (NYSE:MGI), today announced second
quarter 2007 net income of $32.4 million, or $0.38 per diluted share,
compared to $36.7 million, or $0.42 per diluted share in the second
quarter of 2006. The second quarter of 2006 benefited from $8.6
million of pretax (or $5.4 million after tax) cash flows from
previously impaired investments and income from limited partnership
interests, which amounted to $0.06 per diluted share.
Second quarter 2007 results reflect:
-- Global Funds Transfer segment revenue growth of 22 percent
compared to the second quarter of 2006. The growth was driven
by money transfer transaction volume growth of 29 percent and
money transfer revenue growth of 29 percent.
-- Net investment margin of 2.28 percent, as shown in Table One.
-- Fee and other revenue of $233 million, up 24 percent from the
second quarter of 2006, driven primarily by continued growth
of money transfer transaction volume.
-- Expenses increase of 17 percent, driven by increased headcount
and infrastructure costs supporting the growth in money
transfer.
Philip Milne, president and chief executive officer said, "Our
money transfer business continues to generate a robust growth rate, up
29 percent from last year. We are very pleased with MoneyGram
International's performance in the second quarter of 2007, especially
given the strong quarter we reported in the second quarter of 2006. We
continue to strengthen our global presence and our infrastructure,
which we believe enhances our future transaction growth and leverages
our money transfer platform. Additionally, we continue to be pleased
with year over year performance of our investment portfolio that
allows us to continue to invest in our money transfer platform."
Segment Highlights
MoneyGram operates in two reportable business segments, Global
Funds Transfer and Payment Systems.
Global Funds Transfer
($ in millions)
Q2 Q2 %
2007 2006 Change
- ----------------------------------------------------------------------
Revenue $247.1 $202.0 22.3%
Commissions Expense 105.2 80.3 31.0%
Net Revenue 141.9 121.7 16.6%
Operating Income $40.8 $40.8 0.0%
Operating Margin 16.5% 20.2%
For the Global Funds Transfer segment, which consists of money
transfer (including urgent bill payment) and retail money orders,
revenue increased 22 percent to $247 million. Revenue improved as a
result of growth in money transfer transaction volume. Operating
income was flat at $41 million in the second quarter of 2007 compared
to the second quarter 2006. Growth in money transfer transactions was
offset by higher money transfer commissions and transaction and
infrastructure costs related to the expansion of the business and the
global network. The increased commissions and expenses had a 290 basis
point impact on the operating margin compared to the second quarter of
2006.
Money transfer transaction volume grew 29 percent and money
transfer revenue (see Table Four) grew 29 percent to $209.2 million
compared to the second quarter of 2006. The money transfer agent
network grew 30 percent to 125,000 agent locations from the second
quarter of 2006. As expected, money order transaction volume was down
four percent compared to the second quarter of 2006.
Payment Systems
($ in millions)
Q2 Q2 %
2007 2006 Change
- ----------------------------------------------------------------------
Revenue $86.1 $90.9 (5.3%)
Commissions Expense 60.4 58.3 3.5%
Net Revenue 25.7 32.6 (21.0%)
Operating Income $9.9 $16.2 (38.9%)
Operating Margin 11.5% 17.8%
The Payment Systems segment includes PrimeLink/Official Check
outsourcing services, financial money orders and controlled
disbursement processing services. Payment Systems revenue decreased 5
percent to $86.1 million in the second quarter of 2007 from $90.9
million in the second quarter of 2006 primarily due to $6.7 million of
pretax income from limited partnership interests and cash flows from
previously impaired securities earned in the second quarter of 2006.
Operating income for the segment was $9.9 million and operating margin
11.5 percent in the second quarter of 2007, compared to $16.2 million
and 17.8 percent in the second quarter of 2006. Operating income for
the second quarter of 2006 benefited from the $6.7 million of pretax
income mentioned above, which added 650 basis points to the operating
margin in that period.
Share Repurchase
During the second quarter of 2007, MoneyGram International bought
back 650,000 shares at an average price of $28.89 per share. The
company has 5.7 million shares remaining under its current share
buyback authorization.
2007 Outlook
The company expects the following financial results in the full
year 2007:
-- Net revenue (total revenue less total commissions) is expected
to be in the range of $665 million to $690 million, unchanged
from previous guidance.
-- Net investment margin is expected to be in the range of 200 to
215 basis points, up from previous guidance of 180 to 195
basis points. Average portfolio balances are expected to be in
the range of $6.0 - $6.3 billion for the year, unchanged from
previous guidance.
-- Income from continuing operations before taxes is expected to
be in the range of $183 million to $192 million, compared to
our previous guidance of $183 to $195 million.
-- Earnings per diluted share is expected to be in the range of
$1.49 to $1.55, narrowing the range from previous guidance of
$1.47 - $1.55.
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 the second quarter of 2007. Phil
Milne, chief executive officer, and Dave Parrin, chief financial
officer, will speak on the call. The conference call can be accessed
by calling 888-679-8040 in the U.S. The participant passcode is
69187960. 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 July 24, 2007. The replay of the call is
available at 888-286-8010 for U.S. callers or 617-801-6888 for
international callers, passcode 15103916. 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 product 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 $1.16
billion in revenue in 2006 and approximately 125,000 global money
transfer 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 or inability to maintain our network 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; (d) ability
to protect and defend the intellectual property rights related to our
existing and any new or enhanced products and services; (e) failure to
continue to compete effectively; (f) our and our agents ability to
comply with U.S and International regulatory requirements; (g)
conducting money transfer transactions through agents in regions that
are politically volatile and/or in a limited number of cases, subject
to certain OFAC restrictions; (h) ability to manage security risks
related to our electronic processing and transmission of confidential
customer information; (i) ability to process and settle transactions
accurately and on the efficient and uninterrupted operation of our
computer network systems and data centers; (j) ability to manage
credit and fraud risks from our retail agents; (k) ability to manage
reputational damage to our brand due to fraudulent use of our
services; (l) litigation or investigations of us or our agents that
could result in material settlements, fines or penalties; (m) ability
to manage credit risk related to our investment portfolio and our use
of derivatives; (n) fluctuations in interest rates; (o) material
changes in the market value of securities we hold; (p) ability to
manage risks related to opening of new retail locations and
acquisition of businesses; (q) material slow down or complete
disruption in international migration patterns; (r) unexpected
liquidity needs; (s) ability for us or our agents to maintain adequate
banking relationships; (t) ability to manage risks associated with our
international sales and operations; (u) ability to maintain effective
internal controls; (v) 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 (w) 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 2007 vs
2007 2006 2006
---------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $ 101,107 $ 106,516 $ (5,409)
Investment commissions expense
(1) (65,320) (63,036) (2,284)
---------------------------------
Net investment revenue $ 35,787 $ 43,480 $ (7,693)
=================================
Average balances:
Cash equivalents and investments $6,298,881 $6,430,475 ($131,594)
Payment service obligations (2) 4,792,377 4,904,676 (112,299)
Average yields earned and rates
paid (3):
Investment yield 6.44% 6.64% -0.20%
Investment commission rate 5.47% 5.16% 0.31%
Net investment margin 2.28% 2.71% -0.43%
Six months ended
June 30 2007 vs
2007 2006 2006
---------------------------------
(Dollars in thousands)
Components of net investment
revenue:
Investment revenue $ 197,161 $ 201,476 $ (4,315)
Investment commissions expense
(1) (127,568) (121,825) (5,743)
---------------------------------
Net investment revenue $ 69,593 $ 79,651 $ (10,058)
=================================
Average balances:
Cash equivalents and investments $6,246,056 $6,386,878 ($140,822)
Payment service obligations (2) 4,727,577 4,848,801 (121,224)
Average yields earned and rates paid
(3):
Investment yield 6.37% 6.36% 0.01%
Investment commission rate 5.44% 5.07% 0.37%
Net investment margin 2.25% 2.51% -0.26%
(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 ($369.7 million
and $374.8 million for the second quarter of 2007 and 2006,
respectively, and $369.9 million and $383.8 million for the six
months ended June 30, 2007 and 2006, 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 mulitplied 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
2007 2006 2007 2006
--------- -------- -------- --------
(Dollars and shares in thousands,
except per share data)
REVENUE:
Fee and other revenue $232,533 $186,837 $445,666 $355,968
Investment revenue 101,107 106,516 197,161 201,476
Net securities gains (losses) (381) (440) 483 (859)
--------- -------- -------- --------
Total revenue 333,259 292,913 643,310 556,585
Fee commissions expense 100,279 75,619 190,291 143,103
Investment commissions expense 65,320 63,036 127,568 121,825
--------- -------- -------- --------
Total commissions
expense 165,599 138,655 317,859 264,928
--------- -------- -------- --------
Net revenue 167,660 154,258 325,451 291,657
EXPENSES:
Compensation and benefits 50,363 43,093 100,394 83,721
Transaction and operations
support 44,238 39,210 83,852 71,296
Depreciation and amortization 12,211 9,345 23,891 17,777
Occupancy, equipment and
supplies 10,985 8,817 21,402 17,434
Interest expense 1,983 1,975 3,941 3,922
--------- -------- -------- --------
Total expenses 119,780 102,440 233,480 194,150
--------- -------- -------- --------
Income before income taxes 47,880 51,818 91,971 97,507
Income tax expense 15,521 15,112 29,773 29,865
--------- -------- -------- --------
NET INCOME $ 32,359 $ 36,706 $ 62,198 $ 67,642
========= ======== ======== ========
Basic earnings per share
--------- -------- -------- --------
Earnings per common share $ 0.39 $ 0.43 $ 0.75 $ 0.80
========= ======== ======== ========
Average outstanding common shares 82,922 84,727 83,194 84,552
========= ======== ======== ========
Diluted earnings per share
--------- -------- -------- --------
Earnings per common share $ 0.38 $ 0.42 $ 0.74 $ 0.78
========= ======== ======== ========
Average outstanding and
potentially dilutive common
shares 84,169 86,483 84,477 86,329
========= ======== ======== ========
TABLE THREE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
2007
-----------------------------------------------
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
-----------------------------------------------
(Dollars in thousands)
Revenue:
Global Funds Transfer $226,636 $247,090
Payment Systems 83,197 86,092
Operating income:
Global Funds Transfer 37,551 40,792
Payment Systems 9,566 9,898
Operating Margin:
Global Funds Transfer 16.6% 16.5%
Payment Systems 11.5% 11.5%
2006
-----------------------------------------------
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
-----------------------------------------------
(Dollars in thousands)
Revenue:
Global Funds Transfer $182,987 $202,038 $213,451 $223,270 $821,746
Payment Systems 80,685 90,875 82,468 83,069 337,097
Operating income:
Global Funds Transfer 39,907 40,801 38,566 33,305 152,579
Payment Systems 10,323 16,207 7,539 7,550 41,619
Operating Margin:
Global Funds Transfer 21.8% 20.2% 18.1% 14.9% 18.6%
Payment Systems 12.8% 17.8% 9.1% 9.1% 12.3%
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)
2004 86,198 95,174 102,764 111,234 395,370
2005 111,296 124,545 132,802 139,083 507,726
2006 144,987 161,917 176,220 186,728 669,852
2007 190,104 209,190
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
June 30 December 31
2007 2006
------------ ------------
(Dollars in thousands)
Payment service assets $ 8,508,603 $ 8,568,713
Amounts restricted to cover payment service
obligations (8,211,535) (8,209,789)
------------ ------------
Unrestricted assets (1) $ 297,068 $ 358,924
============ ============
(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.
Investor Relations:
Tim Gallaher, 952-591-3840
ir@moneygram.com