“During the quarter, we increased our money transfer revenue, grew our global agent network and launched new products and services to bring more value to more customers all over the world”
- Money transfer transaction volume increased 7 percent, and money transfer fee and other revenue increased 6 percent in the fourth quarter of 2009 versus prior year. On a constant currency basis, money transfer fee and other revenue increased 3 percent versus prior year.
- Global agent locations reached 190,000, an 8 percent increase over prior year.
- Total revenue in the fourth quarter was $296.4 million compared with $319.0 million in the same period last year. Fourth quarter 2008 total revenue included net securities gains of $10.2 million and investment revenue that was $27.6 million more favorable compared with 2009.
- Full-year total revenue in 2009 was $1,171.9 million, up from $927.1 million in 2008. Total revenue in 2008 included net securities losses of $340.7 million and investment revenue that was $128.9 million more favorable compared with 2009.
- Net income for the quarter was $28.1 million and EBITDA was $60.0 million. Both net income and EBITDA benefited from $2.6 million (pre-tax) of significant items in the quarter. These items include a $15.5 million curtailment gain on the Company’s benefit plans, partially offset by $7.1 million of stock-based compensation and $6.1 million in asset impairment charges. Net income included a $20.3 million tax benefit related to net securities losses in 2007 and 2008.
- Adjusted EBITDA in the quarter was $57.4 million versus $62.4 million in the prior year. Fourth-quarter 2009 Adjusted EBITDA includes $6.0 million of net investment revenue compared with $33.0 million in the comparable period last year.
Balance Sheet Items
In the fourth quarter of 2009, MoneyGram paid the remaining $45.0 million outstanding on its revolving credit facility and made a $40.0 million prepayment on its Senior Tranche B Loan under its Senior Facility. In 2009, the Company paid down $186.9 million, or 19 percent, of its total outstanding debt. The Company ended the year with assets in excess of payment service obligations of $313.3 million.
Market Development
The Company continues its focus on enhancing its product offerings and expanding its agent network. MoneyGram recently:Announced an agreement with SMART Communications, Inc. that will make it easier and more convenient for consumers in the Philippines to receive money transfers to their SMART Money account on their mobile phones. This relationship connects money transfer services to SMART's network of over 39 million mobile phone users in the Philippines.
- Launched the Poste Mobile service in Italy, enabling customers of the Italian Post Office to send a money transfer from a mobile phone.
- Announced an expansion of its agreement with the Bank of China to bring money transfer services to the bank’s 10,000 locations across China.
- Expanded its network in India through an agreement with two urban co-operative banks, Abhyudaya Co-op Bank and Thane Janata Sahakari Bank.
- Added Hungary to its global money transfer network with the signing of new super agent Corner Cash Keszpenz Zrt.
- Renewed its agreement with Duane Reade, the New York City-based drugstore chain, and added Utility Bill Payment services as part of the multi-year agreement.
- Announced an alliance with Alpha Bank Srbija A.D. to add MoneyGram money transfer services to more than 165 locations in Serbia.
- Expanded its presence in Romania through an agreement with Intesa Sanpaolo Bank to offer money transfer services at nearly 100 locations in the country.
- Introduced MoneyGram Rewards in Canada, expanding the Company’s loyalty program that offers members fee discounts, receive notices, and fast and convenient money transfers.
- Announced an agreement between MoneyGram’s wholly owned subsidiary PropertyBridge and Bank of America Merrill Lynch that will bring PropertyBridge’s state-of-the-art rent and lease payments platform to the bank’s property management clients, which include 40 of the top 50 property management companies in the U.S.
Segment Reporting Changes
MoneyGram revised its segment reporting in the fourth quarter of 2009 to reflect changes in how it reviews operating performance and allocates resources. The Company now manages its business primarily through two reporting segments: Global Funds Transfer, which is composed of the money transfer and bill payment products; and Financial Paper Products, which is composed of the official check and money order products.
Global Funds Transfer Segment Results
Total revenue for the Global Funds Transfer segment rose to $263.8 million in the fourth quarter of 2009 from $252.2 million in the same period last year. The segment reported operating income of $29.0 million, and an operating margin of 11.0 percent in the fourth quarter.
Money transfer transaction volume increased 7 percent and fee and other revenue increased 6 percent to $230.6 million in the fourth quarter of 2009 from $217.0 million in the fourth quarter of 2008. On a constant currency basis, money transfer fee and other revenue improved 3 percent. The difference between transaction growth and constant currency revenue growth is primarily related to lower average principal and lower average fee per transaction.
In the fourth quarter, money transfer transactions originating in the United States, which excludes transactions sent to Mexico, increased 7 percent. Transactions originating outside of the United States increased 13 percent from the prior year. The economic downturn in Spain continues to impact the Company’s non-U.S. transaction growth. Excluding Spain, transactions originating outside of the United States increased a healthy 20 percent from the prior year. MoneyGram’s fourth quarter transaction volume to Mexico decreased 13 percent.
Bill payment transaction volume declined 3 percent and fee and other revenue decreased 5 percent to $33.1 million in the fourth quarter of 2009 from $34.7 million in the fourth quarter of 2008. MoneyGram’s bill payment products continued to be impacted by the economic slow-down in the U.S., particularly in the auto and credit card sectors.
Financial Paper Products Segment Results
Financial Paper Products total revenue declined to $30.1 million in the fourth quarter of 2009 from $52.9 million in the fourth quarter of 2008. Total revenue in 2009 and 2008 reflect investment revenue of $5.7 million and $33.4 million, respectively. The segment reported operating income of $1.4 million in the fourth quarter of 2009, compared with $24.1 million in the fourth quarter of 2008.
Non-GAAP Measures
In addition to results presented in accordance with GAAP, this press release and related tables include certain non-GAAP financial measures, including a presentation of EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization) and Adjusted EBITDA (EBITDA adjusted for significant items). The following tables include a full reconciliation of these non-GAAP financial measures to the related GAAP financial measures.
We believe that EBITDA and Adjusted EBITDA provide useful information to investors because they are an indicator of the strength and performance of ongoing business operations, including our ability to service debt and fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies within our industry. In addition, the Company’s debt agreements require compliance with financial measures based on EBITDA and Adjusted EBITDA. Finally, EBITDA and Adjusted EBITDA are financial measures used by management in reviewing results of operations, forecasting, assessing cash flow and capital, allocating resources and establishing employee incentive programs.
Although MoneyGram believes the above non-GAAP financial measures enhance investors’ understanding of its business and performance, these non-GAAP financial measures should not be considered an exclusive alternative to accompanying GAAP financial measures.
Conference Call
MoneyGram International will host a conference call today at 9:00 a.m. ET, 8:00 a.m. CT to discuss its fourth quarter and full-year 2009 results. Pamela H. Patsley, chairman and chief executive officer, will host the call. The conference call can be accessed by calling 1-877-548-7911 in the U.S. The participant confirmation number is 9618545. Slides are available on MoneyGram’s website at www.moneygram.com. A replay of the conference call will be available one hour after the call concludes through 5:00 p.m. ET on Feb. 11, 2010. The replay of the call is available at 1-888-203-1112 for U.S. callers or 1-719-457-0820 for international callers. The confirmation code is 9618545.
About MoneyGram International, Inc.
MoneyGram International, Inc. is a leading global payment services 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 190,000 global money transfer agent locations in 190 countries and territories. For more information, visit the Company's website at www.moneygram.com.
