MoneyGram (MGI) Tops Q3 Earnings Estimates, Lowers Guidance

Zacks

MoneyGram International Inc.’s (MGI Free Report) third-quarter earnings of 24 cents per share beat the Zacks Consensus Estimate by 118% but remained unchanged year over year. A decline in expenses aided results.

MoneyGram’s total revenues for the reported quarter were $347.2 million, down 13% on a reported basis and 12% on a constant currency, year over year. Revenues missed the Zacks Consensus Estimate by 8.9%.

Fees and other revenues decreased 56.4% to $333.7 million, while investment revenues increased 5.8% to $13.5 million.

Adjusted EBITDA margin of 17.1% remained flat year over year.
Total operating expenses declined by 14.7% year over year to $358.1 million.

MoneyGram International Inc. Price, Consensus and EPS Surprise

Segment Details

In the Global Funds Transfer segment, money transfer revenues decreased 14% year over year to $304.2 million. Bill payment revenues also decreased 14% year over year to $17.4 million. Revenues include the impact of higher compliance standards and newly implemented corridor specific controls. MoneyGram.com revenues grew 3%. It was affected by enhanced compliance controls and introductory pricing.

Total digital solutions, which include MoneyGram.com, represented 16% of total money transfer revenues. Investment revenues benefited from higher yields and investment balances and grew 75% to $13.5 million.

The Financial Paper Products segment reported total revenues of $25.6 million, up 24% year over year due to a 9.4% uptick in money order revenues and a 46.8% increase in official check revenues. Adjusted operating margin improved 1480 basis points from the year-ago quarter to 37.5%.

Liquidity Position

As of Sep 30, 2018, MoneyGram had cash and cash equivalents of $208.8 million, up 9.8% from year-end 2017 levels.  The company’s total assets were $4.5 billion, down 5.2% from year-end 2017 levels. The company exited the second quarter with $902 million of outstanding debt, down 0.7% from year-end 2017 levels.

Adjusted free cash flow for the first nine months of 2018 was $79.9 million, up 19% year over year.

Guidance Revised Down

The company is revising its full-year estimates for 2018. Revenues are expected to decline approximately 10% on a constant currency basis (compared with the earlier estimate of growth between 7% and 9%).

Adjusted EBITDA is expected to decline approximately 15% on a constant currency basis (compared with constant currency adjusted EBITDA growth projection in the range of 9-11%).

Zacks Rank

Currently, MoneyGram carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Players in the Sector

The bottom line of American Express Co. (AXP Free Report) , MasterCard Inc. (MA Free Report) and Visa Inc. (V Free Report) beat their respective Zacks Consensus Estimate for the quarter ending Sep 30, 2018.

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