MoneyGram International Reports Third Quarter 2019 Financial Results

DALLAS, Oct. 31, 2019 /PRNewswire/ -- MoneyGram International, Inc. MGI today reported financial results for its third quarter ending September 30, 2019.

Business Update

• Business transformation continues to accelerate, demonstrated by both the expansion of digital capabilities to over 60 countries, including 25 countries with MoneyGram Online capabilities. Total digital transactions represented 20% of money transfer transactions.
• Outside the US, money transfer transactions improved to a 7% year-over-year growth rate while returning to positive revenue growth. 60% of our total money transfer revenue now comes from business generated outside the United States.
• First money transfer company to launch Visa Direct.
• First money transfer company to utilize blockchain capabilities at scale through our Ripple strategic partnership.

"Our third quarter results reflect the continued transformation of our business as we increasingly focus on customer experience improvements, cross-border digital growth and industry-leading innovation through our strategic partnership with Ripple," said Alex Holmes Chairman and CEO. He added: "While the US market, which continues to be our primary challenge, showed signs of improvement on a sequential basis, we are very pleased that our non-US business achieved year-over-year growth for the quarter."

Third Quarter 2019 Financial Results

• Total revenue was $324.6 million and $347.2 million for the three months ended September 30, 2019 and 2018, respectively.
• Money transfer revenue was $284.9 million for the quarter compared to $304.2 million for the three months ended September 30, 2018.
• Investment revenue was $13.4 million for the quarter.
• Net loss was $7.7 million compared to $20.9 million for the third quarter of 2018. EBITDA was $44.6 million, an increase of $24.2 million as compared to the year-ago period. The prior year period included a $30.0 million accrual related to the resolution of the deferred prosecution agreement (the "DPA").
• Adjusted EBITDA was $51.7 million and $59.5 million for the three months ended September 30, 2019 and 2018, respectively. Adjusted EBITDA margin was 15.9% for the three months ended September 30, 2019.
• For the quarter, diluted loss per share was $0.10 and adjusted diluted loss per share was $0.03.
• Adjusted Free Cash Flow was $9.3 million for the quarter.

Balance Sheet Highlights and Capital Structure Highlights

The Company ended the third quarter of 2019 with a cash and cash equivalents balance of $119.1 million compared to $145.5 million at the end of 2018. Third quarter interest expense was $24.8 million and capital expenditures were $13.3 million.

Fourth Quarter 2019 Outlook

The Company is revising its guidance to reflect the forecast for its fourth quarter results.  For the fourth quarter of 2019, the Company anticipates total revenue of approximately $330 million, and adjusted EBITDA of approximately $50 million.

Forward-Looking Statements

This communication contains forward-looking statements which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect MoneyGram's current beliefs, expectations or intentions regarding future events. Words such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions are intended to identify such forward-looking statements. The statements in this communication that are not historical statements are forward-looking statements within the meaning of the federal securities laws. Specific forward-looking statements include, among others, statements regarding the company's projected results of operations, specific factors expected to impact the company's results of operations, and the expected restructuring and reorganization program results. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond MoneyGram's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: our ability to compete effectively; our ability to maintain key agent or biller relationships, or a reduction in business or transaction volume from these relationships, including our largest agent, Walmart, whether through the introduction by Walmart of additional competing "white label" branded money transfer products or otherwise; our ability to manage fraud risks from consumers or agents; the ability of us and our agents to comply with U.S. and international laws and regulations; litigation or investigations involving us or our agents; uncertainties relating to compliance with the DPA entered into with the U.S. federal government and the effect of the DPA on our reputation and business; regulations addressing consumer privacy, data use and security; our ability to successfully develop and timely introduce new and enhanced products and services and our investments in new products, services or infrastructure changes; our ability to manage risks associated with our international sales and operations; our offering of money transfer services through agents in regions that are politically volatile; changes in tax laws or an unfavorable outcome with respect to the audit of our tax returns or tax positions, or a failure by us to establish adequate reserves for tax events; our substantial debt service obligations, significant debt covenant requirements and credit ratings; major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions; the ability of us and our agents to maintain adequate banking relationships; a security or privacy breach in systems, networks or databases on which we rely; disruptions to our computer network systems and data centers; weakness in economic conditions, in both the U.S. and global markets; a significant change, material slow down or complete disruption of international migration patterns; the financial health of certain European countries or the secession of a country from the European Union; our ability to manage credit risks from our agents and official check financial institution customers; our ability to adequately protect our brand and intellectual property rights and to avoid infringing on the rights of others; our ability to attract and retain key employees; our ability to manage risks related to the operation of retail locations and the acquisition or start-up of businesses; any restructuring actions and cost reduction initiatives that we undertake may not deliver the expected results and these actions may adversely affect our business; our ability to maintain effective internal controls; our capital structure and the special voting rights provided to designees of Thomas H. Lee Partners, L.P. on our Board of Directors; and uncertainties described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of MoneyGram's public reports filed with the Securities and Exchange Commission (the "SEC"), including MoneyGram's annual report on Form 10-K for the year ended December 31, 2018 and MoneyGram's quarterly reports on Form 10-Q.

Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in MoneyGram's SEC filings. MoneyGram's SEC filings may be obtained by contacting MoneyGram, through MoneyGram's web site at ir.moneygram.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System ("EDGAR") at http://www.sec.gov. MoneyGram undertakes no obligation to publicly update or revise any forward-looking statement.

Non-GAAP Measures

In addition to results presented in accordance with accounting principles generally accepted in the United States ("GAAP"), this news 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), Adjusted EBITDA (EBITDA adjusted for certain significant items), Adjusted EBITDA margin, Adjusted Free Cash Flow (Adjusted EBITDA less cash interest, cash taxes and cash payments for capital expenditures and agent signing bonuses), constant currency measures (which assume that amounts denominated in foreign currencies are translated to the U.S. dollar at rates consistent with those in the prior year), adjusted diluted earnings per share and adjusted net income. In addition, we present adjusted operating income and adjusted operating margin for our two reporting segments. The following tables include a full reconciliation of non-GAAP financial measures to the related GAAP financial measures. The equivalent GAAP financial measures for projected results are not provided, and projected results do not reflect the potential impact of certain non-GAAP adjustments, which include (but in future periods, may not be limited to) stock-based, contingent and incentive compensation costs, compliance enhancement program costs, direct monitor costs, legal and contingent matter costs, restructuring and reorganization costs, currency changes and the tax effect of such items. We cannot reliably predict or estimate if and when these types of costs, adjustments or changes may occur or their impact to our financial statements. Accordingly, a reconciliation of the non-GAAP financial measures to the equivalent GAAP financial measures for projected results is not available.

We believe that these non-GAAP financial measures provide useful information to investors because they are an indicator of the strength and performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and other interested parties to evaluate and compare the operating performance and value of companies within our industry. Finally, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Free Cash Flow, constant currency, adjusted diluted earnings per share and adjusted net income figures are financial and performance measures used by management in reviewing results of operations, forecasting, allocating resources or 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 in isolation or as substitutes for the accompanying GAAP financial measures.

Description of Tables

Conference Call

MoneyGram International will host a conference call on November 1, at 9:00 a.m. ET, to discuss its results. Alex Holmes, Chairman and CEO, and Larry Angelilli, CFO, will host the call.

About MoneyGram International

MoneyGram is a global leader in omnichannel money transfer and payment services that enables friends and family to safely, conveniently, and affordably send money for life's daily needs in over 200 countries and territories. The innovative MoneyGram platform leverages its leading digital and physical network, global financial settlement engine, cloud-based infrastructure with integrated APIs, and its unparalleled compliance program that leads the industry in protecting consumers. More information about MoneyGram International, Inc. is available at moneygram.com.

CONTACT

Investor Relations:
214-979-1400
InvestorRelations@moneygram.com

Media Relations:
Noelle Whittington
214-979-1402
media@moneygram.com