MoneyGram Q2 Adj Profit Misses View, But Revenues Top; Backs 2014 Outlook

(RTTNews) - Global payment services provider MoneyGram International, Inc. (MGI) reported Friday a profit for the second quarter that increased from last year, reflecting revenue growth and a gain from securities settlements.

However, adjusted earnings per share missed analysts' expectations, while quarterly revenues topped their estimates by a whisker. The company also reaffirmed its revenue growth guidance for the full-year 2014.

"MoneyGram faced significant headwinds in the quarter particularly in our U.S.-to-U.S. business. While our growth is not at our historically high levels, we did continue to see particularly strong performance in our U.S. outbound business, self-service channels and emerging markets. We also continued to strengthen our core money transfer business through key agent signings," Chairman and CEO Pamela Patsley said in a statement.

The Dallas, Texas-based company reported net income of $25.6 million or $0.40 per share for the second quarter, higher than $19.1 million or $0.27 per share in the prior-year quarter.

The results for the latest quarter primarily include a $0.35 per share gain from securities settlements, and $0.32 per share of reorganization and restructuring costs.

Excluding items, adjusted net income for the quarter was $17.9 million or $0.28 per share, compared to $22.6 million or $0.32 per share in the year-ago quarter.

On average, eleven analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter increased 2 percent to $372.4 million from $365.1 million in the same quarter last year, and topped ten Wall Street analysts' consensus estimate of $371.47 million by a whisker. Total revenue grew 1 percent on a constant currency basis.

Total fee and other revenues increased to $368.8 million from $361.6 million, and investment revenues edged up to $3.6 million from $3.5 million in the year-ago quarter.

Global funds transfer revenues grew 3 percent to $328.2 million, with money transfer transaction volumes increasing 4 percent. Self-service money transfer transaction growth accelerates to 60 percent.

The company noted that MoneyGram transaction volume and revenue were negatively impacted after retail giant Wal-Mart Stores, Inc. (WMT) introduced in mid-April a competing U.S.-to-U.S. white-label product. Excluding U.S.-to-U.S. transactions originated at Walmart, Money transfer revenue increased 10 percent, with money transfer transaction volumes increasing 13 percent.

Financial paper products revenues edged down to $19.6 million from $20.3 million the year-ago quarter.

Total operating expenses for the quarter grew to $351.3 million from $322.6 million in the year-ago quarter, with transaction and operations support expenses rising to $77.3 million from last year's $62.4 million.

The company noted that it has now secured seven of its top ten send agents until the second quarter of 2017, with several through 2020, including the renewal of CVS and Canada Post. The company also resolved additional legacy matters in the quarter, recognizing a significant cash gain.

Looking ahead to fiscal 2014, the company continues to expect constant currency revenue growth to be in the range of 1 to 3 percent , while Street is currently looking for revenue growth of 2.1 percent to $1.51 billion.

"MoneyGram's global transformation program will reposition the Company to be even more nimble, innovative and cost effective. In 2017, our goal continues to be $2 billion in annual revenue with 15 to 20 percent of money transfer revenue generated from self-service products," Patsley added.

In Friday's regular trading session, MGI is currently trading at $14.56, up $0.11 or 0.76% on a volume of 38,836 shares.