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MoneyGram (MGI) Q4 Earnings Beat on Strong Digital Business
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MoneyGram International, Inc. reported fourth-quarter 2021 adjusted earnings per share of 22 cents, which beat the Zacks Consensus Estimate of 13 cents. Earnings were also up from the year-ago level of 12 cents per share.
Revenues of $324.6 million were up from $323.3 million a year ago but marginally missed the Zacks Consensus Estimate by 0.1%.
The better-than-expected results were supported by the company’s strong digital business, increased cross-border transactions and fees. Yet, the positives were partially offset by a rise in operating expenses.
MoneyGram International Inc. Price, Consensus and EPS Surprise
Total operating expenses of $137.4 million increased $16.6 million from a year ago, primarily due to higher transaction and operation support costs. Interest expense dropped $11.2 million year over year to $11.7 million for the quarter under review.
Adjusted EBITDA of $61 million fell $3.6 million year over year primarily due to a $14-million impact from legal and contingent matters and $1.1 million restructuring and reorganization costs. Adjusted EBITDA margin contracted 120 basis points (bps) year over year to 18.8%.
Segments in Detail
Global Funds Transfer
The segment reported total revenues of $311.3 million, which increased $2.2 million year over year, thanks to a $3.8 million rise in Money Transfer revenues. The Money Transfer business of MoneyGram continued to perform well in the quarter, attributable to a 36% year-over-year surge in cross-border transactions of MoneyGram Online (“MGO”). Cross-border customer growth jumped 28% from the year-ago period. Digital revenues climbed 32% year over year and attained a record figure of $77 million. The segment reported a gross profit of $140.9 million for the fourth quarter, up $2.8 million from a year ago.
Financial Paper Products
Total revenues declined $0.9 million year over year to $13.3 million. While money order revenues of $9.9 million dipped $0.2 million from a year ago, official check revenues declined $0.7 million to $3.4 million. The segment reported a gross profit of $13.1 million for the fourth quarter, down $0.8 million from a year ago.
Financial Position (as of Dec 31, 2021)
Cash and cash equivalents were $155.2 million, down 20.9% from the level at 2020-end. The company’s payment service obligations as of Dec 31, 2021 was $3,591.4 million. The figure declined 3% from the level as of Dec 31, 2020. Net debt was recorded at $786.7 million, down from the year-ago level of $857.8 million.
MGI generated an adjusted free cash flow of $30.8 million in the fourth quarter, which increased from $19.3 million a year ago.
Capital expenditures were $10 million, reflecting a decrease of $0.2 million from the fourth-quarter 2020 level.
Full-Year 2021
MoneyGram’s top line for 2021 increased to $1,283.6 million from $1,217.2 million in 2020. It generated 2021 adjusted earnings per share of 34 cents, up from 28 cents in 2020. Adjusted free cash flow of $87.3 million for 2021 increased from $66.1 million a year ago
Outlook
MoneyGram served more than 47 million people in 2021. The company expects digital transactions to grow through 2022. Diversification of product and service offerings is likely to be a major theme going ahead. Yet, a competitive pricing environment is likely to persist. MGI expects the decline in overall paper-based transactions in the Financial Paper Products unit to continue in 2022, as customers are opting for other payment methods.
MoneyGram is expected to be acquired by Chicago-based private equity firm Madison Dearborn Partners, LLC for $1.8 billion. The deal is likely to close in the December quarter of 2022.
Of the Finance space players that have reported fourth-quarter results so far, Discover Financial Services (DFS - Free Report) , Aon plc (AON - Free Report) and Western Union Co. (WU - Free Report) beat the Zacks Consensus Estimate for earnings.
Discover Financial reported fourth-quarter 2021 adjusted earnings of $3.64 per share, which outpaced the Zacks Consensus Estimate of $3.61. A solid performance of the Digital Banking business aided DFS’ results. Increased sales, new account growth and strong credit performance were major positives for Discover Financial. Yet, the positives were partially offset by escalating operating costs. DFS’ integrated digital banking and payments model as well as ongoing economic recovery buoyed the company’s results.
AON reported fourth-quarter 2021 operating earnings of $3.71 per share. Aon’s earnings outpaced the Zacks Consensus Estimate by 9.1% on solid contributions from its Reinsurance Solutions, Commercial Risk Solutions, Health Solutions and Wealth Solutions segments. Also, decreased operating expenses benefited AON’s bottom line.
Western Union’s fourth-quarter 2021 earnings per share of 64 cents beat the Zacks Consensus Estimate of 53 cents driven by a non-cash charge from the termination of its pension plan. Improvement in Western Union’s digital business that registered double-digit growth in the fourth quarter was a major positive. WU expects operating profit margin in the band of 21-22% in 2022.
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MoneyGram (MGI) Q4 Earnings Beat on Strong Digital Business
MoneyGram International, Inc. reported fourth-quarter 2021 adjusted earnings per share of 22 cents, which beat the Zacks Consensus Estimate of 13 cents. Earnings were also up from the year-ago level of 12 cents per share.
Revenues of $324.6 million were up from $323.3 million a year ago but marginally missed the Zacks Consensus Estimate by 0.1%.
The better-than-expected results were supported by the company’s strong digital business, increased cross-border transactions and fees. Yet, the positives were partially offset by a rise in operating expenses.
MoneyGram International Inc. Price, Consensus and EPS Surprise
MoneyGram International Inc. price-consensus-eps-surprise-chart | MoneyGram International Inc. Quote
Quarterly Operational Update
Total operating expenses of $137.4 million increased $16.6 million from a year ago, primarily due to higher transaction and operation support costs. Interest expense dropped $11.2 million year over year to $11.7 million for the quarter under review.
Adjusted EBITDA of $61 million fell $3.6 million year over year primarily due to a $14-million impact from legal and contingent matters and $1.1 million restructuring and reorganization costs. Adjusted EBITDA margin contracted 120 basis points (bps) year over year to 18.8%.
Segments in Detail
Global Funds Transfer
The segment reported total revenues of $311.3 million, which increased $2.2 million year over year, thanks to a $3.8 million rise in Money Transfer revenues. The Money Transfer business of MoneyGram continued to perform well in the quarter, attributable to a 36% year-over-year surge in cross-border transactions of MoneyGram Online (“MGO”). Cross-border customer growth jumped 28% from the year-ago period. Digital revenues climbed 32% year over year and attained a record figure of $77 million. The segment reported a gross profit of $140.9 million for the fourth quarter, up $2.8 million from a year ago.
Financial Paper Products
Total revenues declined $0.9 million year over year to $13.3 million. While money order revenues of $9.9 million dipped $0.2 million from a year ago, official check revenues declined $0.7 million to $3.4 million. The segment reported a gross profit of $13.1 million for the fourth quarter, down $0.8 million from a year ago.
Financial Position (as of Dec 31, 2021)
Cash and cash equivalents were $155.2 million, down 20.9% from the level at 2020-end. The company’s payment service obligations as of Dec 31, 2021 was $3,591.4 million. The figure declined 3% from the level as of Dec 31, 2020. Net debt was recorded at $786.7 million, down from the year-ago level of $857.8 million.
MGI generated an adjusted free cash flow of $30.8 million in the fourth quarter, which increased from $19.3 million a year ago.
Capital expenditures were $10 million, reflecting a decrease of $0.2 million from the fourth-quarter 2020 level.
Full-Year 2021
MoneyGram’s top line for 2021 increased to $1,283.6 million from $1,217.2 million in 2020. It generated 2021 adjusted earnings per share of 34 cents, up from 28 cents in 2020. Adjusted free cash flow of $87.3 million for 2021 increased from $66.1 million a year ago
Outlook
MoneyGram served more than 47 million people in 2021. The company expects digital transactions to grow through 2022. Diversification of product and service offerings is likely to be a major theme going ahead. Yet, a competitive pricing environment is likely to persist. MGI expects the decline in overall paper-based transactions in the Financial Paper Products unit to continue in 2022, as customers are opting for other payment methods.
MoneyGram is expected to be acquired by Chicago-based private equity firm Madison Dearborn Partners, LLC for $1.8 billion. The deal is likely to close in the December quarter of 2022.
Zacks Rank
MGI currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Firms
Of the Finance space players that have reported fourth-quarter results so far, Discover Financial Services (DFS - Free Report) , Aon plc (AON - Free Report) and Western Union Co. (WU - Free Report) beat the Zacks Consensus Estimate for earnings.
Discover Financial reported fourth-quarter 2021 adjusted earnings of $3.64 per share, which outpaced the Zacks Consensus Estimate of $3.61. A solid performance of the Digital Banking business aided DFS’ results. Increased sales, new account growth and strong credit performance were major positives for Discover Financial. Yet, the positives were partially offset by escalating operating costs. DFS’ integrated digital banking and payments model as well as ongoing economic recovery buoyed the company’s results.
AON reported fourth-quarter 2021 operating earnings of $3.71 per share. Aon’s earnings outpaced the Zacks Consensus Estimate by 9.1% on solid contributions from its Reinsurance Solutions, Commercial Risk Solutions, Health Solutions and Wealth Solutions segments. Also, decreased operating expenses benefited AON’s bottom line.
Western Union’s fourth-quarter 2021 earnings per share of 64 cents beat the Zacks Consensus Estimate of 53 cents driven by a non-cash charge from the termination of its pension plan. Improvement in Western Union’s digital business that registered double-digit growth in the fourth quarter was a major positive. WU expects operating profit margin in the band of 21-22% in 2022.