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MoneyGram (MGI) Posts In-Line Q2 Earnings; Keeps View

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MoneyGram International Inc.’s second-quarter earnings of 15 cents per share came in line with the Zacks Consensus Estimate. However, the bottom line plunged 34.8% year over year.

MoneyGram’s total revenue for the reported quarter was $383.7 million, up 7% on both constant currency basis and reported basis. Revenues missed the Zacks Consensus estimate by 0.9%.

Fees and other revenues increased 6.5% to $379.3 million, while investment revenues surged 57.1% to $4.4 million.

The company’s adjusted EBITDA came in at $69.8 million, up 28% on a reported basis and 29% on constant currency basis.

Total operating expenses declined by 1.9% year over year to $367.5 million.

Segment Details

In the Global Funds Transfer segment, money transfer revenues increased 7.9% on both reported currency basis and constant currency basis to $341.5 million. Non-U.S. revenues climbed 11% on a reported basis and 12% on a constant currency on the back of solid performance in Africa and Europe. The U.S. Outbound revenues rose 10% on both reported and constant currency basis driven by sends to Latin America and Africa. Revenues from U.S. Outbound and Non-U.S. sends, which account for 88% of total money transfer revenue, grew 11% year over year on both constant currency and reported basis.

Digital money transfer transactions, which jumped 9% year on year, represented 15% of the total money transfer transaction. Digital money transfer revenues, which grew 17% year on year, accounted for 13% of the total money transfer revenue. The results were supported by higher customer adoption of MoneyGram’s kiosks and moneygram.com, mobile solutions and account deposit services.

The Financial Paper Products segment reported total revenue of $19 million grew 5% year over year due to a 0.8% uptick in money order revenues and 15% increase in official check revenues. Adjusted operating margin deteriorated 300 basis points from the year-ago quarter to 27.9%.

Liquidity

As of Jun 30, 2016 MoneyGram had cash and cash equivalents of $148.6 million, down 9.7% from $164.5 million at year-end 2015. The company’s total assets dipped 4.4% to $4.3 billion from $4.5 billion. The company exited the second quarter with $939 million of outstanding debt, down 0.32% from $942.6 million at year-end 2015.

Adjusted free cash flow was $52.8 million for the first half of 2016.

Full-year Outlook

MoneyGram expects constant currency revenue growth between 7% and 9%. The company maintained its full-year constant currency adjusted EBITDA growth projection in the range of 9–11%.

Zacks Rank

Currently, MoneyGram holds a Zacks Rank #2 (Buy).

MONEYGRAM INTL Price, Consensus and EPS Surprise

MONEYGRAM INTL Price, Consensus and EPS Surprise | MONEYGRAM INTL Quote

Performance of Other Players in the Sector

The bottom line at American Express Co. (AXP - Free Report) , MasterCard (MA - Free Report) and Visa Inc. (V - Free Report) beat their respective Zacks Consensus Estimate for the quarter ending as of Jun 30, 2016.

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