Form 8-K MONEYGRAM INTERNATIONAL For: Jul 29

MoneyGram International Reports Second Quarter 2016 Financial Results

Second Quarter Financial Results

• Total revenue for the quarter was $383.7 million, an increase of 7% on a reported and constant currency basis.
• Net income for the quarter was $3.1 million, an increase of $15.5 million, and EBITDA was $50.1 million, an increase of $34.1 million.
• Operating income for the quarter was $16.2 million, an increase of $31.9 million.
• Adjusted EBITDA for the quarter was $61.2 million, an increase of 6% on a reported basis and 7% on a constant currency basis. Adjusted EBITDA margin was 16.0%.
• Diluted earnings per share for the quarter was $0.05. Adjusted diluted earnings per share was $0.15.
• Year-to-date Adjusted Free Cash Flow was $52.8 million.

"MoneyGram performed well in the second quarter with solid improvements to key financial metrics as the global nature of our business enabled us to deliver bottom-line growth within our expectations," said Alex Holmes, MoneyGram's chief executive officer. "Economic and geopolitical issues in certain countries accelerated during the quarter and impacted our top-line performance. As a result, we now expect constant currency revenue growth of 7% to 9%, which primarily reflects the ongoing impact of slower growth in these countries. We remain focused on disciplined expense management while continuing to capitalize on profitable growth and expansion initiatives. Therefore we are maintaining our outlook for constant currency adjusted EBITDA growth of 9% to 11%. Importantly, our team is hard at work implementing technologies that, combined with our global network, will differentiate the MoneyGram brand. We are energized to gain market share through delivering a superior customer experience."

Second Quarter Money Transfer Highlights

• Money transfer revenue for the quarter was $341.5 million, representing an 8% increase on a reported and constant currency basis.
• Money transfer revenue growth reflects the continued strength in the Company's Non-U.S. and U.S. Outbound sends in the second quarter:
  • Non-U.S. revenue grew 11% on a reported basis and 12% on a constant currency basis led by Western Europe and Africa.
  • U.S. Outbound revenue grew 10% on a reported and constant currency basis led by sends to Latin America and Africa.
  • U.S. to U.S. revenue declined 5% on a reported and constant currency basis primarily due to lower volume of transactions under $200.
• Money transfer revenue from U.S. Outbound and Non-U.S. sends grew 11% in the quarter on a reported and constant currency basis and accounted for 88% of total money transfer revenue.
• Digital money transfer revenue grew 17% over the prior year, and represented 13% of total money transfer revenue.
• Digital money transfer transactions increased 9%, and represented 15% of total money transfer transactions.
• moneygram.com attracted more than 214,000 new active customers.

Full Year 2016 Outlook

For the full year 2016, the Company now expects 7%-9% constant currency revenue growth. The Company's outlook for constant currency adjusted EBITDA growth of 9%-11% is unchanged.

Forward-Looking Statements

This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements with respect to, among other things, the financial condition, results of operations, plans, objectives, future performance and business of MoneyGram and its subsidiaries. Forward-looking statements can be identified by words such as "believes," "estimates," "expects," "projects," "plans," "anticipates," "intends," "continues," "will," "should," "could," "may," "would," "goals" and other similar expressions. These forward-looking statements speak only as of the date they are made, and MoneyGram undertakes no obligation to publicly update or revise any forward-looking statement, except as required by federal securities law. These forward-looking statements are based on management's current expectations and are subject to certain risks, uncertainties and changes in circumstances due to a number of factors. These factors 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 a competing "white label" branded money transfer product 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, which could result in material settlements, fines or penalties, revocation of required licenses or registrations, terminations of contracts, other administrative actions or lawsuits or negative publicity; uncertainties relating to compliance with and the impact of the deferred prosecution agreement entered into with the U.S. federal government and the effect of the deferred prosecution agreement 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 or investments in unsuccessful new products, services or infrastructure changes; our offering of money transfer services through agents in regions that are politically volatile or, in a limited number of cases, are subject to certain restrictions by the Office of Foreign Assets Control; changes in tax laws or unfavorable outcomes of tax positions we take, or a failure by us to establish adequate reserves for tax events; our substantial debt service obligations, significant debt covenant requirements and credit ratings; our ability to manage risks associated with our international sales and operations, including risks associated with the United Kingdom's vote to withdraw from the European Union; 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; weakened consumer confidence in our business or money transfers generally; continued 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; concerns regarding the financial health of certain European countries; our ability to manage credit risks from our retail agents and official check financial institution customers; our ability to retain partners to operate our official check and money order businesses; 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; 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; any restructuring actions and cost reduction initiatives that we undertake may not deliver the expected results and these actions may adversely affect our business; and the risks 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 SEC, including MoneyGram's annual report on Form 10-K for the year ended December 31, 2015 and subsequent Form 10-Q.

Non-GAAP Measures

In addition to results presented in accordance with 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 significant items), Adjusted EBITDA margin, Adjusted Free Cash Flow (Adjusted EBITDA less cash interest, cash taxes, cash payments related to an IRS tax matter, 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, reorganization and restructuring 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 today at 8:00 a.m. CT, 9:00 a.m. ET, to discuss its results. Alex Holmes, chief executive officer, and Larry Angelilli, chief financial officer, will host the call.

About MoneyGram International, Inc.

MoneyGram is a global provider of innovative money transfer and payment services and is recognized worldwide as a financial connection to friends and family. Whether online, or through a mobile device, at a kiosk or in a local store, we connect consumers any way that is convenient for them. We also provide bill payment services, issue money orders and process official checks in select markets. More information about MoneyGram International, Inc. is available at moneygram.com.