MoneyGram International Inc. (NASDAQ:MGI) reported earnings of 26 cents per share, beating the Zacks Consensus Estimate by 36.8%. Earnings grew 30% year over year.
Total revenues of $408.2 million declined 2% on a reported basis and 4% on constant currency basis but surpassed the Zacks Consensus Estimate of $403 million.
Top-line growth was impacted by a changing macroeconomic environment, including softness in previously strong markets and corridors, central bank intervention of capital flows, and a volatile immigration environment, which adversely affected the money transfer business.
Among the revenue components, fees and other revenues declined 2.8% year over year to $399.4 million, while investment revenues increased 66% from the prior-year quarter to $8.8 million.
Total operating expenses of $464.7 million increased 18% year over year, due to higher transaction and operations support.
Adjusted EBITDA was $71.3 million, up 10% on a reported basis and 8% on constant currency basis, year over year. Adjusted EBITDA margin was 17.5%, up 200 basis points from the year-ago quarter.
Segment Update
The company’s Global Funds Transfer segment reported revenues of $386.6 million, down 2.3% year over year due to a decline in money transfer and bill payment revenues. Money transfer revenue results were primarily impacted by weak U.S. to U.S. business and slower growth in Africa, partially offset by favorable currency movement. The segment reported an operating loss of $56.1 million against operating earnings of $25.8 million in the year-ago quarter.
In the Financial Paper Products segment, the company reported revenues of $21.6 million, up 10.2% year over year. Operating income nudged up 2% from the prior-year quarter to $5 million. Operating margin decreased 190 basis points year over year to 23.1%.
Financial Update
Adjusted free cash flow was $105.1 million, up 8.6% from the prior-year quarter.
Total assets of $4.77 billion as of Dec 31, 2017, increased 3.8% year over year.
Merger with Ant Financial Called Off
The merger of MoneyGram with Ant Financial Services Group has met a dead end after the deal was shown a red flag by the Committee on Foreign Investment in the United States (CFIUS).
Ant Financial, controlled by Alibaba’s co-founder Jack Ma, was to acquire each share of MoneyGram for $18.00, which valued the deal at nearly $1.2 billion. Despite concerted efforts by both the companies involved to satisfy the CFIUS, the security concerns were a real bother.
Zacks Rank and Other Releases
MoneyGram carries a Zacks Rank #3 (Hold). Some of the stocks in the same space that reported better-than-expected results in the fourth quarter are Houlihan Lokey, Inc. (NYSE:HLI) , Moody's Corp. (NYSE:MCO) and American Express Co. (NYSE:AXP) , which beat their respective Zacks Consensus Estimate by 21.1%, 41% and 2.6%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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