MoneyGram International, Inc. (MGI)
Q4 2008 Earnings Call Transcript
February 26, 2009 at 5:00 p.m. ET

Executives

Pamela H. Patsley - Executive Chairman
Anthony P. Ryan – President, Chief Executive Officer & Director
David J. Parrin - Chief Financial Officer & Executive Vice President

Analysts

Kartik Mehta - FTN Equity Capital Markets
David Scharf - JMP Securities
Robert Dodd - Morgan Keegan & Company
John Williams - Macquarie Research Equities
Craig Maurer - Calyon Securities (USA), Inc.

Presentation

Operator

Good afternoon and welcome to the MoneyGram International fourth quarter 2008 earnings conference call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. It is now my pleasure to turn the floor over to your host, Dave Parrin, Chief Financial Officer. Please go ahead, sir.

David J. Parrin

Thank you, Jay and good afternoon everybody. Welcome to our fourth quarter 2008 conference call. With me on the call today are Pam Patsley, Executive Chairman of MoneyGram International and Tony Ryan, our President and Chief Operating Officer. If you have not yet seen our earnings release, you can find it on our website at www.moneygram.com.

I must remind you that today''s call is being recorded and the various remarks we make about future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from expectations, plans and prospects contemplated in any forward-looking statements as a result of various factors including those discussed in our filings with the SEC.

I encourage everybody to read our SEC filings, including our 10-K for the period ended December 31, 2008 which is expected to be filed with the SEC on March 2, 2009. Additionally, I want to note that today''s remarks include certain non-GAAP financial measures including a presentation of EBITDA and adjusted EBITDA. Our earnings release includes the full reconciliation of these non-GAAP financial measures to the related GAAP financial measures.

And now, I will hand it over to Pam Patsley.

Pamela H. Patsley

Great, thank you Dave and thanks to each of you for joining us on our fourth quarter 2008 conference call. First, let me say just how excited I am to have joined MoneyGram. I believe there are tremendous growth opportunities in the broad global payments industry and truly extraordinary possibilities ahead for this organization.

While Tony and Dave will cover 2008 results in more detail, I want to stress that MoneyGram continued to execute on its strategy and delivered a strong financial performance in our core money transfer and bill payment business in the midst of the challenging economy. We showed growth in money transfer and bill payment revenues, transaction volumes and agent locations.

For the full year, money transfer revenue increased 18% and volume was up 15%. This significantly outpaced the World Bank''s estimate of a 6% growth rate in global remittances in 2008.

In the fourth quarter, MoneyGram delivered solid financial performance despite the weak economy. We demonstrated a 6% increase in money transfer revenue to $249 million from $234 million in the fourth quarter of 2007. Money transfer revenue growth slowed in the fourth quarter due to economic pressures and several important markets but particularly in Spain.

Transactions to Mexico increased 1% and we outperformed the market which according to Banco de Mexico was down more than 6% in the fourth quarter of 2008. For the full year, the Mexican market was down 4% while our transaction volume was up 2%. Transactions originating internationally or outside of North America grew 4% as a result of the growth in the Middle East and Western Europe. This was offset by continued deterioration in Spain.

Our international transactions accounted for 22% of our volume. Money transfers originated in the United States and Canada grew 10% driven by continued expansion of our agent network and our loyalty program MoneyGram Reward. EBITDA was $73 million for the quarter and adjusted EBITDA was $61 million. We continue to generate substantial cash flow allowing us to invest in our core money transfer and bill payment products while servicing our debt.