MONEYGRAM INTERNATIONAL INC files 10-Q

MONEYGRAM INTERNATIONAL INC filed 10-Q with SEC. Learn ‘s full submitting at 000127393119000092.

As of June 30, 2019 and December 31, 2018, 80% and 79%, respectively, of the honest worth of the available-for-sale portfolio have been invested in residential mortgage-backed securities issued by U.S. authorities businesses. These securities have the implicit backing of the U.S. authorities and the Firm expects to obtain full par worth upon maturity or pay-down, in addition to all curiosity funds.

The First Lien Revolving Credit score Facility and the First Lien Time period Credit score Facility will every allow each base charge borrowings and LIBOR borrowings, in every case plus an expansion above the bottom charge or LIBOR charge, as relevant. With respect to the First Lien Revolving Credit score Facility, the unfold for base charge borrowings might be both 5.00% every year or four.75% every year relying upon the Firm’s First Lien Leverage Ratio (as outlined within the First Lien Credit score Settlement), and the unfold for LIBOR borrowings might be both 6.00% or 5.75% every year relying on the Firm’s First Lien Leverage Ratio. The rate of interest unfold relevant to loans below the First Lien Time period Credit score Facility is 5.00% every year for base charge loans and 6.00% every year for LIBOR charge loans. The Firm will make quarterly principal funds of $1.6125 million on its First Lien Time period Credit score Facility on the final enterprise day of every quarter beginning with the third quarter of 2019, with the remaining excellent principal stability due on the maturity date.

Second Lien Credit score Settlement – The Second Lien Credit score Settlement gives for a second lien secured five-year time period mortgage facility in an mixture principal quantity of $245.zero million (the ‘Second Lien Time period Credit score Facility’ and along with the First Lien Credit score Facility, the ‘Credit score Amenities’). The Firm incurred debt issuance prices of $11.zero million for the Second Lien Time period Credit score Facility, which have been recorded as a direct deduction from the carrying quantity of the associated indebtedness. All time period loans below the Second Lien Time period Credit score Facility bear curiosity at a charge of 13.00% every year. Topic to sure circumstances and limitations, the Firm might elect to pay curiosity below the Second Lien Time period Credit score Facility partially in money and partially in variety. The excellent principal stability for the Second Lien Credit score Settlement is due on the maturity date.

The Firm’s reporting segments are primarily organized based mostly on the character of services supplied and the kind of client served. The Firm has two reporting segments: International Funds Switch and Monetary Paper Merchandise. See Word 1 – Description of the Enterprise and Foundation for Presentation for additional dialogue on our segments. Walmart Inc. is our solely agent, for each the International Funds Switch phase and the Monetary Paper Merchandise phase, that accounts for greater than 10% of whole income. For the three months ended June 30, 2019 and 2018, Walmart accounted for 16% of whole income, and for the six months ended June 30, 2019 and 2018, Walmart accounted for 16% and 17%, respectively, of whole income.

The Firm’s varied noncancellable working leases for buildings, tools and automobiles terminate by 2028. Our lease phrases might embrace choices to increase or terminate the lease when it’s moderately sure that we’ll train that choice. As of June 30, 2019, the leases had a weighted-average remaining lease time period of four.5 years. As most of our leases don’t present an implicit charge, the Firm utilized the portfolio strategy in figuring out the low cost charge. The portfolios have been grouped based mostly on lease sort and geographical location. As of June 30, 2019, the weighted-average low cost charge was four.5%.

We handle our income and associated commissions expense by two reporting segments: International Funds Switch and Monetary Paper Merchandise. The International Funds Switch phase gives world cash switch providers in roughly 350,00zero agent areas. Our world cash switch providers are our major income driver, accounting for 87% of whole income for the three and 6 months ended June 30, 2019. The International Funds Switch phase additionally gives invoice cost providers to customers by considerably all of our cash switch agent areas, at sure agent areas in choose Caribbean and European nations and thru our Digital options. The Monetary Paper Merchandise phase gives cash order providers to customers by retail areas and monetary establishments situated within the U.S. and Puerto Rico and gives official test providers to monetary establishments within the U.S. Company bills that aren’t associated to our segments’ efficiency are excluded from working revenue for International Funds Switch and Monetary Paper Merchandise segments.

We’re making progress towards turning into a digitally-enabled, customer-centric group to raised place the Firm to compete with new entrants targeted solely on digital cash switch options. Digital options income for the three and 6 months ended June 30, 2019 was $44.2 million and $88.four million, respectively, or 16% of cash switch income for every interval. Digital options income for the three and 6 months ended June 30, 2018 was $53.three million and $106.7 million, respectively, or 16% of cash switch income for every interval.

For the three and 6 months ended June 30, 2019, invoice cost payment and different income decreased by $four.5 million and $9.four million, respectively, or 23% for each durations, when in comparison with the identical durations in 2018, attributable to elevated competitors.

Monetary Paper Merchandise income elevated by $1.2 million or 5% throughout the three months ended June 30, 2019, and $four.eight million or 10% throughout the six months ended June 30, 2019, primarily attributable to greater yields on our funding portfolio when in comparison with the prior durations, partially offset by the decline in Monetary Paper Merchandise payment and different income.

Three Months Ended June 30, Six Months Ended June 30,(Quantities in hundreds of thousands)2019 2018 2019 2018(Loss) revenue earlier than revenue taxes$(35.zero) $(5.1) $(41.9) $16.8Interest expense14.zero 13.7 27.9 26.0Depreciation and amortization18.2 20.1 37.2 38.2Signing bonus amortization11.7 14.7 23.four 28.7EBITDA8.9 43.four 46.6 109.7Significant objects impacting EBITDA:       Non-cash pension settlement cost (1)31.three – 31.three -Direct monitor prices 6.2 2.6 10.three 5.7Debt extinguishment prices (2)2.four – 2.four -Compliance enhancement program2.three four.6 three.eight 7.2Stock-based, contingent and incentive compensation1.9 2.7 four.5 7.5Legal and contingent issues (three)zero.7 1.three 1.three 12.7Restructuring and reorganization costs0.5 5.2 four.zero 12.5Severance and associated costs0.1 – zero.2 zero.4Costs (revenue) associated to the terminated merger with Ant Monetary (four)- – – (29.three)Adjusted EBITDA$54.three $59.eight $104.four $126.four        Adjusted EBITDA change, as reported(9)%   (17)%  Adjusted EBITDA change, fixed forex adjusted(7)%   (15)%          Adjusted EBITDA$54.three $59.eight $104.four $126.4Cash funds for curiosity(13.2) (12.9) (26.zero) (24.four)Money funds for taxes, internet of refunds0.7 (1.three) (zero.5) (2.9)Money funds for capital expenditures(16.5) (16.2) (29.2) (28.5)Money funds for agent signing bonuses(5.three) (7.eight) (15.four) (19.6)Adjusted Free Money Move$20.zero $21.6 $33.three $51.zero(1) Non-cash cost of $31.three million from the sale of pension legal responsibility in June 2019.(2) Debt extinguishment prices associated to the amended and new debt agreements entered on June 26, 2019.(three) Six months ended June 30, 2018 consists of an accrual of $10.zero million associated to the decision of the DPA matter.(four) Prices embrace, however will not be restricted to, authorized, financial institution and advisor charges and revenue consists of the $30.zero million merger termination payment.

Rate of interest danger represents the danger that our working outcomes are negatively impacted, and our funding portfolio declines in worth, attributable to adjustments in rates of interest. Given the brief maturity profile of the funding portfolio and the low stage of rates of interest, we consider there may be an especially low danger that the worth of those securities would decline such that we’d have a cloth antagonistic change in our working outcomes. As of June 30, 2019, the Firm held $208.three million, or eight%, of the funding portfolio in mounted charge investments.

Our outcomes are impacted by rate of interest danger by our curiosity expense for borrowings below the amended First Lien Credit score Settlement. The First Lien Revolving Credit score Facility and the First Lien Time period Credit score Facility will every allow each base charge borrowings and LIBOR borrowings, in every case plus an expansion above the bottom charge or LIBOR charge, as relevant. With respect to the First Lien Revolving Credit score Facility, the unfold for base charge borrowings might be both 5.00% every year or four.75% every year relying upon the Firm’s first lien leverage ratio (as outlined within the First Lien Credit score Settlement), and the unfold for LIBOR borrowings might be both 6.00% or 5.75% every year relying on the Firm’s first lien leverage ratio. The rate of interest unfold relevant to loans below the First Lien Time period Credit score Facility is 5.00% every year for base charge loans and 6.00% every year for LIBOR charge loans. Accordingly, any will increase in rates of interest will adversely have an effect on curiosity expense. As of June 30, 2019, the Firm no borrowings below the First Lien Revolving Credit score Facility.

In reference to the closing of the Second Lien Time period Credit score Facility, the Firm issued Warrants representing the correct to buy 5,423,470 shares of our frequent inventory (representing roughly eight% of the then-outstanding absolutely diluted frequent inventory of the Firm) to the lenders below the Second Lien Time period Credit score Facility. As well as, the Firm offered a Warrant to Ripple Labs Inc. (“Ripple”) at a per share reference value of $four.10 representing the correct to buy 1,706,151 shares of our frequent inventory.