UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 8-K
_______________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2015
_______________________________
THE WESTERN UNION COMPANY
(Exact name of registrant as specified in its charter)
_______________________________
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Delaware | | 001-32903 | | 20-4531180 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
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12500 East Belford Avenue Englewood, Colorado | | 80112 |
(Address of principal executive offices) | | (Zip Code) |
(866) 405-5012
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02. | Results of Operations and Financial Condition. |
On July 30, 2015, The Western Union Company (the “Company”) issued a press release relating to the Company’s earnings for the second quarter of fiscal year 2015 (the “Earnings Release”). A copy of the Earnings Release is attached as Exhibit 99.1. The information furnished under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.
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Item 7.01. | Regulation FD Disclosure. |
In connection with the issuance of the Earnings Release, the Company is holding a public conference call and webcast on July 30, 2015 at 4:30 p.m. Eastern Time, during which Hikmet Ersek, President and Chief Executive Officer, and Raj Agrawal, Executive Vice President and Chief Financial Officer, will provide the presentation attached as Exhibit 99.2. Information regarding access to the conference call and webcast is set forth in the Earnings Release. The information furnished under this Item 7.01, including Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.
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Item 9.01. | Financial Statements and Exhibits. |
The following is a list of the Exhibits furnished herewith.
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Exhibit Number | Description of Exhibit |
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99.1 | Earnings press release issued by the Company on July 30, 2015. |
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99.2 | Presentation of the Company dated July 30, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: July 30, 2015 | | | | THE WESTERN UNION COMPANY |
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| | | | | | By: | | /s/ JOHN R. DYE |
| | | | | | Name: | | John R. Dye |
| | | | | | Title: | | Executive Vice President, General Counsel and Secretary |
EXHIBIT INDEX
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Exhibit Number | Description of Exhibit |
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99.1 | Earnings press release issued by The Western Union Company on July 30, 2015. |
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99.2 | Presentation of The Western Union Company dated July 30, 2015. |
Exhibit 99.1
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Contacts: Media | | Investors |
Dan Diaz | | Mike Salop |
720-332-5564 | | 720-332-8276 |
daniel.diaz@westernunion.com | | mike.salop@westernunion.com |
Western Union Reports Second Quarter Results
Revenue $1.4 Billion; EPS Increases 14% to $0.41 (excluding charge)
GAAP EPS of $0.36
2015 Adjusted EPS and Constant Currency Revenue Outlooks Raised
_________________________________________________________
Englewood, Colo., July 30, 2015 - The Western Union Company (NYSE: WU) today reported financial results for the 2015 second quarter and updated its full year financial outlook, which was previously provided on April 30, 2015.
On a constant currency basis, second quarter revenues increased 4% compared to the prior year period. Reported revenues declined 2%, primarily due to the impact of the stronger U.S. dollar. Earnings per share, excluding the impact of the previously announced Paymap settlement agreement with the Consumer Financial Protection Bureau (CFPB), increased 14% to $0.41. GAAP EPS was $0.36.
For the full year, the Company increased its expected EPS outlook, excluding the settlement impact, to a range of approximately $1.60 to $1.67. The constant currency revenue range outlook was also raised. The GAAP EPS outlook range is approximately $1.55 to $1.62.
“We posted another quarter of solid results, with improved constant currency revenue trends across all our business segments, despite some geopolitical and global economic challenges,” said President and Chief Executive Officer Hikmet Ersek. “Westernunion.com growth also accelerated in the quarter. Our global digital presence is expanding quickly, as we continue to advance our omnichannel strategy for cross border money movement.”
Executive Vice President and Chief Financial Officer Raj Agrawal stated, “Based on our performance to date and our projections for the remainder of the year, we are pleased to be able to increase our full year outlooks for adjusted earnings per share and constant currency revenue growth.”
“In the quarter, consumer money transfer trends benefited from ongoing strength from U.S. Outbound and high digital growth across most of our online markets. Western Union Business Solutions and Consumer Bill Payments also delivered good results. In addition, cost savings initiatives and foreign exchange hedges helped drive operating margin improvement, and we continued to generate and deploy healthy cash flow for our shareholders,” Agrawal added.
In the second quarter Consumer-to-Consumer (C2C) revenues declined 3%, although transactions and constant currency revenues each increased 3%. Westernunion.com C2C revenue increased 22%, or 28% constant currency, on transaction growth of 27%. Electronic channels revenue, which includes westernunion.com, account based money transfer through banks, and mobile money transfer, increased 19% in the quarter and represented 7% of total Company revenues.
Consumer-to-Business (C2B) revenues grew 8% in the quarter, or 12% constant currency, driven by the Argentina walk-in and the U.S. electronic bill payments businesses.
Western Union Business Solutions revenues decreased 1%, or increased 9% on a constant currency basis. Constant currency growth was driven by Europe and led by strong sales of hedging instruments.
In the quarter, the Company recorded a pre-tax charge of $35.3 million related to its Paymap subsidiary’s settlement with the CFPB. The CFPB previously claimed that certain aspects of the marketing of Paymap’s Equity Accelerator service violated the Consumer Financial Protection Act’s prohibition against unfair, deceptive, and abusive acts and practices. The Company agreed to resolve the matter without admitting or denying the allegations. After-tax, the charge amounted to $24.2 million, or $0.05 per share.
Operating margin excluding the impact of the settlement was 20.7% for the quarter, which compares to 19.8% in the second quarter of 2014. The operating margin improvement primarily resulted from cost savings initiatives and the net impact of foreign currency movements, which were partially offset by increases in incentive compensation, compliance and technology costs. While foreign currency movements negatively impacted revenues and profits in the quarter, the operating margin benefitted as a result of gains on foreign exchange hedges. GAAP operating margin was 18.1% in the quarter.
Earnings per share excluding the settlement increased 14% to $0.41, compared to $0.36 in the prior year period. The earnings per share increase was driven by operating margin expansion, a lower effective tax rate, and fewer shares outstanding. The effective tax rate, excluding the impact of the settlement, was 11.8%. GAAP earnings per share were $0.36 in the quarter, with an effective tax rate of 8.5%.
The Company returned $235 million to shareholders in the second quarter, consisting of $156 million of share repurchases and $79 million of dividends. Year-to-date, cash flow from operating activities totaled $466 million and the same amount has been returned to shareholders through share repurchases and dividends.
2015 Full Year Outlook
The Company updated its outlook for 2015 (adjusted metrics exclude the impact of the Paymap settlement):
Revenue
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• | Low to mid-single digit constant currency revenue increase (previously low single digit increase) |
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• | Low to mid-single digit GAAP revenue decrease |
Operating Profit Margin
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• | Adjusted operating margin of approximately 21% |
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• | GAAP operating margin of approximately 20% |
Earnings per Share
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• | Adjusted EPS in a range of approximately $1.60 to $1.67 (previously a range of approximately $1.58 to $1.65) |
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• | GAAP EPS in a range of approximately $1.55 to $1.62 |
Cash Flow
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• | Cash flow from operating activities of approximately $1 billion. The cash flow outlook excludes $100 million of anticipated final tax payments relating to the agreement announced with the U.S. Internal Revenue Service in December 2011. Some or all of these payments may occur in 2015. |
Additional Statistics
Additional key statistics for the quarter and historical trends can be found in the supplemental tables included with this press release.
Non-GAAP Measures
Western Union presents a number of non-GAAP financial measures because management believes that these metrics provide meaningful supplemental information in addition to the GAAP metrics and provide comparability and consistency to prior periods. Constant currency results assume foreign revenues are translated from foreign currencies to the U.S. dollar, net of the effect of foreign currency hedges, at rates consistent with those in the prior year.
These non-GAAP financial measures include revenue change constant currency adjusted; operating income margin, excluding Paymap settlement agreement; diluted earnings per share, excluding Paymap settlement agreement; effective tax rate, excluding Paymap settlement agreement; Consumer-to-Consumer segment revenue change constant currency adjusted; Consumer-to-Consumer segment westernunion.com region revenue change constant currency adjusted; Consumer-to-Business segment revenue change constant currency adjusted; Business Solutions segment revenue change constant currency adjusted; 2015 operating income margin outlook, excluding Paymap settlement agreement; 2015 earnings per share outlook, excluding Paymap settlement agreement, net of income tax benefit; and additional measures found in the supplemental tables included with this press release.
Reconciliations of non-GAAP to comparable GAAP measures are available in the accompanying schedules and in the “Investor Relations” section of the Company’s website at http://ir.westernunion.com.
Investor and Analyst Conference Call and Slide Presentation
The Company will host a conference call and webcast, including slides, at 4:30 p.m. Eastern Time today. To listen to the conference call via telephone, dial 1 (888) 317-6003 (U.S.) or
+1 (412) 317-6061 (outside the U.S.) ten minutes prior to the start of the call. The pass code is 5762800.
The conference call and accompanying slides will be available via webcast at http://ir.westernunion.com. Registration for the event is required, so please register at least five minutes prior to the scheduled start time.
A replay of the call will be available approximately one hour after the call ends through
August 13, 2015, at 1 (877) 344-7529 (U.S.) or +1 (412) 317-0088 (outside the U.S.). The pass code is 10068122. A webcast replay will be available at http://ir.westernunion.com.
Please note: All statements made by Western Union officers on this call are the property of Western Union and subject to copyright protection. Other than the replay, Western Union has not authorized, and disclaims responsibility for, any recording, replay or distribution of any transcription of this call.
Safe Harbor Compliance Statement for Forward-Looking Statements
This press release contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as "expects," "intends," "anticipates," "believes," "estimates," "guides," "provides guidance," "provides outlook" and other similar expressions or future or conditional verbs such as "may," "will," "should," "would," "could," and "might" are intended to identify such forward-looking statements. Readers of this press release of The Western Union Company (the "Company," "Western Union," "we," "our" or "us") should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed in the "Risk Factors" section and throughout the Annual Report on Form 10-K
for the year ended December 31, 2014. The statements are only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement.
Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following: (i) events related to our business and industry, such as: changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic and trade downturns, or significantly slower growth or declines in the money transfer, payment service, and other markets in which we operate, including downturns or declines related to interruptions in migration patterns, or non-performance by our banks, lenders, insurers, or other financial services providers; failure to compete effectively in the money transfer and payment service industry, including among other things, with respect to price, with global and niche or corridor money transfer providers, banks and other money transfer and payment service providers, including card associations, card-based payment providers, electronic, mobile and Internet-based services, digital currencies and related protocols, and other innovations in technology and business models; deterioration in customer confidence in our business, or in money transfer and payment service providers generally; our ability to adopt new technology and develop and gain market acceptance of new and enhanced services in response to changing industry and consumer needs or trends; changes in, and failure to manage effectively, exposure to foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers and payment transactions; political conditions and related actions in the United States and abroad which may adversely affect our business and economic conditions as a whole, including interruptions of United States or other government relations with countries in which we have or are implementing significant business relationships with agents or clients; any material breach of security, including cybersecurity, or safeguards of or interruptions in any of our systems or those of our vendors or other third parties; mergers, acquisitions and integration of acquired businesses and technologies into our Company, and the failure to realize anticipated financial benefits from these acquisitions, and events requiring us to write down our goodwill; failure to manage credit and fraud risks presented by our agents, clients and consumers; failure to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place, including due to increased costs or loss of business as a result of increased compliance requirements or difficulty for us, our agents or their subagents in establishing or maintaining relationships with banks needed to conduct our services; decisions to change our business mix; adverse rating actions by credit rating agencies; cessation of or defects in various services provided to us by third-party vendors; our ability to realize the anticipated benefits from productivity and cost-savings and other related initiatives, which may include decisions to downsize or to transition operating activities from one location to another, and to minimize any disruptions in our workforce that may result from those initiatives; our ability to protect our brands and our other intellectual property rights and to defend ourselves against potential intellectual property infringement claims; changes in tax laws and unfavorable resolution of tax contingencies; our ability to attract and retain qualified key employees and to manage our workforce successfully; material changes in the market value or liquidity of securities that we hold; restrictions imposed by our debt obligations; (ii) events related to our regulatory and litigation environment, such as: liabilities or loss of business resulting from a failure by us, our agents or their subagents to comply with laws and regulations and regulatory or judicial interpretations thereof, including laws and regulations designed to protect consumers, or detect and prevent money laundering, terrorist financing, fraud and other illicit activity; increased costs or loss of business due to regulatory initiatives and changes in laws, regulations and industry practices and standards, including changes in interpretations in the United States and globally, affecting us, our agents or their subagents, or the banks with which we or our agents maintain bank accounts needed to provide our services, including related to anti-money laundering regulations, anti-fraud measures, customer due diligence, agent and subagent due diligence, registration, and monitoring requirements, and consumer protection; liabilities or loss of business and unanticipated developments resulting from governmental investigations and consent agreements with or enforcement actions by regulators, including those associated with compliance with or failure to comply with the settlement agreement with the State of Arizona, as amended; the potential impact on our business from the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as regulations issued pursuant to it and the actions of the Consumer Financial Protection Bureau and similar legislation and regulations enacted by other governmental authorities related to consumer protection; liabilities resulting from litigation, including class-action lawsuits and similar matters, including costs, expenses, settlements and judgments; failure to comply with regulations and changes in expectations regarding consumer privacy and data use and security; effects of unclaimed property laws; failure to maintain sufficient amounts or types of regulatory capital or other restrictions on the use of our working capital to meet the changing requirements of our regulators worldwide; changes in accounting
standards, rules and interpretations or industry standards affecting our business; and (iii) other events, such as: adverse tax consequences from our spin-off from First Data Corporation; catastrophic events; and management's ability to identify and manage these and other risks.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western Union Business Solutions branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, to send payments and to purchase money orders. As of June 30, 2015, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of over 500,000 agent locations in 200 countries and territories and over 100,000 ATMs and kiosks, and included the capability to send money to millions of bank accounts. In 2014, The Western Union Company completed 255 million consumer-to-consumer transactions worldwide, moving $85 billion of principal between consumers, and 484 million business payments. For more information, visit www.westernunion.com.
WU-F, WU-G
THE WESTERN UNION COMPANY
KEY STATISTICS
(Unaudited)
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| Notes* | | 2Q14 | | 3Q14 | | 4Q14 | | FY2014 | | 1Q15 | | 2Q15 | | YTD 2Q15 |
Consolidated Metrics | | | | | | | | | | | | | | | |
Consolidated revenues (GAAP) - YoY % change | | | 1 | % | | 2 | % | | (1 | )% | | 1 | % | | (2 | )% | | (2 | )% | | (2 | )% |
Consolidated revenues (constant currency) - YoY % change | a | | 3 | % | | 5 | % | | 4 | % | | 4 | % | | 4 | % | | 4 | % | | 4 | % |
Consolidated operating margin (GAAP) | | | 19.8 | % | | 21.8 | % | | 19.6 | % | | 20.3 | % | | 20.6 | % | | 18.1 | % | | 19.3 | % |
Consolidated operating margin (excluding Paymap settlement agreement) | b | | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 20.7 | % | | 20.6 | % |
| | | | | | | | | | | | | | | |
Consumer-to-Consumer (C2C) Segment | | | | | | | | | | | | | | | |
Revenues (GAAP) - YoY % change | | | 2 | % | | 2 | % | | (2 | )% | | 1 | % | | (4 | )% | | (3 | )% | | (3 | )% |
Revenues (constant currency) - YoY % change | f | | 3 | % | | 4 | % | | 2 | % | | 3 | % | | 2 | % | | 3 | % | | 3 | % |
Operating margin | | | 22.7 | % | | 24.9 | % | | 23.1 | % | | 23.4 | % | | 23.1 | % | | 23.3 | % | | 23.2 | % |
| | | | | | | | | | | | | | | |
Transactions (in millions) | | | 63.96 |
| | 65.31 |
| | 65.42 |
| | 254.93 |
| | 61.75 |
| | 65.76 |
| | 127.51 |
|
Transactions - YoY % change | | | 6 | % | | 5 | % | | 2 | % | | 5 | % | | 3 | % | | 3 | % | | 3 | % |
| | | | | | | | | | | | | | | |
Total principal ($ - billions) | | | $ | 21.8 |
| | $ | 22.1 |
| | $ | 21.2 |
| | $ | 85.4 |
| | $ | 19.5 |
| | $ | 20.8 |
| | $ | 40.3 |
|
Principal per transaction ($ - dollars) | | | $ | 341 |
| | $ | 339 |
| | $ | 323 |
| | $ | 335 |
| | $ | 315 |
| | $ | 316 |
| | $ | 316 |
|
Principal per transaction - YoY % change | | | 0 | % | | 0 | % | | (4 | )% | | (1 | )% | | (7 | )% | | (7 | )% | | (7 | )% |
Principal per transaction (constant currency) - YoY % change | g | | 0 | % | | 0 | % | | 0 | % | | 0 | % | | (1 | )% | | (1 | )% | | (1 | )% |
| | | | | | | | | | | | | | | |
Cross-border principal ($ - billions) | | | $ | 19.7 |
| | $ | 20.0 |
| | $ | 19.2 |
| | $ | 77.2 |
| | $ | 17.5 |
| | $ | 18.8 |
| | $ | 36.3 |
|
Cross-border principal - YoY % change | | | 7 | % | | 5 | % | | (1 | )% | | 5 | % | | (4 | )% | | (5 | )% | | (4 | )% |
Cross-border principal (constant currency) - YoY % change | h | | 6 | % | | 5 | % | | 2 | % | | 6 | % | | 2 | % | | 2 | % | | 2 | % |
| | | | | | | | | | | | | | | |
Europe and CIS region revenues (GAAP) - YoY % change | v, w | | 3 | % | | 1 | % | | (5 | )% | | 0 | % | | (9 | )% | | (9 | )% | | (9 | )% |
Europe and CIS region revenues (constant currency) - YoY % change | i, v, w | | 2 | % | | 3 | % | | 1 | % | | 1 | % | | 2 | % | | 2 | % | | 2 | % |
Europe and CIS region transactions - YoY % change | v, w | | 11 | % | | 10 | % | | 6 | % | | 9 | % | | 4 | % | | 1 | % | | 2 | % |
| | | | | | | | | | | | | | | |
North America region revenues (GAAP) - YoY % change | v, x | | 1 | % | | 2 | % | | 0 | % | | 1 | % | | (2 | )% | | (2 | )% | | (2 | )% |
North America region revenues (constant currency) - YoY % change | j, v, x | | 1 | % | | 2 | % | | 1 | % | | 1 | % | | 0 | % | | (1 | )% | | (1 | )% |
North America region transactions - YoY % change | v, x | | 3 | % | | 3 | % | | 2 | % | | 3 | % | | 3 | % | | 3 | % | | 3 | % |
| | | | | | | | | | | | | | | |
Middle East and Africa region revenues (GAAP) - YoY % change | v, y | | 6 | % | | 3 | % | | (3 | )% | | 2 | % | | (6 | )% | | (4 | )% | | (5 | )% |
Middle East and Africa region revenues (constant currency) - YoY % change | k, v, y | | 6 | % | | 4 | % | | 0 | % | | 3 | % | | (1 | )% | | 1 | % | | 0 | % |
Middle East and Africa region transactions - YoY % change | v, y | | 6 | % | | 1 | % | | (3 | )% | | 3 | % | | (3 | )% | | 0 | % | | (1 | )% |
| | | | | | | | | | | | | | | |
APAC region revenues (GAAP) - YoY % change | v, z | | 1 | % | | 1 | % | | (3 | )% | | 0 | % | | (6 | )% | | (5 | )% | | (6 | )% |
APAC region revenues (constant currency) - YoY % change | l, v, z | | 2 | % | | 2 | % | | 1 | % | | 2 | % | | (2 | )% | | 0 | % | | (1 | )% |
APAC region transactions - YoY % change | v, z | | 3 | % | | 0 | % | | (4 | )% | | 1 | % | | (4 | )% | | (3 | )% | | (3 | )% |
| | | | | | | | | | | | | | | |
LACA region revenues (GAAP) - YoY % change | v, aa | | (13 | )% | | (3 | )% | | (3 | )% | | (6 | )% | | 4 | % | | 6 | % | | 5 | % |
LACA region revenues (constant currency) - YoY % change | m, v, aa | | (7 | )% | | 4 | % | | 4 | % | | 2 | % | | 10 | % | | 13 | % | | 12 | % |
LACA region transactions - YoY % change | v, aa | | 0 | % | | 2 | % | | 2 | % | | 3 | % | | 6 | % | | 7 | % | | 7 | % |
THE WESTERN UNION COMPANY
KEY STATISTICS
(Unaudited)
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| Notes* | | 2Q14 | | 3Q14 | | 4Q14 | | FY2014 | | 1Q15 | | 2Q15 | | YTD 2Q15 |
westernunion.com region revenues (GAAP) - YoY % change | v, bb | | 31 | % | | 21 | % | | 19 | % | | 28 | % | | 17 | % | | 22 | % | | 20 | % |
westernunion.com region revenues (constant currency) - YoY % change | n, v, bb | | 30 | % | | 20 | % | | 23 | % | | 29 | % | | 23 | % | | 28 | % | | 26 | % |
westernunion.com region transactions - YoY % change | v, bb | | 46 | % | | 34 | % | | 27 | % | | 39 | % | | 25 | % | | 27 | % | | 26 | % |
| | | | | | | | | | | | | | | |
International revenues - YoY % change | cc | | 1 | % | | 1 | % | | (4 | )% | | 0 | % | | (7 | )% | | (5 | )% | | (6 | )% |
International transactions - YoY % change | cc | | 6 | % | | 4 | % | | 0 | % | | 5 | % | | 0 | % | | 1 | % | | 0 | % |
International revenues - % of C2C segment revenues | cc | | 71 | % | | 72 | % | | 72 | % | | 72 | % | | 69 | % | | 70 | % | | 69 | % |
| | | | | | | | | | | | | | | |
United States originated revenues - YoY % change | dd | | 5 | % | | 4 | % | | 3 | % | | 5 | % | | 4 | % | | 3 | % | | 4 | % |
United States originated transactions - YoY % change | dd | | 6 | % | | 6 | % | | 5 | % | | 6 | % | | 6 | % | | 6 | % | | 6 | % |
United States originated revenues - % of C2C segment revenues | dd | | 29 | % | | 28 | % | | 28 | % | | 28 | % | | 31 | % | | 30 | % | | 31 | % |
| | | | | | | | | | | | | | | |
Electronic channels revenues - YoY % change | ee | | 27 | % | | 21 | % | | 17 | % | | 24 | % | | 17 | % | | 19 | % | | 18 | % |
| | | | | | | | | | | | | | | |
Consumer-to-Business (C2B) Segment | | | | | | | | | | | | | | | |
Revenues (GAAP) - YoY % change | | | (5 | )% | | (1 | )% | | 4 | % | | (2 | )% | | 7 | % | | 8 | % | | 8 | % |
Revenues (constant currency) - YoY % change | o | | 8 | % | | 11 | % | | 15 | % | | 10 | % | | 11 | % | | 12 | % | | 12 | % |
Operating margin | | | 16.2 | % | | 15.4 | % | | 14.2 | % | | 16.5 | % | | 18.7 | % | | (4.1 | )% | | 7.3 | % |
Operating margin (excluding Paymap settlement agreement) | p | | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 18.3 | % | | 18.5 | % |
| | | | | | | | | | | | | | | |
Business Solutions (B2B) Segment | | | | | | | | | | | | | | | |
Revenues (GAAP) - YoY % change | | | 0 | % | | 4 | % | | 1 | % | | 3 | % | | (1 | )% | | (1 | )% | | (1 | )% |
Revenues (constant currency) - YoY % change | q | | 0 | % | | 3 | % | | 5 | % | | 4 | % | | 7 | % | | 9 | % | | 8 | % |
Operating margin | | | (3.4 | )% | | (0.2 | )% | | (4.9 | )% | | (3.0 | )% | | 2.1 | % | | (0.4 | )% | | 0.9 | % |
| | | | | | | | | | | | | | | |
% of Total Company Revenue | | | | | | | | | | | | | | | |
Consumer-to-Consumer segment revenues | | | 81 | % | | 80 | % | | 80 | % | | 80 | % | | 79 | % | | 80 | % | | 79 | % |
Consumer-to-Business segment revenues | | | 10 | % | | 11 | % | | 11 | % | | 11 | % | | 12 | % | | 11 | % | | 12 | % |
Business Solutions segment revenues | | | 7 | % | | 7 | % | | 7 | % | | 7 | % | | 7 | % | | 7 | % | | 7 | % |
Consumer-to-Consumer region revenues: | | | | | | | | | | | | | | | |
Europe and CIS revenues | v, w | | 22 | % | | 21 | % | | 21 | % | | 21 | % | | 20 | % | | 20 | % | | 20 | % |
North America revenues | v, x | | 19 | % | | 19 | % | | 19 | % | | 19 | % | | 19 | % | | 19 | % | | 19 | % |
Middle East and Africa revenues | v, y | | 16 | % | | 16 | % | | 16 | % | | 16 | % | | 16 | % | | 16 | % | | 16 | % |
APAC revenues | v, z | | 12 | % | | 12 | % | | 11 | % | | 12 | % | | 11 | % | | 11 | % | | 11 | % |
LACA revenues | v, aa | | 8 | % | | 8 | % | | 9 | % | | 8 | % | | 8 | % | | 9 | % | | 8 | % |
westernunion.com revenues | v, bb | | 4 | % | | 4 | % | | 4 | % | | 4 | % | | 5 | % | | 5 | % | | 5 | % |
Electronic channels revenues | ee | | 6 | % | | 6 | % | | 6 | % | | 6 | % | | 7 | % | | 7 | % | | 7 | % |
|
| | | | | | | | | | |
* See page 13 of the press release for the applicable Note references and the reconciliation of non-GAAP financial measures. |
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
|
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| 2015 | | 2014 | | % Change | | 2015 | | 2014 | | % Change |
Revenues: | | | | | | | | | | | |
Transaction fees | $ | 988.3 |
| | $ | 1,029.0 |
| | (4 | )% | | $ | 1,936.9 |
| | $ | 2,016.9 |
| | (4 | )% |
Foreign exchange revenues | 362.1 |
| | 344.3 |
| | 5 | % | | 700.1 |
| | 673.6 |
| | 4 | % |
Other revenues | 33.2 |
| | 32.3 |
| | 3 | % | | 67.5 |
| | 65.9 |
| | 2 | % |
Total revenues | 1,383.6 |
| | 1,405.6 |
| | (2 | )% | | 2,704.5 |
| | 2,756.4 |
| | (2 | )% |
Expenses: | | | | | | | | | | | |
Cost of services | 799.4 |
| | 827.8 |
| | (3 | )% | | 1,571.2 |
| | 1,625.0 |
| | (3 | )% |
Selling, general and administrative (a) | 333.4 |
| | 299.5 |
| | 11 | % | | 610.2 |
| | 581.1 |
| | 5 | % |
Total expenses | 1,132.8 |
| | 1,127.3 |
| | 0 | % | | 2,181.4 |
| | 2,206.1 |
| | (1 | )% |
Operating income | 250.8 |
| | 278.3 |
| | (10 | )% | | 523.1 |
| | 550.3 |
| | (5 | )% |
Other income/(expense): | | | | | | | | | | | |
Interest income | 2.5 |
| | 2.9 |
| | (14 | )% | | 5.4 |
| | 7.6 |
| | (29 | )% |
Interest expense | (43.1 | ) | | (43.4 | ) | | (1 | )% | | (84.9 | ) | | (91.0 | ) | | (7 | )% |
Derivative gains/(losses), net | — |
| | (2.0 | ) | | (b) |
| | 1.0 |
| | (2.6 | ) | | (b) |
|
Other expense, net | (3.3 | ) | | (3.7 | ) | | (11 | )% | | (5.1 | ) | | (4.8 | ) | | 6 | % |
Total other expense, net | (43.9 | ) | | (46.2 | ) | | (5 | )% | | (83.6 | ) | | (90.8 | ) | | (8 | )% |
Income before income taxes | 206.9 |
| | 232.1 |
| | (11 | )% | | 439.5 |
| | 459.5 |
| | (4 | )% |
Provision for income taxes | 17.6 |
| | 38.3 |
| | (54 | )% | | 46.3 |
| | 62.7 |
| | (26 | )% |
Net income | $ | 189.3 |
| | $ | 193.8 |
| | (2 | )% | | $ | 393.2 |
| | $ | 396.8 |
| | (1 | )% |
Earnings per share: | | | | | | | | | | | |
Basic | $ | 0.37 |
| | $ | 0.36 |
| | 3 | % | | $ | 0.76 |
| | $ | 0.73 |
| | 4 | % |
Diluted | $ | 0.36 |
| | $ | 0.36 |
| | 0 | % | | $ | 0.75 |
| | $ | 0.73 |
| | 3 | % |
Weighted-average shares outstanding: | | | | | | | | | | | |
Basic | 515.2 |
| | 537.1 |
| | | | 518.1 |
| | 541.5 |
| | |
Diluted | 519.8 |
| | 539.9 |
| | | | 522.5 |
| | 544.6 |
| | |
| | | | | | | | | | | |
Cash dividends declared per common share | $ | 0.155 |
| | $ | 0.125 |
| | 24 | % | | $ | 0.31 |
| | $ | 0.25 |
| | 24 | % |
|
| | | | | | | |
__________ | | | | | | |
(a) | For both the three and six months ended June 30, 2015, selling, general and administrative expenses included $35.3 million of expenses related to a settlement agreement reached with the Consumer Financial Protection Bureau regarding the Equity Accelerator service of Paymap, Inc., a subsidiary of the Company. |
(b) | Calculation not meaningful. | | | |
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions, except per share amounts)
|
| | | | | | | | |
| | June 30, 2015 | | December 31, 2014 |
Assets | | | | |
Cash and cash equivalents (a) | | $ | 1,630.5 |
| | $ | 1,783.2 |
|
Settlement assets | | 3,490.4 |
| | 3,313.7 |
|
Property and equipment, net of accumulated depreciation of | | | | |
$509.1 and $478.5, respectively | | 201.2 |
| | 206.4 |
|
Goodwill | | 3,168.3 |
| | 3,169.2 |
|
Other intangible assets, net of accumulated amortization of | | | | |
$834.7 and $820.0, respectively | | 768.3 |
| | 748.1 |
|
Other assets | | 805.1 |
| | 669.8 |
|
Total assets | | $ | 10,063.8 |
| | $ | 9,890.4 |
|
Liabilities and Stockholders' Equity | | | | |
Liabilities: | | | | |
Accounts payable and accrued liabilities | | $ | 587.8 |
| | $ | 600.4 |
|
Settlement obligations | | 3,490.4 |
| | 3,313.7 |
|
Income taxes payable | | 176.8 |
| | 166.3 |
|
Deferred tax liability, net | | 310.1 |
| | 305.0 |
|
Borrowings | | 3,725.8 |
| | 3,720.4 |
|
Other liabilities | | 465.5 |
| | 484.2 |
|
Total liabilities | | 8,756.4 |
| | 8,590.0 |
|
| | | | |
Stockholders' equity: | | | | |
Preferred stock, $1.00 par value; 10 shares authorized; | | | | |
no shares issued | | — |
| | — |
|
Common stock, $0.01 par value; 2,000 shares authorized; | | | | |
512.1 shares and 521.5 shares issued and outstanding as of | | | | |
June 30, 2015 and December 31, 2014, respectively | | 5.1 |
| | 5.2 |
|
Capital surplus | | 541.6 |
| | 445.4 |
|
Retained earnings | | 884.2 |
| | 968.7 |
|
Accumulated other comprehensive loss | | (123.5 | ) | | (118.9 | ) |
Total stockholders' equity | 1,307.4 |
| | 1,300.4 |
|
Total liabilities and stockholders' equity | | $ | 10,063.8 |
| | $ | 9,890.4 |
|
|
| | | | |
__________ | | | |
(a) | Approximately $1.0 billion and $950 million was held by entities outside of the United States as of June 30, 2015 and December 31, 2014, respectively. |
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
|
| | | | | | | | |
| | Six Months Ended
June 30, |
| | 2015 | | 2014 |
Cash Flows From Operating Activities | | | | |
Net income | | $ | 393.2 |
| | $ | 396.8 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | |
| |
|
Depreciation | | 32.6 |
| | 33.0 |
|
Amortization | | 94.2 |
| | 102.6 |
|
Other non-cash items, net | | 24.9 |
| | 32.0 |
|
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in: | |
| |
|
Other assets | | (57.6 | ) | | (16.6 | ) |
Accounts payable and accrued liabilities | | (23.1 | ) | | (100.9 | ) |
Income taxes payable | | 10.9 |
| | (8.5 | ) |
Other liabilities | | (9.4 | ) | | 11.7 |
|
Net cash provided by operating activities | | 465.7 |
| | 450.1 |
|
Cash Flows From Investing Activities | | | | |
Capitalization of contract costs | | (74.7 | ) | | (44.4 | ) |
Capitalization of purchased and developed software | | (20.8 | ) | | (17.6 | ) |
Purchases of property and equipment | | (26.9 | ) | | (34.3 | ) |
Acquisition of business | | — |
| | (10.6 | ) |
Purchase of non-settlement related investments | | (100.0 | ) | | — |
|
Proceeds from sale of non-settlement related investments | | — |
| | 100.2 |
|
Net cash used in investing activities | | (222.4 | ) | | (6.7 | ) |
Cash Flows From Financing Activities | | | | |
Proceeds from exercise of options | | 77.8 |
| | 5.6 |
|
Cash dividends paid | | (160.0 | ) | | (134.4 | ) |
Common stock repurchased | | (313.8 | ) | | (318.0 | ) |
Net proceeds from commercial paper | | — |
| | 35.0 |
|
Principal payments on borrowings | | — |
| | (500.0 | ) |
Net cash used in financing activities | | (396.0 | ) | | (911.8 | ) |
Net change in cash and cash equivalents | | (152.7 | ) | | (468.4 | ) |
Cash and cash equivalents at beginning of period | | 1,783.2 |
| | 2,073.1 |
|
Cash and cash equivalents at end of period | | $ | 1,630.5 |
| | $ | 1,604.7 |
|
THE WESTERN UNION COMPANY
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
|
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| 2015 |
| 2014 | | % Change | | 2015 | | 2014 | | % Change |
Revenues: | | | | | | | | | | | |
Consumer-to-Consumer (C2C): | | | | | | | | | | | |
Transaction fees | $ | 816.1 |
| | $ | 867.1 |
| | (6 | )% | | $ | 1,592.3 |
| | $ | 1,692.7 |
| | (6 | )% |
Foreign exchange revenues | 268.9 |
| | 249.6 |
| | 8 | % | | 513.0 |
| | 485.6 |
| | 6 | % |
Other revenues | 16.5 |
| | 15.4 |
| | 7 | % | | 34.5 |
| | 31.3 |
| | 10 | % |
Total Consumer-to-Consumer | 1,101.5 |
| | 1,132.1 |
| | (3 | )% | | 2,139.8 |
| | 2,209.6 |
| | (3 | )% |
Consumer-to-Business (C2B): | | | | | | | | | | | |
Transaction fees | 151.6 |
| | 139.4 |
| | 9 | % | | 303.0 |
| | 280.1 |
| | 8 | % |
Foreign exchange and other revenues | 6.3 |
| | 6.5 |
| | (3 | )% | | 12.7 |
| | 13.0 |
| | (2 | )% |
Total Consumer-to-Business | 157.9 |
| | 145.9 |
| | 8 | % | | 315.7 |
| | 293.1 |
| | 8 | % |
Business Solutions (B2B): | | | | | | | | | | | |
Foreign exchange revenues | 87.5 |
| | 87.7 |
| | 0 | % | | 175.4 |
| | 178.1 |
| | (2 | )% |
Transaction fees and other revenues | 10.1 |
| | 10.5 |
| | (4 | )% | | 20.2 |
| | 19.5 |
| | 4 | % |
Total Business Solutions | 97.6 |
| | 98.2 |
| | (1 | )% | | 195.6 |
| | 197.6 |
| | (1 | )% |
Other: | | | | | | | | | | | |
Total revenues | 26.6 |
| | 29.4 |
| | (10 | )% | | 53.4 |
| | 56.1 |
| | (5 | )% |
Total consolidated revenues | $ | 1,383.6 |
| | $ | 1,405.6 |
| | (2 | )% | | $ | 2,704.5 |
| | $ | 2,756.4 |
| | (2 | )% |
Operating income/(loss): | | | | | | | | | | | |
Consumer-to-Consumer | $ | 256.6 |
| | $ | 257.5 |
| | 0 | % | | $ | 496.8 |
| | $ | 504.5 |
| | (2 | )% |
Consumer-to-Business | (6.4 | ) | | 23.6 |
| | (a) |
| | 23.1 |
| | 53.4 |
| | (a) |
|
Business Solutions | (0.4 | ) | | (3.3 | ) | | (b) |
| | 1.7 |
| | (6.9 | ) | | (b) |
|
Other | 1.0 |
| | 0.5 |
| | (b) |
| | 1.5 |
| | (0.7 | ) | | (b) |
|
Total consolidated operating income | $ | 250.8 |
| | $ | 278.3 |
| | (10 | )% | | $ | 523.1 |
| | $ | 550.3 |
| | (5 | )% |
Operating income/(loss) margin: | | | | | | | | | | | |
Consumer-to-Consumer | 23.3 | % | | 22.7 | % | | 0.6 | % | | 23.2 | % | | 22.8 | % | | 0.4 | % |
Consumer-to-Business | (4.1) | % | | 16.2 | % | | (a) |
| | 7.3 | % | | 18.2 | % | | (a) |
|
Business Solutions | (0.4) | % | | (3.4 | )% | | 3.0 | % | | 0.9 | % | | (3.5) | % | | 4.4 | % |
Total consolidated operating income margin | 18.1 | % | | 19.8 | % | | (1.7 | )% | | 19.3 | % | | 20.0 | % | | (0.7 | )% |
|
| |
__________ |
(a) | For both the three and six months ended June 30, 2015, Consumer-to-Business operating income/(loss) included $35.3 million of expenses related to a settlement agreement reached with the Consumer Financial Protection Bureau regarding the Equity Accelerator service of Paymap, Inc., a subsidiary of the Company. |
(b) | Calculation not meaningful. |
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise)
(Unaudited)
Western Union’s management believes the non-GAAP financial measures presented provide meaningful supplemental information regarding our operating results to assist management, investors, analysts, and others in understanding our financial results and to better analyze trends in our underlying business, because they provide consistency and comparability to prior periods.
A non-GAAP financial measure should not be considered in isolation or as a substitute for the most comparable GAAP financial measure. A non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliation to the corresponding GAAP financial measure, provide a more complete understanding of our business. Users of the financial statements are encouraged to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included below.
All adjusted year-over-year changes were calculated using prior year reported amounts.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2Q14 | | 3Q14 | | 4Q14 | | FY2014 | | 1Q15 | | 2Q15 | | YTD 2Q15 |
| Consolidated Metrics | | | | | | | | | | | | | |
(a) | Revenues, as reported (GAAP) | $ | 1,405.6 |
| | $ | 1,440.9 |
| | $ | 1,409.9 |
| | $ | 5,607.2 |
| | $ | 1,320.9 |
| | $ | 1,383.6 |
| | $ | 2,704.5 |
|
| Foreign currency translation impact (s) | 26.3 |
| | 35.0 |
| | 63.7 |
| | 157.5 |
| | 78.6 |
| | 84.7 |
| | 163.3 |
|
| Revenues, constant currency adjusted | $ | 1,431.9 |
| | $ | 1,475.9 |
| | $ | 1,473.6 |
| | $ | 5,764.7 |
| | $ | 1,399.5 |
| | $ | 1,468.3 |
| | $ | 2,867.8 |
|
| Prior year revenues, as reported (GAAP) | $ | 1,385.9 |
| | $ | 1,408.8 |
| | $ | 1,421.9 |
| | $ | 5,542.0 |
| | $ | 1,350.8 |
| | $ | 1,405.6 |
| | $ | 2,756.4 |
|
| Revenue change, as reported (GAAP) | 1 | % | | 2 | % | | (1 | )% | | 1 | % | | (2 | )% | | (2 | )% | | (2 | )% |
| Revenue change, constant currency adjusted | 3 | % | | 5 | % | | 4 | % | | 4 | % | | 4 | % | | 4 | % | | 4 | % |
| | | | | | | | | | | | | | | |
(b) | Operating income, as reported (GAAP) | $ | 278.3 |
| | $ | 314.1 |
| | $ | 276.1 |
| | $ | 1,140.5 |
| | $ | 272.3 |
| | $ | 250.8 |
| | $ | 523.1 |
|
| Less: Paymap settlement agreement (t) | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 35.3 |
| | 35.3 |
|
| Operating income, excluding Paymap settlement agreement | $ | 278.3 |
| | $ | 314.1 |
| | $ | 276.1 |
| | $ | 1,140.5 |
| | $ | 272.3 |
| | $ | 286.1 |
| | $ | 558.4 |
|
| Operating income margin, as reported (GAAP) | 19.8 | % | | 21.8 | % | | 19.6 | % | | 20.3 | % | | 20.6 | % | | 18.1 | % | | 19.3 | % |
| Operating income margin, excluding Paymap settlement agreement | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 20.7 | % | | 20.6 | % |
| | | | | | | | | | | | | | | |
(c) | Operating income, as reported (GAAP) | $ | 278.3 |
| | $ | 314.1 |
| | $ | 276.1 |
| | $ | 1,140.5 |
| | $ | 272.3 |
| | $ | 250.8 |
| | $ | 523.1 |
|
| Reversal of depreciation and amortization | 68.4 |
| | 66.8 |
| | 69.5 |
| | 271.9 |
| | 63.9 |
| | 62.9 |
| | 126.8 |
|
| EBITDA (u) | $ | 346.7 |
| | $ | 380.9 |
| | $ | 345.6 |
| | $ | 1,412.4 |
| | $ | 336.2 |
| | $ | 313.7 |
| | $ | 649.9 |
|
| Less: Paymap settlement agreement (t) | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 35.3 |
| | 35.3 |
|
| Adjusted EBITDA, excluding Paymap settlement agreement | $ | 346.7 |
| | $ | 380.9 |
| | $ | 345.6 |
| | $ | 1,412.4 |
| | $ | 336.2 |
| | $ | 349.0 |
| | $ | 685.2 |
|
| Operating income margin, as reported (GAAP) | 19.8 | % | | 21.8 | % | | 19.6 | % | | 20.3 | % | | 20.6 | % | | 18.1 | % | | 19.3 | % |
| EBITDA margin | 24.7 | % | | 26.4 | % | | 24.5 | % | | 25.2 | % | | 25.5 | % | | 22.7 | % | | 24.0 | % |
| Adjusted EBITDA margin, excluding Paymap settlement agreement | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 25.2 | % | | 25.3 | % |
| | | | | | | | | | | | | | | |
(d) | Net income, as reported (GAAP) | $ | 193.8 |
| | $ | 234.1 |
| | $ | 221.5 |
| | $ | 852.4 |
| | $ | 203.9 |
| | $ | 189.3 |
| | $ | 393.2 |
|
| Less: Paymap settlement agreement, net of income tax benefit (t) | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 24.2 |
| | 24.2 |
|
| Net income, excluding Paymap settlement agreement | $ | 193.8 |
| | $ | 234.1 |
| | $ | 221.5 |
| | $ | 852.4 |
| | $ | 203.9 |
| | $ | 213.5 |
| | $ | 417.4 |
|
| Diluted earnings per share ("EPS"), as reported (GAAP) ($-dollars) | $ | 0.36 |
| | $ | 0.44 |
| | $ | 0.42 |
| | $ | 1.59 |
| | $ | 0.39 |
| | $ | 0.36 |
| | $ | 0.75 |
|
| Impact from Paymap settlement agreement, net of income tax benefit ($-dollars) | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 0.05 |
| | 0.05 |
|
| Diluted EPS, excluding Paymap settlement agreement ($-dollars) | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | $ | 0.41 |
| | $ | 0.80 |
|
| Diluted weighted-average shares outstanding | 539.9 |
| | 531.2 |
| | 526.9 |
| | 536.8 |
| | 525.2 |
| | 519.8 |
| | 522.5 |
|
| | | | | | | | | | | | | | | |
(e) | Effective tax rate, as reported (GAAP) | 16.5 | % | | 14.2 | % | | 6.1 | % | | 12.0 | % | | 12.3 | % | | 8.5 | % | | 10.5 | % |
| Impact from Paymap settlement agreement, net of income tax benefit (t) | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 3.3 | % | | 1.6 | % |
| Effective tax rate, excluding Paymap settlement agreement | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 11.8 | % | | 12.1 | % |
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2Q14 | | 3Q14 | | 4Q14 | | FY2014 | | 1Q15 | | 2Q15 | | YTD 2Q15 |
| Consumer-to-Consumer Segment | | | | | | | | | | | | | |
(f) | Revenues, as reported (GAAP) | $ | 1,132.1 |
| | $ | 1,150.9 |
| | $ | 1,125.3 |
| | $ | 4,485.8 |
| | $ | 1,038.3 |
| | $ | 1,101.5 |
| | $ | 2,139.8 |
|
| Foreign currency translation impact (s) | 7.5 |
| | 17.9 |
| | 42.8 |
| | 80.7 |
| | 63.0 |
| | 69.1 |
| | 132.1 |
|
| Revenues, constant currency adjusted | $ | 1,139.6 |
| | $ | 1,168.8 |
| | $ | 1,168.1 |
| | $ | 4,566.5 |
| | $ | 1,101.3 |
| | $ | 1,170.6 |
| | $ | 2,271.9 |
|
| Prior year revenues, as reported (GAAP) | $ | 1,108.8 |
| | $ | 1,128.1 |
| | $ | 1,146.5 |
| | $ | 4,433.6 |
| | $ | 1,077.5 |
| | $ | 1,132.1 |
| | $ | 2,209.6 |
|
| Revenue change, as reported (GAAP) | 2 | % | | 2 | % | | (2 | )% | | 1 | % | | (4 | )% | | (3) | % | | (3) | % |
| Revenue change, constant currency adjusted | 3 | % | | 4 | % | | 2 | % | | 3 | % | | 2 | % | | 3 | % | | 3 | % |
| | | | | | | | | | | | | | | |
(g) | Principal per transaction, as reported ($ - dollars) | $ | 341 |
| | $ | 339 |
| | $ | 323 |
| | $ | 335 |
| | $ | 315 |
| | $ | 316 |
| | $ | 316 |
|
| Foreign currency translation impact (s) ($ - dollars) | (2 | ) | | — |
| | 12 |
| | 3 |
| | 19 |
| | 23 |
| | 21 |
|
| Principal per transaction, constant currency adjusted ($ - dollars) | $ | 339 |
| | $ | 339 |
| | $ | 335 |
| | $ | 338 |
| | $ | 334 |
| | $ | 339 |
| | $ | 337 |
|
| Prior year principal per transaction, as reported ($ - dollars) | $ | 340 |
| | $ | 339 |
| | $ | 335 |
| | $ | 338 |
| | $ | 338 |
| | $ | 341 |
| | $ | 339 |
|
| Principal per transaction change, as reported | 0 | % | | 0 | % | | (4 | )% | | (1 | )% | | (7 | )% | | (7) | % | | (7) | % |
| Principal per transaction change, constant currency adjusted | 0 | % | | 0 | % | | 0 | % | | 0 | % | | (1 | )% | | (1) | % | | (1) | % |
| | | | | | | | | | | | | | | |
(h) | Cross-border principal, as reported ($ - billions) | $ | 19.7 |
| | $ | 20.0 |
| | $ | 19.2 |
| | $ | 77.2 |
| | $ | 17.5 |
| | $ | 18.8 |
| | $ | 36.3 |
|
| Foreign currency translation impact (s) ($ - billions) | (0.1 | ) | | — |
| | 0.8 |
| | 0.8 |
| | 1.1 |
| | 1.3 |
| | 2.4 |
|
| Cross-border principal, constant currency adjusted ($ - billions) | $ | 19.6 |
| | $ | 20.0 |
| | $ | 20.0 |
| | $ | 78.0 |
| | $ | 18.6 |
| | $ | 20.1 |
| | $ | 38.7 |
|
| Prior year cross-border principal, as reported ($ - billions) | $ | 18.5 |
| | $ | 19.0 |
| | $ | 19.5 |
| | $ | 73.9 |
| | $ | 18.3 |
| | $ | 19.7 |
| | $ | 38.0 |
|
| Cross-border principal change, as reported | 7 | % | | 5 | % | | (1 | )% | | 5 | % | | (4 | )% | | (5) | % | | (4) | % |
| Cross-border principal change, constant currency adjusted | 6 | % | | 5 | % | | 2 | % | | 6 | % | | 2 | % | | 2 | % | | 2 | % |
| | | | | | | | | | | | | | | |
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | 2Q14 | | 3Q14 | | 4Q14 | | FY2014 | | 1Q15 | | 2Q15 | | YTD 2Q15 |
| Consumer-to-Consumer Segment cont. | | | | | | | | | | | | | |
(i) | Europe and CIS region revenue change, as reported (GAAP) | 3 | % | | 1 | % | | (5 | )% | | 0 | % | | (9 | )% | | (9 | )% | | (9 | )% |
| Europe and CIS region foreign currency translation impact (s) | (1 | )% | | 2 | % | | 6 | % | | 1 | % | | 11 | % | | 11 | % | | 11 | % |
| Europe and CIS region revenue change, constant currency adjusted | 2 | % | | 3 | % | | 1 | % | | 1 | % | | 2 | % | | 2 | % | | 2 | % |
| | | | | | | | | | | | | | |
(j) | North America region revenue change, as reported (GAAP) | 1 | % | | 2 | % | | 0 | % | | 1 | % | | (2 | )% | | (2 | )% | | (2 | )% |
| North America region foreign currency translation impact (s) | 0 | % | | 0 | % | | 1 | % | | 0 | % | | 2 | % | | 1 | % | | 1 | % |
| North America region revenue change, constant currency adjusted | 1 | % | | 2 | % | | 1 | % | | 1 | % | | 0 | % | | (1 | )% | | (1 | )% |
| | | | | | | | | | | | | | |
(k) | Middle East and Africa region revenue change, as reported (GAAP) | 6 | % | | 3 | % | | (3 | )% | | 2 | % | | (6 | )% | | (4 | )% | | (5 | )% |
| Middle East and Africa region foreign currency translation impact (s) | 0 | % | | 1 | % | | 3 | % | | 1 | % | | 5 | % | | 5 | % | | 5 | % |
| Middle East and Africa region revenue change, constant currency adjusted | 6 | % | | 4 | % | | 0 | % | | 3 | % | | (1 | )% | | 1 | % | | 0 | % |
| | | | | | | | | | | | | | |
(l) | APAC region revenue change, as reported (GAAP) | 1 | % | | 1 | % | | (3 | )% | | 0 | % | | (6 | )% | | (5 | )% | | (6 | )% |
| APAC region foreign currency translation impact (s) | 1 | % | | 1 | % | | 4 | % | | 2 | % | | 4 | % | | 5 | % | | 5 | % |
| APAC region revenue change, constant currency adjusted | 2 | % | | 2 | % | | 1 | % | | 2 | % | | (2 | )% | | 0 | % | | (1 | )% |
| | | | | | | | | | | | | | |
(m) | LACA region revenue change, as reported (GAAP) | (13 | )% | | (3 | )% | | (3 | )% | | (6 | )% | | 4 | % | | 6 | % | | 5 | % |
| LACA region foreign currency translation impact (s) | 6 | % | | 7 | % | | 7 | % | | 8 | % | | 6 | % | | 7 | % | | 7 | % |
| LACA region revenue change, constant currency adjusted | (7 | )% | | 4 | % | | 4 | % | | 2 | % | | 10 | % | | 13 | % | | 12 | % |
| | | | | | | | | | | | | | |
(n) | westernunion.com region revenue change, as reported (GAAP) | 31 | % | | 21 | % | | 19 | % | | 28 | % | | 17 | % | | 22 | % | | 20 | % |
| westernunion.com region foreign currency translation impact (s) | (1 | )% | | (1 | )% | | 4 | % | | 1 | % | | 6 | % | | 6 | % | | 6 | % |
| westernunion.com region revenue change, constant currency adjusted | 30 | % | | 20 | % | | 23 | % | | 29 | % | | 23 | % | | 28 | % | | 26 | % |
| | | | | | | | | | | | | | | |
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2Q14 | | 3Q14 | | 4Q14 | | FY2014 | | 1Q15 | | 2Q15 | | YTD 2Q15 |
| Consumer-to-Business Segment | | | | | | | | | | | | | |
(o) | Revenues, as reported (GAAP) | $ | 145.9 |
| | $ | 150.4 |
| | $ | 155.3 |
| | $ | 598.8 |
| | $ | 157.8 |
| | $ | 157.9 |
| | $ | 315.7 |
|
| Foreign currency translation impact (s) | 18.8 |
| | 18.1 |
| | 16.6 |
| | 70.1 |
| | 6.3 |
| | 4.9 |
| | 11.2 |
|
| Revenues, constant currency adjusted | $ | 164.7 |
| | $ | 168.5 |
| | $ | 171.9 |
| | $ | 668.9 |
| | $ | 164.1 |
| | $ | 162.8 |
| | $ | 326.9 |
|
| Prior year revenues, as reported (GAAP) | $ | 153.0 |
| | $ | 152.3 |
| | $ | 149.5 |
| | $ | 608.5 |
| | $ | 147.2 |
| | $ | 145.9 |
| | $ | 293.1 |
|
| Revenue change, as reported (GAAP) | (5 | )% | | (1 | )% | | 4 | % | | (2 | )% | | 7 | % | | 8 | % | | 8 | % |
| Revenue change, constant currency adjusted | 8 | % | | 11 | % | | 15 | % | | 10 | % | | 11 | % | | 12 | % | | 12 | % |
| | | | | | | | | | | | | | | |
(p) | Operating income/(loss), as reported (GAAP) | $ | 23.6 |
| | $ | 23.2 |
| | $ | 22.1 |
| | $ | 98.7 |
| | $ | 29.5 |
| | $ | (6.4 | ) | | $ | 23.1 |
|
| Less: Paymap settlement agreement (t) | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 35.3 |
| | 35.3 |
|
| Operating income, excluding Paymap settlement agreement | $ | 23.6 |
| | $ | 23.2 |
| | $ | 22.1 |
| | $ | 98.7 |
| | $ | 29.5 |
| | $ | 28.9 |
| | $ | 58.4 |
|
| Operating income/(loss) margin, as reported (GAAP) | 16.2 | % | | 15.4 | % | | 14.2 | % | | 16.5 | % | | 18.7 | % | | (4.1 | )% | | 7.3 | % |
| Operating income margin, excluding Paymap settlement agreement | N/A |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
| | 18.3 | % | | 18.5 | % |
| | | | | | | | | | | | | | | |
| Business Solutions Segment | | | | | | | | | | | | | |
(q) | Revenues, as reported (GAAP) | $ | 98.2 |
| | $ | 105.8 |
| | $ | 101.2 |
| | $ | 404.6 |
| | $ | 98.0 |
| | $ | 97.6 |
| | $ | 195.6 |
|
| Foreign currency translation impact (s) | (0.3 | ) | | (1.6 | ) | | 3.7 |
| | 4.5 |
| | 8.1 |
| | 9.4 |
| | 17.5 |
|
| Revenues, constant currency adjusted | $ | 97.9 |
| | $ | 104.2 |
| | $ | 104.9 |
| | $ | 409.1 |
| | $ | 106.1 |
| | $ | 107.0 |
| | $ | 213.1 |
|
| Prior year revenues, as reported (GAAP) | $ | 98.3 |
| | $ | 101.6 |
| | $ | 100.2 |
| | $ | 392.9 |
| | $ | 99.4 |
| | $ | 98.2 |
| | $ | 197.6 |
|
| Revenue change, as reported (GAAP) | 0 | % | | 4 | % | | 1 | % | | 3 | % | | (1 | )% | | (1 | )% | | (1 | )% |
| Revenue change, constant currency adjusted | 0 | % | | 3 | % | | 5 | % | | 4 | % | | 7 | % | | 9 | % | | 8 | % |
| | | | | | | | | | | | | | | |
(r) | Operating income/(loss), as reported (GAAP) | $ | (3.3 | ) | | $ | (0.2 | ) | | $ | (5.0 | ) | | $ | (12.1 | ) | | $ | 2.1 |
| | $ | (0.4 | ) | | $ | 1.7 |
|
| Reversal of depreciation and amortization | 14.8 |
| | 13.7 |
| | 12.7 |
| | 56.1 |
| | 12.2 |
| | 12.2 |
| | 24.4 |
|
| EBITDA (u) | $ | 11.5 |
| | $ | 13.5 |
| | $ | 7.7 |
| | $ | 44.0 |
| | $ | 14.3 |
| | $ | 11.8 |
| | $ | 26.1 |
|
| Operating income/(loss) margin, as reported (GAAP) | (3.4 | )% | | (0.2 | )% | | (4.9 | )% | | (3.0 | )% | | 2.1 | % | | (0.4 | )% | | 0.9 | % |
| EBITDA margin | 11.7 | % | | 12.8 | % | | 7.6 | % | | 10.9 | % | | 14.6 | % | | 12.1 | % | | 13.3 | % |
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise)
(Unaudited)
|
| | | | | | | | |
2015 Operating Income Margin Outlook | | | |
| Operating income margin (GAAP) | | | 20 | % |
| Impact for Paymap settlement agreement (t) | | | 1 | % |
| Operating income margin, excluding Paymap settlement agreement | | | 21 | % |
| | | | |
2015 EPS Outlook | Range |
| EPS guidance (GAAP) ($ - dollars) | $ | 1.55 |
| | $ | 1.62 |
|
| Impact from Paymap settlement agreement, net of income tax benefit (t) ($ - dollars) | 0.05 |
| | 0.05 |
|
| EPS guidance, excluding Paymap settlement agreement, net of income tax benefit ($ - dollars) | $ | 1.60 |
| | $ | 1.67 |
|
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise)
(Unaudited)
|
| | | | | | | | | | | | | | |
Non-GAAP related notes: | | | | | | | | | | |
(s) | Represents the impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States dollar. Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar, net of foreign currency hedges, which would not have occurred if there had been a constant exchange rate. |
(t) | Represents the impact from a settlement agreement reached with the Consumer Financial Protection Bureau regarding the Equity Accelerator service of Paymap, Inc., a subsidiary of the Company. |
(u) | Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") results from taking operating income and adjusting for depreciation and amortization expenses. EBITDA results provide an additional performance measurement calculation which helps neutralize the operating income effect of assets acquired in prior periods. |
Other notes: | | | | | | | | | | | |
(v) | Geographic split is determined based upon the region where the money transfer is initiated and the region where the money transfer is paid. For transactions originated and paid in different regions, the Company splits the transaction count and revenue between the two regions, with each region receiving 50%. For money transfers initiated and paid in the same region, 100% of the revenue and transactions are attributed to that region. For money transfers initiated through the Company’s websites (“westernunion.com”), 100% of the revenue and transactions are attributed to westernunion.com. |
(w) | Represents the Europe and the Commonwealth of Independent States ("CIS") region of our Consumer-to-Consumer segment. |
(x) | Represents the North America region of our Consumer-to-Consumer segment, including the United States, Mexico, and Canada. |
(y) | Represents the Middle East and Africa region of our Consumer-to-Consumer segment. |
(z) | Represents the Asia Pacific ("APAC") region of our Consumer-to-Consumer segment, including India, China, and South Asia. |
(aa) | Represents the Latin America and the Caribbean ("LACA") region of our Consumer-to-Consumer segment. |
(bb) | Represents transactions initiated on westernunion.com which are primarily paid out at Western Union agent locations in the respective regions. |
(cc) | Represents transactions between and within foreign countries (including Canada and Mexico). Excludes all transactions originated in the United States. |
(dd) | Represents transactions originated in the United States, including intra-country transactions. |
(ee) | Represents revenue generated from electronic channels, which include westernunion.com, account based money transfer and mobile money transfer (included in the various segments). |
Second Quarter 2015 Earnings Webcast & Conference Call July 30, 2015 Exhibit 99.2
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Mike Salop Senior Vice President, Investor Relations 2
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Safe Harbor 3 This presentation contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward- looking statements. Words such as "expects," "intends," "anticipates," "believes," "estimates," "guides," "provides guidance," "provides outlook" and other similar expressions or future or conditional verbs such as "may," "will," "should," "would," "could," and "might" are intended to identify such forward-looking statements. Readers of this presentation of The Western Union Company (the "Company," "Western Union," "we," "our" or "us") should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed in the "Risk Factors" section and throughout the Annual Report on Form 10-K for the year ended December 31, 2014. The statements are only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement. Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following: (i) events related to our business and industry, such as: changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic and trade downturns, or significantly slower growth or declines in the money transfer, payment service, and other markets in which we operate, including downturns or declines related to interruptions in migration patterns, or non- performance by our banks, lenders, insurers, or other financial services providers; failure to compete effectively in the money transfer and payment service industry, including among other things, with respect to price, with global and niche or corridor money transfer providers, banks and other money transfer and payment service providers, including card associations, card-based payment providers, electronic, mobile and Internet-based services, digital currencies and related protocols, and other innovations in technology and business models; deterioration in customer confidence in our business, or in money transfer and payment service providers generally; our ability to adopt new technology and develop and gain market acceptance of new and enhanced services in response to changing industry and consumer needs or trends; changes in, and failure to manage effectively, exposure to foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers and payment transactions; political conditions and related actions in the United States and abroad which may adversely affect our business and economic conditions as a whole, including interruptions of United States or other government relations with countries in which we have or are implementing significant business relationships with agents or clients; any material breach of security, including cybersecurity, or safeguards of or interruptions in any of our systems or those of our vendors or other third parties; mergers, acquisitions and integration of acquired businesses and technologies into our Company, and the failure to realize anticipated financial benefits from these acquisitions, and events requiring us to write down our goodwill; failure to manage credit and fraud risks presented by our agents, clients and consumers; failure to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place, including due to increased costs or loss of business as a result of increased compliance requirements or difficulty for us, our agents or their subagents in establishing or maintaining relationships with banks needed to conduct our services; decisions to change our business mix; adverse rating actions by credit rating agencies; cessation of or defects in various services provided to us by third-party vendors; our ability to realize the anticipated benefits from productivity and cost-savings and other related initiatives, which may include decisions to downsize or to transition operating activities from one location to another, and to minimize any disruptions in our workforce that may result from those initiatives; our ability to protect our brands and our other intellectual property rights and to defend ourselves against potential intellectual property infringement claims; changes in tax laws and unfavorable resolution of tax contingencies; our ability to attract and retain qualified key employees and to manage our workforce successfully; material changes in the market value or liquidity of securities that we hold; restrictions imposed by our debt obligations; (ii) events related to our regulatory and litigation environment, such as: liabilities or loss of business resulting from a failure by us, our agents or their subagents to comply with laws and regulations and regulatory or judicial interpretations thereof, including laws and regulations designed to protect consumers, or detect and prevent money laundering, terrorist financing, fraud and other illicit activity; increased costs or loss of business due to regulatory initiatives and changes in laws, regulations and industry practices and standards, including changes in interpretations in the United States and globally, affecting us, our agents or their subagents, or the banks with which we or our agents maintain bank accounts needed to provide our services, including related to anti-money laundering regulations, anti-fraud measures, customer due diligence, agent and subagent due diligence, registration, and monitoring requirements, and consumer protection; liabilities or loss of business and unanticipated developments resulting from governmental investigations and consent agreements with or enforcement actions by regulators, including those associated with compliance with or failure to comply with the settlement agreement with the State of Arizona, as amended; the potential impact on our business from the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as regulations issued pursuant to it and the actions of the Consumer Financial Protection Bureau and similar legislation and regulations enacted by other governmental authorities related to consumer protection; liabilities resulting from litigation, including class-action lawsuits and similar matters, including costs, expenses, settlements and judgments; failure to comply with regulations and changes in expectations regarding consumer privacy and data use and security; effects of unclaimed property laws; failure to maintain sufficient amounts or types of regulatory capital or other restrictions on the use of our working capital to meet the changing requirements of our regulators worldwide; changes in accounting standards, rules and interpretations or industry standards affecting our business; and (iii) other events, such as: adverse tax consequences from our spin-off from First Data Corporation; catastrophic events; and management's ability to identify and manage these and other risks.
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Hikmet Ersek President & Chief Executive Officer 4
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Solid performance amid challenging global environment Consumer money transfer trends led by strength in U.S. outbound and westernunion.com Business Solutions and Consumer Bill Pay delivered strong constant currency revenue growth* Expanded operating margins (excluding charge)* Returned $235 million to shareholders through dividends and repurchases Overview 2015 Adjusted EPS and CC Revenue Outlooks Raised* 5 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures.
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Consumer Accounts Banks, Wallets, Social Media Commercial Accounts Billers, Corporations, NGOs, Education, Governments WU Retail Retail locations, Kiosks, ATMs Vision: To be a leader in cross-border, cross-currency money transfer and payments Technology Regulatory and Compliance Settlement & FX WU Cross-Border Platform Cross-Border Consumer Money Transfer Cross-Border Payments Funds out Funds in C2C C2B • B2C • B2B Data management Retail, Digital, Direct 6
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Recently announced agreements 7
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. wu.com 29 on-line send markets 8 Payout to over 200 countries and territories
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Raj Agrawal Executive Vice President & Chief Financial Officer 9
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. $1,029 $988 $344 $362 $33 $34 Q2 2014 Q2 2015 Transaction Fee Foreign Exchange Other ($ in millions) $1,384 $1,406 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Consolidated revenue decreased 2% on a reported basis, or increased 4% constant currency* Transaction fee revenue decreased 4% Foreign exchange revenue increased 5% Revenue Q2 10
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. 80% of Company revenue Revenue decreased 3%, or increased 3% constant currency* Total transactions increased 3% Cross-border principal decreased 5%, or increased 2% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Consumer-to-Consumer Q2 11
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. C2C Transaction and Revenue Analysis 12 Q2 2015
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Regions Revenue Growth/ Decline Constant Currency Rev. Growth/ Decline* Transaction Growth/ Decline % of Company Revenue Europe and CIS -9% 2% 1% 20% North America -2% -1% 3% 19% Middle East and Africa -4% 1% 0% 16% Asia Pacific -5% 0% -3% 11% LACA 6% 13% 7% 9% westernunion.com 22% 28% 27% 5% Q2 2015 Consumer-to-Consumer 13 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures.
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Consumer-to-Business 11% of Company revenue Revenue increased 8%, or 12% constant currency* Business Solutions 7% of Company revenue Revenue decreased 1%, or increased 9% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. C2B and B2B Q2 14
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. 19.8% 18.1% 20.7%* 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Q2 2014 Q2 2015 Q2 2015 Operating Margin Q2 Adjusted operating margin increase • Primarily due to cost savings initiatives and the net impact of foreign currency movements, which were partially offset by increases in incentive compensation, compliance, and technology costs 15 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. (excluding charge) GAAP
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Operating margin increase • Primarily due to cost savings initiatives and the net impact of foreign exchange, partially offset by increased compliance costs and incentive compensation 22.7% 23.3% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Q2 2014 Q2 2015 C2C Operating Margin Q2 16
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Adjusted operating margin increase • Primarily due to higher revenue and cost savings initiatives 16.2% -4.1% 18.3%* -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Q2 2014 Q2 2015 Q2 2015 C2B Operating Margin Q2 17 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. (excluding charge) GAAP
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Operating Profit Operating profit break-even compared to an operating loss of $3 million in the prior year period The improvement was primarily due to lower amortization expense Depreciation and amortization of approximately $12 million in the current quarter, compared to $15 million in the prior year period Business Solutions Operating Profit Q2 18
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. YTD 2015 Cash Flow from Operations $466 million Capital Expenditures $122 million Stock Repurchases $306 million Dividends Paid $160 million Cash Balance, June 30, 2015 $1.6 billion Debt Outstanding, June 30, 2015 $3.7 billion Financial Strength 19
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Revenue – Low to mid-single digit constant currency revenue* increase (previously low single digit increase) – Low to mid-single digit GAAP revenue decrease Operating Profit Margin – Adjusted operating margin* of approximately 21% – GAAP operating margin of approximately 20% Earnings per Share – Adjusted EPS* in a range of approximately $1.60 to $1.67 (previously in a range of approximately $1.58 to $1.65) – GAAP EPS in a range of approximately $1.55 to $1.62 Tax Rate – Adjusted effective tax rate* of approximately 13% – GAAP effective tax rate of approximately 12% Cash Flow – Cash flow from operating activities of approximately $1 billion. The cash flow outlook excludes $100 million of anticipated final tax payments relating to the agreement announced with the U.S. Internal Revenue Service in December 2011. Some or all of these payments may occur in 2015. 2015 Outlook 20 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures.
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Questions & Answers 21
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Second Quarter 2015 Earnings Webcast & Conference Call July 30, 2015 Appendix 22
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Western Union's management believes the non-GAAP financial measures presented provide meaningful supplemental information regarding our operating results to assist management, investors, analysts, and others in understanding our financial results and to better analyze trends in our underlying business, because they provide consistency and comparability to prior periods. These non-GAAP financial measures include revenue change constant currency adjusted; operating income margin, excluding Paymap settlement agreement; EBITDA margin; adjusted EBITDA margin, excluding Paymap settlement agreement; diluted earnings per share, excluding Paymap settlement agreement; effective tax rate, excluding Paymap settlement agreement; Consumer-to-Consumer segment revenue change constant currency adjusted; Consumer-to- Consumer segment principal per transaction change constant currency adjusted; Consumer-to-Consumer segment cross- border principal change constant currency adjusted; Consumer-to-Consumer segment region and westernunion.com revenue change constant currency adjusted; Consumer-to-Business segment revenue change constant currency adjusted; Consumer-to-Business segment operating income margin, excluding Paymap settlement agreement; Business Solutions segment revenue change constant currency adjusted; Business Solutions segment EBITDA margin; 2015 operating income margin outlook, excluding Paymap settlement agreement; 2015 earnings per share outlook, excluding Paymap settlement agreement, net of income tax benefit; and 2015 tax rate outlook, excluding Paymap settlement agreement. Constant currency results assume foreign revenues are translated from foreign currencies to the U.S. dollar, net of the effect of foreign currency hedges, at rates consistent with those in the prior year. A non-GAAP financial measure should not be considered in isolation or as a substitute for the most comparable GAAP financial measure. A non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliation to the corresponding GAAP financial measure, provide a more complete understanding of our business. Users of the financial statements are encouraged to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included below. All adjusted year-over-year changes were calculated using prior year reported amounts. Amounts included below are in millions, unless indicated otherwise. Non-GAAP Measures 23
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Reconciliation of Non-GAAP Measures 24 2Q14 3Q14 4Q14 FY2014 1Q15 2Q15 YTD 2Q15 Consolidated Metrics Revenues, as reported (GAAP) 1,405.6$ 1,440.9$ 1,409.9$ 5,607.2$ 1,320.9$ 1,383.6$ 2,704.5$ Foreign currency translation impact (a) 26.3 35.0 63.7 157.5 78.6 84.7 163.3 Revenues, constant currency adjusted 1,431.9$ 1,475.9$ 1,473.6$ 5,764.7$ 1,399.5$ 1,468.3$ 2,867.8$ Prior year revenues, as reported (GAAP) 1,385.9$ 1,408.8$ 1,421.9$ 5,542.0$ 1,350.8$ 1,405.6$ 2,756.4$ Revenue change, as reported (GAAP) 1 % 2 % (1)% 1 % (2)% (2)% (2)% Revenue change, constant currency adjusted 3 % 5 % 4 % 4 % 4 % 4 % 4 % Operating income, as reported (GAAP) 278.3$ 314.1$ 276.1$ 1,140.5$ 272.3$ 250.8$ 523.1$ Less: Paymap settlement agreement (b) N/A N/A N/A N/A N/A 35.3 35.3 Operating income, excluding Paymap settlement agreement 278.3$ 314.1$ 276.1$ 1,140.5$ 272.3$ 286.1$ 558.4$ Operating income margin, as reported (GAAP) 19.8 % 21.8 % 19.6 % 20.3 % 20.6 % 18.1 % 19.3 % Operating income margin, excluding Paymap settlement agreement N/A N/A N/A N/A N/A 20.7 % 20.6 % 278.3$ 314.1$ 276.1$ 1,140.5$ 272.3$ 250.8$ 523.1$ 68.4 66.8 69.5 271.9 63.9 62.9 126.8 346.7$ 380.9$ 345.6$ 1,412.4$ 336.2$ 313.7$ 649.9$ N/A N/A N/A N/A N/A 35.3$ 35.3$ 346.7$ 380.9$ 345.6$ 1,412.4$ 336.2$ 349.0$ 685.2$ 19.8 % 21.8 % 19.6 % 20.3 % 20.6 % 18.1 % 19.3 % 24.7 % 26.4 % 24.5 % 25.2 % 25.5 % 22.7 % 24.0 % N/A N/A N/A N/A N/A 25.2 % 25.3 % Net income, as reported (GAAP) 193.8$ 234.1$ 221.5$ 852.4$ 203.9$ 189.3$ 393.2$ Less: Paymap settlement agreement, net of income tax benefit (b) N/A N/A N/A N/A N/A 24.2 24.2 Net income, excluding Paymap settlement agreement 193.8$ 234.1$ 221.5$ 852.4$ 203.9$ 213.5$ 417.4$ Diluted earnings per share ("EPS"), as reported (GAAP) ($-dollars) $0.36 $0.44 $0.42 $1.59 $0.39 $0.36 $0.75 Impact from Paymap settlement agreement, net of income tax benefit ($-dollars) N/A N/A N/A N/A N/A 0.05 0.05 Diluted EPS, excluding Paymap settlement agreement ($-dollars) N/A N/A N/A N/A N/A $0.41 $0.80 Diluted weighted-average shares outstanding 539.9 531.2 526.9 536.8 525.2 519.8 522.5 Effective tax rate, as reported (GAAP) 16.5 % 14.2 % 6.1 % 12.0 % 12.3 % 8.5 % 10.5 % Impact from Paymap settlement agreement, net of income tax benefit (b) N/A N/A N/A N/A N/A 3.3 % 1.6 % Effective tax rate, excluding Paymap settlement agreement N/A N/A N/A N/A N/A 11.8 % 12.1 % Operating income margin, as reported (GAAP) EBITDA margin Adjusted EBITDA margin, excluding Paymap settlement agreement Operating income, as reported (GAAP) Reversal of depreciation and amortization EBITDA (c) Less: Paymap settlement agreement (b) Adjusted EBITDA, excluding Paymap settlement agreement
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Reconciliation of Non-GAAP Measures 25 2Q14 3Q14 4Q14 FY2014 1Q15 2Q15 YTD 2Q15 Consumer-to-Consumer Segment Revenues, as reported (GAAP) 1,132.1$ 1,150.9$ 1,125.3$ 4,485.8$ 1,038.3$ 1,101.5$ 2,139.8$ Foreign currency translation impact (a) 7.5 17.9 42.8 80.7 63.0 69.1 132.1 Revenues, constant currency adjusted 1,139.6$ 1,168.8$ 1,168.1$ 4,566.5$ 1,101.3$ 1,170.6$ 2,271.9$ Prior year revenues, as reported (GAAP) 1,108.8$ 1,128.1$ 1,146.5$ 4,433.6$ 1,077.5$ 1,132.1$ 2,209.6$ Revenue change, as reported (GAAP) 2 % 2 % (2)% 1 % (4)% (3)% (3)% Revenue change, constant currency adjusted 3 % 4 % 2 % 3 % 2 % 3 % 3 % Principal per transaction, as reported ($ - dollars) 341$ 339$ 323$ 335$ 315$ 316$ 316$ Foreign currency translation impact (a) ($ - dollars) (2) — 12 3 19 23 21 Principal per transaction, constant currency adjusted ($ - dollars) 339$ 339$ 335$ 338$ 334$ 339$ 337$ Prior year principal per transaction, as reported ($ - dollars) 340$ 339$ 335$ 338$ 338$ 341$ 339$ Principal per transaction change, as reported 0 % 0 % (4)% (1)% (7)% (7)% (7)% Principal per transaction change, constant currency adjusted 0 % 0 % 0 % 0 % (1)% (1)% (1)% Cross-border principal, as reported ($ - billions) 19.7$ 20.0$ 19.2$ 77.2$ 17.5$ 18.8$ 36.3$ Foreign currency translation impact (a) ($ - billions) (0.1) — 0.8 0.8 1.1 1.3 2.4 Cross-border principal, constant currency adjusted ($ - billions) 19.6$ 20.0$ 20.0$ 78.0$ 18.6$ 20.1$ 38.7$ Prior year cross-border principal, as reported ($ - billions) 18.5$ 19.0$ 19.5$ 73.9$ 18.3$ 19.7$ 38.0$ Cross-border principal change, as reported 7 % 5 % (1)% 5 % (4)% (5)% (4)% Cross-border principal change, constant currency adjusted 6 % 5 % 2 % 6 % 2 % 2 % 2 %
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Reconciliation of Non-GAAP Measures 26 2Q14 3Q14 4Q14 FY2014 1Q15 2Q15 YTD 2Q15 Consumer-to-Consumer Segment cont. Europe and CIS region revenue change, as reported (GAAP) 3 % 1 % (5)% 0 % (9)% (9)% (9)% Europe and CIS region foreign currency translation impact (a) (1)% 2 % 6 % 1 % 11 % 11 % 11 % Europe and CIS region revenue change, constant currency adjusted 2 % 3 % 1 % 1 % 2 % 2 % 2 % North America region revenue change, as reported (GAAP) 1 % 2 % 0 % 1 % (2)% (2)% (2)% North America region foreign currency translation impact (a) 0 % 0 % 1 % 0 % 2 % 1 % 1 % North America region revenue change, constant currency adjusted 1 % 2 % 1 % 1 % 0 % (1)% (1)% Middle East and Africa region revenue change, as reported (GAAP) 6 % 3 % (3)% 2 % (6)% (4)% (5)% Middle East and Africa region foreign currency translation impact (a) 0 % 1 % 3 % 1 % 5 % 5 % 5 % Middle East and Africa region revenue change, constant currency adjusted 6 % 4 % 0 % 3 % (1)% 1 % 0 % APAC region revenue change, as reported (GAAP) 1 % 1 % (3)% 0 % (6)% (5)% (6)% APAC region foreign currency translation impact (a) 1 % 1 % 4 % 2 % 4 % 5 % 5 % APAC region revenue change, constant currency adjusted 2 % 2 % 1 % 2 % (2)% 0 % (1)% LACA region revenue change, as reported (GAAP) (13)% (3)% (3)% (6)% 4 % 6 % 5 % LACA region foreign currency translation impact (a) 6 % 7 % 7 % 8 % 6 % 7 % 7 % LACA region revenue change, constant currency adjusted (7)% 4 % 4 % 2 % 10 % 13 % 12 % westernunion.com region revenue change, as reported (GAAP) 31 % 21 % 19 % 28 % 17 % 22 % 20 % westernunion.com region foreign currency translation impact (a) (1)% (1)% 4 % 1 % 6 % 6 % 6 % westernunion.com region revenue change, constant currency adjusted 30 % 20 % 23 % 29 % 23 % 28 % 26 %
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Reconciliation of Non-GAAP Measures 27 2Q14 3Q14 4Q14 FY2014 1Q15 2Q15 YTD 2Q15 Consumer-to-Business Segment Revenues, as reported (GAAP) 145.9$ 150.4$ 155.3$ 598.8$ 157.8$ 157.9$ 315.7$ Foreign currency translation impact (a) 18.8 18.1 16.6 70.1 6.3 4.9 11.2 Revenues, constant currency adjusted 164.7$ 168.5$ 171.9$ 668.9$ 164.1$ 162.8$ 326.9$ Prior year revenues, as reported (GAAP) 153.0$ 152.3$ 149.5$ 608.5$ 147.2$ 145.9$ 293.1$ Revenue change, as reported (GAAP) (5)% (1)% 4 % (2)% 7 % 8 % 8 % Revenue change, constant currency adjusted 8 % 11 % 15 % 10 % 11 % 12 % 12 % Operating income/(loss), as reported (GAAP) 23.6$ 23.2$ 22.1$ 98.7$ 29.5$ (6.4)$ 23.1$ Less: Paymap settlement agreement (b) N/A N/A N/A N/A N/A 35.3 35.3 Operating income, excluding Paymap settlement agreement 23.6$ 23.2$ 22.1$ 98.7$ 29.5$ 28.9$ 58.4$ Operating income/(loss) margin, as reported (GAAP) 16.2 % 15.4 % 14.2 % 16.5 % 18.7 % (4.1)% 7.3 % Operating income margin, excluding Paymap settlement agreement N/A N/A N/A N/A N/A 18.3 % 18.5 % Business Solutions Segment Revenues, as reported (GAAP) 98.2$ 105.8$ 101.2$ 404.6$ 98.0$ 97.6$ 195.6$ Foreign currency translation impact (a) (0.3) (1.6) 3.7 4.5 8.1 9.4 17.5 Revenues, constant currency adjusted 97.9$ 104.2$ 104.9$ 409.1$ 106.1$ 107.0$ 213.1$ Prior year revenues, as reported (GAAP) 98.3$ 101.6$ 100.2$ 392.9$ 99.4$ 98.2$ 197.6$ Revenue change, as reported (GAAP) 0 % 4 % 1 % 3 % (1)% (1)% (1)% Revenue change, constant currency adjusted 0 % 3 % 5 % 4 % 7 % 9 % 8 % Operating income/(loss), as reported (GAAP) (3.3)$ (0.2)$ (5.0)$ (12.1)$ 2.1$ (0.4)$ 1.7$ Reversal of depreciation and amortization 14.8 13.7 12.7 56.1 12.2 12.2 24.4 EBITDA (c) 11.5$ 13.5$ 7.7$ 44.0$ 14.3$ 11.8$ 26.1$ Operating income/(loss) margin, as reported (GAAP) (3.4)% (0.2)% (4.9)% (3.0)% 2.1 % (0.4)% 0.9 % EBITDA margin 11.7 % 12.8 % 7.6 % 10.9 % 14.6 % 12.1 % 13.3 %
Western Union | ©2015 Western Union Holdings, Inc. All Rights Reserved. Reconciliation of Non-GAAP Measures 28 Non-GAAP related notes: (a) (b) (c) Represents the impact from a settlement agreement reached with the Consumer Financial Protection Bureau regarding the Equity Accelerator service of Paymap, Inc., a subsidiary of the Company. Represents the impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States dollar. Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar, net of foreign currency hedges, which would not have occurred if there had been a constant exchange rate. Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") results from taking operating income and adjusting for depreciation and amortization expenses. EBITDA results provide an additional performance measurement calculation which helps neutralize the operating income effect of assets acquired in prior periods. 2015 Outlook Metrics 2015 Operating Income Margin Outlook Operating income margin (GAAP) 20 % Impact for Paymap settlement agreement (b) 1 % Operating income margin, excluding Paymap settlement agreement 21 % 2015 EPS Outlook EPS guidance (GAAP) ($-dollars) 1.55$ 1.62$ Impact from Paymap settlement agreement, net of income tax benefit (b) ($ - dollars) 0.05 0.05 EPS guidanc , excluding Paymap settlement greem nt, net of income tax benefit ($ - dollars) 1.60$ 1.67$ 2015 Tax Rate Outlook Full year effective tax rate (GAAP) 12 % Impact from Paymap settlement agreement, net of income tax benefit (b) 1 % Full year effective tax rate, excluding Paymap settlement agreement 13 % Range
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