Revenues increase 7%, driven by consumer
money transfer
Digital remains strong; westernunion.com
money transfer revenues increase 23%
The Western Union Company (NYSE: WU), a leader in cross border,
cross currency money movement, today reported first quarter
financial results and an updated outlook for 2018.
In the first quarter, the Company generated revenue of $1.4
billion, which increased 7% compared to the prior year, or 5% on a
constant currency basis. The revenue increase was driven by strong
growth in the consumer money transfer business.
“We were able to sustain the growth momentum generated at the
end of 2017,” said president and chief executive officer Hikmet
Ersek. “Our digital money transfer business posted another
impressive quarter, with westernunion.com delivering a 23% revenue
increase.”
Ersek added, “The positive traction in our core business helps
enable us to pursue new customer segments in cross-border money
movement.”
GAAP earnings per share in the quarter was $0.46 compared to
$0.33 in the prior year period. On an adjusted basis, earnings per
share was $0.45 compared to $0.35 in the prior year period. The
increase in earnings per share was primarily due to revenue growth,
a lower effective tax rate and fewer shares outstanding compared to
the first quarter of 2017.
Executive Vice President and Chief Financial Officer Raj Agrawal
stated, “We delivered strong revenue growth, profitability, and
cash flow in the first quarter and are solidly on track to meet our
full year targets.”
Q1 Business Unit
Highlights
- Consumer-to-Consumer (C2C) revenues,
which represented 79% of total Company revenue in the quarter,
increased 7%, or 5% constant currency, while transactions grew 4%.
Geographically, revenue growth was led by sends originated in Latin
America, North America, and Europe.Westernunion.com C2C revenues
increased 23%, or 20% constant currency, on transaction growth of
24% and represented 11% of total C2C revenue in the quarter.
- Western Union Business Solutions
revenues increased 3% or decreased 2% on a constant currency basis.
Business Solutions represented 7% of total Company revenues in the
quarter.
- Other revenues, which primarily consist
of bill payments businesses in the U.S. and Argentina, increased
4%, or 10% on a constant currency basis. Growth in the quarter was
driven by the Pago Facil Argentina walk-in and the Speedpay U.S.
electronic bill payments businesses. Other revenues represented 14%
of total Company revenues in the quarter.
Additional Q1 Financial
Highlights
- GAAP operating margin in the quarter
was 19.1%, which compares to 18.4% in the prior year period, or
19.5% in the prior year on an adjusted basis. The adjusted margin
decrease was primarily due to higher marketing spending and the
negative impact of foreign exchange, partially offset by operating
leverage from revenue growth.
- The effective tax rate in the quarter
was 8.9% compared to 24.1% in the prior year period. On an adjusted
basis, the tax rate was 11.4% compared to 24.8% in the prior year
period. The prior year tax rate reflected a negative impact from
changes in the internal ownership structure of certain of the
Company’s international subsidiaries, while the current year rate
benefited from certain discrete items.
- Cash flow from operating activities for
the quarter totaled $133 million, which included the impact of a
$60 million payment for the previously announced NYDFS settlement
and approximately $20 million of outflows for prior year WU Way
expenses. The Company returned $88 million in dividends to
shareholders in the first quarter.
Adjustment Items
Adjusted metrics for the 2018 first quarter exclude the impact
of a $6 million tax benefit related to changes in estimates for the
provisional accounting for United States tax reform legislation
enacted in December 2017 (the “Tax Act”).
Adjusted metrics for the 2017 first quarter exclude $14 million
of WU Way related expenses and the associated tax benefits.
2018 Outlook
The Company affirmed its revenue, operating margin, and cash
flow outlooks for 2018, which were previously reported on February
13. The GAAP earnings per share outlook was increased to reflect a
more favorable expected tax rate and the impact of the adjustment
related to the 2017 Tax Act. An adjusted EPS outlook that excludes
the Tax Act benefit has also now been provided.
Revenue
- Low to mid-single digit increase in
GAAP and constant currency revenue
Operating Profit Margin
- Operating margin of approximately
20%
Tax Rate
- GAAP effective tax rate of
approximately 14% and adjusted tax rate of approximately 15%
(previously 15% to 16%)
Earnings per Share
- GAAP EPS in a range of $1.81 to $1.91
and adjusted EPS in a range of $1.80 to $1.90 (previously $1.78 to
$1.90)
Cash Flow
- Cash flow from operating activities of
approximately $800 million, which includes approximately $200
million of outflows for the combination of anticipated final tax
payments related to the agreement with the U.S. Internal Revenue
Service announced in 2011, the NYDFS settlement payment, and WU Way
payments related to 2017 expenses
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release.
Beginning April 1, 2017, the Company implemented a new segment
structure due to leadership and organizational structure changes.
The new structure shifted all businesses previously in the
historical Consumer-to-Business segment into Other.
Expenses related to the WU Way business transformation are not
included in operating segment results, as they are excluded from
the measurement of segment operating income provided to the chief
operating decision maker for purposes of assessing segment
performance and decision making with respect to resource
allocation. Expenses associated with the WU Way business
transformation initiative were effectively complete as of December
31, 2017.
All amounts included in the supplemental tables to this press
release are rounded to the nearest tenth of a million, except as
otherwise noted. As a result, the percentage changes and margins
disclosed herein may not recalculate precisely using the rounded
amounts provided.
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 consolidated revenue
change constant currency adjusted; Consumer-to-Consumer segment
revenue change constant currency adjusted; Consumer-to-Consumer
segment westernunion.com revenue change constant currency adjusted;
Business Solutions segment revenue change constant currency
adjusted; Other revenue change constant currency adjusted;
consolidated operating income, excluding the impact from WU Way
business transformation expenses; consolidated operating margin,
excluding WU Way business transformation expenses; effective tax
rate excluding WU Way business transformation expenses and Tax Act;
earnings per share, excluding WU Way business transformation
expenses and Tax Act; effective tax rate outlook, excluding Tax
Act; earnings per share outlook, excluding Tax Act; and additional
measures found in the supplemental tables included with this press
release. Although the expenses related to the WU Way business
transformation are specific to that initiative, the types of
expenses related to the WU Way business transformation are similar
to expenses that the Company has previously incurred and can
reasonably be expected to incur in the future.
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 4160099.
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 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, 2017.
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 electronic,
mobile and Internet-based services, card associations, and
card-based payment providers, and with digital currencies and
related protocols, and other innovations in technology and business
models; 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; 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; 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; cessation of or defects in various services
provided to us by third-party vendors; 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; changes in tax laws, or their interpretation, including with
respect to United States tax reform legislation enacted in December
2017 (the "Tax Act") and potential related state income tax
impacts, and unfavorable resolution of tax contingencies; adverse
rating actions by credit rating agencies; our ability to realize
the anticipated benefits from business transformation, 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; 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, the European Union 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,
our licensing arrangements, customer due diligence, agent and
subagent due diligence, registration and monitoring requirements,
consumer protection requirements, remittances, and immigration;
liabilities, increased costs or loss of business and unanticipated
developments resulting from governmental investigations and consent
agreements with or enforcement actions by regulators, including
those associated with the settlement agreements with the United
States Department of Justice, certain United States Attorney's
Offices, the United States Federal Trade Commission, the Financial
Crimes Enforcement Network of the United States Department of
Treasury, and various state attorneys general (the "Joint
Settlement Agreements"), and those associated with the January 4,
2018 consent order which resolved a matter with the New York State
Department of Financial Services (the "NYDFS Consent Order");
liabilities resulting from litigation, including class-action
lawsuits and similar matters, and regulatory actions, including
costs, expenses, settlements and judgments; failure to comply with
regulations and evolving industry standards regarding consumer
privacy and data use and security, including with respect to the
General Data Protection Regulation ("GDPR") approved by the
European Union ("EU"); the ongoing impact on our business from the
Dodd-Frank Wall Street Reform and Consumer Protection Act (the
"Dodd-Frank 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 in the United States and abroad related to consumer
protection; effects of unclaimed property laws or their
interpretation or the enforcement thereof; 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 global leader in
cross-border, cross-currency money movement. Our omnichannel
platform connects the digital and physical worlds and makes it
possible for consumers and businesses to send and receive money and
make payments with speed, ease, and reliability. As of March
31, 2018, our network included over 550,000 retail agent locations
offering Western Union, Vigo or Orlandi Valuta branded services in
more than 200 countries and territories, with the capability to
send money to billions of accounts. Additionally, westernunion.com,
our fastest growing channel in 2017, is available in more than
40 countries to move money around the world. In 2017, we moved
over $300 billion in principal in nearly 130 currencies and
processed 32 transactions every second across all our services.
With our global reach, Western Union moves money for better,
connecting family, friends and businesses to enable financial
inclusion and support economic growth. For more information, visit
www.westernunion.com.
WU-G
THE WESTERN UNION COMPANY KEY STATISTICS
(Unaudited)
Notes* 1Q17 2Q17 3Q17
4Q17 FY2017 1Q18 Consolidated
Metrics Consolidated revenues (GAAP) - YoY % change 0 % 0 % 2 %
5 % 2 % 7 % Consolidated revenues (constant currency) - YoY %
change a 3 % 2 % 3 % 4 % 3 % 5 % Consolidated operating
income/(loss) (GAAP) - YoY % change
(7
)
%
(18
)
%
(2
)
%
19 %
(2
)
%
10 % Consolidated operating income (constant currency adjusted,
excluding Goodwill impairment, NYDFS Consent Order, Joint
Settlement Agreements and WU Way business transformation expenses)
- YoY % change b 4 % 10 % 0 % 0 % 3 % 5 % Consolidated operating
margin (GAAP) jj 18.4 % 15.6 % 19.4 %
(17.5
)
%
8.6 % 19.1 % Consolidated operating margin (excluding Goodwill
impairment, NYDFS Consent Order, Joint Settlement Agreements and WU
Way business transformation expenses) c 19.5 % 21.7 % 20.7 % 18.0 %
20.0 % 19.1 %
Consumer-to-Consumer (C2C) Segment
Revenues (GAAP) - YoY % change 0 %
(1
)
%
1 % 5 % 1 % 7 % Revenues (constant currency) - YoY % change g 2 % 1
% 1 % 4 % 2 % 5 % Operating margin (jj) 22.5 % 24.9 % 23.5 % 21.5 %
23.1 % 22.2 % Transactions (in millions) 65.3 69.9 69.2 71.4
275.8 67.8 Transactions - YoY % change 2 % 3 % 2 % 3 % 3 % 4 %
Total principal ($ - billions) $ 19.1 $ 20.4 $ 21.0 $ 21.3 $
81.8 $ 20.8 Principal per transaction ($ - dollars) $ 292 $ 293 $
302 $ 300 $ 297 $ 307 Principal per transaction - YoY % change
(2
)
%
(3
)
%
1 % 3 % 0 % 5 % Principal per transaction (constant currency) - YoY
% change h
(1
)
%
(2
)
%
0 % 0 %
(1
)
%
2 % Cross-border principal ($ - billions) $ 17.3 $ 18.7 $
19.0 $ 19.5 $ 74.5 $ 18.9 Cross-border principal - YoY % change 1 %
1 % 4 % 6 % 3 % 9 % Cross-border principal (constant currency) -
YoY % change i 2 % 2 % 2 % 4 % 2 % 5 % NA region revenues
(GAAP) - YoY % change aa, bb 3 % 3 % 1 % 3 % 2 % 4 % NA region
revenues (constant currency) - YoY % change j, aa, bb 4 % 3 % 1 % 3
% 3 % 4 % NA region transactions - YoY % change aa, bb 5 % 4 % 2 %
1 % 3 % 1 % EU & CIS region revenues (GAAP) - YoY %
change aa, cc
(1
)
%
(2
)
%
2 % 6 % 1 % 14 % EU & CIS region revenues (constant currency) -
YoY % change k, aa, cc 4 % 2 % 1 % 2 % 2 % 5 % EU & CIS region
transactions - YoY % change aa, cc 8 % 7 % 7 % 7 % 7 % 8 %
MEASA region revenues (GAAP) - YoY % change aa, dd
(13
)
%
(12
)
%
(8
)
%
1 %
(8
)
%
0 % MEASA region revenues (constant currency) - YoY % change l, aa,
dd
(10
)
%
(11
)
%
(8
)
%
0 %
(7
)
%
(1
)
%
MEASA region transactions - YoY % change aa, dd
(15
)
%
(10
)
%
(11
)
%
(2
)
%
(10
)
%
(2
)
%
LACA region revenues (GAAP) - YoY % change aa, ee 26 % 21 %
19 % 21 % 22 % 20
%
LACA region revenues (constant currency) - YoY % change m, aa, ee
25 % 22 % 22 % 23 % 23 % 25 % LACA region transactions - YoY %
change aa, ee 17 % 16 % 17 % 17 % 17 % 17 % APAC region
revenues (GAAP) - YoY % change aa, ff
(2
)
%
(4
)
%
(1
)
%
0 %
(2
)
%
2 % APAC region revenues (constant currency) - YoY % change n, aa,
ff
(1
)
%
(2
)
%
1 % 0 % 0 % 0 % APAC region transactions - YoY % change aa, ff
(2
)
%
(1
)
%
0 % 3 % 0 % 1 % International revenues - YoY % change gg
(2
)
%
(3
)
%
1 % 6 % 0 % 9 % International transactions - YoY % change gg 1 % 2
% 3 % 6 % 3 % 6 % International revenues - % of C2C segment
revenues gg 66 % 66 % 67 % 67 % 66 % 67 % United States
originated revenues - YoY % change hh 4 % 3 % 1 % 3 % 3 % 4 %
United States originated transactions - YoY % change hh 4 % 4 % 1 %
0 % 2 % 1 % United States originated revenues - % of C2C segment
revenues hh 34 % 34 % 33 % 33 % 34 % 33 % westernunion.com
revenues (GAAP) - YoY % change ii 26 % 21 % 23 % 22 % 23 % 23 %
westernunion.com revenues (constant currency) - YoY % change o, ii
28 % 23 % 23 % 22 % 24 % 20 % westernunion.com transactions - YoY %
change ii 27 % 25 % 24 % 22 % 24 % 24 %
% of
Consumer-to-Consumer Revenue Regional Revenues: NA region
revenues aa, bb 37 % 37 % 36 % 37 % 37 % 36 % EU & CIS region
revenues aa, cc 30 % 31 % 31 % 31 % 31 % 32 % MEASA region revenues
aa, dd 17 % 16 % 16 % 16 % 16 % 16 % LACA region revenues aa, ee 8
% 8 % 9 % 9 % 8 % 9 % APAC region revenues aa, ff 8 % 8 % 8 % 7 % 8
% 7 % westernunion.com revenues ii 9 % 9 % 10 % 10 % 10 % 11 %
Business Solutions (B2B) Segment Revenues (GAAP) -
YoY % change
(6
)
%
(4
)
%
2 %
(4
)
%
(3
)
%
3 % Revenues (constant currency) - YoY % change p
(3
)
%
(1
)
%
1 %
(8
)
%
(3
)
%
(2
)
%
Operating margin 2.6 % 5.5 % 9.1 %
(3.2
)
%
3.6 % 2.9 %
Other (primarily bill payments businesses in
United States and Argentina) Revenues (GAAP) - YoY % change 7 %
9 % 9 % 11 % 9 % 4 % Revenues (constant currency) - YoY % change r
9 % 12 % 13 % 14 % 12 % 10 % Operating margin 12.4 % 12.1 % 10.5 %
7.9 % 10.7 % 10.1 %
% of Total Company Revenue
Consumer-to-Consumer segment revenues 78 % 79 % 79 % 80 % 79 % 79 %
Business Solutions segment revenues 7 % 7 % 7 % 6 % 7 % 7 % Other
revenues 15 % 14 % 14 % 14 % 14 % 14 % * See the "Notes to
Key Statistics" section 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 March 31, 2018
2017 % Change Revenues $ 1,389.4 $ 1,302.4 7 %
Expenses: Cost of services (a) 825.4 799.9 3 % Selling, general and
administrative 299.1 262.4 14 % Total
expenses (b) 1,124.5 1,062.3 6 %
Operating income 264.9 240.1 10 % Other income/(expense): Interest
income 0.7 1.1
(42)
%
Interest expense (35.5 ) (31.3 ) 13 % Other income, net (a)
4.4 3.2 40 % Total other expense, net
(30.4 ) (27.0 ) 13 % Income before income taxes 234.5 213.1
10 % Provision for income taxes 20.9 51.4
(59)
%
Net income $ 213.6 $ 161.7 32 % Earnings per share:
Basic $ 0.46 $ 0.34 35 % Diluted $ 0.46 $ 0.33 39 %
Weighted-average shares outstanding: Basic 460.3 479.8 Diluted
463.6 483.4 Cash dividends declared per common share $ 0.19 $ 0.175
9 %
____________
(a) On January 1, 2018, the Company adopted an accounting
pronouncement that requires the non-service costs of the defined
benefit pension plan to be presented outside a subtotal of income
from operations, with adoption retrospective for periods previously
presented. The adoption of this standard resulted in reductions to
"Cost of services" and "Other income, net" of $0.6 million for the
three months ended March 31, 2017 from the amounts previously
reported. (b) For the three months ended March 31, 2017, total WU
Way business transformation expenses were $14.3 million, including
$4.2 million in cost of services and $10.1 million in selling,
general and administrative, respectively.
THE
WESTERN UNION COMPANY CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (in millions, except per share
amounts) March 31, December 31,
2018 2017
Assets Cash and cash equivalents $ 934.3 $ 838.2
Settlement assets 4,026.5 4,188.9
Property and equipment, net of accumulated
depreciation of
$653.6 and $635.7, respectively 215.7 214.2 Goodwill 2,726.7
2,727.9 Other intangible assets, net of accumulated amortization of
$1,071.8 and $1,042.7, respectively 569.2 586.3 Other assets
715.6 675.9 Total assets $ 9,188.0 $
9,231.4
Liabilities and Stockholders' Deficit
Liabilities: Accounts payable and accrued liabilities $ 594.1 $
718.5 Settlement obligations 4,026.5 4,188.9 Income taxes payable
1,262.4 1,252.0 Deferred tax liability, net 173.8 173.0 Borrowings
3,143.4 3,033.6 Other liabilities 363.6 356.8
Total liabilities 9,563.8 9,722.8 Stockholders'
deficit:
Preferred stock, $1.00 par value; 10
shares authorized;
no shares issued — — Common stock, $0.01 par value; 2,000 shares
authorized; 460.6 shares and 459.0 shares issued and outstanding as
of March 31, 2018 and December 31, 2017, respectively 4.6 4.6
Capital surplus 715.4 697.8 Accumulated deficit (819.8 ) (965.9 )
Accumulated other comprehensive loss (276.0 ) (227.9
) Total stockholders' deficit (375.8 ) (491.4 ) Total
liabilities and stockholders' deficit $ 9,188.0 $ 9,231.4
THE WESTERN UNION COMPANY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in
millions)
Three Months EndedMarch 31,
2018 2017
Cash Flows From Operating Activities
Net income $ 213.6 $ 161.7
Adjustments to reconcile net income
to net cash provided by operating activities: Depreciation 19.3
18.6 Amortization 47.4 47.8 Other non-cash items, net 8.9 76.0
Increase/(decrease) in cash resulting from changes in: Other assets
(47.3 ) (20.4 ) Accounts payable and accrued liabilities (123.2 )
(192.7 ) Income taxes payable 11.5 (5.2 ) Other liabilities
2.5 0.5 Net cash provided by operating
activities 132.7 86.3
Cash Flows From Investing Activities
Capitalization of contract costs (10.3 ) (6.8 ) Capitalization of
purchased and developed software (6.7 ) (11.7 ) Purchases of
property and equipment (20.2 ) (7.9 ) Purchases of non-settlement
related investments and other (4.3 ) (21.3 ) Proceeds from maturity
of non-settlement related investments 10.0 — Purchases of
held-to-maturity non-settlement related investments (1.4 ) (15.2 )
Proceeds from held-to-maturity non-settlement related investments
— 12.3 Net cash used in investing
activities (32.9 ) (50.6 )
Cash Flows From Financing
Activities Cash dividends paid (87.5 ) (83.3 ) Common stock
repurchased (11.6 ) (219.3 ) Net proceeds from commercial paper
110.0 310.0 Net proceeds from issuance of borrowings — 396.9
Proceeds from exercise of options 3.8 5.8 Other financing
activities (5.2 ) — Net cash provided by
financing activities 9.5 410.1 Net
change in cash, cash equivalents and restricted cash 109.3 445.8
Cash, cash equivalents and restricted cash at beginning of period
844.4 877.5 Cash, cash equivalents and
restricted cash at end of period $ 953.7 $ 1,323.3
THE WESTERN UNION COMPANY SUMMARY SEGMENT
DATA (Unaudited) (in millions)
Three Months EndedMarch 31,
2018 2017 % Change Revenues:
Consumer-to-Consumer $ 1,091.0 $ 1,015.0 7 % Business Solutions
96.7 93.6 3 % Other (a) 201.7 193.8 4 %
Total consolidated revenues $ 1,389.4 $ 1,302.4 7 %
Operating income (b): Consumer-to-Consumer $ 241.7 $ 228.0 6 %
Business Solutions 2.8 2.4 19 % Other (a) 20.4
24.0
(15)
%
Total segment operating income (b) 264.9 254.4 4 % Business
transformation expenses (c) — (14.3 )
(d)
Total consolidated operating income (b) $ 264.9 $ 240.1
10 % Operating income margin (b): Consumer-to-Consumer 22.2
% 22.5 %
(0.3)
%
Business Solutions 2.9 % 2.6 % 0.3 % Other (a) 10.1 % 12.4 %
(2.3)
%
Total consolidated operating income margin (b) 19.1 % 18.4 % 0.7 %
____________
(a) Consists primarily of the Company's bill payments
businesses in the United States and Argentina. (b) On January 1,
2018, the Company adopted an accounting pronouncement that requires
the non-service costs of the defined benefit pension plan to be
presented outside a subtotal of income from operations, with
adoption retrospective for periods previously presented. The
adoption of this standard resulted in an increase of $0.6 million
to operating income for the three months ended March 31, 2017 from
the amounts previously reported, and this increase was allocated
among the segments in a method consistent with the original
allocation of this expense. (c) Expenses related to the WU Way
business transformation are excluded from the measurement of
segment operating income provided to the chief operating decision
maker for purposes of assessing segment performance and decision
making with respect to resource allocation. (d) Calculation not
meaningful.
THE WESTERN UNION COMPANYNOTES 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 amounts, which have been
adjusted for changes in our reporting segments, as described
earlier. Although the expenses related to the WU Way are specific
to that initiative, the types of expenses related to the WU Way
initiative are similar to expenses that the Company has previously
incurred and can reasonably be expected to incur in the future.
1Q17 2Q17
3Q17 4Q17 FY2017
1Q18 Consolidated Metrics (a) Revenues, as reported
(GAAP) $ 1,302.4 $ 1,378.9 $ 1,404.7 $ 1,438.3 $ 5,524.3 $ 1,389.4
Foreign currency translation impact (s) 30.1
29.0 7.7 (5.5 ) 61.3
(18.9 ) Revenues, constant currency adjusted $ 1,332.5
$ 1,407.9 $ 1,412.4 $ 1,432.8 $ 5,585.6
$ 1,370.5 Prior year revenues, as reported (GAAP) $
1,297.7 $ 1,375.7 $ 1,377.8 $ 1,371.7 $ 5,422.9 $ 1,302.4 Revenue
change, as reported (GAAP) 0 % 0 % 2 % 5 % 2 % 7 % Revenue change,
constant currency adjusted 3 % 2 % 3 % 4 % 3 % 5 % (b)
Operating income/(loss), as reported (GAAP) (jj) $ 240.1 $ 215.3 $
272.2 $ (251.9 ) $ 475.7 $ 264.9 Foreign currency translation
impact (s) 15.0 6.8 8.9 13.3 44.0 3.4 Goodwill impairment (t) N/A
N/A N/A 464.0 464.0 N/A NYDFS Consent Order (u) N/A 49.0 — 11.0
60.0 N/A Joint Settlement Agreements (v) — — 8.0 — 8.0 N/A WU Way
business transformation expenses (w) 14.3 35.0
9.9 35.2 94.4
N/A Operating income, constant currency adjusted,
excluding Goodwill impairment, NYDFS Consent Order, Joint
Settlement Agreements and WU Way business transformation expenses $
269.4 $ 306.1 $ 299.0 $ 271.6 $ 1,146.1
$ 268.3 Prior year operating income, excluding Joint
Settlement Agreements and WU Way business transformation expenses $
259.4 $ 278.2 $ 299.2 $ 271.5 $ 1,108.3 $ 254.4 Operating income
change, as reported (GAAP)
(7)
%
(18)
%
(2)
%
19
%
(2)
%
10 % Operating income change, constant currency adjusted, excluding
Goodwill impairment, NYDFS Consent Order, Joint Settlement
Agreements and WU Way business transformation expenses 4 % 10 % 0 %
0 % 3 % 5 % (c) Operating income/(loss), as reported (GAAP)
(jj) $ 240.1 $ 215.3 $ 272.2 $ (251.9 ) $ 475.7 $ 264.9 Goodwill
impairment (t) N/A N/A N/A 464.0 464.0 N/A NYDFS Consent Order (u)
N/A 49.0 — 11.0 60.0 N/A Joint Settlement Agreements (v) — — 8.0 —
8.0 N/A WU Way business transformation expenses (w) 14.3
35.0 9.9 35.2
94.4 N/A Operating income, excluding
Goodwill impairment, NYDFS Consent Order, Joint Settlement
Agreements and WU Way business transformation expenses $ 254.4
$ 299.3 $ 290.1 $ 258.3 $ 1,102.1
$ 264.9 Operating margin, as reported (GAAP) (jj)
18.4 % 15.6 % 19.4 %
(17.5)
%
8.6 % 19.1 % Operating margin, excluding Goodwill impairment, NYDFS
Consent Order, Joint Settlement Agreements and WU Way business
transformation expenses 19.5 % 21.7 % 20.7 % 18.0 % 20.0 % 19.1 %
(d) Operating income/(loss), as reported (GAAP) (jj) $ 240.1
$ 215.3 $ 272.2 $ (251.9 ) $ 475.7 $ 264.9 Reversal of depreciation
and amortization 66.4 65.2 65.5
65.8 262.9 66.7
EBITDA (y) $ 306.5 $ 280.5 $ 337.7 $ (186.1 )
$ 738.6 $ 331.6 Goodwill impairment (t) N/A N/A N/A
464.0 464.0 N/A NYDFS Consent Order (u) N/A 49.0 — 11.0 60.0 N/A
Joint Settlement Agreements (v) — — 8.0 — 8.0 N/A WU Way business
transformation expenses (w) 14.3 35.0
9.9 35.2 94.4 N/A
Adjusted EBITDA, excluding Goodwill impairment, NYDFS
Consent Order, Joint Settlement Agreements and WU Way business
transformation expenses $ 320.8 $ 364.5 $ 355.6
$ 324.1 $ 1,365.0 $ 331.6 Operating
margin, as reported (GAAP) (jj) 18.4 % 15.6 % 19.4 %
(17.5)
%
8.6 % 19.1 % EBITDA margin 23.5 % 20.4 % 24.0 %
(13.0)
%
13.4 % 23.9 % Adjusted EBITDA margin, excluding Goodwill
impairment, NYDFS Consent Order, Joint Settlement Agreements and WU
Way business transformation expenses 24.6 % 26.4 % 25.3 % 22.5 %
24.7 % 23.9 % (e) Net income/(loss), as reported (GAAP) $
161.7 $ 166.5 $ 235.6 $ (1,120.9 ) $ (557.1 ) $ 213.6 Goodwill
impairment (t) N/A N/A N/A 464.0 464.0 N/A NYDFS Consent Order (u)
N/A 49.0 — 11.0 60.0 N/A Joint Settlement Agreements (v) — — 8.0 —
8.0 N/A WU Way business transformation expenses (w) 14.3 35.0 9.9
35.2 94.4 N/A Income tax benefit from Goodwill impairment (t) N/A
N/A N/A (17.2 ) (17.2 ) N/A Income tax benefit from Joint
Settlement Agreements (v) — — (2.9 ) — (2.9 ) N/A Income tax
benefit from WU Way business transformation expenses (w) (5.0 )
(12.3 ) (2.7 ) (11.1 ) (31.1 ) N/A Income tax expense/(benefit)
from Tax Act (x) N/A N/A N/A
828.3 828.3 (6.0 )
Goodwill impairment, NYDFS Consent Order, Joint Settlement
Agreements and WU Way business transformation expenses, net of
income tax expense/(benefit) and Tax Act 9.3
71.7 12.3 1,310.2 1,403.5
(6.0 ) Net income, excluding Goodwill impairment,
NYDFS Consent Order, Joint Settlement Agreements, WU Way business
transformation expenses and Tax Act $ 171.0 $ 238.2 $
247.9 $ 189.3 $ 846.4 $ 207.6 Diluted
earnings/(loss) per share ("EPS"), as reported (GAAP) ($ - dollars)
$ 0.33 $ 0.35 $ 0.51 $ (2.44 ) $ (1.19 ) $ 0.46 EPS impact as a
result of Goodwill impairment ($ - dollars) (t) N/A N/A N/A $ 1.01
$ 1.00 N/A EPS impact as a result of NYDFS Consent Order ($ -
dollars) (u) N/A $ 0.10 $ — $ 0.02 $ 0.13 N/A EPS impact as a
result of Joint Settlement Agreements ($ - dollars) (v) $ — $ — $
0.02 $ — $ 0.02 N/A EPS impact as a result of WU Way business
transformation expenses ($ - dollars) (w) $ 0.03 $ 0.07 $ 0.02 $
0.08 $ 0.20 N/A EPS impact from income tax benefit from Goodwill
impairment ($ - dollars) (t) N/A N/A N/A $ (0.04 ) $ (0.04 ) N/A
EPS impact from income tax benefit from Joint Settlement Agreements
($ - dollars) (v) $ — $ — $ (0.01 ) $ — $ (0.01 ) N/A EPS impact
from income tax benefit from WU Way business transformation
expenses ($ - dollars) (w) $ (0.01 ) $ (0.02 ) $ (0.01 ) $ (0.02 )
$ (0.07 ) N/A EPS impact as a result of Tax Act ($ - dollars) (x)
N/A N/A N/A $ 1.80
$ 1.76 $ (0.01 ) EPS impact as a result of Goodwill
impairment, NYDFS Consent Order, Joint Settlement Agreements and WU
Way business transformation expenses, net of income tax
expense/(benefit) and Tax Act ($ - dollars) $ 0.02 $ 0.15
$ 0.02 $ 2.85 $ 2.99 $ (0.01 ) Diluted
EPS, excluding Goodwill impairment, NYDFS Consent Order, Joint
Settlement Agreements, WU Way business transformation expenses and
Tax Act ($ - dollars) $ 0.35 $ 0.50 $ 0.53 $
0.41 $ 1.80 $ 0.45 Diluted weighted-average
shares outstanding (z) 483.4 472.0 465.4 462.9 470.9 463.6
(f) Effective tax rate, as reported (GAAP) 24 % 10 % 2 %
(288)
%
260 % 9 % Impact from Goodwill impairment (t) N/A N/A N/A 773 %
(146)
%
N/A Impact from NYDFS Consent Order (u) N/A
(2)
%
0 %
(29)
%
(8)
%
N/A Impact from Joint Settlement Agreements (v) 0 % 0 % 1 % 0 %
(1)
%
N/A Impact from WU Way business transformation expenses (w) 1 % 3 %
1 %
(67)
%
(7)
%
N/A Impact from Tax Act (x) N/A N/A
N/A
(375)
%
(85)
%
2 % Effective tax rate, excluding Goodwill impairment, NYDFS
Consent Order, Joint Settlement Agreements, WU Way business
transformation expenses and Tax Act 25 % 11 %
4 % 14 % 13 % 11 %
Consumer-to-Consumer Segment (g) Revenues, as reported
(GAAP) $ 1,015.0 $ 1,087.3 $ 1,107.7 $ 1,144.5 $ 4,354.5 $ 1,091.0
Foreign currency translation impact (s) 24.1
20.8 1.8 (9.0 ) 37.7
(26.4 ) Revenues, constant currency adjusted $ 1,039.1
$ 1,108.1 $ 1,109.5 $ 1,135.5 $ 4,392.2
$ 1,064.6 Prior year revenues, as reported (GAAP) $
1,017.4 $ 1,095.8 $ 1,098.9 $ 1,092.5 $ 4,304.6 $ 1,015.0 Revenue
change, as reported (GAAP) 0 %
(1)
%
1 % 5 % 1 % 7 % Revenue change, constant currency adjusted 2 % 1 %
1 % 4 % 2 % 5 % (h) Principal per transaction, as reported
($ - dollars) $ 292 $ 293 $ 302 $ 300 $ 297 $ 307 Foreign currency
translation impact ($ - dollars) (s) 3 3
(2 ) (6 ) (1 ) (10 ) Principal
per transaction, constant currency adjusted ($ - dollars) $ 295
$ 296 $ 300 $ 294 $ 296 $ 297
Prior year principal per transaction, as reported ($ -
dollars) $ 299 $ 301 $ 300 $ 292 $ 298 $ 292 Principal per
transaction change, as reported
(2)
%
(3)
%
1 % 3 % 0 % 5 % Principal per transaction change, constant currency
adjusted
(1)
%
(2)
%
0 % 0 %
(1)
%
2 % (i) Cross-border principal, as reported ($ - billions) $
17.3 $ 18.7 $ 19.0 $ 19.5 $ 74.5 $ 18.9 Foreign currency
translation impact ($ - billions) (s) 0.2 0.2
(0.2 ) (0.4 ) (0.2 ) (0.7 )
Cross-border principal, constant currency adjusted ($ - billions) $
17.5 $ 18.9 $ 18.8 $ 19.1 $ 74.3
$ 18.2 Prior year cross-border principal, as reported ($ -
billions) $ 17.3 $ 18.5 $ 18.4 $ 18.3 $ 72.5 $ 17.3 Cross-border
principal change, as reported 1 % 1 % 4 % 6 % 3 % 9 % Cross-border
principal change, constant currency adjusted 2 % 2 % 2 % 4 % 2 % 5
% (j) NA region revenue change, as reported (GAAP) 3 % 3 % 1
% 3 % 2 % 4 % NA region foreign currency translation impact (s)
1 % 0 % 0 % 0 % 1 % 0 %
NA region revenue change, constant currency adjusted 4 %
3 % 1 % 3 % 3 % 4 % (k)
EU & CIS region revenue change, as reported (GAAP)
(1)
%
(2)
%
2 % 6 % 1 % 14 % EU & CIS region foreign currency translation
impact (s) 5 % 4 %
(1)
%
(4)
%
1 %
(9)
%
EU & CIS region revenue change, constant currency adjusted
4 % 2 % 1 % 2 % 2 % 5 %
(l) MEASA region revenue change, as reported (GAAP)
(13)
%
(12)
%
(8)
%
1 %
(8)
%
0 % MEASA region foreign currency translation impact (s) 3 %
1 % 0 %
(1)
%
1 %
(1)
%
MEASA region revenue change, constant currency adjusted
(10)
%
(11)
%
(8)
%
0 %
(7)
%
(1)
%
(m) LACA region revenue change, as reported (GAAP) 26 % 21 %
19 % 21 % 22 % 20 % LACA region foreign currency translation impact
(s)
(1)
%
1 % 3 % 2 % 1 % 5 % LACA region
revenue change, constant currency adjusted 25 % 22 %
22 % 23 % 23 % 25 % (n) APAC
region revenue change, as reported (GAAP)
(2)
%
(4)
%
(1)
%
0 %
(2)
%
2 % APAC region foreign currency translation impact (s) 1 %
2 % 2 % 0 % 2 %
(2)
%
APAC region revenue change, constant currency adjusted
(1)
%
(2)
%
1 % 0 % 0 % 0 % (o)
westernunion.com revenue change, as reported (GAAP) 26 % 21 % 23 %
22 % 23
%
23 % westernunion.com foreign currency translation impact (s)
2 % 2 % 0 % 0 % 1 %
(3)
%
westernunion.com revenue change, constant currency adjusted
28 % 23 % 23 % 22 % 24 % 20 %
Business Solutions Segment (p) Revenues, as reported
(GAAP) $ 93.6 $ 96.6 $ 99.4 $ 94.3 $ 383.9 $ 96.7 Foreign currency
translation impact (s) 2.8 3.2
(1.2 ) (3.0 ) 1.8 (4.8 ) Revenues,
constant currency adjusted $ 96.4 $ 99.8 $ 98.2
$ 91.3 $ 385.7 $ 91.9 Prior year
revenues, as reported (GAAP) $ 99.2 $ 100.8 $ 97.2 $ 98.8 $ 396.0 $
93.6 Revenue change, as reported (GAAP)
(6)
%
(4)
%
2 %
(4)
%
(3)
%
3 % Revenue change, constant currency adjusted
(3)
%
(1)
%
1 %
(8)
%
(3)
%
(2)
%
(q) Operating income/(loss), as reported (GAAP) (jj) $ 2.4 $
5.3 $ 9.1 $ (3.0 ) $ 13.8 $ 2.8 Reversal of depreciation and
amortization 10.6 10.6 10.6
10.7 42.5 10.6
EBITDA (y) $ 13.0 $ 15.9 $ 19.7 $ 7.7 $
56.3 $ 13.4 Operating income margin, as reported
(GAAP) (jj) 2.6 % 5.5 % 9.1 %
(3.2)
%
3.6 % 2.9 % EBITDA margin 13.8 % 16.6 % 19.8 % 8.1 % 14.7 % 13.8 %
(r)
Other (primarily bill payments businesses in United
States and Argentina) Revenues, as reported (GAAP) $ 193.8 $
195.0 $ 197.6 $ 199.5 $ 785.9 $ 201.7 Foreign currency translation
impact (s) 3.2 5.0 7.1
6.5 21.8 12.3 Revenues,
constant currency adjusted $ 197.0 $ 200.0 $ 204.7
$ 206.0 $ 807.7 $ 214.0 Prior year
revenues, as reported (GAAP) $ 181.1 $ 179.1 $ 181.7 $ 180.4 $
722.3 $ 193.8 Revenue change, as reported (GAAP) 7 % 9 % 9 % 11 % 9
% 4 % Revenue change, constant currency adjusted 9 % 12 % 13 % 14 %
12 % 10 %
2018 Consolidated Outlook Metrics Range
Earnings per share (GAAP) ($ - dollars) $ 1.81 $ 1.91 Impact as a
result of Tax Act ($ - dollars) (x) (0.01 ) (0.01 )
Earnings per share excluding Tax Act ($ - dollars) $ 1.80 $
1.90 Effective tax rate (GAAP) 14 % Impact from Tax
Act (x) 1 % Effective tax rate excluding Tax Act 15 %
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. We believe that this measure provides
management and investors with information about operating results
and trends that eliminates currency volatility and provides greater
clarity regarding, and increases the comparability of, our
underlying results and trends.
(t) Represents a non-cash goodwill impairment charge related
to our Business Solutions reporting unit. The impairment primarily
resulted from a decrease in projected revenue growth rates and
EBITDA margins. These projections were reevaluated due to the
declines in revenues and operating results recognized in the fourth
quarter of 2017, which were significantly below management’s
expectations. Additionally, as disclosed in prior Annual Reports on
Form 10-K and Quarterly Reports on Form 10-Q, the total estimated
fair value of the Business Solutions reporting unit previously
included value derived from strategies to optimize United States
cash flow management and global liquidity by utilizing
international cash balances (including balances generated by other
operating segments) to initially fund global principal payouts for
Business Solutions transactions initiated in the United States that
would have been available to certain market participants. However,
the December 2017 enactment of tax reform into United States law
(“Tax Act”) eliminated any fair value associated with these cash
management strategies. This charge has been excluded from segment
operating income, as this charge has been excluded from the
measurement of segment operating income provided to the chief
operating decision maker for purposes of assessing segment
performance and decision making with respect to resource
allocation. We believe that, by excluding the effects of
significant charges associated with non-cash impairment charges
that can impact operating trends, management and investors are
provided with a measure that increases the comparability of our
underlying operating results. (u) Represents the impact from
an accrual for a consent order with the New York State Department
of Financial Services ("NYDFS") related to matters identified as
part of the Joint Settlement Agreements (referred to above as the
"NYDFS Consent Order" or the "NYDFS Settlement"), as described in
our Form 8-K filed with the Securities and Exchange Commission on
January 4, 2018. Amounts related to the NYDFS Consent Order were
recognized in the second and fourth quarters of 2017, and the
expenses had no related income tax benefit. These expenses have
been excluded from segment operating income, as these expenses are
excluded from the measurement of segment operating income provided
to the chief operating decision maker for purposes of assessing
segment performance and decision making with respect to resource
allocation. We believe that, by excluding the effects of
significant charges associated with the settlement of litigation
that can impact operating trends, management and investors are
provided with a measure that increases the comparability of our
underlying operating results. (v)
Represents the impact from the settlement
agreements related to (1) a Deferred Prosecution Agreement with the
United States Department of Justice, and the United States
Attorney’s Offices for the Eastern and Middle Districts of
Pennsylvania, the Central District of California, and the Southern
District of Florida, (2) a Stipulated Order for Permanent
Injunction and Final Judgment with the United States Federal Trade
Commission ("FTC"), and (3) a Consent to the Assessment of Civil
Money Penalty with the Financial Crimes Enforcement Network of the
United States Department of Treasury (referred to above,
collectively, as the “Joint Settlement Agreements”), to resolve the
respective investigations of those agencies, as described in our
Form 8-K filed with the Securities and Exchange Commission on
January 20, 2017, and related matters. Amounts related to these
matters were recognized in the second, third, and fourth quarters
of 2016 and the full year 2016 results. Additionally, in the third
quarter of 2017, we recorded an additional accrual in the amount of
$8 million related to an independent compliance auditor, pursuant
to the terms of the Joint Settlement Agreements. These expenses
have been excluded from our segment operating income, as these
expenses are excluded from the measurement of segment operating
income provided to the chief operating decision maker for purposes
of assessing segment performance and decision making with respect
to resource allocation. Additionally, income tax benefit was
adjusted in the fourth quarter of 2016 to reflect the revised
determination, based on final agreement terms. We believe that, by
excluding the effects of significant charges associated with the
settlement of litigation that can impact operating trends,
management and investors are provided with a measure that increases
the comparability of our underlying operating results.
(w)
Represents the expenses incurred to
transform our operating model, focusing on technology
transformation, network productivity, customer and agent process
optimization, and organizational redesign to better drive
efficiencies and growth initiatives (“WU Way business
transformation expenses”). Amounts related to the WU Way business
transformation expenses were recognized beginning in the second
quarter of 2016, and each subsequent quarter in 2017. As of
December 31, 2017, expenses associated with the WU Way initiative
were effectively complete. These expenses have been excluded from
our segment operating income, as these expenses are excluded from
the measurement of segment operating income provided to the chief
operating decision maker for purposes of assessing segment
performance and decision making with respect to resource
allocation. We believe that, by excluding the effects of
significant charges associated with the transformation of our
operating model that can impact operating trends, management and
investors are provided with a measure that increases the
comparability of our other underlying operating results. Although
the expenses related to the WU Way are specific to that initiative,
the types of expenses related to the WU Way initiative are similar
to expenses that the Company has previously incurred and can
reasonably be expected to incur in the future.
(x) Represents the estimated impact to our provision for
income taxes related to the Tax Act, primarily due to a tax on
previously undistributed earnings of certain foreign subsidiaries,
partially offset by the remeasurement of deferred tax assets and
liabilities and other tax balances to reflect the lower federal
income tax rate, among other effects. Certain of the Tax Act's
impacts have been provisionally estimated and will likely be
adjusted in future periods as we complete our accounting for these
matters in 2018, in accordance with a recent staff accounting
bulletin issued by the SEC. (y)
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.
(z) For the three months and twelve months ended December
31, 2017, non-GAAP diluted weighted-average shares outstanding
includes 3.3 million and 3.0 million shares, respectively. These
shares are excluded from the Company's GAAP diluted
weighted-average shares outstanding, as they are anti-dilutive due
to the Company's GAAP net losses for the respective periods.
Other
notes:
(aa)
Geographic split for transactions and
revenue, including transactions initiated through westernunion.com,
is determined entirely based upon the region where the money
transfer is initiated.
(bb)
Represents the North America (United
States and Canada) ("NA") region of our Consumer-to-Consumer
segment.
(cc)
Represents the Europe and the
Russia/Commonwealth of Independent States ("EU & CIS") region
of our Consumer-to-Consumer segment.
(dd)
Represents the Middle East, Africa, and
South Asia ("MEASA") region of our Consumer-to-Consumer segment,
including India and certain South Asian countries, which consist of
Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka.
(ee)
Represents the Latin America and the
Caribbean ("LACA") region of our Consumer-to-Consumer segment,
including Mexico.
(ff)
Represents the East Asia and Oceania
("APAC") region of our Consumer-to-Consumer segment.
(gg)
Represents transactions, including
westernunion.com transactions initiated outside the United States,
between and within foreign countries (including Canada and Mexico).
Excludes all transactions originated in the United States.
(hh)
Represents transactions originated in the
United States, including intra-country transactions and
westernunion.com transactions initiated from the United States.
(ii)
Represents transactions initiated and
funded on Western Union branded websites and mobile apps (referred
to throughout as "westernunion.com").
(jj)
On January 1, 2018, the Company adopted an
accounting pronouncement that requires the non-service costs of a
defined benefit pension plan to be presented outside a subtotal of
income from operations, with adoption retrospective for periods
previously presented. The adoption of this standard resulted in
increases to operating income in the amount of $0.6 million for
each quarter of 2017, $2.4 million for the year ended December 31,
2017, $0.8 million for each of the first, second, and fourth
quarters of 2016, $0.9 million for the third quarter of 2016, and
$3.3 million for the year ended December 31, 2016.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180501006448/en/
The Western Union CompanyMedia Relations:Jennifer
Pakradooni, +1 720-332-0516jennifer.pakradooni@wu.comorInvestor
Relations:Mike Salop, +1
720-332-8276mike.salop@westernunion.com
Western Union (NYSE:WU)
Historical Stock Chart
From Sep 2024 to Oct 2024
Western Union (NYSE:WU)
Historical Stock Chart
From Oct 2023 to Oct 2024