Strong digital growthFull year
operating margin 20.1%Over $740 million returned to
shareholders in 2018Quarterly dividend increased 5%
The Western Union Company (NYSE: WU), a global leader in
cross-border, cross-currency money movement, today reported
financial results for the 2018 fourth quarter and full year and
provided its financial outlook for 2019.
GAAP earnings per share in the fourth quarter was $0.48 compared
to a loss of ($2.44) in the prior year period, as the prior year
period was negatively impacted by significant adjustment items
(refer to Adjustment Items section for details). On an adjusted
basis, earnings per share was $0.49 compared to $0.41 in the prior
year period. The increase in adjusted earnings per share was
primarily due to an increased operating profit margin, a lower
effective tax rate, and fewer shares outstanding, partially offset
by lower revenues.
The Company generated revenue of $1.4 billion in the quarter,
which declined 3% compared to the prior year, or increased 2% on a
constant currency basis. The strengthening of the dollar against
the Argentine peso negatively impacted reported revenue by 4
percentage points in the quarter, while the effects of inflation on
the Company’s Argentina-based businesses are estimated to have
positively impacted both reported and constant currency revenue by
approximately 2 percentage points.
Consumer money transfer revenues declined 1% in the quarter due
to the impact of foreign exchange, but increased 1% in constant
currency, led by strong growth in westernunion.com. The Company’s
operating profit margin was 19.3% in the quarter.
“Strong digital growth continues to drive our results,” said
president and CEO Hikmet Ersek. “Westernunion.com money transfer
transaction growth accelerated to 25% in the quarter, while overall
margins were solid. Our customers have consistently demonstrated
their resilience, even in periods of slowing global economic
growth.”
Ersek added, “In 2018 we made important strategic progress. We
feel confident about our operations and business. In 2019 we will
continue to execute our strategy to deliver strong digital
expansion, offer our cross-border platform to new payments areas,
and generate additional operating efficiencies.”
The new quarterly dividend of $0.20 per common share, which
represents a 5% increase over the previous dividend of $0.19, is
payable March 29, 2019 to shareholders of record at the close of
business on March 15, 2019.
Executive vice president and CFO Raj Agrawal stated, “Efficient
cost management and our WU Way programs helped us deliver stable
profit margins and solid cash flow in 2018. We returned over $740
million to shareholders through dividends and share repurchases
last year and are pleased to announce today a 5% increase in our
quarterly dividend.”
Q4 Business Unit
Highlights
- Consumer-to-Consumer (C2C) revenues,
which represented 80% of total Company revenue in the quarter,
declined 1% on a reported basis, or increased 1% constant currency,
while transactions grew 4%. Geographically, constant currency
revenue growth was led by sends originated in Latin America and
Europe, partially offset by declines in the Middle East and Asia
Pacific.Westernunion.com C2C revenues increased 21%, or 22%
constant currency, and transactions increased 25%. Westernunion.com
is now available in more than 60 countries, plus additional
territories, including approximately 20 new launches over the past
year. Westernunion.com revenues represented 12% of total C2C
revenue in the quarter.
- Western Union Business Solutions
revenues increased 3%, or 5% on a constant currency basis, driven
by growth in both payments and foreign exchange services. 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, declined
11%, or increased 10% on a constant currency basis. The
strengthening of the dollar against the Argentine peso negatively
impacted Other reported revenue by 21 percentage points in the
quarter, while the effects of inflation on the Argentina Pago Facil
bill payments business are estimated to have positively impacted
both reported and constant currency revenue by approximately 11
percentage points. Other revenues represented 13% of total Company
revenues in the quarter.
Additional Q4 Financial
Highlights
- GAAP operating margin in the quarter
was 19.3%, which compares to (17.5%) in the prior year period, or
18.0% in the prior year on an adjusted basis. GAAP operating profit
of $271 million compares to a loss of ($252) million in the prior
year, or $258 million in the prior year on an adjusted basis. The
improvement in GAAP operating profit was primarily due to
adjustment items in the prior year period. The improvement in
adjusted operating profit margin was driven by lower bad debt,
marketing, and incentive compensation expenses compared to the
prior year period, which were partially offset by higher corporate
expenses and technology spending.
- The effective tax rate in the quarter
was 9.8%, with tax expense in the current year quarter of $23
million comparing to $832 million in the prior year period. The
decrease in tax expense was primarily due to the impact of the Tax
Act in the U.S. On an adjusted basis, the tax rate was 6.3%
compared to 14.3% in the prior year period. The decrease in the
adjusted effective tax rate was primarily due to certain discrete
items in the current year period.
- The Company returned $133 million to
shareholders in the fourth quarter, consisting of $49 million in
share repurchases and $84 million of dividends.
2018 Full Year Results
- The Company’s full year revenue
increased 1%, or 3% on a constant currency basis, compared to the
prior year. The strengthening of the dollar against the Argentine
peso reduced reported revenue growth by approximately 2.5
percentage points, while the impact of inflation on the Company’s
Argentina-based businesses is estimated to have increased revenue
growth by approximately 1.5 percentage points.
- GAAP operating margin of 20.1% compares
to 8.6% in the prior year, or 20.0% on an adjusted basis in 2017.
The improvement in GAAP operating margin was primarily due to
adjustment items in the prior year period.
- The effective tax rate for the year was
14.1%. The full year tax expense was $139 million, which compares
to $905 million in the prior year, with the decrease primarily due
to the impact of adjustment items in the prior year, including
expenses associated with the Tax Act. Excluding the impact of the
Tax Act and other adjustment items, the adjusted tax rate of 11.8%
for the full year compares to 13.1% in 2017. The adjusted tax rate
in both periods benefited from various discrete items.
- GAAP earnings / (loss) per share of
$1.87 increased from ($1.19) in the prior year, primarily due to
adjustment items in the prior year. Adjusted earnings per share of
$1.92 compares to $1.80 in 2017. The increase in adjusted earnings
per share was primarily due to higher revenues, a lower effective
tax rate, and fewer shares outstanding.
- GAAP cash flow from operating
activities for the year was $821 million, including the impact of
approximately $120 million of tax payments related to the agreement
with the U.S. Internal Revenue Service announced in 2011, a $60
million payment for the previously announced NYDFS settlement, and
approximately $30 million of outflows for prior year WU Way
expenses. The Company returned $741 million to shareholders through
dividends and share repurchases for the full year.
Adjustment Items
Adjusted metrics for 2018 exclude the impact of tax expense
related to changes in estimates for the provisional accounting for
the Tax Act ($8 million for Q4 and $23 million for the full
year).
Adjusted metrics for 2017 exclude the impact of the Tax Act
($828 million for Q4 and full year), a non-cash goodwill impairment
charge related to the Business Solutions reporting unit ($464
million for Q4 and full year), expenses related to the WU Way
business transformation ($35 million for Q4 and $94 million for
full year), an accrual related to a settlement with the New York
Department of Financial Services (“NYDFS Settlement,” $11 million
for Q4 and $60 million for full year), additional expenses for an
independent compliance auditor as required by the Joint Settlement
Agreements ($8 million for full year), and related tax impacts.
2019 Outlook
The Company’s strategies remain focused on digital expansion,
customer experience improvements, operating efficiencies, and new
cross-border payments opportunities. In 2019, the Company expects
stable financial performance in a slowing global economic growth
environment, with a negative impact from foreign exchange and a
higher effective tax rate compared to the prior year, primarily due
to impacts from the U.S. Tax Act’s Base Erosion Anti-Abuse Tax
(BEAT).
The Company has identified and is in the process of implementing
structural actions to mitigate the adverse impact of BEAT. The 2019
outlook reflects an effective tax rate of approximately 17-18%,
which anticipates the mitigation efforts are implemented in stages
during the year. The Company currently expects the effective tax
rate to be in the mid-teens level in 2020, reflecting the full
effect of mitigation.
The Company expects the following outlook for 2019:
Revenue
- GAAP: low single-digit decrease to a
low single-digit increase
- Constant currency: low single-digit
increase (excluding any benefit related to Argentina
inflation)
Operating Profit Margin
- Operating margin of approximately
20%
Tax Rate
- Effective tax rate of approximately 17%
to 18% in 2019
Earnings per Share
- EPS in a range of $1.83 to $1.95
Cash Flow
- Cash flow from operating activities of
approximately $1 billion
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release.
Expenses related to the goodwill impairment, NYDFS Settlement,
Joint Settlement Agreements and 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 goodwill
impairment, NYDFS Settlement, Joint Settlement Agreements and WU
Way business transformation expenses; consolidated operating
margin, excluding goodwill impairment, NYDFS Settlement, Joint
Settlement Agreements and WU Way business transformation expenses;
effective tax rate excluding goodwill impairment, NYDFS Settlement,
Joint Settlement Agreements, WU Way business transformation
expenses and Tax Act; earnings per share, excluding goodwill
impairment, NYDFS Settlement, Joint Settlement Agreements, WU Way
business transformation expenses and 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 9862712.
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 downturns
and trade disruptions, 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, including trade restrictions and government sanctions, 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
the integration of acquired businesses and technologies into our
Company, divestitures, and the failure to realize anticipated
financial benefits from these transactions, and events requiring us
to write down our goodwill; decisions to change our business mix;
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; changes in tax laws, or their
interpretation, including with respect to United States tax reform
legislation enacted in December 2017 (the "Tax Act"), any
subsequent regulation, 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 and abroad, 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 enforcement 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"); failure
to comply with 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 and derivatives transactions;
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: 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 December 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 2018, is available in more than
60 countries, plus additional territories, to move money around the
world. In 2018, we moved over $300 billion in principal in nearly
130 currencies and processed 34 transactions every second across
all our services. With our global reach, Western Union moves money
for better, connecting family, friends and businesses to enable
financial inclusion and support economic growth. For more
information, visit www.westernunion.com.
WU-G
THE WESTERN UNION COMPANY KEY
STATISTICS (Unaudited) Notes*
4Q17 FY2017 1Q18
2Q18 3Q18 4Q18
FY2018 Consolidated Metrics Consolidated revenues
(GAAP) - YoY % change 5 % 2 % 7 % 2 % (1 ) % (3 ) % 1 %
Consolidated revenues (constant currency) - YoY % change a 4 % 3 %
5 % 3 % 3 % 2 % 3 % Consolidated operating income/(loss) (GAAP) -
YoY % change 19 % (2 ) % 10 % 32 % 11 % 208 % 136 % Consolidated
operating income (constant currency adjusted, excluding Goodwill
impairment, NYDFS Consent Order, Joint Settlement Agreements and WU
Way business transformation expenses) - YoY % change b 0 % 3 % 5 %
(4 ) % 7 % 7 % 3 % Consolidated operating margin (GAAP) jj (17.5 )
% 8.6 % 19.1 % 20.1 % 21.8 % 19.3 % 20.1 % Consolidated operating
margin (excluding Goodwill impairment, NYDFS Consent Order, Joint
Settlement Agreements and WU Way business transformation expenses)
c 18.0 % 20.0 % 19.1 % 20.1 % 21.8 % 19.3 % 20.1 %
Consumer-to-Consumer (C2C) Segment Revenues (GAAP) - YoY %
change 5 % 1 % 7 % 4 % 0 % (1 ) % 2 % Revenues (constant currency)
- YoY % change g 4 % 2 % 5 % 3 % 2 % 1 % 2 % Operating margin jj
21.5 % 23.1 % 22.2 % 23.6 % 25.1 % 23.3 % 23.5 %
Transactions (in millions) 71.4 275.8 67.8 73.1 71.8 74.3 287.0
Transactions - YoY % change 3 % 3 % 4 % 5 % 4 % 4 % 4 %
Total principal ($- billions) $ 21.3 $ 81.8 $ 20.8 $ 22.4 $ 22.1 $
22.4 $ 87.7 Principal per transaction ($- dollars) $ 300 $ 297 $
307 $ 306 $ 308 $ 301 $ 305 Principal per transaction - YoY %
change 3 % 0 % 5 % 5 % 2 % 0 % 3 % Principal per transaction
(constant currency) - YoY % change h 0 % (1 ) % 2 % 3 % 4 % 3 % 3 %
Cross-border principal ($- billions) $ 19.5 $ 74.5 $ 18.9 $
20.4 $ 20.1 $ 20.5 $ 79.9 Cross-border principal - YoY % change 6 %
3 % 9 % 9 % 6 % 5 % 7 % Cross-border principal (constant currency)
- YoY % change i 4 % 2 % 5 % 8 % 7 % 8 % 7 % NA region
revenues (GAAP) - YoY % change aa, bb 3 % 2 % 4 % 3 % 2 % 0 % 2 %
NA region revenues (constant currency) - YoY % change j, aa, bb 3 %
3 % 4 % 3 % 2 % 0 % 2 % NA region transactions - YoY % change aa,
bb 1 % 3 % 1 % 2 % 1 % 2 % 2 % EU & CIS region revenues
(GAAP) - YoY % change aa, cc 6 % 1 % 14 % 9 % 3 % 1 % 7 % EU &
CIS region revenues (constant currency) - YoY % change k, aa, cc 2
% 2 % 5 % 4 % 4 % 2 % 4 % EU & CIS region transactions - YoY %
change aa, cc 7 % 7 % 8 % 9 % 8 % 8 % 8 % MEASA region
revenues (GAAP) - YoY % change aa, dd 1 % (8 ) % 0 % (4 ) % (7 ) %
(7 ) % (5 ) % MEASA region revenues (constant currency) - YoY %
change l, aa, dd 0 % (7 ) % (1 ) % (5 ) % (6 ) % (6 ) % (4 ) %
MEASA region transactions - YoY % change aa, dd (2 ) % (10 ) % (2 )
% (1 ) % 2 % 3 % 1 % LACA region revenues (GAAP) - YoY %
change aa, ee 21 % 22 % 20 % 11 % 2 % 0 % 8 % LACA region revenues
(constant currency) - YoY % change m, aa, ee 23 % 23 % 25 % 20 % 16
% 16 % 19 % LACA region transactions - YoY % change aa, ee 17 % 17
% 17 % 16 % 11 % 11 % 14 % APAC region revenues (GAAP) - YoY
% change aa, ff 0 % (2 ) % 2 % (5 ) % (10 ) % (9 ) % (6 ) % APAC
region revenues (constant currency) - YoY % change n, aa, ff 0 % 0
% 0 % (5 ) % (9 ) % (8 ) % (6 ) % APAC region transactions - YoY %
change aa, ff 3 % 0 % 1 % 0 % (2 ) % (4 ) % (1 ) %
International revenues - YoY % change gg 6 % 0 % 9 % 4 % (1 ) % (2
) % 3 % International transactions - YoY % change gg 6 % 3 % 6 % 7
% 6 % 6 % 6 % International revenues - % of C2C segment revenues gg
67 % 66 % 67 % 66 % 67 % 67 % 67 % United States originated
revenues - YoY % change hh 3 % 3 % 4 % 3 % 1 % (1 ) % 2 % United
States originated transactions - YoY % change hh 0 % 2 % 1 % 2 % 1
% 2 % 1 % United States originated revenues - % of C2C segment
revenues hh 33 % 34 % 33 % 34 % 33 % 33 % 33 %
westernunion.com revenues (GAAP) - YoY % change ii 22 % 23 % 23 %
22 % 19 % 21 % 21 % westernunion.com revenues (constant currency) -
YoY % change o, ii 22 % 24 % 20 % 21 % 20 % 22 % 21 %
westernunion.com transactions - YoY % change ii 22 % 24 % 24 % 26 %
23 % 25 % 25 %
% of Consumer-to-Consumer Revenue
Regional Revenues: NA region revenues aa, bb 37 % 37 % 36 % 37 % 37
% 37 % 37 % EU & CIS region revenues aa, cc 31 % 31 % 32 % 32 %
32 % 32 % 32 % MEASA region revenues aa, dd 16 % 16 % 16 % 15 % 15
% 15 % 15 % LACA region revenues aa, ee 9 % 8 % 9 % 9 % 9 % 9 % 9 %
APAC region revenues aa, ff 7 % 8 % 7 % 7 % 7 % 7 % 7 %
westernunion.com revenues ii 10 % 10 % 11 % 11 % 12 % 12 % 12 %
Business Solutions (B2B) Segment Revenues (GAAP) -
YoY % change (4 ) % (3 ) % 3 % (4 ) % 1 % 3 % 1 % Revenues
(constant currency) - YoY % change p (8 ) % (3 ) % (2 ) % (6 ) % 3
% 5 % 0 % Operating margin (3.2 ) % 3.6 % 2.9 % 1.2 % 14.2 % 5.4 %
6.1 %
Other (primarily bill payments
businesses in United States and Argentina)
Revenues (GAAP) - YoY % change 11 % 9 % 4 % (2 ) % (9 ) % (11 ) %
(5 ) % Revenues (constant currency) - YoY % change r 14 % 12 % 10 %
9 % 7 % 10 % 9 % Operating margin 7.9 % 10.7 % 10.1 % 8.5 % 5.9 %
1.8 % 6.7 %
% of Total Company Revenue
Consumer-to-Consumer segment revenues 80 % 79 % 79 % 80 % 80 % 80 %
80 % Business Solutions segment revenues 6 % 7 % 7 % 7 % 7 % 7 % 7
% Other revenues 14 % 14 % 14 % 13 % 13 % 13 % 13 % * 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
CONSOLIDATED STATEMENTS OF INCOME/(LOSS) (Unaudited)
(in millions, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31, 2018
2017 % Change 2018 2017
% Change Revenues $ 1,401.6 $ 1,438.3 (3 ) % $
5,589.9 $ 5,524.3 1 % Expenses: Cost of services (a) 833.8 870.3 (4
) % 3,300.8 3,353.0 (2 ) % Selling, general and administrative
296.8 355.9 (17 ) % 1,167.0 1,231.5 (5 ) % Goodwill impairment
charge — 464.0
(d)
— 464.0
(d)
Total expenses (b) 1,130.6 1,690.2 (33
) % 4,467.8 5,048.5 (12 ) % Operating
income/(loss) 271.0 (251.9 )
(d)
1,122.1 475.8
(d)
Other income/(expense): Interest income 1.2 1.1 1 % 4.8 4.9 (3 ) %
Interest expense (38.2 ) (37.9 ) 1 % (149.6 ) (142.1 ) 5 % Other
income/(expense), net (a) 1.0 (0.5 )
(d)
14.1 8.9 57 % Total other expense, net
(36.0 ) (37.3 ) (4 ) % (130.7 ) (128.3
) 2 % Income/(loss) before income taxes 235.0 (289.2 )
(d)
991.4 347.5
(d)
Provision for income taxes (c) 22.9 831.7
(97 ) % 139.5 904.6 (85 ) % Net
income/(loss) $ 212.1 $ (1,120.9 )
(d)
$ 851.9 $ (557.1 )
(d)
Earnings/(loss) per share: Basic $ 0.48 $ (2.44 )
(d)
$ 1.89 $ (1.19 )
(d)
Diluted $ 0.48 $ (2.44 )
(d)
$ 1.87 $ (1.19 )
(d)
Weighted-average shares outstanding: Basic 442.9 459.6 451.8 467.9
Diluted 445.4 459.6 454.4 467.9 Cash dividends declared per common
share $ 0.19 $ 0.175 9 % $ 0.76 $ 0.70 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/(expense), net" of $0.6
million and $2.4 million for the three and twelve months ended
December 31, 2017, respectively, from the amounts previously
reported. (b) As of December 31, 2017, expenses associated with the
WU Way initiative were effectively complete. For the three and
twelve months ended December 31, 2017, total WU Way business
transformation expenses were $35.2 million and $94.4 million,
respectively, including $8.0 million and $35.7 million in cost of
services and $27.2 million and $58.7 million in selling, general
and administrative, respectively. (c) For both the three and twelve
months ended December 31, 2017, provision for income taxes included
an estimated $828.3 million related to the enactment of the Tax Act
into United States law. During the year ended December 31, 2018,
the Company completed its accounting for certain of the Tax Acts
impacts that were provisionally estimated at December 31, 2017.
During the three and twelve months ended December 31, 2018, the
Company recorded an additional income tax expense of $8.1 million
and $22.5 million, respectively. (d) Calculation not meaningful.
THE WESTERN UNION COMPANY CONSOLIDATED
BALANCE SHEETS (Unaudited) (in millions, except per
share amounts) December
31, 2018 2017 Assets Cash
and cash equivalents $ 973.4 $ 838.2 Settlement assets 3,813.8
4,188.9
Property and equipment, net of accumulated
depreciation of $702.4 and $635.7, respectively
270.4 214.2 Goodwill 2,725.0 2,727.9
Other intangible assets, net of
accumulated amortization of $1,047.6 and $1,042.7, respectively
598.2 586.3 Other assets 616.0 675.9
Total assets $ 8,996.8 $ 9,231.4
Liabilities and
Stockholders' Deficit Liabilities: Accounts payable and accrued
liabilities $ 564.9 $ 718.5 Settlement obligations 3,813.8 4,188.9
Income taxes payable 1,054.0 1,252.0 Deferred tax liability, net
161.1 173.0 Borrowings 3,433.7 3,033.6 Other liabilities 279.1
356.8 Total liabilities 9,306.6 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; 441.2 shares and 459.0 shares issued and
outstanding as of December 31, 2018 and 2017, respectively
4.4 4.6 Capital surplus 755.6 697.8 Accumulated deficit (838.8 )
(965.9 ) Accumulated other comprehensive loss (231.0 )
(227.9 ) Total stockholders' deficit (309.8 )
(491.4 ) Total liabilities and stockholders' deficit $ 8,996.8
$ 9,231.4
THE WESTERN UNION
COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in millions)
Year Ended December 31, 2018
2017 Cash flows from operating activities Net
income/(loss) $ 851.9 $ (557.1 )
Adjustments to reconcile net
income/(loss) to net cash provided by operating activities:
Depreciation 76.9 77.1 Amortization 187.8 185.8 Goodwill impairment
charge — 464.0 Deferred income tax provision/(benefit) (15.1 ) 69.5
Other non-cash items, net 66.2 124.2
Increase/(decrease) in cash, excluding the
effects of acquisitions, resulting from changes in:
Other assets (31.0 ) (62.5 ) Accounts payable and accrued
liabilities (126.5 ) (417.6 ) Income taxes payable (193.1 ) 850.4
Other liabilities 4.2 8.2 Net cash
provided by operating activities 821.3 742.0
Cash flows from
investing activities Capitalization of contract costs (150.3 )
(74.8 ) Capitalization of purchased and developed software (52.0 )
(33.2 ) Purchases of property and equipment (136.7 ) (69.1 )
Purchases of non-settlement related investments and other (24.2 )
(192.1 ) Proceeds from maturity of non-settlement related
investments and other 13.7 203.8 Purchases of held-to-maturity
non-settlement related investments (2.8 ) (42.7 ) Proceeds from
held-to-maturity non-settlement related investments 23.5 28.4
Acquisition of businesses, net — (24.9 ) Net
cash used in investing activities (328.8 ) (204.6 )
Cash flows
from financing activities Cash dividends paid (341.7 ) (325.6 )
Common stock repurchased (412.4 ) (502.8 ) Net proceeds from
commercial paper 125.0 — Net proceeds from issuance of borrowings
685.4 746.2 Principal payments on borrowings (414.4 ) (500.0 )
Proceeds from exercise of options 10.1 13.0 Other financing
activities (9.2 ) (1.3 ) Net cash used in financing
activities (357.2 ) (570.5 ) Net change in cash, cash
equivalents and restricted cash 135.3 (33.1 ) Cash, cash
equivalents and restricted cash at beginning of year (a)
844.4 877.5 Cash, cash equivalents and
restricted cash at end of year (a) $ 979.7 $ 844.4
________________________
(a) On January 1, 2018, the Company retrospectively adopted
an accounting pronouncement that requires restricted cash, which is
recorded in "Other assets" in the Company's Consolidated Balance
Sheets, to be included with cash and cash equivalents when
reconciling the beginning-of-period and end-of-period amounts shown
on the statements of cash flows. As of December 31, 2018 and 2017,
the Company had $6.3 million and $6.2 million, respectively, of
restricted cash.
THE WESTERN UNION COMPANY
SUMMARY SEGMENT DATA (Unaudited) (in millions)
Three Months Ended Twelve
Months Ended December 31, December 31,
2018 2017 % Change 2018
2017 % Change Revenues:
Consumer-to-Consumer $ 1,127.7 $ 1,144.5 (1 ) % $ 4,453.6 $ 4,354.5
2 % Business Solutions 96.8 94.3 3 % 386.8 383.9 1 % Other (a)
177.1 199.5 (11 ) % 749.5
785.9 (5 ) % Total consolidated
revenues $ 1,401.6 $ 1,438.3 (3 ) % $ 5,589.9
$ 5,524.3 1 % Operating income (b):
Consumer-to-Consumer $ 262.5 $ 245.5 7 % $ 1,048.2 $ 1,004.2 4 %
Business Solutions 5.2 (3.0 )
(d)
23.4 13.8 70 % Other (a) 3.3 15.8
(80 ) % 50.5 84.2 (40 ) %
Total segment operating income (b) 271.0 258.3 5 % 1,122.1 1,102.2
2 % Goodwill impairment (c) — (464.0 )
(d)
— (464.0 )
(d)
NYDFS Consent Order (c) — (11.0 )
(d)
— (60.0 )
(d)
Joint Settlement Agreements (c) — —
(d)
— (8.0 )
(d)
Business transformation expenses (c) — (35.2 )
(d)
— (94.4 )
(d)
Total consolidated operating income/(loss) (b) $ 271.0 $
(251.9 )
(d)
$ 1,122.1 $ 475.8
(d)
Operating income margin/(loss) (b): Consumer-to-Consumer 23.3 %
21.5 % 1.8 % 23.5 % 23.1 % 0.4 % Business Solutions 5.4 % (3.2 ) %
8.6 % 6.1 % 3.6 % 2.5 % Other (a) 1.8 % 7.9 % (6.1 ) % 6.7 % 10.7 %
(4.0 ) % Total consolidated operating income margin/(loss) (b) 19.3
% (17.5 ) % 36.8 % 20.1 % 8.6 % 11.5 %
________________________
(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 reductions to "Cost of
services" and "Other income/(expense), net" of $0.6 million and
$2.4 million for the three and twelve months ended December 31,
2017, respectively, from the amounts previously reported. (c)
Expenses related to the Goodwill impairment, NYDFS Consent Order,
the WU Way business transformation, and the Joint Settlement
Agreements 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. 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.
4Q17 FY2017
1Q18 2Q18 3Q18
4Q18 FY2018
Consolidated Metrics
(a) Revenues, as reported (GAAP) $ 1,438.3 $ 5,524.3 $ 1,389.4 $
1,411.1 $ 1,387.8 $ 1,401.6 $ 5,589.9 Foreign currency translation
impact (s) (5.5 ) 61.3
(18.9 ) 9.1 52.8
68.9 111.9 Revenues,
constant currency adjusted $ 1,432.8 $ 5,585.6
$ 1,370.5 $ 1,420.2 $ 1,440.6
$ 1,470.5 $ 5,701.8 Prior
year revenues, as reported (GAAP) $ 1,371.7 $ 5,422.9 $ 1,302.4 $
1,378.9 $ 1,404.7 $ 1,438.3 $ 5,524.3 Revenue change, as reported
(GAAP) 5 % 2 % 7 % 2 % (1 ) % (3 ) % 1 % Revenue change, constant
currency adjusted 4 % 3 % 5 % 3 % 3 % 2 % 3 % (b) Operating
income/(loss), as reported (GAAP) (jj) $ (251.9 ) $ 475.8 $ 264.9 $
283.6 $ 302.6 $ 271.0 $ 1,122.1 Foreign currency translation impact
(s) 13.3 44.0 3.4 2.9 7.2 4.6 18.1 Goodwill impairment (t) 464.0
464.0 N/A N/A N/A N/A N/A NYDFS Consent Order (u) 11.0 60.0 N/A N/A
N/A N/A N/A Joint Settlement Agreements (v) — 8.0 N/A N/A N/A N/A
N/A WU Way business transformation expenses (w) 35.2
94.4 N/A
N/A N/A N/A
N/A Operating income, constant currency
adjusted, excluding Goodwill impairment, NYDFS Consent Order, Joint
Settlement Agreements and WU Way business transformation expenses $
271.6 $ 1,146.2 $ 268.3 $
286.5 $ 309.8 $ 275.6 $
1,140.2 Prior year operating income, excluding NYDFS
Consent Order, Joint Settlement Agreements and WU Way business
transformation expenses $ 271.5 $ 1,108.3 $ 254.4 $ 299.4 $ 290.1 $
258.3 $ 1,102.2 Operating income change, as reported (GAAP) 19 % (2
) % 10 % 32 % 11 % 208 % 136 % Operating income change, constant
currency adjusted, excluding Goodwill impairment, NYDFS Consent
Order, Joint Settlement Agreements and WU Way business
transformation expenses 0 % 3 % 5 % (4 ) % 7 % 7 % 3 % (c)
Operating income/(loss), as reported (GAAP) (jj) $ (251.9 ) $ 475.8
$ 264.9 $ 283.6 $ 302.6 $ 271.0 $ 1,122.1 Goodwill impairment (t)
464.0 464.0 N/A N/A N/A N/A N/A NYDFS Consent Order (u) 11.0 60.0
N/A N/A N/A N/A N/A Joint Settlement Agreements (v) — 8.0 N/A N/A
N/A N/A N/A WU Way business transformation expenses (w) 35.2
94.4 N/A
N/A N/A N/A
N/A Operating income, excluding
Goodwill impairment, NYDFS Consent Order, Joint Settlement
Agreements and WU Way business transformation expenses $ 258.3
$ 1,102.2 $ 264.9 $ 283.6
$ 302.6 $ 271.0 $ 1,122.1
Operating margin, as reported (GAAP) (jj) (17.5 ) %
8.6 % 19.1 % 20.1 % 21.8 % 19.3 % 20.1 % Operating margin,
excluding Goodwill impairment, NYDFS Consent Order, Joint
Settlement Agreements and WU Way business transformation expenses
18.0 % 20.0 % 19.1 % 20.1 % 21.8 % 19.3 % 20.1 % (d)
Operating income/(loss), as reported (GAAP) (jj) $ (251.9 ) $ 475.8
$ 264.9 $ 283.6 $ 302.6 $ 271.0 $ 1,122.1 Reversal of depreciation
and amortization 65.8 262.9
66.7 65.7
63.6 68.7 264.7
EBITDA (y) $ (186.1 ) $ 738.7 $ 331.6
$ 349.3 $ 366.2 $ 339.7
$ 1,386.8 Goodwill impairment (t) 464.0
464.0 N/A N/A N/A N/A N/A NYDFS Consent Order (u) 11.0 60.0 N/A N/A
N/A N/A N/A Joint Settlement Agreements (v) — 8.0 N/A N/A N/A N/A
N/A WU Way business transformation expenses (w) 35.2
94.4 N/A
N/A N/A N/A
N/A Adjusted EBITDA, excluding Goodwill
impairment, NYDFS Consent Order, Joint Settlement Agreements and WU
Way business transformation expenses $ 324.1 $
1,365.1 $ 331.6 $ 349.3 $
366.2 $ 339.7 $ 1,386.8
Operating margin, as reported (GAAP) (jj) (17.5 ) % 8.6 % 19.1 %
20.1 % 21.8 % 19.3 % 20.1 % EBITDA margin (13.0 ) % 13.4 % 23.9 %
24.7 % 26.4 % 24.2 % 24.8 % Adjusted EBITDA margin, excluding
Goodwill impairment, NYDFS Consent Order, Joint Settlement
Agreements and WU Way business transformation expenses 22.5 % 24.7
% 23.9 % 24.7 % 26.4 % 24.2 % 24.8 % (e) Net income/(loss),
as reported (GAAP) $ (1,120.9 ) $ (557.1 ) $ 213.6 $ 217.6 $ 208.6
$ 212.1 $ 851.9 Goodwill impairment (t) 464.0 464.0 N/A N/A N/A N/A
N/A NYDFS Consent Order (u) 11.0 60.0 N/A N/A N/A N/A N/A Joint
Settlement Agreements (v) — 8.0 N/A N/A N/A N/A N/A WU Way business
transformation expenses (w) 35.2 94.4 N/A N/A N/A N/A N/A Income
tax benefit from Goodwill impairment (t) (17.2 ) (17.2 ) N/A N/A
N/A N/A N/A Income tax benefit from Joint Settlement Agreements (v)
— (2.9 ) N/A N/A N/A N/A N/A Income tax benefit from WU Way
business transformation expenses (w) (11.1 ) (31.1 ) N/A N/A N/A
N/A N/A Income tax expense/(benefit) from Tax Act (x) 828.3
828.3 (6.0 )
(6.2 ) 26.6 8.1
22.5 Goodwill impairment, NYDFS Consent
Order, Joint Settlement Agreements and WU Way business
transformation expenses, net of income tax benefit and Tax Act
1,310.2 1,403.5
(6.0 ) (6.2 ) 26.6
8.1 22.5 Net income, excluding
Goodwill impairment, NYDFS Consent Order, Joint Settlement
Agreements, WU Way business transformation expenses and Tax Act $
189.3 $ 846.4 $ 207.6 $
211.4 $ 235.2 $ 220.2 $
874.4 Diluted earnings/(loss) per share ("EPS"), as
reported (GAAP) ($- dollars) $ (2.44 ) $ (1.19 ) $ 0.46 $ 0.47 $
0.46 $ 0.48 $ 1.87 EPS impact as a result of Goodwill impairment
($- dollars) (t) $ 1.01 $ 1.00 N/A N/A N/A N/A N/A EPS impact as a
result of NYDFS Consent Order ($- dollars) (u) $ 0.02 $ 0.13 N/A
N/A N/A N/A N/A EPS impact as a result of Joint Settlement
Agreements ($- dollars) (v) $ — $ 0.02 N/A N/A N/A N/A N/A EPS
impact as a result of WU Way business transformation expenses ($-
dollars) (w) $ 0.08 $ 0.20 N/A N/A N/A N/A N/A EPS impact from
income tax benefit from Goodwill impairment ($- dollars) (t) $
(0.04 ) $ (0.04 ) N/A N/A N/A N/A N/A
EPS impact from income tax benefit from
Joint Settlement Agreements ($- dollars) (v)
$ — $ (0.01 ) N/A N/A N/A N/A N/A EPS impact from income tax
benefit from WU Way business transformation expenses ($- dollars)
(w) $ (0.02 ) $ (0.07 ) N/A N/A N/A N/A N/A EPS impact as a result
of Tax Act ($- dollars) (x) $ 1.80 $ 1.76 $ (0.01 ) $
(0.01 ) $ 0.06 $ 0.01 $ 0.05 EPS impact
as a result of Goodwill impairment, NYDFS Consent Order, Joint
Settlement Agreements and WU Way business transformation expenses,
net of income tax benefit and Tax Act ($- dollars) $ 2.85 $
2.99 $ (0.01 ) $ (0.01 ) $ 0.06 $ 0.01 $ 0.05
Diluted EPS, excluding Goodwill
impairment, NYDFS Consent Order, Joint Settlement Agreements, WU
Way business transformation expenses and Tax Act ($- dollars)
$ 0.41 $ 1.80 $ 0.45 $ 0.46 $ 0.52
$ 0.49 $ 1.92 Diluted weighted-average
shares outstanding (z) 462.9 470.9 463.6 459.6 449.0 445.4 454.4
(f) Effective tax rate, as reported (GAAP) (288 ) % 260 % 9
% 15 % 22 % 10 % 14 % Impact from Goodwill impairment (t) 773 %
(146 ) % N/A N/A N/A N/A N/A Impact from NYDFS Consent Order (u)
(29 ) % (8 ) % N/A N/A N/A N/A N/A Impact from Joint Settlement
Agreements (v) 0 % (1 ) % N/A N/A N/A N/A N/A
Impact from WU Way business transformation
expenses (w)
(67 ) % (7 ) % N/A N/A N/A N/A N/A Impact from Tax Act (x)
(375 ) % (85 ) % 2 % 2 %
(10 ) % (4 ) % (2 ) % Effective tax rate, excluding
Goodwill impairment, NYDFS Consent Order, Joint Settlement
Agreements, WU Way business transformation expenses and Tax Act
14 % 13 % 11 % 17
% 12 % 6 % 12 %
Consumer-to-Consumer Segment
(g) Revenues, as reported (GAAP) $ 1,144.5 $ 4,354.5 $ 1,091.0 $
1,127.5 $ 1,107.4 $ 1,127.7 $ 4,453.6 Foreign currency translation
impact (s) (9.0 ) 37.7 (26.4 )
(9.6 ) 18.7 23.9 6.6
Revenues, constant currency adjusted $ 1,135.5 $
4,392.2 $ 1,064.6 $ 1,117.9 $ 1,126.1 $
1,151.6 $ 4,460.2 Prior year revenues, as
reported (GAAP) $ 1,092.5 $ 4,304.6 $ 1,015.0 $ 1,087.3 $ 1,107.7 $
1,144.5 $ 4,354.5 Revenue change, as reported (GAAP) 5 % 1 % 7 % 4
% 0 % (1 ) % 2 % Revenue change, constant currency adjusted 4 % 2 %
5 % 3 % 2 % 1 % 2 % (h) Principal per transaction, as
reported ($- dollars) $ 300 $ 297 $ 307 $ 306 $ 308 $ 301 $ 305
Foreign currency translation impact ($- dollars) (s) (6 )
(1 ) (10 ) (4 ) 5 7
— Principal per transaction, constant
currency adjusted ($- dollars) $ 294 $ 296 $ 297
$ 302 $ 313 $ 308 $ 305
Prior year principal per transaction, as reported ($- dollars) $
292 $ 298 $ 292 $ 293 $ 302 $ 300 $ 297 Principal per transaction
change, as reported 3 % 0 % 5 % 5 % 2 % 0 % 3 % Principal per
transaction change, constant currency adjusted 0 % (1 ) % 2 % 3 % 4
% 3 % 3 % (i) Cross-border principal, as reported ($-
billions) $ 19.5 $ 74.5 $ 18.9 $ 20.4 $ 20.1 $ 20.5 $ 79.9 Foreign
currency translation impact ($- billions) (s) (0.4 )
(0.2 ) (0.7 ) (0.2 ) 0.3 0.4
(0.2 ) Cross-border principal, constant
currency adjusted ($- billions) $ 19.1 $ 74.3 $ 18.2
$ 20.2 $ 20.4 $ 20.9 $ 79.7
Prior year cross-border principal, as reported ($- billions)
$ 18.3 $ 72.5 $ 17.3 $ 18.7 $ 19.0 $ 19.5 $ 74.5 Cross-border
principal change, as reported 6 % 3 % 9 % 9 % 6 % 5 % 7 %
Cross-border principal change, constant currency adjusted 4 % 2 % 5
% 8 % 7 % 8 % 7 % (j) NA region revenue change, as reported
(GAAP) 3 % 2 % 4 % 3 % 2 % 0 % 2 % NA region foreign currency
translation impact (s) 0 % 1 % 0 % 0 %
0 % 0 % 0 % NA region revenue change, constant
currency adjusted 3 % 3 % 4 % 3 % 2
% 0 % 2 % (k) EU & CIS region
revenue change, as reported (GAAP) 6 % 1 % 14 % 9 % 3 % 1 % 7 % EU
& CIS region foreign currency translation impact (s) (4 ) % 1
% (9 ) % (5 ) % 1 % 1 % (3 ) % EU & CIS
region revenue change, constant currency adjusted 2 % 2
% 5 % 4 % 4 % 2 % 4 %
(l) MEASA region revenue change, as reported (GAAP) 1 % (8 )
% 0 % (4 ) % (7 ) % (7 ) % (5 ) % MEASA region foreign currency
translation impact (s) (1 ) % 1 % (1 ) % (1 ) % 1 % 1
% 1 % MEASA region revenue change, constant currency
adjusted 0 % (7 ) % (1 ) % (5 ) % (6 ) % (6 ) % (4 ) %
(m)
LACA region revenue change, as reported (GAAP) 21 % 22 % 20 % 11 %
2 % 0 % 8 % LACA region foreign currency translation impact (s) 2
% 1 % 5 % 9 % 14 % 16 %
11 % LACA region revenue change, constant currency adjusted
23 % 23 % 25 % 20 % 16 % 16
% 19 % (n) APAC region revenue change, as
reported (GAAP) 0 % (2 ) % 2 % (5 ) % (10 ) % (9 ) % (6 ) % APAC
region foreign currency translation impact (s) 0 % 2
% (2 ) % 0 % 1 % 1 % 0 % APAC region
revenue change, constant currency adjusted 0 % 0 % 0
% (5 ) % (9 ) % (8 ) % (6 ) % (o) westernunion.com
revenue change, as reported (GAAP) 22 % 23 % 23 % 22 % 19 % 21 % 21
% westernunion.com foreign currency translation impact (s) 0
% 1 % (3 ) % (1 ) % 1 % 1 % 0 %
westernunion.com revenue change, constant currency adjusted 22
% 24 % 20 % 21 % 20 % 22
% 21 %
Business Solutions Segment
(p)
Revenues, as reported (GAAP) $ 94.3 $ 383.9 $ 96.7 $ 93.1 $ 100.2 $
96.8 $ 386.8 Foreign currency translation impact (s) (3.0 )
1.8 (4.8 ) (2.7 ) 2.3
2.6 (2.6 ) Revenues, constant currency
adjusted $ 91.3 $ 385.7 $ 91.9 $ 90.4 $
102.5 $ 99.4 $ 384.2 Prior year
revenues, as reported (GAAP) $ 98.8 $ 396.0 $ 93.6 $ 96.6 $ 99.4 $
94.3 $ 383.9 Revenue change, as reported (GAAP) (4 ) % (3 ) % 3 %
(4 ) % 1 % 3 % 1 % Revenue change, constant currency adjusted (8 )
% (3 ) % (2 ) % (6 ) % 3 % 5 % 0 % (q) Operating
income/(loss), as reported (GAAP) (jj) $ (3.0 ) $ 13.8 $ 2.8 $ 1.1
$ 14.3 $ 5.2 $ 23.4 Reversal of depreciation and amortization
10.7 42.5 10.6
10.5 10.4 10.4 41.9
EBITDA (y) $ 7.7 $ 56.3 $ 13.4 $
11.6 $ 24.7 $ 15.6 $ 65.3
Operating income margin, as reported (GAAP) (jj) (3.2 ) % 3.6 % 2.9
% 1.2 % 14.2 % 5.4 % 6.1 % EBITDA margin 8.1 % 14.7 % 13.8 % 12.6 %
24.6 % 16.2 % 16.9 % (r)
Other (primarily bill payments
businesses in United States and Argentina)
Revenues, as reported (GAAP) $ 199.5 $ 785.9 $ 201.7 $ 190.5 $
180.2 $ 177.1 $ 749.5 Foreign currency translation impact (s)
6.5 21.8 12.3 21.4
31.8 42.4 107.9
Revenues, constant currency adjusted $ 206.0 $ 807.7
$ 214.0 $ 211.9 $ 212.0 $ 219.5
$ 857.4 Prior year revenues, as reported (GAAP) $
180.4 $ 722.3 $ 193.8 $ 195.0 $ 197.6 $ 199.5 $ 785.9 Revenue
change, as reported (GAAP) 11 % 9 % 4 % (2 ) % (9 ) % (11 ) % (5 )
% Revenue change, constant currency adjusted 14 % 12 % 10 % 9 % 7 %
10 % 9 %
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. 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 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. During the fourth quarter of 2018, we
completed our accounting for the Tax Act. (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 conducted and funded through 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/20190207005638/en/
The Western Union CompanyMedia Relations:Claire Treacy+1
(720) 332-0652claire.treacy@westernunion.comInvestor Relations:Mike
Salop+1 (720) 332-8276mike.salop@westernunion.com
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