Second quarter GAAP earnings per share (EPS)
of $0.50, adjusted EPS of $0.51; 23.2% GAAP operating margin, 23.3%
adjusted operating margin
Company to provide update on global
long-term strategy at investor day on October 20, 2022
2022 financial outlook revised
The Western Union Company (NYSE: WU), a global leader in
cross-border, cross-currency money movement and payments, today
reported second quarter 2022 financial results and updated its full
year financial outlook.
The Company’s second quarter revenue of $1.1 billion declined
12% on a reported basis, or 4% on a constant currency basis
excluding the contribution from Business Solutions, compared to the
prior year period. The suspension of operations in Russia and
Belarus negatively impacted revenue by approximately three
percentage points, while Argentina inflation benefited revenue by
approximately one percentage point. Second quarter revenue was
impacted by continued softness in retail money transfer.
GAAP EPS in the second quarter was $0.50, compared to $0.54 in
the prior year period. The year-over-year decrease in GAAP EPS was
primarily due to a gain on investment sale recognized in the prior
year period.
Adjusted EPS in the second quarter was $0.51, compared to $0.48
in the prior year period. Year-over-year growth in adjusted EPS was
driven by lower share count and higher operating margin, partially
offset by a higher effective tax rate. For a full reconciliation
between GAAP and Adjusted EPS, please see the “Adjustment Items”
section of this press release.
“Having spent the last six months with my senior leadership team
reviewing all aspects of our business, I believe the long-term
prospects for the Company remain strong,” said Devin McGranahan,
President and Chief Executive Officer of Western Union. “We have
identified new business opportunities and operational performance
improvements, as well as started to create an organizational
structure that can drive execution. We are beginning to see the
effects of certain operational improvements in second quarter
margin results, and I look forward to sharing additional details at
our upcoming Investor Day in October.”
McGranahan added, “Despite elevated macroeconomic stress and
heightened geopolitical uncertainty, revenue growth, while below
long-term aspirations, largely performed in-line with expectations
during second quarter. We expect that the macroeconomic environment
will continue to slow as the year progresses in-line with the
current prevailing forecasts. Historically, remittances have been
resilient in periods of economic contraction due to their largely
nondiscretionary nature; however, portions of our core customer
segment may be vulnerable.”
CFO Raj Agrawal stated, “I was pleased with our expense
management in the quarter, creating capacity, as we begin to shift
focus to investing ahead of our updated long-term strategy. We
expect to increase investment levels in the second half of the
year, which is reflected in our revised adjusted operating margin
outlook of between 20% to 21% for 2022, higher than our previous
outlook.”
Q2 Business Highlights
- Consumer-to-Consumer (C2C) revenues declined 9% on a reported
basis, or 6% constant currency, while transactions declined 13%
compared to the prior year period. As expected, the suspension of
operations in Russia and Belarus negatively impacted C2C revenue
and transactions, decreasing C2C reported and constant currency
revenue by three percentage points and decreasing C2C transactions
by eight percentage points in the quarter. Regionally, transaction
declines in Europe and CIS, North America, APAC, and MEASA were
partially offset by transaction growth in LACA.
- Digital money transfer revenues declined 6% on a reported
basis, or 3% constant currency, and represented 25% and 33% of
total C2C revenues and transactions, respectively. As expected, the
suspension of operations in Russia and Belarus negatively impacted
digital money transfer revenue and transactions, decreasing
reported and constant currency revenue by six percentage points and
decreasing transactions by 19 percentage points.
- Westernunion.com revenue declined 1% on a reported basis, or
grew 1% on a constant currency basis, including cross-border
revenue growth of 1%. As expected, the suspension of operations in
Russia and Belarus negatively impacted Westernunion.com revenue and
transactions, decreasing reported revenue, constant currency
revenue, and transactions by two percentage points.
Q2 Financial Highlights
- GAAP operating margin in the quarter was 23.2%, compared to
19.8% in the prior year period. The adjusted operating margin was
23.3% compared to 20.2% in the prior year period, with the prior
year negatively impacted by 60 basis points from the inclusion of
Business Solutions. The increase in adjusted operating margin was
primarily due to changes in foreign currency, lower
compensation-related expenses, and product mix. For a detailed
reconciliation between GAAP and Adjusted operating margin, please
see the “Adjustment Items” section of this press release.
- The GAAP effective tax rate in the quarter was 17.9%, compared
to 14.5% in the prior year period, and the increase was primarily
due to the sale of Business Solutions and the Company's decision to
suspend its operations in Russia and Belarus. The adjusted
effective tax rate was 16.9% in the quarter, compared to 14.2% in
the prior year period, primarily due to an increase in the
proportion of higher taxed earnings and the effects of changes in
U.S. tax rules.
- Cash flow from operating activities was $307 million
year-to-date, which includes a transition tax payment of $64
million paid in the second quarter. These transition tax payments
resulted from United States tax reform legislation enacted in 2017
and stop after 2025. The Company returned $112 million to
shareholders in the second quarter, consisting of $91 million in
dividends and $21 million of share repurchases.
2022 Outlook
Today, the Company revised its full year 2022 financial outlook,
lowering its revenue outlook and raising its operating profit
margin outlook for the year based on the timing of expenses, better
than expected cost management year-to-date, as well as a softer
environment for topline trends. The revised revenue outlook
includes a partial year impact related to a key retail agent
exiting the category in the Europe and CIS region in the fourth
quarter of 2022. A second key retail agent in Europe and CIS will
exit the category beginning in the second quarter of 2023. The GAAP
revenue outlook was also adjusted to reflect changes in exchange
rates. The revised outlook assumes that macroeconomic conditions
will continue to soften as the year progresses.
GAAP figures reflect an expected partial year of Business
Solutions ownership, including contractual payments to the buyers,
representing profits between the first and second closings,
associated divestiture and acquisition costs, exit costs, and an
estimated pre-tax gain of approximately $270 million for the full
year, of which $151 million was recognized year-to-date. The second
closing is expected to be completed in the fourth quarter of 2022,
subject to regulatory approvals, at which time the remainder of the
gain will be recognized subject to regulatory capital
adjustments.
Adjusted revenue growth and operating margin exclude
contributions from Business Solutions. In addition, adjusted
operating margin excludes associated divestiture and acquisition
costs, Business Solutions exit costs, and costs related to the exit
from Russia and Belarus. The adjusted effective tax rate and EPS
exclude the expected gain on sale, divestiture and acquisition
costs, Business Solutions exit costs, and exit costs from Russia
and Belarus.
Revenue
GAAP: approximately -11% to -13%
(previously approximately -9% to -11%)
Adjusted (constant currency, excluding
the impact of Argentina inflation and proforma for the
planned sale of Business Solutions): mid-single digit decline
(previously low-single digit decline)
Operating Profit
Margin
GAAP and Adjusted: a range of 20%
to 21% (previously approximately 20%)
Effective Tax Rate
GAAP: approximately 20% (previously
approximately 21%) Adjusted: mid-teens range
EPS
GAAP: $2.18 - $2.28 (previously
$2.13 - $2.23) Adjusted: $1.75 - $1.85
Adjustment Items
Adjusted constant currency revenue growth metrics for 2022
exclude contributions from Business Solutions as the Company
entered into an agreement to sell the business in 2021 and the
first of two closings occurred on March 1, 2022. Adjusted operating
profit metrics for 2022 exclude contributions from Business
Solutions, acquisition and divestitures costs, Russia and Belarus
exit costs, and Business Solutions exit costs. Adjusted tax rate
and earnings per share metrics for 2022 periods exclude the
following items and the related taxes, as applicable: acquisition
and divestiture costs, Russia and Belarus exit costs, Business
Solutions exit costs, and gain on the sale of Business
Solutions.
Adjusted constant currency revenue growth metrics for 2021
exclude contributions from Business Solutions. Adjusted operating
profit metrics for 2021 periods exclude acquisition and divestiture
costs. Adjusted tax rate and earnings per share metrics for 2021
periods exclude the following items and the related taxes, as
applicable: acquisition and divestiture costs (all quarters), the
impact from the gain on an investment sale (second quarter), debt
retirement expenses (second quarter), Business Solutions change in
permanent reinvestment tax assertion (third quarter), and non-cash
expenses associated with the termination of the Company’s pension
plan (fourth quarter).
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release.
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.
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
https://ir.westernunion.com.
Environmental, Social, and Governance
(ESG)
Western Union is committed to making a positive impact. For more
details on how Western Union is addressing some of the most
pressing issues facing society, our shared environment, and our
Company, please view our latest ESG report:
https://corporate.westernunion.com/esg.
Investor and Analyst Conference Call
and Slide Presentation
The Company will host a conference call and webcast, including
slides, at 4:30 p.m. ET today.
To listen to the conference call via telephone in the U.S., dial
+1 (669) 900-6833 or +1 (253) 215-8782 fifteen minutes prior to the
start of the call, followed by the meeting ID, which is 9700 5047
253 and the passcode, which is 008582. To listen to the conference
call via telephone outside the U.S., dial the country number from
the international directory fifteen minutes prior to the start of
the call, followed by the meeting ID, which is 9700 5047 253 and
the passcode, which is 008582. Alternatively, you can join by
clicking the link here.
The webcast and presentation will be available at
https://ir.westernunion.com. Registration for the event is
required, so please register at least fifteen minutes prior to the
scheduled start time.
A webcast replay will be available at
https://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," "targets," "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, 2021.
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 other events, such as public
health emergencies, epidemics, or pandemics, such as COVID-19,
civil unrest, war, terrorism, natural disasters, 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 digital, mobile and internet-based services,
card associations, and card-based payment providers, and with
digital currencies and related exchanges and protocols, and other
innovations in technology and business models; geopolitical
tensions, political conditions and related actions, including trade
restrictions and government sanctions, 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, clients, or other partners;
deterioration in customer confidence in our business, or in money
transfer and payment service providers generally; failure to
maintain our agent network and business relationships under terms
consistent with or more advantageous to us than those currently in
place; 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; 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; 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; changes in tax laws, or their interpretation,
any subsequent regulation, and potential related state income tax
impacts, and unfavorable resolution of tax contingencies; 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; our ability to realize the
anticipated benefits from restructuring-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; failure to manage credit and fraud risks presented by
our agents, clients, and consumers; adverse rating actions by
credit rating agencies; our ability to protect our trademarks,
patents, copyrights, and 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; 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, data use,
the transfer of personal data between jurisdictions, and
information security, including with respect to the General Data
Protection Regulation (“GDPR”) in the European Union ("EU") and the
California Consumer Privacy Act; 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 (“CFPB”)
and similar legislation and regulations enacted by other
governmental authorities in the United States and abroad related to
consumer protection and derivative 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;
(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 and payments. Western
Union’s platform provides seamless cross-border flows and its
leading global financial network bridges more than 200 countries
and territories and approximately 130 currencies. We connect
consumers, businesses, financial institutions, and governments
through one of the world’s widest reaching networks, accessing
billions of bank accounts, millions of digital wallets and cards,
and a substantial global network of retail locations. Western Union
connects the world to bring boundless possibilities within reach.
For more information, visit www.westernunion.com.
WU-G
THE WESTERN UNION
COMPANY
KEY STATISTICS
(Unaudited)
Notes*
2Q21
3Q21
4Q21
FY2021
1Q22
2Q22
YTD 2Q22
Consolidated Metrics
Consolidated revenues (GAAP) - YoY % change
16
%
2
%
1
%
5
%
(4
)%
(12
)%
(8
)%
Consolidated revenues, constant currency (non-GAAP) - YoY % change
(a)
13
%
2
%
2
%
4
%
(2
)%
(8
)%
(5
)%
Consolidated revenues, constant currency, excluding Business
Solutions (non-GAAP) - YoY % Change (a)
13
%
0
%
1
%
4
%
(1
)%
(4
)%
(3
)%
Consolidated operating margin (GAAP)
19.8
%
24.8
%
24.7
%
22.1
%
20.5
%
23.2
%
21.9
%
Consolidated operating margin, excluding acquisition and
divestiture costs, Russia/Belarus exit costs, and Business
Solutions exit costs (non-GAAP) (b)
20.2
%
25.2
%
24.9
%
22.5
%
22.5
%
23.3
%
22.9
%
Consolidated operating margin, excluding acquisition and
divestiture costs, Russia/Belarus exit costs, and Business
Solutions operating income and exit costs (non-GAAP) (1) (b)
N/A
N/A
N/A
N/A
21.8
%
23.3
%
22.6
%
EBITDA margin (non-GAAP) (c)
24.1
%
28.8
%
28.4
%
26.3
%
24.6
%
27.2
%
25.9
%
Consumer-to-Consumer (C2C) Segment Metrics
Revenues (GAAP) - YoY % change
15
%
0
%
(1
)%
4
%
(5
)%
(9
)%
(7
)%
Revenues, constant currency (non-GAAP) - YoY % change (g)
12
%
(1
)%
0
%
3
%
(3
)%
(6
)%
(5
)%
Transactions (in millions)
78.0
76.6
78.3
305.9
69.7
68.2
137.9
Transactions - YoY % change
15
%
(1
)%
0
%
5
%
(4
)%
(13
)%
(9
)%
Total principal ($- billions) $
27.9
$
27.7
$
27.7
$
109.0
$
24.8
$
24.5
$
49.3
Principal per transaction, as reported - YoY % change
11
%
4
%
4
%
8
%
1
%
0
%
1
%
Principal per transaction, constant currency - YoY % change (h)
8
%
3
%
4
%
6
%
3
%
4
%
4
%
Cross-border principal, as reported - YoY % change
29
%
4
%
5
%
15
%
(3
)%
(12
)%
(8
)%
Cross-border principal, constant currency - YoY % change (i)
25
%
3
%
5
%
14
%
(1
)%
(9
)%
(5
)%
Operating margin
20.7
%
24.3
%
24.2
%
22.2
%
20.7
%
22.0
%
21.4
%
Digital money transfer revenues (GAAP) - YoY % change (hh)
22
%
15
%
13
%
22
%
5
%
(6
)%
(1
)%
Digital money transfer foreign currency translation impact (k)
(3
)%
(1
)%
(1
)%
(1
)%
1
%
3
%
2
%
Digital money transfer revenues, constant currency (non-GAAP) - YoY
% change (hh)
19
%
14
%
12
%
21
%
6
%
(3
)%
1
%
Digital money transfer transactions - YoY % change
33
%
19
%
17
%
32
%
4
%
(20
)%
(9
)%
westernunion.com revenues (GAAP) - YoY % change (gg)
18
%
12
%
9
%
18
%
4
%
(1
)%
1
%
westernunion.com foreign currency translation impact (k)
(3
)%
(1
)%
0
%
(1
)%
1
%
2
%
2
%
westernunion.com revenues, constant currency (non-GAAP) - YoY %
change (gg)
15
%
11
%
9
%
17
%
5
%
1
%
3
%
westernunion.com transactions - YoY % change (gg)
18
%
9
%
6
%
19
%
0
%
(3
)%
(1
)%
C2C Segment Regional Metrics - YoY % change
NA region revenues (GAAP) (aa), (bb)
4
%
(2
)%
2
%
1
%
(1
)%
(2
)%
(2
)%
NA region foreign currency translation impact (k)
0
%
0
%
0
%
0
%
0
%
0
%
0
%
NA region revenues, constant currency (non-GAAP) (aa), (bb)
4
%
(2
)%
2
%
1
%
(1
)%
(2
)%
(2
)%
NA region transactions (aa), (bb)
3
%
(5
)%
(2
)%
(1
)%
(6
)%
(6
)%
(6
)%
EU & CIS region revenues (GAAP) (aa), (cc)
18
%
(3
)%
(8
)%
3
%
(14
)%
(21
)%
(18
)%
EU & CIS region foreign currency translation impact (k)
(8
)%
(2
)%
1
%
(3
)%
4
%
5
%
5
%
EU & CIS region revenues, constant currency (non-GAAP) (aa),
(cc)
10
%
(5
)%
(7
)%
0
%
(10
)%
(16
)%
(13
)%
EU & CIS region transactions (aa), (cc)
26
%
3
%
1
%
13
%
(7
)%
(30
)%
(19
)%
MEASA region revenues (GAAP) (aa), (dd)
19
%
(2
)%
2
%
4
%
2
%
(4
)%
(1
)%
MEASA region foreign currency translation impact (k)
(1
)%
0
%
0
%
0
%
1
%
1
%
1
%
MEASA region revenues, constant currency (non-GAAP) (aa), (dd)
18
%
(2
)%
2
%
4
%
3
%
(3
)%
0
%
MEASA region transactions (aa), (dd)
22
%
2
%
6
%
10
%
5
%
(3
)%
1
%
LACA region revenues (GAAP) (aa), (ee)
70
%
25
%
8
%
22
%
2
%
2
%
2
%
LACA region foreign currency translation impact (k)
(2
)%
1
%
4
%
2
%
3
%
2
%
3
%
LACA region revenues, constant currency (non-GAAP) (aa), (ee)
68
%
26
%
12
%
24
%
5
%
4
%
5
%
LACA region transactions (aa), (ee)
42
%
10
%
2
%
9
%
2
%
4
%
3
%
APAC region revenues (GAAP) (aa), (ff)
20
%
1
%
0
%
6
%
(6
)%
(10
)%
(8
)%
APAC region foreign currency translation impact (k)
(7
)%
(2
)%
0
%
(3
)%
3
%
4
%
4
%
APAC region revenues, constant currency (non-GAAP) (aa), (ff)
13
%
(1
)%
0
%
3
%
(3
)%
(6
)%
(4
)%
APAC region transactions (aa), (ff)
3
%
(13
)%
(13
)%
(7
)%
(13
)%
(11
)%
(12
)%
% of C2C Revenue
NA region revenues (aa), (bb)
37
%
37
%
38
%
37
%
39
%
40
%
39
%
EU & CIS region revenues (aa), (cc)
33
%
32
%
31
%
32
%
29
%
28
%
29
%
MEASA region revenues (aa), (dd)
15
%
15
%
15
%
15
%
17
%
16
%
17
%
LACA region revenues (aa), (ee)
9
%
9
%
9
%
9
%
9
%
10
%
9
%
APAC region revenues (aa), (ff)
6
%
7
%
7
%
7
%
6
%
6
%
6
%
Digital money transfer revenues (aa)
24
%
24
%
24
%
24
%
25
%
25
%
25
%
Other (primarily bill payments businesses in Argentina and the
United States and money orders)
Revenues (GAAP) - YoY % change
8
%
3
%
5
%
(1
)%
8
%
19
%
14
%
Operating margin
16.2
%
18.3
%
21.3
%
19.6
%
31.7
%
40.1
%
36.1
%
% of Total Company Revenue (GAAP)
Consumer-to-Consumer segment revenues
87
%
86
%
87
%
87
%
86
%
90
%
88
%
Business Solutions segment revenues
8
%
9
%
8
%
8
%
8
%
3
%
6
%
Other revenues
5
%
5
%
5
%
5
%
6
%
7
%
6
%
____________________
(1)
Concurrent with the sale in the
first quarter of 2022, the Business Solutions operating income has
been excluded. See tickmark (r) below for more information.
*
See the “Notes to Key Statistics”
section of the press release for the applicable Note references and
the reconciliation of non-GAAP financial measures, unless already
reconciled herein.
THE WESTERN UNION
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share
amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
% Change
2022
2021
% Change
Revenues $
1,138.3
$
1,289.7
(12)
%
$
2,294.0
$
2,499.7
(8)
%
Expenses:
Cost of services
653.0
755.0
(14)
%
1,308.1
1,461.0
(10)
%
Selling, general, and administrative
221.3
279.8
(21)
%
484.4
551.0
(12)
%
Total expenses
874.3
1,034.8
(16)
%
1,792.5
2,012.0
(11)
%
Operating income
264.0
254.9
4
%
501.5
487.7
3
%
Other income/(expense):
Gain on divestiture of business (a)
—
—
(b)
151.4
—
(b)
Interest income
1.8
0.3
(b)
2.4
0.7
(b)
Interest expense
(24.8
)
(25.6
)
(3)
%
(49.6
)
(54.0
)
(8)
%
Other income/(expense), net
(4.8
)
30.5
(b)
(7.3
)
28.6
(b)
Total other income/(expense), net
(27.8
)
5.2
(b)
96.9
(24.7
)
(b)
Income before income taxes
236.2
260.1
(9)
%
598.4
463.0
29
%
Provision for income taxes
42.2
37.6
12
%
111.1
58.7
89
%
Net income $
194.0
$
222.5
(13)
%
$
487.3
$
404.3
21
%
Earnings per share:
Basic $
0.50
$
0.54
(7)
%
$
1.25
$
0.98
28
%
Diluted $
0.50
$
0.54
(7)
%
$
1.25
$
0.98
28
%
Weighted-average shares outstanding:
Basic
386.7
409.3
389.9
410.5
Diluted
387.6
411.5
391.0
412.9
____________________
(a)
On March 1, 2022, the Company
completed the first close of the sale of its Business Solutions
business to Goldfinch Partners LLC and The Baupost Group LLC
(collectively, the "Buyer"), and received cash consideration of
approximately $910 million, subject to regulatory and working
capital adjustments. The first close excluded the operations in the
European Union and the United Kingdom. The second closing is
expected in the fourth quarter of 2022.
(b)
Calculation not meaningful.
THE WESTERN UNION COMPANY CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited) (in millions, except per
share amounts)
June 30,
December 31,
2022
2021
Assets Cash and cash equivalents $
1,201.9
$
1,208.3
Settlement assets
3,106.6
2,843.5
Property and equipment, net of accumulated depreciation of $649.1
and $650.4, respectively
115.6
129.4
Goodwill
2,034.6
2,034.6
Other intangible assets, net of accumulated amortization of $727.9
and $731.8, respectively
446.1
417.1
Other assets
1,193.6
737.7
Assets held for sale (a)
688.9
1,452.9
Total assets $
8,787.3
$
8,823.5
Liabilities and stockholders' equity Liabilities: Accounts
payable and accrued liabilities $
411.5
$
450.2
Settlement obligations
3,106.6
2,843.5
Income taxes payable
851.6
870.7
Deferred tax liability, net
169.6
203.8
Borrowings
2,695.3
3,008.4
Other liabilities
679.5
269.4
Liabilities associated with assets held for sale (a)
424.9
821.9
Total liabilities
8,339.0
8,467.9
Stockholders' equity: Preferred stock, $1.00 par value; 10
shares authorized; no shares issued
—
—
Common stock, $0.01 par value; 2,000 shares authorized; 386.1
shares and 393.8 shares issued and outstanding as of June 30, 2022
and December 31, 2021, respectively
3.9
3.9
Capital surplus
973.3
941.0
Accumulated deficit
(412.1
)
(537.2
)
Accumulated other comprehensive loss
(116.8
)
(52.1
)
Total stockholders' equity
448.3
355.6
Total liabilities and stockholders' equity $
8,787.3
$
8,823.5
____________________
(a)
Includes balances associated with the
Company’s Business Solutions business, which were held for sale as
of June 30, 2022 and December 31, 2021. On March 1, 2022, the
Company completed the first close of the Business Solutions
business, which excluded the operations of the European Union and
the United Kingdom, and received the entire cash consideration.
THE WESTERN UNION COMPANY CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (in
millions)
Six Months Ended
June 30,
2022
2021
Cash flows from operating activities Net income $
487.3
$
404.3
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
22.6
26.0
Amortization
70.1
83.0
Gain on divestiture of business, excluding transaction costs
(155.8
)
—
Gain on the sale of noncontrolling interest in a private company
—
(47.9
)
Other non-cash items, net
32.8
80.1
Increase/(decrease) in cash, excluding the effects of divestitures,
resulting from changes in: Other assets
(131.2
)
(84.5
)
Accounts payable and accrued liabilities
19.6
(29.8
)
Income taxes payable
(20.5
)
(66.5
)
Other liabilities
(18.1
)
(15.2
)
Net cash provided by operating activities
306.8
349.5
Cash flows from investing activities Payments for
capitalized contract costs
(26.3
)
(82.2
)
Payments for internal use software
(42.7
)
(45.2
)
Purchases of property and equipment
(15.3
)
(17.9
)
Purchases of settlement investments
(495.3
)
(270.5
)
Proceeds from the sale of settlement investments
290.2
539.6
Maturities of settlement investments
84.4
130.9
Proceeds from the sale of noncontrolling interest in a private
company
—
50.9
Purchase of noncontrolling interest in stc Bank
—
(200.0
)
Purchases of non-settlement investments
(400.0
)
—
Proceeds from divestiture, net of cash divested
896.4
—
Other investing activities
0.9
(2.9
)
Net cash provided by investing activities
292.3
102.7
Cash flows from financing activities Cash dividends and
dividend equivalents paid
(184.8
)
(193.5
)
Common stock repurchased
(185.5
)
(160.5
)
Net proceeds from/(repayments of) commercial paper
(15.0
)
185.0
Net proceeds from issuance of borrowings
—
891.7
Principal payments on borrowings
(300.0
)
(1,150.0
)
Make-whole premium on early extinguishment of debt
—
(14.3
)
Proceeds from exercise of options
9.4
11.6
Net change in settlement obligations
(112.1
)
(93.1
)
Other financing activities
—
4.0
Net cash used in financing activities
(788.0
)
(519.1
)
Net change in cash and cash equivalents, including settlement, and
restricted cash
(188.9
)
(66.9
)
Cash and cash equivalents, including settlement, and restricted
cash at beginning of period
2,110.9
2,143.1
Cash and cash equivalents, including settlement, and restricted
cash at end of period $
1,922.0
$
2,076.2
June 30,
2022
2021
Reconciliation of balance sheet cash and cash equivalents to
cash flows: Cash and cash equivalents on balance sheet $
1,201.9
$
1,061.4
Settlement cash and cash equivalents
602.7
1,002.6
Restricted cash in Other assets
40.4
12.2
Cash and cash equivalents included in Assets held for sale
77.0
—
Cash and cash equivalents, including settlement, and restricted
cash $
1,922.0
$
2,076.2
THE WESTERN UNION
COMPANY
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
% Change
2022
2021
% Change
Revenues: Consumer-to-Consumer $
1,026.9
$
1,127.1
(9)
%
$
2,025.9
$
2,178.0
(7)
%
Business Solutions (a)
35.7
99.3
(64)
%
124.8
195.8
(36)
%
Other (b)
75.7
63.3
19
%
143.3
125.9
14
%
Total consolidated revenues $
1,138.3
$
1,289.7
(12)
%
$
2,294.0
$
2,499.7
(8)
%
Segment operating income: Consumer-to-Consumer $
225.6
$
233.8
(4)
%
$
432.8
$
439.9
(2)
%
Business Solutions (a)
8.3
10.9
(23)
%
35.8
23.5
53
%
Other (b)
30.3
10.2
(c)
51.8
24.3
(c)
Total segment operating income
264.2
254.9
4
%
520.4
487.7
7
%
Russia/Belarus exit costs (d)
(0.2
)
—
(c)
(11.2
)
—
(c)
Business Solutions exit costs (d)
—
—
(c)
(7.7
)
—
(c)
Total consolidated operating income $
264.0
$
254.9
4
%
$
501.5
$
487.7
3
%
Segment operating income margin Consumer-to-Consumer
22.0
%
20.7
%
1.3
%
21.4
%
20.2
%
1.2
%
Business Solutions (a)
23.5
%
10.9
%
12.6
%
28.7
%
12.0
%
16.7
%
Other (b)
40.1
%
16.2
%
23.9
%
36.1
%
19.4
%
16.7
%
____________________
(a)
On August 4, 2021, the Company
entered into an agreement to sell its Business Solutions business
to the Buyer, which will be completed in two closings, the first
which occurred on March 1, 2022, with the second expected in the
fourth quarter of 2022. The operations of the Business Solutions
business to be sold in the second closing continue to be included
in Revenues and Operating income after the first closing. However,
between the first and second closing, the Company will pay the
Buyer a measure of the profits from these operations, adjusted for
other charges, as contractually agreed, and this expense is
recognized in Other income/(expense), net in the Condensed
Consolidated Statements of Income.
(b)
Other primarily includes the
Company’s bill payment services which facilitate payments from
consumers to businesses and other organizations and the Company’s
money order services.
(c)
Calculation not meaningful.
(d)
Represents the exit costs
incurred in connection with the suspension of operations in Russia
and Belarus and the divestiture of the Business Solutions
business.
THE WESTERN UNION COMPANY NOTES TO
KEY STATISTICS (Unaudited) (in millions, unless
indicated otherwise)
Western Union’s management believes the non-GAAP financial
measures presented provide meaningful supplemental information
regarding the Company’s operating results to assist management,
investors, analysts, and others in understanding the Company’s
financial results and to better analyze trends in the Company’s
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 the Company’s operations that, when viewed with
the Company’s GAAP results and the reconciliation to the
corresponding GAAP financial measure, provides a more complete
understanding of the Company’s business. Users of the financial
statements are encouraged to review the Company’s 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, where not previously reconciled
above.
Notes
2Q21
3Q21
4Q21
FY2021
1Q22
2Q22
YTD 2Q22
Consolidated Metrics
(a)
Revenues (GAAP) $
1,289.7
$
1,286.3
$
1,284.8
$
5,070.8
$
1,155.7
$
1,138.3
$
2,294.0
Foreign currency translation impact
(k)
(29.4
)
(2.8
)
14.8
(18.3
)
33.2
42.1
75.3
Revenues, constant currency (non-GAAP)
1,260.3
1,283.5
1,299.6
5,052.5
1,188.9
1,180.4
2,369.3
Less Business Solutions revenues, constant currency (non-GAAP)
(j), (r)
(92.1
)
(113.7
)
(109.2
)
(405.9
)
(91.9
)
(40.1
)
(132.0
)
Revenues, constant currency, excluding Business Solutions
(non-GAAP)
$
1,168.2
$
1,169.8
$
1,190.4
$
4,646.6
$
1,097.0
$
1,140.3
$
2,237.3
Prior year revenues (GAAP)
$
1,114.7
$
1,258.5
$
1,271.8
$
4,835.0
$
1,210.0
$
1,289.7
$
2,499.7
Less prior year revenues from Business Solutions (GAAP)
(r)
(79.4
)
(89.1
)
(89.2
)
(356.1
)
(96.5
)
(99.3
)
(195.8
)
Prior year revenues, adjusted, excluding Business Solutions
$
1,035.3
$
1,169.4
$
1,182.6
$
4,478.9
$
1,113.5
$
1,190.4
$
2,303.9
Revenues (GAAP) - YoY % Change
16
%
2
%
1
%
5
%
(4)
%
(12)
%
(8)
%
Revenues, constant currency (non-GAAP) - YoY% Change
13
%
2
%
2
%
4
%
(2)
%
(8)
%
(5)
%
Revenues, constant currency, excluding Business Solutions
(non-GAAP) - YoY % Change
13
%
0
%
1
%
4
%
(1)
%
(4)
%
(3)
%
(b)
Operating income (GAAP)
$
254.9
$
318.6
$
316.8
$
1,123.1
$
237.5
$
264.0
$
501.5
Acquisition and divestiture costs
(m)
5.6
5.5
3.7
15.7
3.3
0.9
4.2
Russia/Belarus exit costs
(s)
N/A
N/A
N/A
N/A
11.0
0.2
11.2
Business Solutions exit costs
(s)
N/A
N/A
N/A
N/A
7.7
—
7.7
Operating income, excluding acquisition and divestiture costs,
Russia/Belarus exit costs, and Business Solutions exit costs
(non-GAAP)
$
260.5
$
324.1
$
320.5
$
1,138.8
$
259.5
$
265.1
$
524.6
Less Business Solutions operating income(1)
(r)
N/A
N/A
N/A
N/A
(26.5
)
(7.9
)
(34.4
)
Operating income, excluding acquisition and divestiture costs,
Russia/Belarus exit costs, and Business Solutions operating income
and exit costs (non-GAAP)
$
260.5
$
324.1
$
320.5
$
1,138.8
$
233.0
$
257.2
$
490.2
Operating margin (GAAP)
19.8
%
24.8
%
24.7
%
22.1
%
20.5
%
23.2
%
21.9
%
Operating margin, excluding acquisition and divestiture costs,
Russia/Belarus exit costs, and Business Solutions exit costs
(non-GAAP)
20.2
%
25.2
%
24.9
%
22.5
%
22.5
%
23.3
%
22.9
%
Operating margin, excluding acquisition and divestiture costs,
Russia/Belarus exit costs, and Business Solutions operating income
and exit costs (non-GAAP)(1)
N/A
N/A
N/A
N/A
21.8
%
23.3
%
22.6
%
(c)
Operating income (GAAP)
$
254.9
$
318.6
$
316.8
$
1,123.1
$
237.5
$
264.0
$
501.5
Depreciation and amortization
55.6
51.3
47.9
208.2
46.8
45.9
92.7
EBITDA (non-GAAP)
(l)
$
310.5
$
369.9
$
364.7
$
1,331.3
$
284.3
$
309.9
$
594.2
Operating margin (GAAP)
19.8
%
24.8
%
24.7
%
22.1
%
20.5
%
23.2
%
21.9
%
EBITDA margin (non-GAAP)
24.1
%
28.8
%
28.4
%
26.3
%
24.6
%
27.2
%
25.9
%
(d)
Net income (GAAP)
$
222.5
$
232.7
$
168.8
$
805.8
$
293.3
$
194.0
$
487.3
Acquisition and divestiture costs
(m)
5.6
5.5
3.7
15.7
3.3
0.9
4.2
Gain on investment sale
(n)
(47.9
)
—
—
(47.9
)
N/A
N/A
N/A
Debt extinguishment costs
(o)
14.8
—
—
14.8
N/A
N/A
N/A
Pension settlement charge
(p)
N/A
N/A
109.8
109.8
N/A
N/A
N/A
Business Solutions gain
(r)
N/A
N/A
N/A
N/A
(151.4
)
—
(151.4
)
Business Solutions exit costs
(s)
N/A
N/A
N/A
N/A
7.7
—
7.7
Russia/Belarus exit costs
(s)
N/A
N/A
N/A
N/A
11.0
0.2
11.2
Income tax expense from change in permanent reinvestment assertion
related to the sale of Business Solutions
(q)
N/A
18.1
(0.2
)
17.9
N/A
N/A
N/A
Income tax benefit from acquisition and divestiture costs
(m)
(1.3
)
(1.0
)
(0.7
)
(3.2
)
(0.7
)
(0.3
)
(1.0
)
Income tax expense from the gain on investment sale
(n)
8.3
1.5
1.1
10.9
N/A
N/A
N/A
Income tax benefit from debt extinguishment costs
(o)
(2.5
)
(0.5
)
(0.2
)
(3.2
)
N/A
N/A
N/A
Income tax benefit from pension settlement charge
(p)
N/A
N/A
(23.5
)
(23.5
)
N/A
N/A
N/A
Income tax expense from Business Solutions gain
(r)
N/A
N/A
N/A
N/A
42.0
2.9
44.9
Income tax benefit from Business Solutions exit costs
(s)
N/A
N/A
N/A
N/A
(1.2
)
(0.2
)
(1.4
)
Income tax benefit from Russia/Belarus exit costs
(s)
N/A
N/A
N/A
N/A
(1.4
)
(0.4
)
(1.8
)
Net income, adjusted (non-GAAP)
$
199.5
$
256.3
$
258.8
$
897.1
$
202.6
$
197.1
$
399.7
(e)
Effective tax rate (GAAP)
14
%
20
%
7
%
14
%
19
%
18
%
19
%
Change in permanent reinvestment assertion related to the sale of
Business Solutions
(q)
N/A
(6)
%
0
%
(2)
%
N/A
N/A
N/A
Acquisition and divestiture costs
(m)
0
%
0
%
0
%
0
%
0
%
0
%
0
%
Gain on investment sale
(n)
0
%
0
%
(1)
%
0
%
N/A
N/A
N/A
Debt extinguishment costs
(o)
0
%
0
%
0
%
0
%
N/A
N/A
N/A
Pension settlement charge
(p)
0
%
0
%
6
%
1
%
N/A
N/A
N/A
Business Solutions gain
(r)
N/A
N/A
N/A
N/A
(6)
%
(1)
%
(4)
%
Business Solutions exit costs
(s)
N/A
N/A
N/A
N/A
0
%
0
%
0
%
Russia/Belarus exit costs
(s)
N/A
N/A
N/A
N/A
0
%
0
%
0
%
Effective tax rate, adjusted (non-GAAP)
14
%
14
%
12
%
13
%
13
%
17
%
15
%
(f)
Diluted Earnings per Share (GAAP)
$
0.54
$
0.57
$
0.42
$
1.97
$
0.74
$
0.50
$
1.25
Pretax impacts from the following:
Acquisition and divestiture costs
(m)
0.01
0.01
0.01
0.03
0.01
—
0.01
Gain on investment sale
(n)
(0.12
)
—
—
(0.12
)
N/A
N/A
N/A
Debt extinguishment costs
(o)
0.04
—
—
0.04
N/A
N/A
N/A
Pension settlement charge
(p)
N/A
N/A
0.27
0.27
N/A
N/A
N/A
Business Solutions gain
(r)
N/A
N/A
N/A
N/A
(0.38
)
—
(0.39
)
Business Solutions exit costs
(s)
N/A
N/A
N/A
N/A
0.02
—
0.02
Russia/Belarus exit costs
(s)
N/A
N/A
N/A
N/A
0.02
—
0.02
Income tax expense/(benefit) impacts from the following:
Change in permanent reinvestment assertion related to the sale of
Business Solutions
(q)
N/A
0.05
—
0.04
N/A
N/A
N/A
Acquisition and divestiture costs
(m)
—
—
—
—
—
—
—
Gain on investment sale
(n)
0.02
—
—
0.03
N/A
N/A
N/A
Debt extinguishment costs
(o)
(0.01
)
—
—
(0.01
)
N/A
N/A
N/A
Pension settlement charge
(p)
N/A
N/A
(0.06
)
(0.06
)
—
N/A
N/A
Business Solutions gain
(r)
N/A
N/A
N/A
N/A
0.10
0.01
0.11
Business Solutions exit costs
(s)
N/A
N/A
N/A
N/A
—
—
—
Russia/Belarus exit costs
(s)
N/A
N/A
N/A
N/A
—
—
—
Diluted Earnings per share, adjusted (non-GAAP)
$
0.48
$
0.63
$
0.64
$
2.19
$
0.51
$
0.51
$
1.02
C2C Segment Metrics
(g)
Revenues (GAAP)
$
1,127.1
$
1,104.5
$
1,111.5
$
4,394.0
$
999.0
$
1,026.9
$
2,025.9
Foreign currency translation impact
(k)
(32.1
)
(9.4
)
6.2
(46.4
)
20.8
28.1
48.9
Revenues, constant currency (non-GAAP)
$
1,095.0
$
1,095.1
$
1,117.7
$
4,347.6
$
1,019.8
$
1,055.0
$
2,074.8
Prior year revenues (GAAP)
$
976.6
$
1,106.5
$
1,121.5
$
4,220.0
$
1,050.9
$
1,127.1
$
2,178.0
Revenues (GAAP) - YoY % change
15
%
0
%
(1)
%
4
%
(5)
%
(9)
%
(7)
%
Revenues, constant currency (non-GAAP) - YoY % change
12
%
(1)
%
0
%
3
%
(3)
%
(6)
%
(5)
%
(h)
Principal per transaction, as reported ($- dollars)
$
357
$
361
$
354
$
356
$
356
$
359
$
357
Foreign currency translation impact ($- dollars)
(k)
(10
)
(1
)
2
(4
)
8
13
11
Principal per transaction, constant currency ($- dollars)
$
347
$
360
$
356
$
352
$
364
$
372
$
368
Prior year principal per transaction, as reported ($- dollars)
$
322
$
348
$
341
$
331
$
353
$
357
$
355
Principal per transaction, as reported - YoY % change
11
%
4
%
4
%
8
%
1
%
0
%
1
%
Principal per transaction, constant currency - YoY % change
8
%
3
%
4
%
6
%
3
%
4
%
4
%
(i)
Cross-border principal, as reported ($- billions)
$
26.6
$
26.5
$
26.5
$
104.1
$
23.8
$
23.4
$
47.2
Foreign currency translation impact ($- billions)
(k)
(0.7
)
(0.2
)
0.2
(1.2
)
0.5
0.9
1.4
Cross-border principal, constant currency ($- billions)
$
25.9
$
26.3
$
26.7
$
102.9
$
24.3
$
24.3
$
48.6
Prior year cross-border principal, as reported ($- billions)
$
20.7
$
25.5
$
25.3
$
90.6
$
24.5
$
26.6
$
51.1
Cross-border principal, as reported - YoY % change
29
%
4
%
5
%
15
%
(3)
%
(12)
%
(8)
%
Cross-border principal, constant currency - YoY % change
25
%
3
%
5
%
14
%
(1)
%
(9)
%
(5)
%
Business Solutions Segment Metrics
(j)
Revenues (GAAP)
$
99.3
$
116.8
$
109.2
$
421.8
$
89.1
$
35.7
$
124.8
Foreign currency translation impact
(k)
(7.2
)
(3.1
)
0.0
(15.9
)
2.8
4.4
7.2
Revenues, constant currency (non-GAAP)
$
92.1
$
113.7
$
109.2
$
405.9
$
91.9
$
40.1
$
132.0
Prior year revenues (GAAP) $
79.4
$
89.1
$
89.2
$
356.1
$
96.5
$
99.3
$
195.8
Revenues (GAAP) - YoY % change
25
%
31
%
22
%
18
%
(8)
%
(64)
%
(36)
%
Revenues, constant currency (non-GAAP) - YoY % change
16
%
28
%
22
%
14
%
(5)
%
(60)
%
(33)
%
____________________
(1)
Concurrent with the sale in the
first quarter of 2022, the Business Solutions operating income has
been excluded. See tickmark (r) below for more information.
2022 Consolidated Outlook Metrics Notes
Range Operating margin (GAAP)
20.0
%
21.0
%
Impact from acquisition and divestiture costs (m)
0.0
%
0.0
%
Impact from the sale of Business Solutions, including exit costs
(r), (s)
(0.5)
%
(0.5)
%
Impact from Russia/Belarus exit costs (s)
0.5
%
0.5
%
Operating margin, adjusted, excluding acquisition and divestiture
costs, the sale of Business Solutions, including exit costs, and
Russia/Belarus exit costs (non-GAAP)
20.0
%
21.0
%
Range Earnings per share (GAAP) ($- dollars) $
2.18
$
2.28
Impact from acquisition and divestiture costs, net of related taxes
(m)
0.02
0.02
Gain on the sale of Business Solutions, net of related taxes (r)
(0.49
)
(0.49
)
Impact from Business Solutions exit costs, net of related taxes (s)
0.01
0.01
Impact from Russia/Belarus exit costs, net of related taxes (s)
0.03
0.03
Earnings per share, adjusted, excluding the acquisition and
divestiture costs, gain on the sale of Business Solutions, and exit
costs from Business Solutions and Russia/Belarus, net of related
taxes (non-GAAP) ($- dollars) $
1.75
$
1.85
Non-GAAP related notes:
(k)
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. The Company
believes that this measure provides management and investors with
information about revenue results and trends that eliminates
currency volatility while increasing the comparability of the
Company's underlying results and trends.
(l)
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.
(m)
Represents the impact from
expenses incurred in connection with the Company's acquisition and
divestiture activity, including for the review and closing of these
transactions. The Company believes that, by excluding the effects
of these charges that can impact operating trends, management and
investors are provided with a measure that increases the
comparability of the Company's underlying operating results.
(n)
On April 12, 2021, the Company
sold a substantial majority of the noncontrolling interest it held
in a private company for cash proceeds of $50.9 million. As a
result, the Company recorded a pre-tax gain in the second quarter
of 2021. The gain on the sale and the income taxes on the gain have
been removed from adjusted results. The Company believes excluding
the impact of this gain will provide investors with a more
meaningful comparison of results with the historical periods
presented.
(o)
On April 1, 2021, the Company
repaid $500 million of aggregate principal amount of 3.6% unsecured
notes due in 2022 and incurred approximately $14.8 million of
costs, excluding accrued interest, in connection with the
repayment. The cost associated with the repayment was recorded to
Other income/(expense), net, in the second quarter of 2021. The
costs associated with the payment and related tax benefit have been
removed from adjusted results. The Company believes excluding the
impact of this charge will provide investors with a more meaningful
comparison of results with the historical periods presented.
(p)
Represents the settlement charges
for the Company's defined benefit pension plan incurred in the
fourth quarter of 2021. On July 22, 2021, the Company's Board of
Directors approved a plan to terminate and settle this frozen
defined benefit plan, and during the fourth quarter of 2021, the
Company settled its obligations under the plan and transferred the
corresponding amount of plan assets to the insurer. The expenses
associated with the pension settlement were recorded to Pension
settlement charges within Total other income/(expense), net. The
Company believes excluding the impact of this charge will provide
investors with a more meaningful comparison of results with the
historical periods presented.
(q)
Represents the tax impact from
changes to certain of the Company's permanent reinvestment
assertions related to its decision to classify its Business
Solutions business as held for sale in 2021. The Company believes
excluding the impact of this charge will provide investors with a
more meaningful comparison of results with the historical periods
presented.
(r)
During 2021, the Company entered
into an agreement to sell its Business Solutions business to
Goldfinch Partners LLC and The Baupost Group LLC (collectively, the
"Buyer") for cash consideration of $910.0 million, subject to
regulatory and working capital adjustments. The sale will be
completed in two closings, the first of which occurred on March 1,
2022 with the entirety of the cash consideration collected and
allocated to the closings on a relative fair value basis. The first
closing excluded the operations in the European Union and the
United Kingdom and resulted in a gain of $151.4 million. The second
closing is currently expected to occur in the fourth quarter of
2022, pending regulatory approvals, at which time the remainder of
the gain will be recognized. Revenues have been adjusted to exclude
the carved out financial information for the Business Solutions
business to compare the year-over-year changes and trends in the
Company's continuing businesses, excluding the effects of this
divestiture. While the sale of the Company's Business Solutions
business does not qualify for or represent discontinued operations,
the Company has also adjusted operating income, beginning in the
first quarter of 2022 and concurrent with the sale, to exclude the
carved out direct profit of the Business Solutions business.
Between the first and second closing, the Company will continue to
record revenues and operating income for the European Union and
United Kingdom operations, but it will pay the Buyer a measure of
the profits from these operations, adjusted for other charges, as
contractually agreed, and this expense is recognized in Other
income/(expense), net. Therefore, the Company believes that
providing this information enhances investors' understanding of the
profitability of the Company's remaining businesses. The Company
has also excluded the gain on the sale, net of related taxes from
its first quarter 2022 results and the 2022 adjusted outlook, as
management believes that excluding the impact from the gain on sale
of the Business Solutions business will provide investors with a
clearer and more meaningful comparison of results in 2022 and
future periods. These financial measures are non-GAAP measures and
should not be considered a substitute for the GAAP measures.
(s)
Represents the exit costs
incurred in connection with the divestiture of the Business
Solutions business and the suspension of operations in Russia and
Belarus, primarily related to severance and non-cash impairments of
property and equipment, an operating lease right-of-use asset, and
other intangible assets. While certain of the expenses are
identifiable to the Company's segments, the expenses are not
included in the measurement of segment operating income provided to
the Chief Operating Decision Maker for purposes of performance
assessment and resource allocation. These expenses are therefore
excluded from the Company's segment operating income results. These
expenses have been excluded from operating income, the effective
tax rate, and diluted earnings per share, net of related taxes.
Additionally, the outlook metrics have been adjusted to exclude
these costs, net of related taxes where applicable. The Company
believes that, by excluding the effects of these charges that can
impact operating trends, management and investors are provided with
a measure that increases the comparability of the Company's
underlying operating results.
Other notes:
(aa)
Geographic split for transactions
and revenue, including transactions initiated digitally, as earlier
defined, 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 the Company's
Consumer-to-Consumer segment.
(cc)
Represents the Europe and the
Russia/Commonwealth of Independent States (“EU & CIS”) region
of the Company's Consumer-to-Consumer segment.
(dd)
Represents the Middle East,
Africa, and South Asia (“MEASA”) region of the Company's
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 the Company’s Consumer-to-Consumer
segment, including Mexico.
(ff)
Represents the East Asia and
Oceania (“APAC”) region of the Company’s Consumer-to-Consumer
segment.
(gg)
Represents transactions conducted
and funded through websites and mobile applications marketed under
the Company’s brands (“westernunion.com”).
(hh)
Represents revenue from
transactions conducted and funded through westernunion.com and
transactions initiated on websites and mobile applications hosted
by the Company's third-party white label or co-branded digital
partners.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220802006143/en/
Media Relations: Claire Treacy media@westernunion.com
Investor Relations: Tom Hadley
WesternUnion.IR@westernunion.com
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