- Revenue trends expected to improve annually over the next 3
years
- Operating margins expected to be in a range of approximately
19% to 21%
- Earnings per share (EPS) mid-single digit growth expected in
2024 and 2025
The Western Union Company (NYSE: WU) (the “Company”) will host a
meeting with investors and analysts today where it will detail the
Company’s Evolve 2025 strategy that connects to its purpose by
bringing high-value, accessible financial services to the world’s
aspiring populations.
“We’re excited to introduce our new strategy for this iconic
171-year-old company, which builds upon our existing set of assets
including our global and trusted brand, our retail network of
nearly 600,000 agent locations, and our strong compliance
capabilities,” said Devin McGranahan, President and Chief Executive
Officer.
McGranahan added, “At the heart of our new strategy is
evolution. Our new strategy is designed to enhance the products and
services we provide to our customers. It will leverage the strong
foundation we have built to create a more meaningful relationship
with our customers by providing essential financial services
outside of money transfer.”
Three-Year Financial
Outlook
Today, the Company has provided a 3-year financial outlook
reflecting its new long-term strategy. As the strategy begins to
take hold, the Company expects revenue trends to improve annually
starting in 2023 through 2025.
In 2023, the Company anticipates impacts to results related to
the sale of Business Solutions, the loss of two key agents in
Europe (the first will take effect in the fourth quarter of 2022
and the second will take effect in the second quarter of 2023), its
decision to suspend operations in Russia and Belarus, and foreign
exchange related to the continued strengthening of the U.S. dollar.
As a result, the Company preliminarily expects the following in
2023:
Outlook: 2023
Revenue
GAAP: in a range of approximately
-10% to -8% Adjusted (constant currency, excluding the impact of
Argentina inflation and proforma for the planned sale of Business
Solutions): in a range of approximately -4% to -2%
Operating Profit Margin1
GAAP and Adjusted: a range of 19%
to 21%
EPS1
GAAP and Adjusted: $1.55 to
$1.65
In 2024 and 2025, the Company expects the following:
Outlook: 2024 to 2025
Revenue
2% revenue growth by 2025, including
annual improvement beginning in 2023
Operating Profit Margin
A range of 19% to 21%
EPS
Mid-single digit growth
____________________
1
As part of the strategy, the
Company has implemented an operational efficiency program, which
aims to redeploy approximately $150 million in expenses in the
current cost base over the next 5 years accomplished through
optimizations in vendor spend, real estate, marketing, and people
costs. The timing and pace of redeployment may vary, and the
Company will provide an update during its fourth quarter and full
year results 2022 earnings call.
2022 Investor Day
Webcast
The event will begin on October 20, 2022, at 9:00 a.m. Eastern
Time and conclude at approximately 12:30 p.m. Eastern Time. A live
webcast and presentation will be available at
https://ir.westernunion.com. Registration for the event is
required, so please register at least 15 minutes prior to the
scheduled start time. A webcast replay will be available shortly
after the event.
Outlook Adjustment Items
Adjusted constant currency revenue growth metrics for 2023
exclude contributions from Business Solutions. Adjusted operating
profit metrics for 2023 exclude contributions from Business
Solutions and acquisition and divestiture costs. Earnings per share
metrics for 2023 exclude the following items and the related taxes,
as applicable: the gain on sale of Business Solutions and
acquisition and divestiture costs.
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.
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," "projects,"
"designed to," 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 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 in the European Union and the California
Consumer Privacy Act; failure to comply with the Dodd-Frank Wall
Street Reform and Consumer Protection Act, as well as regulations
issued pursuant to it and the actions of the Consumer Financial
Protection Bureau and similar legislation and regulations enacted
by other governmental authorities 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 NON-GAAP
FINANCIAL MEASURES (Unaudited)
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.
2022 Investor Day Reconciliation of
Non-GAAP to GAAP Financial Measures - 2023 Outlook
2023 Consolidated Outlook
Metrics
Notes
Range
Revenues (GAAP) - YoY % Change
(10
)%
(8
)%
Foreign currency translation impact
(a)
2
%
2
%
Impact from the sale of Business
Solutions
(b)
4
%
4
%
Revenues, constant currency, excluding
Business Solutions (non-GAAP) - YoY % Change
(4
)%
(2
)%
Notes
Range
Operating margin (GAAP)
19.0
%
21.0
%
Impact from acquisition and divestiture
costs
(c)
—
—
Impact from the sale of Business
Solutions
(b)
—
—
Operating margin, adjusted, excluding
acquisition and divestiture costs and the sale of Business
Solutions (non-GAAP)
19.0
%
21.0
%
Range
Earnings per share (GAAP) ($- dollars)
$
1.55
$
1.65
Impact from acquisition and divestiture
costs
(c)
—
—
Earnings per share, adjusted, excluding
the acquisition and divestiture costs (non-GAAP) ($- dollars)
$
1.55
$
1.65
THE WESTERN UNION COMPANY NOTES TO
NON-GAAP FINANCIAL MEASURES (Unaudited)
Non-GAAP related notes:
(a)
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.
(b)
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 three closings, the first of which occurred on March
1, 2022 with the entirety of the cash consideration collected at
that time 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 on
December 1, 2022, and includes the United Kingdom operations. The
third closing, which includes the European Union operations, is
currently expected in the first quarter of 2023, pending regulatory
approvals. 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. During the period
between the first and third closings, 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. These
financial measures are non-GAAP measures and should not be
considered a substitute for the GAAP measures.
(c)
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221019006126/en/
Media Relations: Claire Treacy media@westernunion.com
Investor Relations: Tom Hadley
WesternUnion.IR@westernunion.com
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