- Q2 GAAP revenue of $1.17 billion grew 3% on a reported
basis, or 9% on an adjusted basis
- Q2 GAAP EPS of $0.47, a decrease of 6% year-over-year; Q2
adjusted EPS of $0.51, flat year-over-year
- C2C transactions accelerated and grew 4%, supported by 12%
branded digital transaction growth, and improving retail
transaction trends
- Company raises full-year 2023 outlook
The Western Union Company (the “Company”) (NYSE: WU) today
reported second quarter 2023 results.
The Company’s second-quarter revenue of $1.17 billion grew 3% on
a reported basis, or 9% on a constant currency basis excluding the
contribution from Business Solutions, compared to the prior year
period. Argentinian inflation benefited revenue by approximately
three percentage points. A revenue increase in Iraq was partially
offset by investments in the Company’s ‘Evolve 2025’ strategy.
“Our progress continued into the second quarter, with strong
results that exceeded our expectations,” said Devin McGranahan,
President and Chief Executive Officer of Western Union. “Growth in
our C2C transactions was the highest since 2021, primarily driven
by our branded digital go-to-market program. We also experienced an
increase in revenue from Iraq arising from prior changes in Iraqi
monetary policies.”
McGranahan added, “These results reflect the advancement of our
‘Evolve 2025’ strategy and demonstrate continued momentum building
across channels and geographies.”
GAAP EPS in the second quarter was $0.47 compared to $0.50 in
the prior year period. The year-over-year decrease was due to lower
operating profit, including costs related to the Company’s
operating expense redeployment program in the current period.
Adjusted EPS in the second quarter was $0.51 and flat compared to
the prior year period, with the current year period benefiting from
a lower share count and a lower adjusted effective tax rate,
partially offset by lower pre-tax profit.
Q2 Business Results
- C2C revenues grew 4% on a reported basis, or 5% constant
currency, while transactions increased 4% compared to the prior
year period. Regionally, revenue growth was driven by MEASA, due to
Iraq, LACA, and sequential improvements in Europe & CIS, North
America, and APAC.
- Branded digital revenue declined 2% on a reported and constant
currency basis, and represented 21% and 28% of total C2C revenues
and transactions, respectively. Transactions accelerated and grew
12% in the quarter driven by the Company’s updated go-to-market
strategy.
- On July 1, 2023, the Company completed the third and final
closing of its Business Solutions business, which included the
European Union operations. The gain associated with the final
closing, continues to be subject to regulatory capital adjustments.
All cash consideration was received at the first closing.
Q2 Financial Results
- GAAP operating margin in the quarter was 20.7%, compared to
23.2% in the prior year period. The adjusted operating margin was
21.8% compared to 23.3% in the prior year period. The decrease in
the adjusted operating margin was primarily due to currency
impacts, higher incentive compensation, higher variable costs, and
investments related to the Company’s ‘Evolve 2025’ strategy,
partially offset by lower marketing spend and net savings related
to the Company’s operating expense redeployment program.
- The GAAP effective tax rate in the quarter was 18.6%, compared
to 17.9% in the prior year period. The adjusted effective tax rate
was 16.0% in the quarter, compared to 16.9% in the prior year
period.
- Year-to-date, cash flow from operating activities was $264
million, including a $119 million transition tax payment in the
second quarter related to the 2017 U.S. Tax Cuts and Jobs Act. The
Company returned $88 million to shareholders in the second quarter
through dividends.
2023 Outlook
Today, the Company raised its 2023 full-year revenue and EPS
outlook due primarily to business performance in Iraq. The outlook
assumes no material changes in macroeconomic conditions, including
changes in foreign currencies or Argentinian inflation.
The 2023 outlook is as follows:
Revised 2023 Outlook
Previous 2023 Outlook
GAAP
Adjusted
GAAP
Adjusted
Revenue1
(5%) to (3%)
(1%) to 1%
(9%) to (7%)
(4%) to (2%)
Operating Margin
18% to 20%
19% to 21%
18% to 20%
19% to 21%
EPS
$1.63 to $1.73
$1.65 to $1.75
$1.53 to $1.63
$1.55 to $1.65
1 Adjusted revenue excludes currency
impact, Argentinian Inflation, and Business Solutions
The Company has been in regular discussions with policymakers in
both the U.S. and Iraq about the elevated remittance volumes
flowing through its network in Iraq during the second quarter. Due
to recent U.S. government actions, including those announced on
July 19, 2023, impacting fourteen Iraqi banks, some of whom were
the Company’s agents, the ongoing and future application of the
Company’s own compliance and risk controls, and future regulatory
and policy changes, the Company expects these volumes to be
significantly lower going forward. As a result, the Company has not
included any of the elevated remittance volume from Iraq in its
outlook after July.
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.
GAAP figures reflect an expected partial year of Business
Solutions ownership, including contractual payments to the buyers,
representing profits between the first and third closings. Adjusted
constant currency revenue growth metrics exclude contributions from
Business Solutions. Adjusted operating profit metrics exclude the
following items, as applicable: contributions from Business
Solutions, operating expense redeployment program costs,
acquisition and separation costs, and Russia and Belarus exit
costs. Adjusted effective tax rate and adjusted earnings per share
metrics exclude the following items and the related taxes, as
applicable: Business Solutions gain, operating expense redeployment
program costs, acquisition and separation costs, Russia and Belarus
exit costs, and the reversal of significant uncertain tax
positions.
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.
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 Presentation
The Company will host a conference call and webcast at 4:30 p.m.
ET today.
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 shortly
after the event.
To listen to the conference call via telephone in the U.S., dial
+1 (719) 359-4580 fifteen minutes prior to the start of the call,
followed by the meeting ID, which is 910 5837 9984 and the
passcode, which is 534903. To listen to the conference call via
telephone outside the U.S., dial the country number from the
international directory, followed by the meeting ID, which is 910
5837 9984 and the passcode, which is 534903.
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 (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, 2022. 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 or customer experience, 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 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; our ability to attract and retain
qualified key employees and to manage our workforce successfully;
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; 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,
immigration, and sustainability reporting including climate-related
reporting; 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; 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 committed to helping
people around the world who aspire to build financial futures for
themselves, their loved ones and their communities. Our leading
cross-border, cross-currency money movement, payments and digital
financial services empower consumers, businesses, financial
institutions and governments—across more than 200 countries and
territories and nearly 130 currencies—to connect with billions of
bank accounts, millions of digital wallets and cards, and a global
footprint of hundreds of thousands of retail locations. Our goal is
to offer accessible financial services that help people and
communities prosper. For more information, visit
www.westernunion.com.
WU-G
THE WESTERN UNION
COMPANY
KEY STATISTICS
(Unaudited)
Notes*
2Q22
3Q22
4Q22
FY2022
1Q23
2Q23
YTD 2Q23
Consolidated Metrics Revenues (GAAP) - YoY % change
(12)%
(15)%
(15)%
(12)%
(10)%
3%
(4)%
Adjusted revenues (non-GAAP) - YoY % change
(a)
(4)%
(6)%
(6)%
(4)%
(1)%
9%
4%
Operating margin (GAAP)
23.2%
21.3%
13.9%
19.8%
19.7%
20.7%
20.3%
Adjusted operating margin (non-GAAP)
(b)
23.3%
20.6%
15.8%
20.4%
20.5%
21.8%
21.2%
Adjusted EBITDA margin (non-GAAP)
(b)
27.5%
24.9%
20.2%
24.7%
25.1%
25.7%
25.4%
Consumer-to-Consumer (C2C) Segment Metrics
Revenues (GAAP) - YoY % change
(9)%
(11)%
(11)%
(9)%
(6)%
4%
(1)%
Adjusted revenues (non-GAAP) - YoY % change
(f)
(6)%
(8)%
(9)%
(6)%
(5)%
5%
0%
Transactions (in millions)
68.2
66.9
69.3
274.1
65.3
70.6
135.9
Transactions - YoY % change
(13)%
(12)%
(12)%
(10)%
(6)%
4%
(1)%
Cross-border principal, as reported - YoY % change
(12)%
(13)%
(12)%
(10)%
(3)%
17%
7%
Cross-border principal (constant currency) - YoY % change
(g)
(9)%
(9)%
(9)%
(7)%
(1)%
18%
8%
Operating margin
22.0%
19.7%
14.1%
19.2%
18.9%
21.5%
20.3%
Branded Digital revenues (GAAP) - YoY % change
(gg)
(1)%
(8)%
(8)%
(3)%
(7)%
(2)%
(5)%
Branded Digital foreign currency translation impact
(i)
2%
3%
2%
2%
1%
0%
1%
Adjusted Branded Digital revenues (non-GAAP) - YoY % change
(gg)
1%
(5)%
(6)%
(1)%
(6)%
(2)%
(4)%
Branded Digital transactions - YoY % change
(gg)
(3)%
(1)%
2%
0%
7%
12%
9%
C2C Segment Regional Metrics - YoY % change
NA region revenues (GAAP)
(aa), (bb)
(2)%
(5)%
(7)%
(4)%
(8)%
(8)%
(8)%
NA region foreign currency translation impact
(i)
0%
0%
0%
0%
0%
1%
0%
Adjusted NA region revenues (non-GAAP)
(aa), (bb)
(2)%
(5)%
(7)%
(4)%
(8)%
(7)%
(8)%
NA region transactions
(aa), (bb)
(6)%
(5)%
(2)%
(5)%
1%
4%
3%
EU & CIS region revenues (GAAP)
(aa), (cc)
(21)%
(23)%
(23)%
(20)%
(16)%
(12)%
(14)%
EU & CIS region foreign currency translation impact
(i)
5%
7%
6%
5%
3%
2%
2%
Adjusted EU & CIS region revenues (non-GAAP)
(aa), (cc)
(16)%
(16)%
(17)%
(15)%
(13)%
(10)%
(12)%
EU & CIS region transactions
(aa), (cc)
(30)%
(32)%
(31)%
(25)%
(23)%
(1)%
(13)%
MEASA region revenues (GAAP)
(aa), (dd)
(4)%
(5)%
(9)%
(4)%
5%
66%
35%
MEASA region foreign currency translation impact
(i)
1%
2%
2%
2%
1%
1%
1%
Adjusted MEASA region revenues (non-GAAP)
(aa), (dd)
(3)%
(3)%
(7)%
(2)%
6%
67%
36%
MEASA region transactions
(aa), (dd)
(3)%
(1)%
(5)%
(1)%
(3)%
8%
3%
LACA region revenues (GAAP)
(aa), (ee)
2%
0%
11%
4%
15%
6%
10%
LACA region foreign currency translation impact
(i)
2%
4%
2%
3%
2%
2%
3%
Adjusted LACA region revenues (non-GAAP)
(aa), (ee)
4%
4%
13%
7%
17%
8%
13%
LACA region transactions
(aa), (ee)
4%
3%
8%
5%
9%
8%
9%
APAC region revenues (GAAP)
(aa), (ff)
(10)%
(16)%
(20)%
(13)%
(8)%
(7)%
(7)%
APAC region foreign currency translation impact
(i)
4%
5%
6%
4%
3%
3%
3%
Adjusted APAC region revenues (non-GAAP)
(aa), (ff)
(6)%
(11)%
(14)%
(9)%
(5)%
(4)%
(4)%
APAC region transactions
(aa), (ff)
(11)%
(11)%
(12)%
(12)%
(2)%
1%
(1)%
% of C2C Revenue
NA region revenues
(aa), (bb)
40%
40%
39%
40%
38%
35%
37%
EU & CIS region revenues
(aa), (cc)
28%
28%
27%
28%
26%
24%
25%
MEASA region revenues
(aa), (dd)
16%
16%
16%
16%
19%
26%
22%
LACA region revenues
(aa), (ee)
10%
10%
12%
10%
11%
10%
10%
APAC region revenues
(aa), (ff)
6%
6%
6%
6%
6%
5%
6%
Branded Digital revenues
(aa), (gg)
22%
21%
21%
22%
22%
21%
21%
Other (primarily bill payments businesses in Argentina and the
United States and money orders)
Revenues (GAAP) - YoY % change
19%
0%
20%
12%
23%
10%
16%
Operating margin
40.1%
33.4%
35.5%
35.4%
38.6%
22.0%
30.3%
% of Total Company Revenue (GAAP)
Consumer-to-Consumer segment revenues
90%
90%
90%
89%
91%
92%
91%
Business Solutions segment revenues
3%
4%
3%
5%
1%
1%
1%
Other revenues
7%
6%
7%
6%
8%
7%
8%
____________________ * 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,
2023
2022
% Change
2023
2022
% Change
Revenues $
1,170.0
$
1,138.3
3
%
$
2,206.9
$
2,294.0
(4)
%
Expenses: Cost of services
698.9
653.0
7
%
1,328.4
1,308.1
2
%
Selling, general, and administrative
228.5
221.3
3
%
431.2
484.4
(11)
%
Total expenses
927.4
874.3
6
%
1,759.6
1,792.5
(2)
%
Operating income
242.6
264.0
(8)
%
447.3
501.5
(11)
%
Other income/(expense): Gain on divestiture of business (a)
—
—
(b)
—
151.4
(b)
Interest income
4.2
1.8
(b)
7.4
2.4
(b)
Interest expense
(27.0
)
(24.8
)
9
%
(52.0
)
(49.6
)
5
%
Other expense, net
(3.4
)
(4.8
)
(30)
%
(5.3
)
(7.3
)
(26)
%
Total other income/(expense), net
(26.2
)
(27.8
)
(6)
%
(49.9
)
96.9
(b)
Income before income taxes
216.4
236.2
(8)
%
397.4
598.4
(34)
%
Provision for income taxes
40.2
42.2
(5)
%
69.4
111.1
(38)
%
Net income $
176.2
$
194.0
(9)
%
$
328.0
$
487.3
(33)
%
Earnings per share: Basic $
0.47
$
0.50
(6)
%
$
0.88
$
1.25
(30)
%
Diluted $
0.47
$
0.50
(6)
%
$
0.87
$
1.25
(30)
%
Weighted-average shares outstanding: Basic
375.0
386.7
374.7
389.9
Diluted
375.6
387.6
375.6
391.0
____________________
(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").
(b)
Calculation not meaningful.
THE WESTERN UNION
COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in millions, except per share
amounts)
June 30,
December 31,
2023
2022
Assets Cash and cash equivalents $
1,585.9
$
1,285.9
Settlement assets
3,328.1
3,486.8
Property and equipment, net of accumulated depreciation of $449.7
and $512.8, respectively
96.3
109.6
Goodwill
2,034.6
2,034.6
Other intangible assets, net of accumulated amortization of $655.7
and $616.3, respectively
430.3
457.9
Other assets
771.6
859.9
Assets held for sale (a)
240.6
261.6
Total assets $
8,487.4
$
8,496.3
Liabilities and stockholders' equity Liabilities: Accounts
payable and accrued liabilities $
418.2
$
464.0
Settlement obligations
3,328.1
3,486.8
Income taxes payable
635.4
725.3
Deferred tax liability, net
153.9
158.5
Borrowings
2,813.0
2,616.8
Other liabilities
350.8
384.6
Liabilities associated with assets held for sale (a)
161.5
182.5
Total liabilities
7,860.9
8,018.5
Stockholders' equity: Preferred stock, $1.00 par value; 10
shares authorized; no shares issued
—
—
Common stock, $0.01 par value; 2,000 shares authorized; 374.5
shares and 373.5 shares issued and outstanding as of June 30, 2023
and December 31, 2022, respectively
3.7
3.7
Capital surplus
1,013.6
995.9
Accumulated deficit
(210.4
)
(353.9
)
Accumulated other comprehensive loss
(180.4
)
(167.9
)
Total stockholders' equity
626.5
477.8
Total liabilities and stockholders' equity $
8,487.4
$
8,496.3
____________________
(a)
Includes balances associated with
the Company’s Business Solutions business, which were held for sale
as of June 30, 2023 and December 31, 2022, respectively.
THE WESTERN UNION
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
Six Months Ended
June 30,
2023
2022
Cash flows from operating activities Net income $
328.0
$
487.3
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
20.1
22.6
Amortization
72.4
70.1
Gain on divestiture of business, excluding transaction costs
—
(155.8
)
Other non-cash items, net
35.6
32.8
Increase/(decrease) in cash, excluding the effects of divestitures,
resulting from changes in: Other assets
(52.7
)
(131.2
)
Accounts payable and accrued liabilities
(52.0
)
19.6
Income taxes payable
(86.4
)
(20.5
)
Other liabilities
(1.0
)
(18.1
)
Net cash provided by operating activities
264.0
306.8
Cash flows from investing activities Payments for
capitalized contract costs
(32.9
)
(26.3
)
Payments for internal use software
(46.0
)
(42.7
)
Purchases of property and equipment
(11.2
)
(15.3
)
Purchases of settlement investments
(198.3
)
(495.3
)
Proceeds from the sale of settlement investments
66.8
290.2
Maturities of settlement investments
54.3
84.4
Purchases of non-settlement investments
—
(400.0
)
Proceeds from the sale of non-settlement investments
100.0
—
Proceeds from divestiture, net of cash divested
—
896.4
Other investing activities
2.2
0.9
Net cash provided by/(used in) investing activities
(65.1
)
292.3
Cash flows from financing activities Cash dividends and
dividend equivalents paid
(178.7
)
(184.8
)
Common stock repurchased
(6.0
)
(185.5
)
Net proceeds from/(repayments of) commercial paper
494.6
(15.0
)
Principal payments on borrowings
(300.0
)
(300.0
)
Proceeds from exercise of options
0.3
9.4
Net change in settlement obligations
(619.8
)
(112.1
)
Other financing activities
0.1
—
Net cash used in financing activities
(609.5
)
(788.0
)
Net change in cash and cash equivalents, including settlement, and
restricted cash
(410.6
)
(188.9
)
Cash and cash equivalents, including settlement, and restricted
cash at beginning of period
2,040.7
2,110.9
Cash and cash equivalents, including settlement, and restricted
cash at end of period $
1,630.1
$
1,922.0
June 30,
2023
2022
Reconciliation of balance sheet cash and cash equivalents to
cash flows: Cash and cash equivalents on balance sheet $
1,585.9
$
1,201.9
Settlement cash and cash equivalents
11.1
602.7
Restricted cash in Other assets
33.1
40.4
Cash and cash equivalents included in Assets held for sale
—
77.0
Cash and cash equivalents, including settlement, and restricted
cash at end of period $
1,630.1
$
1,922.0
THE WESTERN UNION COMPANY SUMMARY SEGMENT DATA
(Unaudited) (in millions, unless indicated otherwise)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
Revenues: Consumer-to-Consumer $
1,072.2
$
1,026.9
4
%
$
2,010.5
$
2,025.9
(1)
%
Business Solutions (a)
14.3
35.7
(60)
%
29.7
124.8
(76)
%
Other (b)
83.5
75.7
10
%
166.7
143.3
16
%
Total consolidated revenues $
1,170.0
$
1,138.3
3
%
$
2,206.9
$
2,294.0
(4)
%
Segment operating income: Consumer-to-Consumer $
230.7
$
225.6
2
%
$
408.5
$
432.8
(6)
%
Business Solutions (a)
1.8
8.3
(79)
%
3.7
35.8
(90)
%
Other (b)
18.4
30.3
(39)
%
50.5
51.8
(3)
%
Total segment operating income
250.9
264.2
(5)
%
462.7
520.4
(11)
%
Russia/Belarus exit costs (c)
—
(0.2
)
(e)
—
(11.2
)
(e)
Business Solutions exit costs (c)
—
—
(e)
—
(7.7
)
(e)
Operating expense redeployment program costs (d)
(8.3
)
—
(e)
(15.4
)
—
(e)
Total consolidated operating income $
242.6
$
264.0
(8)
%
$
447.3
$
501.5
(11)
%
Segment operating income margin Consumer-to-Consumer
21.5
%
22.0
%
(0.5)
%
20.3
%
21.4
%
(1.1)
%
Business Solutions (a)
12.1
%
23.5
%
(11.4)
%
12.4
%
28.7
%
(16.3)
%
Other (b)
22.0
%
40.1
%
(18.1)
%
30.3
%
36.1
%
(5.8)
%
____________________
(a)
On August 4, 2021, the Company
entered into an agreement to sell its Business Solutions business
to the Buyer. The sale was completed in three closings, the first
of which occurred on March 1, 2022. The second occurred on December
31, 2022 and the final occurred on July 1, 2023. The remaining
operations of the Business Solutions business were included in
Revenues and Operating income until closing. During the period
between the first and final closings, the Company was required to
pay the Buyer a measure of profit from these operations, while
owned by the Company, adjusted for other charges, as contractually
agreed, which was included in Other 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)
Represents the exit costs
incurred in connection with the suspension of operations in Russia
and Belarus and the divestiture of the Business Solutions business.
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.
(d)
Represents severance, expenses
associated with streamlining the Company's organizational and legal
structure, and other expenses associated with the Company's program
to redeploy expenses in its cost base through optimizations in
vendor management, real estate, marketing, and people strategy, as
previously announced in October 2022.
(e)
Calculation not meaningful.
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 within this press release and related tables
provide meaningful supplemental information regarding the Company’s
results to assist management, investors, analysts, and others in
understanding the Company’s financial results and to better analyze
operating, profitability, and other financial performance trends in
the Company’s underlying business because they provide consistency
and comparability to prior periods or eliminate currency
volatility, increasing the comparability of the Company's
underlying results and trends.
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
2Q22
3Q22
4Q22
FY2022
1Q23
2Q23
YTD 2Q23
Consolidated Metrics
(a)
Revenues (GAAP) $
1,138.3
$
1,089.6
$
1,091.9
$
4,475.5
$
1,036.9
$
1,170.0
$
2,206.9
Foreign currency translation impact
(i)
42.1
60.8
49.4
185.5
35.2
40.6
75.8
Revenues, constant currency (non-GAAP)
1,180.4
1,150.4
1,141.3
4,661.0
1,072.1
1,210.6
2,282.7
Less Business Solutions revenues, constant currency (non-GAAP)
(i), (l)
(40.1
)
(50.4
)
(34.0
)
(216.4
)
(16.0
)
(13.9
)
(29.9
)
Adjusted revenues (non-GAAP)
$
1,140.3
$
1,100.0
$
1,107.3
$
4,444.6
$
1,056.1
$
1,196.7
$
2,252.8
Prior year revenues (GAAP)
$
1,289.7
$
1,286.3
$
1,284.8
$
5,070.8
$
1,155.7
$
1,138.3
$
2,294.0
Less prior year revenues from Business Solutions (GAAP)
(l)
(99.3
)
(116.8
)
(109.2
)
(421.8
)
(89.1
)
(35.7
)
(124.8
)
Adjusted prior year revenues (non-GAAP)
$
1,190.4
$
1,169.5
$
1,175.6
$
4,649.0
$
1,066.6
$
1,102.6
$
2,169.2
Revenues (GAAP) - YoY % change
(12)
%
(15)
%
(15)
%
(12)
%
(10)
%
3
%
(4)
%
Revenues, constant currency (non-GAAP) - YoY% change
(8)
%
(11)
%
(11)
%
(8)
%
(7)
%
6
%
0
%
Adjusted revenues (non-GAAP) - YoY % change
(4)
%
(6)
%
(6)
%
(4)
%
(1)
%
9
%
4
%
(b)
Operating income (GAAP)
$
264.0
$
231.8
$
151.6
$
884.9
$
204.7
$
242.6
$
447.3
Acquisition and separation costs
(k)
0.9
0.4
1.6
13.9
—
2.4
2.4
Russia/Belarus exit costs
(m)
0.2
(0.6
)
(0.6
)
10.0
—
—
—
Operating expense redeployment program costs
(o)
N/A
N/A
21.8
21.8
7.1
8.3
15.4
Less Business Solutions operating income
(l)
(7.9
)
(15.6
)
(6.6
)
(56.6
)
(1.9
)
(1.7
)
(3.6
)
Adjusted operating income (non-GAAP)
$
257.2
$
216.0
$
167.8
$
874.0
$
209.9
$
251.6
$
461.5
Depreciation and amortization
45.9
44.7
46.4
183.8
46.6
45.9
92.5
Adjusted EBITDA (non-GAAP)
(j)
$
303.1
$
260.7
$
214.2
$
1,057.8
$
256.5
$
297.5
$
554.0
Operating margin (GAAP)
23.2
%
21.3
%
13.9
%
19.8
%
19.7
%
20.7
%
20.3
%
Adjusted operating margin (non-GAAP)
23.3
%
20.6
%
15.8
%
20.4
%
20.5
%
21.8
%
21.2
%
Adjusted EBITDA margin (non-GAAP)
27.5
%
24.9
%
20.2
%
24.7
%
25.1
%
25.7
%
25.4
%
(c)
Net income (GAAP)
$
194.0
$
173.9
$
249.4
$
910.6
$
151.8
$
176.2
$
328.0
Acquisition and separation costs
(k)
0.9
0.4
1.6
13.9
—
2.4
2.4
Business Solutions gain
(l)
—
—
(96.9
)
(248.3
)
—
—
—
Russia/Belarus exit costs
(m)
0.2
(0.6
)
(0.6
)
10.0
—
—
—
Operating expense redeployment program costs
(o)
N/A
N/A
21.8
21.8
7.1
8.3
15.4
Income tax benefit from reversal of significant uncertain tax
positions
(n)
N/A
(13.2
)
(68.5
)
(81.7
)
—
—
—
Income tax expense from other adjustments
(k), (l), (m), (o)
2.0
3.0
14.7
58.4
3.7
3.8
7.5
Adjusted net income (non-GAAP)
$
197.1
$
163.5
$
121.5
$
684.7
$
162.6
$
190.7
$
353.3
(d)
Effective tax rate (GAAP)
18
%
10
%
(15)
%
10
%
16
%
19
%
17
%
Reversal of significant uncertain tax positions
(n)
N/A
7
%
32
%
8
%
0
%
0
%
0
%
Other adjustments
(k), (l), (m), (o)
(1)
%
(2)
%
(2)
%
(3)
%
(2)
%
(3)
%
(2)
%
Adjusted effective tax rate (non-GAAP)
17
%
15
%
15
%
15
%
14
%
16
%
15
%
(e)
Diluted earnings per share (GAAP) ($- dollars)
$
0.50
$
0.45
$
0.65
$
2.34
$
0.40
$
0.47
$
0.87
Pretax impacts from the following:
Acquisition and separation costs
(k)
—
—
—
0.03
—
0.01
0.01
Business Solutions gain
(l)
—
—
(0.25
)
(0.64
)
—
—
—
Russia/Belarus exit costs
(m)
—
—
—
0.03
—
—
—
Operating expense redeployment program costs
(o)
N/A
N/A
0.06
0.06
0.02
0.02
0.04
Income tax expense/(benefit) impacts from the following:
Reversal of significant uncertain tax positions
(n)
N/A
(0.03
)
(0.18
)
(0.21
)
—
—
—
Other adjustments
(k), (l), (m), (o)
0.01
—
0.04
0.15
0.01
0.01
0.02
Adjusted diluted earnings per share (non-GAAP) ($- dollars)
$
0.51
$
0.42
$
0.32
$
1.76
$
0.43
$
0.51
$
0.94
C2C Segment Metrics
(f)
Revenues (GAAP)
$
1,026.9
$
982.4
$
985.2
$
3,993.5
$
938.3
$
1,072.2
$
2,010.5
Foreign currency translation impact
(i)
28.1
37.1
30.9
116.9
13.8
8.5
22.3
Revenues, constant currency (non-GAAP)
$
1,055.0
$
1,019.5
$
1,016.1
$
4,110.4
$
952.1
$
1,080.7
$
2,032.8
Prior year revenues (GAAP)
$
1,127.1
$
1,104.5
$
1,111.5
$
4,394.0
$
999.0
$
1,026.9
$
2,025.9
Revenues (GAAP) - YoY % change
(9)
%
(11)
%
(11)
%
(9)
%
(6)
%
4
%
(1)
%
Adjusted revenues (non-GAAP) - YoY % change
(6)
%
(8)
%
(9)
%
(6)
%
(5)
%
5
%
0
%
(g)
Cross-border principal, as reported ($- billions)
$
23.4
$
23.0
$
23.4
$
93.6
$
23.0
$
27.5
$
50.5
Foreign currency translation impact
(i)
0.9
1.1
0.8
3.3
0.5
0.0
0.5
Cross-border principal, constant currency ($- billions)
$
24.3
$
24.1
$
24.2
$
96.9
$
23.5
$
27.5
$
51.0
Prior year cross-border principal, as reported ($- billions)
$
26.6
$
26.5
$
26.5
$
104.1
$
23.8
$
23.4
$
47.2
Cross-border principal, as reported - YoY % change
(12)
%
(13)
%
(12)
%
(10)
%
(3)
%
17
%
7
%
Cross-border principal, constant currency - YoY % change
(9)
%
(9)
%
(9)
%
(7)
%
(1)
%
18
%
8
%
Business Solutions Segment Metrics
(h)
Revenues (GAAP)
$
35.7
$
42.6
$
29.5
$
196.9
$
15.4
$
14.3
$
29.7
Foreign currency translation impact
(i)
4.4
7.8
4.5
19.5
0.6
(0.4
)
0.2
Revenues, constant currency (non-GAAP) $
40.1
$
50.4
$
34.0
$
216.4
$
16.0
$
13.9
$
29.9
Prior year revenues (GAAP) $
99.3
$
116.8
$
109.2
$
421.8
$
89.1
$
35.7
$
124.8
Revenues (GAAP) - YoY % change
(64)
%
(63)
%
(73)
%
(53)
%
(83)
%
(60)
%
(76)
%
Adjusted revenues (non-GAAP) - YoY % change
(60)
%
(57)
%
(69)
%
(49)
%
(82)
%
(61)
%
(76)
%
2023 Consolidated Outlook Metrics Notes
Range Revenues (GAAP) - YoY % change
(5)
%
(3)
%
Foreign currency translation impact
(i)
0
%
0
%
Impact from Business Solutions
(l)
4
%
4
%
Revenues, constant currency, excluding Business Solutions
(non-GAAP) - YoY % change
(1)
%
1
%
Range Operating margin (GAAP)
18
%
20
%
Operating expense redeployment program costs
(o)
1
%
1
%
Impact from acquisition and separation costs
(k)
0
%
0
%
Impact from Business Solutions
(l)
0
%
0
%
Operating margin, adjusted (non-GAAP)
19
%
21
%
Range Earnings per share (GAAP) ($- dollars)
$
1.63
$
1.73
Gain on the sale of Business Solutions
(l)
(0.06
)
(0.06
)
Operating expense redeployment program costs
(o)
0.08
0.08
Acquisition and separation costs
(k)
—
—
Income taxes associated with these adjustments
(l), (o)
—
—
Earnings per share, adjusted (non-GAAP) ($- dollars) $
1.65
$
1.75
Non-GAAP related notes:
(i)
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.
(j)
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.
(k)
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. Also includes costs associated with the divestiture
of the Business Solutions business, primarily related to severance
and non-cash impairments of property and equipment and an operating
lease right-of-use asset.
(l)
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"). The sale was 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, which
included the United Kingdom operations, occurred on December 31,
2022 and resulted in a gain of $96.9 million. The final closing,
which included the European Union operations, occurred on July 1,
2023, and the gain associated with the final closing that will be
recognized in Q3 2023 will be subject to regulatory capital
adjustments. 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. The operations of
the Business Solutions business sold in the final closing continued
to be included in Revenues and Operating income after the second
closing. However, between the first and final closings, the Company
was required to pay the Buyer a measure of the profits from these
operations, while owned by the Company, adjusted for other charges,
and this expense was recognized in Other 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 results.
(m)
Represents the exit costs
incurred in connection with the Company's suspension of its
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.
(n)
Represents non-cash reversals of
significant uncertain tax positions. While the Company continues to
reverse its uncertain tax positions upon settlements with taxing
authorities, the lapse of the applicable statute of limitations,
and other events, the Company has excluded certain reversals of
uncertain tax positions in the third and fourth quarter of 2022
because of the significance of these reversals on its reported
results.
(o)
Represents severance, expenses
associated with streamlining the Company's organizational and legal
structure, and other expenses associated with the Company's program
to redeploy expenses in its cost base through optimizations in
vendor management, real estate, marketing, and people strategy as
previously announced in October 2022. Previous expenses incurred
under the program included non-cash impairments of operating lease
right-of-use assets and property and equipment. 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.
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
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 (“Branded Digital”).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726081191/en/
Media Relations: Claire Treacy media@westernunion.com
Investor Relations: Tom Hadley
WesternUnion.IR@westernunion.com
Western Union (NYSE:WU)
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