Western Union Company (the) · NYSE:WU

Western Union Company (the) — The Western Union Company — Q2 2013 Earnings Presentation

27 slides from Western Union Company (the)'s earnings presentation, Jul 30, 2013

  1. Slide 1: Second Quarter 2013 Earnings Webcast & Conference Call

    Second Quarter 2013 Earnings Webcast & Conference Call July 30, 2013

  2. Slide 2: Mike Salop, Senior Vice President, Investor Relations

    Mike Salop Senior Vice President, Investor Relations Western Union Confidential | ©2013 Western Union Holdings, Inc. All Rights Reserved. 2

  3. Slide 3: Safe Harbor

    Safe Harbor This presentation 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 pred

  4. Slide 4: Hikmet Ersek, President & Chief Executive Officer

    Hikmet Ersek President & Chief Executive Officer Western Union Confidential | ©2013 Western Union Holdings, Inc. All Rights Reserved. 4

  5. Slide 5: Overview Q2

    Overview Q2 Business improved from Q1  Consumer money transfer transaction growth rates accelerated  Business Solutions and Consumer Bill Payments delivered good growth  2013 financial outlook affirmed Strong progress on 2013 key strategies Western Union Confidential | ©2013 Western Union Holding

  6. Slide 6: 2013 Strategic Initiatives: Consumer Money Transfer

    2013 Strategic Initiatives Strengthening the consumer money transfer business – Q2  Strategic pricing actions yielding positive results – Transactions +17% in priced corridors  Expanding the global agent network – 520,000 locations  Strong growth in electronic channels – +26% revenue growth Weste

  7. Slide 7: 2013 Strategic Initiatives: Business-to-Business

    2013 Strategic Initiatives Driving growth in customers and usage in business- to-business – Q2  Delivered 6% revenue growth, or 8% constant currency*  Gaining traction in sales efforts and retention  Increasing partnerships and service offerings *Note: See appendix for reconciliation of Non-GAAP

  8. Slide 8: 2013 Strategic Initiatives: Cash Flow for Shareholders

    2013 Strategic Initiatives Generating and deploying strong cash flow for shareholders  Cash flow from operations of $478 million year-to-date  Returned over $450 million to shareholders through share repurchases and dividends Expect to return ~$700 million to shareholders in 2013 Represents approx

  9. Slide 9: Scott Scheirman, Chief Financial Officer

    Scott Scheirman Executive Vice President & Chief Financial Officer Western Union Confidential | ©2013 Western Union Holdings, Inc. All Rights Reserved. 9

  10. Slide 10: Revenue Q2

    Revenue Q2 ($ in millions) $1,425 $1,386  Consolidated revenue down $31 $32 3% on a reported basis, or 2% constant currency* $335 $338  Transaction fee revenue decreased 4% $1,059  Foreign exchange revenue $1,016 increased 1% Q2 2012 Q2 2013 Transaction Fee Foreign Exchange Other *Note: See appen

  11. Slide 11: Consumer-to-Consumer Q2

    Consumer-to-Consumer Q2  80% of Company revenue  Reported revenue decreased 4%, or 3% constant currency*  Western Union brand transactions increased 7%, while total transactions increased 3%  Cross-border principal increased 2%  Western Union brand cross-border principal increased 5% WU brand t

  12. Slide 12: C2C Transaction and Revenue Analysis

    C2C Transaction and Revenue Analysis Q2 2013 3% -3% -4% Transaction Growth Price Reductions Other Mix Constant Currency Currency Impact Reported Revenue Revenue Decline* Decline *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union Confidential | ©2013 Western

  13. Slide 13: Consumer-to-Consumer by Region

    Consumer-to-Consumer Q2 2013 Revenue Transaction Growth/ Currency Growth/ % of Total Regions Decline Impact** Decline Revenue Europe and CIS -4% 1% 3% 21% North America -12% 0% -2% 19% Middle East and Africa 0% 0% 6% 16% Asia Pacific -4% -1% 5% 12% LACA 0% -7% -3% 9% westernunion.com 25% 0% 68% 3% W

  14. Slide 14: Electronic Channels & Prepaid Q2

    Electronic Channels & Prepaid Q2  Account based money transfer  Revenue increased 31% and transactions grew 51%  Over 70 banks active globally  Westernunion.com  C2C revenue increased 25%  C2C transactions grew 68%  Prepaid  Revenue declined 9% Electronic Channels Revenue Growth 26% Western

  15. Slide 15: C2B and B2B Q2

    C2B and B2B Q2  Consumer-to-Business  11% of Company revenue  Revenue increased 2%, or 7% constant currency*  Business Solutions  7% of Company revenue  Revenue increased 6%, or 8% and 8% on constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Weste

  16. Slide 16: Operating Margin Q2

    Operating Margin Q2 30.0% 25.0% 24.3%  Operating margin decrease 20.0% • Primarily impacted by increased 20.0% compliance costs, pricing driven revenue declines and mix, 15.0% strategic investments primarily in IT, expenses for cost savings 10.0% initiatives, and higher marketing 5.0% • Partially o

  17. Slide 17: C2C Operating Margin Q2

    C2C Operating Margin Q2 30.0% 28.5% 25.0% 23.2%  Operating margin decrease 20.0% • Primarily impacted by increased compliance costs, strategic 15.0% investments, pricing driven revenue declines and mix, 10.0% expenses related to cost savings initiatives, and higher marketing 5.0% 0.0% Q2 2012 Q2 20

  18. Slide 18: C2B Operating Margin Q2

    C2B Operating Margin Q2 30.0% 25.0% 22.4%  Operating margin decrease 20.5% 20.0% • Negatively impacted by pass- throughs of Durbin related debit 15.0% card savings to customers 10.0% 5.0% 0.0% Q2 2012 Q2 2013 Western Union Confidential | ©2013 Western Union Holdings, Inc. All Rights Reserved. 18

  19. Slide 19: Business Solutions Operating Loss Q2

    Business Solutions Operating Loss Q2  Operating Loss  Operating loss of $7 million compared to an operating loss of $15 million in the prior year period  Includes $15 million of depreciation and amortization in current quarter and in the prior year period  Includes $6 million of integration expe

  20. Slide 20: Financial Strength

    Financial Strength YTD 2013 Cash Flow from Operations $478 million Capital Expenditures $107 million Stock Repurchases $314 million Dividends Paid $140 million Cash Balance, June 30, 2013 $1.4 billion Debt Outstanding, June 30, 2013 $3.7 billion Western Union Confidential | ©2013 Western Union Holdi

  21. Slide 21: 2013 Outlook Affirmed

    2013 Outlook Affirmed  Revenue – Low single digit constant currency revenue declines  Margins – GAAP operating margin of approximately 20% – EBITDA margin of approximately 24.5%*  Earnings per Share – GAAP EPS in a range of $1.33 to $1.43  Cash Flow – GAAP Cash flow from operating activities of

  22. Slide 22: Questions & Answers

    Questions & Answers Western Union Confidential | ©2013 Western Union Holdings, Inc. All Rights Reserved. 22

  23. Slide 23: Appendix

    Appendix Second Quarter 2013 Earnings Webcast & Conference Call July 30, 2013 Western Union Confidential | ©2013 Western Union Holdings, Inc. All Rights Reserved. 23

  24. Slide 24: Non-GAAP Measures

    Non-GAAP Measures Western Union's management believes the non-GAAP financial measures presented provide meaningful supplemental information regarding our operating results to assist management, investors, analysts, and others in understanding our financial results and to better analyze trends in our

  25. Slide 25: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2Q12 3Q12 4Q12 FY2012 1Q13 2Q13 YTD 2Q13 Consolidated Metrics Revenues, as reported (GAAP) $ 1,425.1 $ 1,421.6 $ 1,424.7 $ 5,664.8 $ 1,325.4 $ 1,385.9 $ 2,711.3 Foreign currency translation impact (a) 34.6 37.7 13.4 93.8 12.3 14.9 27.2 Revenues, constant currency

  26. Slide 26: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2Q12 3Q12 4Q12 FY2012 1Q13 2Q13 YTD 2Q13 Consumer-to-Business Segment Revenues, as reported (GAAP) $ 149.4 $ 147.3 $ 152.1 $ 603.9 $ 153.7 $ 153.0 $ 306.7 Foreign currency translation impact (a) 3.5 4.2 4.9 15.5 5.9 7.2 13.1 Revenues, constant currency adjusted $

  27. Slide 27: Reconciliation of Non-GAAP Measures: 2013 Outlook Metrics

    Reconciliation of Non-GAAP Measures 2013 Outlook Metrics Operating income margin (GAAP) 20.0% Depreciation and amortization impact 4.5% EBITDA margin (c) 24.5% Operating cash flow (GAAP) $ 900 Payments on IRS Agreement (d) 100 Operating cash flow, IRS Agreement adjusted $ 1,000 Non-GAAP related note

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