Western Union Company (the) · NYSE:WU
Western Union Company (the) — Q1 2009 Earnings Presentation
48 slides from Western Union Company (the)'s earnings presentation, Apr 21, 2009
Slide 1: First Quarter 2009 Earnings Webcast & Conference Call
First Quarter 2009 Earnings Webcast & Conference Call April 21, 2009 Exhibit 99.2
Slide 2: Gary Kohn, Vice President Investor Relations
Gary Kohn Vice President Investor Relations
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
Slide 4: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer
Slide 5: Strong margins and cash flow
Strong margins and cash flow Financial Results – Q1 2009 Revenue $1.2B (5)% Note: See appendix for reconciliation of Non-GAAP to GAAP measures. EPS $0.32 19% Revenue, constant currency flat EPS, excluding Q1 restructuring 10% EPS, constant currency $0.33
Slide 6: Industry leading operating margin
Industry leading operating margin 24.4% 26.3% 28.4% Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Financial Results – Q1 2009 Financial Results – Q1 2009 Q1 2008 Reported Q1 2008 Excluding Restructuring Q1 2009 Reported Operating Margin Cost savings initiatives Headcount reduct
Slide 7: 2009 – Year of Opportunity
2009 – Year of Opportunity C2C transactions up 7% in Q1 FEXCO acquisition U.S. Bank agreement Fidelity National Information Service agreement Financial strength as strategic asset Invest to gain market share
Slide 8: Geographically Diverse Portfolio: Europe, Middle East, Africa, S. Asia
Geographically Diverse Portfolio Revenue Transactions Q1 09 (4)% 15% Europe, Middle East, Africa, S. Asia 43% of Western Union revenue Revenue impacted by currency fluctuations Europe slowed moderately Gulf States and India among fastest growers Investing in market share opportunities Payment Servic
Slide 9: Geographically Diverse Portfolio: Americas
Geographically Diverse Portfolio Revenue Transactions Q1 09 Americas (7)% (3)% 33% of Western Union revenue Mexico and domestic challenged in 2009 U.S outbound stable New “Go-to-Market” strategy Combined U.S. and Latin American organizations U.S. Bank Fidelity National Information Service
Slide 10: Geographically Diverse Portfolio: Asia Pacific
Geographically Diverse Portfolio Revenue Transactions Q1 09 Asia Pacific 3% 25% 8% of Western Union revenue China slowed sequentially due to fewer small enterprise transfers Increased focus on China strategy Philippines inbound remittance growth remained strong Asia Pacific region represents signifi
Slide 11: Expand the C2B/Payments Business
Revenue Transactions Q1 09 C2B/Payments (8)% 2% Nearly 90% of revenue is U.S. derived International and product expansion is key Real-time offering with Yodlee and Fidelity National Information Services New leadership Expand the C2B/Payments Business Expand the C2B/Payments Business
Slide 12: Proven Business Model
Proven Business Model Performing well in challenging environment World class brand Diverse network across 200 countries and territories Strong balance sheet, cash flow and margin
Slide 13: Scott Scheirman, Executive Vice President & Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer
Slide 14: Q1 results in-line with expectations
Q1 results in-line with expectations Financial Results – Q1 2009 Revenue $1.2B (5)% Note: See appendix for reconciliation of Non-GAAP to GAAP measures. EPS $0.32 19% Revenue, constant currency flat EPS, excluding Q1 restructuring 10% EPS, constant currency $0.33
Slide 15: Components of Revenue: Transaction Fee and Foreign Exchange
(6)% (2)% Transaction Fee Components of Revenue $ in millions Q1 08 Q1 09 Foreign Exchange Q1 08 Q1 09 $1,021 $959 $210 $205
Slide 16: Consumer-to-Consumer: 84% of revenue
84% of revenue Consumer-to-Consumer Q1 2009 Change (millions) Transactions 7% Revenue $1,004 (5)% Revenue, constant currency 1% Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Operating Income 5% Operating Margin 270 bp 28.6% $287
Slide 17: C2C Transaction and Revenue Growth
(5)% 7% 1% Transaction Growth Mix Price Reductions Constant Currency Revenue Growth Currency Impact Reported Revenue Growth C2C Transaction and Revenue Growth Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Q1 2009
Slide 18: Strong C2C Operating Margin
270 bp Strong C2C Operating Margin 25.9% 28.6% First Quarter Call center relocations Workforce reductions Combining of C2C regions Expense management
Slide 19: Consumer-to-Business/Payments: 14% of revenue
14% of revenue Consumer-to-Business/Payments Q1 2009 Change (millions) Transactions 2% Revenue $174 (8)% Operating Income $50 (10)% Operating Margin 29% (60) bp
Slide 20: Cost of Services – Improving as Percent of Revenue
Cost of Services – Improving as Percent of Revenue Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 59.9% 58.2% 55.7% Reported Reported Excl. Restructuring First Quarter
Slide 21: SG&A – Consistent as Percent of Revenue
SG&A – Consistent as Percent of Revenue Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Reported Reported Excl. Restructuring First Quarter 15.6% 15.5% 15.9%
Slide 22: Improving Operating Margin
24.4% 26.3% 28.4% Improving Operating Margin Note: See appendix for reconciliation of Non-GAAP to GAAP measures. First Quarter Reported Reported Excl. Restructuring
Slide 23: Improving Tax Rate
Improving Tax Rate Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 29.2% 29.8% 26.6% First Quarter Reported Reported Excl. Restructuring
Slide 24: Liquidity is a Distinct Advantage
Liquidity is a Distinct Advantage Cash Flows From Operations, Q1 2009 $357 million Cash Balance, March 31, 2009 $1.5 billion Debt Balance, March 31, 2009 $3.1 billion Capital Expenditures, Q1 2009 $16 million $1 billion due in 2011 $500 million due in 2014 $1 billion due in 2016 $500 million due in
Slide 25: Reaffirm 2009 Outlook: Revenue
Reaffirm 2009 Outlook Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Revenue assumptions include: – Mid- to high-single digit C2C transaction growth – Single-digit cross-border principal growth – Global market share gains – C2C principal per transaction to decline – C2B trends t
Slide 26: Reaffirm 2009 Outlook: EPS
Reaffirm 2009 Outlook Note: See appendix for reconciliation of Non-GAAP to GAAP measures. EPS assumptions include: – FEXCO acquisition – Net other expense of $150 million – Tax rate of approximately 26% – Buyback of $400 million – Full-year margins of around 27% Constant Currency EPS of $1.16 to $1.
Slide 27: Reaffirm 2009 Outlook: Cash Flow and Capex
Reaffirm 2009 Outlook Cash Flow from Operations to exceed $1.1 billion Capital Expenditures of less than $150 million
Slide 28: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer
Slide 29: Creating shareholder value: Setting the stage for strategic progress
Creating shareholder value Setting the stage for strategic progress Strong Get Stronger 2009 a year of opportunity Investing for tomorrow More efficient regional structure with new leadership Focus on the core and move money transfer business forward Invest in initiatives that target broader payment
Slide 30: Building on Success – Attract New, Incremental Customers
Building on Success – Attract New, Incremental Customers Westernunion.com Made user experience easier and faster Expanding internationally while improving margins Intra-country opportunities Leverage network and high brand awareness Banking strategy Expand distribution and extend brand to new custom
Slide 31: Building on Success – Attract New, Incremental Customers
Building on Success – Attract New, Incremental Customers Mobile money transfer Signing key operators Implementing new test Prepaid, reloadable MoneyWise Visa card Innovated feature – Home Delivery Expanding to additional cities ™ ®
Slide 32: Significant Market Opportunity
Significant Market Opportunity World Bank estimates remittance market returning to growth in 2010 Mobile workforce continues to seek employment Remittance flows remain resilient Migrant population has increasing financial service needs Source: World Bank March 24, 2009
Slide 33: Western Union - Consumer Centric Organization
Western Union - Consumer Centric Organization Demand based product development In-house consumer database yes campaign Efficient techniques including social media Launched globally Commercials running in 21 languages
Slide 34: Well positioned for long-term growth
Well positioned for long-term growth Global Leader Leadership position in growing market 379,000 agent locations Well-known brand Geographically diverse revenue stream Scalable infrastructure Industry-leading compliance capabilities Solid financial position
Slide 35: First Quarter 2009 Earnings Webcast & Conference Call Appendix
First Quarter 2009 Earnings Webcast & Conference Call Appendix April 21, 2009
Slide 36: Non-GAAP Measures
Non-GAAP Measures Western Union's management has presented: (1) Consolidated and consumer-to-consumer segment revenue growth, international consumer-to-consumer revenue growth and international consumer-to-consumer excluding United states originated transactions revenue growth, excluding the impact
Slide 37: Reconciliation of Non-GAAP Measures: Revenue
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) Consolidated Consumer-to- Consumer segment International Consumer-to- Consumer International Consumer-to- Consumer excluding United States originated transactions 2009 Revenues, as reported (GAAP) $ 1,201.2 $ 1,0
Slide 38: Reconciliation of Non-GAAP Measures: Cost of Services
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) Revenues $ 1,201.2 $ 1,265.9 $ 669.1 $ 758.6 Restructuring and related expenses (b) - (22.4) $ 669.1 $ 736.2 55.7% 59.9% 55.7% 58.2% Refer to footnote explanations at the end of this "Reconciliation of Non-GAAP M
Slide 39: Reconciliation of Non-GAAP Measures: SG&A
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) Revenues $ 1,201.2 $ 1,265.9 $ 191.2 $ 198.0 Restructuring and related expenses (b) - (1.8) $ 191.2 $ 196.2 15.9% 15.6% 15.9% 15.5% Refer to footnote explanations at the end of this "Reconciliation of Non-GAAP Me
Slide 40: Reconciliation of Non-GAAP Measures: Earnings per Share
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) $ 223.9 $ 207.1 Restructuring and related expenses, net of income tax benefit of $9.1 million for the three months ended March 31, 2008 (b) - 15.1 $ 223.9 $ 222.2 As reported (GAAP) $ 0.
Slide 41: Reconciliation of Non-GAAP Measures: Operating Income
Revenues $ 1,201.2 $ 1,265.9 $ 340.9 $ 309.3 Restructuring and related expenses (b) - 24.2 $ 340.9 $ 333.5 Operating income margin, as reported (GAAP) 28.4% 24.4% Operating income margin, adjusted 28.4% 26.3% Refer to footnote explanations at the end of this "Reconciliation of Non-GAAP Measures" sec
Slide 42: Reconciliation of Non-GAAP Measures: Constant Currency EPS
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) Three Months Ended March 31, 2009 $ Reversal of impact from translation of foreign currency denominated amounts into United States dollars, net of income tax expense of $4.0 million (a)
Slide 43: Reconciliation of Non-GAAP Measures: Effective Tax Rate
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) Income before income taxes, as reported (GAAP) $ 305.2 292.5 $ Adjustments: Restructuring and related expenses (b) - 24.2 Income before income taxes, adjusted $ 305.2 $ 316.7 Provision for income taxes, as report
Slide 44: Reconciliation of Non-GAAP Measures: C2C Principal per Transaction
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES $ $ Reversal of impact from translation of foreign currency denominated amounts into United States dollars (a) - $ $ Consumer-to-consumer principal per transaction decline, as reported (GAAP) (10)% Consumer-to-consumer princip
Slide 45: Reconciliation of Non-GAAP Measures: Cross-Border Principal
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in billions) $ 15.0 $ 15.5 Reversal of impact from translation of foreign currency denominated amounts into United States dollars (a) 1.1 - $ 16.1 $ 15.5 Consumer-to-consumer cross-border principal decline, as reported (GAAP)
Slide 46: Reconciliation of Non-GAAP Measures: 2009 Outlook
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES 2009 Revenue Outlook Revenue decreases GAAP basis (5)% (8)% Adjustments: Reversal of estimated impact of translation of foreign currency denominated amounts into United States dollars (c) 3% 3% Adjusted estimated revenue decli
Slide 47: Footnote explanations
Footnote explanations (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 U.S.
Slide 48: Use of Material
Use of Material The information contained in this presentation is being provided for your convenience and information only. This information is accurate as of the date of its initial presentation, April 21, 2009. If you plan to use this information for any purpose, verification of its continued accu