Western Union Company (the) · NYSE:WU
Western Union Company (the) — Q4 2019 Earnings Presentation
26 slides from Western Union Company (the)'s earnings presentation, Feb 11, 2020
Slide 1: Fourth Quarter 2019 Earnings Webcast and Conference Call
Fourth Quarter 2019 1 Earnings Webcast and Conference Call February 11, 2020 Exhibit 99.2
Slide 2: Brad Windbigler, Head of Investor Relations and Treasury
Brad Windbigler Head of Investor Relations and Treasury 2
Slide 3: Forward-looking statements
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 predict. Actual
Slide 4: Hikmet Ersek, Chief Executive Officer
Hikmet Ersek Chief Executive Officer 4
Slide 5: Fourth quarter and full year Overview
5 Solid fourth quarter results; GAAP revenue down 7%, or increased 3% on an adjusted constant currency basis* Digital money transfer revenues including wu.com and white label increased 24% reported, or 25% constant currency in the fourth quarter* Business Solutions continued growth trend driven by e
Slide 6: 2020 Strategic Objectives
2020 Strategic Objectives Organizational Strength 1 Leverage our cross-border platform for multiple use cases 2 Digital strategy 3 Shareholder Value 4 6 • WU Way investments and returns • Lifetime value model • Mission driven • ESG
Slide 7: Raj Agrawal, Chief Financial Officer
Raj Agrawal Chief Financial Officer 7
Slide 8: Revenue Q4 Consolidated
Revenue Q4 8 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Consolidated revenues of $1.3 billion declined 7% compared to the prior year period, or increased 3% on an adjusted constant currency basis*
Slide 9: Consumer-to-Consumer Q4
• 86% of Company revenue • Revenue was flat, or increased 1% constant currency* • Transactions declined 1% • Cross-border principal increased 1%, or 2% constant currency* Consumer-to-Consumer Q4 9 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures.
Slide 10: Consumer-to-Consumer Q4 2019 Regions
Consumer-to-Consumer 10 Q4 2019 Regions Revenue Change Constant Currency Rev. Change* Transaction Change % of C2C Revenue North America 1% 1% (4%) 38% Europe and CIS 1% 2% 5% 32% MEASA 0% 0% (1%) 15% LACA (2%) 6% 4% 9% APAC (10%) (10%) (7%) 6% Total C2C 0% 1% (1%) 100% Included in C2C regions above:
Slide 11: Business Solutions and Other Q4
Business Solutions (B2B) Business Solutions and Other Q4 11 • 7% of Company revenue • Revenue flat, or increased 1% constant currency* Other (primarily retail bill payments businesses in the U.S. & Argentina) • 7% of Company revenue • Revenue decreased 52% due to the divestiture of the Speedpay busi
Slide 12: Operating Margin Q4
Operating Margin Q4 12 • GAAP operating margin declined due to higher marketing investment, the impact of restructuring expenses, and the divestiture of Speedpay in May 2019 19.3% 17.3% 19.9% 18.7% Q4 2018 Q4 2019 Q4 2018 Q4 2019 ADJUSTED* GAAP ADJUSTED* GAAP • Adjusted operating margin decreased pr
Slide 13: Other Financial Highlights
Other Financial Highlights 13 Year Ended December 31, 2019 Cash Flow from Operations $915 million Cash Flow from Operations, Adjusted* $1.1 billion Capital Expenditures $128 million Stock Repurchases $540 million Dividends Paid $341 million Cash Balance, December 31, 2019 $1.5 billion Debt Outstandi
Slide 14: 2020 Outlook
Revenue GAAP revenue: flat to low single-digit decline, primarily due to the divestiture of Speedpay Adjusted constant currency revenue: low single-digit increase, excluding any benefit related to Argentina inflation Operating Profit Margin Operating profit margin of approximately 20% and adjusted o
Slide 15: Questions and Answers
WesternUnion\WU Questions and Answers
Slide 16: Appendix
Appendix 4th Quarter 2019 Earnings Webcast and Conference Call 16
Slide 17: 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
Slide 18: Reconciliation of Non-GAAP Measures Consolidated Metrics
Reconciliation of Non-GAAP Measures 18 Consolidated Metrics Revenues, as reported (GAAP) $ 1,401.6 $ 5,589.9 $ 1,337.0 $ 1,340.5 $ 1,306.9 $ 1,307.7 $ 5,292.1 Foreign currency translation impact (a) 68.9 111.9 77.2 74.2 45.8 41.7 238.9 Revenues, constant currency adjusted 1,470.5 5,701.8 1,414.2 1,4
Slide 19: Reconciliation of Non-GAAP Measures Consolidated Metrics cont.
Reconciliation of Non-GAAP Measures 19 Consolidated Metrics cont. Operating income, as reported (GAAP) $ 271.0 $ 1,122.1 $ 251.2 $ 258.9 $ 197.4 $ 226.5 $ 934.0 Operating margin, as reported (GAAP) 19.3 % 20.1 % 18.8 % 19.3 % 15.1 % 17.3 % 17.6 % Speedpay and Paymap contribution to operating income
Slide 20: Reconciliation of Non-GAAP Measures Consolidated Metrics cont.
Reconciliation of Non-GAAP Measures 20 Consolidated Metrics cont. Net income, as reported (GAAP) $ 212.1 $ 851.9 $ 173.1 $ 614.8 $ 135.0 $ 135.4 $ 1,058.3 Restructuring-related expenses (e) N/A N/A N/A 7.4 91.5 16.6 115.5 Acquisition and divestiture costs (f) 8.4 14.9 6.9 5.7 2.5 0.9 16.0 Gain on sa
Slide 21: Reconciliation of Non-GAAP Measures Consolidated Metrics cont.
Reconciliation of Non-GAAP Measures 21 Consolidated Metrics cont. Effective tax rate, as reported (GAAP) 10 % 14 % 20 % 18 % 17 % 31 % 20 % Impact from restructuring-related expenses (e) N/A N/A N/A 0 % 1 % 0 % 1 % Impact from acquisition and divestiture costs (f) 1 % 0 % 0 % 0 % 0 % 0 % 0 % Impact
Slide 22: Reconciliation of Non-GAAP Measures Consumer-to-Consumer Segment cont.
Reconciliation of Non-GAAP Measures 22 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 0 % 2 % 1 % 2 % 2 % 1 % 2 % NA region foreign currency translation impact (a) 0 % 0 % 0 % 0 % 0 % 0 % 0 % NA region revenue change, constant currency adjusted 0 % 2 % 1 % 2 % 2 % 1
Slide 23: Reconciliation of Non-GAAP Measures Business Solutions Segment
Reconciliation of Non-GAAP Measures 23 Business Solutions Segment Revenues, as reported (GAAP) $ 96.8 $ 386.8 $ 95.6 $ 95.6 $ 100.6 $ 97.0 $ 388.8 Foreign currency translation impact (a) 2.6 (2.6) 4.6 3.6 2.9 1.0 12.1 Revenues, constant currency adjusted $ 99.4 $ 384.2 $ 100.2 $ 99.2 $ 103.5 $ 98.0
Slide 24: Reconciliation of Non-GAAP Measures Digital Money Transfer Revenues
Reconciliation of Non-GAAP Measures 24 Digital Money Transfer Revenues Digital money transfer revenue change (GAAP) 24 % Digital money transfer foreign currency translation impact (a) 1 % Digital money transfer revenue change, constant currency adjusted 25 % Cash Flows from Operating Activities Cash
Slide 25: Reconciliation of Non-GAAP Measures notes
Reconciliation of Non-GAAP Measures 25 (a) (b) Non-GAAP related notes: 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 fluctuat
Slide 26: Reconciliation of Non-GAAP Measures notes
Reconciliation of Non-GAAP Measures 26 (c) (d) (e) (f) Represents impact from expenses incurred in connection with an overall restructuring plan, approved by the Board of Directors on August 1, 2019, to improve our business processes and cost structure by reducing headcount and consolidating various