Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q3 2019 Earnings Presentation
27 slides from Western Union Company (the)'s earnings presentation, Oct 31, 2019
Slide 1: Third Quarter 2019 Earnings Webcast and Conference Call
Third Quarter 2019 Earnings Webcast and Conference Call October 31, 2019 1
Slide 2: Brad Windbigler, Head of Investor Relations and Treasury
Brad Windbigler Head of Investor Relations and Treasury 2
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: Hikmet Ersek, Chief Executive Officer
Hikmet Ersek Chief Executive Officer 4
Slide 5: Overview
Overview Third quarter results Third quarter results solid Westernunion.com Business Solutions Strong with strong adjusted transactions grew 16%; achieved constant cash flow margins and improved cross-border wu.com currency revenue growth generation consumer money transfer transactions increased for
Slide 6: Strategy Recap
Strategy Recap Shareholder 4 Return 3 XB Platform serving multi-cases • Grow and deliver our core • Open our cross-border platform for new use cases 2 Making our cross-border platform more agile • WU Way investments and returns Global, complex, resilient, 1 purpose-driven business 6
Slide 7: Financial Targets
Financial Targets 3-Year Summary 3 Untapped Growth Potential • Open XB Platform to third parties 2 Returning Funds to Shareholders • ~$2.5 - $3 billion share buy backs and dividends 2020 – 20222 1 Resilient and Profitable Business • 23% operating margin in 2022 • Low double-digit EPS CAGR 2020 – 202
Slide 8: Raj Agrawal, Chief Financial Officer
Raj Agrawal Chief Financial Officer 8
Slide 9: Revenue Q3
Revenue Q3 Consolidated revenues of $1.3 billion declined 6% compared to the prior year period, or increased 4% on an adjusted constant currency basis* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 9
Slide 10: Consumer-to-Consumer Q3
Consumer-to-Consumer Q3 • 85% of Company revenue • Revenue increased 1%, or 2% constant currency* • Transactions grew 2% • Cross-border principal increased 3%, or 4% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 10
Slide 11: Consumer-to-Consumer
Consumer-to-Consumer Q3 2019 Revenue Constant Currency Transaction % of C2C Regions Change Rev. Change* Change Revenue North America 2% 2% (1%) 38% Europe and CIS (1%) 1% 6% 32% MEASA 4% 5% 1% 15% LACA 4% 12% 10% 9% APAC (13%) (13%) (6%) 6% Total C2C 1% 2% 2% 100% Included in C2C regions above: 16%
Slide 12: Business Solutions and Other Q3
Business Solutions and Other Q3 Business Solutions (B2B) • 8% of Company revenue • Revenue flat, or increased 3% constant currency* Other (primarily retail bill payments businesses in the U.S. & Argentina) • 7% of Company revenue • Revenue decreased 48% due to the divestiture of the Speedpay busines
Slide 13: Operating Margin Q3
Operating Margin Q3 21.8% 22.0% 22.3% • GAAP operating margin declined due to the impact of 15.1% restructuring expenses • Adjusted operating margin increased primarily due to operating efficiencies, partially offset by the impact of the Speedpay Q3 2018 Q3 2019 Q3 2018 Q3 2019 divestiture GAAP GAAP
Slide 14: Other Financial Highlights
Other Financial Highlights Year-to-Date September 30, 2019 Cash Flow from Operations $665 million Capital Expenditures $94 million Stock Repurchases $475 million Dividends Paid $257 million Cash Balance, September 30, 2019 $1.4 billion Debt Outstanding, September 30, 2019 $3.2 billion 14
Slide 15: 2019 Outlook
2019 Outlook Revenue Earnings per Share Mid-single-digit GAAP revenue decrease GAAP EPS in a range of $2.47 to $2.57 Low single-digit adjusted constant currency Adjusted EPS in a range of $1.70 to $1.80* revenue increase, excluding any benefit related to Argentina inflation Operating Profit Margin C
Slide 16: Questions and Answers
WesternUnion\WU Questions and Answers
Slide 17: Appendix
Appendix 3rd Quarter 2019 Earnings Webcast and Conference Call 17
Slide 18: Non-GAAP Measures
Non-GAAP Measures Western Union's management believes the non-GAAP financial measures A non-GAAP financial measure should not be considered in isolation or as a presented provide meaningful supplemental information regarding our operating substitute for the most comparable GAAP financial measure. A
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Notes* 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 YTD 3Q19 Consolidated Metrics Revenues, as reported (GAAP) $ 1,387.8 $ 1,401.6 $ 5,589.9 $ 1,337.0 $ 1,340.5 $ 1,306.9 $ 3,984.4 Foreign currency translation impact (a) 52.8 68.9 111.9 77.2 74.2 45.8 197.2 Revenues, constant
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Notes* 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 YTD 3Q19 Consolidated Metrics cont. Operating income, as reported (GAAP) $ 302.6 $ 271.0 $ 1,122.1 $ 251.2 $ 258.9 $ 197.4 $ 707.5 Operating margin, as reported (GAAP) 21.8 % 19.3 % 20.1 % 18.8 % 19.3 % 15.1 % 17.8 % Speedpay
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Notes* 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 YTD 3Q19 Consolidated Metrics cont. Net income, as reported (GAAP) $ 208.6 $ 212.1 $ 851.9 $ 173.1 $ 614.8 $ 135.0 $ 922.9 Restructuring-related expenses (e) N/A N/A N/A N/A 7.4 91.5 98.9 Acquisition and divestiture costs (f)
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Notes* 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 YTD 3Q19 Consolidated Metrics cont. Effective tax rate, as reported (GAAP) 22 % 10 % 14 % 20 % 18 % 17 % 18 % Impact from restructuring-related expenses (e) N/A N/A N/A N/A 0 % 1 % 0 % Impact from acquisition and divestiture
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Notes* 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 YTD 3Q19 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 2 % 0 % 2 % 1 % 2 % 2 % 2 % NA region foreign currency translation impact (a) 0 % 0 % 0 % 0 % 0 % 0 % 0 % NA region revenue change, cons
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Notes* 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 YTD 3Q19 Business Solutions Segment Revenues, as reported (GAAP) $ 100.2 $ 96.8 $ 386.8 $ 95.6 $ 95.6 $ 100.6 $ 291.8 Foreign currency translation impact (a) 2.3 2.6 (2.6) 4.6 3.6 2.9 11.1 Revenues, constant currency adjusted
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2019 Consolidated Outlook Metrics Notes* Operating margin (GAAP) 18 % Impact from restructuring-related expenses and acquisition and divestiture costs (e), (f) 2 % Operating margin, adjusted, excluding restructuring-related expenses and acquisition and divestiture
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 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 be
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Non-GAAP related notes (continued): (c) 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 measu
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