Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q1 2018 Earnings Presentation
28 slides from Western Union Company (the)'s earnings presentation, May 1, 2018
Slide 1: Western Union
Western Union | ©2018 Western Union Holdings, Inc. All rights reserved.
Slide 2: Mike Salop, Investor Relations
Mike Salop Senior Vice President, Investor Relations Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 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, President & CEO
Hikmet Ersek President & Chief Executive Officer Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 4
Slide 5: Overview
Overview A strong start to the year • Revenue growth of 7%, or 5% on a constant currency basis* • Continued momentum in consumer money transfer • Westernunion.com money transfer revenues increased 23% • Bill payments businesses delivered solid revenue growth • Business Solutions improved from last q
Slide 6: Overview: Strategic initiatives
Overview Strategic initiatives • Leverage cross-border capabilities to increase revenue growth • Drive digital expansion in consumer money transfer • Optimize customer experience in retail money transfer • Expand payments based services and digital solutions Western Union | ©2018 Western Union Holdi
Slide 7: Raj Agrawal, Chief Financial Officer
Raj Agrawal Executive Vice President & Chief Financial Officer Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 7
Slide 8: Revenue
Revenue ▪ Consolidated revenues of $1.4 billion increased 7% compared to the prior year period, or 5% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 8
Slide 9: Consumer-to-Consumer Q1
Consumer-to-Consumer Q1 ▪ 79% of Company revenue ▪ Revenue increased 7% on a reported basis and 5% constant currency* ▪ Total transactions increased 4% ▪ Cross-border principal increased 9%, or 5% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Weste
Slide 10: Consumer-to-Consumer
Consumer-to-Consumer Q1 2018 Constant Revenue Currency Rev. Transaction % of C2C Regions Change Change* Change Revenue North America 4% 4% 1% 36% Europe and CIS 14% 5% 8% 32% MEASA 0% (1%) (2%) 16% LACA 20% 25% 17% 9% APAC 2% 0% 1% 7% Total C2C 7% 5% 4% 100% Included in C2C regions above: westernuni
Slide 11: Business Solutions and Other Q1
Business Solutions and Other Q1 ▪ Business Solutions (B2B) ▪ 7% of Company revenue ▪ Revenue increased 3%, or declined 2% constant currency* ▪ Other (primarily bill payments businesses in the U.S. & Argentina) ▪ 14% of Company revenue ▪ Revenue increased 4%, or 10% constant currency* *Note: See appe
Slide 12: Operating Margin Q1
Operating Margin Q1 22.0% 21.0% 20.0% 19.5% * 19.1% ▪ Operating margin 19.0% 18.4% • Adjusted operating margin decrease 18.0% o primarily due to higher marketing spending and the 17.0% negative impact of foreign exchange 16.0% o partially offset by lower 15.0% average commission rates and Q1 2017 Q1
Slide 13: C2C Operating Margin Q1
C2C Operating Margin Q1 30.0% 25.0% 22.5% 22.2% ▪ Operating margin 20.0% • Decrease primarily due to higher 15.0% marketing spending and the negative impact of foreign exchange 10.0% • partially offset by lower average 5.0% commission rates and operating leverage from revenue growth 0.0% Q1 2017 Q1
Slide 14: B2B Operating Margin Q1
B2B Operating Margin Q1 ▪ Operating margin ▪ Operating margin was 2.9% in the quarter compared to 2.6% in the prior year period ▪ EBITDA* margin was 13.8% in both the current and prior year period *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union | ©2018 We
Slide 15: Other Operating Margin Q1
Other Operating Margin Q1 (Primarily consists of bill payments businesses in the U.S. & Argentina) 14.0% 12.4% 12.0% 10.1% 10.0% ▪ Operating margin • The decline was primarily due to 8.0% 6.0% higher bank fees in our U.S. electronic business, partially offset by revenue 4.0% growth 2.0% 0.0% Q1 2017
Slide 16: Other Financial Highlights
Other Financial Highlights Quarter Ended March 31, 2018 Cash Flow from Operations $133 million Capital Expenditures $37 million Dividends Paid $88 million Cash Balance, March 31, 2018 $934 million Debt Outstanding, March 31, 2018 $3.1 billion Western Union | ©2018 Western Union Holdings, Inc. All ri
Slide 17: 2018 Outlook
2018 Outlook ▪ Revenue • Low to mid-single digit increase in both GAAP and constant currency revenue* ▪ Operating Profit Margin • Operating margin of approximately 20% ▪ Earnings per Share • GAAP EPS in a range of $1.81 to $1.91 and adjusted EPS in a range of $1.80 to $1.90* (previously $1.78 to $1.
Slide 18: Questions & Answers
Questions & Answers Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 18
Slide 19: Appendix
Appendix First Quarter 2018 Earnings Webcast & Conference Call Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 19
Slide 20: 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 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q17 2Q17 3Q17 4Q17 FY2017 1Q18 Consolidated Metrics Revenues, as reported (GAAP) $ 1,302.4 $ 1,378.9 $ 1,404.7 $ 1,438.3 $ 5,524.3 $ 1,389.4 Foreign currency translation impact (a) 30.1 29.0 7.7 (5.5) 61.3 (18.9) Revenues, constant currency adjusted $ 1,332.5 $ 1
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q17 2Q17 3Q17 4Q17 FY2017 1Q18 Consolidated Metrics cont. Operating income/(loss), as reported (GAAP) (i) $ 240.1 $ 215.3 $ 272.2 $ (251.9) $ 475.7 $ 264.9 Reversal of depreciation and amortization 66.4 65.2 65.5 65.8 262.9 66.7 EBITDA (g) $ 306.5 $ 280.5 $ 337.7
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q17 2Q17 3Q17 4Q17 FY2017 1Q18 Consolidated Metrics cont. Diluted earnings/(loss) per share ("EPS"), as reported (GAAP) ($ - dollars) $ 0.33 $ 0.35 $ 0.51 $ (2.44) $ (1.19) $ 0.46 EPS impact as a result of Goodwill impairment ($ - dollars) (b) N/A N/A N/A $ 1.01
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q17 2Q17 3Q17 4Q17 FY2017 1Q18 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,015.0 $ 1,087.3 $ 1,107.7 $ 1,144.5 $ 4,354.5 $ 1,091.0 Foreign currency translation impact (a) 24.1 20.8 1.8 (9.0) 37.7 (26.4) Revenues, constant currency adjusted $ 1,0
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q17 2Q17 3Q17 4Q17 FY2017 1Q18 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 3% 3% 1% 3% 2% 4% NA region foreign currency translation impact (a) 1% 0% 0% 0% 1% 0% NA region revenue change, constant currency adjusted 4% 3% 1% 3% 3
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q17 2Q17 3Q17 4Q17 FY2017 1Q18 Business Solutions Segment Revenues, as reported (GAAP) $ 93.6 $ 96.6 $ 99.4 $ 94.3 $ 383.9 $ 96.7 Foreign currency translation impact (a) 2.8 3.2 (1.2) (3.0) 1.8 (4.8) Revenues, constant currency adjusted $ 96.4 $ 99.8 $ 98.2 $ 91.
Slide 27: 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 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Non-GAAP related notes continued: (g) 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 measurem
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