Slide 1: Western Union Fourth Quarter 2010 Earnings Webcast & Conference Call
Western Union Fourth Quarter 2010 Earnings Webcast & Conference Call February 1, 2011 Exhibit 99.2
Slide 2: Mike Salop, Senior Vice President, Investor Relations
Mike Salop Senior Vice President, Investor Relations * * * * * *
Slide 3: Hikmet Ersek, President & Chief Executive Officer
Hikmet Ersek President & Chief Executive Officer * * * * * *
Slide 4: Q4 Highlights
Q4 Highlights Total revenue increased 3%, or 5% constant currency C2C revenue grew 5% constant currency Revenue growth rates improved in each region Domestic money transfer revenue increased 7% Bill Payments revenue decline moderated Business Solutions revenue grew to $30 million Strong Finish to 20
Slide 5: Expectations for 2011
Expectations for 2011 Constant currency revenue growth range 3% to 4% Share gains in cross border remittances Strong growth in Electronic Channels Revenue declines to moderate in Bill Payments Mid-teens revenue growth in Business Solutions Operating margin expansion Strong cash flow generation and d
Slide 6: Strategic Priorities
Strategic Priorities Strategy in place Focused on execution
Slide 7: Strategic Priorities: Grow Retail Channels
Strategic Priorities Long-term, demographic data suggest growth in new migrant flows Cash-to-cash share of market has been increasing WU network expansion can drive incremental growth New consumer opportunities exist Grow Retail Channels
Slide 8: Strategic Priorities: Expand Electronic Channels
Strategic Priorities Leverage retail network, brand, compliance, infrastructure More choice for consumers New consumers Coordinated offerings, strategies Expand Electronic Channels
Slide 9: Strategic Priorities: Develop Product Portfolio
Strategic Priorities Develop Product Portfolio Prepaid Fast-growing, global market Additional service to new and existing consumers Business Solutions Large, fragmented market Serving the underserved small and medium sized enterprises
Slide 10: Strategic Priorities: Improve Processes and Productivity
Strategic Priorities Improve Processes and Productivity Faster decision making, closer to consumers and agents More efficient organization Margin focus through constant improvement
Slide 11: Scott Scheirman, Executive Vice President & Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer * * * * * *
Slide 12: Q4 Revenue
Q4 Revenue Consolidated revenue up 3%, or up 5% constant currency adjusted Transaction fees increased 2% Foreign exchange revenue increased 7% Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Slide 13: C2C Remittance Trends
C2C Remittance Trends +9% C2C Revenue growth 3%, or 5% constant currency Total Q4 Western Union cross- border principal of $18 billion Increased 6% on reported basis Increased 7% constant currency Principal per transaction Declined 3% on reported basis Declined 1% constant currency C2C Transactions
Slide 14: Consumer-to-Consumer: EMEASA
Consumer-to-Consumer Revenue Transactions Q4 2010 (1)% 6% Europe, Middle East, Africa, S. Asia 44% of Western Union revenue EMEASA constant currency revenue increased Continued constant currency revenue growth in U.K., Germany and Russia Gulf States returned to positive transaction and revenue growt
Slide 15: Consumer-to-Consumer: Americas
Consumer-to-Consumer Revenue Transactions Americas 7% 11% 32% of Western Union revenue U.S. Domestic repositioning driving new business Domestic money transfer revenue growth 7% and transaction growth 29% Continued solid U.S. Outbound performance Mexico 3% transaction and revenue growth Q4 2010
Slide 16: Consumer-to-Consumer: Asia Pacific
Consumer-to-Consumer Revenue Transactions Asia Pacific 14% 14% 9% of Western Union revenue China grew transactions 7% and revenue 6% Philippines & Australia performing well Q4 2010
Slide 17: C2C Transaction and Revenue Growth
C2C Transaction and Revenue Growth 9% 5% 3% Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Transaction Growth Price Reductions Mix Constant Currency Revenue Growth Currency Impact Reported Revenue Growth Q4 2010
Slide 18: Global Business Payments
Global Business Payments Revenue Transactions Global Business Payments 0% 6% 13% of Western Union revenue $30 million Business Solutions (Custom House) revenue Continued challenges in U.S. bill payments Q4 2010
Slide 19: Electronic Channels & Prepaid Q4 Highlights
Electronic Channels & Prepaid Q4 Highlights Westernunion.com 50% transaction growth in international markets Added transaction sites in Denmark, Finland and Poland Account-based money transfer Over 40% transaction growth 40 banks globally Mobile 12 agreements in place Over 80,000 locations enabled f
Slide 20: Operating Margin – Q4
Operating Margin – Q4 Operating margin excluding restructuring, +30 basis points Note: See appendix for reconciliation of Non-GAAP to GAAP measures GAAP Excluding Restructuring (1) Q4 2010 consolidated operating margin excludes restructuring charges
Slide 21: Operating Margin – Full Year
Operating Margin – Full Year Note: See appendix for reconciliation of Non-GAAP to GAAP measures GAAP Excluding Items (1) FY 2009 consolidated operating margin excludes settlement accrual (2) FY 2010 consolidated operating margin excludes restructuring charges Operating margin excluding restructuring
Slide 22: Q4 EPS
Q4 EPS Reserve International Liquidity Fund - $6 million benefit to other income/expense Tax rate benefit from cumulative adjustments Q4 EPS $0.37 or $0.38 excluding restructuring expenses Note: See appendix for reconciliation of Non-GAAP to GAAP measures
Slide 23: C2C Operating Margin
C2C Operating Margin C2C 84% of total company revenue for full year 2010 Operating Margin Q4 10, +130 basis points YoY • Revenue growth • Lower marketing spend FY 2010, +110 basis points YoY • Lower marketing spend
Slide 24: Global Business Payments Operating Margin
Global Business Payments Operating Margin Note: See appendix for reconciliation of Non-GAAP to GAAP measures GBP 14% of total company revenue for full year 2010 Operating margin declined YoY Revenue declines and mix shifts in U.S. bill payments Higher Business Solutions investments Full year of Busi
Slide 25: Financial Strength
Financial Strength Full Year Cash Flow from Operations Excluding Tax Deposit $1.2 billion Refundable IRS Tax Deposit ($250) million GAAP Cash Flow from Operations $994 million Capital Expenditures $114 million Stock Repurchases $584 million Dividends Paid $165 million Cash Balance, December 31, 2010
Slide 26: 2011 Outlook
2011 Outlook Key Revenue Drivers Stronger C2C revenue growth Moderating Bill Payments declines Mid-teens revenue growth from Business Solutions Operating Income Margins expected to expand Pre-tax Restructuring: Expenses approximately $50 million Savings approximately $50 million Tax rate of approxim
Slide 27: 2011 Outlook
2011 Outlook Constant currency revenue in the range of 3% to 4% GAAP revenue growth similar to constant currency GAAP operating margin of approximately 26% Operating margin of approximately 27%, excluding restructuring expenses GAAP EPS of $1.41 to $1.46 EPS excluding restructuring charges of $1.47
Slide 28: Questions & Answers
Questions & Answers * * * * * *
Slide 29: Slide 29
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q09 FY2009 1Q10 2Q10 3Q10 4Q10 FY2010 Consumer-to-Consumer Segment Revenues, as reported (GAAP) 1,113.7 $ 4,300.7 $ 1,030.2 $ 1,073.1 $ 1,128.3 $ 1,151.8 $ 4,383.4 $ Foreign currency translation impact (a) (36.2) 101.3 (21.9) 15.0 21.2 18.0 32.3 Revenues, constan
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q09 FY2009 1Q10 2Q10 3Q10 4Q10 FY2010 Global Business Payments Segment Operating income, as reported (GAAP) 35.7 $ 171.9 $ 37.6 $ 33.8 $ 27.0 $ 24.1 $ 122.5 $ Reversal of Western Union Business Solutions operating loss (b) 4.9 6.2 3.1 4.6 8.3 7.7 23.7 Operating i
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2011 EPS Outlook EPS guidance (GAAP) ($ - dollars) 1.41 $ 1.46 $ Impact from restructuring and related expenses, net of income tax benefit (d) ($ - dollars) 0.06 0.06 EPS guidance, restructuring adjusted ($ - dollars) 1.47 $ 1.52 $ 2011 Operating Income Margin Out