Western Union Company (the) · NYSE:WU
Western Union Company (the) — Q3 2012 Earnings Presentation
28 slides from Western Union Company (the)'s earnings presentation, Oct 30, 2012
Slide 1: Third Quarter 2012 Earnings Webcast & Conference Call
Western Union Third Quarter 2012 Earnings Webcast & Conference Call October 30, 2012 Exhibit 99.2
Slide 2: Mike Salop, SVP Investor Relations
Mike Salop Senior Vice President, Investor Relations
Slide 3: Safe Harbor
Safe Harbor 3 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 pr
Slide 4: Hikmet Ersek, President & Chief Executive Officer
Hikmet Ersek President & Chief Executive Officer
Slide 5: Third Quarter Overview
Revenues increased 1% Western Union branded C2C revenues increased slightly constant currency Business Solutions pro forma revenues flat constant currency* Electronic Channels revenue increased 25% 5 Third Quarter Overview Retail money transfer impacted by global economy, compliance changes,
Slide 6: Strategic Initiatives
Action plans to regain momentum Enhancing value proposition in key corridors Accelerating investment in fast growing digital channels Improving productivity and optimizing the cost structure 6 Strategic Initiatives Goal is to gain customers and optimize long-term revenue and profitability
Slide 7: Capital Allocation
Strong cash flow generation A leader in growing global consumer money transfer market Additional growth opportunities from Business Solutions, Stored Value, Ventures Capital Allocation Dividend increased 25% to $0.50 per share annually New $550 million share repurchase authorization; appr
Slide 8: Scott Scheirman, EVP Chief Financial Officer & Global Operations
Scott Scheirman Executive Vice President Chief Financial Officer & Global Operations
Slide 9: Consolidated Revenue
$1,083 $1,053 $294 $338 $34 $31 Q3 2011 Q3 2012 Transaction Fee Foreign Exchange Other Revenue 9 ($ in millions) $1,422 $1,411 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Consolidated revenue up 1% reported and 3% constant currency adjusted* Pro forma revenue d
Slide 10: Consumer-to-Consumer
Consumer-to-Consumer 10 C2C 81% of Company revenue C2C revenue decreased 4%, or 1% constant currency,* on flat transaction growth Western Union branded constant currency revenue grew slightly on transaction growth of 3% Total Q3 Western Union cross-border principal of $18 billion Declined
Slide 11: Consumer-to-Consumer Regions
Consumer-to-Consumer 11 Regions Revenue Growth Currency Impact** Transaction Growth % of Total Revenue Europe and CIS -9% -5% -3% 22% North America -8% 0% -5% 20% Middle East and Africa 0% -3% 4% 15% Asia Pacific 1% -1% 2% 12% LACA 4% -3% -2% 9% westernunion.com 22% -4% 40% 3% Q3 2012 **Note: Curren
Slide 12: Electronic Channels & Prepaid Highlights
Electronic Channels & Prepaid Highlights Account based money transfer Revenue increased 32% Agreements in place with nearly 110 banks globally Westernunion.com C2C revenue increased 22% (includes 4% negative impact from currency translation) C2C transactions grew 40% Prepaid Revenue
Slide 13: C2C Transaction and Revenue Growth Q3 2012
C2C Transaction and Revenue Growth 13 Q3 2012 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures.
Slide 14: C2B and B2B
C2B and B2B 14 Consumer-to-Business C2B 10% of Company revenue Revenue declined 5%, or 2% constant currency* Business Solutions Business Solutions 7% of Company revenue Pro forma revenue flat on a constant currency* basis, including TGBP in the prior year period *Note: See appendix for r
Slide 15: Operating Margin
15 Operating Margin 25.7% 25.7% 26.7% 26.4% GAAP Excluding Restructuring and TGBP Integration Expenses* Operating margin excluding restructuring expense and TGBP integration expense declined 30 basis points* • Higher Business Solutions amortization, incremental compliance costs, and investments in
Slide 16: C2C Operating Margin
16 C2C Operating Margin Operating margin increased 40 basis points from prior year • Benefits from currency and lower compensation costs were partially offset by IT and other investments, and higher compliance costs 29.0% 29.4% 15.0% 17.0% 19.0% 21.0% 23.0% 25.0% 27.0% 29.0% Q3 2011 Q3 2012
Slide 17: C2B Operating Margin
17 C2B Operating Margin Operating margin increased Improvement driven primarily by lower debit fees related to Durbin 21.0% 25.3% 15.0% 17.0% 19.0% 21.0% 23.0% 25.0% 27.0% 29.0% Q3 2011 Q3 2012
Slide 18: Business Solutions Margin
18 Business Solutions Margin Operating Loss Operating loss of $7 million compared to an operating loss of $2 million in the prior year period Includes $17 million of depreciation and amortization in current quarter, compared to $5 million in the prior year period Includes $10 million of inte
Slide 19: Financial Strength
19 Financial Strength YTD September 2012 Cash Flow from Operations** $860 million Capital Expenditures $183 million Stock Repurchases $421 million Dividends Declared $182 million Cash Balance, Sept. 30, 2012 $1.4 billion Debt Outstanding, Sept. 30, 2012 $3.4 billion ** Note: Includes the impact of t
Slide 20: 2012 Outlook
2012 Outlook 20 Outlook updated to reflect lower second half revenue trends and impact of $30 million expenses related to new cost savings initiatives. These expenses negatively impacted the margin outlook by 0.5% and the EPS outlook by $0.04 Revenue Constant currency revenue growth in the ran
Slide 21: 2012 Outlook
2012 Outlook 21 Tax Rate Effective tax rate in a range of 14% to 15%, including the non-recurring benefit in the second quarter Earnings per Share GAAP EPS in a range of $1.60 to $1.63, compared to previous outlook of $1.68 to $1.72 EPS excluding TGBP integration expenses in a range of $1.
Slide 22: Questions & Answers
Questions & Answers
Slide 23: Appendix
Appendix Third Quarter 2012 Earnings Webcast & Conference Call October 30, 2012 23
Slide 24: Non-GAAP Measures
Non-GAAP Measures 24 Western Union's management believes the non-GAAP financial measures presented provide meaningful supplemental information regarding our operating results to assist management, investors, analysts, and others in understanding our financial results and to better analyze trends in
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 25 3Q11 4Q11 FY2011 1Q12 2Q12 3Q12 YTD 3Q12 Consolidated Metrics Revenues, as reported (GAAP) 1,410.8$ 1,431.3$ 5,491.4$ 1,393.4$ 1,425.1$ 1,421.6$ 4,240.1$ Foreign currency translation impact (a) (18.2) 10.4 (38.0) 8.1 34.6 37.7 80.4 Revenues, constant currency a
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 26 3Q11 4Q11 FY2011 1Q12 2Q12 3Q12 YTD 3Q12 Consumer-to-Consumer Segment Revenues, as reported (GAAP) 1,193.3$ 1,181.9$ 4,608.4$ 1,124.6$ 1,155.0$ 1,151.5$ 3,431.1$ Foreign currency translation impact (a) (17.9) 8.0 (39.1) 5.2 30.1 32.8 68.1 Revenues, constant cur
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 27 2012 Outlook Metrics Revenue change (GAAP) 2 % 3 % Foreign currency translation impact (g) 2 % 2 % Revenue change, constant currency adjusted 4 % 5 % Operating income margin (GAAP) 23.5 % TGBP integration expense impact (d) 1.0 % Operating income margin, TGBP i
Slide 28: Footnote explanations
Footnote explanations 28 Non-GAAP related notes: (a) (b) (c) (d) (e) (f) (g) Represents the estimated impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States dollar. Constant currency results exclude any estimated benefit or loss caused by