Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q1 2009 Earnings Presentation
48 slides from Western Union Company (the)'s earnings presentation, Apr 21, 2009
Slide 1: First Quarter 2009 Earnings Webcast & Conference Call
First Quarter 2009 Earnings Webcast & Conference Call April 21, 2009
Slide 2: Gary Kohn, Vice President Investor Relations
Gary Kohn Vice President Investor Relations
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: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer
Slide 5: Financial Results – Q1 2009
Financial Results – Q1 2009 Revenue $1.2B (5)% Revenue, constant currency flat EPS $0.32 19% EPS, excluding Q1 2008 restructuring 10% EPS, constant currency $0.33 Strong margins and cash flow Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 5
Slide 6: Financial Results – Q1 2009 Operating Margin
Financial Results – Q1 2009 Operating Margin y Cost savings initiatives 28.4% y Headcount reductions 26.3% 24.4% y Position relocations y Selectively lowering commissions y Consolidation of C2C regions y Timing of 2009 investments y Generated $357 million of Cash Flow from Operations Q1 2008 Q1 2008
Slide 7: 2009 – Year of Opportunity
2009 – Year of Opportunity y C2C transactions up 7% in Q1 y FEXCO acquisition y U.S. Bank agreement y Fidelity National Information Service agreement y Financial strength as strategic asset y Invest to gain market share 7
Slide 8: Geographically Diverse Portfolio: EMEA & S. Asia
Geographically Diverse Portfolio Q1 09 Revenue Transactions Europe, Middle East, Africa, S. Asia (4)% 15% y 43% of Western Union revenue y Revenue impacted by currency fluctuations y Europe slowed moderately y Gulf States and India among fastest growers y Investing in market share opportunities y Pa
Slide 9: Geographically Diverse Portfolio: Americas
Geographically Diverse Portfolio Q1 09 Revenue Transactions Americas (7)% (3)% y 33% of Western Union revenue y Mexico and domestic challenged in 2009 y U.S outbound stable y New “Go-to-Market” strategy y Combined U.S. and Latin American organizations y U.S. Bank y Fidelity National Information Serv
Slide 10: Geographically Diverse Portfolio: Asia Pacific
Geographically Diverse Portfolio Q1 09 Revenue Transactions Asia Pacific 3% 25% y 8% of Western Union revenue y China slowed sequentially due to fewer small enterprise transfers y Increased focus on China strategy y Philippines inbound remittance growth remained strong y Asia Pacific region represen
Slide 11: Expand the C2B/Payments Business
Expand the C2B/Payments Business Q1 09 Revenue Transactions C2B/Payments (8)% 2% y Nearly 90% of revenue is U.S. derived y International and product expansion is key y Real-time offering with Yodlee and Fidelity National Information Services y New leadership 11
Slide 12: Proven Business Model
Proven Business Model y Performing well in challenging environment y World class brand y Diverse network across 200 countries and territories y Strong balance sheet, cash flow and margin 12
Slide 13: Scott Scheirman, Executive Vice President & CFO
Scott Scheirman Executive Vice President & Chief Financial Officer
Slide 14: Financial Results – Q1 2009
Financial Results – Q1 2009 Revenue $1.2B (5)% Revenue, constant currency flat EPS $0.32 19% EPS, excluding Q1 2008 restructuring 10% EPS, constant currency $0.33 Q1 results in-line with expectations Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 14
Slide 15: Components of Revenue
Components of Revenue Transaction Fee Foreign Exchange (6)% $1,021 $959 (2)% $210 $205 Q1 08 Q1 09 Q1 08 Q1 09 $ in millions 15
Slide 16: Consumer-to-Consumer
Consumer-to-Consumer (millions) Change Q1 2009 Transactions 46 7% Revenue $1,004 (5)% Revenue, constant currency 1% Operating Income $287 5% Operating Margin 28.6% 270 bp 84% of revenue Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 16
Slide 17: C2C Transaction and Revenue Growth
C2C Transaction and Revenue Growth Q1 2009 7% 1% (5)% Transaction Mix Price Constant Currency Reported Grow th Reductions Currency Im pact Revenue Revenue Grow th Grow th Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 17
Slide 18: Strong C2C Operating Margin
Strong C2C Operating Margin First Quarter 270 bp y Call center relocations 28.6% y Workforce reductions 25.9% y Combining of C2C regions y Expense management 2008 2009 18
Slide 19: Consumer-to-Business/Payments
Consumer-to-Business/Payments (millions) Q1 2009 Change Transactions 106 2% Revenue $174 (8)% Operating Income $50 (10)% Operating Margin 29% (60) bp 14% of revenue 19
Slide 20: Cost of Services – Improving as Percent of Revenue
Cost of Services – Improving as Percent of Revenue First Quarter 59.9% 58.2% 55.7% 2008 2008 2009 Reported Excl. Restructuring Reported Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 20
Slide 21: SG&A – Consistent as Percent of Revenue
SG&A – Consistent as Percent of Revenue First Quarter 15.6% 15.5% 15.9% 2008 2008 2009 Reported Excl. Restructuring Reported Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 21
Slide 22: Improving Operating Margin
Improving Operating Margin First Quarter 28.4% 26.3% 24.4% 2008 2008 2009 Reported Excl. Restructuring Reported Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 22
Slide 23: Improving Tax Rate
Improving Tax Rate First Quarter 29.2% 29.8% 26.6% 2008 2008 2009 Reported Excl. Restructuring Reported Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 23
Slide 24: Liquidity is a Distinct Advantage
Liquidity is a Distinct Advantage Cash Flows From Operations, Q1 2009 $357 million Capital Expenditures, Q1 2009 $16 million Cash Balance, March 31, 2009 $1.5 billion Debt Balance, March 31, 2009 $3.1 billion $1 billion due in 2011 $500 million due in 2014 $1 billion due in 2016 $500 million due in
Slide 25: Reaffirm 2009 Outlook: Revenue
Reaffirm 2009 Outlook y Constant Currency Revenue to be down 2% to 5% y GAAP Revenue to be down 5% to 8% y Revenue assumptions include: – Mid- to high-single digit C2C transaction growth – Single-digit cross-border principal growth – Global market share gains – C2C principal per transaction to decli
Slide 26: Reaffirm 2009 Outlook: EPS
Reaffirm 2009 Outlook y Constant Currency EPS of $1.16 to $1.26 y GAAP EPS of $1.18 to $1.28 y EPS assumptions include: – FEXCO acquisition – Net other expense of $150 million – Tax rate of approximately 26% – Buyback of $400 million – Full-year margins of around 27% Note: See appendix for reconcili
Slide 27: Reaffirm 2009 Outlook: Cash Flow and Capex
Reaffirm 2009 Outlook y Cash Flow from Operations to exceed $1.1 billion y Capital Expenditures of less than $150 million 27
Slide 28: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer
Slide 29: Strong Get Stronger
Strong Get Stronger y 2009 a year of opportunity y Investing for tomorrow y More efficient regional structure with new leadership y Focus on the core and move money transfer business forward y Invest in initiatives that target broader payments market Setting the stage for strategic progress Creating
Slide 30: Building on Success – Attract New, Incremental Customers
Building on Success – Attract New, Incremental Customers y Westernunion.com y Made user experience easier and faster y Expanding internationally while improving margins y Intra-country opportunities y Leverage network and high brand awareness y Banking strategy y Expand distribution and extend brand
Slide 31: Building on Success – Mobile money transfer
Building on Success – Attract New, Incremental Customers y Mobile money transfer y Signing key operators y Implementing new test ® y Prepaid, reloadable MoneyWise™ Visa card y Innovated feature – Home Delivery y Expanding to additional cities 31
Slide 32: Significant Market Opportunity
Significant Market Opportunity y World Bank estimates remittance market returning to growth in 2010 y Mobile workforce continues to seek employment y Remittance flows remain resilient y Migrant population has increasing financial service needs Source: World Bank March 24, 2009 32
Slide 33: Western Union - Consumer Centric Organization
Western Union - Consumer Centric Organization y Demand based product development y In-house consumer database y yes! campaign y Efficient techniques including social media y Launched globally y Commercials running in 21 languages 33
Slide 34: Global Leader
Global Leader y Leadership position in growing market y 379,000 agent locations y Well-known brand y Geographically diverse revenue stream y Scalable infrastructure y Industry-leading compliance capabilities y Solid financial position Well positioned for long-term growth 34
Slide 35: Appendix
First Quarter 2009 Earnings Webcast & Conference Call Appendix April 21, 2009
Slide 36: Non-GAAP Measures
Non-GAAP Measures Western Union's management has presented: (1) Consolidated and consumer-to-consumer segment revenue growth, international consumer- to-consumer revenue growth and international consumer-to-consumer excluding United states originated transactions revenue growth, excluding the impact
Slide 37: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended March 31, International Consumer-to- Consumer excluding Consumer-to- International United States Consumer Consumer-to- originated Consolidated segment Consumer transactions 2009 Revenues, as re
Slide 38: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended March 31, 2009 2008 Revenues $ 1,201.2 $ 1,265.9 Cost of services, as reported (GAAP) $ 669.1 $ 758.6 Adjustments: Restructuring and related expenses (b) - (22.4) Cost of services, adjusted $ 6
Slide 39: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended March 31, 2009 2008 Revenues $ 1,201.2 $ 1,265.9 Selling, general and administrative, as reported (GAAP) $ 191.2 $ 198.0 Adjustments: Restructuring and related expenses (b) - (1.8) Selling, gen
Slide 40: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) (unaudited) Three Months Ended March 31, 2009 2008 Net income, as reported (GAAP) $ 223.9 $ 207.1 Adjustment: Restructuring and related expenses, net of income tax benefit of $9.1 million for the th
Slide 41: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended March 31, 2009 2008 Revenues $ 1,201.2 $ 1,265.9 Operating income, as reported (GAAP) $ 340.9 $ 309.3 Adjustment: Restructuring and related expenses (b) - 24.2 Operating income, adjusted $ 340.
Slide 42: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) (unaudited) Three Months Ended March 31, 2009 Net income, as reported (GAAP) $ 223.9 Adjustment: Reversal of impact from translation of foreign currency denominated amounts into United States dollar
Slide 43: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended March 31, 2009 2008 Income before income taxes, as reported (GAAP) $ 305.2 $ 292.5 Adjustments: Restructuring and related expenses (b) - 24.2 Income before income taxes, adjusted $ 305.2 $ 316.
Slide 44: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (unaudited) Three Months Ended March 31, 2009 2008 Consumer-to-consumer principal per transaction $ 358 $ 396 Adjustment: Reversal of impact from translation of foreign currency denominated amounts into United States dollars (a) 26 - Cons
Slide 45: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in billions) (unaudited) Three Months Ended March 31, 2009 2008 Consumer-to-consumer cross-border principal $ 15.0 $ 15.5 Adjustment: Reversal of impact from translation of foreign currency denominated amounts into United States dollars
Slide 46: Reconciliation of Non-GAAP Measures: 2009 Outlook
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (unaudited) 2009 Revenue Outlook Range Revenue decreases GAAP basis (5)% (8)% Adjustments: Reversal of estimated impact of translation of 3% 3% foreign currency denominated amounts into United States dollars (c) Adjusted estimated revenue
Slide 47: Footnote explanations
Footnote explanations (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 between foreign currencies and the U.S.
Slide 48: Use of Material
Use of Material The information contained in this presentation is being provided for your convenience and information only. This information is accurate as of the date of its initial presentation, April 21, 2009. If you plan to use this information for any purpose, verification of its continued accu
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