Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q2 2012 Earnings Presentation
27 slides from Western Union Company (the)'s earnings presentation, Jul 24, 2012
Slide 1: Second Quarter 2012 Earnings Webcast & Conference Call
Western Union Second Quarter 2012 Earnings Webcast & Conference Call July 24, 2012
Slide 2: Mike Salop, SVP Investor Relations
Mike Salop Senior 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: Hikmet Ersek, President & CEO
Hikmet Ersek President & Chief Executive Officer
Slide 5: Strategic Overview
Strategic Overview Vision: Premier financial services provider for the underserved Focused on key strategies to accelerate growth for the long-term Expanding our network and increasing consumer retention in Global Consumer Financial Services; Expanding penetration and services in Business So
Slide 6: Q2 Highlights
Q2 Highlights Solid C2C results overall Flat revenue reported or 3% constant currency* growth Consistent C2C margins Continued strategic progress in Business Solutions and Ventures Approximately 510,000 Agent locations globally Returned over $430 million through buyback and dividends year-
Slide 7: Scott Scheirman, EVP & CFO
Scott Scheirman Executive Vice President Chief Financial Officer & Global Operations
Slide 8: Revenue
Revenue ($ in millions) $1,366 $1,425 Consolidated revenue up 4% $31 reported and 7% constant $30 currency adjusted* $279 $335 Pro forma revenue increased 2% constant currency, including Travelex Global Business Payments (TGBP) in prior period* $1,057 $1,059 Foreign exchange revenue increased
Slide 9: Consumer-to-Consumer
Consumer-to-Consumer C2C 81% of Company revenue C2C revenue growth flat, or 3% constant currency* Transaction growth of 4% Total Q2 Western Union cross-border principal of $18 billion Declined 2% on a reported basis Increased 1% constant currency* Principal per transaction Declined 6
Slide 10: Consumer-to-Consumer
Consumer-to-Consumer Q2 2012 Revenue Currency Transaction % of Total Regions Growth Impact* Growth Revenue Europe and CIS -8% -5% -2% 22% North America 0% 0% 2% 21% Middle East and Africa 3% -3% 9% 15% Asia Pacific 4% -2% 5% 12% LACA 5% -2% 5% 9% westernunion.com 23% -4% 35% 2% *Note: Currency impac
Slide 11: Electronic Channels & Prepaid Highlights
Electronic Channels & Prepaid Highlights Account based money transfer Revenue increased 34% Agreements in place with nearly 100 banks globally westernunion.com C2C revenue increased 23% (includes 4% negative impact from currency translation) Transactions grew 35% Prepaid Revenue incr
Slide 12: C2C Transaction and Revenue Growth
C2C Transaction and Revenue Growth Q2 2012 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 12
Slide 13: C2B and B2B
C2B and B2B Consumer-to-Business C2B 11% of Company revenue Revenue declined 3%, or flat constant currency* Business Solutions Business Solutions 6% of Company revenue Pro forma revenue increased 4% constant currency*, including TGBP in the prior year period *Note: See appendix for recon
Slide 14: Operating Margin
Operating Margin 25.7% 26.3% 24.3% 25.3% Operating margin excluding restructuring expense and TGBP integration expense declined 100 basis points • Business Solutions results negatively impacted margin, including $10 million of incremental TGBP depreciation and amortization • C2C margins consistent
Slide 15: C2C Operating Margin
C2C Operating Margin 29.0% 28.6% 28.5% 27.0% Operating margin decreased 10 basis points from prior year 25.0% • Benefits from currency, lower 23.0% average commission rates, and lower marketing were offset by higher 21.0% compliance costs (primarily related to Southwest Border), Costa and Finint 1
Slide 16: C2B Operating Margin
C2B Operating Margin 29.0% 27.0% Operating margin lower 25.0% 24.6% Primarily due to geographic and product mix and higher 23.0% 22.4% bank fees, partially offset by 21.0% decreased debit fees related to Durbin 19.0% 17.0% 15.0% Q2 2011 Q2 2012 16
Slide 17: Business Solutions Operating Margin
Business Solutions Operating Margin Operating Loss Operating loss of $15 million compared to an operating loss of $2 million in the prior year period Includes $15 million of depreciation and amortization in current quarter, compared to $5 million in the prior year period Includes $14 million
Slide 18: Financial Strength
Financial Strength YTD 2012 Cash Flow from Operations* $446 million Capital Expenditures $121 million Stock Repurchases $309 million Dividends Paid $122 million Cash Balance, June 30, 2012 $1.4 billion Debt Outstanding, June 30, 2012 $3.7 billion * Note: Includes the impact of tax payments of approx
Slide 19: 2012 Outlook
2012 Outlook Revenue Constant currency revenue growth in the range of 6% to 8%*, including 4% benefit from a full year of TGBP GAAP revenue growth 2% lower than constant currency Business Solutions pro forma constant currency revenue growth of mid-single digits, including TGBP revenue in the
Slide 20: 2012 Outlook
2012 Outlook Tax Rate Effective tax rate in a range of 15% to 16%, including the non-recurring benefit in the second quarter. Previous outlook was 16% to 17% Earnings per Share GAAP EPS in a range of $1.68 to $1.72, compared to previous outlook of $1.65 to $1.70 (increase primarily due to no
Slide 21: Questions & Answers
Questions & Answers
Slide 22: Appendix
Appendix Second Quarter 2012 Earnings Webcast & Conference Call July 24, 2012 22
Slide 23: 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 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q11 3Q11 4Q11 FY2011 1Q12 2Q12 YTD 2Q12 Consolidated Metrics Revenues, as reported (GAAP) $ 1,366.3 $ 1,410.8 $ 1,431.3 $ 5,491.4 $ 1,393.4 $ 1,425.1 $ 2,818.5 Foreign currency translation impact (a) (32.5) (18.2) 10.4 (38.0) 8.1 34.6 42.7 Revenues, constant curr
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q11 3Q11 4Q11 FY2011 1Q12 2Q12 YTD 2Q12 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,155.1 $ 1,193.3 $ 1,181.9 $ 4,608.4 $ 1,124.6 $ 1,155.0 $ 2,279.6 Foreign currency translation impact (a) (31.4) (17.9) 8.0 (39.1) 5.2 30.1 35.3 Revenues, consta
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2012 Outlook Metrics Range Revenue change (GAAP) 4% 6% Foreign currency translation impact (g) 2% 2% Revenue change, constant currency adjusted 6% 8% Operating income margin (GAAP) 24.5 % TGBP integration expense impact (d) 1.0 % Operating income margin, TGBP inte
Slide 27: Footnote explanations
Footnote explanations 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 between foreign
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