Western Union Company (the) · NYSE:WU

Western Union Company (the) — The Western Union Company — Q4 2013 Earnings Presentation

28 slides from Western Union Company (the)'s earnings presentation, Feb 11, 2014

  1. Slide 1: Fourth Quarter 2013 Earnings Webcast & Conference Call

    Fourth Quarter 2013 Earnings Webcast & Conference Call February 11, 2014

  2. Slide 2: Mike Salop, Senior Vice President, Investor Relations

    Mike Salop Senior Vice President, Investor Relations Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 2

  3. 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

  4. Slide 4: Hikmet Ersek, President & Chief Executive Officer

    Hikmet Ersek President & Chief Executive Officer Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 4

  5. Slide 5: Overview

    Overview 2013 results consistent with expectations  Investment year to better position business for the future  Increased compliance investments  EPS of $1.43 at high end of outlook range 2013 focused on three key strategic initiatives Western Union | ©2014 Western Union Holdings, Inc. All Rights

  6. Slide 6: 2013 Strategic Initiatives: Consumer Money Transfer

    2013 Strategic Initiatives Strengthening the consumer money transfer business – Q4  Strategic pricing actions yielding positive transaction results – Transaction growth 9% overall, and 20% in priced corridors  Strong growth in electronic channels – 32% revenue growth – wu.com C2C revenue growth ac

  7. Slide 7: 2013 Strategic Initiatives: Business-to-Business

    2013 Strategic Initiatives Driving growth in customers and usage in business- to-business – Q4  Delivered 8% revenue growth, or 12% constant currency*  Sequential constant currency revenue growth improvement throughout 2013 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measu

  8. Slide 8: 2013 Strategic Initiatives: Cash Flow for Shareholders

    2013 Strategic Initiatives Generating and deploying strong cash flow for shareholders - 2013  Cash flow from operations of approximately $1.1 billion  Returned $671 million to shareholders through share repurchases and dividends Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserve

  9. Slide 9: 2014 Strategic Focus

    2014 Strategic Focus Strengthening consumer money transfer  Electronic channel expansion Driving growth in Business Solutions  Sales force effectiveness and product development  Tailored product solutions for specific markets and channels Generate and deploy strong cash flow  New $500 million sh

  10. Slide 10: Raj Agrawal, Interim Chief Financial Officer

    Raj Agrawal Executive Vice President & Interim Chief Financial Officer Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 10

  11. Slide 11: Revenue Q4

    Revenue Q4 ($ in millions) $1,425 $1,422  Consolidated revenue flat on $31 $30 a reported basis, and increased 1% constant $337 $350 currency*  Transaction fee revenue decreased 1% $1,057 $1,042  Foreign exchange revenue increased 4% Q4 2012 Q4 2013 Transaction Fee Foreign Exchange Other *Note: S

  12. Slide 12: Consumer-to-Consumer Q4

    Consumer-to-Consumer Q4  81% of Company revenue  Reported revenue decreased 1%, or flat constant currency*  Total transactions increased 9%  In priced corridors, transactions increased 20%, or 15% excluding wu.com  In non-priced corridors, transactions increased 5%  Cross-border principal incr

  13. Slide 13: C2C Transaction and Revenue Analysis

    C2C Transaction and Revenue Analysis Q4 2013 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 13

  14. Slide 14: Consumer-to-Consumer by Region Q4 2013

    Consumer-to-Consumer Q4 2013 Revenue Growth/ Currency Transaction % of Total Regions Decline Impact** Growth Revenue Europe and CIS -2% 1% 7% 22% North America -2% 0% 6% 18% Middle East and Africa 0% 0% 8% 16% Asia Pacific -2% -2% 11% 12% LACA -4% -8% 6% 9% westernunion.com 34% -1% 64% 4% **Note: Cu

  15. Slide 15: Electronic Channels Q4

    Electronic Channels Q4  Electronic channels revenue increased 32% – Electronic channels represented 5% of Company revenue – Account based money transfer revenue increased 33% and transactions grew 63%; over 75 banks active globally – Westernunion.com C2C revenue increased 34% and transactions grew

  16. Slide 16: C2B, B2B and Prepaid Q4

    C2B, B2B and Prepaid Q4  Consumer-to-Business  10% of Company revenue  Revenue declined 2%, or increased 5% constant currency*  Business Solutions  7% of Company revenue  Revenue increased 8%, or 12% and 8% on constant currency*  Prepaid  1% of Company revenue  Revenue declined 9% *Note: Se

  17. Slide 17: Operating Margin Q4

    Operating Margin Q4 30.0% 25.0%  Operating margin decrease 20.1% • Primarily result of pricing and 20.0% other strategic investments, 16.8% higher compliance expense, and 15.0% lower compensation expense in the prior year quarter, partially 10.0% offset by lower marketing expense 5.0% 0.0% Q4 2012

  18. Slide 18: C2C Operating Margin Q4

    C2C Operating Margin Q4 30.0% 25.0% 25.0%  Operating margin decrease 20.5% 20.0% • Primarily result of pricing and other strategic investments, 15.0% higher compliance expense, and lower compensation expense in 10.0% the prior year quarter, partially offset by lower marketing 5.0% expense 0.0% Q4 2

  19. Slide 19: C2B Operating Margin Q4

    C2B Operating Margin Q4 30.0% 25.0%  Operating margin decrease 20.0% • Primarily due to higher IT expense, 17.0% bank fees driven by mix, and the 15.6% 15.0% pass-through to billers of Durbin related debit card savings, which 10.0% were partially offset by non- recurring costs in the prior year 5.0

  20. Slide 20: Business Solutions Operating Loss Q4

    Business Solutions Operating Loss Q4  Operating Loss  Operating loss of $11 million compared to an operating loss of $18 million in the prior year period  Includes $13 million of depreciation and amortization in current quarter and $18 million in the prior year period  Includes $5 million of int

  21. Slide 21: Financial Strength

    Financial Strength Full Year 2013 Cash Flow from Operations $1.1 billion Capital Expenditures $241 million Stock Repurchases $394 million Dividends Paid $277 million Cash Balance, Dec. 31, 2013 $2.1 billion Debt Outstanding, Dec. 31, 2013 $4.2 billion  $500 million of debt to be repaid February 201

  22. Slide 22: 2014 Outlook

    2014 Outlook  Revenue – Low to mid-single digit constant currency revenue increase – Flat to low single digit GAAP revenue growth, which reflects expected negative currency impact from certain emerging market countries  Margins – GAAP operating margin in a range of 19% to 20%  Earnings per Share

  23. Slide 23: Questions & Answers

    Questions & Answers Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 23

  24. Slide 24: Appendix

    Appendix Fourth Quarter 2013 Earnings Webcast & Conference Call February 11, 2014 Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 24

  25. Slide 25: 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

  26. Slide 26: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 4Q12 FY2012 1Q13 2Q13 3Q13 4Q13 FY2013 Consolidated Metrics Revenues, as reported (GAAP) $ 1,424.7 $ 5,664.8 $ 1,325.4 $ 1,385.9 $ 1,408.8 $ 1,421.9 $ 5,542.0 Foreign currency translation impact (a) 13.4 93.8 12.3 14.9 19.2 23.9 70.3 Revenues, constant currency ad

  27. Slide 27: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 4Q12 FY2012 1Q13 2Q13 3Q13 4Q13 FY2013 Consumer-to-Business Segment Revenues, as reported (GAAP) $ 152.1 $ 603.9 $ 153.7 $ 153.0 $ 152.3 $ 149.5 $ 608.5 Foreign currency translation impact (a) 4.9 15.5 5.9 7.2 8.3 10.2 31.6 Revenues, constant currency adjusted $ 1

  28. Slide 28: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2014 Outlook Metrics Operating cash flow (GAAP) $ 900 Payments on IRS Agreement (d) 100 Operating cash flow, IRS Agreement adjusted $ 1,000 Non-GAAP related notes: (a) Represents the impact from the fluctuation in exchange rates between all foreign currency denomi

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