Slide 1: Fourth Quarter 2011 Earnings Webcast & Conference Call
Western Union Fourth Quarter 2011 Earnings Webcast & Conference Call February 7, 2012
Slide 2: Mike Salop, Senior Vice President, 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 & Chief Executive Officer
Hikmet Ersek President & Chief Executive Officer
Slide 5: 2011 Highlights
2011 Highlights Evolved Brand MasterCard Announced Prepaid & MT Resolved $1B buy-back Partnership IRS tax authorization issue Agent Completed Locations Restructuring reach ~485,000 2011 Increased EPS guidance Acquired Launched $0.06 WU Ventures, Completed E-channels $800 Million 35% Rev Share Growth
Slide 6: Focus on Execution
Focus on Execution Global Consumer Financial Services C2C and Consumer Bill Pay Western Union Ventures WU.com, Prepaid/Stored Value, Mobile New products and services Western Union Business Solutions B2B 6
Slide 7: 2 Billion Consumers Worldwide
2 Billion Consumers Worldwide Our objective: To be the premier financial service provider for the underserved The underserved – More than just the immigrant population 7 SOURCE: McKinsey & Co., October 2009; CGAP, 2009; C.K. Prahalad, 2004; Hammond et all, 2007; World Bank 2009, Company analysis
Slide 8: Global Consumer Financial Services
Global Consumer Financial Services Transition from a transaction based company to consumer-centric organization Increase loyalty and add new consumers Accelerate network expansion in 2012 8
Slide 9: Electronic Channels
Electronic Channels Digital business headquartered in San Francisco Investing in people and technology to redesign consumer experience, offer multiple funding and receive options, and optimize risk mitigation Grow Westernunion.com from over $100 million in revenues to over $500 million in reve
Slide 10: Western Union Business Solutions
Western Union Business Solutions Focus on growth and integration of Travelex Global Business Payments (TGBP) Ended the year with approximately 100,000 customers in 23 countries, including over 500 financial institutions Significant opportunity to increase market share Adding sales resources
Slide 11: Positioned for Growth
Positioned for Growth Global Consumer Financial Services Strong foundation and brand Expand global network Western Union Ventures Build a world class digital business Western Union Business Solutions Integrate and grow B2B 11
Slide 12: Scott Scheirman, Executive Vice President & Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer
Slide 13: Revenue
Revenue ($ in millions) $1,357 $1,431 Consolidated revenue up $27 $31 5%, or up 6% constant $322 currency adjusted* $268 Excluding TGBP up 3%, or 4% constant currency* Transaction fees increased 2% $1,082 Foreign exchange revenue $1,058 increased 20% TGBP acquisition aided FX revenue Q4 20
Slide 14: Consumer-to-Consumer
Consumer-to-Consumer C2C Transactions (millions) C2C revenue growth of 3% reported and constant currency* 56 +5% 59 Total Q4 Western Union cross- border principal of $19 billion Increased 2% on a reported basis Increased 3% constant currency* Principal per transaction Declined 2% on a re
Slide 15: Consumer-to-Consumer: EMEASA
Consumer-to-Consumer Q4 2011 Revenue Transactions Europe, Middle East, Africa, S. Asia 2% 3% 43% of Western Union revenue Reported revenue growth moderated from Q3 due to currency and challenges in Southern Europe and Russia U.K., France, and Germany performed well India grew revenue 12% and
Slide 16: Consumer-to-Consumer: Americas
Consumer-to-Consumer Q4 2011 Revenue Transactions Americas 3% 6% 31% of Western Union revenue Domestic money transfer grew revenue 7% and transactions 11% Mexico revenue declined 1% while transactions increased 1% U.S. outbound revenue growth improved from Q3 16
Slide 17: Consumer-to-Consumer: Asia Pacific
Consumer-to-Consumer Q4 2011 Revenue Transactions Asia Pacific 6% 8% 9% of Western Union revenue Philippines delivered growth similar to Q3 and Australia delivered solid growth, though not as strong as Q3 China revenue down 5% and transactions grew 1% 17
Slide 18: C2C Transaction and Revenue Growth
C2C Transaction and Revenue Growth Q4 2011 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 18
Slide 19: Electronic Channels & Prepaid Q4 Highlights
Electronic Channels & Prepaid Q4 Highlights Account-based money transfer Over 40% transaction growth Agreements in place with over 80 banks globally Westernunion.com Transactions increased by over 30% Over 40% transaction growth in international markets Prepaid Nearly 1.5 million pre
Slide 20: Global Business Payments
Global Business Payments Q4 2011 Revenue Global Business Payments 24% 16% of Western Union revenue Business Solutions revenue growth of 13% excluding TGBP Consumer Bill Payments revenue increased 2% 20
Slide 21: Operating Margin – Q4
Operating Margin – Q4 25.0% 25.0% Operating margin excluding 24.5% restructuring expense improved 23.7% 50 basis points* • Benefits from revenue leverage, restructuring savings, Durbin, and lower marketing expense • TGBP results negatively impacted 4Q margin by 100 basis points • Deal costs relate
Slide 22: Operating Margin – Full Year
Operating Margin – Full Year 26.2% 26.1% 25.0% 25.2% Operating margin excluding restructuring relatively flat* • Benefits from restructuring savings and revenue leverage offset by foreign exchange, spending on initiatives, and acquisition deal costs GAAP Excluding Restructuring* *Note: See appendi
Slide 23: EPS – Q4
EPS – Q4 Other income gains Gain of $20 million relating to the revaluation of the Company’s previous ownership position in Finint and $21 million on foreign currency forward contracts related primarily to the acquisition of Travelex Global Business Payments Tax agreement Benefit of approxim
Slide 24: C2C Operating Margin – Q4
C2C Operating Margin – Q4 29.0% 28.0% C2C 83% of total company revenue 27.0% 27.0% Operating margin increased 100 basis 25.0% points from prior year 23.0% • Benefits from restructuring savings and revenue leverage 21.0% 19.0% 17.0% 15.0% Q4 2010 Q4 2011 24
Slide 25: Global Business Payments Operating Margin – Q4
Global Business Payments Operating Margin – Q4 GBP 16% of total company revenue Operating margin improvement 17.5% Revenue leverage, restructuring savings, Durbin benefit, lower integration and investment spending in WUBS 13.3% Q4 2010 Q4 2011 25
Slide 26: Financial Strength
Financial Strength 2011 Cash Flow from Operations $1.2 billion Capital Expenditures $163 million Stock Repurchases $800 million Dividends Paid $194 million Cash Balance, Dec. 31, 2011 $1.4 billion Debt Outstanding, Dec. 31, 2011 $3.6 billion 26
Slide 27: 2012 Outlook - Revenues
2012 Outlook - Revenues 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 Consumer-to-consumer trends expected to be similar to fourth quarter 2011 Western Union Business Solutions app
Slide 28: 2012 Outlook - Margins
2012 Outlook - Margins Operating margins expected to be similar to 2011 GAAP operating margin of approximately 25%, compared to 25.2% in 2011 Operating margin excluding TGBP integration costs of approximately 26%, compared to 26.2%, excluding TGBP integration costs and restructuring expenses i
Slide 29: 2012 Outlook – EPS
2012 Outlook – EPS Net Other Expense expected to increase due to $71 million of non- recurring acquisition related gains in 2011 Effective tax rate in a range of 16% to 17% GAAP EPS in a range of $1.65 to $1.70, or $1.70 to $1.75 excluding TGBP integration expense* Compares to $1.57 in 2011
Slide 30: 2012 Outlook – Cash Flow
2012 Outlook – Cash Flow GAAP cash flows from operations in range of $1.0 billion to $1.1 billion, or $1.2 billion to $1.3 billion excluding estimated tax payments of approximately $200 million related to the IRS agreement* Capital expenditures in a range of 4% to 5% of revenue due to key agent
Slide 31: Questions & Answers
Questions & Answers
Slide 32: Appendix
Appendix Fourth Quarter 2011 Earnings Webcast & Conference Call February 7, 2012 32
Slide 33: 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 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q10 FY2010 1Q11 2Q11 3Q11 4Q11 FY2011 Consolidated Metrics Revenues, as reported (GAAP) $ 1,357.0 $ 5,192.7 $ 1,283.0 $ 1,366.3 $ 1,410.8 $ 1,431.3 $ 5,491.4 Reversal of TGBP revenues, including foreign currency translation impact (a) N/A N/A N/A N/A N/A (35.2) (
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q10 FY2010 1Q11 2Q11 3Q11 4Q11 FY2011 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,151.8 $ 4,383.4 $ 1,078.1 $ 1,155.1 $ 1,193.3 $ 1,181.9 $ 4,608.4 Foreign currency translation impact (b) 18.0 32.3 2.2 (31.4) (17.9) 8.0 (39.1) Revenues, constant
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2011 Effective Tax Rate 4Q11 FY2011 Effective tax rate, as reported (GAAP) (28.3)% 8.6 % IRS agreement tax provision benefit impact (e) 58.1% 16.1% Restructuring and related expenses, net of income tax benefit impact (c) N/A 0.2% Effective tax rate, restructuring
Slide 37: Footnote explanations
Footnote explanations Non-GAAP related notes: (a) Represents the incremental impact, including the impact from fluctuations in exchange rates, when applicable, of Travelex Global Business Payments ("TGBP") on consolidated revenue. (b) Represents the impact from the fluctuation in exchange rates betw