Western Union Company (the) · NYSE:WU
Western Union Company (the) — Q2 2010 Earnings Presentation
26 slides from Western Union Company (the)'s earnings presentation, Jul 27, 2010
Slide 1: Western Union Second Quarter 2010 Earnings Webcast & Conference Call
Western Union Second Quarter 2010 Earnings Webcast & Conference Call July 27, 2010 Exhibit 99.2
Slide 2: Mike Salop, Senior Vice President, Investor Relations
Mike Salop Senior Vice President, Investor Relations * * *
Slide 3: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer * * *
Slide 4: Overview
Overview Continued momentum Diversified portfolio Americas improvement Strong margins and shareholder payout Global network, emerging opportunities Foundation for future growth
Slide 5: Hikmet Ersek, Chief Operating Officer & CEO-Elect
Hikmet Ersek Chief Operating Officer & CEO-Elect * * *
Slide 6: Q2 Highlights
Q2 Highlights Consumer-to-Consumer money transfer Broad-based growth Americas leading improvement Continued growth internationally Global Business Payments Custom House expanded U.S. bill payment declined as expected Electronic Channels Prepaid: >500,000 prepaid cards; >8,000 locations offering card
Slide 7: Consumer-to-Consumer: EMEASA
Consumer-to-Consumer Revenue Transactions Q2 2010 (1)% 5% Europe, Middle East, Africa, S. Asia 44% of Western Union revenue EMEASA constant currency revenue increased Transaction growth in European Union Solid performance in Russia Modest transaction declines in Gulf
Slide 8: Consumer-to-Consumer: Americas
Consumer-to-Consumer Revenue Transactions Americas 1% 12% 32% of Western Union revenue Momentum continued from recent quarters Positive quarter for Mexico Solid performance in U.S Outbound 28% U.S. domestic money transfer transaction growth; >30% operating margin Q2 2010
Slide 9: Consumer-to-Consumer: Asia Pacific
Consumer-to-Consumer Revenue Transactions Asia Pacific 11% 14% 8% of Western Union revenue Philippines transaction growth remained strong China grew revenue 11% on 6% transaction increase Opportunities in Japanese market Q2 2010
Slide 10: Global Business Payments
Global Business Payments Revenue Transactions Global Business Payments 9% (6)% 14% of Western Union revenue Custom House revenue increased to $28 million; investing to expand Challenges in U.S. bill payments; integrating with Americas Pago Facil continued positive performance Q2 2010
Slide 11: Restructuring Overview
Restructuring Overview Objectives: Enhance speed and execution Drive long-term growth Realize cost efficiencies Reduce layers and leverage cost structure Leverage global centers of excellence On-going commitment to process improvement
Slide 12: Scott Scheirman, Executive Vice President & Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer * * *
Slide 13: Revenue
Revenue ($ in millions) $1,254 Consolidated revenue up 2% or up 3% constant currency adjusted Transaction fees flat Foreign exchange revenue increased 15%, primarily due to Custom House $1,273 Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Slide 14: C2C Remittance Trends
C2C Remittance Trends +9% Total Q2 Western Union cross- border principal of $17 billion Increased 6% on reported basis Increased 7% constant currency Principal per transaction declined 2% C2C Transactions (millions) Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Slide 15: C2C Transaction and Revenue Growth
+9% +2% +1% C2C Transaction and Revenue Growth Transaction Growth Domestic Price Reduction / Mix Other Price Reductions Other Mix Constant Currency Revenue Growth Currency Impact GAAP Revenue Growth Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Q2 2010
Slide 16: Operating Margin
Operating Margin Consistent o perating margin YoY excluding restructuring • Lower marketing • Custom House investment and amortization Operating margin excluding restructuring improved 150 basis points from Q1 10 Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Slide 17: Restructuring Update
Restructuring Update ~$80 million restructuring charges expected through 2011 Majority to occur in 2010 $35 million restructuring charge in Q2 ~$10 million in Cost of Services ~$25 million in SG&A ~$50 million annualized pre-tax savings in 2012 ~$10 million savings in 2010 $30 million to $40 million
Slide 18: C2C Operating Margin
C2C Operating Margin C2C operating margin increased 150 basis points YoY Lower marketing Operational efficiencies C2C operating margin improved 170 basis points from Q1 10 Expect full year C2C margin expansion in 2010 compared to
Slide 19: Global Business Payments Operating Margin
Global Business Payments Operating Margin Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Segment margin declined YoY Custom House investments and amortization Reduced volumes in U.S. bill payment business Custom House Base business profitable Slightly dilutive in 2010 due to inv
Slide 20: Financial Strength
Financial Strength YTD Cash Flow from Operations Excluding Tax Deposit $576 million Refundable IRS Tax Deposit ($250) million GAAP Cash Flow from Operations $326 million Capital Expenditures $44 million Stock Repurchases $417 million Dividends $80 million Cash Balance, June 30, 2010 $1.7 billion Deb
Slide 21: 2010 Outlook
2010 Outlook GAAP revenue in a range of -2% to +1% Constant currency revenue growth 2% higher than GAAP (0% to +3%) GAAP EPS of $1.24 to $1.29, including $0.07 of restructuring charges EPS excluding restructuring charges of $1.31 to $1.36 Constant currency EPS $0.02 higher GAAP cash flow from operat
Slide 22: Questions & Answers
Questions & Answers Hikmet Ersek & Scott Scheirman * * *
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q09 3Q09 4Q09 FY2009 1Q10 2Q10 YTD 2Q10 Consolidated Metrics Revenues, as reported (GAAP) $ 1,254.3 $ 1,314.1 $ 1,314.0 $ 5,083.6 $ 1,232.7 $ 1,273.4 $ 2,506.1 Foreign currency translation impact (a) 60.1 31.1 (32.4) 119.5 (20.0) 16.1 (3.9) Revenues, constant cur
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q09 3Q09 4Q09 FY2009 1Q10 2Q10 YTD 2Q10 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,065.5 $ 1,117.8 $ 1,113.7 $ 4,300.7 $ 1,030.2 $ 1,073.1 $ 2,103.3 Foreign currency translation impact (a) 55.2 24.4 (36.2) 101.3 (21.9) 15.0 (6.9) Revenues, cons
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q09 3Q09 4Q09 FY2009 1Q10 2Q10 YTD 2Q10 Global Business Payments Segment . Revenues, as reported (GAAP) $ 164.4 $ 171.3 $ 181.8 $ 691.7 $ 181.8 $ 179.3 $ 361.1 Reversal of Custom House revenues (e) N/A (7.9) (22.9) (30.8) (25.6) (28.5) (54.1) Revenues, excluding
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2010 Revenue Outlook Range Revenue change (GAAP) (2)% 1 % Foreign currency translation impact (f) 2 % 2 % Revenue change, constant currency adjusted 0 % 3 % 2010 Operating Income Margin Outlook Range Operating income margin (GAAP) 24.5% 25.0% Impact from restructu