Western Union Company (the) · NYSE:WU
Western Union Company (the) — Q2 2018 Earnings Presentation
28 slides from Western Union Company (the)'s earnings presentation, Aug 2, 2018
Slide 1: Western Union
Western Union | ©2018 Western Union Holdings, Inc. All rights reserved.
Slide 2: Mike Salop, Senior Vice President, Investor Relations
Mike Salop Senior Vice President, Investor Relations Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 2
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 Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 4
Slide 5: Overview: Solid performance in the second quarter
Overview Solid performance in the second quarter • Revenue growth of 2%, or 3% on a constant currency basis* • Growth led by consumer money transfer • 22% increase in westernunion.com revenue • Business Solutions declined, bill payments businesses mixed • Operating margin 20.1% Returned over $420 mi
Slide 6: Overview: Strategic initiatives
Overview Strategic initiatives • Expand digital offerings • Enhance the customer experience • Enter new cross-border opportunities • Drive ongoing operating efficiencies Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 6
Slide 7: Raj Agrawal, Executive Vice President & Chief Financial Officer
Raj Agrawal Executive Vice President & Chief Financial Officer Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 7
Slide 8: Revenue
Revenue . Consolidated revenues of $1.4 billion increased 2% compared to the prior year period, or 3% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 8
Slide 9: Consumer-to-Consumer Q2
Consumer-to-Consumer Q2 . 80% of Company revenue . Revenue increased 4% on a reported basis, or 3% constant currency* . Total transactions increased 5% . Cross-border principal increased 9%, or 8% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Weste
Slide 10: Consumer-to-Consumer Q2 2018 by region
Consumer-to-Consumer Q2 2018 Constant Revenue Currency Rev. Transaction % of C2C Regions Change Change* Change Revenue North America 3% 3% 2% 37% Europe and CIS 9% 4% 9% 32% MEASA (4%) (5%) (1%) 15% LACA 11% 20% 16% 9% APAC (5%) (5%) 0% 7% Total C2C 4% 3% 5% 100% Included in C2C regions above: weste
Slide 11: Business Solutions and Other Q2
Business Solutions and Other Q2 . Business Solutions (B2B) . 7% of Company revenue . Revenue decreased 4%, or declined 6% constant currency* . Other (primarily bill payments businesses in the U.S. & Argentina) . 13% of Company revenue . Revenue decreased 2%, or increased 9% constant currency* *Note:
Slide 12: Operating Margin Q2
Operating Margin Q2 25.0% 23.0% 21.7%* 21.0% 20.1% 19.0% . Operating margin 17.0% 15.6% • Increase in reported operating 15.0% margin primarily due to NYDFS 13.0% settlement accrual and WU Way 11.0% related expenses incurred in the prior year period 9.0% • Adjusted operating margin decrease 7.0% dri
Slide 13: C2C Operating Margin Q2
C2C Operating Margin Q2 30.0% 24.9% 25.0% 23.6% . Operating margin 20.0% • Decrease was primarily due to timing of marketing and 15.0% compliance related spending 10.0% 5.0% 0.0% Q2 2017 Q2 2018 Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 13
Slide 14: B2B Operating Margin Q2
B2B Operating Margin Q2 . Operating margin . Operating margin of 1.2% in the quarter compared to 5.5% in the prior year period, which declined primarily due to lower revenue and increases in various expenses . Depreciation and amortization of approximately $11 million in both the current and prior y
Slide 15: Other Operating Margin Q2
Other Operating Margin Q2 (Primarily consists of bill payments businesses in the U.S. & Argentina) 14.0% 12.1% 12.0% 10.0% 8.5% . Operating margin 8.0% • The decline was primarily due to 6.0% lower revenue and higher bank fees in the U.S. electronic bill payments 4.0% business 2.0% 0.0% Q2 2017 Q2 2
Slide 16: Other Financial Highlights
Other Financial Highlights YTD June 30, 2018 Cash Flow from Operations $299 million Capital Expenditures $91 million Stock Repurchases $250 million Dividends Paid $173 million Cash Balance, June 30, 2018 $938 million Debt Outstanding, June 30, 2018 $3.3 billion Western Union | ©2018 Western Union Ho
Slide 17: 2018 Outlook
2018 Outlook . Revenue • Low single-digit GAAP revenue increase (previously low to mid-single-digit increase) and low to mid-single-digit increase constant currency revenue* . Operating Profit Margin • Operating margin of approximately 20% . Earnings per Share • GAAP EPS in a range of $1.82 to $1.92
Slide 18: Questions & Answers
Questions & Answers Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 18
Slide 19: Appendix
Appendix Second Quarter 2018 Earnings Webcast & Conference Call Western Union | ©2018 Western Union Holdings, Inc. All rights reserved. 19
Slide 20: 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 21: Reconciliation of Non-GAAP Measures: Consolidated Metrics
Reconciliation of Non-GAAP Measures 2Q17 3Q17 4Q17 FY2017 1Q18 2Q18 YTD 2Q18 Consolidated Metrics Revenues, as reported (GAAP) $ 1,378.9 $ 1,404.7 $ 1,438.3 $ 5,524.3 $ 1,389.4 $ 1,411.1 $ 2,800.5 Foreign currency translation impact (a) 29.0 7.7 (5.5) 61.3 (18.9) 9.1 (9.8) Revenues, constant currenc
Slide 22: Reconciliation of Non-GAAP Measures: Consolidated Metrics cont.
Reconciliation of Non-GAAP Measures 2Q17 3Q17 4Q17 FY2017 1Q18 2Q18 YTD 2Q18 Consolidated Metrics cont. Operating income/(loss), as reported (GAAP) (i) $ 215.4 $ 272.2 $ (251.9) $ 475.8 $ 264.9 $ 283.6 $ 548.5 Reversal of depreciation and amortization 65.2 65.5 65.8 262.9 66.7 65.7 132.4 EBITDA (g)
Slide 23: Reconciliation of Non-GAAP Measures: Consolidated Metrics cont.
Reconciliation of Non-GAAP Measures 2Q17 3Q17 4Q17 FY2017 1Q18 2Q18 YTD 2Q18 Consolidated Metrics cont. Diluted earnings/(loss) per share ("EPS"), as reported (GAAP) ($ - dollars) $ 0.35 $ 0.51 $ (2.44) $ (1.19) $ 0.46 $ 0.47 $ 0.93 EPS impact as a result of Goodwill impairment ($ - dollars) (b) N/A
Slide 24: Reconciliation of Non-GAAP Measures: Consumer-to-Consumer Segment
Reconciliation of Non-GAAP Measures 2Q17 3Q17 4Q17 FY2017 1Q18 2Q18 YTD 2Q18 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,087.3 $ 1,107.7 $ 1,144.5 $ 4,354.5 $ 1,091.0 $ 1,127.5 $ 2,218.5 Foreign currency translation impact (a) 20.8 1.8 (9.0) 37.7 (26.4) (9.6) (36.0) Revenues, const
Slide 25: Reconciliation of Non-GAAP Measures: Consumer-to-Consumer Segment cont.
Reconciliation of Non-GAAP Measures 2Q17 3Q17 4Q17 FY2017 1Q18 2Q18 YTD 2Q18 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 3% 1% 3% 2% 4% 3% 4% NA region foreign currency translation impact (a) 0% 0% 0% 1% 0% 0% (1)% NA region revenue change, constant currency adjus
Slide 26: Reconciliation of Non-GAAP Measures: Business Solutions Segment
Reconciliation of Non-GAAP Measures 2Q17 3Q17 4Q17 FY2017 1Q18 2Q18 YTD 2Q18 Business Solutions Segment Revenues, as reported (GAAP) $ 96.6 $ 99.4 $ 94.3 $ 383.9 $ 96.7 $ 93.1 $ 189.8 Foreign currency translation impact (a) 3.2 (1.2) (3.0) 1.8 (4.8) (2.7) (7.5) Revenues, constant currency adjusted $
Slide 27: Reconciliation of Non-GAAP Measures: Notes
Reconciliation of Non-GAAP Measures 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 be
Slide 28: Reconciliation of Non-GAAP Measures: Notes continued
Reconciliation of Non-GAAP Measures Non-GAAP related notes continued: (g) Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") results from taking operating income and adjusting for depreciation and amortization expenses. EBITDA results provide an additional performance measurem