Western Union Company (the) · NYSE:WU

Western Union Company (the) — The Western Union Company — Q3 2016 Earnings Presentation

24 slides from Western Union Company (the)'s earnings presentation, Nov 1, 2016

  1. Slide 1: Third Quarter 2016 Earnings Webcast & Conference Call

    THIS IS THIRD QUARTER 2016 Earnings Webcast & aul Conference Call November 1, 2016 ed ' / WESTERN i - moving money for better onion WW

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

    Mike Salop Senior Vice President, Investor Relations 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 4

  5. Slide 5: Overview

    Overview Delivered solid results for the third quarter • Consumer money transfer performance driven by westernunion.com and the U.S. business, offset by oil related softness in many Middle East and African countries • Operating margin of 20.2% • Returned $162 million to shareholders through dividend

  6. Slide 6: Raj Agrawal, Executive Vice President & Chief Financial Officer

    Raj Agrawal Executive Vice President & Chief Financial Officer 6

  7. Slide 7: Revenue

    Revenue ($ in millions) $1,399 $1,378  Consolidated revenue $32 $36 decreased 2%, or increased 2% constant currency* $372 $382  Transaction fee revenue decreased 3%  Foreign exchange revenue $995 $960 increased 2% Q3 2015 Q3 2016 Transaction Fee Foreign Exchange Other *Note: See appendix for reco

  8. Slide 8: Consumer-to-Consumer Q3

    Consumer-to-Consumer Q3  80% of Company revenue  Revenue decreased 1%, or increased 1% constant currency*  Total transactions increased 2%  Cross-border principal decreased 3%, or 2% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 8

  9. Slide 9: C2C Transaction and Revenue Analysis

    C2C Transaction and Revenue Analysis Q3 2016 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 9

  10. Slide 10: Consumer-to-Consumer

    Consumer-to-Consumer Q3 2016 Constant Revenue Currency Rev. Transaction Growth/ Growth/ Growth/ % of C2C Decline Regions Decline* Decline Revenue North America 6% 7% 7% 29% Europe and CIS -2% 1% 2% 26% Middle East and Africa -10% -8% -9% 19% Asia Pacific -4% -3% -5% 14% LACA 3% 8% 12% 12% Total C2C

  11. Slide 11: C2B and B2B Q3

    C2B and B2B Q3  Consumer-to-Business  11% of Company revenue  Revenue declined 3%, or increased 11% constant currency*  Business Solutions  7% of Company revenue  Revenue decreased 4%, or was flat constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures.

  12. Slide 12: Operating Margin Q3

    Operating Margin Q3  Operating margin 30.0% 25.0% • Negatively impacted by $15 21.8% million FTC accrual (110 basis 20.2% 20.0% points), foreign exchange, customer and funding mix in 15.0% C2B, and incremental technology expense 10.0% • Partially offset by lower compensation and depreciation 5.0% a

  13. Slide 13: C2C Operating Margin Q3

    C2C Operating Margin Q3 30.0% 25.5% 25.0% 23.4%  Operating margin 20.0% • Negatively impacted by $15 million FTC accrual (140 basis 15.0% points), foreign exchange and incremental technology expense 10.0% • Partially offset by lower 5.0% compensation related expenses 0.0% Q3 2015 Q3 2016 13

  14. Slide 14: C2B Operating Margin Q3

    C2B Operating Margin Q3 30.0% 25.0% 20.0% 16.4%  Operating margin 15.0% • Negatively impacted by customer and funding mix in the U.S. 10.0% 9.1% electronic business 5.0% 0.0% Q3 2015 Q3 2016 14

  15. Slide 15: B2B Operating Profit

    B2B Operating Profit  Operating Profit  Operating profit of $3 million in the current period compared to a loss of $3 million in the prior year period  Depreciation and amortization of approximately $13 million, compared to $20 million in the prior year period  Operating profit margin improved t

  16. Slide 16: Financial Strength

    Financial Strength YTD September 30, 2016 Cash Flow from Operations $822 million Capital Expenditures $177 million Stock Repurchases $402 million Dividends Paid $235 million Cash Balance, September 30, 2016 $1.3 billion Debt Outstanding, September 30, 2016 $3.2 billion 16

  17. Slide 17: 2016 Outlook

    2016 Outlook  Revenue • Decrease of approximately 1%, or an increase of approximately 3% constant currency*  Operating Profit Margin • Operating margin of approximately 20%  Earnings per Share • EPS in a range of $1.60 to $1.70  Cash Flow • Cash flow from operating activities of approximately $1

  18. Slide 18: Questions & Answers

    Questions & Answers 18

  19. Slide 19: Appendix

    Appendix Third Quarter 2016 Earnings Webcast & Conference Call November 1, 2016 19

  20. 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

  21. Slide 21: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q15 4Q15 FY2015 1Q16 2Q16 3Q16 YTD 3Q16 Consolidated Metrics Revenues, as reported (GAAP) $ 1,399.2 $ 1,380.0 $ 5,483.7 $ 1,297.7 $ 1,375.7 $ 1,377.8 $ 4,051.2 Foreign currency translation impact (a) 85.4 73.9 322.6 57.4 48.9 52.1 158.4 Revenues, constant currenc

  22. Slide 22: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q15 4Q15 FY2015 1Q16 2Q16 3Q16 YTD 3Q16 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,112.9 $ 1,091.2 $ 4,343.9 $ 1,017.4 $ 1,095.8 $ 1,098.9 $ 3,212.1 Foreign currency translation impact (a) 67.1 56.8 256.0 30.5 23.0 25.3 78.8 Revenues, constant

  23. Slide 23: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q15 4Q15 FY2015 1Q16 2Q16 3Q16 YTD 3Q16 Consumer-to-Consumer Segment (cont.) North America region revenue change, as reported (GAAP) 2% 3% 2% 3% 6% 6% 5% North America region foreign currency translation impact (a) 2% 2% 1% 2% 1% 1% 1% North America region revenu

  24. Slide 24: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q15 4Q15 FY2015 1Q16 2Q16 3Q16 YTD 3Q16 Consumer-to-Business Segment Revenues, as reported (GAAP) $ 160.1 $ 161.9 $ 637.7 $ 156.1 $ 154.2 $ 155.7 $ 466.0 Foreign currency translation impact (a) 5.6 7.8 24.6 20.9 21.9 22.8 65.6 Revenues, constant currency adjusted

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