Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q1 2008 Earnings Presentation
36 slides from Western Union Company (the)'s earnings presentation, Apr 22, 2008
Slide 1: First Quarter 2008 Earnings Webcast & Conference Call
First Quarter 2008 Earnings Webcast & Conference Call April 22, 2008 1
Slide 2: Gary Kohn, Vice President Investor Relations
Gary Kohn Vice President Investor Relations 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: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer 4
Slide 5: Strong First Quarter Results
Strong First Quarter Results Revenue $1.27B up 12% • C2C revenue and transactions up 14% • International C2C revenue and transactions up 19% – International (excluding U.S.-originated) • Revenue up 28%, transactions up 29% • Stability of Mexico business 4th consecutive quarter of organic revenue 5 g
Slide 6: Strong First Quarter Results
Strong First Quarter Results EPS, ex restructuring $0.29 up 16% EPS, reported $0.27 up 8% 6 Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Slide 7: Driving Success
Driving Success Huge Market Opportunity Brand Recognition Unmatched Distribution Financial Strength 7
Slide 8: Q1 Growth in Top Remittance Markets
Q1 08 Growth in Top Remittance Markets Revenue Transactions India 52% 65% China 35% 22% Chinese New Year Promotional Materials India and China represent 6% of Western Union revenue 8
Slide 9: 1. Grow the C2C Business
1. Grow the C2C Business • Increase distribution – 345,000 agent locations – Key signings and renewals – Vigo international expansion • Brand strategy – Extending the brand – Loyalty initiatives • Expand distribution channels – westernunion.com – Scotiabank 9
Slide 10: 2. Expand the C2B Business
2. Expand the C2B Business • Pago Fácil performing well – Expanding footprint in Latin America • Small business payment options – www.globalbusinesspayments.com • Yodlee Partnership 10
Slide 11: 3. Innovate New Services and Technologies
3. Innovate New Services and Technologies • Mobile Money Transfer – Customer pilot test to begin in Q2 with: • Globe Telecom & Smart Communications in the Philippines – Expanded Radio Shack, Trumpet mobile offering • Micro Lending – Marketing to select Western Union customers – Pilot test in process
Slide 12: 4. Focus on Profitability
4. Focus on Profitability • Operating income margin improvement is an ongoing objective • Goal to improve 2009 margin by up to 50 basis points • Maintain important investments in the business 12
Slide 13: Strong First Quarter
Strong First Quarter • Solid financial results • Loyal customers • Global presence • World-class team of agents and employees 13
Slide 14: Scott Scheirman, Executive Vice President & CFO
Scott Scheirman Executive Vice President & CFO 14
Slide 15: Strong First Quarter Results
Strong First Quarter Results Revenue $1.27B up 12% EPS, ex restructuring $0.29 up 16% EPS, reported $0.27 up 8% Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Geographically diverse revenue stream 15
Slide 16: Imported Labor Drives Growth
Imported Labor Drives Growth • UAE – Huge opportunity – Native Population = 1 million – Expatriates = 4 million – Home to 16% of the world’s construction cranes Dubai decades ago Dubai today 16
Slide 17: Components of Revenue
Components of Revenue $ in millions Transaction Fee Foreign Exchange Up 10% $1,021 $930 Up 26% $210 $167 Q1 07 Q1 08 Q1 07 Q1 08 Foreign exchange revenue driven by international transaction growth 17
Slide 18: Operating Income Margin
Operating Income Margin • Q1 operating income margin impacted by: – Restructuring expenses – C2B product mix shift • Expect 2008 operating income margin excluding restructuring expenses to be consistent with 2007 • Operating income margin stronger in second half 18
Slide 19: Profitability Initiatives
Profitability Initiatives • Q1 Restructuring expense = $24 million – $17 million related to the transition of Missouri and Texas operations – $7 million related to January and February actions • Full-year 2008 restructuring expenses estimated at $69 million • Expected savings of $10 million in 2008
Slide 20: Selected Financial Results
Selected Financial Results Excluding $ in billions except for per share Restructuring and tax rate information Q1 2008 Q1 2007 % Change Expense Revenue $ 1.266 $ 1.131 12% Cost of Services 0.759 0.646 17% 14% SG&A 0.198 0.181 10% 9% Operating Income 0.309 0.305 2% 9% Total other expense, net (0.017)
Slide 21: Strong Cash Generation and Position
Strong Cash Generation and Position $ in millions Q1 2008 Cash Flow From Operations $ 318 Cash Balance on March 31 $ 1,895 Capital Expenditures $ 23 Stock Repurchases 14 Million Shares $ 297 Remaining for buyback March 31 $ 956 Investing in the business and returning capital to shareholders 21
Slide 22: Consumer-to-Consumer
Consumer-to-Consumer (millions) Q1 2008 Change Transactions 43.1 14% Revenue $1,054 14% Operating income $273 15% Operating margin 25.9% +10bps 22
Slide 23: Consumer-to-Consumer Growth
Consumer-to-Consumer Growth Q1 08 Revenue Transactions International 19% 19% International excluding U.S. Outbound 28% 29% Mexico 1% 2% Domestic (8%) (3%) 23
Slide 24: Consumer-to-Business
Consumer-to-Business (millions) Q1 2008 Change Transactions 103.5 3% Revenue $190 4% Operating income $56 (8%) Operating margin 29.6% (380bps) 24
Slide 25: 2008 Financial Guidance
2008 Financial Guidance Revenue Growth 9% to 11% Cash Flow from Operations $1.2 Billion Capital Expenditures <$200 Million EPS, Excluding $0.06 of restructuring $1.25 to $1.29 expenses, and including $0.01 in cost savings GAAP EPS $1.19 to $1.23 25 Note: See appendix for reconciliation of Non-GAAP t
Slide 26: Summary
Summary • International strength driving revenue and earnings • Important cost-savings measures implemented • Strong cash flow in 2008 • Cash priorities remain: • Grow the business • Make acquisitions • Return capital to shareholders primarily through stock buyback Confident in the state of the busi
Slide 27: Questions and Answers
wale ELE | UNION Questions and Answers 27
Slide 28: Driving Success
Driving Success Huge Market Opportunity Brand Recognition Unmatched Distribution Financial Strength 28
Slide 29: Appendix
First Quarter 2008 Earnings Webcast & Conference Call April 22, 2008 Appendix 29
Slide 30: Non-GAAP Measures
Non-GAAP Measures Western Union’s management has presented revenue growth excluding the foreign currency translation impact of euro denominated revenues. In addition, Western Union's management has presented cost of services as a percent of revenue, operating income margin, and growth rates for cost
Slide 31: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended March 31, 2008 2007 Growth Revenue as reported (GAAP) $ 1,265.9 $ 1,131.0 12% Adjustments: Benefit from euro translation (a) (32.9) - Revenue adjusted $ 1,233.0 $ 1,131.0 9% Three Months Ended
Slide 32: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended March 31, 2008 As reported Restructuring and (GAAP) Related Expenses (b) Adjusted Revenues $ 1,265.9 $ - $ 1,265.9 Cost of services 758.6 (22.4) 736.2 Selling, general and administrative 198.0
Slide 33: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) EPS Guidance Range 2008 EPS Guidance GAAP basis $ 1.19 $ 1.23 Adjustment: Estimated restructuring and related expenses, net of income tax benefit (b), (c) 0.06 0.06 Adjusted 2008 EPS Guidance, excluding estimated
Slide 34: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (a) Represents a benefit in the fluctuation in the exchange rate between the euro and the United States dollar. This benefit would not have occurred had there been a constant exchange rate, and was net of the impact of our foreign currenc
Slide 35: Restructuring Expenses
Restructuring Expenses During the quarter, Western Union incurred a total of $24 million in restructuring expenses. Of this total, $17 million is related to the company’s decision to close substantially all of its union operating facilities in Missouri and Texas as disclosed on March 20. The restruc
Slide 36: Use of Material
Use of Material The information contained in this presentation is being provided for your convenience and information only. This information is accurate as of the date of its initial presentation, April 22, 2008. If you plan to use this information for any purpose, verification of its continued accu
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