Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q2 2019 Earnings Presentation
27 slides from Western Union Company (the)'s earnings presentation, Aug 1, 2019
Slide 1: Second Quarter 2019 Earnings Webcast & Conference Call
SECOND QUARTER 2019 Earnings Webcast & Conference Call August 1, 2019
Slide 2: Mike Salop, SVP Investor Relations
Mike Salop Senior 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: Hikmet Ersek, President & CEO
Hikmet Ersek President & Chief Executive Officer 4
Slide 5: Overview: Second quarter results
Overview Second quarter results Second quarter results stable Westernunion.com money transfer revenue Speedpay and Paymap divestitures completed growth of 18%, or 20% constant currency* Business Solutions achieved constant currency for approximately $750 revenue growth for fourth consecutive quarter
Slide 6: Overview: Second quarter business highlights
Overview Second quarter business highlights Continue to sign new agreements that expand our unique cross-border platform into new areas • TD Bank customers can now send Western Union cross-border money transfers digitally, funded from their accounts • UK Post Office has expanded digital internationa
Slide 7: Begins implementation of new Global Strategy
Overview Begins implementation of new Global Strategy Announced the changes to the Company’s operating model designed to drive profitability, efficiency, and long-term growth Expect to generate annual savings of $100 million beginning in 2021, with approximately $50 million anticipated in 2020 Expen
Slide 8: Raj Agrawal, EVP & Chief Financial Officer
Raj Agrawal Executive Vice President & Chief Financial Officer 8
Slide 9: Revenue Q2
Revenue Q2 Consolidated revenues of $1.3 billion declined 5% compared to the prior year period, or increased 4% on an adjusted constant currency basis* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 9
Slide 10: Consumer-to-Consumer Q2
Consumer-to-Consumer Q2 ▪ 83% of Company revenue ▪ Revenues declined 1%, or increased 1% constant currency* ▪ Transactions increased 1% ▪ Cross-border principal was flat, or increased 3% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 10
Slide 11: Consumer-to-Consumer Q2 2019 by region
Consumer-to-Consumer Q2 2019 Revenue Constant Currency Transaction % of C2C Regions Change Rev. Change* Change Revenue North America 2% 2% (1%) 38% Europe and CIS (3%) 1% 4% 32% MEASA (3%) (1%) (3%) 15% LACA 4% 16% 11% 9% APAC (14%) (12%) (9%) 6% Total C2C (1%) 1% 1% 100% Included in C2C regions abo
Slide 12: Business Solutions and Other Q2
Business Solutions and Other Q2 Business Solutions (B2B) ▪ 7% of Company revenue ▪ Revenue increased 3%, or increased 7% constant currency* Other (primarily retail bill payments businesses in the U.S. & Argentina) ▪ 10% of Company revenue ▪ Revenue decreased 31% *Note: See appendix for reconciliatio
Slide 13: Operating Margin Q2
Operating Margin Q2 20.1% 19.3% 20.2% 20.3% GAAP operating margin declined due to the impact of the sale of the Speedpay business, higher marketing spending, and restructuring expenses, which were partially offset by Business Solutions margin improvement and other operating efficiencies Q2 2018 Q2 2
Slide 14: Other Financial Highlights
Other Financial Highlights Year-to-Date June 30, 2019 Cash Flow from Operations $403 million Capital Expenditures $75 million Stock Repurchases $335 million Dividends Paid $173 million Cash Balance, June 30, 2019 $1.2 billion Debt Outstanding, June 30, 2019 $3.1 billion 14
Slide 15: 2019 Outlook
2019 Outlook Revenue Earnings per Share Mid-single-digit GAAP revenue decrease (no change from EPS in a range of $2.47 to $2.57 (previously $2.66 to previous outlook) $2.76); change reflects impact from restructuring expenses Low single-digit adjusted constant currency revenue increase, Adjusted EPS
Slide 16: Questions and Answers
Questions and Answers 16
Slide 17: Appendix
Appendix Second Quarter 2019 Earnings Webcast & Conference Call 17 17
Slide 18: Non-GAAP Measures
Non-GAAP Measures Western Union's management believes the non-GAAP financial measures A non-GAAP financial measure should not be considered in isolation or as a presented provide meaningful supplemental information regarding our operating substitute for the most comparable GAAP financial measure. A
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 YTD 2Q19 Consolidated Metrics Revenues, as reported (GAAP) $ 1,411.1 $ 1,387.8 $ 1,401.6 $ 5,589.9 $ 1,337.0 $ 1,340.5 $ 2,677.5 Foreign currency translation impact (a) 9.1 52.8 68.9 111.9 77.2 74.2 151.4 Revenues, constant currency
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 YTD 2Q19 Consolidated Metrics cont. Operating income, as reported (GAAP) $ 283.6 $ 302.6 $ 271.0 $ 1,122.1 $ 251.2 $ 258.9 $ 510.1 Operating margin, as reported (GAAP) 20.1 % 21.8 % 19.3 % 20.1 % 18.8 % 19.3 % 19.1 % Speedpay and Pa
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 YTD 2Q19 Consolidated Metrics cont. Net income, as reported (GAAP) $ 217.6 $ 208.6 $ 212.1 $ 851.9 $ 173.1 $ 614.8 $ 787.9 Restructuring-related expenses (e) N/A N/A N/A N/A N/A 7.4 7.4 Acquisition and divestiture costs (f) 1.8 2.6
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 YTD 2Q19 Consolidated Metrics cont. Effective tax rate, as reported (GAAP) 15 % 22 % 10 % 14 % 20 % 18 % 18 % Impact from restructuring-related expenses (e) N/A N/A N/A N/A N/A — % — % Impact from acquisition and divestiture costs (
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 YTD 2Q19 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 3 % 2 % 0 % 2 % 1 % 2 % 1 % NA region foreign currency translation impact (a) 0 % 0 % 0 % 0 % 0 % 0 % 1 % NA region revenue change, constant cu
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 YTD 2Q19 Business Solutions Segment Revenues, as reported (GAAP) $ 93.1 $ 100.2 $ 96.8 $ 386.8 $ 95.6 $ 95.6 $ 191.2 Foreign currency translation impact (a) (2.7) 2.3 2.6 (2.6) 4.6 3.6 8.2 Revenues, constant currency adjusted $ 90.4
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2019 Consolidated Outlook Metrics Operating cash flow (GAAP) ($- millions) $ 800 Impact from estimated cash payments related to restructuring-related expenses and acquisition and divestiture costs ($- millions) (e)(f) 60 Impact from tax payments related to net gai
Slide 26: Reconciliation of Non-GAAP Measures
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 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Non-GAAP related notes (continued): (c) 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 measu
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