Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q4 2017 Earnings Presentation
28 slides from Western Union Company (the)'s earnings presentation, Feb 13, 2018
Slide 1: Western Union
Western Union Confidential | ©2017 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 Confidential | ©2017 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 Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 4
Slide 5: Overview
Overview Solid business performance in the fourth quarter • Revenue growth accelerated to 5%, or 4% on a constant currency basis* • Improved trends in consumer money transfer • Westernunion.com money transfer revenues increased 22% • Strong growth from bill payments businesses • Declines in Business
Slide 6: Overview: 2018 strategic plans
Overview 2018 strategic plans • Drive digital expansion in consumer money transfer • Optimize customer experience in retail money transfer • Implement new go-to-market strategies in payments businesses and leverage digital platforms Generate operating efficiencies to fuel long-term growth Western Un
Slide 7: Raj Agrawal, Executive Vice President & Chief Financial Officer
Raj Agrawal Executive Vice President & Chief Financial Officer Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 7
Slide 8: Revenue
Revenue ▪ Consolidated revenues of $1.4 billion increased 5% compared to the prior year period, or 4% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 8
Slide 9: Consumer-to-Consumer Q4
Consumer-to-Consumer Q4 ▪ 80% of Company revenue ▪ Revenue increased 5% on a reported basis and 4% constant currency* ▪ Total transactions increased 3% ▪ Cross-border principal increased 6%, or 4% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Weste
Slide 10: Consumer-to-Consumer
Consumer-to-Consumer Q4 2017 Constant Revenue Currency Rev. Transaction % of C2C Regions Change Change* Change Revenue North America 3% 3% 1% 37% Europe and CIS 6% 2% 7% 31% MEASA 1% 0% (2%) 16% LACA 21% 23% 17% 9% APAC 0% 0% 3% 7% Total C2C 5% 4% 3% 100% Included in C2C regions above: westernunion.
Slide 11: Business Solutions and Other Q4
Business Solutions and Other Q4 ▪ Business Solutions (B2B) ▪ 6% of Company revenue ▪ Revenue decreased 4%, or declined 8% constant currency* ▪ Other (primarily bill payments businesses in the U.S. & Argentina) ▪ 14% of Company revenue ▪ Revenue increased 11%, or 14% constant currency* *Note: See app
Slide 12: Operating Margin Q4
Operating Margin Q4 25.0% 19.7% * 20.0% 17.9% * 15.0% 10.0% 5.0% ▪ Operating margin 0.0% • Adjusted operating margin -5.0% decreased primarily due to higher -10.0% marketing spending and the negative impact of foreign exchange -15.0% -20.0% -17.6% -25.0% -22.9% -30.0% Q4 2016 Q4 2017 Q4 2016 Q4 2017
Slide 13: C2C Operating Margin Q4
C2C Operating Margin Q4 30.0% 25.0% 22.8% 21.4% ▪ Operating margin 20.0% • Decreased due to higher marketing 15.0% spending and the negative impact of foreign exchange, partially offset by a lower average commission 10.0% rate and decreased technology expenses 5.0% 0.0% Q4 2016 Q4 2017 Western Union
Slide 14: B2B Operating Margin Q4
B2B Operating Margin Q4 ▪ Operating Margin ▪ Operating margin declined to (3.2%) in the current period from 9.7% in the prior year period due to lower revenues and higher technology and other operating expenses ▪ Depreciation and amortization of approximately $11 million, compared to $12 million in
Slide 15: Other Operating Margin Q4
Other Operating Margin Q4 (Primarily consists of bill payments businesses in the U.S. & Argentina) 10.0% 8.0% 7.8% 6.6% ▪ Operating margin 6.0% • Improvement was driven by revenue growth, partially offset by the 4.0% negative impact of foreign exchange 2.0% 0.0% Q4 2016 Q4 2017 Western Union Confide
Slide 16: Other Financial Highlights
Other Financial Highlights Year Ended December 31, 2017 Cash Flow from Operations $736 million Capital Expenditures $177 million Stock Repurchases $487 million Dividends Paid $326 million Cash Balance, December 31, 2017 $838 million Debt Outstanding, December 31, 2017 $3.0 billion Western Union Conf
Slide 17: 2018 Outlook
2018 Outlook ▪ Revenue • Low to mid-single digit increase in both GAAP and constant currency revenue* ▪ Operating Profit Margin • Operating margin of approximately 20% ▪ Earnings per Share • EPS in a range of $1.78 to $1.90 ▪ Cash Flow • GAAP Cash flow from operating activities of approximately $800
Slide 18: Questions & Answers
Questions & Answers Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 18
Slide 19: Appendix
Appendix Fourth Quarter 2017 Earnings Webcast & Conference Call Western Union Confidential | ©2017 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
Reconciliation of Non-GAAP Measures 4Q16 FY2016 1Q17 2Q17 3Q17 4Q17 FY2017 Consolidated Metrics Revenues, as reported (GAAP) $ 1,371.7 $ 5,422.9 $ 1,302.4 $ 1,378.9 $ 1,404.7 $ 1,438.3 $ 5,524.3 Foreign currency translation impact (a) 58.7 217.1 30.1 29.0 7.7 (5.5) 61.3 Revenues, constant currency a
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q16 FY2016 1Q17 2Q17 3Q17 4Q17 FY2017 Consolidated Metrics cont. Operating income/(loss), as reported (GAAP) $ (313.5) $ 483.7 $ 239.5 $ 214.8 $ 271.6 $ (252.5) $ 473.4 Reversal of depreciation and amortization 65.3 263.2 66.4 65.2 65.5 65.8 262.9 EBITDA (h) $ (2
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q16 FY2016 1Q17 2Q17 3Q17 4Q17 FY2017 Consolidated Metrics cont. Diluted earnings/(loss) per share ("EPS"), as reported (GAAP) ($ - dollars) $ (0.73) $ 0.51 $ 0.33 $ 0.35 $ 0.51 $ (2.44) $ (1.19) EPS impact as a result of Goodwill impairment ($ - dollars) (b) N/A
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q16 FY2016 1Q17 2Q17 3Q17 4Q17 FY2017 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,092.5 $ 4,304.6 $ 1,015.0 $ 1,087.3 $ 1,107.7 $ 1,144.5 $ 4,354.5 Foreign currency translation impact (a) 33.4 112.2 24.1 20.8 1.8 (9.0) 37.7 Revenues, constant cu
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q16 FY2016 1Q17 2Q17 3Q17 4Q17 FY2017 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 8% 6% 3% 3% 1% 3% 2% NA region foreign currency translation impact (a) 0% 1% 1% 0% 0% 0% 1% NA region revenue change, constant currency adjusted
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q16 FY2016 1Q17 2Q17 3Q17 4Q17 FY2017 Business Solutions Segment Revenues, as reported (GAAP) $ 98.8 $ 396.0 $ 93.6 $ 96.6 $ 99.4 $ 94.3 $ 383.9 Foreign currency translation impact (a) 3.9 15.0 2.8 3.2 (1.2) (3.0) 1.8 Revenues, constant currency adjusted $ 102.7
Slide 27: 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 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Non-GAAP related notes continued: (g) Represents the impact from a settlement agreement reached with the Consumer Financial Protection Bureau regarding the Equity Accelerator service of Paymap, Inc., a subsidiary of the Company (the "Paymap Settlement Agreement"),
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