Western Union Company (the) · NYSE:WU
Western Union Company (the) — Q1 2017 Earnings Presentation
27 slides from Western Union Company (the)'s earnings presentation, May 2, 2017
Slide 1: Western Union
Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved.
Slide 2: Mike Salop, SVP 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 & CEO
Hikmet Ersek President & Chief Executive Officer Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 4
Slide 5: Overview: A solid start to the year
Overview A solid start to the year • GAAP revenues flat, while constant currency revenues increased 3%* • Strong growth from digital in consumer money transfer and from consumer bill payments • Westernunion.com transactions increased 27% • Returned more than $300 million to shareholders through buyb
Slide 6: Overview: Key strategic initiatives
Overview Key strategic initiatives • Implement WU Way transformation program • Expand mobile and online • Build account payout network and business • Improve and enhance customer experience Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 6
Slide 7: Raj Agrawal, EVP & CFO
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 revenue of $1.3 billion was flat with the prior year period, or increased 3% 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 Q1
Consumer-to-Consumer Q1 ▪ 78% of Company revenue ▪ Revenue flat with prior year period, or increased 2% constant currency* ▪ Total transactions increased 2% ▪ Cross-border principal increased 1%, or increased 2% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial
Slide 10: Consumer-to-Consumer
Consumer-to-Consumer Q1 2017 Constant Revenue Currency Rev. Transaction Growth/ Growth/ Growth/ % of C2C Decline Regions Decline* Decline Revenue North America 3% 4% 5% 37% Europe and CIS -1% 4% 8% 30% MEASA -13% -10% -15% 17% APAC -2% -1% -2% 8% LACA 26% 25% 17% 8% Total C2C 0% 2% 2% 100% Included
Slide 11: C2B and B2B Q1
C2B and B2B Q1 ▪ Consumer-to-Business ▪ 13% of Company revenue ▪ Revenue increased 8%, or increased 10% constant currency* ▪ Business Solutions ▪ 7% of Company revenue ▪ Revenue decreased 6%, or decreased 3% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial meas
Slide 12: Operating Margin Q1
Operating Margin Q1 30.0% 25.0% ▪ Operating margin 19.9% 19.5% * 20.0% 18.4% • GAAP margin includes $14 million of expenses related to the WU Way 15.0% transformation program 10.0% • Adjusted margin negatively impacted by foreign exchange and 5.0% unfavorable customer and funding mix in C2B, partial
Slide 13: C2C Operating Margin Q1
C2C Operating Margin Q1 40.0% 35.0% ▪ Operating margin 30.0% 25.0% 22.7% 22.4% • Negatively impacted by foreign 20.0% exchange, offset by benefits from timing of marketing spend 15.0% 10.0% 5.0% 0.0% Q1 2016 Q1 2017 Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved.
Slide 14: C2B Operating Margin Q1
C2B Operating Margin Q1 25.0% 20.0% 15.0% 14.6% ▪ Operating margin 12.2% • Negatively impacted by customer and 10.0% funding mix in the U.S. electronic business, including increased credit card usage 5.0% 0.0% Q1 2016 Q1 2017 Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights
Slide 15: B2B Operating Margin Q1
B2B Operating Margin Q1 ▪ Operating Margin ▪ Operating margin of 2.5% in the current period, compared to a 2.4% margin in the prior year period ▪ Depreciation and amortization of approximately $11 million, compared to $13 million in the prior year period ▪ EBITDA* margin of 13.7% compared to 15.1% i
Slide 16: Financial Strength
Financial Strength Quarter Ended March 31, 2017 Cash Flow from Operations $86 million Capital Expenditures $26 million Stock Repurchases $225 million Dividends Paid $83 million Cash Balance, March 31, 2017 $1.3 billion Debt Outstanding, March 31, 2017 $3.5 billion Western Union Confidential | ©2017
Slide 17: 2017 Outlook
2017 Outlook ▪ Revenue • Flat to low single digit decrease in GAAP revenues, or a low single digit increase constant currency* ▪ Operating Profit Margin • GAAP operating margin of approximately 18% and adjusted operating margin of approximately 20%* ▪ Earnings per Share • GAAP EPS in a range of $1.4
Slide 18: Questions & Answers
Questions & Answers Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 18
Slide 19: Appendix
Appendix First Quarter 2017 Earnings Webcast & Conference Call May 2, 2017 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 1Q16 2Q16 3Q16 4Q16 FY2016 1Q17 Consolidated Metrics Revenues, as reported (GAAP) $ 1,297.7 $ 1,375.7 $ 1,377.8 $ 1,371.7 $ 5,422.9 $ 1,302.4 Foreign currency translation impact (a) 57.4 48.9 52.1 58.7 217.1 30.1 Revenues, constant currency adjusted $ 1,355.1 $ 1,
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q16 2Q16 3Q16 4Q16 FY2016 1Q17 Consolidated Metrics (cont.) Operating income/(loss), as reported (GAAP) $ 258.6 $ 260.3 $ 278.3 $ (313.5) $ 483.7 $ 239.5 Reversal of depreciation and amortization 65.6 65.9 66.4 65.3 263.2 66.4 EBITDA (e) $ 324.2 $ 326.2 $ 344.7 $
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q16 2Q16 3Q16 4Q16 FY2016 1Q17 Consolidated Metrics (cont.) Effective tax rate, as reported (GAAP) 14.6 % 7.6 % 9.6 % (4.9)% 25.9 % 24.1 % Impact from Joint Settlement Agreements (b) N/A 1.8 % 1.6 % 9.7 % (15.9)% N/A Impact from WU Way business transformation exp
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q16 2Q16 3Q16 4Q16 FY2016 1Q17 Consumer-to-Consumer Segment (cont.) NA region revenue change, as reported (GAAP) 4% 6% 7% 8% 6% 3% NA region foreign currency translation impact (a) 1% 1% 0% 0% 1% 1% NA region revenue change, constant currency adjusted 5% 7% 7% 8%
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1Q16 2Q16 3Q16 4Q16 FY2016 1Q17 Consumer-to-Business Segment Revenues, as reported (GAAP) $ 156.1 $ 154.2 $ 155.7 $ 155.2 $ 621.2 $ 168.2 Foreign currency translation impact (a) 20.9 21.9 22.8 21.5 87.1 3.8 Revenues, constant currency adjusted $ 177.0 $ 176.1 $ 17
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2017 Consolidated Outlook Metrics Operating margin (GAAP) 18% WU Way business transformation expenses (c) 2% Operating margin, excluding WU Way business transformation expenses 20% Range Earnings per share (GAAP) ($ - dollars) $ 1.48 $ 1.60 WU Way business transfo
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