Slide 1: Fourth Quarter and Year End 2009 Earnings Webcast & Conference Call
Fourth Quarter and Year End 2009 Earnings Webcast & Conference Call February 3, 2010
Slide 2: Mike Salop, Senior Vice President Investor Relations
Mike Salop Senior Vice President Investor Relations
Slide 3: Safe Harbor
5 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 pr
Slide 4: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer
Slide 5: 2009 Highlights
9 2009 Highlights Delivered on financial outlook Growing share of remittance market Advanced key initiatives Custom House and FEXCO Bank distribution in North America U.S. domestic money transfer Strong financial position Western Union Estimated Share of Cross-Border Remittance Market * * Aite, Apri
Slide 6: Hikmet Ersek, Chief Operating Officer
Hikmet Ersek Chief Operating Officer
Slide 7: C2C Highlights
13 C2C Highlights Note: See appendix for reconciliation of Non-GAAP to GAAP measures. C2C Revenue - Q4 2009 2 % C2C Revenue - Q4 2009, constant currency (2)% C2C Transactions - Q4 2009 5 % WU Cross-border Principal - Full Year 2009 (3)% Industry Cross-border Principal - Full Year 2009* (5)%-(7)% Geo
Slide 8: Geographically Diverse Portfolio - Europe, Middle East, Africa, S. Asia
15 Geographically Diverse Portfolio - C2C Revenue Transactions Q4 09 6% 8% Europe, Middle East, Africa, S. Asia 46% of Western Union revenue W. Europe accelerated from Q3 2009, particularly U.K. and Germany Spain and Russia improved Gulf States slowed significantly 28% FY09 operating profit margin
Slide 9: Geographically Diverse Portfolio - Americas
17 Geographically Diverse Portfolio - C2C Revenue Transactions Q4 09 Americas (7)% flat 31% of Western Union revenue Americas trends improved significantly from recent quarters Domestic transactions up 5% U.S outbound improved Mexico negative, though decline moderated from recent quarters 26% FY09 o
Slide 10: Geographically Diverse Portfolio - Asia Pacific
19 Geographically Diverse Portfolio - C2C Revenue Transactions Q4 09 Asia Pacific 14% 13% 8% of Western Union revenue China 22% revenue growth and 8% transaction growth Asia Pacific region remains underpenetrated Leveraging cost structure 27% FY09 operating profit margin
Slide 11: Global Business Payments
21 Revenue Transactions Q4 09 Global Business Payments 4% (4)% 14% of Western Union revenue Excluding Custom House, revenue declined 9% U.S. consumer bill payment challenging Pago Facil transactions continue to grow Custom House expansion plan underway Global Business Payments Note: See appendix for
Slide 12: Scott Scheirman, Executive Vice President & Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer
Slide 13: Financial Results
25 Financial Results Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Q4 09 FY09 Revenue $1.3B $5.1B Revenue - YoY Change 2% (4)% Revenue - YoY Change, constant currency (1)% (1)% EPS $0.32 $1.21 EPS, excluding settlement accrual $1.29
Slide 14: Operating Margin - Full Year
27 Operating Margin - Full Year Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Operating margin declined 60 basis points Commission initiatives 2008 restructuring Custom House and FEXCO acquisition- related costs Other expenses Cost of services decreased 80 basis points SG&A inc
Slide 15: Operating Margin - Fourth Quarter
29 Operating Margin - Fourth Quarter Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Operating margin declined 420 basis points Custom House and FEXCO acquisition related costs Increased marketing U.S. domestic re-pricing Retail Money Order portfolio Technology investments Cost o
Slide 16: Tax Rate
31 Tax Rate Fourth Quarter Full Year
Slide 17: C2C Q4 2009 Trends
C2C Q4 2009 Trends Principal per transaction down 6% (constant currency) Down 2% as reported International C2C transaction and revenue trends improved sequentially International PPT declined 5% (constant currency) Flat on a reported basis 33 Up 5% C2C Transactions (millions) Note: See appendix for r
Slide 18: C2C Operating Margin
35 C2C Operating Margin Fourth Quarter Full Year
Slide 19: C2C Transaction and Revenue Growth
+ 5% - - 2% + 2% Transaction Growth Mix Price Reductions Constant Currency Revenue Decline Currency Impact GAAP Revenue Growth 37 C2C Transaction and Revenue Growth Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Excluding currency and domestic re-pricing, other factors consisten
Slide 20: Global Business Payments Operating Margin
39 Global Business Payments Operating Margin Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Fourth Quarter Full Year
Slide 21: Financial Strength - 2009
41 Financial Strength - 2009 Cash Flow from Operations $1.2 billion Capital Expenditures $99 million Stock Repurchases $400 million Dividends $41 million Cash Balance, December 31, 2009 $1.7 billion Debt Outstanding, December 31, 2009 $3.0 billion
Slide 22: 2010 Outlook
43 2010 Outlook GAAP revenue growth range (1)% to +2% Constant currency revenue growth 1% lower than GAAP C2C revenue outlook C2C market share gains Gulf States to slow from 2009 levels Domestic to return to revenue growth late 2010 Global Business Payments revenue outlook Softness in U.S. consumer
Slide 23: 2010 Outlook
45 2010 Outlook Operating income margins C2C margins expanding Global Business Payments margins declining Consolidated margins at 26% Net other expenses of ($160) million Tax rate 24% to 25% EPS of $1.29 to $1.34 No impact from currency
Slide 24: 2010 Outlook
47 2010 Outlook Capital expenditures 2%-3% of revenue Cash flow from operations at $800 million to $900 million Pay $71 million settlement accrual Pay $250 million refundable deposit to IRS Balanced shareholder payout through dividends and stock repurchase
Slide 25: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer
Slide 26: Focused Strategy - Core C2C
51 450,000 agent locations by YE 2010 Payment Services Directive in Europe Grow share in Asia Return domestic money transfer to revenue growth Increase bank distribution in North America Grow intra-country money transfer Focused Strategy - Core C2C
Slide 27: Focused Strategy - Electronic Channels Portfolio
53 Westernunion.com Expand to new markets Account-to-cash Double the number of banks offering service Prepaid Cards 750,000 cards enrolled by YE10 Mobile 75,000 agent locations enabled, access to 150 MM phones by YE10 Focused Strategy - Electronic Channels Portfolio Reaching new customers and increa
Slide 28: Focused Strategy - B2B Payments
55 Cross-border foreign exchange payments for small and medium-sized businesses Grow B2B Increase penetration in existing countries Expand to new markets with high volume of cross-border trade Enhance online distribution Focused Strategy - B2B Payments
Slide 29: Focused Strategy, Investing for Growth
57 Global Leader World-class brand 410,000 agent locations Industry-leading compliance capabilities Solid financial position Strong and predictable cash flows Focused Strategy, Investing for Growth
Slide 30: Appendix
Fourth Quarter and Full Year 2009 Earnings Webcast & Conference Call February 3, 2010 Appendix
Slide 31: Non-GAAP Measures
61 Non-GAAP Measures Western Union's management has presented: (1) Consolidated, consumer - - to - - consumer segment, international consumer - - to - - consumer, and international consumer - - to - - consumer e xcluding United States originated transactions revenue changes, excluding the impact of
Slide 32: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) 63 Consolidated Consumer-to- Consumer Segment International Consumer-to- Consumer International Consumer-to- Consumer excluding United States originated transactions 2009 Revenues, as reported (GAAP) 1,314.0 $ 1,
Slide 33: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) 65 Consolidated Consumer-to- Consumer Segment International Consumer-to- Consumer International Consumer-to- Consumer excluding United States originated transactions 2009 Revenues, as reported (GAAP) 5,083.6 $ 4,
Slide 34: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) 67 2009 2008 2009 2008 Revenues $ 1,314.0 $ 1,291.6 $ 5,083.6 $ 5,282.0 $ 762.9 $ 749.4 $ 2,874.9 $ 3,093.0 Restructuring and related expenses (d) - (19.8) - (62.8) $ 762.9 $ 729.6 $ 2,874.9 $ 3,030.2 58.1% 58.0%
Slide 35: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) 69 2009 2008 2009 2008 Revenues $ 1,314.0 $ 1,291.6 $ 5,083.6 $ 5,282.0 $ 232.5 $ 207.9 $ 926.0 $ 834.0 Settlement accrual (b) - - (71.0) - Restructuring and related expenses (d) - (12.8) - (20.1) $ 232.5 $ 195.1
Slide 36: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) 71 2009 2008 2009 2008 Revenues 1,314.0 $ 1,291.6 $ 5,083.6 $ $ 5,282.0 318.6 334.3 1,282.7 1,355.0 Settlement accrual (b) - - - - 71.0 - Restructuring and related expenses (d) - - 32.6 - - 82.9 318.6 $ 366.9 $ 1
Slide 37: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) (unaudited) 73 2009 2008 2009 2008 $ 223.7 $ 239.6 $ 848.8 $ 919.0 Reversal of impact from the settlement accrual, net of income tax benefit of $17.1 million (b) - - 53.9 - Reversal of impact from r
Slide 38: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in billions) (unaudited) 75 2009 2008 2009 2008 17.1 $ 16.6 $ 65.0 $ 67.1 $ Reversal of impact from translation of foreign currency denominated amounts into United States dollars (a) (0.7) - - 2.0 - - 16.4 $ 16.6 $ 67.0 $ 67.1 $ Consumer
Slide 39: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (unaudited) 77 2009 2008 365 $ 372 $ Reversal of impact from translation of foreign currency denominated amounts into United States dollars (a) (14) - - 351 $ 372 $ Consumer-to-consumer principal per transaction decline, as reported (2)%
Slide 40: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (unaudited) 79 2009 2008 390 $ 392 $ Reversal of impact from translation of foreign currency denominated amounts into United States dollars (a) (16) - - 374 $ 392 $ International consumer-to-consumer principal per transaction change, as r
Slide 41: Reconciliation of Non-GAAP Measures
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) 81 2009 2008 2009 2008 Global Business Payments revenue, as reported (GAAP) 181.8 $ 174.2 $ 691.7 $ 719.8 $ Reversal of Custom House revenue (c) (22.9) - - (30.8) - - Global Business Payments revenue, adjusted 15
Slide 42: Footnote explanations
83 Footnote explanations (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 exc hange fluctuations between foreign currencies and the U
Slide 43: Use of Material
85 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, February 3, 2010. If you plan to use this information for any purpose, verification of its continued