Slide 1: Third Quarter 2008 Earnings Webcast & Conference Call
Third Quarter 2008 Earnings Webcast & Conference Call October 21, 2008 Exhibit 99.2
Slide 2: Gary Kohn, Vice President Investor Relations
Gary Kohn Vice President Investor Relations Earnings Webcast & Conference Call October 21, 2008
Slide 3: Safe Harbor
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 diffi
Slide 4: Christina Gold, President & Chief Executive Officer
Christina Gold President & Chief Executive Officer Earnings Webcast & Conference Call October 21, 2008
Slide 5: Strong Third Quarter Results
Strong Third Quarter Results Strong Third Quarter Results Revenue $1.38B up 10% • Transaction growth rates held strong • Operating margin 27.2%, or 27.5% excluding restructuring expense • Year-to-date cash flow from operations $925 million Note: See appendix for reconciliation of Non-GAAP to GAAP me
Slide 6: Western Union Strategy
Accelerate profitable growth in the global cash money transfer business Innovate new products and services for our target customers Improve profitability by leveraging scale, reducing costs and effectively utilizing capital Expand and globalize the C2B payments business Western Union Strategy Wester
Slide 7: Grow the C2C Business
Grow the C2C Business Grow the C2C Business • Promote and market Western Union brand • Grow the agent network – 365,000 agent locations – Key signings and renewals • Vietnam, Philippines, Malaysia, Thailand, South Africa, France, United Kingdom, Greece, Qatar, UAE • Expand product offerings – Intra
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Slide 9: Growth Through New Initiatives
Growth Through New Initiatives Growth Through New Initiatives • Intra money transfer – 300 million “intra-country migrants” – $100 million business CAGR exceeds 30% since 2005 • Online money transfer – New customers – From bank direct to agent location • Canada, Germany, Malaysia
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Slide 11: Innovate New Services and Technologies
Innovate New Services and Technologies Innovate New Services and Technologies • ORASCOM alliance – 77 million subscribers • Mobile Money Transfer – Expanded pilot; UAE, Singapore, Hong Kong
Slide 12: Improve Profitability
Global scale provides margin expansion opportunities Improve Profitability Improve Profitability • 2008 operating margin excluding restructuring expenses expected to be consistent with 2007 • Goal to improve 2009 margin by up to 50 basis points • Scalable business – Reduce operating expenses – Reduc
Slide 13: Leading the Global Money Transfer Marketplace
Well positioned for growth Leading the Global Money Transfer Marketplace Leading the Global Money Transfer Marketplace • Leadership position in growing market • 365,000 agent locations • Well-known brand • Geographically diverse revenue stream • Scalable infrastructure • Industry-leading compliance
Slide 14: Scott Scheirman, Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer Earnings Webcast & Conference Call October 21, 2008
Slide 15: Third Quarter Results
$925 million in operating cash flow Revenue 1.38B $ up 10% EPS, reported 0.33 $ up 18% Third Quarter Results Third Quarter Results Note: See appendix for reconciliation of Non-GAAP to GAAP measures. EPS, excluding restructuring expenses and 2007 stock compensation charge 0.33 $ up 10%
Slide 16: Components of Revenue
Up 8% Up 17% Transaction Fee Components of Revenue Components of Revenue $ in millions Q3 07 Q3 08 Foreign Exchange Q3 07 Q3 08 $1,020 $1,099 $203 $239
Slide 17: Operating Income Margin
Expect 2008 operating margin ex restructuring consistent with 2007 Operating Income Margin Operating Income Margin • Q3 operating income margin, excluding restructuring was 27.5% (27.2% reported) – Sequential improvement from Q1 and Q2 • Operating income margin strongest in fourth quarter Note: See
Slide 18: Profitability Initiatives
Goal of expanding 2009 margin up to 50 basis points Profitability Initiatives Profitability Initiatives • Restructuring expenses – $3 million in Q3 – Approximately $70 million full-year 2008 • Estimated savings unchanged – $10 million in 2008 – $35 million annually in 2009 and beyond
Slide 19: Selected Financial Results
Selected Financial Results Selected Financial Results Q3 2008 Q3 2007 % Change $ in millions except for per share and tax rate information Excluding 2008 Restructuring Expense and 2007 Stock Comp Charge Note: See appendix for reconciliation of Non-GAAP to GAAP measures. Revenue 1,377 $ 1,257 $ 10% C
Slide 20: Cash Generation and Position
Expect 2008 Cash Flow From Operations of $1.2B Cash Generation and Position Cash Generation and Position Cash Flows From Operations, year-to-date $925 Cash Balance on September 30 $1,130 Remaining authorized for buyback, Sept. 30 $1,049 Stock Repurchases, spin through Sept. 30 (86 million shares or
Slide 21: Consumer-to-Consumer
85% of revenue Consumer-to-Consumer Consumer-to-Consumer Q3 2008 Change (millions) Transactions 48.8 13% Revenue $1,178 12% Operating Income $328 20% Operating Margin 27.8% 180 bp Excluding Stock Comp Charge n/a n/a 12% flat Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Slide 22: Consumer-to-Business
13% of revenue Consumer-to-Business Consumer-to-Business Q3 2008 Change (millions) Transactions 103.3 2% Revenue $176 -2% Operating Income $47 -10% Operating Margin 26.4% -260 bp n/a n/a -15% Note: See appendix for reconciliation of Non-GAAP to GAAP measures. -420 bp Excluding Stock Comp Charge
Slide 23: Hedging Strategy
Hedging Strategy Hedging Strategy • Increase predictability of net revenues and cash flows – Use foreign currency forward contracts to lock in f/x rates for 12 to 36 months • Euro impact to revenue – 2008 year-to-date: $95 million benefit – Q4 2008 and 2009: negative impact at current euro exchange
Slide 24: 2008 Financial Guidance
2008 Financial Guidance 2008 Financial Guidance • Revenue growth of 9% to 10% • Non-GAAP EPS of $1.29 to $1.31 – Excludes $0.06 of restructuring expenses and includes $0.01 in cost savings • GAAP EPS of $1.23 to $1.25 – Includes $70 million in restructuring expenses (previous estimate was for $80 mi
Slide 25: Summary
Creating shareholder value Summary Summary • Business model and strategy are sound • Western Union continues to grow profitably • Results driven by execution of four key strategies • Geographically diverse revenue • On target to generate $1.2 billion of cash flow from operations
Slide 26: Questions and Answers
Well positioned for growth Questions and Answers Questions and Answers • Leadership position in growing market • 365,000 agent locations • Well-known brand • Geographically diverse revenue stream • Scalable infrastructure • Industry-leading compliance capabilities • Solid financial position
Slide 27: Appendix
Third Quarter 2008 Earnings Webcast & Conference Call October 21, 2008 Appendix
Slide 28: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Measures Western Union's management has presented: (1) Revenue growth excluding the foreign currency translation impact of euro denominated revenues; (2) Cost of services growth, selling, general and administrative expenses growth, operating income growth, net income growt
Slide 29: Reconciliation of Non-GAAP Measures: Revenue
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) 2008 2007 Growth $ 1,377.4 $ 1,257.2 10% Benefit from euro translation (a) (24.1) - $ 1,353.3 $ 1,257.2 8% Refer to footnote explanations at the end of this "Reconciliation of Non-GAAP Measures" section. Revenue
Slide 30: Reconciliation of Non-GAAP Measures
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) As reported (GAAP) Adjustments (b) Adjusted Revenue $ 1,377.4 - $ $ 1,377.4 Cost of services 785.6 (1.1) 784.5 Selling, general and administrative 216.6 (2.1) 214.5 Net income 240.8 2.5 243.3 Earnings per share $
Slide 31: Reconciliation of Non-GAAP Measures: Operating Income
(unaudited) THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES (in millions) September 30, 2008 June 30, 2008 March 31, 2008 September 30, 2007 Revenues $ 1,377.4 $ 1,347.1 $ 1,265.9 $ 1,257.2 $ 375.2 $ 336.2 $ 309.3 $ 330.1 Restructuring and related expenses (b) 3.2 22.9 24.2 - Accelerat
Slide 32: Reconciliation of Non-GAAP Measures: Cost of Services
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES September 30, 2008 June 30, 2008 March 31, 2008 September 30, 2007 Revenues $ 1,377.4 $ 1,347.1 $ 1,265.9 $ 1,257.2 $ 785.6 $ 799.4 $ 758.6 $ 722.2 Restructuring and related ex
Slide 33: Reconciliation of Non-GAAP Measures: Segment Operating Income
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES C2C C2B Operating income, as reported (GAAP) 327.7 $ 46.6 $ C2C C2B Revenue, as reported (GAAP) 1,055.8 $ 179.5 $ Operating income, as reported (GAAP) 274.1 $ 52.0 $ Adjustment
Slide 34: Reconciliation of Non-GAAP Measures: Tax Rate and EPS Guidance
THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES THE WESTERN UNION COMPANY RECONCILIATION OF NON-GAAP MEASURES 2008 Full Year Estimated Effective Tax Rate Guidance ("ETR") 2008 Estimated ETR (GAAP Basis) 26.5% Estimated ETR benefit for estimated 2008 restructuring and related expenses (
Slide 35: Reconciliation of Non-GAAP Measures: Footnotes
THE WESTERN UNION COMPANY 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 e
Slide 36: Use of Material
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, October 21, 2008. If you plan to use this information for any purpose, verification of