Western Union Company (the) · NYSE:WU
Western Union Company (the) — Q3 2018 Earnings Presentation
28 slides from Western Union Company (the)'s earnings presentation, Nov 1, 2018
Slide 1: Third Quarter 2018
Exhibit 99.2 THIRD QUARTER 2018
Slide 2: Mike Salop, Senior Vice President, 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 & Chief Executive Officer
Hikmet Ersek President & Chief Executive Officer 4
Slide 5: Overview: Solid results in the third quarter
Overview Solid results in the third quarter Revenue declined 1%, or increased 3% on a constant currency basis* Westernunion.com money transfer revenue increased 19% Returned over $600 million to shareholders Business Solutions improved year-to-date Operating margin increased to 21.8% *Note: See appe
Slide 6: Overview: Strategic Initiatives
Overview Strategic Initiatives Advancing digital expansion Leveraging our platform with new partners Adding new cross-border payments opportunities Driving operating efficiencies with the WU Way 6
Slide 7: Raj Agrawal, Executive Vice President & Chief Financial Officer
Raj Agrawal Executive Vice President & Chief Financial Officer 7
Slide 8: Revenue
Revenue Consolidated revenues of $1.4 billion declined 1%, or increased 3% constant currency*, compared to the prior year period *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 8
Slide 9: Consumer-to-Consumer Q3
Consumer-to-Consumer Q3 . 80% of Company revenue . Revenues were flat, or increased 2% constant currency* . Total transactions increased 4% . Cross-border principal increased 6%, or 7% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 9
Slide 10: Consumer-to-Consumer Q3 2018 by region
Consumer-to-Consumer Q3 2018 Revenue Constant Currency Transaction % of C2C Regions Change Rev. Change* Change Revenue North America 2% 2% 1% 37% Europe and CIS 3% 4% 8% 32% MEASA (7%) (6%) 2% 15% LACA 2% 16% 11% 9% APAC (10%) (9%) (2%) 7% Total C2C 0% 2% 4% 100% Included in C2C regions above: 19% 2
Slide 11: Business Solutions and Other Q3
Business Solutions and Other Q3 Business Solutions (B2B) . 7% of Company revenue . Revenue increased 1%, or 3% constant currency* Other (primarily bill payments businesses in the U.S. & Argentina) . 13% of Company revenue . Revenue decreased 9%, or increased 7% constant currency* *Note: See appendix
Slide 12: Operating Margin Q3
Operating Margin Q3 * 21.8% GAAP margin in the prior year period reflected WU 20.7% Way expenses and an accrual related to the Joint 19.4% Settlement Agreements Adjusted operating margin expansion driven by higher incentive compensation related Q3 2017 Q3 2017 Q3 2018 expenses in the prior year and
Slide 13: C2C Operating Margin Q3
C2C Operating Margin Q3 25.1% Operating margin increase was primarily due 23.5% to the impact of currency, higher incentive compensation related expenses in the prior year, timing of marketing spending and lower average retail commission rates Q3 2017 Q3 2018 13
Slide 14: B2B Operating Margin Q3
B2B Operating Margin Q3 14.2% Operating margin increased primarily due to timing of spending and cost efficiencies 9.1% . Depreciation and amortization of approximately $10 million in the current period and $11 million in the prior year period Q3 2017 Q3 2018 EBITDA* margin was 24.6% in the quarter
Slide 15: Other Operating Margin Q3
Other Operating Margin Q3 (Primarily consists of payments businesses in the U.S. & Argentina) 10.5% Operating margin decline was primarily due to lower overall revenue and higher bank fees as a percentage of revenue in our U.S. 5.9% electronic business Q3 2017 Q3 2018 15
Slide 16: Other Financial Highlights
Other Financial Highlights YTD September 30, 2018 Cash Flow from Operations $518 million Capital Expenditures $248 million Stock Repurchases $350 million Dividends Paid $258 million Cash Balance, September 30, 2018 $768 million Debt Outstanding, September 30, 2018 $3.3 billion 16
Slide 17: 2018 Outlook
2018 Outlook Revenue Earnings per Share Low single-digit GAAP revenue increase and low to mid- GAAP EPS in a range of $1.85 to $1.92 (previously single-digit constant currency revenue increase * $1.82 to $1.92) and adjusted EPS in a range of $1.88 to $1.95 (previously $1.80 to $1.90)* Operating Prof
Slide 18: Questions and Answers
Questions and Answers 18
Slide 19: Appendix
Appendix Third Quarter 2018 Earnings Webcast & Conference Call 19 19
Slide 20: Non-GAAP Measures
Non-GAAP Measures Western Union's management believes the non-GAAP financial measures Although the expenses related to the WU Way are specific to that initiative, the presented provide meaningful supplemental information regarding our operating types of expenses related to the WU Way initiative are
Slide 21: Reconciliation of Non-GAAP Measures: Consolidated Metrics
Reconciliation of Non-GAAP Measures YTD 3Q17 4Q17 FY2017 1Q18 2Q18 3Q18 3Q18 Consolidated Metrics Revenues, as reported (GAAP) $ 1,404.7 $ 1,438.3 $ 5,524.3 $ 1,389.4 $ 1,411.1 $ 1,387.8 $ 4,188.3 Foreign currency translation impact (a) 7.7 (5.5) 61.3 (18.9) 9.1 52.8 43.0 Revenues, constant currency
Slide 22: Reconciliation of Non-GAAP Measures: Consolidated Metrics cont.
Reconciliation of Non-GAAP Measures YTD 3Q17 4Q17 FY2017 1Q18 2Q18 3Q18 3Q18 Consolidated Metrics cont. Operating income/(loss), as reported (GAAP) (i) $ 272.2 $ (251.9) $ 475.8 $ 264.9 $ 283.6 $ 302.6 $ 851.1 Reversal of depreciation and amortization 65.5 65.8 262.9 66.7 65.7 63.6 196.0 EBITDA (g)
Slide 23: Reconciliation of Non-GAAP Measures: Consolidated Metrics cont.
Reconciliation of Non-GAAP Measures YTD 3Q17 4Q17 FY2017 1Q18 2Q18 3Q18 3Q18 Consolidated Metrics cont. Diluted earnings/(loss) per share ("EPS"), as reported (GAAP) ($ - dollars) $ 0.51 $ (2.44) $ (1.19) $ 0.46 $ 0.47 $ 0.46 $ 1.40 EPS impact as a result of Goodwill impairment ($ - dollars) (b) N/A
Slide 24: Reconciliation of Non-GAAP Measures: Consumer-to-Consumer Segment
Reconciliation of Non-GAAP Measures YTD 3Q17 4Q17 FY2017 1Q18 2Q18 3Q18 3Q18 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,107.7 $ 1,144.5 $ 4,354.5 $ 1,091.0 $ 1,127.5 $ 1,107.4 $ 3,325.9 Foreign currency translation impact (a) 1.8 (9.0) 37.7 (26.4) (9.6) 18.7 (17.3) Revenues, const
Slide 25: Reconciliation of Non-GAAP Measures: Consumer-to-Consumer Segment cont.
Reconciliation of Non-GAAP Measures YTD 3Q17 4Q17 FY2017 1Q18 2Q18 3Q18 3Q18 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 1% 3% 2% 4% 3% 2% 3% NA region foreign currency translation impact (a) 0% 0% 1% 0% 0% 0% 0% NA region revenue change, constant currency adjuste
Slide 26: Reconciliation of Non-GAAP Measures: Business Solutions Segment
Reconciliation of Non-GAAP Measures YTD 3Q17 4Q17 FY2017 1Q18 2Q18 3Q18 3Q18 Business Solutions Segment Revenues, as reported (GAAP) $ 99.4 $ 94.3 $ 383.9 $ 96.7 $ 93.1 $ 100.2 $ 290.0 Foreign currency translation impact (a) (1.2) (3.0) 1.8 (4.8) (2.7) 2.3 (5.2) Revenues, constant currency adjusted
Slide 27: Reconciliation of Non-GAAP Measures: Notes
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: Notes continued
Reconciliation of Non-GAAP Measures Non-GAAP related notes continued: (g) 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 measurem