Western Union Company (the) · NYSE:WU

Western Union Company (the) — The Western Union Company — Q1 2014 Earnings Presentation

24 slides from Western Union Company (the)'s earnings presentation, May 1, 2014

  1. Slide 1: First Quarter 2014 Earnings Webcast & Conference Call

    First Quarter 2014 Earnings Webcast & Conference Call May 1, 2014

  2. Slide 2: Mike Salop, Senior Vice President, Investor Relations

    Mike Salop Senior Vice President, Investor Relations 2

  3. 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

  4. Slide 4: Hikmet Ersek, President & Chief Executive Officer

    Hikmet Ersek President & Chief Executive Officer 4

  5. Slide 5: Overview

    Overview First quarter results consistent with expectations  Total revenue increased 2%, or 4% constant currency*  Consumer money transfer business continued to rebound – Consumer money transfer transactions grew 9% – Revenue increased 3%, or 4% constant currency* – westernunion.com revenue growth

  6. Slide 6: Strategic Initiatives 2014

    Strategic Initiatives 2014 Continued focus on three key areas  Strengthening consumer money transfer, with an emphasis on digital expansion  Growing Western Union Business Solutions  Generating and deploying strong cash flow for our shareholders 2014 full year financial outlook affirmed Western U

  7. Slide 7: Raj Agrawal, Interim Chief Financial Officer

    Raj Agrawal Executive Vice President & Interim Chief Financial Officer Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 7

  8. Slide 8: Revenue Q1

    Revenue Q1 ($ in millions) $1,325 $1,351  Consolidated revenue $34 increased 2% on a reported $35 basis, and 4% constant $312 $329 currency*  Transaction fee revenue increased 1% $978 $988  Foreign exchange revenue increased 5% Q1 2013 Q1 2014 Transaction Fee Foreign Exchange Other *Note: See app

  9. Slide 9: Consumer-to-Consumer Q1

    Consumer-to-Consumer Q1  80% of Company revenue  Reported revenue increased 3%, or 4% constant currency*  Total transactions increased 9%, driven by previously implemented pricing actions and strong growth in electronic channels  Cross-border principal increased 8%, or 9% constant currency* *Not

  10. Slide 10: C2C Transaction and Revenue Analysis

    C2C Transaction and Revenue Analysis Q1 2014 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 10

  11. Slide 11: Consumer-to-Consumer

    Consumer-to-Consumer Q1 2014 Revenue Growth/ Currency Transaction % of Total Regions Decline Impact** Growth Revenue Europe and CIS 1% 1% 10% 21% North America 1% -1% 4% 19% Middle East and Africa 4% 1% 8% 16% Asia Pacific 1% -3% 8% 12% LACA -4% -9% 6% 8% westernunion.com 45% -1% 55% 4% **Note: Curr

  12. Slide 12: C2B and B2B Q1

    C2B and B2B Q1  Consumer-to-Business  11% of Company revenue  Revenue declined 4%, or increased 7% constant currency*  Business Solutions  7% of Company revenue  Revenue increased 7%, or 10% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Weste

  13. Slide 13: Operating Margin Q1

    Operating Margin Q1 30.0% 25.0%  Operating margin decrease 22.4% 20.1% • Primarily due to higher average 20.0% C2C retail commission rates, increased compliance 15.0% expenses, and higher funding costs in C2B, partially offset by 10.0% benefits from cost savings initiatives and lower integration 5.

  14. Slide 14: C2C Operating Margin Q1

    C2C Operating Margin Q1 30.0% 25.4% 25.0% 22.9%  Operating margin decrease 20.0% • Driven primarily by higher average retail commission rates 15.0% and increased compliance costs, partially offset by benefits from 10.0% cost savings initiatives 5.0% 0.0% Q1 2013 Q1 2014 Western Union | ©2014 Wester

  15. Slide 15: C2B Operating Margin Q1

    C2B Operating Margin Q1 30.0% 24.7% 25.0%  Operating margin decrease 20.2% • Primarily due to higher interchange 20.0% costs, driven by more card usage 15.0% and larger principal transactions 10.0% 5.0% 0.0% Q1 2013 Q1 2014 Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 15

  16. Slide 16: Business Solutions Operating Loss Q1

    Business Solutions Operating Loss Q1  Operating Loss  Operating loss of $4 million compared to an operating loss of $6 million in the prior year period  Both current and prior year included depreciation and amortization of approximately $15 million  The reduction in operating loss was driven mai

  17. Slide 17: Financial Strength

    Financial Strength 1Q 2014 Cash Flow from Operations $197 million Capital Expenditures $46 million Stock Repurchases $180 million Dividends Paid $68 million Cash Balance, March 31, 2014 $1.7 billion Debt Outstanding, March 31, 2014 $3.8 billion  $500 million debt maturity paid in February 2014 West

  18. Slide 18: 2014 Outlook

    2014 Outlook  Revenue – Low to mid-single digit constant currency revenue increase – Flat to low single digit GAAP revenue growth, which reflects expected negative currency impact from certain emerging market countries  Margins – GAAP operating margin in a range of 19% to 20%  Earnings per Share

  19. Slide 19: Questions & Answers

    Questions & Answers Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 19

  20. Slide 20: Appendix

    Appendix First Quarter 2014 Earnings Webcast & Conference Call May 1, 2014 Western Union | ©2014 Western Union Holdings, Inc. All Rights Reserved. 20

  21. Slide 21: 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

  22. Slide 22: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 1Q13 2Q13 3Q13 4Q13 FY2013 1Q14 Consolidated Metrics Revenues, as reported (GAAP) $ 1,325.4 $ 1,385.9 $ 1,408.8 $ 1,421.9 $ 5,542.0 $ 1,350.8 Foreign currency translation impact (a) 12.3 14.9 19.2 23.9 70.3 32.5 Revenues, constant currency adjusted $ 1,337.7 $ 1,4

  23. Slide 23: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 1Q13 2Q13 3Q13 4Q13 FY2013 1Q14 Consumer-to-Business Segment Revenues, as reported (GAAP) $ 153.7 $ 153.0 $ 152.3 $ 149.5 $ 608.5 $ 147.2 Foreign currency translation impact (a) 5.9 7.2 8.3 10.2 31.6 16.6 Revenues, constant currency adjusted $ 159.6 $ 160.2 $ 160.

  24. Slide 24: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2014 Outlook Metrics Operating cash flow (GAAP) $ 900 Payments on IRS Agreement (c) 100 Operating cash flow, IRS Agreement adjusted $ 1,000 Non-GAAP related notes: (a) Represents the impact from the fluctuation in exchange rates between all foreign currency denomi

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