Slide 1: Western Union Third Quarter 2010 Earnings Webcast & Conference Call
Western Union Third Quarter 2010 Earnings Webcast & Conference Call October 26, 2010
Slide 2: Mike Salop, Senior Vice President, Investor Relations
Mik S Mike Salop l Senior Vice President, Investor Relations
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
Slide 5: Overview
Overview Continued progress 10% C2C transaction growth in Q3 Steady to improved trends across all regions Strong margins, cash flow, and shareholder payout Raising full year 2010 EPS outlook 5
Slide 6: Electronic Channels Highlights
Electronic Channels Highlights Westernunion.com 60% transaction growth in international markets 20% ttransaction ti growth th overallll Account-based money transfer 50% transaction growth 27 banks globally Mobile 70,000 locations enabled for cash-to-mobile in 27 countries 6 country
Slide 7: Strategic Priorities
Strategic Priorities 1 Grow Retail Channels 2 Expand p Electronic Channels 3 Develop Product Portfolio 4 Improve Process and Productivity Strategy in place Focused on execution 7
Slide 8: Scott Scheirman, Executive Vice President & Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer
Slide 9: Revenue
Revenue ($ in millions) $1,314 , $1,330 , $36 $31 Consolidated revenue up 1%, $238 $263 or up 3% constant currency adjusted Transaction fees flat $1,040 $1,036 Foreign exchange revenue increased 11%,, primarily p y due to Custom House Q3 2009 Q3 2010 Transaction Fee Foreign Exchange Other Note
Slide 10: C2C Remittance Trends
C2C Remittance Trends C2C Transactions (millions) +10% 55 50 Total Q3 Western Union cross- border principal of $18 billion Increased 4% on reported basis Increased 6% constant currency Principal per transaction Declined 4% on reported basis Declined 3% constant currency Q3 2009 Q3 2010 N
Slide 11: Consumer-to-Consumer: Europe, Middle East, Africa, S. Asia
Consumer-to-Consumer Q3 2010 Revenue Transactions Europe, Middle East, Africa, S. Asia (2)% 5% 44% of Western Union revenue EMEASA constant currency revenue increased Good performance in major markets including U.K., Germany, and Russia Transaction declines in Gulf, in-line with Q2 trends 11
Slide 12: Consumer-to-Consumer: Americas
Consumer-to-Consumer Q3 2010 Revenue Transactions Americas 2% 13% 32% of Western Union revenue Momentum continued in the region 35% domestic money transfer transaction growth Strong U.S Outbound results 2% Mexico transaction growth, 1% revenue decline 12
Slide 13: Consumer-to-Consumer: Asia Pacific
Consumer-to-Consumer Q3 2010 Revenue Transactions Asia Pacific 12% 15% 9% off Western W t Union U i revenue China grew revenue and transactions 6% Philippines intra business strong Good growth in Australia 13
Slide 14: C2C Transaction and Revenue Growth
C2C Transaction and Revenue Growth Q3 2010 +10% +3% +1% Transaction Domestic Other Price Other Mix Constant Currency GAAP Growth Price Reductions Currency Impact Revenue Reduction / Revenue Growth Mix Growth Note: See appendix for reconciliation of Non-GAAP to GAAP measures. 14
Slide 15: Global Business Payments
Global Business Payments Q3 2010 Revenue Transactions Global Business Payments 5% (2)% 13% of Western Union revenue $27 million Business Solutions (Custom House) revenue Challenges in U.S. bill payments Solid Pago Facil performance 15
Slide 16: Operating Margin
Operating Margin 27.5% 26.4% 26.8% 27.1% 24.4% Operating margin excluding restructuring and settlement 21.4% accrual • +70 basis points vs vs. Q3 09 • +40 basis points vs. Q2 10 YoY operating margin improvement excluding restructuring • Lower marketing • Operating efficiencies • Higher Business
Slide 17: C2C Operating Margin
C2C Operating Margin C2C operating margin 29.1% 29.9% increased 230 basis points YoY 27.6% Lower marketing Operating efficiencies Currency C2C operating margin improved 80 basis points from Q2 10 Q3 2009 Q2 2010 Q3 2010 17
Slide 18: Global Business Payments Operating Margin
Global Business Payments Operating Margin 26 3% 25.5% 26.3% 24.3% 23.2% 18.9% Segment margin declined YoY 15 1% 15.1% Business B i S Solutions l ti investments and amortization Reduced U.S. bill payment revenues GAAP Excluding Business Solutions Note: See appendix for reconciliation of Non-GAA
Slide 19: Financial Strength
Financial Strength YTD Cash Flow from Operations Excluding Tax Deposit $960 million Refundable IRS Tax Deposit ($250) million GAAP Cash Flow from Operations $710 million Capital Expenditures $88 million St k Repurchases Stock R h $514 million illi Dividends Paid $80 million Cash Balance, September 3
Slide 20: 2010 Outlook
2010 Outlook GAAP revenue in a range of +1% to +2% Constant C currency revenue growth h 1% hi higher h than h GAAP ((+2% 2% to +3%) 3%) GAAP EPS of $1.29 to $1.32, including $0.07 of restructuring charges EPS excluding restructuring charges of $1.36 to $1.39 Constant currency EPS $0.01 hig
Slide 21: Questions & Answers
Questions & Answers
Slide 22: Appendix
Appendix Third Thi d Quarter Q t 2010 Earnings E i Webcast & Conference Call October 26 26, 2010 22
Slide 23: Non-GAAP Measures
Non-GAAP Measures Western Union's management believes the non-GAAP 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 underlyin
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 3Q09 4Q09 FY2009 1Q10 2Q10 3Q10 YTD 3Q10 Consolidated Metrics Revenues, as reported (GAAP) $ 1,314.1 $ 1,314.0 $ 5,083.6 $ 1,232.7 $ 1,273.4 $ 1,329.6 $ 3,835.7 Foreign currency translation impact (a) 31.1 (32.4) 119.5 (20.0) 16.1 22.2 18.3 Revenues, constant curr
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 3Q09 4Q09 FY2009 1Q10 2Q10 3Q10 YTD 3Q10 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,117.8 $ 1,113.7 $ 4,300.7 $ 1,030.2 $ 1,073.1 $ 1,128.3 $ 3,231.6 Foreign currency translation impact (a) 24.4 (36.2) 101.3 (21.9) 15.0 21.2 14.3 Revenues, const
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 3Q09 4Q09 FY2009 1Q10 2Q10 3Q10 YTD 3Q10 Global Business Payments Segment Revenues, as reported (GAAP) $ 171.3 $ 181.8 $ 691.7 $ 181.8 $ 179.3 $ 179.2 $ 540.3 Reversal of Custom House revenues (b) (7.9) (22.9) (30.8) (25.6) (28.5) (26.8) (80.9) Revenues, excluding
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2010 Revenue Outlook Range Revenue change (GAAP) 1% 2% Foreign currency translation impact (e) 1% 1% Revenue change, constant currency adjusted 2% 3% 2010 EPS Outlook Range EPS guidance (GAAP) ($ - dollars) $ 1.29 $ 1.32 I Impact t from f restructuring t t i andd
Slide 28: Footnote explanations
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 exchange fluctuations between foreign currencies and the Unite