Slide 1: Fourth Quarter 2012 Earnings Webcast & Conference Call
Western Union Fourth Quarter 2012 Earnings Webcast & Conference Call February 12, 2013 Exhibit 99.2
Slide 2: Mike Salop, Senior Vice President, Investor Relations
Mike Salop Senior Vice President, Investor Relations
Slide 3: Safe Harbor
Safe Harbor 3 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: Hikmet Ersek, President & Chief Executive Officer
Hikmet Ersek President & Chief Executive Officer
Slide 5: 2012 Overview
Reported revenue increased 3%, or 1% pro forma constant currency* Electronic Channels revenue increased 27% Cash flow from operations reached approximately $1.2 billion 5 2012 Overview Over $1 billion returned to shareholders through share repurchases and dividends *Note: See appendix for reconc
Slide 6: 2013 Strategic Initiatives
2013 strategies focused on three key initiatives Strengthening the consumer money transfer business Driving growth in customers and usage in Business Solutions Generating and deploying strong cash flow for our shareholders 6 2013 Strategic Initiatives Repositioning the Company for revenue an
Slide 7: 2013 Strategic Initiatives: Strengthening Consumer Money Transfer
Strengthening the consumer money transfer business Improving the consumer value proposition Expanding digital and account based electronic channels Increasing the agent location network 7 2013 Strategic Initiatives
Slide 8: 2013 Strategic Initiatives: Business Solutions Growth
Driving growth in customers and usage in Business Solutions Expanding geographic presence Improving sales force effectiveness Increasing product offerings 8 2013 Strategic Initiatives
Slide 9: 2013 Strategic Initiatives: Strong Cash Flow for Shareholders
Generating and deploying strong cash flow for shareholders Cash flow from operations of approximately $1 billion* in 2013 excluding tax payments for IRS Agreement Expect to return approximately $700 million to shareholders this year 9 2013 Strategic Initiatives *Note: See appendix for reconcil
Slide 10: Scott Scheirman, Executive Vice President & Chief Financial Officer
Scott Scheirman Executive Vice President & Chief Financial Officer
Slide 11: Consolidated Revenue Q4
$1,082 $1,057 $322 $337 $27 $31 Q4 2011 Q4 2012 Transaction Fee Foreign Exchange Other Revenue Q4 11 ($ in millions) $1,425 $1,431 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Consolidated revenue flat on a reported and a constant currency basis* Pro forma reven
Slide 12: Consumer-to-Consumer Q4
Consumer-to-Consumer Q4 12 81% of Company revenue Revenue decreased 2% reported and constant currency,* with transactions down 1% Western Union branded constant currency revenue grew slightly on transaction growth of 3% Total Q4 Western Union cross-border principal of $18 billion Declined
Slide 13: Consumer-to-Consumer Regions
Consumer-to-Consumer 13 Regions Revenue Growth Currency Impact** Transaction Growth % of Total Revenue Europe and CIS -5% -2% 0% 22% North America -9% 0% -6% 19% Middle East and Africa 3% -2% 6% 16% Asia Pacific 0% 1% 0% 12% LACA 2% -2% -5% 9% westernunion.com 16% 0% 46% 3% Q4 2012 **Note: Currency
Slide 14: Electronic Channels & Prepaid Highlights Q4
Electronic Channels & Prepaid Highlights Q4 Account based money transfer Revenue increased 37% Agreements in place with nearly 115 banks globally westernunion.com C2C revenue increased 16% C2C transactions grew 46% Prepaid Revenue increased 16% 14 Electronic Channels Revenue Growth 2
Slide 15: C2C Transaction and Revenue Growth Q4 2012
C2C Transaction and Revenue Growth 15 Q4 2012 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures.
Slide 16: C2B and B2B Q4
C2B and B2B Q4 16 Consumer-to-Business 11% of Company revenue Revenue declined 1%, or increased 2% constant currency* Business Solutions 6% of Company revenue Pro forma revenue down 2% on a constant currency* basis, including a full quarter of TGBP in the prior year period *Note: See app
Slide 17: Operating Margin Q4
17 Operating Margin Q4 25.0% 20.1% 25.4% 20.9% GAAP Excluding TGBP Integration Expenses* Operating margin excluding TGBP integration expense decrease • Current quarter includes $31 million of expenses related to new cost savings initiatives • Also negatively impacted by higher Business Solutions e
Slide 18: C2C Operating Margin Q4
18 C2C Operating Margin Q4 Operating margin decrease • Impacted by expenses related to cost savings initiatives, pricing investment, increased bad debt expense, and higher marketing 28.0% 25.0% 15.0% 17.0% 19.0% 21.0% 23.0% 25.0% 27.0% 29.0% Q4 2011 Q4 2012
Slide 19: C2B Operating Margin Q4
19 C2B Operating Margin Q4 Operating margin decrease Driven by the impact of the renegotiation of a third party sales and distribution agreement and expenses related to cost savings initiatives 27.3% 17.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Q4 2011 Q4 2012
Slide 20: Business Solutions Operating Loss Q4
20 Business Solutions Operating Loss Q4 Operating Loss Operating loss of $18 million compared to an operating loss of $2 million in the prior year period. Prior year reflects only a partial quarter of TGBP following November acquisition Includes $18 million of depreciation and amortization in
Slide 21: Financial Strength
21 Financial Strength 2012 Full Year Cash Flow from Operations** $1.2 billion Capital Expenditures $268 million Stock Repurchases $772 million Dividends Declared and Paid $254 million Cash Balance, Dec. 31, 2012 $1.8 billion Debt Outstanding, Dec. 31, 2012 $4.0 billion ** Note: Includes the impact o
Slide 22: 2013 Outlook
2013 Outlook 22 Revenue Low single digit constant currency revenue declines Consumer-to-Consumer (C2C) Transactions Mid to high single digit Western Union brand C2C transaction increases, with overall C2C transaction growth approximately 2 percentage points lower than the Western Union brand
Slide 23: 2013 Outlook: Earnings per Share and Cash Flow
2013 Outlook 23 Earnings per Share GAAP EPS in a range of $1.33 to $1.43, including $0.03 per share of after-tax expense related to TGBP integration activities EPS includes approximately $0.06 per share of after-tax expense related to new cost savings initiatives EPS reflects an increase in
Slide 24: Questions & Answers
Questions & Answers
Slide 25: Appendix
Appendix Fourth Quarter 2012 Earnings Webcast & Conference Call February 12, 2013 25
Slide 26: Non-GAAP Measures
Non-GAAP Measures 26 Western Union's management believes the non-GAAP financial measures presented provide meaningful supplemental information regarding our operating results to assist management, investors, analysts, and others in understanding our financial results and to better analyze trends in
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 27 4Q11 FY2011 1Q12 2Q12 3Q12 4Q12 FY2012 Consolidated Metrics Revenues, as reported (GAAP) 1,431.3$ 5,491.4$ 1,393.4$ 1,425.1$ 1,421.6$ 1,424.7$ 5,664.8$ Foreign currency translation impact (a) 10.4 (38.0) 8.1 34.6 37.7 13.4 93.8 Revenues, constant currency adjus
Slide 28: Reconciliation of Non-GAAP Measures: Consumer-to-Consumer
Reconciliation of Non-GAAP Measures 28 4Q11 FY2011 1Q12 2Q12 3Q12 4Q12 FY2012 Consumer-to-Consumer Segment Revenues, as reported (GAAP) 1,181.9$ 4,608.4$ 1,124.6$ 1,155.0$ 1,151.5$ 1,153.2$ 4,584.3$ Foreign currency translation impact (a) 8.0 (39.1) 5.2 30.1 32.8 9.5 77.6 Revenues, constant currency
Slide 29: Reconciliation of Non-GAAP Measures: 2013 Outlook
Reconciliation of Non-GAAP Measures 29 2013 Outlook Metrics Operating income margin (GAAP) 20.0 % Depreciation and amortization impact 4.5 % EBITDA margin (e) 24.5 % Operating cash flow (GAAP) 900$ Payments on IRS Agreement (f) 100 Operating cash flow, IRS Agreement adjusted 1,000$
Slide 30: Footnote explanations
Footnote explanations 30 Non-GAAP related notes: (a) (b) (c) (d) (e) (f) Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) results from taking operating income and adjusting for depreciation and amortization expenses. Represents the impact from the tax benefit in December 2011