Western Union Company (the) · NYSE:WU

Western Union Company (the) — The Western Union Company — Q2 2016 Earnings Presentation

25 slides from Western Union Company (the)'s earnings presentation, Aug 3, 2016

  1. Slide 1: This Is Second Quarter 2016

    THIS IS SECOND QUARTER 2016 Earnings Webcast & aul Conference Call August 3, 2016 ed ' / WESTERN i - moving money for better onion WW

  2. Slide 2: Mike Salop

    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

    Hikmet Ersek President & Chief Executive Officer 4

  5. Slide 5: Overview

    Overview Delivered solid results for the second quarter • Consumer money transfer performance led by westernunion.com and U.S. outbound • GAAP operating margin of 18.9%, including a negative impact of 110 basis points from the FTC legal matter accrual • Returned $156 million to shareholders through

  6. Slide 6: Overview

    Overview Strategic progress in 2Q • Introduced upgraded mobile transaction apps for wu.com in 8 markets; now in 11 countries total • Signed or renewed key agent agreements including Walmart de Mexico and Rite Aid • Expanded account payout network, enabling capability to deliver funds into billions o

  7. Slide 7: Raj Agrawal

    Raj Agrawal Executive Vice President & Chief Financial Officer 7

  8. Slide 8: Revenue

    Revenue ($ in millions) $1,384 $1,376  Consolidated revenue $34 $36 decreased 1% on a reported basis, or increased 3% $362 $379 constant currency*  Transaction fee revenue decreased 3% $988 $961  Foreign exchange revenue increased 5% Q2 2015 Q2 2016 Transaction Fee Foreign Exchange Other *Note: S

  9. Slide 9: Consumer-to-Consumer Q2

    Consumer-to-Consumer Q2  80% of Company revenue  Revenue decreased 1%, or increased 2% constant currency*  Total transactions increased 3%  Cross-border principal decreased 1%, or was flat on a constant currency* basis *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures

  10. Slide 10: C2C Transaction and Revenue Analysis

    C2C Transaction and Revenue Analysis Q2 2016 *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 10

  11. Slide 11: Consumer-to-Consumer

    Consumer-to-Consumer Q2 2016 Constant Revenue Currency Rev. Transaction Growth/ Growth/ Growth/ % of C2C Decline Regions Decline* Decline Revenue North America 6% 7% 7% 28% Europe and CIS -3% -1% 3% 26% Middle East and Africa -4% -3% -5% 20% Asia Pacific -3% -1% -3% 15% LACA 0% 6% 12% 11% Total C2C

  12. Slide 12: C2B and B2B Q2

    C2B and B2B Q2  Consumer-to-Business  11% of Company revenue  Revenue declined 2%, or increased 12% constant currency*  Business Solutions  7% of Company revenue  Revenue increased 3%, or 6% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 12

  13. Slide 13: Operating Margin Q2

    Operating Margin Q2  Operating margin 30.0% 25.0% • Negatively impacted by $15 20.7%* million FTC accrual (110 basis 20.0% 18.1% 18.9% points), incremental technology expense and the impact of 15.0% foreign exchange • Partially offset by reductions in 10.0% compensation related costs and other expe

  14. Slide 14: C2C Operating Margin Q2

    C2C Operating Margin Q2 30.0% 25.0% 23.3% 21.5%  Operating margin 20.0% • Negatively impacted by $15 million FTC accrual (130 basis 15.0% points), incremental technology expense and the impact of 10.0% foreign exchange 5.0% • Partially offset by reductions in compensation related costs and 0.0% oth

  15. Slide 15: C2B Operating Margin Q2

    C2B Operating Margin Q2 30.0% 25.0% 20.0% 18.3%* 15.0% 11.5%  Operating margin 10.0% • Negatively impacted by increased technology expense and customer 5.0% mix 0.0% • 2015 Q2 GAAP margin included -5.0% the impact of a $35 million charge -4.1% related to the Paymap settlement -10.0% agreement with

  16. Slide 16: B2B Operating Profit

    B2B Operating Profit  Operating Profit  Operating profit of $5 million in the current period compared to break-even in the prior year period  Depreciation and amortization of approximately $13 million, compared to $12 million in the prior year period  Operating profit margin improved to 5.0% fro

  17. Slide 17: Financial Strength

    Financial Strength YTD June 30, 2016 Cash Flow from Operations $486 million Capital Expenditures $109 million Stock Repurchases $318 million Dividends Paid $157 million Cash Balance, June 30, 2016 $1.2 billion Debt Outstanding, June 30, 2016 $3.2 billion 17

  18. Slide 18: 2016 Outlook

    2016 Outlook  Revenue • Low to mid-single digit constant currency revenue increase, with GAAP revenue change approximately 400 basis points lower than constant currency  Operating Profit Margin • Operating margin of approximately 20%  Earnings per Share • EPS in a range of $1.60 to $1.70  Cash F

  19. Slide 19: Questions & Answers

    Questions & Answers 19

  20. Slide 20: Appendix

    Appendix Second Quarter 2016 Earnings Webcast & Conference Call August 3, 2016 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 2Q15 3Q15 4Q15 FY2015 1Q16 2Q16 YTD 2Q16 Consolidated Metrics Revenues, as reported (GAAP) $ 1,383.6 $ 1,399.2 $ 1,380.0 $ 5,483.7 $ 1,297.7 $ 1,375.7 $ 2,673.4 Foreign currency translation impact (a) 84.7 85.4 73.9 322.6 57.4 48.9 106.3 Revenues, constant currenc

  23. Slide 23: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2Q15 3Q15 4Q15 FY2015 1Q16 2Q16 YTD 2Q16 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,101.5 $ 1,112.9 $ 1,091.2 $ 4,343.9 $ 1,017.4 $ 1,095.8 $ 2,113.2 Foreign currency translation impact (a) 69.1 67.1 56.8 256.0 30.5 23.0 53.5 Revenues, constant

  24. Slide 24: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2Q15 3Q15 4Q15 FY2015 1Q16 2Q16 YTD 2Q16 Consumer-to-Consumer Segment (cont.) North America region revenue change, as reported (GAAP) 1% 2% 3% 2% 3% 6% 5% North America region foreign currency translation impact (a) 1% 2% 2% 1% 2% 1% 1% North America region revenu

  25. Slide 25: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2Q15 3Q15 4Q15 FY2015 1Q16 2Q16 YTD 2Q16 Consumer-to-Business Segment Revenues, as reported (GAAP) $ 157.9 $ 160.1 $ 161.9 $ 637.7 $ 156.1 $ 154.2 $ 310.3 Foreign currency translation impact (a) 4.9 5.6 7.8 24.6 20.9 21.9 42.8 Revenues, constant currency adjusted

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