Western Union Company (the) · NYSE:WU

Western Union Company (the) — The Western Union Company — Q3 2017 Earnings Presentation

28 slides from Western Union Company (the)'s earnings presentation, Nov 2, 2017

1. Slide 1: Western Union

   Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved.

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

   Mike Salop Senior Vice President, Investor Relations Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 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 Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 4

5. Slide 5: Overview

   Overview Solid performance in the third quarter • GAAP revenues increased 2%, or 3% on a constant currency basis* • Strong growth from digital in consumer money transfer and from Speedpay U.S. electronic bill payments • Westernunion.com revenues increased 23% EPS outlook increased for the year *Note

6. Slide 6: Overview: Long-term strategic plans

   Overview Long-term strategic plans • Digital expansion in money transfer • Optimization of retail money transfer business • Expansion of payments based businesses, including Business Solutions and U.S. electronic bill payments • Drive operating efficiencies • WU Way expected savings increasing to $5

7. Slide 7: Raj Agrawal, Executive Vice President & Chief Financial Officer

   Raj Agrawal Executive Vice President & Chief Financial Officer Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 7

8. Slide 8: Revenue

   Revenue ▪ Consolidated revenues of $1.4 billion increased 2% compared to the prior year period, or 3% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 8

9. Slide 9: Consumer-to-Consumer Q3

   Consumer-to-Consumer Q3 ▪ 79% of Company revenue ▪ Revenue increased 1% on both a reported and constant currency basis* ▪ Total transactions increased 2% ▪ Cross-border principal increased 4%, or 2% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. Wes

10. Slide 10: Consumer-to-Consumer

    Consumer-to-Consumer Q3 2017 Constant Revenue Currency Rev. Transaction Growth/ Growth/ Growth/ % of C2C Decline Regions Decline* Decline Revenue North America 1% 1% 2% 36% Europe and CIS 2% 1% 7% 31% MEASA -8% -8% -11% 16% APAC -1% 1% 0% 8% LACA 19% 22% 17% 9% Total C2C 1% 1% 2% 100% Included in C2

11. Slide 11: Business Solutions and Other Q3

    Business Solutions and Other Q3 ▪ Business Solutions (B2B) ▪ 7% of Company revenue ▪ Revenue increased 2%, or 1% constant currency* ▪ Other (primarily bill payments businesses in the U.S. & Argentina) ▪ 14% of Company revenue ▪ Revenue increased 9%, or 13% constant currency* *Note: See appendix for

12. Slide 12: Operating Margin Q3

    Operating Margin Q3 ▪ Operating margin 30.0% • Decreased primarily due to higher incentive compensation expense 25.0% and increased marketing spend 21.7% * 20.2% 20.6% * • Adjusted margin in the current 20.0% 19.3% quarter excludes $10 million of WU 15.0% Way expenses and $8 million related to an ac

13. Slide 13: C2C Operating Margin Q3

    C2C Operating Margin Q3 40.0% 35.0% ▪ Operating margin 30.0% 25.1% 25.0% 23.5% • Decreased primarily due to higher 20.0% incentive compensation related expense and increased marketing 15.0% spend 10.0% 5.0% 0.0% Q3 2016 Q3 2017 Western Union Confidential | ©2017 Western Union Holdings, Inc. All righ

14. Slide 14: B2B Operating Margin Q3

    B2B Operating Margin Q3 ▪ Operating Margin ▪ Operating margin was 9.1% in the current period compared to 4.0% in the prior year period, driven by operating expense efficiencies and lower depreciation and amortization, which were partially offset by higher technology expense ▪ Depreciation and amorti

15. Slide 15: Other Operating Margin Q3

    Other Operating Margin Q3 (Primarily consists of bill payments businesses in the U.S. & Argentina) 25.0% 20.0% 15.0% ▪ Operating margin • Improvement was driven by revenue 10.1% 10.5% 10.0% growth and technology efficiencies, partially offset by higher incentive compensation related expense and 5.0%

16. Slide 16: Financial Strength

    Financial Strength YTD September 30, 2017 Cash Flow from Operations $423 million Capital Expenditures $122 million Stock Repurchases $475 million Dividends Paid $245 million Cash Balance, September 30, 2017 $1.0 billion Debt Outstanding, September 30, 2017 $3.5 billion Western Union Confidential | ©

17. Slide 17: 2017 Outlook

    2017 Outlook ▪ Revenue • Low single digit increase in both GAAP and constant currency revenue* (previously flat to low single digit increase for GAAP revenue) ▪ Operating Profit Margin • GAAP operating margin of approximately 17% and adjusted operating margin of approximately 20%* ▪ Earnings per Sha

18. Slide 18: Questions & Answers

    Questions & Answers Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 18

19. Slide 19: Appendix

    Appendix Third Quarter 2017 Earnings Webcast & Conference Call Western Union Confidential | ©2017 Western Union Holdings, Inc. All rights reserved. 19

20. Slide 20: 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

21. Slide 21: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q16 4Q16 FY2016 1Q17 2Q17 3Q17 YTD 2017 Consolidated Metrics Revenues, as reported (GAAP) $ 1,377.8 $ 1,371.7 $ 5,422.9 $ 1,302.4 $ 1,378.9 $ 1,404.7 $ 4,086.0 Foreign currency translation impact (a) 52.1 58.7 217.1 30.1 29.0 7.7 66.8 Revenues, constant currency

22. Slide 22: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q16 4Q16 FY2016 1Q17 2Q17 3Q17 YTD 2017 Consolidated Metrics (cont.) Operating income/(loss), as reported (GAAP) $ 278.3 $ (313.5) $ 483.7 $ 239.5 $ 214.8 $ 271.6 $ 725.9 Reversal of depreciation and amortization 66.4 65.3 263.2 66.4 65.2 65.5 197.1 EBITDA (f) $

23. Slide 23: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q16 4Q16 FY2016 1Q17 2Q17 3Q17 YTD 2017 Consolidated Metrics (cont.) Diluted earnings/(loss) per share ("EPS"), as reported (GAAP) ($ - dollars) $ 0.44 $ (0.73) $ 0.51 $ 0.33 $ 0.35 $ 0.51 $ 1.19 EPS impact as a result of State Regulator Matter ($ - dollars) (b)

24. Slide 24: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q16 4Q16 FY2016 1Q17 2Q17 3Q17 YTD 2017 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,098.9 $ 1,092.5 $ 4,304.6 $ 1,015.0 $ 1,087.3 $ 1,107.7 $ 3,210.0 Foreign currency translation impact (a) 25.3 33.4 112.2 24.1 20.8 1.8 46.7 Revenues, constant c

25. Slide 25: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q16 4Q16 FY2016 1Q17 2Q17 3Q17 YTD 2017 Consumer-to-Consumer Segment (cont.) NA region revenue change, as reported (GAAP) 7% 8% 6% 3% 3% 1% 2% NA region foreign currency translation impact (a) 0% 0% 1% 1% 0% 0% 1% NA region revenue change, constant currency adjus

26. Slide 26: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 3Q16 4Q16 FY2016 1Q17 2Q17 3Q17 YTD 2017 Business Solutions Segment Revenues, as reported (GAAP) $ 97.2 $ 98.8 $ 396.0 $ 93.6 $ 96.6 $ 99.4 $ 289.6 Foreign currency translation impact (a) 3.5 3.9 15.0 2.8 3.2 (1.2) 4.8 Revenues, constant currency adjusted $ 100.7

27. Slide 27: Reconciliation of Non-GAAP Measures

    Reconciliation of Non-GAAP Measures 2017 Consolidated Outlook Metrics Operating margin (GAAP) 17% State Regulator Matter (b) 1% Joint Settlement Agreements (c) 0% WU Way business transformation expenses (d) 2% Operating margin, excluding State Regulator Matter, Joint Settlement Agreements, and WU Wa

28. Slide 28: Reconciliation of Non-GAAP Measures

    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

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