Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Q4 2018 Earnings Presentation
28 slides from Western Union Company (the)'s earnings presentation, Feb 7, 2019
Slide 1: Fourth Quarter 2018 Earnings Webcast & Conference Call
FOU RTH Earnings Webcast & Q UA RTE R Conference Call 201 8 February 7, 2019
Slide 2: Mike Salop, Senior Vice President, Investor Relations
Mike Salop Senior Vice President, Investor Relations 2
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 4
Slide 5: Overview
Overview Stable results in the fourth quarter Consumer money transfer revenue decreased 1%, or increased 1% constant currency* Westernunion.com money transfer transactions accelerated to 25% growth Returned over $740 million to shareholders Business Solutions revenue grew 3%, or 5% for the full year
Slide 6: Overview: 2019 Strategic Priorities
Overview 2019 Strategic Priorities Driving digital growth and expansion Penetrating new cross-border opportunities Increasing operating efficiencies 6
Slide 7: Raj Agrawal, Executive Vice President & Chief Financial Officer
Raj Agrawal Executive Vice President & Chief Financial Officer 7
Slide 8: Revenue Q4
Revenue Q4 Consolidated revenues of $1.4 billion declined 3%, or increased 2% constant currency*, compared to the prior year period *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 8
Slide 9: Consumer-to-Consumer Q4
Consumer-to-Consumer Q4 ▪ 80% of Company revenue ▪ Revenues declined 1%, or increased 1% constant currency* ▪ Total transactions increased 4% ▪ Cross-border principal increased 5%, or 8% constant currency* *Note: See appendix for reconciliation of Non-GAAP to GAAP financial measures. 9
Slide 10: Consumer-to-Consumer
Consumer-to-Consumer Q4 2018 Revenue Constant Currency Transaction % of C2C Regions Change Rev. Change* Change Revenue North America 0% 0% 2% 37% Europe and CIS 1% 2% 8% 32% MEASA (7%) (6%) 3% 15% LACA 0% 16% 11% 9% APAC (9%) (8%) (4%) 7% Total C2C (1%) 1% 4% 100% Included in C2C regions above: 21%
Slide 11: Business Solutions and Other Q4
Business Solutions and Other Q4 Business Solutions (B2B) ▪ 7% of Company revenue ▪ Revenue increased 3%, or 5% constant currency* Other (primarily bill payments businesses in the U.S. & Argentina) ▪ 13% of Company revenue ▪ Revenue decreased 11%, or increased 10% constant currency* *Note: See append
Slide 12: Operating Margin Q4
Operating Margin Q4 GAAP margin in the prior year period includes a non- 18.0% 19.3% cash goodwill impairment charge related to Business Solutions, WU Way expenses and expenses related to the NYDFS settlement -17.5% Q4 2017 Q4 2017 Q4 2018 Adjusted operating margin expansion driven by GAAP ADJUSTED*
Slide 13: C2C Operating Margin Q4
C2C Operating Margin Q4 23.3% Operating margin increase was driven by lower bad debt, marketing, and incentive 21.5% compensation expenses, which were partially offset by higher technology spending Q4 2017 Q4 2018 13
Slide 14: B2B Operating Margin Q4
B2B Operating Margin Q4 Operating margin increased primarily due to high technology and other operating 5.4% expenses in the fourth quarter of 2017 ▪ Depreciation and amortization of approximately $10 million in the current period and $11 million in the prior -3.2% year period Q4 2017 Q4 2018 EBITDA
Slide 15: Other Operating Margin Q4
Other Operating Margin Q4 (Primarily consists of payments businesses in the U.S. & Argentina) Operating margin decline was primarily due to lower revenue and higher corporate expenses 7.9% 1.8% Q4 2017 Q4 2018 15
Slide 16: Other Financial Highlights
Other Financial Highlights Year Ended December 31, 2018 Cash Flow from Operations $821 million Capital Expenditures $339 million Stock Repurchases $399 million Dividends Paid $342 million Cash Balance, December 31, 2018 $973 million Debt Outstanding, December 31, 2018 $3.4 billion 16
Slide 17: 2019 Outlook
2019 Outlook Revenue Earnings per Share Low single-digit GAAP revenue decrease to a low single- EPS in a range of $1.83 to $1.95 digit increase Low single-digit constant currency revenue increase (excluding any benefit related to Argentina inflation) Operating Profit Margin Cash Flow Operating margi
Slide 18: Questions and Answers
Questions and Answers 18
Slide 19: Appendix
Appendix Fourth Quarter 2018 Earnings Webcast & Conference Call 19 19
Slide 20: Non-GAAP Measures
Non-GAAP Measures Western Union's management believes the non-GAAP financial measures Although the expenses related to the WU Way are specific to that initiative, presented provide meaningful supplemental information regarding our the types of expenses related to the WU Way initiative are similar to
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q17 FY2017 1Q18 2Q18 3Q18 4Q18 FY2018 Consolidated Metrics Revenues, as reported (GAAP) $ 1,438.3 $ 5,524.3 $ 1,389.4 $ 1,411.1 $ 1,387.8 $ 1,401.6 $ 5,589.9 Foreign currency translation impact (a) (5.5) 61.3 (18.9) 9.1 52.8 68.9 111.9 Revenues, constant currency
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q17 FY2017 1Q18 2Q18 3Q18 4Q18 FY2018 Consolidated Metrics cont. Operating income/(loss), as reported (GAAP) (i) $ (251.9) $ 475.8 $ 264.9 $ 283.6 $ 302.6 $ 271.0 $ 1,122.1 Reversal of depreciation and amortization 65.8 262.9 66.7 65.7 63.6 68.7 264.7 EBITDA (g)
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q17 FY2017 1Q18 2Q18 3Q18 4Q18 FY2018 Consolidated Metrics cont. Diluted earnings/(loss) per share ("EPS"), as reported (GAAP) ($- dollars) $ (2.44) $ (1.19) $ 0.46 $ 0.47 $ 0.46 $ 0.48 $ 1.87 EPS impact as a result of Goodwill impairment ($- dollars) (b) $ 1.01
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q17 FY2017 1Q18 2Q18 3Q18 4Q18 FY2018 Consumer-to-Consumer Segment Revenues, as reported (GAAP) $ 1,144.5 $ 4,354.5 $ 1,091.0 $ 1,127.5 $ 1,107.4 $ 1,127.7 $ 4,453.6 Foreign currency translation impact (a) (9.0) 37.7 (26.4) (9.6) 18.7 23.9 6.6 Revenues, constant
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q17 FY2017 1Q18 2Q18 3Q18 4Q18 FY2018 Consumer-to-Consumer Segment cont. NA region revenue change, as reported (GAAP) 3 % 2 % 4 % 3 % 2 % 0 % 2 % NA region foreign currency translation impact (a) 0 % 1 % 0 % 0 % 0 % 0 % 0 % NA region revenue change, constant curr
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 4Q17 FY2017 1Q18 2Q18 3Q18 4Q18 FY2018 Business Solutions Segment Revenues, as reported (GAAP) $ 94.3 $ 383.9 $ 96.7 $ 93.1 $ 100.2 $ 96.8 $ 386.8 Foreign currency translation impact (a) (3.0) 1.8 (4.8) (2.7) 2.3 2.6 (2.6) Revenues, constant currency adjusted $ 91
Slide 27: 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
Slide 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Non-GAAP related notes continued: (e) Represents the expenses incurred to transform our operating model, focusing on technology transformation, network productivity, customer and agent process optimization, and organizational redesign to better drive efficiencies
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