Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Western Union CO | d8k.htm |
| EX-99.1 - PRESS RELEASE ISSUED BY THE COMPANY ON JULY 26, 2011 - Western Union CO | dex991.htm |
 Western Union
Second Quarter 2011
Earnings Webcast & Conference Call
July 26, 2011
Exhibit 99.2 |
 Mike
Salop Senior Vice President, Investor Relations
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 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 predict. Actual
outcomes
and
results
may
differ
materially
from
those
expressed
in,
or
implied
by,
our
forward-looking
statements.
Words
such
as
“expects,”
“intends,”
“anticipates,”
“believes,”
“estimates,”
“guides,”
“provides guidance,”
“provides outlook”
and other similar expressions or future or conditional verbs such
as “will,”
“should,”
“would”
and “could”
are intended to identify such forward-looking statements. Readers of this
presentation by The Western Union Company (the “Company,”
“Western Union,”
“we,”
“our”
or “us”) should not rely solely on the forward-looking statements
and should consider all uncertainties and risks discussed in the “Risk
Factors” section and throughout the Annual Report on Form
10-K for the year ended December 31, 2010.
The statements are only as of the date they are made, and the Company undertakes no
obligation to update any forward-looking statement. Possible events or
factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include
the following: changes in immigration laws, patterns and other factors
related to migrants; our ability to adapt technology in response to changing
industry and consumer needs or trends; our failure to develop and introduce new
products, services and enhancements, and gain market acceptance of such
products; the failure by us, our agents or subagents to comply with our business and technology standards and contract requirements or applicable
laws and regulations, especially laws designed to prevent money laundering,
terrorist financing and anti-competitive behavior, and/or changing
regulatory or enforcement interpretations of those laws; the impact on our business
of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the
rules promulgated there-under; changes in United States or foreign laws, rules and regulations including the Internal Revenue Code and
governmental or judicial interpretations thereof; changes in general economic
conditions and economic conditions in the regions and industries in which we
operate; political conditions and related actions in the United States and abroad which may adversely affect our businesses and economic conditions
as a whole; interruptions of United States government relations with countries in
which we have or are implementing material agent contracts; mergers,
acquisitions and integration of acquired businesses and technologies into our
Company, and the realization of anticipated financial benefits from these
acquisitions; changes in, and failure to manage effectively exposure to, foreign
exchange rates, including the impact of the regulation of foreign exchange
spreads on money transfers and payment transactions; our ability to resolve tax matters with the Internal Revenue Service and other tax
authorities
consistent
with
our
reserves;
failure
to
comply
with
the
settlement
agreement
with
the
State
of
Arizona;
liabilities
and
unanticipated
developments
resulting
from
litigation
and
regulatory
investigations
and
similar
matters,
including
costs,
expenses,
settlements
and
judgments;
failure
to
maintain sufficient amounts or types of regulatory capital to meet the changing
requirements of our regulators worldwide; deterioration in consumers' and
clients' confidence in our business, or in money transfer providers generally; failure to manage credit and fraud risks presented by our agents,
clients and consumers or non-performance by our banks, lenders, other financial
services providers or insurers; any material breach of security of or
interruptions in any of our systems; our ability to attract and retain qualified
key employees and to manage our workforce successfully; our ability to
maintain our agent network and business relationships under terms consistent with
or more advantageous to us than those currently in place; failure to
implement agent contracts according to schedule; adverse rating actions by credit
rating agencies; failure to compete effectively in the money transfer
industry with respect to global and niche or corridor money transfer providers,
banks and other money transfer services providers, including
telecommunications providers, card associations, card-based payment providers
and electronic and internet providers; our ability to protect our brands and
our other intellectual property rights; our failure to manage the potential both for patent protection and patent liability in the context of a rapidly
developing legal framework for intellectual property protection;
cessation of various services provided to us by third-party vendors; adverse
movements and volatility in capital markets and other events which affect
our liquidity, the liquidity of our agents or clients, or the value of, or our ability to recover
our investments or amounts payable to us; decisions to downsize,
sell or close units, or to transition operating activities from
one location to another or
to third parties, particularly transitions from the United States to other
countries; changes in industry standards affecting our business; changes in
accounting standards, rules and interpretations; significantly slower growth or
declines in the money transfer market and other markets in which we operate;
adverse consequences from our spin-off from First Data Corporation; decisions to change our business mix; catastrophic events; and
management's ability to identify and manage these and other risks.
|
 Hikmet Ersek
President
& Chief Executive Officer
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 Q2
Highlights Total revenue increased 7%, or 5% constant currency
Strong trends continue in C2C
8% reported revenue growth and 5% constant currency
Bill Payments revenue grew 2%
Business Solutions revenue grew 14%
470,000 agent locations
5
Raising 2011 Revenue and EPS Outlook
Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
|
 Electronic Channels & Prepaid Q2 Highlights
Account-based money transfer
Approximately 40% transaction growth
Agreements in place with over 60 banks globally
Westernunion.com
Nearly 40% transaction growth in international markets
Transactions increased by over 25% globally
Mobile
18 agreements in place
Over 100,000 locations enabled for cash-to-mobile in 57 countries
Prepaid
1.1 million prepaid cards in force
Approximately $120 million principal loaded through 500,000 loads
6
Electronic Channels Revenue Growth Over 35% |
 Scott Scheirman
Executive Vice President
& Chief Financial Officer
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 Revenue
8
($ in millions)
$1,273
$1,366
Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Consolidated revenue up 7%,
or up 5% constant currency
adjusted
Transaction fees increased
6%
Foreign exchange revenue
increased 12%
C2C cross-border principal
increased 10% |
 9
+6%
C2C Transactions
(millions)
Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
C2C Revenue growth of 8%, or
5% constant currency
Total Q2 Western Union cross-
border principal of $19 billion
Increased 10% on a reported basis
Increased 6% constant currency
Principal per transaction
Increased 4% on a reported basis
Flat on a constant currency basis
2010 cross-border market share
17.2%
(Aite,
July
2011)
Increase of 50 bps from 2009
Consumer-to-Consumer |
 Consumer-to-Consumer
10
Revenue
Transactions
Q2 2011
8%
4%
Europe, Middle East, Africa, S. Asia
43% of Western Union revenue
Transaction growth similar to Q1
Reported revenue improved from Q1 primarily due to stronger Euro
India grew revenue 11% and transactions 8%
Closed Angelo Costa acquisition and signed agreement to acquire Finint,
furthering the European strategy of gaining more direct access to agent
locations and creating scale efficiencies |
 11
Revenue
Transactions
Americas
5%
7%
32% of Western Union revenue
Domestic money transfer grew revenue 9% and transactions 19%
Mexico grew revenue 1% while transactions declined 1%
Signed Regions Bank, expanding our North American banking
strategy
Q2 2011
Consumer-to-Consumer |
 12
Revenue
Transactions
Asia Pacific
16%
12%
9% of Western Union revenue
Solid growth across the region, acceleration in Australia and China
China grew revenue 13% and transactions 7%
Q2 2011
Consumer-to-Consumer |
 C2C
Transaction and Revenue Growth 13
Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Q2 2011 |
 Global Business Payments
14
Revenue
Transactions
Global Business Payments
4%
8%
14% of Western Union revenue
Bill payments revenue turned positive increasing 2%
Business Solutions grew revenue 14%
Q2 2011 |
 15
Operating Margin
Note: See appendix for reconciliation of Non-GAAP to GAAP measures
GAAP
Excluding
Restructuring
(1)
(1)
Consolidated operating margin excludes restructuring charges
Operating margin excluding
restructuring expense declined
80 basis points
•
Currency translation net of
hedges negatively impacted
margins
•
Higher spending on initiatives
•
Deal costs related to Travelex
Global Business Payments of
$6 million in 2Q11
•
Benefits from other operating
efficiencies, including
restructuring savings, and
revenue leverage |
 16
C2C Operating Margin
C2C 84% of total company
revenue
Operating Margin down 50 basis
points from prior year
•
Negative impact of currency
net of hedges and higher
spending on initiatives offset
other efficiencies, including
restructuring savings, and
revenue leverage
29.1%
28.6%
Q2 2010
Q2 2011 |
 17
Global Business Payments
Operating Margin
GBP 14% of total company
revenue
Operating margin improved
Revenue increases
Bill Payment improvement
Lower integration and investment
spending in WUBS |
 18
Financial Strength
YTD 2011
Cash Flow from Operations
$506 million
Capital Expenditures
$75 million
Stock Repurchases
$660 million
Dividends Paid
$95 million
Cash Balance, June 30, 2011
$2.1 billion
Debt Outstanding, June 30, 2011
$3.6 billion |
 2011
Outlook 19
Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
Constant currency revenue growth in the range of 4% to 5%
GAAP revenue growth in the range of 5% to 6%
GAAP EPS of $1.48 to $1.53
EPS excluding restructuring charges of $1.53 to $1.58
Restructuring expenses approximately $45 million
Increasing 2011 Revenue and EPS Outlook |
 2011
EPS Outlook – July vs. April
20
GAAP April
Outlook
Lower
Restruct.
Expense
April
Outlook
Excl.
Restruct.
1% Rev.
Incr.
Constant
Currency
1% Rev.
Incr. from
Currency
Translation,
Net of
Hedges
Incremental
Acquisition
Impacts
-Costa $0.01
-Finint $0.02
-
TGBP ($0.02)
Tax rate
Decrease
GAAP July
Outlook
July
Outlook
Excl.
Restruct.
$1.41
to
$1.46
$1.47
to
$1.52
$0.01
$0.02
$0.02
$0.01
$0.01
$1.48
to
$1.53
$1.53
to
$1.58 |
 2011
Outlook 21
Note: See appendix for reconciliation of Non-GAAP to GAAP measures.
GAAP operating margin range of 25% to 25.5% (including Travelex deal
costs of approximately $15 million)
Operating margin range of 26% to 26.5%, excluding restructuring
charges
Operating margin on a constant currency basis range of 26.5% to 27%,
excluding restructuring charges (including Travelex deal costs)
GAAP
cash
flows
from
operating
activities
to
be
at
the
lower
end
of
the
previous range of $1.2 billion to $1.3 billion
Increasing 2011 Revenue and EPS Outlook |
 Questions & Answers
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 Appendix
Second Quarter 2011 Earnings
Webcast & Conference Call
July 26, 2011
23 |
 Non-GAAP Measures
24
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
underlying
business,
because
they
provide
consistency
and
comparability
to
prior
periods.
These
non-GAAP
measurements
include
revenue
change
constant
currency
adjusted,
operating
income
margin
and
earnings
per
share
excluding
restructuring
expenses,
effective
tax
rate
restructuring
adjusted,
consumer-to-consumer
segment
revenue
change
constant
currency
adjusted,
consumer-to-consumer
segment
principal
per
transaction
change
constant
currency
adjusted,
consumer-to-consumer
cross-
border
principal
change
constant
currency
adjusted,
consumer-to-consumer
international
revenue
change
constant
currency
adjusted,
consumer-to-consumer
international
principal
per
transaction
change
constant
currency
adjusted,
2011
revenue
outlook
constant
currency
adjusted,
2011
operating
income
margin
outlook
restructuring
and
constant
currency
adjusted,
and
2011
earnings
per
share
outlook
excluding
restructuring
expenses.
A
non-GAAP
financial
measure
should
not
be
considered
in
isolation
or
as
a
substitute
for
the
most
comparable
GAAP
financial
measure.
A
non-GAAP
financial
measure
reflects
an
additional
way
of
viewing
aspects
of
our
operations
that,
when
viewed
with
our
GAAP
results
and
the
reconciliation
to
the
corresponding
GAAP
financial
measure,
provide
a
more
complete
understanding
of
our
business.
Users
of
the
financial
statements
are
encouraged
to
review
our
financial
statements
and
publicly-filed
reports
in
their
entirety
and
not
to
rely
on
any
single
financial
measure.
A
reconciliation
of
non-GAAP
measures
to
the
most
directly
comparable
GAAP
financial
measures
is
included
below. |
 Reconciliation of Non-GAAP Measures
25
2Q10
3Q10
4Q10
FY2010
1Q11
2Q11
YTD 2Q11
Consolidated Metrics
Revenues, as reported (GAAP)
1,273.4
$
1,329.6
$
1,357.0
$
5,192.7
$
1,283.0
$
1,366.3
$
2,649.3
$
Foreign currency translation impact (a)
16.1
22.2
18.5
36.8
2.3
(32.5)
(30.2)
Revenues, constant currency adjusted
1,289.5
$
1,351.8
$
1,375.5
$
5,229.5
$
1,285.3
$
1,333.8
$
2,619.1
$
Prior year revenues, as reported (GAAP)
1,254.3
$
1,314.1
$
1,314.0
$
5,083.6
$
1,232.7
$
1,273.4
$
2,506.1
$
Revenue change, as reported (GAAP)
2
%
1
%
3
%
2
%
4
%
7
%
6
%
Revenue change, constant currency adjusted
3
%
3
%
5
%
3
%
4
%
5
%
5
%
Operating income, as reported (GAAP)
311.0
$
351.2
$
322.1
$
1,300.1
$
312.9
$
350.7
$
663.6
$
Reversal of restructuring and related expenses (b)
34.5
14.0
11.0
59.5
24.0
8.9
32.9
Operating income, excluding restructuring
345.5
$
365.2
$
333.1
$
1,359.6
$
336.9
$
359.6
$
696.5
$
Operating income margin, as reported (GAAP)
24.4
%
26.4
%
23.7
%
25.0
%
24.4
%
25.7
%
25.0
%
Operating income margin, excluding restructuring
27.1
%
27.5
%
24.5
%
26.2
%
26.3
%
26.3
%
26.3
%
Net income, as reported (GAAP)
221.0
$
238.4
$
242.6
$
909.9
$
210.2
$
263.2
$
473.4
$
Reversal of restructuring and related expenses, net of income tax
benefit (b) 22.4
9.5
7.4
39.3
16.4
5.9
22.3
Net income, restructuring adjusted, net of income
tax 243.4
$
247.9
$
250.0
$
949.2
$
226.6
$
269.1
$
495.7
$
Diluted earnings per share ("EPS"), as reported (GAAP) ($ -
dollars) 0.33
$
0.36
$
0.37
$
1.36
$
0.32
$
0.41
$
0.74
$
Impact from restructuring and related expenses, net of income tax
benefit (b) ($ - dollars) 0.03
0.01
0.01
0.06
0.03
0.01
0.03
Diluted EPS, restructuring adjusted ($ -
dollars) 0.36
$
0.37
$
0.38
$
1.42
$
0.35
$
0.42
$
0.77
$
Diluted weighted-average shares outstanding
671.6
661.3
658.4
668.9
652.1
635.8
644.0
Effective tax rate, as reported (GAAP)
18.8
%
22.7
%
15.9
%
20.5
%
23.5
%
21.1
%
22.2
%
Impact from restructuring expenses, net of income tax benefit (b)
1.9
%
0.5
%
0.6
%
0.7
%
0.6
%
0.3
%
0.5
%
Effective tax rate, restructuring adjusted
20.7
%
23.2
%
16.5
%
21.2
%
24.1
%
21.4
%
22.7
% |
 Reconciliation of Non-GAAP Measures
26
2Q10
3Q10
4Q10
FY2010
1Q11
2Q11
YTD 2Q11
Consumer-to-Consumer Segment
Revenues, as reported (GAAP)
1,073.1
$
1,128.3
$
1,151.8
$
4,383.4
$
1,078.1
$
1,155.1
$
2,233.2
$
Foreign currency translation impact (a)
15.0
21.2
18.0
32.3
2.2
(31.4)
(29.2)
Revenues, constant currency adjusted
1,088.1
$
1,149.5
$
1,169.8
$
4,415.7
$
1,080.3
$
1,123.7
$
2,204.0
$
Prior year revenues, as reported (GAAP)
1,065.5
$
1,117.8
$
1,113.7
$
4,300.7
$
1,030.2
$
1,073.1
$
2,103.3
$
Revenue change, as reported (GAAP)
1
%
1
%
3
%
2
%
5
%
8
%
6
%
Revenue change, constant currency adjusted
2
%
3
%
5
%
3
%
5
%
5
%
5
%
Principal per transaction, as reported ($ - dollars)
351
$
355
$
356
$
355
$
360
$
365
$
363
$
Foreign currency translation impact (a) ($ - dollars)
2
7
5
1
(1)
(14)
(8)
Principal per transaction, constant currency adjusted ($ -
dollars) 353
$
362
$
361
$
356
$
359
$
351
$
355
$
Prior year principal per transaction, as reported ($ -
dollars) 358
$
371
$
365
$
363
$
357
$
351
$
354
$
Principal per transaction change, as reported
(2)%
(4)%
(3)%
(2)%
1
%
4
%
3
%
Principal per transaction change, constant currency adjusted
(2)%
(3)%
(1)%
(2)%
1
%
0
%
0
%
Cross-border principal, as reported ($ - billions)
16.8
$
17.6
$
18.1
$
68.6
$
17.1
$
18.6
$
35.7
$
Foreign currency translation impact (a) ($ - billions)
0.1
0.4
0.3
0.3
-
(0.8)
(0.8)
Cross-border principal, constant currency adjusted ($
- billions) 16.9
$
18.0
$
18.4
$
68.9
$
17.1
$
17.8
$
34.9
$
Prior year cross-border principal, as reported ($ -
billions) 15.9
$
17.0
$
17.1
$
65.0
$
16.1
$
16.8
$
32.9
$
Cross-border principal change, as reported
6
%
4
%
6
%
6
%
7
%
10
%
8
%
Cross-border principal change, constant currency adjusted
7
%
6
%
7
%
6
%
6
%
6
%
6
%
International revenues, as reported (GAAP)
890.8
$
944.0
$
972.4
$
3,669.2
$
901.7
$
962.9
$
1,864.6
$
Foreign currency translation impact (a)
15.7
21.7
18.4
35.0
2.6
(30.7)
(28.1)
International revenues, constant currency adjusted
906.5
$
965.7
$
990.8
$
3,704.2
$
904.3
$
932.2
$
1,836.5
$
Prior year international revenues, as reported (GAAP)
875.0
$
926.5
$
943.4
$
3,559.7
$
862.0
$
890.8
$
1,752.8
$
International revenue change, as reported (GAAP)
2
%
2
%
3
%
3
%
5
%
8
%
6
%
International revenue change, constant currency adjusted
4
%
4
%
5
%
4
%
5
%
5
%
5
%
International principal per transaction, as reported ($ -
dollars) 376
$
384
$
386
$
382
$
390
$
399
$
394
$
Foreign currency translation impact (a) ($ - dollars)
3
8
7
2
(2)
(18)
(9)
International principal per transaction, constant currency adjusted ($
- dollars) 379
$
392
$
393
$
384
$
388
$
381
$
385
$
Prior year international principal per transaction, as reported
($ - dollars) 380
$
395
$
390
$
386
$
381
$
376
$
379
$
International principal per transaction change, as
reported (1)%
(3)%
(1)%
(1)%
2
%
6
%
4
%
International principal per transaction change, constant currency
adjusted 0
%
(1)%
1
%
(1)%
2
%
1
%
2
% |
 Reconciliation of Non-GAAP Measures
27
2011 Revenue Outlook
Revenue change (GAAP)
5
%
6
%
Foreign currency translation impact (c)
(1)%
(1)%
Revenue change, constant currency adjusted
4
%
5
%
2011 Operating Income Margin Outlook
Operating income margin (GAAP)
25.0
%
25.5
%
Impact from restructuring and related expenses (b)
1.0
%
1.0
%
Operating income margin, restructuring adjusted
26.0
%
26.5
%
Foreign currency translation impact (c)
0.5
%
0.5
%
Operating income margin, restructuring and constant currency
adjusted 26.5
%
27.0
%
2011 EPS Outlook
EPS guidance (GAAP) ($ - dollars)
1.48
$
1.53
$
Impact from restructuring and related expenses, net of income tax
benefit (b) ($ - dollars) 0.05
0.05
EPS guidance, restructuring adjusted ($ -
dollars) 1.53
$
1.58
$
Range
Range
Range |
 Footnote explanations
28
(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 United States dollar, net of foreign currency hedges, which would not
have occurred if there had been a constant exchange rate.
(b)
Restructuring and related expenses consist of direct and incremental expenses
including the impact from fluctuations in exchange rates associated with
restructuring and related activities, consisting of severance, outplacement and
other related benefits; facility closure and migration of the Company's IT
infrastructure; and other expenses related to the relocation of various
operations to new or existing Company facilities and third-party providers, including hiring,
training, relocation, travel, and professional fees. Also included in the facility
closure expenses are non-cash expenses related to fixed asset and
leasehold improvement write-offs and the acceleration of depreciation and
amortization. Restructuring and related expenses were not allocated to the
segments. (c)
Represents the estimated impact from the fluctuation in exchange
rates between all foreign currency denominated
amounts and the United States dollar. Constant currency results exclude any
estimated benefit or loss caused by foreign exchange fluctuations between
foreign currencies and the United States dollar, net of foreign currency
hedges, which would not have occurred if there had been a constant exchange
rate. |