The Western Union Company (NYSE: WU) today reported financial
results for the 2013 first quarter. The Company also affirmed its
full year financial outlook provided on February 12, 2013.
“The first quarter provided signs that we are making progress
with our strategies to strengthen consumer money transfer, increase
customers and usage in business-to-business, and generate and
deploy strong cash flow for our shareholders,” said President
and Chief Executive Officer Hikmet Ersek. “Our strategic
pricing investments in consumer money transfer are working,
electronic channels continue to expand at a robust pace, and
Business Solutions delivered solid results. As we stated in
February, we expect 2013 to be a transitional year as we implement
key strategic actions, but we remain confident these actions will
drive revenue and profit growth in 2014 and beyond.”
In the first quarter revenues declined 5%, or 4% on a constant
currency basis. The revenue decline was primarily driven by the
Consumer-to-Consumer (C2C) segment, which was impacted by pricing
investments and compliance related changes. C2C revenues declined
7%, including a negative 2% impact from the Vigo and Orlandi Valuta
brands and a negative 1% impact from currency.
Total C2C transactions decreased 2%, primarily due to the impact
of compliance related changes implemented in the third quarter of
2012 that affected the Vigo and Orlandi Valuta brands. Western
Union branded C2C transactions increased 2%. Pricing investments in
key corridors increased transaction growth as anticipated; however,
these benefits were partially offset by the impact of compliance
related actions in various corridors, softness in certain markets,
and challenging prior year comparisons. The Company expects C2C
transaction trends to improve sequentially throughout the remainder
of 2013, driven by increased traction from the pricing investments,
the rollout of added capabilities in the online business, and
expansion of the agent network.
Consumer-to-Business (C2B) revenues declined 1%, including a
negative 4% impact from currency. Western Union Business Solutions
revenues increased 7%, with no impact from currency
translation.
GAAP operating margin was 22.4%, which compares to 23.9% in the
first quarter of 2012. The Company expects 2013 full year operating
margins of approximately 20%, but the first quarter margin
benefited from the timing of certain expenses. Earnings per share
of $0.37 compares to $0.40 in the prior year period.
Progress on 2013 Key
Strategies
Strengthen consumer money transfer
The increased pricing investments intended to regain customer
momentum are meeting the Company’s transaction volume objectives.
In the fourth quarter of 2012, approximately 50% of the planned
pricing investments for the year were initiated in select
corridors. In the first quarter total C2C transactions increased in
the low teens in these corridors. By the end of the first quarter,
approximately 75% of the planned pricing investments for the year
had been initiated.
Pricing investments in Mexico are delivering targeted results,
and the Company also signed new agents to expand its network in the
country. Western Union branded transactions in Mexico increased 9%
in the first quarter, which compares to a 2% growth rate in the
fourth quarter, despite softness in the overall Mexico remittance
market.
Electronic channels continued to expand, with revenue growth of
18% in the quarter. Westernunion.com online money transfer
transactions increased 60%, and transactions from account based
money transfer through banks increased 45%.
Increase customers and usage in business-to-business
Enhanced go-to-market processes and execution are aiding Western
Union Business Solutions growth. In the first quarter, the 7%
revenue increase in business-to-business was driven by incremental
customer hedging activity and the addition of the Travelex Global
Business Payments (TGBP) business in France, which was acquired in
the second quarter of 2012. New products and services continue to
be introduced, including cash management tools for small and
medium-sized business clients and currency options in the U.K.
Generate and deploy strong cash flow for shareholders
Cash flow from operating activities was $237 million in the
quarter. The Company returned $260 million to shareholders,
consisting of $190 million of share repurchases and $70 million of
dividends.
The Company expects to generate cash flow from operating
activities of approximately $900 million in 2013, or approximately
$1 billion excluding final tax payments related to the agreement
announced with the Internal Revenue Service in December 2011 (IRS
Agreement). Full year share repurchases and dividends are expected
to total approximately $700 million, which represents approximately
8% of current market capitalization.
2013 Full Year Outlook
The Company affirms its full year outlook for 2013 provided on
February 12:
Revenue and C2C Transactions
- Low single digit constant currency
revenue declines
- Consumer money transfer pricing
investments of approximately $300 million, or 5% of total Company
revenue, are reflected in the outlook
- Mid to high single digit Western Union
brand C2C transaction increases
- Overall C2C transaction growth
approximately 2 percentage points lower than the Western Union
brand due to declines from Vigo and Orlandi Valuta resulting from
compliance related actions
Operating Margins
- GAAP operating margin of approximately
20%
- EBITDA margin of approximately
24.5%
Tax Rate
- Effective tax rate of approximately
15%
Earnings per Share
- GAAP EPS in a range of $1.33 to
$1.43
Cash Flow
- Cash flow from operating activities of
approximately $900 million, or approximately $1 billion excluding
anticipated final tax payments of approximately $100 million
relating to the IRS Agreement.
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release.
Non-GAAP Measures
Western Union presents a number of non-GAAP financial measures
because management believes that these metrics provide meaningful
supplemental information in addition to the GAAP metrics and
provide comparability and consistency to prior periods. These
non-GAAP financial measures include revenue change constant
currency adjusted; 2013 EBITDA margin outlook; 2013 operating cash
flow outlook IRS Agreement adjusted; and additional measures found
in the supplemental schedule included with this press release.
Reconciliations of non-GAAP to comparable GAAP measures are
available in the accompanying schedules and in the “Investor
Relations” section of the Company’s website at
http://ir.westernunion.com.
EBITDA
Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA) results from taking operating income and adjusting for
depreciation and amortization expenses. EBITDA results provide an
additional performance measurement calculation which helps
neutralize the operating income effect of assets acquired in prior
periods.
Currency
Constant currency results assume foreign revenues and expenses
are translated from foreign currencies to the U.S. dollar, net of
the effect of foreign currency hedges, at rates consistent with
those in the prior year. Constant currency results also assume any
benefit or loss caused by foreign exchange fluctuations between
foreign currencies and the U.S. dollar, net of the effect of
foreign currency hedges, would have been consistent with the prior
year. Additionally, the measurement assumes the impact of
fluctuations in foreign currency derivatives not designated as
hedges and the portion of fair value that is excluded from the
measure of effectiveness for those contracts designated as hedges
is consistent with the prior year.
Investor and Analyst Conference Call
and Slide Presentation
The Company will host a conference call and webcast, including
slides, at 4:30 p.m. Eastern Time today. To listen to the
conference call via telephone, dial 1 (888) 317-6003 (U.S.) or +1
(412) 317-6061 (outside the U.S.) ten minutes prior to the start of
the call. The pass code is 5745293.
The conference call and accompanying slides will be available
via webcast at http://ir.westernunion.com. Registration for the
event is required, so please register at least five minutes prior
to the scheduled start time.
A replay of the call will be available approximately one hour
after the call ends through May 14, 2013, at 1 (877) 344-7529
(U.S.) or +1 (412) 317-0088 (outside the U.S.). The pass code is
5745293. A webcast replay will be available at
http://ir.westernunion.com.
Please note: All statements made by Western Union officers on
this call are the property of Western Union and subject to
copyright protection. Other than the replay, Western Union has not
authorized, and disclaims responsibility for, any recording, replay
or distribution of any transcription of this call.
Safe Harbor Compliance Statement for Forward-Looking
Statements
This press release 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 press release 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, 2012. 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: (i) events
related to our business and industry, such as: deterioration in
consumers' and clients' confidence in our business, or in money
transfer and payment service providers generally; changes in
general economic conditions and economic conditions in the regions
and industries in which we operate, including global economic and
trade downturns and financial market disruptions; political
conditions and related actions in the United States and abroad
which may adversely affect our business and economic conditions as
a whole; failure to compete effectively in the money transfer and
payment service industry with respect to global and niche or
corridor money transfer providers, banks and other money transfer
and payment service providers, including telecommunications
providers, card associations, card-based payment providers and
electronic and Internet providers; the pricing of our services and
any pricing reductions, and their impact on our consumers and our
financial results; our ability to adapt technology in response to
changing industry and consumer needs or trends; our failure to
develop and introduce new services and enhancements, and gain
market acceptance of such services; 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; interruptions of United States
government relations with countries in which we have or are
implementing significant business relationships with agents or
clients; changes in immigration laws, interruptions in immigration
patterns and other factors related to migrants; mergers,
acquisitions and integration of acquired businesses and
technologies into our Company, including Travelex Global Business
Payments, and the realization of anticipated financial benefits
from these acquisitions, and events requiring us to write down our
goodwill; decisions to change our business mix; 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; 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; any material
breach of security or safeguards 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;
adverse rating actions by credit rating agencies; our ability to
realize the anticipated benefits from productivity and cost-savings
and other related initiatives, which may include decisions to
downsize or to transition operating activities from one location to
another, and to minimize any disruptions in our workforce that may
result from those initiatives; 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; changes in tax laws and
unfavorable resolution of tax contingencies; cessation of or
defects in various services provided to us by third-party vendors;
material changes in the market value or liquidity of securities
that we hold; restrictions imposed by our debt obligations;
significantly slower growth or declines in the money transfer,
payment service, and other markets in which we operate; and changes
in industry standards affecting our business; (ii) events related
to our regulatory and litigation environment, such as: the failure
by us, our agents or their subagents to comply with laws and
regulations, including regulatory or judicial interpretations
thereof, designed to detect and prevent money laundering, terrorist
financing, fraud and other illicit activity, and increased costs or
loss of business associated with compliance with those laws and
regulations; changes in United States or foreign laws, rules and
regulations including the Internal Revenue Code, governmental or
judicial interpretations thereof and industry practices and
standards, including the impact of the Foreign Account Tax
Compliance provisions of the Hiring Incentives to Restore
Employment Act; liabilities resulting from a failure of our agents
or their subagents to comply with laws and regulations; increased
costs or loss of business due to regulatory initiatives and changes
in laws, regulations and industry practices and standards affecting
us, our agents, or their subagents; liabilities and unanticipated
developments resulting from governmental investigations and consent
agreements with, or enforcement actions by, regulators, including
those associated with compliance with, failure to comply with, or
extension of, the settlement agreement with the State of Arizona;
the impact on our business from the Dodd-Frank Wall Street Reform
and Consumer Protection Act, the rules promulgated there-under, and
the actions of the Consumer Financial Protection Bureau;
liabilities resulting from litigation, including class-action
lawsuits and similar matters, including costs, expenses,
settlements and judgments; failure to comply with regulations
regarding consumer privacy and data use and security; effects of
unclaimed property laws; failure to maintain sufficient amounts or
types of regulatory capital to meet the changing requirements of
our regulators worldwide; and changes in accounting standards,
rules and interpretations; and (iii) other events, such as: adverse
tax consequences from our spin-off from First Data Corporation;
catastrophic events; and management's ability to identify and
manage these and other risks.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global
payment services. Together with its Vigo, Orlandi Valuta, Pago
Facil and Western Union Business Solutions branded payment
services, Western Union provides consumers and businesses with
fast, reliable and convenient ways to send and receive money around
the world, to send payments and to purchase money orders. As of
March 31, 2013, the Western Union, Vigo and Orlandi Valuta branded
services were offered through a combined network of approximately
515,000 agent locations in 200 countries and territories. In 2012,
The Western Union Company completed 231 million
consumer-to-consumer transactions worldwide, moving $79 billion of
principal between consumers, and 432 million business payments. For
more information, visit www.westernunion.com.
THE WESTERN UNION COMPANY
KEY STATISTICS (Unaudited) Notes*
1Q12 2Q12 3Q12 4Q12 FY2012
1Q13 Consolidated Metrics Consolidated
revenues (GAAP) - YoY % change 9
%
4
%
1
%
0
%
3
%
(5 )% Consolidated revenues (constant currency) - YoY % change a 9
%
7
%
3
%
0
%
5
%
(4 )% Agent locations 495,000 510,000 510,000 510,000 510,000
515,000
Consumer-to-Consumer (C2C) Segment Revenues
(GAAP) - YoY % change 4
%
0
%
(4 )% (2 )% (1 )% (7 )% Revenues (constant currency) - YoY % change
c 5
%
3
%
(1 )% (2 )% 1
%
(6 )% Operating margin 27.7
%
28.5
%
29.4
%
25.0
%
27.6
%
25.4
%
Transactions (in millions) 56.37 58.49 57.47 58.65 230.98
55.44 Transactions - YoY% change 7
%
4
%
0
%
(1 )% 2
%
(2 )% Total principal ($ - billions) 19.5 20.1 19.7 20.0
79.3 18.9 Principal per transaction ($ - dollars) 346 344 342 341
343 341 Principal per transaction - YoY % change (4 )% (6 )% (6 )%
(2 )% (5 )% (1 )% Principal per transaction (constant currency) -
YoY % change d (3 )% (3 )% (3 )% (2 )% (3 )% (1 )%
Cross-border principal ($ - billions) 17.5 18.2 17.6 18.0 71.3 16.9
Cross-border principal - YoY % change 2
%
(2 )% (7 )% (3 )% (3 )% (3 )% Cross-border principal (constant
currency) - YoY % change e 3
%
1
%
(4 )% (2 )% 0
%
(3 )% Europe and CIS region revenues - YoY % change l, m 0
%
(8 )% (9 )% (5 )% (6 )% (6 )% Europe and CIS region transactions -
YoY % change l, m 1
%
(2 )% (3 )% 0
%
(1 )% (1 )% North America region revenues - YoY % change l,
n 5
%
0
%
(8 )% (9 )% (3 )% (15 )% North America region transactions - YoY %
change l, n 6
%
2
%
(5 )% (6 )% (1 )% (7 )% Middle East and Africa region
revenues - YoY % change l, o 6
%
3
%
0
%
3
%
3
%
0
%
Middle East and Africa region transactions - YoY % change l, o 9
%
9
%
4
%
6
%
7
%
4
%
APAC region revenues - YoY % change l, p 7
%
4
%
1
%
0
%
3
%
(5 )% APAC region transactions - YoY % change l, p 6
%
5
%
2
%
0
%
3
%
0
%
LACA region revenues - YoY % change l, q 2
%
5
%
4
%
2
%
3
%
(7 )% LACA region transactions - YoY % change l, q 8
%
5
%
(2 )% (5 )% 1
%
(10 )% westernunion.com region revenues - YoY % change l, r
39
%
23
%
22 % 16
%
24
%
13
%
westernunion.com region transactions - YoY % change l, r 41
%
35
%
40 % 46
%
41
%
60
%
International revenues - YoY % change s 4
%
(1 )% (2 )% 1
%
0
%
(2 )% International transactions - YoY % change s 7
%
5
%
2
%
3
%
4
%
1
%
International revenues - % of C2C segment revenues s 69
%
69
%
71
%
73
%
71
%
72
%
United States originated revenues - YoY % change t 6
%
1
%
(6 )% (11 )% (3 )% (17 )% United States originated transactions -
YoY % change t 6
%
2
%
(4 )% (5 )% 0
%
(5 )% United States originated revenues - % of C2C segment revenues
t 31
%
31
%
29
%
27
%
29
%
28
%
Electronic channels revenues - YoY % change u 38
%
26
%
25
%
22
%
27
%
18
%
Consumer-to-Business (C2B) Segment Revenues (GAAP) -
YoY % change 1
%
(3 )% (5 )% (1 )% (2 )% (1 )% Revenues (constant currency) - YoY %
change f 3
%
0
%
(2 )% 2
%
1
%
3
%
Operating margin 26.5
%
22.4
%
25.3
%
17.0
%
22.8
%
24.7
%
Business Solutions (B2B) Segment Revenues (GAAP) -
YoY % change ** ** ** ** ** 7
%
Revenues (constant currency) - YoY % change g ** ** ** ** ** 7
%
Operating margin (17.0 )% (15.7 )% (7.9 )% (19.4 )% (14.9 )% (6.7
)% Depreciation and amortization 15.2 15.4 17.4 17.7 65.7 15.3 TGBP
integration expense v 6.4 14.5 10.3 11.6 42.8 3.9
% of
Total Company Revenue Consumer-to-Consumer segment revenues 81
%
81
%
81
%
81
%
81
%
79
%
Consumer-to-Business segment revenues 11
%
11
%
10
%
11
%
11
%
12
%
Business Solutions segment revenues 6
%
6
%
7
%
6
%
6
%
7
%
Consumer-to-Consumer region revenues: Europe and CIS revenues l, m
22
%
22
%
22
%
22
%
22
%
21
%
North America revenues l, n 21
%
21
%
20
%
19
%
20
%
19
%
Middle East and Africa revenues l, o 15
%
15
%
15
%
16
%
15
%
16
%
APAC revenues l, p 12
%
12
%
12
%
12
%
12
%
12
%
LACA revenues l, q 9
%
9
%
9
%
9
%
9
%
8
%
westernunion.com revenues l, r 2
%
2
%
3
%
3
%
3
%
3
%
Electronic channels revenues u 3
%
3
%
4
%
4
%
4
%
4
%
Prepaid revenues w 1
%
1
%
1
%
1
%
1
%
1
%
Marketing expense x 3.8
%
3.7
%
4.2
%
5.1
%
4.2
%
3.9
%
* See page 13 of the press release for the applicable Note
references and the reconciliation of non-GAAP financial measures.
** Calculation of growth percentage is not meaningful due to
the impact of the TGBP acquisition in November 2011.
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(Unaudited) (in millions, except per share amounts)
Three Months Ended
March 31,
2013 2012 % Change Revenues: Transaction fees $ 978.0 $
1,040.9 (6 )% Foreign exchange revenues 312.4 322.6 (3 )% Other
revenues 35.0 29.9 17
%
Total revenues 1,325.4 1,393.4 (5 )% Expenses: Cost of
services 759.4 783.0 (3 )% Selling, general and administrative
269.1 277.9 (3 )% Total expenses
1,028.5 1,060.9 (3 )% Operating income
296.9 332.5 (11 )% Other income/(expense): Interest income
0.4 1.5 (73 )% Interest expense (48.9 ) (44.4 ) 10
%
Derivative gains, net 0.5 1.6 (69 )% Other income/(expense), net
1.3 (1.1 ) (a) Total other expense, net
(46.7 ) (42.4 ) 10
%
Income before income taxes 250.2 290.1 (14 )% Provision for
income taxes 38.2 42.8 (11 )%
Net income
$
212.0 $ 247.3 (14 )% Earnings per share: Basic
$
0.37
$
0.40 (8 )% Diluted
$
0.37
$
0.40 (8 )% Weighted-average shares outstanding: Basic 567.6
619.1 Diluted 569.7 621.9 Cash dividends declared per common
share $ 0.125 $ 0.10 25
%
__________ (a) Calculation not meaningful.
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited) (in millions, except per share amounts)
March 31,2013
December 31,2012
Assets Cash and cash equivalents (a) $ 1,417.1 $ 1,776.5
Settlement assets 3,319.2 3,114.6 Property and equipment, net of
accumulated depreciation of $402.2 and $384.5, respectively 198.7
196.1 Goodwill 3,178.5 3,179.7 Other intangible assets, net of
accumulated amortization of $562.3 and $519.7, respectively 863.3
878.9 Other assets 384.9 319.9 Total
assets $ 9,361.7 $ 9,465.7
Liabilities and
Stockholders' Equity Liabilities: Accounts payable and accrued
liabilities $ 524.2 $ 556.2 Settlement obligations 3,319.2 3,114.6
Income taxes payable 228.5 218.3 Deferred tax liability, net 354.0
352.1 Borrowings 3,726.8 4,029.2 Other liabilities 291.4
254.7 Total liabilities 8,444.1 8,525.1
Stockholders' equity: Preferred stock, $1.00 par value; 10 shares
authorized; no shares issued — — Common stock, $0.01 par value;
2,000 shares authorized; 559.4 shares and 572.1 shares issued and
outstanding as of March 31, 2013 and December 31, 2012,
respectively 5.6 5.7 Capital surplus 342.9 332.8 Retained earnings
702.8 754.7 Accumulated other comprehensive loss (133.7 )
(152.6 ) Total stockholders' equity 917.6
940.6 Total liabilities and stockholders' equity $
9,361.7 $ 9,465.7
__________
(a) Approximately $870 million was held by entities outside of the
United States as of March 31, 2013.
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited) (in millions) Three Months Ended
March 31,
2013 2012
Cash Flows From Operating Activities Net
income $ 212.0 $ 247.3 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation 15.4 15.3
Amortization 47.5 48.6 Other non-cash items, net 9.3 1.6
Increase/(decrease) in cash, excluding the effects of acquisitions,
resulting from changes in: Other assets (10.4 ) (10.1 ) Accounts
payable and accrued liabilities (36.1 ) (35.7 ) Income taxes
payable (a) 7.3 (40.1 ) Other liabilities (7.7 )
(11.9 ) Net cash provided by operating activities 237.3
215.0
Cash Flows From Investing Activities Capitalization
of contract costs (11.8 ) (55.8 ) Capitalization of purchased and
developed software (8.8 ) (5.8 ) Purchases of property and
equipment (17.3 ) (14.2 ) Net cash used in investing
activities (37.9 ) (75.8 )
Cash Flows From Financing
Activities Proceeds from exercise of options 1.7 41.2 Cash
dividends paid (70.3 ) (61.6 ) Common stock repurchased (190.2 )
(146.8 ) Net proceeds from commercial paper — 53.0 Principal
payments on borrowings (300.0 ) — Net cash
used in financing activities (558.8 ) (114.2 )
Net change in cash and cash equivalents (359.4 ) 25.0 Cash and cash
equivalents at beginning of period 1,776.5
1,370.9 Cash and cash equivalents at end of period $ 1,417.1
$ 1,395.9
__________
(a) The Company made tax payments of approximately $65
million in the first quarter of 2012 due to the December 2011
agreement with the United States Internal Revenue Services ("IRS")
resolving substantially all of the issues related to the
restructuring of our international operations in 2003 ("IRS
Agreement").
THE WESTERN UNION COMPANY
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
Three Months Ended
March 31,
2013 2012 % Change Revenues: Consumer-to-Consumer (C2C):
Transaction fees $ 809.6 $ 872.0 (7 )% Foreign exchange revenues
225.6 239.4 (6 )% Other revenues 15.0 13.2
14
%
Total Consumer-to-Consumer: 1,050.2 1,124.6 (7 )%
Consumer-to-Business (C2B): Transaction fees 145.8 147.7 (1 )%
Foreign exchange and other revenues 7.9 7.4
7
%
Total Consumer-to-Business: 153.7 155.1 (1 )% Business
Solutions (B2B): Foreign exchange revenues 84.0 80.1 5
%
Transaction fees and other revenues 8.8 6.8
29
%
Total Business Solutions: 92.8 86.9 7
%
Other: Total revenues 28.7 26.8 7
%
Total consolidated revenues $ 1,325.4 $
1,393.4 (5 )% Operating income/(loss):
Consumer-to-Consumer $ 267.1 $ 311.3 (14 )% Consumer-to-Business
37.9 41.1 (8 )% Business Solutions (a) (6.2 ) (14.8 ) (b) Other
(1.9 ) (5.1 ) (b) Total consolidated operating income
$ 296.9 $ 332.5 (11 )% Operating
income/(loss) margin: Consumer-to-Consumer 25.4 % 27.7 % (2.3 )%
Consumer-to-Business 24.7 % 26.5 % (1.8 )% Business Solutions (6.7
)% (17.0 )% 10.3
%
Total consolidated operating income margin 22.4 % 23.9 % (1.5 )%
Depreciation and amortization: Consumer-to-Consumer $ 41.9 $
42.8 (2 )% Consumer-to-Business 3.8 3.9 (3 )% Business Solutions
15.3 15.2 1
%
Other 1.9 2.0 (5 )% Total consolidated
depreciation and amortization $ 62.9 $ 63.9 (2 )%
__________ (a) Business Solutions operating loss includes
TGBP integration expense of $3.9 million and $6.4 million for the
three months ended March 31, 2013 and 2012, respectively. (b)
Calculation not meaningful.
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS (in millions, unless indicated
otherwise) (Unaudited)
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 underlying
business, because they provide consistency and comparability to
prior periods. 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 financial
measures to the most directly comparable GAAP financial measures is
included below. All adjusted year-over-year changes were
calculated using prior year reported amounts, unless indicated
otherwise.
1Q12 2Q12
3Q12 4Q12 FY2012
1Q13 Consolidated Metrics (a) Revenues, as reported
(GAAP) $ 1,393.4 $ 1,425.1 $ 1,421.6 $ 1,424.7 $ 5,664.8 $ 1,325.4
Foreign currency translation impact (h) 8.1
34.6 37.7 13.4 93.8
12.3 Revenues, constant currency adjusted $
1,401.5 $ 1,459.7 $ 1,459.3 $ 1,438.1 $
5,758.6 $ 1,337.7 Prior year revenues, as reported
(GAAP) $ 1,283.0 $ 1,366.3 $ 1,410.8 $ 1,431.3 $ 5,491.4 $ 1,393.4
Pro forma prior year revenues, TGBP adjusted (i) $ 1,338.0 $
1,426.0 $ 1,474.8 $ 1,456.2 $ 5,695.0 N/A Revenue change, as
reported (GAAP) 9
%
4
%
1
%
0
%
3
%
(5 )% Revenue change, constant currency adjusted 9
%
7
%
3
%
0
%
5
%
(4 )% Pro forma revenue change, TGBP adjusted 4
%
0
%
(4 )% (2 )% (1 )% N/A Pro forma revenue change, TGBP and constant
currency adjusted 5
%
2
%
(1 )% (1 )% 1
%
N/A (b) Operating income, as reported (GAAP) $ 332.5 $ 345.9
$ 365.6 $ 286.0 $ 1,330.0 $ 296.9 Reversal of depreciation and
amortization (j) 63.9 59.0 61.2
62.0 246.1 62.9
EBITDA (j) $ 396.4 $ 404.9 $ 426.8 $ 348.0
$ 1,576.1 $ 359.8 Operating income margin, as
reported (GAAP) 23.9
%
24.3
%
25.7
%
20.1
%
23.5
%
22.4
%
EBITDA margin 28.4
%
28.4
%
30.0
%
24.4
%
27.8
%
27.1
%
Consumer-to-Consumer Segment (c) Revenues, as
reported (GAAP)
$
1,124.6 $ 1,155.0 $ 1,151.5 $ 1,153.2 $ 4,584.3 $ 1,050.2 Foreign
currency translation impact (h) 5.2 30.1
32.8 9.5 77.6
6.1 Revenues, constant currency adjusted $ 1,129.8
$ 1,185.1 $ 1,184.3 $ 1,162.7 $ 4,661.9
$ 1,056.3 Prior year revenues, as reported (GAAP)
$
1,078.1
$
1,155.1
$
1,193.3
$
1,181.9
$
4,608.4 $ 1,124.6 Revenue change, as reported (GAAP) 4
%
0
%
(4
)%
(2 )% (1 )% (7 )% Revenue change, constant currency adjusted 5
%
3
%
(1 )% (2 )% 1
%
(6 )% (d) Principal per transaction, as reported ($ -
dollars) $ 346 $ 344 $ 342 $ 341 $ 343 $ 341 Foreign currency
translation impact (h) ($ - dollars) 3 11
12 2 8 —
Principal per transaction, constant currency adjusted ($ -
dollars) $ 349 $ 355 $ 354 $ 343 $ 351
$ 341 Prior year principal per transaction, as
reported ($ - dollars) $ 360 $ 365 $ 366 $ 349 $ 360 $ 346
Principal per transaction change, as reported (4 )% (6 )% (6 )% (2
)% (5 )% (1 )% Principal per transaction change, constant currency
adjusted (3 )% (3 )% (3 )% (2 )% (3 )% (1 )% (e)
Cross-border principal, as reported ($ - billions) $ 17.5 $ 18.2 $
17.6 $ 18.0 $ 71.3 $ 16.9 Foreign currency translation impact (h)
($ - billions) 0.2 0.6 0.7
0.1 1.6 0.1
Cross-border principal, constant currency adjusted ($ - billions) $
17.7 $ 18.8 $ 18.3 $ 18.1 $ 72.9
$ 17.0 Prior year cross-border principal, as reported ($ -
billions) $ 17.1 $ 18.6 $ 19.0 $ 18.5 $ 73.2 $ 17.5 Cross-border
principal change, as reported 2
%
(2 )% (7 )% (3 )% (3 )% (3 )% Cross-border principal change,
constant currency adjusted 3
%
1
%
(4 )% (2 )% 0
%
(3 )%
Consumer-to-Business Segment (f)
Revenues, as reported (GAAP) $ 155.1 $ 149.4 $ 147.3 $ 152.1 $
603.9 $ 153.7 Foreign currency translation impact (h) 2.9
3.5 4.2 4.9
15.5 5.9 Revenues, constant currency adjusted
$ 158.0 $ 152.9 $ 151.5 $ 157.0 $ 619.4
$ 159.6 Prior year revenues, as reported (GAAP) $
153.2 $ 153.5 $ 155.3 $ 153.9 $ 615.9 $ 155.1 Revenue change, as
reported (GAAP) 1
%
(3 )% (5 )% (1 )% (2 )% (1 )% Revenue change, constant currency
adjusted 3
%
0
%
(2 )% 2
%
1
%
3
%
Business Solutions Segment (g) Revenues, as reported
(GAAP) $ 86.9 $ 92.5 $ 95.4 $ 92.6 $ 367.4 $ 92.8 Foreign currency
translation impact (h) (0.1 ) 0.9 0.6
(1.0 ) 0.4 0.2 Revenues,
constant currency adjusted $ 86.8 $ 93.4 $ 96.0
$ 91.6 $ 367.8 $ 93.0 Prior year
revenues, as reported (GAAP) $ 27.9 $ 31.4 $ 33.6 $ 68.2 $ 161.1 $
86.9 Pro forma prior year revenues, TGBP adjusted (i) $ 82.9 $ 91.1
$ 97.6 $ 93.1 $ 364.7 N/A Revenue change, as reported (GAAP)
**
** ** ** ** 7
%
Revenue change, constant currency adjusted ** ** ** ** ** 7
%
Pro forma revenue change, TGBP adjusted 5 % 2
%
(2 )% (1 )% 1
%
N/A Pro forma revenue change, TGBP and constant currency adjusted 4
% 4
%
0
%
(2 )% 2
%
N/A
2013 Outlook Metrics Operating income margin
(GAAP) 20.0
%
Depreciation and amortization impact 4.5
%
EBITDA margin (j) 24.5
%
Operating cash flow (GAAP) $ 900 Payments on IRS Agreement
(k) 100 Operating cash flow, IRS Agreement adjusted $
1,000
Non-GAAP related
notes:
(h) 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. (i) Represents the pro forma
incremental impact of Travelex Global Business Payments ("TGBP") on
Consolidated and Business Solutions segment revenues. Pro forma
revenues presents the results of operations of the Company and its
Business Solutions segment as they may have appeared had the
acquisition of TGBP occurred as of January 1, 2011. The pro forma
information is provided for illustrative purposes only and does not
purport to present what the actual results of operations would have
been had the acquisition actually occurred on the date indicated.
The results of operations for TGBP have been included in
Consolidated and Business Solutions segment revenues from November
7, 2011, the date of acquisition. (j) Earnings before
Interest, Taxes, Depreciation and Amortization (EBITDA) results
from taking operating income and adjusting for depreciation and
amortization expenses. (k) Represents the remaining tax
payments of approximately $100 million the Company expects to make
due to the December 2011 agreement with the IRS resolving
substantially all of the issues related to the restructuring of our
international operations in 2003.
Other
notes:
(l) Geographic split is determined based upon the region
where the money transfer is initiated and the region where the
money transfer is paid. For transactions originated and paid in
different regions, the Company splits the transaction count and
revenue between the two regions, with each region receiving 50%.
For money transfers initiated and paid in the same region, 100% of
the revenue and transactions are attributed to that region. For
money transfers initiated through the Company’s websites
(“westernunion.com”), 100% of the revenue and transactions are
attributed to that business. (m) Represents the Europe and
the Commonwealth of Independent States ("CIS") region of our
Consumer-to-Consumer segment. (n) Represents the North
America region of our Consumer-to-Consumer segment, including the
United States, Mexico, and Canada. (o) Represents the Middle
East and Africa region of our Consumer-to-Consumer segment.
(p) Represents the Asia Pacific ("APAC") region of our
Consumer-to-Consumer segment, including India, China, and South
Asia. (q) Represents the Latin America and the Caribbean
("LACA") region of our Consumer-to-Consumer segment. (r)
Represents transactions initiated on westernunion.com which are
primarily paid out at Western Union agent locations in the
respective regions. (s) Represents transactions between and
within foreign countries (including Canada and Mexico). Excludes
all transactions originated in the United States. (t)
Represents transactions originated in the United States, including
intra-country transactions. (u) Represents revenue generated
from electronic channels, which include westernunion.com, account
based money transfer and mobile money transfer (included in the
various segments). (v) TGBP integration expense consists
primarily of severance and other benefits, retention, direct and
incremental expense consisting of facility relocation,
consolidation and closures; IT systems integration; amortization of
a transitional trademark license; and other expenses such as
training, travel and professional fees. Integration expense does
not include costs related to the completion of the TGBP
acquisition. (w) Represents revenue from prepaid services.
This revenue is included within Other. (x) Marketing expense
includes advertising, events, costs to administer loyalty programs,
and the cost of employees dedicated to marketing activities.
WU-F, WU-G
Western Union (NYSE:WU)
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