Solid business performance with continued
strong digital growthApproximately $540 million returned to
shareholders year-to-date
_________________________________________________________
The Western Union Company (NYSE: WU) today reported second
quarter financial results and an updated outlook for 2017.
In the second quarter, the Company generated revenue of $1.4
billion, which was flat compared to the prior year, or an increase
of 2% on a constant currency basis.
Earnings per share of $0.35 compares to $0.42 in the prior year
period. Adjusted earnings per share of $0.50 compares to $0.44 in
the same period last year. Adjusted metrics exclude WU Way business
transformation expenses in the current and prior years, expenses
related to the settlement with federal and state governments in the
prior year, and the impact of an accrual related to a state
regulator legal matter in the current year.
The Company reduced its full year GAAP EPS outlook to a range of
$1.46 to $1.56 (previously $1.48 to $1.60), due to the legal matter
accrual. The adjusted EPS outlook was increased to a range of $1.70
to $1.80 (previously $1.63 to $1.75), primarily due to expense
favorability, improvements in foreign exchange rates, and lower
expected effective tax rates.
“Our globally diverse business continued to deliver solid
performance,” said President and Chief Executive Officer Hikmet
Ersek. “Digital remained strong, with westernunion.com money
transfer transactions increasing 25 percent, and our Latin America
money transfer and Speedpay U.S. electronic bill payments
businesses provided robust growth.”
“Strategically, we remain focused on expanding our digital and
payments businesses, optimizing our retail money transfer business,
and driving further operational efficiencies,” Ersek added.
Executive Vice President and Chief Financial Officer Raj Agrawal
stated, “We are pleased with the stability of the business. Our
balance sheet remains strong, and we have returned approximately
$540 million to shareholders year-to-date through share repurchases
and dividends. We are also continuing to roll out the WU Way
transformation program to drive additional operational efficiencies
and aid growth acceleration over the coming years.”
The legal matter accrual negatively impacted current quarter EPS
by $0.10, as the Company accrued $49 million towards a possible
resolution with a state regulator. On July 28, 2017, the state
regulator informed the Company that the facts set forth in the
Company’s agreement with federal government agencies announced in
January 2017 concerning its anti-money laundering programs over the
2004 through 2012 period give it a basis to take additional
enforcement action, the resolution of which would involve a payment
to the regulator. Additional information regarding this matter can
be found in the Company’s second quarter 2017 quarterly report on
Form 10-Q.
Q2 Business Unit
Highlights
- Consumer-to-Consumer (C2C) revenues
decreased 1%, or increased 1% on a constant currency basis.
Transactions grew 3%, driven by strong increases from
westernunion.com. Geographically, constant currency revenue growth
was led by transactions originated in Latin America, North America,
and Europe, partially offset by declines from oil producing
countries in the Middle East and Africa.Westernunion.com C2C
revenues increased 21%, or 23% on a constant currency basis, on
transaction growth of 25%. Westernunion.com represented 9% of total
C2C revenue in the quarter.
- Western Union Business Solutions
revenues declined 4%, or decreased 1% on a constant currency basis.
Revenue was negatively impacted by the termination of a partner
contract which occurred in the fourth quarter of 2016.
- Other revenues, which primarily consist
of the U.S. and Argentina bill payments businesses, increased 9% in
the quarter, or 12% on a constant currency basis. Growth in the
quarter was driven by the Speedpay U.S. electronic and Pago Facil
Argentina walk-in bill payments businesses.The businesses that were
previously reported in a separate Consumer-to-Business segment are
now reported in Other, due to recent organizational changes that
resulted in a split of executive leadership responsibility for the
component businesses. These bill payments businesses represented
over 85% of Other revenues in the quarter, with the remainder
primarily consisting of the Company’s retail money order and retail
foreign exchange businesses.
Additional Q2 Financial
Highlights
- GAAP operating margin in the quarter
was 15.6%, which compares to 18.9% in the prior year period, with
the decline driven by the accrual for the legal matter. Adjusted
operating margin of 21.7% in the quarter compares to 20.2% in the
prior year period. The adjusted margin increase compared to the
prior year was primarily due to the timing of marketing spending
and lower commission expenses.
- GAAP operating profit in the quarter
was $215 million, which compares to $260 million in the prior year
period, while adjusted operating income of $299 million compares to
$277 million in the prior year period. The current quarter
operating income reflects a negative impact of approximately $7
million from changes in foreign exchange rates.Adjusted operating
profit excludes $35 million of WU Way expenses and $49 million
related to the legal matter accrual in the current quarter, $2
million of WU Way expenses and $15 million of accruals related to
the settlement with federal and state governments in the prior year
period.
- The effective tax rate in the quarter
was 9.7%, which compares to 7.6% in the prior year period. The
adjusted tax rate of 11.2% in the quarter compares to 9.7% in the
prior year period. The Company now expects a full year GAAP
effective tax rate of approximately 10% to 11% (previous outlook
was 11%), and an adjusted rate of approximately 12% to 13%
(previous outlook was 13%).
- The Company returned $232 million to
shareholders in the second quarter, consisting of $150 million of
share repurchases and $82 million of dividends, and $540 million
year-to-date. Year-to-date cash flow from operating activities was
a usage of $24 million, including $591 million of payments related
to the settlement with federal and state governments announced in
January and approximately $39 million of WU Way related payments.
Excluding these items, year-to-date cash flow from operating
activities was $606 million.
2017 Outlook
The Company affirmed its constant currency revenue, adjusted
operating margin, and cash flow outlooks for 2017, increased its
GAAP revenue and adjusted earnings per share outlooks, and
decreased its GAAP operating margin and GAAP earnings per share
outlooks. The previous financial outlook was reported on May 2.
Revenue
- Flat to low single digit increase in
GAAP revenue (previously flat to low single digit decrease), or a
low single digit increase constant currency.
Operating Profit Margin
- GAAP operating margin of approximately
17% and adjusted operating margin of approximately 20%. Adjusted
operating margins exclude approximately $100 million of expected WU
Way related expenses and $49 million related to the accrual for the
legal matter.
Earnings per Share
- GAAP EPS in a range of $1.46 to $1.56
(previously 1.48 to $1.60), and adjusted EPS in a range of $1.70 to
$1.80 (previously $1.63 to $1.75). Adjusted EPS excludes the impact
of the WU Way related expenses and the accrual for the legal
matter.
Cash Flow
- GAAP cash flow from operating
activities of approximately $200 million, which includes $591
million of payments related to the settlement with federal and
state governments announced in January 2017, approximately $100
million of anticipated final tax payments relating to the agreement
announced with the U.S. Internal Revenue Service in December 2011
(the “IRS Agreement”), and WU Way related payments. Excluding these
items, expected cash flow from operating activities would be
approximately $1 billion.
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release. As discussed in the Company’s Form 8-K filed with the SEC
on April 27, 2017, beginning in the first quarter of 2017 the
Company implemented a new region structure in its
Consumer-to-Consumer operating segment, due to leadership and
organizational structure changes within the Company.
Also beginning January 1, 2017, the determination of the
geographic split for transactions and revenue in the C2C segment,
including transactions initiated through westernunion.com, is based
entirely upon the region where the money transfer is initiated.
Prior to January 1, 2017, for transactions originated and paid in
different regions, the Company split the transaction count and
revenue between the two regions, with each region receiving
50%.
Beginning April 1, 2017, the Company implemented a new segment
structure due to leadership and organizational structure changes.
The new structure shifted all businesses previously in the
historical Consumer-to-Business segment into Other.
Regional and segment results for the prior periods presented
within this press release have been adjusted for the new region and
segment structure and geographic split methodology.
Expenses related to the state regulator legal matter, the
settlement with federal and state governments announced in January
2017 and the WU Way business transformation are not included in
operating segment results, as they are excluded from the
measurement of segment operating income provided to the chief
operating decision maker for purposes of assessing segment
performance and decision making with respect to resource
allocation.
All amounts included in the supplemental tables to this press
release are rounded to the nearest tenth of a million, except as
otherwise noted. As a result, the percentage changes and margins
disclosed herein may not recalculate precisely using the rounded
amounts provided.
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. Constant
currency results assume foreign revenues 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.
These non-GAAP financial measures include consolidated revenue
change constant currency adjusted; Consumer-to-Consumer segment
revenue change constant currency adjusted; Consumer-to-Consumer
segment westernunion.com revenue change constant currency adjusted;
Business Solutions segment revenue change constant currency
adjusted; Other revenue change constant currency adjusted;
consolidated operating income, excluding the state regulator matter
accrual, WU Way business transformation expenses and Joint
Settlement Agreements (as defined in the notes below); consolidated
operating margin, excluding the state regulator matter accrual,
Joint Settlement Agreements and WU Way business transformation
expenses; effective tax rate excluding the state regulator matter
accrual, Joint Settlement Agreements and WU Way business
transformation expenses; earnings/(loss) per share, excluding the
state regulator matter accrual, Joint Settlement Agreements and WU
Way business transformation expenses; cash flow from operating
activities, excluding payments for Joint Settlement Agreements and
WU Way business transformation expenses; operating margin outlook
excluding the state regulator matter accrual and WU Way business
transformation expenses; earnings per share outlook excluding the
state regulator matter and WU Way business transformation expenses;
cash flow from operating activities outlook, excluding payments for
Joint Settlement Agreements, WU Way business transformation
expenses, and IRS Agreement payments; effective tax rate outlook,
excluding the state regulator matter accrual and WU Way business
transformation expenses; and additional measures found in the
supplemental tables included with this press release. Although the
expenses related to the WU Way business transformation are specific
to that initiative, the types of expenses related to the WU Way
business transformation are similar to expenses that the Company
has previously incurred and can reasonably be expected to incur in
the future.
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.
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 9405564.
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 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 "may," "will,"
"should," "would," "could," and "might" are intended to identify
such forward-looking statements. Readers of this press release of
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, 2016.
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: changes in general
economic conditions and economic conditions in the regions and
industries in which we operate, including global economic and trade
downturns, or significantly slower growth or declines in the money
transfer, payment service, and other markets in which we operate,
including downturns or declines related to interruptions in
migration patterns, or non-performance by our banks, lenders,
insurers, or other financial services providers; failure to compete
effectively in the money transfer and payment service industry,
including among other things, with respect to price, with global
and niche or corridor money transfer providers, banks and other
money transfer and payment service providers, including electronic,
mobile and Internet-based services, card associations, and
card-based payment providers, and with digital currencies and
related protocols, and other innovations in technology and business
models; political conditions and related actions in the United
States and abroad which may adversely affect our business and
economic conditions as a whole, including interruptions of United
States or other government relations with countries in which we
have or are implementing significant business relationships with
agents or clients; deterioration in customer confidence in our
business, or in money transfer and payment service providers
generally; our ability to adopt new technology and develop and gain
market acceptance of new and enhanced services in response to
changing industry and consumer needs or trends; 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; any material breach of
security, including cybersecurity, or safeguards of or
interruptions in any of our systems or those of our vendors or
other third parties; cessation of or defects in various services
provided to us by third-party vendors; mergers, acquisitions and
integration of acquired businesses and technologies into our
Company, and the failure to realize anticipated financial benefits
from these acquisitions, and events requiring us to write down our
goodwill; failure to manage credit and fraud risks presented by our
agents, clients and consumers; failure to maintain our agent
network and business relationships under terms consistent with or
more advantageous to us than those currently in place, including
due to increased costs or loss of business as a result of increased
compliance requirements or difficulty for us, our agents or their
subagents in establishing or maintaining relationships with banks
needed to conduct our services; decisions to change our business
mix; changes in tax laws, or their interpretation, and unfavorable
resolution of tax contingencies; adverse rating actions by credit
rating agencies; our ability to realize the anticipated
benefits from business transformation, 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 and
to defend ourselves against potential intellectual property
infringement claims; our ability to attract and retain qualified
key employees and to manage our workforce successfully; material
changes in the market value or liquidity of securities that we
hold; restrictions imposed by our debt obligations; (ii) events
related to our regulatory and litigation environment, such as:
liabilities or loss of business resulting from a failure by us, our
agents or their subagents to comply with laws and regulations and
regulatory or judicial interpretations thereof, including laws and
regulations designed to protect consumers, or detect and prevent
money laundering, terrorist financing, fraud and other illicit
activity; increased costs or loss of business due to regulatory
initiatives and changes in laws, regulations and industry practices
and standards, including changes in interpretations in the United
States, the European Union and globally, affecting us, our agents
or their subagents, or the banks with which we or our agents
maintain bank accounts needed to provide our services, including
related to anti-money laundering regulations, anti-fraud measures,
our licensing arrangements, customer due diligence, agent and
subagent due diligence, registration and monitoring requirements,
consumer protection requirements, remittances, and immigration;
liabilities, increased costs or loss of business and unanticipated
developments resulting from governmental investigations and consent
agreements with or enforcement actions by regulators, including
those associated with the settlement agreements with the United
States Department of Justice, certain United States Attorney's
Offices, the United States Federal Trade Commission, the Financial
Crimes Enforcement Network of the United States Department of
Treasury, and various state attorneys general (the “Joint
Settlement Agreements”) and the potential resolution of a matter
with the New York Department of Financial Services; the impact on
our business from the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the “Dodd Frank Act”), as well as regulations
issued pursuant to it and the actions of the Consumer Financial
Protection Bureau and similar legislation and regulations enacted
by other governmental authorities related to consumer protection;
liabilities resulting from litigation, including class-action
lawsuits and similar matters, and regulatory actions, including
costs, expenses, settlements and judgments; failure to comply with
regulations and evolving industry standards regarding consumer
privacy and data use and security; effects of unclaimed property
laws; failure to maintain sufficient amounts or types of regulatory
capital or other restrictions on the use of our working capital to
meet the changing requirements of our regulators worldwide; changes
in accounting standards, rules and interpretations or industry
standards affecting our business; 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
June 30, 2017, the Western Union, Vigo and Orlandi Valuta branded
services were offered through a combined network of over 550,000
agent locations in 200 countries and territories and over 150,000
ATMs and kiosks, and included the capability to send money to
billions of accounts. In 2016, The Western Union Company completed
268 million consumer-to-consumer transactions worldwide, moving $80
billion of principal between consumers, and 523 million business
payments. For more information, visit www.westernunion.com.
WU-G
THE WESTERN UNION COMPANYKEY
STATISTICS(Unaudited) Notes*
2Q16 3Q16 4Q16
FY2016 1Q17 2Q17
YTD 2Q17
Consolidated Metrics Consolidated revenues (GAAP) -
YoY % change
(1)
%
(2)
%
(1)
%
(1)
%
0 % 0 % 0 % Consolidated revenues (constant currency) - YoY %
change a 3 % 2 % 4 % 3 % 3 % 2 % 3 % Consolidated operating
income/(loss) (GAAP) - YoY % change 4 %
(9)
%
(211)
%
(56)
%
(7)
%
(18)
%
(12)
%
Consolidated operating income (constant currency, excluding state
regulator matter accrual, Joint Settlement Agreements, WU Way
business transformation expenses, and 2015 Paymap Settlement
Agreement) - YoY % change b 5 % 5 % 6 % 4 % 4 % 10 % 7 %
Consolidated operating margin (GAAP) 18.9 % 20.2 %
(22.9)
%
8.9 % 18.4 % 15.6 % 16.9 % Consolidated operating margin (excluding
state regulator matter accrual, Joint Settlement Agreements and WU
Way business transformation expenses) c 20.2 % 21.7 % 19.7 % 20.4 %
19.5 % 21.7 % 20.6 %
Consumer-to-Consumer (C2C)
Segment Revenues (GAAP) - YoY % change
(1)
%
(1)
%
0 %
(1)
%
0 %
(1)
%
(1)
%
Revenues (constant currency) - YoY % change h 2 % 1 % 3 % 2 % 2 % 1
% 2 % Operating margin 23.0 % 25.1 % 22.8 % 23.4 % 22.4 % 24.8 %
23.7 % Transactions (in millions) 67.7 67.8 69.1 268.3 65.3
69.9 135.2 Transactions - YoY % change 3 % 2 % 2 % 3 % 2 % 3 % 3 %
Total principal ($ - billions) $ 20.4 $ 20.3 $ 20.2 $ 80.0 $
19.1 $ 20.4 $ 39.5 Principal per transaction ($ - dollars) $ 301 $
300 $ 292 $ 298 $ 292 $ 293 $ 292 Principal per transaction - YoY %
change
(5)
%
(5)
%
(3)
%
(5)
%
(2)
%
(3)
%
(3)
%
Principal per transaction (constant currency) - YoY % change i
(4)
%
(4)
%
(2)
%
(3)
%
(1)
%
(2)
%
(2)
%
Cross-border principal ($ - billions) $ 18.5 $ 18.4 $ 18.3 $
72.5 $ 17.3 $ 18.7 $ 36.0 Cross-border principal - YoY % change
(1)
%
(3)
%
(1)
%
(2)
%
1 % 1 % 1 % Cross-border principal (constant currency) - YoY %
change j 0 %
(2)
%
1 % 0 % 2 % 2 % 2 % NA region revenues (GAAP) - YoY % change
z, aa 6 % 7 % 8 % 6 % 3 % 3 % 3 % NA region revenues (constant
currency) - YoY % change k, z, aa 7 % 7 % 8 % 7 % 4 % 3 % 4 % NA
region transactions - YoY % change z, aa 7 % 7 % 8 % 7 % 5 % 4 % 4
% EU & CIS region revenues (GAAP) - YoY % change z, bb
(2)
%
(2)
%
(2)
%
(2)
%
(1)
%
(2)
%
(2)
%
EU & CIS region revenues (constant currency) - YoY % change l,
z, bb 0 % 2 % 4 % 1 % 4 % 2 % 3 % EU & CIS region transactions
- YoY % change z, bb 5 % 3 % 5 % 4 % 8 % 7 % 8 % MEASA
region revenues (GAAP) - YoY % change z, cc
(7)
%
(16)
%
(14)
%
(10)
%
(13)
%
(12)
%
(13)
%
MEASA region revenues (constant currency) - YoY % change m, z, cc
(6)
%
(14)
%
(12)
%
(8)
%
(10)
%
(11)
%
(11)
%
MEASA region transactions - YoY % change z, cc
(8)
%
(14)
%
(17)
%
(11)
%
(15)
%
(10)
%
(13)
%
APAC region revenues (GAAP) - YoY % change z, dd
(2)
%
2
%
(2)
%
(2)
%
(2)
%
(4)
%
(3)
%
APAC region revenues (constant currency) - YoY % change n, z, dd 1
% 2 %
(1)
%
0 %
(1)
%
(2)
%
(1)
%
APAC region transactions - YoY % change z, dd
(5)
%
(5)
%
(6)
%
(6)
%
(2)
%
(1)
%
(2)
%
LACA region revenues (GAAP) - YoY % change z, ee
(7)
%
0 % 11 %
(3)
%
26 % 21 % 23 % LACA region revenues (constant currency) - YoY %
change o, z, ee 3 % 9 % 20 % 7 % 25 % 22 % 23 % LACA region
transactions - YoY % change z, ee 11 % 15 % 18 % 13 % 17 % 16 % 16
% International revenues - YoY % change ff
(4)
%
(5)
%
(4)
%
(4)
%
(2)
%
(3)
%
(2)
%
International transactions - YoY % change ff 0 %
(2)
%
(1)
%
(1)
%
1 % 2 % 2 % International revenues - % of C2C segment revenues ff
67 % 67 % 66 % 67 % 66 % 66 % 66 % United States originated
revenues - YoY % change gg 7 % 7 % 8 % 7 % 4 % 3 % 3 % United
States originated transactions - YoY % change gg 8 % 7 % 8 % 8 % 4
% 4 % 4 % United States originated revenues - % of C2C segment
revenues gg 33 % 33 % 34 % 33 % 34 % 34 % 34 %
westernunion.com revenues (GAAP) - YoY % change hh 19 % 26 % 27 %
22 % 26 % 21 % 23 % westernunion.com revenues (constant currency) -
YoY % change p, hh 20 % 28 % 30 % 24 % 28 % 23 % 25 %
westernunion.com transactions - YoY % change hh 25 % 29 % 28 % 27 %
27 % 25 % 26 %
% of Consumer-to-Consumer Revenue
Regional Revenues: NA region revenues z, aa 36 % 37 % 37 % 36 % 37
% 37 % 37 %
EU & CIS region revenues
z, bb 31 % 31 % 31 % 31 % 30 % 31 % 30 % MEASA region revenues z,
cc 18 % 17 % 16 % 18 % 17 % 16 % 17 % APAC region revenues z, dd 8
% 8 % 8 % 8 % 8 % 8 % 8 % LACA region revenues z, ee 7 % 7 % 8 % 7
% 8 % 8 % 8 % westernunion.com revenues hh 8 % 8 % 9 % 8 % 9 % 9 %
9 %
Business Solutions (B2B) Segment Revenues (GAAP)
- YoY % change 3 %
(4)
%
(3)
%
(1)
%
(6)
%
(4)
%
(5)
%
Revenues (constant currency) - YoY % change q 6 % 0 % 1 % 3 %
(3)
%
(1)
%
(2)
%
Operating margin 5.2 % 4.0 % 9.7 % 5.3 % 2.5 % 5.5 % 4.0 %
Other (primarily bill payments businesses in United States and
Argentina) Revenues (GAAP) - YoY % change
(3)
%
(2)
%
(4)
%
(3)
%
7 % 9 % 8 % Revenues (constant currency) - YoY % change s 9 % 11 %
8 % 10 % 9 % 12 % 10 % Operating margin 11.3 % 10.1 % 6.6 % 10.4 %
12.3 % 12.1 % 12.2 %
% of Total Company Revenue
Consumer-to-Consumer segment revenues 80 % 80 % 80 % 79 % 78 % 79 %
78 % Business Solutions segment revenues 7 % 7 % 7 % 7 % 7 % 7 % 7
% Other revenues 13 % 13 % 13 % 14 % 15 % 14 % 15 % * See
the "Notes to Key Statistics" section of the press release for the
applicable Note references and the reconciliation of non-GAAP
financial measures.
THE WESTERN UNION
COMPANYCONDENSED CONSOLIDATED STATEMENTS OF
INCOME(Unaudited)(in millions, except per share
amounts) Three Months
Ended Six Months Ended June 30, June 30, 2017
2016 % Change 2017 2016 % Change
Revenues $ 1,378.9 $ 1,375.7 0 % $ 2,681.3 $ 2,673.4 0 % Expenses:
Cost of services 842.9 821.9 3 % 1,643.4 1,601.3 3 % Selling,
general and administrative (a) 321.2 293.5
9 % 583.6 553.2 6 % Total
expenses (b) 1,164.1 1,115.4 4 %
2,227.0 2,154.5 3 % Operating income 214.8
260.3
(18)
%
454.3 518.9
(12)
%
Other income/(expense): Interest income 1.4 0.7 78 % 2.5 1.6 54 %
Interest expense (35.7 ) (41.0 )
(13)
%
(67.0 ) (81.5 )
(18)
%
Derivative gains, net 2.2 1.4 (c) 4.8 1.9 (c) Other
income/(expense), net 1.7 1.1 (c)
2.9 (0.9 ) (c) Total other expense, net
(30.4 ) (37.8 )
(20)
%
(56.8 ) (78.9 )
(28)
%
Income before income taxes 184.4 222.5
(17)
%
397.5 440.0
(10)
%
Provision for income taxes 17.9 16.9 5
% 69.3 48.7 42 % Net income $ 166.5
$ 205.6
(19)
%
$ 328.2 $ 391.3
(16)
%
Earnings per share: Basic $ 0.35 $ 0.42
(17)
%
$ 0.69 $ 0.79
(13)
%
Diluted $ 0.35 $ 0.42
(17)
%
$ 0.69 $ 0.79
(13)
%
Weighted-average shares outstanding: Basic 469.4 490.3 474.6 495.1
Diluted 472.0 493.0 477.7 498.1 Cash dividends declared per common
share $ 0.175 $ 0.16 9 % $ 0.35 $ 0.32 9 % __________ (a)
For both the three and six months ended June 30, 2017, selling,
general and administrative expenses included $49.0 million for an
accrual related to a matter with a state regulator, as described in
Part I, Item 1, Financial Statements, Note 5, "Commitments and
Contingencies" of our second quarter 2017 Quarterly Report on Form
10-Q. (b) For the three and six months ended June 30, 2017, total
WU Way business transformation expenses were $35.0 million and
$49.3 million, respectively, including $19.5 million and $23.7
million in cost of services and $15.5 million and $25.6 million in
selling, general and administrative, respectively. For the three
and six months ended June 30, 2016, total WU Way business
transformation expenses were $2.1 million, all of which were
classified as selling, general and administrative. (c)
Calculation not meaningful.
THE WESTERN UNION COMPANYCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)(in millions, except per share
amounts) June 30, December 31, 2017
2016
Assets Cash and cash equivalents (a) $ 1,059.2 $ 877.5
Settlement assets 3,646.4 3,749.1 Property and equipment, net of
accumulated depreciation of $632.1 and $600.0, respectively 215.3
220.5 Goodwill 3,161.7 3,162.0 Other intangible assets, net of
accumulated amortization of $1,016.2 and $958.2, respectively 615.9
664.2 Other assets 709.7 746.3 Total
assets $ 9,408.2 $ 9,419.6
Liabilities and
Stockholders' Equity Liabilities: Accounts payable and accrued
liabilities $ 523.8 $ 1,129.6 Settlement obligations 3,646.4
3,749.1 Income taxes payable 403.8 407.3 Deferred tax liability,
net 135.7 85.9 Borrowings 3,627.4 2,786.1 Other liabilities
409.9 359.4 Total liabilities 8,747.0 8,517.4
Stockholders' equity: Preferred stock, $1.00 par value; 10
shares authorized; no shares issued — — Common stock, $0.01 par
value; 2,000 shares authorized; 464.3 shares and 481.5 shares
issued and outstanding as of June 30, 2017 and December 31, 2016,
respectively 4.6 4.8 Capital surplus 672.1 640.9 Retained earnings
193.9 419.3 Accumulated other comprehensive loss (209.4 )
(162.8 ) Total stockholders' equity 661.2
902.2 Total liabilities and stockholders' equity $
9,408.2 $ 9,419.6
__________
(a) Approximately $700 million was held by entities outside
of the United States as of both June 30, 2017 and December 31,
2016.
THE WESTERN UNION COMPANYCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(in
millions) Six Months Ended June 30,
2017 2016
Cash Flows From
Operating Activities Net income $ 328.2 $ 391.3
Adjustments to reconcile net income to
net cash (used in)/provided by operating activities:
Depreciation 37.7 36.3 Amortization 93.9 95.2 Other non-cash items,
net 104.2 42.3 Increase/(decrease) in cash, resulting from changes
in: Other assets (25.8 ) 9.2 Accounts payable and accrued
liabilities (606.9 ) (99.5 ) Income taxes payable (3.7 ) 5.3 Other
liabilities 48.4 5.5 Net cash (used
in)/provided by operating activities (a) (24.0 ) 485.6
Cash
Flows From Investing Activities Capitalization of contract
costs (20.5 ) (60.0 ) Capitalization of purchased and developed
software (22.6 ) (21.3 ) Purchases of property and equipment (32.2
) (27.4 ) Purchases of non-settlement related investments and other
(25.7 ) (34.9 )
Proceeds from maturity of non-settlement
related investments
21.2 11.0 Purchases of held-to-maturity non-settlement related
investments (36.8 ) (26.5 ) Proceeds from held-to-maturity
non-settlement related investments 25.3 2.0
Net cash used in investing activities (91.3 ) (157.1 )
Cash Flows From Financing Activities Cash dividends paid
(164.8 ) (157.4 ) Common stock repurchased (386.6 ) (334.0 ) Net
proceeds from commercial paper 445.0 — Net proceeds from issuance
of borrowings 396.2 — Proceeds from exercise of options and other
7.2 9.6 Net cash provided by/(used in)
financing activities 297.0 (481.8 ) Net change
in cash and cash equivalents 181.7 (153.3 ) Cash and cash
equivalents at beginning of period 877.5
1,315.9 Cash and cash equivalents at end of period $ 1,059.2
$ 1,162.6
__________
(a) The decrease in cash flow from operations for the six
months ended June 30, 2017 compared to the corresponding period in
the prior year was primarily due to cash payments made related to
the Joint Settlement Agreements.
THE WESTERN UNION
COMPANYSUMMARY SEGMENT DATA(Unaudited)(in
millions)
Three Months Ended Six Months Ended June 30, June 30,
2017 2016 % Change 2017
2016 % Change Revenues: Consumer-to-Consumer $ 1,087.3 $
1,095.8
(1)
%
$ 2,102.3 $ 2,113.2
(1)
%
Business Solutions 96.6 100.8
(4)
%
190.2 200.0
(5)
%
Other (a) 195.0 179.1 9 % 388.8
360.2 8 % Total consolidated revenues $
1,378.9 $ 1,375.7 0 % $ 2,681.3 $ 2,673.4
0 % Operating income: Consumer-to-Consumer $ 269.9 $ 251.9 7
% $ 497.5 $ 483.2 3 % Business Solutions 5.3 5.2 1 % 7.6 7.6 0 %
Other 23.6 20.3 16 % 47.5
45.2 5 % Total segment operating income 298.8 277.4 8
% 552.6 536.0 3 % State regulator matter accrual (b) (49.0 ) — (c)
(49.0 ) — (c) Joint Settlement Agreements (b) — (15.0 )
(c)
— (15.0 ) (c) Business transformation expenses (b) (35.0 )
(2.1 ) (c)
(49.3 ) (2.1 ) (c) Total consolidated operating
income $ 214.8 $ 260.3
(18)
% $ 454.3 $ 518.9
(12)
%
Operating income margin: Consumer-to-Consumer 24.8 % 23.0 % 1.8 %
23.7 % 22.9 % 0.8 % Business Solutions 5.5 % 5.2 % 0.3 % 4.0 % 3.8
% 0.2 % Other 12.1 % 11.3 % 0.8 % 12.2 % 12.5 %
(0.3)
%
Total consolidated operating income margin 15.6 % 18.9 %
(3.3)
%
16.9 % 19.4 %
(2.5)
%
__________ (a) Consists primarily of the Company's bill
payments businesses in the United States and Argentina. (b)
Expenses related to the state regulator matter accrual, Joint
Settlement Agreements and the WU Way business transformation are
excluded from the measurement of segment operating income provided
to the chief operating decision maker for purposes of assessing
segment performance and decision making with respect to resource
allocation. (c) 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 amounts, which have been adjusted for changes in
our reporting segments and geographic regions, as described
earlier. Although the expenses related to the WU Way are specific
to that initiative, the types of expenses related to the WU Way
initiative are similar to expenses that the Company has previously
incurred and can reasonably be expected to incur in the future.
2Q16 3Q16
4Q16 FY2016 1Q17
2Q17
YTD 2017
Consolidated Metrics (a) Revenues, as reported (GAAP) $
1,375.7 $ 1,377.8 $ 1,371.7 $ 5,422.9 $ 1,302.4 $ 1,378.9 $ 2,681.3
Foreign currency translation impact (t) 48.9
52.1 58.7 217.1 30.1
29.0 59.1 Revenues, constant
currency adjusted $ 1,424.6 $ 1,429.9 $ 1,430.4
$ 5,640.0 $ 1,332.5 $ 1,407.9 $ 2,740.4
Prior year 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 Revenue change,
as reported (GAAP)
(1)
%
(2)
%
(1)
%
(1)
%
0 % 0 % 0 % Revenue change, constant currency adjusted 3 % 2 % 4 %
3 % 3 % 2 % 3 % (b) Operating income/(loss), as reported
(GAAP) $ 260.3 $ 278.3 $
(313.5)
$ 483.7 $ 239.5 $ 214.8 $ 454.3 Foreign currency translation impact
(t) 23.5 21.9 28.0 90.2 15.0 6.8 21.8 State regulator matter
accrual (u) N/A N/A N/A N/A N/A 49.0 49.0 Joint Settlement
Agreements (w) 15.0 15.0 571.0 601.0 N/A N/A N/A WU Way business
transformation expenses (x) 2.1 5.0
13.2 20.3 14.3
35.0 49.3 Operating income, constant currency
adjusted, excluding state regulator matter accrual, Joint
Settlement Agreements and WU Way business transformation expenses $
300.9 $ 320.2 $ 298.7 $ 1,195.2 $ 268.8
$ 305.6 $ 574.4 Prior year operating income,
excluding Joint Settlement Agreements, WU Way business
transformation expenses, and 2015 Paymap Settlement Agreement (v) $
286.1 $ 304.5 $ 281.8 $ 1,144.7 $ 258.6 $ 277.4 $ 536.0 Operating
income change, as reported (GAAP) 4 %
(9)
%
(211)
%
(56)
%
(7)
%
(18)
%
(12)
%
Operating income change, constant currency adjusted, excluding
state regulator matter accrual, Joint Settlement Agreements, WU Way
business transformation expenses and 2015 Paymap Settlement
Agreement 5 % 5 % 6 % 4 % 4 % 10 % 7 % (c) Operating
income/(loss), as reported (GAAP) $ 260.3 $ 278.3 $
(313.5)
$ 483.7 $ 239.5 $ 214.8 $ 454.3 State regulator matter accrual (u)
N/A N/A N/A N/A N/A 49.0 49.0 Joint Settlement Agreements (w) 15.0
15.0 571.0 601.0 N/A N/A N/A WU Way business transformation
expenses (x) 2.1 5.0 13.2
20.3 14.3 35.0
49.3 Operating income, excluding state regulator matter
accrual, Joint Settlement Agreements and WU Way business
transformation expenses $ 277.4 $ 298.3 $ 270.7
$ 1,105.0 $ 253.8 $ 298.8 $ 552.6
Operating margin, as reported (GAAP) 18.9 % 20.2 %
(22.9)
%
8.9 % 18.4 % 15.6 % 16.9 % Operating margin, excluding state
regulator matter accrual, Joint Settlement Agreements and WU Way
business transformation expenses 20.2 % 21.7 % 19.7 % 20.4 % 19.5 %
21.7 % 20.6 % (d) Operating income/(loss), as reported
(GAAP) $ 260.3 $ 278.3 $
(313.5)
$ 483.7 $ 239.5 $ 214.8 $ 454.3 Reversal of depreciation and
amortization 65.9 66.4 65.3
263.2 66.4 65.2
131.6 EBITDA (y) $ 326.2 $ 344.7 $
(248.2)
$ 746.9 $ 305.9 $ 280.0 $ 585.9 State
regulator matter accrual (u) N/A N/A N/A N/A N/A 49.0 49.0 Joint
Settlement Agreements (w) 15.0 15.0 571.0 601.0 N/A N/A N/A WU Way
business transformation expenses (x) 2.1 5.0
13.2 20.3 14.3
35.0 49.3 Adjusted EBITDA, excluding
state regulator matter accrual, Joint Settlement Agreements and WU
Way business transformation expenses $ 343.3 $ 364.7
$ 336.0 $ 1,368.2 $ 320.2 $ 364.0 $
684.2 Operating margin, as reported (GAAP) 18.9 % 20.2 %
(22.9)
%
8.9 % 18.4 % 15.6 % 16.9 % EBITDA margin 23.7 % 25.0 %
(18.1)
%
13.8 % 23.5 % 20.3 % 21.9 % Adjusted EBITDA margin, excluding state
regulator matter accrual, Joint Settlement Agreements and WU Way
business transformation expenses 25.0 % 26.5 % 24.5 % 25.2 % 24.6 %
26.4 % 25.5 % (e) Net income/(loss), as reported (GAAP) $
205.6 $ 216.9 $
(355.0)
$ 253.2 $ 161.7 $ 166.5 $ 328.2 State regulator matter accrual (u)
N/A N/A N/A N/A N/A 49.0 49.0 Joint Settlement Agreements (w) 15.0
15.0 571.0 601.0 N/A N/A N/A WU Way business transformation
expenses (x) 2.1 5.0 13.2 20.3 14.3 35.0 49.3 Income tax benefit
from state regulator matter accrual (u) N/A N/A N/A N/A N/A — —
Income tax expense/(benefit) from Joint
Settlement Agreements (w)
(5.4)
(5.5)
5.5
(5.4)
N/A N/A N/A
Income tax benefit from WU Way business
transformation expenses (x)
(0.8)
(1.8)
(4.8)
(7.4)
(5.0)
(12.3)
(17.3)
State regulator matter accrual, Joint Settlement Agreements and WU
Way
business transformation expenses, net of income tax
expense/(benefit) 10.9 12.7
584.9 608.5 9.3 71.7
81.0 Net income, excluding state regulator
accrual matter, Joint Settlement Agreements and WU Way business
transformation expenses, net of income tax expense/(benefit) $
216.5 $ 229.6 $ 229.9 $ 861.7 $ 171.0
$ 238.2 $ 409.2 Diluted earnings/(loss) per
share ("EPS"), as reported (GAAP) ($ - dollars) $ 0.42 $ 0.44 $
(0.73)
$ 0.51 $ 0.33 $ 0.35 $ 0.69 EPS impact as a result of state
regulator matter accrual ($ - dollars) (u) N/A N/A N/A N/A N/A $
0.10 $ 0.10 EPS impact as a result of Joint Settlement Agreements
($ - dollars) (w) $ 0.03 $ 0.03 $ 1.17 $ 1.22 N/A N/A N/A EPS
impact as a result of WU Way business transformation expenses ($ -
dollars) (x) $ — $ 0.01 $ 0.03 $ 0.04 $ 0.03 $ 0.07 $ 0.10 EPS
impact from income tax benefit from state regulator matter accrual
($ - dollars) (u) N/A N/A N/A N/A N/A $ — $ —
EPS impact from income tax
expense/(benefit) from Joint Settlement
Agreements ($ - dollars) (w)
$ (0.01) $ (0.01) $ 0.01 $ (0.01) N/A N/A N/A EPS impact from
income tax benefit from WU Way business transformation expenses ($
- dollars) (x) $ — $ — $ (0.01) $ (0.01)
$ (0.01) $ (0.02) $ (0.03) EPS impact
as a result of state regulator matter accrual, Joint Settlement
Agreements and WU Way business transformation expenses, net of
income tax expense/(benefit) ($ - dollars) $ 0.02 $ 0.03
$ 1.20 $ 1.24 $ 0.02 $ 0.15 $
0.17 Diluted EPS, excluding state regulator matter accrual,
Joint Settlement Agreements and WU Way business transformation
expenses ($ - dollars) $ 0.44 $ 0.47 $ 0.47 $
1.75 $ 0.35 $ 0.50 $ 0.86 Diluted
weighted-average shares outstanding 493.0 490.3 483.6 493.5 483.4
472.0 477.7 (f) Effective tax rate, as reported (GAAP) 7.6 %
9.6 %
(4.9)
%
25.9 % 24.1 % 9.7 % 17.4 % Impact from state regulator matter
accrual (u) N/A N/A N/A N/A N/A
(2.0)
%
(1.9)
%
Impact from Joint Settlement Agreements (w) 1.8 % 1.6 % 9.7 %
(15.9)
%
N/A N/A N/A Impact from WU Way business transformation expenses (x)
0.3 % 0.5 % 1.7 % 0.5 % 0.7 %
3.5 % 2.0 % Effective tax rate, excluding state
regulator matter accrual, Joint Settlement Agreements and WU Way
business transformation expenses 9.7 % 11.7 %
6.5 % 10.5 % 24.8 % 11.2 % 17.5 %
(g) Cash flow from operating activities (GAAP) $ 272.9 $
336.3 $ 220.0 $ 1,041.9 $ 86.3 $
(110.3)
$
(24.0)
Joint Settlement Agreements payments (w) N/A N/A N/A N/A 151.3
439.7 591.0 Payments of WU Way business transformation expenses (x)
N/A 1.1 6.3 7.4
18.6 20.3 38.9
Cash flow from operating activities, excluding payments for Joint
Settlement Agreements and WU Way business transformation expenses $
272.9 $ 337.4 $ 226.3 $ 1,049.3 $ 256.2
$ 349.7 $ 605.9
Consumer-to-Consumer
Segment (h) Revenues, as reported (GAAP) $ 1,095.8 $ 1,098.9 $
1,092.5 $ 4,304.6 $ 1,015.0 $ 1,087.3 $ 2,102.3 Foreign currency
translation impact (t) 23.0 25.3
33.4 112.2 24.1 20.8
44.9 Revenues, constant currency adjusted $
1,118.8 $ 1,124.2 $ 1,125.9 $ 4,416.8 $
1,039.1 $ 1,108.1 $ 2,147.2 Prior year
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 Revenue change, as reported
(GAAP)
(1)
%
(1)
%
0 %
(1)
%
0 %
(1)
%
(1)
%
Revenue change, constant currency adjusted 2 % 1 % 3 % 2 % 2 % 1 %
2 % (i) Principal per transaction, as reported ($ - dollars)
$ 301 $ 300 $ 292 $ 298 $ 292 $ 293 $ 292
Foreign currency translation impact ($ -
dollars) (t)
3 3 4 4
3 3 4 Principal per
transaction, constant currency adjusted ($ - dollars) $ 304
$ 303 $ 296 $ 302 $ 295 $ 296 $
296 Prior year principal per transaction, as reported ($ -
dollars) $ 316 $ 315 $ 303 $ 312 $ 299 $ 301 $ 300 Principal per
transaction change, as reported
(5)
%
(5)
%
(3)
%
(5)
%
(2)
%
(3)
%
(3)
%
Principal per transaction change, constant currency adjusted
(4)
%
(4)
%
(2)
%
(3)
%
(1)
%
(2)
%
(2)
%
(j) Cross-border principal, as reported ($ - billions) $
18.5 $ 18.4 $ 18.3 $ 72.5 $ 17.3 $ 18.7 $ 36.0
Foreign currency translation impact ($ -
billions) (t)
0.2 0.2 0.2 1.0
0.2 0.2 0.4
Cross-border principal, constant currency adjusted ($ - billions) $
18.7 $ 18.6 $ 18.5 $ 73.5 $ 17.5
$ 18.9 $ 36.4 Prior year cross-border principal, as
reported ($ - billions) $ 18.8 $ 18.9 $ 18.4 $ 73.6 $ 17.3 $ 18.5 $
35.8 Cross-border principal change, as reported
(1)
%
(3)
%
(1)
%
(2)
%
1 % 1 % 1 % Cross-border principal change, constant currency
adjusted 0 %
(2)
%
1 % 0 % 2 % 2 % 2 % (k) NA region revenue change, as
reported (GAAP) 6 % 7 % 8 % 6 % 3 % 3 % 3 % NA region foreign
currency translation impact (t) 1 % 0 % 0 %
1 % 1 % 0 % 1 % NA region revenue
change, constant currency adjusted 7 % 7 % 8 %
7 % 4 % 3 % 4 % (l) EU & CIS
region revenue change, as reported (GAAP)
(2)
%
(2)
%
(2)
%
(2)
%
(1)
%
(2)
%
(2)
%
EU & CIS region foreign currency translation impact (t)
2 % 4 % 6 % 3 % 5 % 4 % 5
% EU & CIS region revenue change, constant currency adjusted
0 % 2 % 4 % 1 % 4 % 2 %
3 % (m) MEASA region revenue change, as reported
(GAAP)
(7)
%
(16)
%
(14)
%
(10)
%
(13)
%
(12)
%
(13)
%
MEASA region foreign currency translation impact (t) 1 %
2 % 2 % 2 % 3 % 1 % 2 %
MEASA region revenue change, constant currency adjusted
(6)
%
(14)
%
(12)
%
(8)
%
(10)
%
(11)
%
(11)
%
(n) APAC region revenue change, as reported (GAAP)
(2)
%
2 %
(2)
%
(2)
%
(2)
%
(4)
%
(3)
%
APAC region foreign currency translation impact (t) 3 %
0 % 1 % 2 % 1 % 2 % 2 %
APAC region revenue change, constant currency adjusted 1 %
2 %
(1)
%
0 %
(1)
%
(2)
%
(1)
%
(o) LACA region revenue change, as reported (GAAP)
(7)
%
0 % 11 %
(3)
%
26 % 21 % 23 % LACA region foreign currency translation impact (t)
10 % 9 % 9 % 10 %
(1)
%
1 % 0 % LACA region revenue change, constant currency
adjusted 3 % 9 % 20 % 7 % 25 %
22 % 23 % (p) westernunion.com revenue change,
as reported (GAAP) 19 % 26 % 27 % 22 % 26 % 21 % 23 %
westernunion.com region foreign currency translation impact (t)
1 % 2 % 3 % 2 % 2 % 2 %
2 % westernunion.com revenue change, constant currency
adjusted 20 % 28 % 30 % 24 % 28
% 23 % 25 %
Business Solutions Segment
(q) Revenues, as reported (GAAP) $ 100.8 $ 97.2 $ 98.8 $ 396.0 $
93.6 $ 96.6 $ 190.2 Foreign currency translation impact (t)
3.0 3.5 3.9 15.0
2.8 3.2 6.0 Revenues,
constant currency adjusted $ 103.8 $ 100.7 $ 102.7
$ 411.0 $ 96.4 $ 99.8 $ 196.2
Prior year revenues, as reported (GAAP) $ 97.6 $ 101.2 $ 101.9 $
398.7 $ 99.2 $ 100.8 $ 200.0 Revenue change, as reported (GAAP) 3 %
(4)
%
(3)
%
(1)
%
(6)
%
(4)
%
(5)
%
Revenue change, constant currency adjusted 6 % 0 % 1 % 3 %
(3)
%
(1)
%
(2)
%
(r) Operating income, as reported (GAAP) $ 5.2 $ 3.9 $ 9.6 $
21.1 $ 2.3 $ 5.3 $ 7.6 Reversal of depreciation and amortization
13.1 13.2 11.9
50.8 10.6 10.6 21.2
EBITDA (y) $ 18.3 $ 17.1 $ 21.5 $ 71.9
$ 12.9 $ 15.9 $ 28.8 Operating income
margin, as reported (GAAP) 5.2 % 4.0 % 9.7 % 5.3 % 2.5 % 5.5 % 4.0
% EBITDA margin 18.2 % 17.5 % 21.8 % 18.1 % 13.7 % 16.6 % 15.2 %
(s)
Other (primarily bill payments businesses in United
States and Argentina) Revenues, as reported (GAAP) $ 179.1 $
181.7 $ 180.4 $ 722.3 $ 193.8 $ 195.0 $ 388.8 Foreign currency
translation impact (t) 22.8 23.2
21.6 89.9 3.2 5.0
8.2 Revenues, constant currency adjusted $ 201.9
$ 204.9 $ 202.0 $ 812.2 $ 197.0
$ 200.0 $ 397.0 Prior year revenues, as reported
(GAAP) $ 184.5 $ 185.1 $ 186.9 $ 741.1 $ 181.1 $ 179.1 $ 360.2
Revenue change, as reported (GAAP)
(3)
%
(2)
%
(4)
%
(3)
%
7 % 9 % 8 % Revenue change, constant currency adjusted 9 % 11 % 8 %
10 % 9 % 12 % 10 %
2017 Consolidated Outlook Metrics
Operating margin (GAAP) 17 % State regulator matter accrual (u) 1 %
WU Way business transformation expenses (x) 2 %
Operating margin, excluding state
regulator matter accrual and WU Way business transformation
expenses
20 % Range Earnings per share (GAAP) ($ - dollars) $
1.46 $ 1.56 State regulator matter accrual ($ - dollars) (u) 0.10
0.10 WU Way business transformation expenses ($ - dollars) (x)
0.14 0.14
Earnings per share, excluding state
regulator matter accrual and WU Way business transformation
expenses ($ - dollars)
$ 1.70 $ 1.80 Range Effective tax rate (GAAP)
10 % 11 % Impact from state regulator matter accrual (u)
(1)
%
(1)
%
Impact from WU Way business transformation
expenses (x)
3 % 3 %
Effective tax rate, excluding state
regulator matter accrual and WU Way business transformation
expenses
12 % 13 %
Non-GAAP related
notes:
(t) 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. We believe that this measure provides management and
investors with information about operating results and trends that
eliminates currency volatility and provides greater clarity
regarding, and increases the comparability of, our underlying
results and trends. (u)
Represents the impact from an accrual related to a potential
resolution with a state regulator related to matters identified as
part of the Joint Settlement Agreements. Discussions with the state
regulator are ongoing, and there can be no assurance that we will
reach an agreement with the state regulator. The discussions could
result in additional future accruals to reach a settlement
agreement with the state regulator. Additionally, if this matter is
not settled and proceeds to civil litigation, the state regulator
would seek to impose fines, damages, or other regulatory
consequences. Resolution of this matter could have a material
adverse effect on our business, financial condition, results of
operations and cash flow. These expenses have been excluded from
segment operating income, as these expenses are excluded from the
measurement of segment operating income provided to the chief
operating decision maker for purposes of assessing segment
performance and decision making with respect to resource
allocation. We believe that, by excluding the effects of
significant charges associated with the potential settlement of
legal matters that can impact operating trends, management and
investors are provided with a measure that increases the
comparability of our underlying operating results. (v)
Represents the impact from a settlement agreement reached with the
Consumer Financial Protection Bureau regarding the Equity
Accelerator service of Paymap, Inc., a subsidiary of the Company
(the "Paymap Settlement Agreement"), included in full year 2015
results. We believe that, by excluding the effects of significant
charges associated with the settlement of litigation that can
impact operating trends, management and investors are provided with
a measure that increases the comparability of our underlying
operating results. See below for reconciliation of prior year
operating income, excluding Paymap Settlement Agreement.
2Q15 3Q15 4Q15 FY2015 Operating income,
as reported (GAAP) $ 250.8 $ 304.5 $ 281.8 $ 1,109.4 Paymap
Settlement Agreement 35.3 N/A N/A 35.3
Operating income, excluding Paymap Settlement Agreement $ 286.1 $
304.5 $ 281.8 $
1,144.7
(w) Represents the impact from the settlement
agreements related to (1) a Deferred Prosecution Agreement with the
United States Department of Justice, and the United States
Attorney’s Offices for the Eastern and Middle Districts of
Pennsylvania, the Central District of California, and the Southern
District of Florida, (2) a Stipulated Order for Permanent
Injunction and Final Judgment with the United States Federal Trade
Commission ("FTC"), (3) a Consent to the Assessment of Civil Money
Penalty with the Financial Crimes Enforcement Network of the United
States Department of Treasury (collectively, the “Joint Settlement
Agreements”), to resolve the respective investigations of those
agencies, as described in our Form 8-K filed with the Securities
and Exchange Commission on January 20, 2017, and related matters.
Amounts related to these matters were recognized in the second,
third, and fourth quarters of 2016 and the full year 2016 results.
These expenses have been excluded from our segment operating
income, as these expenses are excluded from the measurement of
segment operating income provided to the chief operating decision
maker for purposes of assessing segment performance and decision
making with respect to resource allocation. Additionally, income
tax benefit was adjusted in the fourth quarter of 2016 to reflect
the revised determination, based on final agreement terms. We
believe that, by excluding the effects of significant charges
associated with the settlement of litigation that can impact
operating trends, management and investors are provided with a
measure that increases the comparability of our underlying
operating results. (x) 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 and growth initiatives (“WU Way business
transformation expenses”). Amounts related to the WU Way business
transformation expenses were recognized beginning in the second
quarter of 2016, and each subsequent quarter. These expenses have
been excluded from our segment operating income, as these expenses
are excluded from the measurement of segment operating income
provided to the chief operating decision maker for purposes of
assessing segment performance and decision making with respect to
resource allocation. We believe that, by excluding the effects of
significant charges associated with the transformation of our
operating model that can impact operating trends, management and
investors are provided with a measure that increases the
comparability of our other underlying operating results. Although
the expenses related to the WU Way are specific to that initiative,
the types of expenses related to the WU Way initiative are similar
to expenses that the Company has previously incurred and can
reasonably be expected to incur in the future. (y) 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.
Other
notes:
(z) Geographic split for transactions and revenue, including
transactions initiated through westernunion.com, is determined
entirely based upon the region where the money transfer is
initiated. Prior to January 1, 2017, for transactions originated
and paid in different regions, we split the transaction count and
revenue between the two regions, with each region receiving 50%.
Therefore, regional results for all periods previously presented
have also been adjusted to attribute the transactions and revenue
entirely to the region where the transaction was initiated.
(aa) Represents the North America (United States and Canada) ("NA")
region of our Consumer-to-Consumer segment. (bb) Represents
the Europe and the Russia/Commonwealth of Independent States ("EU
& CIS") region of our Consumer-to-Consumer segment. (cc)
Represents the Middle East, Africa, and South Asia ("MEASA") region
of our Consumer-to-Consumer segment, including India and certain
South Asian countries, which consist of Bangladesh, Bhutan,
Maldives, Nepal, and Sri Lanka. (dd) Represents the East
Asia and Oceania ("APAC") region of our Consumer-to-Consumer
segment. (ee) Represents the Latin America and the Caribbean
("LACA") region of our Consumer-to-Consumer segment, including
Mexico. (ff) Represents transactions, including
westernunion.com transactions initiated outside the United States,
between and within foreign countries (including Canada and Mexico).
Excludes all transactions originated in the United States.
(gg) Represents transactions originated in the United States,
including intra-country transactions and westernunion.com
transactions initiated from the United States. (hh)
Represents transactions initiated on westernunion.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170803006285/en/
The Western Union CompanyBill Chandler,
720-332-2014bill.chandler@westernunion.comorMike Salop,
720-332-8276mike.salop@westernunion.com
Western Union (NYSE:WU)
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Western Union (NYSE:WU)
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