Revenue $1.4 Billion; EPS Increases 14% to
$0.41 (excluding charge)GAAP EPS of $0.362015
Adjusted EPS and Constant Currency Revenue Outlooks Raised
_____________________________________________________________
The Western Union Company (NYSE: WU) today reported financial
results for the 2015 second quarter and updated its full year
financial outlook, which was previously provided on April 30,
2015.
On a constant currency basis, second quarter revenues increased
4% compared to the prior year period. Reported revenues declined
2%, primarily due to the impact of the stronger U.S. dollar.
Earnings per share, excluding the impact of the previously
announced Paymap settlement agreement with the Consumer Financial
Protection Bureau (CFPB), increased 14% to $0.41. GAAP EPS was
$0.36.
For the full year, the Company increased its expected EPS
outlook, excluding the settlement impact, to a range of
approximately $1.60 to $1.67. The constant currency revenue range
outlook was also raised. The GAAP EPS outlook range is
approximately $1.55 to $1.62.
“We posted another quarter of solid results, with improved
constant currency revenue trends across all our business segments,
despite some geopolitical and global economic challenges,” said
President and Chief Executive Officer Hikmet Ersek.
“Westernunion.com growth also accelerated in the quarter. Our
global digital presence is expanding quickly, as we continue to
advance our omnichannel strategy for cross border money
movement.”
Executive Vice President and Chief Financial Officer Raj
Agrawal stated, “Based on our performance to date and our
projections for the remainder of the year, we are pleased to be
able to increase our full year outlooks for adjusted earnings per
share and constant currency revenue growth.”
“In the quarter, consumer money transfer trends benefited from
ongoing strength from U.S. Outbound and high digital growth across
most of our online markets. Western Union Business Solutions and
Consumer Bill Payments also delivered good results. In addition,
cost savings initiatives and foreign exchange hedges helped drive
operating margin improvement, and we continued to generate and
deploy healthy cash flow for our shareholders,” Agrawal
added.
In the second quarter Consumer-to-Consumer (C2C) revenues
declined 3%, although transactions and constant currency revenues
each increased 3%. Westernunion.com C2C revenue increased 22%, or
28% constant currency, on transaction growth of 27%. Electronic
channels revenue, which includes westernunion.com, account based
money transfer through banks, and mobile money transfer, increased
19% in the quarter and represented 7% of total Company
revenues.
Consumer-to-Business (C2B) revenues grew 8% in the quarter, or
12% constant currency, driven by the Argentina walk-in and the U.S.
electronic bill payments businesses.
Western Union Business Solutions revenues decreased 1%, or
increased 9% on a constant currency basis. Constant currency growth
was driven by Europe and led by strong sales of hedging
instruments.
In the quarter, the Company recorded a pre-tax charge of $35.3
million related to its Paymap subsidiary’s settlement with the
CFPB. The CFPB previously claimed that certain aspects of the
marketing of Paymap’s Equity Accelerator service violated the
Consumer Financial Protection Act’s prohibition against unfair,
deceptive, and abusive acts and practices. The Company agreed to
resolve the matter without admitting or denying the allegations.
After-tax, the charge amounted to $24.2 million, or $0.05 per
share.
Operating margin excluding the impact of the settlement was
20.7% for the quarter, which compares to 19.8% in the second
quarter of 2014. The operating margin improvement primarily
resulted from cost savings initiatives and the net impact of
foreign currency movements, which were partially offset by
increases in incentive compensation, compliance and technology
costs. While foreign currency movements negatively impacted
revenues and profits in the quarter, the operating margin
benefitted as a result of gains on foreign exchange hedges. GAAP
operating margin was 18.1% in the quarter.
Earnings per share excluding the settlement increased 14% to
$0.41, compared to $0.36 in the prior year period. The earnings per
share increase was driven by operating margin expansion, a lower
effective tax rate, and fewer shares outstanding. The effective tax
rate, excluding the impact of the settlement, was 11.8%. GAAP
earnings per share were $0.36 in the quarter, with an effective tax
rate of 8.5%.
The Company returned $235 million to shareholders in the second
quarter, consisting of $156 million of share repurchases and $79
million of dividends. Year-to-date, cash flow from operating
activities totaled $466 million and the same amount has been
returned to shareholders through share repurchases and
dividends.
2015 Full Year Outlook
The Company updated its outlook for 2015 (adjusted metrics
exclude the impact of the Paymap settlement):
Revenue
- Low to mid-single digit constant
currency revenue increase (previously low single digit
increase)
- Low to mid-single digit GAAP revenue
decrease
Operating Profit Margin
- Adjusted operating margin of
approximately 21%
- GAAP operating margin of approximately
20%
Earnings per Share
- Adjusted EPS in a range of
approximately $1.60 to $1.67 (previously a range of approximately
$1.58 to $1.65)
- GAAP EPS in a range of approximately
$1.55 to $1.62
Cash Flow
- Cash flow from operating activities of
approximately $1 billion. The cash flow outlook excludes $100
million of anticipated final tax payments relating to the agreement
announced with the U.S. Internal Revenue Service in December 2011.
Some or all of these payments may occur in 2015.
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. 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 revenue change
constant currency adjusted; operating income margin, excluding
Paymap settlement agreement; diluted earnings per share, excluding
Paymap settlement agreement; effective tax rate, excluding Paymap
settlement agreement; Consumer-to-Consumer segment revenue change
constant currency adjusted; Consumer-to-Consumer segment
westernunion.com region revenue change constant currency adjusted;
Consumer-to-Business segment revenue change constant currency
adjusted; Business Solutions segment revenue change constant
currency adjusted; 2015 operating income margin outlook, excluding
Paymap settlement agreement; 2015 earnings per share outlook,
excluding Paymap settlement agreement, net of income tax benefit;
and additional measures found in the supplemental tables 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.
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 5762800.
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 August 13, 2015, at 1 (877) 344-7529
(U.S.) or +1 (412) 317-0088 (outside the U.S.). The pass code is
10068122. 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, 2014.
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 card
associations, card-based payment providers, electronic, mobile and
Internet-based services, digital currencies and related protocols,
and other innovations in technology and business models;
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; 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; 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; 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; adverse rating actions by credit rating
agencies; cessation of or defects in various services provided
to us by third-party vendors; 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 and to defend ourselves against
potential intellectual property infringement claims; changes in tax
laws and unfavorable resolution of tax contingencies; 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 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, customer due diligence, agent and
subagent due diligence, registration, and monitoring requirements,
and consumer protection; liabilities or loss of business and
unanticipated developments resulting from governmental
investigations and consent agreements with or enforcement actions
by regulators, including those associated with compliance with or
failure to comply with the settlement agreement with the State of
Arizona, as amended; the potential impact on our business from the
Dodd-Frank Wall Street Reform and Consumer Protection 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, including
costs, expenses, settlements and judgments; failure to comply with
regulations and changes in expectations 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, 2015, the Western Union, Vigo and Orlandi Valuta branded
services were offered through a combined network of over 500,000
agent locations in 200 countries and territories and over 100,000
ATMs and kiosks, and included the capability to send money to
millions of bank accounts. In 2014, The Western Union Company
completed 255 million consumer-to-consumer transactions worldwide,
moving $85 billion of principal between consumers, and 484 million
business payments. For more information, visit
www.westernunion.com.
THE WESTERN UNION COMPANY KEY STATISTICS
(Unaudited)
Notes* 2Q14 3Q14 4Q14
FY2014 1Q15 2Q15 YTD 2Q15
Consolidated Metrics Consolidated revenues (GAAP) - YoY %
change 1 % 2 % (1 )% 1 % (2 )% (2 )% (2 )% Consolidated revenues
(constant currency) - YoY % change a 3 % 5 % 4 % 4 % 4 % 4 % 4 %
Consolidated operating margin (GAAP) 19.8 % 21.8 % 19.6 % 20.3 %
20.6 % 18.1 % 19.3 % Consolidated operating margin (excluding
Paymap settlement agreement) b N/A N/A N/A N/A N/A 20.7 % 20.6 %
Consumer-to-Consumer (C2C) Segment Revenues (GAAP) -
YoY % change 2 % 2 % (2 )% 1 % (4 )% (3 )% (3 )% Revenues (constant
currency) - YoY % change f 3 % 4 % 2 % 3 % 2 % 3 % 3 % Operating
margin 22.7 % 24.9 % 23.1 % 23.4 % 23.1 % 23.3 % 23.2 %
Transactions (in millions) 63.96 65.31 65.42 254.93 61.75 65.76
127.51 Transactions - YoY % change 6 % 5 % 2 % 5 % 3 % 3 % 3 %
Total principal ($ - billions) $ 21.8 $ 22.1 $ 21.2 $ 85.4 $
19.5 $ 20.8 $ 40.3 Principal per transaction ($ - dollars) $ 341 $
339 $ 323 $ 335 $ 315 $ 316 $ 316 Principal per transaction - YoY %
change 0 % 0 % (4 )% (1 )% (7 )% (7 )% (7 )% Principal per
transaction (constant currency) - YoY % change g 0 % 0 % 0 % 0 % (1
)% (1 )% (1 )% Cross-border principal ($ - billions) $ 19.7
$ 20.0 $ 19.2 $ 77.2 $ 17.5 $ 18.8 $ 36.3 Cross-border principal -
YoY % change 7 % 5 % (1 )% 5 % (4 )% (5 )% (4 )% Cross-border
principal (constant currency) - YoY % change h 6 % 5 % 2 % 6 % 2 %
2 % 2 % Europe and CIS region revenues (GAAP) - YoY % change
v, w 3 % 1 % (5 )% 0 % (9 )% (9 )% (9 )% Europe and CIS region
revenues (constant currency) - YoY % change i, v, w 2 % 3 % 1 % 1 %
2 % 2 % 2 % Europe and CIS region transactions - YoY % change v, w
11 % 10 % 6 % 9 % 4 % 1 % 2 % North America region revenues
(GAAP) - YoY % change v, x 1 % 2 % 0 % 1 % (2 )% (2 )% (2 )% North
America region revenues (constant currency) - YoY % change j, v, x
1 % 2 % 1 % 1 % 0 % (1 )% (1 )% North America region transactions -
YoY % change v, x 3 % 3 % 2 % 3 % 3 % 3 % 3 % Middle East
and Africa region revenues (GAAP) - YoY % change v, y 6 % 3 % (3 )%
2 % (6 )% (4 )% (5 )% Middle East and Africa region revenues
(constant currency) - YoY % change k, v, y 6 % 4 % 0 % 3 % (1 )% 1
% 0 % Middle East and Africa region transactions - YoY % change v,
y 6 % 1 % (3 )% 3 % (3 )% 0 % (1 )% APAC region revenues
(GAAP) - YoY % change v, z 1 % 1 % (3 )% 0 % (6 )% (5 )% (6 )% APAC
region revenues (constant currency) - YoY % change l, v, z 2 % 2 %
1 % 2 % (2 )% 0 % (1 )% APAC region transactions - YoY % change v,
z 3 % 0 % (4 )% 1 % (4 )% (3 )% (3 )% LACA region revenues
(GAAP) - YoY % change v, aa (13 )% (3 )% (3 )% (6 )% 4 % 6 % 5 %
LACA region revenues (constant currency) - YoY % change m, v, aa (7
)% 4 % 4 % 2 % 10 % 13 % 12 % LACA region transactions - YoY %
change v, aa 0 % 2 % 2 % 3 % 6 % 7 % 7 % westernunion.com
region revenues (GAAP) - YoY % change v, bb 31 % 21 % 19 % 28 % 17
% 22 % 20 % westernunion.com region revenues (constant currency) -
YoY % change n, v, bb 30 % 20 % 23 % 29 % 23 % 28 % 26 %
westernunion.com region transactions - YoY % change v, bb 46 % 34 %
27 % 39 % 25 % 27 % 26 % International revenues - YoY %
change cc 1 % 1 % (4 )% 0 % (7 )% (5 )% (6 )% International
transactions - YoY % change cc 6 % 4 % 0 % 5 % 0 % 1 % 0 %
International revenues - % of C2C segment revenues cc 71 % 72 % 72
% 72 % 69 % 70 % 69 % United States originated revenues -
YoY % change dd 5 % 4 % 3 % 5 % 4 % 3 % 4 % United States
originated transactions - YoY % change dd 6 % 6 % 5 % 6 % 6 % 6 % 6
% United States originated revenues - % of C2C segment revenues dd
29 % 28 % 28 % 28 % 31 % 30 % 31 % Electronic channels
revenues - YoY % change ee 27 % 21 % 17 % 24 % 17 % 19 % 18 %
Consumer-to-Business (C2B) Segment Revenues (GAAP) -
YoY % change (5 )% (1 )% 4 % (2 )% 7 % 8 % 8 % Revenues (constant
currency) - YoY % change o 8 % 11 % 15 % 10 % 11 % 12 % 12 %
Operating margin 16.2 % 15.4 % 14.2 % 16.5 % 18.7 % (4.1 )% 7.3 %
Operating margin (excluding Paymap settlement agreement) p N/A N/A
N/A N/A N/A 18.3 % 18.5 %
Business Solutions (B2B)
Segment Revenues (GAAP) - YoY % change 0 % 4 % 1 % 3 % (1 )% (1
)% (1 )% Revenues (constant currency) - YoY % change q 0 % 3 % 5 %
4 % 7 % 9 % 8 % Operating margin (3.4 )% (0.2 )% (4.9 )% (3.0 )%
2.1 % (0.4 )% 0.9 %
% of Total Company Revenue
Consumer-to-Consumer segment revenues 81 % 80 % 80 % 80 % 79 % 80 %
79 % Consumer-to-Business segment revenues 10 % 11 % 11 % 11 % 12 %
11 % 12 % Business Solutions segment revenues 7 % 7 % 7 % 7 % 7 % 7
% 7 % Consumer-to-Consumer region revenues: Europe and CIS revenues
v, w 22 % 21 % 21 % 21 % 20 % 20 % 20 % North America revenues v, x
19 % 19 % 19 % 19 % 19 % 19 % 19 % Middle East and Africa revenues
v, y 16 % 16 % 16 % 16 % 16 % 16 % 16 % APAC revenues v, z 12 % 12
% 11 % 12 % 11 % 11 % 11 % LACA revenues v, aa 8 % 8 % 9 % 8 % 8 %
9 % 8 % westernunion.com revenues v, bb 4 % 4 % 4 % 4 % 5 % 5 % 5 %
Electronic channels revenues ee 6 % 6 % 6 % 6 % 7 % 7 % 7 % * See
page 13 of the press release for the applicable Note references and
the reconciliation of non-GAAP financial measures.
THE WESTERN UNION COMPANY CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in
millions, except per share amounts) Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 % Change 2015
2014 % Change Revenues: Transaction
fees $ 988.3 $ 1,029.0 (4 )% $ 1,936.9 $ 2,016.9 (4 )% Foreign
exchange revenues 362.1 344.3 5 % 700.1 673.6 4 % Other revenues
33.2 32.3 3 % 67.5
65.9 2 % Total revenues 1,383.6 1,405.6 (2 )% 2,704.5
2,756.4 (2 )% Expenses: Cost of services 799.4 827.8 (3 )% 1,571.2
1,625.0 (3 )% Selling, general and administrative (a) 333.4
299.5 11 % 610.2 581.1
5 % Total expenses 1,132.8 1,127.3
0 % 2,181.4 2,206.1 (1 )%
Operating income 250.8 278.3 (10 )% 523.1 550.3 (5 )% Other
income/(expense): Interest income 2.5 2.9 (14 )% 5.4 7.6 (29 )%
Interest expense (43.1 ) (43.4 ) (1 )% (84.9 ) (91.0 ) (7 )%
Derivative gains/(losses), net — (2.0 )
(b
)
1.0 (2.6 )
(b
)
Other expense, net (3.3 ) (3.7 ) (11 )% (5.1 )
(4.8 ) 6 % Total other expense, net (43.9 )
(46.2 ) (5 )% (83.6 ) (90.8 ) (8 )% Income before
income taxes 206.9 232.1 (11 )% 439.5 459.5 (4 )% Provision for
income taxes 17.6 38.3 (54 )%
46.3 62.7 (26 )% Net income $ 189.3 $
193.8 (2 )% $ 393.2 $ 396.8 (1 )% Earnings per
share: Basic $ 0.37 $ 0.36 3 % $ 0.76 $ 0.73 4 % Diluted $ 0.36 $
0.36 0 % $ 0.75 $ 0.73 3 % Weighted-average shares outstanding:
Basic 515.2 537.1 518.1 541.5 Diluted 519.8 539.9 522.5 544.6 Cash
dividends declared per common share $ 0.155 $ 0.125 24 % $ 0.31 $
0.25 24 % __________ (a) For both the three and six months
ended June 30, 2015, selling, general and administrative expenses
included $35.3 million of expenses related to a settlement
agreement reached with the Consumer Financial Protection Bureau
regarding the Equity Accelerator service of Paymap, Inc., a
subsidiary of the Company. (b) Calculation not meaningful.
THE WESTERN UNION COMPANY CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions,
except per share amounts)
June 30, December 31, 2015 2014
Assets Cash and cash equivalents (a) $ 1,630.5 $ 1,783.2
Settlement assets 3,490.4 3,313.7 Property and equipment, net of
accumulated depreciation of $509.1 and $478.5, respectively 201.2
206.4 Goodwill 3,168.3 3,169.2 Other intangible assets, net of
accumulated amortization of $834.7 and $820.0, respectively 768.3
748.1 Other assets 805.1 669.8 Total
assets $ 10,063.8 $ 9,890.4
Liabilities and
Stockholders' Equity Liabilities: Accounts payable and accrued
liabilities $ 587.8 $ 600.4 Settlement obligations 3,490.4 3,313.7
Income taxes payable 176.8 166.3 Deferred tax liability, net 310.1
305.0 Borrowings 3,725.8 3,720.4 Other liabilities 465.5
484.2 Total liabilities 8,756.4 8,590.0
Stockholders' equity: Preferred stock, $1.00 par value; 10 shares
authorized; no shares issued — — Common stock, $0.01 par value;
2,000 shares authorized;
512.1 shares and 521.5 shares issued and outstanding as of June 30,
2015 and December 31, 2014, respectively 5.1 5.2 Capital surplus
541.6 445.4 Retained earnings 884.2 968.7 Accumulated other
comprehensive loss (123.5 ) (118.9 ) Total
stockholders' equity 1,307.4 1,300.4
Total liabilities and stockholders' equity $ 10,063.8 $
9,890.4 __________ (a) Approximately $1.0 billion and
$950 million was held by entities outside of the United States as
of June 30, 2015 and December 31, 2014, respectively.
THE WESTERN UNION COMPANY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in
millions) Six Months Ended
June 30,
2015 2014
Cash Flows From
Operating Activities Net income $ 393.2 $ 396.8 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation 32.6 33.0 Amortization 94.2 102.6 Other non-cash
items, net 24.9 32.0 Increase/(decrease) in cash, excluding the
effects of acquisitions, resulting from changes in: Other assets
(57.6 ) (16.6 ) Accounts payable and accrued liabilities (23.1 )
(100.9 ) Income taxes payable 10.9 (8.5 ) Other liabilities
(9.4 ) 11.7 Net cash provided by operating activities
465.7 450.1
Cash Flows From Investing Activities
Capitalization of contract costs (74.7 ) (44.4 ) Capitalization of
purchased and developed software (20.8 ) (17.6 ) Purchases of
property and equipment (26.9 ) (34.3 ) Acquisition of business —
(10.6 ) Purchase of non-settlement related investments (100.0 ) —
Proceeds from sale of non-settlement related investments —
100.2 Net cash used in investing activities
(222.4 ) (6.7 )
Cash Flows From Financing Activities
Proceeds from exercise of options 77.8 5.6 Cash dividends paid
(160.0 ) (134.4 ) Common stock repurchased (313.8 ) (318.0 ) Net
proceeds from commercial paper — 35.0 Principal payments on
borrowings — (500.0 ) Net cash used in
financing activities (396.0 ) (911.8 ) Net change in
cash and cash equivalents (152.7 ) (468.4 ) Cash and cash
equivalents at beginning of period 1,783.2
2,073.1 Cash and cash equivalents at end of period $ 1,630.5
$ 1,604.7
THE WESTERN UNION COMPANY
SUMMARY SEGMENT DATA (Unaudited) (in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 % Change 2015
2014 % Change Revenues:
Consumer-to-Consumer (C2C): Transaction fees $ 816.1 $ 867.1 (6 )%
$ 1,592.3 $ 1,692.7 (6 )% Foreign exchange revenues 268.9 249.6 8 %
513.0 485.6 6 % Other revenues 16.5 15.4
7 % 34.5 31.3 10 % Total
Consumer-to-Consumer 1,101.5 1,132.1 (3 )% 2,139.8 2,209.6 (3 )%
Consumer-to-Business (C2B): Transaction fees 151.6 139.4 9 % 303.0
280.1 8 % Foreign exchange and other revenues 6.3
6.5 (3 )% 12.7 13.0 (2 )%
Total Consumer-to-Business 157.9 145.9 8 % 315.7 293.1 8 % Business
Solutions (B2B): Foreign exchange revenues 87.5 87.7 0 % 175.4
178.1 (2 )% Transaction fees and other revenues 10.1
10.5 (4 )% 20.2 19.5 4 %
Total Business Solutions 97.6 98.2 (1 )% 195.6 197.6 (1 )% Other:
Total revenues 26.6 29.4 (10 )%
53.4 56.1 (5 )% Total consolidated revenues $
1,383.6 $ 1,405.6 (2 )% $ 2,704.5 $ 2,756.4
(2 )% Operating income/(loss): Consumer-to-Consumer $ 256.6
$ 257.5 0 % $ 496.8 $ 504.5 (2 )% Consumer-to-Business (6.4 ) 23.6
(a
)
23.1 53.4
(a
)
Business Solutions (0.4 ) (3.3 )
(b
)
1.7 (6.9 )
(b
)
Other 1.0 0.5
(b
)
1.5 (0.7 )
(b
)
Total consolidated operating income $ 250.8 $ 278.3
(10 )% $ 523.1 $ 550.3 (5 )% Operating income/(loss)
margin: Consumer-to-Consumer 23.3 % 22.7 % 0.6 % 23.2 % 22.8 % 0.4
% Consumer-to-Business (4.1 )% 16.2 %
(a
)
7.3 % 18.2 %
(a
)
Business Solutions (0.4 )% (3.4 )% 3.0 % 0.9 % (3.5 )% 4.4 % Total
consolidated operating income margin 18.1 % 19.8 % (1.7 )% 19.3 %
20.0 %
(0.7
)%
_____________
(a) For both the three and six months ended June 30, 2015,
Consumer-to-Business operating income/(loss) included $35.3 million
of expenses related to a settlement agreement reached with the
Consumer Financial Protection Bureau regarding the Equity
Accelerator service of Paymap, Inc., a subsidiary of the Company.
(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.
2Q14 3Q14 4Q14 FY2014 1Q15
2Q15 YTD 2Q15 Consolidated Metrics (a)
Revenues, as reported (GAAP) $ 1,405.6 $ 1,440.9 $ 1,409.9 $
5,607.2 $ 1,320.9 $ 1,383.6 $ 2,704.5 Foreign currency translation
impact (s) 26.3 35.0 63.7
157.5 78.6 84.7
163.3 Revenues, constant currency adjusted $ 1,431.9
$ 1,475.9 $ 1,473.6 $ 5,764.7 $ 1,399.5
$ 1,468.3 $ 2,867.8 Prior year revenues, as reported
(GAAP) $ 1,385.9 $ 1,408.8 $ 1,421.9 $ 5,542.0 $ 1,350.8 $ 1,405.6
$ 2,756.4 Revenue change, as reported (GAAP) 1 % 2 % (1 )% 1 % (2
)% (2 )% (2 )% Revenue change, constant currency adjusted 3 % 5 % 4
% 4 % 4 % 4 % 4 % (b) Operating income, as reported (GAAP) $
278.3 $ 314.1 $ 276.1 $ 1,140.5 $ 272.3 $ 250.8 $ 523.1 Less:
Paymap settlement agreement (t) N/A N/A
N/A N/A N/A 35.3
35.3 Operating income, excluding Paymap
settlement agreement $ 278.3 $ 314.1 $ 276.1 $
1,140.5 $ 272.3 $ 286.1 $ 558.4
Operating income margin, as reported (GAAP) 19.8 % 21.8 % 19.6 %
20.3 % 20.6 % 18.1 % 19.3 % Operating income margin, excluding
Paymap settlement agreement N/A N/A N/A N/A N/A 20.7 % 20.6 %
(c) Operating income, as reported (GAAP) $ 278.3 $ 314.1 $
276.1 $ 1,140.5 $ 272.3 $ 250.8 $ 523.1 Reversal of depreciation
and amortization 68.4 66.8 69.5
271.9 63.9 62.9
126.8 EBITDA (u) $ 346.7 $ 380.9 $
345.6 $ 1,412.4 $ 336.2 $ 313.7 $ 649.9
Less: Paymap settlement agreement (t) N/A
N/A N/A N/A N/A
35.3 35.3 Adjusted EBITDA,
excluding Paymap settlement agreement $ 346.7 $ 380.9
$ 345.6 $ 1,412.4 $ 336.2 $ 349.0 $
685.2 Operating income margin, as reported (GAAP) 19.8 %
21.8 % 19.6 % 20.3 % 20.6 % 18.1 % 19.3 % EBITDA margin 24.7 % 26.4
% 24.5 % 25.2 % 25.5 % 22.7 % 24.0 % Adjusted EBITDA margin,
excluding Paymap settlement agreement N/A N/A N/A N/A N/A 25.2 %
25.3 % (d) Net income, as reported (GAAP) $ 193.8 $ 234.1 $
221.5 $ 852.4 $ 203.9 $ 189.3 $ 393.2 Less: Paymap settlement
agreement, net of income tax benefit (t) N/A
N/A N/A N/A N/A
24.2 24.2 Net income, excluding Paymap
settlement agreement $ 193.8 $ 234.1 $ 221.5 $
852.4 $ 203.9 $ 213.5 $ 417.4 Diluted
earnings per share ("EPS"), as reported (GAAP) ($-dollars) $ 0.36 $
0.44 $ 0.42 $ 1.59 $ 0.39 $ 0.36 $ 0.75 Impact from Paymap
settlement agreement, net of income tax benefit ($-dollars)
N/A N/A N/A N/A
N/A 0.05 0.05 Diluted
EPS, excluding Paymap settlement agreement ($-dollars) N/A
N/A N/A N/A
N/A $ 0.41 $ 0.80 Diluted weighted-average
shares outstanding 539.9 531.2 526.9 536.8 525.2 519.8 522.5
(e) Effective tax rate, as reported (GAAP) 16.5 % 14.2 % 6.1 % 12.0
% 12.3 % 8.5 % 10.5 % Impact from Paymap settlement agreement, net
of income tax benefit (t) N/A N/A
N/A N/A N/A 3.3 %
1.6 % Effective tax rate, excluding Paymap settlement
agreement N/A N/A N/A
N/A N/A 11.8 % 12.1 %
Consumer-to-Consumer Segment (f) Revenues, as
reported (GAAP) $ 1,132.1 $ 1,150.9 $ 1,125.3 $ 4,485.8 $ 1,038.3 $
1,101.5 $ 2,139.8 Foreign currency translation impact (s)
7.5 17.9 42.8 80.7
63.0 69.1 132.1 Revenues,
constant currency adjusted $ 1,139.6 $ 1,168.8 $
1,168.1 $ 4,566.5 $ 1,101.3 $ 1,170.6 $
2,271.9 Prior year revenues, as reported (GAAP) $ 1,108.8 $
1,128.1 $ 1,146.5 $ 4,433.6 $ 1,077.5 $ 1,132.1 $ 2,209.6 Revenue
change, as reported (GAAP) 2 % 2 % (2 )% 1 % (4 )% (3 )% (3 )%
Revenue change, constant currency adjusted 3 % 4 % 2 % 3 % 2 % 3 %
3 % (g) Principal per transaction, as reported ($ - dollars)
$ 341 $ 339 $ 323 $ 335 $ 315 $ 316 $ 316 Foreign currency
translation impact (s) ($ - dollars) (2 ) —
12 3 19 23
21 Principal per transaction, constant currency
adjusted ($ - dollars) $ 339 $ 339 $ 335 $ 338
$ 334 $ 339 $ 337 Prior year principal
per transaction, as reported ($ - dollars) $ 340 $ 339 $ 335 $ 338
$ 338 $ 341 $ 339 Principal per transaction change, as reported 0 %
0 % (4 )% (1 )% (7 )% (7 )% (7 )% Principal per transaction change,
constant currency adjusted 0 % 0 % 0 % 0 % (1 )% (1 )% (1 )%
(h) Cross-border principal, as reported ($ - billions) $ 19.7 $
20.0 $ 19.2 $ 77.2 $ 17.5 $ 18.8 $ 36.3 Foreign currency
translation impact (s) ($ - billions) (0.1 ) —
0.8 0.8 1.1 1.3
2.4 Cross-border principal, constant currency
adjusted ($ - billions) $ 19.6 $ 20.0 $ 20.0 $
78.0 $ 18.6 $ 20.1 $ 38.7 Prior year
cross-border principal, as reported ($ - billions) $ 18.5 $ 19.0 $
19.5 $ 73.9 $ 18.3 $ 19.7 $ 38.0 Cross-border principal change, as
reported 7 % 5 % (1 )% 5 % (4 )% (5 )% (4 )% Cross-border principal
change, constant currency adjusted 6 % 5 % 2 % 6 % 2 % 2 % 2 %
(i) Europe and CIS region revenue change, as reported (GAAP)
3 % 1 % (5 )% 0 % (9 )% (9 )% (9 )% Europe and CIS region foreign
currency translation impact (s) (1 )% 2 % 6 %
1 % 11 % 11 % 11 % Europe and CIS
region revenue change, constant currency adjusted 2 %
3 % 1 % 1 % 2 % 2 % 2 %
(j) North America region revenue change, as reported (GAAP) 1 % 2 %
0 % 1 % (2 )% (2 )% (2 )% North America region foreign currency
translation impact (s) 0 % 0 % 1 % 0 %
2 % 1 % 1 % North America region revenue
change, constant currency adjusted 1 % 2 % 1 %
1 % 0 % (1 )% (1 )% (k) Middle
East and Africa region revenue change, as reported (GAAP) 6 % 3 %
(3 )% 2 % (6 )% (4 )% (5 )% Middle East and Africa region foreign
currency translation impact (s) 0 % 1 % 3 %
1 % 5 % 5 % 5 % Middle East and Africa
region revenue change, constant currency adjusted 6 %
4 % 0 % 3 % (1 )% 1 % 0 %
(l) APAC region revenue change, as reported (GAAP) 1 % 1 % (3 )% 0
% (6 )% (5 )% (6 )% APAC region foreign currency translation impact
(s) 1 % 1 % 4 % 2 % 4 % 5
% 5 % APAC region revenue change, constant currency adjusted
2 % 2 % 1 % 2 % (2 )% 0 %
(1 )%
(m)
LACA region revenue change, as reported (GAAP) (13 )% (3 )% (3 )%
(6 )% 4 % 6 % 5 % LACA region foreign currency translation impact
(s) 6 % 7 % 7 % 8 % 6 % 7
% 7 % LACA region revenue change, constant currency adjusted
(7 )% 4 % 4 % 2 % 10 % 13
% 12 % (n) westernunion.com region revenue change, as
reported (GAAP) 31 % 21 % 19 % 28 % 17 % 22 % 20 % westernunion.com
region foreign currency translation impact (s) (1 )%
(1 )% 4 % 1 % 6 % 6 % 6 %
westernunion.com region revenue change, constant currency adjusted
30 % 20 % 23 % 29 % 23 %
28 % 26 %
Consumer-to-Business Segment (o)
Revenues, as reported (GAAP) $ 145.9 $ 150.4 $ 155.3 $ 598.8 $
157.8 $ 157.9 $ 315.7 Foreign currency translation impact (s)
18.8 18.1 16.6
70.1 6.3 4.9 11.2
Revenues, constant currency adjusted $ 164.7 $ 168.5
$ 171.9 $ 668.9 $ 164.1 $ 162.8 $ 326.9
Prior year revenues, as reported (GAAP) $ 153.0 $ 152.3 $
149.5 $ 608.5 $ 147.2 $ 145.9 $ 293.1 Revenue change, as reported
(GAAP) (5 )% (1 )% 4 % (2 )% 7 % 8 % 8 % Revenue change, constant
currency adjusted 8 % 11 % 15 % 10 % 11 % 12 % 12 % (p)
Operating income/(loss), as reported (GAAP) $ 23.6 $ 23.2 $ 22.1 $
98.7 $ 29.5 $ (6.4 ) $ 23.1 Less: Paymap settlement agreement (t)
N/A N/A N/A N/A
N/A 35.3 35.3
Operating income, excluding Paymap settlement agreement $ 23.6
$ 23.2 $ 22.1 $ 98.7 $ 29.5 $
28.9 $ 58.4 Operating income/(loss) margin, as
reported (GAAP) 16.2 % 15.4 % 14.2 % 16.5 % 18.7 % (4.1 )% 7.3 %
Operating income margin, excluding Paymap settlement agreement N/A
N/A N/A N/A N/A 18.3 % 18.5 %
Business Solutions
Segment (q) Revenues, as reported (GAAP) $ 98.2 $ 105.8 $ 101.2
$ 404.6 $ 98.0 $ 97.6 $ 195.6 Foreign currency translation impact
(s) (0.3 ) (1.6 ) 3.7 4.5
8.1 9.4 17.5 Revenues,
constant currency adjusted $ 97.9 $ 104.2 $ 104.9
$ 409.1 $ 106.1 $ 107.0 $ 213.1
Prior year revenues, as reported (GAAP) $ 98.3 $ 101.6 $ 100.2 $
392.9 $ 99.4 $ 98.2 $ 197.6 Revenue change, as reported (GAAP) 0 %
4 % 1 % 3 % (1 )% (1 )% (1
)%
Revenue change, constant currency adjusted 0 % 3 % 5 % 4 % 7 % 9 %
8 % (r) Operating income/(loss), as reported (GAAP) $ (3.3 )
$ (0.2 ) $ (5.0 ) $ (12.1 ) $ 2.1 $ (0.4 ) $ 1.7 Reversal of
depreciation and amortization 14.8 13.7
12.7 56.1 12.2
12.2 24.4 EBITDA (u) $ 11.5 $ 13.5
$ 7.7 $ 44.0 $ 14.3 $ 11.8 $
26.1 Operating income/(loss) margin, as reported (GAAP) (3.4
)% (0.2 )% (4.9 )% (3.0 )% 2.1 % (0.4 )% 0.9 % EBITDA margin 11.7 %
12.8 % 7.6 % 10.9 % 14.6 % 12.1 % 13.3 %
2015 Operating
Income Margin Outlook Operating income margin (GAAP) 20 %
Impact for Paymap settlement agreement (t) 1 % Operating
income margin, excluding Paymap settlement agreement 21 %
2015 EPS Outlook Range EPS guidance (GAAP)
($-dollars) $ 1.55 $ 1.62 Impact from Paymap settlement agreement,
net of income tax benefit (t) ($ - dollars) 0.05
0.05 EPS guidance, excluding Paymap settlement
agreement, net of income tax benefit ($ - dollars) $ 1.60 $
1.67
Non-GAAP related
notes:
(s)
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. (t) 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. (u) 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:
(v) 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 westernunion.com.
(w) Represents the Europe and the Commonwealth of
Independent States ("CIS") region of our Consumer-to-Consumer
segment. (x) Represents the North America region of our
Consumer-to-Consumer segment, including the United States, Mexico,
and Canada. (y) Represents the Middle East and Africa region
of our Consumer-to-Consumer segment. (z) Represents the Asia
Pacific ("APAC") region of our Consumer-to-Consumer segment,
including India, China, and South Asia. (aa) Represents the
Latin America and the Caribbean ("LACA") region of our
Consumer-to-Consumer segment. (bb) Represents transactions
initiated on westernunion.com which are primarily paid out at
Western Union agent locations in the respective regions.
(cc) Represents transactions between and within foreign countries
(including Canada and Mexico). Excludes all transactions originated
in the United States. (dd) Represents transactions
originated in the United States, including intra-country
transactions. (ee) Represents revenue generated from
electronic channels, which include westernunion.com, account based
money transfer and mobile money transfer (included in the various
segments).
WU-F, WU-G
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150730006606/en/
Western UnionMediaDan Diaz,
720-332-5564daniel.diaz@westernunion.comorInvestorsMike
Salop, 720-332-8276mike.salop@westernunion.com
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