- Expected third quarter GAAP earnings per share (EPS) of
$0.45; adjusted EPS of $0.42
- Company reaffirms 2022 financial outlook and sets third
quarter earnings release date for November 1, 2022
- Company to host investor day on October 20, 2022
The Western Union Company (NYSE: WU) (the “Company”) today
reported selected preliminary results for the third quarter of 2022
and reaffirmed its full-year 2022 financial outlook ahead of its
upcoming Investor Day to be held in New York City on October 20,
2022. The Company plans to release final comprehensive third
quarter results on November 1, 2022.
Preliminary Third Quarter
Results
The Company expects third quarter revenue of $1.1 billion to
decline 15% on a reported basis, or 6% on a constant currency basis
excluding the contribution from Business Solutions, compared to the
prior year period. The suspension of operations in Russia and
Belarus negatively impacted revenue by approximately three
percentage points in the quarter compared to the prior year period,
while Argentina inflation benefited revenue by approximately one
percentage point.
GAAP operating margin in the quarter is expected to be 21.3%,
while the adjusted operating margin excluding the contribution from
Business Solutions is expected to be 20.6%.
GAAP EPS in the third quarter is expected to be $0.45, while
adjusted EPS is expected to be $0.42.
2022 Outlook
Today, the Company reaffirmed its full year 2022 financial
outlook provided on August 3, 2022. The outlook assumes that
macroeconomic softness will persist for the remainder of the
year.
During the third quarter, the Company agreed with Goldfinch
Partners LLC and The Baupost Group LLC to complete the divestiture
of Business Solutions in three closings instead of two, the first
of which occurred on March 1, 2022. GAAP figures reflect an
expected partial year of Business Solutions ownership, including
contractual payments to the buyers, representing profits between
the first and third closings, associated divestiture and
acquisition costs, exit costs, and an estimated pre-tax gain of
approximately $274 million of which $151 million was recognized
year-to-date. The second closing is expected to occur on December
1, 2022, and includes the United Kingdom operations, which will
result in a pre-tax gain of approximately $93 million, subject to
regulatory capital adjustments. The third closing, which includes
the European Union operations, is expected to occur in the first
quarter of 2023, pending required regulatory approvals, at which
time the remainder of the gain will be recognized, subject to
regulatory capital adjustments.
Adjusted revenue growth and operating margin exclude
contributions from Business Solutions. In addition, adjusted
operating margin excludes associated divestiture and acquisition
costs, Business Solutions exit costs, and costs related to the exit
from Russia and Belarus. The adjusted effective tax rate and EPS
exclude the expected gain on sale of Business Solutions,
acquisition and divestiture costs, Business Solutions exit costs,
exit costs from Russia and Belarus, and the reversal of uncertain
tax positions.
The 2022 outlook is as follows:
Revenue
GAAP: approximately -11% to
-13%
Adjusted (constant currency, excluding
the impact of Argentina inflation and proforma for the
planned sale of Business Solutions): mid-single digit
decline
Operating Profit Margin
GAAP and Adjusted: a range of 20%
to 21%
Effective Tax Rate
GAAP: approximately 20%
Adjusted: mid-teens range
EPS
GAAP: $2.18 - $2.28
Adjusted: $1.75 - $1.85
2022 Investor Day
The Company will host an investor day on Thursday, October 20,
2022. Presentations will begin at 9:00 a.m. Eastern Time and
conclude at approximately 12:30 p.m. Eastern Time. During the
meeting, President and Chief Executive Officer Devin McGranahan and
other members of the Executive Leadership Team will provide an
update on the Company’s long-term strategy followed by a Q&A
session.
A live webcast and presentation will be available at
https://ir.westernunion.com. Registration for the event is
required, so please register at least 15 minutes prior to the
scheduled start time. A webcast replay will be available shortly
after the event.
Third Quarter 2022
Results
The Company will host a webcast and conference call announcing
third quarter 2022 results on November 1, 2022, at 4:30 p.m. ET. A
press release highlighting the financial results will be issued at
approximately 4:05 p.m. ET the same day.
The webcast and presentation will be available at
https://ir.westernunion.com. Registration for the event is
required, so please register at least fifteen minutes prior to the
scheduled start time. A webcast replay will be available shortly
after the event.
To listen to the conference call via telephone in the U.S., dial
+1 (669) 900-6833 or +1 (253) 215-8782 fifteen minutes prior to the
start of the call, followed by the meeting ID, which is 989 1814
1385 and the passcode, which is 686785. To listen to the conference
call via telephone outside the U.S., dial the country number from
the international directory, followed by the meeting ID, which is
989 1814 1385 and the passcode, which is 686785.
Adjustment Items
Adjusted constant currency revenue growth metrics for 2022
exclude contributions from Business Solutions. Adjusted operating
profit metrics for 2022 exclude contributions from Business
Solutions, acquisition and divestiture costs, Russia and Belarus
exit costs, and Business Solutions exit costs. The adjusted
effective tax rate and EPS metrics for 2022 exclude the expected
gain on sale of Business Solutions, acquisition and divestiture
costs, Business Solutions exit costs, exit costs from Russia and
Belarus, and the reversal of uncertain tax positions.
Adjusted constant currency revenue growth metrics for 2021
exclude contributions from Business Solutions. Adjusted operating
profit metrics for 2021 periods exclude acquisition and divestiture
costs. Adjusted earnings per share metrics for 2021 periods exclude
the following items and the related taxes, as applicable:
acquisition and divestiture costs, the impact from the gain on an
investment sale, debt retirement expenses, Business Solutions
change in permanent reinvestment tax assertion, and non-cash
expenses associated with the termination of the Company’s pension
plan.
All preliminary amounts included in this press release are
subject to change as a result of the normal quarterly close and
review process.
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.
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
https://ir.westernunion.com.
Environmental, Social, and Governance
(ESG)
Western Union is committed to making a positive impact. For more
details on how Western Union is addressing some of the most
pressing issues facing society, our shared environment, and our
Company, please view our latest ESG report:
https://corporate.westernunion.com/esg.
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," "targets," "anticipates," "believes," "estimates,"
"guides," "provides guidance," "provides outlook," "projects,"
"designed to," 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 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, 2021. 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 downturns
and trade disruptions, 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 other events, such as public
health emergencies, epidemics, or pandemics, such as COVID-19,
civil unrest, war, terrorism, natural disasters, 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 digital, mobile and internet-based services,
card associations, and card-based payment providers, and with
digital currencies and related exchanges and protocols, and other
innovations in technology and business models; geopolitical
tensions, political conditions and related actions, including trade
restrictions and government sanctions, 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, clients, or other partners;
deterioration in customer confidence in our business, or in money
transfer and payment service providers generally; failure to
maintain our agent network and business relationships under terms
consistent with or more advantageous to us than those currently in
place; 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; mergers,
acquisitions, and the integration of acquired businesses and
technologies into our Company, divestitures, and the failure to
realize anticipated financial benefits from these transactions, and
events requiring us to write down our goodwill; decisions to change
our business mix; 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; changes in tax laws, or their interpretation,
any subsequent regulation, and potential related state income tax
impacts, and unfavorable resolution of tax contingencies; 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; our ability to realize the
anticipated benefits from restructuring-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; failure to manage credit and fraud risks presented by
our agents, clients, and consumers; adverse rating actions by
credit rating agencies; our ability to protect our trademarks,
patents, copyrights, and 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 and abroad, 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; liabilities resulting from
litigation, including class-action lawsuits and similar matters,
and regulatory enforcement actions, including costs, expenses,
settlements, and judgments; failure to comply with regulations and
evolving industry standards regarding consumer privacy, data use,
the transfer of personal data between jurisdictions, and
information security, including with respect to the General Data
Protection Regulation in the European Union and the California
Consumer Privacy Act; failure to comply with 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 in the United States and abroad
related to consumer protection and derivative transactions; effects
of unclaimed property laws or their interpretation or the
enforcement thereof; 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 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 global leader in
cross-border, cross-currency money movement and payments. Western
Union’s platform provides seamless cross-border flows and its
leading global financial network bridges more than 200 countries
and territories and approximately 130 currencies. We connect
consumers, businesses, financial institutions, and governments
through one of the world’s widest reaching networks, accessing
billions of bank accounts, millions of digital wallets and cards,
and a substantial global network of retail locations. Western Union
connects the world to bring boundless possibilities within reach.
For more information, visit www.westernunion.com.
WU-G
THE WESTERN UNION
COMPANY
NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(in millions, unless indicated
otherwise)
Western Union’s management believes the
non-GAAP financial measures presented provide meaningful
supplemental information regarding the Company’s operating results
to assist management, investors, analysts, and others in
understanding the Company’s financial results and to better analyze
trends in the Company’s 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 the Company’s operations that,
when viewed with the Company’s GAAP results and the reconciliation
to the corresponding GAAP financial measure, provides a more
complete understanding of the Company’s business. Users of the
financial statements are encouraged to review the Company’s
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.
2022 Investor Day Reconciliation of
Non-GAAP to GAAP Financial Measures
Notes
3Q22
Revenues (GAAP)
$
1,089.6
Foreign currency translation impact
(a)
60.8
Revenues, constant currency (non-GAAP)
1,150.4
Less Business Solutions revenues, constant
currency (non-GAAP)
(b)
(50.4
)
Revenues, constant currency, excluding
Business Solutions (non-GAAP)
$
1,100.0
Prior year revenues (GAAP)
$
1,286.3
Less prior year revenues from Business
Solutions (GAAP)
(b)
(116.8
)
Prior year revenues, adjusted, excluding
Business Solutions
$
1,169.5
Revenues (GAAP) - YoY % Change
(15
)%
Revenues, constant currency (non-GAAP) -
YoY% Change
(11
)%
Revenues, constant currency, excluding
Business Solutions (non-GAAP) - YoY % Change
(6
)%
Business Solutions Segment
Metrics
Notes
3Q22
Revenues (GAAP)
$
42.6
Foreign currency translation impact
(a)
7.8
Revenues, constant currency (non-GAAP)
$
50.4
Prior year revenues (GAAP)
$
116.8
Revenues (GAAP) - YoY % change
(63
)%
Revenues, constant currency (non-GAAP) -
YoY % change
(57
)%
THE WESTERN UNION
COMPANY
NON-GAAP FINANCIAL
MEASURES
(Unaudited)
Notes
3Q22
Operating income (GAAP)
$
231.8
Acquisition and divestiture costs
(c)
0.4
Russia/Belarus exit costs
(d)
(0.6
)
Business Solutions exit costs
(d)
—
Operating income, excluding acquisition
and divestiture costs, Russia/Belarus exit costs, and Business
Solutions exit costs (non-GAAP)
$
231.6
Less Business Solutions operating
income(1)
(b)
(15.6
)
Operating income, excluding acquisition
and divestiture costs, Russia/Belarus exit costs, and Business
Solutions operating income and exit costs (non-GAAP)
$
216.0
Operating margin (GAAP)
21.3
%
Operating margin, excluding acquisition
and divestiture costs, Russia/Belarus exit costs, and Business
Solutions exit costs (non-GAAP)
21.2
%
Operating margin, excluding acquisition
and divestiture costs, Russia/Belarus exit costs, and Business
Solutions operating income and exit costs (non-GAAP)(1)
20.6
%
___________________________________________________
(1) Concurrent with the sale in the first
quarter of 2022, the Business Solutions operating income has been
excluded. See tickmark (b) below for more information.
Notes
3Q22
Diluted Earnings per Share (GAAP) ($-
dollars)
$
0.45
Pretax impacts from the following:
—
Acquisition and divestiture costs
(c)
—
Business Solutions exit costs
(d)
—
Russia/Belarus exit costs
(d)
—
Income tax expense/(benefit) impacts from
the following:
—
Acquisition and divestiture costs
(c)
—
Business Solutions exit costs
(d)
—
Russia/Belarus exit costs
(d)
—
Reversal of uncertain tax positions
(e)
(0.03
)
Diluted Earnings per share, adjusted
(non-GAAP) ($- dollars)
$
0.42
THE WESTERN UNION
COMPANY
NON-GAAP FINANCIAL
MEASURES
(Unaudited)
2022 Investor Day
Reconciliation of Non-GAAP to GAAP Financial Measures - 2022
Outlook
2022 Consolidated Outlook
Metrics
Notes
Range
Operating margin (GAAP)
20.0
%
21.0
%
Impact from acquisition and divestiture
costs
(c)
0.0
%
0.0
%
Impact from the sale of Business
Solutions, including exit costs
(b), (d)
(0.5
)%
(0.5
)%
Impact from Russia/Belarus exit costs
(d)
0.5
%
0.5
%
Operating margin, adjusted, excluding
acquisition and divestiture costs, the sale of Business Solutions,
including exit costs, and Russia/Belarus exit costs (non-GAAP)
20.0
%
21.0
%
Range
Earnings per share (GAAP) ($- dollars)
$
2.18
$
2.28
Impact from acquisition and divestiture
costs, net of related taxes
(c)
0.01
0.01
Gain on the sale of Business Solutions,
net of related taxes
(b)
(0.45
)
(0.45
)
Impact from Business Solutions exit costs,
net of related taxes
(d)
0.02
0.02
Impact from Russia/Belarus exit costs, net
of related taxes
(d)
0.02
0.02
Reversal of uncertain tax positions
(e)
(0.03
)
(0.03
)
Earnings per share, adjusted, excluding
the acquisition and divestiture costs, gain on the sale of Business
Solutions, and exit costs from Business Solutions and
Russia/Belarus, net of related taxes, and reversal of uncertain tax
positions (non-GAAP) ($- dollars)
$
1.75
$
1.85
THE WESTERN UNION
COMPANY
NOTES TO NON-GAAP FINANCIAL
MEASURES
(Unaudited)
Non-GAAP related
notes:
(a)
Represents the impact from the
fluctuation in exchange rates between all foreign currency
denominated amounts and the United States dollar. Constant currency
results exclude any benefit or loss caused by foreign exchange
fluctuations 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. The Company
believes that this measure provides management and investors with
information about revenue results and trends that eliminates
currency volatility while increasing the comparability of the
Company's underlying results and trends.
(b)
During 2021, the Company entered
into an agreement to sell its Business Solutions business to
Goldfinch Partners LLC and The Baupost Group LLC (collectively, the
"Buyer") for cash consideration of $910.0 million, subject to
regulatory and working capital adjustments. The sale will be
completed in three closings, the first of which occurred on March
1, 2022 with the entirety of the cash consideration collected at
that time and allocated to the closings on a relative fair value
basis. The first closing excluded the operations in the European
Union and the United Kingdom and resulted in a gain of $151.4
million. The second closing is currently expected to occur on
December 1, 2022, and includes the United Kingdom operations. The
third closing, which includes the European Union operations, is
currently expected in the first quarter of 2023, pending regulatory
approvals. Revenues have been adjusted to exclude the carved out
financial information for the Business Solutions business to
compare the year-over-year changes and trends in the Company's
continuing businesses, excluding the effects of this divestiture.
While the sale of the Company's Business Solutions business does
not qualify for or represent discontinued operations, the Company
has also adjusted operating income, beginning in the first quarter
of 2022 and concurrent with the sale, to exclude the carved out
direct profit of the Business Solutions business. During the period
between the first and third closings, the Company will continue to
record revenues and operating income for the European Union and
United Kingdom operations, but it will pay the Buyer a measure of
the profits from these operations, adjusted for other charges, as
contractually agreed, and this expense is recognized in Other
income/(expense), net. Therefore, the Company believes that
providing this information enhances investors' understanding of the
profitability of the Company's remaining businesses. The Company
has also excluded the gain on the sale, net of related taxes from
its first quarter 2022 results and the 2022 adjusted outlook, as
management believes that excluding the impact from the gain on sale
of the Business Solutions business will provide investors with a
clearer and more meaningful comparison of results in 2022 and
future periods. These financial measures are non-GAAP measures and
should not be considered a substitute for the GAAP measures.
(c)
Represents the impact from
expenses incurred in connection with the Company's acquisition and
divestiture activity, including for the review and closing of these
transactions. The Company believes that, by excluding the effects
of these charges that can impact operating trends, management and
investors are provided with a measure that increases the
comparability of the Company's underlying operating results.
(d)
Represents the exit costs
incurred in connection with the divestiture of the Business
Solutions business and the suspension of operations in Russia and
Belarus, primarily related to severance and non-cash impairments of
property and equipment, an operating lease right-of-use asset, and
other intangible assets. While certain of the expenses are
identifiable to the Company's segments, the expenses are not
included in the measurement of segment operating income provided to
the Chief Operating Decision Maker for purposes of performance
assessment and resource allocation. These expenses are therefore
excluded from the Company's segment operating income results. These
expenses have been excluded from operating income, the effective
tax rate, and diluted earnings per share, net of related taxes.
Additionally, the outlook metrics have been adjusted to exclude
these costs, net of related taxes where applicable. The Company
believes that, by excluding the effects of these charges that can
impact operating trends, management and investors are provided with
a measure that increases the comparability of the Company's
underlying operating results.
(e)
Represents non-cash reversals of
significant uncertain tax positions. The Company believes excluding
these reversals provides a more meaningful comparison of results to
the historical periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221018006332/en/
Media Relations: Claire Treacy media@westernunion.com
Investor Relations: Tom Hadley
WesternUnion.IR@westernunion.com
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