- Q1 GAAP revenue of $1.04 billion, down 10% on a reported
basis, or 1% on an adjusted basis
- GAAP EPS of $0.40, a decrease of 46% year-over-year;
Adjusted EPS of $0.43, a decrease of 16% year-over-year
- GAAP operating margin of 19.7%, a decrease of 80 bps
year-over-year; Adjusted operating margin of 20.5%, a decrease of
130 bps year-over-year
- New branded digital go-to-market strategy continued momentum
in Q1 with new customers up 14% and transactions up 7% globally,
while U.S. outbound new customers were up 21% and transactions were
up 11% 1
The Western Union Company (the “Company”) (NYSE: WU) today
reported first quarter 2023 results.
The Company’s first quarter revenue of $1.04 billion declined
10% on a reported basis, or 1% 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, while Argentina inflation benefited revenue by
approximately two percentage points. Softness in the retail money
transfer business as well as the impact of promotional pricing
activities related to the Company’s new branded digital
go-to-market strategy was partially offset by Other, which includes
the Company’s bill payments businesses and retail money order.
GAAP EPS in the first quarter was $0.40 compared to $0.74 in the
prior year period. The year-over-year decrease in GAAP EPS was
primarily due to the partial recognition of the Business Solutions
gain in the prior year period.
Adjusted EPS in the first quarter was $0.43 compared to $0.51 in
the prior year period. The year-over-year decline in adjusted EPS
was driven by lower operating profit due to a $0.09 contribution
from Business Solutions, Russia, and Belarus in the prior year
period, partially offset by lower share count.
“I am pleased to say we exceeded our expectations in the first
quarter,” said Devin McGranahan, President and Chief Executive
Officer of Western Union. “This was achieved through momentum
created by our 'Evolve 2025' strategic initiatives, strength in our
Middle East business, and the Company’s remaining business
performing in-line with our expectations.”
McGranahan added, “While revenue remained below our long-term
aspirations for the Company, we were pleased to see a significant
improvement in trajectory relative to the fourth quarter in many
key markets around the world. We are particularly pleased with the
ongoing momentum in our digital business with 14% growth in our new
branded digital customer base, which accelerated global branded
digital transaction growth to 7%. We remain focused on driving our
'Evolve 2025' strategy to become the leading provider of branded
accessible financial services serving aspiring populations around
the world.”
____________________ Note: for a full reconciliation between GAAP
and non-GAAP metrics, please see the “Non-GAAP Measures” section of
this press release.
1 New branded digital customer growth
excludes the impact of Russia and Belarus
Q1 Business Results
- C2C revenues declined 6% on a reported basis, or 5% constant
currency, while transactions declined 6% compared to the prior year
period. The suspension of operations in Russia and Belarus
negatively impacted C2C revenue and transactions by three
percentage points and six percentage points, respectively.
Regionally, softness in Europe & CIS, North America, and APAC
was partially offset by continued strength in LACA and strength in
MEASA led by Iraq.
- Branded digital revenue declined 7% on a reported basis, or 6%
constant currency, and represented 22% and 29% of total C2C
revenues and transactions, respectively. Transactions grew 7% in
the quarter driven by the Company’s new go-to-market strategy. The
Company expects that revenue will be adversely impacted in the near
term related to its new go-to-market strategy, which includes
promotional pricing activities. The suspension of operations in
Russia and Belarus negatively impacted both branded digital revenue
and transactions by 2 percentage points in the quarter.
Q1 Financial Results
- GAAP operating margin in the quarter was 19.7%, compared to
20.5% in the prior year period. The adjusted operating margin was
20.5% compared to 21.8% in the prior year period. The decrease in
the adjusted operating margin was primarily due to increased
technology investment driven by the Company’s 'Evolve 2025'
strategy and lower revenue.
- The GAAP effective tax rate in the quarter was 16.1%, compared
to 19.0% in the prior year period, with the decrease primarily due
to the effects of the sale of Business Solutions offset by discrete
expenses in the current period. The adjusted effective tax rate was
13.5% in the quarter, compared to 13.0% in the prior year period,
with the increase primarily due to discrete expenses in the current
period.
- Cash flow from operating activities was $137 million compared
to $200 million in the prior year period due to timing of payments
related to expenses incurred in previous periods. The Company
returned $88 million to shareholders in the first quarter through
dividends.
2023 Outlook
Today, the Company reaffirmed its 2023 adjusted full year
financial outlook provided on February 7, 2023. The outlook assumes
no material changes in macroeconomic conditions, including changes
in foreign currencies or Argentina inflation.
The 2023 outlook is as follows:
GAAP
Adjusted
Revenue1
(9%) to (7%)
(4%) to (2%)
Operating Margin
18% to 20%
19% to 21%
EPS
$1.53 to $1.63
$1.55 to $1.65
1 Adjusted revenue is constant currency
excluding the impact of Argentina inflation and proforma for the
planned sale of Business Solutions
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.
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. Adjusted
constant currency revenue growth metrics exclude contributions from
Business Solutions. Adjusted operating profit metrics exclude the
following items, as applicable: contributions from Business
Solutions, operating expense redeployment program costs,
acquisition and divestiture costs, Russia and Belarus exit costs,
and Business Solutions exit costs. Adjusted effective tax rate and
adjusted earnings per share metrics exclude the following items and
the related taxes, as applicable: Business Solutions gain,
operating expense redeployment program costs, acquisition and
divestiture costs, Russia and Belarus exit costs, Business
Solutions exit costs, and the reversal of significant uncertain tax
positions.
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release. 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.
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.
Investor and Analyst Conference Call
and Presentation
The Company will host a conference call and webcast at 4:30 p.m.
ET today.
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 (719) 359-4580 fifteen minutes prior to the start of the call,
followed by the meeting ID, which is 920 8368 6498 and the
passcode, which is 123540. 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 920
8368 6498 and the passcode, which is 123540.
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 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, 2022. 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 or customer experience, 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 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; our ability to attract and retain
qualified key employees and to manage our workforce successfully;
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; 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,
immigration, and sustainability reporting including climate-related
reporting; 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 committed to helping
people around the world who aspire to build financial futures for
themselves, their loved ones and their communities. Our leading
cross-border, cross-currency money movement, payments and digital
financial services empower consumers, businesses, financial
institutions and governments—across more than 200 countries and
territories and nearly 130 currencies—to connect with billions of
bank accounts, millions of digital wallets and cards, and a global
footprint of hundreds of thousands of retail locations. Our goal is
to offer accessible financial services that help people and
communities prosper. For more information, visit
www.westernunion.com.
WU-G
THE WESTERN UNION
COMPANY
KEY STATISTICS
(Unaudited)
Notes*
1Q22
2Q22
3Q22
4Q22
FY2022
1Q23
Consolidated Metrics
Revenues (GAAP) - YoY % change
(4)
%
(12)
%
(15)
%
(15)
%
(12)
%
(10)
%
Adjusted revenues (non-GAAP) - YoY % change
(a)
(1)
%
(4)
%
(6)
%
(6)
%
(4)
%
(1)
%
Operating margin (GAAP)
20.5
%
23.2
%
21.3
%
13.9
%
19.8
%
19.7
%
Adjusted operating margin (non-GAAP)
(b)
21.8
%
23.3
%
20.6
%
15.8
%
20.4
%
20.5
%
Adjusted EBITDA margin (non-GAAP)
(b)
26.2
%
27.5
%
24.9
%
20.2
%
24.7
%
25.1
%
Consumer-to-Consumer (C2C) Segment Metrics
Revenues (GAAP) - YoY % change
(5)
%
(9)
%
(11)
%
(11)
%
(9)
%
(6)
%
Adjusted revenues (non-GAAP) - YoY % change
(f)
(3)
%
(6)
%
(8)
%
(9)
%
(6)
%
(5)
%
Transactions (in millions)
69.7
68.2
66.9
69.3
274.1
65.3
Transactions - YoY % change
(4)
%
(13)
%
(12)
%
(12)
%
(10)
%
(6)
%
Cross-border principal, as reported - YoY % change
(3)
%
(12)
%
(13)
%
(12)
%
(10)
%
(3)
%
Cross-border principal (constant currency) - YoY % change
(g)
(1)
%
(9)
%
(9)
%
(9)
%
(7)
%
(1)
%
Operating margin
20.7
%
22.0
%
19.7
%
14.1
%
19.2
%
18.9
%
Branded Digital revenues (GAAP) - YoY % change
(gg)
4
%
(1)
%
(8)
%
(8)
%
(3)
%
(7)
%
Branded Digital foreign currency translation impact
(i)
1
%
2
%
3
%
2
%
2
%
1
%
Adjusted Branded Digital revenues (non-GAAP) - YoY % change
(gg)
5
%
1
%
(5)
%
(6)
%
(1)
%
(6)
%
Branded Digital transactions - YoY % change
(gg)
0
%
(3)
%
(1)
%
2
%
0
%
7
%
C2C Segment Regional Metrics - YoY % change
NA region revenues (GAAP)
(aa), (bb)
(1)
%
(2)
%
(5)
%
(7)
%
(4)
%
(8)
%
NA region foreign currency translation impact
(i)
0
%
0
%
0
%
0
%
0
%
0
%
Adjusted NA region revenues (non-GAAP)
(aa), (bb)
(1)
%
(2)
%
(5)
%
(7)
%
(4)
%
(8)
%
NA region transactions
(aa), (bb)
(6)
%
(6)
%
(5)
%
(2)
%
(5)
%
1
%
EU & CIS region revenues (GAAP)
(aa), (cc)
(14)
%
(21)
%
(23)
%
(23)
%
(20)
%
(16)
%
EU & CIS region foreign currency translation impact
(i)
4
%
5
%
7
%
6
%
5
%
3
%
Adjusted EU & CIS region revenues (non-GAAP)
(aa), (cc)
(10)
%
(16)
%
(16)
%
(17)
%
(15)
%
(13)
%
EU & CIS region transactions
(aa), (cc)
(7)
%
(30)
%
(32)
%
(31)
%
(25)
%
(23)
%
MEASA region revenues (GAAP)
(aa), (dd)
2
%
(4)
%
(5)
%
(9)
%
(4)
%
5
%
MEASA region foreign currency translation impact
(i)
1
%
1
%
2
%
2
%
2
%
1
%
Adjusted MEASA region revenues (non-GAAP)
(aa), (dd)
3
%
(3)
%
(3)
%
(7)
%
(2)
%
6
%
MEASA region transactions
(aa), (dd)
5
%
(3)
%
(1)
%
(5)
%
(1)
%
(3)
%
LACA region revenues (GAAP)
(aa), (ee)
2
%
2
%
0
%
11
%
4
%
15
%
LACA region foreign currency translation impact
(i)
3
%
2
%
4
%
2
%
3
%
2
%
Adjusted LACA region revenues (non-GAAP)
(aa), (ee)
5
%
4
%
4
%
13
%
7
%
17
%
LACA region transactions
(aa), (ee)
2
%
4
%
3
%
8
%
5
%
9
%
APAC region revenues (GAAP)
(aa), (ff)
(6)
%
(10)
%
(16)
%
(20)
%
(13)
%
(8)
%
APAC region foreign currency translation impact
(i)
3
%
4
%
5
%
6
%
4
%
3
%
Adjusted APAC region revenues (non-GAAP)
(aa), (ff)
(3)
%
(6)
%
(11)
%
(14)
%
(9)
%
(5)
%
APAC region transactions
(aa), (ff)
(13)
%
(11)
%
(11)
%
(12)
%
(12)
%
(2)
%
% of C2C Revenue
NA region revenues
(aa), (bb)
39
%
40
%
40
%
39
%
40
%
38
%
EU & CIS region revenues
(aa), (cc)
29
%
28
%
28
%
27
%
28
%
26
%
MEASA region revenues
(aa), (dd)
17
%
16
%
16
%
16
%
16
%
19
%
LACA region revenues
(aa), (ee)
9
%
10
%
10
%
12
%
10
%
11
%
APAC region revenues
(aa), (ff)
6
%
6
%
6
%
6
%
6
%
6
%
Branded Digital revenues
(aa), (gg)
22
%
22
%
21
%
21
%
22
%
22
%
Other (primarily bill payments businesses in Argentina and the
United States and money orders)
Revenues (GAAP) - YoY % change
8
%
19
%
0
%
20
%
12
%
23
%
Operating margin
31.7
%
40.1
%
33.4
%
35.5
%
35.4
%
38.6
%
% of Total Company Revenue (GAAP)
Consumer-to-Consumer segment revenues
86
%
90
%
90
%
90
%
89
%
91
%
Business Solutions segment revenues
8
%
3
%
4
%
3
%
5
%
1
%
Other revenues
6
%
7
%
6
%
7
%
6
%
8
%
____________________ * See the “Notes to Key Statistics” section of
the press release for the applicable Note references and the
reconciliation of non-GAAP financial measures, unless already
reconciled herein.
THE WESTERN UNION
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share
amounts)
Three Months Ended
March 31,
2023
2022
% Change
Revenues $
1,036.9
$
1,155.7
(10)
%
Expenses: Cost of services
629.5
655.1
(4)
%
Selling, general, and administrative
202.7
263.1
(23)
%
Total expenses
832.2
918.2
(9)
%
Operating income
204.7
237.5
(14)
%
Other income/(expense): Gain on divestiture of business (a)
—
151.4
(b)
Interest income
3.2
0.6
(b)
Interest expense
(25.0
)
(24.8
)
1
%
Other expense, net
(1.9
)
(2.5
)
(19)
%
Total other income/(expense), net
(23.7
)
124.7
(b)
Income before income taxes
181.0
362.2
(50)
%
Provision for income taxes
29.2
68.9
(58)
%
Net income $
151.8
$
293.3
(48)
%
Earnings per share: Basic $
0.41
$
0.75
(45)
%
Diluted $
0.40
$
0.74
(46)
%
Weighted-average shares outstanding: Basic
374.4
393.1
Diluted
375.5
394.5
____________________
(a)
On March 1, 2022 and December 31,
2022, the Company completed the first and second closes,
respectively, of the sale of its Business Solutions business to
Goldfinch Partners LLC and The Baupost Group LLC (collectively, the
"Buyer"), and received cash consideration of $887.2 million, net of
cash divested, subject to the remaining close and regulatory
capital adjustments. The first closing excluded the operations in
the European Union and the United Kingdom and the second closing
included the United Kingdom operations. The third closing is
expected to occur in the second quarter of 2023 and includes the
European Union operations.
(b)
Calculation not meaningful.
THE WESTERN UNION
COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in millions, except per share
amounts)
March 31,
December 31,
2023
2022
Assets Cash and cash equivalents $
1,228.6
$
1,285.9
Settlement assets
3,386.8
3,486.8
Property and equipment, net of accumulated depreciation of $522.7
and $512.8, respectively
103.1
109.6
Goodwill
2,034.6
2,034.6
Other intangible assets, net of accumulated amortization of $637.2
and $616.3, respectively
440.2
457.9
Other assets
790.4
859.9
Assets held for sale (a)
249.8
261.6
Total assets $
8,233.5
$
8,496.3
Liabilities and stockholders' equity Liabilities: Accounts
payable and accrued liabilities $
409.4
$
464.0
Settlement obligations
3,386.8
3,486.8
Income taxes payable
742.2
725.3
Deferred tax liability, net
162.7
158.5
Borrowings
2,462.7
2,616.8
Other liabilities
346.2
384.6
Liabilities associated with assets held for sale (a)
170.7
182.5
Total liabilities
7,680.7
8,018.5
Stockholders' equity: Preferred stock, $1.00 par value; 10
shares authorized; no shares issued
—
—
Common stock, $0.01 par value; 2,000 shares authorized; 374.4
shares and 373.5 shares issued and outstanding as of March 31, 2023
and December 31, 2022, respectively
3.7
3.7
Capital surplus
1,004.1
995.9
Accumulated deficit
(296.8
)
(353.9
)
Accumulated other comprehensive loss
(158.2
)
(167.9
)
Total stockholders' equity
552.8
477.8
Total liabilities and stockholders' equity $
8,233.5
$
8,496.3
____________________
(a)
Includes balances associated with
the Company’s Business Solutions business, which were held for sale
as of March 31, 2023 and December 31, 2022, respectively.
THE WESTERN UNION COMPANY CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (in
millions)
Three Months Ended
March 31,
2023
2022
Cash flows from operating activities Net income $
151.8
$
293.3
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
10.2
11.3
Amortization
36.4
35.5
Gain on divestiture of business, excluding transaction costs
—
(155.8
)
Other non-cash items, net
19.3
22.9
Increase/(decrease) in cash, excluding the effects of divestitures,
resulting from changes in: Other assets
(28.1
)
(93.2
)
Accounts payable and accrued liabilities
(62.2
)
36.0
Income taxes payable
17.2
56.2
Other liabilities
(7.3
)
(6.2
)
Net cash provided by operating activities
137.3
200.0
Cash flows from investing activities Payments for
capitalized contract costs
(31.0
)
(6.9
)
Payments for internal use software
(19.6
)
(12.6
)
Purchases of property and equipment
(6.8
)
(10.3
)
Purchases of settlement investments
(124.7
)
(178.4
)
Proceeds from the sale of settlement investments
22.2
71.6
Maturities of settlement investments
22.4
37.4
Purchases of non-settlement investments
—
(250.0
)
Proceeds from the sale of non-settlement investments
100.0
—
Proceeds from divestiture, net of cash divested
—
896.1
Other investing activities
1.1
(5.9
)
Net cash provided by/(used in) investing activities
(36.4
)
541.0
Cash flows from financing activities Cash dividends and
dividend equivalents paid
(88.1
)
(91.8
)
Common stock repurchased
(5.1
)
(154.4
)
Net repayments of commercial paper
(155.0
)
(175.0
)
Principal payments on borrowings
—
(300.0
)
Proceeds from exercise of options
0.3
8.9
Net change in settlement obligations
109.1
(80.4
)
Other financing activities
(0.2
)
—
Net cash used in financing activities
(139.0
)
(792.7
)
Net change in cash and cash equivalents, including settlement, and
restricted cash
(38.1
)
(51.7
)
Cash and cash equivalents, including settlement, and restricted
cash at beginning of period
2,040.7
2,110.9
Cash and cash equivalents, including settlement, and restricted
cash at end of period $
2,002.6
$
2,059.2
March 31,
2023
2022
Reconciliation of balance sheet cash and cash equivalents to
cash flows: Cash and cash equivalents on balance sheet $
1,228.6
$
1,295.8
Settlement cash and cash equivalents
737.1
685.7
Restricted cash in Other assets
36.9
24.6
Cash and cash equivalents included in Assets held for sale
—
53.1
Cash and cash equivalents, including settlement, and restricted
cash at end of period $
2,002.6
$
2,059.2
THE WESTERN UNION
COMPANY
SUMMARY SEGMENT DATA
(Unaudited)
(in millions, unless indicated
otherwise)
Three Months Ended
March 31,
2023
2022
% Change
Revenues: Consumer-to-Consumer $
938.3
$
999.0
(6)
%
Business Solutions (a)
15.4
89.1
(83)
%
Other (b)
83.2
67.6
23
%
Total consolidated revenues $
1,036.9
$
1,155.7
(10)
%
Segment operating income: Consumer-to-Consumer $
177.8
$
207.2
(14)
%
Business Solutions (a)
1.9
27.5
(93)
%
Other (b)
32.1
21.5
50
%
Total segment operating income
211.8
256.2
(17)
%
Russia/Belarus exit costs (c)
—
(11.0
)
(e)
Business Solutions exit costs (c)
—
(7.7
)
(e)
Operating expense redeployment program costs (d)
(7.1
)
—
(e)
Total consolidated operating income $
204.7
$
237.5
(14)
%
Segment operating income margin Consumer-to-Consumer
18.9
%
20.7
%
(1.8)
%
Business Solutions (a)
12.7
%
30.8
%
(18.1)
%
Other (b)
38.6
%
31.7
%
6.9
%
____________________
(a)
On August 4, 2021, the Company
entered into an agreement to sell its Business Solutions business
to the Buyer. The sale will be completed in three closings, the
first of which occurred on March 1, 2022. The second occurred on
December 31, 2022 and the third is expected in the second quarter
of 2023. The remaining operations of the Business Solutions
business continue to be included in Revenues and Operating income
until closing. During the period between the first and third
closings, the Company is required to pay the Buyer a measure of
profit from these operations, while owned by the Company, adjusted
for other charges, as contractually agreed, which was included in
Other expense, net in the Condensed Consolidated Statements of
Income.
(b)
Other primarily includes the
Company’s bill payment services which facilitate payments from
consumers to businesses and other organizations and the Company’s
money order services.
(c)
Represents the exit costs
incurred in connection with the suspension of operations in Russia
and Belarus and the divestiture of the Business Solutions
business.
(d)
Represents severance, expenses
associated with streamlining the Company's organizational and legal
structure, and other expenses associated with the Company's program
to redeploy expenses in its cost base through optimizations in
vendor management, real estate, marketing, and people strategy, as
previously announced in October 2022.
(e)
Calculation not meaningful.
THE WESTERN UNION COMPANY NOTES TO
KEY STATISTICS (Unaudited) (in millions, unless
indicated otherwise)
Western Union’s management believes the non-GAAP financial
measures presented within this press release and related tables
provide meaningful supplemental information regarding the Company’s
results to assist management, investors, analysts, and others in
understanding the Company’s financial results and to better analyze
operating, profitability, and other financial performance trends in
the Company’s underlying business because they provide consistency
and comparability to prior periods or eliminate currency
volatility, increasing the comparability of the Company's
underlying results and trends.
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, where not previously reconciled
above.
Notes
1Q22
2Q22
3Q22
4Q22
FY2022
1Q23
Consolidated Metrics
(a)
Revenues (GAAP)
$
1,155.7
$
1,138.3
$
1,089.6
$
1,091.9
$
4,475.5
$
1,036.9
Foreign currency translation impact
(i)
33.2
42.1
60.8
49.4
185.5
35.2
Revenues, constant currency (non-GAAP)
1,188.9
1,180.4
1,150.4
1,141.3
4,661.0
1,072.1
Less Business Solutions revenues, constant currency (non-GAAP)
(i), (l)
(91.9
)
(40.1
)
(50.4
)
(34.0
)
(216.4
)
(16.0
)
Adjusted revenues (non-GAAP)
$
1,097.0
$
1,140.3
$
1,100.0
$
1,107.3
$
4,444.6
$
1,056.1
Prior year revenues (GAAP)
$
1,210.0
$
1,289.7
$
1,286.3
$
1,284.8
$
5,070.8
$
1,155.7
Less prior year revenues from Business Solutions (GAAP)
(l)
(96.5
)
(99.3
)
(116.8
)
(109.2
)
(421.8
)
(89.1
)
Adjusted prior year revenues (non-GAAP)
$
1,113.5
$
1,190.4
$
1,169.5
$
1,175.6
$
4,649.0
$
1,066.6
Revenues (GAAP) - YoY % change
(4)
%
(12)
%
(15)
%
(15)
%
(12)
%
(10)
%
Revenues, constant currency (non-GAAP) - YoY% change
(2)
%
(8)
%
(11)
%
(11)
%
(8)
%
(7)
%
Adjusted revenues (non-GAAP) - YoY % change
(1)
%
(4)
%
(6)
%
(6)
%
(4)
%
(1)
%
(b)
Operating income (GAAP)
$
237.5
$
264.0
$
231.8
$
151.6
$
884.9
$
204.7
Acquisition and divestiture costs
(k)
3.3
0.9
0.4
1.6
6.2
—
Russia/Belarus exit costs
(m)
11.0
0.2
(0.6
)
(0.6
)
10.0
—
Business Solutions exit costs
(m)
7.7
—
—
—
7.7
—
Operating expense redeployment program costs
(o)
N/A
N/A
N/A
21.8
21.8
7.1
Less Business Solutions operating income
(l)
(26.5
)
(7.9
)
(15.6
)
(6.6
)
(56.6
)
(1.9
)
Adjusted operating income (non-GAAP)
$
233.0
$
257.2
$
216.0
$
167.8
$
874.0
$
209.9
Depreciation and amortization
46.8
45.9
44.7
46.4
183.8
46.6
Adjusted EBITDA (non-GAAP)
(j)
$
279.8
$
303.1
$
260.7
$
214.2
$
1,057.8
$
256.5
Operating margin (GAAP)
20.5
%
23.2
%
21.3
%
13.9
%
19.8
%
19.7
%
Adjusted operating margin (non-GAAP)
21.8
%
23.3
%
20.6
%
15.8
%
20.4
%
20.5
%
Adjusted EBITDA margin (non-GAAP)
26.2
%
27.5
%
24.9
%
20.2
%
24.7
%
25.1
%
(c)
Net income (GAAP)
$
293.3
$
194.0
$
173.9
$
249.4
$
910.6
$
151.8
Acquisition and divestiture costs
(k)
3.3
0.9
0.4
1.6
6.2
—
Business Solutions gain
(l)
(151.4
)
—
—
(96.9
)
(248.3
)
—
Business Solutions exit costs
(m)
7.7
—
—
—
7.7
—
Russia/Belarus exit costs
(m)
11.0
0.2
(0.6
)
(0.6
)
10.0
—
Operating expense redeployment program costs
(o)
N/A
N/A
N/A
21.8
21.8
7.1
Income tax benefit from reversal of significant uncertain tax
positions
(n)
N/A
N/A
(13.2
)
(68.5
)
(81.7
)
—
Income tax expense from other adjustments
(k), (l), (m), (o)
38.7
2.0
3.0
14.7
58.4
3.7
Adjusted net income (non-GAAP)
$
202.6
$
197.1
$
163.5
$
121.5
$
684.7
$
162.6
(d)
Effective tax rate (GAAP)
19
%
18
%
10
%
(15)
%
10
%
16
%
Reversal of significant uncertain tax positions
(n)
N/A
N/A
7
%
32
%
8
%
0
%
Other adjustments
(k), (l), (m), (o)
(6)
%
(1)
%
(2)
%
(2)
%
(3)
%
(2)
%
Adjusted effective tax rate (non-GAAP)
13
%
17
%
15
%
15
%
15
%
14
%
(e)
Diluted earnings per share (GAAP) ($- dollars)
$
0.74
$
0.50
$
0.45
$
0.65
$
2.34
$
0.40
Pretax impacts from the following:
Acquisition and divestiture costs
(k)
0.01
—
—
—
0.01
—
Business Solutions gain
(l)
(0.38
)
—
—
(0.25
)
(0.64
)
—
Business Solutions exit costs
(m)
0.02
—
—
—
0.02
—
Russia/Belarus exit costs
(m)
0.02
—
—
—
0.03
—
Operating expense redeployment program costs
(o)
N/A
N/A
N/A
0.06
0.06
0.02
Income tax expense/(benefit) impacts from the following:
Reversal of significant uncertain tax positions
(n)
N/A
N/A
(0.03
)
(0.18
)
(0.21
)
—
Other adjustments
(k), (l), (m), (o)
0.10
0.01
—
0.04
0.15
0.01
Adjusted diluted earnings per share (non-GAAP) ($- dollars)
$
0.51
$
0.51
$
0.42
$
0.32
$
1.76
$
0.43
C2C Segment Metrics
(f)
Revenues (GAAP)
$
999.0
$
1,026.9
$
982.4
$
985.2
$
3,993.5
$
938.3
Foreign currency translation impact
(i)
20.8
28.1
37.1
30.9
116.9
13.8
Revenues, constant currency (non-GAAP)
$
1,019.8
$
1,055.0
$
1,019.5
$
1,016.1
$
4,110.4
$
952.1
Prior year revenues (GAAP)
$
1,050.9
$
1,127.1
$
1,104.5
$
1,111.5
$
4,394.0
$
999.0
Revenues (GAAP) - YoY % change
(5)
%
(9)
%
(11)
%
(11)
%
(9)
%
(6)
%
Adjusted revenues (non-GAAP) - YoY % change
(3)
%
(6)
%
(8)
%
(9)
%
(6)
%
(5)
%
(g)
Cross-border principal, as reported ($- billions)
$
23.8
$
23.4
$
23.0
$
23.4
$
93.6
$
23.0
Foreign currency translation impact
(i)
0.5
0.9
1.1
0.8
3.3
0.5
Cross-border principal, constant currency ($- billions)
$
24.3
$
24.3
$
24.1
$
24.2
$
96.9
$
23.5
Prior year cross-border principal, as reported ($- billions)
$
24.5
$
26.6
$
26.5
$
26.5
$
104.1
$
23.8
Cross-border principal, as reported - YoY % change
(3)
%
(12)
%
(13)
%
(12)
%
(10)
%
(3)
%
Cross-border principal, constant currency - YoY % change
(1)
%
(9)
%
(9)
%
(9)
%
(7)
%
(1)
%
Business Solutions Segment Metrics
(h)
Revenues (GAAP)
$
89.1
$
35.7
$
42.6
$
29.5
$
196.9
$
15.4
Foreign currency translation impact
(i)
2.8
4.4
7.8
4.5
19.5
0.6
Revenues, constant currency (non-GAAP)
$
91.9
$
40.1
$
50.4
$
34.0
$
216.4
$
16.0
Prior year revenues (GAAP)
$
96.5
$
99.3
$
116.8
$
109.2
$
421.8
$
89.1
Revenues (GAAP) - YoY % change
(8)
%
(64)
%
(63)
%
(73)
%
(53)
%
(83)
%
Adjusted revenues (non-GAAP) - YoY % change
(5)
%
(60)
%
(57)
%
(69)
%
(49)
%
(82)
%
2023 Consolidated Outlook Metrics
Notes
Range Revenues (GAAP) - YoY % change
(9)
%
(7)
%
Foreign currency translation impact
(i)
1
%
1
%
Impact from Business Solutions
(l)
4
%
4
%
Revenues, constant currency, excluding Business Solutions
(non-GAAP) - YoY % change
(4)
%
(2)
%
Range Operating margin (GAAP)
18
%
20
%
Operating expense redeployment program costs
(o)
1
%
1
%
Impact from acquisition and divestiture costs
(k)
0
%
0
%
Impact from Business Solutions
(l)
0
%
0
%
Operating margin, adjusted (non-GAAP)
19
%
21
%
Range Earnings per share (GAAP) ($- dollars)
$
1.53
$
1.63
Gain on the sale of Business Solutions
(l)
(0.06
)
(0.06
)
Operating expense redeployment program costs
(o)
0.08
0.08
Income taxes associated with these adjustments
(l), (o)
—
—
Earnings per share, adjusted (non-GAAP) ($- dollars)
$
1.55
$
1.65
Non-GAAP related notes:
(i)
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.
(j)
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.
(k)
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.
(l)
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") and received cash consideration of $887.2 million, net of
cash divested, subject to the remaining close and regulatory
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, which
includes the United Kingdom operations, occurred on December 31,
2022 and resulted in a gain of $96.9 million. The third closing,
which includes the European Union operations, is currently expected
in the second 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. The operations of the
Business Solutions business to be sold in the third closing will
continue to be included in Revenues and Operating income after the
second closing. However, between the first and third closings, the
Company is required to pay the Buyer a measure of the profits from
these operations, while owned by the Company, adjusted for other
charges, and this expense is recognized in Other 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 results.
(m)
Represents the exit costs
incurred in connection with the Company's suspension of its
operations in Russia and Belarus and the divestiture of the
Business Solutions business, 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
have been excluded from the Company's operating income, the
effective tax rate, and diluted earnings per share, net of related
taxes.
(n)
Represents non-cash reversals of
significant uncertain tax positions. While the Company continues to
reverse its uncertain tax positions upon settlements with taxing
authorities, the lapse of the applicable statute of limitations,
and other events, the Company has excluded certain reversals of
uncertain tax positions in the third and fourth quarter of 2022
because of the significance of these reversals on its reported
results.
(o)
Represents severance, expenses
associated with streamlining the Company's organizational and legal
structure, and other expenses associated with the Company's program
to redeploy expenses in its cost base through optimizations in
vendor management, real estate, marketing, and people strategy as
previously announced in October 2022. Previous expenses incurred
under the program included non-cash impairments of operating lease
right-of-use assets and property and equipment. 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.
Other
notes:
(aa)
Geographic split for transactions
and revenue, including transactions initiated digitally, as earlier
defined, is determined entirely based upon the region where the
money transfer is initiated.
(bb)
Represents the North America
(United States and Canada) (“NA”) region of the Company's
Consumer-to-Consumer segment.
(cc)
Represents the Europe and the
Commonwealth of Independent States (“EU & CIS”) region of the
Company's Consumer-to-Consumer segment.
(dd)
Represents the Middle East,
Africa, and South Asia (“MEASA”) region of the Company's
Consumer-to-Consumer segment, including India and certain South
Asian countries, which consist of Bangladesh, Bhutan, Maldives,
Nepal, and Sri Lanka.
(ee)
Represents the Latin America and
the Caribbean (“LACA”) region of the Company’s Consumer-to-Consumer
segment, including Mexico.
(ff)
Represents the East Asia and
Oceania (“APAC”) region of the Company’s Consumer-to-Consumer
segment.
(gg)
Represents transactions conducted
and funded through websites and mobile applications marketed under
the Company’s brands (“Branded Digital”).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502005482/en/
Media Relations: Claire Treacy media@westernunion.com
Investor Relations: Tom Hadley
WesternUnion.IR@westernunion.com
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