Revenue $1.4 Billion; Earnings Per Share
$0.42
2016 EPS Outlook Updated to a Range of $1.60
to $1.70
Company Continues to Deliver Solid
Results
The Western Union Company (NYSE: WU) today reported financial
results for the 2016 second quarter and updated its full year
financial outlook, which was previously reported on May 3,
2016.
In the second quarter, reported revenues declined 1%, or
increased 3% on a constant currency basis, compared to the prior
year period. Earnings per share increased to $0.42, up from $0.36
in the prior year period on a GAAP basis or $0.41 excluding the
prior year Paymap settlement charge. The current period EPS
includes a negative $0.02 impact from a $15 million accrual ($10
million after-tax) related to a legal matter.
The Company updated its full year financial outlook, narrowing
EPS to a range of $1.60 to $1.70, compared to the previous range of
$1.58 to $1.70. The current outlook reflects the benefit of a lower
expected effective tax rate, partially offset by the legal matter
accrual.
“We delivered another solid quarter, led by strong growth from
our digital business,” said President and Chief Executive
Officer Hikmet Ersek. “While international markets are mixed,
our U.S. money transfer business continued to provide steady
performance, helping drive good profitability and cash flow.”
Ersek added, “Strategically, we continue to make good
progress. We released upgraded mobile apps for westernunion.com in
eight markets and expanded our account payout capabilities to be
able to reach billions of accounts in more than 50 countries. We
also activated thousands of business customers on our new WU EDGE
digital platform, and continued to invest in enhancing our
technology infrastructure and compliance programs across the
company.”
Executive Vice President and Chief Financial Officer Raj
Agrawal stated, “Operating margins remain healthy, and strong
cash flow generation continues to allow us to return significant
funds to shareholders. Given the macro challenges in many parts of
the world, we are pleased with our results and outlook.”
Consumer-to-Consumer (C2C) revenues declined 1% in the quarter,
or increased 2% on a constant currency basis, on transaction growth
of 3%. Westernunion.com C2C revenues increased 19% (or 20% constant
currency) on transaction growth of 25%, and represented 8% of total
C2C revenue in the quarter.
Consumer-to-Business (C2B) revenues declined 2% in the quarter,
or increased 12% on a constant currency basis. The depreciation of
the Argentine peso caused the decline in reported revenues, while
constant currency growth was led by the Argentina walk-in and U.S.
electronic bill payments businesses.
Western Union Business Solutions revenues increased 3%, or 6% on
a constant currency basis, driven by strong growth in Europe.
Operating margin in the quarter was 18.9%, including a negative
impact of 110 basis points from the legal matter accrual, which
relates to the Company’s consumer protection and anti-fraud
programs.
The operating margin was 18.1% in the second quarter of last
year, or 20.7% excluding the impact of the Paymap settlement
agreement. Other factors affecting the year-on-year change in
margins include incremental investment in technology and the
negative impact of foreign exchange, partially offset by reductions
in compensation related costs and other expenses.
The effective tax rate was 7.6%, which compares to 8.5% in the
prior year period, or 11.8% excluding the Paymap charge. The
current quarter rate included a positive impact of 180 basis points
from the legal matter accrual, and also benefitted from several
discrete items.
The Company returned $156 million to shareholders in the second
quarter, consisting of $78 million of share repurchases and $78
million of dividends. Year-to-date, cash flow from operating
activities totaled $486 million and $475 million has been returned
to shareholders through share repurchases and dividends.
2016 Full Year Outlook
The Company affirmed its full year 2016 outlooks for constant
currency revenue growth, operating profit margin, and operating
cash flow. The GAAP revenue outlook was decreased slightly to
reflect changes in several key foreign currencies against the U.S.
dollar. The impact on operating profit from the currency changes is
largely expected to be offset by incremental hedge benefits, with
hedge gains now projected at approximately $45 million compared to
approximately $40 million in the prior outlook.
The Company’s current outlook for the full year effective tax
rate is approximately 12%, compared to a mid-teens rate in the
prior outlook.
The outlook for GAAP earnings per share has been narrowed to a
range of $1.60 to $1.70, which primarily reflects the impact of the
lower effective tax rate and the legal matter accrual.
The updated outlook follows:
Revenue
- Low to mid-single digit constant
currency revenue increase, with the GAAP revenue change
approximately 400 basis points lower than constant currency
(previously 300 basis points)
Operating Profit Margin
- Operating margin of approximately
20%
Earnings per Share
- EPS in a range of $1.60 to $1.70
(previously $1.58 to $1.70)
Cash Flow
- Cash flow from operating activities of
approximately $1 billion. The cash flow outlook excludes
approximately $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 2016.
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release. In the C2C segment, the geographic split for transactions
and revenue, including transactions initiated through
westernunion.com, 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,
we split 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 transactions and revenue are
attributed to that region.
Prior to January 1, 2016, we reported westernunion.com as a
separate region with 100% of the corresponding transactions and
revenue attributed to that region, regardless of where the
transactions were paid out. Separate westernunion.com statistics
provided in the tables included with this press release maintain
that 100% allocation methodology. Prior period regional results
have been adjusted to include transactions initiated through
westernunion.com, as described in the preceding paragraph.
All amounts included in the supplemental tables to this press
release are rounded to the nearest tenth of a million, except as
otherwise noted. As a result, the percentage changes and margins
disclosed herein may not recalculate precisely using the rounded
amounts provided.
Non-GAAP Measures
Western Union presents a number of non-GAAP financial measures
because management believes that these metrics provide meaningful
supplemental information in addition to the GAAP metrics and
provide comparability and consistency to prior periods. Constant
currency results assume foreign revenues are translated from
foreign currencies to the U.S. dollar, net of the effect of foreign
currency hedges, at rates consistent with those in the prior
year.
These non-GAAP financial measures include revenue change
constant currency adjusted; Consumer-to-Consumer segment revenue
change constant currency adjusted; Consumer-to-Consumer segment
westernunion.com revenue change constant currency adjusted;
Consumer-to-Business segment revenue change constant currency
adjusted; Business Solutions segment revenue change constant
currency adjusted; operating income margin, excluding Paymap
settlement agreement; effective tax rate, excluding Paymap
settlement agreement; diluted earnings per share, excluding Paymap
settlement agreement; 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 9233641.
The conference call and accompanying slides will be available
via webcast at http://ir.westernunion.com. Registration for the
event is required, so please register at least five minutes prior
to the scheduled start time.
A webcast replay will be available at
http://ir.westernunion.com.
Please note: All statements made by Western Union officers on
this call are the property of Western Union and subject to
copyright protection. Other than the replay, Western Union has not
authorized, and disclaims responsibility for, any recording, replay
or distribution of any transcription of this call.
Safe Harbor Compliance Statement for Forward-Looking
Statements
This press release contains certain statements that are
forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are not guarantees
of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Actual outcomes and
results may differ materially from those expressed in, or implied
by, our forward-looking statements. Words such as "expects,"
"intends," "anticipates," "believes," "estimates," "guides,"
"provides guidance," "provides outlook" and other similar
expressions or future or conditional verbs such as "may," "will,"
"should," "would," "could," and "might" are intended to identify
such forward-looking statements. Readers of this press release of
The Western Union Company (the "Company," "Western Union," "we,"
"our" or "us") should not rely solely on the forward-looking
statements and should consider all uncertainties and risks
discussed in the "Risk Factors" section and throughout the Annual
Report on Form 10-K for the year ended December 31, 2015.
The statements are only as of the date they are made, and the
Company undertakes no obligation to update any forward-looking
statement.
Possible events or factors that could cause results or
performance to differ materially from those expressed in our
forward-looking statements include the following: (i) events
related to our business and industry, such as: changes in general
economic conditions and economic conditions in the regions and
industries in which we operate, including global economic and trade
downturns, or significantly slower growth or declines in the money
transfer, payment service, and other markets in which we operate,
including downturns or declines related to interruptions in
migration patterns, or non-performance by our banks, lenders,
insurers, or other financial services providers; failure to compete
effectively in the money transfer and payment service industry,
including among other things, with respect to price, with global
and niche or corridor money transfer providers, banks and other
money transfer and payment service providers, including electronic,
mobile and Internet-based services, card associations, and
card-based payment providers, and with digital currencies and
related protocols, and other innovations in technology and business
models; deterioration in customer confidence in our business, or in
money transfer and payment service providers generally; our ability
to adopt new technology and develop and gain market acceptance of
new and enhanced services in response to changing industry and
consumer needs or trends; changes in, and failure to manage
effectively, exposure to foreign exchange rates, including the
impact of the regulation of foreign exchange spreads on money
transfers and payment transactions; any material breach of
security, including cybersecurity, or safeguards of or
interruptions in any of our systems or those of our vendors or
other third parties; cessation of or defects in various services
provided to us by third-party vendors; mergers, acquisitions and
integration of acquired businesses and technologies into our
Company, and the failure to realize anticipated financial benefits
from these acquisitions, and events requiring us to write down our
goodwill; 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; failure to manage credit and fraud risks
presented by our agents, clients and consumers; failure to maintain
our agent network and business relationships under terms consistent
with or more advantageous to us than those currently in place,
including due to increased costs or loss of business as a result of
increased compliance requirements or difficulty for us, our agents
or their subagents in establishing or maintaining relationships
with banks needed to conduct our services; decisions to change our
business mix; changes in tax laws, or their interpretation, and
unfavorable resolution of tax contingencies; adverse rating actions
by credit rating agencies; our ability to realize the
anticipated benefits from productivity and cost-savings and other
related initiatives, which may include decisions to downsize or to
transition operating activities from one location to another, and
to minimize any disruptions in our workforce that may result from
those initiatives; our ability to protect our brands and our other
intellectual property rights and to defend ourselves against
potential intellectual property infringement claims; our ability to
attract and retain qualified key employees and to manage our
workforce successfully; material changes in the market value or
liquidity of securities that we hold; restrictions imposed by our
debt obligations; (ii) events related to our regulatory and
litigation environment, such as: liabilities or loss of business
resulting from a failure by us, our agents or their subagents to
comply with laws and regulations and regulatory or judicial
interpretations thereof, including laws and regulations designed to
protect consumers, or detect and prevent money laundering,
terrorist financing, fraud and other illicit activity; increased
costs or loss of business due to regulatory initiatives and changes
in laws, regulations and industry practices and standards,
including changes in interpretations in the United States 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 requirements; 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 (the
“Dodd-Frank Act”), as well as regulations issued pursuant to it and
the actions of the Consumer Financial Protection Bureau and similar
legislation and regulations enacted by other governmental
authorities related to consumer protection; liabilities resulting
from litigation, including class-action lawsuits and similar
matters, including costs, expenses, settlements and judgments;
failure to comply with regulations and evolving industry standards
regarding consumer privacy and data use and security; effects of
unclaimed property laws; failure to maintain sufficient amounts or
types of regulatory capital or other restrictions on the use of our
working capital to meet the changing requirements of our regulators
worldwide; changes in accounting standards, rules and
interpretations or industry standards affecting our business; and
(iii) other events, such as: adverse tax consequences from our
spin-off from First Data Corporation; catastrophic events; and
management's ability to identify and manage these and other
risks.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global
payment services. Together with its Vigo, Orlandi Valuta, Pago
Facil and Western Union Business Solutions branded payment
services, Western Union provides consumers and businesses with
fast, reliable and convenient ways to send and receive money around
the world, to send payments and to purchase money orders. As of
June 30, 2016, 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
billions of accounts. In 2015, The Western Union Company completed
262 million consumer-to-consumer transactions worldwide, moving $82
billion of principal between consumers, and 508 million business
payments. For more information, visit www.westernunion.com.
WU-G
THE WESTERN UNION COMPANY KEY STATISTICS
(Unaudited) Notes* 2Q15
3Q15 4Q15 FY2015 1Q16 2Q16
YTD 2Q16 Consolidated Metrics Consolidated
revenues (GAAP) - YoY % change (2 )% (3 )% (2 )% (2 )% (2 )% (1 )%
(1 )% Consolidated revenues (constant currency) - YoY % change a 4
% 3 % 3 % 4 % 3 % 3 % 3 % Consolidated operating margin (GAAP) 18.1
% 21.8 % 20.4 % 20.2 % 19.9 % 18.9 % 19.4 % Consolidated operating
margin (excluding Paymap settlement agreement) b 20.7 % N/A N/A
20.9 % N/A N/A N/A
Consumer-to-Consumer (C2C) Segment
Revenues (GAAP) - YoY % change (3 )% (3 )% (3 )% (3 )% (2 )% (1 )%
(1 )% Revenues (constant currency) - YoY % change f 3 % 3 % 2 % 3 %
1 % 2 % 1 % Operating margin 23.3 % 25.5 % 24.0 % 24.0 % 22.7 %
21.5 % 22.1 % Transactions (in millions) 65.7 66.6 67.4
261.5 63.7 67.7 131.4 Transactions - YoY % change 3 % 2 % 3 % 3 % 3
% 3 % 3 % Total principal ($ - billions) $ 20.8 $ 20.9 $
20.4 $ 81.6 $ 19.1 $ 20.4 $ 39.5 Principal per transaction ($ -
dollars) $ 316 $ 315 $ 303 $ 312 $ 299 $ 301 $ 300 Principal per
transaction - YoY % change (7 )% (7 )% (6 )% (7 )% (5 )% (5 )% (5
)% Principal per transaction (constant currency) - YoY % change g
(1 )% 0 % (1 )% (1 )% (3 )% (4 )% (3 )% Cross-border
principal ($ - billions) $ 18.8 $ 18.9 $ 18.4 $ 73.6 $ 17.3 $ 18.5
$ 35.8 Cross-border principal - YoY % change (5 )% (6 )% (4 )% (5
)% (2 )% (1 )% (1 )% Cross-border principal (constant currency) -
YoY % change h 2 % 1 % 1 % 2 % 1 % 0 % 0 % North America
region revenues (GAAP) - YoY % change v, w 1 % 2 % 3 % 2 % 3 % 6 %
5 % North America region revenues (constant currency) - YoY %
change i, v, w 2 % 4 % 5 % 3 % 5 % 7 % 6 % North America region
transactions - YoY % change v, w 5 % 6 % 8 % 6 % 7 % 7 % 7 %
Europe and CIS region revenues (GAAP) - YoY % change v, x (8 )% (9
)% (7 )% (8 )% (3 )% (3 )% (3 )% Europe and CIS region revenues
(constant currency) - YoY % change j, v, x 3 % 0 % 1 % 2 % 0 % (1
)% (1 )% Europe and CIS region transactions - YoY % change v, x 2 %
(2 )% 3 % 2 % 3 % 3 % 3 % Middle East and Africa region
revenues (GAAP) - YoY % change v, y (4 )% (2 )% (4 )% (4 )% (4 )%
(4 )% (4 )% Middle East and Africa region revenues (constant
currency) - YoY % change k, v, y 2 % 3 % 0 % 1 % (1 )% (3 )% (2 )%
Middle East and Africa region transactions - YoY % change v, y 0 %
0 % (1 )% (1 )% (3 )% (5 )% (4 )% APAC region revenues
(GAAP) - YoY % change v, z (4 )% (7 )% (5 )% (5 )% (4 )% (3 )% (4
)% APAC region revenues (constant currency) - YoY % change l, v, z
1 % 0 % 0 % 0 % (1 )% (1 )% (1 )% APAC region transactions - YoY %
change v, z (1 )% (5 )% (4 )% (3 )% (4 )% (3 )% (3 )% LACA
region revenues (GAAP) - YoY % change v, aa 7 % 1 % (1 )% 3 % (5 )%
0 % (2 )% LACA region revenues (constant currency) - YoY % change
m, v, aa 14 % 8 % 5 % 10 % 1 % 6 % 4 % LACA region transactions -
YoY % change v, aa 8 % 8 % 8 % 8 % 11 % 12 % 11 %
International revenues - YoY % change bb (5 )% (7 )% (7 )% (6 )% (5
)% (4 )% (4 )% International transactions - YoY % change bb 1 % (2
)% 0 % 0 % 0 % 0 % 0 % International revenues - % of C2C segment
revenues bb 70 % 70 % 69 % 69 % 67 % 67 % 67 % United States
originated revenues - YoY % change cc 3 % 6 % 6 % 5 % 5 % 7 % 6 %
United States originated transactions - YoY % change cc 6 % 8 % 8 %
7 % 8 % 8 % 8 % United States originated revenues - % of C2C
segment revenues cc 30 % 30 % 31 % 31 % 33 % 33 % 33 %
westernunion.com revenues (GAAP) - YoY % change dd 22 % 22 % 21 %
21 % 16 % 19 % 17 % westernunion.com revenues (constant currency) -
YoY % change n, dd 28 % 28 % 25 % 26 % 18 % 20 % 19 %
westernunion.com transactions - YoY % change dd 27 % 25 % 28 % 26 %
25 % 25 % 25 %
% of Consumer-to-Consumer Revenue
Regional Revenues: North America region revenues v, w 27 % 27 % 27
% 27 % 28 % 28 % 28 % Europe and CIS region revenues v, x 26 % 26 %
27 % 26 % 26 % 26 % 26 % Middle East and Africa region revenues v,
y 21 % 21 % 20 % 21 % 20 % 20 % 20 % APAC region revenues v, z 15 %
15 % 15 % 15 % 15 % 15 % 15 % LACA region revenues v, aa 11 % 11 %
11 % 11 % 11 % 11 % 11 % westernunion.com revenues dd 6 % 6 % 7 % 6
% 7 % 8 % 8 %
Consumer-to-Business (C2B) Segment
Revenues (GAAP) - YoY % change 8 % 6 % 4 % 6 % (1 )% (2 )% (2 )%
Revenues (constant currency) - YoY % change o 12 % 10 % 9 % 11 % 12
% 12 % 12 % Operating margin (4.1 )% 16.4 % 11.9 % 10.8 % 14.6 %
11.5 % 13.1 % Operating margin (excluding Paymap settlement
agreement) p 18.3 % N/A N/A 16.3 % N/A N/A N/A
Business
Solutions (B2B) Segment Revenues (GAAP) - YoY % change (1 )% (4
)% 1 % (1 )% 1 % 3 % 2 % Revenues (constant currency) - YoY %
change q 9 % 6 % 8 % 7 % 6 % 6 % 6 % Operating margin (0.4 )% (2.7
)% 3.7 % 0.7 % 2.4 % 5.0 % 3.7 %
% of Total Company
Revenue Consumer-to-Consumer segment revenues 80 % 80 % 79 % 79
% 78 % 80 % 79 % Consumer-to-Business segment revenues 11 % 11 % 12
% 12 % 12 % 11 % 12 % Business Solutions segment revenues 7 % 7 % 7
% 7 % 8 % 7 % 7 % * See the "Notes to Key Statistics"
section of the press release for the applicable Note references and
the reconciliation of non-GAAP financial measures.
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (in millions, except per share amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2016 2015 % Change 2016
2015 % Change Revenues: Transaction
fees $ 961.3 $ 988.3 (3 )% $ 1,880.3 $ 1,936.9 (3 )% Foreign
exchange revenues 378.8 362.1 5
%
724.3 700.1 3
%
Other revenues 35.6 33.2 7
%
68.8 67.5 2
%
Total revenues 1,375.7 1,383.6 (1 )% 2,673.4 2,704.5 (1 )%
Expenses: Cost of services 821.9 799.4 3
%
1,601.3 1,571.2 2
%
Selling, general and administrative (a) 293.5
333.4 (12 )% 553.2 610.2 (9 )%
Total expenses 1,115.4 1,132.8 (2 )%
2,154.5 2,181.4 (1 )% Operating income
(b) 260.3 250.8 4
%
518.9 523.1 (1 )% Other income/(expense): Interest income 0.7 2.5
(70 )% 1.6 5.4 (70 )% Interest expense (41.0 ) (43.1 ) (5 )% (81.5
) (84.9 ) (4 )% Derivative gains, net 1.4 —
(c
)
1.9 1.0 94
%
Other income/(expense), net 1.1 (3.3 )
(c
)
(0.9 ) (5.1 ) (83 )% Total other expense, net
(37.8 ) (43.9 ) (14 )% (78.9 ) (83.6 ) (6 )%
Income before income taxes 222.5 206.9 8
%
440.0 439.5 0
%
Provision for income taxes 16.9 17.6 (4
)% 48.7 46.3 5
%
Net income $ 205.6 $ 189.3 9
%
$ 391.3 $ 393.2
0
%
Earnings per share: Basic $ 0.42 $ 0.37 14
%
$ 0.79 $ 0.76 4
%
Diluted $ 0.42 $ 0.36 17
%
$ 0.79 $ 0.75 5
%
Weighted-average shares outstanding: Basic 490.3 515.2 495.1 518.1
Diluted 493.0 519.8 498.1 522.5 Cash dividends declared per common
share $ 0.16 $ 0.155 3
%
$ 0.32 $ 0.31 3
%
__________ (a) For 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) For the three and six months ended June 30, 2016 compared to
the corresponding periods in the prior year, the strengthening of
the United States dollar compared to foreign currencies, net of the
impact of foreign currency hedges, negatively impacted operating
income by approximately $23 million and $40 million, respectively.
(c) Calculation not meaningful.
THE WESTERN UNION
COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in millions, except per share amounts)
June 30,
2016
December 31,
2015
Assets Cash and cash equivalents (a) $ 1,162.6 $ 1,315.9
Settlement assets 3,357.1 3,308.7 Property and equipment, net of
accumulated depreciation of $568.8 and $538.2, respectively 221.7
231.8 Goodwill 3,162.4 3,163.8 Other intangible assets, net of
accumulated amortization of $931.2 and $884.4, respectively 701.5
705.0 Other assets 789.6 724.0 Total
assets $ 9,394.9 $ 9,449.2
Liabilities and
Stockholders' Equity Liabilities: Accounts payable and accrued
liabilities $ 512.4 $ 606.6 Settlement obligations 3,357.1 3,308.7
Income taxes payable 213.2 211.5 Deferred tax liability, net 268.1
272.6 Borrowings 3,228.5 3,215.9 Other liabilities 501.2
429.0 Total liabilities 8,080.5 8,044.3
Stockholders' equity: Preferred stock, $1.00 par value; 10 shares
authorized; no shares issued — — Common stock, $0.01 par value;
2,000 shares authorized; 488.0 shares and 502.4 shares issued and
outstanding as of June 30, 2016 and December 31, 2015, respectively
4.9 5.0 Capital surplus 597.3 566.5 Retained earnings 877.2 977.3
Accumulated other comprehensive loss (165.0 ) (143.9
) Total stockholders' equity 1,314.4 1,404.9
Total liabilities and stockholders' equity $ 9,394.9
$ 9,449.2 __________ (a)
Approximately $850 million and $950
million was held by entities outside of the United States as ofJune
30, 2016 and December 31, 2015, respectively.
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in millions) Six
Months Ended
June 30,
2016 2015
Cash Flows From
Operating Activities Net income $ 391.3 $ 393.2 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation 36.3 32.6 Amortization 95.2 94.2 Other non-cash items,
net 42.3 24.9
Increase/(decrease) in cash resulting from
changes in:
Other assets 9.2 (57.6 ) Accounts payable and accrued liabilities
(99.5 ) (23.1 ) Income taxes payable 5.3 10.9 Other liabilities
5.5 (9.4 ) Net cash provided by operating
activities 485.6 465.7
Cash Flows From Investing Activities
Capitalization of contract costs (60.0 ) (74.7 ) Capitalization of
purchased and developed software (21.3 ) (20.8 ) Purchases of
property and equipment (27.4 ) (26.9 ) Purchases of non-settlement
related investments (34.9 ) (100.0 ) Proceeds from maturity of
non-settlement related investments 11.0 — Purchases of
held-to-maturity non-settlement related investments (26.5 ) —
Proceeds from held-to-maturity non-settlement related investments
2.0 — Net cash used in investing
activities (157.1 ) (222.4 )
Cash Flows From Financing
Activities Cash dividends paid (157.4 ) (160.0 ) Common stock
repurchased (334.0 ) (313.8 ) Proceeds from exercise of options and
other 9.6 77.8 Net cash used in
financing activities (481.8 ) (396.0 ) Net change in
cash and cash equivalents (153.3 ) (152.7 ) Cash and cash
equivalents at beginning of period 1,315.9
1,783.2 Cash and cash equivalents at end of period $ 1,162.6
$ 1,630.5
THE WESTERN UNION COMPANY SUMMARY SEGMENT DATA
(Unaudited) (in millions) Three Months
Ended
June 30,
Six Months Ended
June 30,
2016 2015 % Change
2016 2015 % Change Revenues:
Consumer-to-Consumer (C2C): Transaction fees $ 795.0 $ 816.1 (3 )%
$ 1,545.6 $ 1,592.3 (3 )% Foreign exchange revenues 283.4 268.9 5
%
534.9 513.0 4
%
Other revenues 17.4 16.5 5
%
32.7 34.5 (5 )% Total
Consumer-to-Consumer 1,095.8 1,101.5 (1 )% 2,113.2 2,139.8 (1 )%
Consumer-to-Business (C2B): Transaction fees 147.5 151.6 (3 )%
298.2 303.0 (2 )% Foreign exchange and other revenues 6.7
6.3 6
%
12.1 12.7 (5 )% Total
Consumer-to-Business 154.2 157.9 (2 )% 310.3 315.7 (2 )% Business
Solutions (B2B): Foreign exchange revenues 89.9 87.5 3
%
179.3 175.4 2
%
Transaction fees and other revenues 10.9 10.1
8
%
20.7 20.2 2
%
Total Business Solutions 100.8 97.6 3
%
200.0 195.6 2
%
Other: Total revenues 24.9 26.6 (6 )%
49.9 53.4 (7 )% Total consolidated
revenues $ 1,375.7 $ 1,383.6 (1 )% $ 2,673.4 $
2,704.5 (1 )% Operating income/(loss): Consumer-to-Consumer
$ 235.3 $ 256.6 (8 )% $ 466.6 $ 496.8 (6 )% Consumer-to-Business
17.7 (6.4 )
(a
)
40.6 23.1
(a
)
Business Solutions 5.1 (0.4 )
(b
)
7.5 1.7
(b
)
Other 2.2 1.0
(b
)
4.2 1.5
(b
)
Total consolidated operating income $ 260.3 $ 250.8 4
%
$ 518.9 $ 523.1 (1 )% Operating income/(loss) margin:
Consumer-to-Consumer 21.5 % 23.3 % (1.8 )% 22.1 % 23.2 % (1.1 )%
Consumer-to-Business 11.5 % (4.1 )%
(a
)
13.1 % 7.3 %
(a
)
Business Solutions 5.0 % (0.4 )% 5.4
%
3.7 % 0.9 % 2.8
%
Total consolidated operating income margin 18.9 % 18.1 % 0.8
%
19.4 % 19.3 % 0.1
%
__________ (a) For 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.
2Q15 3Q15 4Q15 FY2015
1Q16 2Q16 YTD 2Q16 Consolidated Metrics
(a) Revenues, as reported (GAAP) $ 1,383.6 $ 1,399.2 $ 1,380.0 $
5,483.7 $ 1,297.7 $ 1,375.7 $ 2,673.4 Foreign currency translation
impact (s) 84.7 85.4 73.9
322.6 57.4 48.9
106.3 Revenues, constant currency adjusted $ 1,468.3
$ 1,484.6 $ 1,453.9 $ 5,806.3 $ 1,355.1
$ 1,424.6 $ 2,779.7 Prior year 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 Revenue change, as reported (GAAP) (2 )% (3 )% (2 )% (2
)% (2 )% (1 )% (1 )% Revenue change, constant currency adjusted 4 %
3 % 3 % 4 % 3 % 3 % 3 % (b) Operating income, as reported
(GAAP) $ 250.8 $ 304.5 $ 281.8 $ 1,109.4 $ 258.6 $ 260.3 $ 518.9
Paymap settlement agreement (t) 35.3 N/A
N/A 35.3 N/A
N/A N/A Operating income, excluding
Paymap settlement agreement $ 286.1 $ 304.5 $ 281.8
$ 1,144.7 $ 258.6 $ 260.3 $ 518.9
Operating income margin, as reported (GAAP) 18.1 % 21.8 %
20.4 % 20.2 % 19.9 % 18.9 % 19.4 % Operating income margin,
excluding Paymap settlement agreement 20.7 % N/A N/A 20.9 % N/A N/A
N/A (c) Operating income, as reported (GAAP) $ 250.8 $ 304.5
$ 281.8 $ 1,109.4 $ 258.6 $ 260.3 $ 518.9 Reversal of depreciation
and amortization 62.9 74.4 69.0
270.2 65.6 65.9
131.5 EBITDA (u) $ 313.7 $ 378.9 $
350.8 $ 1,379.6 $ 324.2 $ 326.2 $ 650.4
Paymap settlement agreement (t) 35.3
N/A N/A 35.3 N/A
N/A N/A Adjusted EBITDA, excluding
Paymap settlement agreement $ 349.0 $ 378.9 $ 350.8
$ 1,414.9 $ 324.2 $ 326.2 $ 650.4
Operating income margin, as reported (GAAP) 18.1 % 21.8 %
20.4 % 20.2 % 19.9 % 18.9 % 19.4 % EBITDA margin 22.7 % 27.1 % 25.4
% 25.2 % 25.0 % 23.7 % 24.3 % Adjusted EBITDA margin, excluding
Paymap settlement agreement 25.2 % N/A N/A 25.8 % N/A N/A N/A
(d) Net income, as reported (GAAP) $ 189.3 $ 232.3 $ 212.3 $
837.8 $ 185.7 $ 205.6 $ 391.3 Paymap settlement agreement (t) 35.3
N/A N/A 35.3 N/A N/A N/A Income tax benefit from Paymap settlement
agreement (t) (11.1 ) N/A N/A
(11.1 ) N/A N/A N/A
Paymap settlement agreement, net of income tax benefit (t)
24.2 N/A N/A 24.2
N/A N/A N/A Net
income, excluding Paymap settlement agreement $ 213.5 $
232.3 $ 212.3 $ 862.0 $ 185.7 $ 205.6
$ 391.3 Diluted earnings per share ("EPS"), as
reported (GAAP) ($ - dollars) $ 0.36 $ 0.45 $ 0.42 $ 1.62 $ 0.37 $
0.42 $ 0.79 Paymap settlement agreement ($ - dollars) $ 0.07 N/A
N/A $ 0.07 N/A N/A N/A Income tax benefit from Paymap settlement
agreement ($ - dollars) $ (0.02 ) N/A N/A
$ (0.02 ) N/A N/A N/A
Impact from Paymap settlement agreement, net of income tax
benefit ($ - dollars)
$
0.05 N/A N/A
$
0.05 N/A N/A N/A
Diluted EPS, excluding Paymap settlement agreement ($ - dollars) $
0.41 N/A N/A $ 1.67
N/A N/A N/A Diluted
weighted-average shares outstanding 519.8 513.2 508.6 516.7 503.2
493.0 498.1 (e) Effective tax rate, as reported (GAAP) 8.5 %
12.5 % 10.4 % 11.0 % 14.6 % 7.6 % 11.1 % Impact from Paymap
settlement agreement (t) 3.3 % N/A N/A
0.8 % N/A N/A N/A
Effective tax rate, excluding Paymap settlement agreement
11.8 % N/A N/A 11.8 %
N/A N/A N/A
Consumer-to-Consumer Segment (f) Revenues, as reported
(GAAP) $ 1,101.5 $ 1,112.9 $ 1,091.2 $ 4,343.9 $ 1,017.4 $ 1,095.8
$ 2,113.2 Foreign currency translation impact (s) 69.1
67.1 56.8 256.0
30.5 23.0 53.5 Revenues,
constant currency adjusted $ 1,170.6 $ 1,180.0 $
1,148.0 $ 4,599.9 $ 1,047.9 $ 1,118.8 $
2,166.7 Prior year 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 Revenue
change, as reported (GAAP) (3 )% (3 )% (3 )% (3 )% (2 )% (1 )% (1
)% Revenue change, constant currency adjusted 3 % 3 % 2 % 3 % 1 % 2
% 1 % (g) Principal per transaction, as reported ($ -
dollars) $ 316 $ 315 $ 303 $ 312 $ 299 $ 301 $ 300 Foreign currency
translation impact (s) ($ - dollars) 23 23
16 20 7 3
5 Principal per transaction, constant currency
adjusted ($ - dollars) $ 339 $ 338 $ 319 $ 332
$ 306 $ 304 $ 305 Prior year principal
per transaction, as reported ($ - dollars) $ 341 $ 339 $ 323 $ 335
$ 315 $ 316 $ 316 Principal per transaction change, as reported (7
)% (7 )% (6 )% (7 )% (5 )% (5 )% (5 )% Principal per transaction
change, constant currency adjusted (1 )% 0 % (1 )% (1 )% (3 )% (4
)% (3 )% (h) Cross-border principal, as reported ($ -
billions) $ 18.8 $ 18.9 $ 18.4 $ 73.6 $ 17.3 $ 18.5 $ 35.8 Foreign
currency translation impact (s) ($ - billions) 1.3
1.3 1.2 4.9 0.4
0.2 0.6 Cross-border principal,
constant currency adjusted ($ - billions) $ 20.1 $ 20.2
$ 19.6 $ 78.5 $ 17.7 $ 18.7 $
36.4 Prior year cross-border principal, as reported ($ -
billions) $ 19.7 $ 20.0 $ 19.2 $ 77.2 $ 17.5 $ 18.8 $ 36.3
Cross-border principal change, as reported (5 )% (6 )% (4 )% (5 )%
(2 )% (1 )% (1 )% Cross-border principal change, constant currency
adjusted 2 % 1 % 1 % 2 % 1 % 0 % 0 % (i) North America
region revenue change, as reported (GAAP) 1 % 2 % 3 % 2 % 3 % 6 % 5
% North America region foreign currency translation impact (s)
1 % 2 % 2 % 1 % 2 % 1 %
1 % North America region revenue change, constant
currency adjusted 2 % 4 % 5 % 3 %
5 % 7 % 6 % (j) Europe and CIS
region revenue change, as reported (GAAP) (8 )% (9 )% (7 )% (8 )%
(3 )% (3 )% (3 )% Europe and CIS region foreign currency
translation impact (s) 11 % 9 % 8 % 10
% 3 % 2 % 2 % Europe and CIS region
revenue change, constant currency adjusted 3 % 0 %
1 % 2 % 0 % (1 )% (1 )%
(k) Middle East and Africa region revenue change, as
reported (GAAP) (4 )% (2 )% (4 )% (4 )% (4 )% (4 )% (4 )% Middle
East and Africa region foreign currency translation impact (s)
6 % 5 % 4 % 5 % 3 % 1 %
2 % Middle East and Africa region revenue change,
constant currency adjusted 2 % 3 % 0 %
1 % (1 )% (3 )% (2 )% (l) APAC
region revenue change, as reported (GAAP) (4 )% (7 )% (5 )% (5 )%
(4 )% (3 )% (4 )% APAC region foreign currency translation impact
(s) 5 % 7 % 5 % 5 % 3 % 2
% 3 % APAC region revenue change, constant currency
adjusted 1 % 0 % 0 % 0 % (1 )%
(1 )% (1 )% (m) LACA region revenue
change, as reported (GAAP) 7 % 1 % (1 )% 3 % (5 )% 0 % (2 )% LACA
region foreign currency translation impact (s) 7 % 7
% 6 % 7 % 6 % 6 % 6 %
LACA region revenue change, constant currency adjusted 14 %
8 % 5 % 10 % 1 % 6 %
4 % (n) westernunion.com revenue change, as reported
(GAAP) 22 % 22 % 21 % 21 % 16 % 19 % 17 % westernunion.com foreign
currency translation impact (s) 6 % 6 % 4 %
5 % 2 % 1 % 2 % westernunion.com
revenue change, constant currency adjusted 28 % 28 %
25 % 26 % 18 % 20 % 19 %
Consumer-to-Business Segment (o) Revenues, as
reported (GAAP) $ 157.9 $ 160.1 $ 161.9 $ 637.7 $ 156.1 $ 154.2 $
310.3 Foreign currency translation impact (s) 4.9
5.6 7.8 24.6 20.9
21.9 42.8 Revenues, constant
currency adjusted $ 162.8 $ 165.7 $ 169.7 $
662.3 $ 177.0 $ 176.1 $ 353.1 Prior
year revenues, as reported (GAAP) $ 145.9 $ 150.4 $ 155.3 $ 598.8 $
157.8 $ 157.9 $ 315.7 Revenue change, as reported (GAAP) 8 % 6 % 4
% 6 % (1 )% (2 )% (2 )% Revenue change, constant currency adjusted
12 % 10 % 9 % 11 % 12 % 12 % 12 % (p) Operating
income/(loss), as reported (GAAP) $ (6.4
)
$ 26.2 $ 19.3 $ 68.6 $ 22.9 $ 17.7 $ 40.6 Paymap settlement
agreement (t) 35.3 N/A N/A
35.3 N/A N/A
N/A Operating income, excluding Paymap settlement
agreement $ 28.9 $ 26.2 $ 19.3 $ 103.9
$ 22.9 $ 17.7 $ 40.6 Operating income/(loss)
margin, as reported (GAAP) (4.1 )% 16.4 % 11.9 % 10.8 % 14.6 % 11.5
% 13.1 % Operating income margin, excluding Paymap settlement
agreement 18.3 % N/A N/A 16.3 % N/A N/A N/A
Business
Solutions Segment (q) Revenues, as reported (GAAP) $ 97.6 $
101.2 $ 101.9 $ 398.7 $ 99.2 $ 100.8 $ 200.0 Foreign currency
translation impact (s) 9.4 10.9
7.7 36.1 4.6 3.0
7.6 Revenues, constant currency adjusted $ 107.0
$ 112.1 $ 109.6 $ 434.8 $ 103.8
$ 103.8 $ 207.6 Prior year revenues, as reported
(GAAP) $ 98.2 $ 105.8 $ 101.2 $ 404.6 $ 98.0 $ 97.6 $ 195.6 Revenue
change, as reported (GAAP) (1 )% (4 )% 1 % (1 )% 1 % 3 % 2 %
Revenue change, constant currency adjusted 9 % 6 % 8 % 7 % 6 % 6 %
6 % (r) Operating income/(loss), as reported (GAAP) $ (0.4
)
$ (2.7 ) $ 3.8 $ 2.8 $ 2.4 $ 5.1 $ 7.5 Reversal of depreciation and
amortization 12.2 20.3 12.7
57.4 12.6 13.1
25.7 EBITDA (u) $ 11.8 $ 17.6 $ 16.5
$ 60.2 $ 15.0 $ 18.2 $ 33.2
Operating income/(loss) margin, as reported (GAAP) (0.4 )% (2.7 )%
3.7 % 0.7 % 2.4 % 5.0 % 3.7 % EBITDA margin 12.1 % 17.4 % 16.2 %
15.1 % 15.1 % 18.1 % 16.6 %
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. We believe
that this measure provides management and investors with
information about operating results and trends that eliminates
currency volatility and provides greater clarity regarding, and
increases the comparability of, our underlying results and trends.
(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. We believe that, by excluding the effects of significant
charges associated with the settlement of litigation that can
impact operating trends, management and investors are provided with
a measure that increases the comparability of our underlying
operating results. (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 for transactions and
revenue, including westernunion.com transactions, 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. (w) Represents the North America region of our
Consumer-to-Consumer segment, including the United States, Mexico,
and Canada. (x) Represents the Europe and the Commonwealth
of Independent States ("CIS") region of our Consumer-to-Consumer
segment. (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,
including westernunion.com transactions initiated outside the
United States, between and within foreign countries (including
Canada and Mexico). Excludes all transactions originated in the
United States. (cc) Represents transactions originated in
the United States, including intra-country transactions and
westernunion.com transactions initiated from the United States.
(dd) Represents transactions initiated on westernunion.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160803006368/en/
The Western Union CompanyMediaDan Diaz,
720-332-5564daniel.diaz@westernunion.comorInvestorsMike
Salop, 720-332-8276mike.salop@westernunion.com
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