Company Delivers Solid Performance with
Revenue of $1.4 Billion and EPS of $0.44Digital Business
AcceleratesFull-year EPS Outlook Affirmed
The Western Union Company (NYSE: WU) today reported financial
results for the 2016 third quarter and updated its full year
financial outlook, which was previously reported on August 3,
2016.
The Company delivered revenue of $1.4 billion for the quarter,
reflecting a decline of 2% compared to last year, or an increase of
2% on a constant currency basis. Earnings per share of $0.44
includes a negative $0.02 impact from an additional accrual related
to the previously disclosed FTC legal matter, and compares to $0.45
in the same quarter last year.
For the full year, the Company narrowed its revenue outlook and
affirmed its EPS outlook range of $1.60 to $1.70.
“Our diversified global business and strategic initiatives
enabled us to deliver another solid earnings performance in the
quarter, as we successfully navigated currency headwinds and macro
challenges in international markets,” said President and Chief
Executive Officer Hikmet Ersek. “While results in oil dependent
countries softened, our U.S. business remained strong, and
westernunion.com money transfer transaction growth accelerated to
29%.”
Western Union also expanded its in-person and online network
this quarter. The Company serves consumers in more than 200
countries and territories through more than 550,000 agent
locations, including a recent near doubling of its locations in
Mexico. In addition, westernunion.com transaction sites are in 37
countries, including mobile apps in 16 of these, and the Company
has the ability to deliver funds to billions of accounts
globally.
Executive Vice President and Chief Financial Officer Raj
Agrawal stated, “We are pleased to be on track to meet our
earnings outlook, reflecting tight expense management while still
progressing targeted investments in digital, technology, and
compliance initiatives. Our business model continues to generate
strong cash flow, which allowed us to return nearly $640 million to
shareholders through share repurchases and dividends so far this
year.”
Q3 Business Unit
Highlights
- Consumer-to-Consumer (C2C) revenues
declined 1%, or increased 1% on a constant currency basis, while
transactions grew 2%. Westernunion.com C2C revenues increased 26%,
or 28% on a constant currency basis, on transaction growth of 29%.
The westernunion.com C2C revenue represented 8% of the C2C total
this quarter.
- Consumer-to-Business (C2B) revenues
declined 3% in the quarter, or increased 11% on a constant currency
basis. The depreciation of the Argentine peso contributed to the
decline in reported revenues, while the constant currency growth
benefit was led by the Argentina walk-in and U.S. electronic bill
payments businesses.
- Western Union Business Solutions
revenues declined 4%, or were flat on a constant currency
basis.
Additional Q3 Financial
Highlights
- Operating margin in the quarter was
20.2%, including a negative impact of 110 basis points from the
legal matter accrual. The margin was 21.8% in the prior year
period. Other factors contributing to the year-on-year reduction in
margin were the negative impact of foreign exchange, customer and
funding mix in C2B, and incremental technology investment,
partially offset by lower compensation and depreciation and
amortization expenses.
- Operating income in the quarter was
$278.3 million, which compares to $304.5 million in the prior year
period. The current quarter operating income reflects negative
impacts of approximately $22 million from foreign exchange and $15
million from the legal matter accrual. The Company has accrued $30
million year-to-date for this matter, but has not reached a
resolution with the FTC at this time.
- The effective tax rate was 9.6%, which
compares to 12.5% in the prior year period. The current quarter
rate included a positive impact of 160 basis points from the legal
matter accrual.
- The Company returned $162 million to
shareholders in the third quarter, consisting of $84 million of
share repurchases and $78 million of dividends. Year-to-date, cash
flow from operating activities totaled $822 million, with $637
million returned to shareholders through share repurchases and
dividends.
2016 Full Year Outlook
The Company narrowed its full year outlook for revenue growth,
and affirmed its full year outlook for operating margin, EPS, and
operating cash flow.
The updated outlook follows:
Revenue
- Decrease of approximately 1%, or an
increase of approximately 3% constant currency (previously low to
mid-single digit constant currency increase, with GAAP revenue
growth approximately 400 basis points lower)
Operating Profit Margin
- Operating margin of approximately
20%
Earnings per Share
- EPS in a range of $1.60 to $1.70
Cash Flow
- Cash flow from operating activities of
approximately $1 billion
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release. 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; revenue change outlook, constant currency
adjusted; 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 2678212.
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
September 30, 2016, the Western Union, Vigo and Orlandi Valuta
branded services were offered through a combined network of over
550,000 agent locations in 200 countries and territories and over
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 $82 billion of principal between consumers, and 508 million
business payments. For more information, visit
www.westernunion.com.
THE WESTERN UNION COMPANY KEY STATISTICS
(Unaudited)
Notes* 3Q15 4Q15 FY2015
1Q16 2Q16 3Q16 YTD 3Q16
Consolidated Metrics Consolidated revenues (GAAP) - YoY %
change (3 )% (2 )% (2 )% (2 )% (1 )% (2 )% (1 )% Consolidated
revenues (constant currency) - YoY % change a 3 % 3 % 4 % 3 % 3 % 2
% 3 % Consolidated operating margin (GAAP) 21.8 % 20.4 % 20.2 %
19.9 % 18.9 % 20.2 % 19.7 % Consolidated operating margin
(excluding Paymap settlement agreement) b N/A N/A 20.9 % N/A N/A
N/A N/A
Consumer-to-Consumer (C2C) Segment Revenues
(GAAP) - YoY % change (3 )% (3 )% (3 )% (2 )% (1 )% (1 )% (1
)%
Revenues (constant currency) - YoY % change f 3 % 2 % 3 % 1 % 2 % 1
% 1 % Operating margin 25.5 % 24.0 % 24.0 % 22.7 % 21.5 % 23.4 %
22.5 % Transactions (in millions) 66.6 67.4 261.5 63.7 67.7
67.8 199.2 Transactions - YoY % change 2 % 3 % 3 % 3 % 3 % 2 % 3 %
Total principal ($ - billions) $ 20.9 $ 20.4 $ 81.6 $ 19.1 $
20.4 $ 20.3 $ 59.8 Principal per transaction ($ - dollars) $ 315 $
303 $ 312 $ 299 $ 301 $ 300 $ 300 Principal per transaction - YoY %
change (7 )% (6 )% (7 )% (5 )% (5 )% (5 )% (5 )% Principal per
transaction (constant currency) - YoY % change g 0 % (1 )% (1 )% (3
)% (4 )% (4 )% (3 )% Cross-border principal ($ - billions) $
18.9 $ 18.4 $ 73.6 $ 17.3 $ 18.5 $ 18.4 $ 54.2 Cross-border
principal - YoY % change (6 )% (4 )% (5 )% (2 )% (1 )% (3 )% (2 )%
Cross-border principal (constant currency) - YoY % change h 1 % 1 %
2 % 1 % 0 % (2 )% 0 % North America region revenues (GAAP) -
YoY % change v, w 2 % 3 % 2 % 3 % 6 % 6 % 5 % North America region
revenues (constant currency) - YoY % change i, v, w 4 % 5 % 3 % 5 %
7 % 7 % 6 % North America region transactions - YoY % change v, w 6
% 8 % 6 % 7 % 7 % 7 % 7 % Europe and CIS region revenues
(GAAP) - YoY % change v, x (9 )% (7 )% (8 )% (3 )% (3 )% (2 )% (3
)% Europe and CIS region revenues (constant currency) - YoY %
change j, v, x 0 % 1 % 2 % 0 % (1 )% 1 % 0 % Europe and CIS region
transactions - YoY % change v, x (2 )% 3 % 2 % 3 % 3 % 2 % 3 %
Middle East and Africa region revenues (GAAP) - YoY % change
v, y (2 )% (4 )% (4 )% (4 )% (4 )% (10 )% (6 )% Middle East and
Africa region revenues (constant currency) - YoY % change k, v, y 3
% 0 % 1 % (1 )% (3 )% (8 )% (4 )% Middle East and Africa region
transactions - YoY % change v, y 0 % (1 )% (1 )% (3 )% (5 )% (9 )%
(6 )% APAC region revenues (GAAP) - YoY % change v, z (7 )%
(5 )% (5 )% (4 )% (3 )% (4 )% (4 )% APAC region revenues (constant
currency) - YoY % change l, v, z 0 % 0 % 0 % (1 )% (1 )% (3 )% (1
)% APAC region transactions - YoY % change v, z (5 )% (4 )% (3 )%
(4 )% (3 )% (5 )% (4 )% LACA region revenues (GAAP) - YoY %
change v, aa 1 % (1 )% 3 % (5 )% 0 % 3 % (1 )% LACA region revenues
(constant currency) - YoY % change m, v, aa 8 % 5 % 10 % 1 % 6 % 8
% 5 % LACA region transactions - YoY % change v, aa 8 % 8 % 8 % 11
% 12 % 12 % 12 % International revenues - YoY % change bb (7
)% (7 )% (6 )% (5 )% (4 )% (5 )% (5 )% International transactions -
YoY % change bb (2 )% 0 % 0 % 0 % 0 % (2 )% (1 )% International
revenues - % of C2C segment revenues bb 70 % 69 % 69 % 67 % 67 % 67
% 67 % United States originated revenues - YoY % change cc 6
% 6 % 5 % 5 % 7 % 7 % 6 % United States originated transactions -
YoY % change cc 8 % 8 % 7 % 8 % 8 % 7 % 8 % United States
originated revenues - % of C2C segment revenues cc 30 % 31 % 31 %
33 % 33 % 33 % 33 % westernunion.com revenues (GAAP) - YoY %
change dd 22 % 21 % 21 % 16 % 19 % 26 % 20 % westernunion.com
revenues (constant currency) - YoY % change n, dd 28 % 25 % 26 % 18
% 20 % 28 % 22 % westernunion.com transactions - YoY % change dd 25
% 28 % 26 % 25 % 25 % 29 % 26 %
% of Consumer-to-Consumer
Revenue Regional Revenues: North America region revenues v, w
27 % 27 % 27 % 28 % 28 % 29 % 28 % Europe and CIS region revenues
v, x 26 % 27 % 26 % 26 % 26 % 26 % 26 % Middle East and Africa
region revenues v, y 21 % 20 % 21 % 20 % 20 % 19 % 20 % APAC region
revenues v, z 15 % 15 % 15 % 15 % 15 % 14 % 15 % LACA region
revenues v, aa 11 % 11 % 11 % 11 % 11 % 12 % 11 % westernunion.com
revenues dd 6 % 7 % 6 % 7 % 8 % 8 % 8 %
Consumer-to-Business (C2B) Segment Revenues (GAAP) - YoY %
change 6 % 4 % 6 % (1 )% (2 )% (3 )% (2 )% Revenues (constant
currency) - YoY % change o 10 % 9 % 11 % 12 % 12 % 11 % 12 %
Operating margin 16.4 % 11.9 % 10.8 % 14.6 % 11.5 % 9.1 % 11.8 %
Operating margin (excluding Paymap settlement agreement) p N/A N/A
16.3 % N/A N/A N/A N/A
Business Solutions (B2B)
Segment Revenues (GAAP) - YoY % change (4 )% 1 % (1 )% 1 % 3 %
(4 )% 0 % Revenues (constant currency) - YoY % change q 6 % 8 % 7 %
6 % 6 % 0 % 4 % Operating margin (2.7 )% 3.7 % 0.7 % 2.4 % 5.0 %
3.5 % 3.7 %
% of Total Company Revenue
Consumer-to-Consumer segment revenues 80 % 79 % 79 % 78 % 80 % 80 %
79 % Consumer-to-Business segment revenues 11 % 12 % 12 % 12 % 11 %
11 % 12 % Business Solutions segment revenues 7 % 7 % 7 % 8 % 7 % 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 EndedSeptember 30,
Nine Months EndedSeptember 30,
2016 2015 % Change 2016 2015 % Change
Revenues: Transaction fees $ 960.4 $ 994.9 (3 )% $ 2,840.7 $
2,931.8 (3 )% Foreign exchange revenues 381.5 372.3 2
%
1,105.8 1,072.4 3
%
Other revenues 35.9 32.0 12
%
104.7 99.5 5
%
Total revenues 1,377.8 1,399.2 (2 )% 4,051.2 4,103.7 (1 )%
Expenses: Cost of services 822.9 817.2 1
%
2,424.2 2,388.4 1
%
Selling, general and administrative (a) 276.6
277.5 0
%
829.8 887.7 (7 )% Total expenses
1,099.5 1,094.7 0
%
3,254.0 3,276.1 (1 )% Operating income
(b) 278.3 304.5 (9 )% 797.2 827.6 (4 )% Other income/(expense):
Interest income 1.1 3.0 (64 )% 2.7 8.4 (68 )% Interest expense
(41.4 ) (42.2 ) (2 )% (122.9 ) (127.1 ) (3 )% Derivative gains, net
0.3 1.4 (76 )% 2.2 2.4 (8 )% Other income/(expense), net 1.7
(1.3 )
(c
)
0.8 (6.4 )
(c
)
Total other expense, net (38.3 ) (39.1 ) (2 )%
(117.2 ) (122.7 ) (4 )% Income before income taxes 240.0
265.4 (10 )% 680.0 704.9 (4 )% Provision for income taxes
23.1 33.1 (30 )% 71.8
79.4 (9 )% Net income $ 216.9 $ 232.3 (7 )% $
608.2 $ 625.5 (3 )% Earnings per share: Basic $ 0.45
$ 0.46 (2 )% $ 1.24 $ 1.21 2
%
Diluted $ 0.44 $ 0.45 (2 )% $ 1.23 $ 1.20 3
%
Weighted-average shares outstanding: Basic 487.0 509.6 492.4 515.3
Diluted 490.3 513.2 495.5 519.4 Cash dividends declared per common
share $ 0.16 $ 0.155 3
%
$ 0.48 $ 0.465 3
%
_________________
(a) For the three and nine months ended September 30, 2016,
selling, general and administrative expenses included $15 million
and $30 million, respectively, for accruals related to a matter
with the United States Federal Trade Commission (the "FTC")
regarding our consumer protection and anti-fraud programs, as
described in Part II, Item I, Legal Proceedings, of our third
quarter 2016 Quarterly Report on Form 10-Q. For the nine months
ended September 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 nine months ended
September 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 $22
million and $62 million, respectively. (c) Calculation not
meaningful.
THE WESTERN UNION
COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in millions, except per share amounts)
September 30,
2016
December 31,
2015
Assets Cash and cash equivalents (a) $ 1,280.7 $ 1,315.9
Settlement assets 3,389.0 3,308.7 Property and equipment, net of
accumulated depreciation of $587.2 and $538.2, respectively 224.4
231.8 Goodwill 3,162.3 3,163.8 Other intangible assets, net of
accumulated amortization of $955.4 and $884.4, respectively 693.4
705.0 Other assets 768.9 724.0 Total
assets $ 9,518.7 $ 9,449.2
Liabilities and
Stockholders' Equity Liabilities: Accounts payable and accrued
liabilities $ 557.4 $ 606.6 Settlement obligations 3,389.0 3,308.7
Income taxes payable 235.8 211.5 Deferred tax liability, net 272.8
272.6 Borrowings 3,224.8 3,215.9 Other liabilities 451.3
429.0 Total liabilities 8,131.1 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; 485.2 shares and 502.4 shares issued and
outstanding as of September 30, 2016 and December 31, 2015,
respectively 4.9 5.0 Capital surplus 628.7 566.5 Retained earnings
930.9 977.3 Accumulated other comprehensive loss (176.9 )
(143.9 ) Total stockholders' equity 1,387.6
1,404.9 Total liabilities and stockholders' equity $
9,518.7 $ 9,449.2
____________
(a) Approximately $650 million and $950 million was held by
entities outside of the United States as of September 30, 2016 and
December 31, 2015, respectively.
THE WESTERN UNION COMPANY CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (in
millions) Nine Months Ended
September 30,
2016 2015
Cash Flows From Operating
Activities Net income $ 608.2 $ 625.5 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation 55.0 49.6 Amortization 142.9 151.6 Other non-cash
items, net 62.0 32.8
Increase/(decrease) in cash resulting from
changes in:
Other assets (41.8 ) (118.2 ) Accounts payable and accrued
liabilities (50.2 ) 41.1 Income taxes payable 25.6 33.5 Other
liabilities 20.2 (11.7 ) Net cash provided by
operating activities 821.9 804.2
Cash Flows From Investing
Activities Capitalization of contract costs (85.9 ) (110.5 )
Capitalization of purchased and developed software (39.7 ) (30.5 )
Purchases of property and equipment (51.4 ) (65.7 ) Purchases of
non-settlement related investments and other (44.1 ) (111.2 )
Proceeds from maturity of non-settlement related investments and
other 22.7 — Purchases of held-to-maturity non-settlement related
investments (39.7 ) — Proceeds from held-to-maturity non-settlement
related investments 4.2 — Net cash used
in investing activities (233.9 ) (317.9 )
Cash Flows From
Financing Activities Cash dividends paid (235.1 ) (238.5 )
Common stock repurchased (419.8 ) (441.9 ) Principal payments on
borrowings — (250.0 ) Proceeds from exercise of options and other
31.7 75.3 Net cash used in financing
activities (623.2 ) (855.1 ) Net change in cash and
cash equivalents (35.2 ) (368.8 ) Cash and cash equivalents at
beginning of period 1,315.9 1,783.2
Cash and cash equivalents at end of period $ 1,280.7 $
1,414.4
THE WESTERN
UNION COMPANY SUMMARY SEGMENT DATA (Unaudited)
(in millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 % Change 2016 2015 %
Change Revenues: Consumer-to-Consumer (C2C): Transaction fees $
791.4 $ 820.4 (4 )% $ 2,337.0 $ 2,412.7 (3 )% Foreign exchange
revenues 290.3 276.1 5
%
825.2 789.1 5
%
Other revenues 17.2 16.4 5
%
49.9 50.9 (2 )% Total
Consumer-to-Consumer 1,098.9 1,112.9 (1 )% 3,212.1 3,252.7 (1 )%
Consumer-to-Business (C2B): Transaction fees 149.4 154.1 (3 )%
447.6 457.1 (2 )% Foreign exchange and other revenues 6.3
6.0 4
%
18.4 18.7 (2 )% Total
Consumer-to-Business 155.7 160.1 (3 )% 466.0 475.8 (2 )% Business
Solutions (B2B): Foreign exchange revenues 85.3 90.6 (6 )% 264.6
266.0 (1 )% Transaction fees and other revenues 11.9
10.6 12
%
32.6 30.8 6
%
Total Business Solutions 97.2 101.2 (4 )% 297.2 296.8 0
%
Other: Total revenues 26.0 25.0 4
%
75.9 78.4 (3 )% Total consolidated
revenues $ 1,377.8 $ 1,399.2 (2 )% $ 4,051.2 $
4,103.7 (1 )% Operating income/(loss): Consumer-to-Consumer
(a) $ 257.1 $ 283.3 (9 )% $ 723.7 $ 780.1 (7 )%
Consumer-to-Business (b) 14.2 26.2 (46 )% 54.8 49.3 11
%
Business Solutions 3.4 (2.7 )
(c
)
10.9 (1.0 )
(c
)
Other 3.6 (2.3 )
(c
)
7.8 (0.8 )
(c
)
Total consolidated operating income $ 278.3 $ 304.5
(9 )% $ 797.2 $ 827.6 (4 )% Operating income/(loss)
margin: Consumer-to-Consumer 23.4 % 25.5 % (2.1 )% 22.5 % 24.0 %
(1.5 )% Consumer-to-Business 9.1 % 16.4 % (7.3 )% 11.8 % 10.4 % 1.4
%
Business Solutions 3.5 % (2.7 )% 6.2
%
3.7 % (0.3 )% 4.0
%
Total consolidated operating income margin 20.2 % 21.8 % (1.6 )%
19.7 % 20.2 % (0.5 )%
________________
(a) For the three and nine months ended September 30, 2016,
Consumer-to-Consumer operating income included $15 million and $30
million, respectively, for accruals related to a matter with the
FTC regarding our consumer protection and anti-fraud programs, as
described in Part II, Item I, Legal Proceedings, of our third
quarter 2016 Quarterly Report on Form 10-Q. (b) For the nine months
ended September 30, 2015, Consumer-to-Business operating income
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. (c) Calculation not meaningful.
THE WESTERN UNION COMPANY NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise) (Unaudited)
Western Union's management believes the non-GAAP financial
measures presented provide meaningful supplemental information
regarding our operating results to assist management, investors,
analysts, and others in understanding our financial results and to
better analyze trends in our underlying business, because they
provide consistency and comparability to prior periods. A
non-GAAP financial measure should not be considered in isolation or
as a substitute for the most comparable GAAP financial measure. A
non-GAAP financial measure reflects an additional way of viewing
aspects of our operations that, when viewed with our GAAP results
and the reconciliation to the corresponding GAAP financial measure,
provide a more complete understanding of our business. Users of the
financial statements are encouraged to review our financial
statements and publicly-filed reports in their entirety and not to
rely on any single financial measure. A reconciliation of non-GAAP
financial measures to the most directly comparable GAAP financial
measures is included below. All adjusted year-over-year changes
were calculated using prior year reported amounts.
3Q15 4Q15
FY2015 1Q16 2Q16 3Q16 YTD 3Q16
Consolidated Metrics (a) Revenues, as reported (GAAP) $
1,399.2 $ 1,380.0 $ 5,483.7 $ 1,297.7 $ 1,375.7 $ 1,377.8 $ 4,051.2
Foreign currency translation impact (s) 85.4
73.9 322.6 57.4 48.9
52.1 158.4 Revenues, constant
currency adjusted $ 1,484.6 $ 1,453.9 $ 5,806.3
$ 1,355.1 $ 1,424.6 $ 1,429.9 $ 4,209.6
Prior year revenues, as reported (GAAP) $ 1,440.9 $ 1,409.9
$ 5,607.2 $ 1,320.9 $ 1,383.6 $ 1,399.2 $ 4,103.7 Revenue change,
as reported (GAAP) (3 )% (2 )% (2 )% (2 )% (1 )% (2 )% (1 )%
Revenue change, constant currency adjusted 3 % 3 % 4 % 3 % 3 % 2 %
3 % (b) Operating income, as reported (GAAP) $ 304.5 $ 281.8
$ 1,109.4 $ 258.6 $ 260.3 $ 278.3 $ 797.2 Paymap settlement
agreement (t) N/A N/A 35.3
N/A N/A N/A
N/A Operating income, excluding Paymap settlement agreement
$ 304.5 $ 281.8 $ 1,144.7 $ 258.6 $
260.3 $ 278.3 $ 797.2 Operating income margin,
as reported (GAAP) 21.8 % 20.4 % 20.2 % 19.9 % 18.9 % 20.2 % 19.7 %
Operating income margin, excluding Paymap settlement agreement N/A
N/A 20.9 % N/A N/A N/A N/A (c) Operating income, as reported
(GAAP) $ 304.5 $ 281.8 $ 1,109.4 $ 258.6 $ 260.3 $ 278.3 $ 797.2
Reversal of depreciation and amortization 74.4
69.0 270.2 65.6 65.9
66.4 197.9 EBITDA (u) $ 378.9
$ 350.8 $ 1,379.6 $ 324.2 $ 326.2
$ 344.7 $ 995.1 Paymap settlement agreement
(t) N/A N/A 35.3
N/A N/A N/A N/A
Adjusted EBITDA, excluding Paymap settlement agreement $ 378.9
$ 350.8 $ 1,414.9 $ 324.2 $ 326.2
$ 344.7 $ 995.1 Operating income margin, as
reported (GAAP) 21.8 % 20.4 % 20.2 % 19.9 % 18.9 % 20.2 % 19.7 %
EBITDA margin 27.1 % 25.4 % 25.2 % 25.0 % 23.7 % 25.0 % 24.6 %
Adjusted EBITDA margin, excluding Paymap settlement agreement N/A
N/A 25.8 % N/A N/A N/A N/A (d) Net income, as reported
(GAAP) $ 232.3 $ 212.3 $ 837.8 $ 185.7 $ 205.6 $ 216.9 $ 608.2
Paymap settlement agreement (t) N/A N/A 35.3 N/A N/A N/A N/A Income
tax benefit from Paymap settlement agreement (t) N/A
N/A (11.1 ) N/A N/A
N/A N/A Paymap settlement
agreement, net of income tax benefit (t) N/A
N/A 24.2 N/A N/A
N/A N/A Net income, excluding Paymap
settlement agreement $ 232.3 $ 212.3 $ 862.0 $
185.7 $ 205.6 $ 216.9 $ 608.2 Diluted
earnings per share ("EPS"), as reported (GAAP) ($ - dollars) $ 0.45
$ 0.42 $ 1.62 $ 0.37 $ 0.42 $ 0.44 $ 1.23 Paymap settlement
agreement ($ - dollars) N/A N/A $ 0.07 N/A N/A N/A N/A Income tax
benefit from Paymap settlement agreement ($ - dollars) N/A
N/A $ (0.02 ) N/A N/A
N/A N/A Impact from Paymap
settlement agreement, net of income tax benefit ($ - dollars)
N/A N/A $ 0.05 N/A
N/A N/A N/A Diluted EPS,
excluding Paymap settlement agreement ($ - dollars) N/A
N/A $ 1.67 N/A N/A
N/A N/A Diluted weighted-average
shares outstanding 513.2 508.6 516.7 503.2 493.0 490.3 495.5
(e) Effective tax rate, as reported (GAAP) 12.5 % 10.4 % 11.0 %
14.6 % 7.6 % 9.6 % 10.6 % Impact from Paymap settlement agreement
(t) N/A N/A 0.8 % N/A
N/A N/A N/A
Effective tax rate, excluding Paymap settlement agreement
N/A N/A 11.8 % N/A
N/A N/A N/A
Consumer-to-Consumer Segment (f) Revenues, as reported
(GAAP) $ 1,112.9 $ 1,091.2 $ 4,343.9 $ 1,017.4 $ 1,095.8 $ 1,098.9
$ 3,212.1 Foreign currency translation impact (s) 67.1
56.8 256.0 30.5
23.0 25.3 78.8 Revenues,
constant currency adjusted $ 1,180.0 $ 1,148.0 $
4,599.9 $ 1,047.9 $ 1,118.8 $ 1,124.2 $
3,290.9 Prior year revenues, as reported (GAAP) $ 1,150.9 $
1,125.3 $ 4,485.8 $ 1,038.3 $ 1,101.5 $ 1,112.9 $ 3,252.7 Revenue
change, as reported (GAAP) (3 )% (3 )% (3 )% (2 )% (1 )% (1 )% (1
)% Revenue change, constant currency adjusted 3 % 2 % 3 % 1 % 2 % 1
% 1 % (g) Principal per transaction, as reported ($ -
dollars) $ 315 $ 303 $ 312 $ 299 $ 301 $ 300 $ 300 Foreign currency
translation impact (s) ($ - dollars) 23 16
20 7 3 3
4 Principal per transaction, constant currency
adjusted ($ - dollars) $ 338 $ 319 $ 332 $ 306
$ 304 $ 303 $ 304 Prior year principal
per transaction, as reported ($ - dollars) $ 339 $ 323 $ 335 $ 315
$ 316 $ 315 $ 315 Principal per transaction change, as reported (7
)% (6 )% (7 )% (5 )% (5 )% (5 )% (5 )% Principal per transaction
change, constant currency adjusted 0 % (1 )% (1 )% (3 )% (4 )% (4
)% (3 )% (h) Cross-border principal, as reported ($ -
billions) $ 18.9 $ 18.4 $ 73.6 $ 17.3 $ 18.5 $ 18.4 $ 54.2 Foreign
currency translation impact (s) ($ - billions) 1.3
1.2 4.9 0.4 0.2
0.2 0.8 Cross-border principal,
constant currency adjusted ($ - billions) $ 20.2 $ 19.6
$ 78.5 $ 17.7 $ 18.7 $ 18.6 $
55.0 Prior year cross-border principal, as reported ($ -
billions) $ 20.0 $ 19.2 $ 77.2 $ 17.5 $ 18.8 $ 18.9 $ 55.2
Cross-border principal change, as reported (6 )% (4 )% (5 )% (2 )%
(1 )% (3 )% (2 )% Cross-border principal change, constant currency
adjusted 1 % 1 % 2 % 1 % 0 % (2 )% 0 % (i) North America
region revenue change, as reported (GAAP) 2 % 3 % 2 % 3 % 6 % 6 % 5
% North America region foreign currency translation impact (s)
2 % 2 % 1 % 2 % 1 % 1 %
1 % North America region revenue change, constant currency
adjusted 4 % 5 % 3 % 5 % 7 %
7 % 6 % (j) Europe and CIS region revenue
change, as reported (GAAP) (9 )% (7 )% (8 )% (3 )% (3 )% (2 )% (3
)% Europe and CIS region foreign currency translation impact (s)
9 % 8 % 10 % 3 % 2 % 3 %
3 % Europe and CIS region revenue change, constant currency
adjusted 0 % 1 % 2 % 0 % (1 )%
1 % 0 % (k) Middle East and Africa region
revenue change, as reported (GAAP) (2 )% (4 )% (4 )% (4 )% (4 )%
(10 )% (6 )% Middle East and Africa region foreign currency
translation impact (s) 5 % 4 % 5 % 3 %
1 % 2 % 2 % Middle East and Africa region
revenue change, constant currency adjusted 3 % 0 %
1 % (1 )% (3 )% (8 )% (4 )%
(l) APAC region revenue change, as reported (GAAP) (7 )% (5
)% (5 )% (4 )% (3 )% (4 )% (4 )% APAC region foreign currency
translation impact (s) 7 % 5 % 5 % 3 %
2 % 1 % 3 % APAC region revenue change,
constant currency adjusted 0 % 0 % 0 %
(1 )% (1 )% (3 )% (1 )%
(m)
LACA region revenue change, as reported (GAAP) 1 % (1 )% 3 % (5 )%
0 % 3 % (1 )% LACA region foreign currency translation impact (s)
7 % 6 % 7 % 6 % 6 % 5 %
6 % LACA region revenue change, constant currency adjusted
8 % 5 % 10 % 1 % 6 % 8 %
5 % (n) westernunion.com revenue change, as reported
(GAAP) 22 % 21 % 21 % 16 % 19 % 26 % 20 % westernunion.com foreign
currency translation impact (s) 6 % 4 % 5 %
2 % 1 % 2 % 2 % westernunion.com
revenue change, constant currency adjusted 28 % 25 %
26 % 18 % 20 % 28 % 22 %
Consumer-to-Business Segment (o) Revenues, as reported
(GAAP) $ 160.1 $ 161.9 $ 637.7 $ 156.1 $ 154.2 $ 155.7 $ 466.0
Foreign currency translation impact (s) 5.6
7.8 24.6 20.9 21.9
22.8 65.6 Revenues, constant currency
adjusted $ 165.7 $ 169.7 $ 662.3 $ 177.0
$ 176.1 $ 178.5 $ 531.6 Prior year
revenues, as reported (GAAP) $ 150.4 $ 155.3 $ 598.8 $ 157.8 $
157.9 $ 160.1 $ 475.8 Revenue change, as reported (GAAP) 6 % 4 % 6
% (1 )% (2 )% (3 )% (2 )% Revenue change, constant currency
adjusted 10 % 9 % 11 % 12 % 12 % 11 % 12 %
(p)
Operating income, as reported (GAAP)
$ 26.2 $ 19.3 $ 68.6 $ 22.9 $ 17.7 $ 14.2 $ 54.8 Paymap settlement
agreement (t) N/A N/A 35.3
N/A N/A N/A
N/A Operating income, excluding Paymap settlement agreement
$ 26.2 $ 19.3 $ 103.9 $ 22.9 $ 17.7
$ 14.2 $ 54.8
Operating income margin, as reported
(GAAP)
16.4 % 11.9 % 10.8 % 14.6 % 11.5 % 9.1 % 11.8 % Operating income
margin, excluding Paymap settlement agreement N/A N/A 16.3 % N/A
N/A N/A N/A
Business Solutions Segment (q) Revenues,
as reported (GAAP) $ 101.2 $ 101.9 $ 398.7 $ 99.2 $ 100.8 $ 97.2 $
297.2 Foreign currency translation impact (s) 10.9
7.7 36.1 4.6 3.0
3.5 11.1 Revenues, constant
currency adjusted $ 112.1 $ 109.6 $ 434.8 $
103.8 $ 103.8 $ 100.7 $ 308.3 Prior
year revenues, as reported (GAAP) $ 105.8 $ 101.2 $ 404.6 $ 98.0 $
97.6 $ 101.2 $ 296.8 Revenue change, as reported (GAAP) (4 )% 1 %
(1 )% 1 % 3 % (4 )% 0 % Revenue change, constant currency adjusted
6 % 8 % 7 % 6 % 6 % 0 % 4 % (r) Operating income/(loss), as
reported (GAAP) $ (2.7 ) $ 3.8 $ 2.8 $ 2.4 $ 5.1 $ 3.4 $ 10.9
Reversal of depreciation and amortization 20.3
12.7 57.4 12.6 13.1
13.2 38.9 EBITDA (u) $ 17.6
$ 16.5 $ 60.2 $ 15.0 $ 18.2 $
16.6 $ 49.8 Operating income/(loss) margin, as
reported (GAAP) (2.7 )% 3.7 % 0.7 % 2.4 % 5.0 % 3.5 % 3.7 % EBITDA
margin 17.4 % 16.2 % 15.1 % 15.1 % 18.1 % 17.1 % 16.7 %
2016 Consolidated Outlook Metrics Revenue change (1 )%
Foreign currency translation impact
(s)
4 % Revenue change, constant currency adjusted 3 %
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.
WU-G
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161101006302/en/
Western UnionMediaDan Diaz,
720-332-5564daniel.diaz@westernunion.comorInvestorsMike
Salop, 720-332-8276mike.salop@westernunion.com
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