Solid fourth quarter business performance;
strong digital growthQuarterly dividend increased
9%New $1.2 billion share repurchase program
announced
_________________________________________________________
The Western Union Company (NYSE: WU) today reported financial
results for the 2016 fourth quarter and full year, and provided its
financial outlook for 2017. The Company also announced that its
Board of Directors declared an increased quarterly dividend and
approved a new three-year share repurchase authorization.
In the fourth quarter, the Company delivered revenue of $1.4
billion, reflecting a decline of 1% compared to last year, or an
increase of 4% on a constant currency basis.
Earnings / (loss) per share of ($0.73) includes an ($1.18)
impact from the previously disclosed charge related to settlements
with various U.S. federal and state government agencies
(“settlement charge”), and an ($0.02) impact from expenses
associated with spending on a new business transformation program,
referred to as the “WU Way.” Excluding the settlement charge and WU
Way related expenses, fourth quarter earnings per share of $0.47
increased from $0.42 in the same period last year.
“We are pleased to have delivered a solid business performance
in the fourth quarter, despite ongoing macro challenges,” said
President and Chief Executive Officer Hikmet Ersek. “Our digital
efforts continue to produce notable results, with westernunion.com
money transfer achieving 28 percent transaction growth in the
quarter.”
“These results demonstrate the resilience of our business, and
in 2017 we are also engaging in comprehensive efforts to transform
our operating model to drive efficiencies and accelerate future
growth,” Ersek added.
Executive Vice President and Chief Financial Officer Raj Agrawal
stated, “Strong cash flow generation remains a defining
characteristic of our business model. Last year we returned almost
$800 million to shareholders through share repurchases and
dividends, and we are pleased to announce a sustained commitment to
shareholder-focused capital allocation in 2017.”
The new quarterly cash dividend of $0.175 per common share,
which represents a 9% increase over the previous dividend of $0.16,
is payable March 31, 2017 to shareholders of record at the close of
business on March 17, 2017. The new $1.2 billion share repurchase
authorization will expire December 31, 2019, and is in addition to
the $231 million remaining under the previous authorization at
year-end.
The WU Way program is designed to transform the Company’s
operating model to better enable innovation, improve the customer
experience, and drive cost efficiencies. Initiatives focus on
technology transformation, network productivity, end-to-end
improvements in customer and agent processes, and organizational
redesign. The technology transformation is designed to create a
more agile and centralized fintech organization that can better
respond to the evolving digital focus of the business.
The Company has dedicated significant resources to the WU Way
program and $20 million of related expenses were incurred in 2016,
including $13 million in the fourth quarter. The Company expects to
spend an additional approximately $100 million in 2017. These
expenses consist primarily of program implementation, consulting,
and severance costs. Although the Company has previously incurred
and can reasonably be expected to incur these types of costs in the
future, the noted expenses are specific to the WU Way initiative
and the Company has therefore provided adjusted financial results
that exclude these expenses. WU Way related expenses are also not
included in operating segment results.
The settlements with U.S. federal and state government agencies
resolved investigations focused primarily on the Company’s
oversight of certain agents, and whether its anti-fraud program, as
well as its anti-money laundering controls, adequately prevented
misconduct by those agents and third parties. The conduct at issue
mainly occurred from 2004 to 2012. Related to the settlements, the
Company recorded a $571 million charge in the fourth quarter, which
was in addition to $30 million accrued in previous quarters. The
full year charge of $601 million ($596 million after-tax) consists
of $586 million to be paid to the federal government, $5 million
for state attorneys general, and $10 million for estimated costs of
a required independent compliance auditor over a three-year
period.
Q4 Highlights
- Consumer-to-Consumer (C2C) revenues
were flat, or increased 3% on a constant currency basis.
Transactions grew 2%, driven by strong increases in U.S. originated
business. Westernunion.com C2C revenues increased 27%, or 30% on a
constant currency basis, on transaction growth of 28%.
Westernunion.com represented 9% of total C2C revenue in the
quarter.
- Consumer-to-Business (C2B) revenues
declined 4% in the quarter, or increased 9% on a constant currency
basis. The depreciation of the Argentine peso contributed to the
decline in reported revenues, while the constant currency growth
was led by the Argentina walk-in and U.S. electronic bill payments
businesses.
- Western Union Business Solutions
revenues declined 3%, or increased 1% on a constant currency
basis.
- GAAP operating margin in the quarter
was (22.9%). Excluding the impact of the settlement charge and WU
Way related expenses, adjusted operating margin was 19.7%, which
compares to 20.4% in the prior year period. The negative impact of
foreign exchange and incremental technology investment contributed
to the year-on-year decline in margin.
- GAAP operating loss in the quarter was
($314) million. Adjusted operating income of $271 million compares
to $282 million in the prior year period. The current quarter
operating income also reflects a negative impact of approximately
$28 million from foreign exchange.
- The effective tax rate in the quarter
was (4.9%), or 6.5% excluding the impact of the settlement charge
and the WU Way related expenses, which compares to 10.4% in the
prior year period. The current period’s rate benefited from various
discrete items.
- The Company returned $156 million to
shareholders in the fourth quarter, consisting of $79 million of
share repurchases and $77 million of dividends.
2016 Full Year Results
The Company’s full year revenue declined 1%, or increased 3% on
a constant currency basis, compared to the prior year period.
Foreign currency translation, net of hedge benefits, negatively
impacted revenue by $217 million.
As a result of the settlement charge, GAAP operating margin for
the year was 8.9%, which compares to 20.2% in the prior year.
Excluding the settlement charge and WU Way related expenses,
adjusted operating margin was 20.4%, which compares to 20.9% in the
prior year, excluding the 2015 settlement charge related to our
Paymap subsidiary. The negative impact of foreign exchange and
incremental technology investment contributed to the year-on-year
decline in adjusted margin.
The full year effective tax rate was 25.9%, or 10.5% excluding
the impact of the settlement charge and WU Way related expenses.
This compares to an effective rate of 11.0% in 2015, or 11.8%
excluding the impact of the Paymap settlement charge.
GAAP earnings per share of $0.51 includes the negatives from the
settlement charge and WU Way related expenses, and compares to
$1.62 in the prior year. Excluding the settlement charge and WU Way
related expenses in 2016 and the Paymap settlement charge in 2015,
earnings per share of $1.75 increased from $1.67 in the prior
year.
Cash flow from operating activities for the year was $1.0
billion, and the Company returned $793 million to shareholders
through dividends and share repurchases.
2017 Outlook
The Company expects the following outlook for 2017:
Revenue
- Flat to low single digit decrease in
GAAP revenues, or a low single digit increase constant currency.
Western Union anticipates the macro environment in 2017 will be
largely similar to the prior year, with continued challenges from
the impact of a strong U.S. dollar, softness in oil producing
markets, and geopolitical disruptions.
Operating Profit Margin
- GAAP operating margin of approximately
18% and adjusted operating margin of approximately 20%. Adjusted
operating margins exclude approximately $100 million of WU Way
related expenses. The Company expects to generate savings of
approximately $20 million in 2017 and an additional approximately
$25 million in 2018 from efficiency actions included in the WU Way
program.The margin outlooks reflect a negative foreign exchange
impact of approximately 50 basis points, and compliance expense in
the higher end of the range of 3.5% to 4.0% of revenue.
Earnings per Share
- GAAP EPS in a range of $1.48 to $1.60
and adjusted EPS in a range of $1.63 to $1.75. Adjusted EPS
excludes the impact of the WU Way related expenses. The EPS ranges
reflect an approximately $0.09 negative impact from foreign
exchange, and assume a GAAP effective tax rate of approximately 11%
and an adjusted effective tax rate of approximately 13%.
Cash Flow
- GAAP cash flow from operating
activities of approximately $200 million, which includes $591
million of payments related to the settlement with federal and
state governments announced in January 2017, approximately $100
million of anticipated final tax payments relating to the agreement
announced with the U.S. Internal Revenue Service in December 2011,
and the WU Way related expenses. Excluding these items, expected
cash flow from operating activities would be 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; operating income and operating margin, excluding
Paymap Settlement Agreement and Joint Settlement Agreements and
expenses related to the WU Way initiative; effective tax rate,
excluding Paymap Settlement Agreement and Joint Settlement
Agreements and expenses related to the WU Way initiative;
earnings/(loss) per share, excluding Paymap Settlement Agreement
and Joint Settlement Agreements and expenses related to the WU Way
initiative; operating margin outlook excluding expenses related to
the WU Way initiative; earnings per share outlook excluding
expenses related to the WU Way initiative; effective tax rate
outlook, excluding expenses related to the WU Way initiative; cash
flow from operating activities outlook, excluding Joint Settlement
Agreements, IRS Agreement payments, and WU Way initiative; and
additional measures found in the supplemental tables included with
this press release. Although the expenses related to the WU Way are
specific to that initiative, the types of expenses related to the
WU Way initiative are similar to expenses that the Company has
previously incurred and can reasonably be expected to incur in the
future.
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 0037008.
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; 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; 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; 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 business transformation, 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, the European Union 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,
our licensing arrangements, customer due diligence, agent and
subagent due diligence, registration and monitoring requirements,
consumer protection requirements, remittances, and immigration;
liabilities, increased costs or loss of business and unanticipated
developments resulting from governmental investigations and consent
agreements with or enforcement actions by regulators, including
those associated with compliance with or failure to comply with the
settlement agreement with the State of Arizona, as amended, or with
the settlement agreements with the United States Department of
Justice, certain United States Attorney's Offices, the United
States Federal Trade Commission, the Financial Crimes Enforcement
Network of the United States Department of Treasury, and various
state attorneys general; the impact on our business from the
Dodd-Frank Wall Street Reform and Consumer Protection Act, as well
as regulations issued pursuant to it and the actions of the
Consumer Financial Protection Bureau and similar legislation and
regulations enacted by other governmental authorities related to
consumer protection; liabilities resulting from litigation,
including class-action lawsuits and similar matters, and regulatory
actions, 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
December 31, 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 2016, The Western Union Company
completed 268 million consumer-to-consumer transactions worldwide,
moving $80 billion of principal between consumers, and 523 million
business payments. For more information, visit
www.westernunion.com.
WU-G
THE
WESTERN UNION COMPANYKEY STATISTICS(Unaudited)
Notes* 4Q15 FY2015 1Q16
2Q16 3Q16 4Q16 FY2016
Consolidated Metrics Consolidated revenues (GAAP) - YoY %
change
(2)
%
(2)
%
(2)
%
(1)
%
(2)
%
(1)
%
(1)
%
Consolidated revenues (constant currency) - YoY % change a 3 % 4 %
3 % 3 % 2 % 4 % 3 % Consolidated operating income/(loss) (GAAP) -
YoY % change 2 %
(3)
%
(5)
%
4 %
(9)
%
(211)
%
(56)
%
Consolidated operating income (constant
currency, excluding Paymap Settlement Agreement, Joint
Settlement Agreements and WU Way business transformation
expenses) - YoY % change
b 2 % 4 % 1 % 5 % 5 % 6 % 4 % Consolidated operating margin (GAAP)
20.4 % 20.2 % 19.9 % 18.9 % 20.2 %
(22.9)
%
8.9 %
Consolidated operating margin (excluding
Paymap Settlement Agreement, Joint Settlement Agreements
and WU Way business transformation expenses)
c N/A 20.9 % N/A 20.2 % 21.7 % 19.7 % 20.4 %
Consumer-to-Consumer (C2C) Segment Revenues (GAAP) - YoY %
change
(3)
%
(3)
%
(2)
%
(1)
%
(1)
%
0 %
(1)
%
Revenues (constant currency) - YoY % change g 2 % 3 % 1 % 2 % 1 % 3
% 2 % Operating margin v,w 24.0 % 24.0 % 22.7 % 23.0 % 25.1 % 22.8
% 23.4 % Transactions (in millions) 67.4 261.5 63.7 67.7
67.8 69.1 268.3 Transactions - YoY % change 3 % 3 % 3 % 3 % 2 % 2 %
3 % Total principal ($ - billions) $ 20.4 $ 81.6 $ 19.1 $
20.4 $ 20.3 $ 20.2 $ 80.0 Principal per transaction ($ - dollars) $
303 $ 312 $ 299 $ 301 $ 300 $ 292 $ 298 Principal per transaction -
YoY % change
(6)
%
(7)
%
(5)
%
(5)
%
(5)
%
(3)
%
(5)
%
Principal per transaction (constant currency) - YoY % change h
(1)
%
(1)
%
(3)
%
(4)
%
(4)
%
(2)
%
(3)
%
Cross-border principal ($ - billions) $ 18.4 $ 73.6 $ 17.3 $
18.5 $ 18.4 $ 18.3 $ 72.5 Cross-border principal - YoY % change
(4)
%
(5)
%
(2)
%
(1)
%
(3)
%
(1)
%
(2)
%
Cross-border principal (constant currency) - YoY % change i 1 % 2 %
1 % 0 %
(2)
%
1 % 0 % North America region revenues (GAAP) - YoY % change
y,z 3 % 2 % 3 % 6 % 6 % 7 % 6 % North America region revenues
(constant currency) - YoY % change j,y,z 5 % 3 % 5 % 7 % 7 % 8 % 7
% North America region transactions - YoY % change y,z 8 % 6 % 7 %
7 % 7 % 7 % 7 % Europe and CIS region revenues (GAAP) - YoY
% change y,aa
(7)
%
(8)
%
(3)
%
(3)
%
(2)
%
(1)
%
(2)
%
Europe and CIS region revenues (constant currency) - YoY % change
k,y,aa
1
%
2 % 0 %
(1)
%
1 % 3 % 1 % Europe and CIS region transactions - YoY % change y,aa
3 % 2 % 3 % 3 % 2 % 5 % 3 % Middle East and Africa region
revenues (GAAP) - YoY % change y,bb
(4)
%
(4)
%
(4)
%
(4)
%
(10)
%
(8)
%
(7)
%
Middle East and Africa region revenues (constant currency) - YoY %
change l,y,bb 0 % 1 %
(1)
%
(3)
%
(8)
%
(5)
%
(4)
%
Middle East and Africa region transactions - YoY % change y,bb
(1)
%
(1)
%
(3)
%
(5)
%
(9)
%
(9)
%
(6)
%
APAC region revenues (GAAP) - YoY % change y,cc
(5)
%
(5)
%
(4)
%
(3)
%
(4)
%
(7)
%
(5)
%
APAC region revenues (constant currency) - YoY % change m,y,cc 0 %
0 %
(1)
%
(1)
%
(3)
%
(5)
%
(2)
%
APAC region transactions - YoY % change y,cc
(4)
%
(3)
%
(4)
%
(3)
%
(5)
%
(9)
%
(5)
%
LACA region revenues (GAAP) - YoY % change y,dd
(1)
%
3 %
(5)
%
0 % 3 % 11 % 2 % LACA region revenues (constant currency) - YoY %
change n,y,dd 5 % 10 % 1 % 6 % 8 % 16 % 8 % LACA region
transactions - YoY % change y,dd 8 % 8 % 11 % 12 % 12 % 14 % 12 %
International revenues - YoY % change ee
(7)
%
(6)
%
(5)
%
(4)
%
(5)
%
(4)
%
(4)
%
International transactions - YoY % change ee 0 % 0 % 0 % 0 %
(2)
%
(1)
%
(1)
%
International revenues - % of C2C segment revenues ee 69 % 69 % 67
% 67 % 67 % 66 % 67 % United States originated revenues -
YoY % change ff 6 % 5 % 5 % 7 % 7 % 8 % 7 % United States
originated transactions - YoY % change ff 8 % 7 % 8 % 8 % 7 % 8 % 8
% United States originated revenues - % of C2C segment revenues ff
31 % 31 % 33 % 33 % 33 % 34 % 33 % westernunion.com revenues
(GAAP) - YoY % change gg 21 % 21 % 16 % 19 % 26 % 27 % 22 %
westernunion.com revenues (constant currency) - YoY % change o,gg
25 % 26 % 18 % 20 % 28 % 30 % 24 % westernunion.com transactions -
YoY % change gg 28 % 26 % 25 % 25 % 29 % 28 % 27 %
% of
Consumer-to-Consumer Revenue Regional Revenues: North America
region revenues y,z 27 % 27 % 28 % 28 % 29 % 29 % 29 % Europe and
CIS region revenues y,aa 27 % 26 % 26 % 26 % 26 % 26 % 26 % Middle
East and Africa region revenues y,bb 20 % 21 % 20 % 20 % 19 % 19 %
19 % APAC region revenues y,cc 15 % 15 % 15 % 15 % 14 % 14 % 15 %
LACA region revenues y,dd 11 % 11 % 11 % 11 % 12 % 12 % 11 %
westernunion.com revenues gg 7 % 6 % 7 % 8 % 8 % 9 % 8 %
Consumer-to-Business (C2B) Segment Revenues (GAAP) - YoY %
change 4 % 6 %
(1)
%
(2)
%
(3)
%
(4)
%
(3)
%
Revenues (constant currency) - YoY % change p 9 % 11 % 12 % 12 % 11
% 9 % 11 % Operating margin w 11.9 % 10.8 % 14.6 % 11.7 % 9.5 % 5.7
% 10.4 %
Operating margin (excluding Paymap
Settlement Agreement)
q N/A 16.3 % N/A N/A N/A N/A N/A
Business Solutions (B2B)
Segment Revenues (GAAP) - YoY % change 1 %
(1)
%
1 % 3 %
(4)
%
(3)
%
(1)
%
Revenues (constant currency) - YoY % change r 8 % 7 % 6 % 6 % 0 % 1
% 3 % Operating margin w 3.7 % 0.7 % 2.4 % 5.2 % 4.0 % 9.7 % 5.3 %
% of Total Company Revenue Consumer-to-Consumer
segment revenues 79 % 79 % 78 % 80 % 80 % 80 % 79 %
Consumer-to-Business segment revenues 12 % 12 % 12 % 11 % 11 % 11 %
12 % Business Solutions segment revenues 7 % 7 % 8 % 7 % 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
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited) (in millions, except per share amounts)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31,
2016 2015 % Change 2016 2015 % Change
Revenues:
Transaction fees $ 954.4 $ 983.8
(3)
%
$ 3,795.1 $ 3,915.6
(3)
%
Foreign exchange revenues 384.4 363.8 6 % 1,490.2 1,436.2 4 % Other
revenues 32.9 32.4 2 % 137.6
131.9 4 % Total revenues 1,371.7 1,380.0
(1)
%
5,422.9 5,483.7
(1)
%
Expenses: Cost of services 845.8 811.0 4 % 3,270.0 3,199.4 2 %
Selling, general and administrative (a) 839.4
287.2 (b) 1,669.2 1,174.9 42 %
Total expenses 1,685.2 1,098.2 53 %
4,939.2 4,374.3 13 % Operating
income/(loss) (313.5 ) 281.8 (b) 483.7 1,109.4
(56)
%
Other income/(expense): Interest income 0.8 2.5
(67)
%
3.5 10.9
(68)
%
Interest expense (29.6 ) (40.8 )
(28)
%
(152.5 ) (167.9 )
(9)
%
Derivative gains/(losses), net 2.3 (1.2 ) (b) 4.5 1.2 (b) Other
income/(expense), net 1.7 (5.4 ) (b)
2.5 (11.8 ) (b) Total other expense, net (24.8
) (44.9 )
(45)
%
(142.0 ) (167.6 )
(15)
%
Income/(loss) before income taxes (338.3 ) 236.9 (b) 341.7 941.8
(64)
%
Provision for income taxes 16.7 24.6
(32)
%
88.5 104.0
(15)
%
Net income/(loss) $ (355.0 ) $ 212.3 (b) $ 253.2 $
837.8
(70)
%
Earnings/(loss) per share:
Basic $ (0.73 ) $ 0.42 (b) $ 0.52 $ 1.63
(68)
%
Diluted $ (0.73 ) $ 0.42 (b) $ 0.51 $ 1.62
(69)
%
Weighted-average shares outstanding: Basic 483.6 504.5 490.2 512.6
Diluted 483.6 508.6 493.5 516.7 Cash dividends declared per common
share $ 0.16 $ 0.155 3 % $ 0.64 $ 0.62 3 %
______________
(a)
For the three and twelve months ended
December 31, 2016, selling, general and administrative expenses
included $571 million and $601 million, respectively, related to
(1) a Deferred Prosecution Agreement with the United States
Department of Justice, and the United States Attorney's Offices for
the Eastern and Middle Districts of Pennsylvania, the Central
District of California, and the Southern District of Florida, (2) a
Stipulated Order for Permanent Injunction and Final Judgment with
the United States Federal Trade Commission, (3) a Consent to the
Assessment of Civil Money Penalty with the Financial Crimes
Enforcement Network of the United States Department of Treasury
(collectively, the "Joint Settlement Agreements"), to resolve the
respective investigations of those agencies, as described in our
Form 8-K filed with the Securities and Exchange Commission on
January 20, 2017, and related matters. For the twelve months ended
December 31, 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 (the "Paymap Settlement Agreement").
(b) Calculation not meaningful.
THE WESTERN UNION
COMPANYCONSOLIDATED BALANCE
SHEETS(Unaudited)(in millions, except per share
amounts)
December 31,
2016
2015
Assets Cash and cash equivalents (a) $ 877.5 $ 1,315.9
Settlement assets 3,749.1 3,308.7 Property and equipment, net of
accumulated depreciation of $600.0 and $538.2, respectively 220.5
231.8 Goodwill 3,162.0 3,163.8 Other intangible assets, net of
accumulated amortization of $958.2 and $884.4, respectively 664.2
705.0 Other assets 746.3 724.0 Total
assets $ 9,419.6 $ 9,449.2
Liabilities and
Stockholders' Equity Liabilities: Accounts payable and accrued
liabilities $ 1,129.6 $ 606.6 Settlement obligations 3,749.1
3,308.7 Income taxes payable 407.3 211.5 Deferred tax liability,
net 85.9 272.6 Borrowings 2,786.1 3,215.9 Other liabilities
359.4 429.0 Total liabilities 8,517.4 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; 481.5 shares and 502.4 shares
issued and outstanding as of December 31, 2016 and December 31,
2015, respectively 4.8 5.0 Capital surplus 640.9 566.5 Retained
earnings 419.3 977.3 Accumulated other comprehensive loss
(162.8 ) (143.9 ) Total stockholders' equity 902.2
1,404.9 Total liabilities and stockholders'
equity $ 9,419.6 $ 9,449.2
______________
(a) Approximately $700 million and $950 million was held by
entities outside of the United States as of December 31, 2016 and
December 31, 2015, respectively.
THE WESTERN UNION
COMPANYCONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(in millions)
Year Ended
December 31,
2016 2015
Cash Flows From Operating Activities Net
income $ 253.2 $ 837.8 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation 74.2 67.7
Amortization 189.0 202.5 Deferred income tax benefit (174.2 ) (39.9
) Other non-cash items, net 98.3 63.7 Increase/(decrease) in cash,
resulting from changes in: Other assets (71.4 ) (107.4 ) Accounts
payable and accrued liabilities 522.8 14.2 Income taxes payable
190.9 47.1 Other liabilities (40.9 ) (14.6 ) Net cash
provided by operating activities 1,041.9 1,071.1
Cash Flows From
Investing Activities Capitalization of contract costs (107.3 )
(122.8 ) Capitalization of purchased and developed software (53.7 )
(49.3 ) Purchases of property and equipment (68.8 ) (94.4 )
Purchases of non-settlement related investments and other (64.7 )
(110.9 ) Proceeds from maturity of non-settlement related
investments and other 53.2 100.3 Purchases of held-to-maturity
non-settlement related investments (39.7 ) (9.3 ) Proceeds from
held-to-maturity non-settlement related investments 9.9
— Net cash used in investing activities (271.1
) (286.4 )
Cash Flows From Financing Activities Cash
dividends paid (312.2 ) (316.5 ) Common stock repurchased (501.6 )
(511.3 ) Proceeds from issuance of borrowings 575.0 — Principal
payments on borrowings (1,005.4 ) (500.0 ) Proceeds from exercise
of options and other 35.0 75.8 Net cash
used in financing activities (1,209.2 ) (1,252.0 )
Net change in cash and cash equivalents (438.4 ) (467.3 ) Cash and
cash equivalents at beginning of year 1,315.9
1,783.2 Cash and cash equivalents at end of year $ 877.5
$ 1,315.9
THE WESTERN UNION
COMPANYSUMMARY SEGMENT DATA(Unaudited)(in
millions)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31,
2016 2015 % Change 2016 2015 % Change Revenues:
Consumer-to-Consumer (C2C): Transaction fees $ 786.8 $ 808.3
(3)
%
$ 3,123.8 $ 3,221.0
(3)
%
Foreign exchange revenues 290.8 268.0 9 % 1,116.0 1,057.1 6 % Other
revenues 14.9 14.9 0 % 64.8
65.8
(2)
%
Total Consumer-to-Consumer 1,092.5 1,091.2 0 % 4,304.6 4,343.9
(1)
%
Consumer-to-Business (C2B): Transaction fees 149.1 155.6
(4)
%
596.7 612.7
(3)
%
Foreign exchange and other revenues 6.1 6.3
(4)
%
24.5 25.0
(2)
%
Total Consumer-to-Business 155.2 161.9
(4)
%
621.2 637.7
(3)
%
Business Solutions (B2B): Foreign exchange revenues 88.0 91.2
(4)
%
352.6 357.2
(1)
%
Transaction fees and other revenues 10.8 10.7
2 % 43.4 41.5 5 % Total Business
Solutions 98.8 101.9
(3)
%
396.0 398.7
(1)
%
Other: Total revenues 25.2 25.0 1 %
101.1 103.4
(2)
%
Total consolidated revenues $ 1,371.7 $ 1,380.0
(1)
%
$ 5,422.9 $ 5,483.7
(1)
%
Operating income/(loss): Consumer-to-Consumer (a) $ 249.3 $ 261.9
(5)
%
$ 1,008.7 $ 1,042.0
(3)
%
Consumer-to-Business (b) 8.8 19.3
(54)
%
64.4 68.6
(6)
%
Business Solutions 9.6 3.8
(d)
21.1 2.8 (d) Other 3.0 (3.2 ) (d) 10.8
(4.0 ) (d) Total segment operating income/(loss) $
270.7 $ 281.8
(4)
%
$ 1,105.0 $ 1,109.4 0 % Joint Settlement Agreements (c) (571.0 ) -
(d)
(601.0 ) - (d) WU Way business transformation expenses (c)
(13.2 ) - (d)
(20.3 ) - (d) Total consolidated operating
income/(loss) $ (313.5 ) $ 281.8 (d) $ 483.7 $
1,109.4
(56)
%
Operating income/(loss) margin: Consumer-to-Consumer 22.8 % 24.0 %
(1.2)
%
23.4 % 24.0 %
(0.6)
%
Consumer-to-Business 5.7 % 11.9 %
(6.2)
%
10.4 % 10.8 %
(0.4)
%
Business Solutions 9.7 % 3.7 % 6.0 % 5.3 % 0.7 % 4.6 %
Total consolidated operating
income/(loss)margin
(22.9)
%
20.4 %
(43.3)
%
8.9 % 20.2 %
(11.3)
%
______________
(a) For the three and twelve months ended December 31, 2016,
Consumer-to-Consumer operating income/(loss) included $571 million
and $601 million, respectively, for the Joint Settlement Agreements
and related matters, as described in our Form 8-K filed with the
Securities Exchange Commission on January 20, 2017. (b) For the
twelve months ended December 31, 2015, Consumer-to-Business
operating income included $35.3 million of expenses related to the
Paymap Settlement Agreement. (c) Expenses related to the Joint
Settlement Agreements and WU Way business transformation are
excluded from the measurement of segment operating income provided
to the chief operating decision maker for purposes of assessing
segment performance and decision making with respect to resource
allocation. (d) Calculation not meaningful.
THE WESTERN UNION COMPANYNOTES
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. Although the expenses related to
the WU Way are specific to that initiative, the types of expenses
related to the WU Way initiative are similar to expenses that the
Company has previously incurred and can reasonably be expected to
incur in the future.
4Q15 FY2015 1Q16
2Q16 3Q16 4Q16 FY2016 Consolidated
Metrics (a) Revenues, as reported (GAAP) $ 1,380.0 $ 5,483.7 $
1,297.7 $ 1,375.7 $ 1,377.8 $ 1,371.7 $ 5,422.9 Foreign currency
translation impact (t) 73.9 322.6
57.4 48.9 52.1
58.7 217.1 Revenues, constant currency
adjusted $ 1,453.9 $ 5,806.3 $ 1,355.1 $
1,424.6 $ 1,429.9 $ 1,430.4 $ 5,640.0
Prior year revenues, as reported (GAAP) $ 1,409.9 $ 5,607.2 $
1,320.9 $ 1,383.6 $ 1,399.2 $ 1,380.0 $ 5,483.7 Revenue change, as
reported (GAAP)
(2)
%
(2)
%
(2)
%
(1)
%
(2)
%
(1)
%
(1)
%
Revenue change, constant currency adjusted 3 % 4 % 3 % 3 % 2 % 4 %
3 % (b) Operating income/(loss), as reported (GAAP) $ 281.8
$ 1,109.4 $ 258.6 $ 260.3 $ 278.3 $ (313.5 ) $ 483.7 Foreign
currency translation impact (t) 0.9 45.8 16.8 23.5 21.9 28.0 90.2
Paymap Settlement Agreement (u) N/A 35.3 N/A N/A N/A N/A N/A Joint
Settlement Agreements (v) N/A N/A N/A 15.0 15.0 571.0 601.0 WU Way
business transformation expenses (w) N/A N/A
N/A 2.1 5.0
13.2 20.3
Operating income, constant currency
adjusted, excluding Paymap Settlement Agreement, Joint
Settlement Agreements and WU Way business transformation
expenses
$ 282.7 $ 1,190.5 $ 275.4 $ 300.9 $
320.2 $ 298.7 $ 1,195.2 Prior year operating
income, excluding Paymap Settlement Agreement (u) $ 276.1 $ 1,140.5
$ 272.3 $ 286.1 $ 304.5 $ 281.8 $ 1,144.7 Operating income change,
as reported (GAAP) 2 %
(3)
%
(5)
%
4 %
(9)
%
(211)
%
(56)
%
Operating income change, constant currency
adjusted, excluding Paymap Settlement Agreement, Joint
Settlement Agreements and WU Way business transformation
expenses
2 % 4 % 1 % 5 % 5 % 6 % 4 % (c) Operating income/(loss), as
reported (GAAP) $ 281.8 $ 1,109.4 $ 258.6 $ 260.3 $ 278.3 $ (313.5
) $ 483.7 Paymap Settlement Agreement (u) N/A 35.3 N/A N/A N/A N/A
N/A Joint Settlement Agreements (v) N/A N/A N/A 15.0 15.0 571.0
601.0 WU Way business transformation expenses (w) N/A
N/A N/A 2.1 5.0
13.2 20.3
Operating income, excluding Paymap
Settlement Agreement, Joint Settlement Agreements and WU
Way business transformation expenses
$ 281.8 $ 1,144.7 $ 258.6 $ 277.4 $
298.3 $ 270.7 $ 1,105.0 Operating margin, as
reported (GAAP) 20.4 % 20.2 % 19.9 % 18.9 % 20.2 %
(22.9)
%
8.9 %
Operating margin, excluding Paymap
Settlement Agreement, Joint Settlement Agreements and WU
Way business transformation expenses
N/A 20.9 % N/A 20.2 % 21.7 % 19.7 % 20.4 % (d) Operating
income/(loss), as reported (GAAP) $ 281.8 $ 1,109.4 $ 258.6 $ 260.3
$ 278.3 $ (313.5 ) $ 483.7 Reversal of depreciation and
amortization 69.0 270.2 65.6
65.9 66.4 65.3
263.2 EBITDA (x) $ 350.8 $ 1,379.6 $
324.2 $ 326.2 $ 344.7 $ (248.2 ) $ 746.9
Paymap Settlement Agreement (u) N/A 35.3 N/A N/A N/A N/A N/A
Joint Settlement Agreements (v) N/A N/A N/A 15.0 15.0 571.0 601.0
WU Way business transformation expenses (w) N/A
N/A N/A 2.1 5.0
13.2 20.3
Adjusted EBITDA, excluding Paymap
Settlement Agreement, Joint Settlement Agreements and WU
Way business transformation expenses
$ 350.8 $ 1,414.9 $ 324.2 $ 343.3 $
364.7 $ 336.0 $ 1,368.2 Operating margin, as
reported (GAAP) 20.4 % 20.2 % 19.9 % 18.9 % 20.2 %
(22.9)
%
8.9 % EBITDA margin 25.4 % 25.2 % 25.0 % 23.7 % 25.0 %
(18.1)
%
13.8 %
Adjusted EBITDA margin, excluding Paymap
Settlement Agreement, Joint Settlement Agreements and WU
Way transformation expenses
N/A 25.8 % N/A 25.0 % 26.5 % 24.5 % 25.2 % (e) Net
income/(loss), as reported (GAAP) $ 212.3 $ 837.8 $ 185.7 $ 205.6 $
216.9 $ (355.0 ) $ 253.2 Paymap Settlement Agreement (u) N/A 35.3
N/A N/A N/A N/A N/A Joint Settlement Agreements (v) N/A N/A N/A
15.0 15.0 571.0 601.0 WU Way business transformation expenses (w)
N/A N/A N/A 2.1 5.0 13.2 20.3
Income tax expense/(benefit) from Paymap
Settlement Agreement and Joint Settlement Agreements (u)
(v)
N/A (11.1 ) N/A (5.4 ) (5.5 ) 5.5 (5.4 ) Income tax benefit from WU
Way business transformation expenses (w) N/A
N/A N/A (0.8 ) (1.8 )
(4.8 ) (7.4 )
Paymap Settlement Agreement, Joint
Settlement Agreements and WU Way businesstransformation
expenses, net of income tax expense/(benefit) (u) (v)
(w)
N/A 24.2 N/A 10.9
12.7 584.9 608.5
Net income, excluding Paymap Settlement
Agreement, Joint Settlement Agreements and WU Way
business transformation expenses, net of income
tax expense/(benefit)
$ 212.3 $ 862.0 $ 185.7 $ 216.5 $ 229.6
$ 229.9 $ 861.7 Diluted earnings/(loss) per
share ("EPS"), as reported (GAAP) ($ - dollars) $ 0.42 $ 1.62 $
0.37 $ 0.42 $ 0.44 $ (0.73 ) $ 0.51 EPS impact as a result of
Paymap Settlement Agreement ($ - dollars) (u) N/A $ 0.07 N/A N/A
N/A N/A N/A EPS impact as a result of Joint Settlement Agreements
($ - dollars) (v) N/A N/A N/A $ 0.03 $ 0.03 $ 1.17 $ 1.22
EPS impact as a result of WU Way business
transformation expenses ($ - dollars) (w)
N/A N/A N/A $ — $ 0.01 $ 0.03 $ 0.04
EPS impact from income tax
expense/(benefit) from Paymap Settlement Agreement and
Joint Settlement Agreements ($ - dollars) (u) (v)
N/A $ (0.02 ) N/A $ (0.01 ) $ (0.01 ) $ 0.01 $ (0.01 )
EPS impact from income tax benefit from WU
Way business transformation expenses ($ - dollars)
(w)
N/A N/A N/A $ — $
— $ (0.01 ) $ (0.01 )
EPS impact as a result of Paymap
Settlement Agreement, Joint Settlement Agreements and WU
Way business transformation expenses, net of income
tax expense/(benefit) ($ - dollars)
N/A $ 0.05 N/A $ 0.02 $
0.03 $ 1.20 $ 1.24
Diluted EPS, excluding Paymap Settlement
Agreement, Joint Settlement Agreements and WU Way
business transformation expenses ($ - dollars)
N/A $ 1.67 N/A $ 0.44 $
0.47 $ 0.47 $ 1.75 Diluted weighted-average
shares outstanding 508.6 516.7 503.2 493.0 490.3 483.6 493.5
(f) Effective tax rate, as reported (GAAP) 10.4 % 11.0 % 14.6 % 7.6
% 9.6 %
(4.9)
%
25.9 % Impact from Paymap Settlement Agreement (u) N/A 0.8 % N/A
N/A N/A N/A N/A Impact from Joint Settlement Agreements (v) N/A N/A
N/A 1.8 % 1.6 % 9.7 %
(15.9)
%
Impact from WU Way business transformation expenses (w) N/A
N/A N/A 0.3 % 0.5
% 1.7 % 0.5 %
Effective tax rate, excluding Paymap
Settlement Agreement, Joint Settlement Agreements and WU
Way business transformation expenses
N/A 11.8 % N/A 9.7 %
11.7 % 6.5 % 10.5 %
Consumer-to-Consumer Segment (g) Revenues, as reported
(GAAP) $ 1,091.2 $ 4,343.9 $ 1,017.4 $ 1,095.8 $ 1,098.9 $ 1,092.5
$ 4,304.6 Foreign currency translation impact (t) 56.8
256.0 30.5 23.0
25.3 33.4 112.2 Revenues,
constant currency adjusted $ 1,148.0 $ 4,599.9 $
1,047.9 $ 1,118.8 $ 1,124.2 $ 1,125.9 $
4,416.8 Prior year revenues, as reported (GAAP) $ 1,125.3 $
4,485.8 $ 1,038.3 $ 1,101.5 $ 1,112.9 $ 1,091.2 $ 4,343.9 Revenue
change, as reported (GAAP)
(3)
%
(3)
%
(2)
%
(1)
%
(1)
%
0 %
(1)
%
Revenue change, constant currency adjusted 2 % 3 % 1 % 2 % 1 % 3 %
2 % (h) Principal per transaction, as reported ($ - dollars)
$ 303 $ 312 $ 299 $ 301 $ 300 $ 292 $ 298 Foreign currency
translation impact (t) ($ - dollars) 16 20
7 3 3 4
4 Principal per transaction, constant currency
adjusted ($ - dollars) $ 319 $ 332 $ 306 $ 304
$ 303 $ 296 $ 302 Prior year principal
per transaction, as reported ($ - dollars) $ 323 $ 335 $ 315 $ 316
$ 315 $ 303 $ 312 Principal per transaction change, as reported
(6)
%
(7)
%
(5)
%
(5)
%
(5)
%
(3)
%
(5)
%
Principal per transaction change, constant currency adjusted
(1)
%
(1)
%
(3)
%
(4)
%
(4)
%
(2)
%
(3)
%
(i) Cross-border principal, as reported ($ - billions) $
18.4 $ 73.6 $ 17.3 $ 18.5 $ 18.4 $ 18.3 $ 72.5 Foreign currency
translation impact (t) ($ - billions) 1.2 4.9
0.4 0.2 0.2
0.2 1.0 Cross-border principal, constant
currency adjusted ($ - billions) $ 19.6 $ 78.5 $ 17.7
$ 18.7 $ 18.6 $ 18.5 $ 73.5
Prior year cross-border principal, as reported ($ - billions) $
19.2 $ 77.2 $ 17.5 $ 18.8 $ 18.9 $ 18.4 $ 73.6 Cross-border
principal change, as reported
(4)
%
(5)
%
(2)
%
(1)
%
(3)
%
(1)
%
(2)
%
Cross-border principal change, constant currency adjusted 1 % 2 % 1
% 0 %
(2)
%
1 % 0 % (j) North America region revenue change, as reported
(GAAP) 3 % 2 % 3 % 6 % 6 % 7 % 6 % North America region foreign
currency translation impact (t) 2 % 1 % 2 %
1 % 1 % 1 % 1 % North America region
revenue change, constant currency adjusted 5 % 3 %
5 % 7 % 7 % 8 % 7 % (k)
Europe and CIS region revenue change, as reported (GAAP)
(7)
%
(8)
%
(3)
%
(3)
%
(2)
%
(1)
%
(2)
%
Europe and CIS region foreign currency translation impact (t)
8 % 10 % 3 % 2 % 3 % 4 %
3 % Europe and CIS region revenue change, constant currency
adjusted 1 % 2 % 0 %
(1)
%
1 % 3 % 1 % (l) Middle East and Africa
region revenue change, as reported (GAAP)
(4)
%
(4)
%
(4)
%
(4)
%
(10)
%
(8)
%
(7)
%
Middle East and Africa region foreign currency translation impact
(t) 4 % 5 % 3 % 1 % 2 % 3
% 3 % Middle East and Africa region revenue change, constant
currency adjusted 0 % 1 %
(1)
%
(3)
%
(8)
%
(5)
%
(4)
%
(m) APAC region revenue change, as reported (GAAP)
(5)
%
(5)
%
(4)
%
(3)
%
(4)
%
(7)
%
(5)
%
APAC region foreign currency translation impact (t) 5 %
5 % 3 % 2 % 1 % 2 % 3 %
APAC region revenue change, constant currency adjusted 0 %
0 %
(1)
%
(1)
%
(3)
%
(5)
%
(2)
%
(n) LACA region revenue change, as reported (GAAP)
(1)
%
3 %
(5)
%
0 % 3 % 11 % 2 % LACA region foreign currency translation impact
(t) 6 % 7 % 6 % 6 % 5 % 5
% 6 % LACA region revenue change, constant currency adjusted
5 % 10 % 1 % 6 % 8 % 16 %
8 % (o) westernunion.com revenue change, as reported
(GAAP) 21 % 21 % 16 % 19 % 26 % 27 % 22 % westernunion.com foreign
currency translation impact (t) 4 % 5 % 2 %
1 % 2 % 3 % 2 % westernunion.com
revenue change, constant currency adjusted 25 % 26 %
18 % 20 % 28 % 30 % 24 %
Consumer-to-Business Segment (p) Revenues, as reported
(GAAP) $ 161.9 $ 637.7 $ 156.1 $ 154.2 $ 155.7 $ 155.2 $ 621.2
Foreign currency translation impact (t) 7.8
24.6 20.9 21.9 22.8
21.5 87.1 Revenues, constant
currency adjusted $ 169.7 $ 662.3 $ 177.0 $
176.1 $ 178.5 $ 176.7 $ 708.3 Prior
year revenues, as reported (GAAP) $ 155.3 $ 598.8 $ 157.8 $ 157.9 $
160.1 $ 161.9 $ 637.7 Revenue change, as reported (GAAP) 4 % 6 %
(1)
%
(2)
%
(3)
%
(4)
%
(3)
%
Revenue change, constant currency adjusted 9 % 11 % 12 % 12 % 11 %
9 % 11 % (q) Operating income, as reported (GAAP) $ 19.3 $
68.6 $ 22.9 $ 18.0 $ 14.7 $ 8.8 $ 64.4 Paymap Settlement Agreement
(u) N/A 35.3 N/A
N/A N/A N/A N/A
Operating income, excluding Paymap Settlement Agreement $ 19.3
$ 103.9 $ 22.9 $ 18.0 $ 14.7 $
8.8 $ 64.4 Operating income margin, as reported
(GAAP) 11.9 % 10.8 % 14.6 % 11.7 % 9.5 % 5.7 % 10.4 % Operating
income margin, excluding Paymap Settlement Agreement N/A 16.3 % N/A
N/A N/A N/A N/A
Business Solutions Segment (r)
Revenues, as reported (GAAP) $ 101.9 $ 398.7 $ 99.2 $ 100.8 $ 97.2
$ 98.8 $ 396.0 Foreign currency translation impact (t) 7.7
36.1 4.6 3.0
3.5 3.9 15.0 Revenues,
constant currency adjusted $ 109.6 $ 434.8 $ 103.8
$ 103.8 $ 100.7 $ 102.7 $ 411.0
Prior year revenues, as reported (GAAP) $ 101.2 $ 404.6 $ 98.0 $
97.6 $ 101.2 $ 101.9 $ 398.7 Revenue change, as reported (GAAP) 1 %
(1)
%
1 % 3 %
(4)
%
(3)
%
(1)
%
Revenue change, constant currency adjusted 8 % 7 % 6 % 6 % 0 % 1 %
3 % (s) Operating income, as reported (GAAP) $ 3.8 $ 2.8 $
2.4 $ 5.2 $ 3.9 $ 9.6 $ 21.1 Reversal of depreciation and
amortization 12.7 57.4 12.6
13.1 13.2 11.9
50.8 EBITDA (x) $ 16.5 $ 60.2 $ 15.0
$ 18.3 $ 17.1 $ 21.5 $ 71.9
Operating income margin, as reported (GAAP) 3.7 % 0.7 % 2.4 % 5.2 %
4.0 % 9.7 % 5.3 % EBITDA margin 16.2 % 15.1 % 15.1 % 18.2 % 17.5 %
21.8 % 18.1 %
2017 Consolidated Outlook
Metrics
Operating margin (GAAP)
18
%
WU Way business transformation expenses
(w)
2
%
Operating margin, excluding WU Way
business transformation expenses
20
%
Range
Earnings per share (GAAP) ($ -
dollars)
$
1.48
$
1.60
WU Way business transformation expenses ($
- dollars) (w)
0.15
0.15
Earnings per share, excluding WU Way
business transformation expenses ($ - dollars)
$
1.63
$
1.75
Effective tax rate (GAAP)
11
%
Impact from WU Way business transformation
expenses (w)
2
%
Effective tax rate, excluding WU Way
business transformation expenses
13
%
Non-GAAP related
notes:
(t) 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.
(u)
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 (the "Paymap Settlement Agreement"),
included in full year 2015 results. 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. See below for
reconciliation of prior year operating income, excluding Paymap
Settlement Agreement.
4Q15 FY2015 1Q16 2Q16
3Q16 4Q16 FY2016 Prior year operating income,
as reported (GAAP) $ 276.1 $ 1,140.5 $ 272.3 $ 250.8 $ 304.5 $
281.8 $ 1,109.4 Paymap Settlement Agreement (prior year period
impact) N/A N/A N/A 35.3 N/A
N/A 35.3 Prior year operating income, excluding
Paymap Settlement Agreement $ 276.1 $ 1,140.5 $ 272.3 $ 286.1 $
304.5 $ 281.8 $ 1,144.7 (v) Represents the impact from the
settlement agreements related to (1) a Deferred Prosecution
Agreement with the United States Department of Justice, and the
United States Attorney’s Offices for the Eastern and Middle
Districts of Pennsylvania, the Central District of California, and
the Southern District of Florida, (2) a Stipulated Order for
Permanent Injunction and Final Judgment with the United States
Federal Trade Commission ("FTC"), (3) a Consent to the Assessment
of Civil Money Penalty with the Financial Crimes Enforcement
Network of the United States Department of Treasury (collectively,
the “Joint Settlement Agreements”), to resolve the respective
investigations of those agencies, as described in our Form 8-K
filed with the Securities and Exchange Commission on January 20,
2017, and related matters. Amounts related to these matters were
recognized in the second, third, and fourth quarters of 2016 and
the full year 2016 results. The second and third quarter 2016
presentations, which previously included accrued expenses for the
FTC matter in our Consumer-to-Consumer segment, have been recast to
provide consistency with the fourth quarter and full year 2016
presentation and exclude these expenses from our segment operating
income, as these expenses are excluded from the measurement of
segment operating income provided to the chief operating decision
maker for purposes of assessing segment performance and decision
making with respect to resource allocation. Additionally, income
tax benefit was adjusted in the fourth quarter of 2016 to reflect
the revised determination, based on final agreement terms. 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. (w)
Represents the expenses incurred to
transform our operating model, focusing on technology
transformation, network productivity, customer and agent process
optimization, and organizational redesign to better drive
efficiencies and growth initiatives (“WU Way business
transformation expenses”). Amounts related to the WU Way business
transformation expenses were recognized in the second, third, and
fourth quarters of 2016 and the full year 2016 results. The second
and third quarter 2016 presentations, which previously included
these expenses in our operating segments, have been recast to
provide consistency with the fourth quarter and full year 2016
presentation and exclude these expenses from our segment operating
income, as these expenses are excluded from the measurement of
segment operating income provided to the chief operating decision
maker for purposes of assessing segment performance and decision
making with respect to resource allocation. We believe that, by
excluding the effects of significant charges associated with the
transformation of our operating model that can impact operating
trends, management and investors are provided with a measure that
increases the comparability of our other underlying operating
results. Although the expenses related to the WU Way are specific
to that initiative, the types of expenses related to the WU Way
initiative are similar to expenses that the Company has previously
incurred and can reasonably be expected to incur in the future.
(x) 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:
(y) 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.
(z) Represents the North America region of our Consumer-to-Consumer
segment, including the United States, Mexico, and Canada.
(aa) Represents the Europe and the Commonwealth of Independent
States ("CIS") region of our Consumer-to-Consumer segment.
(bb) Represents the Middle East and Africa region of our
Consumer-to-Consumer segment. (cc ) Represents the Asia
Pacific ("APAC") region of our Consumer-to-Consumer segment,
including India, China, and South Asia. (dd) Represents the
Latin America and the Caribbean ("LACA") region of our
Consumer-to-Consumer segment. (ee) 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. (ff) Represents transactions originated in
the United States, including intra-country transactions and
westernunion.com transactions initiated from the United States.
(gg) Represents transactions initiated on westernunion.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170209006095/en/
The Western Union CompanyMediaDan Diaz,
720-332-5564daniel.diaz@westernunion.comorInvestorsMike
Salop, 720-332-8276mike.salop@westernunion.com
Western Union (NYSE:WU)
Historical Stock Chart
From Aug 2024 to Sep 2024
Western Union (NYSE:WU)
Historical Stock Chart
From Sep 2023 to Sep 2024