ENGLEWOOD, Colo.--(BUSINESS WIRE)--The Western Union Company (NYSE: WU) today reported third quarter financial results and provided an updated outlook for 2017.
In the third quarter, the Company generated revenue of $1.4 billion, which increased 2% compared to the prior year, or 3% on a constant currency basis.
Earnings per share of $0.51 increased from $0.44 in the prior year period, while adjusted earnings per share of $0.53 increased from $0.47 in the same period last year.
For the full year, the Company raised its GAAP EPS outlook to a range of $1.50 to $1.60 (previously $1.46 to $1.56), and its adjusted EPS outlook to a range of $1.75 to $1.85 (previously $1.70 to $1.80).
“We are pleased with the results for the quarter and the ongoing success of our digital initiatives,” said President and Chief Executive Officer Hikmet Ersek. “Westernunion.com money transfer delivered a 23% revenue increase in the quarter and represented 10% of our total consumer-to-consumer business. Westernunion.com is now in more than 40 countries that can deliver funds to over 200 countries and territories across the world.”
Ersek continued, "Overall, our business remains resilient as we continue to execute on our long-term growth strategy for cross-border money movement.”
Executive Vice President and Chief Financial Officer Raj Agrawal stated, “We generated solid profitability and strong cash flow in the quarter, and have now returned more than $700 million to shareholders through share repurchases and dividends this year. In addition, our WU Way business transformation initiatives, aimed at driving efficiencies and promoting growth, are demonstrating positive early traction.”
Adjusted metrics for the current and prior years exclude expenses related to the WU Way business transformation, expenses related to the Joint Settlement Agreements (as defined below), and the impact of a second quarter 2017 accrual related to the State Regulator Matter (as defined below).
Q3 Business Unit Highlights
-
Consumer-to-Consumer (C2C) revenues increased 1% on both a reported
and constant currency basis. Transactions grew 2%, driven by growth in
westernunion.com. Geographically, revenue growth was led by
transactions originated in Latin America, partially offset by declines
from oil producing countries in the Middle East and Africa.
Westernunion.com C2C revenues increased 23% on both a reported and constant currency basis, on transaction growth of 24%. Westernunion.com represented 10% of total C2C revenue in the quarter.
- Western Union Business Solutions revenues increased 2%, or 1% on a constant currency basis.
- Other revenues, which primarily consist of the U.S. and Argentina bill payments businesses, increased 9% in the quarter, or 13% on a constant currency basis. Growth in the quarter was driven by the Speedpay U.S. electronic and Pago Facil Argentina walk-in bill payments businesses.
Additional Q3 Financial Highlights
- GAAP operating margin in the quarter was 19.3%, which compares to 20.2% in the prior year period. Adjusted operating margin of 20.6% in the quarter compares to 21.7% in the prior year period. The margin decrease compared to the prior year was primarily due to higher incentive compensation related expense and increased marketing spending.
-
GAAP operating profit in the quarter was $272 million, which compares
to $278 million in the prior year period, while adjusted operating
income of $290 million compares to $298 million in the prior year
period. The current quarter operating income reflects a negative
impact of approximately $9 million from changes in foreign exchange
rates.
The current quarter adjusted operating profit excludes $10 million of WU Way expenses and $8 million related to an accrual for estimated costs of an independent compliance auditor, as required by the Joint Settlement Agreements. The prior year quarter adjusted operating profit excludes $5 million of WU Way expenses and $15 million of accruals related to the Joint Settlement Agreements.
- The effective tax rate in the quarter was 1.5%, which compares to 9.6% in the prior year period. The adjusted tax rate of 3.6% in the quarter compares to 11.7% in the prior year period. The tax rate in the quarter benefited from certain discrete items. The Company expects a full year GAAP effective tax rate of approximately 10% to 11%, and an adjusted rate of approximately 12% to 13%.
- The Company returned $180 million to shareholders in the third quarter, consisting of $100 million of share repurchases and $80 million of dividends, and $720 million year-to-date. Year-to-date cash flow from operating activities was $423 million. This includes outflows of approximately $600 million related to the Joint Settlement Agreements and WU Way spending, net of estimated associated tax benefits.
2017 Outlook
The Company affirmed its operating margin outlook for 2017, and increased its earnings per share and cash flow outlooks, compared to the previous financial outlook reported on August 3. The GAAP revenue outlook was increased slightly to reflect more favorable foreign exchange rates, while the constant currency revenue outlook was affirmed.
Revenue
- Low single digit increase in both GAAP and constant currency revenue (previously flat to low single digit increase for GAAP revenue).
Operating Profit Margin
- GAAP operating margin of approximately 17% and adjusted operating margin of approximately 20%. Adjusted operating margins exclude approximately $95 million of expected WU Way related expenses, and accruals of $49 million related to the State Regulator Matter and $8 million related to the independent compliance auditor.
Earnings per Share
- GAAP EPS in a range of $1.50 to $1.60 (previously $1.46 to $1.56) and adjusted EPS in a range of $1.75 to $1.85 (previously $1.70 to $1.80).
Cash Flow
- GAAP cash flow from operating activities of approximately $600 million. This includes outflows of approximately $600 million related to the Joint Settlement Agreements and WU Way spending, net of estimated associated tax benefits.
Additional Statistics
Additional key statistics for the quarter and historical trends can be found in the supplemental tables included with this press release. As discussed in the Company’s Form 8-K filed with the SEC on April 27, 2017, beginning in the first quarter of 2017 the Company implemented a new region structure in its Consumer-to-Consumer operating segment, due to leadership and organizational structure changes within the Company.
Also beginning January 1, 2017, the determination of the geographic split for transactions and revenue in the C2C segment, including transactions initiated through westernunion.com, is based entirely upon the region where the money transfer is initiated. Prior to January 1, 2017, for transactions originated and paid in different regions, the Company split the transaction count and revenue between the two regions, with each region receiving 50%.
Beginning April 1, 2017, the Company implemented a new segment structure due to leadership and organizational structure changes. The new structure shifted all businesses previously in the historical Consumer-to-Business segment into Other.
Regional and segment results for the prior periods presented within this press release have been adjusted for the new region and segment structure and geographic split methodology.
Expenses related to the State Regulator Matter, Joint Settlement Agreements and the WU Way business transformation are not included in operating segment results, as they 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.
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 consolidated 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; Business Solutions segment revenue change constant currency adjusted; Other revenue change constant currency adjusted; consolidated operating income, excluding the impact from an accrual related to a potential resolution with the New York State Department of Financial Services ("State Regulator Matter"), WU Way business transformation expenses and the settlement with federal and state governments announced in January 2017 ("Joint Settlement Agreements"); consolidated operating margin, excluding the State Regulator Matter, Joint Settlement Agreements and WU Way business transformation expenses; effective tax rate excluding the State Regulator Matter, Joint Settlement Agreements and WU Way business transformation expenses; earnings/(loss) per share, excluding the State Regulator Matter, Joint Settlement Agreements and WU Way business transformation expenses; operating margin outlook excluding the State Regulator Matter, Joint Settlement Agreements, and WU Way business transformation expenses; earnings per share outlook excluding the State Regulator Matter, Joint Settlement Agreements, and WU Way business transformation expenses; effective tax rate outlook, excluding the State Regulator Matter, Joint Settlement Agreements and WU Way business transformation expenses; and additional measures found in the supplemental tables included with this press release. Although the expenses related to the WU Way business transformation are specific to that initiative, the types of expenses related to the WU Way business transformation 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 5842594.
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, 2016. 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 the Joint Settlement Agreements and the State Regulator Matter; the 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, 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 or their interpretation or the enforcement thereof; failure to maintain sufficient amounts or types of regulatory capital or other restrictions on the use of our working capital to meet the changing requirements of our regulators worldwide; changes in accounting standards, rules and interpretations or industry standards affecting our business; and (iii) other events, such as: 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, 2017, 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 150,000 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
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| KEY STATISTICS | |||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||
| Notes* | 3Q16 | 4Q16 | FY2016 | 1Q17 | 2Q17 | 3Q17 |
YTD 3Q17 |
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| Consolidated Metrics | |||||||||||||||||||||||||||||||||||||||
| Consolidated revenues (GAAP) - YoY % change | (2 | )% | (1 | )% | (1 | )% | 0 | % | 0 | % | 2 | % | 1 | % | |||||||||||||||||||||||||
| Consolidated revenues (constant currency) - YoY % change | a | 2 | % | 4 | % | 3 | % | 3 | % | 2 | % | 3 | % | 3 | % | ||||||||||||||||||||||||
| Consolidated operating income/(loss) (GAAP) - YoY % change | (9 | )% | (211 | )% | (56 | )% | (7 | )% | (18 | )% | (2 | )% | (9 | )% | |||||||||||||||||||||||||
|
Consolidated operating income (constant currency adjusted,
excluding State Regulator |
b | 5 | % | 6 | % | 4 | % | 4 | % | 10 | % | 0 | % | 5 | % | ||||||||||||||||||||||||
| Consolidated operating margin (GAAP) | 20.2 | % | (22.9 | )% | 8.9 | % | 18.4 | % | 15.6 | % | 19.3 | % | 17.8 | % | |||||||||||||||||||||||||
|
Consolidated operating margin (excluding State Regulator Matter,
Joint Settlement |
c | 21.7 | % | 19.7 | % | 20.4 | % | 19.5 | % | 21.7 | % | 20.6 | % | 20.6 | % | ||||||||||||||||||||||||
| Consumer-to-Consumer (C2C) Segment | |||||||||||||||||||||||||||||||||||||||
| Revenues (GAAP) - YoY % change | (1 | )% | 0 | % | (1 | )% | 0 | % | (1 | )% | 1 | % | 0 | % | |||||||||||||||||||||||||
| Revenues (constant currency) - YoY % change | g | 1 | % | 3 | % | 2 | % | 2 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||||||||||
| Operating margin | 25.1 | % | 22.8 | % | 23.4 | % | 22.4 | % | 24.8 | % | 23.5 | % | 23.6 | % | |||||||||||||||||||||||||
| Transactions (in millions) | 67.8 | 69.1 | 268.3 | 65.3 | 69.9 | 69.2 | 204.4 | ||||||||||||||||||||||||||||||||
| Transactions - YoY % change | 2 | % | 2 | % | 3 | % | 2 | % | 3 | % | 2 | % | 3 | % | |||||||||||||||||||||||||
| Total principal ($ - billions) | $ | 20.3 | $ | 20.2 | $ | 80.0 | $ | 19.1 | $ | 20.4 | $ | 21.0 | $ | 60.5 | |||||||||||||||||||||||||
| Principal per transaction ($ - dollars) | $ | 300 | $ | 292 | $ | 298 | $ | 292 | $ | 293 | $ | 302 | $ | 296 | |||||||||||||||||||||||||
| Principal per transaction - YoY % change | (5 | )% | (3 | )% | (5 | )% | (2 | )% | (3 | )% | 1 | % | (1 | )% | |||||||||||||||||||||||||
| Principal per transaction (constant currency) - YoY % change | h | (4 | )% | (2 | )% | (3 | )% | (1 | )% | (2 | )% | 0 | % | (1 | )% | ||||||||||||||||||||||||
| Cross-border principal ($ - billions) | $ | 18.4 | $ | 18.3 | $ | 72.5 | $ | 17.3 | $ | 18.7 | $ | 19.0 | $ | 55.0 | |||||||||||||||||||||||||
| Cross-border principal - YoY % change | (3 | )% | (1 | )% | (2 | )% | 1 | % | 1 | % | 4 | % | 2 | % | |||||||||||||||||||||||||
| Cross-border principal (constant currency) - YoY % change | i | (2 | )% | 1 | % | 0 | % | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||||||||||
| NA region revenues (GAAP) - YoY % change | y, z | 7 | % | 8 | % | 6 | % | 3 | % | 3 | % | 1 | % | 2 | % | ||||||||||||||||||||||||
| NA region revenues (constant currency) - YoY % change | j, y, z | 7 | % | 8 | % | 7 | % | 4 | % | 3 | % | 1 | % | 3 | % | ||||||||||||||||||||||||
| NA region transactions - YoY % change | y, z | 7 | % | 8 | % | 7 | % | 5 | % | 4 | % | 2 | % | 4 | % | ||||||||||||||||||||||||
| EU & CIS region revenues (GAAP) - YoY % change | y, aa | (2 | )% | (2 | )% | (2 | )% | (1 | )% | (2 | )% | 2 | % | 0 | % | ||||||||||||||||||||||||
| EU & CIS region revenues (constant currency) - YoY % change | k, y, aa | 2 | % | 4 | % | 1 | % | 4 | % | 2 | % | 1 | % | 2 | % | ||||||||||||||||||||||||
| EU & CIS region transactions - YoY % change | y, aa | 3 | % | 5 | % | 4 | % | 8 | % | 7 | % | 7 | % | 8 | % | ||||||||||||||||||||||||
| MEASA region revenues (GAAP) - YoY % change | y, bb | (16 | )% | (14 | )% | (10 | )% | (13 | )% | (12 | )% | (8 | )% | (11 | )% | ||||||||||||||||||||||||
| MEASA region revenues (constant currency) - YoY % change | l, y, bb | (14 | )% | (12 | )% | (8 | )% | (10 | )% | (11 | )% | (8 | )% | (10 | )% | ||||||||||||||||||||||||
| MEASA region transactions - YoY % change | y, bb | (14 | )% | (17 | )% | (11 | )% | (15 | )% | (10 | )% | (11 | )% | (12 | )% | ||||||||||||||||||||||||
| APAC region revenues (GAAP) - YoY % change | y, cc | 2 | % | (2 | )% | (2 | )% | (2 | )% | (4 | )% | (1 | )% | (3 | )% | ||||||||||||||||||||||||
| APAC region revenues (constant currency) - YoY % change | m, y, cc | 2 | % | (1 | )% | 0 | % | (1 | )% | (2 | )% | 1 | % | (1 | )% | ||||||||||||||||||||||||
| APAC region transactions - YoY % change | y, cc | (5 | )% | (6 | )% | (6 | )% | (2 | )% | (1 | )% | 0 | % | (1 | )% | ||||||||||||||||||||||||
| LACA region revenues (GAAP) - YoY % change | y, dd | 0 | % | 11 | % | (3 | )% | 26 | % | 21 | % | 19 | % | 22 | % | ||||||||||||||||||||||||
| LACA region revenues (constant currency) - YoY % change | n, y, dd | 9 | % | 20 | % | 7 | % | 25 | % | 22 | % | 22 | % | 23 | % | ||||||||||||||||||||||||
| LACA region transactions - YoY % change | y, dd | 15 | % | 18 | % | 13 | % | 17 | % | 16 | % | 17 | % | 17 | % | ||||||||||||||||||||||||
| International revenues - YoY % change | ee | (5 | )% | (4 | )% | (4 | )% | (2 | )% | (3 | )% | 1 | % | (1 | )% | ||||||||||||||||||||||||
| International transactions - YoY % change | ee | (2 | )% | (1 | )% | (1 | )% | 1 | % | 2 | % | 3 | % | 2 | % | ||||||||||||||||||||||||
| International revenues - % of C2C segment revenues | ee | 67 | % | 66 | % | 67 | % | 66 | % | 66 | % | 67 | % | 66 | % | ||||||||||||||||||||||||
| United States originated revenues - YoY % change | ff | 7 | % | 8 | % | 7 | % | 4 | % | 3 | % | 1 | % | 2 | % | ||||||||||||||||||||||||
| United States originated transactions - YoY % change | ff | 7 | % | 8 | % | 8 | % | 4 | % | 4 | % | 1 | % | 3 | % | ||||||||||||||||||||||||
| United States originated revenues - % of C2C segment revenues | ff | 33 | % | 34 | % | 33 | % | 34 | % | 34 | % | 33 | % | 34 | % | ||||||||||||||||||||||||
| westernunion.com revenues (GAAP) - YoY % change | gg | 26 | % | 27 | % | 22 | % | 26 | % | 21 | % | 23 | % | 23 | % | ||||||||||||||||||||||||
| westernunion.com revenues (constant currency) - YoY % change | o, gg | 28 | % | 30 | % | 24 | % | 28 | % | 23 | % | 23 | % | 24 | % | ||||||||||||||||||||||||
| westernunion.com transactions - YoY % change | gg | 29 | % | 28 | % | 27 | % | 27 | % | 25 | % | 24 | % | 26 | % | ||||||||||||||||||||||||
| % of Consumer-to-Consumer Revenue | |||||||||||||||||||||||||||||||||||||||
| Regional Revenues: | |||||||||||||||||||||||||||||||||||||||
| NA region revenues | y, z | 37 | % | 37 | % | 36 | % | 37 | % | 37 | % | 36 | % | 37 | % | ||||||||||||||||||||||||
| EU & CIS region revenues | y, aa | 31 | % | 31 | % | 31 | % | 30 | % | 31 | % | 31 | % | 31 | % | ||||||||||||||||||||||||
| MEASA region revenues | y, bb | 17 | % | 16 | % | 18 | % | 17 | % | 16 | % | 16 | % | 16 | % | ||||||||||||||||||||||||
| APAC region revenues | y, cc | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | ||||||||||||||||||||||||
| LACA region revenues | y, dd | 7 | % | 8 | % | 7 | % | 8 | % | 8 | % | 9 | % | 8 | % | ||||||||||||||||||||||||
| westernunion.com revenues | gg | 8 | % | 9 | % | 8 | % | 9 | % | 9 | % | 10 | % | 10 | % | ||||||||||||||||||||||||
| Business Solutions (B2B) Segment | |||||||||||||||||||||||||||||||||||||||
| Revenues (GAAP) - YoY % change | (4 | )% | (3 | )% | (1 | )% | (6 | )% | (4 | )% | 2 | % | (3 | )% | |||||||||||||||||||||||||
| Revenues (constant currency) - YoY % change | p | 0 | % | 1 | % | 3 | % | (3 | )% | (1 | )% | 1 | % | (1 | )% | ||||||||||||||||||||||||
| Operating margin | 4.0 | % | 9.7 | % | 5.3 | % | 2.5 | % | 5.5 | % | 9.1 | % | 5.7 | % | |||||||||||||||||||||||||
| Other (primarily bill payments businesses in United States and Argentina) | |||||||||||||||||||||||||||||||||||||||
| Revenues (GAAP) - YoY % change | (2 | )% | (4 | )% | (3 | )% | 7 | % | 9 | % | 9 | % | 8 | % | |||||||||||||||||||||||||
| Revenues (constant currency) - YoY % change | r | 11 | % | 8 | % | 10 | % | 9 | % | 12 | % | 13 | % | 11 | % | ||||||||||||||||||||||||
| Operating margin | 10.1 | % | 6.6 | % | 10.4 | % | 12.3 | % | 12.1 | % | 10.5 | % | 11.6 | % | |||||||||||||||||||||||||
| % of Total Company Revenue | |||||||||||||||||||||||||||||||||||||||
| Consumer-to-Consumer segment revenues | 80 | % | 80 | % | 79 | % | 78 | % | 79 | % | 79 | % | 79 | % | |||||||||||||||||||||||||
| Business Solutions segment revenues | 7 | % | 7 | % | 7 | % | 7 | % | 7 | % | 7 | % | 7 | % | |||||||||||||||||||||||||
| Other revenues | 13 | % | 13 | % | 14 | % | 15 | % | 14 | % | 14 | % | 14 | % | |||||||||||||||||||||||||
| * See the "Notes to Key Statistics" section of the press release for the applicable Note references and the reconciliation of non-GAAP financial measures. |
| THE WESTERN UNION COMPANY | |||||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||||||||||||||
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||||||||||||||||
| 2017 | 2016 | % Change | 2017 | 2016 | % Change | ||||||||||||||||||||||||
| Revenues | $ | 1,404.7 | $ | 1,377.8 | 2 |
% |
$ | 4,086.0 | $ | 4,051.2 | 1 |
% |
|||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Cost of services | 841.1 | 822.9 | 2 |
% |
2,484.5 | 2,424.2 | 2 |
% |
|||||||||||||||||||||
| Selling, general and administrative (a) | 292.0 | 276.6 | 6 |
% |
875.6 | 829.8 | 6 |
% |
|||||||||||||||||||||
| Total expenses (b) | 1,133.1 | 1,099.5 | 3 |
% |
3,360.1 | 3,254.0 | 3 |
% |
|||||||||||||||||||||
| Operating income | 271.6 | 278.3 | (2 | )% | 725.9 | 797.2 | (9 | )% | |||||||||||||||||||||
| Other income/(expense): | |||||||||||||||||||||||||||||
| Interest income | 1.3 | 1.1 | 23 |
% |
3.8 | 2.7 | 42 |
% |
|||||||||||||||||||||
| Interest expense | (37.2 | ) | (41.4 | ) | (10 | )% | (104.2 | ) | (122.9 | ) | (15 | )% | |||||||||||||||||
| Derivative gains, net | 2.0 | 0.3 |
(c |
) |
6.8 | 2.2 |
(c |
) |
|||||||||||||||||||||
| Other income, net | 1.5 | 1.7 |
(c |
) |
4.4 | 0.8 |
(c |
) |
|||||||||||||||||||||
| Total other expense, net | (32.4 | ) | (38.3 | ) | (15 | )% | (89.2 | ) | (117.2 | ) | (24 | )% | |||||||||||||||||
| Income before income taxes | 239.2 | 240.0 | 0 |
% |
636.7 | 680.0 | (6 | )% | |||||||||||||||||||||
| Provision for income taxes | 3.6 | 23.1 | (84 | )% | 72.9 | 71.8 | 2 |
% |
|||||||||||||||||||||
| Net income | $ | 235.6 | $ | 216.9 | 9 |
% |
$ | 563.8 | $ | 608.2 | (7 | )% | |||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||||||||
| Basic | $ | 0.51 | $ | 0.45 | 13 |
% |
$ | 1.20 | $ | 1.24 | (3 | )% | |||||||||||||||||
| Diluted | $ | 0.51 | $ | 0.44 | 16 |
% |
$ | 1.19 | $ | 1.23 | (3 | )% | |||||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 462.8 | 487.0 | 470.6 | 492.4 | |||||||||||||||||||||||||
| Diluted | 465.4 | 490.3 | 473.6 | 495.5 | |||||||||||||||||||||||||
| Cash dividends declared per common share | $ | 0.175 | $ | 0.16 | 9 |
% |
$ | 0.525 | $ | 0.48 | 9 |
% |
|||||||||||||||||
| __________ | |||||||||||||||||||||||||||||
| (a) | For the nine months ended September 30, 2017, selling, general and administrative expenses included $49.0 million for the State Regulator Matter, as described in Part I, Item 1, Financial Statements, Note 5, "Commitments and Contingencies" of our third quarter 2017 Quarterly Report on Form 10-Q. | |
| (b) | For the three and nine months ended September 30, 2017, total WU Way business transformation expenses were $9.9 million and $59.2 million, respectively, including $4.0 million and $27.7 million in cost of services and $5.9 million and $31.5 million in selling, general and administrative, respectively. For the three and nine months ended September 30, 2016, total WU Way business transformation expenses were $5.0 million and $7.1 million, respectively, all of which were classified as selling, general and administrative. | |
| (c) | Calculation not meaningful. | |
| THE WESTERN UNION COMPANY | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (Unaudited) | ||||||||||||
| (in millions, except per share amounts) | ||||||||||||
|
September 30,
2017 |
December 31,
2016 |
|||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents (a) | $ | 1,034.7 | $ | 877.5 | ||||||||
| Settlement assets | 3,947.0 | 3,749.1 | ||||||||||
| Property and equipment, net of accumulated depreciation of | ||||||||||||
| $654.7 and $600.0, respectively | 211.9 | 220.5 | ||||||||||
| Goodwill | 3,161.1 | 3,162.0 | ||||||||||
| Other intangible assets, net of accumulated amortization of | ||||||||||||
| $1,021.7 and $958.2, respectively | 601.1 | 664.2 | ||||||||||
| Other assets | 917.8 | 746.3 | ||||||||||
| Total assets | $ | 9,873.6 | $ | 9,419.6 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Liabilities: | ||||||||||||
| Accounts payable and accrued liabilities | $ | 590.5 | $ | 1,129.6 | ||||||||
| Settlement obligations | 3,947.0 | 3,749.1 | ||||||||||
| Income taxes payable | 464.5 | 407.3 | ||||||||||
| Deferred tax liability, net | 140.9 | 85.9 | ||||||||||
| Borrowings | 3,533.4 | 2,786.1 | ||||||||||
| Other liabilities | 487.9 | 359.4 | ||||||||||
| Total liabilities | 9,164.2 | 8,517.4 | ||||||||||
| Stockholders' equity: | ||||||||||||
| Preferred stock, $1.00 par value; 10 shares authorized; | ||||||||||||
| no shares issued | — | — | ||||||||||
| Common stock, $0.01 par value; 2,000 shares authorized; | ||||||||||||
| 459.3 shares and 481.5 shares issued and outstanding as of | ||||||||||||
| September 30, 2017 and December 31, 2016, respectively | 4.6 | 4.8 | ||||||||||
| Capital surplus | 685.2 | 640.9 | ||||||||||
| Retained earnings | 247.9 | 419.3 | ||||||||||
| Accumulated other comprehensive loss | (228.3 | ) | (162.8 | ) | ||||||||
| Total stockholders' equity | 709.4 | 902.2 | ||||||||||
| Total liabilities and stockholders' equity | $ | 9,873.6 | $ | 9,419.6 | ||||||||
|
__________ |
||||||||||||
| (a) | Approximately $550 million and $700 million was held by entities outside of the United States as of September 30, 2017 and December 31, 2016. | |
| THE WESTERN UNION COMPANY | |||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| (Unaudited) | |||||||||||||
| (in millions) | |||||||||||||
|
Nine Months Ended
September 30, |
|||||||||||||
| 2017 | 2016 | ||||||||||||
| Cash Flows From Operating Activities | |||||||||||||
| Net income | $ | 563.8 | $ | 608.2 | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
| Depreciation | 57.5 | 55.0 | |||||||||||
| Amortization | 139.6 | 142.9 | |||||||||||
| Other non-cash items, net | 130.3 | 62.0 | |||||||||||
| Increase/(decrease) in cash resulting from changes in: | |||||||||||||
| Other assets | (35.6 | ) | (41.8 | ) | |||||||||
| Accounts payable and accrued liabilities | (538.4 | ) | (50.2 | ) | |||||||||
| Income taxes payable | 57.6 | 25.6 | |||||||||||
| Other liabilities | 48.3 | 20.2 | |||||||||||
| Net cash provided by operating activities (a) | 423.1 | 821.9 | |||||||||||
| Cash Flows From Investing Activities | |||||||||||||
| Capitalization of contract costs | (46.2 | ) | (85.9 | ) | |||||||||
| Capitalization of purchased and developed software | (27.4 | ) | (39.7 | ) | |||||||||
| Purchases of property and equipment | (48.9 | ) | (51.4 | ) | |||||||||
| Purchases of non-settlement related investments and other | (191.6 | ) | (44.1 | ) | |||||||||
| Proceeds from maturity of non-settlement related investments and other | 43.5 | 22.7 | |||||||||||
| Purchases of held-to-maturity non-settlement related investments | (42.7 | ) | (39.7 | ) | |||||||||
| Proceeds from held-to-maturity non-settlement related investments | 27.2 | 4.2 | |||||||||||
| Net cash used in investing activities | (286.1 | ) | (233.9 | ) | |||||||||
| Cash Flows From Financing Activities | |||||||||||||
| Cash dividends paid | (245.3 | ) | (235.1 | ) | |||||||||
| Common stock repurchased | (489.3 | ) | (419.8 | ) | |||||||||
| Net proceeds from issuance of borrowings | 746.4 | — | |||||||||||
| Proceeds from exercise of options and other | 8.4 | 31.7 | |||||||||||
| Net cash provided by/(used in) financing activities | 20.2 | (623.2 | ) | ||||||||||
| Net change in cash and cash equivalents | 157.2 | (35.2 | ) | ||||||||||
| Cash and cash equivalents at beginning of period | 877.5 | 1,315.9 | |||||||||||
| Cash and cash equivalents at end of period | $ | 1,034.7 | $ | 1,280.7 | |||||||||
|
__________ |
|||||||||||||
|
(a) |
The decrease in cash flow from operations for the nine months ended September 30, 2017 compared to the corresponding period in the prior year was primarily due to cash payments made related to the Joint Settlement Agreements. | |
| THE WESTERN UNION COMPANY | |||||||||||||||||||||||||||||||
| SUMMARY SEGMENT DATA | |||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||||||||||||||||||
| 2017 | 2016 | % Change | 2017 | 2016 | % Change | ||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| Consumer-to-Consumer | $ | 1,107.7 | $ | 1,098.9 | 1 |
% |
$ | 3,210.0 | $ | 3,212.1 | 0 |
% |
|||||||||||||||||||
| Business Solutions | 99.4 | 97.2 | 2 |
% |
289.6 | 297.2 | (3 | )% | |||||||||||||||||||||||
| Other (a) | 197.6 | 181.7 | 9 |
% |
586.4 | 541.9 | 8 |
% |
|||||||||||||||||||||||
| Total consolidated revenues | $ | 1,404.7 | $ | 1,377.8 | 2 |
% |
$ | 4,086.0 | $ | 4,051.2 | 1 |
% |
|||||||||||||||||||
| Operating income: | |||||||||||||||||||||||||||||||
| Consumer-to-Consumer | $ | 259.8 | $ | 276.2 | (6 | )% | $ | 757.3 | $ | 759.4 | 0 |
% |
|||||||||||||||||||
| Business Solutions | 9.0 | 3.9 |
(c |
) |
16.6 | 11.5 | 45 |
% |
|||||||||||||||||||||||
| Other | 20.7 | 18.2 | 13 |
% |
68.2 | 63.4 | 7 |
% |
|||||||||||||||||||||||
| Total segment operating income | 289.5 | 298.3 | (3 | )% | 842.1 | 834.3 | 1 |
% |
|||||||||||||||||||||||
| State Regulator Matter (b) | — | — |
(c |
) |
(49.0 | ) | — |
(c |
) |
||||||||||||||||||||||
| Joint Settlement Agreements (b) | (8.0 | ) | (15.0 | ) |
(c |
) |
(8.0 | ) | (30.0 | ) |
(c |
) |
|||||||||||||||||||
| Business transformation expenses (b) | (9.9 | ) | (5.0 | ) |
(c |
) |
(59.2 | ) | (7.1 | ) |
(c |
) |
|||||||||||||||||||
| Total consolidated operating income | $ | 271.6 | $ | 278.3 | (2 | )% | $ | 725.9 | $ | 797.2 | (9 | )% | |||||||||||||||||||
| Operating income margin: | |||||||||||||||||||||||||||||||
| Consumer-to-Consumer | 23.5 | % | 25.1 | % | (1.6 | )% | 23.6 | % | 23.6 | % | 0.0 |
% |
|||||||||||||||||||
| Business Solutions | 9.1 | % | 4.0 | % | 5.1 |
% |
5.7 | % | 3.9 | % | 1.8 |
% |
|||||||||||||||||||
| Other | 10.5 | % | 10.1 | % | 0.4 |
% |
11.6 | % | 11.7 | % | (0.1 | )% | |||||||||||||||||||
| Total consolidated operating income margin | 19.3 | % | 20.2 | % | (0.9 | )% | 17.8 | % | 19.7 | % | (1.9 | )% | |||||||||||||||||||
| __________ | |||||||||||||||||||||||||||||||
| (a) | Consists primarily of the Company's bill payments businesses in the United States and Argentina. | |
| (b) | Expenses related to the State Regulator Matter, Joint Settlement Agreements and the 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. | |
| (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 amounts, which have been adjusted for changes in our reporting segments and geographic regions, as described earlier. 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. | |
| 3Q16 | 4Q16 | FY2016 | 1Q17 | 2Q17 | 3Q17 |
YTD 3Q17 |
||||||||||||||||||||||||||||||
| Consolidated Metrics | ||||||||||||||||||||||||||||||||||||
| (a) | Revenues, as reported (GAAP) | $ | 1,377.8 | $ | 1,371.7 | $ | 5,422.9 | $ | 1,302.4 | $ | 1,378.9 | $ | 1,404.7 | $ | 4,086.0 | |||||||||||||||||||||
| Foreign currency translation impact (s) | 52.1 | 58.7 | 217.1 | 30.1 | 29.0 | 7.7 | 66.8 | |||||||||||||||||||||||||||||
| Revenues, constant currency adjusted | $ | 1,429.9 | $ | 1,430.4 | $ | 5,640.0 | $ | 1,332.5 | $ | 1,407.9 | $ | 1,412.4 | $ | 4,152.8 | ||||||||||||||||||||||
| Prior year 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 | ||||||||||||||||||||||
| Revenue change, as reported (GAAP) | (2 | )% | (1 | )% | (1 | )% | 0 | % | 0 | % | 2 | % | 1 | % | ||||||||||||||||||||||
| Revenue change, constant currency adjusted | 2 | % | 4 | % | 3 | % | 3 | % | 2 | % | 3 | % | 3 | % | ||||||||||||||||||||||
| (b) | Operating income/(loss), as reported (GAAP) | $ | 278.3 | $ | (313.5 | ) | $ | 483.7 | $ | 239.5 | $ | 214.8 | $ | 271.6 | $ | 725.9 | ||||||||||||||||||||
| Foreign currency translation impact (s) | 21.9 | 28.0 | 90.2 | 15.0 | 6.8 | 8.9 | 30.7 | |||||||||||||||||||||||||||||
| State Regulator Matter (t) | N/A | N/A | N/A | N/A | 49.0 | — | 49.0 | |||||||||||||||||||||||||||||
| Joint Settlement Agreements (v) | 15.0 | 571.0 | 601.0 | N/A | N/A | 8.0 | 8.0 | |||||||||||||||||||||||||||||
| WU Way business transformation expenses (w) | 5.0 | 13.2 | 20.3 | 14.3 | 35.0 | 9.9 | 59.2 | |||||||||||||||||||||||||||||
|
Operating income, constant currency adjusted, excluding State
Regulator Matter, |
$ | 320.2 | $ | 298.7 | $ | 1,195.2 | $ | 268.8 | $ | 305.6 | $ | 298.4 | $ | 872.8 | ||||||||||||||||||||||
|
Prior year operating income, excluding Joint Settlement
Agreements, WU Way business |
$ | 304.5 | $ | 281.8 | $ | 1,144.7 | $ | 258.6 | $ | 277.4 | $ | 298.3 | $ | 834.3 | ||||||||||||||||||||||
| Operating income change, as reported (GAAP) | (9 | )% | (211 | )% | (56 | )% | (7 | )% | (18 | )% | (2 | )% | (9 | )% | ||||||||||||||||||||||
|
Operating income change, constant currency adjusted, excluding
State |
5 | % | 6 | % | 4 | % | 4 | % | 10 | % | 0 | % | 5 | % | ||||||||||||||||||||||
| (c) | Operating income/(loss), as reported (GAAP) | $ | 278.3 | $ | (313.5 | ) | $ | 483.7 | $ | 239.5 | $ | 214.8 | $ | 271.6 | $ | 725.9 | ||||||||||||||||||||
| State Regulator Matter (t) | N/A | N/A | N/A | N/A | 49.0 | — | 49.0 | |||||||||||||||||||||||||||||
| Joint Settlement Agreements (v) | 15.0 | 571.0 | 601.0 | N/A | N/A | 8.0 | 8.0 | |||||||||||||||||||||||||||||
| WU Way business transformation expenses (w) | 5.0 | 13.2 | 20.3 | 14.3 | 35.0 | 9.9 | 59.2 | |||||||||||||||||||||||||||||
|
Operating income, excluding State Regulator Matter, Joint
Settlement |
$ | 298.3 | $ | 270.7 | $ | 1,105.0 | $ | 253.8 | $ | 298.8 | $ | 289.5 | $ | 842.1 | ||||||||||||||||||||||
| Operating margin, as reported (GAAP) | 20.2 | % | (22.9 | )% | 8.9 | % | 18.4 | % | 15.6 | % | 19.3 | % | 17.8 | % | ||||||||||||||||||||||
|
Operating income, excluding State Regulator Matter, Joint
Settlement |
21.7 | % | 19.7 | % | 20.4 | % | 19.5 | % | 21.7 | % | 20.6 | % | 20.6 | % | ||||||||||||||||||||||
| (d) | Operating income/(loss), as reported (GAAP) | $ | 278.3 | $ | (313.5 | ) | $ | 483.7 | $ | 239.5 | $ | 214.8 | $ | 271.6 | $ | 725.9 | ||||||||||||||||||||
| Reversal of depreciation and amortization | 66.4 | 65.3 | 263.2 | 66.4 | 65.2 | 65.5 | 197.1 | |||||||||||||||||||||||||||||
| EBITDA (x) | $ | 344.7 | $ | (248.2 | ) | $ | 746.9 | $ | 305.9 | $ | 280.0 | $ | 337.1 | $ | 923.0 | |||||||||||||||||||||
| State Regulator Matter (t) | N/A | N/A | N/A | N/A | 49.0 | — | 49.0 | |||||||||||||||||||||||||||||
| Joint Settlement Agreements (v) | 15.0 | 571.0 | 601.0 | N/A | N/A | 8.0 | 8.0 | |||||||||||||||||||||||||||||
| WU Way business transformation expenses (w) | 5.0 | 13.2 | 20.3 | 14.3 | 35.0 | 9.9 | 59.2 | |||||||||||||||||||||||||||||
|
Adjusted EBITDA, excluding State Regulator Matter, Joint Settlement |
$ | 364.7 | $ | 336.0 | $ | 1,368.2 | $ | 320.2 | $ | 364.0 | $ | 355.0 | $ | 1,039.2 | ||||||||||||||||||||||
| Operating margin, as reported (GAAP) | 20.2 | % | (22.9 | )% | 8.9 | % | 18.4 | % | 15.6 | % | 19.3 | % | 17.8 | % | ||||||||||||||||||||||
| EBITDA margin | 25.0 | % | (18.1 | )% | 13.8 | % | 23.5 | % | 20.3 | % | 24.0 | % | 22.6 | % | ||||||||||||||||||||||
|
Adjusted EBITDA margin, excluding State Regulator Matter, Joint |
26.5 | % | 24.5 | % | 25.2 | % | 24.6 | % | 26.4 | % | 25.3 | % | 25.4 | % | ||||||||||||||||||||||
| (e) | Net income/(loss), as reported (GAAP) | $ | 216.9 | $ | (355.0 | ) | $ | 253.2 | $ | 161.7 | $ | 166.5 | $ | 235.6 | $ | 563.8 | ||||||||||||||||||||
| State Regulator Matter (t) | N/A | N/A | N/A | N/A | 49.0 | — | 49.0 | |||||||||||||||||||||||||||||
| Joint Settlement Agreements (v) | 15.0 | 571.0 | 601.0 | N/A | N/A | 8.0 | 8.0 | |||||||||||||||||||||||||||||
| WU Way business transformation expenses (w) | 5.0 | 13.2 | 20.3 | 14.3 | 35.0 | 9.9 | 59.2 | |||||||||||||||||||||||||||||
| Income tax benefit from State Regulator Matter (t) | N/A | N/A | N/A | N/A | — | — | — | |||||||||||||||||||||||||||||
| Income tax expense/(benefit) from Joint Settlement Agreements (v) | (5.5 | ) | 5.5 | (5.4 | ) | N/A | N/A | (2.9 | ) | (2.9 | ) | |||||||||||||||||||||||||
|
Income tax benefit from WU Way business transformation expenses (w) |
(1.8 | ) | (4.8 | ) | (7.4 | ) | (5.0 | ) | (12.3 | ) | (2.7 | ) | (20.0 | ) | ||||||||||||||||||||||
|
State Regulator Matter, Joint Settlement Agreements and WU Way
business |
12.7 | 584.9 | 608.5 | 9.3 | 71.7 | 12.3 | 93.3 | |||||||||||||||||||||||||||||
|
Net income, excluding State Regulator Matter, Joint Settlement
Agreements |
$ | 229.6 | $ | 229.9 | $ | 861.7 | $ | 171.0 | $ | 238.2 | $ | 247.9 | $ | 657.1 | ||||||||||||||||||||||
| Diluted earnings/(loss) per share ("EPS"), as reported (GAAP) ($ - dollars) | $ | 0.44 | $ | (0.73 | ) | $ | 0.51 | $ | 0.33 | $ | 0.35 | $ | 0.51 | $ | 1.19 | |||||||||||||||||||||
| EPS impact as a result of State Regulator Matter ($ - dollars) (t) | N/A | N/A | N/A | N/A | $ | 0.10 | $ | — | $ | 0.10 | ||||||||||||||||||||||||||
| EPS impact as a result of Joint Settlement Agreements ($ - dollars) (v) | $ | 0.03 | $ | 1.17 | $ | 1.22 | N/A | N/A | $ | 0.02 | $ | 0.02 | ||||||||||||||||||||||||
|
EPS impact as a result of WU Way business transformation expenses ($ - dollars) (w) |
$ | 0.01 | $ | 0.03 | $ | 0.04 | $ | 0.03 | $ | 0.07 | $ | 0.02 | $ | 0.13 | ||||||||||||||||||||||
| EPS impact from income tax benefit from State Regulator Matter ($ - dollars) (t) | N/A | N/A | N/A | N/A | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||
|
EPS impact from income tax expense/(benefit) from Joint Settlement
Agreement |
$ | (0.01 | ) | $ | 0.01 | $ | (0.01 | ) | N/A | N/A | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||||||||||||
|
EPS impact from income tax benefit from WU Way business
transformation expenses |
$ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.04 | ) | ||||||||||||||||
|
EPS impact as a result of State Regulator Matter, Joint Settlement |
$ | 0.03 | $ | 1.20 | $ | 1.24 | $ | 0.02 | $ | 0.15 | $ | 0.02 | $ | 0.20 | ||||||||||||||||||||||
|
Diluted EPS, excluding State Regulator Matter, Joint Settlement |
$ | 0.47 | $ | 0.47 | $ | 1.75 | $ | 0.35 | $ | 0.50 | $ | 0.53 | $ | 1.39 | ||||||||||||||||||||||
| Diluted weighted-average shares outstanding | 490.3 | 483.6 | 493.5 | 483.4 | 472.0 | 465.4 | 473.6 | |||||||||||||||||||||||||||||
| (f) | Effective tax rate, as reported (GAAP) | 9.6 | % | (4.9 | )% | 25.9 | % | 24.1 | % | 9.7 | % | 1.5 | % | 11.4 | % | |||||||||||||||||||||
| Impact from State Regulator Matter (t) | N/A | N/A | N/A | N/A | (2.0 | )% | 0.0 | % | (0.8 | )% | ||||||||||||||||||||||||||
| Impact from Joint Settlement Agreements (v) | 1.6 | % | 9.7 | % | (15.9 | )% | N/A | N/A | 1.1 | % | 0.3 | % | ||||||||||||||||||||||||
| Impact from WU Way business transformation expenses (w) | 0.5 | % | 1.7 | % | 0.5 | % | 0.7 | % | 3.5 | % | 1.0 | % | 1.8 | % | ||||||||||||||||||||||
|
Effective tax rate, excluding State Regulator Matter, Joint
Settlement |
11.7 | % | 6.5 | % | 10.5 | % | 24.8 | % | 11.2 | % | 3.6 | % | 12.7 | % | ||||||||||||||||||||||
| Consumer-to-Consumer Segment | ||||||||||||||||||||||||||||||||||||
| (g) | Revenues, as reported (GAAP) | $ | 1,098.9 | $ | 1,092.5 | $ | 4,304.6 | $ | 1,015.0 | $ | 1,087.3 | $ | 1,107.7 | $ | 3,210.0 | |||||||||||||||||||||
| Foreign currency translation impact (s) | 25.3 | 33.4 | 112.2 | 24.1 | 20.8 | 1.8 | 46.7 | |||||||||||||||||||||||||||||
| Revenues, constant currency adjusted | $ | 1,124.2 | $ | 1,125.9 | $ | 4,416.8 | $ | 1,039.1 | $ | 1,108.1 | $ | 1,109.5 | $ | 3,256.7 | ||||||||||||||||||||||
| Prior year 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 | ||||||||||||||||||||||
| Revenue change, as reported (GAAP) | (1 | )% | 0 | % | (1 | )% | 0 | % | (1 | )% | 1 | % | 0 | % | ||||||||||||||||||||||
| Revenue change, constant currency adjusted | 1 | % | 3 | % | 2 | % | 2 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||||||||
| (h) | Principal per transaction, as reported ($ - dollars) | $ | 300 | $ | 292 | $ | 298 | $ | 292 | $ | 293 | $ | 302 | $ | 296 | |||||||||||||||||||||
| Foreign currency translation impact ($ - dollars) (s) | 3 | 4 | 4 | 3 | 3 | (2 | ) | 1 | ||||||||||||||||||||||||||||
| Principal per transaction, constant currency adjusted ($ - dollars) | $ | 303 | $ | 296 | $ | 302 | $ | 295 | $ | 296 | $ | 300 | $ | 297 | ||||||||||||||||||||||
| Prior year principal per transaction, as reported ($ - dollars) | $ | 315 | $ | 303 | $ | 312 | $ | 299 | $ | 301 | $ | 300 | $ | 300 | ||||||||||||||||||||||
| Principal per transaction change, as reported | (5 | )% | (3 | )% | (5 | )% | (2 | )% | (3 | )% | 1 | % | (1 | )% | ||||||||||||||||||||||
| Principal per transaction change, constant currency adjusted | (4 | )% | (2 | )% | (3 | )% | (1 | )% | (2 | )% | 0 | % | (1 | )% | ||||||||||||||||||||||
| (i) | Cross-border principal, as reported ($ - billions) | $ | 18.4 | $ | 18.3 | $ | 72.5 | $ | 17.3 | $ | 18.7 | $ | 19.0 | $ | 55.0 | |||||||||||||||||||||
| Foreign currency translation impact ($ - dollars) (s) | 0.2 | 0.2 | 1.0 | 0.2 | 0.2 | (0.2 | ) | 0.2 | ||||||||||||||||||||||||||||
| Cross-border principal, constant currency adjusted ($ - billions) | $ | 18.6 | $ | 18.5 | $ | 73.5 | $ | 17.5 | $ | 18.9 | $ | 18.8 | $ | 55.2 | ||||||||||||||||||||||
| Prior year cross-border principal, as reported ($ - billions) | $ | 18.9 | $ | 18.4 | $ | 73.6 | $ | 17.3 | $ | 18.5 | $ | 18.4 | $ | 54.2 | ||||||||||||||||||||||
| Cross-border principal change, as reported | (3 | )% | (1 | )% | (2 | )% | 1 | % | 1 | % | 4 | % | 2 | % | ||||||||||||||||||||||
| Cross-border principal change, constant currency adjusted | (2 | )% | 1 | % | 0 | % | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||||||||
| (j) | NA region revenue change, as reported (GAAP) | 7 | % | 8 | % | 6 | % | 3 | % | 3 | % | 1 | % | 2 | % | |||||||||||||||||||||
| NA region foreign currency translation impact (s) | 0 | % | 0 | % | 1 | % | 1 | % | 0 | % | 0 | % | 1 | % | ||||||||||||||||||||||
| NA region revenue change, constant currency adjusted | 7 | % | 8 | % | 7 | % | 4 | % | 3 | % | 1 | % | 3 | % | ||||||||||||||||||||||
| (k) | EU & CIS region revenue change, as reported (GAAP) | (2 | )% | (2 | )% | (2 | )% | (1 | )% | (2 | )% | 2 | % | 0 | % | |||||||||||||||||||||
| EU & CIS region foreign currency translation impact (s) | 4 | % | 6 | % | 3 | % | 5 | % | 4 | % | (1 | )% | 2 | % | ||||||||||||||||||||||
| EU & CIS region revenue change, constant currency adjusted | 2 | % | 4 | % | 1 | % | 4 | % | 2 | % | 1 | % | 2 | % | ||||||||||||||||||||||
| (l) | MEASA region revenue change, as reported (GAAP) | (16 | )% | (14 | )% | (10 | )% | (13 | )% | (12 | )% | (8 | )% | (11 | )% | |||||||||||||||||||||
| MEASA region foreign currency translation impact (s) | 2 | % | 2 | % | 2 | % | 3 | % | 1 | % | 0 | % | 1 | % | ||||||||||||||||||||||
| MEASA region revenue change, constant currency adjusted | (14 | )% | (12 | )% | (8 | )% | (10 | )% | (11 | )% | (8 | )% | (10 | )% | ||||||||||||||||||||||
| (m) | APAC region revenue change, as reported (GAAP) | 2 | % | (2 | )% | (2 | )% | (2 | )% | (4 | )% | (1 | )% | (3 | )% | |||||||||||||||||||||
| APAC region foreign currency translation impact (s) | 0 | % | 1 | % | 2 | % | 1 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||||||||
| APAC region revenue change, constant currency adjusted | 2 | % | (1 | )% | 0 | % | (1 | )% | (2 | )% | 1 | % | (1 | )% | ||||||||||||||||||||||
| (n) | LACA region revenue change, as reported (GAAP) | 0 | % | 11 | % | (3 | )% | 26 | % | 21 | % | 19 | % | 22 | % | |||||||||||||||||||||
| LACA region foreign currency translation impact (s) | 9 | % | 9 | % | 10 | % | (1 | )% | 1 | % | 3 | % | 1 | % | ||||||||||||||||||||||
| LACA region revenue change, constant currency adjusted | 9 | % | 20 | % | 7 | % | 25 | % | 22 | % | 22 | % | 23 | % | ||||||||||||||||||||||
| (o) | westernunion.com revenue change, as reported (GAAP) | 26 | % | 27 | % | 22 | % | 26 | % | 21 | % | 23 | % | 23 | % | |||||||||||||||||||||
| westernunion.com region foreign currency translation impact (s) | 2 | % | 3 | % | 2 | % | 2 | % | 2 | % | 0 | % | 1 | % | ||||||||||||||||||||||
| westernunion.com revenue change, constant currency adjusted | 28 | % | 30 | % | 24 | % | 28 | % | 23 | % | 23 | % | 24 | % | ||||||||||||||||||||||
| Business Solutions Segment | ||||||||||||||||||||||||||||||||||||
| (p) | Revenues, as reported (GAAP) | $ | 97.2 | $ | 98.8 | $ | 396.0 | $ | 93.6 | $ | 96.6 | $ | 99.4 | $ | 289.6 | |||||||||||||||||||||
| Foreign currency translation impact (s) | 3.5 | 3.9 | 15.0 | 2.8 | 3.2 | (1.2 | ) | 4.8 | ||||||||||||||||||||||||||||
| Revenues, constant currency adjusted | $ | 100.7 | $ | 102.7 | $ | 411.0 | $ | 96.4 | $ | 99.8 | $ | 98.2 | $ | 294.4 | ||||||||||||||||||||||
| Prior year revenues, as reported (GAAP) | $ | 101.2 | $ | 101.9 | $ | 398.7 | $ | 99.2 | $ | 100.8 | $ | 97.2 | $ | 297.2 | ||||||||||||||||||||||
| Revenue change, as reported (GAAP) | (4 | )% | (3 | )% | (1 | )% | (6 | )% | (4 | )% | 2 | % | (3 | )% | ||||||||||||||||||||||
| Revenue change, constant currency adjusted | 0 | % | 1 | % | 3 | % | (3 | )% | (1 | )% | 1 | % | (1 | )% | ||||||||||||||||||||||
| (q) | Operating income, as reported (GAAP) | $ | 3.9 | $ | 9.6 | $ | 21.1 | $ | 2.3 | $ | 5.3 | $ | 9.0 | $ | 16.6 | |||||||||||||||||||||
| Reversal of depreciation and amortization | 13.2 | 11.9 | 50.8 | 10.6 | 10.6 | 10.6 | 31.8 | |||||||||||||||||||||||||||||
| EBITDA (x) | $ | 17.1 | $ | 21.5 | $ | 71.9 | $ | 12.9 | $ | 15.9 | $ | 19.6 | $ | 48.4 | ||||||||||||||||||||||
| Operating income margin, as reported (GAAP) | 4.0 | % | 9.7 | % | 5.3 | % | 2.5 | % | 5.5 | % | 9.1 | % | 5.7 | % | ||||||||||||||||||||||
| EBITDA margin | 17.5 | % | 21.8 | % | 18.1 | % | 13.7 | % | 16.6 | % | 19.7 | % | 16.7 | % | ||||||||||||||||||||||
| (r) | Other (primarily bill payments businesses in United States and Argentina) | |||||||||||||||||||||||||||||||||||
| Revenues, as reported (GAAP) | $ | 181.7 | $ | 180.4 | $ | 722.3 | $ | 193.8 | $ | 195.0 | $ | 197.6 | $ | 586.4 | ||||||||||||||||||||||
| Foreign currency translation impact (s) | 23.2 | 21.6 | 89.9 | 3.2 | 5.0 | 7.1 | 15.3 | |||||||||||||||||||||||||||||
| Revenues, constant currency adjusted | $ | 204.9 | $ | 202.0 | $ | 812.2 | $ | 197.0 | $ | 200.0 | $ | 204.7 | $ | 601.7 | ||||||||||||||||||||||
| Prior year revenues, as reported (GAAP) | $ | 185.1 | $ | 186.9 | $ | 741.1 | $ | 181.1 | $ | 179.1 | $ | 181.7 | $ | 541.9 | ||||||||||||||||||||||
| Revenue change, as reported (GAAP) | (2 | )% | (4 | )% | (3 | )% | 7 | % | 9 | % | 9 | % | 8 | % | ||||||||||||||||||||||
| Revenue change, constant currency adjusted | 11 | % | 8 | % | 10 | % | 9 | % | 12 | % | 13 | % | 11 | % | ||||||||||||||||||||||
| 2017 Consolidated Outlook Metrics | ||||||||||||||||||||||||||||||||||||
| Operating margin (GAAP) | 17 | % | ||||||||||||||||||||||||||||||||||
| State Regulator Matter (t) | 1 | % | ||||||||||||||||||||||||||||||||||
| Joint Settlement Agreements (v) | 0 | % | ||||||||||||||||||||||||||||||||||
| WU Way business transformation expenses (w) | 2 | % | ||||||||||||||||||||||||||||||||||
|
Operating margin, excluding State Regulator Matter, Joint
Settlement Agreements, and |
20 | % | ||||||||||||||||||||||||||||||||||
| Range | ||||||||||||||||||||||||||||||||||||
| Earnings per share (GAAP) ($ - dollars) | $ | 1.50 | $ | 1.60 | ||||||||||||||||||||||||||||||||
| State Regulator Matter ($ - dollars) (t) | 0.10 | 0.10 | ||||||||||||||||||||||||||||||||||
| Joint Settlement Agreements ($ - dollars) (v) | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||||
|
WU Way business transformation expenses ($ - dollars) (w) |
0.14 | 0.14 | ||||||||||||||||||||||||||||||||||
|
Earnings per share, excluding State Regulator Matter, Joint
Settlement Agreements, |
$ |
1.75 |
$ | 1.85 | ||||||||||||||||||||||||||||||||
| Range | ||||||||||||||||||||||||||||||||||||
| Effective tax rate (GAAP) | 10 | % | 11 | % | ||||||||||||||||||||||||||||||||
| Impact from State Regulator Matter (t) | (1 | )% | (1 | )% | ||||||||||||||||||||||||||||||||
| Joint Settlement Agreements (v) | 0 | % | 0 | % | ||||||||||||||||||||||||||||||||
| Impact from WU Way business transformation expenses (w) | 3 | % | 3 | % | ||||||||||||||||||||||||||||||||
|
Effective tax rate, excluding State Regulator Matter, Joint
Settlement Agreements, |
12 | % | 13 | % | ||||||||||||||||||||||||||||||||
|
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 an accrual related to a potential resolution with the New York State Department of Financial Services ("NYDFS") related to matters identified as part of the Joint Settlement Agreements (referred to above as the "State Regulator Matter"). Discussions with the NYDFS are ongoing, and there can be no assurance that we will reach an agreement with the NYDFS. The discussions could result in additional future accruals to reach a settlement agreement with the NYDFS. Additionally, if this matter is not settled and proceeds to civil litigation, the NYDFS would seek to impose fines, damages, or other regulatory consequences. Resolution of this matter could have a material adverse effect on our business, financial condition, results of operations and cash flow. These expenses have been excluded from 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 potential settlement of legal matters that can impact operating trends, management and investors are provided with a measure that increases the comparability of our underlying operating results. | ||
| (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. | ||
| 3Q15 | 4Q15 | FY2015 | |||||||||||
| Operating income, as reported (GAAP) | $ 304.5 | $ 281.8 | $ 1,109.4 | ||||||||||
| Paymap Settlement Agreement | N/A | N/A | 35.3 | ||||||||||
| Operating income, excluding Paymap Settlement Agreement | $ 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 (referred to above, collectively, as 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. Additionally, in the third quarter of 2017, we recorded an additional accrual in the amount of $8 million related to an independent compliance auditor, pursuant to the terms of the Joint Settlement Agreements. These expenses have been excluded 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 beginning in the second quarter of 2016, and each subsequent quarter. These expenses have been excluded 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 transactions initiated through westernunion.com, is determined entirely based upon the region where the money transfer is initiated. Prior to January 1, 2017, for transactions originated and paid in different regions, we split the transaction count and revenue between the two regions, with each region receiving 50%. Therefore, regional results for all periods previously presented have also been adjusted to attribute the transactions and revenue entirely to the region where the transaction was initiated. | ||
| (z) | Represents the North America (United States and Canada) ("NA") region of our Consumer-to-Consumer segment. | ||
| (aa) | Represents the Europe and the Russia/Commonwealth of Independent States ("EU & CIS") region of our Consumer-to-Consumer segment. | ||
| (bb) | Represents the Middle East, Africa, and South Asia ("MEASA") region of our Consumer-to-Consumer segment, including India and certain South Asian countries, which consist of Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka. | ||
| (cc) | Represents the East Asia and Oceania ("APAC") region of our Consumer-to-Consumer segment. | ||
| (dd) | Represents the Latin America and the Caribbean ("LACA") region of our Consumer-to-Consumer segment, including Mexico. | ||
| (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. | ||
