First quarter GAAP earnings per share (EPS)
of $0.74, adjusted EPS of $0.51, 20.5% GAAP operating margin, 21.8%
adjusted operating margin excluding Business Solutions
Proceeds received from Business Solutions
sale
2022 financial outlook revised due to
suspension of services in Russia, Belarus, and related
impacts
The Western Union Company (NYSE: WU), a global leader in
cross-border, cross-currency money movement and payments, today
reported first quarter 2022 financial results and updated its full
year financial outlook.
The Company’s first quarter revenue of $1.2 billion declined 4%
on a reported basis, or 1% on a constant currency basis excluding
the contribution from Business Solutions, compared to the prior
year period. Argentina inflation benefited revenue growth by
approximately 1 percentage point. First quarter revenue was
impacted by a decline in retail money transfer, as well as the
suspension of services in Russia and Belarus.
GAAP EPS in the first quarter was $0.74, compared to $0.44 in
the prior year period. The year-over-year increase in GAAP EPS was
primarily due to partial recognition of the gain on the sale of
Business Solutions.
Adjusted EPS in the first quarter was $0.51, compared to $0.44
in the prior year period. Year-over-year growth in adjusted EPS was
driven by higher operating margin and share repurchases, partially
offset by a higher effective tax rate. For a full reconciliation
between GAAP and Adjusted EPS, please see the “Adjustment Items”
section of this press release.
“As I continue my assessment of Western Union’s business and its
unique assets, I remain optimistic about the potential of the
brand, the platform, and the market opportunity,” said Devin
McGranahan, President and Chief Executive Officer of Western Union.
“Our long-term strategy development process is continuing, and I
look forward to sharing in greater detail our plans for the future
at our Investor Day which we will host in New York City in the
fall."
“In late-March, we suspended Western Union operations in Russia
and Belarus due to the conflict in Ukraine. We are saddened by the
current situation and recognize the harm to our colleagues,
customers, agents, and partners who have been impacted. As a result
of suspending business in those countries, we have revised our 2022
financial outlook downward.”
CFO Raj Agrawal stated, “Our business continues to deliver
strong operating cash flows and our financial position was further
strengthened from the Business Solutions sale proceeds. As we
consider strategic options to deploy the proceeds, we strengthened
our balance sheet, and returned over $240 million to shareholders
through a combination of dividends and share repurchases.”
Q1 Business Highlights
- Consumer-to-Consumer (C2C) revenues declined 5% on a reported
basis or 3% on a constant currency basis, while transactions
declined 4% compared to the prior year period. Regionally,
transaction declines in North America, Europe and CIS, and APAC
were partially offset by transaction growth in MEASA and LACA.
- Digital money transfer revenues increased 5% on a reported
basis, or 6% constant currency, and represented 25% and 37% of
total C2C revenues and transactions, respectively. Westernunion.com
revenue grew 4% on a reported basis, or 5% on a constant currency
basis, including cross-border revenue growth of 7%. As expected,
digital growth moderated, given the significant demand the Company
experienced in 2020 and the first half of 2021.
- The Company completed the first closing of its divestiture of
Business Solutions on March 1, 2022, concurrently receiving the
entire proceeds for the transaction. The second closing is expected
to be completed in the second half of 2022, subject to regulatory
approvals. Until the second closing, the Company will recognize
revenue, operating profit, and contractual profit payments to the
buyers for the business in the European Union and the United
Kingdom.
Q1 Financial Highlights
- GAAP operating margin in the quarter was 20.5%, compared to
19.2% in the prior year period. The adjusted operating margin was
21.8% compared to 19.3% in the prior year period, with the prior
year negatively impacted by 30 basis points from the inclusion of
Business Solutions. The increase in adjusted operating margin was
primarily due to the timing of investments, product and channel
mix, and changes in foreign currency. For a detailed reconciliation
between GAAP and Adjusted operating margin, please see the
“Adjustment Items” section of this press release.
- The GAAP effective tax rate in the quarter was 19.0%, compared
to 10.4% in the prior year period, and the adjusted effective tax
rate was 13.0% in the quarter, compared to 10.5% in the prior year
period. The increase in the Company’s GAAP effective tax rate was
primarily due to the sale of the Company's Business Solutions
business, discrete benefits in the prior period not recurring in
the current period, and the Company's decision to suspend its
operations in Russia and Belarus.
- Cash flow from operating activities for the quarter was $200
million. The Company returned $242 million to shareholders in the
first quarter, consisting of $92 million in dividends and $150
million of share repurchases.
2022 Outlook
Today, the Company updated its full year 2022 financial outlook
due to suspension of operations in Russia and Belarus and other
related impacts.
GAAP figures reflect an expected partial year of Business
Solutions ownership including contractual payments to the buyers,
representing profits between the first and second closings,
associated divestiture and acquisition costs, exit costs, and an
estimated pre-tax gain of approximately $270 million for the full
year, of which $151 million was recognized in the first quarter and
the remainder is expected to occur in the second half of 2022,
subject to regulatory and working capital adjustments.
Adjusted revenue growth and operating margin exclude
contributions from Business Solutions. In addition, adjusted
operating margin excludes associated divestiture and acquisition
costs, Business Solutions exit costs, as well as costs related to
the exit from Russia and Belarus. The adjusted effective tax rate
and EPS exclude the expected gain on sale, divestiture and
acquisition costs, Business Solutions exit costs, and exit costs
from Russia and Belarus.
Revenue
GAAP: approximately -9% to -11%
Adjusted (constant currency, excluding
the impact of Argentina inflation and proforma for the planned sale
of Business Solutions): low-single digit decline
Operating Profit Margin
GAAP and Adjusted: approximately
20%
Effective Tax Rate
GAAP: approximately 21%
Adjusted: mid-teens range
EPS
GAAP: $2.13 - $2.23
Adjusted: $1.75 - $1.85
Adjustment Items
Adjusted constant currency revenue growth metrics for 2022
exclude contributions from Business Solutions as the Company
entered into an agreement to sell the business in 2021 and the
first of two closings occurred on March 1, 2022. Adjusted operating
profit metrics for 2022 exclude contributions from Business
Solutions, acquisition and divestitures costs, Russia and Belarus
exit costs, and Business Solutions exit costs. Adjusted tax rate
and earnings per share metrics for 2022 periods exclude the
following items and the related taxes, as applicable: acquisition
and divestiture costs, Russia and Belarus exit costs, Business
Solutions exit costs, and gain on the sale of Business
Solutions.
Adjusted constant currency revenue growth metrics for 2021
exclude contributions from Business Solutions. Adjusted operating
profit metrics for 2021 periods exclude acquisition and divestiture
costs. Adjusted tax rate and earnings per share metrics for 2021
periods exclude the following items and the related taxes, as
applicable: acquisition and divestiture costs (all quarters), the
impact from the gain on an investment sale (second quarter), debt
retirement expenses (second quarter), Business Solutions change in
permanent reinvestment tax assertion (third quarter), and non-cash
expenses associated with the termination of the Company’s pension
plan (fourth quarter).
Additional Statistics
Additional key statistics for the quarter and historical trends
can be found in the supplemental tables included with this press
release.
All amounts included in the supplemental tables to this press
release are rounded to the nearest tenth of a million, except as
otherwise noted. As a result, the percentage changes and margins
disclosed herein may not recalculate precisely using the rounded
amounts provided.
Non-GAAP Measures
Western Union presents a number of non-GAAP financial measures
because management believes that these metrics provide meaningful
supplemental information in addition to the GAAP metrics and
provide comparability and consistency to prior periods. Constant
currency results assume foreign revenues are translated from
foreign currencies to the U.S. dollar, net of the effect of foreign
currency hedges, at rates consistent with those in the prior
year.
Reconciliations of non-GAAP to comparable GAAP measures are
available in the accompanying schedules and in the “Investor
Relations” section of the Company’s website at
https://ir.westernunion.com.
Environmental, Social, and Governance
(ESG)
Western Union is committed to making a positive impact. For more
details on how Western Union is addressing some of the most
pressing issues facing society, our shared environment, and our
Company, please view our latest ESG report:
https://corporate.westernunion.com/esg.
Investor and Analyst Conference Call
and 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 (669) 900-6833 or +1 (253)
215-8782 fifteen minutes prior to the start of the call, followed
by the meeting ID, which is 979 6440 0760 and the passcode, which
is 455210. Alternatively, you can join by clicking the link
here.
The conference call and accompanying slides will be available
via webcast at https://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
https://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," "targets," "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, 2021.
The statements are only as of the date they are made, and the
Company undertakes no obligation to update any forward-looking
statement.
Possible events or factors that could cause results or
performance to differ materially from those expressed in our
forward-looking statements include the following: (i) events
related to our Business and industry, such as: changes in general
economic conditions and economic conditions in the regions and
industries in which we operate, including global economic downturns
and trade disruptions, or significantly slower growth or declines
in the money transfer, payment service, and other markets in which
we operate, including downturns or declines related to
interruptions in migration patterns or other events, such as public
health emergencies, epidemics, or pandemics, such as COVID-19,
civil unrest, war, terrorism, natural disasters, or non-performance
by our banks, lenders, insurers, or other financial services
providers; failure to compete effectively in the money transfer and
payment service industry, including among other things, with
respect to price, with global and niche or corridor money transfer
providers, banks and other money transfer and payment service
providers, including digital, mobile and internet-based services,
card associations, and card-based payment providers, and with
digital currencies and related exchanges and protocols, and other
innovations in technology and business models; geopolitical
tensions, political conditions and related actions, including trade
restrictions and government sanctions, which may adversely affect
our business and economic conditions as a whole, including
interruptions of United States or other government relations with
countries in which we have or are implementing significant business
relationships with agents, clients, or other partners;
deterioration in customer confidence in our business, or in money
transfer and payment service providers generally; failure to
maintain our agent network and business relationships under terms
consistent with or more advantageous to us than those currently in
place; our ability to adopt new technology and develop and gain
market acceptance of new and enhanced services in response to
changing industry and consumer needs or trends; mergers,
acquisitions, and the integration of acquired businesses and
technologies into our Company, divestitures, and the failure to
realize anticipated financial benefits from these transactions, and
events requiring us to write down our goodwill; decisions to change
our business mix; changes in, and failure to manage effectively,
exposure to foreign exchange rates, including the impact of the
regulation of foreign exchange spreads on money transfers and
payment transactions; changes in tax laws, or their interpretation,
any subsequent regulation, and potential related state income tax
impacts, and unfavorable resolution of tax contingencies; any
material breach of security, including cybersecurity, or safeguards
of or interruptions in any of our systems or those of our vendors
or other third parties; cessation of or defects in various services
provided to us by third-party vendors; our ability to realize the
anticipated benefits from restructuring-related initiatives, which
may include decisions to downsize or to transition operating
activities from one location to another, and to minimize any
disruptions in our workforce that may result from those
initiatives; failure to manage credit and fraud risks presented by
our agents, clients, and consumers; adverse rating actions by
credit rating agencies; our ability to protect our trademarks,
patents, copyrights, and other intellectual property rights, and to
defend ourselves against potential intellectual property
infringement claims; our ability to attract and retain qualified
key employees and to manage our workforce successfully; material
changes in the market value or liquidity of securities that we
hold; restrictions imposed by our debt obligations; (ii) events
related to our regulatory and litigation environment, such as:
liabilities or loss of business resulting from a failure by us, our
agents, or their subagents to comply with laws and regulations and
regulatory or judicial interpretations thereof, including laws and
regulations designed to protect consumers, or detect and prevent
money laundering, terrorist financing, fraud, and other illicit
activity; increased costs or loss of business due to regulatory
initiatives and changes in laws, regulations and industry practices
and standards, including changes in interpretations, in the United
States and abroad, affecting us, our agents or their subagents, or
the banks with which we or our agents maintain bank accounts needed
to provide our services, including related to anti-money laundering
regulations, anti-fraud measures, our licensing arrangements,
customer due diligence, agent and subagent due diligence,
registration and monitoring requirements, consumer protection
requirements, remittances, 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; liabilities resulting from
litigation, including class-action lawsuits and similar matters,
and regulatory enforcement actions, including costs, expenses,
settlements, and judgments; failure to comply with regulations and
evolving industry standards regarding consumer privacy, data use,
the transfer of personal data between jurisdictions, and
information security, including with respect to the General Data
Protection Regulation (“GDPR”) in the European Union ("EU") and the
California Consumer Privacy Act; failure to comply with 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 (“CFPB”)
and similar legislation and regulations enacted by other
governmental authorities in the United States and abroad related to
consumer protection and derivative transactions; effects of
unclaimed property laws or their interpretation or the enforcement
thereof; failure to maintain sufficient amounts or types of
regulatory capital or other restrictions on the use of our working
capital to meet the changing requirements of our regulators
worldwide; changes in accounting standards, rules and
interpretations, or industry standards affecting our business;
(iii) other events, such as catastrophic events; and management’s
ability to identify and manage these and other risks.
About Western Union
The Western Union Company (NYSE: WU) is a global leader in
cross-border, cross-currency money movement and payments. Western
Union’s platform provides seamless cross-border flows and its
leading global financial network bridges more than 200 countries
and territories and over 130 currencies. We connect consumers,
businesses, financial institutions, and governments through one of
the world’s widest reaching networks, accessing billions of bank
accounts, millions of digital wallets and cards, and a substantial
global network of retail locations. Western Union connects the
world to bring boundless possibilities within reach. For more
information, visit www.westernunion.com.
WU-G
THE WESTERN UNION COMPANY KEY STATISTICS
(Unaudited) Notes*
1Q21
2Q21
3Q21
4Q21
FY2021
1Q22
Consolidated Metrics Consolidated revenues (GAAP) - YoY %
change
2
%
16
%
2
%
1
%
5
%
(4
)%
Consolidated revenues, constant currency (non-GAAP) - YoY % change
(a)
2
%
13
%
2
%
2
%
4
%
(2
)%
Consolidated revenues, constant currency, excluding Business
Solutions (non-GAAP) - YoY % Change
(a)
2
%
13
%
0
%
1
%
4
%
(1
)%
Consolidated operating margin (GAAP)
19.2
%
19.8
%
24.8
%
24.7
%
22.1
%
20.5
%
Consolidated operating margin, excluding acquisition and
divestiture costs, Russia/Belarus exit costs, and Business
Solutions exit costs (non-GAAP)
(b)
19.3
%
20.2
%
25.2
%
24.9
%
22.5
%
22.5
%
Consolidated operating margin, excluding acquisition and
divestiture costs, Russia/Belarus exit costs, and Business
Solutions operating income and exit costs (non-GAAP) (1)
(b)
N/A
N/A
N/A
N/A
N/A
21.8
%
EBITDA margin (non-GAAP)
(c)
23.7
%
24.1
%
28.8
%
28.4
%
26.3
%
24.6
%
Consumer-to-Consumer (C2C) Segment Metrics
Revenues (GAAP) - YoY % change
4
%
15
%
0
%
(1
)%
4
%
(5
)%
Revenues, constant currency (non-GAAP) - YoY % change
(f)
2
%
12
%
(1
)%
0
%
3
%
(3
)%
Transactions (in millions)
73.0
78.0
76.6
78.3
305.9
69.7
Transactions - YoY % change
9
%
15
%
(1
)%
0
%
5
%
(4
)%
Total principal ($- billions)
$
25.7
$
27.9
$
27.7
$
27.7
$
109.0
$
24.8
Principal per transaction, as reported - YoY % change
15
%
11
%
4
%
4
%
8
%
1
%
Principal per transaction, constant currency - YoY % change
(g)
12
%
8
%
3
%
4
%
6
%
3
%
Cross-border principal, as reported - YoY % change
28
%
29
%
4
%
5
%
15
%
(3
)%
Cross-border principal, constant currency - YoY % change
(h)
26
%
25
%
3
%
5
%
14
%
(1
)%
Operating margin
19.6
%
20.7
%
24.3
%
24.2
%
22.2
%
20.7
%
Digital money transfer revenues (GAAP) - YoY % change
(hh)
45
%
22
%
15
%
13
%
22
%
5
%
Digital money transfer foreign currency translation impact
(j)
(1
)%
(3
)%
(1
)%
(1
)%
(1
)%
1
%
Digital money transfer revenues, constant currency (non-GAAP) - YoY
% change
(hh)
44
%
19
%
14
%
12
%
21
%
6
%
Digital money transfer transactions - YoY % change
77
%
33
%
19
%
17
%
32
%
4
%
westernunion.com revenues (GAAP) - YoY % change
(gg)
38
%
18
%
12
%
9
%
18
%
4
%
westernunion.com foreign currency translation impact
(j)
(1
)%
(3
)%
(1
)%
0
%
(1
)%
1
%
westernunion.com revenues, constant currency (non-GAAP) - YoY %
change
(gg)
37
%
15
%
11
%
9
%
17
%
5
%
westernunion.com transactions - YoY % change
(gg)
55
%
18
%
9
%
6
%
19
%
0
%
C2C Segment Regional Metrics - YoY % change
NA region revenues (GAAP)
(aa), (bb)
0
%
4
%
(2
)%
2
%
1
%
(1
)%
NA region foreign currency translation impact
(j)
1
%
0
%
0
%
0
%
0
%
0
%
NA region revenues, constant currency (non-GAAP)
(aa), (bb)
1
%
4
%
(2
)%
2
%
1
%
(1
)%
NA region transactions
(aa), (bb)
1
%
3
%
(5
)%
(2
)%
(1
)%
(6
)%
EU & CIS region revenues (GAAP)
(aa), (cc)
8
%
18
%
(3
)%
(8
)%
3
%
(14
)%
EU & CIS region foreign currency translation impact
(j)
(4
)%
(8
)%
(2
)%
1
%
(3
)%
4
%
EU & CIS region revenues, constant currency (non-GAAP)
(aa), (cc)
4
%
10
%
(5
)%
(7
)%
0
%
(10
)%
EU & CIS region transactions
(aa), (cc)
28
%
26
%
3
%
1
%
13
%
(7
)%
MEASA region revenues (GAAP)
(aa), (dd)
1
%
19
%
(2
)%
2
%
4
%
2
%
MEASA region foreign currency translation impact
(j)
(1
)%
(1
)%
0
%
0
%
0
%
1
%
MEASA region revenues, constant currency (non-GAAP)
(aa), (dd)
0
%
18
%
(2
)%
2
%
4
%
3
%
MEASA region transactions
(aa), (dd)
13
%
22
%
2
%
6
%
10
%
5
%
LACA region revenues (GAAP)
(aa), (ee)
3
%
70
%
25
%
8
%
22
%
2
%
LACA region foreign currency translation impact
(j)
5
%
(2
)%
1
%
4
%
2
%
3
%
LACA region revenues, constant currency (non-GAAP)
(aa), (ee)
8
%
68
%
26
%
12
%
24
%
5
%
LACA region transactions
(aa), (ee)
(8
)%
42
%
10
%
2
%
9
%
2
%
APAC region revenues (GAAP)
(aa), (ff)
9
%
20
%
1
%
0
%
6
%
(6
)%
APAC region foreign currency translation impact
(j)
(6
)%
(7
)%
(2
)%
0
%
(3
)%
3
%
APAC region revenues, constant currency (non-GAAP)
(aa), (ff)
3
%
13
%
(1
)%
0
%
3
%
(3
)%
APAC region transactions
(aa), (ff)
(2
)%
3
%
(13
)%
(13
)%
(7
)%
(13
)%
% of C2C Revenue
NA region revenues
(aa), (bb)
37
%
37
%
37
%
38
%
37
%
39
%
EU & CIS region revenues
(aa), (cc)
33
%
33
%
32
%
31
%
32
%
29
%
MEASA region revenues
(aa), (dd)
16
%
15
%
15
%
15
%
15
%
17
%
LACA region revenues
(aa), (ee)
8
%
9
%
9
%
9
%
9
%
9
%
APAC region revenues
(aa), (ff)
6
%
6
%
7
%
7
%
7
%
6
%
Digital money transfer revenues
(aa)
23
%
24
%
24
%
24
%
24
%
25
%
Other (primarily bill payments businesses in Argentina and the
United States and money orders)
Revenues (GAAP) - YoY % change
(18
)%
8
%
3
%
5
%
(1
)%
8
%
Operating margin
22.6
%
16.2
%
18.3
%
21.3
%
19.6
%
31.7
%
% of Total Company Revenue (GAAP)
Consumer-to-Consumer segment revenues
87
%
87
%
86
%
87
%
87
%
86
%
Business Solutions segment revenues
8
%
8
%
9
%
8
%
8
%
8
%
Other revenues
5
%
5
%
5
%
5
%
5
%
6
%
____________________________
(1)
Concurrent with the sale in the first
quarter of 2022, the Business Solutions operating income has been
excluded. See tickmark (q) for more information.
* See the “Notes to Key Statistics” section of the press release
for the applicable Note references and the reconciliation of
non-GAAP financial measures, unless already reconciled herein.
THE WESTERN UNION COMPANY CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (Unaudited) (in millions, except per share amounts)
Three Months Ended March 31,
2022
2021
% Change
Revenues
$
1,155.7
$
1,210.0
(4
)
%
Expenses:
Cost of services
655.1
706.0
(7
)
%
Selling, general, and administrative
263.1
271.2
(3
)
%
Total expenses
918.2
977.2
(6
)
%
Operating income
237.5
232.8
2
%
Other income/(expense):
Gain on divestiture of business (a)
151.4
—
(b)
Interest income
0.6
0.4
51
%
Interest expense
(24.8
)
(28.4
)
(13
)
%
Other expense, net
(2.5
)
(1.9
)
21
%
Total other income/(expense), net
124.7
(29.9
)
(b)
Income before income taxes
362.2
202.9
79
%
Provision for income taxes
68.9
21.1
(b)
Net income
$
293.3
$
181.8
61
%
Earnings per share:
Basic
$
0.75
$
0.44
70
%
Diluted
$
0.74
$
0.44
68
%
Weighted-average shares outstanding:
Basic
393.1
411.7
Diluted
394.5
414.3
____________________________
(a)
On March 1, 2022, the Company completed the first close of the sale
of its Business Solutions business to Goldfinch Partners LLC and
The Baupost Group LLC (collectively, the "Buyer"), and received
cash consideration of approximately $910 million, subject to
regulatory and working capital adjustments. The first close
excluded the operations in the European Union and the United
Kingdom. The second closing is expected in the second half of 2022.
(b)
Calculation not meaningful.
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except per share amounts)
March 31,
December 31,
2022
2021
Assets Cash and cash equivalents
$
1,295.8
$
1,208.3
Settlement assets
2,999.5
2,843.5
Property and equipment, net of accumulated depreciation of $645.0
and $650.4, respectively
122.9
129.4
Goodwill
2,034.6
2,034.6
Other intangible assets, net of accumulated amortization of $753.9
and $731.8, respectively
400.1
417.1
Other assets
1,012.7
737.7
Assets held for sale (a)
623.1
1,452.9
Total assets
$
8,488.7
$
8,823.5
Liabilities and stockholders' equity
Liabilities:
Accounts payable and accrued liabilities
$
470.7
$
450.2
Settlement obligations
2,999.5
2,843.5
Income taxes payable
927.3
870.7
Deferred tax liability, net
182.7
203.8
Borrowings
2,534.5
3,008.4
Other liabilities
662.6
269.4
Liabilities associated with assets held for sale (a)
358.6
821.9
Total liabilities
8,135.9
8,467.9
Stockholders' equity:
Preferred stock, $1.00 par value; 10 shares authorized; no shares
issued
—
—
Common stock, $0.01 par value; 2,000 shares authorized; 387.1
shares and 393.8 shares issued and outstanding as of March 31, 2022
and December 31, 2021, respectively
3.9
3.9
Capital surplus
960.5
941.0
Accumulated deficit
(495.4
)
(537.2
)
Accumulated other comprehensive loss
(116.2
)
(52.1
)
Total stockholders' equity
352.8
355.6
Total liabilities and stockholders' equity
$
8,488.7
$
8,823.5
____________________________
(a)
Includes balances associated with the Company’s Business Solutions
business, which were held for sale as of March 31, 2022 and
December 31, 2021. On March 1, 2022, the Company completed the
first close of the Business Solutions business, which excluded the
operations of the European Union and the United Kingdom, and
received the entire cash consideration.
THE WESTERN UNION
COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in millions)
Three Months Ended
March 31,
2022
2021
Cash flows from operating activities Net income
$
293.3
$
181.8
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation
11.3
12.8
Amortization
35.5
40.6
Gain on divestiture of business, excluding transaction costs
(155.8
)
—
Other non-cash items, net
22.9
30.3
Increase/(decrease) in cash, excluding the effects of divestitures,
resulting from changes in:
Other assets
(93.2
)
(46.9
)
Accounts payable and accrued liabilities
36.0
(35.8
)
Income taxes payable
56.2
5.5
Other liabilities
(6.2
)
(12.5
)
Net cash provided by operating activities
200.0
175.8
Cash flows from investing activities
Payments for capitalized contract costs
(6.9
)
(78.3
)
Payments for internal use software
(12.6
)
(9.9
)
Purchases of property and equipment
(10.3
)
(8.7
)
Purchases of settlement investments
(178.4
)
(161.7
)
Proceeds from the sale of settlement investments
71.6
427.1
Maturities of settlement investments
37.4
100.0
Purchase of a non-settlement investment
(250.0
)
—
Proceeds from divestiture, net of cash divested
896.1
—
Other investing activities
(5.9
)
0.7
Net cash provided by investing activities
541.0
269.2
Cash flows from financing activities
Cash dividends and dividend equivalents paid
(91.8
)
(96.7
)
Common stock repurchased
(154.4
)
(84.5
)
Net repayments of commercial paper
(175.0
)
(80.0
)
Net proceeds from issuance of borrowings
—
892.6
Principal payments on borrowings
(300.0
)
(650.0
)
Proceeds from exercise of options
8.9
8.1
Net change in settlement obligations
(80.4
)
(297.1
)
Other financing activities
—
0.1
Net cash used in financing activities
(792.7
)
(307.5
)
Net change in cash and cash equivalents, including settlement, and
restricted cash
(51.7
)
137.5
Cash and cash equivalents, including settlement, and restricted
cash at beginning of period
2,110.9
2,143.1
Cash and cash equivalents, including settlement, and restricted
cash at end of period
$
2,059.2
$
2,280.6
March 31,
2022
2021
Reconciliation of balance sheet cash and cash equivalents to
cash flows:
Cash and cash equivalents on balance sheet
$
1,295.8
$
1,502.6
Settlement cash and cash equivalents
685.7
764.0
Restricted cash in Other assets
24.6
14.0
Cash included in Assets held for sale
53.1
—
Cash and cash equivalents, including settlement, and restricted
cash
$
2,059.2
$
2,280.6
THE WESTERN UNION COMPANY SUMMARY SEGMENT DATA
(Unaudited) (in millions) Three Months
Ended March 31,
2022
2021
% Change
Revenues: Consumer-to-Consumer
$
999.0
$
1,050.9
(5
)
%
Business Solutions (a)
89.1
96.5
(8
)
%
Other (b)
67.6
62.6
8
%
Total consolidated revenues
$
1,155.7
$
1,210.0
(4
)
%
Segment operating income:
Consumer-to-Consumer
$
207.2
$
206.1
1
%
Business Solutions (a)
27.5
12.6
(c)
Other (b)
21.5
14.1
52
%
Total segment operating income
256.2
232.8
10
%
Russia/ Belarus exit costs (d)
(11.0
)
—
(c)
Business Solutions exit costs (d)
(7.7
)
—
(c)
Total consolidated operating income
$
237.5
$
232.8
2
%
Segment operating income margin
Consumer-to-Consumer
20.7
%
19.6
%
1.1
%
Business Solutions (a)
30.8
%
13.1
%
17.7
%
Other (b)
31.7
%
22.6
%
9.1
%
____________________________
(a)
On August 4, 2021, the Company entered into an agreement to sell
its Business Solutions business to the Buyer, which will be
completed in two closings, the first which occurred on March 1,
2022, with the second expected in the second half of 2022. The
operations of the Business Solutions business to be sold in the
second closing continue to be included in Revenues and Operating
income after the first closing. However, between the first and
second closing, the Company will pay the Buyer a measure of the
profits from these operations, adjusted for income taxes and other
charges, as contractually agreed, and this expense is recognized in
Other expense, net in the Condensed Consolidated Statements of
Income.
(b)
Other primarily includes the Company’s bill payment services which
facilitate payments from consumers to businesses and other
organizations and the Company’s money order services.
(c)
Calculation not meaningful.
(d)
Represents the exit costs incurred in connection with the
suspension of operations in Russia and Belarus and the divestiture
of the Business Solutions business.
THE WESTERN UNION
COMPANY
NOTES TO KEY
STATISTICS
(Unaudited)
(in millions, unless indicated
otherwise)
Western Union’s management
believes the non-GAAP financial measures presented provide
meaningful supplemental information regarding the Company’s
operating results to assist management, investors, analysts, and
others in understanding the Company’s financial results and to
better analyze trends in the Company’s 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 the
Company’s operations that, when viewed with the Company’s GAAP
results and the reconciliation to the corresponding GAAP financial
measure, provides a more complete understanding of the Company’s
business. Users of the financial statements are encouraged to
review the Company’s financial statements and publicly-filed
reports in their entirety and not to rely on any single financial
measure. A reconciliation of non-GAAP financial measures to the
most directly comparable GAAP financial measures is included below,
where not previously reconciled above.
Notes
1Q21
2Q21
3Q21
4Q21
FY2021
1Q22
Consolidated Metrics
(a)
Revenues (GAAP)
$
1,210.0
$
1,289.7
$
1,286.3
$
1,284.8
$
5,070.8
$
1,155.7
Foreign currency translation impact
(j)
(0.9
)
(29.4
)
(2.8
)
14.8
(18.3
)
33.2
Revenues, constant currency (non-GAAP)
1,209.1
1,260.3
1,283.5
1,299.6
5,052.5
1,188.9
Less Business Solutions revenues, constant currency (non-GAAP)
(i), (q)
(90.9
)
(92.1
)
(113.7
)
(109.2
)
(405.9
)
(91.9
)
Revenues, constant currency, excluding Business Solutions
(non-GAAP)
$
1,118.2
$
1,168.2
$
1,169.8
$
1,190.4
$
4,646.6
$
1,097.0
Prior year revenues (GAAP)
$
1,190.0
$
1,114.7
$
1,258.5
$
1,271.8
$
4,835.0
$
1,210.0
Less prior year revenues from Business Solutions (GAAP)
(q)
(98.4
)
(79.4
)
(89.1
)
(89.2
)
(356.1
)
(96.5
)
Prior year revenues, adjusted, excluding Business Solutions
$
1,091.6
$
1,035.3
$
1,169.4
$
1,182.6
$
4,478.9
$
1,113.5
Revenues (GAAP) - YoY % Change
2
%
16
%
2
%
1
%
5
%
(4
)%
Revenues, constant currency (non-GAAP) - YoY% Change
2
%
13
%
2
%
2
%
4
%
(2
)%
Revenues, constant currency,
excluding Business Solutions (non-GAAP) - YoY % Change
2
%
13
%
0
%
1
%
4
%
(1
)%
(b)
Operating income (GAAP)
$
232.8
$
254.9
$
318.6
$
316.8
$
1,123.1
$
237.5
Acquisition and divestiture costs
(l)
0.9
5.6
5.5
3.7
15.7
3.3
Russia/Belarus exit costs
(r)
N/A
N/A
N/A
N/A
N/A
11.0
Business Solutions exit costs
(r)
N/A
N/A
N/A
N/A
N/A
7.7
Operating income, excluding acquisition and divestiture costs,
Russia/Belarus exit costs, and Business Solutions exit costs
(non-GAAP)
$
233.7
$
260.5
$
324.1
$
320.5
$
1,138.8
$
259.5
Less Business Solutions operating income(1)
(q)
N/A
N/A
N/A
N/A
N/A
(26.5
)
Operating income, excluding acquisition and divestiture costs,
Russia/Belarus exit costs, and Business Solutions operating income
and exit costs (non-GAAP)
$
233.7
$
260.5
$
324.1
$
320.5
$
1,138.8
$
233.0
Operating margin (GAAP)
19.2
%
19.8
%
24.8
%
24.7
%
22.1
%
20.5
%
Operating margin, excluding acquisition and divestiture costs,
Russia/Belarus exit costs and Business Solutions exit costs
(non-GAAP)
19.3
%
20.2
%
25.2
%
24.9
%
22.5
%
22.5
%
Operating margin, excluding acquisition and divestiture costs,
Russia/Belarus exit costs, and Business Solutions operating income
and exit costs (non-GAAP)(1)
N/A
N/A
N/A
N/A
N/A
21.8
%
(c)
Operating income (GAAP)
$
232.8
$
254.9
$
318.6
$
316.8
$
1,123.1
$
237.5
Depreciation and amortization
53.4
55.6
51.3
47.9
208.2
46.8
EBITDA (non-GAAP)
(k)
$
286.2
$
310.5
$
369.9
$
364.7
$
1,331.3
$
284.3
Operating margin (GAAP)
19.2
%
19.8
%
24.8
%
24.7
%
22.1
%
20.5
%
EBITDA margin (non-GAAP)
23.7
%
24.1
%
28.8
%
28.4
%
26.3
%
24.6
%
(d)
Effective tax rate (GAAP)
10
%
14
%
20
%
7
%
14
%
19
%
Change in permanent reinvestment assertion related to the sale of
Business Solutions
(p)
N/A
N/A
(6
)%
0
%
(2
)%
N/A
Acquisition and divestiture costs
(l)
0
%
0
%
0
%
0
%
0
%
0
%
Gain on investment sale
(m)
N/A
0
%
0
%
(1
)%
0
%
N/A
Debt extinguishment costs
(n)
N/A
0
%
0
%
0
%
0
%
N/A
Pension settlement charge
(o)
N/A
0
%
0
%
6
%
1
%
N/A
Business Solutions gain
(q)
N/A
N/A
N/A
N/A
N/A
(6
)%
Business Solutions exit costs
(r)
N/A
N/A
N/A
N/A
N/A
0
%
Russia/Belarus exit costs
(r)
N/A
N/A
N/A
N/A
N/A
0
%
Effective tax rate, adjusted (non-GAAP)
10
%
14
%
14
%
12
%
13
%
13
%
(e)
Diluted Earnings per Share (GAAP)
$
0.44
$
0.54
$
0.57
$
0.42
$
1.97
$
0.74
Pretax impacts from the following:
Acquisition and divestiture costs
(l)
N/A
0.01
0.01
0.01
0.03
0.01
Gain on investment sale
(m)
N/A
(0.12
)
—
—
(0.12
)
N/A
Debt extinguishment costs
(n)
N/A
0.04
—
—
0.04
N/A
Pension settlement charge
(o)
N/A
N/A
N/A
0.27
0.27
N/A
Business Solutions gain
(q)
N/A
N/A
N/A
N/A
N/A
(0.38
)
Business Solutions exit costs
(r)
N/A
N/A
N/A
N/A
N/A
0.02
Russia/Belarus exit costs
(r)
N/A
N/A
N/A
N/A
N/A
0.02
Income tax expense/(benefit) impacts from the following:
Change in permanent reinvestment assertion related to the sale of
Business Solutions
(p)
N/A
N/A
0.05
—
0.04
N/A
Acquisition and divestiture costs
(l)
N/A
—
—
—
—
—
Gain on investment sale
(m)
N/A
0.02
—
—
0.03
N/A
Debt extinguishment costs
(n)
N/A
(0.01
)
—
—
(0.01
)
N/A
Pension settlement charge
(o)
N/A
N/A
N/A
(0.06
)
(0.06
)
—
Business Solutions gain
(q)
N/A
N/A
N/A
N/A
N/A
0.10
Business Solutions exit costs
(r)
N/A
N/A
N/A
N/A
N/A
—
Russia/Belarus exit costs
(r)
N/A
N/A
N/A
N/A
N/A
—
Diluted Earnings per share, adjusted (non-GAAP)
$
0.44
$
0.48
$
0.63
$
0.64
$
2.19
$
0.51
C2C Segment Metrics
(f)
Revenues (GAAP)
$
1,050.9
$
1,127.1
$
1,104.5
$
1,111.5
$
4,394.0
$
999.0
Foreign currency translation impact
(j)
(11.1
)
(32.1
)
(9.4
)
6.2
(46.4
)
20.8
Revenues, constant currency (non-GAAP)
$
1,039.8
$
1,095.0
$
1,095.1
$
1,117.7
$
4,347.6
$
1,019.8
Prior year revenues (GAAP)
$
1,015.4
$
976.6
$
1,106.5
$
1,121.5
$
4,220.0
$
1,050.9
Revenues (GAAP) - YoY % change
4
%
15
%
0
%
(1
)%
4
%
(5
)%
Revenues, constant currency (non-GAAP) - YoY % change
2
%
12
%
(1
)%
0
%
3
%
(3
)%
(g)
Principal per transaction, as reported ($- dollars)
$
353
$
357
$
361
$
354
$
356
$
356
Foreign currency translation impact ($- dollars)
(j)
(7
)
(10
)
(1
)
2
(4
)
8
Principal per transaction, constant currency ($- dollars)
$
346
$
347
$
360
$
356
$
352
$
364
Prior year principal per transaction, as reported ($- dollars)
$
308
$
322
$
348
$
341
$
331
$
353
Principal per transaction, as reported - YoY % change
15
%
11
%
4
%
4
%
8
%
1
%
Principal per transaction, constant currency - YoY % change
12
%
8
%
3
%
4
%
6
%
3
%
(h)
Cross-border principal, as reported ($- billions)
$
24.5
$
26.6
$
26.5
$
26.5
$
104.1
$
23.8
Foreign currency translation impact ($- billions)
(j)
(0.5
)
(0.7
)
(0.2
)
0.2
(1.2
)
0.5
Cross-border principal, constant currency ($- billions)
$
24.0
$
25.9
$
26.3
$
26.7
$
102.9
$
24.3
Prior year cross-border principal, as reported ($- billions)
$
19.1
$
20.7
$
25.5
$
25.3
$
90.6
$
24.5
Cross-border principal, as reported - YoY % change
28
%
29
%
4
%
5
%
15
%
(3
)%
Cross-border principal, constant currency - YoY % change
26
%
25
%
3
%
5
%
14
%
(1
)%
Business Solutions Segment Metrics
(i)
Revenues (GAAP)
$
96.5
$
99.3
$
116.8
$
109.2
$
421.8
$
89.1
Foreign currency translation impact
(j)
(5.6
)
(7.2
)
(3.1
)
0.0
(15.9
)
2.8
Revenues, constant currency (non-GAAP)
$
90.9
$
92.1
$
113.7
$
109.2
$
405.9
$
91.9
Prior year revenues (GAAP)
$
98.4
$
79.4
$
89.1
$
89.2
$
356.1
$
96.5
Revenues (GAAP) - YoY % change
(2
)%
25
%
31
%
22
%
18
%
(8
)%
Revenues, constant currency (non-GAAP) - YoY % change
(8
)%
16
%
28
%
22
%
14
%
(5
)%
2022 Consolidated Outlook Metrics
FY2022
Operating margin (GAAP)
20.0
%
Impact from acquisition and divestiture costs
(l)
0.0
%
Impact from the sale of Business Solutions, including exit costs
(q), (r)
(0.5
)%
Impact from Russia/Belarus exit costs
(r)
0.5
%
Operating margin, adjusted, excluding acquisition and divestiture
costs, the sale of Business Solutions, including exit costs, and
Russia/Belarus exit costs (non-GAAP)
20.0
%
Range
Earnings per share (GAAP) ($- dollars)
$
2.13
$
2.23
Impact from acquisition and divestiture costs, net of related taxes
(l)
0.02
0.02
Gain on the sale of Business Solutions, net of related taxes
(q)
(0.44
)
(0.44
)
Impact from Business Solutions exit costs, net of related taxes
(r)
0.01
0.01
Impact from Russia/Belarus exit costs, net of related taxes
(r)
0.03
0.03
Earnings per share, adjusted, excluding the acquisition and
divestiture costs, gain on the sale of Business Solutions, and exit
costs from Business Solutions and Russia/Belarus, net of related
taxes (non-GAAP) ($- dollars)
$
1.75
$
1.85
____________________________
(1)
Concurrent with the sale in the first
quarter of 2022, the Business Solutions operating income has been
excluded. See tickmark (q) for more information.
Non-GAAP related notes:
(j)
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. The Company believes that this measure provides
management and investors with information about revenue results and
trends that eliminates currency volatility while increasing the
comparability of the Company's underlying results and trends.
(k)
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.
(l)
Represents the impact from expenses incurred in connection with the
Company's acquisition and divestiture activity, including for the
review and closing of these transactions. The Company believes
that, by excluding the effects of these charges that can impact
operating trends, management and investors are provided with a
measure that increases the comparability of the Company's
underlying operating results.
(m)
On April 12, 2021, the Company sold a substantial majority of the
noncontrolling interest it held in a private company for cash
proceeds of $50.9 million. As a result, the Company recorded a
pre-tax gain in the second quarter of 2021. The gain on the sale
and the income taxes on the gain have been removed from adjusted
results. The Company believes excluding the impact of this gain
will provide investors with a more meaningful comparison of results
with the historical periods presented.
(n)
On April 1, 2021, the Company repaid $500 million of aggregate
principal amount of 3.6% unsecured notes due in 2022 and incurred
approximately $14.8 million of costs, excluding accrued interest,
in connection with the repayment. The cost associated with the
repayment was recorded to Other expense, net, in the second quarter
of 2021. The costs associated with the payment and related tax
benefit have been removed from adjusted results. The Company
believes excluding the impact of this charge will provide investors
with a more meaningful comparison of results with the historical
periods presented.
(o)
Represents the settlement charges for the Company's defined benefit
pension plan incurred in the fourth quarter of 2021. On July 22,
2021, the Company's Board of Directors approved a plan to terminate
and settle this frozen defined benefit plan, and during the fourth
quarter of 2021, the Company settled its obligations under the plan
and transferred the corresponding amount of plan assets to the
insurer. The expenses associated with the pension settlement were
recorded to Pension settlement charges within Total other
income/(expense), net. The Company believes excluding the impact of
this charge will provide investors with a more meaningful
comparison of results with the historical periods presented.
(p)
Represents the tax impact from changes to certain of the Company's
permanent reinvestment assertions related to its decision to
classify its Business Solutions business as held for sale in 2021.
The Company believes excluding the impact of this charge will
provide investors with a more meaningful comparison of results with
the historical periods presented.
(q)
During 2021, the Company entered into an agreement to sell its
Business Solutions business to Goldfinch Partners LLC and The
Baupost Group LLC (collectively, the "Buyer") for cash
consideration of $910.0 million, subject to regulatory and working
capital adjustments. The sale will be completed in two closings,
the first of which occurred on March 1, 2022 with the entirety of
the cash consideration collected and allocated to the closings on a
relative fair value basis. The first closing excluded the
operations in the European Union and the United Kingdom and
resulted in a gain of $151.4 million. The second closing is
currently expected to occur in the second half of 2022, pending
regulatory approvals, at which time the remainder of the gain will
be recognized. Revenues have been adjusted to exclude the carved
out financial information for the Business Solutions business to
compare the year-over-year changes and trends in the Company's
continuing businesses, excluding the effects of this divestiture.
While the sale of the Company's Business Solutions business does
not qualify for or represent discontinued operations, the Company
has also adjusted operating income, beginning in the first quarter
of 2022 and concurrent with the sale, to exclude the carved out
direct profit of the Business Solutions business. Between the first
and second closing, the Company will continue to record revenues
and operating income for the European Union and United Kingdom
operations, but it will pay the Buyer a measure of the profits from
these operations, adjusted for income taxes and other charges, as
contractually agreed, and this expense is recognized in Other
expense. Therefore, the Company believes that providing this
information enhances investors' understanding of the profitability
of the Company's remaining businesses. The Company has also
excluded the gain on the sale, net of related taxes from its first
quarter 2022 results and the 2022 adjusted outlook, as management
believes that excluding the impact from the gain on sale of the
Business Solutions business will provide investors with a clearer
and more meaningful comparison of results in 2022 and future
periods. These financial measures are non-GAAP measures and should
not be considered a substitute for the GAAP measures.
(r)
Represents the exit costs incurred in connection with the
divestiture of the Business Solutions business and the suspension
of operations in Russia and Belarus, primarily related to severance
and non-cash impairments of property and equipment, an operating
lease right-of-use asset, and other intangible assets. While
certain of the expenses are identifiable to the Company's segments,
the expenses are not included in the measurement of segment
operating income provided to the Chief Operating Decision Maker for
purposes of performance assessment and resource allocation. These
expenses are therefore excluded from the Company's segment
operating income results. These expenses have been excluded from
operating income, the effective tax rate, and diluted earnings per
share, net of related taxes. Additionally, the outlook metrics have
been adjusted to exclude these costs, net of related taxes where
applicable. The Company believes that, by excluding the effects of
these charges that can impact operating trends, management and
investors are provided with a measure that increases the
comparability of the Company's underlying operating results.
Other notes:
(aa)
Geographic split for transactions and revenue, including
transactions initiated digitally, as earlier defined, is determined
entirely based upon the region where the money transfer is
initiated.
(bb)
Represents the North America (United States and Canada) (“NA”)
region of the Company's Consumer-to-Consumer segment.
(cc)
Represents the Europe and the Russia/Commonwealth of Independent
States (“EU & CIS”) region of the Company's
Consumer-to-Consumer segment.
(dd)
Represents the Middle East, Africa, and South Asia (“MEASA”) region
of the Company's Consumer-to-Consumer segment, including India and
certain South Asian countries, which consist of Bangladesh, Bhutan,
Maldives, Nepal, and Sri Lanka.
(ee)
Represents the Latin America and the Caribbean (“LACA”) region of
the Company's Consumer-to-Consumer segment, including Mexico.
(ff)
Represents the East Asia and Oceania (“APAC”) region of the
Company's Consumer-to-Consumer segment.
(gg)
Represents transactions conducted and funded through websites and
mobile applications marketed under the Company's brands
(“westernunion.com”).
(hh)
Represents revenue from transactions conducted and funded through
westernunion.com and transactions initiated on websites and mobile
applications hosted by the Company's third-party white label or
co-branded digital partners.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428005281/en/
Media Relations: Claire Treacy
Claire.Treacy@westernunion.com
Investor Relations: Tom Hadley
WesternUnion.IR@westernunion.com
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