The Western Union Company (NYSE:WU) today reported financial results for the 2011 third quarter.
Financial highlights for the quarter included:
- Revenue of $1.4 billion, an increase of 6% compared to last year's third quarter
- Constant currency adjusted revenue increase of 5%
- Operating margin of 25.7%, or 26.7% excluding restructuring expenses, compared to 26.4%, or 27.5% excluding restructuring expenses, in the prior year. Current quarter includes $5 million of costs related to the Travelex Global Business Payments acquisition
- EPS of $0.38, or $0.40 excluding restructuring expenses, compared to $0.36 in the prior year, or $0.37 in the prior year excluding restructuring expenses
- Year-to-date cash provided by operating activities of $883 million
- Restructuring expenses of $14 million, or $10 million after-tax, related to organizational changes and other actions as previously disclosed by the Company
Additional highlights for the quarter included:
Consumer-to-consumer (C2C) revenue increase of 6% reported and 4% constant currency on transaction growth of 5%; C2C represented 84% of Company revenues
- Europe, Middle East, Africa and South Asia (EMEASA) region revenue increase of 5% on transaction growth of 3%
- Americas region revenue increase of 6% on transaction growth of 6%
- Asia Pacific (APAC) region revenue increase of 11% on transaction growth of 7%
- C2C operating margin of 29.0% compared to 29.9% in prior year
Global Business Payments revenue increase of 7%
- Consumer bill payments revenue increase of 2%
- Western Union Business Solutions (WUBS) revenue increase of 30%
- Global Business Payments operating margin of 17.7% compared to 15.1% in the prior year
Electronic channels revenue grew 40%. Electronic channels, which include westernunion.com, account based money transfer, and mobile money transfer, represented 3% of total Company revenue for the quarter
Prepaid cards in force of over 1.2 million, with retail distribution available at nearly 13,000 U.S. locations
Growth in agent locations to 485,000
Agreement to acquire Travelex Global Business Payments (TGBP), a leading specialist provider of international business payments, which enhances the Company's position in one of its key strategic growth areas, business-to-business cross border payments. The acquisition is expected to close in the fourth quarter following receipt of all regulatory approvals
Share repurchases of $140 million (9 million shares at an average price of $16.18 per share) and dividends declared of $50 million in the quarter (dividends were paid on October 7)
Additional key statistics for the quarter and historical trends can be found in the supplemental table included with this press release.
Western Union President and Chief Executive Officer Hikmet Ersek commented, "Our business continues to demonstrate its resilience, with revenue growth in each of our major regions and businesses. Consumer-to-consumer trends remained solid, bill payments revenue grew for the second consecutive quarter, and business-to-business payments delivered very strong results, with reported revenue growth of 30%. We are on track to deliver our revenue and earnings per share outlook for the year."
Ersek continued, "Our electronic channel strategic initiatives continue to move forward, with revenue growth of 40% in the quarter. We now have money transfer service available through over 30,000 ATMs in Europe and Asia, and have signed over 70 banks for account based money transfer, including most recently La Banque Postale in France."
Ersek added, "In the quarter we also announced the formation of a new business unit structure to align with our key growth strategies. Global Consumer Financial Services consists of our core money transfer services and consumer bill payments and represents most of the Company's revenues today. Western Union Business Solutions includes our existing business-to-business payments services, which will triple in size with the acquisition of Travelex Global Business Payments. Western Union Ventures will focus on developing new service offerings, which will help build deeper relationships with existing and new consumers. Currently, Ventures includes Westernunion.com, prepaid, and mobile money transfer, but we plan to introduce additional services over time. The business units are now in place, and we are very excited about the long-term opportunities available in each of these strategic areas."
The Company affirms its full year 2011 revenue outlook provided on July 26th and has moved the EPS outlook to the higher end of its previous range. The Company expects the following full year 2011 results:
- Constant currency revenue growth in the range of +4% to +5%
- GAAP revenue growth 1% higher than constant currency
The 2011 outlook does not include any revenue impact related to the TGBP acquisition, which remains on track to close in the fourth quarter.
- GAAP EPS of $1.50 to $1.53 (previously $1.48 to $1.53)
- EPS excluding restructuring charges of $1.55 to $1.58 (previously $1.53 to $1.58)
These EPS ranges include a negative $0.02 impact from TGBP deal costs.
The Company's GAAP operating margin continues to be projected at a range of 25% to 25.5%, or a range of 26% to 26.5% excluding restructuring charges. On a constant currency basis, excluding restructuring charges, the Company projects a full year operating margin of 26.5% to 27%, including the negative impact of TGBP deal costs. This compares to an operating margin of 26.2% in 2010, excluding restructuring charges.
Operating Cash Flow
The Company continues to expect GAAP cash flows from operating activities to be at the lower end of the range of $1.2 billion to $1.3 billion.