Revenue $1.4 Billion; Earnings Per Share $0.42

2016 EPS Outlook Updated to a Range of $1.60 to $1.70

Company Continues to Deliver Solid Results

ENGLEWOOD, Colo.--(BUSINESS WIRE)-- The Western Union Company (NYSE: WU) today reported financial results for the 2016 second quarter and updated its full year financial outlook, which was previously reported on May 3, 2016.

In the second quarter, reported revenues declined 1%, or increased 3% on a constant currency basis, compared to the prior year period. Earnings per share increased to $0.42, up from $0.36 in the prior year period on a GAAP basis or $0.41 excluding the prior year Paymap settlement charge. The current period EPS includes a negative $0.02 impact from a $15 million accrual ($10 million after-tax) related to a legal matter.

The Company updated its full year financial outlook, narrowing EPS to a range of $1.60 to $1.70, compared to the previous range of $1.58 to $1.70. The current outlook reflects the benefit of a lower expected effective tax rate, partially offset by the legal matter accrual.

“We delivered another solid quarter, led by strong growth from our digital business,” said President and Chief Executive Officer Hikmet Ersek. “While international markets are mixed, our U.S. money transfer business continued to provide steady performance, helping drive good profitability and cash flow.”

Ersek added, “Strategically, we continue to make good progress. We released upgraded mobile apps for westernunion.com in eight markets and expanded our account payout capabilities to be able to reach billions of accounts in more than 50 countries. We also activated thousands of business customers on our new WU EDGE digital platform, and continued to invest in enhancing our technology infrastructure and compliance programs across the company.”

Executive Vice President and Chief Financial Officer Raj Agrawal stated, “Operating margins remain healthy, and strong cash flow generation continues to allow us to return significant funds to shareholders. Given the macro challenges in many parts of the world, we are pleased with our results and outlook.”

Consumer-to-Consumer (C2C) revenues declined 1% in the quarter, or increased 2% on a constant currency basis, on transaction growth of 3%. Westernunion.com C2C revenues increased 19% (or 20% constant currency) on transaction growth of 25%, and represented 8% of total C2C revenue in the quarter.

Consumer-to-Business (C2B) revenues declined 2% in the quarter, or increased 12% on a constant currency basis. The depreciation of the Argentine peso caused the decline in reported revenues, while constant currency growth was led by the Argentina walk-in and U.S. electronic bill payments businesses.

Western Union Business Solutions revenues increased 3%, or 6% on a constant currency basis, driven by strong growth in Europe.

Operating margin in the quarter was 18.9%, including a negative impact of 110 basis points from the legal matter accrual, which relates to the Company’s consumer protection and anti-fraud programs.

The operating margin was 18.1% in the second quarter of last year, or 20.7% excluding the impact of the Paymap settlement agreement. Other factors affecting the year-on-year change in margins include incremental investment in technology and the negative impact of foreign exchange, partially offset by reductions in compensation related costs and other expenses.

The effective tax rate was 7.6%, which compares to 8.5% in the prior year period, or 11.8% excluding the Paymap charge. The current quarter rate included a positive impact of 180 basis points from the legal matter accrual, and also benefitted from several discrete items.

The Company returned $156 million to shareholders in the second quarter, consisting of $78 million of share repurchases and $78 million of dividends. Year-to-date, cash flow from operating activities totaled $486 million and $475 million has been returned to shareholders through share repurchases and dividends.

2016 Full Year Outlook

The Company affirmed its full year 2016 outlooks for constant currency revenue growth, operating profit margin, and operating cash flow. The GAAP revenue outlook was decreased slightly to reflect changes in several key foreign currencies against the U.S. dollar. The impact on operating profit from the currency changes is largely expected to be offset by incremental hedge benefits, with hedge gains now projected at approximately $45 million compared to approximately $40 million in the prior outlook.

The Company’s current outlook for the full year effective tax rate is approximately 12%, compared to a mid-teens rate in the prior outlook.

The outlook for GAAP earnings per share has been narrowed to a range of $1.60 to $1.70, which primarily reflects the impact of the lower effective tax rate and the legal matter accrual.

The updated outlook follows:

Revenue

• Low to mid-single digit constant currency revenue increase, with the GAAP revenue change approximately 400 basis points lower than constant currency (previously 300 basis points)

Operating Profit Margin

• Operating margin of approximately 20%

Earnings per Share

• EPS in a range of $1.60 to $1.70 (previously $1.58 to $1.70)

Cash Flow

• Cash flow from operating activities of approximately $1 billion. The cash flow outlook excludes approximately $100 million of anticipated final tax payments relating to the agreement announced with the U.S. Internal Revenue Service in December 2011. Some or all of these payments may occur in 2016.

Additional Statistics

Additional key statistics for the quarter and historical trends can be found in the supplemental tables included with this press release. In the C2C segment, the geographic split for transactions and revenue, including transactions initiated through westernunion.com, is determined based upon the region where the money transfer is initiated and the region where the money transfer is paid. For transactions originated and paid in different regions, we split the transaction count and revenue between the two regions, with each region receiving 50%. For money transfers initiated and paid in the same region, 100% of the transactions and revenue are attributed to that region.

Prior to January 1, 2016, we reported westernunion.com as a separate region with 100% of the corresponding transactions and revenue attributed to that region, regardless of where the transactions were paid out. Separate westernunion.com statistics provided in the tables included with this press release maintain that 100% allocation methodology. Prior period regional results have been adjusted to include transactions initiated through westernunion.com, as described in the preceding paragraph.

All amounts included in the supplemental tables to this press release are rounded to the nearest tenth of a million, except as otherwise noted. As a result, the percentage changes and margins disclosed herein may not recalculate precisely using the rounded amounts provided.

Non-GAAP Measures

Western Union presents a number of non-GAAP financial measures because management believes that these metrics provide meaningful supplemental information in addition to the GAAP metrics and provide comparability and consistency to prior periods. Constant currency results assume foreign revenues are translated from foreign currencies to the U.S. dollar, net of the effect of foreign currency hedges, at rates consistent with those in the prior year.

These non-GAAP financial measures include revenue change constant currency adjusted; Consumer-to-Consumer segment revenue change constant currency adjusted; Consumer-to-Consumer segment westernunion.com revenue change constant currency adjusted; Consumer-to-Business segment revenue change constant currency adjusted; Business Solutions segment revenue change constant currency adjusted; operating income margin, excluding Paymap settlement agreement; effective tax rate, excluding Paymap settlement agreement; diluted earnings per share, excluding Paymap settlement agreement; and additional measures found in the supplemental tables included with this press release.

Reconciliations of non-GAAP to comparable GAAP measures are available in the accompanying schedules and in the “Investor Relations” section of the Company’s website at http://ir.westernunion.com.

Investor and Analyst Conference Call and Slide Presentation

The Company will host a conference call and webcast, including slides, at 4:30 p.m. Eastern Time today. To listen to the conference call via telephone, dial 1 (888) 317-6003 (U.S.) or +1 (412) 317-6061 (outside the U.S.) ten minutes prior to the start of the call. The pass code is 9233641.

The conference call and accompanying slides will be available via webcast at http://ir.westernunion.com. Registration for the event is required, so please register at least five minutes prior to the scheduled start time.

A webcast replay will be available at http://ir.westernunion.com.

Please note: All statements made by Western Union officers on this call are the property of Western Union and subject to copyright protection. Other than the replay, Western Union has not authorized, and disclaims responsibility for, any recording, replay or distribution of any transcription of this call.

Safe Harbor Compliance Statement for Forward-Looking Statements

This press release contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as "expects," "intends," "anticipates," "believes," "estimates," "guides," "provides guidance," "provides outlook" and other similar expressions or future or conditional verbs such as "may," "will," "should," "would," "could," and "might" are intended to identify such forward-looking statements. Readers of this press release of The Western Union Company (the "Company," "Western Union," "we," "our" or "us") should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed in the "Risk Factors" section and throughout the Annual Report on Form 10-K for the year ended December 31, 2015. The statements are only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement.

Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following: (i) events related to our business and industry, such as: changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic and trade downturns, or significantly slower growth or declines in the money transfer, payment service, and other markets in which we operate, including downturns or declines related to interruptions in migration patterns, or non-performance by our banks, lenders, insurers, or other financial services providers; failure to compete effectively in the money transfer and payment service industry, including among other things, with respect to price, with global and niche or corridor money transfer providers, banks and other money transfer and payment service providers, including electronic, mobile and Internet-based services, card associations, and card-based payment providers, and with digital currencies and related protocols, and other innovations in technology and business models; deterioration in customer confidence in our business, or in money transfer and payment service providers generally; our ability to adopt new technology and develop and gain market acceptance of new and enhanced services in response to changing industry and consumer needs or trends; changes in, and failure to manage effectively, exposure to foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers and payment transactions; any material breach of security, including cybersecurity, or safeguards of or interruptions in any of our systems or those of our vendors or other third parties; cessation of or defects in various services provided to us by third-party vendors; mergers, acquisitions and integration of acquired businesses and technologies into our Company, and the failure to realize anticipated financial benefits from these acquisitions, and events requiring us to write down our goodwill; political conditions and related actions in the United States and abroad which may adversely affect our business and economic conditions as a whole, including interruptions of United States or other government relations with countries in which we have or are implementing significant business relationships with agents or clients; failure to manage credit and fraud risks presented by our agents, clients and consumers; failure to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place, including due to increased costs or loss of business as a result of increased compliance requirements or difficulty for us, our agents or their subagents in establishing or maintaining relationships with banks needed to conduct our services; decisions to change our business mix; changes in tax laws, or their interpretation, and unfavorable resolution of tax contingencies; adverse rating actions by credit rating agencies; our ability to realize the anticipated benefits from productivity and cost-savings and other related initiatives, which may include decisions to downsize or to transition operating activities from one location to another, and to minimize any disruptions in our workforce that may result from those initiatives; our ability to protect our brands and our other intellectual property rights and to defend ourselves against potential intellectual property infringement claims; our ability to attract and retain qualified key employees and to manage our workforce successfully; material changes in the market value or liquidity of securities that we hold; restrictions imposed by our debt obligations; (ii) events related to our regulatory and litigation environment, such as: liabilities or loss of business resulting from a failure by us, our agents or their subagents to comply with laws and regulations and regulatory or judicial interpretations thereof, including laws and regulations designed to protect consumers, or detect and prevent money laundering, terrorist financing, fraud and other illicit activity; increased costs or loss of business due to regulatory initiatives and changes in laws, regulations and industry practices and standards, including changes in interpretations in the United States and globally, affecting us, our agents or their subagents, or the banks with which we or our agents maintain bank accounts needed to provide our services, including related to anti-money laundering regulations, anti-fraud measures, customer due diligence, agent and subagent due diligence, registration and monitoring requirements, and consumer protection requirements; liabilities or loss of business and unanticipated developments resulting from governmental investigations and consent agreements with or enforcement actions by regulators, including those associated with compliance with or failure to comply with the settlement agreement with the State of Arizona, as amended; the potential impact on our business from the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as well as regulations issued pursuant to it and the actions of the Consumer Financial Protection Bureau and similar legislation and regulations enacted by other governmental authorities related to consumer protection; liabilities resulting from litigation, including class-action lawsuits and similar matters, including costs, expenses, settlements and judgments; failure to comply with regulations and evolving industry standards regarding consumer privacy and data use and security; effects of unclaimed property laws; failure to maintain sufficient amounts or types of regulatory capital or other restrictions on the use of our working capital to meet the changing requirements of our regulators worldwide; changes in accounting standards, rules and interpretations or industry standards affecting our business; and (iii) other events, such as: adverse tax consequences from our spin-off from First Data Corporation; catastrophic events; and management's ability to identify and manage these and other risks.

About Western Union

The Western Union Company (NYSE: WU) is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western Union Business Solutions branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, to send payments and to purchase money orders. As of June 30, 2016, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of over 500,000 agent locations in 200 countries and territories and over 100,000 ATMs and kiosks, and included the capability to send money to billions of accounts. In 2015, The Western Union Company completed 262 million consumer-to-consumer transactions worldwide, moving $82 billion of principal between consumers, and 508 million business payments. For more information, visit www.westernunion.com.

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