Revenue Increases 9%, Strong Electronic Channels Growth

2012 Financial Outlook Affirmed

Company Reaches 500,000 Agent Locations in April

ENGLEWOOD, Colo.--(BUSINESS WIRE)-- The Western Union Company (NYSE: WU) today reported financial results for the 2012 first quarter.

Financial highlights for the quarter included:

• Revenue of $1.4 billion, a reported and constant currency increase of 9% compared to last year’s first quarter. Pro forma revenue increase of 4%, or 5% constant currency including Travelex Global Business Payments (TGBP) in the prior year period
• Operating margin of 23.9% compared to 24.4% in the prior year. Excluding TGBP integration expenses of $6 million operating margin was 24.3%, compared to 26.3% excluding $24 million of restructuring expenses in the prior year period
• The decrease in operating margin was primarily due to an increased operating loss in Business Solutions, including TGBP intangibles amortization, and incremental costs related to investments, compliance, and timing of certain expenses. The Company maintains its full year outlook for GAAP operating margin of approximately 25% and operating margin excluding TGBP integration costs of approximately 26%
• EBITDA margin excluding TGBP integration expenses of 28.9%, compared to 29.7% excluding restructuring expenses in the prior year period
• Cash provided by operating activities of $215 million, including the impact of tax payments of approximately $65 million relating to the agreement with the U.S. Internal Revenue Service announced December 15, 2011
• EPS of $0.40, compared to $0.32 in the prior year, or $0.35 in the prior year excluding restructuring expenses. EPS excluding TGBP integration expenses was also $0.40

Additional highlights for the quarter included:

• Consumer-to-Consumer (C2C) revenue increase of 4% reported and 5% constant currency, on transaction growth of 7%
  • C2C represented 81% of Company revenue
  • North America region revenue increase of 5%
  • Europe and the CIS region revenue flat with the prior year period
  • Middle East and Africa (MEA) region revenue increase of 6%
  • Asia Pacific (APAC) region revenue increase of 7%
  • Latin America and the Caribbean (LACA) region revenue increase of 2%
  • westernunion.com revenue increase of 39%
  • C2C operating margin of 27.7% compared to 28.6% in the prior year
• Consumer-to-Business (C2B) payments revenue increase of 1% reported and 3% constant currency
  • C2B represented 11% of Company revenue
  • C2B operating margin of 26.5% compared to 22.6% in the prior year
• Business Solutions revenue of $87 million, compared to $28 million in the prior year
  • Business Solutions represented 6% of Company revenue
  • Pro forma revenue increase of 5%, or 4% constant currency, including TGBP revenue in the prior year period
  • Operating loss of $15 million, including $14 million of intangibles amortization and $6 million of TGBP integration expenses, compared to an operating loss of $4 million in the prior year (prior year does not include TGBP)
• Electronic channels revenue increase of 38%
  • Electronic channels, which include westernunion.com, account based money transfer, and mobile money transfer, represented 3% of total Company revenue (included in the various segments)
• Prepaid revenue increase of 17%
  • Prepaid including third party top-up represented 1% of Company revenue
• Agent locations of 495,000 as of March 31
• Share repurchases of $147 million (8 million shares at an average price of $17.69 per share) and dividends declared of $0.10 per share or $62 million in the quarter (dividend per share increased 25% from prior quarter)

Additional Statistics

Additional key statistics for the quarter and historical trends can be found in the supplemental tables included with this press release.

Western Union President and Chief Executive Officer Hikmet Ersek commented, “Overall, we started off the year in line with our outlook. Our Consumer-to-Consumer segment growth accelerated compared to the fourth quarter, as strength in North America and the Middle East and Africa offset some expected softness in the Europe and CIS region. We further expanded our global network, including increasing our U.S. banking and European retail presence, and in April we reached 500,000 Agent locations across the world.”

Ersek continued, “While our core is delivering, we are also making progress on evolving our new businesses. The integration of Travelex Global Business Payments is on track, as we continue to establish the foundation for growth in Business Solutions. In Ventures, our westernunion.com on-line money transfer service delivered almost 40% revenue growth in the quarter, and is now available from 23 countries. We also advanced our strategy of offering more services to more customers with the introduction of WU Pay. This innovative electronic payments platform allows on-line shoppers to pay for purchases directly from their bank account or in cash at Western Union locations. Westernunion.com consumers will also be able to utilize WU Pay to fund on-line money transfers.”

Ersek added, “Strong capital deployment remains a priority. In addition to reinvesting in the business, we returned over $200 million to shareholders through the combination of share repurchase and dividends, and we plan to remain active with capital deployment throughout the year.”

2012 Outlook

The Company affirms its full year 2012 financial outlook provided on February 7:

Revenue

• Constant currency revenue growth in a range of +6% to +8%, including a +4% benefit from the full year inclusion of TGBP
• GAAP revenue growth 2% lower than constant currency

Operating Margins

• GAAP operating margin of approximately 25%
• Operating margin of approximately 26% excluding TGBP integration costs
• EBITDA margin excluding TGBP integration costs of approximately 30%

Earnings Per Share

• GAAP EPS in a range of $1.65 to $1.70
• EPS excluding TGBP integration expenses of $1.70 to $1.75

Cash Flow from Operations

• Cash flow from operations in a range of $1.0 billion to $1.1 billion, or $1.2 billion to $1.3 billion excluding anticipated tax payments of approximately $200 million relating to the IRS agreement announced on December 15, 2011

Investor Day

The Company will host an Investor Day Meeting on Wednesday, May 9, 2012 in New York City, beginning at 8:30 a.m. Eastern Time.

Additional information including event details and location, registration instructions, and Web participation directions is available on the company's investor relations website at http://ir.westernunion.com. A webcast replay will be available following the event.

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. These non-GAAP financial measures include revenue change constant currency adjusted, pro forma revenue change TGBP adjusted, pro forma revenue change TGBP and constant currency adjusted, operating income margin excluding restructuring and TGBP integration expense, EBITDA margin excluding restructuring and TGBP integration expense, earnings per share restructuring, IRS agreement and TGBP integration expense adjusted, Consumer-to-Consumer segment revenue change constant currency adjusted, Consumer-to-Business segment revenue change constant currency adjusted, Business Solutions segment pro forma revenue change TGBP adjusted, Business Solutions segment pro forma revenue change TGBP and constant currency adjusted, 2012 revenue change outlook constant currency adjusted, 2012 operating income margin outlook TGBP integration expense adjusted, 2012 EBITDA margin outlook TGBP integration expense adjusted, 2012 earnings per share outlook TGBP integration expense adjusted, 2012 operating cash flow outlook IRS agreement adjusted, and additional measures found in the supplemental schedule 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 www.westernunion.com.

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) results from taking operating income and adjusting for depreciation and amortization expenses. The 2012 EBITDA has been adjusted to exclude TGBP integration expense, and the 2011 EBITDA has been adjusted to exclude restructuring expenses and TGBP integration expense. EBITDA results provide an additional performance measurement calculation which helps neutralize the income statement effect of assets acquired in prior periods.

TGBP Integration

The Company expects approximately $50 million of integration expense for TGBP in 2012, of which approximately $6 million were incurred in the first quarter. TGBP integration expense consists primarily of severance and other benefits, retention, direct and incremental expense consisting of facility relocation, consolidation and closures; IT systems integration; and other expenses such as training, travel and professional fees. Integration expense does not include costs related to the completion of the TGBP acquisition.

Restructuring

The company did not incur any restructuring expenses in the first quarter of 2012. The Company recorded $24 million of restructuring charges in the first quarter of 2011. Approximately $7 million was included in cost of services and $17 million was included in selling, general, and administrative expense. The restructuring charges relate primarily to organizational changes designed to simplify business processes, move decision-making closer to the marketplace, and create operating efficiencies. The Company realized pre-tax savings from the initiatives of approximately $55 million in 2011, and expects $70 million annualized beginning in 2012. Restructuring expenses are not reflected in segment operating results.

Restructuring expenses include expenses related to severance, outplacement and other related benefits; facility closure and migration of IT infrastructure; and other expenses related to relocation of various operations to new or existing Company facilities and third-party providers, including hiring, training, relocation, travel, and professional fees. Also included in the facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs, and the acceleration of depreciation and amortization.

Currency

Constant currency results assume foreign revenues and expenses 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. Constant currency results also assume any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the U.S. dollar, net of the effect of foreign currency hedges, would have been consistent with the prior year. Additionally, the measurement assumes the impact of fluctuations in foreign currency derivatives not designated as hedges and the portion of fair value that is excluded from the measure of effectiveness for those contracts designated as hedges is consistent with the prior year.

Investor and Analyst Conference Call and Slide Presentation

The Company will host a conference call and webcast, including slides, at 8:30 a.m. Eastern Time today. To listen to the conference call live via telephone, dial 866-450-8367 (U.S.) or +1-412-317-5427 (outside the U.S.) ten minutes prior to the start of the call. The pass code is 4289188.

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 replay of the call will be available approximately two hours after the call ends through May 3, 2012, at 877-344-7529 (U.S.) or +1-412-317-0088 (outside the U.S.). The pass code is 4289188. A webcast replay will be available at http://ir.westernunion.com for the same time period.

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 “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Readers of this press release by 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 throughout the Annual Report on Form 10-K for the year ended December 31, 2011, including those described under “Risk Factors”. 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: deterioration in consumers' and clients' confidence in our business, or in money transfer and payment service providers generally; changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic downturns and financial market disruptions; political conditions and related actions in the United States and abroad which may adversely affect our business and economic conditions as a whole; interruptions of United States government relations with countries in which we have or are implementing material agent contracts; 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 immigration laws, interruptions in immigration patterns and other factors related to migrants; our ability to adapt technology in response to changing industry and consumer needs or trends; our failure to develop and introduce new services and enhancements, and gain market acceptance of such services; mergers, acquisitions and integration of acquired businesses and technologies into our Company, and the realization of anticipated financial benefits from these acquisitions; decisions to downsize, sell or close units, or to transition operating activities from one location to another or to third parties, particularly transitions from the United States to other countries; decisions to change our business mix; failure to manage credit and fraud risks presented by our agents, clients and consumers or non-performance by our banks, lenders, other financial services providers or insurers; adverse movements and volatility in capital markets and other events which affect our liquidity, the liquidity of our agents or clients, or the value of, or our ability to recover our investments or amounts payable to us; any material breach of security or safeguards of or interruptions in any of our systems; our ability to attract and retain qualified key employees and to manage our workforce successfully; our ability to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place; adverse rating actions by credit rating agencies; failure to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, banks and other money transfer services providers, including telecommunications providers, card associations, card-based payment providers and electronic and Internet providers; our ability to protect our brands and our other intellectual property rights; our failure to manage the potential both for patent protection and patent liability in the context of a rapidly developing legal framework for intellectual property protection; changes in tax laws and unfavorable resolution of tax contingencies; cessation of various services provided to us by third-party vendors; material changes in the market value or liquidity of securities that we hold; restrictions imposed by our debt obligations; significantly slower growth or declines in the money transfer market and other markets in which we operate; changes in industry standards affecting our business; (ii) events related to our regulatory and litigation environment, such as: the failure by us, our agents or their subagents to comply with laws and regulations designed to detect and prevent money laundering, terrorist financing, fraud and other illicit activity; changes in United States or foreign laws, rules and regulations including the Internal Revenue Code, governmental or judicial interpretations thereof and industry practices and standards; liabilities resulting from a failure of our agents or subagents to comply with laws and regulations; increased costs due to regulatory initiatives and changes in laws, regulations and industry practices and standards affecting our agents; liabilities and unanticipated developments resulting from governmental investigations and consent agreements with, or enforcement actions by, regulators, including those associated with compliance with, or a failure to comply with the settlement agreement with the State of Arizona; the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules promulgated there-under and the creation of the Consumer Financial Protection Bureau; liabilities resulting from litigation, including class-action lawsuits and similar matters, including costs, expenses, settlements and judgments; failure to comply with regulations regarding consumer privacy and data use and security; effects of unclaimed property laws; failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of our regulators worldwide; changes in accounting standards, rules and interpretations; and (iii) other events, such as: adverse 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 March 31, 2012, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of approximately 495,000 agent locations in 200 countries and territories. In 2011, The Western Union Company completed 226 million consumer-to-consumer transactions worldwide, moving $81 billion of principal between consumers, and 425 million business payments. For more information, visit www.westernunion.com.

WU-F, WU-G

Source: Western Union