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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

 

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

 

OR

 

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission File Number: 001-32903

img156430645_0.jpg

THE WESTERN UNION COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

 

20-4531180
(I.R.S. Employer
Identification No.)

 

7001 EAST BELLEVIEW AVENUE
Denver, Colorado 80237
(Address of principal executive offices)

 

 

Registrant’s telephone number, including area code: (866) 405-5012

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $0.01 Par Value

WU

The New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of October 18, 2024, 337,801,066 shares of the registrant’s common stock were outstanding.

 

 

 

 

 

THE WESTERN UNION COMPANY

INDEX

 

PAGE
NUMBER

PART I FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

 

 

 

Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2024 and 2023

3

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023

4

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023

6

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements

10

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

45

 

 

 

Item 4.

Controls and Procedures

45

 

 

 

 

Review Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)

46

 

 

 

PART II OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

47

 

 

 

Item 1A.

Risk Factors

47

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

47

 

 

 

Item 3.

Defaults Upon Senior Securities

47

 

 

 

Item 4.

Mine Safety Disclosures

47

 

 

 

Item 5.

Other Information

47

 

 

 

Item 6.

Exhibits

48

 

 

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in millions, except per share amounts)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenues

 

$

1,036.0

 

 

$

1,097.8

 

 

$

3,151.5

 

 

$

3,304.7

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

653.6

 

 

 

687.2

 

 

 

1,958.8

 

 

 

2,015.6

 

Selling, general, and administrative

 

 

217.5

 

 

 

199.7

 

 

 

645.0

 

 

 

630.9

 

Total expenses

 

 

871.1

 

 

 

886.9

 

 

 

2,603.8

 

 

 

2,646.5

 

Operating income

 

 

164.9

 

 

 

210.9

 

 

 

547.7

 

 

 

658.2

 

Other income/(expense):

 

 

 

 

 

 

 

 

 

 

 

 

Gain on divestiture of business (Note 4)

 

 

—

 

 

 

18.0

 

 

 

—

 

 

 

18.0

 

Interest income

 

 

2.8

 

 

 

3.6

 

 

 

9.6

 

 

 

11.0

 

Interest expense

 

 

(32.2

)

 

 

(27.0

)

 

 

(89.4

)

 

 

(79.0

)

Other income/(expense), net

 

 

0.2

 

 

 

(1.2

)

 

 

3.0

 

 

 

(6.5

)

Total other expense, net

 

 

(29.2

)

 

 

(6.6

)

 

 

(76.8

)

 

 

(56.5

)

Income before income taxes

 

 

135.7

 

 

 

204.3

 

 

 

470.9

 

 

 

601.7

 

Provision for/(benefit from) income taxes (Note 12)

 

 

(129.1

)

 

 

33.3

 

 

 

(77.6

)

 

 

102.7

 

Net income

 

$

264.8

 

 

$

171.0

 

 

$

548.5

 

 

$

499.0

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.78

 

 

$

0.46

 

 

$

1.61

 

 

$

1.33

 

Diluted

 

$

0.78

 

 

$

0.46

 

 

$

1.61

 

 

$

1.33

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

338.3

 

 

 

373.9

 

 

 

340.5

 

 

 

374.5

 

Diluted

 

 

339.5

 

 

 

375.0

 

 

 

341.6

 

 

 

375.4

 

 

See Notes to Condensed Consolidated Financial Statements.

3

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in millions)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income

 

$

264.8

 

 

$

171.0

 

 

$

548.5

 

 

$

499.0

 

Other comprehensive income, net of reclassifications and tax (Note 9):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains/(losses) on investment securities

 

 

33.7

 

 

 

(13.7

)

 

 

27.9

 

 

 

(5.1

)

Unrealized gains/(losses) on hedging activities

 

 

(14.4

)

 

 

10.0

 

 

 

(3.4

)

 

 

(11.1

)

Foreign currency translation adjustments

 

 

1.3

 

 

 

—

 

 

 

1.3

 

 

 

—

 

Total other comprehensive income/(loss)

 

 

20.6

 

 

 

(3.7

)

 

 

25.8

 

 

 

(16.2

)

Comprehensive income

 

$

285.4

 

 

$

167.3

 

 

$

574.3

 

 

$

482.8

 

 

See Notes to Condensed Consolidated Financial Statements.

4

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except per share amounts)

 

 

September 30,

 

 

December 31,

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,097.6

 

 

$

1,268.6

 

Settlement assets

 

 

3,306.9

 

 

 

3,687.0

 

Property and equipment, net of accumulated depreciation of $448.8 and $438.8, respectively

 

 

86.7

 

 

 

91.4

 

Goodwill

 

 

2,061.4

 

 

 

2,034.6

 

Other intangible assets, net of accumulated amortization of $592.9 and $685.9, respectively

 

 

330.8

 

 

 

380.2

 

Other assets

 

 

792.4

 

 

 

737.0

 

Total assets

 

$

7,675.8

 

 

$

8,198.8

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

426.0

 

 

$

453.0

 

Settlement obligations

 

 

3,306.9

 

 

 

3,687.0

 

Income taxes payable (Note 12)

 

 

261.8

 

 

 

659.5

 

Deferred tax liability, net

 

 

157.0

 

 

 

147.6

 

Borrowings

 

 

2,586.7

 

 

 

2,504.6

 

Other liabilities

 

 

284.7

 

 

 

268.1

 

Total liabilities

 

 

7,023.1

 

 

 

7,719.8

 

 

 

 

 

 

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $1.00 par value; 10 shares authorized; no shares issued

 

 

—

 

 

 

—

 

Common stock, $0.01 par value; 2,000 shares authorized; 337.8 shares and 350.5 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

 

3.4

 

 

 

3.5

 

Capital surplus

 

 

1,060.3

 

 

 

1,031.9

 

Accumulated deficit

 

 

(269.5

)

 

 

(389.1

)

Accumulated other comprehensive loss

 

 

(141.5

)

 

 

(167.3

)

Total stockholders' equity

 

 

652.7

 

 

 

479.0

 

Total liabilities and stockholders' equity

 

$

7,675.8

 

 

$

8,198.8

 

 

See Notes to Condensed Consolidated Financial Statements.

5

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

 

 

Nine Months Ended

 

 

September 30,

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

548.5

 

 

$

499.0

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

27.6

 

 

 

29.9

 

Amortization

 

 

108.1

 

 

 

108.6

 

Gain on divestiture of business, excluding transaction costs (Note 4)

 

 

—

 

 

 

(18.0

)

Other non-cash items, net

 

 

89.3

 

 

 

64.7

 

Increase/(decrease) in cash, excluding the effects of acquisitions and divestitures, resulting from changes in:

 

 

 

 

 

 

Other assets

 

 

(55.8

)

 

 

(91.1

)

Accounts payable and accrued liabilities

 

 

(34.0

)

 

 

(47.5

)

Income taxes payable

 

 

(403.2

)

 

 

(60.0

)

Other liabilities

 

 

(8.2

)

 

 

33.0

 

Net cash provided by operating activities

 

 

272.3

 

 

 

518.6

 

Cash flows from investing activities

 

 

 

 

 

 

Payments for capitalized contract costs

 

 

(9.7

)

 

 

(34.3

)

Payments for internal use software

 

 

(59.0

)

 

 

(66.7

)

Purchases of property and equipment

 

 

(23.1

)

 

 

(16.2

)

Purchases of settlement investments

 

 

(336.3

)

 

 

(382.0

)

Proceeds from the sale of settlement investments

 

 

176.6

 

 

 

207.6

 

Maturities of settlement investments

 

 

142.2

 

 

 

112.9

 

Proceeds from the sale of non-settlement investments

 

 

—

 

 

 

100.0

 

Other investing activities

 

 

(24.8

)

 

 

2.2

 

Net cash used in investing activities

 

 

(134.1

)

 

 

(76.5

)

Cash flows from financing activities

 

 

 

 

 

 

Cash dividends and dividend equivalents paid (Note 9)

 

 

(241.9

)

 

 

(266.0

)

Common stock repurchased (Note 9)

 

 

(182.5

)

 

 

(97.1

)

Net proceeds from/(repayments of) commercial paper

 

 

80.1

 

 

 

(10.0

)

Principal payments on borrowings

 

 

—

 

 

 

(300.0

)

Proceeds from exercise of options

 

 

—

 

 

 

0.3

 

Net change in settlement obligations

 

 

(151.3

)

 

 

(162.2

)

Other financing activities

 

 

(1.2

)

 

 

—

 

Net cash used in financing activities

 

 

(496.8

)

 

 

(835.0

)

Net change in cash and cash equivalents, including settlement, and restricted cash

 

 

(358.6

)

 

 

(392.9

)

Cash and cash equivalents, including settlement, and restricted cash at beginning of period

 

 

1,786.2

 

 

 

2,040.7

 

Cash and cash equivalents, including settlement, and restricted cash at end of period

 

$

1,427.6

 

 

$

1,647.8

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

6

THE WESTERN UNION COMPANY

SUPPLEMENTAL CASH FLOW INFORMATION

(Unaudited)

(in millions)

 

 

 

September 30,

 

 

 

2024

 

 

2023

 

Reconciliation of balance sheet cash and cash equivalents to cash flows:

 

 

 

 

 

 

Cash and cash equivalents on balance sheet

 

$

1,097.6

 

 

$

1,138.2

 

Settlement cash and cash equivalents (Note 8)

 

 

327.2

 

 

 

484.4

 

Restricted cash in Other assets

 

 

2.8

 

 

 

25.2

 

Cash and cash equivalents, including settlement, and restricted cash at end of period

 

$

1,427.6

 

 

$

1,647.8

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2024

 

 

2023

 

Supplemental cash flow information:

 

 

 

 

 

 

Interest paid

 

$

82.9

 

 

$

73.1

 

Income taxes paid

 

$

321.7

 

 

$

176.6

 

 

See Notes to Condensed Consolidated Financial Statements.

7

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

Common Stock

 

 

Capital

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Surplus

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance, December 31, 2023

 

 

350.5

 

 

$

3.5

 

 

$

1,031.9

 

 

$

(389.1

)

 

$

(167.3

)

 

$

479.0

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

142.7

 

 

 

—

 

 

 

142.7

 

Stock-based compensation

 

 

—

 

 

 

—

 

 

 

8.7

 

 

 

—

 

 

 

—

 

 

 

8.7

 

Common stock dividends and dividend equivalents declared ($0.235 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(81.9

)

 

 

—

 

 

 

(81.9

)

Repurchase and retirement of common shares

 

 

(12.3

)

 

 

(0.1

)

 

 

—

 

 

 

(156.7

)

 

 

—

 

 

 

(156.8

)

Shares issued under stock-based compensation plans

 

 

1.4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other comprehensive income (Note 9)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6.2

 

 

 

6.2

 

Balance, March 31, 2024

 

 

339.6

 

 

 

3.4

 

 

 

1,040.6

 

 

 

(485.0

)

 

 

(161.1

)

 

 

397.9

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

141.0

 

 

 

—

 

 

 

141.0

 

Stock-based compensation

 

 

—

 

 

 

—

 

 

 

10.2

 

 

 

—

 

 

 

—

 

 

 

10.2

 

Common stock dividends and dividend equivalents declared ($0.235 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(80.4

)

 

 

—

 

 

 

(80.4

)

Repurchase and retirement of common shares

 

 

(2.0

)

 

 

—

 

 

 

—

 

 

 

(26.9

)

 

 

—

 

 

 

(26.9

)

Shares issued under stock-based compensation plans

 

 

0.2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other comprehensive loss (Note 9)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1.0

)

 

 

(1.0

)

Balance, June 30, 2024

 

 

337.8

 

 

 

3.4

 

 

 

1,050.8

 

 

 

(451.3

)

 

 

(162.1

)

 

 

440.8

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

264.8

 

 

 

—

 

 

 

264.8

 

Stock-based compensation

 

 

—

 

 

 

—

 

 

 

9.5

 

 

 

—

 

 

 

—

 

 

 

9.5

 

Common stock dividends and dividend equivalents declared ($0.235 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(81.3

)

 

 

—

 

 

 

(81.3

)

Repurchase and retirement of common shares

 

 

(0.1

)

 

 

—

 

 

 

—

 

 

 

(1.7

)

 

 

—

 

 

 

(1.7

)

Shares issued under stock-based compensation plans

 

 

0.1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other comprehensive income (Note 9)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

20.6

 

 

 

20.6

 

Balance, September 30, 2024

 

 

337.8

 

 

$

3.4

 

 

$

1,060.3

 

 

$

(269.5

)

 

$

(141.5

)

 

$

652.7

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

Common Stock

 

 

Capital

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Surplus

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance, December 31, 2022

 

 

373.5

 

 

$

3.7

 

 

$

995.9

 

 

$

(353.9

)

 

$

(167.9

)

 

$

477.8

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

151.8

 

 

 

—

 

 

 

151.8

 

Stock-based compensation

 

 

—

 

 

 

—

 

 

 

8.0

 

 

 

—

 

 

 

—

 

 

 

8.0

 

Common stock dividends and dividend equivalents declared ($0.235 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(88.6

)

 

 

—

 

 

 

(88.6

)

Repurchase and retirement of common shares

 

 

(0.5

)

 

 

(0.1

)

 

 

—

 

 

 

(6.1

)

 

 

—

 

 

 

(6.2

)

Shares issued under stock-based compensation plans

 

 

1.4

 

 

 

0.1

 

 

 

0.2

 

 

 

—

 

 

 

—

 

 

 

0.3

 

Other comprehensive income (Note 9)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9.7

 

 

 

9.7

 

Balance, March 31, 2023

 

 

374.4

 

 

 

3.7

 

 

 

1,004.1

 

 

 

(296.8

)

 

 

(158.2

)

 

 

552.8

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

176.2

 

 

 

—

 

 

 

176.2

 

Stock-based compensation

 

 

—

 

 

 

—

 

 

 

9.5

 

 

 

—

 

 

 

—

 

 

 

9.5

 

Common stock dividends and dividend equivalents declared ($0.235 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(89.5

)

 

 

—

 

 

 

(89.5

)

Repurchase and retirement of common shares

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.3

)

 

 

—

 

 

 

(0.3

)

Shares issued under stock-based compensation plans

 

 

0.1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other comprehensive loss (Note 9)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(22.2

)

 

 

(22.2

)

Balance, June 30, 2023

 

 

374.5

 

 

 

3.7

 

 

 

1,013.6

 

 

 

(210.4

)

 

 

(180.4

)

 

 

626.5

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

171.0

 

 

 

—

 

 

 

171.0

 

Stock-based compensation

 

 

—

 

 

 

—

 

 

 

9.7

 

 

 

—

 

 

 

—

 

 

 

9.7

 

Common stock dividends and dividend equivalents declared ($0.235 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(88.4

)

 

 

—

 

 

 

(88.4

)

Repurchase and retirement of common shares

 

 

(7.8

)

 

 

—

 

 

 

—

 

 

 

(101.5

)

 

 

—

 

 

 

(101.5

)

Shares issued under stock-based compensation plans

 

 

0.1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other comprehensive loss (Note 9)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3.7

)

 

 

(3.7

)

Balance, September 30, 2023

 

 

366.8