Western Union CO [WU] Filings

10-Q 1 wu-20230630.htm 10-Q 10-Q

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 June 30, 2023



☐	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

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 July 21, 2023, 374,534,805 shares of the registrant’s common stock were outstanding.

Table of Contents

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 six months ended June 30, 2023 and 2022	3

	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022	4

	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

Item 4.	Controls and Procedures	48

	Review Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)	49

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	50

Item 4.	Mine Safety Disclosures	50

Item 5.	Other Information	50

Item 6.	Exhibits	51

Table of Contents

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						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenues	$	1,170.0		$	1,138.3		$	2,206.9		$	2,294.0
Expenses:
Cost of services		698.9			653.0			1,328.4			1,308.1
Selling, general, and administrative		228.5			221.3			431.2			484.4
Total expenses		927.4			874.3			1,759.6			1,792.5
Operating income		242.6			264.0			447.3			501.5
Other income/(expense):
Gain on divestiture of business (Note 4)		—			—			—			151.4
Interest income		4.2			1.8			7.4			2.4
Interest expense		(27.0	)		(24.8	)		(52.0	)		(49.6	)
Other expense, net		(3.4	)		(4.8	)		(5.3	)		(7.3	)
Total other income/(expense), net		(26.2	)		(27.8	)		(49.9	)		96.9
Income before income taxes		216.4			236.2			397.4			598.4
Provision for income taxes		40.2			42.2			69.4			111.1
Net income	$	176.2		$	194.0		$	328.0		$	487.3
Earnings per share:
Basic	$	0.47		$	0.50		$	0.88		$	1.25
Diluted	$	0.47		$	0.50		$	0.87		$	1.25
Weighted-average shares outstanding:
Basic		375.0			386.7			374.7			389.9
Diluted		375.6			387.6			375.6			391.0

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in millions)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net income	$	176.2		$	194.0		$	328.0		$	487.3
Other comprehensive income, net of reclassifications and tax (Note 9):
Unrealized gains/(losses) on investment securities		(11.4	)		(23.7	)		8.6			(75.3	)
Unrealized gains/(losses) on hedging activities		(10.8	)		23.1			(21.1	)		28.4
Foreign currency translation adjustments		—			—			—			(17.8	)
Total other comprehensive loss		(22.2	)		(0.6	)		(12.5	)		(64.7	)
Comprehensive income	$	154.0		$	193.4		$	315.5		$	422.6

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except per share amounts)


	June 30,			December 31,
	2023			2022
Assets
Cash and cash equivalents	$	1,585.9		$	1,285.9
Settlement assets		3,328.1			3,486.8
Property and equipment, net of accumulated depreciation of $449.7 and $512.8, respectively		96.3			109.6
Goodwill		2,034.6			2,034.6
Other intangible assets, net of accumulated amortization of $655.7 and $616.3, respectively		430.3			457.9
Other assets (Note 5)		771.6			859.9
Assets held for sale (Note 4)		240.6			261.6
Total assets	$	8,487.4		$	8,496.3
Liabilities and stockholders' equity
Liabilities:
Accounts payable and accrued liabilities	$	418.2		$	464.0
Settlement obligations		3,328.1			3,486.8
Income taxes payable		635.4			725.3
Deferred tax liability, net		153.9			158.5
Borrowings		2,813.0			2,616.8
Other liabilities		350.8			384.6
Liabilities associated with assets held for sale (Note 4)		161.5			182.5
Total liabilities		7,860.9			8,018.5

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; 374.5 shares and 373.5 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		3.7			3.7
Capital surplus		1,013.6			995.9
Accumulated deficit		(210.4	)		(353.9	)
Accumulated other comprehensive loss		(180.4	)		(167.9	)
Total stockholders' equity		626.5			477.8
Total liabilities and stockholders' equity	$	8,487.4		$	8,496.3

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)


	Six Months Ended
	June 30,
	2023			2022
Cash flows from operating activities
Net income	$	328.0		$	487.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		20.1			22.6
Amortization		72.4			70.1
Gain on divestiture of business, excluding transaction costs (Note 4)		—			(155.8	)
Other non-cash items, net		35.6			32.8
Increase/(decrease) in cash, excluding the effects of divestitures, resulting from changes in:
Other assets		(52.7	)		(131.2	)
Accounts payable and accrued liabilities		(52.0	)		19.6
Income taxes payable		(86.4	)		(20.5	)
Other liabilities		(1.0	)		(18.1	)
Net cash provided by operating activities		264.0			306.8
Cash flows from investing activities
Payments for capitalized contract costs		(32.9	)		(26.3	)
Payments for internal use software		(46.0	)		(42.7	)
Purchases of property and equipment		(11.2	)		(15.3	)
Purchases of settlement investments		(198.3	)		(495.3	)
Proceeds from the sale of settlement investments		66.8			290.2
Maturities of settlement investments		54.3			84.4
Purchases of non-settlement investments (Note 5)		—			(400.0	)
Proceeds from the sale of non-settlement investments (Note 5)		100.0			—
Proceeds from divestiture, net of cash divested (Note 4)		—			896.4
Other investing activities		2.2			0.9
Net cash (used in)/provided by investing activities		(65.1	)		292.3
Cash flows from financing activities
Cash dividends and dividend equivalents paid (Note 9)		(178.7	)		(184.8	)
Common stock repurchased (Note 9)		(6.0	)		(185.5	)
Net proceeds from/(repayments of) commercial paper		494.6			(15.0	)
Principal payments on borrowings		(300.0	)		(300.0	)
Proceeds from exercise of options		0.3			9.4
Net change in settlement obligations		(619.8	)		(112.1	)
Other financing activities		0.1			—
Net cash used in financing activities		(609.5	)		(788.0	)
Net change in cash and cash equivalents, including settlement, and restricted cash		(410.6	)		(188.9	)
Cash and cash equivalents, including settlement, and restricted cash at beginning of period		2,040.7			2,110.9
Cash and cash equivalents, including settlement, and restricted cash at end of period	$	1,630.1		$	1,922.0

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

SUPPLEMENTAL CASH FLOW INFORMATION

(Unaudited)

(in millions)


	June 30,
	2023		2022
Reconciliation of balance sheet cash and cash equivalents to cash flows:
Cash and cash equivalents on balance sheet	$	1,585.9	$	1,201.9
Settlement cash and cash equivalents (Note 8)		11.1		602.7
Restricted cash in Other assets		33.1		40.4
Cash and cash equivalents included in Assets held for sale (Note 4)		—		77.0
Cash and cash equivalents, including settlement, and restricted cash at end of period	$	1,630.1	$	1,922.0
	Six Months Ended
	June 30,
	2023		2022
Supplemental cash flow information:
Interest paid	$	50.9	$	47.6
Income taxes paid	$	162.3	$	148.9
Accrued and unpaid capitalized contract costs	$	—	$	39.8

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

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, 2022		373.5	$	3.7	$	995.9	$	(353.9	)	$	(167.9	)	$	477.8
Net income		—		—		—		151.8			—			151.8
Stock-based compensation		—		—

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