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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended June 30, 2023 |
OR
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
Commission File Number: 001-32903
THE WESTERN UNION COMPANY
(Exact name of registrant as specified in its charter)
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Delaware (State or Other Jurisdiction of Incorporation or Organization) |
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20-4531180 (I.R.S. Employer Identification No.) |
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7001 EAST BELLEVIEW AVENUE Denver, Colorado 80237 (Address of principal executive offices) |
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Registrant’s telephone number, including area code: (866) 405-5012
Securities registered pursuant to Section 12(b) of the Act:
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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
2
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)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenues |
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$ |
1,170.0 |
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$ |
1,138.3 |
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$ |
2,206.9 |
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$ |
2,294.0 |
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Expenses: |
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Cost of services |
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698.9 |
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653.0 |
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1,328.4 |
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1,308.1 |
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Selling, general, and administrative |
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228.5 |
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221.3 |
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431.2 |
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484.4 |
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Total expenses |
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927.4 |
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874.3 |
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1,759.6 |
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1,792.5 |
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Operating income |
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242.6 |
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264.0 |
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447.3 |
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501.5 |
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Other income/(expense): |
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Gain on divestiture of business (Note 4) |
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— |
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— |
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— |
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151.4 |
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Interest income |
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4.2 |
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1.8 |
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7.4 |
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2.4 |
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Interest expense |
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(27.0 |
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(24.8 |
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(52.0 |
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(49.6 |
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Other expense, net |
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(3.4 |
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(4.8 |
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(5.3 |
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(7.3 |
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Total other income/(expense), net |
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(26.2 |
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(27.8 |
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(49.9 |
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96.9 |
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Income before income taxes |
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216.4 |
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236.2 |
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397.4 |
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598.4 |
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Provision for income taxes |
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40.2 |
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42.2 |
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69.4 |
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111.1 |
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Net income |
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$ |
176.2 |
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$ |
194.0 |
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$ |
328.0 |
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$ |
487.3 |
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Earnings per share: |
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Basic |
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$ |
0.47 |
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$ |
0.50 |
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$ |
0.88 |
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$ |
1.25 |
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Diluted |
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$ |
0.47 |
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$ |
0.50 |
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$ |
0.87 |
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$ |
1.25 |
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Weighted-average shares outstanding: |
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Basic |
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375.0 |
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386.7 |
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374.7 |
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389.9 |
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Diluted |
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375.6 |
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387.6 |
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375.6 |
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391.0 |
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See Notes to Condensed Consolidated Financial Statements.
3
Table of Contents
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in millions)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Net income |
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$ |
176.2 |
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$ |
194.0 |
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$ |
328.0 |
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$ |
487.3 |
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Other comprehensive income, net of reclassifications and tax (Note 9): |
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Unrealized gains/(losses) on investment securities |
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(11.4 |
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(23.7 |
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8.6 |
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(75.3 |
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Unrealized gains/(losses) on hedging activities |
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(10.8 |
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23.1 |
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(21.1 |
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28.4 |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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(17.8 |
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Total other comprehensive loss |
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(22.2 |
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(0.6 |
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(12.5 |
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(64.7 |
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Comprehensive income |
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$ |
154.0 |
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$ |
193.4 |
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$ |
315.5 |
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$ |
422.6 |
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See Notes to Condensed Consolidated Financial Statements.
4
Table of Contents
THE WESTERN UNION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions, except per share amounts)
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June 30, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Cash and cash equivalents |
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$ |
1,585.9 |
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$ |
1,285.9 |
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Settlement assets |
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3,328.1 |
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3,486.8 |
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Property and equipment, net of accumulated depreciation of $449.7 and $512.8, respectively |
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96.3 |
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109.6 |
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Goodwill |
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2,034.6 |
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2,034.6 |
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Other intangible assets, net of accumulated amortization of $655.7 and $616.3, respectively |
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430.3 |
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457.9 |
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Other assets (Note 5) |
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771.6 |
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859.9 |
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Assets held for sale (Note 4) |
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240.6 |
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261.6 |
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Total assets |
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$ |
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.
5
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.
6
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.
7
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 |
|
|
— |
|
|
|
— |
|
|
|
|