Western Union Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

Table of Contents

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, 2020


☐	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 October 26, 2020, 411,120,751 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 nine months ended September 30, 2020 and 2019	3

	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019	4

	Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	6

	Condensed Consolidated Statements of Stockholders’ Equity/(Deficit) for the three and nine months ended September 30, 2020 and 2019	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54

Item 4.	Controls and Procedures	54

	Review Report of Independent Registered Public Accounting Firm	55

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	56

Item 1A.	Risk Factors	56

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 3.	Defaults Upon Senior Securities	57

Item 4.	Mine Safety Disclosures	57

Item 5.	Other Information	57

Item 6.	Exhibits	58

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				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues	$	1,258.5	$	1,306.9	$	3,563.2	$	3,984.4
Expenses:
Cost of services		721.7		768.6		2,067.3		2,330.0
Selling, general, and administrative		251.6		340.9		755.7		946.9
Total expenses		973.3		1,109.5		2,823.0		3,276.9
Operating income		285.2		197.4		740.2		707.5
Other income/(expense):
Gain on divestitures of businesses (Note 4)		—		—		—		524.6
Interest income		0.5		1.1		2.9		4.2
Interest expense		(28.2)		(36.2)		(90.4)		(114.5)
Other income/(expense), net		3.5		(0.1)		3.4		2.1
Total other income/(expense), net		(24.2)		(35.2)		(84.1)		416.4
Income before income taxes		261.0		162.2		656.1		1,123.9
Provision for income taxes		32.4		27.2		88.9		201.0
Net income	$	228.6	$	135.0	$	567.2	$	922.9
Earnings per share:
Basic	$	0.56	$	0.32	$	1.38	$	2.14
Diluted	$	0.55	$	0.32	$	1.37	$	2.13
Weighted-average shares outstanding:
Basic		411.6		423.3		412.5		430.3
Diluted		414.6		426.8		415.5		433.0

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in millions)

o	o
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2020		2019		2020		2019
Net income		$	228.6	$	135.0	$	567.2	$	922.9
Other comprehensive income, net of reclassifications and tax (Note 11):
Unrealized gains on investment securities			7.1		5.8		32.3		28.7
Unrealized gains/(losses) on hedging activities			(18.2)		14.5		(16.6)		12.5
Defined benefit pension plan adjustments			2.3		2.3		6.7		6.7
Total other comprehensive income/(loss)			(8.8)		22.6		22.4		47.9
Comprehensive income		$	219.8	$	157.6	$	589.6	$	970.8

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)


	September 30,		December 31,
	2020		2019
Assets
Cash and cash equivalents	$	1,251.4	$	1,450.5
Settlement assets		3,589.4		3,296.7
Property and equipment, net of accumulated depreciation of $656.9 and $616.5, respectively		156.0		186.9
Goodwill		2,566.6		2,566.6
Other intangible assets, net of accumulated amortization of $1,025.9 and $961.5, respectively		449.3		494.9
Other assets		814.5		762.9
Total assets	$	8,827.2	$	8,758.5
Liabilities and stockholders' equity/(deficit)
Liabilities:
Accounts payable and accrued liabilities	$	457.2	$	601.9
Settlement obligations		3,589.4		3,296.7
Income taxes payable		926.5		1,019.7
Deferred tax liability, net		171.7		152.1
Borrowings		3,036.5		3,229.3
Other liabilities		578.8		498.3
Total liabilities		8,760.1		8,798.0

Commitments and contingencies (Note 8)

Stockholders' equity/(deficit):
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued		—		—
Common stock, $0.01 par value; 2,000 shares authorized; 411.0 shares and 418.0 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		4.1		4.2
Capital surplus		874.9		841.2
Accumulated deficit		(625.3)		(675.9)
Accumulated other comprehensive loss		(186.6)		(209.0)
Total stockholders' equity/(deficit)		67.1		(39.5)
Total liabilities and stockholders' equity/(deficit)	$	8,827.2	$	8,758.5

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)


	Nine Months Ended
	September 30,
	2020		2019
Cash flows from operating activities
Net income	$	567.2	$	922.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		46.3		56.5
Amortization		123.2		134.2
Gain on divestitures of businesses, excluding transaction costs (Note 4)		—		(532.1)
Other non-cash items, net		106.4		63.5
Increase/(decrease) in cash, excluding the effects of divestitures, resulting from changes in:
Other assets		(11.5)		19.7
Accounts payable and accrued liabilities		(142.7)		67.9
Income taxes payable		(97.6)		(46.3)
Other liabilities		(5.7)		(21.0)
Net cash provided by operating activities		585.6		665.3
Cash flows from investing activities
Payments for capitalized contract costs		(51.7)		(27.2)
Payments for internal use software		(30.1)		(27.4)
Purchases of property and equipment		(24.5)		(38.9)
Proceeds from the sale of former corporate headquarters (Note 4)		44.2		—
Proceeds from divestitures of businesses, net of cash divested (Note 4)		—		711.7
Purchases of non-settlement related investments		(4.4)		(7.2)
Proceeds from maturity of non-settlement related investments		0.4		19.8
Purchases of held-to-maturity non-settlement related investments		—		(1.3)
Proceeds from held-to-maturity non-settlement related investments		—		27.5
Other investing activities		(2.6)		—
Net cash (used in)/provided by investing activities		(68.7)		657.0
Cash flows from financing activities
Cash dividends and dividend equivalents paid		(277.8)		(257.1)
Common stock repurchased (Note 11)		(238.0)		(483.8)
Net (repayments of)/proceeds from commercial paper		(195.0)		310.0
Principal payments on borrowings		—		(500.0)
Proceeds from exercise of options		1.7		28.0
Other financing activities		(0.7)		(0.9)
Net cash used in financing activities		(709.8)		(903.8)
Net change in cash, cash equivalents, and restricted cash		(192.9)		418.5
Cash, cash equivalents, and restricted cash at beginning of period		1,456.8		979.7
Cash, cash equivalents, and restricted cash at end of period	$	1,263.9	$	1,398.2
Supplemental cash flow information:
Interest paid	$	75.7	$	101.4
Income taxes paid	$	169.1	$	256.5
Cash paid for lease liabilities	$	38.5	$	36.4
Non-cash lease liabilities arising from obtaining right-of-use assets	$	28.2	$	269.1
Restricted cash at end of period (included in Other assets)	$	12.5	$	7.3

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT)

(Unaudited)

(in millions)


								Accumulated
								Other		Total
	Common Stock			Capital		Accumulated		Comprehensive		Stockholders'
	Shares	Amount		Surplus		Deficit		Loss		Equity/(Deficit)
Balance, December 31, 2019	418.0	$	4.2	$	841.2	$	(675.9)	$	(209.0)	$	(39.5)
Adoption of new accounting pronouncement (Note 1)	—		—		—		(0.6)		—		(0.6)
Net income	—		—		—		176.7		—		176.7
Stock-based compensation	—		—		12.5		—		—		12.5
Common stock dividends and dividend equivalents declared ($0.225 per share)	—		—		—		(93.3)		—		(93.3)
Repurchase and retirement of common shares	(9.2)		(0.1)		—		(235.1)		—		(235.2)
Shares issued under stock-based compensation plans	2.1		—		1.0		—		—		1.0
Other comprehensive income (Note 11)	—		—		—		—		28.7		28.7
Balance, March 31, 2020	410.9		4.1		854.7		(828.2)		(180.3)		(149.7)
Net income	—		—		—		161.9		—		161.9
Stock-based compensation	—		—		5.3		—		—		5.3
Common stock dividends and dividend equivalents declared ($0.225 per share)	—		—		—		(93.3)		—		(93.3)
Repurchase and retirement of common shares	(0.1)		—		—		(0.6)		—		(0.6)
Shares issued under stock-based compensation plans	0.2		—		0.5		—		—		0.5
Other comprehensive income (Note 11)	—		—		—		—		2.5		2.5
Balance, June 30, 2020	411.0		4.1		860.5		(760.2)		(177.8)		(73.4)
Net income	—		—		—		228.6		—		228.6
Stock-based compensation	—		—		14.2		—		—		14.2
Common stock dividends and dividend equivalents declared ($0.225 per share)	—		—		—		(93.3)		—		(93.3)
Repurchase and retirement of common shares	—		—		—		(0.4)		—		(0.4)
Shares issued under stock-based compensation plans	—		—		0.2		—		—		0.2
Other comprehensive loss (Note 11)	—		—		—		—		(8.8)		(8.8)
Balance, September 30, 2020	411.0	$	4.1	$	874.9	$	(625.3)	$	(186.6)	$	67.1


								Accumulated
								Other		Total
	Common Stock			Capital		Accumulated		Comprehensive		Stockholders'
	Shares	Amount		Surplus		Deficit		Loss		Equity/(Deficit)
Balance, December 31, 2018	441.2	$	4.4	$	755.6	$	(838.8)	$	(231.0)	$	(309.8)
Net income	—		—		—		173.1		—		173.1
Stock-based compensation	—		—		13.7

Price	21.91	EPS	3
Shares	433	P/E	8
MCap	9,487	P/FCF	14
Net Debt	-1,398	EBIT	1,359
TEV	8,089	TEV/EBIT	6
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-10-29
10-Q	2020-06-30	Filed 2020-08-05
10-Q	2020-03-31	Filed 2020-05-05
10-K	2019-12-31	Filed 2020-02-20
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-07
10-K	2018-12-31	Filed 2019-02-21
10-Q	2018-09-30	Filed 2018-11-01
10-Q	2018-06-30	Filed 2018-08-02
10-Q	2018-03-31	Filed 2018-05-01
10-K	2017-12-31	Filed 2018-02-22
10-Q	2017-09-30	Filed 2017-11-02
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-02
10-K	2016-12-31	Filed 2017-02-22
10-Q	2016-09-30	Filed 2016-11-01
10-Q	2016-06-30	Filed 2016-08-03
10-Q	2016-03-31	Filed 2016-05-03
10-K	2015-12-31	Filed 2016-02-19
10-Q	2015-09-30	Filed 2015-10-29
10-Q	2015-06-30	Filed 2015-07-30
10-Q	2015-03-31	Filed 2015-04-30
10-K	2014-12-31	Filed 2015-02-20
10-Q	2014-09-30	Filed 2014-10-30
10-Q	2014-06-30	Filed 2014-07-31
10-Q	2014-03-31	Filed 2014-05-01
10-K	2013-12-31	Filed 2014-02-24
10-Q	2013-09-30	Filed 2013-11-04
10-Q	2013-06-30	Filed 2013-08-07
10-Q	2013-03-31	Filed 2013-05-06
10-K	2012-12-31	Filed 2013-02-22
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-02
10-Q	2012-03-31	Filed 2012-05-01
10-Q	2011-09-30	Filed 2011-11-03
10-Q	2011-06-30	Filed 2011-08-02
10-Q	2011-03-31	Filed 2011-05-04
10-K	2010-12-31	Filed 2011-02-25
10-Q	2010-09-30	Filed 2010-11-05
10-Q	2010-06-30	Filed 2010-08-04
10-Q	2010-03-31	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-10-29	Earnings, Regulation FD, Exhibits
8-K	2020-08-04	Earnings, Regulation FD, Exhibits
8-K	2020-07-01	Officers, Exhibits
8-K	2020-06-02
8-K	2020-05-28
8-K	2020-05-14
8-K	2020-05-05
8-K	2020-03-27
8-K	2020-03-24
8-K	2020-02-11
8-K	2019-12-18
8-K	2019-12-04
8-K	2019-11-25
8-K	2019-11-18
8-K	2019-10-31
8-K	2019-09-24
8-K	2019-08-01
8-K	2019-05-29
8-K	2019-05-17
8-K	2019-05-09
8-K	2019-05-07
8-K	2019-03-12
8-K	2019-02-28
8-K	2019-02-07
8-K	2018-12-18
8-K	2018-12-11
8-K	2018-07-19
8-K	2018-06-11
8-K	2018-05-18
8-K	2018-05-01
8-K	2018-02-13
8-K	2018-01-04

EX-15	wu-20200930xex15.htm
EX-31.1	wu-20200930xex31d1.htm
EX-31.2	wu-20200930xex31d2.htm
EX-32	wu-20200930xex32.htm

WU 10Q Quarterly Report

Western Union Earnings 2020-09-30