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it

 

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, 2022

 

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

img154580720_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 July 29, 2022, 385,754,381 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, 2022 and 2021

3

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021

4

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

6

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

Item 2.

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

36

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

52

 

 

 

Item 4.

Controls and Procedures

52

 

 

 

 

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

53

 

 

 

PART II OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

54

 

 

 

Item 1A.

Risk Factors

54

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

54

 

 

 

Item 3.

Defaults Upon Senior Securities

54

 

 

 

Item 4.

Mine Safety Disclosures

54

 

 

 

Item 5.

Other Information

54

 

 

 

Item 6.

Exhibits

55

 

 

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)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

$

1,138.3

 

 

$

1,289.7

 

 

$

2,294.0

 

 

$

2,499.7

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

653.0

 

 

 

755.0

 

 

 

1,308.1

 

 

 

1,461.0

 

Selling, general, and administrative

 

 

221.3

 

 

 

279.8

 

 

 

484.4

 

 

 

551.0

 

Total expenses

 

 

874.3

 

 

 

1,034.8

 

 

 

1,792.5

 

 

 

2,012.0

 

Operating income

 

 

264.0

 

 

 

254.9

 

 

 

501.5

 

 

 

487.7

 

Other income/(expense):

 

 

 

 

 

 

 

 

 

 

 

 

Gain on divestiture of business (Note 4)

 

 

 

 

 

 

 

 

151.4

 

 

 

 

Interest income

 

 

1.8

 

 

 

0.3

 

 

 

2.4

 

 

 

0.7

 

Interest expense

 

 

(24.8

)

 

 

(25.6

)

 

 

(49.6

)

 

 

(54.0

)

Other income/(expense), net

 

 

(4.8

)

 

 

30.5

 

 

 

(7.3

)

 

 

28.6

 

Total other income/(expense), net

 

 

(27.8

)

 

 

5.2

 

 

 

96.9

 

 

 

(24.7

)

Income before income taxes

 

 

236.2

 

 

 

260.1

 

 

 

598.4

 

 

 

463.0

 

Provision for income taxes

 

 

42.2

 

 

 

37.6

 

 

 

111.1

 

 

 

58.7

 

Net income

 

$

194.0

 

 

$

222.5

 

 

$

487.3

 

 

$

404.3

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.50

 

 

$

0.54

 

 

$

1.25

 

 

$

0.98

 

Diluted

 

$

0.50

 

 

$

0.54

 

 

$

1.25

 

 

$

0.98

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

386.7

 

 

 

409.3

 

 

 

389.9

 

 

 

410.5

 

Diluted

 

 

387.6

 

 

 

411.5

 

 

 

391.0

 

 

 

412.9

 

 

See Notes to Condensed Consolidated Financial Statements.

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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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

194.0

 

 

$

222.5

 

 

$

487.3

 

 

$

404.3

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains/(losses) on investment securities

 

 

(23.7

)

 

 

2.2

 

 

 

(75.3

)

 

 

(10.8

)

Unrealized gains/(losses) on hedging activities

 

 

23.1

 

 

 

(2.7

)

 

 

28.4

 

 

 

26.2

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

(17.8

)

 

 

 

Defined benefit pension plan adjustments

 

 

 

 

 

2.3

 

 

 

 

 

 

4.8

 

Total other comprehensive income/(loss)

 

 

(0.6

)

 

 

1.8

 

 

 

(64.7

)

 

 

20.2

 

Comprehensive income

 

$

193.4

 

 

$

224.3

 

 

$

422.6

 

 

$

424.5

 

 

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except per share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,201.9

 

 

$

1,208.3

 

Settlement assets

 

 

3,106.6

 

 

 

2,843.5

 

Property and equipment, net of accumulated depreciation of $649.1 and $650.4, respectively

 

 

115.6

 

 

 

129.4

 

Goodwill

 

 

2,034.6

 

 

 

2,034.6

 

Other intangible assets, net of accumulated amortization of $727.9 and $731.8, respectively

 

 

446.1

 

 

 

417.1

 

Other assets (Note 5)

 

 

1,193.6

 

 

 

737.7

 

Assets held for sale (Note 4)

 

 

688.9

 

 

 

1,452.9

 

Total assets

 

$

8,787.3

 

 

$

8,823.5

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

411.5

 

 

$

450.2

 

Settlement obligations

 

 

3,106.6

 

 

 

2,843.5

 

Income taxes payable

 

 

851.6

 

 

 

870.7

 

Deferred tax liability, net

 

 

169.6

 

 

 

203.8

 

Borrowings

 

 

2,695.3

 

 

 

3,008.4

 

Other liabilities (Note 4)

 

 

679.5

 

 

 

269.4

 

Liabilities associated with assets held for sale (Note 4)

 

 

424.9

 

 

 

821.9

 

Total liabilities

 

 

8,339.0

 

 

 

8,467.9

 

 

 

 

 

 

 

 

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; 386.1 shares and 393.8 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

3.9

 

 

 

3.9

 

Capital surplus

 

 

973.3

 

 

 

941.0

 

Accumulated deficit

 

 

(412.1

)

 

 

(537.2

)

Accumulated other comprehensive loss

 

 

(116.8

)

 

 

(52.1

)

Total stockholders' equity

 

 

448.3

 

 

 

355.6

 

Total liabilities and stockholders' equity

 

$

8,787.3

 

 

$

8,823.5

 

 

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

487.3

 

 

$

404.3

 

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

 

 

 

 

 

 

Depreciation

 

 

22.6

 

 

 

26.0

 

Amortization

 

 

70.1

 

 

 

83.0

 

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

 

 

(155.8

)

 

 

 

Gain on the sale of noncontrolling interest in a private company (Note 4)

 

 

 

 

 

(47.9

)

Other non-cash items, net

 

 

32.8

 

 

 

80.1

 

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

 

 

 

 

 

 

Other assets

 

 

(131.2

)

 

 

(84.5

)

Accounts payable and accrued liabilities

 

 

19.6

 

 

 

(29.8

)

Income taxes payable

 

 

(20.5

)

 

 

(66.5

)

Other liabilities

 

 

(18.1

)

 

 

(15.2

)

Net cash provided by operating activities

 

 

306.8

 

 

 

349.5

 

Cash flows from investing activities

 

 

 

 

 

 

Payments for capitalized contract costs

 

 

(26.3

)

 

 

(82.2

)

Payments for internal use software

 

 

(42.7

)

 

 

(45.2

)

Purchases of property and equipment

 

 

(15.3

)

 

 

(17.9

)

Purchases of settlement investments

 

 

(495.3

)

 

 

(270.5

)

Proceeds from the sale of settlement investments

 

 

290.2

 

 

 

539.6

 

Maturities of settlement investments

 

 

84.4

 

 

 

130.9

 

Proceeds from the sale of noncontrolling interest in a private company (Note 4)

 

 

 

 

 

50.9

 

Purchase of noncontrolling interest in stc Bank (Note 4)

 

 

 

 

 

(200.0

)

Purchases of non-settlement investments

 

 

(400.0

)

 

 

 

Proceeds from divestiture, net of cash divested (Note 4)

 

 

896.4

 

 

 

 

Other investing activities

 

 

0.9

 

 

 

(2.9

)

Net cash provided by investing activities

 

 

292.3

 

 

 

102.7

 

Cash flows from financing activities

 

 

 

 

 

 

Cash dividends and dividend equivalents paid

 

 

(184.8

)

 

 

(193.5

)

Common stock repurchased (Note 9)

 

 

(185.5

)

 

 

(160.5

)

Net proceeds from/(repayments of) commercial paper

 

 

(15.0

)

 

 

185.0

 

Net proceeds from issuance of borrowings

 

 

 

 

 

891.7

 

Principal payments on borrowings

 

 

(300.0

)

 

 

(1,150.0

)

Make-whole premium on early extinguishment of debt

 

 

 

 

 

(14.3

)

Proceeds from exercise of options

 

 

9.4

 

 

 

11.6

 

Net change in settlement obligations

 

 

(112.1

)

 

 

(93.1

)

Other financing activities

 

 

 

 

 

4.0

 

Net cash used in financing activities

 

 

(788.0

)

 

 

(519.1

)

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

 

 

(188.9

)

 

 

(66.9

)

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

 

 

2,110.9

 

 

 

2,143.1

 

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

 

$

1,922.0

 

 

$

2,076.2

 

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

THE WESTERN UNION COMPANY

SUPPLEMENTAL CASH FLOW INFORMATION

(Unaudited)

(in millions)

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

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

 

 

 

 

 

 

Cash and cash equivalents on balance sheet

 

$

1,201.9

 

 

$

1,061.4

 

Settlement cash and cash equivalents (Note 8)

 

 

602.7

 

 

 

1,002.6

 

Restricted cash in Other assets

 

 

40.4

 

 

 

12.2

 

Cash and cash equivalents included in Assets held for sale (Note 4)

 

 

77.0

 

 

 

 

Cash and cash equivalents, including settlement, and restricted cash

 

$

1,922.0

 

 

$

2,076.2

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Supplemental cash flow information:

 

 

 

 

 

 

Interest paid

 

$

47.6

 

 

$

52.0

 

Income taxes paid

 

$

148.9

 

 

$

123.9

 

Internal use software capitalized but not yet paid

 

$

 

 

$

23.0

 

Accrued and unpaid capitalized contract costs

 

$

39.8

 

 

$

 

 

See Notes to Condensed Consolidated Financial Statements.

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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, 2021

 

 

393.8

 

 

$

3.9