Leading money transfer company,
Western Union Co.
) reported fourth quarter 2012 operating earning of 42 cents per
share, ahead of the Zacks Consensus Estimate of 35 cents per
share. Earnings also compared favorably with 40 cents per share
reported in the prior-year quarter.
Total revenue was $1.4 billion, in line with the Zacks Consensus
Estimate. It remained unchanged relative to the year-ago quarter.
Lower transaction fees offset the increase in foreign exchange
revenues. Pro forma revenue decreased 1% constant currency,
including a full quarter of Travelex Global Business Payments
(TGBP) in the prior period. The company expects low single digit
constant currency revenue declines in 2013.
Total expense was $1.14 billion, up 6% year over year led by an
increase in cost of service as well as selling general and
Full year results
Total revenue was $5.7 billion up 3% year over year, due to
higher revenues from the Business Solutions segment.
EPS came in at $1.74 ahead of the Zacks Consensus Estimate of
$1.67 per share, and higher 10.8% year over year.
In the Consumer-to-Consumer segment, reported revenues decreased
2% year over year to $1.15 billion, led by lower transaction as
well as lower foreign exchange revenues. The company expects mid
to high single digit transaction increases in this segment.
In the Consumer-to-Business segment, revenues decreased 1% year
over year to $152 million, including a negative 3% impact from
currency translation. South America continues to have steady
growth, but this was offset by declines in U.S. walk-in business.
Business Solutions reported revenues of $92.6 million in the
quarter, which increased 37.0% year over year. On a pro forma
basis, including a full quarter of Travelex results in the prior
year period, Business Solutions' constant currency revenue was
down 2%. The company's Business Solutions customer account
continues to grow, and has expanded its presence in 30 countries
compared to 23 in the year-ago period. Though the transactions
are growing in double digits, principal amounts per transaction
declined, indicating weak global trade conditions.
Electronic Channel revenues, which include westernunion.com,
digital and account-based money transfer through banks, jumped
22% in the quarter. Electronic Channel now contributes 4% to the
company's total revenue, up from 3% in the year-ago quarter.
The company's prepaid revenues increased 16% in the quarter. The
prepaid business, including third-party top-up, represented
approximately 1% of the company revenue. Prepaid cards were
available at approximately 40,000 retail locations globally at
the end of the quarter, including approximately 1,500 locations
outside the U.S.
Cash flow from operations for the year was approximately $1.2
billion. Capital expenditures amounted to $85 million and
included increases in agent signing bonuses, including some major
During the fourth quarter, the company made $351 million worth of
share buybacks. It also declared $72 million in dividends.
The company expects full year 2013, GAAP EPS in a range of $1.33
to $1.43. It expects cash flow from operating activities of
approximately $900 million, or approximately $1 billion when
adjusted for final tax payments relating to the IRS Agreement.
Additionally the company expects to return nearly $700 million to
shareholders in 2013 in the form of share repurchases and
Western Union has taken a series of strategic growth steps. These
include strengthening the consumer money transfer business,
driving growth in customers and usage in Business Solutions and
continuation of strong capital management.
Although the strategic actions are expected to negatively affect
the short-term results in 2013, it will position the company for
long-term revenue and profitability growth in the current
environment. These strategic actions will result in a return to
revenue and profit growth beginning 2014.
Though earnings will remain choppy in the near term, we remain
confident of the long-term opportunities of the businesses of the
company. Western Union is a leader in a growing market with a
strong global brand, a large and growing agent network, a global
organization with best payment capabilities and local market
Among other players in the industry -
Moneygram International Inc.
) reported in line with the Zacks Consensus Estimate,
) reported ahead of the Zacks Consensus Estimate while
Monro Muffler Brake Inc.
) lagged the Zacks Consensus Estimate by a penny.
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MONEYGRAM INTL (MGI): Free Stock Analysis
MONRO MUFFLER (MNRO): Free Stock Analysis
WESTERN UNION (WU): Free Stock Analysis
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