Western Union reports fourth quarter and full year results

Highlights for the fourth quarter included:
• Global consolidated revenue of $1.3bn, a decrease of 1%;
• EPS of $0.34, up 6% compared to last year's fourth quarter
• EPS of $0.37, an increase of 16% excluding fourth quarter restructuring expense
• Operating income margin of 26%; or 28% excluding fourth quarter restructuring
• Net income of $240m, a decrease of 2%; or an increase of 7% excluding fourth quarter restructuring.

Highlights for the full year included:
• Global consolidated revenue of $5.3bn, an increase of 8%; or 6% euro adjusted
• Cash provided by operating activities of $1.25bn
• EPS of $1.24, an increase of 12%
• EPS of $1.31, an increase of 16% excluding restructuring expenses and 2007 accelerated stock compensation charges
• Operating income margin of 26%; or 27% excluding restructuring expenses
• Net income of $919m, an increase of 7%; or 11% excluding restructuring expense and 2007 accelerated stock compensation charges
• Grew agent locations to 375,000 at year end.

Western Union President and Chief Executive Officer Christina Gold stated:

"In 2008 we gained market share and handled $67bn of cross-border remitted principal, 17% more than last year. This was a key driver of our financial performance which included earnings per share and cash flow in line with our guidance. Our revenue performance in the quarter, however, was adversely affected by softening demand for money transfers and bill payments in light of the global economy."

"In 2009, we are confident in our market position. Western Union is the premier brand in the industry with a strong and proven business model, unmatched distribution, and considerable financial strength. In fact, we had more than $1bn in cash on hand at year end and expect to generate cash flow from operations in excess of $1.1bn in 2009. We will ensure that we maintain liquidity while using this cash to invest in market share initiatives, strategic acquisitions and to return capital to shareholders. I am confident that we will emerge from these unprecedented times with an even stronger competitive position that will result in creating value for shareholders over the long run," Gold added.

The Europe, Middle East, Africa and South Asia (EMEASA) region, which represents 44% of Western Union revenue, experienced fourth quarter revenue growth of 1% on transaction growth of 16%. Full-year revenue and transactions grew 16% and 23%, respectively.

Within EMEASA, the Gulf States performance was strong despite falling oil prices. India's performance contributed to the region's results with revenue growth of 29% and transaction growth of 50% in the quarter. The relative strength in these key markets was more than offset by slower growth throughout Europe.

Western Union anticipates that the global money transfer market will grow slower in 2009 compared to 2008. The revenue outlook reflects Western Union C2C transaction growth in the mid- to high-single digits and for principal per transaction to decline. Price decreases are expected to be consistent with 2008 at approximately 1% of consolidated revenue.

Gold commented on the outlook, "The long-term drivers of the money transfer market, notably migration and remitted principal, remain very healthy and Western Union has never been better positioned to capitalize on the opportunity. To that point, our global business model generates cash in excess of net income and we'll use this competitive advantage to grow our core business and pursue other opportunities that create long-term value. At the same time, we will focus on improving operating efficiencies so that as market conditions improve, we will reaccelerate growth and maximize our profitability."