Western Union : Investor Conference 2023 GAAP Reconciliations

Reconciliation of Non-GAAP Measures

Western Union presents a number of non-GAAP financial measures because management believes that these metrics provide meaningful supplemental information in addition to the GAAP metrics and provide comparability and consistency to prior periods. Constant currency results assume foreign revenues are translated from foreign currencies to the U.S. dollar, net of the effect of foreign currency hedges, at rates consistent with those in the prior year. We have also included non-GAAP measures below that remove certain impacts of Business Solutions, in order to provide a more meaningful comparison of results from continuing operations.

A non-GAAP financial measure should not be considered in isolation or as a substitute for the most comparable GAAP financial measure. A non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliation to the corresponding GAAP financial measure, provide a more complete understanding of our business. Users of the financial statements are encouraged to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included below.

Amounts included below are in millions, unless indicated otherwise.

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Reconciliation of Non-GAAP Measures

2022 Consolidated Outlook Metrics

Revenues (GAAP) - YoY % Change	Notes		Range
		(13)%	(11)%
Foreign currency translation impact	(a)	3%	3%
Impact from the sale of Business Solutions	(b)	4%	4%
Revenues, constant currency, excluding Business Solutions (non-GAAP) - YoY % Change			(6)%	(4)%

Operating margin (GAAP)	Notes		Range
		20.0%			21.0%
Impact from acquisition and divestiture costs	(c)	0.0%			0.0%
Impact from the sale of Business Solutions, including exit costs	(b), (d)	(0.5)%			(0.5)%
Impact from Russia/Belarus exit costs	(d)	0.5%			0.5%
Operating margin, adjusted, excluding acquisition and divestiture costs, the sale of Business Solutions,
including exit costs, and Russia/Belarus exit costs (non-GAAP)			20.0%			21.0%

Earnings per share (GAAP) ($- dollars)	Notes			Range
		$	2.18	$	2.28
Impact from acquisition and divestiture costs, net of related taxes	(c)			0.01			0.01
Gain on the sale of Business Solutions, net of related taxes	(b)			(0.45)			(0.45)
Impact from Business Solutions exit costs, net of related taxes	(d)			0.02			0.02
Impact from Russia/Belarus exit costs, net of related taxes	(d)			0.02			0.02
Reversal of uncertain tax positions	(e)			(0.03)			(0.03)
Earnings per share, adjusted, excluding the acquisition and divestiture costs, gain on the sale of Business
Solutions, and exit costs from Business Solutions and Russia/Belarus, net of related taxes, and reversal of			$	1.75		$	1.85
uncertain tax positions (non-GAAP) ($- dollars)

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Reconciliation of Non-GAAP Measures

2023 Consolidated Outlook Metrics
Revenues (GAAP) - YoY % Change	Notes		Range
		(10)%			(8)%
Foreign currency translation impact	(a)	2%			2%
Impact from the sale of Business Solutions	(b)	4%			4%
Revenues, constant currency, excluding Business Solutions (non-GAAP) - YoY % Change			(4)%			(2)%

Operating margin (GAAP)	Notes		Range
		19.0%			21.0%
Impact from acquisition and divestiture costs	(c)		-	-
Impact from the sale of Business Solutions	(b)		-			-
Operating margin, adjusted, excluding acquisition and divestiture costs and the sale of Business Solutions			19.0%			21.0%
(non-GAAP)

Earnings per share (GAAP) ($- dollars)	Notes			Range
		$	1.55	$	1.65
Impact from acquisition and divestiture costs	(c)			-				-
Earnings per share, adjusted, excluding the acquisition and divestiture costs (non-GAAP) ($- dollars)			$	1.55			$	1.65

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Reconciliation of Non-GAAP Measures

Adjusted Free Cash Flow
Operating cash flow (GAAP)	Notes			FY2021			FY2020			FY2019				FY2018				FY2017
		$	1,045		$	878		$	915		$	821		$	742
Transition tax payments	(f)			64			64				64				64			-
NYDFS payment/joint settlement	(g)			-			-				-				60			594
IRS tax settlement	(h)			-			-				-				121			-
Speedpay gain and related taxes	(i)			-			-				93				-			-
WU Way payments	(j)			22			83				38				28			77
Less: capital expenditures				(215)			(157)				(128)				(339)			(177)
Adjusted free cash flow (non-GAAP)			$	916		$	868			$	982			$	755		$	1,236

Net income (GAAP)	Notes			FY2021				FY2020				FY2019				FY2018				FY2018
		$	806		$	744		$	1,058		$	852		$	(557)
Pension settlement	(k)			86				-				-				-				-
Make-whole premium	(l)			12				-				-				-				-
Gain on investment sale	(m)			(37)				-				-				-				-
WUBS tax impact	(n)			18				-				-				-				-
WU Way payments	(j)			-				31				90				-				63
M&A	(c)			13				2				12				12				1
Speedpay gain and related taxes	(i)			-				-				(415)				-				-
Joint settlement agreement	(g)			-				-				-				-				5
Goodwill impairment (WUBS)	(o)			-				-				-				-				447
NYDFS payment	(g)			-				-				-				-				60
Transition tax	(f)			-				-				-				23				828
Adjusted net income (non-GAAP)			$	898			$	777			$	745			$	887		$	847
Adjusted free cash flow (non-GAAP)			$	916		$	868		$	982		$	755		$	1,236
Adjusted free cash flow conversion (non-GAAP)				102%				112%				132%				85%				146%
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Reconciliation of Non-GAAP Measures

Non-GAAP related notes:

1. Represents the impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States dollar. Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar, net of foreign currency hedges, which would not have occurred if there had been a constant exchange rate. The Company believes that this measure provides management and investors with information about revenue results and trends that eliminates currency volatility while increasing the comparability of the Company's underlying results and trends.
2. During 2021, the Company entered into an agreement to sell its Business Solutions business to Goldfinch Partners LLC and The Baupost Group LLC (collectively, the "Buyer") for cash consideration of $910.0 million, subject to regulatory and working capital adjustments. The sale will be completed in three closings, the first of which occurred on March 1, 2022 with the entirety of the cash consideration collected at that time and allocated to the closings on a relative fair value basis. The first closing excluded the operations in the European Union and the United Kingdom and resulted in a gain of $151.4 million. The second closing is currently expected to occur on December 1, 2022, and includes the United Kingdom operations. The third closing, which includes the European Union operations, is currently expected in the first quarter of 2023, pending regulatory approvals. Revenues have been adjusted to exclude the carved out financial information for the Business Solutions business to compare the year-over-year changes and trends in the Company's continuing businesses, excluding the effects of this divestiture. While the sale of the Company's Business Solutions business does not qualify for or represent discontinued operations, the Company has also adjusted operating income, beginning in the first quarter of 2022 and concurrent with the sale, to exclude the carved out direct profit of the Business Solutions business. During the period between the first and third closings, the Company will continue to record revenues and operating income for the European Union and United Kingdom operations, but it will pay the Buyer a measure of the profits from these operations, adjusted for other charges, as contractually agreed, and this expense is recognized in Other income/(expense), net. Therefore, the Company believes that providing this information enhances investors' understanding of the profitability of the Company's remaining businesses. The Company has also excluded the gain on the sale, net of related taxes from its first quarter 2022 results and the 2022 adjusted outlook, as management believes that excluding the impact from the gain on sale of the Business Solutions business will provide investors with a clearer and more meaningful comparison of results in 2022 and future periods. These financial measures are non-GAAP measures and should not be considered a substitute for the GAAP measures.
3. Represents the impact from expenses incurred in connection with the Company's acquisition and divestiture activity, including for the review and closing of these transactions. The Company believes that, by excluding the effects of these charges that can impact operating trends, management and investors are provided with a measure that increases the comparability of the Company's underlying operating results.
4. Represents the exit costs incurred in connection with the divestiture of the Business Solutions business and the suspension of operations in Russia and Belarus, primarily related to severance and non-cash impairments of property and equipment, an operating lease right-of-use asset, and other intangible assets. While certain of the expenses are identifiable to the Company's segments, the expenses are not included in the measurement of segment operating income provided to the Chief Operating Decision Maker for purposes of performance assessment and resource allocation. These expenses are therefore excluded from the Company's segment operating income results. These expenses have been excluded from operating income, the effective tax rate, and diluted earnings per share, net of related taxes. Additionally, the outlook metrics have been adjusted to exclude these costs, net of related taxes where applicable. The Company believes that, by excluding the effects of these charges that can impact operating trends, management and investors are provided with a measure that increases the comparability of the Company's underlying operating results.
5. Represents non-cash reversals of significant uncertain tax positions. The Company believes excluding these reversals provides a more meaningful comparison of results to the historical periods presented.

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