Western Union : Press Release (PDF 621 KB)

FOR IMMEDIATE RELEASE

Western Union Reports Fourth Quarter and Full Year 2021 Results

Q4 GAAP earnings per share (EPS) of $0.42, adjusted EPS of $0.64

Full year 2021 digital money transfer revenue grows 22% to more than $1 billion continuing

double-digit revenue growth in the fourth quarter

Company announces new $1 billion 3-year share repurchase authorization

and dividend of $0.235 per share in first quarter of 2022

DENVER, February 10, 2022: The Western Union Company (NYSE: WU), a global leader in cross-border,cross-currency money movement and payments, today reported fourth quarter and full year financial results and provided its 2022 full year financial outlook.

The Company's fourth quarter revenue of $1.3 billion increased 1% on a reported basis and increased 2% on a constant currency basis compared to the prior year period. Fourth quarter revenue was driven by growth of digital money transfer and the Business Solutions segment, partially offset by a decline in retail money transfer.

GAAP EPS in the fourth quarter was $0.42, compared to $0.43 in the prior year period. The year- over-year decrease in GAAP EPS was primarily due to a non-cash charge from the termination of the Company's pension plan, partially offset by increased Business Solutions segment operating profit and lower planned marketing expense.

Adjusted EPS in the fourth quarter was $0.64, compared to $0.45 in the prior year period. Year- over-year growth in adjusted EPS was driven by similar factors that impacted GAAP EPS, adjusted for certain items including a non-cash charge from the termination of the Company's pension plan and acquisition and divestiture costs. For a full reconciliation between GAAP and Adjusted EPS, please see the "Adjustment Items" section of this press release.

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The Company announced that its board of directors approved a new $1 billion share repurchase authorization, expiring December 31, 2024. The Company also announced a quarterly dividend of $0.235 per common share, payable March 31, 2022, to shareholders of record at the close of business on March 17, 2022.

"I am excited to be at Western Union with its iconic brand, global reach, and an industry-leading digital offering. I believe these unique assets put the Company in a strong position to capitalize on future growth opportunities," said Devin McGranahan, President and Chief Executive Officer of Western Union. "In 2021, in addition to maintaining our leadership in retail cross border payments, we continued to make investments to grow our digital customer base and enhance the long-term success of the Company."

"We delivered another strong quarter across our digital business, with double-digit growth in the fourth quarter and more than $1 billion in revenue for the year. We also broadened our capabilities with the commercial launch of our multi-currency payments wallet and our digital banking platform."

CFO Raj Agrawal stated, "During 2021, we generated over $1 billion of operating cash flow and returned more than $780 million to shareholders through a combination of dividends and share repurchases. We are pleased with the durability our business exhibited over the last twelve months, which allowed us to maintain strong profitability. We are also happy to announce a new share repurchase authorization and issue our financial outlook for 2022."

Q4 Business Highlights

• Consumer-to-Consumer(C2C) revenues declined 1% on a reported basis, or were flat on constant currency basis, while transactions were also flat during the quarter. Regionally, transaction growth in MEASA, Europe and CIS, and LACA was offset by declines in APAC and North America.
• Digital money transfer revenues increased 13% on a reported basis, or 12% constant currency, and represented 24% and 37% of total C2C revenues and transactions, respectively. Digital money transfer reached new quarterly highs for revenue, transactions, and principal. Westernunion.com revenue grew 9% on a reported and constant currency basis, including cross-border revenue growth of 12%. As expected, digital growth rates continued to moderate, given the significant digital demand the Company experienced in 2020.

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• Westernunion.com active users1 for the full year 2021 increased 6% year-over-year and the Western Union mobile app was again the most downloaded mobile app among peer money transfer companies during the fourth quarter, according to data provided by mobile app marketing firm Sensor Tower2.
• Western Union Business Solutions revenues increased 22% on a both reported and constant currency basis, resulting from improvement in international trade, as well as increased activity in the education and financial institution verticals. Other revenues, which consists primarily of retail bill payments in the U.S. and Argentina and money orders, increased 5% on a reported basis.

Q4 Financial Highlights

• GAAP operating margin in the quarter was 24.7%, compared to 17.9% in the prior year period. The adjusted operating margin in the quarter was 24.9%, compared to 18.8% in the prior year period. The increase in the Company's GAAP and adjusted operating margins was primarily due to strong Business Solutions segment operating profit, lower planned marketing expense, lower agent losses, and favorable foreign exchange impact. For a detailed reconciliation between GAAP and Adjusted operating margin, please see the "Adjustment Items" section of this press release.
• The GAAP effective tax rate in the quarter was 6.7%, compared to 11.0% in the prior year period, and the adjusted effective tax rate was 12.1% in the quarter, compared to 11.6% in the prior year period. The decrease in the Company's GAAP effective tax rate was due to discrete tax benefits associated with the pension termination.
• The Company returned $268 million to shareholders in the fourth quarter, consisting of approximately $93 million in dividends and $175 million of share repurchases.

2021 Full Year Financial Highlights

• The Company's full year revenue of $5.1 billion increased 5% compared to the prior year, or 4% on a constant currency basis, including a less than 1% benefit from inflation in Argentina. The revenue increase was driven by a strong growth in digital money transfer and the Business Solutions segment. Total C2C revenue grew 4%, while digital money transfer revenue continued strong double-digit growth, increasing 22% compared to 2020, and

1. Active user defined as a unique consumer transacting at least once during the year
2. Data obtained from Sensor Tower App Install Market Share Report

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exceeded $1 billion for the year. Business Solutions also contributed revenue growth, increasing 18% year-over-year.

• For the full year, the Business Solutions segment generated $422 million of revenue, $120 million of EBITDA, and $104 million of operating profit excluding corporate allocations. In total, Business Solutions contributed approximately $0.22 to 2021 adjusted EPS.
• GAAP operating margin was 22.1%, compared to 20.0% in the prior year. The increase in GAAP operating margin was primarily attributable to revenue growth, mix of commissions and lower other variable costs, the elimination of restructuring expenses, and foreign exchange impacts, partially offset by higher technology investment. Adjusted operating margin was 22.5% compared to 20.8% in the prior year with margin expansion driven by the same factors noted above and adjusted for restructuring expenses and acquisition and divestiture costs.
• The GAAP effective tax rate for 2021 was 13.9%, compared to 12.9% in the prior year, and the adjusted tax rate was 12.7%, compared to 13.0% in 2020. The increase in the GAAP tax rate was primarily due to deferred taxes recorded on the pending sale of Business Solutions, partially offset by discrete tax benefits associated with the pension termination.
• GAAP EPS was $1.97, compared to $1.79 in 2020. Adjusted earnings per share was $2.19, compared to $1.87 in 2020. The increase in GAAP earnings per share was primarily due to similar factors described above for operating margin increase, as well as a gain on an investment sale and fewer shares outstanding. Growth in adjusted EPS was driven by similar factors as above, adjusted for certain items as described in the "Adjustment Items" section below.
• GAAP cash flow from operating activities for the year exceeded $1 billion. The Company returned over $780 million to shareholders in dividends and share repurchases for the full year.

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2022 Outlook

The Company expects the following financial outlook for full year 2022, which assumes no material change in macro-economic conditions.

GAAP figures reflect an expected partial year of Business Solutions ownership including contractual payments to the buyer, representing profits between the first and second closings, associated divestiture and acquisition costs, and an estimated pre-tax gain of approximately $280 million, subject to regulatory and working capital adjustments. The recognition of the gain is expected to be split between two closings with approximately 60% expected to be recognized in the first quarter of 2022 upon the first closing and the remainder on close two in the second half of 2022.

Adjusted revenue growth and operating margin exclude contributions from Business Solutions. In addition, adjusted operating margin excludes associated divestiture and acquisition costs. The adjusted effective tax rate and EPS exclude the expected gain on sale and divestiture and acquisition costs.

Revenue

GAAP: mid-single digit decline

Adjusted (constant currency, excluding the impact of Argentina inflation and proforma for the planned sale of Business

Solutions): flat to low-single digit increase

Operating Profit Margin GAAP and Adjusted: 21% - 22%

Effective Tax Rate

GAAP: high-teens range

Adjusted: mid-teens range

EPS

GAAP: $2.38 - $2.48

Adjusted: $1.90 - $2.00

Adjustment Items

Adjusted operating profit metrics for 2021 periods exclude acquisition and divestiture costs. Adjusted tax rate and earnings per share metrics for 2021 periods exclude the following items net of related taxes, as applicable: acquisition and divestiture costs (all quarters), the impact from the gain on an investment sale (second quarter), debt retirement expenses (second quarter), Business Solutions change in permanent reinvestment tax assertion (third quarter), and non-cash expenses associated with the termination of the Company's pension plan (fourth quarter).

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