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Original Source: FD (FAIR DISCLOSURE) WIRE
. Gary Kohn, Western Union Co., VP of Investor Relations . Christina Gold, Western Union Co., President and CEO . Scott Scheirman, Western Union Co., CFO . Craig Mauer, Cowan, Analyst . Liz Grausam, Goldman Sachs, Analyst . James Kissane, Bear Stearns, Analyst . Pat Burton, CitiGroup, Analyst . Kartik Mehta, FTN Midwest, Analyst . Chris Mammone, Deutsche Bank, Analyst . Charlie Murphy, Morgan Stanley, Analyst . Tien-Tsin Huang, JP Morgan, Analyst . Paul Salmicha, Willington Management, Analyst
For 3Q07, revenue was $1.3b and GAAP operating income was $330m. Guidance was given for full-year 2007 GAAP EPS of $1.09-1.11.
A. Key Data From Call 1. 3Q07 revenue = $1.3b. 2. 3Q07 GAAP operating income = $330m. 3. YTD CapEx = $122m. 4. 3Q07 CapEx = $54m. 5. 3Q07 share repurchase = $300m at an avg. price of $19.59. 6. Full-year 2007 GAAP EPS guidance = $1.09-1.11.
S1. Business Review (C.G.) 1. 3Q07 Highlights: 1. Mexico business out performed the market and is moving towards positive revenue growth. 2. Domestic business, while still facing challenges, is improving slightly. 3. International C2C business remains extremely healthy, C2B is performing well. 4. Made progress on the innovation front. 5. Delivered strong operating margin.
6. Has seen accelerating organic revenue growth. 7. Reported revenue of $1.3b, 10% over 3Q06. 8. EPS was $0.30, excluding accelerated $0.02 non-cash charge, or $0.28 as reported. 9. Operating income margin was 28% before $22m non-cash charge, or 26.3% as reported. 10. Cash flow from operations was healthy, on track to exceed $1b for full-year. 2. 3Q07 Operational Highlights:
1. International C2C business posted strong growth rates, with
revenue up 16% and transactions up 20%. 1. Those transactions originating outside of the US grew even faster with revenue at 23% on transactions of 29%. 1. This subset of business accounts for nearly half of total revenue. 2. Mexico business showed improvement, with transaction growth rates continuing to accelerate to 7%.
3. Revenue was down 1%, an improvement over 7% decline in 2Q07.
1. No significant pricing actions implemented in Mexico during
3Q07 and revenue and transaction growth rates are converging.
4. Since 2Q07, all three of the C2C brands, Western Union, Vigo,
and Orlandi Valuta, showed strength with each brand outperforming the market. 5. Domestic business showed sequential transaction improvement, with transactions down 4% and revenue down 10%.
1. Long-term goal for this business is low single-digit revenue
growth. 6. Consumer to business (C2B) segment posted revenue growth of 14%. 1. Pleased with progress Co. is making with Pago Facil, with nearly a full-year after the acquisition, is on track with expectations. 2. Operating margin remains strong at 31%, excluding share of non-cash charge. 3. Announced a partnership with Yodlee, a leading provider of online banking and bill payment solutions to financial institutions. 1. This partnership will give participating banks, online customers, the option to make bill payments which post immediately to their accounts. 2. That enables customers to better manage their resources and avoid late fees. 3. Gives WU, Yodlee and Co.'s bank partners, a revenue stream which has never existed before. 7. Underlying efforts to build long-term value for shareholders are four key strategies:
1. Expand and diversify global distribution. 2. Build brand and enhance the consumer experience. 3. Develop consumer choice and convenience. 4. Develop new technologies and service offerings.
8. In Singapore, recently strengthened equity relationship with
long-time agent Hersing. 1. In Australia, opened new Oceania regional office in Sydney. 3. Global Money Transfer Market: 1. India is a very important market, as 29m Indians currently live abroad. 2. According to recent World Bank data, the number of immigrants
is now close to 200m, or roughly 3% of the global population.
3. India has emerged as the Number 1 remittance recipient
country, while China is Number 3. 1. As today, these two countries each exceed $20b in remittances. 2. Together, India and China combined contribute 5% of total WU revenue. 3. Mexico alone is 7%. 4. India grew transactions by 69% in 3Q07, while China, where Co. now has 25,000 agent locations, grew transactions by 28%. 1. In each of these two countries, 3Q07 revenue growth exceeded 40%. 5. Dubai is experiencing tremendous growth, supported by a large migrant work force. 1. Reflecting this dynamic in Dubai, remittances from the United Arab Emirates to Bangladesh jumped by nearly 57% in FY ended July 2007, according to the Central Bank of Bangladesh. 1. Has 1,400 locations in Bangladesh to serve these customers. 6. Strengthened agent presence in Europe.
1. Signed a new agent Caixa Central de Credito Agricola Mutuo,
one of the top financial institutions in Portugal. 2. Renewed relationship with Portuguese Post Office, which has more than 650 locations. 3. In Greece, welcomed Millennium Bank with more than 130 locations. 7. In Africa, added Madagascar Post and expects to be in 220 locations over time. 8. In the US, renewed agreement with Safeway. 1. Strengthens position in the US with eight of the country's top ten grocery store chains being WU agents.
2. Renewed important and long-standing relationship with Kmart. 1. Kmart has been offering WU money transfer, bill payment and money orders for ten years. …