Western Union Company (The) Net Income jumped on 253% and Revenue increased slightly on 1.2%
02/07/2019 • About Western Union Company (The) (
$WU) • By InTwits
Western Union Company (The) reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Western Union Company (The) has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $137m in 2018, $69m in 2017, $69m in 2016, $144m in 2015, $106m in 2014
- In the last 5 years the company invested considerably less than D&A: $524m vs. $1,333m. In 2018 this situation was still the same: CAPEX was 137 while D&A was 265
- The company has highly profitable business model: ROIC is 27.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Western Union Company (The)'s Revenue increased slightly on 1.2%. Revenue growth showed slowdown in 18Q4 - it was -2.6% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018. During the last 5 years EBITDA Margin bottomed in 2017 at 13.4%.
Gross Margin increased slightly on 1.6 pp from 39.3% to 41.0% in 2018. SG&A as a % of Revenue decreased slightly on 1.4 pp from 22.3% to 20.9% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2016 at 30.8% and was declining since that time.
Net Income margin surged on 25.3 pp from -10.1% to 15.2% in 2018. The efficient tax rate was 14.1% in 2018.
Investments (CAPEX, working capital and M&A)
Western Union Company (The)'s CAPEX/Revenue was 2.4% in 2018. CAPEX/Revenue showed almost no change from 2015 to 2018. For the last three years the average CAPEX/Revenue was 1.7%.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 2.5x. Net Debt / EBITDA dropped on 1.2x from 3.0x to 1.8x in 2018. Debt jumped on 13.2% while cash jumped on 16.1%. During the last 5 years Net Debt/EBITDA topped in 2017 at 3.0x.
Western Union Company (The) has good short term financial stability: Interest coverage ratio (ICR) is 7.5x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence paid by the company was 4.4% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 7.4x and P/E 9.2x.
The company paid 40.1% of Net Income as dividends in 2018. Dividends grew on average at 5.2% per annum in the last 5 years).
Management team
Western Union Company (The)'s CEO is Hikmet T Ersek. Hikmet T Ersek is a founder and has 8 years tenure with the company. CEO total compensation was
$9,175,300 in 2018 which included
$1,000,000 salary. Rajesh K Agrawal "Raj" is a the company's CFO. Rajesh K Agrawal "Raj" has spent 5 years at the company.
At the end of financial year the company had 0.67% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 12,000 employees. The number of employees increased on 4.3%. Average revenue per employee in 2018 was
$465,825 and it decreased on 3.0%.
Financial and operational results
FY ended 12/31/2018
Western Union Company (The) ($WU) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 5,607 | 5,484 | 5,423 | 5,524 | 5,590 | 1.2% |
| Gross Profit | 2,310 | 2,284 | 2,153 | 2,171 | 2,289 | 5.4% |
| SG&A | 1,169 | 1,175 | 1,669 | 1,232 | 1,167 | -5.2% |
| EBITDA | 1,412 | 1,380 | 747 | 739 | 1,387 | 87.7% |
| EBIT | 1,141 | 1,109 | 484 | 476 | 1,122 | 135.8% |
| Interest expence | 177 | 168 | 153 | 142 | 150 | 5.3% |
| Tax | 116 | 104 | 89 | 905 | 140 | -84.6% |
| Net Income | 852 | 838 | 253 | -557 | 852 | |
Balance Sheet
|
|---|
| Cash | 1,783 | 1,316 | 878 | 838 | 973 | 16.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 3,720 | 3,216 | 2,786 | 3,034 | 3,434 | 13.2% |
Cash flow
|
|---|
| Capex | 106 | 144 | 69 | 69 | 137 | 97.8% |
| Dividends | 265 | 317 | 312 | 326 | 342 | 4.9% |
| Acquisitions | 11 | | | 25 | | |
Ratios
|
|---|
| Revenue growth | 1.2% | -2.2% | -1.1% | 1.9% | 1.2% | |
| EBITDA growth | 3.1% | -2.3% | -45.9% | -1.1% | 87.7% | |
|
|---|
| Gross Margin | 41.2% | 41.7% | 39.7% | 39.3% | 41.0% | 1.6% |
| EBITDA Margin | 25.2% | 25.2% | 13.8% | 13.4% | 24.8% | 11.4% |
| EBIT Margin | 20.3% | 20.2% | 8.9% | 8.6% | 20.1% | 11.5% |
| SG&A, % of revenue | 20.9% | 21.4% | 30.8% | 22.3% | 20.9% | -1.4% |
| Net Income Margin | 15.2% | 15.3% | 4.7% | -10.1% | 15.2% | 25.3% |
| CAPEX, % of revenue | 1.9% | 2.6% | 1.3% | 1.3% | 2.4% | 1.2% |
|
|---|
| ROIC | 21.1% | 22.0% | 10.7% | 11.9% | 27.8% | 15.9% |
| ROE | 70.9% | 61.9% | 21.9% | | | |
| Net Debt/EBITDA | 1.4x | 1.4x | 2.6x | 3.0x | 1.8x | -1.2x |
| Interest coverage ratio (ICR) | 6.5x | 6.6x | 3.2x | 3.3x | 7.5x | 4.2x |
| Interest expence / Average debt | 4.7% | 4.8% | 5.1% | 4.9% | 4.4% | -0.5% |
People
|
|---|
| Insider ownership | 0.7% | 0.7% | 0.7% | 0.7% | 0.7% | 0.0% |
| Employees | 10,000 | 10,000 | 10,700 | 11,500 | 12,000 | 4.3% |
| Revenue/Employee, th. $ | 561 | 548 | 507 | 480 | 466 | -3.0% |
Western Union Company (The) ($WU) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,389 | 1,411 | 1,388 | 1,402 | | 6.7% | 2.3% | -1.2% | -2.6% |
| EBITDA | 332 | 349 | 366 | 340 | | 8.2% | 24.5% | 8.4% | |
| Net Income | 214 | 218 | 209 | 212 | | 32.1% | 30.7% | -11.5% | |
Balance Sheet
|
|---|
| Cash | 934 | 938 | 768 | 973 | | -29.4% | -11.4% | -25.8% | 16.1% |
| Short Term Debt | 110 | 0 | 0 | 0 | | -64.5% | -100.0% | | |
| Long Term Debt | 3,033 | 3,332 | 3,295 | 3,434 | | -4.6% | 4.7% | -6.7% | 13.2% |
Ratios
|
|---|
| Gross Margin | 40.6% | 41.2% | 41.5% | 40.5% | | 2.0% | 2.3% | 1.3% | 1.0% |
| EBITDA Margin | 23.9% | 24.8% | 26.4% | 24.2% | | 0.3% | 4.4% | 2.3% | 37.2% |
| Net Income Margin | 15.4% | 15.4% | 15.0% | 15.1% | | 3.0% | 3.3% | -1.7% | 93.1% |
Peers in Data Processing & Outsourced S
Below you can find Western Union Company (The) benchmarking vs. other companies in Data Processing & Outsourced S industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.7% | 11.8% | 7.5% |
|---|
| Western Union Company (The) ($WU) | | -2.2% | -1.1% | 1.9% | 1.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 38.4% | 39.5% | 39.2% | 39.2% | 41.0% |
|---|
| Western Union Company (The) ($WU) | 41.2% | 41.7% | 39.7% | 39.3% | 41.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.4% | 21.0% | 21.3% | 21.1% | 19.2% |
|---|
| Western Union Company (The) ($WU) | 25.2% | 25.2% | 13.8% | 13.4% | 24.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.2% |
|---|
| Western Union Company (The) ($WU) | 1.9% | 2.6% | 1.3% | 1.3% | 2.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.3% | 12.8% | 11.7% | 10.6% | 10.2% |
|---|
| Western Union Company (The) ($WU) | 21.1% | 22.0% | 10.7% | 11.9% | 27.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.4x | 0.5x | 1.3x | 2.3x | 2.2x |
|---|
| Western Union Company (The) ($WU) | 1.4x | 1.4x | 2.6x | 3.0x | 1.8x |
