Western Union Company (The) Net Income dropped on 29.7% while EBITDA Margin increased on 2.4 pp from 23.6% to 26.0%
02/10/2021 • About Western Union Company (The) (
$WU) • By InTwits
Western Union Company (The) reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Western Union Company (The) is a company in decline: 2020 revenue growth was -8.6%, 5 years revenue CAGR was -2.5%
- Western Union Company (The) has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $900m in 2020, $721m in 2019, $360m in 2018, $287m in 2017, $290m in 2016
- In the last 5 years the company invested considerably less than D&A: $443m vs. $791m
- The company has highly profitable business model: ROIC is 22.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.5x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 8.6%. Annual revenue decline showed slowdown in 20Q4 - revenue decreased on 2.7%. During the last 5 years Revenue growth topped in 2017 at 1.9% and was decelerating since that time. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.4 pp from 23.6% to 26.0% in 2020. EBITDA Margin grew at 3.5 pp per annum in the last 5 years.
Gross Margin showed almost no change in 2020. Gross Margin stuck to a growing trend at 0.61 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 2.5 pp from 24.0% to 21.5% in 2020.
Net Income margin decreased on 4.6 pp from 20.0% to 15.4% in 2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.8% in 2020. Western Union Company (The)'s CAPEX/Revenue increased slightly on 0.56 pp from 1.3% in 2017 to 1.8% in 2020. Average CAPEX/Revenue for the last three years was 1.9%.
Leverage (Debt)
Debt level is 1.5x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA decreased on 0.1x from 1.6x to 1.5x in 2020. Debt decreased on 3.7% while cash decreased slightly on 1.5%. During 2016-2020 Net Debt/EBITDA topped in 2017 at 3.0x and was declining since that time.
Western Union Company (The) has no short term refinancing risk: cash is higher than short term debt (2,751.8%).
Valuation and dividends
Western Union Company (The)'s trades at EV/EBITDA 9.3x and P/E 13.2x.
Management team
The company's CEO Hikmet T Ersek has spent 10 years with the company. Western Union Company (The)'s CFO Rajesh K Agrawal "Raj" has spent 6 years with the company.
Financial and operational results
FY ended 12/31/2020
Western Union Company (The) ($WU) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 5,423 | 5,524 | 5,590 | 5,292 | 4,835 | -8.6% |
| Gross Profit | 2,153 | 2,171 | 2,289 | 2,206 | 2,008 | -8.9% |
| SG&A | 1,669 | 1,232 | 1,167 | 1,272 | 1,041 | -18.1% |
| EBITDA | 747 | 739 | 1,387 | 1,248 | 1,256 | 0.6% |
| EBIT | 484 | 476 | 1,122 | | | |
| Interest expence | 153 | 142 | 150 | | | |
| Tax | 89 | 905 | 140 | | | |
| Net Income | 253 | -557 | 852 | 1,058 | 744 | -29.7% |
Balance Sheet
|
|---|
| Cash | 878 | 838 | 973 | 1,451 | 1,428 | -1.5% |
| Short Term Debt | 0 | 0 | 0 | 53 | 52 | -2.4% |
| Long Term Debt | 2,786 | 3,034 | 3,434 | 3,376 | 3,250 | -3.7% |
Cash flow
|
|---|
| Capex | 69 | 69 | 137 | 81 | 88 | 8.1% |
| Dividends | 312 | 326 | 342 | | | |
| Acquisitions | | 25 | | | | |
Ratios
|
|---|
| Revenue growth | -1.1% | 1.9% | 1.2% | -5.3% | -8.6% | |
| EBITDA growth | -45.9% | -1.1% | 87.7% | -10.0% | 0.6% | |
|
|---|
| Gross Margin | 39.7% | 39.3% | 41.0% | 41.7% | 41.5% | -0.1% |
| EBITDA Margin | 13.8% | 13.4% | 24.8% | 23.6% | 26.0% | 2.4% |
| EBIT Margin | 8.9% | 8.6% | 20.1% | | |
| SG&A, % of revenue | 30.8% | 22.3% | 20.9% | 24.0% | 21.5% | -2.5% |
| Net Income Margin | 4.7% | -10.1% | 15.2% | 20.0% | 15.4% | -4.6% |
| CAPEX, % of revenue | 1.3% | 1.3% | 2.4% | 1.5% | 1.8% | 0.3% |
|
|---|
| ROIC | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% | 0.6% |
| ROE | 21.9% | | | | | |
| Net Debt/EBITDA | 2.6x | 3.0x | 1.8x | 1.6x | 1.5x | -0.1x |
| Interest coverage ratio (ICR) | 3.2x | 3.3x | 7.5x | | |
| Interest expence / Average debt | 5.5% | 4.9% | 4.6% | | | |
People
|
|---|
| Insider ownership | 0.7% | 0.7% | 0.7% | | | |
| Employees | 10,700 | 11,500 | 12,000 | | | |
| Revenue/Employee, th. $ | 507 | 480 | 466 | | | |
Western Union Company (The) ($WU) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,190 | 1,115 | 1,259 | 1,272 | | -11.0% | -16.8% | -3.7% | -2.7% |
| EBITDA | 305 | 292 | 353 | 307 | | -8.0% | -13.7% | 29.6% | -0.1% |
| Net Income | 177 | 162 | 229 | 177 | | 2.1% | -73.7% | 69.3% | 30.8% |
Balance Sheet
|
|---|
| Cash | 1,073 | 1,182 | 1,251 | 1,428 | | 28.8% | -2.4% | -10.0% | -1.5% |
| Short Term Debt | 51 | 50 | 52 | 52 | | -54.6% | -7.4% | -1.9% | -2.4% |
| Long Term Debt | 3,249 | 3,231 | 3,177 | 3,250 | | -7.7% | -1.7% | -7.8% | -3.7% |
Ratios
|
|---|
| Gross Margin | 42.6% | 40.6% | 42.7% | 40.3% | | 1.3% | -1.5% | 1.5% | -1.8% |
| EBITDA Margin | 25.6% | 26.2% | 28.0% | 24.1% | | 0.8% | 1.0% | 7.2% | 0.6% |
| Net Income Margin | 14.8% | 14.5% | 18.2% | 13.9% | | 1.9% | -31.3% | 7.8% | 3.6% |
Peers in Data Processing & Outsourced Services
Below you can find Western Union Company (The) benchmarking vs. other companies in Data Processing & Outsourced Services 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 11.8% | 7.5% | 11.5% | -2.7% |
|---|
| Western Union Company (The) ($WU) | - | 1.9% | 1.2% | -5.3% | -8.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.2% | 39.2% | 41.0% | 40.3% | 36.5% |
|---|
| Western Union Company (The) ($WU) | 39.7% | 39.3% | 41.0% | 41.7% | 41.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 21.1% | 19.2% | 21.7% | 18.2% |
|---|
| Western Union Company (The) ($WU) | 13.8% | 13.4% | 24.8% | 23.6% | 26.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.2% | 3.3% | 3.1% |
|---|
| Western Union Company (The) ($WU) | 1.3% | 1.3% | 2.4% | 1.5% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| TTEC Holdings, Inc. ($TTEC) | 10.1% | 16.1% | 13.5% | 16.8% | 21.1% |
| |
|---|
| Median (39 companies) | 11.7% | 10.6% | 10.2% | 8.2% | 5.5% |
|---|
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.3x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| Western Union Company (The) ($WU) | 2.6x | 3.0x | 1.8x | 1.6x | 1.5x |
