[Q3 2024 Financial and Business Highlights](index=1&type=section&id=Q3_2024_Financial_and_Business_Highlights) Western Union's Q3 2024 featured a GAAP revenue decrease, adjusted growth, significant EPS rise from an IRS settlement, and varied segment performance [Q3 Consolidated Financial Performance](index=1&type=section&id=Q3_Consolidated_Financial_Performance) Western Union reported a 6% GAAP revenue decrease to $1.04 billion in Q3 2024, primarily due to lower contribution from Iraq, while adjusted revenue, excluding Iraq, increased by 1% Revenue Performance | Metric | Q3 2024 (USD Billions) | Q3 2023 (USD Billions) | Reported % Change | Adjusted % Change (excl. Iraq) | | :----- | :--------------------- | :--------------------- | :---------------- | :----------------------------- | | Revenue | $1.04 | $1.10 | (6)% | 1% | EPS Performance | Metric | Q3 2024 (USD) | Q3 2023 (USD) | Reported % Change | | :----- | :------------ | :------------ | :---------------- | | GAAP EPS | $0.78 | $0.46 | 70% | | Adjusted EPS | $0.46 | $0.43 | 7% | - Revenue decline was negatively impacted by **7 percentage points** due to lower contribution from Iraq[1](index=1&type=chunk) - GAAP EPS in Q3 2024 included a **$0.40 benefit** from a settlement with the U.S. Internal Revenue Service regarding 2017 and 2018 federal income tax returns[2](index=2&type=chunk) [Q3 Business Segment Performance](index=1&type=section&id=Q3_Business_Segment_Performance) The Consumer Money Transfer (CMT) segment saw a reported revenue decrease of 9% (8% adjusted), despite a 3% transaction increase, mainly due to Iraq, while Branded Digital and Consumer Services showed strong growth Consumer Money Transfer (CMT) Segment Performance | Metric | Q3 2024 Reported % Change | Q3 2024 Adjusted % Change | Q3 2024 Transactions % Change | | :----- | :------------------------ | :------------------------ | :---------------------------- | | Revenue | (9)% | (8)% | 3% | Branded Digital Business Performance | Metric | Q3 2024 Reported % Change | Q3 2024 Adjusted % Change | Q3 2024 Transactions % Change | % of Total CMT Revenues | % of Total CMT Transactions | | :----- | :------------------------ | :------------------------ | :---------------------------- | :---------------------- | :-------------------------- | | Revenue | 8% | 9% | 15% | 25% | 32% | Consumer Services Segment Performance | Metric | Q3 2024 Reported % Change | Q3 2024 Adjusted % Change | | :----- | :------------------------ | :------------------------ | | Revenue | 32% | 15% | - Consumer Services growth benefited from new and expanded products led by the expansion of the Company's retail foreign exchange business and the addition of the Company's newly launched media network business, as well as the continued strength of the retail money order business[4](index=4&type=chunk) [Q3 Operating and Tax Metrics](index=2&type=section&id=Q3_Operating_and_Tax_Metrics) GAAP operating margin decreased to 15.9% from 19.2% YoY, impacted by redeployment program costs and Russia asset impairments, while adjusted operating margin slightly decreased to 19.1% Operating Margin | Metric | Q3 2024 | Q3 2023 | | :----- | :------ | :------ | | GAAP Operating Margin | 15.9% | 19.2% | | Adjusted Operating Margin | 19.1% | 19.6% | - GAAP operating margin in the current period included redeployment program costs and Russia asset impairments and termination costs[5](index=5&type=chunk) - Adjusted operating margins decreased due to a lower contribution from Iraq and strategic investments in new and expanded products in Consumer Services[5](index=5&type=chunk) Effective Tax Rate | Metric | Q3 2024 | Q3 2023 | | :----- | :------ | :------ | | GAAP Effective Tax Rate | (95.2)% benefit | 16.3% provision | | Adjusted Effective Tax Rate | 8.4% provision | 16.6% provision | - The decrease in the GAAP effective rate was primarily related to the IRS settlement[5](index=5&type=chunk) - The decrease in the adjusted effective tax rate was primarily due to discrete tax benefits[5](index=5&type=chunk) [CEO Commentary on Strategy and Performance](index=1&type=section&id=CEO_Commentary_on_Strategy_and_Performance) CEO Devin McGranahan expressed satisfaction with Q3 results, highlighting continued progress on the Evolve 2025 strategy and consistent transaction growth in Consumer Money Transfer - "We are pleased with third quarter results, which demonstrate continued progress of our Evolve 2025 strategy"[2](index=2&type=chunk) - "We've maintained **mid-single digit transaction growth** in our Consumer Money Transfer business for **five quarters in a row** and are now seeing the effect on revenue, with **positive adjusted consolidated revenue growth** for **two consecutive quarters**, excluding Iraq"[2](index=2&type=chunk) [2024 Financial Outlook](index=2&type=section&id=2024_Financial_Outlook) Western Union revised its GAAP outlook for operating margin and EPS due to specific costs and a tax settlement, while reiterating its adjusted full-year guidance [2024 Outlook Revision and Reiterated Guidance](index=2&type=section&id=2024_Outlook_Revision_and_Reiterated_Guidance) Western Union revised its GAAP operating margin and EPS outlook to account for redeployment program costs, Russia asset impairments, termination costs, and the IRS settlement, while reiterating its full-year 2024 adjusted outlook 2024 Outlook | Metric | GAAP Outlook | Adjusted Outlook | | :----- | :----------- | :--------------- | | Revenue | $4,125 to $4,200 million | $4,150 to $4,225 million | | Operating Margin | 17% to 19% | 19% to 21% | | EPS | $1.94 to $2.04 | $1.70 to $1.80 | - GAAP operating margin and EPS outlook revised to include the impact related to redeployment program costs, Russia asset impairments and termination costs, and the IRS settlement[6](index=6&type=chunk) - Full year 2024 adjusted outlook reiterated based on performance, assuming no material changes in macroeconomic conditions[6](index=6&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed_Consolidated_Financial_Statements) This section presents the company's condensed consolidated statements of income, balance sheets, and cash flows for Q3 and YTD 2024, highlighting key financial movements [Statements of Income](index=5&type=section&id=Statements_of_Income) For Q3 2024, revenues decreased by 6% YoY to $1,036.0 million, leading to a 22% decrease in operating income, but net income significantly increased by 55% to $264.8 million due to a tax benefit Q3 and YTD Income Statement Highlights | Metric (in millions, except per share) | Q3 2024 | Q3 2023 | % Change (Q3) | YTD 2024 | YTD 2023 | % Change (YTD) | | :------------------------------------- | :------ | :------ | :------------ | :------- | :------- | :------------- | | Revenues | $1,036.0 | $1,097.8 | (6)% | $3,151.5 | $3,304.7 | (5)% | | Operating income | $164.9 | $210.9 | (22)% | $547.7 | $658.2 | (17)% | | Income before income taxes | $135.7 | $204.3 | (34)% | $470.9 | $601.7 | (22)% | | Provision for/(benefit from) income taxes | $(129.1) | $33.3 | (b) | $(77.6) | $102.7 | (b) | | Net income | $264.8 | $171.0 | 55% | $548.5 | $499.0 | 10% | | Diluted EPS | $0.78 | $0.46 | 70% | $1.61 | $1.33 | 21% | [Balance Sheets](index=7&type=section&id=Balance_Sheets) As of September 30, 2024, total assets decreased to $7,675.8 million from $8,198.8 million at December 31, 2023, primarily due to decreases in cash and settlement assets, while total stockholders' equity increased Balance Sheet Highlights | Metric (in millions) | Sep 30, 2024 | Dec 31, 2023 | | :------------------- | :----------- | :----------- | | Cash and cash equivalents | $1,097.6 | $1,268.6 | | Settlement assets | $3,306.9 | $3,687.0 | | Total assets | $7,675.8 | $8,198.8 | | Total liabilities | $7,023.1 | $7,719.8 | | Total stockholders' equity | $652.7 | $479.0 | [Statements of Cash Flows](index=8&type=section&id=Statements_of_Cash_Flows) For the nine months ended September 30, 2024, net cash provided by operating activities decreased to $272.3 million, while net cash used in investing activities increased, and net cash used in financing activities decreased YTD Cash Flow Highlights | Metric (in millions) | YTD Sep 30, 2024 | YTD Sep 30, 2023 | | :------------------- | :--------------- | :--------------- | | Net income | $548.5 | $499.0 | | Net cash provided by operating activities | $272.3 | $518.6 | | Net cash used in investing activities | $(134.1) | $(76.5) | | Net cash used in financing activities | $(496.8) | $(835.0) | | Net change in cash and cash equivalents | $(358.6) | $(392.9) | [Segment Performance and Key Statistics](index=9&type=section&id=Segment_Performance_and_Key_Statistics) This section details the Q3 and YTD 2024 performance of Western Union's Consumer Money Transfer and Consumer Services segments, including key revenue, transaction, and operating margin trends [Summary Segment Data](index=9&type=section&id=Summary_Segment_Data) In Q3 2024, Consumer Money Transfer (CMT) revenue decreased 9% to $932.2 million, while Consumer Services (CS) revenue grew 32% to $103.8 million, with Business Solutions reporting no revenue due to divestiture Q3 and YTD Segment Revenues | Segment (in millions) | Q3 2024 Revenue | Q3 2023 Revenue | Q3 % Change | YTD 2024 Revenue | YTD 2023 Revenue | YTD % Change | | :-------------------- | :-------------- | :-------------- | :---------- | :--------------- | :--------------- | :----------- | | Consumer Money Transfer | $932.2 | $1,019.0 | (9)% | $2,859.2 | $3,029.5 | (6)% | | Consumer Services | $103.8 | $78.8 | 32% | $292.3 | $245.5 | 19% | | Business Solutions | — | — | (f) | — | $29.7 | (f) | | Total consolidated revenues | $1,036.0 | $1,097.8 | (6)% | $3,151.5 | $3,304.7 | (5)% | Q3 and YTD Segment Operating Income | Segment (in millions) | Q3 2024 Operating Income | Q3 2023 Operating Income | Q3 % Change | YTD 2024 Operating Income | YTD 2023 Operating Income | YTD % Change | | :-------------------- | :----------------------- | :----------------------- | :---------- | :------------------------ | :------------------------ | :----------- | | Consumer Money Transfer | $188.3 | $193.4 | (3)% | $567.4 | $601.9 | (6)% | | Consumer Services | $9.2 | $21.6 | (58)% | $38.9 | $72.1 | (46)% | | Business Solutions | — | — | (f) | — | $3.7 | (f) | | Total consolidated operating income | $164.9 | $210.9 | (22)% | $547.7 | $658.2 | (17)% | [Consolidated Key Metrics](index=10&type=section&id=Consolidated_Key_Metrics) Consolidated GAAP revenues showed a 6% YoY decrease in Q3 2024, while adjusted revenues (excluding Iraq) increased by 1%, with GAAP operating margin at 15.9% and adjusted operating margin at 19.1% Consolidated Revenue and Operating Margin Trends (YoY % Change) | Metric | 3Q23 | 4Q23 | FY2023 | 1Q24 | 2Q24 | 3Q24 | YTD 3Q24 | | :---------------------------------- | :--- | :--- | :----- | :--- | :--- | :--- | :------- | | Revenues (GAAP) | 1% | (4)% | (3)% | 1% | (9)% | (6)% | (5)% | | Adjusted revenues (non-GAAP) | 4% | (1)% | 1% | 3% | (7)% | (6)% | (4)% | | Adjusted revenues, excluding Iraq (non-GAAP) | (4)% | (4)% | (4)% | (1)% | 0% | 1% | 0% | | Operating margin (GAAP) | 19.2% | 15.1% | 18.8% | 18.3% | 17.9% | 15.9% | 17.4% | | Adjusted operating margin (non-GAAP) | 19.6% | 16.1% | 19.6% | 19.7% | 19.0% | 19.1% | 19.2% | [Consumer Money Transfer (CMT) Segment](index=10&type=section&id=Consumer_Money_Transfer_CMT_Segment) The CMT segment experienced a 9% GAAP revenue decrease (8% adjusted) in Q3 2024, primarily due to Iraq, despite a 3% increase in transactions, with cross-border principal remaining flat YoY CMT Revenue, Transactions, and Principal Trends (YoY % Change) | Metric | 3Q23 | 4Q23 | FY2023 | 1Q24 | 2Q24 | 3Q24 | YTD 3Q24 | | :---------------------------------- | :--- | :--- | :----- | :--- | :--- | :--- | :------- | | Revenues (GAAP) | 4% | (1)% | 0% | 3% | (10)% | (9)% | (6)% | | Adjusted revenues (non-GAAP) | 3% | (1)% | 0% | 3% | (9)% | (8)% | (5)% | | Transactions - YoY % change | 5% | 5% | 2% | 6% | 4% | 3% | 4% | | Cross-border principal, as reported - YoY % change | 13% | 8% | 9% | 7% | (6)% | 0% | 0% | | Operating margin | 19.0% | 15.3% | 18.7% | 19.5% | 19.8% | 20.2% | 19.8% | [Branded Digital Performance](index=10&type=section&id=Branded_Digital_Performance) Branded Digital revenues grew 8% (9% adjusted) in Q3 2024, with transactions increasing by 15% YoY, consistently showing positive growth throughout the year Branded Digital Revenue and Transaction Trends (YoY % Change) | Metric | 3Q23 | 4Q23 | FY2023 | 1Q24 | 2Q24 | 3Q24 | YTD 3Q24 | | :------------------------------------------ | :--- | :--- | :----- | :--- | :--- | :--- | :------- | | Branded Digital revenues (GAAP) | 3% | 4% | 0% | 9% | 5% | 8% | 7% | | Adjusted Branded Digital revenues (non-GAAP) | 3% | 4% | 0% | 9% | 7% | 9% | 8% | | Branded Digital transactions - YoY % change | 12% | 13% | 11% | 13% | 13% | 15% | 13% | [Regional CMT Performance](index=11&type=section&id=Regional_CMT_Performance) Regional performance within CMT varied in Q3 2024, with MEASA revenues significantly decreasing by 32% (GAAP) or 31% (Adjusted) due to Iraq, while other regions showed mixed results CMT Regional Revenue and Transaction Trends (Q3 2024 YoY % Change) | Region | GAAP Revenue % Change | Adjusted Revenue % Change | Transactions % Change | | :----- | :-------------------- | :------------------------ | :-------------------- | | NA | (3)% | (3)% | 3% | | EU & CIS | 0% | 1% | 6% | | MEASA | (32)% | (31)% | 0% | | LACA | (2)% | (1)% | (2)% | | APAC | (2)% | 1% | 11% | [Consumer Services (CS) Segment](index=12&type=section&id=Consumer_Services_CS_Segment) The Consumer Services segment demonstrated strong growth in Q3 2024, with GAAP revenues increasing 32% and adjusted revenues increasing 15% YoY, despite a significant decline in operating margin to 8.7% CS Revenue and Operating Margin Trends (YoY % Change) | Metric | 3Q23 | 4Q23 | FY2023 | 1Q24 | 2Q24 | 3Q24 | YTD 3Q24 | | :---------------------------------- | :--- | :--- | :----- | :--- | :--- | :--- | :------- | | Revenues (GAAP) | 22% | (1)% | 13% | 5% | 21% | 32% | 19% | | Adjusted revenues (non-GAAP) | 24% | 6% | 17% | 8% | 14% | 15% | 13% | | Operating margin | 27.5% | 26.6% | 28.7% | 21.3% | 11.0% | 8.7% | 13.3% | [Business Solutions Segment](index=9&type=section&id=Business_Solutions_Segment) The Business Solutions segment was fully divested by July 1, 2023, resulting in no reported revenues or operating income for Q3 or YTD 2024 - The Business Solutions segment was fully divested by **July 1, 2023**, with the final closing of European Union operations[18](index=18&type=chunk) - The divestiture resulted in a gain of **$18.0 million** in Q3 2023[31](index=31&type=chunk) - No revenues or operating income are reported for Business Solutions in 2024 periods[18](index=18&type=chunk) [Non-GAAP Measures and Notes](index=13&type=section&id=Non-GAAP_Measures_and_Notes) This section provides explanations and reconciliations of non-GAAP financial measures, detailing specific adjustments for a clearer understanding of underlying business performance [Explanation of Non-GAAP Measures](index=13&type=section&id=Explanation_of_Non-GAAP_Measures) Western Union presents non-GAAP financial measures to provide supplemental information that management believes is meaningful for understanding the company's financial results, offering comparability and consistency to prior periods, and eliminating currency volatility - Non-GAAP measures provide meaningful supplemental information to assist management, investors, and analysts in understanding financial results[8](index=8&type=chunk) - They offer comparability and consistency to prior periods or eliminate currency volatility, increasing the comparability of underlying results and trends[22](index=22&type=chunk) - A non-GAAP financial measure should not be considered in isolation or as a substitute for the most comparable GAAP financial measure[23](index=23&type=chunk) [Specific Adjustments and Definitions](index=13&type=section&id=Specific_Adjustments_and_Definitions) This section details the specific adjustments made to GAAP figures to arrive at non-GAAP measures, including constant currency, EBITDA, and impacts from acquisition/divestiture activities, redeployment programs, Russia asset impairments, and the IRS settlement Consolidated Metrics Reconciliation (Q3 2024) | Metric (in millions, except per share) | GAAP | Adjustments | Non-GAAP | | :------------------------------------- | :--- | :---------- | :------- | | Revenues | $1,036.0 | $(5.5) (FX/Argentina) | $1,030.5 | | Operating income | $164.9 | $32.6 (various) | $197.5 | | Net income | $264.8 | $(109.8) (various) | $155.0 | | Diluted EPS | $0.78 | $(0.32) (various) | $0.46 | | Effective tax rate | (95)% | 103% (IRS, other) | 8% | - **Constant Currency:** Excludes benefit or loss from foreign exchange fluctuations, net of hedges. Includes Argentina inflation impact where indicated[8](index=8&type=chunk) - **EBITDA:** Operating income adjusted for depreciation and amortization expenses, providing an additional performance measurement[24](index=24&type=chunk) - **Acquisition, Separation, and Integration Costs:** Expenses incurred for acquisition/divestiture activity, including review, closing, and integration costs, excluded from segment operating income[25](index=25&type=chunk) - **Business Solutions Divestiture:** Sale completed in three closings, final one on **July 1, 2023**, resulting in an **$18.0 million gain**. Revenues adjusted to exclude carved-out financial information for comparability[26](index=26&type=chunk)[31](index=31&type=chunk) - **Redeployment Program Costs:** Severance, organizational streamlining, vendor management, real estate, marketing, and people strategy optimizations, including non-cash impairments. Excluded from segment operating income[27](index=27&type=chunk) - **Russia Asset Impairments and Termination Costs:** In Q3 2024, **$12 million** in asset impairments and associated operating costs due to the decision to liquidate or sell Russian assets. Excluded from segment operating income[31](index=31&type=chunk) - **IRS Settlement:** In Q3 2024, a settlement with the U.S. IRS regarding 2017 and 2018 federal income tax returns. The non-cash reversal of the uncertain tax position liability is excluded due to its significance[32](index=32&type=chunk) - **Iraq Revenues:** Revenues from transactions originated in Iraq. Excluded from adjusted revenue measures due to significant volatility and challenges in offering services in the country, to provide better consistency and comparability[8](index=8&type=chunk)

Core Insights - Analysts project Western Union (WU) will announce quarterly earnings of $0.44 per share, reflecting a year-over-year increase of 2.3% [1] - Revenue is expected to reach $1.03 billion, indicating a decline of 5.9% from the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting a reevaluation of initial estimates by analysts [1] Revenue Projections - The consensus estimate for 'Revenue- Consumer Services' is $83.16 million, showing a year-over-year increase of 5.5% [2] - 'Revenue- Consumer Money Transfer' is projected to be $950.41 million, reflecting a decrease of 6.7% from the previous year [2] - Analysts expect 'Consumer Money Transfer transactions- Total' to reach 70.97 million, slightly up from 70.6 million in the year-ago quarter [2] Stock Performance - Over the past month, Western Union shares have recorded a return of +2.2%, compared to the Zacks S&P 500 composite's +3.8% [3] - Based on its Zacks Rank 3 (Hold), Western Union is expected to perform in line with the overall market in the upcoming period [3]

Group 1 - Western Union faces significant challenges from new competitors and has struggled with declining revenues [1] - Despite revenue challenges, the company maintains strong cash flow and has a lasting customer base [1] Group 2 - The author emphasizes evaluating businesses as entities rather than mere stock tickers, indicating a long-term investment perspective [1]

The Western Union Company (WU) stock is currently trading at a notable discount relative to the Zacks Financial Transaction Services industry. With a forward 12-month price-to-earnings (P/E) ratio of 6.39X, it sits well below the industry average of 22.86X. The company has a Value Score of A. Image Source: Zacks Investment ResearchIn comparison, majorpayment companies such as Mastercard Incorporated (MA) and Visa Inc. (V) are way costlier at 30.59X and 24.63X, respectively.While a discount valuation often p ...

Core Viewpoint - Western Union is perceived as a declining business, which is reflected in its high dividend yield of 8% [1] Company Analysis - Western Union operates in the financial services sector and is currently facing challenges due to the rise of alternative payment methods [1] - The company’s stock performance is influenced by its ability to adapt to changing market conditions and consumer preferences [1] Investment Strategy - The investment approach focuses on long-term ownership rather than short-term price predictions, emphasizing valuations over target prices [1] - The analyst has shifted from issuing multiple sell recommendations to a simplified strategy of "Buy or Don't Buy," indicating a more cautious outlook on investments [1]

The Western Union Company (WU) inked a deal with the Open Finance company, Khipu, enabling customers to transfer money digitally using any bank account in Chile.The agreement incorporates Khipu's technology into Western Union's mobile app and website. Earlier, customers paying through a bank account had to leave the Western Union app or website and log into their bank's platform to complete the payment. This step is now removed as a result of the latest integration, allowing the entire transaction to be com ...

Western Union (WU) ended the recent trading session at $12, demonstrating a +0.17% swing from the preceding day's closing price. The stock trailed the S&P 500, which registered a daily gain of 0.25%. Meanwhile, the Dow gained 0.2%, and the Nasdaq, a tech-heavy index, added 0.56%.The money transfer company's stock has climbed by 0.25% in the past month, falling short of the Business Services sector's gain of 3.75% and the S&P 500's gain of 1.65%.The investment community will be paying close attention to the ...

In the latest market close, Western Union (WU) reached $11.78, with a -1.01% movement compared to the previous day. The stock's change was less than the S&P 500's daily gain of 1.07%. Meanwhile, the Dow experienced a rise of 0.31%, and the technology-dominated Nasdaq saw an increase of 2.17%.Shares of the money transfer company have appreciated by 2.15% over the course of the past month, underperforming the Business Services sector's gain of 5.24% and the S&P 500's gain of 2.92%.Investors will be eagerly wa ...

Western Union (WU) closed at $12.07 in the latest trading session, marking a -1.31% move from the prior day. This change lagged the S&P 500's daily loss of 0.3%. On the other hand, the Dow registered a loss of 0.54%, and the technology-centric Nasdaq increased by 0.25%.The money transfer company's shares have seen an increase of 6.63% over the last month, surpassing the Business Services sector's gain of 5.74% and the S&P 500's gain of 3.42%.Investors will be eagerly watching for the performance of Western ...

Company Performance - Western Union closed at $12.23, with a +0.49% change from the previous day, outperforming the S&P 500's loss of 0.16% [1] - The company's shares gained 5.83% over the past month, while the Business Services sector and S&P 500 gained 5.8% and 3.64%, respectively [1] - Upcoming EPS is projected at $0.44, indicating a 2.33% increase year-over-year, while revenue is expected to be $1.03 billion, reflecting a 5.91% decline compared to the previous year [1] Earnings Estimates - For the full year, earnings are projected at $1.77 per share and revenue at $4.18 billion, showing changes of +1.72% and -4.08% from the previous year [2] - Recent analyst estimate revisions indicate short-term business trends, with positive revisions suggesting optimism about the company's profitability [2] - The Zacks Rank system, which reflects these estimate changes, provides a rating system for investors [2] Valuation Metrics - Western Union has a Forward P/E ratio of 6.89, significantly lower than the industry average of 16.55, indicating it is trading at a discount [3] - The company has a PEG ratio of 1.82, compared to the Financial Transaction Services industry's average PEG ratio of 1.29 [3] Industry Overview - The Financial Transaction Services industry is part of the Business Services sector and holds a Zacks Industry Rank of 82, placing it in the top 33% of over 250 industries [4] - The Zacks Industry Rank evaluates the performance of industry groups, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [4]