Summary of Western Union's Investor and Analyst Conference Call Company and Industry - **Company**: Western Union (WU) - **Industry**: Money transfer and financial services Key Points and Arguments 1. **Acquisition Announcement**: Western Union announced the acquisition of International Money Express for $16 per share in an all-cash offer, highlighting the strategic fit between the two companies [4][5] 2. **Strategic Rationale**: The acquisition aims to accelerate the transformation of Western Union's North American retail operations, leveraging Intermex's successful go-to-market strategy and strong relationships with agents and customers [5][6] 3. **Growth Potential**: Intermex's U.S. retail operations have doubled both principal and revenue over the past five years, indicating strong growth potential that Western Union aims to capitalize on [6][8] 4. **Digital Transformation**: Western Union plans to enhance Intermex's digital offerings by integrating its next-generation digital platform, targeting the rapidly digitizing customer base in the U.S. [7][13] 5. **Synergies**: The merger is expected to generate approximately $30 million in cost synergies, with a projected earnings accretion of $0.10 in the first full year post-acquisition [14][15] 6. **Customer Base Expansion**: The combined entity is expected to serve around 20 million North American retail customers, providing a significant opportunity for cross-selling additional financial services [13][14] 7. **Market Dynamics**: The acquisition is seen as a strategic move to navigate the ongoing migration from retail to digital services, particularly in light of recent market changes such as the remittance tax [14][16] 8. **Regulatory Considerations**: The integration process is expected to take 9 to 12 months, during which regulatory approvals will be sought [24][48] 9. **Brand Strategy**: Western Union intends to maintain a multi-brand strategy, allowing both brands to coexist and target different customer segments effectively [60][66] 10. **Operational Efficiency**: The integration aims to adopt best practices from both companies, enhancing operational efficiency and customer acquisition strategies [75][76] Other Important Content - **Management Team**: The strong management team at Intermex is viewed as a valuable asset that will contribute to the success of the combined company [6][12] - **Market Position**: The acquisition positions Western Union as a leading player in the remittance market, particularly in the U.S.-Mexico corridor [52] - **Competitive Landscape**: The deal is expected to enhance Western Union's competitive position in the fragmented U.S. retail marketplace, allowing for better pricing strategies and customer targeting [46][60] - **Financial Health**: The acquisition is not expected to materially impact Western Union's ability to return capital to shareholders through dividends and share repurchases [15][48] This summary encapsulates the key discussions and insights from the conference call regarding Western Union's strategic acquisition of Intermex and its implications for the company's future growth and market positioning.

Transaction Overview - Western Union will acquire International Money Express for $1600 per share in cash[16] - The transaction is expected to close in mid-2026, pending regulatory approvals and closing conditions[18] - The acquisition is expected to yield $30 million in annual run-rate cost synergies within 24 months[16] - The transaction is expected to be immediately EPS-accretive[17] Strategic Benefits - The acquisition increases scale in high-growth LACA geographies through complementary agent networks[17] - It expands and stabilizes Western Union's U S retail footprint, enhancing resilience and improving customer access across the Americas[17] - The combined company is projected to have approximately 70000 send locations[25] - The combined company is projected to have approximately 21 million customers[25] - The combined company is projected to have approximately $2100 million in revenue[25] Financial Impact - The transaction is expected to drive an incremental $010 of Adjusted EPS in the first full year[31] - The acquisition strengthens long-term Free Cash Conversion[35]

Company Acquisition - Western Union is acquiring International Money Express (Intermex) for $500 million, aimed at enhancing its retail business in the U.S. and accelerating digital customer acquisition [1][2] - The acquisition is described as a strategic move to strengthen North America operations and expand presence with key consumer segments across the U.S. [2] Brand and Customer Relationships - Intermex has established a well-recognized brand and strong agent and customer relationships, which will help Western Union expand its retail footprint and improve operational efficiencies [3] - The acquisition will provide Intermex's 6 million customers access to Western Union's digital platforms and capabilities [3] Market Position and Financial Performance - The deal is expected to stabilize Western Union's U.S. retail footprint, enhancing resilience and improving customer access across the Americas [4] - Western Union reported a 4% drop in revenue in the previous quarter, partly due to a slowdown in its North America retail business [4] Digital Payment Trends - Latin America is experiencing a significant shift towards digital payments, with digital payments accounting for 48% of eCommerce transaction value and 30% of POS transaction value in 2022, up from 14% and 2% in 2014 [6] - Projections indicate that by 2030, these shares will increase to 66% for online purchases and 49% for in-store transactions, while cash transactions are expected to decline from 67% in 2014 to just 17% by 2030 [6] Industry Transformation - The acceleration of digital payments in Latin America is characterized as a transformation, combining mobile-first innovation with inclusive financial infrastructure [7]

Group 1 - Western Union will acquire International Money Express (Intermex) for approximately $500 million in total equity and enterprise value [1] - The acquisition price is set at $16.00 per share of Intermex, representing a premium of about 50% over Intermex's 90-day volume-weighted average stock price [1] - The transaction is expected to close in mid-2026, subject to customary closing conditions and regulatory approvals [1] Group 2 - Western Union anticipates that the acquisition will immediately increase its adjusted earnings per share by over $0.10 in the first full year post-transaction [1] - The deal is projected to generate approximately $30 million in cost synergies annually within the first 24 months [1] - The acquisition has received unanimous approval from the boards of both Western Union and Intermex [1]

Core Viewpoint - Western Union is acquiring International Money Express, Inc. (Intermex) for $16.00 per share in an all-cash transaction, totaling approximately $500 million, aimed at strengthening its retail presence in North America and expanding its digital customer acquisition efforts [1][5][6] Strategic Rationale and Benefits - The acquisition enhances Western Union's retail offering in the U.S. and expands its market coverage in high-potential geographies, leveraging Intermex's market knowledge and agent relationships [2][8] - It is expected to be immediately accretive to Western Union's adjusted EPS by more than $0.10 in the first full year post-close and generate approximately $30 million in annual run-rate cost synergies within the first 24 months [6][8] - The combination of both companies is positioned to drive growth across North America by integrating Intermex's capabilities into Western Union's existing network [3][8] Transaction Details - The acquisition price of $16.00 per share represents a roughly 50% premium to Intermex's 90-day volume-weighted average price [5] - The transaction has been unanimously approved by the boards of directors of both Western Union and Intermex, with recommendations for stockholders to vote in favor of the merger [7] Integration and Future Plans - The transaction is expected to close in mid-2026, subject to customary closing conditions and regulatory approvals, including stockholder approval from Intermex [9] - Following completion, a coordinated integration plan will be implemented to ensure a smooth transition for customers, agents, and partners [9]

Core Insights - Western Union is partnering with two African FinTechs, Zoona Transactions and Chipper Cash, to enhance international money transfer services for customers in Zambia [2][3] - The collaboration aims to leverage Zambia's growing digital financial landscape, allowing users to send and receive money globally through the Chipper Cash app [3][4] Company Developments - The partnership will enable Chipper Cash app users to access Western Union's extensive network, which spans over 200 countries and territories, facilitating seamless money transfers [3] - Western Union's President and CEO, Devin McGranahan, emphasized the company's commitment to its Evolve 2025 strategy despite facing a 4% revenue decline in the second quarter, attributed to challenges in the North America retail business and sanctions affecting operations in Iraq [5] Industry Trends - The rise in smartphone adoption in Zambia is driving demand for mobile-first financial solutions, indicating a shift towards richer, app-based digital financial services [4] - Western Union is exploring the use of stablecoins and artificial intelligence to improve efficiencies in cross-border transfers, viewing stablecoins as an opportunity rather than a threat [6][7]

Core Insights - Shares of The Western Union Company (WU) have decreased by 4.1% following the release of second-quarter 2025 results, which were weaker than expected due to poor performance in the CMT segment, reduced revenues from Iraq, and a decline in the North America retail business. However, improvements in the consumer services unit and branded digital business, along with lower operating expenses, partially mitigated these negatives [1][8]. Financial Performance - WU reported adjusted earnings per share (EPS) of 42 cents for Q2 2025, missing the Zacks Consensus Estimate by 4.6%, and representing a 4.5% decline year over year [2]. - Total revenues for the quarter were $1 billion, down 4% on a reported basis and also missing the Zacks Consensus Estimate by 0.9% [2]. - The adjusted operating margin remained stable at 19% compared to the previous year, while total expenses decreased by 5% year over year to $833.4 million, which was lower than the estimated $834.8 million [3]. - Operating income rose by 1% year over year to $192.7 million, although it fell short of the estimate of $193.4 million [3]. Segment Analysis - The CMT segment's revenues declined by 8% to $885 million, missing the Zacks Consensus Estimate of $919.7 million. Operating income for this segment fell by 12% year over year to $167.7 million, also missing consensus estimates [4]. - Transactions within the CMT segment decreased by 3% year over year, despite a 9% growth in the Branded Digital business, which accounted for 29% of CMT's revenues and improved by 6% [5]. - The Consumer Services (CS) unit reported revenues of $141.1 million, a significant increase of 39% year over year, surpassing the Zacks Consensus Estimate of $115.1 million [5][6]. Financial Position - As of June 30, 2025, WU had cash and cash equivalents of $1 billion, down from $1.5 billion at the end of 2024. Total assets decreased to $8 billion from $8.4 billion [7]. - Borrowings were reduced to $2.7 billion from $2.9 billion as of December 31, 2024, while total stockholders' equity declined to $883.6 million from $968.9 million at the end of 2024 [7]. Outlook - WU has revised its 2025 adjusted revenue and EPS outlook, now forecasting revenues between $4.035 billion and $4.135 billion, indicating a potential 2.7% decline from 2024. Adjusted EPS is now expected to be in the range of $1.65-$1.75, down from the previous estimate of $1.75-$1.85 [11]. - The forecast for GAAP EPS has also been lowered to a range of $1.45-$1.55, reflecting a 45.3% decline from the 2024 figure of $2.74 [12]. Capital Deployment - In Q2 2025, WU returned over $150 million to shareholders through dividends and share buybacks [10].

Core Insights - Western Union reported quarterly earnings of $0.42 per share, missing the Zacks Consensus Estimate of $0.44 per share, and down from $0.44 per share a year ago, representing an earnings surprise of -4.55% [1] - The company posted revenues of $1.03 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.91%, and down from $1.07 billion year-over-year [2] - Western Union shares have declined approximately 19.1% year-to-date, contrasting with the S&P 500's gain of 8.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.46 on revenues of $1.04 billion, and for the current fiscal year, it is $1.76 on revenues of $4.12 billion [7] - The estimate revisions trend for Western Union was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Financial Transaction Services industry, to which Western Union belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - The company reported GAAP revenue of $1 billion for the second quarter, with adjusted revenue down 1% year-over-year when excluding Iraq [23][24] - Adjusted earnings per share (EPS) was $0.42 compared to $0.44 in the same quarter last year [4][24] - Adjusted operating margin remained at 19% for both the current and prior year [23][24] Business Line Data and Key Metrics Changes - Consumer money transfer (CMT) transactions declined by 3% in the quarter, with a 2% decline when excluding Iraq [25] - The branded digital business saw a 9% increase in transactions and a 6% increase in adjusted revenue [4][25] - Consumer services adjusted revenue grew by 41%, driven by the travel money business and the acquisition of EuroChange [31] Market Data and Key Metrics Changes - The Americas retail business faced challenges due to geopolitical issues, while Europe experienced mid-single-digit transaction and revenue growth [3][29] - The travel money business is projected to approach $100 million in revenue this year, a significant increase from previous years [3] - Transaction growth in the U.S. to Mexico corridor, a key market, has slowed, impacting overall performance [40][47] Company Strategy and Development Direction - The company is focused on its Evolve 2025 strategy, aiming for sustainable, profitable revenue growth and enhanced customer experience [2][21] - There is a commitment to digital transformation, particularly in response to new remittance taxes, which is expected to accelerate growth in digital and wallet businesses [28][35] - The company is exploring stablecoin opportunities to modernize money movement and improve liquidity management [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth despite current macroeconomic challenges, emphasizing the resilience of their customer base [2][21] - The impact of U.S. immigration policies is creating short-term headwinds, but management believes in the long-term potential of their customer segments [7][8] - The company is actively working on enhancing customer experience and compliance in light of recent legislative changes [9][10] Other Important Information - The company has saved $40 million year-to-date through operational efficiency programs, completing its cost-saving initiatives ahead of schedule [31] - Cash flow from operations was $148 million year-to-date, a significant increase from the prior year [32] - The company maintains a strong balance sheet with $1 billion in cash and cash equivalents and $2.7 billion in debt [34] Q&A Session Summary Question: Contribution of EuroChange acquisition to revenue growth - The EuroChange acquisition contributed approximately 2% to revenue growth in the quarter, trending better than initially anticipated [37][38] Question: Impact of immigration crackdown on North America - There has not been a significant shift from retail to digital channels; both have seen a decline in transaction volume [40] Question: Deceleration in digital transactions - The slowdown in digital transactions is primarily observed in U.S. outbound to Latin America, particularly Mexico [45][47] Question: Visibility into political headwinds affecting LatAm and US-Mexico business - The impact is somewhat volatile, with fluctuations in customer willingness to transact based on media attention and enforcement activity [55] Question: Demand for stablecoin utilization - There is interest from platform providers for stablecoin infrastructure, with ongoing discussions about B2B solutions for efficient money movement [56][57] Question: Adjustments to Evolve 2025 strategy due to immigration policy - The company remains committed to the Evolve 2025 strategy, focusing on customer resilience and expanding non-remittance products [66][67] Question: Fraud losses in the quarter - Fraud losses were related to a duplicate payment issue during the implementation of a new payment network, but it did not significantly impact margins [72][74] Question: Capital allocation strategy regarding buybacks and dividends - There are no changes to the current capital allocation strategy; the company remains committed to both buybacks and dividends [90] Question: Transfer of European successes to the U.S. market - The company is actively working to implement successful strategies from Europe in the U.S. market [98][99]

Financial Data and Key Metrics Changes - In the second quarter, adjusted revenue was reported at $1,026 million, reflecting a decline of 1% year over year when excluding Iraq impacts [2][21] - Adjusted earnings per share (EPS) decreased to $0.42 from $0.44 in the same quarter last year [3][22] - Adjusted operating margin remained stable at 19% for both the current and prior year [21][22] Business Line Data and Key Metrics Changes - Consumer money transfer (CMT) transactions declined by 3% in the quarter, with a 2% decline when excluding Iraq [22][23] - The branded digital business saw a 9% increase in transactions and a 6% increase in adjusted revenue [3][23] - Consumer services adjusted revenue grew by 41%, driven by the travel money business and the acquisition of EuroChange [30] Market Data and Key Metrics Changes - Retail business in The Americas faced challenges due to geopolitical factors, while retail in Europe showed mid-single-digit transaction and revenue growth [2][27] - The travel money business is projected to approach $100 million in revenue this year, a significant increase from previous years [2][3] - The U.S. to Mexico corridor, a major revenue driver, experienced a slowdown in both retail and digital transactions [39][45] Company Strategy and Development Direction - The company is focused on its Evolve 2025 strategy, aiming for sustainable, profitable revenue growth and enhancing customer experience [1][19] - There is a commitment to increasing digital transformation and expanding the digital wallet offerings in response to market changes [11][62] - The company is exploring stablecoin opportunities to modernize money movement and improve operational efficiency [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth despite current geopolitical challenges affecting transaction volumes [5][19] - The company is adapting to immigration policy changes that have created short-term headwinds, particularly in the U.S. market [6][62] - Future growth is expected to come from digital services and non-remittance products as core remittance growth stabilizes [62] Other Important Information - The company generated $148 million in cash flow from operations year to date, a significant increase from $60 million in the prior year [31] - Capital expenditures were reduced by 15% year over year, indicating a focus on strategic investments [32] - The company returned over $150 million to shareholders through dividends and share repurchases in the second quarter [32] Q&A Session Summary Question: Contribution of EuroChange acquisition to revenue growth - The EuroChange acquisition contributed approximately 2% to revenue growth in the quarter, exceeding initial expectations [36][38] Question: Impact of immigration crackdown on North America - There was no significant shift from retail to digital channels; both experienced a decline in transaction volumes [39] Question: Deceleration in digital transactions - The slowdown in digital transactions is primarily seen in U.S. outbound to Latin America, particularly Mexico [41][43] Question: Demand for stablecoin utilization - There is growing interest in stablecoin infrastructure, particularly in regions with currency controls, indicating potential for future growth [54][56] Question: Visibility into political headwinds affecting business - The impact of political headwinds is volatile, with fluctuations in transaction volumes observed [51][52] Question: Fraud losses in the quarter - Fraud losses were attributed to a duplicate payment issue during the implementation of a new payment network, but it did not significantly impact margins [68][70] Question: Changes in capital allocation strategy - There are currently no changes to the capital allocation strategy regarding buybacks versus dividends [86]