The Western Union Company WU reported first-quarter 2015 operating earnings per share (EPS) of 39 cents per share, beating the Zacks Consensus Estimate by a penny. Earnings were also up 5.4% on a year-over-year basis.
Western Union’s better-than-expected EPS was backed by a decline in total expense and fewer shares outstanding as a result of share buyback.
Total revenue of Western Union came in at $1.32 billion, higher than the Zacks Consensus Estimate of $1.3 billion but down 2% year over year, due to a 4% decline in transaction fees, partly offset by an increase in foreign exchange and other revenues.
Western Union’s total expenses were $1.05 billion, down 3% year over year, primarily due to a decline in cost of services and selling, general and administrative expenses.
Segment Update
The Consumer-to-Consumer segment, which contributes nearly 80% to the company’s revenues, reported a 4% decrease in revenues to $1.04 billion, due to a decline in transaction fees. Operating income decreased 3% year over year $240.2 million.
In the Consumer-to-Business segment, revenues increased 7% year over year to $157.8 million. The segment reported a 1% decline in operating income to $29.5 million.
Business Solutions recorded revenues of $98 million in the quarter, down 1% year over year. The segment reported operating income of $2.1 million against a loss of $3.6 million in the year-ago quarter.
Electronic Channel revenues, which include contribution from westernunion.com, digital and account-based money transfer through banks, increased 17% in the quarter compared to a 6% increase in the year-ago quarter.
Financial Update
Western Union reported cash flow from operating activities of approximately $212 million in the reported quarter.
The company returned $231 million to shareholders through dividends and share repurchases. During the reported quarter, the company announced a 24% increase in its quarterly dividend to $0.155 per common share.
Operating margin improved 50 basis points to 20.6% in the quarter, led by cost saving initiatives but partially offset by an expected increase in compliance costs.
2015 Guidance
Western Union affirmed its previous guidance for the full year. The company expects low single-digit revenue increase on constant currency basis, earnings per share of $1.58 to $1.65, operating margin of nearly 21%, and operating cash flow of approximately $1 billion.
Zacks Rank
Western Union currently carries a Zacks Rank # 3 (Hold).
Performance of Other Financial Transaction Services Providers
Among other players in the same sector, Xoom Corp. XOOM, Alliance Data Systems Corporation ADS and Total System Services Inc. TSS outperformed their respective Zacks Consensus Estimate.
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