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In a statement, president and chief executive officer, Christina Gold said, "Our second quarter results were in line with expectations and we are pleased that Western Union is on track to achieve our full-year revenue and earnings targets. Global consumer-to-consumer transactions continued to grow for the period, and despite a challenging operating environment, we delivered strong margins and cash flow. In addition, we continued to make significant strategic progress on our growth initiatives, building on first quarter momentum."

Second Quarter Results

The Englewood, Colorado-based company reported net income of $220.2 million for the second quarter, down 5% from the prior-year quarter's $231.5 million. Earnings per share for the quarter was flat with the year-ago quarter at $0.31.

The results for the year-ago quarter included restructuring and related expenses. Excluding the charge, adjusted net income for the quarter dropped to $220.2 million from $244.2 million in the same quarter of last year, and earnings per share was $0.31, down 6% from the year-ago quarter's $0.33.

On average, twenty two analysts polled by Thomson Reuters expected the company to report earnings of $0.30 per share for the second quarter. Analysts' estimates typically exclude special items.

Western Union's global consolidated revenues for the quarter decreased 7% to $1.25 billion from $1.35 billion in the same quarter last year, but came in line with twenty one Wall Street analysts' consensus estimate of $1.25 billion. Revenues were down 2% from last year, on a constant currency basis.

Among Western Union's peers, New York-based American Express Co. (AXP) is scheduled to announce financial results for the second quarter on July 23, 2009. Analysts expect the company to report earnings of $0.26 per share for the second quarter on revenues of $6.29 billion.

Another peer, Minneapolis, Minnesota-based MoneyGram International, Inc. (MGI) is scheduled to announce financial results for the second quarter on August 6, 2009. Wall Street analysts are of the view that the company will earn $0.03 per share for the quarter with revenue estimates of $294.33 million.

Segmental Details

Transaction fees for the quarter totaled $999.9 million, a 8% decline from $1.08 billion in the prior-year quarter. Foreign exchange revenue decreased 7% to $217.2 million from last year's $232.3 million. Commission and other revenues were up 11% year-over-year to $37.2 million.

Western Union's consumer-to-consumer segment or C2C, posted quarterly revenues of $1.07 billion, representing 85% of the company's global revenues, down 7%, or 2% decline on constant currency. Western Union's C2C transactions also decreased 3% to 49 million from last year.

The Americas region, which represents 32% of Western Union's revenues, reported a 11% drop in C2C revenue, with a 5% decline in transactions. The Mexico business' C2C revenue and transaction declined 20% and 15%, respectively.

The company's international C2C revenue was down 5%, or up 1% on constant currency, with transactions growing 8%. The Europe, Middle East, Africa and South Asia region or EMEASA, which represents 45% of the company's global revenues, witnessed C2C revenue decline of 5% on transaction growth of 11%. Western Union's Asia Pacific region or APAC, revenues were flat with last year, while transactions grew 19%, and accounted for 8% of the company's total global revenues.

Meanwhile, the company's global payments segment, formerly consumer-to-business segment, posted quarterly revenues of $164 million, an 8% decline from last year. The segment contributed 13% of Western Union's total global revenues.

Other Metrics

Operating income for the quarter was $341.7 million, up 2% from $336.2 million in the year-ago quarter. Meanwhile, operating margin increased 220 basis points to 27.2% from 25.0% in the prior-year quarter.

Total expenses for the quarter were $912.6 million, a 10% decline from $1.01 billion in the same quarter last year. Total expenses include, selling, general and administrative expenses of $212.3 million, marginally up from $198.0 million in the prior-year quarter, and costs of services of $700.3 million, down 12% from $799.4 million in the prior-year quarter.

The company ended the second quarter with cash and cash equivalents of $1.78 billion, compared to $1.87 billion at end of the prior-year quarter. At the end of the second quarter, the company's total outstanding debt stood at about $3 billion.

Half Yearly Highlights

For the first six months, Western Union reported net income of $444.1 million or $0.63 per share, up from 438.6 million or $0.58 per share in the prior-year period.

Western Union's global consolidated revenues for the year-to-date period decreased 6% to $2.46 billion from $2.61 billion in the same period last year.

Outlook

"Western Union continues to invest its significant financial resources and leverage our brand and network in a variety of opportunities that will grow our business, open new channels, introduce new products and attract new consumers. Specifically, we have added additional banks to our U.S. agent network, announced key alliances in mobile money transfer, and continue to pursue opportunities related to the European Payment Services Directive," Gold added.

Looking ahead to fiscal 2009, Western Union reaffirmed its fiscal 2009 GAAP earnings outlook in a range of $1.18 to $1.28 per share. On a constant currency basis, earnings are still estimated in a range of $1.16 to $1.26 per share. Street analysts expect earnings of $1.27 per share for the full-year 2009.

The company also continues to anticipate full year 2009 GAAP revenue decline of 5% to 8% from last year, reflecting revenues of between $4.86 billion and $5.02 billion, and a 2% to 5% drop in constant currency revenue. Analysts expect the company to report revenues of $5.00 billion for fiscal 2009.

Additionally, cash flow from operations is expected to exceed $1.1 billion.

The company added that the fiscal 2009 outlook does not include the pending Custom House acquisition. It expects about $0.01 dilution to 2009 earnings per share, and a less than 1% benefit to full year revenues.

Stock Quote

Earlier in the month, Credit Suisse upgraded Western Union shares to 'Outperform' from 'Neutral' and increased its price target to $21 from $19.

WU closed Monday's regular trading session at $18.25, up $0.08 on a volume of 7.85 million shares, higher than the three-month average volume of 7.43 million shares. In the past 52-week period, the stock has been trading in a range of $10.05 to $28.62.

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