Western Union Q1 Profit Misses Estimates; Updates Guidance

(RTTNews) - The Western Union Company (WU) reported first-quarter GAAP operating margin of 18.8% compared to 19.1% in the prior year period, with the decline primarily attributable to higher acquisition and divestiture related expenses. The company recorded reduced earnings year-over-year primarily due to lower revenues, an increase in acquisition and divestiture related expenses, and a higher effective tax rate. Revenue was down 4% on a reported basis or an increase of 2% in adjusted constant currency terms, compared to the prior year period. Looking forward, the company expects revenue growth and profit margins to improve over the course of the year.

For 2019, the company now expects GAAP EPS in a range of $2.66 to $2.76 (previously $1.83 to $1.95). The company updated the outlook to reflect the approximately $0.84 net accretive effect related to the Speedpay and Paymap transactions. Revenue outlook was lowered to mid-single digit decrease (previously low single-digit decrease to a low single-digit increase).

Also, the company expects to utilize the approximately $600 million in cash proceeds available from the transactions for a combination of share repurchase and net debt reduction over the next 12 months. The company currently expects to spend between $500 million and $600 million on share repurchases in 2019, and a similar amount in 2020.

First-quarter GAAP earnings per share was $0.39 compared to $0.46, prior year, or $0.45 in the prior year period on an adjusted basis. On average, 21 analysts polled by Thomson Reuters expected the company to report profit per share of $0.43 for the quarter. Analysts' estimates typically exclude special items. Revenue was $1.34 billion compared to $1.39 billion, previous year. Analysts expected revenue of $1.36 billion for the quarter.

Shares of Western Union Company were down more than 2% after hours.