The Western Union Company

Good day and welcome to the Western Union fourth quarter and full year 2021 results conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Brad Winbigler, head of treasury and investor relations. Brad, please go ahead. Thank you.

On today's call, we will discuss the company's fourth quarter and full year 2021 results, our financial outlook for 2022, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the investor relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. On our call today is our CEO, Devin McGranahan, and our CFO, Raj Agarwal. Devin McGranahan joined Western Union in late December 2021, succeeding Hikmet Ersec. As you may know, before joining Western Union, Devin served as Executive Vice President and Senior Group President, Global Business Solutions at Fiserv, a global provider of payments and financial services technology solutions. Today's call is being recorded and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2020 Form 10-K for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable gap measures on our website. westernunion.com under the investor relations section. We'll also discuss certain adjusted metrics. The expenses that have been included from adjusted metrics are specific to certain initiatives that may be similar to the types of expenses that the company has previously incurred and can reasonably expect to incur in the future. All statements made by Western Union officers on this call are the property of the Western Union Company and subject to copyright protection. Other than the replay noted in our press release, Western Union has not authorized and disclaims responsibility for any recording, replay, or distribution of any transcription of this call. I will now turn the call over to our CEO, Devin McGranahan.

Thank you, Brad. Good afternoon, everyone. We appreciate you joining us today to discuss our fourth quarter 2021 financial results. As all of you know, this is my inaugural Western Union earnings call. I'm very happy to be here and to have the opportunity to talk with you about my initial thoughts 45 days into the job. Given my background in payments and financial services technology, I'm quickly getting up to speed and learning about the uniqueness of Western Union as a business. I'm excited about being in a consumer facing business with strong operations, a global footprint, and an amazing brand. These are assets we can build upon. In the short time that I've been here, I've begun to develop some hypotheses about where we might take the business that I will share later in this call. But before we go there, let's look at our fourth quarter and the full year of 2021 results. As shared in our earnings press release, Western Union had a solid fourth quarter, leading to strong profitability. For the full year, constant currency revenues were up 4.5% to $5.1 billion, with strong performance from our digital platform and our Western Union business solutions. Nevertheless, we did see a slowing of top-line growth as the year progressed, and we see this continuing as we move into the first quarter of 2022. For the fourth quarter, our results were similar to what we saw in the third quarter of 2021. The digital business has generated strong growth while our retail business declined due to uneven economic recovery negatively impacting our customers. As you know, labor force participation is an important driver of our retail business. And while there have been small improvements in labor force participation, we remain below pre-pandemic trend. In addition, although economic improvement is occurring broadly, we continue to see the lingering effects of COVID in key industries like hospitality and service, which employ many of our customers. In the face of some of these adverse factors, our business continued to show its resilience by generating strong operating cash flows year over year, which enabled us to return over $780 million to shareholders during 2021 consisting of over $380 million in dividends and $400 million in share repurchases. As you would imagine, we are in the midst of reviewing many aspects of our business. We are planning an investor day in the September-October timeframe, at which time we will provide a comprehensive update on our vision for the future and our medium to long-term plans. We hope to see all of you there and in person, pandemic permitting. In the meantime, I've begun to develop some perspectives that will guide our go-forward strategy. I believe that despite uneven and potentially adverse market conditions in our core business, we do have significant opportunities to create shareholder value. First, we have strong and hard to replicate foundational assets. We start with an iconic, trusted global brand, which is both well-known and given our 170 year history, Elastic. We have a diversified omni-channel offering with a global retail agent network consisting of hundreds of thousands of locations serving millions of loyal Western Union customers around the globe every day. We have strong regulatory compliance and risk management assets that enable us to move money reliably in over 200 countries and territories. We have a billion dollar plus digital business which grew double digits in the fourth quarter, including over 9 million WesternUnion.com customers who trust their cross-border financial transactions to us. We also have a talented and dedicated workforce that wakes up every day to help our customers and their families build social and economic bridges that enable the upward mobility of millions of people I personally am very excited to be part of a purpose-driven company that is recognized for the value that our services bring to society. A genuine purpose is an increasingly valuable asset as more and more people want to work for and do business with a company that stands for something. Secondly, We can use these assets to expand our addressable markets. We need to position the company for better long-term growth by focusing on products and markets that have strong underlying growth characteristics. Here are three interesting opportunities that we need to accelerate. These should not be judged as our go-forward strategy, but rather as opportunities I have observed from my first month. We have opportunities to leverage our brand to expand beyond cross-border remittance. With the commercial launch of our multi-currency wallet and digital bank, we are moving in the right direction. We need to accelerate the rollout beyond Germany and Romania and at a pace that can begin to make a difference for our customers and our performance. We must take advantage of the strength of our network and our core capabilities in compliance and money movement. In an increasingly digital and potentially crypto enabled world, We believe the demand for our core assets and capabilities will grow, including omnichannel, on and off ramps, KYC, and our retail distribution. We must now prioritize opportunities and then rigorously drive integration and execution efforts. We believe we can accelerate the growth of our digital footprint and our customer acquisition engine. Over the past two years, we have seen market demand for leveraging our digital money movement platform by large financial institutions. We must pick partners that fit with our brand and can accelerate our trajectory in certain parts of the world. Thirdly, I see opportunities to improve our core operations. Our focus will be on delivering performance improvements that can improve both near-term results and also create capacity for further investment. You'll be hearing about more of this in the future, but I believe a few highlights might include growing our base of high-value digital and omnichannel customers. significantly increasing the percentage of customers that return to Western Union year over year, improving our competitive position at the point of sale, particularly in non-exclusive situations, and innovating on our end-to-end customer experience across all channels. Finally, we will continue to have growing opportunities to prudently deploy capital, I'm sure many of you are asking if there will be a change in capital allocation strategy. With the pending sale of Western Union Business Solutions, this question is even more relevant. It is obviously too early in my tenure to be able to fully answer this question. However, what I can tell you is that we will continue to allocate our strong cash flows in ways that maximize long-term shareholder value. Our focus is and will always be on creating sustainable shareholder value through disciplined capital and resource allocation. I understand that capital is a finite resource and it is our obligation as stewards of your capital to find the best opportunities with the highest risk adjusted returns. We will assess those opportunities through the lens of returning that capital to you, our shareholders, and we will provide you with the roadmaps, the milestones, and the detailed progress updates for you to be able to evaluate our performance on capital management. We clearly have work to do, and it must be done with speed and focus. I am confident that our strong foundation combined with the trusted relationships that we have established with our customers, will enable us to become a broader digital payments platform, helping customers address more of their payments and financial services needs, either directly under our brand or via our strategic growth partners. Now, I'd like to highlight some important recent developments in our business, and then I will turn it over to Raj to talk in more detail about our results and our outlook for 2022. As we begin the year, I am pleased to announce today that we have renewed our partnership with Spare in Russia, one of our largest digital partners. In addition, we are happy to announce the renewal of our long-term relationship with Seven Bank in Japan, who has been a valued Western Union partner for over a decade. This is an exciting development as Japan is one of the largest remittance markets in the APAC region, and Seven Bank is an important partner of ours in that region. These partners and others rely on our platforms and technology to serve their customers. I too view our company at its core as a technology company. And as with all technology companies, we have the need to continue to innovate and invest in next generation capabilities. A few highlights from 2021. We are making a significant technology migration to the cloud. Many of our core processes and most of our data have been migrated. We are working to finish the migration of our core transaction engine, which will be completed by the end of this year. We have also improved our customer experience and servicing platforms by placing many of our CRM components in the cloud. Finally, our previously announced pilot in Germany and Romania for our next generation real-time multi-currency digital wallet and digital banking platform that started in the fourth quarter has been successfully concluded and we are now live in those markets with production technology. While there is always work to be done, I am pleased with the progress we are making on technology and the platform that we will have going forward. In closing, I look forward to meeting with many of you and hearing your perspectives as our owners. In the meantime, you can expect that I will bring passion and discipline to driving the in-period results of our company while working to identify, prioritize, and commercialize a set of initiatives that will increase the long-term value of this business. You can expect to hear more on our next earnings call and certainly at our investor day later this year. I will now turn the call over to Raj to discuss our fourth quarter results in more detail.