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Western Union Co. (WU - Analyst Report) reported second-quarter 2013 operating earnings of 36 cents per share, a couple of pennies ahead of the Zacks Consensus Estimate of 34 cents per share. However, earnings compared unfavorably with 44 cents per share reported in the prior-year quarter.
 
Total revenue of Western Union was $1.39 billion, declining 3% year over year, largely driven by soft results at the Consumer-to-Consumer segment, which was impacted by pricing investments and compliance related changes. Pro forma revenues decreased 2% at constant currency rate. Reported revenues were higher than the Zacks Consensus Estimate of $1.38 billion. 
 
Western Union’s total expense was $1.11 billion, up 3% year over year led by higher cost of service as well as selling, general and administrative expenses.
 
Segment Update
 
In the Consumer-to-Consumer segment, reported revenues decreased 4% year over year to $1.11 billion, led by lower transaction fees and foreign exchange revenues, partly offset by other revenues. The segment reported a 22% decline in operating income to $257.3. The company expects transactions to increase in the mid to high single-digit category for this segment.
 
In the Consumer-to-Business segment, revenues increased 2% year over year to $153.0 million, led by higher transaction fees and foreign exchange fees. The segment reported a 6% decline in operating income to $31.4
 
Business Solutions reported revenues of $98.3 million in the quarter, which increased 6% year over year. The segment reported an operating loss of $7.3 million compared with a loss of $14.5 million. The company’s Business Solutions customer account continues to grow, and has expanded its presence in 32 countries. 
 
Electronic Channel revenues, which include westernunion.com, digital and account-based money transfer through banks, jumped 26% in the quarter. 
 
Western Union ended the quarter with 520,000 agent locations, up 10,000 year over year.  
 
Financial Update
 
Western Union’s cash flow from operations was $477.5 million in the quarter. 
 
With $125 million of share buyback and $69 million of dividend, Western Union returned $194 million to shareholders in the quarter.
 
Guidance
 
Western Union expects full year 2013 EPS in a range of $1.33 to $1.43. It expects cash flow from operating activities of approximately $900 million, or approximately $1 billion when adjusted for final tax payments relating to the IRS Agreement. Additionally Western Union expects to return nearly $700 million to shareholders in 2013 in the form of share repurchases and dividends.
 
Western Union expects constant currency revenues to decline by low-single digit in 2013.
 
Players MoneyGram International Inc. (MGI - Analyst Report), Outerwall Inc. (OUTR - Snapshot Report), Visa Inc. (V - Analyst Report) all reported second quarter earnings ahead of the estimates.

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