DENVER—The Western Union Co. said Tuesday its third-quarter net income fell 11 percent due to expenses stemming from its 2006 spinoff from First Data Corp. while income climbed 10 percent as its Mexico business improved.
The global money transfer services company also noted a 16 percent increase in its international consumer-to-consumer revenue as transactions jumped 20 percent. Its stock rose nearly 7 percent Tuesday.
“Our first year has had its challenges, to be sure, but we’re pushing hard on our core business and some of our initiatives, our new initiatives, are really gaining traction,” Chief Executive Officer Christina Gold told analysts during a conference call.
Based in suburban Englewood, Western Union reported net income of $216.3 million, or 28 cents a share, for the quarter that ended Sept. 30. That compared with $258.1 million, or 34 cents, a share in the third quarter of 2006.
The most recent results reflected $22 million, or 2 cents a share, in non-cash stock compensation expense related to options and awards that were granted to Western Union employees prior to the spinoff. Those stock options and awards vested when private equity group Kravis Kohlberg Roberts & Co. bought First Data Corp. last month.
There also was an additional $4 million in expenses related to its September 2006 separation from First Data and $46 million of incremental pretax interest expense.
Revenue rose 10 percent to $1.3 billion from $1.1 billion in the year-ago quarter which Gold credited to a better performance in all three business categories—domestic, international and Mexico.
The Mexico business, which suffered last year because of immigrant concerns over a national debate over immigration policy reforms, saw a 7 percent increase in transactions although revenue dropped 1 percent.
The domestic business improved slightly from the second quarter although transactions dropped 4 percent and revenue was down 10 percent. The company hopes the category will achieve low, single-digit growth over the long term.
Its growth has been hampered by the slowing housing market which has left consumers worried and holding back on some transactions, Gold said. There also is concern about the ongoing immigration debate.
In the first nine months, Western Union reported net income of $614 million, or 79 cents a share, on revenue of $3.6 billion. That compared with $697 million, or 91 cents, on revenue of $3.3 billion in the first nine months of 2006.
Western Union’s stock rose $1.31 a share to $20.29 in Tuesday trading.
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