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Share Name | Share Symbol | Market | Type |
---|---|---|---|
WEX Inc | NYSE:WEX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.53 | 0.25% | 211.30 | 214.15 | 210.84 | 213.59 | 203,812 | 00:01:17 |
Solid execution against strategic priorities drives results in line with expectations
WEX Inc. (NYSE:WEX), a leading provider of corporate payment solutions, today reported financial results for the three months ended June 30, 2015.
This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20150729005419/en/
Second Quarter 2015 Financial Results
Total revenue for the second quarter of 2015 increased 6% to $213.7 million from $201.6 million for the second quarter of 2014. Net income to common shareholders on a GAAP basis was $26.5 million, or $0.68 per diluted share, compared with $43.3 million, or $1.11 per diluted share, for the second quarter last year.
On a non-GAAP basis, the Company's adjusted net income for the second quarter of 2015 decreased 9% to $48.3 million, or $1.25 per diluted share, from $53.1 million, or $1.36 per diluted share, for the same period a year ago. Note that adjusted net income has been revised to exclude the impact of foreign currency remeasurement gains and losses and related hedges. With the revision of adjusted net income, full year guidance now excludes the impact of these foreign currency remeasurement gains and losses and related hedges. See Exhibit 1 for a full reconciliation of adjusted net income.
"I am pleased to report solid top and bottom line results this quarter that were in line with our expectations. WEX Europe Services and Evolution1 continue to progress better than anticipated, which have partially offset softness in macroeconomic factors, including continued fuel price headwinds. As we move into the second half of the year, I am encouraged by the momentum our team is demonstrating across our high-growth verticals and geographies and the underlying organic growth in the business," said Melissa Smith, WEX's president and chief executive officer.
Smith continued, "Overall, I remain optimistic about the trajectory of our long term growth. Our guidance assumes that 2015 will continue to be a year of investment as we ramp our global operations and optimize the efficiency of our expanded infrastructure and assets. We have established the building blocks we need to retain our market leadership in our core segments while expanding our reach in high-growth, emerging industries. We will continue to seek strategic acquisitions that complement our business or enhance our offering in the market."
Second Quarter 2015 Performance Metrics
Where applicable, the performance metrics listed below have been revised for and include WEX Europe Services, which WEX acquired in December 2014:
Financial Guidance and Assumptions
Third quarter 2015 guidance is based on an assumed average U.S. retail fuel price of $2.77 per gallon, and approximately 39 million shares outstanding. Full-year 2015 guidance is based on an assumed average U.S. retail fuel price of $2.68 per gallon and approximately 39 million shares outstanding. The fuel prices referenced above are based on the applicable NYMEX futures price.
The Company's guidance also assumes that third quarter 2015 credit loss will range between 6 and 11 basis points, and full year 2015 fleet credit loss will range between 7 and 10 basis points. Our guidance also includes $11 million to $14 million of after tax losses related to WEX Europe Services.
The Company's guidance excludes the impact of non-cash, mark-to-market adjustments on the Company's fuel-price-related derivative instruments, foreign currency remeasurement gains and losses and related hedges, stock-based compensation, restructuring charges, gain on divestitures and the amortization of purchased intangibles as well as the related tax and non-controlling interest impacts of the forgoing adjustments.
Additional Information
Exhibit 1 reconciles adjusted net income, which has not been determined in accordance with GAAP, to net income as determined in accordance with GAAP for the three and six months ended June 30, 2015 and 2014.
Management uses the non-GAAP measures presented within this news release to evaluate the Company's performance on a comparable basis, to lessen the volatility associated with its derivative instruments and foreign exchange rates on financial results. Management believes that investors may find these measures useful for the same purposes, but cautions that they should not be considered a substitute for, or superior to, disclosure in accordance with GAAP.
To provide investors with additional insight into its operational performance, WEX has included in this news release a table of selected non-financial metrics for the five quarters ended June 30, 2015. This table is presented as Exhibit 2. The Company is also providing selected segment revenue information for the three and six months ended June 30, 2015 and 2014 in Exhibit 3.
Conference Call Details
In conjunction with this announcement, WEX will host a conference call today, July 29, 2015, at 10:00 a.m. (ET). As previously announced, the conference call will be webcast live on the Internet, and can be accessed at the Investor Relations section of the WEX website, http://www.wexinc.com. The live conference call also can be accessed by dialing (866) 334-7066 or (973) 935-8463. The Conference ID number is 62983827. A replay of the webcast will be available on the Company's website.
About WEX Inc.
WEX Inc. (NYSE: WEX) is a leading provider of corporate payment solutions. From its roots in fleet card payments beginning in 1983, WEX has expanded the scope of its business into a multi-channel provider of corporate payment solutions representing approximately 9.8 million vehicles and offering exceptional payment security and control across a wide spectrum of business sectors. WEX serves a global set of customers and partners through its operations around the world, with offices in the United States, Australia, New Zealand, Brazil, the United Kingdom, Italy, France, Germany, Norway, and Singapore. WEX and its subsidiaries employ approximately 2,000 associates. The Company has been publicly traded since 2005, and is listed on the New York Stock Exchange under the ticker symbol “WEX.” For more information, visit www.wexinc.com and follow WEX on Twitter at @WEXIncNews.
Forward-Looking Statements
This news release contains forward-looking statements, including statements regarding: financial guidance; assumptions underlying the Company's financial guidance; business momentum; optimism about trajectory for long term growth trends; and, plans for strategic acquisitions. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this news release, the words "may," "could," "anticipate," "plan," "continue," "project," "intend," "estimate," "believe," "expect" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including: the effects of general economic conditions on fueling patterns, payments, transaction processing activity and the commercial activity of fleets; the effects of the Company’s business expansion and acquisition efforts; the Company’s failure to successfully integrate the businesses it has acquired; the failure of corporate investments to result in anticipated strategic value; the impact and size of credit losses; the impact of changes to the Company's credit standard; breaches of the Company’s technology systems and any resulting negative impact on our reputation, or liabilities, or loss of relationships with customers or merchants; fuel price volatility and changes in fleet fuel efficiency; the Company’s failure to maintain or renew key agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking regulations impacting the Company’s industrial bank and the Company as the corporate parent; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of the Company’s outstanding notes on its operations; financial loss if the Company determines it necessary to unwind its derivative instrument position prior to the expiration of a contract; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes; the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our Annual Report for the year ended December 31, 2014, filed on Form 10-K with the Securities and Exchange Commission on February 26, 2015. The Company's forward-looking statements do not reflect the potential future impact of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of this earnings release and undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new information, future events or otherwise.
WEX INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Revenues Fleet payment solutions $ 135,520 $ 145,828 $ 264,010 $ 281,263 Other payment solutions 78,133 55,753 151,928 102,386 Total revenues 213,653 201,581 415,938 383,649 Expenses Salary and other personnel 59,091 43,426 117,508 87,328 Restructuring-
-
8,559-
Service fees 33,941 27,831 64,011 54,136 Provision for credit losses 3,983 6,803 7,897 15,893 Technology leasing and support 10,021 7,151 19,455 14,178 Occupancy and equipment 5,034 3,761 10,031 8,127 Depreciation, amortization and impairment 20,759 15,176 42,146 30,194 Operating interest expense 1,357 1,599 2,936 2,887 Cost of hardware and equipment sold 684 2,255 1,793 3,203 Other 15,865 13,250 31,659 25,837Gain on divestiture
-
-
(1,215 )-
Total operating expenses 150,735 121,252 304,780 241,783 Operating income 62,918 80,329 111,158 141,866 Financing interest expense (11,916 ) (7,276 ) (24,004 ) (14,632 ) Net foreign currency (loss) gain (2,161 ) 1,238 (6,537 ) 2,271 Net realized and unrealized loss on fuel price derivative instruments (6,000 ) (7,561 ) (3,251 ) (5,716 ) Income before income taxes 42,841 66,730 77,366 123,789 Income taxes 16,441 23,881 30,933 44,860 Net income 26,400 42,849 46,433 78,929 Less: Net loss attributable to non-controlling interests (92 ) (484 ) (2,404 ) (946 ) Net earnings attributable to WEX Inc. $ 26,492 $ 43,333 $ 48,837 $ 79,875 Net earnings attributable to WEX Inc. per share: Basic $ 0.68 $ 1.12 $ 1.26 $ 2.05 Diluted $ 0.68 $ 1.11 $ 1.26 $ 2.05 Weighted average common shares outstanding: Basic 38,739 38,856 38,798 38,911 Diluted 38,799 38,946 38,880 39,031WEX INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited) June 30, December 31, 2015 2014 Assets Cash and cash equivalents $ 184,332 $ 284,763 Accounts receivable (less reserve for credit losses of $9,665 in 2015 and $13,919 in 2014) 1,972,141 1,865,538
Securitized accounts receivable, restricted
104,259-
Income taxes receivable-
6,859 Available-for-sale securities 18,672 18,940 Fuel price derivatives, at fair value 16,668 40,969 Property, equipment and capitalized software (net of accumulated depreciation of $176,950 in 2015 and $169,382 in 2014) 114,729 105,596 Deferred income taxes, net 11,415 5,764 Goodwill 1,089,271 1,117,149 Other intangible assets, net 461,727 497,297 Other assets 206,559 175,506 Total assets $ 4,179,773 $ 4,118,381 Liabilities and Stockholders’ Equity Accounts payable $ 596,526 $ 425,956 Accrued expenses 125,865 137,227 Income taxes payable 3,032-
Deposits 905,193 979,553Securitized debt
89,176-
Borrowed federal funds 50,500-
Revolving line-of-credit facilities and term loan 720,970 901,564 Deferred income taxes, net 58,766 44,004 Notes outstanding 400,000 400,000 Other debt 51,446 52,975 Amounts due under tax receivable agreement 64,516 69,637 Other liabilities 10,837 13,154 Total liabilities 3,076,827 3,024,070 Commitments and contingencies Redeemable non-controlling interest 14,992 16,590 Stockholders’ Equity Common stock $0.01 par value; 175,000 shares authorized; 43,077 shares issued in 2015 and 43,021 in 2014; 38,745 shares outstanding in 2015 and 38,897 in 2014 431 430 Additional paid-in capital 183,655 179,077 Non-controlling interest 13,165 17,396 Retained earnings 1,130,567 1,081,730 Accumulated other comprehensive income (67,522 ) (50,581 ) Less treasury stock at cost; 4,428 shares in 2015 and 4,218 shares in 2014 (172,342 ) (150,331 ) Total stockholders’ equity 1,087,954 1,077,721 Total liabilities and stockholders’ equity $ 4,179,773 $ 4,118,381
Exhibit 1
Reconciliation of Adjusted Net Income to GAAP Net Earnings (in thousands) (unaudited) Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Adjusted Net Income attributable to WEX Inc. $ 48,317 $ 53,100 $ 94,535 $ 94,091 Unrealized loss on fuel price derivatives (14,956 ) (4,896 ) (24,301 ) (2,073 ) Net foreign currency (loss) gain (2,161 ) 1,238 (6,537 ) 2,271 Amortization of acquired intangible assets (12,016 ) (8,330 ) (24,175 ) (16,617 ) Stock-based compensation (3,942 ) (3,117 ) (7,160 ) (5,540 ) Restructuring-
-
(8,559 )-
Gain on divestiture-
-
1,215-
Expenses and adjustments related to acquisitions-
(500 )-
(500 ) ANI adjustments attributable to non-controlling interests 765 271 3,618 420 Tax impact 10,485 5,567 20,201 7,823 Net earnings attributable to WEX Inc. $ 26,492 $ 43,333 $ 48,837 $ 79,875Beginning in the second quarter of 2015, adjusted net income attributable to WEX Inc. excludes foreign currency remeasurement gains and losses and related hedges. For comparative purposes, adjusted net income attributable to WEX Inc. for the prior periods has been revised to reflect the exclusion of net foreign currency gains and losses and differs from the figure previously reported due to this adjustment. We believe this adjustment facilitates the comparison of operating results and helps identify trends in our businesses.
Although adjusted net income is not calculated in accordance with generally accepted accounting principles (GAAP), this measure is integral to the Company's reporting and planning processes. The Company considers this measure integral because it eliminates the non-cash volatility associated with the fuel price related derivative instruments, and excludes other specified items that the Company's management excludes in evaluating the Company's performance. Specifically, in addition to evaluating the Company's performance on a GAAP basis, management evaluates the Company's performance on a basis that excludes the above items because:
For the same reasons, WEX believes that adjusted net income may also be useful to investors as one means of evaluating the Company's performance. However, because adjusted net income is a non-GAAP measure, it should not be considered as a substitute for, or superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted net income as used by WEX may not be comparable to similarly titled measures employed by other companies.
The tax impact of the foregoing adjustments is the difference between the Company’s U.S. GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes. The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s U.S. GAAP tax provision. The Company is unable to reconcile our adjusted net income guidance to the comparable GAAP measure because of the difficulty in predicting the amounts to be adjusted.
Exhibit 2 Selected Non-Financial Metrics Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Fleet Payment Solutions – Payment Processing Revenue:(1) Payment processing transactions (000s) 86,700 81,934 79,195 80,379 78,390 Gallons per payment processing transaction 23.1 23.1 23.4 23.1 23.2 Payment processing gallons of fuel (000s) 2,005,051 1,890,048 1,850,304 1,859,894 1,816,204 Average US fuel price (US$ / gallon) $ 2.74 $ 2.57 $ 3.17 $ 3.61 $ 3.76 Average Australian fuel price (US$ / gallon) $ 3.91 $ 3.73 $ 4.63 $ 5.22 $ 5.44 Payment processing $ of fuel (000s) $ 5,980,928 $ 5,344,929 $ 6,071,384 $ 6,842,202 $ 6,933,978 Net payment processing rate 1.34 % 1.36 % 1.37 % 1.37 % 1.36 % Fleet payment processing revenue (000s) $ 80,127 $ 72,943 $ 83,336 $ 93,462 $ 94,550 Other Payment Solutions – Payment Processing Revenue:(2) Payment solutions purchase volume (000s) $ 5,682,989 $ 5,039,867 $ 4,500,724 $ 5,477,610 $ 4,339,339 Net interchange rate 0.84 % 0.87 % 0.89 % 0.83 % 0.86 % Payment solutions processing revenue (000s) $ 47,433 $ 43,837 $ 40,279 $ 45,476 $ 37,460(1) As of December 1, 2014, includes metrics for WEX Europe Services where applicable.
(2) Excludes payment processing revenue from rapid! PayCard and UNIK. As of July 16, 2014, includes interchange volume and associated revenue for Evolution1.
Definitions and explanations:
Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with WEX.
Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with WEX.
Payment processing dollars of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with WEX.
Net payment processing rate represents the percentage of the dollar value of each payment processing transaction that WEX records as revenue from merchants less any discounts given to fleets or strategic relationships.
Payment solutions purchase volume represents the total dollar value of all transactions that use corporate card products including single use account products.
Net interchange rate represents the percentage of the dollar value of each transaction that WEX records as revenue less any discounts given to customers.
Exhibit 3 Segment Revenue Information (in thousands) (unaudited) Fleet Payment Solutions (in thousands)Three months ended June 30,
Increase (decrease)Six months ended June 30,
Increase (decrease) 2015 2014 Amount Percent 2015 2014 Amount Percent Revenues Payment processing revenue $ 80,127 $ 94,550 $ (14,423 ) (15 )% $ 153,070 $ 180,252 $ (27,182 ) (15 )% Transaction processing revenue 4,927 5,250 (323 ) (6 )% 9,610 10,140 (530 ) (5 )% Account servicing revenue 25,360 20,112 5,248 26 % 49,243 39,467 9,776 25 % Finance fees 19,069 17,661 1,408 8 % 38,064 34,981 3,083 9 % Other 6,037 8,255 (2,218 ) (27 )% 14,023 16,423 (2,400 ) (15 )% Total revenues $ 135,520 $ 145,828 $ (10,308 ) (7 )% $ 264,010 $ 281,263 $ (17,253 ) (6 )% Other Payment SolutionsThree months ended June 30,
Increase (decrease)Six months ended June 30,
Increase (decrease) (in thousands) 2015 2014 Amount Percent 2015 2014 Amount Percent Revenues Payment processing revenue $ 47,954 $ 40,147 $ 7,807 19 % $ 92,446 $ 72,049 $ 20,397 28 % Transaction processing revenue 1,309 1,652 (343 ) (21 )% 2,916 3,347 (431 ) (13 )% Account servicing revenue 13,114 3,596 9,518 265 % 26,179 6,769 19,410 287 % Finance fees 1,332 1,352 (20 ) (1 )% 2,528 2,794 (266 ) (10 )% Other 14,424 9,006 5,418 60 % 27,859 17,427 10,432 60 % Total revenues $ 78,133 $ 55,753 $ 22,380 40 % $ 151,928 $ 102,386 $ 49,542 48 %
View source version on businesswire.com: http://www.businesswire.com/news/home/20150729005419/en/
News media:WEX Inc.Jessica Roy, 207-523-6763Jessica.Roy@wexinc.comorInvestors:WEX Inc.Michael E. Thomas, 207-523-6743Michael.Thomas@wexinc.com
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