WEX Inc. (NYSE: WEX), a leading financial technology service
provider, today reported financial results for the three months
ended June 30, 2021.
“Momentum continued through the second quarter as we delivered
robust revenue and earnings growth, signed new customer and renewed
existing business, and more than doubled total purchase volume
processed across the Company compared to last year to $21 billion.
These exceptional results reflect strong execution from the WEX
team, positive trends across the business and strong demand for our
platform and services as volumes continue to recover,” said Melissa
Smith, WEX’s Chair and Chief Executive Officer.
Ms. Smith added, “We are driving innovative new solutions to
meet the needs of businesses of all sizes and level of complexity.
The combination of our value based culture, deep payment expertise,
innovative technologies and knowledge in configuring integrated
solutions, continues to open the door for new opportunities for
WEX. Looking ahead to the second half of the year, we are
positioning the business for future growth as demand for our
platform and services accelerates with the increasing adoption of
digital payment technologies.”
Second Quarter 2021 Financial Results
Total revenue for the second quarter of 2021 increased 32% to
$459.5 million from $347.1 million for the second quarter of 2020.
This revenue increase in the quarter includes a $33.3 million
favorable impact from fuel prices and spreads and a $4.6 million
positive impact from foreign exchange rates.
Net (loss) income attributable to shareholders on a GAAP basis
decreased by $106.5 million to a net loss of $33.9 million, or
$(0.76) per diluted share, compared with net income of $72.7
million, or $1.66 per diluted share, for the second quarter of
2020. The Company's adjusted net income attributable to
shareholders, which is a non-GAAP measure, was $104.9 million for
the second quarter of 2021, or $2.31 per diluted share, up 91% per
diluted share from $53.0 million or $1.21 per diluted share for the
same period last year. See Exhibit 1 for a full explanation and
reconciliation of adjusted net income attributable to shareholders
and adjusted net income attributable to shareholders per diluted
share to the comparable GAAP measures.
Second Quarter 2021 Performance Metrics
- Average number of vehicles serviced was approximately 16.2
million, an increase of 7% from the second quarter of 2020.
- Total fuel transactions processed increased 24% from the second
quarter of 2020 to 158.7 million. Payment processing transactions
increased 26% to 130.1 million.
- Travel and Corporate Solutions' purchase volume grew 176% to
$8.7 billion from $3.2 billion in the second quarter of 2020.
- Health and Employee Benefit Solutions' average number of
Software-as-a-Service (SaaS) accounts in the U.S. grew 13% to 16.4
million from 14.5 million in the second quarter of 2020.
“We delivered impressive top- and bottom-line results in the
second quarter representing the highest revenue and adjusted
earnings for Q2 in WEX history. This was driven primarily by
better-than-expected volume recovery in our Fleet Solutions and
Travel and Corporate Solutions segments, higher fuel prices, and
robust operating income margins across each of our segments,” said
Roberto Simon, WEX’s Chief Financial Officer. “We continue to
position WEX for long-term sustainable growth as we execute against
our customer pipeline, integrate recent acquisitions including
benefitexpress, and drive innovation across our technology
platform.”
Financial Guidance and Assumptions
The Company provides revenue guidance on a GAAP basis and
earnings guidance on a non-GAAP basis, due to the uncertainty and
the indeterminate amount of certain elements that are included in
reported GAAP earnings.
- For the third quarter of 2021, the Company expects revenue in
the range of $465 million to $480 million and adjusted net income
in the range of $98 million to $107 million, or $2.15 to $2.35 per
diluted share.
- For the full year 2021, the Company expects revenue in the
range of $1.805 billion to $1.835 billion and adjusted net income
in the range of $377 million to $395 million, or $8.30 to $8.70 per
diluted share.
Third quarter and full year 2021 guidance is based on an assumed
average U.S. retail fuel price of $3.18 and $3.00 per gallon,
respectively. The fuel prices referenced above are based on the
applicable NYMEX futures price from the week of July 16, 2021. Our
guidance assumes approximately 45.4 million shares outstanding for
the full year.
The Company's adjusted net income guidance, which is a non-GAAP
measure, excludes unrealized gains and losses on financial
instruments, net foreign currency gains and losses, change in fair
value of contingent consideration, acquisition-related intangible
amortization, other acquisition and divestiture related items,
stock-based compensation, other costs, debt restructuring and debt
issuance cost amortization, similar adjustments attributable to our
non-controlling interests and certain tax related items. We are
unable to reconcile our adjusted net income guidance to the
comparable GAAP measure without unreasonable effort because of the
difficulty in predicting the amounts to be adjusted, including, but
not limited to, foreign currency exchange rates, unrealized gains
and losses on financial instruments, acquisition and divestiture
related items and adjustments to the redemption value of a
non-controlling interest, which may have a significant impact on
our financial results.
Additional Information
Management uses the non-GAAP measures presented within this news
release to evaluate the Company's performance on a comparable
basis. 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 in
Exhibit 1, reconciliations of non-GAAP measures referenced in this
news release, in Exhibit 2, tables illustrating the impact of
foreign currency rates and fuel prices for each of our reportable
segments for the three and six months ended June 30, 2021, and in
Exhibit 3, a table of selected non-financial metrics for the
quarter ended June 30, 2021 and four preceding quarters. The
Company is also providing segment revenue for the three and six
months ended June 30, 2021 and 2020 in Exhibit 4 and information
regarding segment adjusted operating income margin and adjusted
operating income margin in Exhibit 5.
Conference Call Details
In conjunction with this announcement, WEX will host a
conference call today, July 29, 2021, at 10:00 a.m. (ET). As
previously announced, the conference call will be webcast live on
the Internet, and can be accessed along with the accompanying
slides at the Investor Relations section of the WEX website,
www.wexinc.com. The live conference call also can be accessed by
dialing (833) 714-0940 or +1 (778) 560-2809. The Conference ID
number is 1764307. A replay of the webcast and the accompanying
slides will be available on the Company's website.
About WEX
WEX (NYSE: WEX) is a leading financial technology service
provider. We provide payment solutions to businesses of all sizes
across a wide spectrum of sectors, including fleet, corporate
payments, travel and health. WEX has offices in 14 countries and
employs approximately 5,400 people around the world. Learn more at
LinkedIn, Facebook, Instagram, Twitter, and our corporate blog. For
more information, visit www.wexinc.com.
Forward-Looking Statements
This earnings release contains forward-looking statements,
including statements regarding: expectations for future revenue and
adjusted net income performance; assumptions underlying the
Company's future financial performance and future operations;
future growth opportunities and expectations; future impacts from
areas of investment; expectations for the macro environment; and
expectations for volumes. Any statements that are not statements of
historical facts may be deemed to be forward-looking statements.
When used in this earnings release, the words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “project” 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 extent to which the coronavirus (COVID-19) pandemic
and measures taken in response thereto impact our business, results
of operations and financial condition in excess of current
expectations; the impact of fluctuations in fuel prices and the
resulting impact on our revenues and net income; the effects of
general economic conditions, including those caused by the effects
of COVID-19, on overall employment, travel and fueling patterns as
well as payment and transaction processing activity; changes or
limitations on interchange fees; failure to comply with the
applicable requirements of MasterCard or Visa contracts and rules;
the Company’s failure to maintain or renew key commercial
agreements or to maintain volumes under such agreements; breaches
of the Company’s technology systems or those of our third-party
service providers and any resulting negative impact on our
reputation, liabilities or relationships with customers or
merchants; the effects of the Company’s business expansion and
acquisition efforts; failure to expand the Company’s technological
capabilities and service offerings as rapidly as the Company’s
competitors; the failure of corporate investments to result in
anticipated strategic value; the actions of regulatory bodies,
including banking and securities regulators, or possible changes in
banking or financial regulations impacting the Company’s industrial
bank, the Company as the corporate parent or other subsidiaries or
affiliates; the Company’s failure to comply with the Treasury
Regulations applicable to non-bank custodians; potential adverse
changes to business or employee relationships, including those
resulting from the completion of an acquisition; competitive
responses to any acquisitions; uncertainty of the expected
financial performance of the combined operations following
completion of an acquisition; the failure to complete or
successfully integrate the Company’s acquisitions or the ability to
realize anticipated synergies and cost savings from such
transactions; unexpected costs, charges or expenses resulting from
an acquisition; the Company’s failure to successfully acquire,
integrate, operate and expand commercial fuel card programs; the
impact and size of credit losses; the impact of changes to the
Company’s credit standards; failure to successfully implement the
Company’s information technology strategies and capabilities in
connection with its technology outsourcing and insourcing
arrangements, and any resulting cost associated with that failure;
legal, regulatory, political and economic uncertainty surrounding
the United Kingdom’s departure from the European Union and the
resulting trade agreement; the impact of foreign currency exchange
rates on the Company’s operations, revenue and income; changes in
interest rates; the impact of the future transition from LIBOR as a
global benchmark to a replacement rate; the impact of the Company’s
recently amended and restated credit agreement and its presently
outstanding notes on our operations; the impact of increased
leverage on the Company’s operations, results or borrowing capacity
generally, and as a result of acquisitions specifically; the impact
of sales or dispositions of significant amounts of our outstanding
common stock into the public market, or the perception that such
sales or dispositions could occur; the possible dilution to our
stockholders caused by the issuance of additional shares of common
stock or equity-linked securities, whether as result of our
convertible notes or otherwise; 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 on Form 10-K for the year ended December 31, 2020,
filed with the Securities and Exchange Commission on March 1, 2021.
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 OPERATIONS
(in thousands, except per
share data)
(unaudited)
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
Revenues
Payment processing revenue
$
213,426
$
147,461
$
401,815
$
351,498
Account servicing revenue
132,997
109,479
251,620
223,319
Finance fee revenue
59,499
42,711
111,652
98,638
Other revenue
53,561
47,433
105,153
105,308
Total revenues
459,483
347,084
870,240
778,763
Cost of services
Processing costs
116,208
99,991
225,970
204,908
Service fees
13,759
9,700
24,905
23,454
Provision for credit losses
12,962
20,581
18,021
54,568
Operating interest
2,271
6,504
4,895
14,889
Depreciation and amortization
26,451
25,124
55,645
49,913
Total cost of services
171,651
161,900
329,436
347,732
General and administrative
79,543
62,265
165,974
124,301
Sales and marketing
85,605
54,744
163,952
123,526
Depreciation and amortization
40,406
39,393
78,059
79,593
Operating income
82,278
28,782
132,819
103,611
Financing interest expense
(32,473)
(28,832)
(65,757)
(60,863)
Change in fair value of contingent
consideration
(47,700)
—
(47,700)
—
Net foreign currency gain (loss)
1,342
(2,462)
(1,413)
(31,189)
Net unrealized gain (loss) on financial
instruments
6,013
(3,842)
13,046
(35,889)
Income (loss) before income taxes
9,460
(6,354)
30,995
(24,330)
Income tax benefit
(746)
(19,747)
(2,416)
(25,454)
Net income
10,206
13,393
33,411
1,124
Less: Net income from non-controlling
interests
239
675
965
2,038
Net income (loss) attributable to WEX
Inc.
$
9,967
$
12,718
$
32,446
$
(914)
Change in value of redeemable
non-controlling interest
(43,823)
59,940
(68,867)
57,316
Net (loss) income attributable to
shareholders
$
(33,856)
$
72,658
$
(36,421)
$
56,402
Net loss attributable to shareholders per
share:
Basic
$
(0.76)
$
1.67
$
(0.82)
$
1.30
Diluted
$
(0.76)
$
1.66
$
(0.82)
$
1.28
Weighted average common shares
outstanding:
Basic
44,788
43,574
44,566
43,495
Diluted
44,788
43,779
44,566
43,896
WEX INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
June 30, 2021
December 31, 2020
Assets
Cash and cash equivalents
$
425,322
$
852,033
Restricted cash
576,209
477,620
Accounts receivable
2,861,445
1,993,329
Securitized accounts receivable,
restricted
132,549
93,236
Prepaid expenses and other current
assets
98,397
86,629
Total current assets
4,093,922
3,502,847
Property, equipment and capitalized
software
180,049
188,340
Goodwill and other intangible assets
4,664,153
4,240,150
Investment securities
36,931
37,273
Deferred income taxes, net
34,166
17,524
Other assets
218,389
197,227
Total assets
$
9,227,610
$
8,183,361
Liabilities and Stockholders’
Equity
Accounts payable
$
1,247,995
$
778,207
Accrued expenses
384,306
362,472
Restricted cash payable
574,934
477,620
Short-term deposits
1,109,222
911,395
Short-term debt, net
146,470
152,730
Other current liabilities
52,832
58,429
Total current liabilities
3,515,759
2,740,853
Long-term debt, net
2,867,270
2,874,113
Long-term deposits
401,440
148,591
Deferred income taxes, net
196,032
220,122
Other liabilities
264,250
164,546
Total liabilities
7,244,751
6,148,225
Commitments and contingencies
Redeemable non-controlling
interest
187,937
117,219
Stockholders’ Equity
Total WEX Inc. stockholders’ equity
1,794,922
1,904,895
Non-controlling interest
—
13,022
Total stockholders’ equity
1,794,922
1,917,917
Total liabilities and stockholders’
equity
$
9,227,610
$
8,183,361
Exhibit 1
Reconciliation of Non-GAAP
Measures
(in thousands, except per
share data)
(unaudited)
Reconciliation of GAAP Net
(Loss) Income Attributable to Shareholders to Adjusted Net Income
Attributable to Shareholders
Three Months Ended June
30,
2021
2020
per diluted share
per diluted share
Net (loss) income attributable to
shareholders
$
(33,856)
$
(0.76)
$
72,658
$
1.66
Unrealized (gain) loss on financial
instruments
(6,013)
(0.13)
3,842
0.09
Net foreign currency remeasurement (gain)
loss
(1,342)
(0.03)
2,462
0.06
Change in fair value of contingent
consideration
47,700
1.07
—
—
Acquisition–related intangible
amortization
45,294
1.01
42,478
0.97
Other acquisition and divestiture related
items
10,690
0.24
7,735
0.18
Stock–based compensation
21,662
0.48
15,069
0.34
Other costs
1,705
0.04
4,695
0.11
Debt restructuring and debt issuance cost
amortization
11,461
0.26
2,578
0.06
ANI adjustments attributable to
non–controlling interests
43,206
0.96
(60,558)
(1.38)
Tax related items
(35,613)
(0.80)
(38,004)
(0.87)
Dilutive impact of stock awards1
—
(0.03)
—
—
Adjusted net income attributable to
shareholders
$
104,894
$
2.31
$
52,955
$
1.21
Six Months Ended June
30,
2021
2020
per diluted share
per diluted share
Net (loss) income attributable to
shareholders
$
(36,421)
(0.82)
$
56,402
1.28
Unrealized (gain) loss on financial
instruments
(13,046)
(0.29)
35,889
0.82
Net foreign currency remeasurement
loss
1,413
0.03
31,189
0.71
Change in fair value of contingent
consideration
47,700
1.07
—
—
Acquisition–related intangible
amortization
87,748
1.97
85,016
1.94
Other acquisition and divestiture related
items
25,486
0.57
15,677
0.36
Stock–based compensation
40,605
0.91
26,889
0.61
Other costs
13,942
0.31
6,935
0.16
Debt restructuring and debt issuance cost
amortization
16,553
0.37
4,660
0.11
ANI adjustments attributable to
non–controlling interests
67,006
1.50
(58,334)
(1.33)
Tax related items
(64,818)
$
(1.45)
$
(71,684)
$
(1.63)
Dilutive impact of stock awards1
—
(0.07)
—
—
Adjusted net income attributable to
shareholders
$
186,168
$
4.10
$
132,639
$
3.02
1 As the Company reported a net loss for the three and six months
ended June 30, 2021 under U.S. Generally Accepted Accounting
Principles (“GAAP”), the diluted weighted average shares
outstanding equals the basic weighted average shares outstanding
for those periods. The non-GAAP adjustments described above
resulted in adjusted net income attributable to shareholders
(versus a loss on a GAAP basis) for the three and six months ended
June 30, 2021. Therefore, dilutive common stock equivalents have
been included in the calculation of adjusted diluted weighted
average shares outstanding to arrive at adjusted per share data.
Reconciliation of GAAP
Operating Income to Total Segment Adjusted Operating Income and
Adjusted Operating Income
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Operating income
$
82,278
$
28,782
$
132,819
$
103,611
Unallocated corporate expenses
17,174
13,953
33,383
30,496
Acquisition-related intangible
amortization
45,294
42,478
87,748
85,016
Other acquisition and divestiture related
items
10,690
7,735
25,486
15,677
Stock-based compensation
21,662
15,069
40,605
26,889
Other costs
1,705
4,695
13,942
6,935
Debt restructuring costs
5,299
687
5,936
765
Total segment adjusted operating
income
$
184,102
$
113,399
$
339,919
$
269,389
Unallocated corporate expenses
(17,174)
(13,953)
(33,383)
(30,496)
Adjusted operating income
$
166,928
$
99,446
$
306,536
$
238,893
The Company's non-GAAP adjusted net income excludes unrealized
gains and losses on financial instruments, net foreign currency
gains and losses, changes in fair value of contingent
consideration, acquisition-related intangible amortization, other
acquisition and divestiture related items, stock-based
compensation, other costs, debt restructuring and debt issuance
cost amortization, adjustments attributable to our non-controlling
interests and certain tax related items.
The Company's non-GAAP adjusted operating income excludes
acquisition-related intangible amortization, other acquisition and
divestiture related items, stock-based compensation, other costs,
and debt restructuring costs. Total segment adjusted operating
income incorporates these same adjustments and further excludes
unallocated corporate expenses.
Although adjusted net income, adjusted operating income and
total segment adjusted operating income are not calculated in
accordance with GAAP, these non-GAAP measures are integral to the
Company's reporting and planning processes and the chief operating
decision maker of the Company uses segment adjusted operating
income to allocate resources among our operating segments. The
Company considers these measures integral because they exclude the
above 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:
- Exclusion of the non-cash, mark-to-market adjustments on
financial instruments, including interest rate swap agreements and
investment securities, helps management identify and assess trends
in the Company's underlying business that might otherwise be
obscured due to quarterly non-cash earnings fluctuations associated
with these financial instruments. Additionally, the non-cash
mark-to-market adjustments on financial instruments are difficult
to forecast accurately, making comparisons across historical and
future quarters difficult to evaluate.
- Net foreign currency gains and losses primarily result from the
remeasurement to functional currency of cash, accounts receivable
and accounts payable balances, certain intercompany notes
denominated in foreign currencies and any gain or loss on foreign
currency hedges relating to these items. The exclusion of these
items helps management compare changes in operating results between
periods that might otherwise be obscured due to currency
fluctuations.
- The change in fair value of contingent consideration, which is
related to the acquisition of certain contractual rights to serve
as custodian or sub-custodian to health savings accounts, is
dependent upon changes in future interest rates and has no
significant impact on the ongoing operations of the Company.
Additionally, the non-cash, mark-to-market adjustments on financial
instruments are difficult to forecast accurately, making
comparisons across historical and future quarters difficult to
evaluate.
- The Company considers certain acquisition-related costs,
including investment banking fees, warranty and indemnity
insurance, certain integration related expenses and amortization of
acquired intangibles, as well as gains and losses from
divestitures, to be unpredictable, dependent on factors that may be
outside of our control and unrelated to the continuing operations
of the acquired or divested business or the Company. In addition,
the size and complexity of an acquisition, which often drives the
magnitude of acquisition-related costs, may not be indicative of
such future costs. The Company believes that excluding
acquisition-related costs and gains or losses on divestitures
facilitates the comparison of our financial results to the
Company's historical operating results and to other companies in
our industry.
- Stock-based compensation is different from other forms of
compensation as it is a non-cash expense. For example, a cash
salary generally has a fixed and unvarying cash cost. In contrast,
the expense associated with an equity-based award is generally
unrelated to the amount of cash ultimately received by the
employee, and the cost to the Company is based on a stock-based
compensation valuation methodology and underlying assumptions that
may vary over time.
- We exclude certain other costs when evaluating our continuing
business performance when such items are not consistently occurring
and do not reflect expected future operating expense, nor provide
insight into the fundamentals of current or past operations of our
business. These include costs related to certain identified
initiatives (including technology initiatives) to further
streamline the business, improve the Company's efficiency, create
synergies, and globalize the Company's operations, all with an
objective to improve scale and efficiency and increase
profitability going forward. For the six months ended June 30,
2021, other costs additionally include a penalty of $10.3 million
incurred on termination of a vendor contract. For the three and six
months ended June 30, 2020, other costs include certain costs
incurred in association with COVID-19, including the cost of
providing additional health, welfare and technological support to
our employees as they work remotely.
- Debt restructuring and debt issuance cost amortization are
unrelated to the continuing operations of the Company. Debt
restructuring costs do not reflect expected future operating
expense, nor do they provide insight into the fundamentals of
current or past operations of our business. In addition, since debt
issuance cost amortization is dependent upon the financing method,
which can vary widely company to company, we believe that excluding
these costs helps to facilitate comparison to historical results as
well as to other companies within our industry.
- The adjustments attributable to non-controlling interests,
including adjustments to the redemption value of a non-controlling
interest and non-cash adjustments related to the tax receivable
agreement, have no significant impact on the ongoing operations of
the business.
- The tax related items are 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 as well as the
impact from certain discrete tax items. 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 does not allocate certain corporate expenses to our
operating segments, as these items are centrally controlled and are
not directly attributable to any reportable segment.
For the same reasons, WEX believes that adjusted net income,
adjusted operating income and total segment adjusted operating
income may also be useful to investors when evaluating the
Company's performance. However, because adjusted net income,
adjusted operating income and total segment adjusted operating
income are non-GAAP measures, they 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, adjusted operating
income and total segment adjusted operating income as used by WEX
may not be comparable to similarly titled measures employed by
other companies.
Exhibit 2
Impact of Certain Macro
Factors on Reported Revenue and Adjusted Net Income
(in thousands, except per
share data)
(unaudited)
The table below shows the impact of
certain macro factors on reported revenue:
Segment Revenue
Results
Fleet Solutions
Travel and Corporate
Solutions
Health and Employee Benefit
Solutions
Total WEX Inc.
Three months ended June
30,
2021
2020
2021
2020
2021
2020
2021
2020
Reported revenue
$
274,388
$
204,380
$
81,762
$
54,495
$
103,333
$
88,209
$
459,483
$
347,084
FX impact (favorable) / unfavorable
$
(3,990)
$
—
$
(573)
$
—
$
—
$
—
$
(4,563)
$
—
PPG impact (favorable) / unfavorable
$
(33,271)
$
—
$
—
$
—
$
—
$
—
$
(33,271)
$
—
Segment Revenue
Results
Fleet Solutions
Travel and Corporate
Solutions
Health and Employee Benefit
Solutions
Total WEX Inc.
Six months ended June
30,
2021
2020
2021
2020
2021
2020
2021
2020
Reported revenue
$
518,225
$
454,227
$
152,404
$
138,854
$
199,611
$
185,682
$
870,240
$
778,763
FX impact (favorable) / unfavorable
$
(7,616)
$
—
$
(878)
$
—
$
—
$
—
$
(8,494)
$
—
PPG impact (favorable) / unfavorable
$
(32,305)
$
—
$
—
$
—
$
—
$
—
$
(32,305)
$
—
To determine the impact of foreign exchange translation (“FX”)
on revenue, revenue from entities whose functional currency is not
denominated in U.S. dollars, as well as revenue from purchase
volume transacted in non-U.S. denominated currencies, were
translated using the weighted average exchange rates for the same
period in the prior year, exclusive of revenue derived from 2020
acquisitions for one year following the acquisition dates.
To determine the impact of price per gallon of fuel (“PPG”) on
revenue, revenue subject to changes in fuel prices was calculated
based on the average retail price of fuel for the same period in
the prior year for the portion of our business that earns revenue
based on a percentage of fuel spend, exclusive of revenue derived
from 2020 acquisitions for one year following the acquisition
dates. For the portions of our business that earn revenue based on
margin spreads, revenue was calculated utilizing the comparable
margin from the prior year.
The table below shows the impact of certain macro factors on
Adjusted Net Income:
Segment Estimated Earnings
Impact
Fleet Solutions
Travel and Corporate
Solutions
Health and Employee Benefit
Solutions
Three months ended June
30,
2021
2020
2021
2020
2021
2020
FX impact (favorable) / unfavorable
$
(1,946)
$
—
$
(404)
$
—
$
—
$
—
PPG impact (favorable) / unfavorable
$
(20,960)
$
—
$
—
$
—
$
—
$
—
Six months ended June
30,
2021
2020
2021
2020
2021
2020
FX impact (favorable) / unfavorable
$
(3,635)
$
—
$
(539)
$
—
$
—
$
—
PPG impact (favorable) / unfavorable
$
(20,474)
$
—
$
—
$
—
$
—
$
—
To determine the estimated earnings impact of FX on revenue and
expenses from entities whose functional currency is not denominated
in U.S. dollars, as well as revenue and variable expenses from
purchase volume transacted in non-U.S. denominated currencies,
amounts were translated using the weighted average exchange rates
for the same period in the prior year, net of tax, exclusive of
revenue and expenses derived from 2020 acquisitions for one year
following the acquisition dates.
To determine the estimated earnings impact of PPG, revenue and
certain variable expenses impacted by changes in fuel prices were
adjusted based on the average retail price of fuel for the same
period in the prior year for the portion of our business that earns
revenue based on a percentage of fuel spend, net of applicable
taxes, exclusive of revenue and expenses derived from 2020
acquisitions for one year following the acquisition dates. For the
portions of our business that earn revenue based on margin spreads,
revenue was adjusted to the comparable margin from the prior year,
net of non-controlling interests and applicable taxes.
Exhibit 3
Selected Non-Financial
Metrics
(unaudited)
Q2 2021
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Fleet Solutions:
Payment processing transactions (000s)
(1)
130,104
118,389
118,287
120,900
103,086
Payment processing gallons of fuel (000s)
(2)
3,483,695
3,233,943
3,265,927
3,247,507
2,830,265
Average US fuel price (US$ / gallon)
$
3.04
$
2.72
$
2.26
$
2.23
$
2.07
Payment processing $ of fuel (000s)
(3)
$
10,995,418
$
9,176,960
$
7,767,530
$
7,609,098
$
6,135,265
Net payment processing rate (4)
1.15
%
1.20
%
1.27
%
1.35
%
1.47
%
Payment processing revenue (000s)
$
126,450
$
110,577
$
98,954
$
102,419
$
90,147
Net late fee rate (5)
0.41
%
0.45
%
0.54
%
0.48
%
0.57
%
Late fee revenue (000s) (6)
$
45,235
$
41,150
$
41,901
$
36,232
$
35,071
Travel and Corporate Solutions:
Purchase volume (000s) (7)
$
8,736,019
$
6,107,675
$
4,968,321
$
4,699,737
$
3,168,064
Net interchange rate (8)
0.78
%
0.94
%
1.26
%
1.13
%
1.37
%
Payment solutions processing revenue
(000s)
$
68,282
$
57,248
$
62,376
$
53,239
$
43,261
Health and Employee Benefit
Solutions:
Purchase volume (000s) (9)
$
1,311,131
$
1,484,226
$
1,074,977
$
1,120,786
$
1,017,318
Average number of SaaS accounts (000s)
(10)
16,380
15,513
14,502
14,599
14,487
Definitions and explanations:
(1) Payment processing transactions
represents the total number of purchases made by fleets that have a
payment processing relationship with WEX.
(2) Payment processing gallons of fuel
represents the total number of gallons of fuel purchased by fleets
that have a payment processing relationship with WEX.
(3) Payment processing dollars of fuel
represents the total dollar value of the fuel purchased by fleets
that have a payment processing relationship with WEX.
(4) Net payment processing rate represents
the percentage of the dollar value of each payment processing
transaction that WEX records as revenue from merchants, less
certain discounts given to customers and network fees.
(5) Net late fee rate represents late fee
revenue as a percentage of fuel purchased by fleets that have a
payment processing relationship with WEX.
(6) Late fee revenue represents fees
charged for payments not made within the terms of the customer
agreement based upon the outstanding customer receivable
balance.
(7) Purchase volume represents the total
dollar value of all WEX issued transactions that use WEX corporate
card products and virtual card products.
(8) Net interchange rate represents the
percentage of the dollar value of each payment processing
transaction that WEX records as revenue from merchants, less
certain discounts given to customers and network fees.
(9) Purchase volume in the Health and
Employee Benefit Solutions segment represents the total US dollar
value of all transactions where interchange is earned by WEX.
(10) Average number of Health and Employee
Benefit Solutions accounts represents the number of active Consumer
Directed Health, COBRA, and billing accounts on our SaaS platforms
in the United States.
Exhibit 4
Segment Revenue
Information
(in thousands)
(unaudited)
Three months ended June
30,
Increase (decrease)
Six months ended June
30,
Increase (decrease)
Fleet Solutions
2021
2020
Amount
Percent
2021
2020
Amount
Percent
Revenues
Payment processing revenue
$
126,450
$
90,147
$
36,303
40
%
$
237,026
$
203,470
$
33,556
16
%
Account servicing revenue
42,293
36,694
5,599
15
%
82,284
75,902
6,382
8
%
Finance fee revenue
59,258
42,463
16,795
40
%
111,098
97,805
13,293
14
%
Other revenue
46,387
35,076
11,311
32
%
87,817
77,050
10,767
14
%
Total revenues
$
274,388
$
204,380
$
70,008
34
%
$
518,225
$
454,227
$
63,998
14
%
Three months ended
June 30,
Increase (decrease)
Six months ended June
30,
Increase (decrease)
Travel and Corporate Solutions
2021
2020
Amount
Percent
2021
2020
Amount
Percent
Revenues
Payment processing revenue
$
68,282
$
43,261
$
25,021
58
%
$
125,530
$
113,529
$
12,001
11
%
Account servicing revenue
11,222
10,183
1,039
10
%
21,909
21,246
663
3
%
Finance fee revenue
199
220
(21)
(10)
%
493
755
(262)
(35)
%
Other revenue
2,059
831
1,228
148
%
4,472
3,324
1,148
35
%
Total revenues
$
81,762
$
54,495
$
27,267
50
%
$
152,404
$
138,854
$
13,550
10
%
Three months ended June
30,
Increase (decrease)
Six months ended June
30,
Increase (decrease)
Health and Employee Benefit
Solutions
2021
2020
Amount
Percent
2021
2020
Amount
Percent
Revenues
Payment processing revenue
$
18,694
$
14,053
$
4,641
33
%
$
39,259
$
34,499
$
4,760
14
%
Account servicing revenue
79,482
62,602
16,880
27
%
147,427
126,171
21,256
17
%
Finance fee revenue
42
28
14
50
%
61
78
(17)
(22)
%
Other revenue
5,115
11,526
(6,411)
(56)
%
12,864
24,934
(12,070)
(48)
%
Total revenues
$
103,333
$
88,209
$
15,124
17
%
$
199,611
$
185,682
$
13,929
8
%
Exhibit 5
Segment Adjusted Operating
Income and Adjusted Operating Income Margin Information
(in thousands)
(unaudited)
Segment Adjusted Operating
Income
Segment Adjusted Operating
Income Margin(1)
Three Months Ended June
30,
Three Months Ended June
30,
2021
2020
2021
2020
Fleet Solutions
$
137,865
$
77,180
50.2
%
37.8
%
Travel and Corporate Solutions
$
17,157
$
10,961
21.0
%
20.1
%
Health and Employee Benefit Solutions
$
29,080
$
25,258
28.1
%
28.6
%
Total segment adjusted operating
income
$
184,102
$
113,399
40.1
%
32.7
%
Segment Adjusted Operating
Income
Segment Adjusted Operating
Income Margin(1)
Six Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Fleet Solutions
$
256,123
$
181,788
49.4
%
40.0
%
Travel and Corporate Solutions
$
24,172
$
32,876
15.9
%
23.7
%
Health and Employee Benefit Solutions
$
59,624
$
54,725
29.9
%
29.5
%
Total segment adjusted operating
income
$
339,919
$
269,389
39.1
%
34.6
%
(1) Segment adjusted operating income
margin is derived by dividing segment adjusted operating income by
the revenue of the corresponding segment (or the entire Company in
the case of total segment adjusted operating income). See Exhibit 1
for a reconciliation of segment adjusted operating income to GAAP
operating income.
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Adjusted operating income
$
166,928
$
99,446
$
306,536
$
238,893
Adjusted operating income margin (1)
36.3
%
28.7
%
35.2
%
30.7
%
(1) Adjusted operating income margin is
derived by dividing adjusted operating income by revenue of the
entire Company. See Exhibit 1 for a reconciliation of adjusted
operating income to GAAP operating income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729005166/en/
News media contact: WEX Inc. Jessica Roy, 207-523-6763
Jessica.Roy@wexinc.com or Investor contact: WEX Inc. Steve
Elder, 207-523-7769 Steve.Elder@wexinc.com
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