10/28/2021 | Press release | Distributed by Public on 10/28/2021 04:29
PORTLAND, Maine--(BUSINESS WIRE)-- WEX Inc. (NYSE: WEX), a leading financial technology service provider, today reported financial results for the three months ended September 30, 2021.
"We delivered impressive results in the third quarter driven by recovering customer spend patterns from the COVID impacted lows and implementation of new customer wins coming from continued success in the marketplace. Importantly, total purchase volume processed across the Company reached an all-time high of $26 billion up 93% as we continue to capitalize on these positive trends," said Melissa Smith, WEX's Chair and Chief Executive Officer.
Ms. Smith added, "The strategic investments we have made over the last few years to expand our modern commerce platform are paying dividends. Our proven track record coupled with market-leading innovation, integrated solutions, and digital marketing engine is resonating in the marketplace and underpinning our impressive results. Payment ecosystems can be complex, which is why we work to seamlessly integrate into our customer's workflows and create an intelligent, secure, highly scalable, and resilient infrastructure. We are excited about the growth opportunities ahead and remain committed to driving long-term shareholder value while delivering for our customers."
Third Quarter 2021 Financial Results
Total revenue for the third quarter of 2021 increased 26% to $482.8 million from $382.1 million for the third quarter of 2020. This revenue increase in the quarter includes a $34.9 million favorable impact from fuel prices and spreads and a $1.0 million positive impact from foreign exchange rates.
Net income attributable to shareholders on a GAAP basis increased by $114.2 million to net income of $48.3 million, or $1.07 per diluted share, compared with a net loss of $65.8 million, or $(1.49) per diluted share, for the third quarter of 2020. The Company's adjusted net income attributable to shareholders, which is a non-GAAP measure, was $111.1 million for the third quarter of 2021, or $2.45 per diluted share, up 54% per diluted share from $70.9 million or $1.59 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.
Third Quarter 2021 Performance Metrics
"Building upon the strong momentum in the first half of the year, third quarter results exceeded our expectations, with revenues substantially surpassing the previous quarterly high and adjusted earnings up both year-over-year and sequentially. Our strong adjusted earnings results were driven primarily by persistent better-than-expected volume in our Fleet Solutions and Travel and Corporate Solutions segments, and double-digit revenue increases across each segment," said Roberto Simon, WEX's Chief Financial Officer. "We continue to integrate our recent acquisitions ahead of schedule, while driving robust organic growth and realizing operating efficiencies. In addition, we remain focused on driving innovation across technology platforms in-line with accelerating global trends."
In a separate press release, the Company also announced today that Robert Deshaies, current President of the Health segment, will be its new Chief Operating Officer, Americas, effective January 1, 2022. In addition, Scott Phillips, currently President, Global Fleet, will retain his current position until January 1, 2022, and will help facilitate a smooth transition of the Fleet business, until he leaves WEX on April 1, 2022.
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.
Fourth quarter and full year 2021 guidance is based on assumed average U.S. retail fuel prices of $3.45 and $3.12 per gallon, respectively, with some of the benefit of higher prices in the U.S. being offset by expected lower spreads in Europe. The fuel prices referenced above are based on the applicable NYMEX futures price from the week of October 18, 2021. Our guidance assumes approximately 45.4 million fully diluted shares outstanding for the full year. In addition, in October, the Company renewed a contract with a significant Corporate Payments customer which will alter the presentation of revenue. While there is no material impact to operating income, the accounting presentation of revenue will change from gross to net, with a corresponding change in sales and marketing costs. In 2020, fourth quarter revenue would have been approximately $15 million lower due to this change, which is reflected in the guidance above.
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, changes in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture related items, the gain/loss on sales of subsidiary, 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 earnings 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 earnings release in Exhibit 1, reconciliations of non-GAAP measures referenced in this earnings 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 nine months ended September 30, 2021, and in Exhibit 3, a table of selected non-financial metrics for the quarter ended September 30, 2021 and four preceding quarters. The Company is also providing segment revenue for the three and nine months ended September 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, October 28, 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 (888) 510-2008 or +1 (646) 960-0306. The Conference ID number is 2237921. 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: assumptions underlying the Company's future financial performance, future operations; future growth opportunities and expectations; expectations for future revenue performance, 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 demand for worldwide travel as a result of COVID-19 and the length of time it may take for the travel industry to rebound to and grow beyond pre-pandemic levels; 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 fuel spreads in our international markets, including 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; failure to expand the Company's technological capabilities and service offerings as rapidly as the Company's competitors; 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 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 ability to successfully finalize the recently announced Executive Leadership Team transition plan and to appoint additional officers; the success of the Company's recently announced Executive Leadership Team and strategic reorganization; the effects of the Company's business expansion and acquisition efforts; the failure of corporate investments to result in anticipated strategic value; 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 debt instruments on the Company's 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 and in Item 1A of our quarterly report on Form 10-Q for the quarter ended June 30, 2021, filed with the Securities and Exchange Commission on August 4, 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 September 30, |
Nine months ended September 30, |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenues |
|||||||||||||||
Payment processing revenue |
$ |
226,126 |
$ |
171,077 |
$ |
627,941 |
$ |
522,575 |
|||||||
Account servicing revenue |
137,724 |
112,417 |
389,344 |
335,736 |
|||||||||||
Finance fee revenue |
67,769 |
46,307 |
179,421 |
144,945 |
|||||||||||
Other revenue |
51,145 |
52,315 |
156,298 |
157,623 |
|||||||||||
Total revenues |
482,764 |
382,116 |
1,353,004 |
1,160,879 |
|||||||||||
Cost of services |
|||||||||||||||
Processing costs |
121,207 |
102,244 |
347,177 |
307,152 |
|||||||||||
Service fees |
14,246 |
10,881 |
39,151 |
34,335 |
|||||||||||
Provision for credit losses |
14,127 |
12,283 |
32,148 |
66,851 |
|||||||||||
Operating interest |
2,124 |
5,262 |
7,019 |
20,151 |
|||||||||||
Depreciation and amortization |
28,226 |
26,202 |
83,871 |
76,115 |
|||||||||||
Total cost of services |
179,930 |
156,872 |
509,366 |
504,604 |
|||||||||||
General and administrative |
79,486 |
73,131 |
245,460 |
197,432 |
|||||||||||
Sales and marketing |
82,225 |
64,592 |
246,177 |
188,118 |
|||||||||||
Depreciation and amortization |
40,301 |
39,314 |
118,360 |
118,907 |
|||||||||||
Loss on sale of subsidiary |
- |
46,362 |
- |
46,362 |
|||||||||||
Operating income |
100,822 |
1,845 |
233,641 |
105,456 |
|||||||||||
Financing interest expense |
(32,493) |
(40,950) |
(98,250) |
(101,813) |
|||||||||||
Change in fair value of contingent consideration |
2,800 |
- |
(44,900) |
- |
|||||||||||
Other income |
3,617 |
- |
3,617 |
- |
|||||||||||
Net foreign currency loss |
(9,962) |
(784) |
(11,375) |
(31,973) |
|||||||||||
Net unrealized gain (loss) on financial instruments |
6,424 |
3,774 |
19,470 |
(32,115) |
|||||||||||
Income (loss) before income taxes |
71,208 |
(36,115) |
102,203 |
(60,445) |
|||||||||||
Income tax expense (benefit) |
19,340 |
21,602 |
16,924 |
(3,852) |
|||||||||||
Net income (loss) |
51,868 |
(57,717) |
85,279 |
(56,593) |
|||||||||||
Less: Net income from non-controlling interests |
134 |
1,244 |
1,099 |
3,282 |
|||||||||||
Net income (loss) attributable to WEX Inc. |
$ |
51,734 |
$ |
(58,961) |
$ |
84,180 |
$ |
(59,875) |
|||||||
Change in value of redeemable non-controlling interest |
(3,416) |
(6,879) |
(72,283) |
50,437 |
|||||||||||
Net income (loss) attributable to shareholders |
$ |
48,318 |
$ |
(65,840) |
$ |
11,897 |
$ |
(9,438) |
|||||||
Net income (loss) attributable to shareholders per share: |
|||||||||||||||
Basic |
$ |
1.08 |
$ |
(1.49) |
$ |
0.27 |
$ |
(0.22) |
|||||||
Diluted |
$ |
1.07 |
$ |
(1.49) |
$ |
0.26 |
$ |
(0.22) |
|||||||
Weighted average common shares outstanding: |
|||||||||||||||
Basic |
44,861 |
44,166 |
44,664 |
43,720 |
|||||||||||
Diluted |
45,279 |
44,166 |
45,334 |
43,720 |
WEX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, |
December 31, |
||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
533,830 |
$ |
852,033 |
|||
Restricted cash |
628,436 |
477,620 |
|||||
Accounts receivable |
3,053,565 |
1,993,329 |
|||||
Securitized accounts receivable, restricted |
126,648 |
93,236 |
|||||
Prepaid expenses and other current assets |
93,275 |
86,629 |
|||||
Total current assets |
4,435,754 |
3,502,847 |
|||||
Property, equipment and capitalized software |
178,797 |
188,340 |
|||||
Goodwill and other intangible assets |
4,596,436 |
4,240,150 |
|||||
Investment securities |
36,855 |
37,273 |
|||||
Deferred income taxes, net |
36,431 |
17,524 |
|||||
Other assets |
229,858 |
197,227 |
|||||
Total assets |
$ |
9,514,131 |
$ |
8,183,361 |
|||
Liabilities and Stockholders' Equity |
|||||||
Accounts payable |
$ |
1,289,591 |
$ |
778,207 |
|||
Accrued expenses |
432,879 |
362,472 |
|||||
Restricted cash payable |
627,217 |
477,620 |
|||||
Short-term deposits |
1,016,327 |
911,395 |
|||||
Short-term debt, net |
183,244 |
152,730 |
|||||
Other current liabilities |
55,377 |
58,429 |
|||||
Total current liabilities |
3,604,635 |
2,740,853 |
|||||
Long-term debt, net |
2,802,317 |
2,874,113 |
|||||
Long-term deposits |
600,496 |
148,591 |
|||||
Deferred income taxes, net |
204,730 |
220,122 |
|||||
Other liabilities |
266,221 |
164,546 |
|||||
Total liabilities |
7,478,399 |
6,148,225 |
|||||
Commitments and contingencies |
|||||||
Redeemable non-controlling interest |
191,487 |
117,219 |
|||||
Stockholders' Equity |
|||||||
Total WEX Inc. stockholders' equity |
1,844,245 |
1,904,895 |
|||||
Non-controlling interest |
- |
13,022 |
|||||
Total stockholders' equity |
1,844,245 |
1,917,917 |
|||||
Total liabilities and stockholders' equity |
$ |
9,514,131 |
$ |
8,183,361 |
Exhibit 1
Reconciliation of Non-GAAP Measures
(in thousands, except per share data)
(unaudited)
Reconciliation of GAAP Net Income (Loss) Attributable to Shareholders to Adjusted Net Income Attributable to Shareholders
Three Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
||||||||||||||
per diluted share |
per diluted share |
||||||||||||||
Net income (loss) attributable to shareholders |
$ |
48,318 |
$ |
1.07 |
$ |
(65,840) |
$ |
(1.49) |
|||||||
Unrealized gain on financial instruments |
(6,424) |
(0.14) |
(3,774) |
(0.09) |
|||||||||||
Net foreign currency remeasurement loss |
9,962 |
0.22 |
784 |
0.02 |
|||||||||||
Change in fair value of contingent consideration |
(2,800) |
(0.06) |
- |
- |
|||||||||||
Acquisition-related intangible amortization |
46,965 |
1.04 |
42,831 |
0.97 |
|||||||||||
Other acquisition and divestiture related items |
3,395 |
0.07 |
20,328 |
0.46 |
|||||||||||
Loss on sale of subsidiary |
- |
- |
46,362 |
1.05 |
|||||||||||
Stock-based compensation |
22,166 |
0.49 |
18,170 |
0.41 |
|||||||||||
Other costs |
1,711 |
0.04 |
1,045 |
0.02 |
|||||||||||
Debt restructuring and debt issuance cost amortization |
2,879 |
0.06 |
5,329 |
0.12 |
|||||||||||
ANI adjustments attributable to non-controlling interests |
2,848 |
0.06 |
6,233 |
0.14 |
|||||||||||
Tax related items |
(17,904) |
(0.40) |
(614) |
(0.01) |
|||||||||||
Dilutive impact of stock awards1 |
- |
- |
- |
(0.01) |
|||||||||||
Adjusted net income attributable to shareholders |
$ |
111,116 |
$ |
2.45 |
$ |
70,854 |
$ |
1.59 |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
||||||||||||||
per diluted share |
per diluted share |
||||||||||||||
Net income (loss) attributable to shareholders |
$ |
11,897 |
0.26 |
$ |
(9,438) |
(0.22) |
|||||||||
Unrealized (gain) loss on financial instruments |
(19,470) |
(0.43) |
32,115 |
0.73 |
|||||||||||
Net foreign currency remeasurement loss |
11,375 |
0.25 |
31,973 |
0.73 |
|||||||||||
Change in fair value of contingent consideration |
44,900 |
0.99 |
- |
- |
|||||||||||
Acquisition-related intangible amortization |
134,713 |
2.97 |
127,847 |
2.92 |
|||||||||||
Other acquisition and divestiture related items |
28,881 |
0.64 |
36,005 |
0.82 |
|||||||||||
Loss on sale of subsidiary |
- |
- |
46,362 |
1.06 |
|||||||||||
Stock-based compensation |
62,771 |
1.38 |
45,059 |
1.03 |
|||||||||||
Other costs |
15,653 |
0.35 |
7,980 |
0.18 |
|||||||||||
Debt restructuring and debt issuance cost amortization |
19,432 |
0.43 |
9,989 |
0.23 |
|||||||||||
ANI adjustments attributable to non-controlling interests |
69,854 |
1.54 |
(52,101) |
(1.19) |
|||||||||||
Tax related items |
(82,722) |
$ |
(1.82) |
$ |
(72,298) |
$ |
(1.65) |
||||||||
Dilutive impact of stock awards1 |
- |
- |
- |
(0.03) |
|||||||||||
Adjusted net income attributable to shareholders |
$ |
297,284 |
$ |
6.56 |
$ |
203,493 |
$ |
4.61 |
1 As the Company reported a net loss for the three and nine months ended September 30, 2020 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 nine months ended September 30, 2020. 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 September 30, |
Nine Months Ended September 30, |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
Operating income |
$ |
100,822 |
$ |
1,845 |
$ |
233,641 |
$ |
105,456 |
|||||||
Unallocated corporate expenses |
20,977 |
14,817 |
54,360 |
45,313 |
|||||||||||
Acquisition-related intangible amortization |
46,965 |
42,831 |
134,713 |
127,847 |
|||||||||||
Other acquisition and divestiture related items |
7,012 |
15,430 |
32,498 |
31,107 |
|||||||||||
Loss on sale of subsidiary |
- |
46,362 |
- |
46,362 |
|||||||||||
Stock-based compensation |
22,166 |
18,170 |
62,771 |
45,059 |
|||||||||||
Other costs |
1,711 |
1,045 |
15,653 |
7,980 |
|||||||||||
Debt restructuring costs |
120 |
(240) |
6,056 |
525 |
|||||||||||
Total segment adjusted operating income |
$ |
199,773 |
$ |
140,260 |
$ |
539,692 |
$ |
409,649 |
|||||||
Unallocated corporate expenses |
(20,977) |
(14,817) |
(54,360) |
(45,313) |
|||||||||||
Adjusted operating income |
$ |
178,796 |
$ |
125,443 |
$ |
485,332 |
$ |
364,336 |
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, loss on sale of subsidiary, 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, loss on sale of subsidiary, 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:
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 |
Health and Employee |
Total WEX Inc. |
||||||||||||||||||||||||||||
Three months ended September 30, |
|||||||||||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||||||||||
Reported revenue |
$ |
286,361 |
$ |
228,704 |
$ |
91,002 |
$ |
64,296 |
$ |
105,401 |
$ |
89,116 |
$ |
482,764 |
$ |
382,116 |
|||||||||||||||
FX impact (favorable) / unfavorable |
$ |
(790) |
$ |
- |
$ |
(223) |
$ |
- |
$ |
- |
$ |
- |
$ |
(1,013) |
$ |
- |
|||||||||||||||
PPG impact (favorable) / unfavorable |
$ |
(34,894) |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
(34,894) |
$ |
- |
Segment Revenue Results |
|||||||||||||||||||||||||||||||
Fleet Solutions |
Travel and Corporate |
Health and Employee |
Total WEX Inc. |
||||||||||||||||||||||||||||
Nine months ended September 30, |
|||||||||||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||||||||||
Reported revenue |
$ |
804,586 |
$ |
682,931 |
$ |
243,406 |
$ |
203,150 |
$ |
305,012 |
$ |
274,798 |
$ |
1,353,004 |
$ |
1,160,879 |
|||||||||||||||
FX impact (favorable) / unfavorable |
$ |
(8,406) |
$ |
- |
$ |
(1,101) |
$ |
- |
$ |
- |
$ |
- |
$ |
(9,507) |
$ |
- |
|||||||||||||||
PPG impact (favorable) / unfavorable |
$ |
(67,199) |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
(67,199) |
$ |
- |
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 |
Health and Employee |
|||||||||||||||||||||
Three months ended September 30, |
|||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||||
FX impact (favorable) / unfavorable |
$ |
(426) |
$ |
- |
$ |
(165) |
$ |
- |
$ |
2 |
$ |
- |
|||||||||||
PPG impact (favorable) / unfavorable |
$ |
(22,035) |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
|||||||||||
Nine months ended September 30, |
|||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||||
FX impact (favorable) / unfavorable |
$ |
(4,061) |
$ |
- |
$ |
(704) |
$ |
- |
$ |
5 |
$ |
- |
|||||||||||
PPG impact (favorable) / unfavorable |
$ |
(42,509) |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
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) |
|||||||||||||||||||
Q3 2021 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
|||||||||||||||
Fleet Solutions: |
|||||||||||||||||||
Payment processing transactions (000s) (1) |
134,029 |
130,104 |
118,389 |
118,287 |
120,900 |
||||||||||||||
Payment processing gallons of fuel (000s) (2) |
3,576,781 |
3,483,695 |
3,233,943 |
3,265,927 |
3,247,507 |
||||||||||||||
Average US fuel price (US$ / gallon) |
$ |
3.23 |
$ |
3.04 |
$ |
2.72 |
$ |
2.26 |
$ |
2.23 |
|||||||||
Payment processing $ of fuel (000s) (3) |
$ |
11,907,220 |
$ |
10,995,418 |
$ |
9,176,960 |
$ |
7,767,530 |
$ |
7,609,098 |
|||||||||
Net payment processing rate (4) |
1.09 |
% |
1.15 |
% |
1.20 |
% |
1.27 |
% |
1.35 |
% |
|||||||||
Payment processing revenue (000s) |
$ |
130,006 |
$ |
126,450 |
$ |
110,577 |
$ |
98,954 |
$ |
102,419 |
|||||||||
Net late fee rate (5) |
0.45 |
% |
0.41 |
% |
0.45 |
% |
0.54 |
% |
0.48 |
% |
|||||||||
Late fee revenue (000s) (6) |
$ |
53,104 |
$ |
45,235 |
$ |
41,150 |
$ |
41,901 |
$ |
36,232 |
|||||||||
Travel and Corporate Solutions: |
|||||||||||||||||||
Purchase volume (000s) (7) |
$ |
12,799,555 |
$ |
8,736,019 |
$ |
6,107,675 |
$ |
4,968,321 |
$ |
4,699,737 |
|||||||||
Net interchange rate (8) |
0.62 |
% |
0.78 |
% |
0.94 |
% |
1.26 |
% |
1.13 |
% |
|||||||||
Payment solutions processing revenue (000s) |
$ |
79,815 |
$ |
68,282 |
$ |
57,248 |
$ |
62,376 |
$ |
53,239 |
|||||||||
Health and Employee Benefit Solutions: |
|||||||||||||||||||
Purchase volume (000s) (9) |
$ |
1,173,913 |
$ |
1,311,131 |
$ |
1,484,226 |
$ |
1,074,977 |
$ |
1,120,786 |
|||||||||
Average number of SaaS accounts (000s) (10) |
16,912 |
16,380 |
15,513 |
14,502 |
14,599 |
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 |
Increase (decrease) |
Nine months ended |
Increase (decrease) |
||||||||||||||||||||||||||
Fleet Solutions |
2021 |
2020 |
Amount |
Percent |
2021 |
2020 |
Amount |
Percent |
|||||||||||||||||||||
Revenues |
|||||||||||||||||||||||||||||
Payment processing revenue |
$ |
130,006 |
$ |
102,418 |
$ |
27,588 |
27 |
% |
$ |
367,032 |
$ |
305,888 |
$ |
61,144 |
20 |
% |
|||||||||||||
Account servicing revenue |
43,671 |
39,350 |
4,321 |
11 |
% |
125,955 |
115,252 |
10,703 |
9 |
% |
|||||||||||||||||||
Finance fee revenue |
67,529 |
46,129 |
21,400 |
46 |
% |
178,627 |
143,934 |
34,693 |
24 |
% |
|||||||||||||||||||
Other revenue |
45,155 |
40,807 |
4,348 |
11 |
% |
132,972 |
117,857 |
15,115 |
13 |
% |
|||||||||||||||||||
Total revenues |
$ |
286,361 |
$ |
228,704 |
$ |
57,657 |
25 |
% |
$ |
804,586 |
$ |
682,931 |
$ |
121,655 |
18 |
% |
Three months ended |
Increase (decrease) |
Nine months ended |
Increase (decrease) |
||||||||||||||||||||||||||
Travel and Corporate Solutions |
2021 |
2020 |
Amount |
Percent |
2021 |
2020 |
Amount |
Percent |
|||||||||||||||||||||
Revenues |
|||||||||||||||||||||||||||||
Payment processing revenue |
$ |
79,815 |
$ |
53,239 |
$ |
26,576 |
50 |
% |
$ |
205,345 |
$ |
166,768 |
$ |
38,577 |
23 |
% |
|||||||||||||
Account servicing revenue |
10,908 |
9,964 |
944 |
9 |
% |
32,817 |
31,210 |
1,607 |
5 |
% |
|||||||||||||||||||
Finance fee revenue |
200 |
145 |
55 |
38 |
% |
693 |
900 |
(207) |
(23) |
% |
|||||||||||||||||||
Other revenue |
79 |
948 |
(869) |
(92) |
% |
4,551 |
4,272 |
279 |
7 |
% |
|||||||||||||||||||
Total revenues |
$ |
91,002 |
$ |
64,296 |
$ |
26,706 |
42 |
% |
$ |
243,406 |
$ |
203,150 |
$ |
40,256 |
20 |
% |
Three months ended |
Increase (decrease) |
Nine months ended |
Increase (decrease) |
||||||||||||||||||||||||||
Health and Employee Benefit Solutions |
2021 |
2020 |
Amount |
Percent |
2021 |
2020 |
Amount |
Percent |
|||||||||||||||||||||
Revenues |
|||||||||||||||||||||||||||||
Payment processing revenue |
$ |
16,305 |
$ |
15,420 |
$ |
885 |
6 |
% |
$ |
55,564 |
$ |
49,919 |
$ |
5,645 |
11 |
% |
|||||||||||||
Account servicing revenue |
83,145 |
63,103 |
20,042 |
32 |
% |
230,572 |
189,274 |
41,298 |
22 |
% |
|||||||||||||||||||
Finance fee revenue |
40 |
33 |
7 |
21 |
% |
101 |
111 |
(10) |
(9) |
% |
|||||||||||||||||||
Other revenue |
5,911 |
10,560 |
(4,649) |
(44) |
% |
18,775 |
35,494 |
(16,719) |
(47) |
% |
|||||||||||||||||||
Total revenues |
$ |
105,401 |
$ |
89,116 |
$ |
16,285 |
18 |
% |
$ |
305,012 |
$ |
274,798 |
$ |
30,214 |
11 |
% |
Exhibit 5 Segment Adjusted Operating Income and Adjusted Operating Income Margin Information (in thousands) (unaudited) |
|||||||||||||
Segment Adjusted Operating Income |
Segment Adjusted Operating Income |
||||||||||||
Three Months Ended September 30, |
Three Months Ended September 30, |
||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||
Fleet Solutions |
$ |
144,853 |
$ |
102,276 |
50.6 |
% |
44.7 |
% |
|||||
Travel and Corporate Solutions |
$ |
31,057 |
$ |
14,184 |
34.1 |
% |
22.1 |
% |
|||||
Health and Employee Benefit Solutions |
$ |
23,863 |
$ |
23,800 |
22.6 |
% |
26.7 |
% |
|||||
Total segment adjusted operating income |
$ |
199,773 |
$ |
140,260 |
41.4 |
% |
36.7 |
% |
|||||
Segment Adjusted Operating Income |
Segment Adjusted Operating Income |
||||||||||||
Nine Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||
Fleet Solutions |
$ |
400,976 |
$ |
284,064 |
49.8 |
% |
41.6 |
% |
|||||
Travel and Corporate Solutions |
$ |
55,229 |
$ |
47,060 |
22.7 |
% |
23.2 |
% |
|||||
Health and Employee Benefit Solutions |
$ |
83,487 |
$ |
78,525 |
27.4 |
% |
28.6 |
% |
|||||
Total segment adjusted operating income |
$ |
539,692 |
$ |
409,649 |
39.9 |
% |
35.3 |
% |
(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 total segment adjusted operating income to GAAP operating income.
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
Adjusted operating income |
$ |
178,796 |
$ |
125,443 |
$ |
485,332 |
$ |
364,336 |
|||||||
Adjusted operating income margin (1) |
37.0 |
% |
32.8 |
% |
35.9 |
% |
31.4 |
% |
(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/20211028005254/en/
News media contact:
WEX
Rob Gould, 207-523-7429
[email protected]
or
Investor contact:
WEX
Steve Elder, 207-523-7769
[email protected]
Source: WEX Inc.