WEX Inc. (NYSE: WEX), a leading provider of corporate payment
solutions, today reported financial results for the three months
and year ended December 31, 2017.
Fourth Quarter and Full Year 2017 Financial Results
Total revenue for the fourth quarter of 2017 increased 14%
year-over-year to $331.3 million as compared with $290.8 million
for the fourth quarter of 2016. Net earnings attributable to
shareholders on a GAAP basis were $79.8 million, or $1.85 per
diluted share, compared with $5.3 million, or $0.12 per diluted
share, for the fourth quarter of 2016.
The Company's adjusted net income attributable to shareholders,
which is a non-GAAP measure, increased 17% to $64.5 million for the
fourth quarter of 2017 from $55.2 million for the same period a
year ago. Adjusted net income for the fourth quarter of 2017 was
$1.49 compared to $1.28 per diluted share for the same period a
year ago. See Exhibit 1 for a full reconciliation of adjusted net
income attributable to shareholders and adjusted net income
attributable to shareholders per diluted share to the comparable
GAAP measures.
For the full year 2017, revenue increased 23% to $1.25 billion
from $1.02 billion in 2016. Net earnings attributable to
shareholders on a GAAP basis were $3.72 per diluted share in 2017
compared to $1.48 per diluted share in 2016. On a non-GAAP basis,
adjusted net income attributable to shareholders increased 17% to
$5.41 per diluted share from $4.62 per diluted share in 2016.
"We are extremely pleased by our fourth quarter and fiscal year
performance, with positive contributions from all three of our
segments driving 2017 revenues to record levels,” said Melissa
Smith, WEX's president and chief executive officer. “Our relentless
approach to executing on our strategic priorities continues to
deliver outstanding results and position us for long-term
growth.”
Smith continued, “In 2017, we continued to bring new, compelling
products to the global marketplace through a deep technical
integration with our customers. Our business is more diverse and
innovative than ever before, and we are well situated to enhance
scalability and capture market share as we head into 2018.”
Fourth Quarter 2017 Performance Metrics
- Average number of vehicles serviced was
approximately 11.3 million, an increase of 8% from the fourth
quarter of 2016;
- Total fuel transactions processed
increased 6% from the fourth quarter of 2016 to 130.8 million.
Payment processing transactions increased 9% to 108.8 million;
- U.S. retail fuel price increased 17% to
$2.68 per gallon from $2.30 per gallon in the fourth quarter of
2016;
- Travel and Corporate Solutions purchase
volume grew 17% to $7.4 billion, from $6.4 billion for the fourth
quarter of 2016; and
- Health and Employee Benefits Solutions
average number of SaaS accounts in the US grew 29% to 9.8 million
from 7.6 million for the fourth quarter of 2016.
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
indeterminate amount of certain elements that are included in
reported GAAP earnings.
- For the first quarter of 2018, WEX
expects revenue in the range of $333 million to $343 million and
adjusted net income in the range of $72 million to $75 million, or
$1.66 to $1.74 per diluted share.
- For the full year 2018, the Company
expects revenue in the range of $1.40 billion to $1.44 billion and
adjusted net income in the range of $315 million to $332 million,
or $7.30 to $7.70 per diluted share.
"Our fourth quarter and fiscal year outperformance reflects our
ability to grow organically and leverage our strategic investments.
The foundation we have built has never been stronger and will
continue to drive better execution as we look to capitalize on
additional growth opportunities in the years ahead." said Roberto
Simon, WEX's chief financial officer.
First quarter and full year 2018 guidance is based on an assumed
average U.S. retail fuel price of $2.70 and $2.65 per gallon,
respectively. The fuel prices referenced above are based on the
applicable NYMEX futures price. The Company's guidance also assumes
that fleet credit loss for first quarter will be in the range of 12
to 17 basis points and the full year will be in the range of 11 to
16 basis points. Our guidance assumes approximately 43 million
shares outstanding for the year.
The Company's adjusted net income guidance, which is a non-GAAP
measure, excludes unrealized gains and losses on derivative
instruments, net foreign currency remeasurement gains and losses
and related derivatives, acquisition-related ticking fees,
acquisition related intangible amortization, other acquisition and
divestiture related items, stock-based compensation, restructuring
and other costs, impairment charges, gains or losses on
divestitures a one-time contract renegotiation cost, debt
restructuring and debt issuance cost amortization, non-cash
adjustments related to tax receivable agreement, regulatory
reserves, similar adjustments attributed to our non-controlling
interest 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 derivative
instruments, and acquisition and divestiture related items, 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.
WEX historically used fuel-price derivative instruments to
mitigate financial risks associated with the variability in fuel
prices in North America. Starting with the second quarter of 2016,
there are no longer any fuel price related derivatives
outstanding.
To provide investors with additional insight into its
operational performance, WEX has included in this news release in
Exhibit 2, a table illustrating the impact of foreign currency
translations and fuel prices for each of our operating segments for
the three and twelve months ended December 31, 2017 and 2016, and
in Exhibit 3, a table of selected non-financial metrics for the
five quarters ended December 31, 2017. The Company is also
providing selected segment revenue information for the three and
twelve months ended December 31, 2017 and 2016 in Exhibit 4.
Conference Call Details
In conjunction with this announcement, WEX will host a
conference call today, February 21, 2018, at 9:00 a.m. (ET). As
previously announced, the conference call will be webcast live on
the Internet, and can be accessed, along with the accompanying
investor presentation, 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 5389608. A replay of the webcast along with
the accompanying investor presentation 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 11.3 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 more than 3,300 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; and, management’s expectations
for future growth opportunities, scalability and market expansion.
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 as well as payment and transaction
processing activity; the impact of foreign currency exchange rates
on the Company’s operations, revenue and income; changes in
interest rates; the impact of fluctuations in fuel prices; the
effects of the Company’s business expansion and acquisition
efforts; 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 ability to successfully
integrate the Company's acquisitions; the ability to realize
anticipated synergies and cost savings; unexpected costs, charges
or expenses resulting from an acquisition; the Company's failure to
successfully operate and expand ExxonMobil's European and Asian
commercial fuel card programs; 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
standards; 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 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; 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; 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 impact of the Company’s
outstanding notes on its operations; the impact of increased
leverage on the Company's operations, results or borrowing capacity
generally, and as a result of acquisitions specifically; 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,
2016, filed on Form 10-K with the Securities and Exchange
Commission on March 6, 2017 and our quarterly report on Form 10-Q
for the three months ended March 31, 2017 filed with the Securities
and Exchange Commission on May 8, 2017. 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.
CONSOLIDATED STATEMENTS OF
INCOME
(in thousands, except per share
data)
(unaudited)
Three months ended December
31,
Year ended
December 31,
2017 2016
2017 2016 Revenues
Payment processing revenue
$ 145,732 $ 137,300
$ 569,166 $ 520,619
Account servicing revenue
78,032 60,242
276,570
211,012 Finance fee revenue
51,246 46,592
187,582
138,940 Other revenue
56,295 46,706
217,230 147,889 Total revenues
331,305 290,840
1,250,548 1,018,460
Expenses
Salary and other personnel
101,727 79,521
363,444
286,298 Restructuring
340 (140 )
7,139 7,486 Service
fees
33,831 36,955
149,137 173,052 Provision for
credit losses
13,221 13,498
61,148 33,348 Technology
leasing and support
11,934 13,077
52,179 47,602
Occupancy and equipment
8,377 6,723
27,729 25,820
Depreciation and amortization
53,296 50,270
203,724
141,651 Operating interest expense
7,788 6,897
24,482
12,386 Cost of hardware and equipment
1,121 693
4,314
3,122 Impairment charges and asset write-offs
27,996 —
44,171 — Gain on divestiture
(20,958 ) —
(20,958 ) — Other
25,418 35,548
94,769 92,567 Total
operating expenses
264,091
243,042
1,011,278 823,332
Operating income
67,214 47,798
239,270 195,128
Financing interest expense
(25,618 ) (26,378 )
(107,067 ) (113,418 ) Net foreign currency (loss)
gain
(3,659 ) (24,898 )
29,919 (7,665 ) Net
unrealized gains on interest rate swap agreements
2,163
12,908
1,314 12,908 Net realized and unrealized gains on
fuel price derivatives
— —
— 711 Non-cash adjustments
related to tax receivable agreement
15,259 (395 )
15,259
(563 ) Income before income taxes
55,359 9,035
178,695 87,101 Income taxes
(24,235 ) 5,895
19,525 29,625 Net income
79,594 3,140
159,170 57,476 Less: Net loss from non-controlling interest
(210 ) (2,148 )
(1,096 ) (3,161 )
Net earnings attributable
to shareholders $ 79,804 $ 5,288
$
160,266 $ 60,637
Net earnings attributable to
shareholders per share: Basic
$ 1.86 $ 0.12
$ 3.73 $ 1.49 Diluted
$ 1.85 $ 0.12
$ 3.72 $ 1.48
Weighted average common shares
outstanding: Basic
43,020 42,841
42,977 40,809
Diluted
43,158
43,072
43,105
40,914
WEX INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share
data)
(unaudited)
December 31, 2017
2016
Assets Cash and cash equivalents
$ 508,072 $ 190,930 Accounts receivable (net of
allowances of $30,207 in 2017 and $21,454 in 2016)
2,527,840
2,054,701 Securitized accounts receivable, restricted
150,235 97,417 Income taxes receivable
— 10,765
Available-for-sale securities
23,358 23,525
Property, equipment and capitalized
software (net of accumulated depreciation of $264,928 in2017 and
$228,336 in 2016)
163,908 167,278 Deferred income taxes, net
7,752
6,934 Goodwill
1,876,132 1,838,441
Other intangible assets (net of
accumulated amortization of $392,827 in 2017 and $254,142
in2016)
1,154,047 1,265,468 Other assets
327,831 341,638
Total
assets $ 6,739,175
$ 5,997,097
Liabilities and Stockholders’
Equity Accounts payable
$ 811,362 $ 617,118
Accrued expenses
323,222 331,579 Income taxes payable
1,076 — Deposits
1,293,854 1,118,823 Securitized debt
126,901 84,323 Revolving line-of-credit facility and term
loans, net
1,707,064 1,599,291 Deferred income taxes, net
119,283 152,906 Notes outstanding, net
396,269
395,534 Other debt
194,737 125,755 Amounts due under tax
receivable agreement
20,273 47,302 Other liabilities
24,576 18,719
Total liabilities 5,018,617 4,491,350 Commitments and
contingencies
Stockholders’ Equity
Common stock $0.01 par value; 175,000
shares authorized; 47,352 shares issued in 2017 and 47,173in 2016;
43,022 shares outstanding in 2017 and 42,841 in 2016
473 472 Additional paid-in capital
569,319 547,627
Retained earnings
1,404,683 1,244,271 Accumulated other
comprehensive loss
(90,795 ) (122,839 ) Treasury
stock at cost; 4,428 shares in 2017 and 2016
(172,342 ) (172,342 )
Total WEX Inc.
stockholders' equity 1,711,338 1,497,189 Non-controlling
interest
9,220
8,558
Total stockholders’ equity
1,720,558 1,505,747
Total
liabilities and stockholders’ equity
$ 6,739,175 $ 5,997,097
Exhibit 1
Reconciliation of GAAP Net Earnings
Attributable to Shareholders to Adjusted Net Income Attributable
to
Shareholders
(in thousands, except per share
data)
(unaudited)
Three months ended December 31, 2017
2016
per dilutedshare
per dilutedshare
Net earnings attributable to shareholders
$ 79,804 $ 1.85
$ 5,288 $ 0.12 Unrealized
gains on derivative instruments
(2,163 ) (0.05
) (12,908 ) (0.30 ) Net foreign currency
remeasurement loss
3,659 0.08 24,898 0.58
Acquisition-related intangible amortization
39,207 0.91
38,763 0.90 Other acquisition and divestiture related items
1,620 0.04 1,185 0.03 Stock-based compensation
8,133
0.19 5,430 0.13 Restructuring and other costs
960 0.02 2,306
0.05 Impairment charges and asset write-offs
27,996 0.65 — —
Gain on divestiture
(20,958 ) (0.49 ) — — Vendor
settlement
— — 15,500 0.36 Debt restructuring and debt
issuance cost amortization
2,069 0.05 2,024 0.05 Non-cash
adjustments related to tax receivable agreement
(15,259
) (0.35 ) 395 0.01 ANI adjustments attributable to
non-controlling interest
(401 ) (0.01 ) (1,383 )
(0.03 ) Tax related items
(60,196 )
(1.39 ) (26,329 ) (0.61 )
Adjusted
net income attributable to shareholders
$ 64,471 $ 1.49
$ 55,169 $ 1.28
Year
ended December 31, 2017 2016
per dilutedshare
per dilutedshare
Net earnings attributable to shareholders
$ 160,266 $ 3.72 $
60,637 $ 1.48 Unrealized gains
on derivative instruments
(1,314 ) (0.03 ) (7,901 )
(0.19 ) Net foreign currency remeasurement (gain) loss
(29,919 ) (0.69 ) 7,665 0.19 Acquisition-related
ticking fees
— — 30,045 0.73 Acquisition-related intangible
amortization
153,810 3.57 97,829 2.39 Other acquisition and
divestiture related items
5,000 0.12 20,879 0.51 Stock-based
compensation
30,487 0.71 19,742 0.48 Restructuring and other
costs
11,129 0.26 13,995 0.34 Impairment charges and asset
write-offs
44,171 1.02 — — Gain on divestiture
(20,958 ) (0.49 ) — — Vendor settlement
— —
15,500 0.38 Debt restructuring and debt issuance cost amortization
10,519 0.24 12,673 0.31 Non-cash adjustments related to tax
receivable agreement
(15,259 ) (0.35 ) 563 0.01 ANI
adjustments attributable to non-controlling interests
(1,563
) (0.04 ) (2,583 ) (0.06 ) Tax related items
(113,327
) (2.63 ) (79,834 ) (1.95 )
Adjusted net
income attributable to shareholders $
233,042 $ 5.41 $
189,210 $ 4.62
The Company's non-GAAP adjusted net income excludes unrealized
gains and losses on derivatives, net foreign currency remeasurement
gains and losses, acquisition-related ticking fees,
acquisition-related intangible amortization, other acquisition and
divestiture related items, stock-based compensation, restructuring
and other costs, gain on divestiture, a one time vendor settlement,
debt restructuring and debt issuance cost amortization, non-cash
adjustments related to tax receivable agreement, similar
adjustments attributed to our non-controlling interest and certain
tax related items. In addition, for the three months and year ended
December 31, 2017, we have excluded certain impairment charges and
asset write-offs as described below.
Although adjusted net income is not calculated in accordance
with generally accepted accounting principles (“GAAP”), this
non-GAAP measure is integral to the Company's reporting and
planning processes and the chief operating decision maker of the
Company uses adjusted operating income to allocate resources among
our operating segments The Company considers this measure integral
because it excludes 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 derivative instruments, including
fuel price related derivatives and interest rate swap agreements,
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
derivative contracts.
- Net foreign currency gains and losses
primarily result from the remeasurement to functional currency of
cash, receivable and 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 Company considers certain
acquisition-related costs, including certain financing costs,
ticking fees, 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. During the year ended
December 31, 2017, the Company determined that our Telapoint
business did not align with the long-term strategy of our core
Fleet business and as result sold the net assets of the business.
In prior periods not reflected above, the Company has adjusted for
goodwill impairments and acquisition related asset impairments. 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 of
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.
- Restructuring and other costs are
related to employee termination benefits from certain identified
initiatives to further streamline the business, improve the
Company's efficiency, create synergies and to globalize the
Company's operations, all with an objective to improve scale and
increase profitability going forward. We exclude these items when
evaluating our continuing business performance as 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.
- Impairment charges and asset write-offs
represent non-cash asset write-offs related to the following:
- Impairment of certain prepaid services
following a strategic decision to in-source certain technology
functions.
- Impairments of certain payment
processing software following the acquisition of AOC and as part of
our ongoing platform consolidation strategy, designed to ensure we
continue to deliver superior technology to our customers.
- These charges do not reflect recurring
costs that are relevant to our continuing operations. The Company
believes that excluding these nonrecurring expenses facilitates the
comparison of our financial results to the Company's historical
operating results and to other companies in our industry.
- Vendor settlement represents a payment
made in 2016 in exchange for the release of potential claims
related to insourcing certain technology, and does not reflect
recurring costs that would be relevant to the continuing operations
of the Company. The Company believes that excluding this
nonrecurring expense facilitates the comparison of our financial
results to the Company's historical operating results and to other
companies in our industry.
- Debt restructuring and debt issuance
cost amortization are non-cash items that are unrelated to the
continuing operations of the Company. Debt restructuring costs 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. 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 the non-cash adjustments
related to 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
including various impacts from the tax reform act passed in
December 2017. 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.
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 table below shows the impact of certain macro factors on
reported revenue:
Exhibit 2
Segment Revenue Results
(in thousands)
(unaudited)
Fleet Solutions
Travel and Corporate
Solutions
Health and Employee Benefit
Solutions
Total WEX Inc. Three months ended December
31, 2017 2016
2017
2016
2017 2016
2017 2016 Reported revenue
$ 219,761 192,269
$60,308
$53,454
$51,236 $45,117
$331,305
$ 290,840
FX impact(favorable) /unfavorable
(1,935 ) —
(1,022 ) —
(156
) —
(3,113 ) —
PPG impact(favorable) /unfavorable
(11,614 ) —
— —
—
—
(11,614 )
—
Year ended December 31, 2017
2016
2017 2016
2017 2016
2017 2016 Reported revenue
$
822,966 642,061
$224,047 $215,247
$203,535
$161,152
$1,250,548 $ 1,018,460
FX impact(favorable) /unfavorable
(2,619 ) —
433 —
(2,969 ) —
(5,155 ) —
PPG impact(favorable) /unfavorable
(43,212 ) —
— —
—
—
(43,212 )
—
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-US denominated currencies, were translated
using the weighted average exchange rates for the same period in
the prior year.
To determine the impact of price per gallon of fuel (“PPG”) on
revenue, revenue variable 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. 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
(in thousands)
(unaudited)
Fleet Solutions
Travel and Corporate
Solutions
Health and Employee Benefit
Solutions
Three months ended December 31,
2017
2016
2017 2016
2017
2016
FX impact (favorable) / unfavorable
$ (400 ) —
$ (373 ) —
$ (47 ) — PPG impact (favorable) / unfavorable
(6,727 ) —
— —
— — Realized gain on
hedge settlement
$ — $ —
$ — $ —
$ — $ —
Year ended December 31,
2017 2016
2017 2016
2017 2016 FX impact
(favorable) / unfavorable
$ (530 ) —
$
(96 ) —
$ (524 ) — PPG impact
(favorable) / unfavorable
(24,896 ) —
— —
— — Realized gain on hedge settlement
$ —
$ 3,636
$ — $ —
$
— $ —
To determine the estimated earnings impact of FX, 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-US denominated currencies, were
translated using the weighted average exchange rates for the same
period in the prior year, net of tax.
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. 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 interest and applicable
taxes.
Exhibit 3
Selected Non-Financial Metrics
Q4 2017 Q3 2017
Q2 2017 Q1 2017 Q4 2016
Fleet Solutions:
Payment processing transactions (000s)
108,767
110,047 108,134 102,765 99,662 Payment processing gallons of fuel
(000s)
2,877,971 2,905,700 2,907,875 2,775,590 2,731,994
Average US fuel price (US$ / gallon)
$ 2.68 $ 2.51 $
2.41 $ 2.40 $ 2.30 Payment processing $ of fuel (000s)
$
8,119,619 $ 7,688,750 $ 7,399,901 $ 7,080,117 $ 6,672,281
Net payment processing rate
1.18 % 1.17 % 1.18 % 1.22
% 1.23 % Payment processing revenue (000s)
$ 95,948 $
90,270 $ 87,678 $ 86,262 $ 81,767 Net late fee rate
0.44
% 0.42 % 0.39 % 0.42 % 0.48 % Late fee revenue (000s)
$ 35,510 $ 32,077 $ 28,713 $ 29,463 $ 31,928
Travel and Corporate Solutions: Purchase volume (000s)
$ 7,405,045 $ 8,662,533 $ 7,676,935 $ 6,599,797 $
6,351,741 Net interchange rate
0.53 % 0.51 % 0.52 %
0.53 % 0.71 % Payment solutions processing revenue (000s)
$
39,332 $ 44,177 $ 40,276 $ 34,875 $ 45,390
Health and
Employee Benefit Solutions: Purchase volume (000s)
$
887,511 $ 955,652 $ 1,126,854 $ 1,347,219 $ 803,045
Average number of SaaS accounts (000s)
9,774 9,566 8,934 8,576 7,551
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.
Net late fee rate represents late fee revenue as a percentage of
fuel purchased by fleets that have a payment processing
relationship with WEX.
Late fee revenue represents fees charged for payments not made
within the terms of the customer agreement based upon the
outstanding customer receivable balance.
Purchase volume in the Travel and Corporate Solutions segment
represents the total dollar value of all transactions that use WEX
corporate card products and virtual card 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.
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.
Average number of Health and Employee Benefit Solutions accounts
represents the number of active flexible spending, health savings
and reimbursement accounts.
Exhibit 4
Segment Revenue Information
Fourth Quarter and Full Year Ended 2017
and 2016
(in thousands)
(unaudited)
Fleet Solutions Three months
endedDecember 31, Increase
(decrease) Year endedDecember 31,
Increase (decrease)
2017 2016 Amount Percent
2017 2016 Amount
Percent
Revenues
Payment processing revenue
$
95,948 $ 81,767 $ 14,181 17 %
$ 360,158 $
297,900 $ 62,258 21 % Account servicing revenue
42,845
36,706 6,139 17 %
165,083 127,106 37,977 30 % Finance fee
revenue
45,582 38,884 6,698 17 %
159,336 124,725
34,611 28 % Other revenue
35,386
34,912 474 1 %
138,389 92,330
46,059 50 % Total revenues
$ 219,761 $
192,269 $ 27,492 14 %
$ 822,966 $ 642,061 $ 180,905
28 %
Travel and Corporate
Solutions
Three months endedDecember 31,
Increase (decrease) Year
endedDecember 31, Increase
(decrease) 2017 2016
Amount Percent
2017
2016 Amount Percent
Revenues
Payment processing revenue
$ 39,332 $ 45,390 $ (6,058
) (13 )%
$ 158,660 $ 175,762 $ (17,102 ) (10 )%
Account servicing revenue
7,003 396 6,607 1,668 %
7,531 1,247 6,284 504 % Finance fee revenue
291 307
(16 ) (5 )%
760 643 117 18 % Other revenue
13,682 7,361 6,321
86 %
57,096 37,595
19,501 52 % Total revenues
$ 60,308 $ 53,454 $ 6,854 13 %
$
224,047 $ 215,247 $ 8,800 4 %
Health and Employee Benefit
Solutions
Three months endedDecember 31,
Increase (decrease) Year
endedDecember 31, Increase
(decrease) 2017 2016
Amount Percent
2017
2016 Amount Percent
Revenues
Payment processing revenue
$ 10,452 $ 10,144 $ 308 3
%
$ 50,348 $ 46,957 $ 3,391 7 % Account servicing
revenue
28,184 23,141 5,043 22 %
103,956 82,660
21,296 26 % Finance fee revenue
5,373 7,401 (2,028 ) (27 )%
27,486 13,572 13,914 103 % Other revenue
7,227 4,431 2,796
63 %
21,745 17,963
3,782 21 % Total revenues
$ 51,236 $ 45,117 $ 6,119 14 %
$
203,535 $ 161,152 $ 42,383 26 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180221005368/en/
News Media:WEX Inc.Jessica Roy, 207-523-6763Jessica.Roy@wexinc.comorInvestors:WEX
Inc.Steve Elder, 207-523-7769Steve.Elder@wexinc.com
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