Market Overview

WEX Inc. Reports Second Quarter 2018 Financial Results

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Total Revenue for the Quarter Increased 22%

WEX Inc. (NYSE:WEX), a leading provider of corporate payment solutions,
today reported financial results for the three months ended June 30,
2018.

Second Quarter 2018 Financial Results

Total revenue for the second quarter of 2018 increased 22% to $370.9
million from $303.9 million for the second quarter of 2017. Of the $67
million increase in the quarter, only $16.6 million was the result of
higher fuel prices.

Net income attributable to shareholders on a GAAP basis increased by
$22.2 million to $39.3 million, or $0.90 per diluted share, compared
with $17.1 million, or $0.40 per diluted share, for the second quarter
of 2017. The Company's adjusted net income attributable to shareholders,
which is a non-GAAP measure, was $90.8 million for the second quarter of
2018, or $2.09 per diluted share, up 66% per diluted share from $54.2
million or $1.26 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.

"I am pleased to report another strong quarter and a successful first
half of the year, highlighted by top and bottom line results above our
guidance range with strong contributions from each of our business
segments" said Melissa Smith, WEX's president and chief executive
officer. "We remain focused on our sustained ability to leverage our
talent and technology to bring compelling business-to-business products
to market, which is allowing us to continue to sign new customers,
retain and grow our current base and ultimately drive profitable growth.

Smith continued, "In the first half, we built on our performance from
last year, with our employees across the world focused on bringing
future-based solutions across many B2B markets through the use of
technology and capitalizing on our organic growth opportunities. We are
also pleased to report some significant contract wins during the
quarter, notably the Shell portfolio, one of the most recognized brands
in the industry, further indicating that WEX is the trusted partner of
choice. We look forward to carrying this momentum through the second
half of 2018 and beyond."

Second Quarter 2018 Performance Metrics

  • Average number of vehicles serviced was approximately 11.8 million, an
    increase of 8% from the second quarter of 2017.
  • Total fuel transactions processed increased 7% from the second quarter
    of 2017 to 139.2 million. Payment processing transactions increased 7%
    to 115.9 million.
  • U.S. retail fuel price increased 25% to $3.02 per gallon from $2.41
    per gallon in the second quarter of 2017.
  • Travel and Corporate Solutions purchase volume grew 16% to $8.9
    billion, from $7.7 billion in the second quarter of 2017.
  • Health and Employee Benefit Solutions average number of
    Software-as-a-Service (SaaS) accounts in the U.S. grew 20% to 10.7
    million from 8.9 million in the second quarter of 2017.

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 an
indeterminate amount of certain elements that are included in reported
GAAP earnings.

  • For the full year 2018, the Company expects revenue in the range of
    $1.445 billion to $1.475 billion and adjusted net income in the range
    of $344 million to $355 million, or $7.90 to $8.15 per diluted share.
    Our assumptions for the full-year include an additional $0.10 per
    diluted share in costs from the Shell integration.
  • For the third quarter of 2018, WEX expects revenue in the range of
    $363 million to $373 million and adjusted net income in the range of
    $88 million to $93 million, or $2.03 to $2.13 per diluted share.

"We are excited to deliver another quarter of impressive growth and
build upon the first-quarter's momentum. We expect to sustain this
robust level of performance through the balance of the year, allowing us
to invest in the Shell implementation and absorb changes in foreign
exchange rates" said Roberto Simon, WEX's chief financial officer.

Third quarter 2018 guidance is based on an assumed average U.S. retail
fuel price of $2.90 per gallon. Full year 2018 guidance is based on an
assumed average U.S. retail fuel price of $2.84 per gallon. The fuel
prices referenced above are based on the applicable NYMEX futures price.
Our guidance assumes approximately 43.5 million shares outstanding for
the third quarter and full year 2018.

The Company's guidance also assumes that third quarter 2018 fleet credit
loss will range from 11 to 16 basis points and full year will range from
11 to 16 basis points.

The Company's adjusted net income guidance, which is a non-GAAP measure,
excludes unrealized gains and losses on financial instruments, net
foreign currency remeasurement gains and losses, acquisition related
intangible amortization, other acquisition and divestiture related
items, stock-based compensation, restructuring and other costs, debt
restructuring and debt issuance cost amortization, similar adjustments
attributable 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

As previously disclosed, beginning in the first quarter of 2018, the
Company has modified the presentation of certain line items in its
unaudited condensed consolidated statements of income. Under the new
presentation, the Company segregates costs of services from other
operating expenses and has reclassified its operating expenses into
functional categories in order to provide additional detail into the
underlying drivers of changes in operating expenses and align its
presentation with industry practice. There are no changes to the
presentation of revenues, non-operating expenses or other statement of
income captions. Additionally, the revised presentation does not result
in a change to previously reported revenues, operating income, income
before income taxes or net income. Amounts from the prior period have
been recast to reflect the new presentation.

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 2, a table
illustrating the impact of foreign currency translations and fuel prices
for each of our reportable segments for the three and six months ended
June 30, 2018 and 2017, and in Exhibit 3, a table of selected
non-financial metrics for the quarter ended June 30, 2018 and four
preceding quarters. The Company is also providing selected segment
revenue information for the three and six months ended June 30, 2018 and
2017 in Exhibit 4.

Conference Call Details

In conjunction with this announcement, WEX will host a conference call
today, August 2, 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 slides at the Investor Relations
section of the WEX website, 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 2183139. A replay of the
webcast and the accompanying slides will be available on the Company's
website.

About WEX

Powered by the belief that complex payment systems can be made simple,
WEX (NYSE:WEX) is a leading provider of payment processing and business
solutions across a wide spectrum of sectors, including fleet, travel and
healthcare. WEX operates in more than 10 countries and in more than 20
currencies through more than 3,300 associates around the world. WEX
fleet cards offer approximately 12 million vehicles exceptional payment
security and control; purchase volume in Travel and Corporate Solutions
Segment grew to $8.9 billion; and the WEX Health financial technology
platform helps 300,000 employers and more than 25 million consumers
better manage healthcare expenses. For more information, visit www.wexinc.com.

Forward-Looking Statements

This earnings release contains forward-looking statements, including
statements regarding: financial guidance; assumptions underlying the
Company's financial guidance; future growth opportunities; expectations
for customer signings; profitability; technology advances; and, market
expansion. 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 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 ability
to successfully acquire, integrate, operate and expand 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 the Company's reputation,
liabilities or relationships with customers or merchants; the Company's
failure to maintain or renew key commercial 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, 2017, filed on Form 10-K with the Securities and
Exchange Commission on March 1, 2018. The Company's forward-looking
statements do not reflect the potential future impact of any alliance,
merger, acquisition, disposition or stock repurchases. The
forward-looking statements speak only as of the date of this earnings
release and undue reliance should not be placed on these statements. The
Company disclaims any obligation to update any forward-looking
statements as a result of new information, future events or otherwise.

 
WEX INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
   
Three months ended June 30, Six months ended June 30,
2018   2017 2018   2017
Revenues
Payment processing revenue $ 178,738 $ 141,354 $ 347,192 $ 277,732
Account servicing revenue 78,716 65,677 157,420 127,216
Finance fee revenue 51,573 42,085 101,255 85,457

Other revenue

  61,849   54,768   119,838   104,836  
Total revenues 370,876 303,884 725,705 595,241
Cost of services
Processing costs 76,306 69,233 155,928 133,563
Service fees 13,809 20,177 26,029 37,755
Provision for credit losses 11,505 16,082 25,495 28,313
Operating interest 9,528 4,619 18,013 9,512
Depreciation and amortization   20,612   18,376   41,045   35,760  
Total cost of services 131,760 128,487 266,510 244,903
General and administrative 48,488 40,073 103,921 82,250
Sales and marketing 57,697 39,983 114,238 80,141
Depreciation and amortization 30,020 31,585 59,763 63,439
Impairment charge     16,175     16,175  
Operating income 102,911 47,581 181,273 108,333
Financing interest expense (25,505 ) (28,547 ) (52,842 ) (55,695 )
Net foreign currency (loss) gain (26,734 ) 10,525 (26,344 ) 18,967
Net unrealized gain (loss) on financial instruments   2,706   (2,264 ) 16,214   (699 )
Income before income taxes 53,378 27,295 118,301 70,906
Income taxes   13,938   10,655   29,527   25,190  
Net income 39,440 16,640 88,774 45,716
Less: Net income (loss) from non-controlling interest   142   (450 ) 843   (775 )
Net income attributable to shareholders   $ 39,298   $ 17,090   $ 87,931   $ 46,491  
 
Net income attributable to WEX Inc. per share:
Basic $ 0.91 $ 0.40 $ 2.04 $ 1.08
Diluted $ 0.90 $ 0.40 $ 2.02 $ 1.08
Weighted average common shares outstanding:
Basic 43,181 43,002 43,116 42,937
Diluted 43,546 43,060 43,524 43,090
 

 
WEX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
   

June 30,
2018

December 31,
2017

Assets
Cash and cash equivalents $ 310,784 $ 508,072
Restricted cash 25,009 18,866
Accounts receivable (net of allowances of $30,247 in 2018 and
$30,207 in 2017)
3,087,354 2,517,980
Securitized accounts receivable, restricted 168,274 150,235
Prepaid expenses and other current assets   79,838   69,413  
Total current assets 3,671,259 3,264,566
Property, equipment and capitalized software (net of accumulated
depreciation of $292,111 in 2018 and $264,928 in 2017)
161,708 163,908
Goodwill and other intangible assets (net of accumulated
amortization of $456,537 in 2018 and $392,827 in 2017)
2,946,905 3,030,179
Investment securities 22,970 23,358
Deferred income taxes, net 6,410 7,752
Other assets   142,725   253,088  
Total assets   $ 6,951,977   $ 6,742,851  
Liabilities and Stockholders' Equity
Accounts payable $ 1,015,226 $ 811,362
Accrued expenses 304,346 315,346
Short-term deposits 828,243 986,989
Short-term debt, net 379,538 397,218
Other current liabilities   21,959   24,795  
Total current liabilities 2,549,312 2,535,710
Long-term debt, net 2,125,109 2,027,752
Long-term deposits 326,303 306,865
Deferred income taxes, net 130,266 119,283
Other liabilities   28,991   32,683  
Total liabilities 5,159,981 5,022,293
Commitments and contingencies
Stockholders' Equity
Common Stock $0.01 par value; 175,000 shares authorized; 47,514
shares issued in 2018 and 47,352 in 2017; 43,086 shares outstanding
in 2018 and 43,022 in 2017
475 473
Additional paid-in capital 574,818 569,319
Retained earnings 1,493,255 1,404,683
Accumulated other comprehensive loss (114,079 ) (90,795 )
Treasury stock at cost; 4,428 shares in 2018 and 2017   (172,342 ) (172,342 )
Total WEX Inc. stockholders' equity 1,782,127 1,711,338
Non-controlling interest   9,869   9,220  
Total stockholders' equity   1,791,996   1,720,558  
Total liabilities and stockholders' equity   $ 6,951,977   $ 6,742,851  
 

 
Exhibit 1

Reconciliation of GAAP Net Income Attributable to Shareholders
to Adjusted Net Income Attributable to Shareholders

(in thousands, except per share data)
(unaudited)
 
Three Months Ended June 30,
2018   2017
        per diluted share    

per diluted
share

Net income attributable to shareholders $ 39,298 $ 0.90 $ 17,090 $ 0.40
Unrealized (gains) losses on financial instruments (2,706 ) (0.06 ) 2,264 0.05
Net foreign currency remeasurement losses (gains) 26,734 0.61 (10,525 ) (0.24 )
Acquisition–related intangible amortization 34,921 0.80 38,114 0.89
Other acquisition and divestiture related items 619 0.01 239 0.01
Stock–based compensation 6,905 0.16 7,414 0.17
Restructuring and other costs 630 0.01 2,398 0.06
Impairment charge 16,175 0.38
Debt issuance cost amortization 2,607 0.06 2,209 0.05
ANI adjustments attributable to non–controlling interest (186 ) (156 )
Tax related items   (17,990 ) (0.41 ) (21,022 ) (0.49 )
Adjusted net income attributable to shareholders   $ 90,832   $ 2.09   $ 54,200   $ 1.26  
 
Six Months Ended June 30,
2018 2017
      per diluted share  

per diluted
share

Net income attributable to shareholders $ 87,931 $ 2.02 $ 46,491 $ 1.08
Unrealized (gains) losses on financial instruments (16,214 ) (0.37 ) 699 0.02
Net foreign currency remeasurement losses (gains) 26,344 0.61 (18,967 ) (0.44 )
Acquisition–related intangible amortization 70,157 1.61 76,093 1.77
Other acquisition and divestiture related items 1,256 0.03 2,374 0.06
Stock–based compensation 15,860 0.36 13,871 0.32
Restructuring and other costs 6,301 0.14 4,145 0.10
Impairment charge 16,175 0.38
Debt restructuring and debt issuance cost amortization 9,299 0.21 4,163 0.10
ANI adjustments attributable to non–controlling interest (538 ) (0.01 ) (955 ) (0.02 )
Tax related items   (30,883 ) (0.71 ) (37,001 ) (0.86 )
Adjusted net income attributable to shareholders   $ 169,513   $ 3.89   $ 107,088   $ 2.49  
 

The Company's non-GAAP adjusted net income excludes unrealized gains and
losses on financial instruments, net foreign currency remeasurement
gains and losses, acquisition-related intangible amortization, other
acquisition and divestiture related items, stock-based compensation,
restructuring and other costs, an impairment charge, debt restructuring
and debt issuance cost amortization, similar adjustments attributable to
our non-controlling interest and certain tax related items.

Although adjusted net income is not calculated in accordance with U.S.
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 segment adjusted
operating income to allocate resources among our operating segments. The
Company considers this measure integral because it excludes 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.
  • 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, 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 prior periods not
    reflected above, the Company has adjusted for goodwill impairments,
    acquisition-related asset impairments and gains and losses on
    divestitures. 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 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 do
    they provide insight into the fundamentals of current or past
    operations of our business.
  • Impairment charge represents a non-cash asset write-off related to our
    strategic decision to in-source certain technology functions. This
    charge does not reflect recurring costs that would be relevant to the
    Company's continuing operations. 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 its industry.
  • Debt restructuring and debt issuance cost amortization 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 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 interest 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.

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 June 30,
2018   2017 2018   2017 2018   2017 2018   2017
Reported revenue $ 241,470 $ 200,304 $ 75,764 $ 55,000 $ 53,642 $ 48,580 $ 370,876 $ 303,884
FX impact (favorable) / unfavorable (1,125 ) (1,020 ) 586 (1,559 )
PPG impact (favorable) / unfavorable (16,591 )           (16,591 )
Six months ended June 30,
2018 2017 2018 2017 2018 2017 2018 2017
Reported revenue $ 471,835 $ 391,127 $ 142,543 $ 102,713 $ 111,327 $ 101,401 $ 725,705 $ 595,241
FX impact (favorable) / unfavorable (4,100 ) (2,452 ) 804 (5,748 )
PPG impact (favorable) / unfavorable (25,559 )           (25,559 )
 

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.

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 June 30,
2018   2017 2018   2017 2018   2017
FX impact (favorable) / unfavorable $ 83 $ $ (700 ) $ $ 130 $
PPG impact (favorable) / unfavorable (11,241 )
                     
Six months ended June 30,
2018 2017 2018 2017 2018 2017
FX impact (favorable) / unfavorable $ (671 ) $ $ (1,461 ) $ $ 194 $
PPG impact (favorable) / unfavorable (17,396 )
 

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-U.S. 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 Metrics1

(unaudited)
  Q2 2018   Q1 2018   Q4 2017   Q3 2017   Q2 2017
Fleet Solutions:
Payment processing transactions (000s) 115,919 109,827 108,767 110,047 108,134
Payment processing gallons of fuel (000s) 3,012,912 2,877,303 2,877,971 2,905,700 2,907,875
Average US fuel price (US$ / gallon) $ 3.02 $ 2.78 $ 2.68 $ 2.51 $ 2.41
Payment processing $ of fuel (000s) $ 9,497,050 $ 8,438,143 $ 8,199,619 $ 7,688,750 $ 7,399,901
Net payment processing rate 1.19 % 1.27 % 1.18 % 1.17 % 1.18 %
Payment processing revenue (000s) $ 112,895 $ 106,978 $ 95,948 $ 90,270 $ 87,678
Net late fee rate 0.38 % 0.41 % 0.44 % 0.42 % 0.39 %
Late fee revenue (000s) $ 35,831 $ 34,657 $ 35,510 $ 32,077 $ 28,713
Travel and Corporate Solutions:
Purchase volume (000s) $ 8,930,421 $ 7,940,543 $ 7,405,045 $ 8,662,533 $ 7,676,935
Net interchange rate 0.57 % 0.56 % 0.53 % 0.51 % 0.52 %
Payment solutions processing revenue (000s) $ 51,289 $ 44,777 $ 39,332 $ 44,177 $ 40,276
Health and Employee Benefit Solutions:
Purchase volume (000s) $1,253,309 $ 1,503,400 $ 887,511 $ 955,652 $ 1,126,854
Average number of SaaS accounts (000s) 10,745 10,826 9,774 9,566 8,934
 
1The Company adopted Accounting Standards Update No.
2014-09, Revenue from Contracts with Customers ("Topic 606") as of
January 1, 2018, utilizing the modified retrospective method of
transition. Impacted non-financial metrics have been updated
prospectively.
 

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 prior to January 1, 2018 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. With the adoption of Topic 606,
effective January 1, 2018, 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.

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 WEX issued transactions that use WEX
corporate card products and virtual card products.

Net interchange rate prior to January 1, 2018 represents the percentage
of the dollar value of each transaction that WEX records as revenue,
less any discounts given to customers or strategic relationships. With
the adoption of Topic 606, effective January 1, 2018, 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.

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 Consumer Directed Health, COBRA, and
billing accounts on our SaaS platform 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   2018   2017 Amount   Percent 2018   2017 Amount   Percent
Revenues
Payment processing revenue $ 112,895 $ 87,678 $ 25,217 29 % $ 219,873 $ 173,940 $ 45,933 26 %
Account servicing revenue 43,019 41,311 1,708 4 % 85,229 77,380 7,849 10 %
Finance fee revenue 45,188 36,552 8,636 24 % 88,792 72,981 15,811 22 %
Other revenue   40,368   34,763   5,605   16 % 77,941   66,826   11,115   17 %
Total revenues   $ 241,470   $ 200,304   $ 41,166   21 % $ 471,835   $ 391,127   $ 80,708   21 %
       

Three months ended
June 30,

Increase (decrease)

Six months ended
June 30,

Increase (decrease)
Travel and Corporate Solutions   2018   2017 Amount   Percent 2018   2017 Amount   Percent
Revenues
Payment processing revenue $ 51,289 $ 40,276 $ 11,013 27 % $ 96,066 $ 75,151 $ 20,915 28 %
Account servicing revenue 8,995 167 8,828

NM

18,464 322 18,142 NM
Finance fee revenue 228 159 69 43 % 487 382 105 27 %
Other revenue   15,252   14,398   854   6 % 27,526   26,858   668   2 %
Total revenues   $ 75,764   $ 55,000   $ 20,764   38 % $ 142,543   $ 102,713   $ 39,830   39 %

NM - Not meaningful

 

Three months ended
June 30,

 

Increase (decrease)

 

Six months ended
June 30,

  Increase (decrease)

Health and Employee Benefit
Solutions

  2018   2017 Amount   Percent 2018   2017 Amount   Percent
Revenues
Payment processing revenue $ 14,554 $ 13,400 $ 1,154 9 % $ 31,253 $ 28,641 $ 2,612 9 %
Account servicing revenue 26,702 24,199 2,503 10 % 53,727 49,514 4,213 9 %
Finance fee revenue 6,157 5,374 783 15 % 11,976 12,094 (118 ) (1 )%
Other revenue   6,229   5,607   622   11 % 14,371   11,152   3,219   29 %
Total revenues   $ 53,642   $ 48,580   $ 5,062   10 % $ 111,327   $ 101,401   $ 9,926   10 %

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