File Photo / Tim Greenway
Melissa Smith
Updated: October 24, 2024
Citing economic headwinds, WEX misses on Q3 results, scales back full-year outlook
WEX Inc. (NYSE: WEX), a Portland-based financial technology services provider, on Thursday posted third-quarter earnings and revenues that fell short of market expectations and further scaled back its full-year financial outlook.
Third-quarter adjusted net income was $177.5 million, or $4.35 per diluted share. That's up 7% over the same period last year but shy of the $4.42 per share consensus estimate of analysts polled by Zacks Investment Research.
The company posted third-quarter revenue of $665.5 million, up 2% from $651.4 million a year ago but 3.34% below the Zacks consensus forecast. The increase includes a $21.2 million unfavorable impact from fuel prices and spreads, and a $2.2 million boost from foreign exchange rates.
Over the last four quarters, WEX has surpassed consensus earnings per share estimates twice and revenue estimates just once, according to Zacks.
WEX, led by CEO Melissa Smith, provides fintech services to businesses in the areas of fleet mobility and fueling; corporate payments; travel industry payments; and employee and member benefits. The company recently launched a mobile app to help truckers save money on fuel.
“We continued to deliver growth and strong profitability in the third quarter, driven by healthy sales, high customer retention, and expanding margins. That said, our performance ultimately fell short of our expectations,” Smith said in Thursday's announcement ahead of a morning conference call with analysts.
“Although the third quarter was challenged by the macro environment, I believe that we have the right initiatives in place throughout the organization to drive strong performance over the long-term," she added.
"Underpinned by our solid balance sheet with low leverage, we will continue to make the necessary investments in the business to position WEX for sustained growth while remaining committed to creating value for our shareholders.”
Total volume was across all business segments was $62.3 billion in the third quarter, an increase of 1% from a year ago. However, corporate payments' purchase volume decreased 16% to $27.9 billion.
As of Wednesday's close on Wall Street, WEX shares have a market value of around $8.75 billion. The stock is trading 14% higher than a year ago.
Revised outlook
File Photo / Courtesy of WEX
Jagtar Narula
Pointing to a combination of factors, CFO Jagtar Narula said WEX is "reducing our outlook for the rest of the year to reflect third-quarter performance and our expectation that lower fuel prices and volume softness with mobility customers will continue into the fourth quarter."
For or the fourth quarter, WEX expects revenue in the range of $630 million to $640 million and adjusted net income in the range of $3.51 to $3.61 per diluted share.
And for the full-year, the company now expects revenue in the range of $2.62 billion to $2.63 billion. Adjusted net income is now expected to be in the range of $15.21 to $15.31 per diluted share.
Fourth-quarter and full-year guidance is based on assumed average U.S. retail fuel prices of $3.28 and $3.48 per gallon, respectively, and a 25.0% adjusted net income effective tax rate.
“Looking ahead, we believe in the long-term business momentum of WEX," Narula said. "Our board of directors recently increased our share repurchase program authorization by $1 billion and our share count is at its lowest level in nearly a decade."
He also noted that since reinitiating share repurchases in 2022, the company has reduced the number of outstanding shares by 12%,
In September, WEX shareholders authorized the company to increase its share repurchase program by another $1 billion, giving it the green light to buy up to $2.05 billion of its own common stock through the end of 2025.
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