WEX beats market estimates on Q3 results, raises 2021 guidance

File photo / Courtesy WEX WEX Inc. is a global financial technology service provider headquartered in Portland.

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WEX Inc. (NYSE: WEX), a Portland-based financial technology service provider, on Thursday posted third-quarter results that exceeded market expectations and raised its full-year financial projections.

Adjusted net income attributable to shareholders was $111.1 million for the third quarter, or $2.45 per diluted share. Diluted earnings per share are 54% above the same period last year and higher than the the $2.29 per diluted share consensus forecast of analysts polled by Zacks Investment Research. Over the last four quarters, WEX has exceeded Zacks consensus estimates three times.

Third-quarter revenue was $482.8 million, up 26% over a year earlier and 1.02% above the Zacks consensus forecast. WEX said the revenue increase includes a $34.9 million favorable impact from fuel prices and spreads and a $1 million positive impact from foreign exchange rates.

The company reported a record-high total purchase volume of $26 billion, up 93% over last year.

“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," said WEX Chair and CEO Melissa Smith. "We are excited about the growth opportunities ahead and remain committed to driving long-term shareholder value while delivering for our customers."

Investors were not immediately convinced, however, pushing shares down 11.12% to $163.69 by early afternoon after falling as low as $162.76. The stock has a market capitalization of around $7.33 billion.

In a morning conference call with analysts and investors, Smith noted that the jump in revenue growth was supported by double-digit increases in each business segment. Those increases were 25% in fleet, 42% in travel and corporate and 18% in health and employee benefits.

Concerning WEX's fleet business division, Smith said that that a rebound in mobility overall is leading to higher volumes for the company's North American customers as offices reopen and highlighted several efforts to support WEX fleet customers in the transition to electric vehicles.

One example of that is a new collaboration with Element Fleet Management Corp. (TSX: EFN) and ChargePoint, of Campbell, Calif. she said, adding that WEX is "proud to support the transition" to electric vehicles.

New financial guidance

Just three months after restarting financial guidance, WEX also raised its full-year projections for 2021.

The company said it expects revenue in the range of $1.821 billion to $1.836 billion, compared to a previous range of $1.805 billion to $1.835 billion.

WEX also now expects adjusted full-year net income in the range of $400 million to $409 million, or $8.81 to $9.01 per diluted shares. That compares to a previous projection of $377 million to $395 million, or $8.30 to $8.70 per diluted share.

The full-year projects are based in part on expectations that fourth-quarter revenue will be in the range of $468 million to $483 million and adjusted net income in the range of $102 million to $111 million, or $2.25 to $2.45 per diluted share.

WEX said its fourth-quarter and full-year 2021 guidance is based on assumed average U.S. fuel prices of $3.45 and $3.12 per gallon, respectively, with some of the benefit of higher domestic prices being offset by expected lower spreads in Europe.

Executive leadership team changes

In a separate announcement on Thursday, WEX named Robert Deshaies, who currently serves as president of the company's health division, as its new chief operating officer for the Americas region, a newly created role.

In the coming months, the company said it also expects to name a chief operating officer for the EMEA and APAC regions to lead its strategic growth internationally, as well as a chief digital officer to expand digital commerce and product development opportunities.

"Today's announcement is an important step to ensure we are best positioned to capitalize on the tremendous growth opportunity that lies ahead," Smith said.

WEX also announced that Anthony Hynes, currently president of WEX's global travel division, will move to an an executive advisor role, reporting to Melissa Smith.

In addition, the company said that Scott Phillips, president of WEX's global fleet division, will retain that position until the start of 2022 to help facilitate a sooth transition of the fleet business, until he leaves WEX in April.

The rest of the executive leadership team will continue in their existing roles.

"Looking ahead, I am confident these changes will allow us to secure our next phase of growth and better position us to achieve our strategic priorities," Smith said. "The future is very bright for WEX."

Editor's note: Story updated with latest share price, and to clarify new leadership roles.

About WEX Inc.

WEX Inc. is a financial technology service provider across a wide variety of sectors, including fleet, corporate payments, travel and health. The company has offices in 14 countries and employs around 5,400 people in total. WEX is lead by Chair and CEO Melissa Smith, who was recognized as a Mainebiz Business Leader of the Year in 2017.