WEX beats the Street with Q3 results, raises guidance, announces acquisition

Photo / Renee Cordes WEX is a global company based on Portland's eastern waterfront.

Write a Comment

WEX Inc. (NYSE: WEX), the Portland-based global commerce platform, on Thursday posted third-quarter earnings that surpassed market expectations, raised its full-year financial guidance and announced an acquisition.

Adjusted net income attributable to shareholders was $176.8 million, up 15% from $157.8 million a year ago. Diluted earnings per share were $4.05, beating the $3.77 per share consensus forecast of analysts polled by Zacks Investment Research.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

“The third quarter marked another strong period of financial results for WEX along with meaningful progress against our strategic initiatives," said CEO Melissa Smith, who also serves as the company's chair and president.

"I'm delighted to share that we were able to deliver record highs for quarterly revenue and adjusted net income per diluted share, even with fuel price headwinds, reflecting our strong momentum and resilient business model,” she added.

Total volume across all segments was $61.9 billion, an increase of 7.6% from from the third quarter of 2022, while cash flows from operating activities through Q3 were $146 million.

WEX shares have a market value of around $7.75 billion.

In mid-morning trading Thursday, WEX shares were down 4.09%, to $172.88. The 52-week high for WEX shares is $185.41; the 52-week low is $169.61.

Bullish outlook

Jagtar Narula, the company’s CFO, said WEX is in the enviable position of deploying capital on several fronts, including strategic growth efforts.

“Because of the significant amount of cash we generate, we are able to do all of this while maintaining a solid balance sheet with low leverage,” he said. “To that extent, I’m excited to share that we are again raising our full-year guidance for both revenue and earnings."

For the fourth quarter of 2023, WEX said it expects revenue in the range of $650 million to $660 million and adjusted net income attributable to shareholders in the range of $3.65 to $3.75 per diluted share.

For the full year, WEX said it now expects expects revenue in the range of $2.53 billion to $2.54 billion, up from the prior guidance range of $2.50 billion to $2.52 billion.

Adjusted net income attributable to shareholders is now expected to be in the range of $14.64 to $14.74 per diluted share, an increase from the prior guidance range of $14.15 to $14.35 per diluted share.

Fourth-quarter and full-year 2023 guidance is based on assumed average U.S. retail fuel prices of $3.80 and $3.83 per gallon, respectively.

Acquisition

On the deal-making front, WEX announced an agreement to acquire Payzer, a high-growth, cloud-based field service management software provider based in Charlotte, N.C., for around $250 million plus up to $11 million in contingent payments based on defined performance metrics.

WEX said it plans to finance the purchase through its revolving credit facility and cash on hand, in a deal expected to be completed before year's end subject to customary closing conditions.

Payzer is a full-featured field service management software-as-a-service provider, offering scheduling, dispatching, customer communications, invoicing, sales proposals, supply ordering and maintenance agreements, while WEX provides mobility solutions via 19 million vehicles to more than 600,000 customers.

"Payzer is an example of us finding a high-growth market with a customer base that overlaps with our current customer footprint, with a great product and service offering to address the needs of these customers," Smith said in Thursday's announcement.