WEX hits pause on $50M Scarborough building, but not on M&A
Photos / Tim Greenway and Courtesy, WEX Inc.
Melissa Smith, chair and CEO of WEX Inc., and CFO Roberto Simon talked to Mainebiz on Thursday after reporting third-quarter results.
With the vast majority of its employees still working remotely, Portland-based payments provider WEX Inc. (NYSE: WEX) is pressing the pause button on a planned $50 million operations center in Scarborough.
The original plan, as foreseen in January, was to break ground this year and move in by 2022. Now the company is keeping its options open, including the possibility of not moving ahead with the plan at all.
"We just thought it prudent to step back and evaluate what we're doing," WEX Chair and CEO Melissa Smith told Mainebiz in a phone interview on Thursday after the company posted third-quarter results.
"At the same time," she added, "we're super-excited about standing here and looking out at the second building and having that come online, which will happen in the next few months." She was referring to new construction at 100 Fore St.
WEX employs around 5,000 people worldwide, of whom around 1,300 are in Maine. Smith said that the company has brought back all employees who had been furloughed and was doing some hiring both for vacated positions and new roles.
Smith, who works mainly from home, was at the company's Portland waterfront headquarters Thursday for its third-quarter earnings release. She said that most employees are choosing to work from home through the end of the year and want the ability to continue doing so even after the pandemic.
Decision in 2021
Smith said that WEX will hold off on making a decision about Scarborough until 2021, which the company confirmed in an email to Mainebiz.
"We anticipate changes in how we work so we are taking a pause to make a more informed decision about what new office spaces should look like in the future," it said.
The company also said that its new building at 100 Fore St. is scheduled to open in the first quarter of 2021 and that it plans to keep both Portland buildings open for employees and will consolidate away from some of its older facilities.
"We remain excited and steadfast to provide employees the office structure that will best fit the future," WEX said.
At 100 Fore St, WEX will sublease a floor to Northeastern University's new Roux Institute, with whom it plans to collaborate in several ways, including programs for WEX employees.
"It's a really great thing for Portland and for Maine, and we're really excited about the collaboration," Smith said of the institute.
WEX posted a 17% drop in third-quarter revenue on Thursday and a 39% drop in diluted earnings per share.
M&A 'part of the strategy'
The company, which scrapped two acquisitions earlier this year with a combined $1.7 billion price tag, also pointed to a strong balance sheet and liquidity position.
At the end of the third quarter, the company had $1 billion in corporate cash on its balance sheet and $1.5 billion in total cash, which includes a $400 million investment from Warburg Pincus. It also reported a borrowing capacity of $818 million in borrowing capacity on a line of credit.
"That gives us a great deal of flexibility as we navigate the situation," WEX CFO Roberto Simon told Mainebiz in on Thursday when asked whether it would hold off on further mergers and acquisitions.
"I wouldn't put a pause there, because it's part of the strategy of the company going forward," he said.
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