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WEX Inc. (NYSE: WEX), a Portland-based global provider of payments solutions, on Thursday reported a drop in second-quarter revenue and earnings while sounding a positive note about its balance sheet and liquidity position.
Total revenue for the second quarter decreased 21% from a year ago to $347.1 million, or 1.69% below the analyst consensus forecast by Zacks Investment Research.
The company said the figure includes a $29.2 million unfavorable impact from fuel prices and spreads and a $1.7 million negative impact from foreign exchange rates.
Earnings per diluted share in the second-quarter amounted to $1.21. That represents a 47% decrease from a year ago while falling short of the $1.44 per share predicted in a Zacks analysts poll.
“Our second-quarter results reflect the impact of the COVID-19 pandemic and underscore the resilience of our business, where we saw a few bright spots even in this challenged environment. We experienced recovery in spend volume trends throughout the quarter across each of our segments," said Melissa Smith, WEX's chair and CEO, in a news release.
WEX is Maine's third-largest publicly traded company, measured by revenue.
Smith noted that the company's U.S. health business remains strong with year-over-year top-line growth, driven by an increase in the number of software-as-a service, or on-demand software, accounts as customers continue to rely on WEX products to pay for their essential healthcare needs.
She added, “Strong execution against our strategic pillars, effective cost management, disciplined capital allocation and our recent balance sheet and liquidity enhancements all position WEX to successfully navigate the current market environment. We continued to have notable new customer wins across each of our business segments, which is an important part of our growth strategy, and have begun to realize the early benefits of our cost containment measures and capital allocation plan outlined last quarter. Looking to the back half of the year, we will continue to focus on providing best-in-class products and services to our customers, winning in the marketplace and laying the foundation for sustained long-term growth."
In late morning trading, WEX shares were down 6.60%, at $158.92.
In response to COVID-19 uncertainty, WEX implemented a series of recent actions to reduce discretionary capital and operating expenditures, adjust cost structure and preserve flexibility and a strong liquidity changes. In early April, the company pulled out of two acquisitions in early May worth a combined $1.7 billion and announced other steps to cut costs.
On Thursday, the company said that it still expects to save between $60 million and $65 million in savings this year as a result of various measures and that it believes its balance sheet and liquidity position remain strong.
Roberto Simon, WEX's chief financial officer, said the company continues to look for ways to strengthen its balance sheet and boost its liquidity position in the current uncertain environment.
Along those lines, Simon noted a recent $400 million investment from New York-based private equity firm Warburg Pincus that closed at the start of the third quarter and the fact that WEX favorably amended its current credit agreement.
“These actions provide us with increased financial flexibility, improved liquidity and additional cash on hand to better focus on our strategic priorities as we navigate the pandemic," he said. "Looking ahead, we remain confident in WEX's ability to fund growth initiatives and capitalize on the economic recovery as operating conditions improve.”
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