The Portland-based fintech services provider posted earnings and revenue that surpassed market expectations and urged shareholders to resist calls by an activist hedge fund for a board shakeup.
WEX Inc. (NYSE: WEX) posted earnings and revenue that surpassed market expectations and urged shareholders to resist calls by an activist investor for a board shakeup.
Adjusted first-quarter income rose to $145.3 million, or $4.15 per diluted share, up 18.2% per diluted share over a year ago, WEX said Wednesday after financial markets closed. The figure exceeds the $4 per share consensus estimate of analysts polled by Zacks Investment Research.
The Portland-based financial technology services provider said the strong results bolster the case against efforts by Impactive Capital LP — a New York-based hedge fund with a 4.9% stake — to oust some WEX board members, including Chair and CEO Melissa Smith.
“We have been executing well, and our performance continues to improve,” WEX said in a letter to shareholders ahead of its May 5 annual meeting. Putting three Impactive nominees on WEX’s board “would risk disrupting the company’s momentum and result in the loss of valuable expertise.”
WEX provides fintech services to businesses in fleet mobility and fueling, corporate payments, travel industry payments and employee and member benefits.
Once a stock market darling, WEX shares have recently hit a rough patch. The stock has barely budged over the last three years, while the Nasdaq index of tech stocks has more than doubled in value.
Criticizing WEX’s
"alarming share price underperformance," Impactive has accused the company of asset mismanagement, poor corporate governance and a lack of shareholder accountability.
On Thursday, WEX shares were down nearly 16% in late morning trading at $155.72, giving the stock a market value of $5.46 billion.
Bullish outlook
WEX said the latest results show it’s on the right track, with first-quarter revenue rising 5.8% to $673.8 million, thanks mostly to U.S. fuel prices and foreign exchange rates. The figure beat the Zacks consensus forecast by 0.92%.
The company also gave a more bullish outlook for the full year. It now expects revenue in the range of $2.82 billion to $2.88 billion, up from a
February forecast of $2.7 billion to $2.76 billion.
WEX upped its forecast for full-year adjusted net income to a range of $667 million to $688 million, or $18.95 to $19.55 per diluted share. That compares to the previous forecast of $607 million to $628 million, or $17.25 to $17.85 per diluted share.
“This continued progress reinforces our confidence in our ability to deliver sustainable growth, expanded margins and robust cash flow for our shareholders,” Smith said in Wednesday’s results announcement.
In Thursday's conference call with analysts and investors, WEX CFO Jagtar Narula said the company prioritizes a "safe and strong" balance sheet. He also said that while pursing mergers and acquisitions is not at the forefront today, WEX "will assess opportunities that strengthen our strategic position."
