WEX reports 16% growth in third quarter revenue
WEX Inc. (NYSE: WEX) reported strong third quarter financials today, with total revenue for the three months ended on Sept. 30 showing a 16% increase to $221.1 million from $191.5 million for the third quarter of 2013.
Net income to common shareholders on a generally accepted accounting principles (GAAP) basis was $74.4 million, or $1.91 per diluted share, compared with $43.8 million, or $1.12 per diluted share, for the third quarter last year.
On a non-GAAP basis, the South Portland-based company reported adjusted net income for the third quarter of 2014 increased 17% to $60.7 million, or $1.56 per diluted share, from $52.0 million, or $1.33 per diluted share, for the same period a year ago. For comparative purposes, adjusted net income for the prior period reflects the exclusion of a stock-based compensation expense to conform to the approach that was adopted earlier this year.
“This business is doing very well: 16% growth is something we feel very good about,” WEX President and CEO Melissa Smith told Mainebiz in a telephone interview prior to this morning's conference call with investors.
Smith attributed the strong third quarter earnings report to “steadfast execution against our strategic objectives to expand, globalize and scale the business,” a game plan that includes partnerships announced this month with Sunoco Inc. and Sinclair Oil Corp. for fuel and fleet card services that build on WEX’s longstanding relationship with both companies.
An analyst’s report filed Oct. 21 on Zacks.com concludes that the co-branded Sunoco deal and a new “All Roads” fuel card launched by WEX’s Fleet One division “are expected to leverage WEX’s customer base and increase its scope to expand to more locations.” With Sinclair, WEX inked a 10-year contract on Oct. 20 to be the exclusive fleet card provider for a program that has 90,000 cardholders in 10 states and more than 6,000 locations.
Internationally, Smith said, WEX’s acquisition of ExxonMobil’s European commercial fleet card portfolio continues to meet milestones for closing the purchase by the end of this year or early in 2015. Although costs related to that purchase — including taking over control of the Esso Card program, setting up European offices and eventually assuming up to 300 additional employees — will continue to impact WEX’s revenues over the short term, Smith said it enhances the company’s long-term growth profile by giving it a substantial “on-the-ground” presence in the European market.
“As we further diversify the business, both globally and into new verticals, we are positioning WEX for accelerating growth,” she said.
Third quarter performance metrics include:
• Average number of vehicles serviced worldwide was approximately 8 million, an increase of 6% from the third quarter of 2013.
• Total fuel transactions processed, which includes the impact of the divestiture of Pacific Pride on July 31, 2014, increased 2% from the third quarter of 2013 to 98.5 million. Payment processing transactions increased 5% to 80.4 million.
• Average expenditure per payment processing transaction remained relatively flat from the third quarter of 2013 at $85.12.
• Average U.S. retail fuel price decreased 2.4% to $3.61 per gallon from $3.70 per gallon in the third quarter of 2013.
• Total corporate card purchase volume grew to $5.5 billion, up 38.6% from $4.0 billion for the third quarter of 2013. Included in that jump is volume from Evolution1, a cloud-based technology and health-care payment services company based in Fargo, N.D., WEX purchased earlier this year.
For the fourth quarter of 2014, WEX reported that it expects revenue to be in the range of $206 million to $211 million and adjusted net income in the range of $42 million to $45 million, or $1.07 to $1.14 per diluted share. For the full year 2014, the company expects revenue in the range of $812 million to $817 million and adjusted net income to be in the range of $198 million to $201 million, or $5.08 to $5.15 per diluted share.
In mid-morning trading, WEX shares were trading at $106.32, down almost 1.5% from the previous day’s closing price of $107.99, with a reported volume of 102,364 shares. On the MarketWatch.com website, six analysts give WEX a “buy” recommendation and six recommend “hold.”
Streetinsider.com flagged WEX’s fourth quarter projections as being “light,” compared to its analysts’ consensus expectations.
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