WEX tracking to become $1B company by year's end
File Photo / Tim Greenway
Melissa Smith, president of the South Portland-based WEX Inc.
WEX Inc. (NYSE:WEX) reported total revenue for the second quarter increased 9.5% to $233.9 million, which is $20.2 million more than the $213.7 million reported for the second quarter in 2015. The company expects its revenue trends are on track to achieve total revenues of between $975 million and $1 billion for the full year 2016.
WEX President and CEO Melissa Smith told Mainebiz in a phone interview prior to her mid-morning conference call with investors that the company completed a “strong second quarter, which exceeded expectations.” Revenues increased approximately 22.5% in the company’s health and employee benefits division, by 11% in the travel and corporate payments division and by 6% in its fleet card division, she said.
“Overall, we feel very good about where we stand at the halfway mark this year,” Smith said in a statement accompanying the quarterly earnings report. “Our organic growth engine has proven to be resilient over the years and will become even stronger as we further integrate our newly acquired businesses and pursue new inorganic opportunities. As we enter the second half of the year, I am confident that our momentum will continue as we focus on advancing our market position globally, enhancing our innovative product offering and maintaining our industry leading customer service.”
Net earnings reported on a non-GAAP basis decreased to $42.1 million, from $48.3 million for the same period last year. On a GAAP basis, net earnings decreased $13.9 million to $12.6 million, compared with $26.5 million for a year ago.
Second quarter earnings beat analysts’ expectations, according to the Associated Press and Zacks Investment Research, but shares were down 2.74% in late-morning trading, trading at $93.75.
WEX uses non-GAAP measures in reporting its financials as a way to measure its performance on a comparable basis without having to factor in variables such as foreign currency re-measurement gains and losses that can vary widely each quarter and from year to year.
Acquisition completed
Smith characterized the July 1 completion of WEX’s acquisition of Electronic Funds Source LLC, a fleet card provider, for $1.1 billion in cash plus 4 million shares of common stock, as “a huge lift for us.”
“It has the opportunity to be highly transformative,” she said, noting that EFS has “underlying products and technologies” that will benefit WEX in addition to helping the company gain additional customers in the fleet card market.
Asked how Great Britain’s recent vote to exit from the European Union might affect WEX, Smith says less than 10% of the company’s European business rests in the United Kingdom and that the bigger concern will be what effect, if any, Brexit might have on the broader European economy.
“It’s too early to know for sure,” she said.
Closer to home, Smith said WEX is hosting a number of summer meetings with its corporate customers here in Maine, a tradition that she says has helped reinforce the company’s Maine brand with visitors who’ve come to appreciate the opportunity to meet WEX employees and also enjoy a ferry cruise in Casco Bay that comes with a complete lobster dinner.
“It’s an exciting time,” she said. “I hear from them how connected they are to our employees. It’s a nice time of year for them to be with us in Maine.”
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