Printer Friendly Version View printer-friendly version
<< Back

Wright Express Reports First-Quarter Results

Total Fuel Transactions Rise 11 Percent; Average Number of Vehicles Serviced Increases 10 Percent; Payment Processing Transactions Grow 16 Percent

SOUTH PORTLAND, Maine, May 3 /PRNewswire-FirstCall/ -- Wright Express Corporation (NYSE: WXS), a leading provider of payment processing and information management services to the U.S. commercial and government fleet industry, today reported financial results for the quarter ended March 31, 2006.

Total revenue for the first quarter of 2006 increased 24 percent to $64.6 million from $52.2 million for the first quarter of 2005. Net income to common shareholders on a GAAP basis for the first quarter of 2006 was $11.4 million, or $0.28 per diluted share, compared with a net loss of $18.5 million, or $0.46 per share, for the comparable quarter last year. On a non-GAAP basis, the Company's adjusted net income for the first quarter of 2006 increased to $12.3 million, or $0.30 per diluted share, from $11.3 million, or $0.28 per diluted share, for the year-earlier period.

Wright Express uses fuel-price derivative instruments to mitigate financial risks associated with the variability in fuel prices. For the first quarter of 2006, the Company's GAAP financial results include an unrealized $1.4 million pre-tax, non-cash, mark-to-market loss on these instruments. For the first quarter of 2005, the unrealized pre-tax, non-cash, mark-to-market loss was $34.4 million. Exhibit 1 reconciles adjusted net income for the first quarters of 2006 and 2005, which has not been determined in accordance with GAAP, to net income as determined in accordance with GAAP.

Management uses the non-GAAP measures presented within this news release to evaluate the Company's performance on a comparable basis, to eliminate the volatility associated with its derivative instruments and to measure the amount of cash that is available for making scheduled payments on the Company's financing debt and discretionary purposes. Management believes that investors may find these measures useful for the same purposes, but cautions that they should not be considered a substitute for disclosure in accordance with GAAP.

    First-Quarter 2006 Performance Metrics
  • Average number of vehicles serviced increased 10 percent from the first quarter of 2005 to approximately 4.3 million.
  • Total fuel transactions processed increased 11 percent from the first quarter of 2005 to 58.1 million. Payment processing transactions increased 16 percent to 43.5 million, and transaction processing transactions decreased 3 percent to 14.6 million.
  • Average expenditure per payment processing transaction grew to $48.63, an increase of 25 percent from the same period last year.
  • Average retail fuel price increased 22 percent to $2.41 per gallon, from $1.97 per gallon for the first quarter a year ago.
  • Total MasterCard purchase volume grew to $269.4 million, an increase of 5 percent from the comparable period a year ago.
  • Wright Express paid $6.5 million in principal on its financing debt during the first quarter of 2006.

Management Comments

"The first quarter was a strong start to our second year as a public company," said Michael Dubyak, president and chief executive officer. "It was another quarter of growing demand for our fleet card solutions. Our front-end sales and marketing engine performed well in translating this demand into a pipeline of new business, and in converting these prospects into customers. As a result, we continued to generate double-digit growth in the number of transactions we processed and vehicles we serviced."

"As our business expanded, we continued to improve the Company's productivity in the first quarter," Dubyak said. "Our derivatives strategy continued to successfully mitigate our exposure to the variability in fuel prices, we paid down another $6.5 million of financing debt, and our revenue and adjusted net income for the first quarter met the high end of our guidance."

"We expect to continue leveraging our service excellence to capitalize on our market potential and drive organic growth for Wright Express," said Dubyak. "The Company's size, geographic spread, depth of experience and technical capabilities put us in a position to provide our customers with a wide range of high-quality fleet card solutions. Given the ongoing transition across the economy from cash to electronic commerce, we see enormous potential remaining to be tapped in our core business. At the same time, it is our practice to be looking at the marketplace for potential alliances or acquisitions that can accelerate our growth and/or enhance our strategic position. The Company continues to fire on all cylinders, operationally and financially, and we look forward to another strong year of results in 2006."

Financial Guidance

Wright Express Corporation is issuing financial guidance for the second quarter of 2006, as well as the full year. The Company's guidance excludes the impact of non-cash, mark-to-market adjustments on the Company's fuel-price-related derivative instruments. The fuel prices referenced below are based on the applicable NYMEX futures price:

  • For the second quarter of 2006, revenue in the range of $71 million to $76 million. This is based on an assumed average retail fuel price of $2.80 per gallon.
  • Second-quarter 2006 net income before unrealized gain or loss on derivative contracts in the range of $13 million to $14 million, or $0.32 to $0.35 per diluted share, based on approximately 41 million shares outstanding.
  • For the full year 2006, revenue in the range of $280 million to $290 million. This is based on an assumed average retail fuel price of $2.65 per gallon.
  • For the full year 2006, net income before unrealized gain or loss on derivative contracts in the range of $54 million to $56 million, or $1.32 to $1.38 per diluted share, based on approximately 41 million shares outstanding.

Conference Call Details

In conjunction with this announcement, Wright Express will host a conference call today at 5:00 p.m. (ET) to discuss the Company's financial results, first-quarter operations and business outlook. To access this call by telephone, dial (866) 323-7218 or (706) 643-0228 (Conference ID: 7457037). A live webcast of this conference call will be available at the "Investor Relations" section of the Company's website (http://www.wrightexpress.com). A replay of the webcast will be available on the website for approximately three months.

About Wright Express

Wright Express is a leading provider of payment processing and information management services to the U.S. commercial and government vehicle fleet industry. Wright Express provides these services for approximately 295,000 commercial and government fleets containing 4.3 million vehicles. Wright Express markets these services directly as well as through more than 95 strategic relationships, and offers a MasterCard-branded corporate card. The Company employs more than 650 people and maintains its headquarters in South Portland, Maine. For more information about Wright Express, please visit http://www.wrightexpress.com.

This press release contains forward-looking statements, including statements regarding Wright Express Corporation's: expectation to continue leveraging its service to capitalize on market potential and drive organic growth; plan to provide customers with a wide range of high-quality fleet card solutions; expectation of potential remaining in its core business; intention to explore further opportunities to accelerate growth through potential alliances or acquisitions; assessment of its operational and financial performance; and expectations and guidance for 2006 results.

These forward-looking statements include a number of risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: volatility in fuel prices; second-quarter and full-year 2006 fueling patterns; the effect of the Company's fuel-price-related derivative instruments; effects of competition; the potential loss of key strategic relationships; decreased demand for fuel and other vehicle products and services and the effects of general economic conditions on the commercial activity of fleets; the Company's ability to rapidly implement new technology and systems; potential corporate transactions including alliances, mergers, acquisitions and divestitures; changes in interest rates and the other risks and uncertainties included from time to time in the Company's filings with the Securities and Exchange Commission, including the annual report on Form 10-K filed on March 15, 2006, and the Company's other periodic and current reports. Wright Express Corporation undertakes no obligation to update these forward-looking statements at any future date or dates.

    News media contact:                 Investor contact:
     Jessica Roy                         Steve Elder
     Wright Express                      Wright Express
     207.523.6763                        207.523.7769
     Jessica_Roy@wrightexpress.com       Steve_Elder@wrightexpress.com

    Condensed Financial Statements and Supplemental Exhibits Follow  ...



                          WRIGHT EXPRESS CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                    (in thousands, except per share data)
                                 (unaudited)
                                                       Three months ended
                                                           March 31,
                                                       2006           2005

    Revenues
     Payment processing revenue                      $46,956        $34,809
     Transaction processing revenue                    4,210          4,107
     Account servicing revenue                         5,915          5,619
     Finance fees                                      5,238          3,195
     Other                                             2,319          4,472

      Total revenues                                  64,638         52,202

    Expenses
     Salary and other personnel                       14,354         18,717
     Service fees                                      3,040          3,542
     Provision for credit losses                       3,918          2,937
     Technology leasing and support                    1,863          2,077
     Occupancy and equipment                           1,592          1,442
     Depreciation and amortization                     2,514          1,972
     Operating interest expense                        4,607          2,261

     Other                                             3,843          3,919

      Total operating expenses                        35,731         36,867

    Operating income                                  28,907         15,335

    Financing interest expense                       (3,728)        (1,386)
    Net realized and unrealized losses on
     derivative instruments                          (7,478)       (44,202)

    Income (loss) before income taxes                 17,701       (30,253)
    Provision (benefit) for income taxes               6,351       (11,780)

    Net income (loss)                                 11,350       (18,473)

    Change in net unrealized loss on
     available-for-sale securities, net of tax
     effect of $(41) in 2006 and $(30) in 2005          (63)           (55)
    Change in net unrealized gain on interest
     rate swaps, net of tax effect of $86 in 2006         68              -

    Comprehensive income (loss)                      $11,355      $(18,528)

    Earnings (loss) per share:
     Basic                                             $0.28        $(0.46)
     Diluted                                           $0.28        $(0.46)

    Weighted average common shares outstanding:
     Basic                                            40,245         40,185
     Diluted                                          40,983         40,185



                          WRIGHT EXPRESS CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share data)
                                                   March 31,    December 31,
                                                      2006           2005
                                                  (unaudited)

    Assets
     Cash and cash equivalents                       $19,109        $44,994
     Accounts receivable
      (less reserve for credit losses of
      $5,380 in 2006 and $4,627 in 2005)             726,826        652,132
     Available-for-sale securities                     6,184         20,878
     Property, equipment and capitalized
      software, net                                   38,679         38,543
     Deferred income taxes, net                      507,417        513,018
     Intangible assets, net                            2,421          2,421
     Goodwill                                        135,047        135,047
     Other assets                                     13,106         13,388

    Total assets                                  $1,448,789     $1,420,421

    Liabilities and Stockholders' Equity
     Accounts payable                               $323,698       $254,381
     Accrued expenses                                 17,438         22,197
     Deposits                                        284,355        338,251
     Borrowed federal funds                           48,704         39,027
     Revolving line-of-credit facility                52,000         53,000
     Term loan, net                                  162,213        167,508
     Derivative instruments, at fair value            38,136         36,710
     Other liabilities                                 1,204            331
     Amounts due to Cendant under tax
      receivable agreement                           424,277        424,277
     Preferred stock; 10,000 shares authorized:
      Series A non-voting convertible
       preferred stock; 0.1 shares authorized,
       issued and outstanding                         10,000         10,000

     Total liabilities                             1,362,025      1,345,682

    Commitments and contingencies

    Stockholders' Equity
     Common stock $0.01 par value;
      175,000 shares authorized; 40,299 shares
      issued and outstanding as of March 31, 2006,
      40,210 issued and outstanding as of
      December 31, 2005                                  403            402
     Additional paid-in capital                       55,689         55,020
     Retained earnings                                30,003         18,653
     Other comprehensive income (loss), net of tax:
      Net unrealized gain on interest rate swaps         816            748
      Net unrealized loss on available-for-sale
       securities                                      (147)           (84)

     Accumulated other comprehensive income              669            664

     Total stockholders' equity                       86,764         74,739

    Total liabilities and stockholders' equity    $1,448,789     $1,420,421



                          WRIGHT EXPRESS CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                 (unaudited)
                                                      Three months ended
                                                          March 31,
                                                      2006         2005

    Cash flows from operating activities
     Net income (loss)                               $11,350      $(18,473)
     Adjustments to reconcile net income
      (loss) to net cash provided by
      operating activities:
     Net unrealized loss on derivative instruments     1,426         34,374
     Stock-based compensation                            707          5,677
     Depreciation and amortization                     2,804          2,016
     Deferred taxes                                    5,556        (5,860)
     Provision for credit losses                       3,918          2,937
     Loss on disposal of property and equipment            5              5
     Changes in operating assets and liabilities:
      Accounts receivable                           (78,612)      (73,119)
      Other assets                                       351        (1,907)
      Accounts payable                                69,317         47,061
      Accrued expenses                               (4,759)          (394)
      Other liabilities                                  873             23
      Due to/from related parties                          -         45,051

     Net cash provided by operating activities        12,936         37,391

    Cash flows from investing activities
     Purchases of property and equipment             (2,655)       (2,727)
     Purchases of available-for-sale securities         (33)       (1,091)
     Maturities of available-for-sale securities      14,623             19

     Net cash provided by (used in)
      investing activities                            11,935        (3,799)

    Cash flows from financing activities
     Dividends paid                                        -      (305,887)
     Excess tax benefits of equity instrument
      share-based payment arrangements                   162              -
     Payments in lieu of issuing shares of
      common stock                                      (682)             -
     Proceeds from stock option exercises                483              -
     Net (decrease) increase in deposits            (53,896)        23,066
     Net increase (decrease) in borrowed
      federal funds                                    9,677        (6,728)
     Net (repayments) borrowings on revolving line
      of credit                                      (1,000)        50,000
     Loan origination fees paid for revolving
      line of credit                                       -        (1,704)
     Borrowings on term loan,
      net of loan origination fees of $2,884               -        217,116
     Repayments on term loan                          (5,500)      (20,000)

     Net cash used in financing activities           (50,756)      (44,137)

    Net change in cash and cash equivalents         (25,885)       (10,545)
    Cash and cash equivalents, beginning of period    44,994         31,806

    Cash and cash equivalents, end of period         $19,109        $21,261




                          WRIGHT EXPRESS CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                               (in thousands)
                                 (unaudited)
                                                        Three months ended
                                                            March 31,
                                                      2006          2005

    Supplemental cash flow information:
     Interest paid                                    $8,584         $2,674
     Income taxes paid                                  $380             $-

In April of 2006, we paid Cendant $4,700 in accordance with the terms of our Tax Receivable Agreement. During the three months ended March 31, 2005 the following non-cash transactions occurred:

    * The tax basis of our assets increased creating an initial deferred tax
      asset of $488,719 based upon our estimated tax rate at March 31, 2005.
      We entered into a Tax Receivable Agreement with our former parent
      company, which provides that we will make total payments estimated at
      $415,411 as of March 31, 2005. The difference between the initial asset
      recorded and the initial liability payable to our former parent company
      was recorded as $73,308 of stockholders' equity.
    * We issued 40,000 shares of common stock upon the completion of our
      initial public offering and as part of the conversion from a Delaware
      limited liability company to a Delaware corporation. We did not receive
      any proceeds from this offering as our former parent company received
      all common stock proceeds from the offering concurrent with their sale
      of 100 percent of their interest in us.
    * We issued 0.1 shares of preferred stock as part of the conversion from a
      Delaware limited liability company to a Delaware corporation. We did
      not receive any proceeds from this offering as our former parent
      company received all preferred stock proceeds from this conversion.



                                  Exhibit 1
                          Wright Express Corporation
           Reconciliation of Adjusted Net Income to GAAP Net Income
                         First Quarter 2006 and 2005
                                (in thousands)
                                 (unaudited)

                                                  Three months Three months
                                                      ended         ended
                                                    March 31,     March 31,
                                                      2006          2005

    Adjusted net income                              $12,266        $11,342
    Non-cash, mark-to-market adjustments
     on derivative instruments                       (1,426)       (34,374)
    Termination of derivative instruments                  -        (8,450)
    Conversion of restricted stock units and
     stock options                                         -        (5,723)
    Tax impact                                           510         18,732
    GAAP net income                                  $11,350      $(18,473)

Although adjusted net income is not calculated in accordance with generally accepted accounting principles (GAAP), this measure is integral to the Company's reporting and planning processes. The Company considers this measure integral because it eliminates the non-cash volatility associated with the derivative instruments. Specifically, in addition to evaluating the Company's performance on a GAAP basis, management evaluates the Company's performance on a basis that excludes the above items because:

    * Exclusion of the non-cash, mark-to-market adjustments on derivative
      instruments helps management identify and assess trends in the
      Company's underlying business that might otherwise be obscured due to
      quarterly and annual non-cash earnings fluctuations associated with
      fuel-price derivative contracts;
    * The non-cash, mark-to-market adjustments on derivative instruments are
      difficult to forecast accurately, making comparisons across historical
      and future quarters and years difficult to evaluate;
    * The termination of derivative instruments during the first quarter of
      2005 was a non-recurring event effected by the Company's former parent
      company as part of the process of preparing the Company for its initial
      public offering; and
    * The conversion of restricted stock units and stock options was a non-
      recurring event resulting from the need to convert the equity
      incentives held by the Company's employees so that they were
      exercisable following the initial public offering for Company common
      stock instead of for common stock of the Company's former parent.

For the same reasons, Wright Express believes that adjusted net income may also be useful to investors as one means of evaluating the Company's performance. However, because adjusted net income is a non-GAAP measure, it should not be considered as a substitute for, or superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted net income as used by Wright Express may not be comparable to similarly titled measures employed by other companies.

SOURCE Wright Express Corporation

CONTACT:
Jessica Roy,
+1-207-523-6763,
Jessica_Roy@wrightexpress.com; or
Steve Elder,
+1-207-523-7769,
Steve_Elder@wrightexpress.com,
both of Wright Express