News Details

SOUTH PORTLAND, Maine--(BUSINESS WIRE)--Jul. 29, 2009-- 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 three months ended June 30, 2009.

Total revenue for the second quarter of 2009 decreased 29% to $78.6 million from $111.2 million for the second quarter of 2008. Net income to common shareholders on a GAAP basis was $93.2 million, or $2.36 per diluted share, compared with a net loss of $24.4 million, or $0.63 per share, for the same period last year.

On a non-GAAP basis, the Company’s adjusted net income for the second quarter of 2009 was $22.4 million, or $0.57 per diluted share, compared with $22.4 million, or $0.57 per diluted share, for the year-earlier period. In addition to previously excluded items, adjusted net income for the second quarter of 2009 excludes a pre-tax gain of $136.5 million on the previously announced $51 million prepayment of the Company’s future liability under an existing tax-receivable agreement.

Wright Express uses fuel-price derivative instruments to mitigate financial risks associated with the variability in fuel prices. For the second quarter of 2009, the Company’s GAAP financial results include an unrealized $22.6 million pre-tax, non-cash, mark-to-market loss on these instruments. For the second quarter of 2008, the Company reported an unrealized pre-tax, non-cash, mark-to-market loss of $74.1 million.

Exhibit 1 reconciles adjusted net income for the second quarters of 2009 and 2008, 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 payments on the Company’s financing debt and for 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.

Second Quarter 2009 Performance Metrics

• Average number of vehicles serviced increased 5% from the second quarter of 2008 to approximately 4.7 million.
• Total fuel transactions processed declined 9% from the second quarter of 2008 to 66.1 million. Payment processing transactions decreased 8% to 51.6 million, and transaction processing transactions decreased 14% to 14.5 million.
• Average expenditure per payment processing transaction decreased 40% from the second quarter of 2008 to $47.37.
• Average retail fuel price declined 41% to $2.33 per gallon from $3.96 per gallon in the second quarter of 2008.
• Total MasterCard purchase volume grew 24% to $771 million, from $623 million for the second quarter of 2008.

To provide investors with additional insight into its operational performance, Wright Express has included in this news release a table of selected non-financial metrics for the five quarters ended June 30, 2009. This table is presented as Exhibit 2.

Management Comments on the Second Quarter

“Our second-quarter results were clearly better than we anticipated, with revenue and adjusted net income both exceeding the high end of our guidance range,” said Michael Dubyak, Chairman and CEO. “Reduced credit loss was a key factor, reflecting strong performances by our credit granting and collections areas for the second consecutive quarter. Our results also benefited from higher-than-expected revenues, primarily reflecting a rise in average fuel price.”

“We continue to execute well in a difficult business climate,” Dubyak said. “Leveraging our financial strength and customer value proposition, we are competing for new business aggressively and continuing to gain market share. Our sales force again outpaced the recession-driven erosion in our existing customer base, and our total average vehicle count grew 5% from the second quarter last year.”

“Growth in our customer base, coupled with strict cost containment, is enabling us to continue to produce strong results in the business,” said Dubyak. “As a result, we have been able to steadily invest in diversification as well as fleet card growth opportunities. Our diversification efforts continued to perform well in the second quarter, helping offset the effects of the economic contraction in our core markets.”

“We also continue to execute successfully on our goal of deploying our consistently healthy cash flow to create the greatest possible value over time,” Dubyak said. “In the second quarter we capitalized on an opportunity to further this goal by using $51 million in cash to prepay a portion of our tax receivable liability. We expect this transaction to deliver a cash payback in less than four years while adding between $10 million and $15 million to our cash flow for the next 12 years.”

“Although the recession and slowdown in fleet activity remain with us, the strength of the Wright Express franchise positions us for a continued recovery when the economy rebounds and businesses begin to expand,” said Dubyak. “Until then, we will stay focused on aggressively managing the factors within our control and continuing to deliver solid financial results.”

Financial Guidance

Wright Express Corporation is issuing financial guidance for the third quarter and raising guidance for the full year 2009. In preparing this guidance, for the remainder of the year management is assuming 7% to 10% year-over-year declines in transaction volume within the Company’s installed base of customers due to weak economic conditions. The guidance below further assumes that credit loss for the full year 2009 will range from 18 to 23 basis points. The guidance below does not reflect the impact of any stock repurchases that may occur in 2009.

In addition, the Company’s guidance excludes the impact of non-cash, mark-to-market adjustments on its fuel-price-related derivative instruments, the amortization of purchased intangibles, and adjustments related to the deferred tax asset and related tax-receivable agreement. The guidance below also excludes the gain associated with the settlement of a portion of the liability under the tax receivable agreement. The fuel prices referenced below are based on the applicable NYMEX futures price:

• For the third quarter of 2009, the Company expects revenue in the range of $78 million to $83 million. This is based on an assumed average retail fuel price of $2.39 per gallon.
• For the third quarter of 2009, the Company expects adjusted net income in the range of $21 million to $23 million, or $0.54 to $0.59 per diluted share, based on approximately 39 million shares outstanding.
• For the full year 2009, the Company expects revenue in the range of $300 million to $310 million. This is based on an assumed average retail fuel price of $2.26 per gallon.
• For the full year 2009, the Company expects adjusted net income in the range of $77 million to $81 million, or $1.94 to $2.04 per diluted share, based on approximately 39 million shares outstanding.

Conference Call Details

In conjunction with this announcement, Wright Express will host a conference call today, July 29, 2009, at 10:00 a.m. (ET). The conference call will be webcast live on the Internet, and can be accessed at the Investor Relations section of the Wright Express website, www.wrightexpress.com. The live conference call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. A replay of the webcast will be available on the Company's website for approximately three months.

About Wright Express

Wright Express is a leading global provider of payment processing and information management services. Wright Express captures and combines transaction information from its proprietary network with specialized analytical tools and purchasing control capabilities in a suite of solutions that enable fleets to manage their vehicles more effectively. The Company’s charge cards are used by commercial and government fleets to purchase fuel and maintenance services for approximately 4.7 million vehicles. Wright Express markets its services directly to fleets and as an outsourcing partner for its strategic relationships and franchisees. The Company’s business portfolio includes a MasterCard-branded corporate card as well as TelaPoint, a provider of supply chain software solutions for petroleum distributors and retailers, and Pacific Pride, an independent fuel distributor franchisee network, as well as international subsidiaries. For more information about Wright Express, please visit www.wrightexpress.com.

This press release contains forward-looking statements, including statements regarding: expectations for the cash payback on the prepayment of a portion of the tax receivable agreement; positioning of the Company to capitalize on an economic recovery; and, the Company’s focus on financial results. These forward-looking statements include a number of risks and uncertainties that could cause actual results to differ materially, including: fuel price volatility; the Company’s failure to maintain or renew key agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; the actions of regulatory bodies, including bank regulators, or possible changes in banking regulations impacting the Company’s industrial loan bank and the Company as the corporate parent; the uncertainties of litigation; the effects of general economics on fueling patterns and the commercial activity of fleets, as well as other risks and uncertainties identified in Item 1A of the Company’s Annual Report for the year ended December 31, 2008, filed on Form 10-K with the Securities and Exchange Commission on February 27, 2009 and the Company’s other periodic and current reports. The Company’s forward-looking statements and these factors do not reflect the potential future impact of any alliance, merger, acquisition or disposition. The forward-looking statements speak only as of the date of this press release and undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

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, and excludes the amortization of purchased intangibles, the net impact of tax rate changes on the Company’s deferred tax asset and related changes in the tax-receivable agreement and the gains on the extinguishment of a portion of the tax receivable agreements. 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 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 difficult to evaluate; and
• The amortization of purchased intangibles and extinguishment of liability have no impact on the day-to-day operations of the business.

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 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.

Definitions:

Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with Wright Express.

Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with Wright Express.

Payment processing $ of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with Wright Express.

Net payment processing rate represents the percentage of the dollar value of each payment processing transaction that Wright Express records as revenue from merchants less any discounts given to fleets or strategic relationships.

MasterCard purchase volume represents the total dollar value of all transactions that use a Wright Express MasterCard-branded product.

Net interchange rate represents the percentage of the dollar value of each MasterCard transaction that Wright Express records as revenue less any discounts given to customers.

Source: Wright Express Corporation

News media contact:
Wright Express
Jessica Roy, 207-523-6763
Jessica_Roy@wrightexpress.com
or
Investor contact:
Wright Express
Steve Elder, 207-523-7769
Steve_Elder@wrightexpress.com