Resilient business model and execution on growth strategy drive
quarterly results in-line with guidance
SOUTH PORTLAND, Maine--(BUSINESS WIRE)--Oct. 31, 2012--
WEX
Inc. (NYSE: WXS), a leading international provider of physical,
digital and virtual corporate card payment solutions, today reported
financial results for the three months ended September 30, 2012.
Third Quarter Financial Results
Total revenue for the third quarter of 2012 increased 6% to $161.0
million from $151.9 million for the third quarter of 2011. Net income to
common shareholders on a GAAP basis was $14.3 million, or $0.37 per
diluted share, compared with $48.1 million, or $1.23 per diluted share,
for the third quarter last year. The current quarter’s net income on a
GAAP basis included $16.2 million of impairment costs related to the
Company’s Australian prepaid business which was excluded from adjusted
net income.
On a non-GAAP basis, the Company's adjusted net income for the third
quarter of 2012 increased 9% to $42.0 million, or $1.08 per diluted
share, from $38.7 million, or $0.99 per diluted share, for the same
period a year ago. Adjusted net income for the third quarter of 2012
included a charge related to a retroactive tax law change in Australian
tax legislation that was enacted in the third quarter. Third quarter
adjusted net income also included deal and integration related costs
associated with the previously announced acquisitions of Fleet One and
UNIK, which were not accounted for in the Company’s prior full-year 2012
guidance. Together these items reduced earnings approximately $0.10 per
share.
WEX uses fuel-price derivative instruments to mitigate financial risks
associated with the variability in fuel prices in North America. For the
third quarter of 2012, the Company's GAAP financial results include an
unrealized $12.8 million dollar pre-tax, non-cash, mark-to-market loss
on these instruments. See Exhibit 1 for a full reconciliation of
adjusted net income.
“WEX delivered third quarter results that were consistent with our
expectations driven by continued execution against our long-term growth
strategy. In our fleet segment, card growth increased 6% over the prior
year, better positioning the Company for future growth as the economic
environment improves. In addition, we fortified our competitive stance
through our acquisition of Fleet One,” said Michael Dubyak, Chairman,
President and Chief Executive Officer.
“In our other payment solutions segment, we made further headway
globalizing our virtual card for the travel industry. We also purchased
an equity stake in UNIK, which expands our international footprint into
Latin America and more importantly, opens up opportunities to extend our
paycard presence and move into the fleet card market in Brazil. Overall,
we believe the combination of market opportunities and WEX’s growing
position as a comprehensive business partner for fleet, virtual and
paycard solutions establishes a solid and differentiated platform for
building long-term growth,” concluded Mr. Dubyak.
Third Quarter 2012 Performance Metrics
-
Average number of vehicles serviced worldwide was approximately 6.9
million, an increase of 6.2% from the third quarter of 2011.
-
Total fuel transactions processed increased 0.8% from the third
quarter of 2011 to 85.7 million. Payment processing transactions
increased 1.4% to 66.2 million; transaction processing transactions
decreased 1.3% to 19.6 million.
-
Average expenditure per domestic payment processing transaction
increased 0.5% from the third quarter of 2011 to $72.84.
-
Domestic retail fuel price increased 1.1% to $3.74 per gallon from
$3.70 per gallon in the third quarter of 2011.
-
Total corporate card purchase volume grew 32.3% to $3.2 billion, from
$2.4 billion for the third quarter of 2010.
Financial Guidance and Assumptions
“We’re pleased with our performance year-to-date and anticipate
continued growth as we operate within the current sluggish economic
environment. While our updated guidance reflects our expectation for
healthy growth in our other payments solutions segment and steady growth
in our fleet business, in the short term, we anticipate that deal and
integration expenses related to our acquisition of Fleet One will offset
these benefits,” said Steve Elder, Senior Vice President and Chief
Financial Officer.
-
For the fourth quarter of 2012, WEX expects revenue in the range of
$162 million to $169 million and adjusted net income in the range of
$39 million to $42 million, or $1.01 to $1.08 per diluted share.
-
For the full year 2012, the Company expects revenue in the range of
$616 million to $623 million and adjusted net income to be in the
range of $156 million to $159 million, or $3.99 to $4.06 per diluted
share.
Fourth quarter 2012 guidance is based on an assumed average U.S. retail
fuel price of $3.65 per gallon, and approximately 39 million shares
outstanding. Full-year 2012 guidance is based on an assumed average U.S.
retail fuel price of $3.73 per gallon and approximately 39 million
shares outstanding. In addition, the fuel prices referenced above are
based on the applicable NYMEX futures price. WEX is assuming the
exchange rate of the Australian dollar will remain at a premium to the
US dollar for the remainder of the year.
The Company's guidance also assumes that fourth quarter 2012 domestic
fleet credit loss will range between 10 and 15 basis points, and that
domestic fleet credit loss for full year 2012 will range between 9 to 11
basis points.
The Company's guidance does not reflect the impact of any future stock
repurchases that may occur in 2012. In addition, this guidance excludes
the impact of non-cash, mark-to-market adjustments on the Company's
fuel-price-related derivative instruments and the amortization of
purchased intangibles as well as the related tax impacts.
Additional Information
Exhibit 1 reconciles adjusted net income, which has not been determined
in accordance with GAAP, to net income as determined in accordance with
GAAP for the third quarters of 2012 and 2011.
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, or superior to, disclosure in accordance with GAAP.
To provide investors with additional insight into its operational
performance, WEX has included in this news release a table of selected
non-financial metrics for the five quarters ended September 30, 2012.
This table is presented as Exhibit 2. The Company is also providing
selected segment review information for the three months ending
September 30, 2012 and 2011 in Exhibit 3.
Conference Call Details
In conjunction with this announcement, WEX will host a conference call
today, October 31, 2012, at 10:00 a.m. (ET). As previously announced,
the conference call will be webcast live on the Internet, and can be
accessed at the Investor Relations section of the WEX website, http://www.wexinc.com.
The live conference call also can be accessed by dialing (866) 334-7066
or (973) 935-8463. A replay of the webcast will be available on the
Company's website.
About WEX Inc.
WEX Inc. (NYSE: WXS) is a leading international provider of physical,
digital and virtual corporate card payment solutions. From its roots as
a pioneer in fleet card payments in 1983, WEX now provides its more than
350,000 customers ― representing more than 6.5 million cardholders ―
with exceptional payment security and control across a wide spectrum of
business sectors. The Company’s operations include WEX Bank, Fleet One,
Pacific Pride, rapid! PayCard, Wright Express Prepaid Cards Australia,
Wright Express Fuel Cards Australia, Wright Express New Zealand and
CorporatePay Limited, England, as well as a majority equity position in
UNIK S.A., Brazil. WEX and its subsidiaries employ more than 1,300
associates. For more information about WEX, please visit WEXInc.com.
Forward Looking Statement
This press release contains forward-looking statements, including
statements regarding: financial guidance; assumptions underlying the
Company's financial guidance; management’s expectations for the impact
of recent acquisitions and equity investments; the Company’s positioning
for future growth; and, confidence in future performance. Any statements
that are not statements of historical facts may be deemed to be
forward-looking statements. When used in this earnings release, the
words "may," "could," "anticipate," "plan," "continue," "project,"
"intend," "estimate," "believe," "expect" and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such words. These forward-looking
statements are subject to a number of risks and uncertainties that could
cause actual results to differ materially, including: the effects of
general economic conditions on fueling patterns and the commercial
activity of fleets; the effects of the Company’s business expansion and
acquisition efforts; the Company’s failure to successfully integrate the
businesses it has acquired; the impact and range of credit losses;
breaches of the Company’s technology systems and any resulting negative
impact on our reputation, liability, or loss of relationships with
customers or merchants; 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
banking and securities regulators, or possible changes in banking
regulations impacting the Company’s industrial bank and the Company as
the corporate parent; the impact of foreign currency exchange rates on
the Company’s operations, revenue and income; changes in interest rates;
financial loss if the Company determines it necessary to unwind its
derivative instrument position prior to the expiration of a contract;
the incurrence of impairment charges if our assessment of the fair value
of certain of our reporting units changes; the uncertainties of
litigation; as well as other risks and uncertainties identified in Item
1A of the Company's Annual Report for the year ended December 31, 2011,
filed on Form 10-K with the Securities and Exchange Commission on
February 28, 2012 and the Company's subsequent 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, disposition or stock repurchases. 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.
|
|
|
WEX INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
|
|
COMPREHENSIVE INCOME
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet payment solutions
|
|
$
|
117,877
|
|
|
$
|
117,054
|
|
|
$
|
341,709
|
|
|
$
|
329,236
|
|
|
|
Other payment solutions
|
|
|
43,090
|
|
|
|
34,824
|
|
|
|
112,444
|
|
|
|
84,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
160,967
|
|
|
|
151,878
|
|
|
|
454,153
|
|
|
|
413,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary and other personnel
|
|
|
28,823
|
|
|
|
27,388
|
|
|
|
87,501
|
|
|
|
79,492
|
|
|
|
Service fees
|
|
|
28,968
|
|
|
|
20,774
|
|
|
|
74,046
|
|
|
|
51,978
|
|
|
|
Provision for credit losses
|
|
|
5,647
|
|
|
|
8,677
|
|
|
|
14,874
|
|
|
|
20,464
|
|
|
|
Technology leasing and support
|
|
|
4,577
|
|
|
|
3,895
|
|
|
|
13,718
|
|
|
|
11,851
|
|
|
|
Occupancy and equipment
|
|
|
3,032
|
|
|
|
2,761
|
|
|
|
9,062
|
|
|
|
8,846
|
|
|
|
Depreciation and amortization
|
|
|
27,877
|
|
|
|
11,767
|
|
|
|
50,591
|
|
|
|
33,644
|
|
|
|
Operating interest expense
|
|
|
1,243
|
|
|
|
1,449
|
|
|
|
3,430
|
|
|
|
4,188
|
|
|
|
Cost of hardware and equipment sold
|
|
|
759
|
|
|
|
1,166
|
|
|
|
2,270
|
|
|
|
3,042
|
|
|
|
Other
|
|
|
8,764
|
|
|
|
8,757
|
|
|
|
26,541
|
|
|
|
27,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
109,690
|
|
|
|
86,634
|
|
|
|
282,033
|
|
|
|
240,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
51,277
|
|
|
|
65,244
|
|
|
|
172,120
|
|
|
|
172,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing interest expense
|
|
|
(2,302
|
)
|
|
|
(3,100
|
)
|
|
|
(6,877
|
)
|
|
|
(9,087
|
)
|
|
Gain (loss) on foreign currency transactions
|
|
|
180
|
|
|
|
(855
|
)
|
|
|
(312
|
)
|
|
|
(363
|
)
|
|
Net realized and unrealized gain (loss) on fuel price derivatives
|
|
|
(14,026
|
)
|
|
|
13,952
|
|
|
|
(12,046
|
)
|
|
|
(4,991
|
)
|
|
Decrease in tax refund due to former shareholder of RD Card
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings Australia
|
|
|
—
|
|
|
|
—
|
|
|
|
9,750
|
|
|
|
—
|
|
|
Increase in amount due under tax receivable agreement
|
|
|
—
|
|
|
|
(875
|
)
|
|
|
—
|
|
|
|
(875
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
35,129
|
|
|
|
74,366
|
|
|
|
162,635
|
|
|
|
157,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
20,845
|
|
|
|
26,266
|
|
|
|
94,780
|
|
|
|
56,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before noncontrolling interest
|
|
|
14,284
|
|
|
|
48,100
|
|
|
|
67,855
|
|
|
|
100,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net earnings from noncontrolling interest
|
|
|
(14
|
)
|
|
|
—
|
|
|
|
(14
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to WEX Inc.
|
|
|
14,298
|
|
|
|
48,100
|
|
|
|
67,869
|
|
|
|
100,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in available-for-sale securities, net of tax effect of $27
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$68 in 2012 and $57 and $90 in 2011
|
|
|
44
|
|
|
|
88
|
|
|
|
114
|
|
|
|
144
|
|
|
Changes in interest rate swaps, net of tax effect of $— and $35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in 2012 and $65 and $146 in 2011
|
|
|
—
|
|
|
|
113
|
|
|
|
60
|
|
|
|
252
|
|
|
Foreign currency translation
|
|
|
9,006
|
|
|
|
(29,888
|
)
|
|
|
7,189
|
|
|
|
(11,407
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to WEX Inc.
|
|
$
|
23,348
|
|
|
$
|
18,413
|
|
|
$
|
75,232
|
|
|
$
|
89,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to WEX Inc. per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.37
|
|
|
$
|
1.24
|
|
|
$
|
1.75
|
|
|
$
|
2.61
|
|
|
|
Diluted
|
|
$
|
0.37
|
|
|
$
|
1.23
|
|
|
$
|
1.74
|
|
|
$
|
2.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
38,793
|
|
|
|
38,747
|
|
|
|
38,832
|
|
|
|
38,662
|
|
|
|
Diluted
|
|
|
38,995
|
|
|
|
38,951
|
|
|
|
39,084
|
|
|
|
38,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEX INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
September 30,
2012
|
|
December 31,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
435,303
|
|
|
$
|
25,791
|
|
|
|
Accounts receivable (less reserve for credit losses of $10,068 in
2012 and $11,526 in 2011)
|
|
|
1,630,699
|
|
|
|
1,323,915
|
|
|
|
Available-for-sale securities
|
|
|
16,223
|
|
|
|
17,044
|
|
|
|
Income taxes receivable
|
|
|
—
|
|
|
|
7,755
|
|
|
|
Fuel price derivatives, at fair value
|
|
|
428
|
|
|
|
410
|
|
|
|
Property, equipment and capitalized software (net of accumulated
depreciation of
|
|
|
|
|
|
|
|
|
|
|
|
$121,348 in 2012 and $109,133 in 2011)
|
|
|
65,741
|
|
|
|
62,078
|
|
|
|
Deferred income taxes, net
|
|
|
104,425
|
|
|
|
143,524
|
|
|
|
Goodwill
|
|
|
579,204
|
|
|
|
549,504
|
|
|
|
Other intangible assets, net
|
|
|
137,197
|
|
|
|
109,656
|
|
|
|
Other assets
|
|
|
93,213
|
|
|
|
38,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,062,433
|
|
|
$
|
2,278,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
586,941
|
|
|
$
|
409,226
|
|
|
|
Accrued expenses
|
|
|
50,010
|
|
|
|
54,738
|
|
|
|
Income taxes payable
|
|
|
9,434
|
|
|
|
—
|
|
|
|
Deposits
|
|
|
1,206,114
|
|
|
|
693,654
|
|
|
|
Borrowed federal funds
|
|
|
—
|
|
|
|
6,900
|
|
|
|
Fuel price derivatives, at fair value
|
|
|
2,274
|
|
|
|
415
|
|
|
|
Revolving line-of-credit facilities and term loan
|
|
|
300,000
|
|
|
|
295,300
|
|
|
|
Other liabilities
|
|
|
14,992
|
|
|
|
15,749
|
|
|
|
Amounts due under tax receivable agreement
|
|
|
86,518
|
|
|
|
92,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,256,283
|
|
|
|
1,568,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest (Note 11)
|
|
|
22,113
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEX Inc. Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
Common stock $0.01 par value; 175,000 shares authorized, 42,488 in
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
and 42,252 in 2011 shares issued; 38,810 in 2012 and 38,765 in 2011
shares outstanding
|
|
|
425
|
|
|
|
423
|
|
|
|
|
Additional paid-in capital
|
|
|
157,058
|
|
|
|
146,282
|
|
|
|
|
Retained earnings
|
|
|
701,258
|
|
|
|
633,389
|
|
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain on available-for-sale securities
|
|
|
314
|
|
|
|
200
|
|
|
|
|
|
Net unrealized loss on interest rate swaps
|
|
|
—
|
|
|
|
(60
|
)
|
|
|
|
|
Net foreign currency translation adjustment
|
|
|
37,637
|
|
|
|
30,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
37,951
|
|
|
|
30,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less treasury stock at cost, 3,766 shares in 2012 and 3,566 in 2011
|
|
|
(112,655
|
)
|
|
|
(101,367
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
784,037
|
|
|
|
709,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
3,062,433
|
|
|
$
|
2,278,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEX INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
67,855
|
|
|
$
|
100,830
|
|
|
|
Adjustments to reconcile net income to net cash used for operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Fair value change of fuel price derivatives
|
|
|
1,841
|
|
|
|
(13,785
|
)
|
|
|
|
Stock-based compensation
|
|
|
8,806
|
|
|
|
7,429
|
|
|
|
|
Depreciation and amortization
|
|
|
35,604
|
|
|
|
35,267
|
|
|
|
|
Goodwill impairment
|
|
|
16,171
|
|
|
|
—
|
|
|
|
|
Deferred taxes
|
|
|
35,392
|
|
|
|
20,297
|
|
|
|
|
Provision for credit losses
|
|
|
14,874
|
|
|
|
20,464
|
|
|
|
|
Loss on disposal of property and equipment
|
|
|
—
|
|
|
|
715
|
|
|
|
|
Changes in operating assets and liabilities, net of effects of
acquisition:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(306,350
|
)
|
|
|
(383,951
|
)
|
|
|
|
|
Other assets
|
|
|
(55,572
|
)
|
|
|
(7,981
|
)
|
|
|
|
|
Accounts payable
|
|
|
163,203
|
|
|
|
148,480
|
|
|
|
|
|
Accrued expenses
|
|
|
(5,755
|
)
|
|
|
6,674
|
|
|
|
|
|
Income taxes
|
|
|
16,904
|
|
|
|
(2,765
|
)
|
|
|
|
|
Other liabilities
|
|
|
(12,034
|
)
|
|
|
(962
|
)
|
|
|
|
|
Amounts due under tax receivable agreement
|
|
|
(6,245
|
)
|
|
|
(5,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for operating activities
|
|
|
(25,306
|
)
|
|
|
(74,475
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(21,796
|
)
|
|
|
(19,862
|
)
|
|
|
Purchases of available-for-sale securities
|
|
|
(224
|
)
|
|
|
(8,353
|
)
|
|
|
Maturities of available-for-sale securities
|
|
|
1,228
|
|
|
|
769
|
|
|
|
Acquisition of CorporatePay, net of cash
|
|
|
(27,783
|
)
|
|
|
—
|
|
|
|
Acquisition of ReD – adjustment
|
|
|
—
|
|
|
|
3,734
|
|
|
|
Acquisition of rapid!, net of earn out
|
|
|
—
|
|
|
|
(8,081
|
)
|
|
|
Cash assumed in UNIK acquisition
|
|
|
1,566
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for investing activities
|
|
|
(47,009
|
)
|
|
|
(31,793
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Excess tax benefits from share-based payment arrangements
|
|
|
3,049
|
|
|
|
3,788
|
|
|
|
Repurchase of share-based awards to satisfy tax withholdings
|
|
|
(2,941
|
)
|
|
|
(2,547
|
)
|
|
|
Proceeds from stock option exercises
|
|
|
1,862
|
|
|
|
2,755
|
|
|
|
Net increase in deposits
|
|
|
512,456
|
|
|
|
170,974
|
|
|
|
Net (decrease)increase in borrowed federal funds
|
|
|
(6,900
|
)
|
|
|
9,229
|
|
|
|
Loan origination fee paid for 2011 revolving line-of-credit facility
|
|
|
—
|
|
|
|
(6,184
|
)
|
|
|
Net (repayments) borrowing on 2007 revolving line-of-credit facility
|
|
|
—
|
|
|
|
(332,300
|
)
|
|
|
(Repayments) borrowings on term loan
|
|
|
—
|
|
|
|
(75,000
|
)
|
|
|
Net borrowings in 2011 revolving line-of-credit facility
|
|
|
12,200
|
|
|
|
165,200
|
|
|
|
Borrowings on 2011 term note agreement
|
|
|
—
|
|
|
|
200,000
|
|
|
|
Repayment of 2011 term note agreement
|
|
|
(7,500
|
)
|
|
|
(5,000
|
)
|
|
|
Other financing debt
|
|
|
(19,560
|
)
|
|
|
—
|
|
|
|
Purchase of shares of treasury stock
|
|
|
(11,288
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
481,378
|
|
|
|
130,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
449
|
|
|
|
(615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
409,512
|
|
|
|
24,032
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
25,791
|
|
|
|
18,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
435,303
|
|
|
$
|
42,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
9,676
|
|
|
$
|
11,439
|
|
|
|
Income taxes paid
|
|
$
|
39,455
|
|
|
$
|
35,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant non-cash transaction
|
|
|
|
|
|
|
|
|
|
|
Acquisition of rapid! – estimated earn out
|
|
$
|
—
|
|
|
$
|
10,000
|
|
|
|
Reduction of rapid! – estimated earn out
|
|
$
|
839
|
|
|
$
|
—
|
|
|
|
Acquisition of UNIK– estimated earn out
|
|
$
|
1,013
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 1
|
|
Reconciliation of Adjusted Net Income to GAAP Net Income
|
|
Three and Nine Months Ended September 30, 2012 and 2011
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjusted net income WEX Inc.
|
|
$
|
42,035
|
|
|
$
|
38,707
|
|
|
$
|
116,681
|
|
|
$
|
103,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on fuel price derivatives
|
|
|
(12,848
|
)
|
|
|
20,728
|
|
|
|
(1,840
|
)
|
|
|
13,785
|
|
|
Amortization of acquired intangible assets
|
|
|
(5,411
|
)
|
|
|
(5,778
|
)
|
|
|
(15,481
|
)
|
|
|
(16,722
|
)
|
|
Goodwill impairment
|
|
|
(16,171
|
)
|
|
|
—
|
|
|
|
(16,171
|
)
|
|
|
—
|
|
|
Change in tax refund due to former shareholders of RD Card
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings Australia
|
|
|
—
|
|
|
|
—
|
|
|
|
9,750
|
|
|
|
—
|
|
|
Non-cash adjustment related to the tax receivable agreement
|
|
|
—
|
|
|
|
(875
|
)
|
|
|
—
|
|
|
|
(875
|
)
|
|
Net earnings attributable to noncontrolling interest
|
|
|
77
|
|
|
|
—
|
|
|
|
77
|
|
|
|
—
|
|
|
Tax impact
|
|
|
6,616
|
|
|
|
(4,682
|
)
|
|
|
(25,147
|
)
|
|
|
1,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to WEX Inc.
|
|
$
|
14,298
|
|
|
$
|
48,100
|
|
|
$
|
67,869
|
|
|
$
|
100,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 fuel price related derivative
instruments, and excludes the amortization of purchased intangibles as
well as the goodwill impairment, the net impact of tax rate changes on
the Company's deferred tax asset and related changes in the
tax-receivable agreement including the former shareholder of RD Card
Holdings Australia. 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 fuel-price
related 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, goodwill impairment and
related tax refund due to former shareholders of RD Card HoldingsAustralia have no impact on the operations of the business.
For the same reasons, WEX 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 WEX may not be comparable to similarly titled measures employed
by other companies.
The tax impact of the foregoing adjustments is the difference between
the Company’s GAAP tax provision and a pro forma tax provision based
upon the Company’s adjusted net income before taxes. The methodology
utilized for calculating the Company’s adjusted net income tax provision
is the same methodology utilized in calculating the Company’s GAAP tax
provision.
|
|
|
Exhibit 2
|
|
Selected Non-Financial Metrics
|
|
|
|
|
|
|
Q3 2012
|
|
Q2 2012
|
|
Q1 2012
|
|
Q4 2011
|
|
Q3 2011
|
|
Fleet Payment Solutions – Payment Processing Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment processing transactions (000s)
|
|
|
66,155
|
|
63,912
|
|
60,557
|
|
60,598
|
|
65,230
|
|
Gallons per payment processing transaction
|
|
|
19.3
|
|
19.5
|
|
19.5
|
|
19.6
|
|
19.3
|
|
Payment processing gallons of fuel (000s)
|
|
|
1,274,798
|
|
1,243,466
|
|
1,178,090
|
|
1,185,522
|
|
1,261,088
|
|
Average US fuel price (US$ / gallon)
|
|
$
|
3.74
|
|
3.79
|
|
3.72
|
|
3.53
|
|
3.70
|
|
Average Australian fuel price (US$ / gallon)
|
|
$
|
5.42
|
|
5.60
|
|
5.80
|
|
5.45
|
|
5.50
|
|
Payment processing $ of fuel (000s)
|
|
$
|
4,868,631
|
|
4,823,656
|
|
4,503,698
|
|
4,304,150
|
|
4,778,493
|
|
Net payment processing rate
|
|
|
1.62%
|
|
1.63%
|
|
1.64%
|
|
1.66%
|
|
1.64%
|
|
Fleet payment processing revenue (000s)
|
|
$
|
78,803
|
|
78,451
|
|
73,855
|
|
71,276
|
|
78,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Payment Solutions – Payment Processing Revenue:*
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment solutions purchase volume (000s)
|
|
$
|
3,182,032
|
|
2,822,657
|
|
2,189,578
|
|
2,018,097
|
|
2,404,668
|
|
Net interchange rate
|
|
|
.90%
|
|
0.90%
|
|
0.90%
|
|
0.98%
|
|
0.99%
|
|
Payment solutions processing revenue (000s)
|
|
$
|
28,544
|
|
25,417
|
|
19,747
|
|
19,845
|
|
23,723
|
*Excludes payment processing revenue from Rapid! Paycard and UNIK
Definitions and explanations:
Payment processing transactions represents the total number of purchases
made by fleets that have a payment processing relationship with WEX.
Payment processing gallons of fuel represents the total number of
gallons of fuel purchased by fleets that have a payment processing
relationship with WEX.
Payment processing $ of fuel represents the total dollar value of the
fuel purchased by fleets that have a payment processing relationship
with WEX.
Net payment processing rate represents the percentage of the dollar
value of each payment processing transaction that WEX records as revenue
from merchants less any discounts given to fleets or strategic
relationships.
Payment solutions purchase volume represents the total dollar value of
all transactions that use corporate charge card products including
single use account products.
Net interchange rate represents the percentage of the dollar value of
each transaction that WEX records as revenue less any discounts given to
customers.
|
|
|
Exhibit 3
|
|
Segment Revenue Information
|
|
Three and Nine Months Ended September 30, 2012 and 2011
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
Fleet Payment Solutions
|
|
|
|
(in thousands, except per
|
|
Three months ended
September 30,
|
|
Increase (decrease)
|
|
Nine months ended
September 30,
|
|
Increase (decrease)
|
|
transaction and per gallon data)
|
|
|
2012
|
|
|
2011
|
|
Amount
|
|
Percent
|
|
|
2012
|
|
|
2011
|
|
Amount
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment processing revenue
|
|
$
|
78,803
|
|
$
|
78,381
|
|
$
|
422
|
|
|
1
|
%
|
|
$
|
231,109
|
|
$
|
222,480
|
|
$
|
8,629
|
|
|
4
|
%
|
|
|
Transaction processing revenue
|
|
|
4,097
|
|
|
4,305
|
|
|
(208
|
)
|
|
(5
|
)%
|
|
|
12,235
|
|
|
12,472
|
|
|
(237
|
)
|
|
(2
|
)%
|
|
|
Account servicing revenue
|
|
|
17,657
|
|
|
17,014
|
|
|
643
|
|
|
4
|
%
|
|
|
48,592
|
|
|
45,420
|
|
|
3,172
|
|
|
7
|
%
|
|
|
Finance fees
|
|
|
12,604
|
|
|
12,791
|
|
|
(187
|
)
|
|
(1
|
)%
|
|
|
35,422
|
|
|
33,821
|
|
|
1,601
|
|
|
5
|
%
|
|
|
Other
|
|
|
4,716
|
|
|
4,563
|
|
|
153
|
|
|
3
|
%
|
|
|
14,351
|
|
|
15,043
|
|
|
(692
|
)
|
|
(5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
117,877
|
|
|
117,054
|
|
|
823
|
|
|
1
|
%
|
|
|
341,709
|
|
|
329,236
|
|
|
12,473
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Payment Solutions
|
|
|
|
|
|
Three months ended
September 30,
|
|
Increase (decrease)
|
|
Nine months ended
September 30,
|
|
Increase (decrease)
|
|
(in thousands)
|
|
|
2012
|
|
|
2011
|
|
Amount
|
|
Percent
|
|
|
2012
|
|
|
2011
|
|
Amount
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment processing revenue
|
|
$
|
29,653
|
|
$
|
24,025
|
|
$
|
5,628
|
|
|
23
|
%
|
|
$
|
75,731
|
|
$
|
57,344
|
|
$
|
18,387
|
|
|
32
|
%
|
|
|
Transaction processing revenue
|
|
|
1,531
|
|
|
1,661
|
|
|
(130
|
)
|
|
(8
|
)%
|
|
|
5,128
|
|
|
5,261
|
|
|
(133
|
)
|
|
(3
|
)%
|
|
|
Account servicing revenue
|
|
|
1,627
|
|
|
955
|
|
|
672
|
|
|
70
|
%
|
|
|
3,891
|
|
|
1,994
|
|
|
1,897
|
|
|
95
|
%
|
|
|
Finance fees
|
|
|
521
|
|
|
190
|
|
|
331
|
|
|
174
|
%
|
|
|
840
|
|
|
529
|
|
|
311
|
|
|
59
|
%
|
|
|
Other
|
|
|
9,757
|
|
|
7,993
|
|
|
1,764
|
|
|
22
|
%
|
|
|
26,853
|
|
|
18,876
|
|
|
7,977
|
|
|
42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
43,089
|
|
|
34,824
|
|
|
8,265
|
|
|
24
|
%
|
|
|
112,443
|
|
|
84,004
|
|
|
28,439
|
|
|
34
|
%
|
Source: WEX Inc.
News media contact:
WEX Inc.
Jessica Roy, 207-523-6763
Jessica.Roy@wexinc.com
or
Investor
contact:
WEX Inc.
Michael E. Thomas, 207-523-6743
Michael.Thomas@wexinc.com