Strong transaction growth and record low credit losses drive
quarterly results ahead of guidance
SOUTH PORTLAND, Maine--(BUSINESS WIRE)--May. 1, 2013--
WEX
Inc. (NYSE: WEX), a leading provider of corporate payment solutions,
today reported financial results for the three months ended March 31,
2013.
First Quarter Financial Results
Total revenue for the first quarter of 2013 increased 18% to $165.4
million from $140.1 million for the first quarter of 2012. Net income to
common shareholders on a GAAP basis was $28.7 million, or $0.73 per
diluted share, compared with $23.2 million, or $0.59 per diluted share,
for the first quarter last year.
On a non-GAAP basis, the Company's adjusted net income for the first
quarter of 2013 increased 8% to $38.3 million, or $0.98 per diluted
share, from $35.6 million, or $0.91 per diluted share, for the same
period a year ago.
WEX uses fuel-price derivative instruments to mitigate financial risks
associated with the variability in fuel prices in North America. For the
first quarter of 2013, the Company's GAAP financial results include an
unrealized pre-tax, non-cash, mark-to-market loss of $5.9 million
dollars on these instruments. See Exhibit 1 for a full reconciliation of
adjusted net income.
“We kicked off 2013 with first quarter revenue and adjusted net income
exceeding our guidance, increasing 18% and 8%, respectively, over last
year driven by strong transaction growth, exceptional credit loss
performance and investments in our business to support future growth,”
said Michael E. Dubyak, WEX chairman and chief executive officer. “Year
to date we have made strides in executing on all fronts of our
multi-pronged strategy. We advanced our international presence within
Asia-Pac, Brazil and Europe as a result of investments in WEX Travel,
our virtual payment solution for the travel industry, and further
diversified our business all while expanding our Americas Fleet business
with some marquee wins. With positive momentum in the business and a
robust pipeline of opportunities, we have also positioned WEX for future
success as we leverage our investments in our burgeoning growth
platforms.”
First Quarter 2013 Performance Metrics
Where applicable, the performance metrics listed below include activity
from Fleet One, acquired October 4, 2012, which positively impacted
metrics for the first quarter.
-
Average number of vehicles serviced worldwide was approximately 7.5
million, an increase of 12% from the first quarter of 2012.
-
Total fuel transactions processed increased 10.6% from the first
quarter of 2012 to 87.6 million. Payment processing transactions
increased 13.5% to 68.7 million; transaction processing transactions
increased 0.9% to 18.9 million.
-
Average expenditure per payment processing transaction increased 17.6%
from the first quarter of 2012 to $87.45.
-
Domestic retail fuel price increased 1.1% to $3.76 per gallon from
$3.72 per gallon in the first quarter of 2012.
-
Total corporate card purchase volume grew 20% to $2.6 billion, from
$2.2 billion for the first quarter of 2012.
Financial Guidance and Assumptions
“Strong growth across each area of our business coupled with record low
credit losses drove our performance for the first quarter. Though we
expect to build off this positive momentum, we are updating our
full-year guidance to reflect the recent decline in fuel prices and
foreign exchange rates, as well as incorporating the potential impact of
the payment card litigation settlement,” said Steve Elder, WEX senior
vice president and chief financial officer.
-
For the second quarter of 2013, WEX expects revenue in the range of
$170 million to $177 million and adjusted net income in the range of
$38 million to $41 million, or $0.98 to $1.05 per diluted share.
-
For the full year 2013, the Company expects revenue in the range of
$716 million to $736 million and adjusted net income to be in the
range of $164 million to $170 million, or $4.20 to $4.35 per diluted
share.
Second quarter 2013 guidance is based on an assumed average U.S. retail
fuel price of $3.58 per gallon, and approximately 39 million shares
outstanding. Full-year 2013 guidance is based on an assumed average U.S.
retail fuel price of $3.49 per gallon and approximately 39 million
shares outstanding. The fuel prices referenced above are based on the
applicable NYMEX futures price. WEX is assuming that exchange rates will
remain in the range of the current spot rates.
The Company's guidance also assumes that second quarter 2013 domestic
fleet credit loss will range between 8 and 13 basis points, and that
domestic fleet credit loss for full year 2013 will range between 9 to 14
basis points.
Given the high likelihood that the pending MasterCard merchant
litigation settlement will be approved, the Company’s full-year guidance
also assumes a negative impact to the Company’s interchange rate, which
is expected to be approximately 10 basis points for an eight month
period or $0.07 per share.
The Company's guidance does not reflect the impact of any future stock
repurchases that may occur in 2013. 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 three months ended March 31, 2013 and 2012.
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 March 31, 2013. This
table is presented as Exhibit 2. The Company is also providing selected
segment review information for the three months ended March 31, 2013 and
2012 in Exhibit 3.
Conference Call Details
In conjunction with this announcement, WEX will host a conference call
today, May 1, 2013, 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: WEX) is a leading provider of corporate payment
solutions. From its roots in fleet card payments beginning in 1983, WEX
has expanded the scope of its business into a multi-channel provider of
corporate payment solutions representing more than 7.6 million
cardholders and offering 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 www.wexinc.com.
Forward Looking Statement
This news release contains forward-looking statements, including
statements regarding: financial guidance; assumptions underlying the
Company's financial guidance; management’s expectations for future
growth opportunities; 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 news 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 failure of corporate investments to result in anticipated
strategic value; 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; the impact of
the Company’s outstanding bonds on its operations; 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 on Form 10-K filed with the Securities and Exchange
Commission on March 1, 2013 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 news
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 INCOME
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Fleet payment solutions
|
|
$
|
126,039
|
|
|
$
|
109,147
|
|
|
|
Other payment solutions
|
|
|
39,331
|
|
|
|
30,975
|
|
|
|
|
Total revenues
|
|
|
165,370
|
|
|
|
140,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Salary and other personnel
|
|
|
40,077
|
|
|
|
28,715
|
|
|
|
Service fees
|
|
|
23,805
|
|
|
|
20,308
|
|
|
|
Provision for credit losses
|
|
|
3,756
|
|
|
|
5,043
|
|
|
|
Technology leasing and support
|
|
|
5,485
|
|
|
|
4,267
|
|
|
|
Occupancy and equipment
|
|
|
3,805
|
|
|
|
2,816
|
|
|
|
Depreciation, amortization and impairment
|
|
|
14,607
|
|
|
|
11,317
|
|
|
|
Operating interest expense
|
|
|
1,147
|
|
|
|
1,111
|
|
|
|
Cost of hardware and equipment sold
|
|
|
1,074
|
|
|
|
727
|
|
|
|
Other
|
|
|
11,084
|
|
|
|
7,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
104,840
|
|
|
|
82,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
60,530
|
|
|
|
57,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing interest expense
|
|
|
(7,339
|
)
|
|
|
(2,285
|
)
|
|
Loss on foreign currency transactions
|
|
|
(232
|
)
|
|
|
(20
|
)
|
|
Net realized and unrealized losses on fuel price derivatives
|
|
|
(7,755
|
)
|
|
|
(18,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
45,204
|
|
|
|
36,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
16,627
|
|
|
|
13,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
28,577
|
|
|
|
23,236
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss from noncontrolling interest
|
|
|
(112
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to WEX Inc.
|
|
$
|
28,689
|
|
|
$
|
23,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to WEX Inc. per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.74
|
|
|
$
|
0.60
|
|
|
|
Diluted
|
|
$
|
0.73
|
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
38,888
|
|
|
|
38,820
|
|
|
|
Diluted
|
|
|
39,187
|
|
|
|
39,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEX INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2013
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
349,720
|
|
|
$
|
197,662
|
|
|
|
Accounts receivable (less reserve for credit losses of $10,797 in
2013 and $11,709 in 2012)
|
|
|
1,781,444
|
|
|
|
1,555,814
|
|
|
|
Available-for-sale securities
|
|
|
15,788
|
|
|
|
16,350
|
|
|
|
Property, equipment and capitalized software (net of accumulated
depreciation of
|
|
|
|
|
|
|
|
|
|
|
|
$131,388 in 2013 and $125,659 in 2012)
|
|
|
59,434
|
|
|
|
60,097
|
|
|
|
Deferred income taxes, net
|
|
|
91,143
|
|
|
|
100,128
|
|
|
|
Goodwill
|
|
|
844,158
|
|
|
|
844,285
|
|
|
|
Other intangible assets, net
|
|
|
233,616
|
|
|
|
241,810
|
|
|
|
Other assets
|
|
|
105,085
|
|
|
|
90,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,480,388
|
|
|
$
|
3,106,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
718,121
|
|
|
$
|
527,838
|
|
|
|
Accrued expenses
|
|
|
63,514
|
|
|
|
60,532
|
|
|
|
Income taxes payable
|
|
|
10,978
|
|
|
|
10,151
|
|
|
|
Deposits
|
|
|
1,025,621
|
|
|
|
890,345
|
|
|
|
Borrowed federal funds
|
|
|
—
|
|
|
|
48,400
|
|
|
|
Revolving line-of-credit facilities and term loan
|
|
|
296,250
|
|
|
|
621,000
|
|
|
|
Notes outstanding
|
|
|
400,000
|
|
|
|
—
|
|
|
|
Amounts due under tax receivable agreement
|
|
|
86,894
|
|
|
|
86,550
|
|
|
|
Fuel price derivatives, at fair value
|
|
|
7,611
|
|
|
|
1,729
|
|
|
|
Other liabilities
|
|
|
22,601
|
|
|
|
20,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,631,590
|
|
|
|
2,267,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
21,855
|
|
|
|
21,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
Common stock $0.01 par value; 175,000 shares authorized, 42,817 in
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
and 42,586 in 2012 shares issued; 38,899 in 2013 and 38,908 in 2012
shares outstanding
|
|
|
428
|
|
|
|
426
|
|
|
|
|
Additional paid-in capital
|
|
|
160,627
|
|
|
|
162,470
|
|
|
|
|
Retained earnings
|
|
|
759,000
|
|
|
|
730,311
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
37,454
|
|
|
|
37,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less treasury stock at cost, 4,007 shares in 2013 and 3,766 shares
2012
|
|
|
(130,566
|
)
|
|
|
(112,655
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
826,943
|
|
|
|
817,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
3,480,388
|
|
|
$
|
3,106,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEX INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
28,577
|
|
|
$
|
23,236
|
|
|
|
Adjustments to reconcile net income to net cash provided by (used
for) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Fair value change of fuel price derivatives
|
|
|
5,882
|
|
|
|
13,555
|
|
|
|
|
Stock-based compensation
|
|
|
2,406
|
|
|
|
3,424
|
|
|
|
|
Depreciation and amortization
|
|
|
15,156
|
|
|
|
11,667
|
|
|
|
|
Deferred taxes
|
|
|
9,021
|
|
|
|
1,908
|
|
|
|
|
Provision for credit losses
|
|
|
3,756
|
|
|
|
5,043
|
|
|
|
|
Loss on disposal of property, plant and equipment
|
|
|
63
|
|
|
|
—
|
|
|
|
|
Changes in operating assets and liabilities, net of effects of
acquisition:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(228,297
|
)
|
|
|
(233,962
|
)
|
|
|
|
|
Other assets
|
|
|
(2,971
|
)
|
|
|
(9,864
|
)
|
|
|
|
|
Accounts payable
|
|
|
190,068
|
|
|
|
143,296
|
|
|
|
|
|
Accrued expenses
|
|
|
2,984
|
|
|
|
(4,041
|
)
|
|
|
|
|
Income taxes
|
|
|
776
|
|
|
|
7,205
|
|
|
|
|
|
Other liabilities
|
|
|
1,145
|
|
|
|
295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) operating activities
|
|
|
28,566
|
|
|
|
(38,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(5,560
|
)
|
|
|
(4,968
|
)
|
|
|
Purchases of available-for-sale securities
|
|
|
(65
|
)
|
|
|
(80
|
)
|
|
|
Maturities of available-for-sale securities
|
|
|
502
|
|
|
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for investing activities
|
|
|
(5,123
|
)
|
|
|
(4,701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Excess tax benefits from equity instrument share-based payment
arrangements
|
|
|
5,589
|
|
|
|
2,244
|
|
|
|
Repurchase of share-based awards to satisfy tax withholdings
|
|
|
(9,985
|
)
|
|
|
(2,608
|
)
|
|
|
Proceeds from stock option exercises
|
|
|
146
|
|
|
|
1,287
|
|
|
|
Net change in deposits
|
|
|
135,276
|
|
|
|
13,085
|
|
|
|
Net change in borrowed federal funds
|
|
|
(48,400
|
)
|
|
|
40,326
|
|
|
|
Other financing debt
|
|
|
787
|
|
|
|
—
|
|
|
|
Loan origination fee
|
|
|
(12,023
|
)
|
|
|
—
|
|
|
|
Borrowings on notes outstanding
|
|
|
400,000
|
|
|
|
—
|
|
|
|
Net borrowing on 2011 revolving line of credit
|
|
|
(438,500
|
)
|
|
|
(4,400
|
)
|
|
|
Net borrowings on 2011 term loan
|
|
|
(182,500
|
)
|
|
|
—
|
|
|
|
Borrowings on 2013 term loan
|
|
|
300,000
|
|
|
|
—
|
|
|
|
Repayments on 2013 term loan
|
|
|
(3,750
|
)
|
|
|
(2,500
|
)
|
|
|
Purchase of treasury shares
|
|
|
(17,911
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
128, 729
|
|
|
|
47,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(114
|
)
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
152,058
|
|
|
|
4,652
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
197,662
|
|
|
|
25,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
349,720
|
|
|
$
|
30,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
4,351
|
|
|
$
|
3,319
|
|
|
|
Income taxes paid
|
|
$
|
1,226
|
|
|
$
|
2,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant non-cash transaction
|
|
|
|
|
|
|
|
|
|
|
Reduction to rapid! – estimated earn out
|
|
$
|
—
|
|
|
$
|
839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 1
|
|
Reconciliation of Adjusted Net Income to GAAP Net Earnings
|
|
First Quarter 2013 and 2012
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income WEX Inc.
|
|
$
|
38,309
|
|
|
$
|
35,567
|
|
|
Unrealized losses on fuel price derivatives
|
|
|
(5,882
|
)
|
|
|
(13,555
|
)
|
|
Amortization of acquired intangible assets
|
|
|
(8,379
|
)
|
|
|
(5,086
|
)
|
|
Deferred loan costs associated with the extinguishment of debt
|
|
|
(1,004
|
)
|
|
|
—
|
|
|
ANI adjustments attributable to noncontrolling interest
|
|
|
346
|
|
|
|
—
|
|
|
Tax impact
|
|
|
5,299
|
|
|
|
6,310
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to WEX Inc.
|
|
$
|
28,689
|
|
|
$
|
23,236
|
|
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,
deferred loan cost associated with the extinguishment of debt, goodwill
impairment, asset impairment, other charges related to the acquisition
of Fleet One, 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, asset
impairment and other charges related to the acquisition of Fleet One,
the net impact of tax rate changes on the Company's deferred tax asset
and related tax refund due to former shareholders of RD Card HoldingsAustralia have no impact on the ongoing 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
|
|
|
|
|
|
|
Q1 2013
|
|
Q4 2012
|
|
Q3 2012
|
|
Q2 2012
|
|
Q1 2012
|
|
Fleet Payment Solutions – Payment Processing Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment processing transactions (000s)
|
|
|
68,742
|
|
70,091
|
|
66,155
|
|
63,912
|
|
60,557
|
|
Gallons per payment processing transaction
|
|
|
22.8
|
|
22.7
|
|
19.3
|
|
19.5
|
|
19.5
|
|
Payment processing gallons of fuel (000s)
|
|
|
1,567,230
|
|
1,592,347
|
|
1,274,798
|
|
1,243,466
|
|
1,178,090
|
|
Average US fuel price (US$ / gallon)
|
|
$
|
3.76
|
|
3.69
|
|
3.74
|
|
3.79
|
|
3.72
|
|
Average Australian fuel price (US$ / gallon)
|
|
$
|
5.75
|
|
5.82
|
|
5.42
|
|
5.60
|
|
5.80
|
|
Payment processing $ of fuel (000s)
|
|
$
|
6,011,767
|
|
6,083,379
|
|
4,868,631
|
|
4,823,656
|
|
4,503,698
|
|
Net payment processing rate*
|
|
|
1.38%
|
|
1.40%
|
|
1.62%
|
|
1.63%
|
|
1.64%
|
|
Fleet payment processing revenue (000s)
|
|
$
|
83,194
|
|
85,371
|
|
78,803
|
|
78,451
|
|
73,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Payment Solutions – Payment Processing Revenue:**
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment solutions purchase volume (000s)
|
|
$
|
2,635,062
|
|
2,494,508
|
|
3,182,032
|
|
2,822,657
|
|
2,189,578
|
|
Net interchange rate
|
|
|
0.96%
|
|
0.94%
|
|
0.90%
|
|
0.90%
|
|
0.90%
|
|
Payment solutions processing revenue (000s)
|
|
$
|
25,238
|
|
23,322
|
|
28,544
|
|
25,417
|
|
19,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*The decline in the net payment process rate during Q4 2012 is primarily
due to the acquisition of Fleet One in October of 2012.
** 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 Months Ended March 31, 2013 and 2012
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
Fleet Payment Solutions
|
|
|
|
|
|
Three months ended
March 31,
|
|
Increase (decrease)
|
|
(in thousands)
|
|
|
2013
|
|
|
2012
|
|
Amount
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment processing revenue
|
|
$
|
83,194
|
|
|
73,855
|
|
$
|
9,339
|
|
|
13
|
%
|
|
|
Transaction processing revenue
|
|
|
4,610
|
|
|
3,981
|
|
|
629
|
|
|
16
|
%
|
|
|
Account servicing revenue
|
|
|
18,563
|
|
|
15,454
|
|
|
3,109
|
|
|
20
|
%
|
|
|
Finance fees
|
|
|
13,248
|
|
|
11,189
|
|
|
2,059
|
|
|
18
|
%
|
|
|
Other
|
|
|
6,424
|
|
|
4,668
|
|
|
1,756
|
|
|
38
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
126,039
|
|
$
|
109,147
|
|
$
|
16,892
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Payment Solutions
|
|
|
|
|
|
Three months ended
March 31,
|
|
Increase (decrease)
|
|
(in thousands)
|
|
|
2013
|
|
|
2012
|
|
Amount
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment processing revenue
|
|
$
|
27,132
|
|
$
|
20,165
|
|
$
|
6,967
|
|
|
35
|
%
|
|
|
Transaction processing revenue
|
|
|
1,548
|
|
|
2,038
|
|
|
(490
|
)
|
|
(24
|
)%
|
|
|
Account servicing revenue
|
|
|
2,443
|
|
|
1,044
|
|
|
1,399
|
|
|
134
|
%
|
|
|
Finance fees
|
|
|
1,469
|
|
|
172
|
|
|
1,297
|
|
|
754
|
%
|
|
|
Other
|
|
|
6,739
|
|
|
7,556
|
|
|
(817
|
)
|
|
(11
|
) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
39,331
|
|
$
|
30,975
|
|
$
|
8,356
|
|
|
27
|
%
|
Source: WEX Inc.
WEX Inc.
News media contact:
Jessica Roy,
207-523-6763
Jessica.Roy@wexinc.com
or
Investor
relations contact:
Michael E. Thomas, 207-523-6743
Michael.Thomas@wexinc.com