Q2 revenue increased 8% year-over-year to a
second quarter record $673 million, driven by 13% growth in the
Benefits segment and acceleration in Mobility segment growth
rate
Q2 GAAP net income was $1.83 per diluted share;
Q2 adjusted net income was $3.91 per diluted share
Q2 GAAP operating income margin of 25.0% and
adjusted operating income margin of 40.7%
Share repurchases of approximately $100 million
during Q2, an additional $70 million in July 2024, and expect to
enter into a $300 million accelerated share repurchase agreement in
the near future
WEX (NYSE: WEX), the global commerce platform that simplifies
the business of running a business, today reported financial
results for the three months ended June 30, 2024.
“WEX achieved another quarter of record revenue and delivered
adjusted earnings per share above the top end of our guidance
range, showcasing our ability to deliver consistently strong
financial results even in challenging economic conditions,” said
Melissa Smith, WEX’s Chair, Chief Executive Officer, and
President.
“During the quarter, we exceeded our goal of achieving $100
million of run rate savings six months earlier than expected. We
also made meaningful progress advancing our strategic initiatives
to expand our product capabilities on our commerce platform in each
of our segments. Further, we continued to invest in our EV
offerings to support the transition to mixed fleets and embraced
digital transformation by harnessing cutting-edge technologies and
leveraging AI capabilities. We remain committed to creating value
for our shareholders and expect to enter into an accelerated share
repurchase agreement in the near future to repurchase $300 million
of WEX common stock, reflecting our confidence in WEX’s intrinsic
value and long-term growth potential.”
Second Quarter 2024 Financial Results
Total revenue for the second quarter of 2024 increased 8% to
$673.5 million from $621.3 million for the second quarter of 2023.
The revenue increase in the quarter includes a $5.4 million
unfavorable impact from fuel prices and spreads and a $0.8 million
unfavorable impact from foreign exchange rates.
Net income on a GAAP basis decreased by $18.3 million to a net
income of $77.0 million, or $1.83 per diluted share, for the second
quarter of 2024, compared with net income of $95.3 million, or
$2.20 per diluted share, for the second quarter of 2023. The
Company's adjusted net income, which is a non-GAAP measure, was
$164.0 million for the second quarter of 2024, or $3.91 per diluted
share, up 8% per diluted share from $159.3 million, or $3.63 per
diluted share, for the same period last year. GAAP operating income
margin for the second quarter of 2024 was 25.0% compared to 25.7%
last year. Adjusted operating income margin was 40.7% in the second
quarter of 2024 compared to 40.3% for the prior year comparable
period. See Exhibit 1 for a full explanation and reconciliation of
adjusted net income, adjusted net income per diluted share, and
adjusted operating income to the most directly comparable GAAP
financial measures. See Exhibit 5 for information on the
calculation of adjusted operating income margin.
Second Quarter 2024 Performance Metrics
- Total volume across all segments was $60.1 billion, an increase
of 9% from the second quarter of 2023.
- Mobility payment processing transactions in the second quarter
of 2024 increased 2% to 144.9 million compared with the prior year
at 142.4 million.
- Average number of vehicles serviced was approximately 19.4
million, an increase of 3% from the second quarter of 2023.
- Benefits’ average number of Software-as-a-Service (SaaS)
accounts grew 3% to 20.0 million compared with the second quarter
of 2023.
- Average HSA custodial cash assets in the second quarter of 2024
were $4.2 billion, which is 9% higher than $3.9 billion a year
ago.
- Corporate Payments’ purchase volume grew 12% to $25.8 billion
from $22.9 billion in the second quarter of 2023.
- The Company repurchased 0.5 million shares of its stock for a
total cost of approximately $100 million.
- Cash flows used in operating activities in the second quarter
of this year were $7.0 million. Adjusted free cash flow, which is a
non-GAAP measure, was $161.1 million for the same period. Please
see Exhibit 1 for a reconciliation of operating cash flow to this
non-GAAP measure.
“We delivered solid financial performance in the second quarter,
underpinned by our solid balance sheet, strong cash generation, and
low leverage ratio that allow us to invest in the business and
return capital to our shareholders,” said Jagtar Narula, WEX’s
Chief Financial Officer. “Our Mobility segment revenue growth
accelerated in Q2 as expected, however, as a result of recent
trends in the travel environment, we are modestly revising our
outlook for the second half of 2024. We are taking actions to drive
further operational efficiency, and remain confident in WEX’s
strong market position, strategic growth initiatives, and culture
of innovation that empowers us to drive sustainable long-term
success.”
Financial Guidance and Assumptions
The Company provides revenue guidance on a GAAP basis and
earnings guidance on a non-GAAP basis, due to the uncertainty and
the indeterminate amount of certain elements that are included in
reported GAAP earnings.
- For the third quarter of 2024, the Company expects revenue in
the range of $688 million to $698 million and adjusted net income
in the range of $4.42 to $4.52 per diluted share.
- For the full year 2024, the Company now expects revenue in the
range of $2.68 billion to $2.72 billion. Adjusted net income is now
expected to be in the range of $15.98 to $16.38 per diluted
share.
Third quarter and full year 2024 guidance is based on assumed
average U.S. retail fuel prices of $3.65 and $3.61 per gallon,
respectively, and a 25.0% adjusted net income effective tax rate.
The fuel prices referenced above are based on the applicable NYMEX
futures price from the week of July 15, 2024. Our guidance assumes
approximately 40.8 million and 41.4 million fully diluted shares
outstanding for the third quarter and the full year, respectively.
The share count assumptions include the effect of approximately $70
million of shares purchased during the month of July and the
expected effect of entering into a $300 million accelerated share
repurchase transaction that we expect to do in the near future.
The Company's adjusted net income guidance, which is a non-GAAP
measure, excludes unrealized gains and losses on financial
instruments, net foreign currency gains and losses,
acquisition-related intangible amortization, other acquisition and
divestiture related items, stock-based compensation, other costs,
debt restructuring costs and debt issuance cost amortization, tax
related items and certain other non-operating items and
non-recurring or non-cash operating charges that are not core to
our operations, as applicable depending on the period presented. We
are unable to reconcile our adjusted net income guidance to the
comparable GAAP measure without unreasonable effort because of the
difficulty in predicting the amounts to be adjusted, including, but
not limited to, foreign currency exchange rates, unrealized gains
and losses on financial instruments, and acquisition and
divestiture related items, which may have a significant impact on
our financial results.
Additional Information
Management uses the non-GAAP measures presented within this
earnings release to evaluate the Company’s performance on a
comparable basis. 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 earnings release:
in Exhibit 1, reconciliations of non-GAAP measures referenced in
this earnings release; in Exhibit 2, tables illustrating the impact
of foreign currency rates and fuel prices for each of our
reportable segments for the three months ended June 30, 2024; and
in Exhibit 3, a table of selected other metrics for the quarter
ended June 30, 2024 and the four preceding quarters. See segment
revenue for the three months ended June 30, 2024 and 2023 in
Exhibit 4 and information regarding segment adjusted operating
income margin and adjusted operating income margin in Exhibit
5.
Conference Call Details
In conjunction with this announcement, WEX will host a
conference call today, July 25, 2024, at 10:00 a.m. (ET). As
previously announced, the conference call will be webcast live on
the Internet, and can be accessed along with the accompanying
slides at the Investor Relations section of the WEX website,
www.wexinc.com. The live conference call also can be accessed by
dialing (888) 596-4144 or (646) 968-2525. The Conference ID number
is 2902800. A replay of the webcast and the accompanying slides
will be available on the Company's website for at least 30
days.
About WEX
WEX (NYSE: WEX) is the global commerce platform that simplifies
the business of running a business. WEX has created a powerful
ecosystem that offers seamlessly embedded, personalized solutions
for its customers around the world. Through its rich data and
specialized expertise in simplifying benefits, reimagining
mobility, and paying and getting paid, WEX aims to make it easy for
companies to overcome complexity and reach their full potential.
For more information, please visit www.wexinc.com.
Forward-Looking Statements
This earnings release includes forward-looking statements
including, but not limited to, statements about management’s plans,
goals, expectations, and guidance and assumptions with respect to
future financial performance of the Company as well as our ability
to enter into and execute an expected accelerated share repurchase
agreement. Any statements in this earnings release that are not
statements of historical facts are forward-looking statements. When
used in this earnings release, the words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“project,” “will,” “positions,” “confidence,” and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such words.
Forward-looking statements relate to our future plans, objectives,
expectations, and intentions and are not historical facts and
accordingly involve known and unknown risks and uncertainties and
other factors that may cause the actual results or performance to
be materially different from future results or performance
expressed or implied by these forward-looking statements. The
following factors, among others, could cause actual results to
differ materially from those contained in forward-looking
statements made in this earnings release and in oral statements
made by our authorized officers:
- the impact of fluctuations in demand for fuel and the
volatility and prices of fuel, including fuel spreads in the
Company’s international markets, and the resulting impact on the
Company’s margins, revenues, and net income;
- the effects of general economic conditions, including a decline
in demand for fuel, corporate payment services, travel related
services, or healthcare related products and services;
- the failure to comply with the applicable requirements of
Mastercard or Visa contracts and rules;
- the extent to which unpredictable events in the locations in
which the Company or the Company’s customers operate or elsewhere
may adversely affect the Company’s employees, ability to conduct
business, results of operations and financial condition;
- the impact and size of credit losses, including fraud losses,
and other adverse effects if the Company fails to adequately assess
and monitor credit risk or fraudulent use of our payment cards or
systems;
- the impact of changes to the Company’s credit standards;
- limitations on, or compression of, interchange fees;
- the effect of adverse financial conditions affecting the
banking system;
- the impact of increasing scrutiny with respect to our
environmental, social and governance practices;
- failure to implement new technologies and products;
- the failure to realize or sustain the expected benefits from
our cost and organizational operational efficiencies
initiatives;
- the failure to compete effectively in order to maintain or
renew key customer and partner agreements and relationships, or to
maintain volumes under such agreements;
- the ability to attract and retain employees;
- the ability to execute the Company’s business expansion and
acquisition efforts and realize the benefits of acquisitions we
have completed;
- the failure to achieve commercial and financial benefits as a
result of our strategic minority equity investments;
- the impact of foreign currency exchange rates on the Company’s
operations, revenue and income and other risks associated with our
operations outside the United States;
- the failure to adequately safeguard custodial HSA assets;
- the incurrence of impairment charges if the Company’s
assessment of the fair value of certain of its reporting units
changes;
- the uncertainties of investigations and litigation;
- the ability of the Company to protect its intellectual property
and other proprietary rights;
- the impact of regulatory capital requirements and other
regulatory requirements on the operations of WEX Bank or its
ability to make payments to WEX Inc.;
- the impact of the Company’s debt instruments on the Company’s
operations;
- the impact of leverage on the Company’s operations, results or
borrowing capacity generally;
- changes in interest rates, including those which we must pay
for our deposits, and the rate of inflation;
- the ability to refinance certain indebtedness or obtain
additional financing;
- the actions of regulatory bodies, including tax, banking and
securities regulators, or possible changes in tax, banking or
financial regulations impacting the Company’s industrial bank, the
Company as the corporate parent or other subsidiaries or
affiliates;
- the failure to comply with the Treasury Regulations applicable
to non-bank custodians;
- the impact from breaches of, or other issues with, the
Company’s technology systems or those of its third-party service
providers and any resulting negative impact on the Company’s
reputation, liabilities or relationships with customers or
merchants;
- the impact of regulatory developments with respect to privacy
and data protection;
- the impact of any disruption to the technology and electronic
communications networks we rely on;
- the ability to incorporate artificial intelligence in our
business successfully and ethically;
- the ability to maintain effective systems of internal
controls;
- the impact of provisions in our charter documents, Delaware law
and applicable banking laws that may delay or prevent our
acquisition by a third party; as well as
- other risks and uncertainties identified in Item 1A of our
Annual Report on Form 10-K for the year ended December 31, 2023,
filed with the Securities and Exchange Commission on February 23,
2024, and subsequent filings with the Securities and Exchange
Commission.
The forward-looking statements speak only as of the date of the
initial filing of this earnings 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 OPERATIONS
(in millions, except per share
data)
(unaudited)
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Revenues
Payment processing revenue
$
318.4
$
300.5
$
620.4
$
588.6
Account servicing revenue
168.6
152.9
341.9
313.6
Finance fee revenue
77.8
76.4
148.1
157.1
Other revenue
108.7
91.5
215.8
174.0
Total revenues
673.5
621.3
1,326.1
1,233.3
Cost of services
Processing costs
163.8
149.7
332.9
295.3
Service fees
20.8
17.9
41.8
36.2
Provision for credit losses
20.6
22.7
43.0
68.1
Operating interest
25.7
19.5
49.2
32.3
Depreciation and amortization
32.8
25.2
64.0
50.4
Total cost of services
263.8
235.0
530.9
482.3
General and administrative
101.0
106.2
189.5
195.1
Sales and marketing
93.7
78.9
179.0
158.8
Depreciation and amortization
46.9
41.8
94.0
83.4
Operating income
168.1
159.4
332.6
313.7
Financing interest expense, net of
financial instruments
(59.9
)
(40.2
)
(120.2
)
(93.1
)
Change in fair value of contingent
consideration
(1.7
)
(1.2
)
(3.4
)
(3.0
)
Net foreign currency loss
(0.4
)
(0.2
)
(13.0
)
(1.6
)
Income before income taxes
106.1
117.8
196.1
216.0
Income tax expense
29.1
22.5
53.4
52.7
Net income
$
77.0
$
95.3
$
142.7
$
163.3
Net income per share:
Basic
$
1.85
$
2.22
$
3.42
$
3.80
Diluted
$
1.83
$
2.20
$
3.38
$
3.76
Weighted average common shares
outstanding:
Basic
41.7
42.9
41.8
43.0
Diluted
42.0
43.4
42.2
43.5
WEX INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in millions)
(unaudited)
June 30, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
682.6
$
975.8
Restricted cash
1,095.7
1,254.2
Accounts receivable, net
3,966.4
3,428.5
Investment securities
3,322.5
3,022.1
Securitized accounts receivable,
restricted
138.7
129.4
Prepaid expenses and other current
assets
177.2
125.3
Total current assets
9,383.1
8,935.3
Property, equipment and capitalized
software
256.9
242.9
Goodwill and other intangible assets
4,368.2
4,474.4
Investment securities
65.7
66.8
Deferred income taxes, net
14.6
13.7
Other assets
158.4
149.0
Total assets
$
14,246.9
$
13,882.1
Liabilities and Stockholders’
Equity
Accounts payable
$
1,734.1
$
1,479.1
Accrued expenses and other current
liabilities
702.9
802.7
Restricted cash payable
1,095.1
1,253.5
Short-term deposits
4,288.8
3,942.8
Short-term debt, net
1,248.6
1,041.1
Total current liabilities
9,069.6
8,519.2
Long-term debt, net
2,959.6
2,827.5
Long-term deposits
—
129.8
Deferred income taxes, net
132.6
129.5
Other liabilities
301.6
455.5
Total liabilities
12,463.3
12,061.5
Total stockholders’ equity
1,783.5
1,820.6
Total liabilities and stockholders’
equity
$
14,246.9
$
13,882.1
WEX INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended June
30,
2024
2023
Cash flows from operating
activities
$
(160.3
)
$
99.5
Cash flows from investing
activities
Purchases of property, equipment and
capitalized software
(73.6
)
(65.3
)
Purchase of other investments
(14.5
)
(5.0
)
Purchases of available-for-sale debt
securities
(512.2
)
(1,362.0
)
Sales and maturities of available-for-sale
debt securities
203.5
114.4
Acquisition of intangible assets
(5.1
)
(4.5
)
Other investing activities
(0.9
)
—
Net cash used for investing activities
(402.7
)
(1,322.4
)
Cash flows from financing
activities
Purchase of treasury shares
(173.6
)
(104.0
)
Net change in deposits
216.9
842.8
Net change in restricted cash payable
(133.2
)
271.5
Payments of deferred and contingent
consideration
(86.6
)
(27.2
)
Other financing activities
(20.9
)
(7.9
)
Net debt activity 1
344.1
493.3
Net cash provided by financing
activities
146.7
1,468.5
Effect of exchange rates on cash, cash
equivalents and restricted cash
(35.3
)
13.6
Net change in cash, cash equivalents and
restricted cash
(451.7
)
259.2
Cash, cash equivalents and restricted
cash, beginning of period
2,230.0
1,859.8
Cash, cash equivalents and restricted
cash, end of period
$
1,778.3
$
2,119.0
1 Net activity on debt includes: borrowings and repayments on
revolving credit facility; borrowings and repayments on term loans;
borrowings and repayments on Bank Term Funding Program (BTFP);
borrowings on Federal Home Loan Bank (FHLB); net change in borrowed
federal funds; and net borrowings on or repayments of other debt.
Exhibit 1
Reconciliation of Non-GAAP
Measures
(in millions, except per share
data)
(unaudited)
Reconciliation of GAAP Net Income to
Non-GAAP Adjusted Net Income
Three Months Ended June
30,
2024
2023
per diluted share
per diluted share
Net income
$
77.0
$
1.83
$
95.3
$
2.20
Unrealized loss (gain) on financial
instruments
0.2
—
(2.2
)
(0.05
)
Net foreign currency loss
0.4
0.01
0.2
—
Change in fair value of contingent
consideration
1.7
0.04
1.2
0.03
Acquisition-related intangible
amortization
50.5
1.20
44.3
1.02
Other acquisition and divestiture related
items
3.8
0.09
1.4
0.03
Stock-based compensation
33.3
0.79
36.5
0.84
Other costs
19.4
0.46
9.0
0.21
Debt restructuring and debt issuance cost
amortization
3.2
0.08
4.8
0.11
Tax related items
(25.5
)
(0.61
)
(31.2
)
(0.72
)
Dilutive impact of convertible debt1
—
—
—
(0.04
)
Adjusted net income
$
164.0
$
3.91
$
159.3
$
3.63
Six Months Ended June
30,
2024
2023
per diluted share
per diluted share
Net income
$
142.7
$
3.38
$
163.3
$
3.76
Unrealized loss on financial
instruments
0.4
0.01
12.3
0.28
Net foreign currency loss
13.0
0.31
1.6
0.04
Change in fair value of contingent
consideration
3.4
0.08
3.0
0.07
Acquisition-related intangible
amortization
101.5
2.41
88.4
2.03
Other acquisition and divestiture related
items
7.0
0.17
2.5
0.06
Stock-based compensation
60.0
1.42
62.6
1.44
Other costs
25.2
0.60
13.5
0.31
Debt restructuring and debt issuance cost
amortization
7.7
0.18
9.5
0.22
Tax related items
(50.2
)
(1.19
)
(51.6
)
(1.19
)
Dilutive impact of convertible debt1
—
—
—
(0.08
)
Adjusted net income
$
310.7
$
7.37
$
305.1
$
6.94
1 The dilutive impact of the Convertible Notes was calculated under
the ‘if-converted’ method for the periods through which they were
outstanding. Under the ‘if-converted’ method, interest expense, net
of tax, associated with the Convertible Notes of $3.8 million and
$7.7 million was added back to adjusted net income for the three
and six months ended June 30, 2023, respectively. For the three and
six months ended June 30, 2023, 1.6 million shares of the Company’s
common stock associated with the assumed conversion of the
Convertible Notes (prior to repurchase and cancellation) were
included in the calculation of adjusted net income per diluted
share, as the effect of including such adjustments was dilutive.
The total number of shares used in calculating adjusted net income
per diluted share for the three and six months ended June 30, 2024
was 42.0 million and 42.2 million, respectively. The total number
of shares used in calculating adjusted net income per diluted share
for the three and six months ended June 30, 2023 was 44.9 million
and 45.0 million, respectively.
Reconciliation of GAAP Operating Income
to Non-GAAP Total Segment Adjusted Operating Income and Adjusted
Operating Income
Three Months Ended June
30,
Six Months Ended June
30,
2024
(margin)1
2023
(margin)1
2024
(margin)1
2023
(margin)1
Operating income
$
168.1
25.0
%
$
159.4
25.7
%
$
332.6
25.1
%
$
313.7
25.4
%
Unallocated corporate expenses
26.1
25.3
49.7
47.7
Acquisition-related intangible
amortization
50.5
44.3
101.5
88.4
Other acquisition and divestiture related
items
1.4
1.4
3.8
2.5
Stock-based compensation
33.3
36.5
60.0
62.6
Other costs
20.6
9.0
27.3
13.5
Total segment adjusted operating
income
$
299.9
44.5
%
$
275.9
44.4
%
$
574.9
43.4
%
$
528.4
42.8
%
Unallocated corporate expenses
(26.1
)
(25.3
)
(49.7
)
(47.7
)
Adjusted operating income
$
273.9
40.7
%
$
250.6
40.3
%
$
525.2
39.6
%
$
480.7
39.0
%
1 Margins are derived by dividing the applicable measures by total
net revenue for the Company.
The Company's non-GAAP adjusted net income excludes unrealized
gains and losses on financial instruments, net foreign currency
gains and losses, acquisition-related intangible amortization,
other acquisition and divestiture related items, stock-based
compensation, other costs, debt restructuring costs and debt
issuance cost amortization, tax related items and certain other
non-operating items and non-recurring or non-cash operating charges
that are not core to our operations, as applicable depending on the
period presented.
The Company's non-GAAP adjusted operating income excludes
acquisition-related intangible amortization, other acquisition and
divestiture related items, debt restructuring costs, stock-based
compensation, other costs and certain non-recurring or non-cash
operating charges that are not core to our operations, as
applicable depending on the period presented. Total segment
adjusted operating income incorporates these same adjustments and
further excludes unallocated corporate expenses.
Although adjusted net income, adjusted operating income, and
total segment adjusted operating income are not calculated in
accordance with GAAP, our management team believes these non-GAAP
measures are integral to our reporting and planning processes and
uses them to assess operating performance because they generally
exclude financial results that are outside the normal course of our
business operations or management’s control. These measures are
also used to allocate resources among our operating segments and
for internal budgeting and forecasting purposes for both short- and
long-term operating plans.
For the periods presented herein, the following items have been
excluded in determining one or more non-GAAP measures for the
following reasons:
- Exclusion of the non-cash, mark-to-market adjustments on
financial instruments, including interest rate swap agreements and
investment securities, 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 these financial instruments. Additionally, the non-cash,
mark-to-market adjustments on financial instruments are difficult
to forecast accurately, making comparisons across historical and
future periods difficult to evaluate;
- Net foreign currency gains and losses primarily result from the
remeasurement to functional currency of cash, accounts receivable
and accounts payable balances, certain intercompany notes
denominated in foreign currencies and any gain or loss on foreign
currency economic hedges relating to these items. The exclusion of
these items helps management compare changes in operating results
between periods that might otherwise be obscured due to currency
fluctuations;
- The change in fair value of contingent consideration, which is
related to the acquisition of certain contractual rights to serve
as custodian or sub-custodian to HSAs, is dependent upon changes in
future interest rate assumptions and has no significant impact on
the ongoing operations of the Company. Additionally, the non-cash,
mark-to-market adjustments on financial instruments are difficult
to forecast accurately, making comparisons across historical and
future periods difficult to evaluate;
- The Company considers certain acquisition-related costs,
including certain financing costs, investment banking fees,
warranty and indemnity insurance, certain integration-related
expenses and amortization of acquired intangibles, as well as gains
and losses from divestitures to be unpredictable, dependent on
factors that may be outside of our control and unrelated to the
continuing operations of the acquired or divested business or the
Company. In addition, the size and complexity of an acquisition,
which often drives the magnitude of acquisition-related costs, may
not be indicative of such future costs. The Company believes that
excluding acquisition-related costs and gains or losses on
divestitures facilitates the comparison of our financial results to
the Company’s historical operating results and to other companies
in our industry;
- Stock-based compensation is different from other forms of
compensation as it is a non-cash expense. For example, a cash
salary generally has a fixed and unvarying cash cost. In contrast,
the expense associated with an equity-based award is generally
unrelated to the amount of cash ultimately received by the
employee, and the cost to the Company is based on a stock-based
compensation valuation methodology and underlying assumptions that
may vary over time;
- Other costs are not consistently occurring and do not reflect
expected future operating expense, nor do they provide insight into
the fundamentals of current or past operations of our business.
This also includes non-recurring professional service costs, costs
related to certain identified initiatives, including restructuring
and technology initiatives, to further streamline the business,
improve the Company’s efficiency, create synergies and globalize
the Company’s operations, all with an objective to improve scale
and efficiency and increase profitability going forward.
- Impairment charges represent non-cash asset write-offs, which
do not reflect recurring costs that would be relevant to the
Company’s continuing operations. The Company believes that
excluding these nonrecurring expenses facilitates the comparison of
our financial results to the Company’s historical operating results
and to other companies in its industry;
- Debt restructuring and debt issuance cost amortization are
unrelated to the continuing operations of the Company. Debt
restructuring costs are not consistently occurring and do not
reflect expected future operating expense, nor do they provide
insight into the fundamentals of current or past operations of our
business. In addition, since debt issuance cost amortization is
dependent upon the financing method, which can vary widely company
to company, we believe that excluding these costs helps to
facilitate comparison to historical results as well as to other
companies within our industry;
- The tax related items are the difference between the Company’s
GAAP tax provision and a non-GAAP tax provision. Beginning in
fiscal year 2024, the Company utilizes a fixed annual projected
long-term non-GAAP tax rate in order to provide better consistency
across reporting periods. To determine this long-term projected tax
rate, the Company performs a pro forma tax provision based upon the
Company’s projected adjusted net income before taxes. The fixed
annual projected long-term non-GAAP tax rate could be subject to
change in future periods for a variety of reasons, including the
rapidly evolving global tax environment, significant changes in our
geographic earnings mix including due to acquisition activity, or
other changes to our strategy or business operations; and
- The Company does not allocate certain corporate expenses to our
operating segments, as these items are centrally controlled and are
not directly attributable to any reportable segment.
WEX believes that adjusted net income, adjusted operating
income, and total segment adjusted operating income may also be
useful to investors when evaluating the Company’s performance.
However, because adjusted net income, adjusted operating income,
and total segment adjusted operating income are non-GAAP measures,
they 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, adjusted operating income, and total segment
adjusted operating income as used by WEX may not be comparable to
similarly titled measures employed by other companies.
Reconciliation of GAAP Operating Cash Flow to Non-GAAP
Adjusted Free Cash Flow
The Company’s non-GAAP adjusted free cash flow is calculated as
cash flows from operating activities, adjusted for net purchases of
current investment securities, capital expenditures, net funding
activity including the change in net deposits, net advances from
the FHLB, and changes in borrowings under the BTFP and borrowed
federal funds, and certain other adjustments which, for the six
months ended June 30, 2024 and 2023, reflects an adjustment for
contingent and deferred consideration paid to sellers in excess of
acquisition-date fair value. Although non-GAAP adjusted free cash
flow is not calculated in accordance with GAAP, WEX believes that
adjusted free cash flow is a useful measure for investors to
further evaluate our results of operations because (i) adjusted
free cash flow indicates the level of cash generated by the
operations of the business, which excludes consideration paid on
acquisitions, after appropriate reinvestment for recurring
investments in property, equipment and capitalized software that
are required to operate the business; (ii) net funding activity
includes fluctuations in deposits and other borrowings primarily
used as part of our accounts receivable funding strategy; and (iii)
purchases of current investment securities are made as a result of
deposits gathered operationally. However, because adjusted free
cash flow is a non-GAAP measure, it should not be considered as a
substitute for, or superior to, operating cash flow as determined
in accordance with GAAP. In addition, adjusted free cash flow as
used by WEX may not be comparable to similarly titled measures
employed by other companies.
The following table reconciles GAAP operating cash flow to
adjusted free cash flow:
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Operating cash flow, as
reported
$
(7.0
)
$
72.4
$
(160.3
)
$
99.5
Adjustments to operating cash flow:
Other
—
—
67.1
1.5
Adjusted for certain investing and
financing activities:
Net funding activity
233.3
375.4
431.9
1,342.8
Less: Purchases of current investment
securities, net of sales and maturities
(25.6
)
(220.8
)
(308.5
)
(1,247.6
)
Less: Capital expenditures
(39.6
)
(34.7
)
(73.6
)
(65.3
)
Adjusted free cash flow
$
161.1
$
192.3
$
(43.4
)
$
130.9
Exhibit 2
Impact of Certain Macro
Factors on Reported Revenue and Adjusted Net Income
(in millions, except per share
data)
(unaudited)
The tables below show the impact of certain macro factors on
reported revenue:
Segment Revenue
Results
Mobility
Corporate Payments
Benefits
Total WEX Inc.
Three months ended June
30,
2024
2023
2024
2023
2024
2023
2024
2023
Reported revenue
$
359.6
$
340.2
$
134.1
$
121.9
$
179.8
$
159.2
$
673.5
$
621.3
FX impact (favorable) / unfavorable
$
0.4
$
0.5
$
—
$
0.8
PPG impact (favorable) / unfavorable
$
5.4
$
—
$
—
$
5.4
Six months ended June
30,
2024
2023
2024
2023
2024
2023
2024
2023
Reported revenue
$
698.5
$
682.5
$
256.6
$
226.7
$
371.0
$
324.1
$
1,326.1
$
1,233.3
FX impact (favorable) / unfavorable
$
0.5
$
(0.4
)
$
—
$
0.1
PPG impact (favorable) / unfavorable
$
25.9
$
—
$
—
$
25.9
To determine the impact of foreign exchange translation (“FX”)
on revenue, revenue from entities whose functional currency is not
denominated in U.S. dollars, as well as revenue from purchase
volume transacted in non-U.S. denominated currencies, were
translated using the weighted average exchange rates for the same
period in the prior year, exclusive of revenue derived from
acquisitions for one year following the acquisition dates.
To determine the impact of price per gallon of fuel (“PPG”) on
revenue, revenue subject to changes in fuel prices was calculated
based on the average retail price of fuel for the same period in
the prior year for the portion of our business that earns revenue
based on a percentage of fuel spend, exclusive of revenue derived
from acquisitions for one year following the acquisition dates. For
the portions of our business that earn revenue based on margin
spreads, revenue was calculated utilizing the comparable margin
from the prior year.
The table below shows the impact of certain macro factors on
adjusted net income by segment:
Segment Estimated Adjusted Net
Income Impact
Mobility
Corporate Payments
Benefits
Three months ended June
30,
2024
2023
2024
2023
2024
2023
FX impact (favorable) / unfavorable
$
(0.2
)
$
—
$
0.2
$
—
$
—
$
—
PPG impact (favorable) / unfavorable
$
3.8
$
—
$
—
$
—
$
—
$
—
Six months ended June
30,
2024
2023
2024
2023
2024
2023
FX impact (favorable) / unfavorable
$
0.4
$
—
$
(0.5
)
$
—
$
—
$
—
PPG impact (favorable) / unfavorable
$
17.9
$
—
$
—
$
—
$
—
$
—
To determine the estimated adjusted net income impact of FX on
revenue and expenses from entities whose functional currency is not
denominated in U.S. dollars, as well as revenue and variable
expenses from purchase volume transacted in non-U.S. denominated
currencies, amounts were translated using the weighted average
exchange rates for the same period in the prior year, net of tax,
exclusive of revenue and expenses derived from acquisitions for one
year following the acquisition dates.
To determine the estimated adjusted net income impact of PPG,
revenue and certain variable expenses impacted by changes in fuel
prices were adjusted based on the average retail price of fuel for
the same period in the prior year for the portion of our business
that earns revenue based on a percentage of fuel spend, net of
applicable taxes, exclusive of revenue and expenses derived from
acquisitions for one year following the acquisition dates. For the
portions of our business that earn revenue based on margin spreads,
revenue was adjusted to the comparable margin from the prior year,
net of applicable taxes.
Exhibit 3
Selected Other Metrics
(in millions, except rate
statistics)
(unaudited)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Mobility:
Payment processing transactions (1)
144.9
136.9
138.1
144.6
142.4
Payment processing gallons of fuel (2)
3,694.4
3,567.7
3,578.6
3,687.2
3,664.5
Average US fuel price (US$ / gallon)
$
3.62
$
3.56
$
3.76
$
3.97
$
3.68
Payment processing $ of fuel (3)
$
13,729.1
$
13,061.0
$
13,814.3
$
14,945.1
$
13,779.8
Net payment processing rate (4)
1.29
%
1.31
%
1.26
%
1.18
%
1.25
%
Payment processing revenue
$
177.2
$
170.7
$
174.4
$
176.9
$
172.1
Net late fee rate (5)
0.49
%
0.46
%
0.50
%
0.44
%
0.48
%
Late fee revenue (6)
$
67.3
$
60.4
$
69.0
$
66.4
$
66.3
Corporate Payments:
Purchase volume (7)
$
25,756.2
$
23,947.9
$
22,800.8
$
27,860.1
$
22,901.3
Net interchange rate (8)
0.45
%
0.43
%
0.52
%
0.42
%
0.46
%
Payment solutions processing revenue
$
116.2
$
103.2
$
117.4
$
115.7
$
104.8
Benefits:
Purchase volume (9)
$
1,865.1
$
2,114.7
$
1,510.0
$
1,501.3
$
1,715.9
Average number of SaaS accounts (10)
20.0
20.3
19.9
19.9
19.5
Definitions and explanations:
(1) Payment processing transactions represents the total number of
purchases made by fleets that have a payment processing
relationship with WEX where the Company maintains the receivable
for the total purchase. (2) Payment processing gallons of fuel
represents the total number of gallons of fuel purchased by fleets
that have a payment processing relationship with WEX. (3) Payment
processing $ of fuel represents the total dollar value of the fuel
purchased by fleets that have a payment processing relationship
with WEX. (4) Net payment processing rate represents the percentage
of each payment processing dollar of fuel transaction that WEX
records as revenue from merchants, less certain discounts given to
customers and network fees. (5) Net late fee rate represents late
fee revenue as a percentage of fuel purchased by fleets that have a
payment processing relationship with WEX. (6) Late fee revenue
represents fees charged for payments not made within the terms of
the customer agreement based upon the outstanding customer
receivable balance. (7) Purchase volume represents the total dollar
value of all WEX-issued transactions that use WEX corporate card
products and virtual card products. (8) Net interchange rate
represents the percentage of the dollar value of each payment
processing transaction that WEX records as revenue from merchants,
less certain discounts given to customers and network fees. (9)
Purchase volume represents the total dollar value of all
transactions where interchange is earned by WEX. (10) Average
number of SaaS accounts represents the number of active
consumer-directed health, COBRA, and billing accounts on our SaaS
platforms.
Exhibit 4
Segment Revenue
Information
(in millions)
(unaudited)
Three months ended June
30,
Increase (decrease)
Six months ended June
30,
Increase (decrease)
Mobility
2024
2023
Amount
Percent
2024
2023
Amount
Percent
Revenues
Payment processing revenue
$
177.2
$
172.2
$
5.0
3
%
$
347.9
$
343.7
$
4.2
1
%
Account servicing revenue
$
49.8
40.8
9.0
22
%
96.2
81.1
15.1
19
%
Finance fee revenue
$
77.7
76.3
1.4
2
%
147.7
156.7
(9.0
)
(6
)%
Other revenue
$
54.8
50.9
3.9
8
%
106.7
101.0
5.7
6
%
Total revenues
$
359.6
$
340.2
$
19.4
6
%
$
698.5
$
682.5
$
16.0
2
%
Three months ended June
30,
Increase (decrease)
Six months ended June
30,
Increase (decrease)
Corporate Payments
2024
2023
Amount
Percent
2024
2023
Amount
Percent
Revenues
Payment processing revenue
$
116.2
$
104.7
$
11.5
11
%
$
219.4
$
194.8
$
24.6
13
%
Account servicing revenue
10.3
10.6
(0.3
)
(2
)%
20.3
21.2
(0.9
)
(4
)%
Finance fee revenue
(0.1
)
0.1
(0.2
)
NM
0.2
0.3
(0.1
)
NM
Other revenue
7.6
6.5
1.1
16
%
16.7
10.4
6.3
61
%
Total revenues
$
134.1
$
121.9
$
12.2
10
%
$
256.6
$
226.7
$
29.9
13
%
Three months ended June
30,
Increase (decrease)
Six months ended June
30,
Increase (decrease)
Benefits
2024
2023
Amount
Percent
2024
2023
Amount
Percent
Revenues
Payment processing revenue
$
24.9
$
23.6
$
1.3
6
%
$
53.1
$
50.1
$
3.0
6
%
Account servicing revenue
108.4
101.5
6.9
7
%
225.4
211.3
14.1
7
%
Finance fee revenue
0.1
—
0.1
NM
0.2
0.1
0.1
NM
Other revenue
46.3
34.1
12.2
36
%
92.3
62.6
29.7
48
%
Total revenues
$
179.8
$
159.2
$
20.6
13
%
$
371.0
$
324.1
$
46.9
14
%
NM - Not meaningful
Exhibit 5
Segment Adjusted Operating
Income and Adjusted Operating Income Margin Information
(in millions)
(unaudited)
Segment Adjusted Operating
Income
Segment Adjusted Operating
Income Margin(1)
Three Months Ended June
30,
Three Months Ended June
30,
2024
2023
2024
2023
Mobility
$
154.3
$
150.3
42.9
%
44.2
%
Corporate Payments
74.4
66.3
55.5
%
54.4
%
Benefits
71.1
59.3
39.6
%
37.2
%
Total segment adjusted operating
income
$
299.9
$
275.9
44.5
%
44.4
%
Segment Adjusted Operating
Income
Segment Adjusted Operating
Income Margin(1)
Six Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Mobility
$
285.4
$
289.1
40.9
%
42.4
%
Corporate Payments
139.0
115.5
54.2
%
50.9
%
Benefits
150.5
123.8
40.6
%
38.2
%
Total segment adjusted operating
income
$
574.9
$
528.4
43.4
%
42.8
%
(1) Segment adjusted operating income margin is derived by dividing
segment adjusted operating income by the revenue of the
corresponding segment (or the entire Company in the case of total
segment adjusted operating income). See Exhibit 1 for a
reconciliation of GAAP operating income and related margin to total
segment adjusted operating income and related margin.
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Adjusted operating income
$
273.9
$
250.6
$
525.2
$
480.7
Adjusted operating income margin (1)
40.7
%
40.3
%
39.6
%
39.0
%
(1) Adjusted operating income margin is derived by dividing
adjusted operating income by total revenues of the entire Company
as shown on the Condensed Consolidated Statement of Operations. See
Exhibit 1 for a reconciliation of GAAP operating income and related
margin to adjusted operating income and related margin.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240724707432/en/
News media contact: WEX Julie Lydon, 415-816-9397
Julie.Lydon@wexinc.com or Investor contact: WEX Steve Elder,
207-523-7769 Steve.Elder@wexinc.com
WEX (NYSE:WEX)
過去 株価チャート
から 6 2024 まで 7 2024
WEX (NYSE:WEX)
過去 株価チャート
から 7 2023 まで 7 2024
