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WEX Inc. Reports Second Quarter 2021 Financial Results

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PORTLAND, Maine, July 29, 2021--(BUSINESS WIRE)--WEX Inc. (NYSE: WEX), a leading financial technology service provider, today reported financial results for the three months ended June 30, 2021.

"Momentum continued through the second quarter as we delivered robust revenue and earnings growth, signed new customer and renewed existing business, and more than doubled total purchase volume processed across the Company compared to last year to $21 billion. These exceptional results reflect strong execution from the WEX team, positive trends across the business and strong demand for our platform and services as volumes continue to recover," said Melissa Smith, WEX’s Chair and Chief Executive Officer.

Ms. Smith added, "We are driving innovative new solutions to meet the needs of businesses of all sizes and level of complexity. The combination of our value based culture, deep payment expertise, innovative technologies and knowledge in configuring integrated solutions, continues to open the door for new opportunities for WEX. Looking ahead to the second half of the year, we are positioning the business for future growth as demand for our platform and services accelerates with the increasing adoption of digital payment technologies."

Second Quarter 2021 Financial Results

Total revenue for the second quarter of 2021 increased 32% to $459.5 million from $347.1 million for the second quarter of 2020. This revenue increase in the quarter includes a $33.3 million favorable impact from fuel prices and spreads and a $4.6 million positive impact from foreign exchange rates.

Net (loss) income attributable to shareholders on a GAAP basis decreased by $106.5 million to a net loss of $33.9 million, or $(0.76) per diluted share, compared with net income of $72.7 million, or $1.66 per diluted share, for the second quarter of 2020. The Company's adjusted net income attributable to shareholders, which is a non-GAAP measure, was $104.9 million for the second quarter of 2021, or $2.31 per diluted share, up 91% per diluted share from $53.0 million or $1.21 per diluted share for the same period last year. See Exhibit 1 for a full explanation and reconciliation of adjusted net income attributable to shareholders and adjusted net income attributable to shareholders per diluted share to the comparable GAAP measures.

Second Quarter 2021 Performance Metrics

  • Average number of vehicles serviced was approximately 16.2 million, an increase of 7% from the second quarter of 2020.

  • Total fuel transactions processed increased 24% from the second quarter of 2020 to 158.7 million. Payment processing transactions increased 26% to 130.1 million.

  • Travel and Corporate Solutions' purchase volume grew 176% to $8.7 billion from $3.2 billion in the second quarter of 2020.

  • Health and Employee Benefit Solutions' average number of Software-as-a-Service (SaaS) accounts in the U.S. grew 13% to 16.4 million from 14.5 million in the second quarter of 2020.

"We delivered impressive top- and bottom-line results in the second quarter representing the highest revenue and adjusted earnings for Q2 in WEX history. This was driven primarily by better-than-expected volume recovery in our Fleet Solutions and Travel and Corporate Solutions segments, higher fuel prices, and robust operating income margins across each of our segments," said Roberto Simon, WEX’s Chief Financial Officer. "We continue to position WEX for long-term sustainable growth as we execute against our customer pipeline, integrate recent acquisitions including benefitexpress, and drive innovation across our technology platform."

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 2021, the Company expects revenue in the range of $465 million to $480 million and adjusted net income in the range of $98 million to $107 million, or $2.15 to $2.35 per diluted share.

  • For the full year 2021, the Company expects revenue in the range of $1.805 billion to $1.835 billion and adjusted net income in the range of $377 million to $395 million, or $8.30 to $8.70 per diluted share.

Third quarter and full year 2021 guidance is based on an assumed average U.S. retail fuel price of $3.18 and $3.00 per gallon, respectively. The fuel prices referenced above are based on the applicable NYMEX futures price from the week of July 16, 2021. Our guidance assumes approximately 45.4 million shares outstanding for the full year.

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, change in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, other costs, debt restructuring and debt issuance cost amortization, similar adjustments attributable to our non-controlling interests and certain tax related items. 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, acquisition and divestiture related items and adjustments to the redemption value of a non-controlling interest, which may have a significant impact on our financial results.

Additional Information

Management uses the non-GAAP measures presented within this news 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 news release in Exhibit 1, reconciliations of non-GAAP measures referenced in this news release, in Exhibit 2, tables illustrating the impact of foreign currency rates and fuel prices for each of our reportable segments for the three and six months ended June 30, 2021, and in Exhibit 3, a table of selected non-financial metrics for the quarter ended June 30, 2021 and four preceding quarters. The Company is also providing segment revenue for the three and six months ended June 30, 2021 and 2020 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 29, 2021, 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 (833) 714-0940 or +1 (778) 560-2809. The Conference ID number is 1764307. A replay of the webcast and the accompanying slides will be available on the Company's website.

About WEX

WEX (NYSE: WEX) is a leading financial technology service provider. We provide payment solutions to businesses of all sizes across a wide spectrum of sectors, including fleet, corporate payments, travel and health. WEX has offices in 14 countries and employs approximately 5,400 people around the world. Learn more at LinkedIn, Facebook, Instagram, Twitter, and our corporate blog. For more information, visit www.wexinc.com.

Forward-Looking Statements

This earnings release contains forward-looking statements, including statements regarding: expectations for future revenue and adjusted net income performance; assumptions underlying the Company's future financial performance and future operations; future growth opportunities and expectations; future impacts from areas of investment; expectations for the macro environment; and expectations for volumes. 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 "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project" 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 extent to which the coronavirus (COVID-19) pandemic and measures taken in response thereto impact our business, results of operations and financial condition in excess of current expectations; the impact of fluctuations in fuel prices and the resulting impact on our revenues and net income; the effects of general economic conditions, including those caused by the effects of COVID-19, on overall employment, travel and fueling patterns as well as payment and transaction processing activity; changes or limitations on interchange fees; failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; the Company’s failure to maintain or renew key commercial agreements or to maintain volumes under such agreements; breaches of the Company’s technology systems or those of our third-party service providers and any resulting negative impact on our reputation, liabilities or relationships with customers or merchants; the effects of the Company’s business expansion and acquisition efforts; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; the failure of corporate investments to result in anticipated strategic value; the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or affiliates; the Company’s failure to comply with the Treasury Regulations applicable to non-bank custodians; potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition; competitive responses to any acquisitions; uncertainty of the expected financial performance of the combined operations following completion of an acquisition; the failure to complete or successfully integrate the Company’s acquisitions or the ability to realize anticipated synergies and cost savings from such transactions; unexpected costs, charges or expenses resulting from an acquisition; the Company’s failure to successfully acquire, integrate, operate and expand commercial fuel card programs; the impact and size of credit losses; the impact of changes to the Company’s credit standards; failure to successfully implement the Company’s information technology strategies and capabilities in connection with its technology outsourcing and insourcing arrangements, and any resulting cost associated with that failure; legal, regulatory, political and economic uncertainty surrounding the United Kingdom’s departure from the European Union and the resulting trade agreement; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of the future transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company’s recently amended and restated credit agreement and its presently outstanding notes on our operations; the impact of increased leverage on the Company’s operations, results or borrowing capacity generally, and as a result of acquisitions specifically; the impact of sales or dispositions of significant amounts of our outstanding common stock into the public market, or the perception that such sales or dispositions could occur; the possible dilution to our stockholders caused by the issuance of additional shares of common stock or equity-linked securities, whether as result of our convertible notes or otherwise; 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 our annual report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 1, 2021. The Company's forward-looking statements 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 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 thousands, except per share data)

(unaudited)

Three months ended June 30,

Six months ended June 30,

2021

2020

2021

2020

Revenues

Payment processing revenue

$

213,426

$

147,461

$

401,815

$

351,498

Account servicing revenue

132,997

109,479

251,620

223,319

Finance fee revenue

59,499

42,711

111,652

98,638

Other revenue

53,561

47,433

105,153

105,308

Total revenues

459,483

347,084

870,240

778,763

Cost of services

Processing costs

116,208

99,991

225,970

204,908

Service fees

13,759

9,700

24,905

23,454

Provision for credit losses

12,962

20,581

18,021

54,568

Operating interest

2,271

6,504

4,895

14,889

Depreciation and amortization

26,451

25,124

55,645

49,913

Total cost of services

171,651

161,900

329,436

347,732

General and administrative

79,543

62,265

165,974

124,301

Sales and marketing

85,605

54,744

163,952

123,526

Depreciation and amortization

40,406

39,393

78,059

79,593

Operating income

82,278

28,782

132,819

103,611

Financing interest expense

(32,473)

(28,832)

(65,757)

(60,863)

Change in fair value of contingent consideration

(47,700)

(47,700)

Net foreign currency gain (loss)

1,342

(2,462)

(1,413)

(31,189)

Net unrealized gain (loss) on financial instruments

6,013

(3,842)

13,046

(35,889)

Income (loss) before income taxes

9,460

(6,354)

30,995

(24,330)

Income tax benefit

(746)

(19,747)

(2,416)

(25,454)

Net income

10,206

13,393

33,411

1,124

Less: Net income from non-controlling interests

239

675

965

2,038

Net income (loss) attributable to WEX Inc.

$

9,967

$

12,718

$

32,446

$

(914)

Change in value of redeemable non-controlling interest

(43,823)

59,940

(68,867)

57,316

Net (loss) income attributable to shareholders

$

(33,856)

$

72,658

$

(36,421)

$

56,402

Net loss attributable to shareholders per share:

Basic

$

(0.76)

$

1.67

$

(0.82)

$

1.30

Diluted

$

(0.76)

$

1.66

$

(0.82)

$

1.28

Weighted average common shares outstanding:

Basic

44,788

43,574

44,566

43,495

Diluted

44,788

43,779

44,566

43,896

WEX INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

June 30,
2021

December 31,
2020

Assets

Cash and cash equivalents

$

425,322

$

852,033

Restricted cash

576,209

477,620

Accounts receivable

2,861,445

1,993,329

Securitized accounts receivable, restricted

132,549

93,236

Prepaid expenses and other current assets

98,397

86,629

Total current assets

4,093,922

3,502,847

Property, equipment and capitalized software

180,049

188,340

Goodwill and other intangible assets

4,664,153

4,240,150

Investment securities

36,931

37,273

Deferred income taxes, net

34,166

17,524

Other assets

218,389

197,227

Total assets

$

9,227,610

$

8,183,361

Liabilities and Stockholders’ Equity

Accounts payable

$

1,247,995

$

778,207

Accrued expenses

384,306

362,472

Restricted cash payable

574,934

477,620

Short-term deposits

1,109,222

911,395

Short-term debt, net

146,470

152,730

Other current liabilities

52,832

58,429

Total current liabilities

3,515,759

2,740,853

Long-term debt, net

2,867,270

2,874,113

Long-term deposits

401,440

148,591

Deferred income taxes, net

196,032

220,122

Other liabilities

264,250

164,546

Total liabilities

7,244,751

6,148,225

Commitments and contingencies

Redeemable non-controlling interest

187,937

117,219

Stockholders’ Equity

Total WEX Inc. stockholders’ equity

1,794,922

1,904,895

Non-controlling interest

13,022

Total stockholders’ equity

1,794,922

1,917,917

Total liabilities and stockholders’ equity

$

9,227,610

$

8,183,361

Exhibit 1

Reconciliation of Non-GAAP Measures

(in thousands, except per share data)

(unaudited)

Reconciliation of GAAP Net (Loss) Income Attributable to Shareholders to Adjusted Net
Income Attributable to Shareholders

Three Months Ended June 30,

2021

2020

per diluted share

per diluted share

Net (loss) income attributable to shareholders

$

(33,856)

$

(0.76)

$

72,658

$

1.66

Unrealized (gain) loss on financial instruments

(6,013)

(0.13)

3,842

0.09

Net foreign currency remeasurement (gain) loss

(1,342)

(0.03)

2,462

0.06

Change in fair value of contingent consideration

47,700

1.07

Acquisition–related intangible amortization

45,294

1.01

42,478

0.97

Other acquisition and divestiture related items

10,690

0.24

7,735

0.18

Stock–based compensation

21,662

0.48

15,069

0.34

Other costs

1,705

0.04

4,695

0.11

Debt restructuring and debt issuance cost amortization

11,461

0.26

2,578

0.06

ANI adjustments attributable to non–controlling interests

43,206

0.96

(60,558)

(1.38)

Tax related items

(35,613)

(0.80)

(38,004)

(0.87)

Dilutive impact of stock awards1

(0.03)

Adjusted net income attributable to shareholders

$

104,894

$

2.31

$

52,955

$

1.21

Six Months Ended June 30,

2021

2020

per diluted share

per diluted share

Net (loss) income attributable to shareholders

$

(36,421)

(0.82)

$

56,402

1.28

Unrealized (gain) loss on financial instruments

(13,046)

(0.29)

35,889

0.82

Net foreign currency remeasurement loss

1,413

0.03

31,189

0.71

Change in fair value of contingent consideration

47,700

1.07

Acquisition–related intangible amortization

87,748

1.97

85,016

1.94

Other acquisition and divestiture related items

25,486

0.57

15,677

0.36

Stock–based compensation

40,605

0.91

26,889

0.61

Other costs

13,942

0.31

6,935

0.16

Debt restructuring and debt issuance cost amortization

16,553

0.37

4,660

0.11

ANI adjustments attributable to non–controlling interests

67,006

1.50

(58,334)

(1.33)

Tax related items

(64,818)

$

(1.45)

$

(71,684)

$

(1.63)

Dilutive impact of stock awards1

(0.07)

Adjusted net income attributable to shareholders

$

186,168

$

4.10

$

132,639

$

3.02

1 As the Company reported a net loss for the three and six months ended June 30, 2021 under U.S. Generally Accepted Accounting Principles ("GAAP"), the diluted weighted average shares outstanding equals the basic weighted average shares outstanding for those periods. The non-GAAP adjustments described above resulted in adjusted net income attributable to shareholders (versus a loss on a GAAP basis) for the three and six months ended June 30, 2021. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding to arrive at adjusted per share data.

Reconciliation of GAAP Operating Income to Total Segment Adjusted Operating Income and Adjusted Operating Income

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Operating income

$

82,278

$

28,782

$

132,819

$

103,611

Unallocated corporate expenses

17,174

13,953

33,383

30,496

Acquisition-related intangible amortization

45,294

42,478

87,748

85,016

Other acquisition and divestiture related items

10,690

7,735

25,486

15,677

Stock-based compensation

21,662

15,069

40,605

26,889

Other costs

1,705

4,695

13,942

6,935

Debt restructuring costs

5,299

687

5,936

765

Total segment adjusted operating income

$

184,102

$

113,399

$

339,919

$

269,389

Unallocated corporate expenses

(17,174)

(13,953)

(33,383)

(30,496)

Adjusted operating income

$

166,928

$

99,446

$

306,536

$

238,893

The Company's non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, changes in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, other costs, debt restructuring and debt issuance cost amortization, adjustments attributable to our non-controlling interests and certain tax related items.

The Company's non-GAAP adjusted operating income excludes acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, other costs, and debt restructuring costs. 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, these non-GAAP measures are integral to the Company's reporting and planning processes and the chief operating decision maker of the Company uses segment adjusted operating income to allocate resources among our operating segments. The Company considers these measures integral because they exclude the above specified items that the Company's management excludes in evaluating the Company's performance. 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 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 quarters 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 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 health savings accounts, is dependent upon changes in future interest rates 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 quarters difficult to evaluate.

  • The Company considers certain acquisition-related costs, including 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.

  • We exclude certain other costs when evaluating our continuing business performance when such items are not consistently occurring and do not reflect expected future operating expense, nor provide insight into the fundamentals of current or past operations of our business. These include costs related to certain identified initiatives (including 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. For the six months ended June 30, 2021, other costs additionally include a penalty of $10.3 million incurred on termination of a vendor contract. For the three and six months ended June 30, 2020, other costs include certain costs incurred in association with COVID-19, including the cost of providing additional health, welfare and technological support to our employees as they work remotely.

  • Debt restructuring and debt issuance cost amortization are unrelated to the continuing operations of the Company. Debt restructuring costs 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 adjustments attributable to non-controlling interests, including adjustments to the redemption value of a non-controlling interest and non-cash adjustments related to the tax receivable agreement, have no significant impact on the ongoing operations of the business.

  • The tax related items are the difference between the Company’s U.S. GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes as well as the impact from certain discrete tax items. The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s U.S. GAAP tax provision.

  • 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.

For the same reasons, 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.

Exhibit 2

Impact of Certain Macro Factors on Reported Revenue and Adjusted Net Income

(in thousands, except per share data)

(unaudited)

The table below shows the impact of certain macro factors on reported revenue:

Segment Revenue Results

Fleet Solutions

Travel and Corporate
Solutions

Health and Employee Benefit
Solutions

Total WEX Inc.

Three months ended June 30,

2021

2020

2021

2020

2021

2020

2021

2020

Reported revenue

$

274,388

$

204,380

$

81,762

$

54,495

$

103,333

...

$

88,209

$

459,483

$

347,084

FX impact (favorable) / unfavorable

$

(3,990)

$

$

(573)

...

$

$

$

$

(4,563)

$

PPG impact (favorable) / unfavorable

$

(33,271)

$

$

$

$

$

$

(33,271)

$

Segment Revenue Results

Fleet Solutions

Travel and Corporate
Solutions

Health and Employee Benefit
Solutions

Total WEX Inc.

Six months ended June 30,

2021

2020

2021

2020

2021

2020

2021

2020

Reported revenue

$

518,225

$

454,227

$

152,404

$

138,854

$

199,611

$

185,682

$

870,240

$

778,763

FX impact (favorable) / unfavorable

$

(7,616)

$

$

(878)

$

$

$

$

(8,494)

$

PPG impact (favorable) / unfavorable

$

(32,305)

$

$

$

$

$

$

(32,305)

$

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 2020 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 2020 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:

Segment Estimated Earnings Impact

Fleet Solutions

Travel and Corporate
Solutions

Health and Employee
Benefit Solutions

Three months ended June 30,

2021

2020

2021

2020

2021

2020

FX impact (favorable) / unfavorable

$

(1,946)

$

$

(404)

$

$

$

PPG impact (favorable) / unfavorable

$

(20,960)

$

$

$

$

$

Six months ended June 30,

2021

2020

2021

2020

2021

2020

FX impact (favorable) / unfavorable

$

(3,635)

$

$

(539)

$

$

$

PPG impact (favorable) / unfavorable

$

(20,474)

$

$

$

$

$

To determine the estimated earnings 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 2020 acquisitions for one year following the acquisition dates.

To determine the estimated earnings 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 2020 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 non-controlling interests and applicable taxes.

Exhibit 3

Selected Non-Financial Metrics

(unaudited)

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Fleet Solutions:

Payment processing transactions (000s) (1)

130,104

118,389

118,287

120,900

103,086

Payment processing gallons of fuel (000s) (2)

3,483,695

3,233,943

3,265,927

3,247,507

2,830,265

Average US fuel price (US$ / gallon)

$

3.04

$

2.72

$

2.26

$

2.23

$

2.07

Payment processing $ of fuel (000s) (3)

$

10,995,418

$

9,176,960

$

7,767,530

$

7,609,098

$

6,135,265

Net payment processing rate (4)

1.15

%

1.20

%

1.27

%

1.35

%

1.47

%

Payment processing revenue (000s)

$

126,450

$

110,577

$

98,954

$

102,419

$

90,147

Net late fee rate (5)

0.41

%

0.45

%

0.54

%

0.48

%

0.57

%

Late fee revenue (000s) (6)

$

45,235

$

41,150

$

41,901

$

36,232

$

35,071

Travel and Corporate Solutions:

Purchase volume (000s) (7)

$

8,736,019

$

6,107,675

$

4,968,321

$

4,699,737

$

3,168,064

Net interchange rate (8)

0.78

%

0.94

%

1.26

%

1.13

%

1.37

%

Payment solutions processing revenue (000s)

$

68,282

$

57,248

$

62,376

$

53,239

$

43,261

Health and Employee Benefit Solutions:

Purchase volume (000s) (9)

$

1,311,131

$

1,484,226

$

1,074,977

$

1,120,786

$

1,017,318

Average number of SaaS accounts (000s) (10)

16,380

15,513

14,502

14,599

14,487

Definitions and explanations:

(1) Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with WEX.

(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 dollars 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 the dollar value of each payment processing 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 in the Health and Employee Benefit Solutions segment represents the total US dollar value of all transactions where interchange is earned by WEX.

(10) Average number of Health and Employee Benefit Solutions accounts represents the number of active Consumer Directed Health, COBRA, and billing accounts on our SaaS platforms in the United States.

Exhibit 4

Segment Revenue Information

(in thousands)

(unaudited)

Three months ended
June 30,

Increase (decrease)

Six months ended
June 30,

Increase (decrease)

Fleet Solutions

2021

2020

Amount

Percent

2021

2020

Amount

Percent

Revenues

Payment processing revenue

$

126,450

$

90,147

$

36,303

40

%

$

237,026

$

203,470

$

33,556

16

%

Account servicing revenue

42,293

36,694

5,599

15

%

82,284

75,902

6,382

8

%

Finance fee revenue

59,258

42,463

16,795

40

%

111,098

97,805

13,293

14

%

Other revenue

46,387

35,076

11,311

32

%

87,817

77,050

10,767

14

%

Total revenues

$

274,388

$

204,380

$

70,008

34

%

$

518,225

$

454,227

$

63,998

14

%

Three months ended

June 30,

Increase (decrease)

Six months ended
June 30,

Increase (decrease)

Travel and Corporate Solutions

2021

2020

Amount

Percent

2021

2020

Amount

Percent

Revenues

Payment processing revenue

$

68,282

$

43,261

$

25,021

58

%

$

125,530

$

113,529

$

12,001

11

%

Account servicing revenue

11,222

10,183

1,039

10

%

21,909

21,246

663

3

%

Finance fee revenue

199

220

(21)

(10)

%

493

755

(262)

(35)

%

Other revenue

2,059

831

1,228

148

%

4,472

3,324

1,148

35

%

Total revenues

$

81,762

$

54,495

$

27,267

50

%

$

152,404

$

138,854

$

13,550

10

%

Three months ended
June 30,

Increase (decrease)

Six months ended
June 30,

Increase (decrease)

Health and Employee Benefit
Solutions

2021

2020

Amount

Percent

2021

2020

Amount

Percent

Revenues

Payment processing revenue

$

18,694

$

14,053

$

4,641

33

%

$

39,259

$

34,499

$

4,760

14

%

Account servicing revenue

79,482

62,602

16,880

27

%

147,427

126,171

21,256

17

%

Finance fee revenue

42

28

14

50

%

61

78

(17)

(22)

%

Other revenue

5,115

11,526

(6,411)

(56)

%

12,864

24,934

(12,070)

(48)

%

Total revenues

$

103,333

$

88,209

$

15,124

17

%

$

199,611

$

185,682

$

13,929

8

%

Exhibit 5

Segment Adjusted Operating Income and Adjusted Operating Income Margin Information

(in thousands)

(unaudited)

Segment Adjusted Operating Income

Segment Adjusted Operating Income
Margin(1)

Three Months Ended June 30,

Three Months Ended June 30,

2021

2020

2021

2020

Fleet Solutions

$

137,865

$

77,180

50.2

%

37.8

%

Travel and Corporate Solutions

$

17,157

$

10,961

21.0

%

20.1

%

Health and Employee Benefit Solutions

$

29,080

$

25,258

28.1

%

28.6

%

Total segment adjusted operating income

$

184,102

$

113,399

40.1

%

32.7

%

Segment Adjusted Operating Income

Segment Adjusted Operating Income
Margin(1)

Six Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Fleet Solutions

$

256,123

$

181,788

49.4

%

40.0

%

Travel and Corporate Solutions

$

24,172

$

32,876

15.9

%

23.7

%

Health and Employee Benefit Solutions

$

59,624

$

54,725

29.9

%

29.5

%

Total segment adjusted operating income

$

339,919

$

269,389

39.1

%

34.6

%

(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 segment adjusted operating income to GAAP operating income.

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Adjusted operating income

$

166,928

$

99,446

$

306,536

$

238,893

Adjusted operating income margin (1)

36.3

%

28.7

%

35.2

%

30.7

%

(1) Adjusted operating income margin is derived by dividing adjusted operating income by revenue of the entire Company. See Exhibit 1 for a reconciliation of adjusted operating income to GAAP operating income.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005166/en/

Contacts

News media contact:
WEX Inc.
Jessica Roy, 207-523-6763
Jessica.Roy@wexinc.com
or
Investor contact:
WEX Inc.
Steve Elder, 207-523-7769
Steve.Elder@wexinc.com

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