WEX Inc. Reports Fourth Quarter and Full Year 2020 Financial Results
WEX Inc. (NYSE: WEX), a leading financial technology service provider, today reported financial results for the three months and year ended December 31, 2020.
Fourth Quarter and Full Year 2020 Financial Results
Total revenue for the fourth quarter of 2020 decreased
Net income attributable to shareholders on a GAAP basis for the fourth quarter decreased by
For the full year 2020, revenue decreased
“This year proved to be a year like no other as the world faced a number of challenges. Nevertheless, WEX remained resilient as we continued to advance our strategic objectives. The fourth quarter played out better than expected and we began to see some encouraging trends as customer demand slowly returned despite renewed lockdowns across many parts of the world. Our over-the road, corporate payments and U.S. health businesses remained bright spots, each posting another quarter of top-line growth,” said Melissa Smith, WEX’s Chair and Chief Executive Officer. “We also closed the eNett and Optal transactions at the end of 2020, which increases our flexibility and opportunities going forward. While the travel market will be volatile in the short term, it remains an area of long term opportunity for WEX.”
Ms. Smith continued, “Our solid execution in 2020 underpins the strength and diversification of WEX’s business model. We continued to innovate and advance our products, reflected by the significant number of contract signings and renewals, as well as the achievement of running approximately two thirds of our volume in the cloud. Advancements like this, combined with our customer-centric focus, will continue to differentiate WEX in the marketplace going forward. While the pace of recovery will vary, the anticipated return of volumes from existing customers coupled with new customer additions positions us well to succeed post-pandemic. These factors, bolstered by our continued strategic investments, give me confidence that our next chapter of growth will be our best.”
Fourth Quarter 2020 Performance Metrics
-
Average number of vehicles serviced was 15.8 million, an increase of
6% from the fourth quarter of 2019. -
Total fuel transactions processed decreased
5% from the fourth quarter of 2019 to 147.7 million. -
Payment processing transactions decreased
7% to 118.3 million. -
U.S. retail fuel price decreased to
$2.26 per gallon from$2.80 per gallon in the fourth quarter of 2019. -
Travel and Corporate Solutions' purchase volume decreased
48% to$5.0 billion from$9.6 billion for the fourth quarter of 2019. -
Health and Employee Benefit Solutions' average number of Software-as-a-Service (SaaS) accounts in the U.S. grew
8% to 14.5 million from 13.4 million for the fourth quarter of 2019.
“While fourth quarter and full year results continued to be impacted by the pandemic, we were encouraged by continued sequential improvement across much of the business. As in prior quarters, we successfully executed against our strategic pillars, drove efficiencies, invested in high-growth areas, maintained high retention rates, and signed new business across all segments,” said Roberto Simon, WEX’s Chief Financial Officer. “We are proud of the resilience WEX demonstrated in 2020, and believe we are well positioned to capture future growth as the economy continues to improve.”
Cost Actions and Liquidity Update
In response to COVID-19 uncertainty, the Company implemented a number of actions to reduce capital and operating expenditures, adjust cost structure and preserve financial flexibility and a strong liquidity position. The total operating expense savings resulting from these actions were in excess of
Financial Guidance
On May 7, 2020, the Company withdrew all previously-issued full fiscal year 2020 financial guidance due to COVID-19. Given the continued uncertainty related to COVID-19, the Company is not providing any further financial guidance at this time. WEX continues to carefully monitor the pandemic and the impact on its business; however, given the uncertainty regarding the pandemic's spread, duration, and impact, the Company is currently unable to predict the precise extent to which the COVID-19 pandemic will impact its future operations and 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, a table illustrating the impact of foreign currency rates and fuel prices for each of our reportable segments for the three and twelve months ended December 31, 2020 and 2019, and in Exhibit 3, a table of selected non-financial metrics for the quarter ended December 31, 2020 and four preceding quarters. The Company is also providing segment revenue for the three and twelve months ended December 31, 2020 and 2019 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, February 24, 2021, at 9:00 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 778-560-2809. The Conference ID number is 1981477 and the passcode is 17620339. A replay of the webcast and the accompanying slides will be available on the Company's website.
About WEX
Powered by the belief that complex payment systems can be made simple, WEX (NYSE: WEX) is a leading financial technology service provider across a wide spectrum of sectors, including fleet, travel and healthcare. WEX operates in more than 10 countries and in more than 20 currencies through more than 5,200 associates around the world. WEX fleet cards offer 15.8 million vehicles exceptional payment security and control; purchase volume in travel and corporate solutions was
Forward-Looking Statements
This earnings release contains forward-looking statements, including statements regarding: assumptions underlying the Company's future financial performance, future operations; future growth opportunities and expectations; expectations for future revenue performance, 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 effects of general economic conditions on fueling patterns as well as payment and transaction processing activity; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of fluctuations in fuel prices, including the impact of any continued reductions in fuel price and the resulting impact on our revenues and net income; changes or limitations on interchange fees; failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; the effects of the Company’s business expansion and acquisition efforts; 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, specifically including the recent eNett and Optal acquisitions; the Company’s failure to successfully acquire, integrate, operate and expand commercial fuel card programs; the failure of corporate investments to result in anticipated strategic value; the impact and size of credit losses; the impact of changes to the Company’s credit standards; 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 Company’s failure to maintain or renew key commercial agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; 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; 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; legal, regulatory, political and economic uncertainty surrounding the United Kingdom’s departure from the European Union and the resulting trade agreement; the impact of the future transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company’s presently outstanding notes on its 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, 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 for the year ended December 31, 2019, filed on Form 10-K with the Securities and Exchange Commission on February 28, 2020 and Item 1A of our quarterly reports for the quarters ended June 30, 2020 and September 30, 2020, filed on Forms 10-Q with the Securities and Exchange Commission on August 5, 2020 and November 9, 2020, respectively. 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. |
||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
Three months ended December 31, |
|
Year ended December 31, |
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
Revenues |
|
|
|
|
|
|
|
|||||||||
Payment processing revenue |
$ |
176,316 |
|
|
$ |
199,212 |
|
|
$ |
698,891 |
|
|
$ |
825,592 |
|
|
Account servicing revenue |
113,720 |
|
|
110,369 |
|
|
449,456 |
|
|
413,552 |
|
|||||
Finance fee revenue |
53,578 |
|
|
71,651 |
|
|
198,523 |
|
|
247,318 |
|
|||||
Other revenue |
55,376 |
|
|
58,813 |
|
|
212,999 |
|
|
237,229 |
|
|||||
Total revenues |
398,990 |
|
|
440,045 |
|
|
1,559,869 |
|
|
1,723,691 |
|
|||||
Cost of services |
|
|
|
|
|
|
|
|||||||||
Processing costs |
111,889 |
|
|
111,543 |
|
|
419,041 |
|
|
400,439 |
|
|||||
Service fees |
12,954 |
|
|
13,679 |
|
|
47,289 |
|
|
57,027 |
|
|||||
Provision for credit losses |
11,592 |
|
|
18,194 |
|
|
78,443 |
|
|
65,664 |
|
|||||
Operating interest |
3,659 |
|
|
10,150 |
|
|
23,810 |
|
|
41,915 |
|
|||||
Depreciation and amortization |
28,477 |
|
|
26,519 |
|
|
104,592 |
|
|
94,725 |
|
|||||
Total cost of services |
168,571 |
|
|
180,085 |
|
|
673,175 |
|
|
659,770 |
|
|||||
General and administrative |
94,677 |
|
|
69,732 |
|
|
292,109 |
|
|
275,807 |
|
|||||
Sales and marketing |
78,566 |
|
|
49,230 |
|
|
266,684 |
|
|
259,869 |
|
|||||
Depreciation and amortization |
38,427 |
|
|
37,140 |
|
|
157,334 |
|
|
142,404 |
|
|||||
Legal settlement |
162,500 |
|
|
— |
|
|
162,500 |
|
|
— |
|
|||||
Impairment charges |
53,378 |
|
|
— |
|
|
53,378 |
|
|
— |
|
|||||
Loss on sale of subsidiary |
— |
|
|
— |
|
|
46,362 |
|
|
— |
|
|||||
Operating (loss) income |
(197,129 |
) |
|
103,858 |
|
|
(91,673 |
) |
|
385,841 |
|
|||||
Financing interest expense |
(55,267 |
) |
|
(33,378 |
) |
|
(157,080 |
) |
|
(134,677 |
) |
|||||
Net foreign currency gain (loss) |
6,190 |
|
|
12,822 |
|
|
(25,783 |
) |
|
(926 |
) |
|||||
Net unrealized gains (losses) on financial instruments |
5,079 |
|
|
4,424 |
|
|
(27,036 |
) |
|
(34,654 |
) |
|||||
Non-cash adjustments related to tax receivable agreement |
491 |
|
|
932 |
|
|
491 |
|
|
932 |
|
|||||
(Loss) income before income taxes |
(240,636 |
) |
|
88,658 |
|
|
(301,081 |
) |
|
216,516 |
|
|||||
Income tax (benefit) provision |
(16,745 |
) |
|
23,871 |
|
|
(20,597 |
) |
|
61,223 |
|
|||||
Net (loss) income |
(223,891 |
) |
|
64,787 |
|
|
(280,484 |
) |
|
155,293 |
|
|||||
Less: Net income (loss) from non-controlling interests |
184 |
|
|
(797 |
) |
|
3,466 |
|
|
(1,030 |
) |
|||||
Net (loss) income attributable to WEX Inc. |
(224,075 |
) |
|
65,584 |
|
|
(283,950 |
) |
|
156,323 |
|
|||||
Change in value of redeemable non-controlling interest |
(10,125 |
) |
|
(11,138 |
) |
|
40,312 |
|
|
(57,317 |
) |
|||||
Net (loss) income attributable to shareholders |
$ |
(234,200 |
) |
|
$ |
54,446 |
|
|
$ |
(243,638 |
) |
|
$ |
99,006 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income attributable to shareholders per share: |
|
|
|
|
|
|
|
|||||||||
Basic |
$ |
(5.30 |
) |
|
$ |
1.26 |
|
|
$ |
(5.56 |
) |
|
$ |
2.29 |
|
|
Diluted |
$ |
(5.30 |
) |
|
$ |
1.24 |
|
|
$ |
(5.56 |
) |
|
$ |
2.26 |
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|||||||||
Basic |
44,210 |
|
|
43,367 |
|
|
43,842 |
|
|
43,316 |
|
|||||
Diluted |
44,210 |
|
|
43,931 |
|
|
43,842 |
|
|
43,769 |
|
|||||
| WEX INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
(in thousands) |
||||||
(unaudited) |
||||||
|
December 31, |
|||||
|
2020 |
|
2019 |
|||
Assets |
|
|
|
|||
Cash and cash equivalents |
$ |
852,033 |
|
$ |
810,932 |
|
Restricted cash |
477,620 |
|
170,449 |
|||
Accounts receivable |
1,993,329 |
|
2,661,108 |
|||
Securitized accounts receivable, restricted |
93,236 |
|
112,192 |
|||
Prepaid expenses and other current assets |
86,629 |
|
87,694 |
|||
Total current assets |
3,502,847 |
|
3,842,375 |
|||
Property, equipment and capitalized software |
188,340 |
|
212,475 |
|||
Goodwill and other intangible assets |
4,240,150 |
|
4,016,251 |
|||
Investment securities |
37,273 |
|
30,460 |
|||
Deferred income taxes, net |
17,524 |
|
12,833 |
|||
Other assets |
197,227 |
|
184,024 |
|||
Total assets |
$ |
8,183,361 |
|
$ |
8,298,418 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|||
Accounts payable |
$ |
778,207 |
|
$ |
969,816 |
|
Accrued expenses |
362,472 |
|
315,642 |
|||
Restricted cash payable |
477,620 |
|
170,449 |
|||
Short-term deposits |
911,395 |
|
1,310,813 |
|||
Short-term debt, net |
152,730 |
|
248,531 |
|||
Other current liabilities |
58,429 |
|
34,692 |
|||
Total current liabilities |
2,740,853 |
|
3,049,943 |
|||
Long-term debt, net |
2,874,113 |
|
2,686,513 |
|||
Long-term deposits |
148,591 |
|
143,399 |
|||
Deferred income taxes, net |
220,122 |
|
218,740 |
|||
Other liabilities |
164,546 |
|
106,422 |
|||
Total liabilities |
6,148,225 |
|
6,205,017 |
|||
Commitments and contingencies |
|
|
|
|||
Redeemable non-controlling interest |
117,219 |
|
156,879 |
|||
Stockholders’ Equity |
|
|
|
|||
Total WEX Inc. stockholders' equity |
1,904,895 |
|
1,926,947 |
|||
Non-controlling interest |
13,022 |
|
9,575 |
|||
Total stockholders’ equity |
1,917,917 |
|
1,936,522 |
|||
Total liabilities and stockholders’ equity |
$ |
8,183,361 |
|
$ |
8,298,418 |
|
Exhibit 1 |
Reconciliation of Non - GAAP Measures |
Reconciliation of GAAP Net (Loss) Income Attributable to Shareholders to Adjusted Net Income Attributable to Shareholders |
(in thousands, except per share data) |
(unaudited) |
Three Months Ended December 31, |
|
|||||||||||||||
|
2020 |
|
2019 |
|||||||||||||
|
|
per diluted share |
|
|
|
per diluted share |
||||||||||
Net (loss) income attributable to shareholders |
$ |
(234,200 |
) |
|
$ |
(5.30 |
) |
|
$ |
54,446 |
|
|
$ |
1.24 |
|
|
Unrealized (gains) losses on financial instruments |
(5,079 |
) |
|
(0.11 |
) |
|
(4,424 |
) |
|
(0.10 |
) |
|||||
Net foreign currency (gain) loss |
(6,190 |
) |
|
(0.14 |
) |
|
(12,822 |
) |
|
(0.29 |
) |
|||||
Acquisition-related intangible amortization |
43,297 |
|
|
0.98 |
|
|
42,929 |
|
|
0.98 |
|
|||||
Other acquisition and divestiture related items |
21,782 |
|
|
0.49 |
|
|
12,971 |
|
|
0.30 |
|
|||||
Legal settlement |
162,500 |
|
|
3.68 |
|
|
— |
|
|
— |
|
|||||
Stock-based compensation |
20,782 |
|
|
0.47 |
|
|
12,555 |
|
|
0.29 |
|
|||||
Restructuring and other costs |
5,575 |
|
|
0.13 |
|
|
12,192 |
|
|
0.28 |
|
|||||
Impairment charge |
53,378 |
|
|
1.21 |
|
|
— |
|
|
— |
|
|||||
Debt restructuring and debt issuance cost amortization |
30,074 |
|
|
0.68 |
|
|
2,804 |
|
|
0.06 |
|
|||||
Non-cash adjustments related to tax receivable agreement |
(491 |
) |
|
(0.01 |
) |
|
(932 |
) |
|
(0.02 |
) |
|||||
ANI adjustments attributable to non-controlling interest |
9,191 |
|
|
0.21 |
|
|
9,161 |
|
|
0.21 |
|
|||||
Tax related items |
(35,788 |
) |
|
(0.81 |
) |
|
(14,158 |
) |
|
(0.32 |
) |
|||||
Dilutive impact of stock awards1 |
— |
|
|
(0.03 |
) |
|
— |
|
|
— |
|
|||||
Adjusted net income attributable to shareholders |
$ |
64,831 |
|
|
$ |
1.45 |
|
|
$ |
114,722 |
|
|
$ |
2.61 |
|
|
|
Year Ended December 31, |
|||||||||||||||
|
2020 |
|
2019 |
|||||||||||||
|
|
per diluted share |
|
|
|
per diluted share |
||||||||||
Net (loss) income attributable to shareholders |
$ |
(243,638 |
) |
|
$ |
(5.56 |
) |
|
$ |
99,006 |
|
|
$ |
2.26 |
|
|
Unrealized losses (gains) on financial instruments |
27,036 |
|
|
0.62 |
|
|
34,654 |
|
|
0.79 |
|
|||||
Net foreign currency loss |
25,783 |
|
|
0.59 |
|
|
926 |
|
|
0.02 |
|
|||||
Acquisition-related intangible amortization |
171,144 |
|
|
3.90 |
|
|
159,431 |
|
|
3.64 |
|
|||||
Other acquisition and divestiture related items |
57,787 |
|
|
1.32 |
|
|
37,675 |
|
|
0.86 |
|
|||||
Legal settlement |
162,500 |
|
|
3.71 |
|
|
— |
|
|
— |
|
|||||
Stock-based compensation |
65,841 |
|
|
1.50 |
|
|
47,511 |
|
|
1.09 |
|
|||||
Restructuring and other costs |
13,555 |
|
|
0.31 |
|
|
25,106 |
|
|
0.57 |
|
|||||
Loss on sale of subsidiary |
46,362 |
|
|
1.06 |
|
|
— |
|
|
— |
|
|||||
Impairment charge |
53,378 |
|
|
1.22 |
|
|
— |
|
|
— |
|
|||||
Debt restructuring and debt issuance cost amortization |
40,063 |
|
|
0.91 |
|
|
21,004 |
|
|
0.48 |
|
|||||
Non-cash adjustments related to tax receivable agreement |
(491 |
) |
|
(0.01 |
) |
|
(932 |
) |
|
(0.02 |
) |
|||||
ANI adjustments attributable to non-controlling interests |
(42,910 |
) |
|
(0.98 |
) |
|
53,035 |
|
|
1.21 |
|
|||||
Tax related items |
(108,086 |
) |
|
(2.47 |
) |
|
(74,743 |
) |
|
(1.71 |
) |
|||||
Dilutive impact of stock awards1 |
— |
|
|
(0.06 |
) |
|
— |
|
|
— |
|
|||||
Adjusted net income attributable to shareholders |
$ |
268,324 |
|
|
$ |
6.06 |
|
|
$ |
402,673 |
|
|
$ |
9.20 |
|
|
1 As the Company reported net losses for the fourth quarter of 2020 and year ended December 31, 2020, the diluted weighted average shares outstanding equal the basic weighted average shares outstanding for those periods under U.S. Generally Accepted Accounting Principles ("GAAP"). The non-GAAP adjustments described above resulted in adjusted net income attributable to shareholders (versus a loss on a GAAP basis) for the fourth quarter of 2020 and the year ended December 31, 2020. 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 |
||||||||||||||||
(in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
Operating income |
$ |
(197,129 |
) |
|
$ |
103,858 |
|
|
$ |
(91,673 |
) |
|
$ |
385,841 |
|
|
Unallocated corporate expenses |
17,625 |
|
|
15,847 |
|
|
62,938 |
|
|
67,982 |
|
|||||
Acquisition-related intangible amortization |
43,297 |
|
|
42,929 |
|
|
171,144 |
|
|
159,431 |
|
|||||
Other acquisition and divestiture related items |
26,680 |
|
|
12,971 |
|
|
57,787 |
|
WEX Inc.
NYSE:WEXWEX RankingsWEX Latest NewsWEX Stock Data
8.77B
39.33M
0.55%
102.58%
2.02%
Data Processing, Hosting, and Related Services
Information
United States of America
PORTLAND
About WEXwex inc. (nyse: wex) is a leading global provider of corporate payment solutions that enable its customers to manage their businesses more efficiently, with enhanced security and greater control over their costs. from its roots in fleet card payments beginning in 1983, wex has expanded its scope to become a multi-channel provider of corporate payment solutions with millions of cardholders across several growing market sectors including travel, health care and employee benefits. our focus is on providing exceptional payment security and control for a vast spectrum of payment sectors while delivering an exceptional experience so that our customers – whether large or small – can operate efficiently, securely and profitably. the company has operations in north and south america, europe, australia, new zealand, and asia, and employs more than 2,000 associates. for more information about wex, please visit www.wexinc.com.
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