Q1 revenue increased 7% year-over-year to a
first quarter record $653 million, driven by 16% growth in the
Benefits segment and 17% in the Corporate Payments segment
Q1 GAAP net income was $1.55 per diluted share;
Q1 adjusted net income was $3.46 per diluted share
Q1 GAAP operating income margin of 25.2% and
adjusted operating income margin of 38.5%
Raises full-year 2024 financial guidance
WEX (NYSE: WEX), the global commerce platform that simplifies
the business of running a business, today reported financial
results for the three months ended March 31, 2024.
“WEX delivered impressive financial results in the first
quarter, including record first quarter revenue, marking a strong
start to 2024 and reinforcing our ability to drive robust
performance in any macroeconomic environment,” said Melissa Smith,
WEX’s Chair, Chief Executive Officer, and President.
“Moreover, we continued to execute against our strategic
initiatives. During the quarter, we made great progress integrating
our recent acquisitions, launched the pilot for an enhanced
acceptance offering for our North American Mobility customers, and
continued to drive innovation to expand our customer value
proposition. We are also laser-focused on leveraging technology and
AI to improve efficiency and further enhance our offerings. Looking
ahead, I remain confident in our ability to drive growth across the
business in the near- and long-term.”
First Quarter 2024 Financial Results
Total revenue for the first quarter of 2024 increased 7% to
$652.7 million from $612.0 million for the first quarter of 2023.
The revenue increase in the quarter includes a $20.5 million
unfavorable impact from fuel prices and spreads and a $0.7 million
favorable impact from foreign exchange rates. Relative to prior
guidance, negative fuel price spreads in Europe offset the revenue
benefit from higher-than-anticipated domestic fuel prices.
Net income on a GAAP basis decreased by $2.2 million to a net
income of $65.8 million, or $1.55 per diluted share, for the first
quarter of 2024, compared with net income of $68.0 million, or
$1.56 per diluted share, for the first quarter of 2023. The
Company's adjusted net income, which is a non-GAAP measure, was
$146.7 million for the first quarter of 2024, or $3.46 per diluted
share, up 5% per diluted share from $145.8 million, or $3.31 per
diluted share, for the same period last year. GAAP operating income
margin for the first quarter of 2024 and the prior year comparable
period was 25.2%. Adjusted operating income margin was 38.5% in the
first quarter of 2024 compared to 37.6% 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.
First Quarter 2024 Performance Metrics
- Total volume across all segments was $56.8 billion, an increase
of 8.6% from the first quarter of 2023.
- Mobility payment processing transactions in the first quarter
of 2024 were flat with the prior year at 136.9 million.
- Average number of vehicles serviced was approximately 19.4
million, an increase of 4% from the first quarter of 2023.
- Benefits’ average number of Software-as-a-Service (SaaS)
accounts were even with the first quarter of 2023 at 20.3
million.
- Average HSA custodial cash assets in the first quarter of 2024
were $4.2 billion, which is 14% higher than $3.7 billion a year
ago.
- Corporate Payments’ purchase volume grew 29% to $23.9 billion
from $18.6 billion in the first quarter of 2023.
- The Company repurchased 353.1 thousand shares of its stock for
a total cost of approximately $73.6 million.
- Cash flows used in operating activities through the first
quarter of this year were $153.3 million. Adjusted free cash flow,
which is a non-GAAP measure, was negative $204.5 million for the
same period. The timing of the end of the quarter falling on a
weekend resulted in a larger negative number than normal, which is
expected to reverse. Please see Exhibit 1 for a reconciliation of
operating cash flow to this non-GAAP measure.
“Our strong results this quarter continue to demonstrate the
strength and resiliency of our business model as we execute against
our strategic priorities and create value for our shareholders,”
said Jagtar Narula, WEX’s Chief Financial Officer. “With continued
momentum across our growth drivers, we are confident in our ability
to extend our market leadership position. I’m pleased to share that
we are raising our full-year 2024 guidance ranges.”
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 second quarter of 2024, the Company expects revenue in
the range of $675 million to $685 million and adjusted net income
in the range of $3.75 to $3.85 per diluted share.
- For the full year 2024, the Company now expects revenue in the
range of $2.73 billion to $2.77 billion, up from the prior guidance
range of $2.70 billion to $2.74 billion. Adjusted net income is now
expected to be in the range of $16.10 to $16.60 per diluted share,
an increase from the prior guidance range of $15.90 to $16.40 per
diluted share.
Second quarter and full year 2024 guidance is based on assumed
average U.S. retail fuel prices of $3.69 and $3.64 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 April 15, 2024. Our guidance assumes
approximately 42.5 million fully diluted shares outstanding for the
full year. Second quarter and full year 2024 guidance includes the
anticipated impact of the Company’s new long-term agreement with
Booking.com, which was announced today in a separate press
release.
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 March 31, 2024; and
in Exhibit 3, a table of selected other metrics for the quarter
ended March 31, 2024 and the four preceding quarters. See segment
revenue for the three months ended March 31, 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, April 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) 510-2008 or (646) 960-0306. The Conference ID number
is 2237921. 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. 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 March
31,
2024
2023
Revenues
Payment processing revenue
$
302.0
$
288.1
Account servicing revenue
173.3
160.7
Finance fee revenue
70.3
80.7
Other revenue
107.1
82.5
Total revenues
652.7
612.0
Cost of services
Processing costs
169.1
145.6
Service fees
21.0
18.3
Provision for credit losses
22.4
45.4
Operating interest
23.5
12.8
Depreciation and amortization
31.2
25.2
Total cost of services
267.2
247.3
General and administrative
88.5
88.9
Sales and marketing
85.3
79.9
Depreciation and amortization
47.2
41.6
Operating income
164.5
154.3
Financing interest expense, net of
financial instruments
(60.3
)
(52.9
)
Change in fair value of contingent
consideration
(1.7
)
(1.8
)
Net foreign currency loss
(12.5
)
(1.4
)
Income before income taxes
90.0
98.2
Income tax expense
24.2
30.2
Net income
$
65.8
$
68.0
Net income per share:
Basic
$
1.57
$
1.58
Diluted
$
1.55
$
1.56
Weighted average common shares
outstanding:
Basic
41.8
43.1
Diluted
42.4
43.6
WEX INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in millions)
(unaudited)
March 31, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
779.6
$
975.8
Restricted cash
1,302.1
1,254.2
Accounts receivable, net
3,857.2
3,428.5
Investment securities
3,304.9
3,022.1
Securitized accounts receivable,
restricted
143.3
129.4
Prepaid expenses and other current
assets
147.4
125.3
Total current assets
9,534.5
8,935.3
Property, equipment and capitalized
software
249.5
242.9
Goodwill and other intangible assets
4,410.1
4,474.4
Investment securities
66.1
66.8
Deferred income taxes, net
14.8
13.7
Other assets
146.8
149.0
Total assets
$
14,421.8
$
13,882.1
Liabilities and Stockholders’
Equity
Accounts payable
$
1,824.0
$
1,479.1
Accrued expenses and other current
liabilities
671.2
802.7
Restricted cash payable
1,301.4
1,253.5
Short-term deposits
4,075.9
3,942.8
Short-term debt, net
1,113.0
1,041.1
Total current liabilities
8,985.5
8,519.2
Long-term debt, net
3,081.5
2,827.5
Long-term deposits
129.7
129.8
Deferred income taxes, net
132.8
129.5
Other liabilities
314.6
455.5
Total liabilities
12,644.1
12,061.5
Total stockholders’ equity
1,777.7
1,820.6
Total liabilities and stockholders’
equity
$
14,421.8
$
13,882.1
WEX INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended March
31,
2024
2023
Cash flows from operating
activities
$
(153.3
)
$
27.1
Cash flows from investing
activities
Purchases of property, equipment and
capitalized software
(34.0
)
(30.6
)
Purchases of available-for-sale debt
securities
(391.7
)
(1,107.4
)
Sales and maturities of available-for-sale
debt securities
108.8
80.5
Acquisition of intangible assets
—
(4.5
)
Other investing activities
(0.9
)
—
Net cash used for investing activities
(317.8
)
(1,062.0
)
Cash flows from financing
activities
Purchase of treasury shares
(73.6
)
(100.9
)
Net change in deposits
133.6
967.4
Net change in restricted cash payable
69.3
12.5
Payments of deferred and contingent
consideration
(86.6
)
(27.2
)
Other financing activities
(15.9
)
(2.5
)
Net debt activity 1
327.3
194.5
Net cash provided by financing
activities
354.1
1,043.8
Effect of exchange rates on cash, cash
equivalents and restricted cash
(31.3
)
11.7
Net change in cash, cash equivalents and
restricted cash
(148.3
)
20.6
Cash, cash equivalents and restricted
cash, beginning of period
2,230.0
1,859.8
Cash, cash equivalents and restricted
cash, end of period
$
2,081.7
$
1,880.4
1 Net activity on debt includes:
borrowings on revolving credit facility; repayments on revolving
credit facility; repayments on term loans; borrowings on Bank Term
Funding Program (BTFP); repayments on BTFP; 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 March
31,
2024
2023
per diluted share
per diluted share
Net income
$
65.8
$
1.55
$
68.0
$
1.56
Unrealized loss on financial
instruments
0.2
—
14.5
0.33
Net foreign currency loss
12.5
0.29
1.4
0.03
Change in fair value of contingent
consideration
1.7
0.04
1.8
0.04
Acquisition-related intangible
amortization
50.9
1.20
44.1
1.01
Other acquisition and divestiture related
items
3.2
0.08
1.1
0.03
Stock-based compensation
26.7
0.63
26.1
0.60
Other costs
5.8
0.14
4.5
0.10
Debt restructuring and debt issuance cost
amortization
4.5
0.11
4.7
0.11
Tax related items
(24.7
)
(0.58
)
(20.4
)
(0.47
)
Dilutive impact of convertible debt1
—
—
—
(0.03
)
Adjusted net income
$
146.7
$
3.46
$
145.8
$
3.31
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 was added back to
adjusted net income for the three months ended March 31, 2023. For
the three months ended March 31, 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 months ended March 31, 2024 and
2023 was 42.4 million and 45.2 million, respectively.
Reconciliation of GAAP Operating Income
to Non-GAAP Total Segment Adjusted Operating Income and Adjusted
Operating Income
Three Months Ended March
31,
2024
(margin)1
2023
(margin)1
Operating income
$
164.5
25.2
%
$
154.3
25.2
%
Unallocated corporate expenses
23.6
22.4
Acquisition-related intangible
amortization
50.9
44.1
Other acquisition and divestiture related
items
2.4
1.1
Stock-based compensation
26.7
26.1
Other costs
6.7
4.5
Total segment adjusted operating
income
$
274.9
42.1
%
$
252.5
41.3
%
Unallocated corporate expenses
(23.6
)
(22.4
)
Adjusted operating income
$
251.3
38.5
%
$
230.1
37.6
%
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
operating cash flow, adjusted for net purchases of current
investment securities, capital expenditures, the change in net
deposits, changes in borrowings under the BTFP and borrowed federal
funds and certain other adjustments which, for the three months
ended March 31, 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) changes in net deposits
occur on a daily basis as a regular part of operations; (iii)
borrowings under the BTFP and borrowed federal funds are primarily
used as a replacement for brokered deposits as part of our accounts
receivable funding strategy; and (iv) 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 March
31,
2024
2023
Operating cash flow, as
reported
$
(153.3
)
$
27.1
Adjustments to operating cash flow:
Other
67.1
1.5
Adjusted for certain investing and
financing activities:
Increases in net deposits
133.6
967.4
Net repayment of borrowings under the
BTFP
(15.0
)
—
Increases in borrowed federal funds
80.0
—
Less: Purchases of current investment
securities, net of sales and maturities
(282.9
)
(1,026.8
)
Less: Capital expenditures
(34.0
)
(30.6
)
Adjusted free cash flow
$
(204.5
)
$
(61.4
)
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 March
31,
2024
2023
2024
2023
2024
2023
2024
2023
Reported revenue
$
339.0
$
342.3
$
122.5
$
104.8
$
191.2
$
164.9
$
652.7
$
612.0
FX impact (favorable) / unfavorable
$
0.1
$
(0.9
)
$
—
$
(0.7
)
PPG impact (favorable) / unfavorable
$
20.5
$
—
$
—
$
20.5
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 March
31,
2024
2023
2024
2023
2024
2023
FX impact (favorable) / unfavorable
$
0.6
$
—
$
(0.6
)
$
—
$
—
$
—
PPG impact (favorable) / unfavorable
$
14.0
$
—
$
—
$
—
$
—
$
—
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 non-controlling interests and applicable taxes.
Exhibit 3
Selected Other Metrics
(in millions, except rate
statistics)
(unaudited)
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Mobility:
Payment processing transactions (1)
136.9
138.1
144.6
142.4
137.5
Payment processing gallons of fuel (2)
3,567.7
3,578.6
3,687.2
3,664.5
3,577.0
Average US fuel price (US$ / gallon)
$
3.56
$
3.76
$
3.97
$
3.68
$
3.86
Payment processing $ of fuel (3)
$
13,061.0
$
13,814.3
$
14,945.1
$
13,779.8
$
14,144.4
Net payment processing rate (4)
1.31
%
1.26
%
1.18
%
1.25
%
1.21
%
Payment processing revenue
$
170.7
$
174.4
$
176.9
$
172.1
$
171.5
Net late fee rate (5)
0.46
%
0.50
%
0.44
%
0.48
%
0.50
%
Late fee revenue (6)
$
60.4
$
69.0
$
66.4
$
66.3
$
70.2
Corporate Payments:
Purchase volume (7)
$
23,947.9
$
22,800.8
$
27,860.1
$
22,901.3
$
18,634.7
Net interchange rate (8)
0.43
%
0.52
%
0.42
%
0.46
%
0.48
%
Payment solutions processing revenue
$
103.2
$
117.4
$
115.7
$
104.8
$
90.1
Benefits:
Purchase volume (9)
$
2,114.7
$
1,510.0
$
1,501.3
$
1,715.9
$
1,928.5
Average number of SaaS accounts (10)
20.3
19.9
19.9
19.5
20.3
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 March
31,
Increase (decrease)
Mobility
2024
2023
Amount
Percent
Revenues
Payment processing revenue
$
170.7
$
171.5
$
(0.8
)
—
%
Account servicing revenue
$
46.3
40.3
6.0
15
%
Finance fee revenue
$
70.0
80.4
(10.4
)
(13
)%
Other revenue
$
51.9
50.1
1.8
4
%
Total revenues
$
339.0
$
342.3
$
(3.3
)
(1
)%
Three months ended March
31,
Increase (decrease)
Corporate Payments
2024
2023
Amount
Percent
Revenues
Payment processing revenue
$
103.2
$
90.1
$
13.1
15
%
Account servicing revenue
10.0
10.6
(0.6
)
(6
)%
Finance fee revenue
0.2
0.2
—
—
%
Other revenue
9.2
3.9
5.3
136
%
Total revenues
$
122.5
$
104.8
$
17.7
17
%
Three months ended March
31,
Increase (decrease)
Benefits
2024
2023
Amount
Percent
Revenues
Payment processing revenue
$
28.1
$
26.5
$
1.6
6
%
Account servicing revenue
117.0
109.8
7.2
7
%
Finance fee revenue
0.1
0.1
—
—
%
Other revenue
46.0
28.5
17.5
61
%
Total revenues
$
191.2
$
164.9
$
26.3
16
%
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 March
31,
Three Months Ended March
31,
2024
2023
2024
2023
Mobility
$
131.0
$
138.8
38.6
%
40.5
%
Corporate Payments
64.6
49.2
52.7
%
46.9
%
Benefits
79.4
64.5
41.5
%
39.1
%
Total segment adjusted operating
income
$
274.9
$
252.5
42.1
%
41.3
%
(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 March
31,
2024
2023
Adjusted operating income
$
251.3
$
230.1
Adjusted operating income margin (1)
38.5
%
37.6
%
(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/20240424651144/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)
Historical Stock Chart
From Sep 2024 to Oct 2024
WEX (NYSE:WEX)
Historical Stock Chart
From Oct 2023 to Oct 2024