Fuel price, foreign exchange volatility temper WEX's earnings
WEX Inc. (NYSE: WEX) on Monday reported a 16% increase in total revenue for the fourth quarter of 2014 compared to the same period in 2013, which enabled the company to end the year with $817.6 million in total revenue, up 14% from $717.5 million in 2013.
The South Portland-based company reported total revenue of $211.9 million for the quarter that ended Dec. 31, compared to $182.3 million for the fourth quarter of 2013. Net income to common shareholders on a generally accepted accounting principles (GAAP) basis was $47.9 million, or $1.23 per diluted share, compared with $34.5 million, or $0.88 per diluted share, for the fourth quarter of 2013.
For the full year, net income to common shareholders on a GAAP basis was $5.18 per diluted share compared to $3.82 per diluted share in 2013.
On a non-GAAP basis, the company’s adjusted net income for the fourth quarter of 2014 decreased 18% to $37.2 million, or $0.96 per diluted share, from $45.7 million, or $1.17 per diluted share, for the same period a year ago.
In a telephone interview prior to this morning’s conference call with investors, WEX President and CEO Melissa Smith told Mainebiz the company’s fourth quarter decrease in non-GAAP adjusted net income was due to the recent volatility of fuel prices and the impact of a non-operating pre-tax expense of $8.1 million related to a net foreign exchange loss.
Smith said the foreign exchange rate market has been “abnormally volatile” in recent months. “We are in the process of making changes in the amount of our exposure,” she said, noting that the company is reducing its foreign currency holdings to minimize the impact going forward of wide fluctuations in the foreign currency exchange markets.
On the plus side, she said the company’s purchase of ExxonMobil’s European commercial fuel card program and its $532.5 million cash acquisition of Evolution1, both completed in 2014, put the company in a strong position for solid growth in 2015.
“In 2014, we made significant progress against our strategic objectives to accelerate our growth, make targeted investments and drive scale across the organization,” she said. “In particular, we made transformative investments including the purchase of ExxonMobil's European commercial fuel card program as well as our entry into the health-care payments market through our acquisition of Evolution1. These important investments have greatly expanded our addressable market and positioned WEX for future growth.”
Smith said the company ended 2014 with a “strong operational performance” from the fleet card, travel, health care and corporate payment segments of its business, both nationally and internationally.
“Despite the foreign exchange and fuel price headwinds we experienced this quarter, the underlying fundamentals of our business remain very strong and we look to carry this momentum forward into 2015,” she said.
In the forward-looking statements of its earnings report, WEX Senior Vice President and Chief Financial Officer Steve Elder projected the company’s revenue in the first quarter of 2015 to be in the range of $192 million to $201 million — with adjusted net income in the range of $37 million to $40 million, or 94 cents to $1.02 per diluted share.
For the full year, the company expects revenue in the range of $860 million to $890 million and adjusted net income to be in the range of $191 million to $203 million, or $4.90 to $5.20 per diluted share.
WEX’s stock was trading at $98.85 at 11 a.m. Monday, after opening at $96.92 per share.
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