WEX beats analysts' projections in Q1 earnings
WEX Inc. (NYSE: WEX) beat analysts’ projections in reporting its total revenue for the first quarter of 2015 increased 11% to $202.3 million from $182.1 million for the first quarter of 2014.
On a non-GAAP basis, the South Portland-based company said Wednesday that its adjusted net income for the first quarter of 2015 increased 3% to $42.9 million, or $1.10 per diluted share, from $41.6 million, or $1.06 per diluted share, for the same period a year ago. MarketWatch’s consensus of 13 analysts had anticipated earnings would be 11 cents lower. Net income to common shareholders on a GAAP basis was $22.3 million, or $0.57 per diluted share, compared with $36.5 million, or $0.93 per diluted share, for the first quarter last year.
In a telephone interview prior to a morning conference call with investors, WEX President and CEO Melissa Smith told Mainebiz the company’s revenue growth would have been even higher if not for the continuing impact of lower fuel prices on its fleet card revenues. The company’s earnings statement for the three months ended March 31 reported that U.S. retail fuel prices decreased 29% to $2.57 per gallon from $3.64 per gallon in the first quarter of 2014. Smith said the company’s first quarter revenue would have increased by 26%, rather than 11%, if fuel prices had remained at $3.64 per gallon.
“It clearly had an impact on our business,” Smith said, noting that while hedging has helped the company minimize the impact of lower fuel prices on its revenues, the bigger picture is that the company’s diversification into travel and health payments has greatly reduced its exposure to fuel price volatility. The fleet card portion of the business has decreased from 70% to less than 40%, she said, which diversifies risk by adding new streams of revenue.
"I am pleased with the growth we demonstrated across our geographies and verticals this quarter, despite the backdrop of ongoing fuel price headwinds," she said in the release accompanying the earnings report. "We delivered top and bottom line results that exceeded our expectations driven by broad-based growth and continued execution against our strategic priorities. Our continued momentum following a strong fiscal 2014 speaks to the strength of our market position and our ability to grow the business organically, and to compound that through acquisitions."
Looking ahead, Smith said WEX intends to “enhance its competitive position within existing verticals, further globalize the business, and strategically invest in areas that have contributed to our solid performance and have the potential to drive even higher growth in years to come."
She pointed to the company’s pilot project called Mobile Payment Gateway Enabler, which received an innovation award this week from InformationWeek for being a “best new technology product,” as one example of the company’s efforts to remain a leader in the fleet card and payment solutions business sectors. The technology works with the latest smartphones and electronic wallet technology to give fleet managers better security and improved management of fuel card purchases.
“The work we’re doing on the innovation front is being recognized,” Smith said. “We feel pretty good about that.”
For the second quarter of 2015, WEX expects revenue in the range of $211 million to $220 million and adjusted net income in the range of $46 million to $49 million, or $1.18 to $1.26 per diluted share. For the full year 2015, the company expects revenue in the range of $867 million to $897 million and adjusted net income in the range of $192 million to $204 million, or $4.92 to $5.22 per diluted share.
Second quarter 2015 guidance is based on an assumed average U.S. retail fuel price of $2.77 per gallon, and approximately 39 million shares outstanding. Full-year 2015 guidance is based on an assumed average U.S. retail fuel price of $2.71 per gallon and approximately 39 million shares outstanding. The fuel prices referenced above are based on the applicable NYMEX futures price.
In late-morning trading, WEX shares were up 2.12%, to $115.59.
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