WEX acquires business line from ExxonMobil, raises financial guidance
File photo / Courtesy WEX
WEX Inc. is a global financial technology service provider headquartered in Portland.
WEX Inc. (NYSE: WEX), the Portland-based financial technology service provider, on Thursday announced it has acquired the Business Card portfolio of ExxonMobil Corp. (NYSE: XOM) and raised financial guidance amid higher-than-expected second-quarter results.
Terms of the transaction, WEX's first since purchasing Illinois-based benefitexpress for $275 million in June 2021, were not disclosed.
WEX said that total revenue for the second quarter of 2022 increased 30% to $598.2 million from $459.5 million for the second quarter of 2021. The revenue increase in the quarter includes a $64.2 million favorable impact from fuel prices and spreads and an $8.4 million negative impact from foreign exchange rates.
Adjusted net income attributable to shareholders, a non-GAAP measure, was $169.4 million, or $3.71 per diluted share, up 61% per diluted share from $104.9 million or $2.31 per diluted share for the same period last year. The future compares to a $3.42 per share consensus forecast of analysts polled by Zacks Investment Research.
Earnings were also above the Zacks consensus forecast, by 5.2%, and WEX has topped consensus revenue estimates four times over the last four quarters.
"I am pleased to report that in the second quarter, we once again delivered record revenue and adjusted net income per share, driven by strong volume trends across the Company and favorable fuel prices,” said WEX Chair and CEO Melissa Smith.
Among business segments, fleet solutions registered a 38% revenue increase over a year ago. Revenue for travel and corporate solutions was 23% higher and health and employee benefits was up 15%.
"Building on the momentum we had after the first quarter, we delivered a record-breaking second quarter in terms of both revenue and adjusted earnings by a wide margin,” said CFO Jagtar Narula. “I’m pleased to share that we are raising our full year guidance, while simultaneously making targeted investments in specific areas of strategic focus, including cross-sell, additional enhancements to our technology, product innovation including EV’s [electric vehicles] and process simplification.”
WEX bought back 520,000 of its shares at a cost of around $81 million.
Updated 2022 guidance
For the third quarter of 2022, WEX expects revenue in the range of $580 million to $590 million and adjusted net income in the range of $152 million to $156 million, or $3.35 to $3.45 per diluted share.
For the full year 2022, the company now expects revenue in the range of $2.25 billion to $2.28 billion, up from a previous projection of $2.155 billion to $2.195 billion.
Adjusted net income is now expected to be in the range of $592 million to $603 million, or $13.05 to $13.30 per diluted share, an increase from the previous projection of $569 million to $588 million, or $12.40 to $12.80 per diluted share.
Third-quarter and full-year 2022 guidance is based on an assumed average U.S. retail fuel prices of $4.50 and $4.36 per gallon, respectively.
"I believe we are well positioned as we continue to expand and diversify our offerings that businesses rely upon," Smith said. "We are also making targeted investments, which we believe will further solidify our market leadership position, accelerate our strategy, and enhance our speed to market.”
ExxonMobil deal rationale
WEX said the deal announced Thursday is contingent upon certain conditions and subject to closing. Upon completion, all of ExxonMobil’s commercial card portfolio will be consolidated and administered by WEX, the Portland-based company said.
The business supports a private-label, revolving credit card offering which can be used at over 12,000 Exxon and Mobil fueling locations within the United States, plus acceptance in Canada.
WEX noted that the simple interface is designed for small business customers who typically fuel at the same stations close to where they are based.
"The consolidation of the Exxon Mobil Business Card into our Exxon Mobil BusinessPro program with WEX will provide a simplified commercial card offer for prospective customers,” said Austin Johansen, fleet marketing manager at ExxonMobil. “WEX has been a valued partner for ExxonMobil, delivering excellent service and offerings to fleets and small businesses.”
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