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April 16, 2020

WEX cuts jobs as COVID-19 impact hurts demand

Three weeks after deciding to limit hiring to "business-critical positions," Portland-based global payments company WEX Inc. (NYSE: WEX) is trimming its workforce.

In Maine, it's cutting 45 positions and putting 90 people on temporary furlough as part of a plan to trim its U.S. workforce by 2% and put another 3% on temporary furlough.

Out of 5,000 employees worldwide, 1,500 are in Maine.

"Like many organizations, we have been closely monitoring the impact of COVID-19 around the world, and how our partners have modified their businesses in response," said Melanie Tinto, WEX chief human resources, in an emailed statement.  "As a result, we have had to make some difficult decisions on how we adapt certain areas of our company for the near term."

She added that the workforce cutback reflects the impact some of WEX's customers and partners are experiencing along with a decline in demand for services, which in turn has affected WEX's business.

A spokesman for the company told Mainebiz that the eliminations and furloughs were made across a variety of positions, without giving any further details.

In late morning trading, shares of WEX were down 3.62%, to $104.80, putting its market capitalization at around $4.69 billion. The Dow Jones Industrial Average was down 91.43 points, or 0.39%.

The company, led by Chair and CEO Melissa Smith, did some test days with employees before going to remote operations last month. Tinto told Mainebiz in a March 24 interview that the transition went very smoothly amid the fintech company's "pretty strong" technology.

Side-by-side photos of Melissa Smith and Melanie Tinto of Wex.
Photos / Tim Greenway and Courtesy / WEX
WEX Chair and CEO Melissa Smith, left, and Chief Human Resources Officer Melanie Tinto.

In its latest financial guidance issued March 3, WEX said it expects first-quarter 2020 revenue to be around 2% to 3% lower than its earlier projection, assuming that trends in February continue in March.

The company also said that while its U.S. health and corporate payments divisions are performing better than expected, travel and, to a lesser extent, shipping activity and fuel prices are being affected negatively by the coronavirus. 

But WEX noted that the impact on second-quarter and fiscal 2020 results cannot yet be reasonably estimated given the magnitude, duration and global reach of the pandemic. In February, WEX posted greater-than-expected earnings with an upbeat outlook on growing market share. 

WEX typically releases first-quarter results in late April or early May, setting a date about two weeks in advance.

No events are currently listed on its online calendar.

Employee benefits for workers let go

On Wednesday, Tinto said that workers whose positions have been eliminated will receive severance, job assistance, and an additional allowance to cover their health care for about six month, and that U.S. workers who are furloughed will be eligible for unemployment.

For those enrolled in WEX benefits, the company will continue to pay benefit premiums, which includes medical, dental,vision and life insurance during the time they are furloughed, Tinto said.

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