WEX
$191.50
Wex
$1.12
.59%
Earnings Details
2nd Quarter June 2018
Thursday, August 2, 2018 6:30:00 AM
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Summary

Wex Beats

Wex (WEX) reported 2nd Quarter June 2018 earnings of $2.12 per share on revenue of $370.9 million. The consensus earnings estimate was $2.05 per share on revenue of $363.0 million. The Earnings Whisper number was $2.08 per share. Revenue grew 22.0% on a year-over-year basis.

The company said it expects third quarter earnings of $2.03 to $2.13 per share on revenue of $363.0 million to $373.0 million. The current consensus earnings estimate is $2.16 per share on revenue of $377.4 million for the quarter ending September 30, 2018. The company said it expects 2018 earnings of $7.90 to $8.15 per share on revenue of $1.445 billion to $1.475 billion. The company's previous guidance was earnings of $7.75 to $8.15 per share on revenue of $1.435 billion to $1.475 billion and the current consensus earnings estimate is $8.05 per share on revenue of $1.46 billion for the year ending December 31, 2018.

WEX Inc is a provider of corporate payment solutions. It also provides funding mechanism, among other services.

Results
Reported Earnings
$2.12
Earnings Whisper
$2.08
Consensus Estimate
$2.05
Reported Revenue
$370.9 Mil
Revenue Estimate
$363.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

WEX Inc. Reports Second Quarter 2018 Financial Results

Total Revenue for the Quarter Increased 22%

SOUTH PORTLAND, Maine--(BUSINESS WIRE)-- WEX Inc. (NYSE: WEX), a leading provider of corporate payment solutions, today reported financial results for the three months ended June 30, 2018.

Second Quarter 2018 Financial Results

Total revenue for the second quarter of 2018 increased 22% to $370.9 million from $303.9 million for the second quarter of 2017. Of the $67 million increase in the quarter, only $16.6 million was the result of higher fuel prices.

Net income attributable to shareholders on a GAAP basis increased by $22.2 million to $39.3 million, or $0.90 per diluted share, compared with $17.1 million, or $0.40 per diluted share, for the second quarter of 2017. The Company's adjusted net income attributable to shareholders, which is a non-GAAP measure, was $90.8 million for the second quarter of 2018, or $2.09 per diluted share, up 66% per diluted share from $54.2 million or $1.26 per diluted share for the same period last year. See Exhibit 1 for a full explanation and reconciliation of adjusted net income attributable to shareholders and adjusted net income attributable to shareholders per diluted share to the comparable GAAP measures.

“I am pleased to report another strong quarter and a successful first half of the year, highlighted by top and bottom line results above our guidance range with strong contributions from each of our business segments” said Melissa Smith, WEX’s president and chief executive officer. “We remain focused on our sustained ability to leverage our talent and technology to bring compelling business-to-business products to market, which is allowing us to continue to sign new customers, retain and grow our current base and ultimately drive profitable growth.

Smith continued, “In the first half, we built on our performance from last year, with our employees across the world focused on bringing future-based solutions across many B2B markets through the use of technology and capitalizing on our organic growth opportunities. We are also pleased to report some significant contract wins during the quarter, notably the Shell portfolio, one of the most recognized brands in the industry, further indicating that WEX is the trusted partner of choice. We look forward to carrying this momentum through the second half of 2018 and beyond.”

Second Quarter 2018 Performance Metrics

  • Average number of vehicles serviced was approximately 11.8 million, an increase of 8% from the second quarter of 2017.
  • Total fuel transactions processed increased 7% from the second quarter of 2017 to 139.2 million. Payment processing transactions increased 7% to 115.9 million.
  • U.S. retail fuel price increased 25% to $3.02 per gallon from $2.41 per gallon in the second quarter of 2017.
  • Travel and Corporate Solutions purchase volume grew 16% to $8.9 billion, from $7.7 billion in the second quarter of 2017.
  • Health and Employee Benefit Solutions average number of Software-as-a-Service (SaaS) accounts in the U.S. grew 20% to 10.7 million from 8.9 million in the second quarter of 2017.

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 an indeterminate amount of certain elements that are included in reported GAAP earnings.

  • For the full year 2018, the Company expects revenue in the range of $1.445 billion to $1.475 billion and adjusted net income in the range of $344 million to $355 million, or $7.90 to $8.15 per diluted share. Our assumptions for the full-year include an additional $0.10 per diluted share in costs from the Shell integration.
  • For the third quarter of 2018, WEX expects revenue in the range of $363 million to $373 million and adjusted net income in the range of $88 million to $93 million, or $2.03 to $2.13 per diluted share.

"We are excited to deliver another quarter of impressive growth and build upon the first-quarter's momentum. We expect to sustain this robust level of performance through the balance of the year, allowing us to invest in the Shell implementation and absorb changes in foreign exchange rates" said Roberto Simon, WEX's chief financial officer.

Third quarter 2018 guidance is based on an assumed average U.S. retail fuel price of $2.90 per gallon. Full year 2018 guidance is based on an assumed average U.S. retail fuel price of $2.84 per gallon. The fuel prices referenced above are based on the applicable NYMEX futures price. Our guidance assumes approximately 43.5 million shares outstanding for the third quarter and full year 2018.

The Company's guidance also assumes that third quarter 2018 fleet credit loss will range from 11 to 16 basis points and full year will range from 11 to 16 basis points.

The Company's adjusted net income guidance, which is a non-GAAP measure, excludes unrealized gains and losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition related intangible amortization, other acquisition and divestiture related items, stock-based compensation, restructuring and other costs, debt restructuring and debt issuance cost amortization, similar adjustments attributable to our non-controlling interest and certain tax related items. 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 derivative instruments and acquisition and divestiture related items, which may have a significant impact on our financial results.

Additional Information

As previously disclosed, beginning in the first quarter of 2018, the Company has modified the presentation of certain line items in its unaudited condensed consolidated statements of income. Under the new presentation, the Company segregates costs of services from other operating expenses and has reclassified its operating expenses into functional categories in order to provide additional detail into the underlying drivers of changes in operating expenses and align its presentation with industry practice. There are no changes to the presentation of revenues, non-operating expenses or other statement of income captions. Additionally, the revised presentation does not result in a change to previously reported revenues, operating income, income before income taxes or net income. Amounts from the prior period have been recast to reflect the new presentation.

Management uses the non-GAAP measures presented within this news 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 news release in Exhibit 2, a table illustrating the impact of foreign currency translations and fuel prices for each of our reportable segments for the three and six months ended June 30, 2018 and 2017, and in Exhibit 3, a table of selected non-financial metrics for the quarter ended June 30, 2018 and four preceding quarters. The Company is also providing selected segment revenue information for the three and six months ended June 30, 2018 and 2017 in Exhibit 4.

Conference Call Details

In conjunction with this announcement, WEX will host a conference call today, August 2, 2018, at 9:00 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 (866) 334-7066 or (973) 935-8463. The Conference ID number is 2183139. A replay of the webcast and the accompanying slides will be available on the Company's website.

About WEX

Powered by the belief that complex payment systems can be made simple, WEX (NYSE: WEX) is a leading provider of payment processing and business solutions across a wide spectrum of sectors, including fleet, travel and healthcare. WEX operates in more than 10 countries and in more than 20 currencies through more than 3,300 associates around the world. WEX fleet cards offer approximately 12 million vehicles exceptional payment security and control; purchase volume in Travel and Corporate Solutions Segment grew to $8.9 billion; and the WEX Health financial technology platform helps 300,000 employers and more than 25 million consumers better manage healthcare expenses. For more information, visit www.wexinc.com.

Forward-Looking Statements

This earnings release contains forward-looking statements, including statements regarding: financial guidance; assumptions underlying the Company's financial guidance; future growth opportunities; expectations for customer signings; profitability; technology advances; and, market expansion. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this earnings release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including: the effects of general economic conditions on fueling patterns as well as payment and transaction processing activity; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of fluctuations in fuel prices; the effects of the Company’s business expansion and acquisition efforts; potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition; competitive responses to any acquisitions; uncertainty of the expected financial performance of the combined operations following completion of an acquisition; the ability to successfully integrate the Company's acquisitions; the ability to realize anticipated synergies and cost savings; unexpected costs, charges or expenses resulting from an acquisition; the Company's ability to successfully acquire, integrate, operate and expand commercial fuel card programs; the failure of corporate investments to result in anticipated strategic value; the impact and size of credit losses; the impact of changes to the Company's credit standards; breaches of the Company’s technology systems or those of our third-party service providers and any resulting negative impact on the Company's reputation, liabilities or relationships with customers or merchants; the Company’s failure to maintain or renew key commercial agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; failure to successfully implement the Company's information technology strategies and capabilities in connection with its technology outsourcing and insourcing arrangements and any resulting cost associated with that failure; the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or affiliates; the impact of the Company’s outstanding notes on its operations; the impact of increased leverage on the Company's operations, results or borrowing capacity generally, and as a result of acquisitions specifically; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes; the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our Annual Report for the year ended December 31, 2017, filed on Form 10-K with the Securities and Exchange Commission on March 1, 2018. The Company's forward-looking statements do not reflect the potential future impact of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date 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 INCOME
(in thousands, except per share data)
(unaudited)
   
Three months ended June 30, Six months ended June 30,
2018   2017 2018   2017
Revenues
Payment processing revenue $ 178,738 $ 141,354 $ 347,192 $ 277,732
Account servicing revenue 78,716 65,677 157,420 127,216
Finance fee revenue 51,573 42,085 101,255 85,457

Other revenue

  61,849   54,768   119,838   104,836  
Total revenues 370,876 303,884 725,705 595,241
Cost of services
Processing costs 76,306 69,233 155,928 133,563
Service fees 13,809 20,177 26,029 37,755
Provision for credit losses 11,505 16,082 25,495 28,313
Operating interest 9,528 4,619 18,013 9,512
Depreciation and amortization   20,612   18,376   41,045   35,760  
Total cost of services 131,760 128,487 266,510 244,903
General and administrative 48,488 40,073 103,921 82,250
Sales and marketing 57,697 39,983 114,238 80,141
Depreciation and amortization 30,020 31,585 59,763 63,439
Impairment charge     16,175     16,175  
Operating income 102,911 47,581 181,273 108,333
Financing interest expense (25,505 ) (28,547 ) (52,842 ) (55,695 )
Net foreign currency (loss) gain (26,734 ) 10,525 (26,344 ) 18,967
Net unrealized gain (loss) on financial instruments   2,706   (2,264 ) 16,214   (699 )
Income before income taxes 53,378 27,295 118,301 70,906
Income taxes   13,938   10,655   29,527   25,190  
Net income 39,440 16,640 88,774 45,716
Less: Net income (loss) from non-controlling interest   142   (450 ) 843   (775 )
Net income attributable to shareholders   $ 39,298   $ 17,090   $ 87,931   $ 46,491  
 
Net income attributable to WEX Inc. per share:
Basic $ 0.91 $ 0.40 $ 2.04 $ 1.08
Diluted $ 0.90 $ 0.40 $ 2.02 $ 1.08
Weighted average common shares outstanding:
Basic 43,181 43,002 43,116 42,937
Diluted 43,546 43,060 43,524 43,090
 

 
WEX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
   

June 30,
2018

December 31,
2017

Assets
Cash and cash equivalents $ 310,784 $ 508,072
Restricted cash 25,009 18,866
Accounts receivable (net of allowances of $30,247 in 2018 and $30,207 in 2017) 3,087,354 2,517,980
Securitized accounts receivable, restricted 168,274 150,235
Prepaid expenses and other current assets   79,838   69,413  
Total current assets 3,671,259 3,264,566
Property, equipment and capitalized software (net of accumulated depreciation of $292,111 in 2018 and $264,928 in 2017) 161,708 163,908
Goodwill and other intangible assets (net of accumulated amortization of $456,537 in 2018 and $392,827 in 2017) 2,946,905 3,030,179
Investment securities 22,970 23,358
Deferred income taxes, net 6,410 7,752
Other assets   142,725   253,088  
Total assets   $ 6,951,977   $ 6,742,851  
Liabilities and Stockholders’ Equity
Accounts payable $ 1,015,226 $ 811,362
Accrued expenses 304,346 315,346
Short-term deposits 828,243 986,989
Short-term debt, net 379,538 397,218
Other current liabilities   21,959   24,795  
Total current liabilities 2,549,312 2,535,710
Long-term debt, net 2,125,109 2,027,752
Long-term deposits 326,303 306,865
Deferred income taxes, net 130,266 119,283
Other liabilities   28,991   32,683  
Total liabilities 5,159,981 5,022,293
Commitments and contingencies
Stockholders’ Equity
Common Stock $0.01 par value; 175,000 shares authorized; 47,514 shares issued in 2018 and 47,352 in 2017; 43,086 shares outstanding in 2018 and 43,022 in 2017 475 473
Additional paid-in capital 574,818 569,319
Retained earnings 1,493,255 1,404,683
Accumulated other comprehensive loss (114,079 ) (90,795 )
Treasury stock at cost; 4,428 shares in 2018 and 2017   (172,342 ) (172,342 )
Total WEX Inc. stockholders’ equity 1,782,127 1,711,338
Non-controlling interest   9,869   9,220  
Total stockholders’ equity   1,791,996   1,720,558  
Total liabilities and stockholders’ equity   $ 6,951,977   $ 6,742,851  
 

 
Exhibit 1

Reconciliation of GAAP Net Income Attributable to Shareholders to Adjusted Net Income Attributable to Shareholders

(in thousands, except per share data)
(unaudited)
 
Three Months Ended June 30,
2018   2017
        per diluted share    

per diluted
share

Net income attributable to shareholders $ 39,298 $ 0.90 $ 17,090 $ 0.40
Unrealized (gains) losses on financial instruments (2,706 ) (0.06 ) 2,264 0.05
Net foreign currency remeasurement losses (gains) 26,734 0.61 (10,525 ) (0.24 )
Acquisition–related intangible amortization 34,921 0.80 38,114 0.89
Other acquisition and divestiture related items 619 0.01 239 0.01
Stock–based compensation 6,905 0.16 7,414 0.17
Restructuring and other costs 630 0.01 2,398 0.06
Impairment charge 16,175 0.38
Debt issuance cost amortization 2,607 0.06 2,209 0.05
ANI adjustments attributable to non–controlling interest (186 ) (156 )
Tax related items   (17,990 ) (0.41 ) (21,022 ) (0.49 )
Adjusted net income attributable to shareholders   $ 90,832   $ 2.09   $ 54,200   $ 1.26  
 
Six Months Ended June 30,
2018 2017
      per diluted share  

per diluted
share

Net income attributable to shareholders $ 87,931 $ 2.02 $ 46,491 $ 1.08
Unrealized (gains) losses on financial instruments (16,214 ) (0.37 ) 699 0.02
Net foreign currency remeasurement losses (gains) 26,344 0.61 (18,967 ) (0.44 )
Acquisition–related intangible amortization 70,157 1.61 76,093 1.77
Other acquisition and divestiture related items 1,256 0.03 2,374 0.06
Stock–based compensation 15,860 0.36 13,871 0.32
Restructuring and other costs 6,301 0.14 4,145 0.10
Impairment charge 16,175 0.38
Debt restructuring and debt issuance cost amortization 9,299 0.21 4,163 0.10
ANI adjustments attributable to non–controlling interest (538 ) (0.01 ) (955 ) (0.02 )
Tax related items   (30,883 ) (0.71 ) (37,001 ) (0.86 )
Adjusted net income attributable to shareholders   $ 169,513   $ 3.89   $ 107,088   $ 2.49  
 

The Company's non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, restructuring and other costs, an impairment charge, debt restructuring and debt issuance cost amortization, similar adjustments attributable to our non-controlling interest and certain tax related items.

Although adjusted net income is not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), this non-GAAP measure is integral to the Company's reporting and planning processes and the chief operating decision maker of the Company uses segment adjusted operating income to allocate resources among our operating segments. The Company considers this measure integral because it excludes the above-specified items that the Company's management excludes in evaluating the Company's performance. Specifically, in addition to evaluating the Company's performance on a GAAP basis, management evaluates the Company's performance on a basis that excludes the above items because:

  • 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.
  • Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, receivable and payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on foreign currency 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 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 prior periods not reflected above, the Company has adjusted for goodwill impairments, acquisition-related asset impairments and gains and losses on divestitures. 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 of 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.
  • Restructuring and other costs are related to certain identified initiatives to further streamline the business, improve the Company's efficiency, create synergies and to globalize the Company's operations, all with an objective to improve scale and increase profitability going forward. We exclude these items when evaluating our continuing business performance as such items 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.
  • Impairment charge represents a non-cash asset write-off related to our strategic decision to in-source certain technology functions. This charge does not reflect recurring costs that would be relevant to the Company's continuing operations. The Company believes that excluding this nonrecurring expense 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 adjustments attributable to non-controlling interest have no significant impact on the ongoing operations of the business.
  • The tax related items are the difference between the Company’s U.S. GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes as well as the impact from certain discrete tax items. The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s U.S. GAAP tax provision.

For the same reasons, WEX believes that adjusted net income may also be useful to investors as one means of evaluating the Company's performance. However, because adjusted net income is a non-GAAP measure, it 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 as used by WEX may not be comparable to similarly titled measures employed by other companies.

The table below shows the impact of certain macro factors on reported revenue:

 
Exhibit 2
Segment Revenue Results
(in thousands)
(unaudited)
  Fleet Solutions  

Travel and Corporate
Solutions

 

Health and Employee
Benefit Solutions

  Total WEX Inc.
Three months ended June 30,
2018   2017 2018   2017 2018   2017 2018   2017
Reported revenue $ 241,470 $ 200,304 $ 75,764 $ 55,000 $ 53,642 $ 48,580 $ 370,876 $ 303,884
FX impact (favorable) / unfavorable (1,125 ) (1,020 ) 586 (1,559 )
PPG impact (favorable) / unfavorable (16,591 )           (16,591 )
Six months ended June 30,
2018 2017 2018 2017 2018 2017 2018 2017
Reported revenue $ 471,835 $ 391,127 $ 142,543 $ 102,713 $ 111,327 $ 101,401 $ 725,705 $ 595,241
FX impact (favorable) / unfavorable (4,100 ) (2,452 ) 804 (5,748 )
PPG impact (favorable) / unfavorable (25,559 )           (25,559 )
 

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.

To determine the impact of price per gallon of fuel (“PPG”) on revenue, revenue variable 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. 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:

 
Segment Estimated Earnings Impact
(in thousands)
(unaudited)
  Fleet Solutions  

Travel and Corporate
Solutions

 

Health and Employee
Benefit Solutions

Three months ended June 30,
2018   2017 2018   2017 2018   2017
FX impact (favorable) / unfavorable $ 83 $ $ (700 ) $ $ 130 $
PPG impact (favorable) / unfavorable (11,241 )
                     
Six months ended June 30,
2018 2017 2018 2017 2018 2017
FX impact (favorable) / unfavorable $ (671 ) $ $ (1,461 ) $ $ 194 $
PPG impact (favorable) / unfavorable (17,396 )
 

To determine the estimated earnings impact of FX, 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, were translated using the weighted average exchange rates for the same period in the prior year, net of tax.

To determine the estimated earnings 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. 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 interest and applicable taxes.

 
Exhibit 3

Selected Non-Financial Metrics1

(unaudited)
  Q2 2018   Q1 2018   Q4 2017   Q3 2017   Q2 2017
Fleet Solutions:
Payment processing transactions (000s) 115,919 109,827 108,767 110,047 108,134
Payment processing gallons of fuel (000s) 3,012,912 2,877,303 2,877,971 2,905,700 2,907,875
Average US fuel price (US$ / gallon) $ 3.02 $ 2.78 $ 2.68 $ 2.51 $ 2.41
Payment processing $ of fuel (000s) $ 9,497,050 $ 8,438,143 $ 8,199,619 $ 7,688,750 $ 7,399,901
Net payment processing rate 1.19 % 1.27 % 1.18 % 1.17 % 1.18 %
Payment processing revenue (000s) $ 112,895 $ 106,978 $ 95,948 $ 90,270 $ 87,678
Net late fee rate 0.38 % 0.41 % 0.44 % 0.42 % 0.39 %
Late fee revenue (000s) $ 35,831 $ 34,657 $ 35,510 $ 32,077 $ 28,713
Travel and Corporate Solutions:
Purchase volume (000s) $ 8,930,421 $ 7,940,543 $ 7,405,045 $ 8,662,533 $ 7,676,935
Net interchange rate 0.57 % 0.56 % 0.53 % 0.51 % 0.52 %
Payment solutions processing revenue (000s) $ 51,289 $ 44,777 $ 39,332 $ 44,177 $ 40,276
Health and Employee Benefit Solutions:
Purchase volume (000s) $1,253,309 $ 1,503,400 $ 887,511 $ 955,652 $ 1,126,854
Average number of SaaS accounts (000s) 10,745 10,826 9,774 9,566 8,934
 
1The Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("Topic 606") as of January 1, 2018, utilizing the modified retrospective method of transition. Impacted non-financial metrics have been updated prospectively.
 

Definitions and explanations:

Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with WEX.

Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with WEX.

Payment processing dollars of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with WEX.

Net payment processing rate prior to January 1, 2018 represents the percentage of the dollar value of each payment processing transaction that WEX records as revenue from merchants, less any discounts given to fleets or strategic relationships. With the adoption of Topic 606, effective January 1, 2018, net payment processing 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.

Net late fee rate represents late fee revenue as a percentage of fuel purchased by fleets that have a payment processing relationship with WEX.

Late fee revenue represents fees charged for payments not made within the terms of the customer agreement based upon the outstanding customer receivable balance.

Purchase volume in the Travel and Corporate Solutions segment represents the total dollar value of all WEX issued transactions that use WEX corporate card products and virtual card products.

Net interchange rate prior to January 1, 2018 represents the percentage of the dollar value of each transaction that WEX records as revenue, less any discounts given to customers or strategic relationships. With the adoption of Topic 606, effective January 1, 2018, 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.

Purchase volume in the Health and Employee Benefit Solutions segment represents the total US dollar value of all transactions where interchange is earned by WEX.

Average number of Health and Employee Benefit Solutions accounts represents the number of active Consumer Directed Health, COBRA, and billing accounts on our SaaS platform in the United States.

 
Exhibit 4
Segment Revenue Information
(in thousands)
(unaudited)
 

Three months ended
June 30,

  Increase (decrease)  

Six months ended
June 30,

  Increase (decrease)
Fleet Solutions   2018   2017 Amount   Percent 2018   2017 Amount   Percent
Revenues
Payment processing revenue $ 112,895 $ 87,678 $ 25,217 29 % $ 219,873 $ 173,940 $ 45,933 26 %
Account servicing revenue 43,019 41,311 1,708 4 % 85,229 77,380 7,849 10 %
Finance fee revenue 45,188 36,552 8,636 24 % 88,792 72,981 15,811 22 %
Other revenue   40,368   34,763   5,605   16 % 77,941   66,826   11,115   17 %
Total revenues   $ 241,470   $ 200,304   $ 41,166   21 % $ 471,835   $ 391,127   $ 80,708   21 %
       

Three months ended
June 30,

Increase (decrease)

Six months ended
June 30,

Increase (decrease)
Travel and Corporate Solutions   2018   2017 Amount   Percent 2018   2017 Amount   Percent
Revenues
Payment processing revenue $ 51,289 $ 40,276 $ 11,013 27 % $ 96,066 $ 75,151 $ 20,915 28 %
Account servicing revenue 8,995 167 8,828

NM

18,464 322 18,142 NM
Finance fee revenue 228 159 69 43 % 487 382 105 27 %
Other revenue   15,252   14,398   854   6 % 27,526   26,858   668   2 %
Total revenues   $ 75,764   $ 55,000   $ 20,764   38 % $ 142,543   $ 102,713   $ 39,830   39 %

NM - Not meaningful

 

Three months ended
June 30,

 

Increase (decrease)

 

Six months ended
June 30,

  Increase (decrease)

Health and Employee Benefit
Solutions

  2018   2017 Amount   Percent 2018   2017 Amount   Percent
Revenues
Payment processing revenue $ 14,554 $ 13,400 $ 1,154 9 % $ 31,253 $ 28,641 $ 2,612 9 %
Account servicing revenue 26,702 24,199 2,503 10 % 53,727 49,514 4,213 9 %
Finance fee revenue 6,157 5,374 783 15 % 11,976 12,094 (118 ) (1 )%
Other revenue   6,229   5,607   622   11 % 14,371   11,152   3,219   29 %
Total revenues   $ 53,642   $ 48,580   $ 5,062   10 % $ 111,327   $ 101,401   $ 9,926   10 %

News media:
WEX Inc.
Jessica Roy, 207-523-6763
Jessica.Roy@wexinc.com
or
Investor:
WEX Inc.
Steve Elder, 207-523-7769
Steve.Elder@wexinc.com

Source: WEX Inc.