WEX Inc. Reports Fourth Quarter and Full Year 2020 Financial Results
WEX Inc. (NYSE: WEX), a leading financial technology service provider, today reported financial results for the three months and year ended December 31, 2020.
Fourth Quarter and Full Year 2020 Financial Results
Total revenue for the fourth quarter of 2020 decreased 9% to $399.0 million from $440.0 million for the fourth quarter of 2019. The $41.1 million decrease in the quarter includes a $16.8 million negative impact from lower average fuel prices and foreign exchange rates.
Net income attributable to shareholders on a GAAP basis for the fourth quarter decreased by $288.6 million to a net loss of $(234.2) million, or $(5.30) per diluted share, due primarily to two nonrecurring charges, compared to net income of $54.4 million, or $1.24 per diluted share for the same period a year ago. The Company's adjusted net income attributable to shareholders, which is a non-GAAP measure, was $64.8 million for the fourth quarter of 2020, or $1.45 per diluted share, down 45% from $114.7 million, or $2.61 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.
For the full year 2020, revenue decreased 10% to $1.56 billion from $1.72 billion in 2019. Net income attributable to shareholders on a GAAP basis was a net loss of $5.56 per diluted share in 2020 compared to income of $2.26 per diluted share in 2019. On a non-GAAP basis, adjusted net income per diluted share decreased 34% to $6.06 from $9.20 in 2019.
“This year proved to be a year like no other as the world faced a number of challenges. Nevertheless, WEX remained resilient as we continued to advance our strategic objectives. The fourth quarter played out better than expected and we began to see some encouraging trends as customer demand slowly returned despite renewed lockdowns across many parts of the world. Our over-the road, corporate payments and U.S. health businesses remained bright spots, each posting another quarter of top-line growth,” said Melissa Smith, WEX’s Chair and Chief Executive Officer. “We also closed the eNett and Optal transactions at the end of 2020, which increases our flexibility and opportunities going forward. While the travel market will be volatile in the short term, it remains an area of long term opportunity for WEX.”
Ms. Smith continued, “Our solid execution in 2020 underpins the strength and diversification of WEX’s business model. We continued to innovate and advance our products, reflected by the significant number of contract signings and renewals, as well as the achievement of running approximately two thirds of our volume in the cloud. Advancements like this, combined with our customer-centric focus, will continue to differentiate WEX in the marketplace going forward. While the pace of recovery will vary, the anticipated return of volumes from existing customers coupled with new customer additions positions us well to succeed post-pandemic. These factors, bolstered by our continued strategic investments, give me confidence that our next chapter of growth will be our best.”
Fourth Quarter 2020 Performance Metrics
Average number of vehicles serviced was 15.8 million, an increase of 6% from the fourth quarter of 2019. Total fuel transactions processed decreased 5% from the fourth quarter of 2019 to 147.7 million. Payment processing transactions decreased 7% to 118.3 million. U.S. retail fuel price decreased to $2.26 per gallon from $2.80 per gallon in the fourth quarter of 2019. Travel and Corporate Solutions' purchase volume decreased 48% to $5.0 billion from $9.6 billion for the fourth quarter of 2019. Health and Employee Benefit Solutions' average number of Software-as-a-Service (SaaS) accounts in the U.S. grew 8% to 14.5 million from 13.4 million for the fourth quarter of 2019.“While fourth quarter and full year results continued to be impacted by the pandemic, we were encouraged by continued sequential improvement across much of the business. As in prior quarters, we successfully executed against our strategic pillars, drove efficiencies, invested in high-growth areas, maintained high retention rates, and signed new business across all segments,” said Roberto Simon, WEX’s Chief Financial Officer. “We are proud of the resilience WEX demonstrated in 2020, and believe we are well positioned to capture future growth as the economy continues to improve.”
Cost Actions and Liquidity Update
In response to COVID-19 uncertainty, the Company implemented a number of actions to reduce capital and operating expenditures, adjust cost structure and preserve financial flexibility and a strong liquidity position. The total operating expense savings resulting from these actions were in excess of $65 million for the year, compared to our original guidance. The Company believes WEX’s balance sheet and liquidity position remain strong. Year end leverage was 3.7x compared to 3.5x for last year.
Financial Guidance
On May 7, 2020, the Company withdrew all previously-issued full fiscal year 2020 financial guidance due to COVID-19. Given the continued uncertainty related to COVID-19, the Company is not providing any further financial guidance at this time. WEX continues to carefully monitor the pandemic and the impact on its business; however, given the uncertainty regarding the pandemic's spread, duration, and impact, the Company is currently unable to predict the precise extent to which the COVID-19 pandemic will impact its future operations and financial results.
Additional Information
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 1, reconciliations of non-GAAP measures referenced in this news release, in Exhibit 2, a table illustrating the impact of foreign currency rates and fuel prices for each of our reportable segments for the three and twelve months ended December 31, 2020 and 2019, and in Exhibit 3, a table of selected non-financial metrics for the quarter ended December 31, 2020 and four preceding quarters. The Company is also providing segment revenue for the three and twelve months ended December 31, 2020 and 2019 in Exhibit 4 and information regarding segment adjusted operating income margin and adjusted operating income margin in Exhibit 5.
Conference Call Details
In conjunction with this announcement, WEX will host a conference call today, February 24, 2021, 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 833-714-0940 or 778-560-2809. The Conference ID number is 1981477 and the passcode is 17620339. 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 financial technology service provider 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 5,200 associates around the world. WEX fleet cards offer 15.8 million vehicles exceptional payment security and control; purchase volume in travel and corporate solutions was $20.9 billion in 2020; and the WEX Health financial technology platform helps 408,000 employers and 33.1 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: assumptions underlying the Company's future financial performance, future operations; future growth opportunities and expectations; expectations for future revenue performance, future impacts from areas of investment, expectations for the macro environment; and, expectations for volumes. 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 extent to which the coronavirus (COVID-19) pandemic and measures taken in response thereto impact our business, results of operations and financial condition in excess of current expectations; 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, including the impact of any continued reductions in fuel price and the resulting impact on our revenues and net income; changes or limitations on interchange fees; failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; 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 failure to complete or successfully integrate the Company’s acquisitions or the ability to realize anticipated synergies and cost savings from such transactions; unexpected costs, charges or expenses resulting from an acquisition, specifically including the recent eNett and Optal acquisitions; the Company’s failure 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 our 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; legal, regulatory, political and economic uncertainty surrounding the United Kingdom’s departure from the European Union and the resulting trade agreement; the impact of the future transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company’s presently 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 impact of sales or dispositions of significant amounts of our outstanding common stock into the public market, or the perception that such sales or dispositions could occur; the possible dilution to our stockholders caused by the issuance of additional shares of common stock or equity-linked securities, as result of our convertible notes or otherwise; 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, 2019, filed on Form 10-K with the Securities and Exchange Commission on February 28, 2020 and Item 1A of our quarterly reports for the quarters ended June 30, 2020 and September 30, 2020, filed on Forms 10-Q with the Securities and Exchange Commission on August 5, 2020 and November 9, 2020, respectively. 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended December 31,
Year ended December 31,
2020
2019
2020
2019
Revenues
Payment processing revenue
$
176,316
$
199,212
$
698,891
$
825,592
Account servicing revenue
113,720
110,369
449,456
413,552
Finance fee revenue
53,578
71,651
198,523
247,318
Other revenue
55,376
58,813
212,999
237,229
Total revenues
398,990
440,045
1,559,869
1,723,691
Cost of services
Processing costs
111,889
111,543
419,041
400,439
Service fees
12,954
13,679
47,289
57,027
Provision for credit losses
11,592
18,194
78,443
65,664
Operating interest
3,659
10,150
23,810
41,915
Depreciation and amortization
28,477
26,519
104,592
94,725
Total cost of services
168,571
180,085
673,175
659,770
General and administrative
94,677
69,732
292,109
275,807
Sales and marketing
78,566
49,230
266,684
259,869
Depreciation and amortization
38,427
37,140
157,334
142,404
Legal settlement
162,500
—
162,500
—
Impairment charges
53,378
—
53,378
—
Loss on sale of subsidiary
—
—
46,362
—
Operating (loss) income
(197,129
)
103,858
(91,673
)
385,841
Financing interest expense
(55,267
)
(33,378
)
(157,080
)
(134,677
)
Net foreign currency gain (loss)
6,190
12,822
(25,783
)
(926
)
Net unrealized gains (losses) on financial instruments
5,079
4,424
(27,036
)
(34,654
)
Non-cash adjustments related to tax receivable agreement
491
932
491
932
(Loss) income before income taxes
(240,636
)
88,658
(301,081
)
216,516
Income tax (benefit) provision
(16,745
)
23,871
(20,597
)
61,223
Net (loss) income
(223,891
)
64,787
(280,484
)
155,293
Less: Net income (loss) from non-controlling interests
184
(797
)
3,466
(1,030
)
Net (loss) income attributable to WEX Inc.
(224,075
)
65,584
(283,950
)
156,323
Change in value of redeemable non-controlling interest
(10,125
)
(11,138
)
40,312
(57,317
)
Net (loss) income attributable to shareholders
$
(234,200
)
$
54,446
$
(243,638
)
$
99,006
Net (loss) income attributable to shareholders per share:
Basic
$
(5.30
)
$
1.26
$
(5.56
)
$
2.29
Diluted
$
(5.30
)
$
1.24
$
(5.56
)
$
2.26
Weighted average common shares outstanding:
Basic
44,210
43,367
43,842
43,316
Diluted
44,210
43,931
43,842
43,769
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31,
2020
2019
Assets
Cash and cash equivalents
$
852,033
$
810,932
Restricted cash
477,620
170,449
Accounts receivable
1,993,329
2,661,108
Securitized accounts receivable, restricted
93,236
112,192
Prepaid expenses and other current assets
86,629
87,694
Total current assets
3,502,847
3,842,375
Property, equipment and capitalized software
188,340
212,475
Goodwill and other intangible assets
4,240,150
4,016,251
Investment securities
37,273
30,460
Deferred income taxes, net
17,524
12,833
Other assets
197,227
184,024
Total assets
$
8,183,361
$
8,298,418
Liabilities and Stockholders’ Equity
Accounts payable
$
778,207
$
969,816
Accrued expenses
362,472
315,642
Restricted cash payable
477,620
170,449
Short-term deposits
911,395
1,310,813
Short-term debt, net
152,730
248,531
Other current liabilities
58,429
34,692
Total current liabilities
2,740,853
3,049,943
Long-term debt, net
2,874,113
2,686,513
Long-term deposits
148,591
143,399
Deferred income taxes, net
220,122
218,740
Other liabilities
164,546
106,422
Total liabilities
6,148,225
6,205,017
Commitments and contingencies
Redeemable non-controlling interest
117,219
156,879
Stockholders’ Equity
Total WEX Inc. stockholders' equity
1,904,895
1,926,947
Non-controlling interest
13,022
9,575
Total stockholders’ equity
1,917,917
1,936,522
Total liabilities and stockholders’ equity
$
8,183,361
$
8,298,418
Exhibit 1
Reconciliation of Non - GAAP Measures
Reconciliation of GAAP Net (Loss) Income Attributable to Shareholders to Adjusted Net Income Attributable to Shareholders
(in thousands, except per share data)
(unaudited)
Three Months Ended December 31,
2020
2019
per diluted share
per diluted share
Net (loss) income attributable to shareholders
$
(234,200
)
$
(5.30
)
$
54,446
$
1.24
Unrealized (gains) losses on financial instruments
(5,079
)
(0.11
)
(4,424
)
(0.10
)
Net foreign currency (gain) loss
(6,190
)
(0.14
)
(12,822
)
(0.29
)
Acquisition-related intangible amortization
43,297
0.98
42,929
0.98
Other acquisition and divestiture related items
21,782
0.49
12,971
0.30
Legal settlement
162,500
3.68
—
—
Stock-based compensation
20,782
0.47
12,555
0.29
Restructuring and other costs
5,575
0.13
12,192
0.28
Impairment charge
53,378
1.21
—
—
Debt restructuring and debt issuance cost amortization
30,074
0.68
2,804
0.06
Non-cash adjustments related to tax receivable agreement
(491
)
(0.01
)
(932
)
(0.02
)
ANI adjustments attributable to non-controlling interest
9,191
0.21
9,161
0.21
Tax related items
(35,788
)
(0.81
)
(14,158
)
(0.32
)
Dilutive impact of stock awards1
—
(0.03
)
—
—
Adjusted net income attributable to shareholders
$
64,831
$
1.45
$
114,722
$
2.61
Year Ended December 31,
2020
2019
per diluted share
per diluted share
Net (loss) income attributable to shareholders
$
(243,638
)
$
(5.56
)
$
99,006
$
2.26
Unrealized losses (gains) on financial instruments
27,036
0.62
34,654
0.79
Net foreign currency loss
25,783
0.59
926
0.02
Acquisition-related intangible amortization
171,144
3.90
159,431
3.64
Other acquisition and divestiture related items
57,787
1.32
37,675
0.86
Legal settlement
162,500
3.71
—
—
Stock-based compensation
65,841
1.50
47,511
1.09
Restructuring and other costs
13,555
0.31
25,106
0.57
Loss on sale of subsidiary
46,362
1.06
—
—
Impairment charge
53,378
1.22
—
—
Debt restructuring and debt issuance cost amortization
40,063
0.91
21,004
0.48
Non-cash adjustments related to tax receivable agreement
(491
)
(0.01
)
(932
)
(0.02
)
ANI adjustments attributable to non-controlling interests
(42,910
)
(0.98
)
53,035
1.21
Tax related items
(108,086
)
(2.47
)
(74,743
)
(1.71
)
Dilutive impact of stock awards1
—
(0.06
)
—
—
Adjusted net income attributable to shareholders
$
268,324
$
6.06
$
402,673
$
9.20
1 As the Company reported net losses for the fourth quarter of 2020 and year ended December 31, 2020, the diluted weighted average shares outstanding equal the basic weighted average shares outstanding for those periods under U.S. Generally Accepted Accounting Principles ("GAAP"). The non-GAAP adjustments described above resulted in adjusted net income attributable to shareholders (versus a loss on a GAAP basis) for the fourth quarter of 2020 and the year ended December 31, 2020. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding to arrive at adjusted per share data.
Reconciliation of GAAP Operating Income to Total Segment Adjusted Operating Income and Adjusted Operating Income
(in thousands)
(unaudited)
Three Months Ended December 31,
Year Ended December 31,
2020
2019
2020
2019
Operating income
$
(197,129
)
$
103,858
$
(91,673
)
$
385,841
Unallocated corporate expenses
17,625
15,847
62,938
67,982
Acquisition-related intangible amortization
43,297
42,929
171,144
159,431
Other acquisition and divestiture related items
26,680
12,971
57,787
37,675
Legal settlement
162,500
—
162,500
—
Loss on sale of subsidiary
—
—
46,362
—
Stock-based compensation
20,782
12,555
65,841
47,511
Restructuring and other costs
5,575
12,192
13,555
25,106
Debt restructuring costs
10
422
535
11,062
Impairment charge
53,378
—
53,378
—
Total segment adjusted operating income
$
132,718
$
200,774
$
542,367
$
734,608
Unallocated corporate expenses
(17,625
)
(15,847
)
(62,938
)
(67,982
)
Adjusted operating income
$
115,093
$
184,927
$
479,429
$
666,626
The Company's non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, acquisition-related intangible amortization, other acquisition and divestiture related items, legal settlement, stock-based compensation, restructuring and other costs, loss on sale of subsidiary, impairment charges, debt restructuring and debt issuance cost amortization, non-cash adjustments related to the tax receivable agreement, similar adjustments attributable to our non-controlling interests and certain tax related items.
The Company's non-GAAP adjusted operating income excludes acquisition-related intangible amortization, other acquisition and divestiture related items, legal settlement, loss on sale of subsidiary, stock-based compensation, restructuring and other costs, debt restructuring costs and impairment charges. Total segment adjusted operating income incorporates these same adjustments and further excludes unallocated corporate expenses.
Although adjusted net income, adjusted operating income and total segment adjusted operating income are not calculated in accordance with GAAP, these non-GAAP measures are 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 these measures integral because they exclude 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:
For the same reasons, WEX believes that adjusted net income, adjusted operating income and total segment adjusted operating income may also be useful to investors when evaluating the Company's performance. However, because adjusted net income, adjusted operating income and total segment adjusted operating income are non-GAAP measures, they 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, adjusted operating income and total segment adjusted operating income as used by WEX may not be comparable to similarly titled measures employed by other companies.
Exhibit 2 below shows the impact of certain macro factors on reported Revenue and Net Income:
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 December 31,
2020
2019
2020
2019
2020
2019
2020
2019
Reported revenue
$
235,379
$
260,773
$
74,690
$
95,700
$
88,921
$
83,572
$
398,990
$
440,045
FX impact (favorable) / unfavorable
$
(2,269
)
$
—
$
151
$
—
$
—
$
—
$
(2,118
)
$
—
PPG impact (favorable) / unfavorable
$
18,896
$
—
$
—
$
—
$
—
$
—
$
18,896
$
—
Year ended December 31,
2020
2019
2020
2019
2020
2019
2020
2019
Reported revenue
$
918,310
$
1,038,395
$
277,840
$
367,826
$
363,719
$
317,470
$
1,559,869
$
1,723,691
FX impact (favorable) / unfavorable
$
(600
)
$
—
$
752
$
—
$
1,622
$
—
$
1,774
$
—
PPG impact (favorable) / unfavorable
$
61,423
$
—
$
—
$
—
$
—
$
—
$
61,423
$
—
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, exclusive of revenue derived from 2019 acquisitions for one year following the acquisition dates.
To determine the impact of price per gallon of fuel (“PPG”) on revenue, revenue subject 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, exclusive of revenue derived from 2019 acquisitions for one year following the acquisition dates. For the portions of our business that earn revenue based on margin spreads, revenue was calculated utilizing the comparable margin from the prior year.
Segment Estimated Earnings Impact
(in thousands)
(unaudited)
Fleet Solutions
Travel and Corporate Solutions
Health and Employee Benefit
Solutions
Three months ended December 31,
2020
2019
2020
2019
2020
2019
FX impact (favorable) / unfavorable
$
(880
)
$
—
$
326
$
—
$
—
$
—
PPG impact (favorable) / unfavorable
$
12,507
$
—
$
—
$
—
$
—
$
—
Year ended December 31,
2020
2019
2020
2019
2020
2019
FX impact (favorable) / unfavorable
$
(528
)
$
—
$
(5,538
)
$
—
$
(304
)
$
—
PPG impact (favorable) / unfavorable
$
38,957
$
—
$
—
$
—
$
—
$
—
To determine the estimated earnings impact of FX on 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, amounts were translated using the weighted average exchange rates for the same period in the prior year, net of tax, exclusive of revenue and expenses derived from 2019 acquisitions for one year following the acquisition dates.
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, exclusive of revenue and expenses derived from 2019 acquisitions for one year following the acquisition dates. 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 interests and applicable taxes.
Exhibit 3
Selected Non-Financial Metrics
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Fleet Solutions:
Payment processing transactions (000s) (1)
118,287
120,900
103,086
121,591
126,666
Payment processing gallons of fuel (000s) (2)
3,265,927
3,247,507
2,830,265
3,123,066
3,218,466
Average US fuel price (US$ / gallon)
$
2.26
$
2.23
$
2.07
$
2.57
$
2.80
Payment processing $ of fuel (000s) (3)
$
7,767,530
$
7,609,098
$
6,135,265
$
8,412,642
$
9,417,278
Net payment processing rate (4)
1.27
%
1.35
%
1.47
%
1.35
%
1.10
%
Payment processing revenue (000s)
$
98,954
$
102,419
$
90,147
$
113,323
$
103,831
Net late fee rate (5)
0.54
%
0.48
%
0.57
%
0.56
%
0.65
%
Late fee revenue (000s) (6)
$
41,901
$
36,232
$
35,071
$
46,740
$
61,587
Travel and Corporate Solutions:
Purchase volume (000s) (7)
$
4,968,321
$
4,699,737
$
3,168,064
$
8,041,112
$
9,635,211
Net interchange rate (8)
1.26
%
1.13
%
1.37
%
0.87
%
0.84
%
Payment solutions processing revenue (000s)
$
62,376
$
53,239
$
43,261
$
70,268
$
80,986
Health and Employee Benefit Solutions:
Purchase volume (000s) (9)
$
1,074,977
$
1,120,786
$
1,017,318
$
1,592,313
$
1,047,939
Average number of SaaS accounts (000s) (10)
14,502
14,599
14,487
14,458
13,391
Definitions and explanations:
(1) Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with WEX.
(2) Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with WEX.
(3) Payment processing dollars of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with WEX.
(4) 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.
(5) Net late fee rate represents late fee revenue as a percentage of fuel purchased by fleets that have a payment processing relationship with WEX.
(6) Late fee revenue represents fees charged for payments not made within the terms of the customer agreement based upon the outstanding customer receivable balance.
(7) Purchase volume represents the total dollar value of all WEX issued transactions that use WEX corporate card products and virtual card products.
(8) 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.
(9) Purchase volume represents the total US dollar value of all transactions where interchange is earned by WEX.
(10) Average number of Health and Employee Benefit Solutions accounts represents the number of active Consumer Directed Health, COBRA, and billing accounts on our SaaS platforms in the United States.
Exhibit 4
Segment Revenue Information
(in thousands)
(unaudited)
Three months ended
December 31,
Increase (decrease)
Year ended
December 31,
Increase (decrease)
Fleet Solutions
2020
2019
Amount
Percent
2020
2019
Amount
Percent
Payment processing revenue
$
98,955
$
103,831
$
(4,876
)
(5
)%
$
404,843
$
457,244
$
(52,401
)
(11
)%
Account servicing revenue
38,571
41,953
(3,382
)
(8
)%
153,823
164,735
(10,912
)
(7
)%
Finance fee revenue
53,373
71,015
(17,642
)
(25
)%
197,307
245,082
(47,775
)
(19
)%
Other revenue
44,480
43,974
506
1
%
162,337
171,334
(8,997
)
(5
)%
Total revenues
$
235,379
$
260,773
$
(25,394
)
(10
)%
$
918,310
$
1,038,395
$
(120,085
)
(12
)%
Three months ended
December 31,
Increase (decrease)
Year ended
December 31,
Increase (decrease)
Travel and Corporate Solutions
2020
2019
Amount
Percent
2020
2019
Amount
Percent
Payment processing revenue
$
62,376
$
80,986
$
(18,610
)
(23
)%
$
229,144
$
303,385
$
(74,241
)
(24
)%
Account servicing revenue
10,717
11,274
(557
)
(5
)%
41,927
43,293
(1,366
)
(3
)%
Finance fee revenue
179
588
(409
)
(70
)%
1,079
2,086
(1,007
)
(48
)%
Other revenue
1,418
2,852
(1,434
)
(50
)%
5,690
19,062
(13,372
)
(70
)%
Total revenues
$
74,690
$
95,700
$
(21,010
)
(22
)%
$
277,840
$
367,826
$
(89,986
)
(24
)%
Three months ended
December 31,
Increase (decrease)
Year ended
December 31,
Increase (decrease)
Health and Employee Benefit Solutions
2020
2019
Amount
Percent
2020
2019
Amount
Percent
Payment processing revenue
$
14,985
$
14,395
$
590
4
%
$
64,904
$
64,963
$
(59
)
—
%
Account servicing revenue
64,432
57,142
7,290
13
%
253,706
205,524
48,182
23
%
Finance fee revenue
26
48
(22
)
(46
)%
137
150
(13
)
(9
)%
Other revenue
9,478
11,987
(2,509
)
(21
)%
44,972
46,833
(1,861
)
(4
)%
Total revenues
$
88,921
$
83,572
$
5,349
6
%
$
363,719
$
317,470
$
46,249
15
%
Exhibit 5
Segment Adjusted Operating Income and Adjusted Operating Income Margin Information
(in thousands)
(unaudited)
Segment Adjusted Operating Income
Segment Adjusted Operating Income Margin(1)
Three Months Ended December 31,
Three Months Ended December 31,
2020
2019
2020
2019
Fleet Solutions
$
99,438
$
136,639
42.2
%
52.4
%
Travel and Corporate Solutions
$
15,036
$
46,205
20.1
%
48.3
%
Health and Employee Benefit Solutions
$
18,244
$
17,930
20.5
%
21.5
%
Total segment adjusted operating income
$
132,718
$
200,774
33.3
%
45.6
%
Segment Adjusted Operating Income
Segment Adjusted Operating Income Margin(1)
Year Ended December 31,
Year Ended December 31,
2020
2019
2020
2019
Fleet Solutions
$
383,502
$
485,539
41.8
%
46.8
%
Travel and Corporate Solutions
$
62,096
$
168,786
22.3
%
45.9
%
Health and Employee Benefit Solutions
$
96,769
$
80,283
26.6
%
25.3
%
Total segment adjusted operating income
$
542,367
$
734,608
34.8
%
42.6
%
(1) Segment adjusted operating income margin is derived by dividing segment adjusted operating income by the revenue of the corresponding segment (or the entire Company in the case of total segment adjusted operating income). See Exhibit 1 for a reconciliation of GAAP operating income to total segment adjusted operating income.
Three Months Ended December 31,
Year Ended December 31,
2020
2019
2020
2019
Adjusted operating income
$
115,093
$
184,927
$
479,429
$
666,626
Adjusted operating income margin (1)
28.8
%
42.0
%
30.7
%
38.7
%
(1) Adjusted operating income margin is derived by dividing adjusted operating income by total revenue. See Exhibit 1 for a reconciliation of GAAP operating income to adjusted operating income.
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