WEX Inc. Reports Fourth Quarter and Full Year 2021 Financial Results
WEX reported a strong financial performance for Q4 and the full year of 2021. Total revenue rose 25% year-over-year to $497.5 million, driven by higher fuel prices. The GAAP net loss narrowed to $11.8 million from $234.2 million a year earlier. Adjusted net income soared 78% to $116.8 million, or $2.58 per diluted share. For 2021, total revenue increased 19% to $1.85 billion, with adjusted earnings per share climbing 51% to $9.14. Looking forward, WEX targets Q1 2022 revenue of $495-$505 million and full-year revenue of $2.05-$2.09 billion.
- Q4 2021 revenue increased 25% to $497.5 million.
- Adjusted net income was $116.8 million, up 78% year-over-year.
- 2021 total revenue of $1.85 billion exceeded 2019 pre-pandemic levels by $125 million.
- Purchase volume grew 79% year-over-year to $25 billion in Q4.
- GAAP net loss in Q4 2021 was $11.8 million.
- Accounting change reduced revenue presentation from gross to net by approximately $52 million in 2021.
Fourth Quarter and Full Year 2021 Financial Results
Total revenue for the fourth quarter of 2021 increased
On a GAAP basis, net loss attributable to shareholders for the fourth quarter of 2021 was
For the full year 2021, revenue increased
“Overall, 2021 was one of the best years in our history, with record revenue and near record adjusted net income per share. We continued to win new customers and expand our relationships with existing partners across the WEX ecosystem, a testament to our compelling suite of solutions, which are underpinned by global scale and reliability, customer-focused innovation, and specialized focus with rich data,” said
“We entered 2022 with significant momentum, underscored by strong sales and a robust open enrollment season in our health business that exceeded our expectations. At our Investor Day in March, I look forward to introducing two new members of the team,
Fourth Quarter 2021 Performance Metrics
-
Total purchase volume across all segments increased
79% year over year to$25 billion -
Payment processing transactions increased
12% to 132.9 million. -
Total fuel transactions processed increased
9% from the fourth quarter of 2020 to 161.7 million. -
Average number of vehicles serviced was 16.9 million, an increase of
7% from the fourth quarter of 2020. -
Average
U.S. retail fuel price increased to$3.42 $2.26 -
Health and
Employee Benefit Solutions' average number of Software-as-a-Service (SaaS) accounts in theU.S. grew12% to 16.2 million from 14.5 million for the fourth quarter of 2020. -
Travel and Corporate Solutions' purchase volume grew
120% to$10.9 billion $5.0 billion
“Both fourth quarter and full year 2021 results exceeded our expectations. Full year revenue was a record high, exceeding 2019 pre-pandemic levels by more than
Financial Guidance
The Company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis, due to the uncertainty and the indeterminate amount of certain elements that are included in reported GAAP earnings.
-
For the first quarter of 2022, the Company expects revenue in the range of
$495 million $505 million $117 million $122 million $2.55 $2.65 -
For the full year 2022, the Company expects revenue in the range of
$2.05 billion $2.09 billion $517 million $536 million $11.20 $11.60
As previously disclosed in our 3Q 2021 earnings release, a contract change for one customer beginning in the fourth quarter of 2021 moved revenue presentation from gross to net with no impact to operating income. In the first three quarters of 2021, revenue would have been approximately
The Company's adjusted net income guidance, which is a non-GAAP measure, excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, changes in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture related items, legal settlement, stock-based compensation, other costs, gains and losses on divestitures, impairment charges, debt restructuring and debt issuance cost amortization, similar adjustments attributable to our non-controlling interests 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 financial instruments, acquisition and divestiture related items and adjustments to the redemption value of a non-controlling interest, which may have a significant impact on our financial results.
Additional Information
Management uses the non-GAAP measures presented within this earnings 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 earnings release in Exhibit 1, reconciliations of non-GAAP measures referenced in this earnings release; in Exhibit 2, tables illustrating the impact of foreign currency rates and fuel prices for each of our reportable segments for the three and twelve months ended
Conference Call Details
In conjunction with this announcement, WEX will host a conference call today,
About WEX
WEX (NYSE: WEX) is a leading financial technology service provider. We provide payment solutions to businesses of all sizes across a wide spectrum of sectors, including fleet, corporate payments, travel and health. WEX has offices in 14 countries and employs approximately 5,600 people around the world. Learn more at LinkedIn, Facebook, Instagram, Twitter, and our corporate blog. 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,” “will” 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 the Company’s employees, business, results of operations and financial condition in excess of current expectations, particularly with respect to demand for worldwide travel; the impact of fluctuations in fuel prices and fuel spreads in the Company’s international markets, including the resulting impact on the Company’s revenues and net income; the failure to maintain or renew key customer and partner agreements and relationships, or to maintain volumes under such agreements; breaches of, or other issues with, the Company’s technology systems or those of its third-party service providers and any resulting negative impact on its reputation, liabilities or relationships with customers or merchants; 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 failure to comply with the applicable requirements of MasterCard or
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) |
|||||||||||||||
|
Three months ended |
|
Year ended |
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Revenues |
|
|
|
|
|
|
|
||||||||
Payment processing revenue |
$ |
231,049 |
|
|
$ |
176,316 |
|
|
$ |
858,990 |
|
|
$ |
698,891 |
|
Account servicing revenue |
|
137,514 |
|
|
|
113,720 |
|
|
|
526,858 |
|
|
|
449,456 |
|
Finance fee revenue |
|
75,902 |
|
|
|
53,578 |
|
|
|
255,323 |
|
|
|
198,523 |
|
Other revenue |
|
53,073 |
|
|
|
55,376 |
|
|
|
209,371 |
|
|
|
212,999 |
|
Total revenues |
|
497,538 |
|
|
|
398,990 |
|
|
|
1,850,542 |
|
|
|
1,559,869 |
|
Cost of services |
|
|
|
|
|
|
|
||||||||
Processing costs |
|
135,693 |
|
|
|
111,889 |
|
|
|
482,870 |
|
|
|
419,041 |
|
Service fees |
|
13,653 |
|
|
|
12,954 |
|
|
|
52,804 |
|
|
|
47,289 |
|
Provision for credit losses |
|
12,966 |
|
|
|
11,592 |
|
|
|
45,114 |
|
|
|
78,443 |
|
Operating interest |
|
2,138 |
|
|
|
3,659 |
|
|
|
9,157 |
|
|
|
23,810 |
|
Depreciation and amortization |
|
28,293 |
|
|
|
28,477 |
|
|
|
112,164 |
|
|
|
104,592 |
|
Total cost of services |
|
192,743 |
|
|
|
168,571 |
|
|
|
702,109 |
|
|
|
673,175 |
|
General and administrative |
|
81,418 |
|
|
|
94,677 |
|
|
|
326,878 |
|
|
|
292,109 |
|
Sales and marketing |
|
72,901 |
|
|
|
78,566 |
|
|
|
319,078 |
|
|
|
266,684 |
|
Depreciation and amortization |
|
42,117 |
|
|
|
38,427 |
|
|
|
160,477 |
|
|
|
157,334 |
|
Legal settlement |
|
— |
|
|
|
162,500 |
|
|
|
— |
|
|
|
162,500 |
|
Impairment charges |
|
— |
|
|
|
53,378 |
|
|
|
— |
|
|
|
53,378 |
|
Loss on sale of subsidiary |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
46,362 |
|
Operating income (loss) |
|
108,359 |
|
|
|
(197,129 |
) |
|
|
342,000 |
|
|
|
(91,673 |
) |
Financing interest expense |
|
(30,172 |
) |
|
|
(55,267 |
) |
|
|
(128,422 |
) |
|
|
(157,080 |
) |
Net foreign currency (loss) gain |
|
(964 |
) |
|
|
6,190 |
|
|
|
(12,339 |
) |
|
|
(25,783 |
) |
Change in fair value of contingent consideration |
|
4,800 |
|
|
|
— |
|
|
|
(40,100 |
) |
|
|
— |
|
Other income |
|
— |
|
|
|
491 |
|
|
|
3,617 |
|
|
|
491 |
|
Net unrealized gains (losses) on financial instruments |
|
19,720 |
|
|
|
5,079 |
|
|
|
39,190 |
|
|
|
(27,036 |
) |
Income (loss) before income taxes |
|
101,743 |
|
|
|
(240,636 |
) |
|
|
203,946 |
|
|
|
(301,081 |
) |
Income tax provision (benefit) |
|
50,883 |
|
|
|
(16,745 |
) |
|
|
67,807 |
|
|
|
(20,597 |
) |
Net income (loss) |
|
50,860 |
|
|
|
(223,891 |
) |
|
|
136,139 |
|
|
|
(280,484 |
) |
Less: Net (loss) income from non-controlling interests |
|
(253 |
) |
|
|
184 |
|
|
|
846 |
|
|
|
3,466 |
|
Net income (loss) attributable to |
|
51,113 |
|
|
|
(224,075 |
) |
|
|
135,293 |
|
|
|
(283,950 |
) |
Change in value of redeemable non-controlling interest |
|
(62,873 |
) |
|
|
(10,125 |
) |
|
|
(135,156 |
) |
|
|
40,312 |
|
Net (loss) income attributable to shareholders |
$ |
(11,760 |
) |
|
$ |
(234,200 |
) |
|
$ |
137 |
|
|
$ |
(243,638 |
) |
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to shareholders per share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(0.26 |
) |
|
$ |
(5.30 |
) |
|
$ |
— |
|
|
$ |
(5.56 |
) |
Diluted |
$ |
(0.26 |
) |
|
$ |
(5.30 |
) |
|
$ |
— |
|
|
$ |
(5.56 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
44,880 |
|
|
|
44,210 |
|
|
|
44,718 |
|
|
|
43,842 |
|
Diluted |
|
44,880 |
|
|
|
44,210 |
|
|
|
45,312 |
|
|
|
43,842 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) |
|||||
|
|
||||
|
2021 |
|
2020 |
||
Assets |
|
|
|
||
Cash and cash equivalents |
$ |
588,923 |
|
$ |
852,033 |
Restricted cash |
|
667,915 |
|
|
477,620 |
Accounts receivable |
|
2,891,242 |
|
|
1,993,329 |
Investment securities |
|
948,677 |
|
|
— |
Securitized accounts receivable, restricted |
|
125,186 |
|
|
93,236 |
Prepaid expenses and other current assets |
|
77,569 |
|
|
86,629 |
Total current assets |
|
5,299,512 |
|
|
3,502,847 |
Property, equipment and capitalized software |
|
179,531 |
|
|
188,340 |
|
|
4,551,353 |
|
|
4,240,150 |
Investment securities |
|
39,650 |
|
|
37,273 |
Deferred income taxes, net |
|
5,635 |
|
|
17,524 |
Other assets |
|
231,147 |
|
|
197,227 |
Total assets |
$ |
10,306,828 |
|
$ |
8,183,361 |
Liabilities and Stockholders’ Equity |
|
|
|
||
Accounts payable |
$ |
1,021,911 |
|
$ |
778,207 |
Accrued expenses |
|
476,971 |
|
|
362,472 |
Restricted cash payable |
|
668,014 |
|
|
477,620 |
Short-term deposits |
|
2,026,420 |
|
|
911,395 |
Short-term debt, net |
|
155,769 |
|
|
152,730 |
Other current liabilities |
|
50,614 |
|
|
58,429 |
Total current liabilities |
|
4,399,699 |
|
|
2,740,853 |
Long-term debt, net |
|
2,695,365 |
|
|
2,874,113 |
Long-term deposits |
|
652,214 |
|
|
148,591 |
Deferred income taxes, net |
|
192,965 |
|
|
220,122 |
Other liabilities |
|
273,706 |
|
|
164,546 |
Total liabilities |
|
8,213,949 |
|
|
6,148,225 |
|
|
|
|
||
Redeemable non-controlling interest |
|
254,106 |
|
|
117,219 |
Stockholders’ Equity |
|
|
|
||
|
|
1,838,773 |
|
|
1,904,895 |
Non-controlling interest |
|
— |
|
|
13,022 |
Total stockholders’ equity |
|
1,838,773 |
|
|
1,917,917 |
Total liabilities and stockholders’ equity |
$ |
10,306,828 |
|
$ |
8,183,361 |
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 |
||||||||||||||
|
2021 |
|
2020 |
||||||||||||
|
|
|
per diluted share |
|
|
|
per diluted share |
||||||||
Net (loss) income attributable to shareholders |
$ |
(11,760 |
) |
|
$ |
(0.26 |
) |
|
$ |
(234,200 |
) |
|
$ |
(5.30 |
) |
Unrealized gains on financial instruments |
|
(19,720 |
) |
|
|
(0.44 |
) |
|
|
(5,079 |
) |
|
|
(0.11 |
) |
Net foreign currency loss (gain) |
|
964 |
|
|
|
0.02 |
|
|
|
(6,190 |
) |
|
|
(0.14 |
) |
Acquisition-related intangible amortization |
|
46,981 |
|
|
|
1.05 |
|
|
|
43,297 |
|
|
|
0.98 |
|
Other acquisition and divestiture related items |
|
8,035 |
|
|
|
0.18 |
|
|
|
21,782 |
|
|
|
0.49 |
|
Legal settlement |
|
— |
|
|
|
— |
|
|
|
162,500 |
|
|
|
3.68 |
|
Stock-based compensation |
|
13,779 |
|
|
|
0.31 |
|
|
|
20,782 |
|
|
|
0.47 |
|
Other costs |
|
7,518 |
|
|
|
0.17 |
|
|
|
5,084 |
|
|
|
0.12 |
|
Impairment charge |
|
— |
|
|
|
— |
|
|
|
53,378 |
|
|
|
1.21 |
|
Debt restructuring and debt issuance cost amortization |
|
2,336 |
|
|
|
0.05 |
|
|
|
30,074 |
|
|
|
0.68 |
|
Change in fair value of contingent consideration |
|
(4,800 |
) |
|
|
(0.11 |
) |
|
|
— |
|
|
|
— |
|
ANI adjustments attributable to non-controlling interest |
|
62,176 |
|
|
|
1.39 |
|
|
|
9,191 |
|
|
|
0.21 |
|
Tax related items |
|
11,264 |
|
|
|
0.25 |
|
|
|
(35,788 |
) |
|
|
(0.81 |
) |
Dilutive impact of stock awards1 |
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
|
|
(0.03 |
) |
Adjusted net income attributable to shareholders |
$ |
116,773 |
|
|
$ |
2.58 |
|
|
$ |
64,831 |
|
|
$ |
1.45 |
|
|
Year Ended |
||||||||||||||
|
2021 |
|
2020 |
||||||||||||
|
|
|
per diluted share |
|
|
|
per diluted share |
||||||||
Net income (loss) attributable to shareholders |
$ |
137 |
|
|
$ |
— |
|
|
$ |
(243,638 |
) |
|
$ |
(5.56 |
) |
Unrealized (gains) losses on financial instruments |
|
(39,190 |
) |
|
|
(0.86 |
) |
|
|
27,036 |
|
|
|
0.62 |
|
Net foreign currency loss |
|
12,339 |
|
|
|
0.27 |
|
|
|
25,783 |
|
|
|
0.59 |
|
Acquisition-related intangible amortization |
|
181,694 |
|
|
|
4.01 |
|
|
|
171,144 |
|
|
|
3.90 |
|
Other acquisition and divestiture related items |
|
36,916 |
|
|
|
0.81 |
|
|
|
57,787 |
|
|
|
1.32 |
|
Legal settlement |
|
— |
|
|
|
— |
|
|
|
162,500 |
|
|
|
3.71 |
|
Stock-based compensation |
|
76,550 |
|
|
|
1.70 |
|
|
|
65,841 |
|
|
|
1.50 |
|
Other costs |
|
23,171 |
|
|
|
0.52 |
|
|
|
13,064 |
|
|
|
0.30 |
|
Loss on sale of subsidiary |
|
— |
|
|
|
— |
|
|
|
46,362 |
|
|
|
1.06 |
|
Impairment charge |
|
— |
|
|
|
— |
|
|
|
53,378 |
|
|
|
1.22 |
|
Debt restructuring and debt issuance cost amortization |
|
21,768 |
|
|
|
0.48 |
|
|
|
40,063 |
|
|
|
0.91 |
|
Change in fair value of contingent consideration |
|
40,100 |
|
|
|
0.88 |
|
|
|
— |
|
|
|
— |
|
ANI adjustments attributable to non-controlling interests |
|
132,030 |
|
|
|
2.91 |
|
|
|
(42,910 |
) |
|
|
(0.98 |
) |
Tax related items |
|
(71,458 |
) |
|
|
(1.58 |
) |
|
|
(108,086 |
) |
|
|
(2.47 |
) |
Dilutive impact of stock awards1 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.06 |
) |
Adjusted net income attributable to shareholders |
$ |
414,057 |
|
|
$ |
9.14 |
|
|
$ |
268,324 |
|
|
$ |
6.06 |
|
1 As the Company reported net losses for the fourth quarters of 2021 and 2020 and year ended
Reconciliation of GAAP Operating Income to Total Segment Adjusted Operating Income and Adjusted Operating Income (in thousands) (unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Operating income |
$ |
108,359 |
|
|
$ |
(197,129 |
) |
|
$ |
342,000 |
|
|
$ |
(91,673 |
) |
Unallocated corporate expenses |
|
23,858 |
|
|
|
17,625 |
|
|
|
78,218 |
|
|
|
62,938 |
|
Acquisition-related intangible amortization |
|
46,981 |
|
|
|
43,297 |
|
|
|
181,694 |
|
|
|
171,144 |
|
Other acquisition and divestiture related items |
|
8,035 |
|
|
|
26,680 |
|
|
|
40,533 |
|
|
|
57,787 |
|
Legal settlement |
|
— |
|
|
|
162,500 |
|
|
|
— |
|
|
|
162,500 |
|
Loss on sale of subsidiary |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
46,362 |
|
Stock-based compensation |
|
13,779 |
|
|
|
20,782 |
|
|
|
76,550 |
|
|
|
65,841 |
|
Other costs |
|
7,518 |
|
|
|
5,575 |
|
|
|
23,171 |
|
|
|
13,555 |
|
Debt restructuring costs |
|
129 |
|
|
|
10 |
|
|
|
6,185 |
|
|
|
535 |
|
Impairment charge |
|
— |
|
|
|
53,378 |
|
|
|
— |
|
|
|
53,378 |
|
Total segment adjusted operating income |
$ |
208,659 |
|
|
$ |
132,718 |
|
|
$ |
748,351 |
|
|
$ |
542,367 |
|
Unallocated corporate expenses |
|
(23,858 |
) |
|
|
(17,625 |
) |
|
|
(78,218 |
) |
|
|
(62,938 |
) |
Adjusted operating income |
$ |
184,801 |
|
|
$ |
115,093 |
|
|
$ |
670,133 |
|
|
$ |
479,429 |
|
The Company's non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, change in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture related items, legal settlement, stock-based compensation, other costs, loss on sale of subsidiary, impairment charges, debt restructuring and debt issuance cost amortization, 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, 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:
- 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. Additionally, the non-cash, mark-to-market adjustments on financial instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate;
- Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, accounts receivable and accounts 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 change in fair value of contingent consideration, which is related to the acquisition of certain contractual rights to serve as custodian or sub-custodian to Health Savings Accounts, is dependent upon changes in future interest rate assumptions and has no significant impact on the ongoing operations of the Company. Additionally, the non-cash, mark-to-market adjustments on financial instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate;
- 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 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 on divestitures facilitates the comparison of our financial results to the Company’s historical operating results and to other companies in our industry;
-
Legal settlement represents the consideration paid to the sellers of eNett and
Optal in excess of the businesses' fair values, which is nonrecurring and does not reflect future operating expenses resulting from this acquisition;
-
The loss on sale of subsidiary relates to the divestiture of the Company's former Brazilian subsidiary as of the date of sale,
September 30, 2020 , and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are considered by the Company to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with the Company's practice of excluding other non-recurring items associated with strategic transactions;
- 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;
-
Certain other 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. This also includes costs related to certain identified initiatives, including technology initiatives, to further streamline the business, improve the Company’s efficiency, create synergies and globalize the Company’s operations and remediate material weaknesses such as the one identified during the 2018 fiscal year, all with an objective to improve scale and efficiency and increase profitability going forward. For the year ended
December 31, 2020 , other costs include certain costs incurred in association with the COVID-19 pandemic, including the cost of providing additional health, welfare and technological support to our employees as they work remotely;
- Impairment charges represent non-cash asset write-offs, which do not reflect recurring costs that would be relevant to the Company’s continuing operations. The Company believes that excluding these nonrecurring expenses 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 interests, including adjustments to the redemption value of a 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 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 GAAP tax provision.
- The Company does not allocate certain corporate expenses to our operating segments, as these items are centrally controlled and are not directly attributable to any reportable segment.
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 adjusted net income:
Exhibit 2 |
||||||||||||||||||||||||||
Segment Revenue Results (in thousands) (unaudited) |
||||||||||||||||||||||||||
|
Fleet Solutions |
|
Travel and Corporate Solutions |
|
Health and |
|
|
|||||||||||||||||||
|
Three months ended |
|||||||||||||||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||||
Reported revenue |
$ |
306,829 |
|
|
$ |
235,379 |
|
$ |
81,512 |
|
|
$ |
74,690 |
|
$ |
109,197 |
|
$ |
88,921 |
|
$ |
497,538 |
|
|
$ |
398,990 |
FX impact (favorable) / unfavorable |
$ |
798 |
|
|
$ |
— |
|
$ |
191 |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
989 |
|
|
$ |
— |
PPG impact (favorable) / unfavorable |
$ |
(48,374 |
) |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(48,374 |
) |
|
$ |
— |
|
Year ended |
|||||||||||||||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
Reported revenue |
$ |
1,111,415 |
|
|
$ |
918,310 |
|
$ |
324,918 |
|
|
$ |
277,840 |
|
$ |
414,209 |
|
$ |
363,719 |
|
$ |
1,850,542 |
|
|
$ |
1,559,869 |
FX impact (favorable) / unfavorable |
$ |
(7,608 |
) |
|
$ |
— |
|
$ |
(910 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(8,518 |
) |
|
$ |
— |
PPG impact (favorable) / unfavorable |
$ |
(115,574 |
) |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(115,574 |
) |
|
$ |
— |
To determine the impact of foreign exchange translation (“FX”) on revenue, revenue from entities whose functional currency is not denominated in
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 2020 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 |
||||||||||||||
|
Three months ended |
||||||||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
FX impact (favorable) / unfavorable |
$ |
193 |
|
|
$ |
— |
|
$ |
(990 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
PPG impact (favorable) / unfavorable |
$ |
(31,143 |
) |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
Year ended |
||||||||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
|
2020 |
FX impact (favorable) / unfavorable |
$ |
(3,868 |
) |
|
$ |
— |
|
$ |
(1,694 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
PPG impact (favorable) / unfavorable |
$ |
(73,651 |
) |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
To determine the estimated earnings impact of FX on revenue and expenses from entities whose functional currency is not denominated in
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 2020 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 2021 |
|
Q3 2021 |
|
Q2 2021 |
|
Q1 2021 |
|
Q4 2020 |
||||||||||
Fleet Solutions: |
|
|
|
|
|
|
|
|
|
||||||||||
Payment processing transactions (000s) (1) |
|
132,894 |
|
|
|
134,029 |
|
|
|
130,104 |
|
|
|
118,389 |
|
|
|
118,287 |
|
Payment processing gallons of fuel (000s) (2) |
|
3,569,979 |
|
|
|
3,576,781 |
|
|
|
3,483,695 |
|
|
|
3,233,943 |
|
|
|
3,265,927 |
|
Average US fuel price (US$ / gallon) |
$ |
3.42 |
|
|
$ |
3.23 |
|
|
$ |
3.04 |
|
|
$ |
2.72 |
|
|
$ |
2.26 |
|
Payment processing $ of fuel (000s) (3) |
$ |
12,600,745 |
|
|
$ |
11,907,220 |
|
|
$ |
10,995,418 |
|
|
$ |
9,176,960 |
|
|
$ |
7,767,530 |
|
Net payment processing rate (4) |
|
1.16 |
% |
|
|
1.09 |
% |
|
|
1.15 |
% |
|
|
1.20 |
% |
|
|
1.27 |
% |
Payment processing revenue (000s) |
$ |
146,333 |
|
|
$ |
130,006 |
|
|
$ |
126,450 |
|
|
$ |
110,577 |
|
|
$ |
98,954 |
|
Net late fee rate (5) |
|
0.48 |
% |
|
|
0.45 |
% |
|
|
0.41 |
% |
|
|
0.45 |
% |
|
|
0.54 |
% |
Late fee revenue (000s) (6) |
$ |
60,101 |
|
|
$ |
53,104 |
|
|
$ |
45,235 |
|
|
$ |
41,150 |
|
|
$ |
41,901 |
|
Travel and Corporate Solutions: |
|
|
|
|
|
|
|
|
|
||||||||||
Purchase volume (000s) (7) |
$ |
10,916,015 |
|
|
$ |
12,799,555 |
|
|
$ |
8,736,019 |
|
|
$ |
6,107,675 |
|
|
$ |
4,968,321 |
|
Net interchange rate (8) |
|
0.63 |
% |
|
|
0.62 |
% |
|
|
0.78 |
% |
|
|
0.94 |
% |
|
|
1.26 |
% |
Payment solutions processing revenue (000s) |
$ |
68,747 |
|
|
$ |
79,815 |
|
|
$ |
68,282 |
|
|
$ |
57,248 |
|
|
$ |
62,376 |
|
Health and |
|
|
|
|
|
|
|
|
|
||||||||||
Purchase volume (000s) (9) |
$ |
1,146,436 |
|
|
$ |
1,173,913 |
|
|
$ |
1,311,131 |
|
|
$ |
1,484,226 |
|
|
$ |
1,074,977 |
|
Average number of SaaS accounts (000s) (10) |
|
16,222 |
|
|
|
16,912 |
|
|
|
16,380 |
|
|
|
15,513 |
|
|
|
14,502 |
|
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
Exhibit 4 Segment Revenue Information (in thousands) (unaudited) |
||||||||||||||||||||||||
|
Three months ended
|
|
Increase (decrease) |
|
Year ended
|
|
Increase (decrease) |
|||||||||||||||||
Fleet Solutions |
2021 |
|
2020 |
|
Amount |
|
Percent |
|
2021 |
|
2020 |
|
Amount |
|
Percent |
|||||||||
Payment processing revenue |
$ |
146,333 |
|
$ |
98,955 |
|
$ |
47,378 |
|
|
48 |
% |
|
$ |
513,365 |
|
$ |
404,843 |
|
$ |
108,522 |
|
27 |
% |
Account servicing revenue |
|
42,395 |
|
|
38,571 |
|
|
3,824 |
|
|
10 |
% |
|
|
168,350 |
|
|
153,823 |
|
|
14,527 |
|
9 |
% |
Finance fee revenue |
|
75,679 |
|
|
53,373 |
|
|
22,306 |
|
|
42 |
% |
|
|
254,306 |
|
|
197,307 |
|
|
56,999 |
|
29 |
% |
Other revenue |
|
42,422 |
|
|
44,480 |
|
|
(2,058 |
) |
|
(5 |
)% |
|
|
175,394 |
|
|
162,337 |
|
|
13,057 |
|
8 |
% |
Total revenues |
$ |
306,829 |
|
$ |
235,379 |
|
$ |
71,450 |
|
|
30 |
% |
|
$ |
1,111,415 |
|
$ |
918,310 |
|
$ |
193,105 |
|
21 |
% |
|
Three months ended
|
|
Increase (decrease) |
|
Year ended
|
|
Increase (decrease) |
||||||||||||||||||
Travel and Corporate Solutions |
2021 |
|
2020 |
|
Amount |
|
Percent |
|
2021 |
|
2020 |
|
Amount |
|
Percent |
||||||||||
Payment processing revenue |
$ |
68,747 |
|
$ |
62,376 |
|
$ |
6,371 |
|
|
10 |
% |
|
$ |
274,092 |
|
$ |
229,144 |
|
$ |
44,948 |
|
|
20 |
% |
Account servicing revenue |
|
11,340 |
|
|
10,717 |
|
|
623 |
|
|
6 |
% |
|
|
44,157 |
|
|
41,927 |
|
|
2,230 |
|
|
5 |
% |
Finance fee revenue |
|
180 |
|
|
179 |
|
|
1 |
|
|
1 |
% |
|
|
873 |
|
|
1,079 |
|
|
(206 |
) |
|
(19 |
)% |
Other revenue |
|
1,245 |
|
|
1,418 |
|
|
(173 |
) |
|
(12 |
)% |
|
|
5,796 |
|
|
5,690 |
|
|
106 |
|
|
2 |
% |
Total revenues |
$ |
81,512 |
|
$ |
74,690 |
|
$ |
6,822 |
|
|
9 |
% |
|
$ |
324,918 |
|
$ |
277,840 |
|
$ |
47,078 |
|
|
17 |
% |
|
Three months ended
|
|
Increase (decrease) |
|
Year ended
|
|
Increase (decrease) |
||||||||||||||||||
Health and |
2021 |
|
2020 |
|
Amount |
|
Percent |
|
2021 |
|
2020 |
|
Amount |
|
Percent |
||||||||||
Payment processing revenue |
$ |
15,969 |
|
$ |
14,985 |
|
$ |
984 |
|
|
7 |
% |
|
$ |
71,533 |
|
$ |
64,904 |
|
$ |
6,629 |
|
|
10 |
% |
Account servicing revenue |
|
83,779 |
|
|
64,432 |
|
|
19,347 |
|
|
30 |
% |
|
|
314,351 |
|
|
253,706 |
|
|
60,645 |
|
|
24 |
% |
Finance fee revenue |
|
43 |
|
|
26 |
|
|
17 |
|
|
65 |
% |
|
|
144 |
|
|
137 |
|
|
7 |
|
|
5 |
% |
Other revenue |
|
9,406 |
|
|
9,478 |
|
|
(72 |
) |
|
(1 |
)% |
|
|
28,181 |
|
|
44,972 |
|
|
(16,791 |
) |
|
(37 |
)% |
Total revenues |
$ |
109,197 |
|
$ |
88,921 |
|
$ |
20,276 |
|
|
23 |
% |
|
$ |
414,209 |
|
$ |
363,719 |
|
$ |
50,490 |
|
|
14 |
% |
As noted in the third quarter 2021 earnings release, one significant corporate payments customer renewed their contract, which changed the revenue presentation from gross to net effective
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 |
|
Three Months Ended |
||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||
Fleet Solutions |
$ |
156,107 |
|
$ |
99,438 |
|
50.9 |
% |
|
42.2 |
% |
Travel and Corporate Solutions |
$ |
31,631 |
|
$ |
15,036 |
|
38.8 |
% |
|
20.1 |
% |
Health and |
$ |
20,921 |
|
$ |
18,244 |
|
19.2 |
% |
|
20.5 |
% |
Total segment adjusted operating income |
$ |
208,659 |
|
$ |
132,718 |
|
41.9 |
% |
|
33.3 |
% |
|
|
|
|
|
|
|
|
||||
|
Segment Adjusted Operating Income |
|
Segment Adjusted Operating Income Margin(1) |
||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||
Fleet Solutions |
$ |
557,083 |
|
$ |
383,502 |
|
50.1 |
% |
|
41.8 |
% |
Travel and Corporate Solutions |
$ |
86,860 |
|
$ |
62,096 |
|
26.7 |
% |
|
22.3 |
% |
Health and |
$ |
104,408 |
|
$ |
96,769 |
|
25.2 |
% |
|
26.6 |
% |
Total segment adjusted operating income |
$ |
748,351 |
|
$ |
542,367 |
|
40.4 |
% |
|
34.8 |
% |
(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 |
|
Year Ended |
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Adjusted operating income |
$ |
184,801 |
|
|
$ |
115,093 |
|
|
$ |
670,133 |
|
|
$ |
479,429 |
|
Adjusted operating income margin (1) |
|
37.1 |
% |
|
|
28.8 |
% |
|
|
36.2 |
% |
|
|
30.7 |
% |
(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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220209005866/en/
News media:
Jessica.Roy@wexinc.com
or
Investor:
Steve.Elder@wexinc.com
Source:
FAQ
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