Core Viewpoint - WEX reported strong fourth-quarter 2024 results, with earnings and revenues exceeding estimates, but both metrics showed a year-over-year decline [2][5]. Financial Performance - Adjusted earnings for Q4 2024 were $3.57 per share, beating the Zacks Consensus Estimate by 0.9%, but down 6.5% from the previous year [2]. - Revenues reached $636.5 million, surpassing estimates by 0.7%, yet declined 4% year-over-year [2]. Segment Performance - The Mobility segment generated revenues of $345.2 million, a decrease of 1.4% from the previous year, but exceeded estimates of $334.5 million due to increased investments in digital marketing [3]. - The Corporate Payments segment saw revenues drop 22.7% to $104.3 million, missing estimates of $122.8 million [3]. - The Benefits segment's revenues increased by 4.9% year-over-year to $186.9 million, surpassing estimates of $175.8 million, driven by strong SaaS account growth [4]. Operating Results - Adjusted operating income fell 6.5% to $269.8 million, exceeding estimates of $246.1 million, with an adjusted operating income margin of 42.4%, down 110 basis points year-over-year [5]. Balance Sheet & Cash Flow - WEX ended the quarter with cash and cash equivalents of $595.8 million, down from $682.6 million in the previous quarter, while long-term debt remained at $3.1 billion [6]. - The company generated $638.4 million in cash from operating activities, with adjusted free cash flow of $169.5 million and capital expenditures totaling $38.7 million [6]. Future Outlook - For Q1 2025, WEX expects revenues between $625 million and $640 million, with adjusted net income projected between $3.35 and $3.50 per share [7]. - For the full year 2025, revenues are anticipated to be between $2.60 billion and $2.66 billion, with adjusted net income expected between $14.65 and $15.25 per share [7]. Estimate Trends - There has been a downward trend in estimates, with a consensus estimate shift of -9.1% over the past month [8]. Investment Scores - WEX holds a Growth Score of B, a Momentum Score of F, and a Value Score of A, resulting in an aggregate VGM Score of B [10].

Regulatory Compliance - WEX Bank is subject to the Durbin Amendment, which regulates interchange fees for debit transactions, with minimal applicability to prepaid or debit card products as of the filing date[99]. - Compliance with the Dodd-Frank Act has added costs to the business, particularly in the over-the-counter derivatives market, which may require changes in hedging practices[100]. - WEX Bank's acceptance of brokered deposits is restricted unless it is "well capitalized," impacting funding strategies[101]. - The company is subject to significant anti-money laundering compliance obligations, including monitoring and reporting unusual account activity[122]. - WEX's European operations must comply with the Payment Services Directive (PSD2) and the Electronic Money Directive (EMD2), with specific regulatory requirements in Ireland[124]. - In the UK, WEX's operations are governed by the Electronic Money Regulations 2011 and the Payment Services Regulations 2017, requiring safeguarding of customer funds[126]. - The company has established anti-money laundering compliance programs, including internal policies, employee training, and independent review functions[122]. - WEX Bank must provide initial and annual privacy notices to customers under the Gramm-Leach-Bliley Act, ensuring transparency in information sharing practices[111]. - The company is subject to various international privacy and data protection laws, including the GDPR, which imposes stringent privacy protections for EU residents[115]. - WEX's operations are impacted by economic sanctions imposed by the U.S. government, affecting transactions with designated foreign countries and nationals[102]. Market and Financial Risks - The company is exposed to market risks including interest rates, foreign currency exchange rates, and commodity prices, with ongoing management of these risks through derivative instruments[407]. - As of December 31, 2024, the company had $3.8 billion invested in current available-for-sale debt securities at fair value, with a potential decrease in fair value of less than 2% from a hypothetical increase in interest rates of 25 basis points[413]. - A 1% hypothetical increase in interest rates could result in an estimated impact of $31.4 million on interest expense related to the company's Credit Agreement[418]. - The company expects to incur a full contingent consideration liability of $225.0 million based on increases in the Federal Funds rate from the date of acquisition, extending through December 31, 2030[419]. - The company estimates that each one cent decline in average domestic fuel prices would result in a $2.0 million decline in revenue for 2025[408]. - If all currencies in which the company earned revenue weakened or strengthened by 10% against the U.S. dollar, revenues and operating income would each change by approximately 2% or less[410]. - The company is not currently hedged for changes in fuel prices, but management continually monitors the market for alternatives[408]. - The company does not utilize hedging instruments to mitigate foreign currency risks but may initiate strategies in the future as international operations grow[410]. Financial Performance - Total revenues for WEX Inc. in 2024 were $2,628.1 million, an increase of 3.1% from $2,548.0 million in 2023[434]. - Payment processing revenue decreased to $1,200.5 million in 2024 from $1,213.7 million in 2023, a decline of 1.3%[434]. - Account servicing revenue increased by 6.8% to $690.6 million in 2024, up from $646.4 million in 2023[434]. - Net income attributable to WEX Inc. rose to $309.6 million in 2024, compared to $266.6 million in 2023, reflecting a growth of 16.1%[434]. - The company's cash and cash equivalents decreased to $595.8 million in 2024 from $975.8 million in 2023, a decline of 38.9%[438]. - Total assets decreased to $13,321.6 million in 2024 from $13,882.1 million in 2023, a reduction of 4.0%[438]. - Total liabilities decreased to $11,832.8 million in 2024 from $12,061.5 million in 2023, a decline of 1.9%[438]. - The company reported a comprehensive income of $226.5 million in 2024, down from $343.7 million in 2023[436]. - Basic earnings per share increased to $7.59 in 2024 from $6.23 in 2023, a rise of 21.7%[434]. - The provision for credit losses decreased to $68.2 million in 2024 from $89.8 million in 2023, a reduction of 24.0%[434]. - Total cash flows from operating activities decreased to $481.4 million in 2024 from $907.9 million in 2023, reflecting a decline of 46.9%[441]. - The company reported a net cash used for investing activities of $960.6 million in 2024, compared to $2,138.3 million in 2023, indicating a reduction of 55.1%[441]. - Cash, cash equivalents, and restricted cash at the end of 2024 totaled $1,437.0 million, down from $2,230.0 million at the end of 2023, a decrease of 35.5%[442]. - Stock-based compensation expense increased to $112.2 million in 2024 from $127.0 million in 2023, a decrease of 11.3%[441]. - The company repurchased common stock totaling $655.1 million in 2024, compared to $297.6 million in 2023, an increase of 120.4%[441]. - Accounts receivable increased by $325.2 million in 2024, contrasting with a decrease of $195.1 million in 2023[441]. - The company experienced a foreign currency translation loss of $50.8 million in 2024, compared to a gain of $15.6 million in 2023[441]. - The total stockholders' equity at the end of 2024 was $1,488.8 million, a decrease from $1,820.6 million at the end of 2023, reflecting a decline of 18.2%[439]. - The company reported a provision for credit losses of $68.2 million in 2024, down from $89.8 million in 2023, a decrease of 24.1%[441]. Investments and Acquisitions - The company completed the acquisition of Payzer Holdings for approximately $250.0 million, contributing $4.3 million to Mobility segment revenues from acquisition date to December 31, 2023[534][537]. - The Ascensus acquisition was completed for approximately $185.5 million, contributing $14.0 million to Benefits segment revenues from acquisition date to December 31, 2023[538][542]. - The company entered into an ASR agreement to repurchase $300.0 million of common stock, receiving approximately 1.3 million shares initially[545]. - The weighted average useful life of amortizable intangible assets acquired in the Payzer acquisition is 3.9 years[536]. Asset Management - The total investment securities as of December 31, 2024, amounted to $3,845.2 million, an increase from $3,088.9 million in 2023, representing a growth of approximately 24.6%[551]. - The fair value of U.S. treasury notes decreased from $378.6 million in 2023 to $353.5 million in 2024, a decline of about 6.6%[551]. - The total unrealized losses on investment securities increased from $107.9 million in 2023 to $131.6 million in 2024, reflecting a rise of approximately 22.0%[553]. - The company has pledged debt securities with a fair value of $1,206.5 million as collateral for FHLB advances as of December 31, 2024[551]. - The total amortized cost of debt securities due after 10 years was $1,960.3 million, with a fair value of $1,903.3 million as of December 31, 2024[558]. - The company reported no expected credit losses recorded against its investment securities for both 2024 and 2023[551]. - The receivables portfolio showed no individual customer with a balance representing 10% or more of the outstanding receivables at the end of 2024 or 2023[550]. Goodwill and Intangible Assets - Goodwill is reviewed for impairment at least annually, with the last review conducted on October 1[477]. - Net goodwill decreased from $3,015.7 million at the beginning of 2024 to $2,983.4 million by December 31, 2024, a reduction of 1.1%[561]. - Gross goodwill for the Mobility segment decreased from $1,556.6 million to $1,545.2 million, a decline of 0.7%[561]. - Accumulated impairment losses remained stable at $200.6 million for both 2024 and 2023[561]. - The total value of computer software, including internal-use software, increased from $714.4 million in 2023 to $823.5 million in 2024, a growth of 15.3%[560]. - The gross amounts capitalized for internal-use computer software were $143.0 million in 2024, up from $136.4 million in 2023 and $107.7 million in 2022[472]. - The amounts expensed for amortization of internal-use computer software were $109.7 million in 2024, compared to $78.7 million in 2023 and $78.0 million in 2022[472]. Depreciation and Capital Expenditures - Total property, equipment, and capitalized software, net increased from $242.9 million in 2023 to $261.2 million in 2024, reflecting a growth of 7.9%[560]. - Depreciation expense rose to $119.5 million in 2024 from $92.2 million in 2023, indicating a year-over-year increase of 29.7%[560]. - Leasehold improvements decreased from $20.8 million in 2023 to $18.6 million in 2024, a decline of 10.6%[560].

Core Insights - WEX Inc. reported strong fourth-quarter 2024 results, with earnings and revenues exceeding the Zacks Consensus Estimate, leading to a 17% stock price increase since the results were released on February 5 [1] Financial Performance - Adjusted earnings per share were $3.57, surpassing the Zacks Consensus Estimate by 0.9%, but down 6.5% year-over-year [2] - Revenues reached $636.5 million, beating the consensus estimate by 0.7%, but declined 4% compared to the previous year [2] Segment Performance - The Mobility segment's revenues decreased 1.4% year-over-year to $345.2 million, exceeding the estimate of $334.5 million due to investments in digital marketing [3] - The Corporate Payments segment's revenues were $104.3 million, down 22.7% from the fourth quarter of 2023, missing the estimate of $122.8 million [3] - The Benefits segment's revenues increased 4.9% year-over-year to $186.9 million, beating the estimate of $175.8 million, driven by strong SaaS account growth [4] Operating Results - Adjusted operating income declined 6.5% to $269.8 million from the year-ago quarter, surpassing the estimate of $246.1 million [5] - The adjusted operating income margin was 42.4%, down 110 basis points year-over-year, but better than the projected 38.9% [5] Balance Sheet & Cash Flow - WEX ended the quarter with cash and cash equivalents of $595.8 million, down from $682.6 million in the previous quarter [6] - Long-term debt remained flat at $3.1 billion [6] - The company generated $638.4 million in cash from operating activities, with adjusted free cash flow of $169.5 million and capital expenditures totaling $38.7 million [6] Guidance - For Q1 2025, WEX expects revenues between $625 million and $640 million, with the midpoint above the current Zacks Consensus Estimate of $628.4 million [7] - Adjusted net income is anticipated to be between $3.35 and $3.50 per share, below the Zacks Consensus estimate of $3.72 [7] - For 2025, revenues are projected to be between $2.60 billion and $2.66 billion, with the midpoint above the current Zacks Consensus Estimate of $2.61 billion [8] - Adjusted net income for 2025 is expected to be between $14.65 and $15.25 per share, below the Zacks Consensus estimate of $16.49 [8]

WEX Inc. (NYSE:WEX) Q4 2024 Earnings Conference Call February 6, 2025 10:00 AM ET Company Participants Steve Elder - Senior Vice President, Investor Relations Melissa Smith - Chair & Chief Executive Officer Jagtar Narula - Chief Financial Officer Conference Call Participants Sanjay Sakhrani - KBW Dan Dolev - Mizuho Dave Koning - Baird Andrew Jeffrey - William Blair John Davis - Raymond James Ramsey El-Assal - Barclays Tien-Tsin Huang - JPMorgan Andrew Bauch - Wells Fargo Daniel Krebs - Wolfe Research Operat ...

Q4 2024 Earnings February 6, 2025 | | | --- | | a o o o o o o o o o o o o o o o | | 0 0 | | 000000000000000000000000 | | 0 0 0 | | 0 0 0 | | .. | | . | | . | | .. | | 0 | | .. | | 0 | | 0 | | 00 | | 0 | | . | | . | | . COL | | . | | . | | 0 0 0 | | .. | | 0 | | 9 | | 900000000000 | | | Forward-Looking Statements These materials include forward-looking statements including, but not limited to, statements about management's plans, goals, expectations, and guidance and assumptions with respect to future financ ...

Core Insights - Wex reported revenue of $636.5 million for the quarter ended December 2024, a decrease of 4% year-over-year, with EPS at $3.57 compared to $3.82 in the same quarter last year, indicating a slight surprise over consensus estimates [1] - The company’s revenue exceeded the Zacks Consensus Estimate by 0.70%, while EPS also surpassed expectations by 0.85% [1] Financial Performance Metrics - Mobility payment processing transactions reached 138.5 million, slightly above the average estimate of 137.58 million [4] - Corporate Payments purchase volume was $16.54 billion, significantly below the estimated $19.54 billion, reflecting a notable decline [4] - Benefits purchase volume was $1.62 billion, slightly above the average estimate of $1.61 billion [4] - Average US fuel price was reported at $3.25 per gallon, marginally lower than the estimated $3.27 per gallon [4] Revenue Breakdown - Corporate Payments revenue was $104.30 million, down 22.7% year-over-year and below the estimated $115.42 million [4] - Benefits revenue was $186.90 million, exceeding the estimate of $184.52 million, with a year-over-year increase of 4.9% [4] - Mobility revenue was $345.20 million, slightly above the estimate of $331.94 million, but down 1.4% year-over-year [4] - Payment processing revenue was $270.20 million, below the estimate of $278.26 million, reflecting a year-over-year decline of 13.3% [4] - Other revenues were reported at $112.60 million, exceeding the estimate of $105.11 million, with a year-over-year increase of 12.4% [4] Stock Performance - Wex shares have returned +3.9% over the past month, outperforming the Zacks S&P 500 composite, which saw a +1.7% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]

Wex (WEX) came out with quarterly earnings of $3.57 per share, beating the Zacks Consensus Estimate of $3.54 per share. This compares to earnings of $3.82 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 0.85%. A quarter ago, it was expected that this provider of fuel payment processing for fleet vehicles would post earnings of $4.42 per share when it actually produced earnings of $4.35, delivering a surprise of -1.58%.Over the ...

Revenue Performance - Total revenue for Q4 2024 decreased by $26.8 million compared to Q4 2023, primarily due to a net $26.6 million unfavorable impact from fuel prices and spreads, and a $1.3 million unfavorable impact from foreign exchange rates [7]. - For the twelve months ended December 31, 2024, total revenue reached $2,628.1 million, reflecting an 8.4% year-over-year increase [8]. - Mobility segment revenue for Q4 2024 decreased 1.4% year-over-year, impacted by a 7.6% drag from lower fuel prices, resulting in a revenue reduction of approximately $27 million [14]. - Benefits revenue for Q4 2024 was $186.9 million, a 4.9% increase year-over-year, driven by strong growth in the HSA business [18]. - Total revenues for the three months ended December 31, 2023, were $178.2 million, reflecting a year-over-year change of 26.7% [19]. - Total purchase volume for the twelve months ended December 31, 2024, is expected to reach $7,243 million, with a year-over-year change of 8.8% [19]. - The Corporate Payments segment reported total revenues of $135.0 million for the three months ended December 31, 2023, down 22.7% year-over-year [25]. Segment Contributions - The Mobility segment generated $1,400.8 million in revenue for the twelve months ended December 31, 2024, accounting for 53% of total revenue [10]. - The Benefits segment contributed $739.5 million in revenue, representing 28% of total revenue for the same period [10]. - The net interchange rate in the Mobility segment improved to 1.36%, up 10 basis points from the same quarter of 2023, reflecting favorable merchant contract renewals [14]. - Benefits purchase volume increased by 7.1% compared to the prior-year quarter, generating a steady interchange rate of 130 to 140 basis points [18]. - The net interchange rate increased by 7 basis points sequentially, driven by customer volume mix [25]. Operating Income and Margins - GAAP operating income margin for the total company was 26.1% for the twelve months ended December 31, 2024, with adjusted operating income margin at 40.3% [10]. - GAAP operating income margin for the Mobility segment was 33.1%, while the adjusted operating income margin was 42.3%, down 0.7% year-over-year due to lower fuel prices [14]. - The adjusted operating income margin for the Benefits segment increased to 41.7%, compared to 33.2% in 2023, driven by high flow-through of custodial income [18]. - Adjusted operating income for the twelve months ended December 31, 2024, is projected to be $307.0 million, with an adjusted operating income margin of 41.5% [19]. - Total segment adjusted operating income for the twelve months ended December 31, 2023, was $1,118.4 million, up 9.7% from $1,019.8 million for the twelve months ended December 31, 2022 [51]. Earnings and Guidance - Adjusted earnings per share increased by 5% on a year-over-year basis, despite macroeconomic headwinds, with underlying revenue growth during the quarter remaining flat compared to the prior year [7]. - The company reported a year-over-year change in GAAP income per diluted share of 21.8% for the twelve months ended December 31, 2024, reaching $7.50 [8]. - Adjusted net income per diluted share for Q1 2025 is projected to be between $3.35 and $3.50, with full year guidance of $14.65 to $15.25, indicating a $0.33 decrease from FY2024 midpoint [40]. - The company adjusted its long-term organic revenue growth target from 8-12% to 5-10% [39]. - The long-term adjusted earnings per share target has been updated to a range of 10-15% [39]. Cash Flow and Liquidity - Operating cash flow for Q4 2024 was reported at $761.9 million, with a full-year adjusted free cash flow of $562 million [34]. - The company ended the year with $735 million in available liquidity, including corporate cash and borrowing capacity [28]. - Adjusted free cash flow for the twelve months ended December 31, 2023, was $510.6 million, compared to $524.2 million for the twelve months ended December 31, 2022 [58]. Capital Expenditures and Investments - Capital expenditures for Q4 2024 totaled $41.9 million, with a total of $438.2 million deployed in capital over the quarter [36]. - The company plans to invest in new product capabilities and additional sales and marketing resources in 2025 to capitalize on growth opportunities in the Direct business [25]. - Share repurchases in 2024 amounted to approximately $650 million, with a total authorization increased to $2.05 billion [37]. Debt and Financial Position - Total long-term debt as of 12/31/23 was $2.828 billion, with a net increase from previous quarters [28]. - The leverage ratio stands at 2.6 times, within the long-term target range of 2.5 to 3.5 times [28]. - Interest expense is expected to decrease by more than $10 million annually due to refinancing activities in 2024 [30]. - The company has a three-year runway before its next debt maturity, allowing for strategic market opportunities [29]. Economic Outlook - The company expects U.S. GDP growth of approximately 2% in 2025, with no benefits from future M&A activity factored into the guidance [40]. - Average U.S. retail fuel prices are expected to be $3.26 per gallon for Q1 2025 and $3.25 for the full year, a decrease of $0.22 or 6% from prior guidance [40]. - Mobility segment revenue growth is anticipated to be 1-3% for the year, excluding fuel price and FX rate changes [41]. - Corporate Payments segment revenue is expected to be slightly negative for the full year due to OTA customer transition, with growth accelerating in the second half [41].

The market expects Wex (WEX) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on Febru ...

Group 1 - Wex's shares are experiencing pressure due to lower fuel prices and weak spending on commercial travel by enterprise customers [1] - The macroeconomic backdrop is challenging, impacting earnings growth outlook for Wex [1] Group 2 - The analyst has a focus on undercovered companies, with a watchlist of over 50 companies in sectors like technology, software, electronics, and energy transition [1] - The analyst has over 7 years of personal investment experience and aims to identify asymmetric investment opportunities for market-beating returns [1]