WEX(WEX) - 2024 Q4 - Annual Results

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].