October 31, 2012

Earnings rise 9% for WEX, once Wright Express

The South Portland company says costs tied to the purchase of Fleet One will continue to be a drag on profits and growth.

By Jessica Hall jhall@pressherald.com
Staff Writer

SOUTH PORTLAND — Credit-card processing company WEX Inc., formerly known as Wright Express, posted a 9 percent increase in adjusted third-quarter earnings, but acquisition-related costs curtailed growth.

Adjusted net income totaled $42.0 million, or $1.08 a share, compared with $38.7 million, or 99 cents a share, a year ago. The results were hurt by acquisition-related costs of 10 cents per share and an Australian tax law change.

Net income applicable to common shareholders fell to $14.3 million, or 37 cents a share, compared with $48.1 million, or $1.23 a share, a year ago. Revenues rose 6 percent to $161.0 million from $151.9 million.

In the short term, the company said costs associated with its purchase of Fleet One will weigh on results and offset steady growth in its fleet business and payment operations.

WEX also continues to grapple with the sluggish U.S. economy, said Chairman Michael Dubyak. Business with existing customers hasn't been growing, so WEX has been pushing to diversify its business through acquisitions and international expansion.

The company aims to further expand its virtual card business into more areas such as Europe and Southeast Asia, Dubyak said.

For the fourth quarter, the company expects revenue in the range of $162 million to $169 million. Adjusted net income will be in the range of $39 million to $42 million, or $1.01 to $1.08 a share.

For the full year, the company expects revenues to be in the range of $616 million to $623 million. Adjusted net income will be in the range of $156 million to $159 million, or $3.99 to $4.06 per diluted share.

On Wednesday, WEX's stock gained 94 cents, 1.3 percent, to $73.06. The stock has jumped more than 70 percent in the past 12 months.

WEX has made a series of recent acquisitions, including the $369 million deal earlier this month to buy fuel-card company Fleet One from private-equity firms.

Other recent deals include buying 51 percent of UNIK SA, a Brazilian provider of payroll cards, for about $21.9 million, as well as acquiring CorporatePay, a London-based provider of corporate prepaid cards for the travel industry, for about $27.5 million in cash. The company also acquired Wright Express Australia in 2010 and rapid! PayCard last year.

The company has been evaluating options for its office space and expects to make a decision by the first quarter of next year. WEX, which employs about 1,300 worldwide, aims to keep its headquarters in Maine.

Staff Writer Jessica Hall can be contacted at 791-6316 or at:

jhall@pressherald.com

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