SOUTH PORTLAND – A lot of companies were blindsided by the recession and financial crisis in late 2008, but Wright Express’ top executive said his company saw trouble about a year ahead of the general public.

That foresight might have helped the company weather the downturn better than many businesses, he said.

“We have a very resilient business model,” said Michael Dubyak, chairman and chief executive officer of the company, which is based in South Portland.

Wright Express, in fact, came through the recession in good enough shape that it was able to announce at the end of last month that it is expanding by purchasing a similar Australian company for $315 million, a deal that is expected to close in the next month or two. It immediately followed up that announcement with a contract to handle transactions for the fleet of vehicles operated by BP International in Australia and New Zealand.

Wright Express’ primary business is handling fleet transactions — issuing charge cards that drivers of a company’s fleet of vehicles use to buy fuel or to pay for repairs. In addition to processing the payments, the company also supplies clients’ fleet managers with detailed information their vehicles and other information that can help control costs.

Wright Express also has a corporate MasterCard credit card business that Dubyak said offers companies a way to make purchases, provide security and control costs.

Information on such transactions helped the company see a slowdown coming even as the economy in general was continuing to grow, Dubyak said. Sifting through the numbers from Wright Express’ 300,000 accounts, analysts started to see fewer and smaller transactions, an indication that business was slowing, he said.

“We knew back in ’07 that there was a slowdown coming, even when the GDP (gross domestic product) was growing by 4 percent,” he said. The company began assessing its credit risks, Dubyak said, and took steps to prepare for the crunch.

Even though bad debt rose for the company as the recession took hold, Dubyak believes it wasn’t as bad as it would have been without the correct read on the economy and planning for a downturn. And Wright Express made sure to keep customers happy by maintaining credit and payment rules, instead of stepping up payment deadlines as some companies did, he said.

Dubyak said that leaves Wright Express well-positioned for when the economy rebounds. He said the signs the company sees so far are encouraging: Even though Wright Express doesn’t have a lot of delivery companies as clients — most maintain large fleets with their own payment and management systems in place — the ones that are Wright customers seem to be getting busier, a sign that businesses and consumers are ordering more goods.

And Wright Express projects that its existing and new customers will add 400,000 to 500,000 vehicles to fleets that Wright Express helps manage this year.

That picture gave the company the confidence it needed to move ahead with a purchase that expands its operations beyond North America.

Dubyak pulls out a report on company strategy that was prepared back in 1997 and points out that Australia was on its radar even then, but none of the operations that attracted the attention of Wright Express were up for sale at the time.

Then, a couple of years ago, the owners of Retail Decisions in Australia indicated the company would be open to purchase offers. For Dubyak and other Wright Express executives, Retail Decisions looked familiar — a fuel card issuer with 270,000 cards circulating Down Under. The company also sells and processes prepaid cards — essentially gift cards — for two large Australian department store chains.

Buying key parts of Retail Decisions gave Wright Express a base for expanding to a new region in a business that it had already mastered. Dubyak said the model could expand beyond Australia to Asia.

“This is our beachhead” in the region, Dubyak said.

That approach appears to sit well with investors — the company’s stock is up more than 15 percent over the past year.

“It does appear to make a lot of sense,” Greg Smith, an analyst with the investment firm Duncan Williams, said of the Australian transaction. “The bulk of it is a complementary business and they’re not acquiring something that’s going to require substantial investments.”

Smith said Wright Express is well run and, despite the recession and volatile fuel costs, has maintained profitability — earnings for the quarter that ended June 30 were up 20 percent over the same period last year, excluding one-time events.

Smith praised Wright Express for moving further into the international market — prior to the Australian purchase, the company for years has been running credit card operations for Esso in Canada, using French-speaking Mainers to help staff customer service lines from the bilingual customer base. Smith said the company has been appropriately cautious as it steps out beyond North America.

“They have to pick and choose their spots,” he said. “A lot of companies have gotten into trouble by trying to move internationally, but they’ve done this at a pretty measured pace.”

Dubyak said the company will continue to look for overseas opportunities, but echoed Smith’s suggestion that caution is needed. For instance, he noted that fueling-charge operations in Europe are controlled largely by the oil companies themselves and, outside of Britain, there aren’t too many companies providing fleet-fueling cards. A foray into that market, he said, would probably require putting together a deal to consolidate several smaller fleet-fueling companies, but that would still likely give the company little more than a toehold in Europe.

Still, he said, any growth should add to the payroll in South Portland. Of the company’s 745 employees, 566 work there.

“You’d like to believe you would consolidate (operations) here rather than somewhere else,” Dubyak said.

Smith believes Wright Express is worth watching.

“They’ve got a great cash cow and the business is very profitable,” he said. “Their MasterCard (operation) is growing and they’ve got interests internationally. You’ve got the makings for an even more exciting story.”

Staff Writer Edward D. Murphy can be contacted at 791-6465 or at:

[email protected]


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