Portland-based Wex Inc. has revised its annual earnings reports going back to 2014 after discovering accounting discrepancies in the ledgers of its Brazilian subsidiary.
Wex executives said errors in manually recorded accounts payable and accounts receivable entries caused the problem, which required a total adjustment of about $70 million over a five-year period to correct.
They said the discrepancies became smaller with each subsequent year as the subsidiary shifted its processes to rely increasingly on automated data entry methods.
“We have improved those processes over time,” Wex President and CEO Melissa Smith said in an interview Wednesday.
Wex is a payment processing company that serves the global fleet, health care and travel industries.
In its annual report filed Monday with the U.S. Securities and Exchange Commission, Wex described the errors as “immaterial” in the sense that correcting them did not significantly alter the company’s previously issued financial statements. Wex also opted to make slight adjustments to past reports to correct other errors that were unrelated to the Brazilian subsidiary.
Investigating and correcting the accounting discrepancies caused Wex to delay the filing of its fourth-quarter and year-end financial reports for 2018 by about a month. The delay did not negatively affect investor sentiment about the fast-growing company, as its share price has increased steadily since it first reported the presence of accounting discrepancies in February.
Smith said the errors had little effect on Wex’s financial performance over the past two years, which is what investors tend to base their outlook upon.
“Investors are pretty focused on what have you done recently,” she said.
Wex reported another year of strong earnings growth in 2018 with revenue of $1.49 billion, up 19 percent from $1.25 billion in 2017. Its adjusted net income for the year was $360.9 million, or $8.28 per share, up 56 percent from $229.3 million, or $5.32 per share, in 2017.
The payment-processing technology firm has about 1,500 employees in Portland and South Portland out of roughly 4,700 worldwide. Wex is in the process of moving about 400 employees to its new downtown headquarters in Portland, which opened this month.
J. Craig Anderson can be contacted at 791-6390 or at:
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