Strong revenue and operating growth driven by solid execution across segments and progress against strategic initiatives

SOUTH PORTLAND, Maine--(BUSINESS WIRE)--February 9, 2015--WEX Inc. (NYSE: WEX), a leading provider of corporate payment solutions, today reported financial results for the three months and twelve months ended December 31, 2014.

Total revenue for the fourth quarter of 2014 increased 16% to $211.9 million from $182.3 million for the fourth quarter of 2013. Net income to common shareholders on a GAAP basis was $47.9 million, or $1.23 per diluted share, compared with $34.5 million, or $0.88 per diluted share, for the fourth quarter of 2013.

On a non-GAAP basis, the Company's adjusted net income for the fourth quarter of 2014 decreased 18% to $37.2 million, or $0.96 per diluted share, from $45.7 million, or $1.17 per diluted share, for the same period a year ago. This includes the impact of a non-operating pre-tax expense of $8.1 million related to a net foreign exchange loss. Excluding the impact of the foreign exchange losses, adjusted net income results for the quarter and full year would have been in the guidance range. For comparative purposes, adjusted net income for prior periods reflects the exclusion of stock-based compensation expense to conform to the approach that was adopted earlier this year. See Exhibit 1 for a full reconciliation of adjusted net income.

For the full year 2014, revenue increased 14% to $817.6 million from $717.5 million in 2013. Net income to common shareholders on a GAAP basis was $5.18 per diluted share in 2014 compared to $3.82 per diluted share in 2013. On a non-GAAP basis, adjusted net income increased 8% to $4.96 per diluted share from $4.60 per diluted share in 2013.

“We delivered strong top-line growth and solid operating performance throughout 2014," said Melissa Smith, WEX's president and chief executive officer. “Despite the foreign exchange and fuel price headwinds we experienced this quarter, the underlying fundamentals of our business remain very strong and we look to carry this momentum forward into 2015.”

Smith continued, “In 2014, we made significant progress against our strategic objectives to accelerate our growth, make targeted investments and drive scale across the organization. In particular, we made transformative investments including the purchase of ExxonMobil's European commercial fuel card program as well as our entry into the healthcare payments market through our acquisition of Evolution1. These important investments have greatly expanded our addressable market and positioned WEX for future growth. As we look ahead to 2015, we remain well positioned in the markets we serve to capture additional market share and to continue to establish our position as a leading diversified global payments provider.”

Where applicable, the performance metrics listed below include the Esso portfolio in Europe;

“Through 2014 we saw considerable momentum throughout our business. We are encouraged by our underlying organic growth and the results of our strategic investments that are globalizing the business and penetrating new markets. Our overall capital structure remains strong, and we are well-positioned for long-term growth and value creation.” said Steve Elder, WEX senior vice president and chief financial officer.

First quarter 2015 guidance is based on an assumed average U.S. retail fuel price of $2.59 per gallon, and approximately 39 million shares outstanding. Full-year 2015 guidance is based on an assumed average U.S. retail fuel price of $2.62 per gallon and approximately 39 million shares outstanding. The fuel prices referenced above are based on the applicable NYMEX futures price.

The Company's guidance also assumes that first quarter and full year 2015 fleet credit loss will range between 10 and 15 basis points. Our guidance also includes exchange rate impacts of approximately 7 cents of earnings per share through January 2015, and assumes that exchange rates will remain in the range of the December 31, 2014 rates for the remainder of the year, and also includes $11 million to $14 million of after tax losses related to the Esso portfolio in Europe.

The Company's guidance excludes the impact of non-cash, mark-to-market adjustments on the Company's fuel-price-related derivative instruments, stock-based compensation and the amortization of purchased intangibles as well as the related tax impacts.

Exhibit 1 reconciles adjusted net income, which has not been determined in accordance with GAAP, to net income as determined in accordance with GAAP for the three months and years ended December 31, 2014 and 2013.

Management uses the non-GAAP measures presented within this news release to evaluate the Company's performance on a comparable basis, to eliminate the volatility associated with its derivative instruments and to measure the amount of cash that is available for making payments on the Company's financing debt and for discretionary purposes. Management believes that investors may find these measures useful for the same purposes, but cautions that they should not be considered a substitute for, or superior to, disclosure in accordance with GAAP.

WEX uses fuel-price derivative instruments to mitigate financial risks associated with the variability in fuel prices in North America. For the fourth quarter of 2014, the Company's GAAP financial results include an unrealized pre-tax, non-cash, mark-to-market gain of $34.2 million on these instruments.

To provide investors with additional insight into its operational performance, WEX has included in this news release a table of selected non-financial metrics for the five quarters ended December 31, 2014. This table is presented as Exhibit 2. The Company is also providing selected segment revenue information for the three months and for the years ended December 31, 2014 and 2013 in Exhibit 3.

In conjunction with this announcement, WEX will host a conference call today, February 9, 2015, at 10:00 a.m. (ET). As previously announced, the conference call will be webcast live on the Internet, and can be accessed at the Investor Relations section of the WEX website, http://www.wexinc.com. The live conference call also can be accessed by dialing (866) 334-7066 or (973) 935-8463. The Conference ID number is 59072490. A replay of the webcast will be available on the Company's website.

WEX Inc. (NYSE: WEX) is a leading provider of corporate payment solutions. From its roots in fleet card payments beginning in 1983, WEX has expanded the scope of its business into a multi-channel provider of corporate payment solutions representing 9 million cardholders and offering exceptional payment security and control across a wide spectrum of business sectors. The Company’s operations include WEX Bank, Fleet One, Evolution1, WEX Australia, WEX New Zealand and WEX Europe, as well as a majority equity position in UNIK S.A., (Brazil) and WEX Europe Services (England). WEX and its subsidiaries employ more than 2,000 associates. For more information, visit www.wexinc.com.

This news release contains forward-looking statements, including statements regarding: financial guidance; assumptions underlying the Company's financial guidance; management’s expectations for future growth opportunities, acquisitions and market expansion; and confidence in future performance. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this news release, the words "may," "could," "anticipate," "plan," "continue," "project," "intend," "estimate," "believe," "expect" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including: the effects of general economic conditions on fueling patterns as well as payments and transaction processing activity; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of the fluctuations of fuel prices; the effects of the Company’s business expansion and acquisition efforts; the Company’s failure to successfully integrate the businesses it has acquired; the Company's failure to successfully operate and expand ExxonMobil's European commercial fuel card program, or Esso Card; the failure of corporate investments to result in anticipated strategic value; the impact and size of credit losses; the impact of changes to the Company's credit standards; breaches of the Company’s technology systems and any resulting negative impact on our reputation, liabilities, or loss of relationships with customers or merchants; the Company’s failure to maintain or renew key agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking or financial regulations impacting the Company’s industrial bank and the Company as the corporate parent or other subsidiaries or affiliates; the impact of the Company’s outstanding notes on its operations; financial loss if the Company determines it necessary to unwind its derivative instrument position prior to the expiration of a contract; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes; the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our Annual Report for the year ended December 31, 2013, filed on Form 10-K with the Securities and Exchange Commission on February 27, 2014. The Company's forward-looking statements do not reflect the potential future impact of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of this earnings release and undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

WEX INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited)
	Three months ended December 31,						Year ended December 31,
	2014			2013			2014			2013
Revenues
Fleet payment solutions	$	136,409		$	133,471		$	562,169		$	527,424
Other payment solutions	75,455			48,812			255,478			190,039
Total revenues	211,864			182,283			817,647			717,463
Expenses
Salary and other personnel	58,089			42,328			200,809			164,521
Service fees	31,716			23,663			119,876			103,428
Provision for credit losses	8,990			6,514			32,144			20,200
Technology leasing and support	8,397			5,505			30,581			24,217
Occupancy and equipment	4,789			4,149			18,278			15,967
Advertising	2,982			2,797			11,814			11,176
Marketing	1,245			961			3,934			3,684
Postage and shipping	1,498			1,411			5,369			5,140
Communications	2,521			1,891			9,213			7,069
Depreciation, amortization and impairments	20,586			14,940			70,380			58,208
Operating interest expense	1,690			1,082			6,437			4,287
Other	7,840			5,807			30,064			22,827
Gain on sale of subsidiary	(321		)	—			(27,490		)	—
Total operating expenses	150,022			111,048			511,409			440,724
Operating income	61,842			71,235			306,238			276,739
Financing interest expense	(11,570		)	(7,342		)	(36,042		)	(29,419		)
Net foreign currency (loss) gain	(8,149		)	(744		)	(13,438		)	964
Net realized and unrealized gain (loss) on fuel price derivatives	37,155			(7,070		)	46,212			(9,851		)
Decrease (increase) in amount due under tax receivable agreement	25			(183		)	(1,331		)	(33		)
Income before income taxes	79,303			55,896			301,639			238,400
Income taxes	32,064			22,005			101,621			90,102
Net income	47,239			33,891			200,018			148,298
Less: Net loss from non-controlling interests	(654		)	(577		)	(2,193		)	(910		)
Net earnings attributable to WEX Inc.	$	47,893		$	34,468		$	202,211		$	149,208
Net earnings attributable to WEX Inc. per share:
Basic	$	1.23		$	0.88		$	5.20		$	3.83
Diluted	$	1.23		$	0.88		$	5.18		$	3.82
Weighted average common shares outstanding:
Basic	38,872			38,983			38,890			38,946
Diluted	38,976			39,103			39,000			39,103

WEX INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited)
	December 31,
	2014			2013
Assets
Cash and cash equivalents	$	284,763		$	361,486
Accounts receivable (less reserve for credit losses of $13,919 in 2014 and $10,396 in 2013)	1,865,540			1,712,061
Income taxes receivable	6,859			—
Available-for-sale securities	18,940			15,963
Fuel price derivatives, at fair value	40,969			—
Property, equipment and capitalized software, net	105,596			72,275
Deferred income taxes, net	5,764			88,965
Goodwill	1,116,365			819,892
Other intangible assets, net	498,045			206,744
Other assets	175,506			154,892
Total assets	$	4,118,347		$	3,432,278
Liabilities and Stockholders’ Equity
Accounts payable	$	425,956		$	512,878
Accrued expenses	137,227			92,335
Income taxes payable	—			16,066
Deposits	979,553			1,088,930
Revolving line-of-credit facilities and term loan	901,564			285,000
Deferred income taxes, net	43,752			13,528
Notes outstanding	400,000			400,000
Other debt	52,975			7,278
Amounts due under tax receivable agreement	69,637			77,785
Fuel price derivatives, at fair value	—			7,358
Other liabilities	13,372			9,094
Total liabilities	3,024,036			2,510,252

Redeemable non-controlling interest	16,590			18,729
Stockholders’ Equity
Common stock $0.01 par value; 175,000 shares authorized; 43,021 in 2014 and 42,901 in 2013 shares issued; 38,897 in 2014 and 38,987 in 2013 shares outstanding	430			429
Additional paid-in capital	179,077			168,891
Non-controlling interest	17,396			519
Retained earnings	1,081,730			879,519
Accumulated other comprehensive (loss)	(50,581		)	(15,495		)
Treasury stock at cost; 4,218 shares in 2014 and 4,007 shares in 2013	(150,331		)	(130,566		)
Total stockholders’ equity	1,077,721			903,297
Total liabilities and stockholders’ equity	$	4,118,347		$	3,432,278

Exhibit 1 Reconciliation of Adjusted Net Income to GAAP Net Earnings Fourth Quarter and Full Year Ended 2014 and 2013 (in thousands) (unaudited)
	Three months ended December 31,						Year ended December 31,
	2014			2013			2014			2013
Adjusted net income attributable to WEX Inc.	$	37,232		$	45,680		$	193,610		$	179,844
Unrealized gain (loss) on fuel price derivatives	34,187			(6,862		)	48,327			(5,628		)
Amortization of acquired intangible assets	(12,207		)	(8,583		)	(40,622		)	(33,147		)
Stock-based compensation	(3,701		)	(2,547		)	(13,790		)	(9,429		)
Deferred loan costs associated with the extinguishment of debt	—			—			—			(1,004		)
Non-cash adjustments related to tax receivable agreement	25			(183		)	(1,331		)	(33		)
Gain on divestiture	321			—			27,490			—
Expenses and adjustments related to acquisitions	(1,635		)	—			(7,694		)	658
ANI adjustments attributable to non-controlling interests	1,178			472			2,191			1,443
Tax impact	(7,507		)	6,491			(5,970		)	16,504
Net earnings attributable to WEX Inc.	$	47,893		$	34,468		$	202,211		$	149,208

Beginning in 2014, adjusted net income attributable to WEX Inc. excludes the expense of stock-based compensation and certain acquisition related expenses. For comparative purposes, adjusted net income attributable to WEX Inc. for the prior period has been adjusted to reflect the exclusion of stock-based compensation and differs from the figures previously reported due to this adjustment. The Company believes these adjustments make this non-GAAP measurement more comparable to its peers. In addition, in light of the sale of Pacific Pride Services LLC, the Company has decided that the gain or loss associated with a divestiture will not be included in adjusted net income attributable to WEX Inc., which it believes is consistent with the Company's practice of excluding other non-recurring items associated with strategic transactions. The Company recognized a gain on the sale of Pacific Pride.

Although adjusted net income is not calculated in accordance with generally accepted accounting principles (GAAP), this measure is integral to the Company's reporting and planning processes. The Company considers this measure integral because it eliminates the non-cash volatility associated with the fuel price related derivative instruments, and excludes other specified items that the Company's management excludes in evaluating the Company's performance. Specifically, in addition to evaluating the Company's performance on a GAAP basis, management evaluates the Company's performance on a basis that excludes the above items because:

For the same reasons, WEX believes that adjusted net income may also be useful to investors as one means of evaluating the Company's performance. However, because adjusted net income is a non-GAAP measure, it should not be considered as a substitute for, or superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted net income as used by WEX may not be comparable to similarly titled measures employed by other companies.

The tax impact of the foregoing adjustments is the difference between the Company’s U.S. GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes. The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s U.S. GAAP tax provision. The Company is unable to reconcile our adjusted net income guidance to the comparable GAAP measure because of the difficulty in predicting the amounts to be adjusted.

Exhibit 2 Selected Non-Financial Metrics
	Q4 2014			Q3 2014			Q2 2014			Q1 2014			Q4 2013
Fleet Payment Solutions – Payment Processing Revenue:⁽¹⁾
Payment processing transactions (000s)	79,195			80,379			78,390			73,327			72,962
Gallons per payment processing transaction	23.4			23.1			23.2			23.2			23.2
Payment processing gallons of fuel (000s)	1,850,304			1,859,894			1,816,204			1,703,887			1,691,884
Average US fuel price (US$ / gallon)	$	3.17		$	3.61		$	3.76		$	3.64		$	3.54
Average Australian fuel price (US$ / gallon)	$	4.63		$	5.22		$	5.44		$	5.34		$	5.30
Payment processing $ of fuel (000s)	$	6,071,384		$	6,842,202		$	6,933,978		$	6,301,668		$	6,112,394
Net payment processing rate	1.37		%	1.37		%	1.36		%	1.36		%	1.40		%
Fleet payment processing revenue (000s)	$	83,336		$	93,462		$	94,550		$	85,702		$	85,402

Other Payment Solutions – Payment Processing Revenue:⁽²⁾
Payment solutions purchase volume (000s)	$	4,500,724		$	5,477,610		$	4,339,339		$	3,670,609		$	3,287,160
Net interchange rate	0.89		%	0.83		%	0.86		%	0.81		%	0.96		%
Payment solutions processing revenue (000s)	$	40,279		$	45,476		$	37,460		$	29,683		$	31,536

⁽¹⁾As of December 1, 2014, includes metrics for the Esso portfolio in Europe where applicable.

⁽²⁾Excludes payment processing revenue from rapid! PayCard and UNIK. As of July 16, 2014, includes interchange volume and associated revenue for Evolution1.

Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with WEX.

Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with WEX.

Payment processing dollars of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with WEX.

Net payment processing rate represents the percentage of the dollar value of each payment processing transaction that WEX records as revenue from merchants less any discounts given to fleets or strategic relationships.

Payment solutions purchase volume represents the total dollar value of all transactions that use corporate card products including single use account products.

Net interchange rate represents the percentage of the dollar value of each transaction that WEX records as revenue less any discounts given to customers.

Exhibit 3 Segment Revenue Information Fourth Quarter and Full Year Ended 2014 and 2013 (in thousands) (unaudited)
Fleet Payment Solutions
	Three months ended December 31,				Increase (decrease)					Year ended December 31,				Increase (decrease)
	2014		2013		Amount			Percent		2014		2013		Amount			Percent
Revenues
Payment processing	$	83,336	$	85,402	$	(2,066	)	(2)	%	$	357,050	$	348,291	$	8,759		3	%
Transaction processing	4,096		4,893		(797		)	(16)	%	18,448		19,444		(996		)	(5)	%
Account servicing	21,074		18,876		2,198			12	%	81,217		75,123		6,094			8	%
Finance fees	21,801		16,851		4,950			29	%	75,703		59,520		16,183			27	%
Other	6,102		7,449		(1,347		)	(18)	%	29,751		25,046		4,705			19	%
Total revenues	$	136,409	$	133,471	$	2,938		2	%	$	562,169	$	527,424	$	34,745		7	%

Other Payment Solutions
	Three months ended December 31,				Increase (decrease)					Year ended December 31,				Increase (decrease)
	2014		2013		Amount			Percent		2014		2013		Amount			Percent
Revenues
Payment processing	$	42,810	$	33,674	$	9,136		27	%	$	162,937	$	133,615	$	29,322		22	%
Transaction processing	2,100		1,864		236			13	%	7,190		5,627		1,563			28	%
Account servicing	14,678		3,500		11,178			319	%	34,292		11,883		22,409			189	%
Finance fees	1,139		1,591		(452		)	(28)	%	5,180		6,368		(1,188		)	(19)	%
Other	14,728		8,183		6,545			80	%	45,879		32,546		13,333			41	%
Total revenues	$	75,455	$	48,812	$	26,643		55	%	$	255,478	$	190,039	$	65,439		34	%

CONTACT:
News media contact:
WEX Inc.
Jessica Roy, 207-523-6763
Jessica.Roy@wexinc.com
or
Investor contact:
WEX Inc.
Michael E. Thomas, 207-523-6743
Michael.Thomas@wexinc.com