Exhibit 99.2
WEX INC. First Quarter 2016
Earnings Call April 27, 2016
2 The attached materials
and our commentary relating to those materials contain statements about
future plans and expectations, which constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements are generally stated
in terms of the Company’s plans, expectations and intentions. Any
statements that are not statements of historical facts are
forward-looking statements. 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 payment 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
fluctuations in 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 or plans to acquire; 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
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, the
Company as the corporate parent or other subsidiaries or affiliates; the
impact of the Company’s outstanding notes on its operations; the impact
of increased leverage on the Company's operations, results or capacity
generally, and as a result of potential acquisitions specifically;
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, 2015, filed on
Form 10-K with the Securities and Exchange Commission on February 26,
2016. 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 presentation 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. Non-GAAP Information: For additional
important information and disclosure regarding non-GAAP metrics,
specifically adjusted net income (or “ANI”), total FX and PPG adjusted
revenue, revenue adjusted for FX and ANI adjusted for FX and PPG, please
see the appendix to this document and our most recent earnings release,
issued on April 27, 2016, for an explanation and reconciliation of
non-GAAP ANI to GAAP net income.
Performance Highlights 3
FINANCIAL SUMMARY STRATEGY PERFORMANCE OF FLEET SOLUTIONS PERFORMANCE OF
HEALTH AND EMPLOYEE BENEFIT SOLUTIONS PERFORMANCE OF TRAVEL AND
CORPORATE SOLUTIONS OUTLOOK
Financial Summary 4
Excluding continued macroeconomic headwinds, drove strong growth across
the businessLeveraged the scale of our global network through efficient
operationsFocused on profitability through execution of cost management
programs Exceeded revenue and ANI guidance 1Q16($) 1Q15($) ∆ YR/YR
Revenue 205,928 202,285 1.8% Revenue – FX and PPG Adjusted 226,590
202,285 12.0% GAAP EPS 0.59 0.57 3.5% ANI EPS 0.97 1.19 -18.5% ANI EPS –
PPG/FX/Hedge Adjusted 1.15 0.99 16.2% (in thousands, except per share
data)
3-Pillar Strategy for
Growth and Margin Expansion ACCELERATE GROWTHIN CORE VERTICALS CAPTURE
EFFICIENCIES AND NEW SCALING OPPORTUNITIES DEVELOP AND DRIVE
MARKET-LEADING, GLOBAL OFFERINGS Our recent actions demonstrate our
ability to pursue the three strategies in tandem, and this success has
driven the momentum we saw this quarter. Brought new capabilities to the
market including Clearview and FlexCardSuccessful integration of
Benaissance product into WEX Health Suite of offerings Maintained our
disciplined focus on organic growth including key wins such as
Enterprise, C-Trip, ContaxSignificant momentum coming out of WEX Health
Partner Conference Strong results with pricing modernization initiatives
in the US and EuropeTransitioned to global technical operations model 5
Fleet Solutions Segment
Performance 6 Continued to modernize pricing structure Deepened
relationships with domestic Fleet customers Domestic same store sales
pressure First Quarter Highlights Second Quarter Outlook 1Q16($) 1Q15($)
∆ Yr/Yr Total Segment Revenue 121,074 128,490 -5.8% Payment processing
62,290 72,943 -14.6% Other 58,784 55,547 5.8% Total Revenue – FX/PPG
Adjusted 139,053 128,490 8.2% Average US fuel price (US$/gallon) $1.97
$2.57 -23.3% Average Australian fuel price (US$/gallon) $3.10 $3.73
-16.9% Payment Processing Transactions* 89,097 81,934 8.7% Net payment
processing rate (%) 1.44 1.36 5.9% Expansion of pricing modernization
Modestly growing fuel prices Acceleration of new products (in thousands,
except for fuel price and net payment processing rate) * Includes growth
from transferring a customer relationship from transaction processing to
payment processing
Travel and Corporate
Solutions Segment Performance 7 (in thousands, except for net
interchange rate) Generated strong volume growth globally New volume
tier with major customers triggering higher rebates Asia virtual
expansion on track with signing of new customer, C-Trip First Quarter
Highlights Second Quarter Outlook 1Q16($) 1Q15($) ∆ Yr/Yr Total Segment
Revenue 45,142 43,073 4.8% Payment processing 34,626 32,635 6.1% Other
10,516 10,438 0.7% Total Revenue – FX Adjusted 46,206 43,073 7.3%
Purchase Volume 4,879,001 4,150,298 17.6% Net Interchange Rate 0.71%
0.79% -10.1% Continued global expansion and investments in Asia and
Europe Focus on operational efficiencies and scale Stability in net
interchange rate
*Domestic purchase volume
only (in thousands) 8 1Q16($) 1Q15($) ∆ Yr/Yr Total Segment Revenue
39,712 30,722 29.3% Total Revenue – FX Adjusted 41,331 30,722 34.5%
Purchase Volume* 1,092,552 889,569 22.8% First Quarter Highlights Second
Quarter Outlook Successful enrollment season and platform user expansion
in WEX Health Solid integration of Benaissance acquisition leading to
revenue opportunities Continued growth and expansion in Brazil market
Significant momentum coming out of industry-leading Partner Conference
Onboarding of Enterprise Partners Ongoing adoption of mobile application
Health and Employee Benefit Solutions Segment
Guidance and Assumptions 9
(in millions, except per share data) 2Q16 Outlook FY16 Outlook Revenue
$216 - $226 $879 - $909 Adj. Net Income $37.0 - $40.0 $158 - $170 Adj.
EPS $0.96 - $1.04 $4.07 - $4.37 Fleet Credit Loss 7 - 12 bps 10 - 15 bps
Domestic Fuel Prices $2.20 per gallon $2.14 per gallon Adj. Net Income
Tax Rate 36% - 37% 36% - 37% Number of Shares Outstanding 39 million 39
million Driving organic growth and leveraging the scale of our global
network, while maintaining financial discipline and cost management.
WEX Appendix
WEX LISTED NYSE 10
11 FX and PPG Adjusted
Revenue by Segment(in thousands)(unaudited) Three months ended March 31,
2016 vs 2015 % change 2016 2015 % Change Excluding FX Excluding PPG
Excluding FX/PPG Fleet Solutions Revenue $121,074 $128,490 -5.8% -4.1%
6.6% 8.2% Travel and Corporate Solutions Revenue 45,142 43,073 4.8% 7.3%
N/A 7.3% Health and Employee Benefit Solutions Revenue 39,712 30,722
29.3% 34.5% N/A 34.5% Total $205,928 $202,285 1.8% 4.2% 9.7% 12.0%
12 Reconciliation of Total
FX and PPGAdjusted Revenue to GAAP Revenue(in thousands)(unaudited)
Fleet Solutions Revenue Travel and Corporate Solutions Revenue Health
and Employee Benefit Solutions Revenue Total Revenue Three months ended
March 31, 2016 2015 2016 2015 2016 2015 2016 2015 Reported revenue
$121,074 $128,490 $45,142 $43,073 $39,712 $30,722 $205,928 $202,285 FX
adjustment 2,094 - 1,064 - 1,619 - 4,777 - PPG adjustments 15,885 - - -
- - 15,885 - Total FX and PPG adjusted revenue $139,053 $128,490 $46,206
$43,073 $41,331 $30,722 $226,590 $202,285 To determine revenue on a FX
adjusted basis, revenue from entities whose functional currency is not
denominated in U.S. dollars, as well as revenue from purchase volume
transacted in non-US denominated currencies, were translated using the
weighted average exchange rates for the same period in the prior year.
To determine revenue on a PPG adjusted basis, revenue was adjusted based
on the average retail price of fuel for the same period in the prior
year for the portion of our business that earns revenue based on a
percentage of fuel spend. For the portions of our business that earn
revenue based on margin spreads, revenue was adjusted to the comparable
margin from the prior year. Although FX and PPG adjusted revenue 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 volatility associated with foreign exchange rates and
fuel price. Specifically, in addition to evaluating the Company's
performance on a GAAP basis, management evaluates the Company's
performance on a FX and PPG adjusted revenue basis as management
considers this an important measure of operational performance.
13 Reconciliation of ANI to
ANI Adjusted for FX and PPG(in thousands)(unaudited) Three months ended
March 31, 2016 2015 % Change Adjusted net income attributable to WEX
Inc. $37,581 $46,218 -18.7% FX adjustment $1,734 - Tax impact of FX
adjustment (631) - FX adjustment, net of tax 1,103 - Adjusted net income
attributable to WEX Inc., with net FX adjusted only $38,684 $46,218
-16.3% PPG/hedge adjustment $9,374 $(12,094) Tax impact of PPG
adjustment (3,413) 4,438 PPG/hedge adjustment, net of tax 5,961 (7,656)
Adjusted net income attributable to WEX Inc., with net PPG adjusted only
$43,542 $38,562 12.9% FX adjustment $1,734 - PPG/hedge adjustment 9,374
(12,094) Tax impact of adjustments (4,044) 4,438 FX and PPG/hedge
adjustments, net of tax 7,064 (7,656) Adjusted net income attributable
to WEX Inc., with net FX and PPG/hedge adjustments $44,645 $38,562 15.8%
Adjusted net income attributable to WEX Inc., with net FX and PPG/hedge
adjustments per diluted share: diluted $1.15 $0.99 16.2% Weighted
average common shares outstanding: diluted 38,850 38,952
To determine adjusted net
income on a FX adjusted basis, revenue and expenses from entities whose
functional currency is not denominated in U.S. dollars, as well as
revenue and variable expenses from purchase volume transacted in non-US
denominated currencies, were translated using the weighted average
exchange rates for the same period in the prior year, net of tax. To
determine adjusted net income on a PPG adjusted basis, revenue, and
expenses variable to changes in fuel prices, were adjusted based on the
average retail price of fuel for the same period in the prior year for
the portion of our business that earns revenue based on a percentage of
fuel spend. For the portions of our business that earn revenue based on
margin spreads, revenue was adjusted to the comparable margin from the
prior year. Realized gains or losses on fuel price related hedges were
removed from both current and the same period in the prior year.
Although FX and PPG adjusted net income is not calculated in accordance
with GAAP, this measure is integral to the Company's reporting and
planning processes. The Company considers this measure integral because
it eliminates the volatility associated with foreign exchange rates and
fuel price. Specifically, in addition to evaluating the Company's
performance on a ANI basis, management evaluates the Company's
performance on a FX and PPG adjusted ANI basis as management considers
this an important measure of operational performance. Reconciliation of
ANI to ANI Adjusted for FX and PPG (Notes) 14
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:
The Company considers certain acquisition-related costs, including
certain financing costs including ticking fees, investment banking fees,
warranty and indemnity insurance, acquisition related expenses and
amortization of acquired intangibles, as well as gains and losses from
divestitures to be unpredictable, dependent on factors that may be
outside of our control and unrelated to the continuing operations of the
acquired or divested business or the Company. In prior periods not
reflected above, the Company has adjusted for goodwill impairments,
acquisition related assets impairments and adjustment to the tax
receivable agreement. In addition, the size and complexity of an
acquisition, which often drives the magnitude of acquisition-related
costs, may not be indicative of such future costs. The Company believes
that excluding acquisition-related costs and gains or losses of
divestitures facilitates the comparison of our financial results to the
Company's historical operating results and to other companies in our
industry. Reconciliation of Adjusted Net Income to GAAP Net Earnings
Reconciliation of Adjusted Net Income to GAAP Net Earnings(in
thousands)(unaudited) Three months ended March 31, 2016 2015 Adjusted
Net Income attributable to WEX Inc. $ 37,581 $ 46,218 Acquisition and
divestiture related items (27,945) (10,944) Stock-based compensation
(4,243) (3,218) Restructuring costs (1,589) (8,559) Changes in
unrealized fuel price derivatives (5,007) (9,345) Net foreign currency
remeasurement gain (loss) 16,124 (4,376) ANI adjustments attributable to
noncontrolling interest (69) 2,853 Tax related items 8,234 9,716 Net
earnings attributable to WEX Inc. $23,086 $22,345 15
Stock-based compensation is
different from other forms of compensation, as it is a non-cash expense.
For example, a cash salary generally has a fixed and unvarying cash
cost. In contrast, the expense associated with an equity-based award is
generally unrelated to the amount of cash ultimately received by the
employee, and the cost to us is based on a stock-based compensation
valuation methodology and underlying assumptions that may vary over
time. Restructuring charges are related to employee termination benefits
from certain identified initiatives to further streamline the business,
improve the Company's efficiency, non-reoccurring costs to create
synergies, and to globalize the Company's operations, all with an
objective to improve scale and increase profitability going forward. We
exclude these items when evaluating our continuing business performance
as such items are not consistently occurring and do not reflect expected
future operating expense, nor provide meaningful insight into the
fundamentals of current or past operations of our business.Exclusion of
the non-cash, mark-to-market adjustments on fuel-price related
derivative instruments helps management identify and assess trends in
the Company's underlying business that might otherwise be obscured due
to quarterly non-cash earnings fluctuations associated with
fuel-price-related derivative contracts. The non-cash, mark-to-market
adjustments on derivative instruments are difficult to forecast
accurately, making comparisons across historical and future quarters
difficult to evaluate. Net foreign currency gains and losses primarily
result from the remeasurement to functional currency of foreign currency
cash, receivable and payable balances, certain intercompany notes and
any gain or loss on foreign currency hedges relating to these items. The
exclusion of these items helps management compare changes in operating
results between periods that might otherwise be obscured due to currency
fluctuations. The adjustments attributable to non-controlling interests,
including adjustments to the redemption value of a non- controlling
interest, have no significant impact on the ongoing operations of the
business.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.
Reconciliation of Adjusted Net Income to GAAP Net Earnings (Cont.) 16
