SOUTH PORTLAND, Maine--(BUSINESS WIRE)--July 27, 2016--WEX Inc. (NYSE:WEX), a leading provider of corporate payment solutions, today reported financial results for the three months ended June 30, 2016.

Total revenue for the second quarter of 2016 increased 9.5% to $233.9 million from $213.7 million for the second quarter of 2015. During the quarter, fuel prices and foreign currency translations negatively impacted revenue by $13.6 million and $2.2 million, respectively, when compared to the prior year period.

Net earnings attributable to WEX Inc. on a GAAP basis decreased $13.9 million to $12.6 million, or $0.32 per diluted share, compared with $26.5 million, or $0.68 per diluted share, for the second quarter 2015. On a non-GAAP basis, the Company's adjusted net income attributable to WEX Inc. for the second quarter of 2016 decreased to $42.1 million, or $1.08 per diluted share, which is above the high end of our guidance range, from $48.3 million, or $1.25 per diluted share, for the same period last year. See Exhibit 1 for a full explanation and reconciliation of adjusted net income attributable to WEX Inc. and adjusted net income attributable to WEX Inc. per diluted share to the GAAP measures.

“I am pleased to announce a strong second quarter, which exceeded expectations. Our results were driven by continued focus on organic growth opportunities across our core verticals and execution against our strategic priorities. As recently announced, we closed the Electronic Funds Source (EFS) acquisition on July 1, which represents a significant milestone for our fleet business. We believe the benefits of the combination are compelling, including the opportunity to drive scale and value creation,” said Melissa Smith, WEX’s president and chief executive officer.

Smith continued, “Overall, we feel very good about where we stand at the halfway mark this year. Our organic growth engine has proven to be resilient over the years and will become even stronger as we further integrate our newly acquired businesses and pursue new inorganic opportunities. As we enter the second half of the year, I am confident that our momentum will continue as we focus on advancing our market position globally, enhancing our innovative product offering and maintaining our industry leading customer service.”

The Company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis, due to the uncertainty and indeterminate amount of certain elements that are included in reported GAAP results.

Third quarter 2016 guidance is based on an assumed average U.S. retail fuel price of $2.22 per gallon, excluding the impact of EFS. Full-year 2016 guidance is based on an assumed average U.S. retail fuel price of $2.16 per gallon, also excluding EFS. The fuel prices referenced above are based on the applicable NYMEX futures price. Our guidance assumes approximately 43 million shares outstanding for the third and fourth quarters.

The Company's guidance also assumes that third quarter 2016 fleet credit loss will range between 9 and 14 basis points, and full year 2016 fleet credit loss will range between 10 and 15 basis points, excluding EFS.

The Company's non-GAAP adjusted net income guidance excludes acquisition and divestiture related items, stock-based compensation, restructuring costs, net foreign currency remeasurement gains and losses, similar adjustments attributed to our non-controlling interest and certain tax related items.

Management uses the non-GAAP measures presented within this news release to evaluate the Company's performance on a comparable basis. 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 has historically used fuel-price derivative instruments to mitigate financial risks associated with the variability in fuel prices in North America. Starting with the second quarter of 2016, there are no longer any fuel price related derivatives outstanding.

To provide investors with additional insight into its operational performance, WEX has included in this news release in Exhibit 2, a table illustrating the impact of foreign currency translations and fuel prices for each of our operating segments for the three and six months ended June 30, 2016 and 2015, and in Exhibit 3, a table of selected non financial metrics for the five quarters ended June 30, 2016. The Company is also providing selected segment revenue information for the three months ended June 30, 2016 and 2015 in Exhibit 4.

In conjunction with this announcement, WEX will host a conference call today, July 27, 2016, at 9:00 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 44671194. 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 approximately 10 million vehicles and offering exceptional payment security and control across a wide spectrum of business sectors. WEX serves a global set of customers and partners through its operations around the world, with offices in the United States, Australia, New Zealand, Brazil, the United Kingdom, Italy, France, Germany, Norway, and Singapore. WEX and its subsidiaries employ more than 2,500 associates. The Company has been publicly traded since 2005, and is listed on the New York Stock Exchange under the ticker symbol “WEX.” For more information, visit www.wexinc.com and follow WEX on Twitter at @WEXIncNews.

This news release contains forward-looking statements, including statements regarding: financial guidance; assumptions underlying the Company's financial guidance; beliefs about opportunities to drive scale; and, confidence about the Company’s market position, product offerings and customer service. 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 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; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of an acquisition; competitive responses to any acquisitions; uncertainty of the expected financial performance of the combined operations following completion of an acquisition; the ability to successfully integrate the Company's acquisitions, specifically, the Electronic Funds Source LLC's operations and employees; the ability to realize anticipated synergies and cost savings; unexpected costs, charges or expenses resulting from an acquisition; 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 any derivative instrument positions 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 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. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited)

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Revenues
Payment processing revenue	$	126,080		$	128,081		$	237,136		$	245,516
Account servicing revenue	47,433			38,474			91,955			75,422
Finance fee revenue	32,704			20,401			56,210			40,592
Other revenue	27,719			26,697			54,563			54,408
Total revenues	233,936			213,653			439,864			415,938
Expenses
Salary and other personnel	66,662			59,091			130,072			117,508
Restructuring	5,985			—			7,574			8,559
Service fees	43,445			33,941			80,204			64,011
Provision for credit losses	6,443			3,983			10,360			7,897
Technology leasing and support	10,932			10,021			22,008			19,455
Occupancy and equipment	6,113			5,034			11,825			10,031
Depreciation and amortization	23,109			20,759			45,373			42,146
Operating interest expense	1,505			1,357			2,891			2,936
Cost of hardware and equipment sold	665			684			1,570			1,793
Other	17,442			15,865			35,225			31,659
Gain on divestiture	—			—			—			(1,215		)
Total operating expenses	182,301			150,735			347,102			304,780
Operating income	51,635			62,918			92,762			111,158
Financing interest expense	(30,418		)	(11,916		)	(51,976		)	(24,004		)
Net foreign currency (loss) gain	(4,823		)	(2,161		)	11,301			(6,537		)
Net realized and unrealized (loss) gain on fuel price derivative instruments	—			(6,000		)	711			(3,251		)
Income before income taxes	16,394			42,841			52,798			77,366
Income taxes	4,482			16,441			17,665			30,933
Net income	11,912			26,400			35,133			46,433
Less: Net loss attributable to non-controlling interests	(655		)	(92		)	(520		)	(2,404		)
Net earnings attributable to WEX Inc.	$	12,567		$	26,492		$	35,653		$	48,837
Net earnings attributable to WEX Inc. per share:
Basic	$	0.32		$	0.68		$	0.92		$	1.26
Diluted	$	0.32		$	0.68		$	0.92		$	1.26
Weighted average common shares outstanding:
Basic	38,806			38,739			38,781			38,798
Diluted	38,857			38,799			38,850			38,880


WEX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

	June 30, 2016			December 31, 2015
Assets
Cash and cash equivalents	$	317,847		$	279,989
Accounts receivable (less reserve for credit losses of $13,064 in 2016 and $13,832 in 2015)	1,886,744			1,508,605
Securitized accounts receivable, restricted	87,241			87,724
Income taxes receivable	11,006			—
Available-for-sale securities	24,405			18,562
Fuel price derivatives, at fair value	—			5,007
Property, equipment and capitalized software (net of accumulated depreciation of $212,060 in 2016 and $192,140 in 2015)	150,276			138,585
Deferred income taxes, net	7,518			10,303
Goodwill	1,119,048			1,112,878
Other intangible assets, net	448,685			470,712
Other assets	209,651			215,544
Total assets	$	4,262,421		$	3,847,909
Liabilities and Stockholders’ Equity
Accounts payable	$	553,522		$	378,811
Accrued expenses	215,480			156,180
Income taxes payable	—			2,732
Deposits	937,707			870,518
Securitized debt	73,327			82,018
Revolving line-of-credit facilities and term loan, net	727,639			664,918
Deferred income taxes, net	95,360			83,912
Notes outstanding, net	395,167			394,800
Other debt	62,149			50,046
Amounts due under tax receivable agreement	52,173			57,537
Other liabilities	13,146			10,756
Total liabilities	3,125,670			2,752,228
Commitments and contingencies
Stockholders’ Equity
Common stock $0.01 par value; 175,000 shares authorized; 43,146 shares issued in 2016 and 43,079 in 2015; 38,814 shares outstanding in 2016 and 38,746 in 2015	431			431
Additional paid-in capital	181,343			174,972
Non-controlling interest	12,052			12,437
Retained earnings	1,219,287			1,183,634
Accumulated other comprehensive income	(104,020		)	(103,451		)
Less treasury stock at cost; 4,428 shares in 2016 and 2015	(172,342		)	(172,342		)
Total stockholders’ equity	1,136,751			1,095,681
Total liabilities and stockholders’ equity	$	4,262,421		$	3,847,909


Exhibit 1
Reconciliation of GAAP Net Earnings to Adjusted Net Income (in thousands, except per share data) (unaudited)

	Three months ended June 30,
	2016						2015
				per diluted share						per diluted share
Net earnings attributable to WEX Inc.	$	12,567		$	0.32		$	26,492		$	0.68
Acquisition and divestiture related items	34,255			0.88			12,016			0.31
Stock-based compensation	4,870			0.13			3,942			0.10
Restructuring costs	5,985			0.15			—			—
Changes in unrealized fuel price derivatives	—			—			14,956			0.39
Net foreign currency remeasurement loss (gain)	4,823			0.12			2,161			0.06
ANI adjustments attributable to non-controlling interest	(930		)	(0.02		)	(765		)	(0.02		)
Tax related items	(19,495		)	(0.50		)	(10,485		)	(0.27		)
Adjusted Net Income attributable to WEX Inc.	$	42,075		$	1.08		$	48,317		$	1.25


	Six months ended June 30,
	2016						2015
				per diluted share						per diluted share
Net earnings attributable to WEX Inc.	$	35,653		$	0.92		$	48,837		$	1.26
Acquisition and divestiture related items	62,200			1.60			22,960			0.59
Stock-based compensation	9,113			0.23			7,160			0.18
Restructuring costs	7,574			0.19			8,559			0.22
Changes in unrealized fuel price derivatives	5,007			0.13			24,301			0.63
Net foreign currency remeasurement loss (gain)	(11,301		)	(0.29		)	6,537			0.17
ANI adjustments attributable to non-controlling interest	(861		)	(0.02		)	(3,618		)	(0.09		)
Tax related items	(27,729		)	(0.71		)	(20,201		)	(0.52		)
Adjusted Net Income attributable to WEX Inc.	$	79,656		$	2.05		$	94,535		$	2.43

Although adjusted net income is not calculated in accordance with generally accepted accounting principles (GAAP), this non-GAAP measure is integral to the Company's reporting and planning processes and the chief operating decision maker of the Company uses it to allocate resources. The Company considers this measure integral because in the periods prior to the second quarter of 2016, it eliminated the non-cash volatility associated with fuel price related derivative instruments, and it continues to exclude 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 related items are 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 as well as the impact from certain discrete tax items. 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
Segment Revenue Results (in thousands) (unaudited)

	Fleet Solutions				Travel and Corporate Solutions				Health and Employee Benefit Solutions				Total Wex Inc.
	Three months ended June 30,
	2016		2015	2016		2015		2016		2015		2016		2015
Reported revenue	$	143,960	135,520	$	53,336	$	48,214	$	36,640	$	29,919	$	233,936	$	213,653
FX impact (favorable) / unfavorable	961		—		759		—		470		—		2,190		—
PPG impact (favorable) / unfavorable	13,559		—		—		—		—		—		13,559		—

	Six months ended June 30,
	2016		2015		2016		2015		2016		2015		2016	2015
Reported revenue	$	265,034	264,010	$	98,478	$	91,288	$	76,352	$	60,640	$	439,864	$	415,938
FX impact (favorable) / unfavorable	3,055		—		1,823		—		2,089		—		6,967		—
PPG impact (favorable) / unfavorable	29,444		—		—		—		—		—		29,444		—

To determine the impact of foreign exchange translation (“FX”) on revenue, 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 the impact of price per gallon of fuel (“PPG”) on revenue, revenue variable to changes in fuel prices was calculated 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 earns revenue based on margin spreads, revenue was calculated utilizing the comparable margin from the prior year.

The table below shows management's estimate of the impact of certain macro factors on reported Net Income:


Segment Estimated Earnings Impact (in thousands) (unaudited)

	Fleet Solutions			Travel and Corporate Solutions			Health and Employee Benefit Solutions
	Three months ended June 30,
	2016		2015		2016	2015		2016	2015
FX impact (favorable) / unfavorable	$	138	—	$	206	—	$	287	—
PPG impact (favorable) / unfavorable	8,192		—		—	—		—	—
Realized gain on hedge settlement	—		5,695		—	—		—	—

	Six months ended June 30,
	2016		2015		2016	2015		2016	2015
FX impact (favorable) / unfavorable	$	745	—	$	534	—	$	455	—
PPG impact (favorable) / unfavorable	17,790		—		—	—		—	—
Realized gain on hedge settlement	—		13,388		—	—		—	—

To determine the estimated earnings impact of foreign exchange translation (“FX”), 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 the estimated earnings impact of price per gallon of fuel (“PPG”), revenue and certain variable expenses impacted by 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, net of applicable taxes. For the portions of our business that earn revenue based on margin spreads, revenue was adjusted to the comparable margin from the prior year, net of applicable taxes.


Exhibit 3 Selected Non-Financial Metrics
	Q2 2016			Q1 2016			Q4 2015			Q3 2015			Q2 2015
Fleet Solutions – Payment Processing Revenue:
Payment processing transactions (000s)	94,155			89,097			84,763			89,578			86,700
Gallons per payment processing transaction	22.6			22.7			23.3			23.0			23.1
Payment processing gallons of fuel (000s)	2,126,372			2,018,310			1,972,028			2,064,100			2,005,051
Average US fuel price (US$ / gallon)	$	2.29		$	1.97		$	2.29		$	2.61		$	2.74
Average Australian fuel price (US$ / gallon)	$	3.29		$	3.10		$	3.36		$	3.63		$	3.91
Payment processing $ of fuel (000s)	$	5,236,151		$	4,336,399		$	5,000,752		$	5,825,928		$	5,980,928
Net payment processing rate	1.35		%	1.44		%	1.46		%	1.38		%	1.34		%
Fleet payment processing revenue (000s)	$	70,711		$	62,290		$	72,995		$	80,230		$	80,127
Travel and Corporate Solutions – Payment Processing Revenue:
Purchase volume (000s)	$	5,595,326		$	4,879,001		$	4,567,831		$	5,800,134		$	4,922,400
Net interchange rate	0.77		%	0.71		%	0.80		%	0.76		%	0.76		%
Payment solutions processing revenue (000s)	$	43,194		$	34,626		$	36,726		$	44,386		$	37,564
Health and Employee Benefit Solutions:
Purchase volume (000s)	$	1,051,839		$	1,092,552		$	591,445		$	651,845		$	760,589

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 4 Segment Revenue Information Second Quarter Ended June 30, 2016 and 2015 (in thousands) (unaudited)

Fleet Solutions
	Three months ended June 30,				Increase (decrease)						Six months ended June 30,				Increase (decrease)
	2016		2015		Amount			Percent			2016		2015		Amount			Percent
Revenues
Payment processing revenue	$	70,711	$	80,127	$	(9,416	)	(11.8	)	%	$	133,001	$	153,070	$	(20,069	)	(13.1	)	%
Account servicing revenue	27,548		25,360		2,188			8.6		%	52,986		49,243		3,743			7.6		%
Finance fee revenue	30,674		19,069		11,605			60.9		%	52,611		38,064		14,547			38.2		%
Other revenue	15,027		10,964		4,063			37.1		%	26,436		23,633		2,803			11.9		%
Total revenues	$	143,960	$	135,520	$	8,440		6.2		%	$	265,034	$	264,010	$	1,024		0.4		%


Travel and Corporate Solutions
	Three months ended June 30,				Increase (decrease)						Six months ended June 30,				Increase (decrease)
	2016		2015		Amount			Percent			2016		2015		Amount			Percent
Revenues
Payment processing revenue	$	43,194	$	37,564	$	5,630		15.0		%	$	77,820	$	70,199	$	7,621		10.9		%
Account servicing revenue	337		472		(135		)	(28.6	)	%	610		880		(270		)	(30.7	)	%
Finance fee revenue	145		73		72			98.6		%	221		129		92			71.3		%
Other revenue	9,660		10,105		(445		)	(4.4	)	%	19,827		20,080		(253		)	(1.3	)	%
Total revenues	$	53,336	$	48,214	$	5,122		10.6		%	$	98,478	$	91,288	$	7,190		7.9		%


Health and Employee Benefit Solutions
	Three months ended June 30,				Increase (decrease)						Six months ended June 30,				Increase (decrease)
	2016		2015		Amount			Percent			2016		2015		Amount			Percent
Revenues
Payment processing revenue	$	12,175	$	10,390	$	1,785		17.2		%	$	26,315	$	22,247	$	4,068		18.3		%
Account servicing revenue	19,548		12,642		6,906			54.6		%	38,359		25,299		13,060			51.6		%
Finance fee revenue	1,885		1,259		626			49.7		%	3,378		2,399		979			40.8		%
Other revenue	3,032		5,628		(2,596		)	(46.1	)	%	8,300		10,695		(2,395		)	(22.4	)	%
Total revenues	$	36,640	$	29,919	$	6,721		22.5		%	$	76,352	$	60,640	$	15,712		25.9		%

CONTACT:
News media:
WEX Inc.
Jessica Roy, 207-523-6763
Jessica.Roy@wexinc.com
or
Investor:
WEX Inc.
Steve Elder, 207-523-7769
Steve.Elder@wexinc.com