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Wex misses third-quarter earnings and revenue estimates

Provider of fuel payment processing for fleet vehicles sees 17% fall in revenue

Wex Inc. (NYSE: WEX) on Thursday reported third-quarter revenue of $382.1 million, down 17% from $460 million in Q3 2019, and adjusted earnings per share (EPA) of $1.59.

The quarterly results fell short of Wall Street expectations, with most analysts predicting earnings of $1.71 to $1.73 per share and revenue of $395 million.

“As expected, the pandemic continues to impact business activity within our customer base,” Wex CEO Melissa Smith said during the company’s quarterly earnings call. “Although profitability remains down due to the impacts of COVID 19, we continue to execute well on the items we can control and drove better than expected results for the quarter.”

Portland, Maine-based Wex is a global payment-processing technology provider for the commercial and government vehicle fleet industry. 

The 17% year-over-year revenue decrease in the third quarter includes a $16.7 million unfavorable impact from fuel prices and spreads and a $700,000 positive impact from foreign exchange rates.

Wex also reported a third-quarter net loss of $65.8 million, after reporting a net profit in the same period a year earlier. Diluted EPA decreased 38.61% to $1.59 for the quarter, compared to $2.59 a year ago.

Fleet solutions, Wex’s largest segment, posted revenue of $228,704 for the third quarter, an 18% decrease compared to 2019.

Total fuel payments processed declined 22% to $7.6 billion as the average fuel price declined 20% in the period.

Fleet transactions decreased 10.6%, with gallons of fuel purchased by Wex’s customers also declining 2.7%. 

The late fee rate – revenue from late fees as a percentage of fleet fuel purchases – declined 10 basis points year-over-year to 0.48% as the gross amount of late fee revenue on fuel payments declined 36% to $36.2 million.

“With over-the-road customers, payment processing transactions grew 8% this quarter,” Smith said. “Recently we’ve also seen stronger new customer applications submitted for approval. Wex’s North American fleet approved applications in September were up 15% compared to last year, and in the over-the-road segment, the number was 21%.”

Wex’s travel and corporate solutions segment posted revenue of $64,296, a 35% decline compared to 2019.

The company’s health and employee benefit solutions segment posted third-quarter revenue of $89,116, a 7% increase compared to last year.

Smith also commented on Wex’s ongoing litigation with ENett and Optal. In May, Wex officials announced that due to the global coronavirus pandemic, the company would not continue with plans for the $1.7 billion acquisition of ENett and Optal.

A British court ruled Oct. 12 that Wex can push ahead with its effort to nullify the acquisition because of the coronavirus pandemic’s negative impact on its financials.

Financial guidance

Wex withdrew all previously issued full fiscal year 2020 financial guidance in May due to COVID-19.

“Given the continued uncertainty related to COVID-19, Wex is not providing any further financial guidance at this time,” the company said in a release.

Wex’s fleet solutions is the company’s largest segment by revenue. (Courtesy Wex)

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Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact