WEX Inc. (WEX) reported fourth-quarter 2014 adjusted net income of 90 cents per share which missed the Zacks Consensus Estimate by 12.6% and declined 20.3% year over year.
Including one-time items net income came in at $47.9 million or $1.23 per share, up from $34.5 million or 88 cents per share in the year-ago quarter.
Though the quarter experienced foreign exchange and fuel price headwinds, the underlying fundamentals of the business remained strong.
Operational Update
Total revenue of $211.9 million surpassed the Zacks Consensus Estimate by 2.7%. Results also improved year over year by 16.2% on the back of solid performances at both the segments.
Total operating expenses rose 35.1% year over year to $150 million in the reported quarter. Higher salary and other personnel expenses, service fees, provision for credit losses, technology leasing and support, occupancy and equipment, advertising, marketing, postage and shipping, communications, depreciation, amortization and impairments, operating interest expense and other expenses led to the rise.
Total corporate card purchase volume grew 37% to $4.5 billion from $3.3 billion in the fourth quarter of 2013.
Segments Details
Fleet Payment Solutions – Fleet payment processing revenues came in at $83.3 million, down 2.4% year over year. Payment processing transactions came in at 79.2 million compared with 72.9 million in the year-ago quarter. The upside was driven by the international exposure that the products received in Brazil, Europe and Asia-Pac, thereby opening up significant new markets.
Other Payment Solutions – The Payment solutions processing revenues came in at $40.3 million, up 27% year over year. The purchase volume came in at $4.5 billion, up 36.9%. Key customer wins and contract extensions in the travel business along with increase in the distribution channels in Europe drove the upside.
Full-Year 2014 Highlights
For full year, WEX reported adjusted net income of $4.96, outperforming the Zacks Consensus Estimate by 2.1% and also improving year over year by 8%.
Revenues for the full year increased 14% to $817.6 million. Results also surpassed the Zacks Consensus Estimate by 0.6%.
Financial Update
WEX exited 2014 with cash and cash equivalents worth $284.8 million down 21.2% from the 2013 level.
Total assets came in at $4.1 billion, up 20.1% from the year-earlier level.
Shareholders’ equity came in at $1.1 billion up 19.3% from 2013.
Strategic Initiatives
On Dec 1, 2014, the company completed the takeover of ExxonMobil’s European commercial fuel card program.
On Jan 12, 2015, WEX acquired Evolution1, thereby entering the health care payments market.
Looking Forward
For the first quarter of 2015, WEX expects adjusted net income between $37 million and $40 million or 94 cents and $1.02 per share on revenues of $192 million and $201 million
For full-year 2015, the company expects revenues in the range of $860 million–$890 million. Adjusted net income is estimated to be in the range of $191 million–$203 million, or $4.90–$5.20 per share.
Zacks Rank
Currently, WEX carries a Zacks Rank #4 (Sell).
Performance of Other Stocks
Visa Inc. (V) beat fiscal first-quarter earnings estimates on improved top line across segments. The company reported operating earnings of $2.53 per share, outpacing the Zacks Consensus Estimate of $2.50 and the prior-year quarter figure of $2.20 per share.
American Express Co. (AXP) reported fourth-quarter operating earnings per share of $1.39, which surpassed the Zacks Consensus Estimate by a penny. This marked the company’s fourth consecutive earnings beat. EPS also topped the year-ago quarter figure of $1.21 by 15%.
Discover Financial Services (DFS) reported fourth-quarter earnings per share of $1.19 that missed the Zacks Consensus Estimate of $1.30 and lagged the year-ago quarter figure by 3%.
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