WEX reports sharp drops in revenue and earnings during second quarter

WEX Inc. (NYSE: WEX) reported earnings of $1.21 per share, a 46.9% decline compared to earnings of $2.28 per share a year ago, during the company’s earnings call on Thursday.

The Portland, Maine-based provider of fuel payment processing for fleet vehicles also reported revenues of $347.08 million for the quarter ended June 2020, compared to year-ago revenues of $441.81 million, a 21.4% decline.

“Our second quarter results reflect the impact of the COVID-19 pandemic and underscore the resilience of our business, where we saw a few bright spots even in this challenged environment,” said Melissa Smith, WEX’s chair and chief executive officer.

WEX reported net income increased by $58.9 million to $72.7 million during the second quarter, which Smith attributed to “disciplined capital allocation” and adding “new customers.”

“During the quarter we signed OMV, a European oil company with 2,100 locations across 10 countries that will use us for their private label processing needs,” Smith said. “We also signed J.B. Hunt, one of the largest trucking companies in the country.”

Wex’s second quarter 2020 performance metrics include:

WEX over-the-road (OTR) fleet solutions decreased 24% to 204,380 compared to the second quarter of 2019

Fuel transactions processed decreased 17% to $127.9 million
Payment processing transactions decreased 19% to $103.1 million
Travel and Corporate Solutions’ purchase volume decreased 68% to $3.2 billion
Health and Employee Benefit Solutions’ average number of Software-as-a-Service (SaaS) accounts in the U.S. grew 15% to 14.5 million
Average number of vehicles serviced was 15.1 million, an 8% increase

“With the over-the-road business, we are seeing larger over-the-road fleets recovering faster than some of the smaller over-the-road fleet customers around the world,” Smith said. “In the North American fleet business, it is actually a little bit less clear. The smaller businesses have held up really well.”

Smith added that they are monitoring how the Paycheck Protection Program (PPP) and federal stimulus programs will affect the business sector. Through June 30, the transportation and warehousing sector had received more than $17 billion in PPP funding.

“It is one of the things that we are just watching – what happens with stimulus money, and how is that going to impact some of the customer behavior,” Smith said.

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.

Officials and shareholders of ENett and Optal filed a lawsuit in May in England alleging WEX breached the terms of its share purchase agreement when it backed out of the deal.

“We continue to remain confident in our position that we cannot predict the outcome of these proceedings,” Smith said. “There’s a trial of preliminary issues scheduled for the end of September, where certain issues related to the case will be decided. It would be impossible to predict the outcome at this point in time.”