Diversified WEX Grows Beyond FX And Fuel Price Headwinds

Corporate payments firm WEX said on Wednesday (July 27) that its second quarter earnings came in above Street expectations, even as it had to deal with the twin challenges of exchange rates and low fuel prices. Total sales came in at just under $234 million, up 9.5 percent from last year.

The headwinds mentioned above dragged sales down by about $15.5 million year to year. Net income, which was down 12.8 percent in the quarter to $1.08 a share, was still above The Street by $0.06. High single-digit top line growth overall reflected the benefits of business and revenue stream diversification. According to recent WEX expansion strategies, efforts continue with nations, such as China and the Philippines.

During a call with the investment community, Melissa Smith, the company’s CEO, stated that models dictate that WEX be less dependent on the vagaries of pricing with far-flung operations.

Management stated that the acquisition of Electronic Funds Source (EFS), which helped the top line grow since closing at the beginning of the month, proceeds apace.

The CEO said that the main considerations thus far of the EFS buy would have “immaterial” impact to the bottom line this year but would also be accretive next year.

The domestic fleet business posted organic gains, but that was overshadowed by the travel and corporate solution segment, with growth of about 11 percent on the top line and strong travel vertical demand.

In an interview with PYMNTS, Smith said that the firm had hired new salespeople to help expand European operations. “Some markets are fragmented,” she noted on the call. “[It is] important that we can move from country to country to get scale.” Later, she told PYMNTS that the push toward the EFS integration and slight top line contribution would be tied to business signed but not yet brought on board. And she felt the company has been, and is, positioned well to take advantage of growing demand for health care and other payments.