Business Wire | Oct 29, 2020 06:30AM EDT

WEX Inc. Reports Third Quarter 2020 Financial Results

Oct. 29, 2020

PORTLAND, Maine--(BUSINESS WIRE)--Oct. 29, 2020--WEX Inc. (NYSE: WEX), a leading financial technology service provider, today reported financial results for the three months ended September 30, 2020.

"In the third quarter, we again demonstrated our ability to adapt to the rapidly-changing operating environment. While demand remained muted due to global uncertainty around COVID-19, spend volumes across all segments steadily recovered as we progressed through the quarter. Notably, our corporate payments customers and U.S. health business experienced year-over-year top-line growth, driven by the recovery of B2B payments volumes and increased SaaS accounts. We were also encouraged by sequential improvement in the Fleet segment, driven by positive over-the-road volume trends," said Melissa Smith, WEX's Chair and Chief Executive Officer.

Ms. Smith added, "We remain focused on positioning WEX for sustained long-term growth once market conditions recover. This includes selectively investing in areas of our business that are growing and building upon our technology position by growing our platform of services allowing us to enhance value-added offerings to customers, which is key to our differentiation in the marketplace. I am pleased with our efforts to successfully control what we could during these unprecedented times and deliver against key priorities this quarter. Our sales momentum continues to be strong which is important to meeting our long-term growth targets and creates confidence in the future of WEX."

Third Quarter 2020 Financial Results

Total revenue for the third quarter of 2020 decreased 17% to $382.1 million from $460.0 million for the third quarter of 2019. This revenue decrease in the quarter includes a $16.7 million unfavorable impact from fuel prices and spreads and $0.7 million positive impact from foreign exchange rates.

Net income attributable to shareholders on a GAAP basis decreased by $80.5 million to a net loss of $65.8 million, or $1.49 per diluted share, compared with net income of $14.6 million, or $0.33 per diluted share, for the third quarter of 2019. The Company's adjusted net income attributable to shareholders, which is a non-GAAP measure, was $70.9 million for the third quarter of 2020, or $1.59 per diluted share, down 39% per diluted share from $113.5 million or $2.59 per diluted share for the same period last year. See Exhibit 1 for a full explanation and reconciliation of adjusted net (loss) income attributable to shareholders and adjusted net income attributable to shareholders per diluted share to the comparable GAAP measures.

Third Quarter 2020 Performance Metrics

* Average number of vehicles serviced was approximately 15.3 million, an increase of 7% from the third quarter of 2019. * Total fuel transactions processed decreased 8% from the third quarter of 2019 to 149.6 million. Payment processing transactions decreased 11% to 120.9 million. * Travel and Corporate Solutions' purchase volume decreased 59% to $4.7 billion from $11.5 billion in the third quarter of 2019. * Health and Employee Benefit Solutions' average number of Software-as-a-Service (SaaS) accounts in the U.S. grew 12% to 14.6 million from 13.0 million in the third quarter of 2019.

"Although revenue remained pressured this quarter, we saw gradual sequential improvement in business activity and volume across all segments, demonstrating the diversification and resilience of our business model. Additionally, we continued to focus on careful and strategic capital allocation as well as disciplined cost and risk management, which are the building blocks of long-term and sustained shareholder value," said Roberto Simon, WEX's Chief Financial Officer. "Looking ahead, we expect revenue to level off in the fourth quarter, and to ramp up investments in select high-growth areas of our business to position WEX advantageously for future opportunities. Importantly, we are on track to meet the cost containment program outlined earlier this year, and we have ample liquidity with a strong balance sheet."

Cost Actions and Liquidity Update

In response to COVID-19 uncertainty, the Company implemented a number of actions to reduce capital and operating expenditures, adjust cost structure and preserve financial flexibility and a strong liquidity position during the second and third quarters of 2020. The total operating expense savings resulting from these changes are still expected to be approximately $60-$65 million for the year, compared to our original guidance. The Company believes WEX's balance sheet and liquidity position remain strong. Third quarter 2020 leverage was 3.2x compared to 3.5x for the end of last year.

Financial Guidance

On May 7, 2020, the Company withdrew all previously-issued full fiscal year 2020 financial guidance due to COVID-19. Given the continued uncertainty related to COVID-19, the Company is not providing any further financial guidance at this time. WEX continues to carefully monitor the pandemic and the impact on its business; however, given the uncertainty regarding the pandemic's spread, duration, and impact, the Company is currently unable to predict the precise extent to which the COVID-19 pandemic will impact its future operations and financial results.

Additional InformationManagement 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.

To provide investors with additional insight into its operational performance, WEX has included in this news release in Exhibit 1, reconciliations of non-GAAP measures referenced in this news release, in Exhibit 2, tables illustrating the impact of foreign currency rates and fuel prices for each of our reportable segments for the three and nine months ended September 30, 2020, and in Exhibit 3, a table of selected non-financial metrics for the quarter ended September 30, 2020 and four preceding quarters. The Company is also providing segment revenue for the three and nine months ended September 30, 2020 and 2019 in Exhibit 4 and information regarding segment adjusted operating income margin and adjusted operating income margin in Exhibit 5.

Conference Call DetailsIn conjunction with this announcement, WEX will host a conference call today, October 29, 2020, at 10:00 a.m. (ET). As previously announced, the conference call will be webcast live on the Internet, and can be accessed along with the accompanying slides at the Investor Relations section of the WEX website, www.wexinc.com. The live conference call also can be accessed by dialing (833) 714-0940 or (778) 560-2809. The Conference ID number is 2894917. A replay of the webcast and the accompanying slides will be available on the Company's website.

About WEXPowered by the belief that complex payment systems can be made simple, WEX (NYSE: WEX) is a leading financial technology service provider across a wide spectrum of sectors, including fleet, travel and healthcare. WEX operates in 10 countries and in 20 currencies through approximately 5,000 associates around the world. WEX fleet cards offer 15 million vehicles exceptional payment security and control; purchase volume in its travel and corporate solutions grew to approximately $40 billion in 2019; and the WEX Health financial technology platform helps 390,000 employers and more than 32 million consumers better manage healthcare expenses. For more information, visit www.wexinc.com.

Forward-Looking StatementsThis earnings release contains forward-looking statements, including statements regarding: financial expectations, financial guidance and potential for providing the same; assumptions underlying the Company's future financial performance; future growth opportunities and expectations; expectations for future revenue performance; future impacts resulting from areas of investment; and, expectations for the macro environment. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this earnings release, the words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project" 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 extent to which the coronavirus (COVID-19) pandemic and measures taken in response thereto adversely impact our business, results of operations and financial condition in excess of current expectations; 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 including the impact of any continued reductions in fuel price and the resulting impact on our revenues and net income; the effects of the Company's business expansion and acquisition efforts; potential adverse 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 failure to complete or successfully integrate the Company's acquisitions; the ability to realize anticipated synergies and cost savings; unexpected costs, charges or expenses resulting from an acquisition; the Company's ability to successfully acquire, integrate, operate and expand commercial fuel card programs; 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 or those of the Company's third-party service providers and any resulting negative impact on the Company's reputation, liabilities or relationships with customers or merchants; the Company's failure to maintain or renew key commercial agreements; failure to expand the Company's technological capabilities and service offerings as rapidly as the Company's competitors; failure to successfully implement the Company's information technology strategies and capabilities in connection with its technology outsourcing and insourcing arrangements and any resulting cost associated with that failure; 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; legal, political and economic uncertainty surrounding the United Kingdom's departure from the European Union; the impact of the transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company's outstanding notes on its operations; the impact of increased leverage on the Company's operations, results or borrowing capacity generally, and as a result of acquisitions specifically; the impact of sales or dispositions of significant amounts of the Company's outstanding common stock into the public market, or the perception that such sales or dispositions could occur; the possible dilution to the Company's stockholders caused by the issuance of additional shares of common stock or equity linked securities, the incurrence of impairment charges if our assessment of the fair value of certain of the Company's reporting units changes; the uncertainties of litigation, including the legal proceedings with respect to the purchase agreement relating to the proposed eNett and Optal acquisition; as well as other risks and uncertainties identified in Item 1A of our annual report on Form 10-K for the year ended December 31, 2019 and our quarterly reports on Forms 10-Q for the quarters ended March 31, 2020 and June 30, 2020, filed respectively with the Securities and Exchange Commission on February 28, 2020, May 11, 2020 and August 5, 2020. 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 OPERATIONS(in thousands, except per share data)(unaudited)

Three months ended Nine months ended September 30, September 30,

2020 2019 2020 2019

Revenues

Payment processing $ 171,077 $ 224,756 $ 522,575 $ 626,380 revenue

Account servicing revenue 112,417 109,205 335,736 303,183

Finance fee revenue 46,307 66,382 144,945 175,667

Other revenue 52,315 59,620 157,623 178,416

Total revenues 382,116 459,963 1,160,879 1,283,646

Cost of services

Processing costs 102,244 98,296 307,152 288,896

Service fees 10,881 14,905 34,335 43,348

Provision for credit 12,283 14,847 66,851 47,470 losses

Operating interest 5,262 11,508 20,151 31,765

Depreciation and 26,202 26,123 76,115 68,206 amortization

Total cost of services 156,872 165,679 504,604 479,685

General and 73,131 65,423 197,432 206,075 administrative

Sales and marketing 64,592 73,689 188,118 210,639

Depreciation and 39,314 36,861 118,907 105,264 amortization

Loss on sale of 46,362 - 46,362 - subsidiary

Operating income 1,845 118,311 105,456 281,983

Financing interest (40,950 ) (34,549 ) (101,813 ) (101,299 )expense

Net foreign currency loss (784 ) (16,528 ) (31,973 ) (13,748 )

Net unrealized gain(loss) on financial 3,774 (5,650 ) (32,115 ) (39,078 )instruments

(Loss) income before (36,115 ) 61,584 (60,445 ) 127,858 income taxes

Income tax provision 21,602 19,137 (3,852 ) 37,352 (benefit)

Net (loss) income (57,717 ) 42,447 (56,593 ) 90,506

Less: Net income (loss)from non-controlling 1,244 (631 ) 3,282 (233 )interests

Net (loss) income $ (58,961 ) $ 43,078 $ (59,875 ) $ 90,739 attributable to WEX Inc.

Change in value ofredeemable (6,879 ) (28,459 ) 50,437 (46,179 )non-controlling interest

Net (loss) incomeattributable to $ (65,840 ) $ 14,619 $ (9,438 ) $ 44,560 shareholders



Net (loss) incomeattributable to shareholders per share:

Basic $ (1.49 ) $ 0.34 $ (0.22 ) $ 1.03

Diluted $ (1.49 ) $ 0.33 $ (0.22 ) $ 1.02

Weighted average common shares outstanding:

Basic 44,166 43,349 43,720 43,300

Diluted 44,166 43,811 43,720 43,715



WEX INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited)

September 30, December 31, 2020 2019

Assets

Cash and cash equivalents $ 1,521,622 $ 810,932

Restricted cash 193,615 170,449

Accounts receivable 2,151,741 2,661,108

Securitized accounts receivable, restricted 97,522 112,192

Prepaid expenses and other current assets 66,589 87,694

Total current assets 4,031,089 3,842,375

Property, equipment and capitalized software 193,165 212,475

Goodwill and other intangible assets 3,875,843 4,016,251

Investment securities 31,259 30,460

Deferred income taxes, net 8,514 12,833

Other assets 174,042 184,024

Total assets $ 8,313,912 $ 8,298,418

Liabilities and Stockholders' Equity

Accounts payable $ 893,766 $ 969,816

Accrued expenses 322,388 315,642

Restricted cash payable 193,615 170,449

Short-term deposits 1,080,136 1,310,813

Short-term debt, net 127,084 248,531

Other current liabilities 55,420 34,692

Total current liabilities 2,672,409 3,049,943

Long-term debt, net 2,879,474 2,686,513

Long-term deposits 211,775 143,399

Deferred income taxes, net 211,555 218,740

Other liabilities 134,476 106,422

Total liabilities 6,109,689 6,205,017

Commitments and contingencies

Redeemable non-controlling interest 107,220 156,879

Stockholders' Equity

Total WEX Inc. stockholders' equity 2,084,930 1,926,947

Non-controlling interest 12,073 9,575

Total stockholders' equity 2,097,003 1,936,522

Total liabilities and stockholders' equity $ 8,313,912 $ 8,298,418

Exhibit 1Reconciliation of Non-GAAP Measures(in thousands, except per share data)(unaudited) Reconciliation of GAAP Net (Loss) Income Attributable to Shareholders toAdjusted Net Income Attributable to Shareholders

Three Months Ended September 30,

2020 2019

per per diluted diluted share share

Net (loss) income attributable $ (65,840 ) $ (1.49 ) $ 14,619 $ 0.33 to shareholders

Unrealized (gain) loss on (3,774 ) (0.09 ) 5,650 0.13 financial instruments

Net foreign currency 784 0.02 16,528 0.38 remeasurement loss

Acquisition-related intangible 42,831 0.97 42,800 0.98 amortization

Other acquisition and 20,328 0.46 7,907 0.18 divestiture related items

Loss on sale of subsidiary 46,362 1.05 - -

Stock-based compensation 18,170 0.41 9,522 0.22

Other costs 1,045 0.02 5,413 0.12

Debt restructuring and debt 5,329 0.12 3,251 0.07 issuance cost amortization

ANI adjustments attributable 6,233 0.14 27,149 0.62 to non-controlling interests

Tax related items (614 ) (0.01 ) (19,348 ) (0.44 )

Dilutive impact of stock - (0.01 ) - - awards^1

Adjusted net income $ 70,854 $ 1.59 $ 113,491 $ 2.59 attributable to shareholders

Nine Months Ended September 30, 2020

2020

2019

per diluted share

per diluted share

Net (loss) income attributable to shareholders

$

(9,438

)

(0.22

)

$

44,560

1.02

Unrealized loss on financial instruments

32,115

0.73

39,078

0.89

Net foreign currency remeasurement loss

31,973

0.73

13,748

0.31

Acquisition-related intangible amortization

127,847

2.92

116,502

2.67

Other acquisition and divestiture related items

36,005

0.82

24,704

0.57

Loss on sale of subsidiary

46,362

1.06

-

-

Stock-based compensation

45,059

1.03

34,956

0.80

Other costs

7,980

0.18

12,914

0.30

Debt restructuring and debt issuance cost amortization

9,989

0.23

18,200

0.42

ANI adjustments attributable to non-controlling interests

(52,101

)

(1.19

)

43,874

1.00

Tax related items

(72,298

)

$

(1.65

)

$

(60,585

)

$

(1.39

)

Dilutive impact of stock awards1

-

(0.03

)

-

-

Adjusted net income attributable to shareholders

$

203,493

$

4.61

$

287,951

$

6.59

1 As the Company reported a net loss for the three and nine months ended September 30, 2020, under U.S. Generally Accepted Accounting Principles ("GAAP"), the diluted weighted average shares outstanding equals the basic weighted average shares outstanding for those periods. The non-GAAP adjustments described above resulted in adjusted net income attributable to shareholders (versus a loss on a GAAP basis) for the third quarter of 2020 and nine months ended September 30, 2020. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding to arrive at adjusted per share data.

Nine Months Ended September 30, 2020

2020 2019

per per diluted diluted share share

Net (loss) incomeattributable to $ (9,438 ) (0.22 ) $ 44,560 1.02 shareholders

Unrealized loss on 32,115 0.73 39,078 0.89 financial instruments

Net foreign currency 31,973 0.73 13,748 0.31 remeasurement loss

Acquisition-related 127,847 2.92 116,502 2.67 intangible amortization

Other acquisition and 36,005 0.82 24,704 0.57 divestiture related items

Loss on sale of subsidiary 46,362 1.06 - -

Stock-based compensation 45,059 1.03 34,956 0.80

Other costs 7,980 0.18 12,914 0.30

Debt restructuring and debt 9,989 0.23 18,200 0.42 issuance cost amortization

ANI adjustmentsattributable to (52,101 ) (1.19 ) 43,874 1.00 non-controlling interests

Tax related items (72,298 ) $ (1.65 ) $ (60,585 ) $ (1.39 )

Dilutive impact of stock - (0.03 ) - - awards^1

Adjusted net incomeattributable to $ 203,493 $ 4.61 $ 287,951 $ 6.59 shareholders

1 As the Company reported a net loss for the three and nine months ended September 30, 2020, under U.S. Generally Accepted Accounting Principles ("GAAP"), the diluted weighted average shares outstanding equals the basic weighted average shares outstanding for those periods. The non-GAAP adjustments described above resulted in adjusted net income attributable to shareholders (versus a loss on a GAAP basis) for the third quarter of 2020 and nine months ended September 30, 2020. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding to arrive at adjusted per share data.

Reconciliation of GAAP Operating Income to Total Segment Adjusted OperatingIncome and Adjusted Operating Income Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Operating income $ 1,845 $ 118,311 $ 105,456 $ 281,983

Unallocated corporate 14,817 17,016 45,313 52,135 expenses

Acquisition-related 42,831 42,800 127,847 116,502 intangible amortization

Other acquisition and 15,430 7,907 31,107 24,704 divestiture related items

Loss on sale of 46,362 - 46,362 - subsidiary

Stock-based compensation 18,170 9,522 45,059 34,956

Other costs 1,045 5,413 7,980 12,914

Debt restructuring costs (240 ) 1,162 525 10,640

Total segment adjusted $ 140,260 $ 202,131 $ 409,649 $ 533,834 operating income

Unallocated corporate (14,817 ) (17,016 ) (45,313 ) (52,135 )expenses

Adjusted operating income $ 125,443 $ 185,115 $ 364,336 $ 481,699

The Company's non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition-related intangible amortization, other acquisition and divestiture related items, loss on sale of a subsidiary, stock-based compensation, other costs, debt restructuring and debt issuance cost amortization, similar adjustments attributable to our non-controlling interests and certain tax related items.

The Company's non-GAAP adjusted operating income excludes acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, other costs, and debt restructuring costs. Total segment adjusted operating income incorporates the same adjustments and further excludes unallocated corporate expenses.

Although adjusted net income, adjusted operating income and total segment adjusted operating income are not calculated in accordance with U.S. GAAP, these non-GAAP measures are integral to the Company's reporting and planning processes and the chief operating decision maker of the Company uses segment adjusted operating income to allocate resources among our operating segments. The Company considers these measures integral because they exclude the above-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:

* Exclusion of the non-cash, mark-to-market adjustments on financial instruments, including interest rate swap agreements and investment securities, helps management identify and assess trends in the Company's underlying business that might otherwise be obscured due to quarterly non-cash earnings fluctuations associated with these financial instruments. Additionally, the non-cash mark-to-market adjustments on financial instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate. * Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, accounts receivable and accounts payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on foreign currency hedges relating to these items. The exclusion of these items helps management compare changes in operating results between periods that might otherwise be obscured due to currency fluctuations. * The Company considers certain acquisition-related costs, including certain financing costs, investment banking fees, warranty and indemnity insurance, certain integration related expenses and amortization of acquired intangibles, as well as gains and losses from divestitures to be unpredictable, dependent on factors that may be outside of our control and unrelated to the continuing operations of the acquired or divested business or the Company. In addition, the size and complexity of an acquisition, which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. The Company believes that excluding acquisition-related costs and gains or losses of divestitures facilitates the comparison of our financial results to the Company's historical operating results and to other companies in our industry. * The loss on sale of subsidiary relates to the divestiture of the Company's former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are considered by the Company to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with the Company's practice of excluding other non-recurring items associated with strategic transactions. * Stock-based compensation is different from other forms of compensation as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time. * We exclude other costs when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals of current or past operations of our business. This includes costs related to further streamline the business, improve the Company's efficiency, create synergies and globalize the Company's operations. For the three and nine months ended September 30, 2020, other costs include certain costs incurred in association with COVID-19, including the cost of providing additional health, welfare and technological support to our employees as they work remotely. * Debt restructuring and debt issuance cost amortization are unrelated to the continuing operations of the Company. Debt restructuring costs are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals of current or past operations of our business. In addition, since debt issuance cost amortization is dependent upon the financing method, which can vary widely company to company, we believe that excluding these costs helps to facilitate comparison to historical results as well as to other companies within our industry. * The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a non-controlling interest, have no significant impact on the ongoing operations of the business. * The tax related items are the difference between the Company'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 GAAP tax provision. * The Company does not allocate certain corporate expenses to our operating segments, as these items are centrally controlled and are not directly attributable to any reportable segment.

For the same reasons, WEX believes that adjusted net income, adjusted operating income and total segment adjusted operating income may also be useful to investors when evaluating the Company's performance. However, because adjusted net income, adjusted operating income and total segment adjusted operating income are non-GAAP measures, they should not be considered as a substitute for, or superior to, net income (loss), operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted net income, adjusted operating income and total segment adjusted operating income as used by WEX may not be comparable to similarly titled measures employed by other companies.

Exhibit 2Impact of Certain Macro Factors on Reported Revenue and Adjusted Net Income(in thousands, except per share data)(unaudited)

The table below shows the impact of certain macro factors on reported revenue:

Segment Revenue Results

Fleet Solutions Travel and Corporate Health and Employee Total WEX Inc. Solutions Benefit Solutions

Three months ended September 30,

2020 2019 2020 2019 2020 2019 2020 2019

Reported $ 228,704 $ 277,526 $ 64,296 $ 99,128 $ 89,116 $ 83,309 $ 382,116 $ 459,963 revenue

FX impact(favorable) $ (1,105 ) $ - $ (223 ) $ - $ 634 $ - $ (694 ) $ - /unfavorable

PPG impact(favorable) $ 16,680 $ - $ - $ - $ - $ - $ 16,680 $ - /unfavorable

Segment Revenue Results

Fleet Solutions

Travel and Corporate Solutions

Health and Employee Benefit Solutions

Total WEX Inc.

Nine months ended September 30,

2020

2019

2020

2019

2020

2019

2020

2019

Reported revenue

$

682,931

$

777,622

$

203,150

$

272,126

$

274,798

$

233,898

$

1,160,879

$

1,283,646

FX impact (favorable) / unfavorable

$

1,669

$

-

$

601

$

-

$

1,622

$

-

$

3,892

$

-

PPG impact (favorable) / unfavorable

$

42,527

$

-

$

-

$

-

$

-

$

-

$

42,527

$

-

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-U.S. denominated currencies, were translated using the weighted average exchange rates for the same period in the prior year, exclusive of revenue derived from 2019 acquisitions for one year following the acquisition dates.

To determine the impact of price per gallon of fuel ("PPG") on revenue, revenue subject 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, exclusive of revenue derived from 2019 acquisitions for one year following the acquisition dates. For the portions of our business that earn revenue based on margin spreads, revenue was calculated utilizing the comparable margin from the prior year.

The table below shows the impact of certain macro factors on Adjusted Net Income:

Segment Revenue Results

Fleet Solutions Travel and Corporate Health and Employee Total WEX Inc. Solutions Benefit Solutions

Nine months ended September 30,

2020 2019 2020 2019 2020 2019 2020 2019

Reported $ 682,931 $ 777,622 $ 203,150 $ 272,126 $ 274,798 $ 233,898 $ 1,160,879 $ 1,283,646 revenue

FX impact(favorable) $ 1,669 $ - $ 601 $ - $ 1,622 $ - $ 3,892 $ - /unfavorable

PPG impact(favorable) $ 42,527 $ - $ - $ - $ - $ - $ 42,527 $ - /unfavorable

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-U.S. denominated currencies, were translated using the weighted average exchange rates for the same period in the prior year, exclusive of revenue derived from 2019 acquisitions for one year following the acquisition dates.

To determine the impact of price per gallon of fuel ("PPG") on revenue, revenue subject 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, exclusive of revenue derived from 2019 acquisitions for one year following the acquisition dates. For the portions of our business that earn revenue based on margin spreads, revenue was calculated utilizing the comparable margin from the prior year.

The table below shows the impact of certain macro factors on Adjusted Net Income:

Segment Estimated Earnings Impact

Travel and Health and Employee Fleet Solutions Corporate Benefit Solutions Solutions

Three months ended September 30,

2020 2019 2020 2019 2020 2019

FX impact(favorable) / $ (576 ) $ - $ (1,245 ) $ - $ 190 $ - unfavorable

PPG impact(favorable) / $ 10,531 $ - $ - $ - $ - $ - unfavorable

Nine months ended September 30,

2020 2019 2020 2019 2020 2019

FX impact(favorable) / $ 352 $ - $ (5,864 ) $ - $ (304 ) $ - unfavorable

PPG impact(favorable) / $ 26,450 $ - $ - $ - $ - $ - unfavorable

To determine the estimated earnings impact of FX on 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-U.S. denominated currencies, amounts were translated using the weighted average exchange rates for the same period in the prior year, net of tax, exclusive of revenue and expenses derived from 2019 acquisitions for one year following the acquisition dates.

To determine the estimated earnings impact of 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, exclusive of revenue and expenses derived from 2019 acquisitions for one year following the acquisition dates. 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 non-controlling interests and applicable taxes.

Exhibit 3Selected Non-Financial Metrics(unaudited)

Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019

Fleet Solutions:

Paymentprocessing 120,900 103,086 121,591 126,666 135,236 transactions(000s) ^(1)

Paymentprocessinggallons of 3,247,507 2,830,265 3,123,066 3,218,466 3,338,322 fuel (000s)^(2)

Average USfuel price $ 2.23 $ 2.07 $ 2.57 $ 2.80 $ 2.80 (US$ /gallon)

Paymentprocessing $ $ 7,609,098 $ 6,135,265 $ 8,412,642 $ 9,417,278 $ 9,737,591 of fuel(000s) ^(3)

Net paymentprocessing 1.35 % 1.47 % 1.35 % 1.10 % 1.29 %rate ^(4)

Paymentprocessing $ 102,419 $ 90,147 $ 113,323 $ 103,831 $ 125,288 revenue(000s)

Net late fee 0.48 % 0.57 % 0.56 % 0.65 % 0.58 %rate ^(5)

Late feerevenue $ 36,232 $ 35,071 $ 46,740 $ 61,587 $ 56,938 (000s) ^(6)

Travel andCorporate Solutions:

Purchasevolume $ 4,699,737 $ 3,168,064 $ 8,041,112 $ 9,635,211 $ 11,543,605 (000s) ^(7)

Netinterchange 1.13 % 1.37 % 0.87 % 0.84 % 0.74 %rate ^(8)

Paymentsolutionsprocessing $ 53,239 $ 43,261 $ 70,268 $ 80,986 $ 85,128 revenue(000s)

Health andEmployee BenefitSolutions:

Purchasevolume $ 1,120,786 $ 1,017,318 $ 1,592,313 $ 1,047,939 $ 1,126,156 (000s) ^(9)

Averagenumber ofSaaS 14,599 14,487 14,458 13,391 13,022 accounts(000s) ^(10)

Definitions and explanations:

(1) Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with WEX. (2) Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with WEX. (3) Payment processing dollars of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with WEX. (4) Net payment processing rate represents the percentage of the dollar value of each payment processing transaction that WEX records as revenue from merchants, less certain discounts given to customers and network fees. (5) Net late fee rate represents late fee revenue as a percentage of fuel purchased by fleets that have a payment processing relationship with WEX. (6) Late fee revenue represents fees charged for payments not made within the terms of the customer agreement based upon the outstanding customer receivable balance. (7) Purchase volume represents the total dollar value of all WEX issued transactions that use WEX corporate card products and virtual card products. (8) Net interchange rate represents the percentage of the dollar value of each payment processing transaction that WEX records as revenue from merchants, less certain discounts given to customers and network fees. (9) Purchase volume represents the total US dollar value of all transactions where interchange is earned by WEX. (10) Average number of Health and Employee Benefit Solutions accounts represents the number of active Consumer Directed Health, COBRA, and billing accounts on our SaaS platforms in the United States.

Exhibit 4Segment Revenue Information(in thousands)(unaudited)

Three months ended Increase (decrease) Nine months ended Increase (decrease) September 30, September 30,

Fleet Solutions 2020 2019 Amount Percent 2020 2019 Amount Percent

Revenues

Payment processing $ 102,418 $ 125,288 $ (22,870 ) (18 )% $ 305,888 $ 353,413 $ (47,525 ) (13 )%revenue

Account servicing 39,350 42,037 (2,687 ) (6 )% 115,252 122,782 (7,530 ) (6 )%revenue

Finance fee 46,129 65,818 (19,689 ) (30 )% 143,934 174,067 (30,133 ) (17 )%revenue

Other revenue 40,807 44,383 (3,576 ) (8 )% 117,857 127,360 (9,503 ) (7 )%

Total revenues $ 228,704 $ 277,526 $ (48,822 ) (18 )% $ 682,931 $ 777,622 $ (94,691 ) (12 )%

Three months ended September 30,

Increase (decrease)

Nine months ended September 30,

Increase (decrease)

Travel and Corporate Solutions

2020

2019

Amount

Percent

2020

2019

Amount

Percent

Revenues

Payment processing revenue

$

53,239

$

85,128

$

(31,889

)

(37

)%

$

166,768

$

222,399

$

(55,631

)

(25

)%

Account servicing revenue

9,964

10,717

(753

)

(7

)%

31,210

32,019

(809

)

(3

)%

Finance fee revenue

145

645

(500

)

(78

)%

900

1,498

(598

)

(40

)%

Other revenue

948

2,638

(1,690

)

(64

)%

4,272

16,210

(11,938

)

(74

)%

Total revenues

$

64,296

$

99,128

$

(34,832

)

(35

)%

$

203,150

$

272,126

$

(68,976

)

(25

)%

Three months ended Increase (decrease) Nine months ended Increase (decrease) September 30, September 30,

Travel andCorporate 2020 2019 Amount Percent 2020 2019 Amount PercentSolutions

Revenues

Paymentprocessing $ 53,239 $ 85,128 $ (31,889 ) (37 )% $ 166,768 $ 222,399 $ (55,631 ) (25 )%revenue

Accountservicing 9,964 10,717 (753 ) (7 )% 31,210 32,019 (809 ) (3 )%revenue

Financefee 145 645 (500 ) (78 )% 900 1,498 (598 ) (40 )%revenue

Other 948 2,638 (1,690 ) (64 )% 4,272 16,210 (11,938 ) (74 )%revenue

Total $ 64,296 $ 99,128 $ (34,832 ) (35 )% $ 203,150 $ 272,126 $ (68,976 ) (25 )%revenues

Three months ended September 30,

Increase (decrease)

Nine months ended September 30,

Increase (decrease)

Health and Employee Benefit Solutions

2020

2019

Amount

Percent

2020

2019

Amount

Percent

Revenues

Payment processing revenue

$

15,420

$

14,340

$

1,080

8

%

$

49,919

$

50,568

$

(649

)

(1

)%

Account servicing revenue

63,103

56,451

6,652

12

%

189,274

148,382

40,892

28

%

Finance fee revenue

33

(81

)

114

(141

)%

111

102

9

9

%

Other revenue

10,560

12,599

(2,039

)

(16

)%

35,494

34,846

648

2

%

Total revenues

$

89,116

$

83,309

$

5,807

7

%

$

274,798

$

233,898

$

40,900

17

%

Three months ended Increase (decrease) Nine months ended Increase (decrease) September 30, September 30,

Health andEmployee 2020 2019 Amount Percent 2020 2019 Amount PercentBenefitSolutions

Revenues

Paymentprocessing $ 15,420 $ 14,340 $ 1,080 8 % $ 49,919 $ 50,568 $ (649 ) (1 )%revenue

Accountservicing 63,103 56,451 6,652 12 % 189,274 148,382 40,892 28 %revenue

Financefee 33 (81 ) 114 (141 )% 111 102 9 9 %revenue

Other 10,560 12,599 (2,039 ) (16 )% 35,494 34,846 648 2 %revenue

Total $ 89,116 $ 83,309 $ 5,807 7 % $ 274,798 $ 233,898 $ 40,900 17 %revenues

Exhibit 5Segment Adjusted Operating Income and Adjusted Operating Income MarginInformation(in thousands)(unaudited)

Segment Adjusted Segment Adjusted Operating Income Operating Income Margin^ (1)

Three Months Ended Three Months Ended September 30, September 30,

2020 2019 2020 2019

Fleet Solutions $ 102,276 $ 133,348 44.7 % 48.0 %

Travel and Corporate $ 14,184 $ 47,356 22.1 % 47.8 %Solutions

Health and Employee $ 23,800 $ 21,427 26.7 % 25.7 %Benefit Solutions

Total segment adjusted $ 140,260 $ 202,131 36.7 % 43.9 %operating income





Segment Adjusted Segment Adjusted Operating Income Operating Income Margin^ (1)

Nine Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Fleet Solutions $ 284,064 $ 348,900 41.6 % 44.9 %

Travel and Corporate $ 47,060 $ 122,581 23.2 % 45.0 %Solutions

Health and Employee $ 78,525 $ 62,353 28.6 % 26.7 %Benefit Solutions

Total segment adjusted $ 409,649 $ 533,834 35.3 % 41.6 %operating income

(1) Segment adjusted operating income margin is derived by dividing segment adjusted operating income by the revenue of the corresponding segment (or the entire Company in the case of total segment adjusted operating income). See Exhibit 1 for a reconciliation of segment adjusted operating income to GAAP operating income.



Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Adjusted operating income $ 125,443 $ 185,115 $ 364,336 $ 481,699

Adjusted operating income 32.8 % 40.2 % 31.4 % 37.5 %margin ^(1)

(1) Adjusted operating income margin is derived by dividing adjusted operating income by revenue of the entire Company. See Exhibit 1 for a reconciliation of adjusted operating income to GAAP operating income.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005256/en/

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