WEX Inc. WEX reported strong fourth-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings of $2.11 per share outpaced the consensus estimate by 2 cents and increased year over year. The reported figure exceeded the midpoint of the company guided range of $2.05-$2.15. The bottom line benefited from organic growth, favorable macroeconomic conditions and a lower tax rate.
Total revenues of $381.2 million beat the consensus mark by $7.7 million and increased 14.9% year over year. Higher fuel prices contributed $13.5 million to revenues. Revenues exceeded the guided range of $370-$380 million.
The fourth quarter marked the tenth consecutive quarter of double-digit top-line growth, driven by strong performance of the company's Fleet Solutions and Travel and Corporate Solutions segments and its U.S. healthcare business.
Shares of WEX have gained 19.1% over the past year, compared with the 19.2% rise of the industry it belongs to.
Let's check out the numbers in detail.
Revenues by Segment
Fleet Solutions revenues (67% of total revenues) increased 15% year over year to $253.7 million due tohigher volume growth, increased late fees and favorable macroeconomic tailwinds including higher fuel prices.
Average number of vehicles serviced was around 12.5 million, up 11% from the year-ago quarter. Total fuel transactions processed increased 7% from the year-ago quarter to 139.5 million. Payment processing transactions increased 7% to 115.9 million. U.S. retail fuel price increased 9.7% to $2.94 per gallon.
Travel and Corporate Solutions revenues (20%) of $77.9 million climbed 29% year over year on the back of strong international performance (driven by Europe, Brazil and Australia) and travel business growth (of 13%) and corporate payments growth (almost more than 100%) in the United States. Purchase volume increased 11% year over year to $8.2 billion.
Health and Employee Benefit Solutions revenues (13%) of $49.4 million declined 4% year over year due to low bound Brazilian benefits business. However, the company's U.S. healthcare business revenues increased 12% in the reported quarter.
The average number of Software-as-a-Service (SaaS) accounts in the United States grew 17% year over year to 11.5 million.
Operating income increased 27.7% from the prior-year quarter to $93.7 million. Operating income margin rose to 24.6% from 22.2% in the prior-year quarter.
WEX Inc. Price, Consensus and EPS Surprise
WEX Inc. Price, Consensus and EPS Surprise | WEX Inc. Quote
WEX exited fourth-quarter 2018 with cash and cash equivalents of $541.49 million compared with $533.36 million at the end of the prior quarter. Long-term debt was $2.13 billion compared with $2.14 billion at the end of the prior quarter.
For first-quarter 2019, WEX expects revenues in the range of $375-$380 million. The current Zacks Consensus Estimate of $377.98 million is higher than the guided range.
Adjusted earnings are expected in the range of $1.64-$1.70 per share. The current Zacks Consensus Estimate of $1.92 is higher than the guided range.
The company's first-quarter guidance is based on an assumed average U.S. retail fuel price of $2.60 per gallon and fleet credit loss ranging between 13-18 basis points.
Full Year 2019
For full year 2019, the company expects revenues in the range of $1.68-$1.72 billion. The current Zacks Consensus Estimate of $1.64 billion is lower than the guided range.
Adjusted earnings are expected in the range of $8.80-$9.20 per share. The Zacks Consensus Estimate of $8.95 per share lies within the guided range.
The company's full-year guidance is based on an assumed average U.S. retail fuel price of $2.63 per gallon and fleet credit loss ranging between 13-18 basis points.The company also assumes almost 43.9 million shares outstanding. Adjusted net income tax rate is expected to be between 24.5% and 26%.
Zacks Rank & Upcoming Releases
Currently, WEX carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Investors interested in the broader Zacks Business Services sector are keenly awaiting earnings reports of key players like FactSet FDS , Paychex PAYX and Accenture ACN . While FactSet and Accenture are slated to report second-quarter fiscal 2019 on Mar 26 and Mar 28, respectively, Paychex is scheduled to release third-quarter fiscal 2019 results on Mar 27.
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