WEX - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, my name is Lance and I will be your operator for today's conference. At this time, I would like to welcome everyone to the WEX 2Q 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the presentation, there will be a question-and-answer session. I would like to introduce our host for today, Mr. Elder. Steve

your begin conference. may You

Steven Alan Elder

our release you, good deck today CFO, to everyone. this press me walk through and prepared included slide the SEC. Melissa the to Thank Roberto and deck also been Smith, posted slide The been X-Ks Investor our we of the and our section remarks morning, the is and wexinc.com. at our release With have in CEO; submitted website A to earlier Lance, Relations President the copy of have issued we Simon. morning and

be As and other SEC statements include statements XX-K SEC debt to a a to during reminder, related slide predict non-GAAP unrealized factors, that net acquisition reported of instruments, net adjusted and amortization, gains second XXXX. Reform would Act and Actual for applicable. and a that stock-based will our quarter as remeasurement our and adjusted subsequent reconciliation we Form like margin year's those other elements cost operating remind this reconciliation revenue X, materially guidance will may net operating explanation income, margin on income on acquisition-related press earnings, to the an of on of and financial discussed for ANI in compensation, of including Exhibit forward-looking GAAP and release to tax income we for adjusted margin. results. unable filed operating press intangible filings. are currency amortization see net we various to in risk certain Private discussing basis, adjusted issuance certain factors release with and are foreign in arrive result the metrics specifically you these on March losses, related Adjustments call. divestiture I operating our metrics, Annual and from a on basis attributable identified GAAP discuss costs, earnings adjustments items company included Please XXXX interest, provides guidance GAAP of results and restructuring non-GAAP The the items, X to as non-controlling the Report also Litigation under as GAAP differ those of adjusted income a XX Securities forward-looking the deck at

future, While to any the do update statements in we we obligations may forward-looking so. disclaim

should turn undue that, only these reliance You not place With speak Smith. over statements, on of the all I'll which today. forward-looking call Melissa of to as

Melissa D. Smith

for both to you today. quarter report and that pleased guidance. bottom strong thank and us joining everyone, I'm morning, another exceeded Good our top line

Net to continue and of GAAP our million. We products up we strategies, business another on we Revenue second $XXX.X last consecutive of growth. through grew year's generated our XX% business our quarter eighth all double-digit XX% second on per last share, and $X.XX basis per diluted our quarter of contribute success reaching share, leveraging while was saw $X.XX quarter. quarter of the segments. This adjusted solutions to three our and to compared net the income a to growth all diluted where of segments execute was revenue year's relative income

quarter. macroeconomic and factors the In our catalysts were performance strong positive execution behind addition, solid this

of recently results organic contract second M&A growth, of renewals strength business quarter, continue partner year revenue large oil pleased and In We've to underlying the revenue new wins conferences the number particularly first and slide our XXXX, held partners. in travel from foreign a us new was in half to excludes activity. QX. allowed which Turning figure post the pillars deliver XX% fuel health our XXXX. the business, we're again strong recognition positive X, am partners. the capitalize to This in with executing I against merchants prices, our and excellent as impacts continued significant higher rates, to we on with and major strategic and of exchange long-time seeing we with standards

During I've our positive products. our our each people on commitment to feedback and received session,

Our partners of and we are do, and core for products customers end everything at services we innovative drive the together and our users.

We to rates see continue customer retention business. high throughout the

them. was for the including successful biggest country, a as and have XXXX, is few the contract The will on platform. number we announced strategy Shell, working business during weeks additional renewals. serve driven execution with of we are signed a deal highlights our begin with quarter our already wins. revenue strong impressive clearly the and Slide by second Fleet in and was sales new our to the new and of which started in market in premier share to fundamentals XX% capture relative Our of the each working quarter growth ago, X second foundation excited are They the quarter, which and continuing one forward. going very of wins brands In was macroeconomic Solutions, to segments we

significant a business for Department the of with Vermont We piece have XX Homeland Security, new states of New contract Mexico, extension and relationships Iowa. and with the renewing of also GSA a with while years signed been our awarded

two transitioning our Shell, work Fleet WEX. towards upon the wins As we we're some as year into to expect visibility alone we us pivotal and such portfolios build also the these continue These segment. excellent portfolios continuing growth next significant give in to to Chevron of

growth largest as from quarter. was well and well volume growth of as Brazil locations, more still QX. in significant at an we as driven licensee contribution Revenue front, one revenue acquisition, very year-over-year, impressive XX%. partnership than the XX% a purchase and ramping saw of Raízen, X,XXX On up the with performance Travel Corporate in signed Solutions, AOC companies In we're largest we of the as in continued energy growth Shell our strong and Asia which our a international by increases Europe, customers, this with Brazil

future this quarter signings customer Our international Travel growth. include of business and Travel important Omega (XX:XX:XX). Tours CN renewal continues of aspect to be a our an

segment As and we I'm from discussed the last in customer we've the perspective. about channel is this diversification pleased of a experienced quarter, one things both most

U.S. this payments corporate quarter. XX% significantly at grow to continues more volume Our than

While channel seen leading majority in growth this our particularly and sales payment with technology have to platforms growth, our their partner is our through who acceleration leverage we direct of complement channel, the providers expertise solutions. fully

our to In institution developing issuance. addition, we're use financial card committed for virtual the their to further channel platform

a with allows global advantage signed agreement issuing to take we their Visa, us Finally, of which full new network.

our our virtual agreement in for While we've small card to primarily years, the Solutions will Employee and relationship had include issuance. expand relationship Visa Benefit with Health segment, a this

and Health second Benefit our Software-as-a-Service remain number had year-over-year, year-over-year quarter on our last year. long-term now, XX% track up on the and in revenue we grew volume by for XX% business expected Solutions of Health Moving the a accounts strong rate. over of quarterly XX% to year. and compared The had grew last quarter XX% was period U.S. Employee and high-teens average segment spend growth revenue growth same The

Services was solution We're Health WEX the to Our announced the (XX:XX:XX), Bank growth by Consolidated Health will technology. this Admin COBRA excited that further XXHourFlex. numerous including of addition quarter and by Bank of was WEX the addition also partners, relationship renewal HSA a driven as that Alaris and strengthened, be note HSA and/or powered

just record to in a opportunity touch Conference we Partner another and latest this some attendance. us with of partners a for held advancements and our some with on This is always these great also and of quarter Lastly, in I'll our interact share technology our successful customers offering. moment.

new business to offerings Moving to Within refine bottom better our said of the some generating our ability closely and is products enabled tied customers, to X, to introducing to serve through as products lead by I've technology. enhance new this slide and before, quarter. superior capabilities we continue and retaining Fleet, consistently

redesign For interface, our one, I'd update small at enhance Snap providing customer release customer analytics market. you and our features. completed experience the a more business of targeted online responsive to the ClearView to like we product another on including

to With our simple taking for are using As introducing interaction. steps perform this we're technology. that tasks part first of without bot we're customers offering, bot Snap, our technology human in asking

In adopt with uses of successful Lastly, release issuance. we're expand locations. and merchant Mastercard we're and Payment to on accepting Travel expand looking to our in Corporate suite. product. transactions. authorize with technology support had technology or our both delivered past facial base product we of a now continue pilot to thumbprint DriverDash another for to Recall a on and a week, we DriverDash network card discussions this This mobile ExxonMobil, Visa with the full our virtual We phone segment, our recognition core flawlessly major

white platform. will release financial label Our our technical delivering that our focus next institution added on functionality major for partners

Health matching app COBRA payments perform corporate the history. our continue build functionality and payment payment to communication we ability architecture significantly database our new mobile registration, the options along for consumers for and released Direct upon In with online that industry-leading Employee merchant mobile first election enhances to microservices our technology This Benefits, provides Bill. with We and platform and capability.

code On type retaining their are business we're scan Expense product detail winning updated a phone basis, On to paying in the products combined consumers HSA front, by expense. eligibility Eligible medical off viewable mobile a technology to to and investment allows investments bar app Medicare as and determine qualified the making a new which customers. with and we've Scanner, the a broadened of our include healthcare

Turning similar our what two certain business. to X, I'd like highlighting aspects quarters, slide to continue of previous in to done I've

quarter, our deeper a going to business. Health take This U.S. we're at look

offer Health more sector, banks software products our XX.X We third-party and primary channels, we plan additional of including along accounts, public U.S. business health providers, wellness flexible that than with of the XX COBRA half administrators. core cover are and accounts the largest payroll financial such roughly million lives types, being and transit SaaS FSAs FSA, sells as type. the than channels, benefit next more distribution have five these institutions, individuals. Through accounts. million HSAs HRA First, offerings with plan plans, through total and HSA, and

via WEX an partner label and those consumers, for access HSA to in of our is front-end claims. From our and What of can quickly this part portals. online products a history customized partners integration mobile portal we of our market easy data balances, offering, Employers offering and app, solutions plan financial have unique information As data. each channels. employer example, who us and employer, these employers which through for and of or private FSA health get makes and provides Health and perspective, information have and

open programs customize flexibility. further adding Looking specifically market. for our for data to web customers allows Open that key technology, differentiators architecture back-end at integration of volumes can segments, their are market services process high and in their APIs the

focused other we this. this as we examples where In In technology, for give is transition partners. true partners call integrate our in offerings. to our orientation. that the in example to more due Overall, growing leader very give on our capability, and like deep on larger expertise easy strong of innovator advanced consumer-focused with, spoke before used, is is I'd automation, happens complex is plans some seen the years. on the few coming momentum you required offerings future is In growth in we've technology, business, platform. bank financial investments billing on deep I'm diverse more needs made the product our While in the public with the the as XXXX, turn second investments and encouraged and the integrations, our are or are than like an solutions To technology Medicaid technology solution benefit runs three and intelligence Benefits. consumer the directed are exchange partners' WEX of creation. programs with quarter, from acquisitions Vermont's partnerships, mobile, like smooth good sector, which like partner, our a solid offerings. Kaiser in Discovery depending rely Bank our runway broad specialize final and areas have enterprise-scale administrator in segments, company. on business into Roberto. and against the a allows business of relationships for such industry, performance I over by integrated which hub the engine value growth the to of of our organizations are a which with thoughts highlighted over like partners ever all pleased well third-party healthcare people our to This These objectives. feed how the before as the our strategic to with see where past we of Health America in also of a our quarter growth WEX long I'm the as may profitable execution our space business be a

of that reoccurring revenue. provide a growing long-term of foundation have base a We customers strong

of knowledge of Our for and us and the in not excellent give performance customers, but the first year implemented half XXXX the of the yet beyond. confidence signed, rest Roberto?

Roberto Simon

morning, thank Melissa. you, and Good everyone,

continued businesses. we was heard, quarter. this The you've to core post financial As from outstanding top line driven strong results our by of each growth performance

the down notable improvement we in a losses, rate. in Looking interest reduction income credit statement, and experienced expense lower financing tax

also We positive in the line top guidance. Overall, year environment. a with the high-end benefited the we with of of both pleased performance and very first macroeconomic from half results are bottom the exceeding

net Non-GAAP quarter the $X.XX diluted $XXX.X see can last the million, year. per As increase a period was XX% was $XX.X from X, revenue million or is adjusted for period. the you share number share. on $X.XX same second XX% diluted This for per up over year slide income prior total

Melissa just strong X mentioned, performance number broken by slide revenue As our segments. shows down

and can volume the continued you expectations revenue had posting to double-digit growth beat Solutions, growth increase. XX% XX% by of As Corporate led Travel all and which segments see, by rates

Additionally, anticipated results better year-over-year. the with growth U.S. XX% business had than Health

by segment broken new and change guidance to earnings fees. number is move accounting let's not reclassifies rebates slide network to recognition This million, you revenue see an changes some which XX can the highlight standard. $XX.X results, on of getting impact Before and The these increase of down to segment. does revenue

slide The and Payment North the XX. segment, strong Breaking XX% we by Solutions experience we of by and fee proud revenue year. again, of revenue down led was to to Fleet results, let when direct that Over-the-Road million increases $XXX.X portfolios. in XX% increase Now, a prior Fleet you moving each XX% growth revenue me double-digit Fleet in segment This XX% revenue, by American achieved segment number an the to to on compared in were continued finance up respectively. are the and report XX%. to processing

fuel points, last is the by includes and up positive by a this to QX $X got of The Fleet in XXX basis for we quarter additional positively which was operations segment. fuel net XXXX. solid prices revenue see continue in $X.XX the guidance The year and low We number and rate to rate changes. million numbers compared rates due from recognition and in versus of The continued $X.XX attrition trends fuel $XX.X U.S., negative spreads basis price in approximately was changes revenue X.X%, marginally other growth movements same-store interchange higher QX unfavorable positive was In market impacted higher X year. point of minor was when our Europe. from million to domestic impacted negatively average organic European include Both in sales. over transaction last the This second quarter, prices.

AOC. this due the segment. quarter growth increased volume Turning momentum in to to segment million continued excellent from to Purchase Travel XX% and primarily revenue Brazil. number to and Europe, a Total volume to $XX.X $X.X billion. WEX volume we excludes Corporate XX% All and solid geographies growth solid XX, equates AOC. the on Solutions Asia issued particularly had see of slide increases, for reached acquisition customers and by This

was strong the payment for posted Additionally, in quarter was very $X.X which corporate the business U.S. growth. expectations. with million, AOC revenue also line

segment, which quarter recognition the X was was rate revenue primarily in points from XX QX to the the the year. basis Finally, up due is interchange This points, net last for changes. basis

in and a and of of The Health continue. season to difficult, enrollment Solutions, average the half XX%. second Health the America of will in XX% than pipeline. Bank increased number first for the half half year good expect up the XX, slide U.S. was of well strong for Employee very up be this a the XX%, to in better accounts business we reflecting second because sales was Benefit growth We Revenue Comps ramped expected. which to last QX was XXXX, performed SaaS in revenue year. relative and on the in Moving quarter more

continue an the place remain high-teens will basis on the are a results the strong trajectory believe growth expect that in absolute We over for fundamentals and to long-term.

difficult. trucking conditions the linked Brazil been the are have As devaluation have three these affected the in in of elections and we real, to presidential uncertainty strike expected, this metrics Despite environment. fall the the The business volume Brazilian recent up steadily business segments. headwinds, all

excluding exchange Additionally, foreign revenue X% country for up was the rates.

on to slide Let's XX. expenses move on

processing primarily cost network categories, part of total and the million Breaking expense items down is changes. [XX.X%] was amortization $XXX.X $X.X million acquisition. the due which million, due these versus last fees line the million, year, to million down prior were expenses total of up the (XX:XX:XX), QX For costs And Service up depreciation quarter, to reclassification from increased were service as XX.X% $XXX.X within SG&A, revenue to mainly year. fees XXXX. $XXX.X AOC (sic) compared the $X.X of recognition in

I'm consecutive to news. losses, quarter Turning to another of positive credit report pleased

guidance a basis period in from for During the volume, the basis is last loss of loss $XX.X In quarter, decrease of consolidated is which credit spend million, a XX.X%. year. XX.X points basis XX.X points the the same Fleet significantly with was which $XX.X and better segment, than line on down million, totaled credit

basis For points. the quarter, fraud losses related X.X represented

are that in controls the decline, put are very We have confident losses continuing we fraud place. to to thanks

LIBOR expense in line losses to This be was and rates historical and Fleet basis the up million Excluding prices. in points Operating quarter. fraud, continue our ranges. higher XXXX $X.X is were of compared we expectations was million due interest the with X.X at credit low-end and to fuel to $X.X

as fuel higher debt operating with levels recall, well. you increased prices, As

the down the to increases the versus reduce price $X.X compensation incentive volume in and bank at to for better We line fuel increases. AOC are expenses. business performance includes have acquisition, G&A year-end due sheet than up of This balance size minor steps and expenses were despite our deposits and million. expense other also taken higher the expected

the due the last earlier. margin XX.X%, increased marketing basis million. sales basis changes recognition the majority from XXX points operating was products We synergies is our EFS and both prices the The lower to to Lastly, delivering these while a new margins at business, on fuel a same non-GAAP the losses, in together, $XX.X expand increase to from and continuing fraud were the AOC mentioned able Margins time, to higher services of increase all the Pulling year. increased line invest and representing from and from acquisitions. market. revenue standard and

Moving taxes. to let's slide XX, talk about

year's was due second Tax quarter and tax Act, rate the the QX XXXX. a quarter last XX.X% saw an the earnings. for last to tax On basis, the this U.S. XX.X% We rate an to for effective ANI XX% on quarter mix from GAAP ANI the second for year the rate was XX% basis, Following QX compared for a tax foreign versus of improvement year. of

levels. balance ended the to million which cash the from to was in XXXX. we slide as XX, quarter at on position compared deposit $XXX sheet $XXX to cash mainly the balances number of in The QX with bank, the now reduction million down cash, used the was Looking reduce end at

approximately On the $XX.X increased corporate by the $XX million. balance million to cash side, cash

of loans balance stands on times, billion Additionally, At of ratio, the approximately revolving quarter-end, credit spread available credit, X.X In stands as as borrowing acquisition leverage defined XXXX, levels. completed points. approximately Term from capacity total line about notes. WEX the and The will B for save a we ago. another in XX expected. million. X.X of based reducing on times the agreement, loan, at year had the basis the continued the down debt total we we $X.X $XXX term at credit in the $X repricing a de-lever This January million of year-end line to on XXXX another EFS, Since

see we on XX interest placed the within We past continued months. gain hedges to the rate unrealized

continued of The of of we interest exposure off our guidance market combination years, a the to will past rates targets, the that on several to the or quarter-end, LIBOR second year. and a stands XXXX, quarter into recent long-term large top better have execution this approximately essentially XX, positive of fixed fixed line our margin are spreads and acquisitions looking in the slide very for to financing at exceeded mitigated hedges $XX.X finally, have average, And As of on remainder the we we results locking portion acceleration. XX% trend and drive Today, from million. rising and continue value we rates. rates. bottom met reducing has moving these forward from debt and at expect of this on Coming anticipating business

rate. lower financing we benefiting a lower tax expense interest both Additionally, and anticipate from

million to of All to than of along bring a early negative next approximately and these WEX, FX benefits net with more will positive costs for year. premier business. factors operating is in which million a for beginning offset impact will $X $X income, long-term Shell the revenue $XX start-up Shell million win

adjusted net million For share, full revenue for are $X.XX $X and the per both guidance narrowing the midpoints raising by the and we and income ranges respectively. year,

to in $X.XX EPS range the to $X.XXX the net range On to expect ANI billion million. of expect $X.XX range per in We be we billion to and basis, be of to revenue in $XXX million $X.XXX share. an the adjusted diluted $XXX income of

range third basis, the million $X.XX we we in and income expect diluted $XX expect EPS to to $XXX adjusted million. the net $X.XX be of the to in of between to revenue share. On range an quarter, $XXX million and net income For adjusted report million per $XX

quarter million third The Now the rate $X.XX the this we credit the on call will before NYMEX And you for for XX.X% from as XX between assumption year. questions. are points of are be year. the future prices to is U.S. additional walk income and The approximately assuming for gallon and open XX.X basis the line year. XX June loss and rates is tax and for XX.X% $X.XX assumptions. fuel per based full turn basis between average quarter adjusted based be there full end the we finally, in fleet me points price over of through will let week. XXXX. To Domestic for third full Exchange are I net to some the will the shares the conclude, for expected outstanding. The both the Steve,

Steven Alan Elder

listening great It's everybody lot prepared and covered been to for today's another of quarter, remarks. far. you Thank we've a so ground

Now back to call Lance line your turn open questions. to I'd like over the and to the take

Operator

from line Your first from comes question of KBW. Sanjay the Sakhrani

Your line open. is

Sanjay Sakhrani

rate Thank year strong and Melissa the you the help how you. year Fleet in Thanks. and next next coming up how Could could us do Good Roberto, think number? through be happening given you year? pretty got for sets on morning. you of guys run that quarter segment, impact envision contracts And much next you've the to Shell in talked total significant be about how of a the Chevron board.

Melissa D. Smith

Sure. will I'll start. I'm add sure Roberto here. on

them say of here creating I'll momentum WEX. so And I'd not talk that Chevron remiss little Shell. first it's tremendous you to excited bit take really then and about then about about the First be and at wins, sequentially, if all, a

been the you of contract it if way about we of think Chevron, we December XXXX. signing, back So have the signed in – timing

for us. going unusual on this a So while. contract has an It's been for

the involved conversion had whole structured we've like got process. something We haven't parties in where three this,

complexity the of elongate. to amount we continues just of relationship. of that so the And in that, terms the of have timing visibility the least because of And

on that guess just progress. updated from I'd we'll removed point at and of reminder, And you With to that keep couple least say things the year. we've related continue for to this in Chevron it's I guidance a anything Shell last our contract a XX-year conversion. the is, about So –

it just is question when happens. of of this a timing So

to as the in to started, said, time-bound. new continues on we as as of begin of I continue to we and start expect So for year. of With of at completed of We've ramp to the QX more next sales with then moving And some We'll year. lot other of the through Shell, progress. of that all already portfolios in we'll portfolios much the conversions new them. by keep this year you in, the end early into And next up timing it's that. sales loop mid-year that a have roll confidence end

year, the of through expect see next it by half first So of you'd second the next the where process to ramped half happens ramp year.

that. specific timing that more give you on there's can we now So right

Roberto Simon

thing only obviously, next been full I Melissa next the year as between as – on mean, add programs. done Shell updated next you I move the mean, specific I we Chevron, – the look has conversion we very QX both into on will keep will mostly and we into on So quarters. year

Sanjay Sakhrani

I'm those And Okay. sure sorry, congratulations wins. on proud. you are I'm guys two big

Melissa D. Smith

Thank you.

Sanjay Sakhrani

of rate the Travel use Is forward had I going on that then When a at that for look to last yields the business. the those business? relatively And year-over-year. that second question couple Corporate on quarters run and we business, have done better the over

Melissa D. Smith

happening pleased spend the doing you've in with talked XX% we've we're is number strong came this We've got for of about seen that's So a that volume things of the business the excluded number. the out. corporate institutions from play organically with results That's and payment really been year, the that because the processing growth. volume acquisition organic that business. financial AOC Roberto And growth

in So, volume large pricing guess, that fact perspective, happen from that as you just through not but renewal and that beginning the market will year see because all, occur feel we seen first had ago, year, the years space. couple of all we secondly, the then that growth. And about had that last every event talked to processes expect concentration of about pricing we we go I in a periodically, affected we of good of a one the

had bit think than of more do volume going little to a be where is growth see And see a can expect of those others. between two. the so, matching we lumpier actual what time, seen. over said we've going periods you we And time growth, But more to this into and year, of which some alignment that's we revenue you it see

Sanjay Sakhrani

Okay.

Roberto Simon

particularly – recognition And which this the fees are from then, rebates that what moved contract impactful, will remember in now because this revenue have And network segment have have and you is I have will the this is revenue. on we all quarter, that you we revenue partner are along, year to in before being the that this changes, on add expense. expenses and also all on were

noise quarters, also have overall, But double-digit. and you two So, volume revenue have there. those some net grown in both

Melissa D. Smith

And there I'd at versus just ago, from if last is the is now portfolio thing you year look a much diversification. add the more

and great still portfolio. travel strength where the spend So, majority in got it's the of that's not, we've

We are number of have a customers that of travel. outside

about also so, term And spend terms growth us both when we gives trajectory that revenue of in and business of the the talk confidence longer volume.

Sanjay Sakhrani

you much. right, very All thank

Operator

Your the next Schneider Goldman from Sachs. of comes Jim line question from

is line Your open.

James Schneider

for my which little chances you you bit including Security, talk of and kind results. about question morning. more how – agencies. your Homeland I can Postal announcements Service you when opportunities expect would the pending months, and Good maybe you maybe over little the Thanks you the a view good talked was next are congratulations U.S. but you're wondering on on if of contracts others seeing those. can I handicap think about clarity few and the various could from you taking GSA a bit Maybe across

Melissa D. Smith

Sure.

the went I So, call one said far so the came business. more that with more than last into have in through what bid. we we We

out competitive landed a going competitors. the chunk it. so with be business. going It's part competitively. done to still process waiting biggest through as still business might after a been about progress or how hard So, there process, to big we the good that's that's the they U.S. bidder. sure of as win the working right process, retain is process we've far, they fighting wait final contract into sitting in the And you that's will this. whole biggest to a out Postal than as were that award we're government as spot And now, the we've Service. we the imagine we highly of better It's are there I'm where much through, agency that the bidding really and in feel But it we

James Schneider

some maybe XXXX following impact Is programs, in helpful think investments revenue it wins. impact, positive, earlier on revenue. of to the IT on do then, you – kind that on terms And of nets kind how XXXX? and as But the and operating think terms color of the of Chevron of margin or of as neutral? in Thanks. about of offsetting the congratulations you Shell how But in question, incremental about puts the margin head and margins and kind the takes the your into Helpful. negative you on impact

Roberto Simon

on point on But the companies have oil are But margins in the erosion operating percentage a global of of the because segment have will revenue say, regular dollars margins an than or margin Fleet there margin incremental the a first and view. to from Fleet oil point companies' lower be income. we incremental obviously, segment lower the will I always the from view, So, of the small going are would thing fleets.

James Schneider

much. Thank Great. very you

Operator

from Peller Wolfe the from line comes question Darrin Research. of next Your

Your line is open.

Darrin Peller

the just touch to first about of right. a Could we When the half moving there's guidance lot think All outlook? we the year, overall on read-through of Thanks, the parts. the second and guys.

to You follow-up had I I there anything type a was through current a side, that to guess that through items necessarily of after any Corporate a which on have half, And second have just I trend. raise? transition the wouldn't then, the nice wouldn't Solutions can Is greater one-time right quarters that ask in flowed of maybe the sort this.

Roberto Simon

Okay.

there. question go then first and take your from I So, we will

So, the would very expectations. and to for keep the have we is have real what we important mind performed operating it's and you business outperformed is first well that really well, I say in half, to

increase EPS led our to $X has by guidance midpoint basis revenue this in $X.XX. million an on and both ANI us So, by

approximately Now, we are and $XX if prices, a positive of rates, those we're the to performance related million it's all we a which numbers, business. trying strip basis like-for-like been on fuel on and the this – are revenue have if you by FX – last better the and revenue of obviously versus raising year, that to point noise view, exclude looking from

Darrin Peller

Right.

Roberto Simon

great which midpoint When a but EPS. $X.XX this case into the look our excluding win, take we from prices almost for are EPS and of Shell a consideration win also also the the have noise have we is you ANI in raising FX, and to problem at us great also and this to fuel year,

benefit a with Now, to short-term obviously, Shell long-term mid is investment a for WEX.

Darrin Peller

helpful, That's Okay. guys. really

on payments, travel, just has Visa that performance how touch the attachment other give And just on that Let quickly we little to corporate now maybe with me more guys. maybe a going, we're strategy can another about just if of that's think do excited when to outside still an around partnership. us area color verticals. the pretty of that for question And about you the you

the partnership Just Mastercard given again, that that around guys. the with discuss and and now. works Visa Thanks rationale how

Melissa D. Smith

start Visa end of the the with Sure. partnership rest on I'll business. the and to I'm going

to as our we've upon also We affected optionality a the you difference we business, reason the smaller, the really important loop proprietary network internationally. then networks. one think a which customers based relationship we've us, loop we So, was had Visa, acceptance does are what to And regionality. build and what on includes open if on It of really that we which we have different with create think certain are that a business is have to our you using, said rates network, while. for about world, closed many why does build combination that is networks for decided partners. In for built you're these the interchange options regions the make and in of that wanted it's and and depending

creating customer also that a doing payment perspective, from novel. like, what optionality. but is We're feel modality, gives we something so, network we're And them

travel, a from it like build us we flexibility can but also time perspective, financial we think the we so, of payments more corporate that then, that over that market terms gives corporate on the in We grew really in payments seen AP year-over-year strength quarter. our corporate great side over outside just of talked XX% beyond we've offering payments the overall core that. about And upon. in And business

really in doing in taking can through that specific offering they're that our basis, an where momentum So, good with with channels, and combining really seen we've we've but a robust on create the a offering partners that more they're for space, technology-enabled, even where market. both are else also even and more momentum direct they seen something partner

– so, like market, it's massive. And the we about it's

talk being we about in. all, parts of that $X.X it we're First trillion just in the

to think of a we can. place want hooks you so, in this And as have many we the water as as

that like to direct The these another channels, continuing we going and in, see relationships. partner with got the in through we're invest we corporate we've so, that we're another and FIs because the to have space. payment And that we market partner as is where area to relationships place, channel this used both

Darrin Peller

to great Thanks, hear. That's Okay. guys.

Operator

from the Your next line of Oscar comes from Turner question SunTrust.

Your line open. is

Oscar Turner

good questions. Thanks morning. for taking my Hey,

the question just is first So, on segment. Travel

can long-term large talk I remaining source of wondering quarter. material then, or think Melissa mentioned away share themselves? previously opportunity share being customers you upside and revenue that about how OTAs from the a this was gains that processed And won the there? I volume just the is this – And competitors gain growth you at

Melissa D. Smith

names. our found they what marquee in they us their still And volume the in continue gives have as we're opportunity underpenetrated business, business, also of of of we've businesses. grow this with amount relationships Part some in have really great that to we confidence their part spend

continuing to work payments. internally doing have outside that with programs been or look they've they additional tap them processing So, – to we're of into hotel that either

and I Brazil. combination Europe benefits a happening talked the of of that. That's as the of existing in we've as we our had what's both growth seen in so, those to are of products in new bringing in and same and places build about in business, Asia time, things success the And and well customers. United States. we've with both those And at continuing

Roberto Simon

and think about diversification channels Brazil, the basis as grew times. a are Melissa we you by four when In example. growing said payments U.S., said over to before, we give in on corporate In Europe, the business. that an we regions, the the Asia, you in XX% Melissa And So, side on we like-for-like doubled XX%. multiplied on

give confidence that the the on together space. long-term for So, all those pieces us growth

Oscar Turner

segment. Fleet for is GSA Okay. RFP that provide discussed? question some color. the next for large just that opportunities the of outside years on Thanks then, you over you into other my Can And few contracts Fleet up insight second the

Melissa D. Smith

look and On channels. marketplace, look a think – how it we both at partner basis direct at you in we about regular the if these

pipelines our so, that channel, account you (XX:XX:XX) if look to at with are continue direct And sitting the we good really large salespeople. have

think things a we of the rigor that that's perspective. one about so, And from

implementation and then move We through contract continue fill to those them an pipelines, through go stage.

amount a that Part confidence of of that introducing to do talk And nature, functionality front, American Snap continuing that allows on of And offer we've North the to space and able work why both them and affordable market really have going way small is we about customer in because it's been then new basis create that it in and a the business. just part roll in of small to base. that we're in important in to manner I I which gives mobile technology. for and to a it's marketplace the do end Fleet What a we're the us that we're on is we tools the so, that the an names the past wouldn't working that a the market Over-the-Road customer on some think what talked base us just that, lot product into And can about doing to been we bot. significant business. signing because not build beyond of the there's talk about of is large they're smaller upon is regular – opportunity on

do we're about is to large have business customer And their to thinking to at make then, tends and we're to make or of their really on customer So, prospects that operational that marketplace, systems within them tools continuing through a appealing us. products, base. around to with into it's that easier work to more we've business easier tapping been – in that get be simplicity intelligent doing the terms way integration pipeline this and sure that for us of small we looking for things making both, what and fleet that it really the And continue and combination we modifying. the

areas those And been about good so, both we those for focus have of of feel And things. us.

small as that into fleet well. salespeople ramp to continue market We

Oscar Turner

And cards Or largely on space fleet before? use that been your in the takeaways? didn't those quick follow-up share companies Thanks. fleet a just previously are one, that small has gains

Melissa D. Smith

competitive little the from bit It's a in a competitive that people market, and of credit likely cards, all general takeaway. fleet of It's be each. almost combination. large a into then When the small cases, are get you that it's so at takeaway. it's that much – end where it's business more because When to market, taking you are look cash using we purpose larger

Oscar Turner

Okay. Thanks.

Operator

Your Citi. Christiansen next question comes from the line from of Pete

Your line is open.

Peter Christiansen

Thank you. morning. question. Good Thanks for quick ones. Two the

Visa guess, should of think cross-border churn? think I then noticed that there sequential I relates small tailwind margin a that? else in we are Thank WEX up Or going SaaS But Health forward? as, to into year-over-year. as is partnership, it accounts to higher Should big decline. you. we factoring natural that realize something of the that And of follow-up, business the As kind I as a a

Melissa D. Smith

of business to enrollment go where is make a and they part time – through see through of a up. that typically an draws around a normal that that cycle, normal little timeframe to think QX you choices that for business. ramp then you season a then in as starting It April It's And the we that go our Yeah. that in are trend bit. see that consumers at point down QX,

XX% growth, year-over-year. we're And pleased we so the that at with it look talk we when we year-over-year. saw about And growth

Roberto Simon

metrics therefore, was that you're be we say year, converted. Bank bit a And some America. year, that if would quarters this Last on today's it mentioned within call. And implemented thing I the can all of is I portfolio we given and large the because a other distorted, –

Peter Christiansen

acceptance? the on Visa then And

Melissa D. Smith

Yes, yeah.

from over and first I'd We the us. time of think benefit immediate. it to But thing foremost a is as around over do think Visa, as product say opposed So create optionality financial for time, perspective. that a does

Peter Christiansen

you. That's helpful. Thank

Operator

from the from Your JPMorgan. next question Tien-Tsin line Huang comes of

open. is line Your

Tien-Tsin Huang

morning. Good you. Thank

obviously. of lots good wins, So

you? M&A other So you'll what have capacity that, the still or larger Melissa? be the to bandwidth appetite you the there busy with deals, curious to either Is do or or portfolio, appetite an if transitions. I'm have do

Melissa D. Smith

Yeah.

are time, I to active be you've like think would disciplined continuing be. And over normally we're We about we found the marketplace pretty that. in

product in through You've upon anything geographic the of technology results and ultimately extensions the that builds in, assets acquired. interested in we're then at come the expansion seen that We're that that looking in performance in have our markets of we scale business. the

And you're that's the so what when of M&A corporate the lot you a that are work doing Fleet happening conversions the an front capacity think about specifically. as has and on our with resources on within more happening enterprise, the to do business

we're business, some So At seeing the feel that right I we is don't the past. where I the same what we about growth organic in think of capacity. strong made time, across good we've the really terms of plays our of we're the in, in of those the love and two markets the opportunity, now are because as overlapping really profile, things about

to M&A that opposed as do. supplement need we So at something looking is that as something to we're to

Tien-Tsin Huang

to reprice a digital. the better is primarily some are products drive just Just digital win The the on of opportunities – the things retention about Or individual and value-added what follow-up. around then talked the investments quick overall And curious I'm Okay. to these one-offs? just or and is strategy there idea you curious, there, share? new those

Melissa D. Smith

it of enhances smaller a product it – markets, end actually depends in get some market offering. the little the into When the you we're bit they're Well, in.

we both technology even that compelling of various the we the us, because create use something and for think – businesses. we So of can we small through have, with more products that that

that it bringing some when our something business, And market way And doing of the simple also is so for more compelling you that that give in us. example specific combination into But less to one incrementally I'll areas to is strategy but a a us. is you like it's of get a of also customers, expensive. other the for

we're through of online that past. our then combine done backside have and in quicker. totality. If leads our actually digital are what move than you the And We've readily work using on that actually application that business, coming that by work more of physically And circumvent through you systems that we you to the an more coming the on the in get have that processed far have on business in an from card into side if Fleet we DriverDash, that move a can with much you easily our done into channel our to hand at doing we've application. to with our look can faster, allowed meaning cards

like applying shaving in mobile can really able use deal, go if maybe that, because that a what to not app week, quickly. a So you who's someone to you're it off being a And sound big the while may on it particular, from not is days, online product hand, mobile makes to fleets does product a activation you appealing better the somebody's increase smaller offering. use rates. And experience your get actually and to the device, which is in because something of ability

it look is digital combination from in working of other if by the started part our in, combined. of of industries kind of nature. And the like some place that already what mobile. virtual And we at doing health from those a you in we're things all business, we're the So of of

area upon. an just build that's to so continue just And we

Tien-Tsin Huang

much. so Thanks hear. to helpful That's Great.

Operator

from question Mizuho. the next from comes Your Tom McCrohan of line

Your open. line is

Thomas McCrohan

Hi.

get kind to wanted a adjusted fall of top how will income. Just line forward the much sense operating growth for to of going

this might assuming renewal to pricing had I'm play relative the you have of and year. last really good been year, So, last conversion year part

should basis? to on your we modeling terms operating income pre-tax what of in be a revenue growth So, the conversion of adjusted

Roberto Simon

top. start me the from let So,

ANI You going know we years, not today, to I targets those to that from excluding or several our and past noise are XX% be and exceeding year XX%. long-term revenue been the to as either. And is fuel meeting prices, in EPS XX%, goals said different to XX% grow have this

we would is before. obviously Number So, long-run, that that respond and say there has be implies margin been question there two – one things. should expansion. But this on I to the and

operating portfolio will have impact appropriately For want and negative year, two like mix manage these a margin that in in expansions. conversions And Chevron next Shell to is gross dollars. the margins, other big not thing we

will there that will organic we of be from with related margins worse very view. that the of years be a to Melissa and growth be well years couple all the before, as So, growth quarters for the the percentage positioned And of others point will where next or But said it's we feel company. better have.

Thomas McCrohan

of Okay, Chevron. Thank Shell series you you. give through European apologies, conversions great. you And it. of an Last going congrats on us build-out, Can that? a again country-by-country. the I and question update kind missed And on were on if

Melissa D. Smith

Sure.

business. talking Fleet you're specifically about So, our

corporate Just part said, FX-adjusted. in product products Roberto our also which last to Europe, over kind diversification hit And we our of we play. – been we what is said have growing, of multiple XX% payments has quarter

for salespeople of was it fuel single-digit externally goal side we that upon scale. that a the of are business grower, also are, at over some different co-located that of around things as to last what of people so where adjusted, build looked people done like-for-like. had the our redesigning type going and replatforming high On work, time, it the but being number from sit Fleet business, business, quarter as what the as that, And we've and of create continue type FX, price a well, this we hit

it so, when acquired business it first we looks several now than ago. that And drastically did years different

technology, of the gone through series of a terms In we've migrations.

number smaller have third-party and that now, use largely continue So, of which we are that working we some – we on countries a have platform our some the regions. internal platform of to

business really it's done we is, like would. like the thought we it performed, so, And where what and we it's how

Thomas McCrohan

you. Thank Great.

Operator

continue. may you Presenters,

Steven Alan Elder

today. I time think have we the for that's all

thank the you look updating So, for hanging to with a we'll you again us little past quarter. hour, – little next over and a forward

Operator

Thank This concludes joining. you conference. today's for

may now You disconnect.

WEX (WEX) 2 Aug 182018 Q2 Earnings call transcript