WEX(US:WEX)2023-07-27 17:42Financial Performance - Total revenues for Q2 2023 were $621.3 million, a 3% increase from $598.2 million in Q2 2022[140] - Net income attributable to shareholders for Q2 2023 was $95.3 million, compared to $34.1 million in Q2 2022, representing a 179% increase[140] - Adjusted net income attributable to shareholders for Q2 2023 was $159.3 million, slightly down from $169.4 million in Q2 2022, a decrease of 6%[140] - Operating income for Q2 2023 was $29.5 million, a substantial increase of $25.6 million (657%) compared to $3.9 million in Q2 2022[160] - Operating income for Corporate Payments increased by $15.4 million (42%) for Q2 2023 and $39.7 million (81%) for the first half of 2023 compared to the prior year[156] - Total segment adjusted operating income for the three months ended June 30, 2023, was $275.9 million, compared to $272.3 million for the same period in 2022[179] Revenue Breakdown - Mobility segment revenues decreased by $39.0 million in Q2 2023, primarily due to lower average fuel prices[143] - Payment processing revenue in the Mobility segment fell by 15% to $172.2 million in Q2 2023 from $202.4 million in Q2 2022[142] - Total Corporate Payments revenue increased by $21.5 million (21%) for Q2 2023 and $49.0 million (28%) for the first half of 2023, driven by strong consumer travel demand[153] - Payment processing revenue grew by $16.1 million (18%) for Q2 2023 and $41.1 million (27%) for the first half of 2023 compared to the prior year[153] - Other revenue surged by $20.2 million (146%) to $34.1 million in Q2 2023, contributing significantly to the overall revenue growth[159] Costs and Expenses - Processing costs increased by $7.6 million (12%) and $13.8 million (11%) for the three and six months ended June 30, 2023, respectively, driven by higher technology and employee-related costs[148] - General and administrative expenses rose by $6.8 million (26%) and $11.2 million (23%) for the three and six months ended June 30, 2023, respectively, due to increased professional services and employee compensation[152] - General and administrative expenses rose by $3.4 million (29%) in Q2 2023, attributed to increased professional services and operational efficiencies[162] Cash Flow and Liquidity - Cash provided by operating activities for the six months ended June 30, 2023, was $99.5 million, an increase of $420.9 million compared to the same period in 2022[3][4] - Cash used for investing activities increased by $711.7 million for the six months ended June 30, 2023, primarily due to higher investments in available-for-sale debt securities[5][6] - Cash provided by financing activities increased by $491.8 million, mainly due to $500.0 million in borrowings under the Bank Term Funding Program (BTFP)[7][8] - Adjusted free cash flow increased by $265.0 million during the six months ended June 30, 2023, reflecting higher borrowings under the BTFP and increased cash from operating activities[9][10] - The company's adjusted free cash flow for the six months ended June 30, 2023, was $130.9 million, a significant improvement from a negative $134.1 million in the same period of 2022[181] Debt and Financing - As of June 30, 2023, the company had outstanding term loan principal borrowings of $2,277.9 million and total deposits of $4,321.9 million[1][2] - The company had no borrowings outstanding on the Federal Reserve Bank Discount Window as of June 30, 2023, with a maximum borrowing limit of $182.2 million[15][16] - The company repurchased approximately 0.5 million shares of common stock for $104.0 million during the first half of 2023, with $413.5 million remaining under the share buyback authorization[17][18] - The company is in compliance with the financial covenants of its Amended and Restated Credit Agreement as of June 30, 2023[19][20] Market and Segment Insights - Average price per gallon of fuel decreased by 26% to $3.68 in Q2 2023 from $4.98 in Q2 2022[143] - The company experienced a decrease in shipping demand, leading to a decline in the size and volume of factored invoices in the first half of 2023[146] - The net interchange rate decreased by 0.06% (12%) for Q2 2023 compared to the prior year, attributed to changes in customer and product mix[153] - Average number of SaaS accounts increased by 2.0 million (11%) to 19.5 million in Q2 2023, reflecting growth in Consumer-Directed Health and COBRA accounts[159] - Average HSA custodial cash assets grew by $768.3 million (25%) to $3,878.1 million compared to $3,109.8 million in the same period last year[159] Tax and Other Financial Metrics - The effective tax rate decreased to 19.1% in Q2 2023 from 29.8% in Q2 2022, primarily due to a valuation allowance release[170] - Provision for credit losses decreased by $20.9 million (49%) for Q2 2023 compared to the same period in the prior year, primarily due to a decrease in fraud losses[149] - Provision for credit losses as a percentage of fuel expenditures was 15.4 and 23.6 basis points for the three and six months ended June 30, 2023, respectively, down from 23.6 and 19.9 basis points in the prior year[150] - The company reported an increase in stock-based compensation to $62.6 million for the six months ended June 30, 2023, up from $50.5 million in the same period of 2022[179] - Unrealized losses on financial instruments for the six months ended June 30, 2023, were $12.3 million, compared to unrealized gains of $66.7 million in the same period of 2022[179] - The company experienced a net foreign currency loss of $1.6 million for the six months ended June 30, 2023, compared to a gain of $14.4 million in the same period of 2022[179] - Acquisition-related intangible amortization for the six months ended June 30, 2023, was $88.4 million, slightly up from $85.3 million in the same period of 2022[179]