WEX(US:WEX)2021-05-06 20:59PART I Financial Statements The unaudited Q1 2021 financial statements reflect a year-over-year revenue decrease and a significant improvement in net loss attributable to shareholders | Financial Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total revenues | $410,757 | $431,679 | | Operating income | $50,541 | $74,829 | | Net income (loss) | $23,205 | $(12,269) | | Net loss attributable to shareholders | $(2,565) | $(16,256) | | Diluted net loss per share | $(0.06) | $(0.37) | | Balance Sheet Item | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $3,708,411 | $3,502,847 | | Total assets | $8,316,733 | $8,183,361 | | Total current liabilities | $3,307,745 | $2,740,853 | | Total liabilities | $6,285,891 | $6,148,225 | | Total stockholders' equity | $1,888,226 | $1,917,917 | | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash (used for) provided by operating activities | $(217,295) | $340,223 | | Net cash used for investing activities | $(16,406) | $(20,708) | | Net cash used for financing activities | $(114,579) | $(257,960) | - On March 15, 2021, the Company redeemed its $400.0 million of 4.75% Notes outstanding, accelerating and expensing unamortized debt issuance costs of $1.4 million95 - Subsequent to quarter-end, the Company completed the acquisition of certain HSA assets for $200 million initial cash, acquired the remaining 25% interest in WEX Europe Services for ~$97 million, and signed an agreement to acquire benefitexpress for ~$275 million153155156 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2021 financial results, highlighting varied COVID-19 impacts on segments, liquidity, and post-quarter strategic acquisitions and financing activities Summary of Performance and Recent Events Q1 2021 performance was impacted by the pandemic, showing varied segment recovery, alongside the redemption of senior notes and post-quarter acquisitions - The Travel and Corporate Solutions segment remains the most impacted by the pandemic, while Fleet Solutions volumes are recovering, and Health and Employee Benefit Solutions purchase volumes are impacted by deferred discretionary healthcare spending163165166 - On March 15, 2021, the company redeemed its outstanding $400 million 4.75% senior secured notes167 - Subsequent to the quarter, WEX acquired the remaining 25% interest in WEX Europe Services for ~$97.1 million and signed a definitive agreement to acquire benefitexpress for ~$275 million170171 Key Performance Indicators Q1 2021 key performance indicators show mixed year-over-year results, with Fleet Solutions recovering, Travel and Corporate Solutions declining, and Health growing SaaS accounts | Key Metric (vs. Q1 2020) | Q1 2021 | Change | % Change | | :--- | :--- | :--- | :--- | | Fleet Solutions | | | | | Fuel transactions processed (millions) | 146.4 | (4.3) | (2.9)% | | Average vehicles serviced (millions) | 15.8 | 0.7 | 4.4% | | Travel and Corporate Solutions | | | | | Payment solutions purchase volume (millions) | $6,107.7 | $(1,933.4) | (24.0)% | | Health and Employee Benefit Solutions | | | | | Average number of U.S. SaaS accounts (millions) | 15.5 | 1.0 | 6.9% | Results of Operations by Segment Q1 2021 segment performance varied, with Fleet Solutions revenue down but operating income up, Travel and Corporate Solutions revenue and operating income significantly down, and Health revenue slightly down but operating income up | Segment | Q1 2021 Revenue | YoY % Change | Q1 2021 Operating Income (Loss) | YoY % Change | | :--- | :--- | :--- | :--- | :--- | | Fleet Solutions | $243.8M | (2)% | $89.6M | 22% | | Travel and Corporate Solutions | $70.6M | (16)% | $(25.8)M | (316)% | | Health and Employee Benefit Solutions | $96.3M | (1)% | $14.3M | 3% | - The Fleet Solutions segment's provision for credit losses decreased by $16.2 million (79%) compared to Q1 2020, when a large provision was made at the onset of the COVID-19 pandemic188 - The Travel and Corporate Solutions segment's operating loss was driven by a $24.2 million (328%) increase in G&A expenses, primarily from a vendor contract termination payment and integration costs for the eNett and Optal acquisition201 Liquidity and Capital Resources Q1 2021 operating cash flow significantly decreased, while liquidity is maintained through credit facilities, and the share repurchase program remains available - Cash used for operating activities was $217.3 million, a decrease of $557.5 million from the prior year, primarily from rebounding customer spend volumes and fuel prices228229 - On April 1, 2021, the company amended its 2016 Credit Agreement, extending maturities, increasing the Revolving Credit Facility to $930 million, and providing approximately $117 million in additional Tranche A Term Loans234 - The company has authorization to repurchase up to $150 million of its common stock until September 2021, which was entirely unused as of March 31, 2021260 Quantitative and Qualitative Disclosures About Market Risk There were no material changes to the company's market risk disclosures from those presented in its Annual Report on Form 10-K for the year ended December 31, 2020 - As of March 31, 2021, there were no material changes to the market risk disclosures previously reported in the Annual Report on Form 10-K for the year ended December 31, 2020269 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal controls over financial reporting during the quarter - The Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2021270 - There has been no change in internal control over financial reporting during the quarter that has materially affected, or is reasonably likely to materially affect, internal controls271 PART II—OTHER INFORMATION Legal Proceedings WEX is not involved in any material legal proceedings as of the filing date, but is cooperating with an SEC investigation related to a former Brazil subsidiary - The company is not involved in any material legal proceedings as of the filing date273 - WEX is cooperating with an SEC investigation concerning its former Brazil subsidiary (sold in September 2020), but the current estimate of a reasonably possible loss contingency is not material273 Risk Factors This section directs readers to the detailed risk factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - The report refers to the risk factors discussed in Part I, "Item 1A. Risk Factors" in the Annual Report on Form 10–K for the year ended December 31, 2020, for a comprehensive understanding of potential risks274 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock during Q1 2021, with the full $150 million authorized under its share repurchase program remaining available - The company did not purchase any shares of its common stock during the quarter ended March 31, 2021276 - As of March 31, 2021, the full $150 million authorized under the share repurchase program was available for future purchases276 Exhibits This section provides a list of all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents and certifications