WEX(US:WEX)2022-02-10 21:44Financial Data and Key Metrics Changes - In Q4 2021, WEX reported record revenue of $498 million, a year-over-year increase of 25%, with approximately 12% of this increase attributed to higher fuel prices [10][12] - Full year 2021 revenue increased 19% year-over-year to $1.85 billion, with adjusted net income per diluted share growing 51% to $9.14 [34][35] - Adjusted net income per diluted share for Q4 was $2.58, reflecting a 78% increase compared to the same quarter last year [11][37] Business Line Data and Key Metrics Changes - Fleet segment revenue grew 30% year-over-year to $306.8 million, driven by higher fuel prices and new customer wins [38] - Travel and Corporate Payments segment reported a 9% increase in revenue to $81.5 million, with travel-related customer volume up nearly 400% [41][44] - Health segment revenue increased 23% year-over-year, supported by strong organic growth and the acquisition of Benefit Express [46] Market Data and Key Metrics Changes - Total purchase volume processed in Q4 grew 79% year-over-year to $25 billion, indicating strong momentum across all business lines [10] - Full year purchase volume reached $88 billion, up 59% compared to 2020 [13] Company Strategy and Development Direction - WEX is focused on expanding its ecosystem with innovative solutions, including a new agreement with Mastercard to enhance customer purchasing capabilities [15][72] - The company aims to integrate products and services across its three verticals, enhancing customer relationships and driving growth [22][23] - WEX is investing in technology to improve cloud capabilities and AI-driven automation, which are expected to enhance efficiency and scalability [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering 2022 with strong momentum, driven by healthy organic growth and a robust open enrollment season in the health business [29] - The company anticipates revenue growth within its long-term guidance range for 2022, despite the impact of higher fuel prices and accounting changes [60][64] Other Important Information - WEX ended 2021 with $589 million in cash and $759 million of liquidity available under its credit agreement [52][53] - The company has made significant investments in its technology stack, which are expected to drive future growth and profitability [95] Q&A Session Summary Question: Inquiry about the new agreement with Mastercard - Management highlighted that the agreement allows customers to use WEX's proprietary network while also enabling broader purchasing capabilities through Mastercard, particularly appealing to smaller fleet customers [72] Question: Impact of travel renewal on yield in Travel and Corporate Payments - Management indicated that the travel renewal should not have a significant impact on the travel yield, with expectations for rate stability in 2022 [77][81] Question: Key segments' performance relative to pre-pandemic levels - Management noted that North American fleet business volume has surpassed pre-pandemic levels, with expectations for continued growth across all segments [81] Question: Margin improvements and drivers - Management attributed margin improvements to synergy realization from acquisitions, increased volume, and a scalable cost structure [94][96] Question: Revenue per account growth in the health segment - Management explained that revenue per account is increasing due to additional services offered to customers and the new revenue from HSA deposits [99] Question: Capital allocation strategy for 2022 - Management stated that the priority for capital allocation will be internal investments, with plans to spend about 6% of revenue on CapEx [121]