Wright Express Corporation (

WXS

)

Q1 2011 Earnings Call

May 4, 2011 10:00 AM ET

Executives

Steven Elder – CFO, SVP and Chief Accounting Officer

Michael Dubyak – Chairman, President and CEO

Analysts

Greg Smith – Duncan Williams

Bob Napoli – Piper Jaffray

Sanjay Sakhrani – KBW

Tien-tsin Huang – JP Morgan

David Parker – Lazard Capital Markets

Robert Dodd – Morgan Keegan

Thomas McCrohan – Janney Capital Markets

John Williams – Goldman Sachs

Presentation

Operator

Compare to:
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» Wright Express CEO Discusses Q4 2010 Results - Earnings Call Transcript
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» Wright Express Corporation Q2 2010 Earnings Call Transcript
» Wright Express Corporation Q1 2010 Earnings Call Transcript

Good morning. My name is Jennifer, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wright Express First Quarter 2011 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Mr. Elder, you may begin your conference.

Steven Elder

Good morning. With me today is our CEO, Mike Dubyak. The financial results press release we issued earlier this morning is posted in the Investor Relations section of our website at wrightexpress.com. A copy of the release has also been included in an 8-K we submitted to the SEC.

As a reminder, we will be discussing a non-GAAP metric, specifically adjusted net income during our call. For this year’s first quarter, adjusted net income excludes non-cash mark-to-market adjustments on our fuel price related derivative instruments and the amortization of acquired intangible assets, as well as the related tax impacts. Please see Exhibit 1 included in the press release for an explanation and reconciliation of adjusted net income to GAAP net income.

I would also like to remind you that we will discuss forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed in our press release, most recent Form 10-K and other SEC filings. While we may update forward-looking statements in the future, we disclaim any obligations to do so. You should not rely on these forward-looking statements after today.

With that, I’ll turn the call over to Mike Dubyak.

Michael Dubyak

Good morning, everyone. And thank you for joining us. 2011 is off to a great start as we reported first-quarter revenue growth of 43% and adjusted net income growth of 23% over the prior year. First quarter revenue and earnings growth surpassed our expectations with total revenue increasing to $120 million and adjusted net income growing to $29 million or $0.75 per share.

Our revenue growth was primarily driven by strong growth in our MasterCard revenue, growth in domestic fuel transactions process coupled with an increase in fuel prices and a full quarter of revenue from our Australian business.

Moving to some of our key metrics, payment processing transactions on a consolidated basis including WEX Australia increased 14% year-over-year, and in North American we saw an increase of 6%, the highest growth since Q4 2008. Additionally, this represents the fourth consecutive quarter of year-on-year growth. Fleet fielding transactions in our installed base of customers or same-store sales increased 1% over the prior year. The South West region saw the best growth for the quarter followed by the northeast.

The Midwest and to a lesser extent the southeast were negatively impacted by inclement weather in the months of January and February which kept the overall number low. However, on a positive note, same-store sales in March returned to the levels we saw in Q4 last year and total transaction growth in April has trended in line with March. I would just note that the slight deceleration from Q4 to Q1 in same-store sales follows a similar pattern that was recently reported with respect to GDP.

The total number of vehicle serviced averaged $5.4 million. In North America, our sales force added 103,000 vehicles in the quarter and they continue to make headway with new private label wins. The momentum we are seeing with private label wins has continued into the second quarter as we have received several verbal commitments from domestic prospects.

In addition, we are seeing growth in the small fleet market and believe that it will continue to be a source of opportunity going forward. I am also pleased to say that BP in Australia, which is roughly double the size of BP New Zealand successfully, came online a few days ago. We have also continued to expand our acceptance network to better serve our customers most recently announcing an agreement with RaceTrac, a southeast chain of convenience stores that adds over 300 locations to our existing network.

As a reminder, with our closed loop network is a significant competitive differentiator for us, as our relationships with both fleets and merchants enables us to provide security and control on the front end, while offering customized reporting for our fleet customers. In addition, the sheer size of our network, which is not easily replicable, is a significant advantage for us in the marketplace.

Along those lines, we continue to look for additional ways to enhance our value proposition to our customers by adding new features and services to help them manage their fleets more efficiently and effectively. In early April, we introduced new fleet features and reports to WEXSMART, a four featured GPS-telematics solution.

The new features combine information from fuel car transactions with GPS vehicle tracking information in meaningful ways to save even more. This capability is particularly useful to our customers in an environment of increasing fuel prices.

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