Wright Express (WXS)

Q1 2012 Earnings Call

May 02, 2012 10:00 AM ET


Steve Elder - CCFO & SVP

Mike Dubyak - President & CEO


Sanjay Sakhrani - KBW

Roman Leal - Goldman Sachs

Phil Stiller - Citi

Robert Napoli - William Blair

Greg Smith - Sterne Agee

Tom McCrohan - Janney

Tien-tsin Huang - JPMorgan

Doug Greiner - Compass Point



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Good morning, my name is Jennifer and I will be your conference operator today. At this time I would like welcome everyone to the Wright Express First Quarter 2012 Financial Results Conference Call. (Operator Instructions).

Thank you Mr. Elder you may begin your conference.

Steve Elder

Good morning. With me today is our CEO, Mike Dubyak. The financial results press release we issued early 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 place undue reliance on these forward-looking statements all of which speak only as of today.

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

Mike Dubyak

Good morning everyone and thanks for joining us. I am pleased to announce another great quarter for Wright Express. For the first quarter revenue increased 17% to $140 million well-adjusted income rose 22% to $0.91 per diluted share both in-line with our guidance.

During the first quarter we saw continued organic growth in our fleet business with consolidated payment processing transactions up 3% over the prior year and vehicle growth of 13% primarily driven from the launch of BP Australia in the second quarter of 2011. We also saw very strong performance from our corporate charge card product in our other payment solution segment. As spend volume increased 52% year-over-year, overall we are executing well and these results underscore the strength of our growth strategy to expand our America’s fleet business, diversify our revenue streams and build out our international presence.

During the first quarter we made further progress in expanding our America’s fleet business, despite choppy economic indicators the macro environment has remained largely stable which coincides with what we are seeing in our existing customer base or same store sales trends. Our existing customer base or same store sales were down approximately 0.5% compared to Q1, 2011.

Looking at our portfolio by SIC code, our two biggest concentrations business services and construction were both slightly positive for the quarter relative to the first quarter of 2011. As was transportation, however, nearly all other SICs were down compared to the prior year. Our existing customer base for the first quarter had relatively steady performance with fourth quarter trends. Looking regionally the South-West was once again the strongest region. Consequently, growth in our core fleet business is been driven by new business wins, a testament to our innovative products, strong customer service and proprietary technology.

On the new business front we had new signings, up market and we experienced continued momentum in our down market strategy was small to mid-sized fleet wins during the first quarter. The down market pipeline remains robust with small and mid-market fleets. Additionally, we saw fair amount of activity in terms of large fleet contracts including the renewal of the State of Georgia, we also sign 3 year extensions with enterprise fleet management and lease plan both long term co-brand partners.

As announced last week, MAPCO Express joined us as a private label partner and will also be offering a co-brand universal card. We believe with our continued success with large fleets and partners is due to our sustained investments in our products and services as well as outstanding customer experience.

One of these recent investments is our free mobile app for iPhone and Android devices called Octane which introduced in March. Octane is the industry’s first fuel site locator that incorporates accurate real time transaction based fuel price data and text to speech capabilities.

In a nutshell, this app helps people find the nearest fueling locations with the lowest prices based on actual transactions from our broad network. This app demonstrates our continued focus on developing innovative solutions and providing customers with the best possible fleet management tools.

We believe this helps drive new business and enhances the value we provide to our customers. Turning now to the second prong of our growth strategy, diversification of our business. During the first quarter our other payment solution segment generated revenue growth of 44%, once again led by our corporate charge card product. Spend volume increased to strong 52% over the prior year to $2.2 billion primarily from our single use electronic credit product in the online travel vertical.

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