Wright Express Corporation (

WXS

)

Q2 2011 Earnings Call

August 3, 2011 10:00 am ET

Executives

Steve Elder – CFO, SVP

Mike Dubyak – CEO

Analysts

Sanjay Sakhrani – KBW

Tien-Tsin Huang – JPMorgan

Tom Mccrohan – Janney

Robert Dodd – Morgan Keegan

Romero El [ph] – Goldman Sachs

Tim Willi – Wells Fargo

Presentation

Operator

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» Wright Express Corporation Q2 2010 Earnings Call Transcript

Good morning, my name is Jenifer and I will be you conference operator today. At this time, I would like to welcome everyone to the Wright Express second quarter 2011 financial results. 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.

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 non-GAAP metric, specifically adjusted net income during our call. For this year’s second 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 impact. Please see exhibit one included in the press release for an explanation and reconciliation of adjusted net income, 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 will turn the call over to Mike Dubyak.

Mike Dubyak

Good morning everyone and thanks for joining us. The second quarter was yet another quarter that exceeded our expectations with revenue growing 55% year-over-year to $141 million and adjusted net income growing 33% to $35.5 million of $0.91 per share. Our performance relative to our expectations was driven by continued stellar growth in our corporate charge card product and an increase in fleet transaction growth.

Starting with some key metrics, consolidated payment processing transactions which include Wright Express Australia increased 15% over the prior year and in North America we saw an increase of 8%. This 8% increase is very positive when realizing the existing customer fleet filing transactions or same store sales was down slightly from the prior year. After two consecutive quarters of positive same store sales, Q2 same store sales was down roughly 0.5% which we believe is somewhat reflective of what we are seeing in the broader economic picture.

Looking at same stores sales by SIC codes, our biggest industries construction in business services were better performing industries, while manufacturing underperformed. On a regional basis, the North East saw a solid activity for the quarter posting positive same store sales growth, while all other regions showed same store sales declines. The total number of vehicle serviced average $6.3 million increasing 29% from the second quarter of 2010.

In addition to the acquisition of retail decisions and the earlier launch of BP in New Zealand, vehicle growth was driven by the successful launch of BP Australia during the second quarter of 2011. We also had consistent fleet wins from our sales team in North America including wins from fuel [ph] gas and NCR. We have a significant pipeline of regional oil companies that will continue to be an opportunity for us going forward.

Our recently announced agreement with Wawa, a chain of 580 convenient stores is a god example of this. The addition of Wawa increases our capability to penetrate the small fleet market. After assessing customer demand for fleet card program Wawa selected Wright Express as a private label partner for our product offering and also highlighted our customer centric focus as an advantage.

As partners and customers continue to recognize the value, convenience, security, and control that our partner issued in universal fleet card programs provide, not to mention our unrelenting focus on customer satisfaction; we believe we are well poised for continued growth. On the international front Wright Express Australia continues to meet expectations. In addition, as I just mentioned during the quarter, we brought on the BP portfolio in Australia and the implantation process has gone extremely well.

As evidence of this, we are now performing some customization work to the processing system at their request which is driving incremental revenue. On the fleet side, we continue to look for opportunities in this market and we have been successful in growing our customer base. Additionally, we continue to believe there are opportunities outside of Australia in the Asia pack region, but these opportunities are still in the exploratory phase.

During the other payment solution segment; we continue to see significant growth in this segment, largely driven by our corporate charge card product. This product continues to surpass our expectations with spend volume in the second quarter increasing 83% over the prior year to $1.9 billion. This growth has been largely due to our single use electronic payment product, specifically in the online travel vertical.

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