Wright Express Corporation (WXS)

40th Annual J.P. Morgan Global Technology, Media and Telecom Conference

May 16, 2012 4:10 p.m. ET


Mike Dubyak - Chairman, President and CEO

Steve Elder - SVP and CFO

Micky Thomas - IR


[Unidentified Analyst]


Unidentified Analyst

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All right thanks. It’s our last presentation of the day. A fun one. Wright Express, leading fleet fuel card company that’s got a lot of non-fuel business has been growing very, very rapidly. So hoping to pick the company’s brain on that. So from the company we’ve got Mike Dubyak who is the CEO, Chairman and President of the company. We’ve got Steve Elder as well, CFO. We’ve got Micky Thomas in the room as well, investor relations. So just want to make sure we acknowledge everyone. And we’re just going to be fireside chat again if that’s okay.

Mike Dubyak


Unidentified Analyst

And maybe just start out with the same question I ask you every year, which what’s going on with the Mcgraw (ph), what’s happening on the ground, maybe if you can just update everyone on what you are seeing.

Mike Dubyak

As you know we have our fleet business which gives us a lot of insight to over 285,000 accounts in the U.S. On that side of the business, we’re seeing just kind of stable growth from the existing customers which we call same-store sales as well. I think we’ve been saying it’s flat to slightly down, so a little bit below the GDP, seeing some strength in, if there are some SICs that are expanding a little bit, it’s in the construction area, manufacturing and transportation. But the rest of the SICs are down.

On a regional basis, we see strength in the southwest, probably not surprising with oil and gas, and everything else is down. The northeast is probably doing the best of the other sectors but again slightly down. On the growth side, we still see, we’re taking market share and we are growing that side of the business. So we still see growth in our fleet card business both in the U.S. and Australia. On the kind of other payment solutions, we are very large with online travel, the Expedias, Pricelines and the Orbitzs. And we’ve seen good growth there. We talked about over 50% spend growth in the first quarter. We upped our trends of the rest of the year from 20% to 30% growth on spend to 25% to 35% growth just because we are seeing better trends in the first quarter.

And then we are expanding internationally. In the call, we couldn’t talk about it. We said we saw some opportunities with acquisitions. We’ve been aggressive trying to move our online travel vertical product to both the UK where we have signed two people and we feel very comfortable that we’re going to see some traction in Australia as well. And we then bought a company in the UK that allows us to get into the virtual card program but even with a prepaid product, not just our credit product. So seeing the growth in fleet, seeing the growth in other payments and seeing now further opportunities on the international side.

Unidentified Analyst

Good. That’s good to hear. So maybe just to a level set now versus where you typically see growth at mid-cycle for both the online travel business as well as your traditional fleet business. What sort of the normal growth for both that we’re looking at it at mid-cycle same store?

Mike Dubyak

Yeah, I think in the past, I mean, we don’t have great trends against previous recessions only because we were probably growing through it at that time. I think what we are seeing this time around, we would typically say that our same-store sales would pretty much track with GDP which didn’t happen in the first quarter. So I think we’re seeing some efficiencies played out in terms of fleet being smarter using GPS to try to be little bit more efficient in terms of their vehicle use. As they turn over vehicles, they’re probably buying more efficient vehicles, getting higher MPGs than the vehicles they turned in. So that’s probably why we are seeing kind of a flat versus the 2.2 GDP in the first quarter.

On the online travel, that one is hard to peg. Now I think if you look at the growth projections for people like Priceline or Expedia, it’s typically in the 10% range but with our program with hotels, there are still hotels not using cards today that are probably converting over and we’re getting some of that growth. There is also the fact that they continue to expand internationally and we are also getting some of that. So last year, I think there was $7.5 billion of spend with the online travel program, $2.5 billion of that was international and we’d like to believe that’s going to continue to expand.

Unidentified Analyst

I am asking because I am to trying to build back up to what your long term growth rates have been. Can you just remind us of your sort of long term revenue and –

Mike Dubyak

I think we can see existing customers start to grow again, we would say mid-single digit growth on the fleet side, so 5%, 6%, 7%, but we talked about the OTA being very different. So we still try to say overall that our business model should be about a 10% revenue grower and then more in the bottom line. If you look at the last five years, we’ve actually grown 14% in the revenue in terms of our five year CAGR, and 21% in terms of EPS growth.

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