☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 01-0526993 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
97 Darling Avenue, South Portland, Maine | 04106 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ | |
Emerging growth company | ☐ |
PART I—FINANCIAL INFORMATION | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II—OTHER INFORMATION | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 6. | |||
2014 Credit Agreement | Second amended and restated credit agreement entered into on August 22, 2014, by and among the Company and certain of its subsidiaries, as borrowers, WEX Card Holding Australia Pty Ltd., as designated borrower, and Bank of America, N.A., as administrative agent on behalf of consenting lenders |
2016 Credit Agreement | Credit agreement entered into on July 1, 2016 by and among the Company and certain of its subsidiaries, as borrowers, WEX Card Holding Australia Pty Ltd., as designated borrower, and Bank of America, N.A., as administrative agent on behalf of the lenders |
Adjusted net income or ANI | A non-GAAP measure that adjusts net earnings attributable to shareholders to exclude fair value changes of unrealized gains or losses on derivatives, the impact of net foreign currency remeasurement gains and losses, the expense associated with stock-based compensation, acquisition and divestiture related expenses and adjustments including the amortization of purchased intangibles, deferred loan costs amortization, restructuring and other costs, and adjustments attributable to non-controlling interest, as well as the related tax impacts of the adjustments |
ASU 2014-09 | Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606) |
ASU 2016-09 | Accounting Standards Update No. 2016-09 Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting |
ASU 2017-07 | Accounting Standards Update No. 2017-07 Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost |
Australian Securitization Subsidiary | Southern Cross WEX 2015–1 Trust, a bankruptcy-remote subsidiary consolidated by the Company |
Average expenditure per payment processing transaction | Average total dollars of spend in a funded fuel transaction |
Company | WEX Inc. and all entities included in the unaudited condensed consolidated financial statements |
EBITDA | A non-GAAP measure that adjusts income before income taxes to exclude interest, depreciation and amortization |
EFS | Electronic Funds Source, LLC, a provider of customized corporate payment solutions for fleet and corporate customers with a focus on the large and mid-sized over-the-road fleets. On July 1, 2016, the Company acquired WP Mustang Topco LLC, the indirect parent of Electronic Funds Source, LLC and Warburg Pincus Private Equity XI (Lexington), LLC, an affiliated entity, from investment funds affiliated with Warburg Pincus LLC |
Esso portfolio in Europe | European commercial fleet card portfolio acquired from ExxonMobil |
European Securitization Subsidiary | Gorham Trade Finance B.V., a bankruptcy-remote subsidiary consolidated by the Company |
Evolution1 | EB Holdings Corp. and its subsidiaries which includes Evolution1, Inc., acquired by the Company on July 16, 2014 |
FASB | Financial Accounting Standards Board |
FDIC | Federal Deposit Insurance Corporation |
GAAP | Generally Accepted Accounting Principles in the United States |
Indenture | The Notes were issued pursuant to an indenture dated as of January 30, 2013 among the Company, the guarantors listed therein, and The Bank of New York Mellon Trust Company, N.A., as trustee |
NCI | Non-controlling interest |
Notes | $400 million notes with a 4.75% fixed rate, issued on January 30, 2013 |
Over-the-road | Typically heavy trucks traveling long distances |
Payment solutions purchase volume | Total amount paid by customers for transactions |
Payment processing transactions | Funded payment transactions where the Company maintains the receivable for total purchase |
SaaS | Software-as-a-service |
SEC | Securities and Exchange Commission |
Ticking fees | A fee incurred by a borrower to compensate the lender for maintaining a commitment of funds for the borrower for a period of time |
Total fuel transactions | Total of transaction processing and payment processing transactions of our Fleet Solutions segment |
Transaction processing transactions | Unfunded payment transactions where the Company is the processor and only has receivables for the processing fee |
UNIK | UNIK S.A., the Company's Brazilian subsidiary, which has been subsequently branded WEX Brazil |
WEX | WEX Inc. |
WEX Health | Evolution1 and Benaissance, collectively |
March 31, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 203,995 | $ | 190,930 | |||
Accounts receivable (less reserve for credit losses of $23,566 in 2017 and $20,092 in 2016) | 2,246,815 | 2,054,701 | |||||
Securitized accounts receivable, restricted | 101,185 | 97,417 | |||||
Income taxes receivable | 9,792 | 10,765 | |||||
Available-for-sale securities | 23,413 | 23,525 | |||||
Property, equipment and capitalized software (net of accumulated depreciation of $240,160 in 2017 and $228,336 in 2016) | 171,254 | 167,278 | |||||
Deferred income taxes, net | 7,042 | 6,934 | |||||
Goodwill | 1,840,844 | 1,838,441 | |||||
Other intangible assets, net | 1,228,670 | 1,265,468 | |||||
Other assets | 342,752 | 341,638 | |||||
Total assets | $ | 6,175,762 | $ | 5,997,097 | |||
Liabilities and Stockholders’ Equity | |||||||
Accounts payable | $ | 674,114 | $ | 617,118 | |||
Accrued expenses | 290,808 | 331,579 | |||||
Deposits | 1,040,675 | 1,118,823 | |||||
Securitized debt | 92,676 | 84,323 | |||||
Revolving line of credit facilities and term loans, net | 1,795,640 | 1,599,291 | |||||
Deferred income taxes, net | 163,465 | 152,906 | |||||
Notes outstanding, net | 395,718 | 395,534 | |||||
Other debt | 107,699 | 125,755 | |||||
Amounts due under tax receivable agreement | 47,302 | 47,302 | |||||
Other liabilities | 18,447 | 18,719 | |||||
Total liabilities | 4,626,544 | 4,491,350 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ Equity | |||||||
Common stock $0.01 par value; 175,000 shares authorized; 47,327 shares issued in 2017 and 47,173 in 2016; 42,899 shares outstanding in 2017 and 42,841 in 2016 | 473 | 472 | |||||
Additional paid-in capital | 545,135 | 547,627 | |||||
Non-controlling interest | 8,275 | 8,558 | |||||
Retained earnings | 1,273,935 | 1,244,271 | |||||
Accumulated other comprehensive loss | (106,258 | ) | (122,839 | ) | |||
Treasury stock at cost; 4,428 shares in 2017 and 2016 | (172,342 | ) | (172,342 | ) | |||
Total stockholders’ equity | 1,549,218 | 1,505,747 | |||||
Total liabilities and stockholders’ equity | $ | 6,175,762 | $ | 5,997,097 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenues | |||||||
Payment processing revenue | $ | 136,378 | $ | 111,057 | |||
Account servicing revenue | 61,539 | 44,522 | |||||
Finance fee revenue | 43,372 | 23,506 | |||||
Other revenue | 50,068 | 26,843 | |||||
Total revenues | 291,357 | 205,928 | |||||
Expenses | |||||||
Salary and other personnel | 83,585 | 63,410 | |||||
Restructuring | 484 | 1,589 | |||||
Service fees | 36,750 | 36,759 | |||||
Provision for credit losses | 12,231 | 3,917 | |||||
Technology leasing and support | 12,516 | 11,076 | |||||
Occupancy and equipment | 6,367 | 5,712 | |||||
Depreciation and amortization | 49,238 | 22,264 | |||||
Operating interest expense | 4,848 | 1,386 | |||||
Cost of hardware and equipment sold | 1,029 | 905 | |||||
Other expenses | 23,557 | 17,783 | |||||
Total operating expenses | 230,605 | 164,801 | |||||
Operating income | 60,752 | 41,127 | |||||
Financing interest expense | (27,148 | ) | (21,558 | ) | |||
Net foreign currency gain | 8,442 | 16,124 | |||||
Net unrealized gains on interest rate swap agreements | 1,565 | — | |||||
Net realized and unrealized gain on fuel price derivatives | — | 711 | |||||
Income before income taxes | 43,611 | 36,404 | |||||
Income taxes | 14,535 | 13,183 | |||||
Net income | 29,076 | 23,221 | |||||
Less: Net (loss) gain from non-controlling interest | (325 | ) | 135 | ||||
Net earnings attributable to shareholders | $ | 29,401 | $ | 23,086 | |||
Net earnings attributable to WEX Inc. per share: | |||||||
Basic | $ | 0.69 | $ | 0.60 | |||
Diluted | $ | 0.68 | $ | 0.59 | |||
Weighted average common shares outstanding: | |||||||
Basic | 42,871 | 38,756 | |||||
Diluted | 43,119 | 38,850 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 29,076 | $ | 23,221 | |||
Changes in available-for-sale securities, net of tax expense of $1 and $97, respectively | 3 | 164 | |||||
Foreign currency translation | 16,620 | 10,774 | |||||
Comprehensive income | 45,699 | 34,159 | |||||
Less: Comprehensive (loss) income attributable to non-controlling interest | (283 | ) | 591 | ||||
Comprehensive income attributable to WEX Inc. | $ | 45,982 | $ | 33,568 |
Common Stock | ||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Treasury Stock | Retained Earnings | Non-Controlling Interest | Total Stockholders' Equity | |||||||||||||||||||||||
Balance at January 1, 2016 | 38,746 | $ | 431 | $ | 174,972 | $ | (103,451 | ) | $ | (172,342 | ) | $ | 1,183,634 | $ | 12,437 | $ | 1,095,681 | |||||||||||||
Stock issued upon exercise of stock options | 1 | — | 5 | — | — | — | — | 5 | ||||||||||||||||||||||
Tax expense from stock option and restricted stock units | — | — | (578 | ) | — | — | — | — | (578 | ) | ||||||||||||||||||||
Stock issued upon vesting of restricted and deferred stock units | 54 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Stock-based compensation, net of share repurchases for tax withholdings | — | — | 2,056 | — | — | — | — | 2,056 | ||||||||||||||||||||||
Changes in available-for-sale securities, net of tax expense of $97 | — | — | — | 164 | — | — | — | 164 | ||||||||||||||||||||||
Foreign currency translation | — | — | — | 10,318 | — | — | 456 | 10,774 | ||||||||||||||||||||||
Net income | — | — | — | — | — | 23,086 | 135 | 23,221 | ||||||||||||||||||||||
Balance at March 31, 2016 | 38,801 | $ | 431 | $ | 176,455 | $ | (92,969 | ) | $ | (172,342 | ) | $ | 1,206,720 | $ | 13,028 | $ | 1,131,323 | |||||||||||||
Balance at January 1, 2017 | 42,841 | $ | 472 | $ | 547,627 | $ | (122,839 | ) | $ | (172,342 | ) | $ | 1,244,271 | $ | 8,558 | $ | 1,505,747 | |||||||||||||
Cumulative-effect adjustment1 | — | — | — | — | — | 263 | — | 263 | ||||||||||||||||||||||
Stock issued upon exercise of stock options | 5 | — | 72 | — | — | — | — | 72 | ||||||||||||||||||||||
Stock issued upon vesting of restricted and deferred stock units | 53 | 1 | (1 | ) | — | — | — | — | — | |||||||||||||||||||||
Stock-based compensation, net of share repurchases for tax withholdings | — | — | (2,563 | ) | — | — | — | — | (2,563 | ) | ||||||||||||||||||||
Changes in available-for-sale securities, net of tax expense of $1 | — | — | — | 3 | — | — | — | 3 | ||||||||||||||||||||||
Foreign currency translation | — | — | — | 16,578 | — | — | 42 | 16,620 | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | 29,401 | (325 | ) | 29,076 | |||||||||||||||||||||
Balance at March 31, 2017 | 42,899 | $ | 473 | $ | 545,135 | $ | (106,258 | ) | $ | (172,342 | ) | $ | 1,273,935 | $ | 8,275 | $ | 1,549,218 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 29,076 | $ | 23,221 | |||
Adjustments to reconcile net income to net cash (used for) provided by operating activities: | |||||||
Net unrealized gain | (2,991 | ) | (11,437 | ) | |||
Stock-based compensation | 6,457 | 4,243 | |||||
Depreciation and amortization | 49,238 | 22,264 | |||||
Debt issuance cost amortization | 1,954 | 772 | |||||
Provision for deferred taxes | 10,517 | 12,644 | |||||
Provision for credit losses | 12,231 | 3,917 | |||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||
Accounts receivable | (194,859 | ) | (49,711 | ) | |||
Other assets | 741 | 12,808 | |||||
Accounts payable | 60,650 | 68,561 | |||||
Accrued expenses | (32,547 | ) | 10,685 | ||||
Income taxes | 685 | (10,818 | ) | ||||
Other liabilities | (331 | ) | (734 | ) | |||
Net cash (used for) provided by operating activities | (59,179 | ) | 86,415 | ||||
Cash flows from investing activities | |||||||
Purchases of property, equipment and capitalized software | (21,693 | ) | (20,494 | ) | |||
Purchases of available-for-sale securities | (114 | ) | (489 | ) | |||
Maturities of available-for-sale securities | 229 | 135 | |||||
Net cash used for investing activities | (21,578 | ) | (20,848 | ) | |||
Cash flows from financing activities | |||||||
Repurchase of share-based awards to satisfy tax withholdings | (9,020 | ) | (2,187 | ) | |||
Proceeds from stock option exercises | 72 | 6 | |||||
Net change in deposits | (78,392 | ) | 170,604 | ||||
Net activity on other debt | (19,010 | ) | — | ||||
Net borrowings on revolving line of credit facility | 202,580 | 15,056 | |||||
Repayments on term loans | (8,688 | ) | (6,875 | ) | |||
Net change in securitized debt | 3,354 | (10,469 | ) | ||||
Net cash provided by financing activities | 90,896 | 166,135 | |||||
Effect of exchange rate changes on cash and cash equivalents | 2,926 | 3,631 | |||||
Net change in cash and cash equivalents | 13,065 | 235,333 | |||||
Cash and cash equivalents, beginning of period | 190,930 | 279,989 | |||||
Cash and cash equivalents, end of period | $ | 203,995 | $ | 515,322 |
1. | Basis of Presentation |
2. | New Accounting Standards |
3. | Business Acquisition |
As Reported December 31, 2016 | Measurement Period Adjustments | As Reported March 31, 2017 | |||||||||
Total consideration, net of cash acquired | $ | 1,444,235 | $ | — | $ | 1,444,235 | |||||
Less: | |||||||||||
Accounts receivable | 162,684 | — | 162,684 | ||||||||
Property and equipment | 2,387 | 1 | 2,388 | ||||||||
Customer relationships (a)(b) | 842,700 | (1,300 | ) | 841,400 | |||||||
Developed technologies (a)(c) | 32,120 | — | 32,120 | ||||||||
Trademarks and trade names (a)(d) | 13,700 | — | 13,700 | ||||||||
Deferred income tax assets | 34,992 | — | 34,992 | ||||||||
Accounts payable | (153,777 | ) | 248 | (153,529 | ) | ||||||
Accrued expenses | (128,267 | ) | 9,146 | (119,121 | ) | ||||||
Deferred income tax liabilities | (91,194 | ) | — | (91,194 | ) | ||||||
Recorded goodwill (a) | $ | 728,890 | $ | (8,095 | ) | $ | 720,795 |
Remaining 2017 | $ | 64,032 | |
2018 | $ | 80,987 | |
2019 | $ | 74,548 | |
2020 | $ | 68,685 | |
2021 | $ | 60,654 | |
2022 | $ | 53,537 | |
Thereafter | $ | 427,408 |
Three Months Ended March 31, 2016 | |||
Total revenues | $ | 240,297 | |
Net earnings attributable to shareholders | $ | 18,333 | |
Pro forma net income attributable to shareholders per common share: | |||
Basic | $ | 0.43 | |
Diluted | $ | 0.43 |
4. | Reserves for Credit Losses |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance, beginning of year | $ | 20,092 | $ | 13,832 | |||
Provision for credit losses | 12,231 | 3,917 | |||||
Charges to other accounts | 2,939 | — | |||||
Charge-offs | (13,369 | ) | (7,036 | ) | |||
Recoveries of amounts previously charged-off | 928 | 1,340 | |||||
Currency translation | 745 | 98 | |||||
Balance, end of period | $ | 23,566 | $ | 12,151 |
5. | Earnings per Share |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net earnings attributable to shareholders | $ | 29,401 | $ | 23,086 | |||
Weighted average common shares outstanding – Basic | 42,871 | 38,756 | |||||
Dilutive impact of share based compensation awards | 248 | 94 | |||||
Weighted average common shares outstanding – Diluted | 43,119 | 38,850 |
6. | Derivative Instruments |
Tranche A | Tranche B | Tranche C | |
Notional amount | $400,000 | $150,000 | $250,000 |
Amortization | 5% annually | N/A | N/A |
Maturity date | 12/31/2020 | 12/31/2020 | 12/31/2018 |
Fixed interest rate | 1.108% | 1.125% | 0.896% |
Aggregate Notional Amount | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Australian dollar | A$ | 18,000 | A$ | 15,000 | |||
Norwegian Krone | NOK | NOK | 40,000 |
Asset Derivatives | ||||||||||
Derivatives Not Designated as Hedging Instruments | Balance Sheet Location | March 31, 2017 | December 31, 2016 | |||||||
Interest rate swaps | Other assets | $ | 14,473 | $ | 12,908 |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) on Derivatives Recognized in Income | Three Months Ended March 31, | ||||||
2017 | 2016 | |||||||
Commodity contracts | Net realized and unrealized gain on fuel price derivatives | $ | — | $ | 711 | |||
Interest rate swap agreements - unrealized portion | Net unrealized gains on interest rate swap agreements | $ | 1,565 | $ | — | |||
Interest rate swap agreements - realized portion | Financing interest expense | $ | (543 | ) | $ | — |
7. | Financing and Other Debt |
March 31, 2017 | December 31, 2016 | ||||||
Revolving line of credit facilities and term loans | $ | 36,600 | $ | 38,334 | |||
Notes outstanding | $ | 4,282 | $ | 4,466 |
8. | Factoring |
9. | Fair Value |
• | Level 1 – Quoted prices for identical instruments in active markets. |
• | Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. |
• | Level 3 – Instruments whose significant value drivers are unobservable. |
Fair Value Hierarchy | March 31, 2017 | December 31, 2016 | ||||||
Assets: | ||||||||
Municipal bonds | 2 | $ | 596 | $ | 682 | |||
Asset-backed securities | 2 | 514 | 648 | |||||
Mortgage-backed securities | 2 | 484 | 490 | |||||
Fixed-income mutual fund | 1 | 21,819 | 21,705 | |||||
Total available-for-sale securities | $ | 23,413 | $ | 23,525 | ||||
Executive deferred compensation plan trust (a) | 1 | $ | 6,716 | $ | 5,673 | |||
Interest rate swaps (a) | 2 | $ | 14,473 | $ | 12,908 |
10. | Accumulated Other Comprehensive Loss |
Three Months Ended March 31, | |||||||||||||||
2017 | 2016 | ||||||||||||||
Unrealized Gains and Losses on Available- for-Sale Securities | Foreign Currency Items | Unrealized Gains and Losses on Available- for-Sale Securities | Foreign Currency Items | ||||||||||||
Beginning balance | $ | (463 | ) | $ | (122,376 | ) | $ | (212 | ) | $ | (103,239 | ) | |||
Other comprehensive income | 3 | 16,578 | 164 | 10,318 | |||||||||||
Ending balance | $ | (460 | ) | $ | (105,798 | ) | $ | (48 | ) | $ | (92,921 | ) |
11. | Non-Controlling Interest |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance, beginning of year | $ | 8,558 | $ | 12,437 | |||
Net (loss) gain attributable to non-controlling interest | (325 | ) | 135 | ||||
Currency translation adjustment | 42 | 456 | |||||
Balance, end of period | $ | 8,275 | $ | 13,028 |
12. | Income Taxes |
13. | Commitments and Contingencies |
14. | Restructuring |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance, beginning of year | $ | 5,231 | $ | 7,249 | |||
Restructuring charges | 310 | 1,589 | |||||
Cash paid | (348 | ) | (647 | ) | |||
Impact of foreign currency translation | 38 | 315 | |||||
Balance, end of period | $ | 5,231 | $ | 8,506 |
Three Months Ended March 31, 2017 | |||
Balance, beginning of year | $ | 3,662 | |
Reserve release | (533 | ) | |
Impact of foreign currency translation | 73 | ||
Balance, end of period | $ | 3,202 |
Three Months Ended March 31, 2017 | |||
Balance, beginning of year | $ | 1,764 | |
Restructuring charges | 707 | ||
Cash paid | (590 | ) | |
Other | 258 | ||
Balance, end of period | $ | 2,139 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance, beginning of year | $ | 10,657 | $ | 7,249 | |||
Restructuring charges | 1,017 | 1,589 | |||||
Reserve release | (533 | ) | — | ||||
Cash paid | (938 | ) | (647 | ) | |||
Other | 258 | — | |||||
Impact of foreign currency translation | 111 | 315 | |||||
Balance, end of period | $ | 10,572 | $ | 8,506 |
15. | Segment Information |
• | Fleet Solutions provides customers with payment and transaction processing services specifically designed for the needs of commercial and government fleets. This segment also provides information management services to these fleet customers. |
• | Travel and Corporate Solutions focuses on the complex payment environment of business-to-business payments, providing customers with payment processing solutions for their corporate payment and transaction monitoring needs. |
• | Health and Employee Benefit Solutions provides healthcare payment products and SaaS consumer directed platforms, as well as payroll related benefits to customers. |
• | Exclusion of the non-cash, mark-to-market adjustments on derivative instruments, including fuel price related derivatives and interest rate swap agreements, helps management identify and assess trends in the Company's underlying business that might otherwise be obscured due to quarterly non-cash earnings fluctuations associated with these derivative contracts. The non-cash, mark-to-market adjustments on derivative instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate. |
• | Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, receivable and payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on foreign currency hedges relating to these items. The exclusion of these items helps management compare changes in operating results between periods that might otherwise be obscured due to currency fluctuations. |
• | The Company considers certain acquisition-related costs, including certain financing costs, ticking fees, investment banking fees, warranty and indemnity insurance, certain integration related expenses and amortization of acquired intangibles, as well as gains and losses from divestitures to be unpredictable, dependent on factors that may be outside of our control and unrelated to the continuing operations of the acquired or divested business or the Company. In addition, the size and complexity of an acquisition, which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. The Company believes that excluding acquisition-related costs and gains or losses of divestitures facilitates the comparison of our financial results to the Company's historical operating results and to other companies in our industry. In prior periods, the Company has adjusted for goodwill impairments and acquisition related asset impairments. No goodwill or acquisition related impairments were identified during the three months ended March 31, 2017 or 2016. |
• | Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time. |
• | Restructuring and other costs are related to employee termination benefits from certain identified initiatives to further streamline the business, improve the Company's efficiency, create synergies, and to globalize the Company's operations, all with an objective to improve scale and increase profitability going forward. We exclude these items when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor provide insight into the fundamentals of current or past operations of our business. |
• | Debt issuance cost amortization is a non-cash item, which is unrelated to the continuing operations of the Company. Because debt issuance cost amortization is dependent upon the financing method which can vary widely company to company, we believe that excluding this cost helps to facilitate comparison to historical results as well as to other companies within our industry. |
• | Beginning in the third quarter of 2016, adjusted pre-tax income before NCI excluded debt issuance cost amortization. For comparative purposes, adjusted pre-tax income before NCI for the prior periods has been adjusted to reflect the exclusion of this item. |
• | The segment information has also been updated to disaggregate revenue into payment processing, account servicing, finance fee and other revenue in order to provide additional information regarding the Company’s significant revenue streams. There was no change to total revenue or other financial information as a result of this updated presentation. |
Fleet Payment Solutions | Travel and Corporate Solutions | Health and Employee Benefit Solutions | Total | ||||||||||||
Three Months Ended March 31, 2017 | |||||||||||||||
Payment processing revenue | $ | 86,262 | $ | 34,875 | $ | 15,241 | $ | 136,378 | |||||||
Account servicing revenue | 36,069 | 155 | 25,315 | 61,539 | |||||||||||
Finance fee revenue | 36,429 | 223 | 6,720 | 43,372 | |||||||||||
Other revenue | 32,063 | 12,460 | 5,545 | 50,068 | |||||||||||
Total revenues | $ | 190,823 | $ | 47,713 | $ | 52,821 | $ | 291,357 | |||||||
Operating interest expense | $ | 1,324 | $ | 1,566 | $ | 1,958 | $ | 4,848 | |||||||
Depreciation and amortization | $ | 36,068 | $ | 3,038 | $ | 10,132 | $ | 49,238 | |||||||
Adjusted pre-tax income before NCI | $ | 51,232 | $ | 22,408 | $ | 10,236 | $ | 83,876 | |||||||
Three Months Ended March 31, 2016 | |||||||||||||||
Payment processing revenue | $ | 62,290 | $ | 34,626 | $ | 14,141 | $ | 111,057 | |||||||
Account servicing revenue | 25,438 | 272 | 18,812 | 44,522 | |||||||||||
Finance fee revenue | 21,938 | 75 | 1,493 | 23,506 | |||||||||||
Other revenue | 11,408 | 10,169 | 5,266 | 26,843 | |||||||||||
Total revenues | $ | 121,074 | $ | 45,142 | $ | 39,712 | $ | 205,928 | |||||||
Operating interest expense | $ | 422 | $ | 552 | $ | 412 | $ | 1,386 | |||||||
Depreciation and amortization | $ | 13,608 | $ | 616 | $ | 8,040 | $ | 22,264 | |||||||
Adjusted pre-tax income before NCI | $ | 33,111 | $ | 20,148 | $ | 6,577 | $ | 59,836 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Fleet Solutions | $ | 1,124 | $ | 884 | |||
Travel and Corporate Solutions | 46 | 92 | |||||
Health and Employee Benefit Solutions | 6,859 | 1,495 | |||||
Total interest income | $ | 8,029 | $ | 2,471 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Income before income taxes | $ | 43,611 | $ | 36,404 | |||
Unrealized (gains) losses on derivative instruments | (1,565 | ) | 5,007 | ||||
Net foreign currency remeasurement gain | (8,442 | ) | (16,124 | ) | |||
Acquisition and divestiture related items | 40,114 | 27,945 | |||||
Stock-based compensation | 6,457 | 4,243 | |||||
Restructuring and other costs | 1,747 | 1,589 | |||||
Debt issuance cost amortization | 1,954 | 772 | |||||
Adjusted pre-tax income before NCI | $ | 83,876 | $ | 59,836 |
16. | Supplementary Regulatory Capital Disclosure |
Actual Amount | Ratio | Minimum for Capital Adequacy Purposes Amount | Ratio | Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | Ratio | |||||||||||||||
March 31, 2017 | ||||||||||||||||||||
Total Capital to risk-weighted assets | $ | 277,198 | 13.28 | % | $ | 166,950 | 8.0 | % | $ | 208,688 | 10.0 | % | ||||||||
Tier 1 Capital to average assets | $ | 262,264 | 12.57 | % | $ | 83,475 | 4.0 | % | $ | 104,344 | 5.0 | % | ||||||||
Common equity to risk-weighted assets | $ | 262,264 | 13.07 | % | $ | 90,294 | 4.5 | % | $ | 130,425 | 6.5 | % | ||||||||
Tier 1 Capital to risk-weighted assets | $ | 262,264 | 13.07 | % | $ | 120,392 | 6.0 | % | $ | 106,523 | 8.0 | % | ||||||||
December 31, 2016 | ||||||||||||||||||||
Total Capital to risk-weighted assets | $ | 228,402 | 12.59 | % | $ | 145,182 | 8.0 | % | $ | 181,477 | 10.0 | % | ||||||||
Tier 1 Capital to average assets | $ | 214,847 | 11.10 | % | $ | 77,413 | 4.0 | % | $ | 96,767 | 5.0 | % | ||||||||
Common equity to risk-weighted assets | $ | 214,847 | 11.84 | % | $ | 81,665 | 4.5 | % | $ | 117,961 | 6.5 | % | ||||||||
Tier 1 Capital to risk-weighted assets | $ | 214,847 | 11.84 | % | $ | 108,887 | 6.0 | % | $ | 145,183 | 8.0 | % |
• | Overview |
• | Summary |
• | Results of Operations |
• | Liquidity and Capital Resources |
• | Critical Accounting Policies and Estimates |
• | Recently Adopted Accounting Standards |
• | Average number of vehicles serviced increased 11 percent from the first quarter of 2016 to approximately 10.6 million for the first quarter of 2017, primarily related to the acquisition of EFS. |
• | Total fuel transactions processed increased 24 percent from the first quarter of 2016 to 123.9 million for the first quarter of 2017. Total payment processing transactions in our Fleet Solutions segment increased 15 percent to 102.8 million for the first quarter of 2017 as compared to the same quarter in 2016. Transaction processing transactions increased 102 percent to 21.2 million for the first quarter of 2017, as compared to the same quarter in 2016. The increase in payment processing transactions resulted from organic revenue growth and the acquisition of EFS. The primary driver for the increase in transaction processing transactions was due to the acquisition of EFS. |
• | Average expenditure per payment processing transaction in our Fleet Solutions segment increased 42 percent to $68.90 for the first quarter of 2017, from $48.67 for the same period in the prior year. The average U.S. fuel price per gallon during the first quarter of 2017 was $2.40, a 22 percent increase as compared to the same period in the prior year. The average Australian fuel price per gallon during the first quarter of 2017 was $3.76, a 21 percent increase as compared to the same period in the prior year. Additionally, the increase in average expenditure |
• | Credit loss expense in the Fleet Solutions segment was $12.6 million during the first quarter of 2017, as compared to $4.0 million during the first quarter of 2016. Spend volume increased 63 percent in the first quarter of 2017, as compared to the same quarter last year and our credit losses were 17.8 basis points of fuel expenditures for the first quarter of 2017, as compared to 9.3 basis points of fuel expenditures for the same period last year. The increase in credit loss was primarily related to higher incidences of fraud and a slight deterioration in accounts receivable. |
• | Travel and Corporate Solutions purchase volume grew by approximately $1.7 billion from the first quarter of 2016 to $6.6 billion for the first quarter of 2017, an increase of 35 percent, driven by organic growth in our travel product and the EFS acquisition. |
• | Health and Employee Benefits Solutions purchase volume grew to $1.3 billion for first quarter of 2017, as compared to $1.1 billion in the first quarter of 2016. This 23 percent increase was primarily related to new customer signings. |
• | Our foreign currency exchange exposure is primarily related to the re-measurement of our cash, receivable and payable balances, including intercompany transactions, that are denominated in foreign currencies. Movements in the exchange rates associated with our foreign held currencies resulted in a gain of $8.4 million for the first quarter of 2017, compared to a gain of $16.1 million for the first quarter of 2016. |
• | Our effective tax rate was 33.3 percent for the first quarter of 2017 as compared to 36.2 percent for the first quarter of 2016. The tax effect of excess tax benefits related to share-based payments recorded to the income statement in the first quarter of 2017 contributed to the lower effective tax rate. Future tax rates may fluctuate due to changes in the mix of earnings among different tax jurisdictions, as well as impacts that tax rate and earnings mix changes have on our net deferred tax assets. The recent adoption of ASU 2016-09 will result in increased income tax expense volatility, the nature of which will be dependent on the magnitude of our common stock price fluctuations. See Part I – Item 1 – Note 1, Basis of Presentation for further information. |
(in thousands, except per transaction and per gallon data) | Three Months Ended March 31, | Increase (Decrease) | ||||||||||||
2017 | 2016 | Amount | Percent | |||||||||||
Revenues | ||||||||||||||
Payment processing revenue | $ | 86,262 | $ | 62,290 | $ | 23,972 | 38 | % | ||||||
Account servicing revenue | 36,069 | 25,438 | 10,631 | 42 | ||||||||||
Finance fee revenue | 36,429 | 21,938 | 14,491 | 66 | ||||||||||
Other revenue | 32,063 | 11,408 | 20,655 | 181 | ||||||||||
Total revenues | 190,823 | 121,074 | 69,749 | 58 | ||||||||||
Total operating expenses | 161,286 | 105,334 | 55,952 | 53 | ||||||||||
Operating income | 29,537 | 15,740 | 13,797 | 88 | ||||||||||
Net foreign currency gain | 1,342 | 12,528 | (11,186 | ) | (89 | ) | ||||||||
Financing interest expense | (16,443 | ) | (15,935 | ) | (508 | ) | (3 | ) | ||||||
Net unrealized gains on interest rate swap agreements | 894 | — | 894 | NM | ||||||||||
Net realized and unrealized gains on derivative instruments | — | 711 | (711 | ) | (100 | ) | ||||||||
Income before income taxes | $ | 15,330 | $ | 13,044 | $ | 2,286 | 18 | % | ||||||
Key operating statistics | ||||||||||||||
Payment processing revenue: | ||||||||||||||
Payment processing transactions | 102,765 | 89,097 | 13,668 | 15 | % | |||||||||
Average expenditure per payment processing transaction | $ | 68.90 | $ | 48.67 | $ | 20.23 | 42 | % | ||||||
Average price per gallon of fuel: | ||||||||||||||
Domestic – ($/gal) | $ | 2.40 | $ | 1.97 | $ | 0.43 | 22 | % | ||||||
Australia – ($/gal) | $ | 3.76 | $ | 3.10 | $ | 0.66 | 21 | % | ||||||
Account servicing revenue: | ||||||||||||||
Average number of vehicles serviced | 10,571 | 9,518 | 1,053 | 11 | % |
(in thousands) | Three Months Ended March 31, | Increase (Decrease) | ||||||||||||
2017 | 2016 | Amount | Percent | |||||||||||
Late fee revenue | $ | 29,463 | $ | 17,588 | $ | 11,875 | 68 | % | ||||||
Factoring fee revenue | 5,757 | 4,163 | 1,594 | 38 | ||||||||||
Cardholder interest income | 76 | 159 | (83 | ) | (52 | ) | ||||||||
Other finance fee revenue | 1,133 | 28 | 1,105 | NM | ||||||||||
Finance fee revenue | $ | 36,429 | $ | 21,938 | $ | 14,491 | 66 | % |
Three Months Ended March 31, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 60,038 | $ | 44,042 | $ | 15,996 | 36 | % | ||||||
Restructuring | $ | 484 | $ | 1,589 | $ | (1,105 | ) | (70 | )% | |||||
Service fees | $ | 18,522 | $ | 17,124 | $ | 1,398 | 8 | % | ||||||
Provision for credit losses | $ | 12,582 | $ | 4,041 | $ | 8,541 | 211 | % | ||||||
Technology leasing and support | $ | 8,835 | $ | 6,564 | $ | 2,271 | 35 | % | ||||||
Depreciation and amortization | $ | 36,068 | $ | 13,608 | $ | 22,460 | 165 | % | ||||||
Operating interest expense | $ | 1,324 | $ | 422 | $ | 902 | 214 | % | ||||||
Other expenses | $ | 18,048 | $ | 13,071 | $ | 4,977 | 38 | % |
Three Months Ended March 31, | Increase (Decrease) | |||||||||||||
(in thousands, except payment solutions purchase volume in millions) | 2017 | 2016 | Amount | Percent | ||||||||||
Revenues | ||||||||||||||
Payment processing revenue | $ | 34,875 | $ | 34,626 | $ | 249 | 1 | % | ||||||
Account servicing revenue | 155 | 272 | (117 | ) | (43 | ) | ||||||||
Finance fee revenue | 223 | 75 | 148 | 197 | ||||||||||
Other revenue | 12,460 | 10,169 | 2,291 | 23 | ||||||||||
Total revenues | 47,713 | 45,142 | 2,571 | 6 | ||||||||||
Total operating expenses | 26,353 | 25,416 | 937 | 4 | ||||||||||
Operating income | 21,360 | 19,726 | 1,634 | 8 | ||||||||||
Financing interest expense | (1,653 | ) | — | (1,653 | ) | NM | ||||||||
Net foreign currency gain | 7,197 | 3,240 | 3,957 | 122 | ||||||||||
Net unrealized gains on interest rate swap agreements | 92 | — | 92 | NM | ||||||||||
Income before income taxes | $ | 26,996 | $ | 22,966 | $ | 4,030 | 18 | % | ||||||
Key operating statistics | ||||||||||||||
Payment processing revenue: | ||||||||||||||
Payment solutions purchase volume | $ | 6,600 | $ | 4,879 | $ | 1,721 | 35 | % |
Three Months Ended March 31, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 6,214 | $ | 5,064 | $ | 1,150 | 23 | % | ||||||
Service fees | $ | 12,319 | $ | 14,918 | $ | (2,599 | ) | (17 | )% | |||||
Technology leasing and support & occupancy and equipment | $ | 2,765 | $ | 3,563 | $ | (798 | ) | (22 | )% | |||||
Depreciation and amortization | $ | 3,038 | $ | 616 | $ | 2,422 | 393 | % | ||||||
Operating interest expense | $ | 1,566 | $ | 552 | $ | 1,014 | 184 | % |
Three Months Ended March 31, | Increase (Decrease) | |||||||||||||
(in thousands, except purchase volume in millions) | 2017 | 2016 | Amount | Percent | ||||||||||
Revenues | ||||||||||||||
Payment processing revenue | $ | 15,241 | $ | 14,141 | $ | 1,100 | 8 | % | ||||||
Account servicing revenue | 25,315 | 18,812 | 6,503 | 35 | ||||||||||
Finance fee revenue | 6,720 | 1,493 | 5,227 | 350 | ||||||||||
Other revenue | 5,545 | 5,266 | 279 | 5 | ||||||||||
Total revenues | 52,821 | 39,712 | 13,109 | 33 | ||||||||||
Total operating expenses | 42,966 | 34,051 | 8,915 | 26 | ||||||||||
Operating income | 9,855 | 5,661 | 4,194 | 74 | ||||||||||
Financing interest expense | (9,052 | ) | (5,623 | ) | (3,429 | ) | (61 | ) | ||||||
Net foreign currency (loss) gain | (97 | ) | 356 | (453 | ) | (127 | ) | |||||||
Net unrealized gains on interest rate swap agreements | 579 | — | 579 | NM | ||||||||||
Income before income taxes | $ | 1,285 | $ | 394 | $ | 891 | 226 | % | ||||||
Purchase volume | $ | 1,347 | $ | 1,093 | $ | 254 | 23 | % |
Three Months Ended March 31, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 17,333 | $ | 14,304 | $ | 3,029 | 21 | % | ||||||
Service fees | $ | 5,909 | $ | 4,717 | $ | 1,192 | 25 | % | ||||||
Depreciation and amortization | $ | 10,132 | $ | 8,040 | $ | 2,092 | 26 | % | ||||||
Operating interest | $ | 1,958 | $ | 412 | $ | 1,546 | 375 | % |
• | Exclusion of the non-cash, mark-to-market adjustments on derivative instruments, including fuel price related derivatives and interest rate swap agreements, helps management identify and assess trends in the Company's underlying business that might otherwise be obscured due to quarterly non-cash earnings fluctuations associated with these derivative contracts. The non-cash, mark-to-market adjustments on derivative instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate. |
• | Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, receivable and payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on foreign currency hedges relating to these items. The exclusion of these items helps management compare changes in operating results between periods that might otherwise be obscured due to currency fluctuations. |
• | The Company considers certain acquisition-related costs, including certain financing costs, ticking fees, investment banking fees, warranty and indemnity insurance, certain integration-related expenses and amortization of acquired intangibles, as well as gains and losses from divestitures to be unpredictable, dependent on factors that may be outside of our control and unrelated to the continuing operations of the acquired or divested business or the Company. In addition, the size and complexity of an acquisition, which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. The Company believes that excluding acquisition-related costs and gains or losses of divestitures facilitates the comparison of our financial results to the Company's historical operating results and to other companies in our industry. In prior periods, the Company adjusted for goodwill impairments and acquisition-related asset impairments. No goodwill or acquisition-related impairments were identified during the three months ended March 31, 2017 or 2016. |
• | Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award |
• | Restructuring costs are related to employee termination benefits from certain identified initiatives to further streamline the business, improve the Company's efficiency, create synergies and globalize the Company's operations, all with an objective to improve scale and increase profitability going forward. We exclude these items when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor provide insight into the fundamentals of current or past operations of our business. |
• | Debt issuance cost amortization is a non-cash item, which is unrelated to the continuing operations of the Company. Because debt issuance cost amortization is dependent upon the financing method which can vary widely company to company, we believe that excluding this cost helps to facilitate comparison to historical results as well as to other companies within our industry. |
• | The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a non-controlling interest and the non-cash adjustments related to the tax receivable agreement have no significant impact on the ongoing operations of the business. |
• | The tax related items are the difference between the Company’s U.S. GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes as well as the impact from certain discrete tax items. The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s U.S. GAAP tax provision. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net earnings attributable to shareholders | $ | 29,401 | $ | 23,086 | |||
Unrealized (gains) losses on derivative instruments | (1,565 | ) | 5,007 | ||||
Net foreign currency remeasurement gain | (8,442 | ) | (16,124 | ) | |||
Acquisition and divestiture related items | 40,114 | 27,945 | |||||
Stock-based compensation | 6,457 | 4,243 | |||||
Restructuring and other costs | 1,747 | 1,589 | |||||
Debt issuance cost amortization | 1,954 | 772 | |||||
ANI adjustments attributable to non-controlling interest | (799 | ) | 69 | ||||
Tax related items | (15,979 | ) | (8,515 | ) | |||
Adjusted net income | $ | 52,888 | $ | 38,072 |
(in thousands) | Three Months Ended March 31, | ||||||
2017 | 2016 | ||||||
Net cash (used for) provided by operating activities | $ | (59,179 | ) | $ | 86,415 | ||
Net cash used for investing activities | $ | (21,578 | ) | $ | (20,848 | ) | |
Net cash provided by financing activities | $ | 90,896 | $ | 166,135 |
WEX INC. | |||
May 8, 2017 | By: | /s/ Roberto Simon | |
Roberto Simon | |||
Chief Financial Officer | |||
(principal financial officer and principal accounting officer) |
Exhibit No. | Description | ||
3.1 | Certificate of Incorporation (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on March 1, 2005, File No. 001-32426) | ||
3.2 | Certificate of Ownership and Merger merging WEX Transitory Corporation with and into Wright Express Corporation (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on October 30, 2012, File No. 001-32426) | ||
3.3 | Amended and Restated By-Laws of WEX Inc. (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on October 30, 2012, File No. 001-32426) | ||
4.1 | Indenture, dated as of January 30, 2013, among WEX Inc., the Guarantors named therein, and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit No. 4.1 to our Current Report on Form 8-K filed with the SEC on February 1, 2013, File No. 001-32426) | ||
4.2 | Supplemental Indenture, dated as of July 1, 2016 to the Indenture, dated as of January 30, 2013 among WEX Inc., the additional subsidiary guarantors thereto and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit No. 4.1 to our Current Report on Form 8-K filed with the SEC on July 1, 2016, File No. 001-32426) | ||
4.3 | U.S. Security Agreement, made by WEX Inc., and the certain of its subsidiaries, as pledgors, assignors and debtors dated as of July 1, 2016, in favor of Bank of America, as collateral agent for the Lenders (incorporated by reference to Exhibit No. 4.2 to our Current Report on Form 8-K filed with the SEC on July 1, 2016, File No. 001-32426) | ||
* | 31.1 | Certification of Chief Executive Officer of WEX INC. pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended | |
* | 31.2 | Certification of Chief Financial Officer of WEX INC. pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended | |
* | 32.1 | Certification of Chief Executive Officer of WEX INC. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code | |
* | 32.2 | Certification of Chief Financial Officer of WEX INC. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code | |
* | 101.INS | XBRL Instance Document | |
* | 101.SCH | XBRL Taxonomy Extension Schema Document | |
* | 101.CAL | XBRL Taxonomy Calculation Linkbase Document | |
* | 101.LAB | XBRL Taxonomy Label Linkbase Document | |
* | 101.PRE | XBRL Taxonomy Presentation Linkbase Document | |
* | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
* | These exhibits have been filed with this Quarterly Report on Form 10-Q. |
1. | I have reviewed this quarterly report on Form 10-Q of WEX Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Melissa D. Smith |
Melissa D. Smith |
Chief Executive Officer and President |
1. | I have reviewed this quarterly report on Form 10-Q of WEX Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Roberto Simon |
Roberto Simon |
Chief Financial Officer |
(Principal accounting and financial officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Melissa D. Smith |
Melissa D. Smith |
Chief Executive Officer and President |
May 8, 2017 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Roberto Simon |
Roberto Simon |
Chief Financial Officer |
(Principal accounting and financial officer) |
May 8, 2017 |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | WEX Inc. | |
Trading Symbol | WEX | |
Entity Central Index Key | 0001309108 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 42,891,269 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, reserve for credit losses | $ 23,566 | $ 20,092 |
Property, equipment and capitalized software, accumulated depreciation | $ 240,160 | $ 228,336 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 175,000,000 | 175,000,000 |
Common stock, shares issued (in shares) | 47,327,000 | 47,173,000 |
Common stock, shares outstanding (in shares) | 42,899,000 | 42,841,000 |
Treasury stock, shares (in shares) | 4,428,000 | 4,428,000 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 29,076 | $ 23,221 |
Changes in available-for-sale securities, net of tax expense of $1 and $97, respectively | 3 | 164 |
Foreign currency translation | 16,620 | 10,774 |
Comprehensive income | 45,699 | 34,159 |
Less: Comprehensive (loss) income attributable to non-controlling interest | (283) | 591 |
Comprehensive income attributable to WEX Inc. | $ 45,982 | $ 33,568 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Changes in available-for-sale securities, tax effect | $ 1 | $ 97 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Stockholders' Equity [Abstract] | ||
Changes in available-for-sale securities, tax effect | $ 1 | $ 97 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Cash flows from operating activities | ||
Net income | $ 29,076 | $ 23,221 |
Adjustments to reconcile net income to net cash (used for) provided by operating activities: | ||
Net unrealized gain | (2,991) | (11,437) |
Stock-based compensation | 6,457 | 4,243 |
Depreciation and amortization | 49,238 | 22,264 |
Debt issuance cost amortization | 1,954 | 772 |
Provision for deferred taxes | 10,517 | 12,644 |
Provision for credit losses | 12,231 | 3,917 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (194,859) | (49,711) |
Other assets | 741 | 12,808 |
Accounts payable | 60,650 | 68,561 |
Accrued expenses | (32,547) | 10,685 |
Income taxes | 685 | (10,818) |
Other liabilities | (331) | (734) |
Net cash (used for) provided by operating activities | (59,179) | 86,415 |
Cash flows from investing activities | ||
Purchases of property, equipment and capitalized software | (21,693) | (20,494) |
Purchases of available-for-sale securities | (114) | (489) |
Maturities of available-for-sale securities | 229 | 135 |
Net cash used for investing activities | (21,578) | (20,848) |
Cash flows from financing activities | ||
Repurchase of share-based awards to satisfy tax withholdings | (9,020) | (2,187) |
Proceeds from stock option exercises | 72 | 6 |
Net change in deposits | (78,392) | 170,604 |
Net activity on other debt | (19,010) | 0 |
Net borrowings on revolving line of credit facility | 202,580 | 15,056 |
Repayments on term loans | (8,688) | (6,875) |
Net change in securitized debt | 3,354 | (10,469) |
Net cash provided by financing activities | 90,896 | 166,135 |
Effect of exchange rate changes on cash and cash equivalents | 2,926 | 3,631 |
Net change in cash and cash equivalents | 13,065 | 235,333 |
Cash and cash equivalents, beginning of period | 190,930 | 279,989 |
Cash and cash equivalents, end of period | $ 203,995 | $ 515,322 |
Basis of Presentation |
3 Months Ended | ||||||
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Mar. 31, 2017 | |||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of WEX Inc. for the year ended December 31, 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 6, 2017. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results for any future periods or the year ending December 31, 2017. The Company rounds amounts in the unaudited condensed consolidated financial statements to thousands and calculates all per-share data from underlying whole-dollar amounts. Thus, certain amounts may not recalculate based on reported numbers due to rounding. The presentation of the accompanying unaudited condensed consolidated statements of income for the three months ended March 31, 2016 has been updated to disaggregate revenue into payment processing, account servicing, finance fee and other revenue in order to provide additional information regarding the Company’s significant revenue streams and to conform to the current year presentation. There was no change to total revenue, income from operations, net income or net income per share as a result of this updated presentation. Effective January 1, 2017, the Company adopted ASU 2016-09, which simplifies several aspects of accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows. Prior to the adoption of this guidance, the Company recognized the net excess tax benefits of vested or settled awards in additional paid-in capital. This standard requires prospective recognition of all the tax effects related to share-based payments in the income statement. The impact of adoption was recorded as a $263 cumulative effect adjustment to Retained earnings. For the three months ended March 31, 2017, the Company recognized $1,600 of excess tax benefits within our income tax provision, which would have been recognized in additional paid-in-capital under previous guidance. See Note 12, Income Taxes, for the resulting impact on our effective tax rate. The Company has elected to prospectively classify these excess tax benefits as cash flows from operating activities for the three months ended March 31, 2017. The Company will continue to estimate the number of awards expected to vest, rather than electing to account for forfeitures as they occur. Adoption of this standard is not anticipated to impact the Company's minimum statutory tax withholding practices. |
New Accounting Standards |
3 Months Ended | ||||||
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Mar. 31, 2017 | |||||||
Accounting Changes and Error Corrections [Abstract] | |||||||
New Accounting Standards |
In March 2017, the FASB issued ASU 2017-07, which changes the presentation of net benefit pension costs by requiring the disaggregation of certain of its components. Under the guidance, companies are required to present the service cost component in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost will be presented in the income statement separately from the service cost component and outside the subtotal of operating income, if one is presented. Additionally, only the service cost component will be eligible for capitalization under the new guidance. The standard is effective for annual or interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements, interim or annual, have not been issued or made available for issuance. The Company does not believe this standard will have a material impact on the consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09 ("Topic 606"), which will supersede most existing revenue recognition guidance under GAAP. The new revenue recognition standard requires entities to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Topic 606 does not apply to rights or obligations associated with financial instruments (e.g. interest income), including the Company’s finance fee and interest income from banking relationships and cardholders. As such, approximately 14 percent of consolidated revenues for the period ended December 31, 2016 will not be impacted by Topic 606. The Company’s revenue from discount and interchange, transaction processing and certain fees is within the scope of Topic 606. FASB and its Transition Resource Group have issued clarifications on various aspects of ASU 2014-09. Those clarifications, along with the guidance under Topic 606 support the conclusion that timing and measurement of revenue associated with the Company’s transaction processing services, including discount and interchange and other transaction processing fees, or approximately 48 percent of consolidated revenues for the period ended December 31, 2016, will remain substantially unchanged under the new standard. The Company is in the process of assessing the remaining revenue streams that fall within the scope of this new standard. Included in this assessment is confirming principal vs. agent determinations, reviewing commission structure and applying the series guidance to the Company's revenue streams. Under the new guidance certain costs to obtain a contract, such as sales commissions are to be capitalized and amortized over the life of the contract, with a practical expedient available for contracts under one year in duration. Sales commissions that were expensed were approximately $5,400 for the period ended March 31, 2017. On July 9, 2015, the FASB voted to defer the effective date by one year to interim and annual reporting periods beginning after December 15, 2017, and permitted early adoption of the standard, but not for periods beginning on or before the original effective date of January 1, 2017. The Company is not electing early adoption and as a result the standard will become effective on January 1, 2018. The guidance permits two methods of adoption: full retrospective approach, which requires an entity to restate each prior period that is reported in the financial statements and modified retrospective approach, which requires a cumulative adjustment to retained earnings as of the effective date, without restatement of prior period amounts. The Company currently anticipates adopting the standard using the modified retrospective method. |
Business Acquisition |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition |
EFS On July 1, 2016, the Company acquired all of the outstanding membership interests of EFS, a provider of customized payment solutions for fleet and corporate customers with a focus on the large and mid-sized over-the-road fleets. The acquisition will enable the Company to expand its customer footprint and to utilize EFS' technology to better serve the needs of all fleet customers. In consideration for the acquisition of EFS, the Company issued 4,012 shares of its common stock valued at approximately $355,000 based on the July 1, 2016 closing price of the Company's common stock on the New York Stock Exchange. This represented approximately 9.4 percent of the Company's outstanding common stock after giving effect to the issuance of the new shares in connection with this acquisition. The cash consideration for the transaction totaled approximately $1,182,000, and was funded with amounts received under the 2016 Credit Agreement described further in Note 7, Financing and Other Debt. The value of the total cash and stock consideration paid for the acquisition of EFS was approximately $1,444,000, net of $93,000 in cash acquired. The Company records adjustments to the assets acquired and liabilities assumed throughout the measurement period, which may be up to one year from the acquisition date. The Company has obtained information to assist in determining the fair values of certain assets acquired and liabilities assumed throughout this period, resulting in the recording of other intangible assets and goodwill as described below. Goodwill is calculated as the consideration in excess of net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized, including synergies derived from the acquisition. The tax structure of EFS consists of limited liability companies and corporations. The Company’s tax election will allow a step-up in tax basis related to its 49.5 percent direct ownership in the parent limited liability company. The remaining 50.5 percent ownership in the parent limited liability company is held by another limited liability company, taxed as a corporation, that is part of the EFS structure and will therefore receive carry over tax basis. The difference between book and tax basis resulting from receiving carry over tax basis has been reflected in the financial statements as an investment in partnership deferred tax liability. The Company is currently evaluating the tax basis and the allocation of book basis to the assets acquired and liabilities assumed in this business combination. In addition, the Company is still reviewing the valuation as well as performing procedures to verify the completeness and accuracy of the data used in the independent valuation for intangible assets identified in the table below. Although not expected, the preliminary estimates could change significantly upon completion of this evaluation. The Company has not finalized the purchase accounting and estimates approximately $591,000 of the goodwill recognized in this business combination will be deductible for income tax purposes. The following represents the components and preliminary allocation of the purchase price:
(a)Approximately $1,262,367 in goodwill and other intangible assets recorded from this business combination were preliminarily allocated to our Fleet Solutions segment; the remaining $345,648 was preliminarily allocated to our Travel and Corporate Solutions segment. (b)Weighted average life – 8.1 years. (c)Weighted average life – 2.0 years. (d)Weighted average life – 7.7 years. At March 31, 2017, estimated amortization expense related to the definite-lived intangible assets listed above for each of the next five fiscal years and thereafter is as follows:
The pro forma financial information presented below includes the effects of the EFS acquisition as if it had been consummated on January 1, 2015. These pro forma results have been calculated after applying our accounting policies and adjusting results to reflect the intangible amortization and interest expense associated with the 2016 Credit Agreement used to fund the acquisition and related income tax results assuming they were applied and incurred since January 1, 2015. As a result, $4,765 in transaction costs which are directly attributable to the acquisition have been excluded from pro forma results for the three months ended March 31, 2016. The pro forma results of operations do not include any cost savings or other synergies that may result from the acquisition or any estimated integration costs that have been or will be incurred by the Company. Accordingly, the following pro forma information is not necessarily indicative of either the future results of operations or results that would have been achieved if the acquisition had taken place at the beginning of 2015. The operations of EFS contributed revenues of approximately $43,375 and net loss before taxes of approximately $11,203 to the Company's unaudited condensed consolidated income statement for the three months ended March 31, 2017. The following represents unaudited pro forma operational results as if the acquisition had occurred January 1, 2015:
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Reserves for Credit Losses |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserves for Credit Losses |
In general, the Company’s trade receivables provide for payment terms of 30 days or less. Receivables not paid within the terms of the customer agreement are generally subject to late fees based upon the outstanding customer receivable balance. The Company extends revolving credit to certain small fleet customers. These accounts are also subject to late fees and balances that are not paid in full are subject to interest charges based on the revolving balance. The Company had approximately $5,800 and $3,400 in receivables with revolving credit balances as of March 31, 2017 and December 31, 2016, respectively. The portfolio of receivables consists of a large group of homogeneous smaller balance amounts that are collectively evaluated for impairment. Receivables are generally written off when they are 150 days past due or upon declaration of bankruptcy by the customer. The reserve for credit losses is calculated by an analytic model that also takes into account other factors, such as the actual charge-offs for the preceding reporting periods, expected charge-offs and recoveries for the subsequent reporting periods, a review of past due accounts receivable balances, changes in customer payment patterns, known fraudulent activity in the portfolio, as well as leading economic and market indicators. As of March 31, 2017, approximately 95 percent of the outstanding balance of total trade accounts receivable was current and approximately 98 percent of the outstanding balance of total trade accounts receivable was less than 60 days past due. As of March 31, 2016, approximately 90 percent of the outstanding balance of total trade accounts receivable was current and approximately 98 percent of the outstanding balance was less than 60 days past due. The outstanding balance is made up of receivables from a wide range of industries. No one customer represented more than 10 percent of the outstanding receivables balance at March 31, 2017. One customer represented 11 percent of the outstanding receivables balance at December 31, 2016. The following table presents changes in reserves for credit losses related to accounts receivable:
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Earnings per Share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share |
Basic earnings per share is computed by dividing net earnings attributable to shareholders by the weighted average number of shares of common stock and vested deferred stock units outstanding during the year. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options, the assumed issuance of unvested restricted stock units and deferred stock units, and unvested performance-based restricted stock units for which the performance condition has been met as of the date of determination using the treasury stock method unless the effect is anti-dilutive. The treasury stock method assumes that proceeds, including cash received from the exercise of employee stock options and the total unrecognized compensation expense for unvested share-based compensation awards, would be used to purchase the Company's common stock at the average market price during the period. Prior to the January 2017 adoption of ASU 2016-09, the treasury stock method also included excess tax benefits in its proceeds calculation. The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the three months ended March 31, 2017 and 2016:
For the three months ended March 31, 2017 and March 31, 2016, an immaterial number of outstanding share-based awards, for which the performance condition had been met as of the dates of determination if applicable, were excluded from the computation of diluted earnings per share because the effect of including these awards would be anti-dilutive. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments |
The Company is exposed to certain market risks relating to its ongoing business operations. From time to time, the Company enters into derivative instrument arrangements to manage various risks including interest rate risk, foreign exchange risk, and commodity price risk. None of these derivative instruments qualify for hedge accounting treatment. Interest Rate Swap Agreements In November 2016, the Company entered into three forward-fixed interest rate swap agreements to manage the interest rate risk associated with our outstanding variable-interest rate borrowings. Under these swap agreements, the Company receives variable interest of 1-month LIBOR and pays fixed rates between 0.896% to 1.125%, reducing a portion of the variability of the future interest payments associated with $800,000 of the Company's borrowings. The notional amounts, fixed and variable interest rates and maturities of the interest rate swap agreements are as follows:
See Note 9, Fair Value for more information regarding the valuation of our interest rate swaps. Foreign Currency Exchange Program The Company utilizes a limited foreign currency exchange hedging program, entering into short-term foreign currency swaps to convert the foreign currency exposures of certain foreign currency denominated intercompany loans and investments to the base currency. We will continue to monitor our foreign currency exposure for discrete items and may, from time to time, hedge certain foreign currency transactions. The following table summarizes the contracts related to foreign currency swaps, which settle in the base currency at various dates within 5 days after quarter-end:
The amount of gains and losses associated with these foreign currency swaps were not material for the quarters ending March 31, 2017 and 2016. Fuel Derivatives Program In prior years, the Company entered into put and call option contracts related to the Company’s commodity price risk. These put and call option contracts, or fuel price derivative instruments, were designed to reduce the volatility of the Company’s cash flows associated with its fuel price-related earnings exposure in North America. During the fourth quarter of 2014, the Company suspended purchases under its fuel derivatives program due to unusually low prices in the commodities market. During the first quarter of 2016, the Company held fuel price sensitive derivative instruments to hedge approximately 20 percent of its anticipated U.S. fuel-price related earnings exposure based on assumptions at time of purchase and all of these positions were settled as of March 31, 2016. The Company is no longer hedged for changes in fuel prices. Management will continue to monitor the fuel price market and evaluate its alternatives as it relates to this hedging program. Consolidated Derivative Instruments The following table presents information on the location and fair value of derivatives recorded in the unaudited condensed consolidated balance sheets:
Given that the Company's commodity contracts and interest rate swap agreements are not designated as hedging instruments, changes in the fair value of these instruments, which represent unrealized gains and losses, are recognized in the consolidated statements of income. The following table presents information on the amounts of derivative gains and the locations in the unaudited condensed consolidated statements of income:
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Financing and Other Debt |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||
Financing and Other Debt |
2016 Credit Agreement On July 1, 2016, the Company entered into the 2016 Credit Agreement, which replaced the 2014 Credit Agreement. The 2016 Credit Agreement provides for term loan facilities and a secured revolving credit facility, with a sublimit for letters of credit and swingline loans. Under this agreement, $925,000 matures on July 1, 2021 and $1,200,000 matures on July 1, 2023. Prior to maturity, amounts under the credit facility will be reduced by mandatory payments. Additional loans may be made available under the 2016 Credit Agreement upon request of the Company subject to specified terms and conditions, including receipt of lender commitments. Proceeds from the 2016 Credit Agreement may be used for working capital purposes, acquisitions, payment of dividends and other restricted payments, refinancing of indebtedness and other general corporate purposes. As of March 31, 2017, the Company had $203,302 of borrowings, net of loan origination fees, against its $470,000 secured revolving credit facility, or approximately $267,000 of availability under the 2016 Credit Agreement, subject to the covenants as described below. The outstanding debt under the 2016 Credit Agreement amortizing term loans arrangement totaled $1,628,938 at March 31, 2017. As of March 31, 2017 and December 31, 2016, amounts outstanding under the 2016 Credit Agreement bore a weighted average effective interest rate of 4.4 percent and 4.2 percent, respectively. As of both March 31, 2017 and December 31, 2016, the Company has posted approximately $13,350 in letters of credit as collateral for lease agreements and virtual card and fuel payment processing activity at our foreign subsidiaries. Amounts outstanding under the 2016 Credit Agreement bear interest at a rate equal to, at the Company’s option, (a) the Eurocurrency Rate, as defined in the 2016 Credit Agreement, plus a margin of between 1.75% to 3.25% (2.75% at March 31, 2017) with respect to the tranche A term loan facility and the revolving credit facility and between 3.25% to 3.50% (3.50% at March 31, 2017) with respect to the tranche B term loan facility (with the Eurocurrency Rate subject to a 0.75% floor in the case of the tranche B term loan facility and a 0.0% floor in the case of the tranche A term loan and revolving credit facility), in each case, based on the ratio of consolidated funded indebtedness less up to $350,000 in permitted securitization transactions of the Company and its subsidiaries to consolidated EBITDA or (b) the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate announced by Bank of America, and (iii) the Eurocurrency Rate plus 1.00%, in each case plus a margin of 0.75% to 2.25% (1.75% at March 31, 2017) with respect to the tranche A term loan facility and the revolving credit facility or 2.25% to 2.50% (2.50% at March 31, 2017) with respect to the tranche B term loan facility, in each case, based on the ratio of consolidated funded indebtedness less up to $350,000 in permitted securitization transactions of the Company and its subsidiaries to consolidated EBITDA. In November 2016, the Company entered into three interest rate swap agreements to manage the interest rate risk associated with our outstanding variable-interest rate borrowings under the 2016 Credit Agreement. See Note 6, Derivative Instruments, for further discussion. In addition, the Company has agreed to pay a quarterly commitment fee at a rate per annum ranging from 0.30% to 0.50% (0.45% at March 31, 2017) based on the ratio of consolidated funded indebtedness less up to $350,000 in permitted securitization transactions of the Company and its subsidiaries to consolidated EBITDA of the daily unused portion of the 2016 Credit Agreement. The tranche B term loan facility was issued with an original issue discount of 1.00%. Debt Covenants As more fully described in our Annual Report on Form 10-K for the year ended December 31, 2016, the 2016 Credit Agreement and the Indenture contain covenants that limit the Company's and our subsidiaries' ability to (i) incur additional debt, (ii) pay dividends or make other distributions on, redeem or repurchase capital stock, or make investments or other restricted payments, (iii) enter into transactions with affiliates, (iv) dispose of assets or issue stock of restricted subsidiaries or regulated subsidiaries, (v) create liens on assets, or (vi) effect a consolidation or merger or sell all, or substantially all, of the Company’s assets. As of March 31, 2017, we were in compliance with all material covenants of our 2016 Credit Agreement and the Indenture. $400 Million Notes Outstanding On January 30, 2013, the Company completed a $400,000 offering in an aggregate principal amount of 4.750 percent senior notes due 2023. The Notes will mature on February 1, 2023, with interest of 4.750 percent payable semiannually. See Note 9, Fair Value, for additional information. Borrowed Federal Funds WEX Bank borrows from lines of credit on a federal funds rate basis to supplement the financing of its accounts receivable. Our federal funds lines of credit were $250,000 as of March 31, 2017 and December 31, 2016, with no outstanding balance as of March 31, 2017. WEX Brazil Debt WEX Brazil had debt of approximately $12,699 and $30,755 as of March 31, 2017 and December 31, 2016, respectively. This was comprised of credit facilities and loan arrangements related to its accounts receivable, with various maturity dates. The average interest rate was 24.1 percent and 19.7 percent as of March 31, 2017 and December 31, 2016, respectively. This debt is classified in Other debt on the Company’s unaudited condensed consolidated balance sheets for the periods presented. Participation Debt WEX Bank maintains agreements with third-party banks to fund customer balances that exceed WEX Bank's lending limit to an individual customer. These borrowings carry a variable interest rate of 1 to 3-month LIBOR plus a margin of 225 basis points. The balance of the debt was $95,000 at each of March 31, 2017 and December 31, 2016, and was secured by an interest in the underlying customer receivables. The balance will fluctuate on a daily basis based on customer funding needs, and could range from $0 to $95,000. The balances will mature in amounts of $50,000 and $45,000 on August 18, 2017 and December 31, 2020, respectively. This debt is classified in Other debt on the Company’s unaudited condensed consolidated balance sheets. Australian Securitization Facility The Company has entered into a one year securitized debt agreement with the Bank of Tokyo-Mitsubishi UFJ, Ltd expiring April 2017. Subsequent to March 31, 2017, this agreement was extended for an additional year. Under the terms of the agreement, each month, on a revolving basis, the Company sells certain of its Australian receivables to the Company's Australian Securitization Subsidiary. The Australian Securitization Subsidiary, in turn, uses the receivables as collateral to issue asset-backed commercial paper ("securitized debt") for approximately 85 percent of the securitized receivables. The amount collected on the securitized receivables is restricted to pay the securitized debt and is not available for general corporate purposes. The Company pays a variable interest rate on the outstanding balance of the securitized debt, based on the Australian Bank Bill Rate plus an applicable margin. The interest rate was 2.68 percent and 2.65 percent as of March 31, 2017 and December 31, 2016, respectively. The Company had securitized debt under this facility of $86,327 and $78,592 as of March 31, 2017 and December 31, 2016, respectively. European Securitization Facility On April 7, 2016, the Company entered into a five year securitized debt agreement with the Bank of Tokyo-Mitsubishi UFJ, Ltd. Under the terms of the agreement, the Company sells certain of its receivables from selected European countries to its European Securitization Subsidiary. The European Securitization Subsidiary, in turn, uses the receivables as collateral to issue securitized debt. The amount collected on the securitized receivables is restricted to pay the securitized debt and is not available for general corporate purposes. The amounts of receivables to be securitized under this agreement will be determined by management on a monthly basis. The interest rate was 0.94 percent and 0.95 percent as of March 31, 2017 and December 31, 2016, respectively. The Company had $6,349 and $5,731 of securitized debt as of March 31, 2017 and December 31, 2016, respectively. Debt Issuance Costs The following table presents the Company's net debt issuance costs related to its revolving line of credit facilities, term loans and notes outstanding:
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Factoring |
3 Months Ended | ||||||
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Mar. 31, 2017 | |||||||
Receivables [Abstract] | |||||||
Factoring |
WEX Europe Services Accounts Receivable Factoring During the first quarter of 2017, WEX Europe Services ("WES") entered into a factoring arrangement with an unrelated third-party financial institution (the "Purchasing Bank") to sell certain of its accounts receivable in order to accelerate the collection of the Company's cash and reduce internal costs, thereby improving liquidity. Under this arrangement, the Purchasing Bank establishes a credit limit for each customer account. The factored receivables are without recourse to the extent that the customer balances are maintained at or below the established credit limit. For customer receivable balances in excess of the Purchasing Bank's credit limit, the Company maintains the risk of default. The Purchasing Bank is deemed the purchaser of these receivables and is entitled to enforce payment of these amounts from the debtor. Additionally, there are no indications of the Company's continuing involvement in the factored receivables. As further substantiation for the treatment of these receivables, we obtained a true sale opinion from an independent attorney, which states that the factoring agreement creates a sale of receivables both below and above the established credit limits under local law. This factoring arrangement is accounted for as a sale and accordingly the Company records the receivables sold as a reduction of accounts receivable and proceeds as cash from operating activities. The Company sold approximately $53,000 receivables during the three months ended March 31, 2017. Proceeds received are recorded net of applicable expenses, interest and commissions. This resulted in a loss on factoring of approximately $200 for the three months ended March 31, 2017, and was recorded in Other expenses in the unaudited condensed consolidated statement of income. As of March 31, 2017, the Company had associated factoring receivables of approximately $400, of which $200 were in excess of the established credit limit. There were no charge-backs on balances in excess of the credit limit during the three months ended March 31, 2017. Brazil Accounts Receivable Factoring During the first quarter of 2017, WEX Brazil entered into a factoring agreement to sell certain unsecured receivables, without recourse, to an unrelated third-party financial institution. Under the terms of the agreement, the Company retains no rights or interest and has no obligations with respect to the receivables. As such, the factoring under this arrangement is accounted for as a sale. The Company sold approximately $8,000 of receivables during the three months ended March 31, 2017, which resulted in a $400 loss on factoring, which was recorded in Other expenses in the unaudited condensed consolidated statement of income. The Company records receivables sold under this agreement as a reduction of accounts receivable and proceeds as cash from operating activities. |
Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value |
The Company holds mortgage-backed securities, fixed income securities, derivatives (see Note 6, Derivative Instruments) and certain other financial instruments which are carried at fair value. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as model pricing, when market quotes are not readily accessible or available. Various factors are considered in determining the fair value of the Company’s obligations, including: closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options and derivatives; price activity for equivalent instruments; and the Company’s own credit standing. These valuation techniques may be based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. We did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during either of three months ended March 31, 2017 or March 31, 2016. The following table presents the Company’s assets that are measured at fair value and the related hierarchy levels:
(a)The fair value of these instruments is recorded in Other assets. Available-For-Sale Securities When available, the Company uses quoted market prices to determine the fair value of available-for-sale securities; such items are classified in Level 1 of the fair-value hierarchy. These securities primarily consist of an open-ended mutual fund which is invested in fixed-income securities and is held in order to satisfy the regulatory requirements of WEX Bank. For mortgage-backed and asset-backed debt securities and municipal bonds, the Company generally uses quoted prices for recent trading activity of assets with similar characteristics to the debt security or bond being valued. The securities and bonds priced using such methods are generally classified as Level 2. Executive Deferred Compensation Plan Trust The obligations related to the deferred compensation plan trust are classified as Level 1 in the fair value hierarchy because the fair value is determined using quoted prices for identical instruments in active markets. Interest Rate Swap Arrangements The Company determines the fair value of its interest rate swaps based on the discounted cash flows of the difference between the projected fixed payments on the swap and the implied floating payments using the current LIBOR curve, which are Level 2 inputs in the fair value hierarchy. $400 Million Notes Outstanding Not considering unamortized loan origination fees, the Notes outstanding have a carrying value of $400,000 at each of March 31, 2017 and December 31, 2016, and a fair value of $394,000 and $390,000 as of March 31, 2017 and December 31, 2016, respectively. The fair value is based on market rates for the issuance of our debt. The Company determined the fair value of its Notes outstanding is classified as Level 2 in the fair value hierarchy. Debt The Company determines the fair value of the amount outstanding under its 2016 Credit Facility based on the market rates for the issuance of the Company's debt, which are Level 2 inputs in the fair value hierarchy. As of March 31, 2017, the 2016 Credit Facility has a carrying value of $1,832,240 and a fair value of $1,846,481. As of December 31, 2016, the carrying value of the Credit Facility approximated its carrying value. |
Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss |
A reconciliation of accumulated other comprehensive loss is as follows:
The total tax effect on accumulated unrealized losses was $5,842 and $3,821 as of March 31, 2017 and March 31, 2016, respectively. The change in foreign currency items is primarily due to the foreign currency translation of non-cash assets such as goodwill and other intangible assets related to the Company's foreign subsidiaries. No amounts were reclassified from accumulated other comprehensive income (loss) in the periods presented. |
Non-Controlling Interest |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Controlling Interest |
On December 1, 2014, WEX acquired the assets of ExxonMobil's Esso portfolio in Europe through its majority owned subsidiary, WEX Europe Services Limited. The Company formed this entity during 2013 and has 75 percent ownership. A reconciliation of non-controlling interest is as follows:
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Income Taxes |
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Mar. 31, 2017 | |||||||
Income Tax Disclosure [Abstract] | |||||||
Income Taxes |
The Company's effective tax rate was 33.3 percent for the first quarter of 2017 as compared to 36.2 percent for the first quarter of 2016. As a result of the recent adoption of ASU 2016-09, the $1,600 tax effect of excess tax benefits related to share-based payments was recorded to the income statement in the first quarter of 2017, which contributed to the lower effective tax rate. See Note 1, Basis of Presentation for more information. Undistributed earnings of certain foreign subsidiaries of the Company amounted to $29,722 and $25,824 at March 31, 2017 and December 31, 2016, respectively. These earnings are considered to be indefinitely reinvested, and accordingly, no U.S. federal and state income taxes have been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. The Company has determined that the amount of taxes attributable to these undistributed earnings is not practicably determinable. |
Commitments and Contingencies |
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Mar. 31, 2017 | |||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||
Commitments and Contingencies |
Litigation On August 11, 2016, the Company was sued in the Circuit Court of St. Charles County, Missouri, in a putative class action alleging the Company improperly sent unauthorized facsimile advertisements in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”). The named plaintiff seeks to represent a nationwide class of recipients of unauthorized facsimile advertisements from the Company (collectively, the "Plaintiffs") and requests statutory damages for each facsimile advertisement. The Plaintiffs further allege that the opt-out notice of the faxes did not meet the criteria set forth in the TCPA or its underlying regulations. The Company removed the case to the United States District Court for the Eastern District of Missouri on September 15, 2016. On October 14, 2016, the Company filed an answer denying liability and stating the facsimile advertisement at issue was sent by FleetOne, LLC, Company’s wholly-owned subsidiary. The Company is currently conducting an internal review of this matter and intends to vigorously defend itself. The current estimate of a reasonably possible loss contingency is not material to the Company's unaudited condensed consolidated financial position, results of operations, cash flows or liquidity. The Company is involved in other pending litigation in the ordinary course of business. In the opinion of management, such litigation will not have a material adverse effect on the Company’s unaudited condensed consolidated financial position, results of operations or cash flows. Commitments Significant commitments and contingencies as of March 31, 2017 are consistent with those discussed in Note 18, Commitments and Contingencies to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2016. |
Restructuring |
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Restructuring |
In the first quarter of 2015, the Company commenced a restructuring initiative (the "2015 Restructuring Initiative") as a result of its global review of operations. The global review of operations identified certain initiatives to further streamline the business, to improve the Company's efficiency, and to globalize the Company's operations, all with an objective to improve scale and increase profitability going forward. The Company continued its efforts to improve its overall operational efficiency and began a second restructuring initiative (the "2016 Restructuring Initiative") during the second quarter of 2016. In connection with the EFS acquisition, the Company initiated a restructuring program in the third quarter of 2016 (the "Acquisition Integration Restructuring Initiative"). The restructuring expenses related to these initiatives primarily consist of employee costs and office closure costs directly associated with the respective program. The Company has determined the amount of expenses related to these initiatives is probable and reasonably estimable. As such, the Company has recorded the impact on the unaudited condensed consolidated statements of income and in Accrued expenses on the unaudited condensed consolidated balance sheets. Restructuring charges incurred to date under these initiatives were $18,357 as of March 31, 2017. The balance under the 2015 Restructuring Initiative is expected to be paid through 2018. Amounts under the 2016 Restructuring Initiative and the Acquisition Integration Restructuring Initiative are expected to be paid through 2017. The Company expects to incur an additional $450 in restructuring costs related to the Acquisition Integration Restructuring Initiative. The Company does not expect to incur any additional restructuring costs related to the 2015 and 2016 Restructuring Initiatives. The following table presents the Company's 2015 Restructuring Initiative liability:
The following table presents the Company’s 2016 Restructuring Initiative liability:
The following table presents the Company’s Acquisition Integration Restructuring Initiative liability:
The following table presents the Company's total restructuring liability:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer. The operating segments are aggregated into the three reportable segments described below.
The Company’s CODM evaluates the operating results of the Company’s operating and reportable segments based upon revenues and adjusted pre-tax income before NCI which adjusts income before income taxes to exclude unrealized gains and losses on derivatives, net foreign currency remeasurement gains and losses, acquisition and divestiture related items, stock-based compensation, restructuring and other costs and debt issuance cost amortization. Although adjusted pre-tax income before NCI is not calculated in accordance with GAAP, this non-GAAP measure is integral to the Company's reporting and planning processes and the CODM uses it to allocate resources. The Company considers this measure integral because it excludes specified items that the Company's management excludes in evaluating the Company's performance. Specifically, in addition to evaluating performance on a GAAP basis, management evaluates performance on a basis that excludes the above items because:
For the same reasons, WEX believes that adjusted pre-tax income before NCI may also be useful to investors as one means of evaluating the Company's performance. However, because adjusted pre-tax income before NCI is a non-GAAP measure, it should not be considered as a substitute for, or superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted pre-tax income before NCI as used by WEX may not be comparable to similarly titled measures employed by other companies. The tables below present the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis and the prior period has been updated to reflect the following:
The following tables present the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis:
Our segments earn interest income both from banking relationships and from cardholders. The majority of interest income from cardholders is earned on our salary payment cards offered in Brazil. The following table presents the Company's interest income by segment:
The following table reconciles income before income taxes to adjusted pre-tax income before NCI:
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Supplementary Regulatory Capital Disclosure |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Regulatory Capital Disclosure |
The Company's subsidiary, WEX Bank, is subject to various regulatory capital requirements administered by the FDIC and the Utah Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, WEX Bank must meet specific capital guidelines that involve quantitative measures of WEX Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. WEX Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require WEX Bank to maintain minimum amounts and ratios as defined in the regulations. As of December 31, 2016, the most recent FDIC exam report categorized WEX Bank as “well capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events subsequent to that examination report that management believes have changed WEX Bank’s capital rating. WEX Bank’s actual and regulatory minimum capital amounts and ratios are presented in the following table:
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New Accounting Standards (Policies) |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of WEX Inc. for the year ended December 31, 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 6, 2017. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results for any future periods or the year ending December 31, 2017. The Company rounds amounts in the unaudited condensed consolidated financial statements to thousands and calculates all per-share data from underlying whole-dollar amounts. Thus, certain amounts may not recalculate based on reported numbers due to rounding. The presentation of the accompanying unaudited condensed consolidated statements of income for the three months ended March 31, 2016 has been updated to disaggregate revenue into payment processing, account servicing, finance fee and other revenue in order to provide additional information regarding the Company’s significant revenue streams and to conform to the current year presentation. There was no change to total revenue, income from operations, net income or net income per share as a result of this updated presentation. |
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New Accounting Standards | Effective January 1, 2017, the Company adopted ASU 2016-09, which simplifies several aspects of accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows. Prior to the adoption of this guidance, the Company recognized the net excess tax benefits of vested or settled awards in additional paid-in capital. This standard requires prospective recognition of all the tax effects related to share-based payments in the income statement. The impact of adoption was recorded as a $263 cumulative effect adjustment to Retained earnings. For the three months ended March 31, 2017, the Company recognized $1,600 of excess tax benefits within our income tax provision, which would have been recognized in additional paid-in-capital under previous guidance. See Note 12, Income Taxes, for the resulting impact on our effective tax rate. The Company has elected to prospectively classify these excess tax benefits as cash flows from operating activities for the three months ended March 31, 2017. The Company will continue to estimate the number of awards expected to vest, rather than electing to account for forfeitures as they occur. Adoption of this standard is not anticipated to impact the Company's minimum statutory tax withholding practices. In March 2017, the FASB issued ASU 2017-07, which changes the presentation of net benefit pension costs by requiring the disaggregation of certain of its components. Under the guidance, companies are required to present the service cost component in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost will be presented in the income statement separately from the service cost component and outside the subtotal of operating income, if one is presented. Additionally, only the service cost component will be eligible for capitalization under the new guidance. The standard is effective for annual or interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements, interim or annual, have not been issued or made available for issuance. The Company does not believe this standard will have a material impact on the consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09 ("Topic 606"), which will supersede most existing revenue recognition guidance under GAAP. The new revenue recognition standard requires entities to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Topic 606 does not apply to rights or obligations associated with financial instruments (e.g. interest income), including the Company’s finance fee and interest income from banking relationships and cardholders. As such, approximately 14 percent of consolidated revenues for the period ended December 31, 2016 will not be impacted by Topic 606. The Company’s revenue from discount and interchange, transaction processing and certain fees is within the scope of Topic 606. FASB and its Transition Resource Group have issued clarifications on various aspects of ASU 2014-09. Those clarifications, along with the guidance under Topic 606 support the conclusion that timing and measurement of revenue associated with the Company’s transaction processing services, including discount and interchange and other transaction processing fees, or approximately 48 percent of consolidated revenues for the period ended December 31, 2016, will remain substantially unchanged under the new standard. The Company is in the process of assessing the remaining revenue streams that fall within the scope of this new standard. Included in this assessment is confirming principal vs. agent determinations, reviewing commission structure and applying the series guidance to the Company's revenue streams. Under the new guidance certain costs to obtain a contract, such as sales commissions are to be capitalized and amortized over the life of the contract, with a practical expedient available for contracts under one year in duration. Sales commissions that were expensed were approximately $5,400 for the period ended March 31, 2017. On July 9, 2015, the FASB voted to defer the effective date by one year to interim and annual reporting periods beginning after December 15, 2017, and permitted early adoption of the standard, but not for periods beginning on or before the original effective date of January 1, 2017. The Company is not electing early adoption and as a result the standard will become effective on January 1, 2018. The guidance permits two methods of adoption: full retrospective approach, which requires an entity to restate each prior period that is reported in the financial statements and modified retrospective approach, which requires a cumulative adjustment to retained earnings as of the effective date, without restatement of prior period amounts. The Company currently anticipates adopting the standard using the modified retrospective method. |
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Fair Value of Financial Instruments | Available-For-Sale Securities When available, the Company uses quoted market prices to determine the fair value of available-for-sale securities; such items are classified in Level 1 of the fair-value hierarchy. These securities primarily consist of an open-ended mutual fund which is invested in fixed-income securities and is held in order to satisfy the regulatory requirements of WEX Bank. For mortgage-backed and asset-backed debt securities and municipal bonds, the Company generally uses quoted prices for recent trading activity of assets with similar characteristics to the debt security or bond being valued. The securities and bonds priced using such methods are generally classified as Level 2. Executive Deferred Compensation Plan Trust The obligations related to the deferred compensation plan trust are classified as Level 1 in the fair value hierarchy because the fair value is determined using quoted prices for identical instruments in active markets. Interest Rate Swap Arrangements The Company determines the fair value of its interest rate swaps based on the discounted cash flows of the difference between the projected fixed payments on the swap and the implied floating payments using the current LIBOR curve, which are Level 2 inputs in the fair value hierarchy. $400 Million Notes Outstanding Not considering unamortized loan origination fees, the Notes outstanding have a carrying value of $400,000 at each of March 31, 2017 and December 31, 2016, and a fair value of $394,000 and $390,000 as of March 31, 2017 and December 31, 2016, respectively. The fair value is based on market rates for the issuance of our debt. The Company determined the fair value of its Notes outstanding is classified as Level 2 in the fair value hierarchy. Debt The Company determines the fair value of the amount outstanding under its 2016 Credit Facility based on the market rates for the issuance of the Company's debt, which are Level 2 inputs in the fair value hierarchy. The Company holds mortgage-backed securities, fixed income securities, derivatives (see Note 6, Derivative Instruments) and certain other financial instruments which are carried at fair value. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as model pricing, when market quotes are not readily accessible or available. Various factors are considered in determining the fair value of the Company’s obligations, including: closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options and derivatives; price activity for equivalent instruments; and the Company’s own credit standing. These valuation techniques may be based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. We did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during either of three months ended March 31, 2017 or March 31, 2016. Available-For-Sale Securities When available, the Company uses quoted market prices to determine the fair value of available-for-sale securities; such items are classified in Level 1 of the fair-value hierarchy. These securities primarily consist of an open-ended mutual fund which is invested in fixed-income securities and is held in order to satisfy the regulatory requirements of WEX Bank. For mortgage-backed and asset-backed debt securities and municipal bonds, the Company generally uses quoted prices for recent trading activity of assets with similar characteristics to the debt security or bond being valued. The securities and bonds priced using such methods are generally classified as Level 2. Executive Deferred Compensation Plan Trust The obligations related to the deferred compensation plan trust are classified as Level 1 in the fair value hierarchy because the fair value is determined using quoted prices for identical instruments in active markets. Interest Rate Swap Arrangements The Company determines the fair value of its interest rate swaps based on the discounted cash flows of the difference between the projected fixed payments on the swap and the implied floating payments using the current LIBOR curve, which are Level 2 inputs in the fair value hierarchy. $400 Million Notes Outstanding Not considering unamortized loan origination fees, the Notes outstanding have a carrying value of $400,000 at each of March 31, 2017 and December 31, 2016, and a fair value of $394,000 and $390,000 as of March 31, 2017 and December 31, 2016, respectively. The fair value is based on market rates for the issuance of our debt. The Company determined the fair value of its Notes outstanding is classified as Level 2 in the fair value hierarchy. |
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Receivables | Receivables are generally written off when they are 150 days past due or upon declaration of bankruptcy by the customer. The reserve for credit losses is calculated by an analytic model that also takes into account other factors, such as the actual charge-offs for the preceding reporting periods, expected charge-offs and recoveries for the subsequent reporting periods, a review of past due accounts receivable balances, changes in customer payment patterns, known fraudulent activity in the portfolio, as well as leading economic and market indicators. |
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Earnings per Share | Basic earnings per share is computed by dividing net earnings attributable to shareholders by the weighted average number of shares of common stock and vested deferred stock units outstanding during the year. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options, the assumed issuance of unvested restricted stock units and deferred stock units, and unvested performance-based restricted stock units for which the performance condition has been met as of the date of determination using the treasury stock method unless the effect is anti-dilutive. The treasury stock method assumes that proceeds, including cash received from the exercise of employee stock options and the total unrecognized compensation expense for unvested share-based compensation awards, would be used to purchase the Company's common stock at the average market price during the period. Prior to the January 2017 adoption of ASU 2016-09, the treasury stock method also included excess tax benefits in its proceeds calculation. |
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Derivative Instruments | The Company is exposed to certain market risks relating to its ongoing business operations. From time to time, the Company enters into derivative instrument arrangements to manage various risks including interest rate risk, foreign exchange risk, and commodity price risk. None of these derivative instruments qualify for hedge accounting treatment. |
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Segment Information | Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer. The operating segments are aggregated into the three reportable segments described below.
The Company’s CODM evaluates the operating results of the Company’s operating and reportable segments based upon revenues and adjusted pre-tax income before NCI which adjusts income before income taxes to exclude unrealized gains and losses on derivatives, net foreign currency remeasurement gains and losses, acquisition and divestiture related items, stock-based compensation, restructuring and other costs and debt issuance cost amortization. Although adjusted pre-tax income before NCI is not calculated in accordance with GAAP, this non-GAAP measure is integral to the Company's reporting and planning processes and the CODM uses it to allocate resources. The Company considers this measure integral because it excludes specified items that the Company's management excludes in evaluating the Company's performance. Specifically, in addition to evaluating performance on a GAAP basis, management evaluates performance on a basis that excludes the above items because:
For the same reasons, WEX believes that adjusted pre-tax income before NCI may also be useful to investors as one means of evaluating the Company's performance. However, because adjusted pre-tax income before NCI is a non-GAAP measure, it should not be considered as a substitute for, or superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted pre-tax income before NCI as used by WEX may not be comparable to similarly titled measures employed by other companies. |
Business Acquisition - (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions | The following represents the components and preliminary allocation of the purchase price:
(a)Approximately $1,262,367 in goodwill and other intangible assets recorded from this business combination were preliminarily allocated to our Fleet Solutions segment; the remaining $345,648 was preliminarily allocated to our Travel and Corporate Solutions segment. (b)Weighted average life – 8.1 years. (c)Weighted average life – 2.0 years. (d)Weighted average life – 7.7 years. |
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Estimated Amortization Expense Related to Definite Lived Intangible Assets | At March 31, 2017, estimated amortization expense related to the definite-lived intangible assets listed above for each of the next five fiscal years and thereafter is as follows:
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Business Acquisition, Pro Forma Information | The following represents unaudited pro forma operational results as if the acquisition had occurred January 1, 2015:
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Reserves for Credit Losses - (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Reserves for Credit Losses Related to Accounts Receivable | The following table presents changes in reserves for credit losses related to accounts receivable:
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Earnings per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Income and Share Data Used in Basic and Diluted Earnings Per Share Computations | The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the three months ended March 31, 2017 and 2016:
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Derivative Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The notional amounts, fixed and variable interest rates and maturities of the interest rate swap agreements are as follows:
The following table summarizes the contracts related to foreign currency swaps, which settle in the base currency at various dates within 5 days after quarter-end:
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Location and Amounts of Derivative Gains and Losses in Condensed Consolidated Statements of Income | The following table presents information on the amounts of derivative gains and the locations in the unaudited condensed consolidated statements of income:
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Location and Amounts of Derivative Fair Values in Condensed Consolidated Balance Sheets | The following table presents information on the location and fair value of derivatives recorded in the unaudited condensed consolidated balance sheets:
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Financing and Other Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Issuance Costs | The following table presents the Company's net debt issuance costs related to its revolving line of credit facilities, term loans and notes outstanding:
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Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value | The following table presents the Company’s assets that are measured at fair value and the related hierarchy levels:
(a)The fair value of these instruments is recorded in Other assets. |
Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Accumulated Other Comprehensive Income | A reconciliation of accumulated other comprehensive loss is as follows:
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Non-Controlling Interest (Tables) |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Noncontrolling Interests | A reconciliation of non-controlling interest is as follows:
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Restructuring (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following table presents the Company's 2015 Restructuring Initiative liability:
The following table presents the Company’s 2016 Restructuring Initiative liability:
The following table presents the Company’s Acquisition Integration Restructuring Initiative liability:
The following table presents the Company's total restructuring liability:
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segment Results | The following tables present the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Income | The following table presents the Company's interest income by segment:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Adjusted Net Income to Net Income | The following table reconciles income before income taxes to adjusted pre-tax income before NCI:
|
Supplementary Regulatory Capital Disclosure (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | WEX Bank’s actual and regulatory minimum capital amounts and ratios are presented in the following table:
|
Basis of Presentation (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative-effect adjustment | [1] | $ 263 | |||
Excess tax benefits recognized | $ 1,600 | ||||
Accounting Standards Update 2016-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Excess tax benefits recognized | $ 1,600 | ||||
Retained Earnings | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative-effect adjustment | [1] | $ 263 | |||
|
New Accounting Standards (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Sales commissions | $ 5 | |
Accounting Standards Update 2014-09 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Percentage of consolidated revenue not affected by new accounting pronouncement | 14.00% | |
Consolidated revenue affected by new accounting pronouncement, percent | 48.00% |
Business Acquisition - Summary of EFS Aquisition (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 01, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Allocation of the purchase price by the assets and liabilities acquired | |||||
Goodwill | $ 1,840,844 | $ 1,840,844 | $ 1,838,441 | ||
Electronic Funds Source LLC | |||||
Business Acquisition [Line Items] | |||||
Consideration transferred, shares (in shares) | 4,012,000 | ||||
Consideration transferred, shares, amount | $ 355,000 | ||||
Percent of ownership interest acquired | 9.40% | ||||
Payments to acquire businesses | $ 1,182,000 | ||||
Consideration transferred | 1,444,000 | ||||
Cash acquired in acquisition | $ 93,000 | ||||
Direct ownership in the limited liability company | 49.50% | ||||
Direct ownership held by other corporation | 50.50% | ||||
Goodwill, expected tax deductible amount | 591,000 | 591,000 | |||
Allocation of the purchase price by the assets and liabilities acquired | |||||
Total consideration, net of cash acquired | 1,444,235 | 1,444,235 | 1,444,235 | ||
Accounts receivable | 162,684 | 162,684 | 162,684 | ||
Property and equipment | 2,388 | 2,388 | 2,387 | ||
Measurement period adjustments, property and equipment | 1 | ||||
Deferred income tax assets | 34,992 | 34,992 | 34,992 | ||
Accounts payable | (153,529) | (153,529) | (153,777) | ||
Measurement period adjustments, accounts payable | 248 | ||||
Accrued expenses | (119,121) | (119,121) | (128,267) | ||
Measurement period adjustments, accrued expenses | (9,146) | ||||
Deferred income tax liabilities | (91,194) | (91,194) | (91,194) | ||
Goodwill | 720,795 | 720,795 | 728,890 | ||
Measurement period adjustments, goodwill | (8,095) | ||||
Estimated amortization expense related to the definite-lived intangible assets | |||||
Remaining 2017 | 64,032 | 64,032 | |||
2018 | 80,987 | 80,987 | |||
2019 | 74,548 | 74,548 | |||
2020 | 68,685 | 68,685 | |||
2021 | 60,654 | 60,654 | |||
2022 | 53,537 | 53,537 | |||
Thereafter | 427,408 | 427,408 | |||
Unaudited pro forma operational results | |||||
Total revenues | $ 240,297 | ||||
Net earnings attributable to shareholders | $ 18,333 | ||||
Pro forma net income attributable to shareholders per common share - basic (in dollars per share) | $ 0.43 | ||||
Pro forma net income attributable to shareholders per common share - Diluted (in dollars per share) | $ 0.43 | ||||
Electronic Funds Source LLC | Acquisition-related Costs | |||||
Unaudited pro forma operational results | |||||
Net earnings attributable to shareholders | $ 4,765 | ||||
Electronic Funds Source LLC | Fleet Payment Solutions | |||||
Business Acquisition [Line Items] | |||||
Intangible Assets, Net (Including Goodwill) | $ 1,262,367 | ||||
Estimated amortization expense related to the definite-lived intangible assets | |||||
Total revenues | 43,375 | ||||
Pre-tax adjusted net income | 11,203 | ||||
Electronic Funds Source LLC | Travel and corporate solutions | |||||
Business Acquisition [Line Items] | |||||
Intangible Assets, Net (Including Goodwill) | $ 345,648 | ||||
Electronic Funds Source LLC | Customer relationships | |||||
Allocation of the purchase price by the assets and liabilities acquired | |||||
Intangible assets | 841,400 | 841,400 | 842,700 | ||
Measurement period adjustments, intangibles | (1,300) | ||||
Weighted average life | 8 years 1 month 6 days | ||||
Electronic Funds Source LLC | Developed technologies | |||||
Allocation of the purchase price by the assets and liabilities acquired | |||||
Intangible assets | 32,120 | 32,120 | 32,120 | ||
Weighted average life | 2 years | ||||
Electronic Funds Source LLC | Trade name | |||||
Allocation of the purchase price by the assets and liabilities acquired | |||||
Intangible assets | $ 13,700 | $ 13,700 | $ 13,700 | ||
Weighted average life | 7 years 8 months 12 days |
Reserves for Credit Losses - Additional Information (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2017
USD ($)
customer
|
Dec. 31, 2016
USD ($)
customer
|
Mar. 31, 2016 |
|
Concentration Risk [Line Items] | |||
Trade receivable payments terms (30 days or less) | 30 days | ||
Threshold period past due for write-off of trade accounts receivable | 150 days | ||
Percentage of trade receivables outstanding balance, current | 95.00% | 90.00% | |
Percentage of trade accounts receivables less than 60 days past due | 98.00% | 98.00% | |
Customer Concentration Risk | Accounts receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Concentration Risk, Number of Customers | customer | 0 | 1 | |
Revolving Credit Facility | |||
Concentration Risk [Line Items] | |||
Loans receivable, net | $ | $ 5,800 | $ 3,400 | |
Customer One | Customer Concentration Risk | Accounts receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% |
Reserves for Credit Losses - Changes in Reserves for Credit Losses Related to Accounts Receivable (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Receivables [Abstract] | ||
Balance, beginning of year | $ 20,092 | $ 13,832 |
Provision for credit losses | 12,231 | 3,917 |
Charges to other accounts | 2,939 | 0 |
Charge-offs | (13,369) | (7,036) |
Recoveries of amounts previously charged-off | 928 | 1,340 |
Currency translation | 745 | 98 |
Balance, end of period | $ 23,566 | $ 12,151 |
Earnings per Share - Reconciliation of Income and Share Data Used in Basic and Diluted Earnings Per Share Computations (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Net earnings attributable to shareholders | $ 29,401 | $ 23,086 |
Weighted average common shares outstanding – Basic (in shares) | 42,871 | 38,756 |
Dilutive impact of share based compensation awards (in shares) | 248 | 94 |
Weighted average common shares outstanding – Diluted (in shares) | 43,119 | 38,850 |
Earnings per Share - Stock Options and Restricted Stock Units (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 |
Restricted Stock Units (RSUs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 |
Performance Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 |
Derivative Instruments - Additional Information (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
Nov. 30, 2016
agreement
|
Mar. 31, 2016 |
---|---|---|---|
Interest rate swap agreements - unrealized portion | |||
Derivative [Line Items] | |||
Number of derivative instruments held | agreement | 3 | ||
Borrowings under derivative agreements | $ | $ 800 | ||
Interest rate swap agreements - unrealized portion | London Interbank Offered Rate (LIBOR) | Minimum | |||
Derivative [Line Items] | |||
Fixed rate variable interest | 0.896% | ||
Interest rate swap agreements - unrealized portion | London Interbank Offered Rate (LIBOR) | Maximum | |||
Derivative [Line Items] | |||
Fixed rate variable interest | 1.125% | ||
Price Risk Derivative | |||
Derivative [Line Items] | |||
Percentage hedged by fuel price derivatives | 20.00% |
Derivative Instruments - Schedule of Notional Amounts of Interest Rate Swap Agreements (Details) - Derivatives Not Designated as Hedging Instruments $ in Thousands |
Nov. 30, 2016
USD ($)
|
---|---|
Tranche A | |
Derivative [Line Items] | |
Notional amount | $ 400,000 |
Amortization | 5.00% |
Fixed interest rate | 1.108% |
Tranche B | |
Derivative [Line Items] | |
Notional amount | $ 150,000 |
Fixed interest rate | 1.125% |
Tranche C | |
Derivative [Line Items] | |
Notional amount | $ 250,000 |
Fixed interest rate | 0.896% |
Derivative Instruments - Summary of Aggregate Notional Amount of Foreign Currency Swap Contracts (Details) NOK in Thousands, AUD in Thousands |
Mar. 31, 2017
NOK
|
Mar. 31, 2017
AUD
|
Mar. 31, 2016
NOK
|
Mar. 31, 2016
AUD
|
---|---|---|---|---|
Derivatives Not Designated as Hedging Instruments | Foreign currency swaps | ||||
Derivative [Line Items] | ||||
Notional amount | NOK 0 | AUD 18,000 | NOK 40,000 | AUD 15,000 |
Derivative Instruments - Location and Amounts of Derivative Fair Values in Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Derivatives Not Designated as Hedging Instruments | Interest rate swap agreements - unrealized portion | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivatives Classified as Assets | $ 14,473 | $ 12,908 |
Derivative Instruments - Location and Amounts of Derivative Gains and Losses in Condensed Consolidated Statements of Income (Details) - Derivatives Not Designated as Hedging Instruments - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net realized and unrealized gain on fuel price derivatives | Commodity contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain recognized in income on derivative | $ 0 | $ 711 |
Net unrealized gains on interest rate swap agreements | Interest rate swap agreements | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain recognized in income on derivative | 1,565 | 0 |
Financing interest expense | Interest rate swap agreements | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain recognized in income on derivative | $ (543) | $ 0 |
Financing and Other Debt - Additional Information (Details) |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jul. 01, 2016
USD ($)
|
Apr. 07, 2016 |
Apr. 28, 2015 |
Mar. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Nov. 30, 2016
agreement
|
Jan. 30, 2013
USD ($)
|
|
Debt Instrument [Line Items] | |||||||
Lines of credit | $ 1,795,640,000 | $ 1,599,291,000 | |||||
Maximum borrowing capacity | 250,000,000 | ||||||
Securitized debt | $ 92,676,000 | $ 84,323,000 | |||||
Unik | |||||||
Debt Instrument [Line Items] | |||||||
Weighted average annual interest rate, percent | 24.10% | 19.70% | |||||
Outstanding debt | $ 12,699,000 | $ 30,755,000 | |||||
Interest rate swap agreements - unrealized portion | |||||||
Debt Instrument [Line Items] | |||||||
Number of derivative instruments held | agreement | 3 | ||||||
Interest Rate Option Two | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 1.00% | ||||||
Interest Rate Option Two | Federal Fund Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 0.50% | ||||||
2016 Credit Agreement Tranche A | |||||||
Debt Instrument [Line Items] | |||||||
Permitted securitization transactions | $ 350,000 | ||||||
2016 Credit Agreement Tranche A | Interest Rate Option One | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, floor | 0.00% | ||||||
2016 Credit Agreement Tranche A | Interest Rate Option One | Minimum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 1.75% | ||||||
2016 Credit Agreement Tranche A | Interest Rate Option One | Maximum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 3.25% | 2.75% | |||||
2016 Credit Agreement Tranche A | Interest Rate Option Two | Minimum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 0.75% | ||||||
2016 Credit Agreement Tranche A | Interest Rate Option Two | Maximum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 2.25% | 1.75% | |||||
2016 Credit Agreement Tranche B | |||||||
Debt Instrument [Line Items] | |||||||
Weighted average annual interest rate, percent | 4.40% | 4.20% | |||||
Debt instrument unamortized discount, percent | 1.00% | ||||||
2016 Credit Agreement Tranche B | Interest Rate Option One | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, floor | 0.75% | ||||||
2016 Credit Agreement Tranche B | Interest Rate Option One | Minimum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate, stated percentage | 3.25% | ||||||
2016 Credit Agreement Tranche B | Interest Rate Option One | Maximum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 3.50% | 3.50% | |||||
2016 Credit Agreement Tranche B | Interest Rate Option Two | Minimum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate, stated percentage | 2.25% | ||||||
2016 Credit Agreement Tranche B | Interest Rate Option Two | Maximum | Eurocurrency Rate | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 2.50% | 2.50% | |||||
Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate, stated percentage | 4.75% | ||||||
Senior notes | $ 400,000,000 | ||||||
2016 Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Current borrowing capacity | $ 0 | ||||||
2016 Credit Agreement | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee percentage | 0.30% | ||||||
2016 Credit Agreement | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee percentage | 0.50% | 0.45% | |||||
Loan Participations and Assignments | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, aggregate principal amount | $ 95,000,000 | $ 95,000 | |||||
Loan Participations and Assignments | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Margin on variable rate, percent | 2.25% | ||||||
Loan Participations and Assignments | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Range of daily balance | $ 0 | ||||||
Loan Participations and Assignments | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Range of daily balance | 95,000,000 | ||||||
Loan Participations and Assignments, Amounts Maturing August 2017 | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, aggregate principal amount | 50,000,000 | ||||||
Loan Participations and Assignments, Amounts Maturing December 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, aggregate principal amount | $ 45,000,000 | ||||||
Securitization Facility | |||||||
Debt Instrument [Line Items] | |||||||
Term of securitization facility | 1 year | ||||||
Securitization facility, percentage of receivables used as collateral | 85.00% | ||||||
Interest rate during period, percent | 2.68% | 2.65% | |||||
Securitized debt | $ 86,327,000 | $ 78,592,000 | |||||
European Securitization Facility | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate during period, percent | 0.94% | 0.95% | |||||
Debt instrument, term | 5 years | ||||||
Securitized debt | $ 6,349,000 | $ 5,731,000 | |||||
Revolving Credit Facility | Two Thousand And Eleven Credit Agreement [Member] | Letter of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Lines of credit | 13,350,000 | 13,350,000 | |||||
Revolving Credit Facility | 2016 Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Current borrowing capacity | $ 470,000,000 | ||||||
Lines of credit | 203,302,000 | ||||||
Credit Facility Term Loans | 2016 Credit Agreement Tranche A | |||||||
Debt Instrument [Line Items] | |||||||
Current borrowing capacity | 925,000,000 | ||||||
Credit Facility Term Loans | 2016 Credit Agreement Tranche B | |||||||
Debt Instrument [Line Items] | |||||||
Current borrowing capacity | $ 1,200,000,000 | ||||||
Lines of credit | $ 1,628,938,000 | ||||||
Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Lines of credit | $ 0 |
Financing and Other Debt - Schedule of Debt Issuance Cost (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Notes outstanding | ||
Line of Credit Facility [Line Items] | ||
Debt issuance costs, net | $ 4,282 | $ 4,466 |
Revolving line of credit facilities and term loans | ||
Line of Credit Facility [Line Items] | ||
Debt issuance costs, net | $ 36,600 | $ 38,334 |
Factoring (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
WEX Europe Services | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Proceeds from sale of factoring receivables | $ 53,000 |
Loss on sale of factoring receivables | 200 |
Amount of factoring receivables | 400 |
Amount of factoring receivables, portion in excess of the established credit limit | 200 |
WEX Brazil | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Proceeds from sale of factoring receivables | 8,000 |
Loss on sale of factoring receivables | $ 400 |
Fair Value - Assets and Liabilities Measured at Fair Value and Related Hierarchy Levels (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets: | ||
Total available-for-sale securities | $ 23,413 | $ 23,525 |
Level 2 | Interest rate swap agreements | ||
Assets: | ||
Derivative asset | 14,473 | 12,908 |
Level 1 | ||
Assets: | ||
Executive deferred compensation plan trust | 6,716 | 5,673 |
Municipal bonds | Level 2 | ||
Assets: | ||
Total available-for-sale securities | 596 | 682 |
Asset-backed securities | Level 2 | ||
Assets: | ||
Total available-for-sale securities | 514 | 648 |
Mortgage-backed securities | Level 2 | ||
Assets: | ||
Total available-for-sale securities | 484 | 490 |
Fixed-income mutual fund | Level 1 | ||
Assets: | ||
Total available-for-sale securities | $ 21,819 | $ 21,705 |
Fair Value - Additional Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Senior Notes | Reported Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | $ 400,000 | $ 400 |
Senior Notes | Estimate of Fair Value Measurement | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | 394,000 | $ 390,000 |
Revolving Credit Facility | Reported Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | 1,832,240 | |
Revolving Credit Facility | Estimate of Fair Value Measurement | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | $ 1,846,481 |
Accumulated Other Comprehensive Loss - Reconciliation of Accumulated Other Comprehensive Loss (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | $ 1,505,747,000 | $ 1,095,681,000 |
Ending balance | 1,549,218,000 | 1,131,323,000 |
Unrealized Gains and Losses on Available- for-Sale Securities | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (463,000) | (212,000) |
Other comprehensive income | 3,000 | 164,000 |
Ending balance | (460,000) | (48,000) |
Tax effect on accumulated unrealized losses | 5,842,000 | 3,821,000 |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 |
Foreign Currency Items | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (122,376,000) | (103,239,000) |
Other comprehensive income | 16,578,000 | 10,318,000 |
Ending balance | (105,798,000) | (92,921,000) |
Amounts reclassified from accumulated other comprehensive income | $ 0 | $ 0 |
Non-Controlling Interest - Additional Information (Details) |
Dec. 31, 2013 |
---|---|
WEX Europe Services | |
Noncontrolling Interest [Line Items] | |
Percent of ownership interest acquired | 75.00% |
Non-Controlling Interest - Redeemable Noncontrolling Interests (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Balance, beginning of year | $ 8,558 | |
Net (loss) gain attributable to non-controlling interest | (325) | $ 135 |
Balance, end of period | 8,275 | |
WEX Europe Services | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Balance, beginning of year | 8,558 | 12,437 |
Net (loss) gain attributable to non-controlling interest | (325) | 135 |
Currency translation adjustment | 42 | 456 |
Balance, end of period | $ 8,275 | $ 13,028 |
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 33.30% | 36.20% | |
Excess tax benefits recognized | $ 1,600 | ||
Undistributed earnings of certain foreign subsidiaries | $ 29,722 | $ 25,824 |
Restructuring - Additional Information (Details) $ in Thousands |
Mar. 31, 2017
USD ($)
|
---|---|
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges incurred to date | $ 18,357 |
Acquisition Integration Restructuring Initiative | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring expected cost | $ 450 |
Restructuring - Schedule of Restructuring Reserve (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Restructuring Reserve | ||
Restructuring charges | $ 484 | $ 1,589 |
Excluding Acquisition Integration Restructuring Initiative | ||
Restructuring Reserve | ||
Balance, beginning of year | 10,657 | 7,249 |
Restructuring charges | 1,017 | 1,589 |
Reserve release | (533) | 0 |
Cash paid | (938) | (647) |
Other | 258 | 0 |
Impact of foreign currency translation | 111 | 315 |
Balance, end of period | 10,572 | 8,506 |
Year 2015 | ||
Restructuring Reserve | ||
Balance, beginning of year | 5,231 | 7,249 |
Restructuring charges | 310 | 1,589 |
Cash paid | (348) | (647) |
Impact of foreign currency translation | 38 | 315 |
Balance, end of period | 5,231 | $ 8,506 |
Year 2016 | ||
Restructuring Reserve | ||
Balance, beginning of year | 3,662 | |
Reserve release | (533) | |
Impact of foreign currency translation | 73 | |
Balance, end of period | 3,202 | |
Acquisition Integration Restructuring Initiative | ||
Restructuring Reserve | ||
Balance, beginning of year | 1,764 | |
Restructuring charges | 707 | |
Cash paid | (590) | |
Other | 258 | |
Balance, end of period | $ 2,139 |
Segment Information - Additional Information (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
segment
|
Mar. 31, 2016
USD ($)
|
|
Segment Reporting [Abstract] | ||
Goodwill and intangible asset impairment | $ | $ 0 | $ 0 |
Number of reportable segments | segment | 3 |
Segment Information - Pre-Tax Income Before NCI (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Segment Reporting Information [Line Items] | ||
Payment processing revenue | $ 136,378 | $ 111,057 |
Account servicing revenue | 61,539 | 44,522 |
Finance fee revenue | 43,372 | 23,506 |
Other revenue | 50,068 | 26,843 |
Total revenues | 291,357 | 205,928 |
Operating interest expense | 4,848 | 1,386 |
Depreciation and amortization | 49,238 | 22,264 |
Adjusted pre-tax income before NCI | 83,876 | 59,836 |
Fleet Payment Solutions | ||
Segment Reporting Information [Line Items] | ||
Payment processing revenue | 86,262 | 62,290 |
Account servicing revenue | 36,069 | 25,438 |
Finance fee revenue | 36,429 | 21,938 |
Other revenue | 32,063 | 11,408 |
Total revenues | 190,823 | 121,074 |
Operating interest expense | 1,324 | 422 |
Depreciation and amortization | 36,068 | 13,608 |
Adjusted pre-tax income before NCI | 51,232 | 33,111 |
Travel and Corporate Solutions | ||
Segment Reporting Information [Line Items] | ||
Payment processing revenue | 34,875 | 34,626 |
Account servicing revenue | 155 | 272 |
Finance fee revenue | 223 | 75 |
Other revenue | 12,460 | 10,169 |
Total revenues | 47,713 | 45,142 |
Operating interest expense | 1,566 | 552 |
Depreciation and amortization | 3,038 | 616 |
Adjusted pre-tax income before NCI | 22,408 | 20,148 |
Health and Employee Benefit Solutions | ||
Segment Reporting Information [Line Items] | ||
Payment processing revenue | 15,241 | 14,141 |
Account servicing revenue | 25,315 | 18,812 |
Finance fee revenue | 6,720 | 1,493 |
Other revenue | 5,545 | 5,266 |
Total revenues | 52,821 | 39,712 |
Operating interest expense | 1,958 | 412 |
Depreciation and amortization | 10,132 | 8,040 |
Adjusted pre-tax income before NCI | $ 10,236 | $ 6,577 |
Segment Information - Summary of Interest Income by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Segment Reporting Information [Line Items] | ||
Interest Income | $ 8,029 | $ 2,471 |
Fleet Payment Solutions | ||
Segment Reporting Information [Line Items] | ||
Interest Income | 1,124 | 884 |
Travel and corporate solutions | ||
Segment Reporting Information [Line Items] | ||
Interest Income | 46 | 92 |
Health and Employee Benefit Solutions | ||
Segment Reporting Information [Line Items] | ||
Interest Income | $ 6,859 | $ 1,495 |
Segment Information - Reconciliation of Adjusted Pre-Tax Income Before NCI to Income Before Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Segment Reporting [Abstract] | ||
Income before income taxes | $ 43,611 | $ 36,404 |
Changes in unrealized fuel price derivatives | (1,565) | 5,007 |
Net foreign currency gain | (8,442) | (16,124) |
Acquisition and divestiture related items | 40,114 | 27,945 |
Stock-based compensation | 6,457 | 4,243 |
Restructuring and other costs | 1,747 | 1,589 |
Debt issuance cost amortization | 1,954 | 772 |
Adjusted pre-tax income before NCI | $ 83,876 | $ 59,836 |
Supplementary Regulatory Capital Disclosure (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Disclosure [Abstract] | ||
Total Capital to risk-weighted assets, Actual Amount | $ 277,198 | $ 228,402 |
Total Capital to risk-weighted assets, Ratio | 13.28% | 12.59% |
Total Capital to risk-weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 166,950 | $ 145,182 |
Total Capital to risk-weighted assets, Ratio | 8.00% | 8.00% |
Total Capital to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 208,688 | $ 181,477 |
Total Capital to risk-weighted assets, Ratio | 10.00% | 10.00% |
Tier 1 Capital to average assets, Actual Amount | $ 262,264 | $ 214,847 |
Tier 1 Capital to average assets, Ratio | 12.57% | 11.10% |
Tier 1 Capital to average assets, Minimum for Capital Adequacy Purposes Amount | $ 83,475 | $ 77,413 |
Tier 1 Capital to average assets, Ratio | 4.00% | 4.00% |
Tier 1 Capital to average assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 104,344 | $ 96,767 |
Tier 1 Capital to average assets, Ratio | 5.00% | 5.00% |
Common equity to risk-weighted assets, Actual Amount | $ 262,264 | $ 214,847 |
Common equity to risk-weighted assets, Ratio | 13.07% | 11.84% |
Common equity to risk-weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 90,294 | $ 81,665 |
Common equity to risk-weighted assets, Ratio | 4.50% | 4.50% |
Common equity to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 130,425 | $ 117,961 |
Common equity to risk-weighted assets, Ratio | 6.50% | 6.50% |
Tier 1 Capital to risk-weighted assets, Actual Amount | $ 262,264 | $ 214,847 |
Tier 1 Capital to risk-weighted assets, Ratio | 13.07% | 11.84% |
Tier 1 Capital to risk-weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 120,392 | $ 108,887 |
Tier 1 Capital to risk-weighted assets, Ratio | 6.00% | 6.00% |
Tier 1 Capital to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 106,523 | $ 145,183 |
Tier 1 Capital to risk-weighted assets, Ratio | 8.00% | 8.00% |
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