☒ | 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. | |||
• | the effects of general economic conditions on fueling patterns as well as payment and transaction processing activity; |
• | the impact of foreign currency exchange rates on the Company’s operations, revenue and income; |
• | changes in interest rates; |
• | the impact of fluctuations in fuel prices; |
• | the effects of the Company’s business expansion and acquisition efforts; |
• | potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition; |
• | competitive responses to any acquisitions; |
• | uncertainty of the expected financial performance of the combined operations following completion of an acquisition; |
• | the ability to successfully integrate the Company's acquisitions, including Electronic Funds Source LLC's operations and employees; |
• | the ability to realize anticipated synergies and cost savings; |
• | unexpected costs, charges or expenses resulting from an acquisition; |
• | the Company's failure to successfully operate and expand ExxonMobil's European and Asian commercial fuel card programs; |
• | the failure of corporate investments to result in anticipated strategic value; |
• | the impact and size of credit losses; |
• | the impact of changes to the Company's credit standards; |
• | breaches of the Company’s technology systems or those of our third-party service providers and any resulting negative impact on our reputation, liabilities or relationships with customers or merchants; |
• | the Company’s failure to maintain or renew key agreements; |
• | failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; |
• | failure to successfully implement the Company's information technology strategies and capabilities in connection with its technology outsourcing and insourcing arrangements and any resulting cost associated with that failure; |
• | the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or affiliates; |
• | the impact of the Company’s outstanding notes on its operations; |
• | the impact of increased leverage on the Company's operations, results or borrowing capacity generally, and as a result of acquisitions specifically; |
• | the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes; |
• | the uncertainties of litigation; as well as |
• | other risks and uncertainties identified in Item 1A of our annual report on Form 10-K for the year ended December 31, 2016, filed on March 6, 2017 and Item 1A. of Part II of the quarterly report on Form 10-Q for the three months ended March 31, 2017 filed on May 8, 2017, both filed with the Securities and Exchange Commission. |
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 operating income | A non-GAAP measure that adjusts operating income to exclude specified items that the Company's management excludes in evaluating segment performance, including acquisition and divestiture related expenses and adjustments including the amortization of purchased intangibles, the expense associated with stock-based compensation, restructuring and other costs and an impairment charge |
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 2017-09 | Accounting Standards Update No. 2017-09 Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting |
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 |
European Fleet business | 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 |
NYSE | New York Stock Exchange |
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 |
WEX | WEX Inc. |
WEX Health | Evolution1 and Benaissance, collectively |
September 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 251,118 | $ | 190,930 | |||
Accounts receivable (net of allowances of $32,712 in 2017 and $20,092 in 2016) | 2,595,371 | 2,054,701 | |||||
Securitized accounts receivable, restricted | 150,845 | 97,417 | |||||
Income taxes receivable | 12,904 | 10,765 | |||||
Available-for-sale securities | 23,584 | 23,525 | |||||
Property, equipment and capitalized software (net of accumulated depreciation of $264,098 in 2017 and $228,336 in 2016) | 185,350 | 167,278 | |||||
Deferred income taxes, net | 8,462 | 6,934 | |||||
Goodwill | 1,813,805 | 1,838,441 | |||||
Other intangible assets (net of accumulated amortization of $375,004 in 2017 and $254,142 in 2016) | 1,155,631 | 1,265,468 | |||||
Other assets | 344,058 | 341,638 | |||||
Total assets | $ | 6,541,128 | $ | 5,997,097 | |||
Liabilities and Stockholders’ Equity | |||||||
Accounts payable | $ | 849,326 | $ | 617,118 | |||
Accrued expenses | 318,402 | 331,579 | |||||
Deposits | 1,091,530 | 1,118,823 | |||||
Borrowed federal funds | 28,462 | — | |||||
Securitized debt | 122,475 | 84,323 | |||||
Revolving line of credit facilities and term loans, net | 1,727,472 | 1,599,291 | |||||
Deferred income taxes, net | 149,605 | 152,906 | |||||
Notes outstanding, net | 396,085 | 395,534 | |||||
Other debt | 166,264 | 125,755 | |||||
Amounts due under tax receivable agreement | 38,375 | 47,302 | |||||
Other liabilities | 20,178 | 18,719 | |||||
Total liabilities | 4,908,174 | 4,491,350 | |||||
Commitments and contingencies | |||||||
Stockholders’ Equity | |||||||
Common stock $0.01 par value; 175,000 shares authorized; 47,349 shares issued in 2017 and 47,173 in 2016; 42,921 shares outstanding in 2017 and 42,841 in 2016 | 473 | 472 | |||||
Additional paid-in capital | 561,155 | 547,627 | |||||
Non-controlling interest | 8,446 | 8,558 | |||||
Retained earnings | 1,324,994 | 1,244,271 | |||||
Accumulated other comprehensive loss | (89,772 | ) | (122,839 | ) | |||
Treasury stock at cost; 4,428 shares in 2017 and 2016 | (172,342 | ) | (172,342 | ) | |||
Total stockholders’ equity | 1,632,954 | 1,505,747 | |||||
Total liabilities and stockholders’ equity | $ | 6,541,128 | $ | 5,997,097 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Payment processing revenue | $ | 145,702 | $ | 146,182 | $ | 423,434 | $ | 383,319 | |||||||
Account servicing revenue | 71,322 | 58,815 | 198,538 | 150,770 | |||||||||||
Finance fee revenue | 50,879 | 36,138 | 136,336 | 92,348 | |||||||||||
Other revenue | 56,099 | 46,621 | 160,935 | 101,184 | |||||||||||
Total revenues | 324,002 | 287,756 | 919,243 | 727,621 | |||||||||||
Expenses | |||||||||||||||
Salary and other personnel | 92,321 | 76,706 | 261,717 | 206,778 | |||||||||||
Restructuring | 4,639 | 2,531 | 6,799 | 7,626 | |||||||||||
Service fees | 41,205 | 53,415 | 115,306 | 136,098 | |||||||||||
Provision for credit losses | 19,614 | 9,489 | 47,927 | 19,849 | |||||||||||
Technology leasing and support | 13,628 | 12,517 | 40,245 | 34,525 | |||||||||||
Occupancy and equipment | 6,526 | 7,271 | 19,352 | 19,096 | |||||||||||
Depreciation and amortization | 51,229 | 46,008 | 150,428 | 91,381 | |||||||||||
Operating interest expense | 7,382 | 2,599 | 16,694 | 5,490 | |||||||||||
Cost of hardware and equipment sold | 1,066 | 859 | 3,193 | 2,429 | |||||||||||
Impairment charge | — | — | 16,175 | — | |||||||||||
Other expenses | 22,669 | 21,793 | 69,351 | 57,018 | |||||||||||
Total operating expenses | 260,279 | 233,188 | 747,187 | 580,290 | |||||||||||
Operating income | 63,723 | 54,568 | 172,056 | 147,331 | |||||||||||
Financing interest expense | (25,754 | ) | (35,064 | ) | (81,449 | ) | (87,040 | ) | |||||||
Net foreign currency gain | 14,611 | 5,932 | 33,578 | 17,233 | |||||||||||
Net unrealized loss on interest rate swap agreements | (150 | ) | — | (849 | ) | — | |||||||||
Net realized and unrealized gain on fuel price derivatives | — | — | — | 711 | |||||||||||
Non-cash adjustments related to tax receivable agreement | — | (168 | ) | — | (168 | ) | |||||||||
Income before income taxes | 52,430 | 25,268 | 123,336 | 78,067 | |||||||||||
Income taxes | 18,570 | 6,065 | 43,760 | 23,730 | |||||||||||
Net income | 33,860 | 19,203 | 79,576 | 54,337 | |||||||||||
Less: Net loss from non-controlling interest | (111 | ) | (493 | ) | (886 | ) | (1,013 | ) | |||||||
Net earnings attributable to shareholders | $ | 33,971 | $ | 19,696 | $ | 80,462 | $ | 55,350 | |||||||
Net earnings attributable to WEX Inc. per share: | |||||||||||||||
Basic | $ | 0.79 | $ | 0.46 | $ | 1.87 | $ | 1.38 | |||||||
Diluted | $ | 0.79 | $ | 0.46 | $ | 1.87 | $ | 1.38 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 43,014 | 42,788 | 42,963 | 40,126 | |||||||||||
Diluted | 43,101 | 42,871 | 43,092 | 40,199 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 33,860 | $ | 19,203 | $ | 79,576 | $ | 54,337 | |||||||
Changes in available-for-sale securities, net of tax (benefit) expense of $(10) and $(37) for the three months ended September 30, 2017 and 2016 and $53 and $123 for the nine months ended September 30, 2017 and 2016, respectively | (12 | ) | (62 | ) | 97 | 209 | |||||||||
Foreign currency translation | 11,042 | 1,549 | 33,744 | 709 | |||||||||||
Comprehensive income | 44,890 | 20,690 | 113,417 | 55,255 | |||||||||||
Less: Comprehensive gain (loss) attributable to non-controlling interest | 122 | (438 | ) | (112 | ) | (823 | ) | ||||||||
Comprehensive income attributable to WEX Inc. | $ | 44,768 | $ | 21,128 | $ | 113,529 | $ | 56,078 |
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 | 21 | — | 283 | — | — | — | — | 283 | ||||||||||||||||||||||
Tax expense from stock option and restricted stock units | — | — | (300 | ) | — | — | — | — | (300 | ) | ||||||||||||||||||||
Stock issued upon vesting of restricted and deferred stock units | 61 | 1 | — | — | — | — | — | 1 | ||||||||||||||||||||||
Stock-based compensation, net of share repurchases for tax withholdings | — | — | 12,142 | — | — | — | — | 12,142 | ||||||||||||||||||||||
Changes in available-for-sale securities, net of tax expense of $123 | — | — | — | 209 | — | — | — | 209 | ||||||||||||||||||||||
Stock issued for July 1, 2016 purchase of EFS | 4,012 | 40 | 354,913 | — | — | — | — | 354,953 | ||||||||||||||||||||||
Foreign currency translation | — | — | — | 709 | — | — | 190 | 899 | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | 55,350 | (1,013 | ) | 54,337 | |||||||||||||||||||||
Balance at September 30, 2016 | 42,840 | $ | 472 | $ | 542,010 | $ | (102,533 | ) | $ | (172,342 | ) | $ | 1,238,984 | $ | 11,614 | $ | 1,518,205 | |||||||||||||
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 | — | — | — | — | — | 261 | — | 261 | ||||||||||||||||||||||
Stock issued upon exercise of stock options | 11 | — | 595 | — | — | — | — | 595 | ||||||||||||||||||||||
Stock issued upon vesting of restricted and deferred stock units | 69 | 1 | (1 | ) | — | — | — | — | — | |||||||||||||||||||||
Stock-based compensation, net of share repurchases for tax withholdings | — | — | 12,934 | — | — | — | — | 12,934 | ||||||||||||||||||||||
Changes in available-for-sale securities, net of tax expense of $53 | — | — | — | 97 | — | — | — | 97 | ||||||||||||||||||||||
Foreign currency translation | — | — | — | 32,970 | — | — | 774 | 33,744 | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | 80,462 | (886 | ) | 79,576 | |||||||||||||||||||||
Balance at September 30, 2017 | 42,921 | $ | 473 | $ | 561,155 | $ | (89,772 | ) | $ | (172,342 | ) | $ | 1,324,994 | $ | 8,446 | $ | 1,632,954 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 79,576 | $ | 54,337 | |||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | |||||||
Net unrealized loss (gain) | 6,411 | (17,402 | ) | ||||
Stock-based compensation | 22,354 | 14,312 | |||||
Depreciation and amortization | 150,428 | 91,381 | |||||
Ticking fees expensed | — | 30,045 | |||||
Debt restructuring and debt issuance cost amortization | 5,935 | 10,649 | |||||
Provision for deferred taxes | 29,924 | 15,668 | |||||
Provision for credit losses | 47,927 | 19,849 | |||||
Impairment charge | 16,175 | — | |||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||
Accounts receivable | (595,804 | ) | (405,616 | ) | |||
Other assets | (18,713 | ) | (44,051 | ) | |||
Accounts payable | 228,284 | 169,716 | |||||
Accrued expenses | (7,740 | ) | 1,572 | ||||
Income taxes | (2,799 | ) | (12,993 | ) | |||
Other liabilities | 1,300 | (416 | ) | ||||
Amounts due under tax receivable agreement | (8,927 | ) | (7,924 | ) | |||
Net cash used for operating activities | (45,669 | ) | (80,873 | ) | |||
Cash flows from investing activities | |||||||
Purchases of property, equipment and capitalized software | (56,095 | ) | (45,016 | ) | |||
Purchases of available-for-sale securities | (355 | ) | (5,716 | ) | |||
Maturities of available-for-sale securities | 445 | 450 | |||||
Acquisitions and investment, net of cash | — | (1,089,280 | ) | ||||
Net cash used for investing activities | (56,005 | ) | (1,139,562 | ) | |||
Cash flows from financing activities | |||||||
Excess tax benefits from equity instrument share-based payment arrangements | — | 391 | |||||
Repurchase of share-based awards to satisfy tax withholdings | (9,420 | ) | (2,170 | ) | |||
Proceeds from stock option exercises | 595 | 284 | |||||
Net change in deposits | (29,052 | ) | 415,737 | ||||
Increase in borrowed federal funds | 28,462 | — | |||||
Net activity on other debt | 39,554 | 56,442 | |||||
Net borrowings on 2016 revolving credit facility | 143,597 | 96,100 | |||||
Borrowings on 2016 term loans | — | 1,643,000 | |||||
Repayments on 2016 term loans | (26,063 | ) | (8,688 | ) | |||
Net repayments on 2014 revolving credit facility | — | (205,549 | ) | ||||
Repayments on 2014 term loan | — | (458,750 | ) | ||||
Ticking fees paid | — | (22,171 | ) | ||||
Debt issuance costs | (438 | ) | (40,868 | ) | |||
Net change in securitized debt | 29,874 | (1,696 | ) | ||||
Net cash provided by financing activities | 177,109 | 1,472,062 | |||||
Effect of exchange rate changes on cash and cash equivalents | (15,247 | ) | 5,534 | ||||
Net change in cash and cash equivalents | 60,188 | 257,161 | |||||
Cash and cash equivalents, beginning of period | 190,930 | 279,989 | |||||
Cash and cash equivalents, end of period | $ | 251,118 | $ | 537,150 |
1. | Basis of Presentation |
2. | New Accounting Standards |
3. | Business Acquisition |
As Reported December 31, 2016 | Measurement Period Adjustments | As Reported, Final | |||||||||
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 | 6,352 | 41,344 | ||||||||
Other assets | — | 739 | 739 | ||||||||
Accounts payable | (153,777 | ) | 248 | (153,529 | ) | ||||||
Accrued expenses | (128,267 | ) | 9,361 | (118,906 | ) | ||||||
Deferred income tax liabilities | (91,194 | ) | 28,071 | (63,123 | ) | ||||||
Recorded goodwill (a) | $ | 728,890 | $ | (43,472 | ) | $ | 685,418 |
Remaining 2017 | $ | 21,344 | |
2018 | $ | 80,987 | |
2019 | $ | 74,548 | |
2020 | $ | 68,685 | |
2021 | $ | 60,654 | |
2022 | $ | 53,537 | |
Thereafter | $ | 427,408 |
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||
Total revenues | $ | 287,756 | $ | 799,039 | ||
Net earnings attributable to shareholders | $ | 27,973 | $ | 48,584 | ||
Net income attributable to shareholders per share: | ||||||
Basic | $ | 0.65 | $ | 1.14 | ||
Diluted | $ | 0.65 | $ | 1.13 |
4. | Accounts Receivable |
September 30, | |||||
Delinquency Status | 2017 | 2016 | |||
Current–29 days past due | 95 | % | 93 | % | |
Current–59 days past due | 97 | % | 97 | % |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Balance, beginning of year | $ | 20,092 | $ | 13,832 | |||
Provision for credit losses | 47,927 | 19,849 | |||||
Charges to other accounts | 12,221 | — | |||||
Charge-offs | (53,044 | ) | (24,825 | ) | |||
Recoveries of amounts previously charged-off | 5,085 | 4,980 | |||||
Currency translation | 431 | 151 | |||||
Balance, end of period | $ | 32,712 | $ | 13,987 |
5. | Earnings per Share |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net earnings attributable to shareholders | $ | 33,971 | $ | 19,696 | $ | 80,462 | $ | 55,350 | |||||||
Weighted average common shares outstanding – Basic | 43,014 | 42,788 | 42,963 | 40,126 | |||||||||||
Dilutive impact of share-based compensation awards | 87 | 83 | 129 | 73 | |||||||||||
Weighted average common shares outstanding – Diluted | 43,101 | 42,871 | 43,092 | 40,199 |
6. | Derivative Instruments |
Tranche A | Tranche B | Tranche C | |||
Notional amount at inception | $400,000 | $150,000 | $250,000 | ||
Amortization | 5% annually | N/A | N/A | ||
Maturity date | December 31, 2020 | December 31, 2020 | December 31, 2018 | ||
Fixed interest rate | 1.108% | 1.125% | 0.896% |
Aggregate Notional Amount | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Australian dollar | A$ | 10,000 | A$ | 10,000 |
Derivatives Not Designated as Hedging Instruments | Balance Sheet Location | September 30, 2017 | December 31, 2016 | |||||||
Interest rate swaps | Other assets | $ | 12,059 | $ | 12,908 |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) on Derivatives Recognized in Income | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Commodity contracts | Net realized and unrealized gain on fuel price derivatives | $ | — | $ | — | $ | — | $ | 711 | |||||||||
Interest rate swap agreements - unrealized portion | Net unrealized loss on interest rate swap agreements | $ | (150 | ) | $ | — | $ | (849 | ) | $ | — | |||||||
Interest rate swap agreements - realized portion | Financing interest income (expense) | $ | 377 | $ | — | $ | (243 | ) | $ | — |
7. | Financing and Other Debt |
September 30, 2017 | December 31, 2016 | ||||||
Revolving line of credit facility and term loans | $ | 33,514 | $ | 38,334 | |||
Notes outstanding 1 | $ | 3,915 | $ | 4,466 |
8. | Off-Balance Sheet Arrangements |
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 | September 30, 2017 | December 31, 2016 | ||||||
Assets | ||||||||
Municipal bonds | 2 | $ | 534 | $ | 682 | |||
Asset-backed securities | 2 | 395 | 648 | |||||
Mortgage-backed securities | 2 | 450 | 490 | |||||
Fixed-income mutual fund | 1 | 22,205 | 21,705 | |||||
Available-for-sale securities | $ | 23,584 | $ | 23,525 | ||||
Executive deferred compensation plan trust (a) | 1 | $ | 6,517 | $ | 5,673 | |||
Interest rate swaps (a) | 2 | $ | 12,059 | $ | 12,908 |
10. | Income Taxes |
11. | Commitments and Contingencies |
12. | Stock-Based Compensation |
Exercise price | $ | 99.69 | |
Expected stock price volatility | 31.14 | % | |
Risk-free interest rate | 2.18 | % | |
Weighted average fair value of performance options granted | $ | 28.69 |
March 20, 2017 | |||
Weighted average expected life (in years) | 6.0 | ||
Weighted average exercise price | $ | 104.95 | |
Weighted average volatility | 30.67 | % | |
Weighted average risk-free rate | 2.13 | % | |
Weighted average fair value | $ | 35.58 |
13. | Impairment and Restructuring Activities |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Balance, beginning of period | $ | 3,008 | $ | 7,085 | $ | 5,231 | $ | 7,249 | |||||||
Restructuring charges1 | 431 | 446 | 1,964 | 2,035 | |||||||||||
Cash paid | (656 | ) | (638 | ) | (3,492 | ) | (2,763 | ) | |||||||
Liability transfer to 2016 Restructuring Initiative | — | — | (1,158 | ) | — | ||||||||||
Impact of foreign currency translation | (22 | ) | 701 | 216 | 1,073 | ||||||||||
Balance, end of period | $ | 2,761 | $ | 7,594 | $ | 2,761 | $ | 7,594 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Balance, beginning of period | $ | 4,342 | $ | 3,488 | $ | 3,662 | $ | — | |||||||
Restructuring charges1 | 88 | — | 307 | 3,506 | |||||||||||
Reserve release | — | — | (533 | ) | — | ||||||||||
Cash paid | (1,778 | ) | (4 | ) | (2,265 | ) | (4 | ) | |||||||
Liability transfer from 2015 Restructuring Initiative | — | — | 1,158 | — | |||||||||||
Impact of foreign currency translation | 35 | 264 | 358 | 246 | |||||||||||
Balance, end of period | $ | 2,687 | $ | 3,748 | $ | 2,687 | $ | 3,748 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Balance, beginning of period | $ | 1,333 | $ | — | $ | 1,764 | $ | — | |||||||
Restructuring charges1 | 4,120 | 2,085 | 5,061 | 2,085 | |||||||||||
Cash paid | (937 | ) | (421 | ) | (2,416 | ) | (421 | ) | |||||||
Other | — | — | 107 | — | |||||||||||
Balance, end of period | $ | 4,516 | $ | 1,664 | $ | 4,516 | $ | 1,664 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Balance, beginning of period | $ | 8,683 | $ | 10,573 | $ | 10,657 | $ | 7,249 | |||||||
Restructuring charges | 4,639 | 2,531 | 7,332 | 7,626 | |||||||||||
Reserve release | — | — | (533 | ) | — | ||||||||||
Cash paid | (3,371 | ) | (1,063 | ) | (8,173 | ) | (3,188 | ) | |||||||
Other | — | — | 107 | — | |||||||||||
Impact of foreign currency translation | 13 | 965 | 574 | 1,319 | |||||||||||
Balance, end of period | $ | 9,964 | $ | 13,006 | $ | 9,964 | $ | 13,006 |
14. | 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. |
Fleet Solutions | Travel and Corporate Solutions | Health and Employee Benefit Solutions | Total | ||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||
Payment processing revenue | $ | 90,270 | $ | 44,177 | $ | 11,255 | $ | 145,702 | |||||||
Account servicing revenue | 44,858 | 206 | 26,258 | 71,322 | |||||||||||
Finance fee revenue | 40,773 | 87 | 10,019 | 50,879 | |||||||||||
Other revenue | 36,177 | 16,556 | 3,366 | 56,099 | |||||||||||
Total revenues | $ | 212,078 | $ | 61,026 | $ | 50,898 | $ | 324,002 | |||||||
Depreciation and amortization | $ | 37,172 | $ | 3,185 | $ | 10,872 | $ | 51,229 | |||||||
Adjusted operating income | $ | 74,782 | $ | 33,971 | $ | 11,509 | $ | 120,262 | |||||||
Three Months Ended September 30, 2016 | |||||||||||||||
Payment processing revenue | $ | 83,132 | $ | 52,551 | $ | 10,499 | $ | 146,182 | |||||||
Account servicing revenue | 37,414 | 242 | 21,159 | 58,815 | |||||||||||
Finance fee revenue | 33,230 | 115 | 2,793 | 36,138 | |||||||||||
Other revenue | 30,982 | 10,407 | 5,232 | 46,621 | |||||||||||
Total revenues | $ | 184,758 | $ | 63,315 | $ | 39,683 | $ | 287,756 | |||||||
Depreciation and amortization | $ | 35,172 | $ | 1,630 | $ | 9,206 | $ | 46,008 | |||||||
Adjusted operating income | $ | 68,987 | $ | 31,449 | $ | 10,053 | $ | 110,489 |
Fleet Solutions | Travel and Corporate Solutions | Health and Employee Benefit Solutions | Total | ||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||
Payment processing revenue | $ | 264,210 | $ | 119,328 | $ | 39,896 | $ | 423,434 | |||||||
Account servicing revenue | 122,238 | 528 | 75,772 | 198,538 | |||||||||||
Finance fee revenue | 113,754 | 469 | 22,113 | 136,336 | |||||||||||
Other revenue | 103,003 | 43,414 | 14,518 | 160,935 | |||||||||||
Total revenues | $ | 603,205 | $ | 163,739 | $ | 152,299 | $ | 919,243 | |||||||
Depreciation and amortization | $ | 109,610 | $ | 9,445 | $ | 31,373 | $ | 150,428 | |||||||
Adjusted operating income | $ | 214,421 | $ | 84,935 | $ | 41,897 | $ | 341,253 | |||||||
Nine Months Ended September 30, 2016 | |||||||||||||||
Payment processing revenue | $ | 216,133 | $ | 130,372 | $ | 36,814 | $ | 383,319 | |||||||
Account servicing revenue | 90,400 | 852 | 59,518 | 150,770 | |||||||||||
Finance fee revenue | 85,841 | 336 | 6,171 | 92,348 | |||||||||||
Other revenue | 57,417 | 30,235 | 13,532 | 101,184 | |||||||||||
Total revenues | $ | 449,791 | $ | 161,795 | $ | 116,035 | $ | 727,621 | |||||||
Depreciation and amortization | $ | 62,927 | $ | 3,007 | $ | 25,447 | $ | 91,381 | |||||||
Adjusted operating income | $ | 145,009 | $ | 74,639 | $ | 32,444 | $ | 252,092 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Fleet Solutions | $ | 944 | $ | 961 | $ | 2,764 | $ | 2,547 | |||||||
Travel and Corporate Solutions | 208 | 143 | 569 | 330 | |||||||||||
Health and Employee Benefit Solutions | 10,899 | 2,794 | 23,253 | 6,176 | |||||||||||
Total interest income | $ | 12,051 | $ | 3,898 | $ | 26,586 | $ | 9,053 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Fleet Solutions | $ | 74,782 | $ | 68,987 | $ | 214,421 | $ | 145,009 | |||||||
Travel and Corporate Solutions | 33,971 | 31,449 | 84,935 | 74,639 | |||||||||||
Health and Employee Benefit Solutions | 11,509 | 10,053 | 41,897 | 32,444 | |||||||||||
Adjusted operating income | $ | 120,262 | $ | 110,489 | $ | 341,253 | $ | 252,092 | |||||||
Acquisition-related intangible amortization | (38,510 | ) | (33,855 | ) | (114,603 | ) | (59,066 | ) | |||||||
Other acquisition and divestiture related items | (1,006 | ) | (13,100 | ) | (3,380 | ) | (19,694 | ) | |||||||
Stock-based compensation | (8,483 | ) | (5,199 | ) | (22,354 | ) | (14,312 | ) | |||||||
Restructuring and other costs | (6,024 | ) | (3,767 | ) | (10,169 | ) | (11,689 | ) | |||||||
Impairment charge | — | — | (16,175 | ) | — | ||||||||||
Debt restructuring | (2,516 | ) | — | (2,516 | ) | — | |||||||||
Operating income | $ | 63,723 | $ | 54,568 | $ | 172,056 | $ | 147,331 | |||||||
Financing interest expense | (25,754 | ) | (35,064 | ) | (81,449 | ) | (87,040 | ) | |||||||
Net foreign currency gain | 14,611 | 5,932 | 33,578 | 17,233 | |||||||||||
Net unrealized loss on interest rate swap agreements | (150 | ) | — | (849 | ) | — | |||||||||
Net realized and unrealized gain on fuel price derivatives | — | — | — | 711 | |||||||||||
Non-cash adjustments related to tax receivable agreement | — | (168 | ) | — | (168 | ) | |||||||||
Income before income taxes | $ | 52,430 | $ | 25,268 | $ | 123,336 | $ | 78,067 |
15. | 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 | |||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Total Capital to risk-weighted assets | $ | 326,773 | 13.12 | % | $ | 199,249 | 8.0 | % | $ | 249,061 | 10.0 | % | ||||||||
Tier 1 Capital to average assets | $ | 314,473 | 12.09 | % | $ | 104,004 | 4.0 | % | $ | 130,004 | 5.0 | % | ||||||||
Common equity to risk-weighted assets | $ | 314,473 | 12.63 | % | $ | 112,078 | 4.5 | % | $ | 161,890 | 6.5 | % | ||||||||
Tier 1 Capital to risk-weighted assets | $ | 314,473 | 12.63 | % | $ | 149,437 | 6.0 | % | $ | 199,250 | 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 | % |
16. | Subsequent Event |
• | Overview |
• | Summary |
• | Results of Operations |
• | Liquidity and Capital Resources |
• | Critical Accounting Policies and Estimates |
• | Recently Adopted Accounting Standards |
• | Average number of vehicles serviced increased 6 percent from the third quarter of 2016 to approximately 11.0 million for the third quarter of 2017, primarily related to growth in our worldwide customer base. |
• | Total fuel transactions processed increased 4 percent from the third quarter of 2016 to 132.0 million for the third quarter of 2017. Total payment processing transactions in our Fleet Solutions segment increased 7 percent to 110.0 million for the third quarter of 2017 as compared to the same period last year resulting primarily from organic growth and the impact of a large customer portfolio converting from an unfunded to fully funded relationship late in 2016. Transaction processing transactions decreased 9 percent to 22.0 million for the third quarter of 2017, as compared to the same period last year due to the portfolio conversion mentioned above. |
• | Average expenditure per payment processing transaction in our Fleet Solutions segment increased 9 percent to $69.87 for the third quarter of 2017, as compared to $64.05 in the same period last year, which was primarily driven by a relative increase in fuel price per gallon. The average U.S. fuel price per gallon during the third quarter of 2017 was $2.51, a 12 percent increase as compared to the same period last year. The average Australian fuel price per gallon during the third quarter of 2017 was $3.78, a 10 percent increase as compared to the same period last year. |
• | Credit loss expense in the Fleet Solutions segment was $19.3 million during the third quarter of 2017, as compared to $5.7 million in the same period last year. The increase in credit loss was primarily related to higher incidences of fraud as compared to the same period last year. Spend volume increased 17 percent in the third quarter of 2017, as compared to the same period last year and our credit losses were 23.5 basis points of fuel expenditures for the third quarter of 2017, as compared to 8.6 basis points of fuel expenditures in the same period last year. |
• | Travel and Corporate Solutions purchase volume grew by approximately $1.5 billion from the third quarter of 2016 to $8.7 billion for the third quarter of 2017, an increase of 21 percent, driven by worldwide organic growth, most notably in the U.S. and Europe. |
• | 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. During the third quarter of 2017, the USD weakened significantly against most of the major foreign currencies in which we transact, including the Australian dollar, Euro and the British pound. These currency movements resulted in a gain of $14.6 million for the third quarter of 2017, compared to a gain of $5.9 million in the same period last year. |
• | Financing interest expense was $25.8 million for the third quarter of 2017, as compared to $35.1 million in the same period last year due to lower relative debt restructuring costs and lower effective interest rates paid on our 2016 credit facility as a result of a July 2017 repricing. |
• | Our effective tax rate was 35.4 percent for the third quarter of 2017 as compared to 24.0 percent in the same period last year. The increase in our effective tax rate was primarily due to the absence of several discrete tax benefits including a decrease in valuation allowance recorded during the third quarter of 2016. 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. |
(in thousands, except per transaction and per gallon data) | Three Months Ended September 30, | Increase (Decrease) | Nine Months Ended September 30, | Increase (Decrease) | |||||||||||||||||||||||||
2017 | 2016 | Amount | Percent | 2017 | 2016 | Amount | Percent | ||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Payment processing revenue | $ | 90,270 | $ | 83,132 | $ | 7,138 | 9 | % | $ | 264,210 | $ | 216,133 | $ | 48,077 | 22 | % | |||||||||||||
Account servicing revenue | 44,858 | 37,414 | 7,444 | 20 | 122,238 | 90,400 | 31,838 | 35 | |||||||||||||||||||||
Finance fee revenue | 40,773 | 33,230 | 7,543 | 23 | 113,754 | 85,841 | 27,913 | 33 | |||||||||||||||||||||
Other revenue | 36,177 | 30,982 | 5,195 | 17 | 103,003 | 57,417 | 45,586 | 79 | |||||||||||||||||||||
Total revenues | 212,078 | 184,758 | 27,320 | 15 | 603,205 | 449,791 | 153,414 | 34 | |||||||||||||||||||||
Total operating expenses | 182,964 | 162,442 | 20,522 | 13 | 525,001 | 385,741 | 139,260 | 36 | |||||||||||||||||||||
Operating income | $ | 29,114 | $ | 22,316 | $ | 6,798 | 30 | % | $ | 78,204 | $ | 64,050 | $ | 14,154 | 22 | % | |||||||||||||
Key operating statistics | |||||||||||||||||||||||||||||
Payment processing revenue: | |||||||||||||||||||||||||||||
Payment processing transactions | 110,047 | 102,947 | 7,100 | 7 | % | 320,946 | 286,199 | 34,747 | 12 | % | |||||||||||||||||||
Average expenditure per payment processing transaction | $ | 69.87 | $ | 64.05 | $ | 5.82 | 9 | % | $ | 69.07 | $ | 56.48 | $ | 12.59 | 22 | % | |||||||||||||
Average price per gallon of fuel: | |||||||||||||||||||||||||||||
Domestic – ($/gal) | $ | 2.51 | $ | 2.24 | $ | 0.27 | 12 | % | $ | 2.44 | $ | 2.18 | $ | 0.26 | 12 | % | |||||||||||||
Australia – ($/gal) | $ | 3.78 | $ | 3.45 | $ | 0.33 | 10 | % | $ | 3.73 | $ | 3.28 | $ | 0.45 | 14 | % | |||||||||||||
Account servicing revenue: | |||||||||||||||||||||||||||||
Average number of vehicles serviced | 11,000 | 10,337 | 663 | 6 | % | 10,808 | 9,832 | 976 | 10 | % |
(in thousands) | Three Months Ended September 30, | Increase (Decrease) | Nine Months Ended September 30, | Increase (Decrease) | |||||||||||||||||||||||||
2017 | 2016 | Amount | Percent | 2017 | 2016 | Amount | Percent | ||||||||||||||||||||||
Late fee revenue | $ | 32,077 | $ | 27,078 | $ | 4,999 | 18 | % | $ | 90,253 | $ | 70,569 | $ | 19,684 | 28 | % | |||||||||||||
Factoring fee revenue | 7,580 | 5,204 | 2,376 | 46 | 19,869 | 13,920 | 5,949 | 43 | |||||||||||||||||||||
Cardholder interest income | 199 | 158 | 41 | 26 | 368 | 496 | (128 | ) | (26 | ) | |||||||||||||||||||
Other finance fee revenue | 917 | 790 | 127 | 16 | 3,264 | 856 | 2,408 | 281 | |||||||||||||||||||||
Finance fee revenue | $ | 40,773 | $ | 33,230 | $ | 7,543 | 23 | % | $ | 113,754 | $ | 85,841 | $ | 27,913 | 33 | % |
Three Months Ended September 30, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 66,919 | $ | 54,667 | $ | 12,252 | 22 | % | ||||||
Restructuring | $ | 4,639 | $ | 2,531 | $ | 2,108 | 83 | % | ||||||
Service fees | $ | 19,218 | $ | 32,431 | $ | (13,213 | ) | (41 | )% | |||||
Provision for credit losses | $ | 19,277 | $ | 5,686 | $ | 13,591 | 239 | % | ||||||
Technology leasing and support | $ | 9,704 | $ | 7,756 | $ | 1,948 | 25 | % | ||||||
Depreciation and amortization | $ | 37,172 | $ | 35,172 | $ | 2,000 | 6 | % | ||||||
Operating interest expense | $ | 2,294 | $ | 1,066 | $ | 1,228 | 115 | % |
Nine Months Ended September 30, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 187,849 | $ | 144,295 | $ | 43,554 | 30 | % | ||||||
Restructuring | $ | 6,799 | $ | 7,626 | $ | (827 | ) | (11 | )% | |||||
Service fees | $ | 54,752 | $ | 73,967 | $ | (19,215 | ) | (26 | )% | |||||
Provision for credit losses | $ | 46,999 | $ | 15,042 | $ | 31,957 | 212 | % | ||||||
Technology leasing and support | $ | 26,833 | $ | 20,671 | $ | 6,162 | 30 | % | ||||||
Depreciation and amortization | $ | 109,610 | $ | 62,927 | $ | 46,683 | 74 | % | ||||||
Operating interest expense | $ | 5,689 | $ | 1,867 | $ | 3,822 | 205 | % | ||||||
Impairment charge | $ | 16,175 | $ | — | $ | 16,175 | NM | |||||||
All other expenses1 | $ | 70,295 | $ | 59,346 | $ | 10,949 | 18 | % |
Three Months Ended September 30, | Increase (Decrease) | Nine Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||||||
(in thousands, except payment solutions purchase volume in millions) | 2017 | 2016 | Amount | Percent | 2017 | 2016 | Amount | Percent | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Payment processing revenue | $ | 44,177 | $ | 52,551 | $ | (8,374 | ) | (16 | )% | $ | 119,328 | $ | 130,372 | $ | (11,044 | ) | (8 | )% | |||||||||||
Account servicing revenue | 206 | 242 | (36 | ) | (15 | ) | 528 | 852 | (324 | ) | (38 | ) | |||||||||||||||||
Finance fee revenue | 87 | 115 | (28 | ) | (24 | ) | 469 | 336 | 133 | 40 | |||||||||||||||||||
Other revenue | 16,556 | 10,407 | 6,149 | 59 | 43,414 | 30,235 | 13,179 | 44 | |||||||||||||||||||||
Total revenues | 61,026 | 63,315 | (2,289 | ) | (4 | ) | 163,739 | 161,795 | 1,944 | 1 | |||||||||||||||||||
Total operating expenses | 29,785 | 33,134 | (3,349 | ) | (10 | ) | 87,090 | 88,984 | (1,894 | ) | (2 | ) | |||||||||||||||||
Operating income | $ | 31,241 | $ | 30,181 | $ | 1,060 | 4 | % | $ | 76,649 | $ | 72,811 | $ | 3,838 | 5 | % | |||||||||||||
Key operating statistics | |||||||||||||||||||||||||||||
Payment processing revenue: | |||||||||||||||||||||||||||||
Payment solutions purchase volume | $ | 8,663 | $ | 7,139 | $ | 1,524 | 21 | % | $ | 22,939 | $ | 17,613 | $ | 5,326 | 30 | % |
Three Months Ended September 30, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 6,350 | $ | 6,027 | $ | 323 | 5 | % | ||||||
Service fees | $ | 15,115 | $ | 15,751 | $ | (636 | ) | (4 | )% | |||||
Provision for credit losses | $ | (575 | ) | $ | 3,552 | $ | (4,127 | ) | (116 | )% | ||||
Technology leasing and support & occupancy and equipment | $ | 2,640 | $ | 4,197 | $ | (1,557 | ) | (37 | )% | |||||
Depreciation and amortization | $ | 3,185 | $ | 1,630 | $ | 1,555 | 95 | % | ||||||
Operating interest expense | $ | 2,377 | $ | 840 | $ | 1,537 | 183 | % |
Nine Months Ended September 30, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 18,858 | $ | 16,627 | $ | 2,231 | 13 | % | ||||||
Service fees | $ | 40,781 | $ | 48,090 | $ | (7,309 | ) | (15 | )% | |||||
Provision for credit losses | $ | (732 | ) | $ | 4,488 | $ | (5,220 | ) | (116 | )% | ||||
Technology leasing and support & occupancy and equipment | $ | 10,229 | $ | 11,534 | $ | (1,305 | ) | (11 | )% | |||||
Depreciation and amortization | $ | 9,445 | $ | 3,007 | $ | 6,438 | 214 | % | ||||||
Operating interest expense | $ | 6,016 | $ | 2,003 | $ | 4,013 | 200 | % |
Three Months Ended September 30, | Increase (Decrease) | Nine Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||||||
(in thousands, except purchase volume in millions) | 2017 | 2016 | Amount | Percent | 2017 | 2016 | Amount | Percent | |||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Payment processing revenue | $ | 11,255 | $ | 10,499 | $ | 756 | 7 | % | $ | 39,896 | $ | 36,814 | $ | 3,082 | 8 | % | |||||||||||||
Account servicing revenue | 26,258 | 21,159 | 5,099 | 24 | 75,772 | 59,518 | 16,254 | 27 | |||||||||||||||||||||
Finance fee revenue | 10,019 | 2,793 | 7,226 | 259 | 22,113 | 6,171 | 15,942 | 258 | |||||||||||||||||||||
Other revenue | 3,366 | 5,232 | (1,866 | ) | (36 | ) | 14,518 | 13,532 | 986 | 7 | |||||||||||||||||||
Total revenues | 50,898 | 39,683 | 11,215 | 28 | 152,299 | 116,035 | 36,264 | 31 | |||||||||||||||||||||
Total operating expenses | 47,530 | 37,612 | 9,918 | 26 | 135,096 | 105,565 | 29,531 | 28 | |||||||||||||||||||||
Operating income | $ | 3,368 | $ | 2,071 | $ | 1,297 | 63 | % | $ | 17,203 | $ | 10,470 | $ | 6,733 | 64 | % | |||||||||||||
Purchase volume | $ | 956 | $ | 876 | $ | 80 | 9 | % | $ | 3,430 | $ | 3,020 | $ | 410 | 14 | % |
Three Months Ended September 30, | Increase (Decrease) | |||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | ||||||||||
Expenses | ||||||||||||||
Salary and other personnel | $ | 19,052 | $ | 16,012 | $ | 3,040 | 19 | % | ||||||
Service fees | $ | 6,871 | $ | 5,233 | $ | 1,638 | 31 | % | ||||||
Depreciation and amortization | $ | 10,872 | $ | 9,206 | $ | 1,666 | 18 | % | ||||||
Operating interest | $ | 2,710 | $ | 693 | $ | 2,017 | 291 | % | ||||||
All other expenses | $ | 8,025 | $ | 6,468 | $ | 1,557 | 24 | % |
Nine Months Ended September 30, | Increase (Decrease) | ||||||||||||||
(in thousands) | 2017 | 2016 | Amount | Percent | |||||||||||
Expenses | |||||||||||||||
Salary and other personnel | $ | 55,010 | $ | 45,856 | $ | 9,154 | 20 | % | |||||||
Service fees | $ | 19,772 | $ | 14,041 | $ | 5,731 | 41 | % | |||||||
Depreciation and amortization | $ | 31,373 | $ | 25,447 | $ | 5,926 | 23 | % | |||||||
Operating interest | $ | 4,988 | $ | 1,620 | $ | 3,368 | 208 | % | |||||||
All other expenses | $ | 23,953 | $ | 18,601 | $ | 5,352 | 29 | % |
• | 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 and nine months ended September 30, 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 include 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. |
• | Impairment charge represents a non-cash asset write-off related to our strategic decision to in-source certain technology functions. This charge does not reflect recurring costs that would be relevant to the Company's continuing operations. The Company believes that excluding this nonrecurring expense facilitates the comparison of our financial results to the Company's historical operating results and to other companies in its industry. |
• | Debt restructuring and debt issuance cost amortization are non-cash items that are unrelated to the continuing operations of the Company. Debt restructuring costs 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. In addition, since debt issuance cost amortization is dependent upon the financing method which can vary widely company to company, we |
• | 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 September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net earnings attributable to shareholders | $ | 33,971 | $ | 19,696 | $ | 80,462 | $ | 55,350 | |||||||
Unrealized losses on derivative instruments | 150 | — | 849 | 5,007 | |||||||||||
Net foreign currency remeasurement gain | (14,611 | ) | (5,932 | ) | (33,578 | ) | (17,233 | ) | |||||||
Non-cash adjustments related to tax receivable agreement | — | 168 | — | 168 | |||||||||||
Acquisition-related ticking fees | — | — | — | 30,045 | |||||||||||
Acquisition-related intangible amortization | 38,510 | 33,855 | 114,603 | 59,066 | |||||||||||
Other acquisition and divestiture related items | 1,006 | 13,100 | 3,380 | 19,694 | |||||||||||
Stock-based compensation | 8,483 | 5,199 | 22,354 | 14,312 | |||||||||||
Restructuring and other costs | 6,024 | 3,767 | 10,169 | 11,689 | |||||||||||
Impairment charge | — | — | 16,175 | — | |||||||||||
Debt restructuring and debt issuance cost amortization | 4,287 | 9,106 | 8,450 | 10,649 | |||||||||||
ANI adjustments attributable to non-controlling interest | (207 | ) | (339 | ) | (1,162 | ) | (1,200 | ) | |||||||
Tax related items | (16,130 | ) | (25,214 | ) | (53,131 | ) | (53,505 | ) | |||||||
Adjusted net income attributable to shareholders | $ | 61,483 | $ | 53,406 | $ | 168,571 | $ | 134,042 |
(in thousands) | Nine Months Ended September 30, | ||||||
Net cash (used for) provided by: | 2017 | 2016 | |||||
Operating activities | $ | (45,669 | ) | $ | (80,873 | ) | |
Investing activities | $ | (56,005 | ) | $ | (1,139,562 | ) | |
Financing activities | $ | 177,109 | $ | 1,472,062 |
Exhibit No. | Description | ||
3.1 | |||
3.2 | |||
3.3 | |||
* | 10.1 | ||
10.2 | |||
* | 31.1 | ||
* | 31.2 | ||
* | 32.1 | ||
* | 32.2 | ||
* | 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. |
WEX INC. | |||
November 8, 2017 | By: | /s/ Roberto Simon | |
Roberto Simon | |||
Chief Financial Officer | |||
(principal financial officer and principal accounting officer) |
Annual Chairman Cash Retainer | $ | 120,000 |
Annual Lead Director Cash Retainer | $ | 85,000 |
Annual Director Cash Retainer (other than Lead Director and Chairman) | $ | 70,000 |
Audit Committee Chair Cash Retainer | $ | 30,000 |
Compensation Committee Chair Cash Retainer | $ | 20,000 |
Technology Committee Chair Cash Retainer | $ | 20,000 |
Finance Committee Chair Cash Retainer | $ | 20,000 |
Governance Committee Chair Cash Retainer | $ | 15,000 |
Finance Committee Member Cash Retainer (other than Committee Chair) | $ | 10,000 |
Audit Committee Member Cash Retainer (other than Committee Chair) | $ | 15,000 |
Compensation Committee Member Cash Retainer (other than Committee Chair) | $ | 10,000 |
Technology Committee Member Cash Retainer (other than Committee Chair) | $ | 10,000 |
Governance Committee Member Cash Retainer (other than Committee Chair) | $ | 7,500 |
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 |
November 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) |
November 8, 2017 |
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 31, 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 | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 42,909,927 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, reserve for credit losses | $ 32,712 | $ 20,092 |
Property, equipment and capitalized software, accumulated depreciation | 264,098 | 228,336 |
Accumulated amortization of intangible assets | $ 375,004 | $ 254,142 |
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) | 47,349,000 | 47,173,000 |
Common stock, shares outstanding (in shares) | 42,921,000 | 42,841,000 |
Treasury stock, shares (in shares) | 4,428,000 | 4,428,000 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Revenues | ||||
Payment processing revenue | $ 145,702 | $ 146,182 | $ 423,434 | $ 383,319 |
Account servicing revenue | 71,322 | 58,815 | 198,538 | 150,770 |
Finance fee revenue | 50,879 | 36,138 | 136,336 | 92,348 |
Other revenue | 56,099 | 46,621 | 160,935 | 101,184 |
Total revenues | 324,002 | 287,756 | 919,243 | 727,621 |
Expenses | ||||
Salary and other personnel | 92,321 | 76,706 | 261,717 | 206,778 |
Restructuring | 4,639 | 2,531 | 6,799 | 7,626 |
Service fees | 41,205 | 53,415 | 115,306 | 136,098 |
Provision for credit losses | 19,614 | 9,489 | 47,927 | 19,849 |
Technology leasing and support | 13,628 | 12,517 | 40,245 | 34,525 |
Occupancy and equipment | 6,526 | 7,271 | 19,352 | 19,096 |
Depreciation and amortization | 51,229 | 46,008 | 150,428 | 91,381 |
Operating interest expense | 7,382 | 2,599 | 16,694 | 5,490 |
Cost of hardware and equipment sold | 1,066 | 859 | 3,193 | 2,429 |
Impairment charge | 0 | 0 | 16,175 | 0 |
Other expenses | 22,669 | 21,793 | 69,351 | 57,018 |
Total operating expenses | 260,279 | 233,188 | 747,187 | 580,290 |
Operating income | 63,723 | 54,568 | 172,056 | 147,331 |
Financing interest expense | (25,754) | (35,064) | (81,449) | (87,040) |
Net foreign currency gain | 14,611 | 5,932 | 33,578 | 17,233 |
Net unrealized loss on interest rate swap agreements | (150) | 0 | (849) | 0 |
Net realized and unrealized gain on fuel price derivatives | 0 | 0 | 0 | 711 |
Non-cash adjustments related to tax receivable agreement | 0 | (168) | 0 | (168) |
Operating income | 52,430 | 25,268 | 123,336 | 78,067 |
Income taxes | 18,570 | 6,065 | 43,760 | 23,730 |
Net income | 33,860 | 19,203 | 79,576 | 54,337 |
Less: Net loss from non-controlling interest | (111) | (493) | (886) | (1,013) |
Net earnings attributable to shareholders | $ 33,971 | $ 19,696 | $ 80,462 | $ 55,350 |
Net earnings attributable to WEX Inc. per share: | ||||
Basic (in dollars per share) | $ 0.79 | $ 0.46 | $ 1.87 | $ 1.38 |
Diluted (in dollars per share) | $ 0.79 | $ 0.46 | $ 1.87 | $ 1.38 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 43,014 | 42,788 | 42,963 | 40,126 |
Diluted (in shares) | 43,101 | 42,871 | 43,092 | 40,199 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 33,860 | $ 19,203 | $ 79,576 | $ 54,337 |
Changes in available-for-sale securities, net of tax (benefit) expense of $(10) and $(37) for the three months ended September 30, 2017 and 2016 and $53 and $123 for the nine months ended September 30, 2017 and 2016, respectively | (12) | (62) | 97 | 209 |
Foreign currency translation | 11,042 | 1,549 | 33,744 | 709 |
Comprehensive income | 44,890 | 20,690 | 113,417 | 55,255 |
Less: Comprehensive gain (loss) attributable to non-controlling interest | 122 | (438) | (112) | (823) |
Comprehensive income attributable to WEX Inc. | $ 44,768 | $ 21,128 | $ 113,529 | $ 56,078 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Changes in available-for-sale securities, tax effect | $ (10) | $ (37) | $ 53 | $ 123 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Stockholders' Equity [Abstract] | ||
Changes in available-for-sale securities, tax effect | $ 53 | $ 123 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Cash flows from operating activities | ||
Net income | $ 79,576 | $ 54,337 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Net unrealized loss (gain) | 6,411 | (17,402) |
Stock-based compensation | 22,354 | 14,312 |
Depreciation and amortization | 150,428 | 91,381 |
Ticking fees expensed | 0 | 30,045 |
Debt restructuring and debt issuance cost amortization | 5,935 | 10,649 |
Provision for deferred taxes | 29,924 | 15,668 |
Provision for credit losses | 47,927 | 19,849 |
Impairment charge | 16,175 | 0 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (595,804) | (405,616) |
Other assets | (18,713) | (44,051) |
Accounts payable | 228,284 | 169,716 |
Accrued expenses | (7,740) | 1,572 |
Income taxes | (2,799) | (12,993) |
Other liabilities | 1,300 | (416) |
Amounts due under tax receivable agreement | (8,927) | (7,924) |
Net cash used for operating activities | (45,669) | (80,873) |
Cash flows from investing activities | ||
Purchases of property, equipment and capitalized software | (56,095) | (45,016) |
Purchases of available-for-sale securities | (355) | (5,716) |
Maturities of available-for-sale securities | 445 | 450 |
Acquisitions and investment, net of cash | 0 | (1,089,280) |
Net cash used for investing activities | (56,005) | (1,139,562) |
Cash flows from financing activities | ||
Excess tax benefits from equity instrument share-based payment arrangements | 0 | 391 |
Repurchase of share-based awards to satisfy tax withholdings | (9,420) | (2,170) |
Proceeds from stock option exercises | 595 | 284 |
Net change in deposits | (29,052) | 415,737 |
Increase in borrowed federal funds | 28,462 | 0 |
Net activity on other debt | 39,554 | 56,442 |
Ticking fees paid | 0 | (22,171) |
Debt issuance costs | (438) | (40,868) |
Net change in securitized debt | 29,874 | (1,696) |
Net cash provided by financing activities | 177,109 | 1,472,062 |
Effect of exchange rate changes on cash and cash equivalents | (15,247) | 5,534 |
Net change in cash and cash equivalents | 60,188 | 257,161 |
Cash and cash equivalents, beginning of period | 190,930 | 279,989 |
Cash and cash equivalents, end of period | 251,118 | 537,150 |
2016 Credit Agreement | ||
Cash flows from financing activities | ||
Proceeds from (repayments of) lines of credit | 143,597 | 96,100 |
Borrowings on 2016 term loans | 0 | 1,643,000 |
Repayments on term loans | (26,063) | (8,688) |
2014 Credit Agreement | ||
Cash flows from financing activities | ||
Proceeds from (repayments of) lines of credit | 0 | (205,549) |
Repayments on term loans | $ 0 | $ (458,750) |
Basis of Presentation |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 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 and nine months ended September 30, 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. |
New Accounting Standards |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||
Accounting Changes and Error Corrections [Abstract] | |||||||
New Accounting Standards |
Adopted During the Nine Months Ended September 30, 2017 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 required prospective recognition of all the tax effects related to share-based payments in the income statement. The impact of adoption was recorded as a cumulative effect adjustment to Retained earnings of approximately $300. For the nine months ended September 30, 2017, the Company recognized approximately $1,600 of excess tax benefits within our income tax provision, which would have been recognized in additional paid-in-capital under previous guidance. For the three months ended September 30, 2017, the amount of excess tax benefits recognized was not material. The Company has elected to prospectively classify these excess tax benefits as cash flows from operating activities effective January 1, 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 has not impacted the Company's minimum statutory tax withholding practices. In May 2017, the FASB issued ASU 2017-09, which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. Under the new guidance, an entity will not apply modification accounting to a share-based payment award if there is no change to the award’s fair value, vesting conditions and classification as an equity or liability instrument. The guidance is effective prospectively for all companies for annual periods beginning on or after December 15, 2017. The Company elected to early adopt this ASU and such adoption has not impacted the Company's consolidated financial statements and related disclosures. Not Yet Adopted 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. The Company will adopt this standard 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 will adopt the standard using the modified retrospective method. 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. In addition, fees associated with cardholder arrangements are outside the scope of Topic 606. As a result of further internal analysis, management now estimates approximately 25 percent of consolidated revenues for the period ended December 31, 2016 are outside the scope of 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, will not be significantly impacted by the new standard. Management estimates approximately 70 percent of consolidated revenues for the period ended December 31, 2016 will remain substantially unchanged under the new standard. 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 expensed were approximately $20,000 for the year ended December 31, 2016. The Company currently anticipates that the treatment of over 90 percent of commission expenses will remain unchanged and will continue to be expensed. The Company is currently in the process of implementing changes to its accounting policies, business processes and internal controls to support the recognition, measurement and disclosure requirements under the new standard. |
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 enabled 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 NYSE. 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 obtained information to determine the fair values of certain assets acquired and liabilities assumed throughout the one year measurement period and recorded adjustments to the assets acquired and liabilities assumed, 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 has determined that approximately $557,000 of the goodwill recognized in this business combination will be deductible for income tax purposes. The following represents the components and final allocation of the purchase price:
(a)$1,235,331 in goodwill and other intangible assets recorded from this business combination were allocated to our Fleet Solutions segment; the remaining $337,307 was 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 September 30, 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 the Company's 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, $11,903 and $18,497 in transaction costs, which are directly attributable to the acquisition, have been excluded from pro forma results for the three and nine months ended September 30, 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 $46,957 and $135,578 and net loss before taxes of approximately $8,058 and $28,070 for the three and nine months ended September 30, 2017, respectively, to the Company's unaudited condensed consolidated statements of income. The following represents unaudited pro forma operational results as if the acquisition had occurred January 1, 2015:
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Accounts Receivable |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable |
Payment Terms 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 $11,200 and $3,400 in receivables with revolving credit balances as of September 30, 2017 and December 31, 2016, respectively. Concentration of Credit Risk The receivables portfolio consists of a large group of homogeneous smaller balances from customers across a wide range of industries, which are collectively evaluated for impairment. No one customer constitutes more than 10 percent of the outstanding receivables balance at September 30, 2017. One customer represented 11 percent of the outstanding receivables balance at December 31, 2016. The following table presents the delinquency status as a percentage of total trade accounts receivable:
Reserves for Accounts Receivable 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. The following table presents changes in reserves for accounts receivable:
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Earnings per Share |
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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 table summarizes net earnings attributable to shareholders and reconciles basic and diluted shares outstanding used in the earnings per share computations:
For the three and nine months ended September 30, 2017 and September 30, 2016, an immaterial number of outstanding share-based awards 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 the Company's 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 the variability of the future interest payments associated with a portion of the Company's borrowings. The terms of the interest rate swap agreements are as follows:
See Note 9, Fair Value for more information regarding the valuation of the Company's 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. The Company will continue to monitor its 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 three and nine months ended September 30, 2017 and September 30, 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 asset 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 unaudited condensed consolidated statements of income. The following table presents information on the amounts of derivative gains and losses and the locations in the unaudited condensed consolidated statements of income:
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Financing and Other Debt |
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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 September 30, 2017, the Company had $149,423 of borrowings against its $470,000 secured revolving credit facility, or approximately $320,000 of availability under the 2016 Credit Agreement, subject to the covenants as described below. The outstanding amortizing term loans under the 2016 Credit Agreement totaled $1,611,563 at September 30, 2017. As of September 30, 2017 and December 31, 2016, amounts outstanding under the 2016 Credit Agreement bore a weighted average effective interest rate of 3.9 percent and 4.2 percent, respectively. As of both September 30, 2017 and December 31, 2016, the Company has posted approximately $13,000 in letters of credit as collateral for lease agreements and virtual card and fuel payment processing activity at its foreign subsidiaries. Effective July 3, 2017, the Company repriced the secured term loans under the 2016 Credit Agreement (the "2016 First Amendment"), which reduced the applicable interest rate margin at current borrowing levels for both LIBOR borrowings and base rate borrowings for the Company's tranche A term loans and tranche B term loans. The applicable interest rate margin for the tranche A term loans will continue to be determined based on the Company's consolidated leverage ratio, with the interest rate margin initially set at 2.75% for LIBOR borrowings, and 1.75% for base rate borrowings. The applicable interest rate margin for the tranche B term loans will no longer be determined based on the Company's consolidated leverage ratio and will instead be set at 2.75% for LIBOR borrowings, and 1.75% for base rate borrowings. The consolidated leverage ratio as defined in the 2016 Credit Agreement (i.e. consolidated funded indebtedness less up to $350,000 in permitted securitization transactions of the Company and its subsidiaries to consolidated EBITDA) was also modified for purposes of calculating the interest rate margin for tranche A term loans and revolving loans and determining compliance with the financial covenant by allowing the Company to exclude up to $75 million of certain corporate cash balances for purposes of determining consolidated funded indebtedness. After giving effect to the terms of the 2016 First Amendment, amounts outstanding under the 2016 Credit Agreement were repriced to 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 September 30, 2017) with respect to the revolving credit facility, between 1.75% to 2.75% (2.25% at September 30, 2017) with respect to the tranche A term loan facility, which represents a reduction of 50 basis points and 2.75% with respect to the tranche B term loan facility, which represents a reduction of 75 basis points (with the Eurocurrency Rate subject to a 0.0% floor), in each case, based on the consolidated leverage ratio 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 September 30, 2017) with respect to the revolving credit facility, 0.75% to 1.75% (1.25% at September 30, 2017) with respect to the tranche A term loan facility and 1.75% with respect to the tranche B term loan facility, with the margin determined in the case of the revolving credit facility and the tranche A term loan facility based on the consolidated leverage ratio. In November 2016, the Company entered into three interest rate swap agreements to manage the interest rate risk associated with its 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 September 30, 2017) based on the consolidated leverage ratio 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%. As the debt repricings under the 2016 First Amendment were not considered substantially different, the Company applied modification accounting and no gain or loss was recognized as a result of the debt modification. Amounts paid as part of this repricing were not material. On October 30, 2017, the Company added $100,000 of capacity under our secured revolving credit facility. See Note 16, Subsequent Event, for further discussion. Debt Covenants As more fully described in the Company's 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 its 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 September 30, 2017, the Company was in compliance with all material covenants of its 2016 Credit Agreement and the Indenture. Borrowed Federal Funds WEX Bank borrows from lines of credit on a federal funds rate basis to supplement the financing of its accounts receivable. The Company's federal funds available lines of credit were $246,500 and $250,000, with approximately $28,500 and $0 outstanding as of September 30, 2017 and December 31, 2016, respectively. Other Debt WEX Brazil Debt WEX Brazil had debt of approximately $11,743 and $30,755 as of September 30, 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 interest rate was 21.4 percent and 19.7 percent as of September 30, 2017 and December 31, 2016, respectively. This debt is recorded 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. During the nine months ended September 30, 2017, the Company increased the funding capacity by $90,000 to $185,000. Associated borrowings carry a variable interest rate of 1 month to 3 month LIBOR plus a margin of 225 basis points. The balance of the debt was approximately $154,521 and $95,000 at September 30, 2017 and December 31, 2016, respectively, and was secured by an interest in the underlying customer receivables. The balance will fluctuate on a daily basis based on customer funding needs. The balance will mature in amounts of $85,000 and $50,000 on May 30, 2018 and December 31, 2021, respectively, with the remaining $19,521 maturing on demand. This debt is recorded in Other debt on the Company’s unaudited condensed consolidated balance sheets for the periods presented. WEX Brazil Securitization Facility During the second quarter of 2017, WEX Brazil entered into a securitized debt agreement to sell certain unsecured receivables associated with our salary payment card product to an investment fund managed by an unrelated third-party financial institution. Under the terms of the agreement, the investment fund's purchase price incorporates a discount relative to the face value of the transferred receivables. Additionally, the investment fund compensates WEX Brazil for continuing to service these receivables through their duration, which on average is less than six months. This securitization arrangement does not meet the derecognition conditions and accordingly WEX Brazil continues to report the transferred receivables in our unaudited condensed consolidated balance sheet with no change in the basis of accounting. Additionally, we recognize the cash proceeds received from the investment fund and record offsetting securitized debt in our unaudited condensed consolidated balance sheet. During the third quarter of 2017, WEX Brazil transferred approximately $31,200 of receivables to the investment fund for cash proceeds of approximately $27,700. This $3,500 discount is recognized as operating interest in the Company's unaudited condensed consolidated statements of income using the effective interest method over the weighted average term of the salary advances. The Company received approximately $2,000 of servicing fee income upon the sale of these receivables, which is recognized as other revenue in our unaudited condensed consolidated statements of income on a straight-line basis over the anticipated loan servicing period. As of September 30, 2017, the Company recognized approximately $20,000 of both transferred receivables and securitized debt on our unaudited condensed consolidated balance sheet. Australian Securitization Facility During the second quarter of 2017, the Company extended an existing securitized debt agreement with the Bank of Tokyo-Mitsubishi UFJ, Ltd through April 2018. 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 2.70 percent and 2.65 percent as of September 30, 2017 and December 31, 2016, respectively. The Company had $83,100 and $78,600 of securitized debt under this facility as of September 30, 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 0.42 percent and 0.95 percent as of September 30, 2017 and December 31, 2016, respectively. The Company had $18,800 and $5,700 of securitized debt under this facility as of September 30, 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:
1 See Note 9, Fair Value for more information regarding the Company's Notes outstanding. |
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 that 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 the three or nine months ended September 30, 2017 or September 30, 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 inputs are classified as 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 valued using Level 2 inputs. 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 Swaps 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 swaps and the implied floating payments using the current LIBOR curve, which are Level 2 inputs of the fair value hierarchy. $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 February 1, 2023, with interest payable semiannually. The Notes outstanding have a fair value of $411,500 and $390,000 as of September 30, 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 Agreement 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 both September 30, 2017 and December 31, 2016, the carrying value of the 2016 Credit Agreement approximated its fair value. |
Off-Balance Sheet Arrangements |
9 Months Ended | ||||||
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Sep. 30, 2017 | |||||||
Receivables [Abstract] | |||||||
Off-Balance Sheet Arrangements |
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. We obtained a true sale opinion from an independent attorney, which states that the factoring agreement creates a sale of receivables under local law for amounts transferred both below and above the established credit limits. Additionally, there are no indications of the Company's continuing involvement in the factored receivables. As a result, the Purchasing Bank is deemed the purchaser of these receivables and is entitled to enforce payment of these amounts from the debtor. 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 provided by operating activities. The Company sold approximately $170,000 and $394,000 of receivables under this arrangement during the three and nine months ended September 30, 2017, respectively. Proceeds received are recorded net of applicable expenses, interest and commissions. This resulted in a loss on factoring of $1,150 and $2,600 for the three and nine months ended September 30, 2017, respectively, which was recorded in Other expenses in the unaudited condensed consolidated statement of income. As of September 30, 2017, the Company had associated factoring receivables of approximately $54,000, of which approximately $3,600 were in excess of the established credit limit. Charge-backs on balances in excess of the credit limit during the three and nine months ended September 30, 2017 were insignificant. Brazil Accounts Receivable Factoring During the first quarter of 2017, WEX Brazil entered into a factoring agreement to sell certain unsecured receivables associated with our salary payment card product, 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 $16,300 of receivables during the nine months ended September 30, 2017. This resulted in a loss on factoring of $800 for the nine months ended September 30, 2017, which was recorded in Other expenses in the unaudited condensed consolidated statement of income. There were no sales under this factoring arrangement during the three months ended September 30, 2017; a recently executed securitization agreement has replaced this factoring arrangement as Brazil's primary funding mechanism. See Note 7, Financing and Other Debt, for more information on this securitization arrangement. The receivables sold under this agreement were recorded as a reduction of accounts receivable and proceeds as cash provided by operating activities. |
Income Taxes |
9 Months Ended | ||||||
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Sep. 30, 2017 | |||||||
Income Tax Disclosure [Abstract] | |||||||
Income Taxes |
The Company's effective tax rate was 35.4 percent for the third quarter of 2017 as compared to 24.0 percent in the same period last year. The increase in our effective tax rate was primarily due to the absence of several discrete tax benefits including a decrease in valuation allowance recorded during the third quarter of 2016. The Company's effective tax rate was 35.5 percent for the first nine months of 2017 as compared to 30.4 percent in the same period last year. The increase in our effective tax rate was primarily due to the absence of tax benefits recorded during the first nine months of 2016. These unfavorable factors were partly offset by the $1,600 tax effect of excess tax benefits related to share-based payments recorded in the income statement in the first nine months of 2017. See Note 2, New Accounting Standards for more information. Undistributed earnings of certain foreign subsidiaries of the Company amounted to $45,981 and $25,824 at September 30, 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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Sep. 30, 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, the Company’s wholly-owned subsidiary. On May 10, 2017, the parties agreed to a settlement in principle to resolve the class claims, which was preliminarily approved by the court on October 6, 2017. The expected settlement amount 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 September 30, 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. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
The fair value of restricted stock units, deferred stock units, performance-based restricted stock units, performance-based stock options and service-based stock options awarded during the three and nine months ended September 30, 2017 totaled $400 and $45,741, respectively, as compared to $4,416 and $30,343 for the three and nine months ended September 30, 2016, respectively. Stock Options Performance-Based Stock Options In May 2017, the Company granted performance-based stock options with a contractual term of ten years to members of senior management. The options contain a market condition that begins operating on the third anniversary of the grant date, requiring the closing price of the Company's stock to meet or exceed certain price thresholds for twenty consecutive trading days (“Stock Price Hurdle”) in order for shares to vest. In addition, award recipients must be continually employed from the grant date until such date that the Stock Price Hurdle is satisfied in order for shares to vest. To the extent both the service condition and the Stock Price Hurdle are not met by the end of a defined measurement period, these performance-based stock options will be canceled. The grant date fair value of these performance options was estimated on the date of the grant using a Monte-Carlo simulation model used to simulate a distribution of future stock price paths based on historical volatility levels. The table below summarizes the assumptions used to calculate the fair value:
These performance-based stock options are expensed on a graded basis over the derived service period of approximately three years regardless of whether the market condition is satisfied. Upon satisfaction of a Stock Price Hurdle, any unrecognized compensation expense for that specific tranche will be accelerated. Service-Based Stock Options On March 20, 2017, the Company approved the grant of stock options to certain officers and employees under the 2010 Equity Incentive Plan. Stock options granted generally become exercisable over three years (with approximately 33 percent of the total grant vesting each year on the anniversary of the grant date) and expire 10 years from the date of grant. The fair value of each option award is estimated on the grant date using a Black-Scholes-Merton option-pricing model and the following assumptions:
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Impairment and Restructuring Activities |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment and Restructuring Activities |
Impairment During the nine months ended September 30, 2017, the Company executed a vendor contract amendment based on a strategic decision to in-source certain previously outsourced technology functions. As a result of this action, the Company determined that $16,175 of prepaid services had no future benefit and were therefore written off within the Fleet Solutions segment during the nine months ended September 30, 2017. 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 $25,689 as of September 30, 2017. The balances under the 2015 Restructuring Initiative and the Acquisition Integration Restructuring Initiative are expected to be paid through 2018. Amounts under the 2016 Restructuring Initiative are expected to be paid through 2017. Based on current plans, which are subject to change, the amount of restructuring costs that the Company expects to incur is immaterial. The following table presents the Company's 2015 Restructuring Initiative liability:
1 Primarily consists of employee costs. The following table presents the Company’s 2016 Restructuring Initiative liability:
1 Primarily consists of employee costs. The following table presents the Company’s Acquisition Integration Restructuring Initiative liability:
1 Primarily consists of office closure costs. 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.
During the third quarter of 2017, the Company revised its operating segment measurement from pre-tax adjusted income to adjusted operating income. The Company no longer allocates financing interest expense to our operating segments as management believes this item can obscure underlying business trends. As such, we believe adjusted operating income reflects a more enhanced measurement of segment profitability. Segment results for the three and nine months ended September 30, 2016 have been revised to reflect this change in operating segment measurement. Adjusted operating income adjusts operating income to exclude: (i) acquisition and divestiture related items (including acquisition-related intangible amortization); (ii) stock-based compensation; (iii) restructuring and other costs; and (iv) debt restructuring costs. In addition, for the nine months ended September 30, 2017, adjusted operating income excludes an impairment charge related to the insourcing of certain technology functions from a third party. The following tables present the Company’s reportable segment results on an adjusted operating income 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 adjusted operating income to income before income taxes:
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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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Subsequent Event |
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Sep. 30, 2017 | |||||||
Subsequent Events [Abstract] | |||||||
Subsequent Event |
Effective October 18, 2017, the Company acquired certain assets and assumed certain liabilities of AOC Solutions and one of its affiliate companies, 3Delta Systems, Inc. (collectively "AOC"), an industry leader in commercial payments technology, for a net purchase price of $112,500. The acquisition was funded with cash on hand and through the Company's 2016 Credit Agreement. In conjunction with the closing of the AOC acquisition, effective October 30, 2017, the Company added $100,000 of capacity to its revolving line of credit to provide additional liquidity and flexibility. The acquisition of AOC, a longstanding technology provider for our virtual card product, will broaden the Company's capabilities, increase our pool of employees with payments platform expertise and allow the Company to evolve with the needs of its customers and partners through the use of AOC’s payments processing technology platforms. This acquisition will be accounted for under the acquisition method of accounting. |
New Accounting Standards (Policies) |
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Sep. 30, 2017 | |||||||||||||
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 and nine months ended September 30, 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. |
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New Accounting Standards | Adopted During the Nine Months Ended September 30, 2017 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 required prospective recognition of all the tax effects related to share-based payments in the income statement. The impact of adoption was recorded as a cumulative effect adjustment to Retained earnings of approximately $300. For the nine months ended September 30, 2017, the Company recognized approximately $1,600 of excess tax benefits within our income tax provision, which would have been recognized in additional paid-in-capital under previous guidance. For the three months ended September 30, 2017, the amount of excess tax benefits recognized was not material. The Company has elected to prospectively classify these excess tax benefits as cash flows from operating activities effective January 1, 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 has not impacted the Company's minimum statutory tax withholding practices. In May 2017, the FASB issued ASU 2017-09, which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. Under the new guidance, an entity will not apply modification accounting to a share-based payment award if there is no change to the award’s fair value, vesting conditions and classification as an equity or liability instrument. The guidance is effective prospectively for all companies for annual periods beginning on or after December 15, 2017. The Company elected to early adopt this ASU and such adoption has not impacted the Company's consolidated financial statements and related disclosures. Not Yet Adopted 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. The Company will adopt this standard 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 will adopt the standard using the modified retrospective method. 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. In addition, fees associated with cardholder arrangements are outside the scope of Topic 606. As a result of further internal analysis, management now estimates approximately 25 percent of consolidated revenues for the period ended December 31, 2016 are outside the scope of 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, will not be significantly impacted by the new standard. Management estimates approximately 70 percent of consolidated revenues for the period ended December 31, 2016 will remain substantially unchanged under the new standard. 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 expensed were approximately $20,000 for the year ended December 31, 2016. The Company currently anticipates that the treatment of over 90 percent of commission expenses will remain unchanged and will continue to be expensed. The Company is currently in the process of implementing changes to its accounting policies, business processes and internal controls to support the recognition, measurement and disclosure requirements under the new standard. |
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Receivables | Payment Terms 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. |
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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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Fair Value of Financial Instruments | 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. Available-For-Sale Securities When available, the Company uses quoted market prices to determine the fair value of available-for-sale securities; such inputs are classified as 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 valued using Level 2 inputs. 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 Swaps 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 swaps and the implied floating payments using the current LIBOR curve, which are Level 2 inputs of the fair value hierarchy. Debt The Company determines the fair value of the amount outstanding under its 2016 Credit Agreement 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 that 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 the three or nine months ended September 30, 2017 or September 30, 2016. |
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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.
During the third quarter of 2017, the Company revised its operating segment measurement from pre-tax adjusted income to adjusted operating income. The Company no longer allocates financing interest expense to our operating segments as management believes this item can obscure underlying business trends. As such, we believe adjusted operating income reflects a more enhanced measurement of segment profitability. Segment results for the three and nine months ended September 30, 2016 have been revised to reflect this change in operating segment measurement. Adjusted operating income adjusts operating income to exclude: (i) acquisition and divestiture related items (including acquisition-related intangible amortization); (ii) stock-based compensation; (iii) restructuring and other costs; and (iv) debt restructuring costs. In addition, for the nine months ended September 30, 2017, adjusted operating income excludes an impairment charge related to the insourcing of certain technology functions from a third party. |
Business Acquisition (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions | The following represents the components and final allocation of the purchase price:
(a)$1,235,331 in goodwill and other intangible assets recorded from this business combination were allocated to our Fleet Solutions segment; the remaining $337,307 was 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 September 30, 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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Accounts Receivable (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Past Due Financing Receivables | The following table presents the delinquency status as a percentage of total trade accounts receivable:
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Changes in Reserves for Credit Losses Related to Accounts Receivable | The following table presents changes in reserves for 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 table summarizes net earnings attributable to shareholders and reconciles basic and diluted shares outstanding used in the earnings per share computations:
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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 terms 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 Fair Values in Condensed Consolidated Balance Sheets | The following table presents information on the location and fair value of asset derivatives recorded in the unaudited condensed consolidated balance sheets:
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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 losses and the locations in the unaudited condensed consolidated statements of income:
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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:
1 See Note 9, Fair Value for more information regarding the Company's Notes outstanding. |
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. |
Stock-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used | The table below summarizes the assumptions used to calculate the fair value:
The fair value of each option award is estimated on the grant date using a Black-Scholes-Merton option-pricing model and the following assumptions:
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Impairment and Restructuring Activities (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following table presents the Company's 2015 Restructuring Initiative liability:
1 Primarily consists of employee costs. The following table presents the Company’s 2016 Restructuring Initiative liability:
1 Primarily consists of employee costs. The following table presents the Company’s Acquisition Integration Restructuring Initiative liability:
1 Primarily consists of office closure costs. The following table presents the Company's total restructuring liability:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segment Results | The following tables present the Company’s reportable segment results on an adjusted operating income basis:
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Interest Income | The following table presents the Company's interest income by segment:
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Reconciliation of Adjusted Net Income to Income Before Income Taxes | The following table reconciles adjusted operating income to income before income taxes:
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Supplementary Regulatory Capital Disclosure (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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:
|
New Accounting Standards (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative-effect adjustment | [1] | $ 261 | ||||
Excess tax benefits recognized | $ 1,600 | |||||
Sales commissions | $ 20,000 | |||||
Accounting Standards Update 2016-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Excess tax benefits recognized | $ 0 | $ 1,600 | ||||
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 | 25.00% | |||||
Percentage of consolidated revenue affected by new accounting pronouncement | 70.00% | |||||
Retained Earnings | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative-effect adjustment | [1] | $ 261 | ||||
Retained Earnings | Accounting Standards Update 2016-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative-effect adjustment | $ 300 | |||||
|
Business Acquisition Summary of EFS Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Allocation of the purchase price by the assets and liabilities acquired | ||||||
Measurement period adjustments, deferred income tax liabilities | $ 28,071 | |||||
Goodwill | $ 1,813,805 | 1,813,805 | $ 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 | $ 557,000 | |||||
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 | 41,344 | 41,344 | 34,992 | |||
Measurement period adjustments, deferred income tax assets | 6,352 | |||||
Other assets | 739 | 739 | 0 | |||
Measurement period adjustments, other assets | 739 | |||||
Accounts payable | (153,529) | (153,529) | (153,777) | |||
Measurement period adjustments, accounts payable | 248 | |||||
Accrued expenses | (118,906) | (118,906) | (128,267) | |||
Measurement period adjustments, accrued expenses | 9,361 | |||||
Deferred income tax liabilities | (63,123) | (63,123) | (91,194) | |||
Goodwill | 685,418 | 685,418 | 728,890 | |||
Measurement period adjustments, goodwill | (43,472) | |||||
Estimated amortization expense related to the definite-lived intangible assets | ||||||
Remaining 2017 | 21,344 | 21,344 | ||||
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 | ||||
Total revenues | 46,957 | 135,578 | ||||
Pre-tax adjusted net income | 8,058 | 28,070 | ||||
Unaudited pro forma operational results | ||||||
Total revenues | $ 287,756 | $ 799,039 | ||||
Net earnings attributable to shareholders | $ 27,973 | $ 48,584 | ||||
Pro forma net income attributable to shareholders per common share - Basic (in dollars per share) | $ 0.65 | $ 1.14 | ||||
Pro forma net income attributable to shareholders per common share - Diluted (in dollars per share) | $ 0.65 | $ 1.13 | ||||
Electronic Funds Source LLC | Acquisition-related Costs | ||||||
Unaudited pro forma operational results | ||||||
Net earnings attributable to shareholders | $ 11,903 | $ 18,497 | ||||
Electronic Funds Source LLC | Fleet Solutions | ||||||
Allocation of the purchase price by the assets and liabilities acquired | ||||||
Goodwill and other intangible assets | 1,235,331 | |||||
Electronic Funds Source LLC | Travel and corporate solutions | ||||||
Allocation of the purchase price by the assets and liabilities acquired | ||||||
Goodwill and other intangible assets | $ 337,307 | |||||
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 |
Accounts Receivable - Additional Information (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 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 | ||
Revolving Credit Facility | |||
Concentration Risk [Line Items] | |||
Accounts Receivable, Gross | $ 11,200 | $ 3,400 | |
Customer One | Customer Concentration Risk | Accounts receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Current–29 days past due | Credit Concentration Risk | Accounts receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 95.00% | 93.00% | |
Current–59 days past due | Credit Concentration Risk | Accounts receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 97.00% | 97.00% |
Accounts Receivable - Changes in Reserves for Accounts Receivable (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Balance, beginning of year | $ 20,092 | $ 13,832 |
Provision for credit losses | 47,927 | 19,849 |
Charges to other accounts | 12,221 | 0 |
Charge-offs | (53,044) | (24,825) |
Recoveries of amounts previously charged-off | 5,085 | 4,980 |
Currency translation | 431 | 151 |
Balance, end of period | $ 32,712 | $ 13,987 |
Earnings per Share - Summary of Net Earning Attributable to Shareholders and Reconciliation of Basic and Diluted Shares (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Net earnings attributable to shareholders | $ 33,971 | $ 19,696 | $ 80,462 | $ 55,350 |
Weighted average common shares outstanding – Basic (in shares) | 43,014 | 42,788 | 42,963 | 40,126 |
Dilutive impact of share-based compensation awards (in shares) | 87 | 83 | 129 | 73 |
Weighted average common shares outstanding – Diluted (in shares) | 43,101 | 42,871 | 43,092 | 40,199 |
Earnings per Share - Stock Options and Restricted Stock Units (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | 0 | 0 |
Derivative Instruments - Additional Information (Details) - agreement |
Sep. 30, 2017 |
Nov. 30, 2016 |
Mar. 31, 2016 |
---|---|---|---|
Derivative [Line Items] | |||
Fixed rate variable interest | 2.25% | ||
Interest rate swap agreements - unrealized portion | |||
Derivative [Line Items] | |||
Number of derivative instruments held (agreement) | 3 | ||
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 |
Nov. 30, 2016
USD ($)
|
---|---|
Tranche A | |
Derivative [Line Items] | |
Notional amount at inception | $ 400,000,000 |
Amortization | 5.00% |
Fixed interest rate | 1.108% |
Tranche B | |
Derivative [Line Items] | |
Notional amount at inception | $ 150,000,000 |
Fixed interest rate | 1.125% |
Tranche C | |
Derivative [Line Items] | |
Notional amount at inception | $ 250,000,000 |
Fixed interest rate | 0.896% |
Derivative Instruments - Summary of Aggregate Notional Amount of Foreign Currency Swap Contracts (Details) - Foreign currency swaps $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
AUD
|
Sep. 30, 2016
AUD
|
|
Derivative [Line Items] | ||||||
Gain (loss) on foreign currency swaps | $ | $ 0 | $ 0 | $ 0 | $ 0 | ||
Derivatives Not Designated as Hedging Instruments | ||||||
Derivative [Line Items] | ||||||
Australian dollar | AUD | AUD 10,000,000 | AUD 10,000,000 |
Derivative Instruments - Location and Amounts of Derivative Fair Values in Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Sep. 30, 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 | $ 12,059 | $ 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 | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Net realized and unrealized gain on fuel price derivatives | Commodity contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in income on derivative | $ 0 | $ 0 | $ 0 | $ 711 |
Net unrealized loss on interest rate swap agreements | Interest rate swaps | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in income on derivative | (150) | 0 | (849) | 0 |
Financing interest income (expense) | Interest rate swaps | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in income on derivative | $ 377 | $ 0 | $ (243) | $ 0 |
Financing and Other Debt - Additional Information (Details) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jul. 03, 2017
USD ($)
|
Jul. 01, 2016
USD ($)
|
Apr. 07, 2016 |
Sep. 30, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Oct. 30, 2017
USD ($)
|
Nov. 30, 2016
agreement
|
|
Debt Instrument [Line Items] | ||||||||
Lines of credit outstanding | $ 1,727,472,000 | $ 1,727,472,000 | $ 1,599,291,000 | |||||
Maximum borrowing capacity | $ 246,500,000 | $ 246,500,000 | 250,000,000 | |||||
Basis points added to LIBOR | 2.25% | 2.25% | ||||||
Receivables transferred as part of securitization agreement | $ 150,845,000 | $ 150,845,000 | 97,417,000 | |||||
Securitized debt | $ 122,475,000 | $ 122,475,000 | $ 84,323,000 | |||||
Interest rate swap agreements - unrealized portion | ||||||||
Debt Instrument [Line Items] | ||||||||
Number of derivative instruments held (agreement) | agreement | 3 | |||||||
Minimum | London Interbank Offered Rate (LIBOR) | Interest rate swap agreements - unrealized portion | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis points added to LIBOR | 0.896% | |||||||
Maximum | London Interbank Offered Rate (LIBOR) | Interest rate swap agreements - unrealized portion | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis points added to LIBOR | 1.125% | |||||||
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 | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 2.75% | |||||||
2016 Credit Agreement Tranche A | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 1.75% | |||||||
2016 Credit Agreement Tranche A | Interest Rate Option One | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate, reduction in basis points | 0.50% | |||||||
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 | 2.75% | 2.25% | ||||||
2016 Credit Agreement Tranche A | Interest Rate Option Two | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 1.25% | |||||||
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 | 1.75% | |||||||
2016 Credit Agreement Tranche B | ||||||||
Debt Instrument [Line Items] | ||||||||
Weighted average annual interest rate, percent | 3.90% | 3.90% | 4.20% | |||||
Debt instrument unamortized discount, percent | 1.00% | |||||||
2016 Credit Agreement Tranche B | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 2.75% | |||||||
2016 Credit Agreement Tranche B | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 1.75% | |||||||
2016 Credit Agreement Tranche B | Interest Rate Option One | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate, reduction in basis points | 0.75% | |||||||
2016 Credit Agreement Tranche B | Interest Rate Option One | Maximum | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 2.75% | |||||||
2016 Credit Agreement Tranche B | Interest Rate Option Two | Maximum | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 1.75% | |||||||
2016 Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Current borrowing capacity | $ 320,000,000 | $ 320,000,000 | ||||||
Permitted securitization transactions | $ 350,000,000 | |||||||
Cash allowed to be excluded for determining consolidated funded indebtedness | $ 75,000,000 | |||||||
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% | ||||||
2016 Credit Agreement | Interest Rate Option One | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 2.75% | |||||||
2016 Credit Agreement | Interest Rate Option One | Minimum | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 1.75% | |||||||
2016 Credit Agreement | Interest Rate Option One | Maximum | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 3.25% | |||||||
Loan Participations and Assignments | ||||||||
Debt Instrument [Line Items] | ||||||||
Increase in funding capacity | $ 90,000,000 | |||||||
Debt instrument, aggregate principal amount | 185,000,000 | 185,000,000 | ||||||
Debt balance | 154,521,000 | $ 154,521,000 | $ 95,000,000 | |||||
Loan Participations and Assignments | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 2.25% | |||||||
Loan Participations and Assignments, Amounts Maturing August 2017 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, aggregate principal amount | 85,000,000 | $ 85,000,000 | ||||||
Loan Participations and Assignments, Amounts Maturing December 2020 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, aggregate principal amount | 50,000,000 | 50,000,000 | ||||||
Loan Participations and Assignments, Amounts Maturing On Demand | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, aggregate principal amount | 19,521,000 | 19,521,000 | ||||||
WEX Brazil Securitization Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Receivables transferred as part of securitization agreement | 20,000,000 | 20,000,000 | ||||||
Securitized debt | 20,000,000 | 20,000,000 | ||||||
Australian Securitization Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Securitized debt | $ 83,100,000 | $ 83,100,000 | $ 78,600,000 | |||||
Securitization facility, percentage of receivables used as collateral | 85.00% | 85.00% | ||||||
Interest rate during period, percent | 2.70% | 2.65% | ||||||
European Securitization Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate during period, percent | 0.42% | 0.95% | ||||||
Debt instrument, term | 5 years | |||||||
Securitized debt | $ 18,800,000 | $ 18,800,000 | $ 5,700,000 | |||||
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 outstanding | 1,611,563,000 | 1,611,563,000 | ||||||
Revolving Credit Facility | 2016 Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Current borrowing capacity | 470,000,000 | 470,000,000 | ||||||
Lines of credit outstanding | 149,423,000 | $ 149,423,000 | ||||||
Revolving Credit Facility | 2016 Credit Agreement | Interest Rate Option Two | Minimum | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 0.75% | |||||||
Revolving Credit Facility | 2016 Credit Agreement | Interest Rate Option Two | Maximum | Eurocurrency Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Margin on variable rate, percent | 2.25% | 1.75% | ||||||
Revolving Credit Facility | 2011 Credit Agreement | Letter of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Lines of credit outstanding | 13,000,000 | $ 13,000,000 | 13,000,000 | |||||
Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Lines of credit outstanding | $ 28,500,000 | $ 28,500,000 | $ 0 | |||||
Subsequent Event | Revolving Credit Facility | 2016 Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Additional capacity added to revolving credit facility | $ 100,000,000 | |||||||
WEX Brazil | ||||||||
Debt Instrument [Line Items] | ||||||||
Weighted average annual interest rate, percent | 21.40% | 21.40% | 19.70% | |||||
Outstanding debt | $ 11,743,000 | $ 11,743,000 | $ 30,755,000 | |||||
WEX Brazil | WEX Brazil Securitization Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Receivables transferred as part of securitization agreement | 31,200,000 | $ 31,200,000 | ||||||
Proceeds from accounts receivable securitization | 27,700,000 | |||||||
Discount on accounts receivable securitization | 3,500,000 | |||||||
Servicing fee income | $ 2,000,000 |
Financing and Other Debt - Schedule of Debt Issuance Costs Related to Revolving Line-of-Credit Facilities, Term Loans, and Notes Outstanding (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Notes outstanding 1 | ||
Line of Credit Facility [Line Items] | ||
Debt issuance costs, net | $ 3,915 | $ 4,466 |
Revolving line of credit facility and term loans | ||
Line of Credit Facility [Line Items] | ||
Debt issuance costs, net | $ 33,514 | $ 38,334 |
Off-Balance Sheet Arrangements (Details) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
|
WEX Europe Services | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Proceeds from sale of factoring receivables | $ 170,000 | $ 394,000 |
Loss on sale of factoring receivables | 1,150 | 2,600 |
Amount of factoring receivables | 54,000 | 54,000 |
Amount of factoring receivables, portion in excess of the established credit limit | $ 3,600 | 3,600 |
WEX Brazil | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Proceeds from sale of factoring receivables | 16,300 | |
Loss on sale of factoring receivables | $ 800 |
Fair Value - Assets and Liabilities Measured at Fair Value and Related Hierarchy Levels (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets | ||
Total available-for-sale securities | $ 23,584 | $ 23,525 |
Level 2 | Interest rate swaps | ||
Assets | ||
Derivative asset | 12,059 | 12,908 |
Level 1 | ||
Assets | ||
Executive deferred compensation plan trust | 6,517 | 5,673 |
Municipal bonds | Level 2 | ||
Assets | ||
Total available-for-sale securities | 534 | 682 |
Asset-backed securities | Level 2 | ||
Assets | ||
Total available-for-sale securities | 395 | 648 |
Mortgage-backed securities | Level 2 | ||
Assets | ||
Total available-for-sale securities | 450 | 490 |
Fixed-income mutual fund | Level 1 | ||
Assets | ||
Total available-for-sale securities | $ 22,205 | $ 21,705 |
Fair Value - Additional Information (Details) - Senior Notes - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
Jan. 30, 2013 |
---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate, stated percentage | 4.75% | ||
Reported Value Measurement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Senior Notes | $ 400,000,000 | ||
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 | $ 411,500,000 | $ 390,000,000 |
Income Taxes Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 35.40% | 24.00% | 35.50% | 30.40% | |
Excess tax benefits recognized | $ 1,600 | ||||
Undistributed earnings of certain foreign subsidiaries | $ 45,981 | $ 45,981 | $ 25,824 |
Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
May 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair value of units awarded | $ 400 | $ 4,416 | $ 45,741 | $ 30,343 | |
Performance Based Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Term of stock options | 10 years | ||||
Conditional threshold period for options vesting | 20 days | ||||
Service period | 3 years | ||||
Stock Options | 2010 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Term of stock options | 10 years | ||||
Period for stock options to become exercisable | 3 years | ||||
Share-based Compensation Award, Tranche One | Stock Options | 2010 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights, percentage | 33.00% | ||||
Share-based Compensation Award, Tranche Two | Stock Options | 2010 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights, percentage | 33.00% | ||||
Share-based Compensation Award, Tranche Three | Stock Options | 2010 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights, percentage | 33.00% |
Stock-Based Compensation - Schedule of Assumptions Used to Calculate Fair Value of Performance-Based Stock Options (Details) - Performance Based Stock Options |
1 Months Ended |
---|---|
May 31, 2017
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price (in dollars per share) | $ 99.69 |
Expected stock price volatility | 31.14% |
Risk-free interest rate | 2.18% |
Weighted average fair value of performance options granted (in dollars per share) | $ 28.69 |
Stock-Based Compensation - Schedule of Assumptions Used to Calculate Fair Value of Stock Options (Details) - Stock Options |
Mar. 20, 2017
$ / shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average expected life (in years) | 6 years |
Weighted average exercise price (in dollars per share) | $ 104.95 |
Weighted average volatility | 30.67% |
Weighted average risk-free rate | 2.13% |
Weighted average fair value (in dollars per share) | $ 35.58 |
Impairment and Restructuring Activities - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Impairment charge | $ 0 | $ 0 | $ 16,175 | $ 0 |
Restructuring charges incurred to date | $ 25,689 | 25,689 | ||
Fleet Solutions | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment charge | $ 16,175 |
Impairment and Restructuring Activities - Schedule of Restructuring Reserve (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Restructuring Reserve | ||||
Balance, beginning of period | $ 8,683 | $ 10,573 | $ 10,657 | $ 7,249 |
Restructuring charges | 4,639 | 2,531 | 6,799 | 7,626 |
Reserve release | 0 | 0 | (533) | 0 |
Cash paid | (3,371) | (1,063) | (8,173) | (3,188) |
Other | 0 | 0 | 107 | 0 |
Impact of foreign currency translation | 13 | 965 | 574 | 1,319 |
Balance, end of period | 9,964 | 13,006 | 9,964 | 13,006 |
Year 2015 | ||||
Restructuring Reserve | ||||
Balance, beginning of period | 3,008 | 7,085 | 5,231 | 7,249 |
Restructuring charges | 431 | 446 | 1,964 | 2,035 |
Cash paid | (656) | (638) | (3,492) | (2,763) |
Liability transfer to from one plan to another | 0 | 0 | (1,158) | 0 |
Impact of foreign currency translation | (22) | 701 | 216 | 1,073 |
Balance, end of period | 2,761 | 7,594 | 2,761 | 7,594 |
Year 2016 | ||||
Restructuring Reserve | ||||
Balance, beginning of period | 4,342 | 3,488 | 3,662 | 0 |
Restructuring charges | 88 | 0 | 307 | 3,506 |
Reserve release | 0 | 0 | (533) | 0 |
Cash paid | (1,778) | (4) | (2,265) | (4) |
Liability transfer to from one plan to another | 0 | 0 | 1,158 | 0 |
Impact of foreign currency translation | 35 | 264 | 358 | 246 |
Balance, end of period | 2,687 | 3,748 | 2,687 | 3,748 |
Acquisition Integration Restructuring Initiative | ||||
Restructuring Reserve | ||||
Balance, beginning of period | 1,333 | 0 | 1,764 | 0 |
Restructuring charges | 4,120 | 2,085 | 5,061 | 2,085 |
Cash paid | (937) | (421) | (2,416) | (421) |
Other | 0 | 0 | 107 | 0 |
Balance, end of period | 4,516 | 1,664 | 4,516 | 1,664 |
Total Restructuring Charges, Including Other Restructuring Costs | ||||
Restructuring Reserve | ||||
Restructuring charges | $ 4,639 | $ 2,531 | $ 7,332 | $ 7,626 |
Segment Information - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information - Pre-Tax Income Before NCI (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Payment processing revenue | $ 145,702 | $ 146,182 | $ 423,434 | $ 383,319 |
Account servicing revenue | 71,322 | 58,815 | 198,538 | 150,770 |
Finance fee revenue | 50,879 | 36,138 | 136,336 | 92,348 |
Other revenue | 56,099 | 46,621 | 160,935 | 101,184 |
Total revenues | 324,002 | 287,756 | 919,243 | 727,621 |
Depreciation and amortization | 51,229 | 46,008 | 150,428 | 91,381 |
Adjusted operating income | 120,262 | 110,489 | 341,253 | 252,092 |
Fleet Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Payment processing revenue | 90,270 | 83,132 | 264,210 | 216,133 |
Account servicing revenue | 44,858 | 37,414 | 122,238 | 90,400 |
Finance fee revenue | 40,773 | 33,230 | 113,754 | 85,841 |
Other revenue | 36,177 | 30,982 | 103,003 | 57,417 |
Total revenues | 212,078 | 184,758 | 603,205 | 449,791 |
Depreciation and amortization | 37,172 | 35,172 | 109,610 | 62,927 |
Adjusted operating income | 74,782 | 68,987 | 214,421 | 145,009 |
Travel and Corporate Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Payment processing revenue | 44,177 | 52,551 | 119,328 | 130,372 |
Account servicing revenue | 206 | 242 | 528 | 852 |
Finance fee revenue | 87 | 115 | 469 | 336 |
Other revenue | 16,556 | 10,407 | 43,414 | 30,235 |
Total revenues | 61,026 | 63,315 | 163,739 | 161,795 |
Depreciation and amortization | 3,185 | 1,630 | 9,445 | 3,007 |
Adjusted operating income | 33,971 | 31,449 | 84,935 | 74,639 |
Health and Employee Benefit Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Payment processing revenue | 11,255 | 10,499 | 39,896 | 36,814 |
Account servicing revenue | 26,258 | 21,159 | 75,772 | 59,518 |
Finance fee revenue | 10,019 | 2,793 | 22,113 | 6,171 |
Other revenue | 3,366 | 5,232 | 14,518 | 13,532 |
Total revenues | 50,898 | 39,683 | 152,299 | 116,035 |
Depreciation and amortization | 10,872 | 9,206 | 31,373 | 25,447 |
Adjusted operating income | $ 11,509 | $ 10,053 | $ 41,897 | $ 32,444 |
Segment Information - Summary of Interest Income by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Interest Income | $ 12,051 | $ 3,898 | $ 26,586 | $ 9,053 |
Fleet Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Interest Income | 944 | 961 | 2,764 | 2,547 |
Travel and corporate solutions | ||||
Segment Reporting Information [Line Items] | ||||
Interest Income | 208 | 143 | 569 | 330 |
Health and Employee Benefit Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Interest Income | $ 10,899 | $ 2,794 | $ 23,253 | $ 6,176 |
Segment Information - Reconciliation of Adjusted Operating Income to Income Before Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Adjusted operating income | $ 120,262 | $ 110,489 | $ 341,253 | $ 252,092 |
Acquisition-related intangible amortization | (38,510) | (33,855) | (114,603) | (59,066) |
Other acquisition and divestiture related items | (1,006) | (13,100) | (3,380) | (19,694) |
Stock-based compensation | (8,483) | (5,199) | (22,354) | (14,312) |
Restructuring and other costs | (6,024) | (3,767) | (10,169) | (11,689) |
Impairment charge | 0 | 0 | (16,175) | 0 |
Debt restructuring | (2,516) | 0 | (2,516) | 0 |
Operating income | 63,723 | 54,568 | 172,056 | 147,331 |
Financing interest expense | (25,754) | (35,064) | (81,449) | (87,040) |
Net foreign currency gain | 14,611 | 5,932 | 33,578 | 17,233 |
Net unrealized loss on interest rate swap agreements | (150) | 0 | (849) | 0 |
Net realized and unrealized gain on fuel price derivatives | 0 | 0 | 0 | 711 |
Non-cash adjustments related to tax receivable agreement | 0 | (168) | 0 | (168) |
Operating income | 52,430 | 25,268 | 123,336 | 78,067 |
Fleet Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Adjusted operating income | 74,782 | 68,987 | 214,421 | 145,009 |
Impairment charge | (16,175) | |||
Travel and corporate solutions | ||||
Segment Reporting Information [Line Items] | ||||
Adjusted operating income | 33,971 | 31,449 | 84,935 | 74,639 |
Health and Employee Benefit Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Adjusted operating income | $ 11,509 | $ 10,053 | $ 41,897 | $ 32,444 |
Supplementary Regulatory Capital Disclosure (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Disclosure [Abstract] | ||
Total Capital to risk-weighted assets, Actual Amount | $ 326,773 | $ 228,402 |
Total Capital to risk-weighted assets, Actual, Ratio | 13.12% | 12.59% |
Total Capital to risk-weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 199,249 | $ 145,182 |
Total Capital to risk-weighted assets, Minimum for Capital Adequacy Purposes, Ratio | 8.00% | 8.00% |
Total Capital to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 249,061 | $ 181,477 |
Total Capital to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 10.00% | 10.00% |
Tier 1 Capital to average assets, Actual Amount | $ 314,473 | $ 214,847 |
Tier 1 Capital to average assets, Actual, Ratio | 12.09% | 11.10% |
Tier 1 Capital to average assets, Minimum for Capital Adequacy Purposes Amount | $ 104,004 | $ 77,413 |
Tier 1 Capital to average assets, Minimum for Capital Adequacy Purposes, Ratio | 4.00% | 4.00% |
Tier 1 Capital to average assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 130,004 | $ 96,767 |
Tier 1 Capital to average assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provision, Ratio | 5.00% | 5.00% |
Common equity to risk-weighted assets, Actual Amount | $ 314,473 | $ 214,847 |
Common equity to risk-weighted assets, Actual, Ratio | 12.63% | 11.84% |
Common equity to risk-weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 112,078 | $ 81,665 |
Common equity to risk-weighted assets, Minimum for Capital Adequacy Purposes, Ratio | 4.50% | 4.50% |
Common equity to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 161,890 | $ 117,961 |
Common equity to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 6.50% | 6.50% |
Tier 1 Capital to risk-weighted assets, Actual Amount | $ 314,473 | $ 214,847 |
Tier 1 Capital to risk-weighted assets, Actual, Ratio | 12.63% | 11.84% |
Tier 1 Capital to risk-weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 149,437 | $ 108,887 |
Tier 1 Capital to risk-weighted assets, Minimum for Capital Adequacy Purposes, Ratio | 6.00% | 6.00% |
Tier 1 Capital to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 199,250 | $ 145,183 |
Tier 1 capital to risk-weighted assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions Amount, Ratio | 8.00% | 8.00% |
Subsequent Event Acquisition of AOC (Details) - Subsequent Event - USD ($) |
Oct. 18, 2017 |
Oct. 30, 2017 |
---|---|---|
AOC | ||
Subsequent Event [Line Items] | ||
Consideration transferred | $ 112,500,000 | |
Revolving Credit Facility | 2016 Credit Agreement | ||
Subsequent Event [Line Items] | ||
Additional capacity added to revolving credit facility | $ 100,000,000 |
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