Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Information

14. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The operating segments are reviewed separately as each operating segment represents a strategic business unit that generally offers different products and serves different markets.

The Company’s chief operating decision maker evaluates the operating results of the Company’s reportable segments based upon revenues and “adjusted net income,” which is defined by the Company as net income adjusted for fair value changes of derivative instruments, the amortization of purchased intangibles, expense associated with stock-based compensation, the net impact of tax rate changes on the Company’s deferred tax asset and related changes in the tax-receivable agreement, deferred loan costs associated with the extinguishment of debt, certain non-cash asset impairment charges, the gains on the extinguishment of a portion of the tax receivable agreement and adjustments attributable to non-controlling interest. These adjustments are reflected net of the tax impact.

The Company operates in two reportable segments, Fleet Payment Solutions and Other Payment Solutions. The Fleet Payment Solutions segment provides customers with payment and transaction processing services specifically designed for the needs of vehicle fleet customers. This segment also provides information management services to those fleet customers. The Other Payment Solutions segment provides customers with a payment processing solution for their corporate purchasing and transaction monitoring needs. Revenue in this segment is derived from the Company’s corporate purchase cards, virtual and prepaid card products. The corporate purchase card products are used by businesses to facilitate purchases of products and to utilize the Company’s information management capabilities.

Financing interest expense through the Company’s corporate debt, including the term loan and bond issuance, and net realized and unrealized losses on derivative instruments are allocated to the Fleet Payment Solutions segment in the computation of segment results for internal evaluation purposes. Total assets are not allocated to the segments.

The following table presents the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis for the three months ended March 31, 2014 and 2013:

	Total Revenues		Operating Interest Expense		Depreciation and Amortization		Adjusted Pre-Tax Net Income before NCI
Three months ended March 31, 2014
Fleet payment solutions	$	135,435	$	524	$	6,377	$	47,674
Other payment solutions	46,633		764		354		17,272
Total	$	182,068	$	1,288	$	6,731	$	64,946
Three months ended March 31, 2013
Fleet payment solutions	$	126,039	$	814	$	5,736	$	52,176
Other payment solutions	39,331		333		492		10,699
Total	$	165,370	$	1,147	$	6,228	$	62,875

The following table reconciles adjusted net income to net income:

	Three months ended   March 31,
	2014			2013
Adjusted net income attributable to WEX Inc.	$	41,612		$	39,840
Unrealized gain (loss) on fuel price derivatives	2,823			(5,882		)
Amortization of acquired intangible assets	(8,287		)	(8,379		)
Stock-based compensation	(2,423		)	(2,406		)
Deferred loan costs associated with the extinguishment of debt	—			(1,004		)
ANI adjustments attributable to non-controlling interests	185			346
Tax impact	2,632			6,174
Net earnings attributable to WEX Inc.	$	36,542		$	28,689

Beginning this quarter, adjusted net income attributable to WEX Inc. excludes the expense of stock-based compensation. For comparative purposes, adjusted net income attributable to WEX Inc. for the prior period has been adjusted to reflect the exclusion of stock-based compensation and differs from the figure previously reported due to this adjustment. We believe this adjustment makes this non-GAAP measurement more comparable to our peers.

The tax impact of the adjustments used to calculate adjusted net income is the difference between the Company’s GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes. The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s GAAP tax provision.