Travel restrictions vex Wex after solid first quarter - Press Herald

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Portland-based Wex Inc. reported increased revenue growth and operating income in the first three months of the year, but said it can’t predict its financial performance for the rest of the year due to the uncertain impact of the coronavirus pandemic.

The company, which provides payment-processing services for corporate vehicle fleets and other business services, said Thursday that revenue for the January-through-March quarter grew by 13 percent, from $381.9 million during the same period last year to $431.7 million this year. Wex revenue for the quarter beat analyst expectations by $4.5 million, according to investor website Seeking Alpha.

Excluding adjustments for one-time gains and losses, the company’s net operating income increased to $79.7 million, or $1.81 per share, up 5 percent from $74.8 million, or $1.72 per share, for the same period a year earlier. That result was 25 cents per share lower than analysts had expected, Seeking Alpha said.

Including adjustments for one-time gains and losses, Wex net income decreased by $32.4 million to a net loss of $16.3 million, or 37 cents per share, compared with net income of $16.1 million, or $0.37 per share, for the first quarter of 2019. The adjusted net income fell short of investor expectations by $1.40 per share.

Given the uncertainty over the coronavirus pandemic’s impact, Wex said it wouldn’t provide guidance on its finances for the next quarter or the rest of the year.

Last month, the company announced layoffs and furloughs affecting 5 percent of its workforce, and pay cuts for executives as part of its response to an expected decline in business as a result of the pandemic. The company said Thursday that it saw a significant decline in fleet and other travel volume in late March, although the decline flattened out in mid-April.

In Maine, the company laid off 45 workers and furloughed 90 in Maine as part of the overall cuts. Wex President and CEO Melissa Smith said Thursday that she doesn’t anticipate further job cuts, but she also said it’s difficult to project what will happen because of uncertainty over the direction of the pandemic.

“We expect difficult operating conditions through the end of the year,” Smith said.

Wex also announced that it was scrapping a deal to buy eNett and Optal, two business-to-business payment transaction companies, for about $1.7 billion. Wex said it has the right to pull out of the purchase because of the impact of the pandemic on the two companies’ operations, while officials for eNett and Optal indicated they would fight the decision.

Many of the corporate fleets to which Wex provides services remained on the road despite stay-at-home orders in much of the country, because the companies that operate the vehicles offer essential services. Smith said that includes communications companies and ambulance fleets. The continued operation of those fleets helped limit the decline in Wex’s revenue despite the overall decline in travel spending, she said.

Smith also said the company’s shift to working from home for most of its employees has worked well. The company made the shift in Portland in about two weeks, and most departments have seen an increase in productivity, she said.

Most people fall into one of two camps on working from home, she said – they either miss the interactions with others or they like the ability to work with fewer interruptions related to an office environment.

Smith also has largely worked from home, although she was in the office Thursday for the company’s earnings release. She is among those who miss an office environment, although she likes the ability to see her three children every evening.

“I like people,” she said. “I’ve got to admit, I miss the interactions with others.”

She also said Wex will move slowly in shifting workers back to the office as Maine eases its stay-at-home order. She said many businesses need their workers on site, and Wex has learned that it can accommodate having many employees working off site.

A year ago, Wex moved into a new corporate headquarters at the corner of Hancock and Thames streets across from Portland’s eastern waterfront, and earlier this year it announced plans for a new operations center for about 1,200 workers at The Downs in Scarborough. A company spokesman said Thursday that there has been no change in those plans.

Founded in 1983 as Wright Express Corp., Wex offers payment-processing services to the vehicle fleet, corporate travel, health care and employee benefit industries.

One of Maine’s largest publicly traded companies, Wex stock trades on the Nasdaq Stock Market under the symbol WEX. Its stock price rose in morning trading. At noon, it was at $137.43 per share, up $7.28, or 5.6 percent, from the previous day’s closing price.

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