Wright Express Corporation, a leading provider of payment processing and information management services to the U.S. commercial and government fleet industry, reported financial results for the quarter ended March 31, 2007.
Total revenue for the first quarter of 2007 increased 11% to $71.8 million from $64.6 million for the first quarter of 2006. Net income to common shareholders on a GAAP basis for the first quarter of 2007 was $8.3 million, or $0.20 per diluted share, compared with $11.4 million, or $0.28 per share, for the comparable quarter last year. On a non-GAAP basis, the Company’s adjusted net income for the first quarter of 2007 increased 21% to $14.8 million, or $0.36 per diluted share, from $12.3 million, or $0.30 per diluted share, for the year-earlier period.
Wright Express uses fuel-price derivative instruments to mitigate financial risks associated with the variability in fuel prices. For the first quarter of 2007, the Company’s GAAP financial results include an unrealized $10.6 million pre-tax, non-cash, mark-to-market loss on these instruments. For the first quarter of 2006, the Company reported an unrealized pre-tax, non-cash, mark-to-market loss of $1.4 million. Exhibit 1 reconciles adjusted net income for the first quarters of 2007 and 2006, which has not been determined in accordance with GAAP, to net income as determined in accordance with GAAP.
Management uses the non-GAAP measures presented within this news release to evaluate the Company’s performance on a comparable basis, to eliminate the volatility associated with its derivative instruments, and to measure the amount of cash that is available for making scheduled payments on the Company’s financing debt and discretionary purposes. Management believes that investors may find these measures useful for the same purposes, but cautions that they should not be considered a substitute for disclosure in accordance with GAAP.
First-Quarter 2007 Performance Metrics
– Total fuel transactions processed increased 3% from the first quarter of 2006 to 59.9 million. Primarily reflecting the conversion to payment processing of the Company’s ExxonMobil portfolio, payment processing transactions increased 16% to 50.6 million, and transaction processing transactions decreased 36% to 9.4 million.
– Average number of vehicles serviced was approximately 4.3 million, compared with approximately 4.3 million in the first quarter of 2006. The comparability of this metric was affected by the termination of inactive vehicles in the private label channel.
– Average expenditure per payment processing transaction increased 1% to $49.32 from $48.63 for the same period last year.
– Average retail fuel price was $2.43 per gallon, compared with $2.41 per gallon for the first quarter a year ago.
– Total MasterCard purchase volume grew 43% to $385.2 million from $269.4 million for the comparable period in 2006.
– Wright Express repurchased approximately 489,000 shares of its common stock at a cost of approximately $14 million during the first quarter of 2007.
Additional selected non-financial metrics are presented in Exhibit 2. Management Comments on the First Quarter
“Overall transaction volume grew 3% this quarter, in line with our expectations,” said Michael Dubyak, president and chief executive officer. “At the same time, purchase volume in our MasterCard business and the net payment processing rate in our fleet segment were higher than we expected, and operating expenses were generally consistent with our plan. As a result, first-quarter adjusted net income exceeded the top end of our guidance range. In addition, we were able to implement our share repurchase program, buying back approximately $14 million of the Company’s common stock through March 31st.”
“Wright Express remains on track for a stronger second half of 2007,” said Dubyak. “Our front-end operations — customer acquisition and activation — continue to perform well. Although we faced some challenges on the annuity side of our business in the fourth quarter of 2006, they have diminished over the past four months. Looking forward, we expect improvement in transaction volume as we move through the year.”
Financial Guidance
Wright Express Corporation is issuing financial guidance for the second quarter of 2007 and updating financial guidance for the full year 2007. The Company’s guidance includes a $1.2 million, or $0.03 per share, non-cash charge, net of taxes, to write off previously capitalized costs for its senior credit facility, which is expected to be re-financed in the second quarter of 2007, and excludes the impact of non-cash, mark-to-market adjustments on its fuel-price-related derivative instruments. The fuel prices referenced below are based on the applicable NYMEX futures price:
– For the second quarter of 2007, revenue in the range of $78 million to $83 million. This is based on an assumed average retail fuel price of $2.81 per gallon.
– Second-quarter 2007 net income, excluding unrealized gain or loss on derivative instruments, in the range of $16 million to $17 million, or $0.38 to $0.41 per diluted share, based on approximately 41 million shares outstanding.
– For the full year 2007, revenue in the range of $315 million to $325 million. This is based on an assumed average retail fuel price of $2.63 per gallon.
– Net income for the full year 2007, excluding unrealized gain or loss on derivative instruments, in the range of $69 million to $74 million, or $1.68 to $1.78 per diluted share, based on approximately 41 million shares outstanding.
About Wright Express
Wright Express is a leading provider of payment processing and information management services to the U.S. commercial and government vehicle fleet industry. Wright Express provides these services for approximately 295,000 commercial and government fleets containing 4.3 million vehicles. Wright Express markets these services directly as well as through more than 125 strategic relationships, and offers a MasterCard-branded corporate card. The Company employs more than 675 people and maintains its headquarters in South Portland, Maine. For more information about Wright Express, please visit http://www.wrightexpress.com.
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[1]: http://www.carddata.com
