Wright Express Reports Third Quarter 2009 Financial Results

Third Quarter Results Exceed Top End of Guidance; Consistent Vehicle Growth and Stability in Credit Portfolio Position Company to Benefit from Economic Recovery

• Press Release
• Source: Wright Express Corporation
• On 7:30 am EDT, Wednesday October 28, 2009

SOUTH PORTLAND, Maine--(BUSINESS WIRE)--Wright Express Corporation (NYSE: WXS - News), a leading provider of payment processing and information management services to the U.S. commercial and government fleet industry, today reported financial results for the three months ended September 30, 2009.

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Total revenue for the third quarter of 2009 decreased 20% to $86.6 million from $108.5 million for the third quarter of 2008. Net income to common shareholders on a GAAP basis was $23.4 million, or $0.60 per diluted share, compared with $72.3 million, or $1.82 per diluted share, for the same period last year. On a non-GAAP basis, the Company’s adjusted net income for the third quarter of 2009 was $24.9 million, or $0.63 per diluted share, compared with $21.8 million, or $0.55 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 third quarter of 2009, the Company’s GAAP financial results include an unrealized $100,000 pre-tax, non-cash, mark-to-market loss on these instruments. For the third quarter of 2008, the Company reported an unrealized pre-tax, non-cash, mark-to-market gain on these instruments of $82.4 million.

Exhibit 1 reconciles adjusted net income for the third quarters of 2009 and 2008, 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 payments on the Company’s financing debt and for 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 or superior to disclosure in accordance with GAAP.

Third Quarter 2009 Performance Metrics

• Average number of vehicles serviced increased 3% from the third quarter of 2008 to approximately 4.6 million.
• Total fuel transactions processed declined 7% from the third quarter of 2008 to 67.1 million. Payment processing transactions decreased 4% to 53.0 million, and transaction processing transactions decreased 17% to 14.1 million.
• Average expenditure per payment processing transaction decreased 35% from the third quarter of 2008 to $52.50.
• Average retail fuel price declined 36% to $2.58 per gallon from $4.02 per gallon in the third quarter of 2008.
• Total MasterCard purchase volume grew 31% to $876 million, from $670 million for the third quarter of 2008.

To provide investors with additional insight into its operational performance, Wright Express has included in this news release a table of selected non-financial metrics for the five quarters ended September 30, 2009. This table is presented as Exhibit 2.

Management Comments on the Third Quarter

“Maintaining focus on growth while managing our business effectively enabled Wright Express to continue delivering strong financial results this quarter, despite economic conditions that remained less than ideal,” said Michael Dubyak, Chairman and CEO. “Revenue and adjusted net income both exceeded the top end of our guidance range.”

“New business again helped offset the contraction in transactions from our existing customer base, and fleet transaction volume was in line with our forecast,” Dubyak said. “Several factors contributed to the positive results this quarter. On the revenue side, we benefited from higher-than-expected MasterCard purchase volumes, fuel prices and late fee income. At the same time, we have continued to be successful in managing credit loss and other operating expenses.”

“Although the macro economy may be showing signs of modest improvement, the current trends in fleet fueling activity suggest that the recovery has not yet extended to many of our existing customers,” said Dubyak. “When it does, the consistent net growth we have achieved in our total vehicle count sets the stage for a solid rebound in transaction volume. In the meantime, we will remain focused on providing greater value to our customers, continuing to gain market share, and deploying our solid cash flow to further strengthen and diversify our business.”

Financial Guidance

Wright Express Corporation is issuing financial guidance for the fourth quarter and raising guidance for the full year 2009. In preparing this guidance, for the fourth quarter of 2009 management is assuming a 5% to 7% year-over-year decline in transaction volume within the Company’s installed base of customers due to weak economic conditions. The guidance below further assumes that credit loss for the fourth quarter of 2009 will range from 25 to 30 basis points. The guidance below does not reflect the impact of any stock repurchases that may occur in 2009.

In addition, the Company’s guidance excludes the impact of non-cash, mark-to-market adjustments on its fuel-price-related derivative instruments, the amortization of purchased intangibles, asset impairment charges and adjustments related to the deferred tax asset and related tax-receivable agreement. The guidance below also excludes the second quarter gain associated with the settlement of a portion of the liability under the tax receivable agreement. The fuel prices referenced below are based on the applicable NYMEX futures price:

• For the fourth quarter of 2009, the Company expects revenue in the range of $76.5 million to $81.5 million. This is based on an assumed average retail fuel price of $2.53 per gallon.
• For the fourth quarter of 2009, the Company expects adjusted net income in the range of $20 million to $22 million, or $0.50 to $0.55 per diluted share, based on approximately 39 million shares outstanding.
• For the full year 2009, the Company expects revenue in the range of $311 million to $316 million. This is based on an assumed average retail fuel price of $2.36 per gallon.
• For the full year 2009, the Company expects adjusted net income in the range of $83 million to $85 million, or $2.12 to $2.17 per diluted share, based on approximately 39 million shares outstanding.

Conference Call Details

In conjunction with this announcement, Wright Express will host a conference call today, October 28, 2009, at 10:00 a.m. (ET). The conference call will be webcast live on the Internet, and can be accessed at the Investor Relations section of the Wright Express website, www.wrightexpress.com. The live conference call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. A replay of the webcast will be available on the Company's website for approximately three months.

About Wright Express

Wright Express is a leading global provider of payment processing and information management services. Wright Express captures and combines transaction information from its proprietary network with specialized analytical tools and purchasing control capabilities in a suite of solutions that enable fleets to manage their vehicles more effectively. The Company’s charge cards are used by commercial and government fleets to purchase fuel and maintenance services for approximately 4.6 million vehicles. Wright Express markets its services directly to fleets and as an outsourcing partner for its strategic relationships and franchisees. The Company’s business portfolio includes a MasterCard-branded corporate card as well as TelaPoint, a provider of supply chain software solutions for petroleum distributors and retailers, and Pacific Pride, an independent fuel distributor franchisee network, as well as international subsidiaries. For more information about Wright Express, please visit www.wrightexpress.com.

This press release contains forward-looking statements, including statements regarding: anticipated increases in transaction volume; focus on providing value to our customers; gaining market share; deploying cash flow to further strengthen and diversify our business; and, earnings guidance. These forward-looking statements include a number of risks and uncertainties that could cause actual results to differ materially, including: fuel price volatility; 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; the actions of regulatory bodies, including bank regulators, or possible changes in banking regulations impacting the Company’s industrial loan bank and the Company as the corporate parent; the uncertainties of litigation; the effects of general economics on fueling patterns and the commercial activity of fleets, as well as other risks and uncertainties identified in Item 1A of the Company’s Annual Report for the year ended December 31, 2008, filed on Form 10-K with the Securities and Exchange Commission on February 27, 2009 and the Company’s subsequent periodic and current reports. The Company’s forward-looking statements and these factors do not reflect the potential future impact of any alliance, merger, acquisition or disposition. The forward-looking statements speak only as of the date of this press release and undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

Although adjusted net income is not calculated in accordance with generally accepted accounting principles (GAAP), this measure is integral to the Company’s reporting and planning processes. The Company considers this measure integral because it eliminates the non-cash volatility associated with the derivative instruments, and excludes the amortization of purchased intangibles. Specifically, in addition to evaluating the Company’s performance on a GAAP basis, management evaluates the Company’s performance on a basis that excludes the above items because:

• Exclusion of the non-cash, mark-to-market adjustments on derivative instruments 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 fuel-price 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; and
• The amortization of purchased intangibles has no impact on the day-to-day operations of the business.

For the same reasons, Wright Express believes that adjusted net income may also be useful to investors as one means of evaluating the Company’s performance. However, because adjusted net income is a non-GAAP measure, it should not be considered as a substitute for, or superior to, net income as determined in accordance with GAAP. In addition, adjusted net income as used by Wright Express may not be comparable to similarly titled measures employed by other companies.

Definitions:

Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with Wright Express.

Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with Wright Express.

Payment processing $ of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with Wright Express.

Net payment processing rate represents the average percentage of the dollar value of each payment processing transaction that Wright Express records as revenue from merchants less any discounts given to fleets or strategic relationships.

MasterCard purchase volume represents the total dollar value of all transactions that use a Wright Express MasterCard-branded product.

Net interchange rate represents the average percentage of the dollar value of each MasterCard transaction that Wright Express records as revenue less any discounts given to customers.

News media contact:
Wright Express
Jessica Roy, 207-523-6763
Jessica_Roy@wrightexpress.com
or
Investor contact:
Wright Express
Steve Elder, 207-523-7769
Steve_Elder@wrightexpress.com