WEX Inc. (NYSE:WEX) Q1 2018 Earnings Conference Call - Final Transcript

May 03, 2018 • 09:00 am ET

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WEX Inc. (NYSE:WEX) Q1 2018 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Certainly. (Operator Instructions). Our first question comes from the line of Ramsey El-Assal of Jefferies. The line is open.

Analyst
Ramsey El-Assal

-- for taking my question. I wanted to revisit the large positive spread between the Travel segment volumes and revenues. If you were to strip out AOC, FX and the accounting change, I'm just trying to gauge how much of that improved kind of revenue conversion there is organic versus those factors?

Executive
Roberto Simon

So, this is Roberto. Good morning. As you recall, I just said that around $9 million is related to AOC and we also have a small tailwinds on FX. So, if you would strip those two pieces, which are around $10 million, you can get now -- to the number pretty quickly.

So, half of it is due to AOC and tailwinds and the rest is obviously the great performance from the Travel segment.

Analyst
Ramsey El-Assal

Great. That's very helpful. Thank you. And given where fuel prices are now, up quite a bit year-over-year, what is your sort of evolving philosophy on rolling back into the hedges in order to kind of normalize out your earnings relative to fuel?

Executive
Melissa Smith

I'll start and Roberto can add on here. But we exited the hedges a few years ago, and you're right, it was around when fuel prices were starting to drop because we just didn't see the upside being worth the downside. I think, as we've stayed out of the marketplace and we've complemented (ph) our position more and when we do look back over time, we know that we've paid out more than we've taken in, even though we were hedging over a relatively long period of time. So, our position has really moved to less likely to re-enter the market.

I think the other point for us is that the business is much more diverse than it was. When we first went public, about 70% of our revenue was exposed to fuel prices and that was really the impetus for us, starting the hedging program and now that's down closer to 20%. And so, as the business has evolved, we just don't think it's important to do now.

Analyst
Ramsey El-Assal

Okay. That's fair. And then a last quick one for me. I saw Roberto mention that same-store sales was marginally positive, which seem to be a little bit of a deceleration, if I recall correctly, versus last quarter. Is there any commentary there or any color? I'm not sure if I have that right actually, but is there any just general commentary along same-store sales, what's -- what are the healthier verticals versus the unhealthier verticals?

Executive
Melissa Smith

Yeah, you're right. It was up a couple of percent, rounded up a couple of percent last quarter and now it's flat for this quarter. I don't know that I would say there's anything that really stands out other than mining and gas -- oil and gas is probably the biggest thing to point from quarter to quarter that we're seeing less.

It's flat in this quarter where