Wright Express Beats the Street Again

In last week’s CWS Market Review, I said to watch for good news from Wright Express’ ($WXS) earnings report. The stock has beaten earnings expectations handily for the past few quarters. Wright did it again today.

Three months ago, Wright said that Q4 EPS would range between 88 cents and 94 cents. Instead, they earned 98 cents per share. Wall Street’s consensus had been for 92 cents per share. That’s earnings growth of 32%. For the quarter, revenue rose 22% to $139.8 million.

Michael Dubyak, Chairman, President and Chief Executive Officer, commented, “2011 was another great year for Wright Express as we experienced continued strength across our business and considerably surpassed our expectations. These results demonstrate further progression against our multi-pronged strategy to grow our North American fleet business, diversify our revenue streams and build out our international presence. The fourth quarter was no exception as we experienced robust performance in our other payments solutions with our corporate charge card product, and steady growth in our core fleet business.”

Mr. Dubyak continued, “As we enter 2012 and think about the year ahead, our strategy remains the same. We are committed to maintaining our investments in the business to accelerate the development of our new products, while also supporting sustainable future growth both domestically and internationally.”

Fourth Quarter 2011 Performance Metrics

• Average number of vehicles serviced worldwide was approximately 6.6 million, an increase of 14% from the fourth quarter of 2010.

• Total fuel transactions processed increased 8% from the fourth quarter of 2010 to 80.0 million. Payment processing transactions increased 3% to 60.6 million; transaction processing transactions increased 31% to 19.4 million.

• Average expenditure per domestic payment processing transaction increased 20% from the fourth quarter of 2010 to $70.10.

• Domestic retail fuel price increased 19% to $3.53 per gallon from $2.96 per gallon in the fourth quarter of 2010.

• Total corporate card purchase volume grew 66% to $2.0 billion, from $1.2 billion for the fourth quarter of 2010.

Next comes the guidance. For Q1, Wright said it expects earnings between 87 and 93 cents per share and revenue between $134 and $139 million. For the year, the company expects earnings to range between $4.10 and $4.30 per share on revenue between $590 million and $610 million. It’s too early for me to get a feel for whether or not these projections are too conservative. Wright’s estimates are based on a few assumptions:

First quarter 2012 guidance is based on an assumed average U.S.
retail fuel price of $3.56 per gallon, and approximately 39 million shares outstanding. Full-year 2012 guidance is based on an assumed average U.S. retail fuel price of $3.59 per gallon and approximately 39 million shares outstanding. In addition, the fuel prices referenced above are based on the applicable NYMEX futures price. We are assuming the exchange rate of the Australian dollar will remain at a premium to the US dollar. The Company’s guidance also assumes that 2012 domestic credit loss for the first quarter and the full year will range between 13 and 18 basis points.

Posted by on February 8th, 2012 at 8:37 am

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