Wex Inc. · NYSE:WEX
Wex — Investor Day (December 2014)
75 slides from Wex's investor day presentation, Dec 9, 2014
Slide 1: Inaugural Investor Day
Exhi INAUGURAL INVESTOR DAY Tuesday, December 9, 2014 The St. Regis, New York
Slide 2: Opening Remarks
December 9, 2014 Opening Remarks Micky Thomas VP Investor Relations and Treasurer
Slide 3: Forward-looking statements
Today’s presentations contain statements about future plans and expectations, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are generally stated in terms of the Company’s plans, expectations and
Slide 4: Today's Agenda
Today’s Agenda 8:00 – 8:30 AM 8:30 – 9:45 AM 9:45 – 10:00 AM 10:00 – 11:00 AM 11:00 – 11:15 AM 11:15 – 11:30 AM 11:30 – 12:00 PM Welcome & Strategic Overview – Melissa Smith, President & CEO Senior Management Presentations Fleet Overview - Ken Janosick, SVP & GM, Fleet Payment Solutions Travel Overv
Slide 5: CEO Introduction
CEO Introduction Melissa Smith President & CEO
Slide 6: Strategic Overview
December 9, 2014 Strategic Overview Melissa Smith President & Chief Executive Officer
Slide 7: Agenda
Agenda Expanding into a Leading Global Payments Provider Execution Against Strategic Objectives Achieving Long-Term, Sustainable Growth
Slide 8: Accelerate Growth, Targeted Investments, Drive Scale
Accelerate Growth Make Targeted Investments Drive Scale Across the Business Targets: Long-Term: 10-15% Revenue Growth315-20% ANI Growth3 Simplify the unique challenges of complex payments systems across industries including Fleet, Travel and Health 3Long-term growth targets A Leader Provider of Corp
Slide 9: Strong leadership positions with further growth opportunities
Strong leadership positions with further growth opportunities Business Overview Based on midpoint of FY14 guidance as of 10/29/14 Fleet Payment Solutions 69% of total revenue Fleet vehicle payment processing services Designed for needs of commercial and government fleets Revenue earned primarily fro
Slide 10: Leveraging Strengths Across Industries
FLEET Technology, combined with our customer-centric approach, has driven success in Fleet and creates further opportunity for WEX in Travel and Health Leveraging Strengths Across Industries TRAVEL HEALTH
Slide 11: Delivering Sustained Growth
Delivering Sustained Growth 1Based on midpoint of FY14 guidance as of 10/29/14 Strong track record of execution, and in turn, financial performance $ in millionsCAGR: 14% CAGR: 17% FY2005 FY2014 REVENUE BY SEGMENT TRAVEL HEALTH EMPLOYEE (other payment solutions) INT’L REVENUE ANI1 6% 94% FLEET 69% U
Slide 12: Expanding Our Leadership Position
EXPANDING OUR LEADERSHIP POSITION
Slide 13: Executing Against our Strategic Objectives
2014 has been a year of great success, due to strong execution on our strategic objectives Executing Against our Strategic Objectives
Slide 14: The Convergence of Trends
The Convergence of Trends Economic expansion domestically and abroad Opportunities in new markets Macroeconomic trends emerging across the globe New opportunities in cloud, mobile, social, and big data Increasing pace of innovation Rising demand for mobile-centric and data rich solutions Evolving pa
Slide 15: Implications for WEX
Implications for WEX MARKET EXPANSION AND INNOVATION will capture growth across new products, geographies and industries. There is a lot of growth available globally from the decreased reliance on cash, the move to eCommerce and the increasing importance of data insights.
Slide 16: Expanding our Global Footprint
Expanding our global footprint has opened opportunities in key regions and across end markets Expanding our Global Footprint WEX CORPORATE OFFICES EVOLUTION1 WEX BANK WEX FLEET ONE WEX FUEL MANAGEMENT WEX rapid! Paycard UNIK WEX EUROPE SERVICES WEX EUROPE WEX EUROPE SERVICES WEX ASIA WEX AUSTRALIA W
Slide 17: Market Opportunity – Fleet
Market Opportunity – Fleet We have maintained our market leadership by offering a complete product offering that addresses the needs of a diversified customer base WEX POSITION ~41M commercial vehicles 16% market share MARKET SIZE (VEHICLES) ~56M commercial vehicles 2% market share ~30M commercial v
Slide 18: Market Opportunity – Travel & Health
Market Opportunity – Travel & Health We have maintained our market leadership by offering a complete product offering that addresses the needs of a diversified customer base TRAVEL MARKET SIZE HEALTHCARE MARKET SIZE Markets: United States, Europe, Asia-PAC, and LATAM.* Market: United States $69B OTA
Slide 19: Accelerating Growth within Fleet Payments
Accelerating Growth within Fleet Payments Expanded offer drives globalization and customer-centric focus drives growth in Fleet
Slide 20: Cultivating our Leadership in Travel
Cultivating our Leadership in Travel Domestic leadership position paving the way for global expansion
Slide 21: Targeted Investments in High Growth Markets
Healthcare presents a growing opportunity in a complex payments ecosystem Targeted Investments in High Growth Markets
Slide 22: Driving Scale in the Business
Scaling our capabilities across verticals and businesses drives operational efficiency and strengthen our offering in diverse markets Driving Scale in the Business
Slide 23: Achieving Long-Term Revenue Growth Targets
Achieving Long-Term Revenue Growth Targets Market Penetration Expansion in New Markets Geographic & International Expansion 10-15% Growth CAGR
Slide 24: WEX Senior Leadership
WEX Senior Leadership WEX ASIA Jeff Ames WEX EUROPE SERVICES Jay Collins CUSTOMER ACQUISITIONS Bill Cooper SHARED SERVICES Steve Crowley CORPORATE FINANCE Steve Elder INTERNATIONAL George Hogan FLEET PAYMENT SOLUTIONSKen Janosick CORPORATE DEVELOPMENT Nicola Morris VIRTUAL PAYMENTS Jim Pratt LEGAL &
Slide 25: Positioned for Success
WEX has demonstrated great success and is well-positioned to continue its profile as a leader across the payments space Positioned for Success Accelerating Growth Making Targeted Investments Driving Scale Strong Foundation Expanded Market Opportunity Long-term Sustainable Growth
Slide 26: Fleet Overview
December 9, 2014 Fleet Overview Ken Janosick SVP and GM, Fleet Payment Solutions
Slide 27: Agenda
Agenda Business Model Competitive Differentiation Accelerating Growth
Slide 28: Strong and Consistent Track Record of Growth
Strong and Consistent Track Record of Growth $562M annual revenue (2014) 15% CAGR 2009-2014 9.0M vehicle network 390M total fuel transactions annually, 5% increase y/y 15% CAGR 1Based on Midpoint of FY14 Guidance as of 10/29/14
Slide 29: Customer Centric Business Model
Customer Centric Business Model Operating savings Increased efficiency and productivity Lower risk Better convenience Security Driver IDs Real-Time Updates Purchase controls Products Alerts Flag Unusual Items Customized Reporting WEXOnline® - Customer Portal Query by driver location Innovative produ
Slide 30: Typical Transaction and Revenue Stream
Typical Transaction and Revenue Stream 1Based on midpoint of FY 14 guidance as of 10/29/14 ACTION RELATED REVENUE STREAMS1 1. 2. 3. 4. 5. 64% 13% 23% Driver inserts card Purchase Controls/Data Capture Transaction approved by WEX WEX pays merchant in 10 days WEX receives payment in 30 days Credit man
Slide 31: Closed Loop Proprietary Network
Closed Loop Proprietary Network Significant Competitive Differentiator Large network of NA fuel and service networks Control POS (Point of Sale) specification Investm ent in leading edge technology Closed Loop v. Open Loop Negotiate terms directly with merchants Provide greater security to protect a
Slide 32: Proven Partner Go To Market Capabilities
Proven Partner Go To Market Capabilities Deep Fleet market understanding built from 30 years of experience, fleet behavioral data and robust customer research Proprietary response and sales coverage models Comprehensive understanding of partner brands and business models New Partner Programs Portfol
Slide 33: Superior Service and Capabilities
Superior Service and Capabilities Superior service capabilities drive… … business growth Higher customer retention and lower churn rate Long st anding customer relationships Greater customer loyalty translating into deeper wallet share Proven brand reputation VIP CUSTOMERS PREMIUM FLEET SERVICES STR
Slide 34: Closed Loop Network, Products, Channels, Market
CLOSED LOOP NETWORK PRODUCTS CHANNELS MARKET FLEET SIZE 160,000 ACCEPTING LOCATIONS WEX DIRECT WEX FLEET 3.8M VEHICLES 3.3 VEHICLES RETAIL PETROLEUM FLEET LEASING 1.9M VEHICLES Private Lable Card Program Cobranded Card Program Over the Road Card Program WEX Direct Card Program Telematics
Slide 35: Strong Market Position with Growth Opportunities
Strong Market Position with Growth Opportunities WEX enjoys 16% market share in the US and excellent opportunity for market expansion in US, Europe, ANZ and Central America WEX POSITION ~41M commercial vehicles 16% market share MARKET SIZE (VEHICLES) ~56M commercial vehicles 2% market share ~30M com
Slide 36: Evolving Market Poses Unique Opportunity
Evolving Market Poses Unique Opportunity Taking our capabilities mobile so that customers can interact with us across channels and reduce cost of service driving scale Mobile technology that enables self service and sourcing of lower cost fuel Data analytics and reporting helps fleets manage the tot
Slide 37: Accelerating Growth: FleetOne Integration and Small Fleets
Integrate our FleetOne Business Small and Mid-Size Fleet Opportunities Cash, check and “consumer cards” ripe for better customer solution Scale opportunities OTR market represents 5.0M vehicle opportunity OTR offering into large and diversified customer base: Ex. Sinclair an d Sunoco OTR product exp
Slide 38: Leadership, Growth and Scale
Leadership, Growth and Scale Sustainable long term growth based on proven Business Model New Business pipelines are strong; high customer retention continues Positioned to ride the next wave of growth; integrated data and mobile Rolling out scale initiatives; continuous improvement and pricing
Slide 39: Travel Overview
December 9, 2014 Travel Overview Alison Vanderhoof SVP and GM, Emerging Industries Jim Pratt VP, Virtual
Slide 40: Agenda
Agenda Expanding Our Business Across Verticals Success in Travel Go-Forward Strategy
Slide 41: Expanding Our Leadership in New Verticals
Expanding Our Leadership in New Verticals Significant success in leveraging our strengths to expand into new industries has resulted in robust growth 1Based on midpoint of FY14 guidance as of 10/29/14 47% CAGR 2014 REVENUE Fleet/Other Payment Solutions TRAVEL, HEALTH & EMPLOYEE (other payment soluti
Slide 42: WEX Travel
WEX Travel Leading knowledge of travel and o nline travel agency operations and needs has secured our leadership domestically Leader in dome stic and international markets Proven product that has competitive advantage Continuing to expand and target new markets
Slide 43: The Global Opportunity
The Global Opportunity Established leadership in the US market, with significant runway in a global $69 billion OTA market Domestic customers include all the major OTA’s in the U.S. Internati onal Expansion Europe Asia-Pac LATAM WEX TRAVEL IS USED IN OVER 200 COUNTRIES AND TERRITORIES
Slide 44: The Future of WEX Travel
The Future of WEX Travel Driving scale and global expansio n will enable continued growth in an attractive vertical PENETRATE MARKETS EXPAND GLOBALLY DRIVE SCALE
Slide 45: Assessment of New Verticals
Assessment of New Verticals Thoughtful approach will uncover new verticals and adjacencies that will benefit from WEX’s unique capabilities and expertise of complex payment systems NEED FOR AGGREGATOR OR INTERMEDIARY B2B MODEL VERTICAL MARKET SHARE HOLDERS HIGH VOLUME OF PAYMENTS PAYMENT COMPLEXITIE
Slide 46: Looking Forward
Looking Forward Entry into new verticals will drive continued contribution from our Other Payments Solutions segment
Slide 47: Health Overview
December 9, 2014 Health Overview Jeff Young SVP and GM, Evolution1
Slide 48: Agenda
Agenda Business Model Market Opportunities Competitive Advantage Go-Forward Strategy
Slide 49: WEX Will Simplify the Business of Consumer Driven Healthcare
Industry Leading Technology Large and Growing Market Innovative Partner Network WEX Will Simplify the Business of Consumer Driven Healthcare Evolution1 strengthens our healthcare vertical, we will continue our mission of simplifying complex payment systems in a high-growth market
Slide 50: Consumer Driven Healthcare Market Opportunity
Explosive Consumer Driven Healthcare Market Opportunity An ever-changing industry has resulted in a consumer-driven market calling for streamlined , simplified payment solutions 66% of companies offer CDH, up from 53% 20% of employers have moved to a total replacement strategy for CDH $1.35T Spend i
Slide 51: Using Rich Technology to Transform Consumer Healthcare
Using Rich Technology to Transform Consumer Healthcare Payment Card Multi Account Based Mobile Deployed Private Exchange / Defined Contribution SaaS / Cloud “Evolution1’s technology has been a key component to aligning our integrated health delivery system with Kaiser's integrated CDHC strategy” Chu
Slide 52: Evolution1 Rich Technology Drives Mobile Adoption
Evolution1 Rich Technology Drives Mobile Adoption AVERAGE NUMBER OF TIMES A PERSON CHECKS THEIR PHONE EACH DAY 150 80% OF COMPANIES WILL DEPLOY NEW MOBILE APPS THIS YEAR THE NUMBER OF SMARTPHONE USERS IN US (2014) – 52.8% OF ALL MOBILE PHONE USERS 133 MILLION 6.8 BILLION ON MOBILE 4.5 BILLION ON SOC
Slide 53: Private Exchange and Defined Contribution Trends
40 million consumers projected in a Private Exchange marketplace over the next 5 years Evolution1’s Solutions Power 40 Private Exchanges Defined Contribution becoming a popular alternative for employees who want to continue coverage 66% 55% Source: Accenture analysis (2013), Kaiser Employer Health B
Slide 54: Innovative Partner Distribution Drives Growth
Innovative Partner Distribution Drives Growth Evolution1’s Partner network provides a strong foundation for establishing WEX’s presence in the healthcare vertical Cloud platform; One solution Mobile access Processed over 65 million transactions and $5 billion in payments volume in 2013 180,000 mobil
Slide 55: Evolution1 Partner Focus Drives Competitive Advantage
“This acquisition will solidify HSA Bank’s position as a leading provider of health savings accounts and will accelerate HSA Bank’s strategy to increase penetration of the carrier and large employer markets,” James C. Smith Chairman and Chief Executive Officer of Webster Webster Financial intends to
Slide 56: WEX Will Simplify the Business of Consumer Driven Healthcare
WEX Will Simplify the Business of Consumer Driven Healthcare Evolution1 Team, Technology Investments, and Partner Base will position WEX as a leader in consumer healthcare Team, Technology Investments, Expanded Partner Base Industry Leading Technology Large and Growing Market Innovative Partner Netw
Slide 57: International Overview
December 9, 2014 International Overview George Hogan SVP and General Manager, International
Slide 58: Agenda
Agenda Business Model Market Opportunities Panel Discussion
Slide 59: Our Approach to Globalization
Our Approach to Globalization Globalization is core to enhancing our competitiveness and capabilities across payment segments. Through organic growth and strategic M&A, we continue to attune our offering to the needs and trends of each region while growing our customer and partnership network Revenu
Slide 60: Expanding our Reach Across Sectors
Expanding our Reach Across Sectors We have made notable strides in expanding our Fleet and Travel businesses on a global scale, laying the groundwork and adapting our capabilities to gain share in Asia-Pac, Europe and Latin America Differentiated offering deliver s tremendous efficiencies for our cu
Slide 61: Market Opportunities
Market Opportunities We play in businesses that are seeing rapid evolution and increasing demand across regions and are building the infrastructure needed to lead the market and define the space EUROPE ASIA-PAC BRAZIL & LATAM
Slide 62: Global Panel Discussion
Global Panel Discussion JAY COLLINS MYLES STEPHENSON JOSE ROBERTO KRACOCHANSKY JEFF AMES Managing Director, WEX Europe Services Managing Director, WEX Europe, CEO, UNIK Managing Director, WEX Asia
Slide 63: Financial Overview
December 9, 2014 Financial Overview Steve Elder Chief Financial Officer
Slide 64: Agenda
Agenda Historical Financials Review of Current Year Results Esso Update Long-Term Targets Capital Allocation
Slide 65: Strong Financial Track Record
Strong Financial Track Record Over our company’s history, we have maintained stable growth and a strong margin profile 21% 5-yr CAGR 19% 5-yr CAGR 1Based on midpoint of FY14 guidance as of 10/29/14
Slide 66: Market Expansion and Globalization
Market Expansion and Globalization The stable growth of our core Fleet business has been complemented by the strong momentum and profitability of our Other Payments segment *2014 based on FY midpoint of guidance as of 10/29/14 47% CAGR 15% CAGR FLEET PAYMENT SOLUTIONS TRAVEL, HEALTH AND EMPLOYEE (ot
Slide 67: Strong 3Q Performance
Strong 3Q Performance Our results for the third quarter of 2014 leave us confident in the s trategies we have in place to continue to drive meaningful growth as we end the year and move into 2015 REVENUE PAYMENT SOLUTIONS PURCHASE VOLUME EARNINGS/DILUTED SHARE FUEL PRICES PER GALLON $ IN MILLIONS
Slide 68: 4Q14 and Full Year Guidance
4Q14 and Full Year Guidance Our results leave us confident in the strategies we have in place to continue to drive meaningful growth as we end the year and move into 2015 $206-$211M $812-$817M $42-$45M $1.07-$1.14 $198-$201M $5.08-$5.15 10-15bps 10-12bps $3.16 per gallon $3.53 per gallon 35-36% 32-3
Slide 69: ExxonMobil Europe Update
Exxon Mobil Europe Update We are excited to be collaborating with ExxonMobil and we are encouraged by our progress to date
Slide 70: Capital Allocation Policy
Capital Allocation Policy We maintain a disciplined and focus approach to our capital allocation DISCIPLINED CAPITAL DEPLOYMENT PHILOSOPHY MAINTAIN STRONG LIQUIDITY REINVEST IN THE BUSINESS EVALUATE M&A OPPORTUNITIES CONDUCT SHARE REPURCHASES Leverage targets 1.5-2.0x EBITDA Unused capacity on revol
Slide 71: Achieving Long-Term Revenue Growth
Achieving Long-Term Revenue Growth Market Penetration Expansion in New Markets Geographic & International Expansion 10-15% Growth CAGR
Slide 72: Closing Remarks
CLOSING REMARKS MELISSA SMITH ACCELERATING GROWTH MAKING TARGETED INVESTMENTS DRIVING SCALE
Slide 73: Summary
Summary Expanding into a Leading Global Payments Provider Execution Against Strategic Objectives Achieving Long-Term, Sustainable Growth
Slide 74: Positioned for Success
Positioned for Success WEX has demonstrated great success and is well-positioned to continue its profile as a leader across the payments space ACCELERATING GROWTH MAKING TARGETED INVESTMENTS DRIVING SCALE Strong Foundation Expanded Market Opportunity Long-term Sustainable Growth
Slide 75: We see corporate payments differently.
We see corporate payments differently.