Wex Preps for European Expansion, Fueled by Exxon Card Acquisition

Corporate payment provider Wex is already laying the groundwork for 2015, when it plans to use the ExxonMobil fleet payments program to jump-start its efforts in the large network of European countries that comes with the new product.

"We're positioning [Wex] to accelerate growth through mergers and acquisition, driving scale across the organization and globalizing our business," says Melissa Smith, Wex's CEO, in an interview the day of Wex's fourth quarter earnings call on Feb. 5.

Wex's acquisition of Exxon's Esso card program touches on all three of those goals. It will add an international network of 1 million closed-loop card payments, giving Wex a substantial foothold in Europe across nine countries.

The deal is expected to close by the end of this year, allowing Wex to take control of the network by early 2015. Wex and Exxon will work on ensuring regulatory compliance this year, Smith says, adding Wex will work with its partner company Radius on a strategy to operate the network.

"There are a number of different European countries that we are going to be operating in," Smith says. This sudden growth will create complexities around the different local payment methods used in Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway and the United Kingdom, with cross-acceptance agreements with other petroleum companies that boost the network to as high as 13,000 locations in 18 countries, she says.

Wex has created a joint venture with Radius, Wex Europe Services Ltd., to manage the network. Radius, which owns 25% of Wex Europe Services, has supplied more than a million fuel cards across Europe and employs more than 600 people in 17 offices across the continent.

"They have significant experience in that market, and we are interested in having them help with all of the nuances that come from operating in these different countries," Smith says. "They have a significant European presence."

Wex's revenue for the fourth quarter of 2013 increased 8%, to $182.3 million, from $169 million in the fourth quarter of 2012. Net income rose 19%, to $34.5 million, in the fourth quarter of 2013, compared to $29.1 million a year earlier. For the full year, revenue increased 15%, to $717.5 million, from $623.2 million in 2012. Its net income for the year rose 54%, to $149.2 million, from a year earlier.

The company's growth in 2013 was partly driven by the issuance of 700,000 new fleet cards globally, an increase in business spending volume by more than 20% and a move into Brazil, Wex says.

For the full year 2014, Wex projects revenue in the range of $751 million to $771 million and adjusted net income to be in the range of $184 million to $191 million.

Wex is also branching into health care payments with virtual cards, and is expanding its virtual travel card program beyond its current 15 currencies. "Enabling purchases in local currencies allows us to enhance controls on our global travel product so users can pin down what they are spending at a much higher level of refinement," Smith says.