Fast-growing Wex Inc. in South Portland has become the third member of Maine’s exclusive billion-dollar club.
In 2016, the company’s annual revenue exceeded $1 billion for the first time in its history, according to a fourth-quarter earnings statement filed Monday with the U.S. Securities and Exchange Commission.
Only two other Maine-based companies, animal testing products maker Idexx Laboratories Inc. in Westbrook and outdoor retailer L.L. Bean Inc. in Freeport, have reported annual revenue of at least $1 billion.
Wex, a provider of corporate payment solutions, has grown significantly in recent years by acquiring competitors, signing new contracts and expanding its business into new areas.
“The fact that we hit the billion-dollar mark was a huge milestone for us,” Wex President and CEO Melissa Smith said in a phone interview, calling the achievement a cause for celebration.
In July 2016, the company closed on its largest acquisition to date, the purchase of Nashville, Tennessee-based competitor Electronic Funds Source LLC for nearly $1.5 billion. The increased revenue from that transaction helped push Wex’s 2016 revenue up to $1.02 billion, a 19.2 percent increase from $854.6 million in 2015. The company also has signed major contracts in recent months with Enterprise Fleet Management, an affiliate of car-rental empire Enterprise Holdings Inc., and Chevron Products Co., a division of petroleum giant Chevron U.S.A. Inc.
Both Wex and Idexx are publicly traded companies and are required to report quarterly and annual revenue. Privately held companies such as L.L. Bean have no such requirement. Though Bean makes a practice of releasing its information, there could be other private companies in Maine that have hit the billion-dollar mark and don’t release their revenue reports.
Bath shipbuilder Bath Iron Works, a division of West Falls Church, Virginia-based General Dynamics Corp., also generates annual revenue of more than $1 billion, as does disability insurance provider Unum Group, which is based in Chattanooga, Tennessee, but has major operations in Portland.
Wex has a workforce of roughly 2,500 employees worldwide, including 750 in South Portland.
York-based consulting economist Charles Lawton said there are several economic benefits to Maine from having a high-profile business success such as Wex headquartered in the state.
“To me the major significance is that we’ve identified another really large, growing company … a company that has grown really radically,” said Lawton, who also writes a business column for the Portland Press Herald. “That, to me, is the story.”
Lawton said other large companies considering Maine as a possible location for expansion certainly will look at Wex’s growth as evidence that it is possible to run a successful business in the state.
“That helps Maine out of the (perception that) it’s just tourism and moose and lobster,” he said.
It’s likely that a wide variety of other companies in Maine benefit financially from the growth of Wex, Lawton said, including banks, marketing firms, transportation services and other businesses.
“I think it creates opportunities for all the other Maine companies that sell to them,” he said.
Wex provides fuel payment cards and payment-processing services to companies and government organizations that operate fleets of trucks and other vehicles. It also provides payment-processing services to online travel-booking services and health care providers.
Smith said she was particularly pleased that the company achieved growth across every segment of the business in the fourth quarter.
For example, its total processed fuel purchases increased by 24 percent from the fourth quarter of 2015 to 123.1 million transactions, its payment-processing transaction volume increased by 18 percent to 99.7 million transactions, and its travel and corporate solutions purchase volume grew by 39 percent to $6.4 billion, up from $4.6 billion for the fourth quarter of 2015.
“Our business is more global, diverse and innovative than ever before, and our capabilities continue to expand and position ourselves to compete in the global marketplace,” she said. “Our performance in both the fourth quarter and fiscal year has provided us with a very solid foundation as we look forward to the company’s continued success.”
Wex reported revenue of $290.8 million for the fourth quarter, up 37 percent from $212.6 million in the fourth quarter of 2015. Net income for the fourth quarter before two one-time adjustments for earned interest and a settlement with a third-party vendor was $55.2 million, or $1.28 per share, up 22 percent from $45.2 million, or $1.16 per share, for the same period of 2015. The company beat analysts’ expectations of $1.26 per share for the quarter, according to investor service Seeking Alpha.
Adjusted net income for the year was relatively flat at $189.2 million, compared with $191.1 million in 2015.
Prior to the earnings statement’s release, stock analysis firm Zacks Equity Research noted that several analysts had revised their earnings predictions upward for the company shortly before Wex reported its quarterly revenue and net income.
“Clearly, recent earnings estimate revisions suggest that good things are ahead for Wex Inc., and that a beat might be in the cards for the upcoming report,” it said.
Earlier this month, Zacks included Wex on its list of “Seven Stocks with Impressive Sales Growth to Buy Right Now.”
Wex trades on the New York Stock Exchange under the symbol WEX. Its stock price reached an all-time high of $122.91 in early trading Monday before ending the day at $113.52.
J. Craig Anderson can be contacted at 791-6390 or at:
Twitter: @jcraiganderson
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