PORTLAND, Maine — When your company’s profits are tied to gasoline prices, the plummeting per-gallon figures at the pump during the fourth quarter of 2014 did not bode well.
That was the challenge for South Portland-based payment processor WEX, whose fourth quarter earnings came in about 13 cents per share lower than analysts expected, at 90 cents of profit per share.
The company grew its profits for the year, but Melissa Smith, the company’s CEO, said that low gasoline prices have caused a “headwind” for the company headed into 2015, as about 40 percent of its earnings vary with fuel prices.
Looking ahead, the company expects an average fuel price nationally of about $2.62 for the full year, which is up from the national average of $2.17 for a gallon of regular gas.
That’s down from the about 70 percent exposure to fuel price fluctuations the company had when it went public in 2005, Smith said. The company generates that revenue from a percentage of the transactions it completes.
“It’s a much smaller variation than it has been in the past, but there is an impact,” Smith said Monday in a telephone interview, noting that earnings still fell within the range of projected earnings from its previous quarterly report.
While the number of fuel card payments rose for the year, WEX’s revenue from processing those transactions fell by about $770 million, to $6.07 billion, compared with the company’s third quarter. Its payment processing rate was the same for both periods, at 1.37 percent.
While fleet payment revenue took a hit with falling gas prices, the company has expanded its geographic reach in recent years and ventured into new areas of payment processing, including health care. It acquired the health care payment processing company Evolution 1 last year.
“Despite the foreign exchange and fuel price headwinds we experienced this quarter, the underlying fundamentals of our business remain very strong, and we look to carry this momentum forward into 2015,” Smith said in a prepared statement.
Smith said in the next year the company with about 650 employees at its Maine headquarters will focus on renovations that allow employees in the home office to teleconference with new arms of the company globally and across the country.
And some of the renovations have sought to reinforce the company’s connection to Maine, such as woodwork by Gorham-based craftsman Tim Hill using white birch recovered from the bottom of Moosehead Lake by DeadHead Lumber Co. in Buxton.
Overall, the company grew its profits by 34 percent in 2014, with net income rising to $200 million for the full year, up from $148 million in 2013. Net income for the fourth quarter was up about 39 percent from the previous year, at $47.1 million from $33.9 million in 2013.