P W E R I N G
THROUGH PAYMENTS
1 hancock street / portland, maine 04101 / (207) 773.8171
newsroom@ wexinc.com / www.wexinc.com
2 0 2 0 A N N U A L R E P O R T
DIRECTORS
MELISSA D. SMITH
Chair and
Chief Executive Officer, WEX
JACK VANWOERKOM
Vice Chairman and
Lead Director, WEX
JAMES NEARY
JOEL (JAY) DEARBORN
Managing Director, Warburg Pincus
President, Corporate Payments
STEPHEN (STEVE) SMITH
ROBERT DESHAIES
President and Chief Executive Officer,
President, Health
L.L.Bean
SUSAN SOBBOTT
ANN (ANNIE) DREW
Chief Risk and Compliance Officer
Former Executive Vice President and
General Counsel, The Home Depot
Former President of Global Commercial
Services, American Express
JOHN (JEB) E. BACHMAN
Former Partner, PwC
REGINA O. SOMMER
Financial and Business Consultant
DANIEL (DON) CALLAHAN
Former Global Head of Operations and
Technology, Citigroup
SHIKHAR GHOSH
Professor, Harvard Business School
JAMES (JIM) GROCH
Former Global Group President and
Chief Investment Officer,
CBRE Group, Inc
EXECUTIVE OFFICERS
MELISSA D. SMITH
Chair and
Chief Executive Officer
DAVID COOPER
Chief Technology Officer
SCOTT PHILLIPS
President, Global Fleet
HILARY A. RAPKIN
Chief Legal Officer
ROBERTO SIMON
Chief Financial Officer
MELANIE TINTO
Chief Human Resources Officer
CORPORATE HEADQUARTERS
ATTORNEYS
INVESTOR RELATIONS
Wilmer Cutler Pickering Hale
Steve Elder
Senior Vice President, Global Investor Relations
(207) 523-7769
Steve.Elder@wexinc.com
FORM 10-K
A copy of the Company’s Form 10-K,
filed with the Securities and Exchange
Commission, is available without charge
upon written request to: WEX
Virtual meeting details to be provided
Investor Relations, 1 Hancock Street
in Notice and Proxy Statement
Portland, ME 04101; by calling
(866) 230-1633; or by emailing
investors@wexinc.com.
WEX
1 Hancock Street
Portland, ME 04101
(207) 773-8171
Email: newsroom@wexinc.com
www.wexinc.com
TRANSFER AGENT
American Stock Transfer
and Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
(800) 937-5449
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
(617) 437-2000
STOCKHOLDERS’ MEETING
and Dorr LLP
60 State Street
Boston, MA 02109
(617) 526-6000
Date: June 4, 2021
Time: 8:00 a.m. ET
Location:
TICKER SYMBOL
NYSE: WEX
WEX is a leading financial technology service provider. Since
our founding in 1983, we have simplified the complexities of
payment systems across continents and industries through
innovative technology, user-friendly tools and industry-leading
customer experience.
Our proprietary technology allows us to harness massive
amounts of data and deliver insights that help customers
make better business decisions. Our expertise within our three
segments—Fleet Solutions, Travel and Corporate Solutions,
and Health and Employee Benefit Solutions—is complemented
by our ability to deliver solutions tailored to meet specific
customer needs.
Through our products and services, we provide security, control
and intelligence for the payment transactions of more than
15.8 million fleet vehicles, $20.9 billion of Travel and Corporate
Solutions spend and 33.1 million healthcare consumers.
WEX and its subsidiaries employ approximately 5,300 associates
around the world. The company has been publicly traded since
2005, and is listed on the New York Stock Exchange under the
ticker symbol “WEX.”
1
2020 proved to be a year like no other and
I am proud of how WEX responded to the
challenging environment. I want to express my
gratitude and deep appreciation for the hard work
and dedication of the entire WEX team. Despite
unprecedented circumstances,
they executed
extraordinarily well, and once again, have proven
why they are the cornerstone of our organization. We
remained resilient and nimble as a company, stacking
up a series of competitive wins and renewals, strategically
targeting spending, and building upon WEX’s proven
robust technology platform.
Business resilience
Our focus on the health and safety of our employees,
customers and partners, and the communities in which we
operate, was paramount in 2020 and remains the same
today. Importantly, we were able to prioritize well-being while
maintaining business continuity, continuing to advance our
products, and increasing the momentum of our technology.
These achievements are reflected in the large number of
customer signings and renewals and a great deal of sales
momentum created throughout the year. On the cost side,
we successfully delivered savings initiatives through expense
management and targeted capital spending in areas that will
drive benefits for years to come.
Powering our future
We continued to push forward on the strategic imperative
of investing for our future. As a technology-focused
company, we made significant investments in increasing
speed and reliability through modern tools and executing
against our Cloud-native development methodology. We
continued the momentum of our global fleet platform
Cloud migrations, and now approximately two-thirds of the
volume we process is Cloud-based – a significant milestone
for WEX. These 2020 technology investments serve to meet
the dynamic needs of our customers and position WEX for
future growth and scalability.
Additionally, we invested in high-growth areas, such as our
U.S. health and corporate payments businesses, and we
also closed the eNett and Optal transaction. I remain excited
about completing this acquisition, as we believe it strengthens
WEX’s travel position and enhances our global payments
capabilities, thus creating value for customers and investors
over the long term by leveraging our collective assets and
global reach as the foundation of future innovation.
2
DEAR FELLOW SHAREHOLDERS
unprecedented circumstances,
2020 proved to be a year like no other and
I am proud of how WEX responded to the
challenging environment. I want to express my
gratitude and deep appreciation for the hard work
and dedication of the entire WEX team. Despite
they executed
extraordinarily well, and once again, have proven
why they are the cornerstone of our organization. We
remained resilient and nimble as a company, stacking
up a series of competitive wins and renewals, strategically
targeting spending, and building upon WEX’s proven
robust technology platform.
Business resilience
Our focus on the health and safety of our employees,
customers and partners, and the communities in which we
operate, was paramount in 2020 and remains the same
today. Importantly, we were able to prioritize well-being while
maintaining business continuity, continuing to advance our
products, and increasing the momentum of our technology.
These achievements are reflected in the large number of
customer signings and renewals and the great deal of sales
momentum created throughout the year. On the cost side,
we successfully delivered savings initiatives through expense
management and targeted capital spending in areas that will
drive benefits for years to come.
Powering our future
We continued to push forward on the strategic imperative
of investing for our future. As a technology-focused
company, we made significant investments in increasing
speed and reliability through modern tools and executing
against our Cloud-first development methodology. We
continued the momentum of our global fleet platform
Cloud migrations, and now approximately two-thirds of the
volume we process is Cloud-based – a significant milestone
for WEX. These 2020 technology investments serve to meet
the dynamic needs of our customers and position WEX for
future growth and scalability.
Additionally, we invested in high-growth areas, such as our
U.S. health and corporate payments businesses, and we
also closed the eNett and Optal transaction. I remain excited
about completing this acquisition, as we believe it strengthens
WEX’s travel position and enhances our global payments
capabilities, thus creating value for customers and investors
over the long term by leveraging our collective assets and
global reach as the foundation of future innovation.
Lastly, we believe a diverse and inclusive workplace
is an important part of our success. During 2020,
we advanced several key diversity and inclusion
initiatives and implemented new programs to support
our broader ESG efforts. Our work in this area,
however, is far from complete and I look forward
to sharing more detail about our plans over the
course of 2021. We remained focused on our core
philanthropic areas, specifically, the arts, education,
social equality, and wellbeing, and in support of this
effort, we awarded grants to more than 130 global,
non-profit organizations. We are proud of the impact
that WEX has been able and continues to make in our
communities.
Looking ahead
As we turned the page on 2020, we refreshed our
strategic pillars to better reflect the opportunities
in front of us as well as the expected operating
environment going forward. As a technology-focused
company, we remained committed to increasing
speed and reliability through the use of modern
tools. We will continue to build upon our deep
sector expertise, trusted client relationships, and risk
management capabilities. We are focused on winning
in the marketplace through anticipating customer
needs, bringing innovative offerings to the market
first through modular integrated solutions, and
fostering our values-based culture to attract and
retain the best talent in the industry.
We are progressing through 2021 with the groundwork
for success and building blocks for future growth
acceleration and market share gains in place. While
the pace of recovery will vary, I am confident that
our next chapter of growth will be our best yet. We
have established a strong platform that is more
resilient and diversified than ever before and remain
committed to driving long-term growth and value for
our shareholders.
The future for WEX is bright. Thank you for your
continued support.
Chair and Chief Executive Officer • April 20, 2021
3
FINANCIAL HIGHLIGHTS
TOTAL REVENUE
($ in Millions)
TOTAL PURCHASE VOLUME
($ in Billions)
82.2
76.5
65.0
50.6
55.6
’16 ’17 ’18 ’19 ‘20
’16 ’17 ’18 ’19 ‘20
KEY FINANCIAL HIGHLIGHTS & RECONCILIATIONS
($ in thousands)
2020
2019
2018
Revenue
$
1,559,869
$
1,723,691 $
1,492,639
Reconciliation of Net (Loss) Income Attributable to Shareholders to Adjusted Net Income ("ANI")
Net (loss) income attributable to shareholders
$
(243,638) $
99,006
$
168,295
Unrealized loss (gain) on financial instruments
Net foreign currency remeasurement loss (gain)
Acquisition-related intangible amortization
Other acquisition and divestiture related items
Legal settlement
Loss on sale of subsidiary
Stock-based compensation
Other costs
Impairment charges
Debt restructuring and debt issuance cost amortization
Non-cash adjustments related to tax receivable agreement
ANI adjustments attributable to non-controlling interests
Tax related items
27,036
25,783
171,144
57,787
162,500
46,362
65,841
13,555
53,378
40,063
(491)
(42,910)
(108,086)
34,654
926
159,431
37,675
–
–
47,511
25,106
–
21,004
(932)
53,035
(74,743)
(2,579)
38,800
138,186
4,143
–
–
35,103
13,717
5,649
14,101
775
(1,370)
(53,918)
Adjusted net income attributable to shareholders
$
268,324
$
402,673
$
360,902
The Company’s non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition-related intangible amortization, other acquisition and divestiture related
items, loss on sale of subsidiary, stock-based compensation, restructuring and other costs, legal settlement, impairment charges, debt restructuring and debt issuance cost amortization, non-cash adjustments related to tax receivable agreement, similar
adjustments attributable to our non-controlling interests and certain tax related items.
Although adjusted net income is not calculated in accordance with GAAP, this non-GAAP measure is integral to the Company’s reporting and planning processes and the chief operating decision maker of the Company uses segment adjusted operating
income to allocate resources among our operating segments. The Company considers this measure integral because it excludes the above-specified items that the Company’s management excludes in evaluating the Company’s performance. Specifically,
in addition to evaluating the Company’s performance on a GAAP basis, management evaluates the Company’s
performance on a basis that excludes the above items because:
• Exclusion of the non-cash, mark-to-market adjustments on financial instruments, including interest rate swap agreements and investment securities, helps management identify and assess trends in the Company’s underlying business that might
otherwise be obscured due to quarterly non-cash earnings fluctuations associated with these financial instruments. Additionally, the non-cash, mark-to-market adjustments on financial instruments are difficult to forecast accurately, making
comparisons across historical and future quarters difficult to evaluate.
• Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, accounts receivable and accounts payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on
foreign currency hedges relating to these items. The exclusion of these items helps management compare changes in operating results between periods that might otherwise be obscured due to currency fluctuations.
• The Company considers certain acquisition-related costs, including certain financing costs, investment banking fees, warranty and indemnity insurance, certain integration related expenses and amortization of acquired intangibles, as well as gains and
losses from divestitures to be unpredictable, dependent on factors that may be outside of our control and unrelated to the continuing operations of the acquired or divested business or the Company. In addition, the size and complexity of an acquisition,
which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. The Company believes that excluding acquisition-related costs and gains or losses of divestitures facilitates the comparison of our financial results
to the Company’s historical operating results and to other companies in our industry.
• Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses
resulting from this acquisition.
• The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are
considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions.
• Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses
resulting from this acquisition.
• The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are
considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions.
• Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally
unrelated to the amount of cash ultimately received by the employee, and the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time.
• We exclude restructuring and other costs when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals
of current or past operations of our business. This also includes costs related to certain identified initiatives, including technology initiatives, to further streamline the business, improve the Company’s efficiency, create synergies and globalize the
Company’s operations and remediate the prior year material weaknesses, all with an objective to improve scale and efficiency and increase profitability going forward. For the year ended December 31, 2020, restructuring and other costs include certain
costs incurred in association with COVID-19, including the cost of providing additional health, welfare and technological support to our employees as they work remotely.
• Impairment charges represent non-cash asset write-offs, which do not reflect recurring costs that would be relevant to the Company’s continuing operations. The Company believes that excluding these nonrecurring expenses facilitates the comparison
of our financial results to the Company’s historical operating results and to other companies in its industry.
• Debt restructuring and debt issuance cost amortization are unrelated to the continuing operations of the Company. Debt restructuring costs are not consistently occurring and do not reflect expected future operating expense, nor do they provide
insight into the fundamentals of current or past operations of our business. In addition, since debt issuance cost amortization is dependent upon the financing method, which can vary widely company to company, we believe that excluding these costs
helps to facilitate comparison to historical results as well as to other companies within our industry.
• The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a noncontrolling interest, and non-cash adjustments related to the tax receivable agreement have no significant impact on the ongoing
operations of the business.
• The tax related items are the difference between the Company’s GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes as well as the impact from certain discrete tax items. The methodology
utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s GAAP tax provision.
For the same reasons, WEX believes that adjusted net income may also be useful to investors as one means of evaluating our performance. However, because adjusted net income is a non-GAAP measure, it should not be considered as a substitute for, or
superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted net income as used by WEX may not be comparable to similarly titled measures employed by other companies.
4
PERFORMANCE GRAPH
TOTAL RETURN PERFORMANCE
)
$
(
E
U
L
A
V
X
E
D
N
I
350
300
250
200
150
100
50
12/31/15 12/31/16 12/31/17 12/31/18
12/31/19
12/31/20
WEX
S&P 500
S&P DATA PROCESSING AND OUTSOURCED SERVICES
PERIOD ENDING DECEMBER 31
2015
2016
2017
2018
2019
2020
$
100.00
$
100.00
$
100.00
126.24
111.96
107.77
159.76
158.44
236.95
136.40
130.42
171.49
150.94
171.53
248.01
230.24
203.04
309.03
FINANCIAL HIGHLIGHTS
TOTAL REVENUE
($ in Millions)
TOTAL PURCHASE VOLUME
($ in Billions)
82.2
76.5
65.0
50.6
55.6
PERFORMANCE GRAPH
The following graph assumes $100 invested December 31, 2015, and compares (a) the percentage change
in the Company’s cumulative total stockholder return on the common stock (as measured by dividing (i)
the sum of (A) the cumulative amount of dividends, assuming dividend reinvestment, during the periods
presented, and (B) the difference between the Company’s share price at the end and the beginning of the
periods presented by (ii) the share price at the beginning of the periods presented) with (b) (i) the S&P 500
Index and (ii) the S&P Data Processing & Outsourced Services Index.
TOTAL RETURN PERFORMANCE
350
300
250
200
150
100
)
$
(
E
U
L
A
V
X
E
D
N
I
50
12/31/15 12/31/16 12/31/17 12/31/18
12/31/19
12/31/20
WEX
S&P 500
S&P DATA PROCESSING AND OUTSOURCED SERVICES
’16 ’17 ’18 ’19 ‘20
’16 ’17 ’18 ’19 ‘20
KEY FINANCIAL HIGHLIGHTS & RECONCILIATIONS
($ in thousands)
Revenue
2020
2019
2018
$
1,559,869
$
1,723,691 $
1,492,639
Reconciliation of Net (Loss) Income Attributable to Shareholders to Adjusted Net Income ("ANI")
Net (loss) income attributable to shareholders
$
(243,638) $
99,006
$
168,295
Unrealized loss (gain) on financial instruments
Net foreign currency remeasurement loss (gain)
Acquisition-related intangible amortization
Other acquisition and divestiture related items
Legal settlement
Loss on sale of subsidiary
Stock-based compensation
Other costs
Impairment charges
Debt restructuring and debt issuance cost amortization
Non-cash adjustments related to tax receivable agreement
ANI adjustments attributable to non-controlling interests
Tax related items
27,036
25,783
171,144
57,787
162,500
46,362
65,841
13,555
53,378
40,063
(491)
(42,910)
(108,086)
34,654
926
159,431
37,675
–
–
–
47,511
25,106
21,004
(932)
53,035
(74,743)
(2,579)
38,800
138,186
4,143
–
–
35,103
13,717
5,649
14,101
775
(1,370)
(53,918)
Adjusted net income attributable to shareholders
$
268,324
$
402,673
$
360,902
The Company’s non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition-related intangible amortization, other acquisition and divestiture related
items, loss on sale of subsidiary, stock-based compensation, restructuring and other costs, legal settlement, impairment charges, debt restructuring and debt issuance cost amortization, non-cash adjustments related to tax receivable agreement, similar
adjustments attributable to our non-controlling interests and certain tax related items.
Although adjusted net income is not calculated in accordance with GAAP, this non-GAAP measure is integral to the Company’s reporting and planning processes and the chief operating decision maker of the Company uses segment adjusted operating
income to allocate resources among our operating segments. The Company considers this measure integral because it excludes the above-specified items that the Company’s management excludes in evaluating the Company’s performance. Specifically,
in addition to evaluating the Company’s performance on a GAAP basis, management evaluates the Company’s
performance on a basis that excludes the above items because:
• Exclusion of the non-cash, mark-to-market adjustments on financial instruments, including interest rate swap agreements and investment securities, helps management identify and assess trends in the Company’s underlying business that might
otherwise be obscured due to quarterly non-cash earnings fluctuations associated with these financial instruments. Additionally, the non-cash, mark-to-market adjustments on financial instruments are difficult to forecast accurately, making
comparisons across historical and future quarters difficult to evaluate.
• Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, accounts receivable and accounts payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on
foreign currency hedges relating to these items. The exclusion of these items helps management compare changes in operating results between periods that might otherwise be obscured due to currency fluctuations.
• The Company considers certain acquisition-related costs, including certain financing costs, investment banking fees, warranty and indemnity insurance, certain integration related expenses and amortization of acquired intangibles, as well as gains and
losses from divestitures to be unpredictable, dependent on factors that may be outside of our control and unrelated to the continuing operations of the acquired or divested business or the Company. In addition, the size and complexity of an acquisition,
which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. The Company believes that excluding acquisition-related costs and gains or losses of divestitures facilitates the comparison of our financial results
to the Company’s historical operating results and to other companies in our industry.
• Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses
resulting from this acquisition.
resulting from this acquisition.
• The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are
considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions.
• Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses
• The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are
considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions.
• Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally
unrelated to the amount of cash ultimately received by the employee, and the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time.
• We exclude restructuring and other costs when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals
of current or past operations of our business. This also includes costs related to certain identified initiatives, including technology initiatives, to further streamline the business, improve the Company’s efficiency, create synergies and globalize the
Company’s operations and remediate the prior year material weaknesses, all with an objective to improve scale and efficiency and increase profitability going forward. For the year ended December 31, 2020, restructuring and other costs include certain
costs incurred in association with COVID-19, including the cost of providing additional health, welfare and technological support to our employees as they work remotely.
• Impairment charges represent non-cash asset write-offs, which do not reflect recurring costs that would be relevant to the Company’s continuing operations. The Company believes that excluding these nonrecurring expenses facilitates the comparison
of our financial results to the Company’s historical operating results and to other companies in its industry.
• Debt restructuring and debt issuance cost amortization are unrelated to the continuing operations of the Company. Debt restructuring costs are not consistently occurring and do not reflect expected future operating expense, nor do they provide
insight into the fundamentals of current or past operations of our business. In addition, since debt issuance cost amortization is dependent upon the financing method, which can vary widely company to company, we believe that excluding these costs
helps to facilitate comparison to historical results as well as to other companies within our industry.
• The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a noncontrolling interest, and non-cash adjustments related to the tax receivable agreement have no significant impact on the ongoing
operations of the business.
• The tax related items are the difference between the Company’s GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes as well as the impact from certain discrete tax items. The methodology
utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s GAAP tax provision.
For the same reasons, WEX believes that adjusted net income may also be useful to investors as one means of evaluating our performance. However, because adjusted net income is a non-GAAP measure, it should not be considered as a substitute for, or
superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted net income as used by WEX may not be comparable to similarly titled measures employed by other companies.
$
100.00
$
100.00
$
100.00
126.24
111.96
107.77
159.76
158.44
236.95
136.40
130.42
171.49
150.94
171.53
248.01
PERIOD ENDING DECEMBER 31
2016
2017
2015
2018
2019
2020
230.24
203.04
309.03
5
L E A D E R S H I P T E A M
B O A R D O F D I R E C T O R S
DAVID COOPER
Chief Technology Officer
JOEL (JAY) DEARBORN
President, Corporate Payments
ROBERT DESHAIES
President, Health
MELISSA D. SMITH
Chair and
Chief Executive Officer
ANN (ANNIE) DREW
Chief Risk and Compliance Officer
SCOTT PHILLIPS
President, Global Fleet
DANIEL (DON) CALLAHAN
Former Global Head of Operations and
Technology, Citigroup
HILARY A. RAPKIN
Chief Legal Officer
ROBERTO SIMON
Chief Financial Officer
MELANIE TINTO
Chief Human Resources Officer
JAMES NEARY
Managing Director, Warburg Pincus
Cautionary Note Regarding Forward-Looking Statements
This annual report contains forward-looking statements, including statements regarding: assumptions underlying the Company’s future financial performance,
future operations, future growth and expansion opportunities and expectations, expectations for future revenue performance, future impacts from areas of
investment, including technology investments, expectations for the macro environment; and, expectations for volumes. Any statements that are not statements of
historical facts may be deemed to be forward-looking statements. When used in this earnings release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements
contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially,
including: the extent to which the coronavirus (COVID-19) pandemic and measures taken in response thereto impact our business, results of operations and
financial condition in excess of current expectations; the effects of general economic conditions on fueling patterns as well as payment and transaction processing
activity; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of fluctuations
in fuel prices, including the impact of any continued reductions in fuel price and the resulting impact on our revenues and net income; changes or limitations on
interchange fees; failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; the effects of the Company’s business expansion
and acquisition efforts; potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition;
competitive responses to any acquisitions; uncertainty of the expected financial performance of the combined operations following completion of an acquisition;
the failure to complete or successfully integrate the Company’s acquisitions or the ability to realize anticipated synergies and cost savings from such transactions;
unexpected costs, charges or expenses resulting from an acquisition, specifically including the recent eNett and Optal acquisitions; the Company’s failure to
successfully acquire, integrate, operate and expand commercial fuel card programs; the failure of corporate investments to result in anticipated strategic value;
6
the impact and size of credit losses; the impact of changes to the Company’s credit standards; breaches of the Company’s technology systems or those of our
third-party service providers and any resulting negative impact on our reputation, liabilities or relationships with customers or merchants; the Company’s failure
to maintain or renew key commercial agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s
competitors; failure to successfully implement the Company’s information technology strategies and capabilities in connection with its technology outsourcing
and insourcing arrangements and any resulting cost associated with that failure; the actions of regulatory bodies, including banking and securities regulators,
or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or
affiliates; legal, regulatory, political and economic uncertainty surrounding the United Kingdom’s departure from the European Union and the resulting trade
agreement; the impact of the future transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company’s presently outstanding
notes on its operations; the impact of increased leverage on the Company’s operations, results or borrowing capacity generally, and as a result of acquisitions
specifically; the impact of sales or dispositions of significant amounts of our outstanding common stock into the public market, or the perception that such sales
or dispositions could occur; the possible dilution to our stockholders caused by the issuance of additional shares of common stock or equity-linked securities, as
result of our convertible notes or otherwise; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes;
the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our annual report for the year ended December 31, 2020, filed on
Form 10-K with the Securities and Exchange Commission on March 1, 2021. The Company’s forward-looking statements do not reflect the potential future impact
of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of this earnings release and
undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new
information, future events or otherwise.
L E A D E R S H I P T E A M
B O A R D O F D I R E C T O R S
ROBERT DESHAIES
President, Health
MELISSA D. SMITH
Chair and
Chief Executive Officer
JACK VANWOERKOM
Vice Chairman and Lead Director, WEX
Former Executive Vice President and
General Counsel, The Home Depot
JOHN (JEB) E. BACHMAN
Former Partner, PwC
DANIEL (DON) CALLAHAN
Former Global Head of Operations and
Technology, Citigroup
SHIKHAR GHOSH
Professor, Harvard Business School
JAMES (JIM) GROCH
Former Global Group President and
Chief Investment Officer, CBRE Group, Inc
MELANIE TINTO
Chief Human Resources Officer
JAMES NEARY
Managing Director, Warburg Pincus
STEPHEN (STEVE) SMITH
President and Chief Executive Officer,
L.L.Bean
SUSAN SOBBOTT
Former President of Global
Commercial Services,
American Express
REGINA O. SOMMER
Financial and Business Consultant
Cautionary Note Regarding Forward-Looking Statements
This annual report contains forward-looking statements, including statements regarding: assumptions underlying the Company’s future financial performance,
future operations, future growth and expansion opportunities and expectations, expectations for future revenue performance, future impacts from areas of
investment, including technology investments, expectations for the macro environment; and, expectations for volumes. Any statements that are not statements of
historical facts may be deemed to be forward-looking statements. When used in this earnings release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements
contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially,
including: the extent to which the coronavirus (COVID-19) pandemic and measures taken in response thereto impact our business, results of operations and
financial condition in excess of current expectations; the effects of general economic conditions on fueling patterns as well as payment and transaction processing
activity; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of fluctuations
in fuel prices, including the impact of any continued reductions in fuel price and the resulting impact on our revenues and net income; changes or limitations on
interchange fees; failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; the effects of the Company’s business expansion
and acquisition efforts; potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition;
competitive responses to any acquisitions; uncertainty of the expected financial performance of the combined operations following completion of an acquisition;
the failure to complete or successfully integrate the Company’s acquisitions or the ability to realize anticipated synergies and cost savings from such transactions;
unexpected costs, charges or expenses resulting from an acquisition, specifically including the recent eNett and Optal acquisitions; the Company’s failure to
successfully acquire, integrate, operate and expand commercial fuel card programs; the failure of corporate investments to result in anticipated strategic value;
6
the impact and size of credit losses; the impact of changes to the Company’s credit standards; breaches of the Company’s technology systems or those of our
third-party service providers and any resulting negative impact on our reputation, liabilities or relationships with customers or merchants; the Company’s failure
to maintain or renew key commercial agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s
competitors; failure to successfully implement the Company’s information technology strategies and capabilities in connection with its technology outsourcing
and insourcing arrangements and any resulting cost associated with that failure; the actions of regulatory bodies, including banking and securities regulators,
or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or
affiliates; legal, regulatory, political and economic uncertainty surrounding the United Kingdom’s departure from the European Union and the resulting trade
agreement; the impact of the future transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company’s presently outstanding
notes on its operations; the impact of increased leverage on the Company’s operations, results or borrowing capacity generally, and as a result of acquisitions
specifically; the impact of sales or dispositions of significant amounts of our outstanding common stock into the public market, or the perception that such sales
or dispositions could occur; the possible dilution to our stockholders caused by the issuance of additional shares of common stock or equity-linked securities, as
result of our convertible notes or otherwise; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes;
the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our annual report for the year ended December 31, 2020, filed on
Form 10-K with the Securities and Exchange Commission on March 1, 2021. The Company’s forward-looking statements do not reflect the potential future impact
of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of this earnings release and
undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new
information, future events or otherwise.
7
UNITED�STATES
SECURITIES�AND�EXCHANGE�COMMISSION
Washington,�D.C.�20549
FORM�10-K
(Mark�One)
☑
☐
ANNUAL�REPORT�PURSUANT�TO�SECTION�13�OR�15(d)�OF�THE�SECURITIES�EXCHANGE�ACT�OF�1934
For�the�fiscal�year�ended�December�31,�2020
OR
TRANSITION�REPORT�PURSUANT�TO�SECTION�13�OR�15(d)�OF�THE�SECURITIES�EXCHANGE�ACT�OF�1934
For�the�transition�period�from����������������������������������������������������������to���������������������������������������������������������.
Commission�file�number�001-32426
��
WEX�INC.
(Exact�name�of�registrant�as�specified�in�its�charter)
Delaware
(State�or�other�jurisdiction�of�
incorporation�or�organization)
1�Hancock�St.,
Portland, ME
(Address�of�principal�executive�offices)
�
�
�
�
01-0526993
(I.R.S.�Employer�
Identification�No.)
04101
(Zip�Code)
(207)�773-8171
(Registrant’s�telephone�number,�including�area�code)
Securities�registered�pursuant�to�Section�12(b)�of�the�Act:
Title�of�each�class
Common�Stock,�$0.01�par�value
�
�
Trading�Symbol(s)
WEX
�
�
Name�of�each�exchange�on�which�registered
New�York�Stock�Exchange
Securities�registered�pursuant�to�Section�12(g)�of�the�Act:
None
(Title�of�class)
Indicate�by�check�mark�if�the�registrant�is�a�well-known�seasoned�issuer,�as�defined�in�Rule�405�of�the�Securities�Act.
Indicate�by�check�mark�if�the�registrant�is�not�required�to�file�reports�pursuant�to�Section�13�or�Section�15(d)�of�the�Act.
����¨��Yes�������������þ��No
Indicate�by�check�mark�whether�the�registrant�(1)�has�filed�all�reports�required�to�be�filed�by�Section�13�or�15(d)�of�the�Securities�Exchange�Act�of�1934�during�the�preceding�12�months�(or
for�such�shorter�period�that�the�registrant�was�required�to�file�such�reports),�and�(2)�has�been�subject�to�such�filing�requirements�for�the�past�90�days.
����þ��Yes������������¨��No
Indicate�by�check�mark�whether�the�registrant�has�submitted�electronically�every�Interactive�Data�File�required�to�be�submitted�pursuant�to�Rule�405�of�Regulation�S–T�(§�232.405�of�this
chapter)�during�the�preceding�12�months�(or�for�such�shorter�period�that�the�registrant�was�required�to�submit�such�files).
����þ��Yes�������������¨��No
Indicate�by�check�mark�whether�the�registrant�is�a�large�accelerated�filer,�an�accelerated�filer,�a�non-accelerated�filer,�a�smaller�reporting�company,�or�an�emerging�growth�company.�See�the
definitions�of�“large�accelerated�filer,”�“accelerated�filer,”�“smaller�reporting�company,”�and�“emerging�growth�company”�in�Rule�12b–2�of�the�Exchange�Act.
����þ��Yes�������������¨��No
Large�accelerated�filer
Non-accelerated�filer
þ�
☐
�� Accelerated�filer
�� Smaller�reporting�company
Emerging�growth�company
☐
☐
☐
If�an�emerging�growth�company,�indicate�by�check�mark�if�the�registrant�has�elected�not�to�use�the�extended�transition�period�for�complying�with�any�new�or�revised�financial�accounting
standards�provided�pursuant�to�Section�13(a)�of�the�Exchange�Act.�¨
Indicate�by�check�mark�whether�the�registrant�has�filed�a�report�on�and�attestation�to�its�management’s�assessment�of�the�effectiveness�of�its�internal�control�over�financial�reporting�under
Section�404(b)�of�the�Sarbanes-Oxley�Act�(15�U.S.C.�7262(b))�by�the�registered�public�accounting�firm�that�prepared�or�issued�its�audit�report.�☑
Indicate�by�check�mark�whether�the�registrant�is�a�shell�company�(as�defined�in�Rule�12b–2�of�the�Act).
The�aggregate�market�value�of�the�voting�and�non-voting�common�equity�held�by�non-affiliates�of�the�registrant�(assuming�for�the�purpose�of�this�calculation,�but�without�conceding,�that
����☐��Yes�������������þ��No
all�directors,�officers�and�any�10�percent�or�greater�stockholders�are�affiliates�of�the�registrant)�as�of�June�30,�2020,�the�last�business�day�of�the�registrant’s�most�recently�completed�second�fiscal
quarter,�was�$7,140,251,666�(based�on�the�closing�price�of�the�registrant’s�common�stock�on�that�date�as�reported�on�the�New�York�Stock�Exchange).
There�were�44,190,995�shares�of�the�registrant’s�common�stock�outstanding�as�of�February�22,�2021.
Portions�of�the�Company’s�definitive�Proxy�Statement�to�be�delivered�to�stockholders�in�connection�with�the�Company's�2021�Annual�Meeting�of�Stockholders�(the�"2021�Proxy
Statement")�are�incorporated�by�reference�into�Part�III�of�this�10–K.�With�the�exception�of�the�sections�of�the�2021�Proxy�Statement�specifically�incorporated�herein�by�reference,�the�2021�Proxy
Statement�is�not�deemed�to�be�filed�as�part�of�this�Annual�Report�on�10–K.
DOCUMENTS�INCORPORATED�BY�REFERENCE
�
Item�1.
Item�1A.
Item�1B.
Item�2.
Item�3.
Item�4.
Item�5.
Item�7.
Item�7A.
Item�8.
Item�9.
Item�9A.
Item�9B.
Item�10.
Item�11.
Item�12.
Item�13.
Item�14.
Item�15.
Item�16.
Forward–Looking�Statements
ACRONYMS�AND�ABBREVIATIONS
Business
Risk�Factors
Unresolved�Staff�Comments
Properties
Legal�Proceedings
Mine�Safety�Disclosures
TABLE�OF�CONTENTS
Part�I
Part�II
Market�for�Registrant’s�Common�Equity,�Related�Stockholder�Matters�and�Issuer�Purchases�of�Equity�Securities
Management’s�Discussion�and�Analysis�of�Financial�Condition�and�Results�of�Operations
Quantitative�and�Qualitative�Disclosures�About�Market�Risk
Financial�Statements�and�Supplementary�Data
Changes�in�and�Disagreements�with�Accountants�on�Accounting�and�Financial�Disclosure
Controls�and�Procedures
Other�Information
Directors,�Executive�Officers�and�Corporate�Governance
Executive�Compensation
Security�Ownership�of�Certain�Beneficial�Owners�and�Management�and�Related�Stockholder�Matters
Certain�Relationships�and�Related�Transactions,�and�Director�Independence
Principal�Accounting�Fees�and�Services
Part�III
Part�IV
Exhibits�and�Financial�Statement�Schedules
Form�10–K�Summary
Signatures
1
3
5
21
42
42
42
42
43
44
71
73
133
133
136
136
136
136
136
136
137
137
142
Unless�otherwise�indicated�or�required�by�the�context,�the�terms�“we,”�“us,”�“our,”�“WEX,”�or�the�“Company,”�in�this�Annual�Report�on�Form�10–K
mean�WEX�Inc.�and�all�of�its�subsidiaries�that�are�consolidated�under�Generally�Accepted�Accounting�Principles�in�the�United�States.
FORWARD–LOOKING�STATEMENTS
The�Private�Securities�Litigation�Reform�Act�of�1995�provides�a�“safe�harbor”�for�statements�that�are�forward-looking�and�are�not�statements�of�historical
facts. �This �Annual �Report �includes �forward-looking �statements �including, �but �not �limited �to, �statements �about �management’s �plan �and �goals �and �statements �of
strategic �priorities �included �within �the �“Strategy” �section �of �this �Annual �Report �in �Item �1. �Any �statements �in �this �Annual �Report �that �are �not �statements �of
historical�facts�are�forward-looking�statements.�When�used�in�this�Annual�Report,�the�words�“anticipate,”�“believe,”�“continue,”�“could,”�“estimate,”�“expect,”
“intend,” �“may,”�“plan,” �“project” �and �similar �expressions �are �intended �to �identify �forward-looking �statements, �although �not �all �forward-looking �statements
contain �such�words.�Forward-looking�statements �relate�to�our�future �plans,�objectives,�expectations �and�intentions�and�are�not �historical�facts�and�accordingly
involve �known�and �unknown �risks �and �uncertainties �and �other �factors �that �may �cause �the �actual �results �or �performance �to �be �materially �different �from �future
results �or �performance �expressed �or �implied �by �these �forward-looking �statements. �The �following �factors, �among �others, �could �cause �actual �results �to �differ
materially�from�those�contained�in�forward-looking�statements�made�in�this�Annual�Report�and�in�oral�statements�made�by�our�authorized�officers:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the �extent �to �which �the �coronavirus �(COVID-19) �pandemic �and �measures �taken �in �response �thereto �impact �our �business, �results �of �operations �and
financial�condition�in�excess�of�current�expectations;
the�demand�for �worldwide�travel �as�a�result �of�COVID-19�and �the�length �of�time �it�may�take �for�the �travel�industry �to�experience �a�rebound�after �the
effects�of�the�COVID-19�pandemic�have�subsided;
the�impact�of�fluctuations�in�fuel�prices,�including�the�impact�of�any�continued�reductions�in�fuel�price�and�the�resulting�impact�on�our�revenues�and�net
income;
the�effects�of�general�economic�conditions,�including�COVID-19,�on�fueling�patterns,�as�well�as�payment�and�transaction�processing�activity;
our�compliance,�or�our�failure�to�comply,�with�the�applicable�requirements�of�MasterCard�or�Visa;
any�limitation,�reduction,�or�elimination�of�interchange�fees;
the�impact�of�foreign�currency�exchange�rates�on�the�Company’s�operations,�revenue�and�income;
changes�in�interest�rates;
the�effects�of�the�Company’s�business�expansion�and�acquisition�efforts;
potential�adverse�changes�to�business�or�employee�relationships,�including�those�resulting�from�the�completion�of�an�acquisition;
competitive�responses�to�any�acquisitions;
uncertainty�of�the�expected�financial�performance�of�the�combined�operations�following�completion�of�an�acquisition;
the�failure�to�complete�or�successfully�integrate�and�realize�anticipated�benefits,�synergies�and�cost�savings�from�the�Company’s�acquisitions,�including
the�recently�competed�eNett�and�Optal�acquisition;
unexpected�costs,�charges�or�expenses�resulting�from�an�acquisition;
the�Company’s�failure�to�successfully�acquire,�integrate,�operate�and�expand�commercial�fuel�card�programs;
the�failure�of�corporate�investments�to�result�in�anticipated�strategic�value;
the�impact�and�size�of�credit�losses�and�fraudulent�use�of�our�payment�cards�or�systems;
the�impact�of�changes�to�the�Company’s�credit�standards;
breaches �of �the �Company’s �technology �systems �or �those �of �our �third-party �service �providers �and �any �resulting �negative �impact �on �our �reputation,
liabilities�or�relationships�with�customers�or�merchants;
the�Company’s �ability �to �successfully �obtain�new �customers �and �commercial �agreements, �maintain �key �commercial �agreements, �or �maintain �customer
volumes�under�such�commercial�agreements;
failure�to�expand�the�Company’s�technological�capabilities�and�service�offerings�as�rapidly�as�the�Company’s�competitors;
failure�to �successfully �implement �the �Company’s�information �technology �strategies �and �capabilities �in �connection�with �its �technology �outsourcing �and
insourcing�arrangements�and�any�resulting�cost�associated�with�that�failure;
the�regulation,�supervision,�and�examination�of�our�business�or�our�entities�by�domestic�and�foreign�governmental�authorities,�as�well�as�litigation�and
regulatory�actions;
the�effect�of�the�United�Kingdom’s�departure�from�the�European�Union�and�the�resulting�trade�agreement;
the�impact�of�the�transition�from�LIBOR�as�a�global�benchmark�to�a�replacement�rate;
the�impact�of�the�2016�Credit�Agreement,�the�Notes�and�the�Convertible�Notes�on�our�operations;
1
•
•
•
•
•
•
the�impact�of�increased�leverage�on�the�Company’s�operations,�results�or�borrowing�capacity�generally,�and�as�a�result�of�acquisitions�specifically;
the�impact�of�sales�or�dispositions�of�significant�amounts�of�our�outstanding�common�stock�into�the�public�market,�or�the�perception�that�such�sales�or
dispositions�could�occur;
the�possible�dilution�to�our�stockholders�caused�by�the�issuance�of�additional�shares�of�common�stock�or�equity-linked�securities,�whether�as�a�result�of
the�Convertible�Notes�or�otherwise;
the�incurrence�of�impairment�charges�if�our�assessment�of�the�fair�value�of�certain�of�our�reporting�units�changes;
the�uncertainties�of�litigation;�as�well�as
other�risks�and�uncertainties�identified�in�Item�1A�of�this�Annual�Report�and�in�connection�with�such�forward-looking�statements.
� � � �Our �forward-looking �statements �and �these �factors �do �not �reflect �the �potential �future �impact �of �any �alliance, �merger, �acquisition, �disposition �or �stock
repurchases.�The�forward-looking�statements�speak�only�as�of�the�date�of�the�initial�filing�of�this�Annual�Report�and�undue�reliance�should�not�be�placed�on�these
statements.�We�disclaim�any�obligation�to�update�any�forward-looking�statements�as�a�result�of�new�information,�future�events�or�otherwise.
RISK�FACTOR�SUMMARY
Investment�in�our�securities�involves�risk.�Below�is�a�summary�of�what�we�believe�to�be�the�principal�risks�facing�our�business.�You�should�carefully
review�and�consider�this�summary�along�with�the�risks�described�more�fully�in�Item�1A,�“Risk�Factors”�of�Part�I�of�this�Annual�Report�and�other�information
included�in�this�Annual�Report.�The�risks�and�uncertainties�described�below�are�not�the�only�risks�and�uncertainties�we�face.�Additional�risks�and�uncertainties�not
presently�known�to�us�or�that�we�presently�deem�less�significant�may�also�impair�our�business�operations.
If�any�of�the�following�risks�occurs,�our�business,�financial�condition,�and�results�of�operations�and�future�growth�prospects�could�be�materially�and
adversely�affected,�and�the�actual�outcomes�of�matters�as�to�which�forward-looking�statements�are�made�in�this�report�could�be�materially�different�from�those
anticipated�in�such�forward-looking�statements.
•
Our�operations,�business,�and�financial�condition�have�been�and�are�expected�to�continue�to�be�adversely�affected�by�the�COVID-19�pandemic.
COVID-19�has�negatively�impacted�the�business�and�consumer�spending�habits�which�result�in�revenues�for�us�and�has�impacted�our�workforce�and�operations�and
the�operations�of�our�customers,�suppliers�and�business�partners.
•
A�significant�portion�of�our�revenues�are�related�to�the�dollar�amount�of�fuel�purchased�by�or�through�our�customers�and�from�our�fuel�retailer
partners,�and,�as�a�result,�a�reduction�in�the�demand�for�fuel�and�other�vehicle�products�and�services�and/or�volatility�in�fuel�prices�could�have�a�material�adverse
effect�on�our�revenues�and�financial�condition.
•
If�we�fail�to�comply�with�the�applicable�requirements�of�MasterCard�or�Visa,�they�could�seek�to�fine�us,�suspend�us�or�terminate�our�registrations.
We�depend�on�MasterCard�or�Visa�to�process�a�large�number�of�transactions�and�any�disruption�or�elimination�of�that�ability�could�have�a�material�adverse�effect
on�our�revenues�and�business.
•
A�substantial�portion�of�our�revenue�is�generated�by�network�processing�fees,�known�as�interchange�fees,�associated�with�transactions�processed
using�our�payment�systems.�Any�limitation,�reduction�or�elimination�of�these�fees,�whether�by�regulation�or�by�private�actions�or�otherwise�could�have�a�material
adverse�effect�on�our�revenues�and�business.
•
If�we�fail�to�adequately�assess�and�monitor�credit�risks�posed�by�our�counterparties�or�there�is�fraudulent�use�of�our�payment�cards�or�systems,�we
could�experience�an�increase�in�credit�loss�and�other�intangible�damages.�This�could�affect�our�results�from�operations�as�well�as�our�business�reputation,�among
other�things.
•
The�payments�solutions�industry�is�highly�competitive.�Such�competition�could�have�a�material�adverse�effect�on�the�fees�we�receive,�our
margins,�and�our�ability�to�gain,�maintain,�or�expand�customer�relationships,�all�on�favorable�terms.
•
We�may�never�realize�the�anticipated�benefits�of�acquisitions�we�have�completed�or�may�undertake�and�we�may�encounter�difficulties�in�trying�to
integrate�such�acquisitions�and�incur�significant�expenses�or�charges�as�a�result�of�an�acquisition.�In�December�2020,�we�consummated�the�acquisition�of�two�travel
focused�electronic�payments�companies�that�were�significantly�impacted�by�the�global�COVID-19�pandemic.�Given�that�the�global�COVID-19�pandemic�has�had,
and�will�likely�continue�to�have,�a�large�effect�on�the�travel�industry,�there�can�be�no�guarantee�that�we�will�achieve�any�of�the�anticipated�benefits�from�this
acquisition.
2
•
Unpredictable�events,�including�natural�catastrophes�or�public�health�crises,�dangerous�weather�conditions,�technology�failure,�political�unrest,
and�terrorist�attacks�in�the�locations�in�which�we�or�our�customers�operate,�or�elsewhere,�may�adversely�affect�our�ability�to�conduct�business�and�could�impact�our
results.
•
WEX�Bank�operates�under�an�industrial�loan�charter�(ILC),�which�allows�us�to�accept�brokered�deposits,�which�we�believe�provides�us�access�to
lower�cost�funds�than�many�of�our�competitors,�thus�helping�us�to�offer�competitive�products.�The�loss�or�suspension�of�WEX�Bank's�industrial�loan�charter,
changes�in�applicable�regulatory�requirements,�or�an�increase�in�the�number�or�type�of�institutions�eligible�for�an�ILC�could�be�disruptive�to�certain�of�our
operations,�increase�costs,�and�increase�competition.
•
We�currently�have�a�substantial�amount�of�indebtedness�and�may�incur�additional�indebtedness,�which�could�affect�our�flexibility�in�managing
our�business�and�could�materially�and�adversely�affect�our�ability�to�meet�our�debt�service�obligations.�At�December�31,�2020,�we�had�approximately�$3,026.8
million�of�debt�outstanding,�net�of�unamortized�debt�issuance�costs�and�debt�discount,�including�$152.7�million�in�current�liabilities.
•
We�may�want�or�need�to�refinance�a�significant�amount�of�indebtedness�or�otherwise�require�additional�financing�to�react�to�changing�economic
or�business�conditions�or�to�replace�maturing�debt,�fund�working�capital,�capital�expenditures,�acquisitions,�or�other�general�corporate�purposes.�In�addition,�our
access�to�lenders�in�the�future�is�also�dependent�on,�among�other�things,�market�conditions,�which�are�variable�and�potentially�volatile,�and�which�could�result�in
increased�costs�for�obtaining�and�servicing�our�indebtedness.�Accordingly,�there�is�no�guarantee,�however,�that�we�will�be�able�to�finance�or�obtain�additional
financing�on�favorable�terms,�or�at�all.
•
Existing�and�new�laws�and�regulations�and�enforcement�activities�could�negatively�impact�our�business�and�the�markets�we�presently�operate�in
or�could�limit�our�expansion�opportunities.�These�regulations�can�negatively�impact�our�revenues�and�increase�our�compliance�costs.�In�addition,�failure�to�comply
with�laws�and�regulations�may�result�in�the�suspension�or�revocation�of�licenses�or�registrations,�the�limitation,�suspension�or�termination�of�services,�and/or�the
imposition�of�civil�and�criminal�penalties,�including�fines,�among�other�things.
•
If�the�technologies�we�use�in�operating�our�business�and�interacting�with�our�customers�fail,�are�unavailable,�or�do�not�operate�to�expectations,�or
we�fail�to�successfully�implement�technology�strategies�and�capabilities�in�connection�with�our�outsourcing�arrangements,�our�business�and�results�of�operations
could�be�adversely�impacted.
•
Our�business�is�regularly�subject�to�cyberattacks�and�attempted�security�and�privacy�breaches�and�we�may�not�be�able�to�adequately�protect�our
information�systems,�including�the�data�we�collect�about�our�customers,�which�could�subject�us�to�liability�and�damage�our�reputation.
•
third�party.
Provisions�in�our�charter�documents,�Delaware�law,�applicable�banking�law�and�the�Convertible�Notes�may�delay�or�prevent�our�acquisition�by�a
•
The�issuance�by�us�of�additional�shares�of�common�stock�or�equity-linked�securities,�including�in�connection�with�conversions�of�our�outstanding
Convertible�Notes�(as�defined�below),�may�cause�dilution�to�our�stockholders.
����The�acronyms�and�abbreviations�identified�below�are�used�in�this�Annual�Report�including�the�accompanying�consolidated�financial�statements�and�the�notes
thereto.�The�following�is�provided�to�aid�the�reader�and�provide�a�reference�point�when�reviewing�the�Annual�Report:
ACRONYMS�AND�ABBREVIATIONS
2016�Credit�Agreement
2017�Tax�Act
Adjusted�Net�Income�or�ANI
AOC
ASC
Credit�agreement�entered�into�on�July�1,�2016,�as�amended�from�time�to�time,�by�and�among�the�Company�and�certain�of�its�subsidiaries,
as �borrowers, �WEX �Card �Holding �Australia �Pty �Ltd., �as �designated �borrower,�and �Bank�of �America, �N.A., �as �administrative �agent �on
behalf�of�the�lenders.
Tax�Cuts�and�Jobs�Act�of�2017
A�non-GAAP�measure�that�adjusts�net�income�attributable�to�shareholders�to�exclude�unrealized�gains�and�losses�on�financial�instruments,
net�foreign�currency�remeasurement�gains�and�losses,�acquisition-related�intangible�amortization,�other�acquisition�and�divestiture�related
items,�loss�on�sale�of�subsidiary,�stock-based�compensation,�restructuring�and�other�costs,�legal�settlement,�impairment�charges,�debt
restructuring�and�debt�issuance�cost�amortization,�non-cash�adjustments�related�to�tax�receivable�agreement,�similar�adjustments
attributable�to�our�non-controlling�interests�and�certain�tax�related�items.
AOC�Solutions�and�one�of�its�affiliate�companies,�3Delta�Systems,�Inc.
Accounting�Standards�Codification
3
ASU�2014–09
ASU�2016–01
ASU�2016–02
ASU�2016–13
ASU�2017–04
Australian�Securitization�Subsidiary
B2B
CDH
Company
Convertible�Notes
COVID-19�or�(“coronavirus”)
CFPB
Discovery�Benefits
DSUs
EBITDA
EFS
eNett
European�Fleet�business
European�Securitization�Subsidiary
FASB
FCPA
FDIC
FinCEN
FRA
FSA
GAAP
GILTI
WEX�Fleet�Europe�(Go�Fuel�Card)
HRA
HSA
ICS
Indenture
Legal�Settlement
NAV
Net�payment�processing�rate
Notes
Noventis
NYSE
OFAC
Optal
Over-the-road
Pavestone�Capital
Payment�processing�fuel�spend
Payment�processing�transactions
Payment�solutions�purchase�volume
PBRSUs
Purchase�volume
Accounting�Standards�Update�No.�2014–09�Revenue�from�Contracts�with�Customers�(Topic�606)
Accounting �Standards �Update �No. �2016–01 �Financial �Instruments–Overall �(Subtopic �825–10): �Recognition �and �Measurement �of
Financial�Assets�and�Financial�Liabilities
Accounting�Standards�Update�No.�2016–02�Leases�(Topic�842)
Accounting�Standards�Update�No.�2016–13�Financial�Instruments–Credit�Losses�(Topic�326):�Measurement�of�Credit�Losses�on�Financial
Instruments
Accounting�Standards�Update�2017–04–Intangibles–Goodwill�and�Other�(Topic�350):�Simplifying�the�Test�for�Goodwill�Impairment
Southern�Cross�WEX�2015-1�Trust,�a�special�purpose�entity�consolidated�by�the�Company
Business-to-business
Consumer-directed�healthcare
WEX�Inc.�and�all�entities�included�in�the�consolidated�financial�statements
Convertible�senior�unsecured�notes�due�on�July�15,�2027�in�an�aggregate�principal�amount�of�$310�million�with�a�6.5�percent�interest�rate,
issued�July�1,�2020.
An �infectious �disease �caused �by �the �SARS-CoV-2 �virus. �The �World �Health �Organization �declared �the �coronavirus �outbreak �a �global
pandemic�on�March�11,�2020.
Consumer�Financial�Protection�Bureau
Discovery�Benefits,�Inc.
Deferred�stock�units
A�non-GAAP�measure�that�adjusts�income�before�income�taxes�to�exclude�interest,�depreciation�and�amortization
Electronic�Funds�Source,�LLC,�a�provider�of�customized�corporate�payment�solutions�for�fleet �and�corporate�customers�with�a�focus�on
the �large �and �mid-sized �over-the-road �fleets. �On �July �1, �2016, �the �Company �acquired �WP �Mustang �Topco �LLC, �the �indirect �parent �of
Electronic �Funds �Source, �LLC �and �Warburg �Pincus �Private �Equity �XI �(Lexington), �LLC, �an �affiliated �entity, �from �investment �funds
affiliated�with�Warburg�Pincus�LLC.
eNett�International�(Jersey)�Limited
WEX�Fleet�Europe�and�WEX�Europe�Services,�collectively
Gorham�Trade�Finance�B.V.,�a�special�purpose�entity�consolidated�by�the�Company
Financial�Accounting�Standards�Board
U.S.�Foreign�Corrupt�Practices�Act
Federal�Deposit�Insurance�Corporation
Financial�Crimes�Enforcement�Network�of�the�U.S.�Department�of�the�Treasury
Federal�Reserve�Act
Flexible�Spending�Accounts
Generally�Accepted�Accounting�Principles�in�the�United�States
Global�Intangible�Low�Taxed�Income
A�fleet�business�in�Europe�acquired�from�EG�Group�on�July�1,�2019
Health�Reimbursement�Arrangements
Health�Savings�Accounts
Insured�Cash�Sweep
The�Notes�were�issued�pursuant�to�an�indenture�dated�as�of�January�30,�2013�among�the�Company,�the�guarantors�listed�therein,�and�The
Bank�of�New�York�Mellon�Trust�Company,�N.A.,�as�trustee
The�settlement�of�legal�proceedings�and�appeals�related�to�the�acquisition�of�eNett�and�Optal.
Net�asset�value
The �percentage �of �the �dollar �value�of �each �payment �processing �transaction �that �the �Company �records �as �revenue �from �merchants �less
certain�discounts�given�to�customers�and�network�fees
$400�million�senior�notes�with�a�4.75%�fixed�rate,�issued�on�January�30,�2013
Noventis,�Inc.
New�York�Stock�Exchange
The�United�States�Treasury’s�Office�of�Foreign�Assets�Control
Optal�Limited
Typically�heavy�trucks�traveling�long�distances
Pavestone�Capital,�LLC
Total�dollar�value�of�the�fuel�purchased�by�fleets�that�have�a�payment�processing�relationship�with�the�Company
Total�number�of�purchases�made�by�fleets�that�have�a�payment�processing�relationship�with�the�Company,�where�the�Company�maintains
the�receivable�for�the�total�purchase
Total�dollar�value�of�all�WEX-issued�transactions�that�use�WEX�corporate�card�products�and�virtual�card�products
Performance-based�restricted�stock�units
Total �U.S. �dollar �value �of �all �transactions �in �the �Health�and �Employee �Benefit �Solutions �segment �where �interchange �is �earned �by �the
Company
4
Redeemable�non-controlling�interest
RSUs
SaaS
SEC
Segment�adjusted�operating�income
TSR
Transaction�processing�transactions
UNIK�or�WEX�Latin�America
U.S.�Health�business
Utah�DFI
VCN
VPN
WEX
WEX�Europe�Services
WEX�Health
ITEM�1.�BUSINESS
Our�Company
The �portion �of�the �U.S.�Health �business’�net �assets �owned�by �a�non-controlling �interest �subject�to �redemption�rights �held �by�the �non-
controlling�interest
Restricted�stock�units
Software-as-a-service
Securities�and�Exchange�Commission
A�non-GAAP�measure�that�adjusts�operating�income�to�exclude�specified�items�that�the�Company’s�management�excludes�in�evaluating
segment�performance,�including�acquisition�and�divestiture�related�expenses�and�adjustments�including�the�acquisition�related�intangible
amortization, �impairment �charges, �stock-based �compensation, �restructuring �and �other �costs, �debt �restructuring �costs �and �unallocated
corporate�expenses.
Total�shareholder�return
Unfunded�payment�transactions�where�the�Company�is�the�processor�and�only�has�receivables�for�the�processing�fee
UNIK �S.A., �the �Company’s �Brazilian �subsidiary, �which �is �branded �WEX �Latin �America. �This �subsidiary �was �sold �on �September �30,
2020
WEX�Health�and�Discovery�Benefits,�collectively
Utah�Department�of�Financial�Institutions
Virtual�card�number
Virtual�private�network
WEX�Inc.,�unless�otherwise�indicated�or�required�by�the�context
A�European�Fleet�business�acquired�by�the�Company�from�ExxonMobil�on�December�1,�2014
Legacy�healthcare�operations�prior�to�the�acquisition�of�Discovery�Benefits�
PART�I
� � � �WEX �Inc. �is �a �leading �financial �technology �service �provider �having �simplified �the �complexities �of �payment �systems �across �continents �and �industries. �We
currently�operate�in�three�reportable�segments:�Fleet�Solutions,�Travel�and�Corporate�Solutions,�and�Health�and�Employee�Benefit�Solutions,�which�are�described
in �more �detail �below. �The �Company’s �U.S. �operations �include �WEX �Inc., �the �majority-owned �U.S. �Health �business �(currently �consisting �of �WEX �Health �and
Discovery�Benefits),�and�our�wholly-owned�subsidiaries�WEX�Bank,�WEX�FleetOne,�Noventis�and�EFS.�Our�international�operations�include�our�wholly-owned
operations�including,�WEX�Fuel�Cards�Australia,�WEX�Prepaid�Cards�Australia,�WEX�Canada,�WEX�Asia,�WEX�Europe�Limited,�WEX�Fleet�Europe,�and�eNett
and�Optal�and�their�respective�operating�subsidiaries,�and�a�controlling�interest�in�WEX�Europe�Services�Limited�and�its�subsidiaries.
����WEX�Bank,�a�Utah�industrial�bank�incorporated�in�1998,�is�an�FDIC�insured�depository�institution.�The�functions�performed�at�WEX�Bank�contribute�to�the
U.S.�and�Canadian�operations�of�Fleet�Solutions�and�the�majority�of�operations�of�Travel�and�Corporate�Solutions�by�providing�a�funding�mechanism,�among�other
services.�With�our�ownership�of�WEX�Bank,�we�have�access�to�low-cost�sources�of�capital.�WEX�Bank�raises�capital�primarily�through�the�issuance�of�brokered
deposit �accounts �and �provides�the �financing �and�makes �credit �decisions �that�enable �the �Fleet �Solutions�and �Travel �and�Corporate �Solutions �segments�to �extend
credit�to�customers.�WEX�Bank�approves�customer�applications,�maintains�appropriate�credit�lines�for�each�customer,�is�the�account�issuer,�and�is�the�counterparty
for �the �customer �relationships �for �most �of �our �programs �in �the �U.S. �Operations �such �as �sales, �marketing, �merchant �relations, �customer �service, �software
development�and�IT�are�performed�as�a�service�within�our�organization�but�outside�of�WEX�Bank.�WEX�Bank’s�primary�regulators�are�Utah�DFI�and�the�FDIC.
The�activities�performed�by�WEX�Bank�are�integrated�into�the�operations�of�our�Fleet�Solutions�and�Travel�and�Corporate�Solutions�segments.�The�relationship
between�WEX�Inc.�and�WEX�Bank�is�governed�under�a�master�service�agreement,�which�establishes�the�parameters�of�the�services�described�above.
Recent�Developments
Acquisition�of�eNett�and�Optal
On �January �24, �2020, �the �Company �entered �into �a �purchase �agreement �to �purchase �eNett, �a �leading �provider �of �B2B �payments �solutions �to �the �travel
industry,�and�Optal,�a�company�that�specializes�in�optimizing�B2B�transactions,�for�an�aggregate�purchase�price�comprised�of�$1.3�billion�in�cash�and�2.0�million
shares�of�the�Company’s�common�stock,�subject�to�customary�closing�conditions,�including�the�absence�of�a�Material�Adverse�Effect�(as�defined�in�the�purchase
agreement�between�WEX,�eNett�and�Optal,�among�others).�The�Company�concluded�that�the�COVID-19�pandemic�and�conditions�arising�in�connection�with�it�had
a�Material�Adverse�Effect�on�the�eNett�and�Optal�businesses,�disproportionate�to�the�effect�on�others
5
in�the�relevant �industry.�Because �of�this �Material�Adverse �Effect,�WEX�formally �advised�eNett �and�Optal �on�May�4, �2020�that �it�was�not �required�to �close�the
transaction�pursuant�to�the�terms�of�the�purchase�agreement.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated�separate�legal�proceedings�in�the
High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom�against�the�Company�seeking�a�declaration�that�no�Material�Adverse�Effect�had�occurred�and
an �order�for�specific�performance�of�WEX's�obligations�under�the�purchase�agreement.�From�September �21,�2020�through�September�29,�2020,�a�London�court
held�a�trial�of�certain�preliminary�issues.�On�October�12,�2020,�the�Court�handed�down�its�judgment,�which�concluded,�among�other�things,�that�the�Optal�and�eNett
Groups �operate �in �the �payments �industry �and �the �B2B�payments �industry�and �that, �for �the �purpose �of �the �definition �of �the �Material �Adverse �Effect �clause, �the
relevant�industry�is�the�B2B�payments�industry.�The�Court�found�that�there�was�no�travel�payments�industry,�as�argued�for�by�eNett�and�Optal.�This�finding�meant
that�when�determining�whether�eNett�or�Optal�have�been�disproportionately�impacted�by�the�pandemic,�a�comparison�would�be�made�against�other�B2B�payments
companies.�The�Company�and�the�claimants�each�sought�permission�to�appeal�certain�portions�of�the�Court’s�judgment.
On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�with�eNett,�Optal�and�the�other�parties�thereto�providing
for,�among�other�things,�(i)�the�dismissal�with�prejudice�of�the�legal�proceedings�and�appeals�described�above,�(ii)�the�amendment�of�original�purchase�agreement
and�(iii)�the�release�of�all�claims�capable�of�arising�out�of,�or�in�any�way�connected�with�or�relating�to�the�COVID-19�pandemic,�but�excluding�any�claims�arising
under�the�amended�purchase�agreement.�The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the�Settlement�Deed�on�December�15,�2020.�The
amended�purchase�agreement�provided�for,�among�other�things,�a�reduction�of�the�aggregate�purchase�price�for�the�acquisition�to�$577.5�million�(subject�to�certain
adjustments)�consisting�entirely�of�cash,�which�the�company�paid�with�cash�on�hand,�and�the�closing�of�the�acquisition�occurring�concurrent�with�the�execution�of
the�Settlement�Deed�on�December�15,�2020.�The�Company�determined�the�aggregate�purchase�price�represents�consideration�paid�for�the�businesses�acquired�and
for �the �settlement �of �legal �proceedings �described �above. �The �preliminary �fair �value �of �the �businesses �acquired �was �estimated �to �be �$415.0 �million �using �a
discounted �cash�flow�analysis�and�guideline�transaction �method.�Since�the�Company �was�not�able �to�reliably�estimate �the�fair�value�of �the�legal�settlement, �the
residual�value�of�$162.5�million�has�been�allocated�to�the�legal�proceedings�settlement,�which�has�been�included�in�legal�settlement�expense�in�the�consolidated
statement�of�operations�for�the�year�ended�December�31,�2020.
Sale�of�Subsidiary
On�September�30,�2020,�the�Company�sold�its�wholly-owned�subsidiary�UNIK�S.A,�(the�"WEX�Latin�America"�business).�The�operations�of�WEX�Latin
America �were�primarily�included�in�the �Health�and�Employee�Benefit�Solutions �segment �through�the�date�of�sale.�A �pre-tax �loss�on�sale�of�subsidiary�of �$46.4
million,�has�been�reflected�in�the�consolidated�statement�of�operations�for�the�year�ended�December�31,�2020.�The�Company�decided�to�sell�UNIK�S.A.�because�it
no�longer�aligned�with�the�strategic�direction�of�the�Company.
Overview
FLEET�SOLUTIONS�SEGMENT
����Our�Fleet�Solutions�segment�is�a�leader�in�fleet�vehicle�payment�processing�services�specifically�designed�for�the�needs�of�large�fleets,�government�fleets,�over-
the-road�carriers�and�small�businesses.�As�of�December�31,�2020,�15.8�million�vehicles�use�our�payment�solutions�for�fleet�management.
Sales
� � � �Payment �processing �transactions �are �the �primary �revenue �source �in �Fleet �Solutions �and �are �based �on �a �percentage �of �the �aggregate �dollar �amount �of �the
customer’s�purchase,�a�fixed�amount�per�transaction�or�a�combination�of�both.�Normally,�in�a�domestic�payment�processing�transaction,�we�extend�short-term�credit
to�the�fleet�cardholder�and�pay�the�merchant�within�ten�days,�on�average,�for�the�purchase�price,�less�the�fees�we�retain�and�record�as�revenue.�Revenue�from�our
WEX �Europe�Services�and�Go�Fuel�Card�operations �is�primarily�derived�from�the�difference �between�the�negotiated�price �of�the�fuel�from�the�supplier�and �the
price �charged �to�the�fleet�customer.�In�both�types�of�transactions,�we�collect�the�total�purchase�price �from �the�fleet�customer,�normally�within�25�days�from�the
billing �date. �In �2020, �we �processed �approximately �464 �million �payment �processing �transactions, �compared �to �approximately �505 �million �payment �processing
transactions�in�2019.����
����
6
The �following�illustration �depicts�our �business�process�for �a�typical �closed-loop�domestic�fuel �payment�processing �transaction�and �a�breakdown�of �the
related�Fleet�Solutions�revenue�streams:
����At�the�point-of-sale,�we�capture�an�array�of�information�including�the�amount�of�the�expenditure,�the�driver,�the�vehicle,�the�odometer�reading,�the�fuel�or�vehicle
maintenance�provider�and�the�items�purchased.�We�provide�standard�and�customized�information�to�customers�through�monthly�vehicle�analysis�reports,�custom
reports�and�our�websites.�We�also�alert�customers�of�unusual�transactions�or�transactions�that�fall�outside�of�pre-established�parameters.�Customers�can�access�their
account�information�through�our�website�including�account�history�and�recent�transactions�and�download�the�related�details.�In�addition,�fleet�managers�can�elect�to
be�notified�by�email�when�limits�are�exceeded�in�specified�purchase�categories,�including�limits�on�transactions�within�a�time�range�and�gallons�per�day.
����In�the�over-the-road�space,�we�offer�customizable�payment�solutions�including�real-time�interactive�and�seamless�interfaces�delivering�data�integrity,�alternative
payment �and �money �transfer �options, �comprehensive �settlement �solutions, �real-time �reports �and �analytics �for �compliance �and �cost-optimization �and �fuel
reconciliation�and�mobile�optimization�tools.
����In�addition�to�revenue�derived�from�payment�processing�transactions,�we�recognize�account�servicing�revenue,�finance�fee�revenue�and�other�revenue�through
the�following�products�and�services:
•
•
•
•
Customer�service,�account�activation�and�account�retention:�We�offer�customer�service,�account�activation�and�account�retention�services�to�fleets,�fleet
management �companies �and �the �fuel �and �vehicle �maintenance �providers �on �our �network. �Our �services �include �promoting �the �adoption �and �use �of �our
products�and�programs�and�account�retention�programs�on�behalf�of�our�customers�and�partners.
Authorization�and�billing�inquiries�and�account�maintenance:�We�handle�authorization�and�billing�questions,�account�changes�and�other�issues�for�fleets
through�our�dedicated�customer�contact�centers,�which�are�available�24�hours�a�day,�seven�days�a�week.�Fleet�customers �also�have�self-service �options
available�to�them�through�our�websites.
Premium�fleet�services:�We�assign�designated�account�managers�to�businesses�and�government�agencies�with�large�fleets.�These�representatives�have�in-
depth�knowledge�of�both�our�programs�and�the�operations�and�objectives�of�the�fleets�they�service.
Credit�and �collections �services:� We �have�developed �proprietary�account �approval,�credit �management �and�fraud�detection �programs. �Our�underwriting
model�produces�a�proprietary�score,�which�we�use�to�predict�the�likelihood�of�an�account�becoming�delinquent�at�application�and�on�an�ongoing�basis.�We
have�developed�a�collections�scoring�model�that�we�use�to�rank�and�prioritize�past�due�accounts�for�collection�activities.�We�also�employ�fraud�specialists
who�monitor�accounts,�alert�customers�and�provide�case�management�expertise�to�minimize�losses�and�reduce�program�abuse.
• Merchant�services:�Our�representatives�work�with�fuel�and�vehicle�maintenance�providers�to�enroll�these�providers�in�our�network,�test�all�network�and
terminal�software�and�hardware,�and�to�provide�training�on�our�sale,�transaction�authorization�and�settlement�processes.
7
•
•
Analytics �solutions: �We �provide �customers �with �access �to �web-based �data �analytics �platforms �and �custom �reporting �tools �that �offer �insights �to �fleet
managers, �including �integrating �and �analyzing �business �fleet �fuel �purchases �to �uncover �fraud, �manage �product �type �controls �and �identify �cost �saving
opportunities.
Ancillary �services �and �offerings: �We �provide �a �variety �of �ancillary �services �and �tools �to �fleets �to �help �them �better �manage �expenses �and �capital
requirements �including �tracking �driver �performance, �location �and �speed; �mobile �account �maintenance �and �payment �tools; �tax �reporting �and �permitting
services.
Marketing�Channels
����We�market �our�fleet�products�and�services�both�directly�and�indirectly�to�commercial�and�government �vehicle�fleet�customers�with�small,�medium�and�large
fleets,�and�over-the-road,�long�haul�fleets.�Our�direct�product�suite�includes�payment�processing�and�transaction�processing�services,�WEX�branded�fleet�cards�in
North �America �and �Motorpass/Motorcharge-branded �fleet �cards �in �Australia. �Additionally, �our �over-the-road �line �of �business �is �marketed �under �the �EFS, �EFS
Transportation�Services,�T-Chek�and�Fleet�One�brands.
����We�also�market�our�products�and�services�indirectly�through�co-branded�and�private�label�relationships.�With�a�co-branded�relationship�product,�we�market�our
products�and�services�for,�and�in�collaboration�with,�both�fuel�providers�and�fleet�management�companies�using�their�brand�names�and�our�logo�on�a�co-branded
fleet �card. �These �companies �seek �to �offer �our �payment �processing �and �information �management �services �as �a �component �of �their �total �offering �to �their �fleet
customers.
����Our�private�label�programs�market�our�products�and�services�for,�and�in�collaboration�with,�fuel�retailers,�using�only�their�brand�names.�The�fuel�retailers�with
which�we�have�formed�strategic�relationships�offer�our�payment�processing�and�information�management�products�and�services�to�their�fleet�customers�in�order�to
establish�and�enhance�customer�loyalty.�These�fleets�use�these�products�and�services�to�purchase�fuel�at�locations�of�the�fuel�retailer�with�whom�we�have�the�private
label�relationship.
Overview
TRAVEL�AND�CORPORATE�SOLUTIONS�SEGMENT
� � � �Our �Travel �and �Corporate�Solutions �segment �provides �innovative �corporate �purchasing �and �payment �capabilities �that �can �be �integrated �with �our �customers’
internal�systems�to�streamline�their�corporate�payments,�accounts�payable�and�reconciliation�processes.
Sales
����The�Travel�and�Corporate�Solutions�segment�allows�businesses�to�centralize�purchasing,�simplify�complex�supply�chain�processes�and�eliminate�the�paper�check
writing�associated�with�traditional�purchase�order�programs.�Our�product�suite�includes�electronic�payments�and�corporate�cards�offered�across�travel,�insurance�&
warranty�and�other�industries.
����Our�electronic�payments�product�includes�virtual�payments�and�integrated�payables.�Our�virtual�payments�program�is�used�for�transactions�where�no�physical
card�is�presented,�including�transactions�conducted�over�the�telephone,�by�mail,�by�fax�or�on�the�Internet�or�for�transactions�that�require�pre-authorization,�such�as
hotel�reservations.�Under�our�virtual�payments�program,�each�transaction�is�assigned�a�unique�account�number�with�a�customized�credit�limit�and�expiration�date.
These �controls �are �in �place �to �limit �fraud �and �unauthorized �spending. �The �unique �account �number �limits �purchase �amounts �and �tracks, �settles �and �reconciles
purchases �more �easily, �creating �efficiencies �and �cost �savings �for �our �customers. �Our �electronic �accounts �payable �solution �is �a �cloud-based �web �platform �that
manages �and �optimizes �all �accounts �payable �disbursements, �regardless �of �type. �Automated �clearing �house, �virtual �cards, �electronic �funds �transfer �and �check
payments�are�streamlined�and�automated�through�our�centralized�application.
����We �offer�a�variety �of�corporate�cards, �designed�to�combine �all�of�a �customer’s�purchasing �needs�into�a�single�integrated�card, �streamline�the �procure-to-pay
process�with�a�single�card�and�control�travel�and�entertainment�spending�and�provide�employees�with�greater�flexibility.
����Additionally,�WEX�Prepaid�Card�Australia�offers�prepaid�and�gift�card�products,�which�provide�secure�payment�and�financial�management�solutions�with�single
card�options,�access�to�open�or�closed�loop�redemption,�load�limits�and�variable�expirations.
����
8
The�following�illustration�depicts�our�business�process�for�a�typical�travel�virtual�card�product�transaction:
�1��Guest�books�a�hotel�through�a�travel�website�owned�by�an�online�travel�company
�2��Online�travel�company�reserves�room�at�hotel�through�reservation�system�using�a�WEX�VCN�to�reserve�the�room
�3��Upon�checkout,�hotel�authorizes�payment�using�the�WEX�VPN
�4��The�WEX�virtual�card�restricts�charge�to�predetermined�cost�of�room�and�incidental�expenses�are�paid�for�by�guest
�5��Online�travel�company�pays�WEX.�WEX�earns�fee�by�retaining�percentage�of�the�online�travel�company�reimbursement�payment
Marketing�Channels
��� �We �market �our �Travel�and �Corporate�Solutions �segment �products�and �services�both �directly �and�indirectly �to�new �and�existing�customers. �Our�products �are
marketed�to�commercial�and�government�organizations�and�we�use�existing�open-loop�networks.
HEALTH�AND�EMPLOYEE�BENEFIT�SOLUTIONS�SEGMENT
Overview
����Our�Health�and�Employee�Benefit�Solutions�segment�is�comprised�of�our�healthcare�payment�products�and�SaaS�platforms�with�which�we�provide�simplified
payment�capabilities�in�a�complex�healthcare�market.
Sales
����Our�healthcare�payment�products�provide�consumer-directed�payments�in�the�complex�healthcare�market.�We�partner�with�employers,�health�plans,�third-party
administrators, �financial �institutions, �payroll �companies �and �the �public �sector �to �provide �a �SaaS �product �to �support �healthcare �benefit �programs �and �administer
COBRA,�flexible�spending,�health�saving�and�reimbursement�accounts,�and�other�healthcare�related�employee�and�dependent�benefits.
����We�currently�have�relationships�with�approximately�408,000�employers,�reaching�approximately�33.1�million�consumers.�Revenue�is�generated�primarily�from
SasS �licensing �fees �charged �to �partners �and �interchange �fees �from �spending �on �customer �debit �cards �issued �under �flexible �spending, �health �savings �and
reimbursement�accounts.�Cards�are�branded�with�either�Visa�or�MasterCard�and�operate�on�a�restricted�open�loop�network.
� � � �Health �and �Employee �Benefit �Solutions �segment �revenues �are �generated �primarily �from �subscription �fees �and �interchange �fees �from�spending �on �the �WEX
Health�payment�cards.
����
9
The�following�illustration�depicts�our�business�process�and�parties�involved�in�our�healthcare�benefits�solution:
BPO:�Business�Process�Outsourcing
Marketing�Channels
����We�market�our�Health�and�Employee�Benefit�Solutions�products�and�services�to�consumers�through�an�extensive�partner�network,�which�includes�health�plans,
third-party�administrators,�financial�institutions,�payroll�companies�and�software�providers,�as�well�as�individual�employer�groups.
Markets
OTHER�ITEMS
� � � �We �face �competition �in �all �of �our �segments. �Our �competitors �vie �with �us �for �prospective �customers �as �well �as �for �companies �with �which �to �form �strategic
relationships. �The �most �significant �competitive �factors �include �the �breadth �of �features �offered, �functionality, �servicing �capability �and �price. �We �compete �with
companies�that�perform�payment�and�transaction�processing�or�similar�services.�Financial�institutions�that�issue�Visa,�MasterCard�and�American�Express�credit�and
specialized�proprietary�cards�currently�compete�primarily�with�our�Fleet�Solutions�and�Travel�and�Corporate�Solutions�segments.�Our�Health�and�Employee�Benefit
Solutions�segment�also�competes�with�other�healthcare�payment�service�providers.�For�more�information�regarding�risks�related�to�competition,�see�the�information
in�Item�1A,�under�the�heading�“Our�industry�continues�to�become�increasingly�competitive,�which�makes�it�more�challenging�for�us�to�maintain�profit�margins�at
historical�levels.”
The�demand�for�our�payment�processing,�account�servicing�and�transaction�processing�services�combined�with�significant�operating�scale�has�historically
driven �strong �revenue �growth �and �earnings �potential. �We �have �an �extensive �history �of �organic �revenue �growth �driven �by �our �various �marketing �channels, �our
extensive�network�of�fuel�and�service�providers,�and�our�growth�in�transaction�volume.�Further,�we�have�completed�a�number�of�strategic�acquisitions�to�expand
our�product�and�service�offerings,�which �have�contributed�to�our�revenue �growth�and�diversification�of�our�products �and�services.�We�have�an�experienced �and
committed �management �team �that �has �substantial �industry �knowledge �and �a �proven �track �record �of �financial �success. �The �team �has �been �successful �in �driving
strong�growth�with�consistent�operating�performance.�We�believe�that�our�management�team�positions�us�well�to�continue�successfully�implementing�our�growth
strategy �and�capturing�operating �efficiencies. �In�addition,�we �believe�that�the�following �factors, �by�reportable�segment,�distinguish�us�from�our�competitors �and
place�us�in�a�strong�competitive�position.
10
Fleet�Solutions
•
•
Our �proprietary �closed-loop �fuel �networks �in �the�U.S. �and �Australia �are �among�the �largest �in �each �country. �We�describe �our �fleet �payment �processing
networks �as �“closed-loop” �because �we �have �a �direct �contractual �relationship �with �both �the �merchant �and �the �fleet, �and �only �WEX�transactions �can �be
processed�on�these�networks.�We�have�built�networks�that�management�estimates�provide�coverage�to�over�90�percent�of�fuel�locations�in�the�U.S.�and
Australia,�as�well�as�wide�acceptance�in�Europe.�This�provides�our�customers�with�the�convenience�of�broad�acceptance.
Our �proprietary �closed-loop �fuel �networks �provide �us �with �access �to �a �higher �level �of �fleet-specific �information �and �control �as �compared �to �what �is
typically�available�on�an�open-loop�network.�This�provides�high-level�purchase�controls�at�the�point-of-sale,�including�the�flexibility�of�allowing�fleets�to
restrict�purchases�and�receive�automated�alerts.�Additionally,�we�have�the�ability�to�refine�the�reporting�provided�to�our�fleet�customers�and�customers�of
our�strategic�relationships.
• We�offer�a�differentiated�set�of�products�and�services,�including�security�and�purchase�controls,�to�allow�our�customers�and�the�customers�of�our�strategic
relationships �to�better�manage�their�vehicle�fleets.�We�provide�customized�analysis�and�reporting�on�the�efficiency�of�fleet�vehicles�and�the�purchasing
behavior�of�fleet�vehicle�drivers.�We�make�this�data�available�to�fleet�customers�through�both�traditional�reporting�services�and�sophisticated�web-based
data�analytics�tools.
•
•
•
Our�long-standing�strategic�relationships,�multi-year�contracts�and�high�contract�renewal�rates�have�contributed�to�the�stability�and�recurring�nature�of�our
revenue�base.�We�believe�that�we�offer�a�compelling�value�to�our�customers�relative�to�our�competitors�given�the�breadth�and�quality�of�our�products�and
services�and�our�deep�understanding�of�our�customers’�operational�needs.�We�have�a�large�installed�customer�base�and�co-branded�strategic�relationships
with �some �of �the �largest �U.S. �fleet �management �providers �and �with �various �oil �companies �and �convenience �store �operators �that �use �our �private �label
solutions. �Our �wide �site �acceptance, �together �with �our �private-label �portfolios �and �value-added �product �and �service �offerings, �drive �high �customer
satisfaction�levels,�as�evidence�by�high�customer�retention�rates.
Our�capabilities�in�the�over-the-road�market�space�enhance�our�ability�to�serve�fleet�customers�who�operate�both�heavy�duty�trucks�and�cars�or�light�duty
vehicles�in�the�U.S.�and�Canada�as�well�as�to�blend�the�small�fleet�and�private�label�businesses�for�greater�scale.
Our �European�commercial�fuel�card �programs,�which�use�a�closed-loop �network,�combined�with�long�term�supply �agreements�to�serve �the�current�and
future�European�Fleet�business,�provides�us�with�a�strong�foundation�in�the�large�European�fleet�market.
Travel�and�Corporate�Solutions
•
Our�travel�and�corporate�payment�products�offer�customers�enhanced�security�and�control�for�complex�payment�needs�and�the�accounts�payable�segment
of �the �market. �Our �strategic �relationships �include �many �of �the �largest �online �travel �agencies �in �the �world. �We �continue �to �expand �our �online �travel
payment�solution�capabilities�and�geographies,�which�currently�include�North�America,�South�America,�the�United�Kingdom,�Europe,�Africa,�Asia�and
Australia/New�Zealand.�As�of�December�31,�2020,�we�settle�transactions�in�over�20�currencies.
Health�and�Employee�Benefit�Solutions
•
The �U.S. �Health �business �uses �an �industry �leading �proprietary �cloud-based �platform �to �simplify �healthcare �benefits �administration �for �employers �and
consumers. �We �provide�a �comprehensive�suite �of�products �and�services �that�can �be�customized �to �fit�the �needs�of �the�complex �healthcare�space. �As�a
result�of�this�complete�solution,�which�distinguishes�us�from�competitors,�we�have�high�customer�retention�rates.�Our�large�partner�network�expands�our
opportunities�in�the�healthcare�financial�technology�market�and�solidifies�our�strong�competitive�position.
Another �factor �that �places �us �in �a �strong �competitive �position �is �that �we�have �an �enterprise-wide �risk �management �program �that �helps �us �identify �and
manage�inherent�risks�related�to�our�liquidity,�extension�of�credit�and�interest�rates.�Our�ownership�of�WEX�Bank�provides�us�with�access�to�low�cost�sources�of
capital,�which�provide�liquidity�to�fund�our�short-term�card�receivables.�We�have�maintained�a�long�record�of�low�credit�losses�due�to�the�short-term,�non-revolving
credit�issued�to�our�customer�base.�Our�credit�risk�management�program�is�enhanced�by�our�proprietary�scoring�models,�managing�credit�lines�and�early�suspension
policy.�Interest�rate�risk�is�managed�through�diversified�funding�sources�at�WEX�Bank�including�interest�bearing�money�market�deposits�and�certificates�of�deposit
with�varying�maturities.�Some�of�our�merchant�contracts�provide�the�ability�to�raise�rates�if�interest�rates�rise.
11
Strategy
The �Company’s �performance �during �the �year �ended �December �31, �2020, �was �shaped �by �a �newly �updated �corporate �strategy �and �the �global �COVID
pandemic.�While�we�continue�to�prioritize�customers,�technology,�talent,�and�execution,�we�refined�our�strategy�to�more�specifically�focus�on�how�we�will�meet�the
needs�of�an�evolving�landscape.
•
•
•
•
•
Continue �to �Win �& �Expand �Using �Customer �Relationships. �We �seek �to �drive �organic �growth �across �our �segments �by �nurturing �our �customer
relationships�and�ensuring�we�are�a�trusted�strategic�partner.�We�have�successfully�integrated�the�two�major�oil�wins�and�those�portfolios�are�continuing�to
perform�well.�Our�industry-leading�support�and�service�will�enable�us�to�grow�with�existing�customers�and�win�new�customers.
Deliver�Modular�Solutions�on�Integrated�Platforms.�We�will�focus�on�differentiating�ourselves�by�anticipating�our�customers’�technology�needs�and
providing�innovative�offerings.�We�will�do�this�through�integrating�and�continuously�improving�our�payment�platforms�and�by�embedding�intelligence,
agility,�and�resiliency�everywhere�across�the�organization.
Continuously�Reinvent�Through�Diversification.�As�global�markets�continue�to�evolve,�we�will�minimize�our�exposure�to�macro�forces�and�customer
concentration.�We�will�accomplish�this�by�identifying�new�verticals,�business�models,�and�geographies�for�expansion.�Along�with�our�organic�growth,�we
will�achieve�this�with�our�acquisition�strategy,�which�brings�further�scale�and�diversification�to�our�offerings.�In�December,�we�closed�the�acquisition�of
eNett�and�Optal,�which�complements�our�existing�travel�business�by�expanding�our�presence�in�Europe�and�entering�into�new�markets�in�Asia.
Transform �to �Mitigate �Risk �& �Maximize �Scale.� To �drive �efficiency, �we �will �optimize �operations �by �improving �technological �capabilities �and �risk
management. �To�accomplish �this,�we �will�maximize �the�value�of �shared�services, �streamline�and �standardize�our�technologies, �and�automate �wherever
possible.�This�year�we�built�out�a�new�data�team�and�platform�to�optimize�our�operations�and�identify�new�ways�to�drive�growth.�We�will�expand�our�use
of�AI,�machine�learning,�and�other�innovative�tools�to�ensure�we�can�scale�with�our�growth�and�further�mature�our�risk�management.
Leverage�Our�Culture�&�Grow�Our�Talent.�Through�leveraging�our�winning,�inclusive,�and�values-based�culture,�we�will�mine,�grow,�and�maximize
talent �that�adapts �to�our �future�business.�During �the�pandemic, �the�safety�and �health�of �our�employees�have �taken�on�even �more�importance. �We�have
made�significant�technology�investments�to�rapidly�support�our�remote�workforce,�we�gave�all�US�employees�an�additional�two�weeks�of�paid�time�off�to
allow�for�personal�time �away�from�“the �office”,�and�we �leveraged �our�Compassion�Fund �to�help�both �furloughed �and�active�employees. �We�have�also
invested�in�our�Diversity�and�Inclusion�efforts�including�the�launch�of�various�employee�resource�groups�to�support�our�current�employees�and�develop�a
culture �of �inclusion �to �attract �new �talent. �One �of �the �benefits �of �supporting �the �remote �workforce �is �that �we �can �now �recruit �from �more �diverse
geographies.
Human�Capital
We �believe �that �maintaining �our �continued �growth �and �position �as �a �leading �provider �of �financial �technology �solutions �requires �a �strategy �focused �on
attracting, �developing�and�retaining�exceptional�talent,�as�well�as�fostering�a�culture�that �supports�innovation �and�collaboration �globally.�Each�of�our�employees
contributes �to �our �growth �and �success. �As �of �December �31, �2020, �WEX �Inc. �and �its �subsidiaries �had �approximately �5,300 �employees, �of �which �approximately
4,300�were�located�in�the�United�States.�None�of�our�U.S.-based�employees�are�subject�to�a�collective�bargaining�agreement.�Certain�non�U.S.-based�employees�are
members�of�trade�unions�or�works�councils.
Values
We �believe �our�core �values�of �Community, �Execution,�Innovation, �Integrity �and�Relationships �differentiate �us�from �our�competitors �and �meaningfully
contribute�to�our�growth�and�business�success.
Operating �with�transparency �and�authenticity �is�of�the�utmost�importance, �internally�and �externally.�Collaboration �across�the �organization,�a �culture�of
curiosity �and �respectful �communication �support �the �development �and �retention �of �superior �talent �and �the �growth �of �our �business. �For �WEX, �it’s �all �about �the
people.
Along �with �being �a �growth-focused �company, �we �take �pride �in �prioritizing �and �maintaining �a �positive �corporate �environment �where �WEX�employees
enjoy�their�work,�respect�and�support�their�colleagues�and�are�encouraged�to�innovate�and�collaborate.�We�strive�to�foster�a�culture�where�our�employees�recognize
the�value�of�their�contributions—and�of�our�business—to�support�the�growth�and�development�of�the�communities�in�which�we�operate.
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Talent�Management�Focused�on�Recruitment,�Development�and�Retention
We�believe�that�attracting,�developing�and�retaining�key�employees�and�members�of�our�management�team�are�of�paramount�importance�to�the�success�of
our�organization,�including �meeting�or �exceeding�our�business �and�growth�goals. �The�skills, �experience, �institutional �and�industry�knowledge �of�our�employees
significantly�benefit�our�operations�and�performance.
There�are�several�ways�in�which�we�attract,�develop,�and�retain�highly�qualified�talent.�Here�is�an�overview�on�key�programs�at�WEX�that�support�each�of
these�pillars:
•
In�line�with�our�values,�we�encourage�creativity�and�innovation�and�regularly�reinforce�the�importance�of�integrity�and�respectful�communication.
• We �strategically �recruit �diverse, �qualified �candidates �to �help �support�our �culture �of �innovation �and �fostering �creativity. �We �support �our �talent �pipeline
through�internships,�co-ops,�and�partnerships�with�universities.
•
In�addition,�we�collaborate�with�a�broad�range�of�organizations�to�introduce�us�to�qualified�diverse�candidates.
• We�provide�competitive�and�valuable�Total�Rewards�benefits�that�help�our�employees�thrive�while�protecting�what�is�most�important:�health,�families�and
overall �well-being. �Our �Total �Rewards �program �consists �of �five �elements: �social; �health;�community; �financial; �and �career, �and �is �designed�to �support
employees�in�reaching�their�personal�and�professional�goals.�We�offer�market-competitive�compensation�packages�as�well�as�a�variety�of�benefits�through
our�Total �Rewards�program, �including �a �401(k)�employer �match, �incentive-based �cash �and/or �equity �based�compensation �awards, �company-subsidized
medical�insurance�coverage,�recognition�programs,�paid�volunteer�time�off,�and�paid�time�off,�among�other�benefits.
• We �provide�employees �with�comprehensive �training �programs,�tools �and�education �throughout�their �employment�with �us,�including �online�self-service
learning�platforms,�professional�development,�leadership�and�mentoring�programs,�wellness�challenges,�incentives�to�foster�community�and�engagement,
dedicated�well-being�campaigns�and�personal�financial�counseling.
•
Through�our�Great�Leader�Behaviors,�employees�are�provided�a�baseline�of�behaviors�and�qualities�to�embody�in�their�daily�interactions�with�colleagues,
customers�and�partners.�We�believe�it’s�not�just�what�we�do,�but�how�we�do�it�that�matters,�and�our�Great�Leader�pillars�lay�the�foundation�for�clear�and
consistent�behavior�at�all�levels.�In�turn,�we�are�better�able�to�maintain�an�inclusive,�innovative�and�collaborative�environment�for�all�employees�to�work,
live�and�thrive.
• We�do�not�limit�equity�awards�to�our�senior�leadership;�employees�at�different�levels�throughout�our�organization�are�eligible�to�receive�equity�awards�as
part�of�their�annual�compensation,�including�a�number�of�individual�contributors.�Equity�compensation�supports�retention�of�key�employees�and�further
aligns�the�interests�of�those�individuals�with�those�of�our�stockholders.�We�operate�in�a�highly�competitive�talent�marketplace,�and�our�approach�to�equity
compensation�supports�WEX�having�the�right�people�in�the�right�roles�at�the�right�time�to�achieve�our�short-�and�long-term�goals.
•
Our�leadership�recognizes�that�small�tweaks�in�processes�or�in�the�way�we�engage�with�employees�or�customers�can�lead�to�big�successes.�We�believe�in
continuous�improvement�and�regularly�evaluate,�and�consider�potential�enhancements�to,�our�internal�processes�and�technologies�to�support�and�increase
employee�engagement,�productivity�and�efficiency.
•
One�way�we�capture�employee�feedback�is�employee�surveys,�which�measures�cultural�and�engagement�indicators.
• We�regularly�review�talent�retention�at�different�levels�of�our�organization�relative�to�expectation,�over-time�trends�and�market�norms.
Diversity,�Equity�and�Inclusion
At�WEX,�we�strive�to�achieve�a�fully�inclusive�global�workplace�that�unifies�and�celebrates�the�diversity�of�our�people,�and�this�is�embedded�in�our�core
values.�We�believe�that�to�fully�realize�our�potential�as�a�company,�we�must�continue�to�foster�a�workplace�that�ignites�a�sense�of�belonging�and�provides�equal
opportunities�and�treatment�for�our�employees.�We�embed�diversity�and�inclusion�as�a�business�imperative�because�we�believe�the�best�solutions�happen�when�all
individuals�are�treated�fairly�and�respectfully,�have�equal�access�to�opportunities�and�resources�and�can�contribute�fully�to�our�organization’s�success.
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Our�commitment�to�diversity�and�inclusion�is�shown�in�many�ways,�including:
•
Our�blend�of�managers�comes�from�both�homegrown�talent�and�from�outside�the�company,�and�leveraging�talent�internally�and�from�companies�we�have
acquired.�Our�leaders�hail�from�businesses�large�and�small,�and�bring�a�diversity�of�thought�and�approach�to�WEX.
• We�furthered�our�commitment�to�diversity,�equity�and�inclusion�during�2020�by�expanding�the�responsibilities�section�of�the�charter�for�the�Compensation
Committee�of�our�Board�of�Directors�to�specifically�include�providing�direction�and�perspective�to�management�on�key�diversity�initiatives,�among�other
strategies,�policies�and�practices�with�significant�human�resource�implications.
•
•
As �part �of �WEX’s �commitment �to �creating �a �diverse �and �inclusive �workplace, �we �proudly �sponsor �employee �resource �groups �(ERGs) �that �focus �on,
among �other�employee �groups:�early�career �professionals;�parents;�the �LGBTQIA+�community; �women;�employees�of �color,�employees�with �differing
abilities;�and�multicultural�employee�interests.�ERGs�are�part�of�our�larger�commitment�to�diversity,�equity�and�inclusion�and�our�long-term�strategy�of
commitment �to �maintain �an �inclusive �community. �They �serve �as �a �key �diversity �tool �in �facilitating �the �recruitment �of �minority �staff, �raising �diversity
awareness�across�the�company�and�driving�strategic�discussions�about�the�advancement�of�employees�and�a�more�inclusive�workplace.�We�continue�to
sponsor�newly�formed�groups�and�employees�are�encouraged�to�form�groups�to�satisfy�their�individual�needs.
Including �our �chair�and �CEO,�nearly �one-third �of�the �members �of�our �board�are �women, �and�40 �percent�of �our �executive�leadership �team�are�women.
Women,�who�are�a�key�part�of�WEX’s�business�at�all�levels,�represent�nearly�half�of�our�global�workforce.
Employee�Health�and�Safety
We �are �committed �to �protecting �the �safety, �health �and �well-being �of �our �employees, �contractors �and �visitors �to �our �office �locations �and �to �ensuring
compliance �with �local �health �and �safety �regulations. �The �health �and �safety �of �our �employees �has �been—and �continues �to �be—of �vital �importance �amidst �the
COVID-19 �pandemic. �In �early �2020, �we �implemented �a �COVID-19 �global �task �force �to �prioritize �our �pandemic �response. �Operating �on �the �task �force’s
recommendation,�we�pivoted�to�a�remote�work�environment�in�March�2020�and�instituted�a�series�of�employee-focused�initiatives,�such�as�increasing�flexibility�on
when�and�where�we�work,�adding�an�additional�10�days�of�emergency�time�off�and�expanding�child-�and�elder-care�benefits.�As�the�pandemic�continues,�we�remain
committed�to�developing�a�staged�plan�for�global�office�reentry�when�safe�to�do�so.�In�2020,�we�also�expanded�the�criteria�of�the�WEX�Cares�Foundation,�funded
by�employees�and�the�WEX�Board�of�Directors,�to�include�support�for�employees�severely�impacted�by�COVID-19�hardships.
We �continue �to �provide �frequent �communications �and �information �to �our �employees �through �a �dedicated �Chief �Human �Resource �Officer �COVID-19
newsletter �series, �town �hall �meetings, �an �internal �COVID-19 �Google �Site �and �external �website �page, �all �with �the �goal �of �keeping �our �employees, �customers,
partners,�and�communities�healthy,�safe�and�informed.
Technology
����We�believe�that�investment�in�technology�is�crucial�in�maintaining�and�enhancing�our�competitive�position�in�the�marketplace.�Our�technology�infrastructure�is
supported�by�secure�and�redundant�data�centers�and�cloud�services�distributed�globally,�including�locations�in�the�United�States,�Europe,�Australia�and�Singapore.
����Our�fleet�fuel-based�closed-loop�proprietary�platforms�capture�detailed�information�from�the�fuel�and�maintenance�locations�within�our�network.�Operating�a
proprietary�network�not�only�enhances�our�value�proposition,�it�also�enables�us�to�limit�dependence�on�third-party�processors�and�to�respond�rapidly�to�changing
customer �needs �with �system �upgrades, �while �maintaining �a �more �secure �environment �than �an �open-loop �network �typically �allows. �The �majority �of �payments
processed�on�our�virtual�card�open-loop�network�are�through�the�Company's�internally�developed�software,�while�a�smaller�portion�are�processed�using�third-party
processors.�Our�infrastructure�has�been�designed�around�industry-standard�architectures�to�minimize�downtime�in�the�event�of�outages�or�catastrophic�occurrences.
At�WEX�Health,�we�maintain�an�integrated�multi-account�payment�platform,�including�a�mobile�application.�In�Australia,�Asia�Pacific�and�the�United�Kingdom,
we�use�standalone�platforms�to�support�operations.
� � � �Our�secure �networks �are �designed �to�isolate �our �data �from�unauthorized �access. �We �use �secure�protocols �among �all �applications, �and �our�employees �access
critical �components �on �a �need-to-know�basis. �We �are �not �aware �of �any �material �data �breaches �experienced �by �the �Company �during �2020. �We �are �continually
improving�our�technology�to�enhance�customer�experience�and�to�increase�efficiency�and�security.�We�also�review�technologies�and�services�provided�by�others�in
order�to�maintain�the�high�level�of�service�expected�by�our�customers�and�continue�to�invest�in�our�technology�infrastructure.
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����For�information�regarding�technology�related�risks,�see�the�information�in�Item�1A�under�the�headings�“Our�business�is�regularly�subject�to�cyberattacks�and
attempted�security�and�privacy�breaches�and�we�may�not�be�able�to�adequately�protect�our�information�systems,�including�the�data�we�collect�about�our�customers,
which�could�subject�us�to�liability�and�damage�our�reputation”,�“Our�failure�to�effectively�implement�new�technology�could�jeopardize�our�position�as�a�leader�in
our�industry,”�“We�are�dependent�on�technology�systems�and�electronic�communications�networks�managed�by�third�parties,�which�could�result�in�our�inability�to
prevent�service�disruptions”�and�“If�the�technologies�we�use�in�operating�our�business�and�interacting�with�our�customers�fail,�are�unavailable,�or�do�not�operate�to
expectations,�or�we�fail�to�successfully�implement�technology�strategies�and�capabilities�in�connection�with�our�outsourcing�arrangements,�our�business�and�results
of�operation�could�be�adversely�impacted.”
Seasonality
����Our�businesses�are�affected�by�seasonal�variations.�For�example,�in�a�typical�year,�fuel�prices�are�typically�higher�during�the�summer�and�online�travel�sales�are
typically �higher �during �the �third �quarter. �In �addition, �we �experience �seasonality �in �our �Health �and �Employee �Benefit �Solutions �segment �as �consumer �spend �is
correlated�with�insurance�deductibles,�typically�resulting�in�higher�spend�in�the�early�part�of�the�year�until�employees�meet�their�deductibles.
Resources
����We�rely�on�a�combination�of�patent,�copyright,�trade�secret�and�trademark�laws,�confidentiality�procedures,�contractual�provisions�and�other�similar�measures�to
protect�the�proprietary�information�and�technology�used�in�our�business.�We�generally�enter�into�agreements�with�clients,�consultants,�service�providers�and�other
partners, �whether�current�or �prospective, �that�contain�provisions �restricting�use�and �disclosure�of�our�proprietary �information�and�technology. �Operationally,�we
have �implemented �certain �safeguards �designed �to �control �access �to �and �distribution �of �our �proprietary �information �and �technology. �Despite �these �efforts,
unauthorized�parties�may�attempt�to�access�or�use�our�proprietary�information�and�technology,�and�third�parties�may�develop�similar�and/or�competing�technology
independently.�We�pursue�registration�and�protection�of�certain�trademarks�in�the�U.S.�and�other�countries�in�which�we�operate�or�plan�to�operate.�We�market�our
products�and�services�using�the�WEX�brand�name�globally,�as�well�as�other�brand�names�such�as�Fleet�One,�EFS,�WEX�Health�Cloud�and�Discovery�Benefits�in
the�U.S.,�and�Motorpass�in�Australia.�
Regulation
����The�Company�and�its�affiliates�are�subject�to�a�substantial�number�of�laws�and�regulations,�both�in�the�United�States�and�other�foreign�jurisdictions,�which�apply
to�businesses�offering�financial�technology�services�and�payment�cards�to�customers�or�processing�or�servicing�for�payment�cards�and�related�accounts.�In�addition,
a�substantial�number�of�laws�and�regulations�govern�insured�depository�institutions�and�their�affiliates,�such�as�WEX�Bank,�and�our�operations�in�the�healthcare
market.
����The�laws�and�regulations�that�apply�to�the�Company�and�its�affiliates�are�often�evolving�and�sometimes�ambiguous�or�inconsistent,�and�the�extent�to�which�they
apply�to�us�is�at�times�unclear.�Failure�to�comply�with�regulations�may�result�in�the�suspension�or�revocation�of�licenses�or�registrations,�the�limitation,�suspension
or�termination�of�services,�and/or�the�imposition�of�civil �and�criminal�penalties,�including�fines.�The�following,�while�not�exhaustive, �is�a�description�of�certain
federal�and�state�laws�and�regulations�in�the�United�States,�as�well�as�foreign�laws�and�regulations,�that�are�applicable�to�our�business,�and�therefore�can�materially
affect�our�capital�expenditures,�earnings,�and�competitive�position.�In�addition,�the�legal�and�regulatory�framework�governing�our�business�is�subject�to�ongoing
revision,�and�changes�in�that�framework�could�have�a�significant�effect�on�us.
Regulation�-�United�States
Exemption�from�Certain�Requirements�of�the�Bank�Holding�Company�Act
��� �As�an�industrial�bank�organized�under�the�laws�of�Utah�that�does�not�accept�demand�deposits�that�may�be�withdrawn�by�check�or�similar�means,�WEX�Bank
currently�meets�the�criteria�for�exemption�as�an�industrial�bank�from�the�definition�of�“bank”�under�the�Bank�Holding�Company�Act.�As�a�result,�the�Company�is
generally,�except�as�stated�above,�not�subject�to�the�Bank�Holding�Company�Act.
Restrictions�on�Intercompany�Borrowings�and�Transactions
� ���Sections �23A �and�23B �of�the �FRA�and �the �implementing �regulations�limit�the �extent �to�which �the �Company�can �borrow�or �otherwise �obtain�credit �from �or
engage�in�other�“covered�transactions”�with�WEX�Bank.�“Covered�transactions”�include�loans�or�extensions�of�credit,�purchases�of�or�investments�in�securities,
purchases�of�assets,�including�assets�subject�to�an�agreement�to�repurchase,�acceptance�of�securities�as�collateral�for�a�loan�or�extension�of�credit,�or�the�issuance�of
a
15
guarantee, �acceptance,�or�letter�of�credit.�Although�the�applicable�rules�do�not�serve�as�an�outright �ban�on�engaging�in�“covered�transactions,”�they�do�limit�the
amount �of �covered �transactions �WEX �Bank �may �have �with �any �one �affiliate �and �with �all �affiliates �in �the �aggregate. �The �applicable �rules �also �require �that �the
Company�engage�in�such�transactions �with�WEX�Bank�only �on�terms�and�under �circumstances �that�are�substantially�the�same,�or �at�least�as�favorable �to�WEX
Bank, �as�those�prevailing�at �the�time�for�comparable �transactions �with�nonaffiliated�companies. �Furthermore,�with�certain �exceptions,�each�loan�or�extension �of
credit �by �WEX �Bank �to �the �Company �or �its �other �affiliates �must �be �secured�by �collateral �with �a �market �value �ranging �from �100 �percent �to �130 �percent �of �the
amount�of�the�loan�or�extension�of�credit,�depending�on�the�type�of�collateral.
The�Dodd-Frank�Act�and�the�Consumer�Financial�Protection�Bureau
����The�Dodd-Frank�Act�created�the�CFPB�to�regulate�the�offering�of�consumer�financial�products�or�services�under�the�federal�consumer�financial�laws.�The�CFPB
assumed�rulemaking�authority�under�the�existing�federal�consumer�financial�protection�laws,�and�enforces�those�laws�against�and�examines�certain�non-depository
institutions�and�insured�depository�institutions�with�total�assets�greater�than�$10�billion�and�their�affiliates.�In�addition,�the�CFPB�was�granted�general�authority�to
prevent�covered�persons�or�service�providers�from�committing�or�engaging�in�unfair,�deceptive�or�abusive�acts�or�practices�under�federal�law�in�connection�with
any�transaction�with�a�consumer�for�a�consumer�financial�product�or�service,�or�the�offering�of�a�consumer�financial�product�or�service.�The�CFPB�is�also�engaged
in �regulating �the �payments �industry, �including �with �respect �to �prepaid �cards. �The �CFPB �amended �several �aspects �of �its �prepaid �accounts �rule, �which �became
effective �on �April �1, �2019. �Among �other �things, �the �rule �established �requirements �for �the �treatment �of �funds �on �lost �or �stolen �cards, �error �resolution �and
investigation,�upfront�fee�disclosures,�access�to�account�information,�and�overdraft�features�if�offered�in�conjunction�with�prepaid�accounts.�The�extensive�nature�of
these�types�of�regulations�and�the�implementation�dates�for�any�such�additional�rulemaking�may�result�in�additional�compliance�obligations�and�expense�for�our
business �and �our �customers. �From �an �enforcement �perspective, �the �legislation �also �gives �the �state �attorneys �general �the �ability �to �enforce �applicable �federal
consumer �protection �laws, �expanding �the �sources �of �regulatory �oversight. �Relatedly, �the �Utah �DFI �is �responsible �for �examining �and �supervising �WEX �Bank's
compliance�with�state�consumer�protection�laws�and�regulations.
����In�addition,�the�Durbin�Amendment�to�the�Dodd-Frank�Act�provided�that�interchange�fees�that�a�card�issuer�or�payment�network�receives�or�charges�for�debit
transactions�will�now�be�regulated�by�the�Federal�Reserve�and�must�be�“reasonable�and�proportional”�to�the�cost�incurred�by�the�card�issuer�in�authorizing,�clearing
and�settling�the�transaction.�Payment�network�fees�may�not�be�used�directly�or�indirectly�to�compensate�card�issuers�in�circumvention�of�the�interchange�transaction
fee�restrictions.�In�July�2011,�the�Federal�Reserve�published�the�final�rules�governing�debit�interchange�fees.�Effective�in�October�2011,�with�certain�exemptions,
debit�interchange�rates�were�capped�at�$0.21�per�transaction�with�an�additional�component�of�five�basis�points�of�the�transaction’s�value�to�reflect�a�portion�of�the
issuer’s�fraud�losses�plus,�for�qualifying�issuing�financial�institutions,�an�additional�$0.01�per�transaction�in�debit�interchange�for�fraud�prevention�costs.
The �Dodd-Frank �Act �also �establishes �federal �oversight �and �regulation �of �the �over-the-counter �derivatives �market �and �entities �that �participate �in �that
market. �Compliance �with �derivatives�regulations �have �added�costs �to �our�business, �and�any �additional �requirements, �such�as �future �registration�requirements �or
increased�regulation�of�derivative�contracts,�may�add�additional�costs�or�may�require�us�to�change�any�fuel�price,�currency�and�interest�rate�hedging�practices�we
may �then �use �to �comply �with �new �regulatory �requirements. �Potential �changes �could �also �include �clearing �and �execution �methodology �of �our �derivatives
transactions.
Brokered�Deposits
� � � �As �of �December �31, �2020, �the �most �recent �FDIC �exam �report �categorized �WEX �Bank �as �“well �capitalized” �under �the �regulatory �framework �for �prompt
corrective�action.�Under�applicable�regulations,�however,�if�WEX�Bank�were�to�be�no�longer�categorized�as�"well�capitalized"�under�such�framework,�it�would�not
be�able�to�finance�its�operations�through�the�acceptance�of�brokered�deposits�without�the�approval�of�the�FDIC.�Moreover,�in�December�2020,�the�FDIC�amended
its�brokered�deposits�regulations,�effective�April�1,�2021,�and�may�in�the�future�change�the�definition�of�brokered�deposits�or�extend�the�classification�to�deposits
not�currently�classified�as�brokered�deposits.
Anti-Money�Laundering�and�Counter�Terrorist�Regulations
����The�applicable�laws�and�regulations�in�the�various�jurisdictions�in�which�we�operate�impose�significant�anti-money�laundering�compliance�and�due�diligence
obligations �on �its �local �entities. �We �must �verify �the �identity �of �customers, �monitor �and �report �unusual �or �suspicious �account �activity, �as �well �as �transactions
involving�amounts�in�excess�of�prescribed�limits,�and�refrain�from�transacting �with�designated�persons�or�in�designated�regions,�in�each�case�as�required�by�the
applicable�laws�and�regulations�(such�as�the�Bank�Secrecy�Act�and�regulations�of�the�United�States�Treasury�Department�and�the�Internal�Revenue�Service�in�the
United�States).�Financial�regulators�have�issued�various�implementing�regulations�and�have�made�enforcement�a�high�priority.
16
The �U.S. �federal �government �has �imposed �economic �sanctions �that �affect �transactions �with �designated �foreign �countries, �nationals �and �others. �These
sanctions,�which�are�administered�by�the�OFAC,�take�many�different�forms�but�generally�include�one�or�more�of�the�following�elements:�(i)�restrictions�on�trade
with�or�investment�in�a�sanctioned�country,�including�prohibitions�against�direct�or�indirect�imports�from�and�exports�to�a�sanctioned�country�and�prohibitions�on
“U.S.�persons”�engaging�in�financial�transactions�relating�to�making�investments�in,�or�providing�investment-related�advice�or�assistance�to,�a�sanctioned�country;
and �(ii) �a �blocking �of �assets �in �which �the �government �or �specially �designated �nationals �of �the �sanctioned �country �have �an �interest, �by �prohibiting �transfers �of
property�subject �to�U.S.�jurisdiction�(including�property�in�the�possession�or�control�of�U.S.�persons).�Blocked�assets�(for�example,�property�and�bank�deposits)
cannot�be�paid�out,�withdrawn,�set�off�or�transferred�in�any�manner�without�a�license�from�OFAC.�We�have�implemented�measures�designed�to�ensure�compliance
with�these�sanctions�and�failure�to�comply�with�these�sanctions�could�have�serious�legal�and�reputational�consequences.
Privacy�and�Information�Security�Regulations
����Under�the�Financial�Services�Modernization�Act�of�1999,�also�referred�to�as�the�Gramm-Leach-Bliley�Act�or�GLBA,�and�certain�state�laws,�we�and�WEX�Bank
are�required�to�maintain�a�comprehensive�written�information�security�program�that�includes�administrative,�technical�and�physical�safeguards�relating�to�consumer
information. �This �requirement �generally �does �not �extend �to �information �about �companies �or �about �individuals �who �obtain �financial �products �or �services �for
business,�commercial,�or�agricultural�purposes.
The �GLBA�also �requires �us �and �WEX�Bank �to �provide �initial �and �annual �privacy �notices �to �customers �that �describe �in �general �terms �our �information �sharing
practices.�If�we�or�WEX�Bank�intend�to�share�nonpublic�personal�information�about�consumers�with�affiliates�and/or�nonaffiliated�third�parties,�we�and�WEX�Bank
must�provide�customers�with�a�notice�and�a�reasonable�period�of�time�for�each�customer�to�“opt�out”�of�any�such�disclosure.�In�addition�to�U.S.�federal�privacy
laws �with �which �we �must �comply, �states �also �have �adopted �statutes, �regulations �and �other �measures, �such �as �the �California �Consumer �Protection �Act �(CCPA),
governing�the�collection�and�distribution�of�nonpublic�personal�information�about�customers.�In�some�cases,�these�state�measures�are�preempted�by�federal�law,�but
if�not,�we�and�WEX�Bank�must�monitor�and�seek�to�comply�with�individual�state�privacy�laws�in�the�conduct�of�our�businesses.
FACT�Act
The�Fair�and�Accurate�Credit�Transactions�Act�of�2003�amended�the�Fair�Credit�Reporting�Act�and�requires�creditors�to�adopt�identity�theft�prevention
programs�to�detect,�prevent�and�mitigate�identity�theft�in�connection�with�covered�accounts,�which�can�include�business�accounts�for�which�there�is�a�reasonably
foreseeable�risk�of�identity�theft.
Truth�in�Lending�Act
The�Truth�in�Lending�Act,�or�TILA,�was�enacted�as�a�consumer�protection�measure�to�increase�consumer�awareness�of�the�cost�of�credit�and�to�protect
consumers �from�unauthorized �charges�or�billing�errors,�and�is �implemented�by�the �Federal�Reserve’s�Regulation �Z.�Most�provisions �of�TILA�and �Regulation�Z
apply�only�to�the�extension�of�consumer�credit,�but�a�limited�number�of�provisions�apply�to�commercial�cards�as�well.�One�example�where�TILA�and�Regulation�Z
are�generally�applicable �is�a�limitation�on�liability �for�unauthorized�use,�although�a�business�that�acquires�10�or�more�credit�cards�for�its�personnel�can�agree�to
more�expansive�liability.
Money�Transmission�and�Payment�Instrument�Licensing�Regulations
We�are�subject�to�various�U.S.�laws�and�regulations�governing�money�transmission�and�the�issuance�and�sale�of�payment�instruments�relating�to�certain
aspects�of�our�business.�In�the�United�States,�most�states�license�money�transmitters�and�issuers�of�payment�instruments.�Through�our�subsidiaries,�we�are�licensed
in�all�states�where�required�for�business.�Many�states�exercise�authority�over�the�operations�of�our�services�related�to�money�transmission�and�payment�instruments
and, �as �part �of �this �authority, �subject �us �to �periodic �examinations, �which �may �include �a �review�of �our �compliance �practices, �policies �and �procedures, �financial
position�and�related�records,�privacy�and�data�security�policies�and�procedures,�and�other�matters�related�to�our�business.
As �a�licensee,�we �are�subject �to�certain�restrictions �and�requirements, �including�net�worth �and�surety�bond �requirements,�record �keeping�and�reporting
requirements,�requirements�for�regulatory�approval�of�controlling�stockholders�or�direct�and�indirect�changes�of�control�of�the�licensee�and�certain�other�corporate
events,�and�requirements�to�maintain�certain�levels�of�permissible�investments�in�an�amount�equal�to�our�outstanding�payment�obligations.�Many�states�also�require
money�transmitters�and�issuers�of�payment�instruments�to�comply�with�federal�and�state�anti-money�laundering�laws�and�regulations.
In�addition,�non-banks�that�provide�certain�financial�services�are�required�to�register�with�FinCEN�as�“money�services�businesses”�(“MSBs”).�Through�a
subsidiary�we�are�registered�as�a�MSB.�As�a�result,�we�have�established�anti-money�laundering�compliance�programs�that�include:�(i)�internal�policies�and�controls;
(ii)�designation�of�a�compliance�officer;�(iii)
17
ongoing �employee �training; �and �(iv) �an �independent �review �function. �We �have �developed �and �implemented �compliance �programs �comprised �of �policies,
procedures,�systems�and�internal�controls�to�monitor�and�address�various�legal�requirements�and�developments.
Government �agencies �may �impose �new �or �additional �requirements �on �money �transmission �and �sales �of �payment �instruments, �and �we �expect �that
compliance�costs�will�increase�in�the�future�for�our�regulated�subsidiaries.
Escheat�Laws
� � � �We �are �subject �to �unclaimed �or �abandoned �property �state �laws �in �the �United �States �and �in �certain �foreign �countries �that �require �us �to �transfer �to �certain
government�authorities�the�unclaimed�property�of�others�that�we�hold�when�that�property�has�been�unclaimed�for�a�certain�period�of�time.�Moreover,�we�are�subject
to�audit�by�state�and�foreign�regulatory�authorities�with�regard�to�our�escheatment�practices.
Restrictions�on�Dividends
� � � �WEX�Bank �is �subject �to �various �regulatory �requirements �relating �to �the �payment �of �dividends, �including �requirements �to �maintain �capital �above �regulatory
minimums.�A�banking�regulator�may�determine�that�the�payment�of�dividends�would�be�inappropriate�and�could�prohibit�payment.�Further,�WEX�Bank�may�not
pay�a�dividend�if�it�is�undercapitalized�or�would�become�undercapitalized�as�a�result�of�paying�the�dividend.�Utah�law�permits�WEX�Bank�to�pay�dividends�out�of
the�net�profits�of�the�industrial�bank�after�providing�for�all�expenses,�losses,�interest,�and�taxes�accrued�or�due,�but�if�WEX�Bank’s�surplus�account�is�less�than�100
percent�of�its�capital�stock,�WEX�Bank�must�transfer�up�to�10�percent�of�its�net�profits�to�the�surplus�account�prior�to�the�payment�of�any�dividends.
�Company�Obligations�to�WEX�Bank
����Any�non-deposit�obligation�of�WEX�Bank�to�the�Company�is�subordinate,�in�right�of�payment,�to�deposits�and�other�indebtedness�of�WEX�Bank.�In�the�event�of
the�Company’s�bankruptcy,�any�commitment�by�the�Company�to�a�federal�bank�regulatory�agency�to�maintain�the�capital�of�WEX�Bank�will�be�assumed�by�the
bankruptcy�trustee�and�entitled�to�priority�of�payment.
Restrictions�on�Ownership�of�WEX�Inc.�Common�Stock
����WEX�Bank,�and�therefore�the�Company,�is�subject�to�banking�regulations�that�impose�requirements�on�entities�that�might�control�WEX�Bank�through�control�of
the�Company.�These�requirements�are�discussed�in�Item�1A�under�the�heading�“Provisions�in�our�charter�documents,�Delaware�law,�applicable�banking�law�and�the
Convertible�Notes�may�delay�or�prevent�our�acquisition�by�a�third�party.”
Healthcare�Regulation
����The�federal�and�state�governments�in�the�U.S.�continue�to�enact�and�consider�many�broad-based�legislative�and�regulatory�proposals�that�could�materially�impact
various�aspects�of�our�health-related�business.�The�plans�that�our�partners�administer�feature�consumer�accounts�that�pay�for�out-of-pocket�expenses�incurred�by
employees�and�qualified�dependents.�These�accounts�include�CDH�accounts�such�as�HSAs,�FSAs�and�HRAs,�as�well�as�wellness�incentives,�commuter�benefits,
and�other�account-based�arrangements.�Most�of�these�accounts�are�tax-advantaged�under�the�appropriate�law.
Employers �are�continuing �to�use�CDH�approaches �to�manage�the �rate�of�increase �in�healthcare�expenditures �and�to �enable�employees�to �make�decisions
about�the�use�of�their�healthcare�savings.�CDH�programs�provide�consumers�with�visibility�into�and�control�over�payment�for�healthcare�expenses.
The�products�that�WEX�Health’s�software�and�payment�solutions�support�are�subject�to�various�state�and�federal�laws,�including�the�Patient�Protection�and
Affordable�Care�Act�and�the�Health�Care�and�Education�Reconciliation�Act�(collectively�referred�to�as�“Health�Care�Reform”),�and�regulations�promulgated�by�the
Internal�Revenue�Service,�the�Department�of�Health�and�Human�Services,�the�Department�of�Labor,�and�the�Consumer�Financial�Protection�Bureau,�and�similar
state�laws�and�regulatory�authorities.�As�such,�changes�in�the�status�of�tax-advantaged�CDH�accounts�could�affect�the�attractiveness�of�these�products.
����In�addition�to�tax-related�regulation,�the�Health�Care�Reform�law�imposes�coverage�standards�affecting�insured�and�self-insured�health�benefit�plans�that�impact
our�current�business�model,�including�our�relationships�with�current�and�future�customers,�producers�and�health�care�providers,�products,�services,�processes�and
technology. �Health �Care�Reform�left �many�details �to�be �established�through �regulations.�The �2017�Tax�Act �repealed�certain�provisions�of �Health�Care �Reform,
including�reducing�to�zero�the�tax�penalty�for�individuals�who�decline�to�obtain�Health�Care�Reform-compliant�healthcare�coverage.�Since
18
the �enactment �of �Health �Care �Reform, �there �has �been �persistent �political �pressure �to �significantly �modify �or �completely �repeal �Health �Care �Reform �and �the
associated�implementing�regulations,�while�the�incoming�Biden�Administration�has�committed�to�pursuing�significant�expansion�of�the�Health�Care�Reform�and�is
likely�to�reverse�actions�taken�by�the�previous�U.S.�Administration�to�reduce�enrollment�and�coverage�requirements�under�Health�Care�Reform.�There�have�been
judicial�and�Congressional�challenges�to�certain�aspects�of�Health�Care�Reform,�and�we�expect�there�will�be�additional�challenges�and�amendments�to�the�ACA�in
the�future.�In�addition,�portions�of�Health�Care�Reform�were�ruled�unconstitutional�by�a�federal�appeals�court�in�2019.�This�ruling�is�under�review�by�the�United
States�Supreme�Court,�which�is�expected�to�rule�on�the�validity�of�Health�Care�Reform�during�the�Court�term�that�ends�in�June�2021.�It�is�unclear�what,�if�any,
additional �legislative�or�regulatory�actions�may�be�taken�in�this�regard.�Accordingly,�there�may�be�an�extended�period�of�uncertainty�and�unpredictability�in�the
U.S.�health�care�market,�which�may�materially�affect�the�availability�and�cost�of�health�coverage,�the�viability�of�health�care�providers�and�health�benefit�plans,�the
proportion �of�persons�in�the�U.S.�who�have�health�insurance;�the�distribution �between�privately�funded�and�government�funded�health�insurance;�and�the�future
demand�for,�and�profitability�of,�the�offerings�of�our�health-related�business�under�our�current�business�model.
����In�connection�with�the�processing�of�data,�we�frequently�undertake�or�are�subject�to�specific�compliance�obligations�under�privacy�and�data�security-related�laws,
including�the �Health �Insurance�Portability �and�Accountability �Act�of �1996,�or �HIPAA,�GLBA,�and �similar�state �and�federal �laws�governing�the �collection,�use,
protection�and�disclosure�of�nonpublic�personally�identifiable�information,�including�individually�identifiable�health�information.
� � � �HIPAA �and �its �implementing �regulations, �as �amended �by �the �Health �Information �Technology �for �Economic �and �Clinical �Health �Act, �or �the �HITECH �Act,
impose�requirements�relating�to�the�privacy,�security�and�transmission�of�individually�identifiable�health�information.�Among�other�things,�HIPAA,�as�amended�by
the�HITECH�Act,�and�its�implementing�regulations,�subjects�us�to�regulations�and�contractual�obligations�that�impose�privacy�and�security�standards�and�breach
notification�and�reporting�requirements.�An�amendment�to�the�HITECH�Act�enacted�in�January�2021�will�require�consideration�of�a�company’s�implementation�of
recognized�security�standards�in�assessing�administrative�fines�and�penalties�under�the�HIPAA�security�standards.
����In �addition�to�tax, �federal �data�privacy, �security�laws�and�regulations, �we�are�subject �to�state�laws, �such�as�the �California�Consumer�Privacy �Act,�governing
confidentiality�and�security�of�personally�identifiable�information�and�additional�state-imposed�breach�notification�and�reporting�requirements.
Anti-Bribery�Regulations
The �FCPA �prohibits �the �payment �of �bribes �to �foreign �government �officials �and �political �figures �and �includes �anti-bribery �provisions �enforced �by �the
Department �of �Justice �and�accounting �provisions �enforced�by�the �SEC.�The �statute�has �a �broad�reach, �covering�all�U.S. �companies �and�citizens �doing �business
abroad,�among�others,�and�defining�a�foreign�official�to�include�not�only�those�holding�public�office�but�also�local�citizens�affiliated�with�foreign�government-run
or�-owned �organizations. �The �statute �also �requires �maintenance �of �appropriate �books�and �records �and �maintenance �of �adequate �internal�controls �to �prevent �and
detect�possible�FCPA�violations.
Regulation�-�Foreign�Jurisdictions
Australia
����The�Company’s�Australian�operations�are�subject�to�laws�and�regulations�of�the�Commonwealth�of�Australia�governing�banking�and�payment�systems,�financial
services,�credit�products�and�money�laundering.�Because�none�of�WEX�Australia,�WEX�Fuel�Cards�Australia�or�WEX�Prepaid�Cards�Australia�holds�an�Australian
Financial �Services �License �or �credit �license �or �is �an �authorized �deposit-taking �institution, �they �operate �within �a �framework �of �regulatory �relief �and �exemptions
afforded �them �on �the �basis �that �they �satisfy �the �requisite �conditions. �The �Company’s �Australian �operations �are �also �subject �to �the �Privacy �Act �(1988) �and �the
Australian�Privacy�Principles.
Asia,�including�Singapore
����The�Company’s�operations�in�Asia�are�subject�to�the�operation�of�the�laws�and�regulation�of�the�countries�in�which�we�operate,�including�laws�with�regards�to
banking�and�payment�systems,�financial�services,�money�laundering�and�data�protection.
Europe�and�the�United�Kingdom
����The�Company’s�European�and�United�Kingdom�operations�are�subject�to�laws�and�regulations�of�the�European�Union�and�United�Kingdom�and�the�countries�in
which�we�operate�including,�among�others,�those�governing�payment�services,�data�protection,�including�General�Data�Protection�Regulation�(commonly�referred
to�as�“GDPR”),�anti-money�laundering�and
19
counter �terrorist�regulations,�including �the�Money�Laundering�and�Terrorist �Financing�Regulations�2019�in�the�UK�and�the�Act�on�Financial �Supervision�in�the
Netherlands,�and�information�security,�and�consumer�credit.
Available�Information
����The�Company’s�principal�executive�offices�are�located�at�1�Hancock�St,�Portland,�ME�04101.�Our�telephone�number�is�(207)�773-8171,�and�our�Internet�address
is �www.wexinc.com. �The �Company’s �annual, �quarterly �and �current �reports, �proxy �statements �and �certain �other �information �filed �with �the �SEC, �as �well �as
amendments�thereto,�may�be�obtained�free�of�charge�from�our�website.�These�documents�are�posted�to�our�website�as�soon�as�reasonably�practicable�after�we�have
filed�or�furnished�these�documents�with�the�SEC.�The�SEC�maintains�an�Internet�site�that�contains�reports,�proxy�and�information�statements�and�other�information
regarding �issuers �that �file �electronically �with �the �SEC �at �www.sec.gov. �The �Company’s �Audit �Committee �Charter, �Compensation �Committee �Charter, �Finance
Committee�Charter,�Corporate�Governance�Committee�Charter,�Technology�Committee�Charter,�Corporate�Governance�Guidelines�and�Code�of�Business�Conduct
and�Ethics�are�available�without�charge�through�the�“Corporate�Governance”�portion�of�the�Investor�Relations�page�of�the�Company’s�website.�Copies�will�also�be
provided,�free�of�charge,�to�any�stockholder�upon�written�request�to�Investor�Relations�at�the�address�above�or�by�telephone�at�(866)�230-1633.
����The�Company’s�Internet�site�and�the�information�contained�on�it�are�not�incorporated�into�this�Form�10–K�and�should�not�be�considered�part�of�this�report.
20
ITEM�1A.�RISK�FACTORS
����The�risks�and�uncertainties�described�below�are�not�the�only�risks�and�uncertainties�that�we�face.�Additional�risks�and�uncertainties�not�presently�known�to�us�or
that�we�currently�deem�immaterial�may�also�impair�our�business�operations.�If�any�of�those�risks�actually�occurs,�our�business,�financial�condition,�results�of
operations�and�cash�flows�could�suffer.�The�risks�and�uncertainties�discussed�below�also�include�forward-looking�statements�and�our�actual�results�may�differ
materially�from�those�discussed�in�these�forward-looking�statements.
Risks�Relating�to�Our�Business�and�Industry
Our�operations,�business,�and�financial�condition�have�been�and�are�expected�to�continue�to�be�adversely�affected�by�the�COVID-19�pandemic.
In�December�2019,�a�novel�strain�of�coronavirus,�known�as�COVID-19,�was�first�reported�and�was�subsequently�declared�a�pandemic�by�the�World�Health
Organization �in �March �2020. �The �spread �and �continued �outbreak �of �the �COVID-19 �pandemic �has �significantly �increased �economic �uncertainty �while �reducing
economic�activity.�The�pandemic�has�resulted�in�transformational�change�in�business�and�consumer�behavior,�as�well�as�the�implementation�by�authorities�around
the�world�of�numerous�measures�aimed�at�containing�the�virus,�such�as�travel�bans�and�restrictions,�quarantines,�shelter�in�place�orders,�and�business�shutdowns,
among�others,�while�some�markets�have�also�implemented�multi-step�policies�with�the�goal�of�resuming�activities�that�are�or�have�previously�been�restricted.�The
effects�of�the�pandemic,�along�with�the�measures�implemented�to�combat�the�pandemic,�will�continue�to�change�and�evolve�as�the�pandemic�changes�and�evolves.
The�regions�in�which�we�operate�are�continuously�in�varying�stages�of�dealing�with,�and�suffering�impacts�from,�the�COVID-19�pandemic.�Certain�jurisdictions
have�experienced�recoveries�from�the�various�stages�of�the�pandemic,�only�to�then�face�a�resurgence�or�increase�in�new�COVID-19�cases.�New�variants�of�the�virus
that �causes �COVID-19 �have�recently �been �discovered. �These�events �have �not �only�negatively �impacted �business �and�consumer �spending �habits, �they�have �also
impacted�and�may�further�impact�our�workforce�and�operations�and�the�operations�of�our�customers,�suppliers�and�business�partners.
In�particular,�we�expect�that�we�will�continue�to�experience�impacts�on�our�business�and�results�of�operations�due�to�a�number�of�factors,�including,�but
not�limited�to:
•
•
•
•
•
•
The�effect�of�COVID-19�on�worldwide�economic�and�financial�market�conditions,�including�conditions�in�the�regions�in�which�we�operate.
The�negative�impact�of�COVID-19�on�the�demand�for�worldwide�travel�and�the�length�of�time�it�may�take�for�the�travel�industry�to�experience�a�rebound
after�the�effects�of�the�COVID-19�pandemic�have�subsided.
Volatility�in�the�demand�for,�and�the�price�of,�fuel,�caused�by�declines�in�demand�as�a�result�of�the�impact�of�COVID-19,�economic�conditions,�and
geopolitical�pressures�affecting�supply,�which�impact�our�operating�results�and�may�continue�to�do�so�if�such�trends�continue.
Losses�arising�from�customer,�partner�and�merchant�failures,�and�credit�settlement�risks.
Increased�exposure�to�industries�substantially�affected�by�the�COVID-19�pandemic,�including�as�a�result�of�acquisitions�such�as�our�December�2020
acquisition�of�eNett�and�Optal.
The�modification�of�our�business�practices�(including�restricting�employee�travel,�social�distancing�and�remote�working�plans�for�our�employees,�and�the
cancellation�of�physical�participation�in�meetings,�events�and�conferences).
These�and�other�factors�may�remain�prevalent�for�a�significant�and�unknown�period�of�time�and�may�continue�to�materially�affect�our�business,�results�of
operations�and�financial�condition�even�after�the�COVID-19�pandemic�has�subsided.�There�are�no�comparable�recent�events�that�provide�guidance�as�to�the�ultimate
and�total�impact�of�the�COVID-19�global�pandemic,�and�therefore�the�ultimate�effects�are�highly�uncertain�and�subject�to�change.�The�extent�to�which�the�COVID-
19�pandemic�will�continue�to�impact�our�business,�results�of�operations�and�financial�condition�will�depend�on�future�developments,�which�are�highly�uncertain�and
are�difficult�to�predict,�including,�but�not�limited�to,�the�duration�and�spread�of�the�pandemic,�its�continued�severity,�whether�resultant�changes�in�business�and
consumer�behavior�continue�for�extended�periods�of�time,�the�success�of�the�actions�to�contain�the�virus�or�treat�its�impact,�the�emergence�and�effect�of�new�virus
variants,�and�how�quickly�and�to�what�extent�normal�economic�and�operating�conditions�can�resume.
21
In�addition,�failure�by�the�relevant�governments�to�enact�or�implement�adequate�or�necessary�stimulus�packages�could�exacerbate�the�effect�of�COVID-19
on�us,�particularly�the�credit�risks�listed�above.�Increased�volatility�or�significant�disruption�of�global�financial�markets�due�in�part�to�COVID-19�could�have�a
negative�impact�on�our�ability�to�access�capital�markets�and�other�funding�sources�on�acceptable�terms�or�at�all�and�impede�our�ability�to�comply�with�debt
covenants.�Even�after�the�COVID-19�pandemic�has�subsided,�we�may�continue�to�experience�impacts�to�our�business�as�a�result�of�the�virus’s�global�economic
impact�and�its�potential�effect�on�the�ways�people�and�businesses�conduct�themselves,�including�the�availability�of�credit,�impacts�on�our�liquidity,�continued
governmental�restrictions,�continued�reduced�demand�for�worldwide�travel,�and�continued�volatility�in�fuel�demand�and�prices.
The�foregoing�and�other�continued�effects�on�our�business�as�a�result�of�the�COVID-19�pandemic�could�result�in�a�material�adverse�effect�on�our�business,
results�of�operations,�financial�condition,�cash�flows�and�our�ability�to�service�our�indebtedness�and�could�heighten�the�risks�in�certain�of�the�other�risk�factors
described�herein.
A�significant�portion�of�our�revenues�is�related�to�the�dollar�amount�of�fuel�purchased�by�or�through�our�customers�and�from�our�fuel�retailer�partners,�and,�as
a�result,�a�reduction�in�the�demand�for�fuel�and�other�vehicle�products�and�services�and/or�volatility�in�fuel�prices�could�have�a�material�adverse�effect�on�our
revenues�and�financial�condition.
����Our�Fleet�Solutions�segment�is�our�largest�segment�and�customers�and�fuel�retailer�partners�in�this�segment�primarily�purchase�or�sell�fuel.�Accordingly,�a
significant�part�of�our�overall�revenue�is�derived�from�fuel�purchases,�making�us�dependent�on�fuel�prices,�which�are�historically�prone�to�volatility.�As�of
December�31,�2020,�management�estimates�that�approximately�20�percent�of�our�total�segment�revenues�result�from�fees�paid�to�us�by�fuel�providers�based�on�a
negotiated�percentage�of�the�purchase�price�of�fuel�purchased�by�our�customers.�We�estimate�that�during�2021,�each�one�cent�decline�in�average�domestic�fuel
prices�below�average�actual�prices�would�result�in�a�$1.5�million�decline�in�2021�revenue.�We�are�currently�exposed�to�the�full�impact�of�fuel�price�declines�and�our
net�income�is�exposed�to�fuel�price�volatility.�Therefore,�extended�declines�in�the�price�of�fuel,�as�well�as�declines�in�the�amount�of�fuel�purchased�by�our�customers
or�sold�by�our�fuel�retailer�partners�would�have�a�material�adverse�effect�on�our�total�revenues�and�therefore�our�business,�financial�condition,�and�operating�results.
����Fuel�prices�are�volatile�and�influenced�by�many�factors,�all�of�which�are�beyond�our�control.�These�factors�include,�but�are�not�limited�to:�
•
•
•
•
•
•
•
•
•
•
•
•
•
domestic�and�foreign�supply�and�demand�for�oil�and�gas,�and�market�expectations�regarding�such�supply�and�demand;
investor�speculation�in�commodities;
actions�by�major�oil�exporting�nations,�including�members�of�the�Organization�of�Petroleum�Exporting�Countries,�and�the�ability�of�the�same�to
maintain�oil�price�and�production�controls;
level�of�domestic�and�foreign�oil�production;
advances�in�oil�production�technologies;
excess�or�overbuilt�infrastructure;
political�conditions�in�oil-producing,�gas-producing�or�supply-route�regions�or�countries,�including�revolution,�insurgency,�environmental
activism,�terrorism,�or�war;
oil�refinery�capacity�and�utilization�rates;
weather,�including�climate�change�and�natural�disasters;
the�value�of�the�U.S.�dollar�(or�other�relevant�currencies)�versus�other�major�currencies;
implementation�of�fuel�efficiency�standards�and�the�adoption�by�fleet�customers�of�vehicles�with�greater�fuel�efficiency�or�alternative�fuel
sources,�such�as�electricity,�ethanol,�biodiesel,�hydrogen,�and�natural�gas;
general�local,�regional,�or�worldwide�economic�conditions;�and
governmental�regulations,�taxes�and�tariffs.
Some�of�these�factors�can�vary�by�region�and�may�change�quickly,�adding�to�market�volatility,�while�others�may�have�longer-term�effects.�The�long-term
effects�of�these�and�other�factors�on�prices�for�fuel�could�be�substantial.
Another�component�of�our�revenue�stream�comes�from�the�late�fees�that�our�customers�pay�on�past�due�balances.�As�a�result,�a�decrease�in�the�price�of
fuel�may�lead�to�a�decline�in�the�amount�of�late�fees�we�earn�from�customers�who�fail�to�pay�us�timely.
22
In�addition�to�its�impact�on�the�price�of�fuel,�the�market�demand�for�and�supply�of�fuel�and�other�vehicle�products�and�services�may�affect�the�number�of
transactions�or�the�volume�of�fuel�sold.�Fewer�gallons�sold�equates�to�a�lesser�purchase�price�of�fuel�on�which�our�negotiated�percentage�revenue�is�determined.
Another�of�our�revenue�streams�comes�from�a�flat�fee�derived�from�a�fuel�purchase�transaction.�Accordingly,�in�a�soft�fuel�demand�environment,�fewer�transactions
will�occur�resulting�in�less�revenue�to�us.�The�factors�that�affect�the�demand�for�and�supply�of�fuel�are�beyond�our�control�and�include�general�local,�regional,�or
worldwide�economic�conditions,�the�implementation�of�fuel�efficiency�standards,�and�the�development�by�vehicle�manufacturers�and�adoption�by�our�fleet
customers�and�others�of�vehicles�with�greater�fuel�efficiency,�or�alternative�fuel�sources,�such�as�electric,�hydrogen,�or�natural�gas�powered�vehicles,�among�other
factors.�Therefore,�although�alternative�fuel�vehicles�currently�make�up�a�small�portion�of�vehicle�sales,�any�substantial�increase�in�their�production�or�usage�or
their�expansion�to�heavier�duty�vehicles�such�as�over-the-road�trucks,�could�adversely�affect�our�revenues�over�time�through�reduced�fuel�demand.�On�the�supply
side,�disruptions�to�supply�caused�by�factors�such�as�geopolitical�issues,�weather,�infrastructure,�or�economic�conditions�could�also�affect�the�amount�of�fuel
purchased�by�our�customers.�To�the�extent�that�our�customers�require,�or�have�access�to,�less�fuel,�that�decline�in�purchase�volume�or�transactions�could�reduce�our
revenues,�or�any�growth�in�our�revenues,�and�have�a�material�adverse�effect�on�our�business,�financial�condition�and�operating�results.
If�we�fail�to�comply�with�the�applicable�requirements�of�MasterCard�or�Visa,�they�could�seek�to�fine�us,�suspend�us�or�terminate�our�registrations.
A�significant�source�of�our�revenue�in�our�Travel�and�Corporate�Solutions�segment�and�Health�and�Employee�Benefit�Solutions�segment�comes�from
processing�transactions�through�the�MasterCard�and�Visa�networks.�Licensing�with�the�MasterCard�and�Visa�schemes�is�achieved�through�WEX�Bank,�our
regulated�subsidiaries�in�Hong�Kong,�Singapore,�and�Australia,�and�our�Dutch,�UK,�and�Irish�licensed�e-money�institutions.�In�the�case�of�the�Health�and�Employee
Benefit�Solutions�segment,�the�scheme�license�is�held�by�a�third�party�sponsor�bank.�We�will�establish�additional�licensed�e-money�institutions�or�regulated
subsidiaries�to�license�with�the�MasterCard�and�Visa�schemes�as�necessary.�If�our�licensed�or�regulated�subsidiaries�or�our�third�party�sponsor�bank�should�stop
providing,�or�are�otherwise�unable�to�provide,�services,�for�any�reason,�or,�in�the�case�of�our�third�party�sponsor�bank,�determine�to�provide�sponsorship�on
materially�less�favorable�terms,�we�would�need�to�find�other�appropriate�institutions�to�provide�those�services�in�the�applicable�jurisdictions.�In�addition,
MasterCard�and�Visa�routinely�update�and�modify�their�requirements.�Changes�in�the�requirements�may�make�it�significantly�more�expensive�for�us�to�maintain
compliance�with�our�license�conditions.�If�we�do�not�comply�with�the�MasterCard�or�Visa�scheme�requirements,�as�the�case�may�be,�we�could�face�fines,
suspensions�or�termination�of�registration.�Any�suspension�of�a�license�could�limit�or�eliminate�our�ability�to�provide�MasterCard�or�Visa�payment�processing
services�in�a�given�jurisdiction,�which�would�materially�affect�our�operations�and�revenues.�Further,�the�termination�of�a�registration,�or�any�changes�in�the�payment
network�rules�that�would�impair�a�registration,�could�require�us�to�stop�providing�MasterCard�or�Visa�payment�processing�services�in�the�applicable�jurisdictions.�If
we�are�unable�to�find�a�replacement�financial�institution�to�provide�sponsorship,�we�may�no�longer�be�able�to�provide�such�payment�processing�services�to�affected
customers,�which�would�materially�affect�our�operations�and�have�a�material�adverse�effect�on�our�business,�financial�condition�and�results�of�operations.
Changes�in�or�limits�on�interchange�fees�could�decrease�our�revenue.
A�substantial�portion�of�our�revenue�is�generated�by�network�processing�fees�charged�to�merchants,�known�as�interchange�fees,�associated�with
transactions�processed�using�our�payment�systems,�including�those�using�MasterCard�or�Visa�branded�cards�or�using�the�MasterCard�or�Visa�system.�Interchange
fee�amounts�associated�with�these�payment�methods�are�affected�by�a�number�of�factors,�including�regulatory�limits�in�certain�of�the�markets�in�which�we�operate
and�fee�or�program�changes�imposed�or�allowed�by�our�third-party�partners,�including�MasterCard�and�Visa.�In�addition,�interchange�fees�are�continually�the
subject�of�intense�legal,�regulatory,�and�legislative�scrutiny�and�competitive�pressures�in�the�markets�in�which�we�operate,�any�of�which�could�result�in�interchange
fees�being�limited,�lowered,�or�eliminated�altogether�in�any�given�jurisdiction�in�the�future.�Future�changes�may�further�restrict�or�otherwise�impact�the�way�we�do
business�or�limit�our�ability�to�charge�certain�fees�to�customers.�Moreover,�temporary�or�permanent�decreases�in,�limitations�on�or�elimination�of�the�interchange
fees�associated�with�our�card�or�virtual�payment�transactions,�could�have�a�material�adverse�effect�on�our�business,�financial�condition,�and�operating�results.
A�portion�of�our�Fleet�Solutions�segment�revenue�in�Europe�is�derived�from�the�difference�between�the�negotiated�price�of�the�fuel�from�the�supplier�and�the
price�charged�to�the�fleet�customer.�As�a�result,�a�contraction�in�these�differences�would�reduce�revenues�and�could�adversely�affect�our�operating�results.
����Revenue�from�our�European�Fleet�business�is�primarily�derived�from�transactions�in�which�our�revenue�is�tied�to�the�difference�between�the�negotiated�price�of
the�fuel�from�the�supplier�and�the�price�charged�to�the�fleet�customer.�The�merchant’s�cost�of�fuel�and�the�amount�we�charge�to�our�fleet�customer�for�fuel�are
dependent�on�several�factors�including,
23
among�others,�the�factors�described�elsewhere�in�this�Item�1A,�“Risk�Factors”�affecting�fuel�prices.�We�experience�fuel-price�related�revenue�contraction�when�the
merchant’s�cost�of�fuel�increases�at�a�faster�rate�than�the�fuel�price�we�charge�to�our�fleet�customers,�or�the�fuel-price�we�charge�to�our�fleet�customers�decreases�at
a�faster�rate�than�the�merchant’s�cost�of�fuel.�If�the�foregoing�scenarios�exist�or�persist�we�would�generate�less�revenue,�which�could�have�a�material�adverse�effect
on�our�business,�financial�condition�and�operating�results.
If�we�fail�to�adequately�assess�and�monitor�credit�risks�posed�by�our�counterparties�or�there�is�fraudulent�use�of�our�payment�cards�or�systems,�we�could
experience�an�increase�in�credit�loss�and�other�adverse�effects.
����We�are�subject�to�credit�risks�posed�by�our�counterparties,�many�of�which�are�small-to�mid-sized�businesses.�Because�we�often�fund�a�counterparty’s�entire
receivable�or�payable,�as�the�case�may�be,�while�our�revenue�is�generated�from�only�a�small�percentage�of�that�amount,�our�risk�of�loss�is�amplified�by�a
counterparty’s�failure�to�pay.�Although�we�use�various�formulas�and�models�to�screen�potential�counterparties�and�establish�appropriate�credit�limits,�these
formulas�and�models�cannot�eliminate�all�potential�credit�risks�and�may�not�prevent�us�from�approving�applications�that�are�fraudulently�completed.�Moreover,
businesses�that�are�good�credit�risks�at�the�time�of�application�may�deteriorate�over�time�and�we�may�fail�to�detect�such�changes.�In�addition,�changes�to�our
policies�on�the�types�and�profiles�of�businesses�to�which�we�extend�credit�could�also�have�an�adverse�impact�on�our�credit�losses.�In�times�of�economic�slowdown,
the�number�of�our�counterparties�who�default�on�payments�owed�to�us�tends�to�increase.�In�particular,�the�effects�of�the�COVID-19�global�pandemic�have�affected,
and�may�continue�to�affect�for�an�unknown�period�of�time,�our�counterparties�and�the�risk�that�they�default�on�amounts�owed�to�us.�Accordingly,�if�we�fail�to
adequately�manage�our�credit�risks,�or�if�economic�conditions�affect�the�businesses�of�our�counterparties�or�of�their�customers,�credit�defaults�could�increase�and
our�provision�for�credit�losses�on�the�income�statement�could�be�significantly�higher,�all�of�which�could�have�a�material�adverse�effect�on�our�business,�financial
condition�and�operating�results.
����When�we�fund�transactions�with�counterparties,�we�may�also�bear�the�risk�of�substantial�losses�due�to�fraudulent�use�of�our�payment�cards�or�payment�systems.
We�are�also�subject�to�risk�from�fraudulent�acts�of�employees�or�contractors.�Although�we�maintain�insurance�for�certain�types�of�losses,�the�coverage�may�be
insufficient�or�limited�and�may�not�fully�protect�against�those�losses.�Additionally,�criminals�use�sophisticated�illegal�activities�to�target�us,�including�“skimming”,
counterfeit�cards�and�accounts,�and�identity�theft.�A�single,�significant�incident�or�a�series�of�incidents�of�fraud�or�theft�could�lead�to,�among�other�things,�increased
overall�levels�of�fraud;�direct�financial�losses�as�a�result�of�fraudulent�activity;�reputational�harm;�decreased�desirability�of�our�services;�greater�regulation;
increased�compliance�costs;�the�imposition�of�regulatory�sanctions;�or�significant�monetary�fines.�Accordingly,�if�material�fraud,�as�described�above�or�otherwise,
were�to�occur,�the�result�could�be�a�material�adverse�effect�on�our�operations,�business�success,�financial�condition�and�results�of�operations.
Fluctuations�in�foreign�currency�exchange�rates�could�affect�our�financial�results.
����We�earn�revenues,�pay�expenses,�own�assets�and�incur�liabilities�in�countries�using�currencies�other�than�the�U.S.�dollar.�Such�currencies�include,�but�are�not
limited�to,�the�Australian�dollar,�the�Canadian�dollar,�the�Euro,�British�Pound�sterling,�and�the�New�Zealand�dollar.�Because�our�consolidated�financial�statements
are�presented�in�U.S.�dollars,�we�must�translate�revenues,�income�and�expenses,�as�well�as�assets�and�liabilities,�into�U.S.�dollars�at�exchange�rates�in�effect�during
or�at�the�end�of�each�reporting�period.�Realized�and�unrealized�gains�and�losses�on�foreign�currency�transactions�as�well�as�the�re-measurement�of�our�cash,
receivable�and�payable�balances�that�are�denominated�in�foreign�currencies,�are�recorded�directly�in�the�consolidated�statements�of�operation.�Therefore,�increases
or�decreases�in�the�value�of�the�U.S.�dollar�against�other�major�currencies�that�we�use�to�conduct�our�business�will�affect�our�revenues,�net�income�and�the�value�of
balance�sheet�items�denominated�in�those�currencies.�Volatility�in�foreign�currency�exchange�rates,�particularly�fluctuations�in�the�U.S.�dollar�against�other
currencies,�could�have�a�material�adverse�effect�on�our�business,�financial�condition,�and�operating�results.
The�payment�solutions�industry�is�highly�competitive.�Such�competition�could�adversely�affect�the�fees�we�receive,�our�revenues�and�margins,�and�our�ability�to
gain,�maintain,�or�expand�customer�relationships,�all�on�favorable�terms.
����We�face�and�expect�to�continue�to�face�competition�in�each�of�our�segments�from�multiple�companies�that�seek�to�offer�competing�capabilities�and�services.
Historically,�we�have�been�able�to�provide�customers�with�a�wide�spectrum�of�services�and�capabilities�and,�therefore,�we�have�not�considered�price�to�be�the
exclusive�or�even�the�primary�basis�on�which�we�compete.�As�our�competitors�have�continued�to�develop�their�service�offerings,�it�has�become�increasingly�more
challenging�for�us�to�compete�solely�on�the�basis�of�superior�capabilities,�technology,�customer�integration�or�service�and�price�has�become�an�increasingly
important�decision�factor�for�our�customers.�In�some�areas�of�our�business�we�have�been�forced�to�respond�to�competitive�pressures�by�reducing�our�fees�and�our
margins.�We�have�seen�erosion�of�our�historical
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profit�margins�as�we�encourage�existing�strategic�relationships�to�sign�long-term�contracts.�If�these�trends�continue�and�if�competition�intensifies,�our�profitability
may�be�adversely�impacted.
����While�we�offer�our�services�to�several�sectors�of�the�payments�industry,�with�a�focus�on�the�fleet,�travel�and�corporate�payments,�and�health�categories,�some�of
our�competitors�have�successfully�garnered�significant�share�in�particular�categories�of�payments.�To�the�extent�that�our�competitors�are�regarded�as�leaders�in
specific�categories,�they�may�have�an�advantage�over�us�as�we�attempt�to�further�penetrate�these�categories.
����
We�also�face�increased�competition�in�our�efforts�to�enter�into�new�customer�agreements�or�strategic�relationships,�renew�or�maintain�existing�agreements
or�relationships�on�similar�or�favorable�terms,�and�grow�volumes�under�existing�relationships�on�favorable�terms.�For�example,�the�termination�of�agreements�with
major�oil�companies,�fuel�retailers,�and�truck�stop�merchants,�would�reduce�the�number�of�locations�where�our�payment�processing�services�are�accepted.�As�a
result,�we�could�lose�our�competitive�advantage�and�our�operating�results�could�be�adversely�affected.�While�we�regularly�monitor�these�relationships,�there�can�be
no�guarantee�that�we�will�be�able�to�maintain�them�in�the�future.In�addition,�we�are�also�subject�to�risks�as�a�result�of�changes�in�business�habits�of�our�vendors�and
customers�as�they�adjust�to�the�competitive�marketplace.�Because�many�of�our�standing�arrangements�and�agreements�with�customers�or�other�partners�contain�no
minimum�purchase,�sale�or�volume�obligations�and�may�be�terminable�by�either�party�upon�no�or�relatively�short�notice,�customers�or�other�partners�may�not�be
required�to�use�the�services�that�we�provide�to�a�specific�degree�or�at�all,�even�though�we�are�under�contract�with�them.�Accordingly,�we�are�subject�to�significant
risks�associated�with�the�loss�or�change�in�the�business�habits�and�financial�condition�of�these�key�constituencies�as�they�consider�changes�in�the�market�or�different
or�less�expensive�services�from�competitors�or�otherwise.
As�set�forth�above,�the�competitive�landscape�in�which�we�operate�could�affect�our�revenues�and�margins�and�have�a�material�adverse�effect�on�our
business,�operations,�and�operating�results.
Our�failure�to�effectively�implement�new�technology�could�jeopardize�our�position�as�a�leader�in�our�industry.
����As�a�provider�of�information�management�and�financial�technology�and�payment�services,�we�must�constantly�adapt�and�respond�to�the�technological�advances
offered�by�our�competitors�and�the�informational�requirements�of�our�customers,�including�those�related�to�the�Internet�and�the�cloud,�in�order�to�maintain�and
improve�upon�our�competitive�position.�We�may�not�be�able�to�expand�our�technological�capabilities�and�service�offerings�as�rapidly�as�our�competitors,�which
could�jeopardize�our�position�as�a�leader�in�our�industry.
We�may�not�be�able�to�successfully�execute�our�strategy�of�growth�through�acquisitions.
We�have�been�an�active�asset�acquirer,�and,�as�part�of�our�growth�strategy,�we�expect�to�seek�to�continue�to�acquire�businesses,�commercial�account�portfolios
and�other�assets�in�the�future.�We�have�substantially�expanded�our�overall�business,�operating�segments,�customer�base,�headcount�and�operations�through
acquisitions.�Our�future�growth�and�profitability�depend,�in�part,�upon�our�continued�successful�expansion�within�the�business�segments�in�which�we�currently
operate.�As�part�of�our�strategy�to�expand,�we�look�for�acquisition�opportunities�and�partnerships�with�other�businesses�that�will�allow�us�to�increase�our�market
penetration,�technological�capabilities,�product�offerings�and�distribution�capabilities.
Any�or�all�of�the�following�risks�could�adversely�affect�our�growth�strategy,�including�that:
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•
•
•
we�may�not�be�able�to�identify�suitable�acquisition�candidates�or�acquire�additional�assets�on�favorable�terms;
we�may�compete�with�others�to�acquire�assets,�which�competition�may�increase,�and�any�level�of�competition�could�result�in�decreased�availability�or
increased�prices�for�acquisition�candidates;
we�may�compete�with�others�for�select�acquisitions�and�our�competition�may�consist�of�larger,�better-funded�organizations�with�more�resources�and�easier
access�to�capital;
we�may�experience�difficulty�in�anticipating�the�timing�and�availability�of�acquisition�candidates;
we�may�not�be�able�to�obtain�the�necessary�funding,�on�favorable�terms�or�at�all,�to�finance�any�of�our�potential�acquisitions;�and
we�may�not�be�able�to�generate�cash�necessary�to�execute�our�acquisition�strategy.
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We�may�never�realize�the�anticipated�benefits�of�acquisitions�we�have�completed�or�may�undertake,�and�we�may�encounter�difficulties�in�trying�to�integrate
such�acquisitions�and�incur�significant�expenses�or�charges�as�a�result�of�an�acquisition.
����The�acquisition�and�integration�of�a�business�involves�a�number�of�risks�and�may�result�in�unforeseen�operating�difficulties�in�assimilating�or�integrating�the
businesses,�technologies,�products,�personnel�or�operations�of�the�acquired�business.
In�evaluating�and�determining�the�purchase�price�for�a�prospective�acquisition,�we�estimate,�among�other�things,�the�future�revenues�and�profits�from�that
acquisition�based�largely�on�historical�financial�performance�as�well�as�any�synergies�that�we�believe�we�may�benefit�from�as�a�result�of�the�acquisition.�Following
an�acquisition,�we�may�not�operate�the�acquired�business�as�successfully�as�it�was�previously�operated,�or�adequately�address�all�of�the�risks�uncovered�during�the
due�diligence�process.�We�may�also�experience�some�attrition�in�the�number�of�clients�serviced�by�the�acquired�business,�causing�us�to�us�not�achieve�the
forecasted�revenues�and�profits�from�an�acquisition�or�not�achieving�the�level�of�synergies�that�we�anticipated�when�entering�into�an�acquisition.�Moreover,
although�we�perform�a�due�diligence�review�of�each�of�our�acquisition�partners,�this�review�may�not�adequately�uncover�all�of�the�contingent,�undisclosed,�or
previously�unknown�liabilities�or�risks�we�may�incur�as�a�consequence�of�the�proposed�acquisition,�exposing�us�to�potentially�significant,�unanticipated�costs,�as
well�as�potential�impairment�charges.�An�acquisition�may�also�subject�us�to�additional�regulatory�burdens�that�may�significantly�affect�our�business�in
unanticipated�and�negative�ways.
Further,�an�acquisition�may�affect�our�financial�condition�in�that�it�may�require�us�to�incur�other�charges,�such�as�severance�expenses,�restructuring
charges�or�change�of�control�payments,�and�substantial�debt�or�other�liabilities.�An�acquisition�may�also�cause�adverse�tax�consequences,�substantial�depreciation
and�amortization�or�deferred�compensation�charges,�may�require�the�amortization,�write-down�or�impairment�of�amounts�related�to�deferred�compensation,
goodwill�and�other�intangible�assets,�may�include�substantial�contingent�consideration�payments�or�other�compensation�that�could�reduce�our�earnings�during�the
quarter�in�which�incurred,�or�may�not�generate�sufficient�financial�return�to�offset�acquisition�costs.�These�expenses,�charges�or�payments,�as�well�as�the�initial
costs�of�integrating�the�personnel�and�facilities�of�an�acquired�business�with�those�of�our�existing�operations,�may�adversely�affect�our�operating�results.
In�addition,�the�process�of�integrating�and�operating�any�acquired�business,�technology,�service�or�product�requires�significant�management�attention�and
resources.�Thus,�the�integration�may�divert�significant�management�attention�from�our�ongoing�business�operations�and�could�lead�to�a�disruption�of�our�ongoing
business�or�inconsistencies�in�our�services,�standards,�controls,�procedures�and�policies,�any�of�which�could�affect�our�ability�to�achieve�the�anticipated�benefits�of
an�acquisition�or�otherwise�adversely�affect�our�business�and�financial�results.
For�example,�on�December�15,�2020,�we�consummated�the�acquisition�of�Optal�and�eNett,�acquiring�travel�focused�electronic�payments�companies�that
were�significantly�impacted�by�the�global�COVID-19�pandemic�after�we�entered�into�the�definitive�agreement�for�the�acquisition.�The�global�COVID-19�pandemic
has�had,�and�will�likely�continue�to�have,�a�large�effect�on�the�travel�industry.�There�can�be�no�guarantee�that�we�will�achieve�any�of�the�anticipated�benefits�from
this�acquisition�or�that�we�uncovered�all�of�eNett�and�Optal’s�the�unknown�or�undisclosed�liabilities�or�risks�.
A�decline�in�general�economic�conditions,�and�in�particular,�a�decline�in�demand�for�fuel,�travel�related�services�or�health�care�services,�and�other�business
related�products�and�services�would�adversely�affect�our�business,�operating�results�and�financial�condition.
Our�operating�results�are�materially�affected�by�general�conditions�in�the�economy,�both�in�the�U.S.�and�internationally.�We�generate�a�substantial�part�of
our�revenue�based�on�the�volume�of�purchase�and�other�transactions�we�process.�Our�transaction�volume�is�correlated�with�general�economic�conditions�and�the
amount�of�business�activity�in�the�economies�in�which�we�operate,�particularly�in�the�U.S.,�Europe,�the�United�Kingdom,�Asia,�Australia,�and�New�Zealand.
Downturns�in�these�economies�are�generally�characterized�by�reduced�commercial�activity�and,�consequently,�reduced�demand�and�use�of�fuel,�travel�related
services,�health�care�services,�health�savings�accounts,�and�other�business�related�products�and�services�by�our�customers�or�partners�and�our�customers'�or�partners'
customers.�The�commercial�payments�industry�in�general,�and�our�commercial�payment�solutions�business�specifically,�depend�heavily�upon�the�overall�level�of
spending.�Unfavorable�changes�in�economic�conditions,�including�declining�consumer�confidence,�increasing�unemployment,�inflation,�recession,�changes�in�the
political�climate�or�other�changes,�may�lead�to�a�reduction�or�plateau�in�spending�by�those�whose�spending�directly�or�indirectly�contributes�to�our�revenues,
resulting�in�reduced�or�stagnant�demand�for,�or�use�of,�our�products�and�services.�As�a�result,�a�sustained�decline�in�general�economic�conditions�in�the�U.S.�or
internationally�could�have�a�material�adverse�effect�on�our�business,�financial�condition,�and�operating�results.
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We�are�exposed�to�risks�associated�with�operations�outside�of�the�United�States,�which�could�harm�both�our�U.S.�and�international�operations.
����In�addition�to�our�operations�in�the�United�States,�we�conduct�operations�internationally�in�many�foreign�countries.�On�December�15,�2020,�we�consummated�our
acquisition�of�Optal�and�eNett,�which�substantially�increased�our�Travel�and�Corporate�Payment�Solutions�segment's�exposure�to�the�Asian,�Australian,�European,
and�United�Kingdom�markets.�This�acquisition�and�any�further�expansion�of�our�international�operations�could�impose�substantial�burdens�on�our�resources,�divert
management’s�attention�from�U.S.�operations�and�otherwise�harm�our�business.�In�addition,�we�are�subject�to�risks�from�operating�internationally,�some�of�which
we�may�not�typically�encounter�in�the�United�States,�including:�
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•
fluctuation�in�foreign�currencies;
changes�in�the�relations�between�the�United�States�and�foreign�countries;
actions�of�foreign�or�United�States�governmental�authorities�affecting�trade�and�foreign�investment;
increased�expense�due�to�the�introduction�of�our�corporate�policies�and�controls�in�our�international�operations;
increased�expense�related�to�localization�of�our�products�and�services,�including�language�translation�and�creation�of�localized�agreements;
increased�infrastructure�costs,�burdens�and�complexities�with�respect�to�legal,�tax,�accounting�and�information�technology�laws,�matters,�and�treaties;
interpretation�and�application�of�local�laws�and�regulations,�including,�among�others,�those�impacting�anti-money�laundering,�bribery,�financial
transaction�reporting,�privacy,�licensing,�and�positive�balance�or�prepaid�cards;
enforceability�of�intellectual�property�and�contract�rights;
potentially�adverse�tax�consequences�due�to,�but�not�limited�to,�the�value�added�tax�systems,�the�repatriation�of�cash,�and�any�adverse�consequences�from
changes�in�tax�rates�and�changes�or�interpretations�of�tax�laws;
competitive�pressure�on�products�and�services�from�companies�based�outside�the�U.S.�that�can�leverage�lower�costs�of�operations;
terrorist�attacks�and�security�concerns�in�general;
increased�expense�to�comply�with�U.S.�laws�that�apply�to�foreign�operations,�including�the�FCPA�and�OFAC�regulations;
political,�social,�and�economic�instability;�and
local�labor�conditions�and�regulations.
����We�cannot�assure�you�that�our�investments�or�businesses�outside�the�United�States�will�produce�desired�levels�of�revenue�or�costs,�or�that�one�or�more�of�the
factors�listed�above�will�not�harm�our�business.
The�United�Kingdom’s�departure�from�the�EU,�or�Brexit,�and�the�resulting�Trade�Agreement�could�adversely�affect�us.
During�June�2016,�the�U.K.�held�a�referendum�in�which�voters�approved�an�exit�from�the�European�Union�(the�"EU"),�commonly�referred�to�as�Brexit.�On
January�24,�2020,�the�U.K.�Parliament�approved�a�withdrawal�agreement�(the�“Withdrawal�Agreement”)�between�the�U.K.�and�the�EU.�On�December�24,�2020,
after�an�eleven�month�transition�period,�the�United�Kingdom�and�the�EU�entered�into�a�trade�deal,�effective�January�1,�2021,�in�which�they�agreed�upon�many�trade
terms�(the�"Trade�Agreement")�as�a�result�of�Brexit.
The�uncertainty�with�respect�to�the�ultimate�effect�on�the�U.K.’s�legal,�political�and�economic�relationship�with�the�EU�as�a�result�of�Brexit�and�the�Trade
Agreement�could�contribute�to�instability�in�global�financial�and�foreign�exchange�markets,�including�volatility�in�the�value�of�the�British�Pound�Sterling�and�Euro,
which�in�turn�could�adversely�affect�us�or�our�customers�and�companies�that�do�business�with�us.�Such�uncertainties�could�also�trigger�a�general�deterioration�in
credit�conditions,�a�downturn�in�consumer�sentiment�and�overall�negative�economic�growth.�Any�of�these�scenarios�could�have�an�adverse�effect�on�our�business�or
on�our�customers.
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The�long-term�effects�of�Brexit�will�depend�on�the�effects�and�implementation�of�the�Trade�Agreement.�A�withdrawal�from�the�EU,�such�as�Brexit,�is
unprecedented,�and�it�currently�remains�unclear�how�the�implementation�of�the�Trade�Agreement�and�the�U.K.’s�access�to�the�European�single�market�for�goods,
capital,�services�and�labor�within�the�EU�and�the�wider�commercial,�legal�and�regulatory�environment,�will�impact�our�U.K.�operations.
In�addition,�Brexit�could�lead�to�legal�uncertainty�and�increased�complexity�as�national�laws�and�regulations�in�the�U.K.�start�to�diverge�from�EU�laws�and
regulations.�In�particular,�we�may�face�new�regulatory�costs�and�challenges,�including�the�following:
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we�could�be�required�to�comply�with�regulatory�requirements�in�the�U.K.�that�are�in�addition�to,�or�inconsistent�with,�the�regulatory�requirements�of
the�EU,�leading�to�increased�complexity�and�costs�for�our�EU�and�U.K.�operations;
the�implementation�of�limitations�on�the�interchange�fees�we�are�allowed�to�charge�our�customers�in�either�the�U.K.�or�the�EU;�and
adverse�impacts�on�our�ability�to�attract�and�retain�the�necessary�human�resources�in�appropriate�locations�to�support�the�U.K.�business�and�the�EU
business.
����These�and�other�factors�related�to�Brexit�and�the�Trade�Agreement�could,�individually�or�in�the�aggregate,�have�a�material�adverse�impact�on�our�business,
financial�condition,�and�results�of�operations.
We�may�incur�impairment�charges�on�goodwill�or�other�intangible�assets.
����Our�goodwill�resides�in�multiple�reporting�units.�The�profitability�of�individual�reporting�units�may�suffer�periodically�from�downturns�in�customer�demand,�the
high�level�of�competition�existing�within�our�industry,�the�level�of�overall�economic�activity�and�other�factors.�Individual�reporting�units�may�be�relatively�more
impacted�by�these�factors�than�the�Company�as�a�whole.�As�a�result,�demand�for�the�services�of�one�or�more�of�the�reporting�units�could�decline,�which�could
adversely�affect�our�operations�and�cash�flow,�and�could�result�in�an�impairment�of�goodwill.�Our�reporting�units�are�tested�annually�during�the�fourth�fiscal�quarter
of�each�year,�or�on�an�interim�basis�if�impairment�indicators�exist�in�order�to�determine�whether�their�carrying�value�exceeds�their�fair�value.�We�use�a�combination
of�discounted�cash�flow�analyses�and�comparable�company�pricing�multiples�to�determine�the�fair�value�of�our�reporting�units�and�to�determine�the�amount�of�any
goodwill�impairment.�In�addition,�our�definite-lived�intangible�assets�are�tested�for�impairment�if�an�event�occurs�or�circumstances�change�that�would�indicate�the
carrying�value�may�not�be�recoverable.
����If�we�determine�the�fair�value�of�the�reporting�units�is�less�than�their�carrying�value�as�a�result�of�the�annual�or�interim�goodwill�tests,�or�the�carrying�value�of�our
definite-lived�intangible�asset�exceeds�the�undiscounted�cash�flows�generated�from�the�use�of�the�asset,�an�impairment�loss�may�be�recognized.�Any�such�write-
down�would�adversely�affect�our�results�of�operations.�As�a�result�of�our�annual�impairment�analysis�in�2020,�the�Company�recorded�a�$53.4�million�non-cash
goodwill�impairment�charge�related�to�the�WEX�Fleet�Europe�reporting�unit.
����While�we�currently�believe�that�the�fair�values�of�our�other�reporting�units�exceed�their�respective�carrying�values�and�that�our�goodwill�will�contribute
indefinitely�to�the�cash�flows�of�the�Company,�materially�different�assumptions�regarding�future�performance�of�our�reporting�units�and�the�weighted-average�cost
of�capital�used�in�the�annual�valuation�could�result�in�impairment�losses.�In�addition,�while�we�believe�that�the�expected�future�cash�flows�to�the�Company�resulting
from�the�use�of�our�definite-lived�intangible�assets�exceeds�the�carrying�value�of�such�assets,�material�changes�in�business�strategy,�customer�attrition�in�excess�of
expectations,�and�technological�obsolescence�could�result�in�impairment�losses�and/or�an�acceleration�of�amortization�expense.
Legislation�and�regulation�of�greenhouse�gases�("GHG")�and�related�divestment�and�other�efforts�could�adversely�affect�our�business.
We�are�aware�of�the�increasing�focus�of�local,�state,�regional,�national�and�international�regulatory�bodies�on�GHG�emissions�and�climate�change�issues.
Legislation�to�regulate�GHG�emissions�has�periodically�been�introduced�in�the�U.S.�Congress,�and�there�has�been�a�wide-ranging�policy�debate,�both�in�the�U.S.
and�internationally,�regarding�the�impact�of�these�gases�and�possible�means�for�their�regulation.�The�Biden�Administration�has�made�climate�change�and�the
limitation�of�GHG�emissions�one�of�its�initial�and�primary�objectives.�For�example,�in�January�2021,�U.S.�President�Biden�signed�a�number�of�executive�orders
with�respect�to�GHGs,�including�one�recommitting�the�United�States�to�the�Paris�Agreement,�pursuant�to�which�nearly�200�nations�have�committed�to�reduce�global
emissions.�Several�states�and�geographic�regions�in�the�U.S.�have�adopted�legislation�and�regulations�to�reduce�emissions�of�GHGs.�Additional�legislation�or
regulation�by�these�states�and�regions,�the�U.S.�Environmental�Protection�Agency,�and/or�any�international�agreements�to�which�the�U.S.�may�become�a�party,�that
control�or�limit�GHG�emissions�or�otherwise�seek�to�address�climate�change�could�adversely�affect�our�partners’,�merchants’�and�our�operations.�Finally,�private
businesses,�including�vehicle�manufacturers,�are�increasingly�taking�proactive�steps�to�control�or�limit�GHG�emissions.�As�an�example,�in�January�2021,�General
Motors�announced�that
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it�aspired�to�have�all�of�its�global�new�light-duty�vehicles�be�zero�emission�by�2035.�Because�our�business�is�currently�heavily�reliant�on�the�level�of�fossil�fuels
purchased�and�sold,�existing�or�future�laws�or�regulations�or�business�actions�related�to�GHGs�and�climate�change,�including�incentives�to�conserve�energy�or�use
alternative�energy�sources,�could�have�a�negative�impact�on�our�business�if�any�of�the�same�serve�to�reduce�demand�for�fossil�fuels.
In�addition�to�the�regulatory�and�private�sector�efforts�described�above,�there�have�also�been�efforts�in�recent�years�aimed�at�the�investment�community,
including�investment�advisors,�sovereign�wealth�funds,�public�pension�funds,�universities�and�other�groups,�promoting�the�divestment�of�equities�issued�by
companies�connected�to�fossil�fuels�as�well�as�to�pressure�lenders�and�other�financial�services�companies�to�limit�or�curtail�activities�with�companies�similarly
connected.�If�these�efforts�are�successful,�and�if�our�business�is�deemed�to�be�sufficiently�tied�to�the�use�of�fossil�fuels�by�such�communities,�our�ability�to�access
capital�markets�may�be�limited�and�our�stock�price�may�be�negatively�impacted.
Members�of�the�investment�community�have�recently�increased�their�focus�on�sustainability�practices�with�regard�to�the�oil�and�gas�industry,�including
practices�related�to�GHGs�and�climate�change.�An�increasing�percentage�of�the�investment�community�considers�sustainability�factors�in�making�investment
decisions,�and�an�increasing�number�of�entities�consider�sustainability�factors�in�awarding�business.�If�we�are�unable�to�appropriately�address�sustainability
enhancement,�we�may�lose�customers,�partners,�or�merchants,�our�stock�price�may�be�negatively�impacted,�our�reputation�may�be�negatively�affected,�and�it�may�be
more�difficult�for�us�to�effectively�compete.
Unpredictable�events,�including�natural�catastrophes�or�public�health�crises,�dangerous�weather�conditions,�technology�failure,�political�unrest,�and�terrorist
attacks�in�the�locations�in�which�we�or�our�customers�operate,�or�elsewhere,�may�adversely�affect�our�ability�to�conduct�business�and�could�impact�our�results.
����In�addition�to�public�health�crises,�such�as�the�COVID-19�global�pandemic,�other�unpredictable�events,�such�as�political�unrest,�terrorist�attacks,�power�failures,
natural�disasters�(such�as�wildfires�or�hurricanes)�and�severe�weather�conditions�could�interrupt�our�operations�by�causing�disruptions�in�global�markets,�economic
conditions,�fuel�supply�or�demand,�travel�and�tourism,�and�the�use�of�health�care�services.�Such�events�could�also�trigger�large-scale�technology�failures,�delays,�or
security�lapses.�Such�events,�if�continuing�or�significant,�could�affect�our�revenues�by�reducing�the�demand�for�our�products�and�services�or�by�limiting�our�ability
to�provide�our�services�or�resulting�in�security�or�other�issues�to�our�technology�systems�and�the�information�contained�therein�and�could�therefore�cause�a�material
adverse�effect�on�our�business,�financial�condition,�and�operating�results.
The�healthcare�industry�changes�often�and�technology-enabled�services�used�by�consumers�are�relatively�new�and�unproven.
The�market�for�technology-enabled�services�for�healthcare�consumers�changes�rapidly�and�new�products�and�services�are�consistently�being�introduced.
Opportunities�to�gain�market�share�are�challenging�due�to�the�significant�resources�of�our�existing�and�potential�competitors.�It�is�uncertain�whether�or�how�fast�this
market�will�continue�to�grow.�In�order�to�remain�competitive,�we�are�continually�involved�in�a�number�of�projects�to�develop�new�services�or�compete�with�these
new�market�entrants,�including�the�development�of�mobile�versions�of�our�proprietary�technology�platform.�These�projects�carry�risks,�such�as�cost�overruns,�delays
in�delivery,�performance�problems�and�lack�of�acceptance�by�our�Health�and�Employee�Benefit�Solutions�segment�customers.
Based�on�our�experience,�consumers�are�still�learning�about�HSAs�and�other�similar�tax-advantaged�healthcare�savings�arrangements.�The�willingness�of
consumers�to�increase�their�use�of�technology�platforms�to�manage�their�healthcare�saving�and�spending�tax�advantaged�benefits�will�impact�our�operating�results.
Our�ability�to�attract�and�retain�qualified�employees�is�critical�to�our�success�and�the�failure�to�do�so�may�materially�adversely�affect�our�performance.
����We�believe�our�employees,�including�our�executive�management�team,�are�our�most�important�resource�and,�in�our�industry�and�geographic�area,�competition�for
qualified�personnel�is�intense.�If�we�were�unable�to�retain�and�attract�qualified�employees,�our�performance�could�be�materially�adversely�affected.
The�Company�is�and�may�in�the�future�become�involved�in�various�claims,�investigations,�and�legal�proceedings�which�could�have�a�material�adverse�effect�on
our�business,�financial�condition�or�results�of�operations.
The�Company�is�subject�to�legal�proceedings�and�claims�in�the�ordinary�course�of�business�and�may�become�involved�in�legal�proceedings�that�could�be
material.�These�proceedings�may�include,�without�limitation,�commercial�or�contractual�disputes,�intellectual�property�matters,�personal�injury�claims,�stockholder
claims,�and�employment�matters.�No�assurances�can�be�given�that�any�such�proceedings�and�claims�will�not�have�a�material�adverse�impact�on�the�Company’s
29
financial�statements.�Legal�proceedings�are�inherently�uncertain�and�there�is�no�guarantee�that�we�will�be�successful�in�defending�ourselves�in�any�such
proceedings,�or�that�our�assessment�of�the�materiality�of�these�matters�and�the�likely�outcome�or�potential�losses�and�established�reserves�will�be�consistent�with�the
ultimate�outcome�of�such�matters.�The�types�of�claims�made�in�such�proceedings�may�include�claims�for�compensatory�damages,�punitive�and�consequential
damages,�specific�performance�and/or�other�injunctive�or�declaratory�relief.�We�may�incur�significant�expenses�in�defending�ourselves�in�any�proceedings�and�may
be�required�to�pay�damage�awards�or�settlements�or�become�subject�to�equitable�remedies�that�adversely�affect�our�operations�and�financial�statements.�Moreover,
any�insurance�or�indemnification�rights�that�we�may�have�may�be�insufficient�or�unavailable�to�protect�us�against�such�losses.�Responding�to�litigation,�claims,
proceedings,�inquiries,�and�investigations,�even�those�that�are�ultimately�non-meritorious,�requires�us�to�incur�significant�expense�and�devote�significant�resources,
and�may�generate�adverse�publicity�that�damages�our�reputation,�resulting�in�an�adverse�impact�on�our�business,�financial�condition,�and�operating�results.
Risks�related�to�WEX�Bank
The�loss�or�suspension�of�WEX�Bank's�industrial�loan�charter�or�changes�in�applicable�regulatory�requirements�could�be�disruptive�to�certain�of�our
operations�and�increase�costs.
����WEX�Bank�is�a�Utah�industrial�bank�incorporated�in�1998�that�operates�under�an�industrial�loan�charter�(ILC).�WEX�Bank�is�also�an�FDIC-insured�depository
institution.�Deposits�issued�by�WEX�Bank�are�currently�used�to�support�and�fund�substantially�all�of�the�U.S.�and�Canadian�operations�in�our�Fleet�Solutions
segment�and�a�substantial�portion�of�the�global�operations�of�our�Travel�and�Corporate�Solutions�segment.�WEX�Bank's�ILC�enables�it�to�issue�certificates�of
deposit,�accept�money�market�deposits�and�borrow�on�federal�funds�lines�of�credit�from�other�banks,�which�we�believe�provides�us�access�to�lower�cost�funds�than
many�of�our�competitors,�thus�helping�us�to�offer�competitive�products�to�our�customers.�WEX�Bank�operates�under�a�uniform�set�of�state�lending�laws,�and�its
operations�are�subject�to�extensive�state�and�federal�regulation.�The�bank’s�primary�regulators�are�the�Utah�DFI�and�the�FDIC.�Continued�licensing�and�federal
deposit�insurance�are�subject�to�ongoing�satisfaction�of�compliance�and�safety�and�soundness�requirements.�Adverse�changes�to�its�ILC�could�impact�WEX�Bank's
ability�to�operate�and/or�attract�funds�or�limit�our�ability�to�provide�competitive�offerings�to�our�customers.�If�industrial�loan�charters�were�eliminated�or�if�changes
to�such�charters�limited�or�effectively�prohibited�us�from�operating�as�we�currently�operate,�without�our�operations�being�"grandfathered",�we�would�either�need�to
outsource�our�credit�support�activities�or�perform�these�activities�ourselves,�which�would�subject�us�to�the�credit�laws�of�each�individual�state�in�which�we�conduct
business.�Furthermore,�we�could�not�be�a�MasterCard�and/or�Visa�issuer�and�would�have�to�work�with�another�financial�institution�to�issue�the�product�or�otherwise
sell�the�portfolio.�Any�such�changes�would�be�disruptive�to�our�operations�and�could�result�in�significant�incremental�costs�and�reduce�or�eliminate�any�perceived�or
actual�competitive�advantage,�resulting�in�a�material�adverse�effect�on�our�business,�financial�condition�and�operating�results.�In�addition,�changes�in�the�bank
regulatory�environment,�including�the�implementation�of�new�or�varying�measures�or�interpretations�by�the�State�of�Utah�or�the�federal�government,�may
significantly�affect�or�restrict�the�manner�in�which�we�conduct�business�in�the�future,�could�subject�us�to�greater�regulatory�oversight�requirements�or�could�create�a
default�under�our�2016�Credit�Agreement.
WEX�Bank�is�subject�to�extensive�supervision�and�regulation�that�could�restrict�our�activities�and�impose�financial�requirements�or�limitations�on�the�conduct
of�our�business�and�limit�our�ability�to�generate�income.
����WEX�Bank�is�subject�to�extensive�federal�and�state�regulation�and�supervision,�including�that�of�the�FDIC,�the�CFPB,�and�the�Utah�DFI.�Banking�regulations�are
primarily�intended�to�protect�depositors’�funds,�federal�deposit�insurance�funds�and�the�banking�system�as�a�whole,�not�shareholders�or�noteholders.�These
regulations�affect�our�payment�operations,�capital�structure,�investment�practices,�dividend�policy,�and�growth,�among�other�things.�Failure�to�comply�with�laws,
regulations�or�policies�could�result�in�sanctions�by�regulatory�agencies,�damages,�civil�money�penalties�or�reputational�damage,�which�could�have�a�material
adverse�effect�on�our�business,�financial�condition�and�results�of�operations.�While�we�have�policies�and�procedures�designed�to�prevent�any�such�violations,�there
can�be�no�assurance�that�such�violations�will�not�occur.�The�U.S.�Congress�and�federal�regulatory�agencies�frequently�revise�banking�and�securities�laws,
regulations�and�policies.�We�cannot�predict�whether,�or�in�what�form,�any�other�proposed�regulations�or�statutes�will�be�adopted�or�the�extent�to�which�our�business
may�be�affected�by�any�new�regulation�or�statute.�Such�changes�could�subject�our�business�to�additional�costs,�limit�the�types�of�financial�services�and�products�we
may�offer�and�increase�the�ability�of�non-banks�to�offer�competing�services�and�products,�among�other�things.
Volatility�or�adverse�conditions�in�the�economy�or�credit�or�other�financial�markets�may�negatively�impact�WEX�Bank’s�ability�to�attract�and�retain�deposits.
����Volatility�or�adverse�conditions�in�the�economy�or�credit�or�other�financial�markets�may�limit�WEX�Bank’s�ability�to�attract�and�retain�deposits�at�a�time�when�it
would�like�or�need�to�do�so.�In�addition,�the�FDIC's�final�rule�regarding�Parent
30
Companies�of�Industrial�Banks�and�Industrial�Loan�Companies,�which�becomes�effective�April�1,�2021,�could�make�it�easier�for�some�commercial�companies�to
obtain�an�industrial�loan�company�charter,�which�could�increase�competition�and�limit�our�ability�to�attract�deposits.�A�significant�credit�rating�downgrade,�material
capital�market�disruptions,�or�significant�withdrawals�by�depositors�at�WEX�Bank,�among�other�things,�could�impact�our�ability�to�maintain�adequate�liquidity�and
impact�our�ability�to�provide�competitive�offerings�to�our�customers.�Further,�any�such�limitation�on�the�availability�of�deposits�to�WEX�Bank�could�have�an
impact�on�our�ability�to�fund�our�customers'�purchases,�which�could�have�a�material�adverse�effect�on�the�Company's�business,�financial�condition,�and�operating
results.��
In�an�environment�of�increasing�interest�rates�and�changes�in�the�brokered�deposit�market,�WEX�Bank's�cost�of�capital�would�increase.
����WEX�Bank�uses�collectively�brokered�deposits,�including�certificates�of�deposit�and�interest-bearing�money-market�deposits�to�finance�its�operations,�which
primarily�involves�financing�payments�on�behalf�of�our�customers.�Certificates�of�deposit�carry�fixed�interest�rates�from�issuance�to�maturity,�which�vary�and�are
relatively�short�term�in�duration.�The�interest-bearing�money�market�deposits�carry�variable�rates.�Upon�maturity,�the�deposits�will�likely�be�replaced�by�issuing
new�deposits�to�the�extent�that�they�are�needed.�In�a�rising�interest�rate�environment,�WEX�Bank�would�not�be�able�to�replace�maturing�deposits�with�deposits�that
carry�the�same�or�lower�interest�rates.�Therefore,�rising�interest�rates�would�result�in�reduced�net�income�to�the�extent�that�certificates�of�deposit�and�interest-
bearing�money�market�deposits�mature�and�are�replaced�with�deposits�that�carry�higher�interest�rates�and�we�are�otherwise�unable�to�increase�the�fees�we�otherwise
receive�under�contracts.�Rising�interest�rates�could�also�therefore�limit�our�ability�to�offer�competitive�product�offerings�to�our�customers.�At�December�31,�2020,
WEX�Bank�had�outstanding�$354.8�million�in�certificates�of�deposit�maturing�within�one�year,�$148.6�million�in�certificates�of�deposit�maturing�between�one�and�3
years,�and�$439.9�million�in�interest-bearing�money�market�deposits,�for�an�aggregate�exposure�of�$943.3�million�in�brokered�deposits�at�WEX�Bank.
WEX�Bank�is�subject�to�funding�risks�associated�with�its�reliance�on�brokered�deposits.
����As�of�December�31,�2020,�the�most�recent�FDIC�exam�report�categorized�WEX�Bank�as�“well�capitalized”�under�the�regulatory�framework�for�prompt
corrective�action.�Under�applicable�regulations,�however,�if�WEX�Bank�were�to�be�no�longer�categorized�as�"well�capitalized"�under�such�framework,�it�would�not
be�able�to�finance�its�operations�through�the�acceptance�of�brokered�deposits�without�the�approval�of�the�FDIC.�Moreover,�in�December�2020,�the�FDIC�amended
its�brokered�deposits�regulations,�effective�April�1,�2021,�and�may�in�the�future�change�the�definition�of�brokered�deposits�or�extend�the�classification�to�deposits
not�currently�classified�as�brokered�deposits.�WEX�Bank’s�inability�to�accept�brokered�deposits,�or�a�loss�of�a�significant�amount�of�its�brokered�deposits,�could
adversely�affect�its�liquidity�and�therefore�its�ability�to�support�and�fund�the�Company's�operations�it�currently�supports�and�funds.�Additionally,�such
circumstances�could�require�WEX�Bank�to�raise�deposit�rates�in�an�attempt�to�attract�new�deposits,�or�to�obtain�funds�through�other�sources�at�higher�rates,�which
would�affect�the�Company's�ability�to�offer�competitive�products�to�our�customers�in�our�segments�served�by�WEX�Bank�and�would�have�a�material�adverse�effect
on�our�business,�financial�condition,�and�operating�results.
WEX�Bank�is�subject�to�regulatory�capital�requirements�that�may�require�us�to�make�capital�contributions�to�WEX�Bank�and�that�may�restrict�WEX�Bank's
ability�to�make�cash�available�to�us.
����WEX�Bank�must�maintain�minimum�amounts�of�regulatory�capital.�If�WEX�Bank�does�not�meet�these�capital�requirements,�its�regulators�have�broad�discretion
to�institute�a�number�of�corrective�actions�that�could�have�a�direct�material�effect�on�our�financial�condition.�WEX�Bank,�as�an�institution�insured�by�the�FDIC,
must�maintain�certain�capital�ratios,�paid-in�capital�minimums�and�adequate�allowances�for�loan�losses.�Under�the�Dodd-Frank�Act,�we�are�also�required�to�serve�as
a�source�of�financial�strength�for�WEX�Bank.�If�WEX�Bank�were�to�fail�to�meet�any�of�the�capital�requirements�to�which�it�is�subject,�or�if�required�under�Dodd-
Frank’s�source�of�strength�requirements,�we�may�be�forced�to�provide�WEX�Bank�with�additional�capital,�which�could�impair�our�ability�to�service�our
indebtedness�or�may�not�be�permitted�under�the�terms�of�our�2016�Credit�Agreement�or�Notes.
In�addition,�substantially�all�of�the�transactions�of,�and�therefore�the�revenues�derived�from,�the�U.S.�and�Canadian�operations�of�our�Fleet�Solutions
segment�and�the�global�operations�of�our�Travel�and�Corporate�Solutions�segment�flow�through�WEX�Bank.�Due�to�the�applicable�regulatory�regime,�WEX�Bank�is
limited�in�the�ways�it�can�transfer�its�cash�or�other�assets�to�WEX�Inc.�One�of�the�primary�methods�by�which�funds�are�transferred�to�WEX�Inc.�is�through�the
payment�of�a�dividend�by�WEX�Bank�to�us.�However,�WEX�Bank�is�subject�to�various�regulatory�requirements�relating�to�the�payment�of�dividends,�including
requirements�to�maintain�capital�above�regulatory�minimums.�Accordingly,�WEX�Bank�may�be�unable�to�make�any,�or�may�only�be�able�to�make�limited�amounts,
of�its�cash�or�other�assets�available�to�us,�which�could�affect�our�ability�to�service�our�indebtedness,�make�acquisitions,�enhance�product�offerings,�or�fund
corporate�needs,�among�other�things,�any�of�which�could�have�a�material�adverse�effect�on�our�business,�operations,�or�financial�condition.
31
If�WEX�Bank�fails�to�meet�certain�criteria,�we�may�become�subject�to�regulation�under�the�Bank�Holding�Company�Act,�which�could�force�us�to�divest�WEX
Bank�or�cease�all�of�our�non-banking�activities,�which�could�have�an�adverse�effect�on�our�revenue�and�business�or�could�create�a�default�under�our�2016
Credit�Agreement.
����WEX�Bank�currently�meets�the�criteria�for�exemption�of�an�industrial�bank�from�the�definition�of�“bank”�under�the�Bank�Holding�Company�Act.�Elimination�of
this�exemption�or�WEX�Bank’s�failure�to�qualify�for�this�exemption�in�the�future�would�cause�us�to�become�subject�to�regulation�under�the�Bank�Holding�Company
Act.�This�would�require�us�to�divest�WEX�Bank�or�become�a�Bank�Holding�Company�and�to�possibly�cease�certain�non-banking�activities�which�may�be
impermissible�for�a�Bank�Holding�Company�and�could�create�a�default�under�our�2016�Credit�Agreement.�Failure�to�qualify�for�or�the�elimination�of�this
exemption�could�thus�have�an�adverse�effect�on�our�revenue�and�business.
We�are�subject�to�limitations�on�transactions�with�WEX�Bank,�which�may�limit�our�ability�to�engage�in�transactions�with�and�obtain�credit�from�it.
����Sections�23A�and�23B�of�the�FRA�and�the�implementing�regulations�limit�the�extent�to�which�we�can�borrow�or�otherwise�obtain�credit�from�or�engage�in�other
“covered�transactions”�with�WEX�Bank.�“Covered�transactions”�include�loans�or�extensions�of�credit,�purchases�of�or�investments�in�securities,�purchases�of
assets,�including�assets�subject�to�an�agreement�to�repurchase,�acceptance�of�securities�as�collateral�for�a�loan�or�extension�of�credit,�or�the�issuance�of�a�guarantee,
acceptance,�or�letter�of�credit.�Although�the�applicable�rules�do�not�serve�as�an�outright�ban�on�engaging�in�“covered�transactions,”�they�do�limit�the�amount�of
covered�transactions�WEX�Bank�may�have�with�any�one�affiliate�and�with�all�affiliates�in�the�aggregate.�The�applicable�rules�also�require�that�we�engage�in�such
transactions�with�WEX�Bank�only�on�terms�and�under�circumstances�that�are�substantially�the�same,�or�at�least�as�favorable�to�WEX�Bank,�as�those�prevailing�at
the�time�for�comparable�transactions�with�nonaffiliated�companies.�Furthermore,�with�certain�exceptions,�each�loan�or�extension�of�credit�by�WEX�Bank�to�the
Company�or�its�other�affiliates�must�be�secured�by�collateral�with�a�market�value�ranging�from�100�percent�to�130�percent�of�the�amount�of�the�loan�or�extension�of
credit,�depending�on�the�type�of�collateral.�Accordingly,�WEX�Bank�may�be�unable�to�provide�credit�or�engage�in�transactions�with�us,�including�transactions
intended�to�help�us�service�our�indebtedness.
Risks�Related�to�our�Indebtedness
We�currently�have�a�substantial�amount�of�indebtedness�and�may�incur�additional�indebtedness,�which�could�affect�our�flexibility�in�managing�our�business
and�could�materially�and�adversely�affect�our�ability�to�meet�our�debt�service�obligations.
At�December�31,�2020,�we�had�approximately�$3,026.8�million�of�debt�outstanding,�net�of�unamortized�debt�issuance�costs�and�debt�discount,�including
$152.7�million�in�current�liabilities,�under�the�Notes,�the�Convertible�Notes�and�our�2016�Credit�Agreement,�which�consists�of�a�tranche�A�term�loan�facility,�a
tranche�B�term�loan�facility,�and�a�secured�revolving�credit�facility.�In�addition�to�our�outstanding�debt,�as�of�December�31,�2020,�we�had�outstanding�letters�of
credit�of�$51.6�million�issued�under�the�2016�Credit�Agreement.�We�have�additional�indebtedness�in�the�form�of�deposits�held�by�WEX�Bank�and�other�liabilities
outstanding.
Our�substantial�indebtedness�currently�outstanding,�or�as�may�become�outstanding�if�we�incur�additional�indebtedness,�and�the�terms�and�conditions�of�such
indebtedness,�could,�among�other�things:
•
•
•
•
•
•
lead�to�difficulty�in�our�ability�to�generate�enough�cash�flow�to�satisfy�our�indebtedness�obligations�under�our�credit�facilities,�and�if�we�fail�to�satisfy
these�indebtedness�obligations,�an�event�of�default�could�result;
require�us�to�dedicate�a�substantial�portion�of�our�cash�flow�to�repaying�our�indebtedness,�thus�reducing�the�amount�of�funds�available�to�execute�on�our
corporate�strategy,�to�fund�working�capital�or�capital�expenditures�or�for�other�general�corporate�purposes;
limit�our�ability�to�borrow�additional�funds�necessary�for�working�capital,�capital�expenditures�or�other�general�corporate�purposes;
increase�our�vulnerability�to�adverse�general�economic�or�industry�conditions;
place�us�at�a�competitive�disadvantage�relative�to�our�competitors�that�have�less�indebtedness�or�better�access�to�capital,�by,�for�example,�limiting�our
ability�to�enter�into�new�markets,�upgrade�our�assets�or�pursue�acquisitions�or�other�business�opportunities;�and
limit�our�flexibility�in�planning�for,�or�reacting�to�changes�in,�our�business.
We�may�also�incur�substantial�additional�indebtedness�in�the�future.�The�Convertible�Notes�were�issued�in�July�2020,�and�consist�of�$310.0�million�in
initial�aggregate�principal�amount�in�notes�to�an�affiliate�of�Warburg�Pincus�in�a�private�placement.�Under�the�terms�of�the�Convertible�Notes,�we�may�elect�to
satisfy�our�bi-annual�interest�payment
32
obligations�through�the�payment�of�interest�in�cash�or�by�increasing�the�principal�amount�of�the�Convertible�Notes�by�an�amount�equal�to�any�interest�we�elect�to
satisfy�in�kind.�As�a�result,�the�outstanding�principal�amount�of�the�Convertible�Notes�may�increase�over�time.�Finally,�we�had�$818.4�million�of�available
borrowing�capacity�remaining�under�the�revolving�credit�facility�of�the�2016�Credit�Agreement�as�of�December�31,�2020.�We�are�also�are�permitted�under�our
credit�facilities�to�incur�additional�indebtedness,�subject�to�specified�limitations,�including�compliance�with�covenants�contained�in�our�2016�Credit�Agreement.�If
new�debt�is�incurred�under�any�circumstance,�the�associated�risks�faced�by�the�Company,�such�as�those�set�forth�above,�could�intensify.
Furthermore,�the�Convertible�Notes�are�convertible�by�their�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase,�based�upon�an
initial�conversion�price�of�$200�per�share�of�common�stock.�We�may�settle�conversions�of�Convertible�Notes,�at�our�election,�in�cash,�shares�of�common�stock,�or�a
combination�of�cash�and�shares�of�common�stock.�If�we�are�unable,�or�it�is�undesirable,�due�to�market�or�other�conditions,�to�issue�shares�of�common�stock�to
satisfy�a�conversion�request,�then�we�will�be�required�to�settle�the�conversion�in�cash,�which�could�reduce�our�cash�position�to�a�point�that�would�materially
adversely�affect�our�business,�operations,�and�financial�condition.�Moreover,�if�we�are�unable�to�meet�any�of�our�principal,�interest,�or�other�payment�or�settlement
obligations�under�any�of�our�debt�agreements,�we�could�be�forced�to�restructure�or�refinance�our�obligations,�seek�additional�equity�financing�or�sell�assets,�which
we�may�not�be�able�to�do�on�satisfactory�terms�or�at�all.�Our�default�on�any�of�our�debt�agreements�could�have�a�material�adverse�effect�on�our�business,�financial
condition�and�results�of�operations.
In�addition,�the�2016�Credit�Agreement�requires�that�we�meet�certain�financial�covenants,�including�a�consolidated�EBITDA�to�consolidated�interest
charge�coverage�ratio�and�a�consolidated�leverage�ratio,�as�described�in�Item�8,�Note�16,�Financing�and�Other�Debt,�2016�Credit�Agreement.�The�2016�Credit
Agreement�also�contains�various�affirmative�and�negative�covenants�that,�subject�to�certain�customary�exceptions,�restrict�our�ability�to,�among�other�things,�create
liens�over�our�property,�incur�additional�indebtedness,�enter�into�sale�and�lease-back�transactions,�make�loans,�advances�or�other�investments,�make�non-ordinary
course�asset�sales,�declare�or�pay�dividends�or�make�other�distributions�with�respect�to�equity�interests,�change�the�nature�of�our�business,�enter�into�certain
agreements�which�restrict�our�ability�to�pay�dividends�or�other�distributions�or�create�liens�on�our�property,�transact�business�with�affiliates�and/or�merge�or
consolidate�with�any�other�person.
Our�ability�to�comply�with�these�provisions�may�be�affected�by�events�beyond�our�control,�including�prevailing�economic,�financial,�and�industry
conditions.�Failure�to�comply�with�the�financial�covenants�or�any�other�non-financial�or�restrictive�covenants�in�our�2016�Credit�Agreement,�for�any�reason,�could
create�a�default.�Upon�a�default,�our�lenders�could�accelerate�the�indebtedness�under�the�facilities�(except�only�the�requisite�lenders�under�the�revolving�credit
facility�and�the�tranche�A�term�loan�facility�may�accelerate�the�revolving�credit�facility�due�to�a�breach�of�the�financial�covenants),�foreclose�against�their�collateral
or�seek�other�remedies,�which�could�trigger�a�default�under�the�Notes�and�the�Convertible�Notes�and�would�jeopardize�our�ability�to�continue�our�current
operations.�The�Notes�and�the�Convertible�Notes�also�contain�customary�negative�and�affirmative�covenants,�including,�without�limitation,�certain�covenants
placing�certain�limitations�on�our�ability�to�incur�additional�debt,�and�events�of�default�that�if�breached�could�allow�the�requisite�noteholders�to�accelerate�the
maturity�of�the�Notes�and�the�Convertible�Notes,�as�applicable,�and�to�exercise�their�rights�and�remedies�under�the�Notes�and�the�Convertible�Notes,�and�could�also
trigger�a�cross-default�under�the�2016�Credit�Agreement.
We�may�want�or�need�to�refinance�a�significant�amount�of�indebtedness�or�otherwise�require�additional�financings,�but�we�cannot�guarantee�that�we�will�be
able�to�refinance�or�obtain�additional�financing�on�favorable�terms�or�at�all.
We�may�elect�or�need�to�refinance�certain�of�our�indebtedness�to�react�to�changing�economic�and�business�conditions,�or�for�other�reasons,�even�if�not
required�to�do�so�by�the�terms�of�such�indebtedness.�Moreover,�we�may�need,�or�want,�to�raise�substantial�additional�financing�to�replace�maturing�debt,�or�to�fund
working�capital,�capital�expenditures,�acquisitions�or�other�general�corporate�requirements.�Our�ability�to�arrange�additional�financing�or�refinancing�will�depend
on,�among�other�factors,�our�financial�position�and�performance,�as�well�as�prevailing�market�conditions�and�other�factors�beyond�our�control.�In�addition,�our
access�to�lenders�in�the�future�is�also�dependent�on,�among�other�things,�market�conditions,�which�are�variable�and�potentially�volatile,�and�which�could�result�in
increased�costs�for�obtaining�and�servicing�our�indebtedness.�Accordingly,�there�can�be�no�assurance�that�we�will�be�able�to�obtain�additional�financing�or
refinancing�on�terms�acceptable�to�us�or�at�all,�which�could�have�a�material�adverse�effect�on�us.
Fluctuations�in�interest�rates�could�materially�affect�the�interest�expense�on�our�2016�Credit�Agreement.
����Because�a�significant�portion�of�our�debt�under�the�2016�Credit�Agreement�bears�interest�at�variable�rates,�increases�in�interest�rates�could�materially�increase�our
interest�expense.�Under�our�2016�Credit�Agreement,�we�had�$2.3�billion�of�indebtedness�outstanding�at�December�31,�2020,�of�which�approximately�40%�was�at
variable�interest�rates�for�which�we�had�not�entered�into�interest�rate�swap�agreements�to�fix�the�future�interest�payments.�An�increase�in�interest�rates�would
increase�the�cost�of�borrowing�under�that�portion�of�our�2016�Credit�Agreement.�As�of�December�31,�2020,�outstanding
33
interest�rate�swap�contracts�are�intended�to�fix�the�future�interest�payments�associated�with�$1.4�billion�of�the�$2.3�billion�of�outstanding�borrowings�under�the�2016
Credit�Agreement.�These�swap�agreements�expire�at�various�points�prior�to�the�maturity�of�the�2016�Credit�Agreement�and�may�not�be�effective�at�mitigating�the
risk�of�increasing�interest�rates.
����Further,�our�2016�Credit�Agreement�uses�LIBOR�as�a�reference�rate�for�our�term�loans�and�revolving�credit�facility,�such�that�the�interest�due�pursuant�to�such
loans�may�be�calculated�using�LIBOR�(subject�to�a�stated�minimum�value).�On�July�27,�2017,�the�United�Kingdom’s�Financial�Conduct�Authority�(the�"FCA"),
which�regulates�LIBOR,�announced�that�it�intends�to�stop�encouraging�or�compelling�banks�to�submit�rates�for�the�calibration�of�LIBOR�by�the�end�of�2021.�On
November�30,�2020,�ICE�Benchmark�Administration,�the�administrator�of�LIBOR,�with�the�support�of�the�United�States�Federal�Reserve�and�the�FCA,�announced
plans�to�consult�on�ceasing�publication�of�LIBOR�on�December�31,�2021�for�only�the�one�week�and�two�month�LIBOR�tenors,�and�on�June�30,�2023�for�all�other
LIBOR�tenors.�While�this�announcement�extends�the�transition�period�to�June�2023,�the�United�States�Federal�Reserve�concurrently�issued�a�statement�advising
banks�to�stop�new�LIBOR�issuances�by�the�end�of�2021.�In�light�of�these�recent�announcements,�the�future�of�LIBOR�at�this�time�is�uncertain�and�any�changes�in
the�methods�by�which�LIBOR�is�determined�or�regulatory�activity�related�to�LIBOR's�phaseout�could�cause�LIBOR�to�perform�differently�than�in�the�past�or�cease
to�exist.�In�June�2017,�the�Alternative�Reference�Rates�Committee�selected�the�Secured�Overnight�Financing�Rate�(“SOFR”),�a�new�index�calculated�by�reference
to�short-term�repurchase�agreements�backed�by�Treasury�securities,�as�its�preferred�replacement�for�U.S.�dollar�LIBOR.�Whether�or�not�SOFR�attains�market
acceptance�as�a�LIBOR�replacement�tool�remains�in�question.�As�such,�the�future�of�LIBOR�and�the�potential�alternatives�at�this�time�is�uncertain.�If�the�method�for
calculation�of�LIBOR�changes,�if�LIBOR�is�no�longer�available�or�if�lenders�have�increased�costs�due�to�changes�in�LIBOR�or�changes�in�law,�we�may�suffer�from
potential�increases�in�interest�rate�costs�on�our�floating�debt�rate�and�our�hedging�arrangements�may�not�perform�as�expected.�Further,�we�may�need�to�renegotiate
our�2016�Credit�Agreement�and�the�variable�rate�loans�thereunder�to�replace�the�interest�rate�calculated�by�reference�to�LIBOR�with�an�interest�rate�calculated�by
reference�to�a�new�standard�that�is�established.
Risks�Related�to�Regulation
Our�business�is�subject�to�a�wide�variety�of�laws,�rules,�regulations�and�government�policies�under�the�Dodd-Frank�Act,�which�may�have�a�significant�impact
on�our�business,�results�of�operations�and�financial�condition.
����On�July�21,�2010,�the�Dodd-Frank�Wall�Street�Reform�and�Consumer�Protection�Act�of�2010,�or�the�Dodd-Frank�Act,�was�enacted�into�law.�Since�enactment,�the
Dodd-Frank�Act�has�generally�resulted�in�increased�government�regulation�and�supervision,�and�when�fully�implemented,�will,�among�other�things,�result�in
substantial�changes�in�the�regulation�of�derivatives�and�capital�market�activities.�The�ultimate�impact�of�the�Dodd-Frank�Act�continues�to�evolve�as�regulations�that
are�intended�to�implement�the�Dodd-Frank�Act�are�adopted,�and�the�text�of�the�Dodd-Frank�Act�is�analyzed�by�stakeholders�and�the�courts.�In�particular,�the�Dodd-
Frank�Act�establishes�federal�oversight�and�regulation�of�the�over-the-counter�derivatives�market�and�entities�that�participate�in�that�market.�Derivatives�regulations
have�added�costs�to�our�business,�and�any�additional�requirements,�such�as�future�registration�requirements�or�increased�regulation�of�derivative�contracts,�may�add
additional�costs�or�may�require�us�to�change�any�fuel�price,�currency�and�interest�rate�hedging�practices�we�may�then�use�to�comply�with�new�regulatory
requirements.�Potential�changes�could�also�include�clearing�and�execution�methodology�of�our�derivatives�transactions.�Presently,�we�cannot�assess�the�capital�or
margin�requirements�which�might�apply�to�our�over-the-counter�transactions.�Once�implemented,�these�changes�could�result�in�increased�transaction�costs.�In
summary,�the�Dodd-Frank�Act�and�any�new�regulations�could�increase�the�cost�of�derivative�contracts�or�modify�the�way�in�which�we�conduct�those�transactions.
Additionally,�we�are�required�to�pay�to�the�lenders�under�the�2016�Credit�Agreement,�any�increased�costs�associated�with�the�Dodd-Frank�Act�and�other�changes�in
laws,�rules�or�regulations,�subject�to�the�terms�of�the�2016�Credit�Agreement.
����The�Dodd-Frank�Act�also�created�the�Consumer�Financial�Protection�Bureau,�or�the�CFPB,�to�regulate�the�offering�of�consumer�financial�products�or�services
under�the�federal�consumer�financial�laws.�The�CFPB�assumed�rulemaking�authority�under�the�existing�federal�consumer�financial�protection�laws,�and�enforces
those�laws�against�and�examines�certain�non-depository�institutions�and�insured�depository�institutions�with�total�assets�greater�than�$10�billion�and�their�affiliates.
In�addition,�the�CFPB�was�granted�general�authority�to�prevent�covered�persons�or�service�providers�from�committing�or�engaging�in�unfair,�deceptive�or�abusive
acts�or�practices�under�federal�law�in�connection�with�any�transaction�with�a�consumer�for�a�consumer�financial�product�or�service,�or�the�offering�of�a�consumer
financial�product�or�service.�The�CFPB�is�also�engaged�in�rulemaking�and�regulation�of�the�payments�industry,�in�particular�with�respect�to�prepaid�cards.�The
CFPB�amended�several�aspects�of�its�prepaid�accounts�rule,�which�became�effective�on�April�1,�2019.�The�extensive�nature�of�these�types�of�regulations�and�the
implementation�dates�for�any�such�additional�rulemaking�may�result�in�additional�compliance�obligations�and�expense�for�our�business�and�our�customers.�The
CFPB�also�has�broad�rulemaking�authority�for�a�wide�range�of�consumer�protection�laws,�which�it�has�exercised�as�described�in�Item�1�under�the�heading�“Other
Items�–�Regulation�-�United�States�–�The�Dodd�Frank�Act�and�the�Consumer�Financial�Protection�Bureau.”�It�is�unclear�what�future
34
regulatory�changes�may�be�promulgated�by�the�CFPB�and�what�effect,�if�any,�such�changes�would�have�on�our�business�and�operations.
����As�required�under�the�Dodd-Frank�Act,�the�Government�Accountability�Office�issued�its�study�on�the�implications�of�any�elimination�of�the�exemption�to�the
definition�of�“bank”�for�industrial�banks�under�the�Bank�Holding�Company�Act.�The�study�did�not�make�a�recommendation�regarding�the�elimination�of�this
exemption.�However,�if�this�exemption�were�eliminated�without�any�grandfathering�or�accommodations�for�existing�institutions,�we�could�be�required�to�become�a
bank�holding�company�which�could�prompt�us�to�either�cease�certain�activities�or�divest�WEX�Bank.
����The�Dodd-Frank�Act�and�any�related�legislation�or�regulations,�or�any�repeal�or�replacement�of�such�legislation�or�regulations,�may�have�a�material�impact�on
our�business,�results�of�operations�and�financial�condition.�The�full�impact�of�the�Dodd-Frank�Act�will�not�be�known�until�all�of�the�regulations�implementing�the
statute�are�adopted�and�implemented.�However,�compliance�with�these�laws�and�regulations,�including�any�subsequent�repeals�or�amendments�of�them,�may�require
us�to�make�changes�to�our�business,�and,�there�is�a�significant�possibility�that�the�Dodd-Frank�Act�will,�at�a�minimum,�result�in�increased�regulatory�burden�and
compliance�costs.�We�have�invested�significant�management�time�and�resources�to�address�the�various�provisions�of�the�Dodd-Frank�Act�and�the�numerous
regulations�that�are�required�to�be�issued�under�it,�and�may�have�to�invest�significant�additional�time,�including�to�address�any�changed�business�environment
resulting�from�a�repeal�or�replacement�of�all�or�part�of�the�Dodd�Frank�Act�and�any�related�legislation�or�regulation.
Existing�and�new�laws�and�regulations�and�enforcement�activities�could�negatively�impact�our�business�and�the�markets�we�presently�operate�in�or�could�limit
our�expansion�opportunities.
����Our�operations�are�subject�to�substantial�regulation�both�domestically�and�internationally.�In�addition,�there�are�often�new�regulatory�efforts�which�could�result�in
significant�constraints�and�may�impact�our�operations.�These�existing�and�emerging�laws�and�regulations�can�make�the�expansion�or�operations�of�our�business
very�difficult�and�negatively�impact�our�revenue�or�increase�our�compliance�costs.�Failure�to�comply�with�applicable�laws�or�regulations�may�result,�among�other
things,�in�the�suspension�or�revocation�of�licenses�or�registrations,�the�limitation,�suspension�or�termination�of�services,�and/or�the�imposition�of�civil�and�criminal
penalties,�including�fines.�Among�the�regulations�that�impact�us�or�could�impact�us�are�those�governing:�interchange�rates,�interest�rate�and�fee�restrictions,�credit
access�and�disclosure�requirements,�collection�and�pricing�requirements,�compliance�obligations,�data�security�and�data�breach�requirements,�identity�theft
avoidance�programs,�health�care�mandates,�the�cost�and�scope�of�public�and�private�health�insurance�coverage,�and�anti-money�laundering�compliance�programs.
We�also�often�must�obtain�permission�from�government�regulators�to�conduct�business�in�new�locations�or�in�connection�with�the�transfer�of�licenses�for�businesses
that�we�acquire.�Changes�to�these�regulations,�including�expansion�of�consumer-oriented�regulation�to�business-to-business�transactions,�could�materially�adversely
affect�our�operations,�financial�condition�and�results�of�operations�and�could�further�increase�our�compliance�costs�and�limit�our�ability�to�expand�to�new�markets.
����We�also�conduct�business�with�other�highly�regulated�businesses�such�as�banks,�payment�card�issuers,�and�health�insurance�providers.�These�industries�are
subject�to�significant�potential�new�regulations,�laws,�or�reforms�that�could�negatively�affect�these�businesses,�their�ability�to�maintain�or�expand�their�products�and
services,�and�the�costs�associated�with�doing�so.�These�developments�could�also�negatively�impact�our�business.
Laws�or�regulations�developed�in�one�jurisdiction�or�for�one�product�could�result�in�new�laws�or�regulations�in�other�jurisdictions�or�for�other�products.
����Regulators�often�monitor�other�approaches�to�the�governance�of�the�payment�industry.�As�a�result,�a�law�or�regulation�enacted�in�one�jurisdiction�could�result�in
similar�developments�in�another.�In�addition,�law�and�regulation�involving�one�product�could�influence�the�extension�of�regulations�to�other�product�offerings.
����The�expansion�of�certain�regulations�could�negatively�impact�our�business�in�other�geographies�or�for�other�products.�Rules�and�regulations�concerning
interchange�and�business�operations�regulations,�for�example,�may�differ�from�country�to�country�which�adds�complexity�and�expense�to�our�operations.
����These�varying�and�increasingly�complex�regulations�could�limit�our�ability�to�globalize�our�products�and�could�significantly�and�adversely�affect�our�business,
financial�condition�and�operating�results.
Regulations�and�industry�standards�intended�to�protect�or�limit�access�to�personal�information�could�adversely�affect�our�ability�to�effectively�provide�our
services.
����Governmental�bodies�in�the�United�States�and�abroad�have�adopted,�or�are�considering�the�adoption�of,�laws�and�regulations�restricting�the�transfer�of,�and
requiring�safeguarding�of,�non-public�personal�information.�For�example,�in�the
35
United�States,�all�financial�institutions�must�undertake�certain�steps�to�ensure�the�privacy�and�security�of�consumer�financial�information,�and�the�California
Consumer�Privacy�Act,�or�CCPA,�which�became�effective�on�January�1,�2020,�imposes�additional�restrictions�on�the�collection,�processing�and�disclosure�of
personally-identifiable�data,�including�imposing�breach�reporting�requirements�and�increased�penalties�on�data�privacy�incidents.�In�Europe,�the�adoption�of
General�Data�Protection�Regulation�(commonly�referred�to�as�GDPR)�also�requires�additional�privacy�protections�and�extends�the�scope�of�the�EU�data�protection
laws�to�all�companies�processing�data�of�EU�residents,�regardless�of�the�company’s�location.�In�connection�with�providing�services�to�our�clients,�we�are�required
by�regulations�and�arrangements�with�payment�networks�and�certain�clients�to�provide�assurances�regarding�the�confidentiality�and�security�of�non-public
consumer�information.�These�arrangements�require�periodic�audits�by�independent�companies�regarding�our�compliance�with�industry�standards�such�as�payment
card�industry�standards�and�also�allow�for�similar�audits�regarding�best�practices�established�by�regulatory�guidelines.�The�compliance�standards�relate�to�our
infrastructure�and�operational�procedures�designed�to�safeguard�the�confidentiality�and�security�of�non-public�consumer�personal�information�received�from�our
customers.�Our�ability�to�maintain�compliance�with�these�standards�and�satisfy�these�audits�will�affect�our�ability�to�attract�and�maintain�business�in�the�future.�If
we�fail�to�comply�with�these�regulations,�we�could�be�exposed�to�suits�for�breach�of�contract�or�to�governmental�proceedings.�In�addition,�our�client�relationships
and�reputation�could�be�harmed,�and�we�could�be�inhibited�in�our�ability�to�obtain�new�clients.�If�more�restrictive�privacy�laws�or�rules�are�adopted�by�authorities�in
the�future�on�the�federal�or�state�level,�our�compliance�costs�may�increase,�our�opportunities�for�growth�may�be�curtailed�by�our�compliance�capabilities�or
reputational�harm�and�our�potential�liability�for�security�and�data�privacy�breaches�may�increase,�all�of�which�could�have�a�material�adverse�effect�on�our�business,
financial�condition�and�operating�results.
Changes�in�our�tax�rates,�the�adoption�of�new�U.S.�or�international�tax�legislation�or�exposure�to�additional�tax�liabilities�could�affect�our�future�results.
����We�are�subject�to�taxes�in�the�U.S.�and�numerous�foreign�jurisdictions.�Significant�judgment�is�required�in�determining�our�global�provision�for�income�taxes,
deferred�tax�assets�or�liabilities�and�in�evaluating�our�tax�positions�on�a�worldwide�basis.�Our�future�effective�tax�rates�could�be�affected�by�changes�in�the�mix�of
earnings�in�countries�with�differing�statutory�tax�rates,�changes�in�the�valuation�of�deferred�tax�assets�and�liabilities,�or�changes�in�tax�laws�or�their�interpretation.
Any�of�these�changes�could�have�a�material�adverse�effect�on�our�profitability.�For�example,�the�2017�Tax�Act�enacted�in�December�2017�had�a�significant�impact
on�our�tax�obligation�and�effective�tax�rate�for�the�fourth�quarter�of�2017.�We�are�also�subject�to�the�examination�of�our�income�tax�returns�by�the�Internal�Revenue
Service�and�other�tax�authorities.�We�regularly�assess�the�likelihood�of�adverse�outcomes�resulting�from�these�examinations�to�determine�the�adequacy�of�our
provision�for�taxes.�There�can�be�no�assurance�that�the�outcomes�from�these�examinations�will�not�materially�adversely�affect�our�financial�condition�and�operating
results.
����We�urge�our�stockholders�to�consult�with�their�legal�and�tax�advisors�with�respect�to�this�legislation�and�the�potential�tax�consequences�of�investing�in�or�holding
our�common�stock.
Compliance�with�anti-money�laundering�laws�and�regulations�creates�additional�compliance�costs�and�reputational�risk.
����The�applicable�laws�and�regulations�in�the�various�jurisdictions�in�which�WEX�operates�impose�significant�anti-money�laundering�compliance�and�due�diligence
obligations�on�the�local�entities,�including�WEX�Bank,�WEX�Europe�UK�Limited,�and�WEX�Europe�(Netherlands)�B.V.,�as�well�as�our�other�regulated
subsidiaries.�We�must�verify�the�identity�of�customers,�monitor�and�report�unusual�or�suspicious�account�activity,�as�well�as�transactions�involving�amounts�in
excess�of�prescribed�limits,�and�refrain�from�transacting�with�designated�persons�or�in�designated�regions,�in�each�case�as�required�by�the�applicable�laws�and
regulations�(such�as�the�Bank�Secrecy�Act�and�regulations�of�the�United�States�Treasury�Department�and�the�Internal�Revenue�Service�regulations�in�the�United
States,�the�Money�Laundering�and�Terrorist�Financing�Regulations�2019�in�the�U.K.�and�the�Act�on�Financial�Supervision�in�the�Netherlands).�Financial�regulators
have�issued�various�implementing�regulations�and�have�made�enforcement�a�high�priority.�Failure�to�maintain�and�implement�adequate�programs�to�combat�money
laundering�and�terrorist�financing,�or�to�comply�with�all�of�the�relevant�laws�or�regulations,�could�result�in�the�imposition�of�fines�or�penalties�and�other�serious
legal�and�reputational�consequences�which�may�impact�our�business,�financial�condition,�and�operating�results.
Evolution�and�expansion�of�our�business�may�subject�us�to�additional�regulatory�requirements�and�other�risks,�for�which�failure�to�comply�or�adapt�could
harm�our�operating�results.
����The�evolution�and�expansion�of�our�business�may�subject�us�to�additional�risks�and�regulatory�requirements,�including�laws�governing�money�transmission�and
payment�processing�services.�These�requirements�vary�throughout�the�markets�in�which�we�operate,�and�have�increased�over�time�as�the�geographic�scope�and
complexity�of�our�payments�product�services�have�expanded.�While�we�maintain�a�compliance�program�focused�on�applicable�laws�and�regulations�throughout�the
payments�industry,�there�is�no�guarantee�that�we�will�not�be�subject�to�fines,�criminal�and�civil�lawsuits�or�other
36
regulatory�enforcement�actions�in�one�or�more�jurisdictions,�or�be�required�to�adjust�business�practices�to�accommodate�future�regulatory�requirements.
����In�order�to�maintain�flexibility�in�the�growth�and�expansion�of�our�payments�operations,�we�have�registered�as�a�money�service�business�with�FinCEN�and�have
obtained�money�transmitter�licenses�(or�their�equivalents)�in�most�states�and�expect�to�continue�the�license�application�process�in�additional�jurisdictions
throughout�the�United�States�as�needed�to�accommodate�new�product�development.�Our�efforts�to�acquire�and�maintain�these�licenses�could�result�in�significant
management�time,�effort,�and�cost,�and�may�still�not�guarantee�compliance�given�the�constant�state�of�change�in�these�regulatory�frameworks.�Accordingly,�costs
associated�with�changes�in�compliance�requirements,�regulatory�audits,�enforcement�actions,�reputational�harm,�or�other�regulatory�limits�on�our�ability�to�grow�our
payment�processing�business�could�adversely�affect�our�financial�results.
Our�increased�presence�in�foreign�jurisdictions�increases�the�possibility�of�foreign�law�violations�or�violation�of�the�FCPA�and�the�United�Kingdom�Bribery�Act
of�2010�(“UKBA”) .
����We�are�subject�to�the�FCPA�and�the�UKBA,�as�we�own�subsidiaries�organized�under�UK�law,�which�serve�as�holding�companies�for�other�subsidiaries.�The
FCPA�generally�prohibits�U.S.�companies�and�their�intermediaries�from�making�improper�payments�to�foreign�officials�for�the�purpose�of�obtaining�or�retaining
business.�The�UKBA�is�broader �in�its �reach�and �prohibits�bribery �in�purely �commercial�contexts �in�addition�to�bribery �of�government �officials, �and�it �does�not
allow�certain�exceptions�that�are�permitted�by�the�FCPA.�Other�countries�in�which�we�operate�or�have�operated,�including�Brazil,�and�other�countries�where�we
intend�to�operate,�also�have�anti-corruption�laws,�which�we�are,�have�been�or�will�be�subject�to.
Our �employees �and �agents �interact �with �government �officials �on �our �behalf, �including �as �necessary �to �obtain �licenses �and �other �regulatory �approvals
necessary�to�operate�our�business.�We�also�have�a�number�of�contracts�with�third-parties�that�are�owned�or�controlled�by�foreign�governments.�These�interactions
and�contracts�create�a�risk�of�unauthorized�payments�or�offers�of�payments�by�one�of�our�employees�or�agents�that�could�be�in�violation�of�the�FCPA,�UKBA�or
other�similar�laws,�we�could�be�held�liable�for�such�unauthorized�actions�taken�by�our�employees�or�agents.
In�recent�years,�there�have�been�significant�regulatory�reviews�and�actions�taken�by�the�United�States�and�other�regulators�related�to�anti-bribery�laws,�and
the�trend�appears�to�be�greater�scrutiny�on�payments�to,�and�relationships�with,�foreign�entities�and�individuals.
� �� �Although �we �have �policies �and �procedures �designed �to �ensure �that �we, �our �employees, �agents �and �intermediaries �comply �with �the �FCPA �and �UKBA, �such
policies�or�procedures�may�not�work�effectively�all�of�the�time�or�protect�us�against�liability�for�actions�taken�by�our�employees,�agents�and�intermediaries�with
respect�to�our�business�or�any�businesses�that�we�may�acquire.�In�the�event�that�we�believe,�or�have�reason�to�believe,�that�our�employees,�agents�or�intermediaries
have�or�may�have�violated�applicable�anti-corruption�laws,�we�may�be�required�to�investigate�or�have�a�third�party�investigate�the�relevant�facts�and�circumstances,
which�can�be�expensive�and�require�significant�time�and�attention�from�senior�management.�Our�continued�operation�and�expansion�outside�the�United�States�could
increase�the�risk�of�such�violations�in�the�future.�Any�violation�of�the�FCPA,�the�UKBA�or�similar�laws�and�regulations,�could�result�in�significant�expenses,�divert
management�attention,�and�otherwise�have�a�negative�impact�on�us.�Any�determination�that�we�have�violated�the�FCPA,�UKBA�or�laws�of�any�other�jurisdiction
could�subject�us�to,�among�other�things,�penalties�and�legal�expenses�that�could�harm�our�reputation�and�have�a�material�adverse�effect�on�our�financial�condition
and �results �of �operations. �The �possibility �of �violations �of �the �FCPA, �UKBA�or �other �similar �laws �or �regulations �may �increase �as �we �expand �globally �and �into
countries�with�recognized�corruption�problems.
Risks�Related�to�our�Dependence�on�Technology
If�the�technologies�we�use�in�operating�our�business�and�interacting�with�our�customers�fail,�are�unavailable,�or�do�not�operate�to�expectations,�or�we�fail�to
successfully�implement�technology�strategies�and�capabilities�in�connection�with�our�outsourcing�arrangements,�our�business�and�results�of�operations�could
be�adversely�impacted.
����We�utilize�a�combination�of�proprietary�and�third-party�technologies,�including�third-party�owned�and�operated�“cloud”�technologies�or�third-party�managed
technology�platforms,�data-centers,�and�processing�systems,�to�conduct�our�business�and�interact�with�our�customers,�partners�and�suppliers,�among�others.�This
includes�technology�that�we�have�developed,�have�contracted�with�others�to�develop,�have�outsourced�to�a�single�provider�to�operate�or�have�obtained�through
third-parties�by�way�of�service�agreements.�To�the�extent�that�our�proprietary�technology�or�a�third-party�providers’�technology�does�not�work�as�agreed�to�or�as
expected,�or�if�we�experience�outages�or�unavailability�resulting�from�their�operations�and�the�services�they�provide�to�us,�our�ability�to�efficiently�and�effectively
deliver�services�could�be�adversely�impacted�and�our�business�and�results�of�operations�could�be�adversely�affected.�Similarly,�any�failure�by�our�customers�or
37
partners�to�access�the�technology�that�we�develop�internally�could�have�an�adverse�effect�on�our�business,�results�of�operations�and�financial�condition.�Although
we�make�substantial�investments�in�technology,�there�is�no�guarantee�that�it�will�function�as�intended�once�it�is�placed�into�operation.�Lastly,�given�our�reliance�on
technology,�we�regularly�assess�our�technology�plans,�including�both�platforms�and�technology�infrastructure.�To�the�extent�that�we�conclude�that�certain
technologies�should�be�retired,�that�existing�platforms�should�be�consolidated,�or�that�we�should�change�our�technology�strategies,�we�may�be�required�to�impair�or
accelerate�depreciation�on�certain�assets.�Any�of�these�potential�changes�or�failures�in�our�technology�strategies�may�also�divert�management’s�attention�and�have�a
material�adverse�effect�on�our�business�and�results�of�operations.
Our�business�is�regularly�subject�to�cyberattacks�and�attempted�security�and�privacy�breaches�and�we�may�not�be�able�to�adequately�protect�our�information
systems,�including�the�data�we�collect�about�our�customers,�which�could�subject�us�to�liability�and�damage�our�reputation.
����We�collect�and�store�data�about�our�customers�and�their�fleets,�including�bank�account�information�and�spending�data.�Our�customers�expect�us�to�keep�this
information�in�our�confidence.�In�certain�instances,�the�information�we�collect�includes�social�security�numbers�and�tax�identification�numbers.�As�a�result�of
applicable�laws,�we�are�required�to�take�commercially�reasonable�measures�to�prevent�and�mitigate�the�impact�of�cyberattacks,�as�well�as�the�unauthorized�access,
acquisition,�release�and�use�of�“personally�identifiable�information,”�such�as�social�security�numbers.�While�social�security�numbers�and�tax�identification�numbers
constitute�only�a�part�of�the�data�we�keep,�in�the�event�of�a�security�breach�we�would�be�required�to�determine�the�types�of�information�compromised�and�determine
corrective�actions�and�next�steps�under�applicable�laws,�which�would�require�us�to�expend�capital�and�other�resources�to�address�the�security�breach�and�protect
against�future�breaches.�In�addition,�as�outsourcing,�specialization�of�functions,�third-party�digital�services�and�technology�innovation�within�the�payments�industry
increase�(including�with�respect�to�mobile�technologies,�tokenization,�big�data�and�cloud�storage�solutions),�more�third�parties�are�involved�in�processing�card
transactions�and�there�is�a�risk�the�confidentiality,�integrity,�privacy�and/or�security�of�data�held�by,�or�accessible�to,�third�parties,�including�merchants�that�accept
our�cards,�payment�processors�and�our�business�partners,�may�be�materially�compromised,�which�could�lead�to�unauthorized�transactions�on�our�cards�and�costs
associated�with�responding�to�such�an�incident.�In�addition,�high�profile�data�breaches�could�change�consumer�behaviors,�impact�our�ability�to�access�data�to�make
product�offers�and�credit�decisions,�result�in�legislation�and�additional�regulatory�requirements,�and�increases�in�our�compliance�and�monitoring�costs.�An
increasing�number�of�organizations,�including�large�on-line�and�off-line�merchants�and�businesses,�large�Internet�companies,�financial�institutions,�and�government
institutions,�have�disclosed�breaches�of�their�information�security�systems,�some�of�which�have�involved�sophisticated�and�highly�targeted�attacks,�including�on
portions�of�their�websites�or�infrastructure.�Like�those�companies,�we�too,�are�subject�to�regular�and�repeated�attempts�to�breach�our�information�security
protections.
��������
����The�techniques�used�in�attempts�to�obtain�unauthorized,�improper�or�illegal�access�to�our�systems,�our�data�or�our�customers’�data,�to�degrade�service,�or�to
sabotage�our�systems�are�constantly�evolving,�are�difficult�to�detect�quickly,�and�may�not�be�recognized�until�after�a�successful�penetration�of�our�information
security�systems.�Unauthorized�parties�attempt�to�gain�access�to�our�systems�or�facilities�through�various�means,�including,�among�others,�targeting�our�systems�or
facilities�or�our�third-party�vendors�or�customers,�or�attempting�to�fraudulently�induce�our�employees,�partners,�customers�or�others�into�disclosing�user�names,
passwords,�payment�card�information,�or�other�sensitive�information,�which�may�in�turn�be�used�to�access�our�information�technology�systems.�Certain�efforts�may
be�state-sponsored�and�supported�by�significant�financial�and�technological�resources,�making�them�even�more�difficult�to�detect.�Like�many�companies,�we�are�a
target�for�such�breaches�and�attacks.�Although�we�have�developed�systems�and�processes�that�are�designed�to�protect�our�data�and�customer�data�and�to�prevent
data�loss�and�other�security�breaches,�and�will�continue�to�expend�significant�additional�resources�to�bolster�these�protections,�these�security�measures�cannot
provide�absolute�security.�Our�information�technology�and�infrastructure�may�be�vulnerable�to�successful�cyberattacks�or�security�breaches,�and�third�parties�may
be�able�to�access�our�customers’�personal�or�proprietary�information�and�data�that�are�stored�on�or�accessible�through�those�systems.
����Our�security�measures�may�also�be�breached�due�to�employee�error,�malfeasance,�system�errors�or�vulnerabilities,�or�other�irregularities.�Any�actual�or�perceived
breach�of�our�security�could�interrupt�our�operations;�result�in�our�systems�or�services�being�unavailable;�result�in�improper�disclosure�of�data;�materially�harm�our
reputation�and�brand;�result�in�significant�legal�and�financial�exposure;�lead�to�loss�of�customer�confidence�in,�or�decreased�use�of,�our�products�and�services;�and,
adversely�affect�our�business�and�results�of�operations.�Any�breaches�of�network�or�data�security�at�our�partners,�some�of�whom�maintain�information�about�our
customers,�or�breaches�of�our�customers’�systems�could�have�similar�effects.�In�addition,�our�customers�could�have�vulnerabilities�on�their�own�computer�systems
that�are�entirely�unrelated�to�our�systems,�but�could�mistakenly�attribute�their�own�vulnerabilities�to�us.�While�we�take�commercially�appropriate�steps�to�safeguard
data�used�by�and�contained�on�the�systems�of�our�partners,�customers�and�vendors,�we�cannot�control�all�access�to�those�systems�and�they�are�therefore�subject�to
potential�cyberattacks�and�fraud.
38
����Furthermore,�as�we�have�increased�the�number�of�platforms�as�well�as�the�size�of�our�networks�and�information�systems,�our�reliance�on�these�technologies�have
become�increasingly�important�to�our�operating�activities.�The�potential�negative�impact�that�a�platform,�network�or�information�system�shutdown�may�have�on�our
operating�activities�has�increased.�Shutdowns�may�be�caused�by�cyberattacks�and�unexpected�catastrophic�events�such�as�natural�disasters�or�other�unforeseen
events,�such�as�software�or�hardware�defects�or�cyber-attacks�by�groups�or�individuals.
����Under�the�Financial�Services�Modernization�Act�of�1999,�also�referred�to�as�the�Gramm-Leach-Bliley�Act�or�GLBA,�and�some�state�laws,�we�and�WEX�Bank
are�required�to�maintain�a�comprehensive�written�information�security�program�that�includes�administrative,�technical�and�physical�safeguards�relating�to�consumer
information.�This�requirement�generally�does�not�extend�to�information�about�companies�or�about�individuals�who�obtain�financial�products�or�services�for
business,�commercial,�or�agricultural�purposes.
����The�GLBA�also�requires�us�and�WEX�Bank�to�provide�initial�and�annual�privacy�notices�to�customers�that�describe�in�general�terms�our�information�sharing
practices.�If�we�or�WEX�Bank�intend�to�share�nonpublic�personal�information�about�consumers�with�affiliates�and/or�nonaffiliated�third�parties,�we�and�WEX�Bank
must�provide�customers�with�a�notice�and�a�reasonable�period�of�time�for�each�customer�to�“opt�out”�of�any�such�disclosure.�In�addition�to�U.S.�federal�privacy
laws�with�which�we�must�comply,�states�also�have�adopted�statutes,�regulations�and�other�measures,�such�as�the�CCPA,�governing�the�collection�and�distribution�of
nonpublic�personal�information�about�customers.�In�some�cases,�these�state�measures�are�preempted�by�federal�law,�but�if�not,�we�and�WEX�Bank�must�monitor
and�seek�to�comply�with�individual�state�privacy�laws�in�the�conduct�of�our�businesses.
����When�we�handle�individually�identifiable�health�information,�regulations�issued�under�Health�Insurance�Portability�and�Accountability�Act�of�1996,�or�HIPAA,
and�the�Health�Information�Technology�for�Economic�and�Clinical�Health�Act,�or�HITECH�Act,�our�contracts�with�our�customers,�and�supplemental�state�laws
require�us�to�implement�privacy�and�data�security�measures�and�to�comply�with�breach�notification�requirements.�We�may�be�subject�to�contractual�damages�and
civil�or�criminal�penalties�if�we�are�found�to�violate�these�privacy,�security�and�breach�notification�requirements.�An�amendment�to�the�HITECH�Act�enacted�in
January�2021�will�require�consideration�of�a�company's�implementation�of�recognized�security�standards�in�assessing�administrative�fines�and�penalties�under�the
HIPAA�security�standards.�This�action�will�potentially�heighten�enforcement�risks�if�we�fail�to�adequately�implement�the�recognized�security�standards,�while
mitigating�such�risks�if�the�recognized�measures�are�successfully�implemented.
����Our�efforts�to�comply�with�existing�and�future�health�and�financial�data�laws�and�regulations,�both�in�the�U.S.�and�abroad,�is�costly�and�time-consuming.
Incidents�involving�our�handling�of�this�protected�and�sensitive�information�may�consume�significant�financial�and�managerial�resources�and�may�damage�our
reputation,�which�may�discourage�customers�from�using,�renewing,�or�expanding�their�use�of�our�services.
����Any�security�breach,�inadvertent�transmission�of�information�about�our�customers,�failure�to�comply�with�applicable�breach�notification�and�reporting
requirements,�or�any�violation�of�international,�federal�or�state�privacy�laws�could�expose�us�to�liability�in�excess�of�any�applicable�insurance�policies,�litigation,
regulatory�scrutiny,�and/or�cause�damage�to�our�reputation.�We�may�also�be�required�to�expend�significant�resources�to�implement�additional�data�protection
measures�or�to�modify�the�features�and�functionality�of�our�system�offerings�in�a�way�that�is�less�attractive�to�customers.
Our�Fleet�business�is�dependent�on�technology�systems�and�electronic�communications�networks�managed�by�third�parties,�which�could�result�in�our�inability
to�prevent�service�disruptions.
����Our�ability�to�process�and�authorize�transactions�electronically�depends�on�our�ability�to�electronically�communicate�with�our�fuel�and�vehicle�maintenance
providers�through�point-of-sale�devices�and�electronic�networks�that�are�owned�and�operated�by�third�parties.�The�electronic�communications�networks�upon�which
we�depend�are�often�subject�to�disruptions�of�various�magnitudes�and�durations.�Any�severe�disruption�of�one�or�more�of�these�networks�could�impair�our�ability�to
authorize�transactions�or�collect�information�about�such�transactions,�which,�in�turn,�could�harm�our�reputation�for�dependable�service�and�adversely�affect�our
results�of�operations.�In�addition,�our�ability�to�collect�enhanced�data�relating�to�our�customers’�purchases�may�be�limited�by�the�use�of�older�point-of-sale�devices
by�fuel�and�vehicle�maintenance�providers.�To�the�extent�that�fuel�and�vehicle�maintenance�providers�within�our�network�are�slow�to�adopt�advanced�point-of-sale
devices,�we�may�not�be�able�to�offer�the�latest�services�and�capabilities�that�our�customers�demand.
The�failure�to�maintain�effective�systems�of�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures�could�result�in�the�inability�to
accurately�report�our�financial�results�or�prevent�material�misstatement�due�to�fraud,�which�could�cause�current�and�potential�shareholders�to�lose�confidence
in�our�financial�reporting,�adversely
Risks�Relating�to�Ownership�of�Our�Common�Stock
39
affect�the�trading�price�of�our�securities,�harm�our�operating�results,�trigger�a�default�under�the�2016�Credit�Agreement�or�result�in�regulatory�proceedings
against�us.
����Effective�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures�are�necessary�for�us�to�provide�reliable�financial�reports�and�effectively
prevent�fraud�and�operate�successfully�as�a�public�company.�The�failure�to�develop�or�maintain�effective�internal�control�over�financial�reporting�and�disclosure
controls�and�procedures�could�harm�our�reputation�or�operating�results,�or�cause�us�to�fail�to�meet�our�reporting�obligations,�or�trigger�a�default�under�the�2016
Credit�Agreement.
����Our�financial�reporting�and�disclosure�controls�and�procedures�are�reliant,�in�part,�on�information�we�receive�from�disparate�internal�financial�reporting�systems
and�third�parties�that�supply�information�to�us�regarding�transactions�that�we�process.�In�addition,�because�our�strategy�includes�pursuing�growth�through
acquisitions�of�other�businesses,�which�are�at�different�levels�of�maturity�and�which�may�have�underdeveloped�financial�reporting�systems�and�processes,�we
depend�on�dispersed�financial�systems�to�process,�summarize�and�report�financial�transactions�for�our�distributed�operations.�To�the�extent�these�systems�do�not
properly�transmit�information�to�our�financial�ledgers,�we�could�fail�to�properly�summarize�and�report�financial�results.
����As�we�expand�our�business�operations�domestically�and�internationally,�and�as�we�implement�new�accounting�standards�promulgated�by�the�FASB,�we�will�need
to�maintain�effective�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures.�If�we�are�unable�to�do�so,�our�external�auditors�could�issue�a
qualified�opinion�on�the�effectiveness�of�our�internal�control�over�financial�reporting.
����Ineffective�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures�could�cause�investors�to�lose�confidence�in�our�reported�financial
information,�which�could�have�a�negative�effect�on�the�trading�price�of�our�securities�or�affect�our�ability�to�access�the�capital�markets�and�could�result�in
regulatory�proceedings�against�us�by,�among�others,�the�SEC.
Currently,�we�are�cooperating�with�an�SEC�investigation�arising�from�the�revision�of�our�financial�statements�in�2019�due�to�issues�involving�our�former
Brazil�subsidiary,�including�our�financial�and�disclosure�controls�and�procedures.�At�this�time,�it�is�not�possible�to�predict�the�outcome�of�the�SEC’s�inquiry,
including�whether�or�not�any�proceeding�will�be�initiated�or,�if�so,�when�or�how�the�matter�will�be�resolved.
Material�weaknesses�in�internal�control�over�financial�reporting�have�in�the�past�and�could�in�the�future�lead�to�deficiencies�in�the�preparation�of�financial
statements.�Deficiencies�in�the�preparation�of�financial�statements,�could�lead�to�litigation�claims�against�us.�The�defense�of�any�such�claims�may�cause�the
diversion�of�management’s�attention�and�resources,�and�we�may�be�required�to�pay�damages�if�any�such�claims�or�proceedings�are�not�resolved�in�our�favor.�Any
litigation,�even�if�resolved�in�our�favor,�could�cause�us�to�incur�significant�legal�and�other�expenses.�Such�events�could�also�affect�our�ability�to�raise�capital�to�fund
future�business�initiatives.
Provisions�in�our�charter�documents,�Delaware�law,�applicable�banking�law�and�the�Convertible�Notes�may�delay�or�prevent�our�acquisition�by�a�third�party.
Our�certificate�of�incorporation�and�by-laws�contain�several�provisions�that�may�make�it�more�difficult�for�a�third�party�to�acquire�control�of�us�without
the�approval�of�our�board�of�directors.�These�provisions�include,�among�other�things,�a�classified�board�of�directors,�the�elimination�of�stockholder�action�by
written�consent,�advance�notice�for�raising�business�or�making�nominations�at�meetings�of�stockholders�and�“blank�check”�preferred�stock.�Blank�check�preferred
stock�enables�our�board�of�directors,�without�stockholder�approval,�to�designate�and�issue�additional�series�of�preferred�stock�with�such�special�dividend,
liquidation,�conversion,�voting�or�other�rights,�including�the�right�to�issue�convertible�securities�with�no�limitations�on�conversion,�and�rights�to�dividends�and
proceeds�in�a�liquidation�that�are�senior�to�the�common�stock,�as�our�board�of�directors�may�determine.�In�addition,�under�the�indenture�for�the�Convertible�Notes,
upon�the�occurrence�of�a�“fundamental�change”�(as�defined�in�the�indenture,�and�which�includes,�among�other�things,�certain�change�of�control�transactions�with
respect�to�the�Company),�holders�may�require�the�Company�to�repurchase�all�or�a�portion�of�their�Convertible�Notes�at�a�repurchase�price�equal�to�the�sum�of�(i)
105%�of�then�accreted�principal�amount�of�the�Convertible�Notes�to�be�repurchased,�plus�accrued�interest�and�(ii)�the�sum�of�the�present�values�of�the�scheduled
remaining�payments�of�interest�had�such�Convertible�Notes�remained�outstanding�through�maturity.�These�provisions�may�make�it�more�difficult�or�expensive�for�a
third�party�to�acquire�a�majority�of�our�outstanding�voting�common�stock.�We�also�are�subject�to�certain�provisions�of�Delaware�law,�which�could�delay,�deter�or
prevent�us�from�entering�into�an�acquisition,�including�Section�203�of�the�Delaware�General�Corporation�Law,�which�prohibits�a�Delaware�corporation�from
engaging�in�a�business�combination�with�an�interested�stockholder�unless�specific�conditions�are�met.�These�provisions�also�may�delay,�prevent�or�deter�a�merger,
acquisition,�tender�offer,�proxy�contest�or�other�transaction�that�might�otherwise�result�in�our�stockholders�receiving�a�premium�over�the�market�price�for�their
common�stock.
40
In�addition,�as�owners�of�a�Utah�industrial�bank,�we�are�subject�to�Utah�banking�regulations�that�require�any�entity�that�controls�10�percent�or�more�of�our
common�stock�to�obtain�the�approval�of�Utah�banking�authorities�prior�to�consummating�any�acquisition�of�shares.�Federal�law�also�prohibits�a�person�or�group�of
persons�from�acquiring�“control”�of�us�unless�the�FDIC�has�been�notified�and�has�not�objected�to�the�transaction.�Under�the�FDIC’s�regulations,�the�acquisition�of
10�percent�or�more�of�a�class�of�our�voting�stock�would�generally�create�a�rebuttable�presumption�of�control.�In�addition,�our�certificate�of�incorporation�requires
that�if�any�stockholder�fails�to�provide�us�with�satisfactory�evidence�that�any�required�approvals�have�been�obtained,�we�may,�or�will�if�required�by�state�or�federal
regulators,�restrict�such�stockholder’s�ability�to�vote�such�shares�with�respect�to�any�matter�subject�to�a�vote�of�our�stockholders.�These�regulatory�requirements
may�preclude�or�delay�the�purchase�of�a�relatively�large�ownership�stake�by�potential�investors.�Further,�as�a�result�of�these�regulatory�requirements,�certain
existing�and�potential�stockholders�may�choose�not�to�invest�or�invest�further�in�our�stock.�This�could�limit�the�number�of�potential�investors�and�impact�our�ability
to�attract�further�funds.
The�issuance�by�us�of�additional�shares�of�common�stock�or�equity-linked�securities,�including�in�connection�with�conversions�of�our�outstanding�Convertible
Notes,�may�cause�dilution�to�our�stockholders.
To�the�extent�that�we�issue�additional�shares�of�common�stock�or�equity-linked�securities,�the�ownership�interests�of�our�stockholders�may�be�diluted.�In
July�2020,�we�issued�$310.0�million�in�initial�aggregate�principal�amount�of�the�Convertible�Notes�and�$90.0�million�of�our�common�stock�to�an�affiliate�of
Warburg�Pincus�in�a�private�placement.�The�Convertible�Notes�are�convertible�by�the�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase,
based�upon�an�initial�conversion�price�of�$200�per�share�of�common�stock.�We�may�settle�conversions�of�Convertible�Notes,�at�our�election,�in�cash,�shares�of
common�stock,�or�a�combination�of�cash�and�shares�of�common�stock.�The�number�of�shares�issuable�upon�conversion�of�the�Convertible�Notes�is�subject�to
increase,�including�as�a�result�of�our�ability�to�elect�to�satisfy�interest�obligations�under�the�Convertible�Notes�by�increasing�the�principal�amount�of�the�Convertible
Notes�rather�than�paying�cash�interest�and�as�a�result�of�adjustments�to�the�conversion�price�under�the�Convertible�Notes�in�connection�with�certain�events.�The
conversion�price�is�subject�to�adjustments�customary�for�convertible�debt�securities�and�is�also�subject�to�a�weighted�average�adjustment�in�the�event�of�issuances
of�equity�and�equity�linked�securities�by�the�Company�at�prices�below�the�then�applicable�conversion�price�for�the�Convertible�Notes�or�the�then�market�price�of�the
Company’s�common�stock,�subject�to�certain�exceptions,�including�exceptions�for�underwritten�offerings,�Rule�144A�offerings,�private�placements�at�discounts�not
exceeding�a�specified�amount,�issuances�as�acquisition�consideration�and�equity�compensation�related�issuances.�To�the�extent�we�issue�shares�of�our�common
stock�in�satisfaction�of�our�conversion�obligations�under�the�Convertible�Notes,�our�stockholders�will�experience�dilution.�Our�ability�to�settle�conversions�of
Convertible�Notes�in�cash�may�be�limited,�including�as�a�result�of�our�available�cash�resources�at�the�time�of�any�conversions�and�as�a�result�of�restrictions�in�our
then�existing�debt�agreements�on�our�ability�to�satisfy�conversions�in�cash�(for�example,�pursuant�to�restricted�payment�covenants�similar�to�those�contained�in�our
existing�debt�agreements).
In�addition�to�potential�dilution�that�may�result�from�the�issuance�of�shares�of�common�stock�pursuant�to�the�terms�of�the�Convertible�Notes,�our
stockholders�may�also�experience�additional�dilution�as�a�result�of�other�future�issuances�by�us�of�common�stock�or�equity-linked�securities,�whether�issued�in
financing�transactions,�in�connection�with�acquisitions,�pursuant�to�equity�compensation�plans�or�otherwise.�Pursuant�to�the�purchase�agreement�entered�into�with
Warburg�Pincus�in�connection�with�the�issuance�of�the�Convertible�Notes,�we�provided�Warburg�Pincus�with�certain�contractual�preemptive�rights�allowing�it�to
maintain�its�proportionate�equity�interest�on�an�as-converted�basis,�subject�to�certain�exceptions,�in�connection�with�certain�future�issuances�by�us�of�common�stock
or�other�equity-linked�securities.
The�sale�or�other�dispositions�of�significant�amounts�of�our�outstanding�common�stock�into�the�public�market�in�the�future,�or�the�perception�that�sales�or
other�dispositions�could�occur,�could�adversely�impact�the�market�price�of�our�common�stock.
In�connection�with�our�July�2020�private�placement�with�Warburg�Pincus,�we�filed�a�registration�statement�registering�under�the�Securities�Act�of�1933,�as
amended,�the�Convertible�Notes�and�the�shares�of�common�stock�issued�in�the�private�placement�and�issuable�pursuant�to�conversions�of�the�Convertible�Notes.
The�purchase�agreement�for�the�Convertible�Notes�provides�that�Warburg�Pincus�is�restricted�from�transferring�the�Convertible�Notes�or�shares�of�common�stock
issued�in�the�private�placement�or�upon�conversion�of�the�Convertible�Notes�until�July�1,�2021,�subject�to�certain�exceptions�(including,�among�other�exceptions,
transfers�pursuant�to�pledge�arrangements�that�may�be�entered�into�by�Warburg�Pincus�in�connection�with�certain�financing�arrangements).�After�July�1,�2021,
transfers�by�Warburg�Pincus�generally�will�not�be�restricted,�subject�to�certain�limitations�on�transfers�to�certain�categories�of�transferees.�The�Company�also�has
the�ability�to�waive�the�transfer�restrictions�under�the�purchase�agreement�prior�to�their�expiration�and�may�elect�to�do�so�in�the�future�and,�as�noted�above,�certain
transfers�may�be�made�by�Warburg�Pincus�prior�to�July�1,�2021.�The�sale�or�other�dispositions�of�a�substantial�number�of�our�shares�by�Warburg�Pincus�or�other
holders�of�our�common�stock�or�the�Convertible�Notes,�or�the�market�perception�that�such�sales�or�other�dispositions�may�occur,�could�have�an�adverse�impact�on
the�price�of�our�common�stock.
41
ITEM�1B.�UNRESOLVED�STAFF�COMMENTS
None.
ITEM�2.��PROPERTIES
All�of�our�facilities�are�leased.�Our�corporate�headquarters,�located�in�Portland,�Maine,�consists�of�90,000�square�feet,�pursuant�to�a�lease�that�expires�in
2034.�We�lease�an�additional�39,595�square�feet�of�office�space�in�Portland,�Maine.�We�lease�49,418�square�feet�and�179,144�square�feet�of�space�in�Minnesota�and
North�Dakota,�respectively,�primarily�for�WEX�Health�operations.�These�leases�expire�at�various�dates�between�2021�and�2035.�We�also�lease�facilities�in�various
other�locations�in�the�United�States�and�around�the�world.
ITEM�3.�LEGAL�PROCEEDINGS
As�of�the�date�of�this�filing,�we�are�not�involved�in�any�material�legal�proceedings.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated
separate�legal�proceedings�against�the�Company�by�filing�claims�in�the�High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom.�The�legal�proceedings
denied�that�there�had�been�a�Material�Adverse�Effect�(as�defined�in�the�original�purchase�agreement�between�WEX,�eNett�and�Optal,�among�others)�and�alleged
that�the�Company�has�threatened�to�breach�its�obligations�under�the�terms�of�the�purchase�agreement.�The�claimants�sought�a�declaration�that�no�Material�Adverse
Effect �had�occurred �within�the �meaning �of �the �purchase �agreement �and �ordered�for �specific �performance�of �WEX’s �obligations �under �the �purchase �agreement.
From�September�21,�2020�through�September�29,�2020,�a�London�court�held�a�trial�of�certain�preliminary�issues,�including,�among�other�things,�the�determination
of�the�industry�in�which�eNett�and�Optal�operate�and�of�the�other�participants�in�such�industry,�in�each�case�for�purposes�of�interpreting�the�definition�of�Material
Adverse�Effect�in�the�purchase�agreement.�On�October�12,�2020,�the�Court�handed�down�its�judgment,�which�concluded,�among�other�things,�that�Optal�and�eNett
operate �in �the�payments �industry �and�the �B2B�payments �industry �and�that, �for�the �purpose�of �the �definition�of �the�Material�Adverse �Effect�clause, �the �relevant
industry�is�the�B2B�payments�industry.�The�Court�found�that�there�was�no�travel�payments�industry,�as�argued�for�by�eNett�and�Optal.�This�finding�meant�that�when
determining�whether�eNett�or�Optal�have�been�disproportionately�impacted�by�COVID-19,�a�comparison�would�be�made�against�other�B2B�payments�companies.
The�Company�and�the�claimants�each�sought�permission�to�appeal�certain�portions�of�the�Court’s�judgment.
On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�with�eNett,�Optal�and�the�other�parties�thereto,�providing
for, �among �other �things, �(i) �the �dismissal �with �prejudice �of �the �legal �proceedings �and �appeals �described �above, �(ii) �the �amendment �of �the �original �purchase
agreement �and�(iii) �the�release �of�all �claims�capable �of�arising �out�of,�or �in�any �way�connected�with �or�relating �to�the �COVID-19�pandemic,�but �excluding�any
claims�arising�under�the�amended�purchase�agreement.�The�amended�purchase�agreement�provided�for,�among�other�things,�a�reduction�of�the�aggregate�purchase
price�for�the�acquisition�to�$577.5�million�(subject�to�certain�adjustments)�consisting�entirely�of�cash,�which�the�Company�paid�with�cash�on�hand,�and�the�closing
of�the�acquisition�occurring�concurrent�with�the�execution�of�the�Settlement�Deed,�which�occurred�on�December�15,�2020.
We�were�not�involved�in�any�other�material�legal�proceedings�that�were�terminated�during�the�fourth�quarter�of�2020.�However,�from�time�to�time,�we�are
subject �to �legal �proceedings �and �claims �in �the �ordinary �course �of �business, �including �but �not �limited �to: �commercial �disputes; �contract �disputes; �employment
litigation;�disputes�regarding�our�intellectual�property�rights;�alleged�infringement�or�misappropriation�by�us�of�intellectual�property�rights�of�others;�and,�matters
relating �to �our �compliance �with �applicable �laws �and �regulations. �In �addition, �we �are �cooperating �with �an �SEC �investigation �arising �from �the �revision �of �our
financial�statements�as�noted�in�our�Annual�Report�on�Form�10–K/A�for�the�year�ended�December�31,�2018�due�to�issues�involving�our�former�Brazil�subsidiary,
which�was�sold�in�September�2020,�including�financial�and�disclosure�controls�and�procedures.�As�of�the�date�of�this�filing,�the�current�estimate�of�a�reasonably
possible�loss�contingency�from�these�matters�is�not�material�to�the�Company’s�consolidated�financial�position,�results�of�operations,�cash�flows�or�liquidity.
ITEM�4.�MINE�SAFETY�DISCLOSURES
Not�applicable.
42
PART�II
ITEM�5.�MARKET�FOR�REGISTRANT’S�COMMON�EQUITY,�RELATED�STOCKHOLDER�MATTERS�AND�ISSUER�PURCHASES�OF�EQUITY
SECURITIES
Market�Information
The �principal�market�for �the�Company’s�common�stock�is�the�NYSE�and�our�ticker �symbol�is�WEX.�As�of �February�22,�2021,�the�closing �price�of�our
common�stock�was�$226.82�per�share,�there�were�44,190,995�shares�of�our�common�stock�outstanding�and�there�were�7�holders�of�record�of�our�common�stock.
The�actual�number�of�stockholders�is�greater�than�this�number�of�record�holders�and�includes�stockholders�who�are�beneficial�owners�but�whose�shares�are�held�in
street�name�by�brokers�or�nominees.
Dividends
The �Company �has �not �declared �any �dividends �on �its �common�stock �since �it �commenced �trading �on �the �NYSE �on �February �16, �2005. �The �timing�and
amount �of �future �dividends, �if �any, �will �be �(i) �dependent �upon �the �Company’s �results �of �operations, �financial �condition, �cash �requirements �and �other �relevant
factors; �(ii) �subject �to �the �discretion �of �the �Board �of �Directors �of �the �Company; �and �(iii) �payable �only �out �of �the �Company’s �surplus �or �current �net �profits �in
accordance�with�the�General�Corporation�Law�of�the�State�of�Delaware.
The �Company �has �certain �restrictions �on �the �dividends �it �may �pay �under �its �revolving �credit �agreement, �including �pro �forma �compliance �with �a
consolidated �leverage �ratio, �testing �consolidated �funded �indebtedness �(excluding �(i) �up �to �$400 �million �of �consolidated �funded �indebtedness �due �to �permitted
securitization�transactions�and�(ii)�the�amount�of�consolidated�funded�indebtedness�constituting�the�non-recourse�portion�of�permitted�factoring�transactions,�and
netting�up�to�(x)�with�respect�to�calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15,�2021,�an�unlimited�amount,�and�(y)
with�respect�to�calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0�million,�of�unrestricted�cash�and�cash�equivalents
denominated�in�U.S.�dollars�or�other�lawful�currencies�(provided�that�such�other�currencies�are�readily�convertible�to,�and�deliverable�in,�U.S.�dollars)�held�by�the
Company�and�its�subsidiaries)�to�consolidated�EBITDA�of�less�than�2.50:1.00�for�the�most�recent�period�of�four�fiscal�quarters.
Share�Repurchases
On�September�20,�2017,�our�board�of�directors�approved�a�share�repurchase�program�authorizing�the�purchase�of�up�to�$150�million�of�our�common�stock,
expiring�in�September�2021.�Share�repurchases�are�to�be�made�on�the�open�market�and�can�be�commenced�or�suspended�at�any�time.
We �did�not �purchase �any �shares �of �our �common�stock �during �the �year �ended �December �31, �2020.�The �dollar �value �of �shares �that �were �available �to �be
purchased�under�our�share�repurchase�program�was�$150�million�as�of�December�31,�2020.
ITEM�6.�RESERVED
43
ITEM�7.�MANAGEMENT’S�DISCUSSION�AND�ANALYSIS�OF�FINANCIAL�CONDITION�AND�RESULTS�OF�OPERATIONS
����The �discussion�below�focuses �on�the�factors �affecting�our�consolidated �results�of �operations�for�the �years�ended�December �31,�2020�and�2019 �and�financial
condition�at�December�31,�2020�and�2019�and,�where�appropriate,�factors�that�may�affect�our�future�financial�performance,�unless�stated�otherwise.�This�discussion
should�be�read�in�conjunction�with�the�consolidated�financial�statements,�notes�to�the�consolidated�financial�statements�and�selected�consolidated�financial�data.
Our�Management’s�Discussion�and�Analysis�of�Financial�Condition�and�Results�of�Operations,�or�MD&A,�is�presented�in�the�following�sections:
•
•
•
•
•
•
•
•
2020�Highlights�and�Year�in�Review
Subsequent�Events
Recent�Events
Segments
Results�of�Operations
Application�of�Critical�Accounting�Policies�and�Estimates
Recently�Adopted�and�New�Accounting�Standards
Liquidity,�Capital�Resources�and�Cash�Flows
2020�Highlights�and�Year�in�Review
����Our�Company’s�management�regularly�monitors�key�performance�indicators�to�measure�our�current�performance�and�project�future�performance.�A�recurring,
comprehensive �list �is �included �by �segment �within �the �Results �of �Operations �section �of �this �Management's �Discussion �and �Analysis. �Management �believes �the
following�key�performance�indicators�by�segment�were�important�to�our�overall�performance�in�2020�as�they�provide�enhanced�information�and�data�underlying
our�financial�results.�See�“COVID-19�Pandemic�Response�and�Impact”�included�in�“Recent�Events”�below�for�further�information�regarding�how�COVID-19�has
impacted�the�Company’s�segments.
Key�Performance�Indicators
Fleet�Solutions
•
•
•
•
Average �number �of �vehicles �serviced �increased �9 �percent �from �2019 �to �15.3 �million �for �2020, �primarily �related �to �growth �in �our �worldwide
customer�base.�As�of�December�31,�2020,�vehicles�serviced�totaled�15.8�million.
The�average�U.S.�price�per�gallon�of�fuel�was�$2.29�during�2020,�an�18�percent�decrease�as�compared�to�2019.
Fuel�transactions�processed�decreased�6�percent�from�2019�to�576.0�million�in�2020.�We�have�seen�strong�over-the-road�trucking�volumes,�with
offsetting�significant�volume�declines�in�small�to�mid-size�North�American�and�international�fleets�as�a�result�of�the�impacts�of�COVID-19.
Payment �processing �transactions, �which �represents �the �total �number �of �purchases �made �by �fleets �that�have �a �payment �processing �relationship
with�WEX,�decreased�8�percent�from�2019�to�463.9�million�in�2020.
Travel�and�Corporate�Solutions
•
Payment �solutions �purchase �volume, �which �represents �the �total �dollar �value �of �all �WEX �issued �transactions �that �use �WEX �corporate �card
products �and�virtual�card�products,�was�$20.9�billion�in�2020,�a�47�percent�decrease �from�2019,�driven�primarily�by�the�decline�in�worldwide
travel �and �tourism �as �a �result �of �the �COVID-19 �pandemic. �This �decrease �was �partly �offset �by �improved �volumes �in �our �corporate �payments
portion�of�the�segment.
Health�and�Employee�Benefit�Solutions
•
Average�number�of�SaaS�accounts,�which�represents�the�number�of�active�Consumer-Directed�Health,�COBRA,�and�billing�accounts�on�our�U.S.
SaaS�platforms,�grew�12%�to�14.5�million�in�2020�from�12.9�million�in�2019.
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•
Purchase�volume,�which�represents�the�total�US�dollar�value�of�all�transactions�where�interchange�is�earned�by�WEX,�decreased�$400.9�million
in�2020,�as�compared�to�2019,�driven�primarily�by�the�impact�of�COVID-19�on�the�segment.
Other�Performance�Metrics
•
Credit�loss�expense�in�the�Fleet�Solutions�segment�decreased�5�percent�to�$56.6�million�during�2020,�as�compared�to�$59.8�million�during�2019.
Our�credit�losses�were�16.7�basis�points�of�fuel�expenditures�for�2020,�as�compared�to�15.1�basis�points�of�fuel�expenditures�for�2019,�an�increase
of�11�percent�primarily�due�to�higher�losses�in�the�small�fleet�over-the-road�business�as�compared�to�2019.
• We�recorded�an�income�tax�benefit�of�$20.6�million�for�2020�as�compared�to�an�income�tax�provision�of�$61.2�million�for�2019.�Our�effective
tax�rate�was�a�6.8�percent�benefit�for�2020�as�compared�to�a�28.3�percent�provision�for�2019.�The�Company's�effective�tax�rate�for�the�year�ended
December�31,�2020�was�impacted�by�no�income�tax�benefit�being�recorded�for�i)�operating�losses�generated�from�WEX�Latin�America�during
the�current�year�through�the�date�of�sale,�ii)�the�loss�on�sale�of�WEX�Latin�America,�and�iii)�the�legal�settlement.�These�losses�were�included�as
part�of�the�current�year�loss�and�determined�to�be�either�non-deductible�for�income�tax�purposes�or�required�a�valuation�allowance.
Subsequent�Events
HSA�Purchase�Agreement
On�February�11,�2021,�the�Company�entered�into�an�asset�purchase�agreement�with�Bell�Bank�to�acquire�certain�HSA�assets,�including�the�custodial�rights
for�certain�HSAs�from�Bell�Bank's�HealthcareBank�division,�the�custodian�bank�for�customers�of�the�U.S.�Health�business.�We�believe�the�acquisition�will�allow
the�Company�to�better�capture�the�economics�from�those�HSAs,�leverage�our�investments�to�provide�customers�with�market-leading�HSA�solutions,�and�align�with
our�growth�strategy.�The�transaction�is�expected�to�close�in�the�second�quarter�of�2021,�subject�to�regulatory�approvals�and�other�customary�closing�conditions.
Pursuant �to �the �purchase �agreement, �the �Company �will �pay �Bell �Bank �initial �cash �consideration �of �approximately �$200 �million, �and �two �additional
deferred�cash�payments�of�$25�million�in�July�2023�and�January�2024,�contingent�upon�closing�of�the�transaction.�The�agreement�also�includes�potential�additional
consideration�payable,�over�the�ten�years�subsequent�to�the�closing�date,�that�is�contingent�on,�and�calculated�based�on,�any�future�increases�in�the�Federal�Funds
rate. �Potential �additional �consideration �may �not �exceed �$225 �million �in �the �aggregate �over �the �ten �year �period �and �will �not �adversely �impact �the �Company’s
adjusted�net�income�or�financial�position�as�net�revenues�earned�on�the�acquired�HSA�assets�will�increase�in�the�event�the�Federal�Funds�rate�increases�in�the�future.
Notes�Redemption�Notice
On�February�11,�2021,�the�Company�provided�irrevocable�notice�to�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.,�the�trustee�for�the�Notes,�of�its
intent�to�redeem�its�outstanding�$400�million�4.75%�Senior�Secured�Notes�due�February�1,�2023�on�March�15,�2021.�The�redemption�price�of�the�Notes�is�$400
million�plus�accrued�and�unpaid�interest�through�the�proposed�redemption�date.�The�redemption�is�expected�to�be�funded�from�cash.
Recent�Events
2020�Acquisition/Legal�Settlement
On �January �24, �2020, �the �Company �entered �into �a �purchase �agreement �to �purchase �eNett, �a �leading �provider �of �B2B �payment �solutions �to �the �travel
industry,�and�Optal,�a�company�that�specializes�in�optimizing�B2B�payments�transactions,�subject�to�certain�working�capital�and�other�adjustments�as�described�in
the�purchase�agreement.�The�parties’�obligations�to�consummate�the�acquisition�were�subject�to�customary�closing�conditions,�including�the�absence�of�a�Material
Adverse�Effect�(as�defined�in�the�purchase�agreement�between�WEX,�eNett�and�Optal,�among�others).�The�Company�subsequently�concluded�that�the�COVID-19
pandemic�and�conditions�arising�in�connection�with�it�had�a�Material�Adverse�Effect�on�the�businesses,�which�was�disproportionate�to�the�effect�on�others�in�the
relevant�industry.�Because�of�this�Material�Adverse�Effect,�WEX�formally�advised�eNett�and�Optal�on�May�4,�2020�that�it�was�not�required�to�close�the�transaction
pursuant�to�the�terms�of�the�original�purchase�agreement.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated�separate�legal�proceedings�in�the
High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom�against�the�Company�seeking�a�declaration�that�no
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Material �Adverse �Effect �had �occurred �and �an �order �for �specific �performance �of �WEX's �obligations �under �the �purchase �agreement. �From �September �21, �2020
through�September�29,�2020,�a�London�court�held�a�trial�of�certain�preliminary�issues,�and�handed�down�its�judgment�on�October�12,�2020.�The�Company�and�the
claimants�each�sought�permission�to�appeal�certain�portions�of�the�Court’s�judgment.
On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�with�eNett,�Optal�and�the�other�parties�thereto,�providing
for�among�other�things,�(i)�the�dismissal�with�prejudice�of�the�legal�proceedings�and�appeals�described�above,�(ii)�amendment�of�the�original�purchase�agreement
and�(iii)�the�release�of�all�claims�capable�of�arising�out�of,�or�in�any�way�connected�with�or�relating�to�the�COVID-19�pandemic,�but�excluding�any�claims�arising
under�the�amended�purchase�agreement.�The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the�Settlement�Deed�on�December�15,�2020.�The
Amended �Purchase �Agreement �provided �for, �among �other �things, �a �reduction �of �the �aggregate �purchase �price �for �the �acquisition �to �$577.5 �million �(subject �to
certain�working�capital�and�other�adjustments�as�described�in�the�Amended�Purchase�Agreement,�which�resulted�in�a�total�cash�payment�of�$615.4�million),�which
the�Company�paid�entirely�with�cash�on�hand.�The�Company�determined�the�aggregate�purchase�price�represents�consideration�paid�for�the�businesses�acquired�and
for�the�legal�settlement�described�above.�The�preliminary�fair�value�of�the�businesses�acquired�was�estimated�to�be�$415.0�million�using�a�discounted�cash�flow
analysis�and�guideline�transaction�method.�Since�the�Company�was�not�able�to�reliably�estimate�the�fair�value�of�the�legal�settlement,�the�residual�value�of�$162.5
million�has �been�allocated �to�the �legal�settlement, �which �has�been �included�in �legal�settlement �expense �in�the �consolidated�statement �of�operations �for �the�year
ended�December�31,�2020.
Private�Placement
On �July�1, �2020, �the �Company �closed �on �a �private �placement �with �an �affiliate �of �Warburg �Pincus �LLC, �pursuant �to �which �the �Company �issued �$310
million �in �aggregate �principal �amount �of �its �senior �Convertible �Notes �due �2027 �and �577,254 �shares �of �the �Company’s �common �stock, �with �gross �proceeds �in
respect�of�the�common�stock�of�$90�million,�reflecting�a�purchase�price�of�$155.91�per�share.�The�issuance�of�the�Convertible�Notes�provided�the�Company�with
net�proceeds�of�approximately�$299�million�after�original�issue�discount.
The�Convertible�Notes,�which�are�unsecured,�have�a�seven-year�term�and�mature�on�July�15,�2027,�unless�either�converted,�repurchased�or�redeemed.�The
Convertible�Notes�bear �interest�at �a�rate�of �6.5%�per�annum, �payable�semi-annually �in�arrears,�with �the�first �interest�payment �due�January�15, �2021.�At�WEX's
option,�interest�is�either�payable�in�cash,�through�accretion�to�the�principal�amount�of�the�Convertible�Notes,�or�a�combination�of�cash�and�accretion.
The�Convertible�Notes�may�be�converted�at�any�time�at�the�option�of�holders�of�the�Convertible�Notes,�based�on�an�initial�conversion�price�of�$200�per
share,�subject�to�certain�adjustments.�Conversions�of�Convertible�Notes�may�be�settled�in�shares�of�WEX�common�stock,�cash,�or�a�combination�thereof�at�WEX's
election.�WEX�will�have�the�right,�at�any�time�following�the�third�anniversary�of�closing,�to�redeem�the�Convertible�Notes�in�whole�or�in�part�if�the�closing�price�of
WEX's�common�stock�is�at�least�200%�of�the�conversion�price�of�the�Convertible�Notes�for�20�out�of�30�days�prior�to�the�time�WEX�delivers�a�redemption�notice
(including�at�least�one�of�the�five�trading�days�immediately�preceding�the�last�day�of�such�30�day�period),�subject�to�the�right�of�holders�of�the�Convertible�Notes�to
convert �their �Convertible �Notes �prior �to �the �redemption �date. �In �the �event �of �certain �fundamental �change �transactions, �including �certain �change �of �control
transactions�and�delisting�events,�holders�of�Convertible�Notes�will�have�the�right�to�require�WEX�to�repurchase�its�Convertible�Notes�in�accordance�with�the�terms
of�the �Convertible�Notes�at�a�repurchase�price�equal�to�the�sum�of�(i)�105%�of�then�accreted�principal�amount�of�the�Convertible�Notes�to�be�repurchased,�plus
accrued�interest,�and�(ii)�the�sum�of�the�present�values�of�the�scheduled�remaining�payments�of�interest�had�such�notes�remained�outstanding�through�the�maturity
date�of�the�Convertible�Notes.
The �indenture �includes �a �debt �incurrence �covenant �that �restricts �the �Company �from �incurring �certain �indebtedness, �including �disqualified �stock �and
preferred �stock �issued�by �the�Company �or�its �subsidiaries, �subject�to �customary�exceptions, �including �if,�after �giving�effect �to �any �such�proposed �incurrence �or
issuance,�and�the�receipt�and�application�of�the�proceeds�therefrom,�the�ratio�of�(x)�the�Company’s�consolidated�EBITDA�for�the�most�recent�four�fiscal�quarters
for�which�financial�statements�are�available,�to�(y)�the�Company’s�consolidated�fixed�charges�for�such�period�would�be�greater�than�1.5:1.0.�The�indenture�contains
other�customary�terms�and�covenants,�including�customary�events�of�default.�The�Convertible�Notes�are�the�Company’s�general�senior�unsecured�obligations�and
rank�equally�with�all�of�the�Company’s�existing�and�future�senior�indebtedness.�The�Convertible�Notes�are�effectively�subordinated�to�all�of�the�Company’s�secured
indebtedness,�including�borrowings�under�the�2016�Credit�Agreement,�as�amended,�to�the�extent�of�the�value�of�the�collateral�securing�such�indebtedness,�and�are
structurally�subordinated�to�all�existing�and�future�indebtedness�and�other�liabilities�of�the�Company’s�subsidiaries.
Sale�of�Subsidiary
On�September�30,�2020,�the�Company�sold�its�wholly-owned�subsidiary�UNIK�S.A.�Under�the�conditions�of�the�sale
46
agreement,�the�Company�was�required�to�make�a�payment�to�the�buyer.�The�Company�wrote-off�the�associated�assets�and�liabilities�of�this�entity�as�of�the�date�of
sale�and�recorded�a�pre-tax�loss�on�sale�of�subsidiary�of�$46.4�million�during�the�year�ended�December�31,�2020.�The�loss�on�sale�of�subsidiary�is�not�deductible�for
tax�purposes.
COVID-19�Pandemic�Response�and�Impact
A�novel�strain�of�coronavirus�(COVID-19)�was �first�identified�in�Wuhan, �China�in�January�2020,�and�subsequently �declared�a�global�pandemic �by�the
World�Health�Organization�on�March�11,�2020.�During�the�first�quarter�of�2020,�the�Company�took�a�number�of�precautionary�steps�to�safeguard�its�business�and
employees �from �the �effects �of �COVID-19 �including �restricting �business �travel, �temporarily �closing �offices �and �canceling �participation �in �various �industry
events.�Additionally,�in�an�effort�to�rescale�the�business�and�safeguard�shareholder�value�in�this�unprecedented�operating�environment,�we�took�certain�measures�to
both �permanently �reduce �headcount �and �furlough �employees �across �our �worldwide �offices �where �necessary. �Aside �from�the �employee �furloughs, �which �ended
during�the�third�quarter�of�2020,�the�precautionary�steps�described�above�largely�remain�in�force�as�the�Company�continues�to�closely�track�and�assess�the�evolving
effect�of�the�pandemic.�The�Company�is�actively�managing�its�responses�in�collaboration�with�its�employees,�customers�and�suppliers.
The�spread�of�COVID-19,�and�conditions�arising�in�connection�with�it,�including�restrictions�on�businesses�and�individuals�and�wider�changes�in�business
and �customer �behavior, �had �a �negative �impact �on�the �Company’s �businesses �during �the �year�ended �December �31, �2020.�While �we�have�seen �varying �levels �of
improvement�since�the�lowest�volume�levels,�we�expect�a�slow�and�steady�volume�recovery�will�continue�across�our�business.�Specific�to�our�Travel�and�Corporate
Solutions�segment,�which�has�been�the �most�severely�impacted,�while�volumes �are�slowly�improving�as�leisure �travel�begins�to�slowly�improve �from�its�lowest
levels,�we�believe�that�COVID-19�has�structurally�changed�the�travel�market�and�we�expect�these�disruptions�to�have�a�continuing�impact�on�the�Company’s�Travel
and�Corporate�Solutions�segment�operating�results.�However,�the�pace�and�breadth�of�the�vaccine�rollout�as�well�as�the�potential�for�government�stimulus�will�be
critical�factors�in�determining�how�quickly�our�existing�customer�activity�across�all�three�segments�will�rebound.�Given�the�current�pace�of�vaccine�distribution�as
well�as�our�own�customer�mix,�we�believe�customer�activity�will�increase�in�the�second�half�of�the�year,�but�likely�more�fully�in�the�fourth�quarter.�The�following
describes�these�impacts�by�reportable�segment:
Fleet�Solutions�—�The�Fleet�Solutions�segment�has�seen�both�positive�and�negative�impacts�as�a�result�of�the�world's�response�to�COVID-19,�with�the
negative �impacts �significantly �outweighing �the �positive. �Firstly, �2020 �revenue �has �significantly �decreased �as �a �result �of �lower �transaction �prices �driven �by �a
decrease�in�the�average�U.S.�price�per�gallon�of�fuel�as�compared�to�2019.�Volumes�have�also�negatively�impacted�the�segment's�results�during�2020�as�compared
to �2019 �due �to �lower �volumes �in �the �North �American �fleet �and �international �portions �of �the �business. �Partly �offsetting �these �negatively �impacted �areas �of �the
business�were�volume�trends�in�our�over-the-road�trucking�business,�which�have�increased�relative�to�prior�year�due�to�increased�shipping�to�individuals�during�the
U.S.�lockdown,�but�represent�a�smaller�portion�of�the�overall�segment.
Travel�and�Corporate�Solutions�—�Of�the�Company's�segments,�Travel�and�Corporate�Solutions�has�been�the�most�severely�impacted�by�the�pandemic
and�the�corresponding�decline�in�worldwide�travel�and�tourism.�Purchase�volume�in�the�travel�portion�of�the�segment�was�significantly�lower�in�2020�as�compared
to�2019. �In�contrast, �the �corporate �payments�portion�of �the�segment �has �seen �an�increase �in �purchase�volumes �during�2020,�which �is �largely �attributable �to�the
ongoing�migration�of�businesses�to�virtual�payments�and �increasing�usage�of�our�accounts�payable�products.�These�improvements, �however,�represent�a�smaller
percentage�of�the�total�segment.
Health�and�Employee�Benefit�Solutions�—�The�Health�and�Employee�Benefit�Solutions'�volume�was�most�challenged�by�the�pandemic�during�the�second
quarter�of�2020�as�a�result�of�cardholders�deferring�non-essential�medical�treatments�when�U.S.�lockdown�restrictions�were�most�severe.�However,�by�the�fourth
quarter�of�2020,�the�U.S.�Health�business�saw�a�slight�increase�in�purchase�volumes�relative�to�the�same�period�in�the�prior�year.
We�are�closely�tracking�and�assessing�the�evolving�effect�of�the�pandemic�and�are�actively�managing�our�responses�in�collaboration�with�our�employees,
customers�and�suppliers.
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Segments
����WEX�operates�in�three�reportable�segments:�Fleet�Solutions,�Travel�and�Corporate�Solutions,�and�Health�and�Employee�Benefit�Solutions.�Our�Fleet�Solutions
segment�provides�payment,�transaction�processing�and�information�management�services�specifically�designed�for�the�needs�of�commercial�and�government�fleets.
Our�Travel�and�Corporate�Solutions�segment�focuses�on�the�complex�payment�environment�of�business-to-business�payments,�providing�customers�with�payment
processing �solutions �for �their �payment �and �transaction �monitoring �needs. �Our �Health �and �Employee �Benefit �Solutions �segment �provides �a �SaaS �platform �for
consumer �directed �healthcare �payments, �and �provided �payroll �related �benefits �to �customers �in �Brazil �until �September �30, �2020, �the �date �of �sale �of �our �former
subsidiary�UNIK�S.A.
Results�of�Operations
����The�Company�does�not�allocate�foreign�currency�gains�and�losses,�financing�interest�expense,�unrealized�and�realized�gains�and�losses�on�financial�instruments,
income�taxes,�adjustments�attributable�to�non-controlling�interests�and�non-cash�adjustments�related�to�our�tax�receivable�agreement�to�our�operating�segments�as
management�believes�these�items�are�unpredictable�and�can�obscure�a�segment's�operating�trends�and�results.�In�addition,�the�Company�does�not�allocate�certain
corporate�expenses�to�our�operating�segments,�as�these�items�are�centrally�controlled�and�are�not�directly�attributable�to�any�reportable�segment.
Sources�of�Operating�Expenses
The�Company's�operating�expenses�consist�of�the�following:
Cost�of�Services
•
•
•
•
•
Processing�costs�-�The�Company’s�processing�costs�consist�of�expenses�related�to�processing�transactions,�servicing�customers�and�merchants�and�cost�of
goods�sold�related�to�hardware�and�other�product�sales.
Service�fees�-�The�Company�incurs�costs�from�third-party�networks�utilized�to�deliver�payment�solutions.�Additionally,�other�third-parties�are�utilized�in
performing�services�directly�related�to�generating�revenue.
Provision�for�credit �losses�-�Changes �in�the �reserve �for�credit �loss�are �the�result �of�changes �in�management’s �estimate �of�the �losses�in �the�Company’s
outstanding�portfolio�of�receivables,�including�losses�from�fraud.
Operating�interest�-�The�Company�incurs�interest�expense�on�the�operating�debt�obtained�to�provide�liquidity�for�its�short-term�receivables.
Depreciation �and �amortization �-� The �Company �has �identified �those �tangible �and �intangible �assets �directly �associated �with �providing �a �service �that
generates �revenue �and �records �the �depreciation �and �amortization �associated �with �those �assets �under �this �category. �Such �assets �include �processing
platforms�and�related�infrastructure,�acquired�developed�technology�intangible�assets�and�other�similar�asset�types.
Other�Operating�Expenses
•
•
•
•
•
•
General �and �administrative �-� General �and �administrative �includes �compensation �and �related �expenses �for �executive, �finance �and �accounting, �other
information �technology, �human �resources, �legal, �and �other �corporate �functions. �Also �included �are �corporate �facilities �expenses, �certain �third-party
professional�service�fees,�and�other�corporate�expenses.
Sales�and�marketing�-�The�Company’s�sales�and�marketing�expenses�relate�primarily�to�compensation,�benefits,�sales�commissions,�and�related�expenses
for�sales,�marketing,�and�other�related�activities.
Depreciation�and�amortization�-�The�depreciation �and�amortization�associated�with�tangible�and�intangible�assets�that�are�not�considered�to�be�directly
associated �with �providing �a �service �that �generates �revenue �are �recorded �as �other �operating �expenses. �Such �assets �include �corporate �facilities �and
information�technology�assets,�and�acquired�intangible�assets�other�than�those�included�in�cost�of�services.
Legal �settlement �-� Represents �the �consideration �paid �to �the �sellers �of �eNett �and �Optal �in �excess �of �the �businesses' �fair �values. �See �Item �8 �– �Note �4,
Acquisitions,�of�our�consolidated�financial�statements�for�more�information.
Impairment�charges�- �During �our �annual �goodwill �assessment �completed �in �the �fourth �quarter �of �2020, �we �recorded �a �non-cash �goodwill �impairment
charge �of �$53.4 �million �for �our �WEX �Fleet �Europe �reporting �unit. �See �Item �8 �– �Note �9, �Goodwill �and �Other �Intangible �Assets, �of �our �consolidated
financial�statements�for�more�information.
Loss�on�sale�of�subsidiary�-�The�loss�on�sale�of�subsidiary�relates�to�the�divestiture�of�the�Company's�former�Brazilian�subsidiary�as�of�the�date�of�sale,
September�30,�2020,�and�the�associated�write-off�of�its�assets�and�liabilities.
48
Year�Ended�December�31,�2020,�Compared�to�the�Year�Ended�December�31,�2019
Fleet�Solutions
Revenues
����The�following�table�reflects�comparative�revenue�and�key�operating�statistics�within�Fleet�Solutions:�
(In�thousands,�except�per�transaction�and�per�gallon�data)
Revenues
1
Payment�processing�revenue
Account�servicing�revenue
Finance�fee�revenue
Other�revenue
Total�revenues
Key�performance�indicators
Payment�processing�revenue:
2
Payment�processing�transactions
3
Payment�processing�fuel�spend
Average�price�per�gallon�of�fuel�–�Domestic�–�($USD/gal)
4
Net�payment�processing�rate
Twelve�Months�Ended�December�31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
$
$
404,843�
153,823�
197,307�
162,337�
918,310�
463,864�
29,924,535�
2.29�
1.35�%
$
$
$
$
457,244�
164,735�
245,082�
171,334�
1,038,395�
505,292�
37,372,684�
2.80�
1.22�%
$
$
$
$
(52,401)
(10,912)
(47,775)
(8,997)
(120,085)
(41,428)
(7,448,149)
(0.51)
0.13�%
(11) %
(7) %
(19) %
(5) %
(12) %
(8) %
(20) %
(18) %
11� %
1
�Foreign�currency�exchange�rate�fluctuations�had�an�insignificant�impact�on�Fleet�Solutions'�revenue�in�2020,�compared�to�the�prior�year.
2�
Payment�processing�transactions�represents�the�total�number�of�purchases�made�by�fleets�that�have�a�payment�processing�relationship�with�WEX.
3�
Payment�processing�fuel�spend�represents�the�total�dollar�value�of�the�fuel�purchased�by�fleets�that�have�a�payment�processing�relationship�with�WEX.
4�
Net�payment�processing�rate�represents�the�percentage�of�the�dollar�value�of�each�payment�processing�transaction�that�WEX�records�as�revenue�from�merchants�less�certain�discounts�given�to
customers�and�network�fees.
����Fleet�Solutions�revenue�decreased�$120.1�million�for�2020,�as�compared�to�2019.�As�discussed�in�the�preceding�“COVID-19�Pandemic�Response�and�Impact”
section, �the �business�has�been �adversely�impacted �by�lower �average�domestic �fuel�prices �during�2020 �as�compared �to�the�prior �year,�and, �to�a �lesser�extent, �by
lower�volumes.�The�decrease�was�partly�offset�by�improvements�in�our�over-the-road�business,�as�long�haul�trucking�has�not�seen�the�same�impacts�to�volume�as
other�parts�of�our�Fleet�Solutions�segment.
����Finance�fee�revenue�is�comprised�of�the�following�components:
(In�thousands)
Finance�income
Factoring�fee�revenue
Finance�fee�revenue
Twelve�Months�Ended�December
31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
159,944�
37,363�
197,307�
$
$
208,911�
36,171�
245,082�
$
$
(48,967)
1,192�
(47,775)
(23) %
3� %
(19) %
����Finance�income�primarily�consists�of�late�fees�charged�for�receivables�not�paid�within�the�terms�of�the�customer�agreement�based�upon�the�outstanding�customer
receivable�balance.�This�revenue�is�earned�when�a�customer’s�receivable�balance�becomes�delinquent�and�is�calculated�using�the�greater�of�a�minimum�charge�or�a
stated�late�fee�rate�multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee�charge.�Changes�in�the�absolute�amount�of�such�outstanding�balances�can�be
attributed�to�(i)�changes�in�fuel�prices;�(ii)�customer�specific�transaction�volume;�and�(iii)�customer�specific�delinquencies.�Late�fee�revenue�can�also�be�impacted
by�(i) �changes �in �late �fee �rates �and �(ii) �increases �or �decreases �in �customer �overdue �balances. �Late �fee �rates �are �determined �and �set �based �primarily �on �the �risk
associated�with�our�customers,�coupled�with�a�strategic�view�of�standard�rates�within�our�industry.�Periodically,�we�assess�the�market�rates�associated�within�our
industry�to�determine�appropriate�late�fee�rates.�We�consider�factors�such�as�the�Company’s�overall�financial�model�and�strategic�plan,�the�cost�to�our�business�from
customers�failing�to�pay�timely�and�the�impact�such�late�payments�have�on�our�financial�results.�These�assessments�are�typically�conducted�at�least�annually�but
may�occur�more�often�depending�on�macro-economic�factors.
49
����Finance�income�decreased�$49.0�million�in�2020,�as�compared�to�2019,�primarily�due�to�a�reduction�of�outstanding�balances�as�a�result�of�declining�fuel�prices
and�reduced�volumes�due�to�COVID-19,�as�well�as�lower�delinquencies.�This�decrease�was�partly�offset�by�an�$8.7�million�benefit�during�2020�arising�from�higher
weighted�average�late�fee�rates.�For�both�2020�and�2019,�monthly�late�fee�rates�and�minimum�finance�charges�ranged�up�to�9.99�percent�and�$75,�respectively.�The
weighted�average�late�fee�rate,�net�of�related�charge-offs�was�5.7�percent�and�5.4�percent�for�2020�and�2019,�respectively,�resulting�from�higher�minimum�finance
charge�instances�relative�to�prior�year.�Concessions�to�certain�customers�experiencing�financial�difficulties�may�be�granted�and�are�limited�to�extending�the�time�to
pay, �placing �a �customer �on �a �payment �plan �or �granting �waivers �of �late �fees. �There �were �no �material �concessions �granted �to �customers �experiencing �financial
difficulties�during�2020�or�2019.�Going�forward,�we�may�see�an�increase�in�concessions�granted�to�customers�as�a�result�of�COVID-19.
��� �The�primary �source�of �factoring �fee�revenue �is�calculated �as�a �negotiated�percentage �fee �of�the �receivable�balance �that�we �purchase.�A �secondary�source �of
factoring�fee�revenue�is�a�flat�rate�service�fee�to�our�customers�that�request�a�non-contractual�same�day�funding�of�the�receivable�balance.�Factoring�fee�revenue�for
2020�was�generally�consistent�with�factoring�fee�revenue�in�2019.
��� �Other�revenue�decreased�$9.0�million�in�2020,�as�compared�to�2019,�due�primarily�to�a�decline�in�servicing�revenue�at�our�international�fleet�business�due�to
lower�levels�of�spend�as�a�result�of�travel�bans�and�restrictions�as�of�result�of�the�government's�response�to�the�COVID-19�pandemic.
Operating�Expenses
����The�following�table�compares�line�items�within�operating�income�for�Fleet�Solutions:��
(In�thousands)
Cost�of�services
Processing�costs
Service�fees
���Provision�for�credit�losses
Operating�interest
Depreciation�and�amortization
Other�operating�expenses
General�and�administrative
Sales�and�marketing
Depreciation�and�amortization
Impairment�charges
Operating�income
NM�-�Not�meaningful
Cost�of�services
Twelve�Months�Ended�December
31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
$
$
$
$
$
$
$
$
200,734�
7,216�
56,620�
18,360�
48,958�
92,268�
148,478�
89,642�
53,378�
202,656�
$
$
$
$
$
$
$
$
$
$
205,034�
7,208�
59,816�
22,141�
43,570�
79,717�
168,155�
86,865�
—�
365,889�
$
$
$
$
$
$
$
$
$
$
(4,300)
8�
(3,196)
(3,781)
5,388�
12,551�
(19,677)
2,777�
53,378�
(163,233)
(2) %
—� %
(5) %
(17) %
12� %
16� %
(12) %
3� %
NM
(45) %
����Processing�costs�decreased�$4.3�million�for�2020,�as�compared�to�2019,�due�to�a�reduction�in�transactions�relative�to�the�prior�year,�primarily�as�a�result�of�the
corresponding�reduction�in�payment�processing�revenue�and�charges�incurred�during�the�three�months�ended�March�31,�2019�to�on-board�significant�customers.
����Service�fees�for�2020�were�generally�consistent�with�service�fees�in�2019.
����Provision�for�credit�losses�decreased�$3.2�million�for�2020,�as�compared�to�2019.�The�reduction�is�primarily�due�to�a�reduction�in�fraud�losses�during�2020�as
compared�to�the�prior�year.�The�adoption�of�the�new�credit�loss�accounting�standard,�Topic�326,�coupled�with�an�increase�in�expected�credit�losses�as�a�result�of
COVID-19, �increased �the �provision �for �credit �losses �through �the �first �half �of �2020. �However, �reductions �in �credit �losses �resulting �from �changes �in �customer
payment �behavior �and �increased �collection�efforts �substantially �offset �those �increases �during�the �latter �half �of�2020. �The �provision �reflects�the �Company’s �best
estimate�for�losses�that�it�expects�to�incur�based�on�the�current�level�of�accounts�receivable�and�the�anticipated�payment�difficulty�for�some�fleet�customers�due�to
changes �in �transportation �activity �as �a �result �of �the �COVID-19 �pandemic. �We �generally �measure �our �credit �loss �performance �by �calculating �fuel-related �credit
losses�as�a�percentage�of�total�fuel
50
expenditures�on�payment�processing�transactions.�This�metric�for�credit�losses�was�16.7�basis�points�of�fuel�expenditures�for�2020,�as�compared�to�15.1�basis�points
of�fuel�expenditures�for�2019.
����Operating�interest�expense�decreased�$3.8�million�in�2020,�as�compared�to�2019.�The�decrease�is�due�to�lower�interest�rates�and�a�decrease�in�deposits.
����Depreciation�and�amortization�increased�$5.4�million�in�2020,�as�compared�to�2019,�due�primarily�to�the�amortization�of�merchant�network�access�agreements
obtained�in�the�Go�Fuel�Card�acquisition�in�July�2019.
Other�operating�expenses
� � � � General �and �administrative �expenses �increased �$12.6 �million �in �2020, �as �compared �to �2019, �due �primarily �to �compensation �and �professional �services �cost
increases�in�2020�as�a�result�of�the�July�2019�acquisition�of�Go�Fuel�Card.
����Sales�and �marketing�expenses�decreased �$19.7�million�in �2020,�as�compared �to�2019,�due�primarily �to�a�decline �in�our�discretionary�spending�as�a�result �of
COVID-19�as�well�as�lower�relative�commission�payments�to�partners.
� � � �Depreciation �and �amortization �increased �$2.8 �million �in �2020, �as �compared �to �2019, �due �primarily �to �the �amortization �of �the �Chevron �customer �portfolio
intangible�asset�and�customer�relationships�obtained�in�the�Go�Fuel�Card�acquisition�in�July�2019.
Impairment�charges�consists�of�a�non-cash�goodwill�impairment�charge�of�$53.4�million�for�our�WEX�Fleet�Europe�reporting�unit,�which�was�identified
during�the�annual�goodwill�assessment�completed�in�the�fourth�quarter�of�2020.�See�Item�8�–�Note�9,�Goodwill�and�Other�Intangible�Assets,�of�our�consolidated
financial�statements�for�more�information.
Travel�and�Corporate�Solutions
Revenues����
����The�following�table�reflects�comparative�revenue�and�key�operating�statistics�within�Travel�and�Corporate�Solutions:�
(In�thousands)
Revenues
1
Payment�processing�revenue
Account�servicing�revenue
Finance�fee�revenue
Other�revenue
Total�revenues
Key�performance�indicators
Payment�processing�revenue:
Payment�solutions�purchase�volume
2
Twelve�Months�Ended�December�31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
229,144�
41,927�
1,079�
5,690�
277,840�
$
$
303,385�
43,293�
2,086�
19,062�
367,826�
$
$
(74,241)
(1,366)
(1,007)
(13,372)
(89,986)
(24) %
(3) %
(48) %
(70) %
(24) %
$
20,877,234�
$
39,632,411�
$
(18,755,177)
(47) %
1�
Foreign�currency�exchange�rate�fluctuations�had�an�insignificant�impact�on�Travel�and�Corporate�Solutions�revenues�in�2020,�compared�to�the�prior�year.
2�
Payment �solutions �purchase �volume �represents �the �total �dollar �value �of �all �WEX-issued �transactions �that �use �WEX �corporate �card �products �and �virtual �card �products. �As �discussed �in �the
preceding�“COVID-19�Pandemic�Response�and�Impact”�section,�our�current�travel-related�transaction�volumes�have�been�impacted�by�the�decline�in�worldwide�travel�and�tourism�as�a�result�of
COVID-19�and�we�expect�them�to�continue�to�be�impacted.
����Travel�and�Corporate�Solutions�total �revenue�decreased�$90.0�million�for�2020,�as�compared�to�2019,�primarily�due�to�the�impact�of�the�pandemic�on�travel
volumes, �with �revenue �down �53 �percent �in �that �portion �of �the �business. �This �unfavorable �factor �was �partly �offset �by �benefits �realized �as �part �of �a �contract
amendment�executed�during�the�second�quarter�of�2020�and�13�percent�revenue�growth�in�the�corporate�payments�portion�of�the�business�as�a�result�of�ongoing
migration�to�virtual�payments�and�increasing�usage�of�our�accounts�payable�products.
����Finance�fee�revenue�was�not�material�to�Travel�and�Corporate�Solutions’�operations�in�2020�or�2019.�Concessions�to�certain�customers�experiencing�financial
difficulties�may�be�granted�and�are�limited�to�extending�the�time�to�pay,�placing�a�customer�on�a�payment�plan�or�granting�waivers�of�late�fees.�During�the�second
quarter �of�2020,�WEX �Latin�America�placed �certain�delinquent �customers,�with�accounts �receivable�balances �of�$11.0�million, �on�payment�plans�ranging �up�to
three �years �in�length. �As�part �of�the �sale �of�WEX �Latin�America, �the�Company �retained �one�of �these�delinquent, �fully�reserved �customer �balances.�No �late�fee
income�has�been�recognized�associated�with�these�payment�plans�during�2020.�There�were�no�material
51
concessions �to �customers �experiencing �financial �difficulties �during �either �2020 �or �2019. �Going �forward, �we �may �see �an �increase �in �concessions �granted �to
customers�as�a�result�of�the�continuing�impact�that�COVID-19�has�on�their�businesses.
Operating�Expenses
����The�following�table�compares�line�items�within�operating�income�for�Travel�and�Corporate�Solutions:�
(In�thousands)
Cost�of�services
Processing�costs
Service�fees
Provision�for�credit�losses
Operating�interest
Depreciation�and�amortization
Other�operating�expenses
General�and�administrative
Sales�and�marketing
Depreciation�and�amortization
Legal�settlement
Operating�(loss)�income
�
NM�-�Not�meaningful
Cost�of�services����
Twelve�Months�Ended�December
31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
$
$
$
$
$
$
$
$
57,735�
17,442�
21,610�
5,331�
20,271�
31,534�
81,958�
23,341�
162,500�
$
$
$
$
$
$
$
$
$
62,179�
27,654�
5,914�
17,496�
17,044�
36,164�
58,927�
18,144�
—�
(143,882) $
124,304�
$
$
$
$
$
$
$
$
$
$
(4,444)
(10,212)
15,696�
(12,165)
3,227�
(4,630)
23,031�
5,197�
162,500�
(7)%
(37)%
265�%
(70)%
19�%
(13)%
39�%
29�%
NM
(268,186)
(216)%
����Processing�costs�decreased�$4.4�million�in�2020,�as�compared�to�2019,�due�primarily�to�volume�related�decreases.
����Service�fees�decreased�$10.2�million�in�2020,�as�compared�to�2019,�due�to�lower�processing�volumes�and�the�conversion�to�an�internal�transaction�processing
platform.
����Provision�for�credit�losses�increased�$15.7�million�in�2020,�as�compared�to�2019,�resulting�primarily�from�an�increase�in�expected�credit�losses�as�a�result�of
COVID-19�and�a�specific�reserve�taken�on�a�customer�in�Brazil�prior�to�the�sale�of�WEX�Latin�America.�The�impact�reflects�our�best�estimate�for�losses�that�we
expect�to�incur�based�on�the�current�level�of�accounts�receivable�and�the�anticipated�payment�difficulty�for�some�online�travel�agency�customers�due�to�reduced
travel�as�a�result�of�the�COVID-19�pandemic.�We�will�continue�to�actively�monitor�the�impact�of�the�COVID-19�pandemic�on�expected�credit�losses.
����Operating�interest�decreased�$12.2�million�in�2020,�as�compared�to�2019,�as�a�result�of�lower�interest�rates�and�lower�overall�deposit�balances.
��� �Depreciation �and�amortization �expenses �increased�$3.2 �million�in �2020,�as �compared �to�2019, �due�primarily �to�the �amortization �of�software �obtained �in�the
Noventis�acquisition.
Other�operating�expenses
����General�and�administrative�expenses�decreased�$4.6�million�in�2020,�as�compared�to�2019,�primarily�due�to�the�expense�incurred�to�accelerate�vesting�of�option
awards�as�part�of�the�Noventis�acquisition�during�2019.
����Sales�and�marketing�expenses�increased�$23.0�million�in�2020,�as�compared�to�2019,�primarily�due�to�higher�relative�commission�payments�to�partners�in�the
corporate�payments�business,�partly�offset�by�a�decrease�in�our�discretionary�spending�as�a�result�of�COVID-19.
����Depreciation�and�amortization�increased�$5.2�million�in�2020,�as�compared�to�2019,�due�primarily�to�higher�amortization�on�customer�relationships�acquired�as
part�of�the�Noventis�acquisition.
52
Legal�settlement�expenses�were�$162.5�million�in�2020�due�to�the�settlement�of�legal�proceedings,�and�represents�the�consideration�paid�to�the�sellers�of
eNett�and�Optal�in�excess�of�the�businesses'�fair�values,�as�further�described�in�Recent�Developments.
Health�and�Employee�Benefit�Solutions
Revenues
����The�following�table�reflects�comparative�revenue�and�key�operating�statistics�within�Health�and�Employee�Benefit�Solutions:
(In�thousands)
Revenues
1
Payment�processing�revenue
Account�servicing�revenue
Finance�fee�revenue
Other�revenue
Total�revenues
Key�performance�indicators
Payment�processing�revenue:
Purchase�volume
2
Account�servicing�revenue:
Average�number�of�SaaS�accounts
3
Twelve�Months�Ended�December�31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
$
64,904�
253,706�
137�
44,972�
363,719�
$
$
64,963�
205,524�
150�
46,833�
317,470�
$
$
(59)
48,182�
(13)
(1,861)
46,249�
4,805,395�
$
5,206,275�
$
(400,879)
14,512�
12,926�
1,586�
—� %
23� %
(9) %
(4) %
15� %
(8) %
12� %
1�
Foreign�currency�exchange�rate�fluctuations�decreased�Health�and�Employee�Benefit�Solutions'�revenue�by�$1.6�million�in�2020,�as�compared�to�the�prior�year.
2�
Purchase�volume�represents�the�total�U.S.�dollar�value�of�all�transactions�where�interchange�is�earned�by�WEX.
3�
Average�number�of�SaaS�accounts�represents�the�number�of�active�Consumer-Directed�Health,�COBRA,�and�billing�accounts�on�our�SaaS�platforms�in�the�U.S.
� � � �Payment �processing �revenues �in �2020 �were �generally �consistent �with �2019 �as �a �result �of �a �decline �in �the �U.S. �Health �business �customer �spend �on �elective
healthcare�procedures�in�connection�with�COVID-19�restrictions,�offset�by�the�acquisition�of�Discovery�Benefits.
����Account�servicing�revenue�increased�$48.2�million�for�2020,�as�compared�to�2019,�primarily�due�to�the�acquisition�of�Discovery�Benefits�and�existing�WEX
Health�customer�growth,�which�resulted�in�a�higher�number�of�participants�using�our�SaaS�healthcare�technology�platform.
� � � �Finance �fee �revenue �was �not �material �to �Health �and �Employee �Benefit �Solutions’ �operations �in �either �2020 �or �2019. �Concessions �to �certain �customers
experiencing�financial�difficulties�may�be�granted�and�are�limited�to�extending�the�time�to�pay,�placing�a�customer�on�a�payment�plan�or�granting�waivers�of�late
fees.
����Other�revenue�decreased�$1.9�million�in�2020�as�compared�to�2019,�which�was�primarily�attributable�to�lower�revenues�from�the�Company's�former�WEX�Latin
America �business, �partly �offset �by �professional �services �revenue �and �growth �in �ancillary �services �to �cardholders �associated �with �the �increased �number �of �SaaS
platform�participants�of�our�U.S.�Health�Business.
53
Operating�Expenses
����The�following�table�compares�line�items�within�operating�income�for�Health�and�Employee�Benefit�Solutions:
(In�thousands)
Cost�of�services
Processing�costs
Service�fees
Provision�for�credit�losses
Operating�interest
Depreciation�and�amortization
Other�operating�expenses
General�and�administrative
Sales�and�marketing
Depreciation�and�amortization
Operating�income
�
NM�-�Not�meaningful
Cost�of�services����
Twelve�Months�Ended�December
31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
$
$
$
$
$
$
$
160,572�
22,631�
213�
119�
35,363�
34,599�
36,248�
42,008�
31,966�
$
$
$
$
$
$
$
$
$
133,226�
22,165�
(66)
2,278�
34,111�
35,739�
32,788�
34,975�
22,254�
$
$
$
$
$
$
$
$
$
27,346�
466�
279�
(2,159)
1,252�
(1,140)
3,460�
7,033�
9,712�
21� %
2� %
NM
(95) %
4� %
(3) %
11� %
20� %
44� %
����Processing�costs �increased �$27.3�million�in �2020,�as�compared�to�2019. �The�increase�was�partly �driven �by�higher�personnel-related �costs�to�support�account
servicing�revenue�growth.�The�acquisition�of�Discovery�Benefits�contributed�to�the�majority�of�the�increase.�This�increase�was�partly�offset�by�the�sale�of�WEX
Latin�America.
����Service�fees�in�2020�were�generally�consistent�with�service�fees�in�2019.
����Provision�for�credit�losses�was�not�material�to�Health�and�Employee�Benefit�Solutions’�operations�in�either�2020�or�2019.
����Operating�interest�decreased�$2.2�million�in�2020,�as�compared�to�2019,�due�primarily�to�a�decrease�in�operating�debt�balances�at�WEX�Latin�America�prior�to
completing�the�sale�of�WEX�Latin�America�during�the�third�quarter�of�2020.
����Depreciation�and�amortization�expenses�increased�$1.3�million�in�2020,�as�compared�to�2019,�resulting�primarily�from�higher�depreciation�expense�on�internally
developed�software�as�we�continued�to�invest�in�WEX�Health�technology,�partly�offset�by�lower�depreciation�and�amortization�expenses�as�compared�to�2019�as�a
result�of�the�sale�of�WEX�Latin�America�during�the�third�quarter�of�2020.
Other�operating�expenses
����General�and�administrative�expenses�decreased�$1.1�million�in�2020,�as�compared�to�2019,�due�to�a�decrease�in�professional�services�expenses�incurred�in�2019
as�a�result�of�the�Discovery�Benefit�acquisition.
����Sales�and�marketing�expenses�increased�$3.5�million�in�2020,�as�compared�to�2019,�due�primarily�to�expenses�in�connection�with�the�acquisition�of�Discovery
Benefits,�partly�offset�by�the�COVID-related�cancellation�of�our�annual�healthcare�payments�technology�conference�and�COVID-related�travel�and�entertainment
decreases.
����Depreciation�and�amortization �increased�$7.0�million�in�2020,�as �compared�to�2019,�due�primarily �to�amortization�of�customer�relationship �intangible�assets
obtained�in�the�Discovery�Benefits�acquisition.
Unallocated�corporate�expenses
����Unallocated�corporate�expenses�represent�the�portion�of�expenses�relating�to�general�corporate�functions�including�acquisition�and�divestiture�expenses,�certain
finance, �legal, �information �technology, �human �resources, �administrative �and �executive �expenses �and �other �expenses �not �directly �attributable �to �a �reportable
segment.
54
����The�following�table�compares�line�items�within�operating�income�for�unallocated�corporate�expenses:
(In�thousands)
Other�operating�expenses
General�and�administrative
Depreciation�and�amortization
Loss�on�sale�of�subsidiary
Twelve�Months�Ended�December
31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
$
133,708�
2,343�
46,362�
$
$
$
124,187�
2,420�
—�
$
$
$
9,521�
(77)
46,362�
8� %
(3) %
NM
����General�and�administrative�expenses�increased�$9.5�million�for�2020�as�compared�to�2019,�primarily�due�to�costs�incurred�in�connection�with�the�acquisition�of
eNett�and�Optal�and�personnel-related�cost�increases�including�stock-based�compensation.�The�increase�was�partly�offset�by�a�decline�in�debt�restructuring�costs
incurred �in�conjunction �with�our�2019�credit �agreement�amendments �and�costs�incurred �to�remediate �material �weaknesses�from �2018�during�the �prior�year,�and
decreases�in�employee�travel�as�a�result�of�the�Company's�current�response�to�the�COVID-19�pandemic.
Loss�on�sale�of�subsidiary�relates�to�the�write-off�of�the�associated�assets�and�liabilities�of�the�Company's�former�WEX�Latin�America�subsidiary�as�of�the
September�30,�2020�sale�date.
����Other�unallocated�corporate�expenses�were�not�material�to�the�Company’s�operations�in�either�2020�or�2019.
Non-operating�income�and�expense
����The�following�table�reflects�comparative�results�for�certain�amounts�excluded�from�operating�income:
(In�thousands)
Financing�interest�expense
Net�foreign�currency�loss
Net�unrealized�loss�on�financial�instruments
Non-cash�adjustments�related�to�tax�receivable�agreement
Income�tax�(benefit)�provision
Net�income�(loss)�from�non-controlling�interests
Change�in�value�of�redeemable�non-controlling�interest
NM�-�Not�meaningful
Twelve�Months�Ended�December�31,
Increase�(Decrease)
2020
2019
Amount
Percent
$
$
$
$
$
$
$
(157,080) $
(25,783) $
(27,036) $
$
491�
(20,597) $
$
3,466�
$
40,312�
(134,677) $
(926) $
(34,654) $
$
932�
61,223�
$
(1,030) $
(57,317) $
22,403�
24,857�
(7,618)
(441)
(81,820)
(4,496)
97,629�
17� %
NM
22� %
(47) %
NM
NM
NM
Financing�interest�expense�increased�$22.4�million�in�2020,�as�compared�to�2019,�due�primarily�to�financing�fees�incurred�in�connection�with�the�eNett
and�Optal�acquisition�and�interest�incurred�on�our�Convertible�Notes�issued�during�July�2020,�partly�offset�by�lower�average�interest�rates.
����Our�foreign�currency�exchange�exposure�is�primarily�related�to�the�remeasurement�of�our�cash,�accounts�receivable�and�accounts�payable�balances,�including
intercompany�transactions�that�are�denominated�in�foreign�currencies.�In�2020,�net�foreign�currency�loss�was�$25.8�million,�as�compared�to�$0.9�million�in�2019.
The�loss�in�2020�is�the�result�of�the�remeasurement�of�assets�and�liabilities�and�losses�on�intercompany�transactions,�resulting�from�the�U.S.�dollar�strengthening
relative�to�numerous�major�foreign�currencies�in�which�we�transact,�including�the�Australian�dollar�and�British�pound.�The�majority�of�these�losses�were�recorded
during�the�three�months�ended�March�31,�2020,�as�a�result�of�the�weakening�of�foreign�currencies�relative�to�the�U.S.�dollar�arising�from�the�COVID-19�pandemic.
����Net�unrealized�loss�on�financial�instruments�decreased�$7.6�million�in�2020,�as�compared�to�2019,�due�primarily�to�a�decrease�in�the�LIBOR�forward�yield�curve.
����Non-cash�adjustments�related�to�tax�receivable�agreement�were�not�material�to�operations�in�2020�or�2019.
We�recorded�an�income�tax�benefit�of�$20.6�million�for�2020�as�compared�to�an�income�tax�provision�of�$61.2�million�for�2019.�Our�effective�tax�rate�was
a �6.8 �percent�benefit �for �2020�as �compared �to�a �28.3�percent �provision �for�2019. �The�Company's�effective �tax �rate �for�the �year�ended �December �31,�2020 �was
impacted�by�no�income�tax�benefit�being�recorded�for�i)�operating�losses�generated�by�WEX�Latin�America�during�the�current�year�through�the�date�of�sale,�ii)�loss
on�sale�of�WEX
55
Latin �America, �and �iii) �legal �settlement. �These �losses �were �included �as �part �of �the �current �year �loss �and �have �been �determined �to �be �either �non-deductible �for
income�tax�purposes�or�required�a�valuation�allowance.
����Net�income�(loss)�from�non-controlling�interests�relates�to�our�non-controlling�interests�in�WEX�Europe�Services�and�the�U.S.�Health�business.�Such�amounts
were�not�material�to�Company�operations�for�2020�or�2019.
����The�Company's�redeemable�non-controlling�interest�in�the�U.S.�Health�business�decreased�by�$40.3�million�during�2020.�The�decrease�was�due�substantially�to�a
second�quarter�change�in�the�redemption�value�resulting�from�a�decline�in�revenue�multiples�of�peer�companies�due�to�the�COVID-19�pandemic.
Year�Ended�December�31,�2019,�Compared�to�the�Year�Ended�December�31,�2018
� � � �Discussion �and �analysis �of �the �year �ended �December �31, �2019 �compared �to �the �year �ended �December �31, �2018 �is �included �under �the �heading �“Item �7.
Management’s�Discussion�and�Analysis�of�Financial�Condition�and�Results�of�Operations”�in�our�Annual�Report�on�Form�10–K�for�the�year�ended�December�31,
2019,�as�filed�with�the�SEC�on�February�28,�2020.
Non-GAAP�Financial�Measures�That�Supplement�GAAP�Measures
����The�Company’s�non-GAAP�adjusted�net�income�excludes�unrealized�gains�and�losses�on�financial�instruments,�net�foreign�currency�remeasurement�gains�and
losses, �acquisition-related �intangible �amortization, �other �acquisition �and �divestiture �related �items, �loss �on �sale �of �subsidiary, �stock-based �compensation,
restructuring �and �other �costs, �legal �settlement, �impairment �charges, �debt �restructuring �and �debt �issuance �cost �amortization, �non-cash �adjustments �related �to �tax
receivable�agreement,�similar�adjustments�attributable�to�our�non-controlling�interests�and�certain�tax�related�items.
Although�adjusted�net�income�is�not�calculated�in�accordance�with�GAAP,�this�non-GAAP�measure�is�integral�to�the�Company’s�reporting�and�planning
processes�and�the�chief�operating�decision�maker�of�the�Company�uses�segment�adjusted�operating�income�to�allocate�resources�among�our�operating�segments.
The �Company �considers �this �measure �integral �because �it �excludes �the �above-specified �items �that �the �Company’s �management �excludes �in �evaluating �the
Company’s�performance.�Specifically,�in�addition�to�evaluating�the�Company’s�performance�on�a�GAAP�basis,�management�evaluates�the�Company’s�performance
on�a�basis�that�excludes�the�above�items�because:
•
•
•
•
•
Exclusion�of�the�non-cash,�mark-to-market�adjustments�on�financial�instruments,�including�interest�rate�swap�agreements�and�investment�securities,�helps
management �identify �and �assess �trends �in �the �Company’s �underlying �business �that �might �otherwise �be �obscured �due �to �quarterly �non-cash �earnings
fluctuations�associated�with�these�financial�instruments.�Additionally,�the�non-cash,�mark-to-market�adjustments�on�financial�instruments�are�difficult�to
forecast�accurately,�making�comparisons�across�historical�and�future�quarters�difficult�to�evaluate.
Net�foreign�currency�gains�and�losses�primarily�result�from�the�remeasurement�to�functional�currency�of�cash,�accounts�receivable�and�accounts�payable
balances, �certain �intercompany �notes �denominated �in �foreign �currencies �and �any �gain �or �loss �on �foreign �currency �hedges �relating �to �these �items. �The
exclusion �of �these �items �helps �management �compare �changes �in �operating �results �between �periods �that �might �otherwise �be �obscured �due �to �currency
fluctuations.
The�Company�considers�certain�acquisition-related�costs,�including�certain�financing�costs,�investment�banking�fees,�warranty�and�indemnity�insurance,
certain�integration�related�expenses�and�amortization�of�acquired�intangibles,�as�well�as�gains�and�losses�from�divestitures�to�be�unpredictable,�dependent
on�factors�that�may�be�outside�of�our�control�and�unrelated�to�the�continuing�operations�of�the�acquired�or�divested�business�or�the�Company.�In�addition,
the�size�and�complexity�of�an�acquisition,�which�often�drives�the�magnitude�of�acquisition-related�costs,�may�not�be�indicative�of�such�future�costs.�The
Company �believes �that �excluding �acquisition-related �costs �and �gains �or �losses �of �divestitures �facilitates �the �comparison �of �our �financial �results �to �the
Company’s�historical�operating�results�and�to�other�companies�in�our�industry.
Legal �settlement�represents�the�consideration�paid�to�the�sellers �of�eNett�and�Optal�in�excess�of�the�businesses' �fair�values.�Management�has�elected�to
exclude�this�item�as�the�charge�is�nonrecurring�and�does�not�reflect�future�operating�expenses�resulting�from�this�acquisition.
The�loss�on�sale�of�subsidiary�relates�to�the�divestiture�of�our�former�Brazilian�subsidiary�as�of�the�date�of�sale,�September�30,�2020,�and�the�associated
write-off�of�its�assets�and�liabilities.�As�previously�discussed,�gains�and�losses�from�divestitures�are�considered�by�us�to�be�unpredictable�and�dependent
on�factors�that�may�be�outside�of�our�control.�The�exclusion�of�these�gains�and�losses�are�consistent�with�our�practice�of�excluding�other�non-recurring
items�associated�with�strategic�transactions.
56
•
Stock-based�compensation�is�different�from�other�forms�of�compensation,�as�it�is�a�non-cash�expense.�For�example,�a�cash�salary�generally�has�a�fixed�and
unvarying�cash�cost.�In�contrast,�the�expense�associated�with�an�equity-based�award�is�generally�unrelated�to�the�amount�of�cash�ultimately�received�by
the�employee,�and�the�cost�to�the�Company�is�based�on�a�stock-based�compensation�valuation�methodology�and�underlying�assumptions�that�may�vary
over�time.
• We�exclude�restructuring�and�other�costs�when�evaluating�our�continuing�business�performance�as�such�items�are�not�consistently�occurring�and�do�not
reflect �expected �future �operating �expense, �nor �do �they �provide �insight �into �the �fundamentals �of �current �or �past �operations �of �our �business. �This �also
includes �costs �related �to �certain �identified �initiatives, �including �technology �initiatives, �to �further �streamline �the �business, �improve �the �Company’s
efficiency,�create�synergies�and�globalize�the�Company’s�operations�and�remediate�the�prior�year�material�weaknesses,�all�with�an�objective�to�improve
scale�and�efficiency�and�increase�profitability�going�forward.�For�the�year�ended�December�31,�2020,�restructuring�and�other�costs�include�certain�costs
incurred �in �association�with �COVID-19,�including �the�cost �of�providing �additional�health, �welfare �and�technological �support�to �our�employees �as�they
work�remotely.
•
•
•
•
Impairment �charges �represent �non-cash �asset �write-offs, �which �do �not �reflect �recurring �costs �that �would �be �relevant �to �the �Company’s �continuing
operations. �The �Company �believes �that �excluding �these �nonrecurring �expenses �facilitates �the �comparison �of �our �financial �results �to �the �Company’s
historical�operating�results�and�to�other�companies�in�its�industry.
Debt �restructuring �and �debt �issuance �cost �amortization �are �unrelated �to �the �continuing �operations �of �the �Company. �Debt �restructuring �costs �are �not
consistently�occurring�and�do�not�reflect�expected�future�operating�expense,�nor�do�they�provide�insight�into�the�fundamentals�of�current�or�past�operations
of�our�business.�In�addition,�since�debt�issuance�cost�amortization�is�dependent�upon�the�financing�method,�which�can�vary�widely�company�to�company,
we�believe�that�excluding�these�costs�helps�to�facilitate�comparison�to�historical�results�as�well�as�to�other�companies�within�our�industry.
The �adjustments �attributable �to �non-controlling �interests, �including �adjustments �to �the �redemption �value �of �a �non-controlling �interest, �and �non-cash
adjustments�related�to�the�tax�receivable�agreement�have�no�significant�impact�on�the�ongoing�operations�of�the�business.
The�tax�related�items�are�the�difference�between�the�Company’s�GAAP�tax�provision�and�a�pro�forma�tax�provision�based�upon�the�Company’s�adjusted
net �income �before �taxes �as �well �as �the �impact �from �certain �discrete �tax �items. �The �methodology �utilized �for �calculating �the �Company’s �adjusted �net
income�tax�provision�is�the�same�methodology�utilized�in�calculating�the�Company’s�GAAP�tax�provision.
����For�the�same�reasons,�WEX�believes�that�adjusted�net�income�may�also�be�useful�to�investors�as�one�means�of�evaluating�our�performance.�However,�because
adjusted �net �income �is �a �non-GAAP �measure, �it �should �not �be �considered �as �a �substitute �for, �or �superior �to, �net �income, �operating �income �or �cash �flows �from
operating�activities�as�determined�in�accordance�with�GAAP.�In�addition,�adjusted�net�income�as�used�by�WEX�may�not�be�comparable�to�similarly�titled�measures
employed�by�other�companies.
57
The�following�table�reconciles�net�(loss)�income�attributable�to�shareholders�to�adjusted�net�income�attributable�to�shareholders:
�
�(In�thousands)
Net�(loss)�income�attributable�to�shareholders
Unrealized�loss�(gain)�on�financial�instruments
Net�foreign�currency�remeasurement�loss�(gain)
Acquisition-related�intangible�amortization
Other�acquisition�and�divestiture�related�items
Legal�settlement
Loss�on�sale�of�subsidiary
Stock-based�compensation
Other�costs
Impairment�charges
Debt�restructuring�and�debt�issuance�cost�amortization
Non-cash�adjustments�related�to�tax�receivable�agreement
ANI�adjustments�attributable�to�non-controlling�interests
Tax�related�items
Adjusted�net�income�attributable�to�shareholders
2020
Year�ended�December�31,
2019
2018
$
$
(243,638)
27,036�
25,783�
171,144�
57,787�
162,500�
46,362�
65,841�
13,555�
53,378�
40,063�
(491)
(42,910)
(108,086)
268,324�
$
$
99,006�
34,654�
926�
159,431�
37,675�
—�
—�
47,511�
25,106�
—�
21,004�
(932)
53,035�
(74,743)
402,673�
$
$
168,295�
(2,579)
38,800�
138,186�
4,143�
—�
—�
35,103�
13,717�
5,649�
14,101�
775�
(1,370)
(53,918)
360,902�
58
Application�of�Critical�Accounting�Policies�and�Estimates
����Our�discussion�and�analysis�of�our�financial�condition�and�results�of�operations�are�based�upon�our�consolidated�financial�statements,�which�have�been�prepared
in �accordance �with �GAAP. �Preparation �of �these �financial �statements �requires �us �to �make �estimates �and �judgments �that �affect �reported �amounts �of �assets �and
liabilities, �revenue �and �expenses �and �related �disclosure �of �contingent �assets �and �liabilities �at �the �date �of �our �financial �statements. �We �continually �evaluate �our
judgments�and�estimates �in�determination �of �our�financial �condition�and �operating �results.�We �base�our �estimates�on �historical�experience �and�on �various�other
assumptions�that�we�believe�to�be�reasonable�under�the�circumstances,�the�results�of�which�form�the�basis�for�making�judgments�about�the�carrying�values�of�assets
and �liabilities �that �are �not �readily �apparent �from �other �sources. �Estimates �are �based �on �information �available �as �of �the �date �of �the �financial �statements �and,
accordingly, �actual�results �could�differ �from�these�estimates, �sometimes�materially. �Critical�accounting �policies�and �estimates�are �defined�as�those �that�are�both
most�important�to�the�portrayal�of�our�financial�condition�and�operating�results�and�require�management’s�most�subjective�judgments.�Our�consolidated�financial
statements�are�based�on�the�selection�and�application�of�critical�accounting�policies�and�estimates,�the�most�significant�of�which�are�included�in�the�tables�below.
Revenue�Recognition
Description�����������������������������������������������������
The�majority�of�the�Company’s�revenues�are�comprised�of
transaction-based�fees,�which�are�generally�calculated�based�on
measures�such�as:�(i)�percentage�of�dollar�value�of�volume
processed;�(ii)�number�of�transactions�processed;�or�(iii)�some
combination�thereof.�
��
Interchange�income,�a�fee�paid�by�a�merchant�bank�to�the�card-
issuing�bank�(the�Company)�through�the�interchange�network,�is
earned�from�the�Company’s�suite�of�card�products.�Interchange
fees�are�set�by�the�credit�card�providers.�
The�Company�has�entered�into�agreements�with�major�oil
companies,�fuel�retailers�and�vehicle�maintenance�providers,
online�travel�agencies�and�health�partners,�which�provide
products�and/or�services�to�the�Company’s�customers.�These
agreements�specify�that�a�transaction�is�deemed�to�be�captured
when�the�Company�has�validated�that�the�transaction�has�no
errors�and�has�accepted�and�posted�the�data�to�the�Company’s
records.�
Account�servicing�revenue�is�primarily�comprised�of�monthly
fees�charged�to�cardholders.�The�Company�also�recognizes�SaaS
based�service�fees�in�the�healthcare�market�and�licensing�fees�for
use�of�our�accounts�receivable�and�accounts�payable�SaaS
platforms.�
The�Company�earns�revenue�on�overdue�accounts,�calculated
using�the�greater�of�a�minimum�charge�or�a�stated�late�fee�rate
multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee
charge.�
The�Company�assesses�fees�for�providing�ancillary�services,
such�as�information�products�and�services,�software
development�projects�and�other�services�sold�subsequent�to�the
core�offerings.�Other�revenues�also�include�international
settlement�fees,�fees�for�overnight�shipping,�certain�customized
electronic�reporting�and�customer�contact�services�provided�on
behalf�of�certain�of�the�Company’s�customers.�
Effect�if�Actual�Results�Differ�from�
Assumptions
In�preparing�the�financial�statements,�management
must�make�estimates�related�to�contractual�terms,
customer�performance�and�sales�volumes�to
determine�the�total�amounts�recorded�as�deductions,
such�as�rebates�and�incentives,�from�revenue.
Rebates�and�incentives�are�calculated�based�on
estimated�performance�and�the�terms�of�the�related
business�agreements.�Management�also�considers
historical�results�in�making�such�estimates.�The
actual�amounts�ultimately�paid�to�the�customer�may
be�different�from�our�estimates.�Such�differences�are
recorded�once�they�have�been�determined�and�have
historically�not�been�significant.�
Assumptions/Approach�Used
The�Company’s�primary�performance�obligation�to�merchants
is�a�stand-ready�commitment�to�provide�payment�and
transaction�processing�services�as�the�merchant�requires,
which�is�satisfied�over�time�in�daily�increments.�
��
Within�our�Travel�and�Corporate�Solutions�and�Health�and
Employee�Benefit�Solutions�segments,�we�provide�SaaS
services�and�support,�which�is�satisfied�over�time�in�a�series�of
daily�increments.�Revenue�is�recognized�based�on�an�output
method�using�days�elapsed�to�measure�progress�as�the
Company�transfers�control�evenly�over�each�monthly
subscription�period.�
The�Company�enters�into�contracts�with�certain�large
customers�or�strategic�cardholders�that�provide�for�fee�rebates
tied�to�performance�milestones.�When�such�rebates�constitute
consideration�payable�to�a�customer�or�other�parties�that
purchase�services�from�the�customer,�they�are�considered
variable�consideration�and�are�recorded�as�a�reduction�in
payment�processing�revenue�in�the�same�period�that�related
interchange�income�is�recognized.�Fee�rebates�made�to�certain
other�partners�were�determined�to�be�costs�to�obtain�a�contract
and�are�recorded�as�sales�and�marketing�expenses.�
The�Company�earns�revenue�on�overdue�accounts,�which�is
recognized�as�revenue�at�the�time�the�fees�are�assessed.�
The�Company�generally�records�revenue�net,�equal�to
consideration�retained,�based�upon�its�conclusion�that�the
Company�is�the�agent�in�its�principal�versus�agent
relationships.�
��
��
59
Reserve�for�Credit�Losses
Description�����������������������������������������������������
The�allowance�for�expected�credit�losses�reflects�management’s
estimate�of�uncollectible�balances�as�of�the�reporting�date
resulting�from�credit�risk�and�including�fraud�losses.�The�reserve
for�credit�losses�reduces�the�Company’s�accounts�receivable
balances,�as�reported�in�the�consolidated�financial�statements,�to
the�net�realizable�value.
��
Effect�if�Actual�Results�Differ�from�
Assumptions
To�the�extent�calculated�expected�credit�losses�are�not
indicative�of�future�performance,�actual�loss
experience�could�differ�significantly�from
management’s�judgments�and�expectations,�resulting
in�either�higher�or�lower�future�provisions�for�credit
losses,�as�applicable.�As�of�December�31,�2020,�we
have�an�estimated�reserve�for�credit�losses,�including
fraud�losses,�that�is�2.9�percent�of�the�total�gross
accounts�receivable�balance.
�
An�increase�or�decrease�to�this�reserve�by�0.5�percent
of�the�total�gross�accounts�receivable�balance�would
increase�or�decrease�the�provision�for�credit�losses�for
the�year�by�$10.3�million.
��
Assumptions/Approach�Used
The�allowance�for�expected�credit�losses�is�primarily
calculated�by�analytical�models�using�actual�loss-rate
experience,�and�adjustments,�where�necessary,�for�current
conditions�and�forecasts�of�leading�economic�indicators
correlated�to�loss-rate�trends.�Management�monitors�the�credit
quality�of�accounts�receivable�in�making�judgments�necessary
to�estimate�expected�credit�losses�by�analyzing�delinquency
reports,�loss-rate�trends,�changes�in�customer�payment
patterns,�economic�indicators,�recent�trends�and�forecasts,�and
competitive,�legal,�and�regulatory�environments.�When�such
indicators�are�forecasted�to�deviate�from�the�current�or
historical�median,�the�Company�qualitatively�assesses�what
impact,�if�any,�the�trends�are�expected�to�have�on�the�reserve
for�credit�losses.�Assumptions�regarding�expected�credit�losses
are�reviewed�each�reporting�period�and�may�be�impacted�by
actual�performance�of�accounts�receivable�and�changes�in�any
of�the�factors�discussed�above.
Receivables�exhibiting�elevated�credit�risk�characteristics�from
homogeneous�pools�are�assessed�on�an�individual�basis�for
expected�credit�losses.�These�receivables�are�assessed
individual�expected�credit�loss�estimates�based�on�the
occurrence�of�bankruptcies,�disputes,�conversations�with
customers,�or�other�significant�credit�loss�events.
Additionally,�the�allowance�for�expected�credit�losses�includes
fraud�losses.�Management�monitors�known�and�suspected
fraudulent�activity�identified�by�the�Company,�as�well�as
fraudulent�claims�reported�by�customers,�in�estimating�the
reserve�for�expected�fraud�losses.
Lastly,�the�allowance�includes�reserves�for�waived�late�fees.
The�Company�earns�revenue�by�assessing�monthly�finance
fees�on�accounts�with�overdue�balances.�These�fees�are
recognized�as�revenue�at�the�time�the�fees�are�assessed.�The
finance�fee�is�calculated�using�the�greater�of�a�minimum
charge�or�a�stated�late�fee�rate�multiplied�by�the�outstanding
balance�that�is�subject�to�a�late�fee�charge.�On�occasion,�these
fees�are�waived�to�maintain�relationship�goodwill.�Charges�to
other�accounts�represents�the�offset�against�the�late�fee
revenue�recognized�when�the�Company�establishes�a�reserve
for�such�waived�amounts.
60
Business�Combinations,�Acquired�Intangible�Assets�and�Goodwill
�
Description�����������������������������������������������������
Business�combinations�are�accounted�for�at�fair
value.�The�accounting�for�business�combinations
requires�estimates�and�judgment�as�to�expectations
for�future�cash�flows�of�the�acquired�business,�and
the�allocation�of�those�cash�flows�to�identifiable
intangible�assets,�in�determining�the�estimated�fair
value�for�assets�and�liabilities�acquired.�
��An�acquisition�not�meeting�the�criteria�to�be
accounted�for�as�a�business�combination�is
accounted�for�as�an�asset�acquisition.�Asset
acquisitions�are�recorded�at�purchase�price,�allocated
based�on�the�relative�fair�value�of�identifiable�assets
and�liabilities.�No�goodwill�is�recorded�in�an�asset
acquisition.�
��Goodwill�is�comprised�of�the�cost�of�business
acquisitions�in�excess�of�the�fair�value�assigned�to
the�net�tangible�and�identifiable�intangible�assets
acquired.�Acquired�intangible�assets�result�from�the
allocation�of�the�cost�of�an�acquisition.�
Goodwill�is�not�amortized�but�is�reviewed�for
impairment�annually,�or�when�events�or�changes�in
the�business�environment�indicate�that�the�carrying
value�of�the�reporting�units�may�exceed�their�fair
value.�The�annual�review�of�goodwill�is�performed
as�of�October�1�of�each�year.�
The�Company�tests�definite-lived�intangible�assets
for�impairment�if�conditions�exist�that�indicate�the
carrying�value�may�not�be�recoverable.�
Such�circumstances�would�include,�but�are�not
limited�to,�a�significant�decrease�in�the�perceived
market�price�of�the�intangible,�a�significant�adverse
change�in�the�way�the�asset�is�being�used,�or�a
history�of�operating�or�cash�flow�losses�associated
with�the�use�of�the�intangible.
Assumptions/Approach�Used
The�fair�values�assigned�to�tangible�and�intangible�assets�acquired�and
liabilities�assumed�are�based�on�management’s�estimates�and�assumptions,
as�well�as�other�information�compiled�by�management,�including�projected
financial�information,�effective�income�tax�rates,�present�value�discount
factors,�and�long-term�growth�expectations.�The�Company�utilizes�third-
party�specialists�to�assist�management�with�the�identification�and�valuation
of�intangible�assets�using�customary�valuation�procedures�and�techniques.
�
During�2020,�the�Company�used�a�discounted�cash�flow�analysis�and
guideline�transaction�method�to�determine�the�fair�value�of�the�eNett�and
Optal�businesses�acquired�on�December�15,�2020.
The�Company’s�annual�goodwill�impairment�test�is�quantitative.�For�the
reporting�units�that�carry�goodwill�balances,�our�impairment�test�consists�of
a�comparison�of�each�reporting�unit’s�carrying�value�to�its�estimated�fair
value.�A�reporting�unit,�for�the�purpose�of�the�impairment�test,�is�one�level
below�the�operating�segment�level.�We�have�three�reporting�segments�that
are�further�broken�into�several�reporting�units�for�the�impairment�review.
The�estimated�fair�value�for�the�majority�of�our�reporting�units�is�estimated
using�a�combination�of�discounted�estimated�future�cash�flows�and�prices
for�comparable�businesses.�An�appropriate�discount�rate�is�used,�as�well�as
risk�premium�for�specific�business�units,�based�on�the�Company’s�cost�of
capital�or�reporting�unit-specific�economic�factors.�We�generally�validate
the�model�through�a�reconciliation�of�the�fair�value�of�all�our�reporting�units
to�our�overall�market�capitalization.�The�assumptions�used�to�estimate�the
discounted�cash�flows�are�based�on�our�best�estimates�about�payment
processing�fees/interchange�rates,�sales�volumes,�costs�(including�fuel
prices),�future�growth�rates,�working�capital�needs,�capital�expenditures�and
market�conditions�over�an�estimate�of�the�remaining�operating�period�at�the
reporting�unit�level.�The�discount�rate�at�each�reporting�unit�is�based�on�the
weighted�average�cost�of�capital�that�is�determined�by�evaluating�the�risk
free�rate�of�return,�cost�of�debt,�and�expected�equity�premiums.
�
The�Company�evaluates�its�definite-lived�intangible�assets�for�impairment
under�certain�circumstances.�Such�assessment�includes�considering�any
negative�financial�performance,�legal,�regulatory,�contractual�or�other
factors�that�could�affect�significant�inputs�used�to�determine�the�fair�value
of�the�asset�and�other�relevant�entity-specific�events�such�as�changes�in
strategy�or�customers�that�could�affect�significant�inputs�used�in
determining�fair�value.�If�the�Company�determines�that�it�is�not�more�likely
than�not�that�the�asset�is�impaired,�then�the�Company�does�not�perform�a
quantitative�impairment�test.�If�the�Company�determines�that�the�asset�is
more�likely�than�not�impaired,�then�a�quantitative�test�is�performed
comparing�the�fair�value�of�the�asset�with�its�carrying�amount�and
impairment�is�measured�as�the�amount�by�which�the�carrying�amount�of�the
asset�group�exceeds�its�fair�value.�Fair�value�measurements�under�FASB
Accounting�Standards�Codification�(“ASC”)�820�–�Fair�Value
Measurements�and�Disclosures,�are�based�on�the�assumptions�of�market
participants.�When�determining�the�fair�value�of�the�asset�group,�entities
must�consider�the�highest�and�best�use�of�the�assets�from�a�market-
participant�perspective.
Effect�if�Actual�Results�Differ�from�
Assumptions
�
Our�goodwill�resides�in�multiple�reporting�units.�The
profitability�of�individual�reporting�units�may�suffer
periodically�from�downturns�in�customer�demand�or
other�economic�factors.�Individual�reporting�units
may�be�more�impacted�than�the�Company�as�a
whole.�Specifically,�during�times�of�economic
slowdown,�our�customers�may�reduce�their
expenditures.�As�a�result,�demand�for�the�services�of
one�or�more�of�the�reporting�units�could�decline,
which�could�adversely�affect�our�operations,�cash
flow,�and�liquidity�and�could�result�in�an�impairment
of�goodwill�or�intangible�assets.�
During�our�annual�goodwill�impairment�test
performed�as�of�October�1,�2020,�we�determined�that
the�reduced�volumes�attributable�in�part�to�COVID-
19,�had�a�significant�impact�on�the�fair�value�of�the
WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel
Card�acquisition).�Based�on�the�carrying�value�of
this�reporting�unit�exceeding�its�fair�value,�the
Company�recorded�a�$53.4�million�goodwill
impairment�charge�during�the�year�ended�December
31,�2020.�There�is�$65.8�million�remaining�goodwill
associated�with�this�reporting�unit.�
For�our�other�reporting�units�with�goodwill,�our
2020�goodwill�impairment�test�indicated�excesses�of
estimated�fair�value�over�the�respective�carrying
amounts�by�amounts�ranging�from�approximately
$10�million�to�$2.3�billion.�
Although�no�reporting�units�are�deemed�at�risk�of
impairment�as�of�December�31,�2020,�subsequent�to
the�impairment�loss�taken�by�WEX�Fleet�Europe�as
of�October�1,�2020,�there�exists�the�potential�for
future�impairment�should�actual�results�deteriorate
versus�our�current�expectations.�As�of�December�31,
2020,�the�Company�had�approximately�$4.2�billion
on�its�consolidated�balance�sheet�related�to�goodwill
and�intangible�assets�of�acquired�entities.�
The�Company�did�not�record�any�goodwill
impairments�during�the�year�ended�December�31,
2019.�
The�Company�did�not�record�any�intangible�asset
impairments�during�the�years�ended�December�31,
2020�and�2019.�
If�the�Company�incorrectly�estimates�the�useful�lives�of�its�intangible�assets,
it�would�result�in�inaccurate�amortization�expense,�which�may�lead�to�future
impairment.
�
�
61
Income�Taxes
�
Description�����������������������������������������������������
In�preparing�the�consolidated�financial�statements,�we�calculate
income�tax�expense�(benefit)�based�on�our�interpretation�of�the�tax
laws�in�the�various�jurisdictions�where�we�conduct�business.�This
requires�us�to�estimate�current�tax�obligations�and�to�assess
temporary�differences�between�the�financial�statement�carrying
amounts�and�the�tax�bases�of�assets�and�liabilities.�These
differences�result�in�long-term�deferred�tax�assets�and�liabilities,
the�net�amount�of�which�we�show�as�a�line�item�on�the
consolidated�balance�sheet.�All�or�a�portion�of�the�benefit�of
income�tax�positions�is�recognized�only�when�we�have�made�a
determination�that�it�is�more�likely�than�not�that�the�tax�position
will�be�sustained�upon�examination,�based�upon�the�technical
merits�of�the�position�and�other�factors.�For�tax�positions�that�are
determined�to�be�more�likely�than�not�sustained�upon�examination,
the�tax�benefit�recognized�is�the�largest�amount�of�benefit�that�is
greater�than�50%�likely�of�being�realized�upon�ultimate�settlement.
We�must�also�assess�the�likelihood�that�the�deferred�tax�assets�will
be�realized.�
To�the�extent�we�believe�that�realization�is�not�more�likely�than
not,�we�establish�a�valuation�allowance.�When�we�establish�a
valuation�allowance�or�increase�this�allowance,�we�generally
record�a�corresponding�income�tax�expense�in�the�consolidated
statement�of�operations�in�the�period�of�the�change.�Conversely,�to
the�extent�circumstances�indicate�that�realization�is�more�likely
than�not,�the�valuation�allowance�is�decreased�to�the�amount
realizable,�which�generates�an�income�tax�benefit.�
�
�
Assumptions/Approach�Used
Management�must�make�judgments�to�determine�income�tax
expense�(benefit),�deferred�tax�assets�and�liabilities�and�any
valuation�allowance�to�be�recorded�against�deferred�tax�assets.
During�the�ordinary�course�of�business,�there�are�many
transactions�and�calculations�for�which�the�ultimate�tax
determination�is�uncertain.�Changes�in�our�estimates�occur
periodically�due�to�changes�in�tax�rates,�changes�in�business
operations,�implementation�of�tax�planning�strategies,�the
expiration�of�relevant�statutes�of�limitations,�resolution�with
taxing�authorities�of�uncertain�tax�positions�and�newly
enacted�statutory,�judicial�and�regulatory�guidance.�We�record
a�valuation�allowance�to�reduce�deferred�tax�assets�to�the
amount�that�is�more�likely�than�not�to�be�realized.�
Significant�judgment�is�required�in�determining�valuation
allowances.�In�evaluating�the�ability�to�recover�deferred�tax
assets,�we�consider�all�available�positive�and�negative
evidence�including�past�operating�results,�the�existence�of
cumulative�losses�in�the�most�recent�years,�forecasted
earnings,�future�taxable�income,�and�prudent�and�feasible�tax
planning�strategies.�In�establishing�a�liability�for�unrecognized
tax�benefits,�assumptions�are�made�in�determining�whether,
and�to�what�extent,�a�tax�position�may�be�sustained.�It�requires
significant�management�judgment�regarding�applicable
statutes�and�their�related�interpretation�as�they�apply�to�our
particular�facts�and�circumstances.�
�
Recently�Adopted�and�New�Accounting�Standards
Effect�if�Actual�Results�Differ�from�
Assumptions
Although�we�believe�that�our�income�tax�related
judgments�and�estimates�are�reasonable,�it�is
possible�that�our�actual�results�could�be�different
than�what�we�expected,�and�we�may�be�exposed�to�a
material�change�in�our�total�income�tax�expense,�tax-
related�balances,�or�valuation�allowances.�Upon
income�tax�audit,�any�unfavorable�tax�settlement
may�require�use�of�our�cash�and�result�in�an�increase
in�our�effective�tax�rate�in�the�period�of�settlement.
A�favorable�tax�settlement�could�be�recognized�as�a
reduction�in�our�effective�tax�rate�in�the�period�of
settlement.�
We�adopted �Topic �326 �on �January �1, �2020, �utilizing �the �modified-retrospective �approach. �Under �the �modified-retrospective �approach, �prior �period �comparable
financial �information �is�not �adjusted.�See �Item�8 �–�Note �1,�Basis�of �Presentation �and�Summary �of�Significant �Accounting�Policies, �and�Item �8-�Note �2,�Recent
Accounting�Pronouncements,�in�this�report�for�further�discussion�of�the�impact�from�the�adoption�of�this�new�accounting�standard.�We�use�a�loss-rate�methodology
to�calculate�our�general�allowance�for�accounts�receivable.�This�methodology�considers�historical�loss�experience�to�calculate�actual�loss-rates�and�analyzes�trends
in �the �calculated �loss-rates �against �trends �in �economic �indicators. �Analyzing �trends �in �loss-rates �against �trends �in �economic �indicators �allows �us �to �identify
correlations �between �economic �environments �and �loss �experience. �Strong �correlations �identified �from �that �analysis �are �factored �into �the �current �and �expected
conditions�of�the�overall�credit�loss�reserve�methodology.�The�expense�we�recognized�in�the�quarter�is�the�amount�necessary�to�bring�the�reserve�to�its�required
level �based �on �this �methodology. �When �individual �accounts �receivable �exhibit �elevated �credit �risk �characteristics �as �a �result �of �bankruptcies, �disputes,
conversations �with �customers, �or �other �significant �credit �loss �events, �they �are �assessed �individual �credit �loss �estimates. �Assumptions �regarding �expected �credit
losses�are�reviewed�each�reporting�period�and�may�be�impacted�by�actual�performance�of�accounts�receivable�and�changes�in�any�of�the�factors�discussed�above.����
See�Item�8�–�Note�2,�Recent�Accounting�Pronouncements,�for�recently�issued�accounting�standards�that�have�not�yet�been�adopted.
62
Liquidity,�Capital�Resources�and�Cash�Flows
����We�believe�that�our�cash�generating�capability,�financial�condition�and�operations,�together�with�the�sources�of�cash�listed�below,�will�be�adequate�to�fund�our
cash�needs�for�at�least�the�next�12�months.�The�table�below�summarizes�our�primary�short-term�sources�and�uses�of�cash:
Sources�of�cash
•
•
•
•
•
•
Borrowings�on�our�2016�Credit�Agreement
Convertible�Notes
Deposits
Borrowed�federal�funds
Participation�debt
Accounts�receivable�factoring�and�securitization�arrangements
1
Use�of�cash
•
•
Payments�on�our�2016�Credit�Agreement
Payments�on�maturities�and�withdrawals�of�certificates�of�deposit�and�brokered�money
market�deposits
•
Payments�on�borrowed�federal�funds
• Working�capital�needs�of�the�business
•
Capital�expenditures
1
�Our�long-term�cash�requirements�consist�primarily�of�amounts�owed�on�our�2016�Credit�Agreement�and�Notes�and�various�facilities�lease�agreements.
Cash�Flows
����The�table�below�summarizes�our�cash�activities:�
�
(In�thousands)
Net�cash�provided�by�operating�activities
Net�cash�used�for�investing�activities
Net�cash�(used�for)�provided�by�financing�activities
�
Operating�Activities
Year�ended�December�31,
2019
2020
$
$
$
857,019�
(329,086)
(179,256)
$
$
$
663,171�
(990,614)
749,773�
$
$
$
2018
400,229�
(254,175)
(102,728)
•
•
Cash�provided�by�operating�activities�for�2020�increased�$193.8�million�as�compared�to�the�prior�year,�resulting�from�increased�collections�on�accounts
receivable�offset�in�part�by�a�reduction�in�payables.
Cash�provided�by�operating�activities�for�2019�increased�$262.9�million�as�compared�to�the�prior�year,�resulting�from�an�increase�in�accounts�payable�and
decrease �in �accounts �receivable �primarily �due �to �a �factoring �arrangement �in �which �the �Company �retains �the �merchant �payable �and �sells �the �related
accounts�receivable.�This�arrangement�was�in�place�during�the�twelve�months�ended�December�31,�2019,�but�not�in�place�until�August�of�2018.
Investing�Activities
•
•
Cash�used�for�investing�activities�for�2020�decreased�$661.5�million�as�compared�to�the�prior�year.�The�Company�completed�one�acquisition�during�2020
with�associated�payments�of�$220.7�million,�net�of�cash�acquired,�as�compared�to�four�acquisitions�completed�during�2019.
Cash �used �for �investing �activities �for �2019 �increased �$736.4 �million �as �compared �to �the �prior �year, �resulting �from �$882.4 �million �of �payments �made
associated�with�the�four�acquisitions�completed�during�2019.
Financing�Activities
•
•
Cash�used�for�financing�activities�during�2020�was�$179.3�million�as�compared�to�cash�provided�by�financing�activities�during�2019�of�$749.8�million.
The�decrease�of�$929.0�million�is�substantially�due�to�a�reduction�in�overall�borrowing�needs�year�over�year�for�the�funding�of�acquisitions.
Cash �used �for �financing �activities �for �2019 �increased �$852.5 �million �as �compared �to �the �prior �year, �primarily �due �to �higher �overall �borrowings �in
connection�with�funding�the�acquisitions�and�raising�deposits�in�order�to�fund�asset�growth.
Liquidity
����In�general,�the�Company’s�trade�receivables�provide�for�payment�terms�of�30�days�or�less.�Receivables�not�paid�within�the�terms�of�the�agreement�are�generally
subject�to�late�fees�based�upon�the�outstanding�receivable�balance.�The�Company�extends�revolving�credit�to�certain�small�fleets.�These�accounts�are�also�subject�to
late�fees,�and�balances�that�are�not�paid�in�full�are�subject�to�interest�charges�based�on�a�revolving�balance.�The�Company�had�approximately�$60.2�million�and
$62.4�million�of�receivables�with�revolving�credit�balances�as�of�December�31,�2020�and�2019,�respectively.
63
����At�December�31,�2020,�approximately�97�percent�of�the�outstanding�balance�of�$2.0�billion�of�total�trade�accounts�receivable�was�29�days�or�less�past�due�and
approximately�98�percent�of�the�outstanding�balance�of�total�trade�accounts�receivable�was�59�days�or�less�past�due.�The�receivables�portfolio�consists�of�a�large
group�of�homogeneous�smaller�balances�across�a�wide�range�of�industries.�No�one�customer�receivable�balance�represented�10�percent�or�more�of�the�outstanding
receivables�balance�at�December�31,�2020�or�December�31,�2019.
����Our�short-term�cash�requirements�consist�primarily�of�funding�the�working�capital�needs�of�our�business,�payments�on�maturities�and�withdrawals�of�certificates
of�deposit �and �brokered �money �market �deposits, �payments �on �borrowed �federal �funds, �required �capital �expenditures, �repayments �on �our �credit �facility, �interest
payments�on�our�credit�facility�and�other�operating�expenses.�WEX�Bank�can�fund�our�short-term�domestic�cash�requirements�through�the�issuance�of�brokered
deposits�and�borrowed�federal�funds.�Any�remaining�cash�needs�are�primarily�funded�through�operations,�our�borrowings�under�our�2016�Credit�Agreement,�our
participation�debt�and�our�accounts�receivable�factoring�and�securitization�arrangements.�Our�long-term�cash�requirements�consist�primarily�of�amounts�owed�on
our�2016�Credit�Agreement�and�Notes�and�various�facilities�lease�agreements.
� � � �Undistributed �earnings �of �certain �foreign �subsidiaries �of �the �Company �amounted �to �$58.5 �million �and �$77.4 �million �at �December �31, �2020 �and �2019,
respectively. �The �Company �had �historically �asserted �that �the �undistributed �earnings �of �foreign �subsidiaries �were �considered �indefinitely �reinvested �outside �the
United�States.�The�Company�reevaluated�its�historic�indefinite�reinvestment�assertion�and�determined�that�any�historical�undistributed�earnings�as�well�as�the�future
earnings�for�WEX�Australia�are�no�longer�considered�to�be�indefinitely�reinvested.�The�Company�continues�to�maintain�its�indefinite�reinvestment�assertion�for�its
remaining�foreign�subsidiaries.�The�deferred�tax�liability�related�to�the�foreign�and�state�tax�costs�associated�with�this�change�in�assertion�was�immaterial.�Upon
distribution�of�the�foreign�subsidiaries�earnings�in�which�the�Company�continues�to�assert�indefinite�reinvestment,�the�Company�would�be�subject�to�withholding
taxes�payable�to�foreign�countries,�where�applicable,�but�would�generally�have�no�further�federal�income�tax�liability.
� � � �Earnings �outside �of �the �United �States �are �accompanied �by �certain �financial �risks, �such �as �changes �in �foreign �currency �exchange �rates. �Changes �in �foreign
currency�exchange�rates�may�reduce�the�reported�value�of�our�foreign�currency�revenues,�net�of�expenses�and�cash�flows.�We�cannot�predict�changes�in�currency
exchange�rates,�the�impact�of�currency�exchange�rate�changes�nor�the�degree�to�which�we�will�be�able�to�manage�the�impact�of�currency�exchange�rate�changes.
Deposits�and�Borrowed�Federal�Funds
����WEX�Bank�has�issued�certificates�of�deposit�in �various�maturities�ranging�between�1�year �and �5�years,�with�interest�rates�ranging�from�1.35�percent �to�3.52
percent�as�of�December�31,�2020,�as�compared�to�maturities�ranging�between�4�months�and�5�years�and�interest�rates�ranging�from�1.80�percent�to�3.52�percent�as
of�December�31,�2019.�As�of�December�31,�2020,�we�had�approximately�$503.4�million�of�certificates�of�deposit�outstanding�at�a�weighted�average�interest�rate�of
1.81�percent,�compared�to�$979.4�million�of�certificates�of�deposit�outstanding�at�a�weighted�average�interest�rate�of�2.57�percent�as�of�December�31,�2019.
� � � �WEX �Bank �also �issues �interest-bearing �brokered �money �market �deposits �with �variable �interest �rates �ranging �from �0.12 �percent �to �0.30 �percent �as �of
December�31,�2020,�as�compared�to�variable�interest�rates�ranging�from�1.63�percent�to�1.90�percent�as�of�December�31,�2019.�As�of�December�31,�2020,�we�had
approximately �$439.9 �million �of �interest-bearing �brokered �money �market �deposits �at �a �weighted �average �interest �rate �of �0.27 �percent, �as �compared �to �$362.2
million�of�interest-bearing�brokered�money�market�deposits�at�a�weighted�average�interest�rate�of�1.88�percent�as�of�December�31,�2019.
����WEX�Bank�may�issue�additional�brokered�deposits�without�limitation,�subject�to�FDIC�rules�governing�minimum�financial�ratios,�which�include�risk-based�asset
and �capital �requirements. �As �of �December �31, �2020, �all �brokered �deposits �were �in �denominations �of �$250 �thousand �or �less, �corresponding �to �FDIC �deposit
insurance�limits.�Interest-bearing�money�market�funds�may�be�withdrawn�at�any�time.�We�believe�that�our�brokered�deposits�are�paying�competitive�yields�and�that
there�continues�to�be�consumer�demand�for�these�instruments.
����We�also�carry �non-interest�bearing�deposits�that �are�required�for�certain �customers�as�collateral �for�their�credit�accounts. �We�had�$116.7�million �and�$112.6
million�of�these�deposits�at�December�31,�2020�and�2019,�respectively.
����
� �� �In �accordance �with�regulatory �requirements, �WEX �Bank �maintains �reserves �against �a �percentage �of �certain�customer �deposits �by �keeping �balances �with�the
Federal�Reserve�Bank.�There�was�no�required�reserve�at�December�31,�2020�due�to�temporarily�relaxed�Federal�Reserve�requirements�enacted�in�response�to�the
COVID-19�pandemic.�The�required�reserve�based�on�the�outstanding�customer�deposits�was�$24.9�million�at�December�31,�2019.
64
����WEX�Bank�also�borrows�from�uncommitted�federal�funds�lines�of�credit�to�supplement�the�financing�of�our�accounts�receivable.�Our�federal�funds�lines�of�credit
were�$376.0�million�and�$355.0�million�as�of�December�31,�2020�and�2019,�respectively,�with�$20.0�million�and�$35.0�million�of�borrowings�as�of�December�31,
2020�and�2019,�respectively.
����WEX�Bank�participates�in�the�ICS�service�offered�by�Promontory�Interfinancial�Network,�which�allows�WEX�Bank�to�purchase�brokered�money�market�demand
accounts�and�demand�deposit�accounts�in�an�amount�not�to�exceed�$125.0�million�as�part�of�a�one-way�buy�program.�At�December�31,�2020�and�2019�there�was�no
outstanding�balance�for�ICS�purchases.
2016�Credit�Agreement
��� �On�July�1,�2016,�we�entered�into�the�2016�Credit�Agreement�in�order�to�permit�the�additional�financing�necessary�to�facilitate�the�EFS�acquisition.�The�2016
Credit�Agreement�initially�provided�for�secured�tranche�A�and�tranche�B�term�loan�facilities�in�original�principal�amounts�equal�to�$455.0�million�and�$1,200.0
million,�respectively,�and�a�$470.0�million�secured�revolving�credit�facility.�As�of�December�31,�2020,�after�giving�effect�to�amendments�prior�to�such�date,�we�had
an�outstanding�principal�amount�of�$873.8�million�on�our�secured�tranche�A�term�loan,�an�outstanding�principal�amount�of�$1,442.4�million�on�our�secured�tranche
B�term�loan�and�outstanding�letters�of�credit�of�$51.6�million�drawn�against�our�$870.0�million�secured�revolving�credit�facility,�with�a�$250.0�million�sublimit�for
letters�of�credit�and�$20.0�million�sublimit�for�swingline�loans.�The�tranche�B�term�loans�mature�during�May�2026�while�the�revolving�credit�facility�and�tranche�A
term�loans�mature�during�July�2023,�subject�to�earlier�maturity�in�August�2022�in�certain�circumstances.�The�revolving�credit�loans�and�tranche�A�term�loans�bear
interest�at�variable�rates,�at�the�Company’s�option,�plus�an�applicable�margin�determined�based�on�the�Company’s�consolidated�leverage�ratio,�which�is�calculated
using�consolidated�funded�indebtedness�(excluding�(i)�up�to�$350.0�million�of�consolidated�funded�indebtedness�due�to�permitted�securitization�transactions�and�(ii)
the �amount �of �consolidated �funded �indebtedness �constituting �the �non-recourse �portion �of �permitted �factoring �transactions, �and �netting �up �to �(x) �with �respect �to
calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15,�2021,�an�unlimited�amount�and�(y)�with�respect�to�calculating�the
consolidated�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0�million,�of�unrestricted�cash�and�cash�equivalents�denominated�in�U.S.�dollars�or
other�lawful�currencies�(provided�that�such�other�currencies�are�readily�convertible�to,�and�deliverable�in,�U.S.�dollars)�held�by�the�Company�and�its�subsidiaries)�to
consolidated�EBITDA.
����Incremental�loans�of�up�to�(i)�the�greater�of�(x)�$375.0�million�and�(y)�50%�of�consolidated�EBITDA�of�the�Company,�plus�(ii)�the�amount�of�certain�voluntary
prepayments�of�the�loans,�plus�(iii)�an�unlimited�amount�subject�to�satisfaction�of�the�Company’s�consolidated�secured�leverage�ratio,�testing�consolidated�funded
indebtedness �that �is �secured �by �a �lien �on �the �assets �of �the �Company �or �any �of �its �subsidiaries �(excluding �(a) �up �to �$400.0 �million �of �consolidated �funded
indebtedness�due�to�permitted�securitization�transactions�and�(b)�the�amount�of�consolidated�funded�indebtedness�constituting�the�non-recourse�portion�of�permitted
factoring�transactions,�and�netting�up�to�(x)�with�respect�to�calculating�the�consolidated�secured�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15,
2021,�an�unlimited�amount,�and�(y)�with�respect�to�calculating�the�consolidated�secured�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0�million,
of�unrestricted�cash�and�cash�equivalents�denominated�in�U.S.�dollars�or�other�lawful�currencies�(provided�that�such�other�currencies�are�readily�convertible�to,�and
deliverable �in, �U.S. �dollars) �held�by �the �Company�and �its �subsidiaries), �minus �(iv)�the �aggregate �amount �of�incremental �loans �incurred �in �reliance�of �clause �(i)
above �since �August �24, �2018, �could �be �made �available �under �the �2016 �Credit �Agreement �upon �the �request �of �the �Company �subject �to �specified �terms �and
conditions,�including�receipt�of�lender�commitments.
Debt�Covenants
� � � �The �2016 �Credit �Agreement �and �the �indenture �governing �the �Notes �contain �various �affirmative �and �negative �covenants �that, �subject �to �certain �customary
exceptions,�limit�the�Company�and�its�subsidiaries’�including,�in�certain�limited�circumstances,�WEX�Bank�and�the�Company’s�other�regulated�subsidiaries,�ability
to,�among�other�things�(i)�incur�additional�debt,�(ii)�pay�dividends�or�make�other�distributions�on,�redeem�or�repurchase�capital�stock,�or�make�investments�or�other
restricted �payments,�(iii)�enter �into�transactions�with�affiliates, �(iv)�dispose�of�assets �or�issue�stock�of�restricted�subsidiaries�or�regulated�subsidiaries, �(v)�create
liens �on �assets, �or �(vi) �effect �a �consolidation �or �merger �or �sell �all, �or �substantially �all, �of �the �Company’s �assets. �Additionally, �the �indenture �governing �the
Convertible�Notes�contains�customary�negative�and�affirmative�covenants�that,�subject�to�certain�customary�exceptions,�limit�the�Company�and�its�subsidiaries',�but
excluding �WEX �Bank �and �the �Company's �other �regulated �subsidiaries, �ability �to, �among �other �things, �incur �additional �debt. �These �covenants �are �subject �to
important�exceptions�and�qualifications.�At�any�time�that�the�Notes�are�rated�investment�grade,�which�is�not�currently�the�case,�and�subject�to�certain�conditions,
certain �covenants �will �be �suspended �with �respect�to �the �Notes. �WEX �Bank �and �the �Company’s �other �regulated �subsidiaries �will �not �be �subject �to �some �of �the
restrictive �covenants �in �the �Indenture �that �place �limitations �on �the �Company �and �its �restricted �subsidiaries’ �actions, �and �where �WEX �Bank�and �the �Company’s
regulated �subsidiaries �are �subject �to �covenants, �there �are �significant �exceptions �and �limitations �on �the �application �of �those �covenants �to �WEX �Bank �and �the
Company’s�regulated�subsidiaries.
65
The �2016 �Credit �Agreement �also �requires, �solely �for �the �benefit �of �the �lenders �of �the �Tranche �A �Term �Loan �and �lenders �under �the �Revolving �Credit
Facility,�that�the�Company�maintain�at�the�end�of�each�fiscal�quarter�the�following�financial�ratios:
•
•
a�Consolidated�Interest�Coverage�(as�defined�in�the�2016�Credit�Agreement)�of�no�less�than�2.75�to�1.00�at�December�31,�2020�and�through�March�31,
2021,�after�which�the�ratio�reverts�back�to�no�less�than�3.00�to�1.00;�and
a �Consolidated �Leverage�Ratio �(as�defined �in �the�2016 �Credit�Agreement) �of�no �more �than�7.50 �to�1.00 �through�March �31,�2021, �7.00�to �1.00�for �the
quarter�ending�June�30,�2021,�6.50�to�1.00�for�the�quarter�ending�September�30,�2021,�6.00�to�1.00�for�the�quarters�ending�December�31,�2021�through
September�30,�2022,�and�5.00�to�1.00�thereafter.
����We�were�in�compliance�with�all�material�covenants�and�restrictions�at�December�31,�2020.
During�2020,�the�Company�entered�into�an�eighth,�ninth,�tenth�and�eleventh�amendment�to�the�2016�Credit�Agreement.�For�a�description�of�the�Eighth
Amendment,�Ninth�Amendment,�Tenth�Amendment�and�Eleventh�Amendment�to�the�2016�Credit�Agreement,�see�Other�Liquidity�Matters�below.
����As�of�December�31,�2020,�we�had�no�outstanding�borrowings�against �our�$870.0�million�revolving�credit�facility.�The�combined�outstanding�debt�under�our
tranche�A�term�loan�facility�and�our�tranche�B�term�loan�facility�totaled�$2.3�billion�at�December�31,�2020.�As�of�December�31,�2020,�amounts�outstanding�under
the�2016�Credit�Agreement�bore�a�weighted�average�effective�interest�rate�of�2.3�percent.
See�Item�8�–�Note�16,�Financing�and�Other�Debt,�for�further�information�regarding�interest�rates,�voluntary�prepayments�rights�and�principal�payments
required�under�the�2016�Credit�Agreement.
Notes�Outstanding
����On�January�30,�2013,�the�Company�completed�an�offering�in�an�aggregate�principal�amount�of�$400.0�million�of�4.750�percent�senior�notes.�Such�Notes�mature
on�February�1,�2023.�The�Notes�can�be�redeemed�at�the�option�of�WEX�without�penalty.�On�February�11,�2020,�the�Company�provided�irrevocable�notice�to�The
Bank�of�New�York�Mellon�Trust�Company,�N.A.,�the�trustee�for�the�Notes,�of�its�intent�to�redeem�the�Notes�on�March�15,�2021.�We�have�elected�to�redeem�for
cash�all�of�the�$400.0�million�aggregate�principal�amount�of�the�Notes�in�accordance�with�the�terms�of�the�indenture�governing�the�Notes.�The�redemption�date�for
the�Notes�will�be�March�15,�2021�(the�“Redemption�Date”).�The�Notes�will�be�redeemed�at�a�redemption�price�equal�to�100%�of�the�principal�amount�of�the�Notes
to�be�redeemed,�plus�accrued�and�unpaid�interest�thereon,�if�any,�to,�but�excluding,�the�Redemption�Date.
Convertible�Notes�Outstanding
On�July�1,�2020,�the�Company�closed�on�a�private�placement�with�Warburg�Pincus,�pursuant�to�which�the�Company�issued�$310.0�million�in�aggregate
principal �amount �of �its �Convertible �Senior �Notes �due �2027. �The �issuance �of �the �Convertible �Notes �provided �the �Company �with �net �proceeds �of �approximately
$299.2�million�after�original�issue�discount.�The�Convertible�Notes�have�a�seven-year�term�and�mature�on�July�15,�2027,�unless�earlier�converted,�repurchased�or
redeemed.�Interest�on�the�Convertible�Notes�is�calculated�at�a�fixed�rate�of�6.5%�per�annum,�payable�semi-annually�in�arrears�on�January�15�and�July�15�of�each
year,�with�the�first�interest�payment�due�January�15,�2021.�At�the�Company's�option,�interest�is�either�payable�in�cash,�through�accretion�to�the�principal�amount�of
the�Convertible�Notes,�or�a�combination�of�cash�and�accretion.
The�Convertible�Notes�may�be�converted�at�the�option�of�the�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase�of�the�Convertible
Notes, �based�upon�an�initial�conversion�price�of�$200�per�share�of�common�stock.�The�Company�may�settle�conversions�of�Convertible�Notes,�at�its�election,�in
cash, �shares �of �the �Company’s �common �stock, �or �a �combination �thereof. �The �initial �conversion �price �is �subject �to �adjustments �customary �for �convertible �debt
securities�and�a�weighted�average�adjustment�in�the�event�of�issuances�of�equity�and�equity�linked�securities�by�the�Company�at�prices�below�the�then�applicable
conversion�price�for�the�Convertible�Notes�or�the�then�market�price�of�the�Company’s�common�stock,�subject�to�certain�exceptions.
The �Company �will �have �the �right, �at �any �time �after �July �1, �2023, �to �redeem �the �Convertible �Notes �in �whole �or �in �part �if �the �closing �price �of �WEX’s
common�stock�is�at�least�200%�of�the�conversion�price�of�the�Convertible�Notes�for�20�trading�days�(whether�or�not�consecutive)�out�of�any�30�consecutive�trading
day�period�prior�to�the�time�the�Company�delivers�a�redemption�notice�(including�at�least�one�of�the�five�trading�days�immediately�preceding�the�last�day�of�such�30
trading�day�period),�subject�to�the�right�of�holders�of�the�Convertible�Notes�to�convert�its�Convertible�Notes�prior�to�the�redemption�date.
66
WEX�Latin�America�Debt
The �Company �sold �its �WEX �Latin �America �subsidiary �on �September �30, �2020. �WEX �Latin �America �had �debt �of �approximately �$2.7 �million �as �of
December�30,�2019,�which�was�comprised�of�credit�facilities�held�in�Brazil�and�loan�arrangements�related�to�our�accounts�receivable,�with�various�maturity�dates,
and�an�effective�interest�rate�of�35.04%.�The�Company�sold�its�WEX�Latin�America�subsidiary�on�September�30,�2020�and�the�Company�no�longer�has�this�debt
obligation.
Participation�Debt
From�time�to�time,�WEX�Bank�enters�into�participation�agreements�with�third-party�banks�to�fund�customer�balances�that�exceed�WEX�Bank’s�lending
limit�to�individual�customers.�Associated�unsecured�borrowings�carry�a�variable�interest�rate�of�1�month�to�3�month�LIBOR�plus�a�margin�of�225�basis�points.
The�following�table�provides�the�amounts�available�and�outstanding�and�the�remaining�funding�capacity�under�the�participation�debt�agreements�in�place:
(In�thousands)
Participation�debt
December�31,�2020
December�31,�2019
Amounts
1
Available
$
60,000�
Amounts�Outstanding
—�
Remaining
Funding�Capacity
60,000�
Amounts
Available
Amounts�Outstanding
2
Remaining
Funding
Capacity
$
80,000�
50,000�
$
30,000�
Average�interest�rate�on�participation�debt
Not�applicable
4.17� %
1
2
�Amounts�available�includes�up�to�$60�million�under�an�agreement�that�terminates�on�December�31,�2021.
�Amounts�outstanding�are�recorded�in�short-term�debt,�net�in�our�financial�statements.
Australian�Securitization�Facility
����The�Company�maintains�a�securitized�debt�agreement�with�the�Bank�of�Tokyo-Mitsubishi�UFJ,�Ltd.,�which�currently�extends�through�April�2021.�Under�the
terms �of �the �agreement, �each �month, �on �a �revolving �basis, �the �Company �sells �certain �of �its �Australian �receivables �to �the �Company’s �Australian �Securitization
Subsidiary. �The �Australian �Securitization �Subsidiary, �in �turn, �uses �the �receivables �as �collateral �to �issue �asset-backed �commercial �paper �(“securitized �debt”) �for
approximately �85 �percent �of �the �securitized �receivables. �The �amount �collected �on �the�securitized �receivables �is �restricted �to �pay �the�securitized �debt �and �is �not
available�for�general�corporate�purposes.
����The�Company�pays�a�variable�interest�rate�on�the�outstanding�balance�of�the�securitized�debt,�based�on�the�Australian�Bank�Bill�Rate�plus�an�applicable�margin.
The �interest �rate �was �0.97 �percent �and �1.80 �percent �as �of �December �31, �2020 �and �2019, �respectively. �The �Company �had �securitized �debt �under �this �facility �of
approximately�$62.6�million�and�$78.6�million�as�of�December�31,�2020�and�2019,�respectively.����
European�Securitization�Facility
����On�April�7,�2016,�the�Company�entered�into�a�five-year�securitized�debt�agreement�with�the�Bank�of�Tokyo-Mitsubishi�UFJ,�Ltd,�which�expires�in�April�2021.
Under�the�terms�of�the�agreement,�the�Company�sells�certain�of�its�receivables�from�selected�European�countries�to�our�European�Securitization�Subsidiary.�The
European �Securitization �Subsidiary, �in �turn, �uses �the �receivables �as �collateral �to �issue �securitized �debt. �The �amount �collected �on �the �securitized �receivables �is
restricted�to�pay�the�securitized�debt�and�is�not�available�for�general�corporate�purposes.�The�interest�rate�was�0.98�percent�and�0.63�percent�as�of�December�31,
2020�and�December�31,�2019,�respectively.�The�Company�had�$23.4�million�and�$25.7�million�of�securitized�debt�under�this�facility�as�of�December�31,�2020�and
December�31,�2019,�respectively.
67
WEX�Latin�America�Securitization�of�Receivables
Prior�to�the�sale�of�WEX�Latin�America�on�September�30,�2020,�the�Company�transferred�certain�unsecured�receivables�associated�with�its�salary�advance
payment�card�product�to�an�investment�fund�in�which�WEX�Latin�America�held�a�non-controlling�equity�interest,�and�that�is�managed�by�an�unrelated�third-party.
During�the�year�ended�December�31,�2020,�the�Company�received�an�insignificant�distribution�from�the�investment�fund�and�did�not�make�equity�contributions�to
the�investment�fund�during�the�year�ended�December�31,�2019.�During�the�year�ended�December�31,�2018,�the�Company’s�equity�contributions�to�the�investment
fund �totaled �$2.8 �million. �The �securitization �arrangement �met �the �derecognition �conditions �under �GAAP �and �transfers �beginning �July �1, �2018 �under �this
arrangement �were �treated �as �sales �and �accounted �for �as �a �reduction �of �trade �receivables. �During �the �year �ended �December �31, �2018, �the �Company �recognized
operating�interest�expense�of�$4.4�million�under�this�financing�arrangement.�During�the�years�ended�December�31,�2020�and�2019,�the�Company�recognized�a�gain
on �sale �of �$6.5 �million �and �$16.1 �million, �respectively. �The �gain �recognized �consists �of �the �difference �between �the �sales �price �and �the �carrying �value �of �the
receivables,�and�is�recorded�within�other�revenue.�Cash�proceeds�from�the�transfer�of�these�receivables�are�recorded�within�operating�activities�in�the�consolidated
statements�of�cash�flows.
WEX�Bank�Accounts�Receivable�Factoring
����WEX�Bank�has�entered�into�a�receivables�purchase�agreement�with�an�unrelated�third-party�financial�institution�to�sell�certain�of�our�trade�accounts�receivable
under�non-recourse�transactions�through�July�31,�2021.�The�purchase�agreement�can�be�renewed�for�successive�one-year�periods�assuming�WEX�provides�advance
written�notice�that�is�accepted�by�the�purchaser.�WEX�Bank�continues�to�service�the�receivables�post-transfer�with�no�participating�interest.�The�Company�obtained
a�true-sale�opinion�from�an�independent�attorney,�which�states�that�the�factoring�agreement�provides�legal�isolation�upon�WEX�Bank�bankruptcy�or�receivership
under �local �law. �As �such, �transfers �under �this �arrangement �are �treated �as �a �sale. �Proceeds �from �the �sale �are �reported �net �of �a �negotiated �discount �rate �and �are
accounted�for�as�a�reduction�in�trade�receivables�because�the�agreements�transfer�effective�control�of�the�receivables�to�the�buyer.
����The�Company�sold�approximately�$4.1�billion�and�$14.8�billion�of�trade�accounts�receivable�under�this�arrangement�during�the�years�ended�December�31,�2020
and�2019,�respectively.�Proceeds�from�the�sale,�which�are�reported�net�of�a�negotiated�discount�rate,�are�recorded�in�operating�activities�within�our�consolidated
statement�of�cash�flows.�The�loss�on�factoring�was�insignificant�and�$3.7�million�for�the�years�ended�December�31,�2020�and�2019,�respectively.
WEX�Europe�Services�Accounts�Receivable�Factoring
����WEX�Europe�Services�has�entered�into�a�factoring�arrangement�with�an�unrelated�third-party�financial�institution�(the�“Purchasing�Bank”)�to�sell�certain�of�its
accounts�receivable�through�December�31,�2020�in�order�to�accelerate�the�collection�of�the�Company’s�cash�and�reduce�internal�costs,�thereby�improving�liquidity.
Under�this�arrangement,�the�Purchasing�Bank�establishes�a�credit�limit�for�each�customer�account.�The�factored�receivables�are�without�recourse�to�the�extent�that
the�customer�balances�are�maintained�at�or�below�the�established�credit�limit.�For�customer�receivable�balances�in�excess�of�the�Purchasing�Bank’s�credit�limit,�the
Company�maintains�the�risk�of�default.�The�Company�obtained�a�true�sale�opinion�from�an�independent�attorney,�which�states�that�the�factoring�agreement�creates�a
sale�of�receivables�under�local�law�for�amounts�transferred�both�below�and�above�the�established�credit�limits.�The�Company�continues�to�service�these�receivables
post-transfer �with�no�participating �interest.�As�a �result,�the�Purchasing �Bank�is�deemed�the �purchaser�of�these�receivables �and�is�entitled �to�enforce�payment �of
these�amounts�from�the�debtor.
� � � �This �factoring �arrangement �is �accounted �for �as �a �sale �and �accordingly �the �Company �records �the �receivables �sold �as �a �reduction �of �accounts �receivable �and
proceeds �as �cash �provided �by �operating �activities. �The �Company �sold �approximately �$452.2 �million �and �$630.3 �million �of �receivables �under �this �arrangement
during �years �ended �December �31, �2020 �and �December �31, �2019, �respectively. �Charge-backs �on �balances �in �excess �of �the �credit �limit �during �the �years �ended
December�31,�2020�and�December�31,�2019�were�insignificant.
WEX�Bank
WEX�Bank,�is�subject�to�various�regulatory�capital�requirements�administered�by�the�FDIC�and�the�Utah�DFI.�Under�capital�adequacy�guidelines�and�the
regulatory �framework�for�prompt�corrective �action,�WEX�Bank�must�meet�specific�capital�guidelines �that�involve�quantitative�measures�of�WEX�Bank’s�assets,
liabilities �and�certain �off-balance �sheet �items. �WEX �Bank’s �capital �amounts �and�classification �are �also �subject�to �qualitative �judgments �by �the�regulators �about
components,�risk�weightings�and�other�factors.�Failure�to�meet�minimum�capital�requirements�can�initiate�certain�mandatory�and�possible�additional�discretionary
actions�by�regulators�that,�if�undertaken,�could�limit�our�business�activities�and�have�a�material�adverse�effect�on�our�business,�results�of�operations�and�financial
condition.�Qualitative�measures�established�by�regulation�to�ensure�capital�adequacy�require�WEX�Bank�to�maintain�minimum�amounts�and�ratios�as�defined�in�the
regulations.�As�of�December
68
31,�2020,�WEX�Bank�met�all�the�requirements�to�be�deemed�“well-capitalized”�pursuant�to�FDIC�regulation�and�for�purposes�of�the�Federal�Deposit�Insurance�Act.
Other�Liquidity�Matters
At �December �31, �2020, �we �had �variable-rate �borrowings �of �$2.3 �billion �under �our �2016 �Credit �Agreement. �We �periodically �review �our �projected
borrowings�under�our�2016�Credit�Agreement�and�the�current�interest�rate�environment�in�order�to�ascertain�whether�interest�rate�swaps�should�be�used�to�reduce
our�exposure�to�interest�rate�volatility.�As�of�December�31,�2020,�we�maintained�six�interest�rate�swap�contracts�that�mature�at�various�times�through�December
2023.�Collectively,�these�derivative�contracts�are�intended�to�fix�the�future�interest�payments�associated�with�$1.4�billion�of�our�variable�rate�borrowings�at�between
0.743�percent�to�2.413�percent.�See�Item�8�–�Note�12,�Derivative�Instruments,�Item�8�–�Note�19,�Fair�Value,�for�more�information.
On �January �24, �2020, �the �Company �entered �into �a �purchase �agreement �to �purchase �eNett �and �Optal �for �an �aggregate �purchase �price �comprised �of
approximately �$1.3 �billion �in �cash �and �2.0 �million �shares �of �the �Company’s �common �stock �and �subject �to �certain �working �capital �and �other �adjustments �as
described �in �the �purchase �agreement. �On �December �15, �2020, �the �Company �entered �into �a �Deed �of �Settlement �with �eNett, �Optal �and �the �other �parties �thereto
dismissing�the�legal�proceedings�and�appeals�relating�to�the�acquisition�and�purchase�agreement,�described�more�fully�in�Item�3�of�Part�I�of�the�Annual�Report�on
Form�10-K,�and�amending�the�purchase�agreement�to�provide�a�reduction�of�the�aggregate�purchase�price�for�the�acquisition�to�$577.5�million�(subject�to�certain
adjustments)�consisting�entirely�of�cash,�which�the�Company�paid�with�cash�on�hand.�The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the
Deed�of�Settlement�on�December�15,�2020.
In �connection �with �the�purchase �agreement, �the�Company �entered �into �a�commitment �letter �with �Bank�of �America,�N.A.�and �BofA�Securities, �Inc. �on
January�24,�2020�(the�“Original�Commitment�Letter”)�for�senior�secured�and�unsecured�credit�facilities�in�the�aggregate�amount�of�up�to�$3.1�billion,�inclusive�of
backstops�totaling�$1.7�billion�that�reduced�to�zero�under�the�terms�of�the�Eighth�Amendment�to�the�2016�Credit�Agreement.�The�Third�Amended�and�Restated
Commitment �Letter �most �recently �amended �and �restated �the �Original �Commitment �Letter �to �among �other �things, �reallocate �$600.0 �million �of �aggregate �credit
commitments�from�a�senior�secured�bridge�facility�to�a�364-day�unsecured�credit�facility�and�to�extend�this�portion�of�the�commitment�by�six�months�to�April�22,
2021.�The �remaining �$752.0 �million �consisted �of �a �seven-year �term �loan �B �facility �commitment �(the �“TLB �Commitment”) �that �was�not �affected �by �the �Third
Amended �and �Restated �Commitment �Letter. �The �TLB �Commitment �terminated �in �October �2020 �and �the �Third �Amended �and �Restated �Commitment �Letter
terminated�concurrently�with�the�closing�of�the�acquisition�on�December�15,�2020,�without�the�funding�of�any�loans�pursuant�thereto.
In�connection�with�the�Original�Commitment�Letter,�on�February�10,�2020,�the�Company�entered�into�an�eighth�amendment�(the�“Eighth�Amendment”)�to
the�2016�Credit�Agreement.�The�Eighth�Amendment,�among�other�things,�effectuated�financial�covenant�amendments�contemplated�by�the�Original�Commitment
Letter�and�increased�the�Company’s�capacity�to�incur�additional�incremental�loan�facilities�up�to�$1.4�billion�The�amendments�set�forth�in�the�Eighth�Amendment
would�have�become�effective�concurrently�with�the�closing�of�the�pending�acquisition�of�eNett�and�Optal,�but�were�superseded�by�the�amendments�set�forth�in�the
Ninth�Amendment�to�the�2016�Credit�Agreement.
On �June�26,�2020,�the �Company�entered�into�a�Ninth�Amendment, �which�made�certain �changes�to�the �2016�Credit�Agreement, �including�among �other
things,�increasing�the�maximum�consolidated�leverage�ratio�following�the�closing�of�the�eNett�and�Optal�acquisition�to�7.5X�at�December�31,�2020�and�March�31,
2021,�with�step-downs�thereafter, �tested�using �consolidated�funded �indebtedness�(excluding�(i) �up�to,�for �the�purpose�of �determining�the �applicable�pricing�tier,
$350.0�million�and,�for�any�other�purpose,�$400.0�million,�of�consolidated�funded�indebtedness�due�to�permitted�securitization�transactions�and�(ii)�the�amount�of
consolidated �funded �indebtedness �constituting�the �non-recourse �portion�of �permitted �factoring �transactions,�and �netting �up�to �(x) �with�respect �to�calculating �the
consolidated�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15,�2021,�for�the�purpose�of�determining�the�applicable�pricing�tier,�$287.6�million�and,
for�any�other�purpose,�an�unlimited�amount,�and�(y)�with�respect�to�calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0
million, �of �unrestricted �cash �and �cash �equivalents �denominated �in �U.S. �dollars �or �other �lawful �currencies �(provided �that �such �other �currencies �are �readily
convertible�to,�and�deliverable�in,�U.S.�dollars)�held�by�the�Company�and�its�subsidiaries)�to�consolidated�EBITDA,�adding�a�fourth�pricing�tier�and�limits�certain
investment�and�restricted�payment�covenants�in�the�case�that�the�consolidated�leverage�ratio�equals�or�exceeds�5.5X�and�introducing�a�LIBOR�floor�on�revolving
credit�facility�borrowings�of�75�basis�points.
On �July �29,�2020, �the�Company �entered�into�a �Tenth�Amendment �to �the�2016 �Credit�Agreement, �which �increased �commitments �under �the�Company's
secured�revolving�credit�facility�from�$820.0�million�to�$870.0�million.�On�August�20,�2020,�the�Company�entered�into�an�eleventh�amendment�(the�“�Eleventh
Amendment")�to�the�2016�Credit�Agreement,�which�limited�the�borrowing�conditions�for�a�$752�million�portion�of�the�revolving�credit�facility�solely�with�respect
to�any�borrowing�for�the�purpose�of�consummating�the�acquisition�of�eNett�and�Optal�on�or�prior�to�April�22,�2021.�Upon�the�closing�of�the
69
acquisition�of�eNett�and�Optal�on�December�15,�2020,�as�described�above,�and�the�payment�of�the�purchase�price�with�cash,�the�foregoing�ability�to�borrow�a�$752
million�portion�of�the�revolving�credit�facility�with�limited�conditions�terminated.
����The�Company’s�long-term�cash�requirements�consist�primarily�of�amounts�owed�on�the�2016�Credit�Agreement,�the�Notes�and�various�facility�lease�agreements.
� � ��As �of �December�31, �2020, �we�had �$51.6 �million�in �letters �of �credit�outstanding�and �$818.4�million �in �remaining �borrowing�capacity �under �the �2016�Credit
Agreement,�subject�to�the�covenants�as�described�above.
����We�currently�have�authorization�from�our�board�of�directors�to�purchase�up�to�$150�million�of�our�common�stock�until�September�2021,�which�is�entirely�unused
as�of�December�31,�2020.�The�program�is�funded�either�through�our�future�cash�flows�or�through�borrowings�on�our�2016�Credit�Agreement.�Share�repurchases�are
made �on �the �open �market �and �may �be �commenced �or �suspended �at �any �time. �The �Company’s �management, �based �on �its �evaluation �of �market �and �economic
conditions�and�other�factors,�determines�the�timing�and�number�of�shares�repurchased.
Contractual�Obligations
The�table�below�summarizes�the�estimated�amounts�of�payments�under�contractual�obligations�as�of�December�31,�2020:
(1)
(In�thousands)
Operating�Lease�Obligations
Debt�Obligations:
��Term�loans
��Interest�payments�on�term�loans
��$400�million�notes
��Interest�on�$400�million�notes
��Interest�of�certificates�of�deposit
��Convertible�Notes
��Interest�payments�on�Convertible�Notes
��Borrowed�federal�funds
(4)
��Securitization�facility
(2)
(6)
(3)
Other�Commitments:
��Certificates�of�deposit
��Interest-bearing�money�market�deposits
��Minimum�volume�purchase�commitments
��Other
(5)
Total
Total
Less�than�1�Year
Payments�Due�By�Period
1-3�Years
3-5�Years
$
124,951�
$
20,942� $
29,460� $
17,369� $
More�Than�5�Years
57,180�
2,316,145�
228,535�
400,000�
47,500�
6,091�
310,000�
141,834�
20,000�
85,945�
503,398�
439,894�
49,602�
17,663�
4,691,558�
$
64,611�
52,616�
—�
19,000�
5,318�
—�
20,934�
20,000�
85,945�
853,208�
93,189�
400,000�
28,500�
773�
—�
40,300�
—�
—�
29,361�
66,325�
—�
—�
—�
—�
40,300�
—�
—�
354,807�
439,894�
12,035�
10,227�
1,106,329� $
148,591�
—�
24,795�
7,436�
1,626,252� $
$
—�
—�
12,772�
—�
166,127� $
1,368,965�
16,405�
—�
—�
—�
310,000�
40,300�
—�
—�
—�
—�
—�
—�
1,792,850�
(1)
�Operating�lease�obligations�–�Primarily�represents�undiscounted�cash�flows�for�remaining�lease�payments�under�long-term�operating�leases�for�office�space.�See�Item�8�–�Note�15,�Leases,�for
more�information�regarding�our�leases.
(2)
�Interest�payments�on�term�loans�–�Interest�payments�are�based�on�effective�rates�and�credit�spreads�in�effect�as�of�December�31,�2020.�See�Item�8�–�Note�16,�Financing�and�Other�Debt,�for
more�information.
(3)
�Interest�payments�on�Convertible�Notes�–�Interest�payments�are�based�on�the�coupon�rate�and�assuming�that�the�Company�will�elect�to�settle�all�interest�payments�in�cash.�See�Item�8�–�Note
16,�Financing�and�Other�Debt,�for�more�information.
(4)
�Securitization�facility�–�Interest�payments�due�on�the�securitization�facility�are�not�included�as�the�amount�was�not�material.
(5)
�Minimum �volume �purchase �commitments�– �Two �of �the �Company’s �subsidiaries �are �required �to �purchase �a �minimum �amount �of �fuel �from �suppliers �on �an �annual �basis. �If �the �minimum
requirement �is �not �fulfilled, �they�are �subject �to�penalties �based�on �the �amount �of�spend �below �the �minimum�annual �volume �commitment. �The �table �above�represents �the �Company’s �annual
penalty�assuming�we�purchase�no�fuel�under�these�commitments�after�December�31,�2020.
(6)�
Notes�–�Included�within�1-3�year�column�due�to�contractual�maturity�date�of�February�2023,�however,�as�discussed�in�Item�8�–�Note�28,�Subsequent�Events,�the�Company�intends�to�early
redeem�the�Notes�in�full�during�March�2021.
70
Off-balance�Sheet�Arrangements
����In�addition�to�the�operating�leases�included�in�the�table�above,�we�have�the�following�off-balance�sheet�arrangements�as�of�December�31,�2020:
•
•
Extension�of�credit�to�customers�–�We �have�entered�into�commitments �to�extend�credit�in�the�ordinary�course �of�business.�We�had�approximately�$6.6
billion �of �unused �commitments �to �extend �credit �at �December �31, �2020, �as �part �of �established �customer �agreements. �These �amounts �may �increase �or
decrease �during �2021�as �we�increase �or�decrease �credit �to�customers, �subject �to�appropriate �credit �reviews, �as �part�of �our�lending �product�agreements.
Many�of�these�commitments�are�not�expected�to�be�utilized.�We�can�adjust�most�of�our�customers’�credit�lines�at�our�discretion�at�any�time.�Therefore,�we
do�not�believe�total�unused�credit�available�to�customers�and�customers�of�strategic�relationships�represents�future�cash�requirements.�We�believe�that�we
can�adequately�fund�actual�cash�requirements�related�to�these�credit�commitments�through�the�issuance�of�certificates�of�deposit,�borrowed�federal�funds
and�other�debt�facilities.
Letters �of �credit �–� As �of �December �31, �2020, �we �had �$51.6 �million �outstanding �in �irrevocable �letters �of �credit �issued �by �us �in �favor �of �third-party
beneficiaries, �primarily �related �to �facility �lease �agreements �and �virtual �card �and �fuel �payment �processing �activity �at �our �foreign �subsidiaries. �These
irrevocable�letters�of�credit�are�unsecured�and�are�renewed�on�an�annual�basis�unless�the�Company�chooses�not�to�renew�them.
•
Accounts�receivable�factoring�and�securitization�–�See�Item�8�–�Note�13,�Off-Balance�Sheet�Arrangements,�for�further�information.
ITEM�7A.�QUANTITATIVE�AND�QUALITATIVE�DISCLOSURES�ABOUT�MARKET�RISK
The�Company�is�exposed�to�market�risk�related�to�interest�rates,�foreign�currency�exchange�rates�and�commodity�prices.�From�time�to�time,�the�Company
enters�into�derivative�instrument�arrangements�to�manage�these�risks.
Interest�Rate�Risk
2016�Credit�Agreement
As �of �December �31, �2020, �we �had �variable-rate �borrowings �of �$2.3 �billion �under �the �2016 �Credit �Agreement. �As �of �December �31, �2020, �outstanding
interest�rate�swap�contracts�are�intended�to�fix�the�future�interest�payments�associated�with�$1.4�billion�of�the�$2.3�billion�of�outstanding�variable-rate�borrowings.
We�periodically�review�the�projected�borrowings�under�our�2016�Credit�Agreement�and�the�current�interest�rate�environment�in�order�to�ascertain�whether�interest
rate�swaps�should�be�used�to�reduce�our�exposure�to�interest�rate�volatility.�See�Item�8�–�Note�12,�Derivative�Instruments,�for�more�information.
Deposits
At�December�31,�2020,�WEX�Bank�had�deposits�(including�certificates�of�deposits�and�interest-bearing�brokered�money�market�deposits)�outstanding�of
$1.1�billion.�The�deposits�are�generally�short-term�in�nature,�though�they�are�issued�in�up�to�five-year�maturities.�Upon�maturity,�the�deposits�will�likely�be�replaced
by�issuing�new�deposits�to�the�extent�they�are�needed.�See�Item�8�–�Note�11,�Deposits,�for�more�information.
Sensitivity�Analysis
The �following �table �presents �a �sensitivity �analysis �of �the �impact �of �changes �in �interest �rates �on �our �deposits �and �corporate �debt, �assuming �amounts
outstanding,�the�notional�amounts�of�our�interest�rate�swap�agreements,�and�certificate�of�deposit�maturities�in�place�as�of�December�31,�2020�remain�the�same.
Actual�results�may�differ�materially.
2016�Credit�Agreement
Securitized�debt
Federal�funds
Certificates�of�deposits
Money�market�deposits
2021�impact�of�1.00%
increase�in�interest
rates
$
$
$
$
$
8,811�
859�
200�
3,052�
4,399�
71
Foreign�Currency�Risk
� � � �Our �exposure �to �foreign �currency �fluctuation �is �due �to �our �financial �statements �being �presented �in �U.S. �dollars �and �our �foreign �subsidiaries �transacting �in
currencies�other�than�the�U.S.�dollar,�which�results�in�gains�and�losses�that�are�reflected�in�our�consolidated�statements�of�operations.�We�currently�do�not�utilize
hedging�instruments�to�mitigate�these�risks.�However,�growth�in�our�international�operations�increases�this�exposure�and�we�may�initiate�strategies�to�hedge�certain
foreign�currency�risks�in�the�future.
Commodity�Price�Risk
The�Company�is�not�hedged�for�changes�in�fuel�prices.�Management�will�continue�to�monitor�the�fuel�price�market�and�evaluate�its�alternatives�as�it�relates
to�a�hedging�program.
72
ITEM�8.�FINANCIAL�STATEMENTS�AND�SUPPLEMENTARY�DATA
Index�to�Consolidated�Financial�Statements
Report�of�Independent�Registered�Public�Accounting�Firm
Consolidated�Statements�of�Operations�for�the�Years�Ended�December�31,�2020,�2019�and�2018
Consolidated�Statements�of�Comprehensive�(Loss)�Income�for�the�Years�Ended�December�31,�2020,�2019�and�2018
Consolidated�Balance�Sheets�at�December�31,�2020�and�2019
Consolidated�Statements�of�Stockholders’�Equity�for�the�Years�Ended�December�31,�2020,�2019�and�2018
Consolidated�Statements�of�Cash�Flows�for�the�Years�Ended�December�31,�2020,�2019�and�2018
Notes�to�Consolidated�Financial�Statements
74
77
78
79
80
81
82
73
REPORT�OF�INDEPENDENT�REGISTERED�PUBLIC�ACCOUNTING�FIRM
To�the�Shareholders�and�the�Board�of�Directors�of�WEX�Inc.
Opinion�on�the�Financial�Statements
We�have�audited�the�accompanying�consolidated�balance�sheets�of�WEX�Inc.�and�subsidiaries�(the�"Company")�as�of�December�31,�2020�and�2019,�the�related�consolidated
statements�of�operations,�comprehensive�(loss)�income,�shareholders'�equity,�and�cash�flows,�for�each�of�the�three�years�in�the�period�ended�December�31,�2020,�and�the�related
notes�(collectively�referred�to�as�the�"financial�statements").�In�our�opinion,�the�financial�statements�present�fairly,�in�all�material�respects,�the�financial�position�of�the�Company
as�of�December�31,�2020�and�2019,�and�the�results�of�its�operations�and�its�cash�flows�for�each�of�the�three�years�in�the�period�ended�December�31,�2020,�in�conformity�with
accounting�principles�generally�accepted�in�the�United�States�of�America.
We�have�also�audited,�in�accordance�with�the�standards�of�the�Public�Company�Accounting�Oversight�Board�(United�States)�(PCAOB),�the�Company's�internal�control�over
financial�reporting�as�of�December�31,�2020,�based�on�criteria�established�in�Internal�Control�—�Integrated�Framework�(2013)�issued�by�the�Committee�of�Sponsoring
Organizations�of�the�Treadway�Commission�and�our�report�dated�March�1,�2021,�expressed�an�unqualified�opinion�on�the�Company's�internal�control�over�financial�reporting.
Basis�for�Opinion
These�financial�statements�are�the�responsibility�of�the�Company's�management.�Our�responsibility�is�to�express�an�opinion�on�the�Company's�financial�statements�based�on�our
audits.�We�are�a�public�accounting�firm�registered�with�the�PCAOB�and�are�required�to�be�independent�with�respect�to�the�Company�in�accordance�with�the�U.S.�federal
securities�laws�and�the�applicable�rules�and�regulations�of�the�Securities�and�Exchange�Commission�and�the�PCAOB.
We�conducted�our�audits�in�accordance�with�the�standards�of�the�PCAOB.�Those�standards�require�that�we�plan�and�perform�the�audit�to�obtain�reasonable�assurance�about
whether�the�financial�statements�are�free�of�material�misstatement,�whether�due�to�error�or�fraud.�Our�audits�included�performing�procedures�to�assess�the�risks�of�material
misstatement�of�the�financial�statements,�whether�due�to�error�or�fraud,�and�performing�procedures�that�respond�to�those�risks.�Such�procedures�included�examining,�on�a�test
basis,�evidence�regarding�the�amounts�and�disclosures�in�the�financial�statements.�Our�audits�also�included�evaluating�the�accounting�principles�used�and�significant�estimates
made�by�management,�as�well�as�evaluating�the�overall�presentation�of�the�financial�statements.�We�believe�that�our�audits�provide�a�reasonable�basis�for�our�opinion.
Critical�Audit�Matters
The�critical�audit�matters�communicated�below�are�matters�arising�from�the�current-period�audit�of�the�financial�statements�that�was�communicated�or�required�to�be
communicated�to�the�audit�committee�and�that�(1)�relates�to�accounts�or�disclosures�that�are�material�to�the�financial�statements�and�(2)�involved�our�especially�challenging,
subjective,�or�complex�judgments.�The�communication�of�critical�audit�matters�does�not�alter�in�any�way�our�opinion�on�the�financial�statements,�taken�as�a�whole,�and�we�are
not,�by�communicating�the�critical�audit�matters�below,�providing�a�separate�opinion�on�the�critical�audit�matters�or�on�the�accounts�or�disclosures�to�which�they�relate.
Revenue�—�Refer�to�Notes�1�and�3�to�the�financial�statements
Critical�Audit�Matter�Description
The�Company’s�revenue�is�comprised�of�transaction-based�fees�made�up�of�a�significant�volume�of�low-dollar�transactions,�sourced�from�multiple�systems,�databases,�and�other
tools.�The�processing�and�recording�of�revenue�is�highly�automated�and�is�based�on�contractual�terms�with�merchants,�customers�and�other�parties.�Because�of�the�nature�of�the
Company’s�transaction-based�fees,�the�Company�uses�automated�systems�to�process�and�record�its�revenue�transactions.
Given�the�Company’s�systems�to�process�and�record�revenue�are�highly�automated,�auditing�revenue�is�complex�and�challenging�due�to�the�extent�of�audit�effort�required�and
involvement�of�professionals�with�expertise�in�information�technology�(IT)�necessary�to�identify,�test,�and�evaluate�the�Company’s�systems,�software�applications,�and
automated�controls.
How�the�Critical�Audit�Matter�Was�Addressed�in�the�Audit
Our�audit�procedures�related�to�the�Company’s�systems�to�process�revenue�transactions�included�the�following�procedures,�among�others:
• With�the�assistance�of�our�IT�specialists,�we:
–
–
Identified�the�significant�systems�used�to�process�revenue�transactions�and�tested�the�effectiveness�of�general�IT�controls�over�each�of�these�systems,
including�testing�of�user�access�controls,�change�management�controls,�and�IT�operations�controls.
Performed�testing�of�the�effectiveness�of�system�interface�controls�and�automated�controls�within�the�relevant�revenue�streams,�as�well�as�the�controls
designed�to�ensure�the�accuracy�and�completeness�of�revenue.
74
• We�tested�the�effectiveness�of�controls�over�the�Company’s�relevant�revenue�business�processes,�including�those�in�place�to�reconcile�the�various�systems�to�the
Company’s�general�ledger.
• With�the�assistance�of�our�data�specialists,�we�created�data�visualizations�to�evaluate�recorded�revenue�and�evaluate�trends�in�the�transactional�revenue�data.
•
For�a�sample�of�revenue�transactions,�we�performed�detail�transaction�testing�by�agreeing�the�amounts�recognized�to�source�documents�and�testing�the�mathematical
accuracy�of�the�recorded�revenue.
Convertible�Notes�—�Refer�to�Note�16�to�the�financial�statements
Critical�Audit�Matter�Description
In�July�2020,�the�Company�issued�shares�of�the�Company’s�common�stock�and�convertible�notes�(“Convertible�Notes”)�for�an�aggregate�purchase�price�of�$389.2�million.�The
Company�allocated�the�total�proceeds�on�a�relative�fair�value�basis�to�the�sale�of�the�Company’s�common�stock�and�the�Convertible�Notes.�Next,�as�the�Convertible�Notes�permit
the�Company�to�settle�the�conversion�in�cash,�the�Company�allocated�the�Convertible�Notes�into�liability�and�equity�components.�The�fair�value�of�the�liability�component�was
determined�utilizing�a�combination�of�a�binomial�lattice-based�model�and�a�discounted�cash�flow�model�that�includes�assumptions�such�as�implied�credit�spread,�expected
volatility,�and�the�risk-free�rate�for�notes�with�a�similar�term.�The�carrying�amount�of�the�equity�component�was�determined�by�deducting�the�fair�value�of�the�liability�component
from�the�total�proceeds�allocated�to�the�Convertible�Notes.
Given�(a)�the�complexity�of�applying�the�accounting�framework�for�the�Convertible�Notes,�and�(b)�the�determination�of�the�fair�value�of�the�liability�component�requires�the
Company�to�make�significant�estimates�and�assumptions�relating�to�the�implied�credit�spread,�expected�volatility,�and�the�risk-free�rate,�performing�audit�procedures�to�(a)
evaluate�the�appropriateness�of�the�accounting�framework�and�(b)�the�reasonableness�of�these�estimates�and�assumptions�required�a�high�degree�of�auditor�judgment�and�an
increased�extent�of�effort,�including�the�need�to�involve�our�fair�value�specialists.
How�the�Critical�Audit�Matter�Was�Addressed�in�the�Audit
Our�audit�procedures�related�to�the�accounting�for�the�Convertible�Notes,�including�the�Company’s�judgments�and�calculations�related�to�the�fair�value�of�the�liability
component,�included�the�following�procedures,�among�others:
• We�tested�the�effectiveness�of�controls�over�the�Company’s�accounting�for�the�Convertible�Notes,�and�over�the�determination�of�the�fair�value�of�the�liability
component.
• With�the�assistance�of�professionals�in�our�firm�having�expertise�in�debt�issuance�accounting,�we�evaluated�the�Company’s�conclusions�regarding�the�accounting
treatment�applied�to�the�Convertible�Notes.
• With�the�assistance�of�our�fair�value�specialists,�we�evaluated�the�reasonableness�of�the�valuation�methodology�and�the�significant�assumptions�used�to�determine�the
fair�value�of�the�liability�component,�by:
–
–
Testing�the�source�information�underlying�the�fair�value�of�the�liability�component�and�the�mathematical�accuracy�of�the�calculations.
Developing�an�independent�expectation�of�certain�of�the�significant�assumptions,�including�the�implied�credit�spread�and�expected�volatility,�and�comparing
our�estimate�to�the�Company’s�estimate.
Acquisitions�—�Refer�to�Note�4�to�the�financial�statements
Critical�Audit�Matter�Description
On�December�15,�2020,�the�Company�entered�into�a�settlement�agreement�dismissing�the�legal�proceedings�and�appeals�between�the�Company�and�the�shareholders�of�eNett,
Optal�and�other�parties�thereto�and�closed�on�the�acquisition�of�the�eNett�and�Optal�businesses�for�an�aggregate�purchase�price�of�$577.5�million.
The�Company�determined�the�aggregate�purchase�price�represents�consideration�paid�for�two�separate�elements,�the�businesses�acquired�and�the�settlement�of�litigation�and
allocated�$415�million�of�the�purchase�price�to�the�acquired�businesses�based�on�their�estimated�fair�value�with�the�residual�value�of�$162.5�million�allocated�to�the�legal
settlement.
Management�has�estimated�the�provisional�fair�value�of�the�acquired�businesses�utilizing�a�discounted�cash�flow�method�and�guideline�transaction�method�that�required�the
Company�to�make�significant�estimates�and�assumptions�related�to�future�cash�flows�and�the�selection�of�the�discount�rate.
We�identified�the�fair�value�of�the�business�as�a�critical�audit�matter�because�of�the�significant�estimates�and�assumptions�the�Company�makes�to�calculate�fair�value�of�the
businesses�for�purposes�of�recording�the�acquisition�and�the�legal�settlement.�This�required�a�high�degree�of�auditor�judgment�and�an�increased�extent�of�effort�when�performing
audit�procedures�to�evaluate�the�reasonableness�of�the�Company’s�forecasts�of�future�cash�flows�as�well�as�the�selection�of�the�discount�rate,�including�the�need�to�involve�our
internal�fair�value�specialists.
75
How�the�Critical�Audit�Matter�Was�Addressed�in�the�Audit
Our�audit�procedures�related�to�the�forecasts�of�future�cash�flows�and�the�selection�of�the�discount�rate�for�the�acquired�businesses�included�the�following,�among�others:
• We�tested�the�effectiveness�of�controls�over�the�valuation�of�the�acquired�businesses,�including�management’s�control�over�the�forecasts�of�future�cash�flows�and
selection�of�the�discount�rate.
• We�evaluated�the�Company’s�conclusions�regarding�the�accounting�treatment�applied�to�the�acquisition�and�legal�settlement.
• We�assessed�the�reasonableness�of�management’s�forecasts�of�future�cash�flows�by�comparing�the�projections�to�historical�results,�certain�peer�companies�and�industry
data.
• We�also�held�various�discussions�with�accounting�and�operations�management�regarding�the�business�assumptions�utilized�in�the�valuation�models�and,�on�a�test�basis,
obtained�audit�support�to�substantiate�the�assumptions�therein.
• With�the�assistance�of�our�fair�value�specialists,�we�evaluated�the�reasonableness�of�the�(1)�valuation�methodologies�and�(2)�discount�rate�used�by:
–
–
–
Evaluating�the�valuation�models�to�ensure�consistency�with�generally�accepted�valuation�practices.
Testing�the�source�information�underlying�the�determination�of�the�discount�rate�and�testing�the�mathematical�accuracy�of�the�calculations.
Developing�a�range�of�independent�estimates�and�comparing�those�to�the�discount�rate�selected�by�management.
• We�evaluated�whether�the�estimated�future�cash�flows�were�consistent�with�evidence�obtained�in�other�areas�of�the�audit.
/s/�Deloitte�&�Touche�LLP
Boston,�Massachusetts
March�1,�2021
We�have�served�as�the�Company's�auditor�since�2003.
76
WEX�INC.
CONSOLIDATED�STATEMENTS�OF�OPERATIONS
(in�thousands,�except�per�share�data)
�
��
Revenues
Payment�processing�revenue
Account�servicing�revenue
Finance�fee�revenue
Other�revenue
Total�revenues
Cost�of�services
Processing�costs
Service�fees
Provision�for�credit�losses
Operating�interest
Depreciation�and�amortization
Total�cost�of�services
General�and�administrative
Sales�and�marketing
Depreciation�and�amortization
Legal�settlement
Impairment�charges
Loss�on�sale�of�subsidiary
Operating�(loss)�income
Financing�interest�expense
Net�foreign�currency�loss
Non-cash�adjustments�related�to�tax�receivable�agreement
Net�unrealized�(loss)�gain�on�financial�instruments
(Loss)�income�before�income�taxes
Income�tax�(benefit)�provision
Net�(loss)�income
Less:�Net�income�(loss)�from�non-controlling�interests
Net�(loss)�income�attributable�to�WEX�Inc.
Change�in�value�of�redeemable�non-controlling�interest
Net�(loss)�income�attributable�to�shareholders
Net�(loss)�income�attributable�to�shareholders�per�share:
Basic
Diluted
Weighted�average�common�shares�outstanding:
Basic
Diluted
See�notes�to�consolidated�financial�statements.
$
$
$
$
Year�ended�December�31,
2020
2019
2018
$
698,891�
449,456�
198,523�
212,999�
1,559,869�
$
825,592�
413,552�
247,318�
237,229�
1,723,691�
723,991�
308,096�
208,627�
251,925�
1,492,639�
419,041�
47,289�
78,443�
23,810�
104,592�
673,175�
292,109�
266,684�
157,334�
162,500�
53,378�
46,362�
(91,673)
(157,080)
(25,783)
491�
(27,036)
(301,081)
(20,597)
(280,484)
3,466�
(283,950)
40,312�
(243,638)
$
(5.56) $
(5.56) $
43,842�
43,842�
400,439�
57,027�
65,664�
41,915�
94,725�
659,770�
275,807�
259,869�
142,404�
—�
—�
—�
385,841�
(134,677)
(926)
932�
(34,654)
216,516�
61,223�
155,293�
(1,030)
156,323�
(57,317)
99,006�
2.29�
2.26�
43,316�
43,769�
$
$
$
309,450�
53,655�
66,482�
38,407�
79,935�
547,929�
209,319�
229,234�
119,870�
—�
5,649�
—�
380,638�
(105,023)
(38,800)
(775)
2,579�
238,619�
68,843�
169,776�
1,481�
168,295�
—�
168,295�
3.90�
3.86�
43,156�
43,574�
77
WEX�INC.
CONSOLIDATED�STATEMENTS�OF�COMPREHENSIVE�(LOSS)�INCOME
(in�thousands)
�
��
Net�(loss)�income
Foreign�currency�translation
Comprehensive�(loss)�income
Less:�Comprehensive�income�(loss)�attributable�to�non-controlling�interest
Comprehensive�(loss)�income�attributable�to�WEX�Inc.
See�notes�to�consolidated�financial�statements.
Year�ended�December�31,
2020
2019
2018
$
$
$
(280,484)
27,864�
(252,620)
4,289�
(256,909) $
155,293�
1,784�
157,077�
(1,088)
158,165�
$
$
169,776�
(28,535)
141,241�
1,007�
140,234�
78
WEX�INC.
CONSOLIDATED�BALANCE�SHEETS
(in�thousands,�except�per�share�data)
�
��
Assets
Cash�and�cash�equivalents
Restricted�cash
Accounts�receivable�(net�of�allowances�of�$59,147�in�2020�and�$52,274�in�2019)
Securitized�accounts�receivable,�restricted
Prepaid�expenses�and�other�current�assets
Total�current�assets
Property,�equipment�and�capitalized�software�(net�of�accumulated�depreciation�of�$402,406�in�2020�and�$344,212�in�2019)
Goodwill
Other�intangible�assets�(net�of�accumulated�amortization�of�$835,163�in�2020�and�$666,793�in�2019)
Investment�securities
Deferred�income�taxes,�net
Other�assets
Total�assets
Liabilities�and�Stockholders’�Equity
Accounts�payable
Accrued�expenses
Restricted�cash�payable
Short-term�deposits
Short-term�debt,�net
Other�current�liabilities
Total�current�liabilities
Long-term�debt,�net
Long-term�deposits
Deferred�income�taxes,�net
Other�liabilities
Total�liabilities
Commitments�and�contingencies�(Note�21)
Redeemable�non-controlling�interest
Stockholders’�Equity
Common�stock�$0.01�par�value;�175,000�shares�authorized;�48,616�shares�issued�in�2020�and�47,749�in�2019;�44,188�shares�outstanding�in�2020�and
43,321�in�2019
Additional�paid-in�capital
Retained�earnings
Accumulated�other�comprehensive�loss
Treasury�stock�at�cost;�4,428�shares�in�2020�and�2019
Total�WEX�Inc.�stockholders’�equity
Non-controlling�interest
Total�stockholders’�equity
Total�liabilities�and�stockholders’�equity
See�notes�to�consolidated�financial�statements.
December�31,
2020
2019
$
$
$
852,033�
477,620�
1,993,329�
93,236�
86,629�
3,502,847�
188,340�
2,688,138�
1,552,012�
37,273�
17,524�
197,227�
8,183,361�
778,207�
362,472�
477,620�
911,395�
152,730�
58,429�
2,740,853�
2,874,113�
148,591�
220,122�
164,546�
6,148,225�
810,932�
170,449�
2,661,108�
112,192�
87,694�
3,842,375�
212,475�
2,441,201�
1,575,050�
30,460�
12,833�
184,024�
8,298,418�
969,816�
315,642�
170,449�
1,310,813�
248,531�
34,692�
3,049,943�
2,686,513�
143,399�
218,740�
106,422�
6,205,017�
117,219�
156,879�
485�
872,711�
1,286,976�
(82,935)
(172,342)
1,904,895�
13,022�
1,917,917�
8,183,361�
$
477�
675,060�
1,539,201�
(115,449)
(172,342)
1,926,947�
9,575�
1,936,522�
8,298,418�
$
$
$
$
79
WEX�INC.
CONSOLIDATED�STATEMENTS�OF�STOCKHOLDERS’�EQUITY
(in�thousands)�
��
��
Balance�at�January�1,�2018
Stock�issued�under�share-based�compensation�plans
Share�repurchases�for�tax�withholdings
Stock-based�compensation�expense
Foreign�currency�translation
Net�income�(loss)
Balance�at�January�1,�2019
Stock�issued�under�share-based�compensation�plans
Share�repurchases�for�tax�withholdings
Stock-based�compensation�expense
Adjustments�of�redeemable�non-controlling�interest
Foreign�currency�translation
Net�income
Balance�at�December�31,�2019
Cumulative�effect�adjustment�(Note�2)
Balance�at�January�1,�2020
Stock�issued�under�share-based�compensation�plans
Fair�value�of�stock�issued�through�private�placement,�net�of
issuance�costs�of�$968�(Note�16)
Share�repurchases�for�tax�withholdings
Equity�component�of�the�convertible�notes,�net�of�allocated
issuance�costs�of�$570�and�taxes�of�$13,623�(Note�16)
Stock-based�compensation�expense
Change�in�value�of�redeemable�non-controlling�interest
Foreign�currency�translation
Transfer�of�cumulative�translation�adjustment�on�the�sale�of
subsidiary
Net�(loss)�income
Common�Stock�Issued
Shares
Amount
Additional�
Paid-in�
Capital
Accumulated�
Other�
Comprehensive�
Loss
Treasury�
Stock
Retained�
Earnings
Non-Controlling
Interest
Total
Stockholders’
Equity
$
$
47,352�
205�
—�
—�
—�
—�
47,557�
192�
—�
—�
—�
—�
—�
47,749�
47,749�
290�
$
577�
—�
—�
—�
—�
—�
—�
—�
$
$
$
473�
2�
—�
—�
—�
—�
475�
2�
—�
—�
—�
—�
—�
477�
477�
2�
6�
—�
—�
—�
—�
—�
—�
—�
$
$
569,319�
2,428�
(12,372)
33,887�
—�
—�
593,262�
4,939�
(10,352)
45,811�
41,400�
—�
—�
675,060�
$
$
(89,230)
—�
—�
—�
(28,061)
—�
(117,291)
—�
—�
—�
—�
1,842�
—�
(115,449)
$
$
(172,342)
—�
—�
—�
—�
—�
(172,342)
—�
—�
—�
—�
—�
—�
(172,342)
675,060�
9,271�
$
(115,449)
—�
$
(172,342)
—�
$
92,970�
(9,519)
41,066�
63,863�
—�
—�
—�
—�
—�
—�
—�
—�
—�
27,041�
5,473�
—�
—�
—�
—�
—�
—�
—�
—�
—�
$
$
$
1,313,298�
—�
—�
—�
—�
168,295�
1,481,593�
—�
—�
—�
(98,715)
156,323�
1,539,201�
(8,587)
1,530,614�
—�
—�
—�
—�
—�
40,312�
—�
—�
(283,950)
$
$
$
9,220�
—�
—�
—�
(474)
1,481�
10,227�
—�
—�
—�
—�
(58)
(594)
9,575�
(190)
9,385�
—�
—�
—�
—�
—�
—�
823�
—�
2,814�
1,630,738�
2,430�
(12,372)
33,887�
(28,535)
169,776�
1,795,924�
4,941�
(10,352)
45,811�
(57,315)
1,784�
155,729�
1,936,522�
(8,777)
1,927,745�
9,273�
92,976�
(9,519)
41,066�
63,863�
40,312�
27,864�
5,473�
(281,136)
1,917,917�
Balance�at�December�31,�2020
48,616�
$
485�
$
872,711�
$
(82,935)
$
(172,342)
$
1,286,976�
$
13,022�
$
See�notes�to�consolidated�financial�statements.
80
WEX�INC.
CONSOLIDATED�STATEMENTS�OF�CASH�FLOWS
(in�thousands)
��
Cash�flows�from�operating�activities
Net�(loss)�income
Adjustments�to�reconcile�net�income�to�net�cash�provided�by�operating�activities:
Net�unrealized�loss
Stock-based�compensation
Depreciation�and�amortization
Loss�on�sale�of�subsidiary
Debt�restructuring�and�debt�issuance�cost�amortization
(Benefit)�provision�for�deferred�taxes
Provision�for�credit�losses
Impairment�charges
Non-cash�adjustments�related�to�tax�receivable�agreement
Changes�in�operating�assets�and�liabilities,�net�of�effects�of�acquisitions:
Accounts�receivable�and�securitized�accounts�receivable
Prepaid�expenses�and�other�current�and�other�long-term�assets
Accounts�payable
Accrued�expenses�and�restricted�cash�payable
Income�taxes
Other�current�and�other�long-term�liabilities
Net�cash�provided�by�operating�activities
Cash�flows�from�investing�activities
Purchases�of�property,�equipment�and�capitalized�software
Cash�paid�on�sale�of�subsidiary
Distribution�(contribution)�of�equity�investment
Purchases�of�investment�securities
Maturities�of�investment�securities
Acquisitions,�net�of�cash�and�restricted�cash�acquired
Net�cash�used�for�investing�activities
Cash�flows�from� financing�activities
Repurchase�of�share-based�awards�to�satisfy�tax�withholdings
Proceeds�from�stock�option�exercises
Net�change�in�deposits
Net�activity�on�other�debt
Borrowings�on�revolving�credit�facility
Repayments�on�revolving�credit�facility
Borrowings�on�term�loans
Repayments�on�term�loans
Proceeds�from�issuance�of�convertible�notes
Proceeds�from�issuance�of�common�stock
Issuance�costs
Net�change�in�securitized�debt
Net�cash�(used�for)�provided�by�financing�activities
Effect�of�exchange�rates�on�cash,�cash�equivalents�and�restricted�cash
Net�change�in�cash,�cash�equivalents�and�restricted�cash
Cash,�cash�equivalents�and�restricted�cash,�beginning�of�year
Cash,�cash�equivalents�and�restricted�cash,�end�of�year
(a)
(a)
2020
Year�ended�December�31,
2019
2018
$
(280,484) $
155,293�
$
169,776�
48,042�
63,863�
261,926�
46,362�
26,196�
(29,342)
78,443�
53,378�
(491)
592,947�
6,514�
(183,708)
151,236�
15,083�
7,054�
857,019�
(80,471)
(22,470)
837�
(6,459)
181�
(220,704)
(329,086)
(9,519)
9,273�
(396,065)
(66,915)
300,000�
(300,000)
—�
(64,611)
299,150�
90,000�
(17,048)
(23,521)
(179,256)
(405)
348,272�
981,381�
1,329,653�
$
29,792�
45,811�
237,129�
—�
9,942�
19,667�
65,664�
—�
(932)
(67,645)
31,337�
139,187�
31,627�
(12,266)
(21,435)
663,171�
(102,860)
—�
—�
(5,567)
230�
(882,417)
(990,614)
(10,352)
4,941�
176,603�
(43,148)
1,267,704�
(1,265,251)
688,990�
(64,329)
—�
—�
(3,442)
(1,943)
749,773�
4,020�
426,350�
555,031�
981,381�
$
21,924�
33,887�
199,805�
—�
9,674�
31,334�
66,482�
5,649�
775�
(201,637)
68,014�
(3,588)
8,654�
(2,107)
(8,413)
400,229�
(87,152)
—�
(2,771)
(1,768)
266�
(162,750)
(254,175)
(12,372)
2,430�
(20,360)
(62,290)
1,570,983�
(1,707,478)
178,000�
(35,791)
—�
—�
(5,841)
(10,009)
(102,728)
(10,680)
32,646�
522,385�
555,031�
$
81
Supplemental�cash�flow�information
Interest�paid
Income�taxes�(refunded)�paid
Supplemental�disclosure�of�non-cash�investing�and�financing�activities
Capital�expenditures�incurred�but�not�paid
2020
2019
2018
163,292�
$
(8,444) $
175,993�
$
50,964� $
141,476�
39,225�
3,179�
$
4,771�
$
8,569�
$
$
$
(a)
�The�following�table�provides�a�reconciliation�of�cash,�cash�equivalents�and�restricted�cash�reported�within�our�consolidated�balance�sheets�to�amounts�within�our�consolidated�statements�of
cash�flows�for�the�years�ended�December�31,�2020,�2019�and�2018:
�
�
Cash�and�cash�equivalents�at�beginning�of�year
Restricted�cash�at�beginning�of�year
Cash,�cash�equivalents�and�restricted�cash�at�beginning�of�year
Cash�and�cash�equivalents�at�end�of�year
Restricted�cash�at�end�of�year
Cash,�cash�equivalents�and�restricted�cash�at�end�of�year
See�notes�to�consolidated�financial�statements.
2020
810,932�
170,449�
981,381�
852,033�
477,620�
1,329,653�
$
$
$
$
$
$
$
$
December�31,
2019
2018
541,498�
13,533�
555,031�
810,932�
170,449�
981,381�
$
$
$
$
503,519�
18,866�
522,385�
541,498�
13,533�
555,031�
82
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
1.
Basis�of�Presentation�and�Summary�of�Significant�Accounting�Policies
Business�Description
� � � �WEX �Inc. �(“Company”, �“we” �or �“our”) �is �a �leading �financial �technology �service �provider �having �simplified �the �complexities �of �payment �systems �across
continents�and�industries.�The�Company�provides�products�and�services�that�meet�the�needs�of�businesses�in�various�geographic�regions�including�North�America,
Asia �Pacific �and �Europe. �The �Company’s �Fleet �Solutions, �Travel �and �Corporate �Solutions, �and �Health �and �Employee �Benefit �Solutions �segments �provide �our
customers�with�security�and�control�for�complex�payments�across�a�wide�spectrum�of�business�sectors.
Basis�of�Presentation�and�Use�of�Estimates�and�Assumptions
� � � �The�accompanying �consolidated �financial �statements �for �the �years�ended �December �31, �2020,�2019 �and �2018, �include�the �accounts �of �the�Company�and �its
wholly�and�majority-owned�subsidiaries.�All�intercompany�accounts�and�transactions�have�been�eliminated�in�consolidation.
The �Company �prepares �its �consolidated �financial �statements �in �conformity �with �GAAP �and �with �the �Rules �and �Regulations �of �the �SEC, �specifically
Regulation�S–X�and�the�instructions�to�Form�10–K.�These�principles�require�management�to�make�estimates�and�assumptions�that�affect�the�reported�amounts�of
assets �and �liabilities �and �the �disclosures �of �contingent �assets �and �liabilities �as �of �the �date �of�the �financial �statements �and �the �reported �amounts �of �revenue �and
expenses�during�the�period.�Actual�results�could�differ�from�those�estimates�and�those�differences�may�be�material.
� � ��The �Company�rounds �amounts �in�the �consolidated �financial�statements �to �thousands�within �tables �and�millions �within �text�(unless �otherwise �specified),�and
calculates �all �percentages �and �per-share �data �from �underlying �whole-dollar �amounts. �Thus, �certain �amounts �may �not �foot, �crossfoot, �or �recalculate �based �on
reported�numbers�due�to�rounding.
COVID-19�Pandemic�Response�and�Impact
A�novel�strain�of�coronavirus�(COVID-19)�was �first�identified�in�Wuhan, �China�in�January�2020,�and�subsequently �declared�a�global�pandemic �by�the
World�Health�Organization�on�March�11,�2020.
During�the�first�quarter�of�2020,�the�Company�took�a�number�of�precautionary�steps�to�safeguard�its�business�and�employees�from�the�effects�of�COVID-
19�including�restricting�business�travel,�temporarily�closing�offices�and�canceling�participation�in�various�industry�events.�Additionally,�in�an�effort�to�rescale�the
business �and �safeguard �shareholder �value �in �this �unprecedented �operating �environment, �we �took �certain �measures �to �both �permanently �reduce �headcount �and
furlough �employees �across �our �worldwide �offices �where �necessary. �Aside �from �the �employee �furloughs, �which �ended �during �the �third �quarter �of �2020, �the
precautionary �steps �described �above �largely �remain �in �force �as �the �Company �continues �to �closely �track �and �assess �the �evolving �effect �of �the �pandemic. �The
Company�is�actively�managing�its�responses�in�collaboration�with�its�employees,�customers�and�suppliers.
The�spread�of�COVID-19,�and�conditions�arising�in�connection�with�it,�including�restrictions�on�businesses�and�individuals�and�wider�changes�in�business
and�customer�behavior,�had�a�negative�impact�on�the�Company’s�businesses�during�the�year�ended�December�31,�2020.�The�following�describes�these�impacts�by
reportable�segment:
Fleet�Solutions�—�The�Fleet�Solutions�segment�has�seen�both�positive�and�negative�impacts�as�a�result�of�the�world's�response�to�COVID-19,�with�the
negative �impacts �significantly �outweighing �the �positive. �Firstly, �2020 �revenue �has �significantly �decreased �as �a �result �of �lower �transaction �prices �driven �by �a
decrease�in�the�average�U.S.�price�per�gallon�of�fuel�as�compared�to�2019.�Volumes�have�also�negatively�impacted�the�segment's�results�during�2020�as�compared
to �2019 �due �to �lower �volumes �in �the �North �American �fleet �and �international �portions �of �the �business. �Partly �offsetting �these �negatively �impacted �areas �of �the
business�were�volume�trends�in�our�over-the-road�trucking�business,�which�have�increased�relative�to�prior�year�due�to�increased�shipping�to�individuals�during�the
U.S.�lockdown,�but�represent�a�smaller�portion�of�the�overall�segment.
Travel�and�Corporate�Solutions�—�Of�the�Company's�segments,�Travel�and�Corporate�Solutions�has�been�the�most�severely�impacted�by�the�pandemic
and�the�corresponding�decline�in�worldwide�travel�and�tourism.�Purchase�volume�in�the�travel�portion�of�the�segment�was�significantly�lower�in�2020�as�compared
to�2019. �In�contrast, �the �corporate �payments�portion �of �the�segment �has �seen �an�increase �in �purchase�volumes �during �2020,�which �is �largely �attributable �to�the
ongoing�migration�of�businesses�to�virtual�payments�and �increasing�usage�of�our�accounts�payable�products.�These�improvements, �however,�represent�a�smaller
percentage�of�the�total�segment.
83
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Health�and�Employee�Benefit�Solutions�—�The�Health�and�Employee�Benefit�Solutions'�volume�was�most�challenged�by�the�pandemic�during�the�second
quarter�of�2020�as�a�result�of�cardholders�deferring�non-essential�medical�treatments�when�U.S.�lockdown�restrictions�were�most�severe.�However,�by�the�fourth
quarter�of�2020,�the�U.S.�Health�business�saw�a�slight�increase�in�purchase�volumes�relative�to�the�same�period�in�the�prior�year.
Significant�Accounting�Policies
Cash�and�Cash�Equivalents
����Highly�liquid�investments�with�original�maturities�at�the�time�of�purchase�of�three�months�or�less�(that�are�readily�convertible�to�cash)�are�considered�to�be�cash
equivalents�and�are�stated�at�cost,�which�approximates�fair�value.�Cash�and�cash�equivalents�include�Eurodollar�time�deposits,�and�money�market�funds,�which�are
unsecured�short-term�investments�entered�into�with�financial�institutions.
Restricted�Cash
Restricted �cash �represents �funds �collected �from �individuals �or �employers �on �behalf �of �our �customers �that �are �to �be �remitted �to �third �parties �or �funds
required�to�be�maintained�under�certain�vendor�agreements.�With�the�acquisition�of�eNett�and�Optal,�restricted�cash�as�of�December�31,�2020�also�includes�amounts
received�from�online�travel�agencies�held�in�segregated�accounts�until�a�transaction�is�settled.�Restricted�cash�is�not�available�to�fund�the�Company’s�operations.
Additionally,�we�maintain�an�offsetting�liability�against�restricted�cash.
Accounts�Receivable,�Net�of�Allowances
Accounts�receivable�consists�of�amounts�billed�and�due�from�third�parties.�We�often�extend�short-term�credit�to�cardholders�and�pay�the�merchant�for�the
purchase�price,�less�the�fees�we�retain�and�record�as�revenue.�We�subsequently�collect�the�total�purchase�price�from�the�cardholder.
����The�Company�adopted�Topic�326�on�January�1,�2020,�utilizing�the�modified-retrospective�approach,�under�which�prior�period�comparable�financial�information
was�not�adjusted.�Topic�326�amends�the�impairment�model�by�requiring�entities�to�use�a�forward-looking�approach�based�on�expected�losses�rather�than�incurred
losses�to�estimate�credit�losses�on�certain�types�of�financial�instruments,�including�trade�receivables�and�off-balance�sheet�credit�exposures.
The�following�table�illustrates�the�adoption�impact�of�Topic�326:
(In�thousands)
Allowance�for�accounts�receivable
Deferred�income�taxes,�net�(within�total�assets)
Deferred�income�taxes,�net�(within�total�liabilities)
Retained�earnings
Non-controlling�interest
1
Prior�to�Adoption
$
$
$
$
$
52,274�
12,833�
218,740�
1,539,201�
9,575�
$
$
$
$
$
January�1,�2020
Impact�of�
Topic�326
11,577�
$
570�
$
(2,230) $
(8,587) $
(190) $
As�Reported
63,851�
13,403�
216,510�
1,530,614�
9,385�
1
�This�impact�does�not�reflect�the�economic�disruption�resulting�from�the�COVID-19�pandemic�since�it�occurred�subsequent�to�January�1,�2020.
Allowance�for�Accounts�Receivable
The�allowance�for�accounts�receivable�reflects�management’s�current�estimate�of�uncollectible�balances�on�its�accounts�receivable�and�consists�primarily
of�reserves�for�credit�losses.�As�a�result �of�the�adoption�of�Topic�326,�the�reserve �for�expected�credit�losses�includes �both�a�quantitative�and�qualitative �reserve
component. �The�quantitative�component �is�primarily�calculated �using�an�analytic�model, �which�includes�the�consideration �of�historical�loss�experience �and�past
events �to �calculate �actual �loss-rates �at �the�portfolio �level. �It�also �includes �reserves �against �specific �customer�account �balances �determined�to �be �at�risk �for�non-
collection �based �on �customer �information �including �delinquency, �changes �in �payment �patterns �and �other �information. �The �qualitative �component �is �determined
through �analyzing �recent �trends �in �economic �indicators �and �other �current �and �forecasted �information �to �determine �whether �loss-rates �are �expected �to �change
significantly�in�comparison�to�historical�loss-rates�at�the�portfolio�level.�When�such�indicators�are�forecasted�to�deviate�from�the�current�or�historical�median,�the
Company�qualitatively�assesses�what�impact,�if�any,�the�trends�are�expected�to�have�on�the�reserve�for�credit�losses.�Economic�indicators�include
84
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
consumer�price�indices,�consumer�spending�and�unemployment�trends,�among�others.�See�Note�6,�Accounts�Receivable,�for�discussion�regarding�the�adjustments
made�during�the�year�ended�December�31,�2020�as�a�result�of�these�assessments.
Accounts�receivable�are�evaluated�for�credit�losses�on�a�pooling�basis�based�on�similar�risk�characteristics�including�industry�of�the�borrower,�historical�or
expected�credit�loss�patterns,�risk�ratings�or�classification,�and�geographic�location.�As�a�result�of�this�evaluation,�our�portfolio�segments�consist�of�the�following:
•
•
•
Fleet�Solutions�-�The�majority�of�the�customer�base�consists�of�companies�within�the�transportation,�logistics�and�fleet�industries.�The�associated�credit
losses�by�customer�are�generally�low,�however,�the�Fleet�Solutions�segment�has�historically�comprised�the�majority�of�the�Company’s�provision�for�credit
loss.�Credit�losses�generally�correlate�with�changes�in�consumer�price�indices�and�other�indices�that�measure�trends�and�volatility�including�the�Institute�of
Supply�Management�Purchasing�Index�and�the�U.S.�Volatility�Index.
Travel �and �Corporate �Solutions �- �The �customer �base �is �comprised �of �businesses �operating �in �a �wide �range �of �industries �including �large �online �travel
agencies.�With�the�exception�of�the�eNett�and�Noventis�portfolios,�which�have�minimal�credit�risk�due�to�their�respective�business�models�and�collection
terms, �the �associated �credit �losses �are�sporadic �and �closely �correlate �with �trends�in �consumer �metrics, �including �consumer �spending �and �the �consumer
price�index.
Health �and �Employee �Benefit �Solutions �- �The �customer �base �includes �third-party �administrators, �individual �employers �and �employees. �The �associated
credit�losses�are�generally�low.�Prior�to�the�sale�of�WEX�Latin�America,�the�Company�maintained�credit�exposure�on�certain�associated�receivables�not
sold �to �the �securitization �fund �and �accordingly �established �an �allowance �for �credit �losses, �which �was �included �in �the �Health �and �Employee �Benefit
Solutions�balance.
When �accounts �receivable �exhibit �elevated �credit �risk �characteristics �as �a �result �of �bankruptcies, �disputes, �conversations �with �customers, �or �other
significant�credit�loss�events,�they�are�assessed�account�level�credit�loss�estimates.�Assumptions�regarding�expected�credit�losses�are�reviewed�each�reporting�period
and�may�be�impacted�by�actual�performance�of�accounts�receivable�and�changes�in�any�of�the�factors�discussed�above.
Prior �to �the �adoption �of �Topic �326 �on �January �1, �2020, �the �accounts �receivable �allowance �reflected �management’s �estimate �of �uncollectible �balances
resulting�from�credit�losses�and�based�on�the�determination�of�the�amount�of�expected�losses�inherent�in�the�accounts�receivable�as�of�the�reporting�date.
The�allowance�for�accounts�receivable�also�includes�reserves�for�waived�finance�fees,�which�are�used�to�maintain�customer�goodwill�and�recorded�against
the�late�fee�revenue�recognized,�as�well�as�reserves�for�fraud�losses,�which�are�recorded�as�credit�losses.�Management�monitors�known�and�suspected�fraudulent
activity�identified�by�the�Company,�as�well�as�fraudulent�claims�reported�by�customers,�in�estimating�the�reserve�for�expected�fraud�losses.
Off-Balance�Sheet�Arrangements
The �Company �has �various �off-balance �sheet �commitments, �including �the �extension �of �credit �to �customers, �accounts �receivable �factoring �and �accounts
receivable �securitization, �which �carry �credit �risk �exposure. �Such �arrangements �are �described �in �Note �21, �Commitments �and �Contingencies, �and �Note �13, �Off-
Balance�Sheet�Arrangements.�These�items�were�not�significantly�impacted�by�the�adoption�of�Topic�326�as�of�December�31,�2020.
Investment�Securities
� � � �Changes �in �the �fair �value �of �investment �securities �are �included �in �net �unrealized �(loss) �gain �on �financial �instruments �within �our �consolidated �statements �of
operations.�Realized�gains�and�losses�and�declines�in�fair�value�determined�to�be�other-than-temporary�are�included�in�non-operating�expenses.�The�cost�basis�of
securities�is�based�on�the�specific�identification�method.�Investment�securities�held�by�the�Company�were�purchased�and�are�held�by�WEX�Bank�primarily�in�order
to�meet�the�requirements�of�the�Community�Reinvestment�Act.
Derivatives
����From�time�to�time,�the�Company�utilizes�derivative�instruments�as�part�of�its�overall�strategy�to�reduce�the�impact�of�interest�and�foreign�currency�exchange�rate
volatility.�The�Company’s�derivative�instruments�are�recorded�at�fair�value�on�the�consolidated�balance�sheets.�The�Company’s�derivative�instruments�outstanding
at�December�31,�2020�and�2019�consist�entirely�of�interest�rate�swap�agreements�that�have�not�been�designated�as�hedges.�Realized�and�unrealized�gains�and�losses
on�the�derivatives�are�recognized�in�financing�interest�and�unrealized�gains�and�losses�on�financial�instruments,�respectively.�For
85
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
the�purposes�of�cash�flow�presentation,�realized�and�unrealized�gains�or�losses�are�included�within�cash�flows�from�operating�activities.
Leases
����Effective�January�1,�2019,�the�Company's�real�estate�leases�are�accounted�for�using�a�right-of-use�model,�which�recognizes�that�at�the�date�of�commencement,�a
lessee �has �a �financial �obligation �to �make �lease �payments �to �the �lessor �for �the �right �to �use �the �underlying �asset �during �the �lease �term. �The �lessee �recognizes �a
corresponding�right-of-use�asset�related�to�this�right.�The�Company�made�an�accounting�policy�election�to�not�recognize�assets�or�liabilities�for�leases�with�a�term
of �less �than �twelve �months �and �to �account �for �all �components �in �a �lease �arrangement �as �a �single �combined �lease �component. �Certain �of �our �lease �agreements
include �variable �rent �payments, �consisting �primarily �of �rental �payments �adjusted �periodically �for �inflation �and �amounts �paid �to �the �lessor �based �on �cost �or
consumption,�such�as�maintenance�and�utilities.�These�costs�are�expensed�as�incurred.�As�the�Company’s�leases�do�not�specify�an�implicit�rate,�the�Company�uses
an�incremental�borrowing�rate�based�on�information�available�at�the�lease�commencement�date�to�determine�the�present�value�of�the�lease�payments.
The�Company�evaluates�right-of-use�assets�for�impairment�when�events�or�changes�in�circumstances�indicate�that�the�carrying�value�of�the�asset�may�not
be�recoverable.�Specifically,�the�Company�may�choose�to�exit�a�lease�prior�to�the�end�of�the�lease�term.�In�circumstances�when�the�Company�has�made�the�decision
to�exit�the�lease�and�does�not�have�the�ability�and�intent�to�sublease�such�exited�facility,�the�Company�adjusts�the�estimated�useful�life�of�the�right-of-use�asset�so
that�it�ends�on�the�cease�use�date.�The�accelerated�lease�expense�is�recognized�on�a�straight-line�basis�through�the�end�of�the�useful�life.
See�Note�15,�Leases,�for�further�information.
Property,�Equipment�and�Capitalized�Software
����Property,�equipment�and�capitalized�software�are�stated�at�cost,�net�of�accumulated�depreciation�and�amortization.�Replacements,�renewals�and�improvements
are �capitalized �and�costs �for�repair �and�maintenance �are�expensed �as�incurred. �Leasehold�improvements �are�depreciated �using�the �straight-line �method�over �the
shorter�of�the�remaining�lease�term�or�the�useful�life�of�the�improvement.�Depreciation�and�amortization�for�all�other�property,�equipment�and�capitalized�software
is�primarily�computed�using�the�straight-line�method�over�the�estimated�useful�lives�shown�below.
��
Furniture,�fixtures�and�equipment
Internal-use�computer�software
Computer�software
Estimated�Useful�Lives
3�to�5�years
1.5�to�5�years
3�years
����
The�Company’s�developed�software�is�used�to�provide�processing�and�information�management�services�to�customers.�A�significant�portion�of�the�Company’s
capital �expenditures �is�devoted �to�the �development�of �such�internal-use �computer�software. �Costs�incurred �during�the �preliminary�project �stage �are�expensed�as
incurred. �Software �development �costs �are �capitalized �during �the �application �development �stage. �Capitalization �begins �when �the �preliminary �project �stage �is
complete, �as�well �as �when �management �authorizes �and �commits �to �the �funding �of �the �project. �Capitalization �of �costs �ceases �when �the �software �is�ready �for �its
intended�use.�Costs�related�to�maintenance�of�internal-use�software�are�expensed�as�incurred.
����Below�are�the�amounts�of�internal-use�computer�software�capitalized�within�property,�equipment�and�capitalized�software�and�the�related�amortization�expense
incurred�on�all�internal-use�computer�software�during�the�years�ended�December�31:
(in�thousands)
Gross�amounts�capitalized�for�internal-use�computer�software�(including�construction-in-process)
Amounts�expensed�for�amortization�of�internal-use�computer�software
2020
2019
2018
$
$
58,881�
72,363�
$
$
74,432�
57,821�
$
$
46,382�
38,632�
Cloud�Computing�Arrangements
The�Company�capitalizes�implementation�costs�in�cloud�computing�arrangements,�including�development�costs�on�third�party�technology�platforms.�Such
amounts�are�amortized,�when�ready�for�intended�use,�over�the�lesser�of�the�term�of�the�hosting�arrangement�or�the�useful�life�of�the�underlying�software.
86
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
As�of�December�31,�2020,�the�Company�had�the�following�costs�capitalized�with�respect�to�cloud�computing�arrangements�on�the�consolidated�balance
sheet:
(in�thousands)
Gross�cloud�computing�costs�(inclusive�of�in-process�amounts)
Accumulated�amortization
Net�cloud�computing�costs
Included�in�prepaid�expenses�and�other�current�assets
Included�in�other�assets
The�Company�had�no�cloud�computing�costs�capitalized�prior�to�2020.
Acquisitions
2020
6,360�
387�
5,973�
4,570�
1,403�
$
$
$
$
� � � �For �acquisitions �that �meet �the �definition �of �a �business �combination, �the �Company �applies �the �acquisition �method �of �accounting �where �assets �acquired �and
liabilities �assumed �are �recorded �at �fair �value �at �the �date �of �each �acquisition. �Any �excess �of �the �consideration �transferred �by �the �Company �over �the �amounts
recognized�for�assets�acquired�and�liabilities�assumed�is�recorded�as�goodwill.�The�Company�continues�to�evaluate�acquisitions�for�a�period�not�to�exceed�one�year
after�the�acquisition �date�of�each�transaction�to�determine�whether�any�additional�adjustments�are�needed�to�the�allocation�of�the�purchase�price.�The�acquiree’s
results�of�operations�are�included�in�consolidated�results�of�the�Company�from�the�date�of�the�respective�acquisition.
� � � �All �other�acquisitions �are �accounted �for �as �asset�acquisitions �and �the �purchase �price �is�allocated �to �the �net �assets �acquired �with �no �recognition �of �goodwill.
Following�the�acquisition�date,�the�purchase�price�is�not�subsequently�adjusted.
� � � �The �fair �value �of �assets �acquired �and �liabilities �assumed �is �based�on �management’s �estimates �and �assumptions, �as �well �as �other �information �compiled �by
management.�Fair�values�are�typically�determined�using�a�discounted�cash�flow�valuation�method,�though�the�Company�utilizes�alternative�valuation�methods�when
deemed�appropriate.�Significant�acquisition�valuation�assumptions�typically�include�timing�and�amount�of�future�cash�flows,�effective�income�tax�rates,�discount
rates,�long-term�growth�expectations�and�customer�attrition�rates.
Goodwill�and�Other�Intangible�Assets
� � � �The �Company �tests �goodwill �for �impairment �at �least �annually �or �more �frequently �if �facts �or �circumstances �indicate �that �the �goodwill �might �be �impaired.
Goodwill�is�assigned�to�reporting�units,�which�are�one�level�below�the�Company’s�operating�segments.�The�Company�performs�goodwill�impairment�tests�at�the
reporting�unit�level�annually�as�of�October�1.�Such�impairment�tests�include�comparing�the�fair�value�of�the�respective�reporting�units�with�their�carrying�values,
including�goodwill.�The�Company�uses�both�discounted�cash�flow�analyses�and�comparable�company�pricing�multiples�to�determine�the�fair�value�of�its�reporting
units.�Such�analyses�are�corroborated�using�market�analytics.�Certain�assumptions�are�used�in�determining�the�fair�value,�including�assumptions�about�future�cash
flows �and �terminal �values. �When �appropriate, �the �Company �considers �the �assumptions �that �it �believes �hypothetical �marketplace �participants �would �use �in
estimating�future�cash�flows.�In�addition,�an�appropriate�discount�rate�is�used,�based�on�the�Company’s�cost�of�capital�or�reporting�unit-specific�economic�factors.
When�the�fair�value�of�a�reporting�unit�is�less�than�its�carrying�value,�a�goodwill�impairment�charge�is�recorded�equal�to�the�amount�by�which�the�carrying�value�of
the�reporting�unit,�including�goodwill,�exceeds�its�fair�value,�limited�to�the�total�amount�of�goodwill�allocated�to�that�reporting�unit.
During�our�annual�goodwill�impairment�test�performed�as�of�October�1,�2020,�we�determined�that�the�reduced�volumes�attributable�in�part�to�COVID-19,
had�a�significant�negative�impact�on�the�fair�value�of�the�WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel�Card�acquisition).�Based�on�the�carrying�value�of�this
reporting �unit�exceeding �its�fair �value,�the �Company�recorded �a�$53.4�million �goodwill�impairment �charge�during �the�year�ended �December�31, �2020.�There�is
$65.8�million�remaining�goodwill�associated �with�this�reporting�unit. �See�Note�9,�Goodwill�and�Other �Intangible�Assets,�and�Note�24,�Impairment �Charges,�for
further�information�regarding�the�outcome�of�the�Company’s�annual�goodwill�impairment�test�performed�as�of�October�1,�2020,�2019,�and�2018.
����Intangible�assets�that�are�deemed�to�have�definite�lives�are�generally�amortized�using�a�method�reflective�of�the�pattern�in�which�the�economic�benefits�of�the
assets �are �expected �to�be �consumed. �If �that �pattern �cannot �be �reliably �determined, �the �assets �are �amortized �using �a �straight-line �method �over �their �useful �lives,
which �is �the �period �of �time �that �the �asset �is �expected �to �contribute �directly �or �indirectly �to �future �cash �flows. �The �Company �determines �the �useful �lives �of �its
identifiable�intangible
87
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
assets�after�considering�the�specific�facts�and�circumstances�related�to�each�intangible�asset.�The�factors�that�management�considers�when�determining�useful�lives
include�the�contractual�term�of�agreements,�the�history�of�the�asset,�the�Company’s�long-term�strategy�for�the�use�of�the�asset,�any�laws�or�other�local�regulations
which �could �impact �the �useful �life �of �the �asset �and �other �economic �factors, �including �competition �and �specific �market �conditions. �The �Company �performs �an
evaluation�of�the�remaining�useful�lives�of�the�definite-lived�intangible�assets�periodically�to�determine�if�any�change�is�warranted.
The �Company �assesses�the �realizability �of�intangible �assets �other�than �goodwill �whenever�conditions �exist�that �indicate �the�carrying �value �may�not �be
recoverable.�Such�conditions�may�include�a�reduction�in�operating�cash�flow�or�a�dramatic�change�in�the�manner�in�which�the�asset�is�intended�to�be�used.
Impairment�of�Long-Lived�Assets
����The�Company’s�long-lived�assets�primarily�include�property,�plant�and�equipment�and�intangible�assets.�The�carrying�values�of�long-lived�assets�are�reviewed
for�impairment�whenever�events�or�changes�in�business�circumstances�indicate�that�the�carrying�amount�of�an�asset�may�not�be�recoverable.
To�test�for�impairment�of�long-lived�assets,�the�Company�generally�uses�a�probability-weighted�estimate�of�the�future�undiscounted�net�cash�flows�of�the
assets�over�their�remaining�lives�to�determine�if�the�value�of�the�asset�is�recoverable.�Long-lived�assets�are�grouped�with�other�assets�and�liabilities�at�the�lowest
level�for�which�independent�identifiable�cash�flows�are�determinable.
An�asset�impairment�is�recognized�when�the�carrying�value�of�the�asset�is�not�recoverable�based�on�the�analysis�described�above,�in�which�case�the�asset�is
written�down�to�its�fair�value.�If�the�asset�does�not�have�a�readily�determinable�market�value,�a�discounted�cash�flow�model�may�be�used�to�determine�the�fair�value
of�the�asset.�In�circumstances�when�an�asset�does�not�have�separate�identifiable�cash�flows,�an�impairment�charge�is�recorded�when�the�Company�no�longer�intends
to�use�the�asset.
Fair�Value�of�Financial�Instruments
����The�Company�holds�mortgage-backed�securities,�fixed-income�mutual�funds,�money�market�funds,�derivatives�(see�Note�12,�Derivative�Instruments)�and�certain
other �financial �instruments �that �are �carried �at �fair �value. �The �Company �determines �fair �value �based �upon �quoted �prices �when �available �or �through �the �use �of
alternative�approaches,�such�as�model�pricing,�when�market�quotes�are�not�readily�accessible�or�available.�Various�factors�are�considered�in�determining�the�fair
value�of�the�Company’s�obligations,�including:�closing�exchange�or�over-the-counter�market�price�quotations;�time�value�and�volatility�factors�underlying�options
and�derivatives;�price�activity�for�equivalent�instruments;�and�the�Company’s�own-credit�standing.
����These�valuation�techniques�may�be�based�upon�observable�and�unobservable�inputs.�Observable�inputs�reflect�market�data�obtained�from�independent�sources,
while�unobservable�inputs�reflect�the�Company’s�market�assumptions.�These�two�types�of�inputs�create�the�following�fair�value�hierarchy:
•
•
•
Level�1�–�Quoted�prices�for�identical�instruments�in�active�markets.
Level�2�–�Quoted�prices�for�similar�instruments�in�active�markets;�quoted�prices�for�identical�or�similar�instruments�in�markets�that�are�not�active;
and�model-derived�valuations�whose�inputs�are�observable�or�whose�significant�value�drivers�are�observable.
Level�3�–�Instruments�whose�significant�value�drivers�are�unobservable.
����Additionally,�the�Company�holds�certain�investments�that�are�measured�at�their�NAV�as�a�practical�expedient,�which�are�excluded�from�the�fair�value�hierarchy.
����Assets�and�liabilities�measured�at�fair�value�are�classified�in�their�entirety�based�on�the�lowest�level�of�input�that�is�significant�to�the�fair�value�measurement.�Our
assessment �of�the�significance �of�a�particular �input�to�the�fair �value�measurement�in �its�entirety�requires�judgment �and�considers�factors �specific�to�the�asset �or
liability.
Revenue�Recognition
����The�Company�generally�accounts�for�its�revenue�under�Topic�606�or�ASC�310,�Receivables�for�rights�or�obligations�associated�with�financial�instruments.�The
Company �generally �records �revenue �net, �equal �to �consideration �retained, �based �upon �its �conclusion �that �the �Company �is �the �agent �in �its �principal �versus �agent
relationships.�The�Company�evaluated�the�nature�of�its
88
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
promise�to�the �customer �and �determined�that �it�does �not�control �a�promised �good�or �service�before �transferring�that �good�or�service �to�the �customer,�but �rather
arranges�for�another�entity�to�provide�the�goods�or�services.����
����The�vast�majority�of�the�Company’s�Topic�606�revenue�is�derived�from�stand-ready�obligations�to�provide�payment�processing,�transaction�processing�and�SaaS
services�and�support.�As�such,�we�view�these�services�as�comprising�a�series�of�distinct�days�of�service�that�are�substantially�the�same�and�have�the�same�pattern�of
transfer �to �the �customer. �Accordingly, �the �promise �to �stand �ready �is �accounted �for �as �a �single-series �performance �obligation. �The �transaction-based �fees �are
generally�calculated�based�on�measures�such�as�(i)�percentage�of�dollar�value�of�volume�processed;�(ii)�number�of�transactions�processed;�or�(iii)�some�combination
thereof. �The �Company �has �entered �into �agreements �with �major �oil �companies, �fuel �retailers, �vehicle �maintenance �providers, �online �travel �agencies �and �health
partners,�which�provide�services�and�limited�products�to�the�Company’s�customers.�These�agreements�specify�that�a�transaction�is�deemed�to�be�captured�when�the
Company�has�validated�that�the�transaction�has�no�errors�and�has�accepted�and�posted�the�data�to�the�Company’s�records.�Revenue�is�recognized�based�on�the�value
of�services�transferred�to�date�using�a�time�elapsed�output�method.�See�Note�3,�Revenue,�for�a�description�of�the�major�components�of�revenue.����
� � � �The �Company �enters �into �contracts �with �certain �large �customers �or �partners �that �provide �for �fee �rebates �tied �to �performance �milestones. �Such �rebates �and
incentives�are�calculated�based�on�estimated�performance�and�the�terms�of�the�related�business�agreements�and�are�typically�recorded�as�a�reduction�of�revenue.
Amounts �paid �to �certain �partners �in �our �Fleet �Solutions �and �Travel �and �Corporate �Solutions �segments �are �recorded �within �sales �and �marketing �expense �on �our
consolidated�statements�of�operations.
Stock-Based�Compensation
����The�Company�recognizes�the�fair�value�of�all�stock-based�payments�to�employees�and�directors�in�its�financial�statements.�The�Company�estimates�the�fair�value
of�service-based�stock�option�awards�on�the�grant�date�using�a�Black-Scholes-Merton�valuation�model.�The�Company�estimates�the�fair�value�of�awards�granted
with�market�conditions�(including�market�performance-based�stock�option�awards�and�TSR�performance�awards)�on�the�grant�date�using�a�Monte�Carlo�simulation
model.�The�fair�value�of�RSUs,�including�PBRSUs�based�on�Company�performance�goals,�is�determined�and�fixed�on�the�grant�date�based�on�the�closing�price�of
the�Company’s�stock.
Stock-based�compensation�expense�is�recorded�net�of�estimated�forfeitures�over�each�award’s�requisite�service�period.�The�Company�uses�the�straight-line
methodology �for �recognizing �the �expense �associated �with �service-based �stock �options �and �RSU �grants �and �a �graded-vesting �methodology �for �the �expense
recognition�of�market�performance-based�stock�options�and�PBRSUs.
See�Note�23,�Stock-Based�Compensation,�for�further�information.
Advertising�Costs
����Advertising�and�marketing�costs�are�expensed�in�the�period�incurred.�During�the�years�ended�December�31,�2020,�2019�and�2018,�advertising�expense�was�$17.4
million,�$17.9�million�and�$16.3�million,�respectively.
Income�Taxes
� � � �Income �taxes�are �accounted �for �under �the�asset �and �liability �method. �Under �this�method, �deferred �tax �assets �and �liabilities �are�recognized �for �the �future �tax
consequences�attributable�to�differences�between�the�financial�statement�carrying�amounts�of�existing�assets�and�liabilities�and�their�respective�tax�bases.�Deferred
tax�assets�and�liabilities�are�measured�using�enacted�tax�rates�expected�to�apply�to�taxable�income�in�the�years�in�which�those�temporary�differences�are�expected�to
be�recovered�or�settled.�The�effect�on�deferred�tax�assets�and�liabilities�of�a�change�in�tax�rates�is�recognized�in�the�period�that�includes�the�enactment�date.
The �ultimate �realization �of �deferred �tax �assets �is �dependent �upon �the �generation �of �future �taxable �income �during �the �periods �in �which �the �associated
temporary�differences�become�deductible.�A�valuation�allowance�is�established�for�those�jurisdictions�in�which�the�realization�of�deferred�tax�assets�is�not�deemed
to�be�more�likely�than�not.
����Accounting�guidance�prescribes�a�recognition�threshold�and�measurement�attribute�for�the�financial�statement�recognition�and�measurement�of�a�tax�position
taken�or�expected�to�be�taken�in�a�tax�return.�This�accounting�guidance�also�provides�guidance�on�derecognition,�classification,�interest�and�penalties,�accounting�in
the�interim�periods,�disclosure,�and�transition.�Penalties�and�interest�related�to�uncertain�tax�positions�are�recognized�as�a�component�of�income�tax�expense.�To�the
89
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
extent�penalties�and�interest�are�not�assessed�with�respect�to�uncertain�tax�positions,�amounts�accrued�are�reduced�and�reflected�as�a�reduction�of�the�overall�income
tax�provision.
Earnings�per�Share
����Basic�earnings�per�share�is�computed�by�dividing�net�income�attributable�to�shareholders�by�the�weighted�average�number�of�shares�of�common�stock�and�vested
DSUs �outstanding �during �the �year. �The �computation �of �diluted �earnings �per �share �is �similar �to �the �computation �of �basic �earnings �per �share, �except �that �the
numerator �is �increased �for �tax �effected �interest �expense �associated �with �our �Convertible �Notes �and �the �denominator �is �increased �for �the �assumed �issuance �of
common�shares�issuable�on�convertible�securities�under�the�"if�converted"�method�unless�the�effect�is�anti-dilutive.�Also,�diluted�earnings�per�share�includes�the
assumed �exercise �of�dilutive�options�and�the�assumed�issuance�of�unvested�RSUs�and�performance-based�awards�for�which�the�performance�condition�has�been
met�as�of�the�date�of�determination�using�the�treasury�stock�method�unless�the�effect�is�anti-dilutive.�The�treasury�stock�method�assumes�that�proceeds,�including
cash�received�from�the�exercise�of�employee�stock�options�and�the�average�unrecognized�compensation�expense�for�unvested�share-based�compensation�awards,
would�be�used�to�purchase�the�Company’s�common�stock�at�the�average�market�price�during�the�period.
����The�following�table�summarizes�net�(loss)�income�attributable�to�shareholders�and�reconciles�basic�and�diluted�shares�outstanding�used�in�the�earnings�per�share
computations:
(In�thousands)
Net�(loss)�income�attributable�to�shareholders
Weighted�average�common�shares�outstanding�–�Basic
Dilutive�impact�of�share-based�compensation�awards
Weighted�average�common�shares�outstanding�–�Diluted
1
2020
Year�ended�December�31,
2019
2018
$
(243,638) $
99,006�
$
168,295�
43,842�
—�
43,842�
43,316�
453�
43,769�
43,156�
418�
43,574�
1
�Due�to�the�Company’s�net�loss�position�for�the�year�ended�December�31,�2020,�0.5�million�incremental�shares,�are�excluded�from�the�table�above�as�the�effect�of�including�those�shares�would
be�anti-dilutive. �For �the �years �ended �December �31, �2019 �and�2018, �an�immaterial �number �of �outstanding �share-based �compensation�awards�were �excluded �from �the �computation �of �diluted
earnings�per�share,�as�the�effect�of�including�these�awards�would�be�anti-dilutive.
It �is �the �Company's �current �intention �to �settle �all �conversions �of �the �Convertible �Notes �in �shares �of �the �Company's �common �stock. �Under �the �"if-
converted"�method,�1.6�million�shares�of�the�Company's�common�stock�associated�with�the�assumed�conversion�of�these�Convertible�Notes�as�of�the�beginning�of
the�period�have�been�excluded�from�diluted�shares�outstanding�for�the�year�ended�December�31,�2020�as�the�effect�of�including�such�shares�would�be�anti-dilutive.
Foreign�Currency�Movement
����The�financial�statements�of�the�Company’s�foreign�subsidiaries,�where�the�local�currency�is�the�functional�currency,�are�translated�to�U.S.�dollars�using�year-end
spot�exchange�rates�for�assets�and�liabilities,�average�exchange�rates�for�revenue�and�expenses�and�historical�exchange�rates�for�equity�transactions.�The�resulting
foreign�currency�translation�adjustment�is�recorded�as�a�component�of�accumulated�other�comprehensive�loss.
����Gains�and�losses�on�foreign�currency�transactions�as�well�as�the�remeasurement�of�the�Company’s�cash,�receivable�and�payable�balances�that�are�denominated�in
foreign �currencies, �are �recorded �directly �in �net �foreign �currency �(loss) �gain �in �the �consolidated �statements �of �income. �However, �gains �or �losses �resulting �from
intercompany �transactions �where �repayment �is �not �anticipated �for �the �foreseeable �future �are �not �recognized �in �the �consolidated �statements �of �income. �In �these
situations,�the�gains�or�losses�are�deferred�and�included�as�a�component�of�accumulated�other�comprehensive�loss.�In�addition,�gains�and�losses�associated�with�the
Company’s�foreign�currency�exchange�derivatives�are�recorded�in�net�foreign�currency�(loss)�gain�in�the�consolidated�statements�of�income.
Accumulated�Other�Comprehensive�Loss�(“AOCL”)
����For�the�years�ended�December�31,�2020,�2019�and�2018,�AOCL�consisted�entirely�of�unrealized�gains�and�losses�on�foreign�currency�translation�adjustments
pertaining�to�the�net�investment�in�foreign�operations.
90
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
2.
Recent�Accounting�Pronouncements
����The�following�table�provides�a�brief�description�of�recent�accounting�pronouncements�that�have�had,�or�could�have,�a�material�effect�on�our�financial�statements:
Description
Standard
Adopted�During�the�Year�Ended�December�31,�2020
ASU�2016–13,�Financial
Instruments–Credit�Losses:
Measurement�of�Credit
Losses�on�Financial
Instruments
This�standard�amends�the�impairment�model�to
utilize�an�expected�loss�methodology�in�place�of
the�incurred�loss�methodology�for�financial
instruments,�including�trade�receivables�and�off-
balance�sheet�credit�exposures.�The�standard
requires�entities�to�consider�a�broader�range�of
information�to�estimate�expected�credit�losses,
including�historical�experience,�current
conditions�and�reasonable�and�supportable
forecasts�that�impact�the�collectability�of�the
reported�amount.
Not�Yet�Adopted�as�of�December�31,�2020
ASU�2020–04,�Reference
Rate�Reform
ASU�2020–06,�Debt�–�Debt
with�Conversion�and�Other
Options�(Subtopic�470-20)
and�Derivatives�and
Hedging�–Contracts�in
Entity's�Own�Equity
(Subtopic�815-40)
This�standard�provides�optional�guidance�for�a
limited�period�of�time�to�ease�the�potential
financial�reporting�burden�in�accounting�for�(or
recognizing�the�effects�of)�the�discontinuation�of
LIBOR�resulting�from�reference�rate�reform.
The�amendments�provide�optional�expedients
and�exceptions�for�applying�GAAP�to�contracts
and�other�transactions�impacted�by�reference
rate�reform.�If�certain�criteria�are�met,�an�entity
will�not�be�required�to�remeasure�or�reassess
contracts�impacted�by�reference�rate�reform.
This�standard�simplifies�the�accounting�for
certain�financial�instruments�with�characteristics
of�liabilities�and�equity,�including�convertible
instruments�and�contracts�in�an�entity's�own
equity.�Among�other�changes,�this�standard
removes�from�GAAP�the�liability�and�equity
separation�model�for�convertible�instruments
with�a�cash�conversion�feature.�Instead,�entities
will�account�for�a�convertible�debt�instrument
wholly�as�debt�unless�(1)�a�convertible�debt
instrument�contains�features�that�require
bifurcation�as�a�derivative�under�ASC�Topic
815,�Derivatives�and�Hedging,�or�(2)�a
convertible�debt�instrument�was�issued�at�a
substantial�premium.�The�standard�also�requires
the�application�of�the�if-converted�method�to
calculate�the�impact�of�convertible�instruments
on�diluted�earnings�per�share.
Date/Method�of�Adoption
Effect�on�financial�statements�or�other�significant�matters
The�Company�adopted�ASU
2016–13�effective�January�1,
2020�using�the�modified-
retrospective�approach.
The�amendments�of�this�new�standard�were�applied�through�a�cumulative-
effect�adjustment�to�total�stockholders’�equity�of�$8.8�million,�net�of�a�$2.8
million�income�tax�benefit,�as�of�January�1,�2020.�This�adjustment�was
driven�by�the�incorporation�of�economic�forecasts�into�the�Company’s
expected�credit�loss�reserve�methodology.�The�consolidated�financial
statements�for�the�year�ended�December�31,�2020�are�presented�under�the
new�standard.�Comparative�periods�presented�have�not�been�adjusted.�Refer
to�Note�1,�Basis�of�Presentation�and�Significant�Accounting�Policies,�for
discussion�of�the�Company’s�credit�loss�methodology.
Election�is�available�through
December�31,�2022.
The�Company�is�currently�evaluating�the�implications�of�these�amendments
to�its�current�efforts�for�reference�rate�reform�implementation�and�any
impact�the�adoption�of�this�ASU�would�have�on�its�financial�condition�and
results�of�operations.
Effective�for�fiscal�years
beginning�after�December�15,
2021�and�may�be�early�adopted
for�the�fiscal�year�beginning
after�December�15,�2020�using�a
modified�retrospective�or�fully
retrospective�method�of
transition.
The�Company�will�early�adopt�this�ASU�effective�January�1,�2021.
Adoption�will�eliminate�the�bifurcation�of�the�equity�component�associated
with�our�Convertible�Notes,�which�was�originally�recorded�within�equity.
Going�forward,�this�equity�component�will�be�included�as�part�of�the
carrying�value�of�the�Convertible�Notes.�Additionally,�interest�expense�is
expected�to�decline�approximately�$6�million�during�the�year�ended
December�31,�2021�as�result�of�the�adoption�of�this�ASU.
91
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
3.
Revenue
����In�accordance�with�Topic�606,�revenue�is�recognized�when,�or�as,�performance�obligations�are�satisfied�as�defined�by�the�terms�of�the�contract,�in�an�amount�that
reflects�the�consideration�to�which�the�Company�expects�to�be�entitled�in�exchange�for�goods�or�services�provided.
����The�following�tables�disaggregate�our�consolidated�revenue:
(In�thousands)
Topic�606�revenues
Payment�processing�revenue
Account�servicing�revenue
Other�revenue
Topic�606�revenues
Non-Topic�606�revenues
Total�revenues
(In�thousands)
Topic�606�revenues
Payment�processing�revenue
Account�servicing�revenue
Other�revenue
Topic�606�revenues
Non-Topic�606�revenues
Total�revenues
(In�thousands)
Topic�606�revenues
Payment�processing�revenue
Account�servicing�revenue
Other�revenue
Topic�606�revenues
Non-Topic�606�revenues
Total�revenues
Fleet�Solutions
Travel�and�Corporate
Solutions
Health�and�Employee
Benefit�Solutions
Total
Year�Ended�December�31,�2020
$
$
$
$
$
$
$
$
$
$
$
$
404,843�
17,512�
78,620�
500,975�
417,335�
918,310�
Fleet�Solutions
457,244�
17,709�
83,765�
558,718�
479,677�
1,038,395�
Fleet�Solutions
464,980�
30,385�
66,379�
561,744�
413,396�
975,140�
$
$
$
$
$
$
$
$
$
$
$
$
229,144�
41,927�
2,559�
273,630�
4,210�
277,840�
$
$
$
$
64,904�
253,706�
35,734�
354,344�
9,375�
363,719�
Year�Ended�December�31,�2019
Travel�and�Corporate
Solutions
Health�and�Employee
Benefit�Solutions
303,385�
43,293�
3,340�
350,018�
17,808�
367,826�
$
$
$
$
64,963�
205,524�
28,225�
298,712�
18,758�
317,470�
Year�Ended�December�31,�2018
Travel�and�Corporate
Solutions
Health�and�Employee
Benefit�Solutions
203,289�
37,262�
4,906�
245,457�
57,887�
303,344�
$
$
$
$
55,722�
108,172�
25,668�
189,562�
24,593�
214,155�
$
$
$
$
$
$
$
$
$
$
$
$
698,891�
313,145�
116,913�
1,128,949�
430,920�
1,559,869�
825,592�
266,526�
115,330�
1,207,448�
516,243�
1,723,691�
723,991�
175,819�
96,953�
996,763�
495,876�
1,492,639�
Total
Total
����The�vast�majority�of�the�above�revenue�relates�to�services�transferred�to�the�customer�over�time.�Point-in-time�revenue�recognized�was�immaterial�during�the
years�ended�December�31,�2020,�2019,�and�2018.
Payment�Processing�Revenue
����Payment�processing�revenue�consists�primarily�of�interchange�income.�Interchange�income�is�a�fee�paid�by�a�merchant�bank�(“merchant”)�to�the�card-issuing
bank�(generally�the�Company)�in�exchange�for�the�Company�facilitating�and�processing�transactions�with�cardholders.�Interchange�fees�are�set�by�the�card�network.
WEX�processes�transactions�through�both�closed-loop�and�open-loop�networks.
•
Fleet�Solutions�segment�interchange�income�primarily�relates�to�revenue�earned�on�transactions�processed�through�the�Company’s�proprietary�closed-loop
fuel �networks.�In�closed-loop�fuel�network�arrangements,�written�contracts �are�entered �into�between�the�Company�and�merchants,�which�determine�the
interchange�fee�charged�on�transactions.�The
92
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Company�extends�short-term�credit�to�the�fleet�cardholder�and�pays�the�merchant�the�purchase�price�for�the�cardholder’s�transaction,�less�the�interchange
fees�the�Company�retains.�The�Company�collects�the�total�purchase�price�from�the�fleet�cardholder.�In�Europe,�interchange�income�is�specifically�derived
from�the�difference�between�the�negotiated�price�of�fuel�from�the�supplier�and�the�agreed�upon�price�paid�by�fleet�cardholders.
•
Interchange�income�in�our�Travel�and�Corporate�Solutions�and�Health�and�Employee�Benefit�Solutions�segments�relates�to�revenue�earned�on�transactions
processed �through �open-loop �networks. �In �open-loop �network �arrangements, �there �are �several �intermediaries �involved �between �the �merchant �and �the
cardholder�and�written�contracts�between�all�parties�involved�in�the�process�do�not�exist.�Rather,�the�transaction�is�governed�by�the�rates�determined�by�the
card �network �at �the �point-of-sale. �This �framework �dictates �the �interchange �rate, �the �risk �of �loss, �dispute �procedures �and �timing �of �payment. �For �these
transactions,�there�is�an�implied�contract�between�the�Company�and�the�merchant.�In�our�Travel�and�Corporate�Solutions�segment,�the�Company�remits
payment�to�the�card�network�for�the�purchase�price�of�the�cardholder�transaction,�less�the�interchange�fees�the�Company�earns.�The�Company�collects�the
total�purchase�price�from�the�cardholder.�In�our�Health�and�Employee�Benefit�Solutions�segment,�funding�of�transactions�and�collections�from�cardholders
is�performed�by�third-party�sponsor�banks,�who�remit�a�portion�of�the�interchange�fee�to�us.
����The�Company�has�determined�that�the�merchant�is�the�customer�as�it�relates�to�interchange�income�regardless�of�the�type�of�network�through�which�transactions
are�processed.�The�Company’s�primary�performance�obligation�to�merchants�is�a�stand-ready�commitment�to�provide�payment�and�transaction�processing�services
as�the�merchant�requires,�which�is�satisfied�over�time�in�daily�increments.�Since�the�timing�and�quantity�of�transactions�to�be�processed�by�us�is�not�determinable,
the�total�consideration�is�determined�to�be�variable�consideration.�The�variable�consideration�for�our�payment�and�transaction�processing�service�is�usage-based�and
therefore�specifically�relates�to�our�efforts�to�satisfy�our�obligation.�The�variability�is�satisfied�each�day�the�service�is�provided�to�the�customer.�We�directly�ascribe
variable�fees�to�the�distinct�day�of�service�to�which�it�relates,�and�we�consider�the�services�performed�each�day�in�order�to�ascribe�the�appropriate�amount�of�total
fees�to�that�day.�Therefore,�we�measure�interchange�income�on�a�daily�basis�based�on�the�services�that�are�performed�on�that�day.
��� �In�determining �the�amount �of�consideration �received�related �to �these�services, �the�Company �applied�the �principal-agent�guidance �in�Topic �606�and �assessed
whether �it �controls �services �performed �by �other �intermediaries. �Based �on �this �assessment, �the �Company �determined �that �WEX �does �not �control �the �services
performed �by �merchant�acquirers, �card�networks �and�sponsor �banks�as �each�of �these�parties �is�the �primary �obligor�for �their�portion �of�payment �and�transaction
processing �services �performed. �Therefore, �interchange�income�is�recognized�net�of�any�fees�owed�to�these�intermediaries.�Conversely,�the�Company�determined
that�services�performed�by�third-party�payment�processors�are�controlled�by�the�Company�as�it�is�responsible�for�directing�how�the�third-party�payment�processor
authorizes�and�processes�transactions.�Therefore,�such�fees�paid�to�third-party�payment�processors�are�recorded�as�service�fees�within�cost�of�services.
����Additionally,�the�Company�enters�into�contracts�with�certain�large�customers�or�strategic�cardholders�that�provide�for�fee�rebates�tied�to�performance�milestones.
When �such �fee �rebates �constitute �consideration �payable �to �a �customer �or �other �party �that �purchases �services �from �the �customer, �they �are �considered �variable
consideration�and�are�recorded�as�a�reduction�in�payment�processing�revenue�in�the�same�period�that�related�interchange�income�is�recognized.�For�the�years�ended
December �31, �2020, �2019, �and �2018, �such �variable �consideration �totaled �$537.7 �million, �$891.0 �million, �and �$858.9 �million �respectively. �Fee �rebates �made �to
certain�other�partners�were�determined�to�be�costs�to�obtain�a�contract�and�are�recorded�as�sales�and�marketing�expenses.
Account�Servicing�Revenue
� �� �In �our �Fleet �Solutions �segment, �account �servicing �revenue �is �primarily �comprised �of �monthly �fees �charged �to �cardholders �based �on �the �number �of �vehicles
serviced. �These �fees �are �primarily �in �return �for �providing �monthly �vehicle �data �reports �and �are �recognized �on �a �monthly �basis �as �the �service �is �provided. �The
Company �also �recognizes �account �servicing �revenue �related �to �reporting �services �on �telematics �hardware �placements �and �permit �sales �to �our �over-the-road
customers,�both�of�which�are�within�the�scope�of�Topic�606.�Additionally,�account�servicing�revenue�includes�other�fees�recognized�as�revenue�when�assessed�to
the�cardholder�as�part�of�the�lending�relationship,�which�are�outside�the�scope�of�Topic�606.
����In�our�Travel�and�Corporate�Solutions�segment,�account�servicing�reflects�licensing�fees�earned�for�use�of�our�accounts�receivable�and�accounts�payable�SaaS
platforms,�all�of�which�is�within�the�scope�of�Topic�606.
����In�our�Health�and�Employee�Benefit�Solutions�segment,�we�recognize�account�servicing�fees�for�the�per-participant�per-month�fee�charged�per�consumer�on�our
SaaS�healthcare�technology�platform.�Customers�including�health�plans,�third-party
93
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
administrators, �financial�institutions�and�payroll�companies�typically�enter�into�three�to�five-year�contracts,�which�contain�significant�termination�penalties. �This
revenue�is�within�the�scope�of�Topic�606.
� � � �Our �Travel �and �Corporate �Solutions �and �Health �and �Employee �Benefit �Solutions �segments �provide �SaaS �services �and �support, �which �are �stand-ready
commitments�and�are�satisfied�over�time�in�a�series�of�daily�increments.�Revenue�is�recognized�based�on�an�output�method�using�days�elapsed�to�measure�progress
as�the�Company�transfers�control�evenly�over�each�monthly�subscription�period.
Finance�Fee�Revenue
����The�Company�earns�revenue�on�overdue�accounts,�which�is�recognized�when�the�fees�are�assessed.�The�finance�fee�is�calculated�using�the�greater�of�a�minimum
charge�or�a�stated�late�fee�rate�multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee�charge.�On�occasion,�these�fees�are�waived�to�maintain�customer
goodwill. �The �established �reserve �for �such �waived �amounts �is �estimated �and �offset �against �the �late �fee �revenue �recognized. �Finance �fee �revenue �also �includes
amounts�earned�by�the�Company’s�factoring�business,�which�purchases�accounts�receivable�from�third-parties�at�a�discount.�This�revenue�is�outside�the�scope�of
Topic�606.
Other�Revenue
����In�our�Fleet�Solutions�segment,�other�revenue�primarily�consists�of�transaction�processing�revenue,�other�fees�charged�to�the�merchants,�professional�services,
including�software�development�projects�and�other�services�sold�subsequent�to�the�core�offerings,�and�the�sales�of�telematics�hardware,�all�of�which�are�within�the
scope�of�Topic�606.�Revenue�is�recognized�when�control�of�the�services�or�hardware�is�transferred�to�our�customers,�in�an�amount�that�reflects�the�consideration
that�we�expect�to�receive�in�exchange�for�those�services.�We�also�recognize�fees�charged�to�cardholders�in�other�revenue,�which�are�outside�the�scope�of�Topic�606.
����In�our�Travel�and�Corporate�Solutions�segment,�the�majority�of�other�revenue�reflects�international�settlement�fees,�which�is�outside�the�scope�of�Topic�606�and
recognized�as�the�service�is�performed.�In�our�Health�and�Employee�Benefit�Solutions�segment,�other�revenue�primarily�consists�of�professional�services,�which�is
within�the�Topic�606,�and�is�recognized�as�the�services�are�performed,�in�the�amount�we�expect�to�receive�from�these�services.�Prior�to�the�sale�of�the�WEX�Latin
America�business,�other�revenue�in�our�Health�and�Employee�Benefit�Solutions�segment�also�included�the�gain�on�sale�of�WEX�Latin�America�receivables,�which
was�outside�the�scope�of�Topic�606�and�is�recognized�on�the�sale�date�of�the�receivables.
Contract�Balances
The�majority�of�the�Company’s�receivables,�which�are�excluded�from�the�table�below,�are�either�due�from�cardholders�who�have�not�been�deemed�our
customer �as �it �relates �to �interchange �income, �or �from �revenues �earned �outside �of �the �scope �of �Topic �606. �The �Company’s �contract �assets �consist �of �upfront
payments �made �to �customers �under �long-term �contracts �and �are �recorded �upon �payment �or �when �due. �The �resulting �asset �is �amortized �against �revenue �as �the
Company�performs�its�obligations�under�these�arrangements.�The�Company’s�contract�liabilities�consist�of�customer�payments�received�before�the�Company�has
satisfied�the�associated�performance�obligations�and�upfront�payments�due�to�the�customer.
����The�following�table�provides�information�about�these�contract�balances:
(In�thousands)
Contract�balance
Receivables
Contract�assets
Contract�assets
Contract�liabilities
Contract�liabilities
Refund�liabilities
Location�on�the�consolidated�balance�sheets
December�31,�2020
December�31,�2019
Accounts�receivable,�net
Prepaid�expenses�and�other�current�assets
Other�assets
Other�current�liabilities
Other�liabilities
Accrued�expenses
$
$
$
$
$
$
43,541�
5,495�
19,927�
8,530�
24,614�
5,265�
$
$
$
$
$
$
43,092�
4,593�
20,496�
5,171�
—�
—�
����Impairment�losses�recognized�on�our�contract�assets�were�immaterial�for�the�years�ended�December�31,�2020,�2019�and�2018.�In�the�years�ended�December�31,
2020�and�2019,�we�recognized�revenue�of�$5.2�million�and�$7.2�million�included�in�the�opening�contract�liabilities�balances,�respectively.
94
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Remaining�Performance�Obligations
The�Company’s�unsatisfied,�or�partially�unsatisfied�performance�obligations�as�of�December�31,�2020�represent�the�remaining�minimum�monthly�fees�on
a�portion�of�contracts�across�the�lines�of�business�and�contractually�obligated�professional�services�yet�to�be�provided�by�the�Company.�The�remaining�performance
obligations�also�includes�payments�to�the�Company�for�providing�payment�processing�services�and�facilitating�transactions�under�certain�long-term�noncancellable
contracts �for �which �the �Company �has �not �satisfied �its �performance �obligations. �The �total �remaining �performance �obligations �below �is �not �indicative �of �the
Company’s�future�revenue,�as�it�relates�to�an�insignificant�portion�of�the�Company’s�operations.
The�following�table�includes�revenue�expected�to�be�recognized�related�to�remaining�performance�obligations�at�the�end�of�the�reporting�period.
(In�thousands)
Minimum�monthly�fees
1
Professional�services
2
Other
3
Total�remaining�performance�obligations
2021
2022
2023
2024
2025
Thereafter
Total
$
$
46,657�
$
31,879�
$
17,766�
$
7,340�
$
2,404�
$
36�
$
106,082�
3,679�
2,771�
53,107�
$
60�
3,302�
35,241�
$
—�
3,349�
21,115�
$
—�
3,770�
11,110�
$
—�
4,321�
6,725�
$
—�
9,301�
9,337�
$
3,739�
26,814�
136,635�
1�
The�transaction�price�allocated�to�the�remaining�performance�obligations�represents�the�minimum�monthly�fees�on�certain�service�contracts,�which�contain�substantive�termination�penalties�that
require�the�counterparty�to�pay�the�Company�for�the�aggregate�remaining�minimum�monthly�fees�upon�an�early�termination�for�convenience.
2
�Includes�software�development�projects�and�other�services�sold�subsequent�to�the�core�offerings,�to�which�the�customer�is�contractually�obligated.
3�
Represents�deferred�revenue�associated�with�remaining�payment�processing�service�obligations.
4.
Acquisitions
����The�Company�incurred�and�expensed�costs�directly�related�to�completed�acquisitions�of�$97.9�million,�$13.0�million�and�$2.5�million�in�2020,�2019�and�2018,
respectively. �Acquisition �costs �incurred�and �expensed �during�2020 �include�financing �fees, �investment �banker�success �fees �and�other �legal �and�professional �fees
incurred�in�conjunction�with�the�2020�acquisition.�Costs�incurred�and�expensed�related�to�acquisitions�in�process�were�immaterial �as�of�December�31,�2020�and
$4.8�million �as�of�December �31,�2019. �Acquisition-related �costs �for�all �years�presented �are�included�within�general �and�administrative �expenses,�except �for�the
financing�fees�incurred�in�2020,�that�are�presented�in�financing�interest�expense�in�the�consolidated�statements�of�operations.
Asset�Acquisition
����During�October�2018,�the�Company�entered�into�a�definitive�asset�purchase�agreement �to�acquire�Chevron’s�existing�trade�accounts�receivable�and�customer
portfolio�from�a�third-party�for�$223.4�million.�During�2018,�the�consideration�paid�consisted�of�$162.8�million�to�acquire�the�customer�portfolio�and�a�deposit�of
$38.9�million�was�paid�into�escrow�for �a�portion�of�the�outstanding�accounts �receivable �at�the�date�of�the �agreement. �The�actual�amount�of�accounts �receivable
purchased �from�the�third �party�during�the�second �quarter�of�2019�was�less �than�the�amount�deposited �in�escrow,�resulting �in�the�Company�receiving �the�excess
funds�of�approximately�$27�million�from�the�escrow�agent�in�January�2020.�During�the�second�quarter�of�2019,�the�Company�determined�that�it�obtained�control�of
the�customer�portfolio�and�accounted�for�this�transaction�under�the�asset�acquisition�method�of�accounting.�At�that�time,�we�allocated�approximately�$168.0�million
of�consideration�paid�to�a�customer�relationship�intangible�asset�and�established�the�accounts�receivable�at�fair�value.�This�customer�relationship�intangible�asset�is
being �amortized �over �the �13 �year �term �of �the �Chevron �agreement, �which �has �been �determined �to �be �the �period �of �anticipated �benefit, �which �began �when �the
Company�took�possession�of�the�customer�portfolio�during�the�second�quarter�of�2019.�Transaction�costs�related�to�the�acquisition�were�insignificant�and�expensed
as�incurred.
Business�Acquisitions
2020�Acquisition/Legal�Settlement
On�January�24,�2020,�the�Company�entered�into�a�purchase�agreement�(the�"Original�Purchase�Agreement")�to�purchase�eNett�and�Optal�for�an�aggregate
purchase �price �comprised �of �$1.3 �billion �in �cash �and �2.0 �million �shares �of �the �Company’s �common �stock �and �subject �to �certain �working �capital �and �other
adjustments �as �described �in �the �purchase �agreement. �The �parties’ �obligations �to �consummate �the �acquisition �were �subject �to �customary �closing �conditions,
including�the�absence�of�a
95
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Material�Adverse�Effect�(as�defined�in�the�Original�Purchase�Agreement�between�WEX,�eNett�and�Optal,�among�others).�The�Company�subsequently�concluded
that�the�COVID-19�pandemic�and�conditions�arising�in�connection�with�it�had�a�Material�Adverse�Effect�on�the�businesses,�which�was�disproportionate�to�the�effect
on�others�in�the�relevant�industry.�Because�of�this�Material�Adverse�Effect,�WEX�formally�advised�eNett�and�Optal�on�May�4,�2020�that�it�was�not�required�to�close
the�transaction�pursuant�to�the�terms�of�the�purchase�agreement.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated�separate�legal�proceedings�in
the�High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom�against�the�Company�seeking�a�declaration�that�no�Material�Adverse�Effect�had�occurred
and �an�order�for�specific�performance �of�WEX's�obligations�under�the�Original�Purchase �Agreement.�From�September�21,�2020 �through�September�29,�2020,�a
London �court �held �a �trial �of �certain �preliminary �issues, �and �handed �down �its �judgement �on �October �12, �2020. �The �Company �and �the �claimants �each �sought
permission�to�appeal�certain�portions�of�the�Court’s�judgment.
On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�between�the�Company,�eNett,�Optal�and�the�other�parties
thereto,�providing�for,�among�other�things,�(i)�the�dismissal�with�prejudice�of�the�legal�proceedings�and�appeals�described�above,�(ii)�the�amendment�of�the�Original
Purchase�Agreement�(as�amended�by�the�Settlement�Deed,�the�“Amended�Purchase�Agreement”)�and�(iii)�the�release�of�all�claims�capable�of�arising�out�of,�or�in
any�way�connected�with�or�relating�to�the�COVID-19�pandemic,�but�excluding�any�of�the�claims�arising�under�the�Amended�Purchase�Agreement.
The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the�Settlement�Deed�on�December�15,�2020.�The�Amended�Purchase�Agreement
provided �for,�among�other�things,�a�reduction�of�the�aggregate�purchase�price�for�the�acquisition �to�$577.5�million�(subject�to�certain�working�capital�and�other
adjustments �as �described �in �the �Amended �Purchase �Agreement, �which �resulted �in �a �total �cash �payment �of �$615.4 �million). �The �Company �purchased �these
businesses�to�complement�its�existing�Travel�and�Corporate�Solutions�segment�and�expand�its�international�footprint.
The �Company �determined �the �aggregate �purchase �price �represents �consideration �paid �for �the �businesses �acquired �and �for �the �settlement �of �legal
proceedings�described�above.�The�preliminary�fair�value�of�the�businesses�acquired�was�estimated�to�be�$415.0�million�using�a�discounted�cash�flow�analysis�and
guideline�transaction�method.�Since�the�Company�was�not�able�to�reliably�estimate�the�fair�value�of�the�legal�settlement,�the�residual�value�of�$162.5�million�has
been �allocated�to�the�legal �proceedings �settlement,�which�has�been �included�in�legal�settlement �expense�in�the�consolidated�statement �of�operations�for�the�year
ended�December�31,�2020.
This �acquisition �has �been �accounted �for �using �the �acquisition �method �of �accounting �which �requires �the �assets �acquired �and �liabilities �assumed �be
recognized �at �their �respective �fair �values �on �the �acquisition �date. �The �table �below �summarizes �the �preliminary �estimated �fair �values �of �the �assets �acquired �and
liabilities�assumed�on�the�acquisition�date.�These�preliminary�estimates�will�be�revised�during�the�measurement�period�as�third-party�valuations�on�the�intangible
assets�are�received�and�finalized,�further�information�becomes�available�and�additional�analyses�are�performed,�and�these�adjustments�could�have�a�material�impact
on�the�preliminary�purchase�price�allocation.
96
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
The�following�is�a�summary�of�the�preliminary�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of
acquisition:
(In�thousands)
Cash�consideration�transferred,�net�of�$232,155�in�cash�and�restricted�cash�acquired
Less:�legal�settlement
(a)(d)
(b)(d)
Total�consideration,�net
Less:
Accounts�receivable
Prepaid�and�other�current�assets
Property�and�equipment
Customer�relationships
Developed�technologies
(c)(d)
License�agreements
Deferred�income�tax�asset
Other�assets
Accounts�payable
Accrued�expenses
Restricted�cash�payable
Other�current�liabilities
Deferred�income�tax�liability
Other�liabilities
Recorded�goodwill
(a)
�Weighted�average�life�-�5�years.
(b)
�Weighted�average�life�-�2.5�years.
(c)�
Weighted�average�life�-�6.5�years.
$
$
$
383,204�
(162,500)
220,704�
14,449�
11,660�
876�
79,923�
63,125�
4,208�
9,424�
4,945�
(16,244)
(21,898)
(186,956)
(11,376)
(20,152)
(3,164)
291,884�
(d)
�The�weighted�average�life�of�the�$147.3�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�4.0�years.
Goodwill�is�calculated�as�the�excess�of�the�consideration�transferred�over�the�net�assets�recognized�and�represents�the�anticipated�synergies�of�acquiring
the�businesses.�The�majority�of�the�goodwill �recognized �as�a�result�of�the�acquisition �is�not�expected�to�be�deductible�for �tax�purposes.�Given�the�timing�of�the
acquisition, �the �Company �utilized �a �benchmarking �approach �based �on �the �Company's �prior �acquisitions �and �similar �industry �acquisitions �to �determine �the
preliminary�fair�values�for�intangible�assets.�See�Note�9,�Goodwill�and�Other�Intangible�Assets,�for�additional�information.
Since�the�acquisition�date�and�through�December�31,�2020,�eNett�and�Optal�have�contributed�immaterial�total�revenues�and�loss�before�income�taxes.
The �pro �forma �information �below �gives �effect �to �the �acquisition �as �if �it �had �been �completed �on �January �1, �2019. �These �pro �forma �results �have �been
calculated �after �applying �the �Company’s �accounting �policies, �adjustments �to �reflect �amortization �associated �with �intangibles �acquired �and �related �income �tax
results.�Additionally,�nonrecurring�pro-forma�adjustments�of�$162.5�million�in�legal�settlement�costs�and�transaction-related�costs�incurred�in�the�fourth�quarter�of
2020�have�been�reflected�in�the�proforma�results�for�the�year�ended�December�31,�2019.�The�pro�forma�financial�information�is�presented�for�comparative�purposes
only,�based�on�certain�estimates�and�assumptions,�which�the�Company�believes�to�be�reasonable�but�not�necessarily�indicative�of�future�results�of�operations�or�the
results�that�would�have�been�reported�if�the�acquisitions�had�been�completed�on�January�1,�2019.
����The�following�represents�unaudited�pro�forma�operational�results:
�(In�thousands,�except�per�share�data)
Total�revenues
Net�loss�attributable�to�shareholders
Net�loss�attributable�to�shareholders�per�share:
Basic
Diluted
Year�Ended�December�31,
2020
2019
1,610,216�
(63,595)
$
$
1,876,494�
(71,788)
(1.45) $
(1.45) $
(1.66)
(1.66)
$
$
$
$
97
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
2019�Business�Acquisitions
As �of�December �31, �2020,�the �purchase�accounting �is �final�for �our�2019 �business�acquisitions. �No �adjustments�to �the�purchase �accounting �were�made
during�the�year�ended�December�31,�2020.
Discovery�Benefits
����On�March�5,�2019,�the�Company�acquired�Discovery�Benefits,�an�employee�benefits�administrator,�for�a�total�purchase�price�of�$526.1�million,�of�which�$50.0
million�was�paid�during�the�fourth�quarter�of�2019.�The�acquisition�was�primarily�funded�with�cash�and�through�borrowings�under�the�2016�Credit�Agreement.�The
seller�of�Discovery�Benefits�obtained�a�4.9�percent�equity�interest�in�the�newly�formed�parent�company�of�WEX�Health�and�Discovery�Benefits,�which�constitutes
the �U.S. �Health �business. �The �fair �value �of �the �equity �interest �was �determined �to �be �$100.0 �million �on �the �acquisition �date. �See �Note �20, �Redeemable �Non-
Controlling�Interest,�for�further�information.
� � � � �The �purpose �of �this �acquisition �was �to �obtain �the �comprehensive �suite �of �products �and �services �for �our �partners �and �customers �and �to �open �go-to-market
channels �to�include�consulting�firms �and�brokers�in�our�Health�and �Employee�Benefit�Solutions�segment.�This�acquisition�has�been�accounted�for �as�a�business
combination,�resulting�in�the�recording�of�goodwill.�The�majority�of�the�associated�goodwill�is�deductible�for�tax�purposes.
����The�following�is�a�summary�of�the�final�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of�acquisition:
(In�thousands)
Cash�consideration,�net�of�$125,865�in�cash�and�restricted�cash�acquired
Fair�value�of�redeemable�non-controlling�interest
Total�consideration,�net�of�cash�and�restricted�cash�acquired
Less:
Accounts�receivable
Property�and�equipment
Customer�relationships
Developed�technologies
Trademarks�and�trade�names
Other�assets
Accounts�payable
Accrued�expenses
Restricted�cash�payable
Deferred�income�taxes
Other�liabilities
(b)(d)
(c)(d)
(a)(d)
Recorded�goodwill
(a)
�Weighted�average�life�-�7.3�years.
(b)
�Weighted�average�life�-�5.4�years.
(c)�
Weighted�average�life�-�7.3�years.
$
$
$
300,191�
100,000�
400,191�
10,722�
4,904�
213,600�
38,900�
13,800�
13,601�
(3,071)
(7,563)
(125,346)
(21,941)
(9,814)
272,399�
(d)
�The�weighted�average�life�of�the�$266.3�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�7.0�years.
����From�the�acquisition�date�to�December�31,�2019,�Discovery�Benefits�contributed�$94.7�million�in�total�revenues�and�income�before�income�taxes�of�$0.3�million.
98
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Noventis
����On�January�24,�2019,�the�Company�acquired�Noventis,�a�long-time�customer�and�electronic�payments�network�focused�on�optimizing�payment�delivery�for�bills
and �invoices �to �commercial �entities, �for �$338.7 �million, �which �was �primarily �funded �with �cash �and �through �borrowings �under �the �2016 �Credit �Agreement.
Excluded�from�the�consideration�is�$5.5�million�paid�to�certain�Noventis�shareholders�who�held�unvested�option�awards�at�the�acquisition�date.�The�modification�of
these�awards�to�accelerate�the�vesting�resulted�in�the�Company�recording�this�expense�as�general�and�administrative�expense�on�our�consolidated�income�statement.
The�Company�purchased�Noventis�to�expand�our�reach�as�a�corporate�payments�supplier�and�provide�more�channels�to�billing�aggregators�and�financial�institutions
in�our�Travel�and�Corporate�Solutions�segment.�This�acquisition�was�accounted�for�as�a�business�combination,�resulting�in�the�recording�of�goodwill.�The�goodwill
associated�with�this�acquisition�is�not�deductible�for�tax�purposes.
����The�following�is�a�summary�of�the�final�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of�acquisition:
(In�thousands)
Total�consideration,�net�of�$44,947�in�cash�acquired
Less:
Accounts�receivable
Property�and�equipment
Network�relationships
Developed�technologies
Other�assets
Accounts�payable
Deferred�income�taxes
Other�liabilities
(a)�(c)
(b)�(c)
Recorded�goodwill
(a)
�Weighted�average�life�-�8.3�years.
(b)
�Weighted�average�life�-�2.9�years.
$
$
293,767�
22,134�
549�
100,900�
15,000�
2,379�
(33,521)
(21,194)
(2,367)
209,887�
(c)
�The�weighted�average�life�of�the�$115.9�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�7.6�years.
����From�the�acquisition�date�to�December�31,�2019,�Noventis�contributed�$43.8�million�in�total�revenues�and�income�before�income�taxes�of�$8.2�million.
Pavestone�Capital,�LLC
����On�February�14,�2019,�the�Company�acquired�Pavestone�Capital,�a�recourse�factoring�company�that�provides�working�capital�to�businesses,�for�a�purchase�price
of�$28.0�million,�net�of�cash�acquired.�This�acquisition,�which�was�funded�with�cash,�has�been�accounted�for�as�a�business�combination.�The�Company�purchased
Pavestone �Capital �to �complement �its �existing �factoring �business. �As �a �result, �the �purchase �price �is �primarily �allocated �to �goodwill, �accounts �receivable �and
customer�relationships�in�amounts�of�$9.5�million,�$14.9�million�and�$3.9�million,�respectively.�The�goodwill�associated�with�this�acquisition�is�deductible�for�tax
purposes.�The�customer�relationships�intangible�asset�has�a�weighted-average�amortization�period�of�6.5�years.
� � � �From �the �acquisition �date�to �December �31, �2019, �Pavestone �Capital �revenues �and �income �before �income �taxes, �which �are �recorded �in �our �Fleet �Solutions
segment, �were �not �material �to �Company �operations. �No �pro �forma �or �current �information �has �been �included �in �these �financial �statements �as �the �operations �of
Pavestone�Capital�for�the�period�that�they�were�not�part�of�the�Company�are�not�material�to�the�Company’s�revenues,�net�income�and�earnings�per�share.
Go�Fuel�Card
����On�July�1,�2019,�the�Company�acquired�Go�Fuel�Card,�a�European�fuel�card�business,�for�a�total�purchase�price�of�€235.0�million�(equivalent�of�$266.0�million
on�date�of�purchase).�This�acquisition,�which�was�funded�with�cash,�was�accounted�for�as�a�business�combination.�The�purpose�of�the�acquisition�was�to�strengthen
our�position�in�the�European�market,�grow�our�existing�customer�base�and�reduce�our�sensitivity�to�retail�fuel�prices,�resulting�in�the�recording�of�goodwill.�The
goodwill�associated�with�the�acquisition�of�Go�Fuel�Card�is�deductible�for�tax�purposes.
99
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����The�following�is�a�summary�of�the�final�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of�acquisition:
(In�thousands)
Total�consideration,�net�of�$5,589�in�cash�acquired
(a)�(d)
(b)(d)
Less:
Network�relationships
Customer�relationships
Brand�name
Deposits
Accrued�expenses
(c)�(d)
Recorded�goodwill
(a)
�Weighted�average�life�-�10.1�years.
(b)�
Weighted�average�life�-�5.0�years.
(c)
�Weighted�average�life�-�1.0�year.
$
$
260,455�
112,893�
33,963�
442�
(5,169)
(420)
118,746�
(d)
�The�weighted�average�life�of�the�$147.3�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�8.9�years.
����From�the�acquisition�date�to�December�31,�2019,�Go�Fuel�Card�contributed�$10.5�million�in�total�revenues�and�loss�before�income�taxes�of�$9.1�million.�No�pro
forma�information�has�been�included�in�these�financial�statements�as�the�operations�of�Go�Fuel�Card�for�the�period�that�they�were�not�part�of�the�Company�are�not
material�to�the�Company’s�revenues,�net�income�and�earnings�per�share.
During�the�Company's�annual�goodwill�assessment�completed�as�of�October�1,�2020,�management�determined�that�the�carrying�value�of�this�reporting�unit
exceeded�its�fair�value�and�the�Company�recorded�a�non-cash�goodwill�impairment�charge�of�$53.4�million,�reducing�the�Go�Fuel�Card�goodwill�to�$65.8�million.
See�Note�9,�Goodwill�and�Other�Intangible�Assets,�for�further�information.
Pro�Forma�Supplemental�Information�(Discovery�Benefits�and�Noventis)
����The�pro�forma�information�below�gives�effect�to�the�Discovery�Benefits�and�Noventis�acquisitions�as�if�they�had�been�completed�on�January�1,�2018.�These�pro
forma�results�have�been�calculated�after�applying�the�Company’s�accounting�policies,�adjustments�to�reflect�amortization�associated�with�intangibles�acquired�and
interest�expense�associated�with�the�incremental�borrowings�under�the�2016�Credit�Agreement�used�to�fund�the�acquisitions�and�related�income�tax�results.�The�pro
forma�financial�information�is�presented�for�comparative�purposes�only,�based�on�certain�estimates�and�assumptions,�which�the�Company�believes�to�be�reasonable
but�not�necessarily�indicative�of�future�results�of�operations�or�the�results�that�would�have�been�reported�if�the�acquisitions�had�been�completed�on�January�1,�2018.
����The�following�represents�unaudited�pro�forma�operational�results:
�(In�thousands,�except�per�share�data)
Total�revenues
Net�income�attributable�to�shareholders
Net�income�attributable�to�shareholders�per�share:
Basic
Diluted
5.
Sale�of�Subsidiary
Year�Ended�December�31,
2019
2018
$
$
$
$
1,742,797�
113,851�
2.63�
2.60�
$
$
$
$
1,604,165�
134,564�
3.12�
3.09�
����On�September�30,�2020,�the�Company�sold�its�wholly-owned�subsidiary�UNIK�S.A,�(the�"WEX�Latin�America"�business).�The�operations�of�UNIK�S.A.,�were
included�in�the�Health�and�Employee�Benefit�Solutions�and�Travel�and�Corporate�Solutions�segments�through�the�date�of�sale.�The�Company�does�not�view�this
sale �of �subsidiary �as �a �strategic �shift �in �its �operations �and �therefore �it �did �not �meet �the �criteria �of �discontinued �operations. �Under �the �conditions �of �the �sale
agreement,�the�Company�was�required�to�make�a�payment�to�the�buyer,�which�has�been�reflected�as�fair�value�of�consideration�transferred�to
100
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
the�buyer�in�the�table�below.�As�part�of�the�divestiture,�the�Company�entered�into�a�transition�services�agreement�with�the�buyer�of�up�to�six�months�post-closing
related �to �various �operational �and �support �services. �The �Company �believes �the �transition �services �agreement �is �of �nominal �value. �The �Company �wrote-off �the
associated�assets�and�liabilities�of�this�entity�as�of�the�date�of�sale�and�recorded�a�pre-tax�loss�on�sale�of�subsidiary�of�$46.4�million,�which�has�been�reflected�in�the
consolidated�statement�of�operations�for�the�year�ended�December�31,�2020.�The�pre-tax�loss�related�to�the�sale�of�this�subsidiary�is�not�deductible�for�income�tax
purposes.
The�following�summarizes�the�loss�on�sale�of�subsidiary:
(In�thousands)
Fair�value�of�consideration�transferred�to�the�buyer
Plus:�expenses�associated�with�the�sale
Plus:�UNIK.S.A.�net�assets�and�liabilities,�including�$12,249�of�cash�and�cash�equivalents
Loss�on�sale�of�subsidiary
6.
Accounts�Receivable
$
$
7,415�
2,806�
36,141�
46,362�
Accounts�receivable�consists�of�amounts�billed�to�and�due�from�customers�across�a�wide�range�of�industries�and�other�third�parties.�The�Company�often
extends�short-term�credit�to�cardholders�and�pays�the�merchant�for�the�purchase�price,�less�the�fees�it�retains�and�records�as�revenue.�The�Company�subsequently
collects�the�total�purchase�price�from�the�cardholder.�In�general,�the�Company’s�trade�receivables�provide�for�payment�terms�of�30�days�or�less.�Receivables�not
paid�in�full�by�payment�due�dates�as�stated�within�the�terms�of�the�agreement�are�generally�considered�past�due�and�subject�to�late�fees�and�interest�based�upon�the
outstanding�receivables�balance.�The�Company�discontinues�late�fee�and�interest�income�accruals�on�outstanding�receivables�once�customers�are�90�and�120�days
past�the�invoice�due�date,�respectively.�Payments�received�subsequent�to�discontinuing�late�fee�and�interest�income�accruals�are�first�applied�to�outstanding�late�fees
and�interest,�and�the�Company�resumes�accruing�interest�and�late�fee�income�as�earned�on�future�receivables�balances.
����The�Company�extends�revolving�credit�to�certain�small�fleets.�These�accounts�are�also�subject�to�late�fees�and�balances�that�are�not�paid�in�full�are�subject�to
interest�charges�based�on�the�revolving�balance.�The�Company�had�approximately�$60.2�million�and�$62.4�million�in�receivables�with�revolving�credit�balances�as
of�December�31,�2020�and�2019,�respectively.����
Allowance�for�Accounts�Receivable
Receivables �are�generally �written�off�when�they �are�180�days �past�due�or�upon �declaration �of�bankruptcy �of�the�customer,�subject �to�local �regulatory
restrictions.�The�allowance�for�accounts�receivable�consists�of�reserves�for�both�credit�and�fraud�losses.�The�reserve�for�credit�losses�is�primarily�calculated�using
historical�loss-rates�applied�at�the�portfolio�level�and�specific�customer�balance�collectability�based�on�a�review�of�past�due�accounts�receivable�balances,�changes
in�payment�patterns,�and�other�customer-specific�available�information.�Management�further�takes�into�account�qualitative�factors,�such�as�leading�economic�and
market�indicator�trends,�to�the�extent�they�deviate�from�historical�loss-rate�trends�when�determining�the�need�for�additional�qualitative�reserves.�The�reserve�for
fraud �losses �is �determined �by �monitoring �pending �fraud �cases, �customer-identified �fraudulent �activity �and �unconfirmed �suspicious �activity �in �order �to �make
judgments�as�to�probable�fraud�losses.�����
Accounts�receivable�are�evaluated�for�impairment�on�a�pooling�basis�based�on�similar�risk�characteristics�including�industry�of�the�borrower,�historical�or
expected �credit�loss�patterns,�risk�ratings�or�classification, �and�geographic�location.�See�Note�1,�Basis�of�Presentation �and�Summary�of�Significant�Accounting
Policies,�for�more�information.
101
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
The�following�tables�present�changes�in�the�accounts�receivable�allowances�by�portfolio�segment:
�
(In�thousands)
Balance,�prior�to�Topic�326�adoption
Impact�of�Topic�326�adoption
1
2
Balance,�beginning�of�year
1
Provision�for�credit�losses
Other
Charge-offs
Recoveries�of�amounts�previously�charged-off
Currency�translation
Balance,�end�of�year
3
Year�ended�December�31,
2020
Fleet�Solutions
Travel�and
Corporate
Solutions
Health�and
Employee�Benefit
Solutions
Total
2019
Total
2018
Total
$
$
$
40,620�
9,390�
50,010�
56,620�
19,019�
(88,091)
10,421�
1,288�
49,267�
$
$
$
3,578�
2,187�
5,765�
21,610�
—�
(18,787)
175�
847�
9,610�
$
$
$
8,076�
—�
8,076�
213�
—�
(5,419)
17�
(2,617)
270�
$
$
$
52,274�
11,577�
63,851�
78,443�
19,019�
(112,297)
10,613�
(482)
59,147�
$
$
$
46,948�
—�
46,948�
65,664�
22,746�
(92,638)
9,781�
(227)
52,274�
$
$
$
33,387�
—�
33,387�
66,482�
19,067�
(78,323)
6,854�
(519)
46,948�
1
�The�provision�is�comprised�of�estimated�credit�losses�based�on�the�Company’s�loss-rate�experience�and�effective�January�1,�2020,�also�includes�adjustments�required�for�forecasted�credit�loss
information.�The�provision�for�credit�losses�for�the�year�ended�December�31,�2020,�includes�estimates�of�expected�credit�losses�over�the�contractual�life�of�receivables�as�the�markets�in�which
the�Company�operates�are�experiencing�a�decline,�primarily�due�to�the�impact�of�COVID-19.�The�provision�for�credit�losses�reported�within�this�table�also�includes�the�provision�for�fraud�losses.
2
�Consists�primarily�of�charges�to�other�accounts.�The�Company�earns�revenue�by�assessing�monthly�finance�fees�on�accounts�with�overdue�balances.�These�fees�are�recognized�as�revenue�at�the
time�the�fees�are�assessed.�The�finance�fee�is�calculated�using�the�greater�of�a�minimum�charge�or�a�stated�late�fee�rate�multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee�charge.
On�occasion,�these�fees�are�waived�to�maintain�relationship�goodwill.�Charges�to�other�accounts�represents�the�offset�against�the�late�fee�revenue�recognized�when�the�Company�establishes�a
reserve�for�such�waived�amounts.
3
�For�the�year�ended�December�31,�2020,�the�majority�of�the�Travel�and�Corporate�Solutions�segment�charge-offs�is�associated�with�the�sale�of�the�WEX�Latin�America�business.�Refer�to�Note
5,�Sale�of�Subsidiary,�for�further�information.
Concentration�of�Credit�Risk
��� �The�receivables �portfolio�consists �of�a �large�group �of�homogeneous�smaller �balances �across �a�wide �range�of �industries,�which �are�collectively �evaluated�for
impairment. �No �one �customer �receivable �balance �represented �10 �percent �or �more �of �the �outstanding �receivables �balance �at �December �31, �2020 �or �2019. �The
following�table�presents�the�outstanding�balance�of�trade�accounts�receivable�that�are�less�than�30�and�60�days�past�due,�shown�in�each�case�as�a�percentage�of�total
trade�accounts�receivable:
Delinquency�Status
29�days�or�less�past�due
59�days�or�less�past�due
December�31,
2020
2019
97�%
98�%
96�%
97�%
102
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
7.
Investment�Securities
����The�Company’s�investment�securities�as�of�December�31,�2020�and�2019,�are�presented�below:��
(In�thousands)
2020
Fixed�income�securities:
���Mortgage-backed�securities
���Asset-backed�securities
���Municipal�bonds
���Mutual�fund
Pooled�investment�fund
Total�investment�securities
(b)(c)
2019
Fixed�income�securities:
���Mortgage-backed�securities
���Asset-backed�securities
���Municipal�bonds
���Mutual�fund
Pooled�investment�fund
Total�investment�securities
(b)(c)
Cost
Gross�
Unrealized�
Gains
Gross�
Unrealized�
Losses
Fair�Value
(a)
$
$
$
$
133�
211�
195�
27,680�
9,000�
37,219�
164�
248�
306�
25,221�
5,000�
30,939�
$
$
$
$
5�
—�
2�
48�
—�
55�
10�
—�
—�
—�
—�
10�
$
$
$
$
—�
1�
—�
—�
—�
1�
—�
1�
4�
484�
—�
489�
$
$
$
$
138�
210�
197�
27,728�
9,000�
37,273�
174�
247�
302�
24,737�
5,000�
30,460�
��
(a)
(b)
(c)
�The�Company’s�techniques�used�to�measure�the�fair�value�of�its�investments�are�discussed�in�Note�19,�Fair�Value.
�The�Company’s�investment�securities�are�not�deemed�available�for�current�operations�and�have�been�classified�as�non-current�on�the�consolidated�balance�sheets.
Excludes�$9.6�million�and�$8.0�million�in�equity�securities�designated�as�trading�as�of�December�31,�2020�and�2019,�respectively,�included�in�prepaid�expenses�and�other�current�assets�and
other�assets�on�the�consolidated�balance�sheets.�See�Note�18,�Employee�Benefit�Plans,�for�additional�information.
����The�Company�reviews�its�investments�to�identify�and�evaluate�indications�of�possible�impairment.�Factors�considered�in�determining�whether�a�loss�is�temporary
include�the�length�of�time�and�extent�to�which�the�fair�value�has�been�less�than�the�cost�basis,�the�financial�condition�and�near-term�prospects�of�the�investee,�and
the�Company’s�intent�and�ability�to�hold�the�investment�for�a�period�of�time�sufficient�to�allow�for�any�anticipated�recovery�in�market�value.�Substantially�all�of�the
Company’s�fixed�income�securities �are�rated �investment�grade�or�better. �The�Company’s�fixed-income �mutual�fund�and�certain�other�insignificant �fixed�income
security�positions�have�been�in�an�unrealized�loss�position�for�greater�than�12�months�as�of�December�31,�2020�and�2019.�The�amount�by�which�these�investment
securities �have �been �in �a�continuous �unrealized �loss �position�is �insignificant. �The �Company’s �management�has �determined �that �these �gross�unrealized �losses �at
December�31,�2020�and�2019�are�temporary�in�nature.
����The�Company�had�insignificant�maturities�of�investment�securities�during�the�years�ended�December�31,�2020,�2019�and�2018,�respectively.
����The�contractual�maturity�dates�of�the�Company’s�investment�securities�are�as�follows:
�
�
(In�thousands)
Due�after�5�years�through�year�10
Due�after�10�years
Mortgage-backed�securities�with�original�maturities�of�30�years
Investment�securities�with�no�maturity�dates
Total
�
December�31,
2020
2019
Cost
Fair�Value
Cost
Fair�Value
$
$
236�
170�
133�
36,680�
37,219�
$
$
236�
171�
138�
36,728�
37,273�
$
$
278�
276�
164�
30,221�
30,939�
$
$
277�
272�
174�
29,737�
30,460�
103
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
8.
Property,�Equipment�and�Capitalized�Software,�Net
����Property,�equipment�and�capitalized�software,�net�consist�of�the�following:�
�
(In�thousands)
Furniture,�fixtures�and�equipment
Computer�software,�including�internal-use�software
Leasehold�improvements
Construction�in�progress
Total
Less:�accumulated�depreciation
Total�property,�equipment�and�capitalized�software,�net
December�31,
2020
2019
$
$
87,111�
463,614�
32,111�
7,910�
590,746�
(402,406)
188,340�
$
$
94,478�
411,308�
32,406�
18,495�
556,687�
(344,212)
212,475�
����Depreciation�expense�was�$90.8�million,�$77.7�million�and�$61.6�million�in�2020,�2019�and�2018,�respectively.
9.
Goodwill�and�Other�Intangible�Assets
Goodwill����
����The�changes�in�goodwill�during�the�period�January�1�to�December�31,�2020�were�as�follows:
(In�thousands)
Gross�goodwill,�January�1,�2020
Current�year�acquisition
Current�year�sale�of�subsidiary
Foreign�currency�translation
Gross�goodwill,�December�31,�2020
Accumulated�impairment,�January�1,�2020
Current�year�sale�of�subsidiary
WEX�Fleet�Europe�impairment
1
Accumulated�impairment,�December�31,�2020
Net�goodwill,�January�1,�2020
Net�goodwill,�December�31,�2020
Fleet�
Solutions�
Segment
Travel�and�Corporate
Solutions
Segment
Health�and�Employee
Benefit�Solutions
Segment
Total
$
$
$
$
$
$
1,378,107�
—�
(3,225)
17,829�
1,392,711�
$
$
(4,087) $
3,225�
(53,378)
(54,240) $
1,374,020�
1,338,471�
$
$
455,007�
291,884�
—�
4,507�
751,398�
$
$
(9,935) $
—�
—�
(9,935) $
445,072�
741,463�
$
$
622,109�
—�
(9,936)
(3,969)
608,204�
—�
—�
—�
—�
622,109�
608,204�
$
$
$
$
$
$
2,455,223�
291,884�
(13,161)
18,367�
2,752,313�
(14,022)
3,225�
(53,378)
(64,175)
2,441,201�
2,688,138�
1
�During�the�Company's�annual�goodwill�assessment�completed�as�of�October�1,�2020,�management�determined�that�the�reduced�volumes�attributable�in�part�to�COVID-19,�had�a
significant�negative�impact�on�the�fair�value�of�the�WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel�Card�acquisition).�The�fair�value�of�the�reporting�unit�was�calculated
using�a�combination�of�the�income�and�market�approaches,�utilizing�significant�judgments�including�estimated�cash�flows�and�market�prices�from�comparable�businesses.�As�the
carrying �value �of�this �reporting�unit �exceeded�its�fair�value, �the�Company �recorded�a �non-cash�goodwill �impairment �charge�of �$53.4�million �to �the�Fleet �Solutions �segment.
There�is�$65.8�million�remaining�goodwill�associated�with�this�reporting�unit.
104
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����The�changes�in�goodwill�during�the�period�January�1�to�December�31,�2019�were�as�follows:�
(In�thousands)
Gross�goodwill,�January�1,�2019
2019�acquisitions
Foreign�currency�translation
Gross�goodwill,�December�31,�2019
Accumulated�impairment,�January�1,�2019
Foreign�currency�translation
Accumulated�impairment,�December�31,�2019
Net�goodwill,�January�1,�2019
Net�goodwill,�December�31,�2019
Other�Intangible�Assets����
����Other�intangible�assets�consist�of�the�following:
Fleet�
Solutions�
Segment
Travel�and�Corporate
Solutions
Segment
Health�and�Employee
Benefit�Solutions�
Segment
Total
$
$
$
$
$
$
1,251,501�
128,251�
(1,645)
1,378,107�
$
$
(4,205) $
118�
(4,087) $
1,247,296�
1,374,020�
$
$
244,632�
209,887�
488�
455,007�
$
$
(9,992) $
57�
(9,935) $
234,640�
445,072�
$
$
350,193�
272,399�
(483)
622,109�
—�
—�
—�
350,193�
622,109�
$
$
$
$
$
$
1,846,326�
610,537�
(1,640)
2,455,223�
(14,197)
175�
(14,022)
1,832,129�
2,441,201�
�
December�31,�2020
December�31,�2019
(in�thousands)
Definite-lived�intangible�assets
Acquired�software�and�developed�technology
Customer�relationships
Licensing�agreements
Patent
Trade�names�and�brand�names
Total
Gross�
Carrying�
Amount
Accumulated�
Amortization
Net�Carrying�
Amount
Gross�
Carrying�
Amount
Accumulated�
Amortization
Net�Carrying�
Amount
$
$
327,134�
1,842,709�
152,805�
2,549�
61,978�
2,387,175�
$
$
(164,245)
(608,178)
(35,010)
(2,549)
(25,181)
(835,163)
$
$
162,889�
1,234,531�
117,795�
—�
36,797�
1,552,012�
$
$
269,888�
1,762,066�
145,295�
2,319�
62,275�
2,241,843�
$
$
(142,239)
(478,680)
(24,160)
(2,183)
(19,531)
(666,793)
$
$
127,649�
1,283,386�
121,135�
136�
42,744�
1,575,050�
����During�the�years�ended�December �31,�2020,�2019�and�2018,�amortization �expense�was�$171.1�million,�$159.4�million�and�$138.2�million,�respectively.�The
following�table�presents�the�estimated�amortization�expense�related�to�the�definite-lived�intangible�assets�listed�above�for�each�of�the�next�five�fiscal�years:
(in�thousands)
2021
2022
2023
2024
2025
10.
Accounts�Payable
����Accounts�payable�consists�of:
�
(In�thousands)
Merchant�payables
Other�payables
Accounts�payable
�
$
$
$
$
$
182,080�
168,842�
157,711�
145,252�
130,911�
December�31,
2020
2019
$
$
647,090�
131,117�
778,207�
$
$
852,964�
116,852�
969,816�
105
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
11.
Deposits
����
� � � �WEX �Bank’s �regulatory �status �enables �it �to �raise �capital �to �fund �the �Company’s �working �capital �requirements �by �issuing �deposits, �subject �to �FDIC �rules
governing�minimum�financial�ratios.�See�Note�26,�Supplementary�Regulatory�Capital�Disclosure,�for�further�information�concerning�these�FDIC�requirements.
����WEX�Bank�accepts�its�deposits�through:�(i)�certain�customers�as�required�collateral�for�credit�that�has�been�extended�(“customer�deposits”)�and�(ii)�contractual
arrangements �with �brokerage �firms �for �both �certificate �of �deposit �and �brokered �money �market �deposit �products. �Customer �deposits �are �generally �non-interest
bearing,�certificates�of�deposit�are�issued�at�fixed�rates�and�brokered�money�market�deposits�are�issued�at�variable�rates�based�on�LIBOR�or�the�Federal�Funds�rate.
����The�following�table�presents�the�composition�of�deposits,�which�are�classified�as�short-term�or�long-term�based�on�their�contractual�maturities:
�
�(in�thousands)
1
Interest-bearing�brokered�money�market�deposits
Customer�deposits
Certificates�of�deposits�with�maturities�within�1�year
1,2
Short-term�deposits
Certificates�of�deposit�with�maturities�greater�than�1�year�and�less�than�5�years
Total�deposits
�1,2
Weighted�average�cost�of�funds�on�certificates�of�deposit�outstanding
Weighted�average�cost�of�interest-bearing�brokered�money�market�deposits
December�31,
2020
439,894�
116,694�
354,807�
911,395�
148,591�
1,059,986�
$
$
2019
362,246�
112,571�
835,996�
1,310,813�
143,399�
1,454,212�
$
$
1.81�%
0.27�%
2.57�%
1.88�%
1�
As�of�December�31,�2020,�all�certificates�of�deposit�and�brokered�money�market�deposits�were�in�denominations�of�$250�thousand�or�less,�corresponding�to�FDIC�deposit�insurance�limits.
2�
Original�maturities�range�from�1�year�to�5�years,�with�interest�rates�ranging�from�1.35�percent�to�3.52�percent�as�of�December�31,�2020.�At�December�31,�2019,�original�maturities�ranged�from
4�months�to�5�years�with�interest�rates�ranging�from�1.80�percent�to�3.52�percent.
����In�accordance�with�regulatory�requirements,�WEX�Bank�maintains�reserves�against�a�portion�of�its�outstanding�customer�deposits�by�keeping�balances�with�the
Federal�Reserve�Bank.�There�was�no�required�reserve�at�December�31,�2020,�due�to�temporarily�relaxed�Federal�Reserve�requirements�enacted�in�response�to�the
COVID-19�pandemic.�The�required�reserve�was�$24.9�million�at�December�31,�2019.
����The�following�table�presents�the�average�interest�rates�for�deposits�and�interest-bearing�brokered�money�market�deposits:
(in�thousands)
Average�interest�rate:
Deposits
Interest-bearing�brokered�money�market�deposits
Sources�of�Funds
ICS�Purchases
2020
Year�ended�December�31,
2019
2018
2.21�%
0.61�%
2.46�%
2.28�%
1.91�%
2.03�%
����From�time�to�time,�WEX�Bank�utilizes�alternative�funding�sources�such�as�Promontory�Interfinancial�Network,�LLC’s�ICS�service,�which�provides�for�one-way
buy�transactions�among�banks �for �the �purposes �of �purchasing �cost-effective �variable-rate �funding �without �collateralization. �WEX�Bank �may�purchase�brokered
money�market�demand�accounts�and�demand�deposit�accounts�in�amounts�not�to�exceed�$125.0�million�through�this�service.�There�were�no�outstanding�balances
for�ICS�purchases�at�December�31,�2020�and�2019.
106
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
12.
Derivative�Instruments
����The�Company�is�exposed�to�certain�market�risks�relating�to�its�ongoing�business�operations.�From�time�to�time,�the�Company�enters�into�derivative�instrument
arrangements�to�manage�various�risks�including�interest�rate�risk.
As�of�December�31,�2019,�the�Company�had�seven�interest�rate�swap�contracts�in�effect�with�a�collective�notional�amount�at�inception�of�$1.5�billion,�with
maturity �dates �from�December �31, �2020 �to �March �12, �2023, �at �interest �rates �between �1.108 �percent �and�2.425 �percent. �During �the �second �quarter �of �2020, �the
Company�amended�and�extended�the�terms�of�five�of�its�interest�rate�swaps�with�a�collective�notional�amount�of�$935.0�million.�These�amendments�merged�two�of
the�previously�existing�interest�rate�swap�agreements�into�one,�reduced�the�effective�fixed�interest�rates�payable�and�extended�the�maturity�date�of�each�previously
existing�agreement �by�a �period�of�one �year.�As �of�December �31,�2020, �outstanding�interest �rate�swap �contracts�are �intended�to �fix�the �future�interest �payments
associated�with�$1.4�billion�of�the�$2.3�billion�of�outstanding�borrowings�under�the�Company’s�2016�Credit�Agreement.�����
����The�following�table�presents�relevant�information�for�the�interest�rate�swap�agreements�outstanding�during�2020:
Notional�amount�at�inception
(in�thousands)
Maturity�date
Fixed�interest�rate
Tranche�A
Tranche�B
Tranche�C
1
Tranche�D
1
Tranche�E
Tranche�F
2
$150,000
3/13/2023
1.954%
$100,000
3/12/2023
1.956%
$200,000
3/12/2023
2.413%
$300,000
12/30/2022
2.204%
$200,000
12/30/2023
1.862%
$485,000
12/31/2021
0.743%
1
�Not�amended�or�extended.
2�
Result�of�the�merging�of�tranches�F�and�G,�which�were�disclosed�within�the�Company’s�Annual�Report�on�Form�10-K�for�the�year�ended�December�31,�2019.
����The�following�table�presents�information�on�the�location�and�amounts�of�interest�rate�swap�gains�and�losses:
(In�thousands)
Derivatives�
Not�Designated�as�Hedging�Instruments
Interest�rate�swap�agreements�–�
unrealized�portion
Interest�rate�swap�agreements�–�
realized�portion
Location�of�Gain�(Loss)�Recognized�in�Consolidated
Statements�of�Income
Net�unrealized�(loss)�gain�on�financial�instruments
Financing�interest�expense
Year�ended�December�31,
2020
2019
2018
$
$
(27,569)
15,842�
$
$
(35,363)
(5,411)
$
$
3,772�
(6,160)
����Derivative �instruments�and �their�related �gains�and�losses �are�reported �within�cash�flows �from�operating �activities�within�the �consolidated�statements �of�cash
flows.�See�Note�19,�Fair�Value,�for�more�information�regarding�the�valuation�of�the�Company’s�interest�rate�swaps.
107
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
13.
Off-Balance�Sheet�Arrangements
WEX�Europe�Services�Accounts�Receivable�Factoring
����Under�a�factoring�arrangement�between�WEX�Europe�Services�and�an�unrelated�third-party�financial�institution,�the�Company�sells�customer�accounts�receivable
balances �without �recourse �to �the �extent �that �the �customer �balances �are �maintained �at �or �below �the �credit �limit �established �by �the �buyer. �If �customer �receivable
balances �exceed �the �buyer’s �credit �limit, �the �Company �maintains �the �risk �of �default. �The �Company �obtained �a �true-sale �opinion �from �an �independent �attorney,
which �states �that�the �factoring �agreement �provides�legal �isolation �upon�WEX �Europe �Services�bankruptcy �or �receivership�under �local �law�and �creates �a�sale �of
receivables�for�amounts�transferred�both�below�and�above�the�established�credit�limits.�The�Company�continues�to�service�these�receivables�post-transfer�with�no
participating �interest. �As �such, �transfers �under �this �arrangement �are �treated �as �sales �and �are �accounted �for �as �reductions �in �trade �accounts �receivable �because
effective�control�of�the�receivables�is�transferred�to�the�buyer.�The�Company�sold�$452.2�million�and�$630.3�million�of�accounts�receivable�under�this�arrangement
during �the �years �ended �December �31, �2020 �and �2019, �respectively. �Proceeds �received, �which �are �recorded �net �of �applicable �costs, �including �interest �and
commissions,�are�recorded�in�operating�activities�in�the�consolidated�statements�of�cash�flows.�The�loss�on�factoring�was�$2.4�million�and�$3.5�million�for�the�years
ended�December�31,�2020�and�2019,�respectively,�and�was�recorded�within�cost�of�services�in�the�consolidated�statements�of�income.�As�of�December�31,�2020�and
2019,�the�amount�of�outstanding�transferred�receivables�in�excess�of�the�established�credit�limit�was�immaterial.�Charge-backs�on�balances�in�excess�of�the�credit
limit�during�the�year�ended�December�31,�2020�and�2019�were�insignificant.
WEX�Bank�Accounts�Receivable�Factoring
����In�August�2018,�WEX�Bank�entered�into�a�factoring�agreement�with�an�unrelated�third-party�financial�institution�to�sell�certain�of�its�trade�accounts�receivable
under�non-recourse�transactions.�The�Company�obtained�a�true-sale�opinion�from�an�independent�attorney,�which�states�that�the�factoring�agreement�provides�legal
isolation�upon�WEX�Bank�bankruptcy�or�receivership�under�local�law.�WEX�Bank�continues�to�service�the�receivables�post-transfer�with�no�participating�interest.
As�such,�transfers�under�this�arrangement�are�treated�as�a�sale�and�are�accounted�for�as�a�reduction�in�trade�accounts�receivable�because�effective�control�of�the
receivables�is�transferred�to�the�buyer.�The�Company�sold�$4.1�billion�and�$14.8�billion�of�trade�accounts�receivable�under�this�arrangement�during�the�years�ended
December �31, �2020 �and �2019, �respectively. �Proceeds �received, �which �are �reported �net �of �a �negotiated �discount �rate, �are �recorded �in �operating �activities �in �the
consolidated �statements �of �cash �flows. �The �loss �on �factoring, �which �is �recorded �within �cost �of �services �in �the �consolidated �statements �of �operations, �was
insignificant�and�$3.7�million�for�the�years�ended�December�31,�2020�and�2019,�respectively.
WEX�Latin�America�Securitization�of�Receivables
��� � Prior�to �the �sale �of �WEX �Latin �America �on �September �30, �2020, �the �Company �transferred �certain �unsecured �receivables �associated �with �its �salary �advance
payment�card�product�to�an�investment�fund�in�which�WEX�Latin�America�held�a�non-controlling�equity�interest,�and�that�is�managed�by�an�unrelated�third-party.
During�the�year�ended�December�31,�2020,�the�Company�received�an�insignificant�distribution�from�the�investment�fund�and�did�not�make�equity�contributions�to
the�investment�fund�during�the�year�ended�December�31,�2019.�During�the�year�ended�December�31,�2018,�the�Company’s�equity�contributions�to�the�investment
fund �totaled �$2.8 �million. �The �securitization �arrangement �met �the �derecognition �conditions �under �GAAP �and �transfers �beginning �July �1, �2018 �under �this
arrangement �were �treated �as �sales �and �accounted �for �as �a �reduction �of �trade �receivables. �During �the �year �ended �December �31, �2018, �the �Company �recognized
operating�interest�expense�of�$4.4�million�under�this�financing�arrangement.�During�the�years�ended�December�31,�2020�and�2019,�the�Company�recognized�a�gain
on �sale �of �$6.5 �million �and �$16.1 �million, �respectively. �The �gain �recognized �consists �of �the �difference �between �the �sales �price �and �the �carrying �value �of �the
receivables,�and�is�recorded�within�other�revenue.�Cash�proceeds�from�the�transfer�of�these�receivables�are�recorded�within�operating�activities�in�the�consolidated
statements�of�cash�flows.
108
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
14.
Income�Taxes
����Income�before�income�taxes�consisted�of�the�following:�
(In�thousands)
United�States
Foreign
Total
�
2020
Year�ended�December�31,
2019
2018
$
$
(163,014) $
(138,067)
(301,081) $
178,235�
38,281�
216,516�
$
$
194,770�
43,849�
238,619�
����Income�taxes�from�continuing�operations�consisted�of�the�following�for�the�years�ended�December�31:
(In�thousands)
2020
Current
Deferred
Income�taxes
2019
Current
Deferred
Income�taxes
2018
Current
Deferred
Income�taxes
������
United�States
State�
and�Local
Foreign
Total
$
$
$
$
$
$
(7,546)
(22,568)
20,748�
19,946�
16,027�
29,520�
$
$
$
$
$
$
2,509�
(4,943)
4,486�
3,831�
3,566�
8,016�
$
$
$
$
$
$
13,782�
$
(1,831) $
$
16,322�
$
(4,110) $
$
17,916�
$
(6,202) $
$
8,745�
(29,342)
(20,597)
41,556�
19,667�
61,223�
37,509�
31,334�
68,843�
Undistributed �earnings �of �certain �foreign �subsidiaries �of �the �Company �amounted �to �$58.5 �million �and �$77.4 �million �at �December �31, �2020 �and �2019,
respectively. �The �Company �had �historically �asserted �that �the �undistributed �earnings �of �foreign �subsidiaries �were �considered �indefinitely �reinvested �outside �the
United�States.�The�Company�reevaluated�its�historic�indefinite�reinvestment�assertion�and�determined�that�any�historical�undistributed�earnings�as�well�as�the�future
earnings�for�WEX�Australia�are�no�longer�considered�to�be�indefinitely�reinvested.�The�Company�continues�to�maintain�its�indefinite�reinvestment�assertion�for�its
remaining�foreign�subsidiaries.�The�deferred�tax�liability�related�to�the�foreign�and�state�tax�costs�associated�with�this�change�in�assertion�was�immaterial.�Upon
distribution�of�the�foreign�subsidiaries�earnings�in�which�the�Company�continues�to�assert�indefinite�reinvestment,�the�Company�would�be�subject�to�withholding
taxes�payable�to�foreign�countries,�where�applicable,�but�would�generally�have�no�further�federal�income�tax�liability.
109
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����The�reconciliation�between�the�income�tax�computed�by�applying�the�U.S.�federal�statutory�rate�and�the�reported�effective�tax�rate�on�income�from�continuing
operations�is�as�follows:
(In�thousands�except�for�tax�rates)
Federal�statutory�rate
State�income�taxes�(net�of�federal�income�tax�benefit)
Foreign�income�tax�rate�differential
Revaluation�of�deferred�tax�assets�for�foreign�and�state�tax�rate�changes,�net
Loss�on�sale�of�subsidiary
Legal�settlement
Purchase�accounting�adjustments
Research�and�development�credit
Tax�reserves
Withholding�taxes
2017�Tax�Act
Change�in�valuation�allowance
Nondeductible�expenses
Incremental�tax�benefit�from�share-based�compensation�awards
GILTI
Other
Effective�tax�rate
Year�ended�December�31,���������
2019
2018
2020
21.0�%
1.6�
3.3�
(1.9)
(2.3)
(5.1)
4.3�
—�
(0.1)
(0.1)
—�
(13.5)
(1.6)
0.2�
—�
1.0�
6.8�%
21.0� %
1.4�
0.8�
(1.0)
—�
—�
—�
(0.5)
0.8�
0.7�
—�
3.1�
2.3�
(2.0)
0.5�
1.2�
28.3� %
21.0� %
2.2�
1.1�
(1.3)
—�
—�
—�
(0.2)
2.0�
0.2�
(0.2)
4.5�
1.4�
(1.7)
0.8�
(0.9)
28.9� %
We�recorded�an�income�tax�benefit�for�2020�as�compared�to�an�income�tax�provision�for�2019.�The�Company's�effective�tax�rate�for�the�year�ended
December�31,�2020�was�impacted�by�no�income�tax�benefit�being�recorded�for�i)�operating�losses�generated�by�WEX�Latin�America�during�the�current�year
through�the�date�of�sale,�ii)�the�loss�on�sale�of�WEX�Latin�America,�and�iii)�the�legal�settlement.�These�losses�were�included�as�part�of�the�current�year�loss�and
have�been�determined�to�be�either�non-deductible�for�income�tax�purposes�or�required�a�valuation�allowance.
A �portion �of �the �legal �settlement �resulted �in �a �foreign �capital �loss, �which �the �Company �concluded �was �not �more �likely �than �not �to �be �realized �and
accordingly �recorded �a �full �valuation �allowance �against �it. �The �remaining �portion �of �the �legal �settlement �was �determined �to �be �non-deductible �for �income �tax
purposes.
Purchase �accounting �adjustments �relate �to �the �additional �tax �basis �and �attributes �for �Discovery �Benefits �and �Noventis �recognized �in �the �income �tax
(benefit)�provision�as�the�respective�measurement�periods�had�ended.
The�lower�effective�tax�rate�for�the�year�ended�December�31,�2019�relative�to�2018�was�primarily�due�to�the�jurisdictional�earnings�mix.
����
110
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
The �tax�effects�of�temporary�differences �in�the�recognition�of �income�and�expense�for�tax�and �financial�reporting�purposes�that�give �rise�to�significant
portions�of�the�deferred�tax�assets�and�liabilities�are�presented�below:
(In�thousands)
Deferred�tax�assets�related�to:
Reserve�for�credit�losses
Tax�credit�carryforwards
Stock-based�compensation,�net
Net�operating�loss�carry�forwards
Capital�loss�carry�forwards
Accruals
Operating�lease�liabilities
Other
Total
Deferred�tax�liabilities�related�to:
Deferred�financing�costs
Property,�equipment�and�capitalized�software
Intangibles
Operating�lease�assets
Other�liabilities
Total
Valuation�allowance
Deferred�income�taxes,�net
����Net�deferred�tax�(liabilities)�assets�by�jurisdiction�are�as�follows:
(In�thousands)
United�States
Australia
Europe
New�Zealand
Singapore
Mexico
Brazil
Canada
$
$
$
$
$
$
December�31,
2020
2019
14,484�
1,371�
21,376�
45,612�
28,211�
29,477�
24,142�
9,013�
173,686�
$
$
(13,590) $
(34,232)
(247,361)
(20,425)
(107)
(315,715)
(60,569)
(202,598) $
$
11,831�
2,570�
16,070�
49,464�
—�
18,934�
18,892�
4,283�
122,044�
(1,090)
(35,273)
(243,229)
(15,602)
(86)
(295,280)
(32,671)
(205,907)
December�31,
2020
2019
$
(201,739)
4,009�
14,839�
123�
(19,863)
6�
—�
27�
(217,927)
(795)
5,645�
237�
—�
—�
6,820�
113�
(205,907)
Deferred�income�taxes,�net
$
(202,598) $
� � � �The �Company �had �approximately �$511.5 �million �of �post �apportionment �state, �$19.8 �million �of �federal �and �$76.4 �million �of �foreign �net �operating �loss
carryforwards �at �December �31, �2020 �and �approximately �$608.7 �million �of �post �apportionment �state, �$31.3 �million �of �federal �and �$58.6 �million �of �foreign �net
operating �loss�carryforwards�at�December �31,�2019.�The�U.S.�losses�expire�at �various �times�through�2040.�Foreign�losses �in�Australia�and�the�United �Kingdom
have�indefinite�carryforward�periods.
����At�December�31,�2020,�the�Company’s�valuation�allowance�primarily�pertains�to�net�deferred�tax�assets�for�certain�states�and�foreign�capital�losses�arising�from
a�portion�of�the�legal�settlement.�In�each�case,�the�Company�has�determined�it�is�not�more�likely�than�not�that�the�benefits�will�be�utilized.�During�2020�and�2019,
the �Company �recorded �tax �expense �of �$40.6 �million �and �$6.6 �million, �respectively, �for �net �increases �to �the �valuation �allowance. �The �increase �in �the �valuation
allowance�in�2020�was�primarily�related�to�the�foreign�capital�losses�arising�from�a�portion�of�the�legal�settlement�and�operating�losses�generated�from�WEX�Latin
America�during�the�current�year�through�the�date�of�sale.�WEX�Latin�America’s�deferred�tax�assets�and�related�valuation�allowance�are�not�reflected�in�the�tables
above,�since�the�Company�sold�WEX�Latin�America�on�September�30,�2020.�The�majority�of�the�increase�in�valuation�allowance�in�2019�was�related�to�state�net
operating�losses�driven�from�the�Company’s�parent�company�separate�state�filings.
111
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����At�December�31,�2020,�the�Company�had�$4.1�million�of�unrecognized�tax�benefits,�net�of�federal�income�tax�benefit,�of�which�$3.6�million�would�decrease�our
effective �tax �rate �if�fully �recognized. �The�Company �does �not�expect �any �changes �to �the�unrecognized �tax �benefits �within�the �next �twelve�months �as �a�result �of
settlements�of�certain�examinations�or�expiration�of�statutes�of�limitations.�The�Company�recognizes�interest�and�penalties�related�to�unrecognized�tax�benefits�in
income�tax�expense.�The�total�amounts�of�interest�and�penalties�were�not�material�for�the�years�ended�December�31,�2020,�2019�and�2018,�and�as�of�December�31,
2020�and�2019,�the�Company�had�no�material�amounts�accrued�for�interest�and�penalties�related�to�unrecognized�tax�benefits.
����A�reconciliation�of�the�beginning�and�ending�amount�of�gross�unrecognized�tax�benefits�excluding�interest�and�penalties�is�as�follows:
(In�thousands)
Beginning�balance
Increases�related�to�prior�year�tax�positions
Increases�related�to�current�year�tax�positions
Decreases�related�to�prior�year�tax�positions
Settlements
Ending�balance
Year�ended�December�31,
2019
2018
2020
$
$
10,320�
—�
—�
(826)
(5,361)
4,133�
$
$
8,996�
1,727�
—�
(39)
(364)
10,320�
$
$
5,898�
4,831�
—�
—�
(1,733)
8,996�
���� �The�Company’s�primary�tax�jurisdictions�are�the�United�States,�Australia�and�the�United�Kingdom.�The�Company�or�one�of�its�subsidiaries�files�income�tax
returns�in�the�United�States�federal�jurisdiction�and�various�state�and�foreign�jurisdictions,�where�required.�In�the�normal�course�of�business,�the�Company�is�no
longer �subject �to �income �tax �examination �after �the �Internal �Revenue �Service �statute �of �limitations �of �three �years. �The �Internal �Revenue �Service �is �currently
examining�the�Company’s�U.S.�federal�income�tax�returns�for�2013�through�2015.�The�Company�concluded�the�appeals�process�with�the�Internal�Revenue�Service
in�connection �with �the �2010 �through �2012 �audits�with �no �additional �tax �impact �to �the �Company. �At�December �31, �2020, �U.S. �state �tax �returns�were �no �longer
subject�to�tax�examination�for�years�prior�to�2014.�The�tax�years�remaining�open�for�income�tax�audits�in�the�United�Kingdom�are�2019�and�2020,�while�the�tax
years�open�for�audit�in�Australia�are�2016�through�2020.
112
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Leases
15.
����
����The�Company�has�non-cancelable�operating�lease�arrangements�for�its�office�space�and�equipment�that�expire�at�various�dates�through�2035.�In�addition,�the
Company�rents�office�equipment�under�agreements�that�may�be�canceled�anytime.
����The�following�table�presents�supplemental�balance�sheet�information�related�to�our�operating�leases:
�(In�thousands)
Assets
Operating�lease�ROU�assets
Liabilities
Current�operating�lease�liabilities
Non-current�operating�lease�liabilities
Total�lease�liabilities
Balance�Sheet�Location
December�31,�2020
December�31,�2019
Other�assets
Other�current�liabilities
Other�liabilities
$
$
85,034�
$
16,445�
82,969�
99,414�
$
68,351�
13,176�
67,910�
81,086�
����The�following�table�presents�the�weighted�average�remaining�lease�term�and�discount�rate:
Operating�leases
Weighted�average�remaining�term�(in�years)
Weighted�average�discount�rate
����Maturities�of�our�operating�lease�liabilities�are�as�follows:
December�31,�2020
December�31,�2019
10.2
4.5� %
8.5
4.6� %
�(In�thousands)
2021
2022
2023
2024
2025
Thereafter
Total�lease�payments
Less:�Imputed�interest
Total�lease�obligations
Less:�Current�portion�of�lease�obligations
Long-term�lease�obligations
December�31,�2020
20,384�
16,668�
12,484�
9,752�
7,583�
57,180�
124,051�
(24,637)
99,414�
16,445�
82,969�
$
$
$
$
Leases�with�an�initial�term�of�twelve�months�or�less�are�not�recorded�on�the�consolidated�balance�sheet.�Short-term�lease�payments�are�recognized�on�a
straight-line�basis �and�variable �short-term �lease�payments �are �recognized�in �the�period �in �which�the �obligation�is �incurred. �We�recognized �$18.2�million, �$18.3
million,�and�$15.7�million�of�operating�lease�expense�during�2020,�2019�and�2018,�respectively,�which�includes�these�immaterial�short-term�leases�and�variable
lease�costs�as�well�as�lease�expense�related�to�equipment�and�vehicles.�These�amounts�are�classified�as�general�and�administrative�expenses�on�our�consolidated
statements�of�income.
����The�following�table�presents�supplemental�cash�flow�and�other�information�related�to�our�leases:
(In�thousands)
Cash�paid�for�amounts�included�in�the�measurement�of�lease�liabilities:
Operating�cash�flows�from�operating�leases
Right-of-use�assets�obtained�in�exchange�for�lease�liabilities:
Operating�leases
(a)
December�31,�2020
December�31,�2019
$
$
14,511�
32,469�
$
$
16,314�
11,001�
(a)�
Includes�non-cash�transactions�resulting�in�adjustments�to�the�lease�liability�or�ROU�asset�due�to�modification,�impairment�or�other�reassessment�events.
113
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
16.
Financing�and�Other�Debt
����The�following�table�summarizes�the�Company’s�total�outstanding�debt�by�type:
Year�ended�December�31,
2019
2020
873,777�
1,442,368�
2,316,145�
400,000�
310,000�
85,945�
—�
20,000�
—�
3,132,090�
$
923,707�
1,457,048�
2,380,755�
400,000�
—�
104,261�
50,000�
34,998�
2,660�
2,972,674�
Year�ended�December�31,
2019
2020
170,556�
(17,826)
152,730�
2,961,534�
(87,421)
2,874,113�
51,628�
818,372�
$
$
$
$
$
$
256,529�
(7,998)
248,531�
2,716,145�
(29,632)
2,686,513�
51,314�
768,686�
$
$
$
$
$
$
$
(In�thousands)
���Tranche�A�term�loan
���Tranche�B�term�loan
Term�loans�under�2016�Credit�Agreement
Notes�outstanding
Convertible�Notes�outstanding
Securitized�debt
Participation�debt
Borrowed�federal�funds
WEX�Latin�America�debt
1
1
1
Total�gross�debt
1�
See�Note�19,�Fair�Value,�for�more�information�regarding�the�Company’s�2016�Credit�Agreement,�Notes�and�Convertible�Notes.
����The�following�table�summarizes�the�Company’s�total�outstanding�debt�by�balance�sheet�classification:
(In�thousands)
Current�portion�of�gross�debt
Less:�Unamortized�debt�issuance�costs/debt�discount
Short-term�debt,�net
Long-term�portion�of�gross�debt
Less:�Unamortized�debt�issuance�costs/debt�discount
Long-term�debt,�net
Supplemental�information�under�2016�Credit�Agreement:
Letters�of�credit
Remaining�borrowing�capacity�on�revolving�credit�facility
1
2
1�
Collateral�for�lease�agreements,�virtual�card�and�fuel�payment�processing�activity�at�the�Company’s�foreign�subsidiaries.
2�
Contingent�on�maintaining�compliance�with�the�financial�covenants�as�defined�in�the�Company’s�2016�Credit�Agreement.
114
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
2016�Credit�Agreement
On�July�1,�2016,�the�Company�entered�into�a�credit�agreement�by�and�among�the�Company�and�certain�of�its�subsidiaries�from�time�to�time�party�thereto,
as�borrowers,�WEX�Card�Holding�Australia�Pty�Ltd.,�as�specified�designated�borrower,�Bank�of�America,�N.A.�as�administrative�agent,�swing�line�lender�and�letter
of�credit�issuer�and�the�lenders�from�time�to�time�party�thereto�(the�“2016�Credit�Agreement”).�As�of�December�31,�2020,�the�2016�Credit�Agreement,�as�amended
through�that�date,�provided�for�a�senior�secured�tranche�A�term�loan�facility�in�an�original�principal�amount�of�$1,030.0�million�(the�“Tranche�A�Term�Loan”),�a
senior�secured�tranche�B�term�loan�facility�in�an�original�principal�amount�of�$1,485.0�million�(the�“Tranche�B�Term�Loan”�and�together�with�the�Tranche�A�Term
Loan,�the�“Term�Loans”),�and�an�$870.0�million�secured�revolving�credit�facility�(the�“Revolving�Credit�Facility”),�with�a�$250.0�million�sublimit�for�letters�of
credit �and �$20.0 �million �sublimit �for �swingline �loans. �As �of �December �31, �2020, �the �Company �had �an �outstanding �principal �amount �of �$873.8 �million �on �the
Tranche �A �Term �Loan, �an �outstanding �principal �amount �of �$1.4 �billion �on �the �Tranche �B �Term �Loan �and �outstanding �letters �of �credit �of �$51.6 �million �drawn
against�the�Revolving�Credit�Facility.
As�of�December�31,�2020,�the�Revolving�Credit�Facility�and�the�Term�Loans�bear�interest�at�variable�rates�determined�by�using�(a)�a�variable�reference
rate,�selected�by�the�Company,�if�applicable,�from�a�prescribed�set�of�variable�reference�rates�including�(x)�the�Eurocurrency�Rate�(as�defined�in�the�2016�Credit
Agreement),�or�(y)�the�highest�of�(1)�the�federal�funds�effective�rate�plus�0.50%,�(2)�the�rate�of�interest�in�effect�for�such�day�as�publicly�announced�from�time�to
time�by�Bank�of�America,�N.A.�as�its �“prime�rate”,�and�(3)�the�Eurocurrency�Rate�plus�1.00%�(the�“Base�Rate”),�plus�(b)�an�applicable�margin.�The�applicable
margin�with�respect�to�the�Revolving�Credit�Facility�and�Tranche�A�Term�Loan,�is�determined�based�on�the�Company’s�Consolidated�Leverage�Ratio�(as�defined�in
the�2016�Credit�Agreement).�The�applicable�margin�with�respect�to�the�Tranche�B�Term�Loan�is�equal�to�1.25�percent�for�loans�accruing�interest�at�the�Base�Rate
and�2.25�percent�for�loans�accruing�interest�at�the�Eurocurrency�Rate.�Starting�in�June�2020,�revolving�credit�facility�borrowings�were�subject�to�a�75�basis�point
LIBOR�floor.
As�of�December�31,�2020�and�December�31,�2019,�amounts�outstanding�under�the�2016�Credit�Agreement�bore�a�weighted�average�effective�interest�rate
of�2.3�percent�and�4.0�percent�per�annum,�respectively.�The�Company�maintains�interest�rate�swap�agreements�to�manage�the�interest�rate�risk�associated�with�its
outstanding �variable-interest �rate �borrowings �under �the �2016 �Credit �Agreement. �See �Note �12, �Derivative �Instruments, �for �further �discussion. �In �addition, �the
Company�has �agreed �to�pay �a�quarterly �commitment�fee�at�a�rate�per�annum�ranging�from�0.30%�to�0.50%�of�the�daily�unused�portion�of�the�Revolving�Credit
Facility�(which�was�0.40%�at�December�31,�2020)�determined�based�on�the�Consolidated�Leverage�Ratio.
The�Revolving�Credit�Facility�and�the�Tranche�A�Term�Loan�mature,�and�the�commitments�under�the�Revolving�Credit�Facility�will�terminate,�on�July�1,
2023. �The �Tranche �B �Term �Loan �matures �on �May �17, �2026. �The �Tranche �A �Term �Loan �and �the �Tranche �B �Term �Loan �require, �prior �to �maturity, �scheduled
quarterly �payments �of �$12.5 �million �and �$3.7 �million, �respectively. �The �2016 �Credit �Agreement �also �requires �the �Term�Loans �to �be �prepaid �with �the �net �cash
proceeds �from �certain �debt �incurrences �or �issuances �and �asset �dispositions, �subject �to �certain �exceptions, �thresholds �and �reinvestment �rights. �The �2016 �Credit
Agreement�also�requires�the�Tranche�B�Term�Loan�to�be�annually�prepaid�with�a�variable�percentage�of�the�Company's�Excess�Cash�Flow�(as�defined�in�the�2016
Credit �Agreement), �ranging�from�zero%�to �50%�determined �based�on�the �Company's �Consolidated�Leverage �Ratio.�As �of�December �31,�2020, �this�prepayment
percentage�was�25%.�The�Company�may�voluntarily�prepay�outstanding�loans�from�time�to�time,�subject�to�certain�conditions,�without�premium�or�penalty�other
than�customary�“breakage”�costs.
The�obligations�of�the�borrowers�under�the�2016�Credit�Agreement�are�guaranteed�by�the�Company�and�certain�direct�and�indirect�wholly-owned�domestic
subsidiaries �of �the �Company�and �the �obligations�of �foreign �borrowers �under�the �Revolving �Credit�Facility �are �guaranteed �by�certain �direct �and�indirect �foreign
subsidiaries�of�the�Company,�subject�to�certain�exceptions.�Under�the�2016�Credit�Agreement,�the�Company�has�granted�a�security�interest�in�substantially�all�of
the�assets�of�the�Company�and�the�guarantors,�subject�to�certain�exceptions�including,�without�limitation,�the�assets�of�WEX�Bank�and�certain�foreign�subsidiaries.
The �2016�Credit �Agreement,�as�amended, �contains�customary �representations�and �warranties,�as �well�as�affirmative �and�negative �covenants,�as �further
described�under�the�following�“Debt�Covenants”�heading.
See�Note�26,�Supplementary�Regulatory�Capital�Disclosure,�for�further�discussion.
Notes�Outstanding
����As�of�December�31,�2020�and�2019,�the�Company�had�$400.0�million�of�4.75�percent�fixed-rate�senior�notes�(the�“Notes”)�outstanding,�which�will�mature�on
February�1,�2023.�Interest�is�payable�semiannually�in�arrears�on�February�1�and�August�1�of�each�year.�The�Company�may�redeem�the�Notes�with�no�premium�due
upon�redemption.�As�discussed�in�Note�28,
115
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Subsequent�Events,�the�Company�delivered�a�notice�of�redemption�to�the�holders�of�the�Notes,�calling�for�redemption�on�March�15,�2021.
��� �The�Notes�are �guaranteed�on �a�senior�secured �basis�by �each�of �the�Company’s�restricted �subsidiaries �and�each�of �the�Company’s �regulated�subsidiaries �that
guaranteed�the�Company’s�obligations�under�the�2016�Credit�Agreement.�WEX�Bank,�is�not�a�guarantor�and�is�not�subject�to�many�of�the�restrictive�covenants�in
the�indenture�governing�the�Notes.�The�Notes�and�guarantees�described�above�are�general�senior�secured�obligations�ranking�equally�with�the�Company’s�existing
and�future�senior�debt,�senior�in�right�of�payment�to�all�of�the�Company’s�subordinated�debt,�and�effectively�equal�in�lien�priority�to�the�Company’s�2016�Credit
Agreement.�In�addition,�the�Notes�and�the�guarantees�are�structurally�subordinated�to�all�liabilities�of�the�Company’s�subsidiaries�that�are�not�guarantors,�including
WEX�Bank.
Convertible�Notes
Pursuant�to�a�purchase�agreement�dated�June�29,�2020,�on�July�1,�2020,�the�Company�closed�on�a�private�placement�with�an�affiliate�of�Warburg�Pincus
LLC�(together�with�its�affiliate,�“Warburg�Pincus”),�pursuant�to�which�the�Company�issued�$310.0�million�in�aggregate�principal�amount�of�the�Convertible�Notes
due�2027�(the�“Convertible�Notes”)�and�577,254�shares�of�the�Company's�common�stock�for�an�aggregate�purchase�price�of�$389.2�million,�of�which�$90.0�million
constituted�the�purchase�price�for�the�shares,�reflecting�a�purchase�price�of�$155.91�per�share.
The �issuance �of �the �Convertible �Notes �provided �the �Company �with �net �proceeds �of �approximately �$299.2 �million �after �original �issue �discount. �The
Convertible�Notes�have�a�seven-year�term�and�mature�on�July�15,�2027,�unless�earlier�converted,�repurchased�or�redeemed.�Interest�on�the�Convertible �Notes�is
calculated�at�a�fixed�rate�of�6.5%�per�annum,�payable�semi-annually�in�arrears�on�January�15�and�July�15�of�each�year,�with�the�first�interest�payment�due�January
15,�2021.�At�the�Company's�option,�interest�is�either�payable�in�cash,�through�accretion�to�the�principal�amount�of�the�Convertible�Notes,�or�a�combination�of�cash
and�accretion.
The�Convertible�Notes�may�be�converted�at�the�option�of�the�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase�of�the�Convertible
Notes,�based�upon�an�initial�conversion�price�of�$200.00�per�share�of�common�stock.�The�Company�may�settle�conversions�of�Convertible�Notes,�at�its�election,�in
cash, �shares �of �the �Company’s �common �stock, �or �a �combination �thereof. �The �initial �conversion �price �is �subject �to �adjustments �customary �for �convertible �debt
securities�and�a�weighted�average�adjustment�in�the�event�of�issuances�of�equity�and�equity�linked�securities�by�the�Company�at�prices�below�the�then�applicable
conversion �price �for �the �Convertible �Notes �or �the �then �market �price �of �the �Company’s �common �stock, �subject �to �certain �exceptions, �including �exceptions �with
respect�to�underwritten�offerings,�Rule�144A�offerings,�private�placements�at�discounts�not�exceeding�a�specified�amount,�issuances�as�acquisition�consideration
and�equity�compensation�related�issuances.
The �Company �will �have �the �right, �at �any �time �after �July �1, �2023, �to �redeem �the �Convertible �Notes �in �whole �or �in �part �if �the �closing �price �of �WEX's
common�stock�is�at�least�200%�of�the�conversion�price�of�the�Convertible�Notes�for�20�trading�days�(whether�or�not�consecutive)�out�of�any�30�consecutive�trading
day�period�prior�to�the�time�the�Company�delivers�a�redemption�notice,�(including�at�least�one�of�the�five�trading�days�immediately�preceding�the�last�day�of�such
30�trading�day�period),�subject�to�the�right�of�holders�of�the�Convertible�Notes�to�convert�its�Convertible�Notes�prior�to�the�redemption�date.
In �the �event �of �certain �fundamental �change �transactions,�including �certain �change �of �control �transactions �and �delisting �events�involving �the �Company,
holders�of�the�Convertible�Notes�will�have�the�right�to�require�the�Company�to�repurchase�its�Convertible�Notes�at�105%�of�the�principal�amount�of�the�Convertible
Notes,�plus�the�present�value�of�future�interest�payments�through�the�date�of�maturity.�No�such�repurchase�occurred�during�the�year�ended�December�31,�2020.
The �$389.2�million�of�proceeds�from�this �private�placement�was�allocated �on�a�relative�fair�value�basis, �with�$94.0�million�allocated�to�the �sale�of�the
Company's�common�stock�and�$295.2�million�to�the�Convertible�Notes.�As�the�Convertible�Notes�permit�the�Company�to�settle�the�conversion�in�cash,�pursuant�to
ASC �470-20, �the �proceeds �attributed �to �the �Convertible �Notes �are �allocated �between �a �liability �and �equity �component. �The �carrying �amount �of �the �liability
component�of�the�Convertible�Notes�was�calculated�by�measuring�the�fair�value�of�a�hypothetical�debt�instrument�with�a�similar�tenor�without�a�conversion�feature.
The �fair �value �was �determined �utilizing �a �combination �of �a �binomial �lattice-based �model �and �a �discounted �cash �flow �model �that �includes �assumptions �such �as
implied �credit �spread, �expected �volatility, �and �the �risk-free �rate �for �notes �with �a �similar �term. �The �carrying �amount �of �the �equity �component �representing �the
conversion�option�was�determined�by�deducting�the�fair�value�of�the�liability�component�from�the�total�proceeds�allocated�to�the�Convertible�Notes.
Applicable�transaction�costs�of�$4.0�million�have�been�allocated�between�the�Convertible�Notes�and�shares�of�the�Company's�common�stock�sold�in�the
transaction�based�on�relative�fair�value�and�further�allocated�between�the�liability�and
116
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
equity �component�of�the�Convertible�Notes�consistent�with�the�initial �allocation�resulting�in�$2.5�million�classified �as�debt �issuance�costs�capitalized�as�a�direct
reduction�to�the�face�value�of�the�Convertible�Notes�and�$1.5�million�deducted�from�the�amounts�recorded�within�stockholders'�equity.�The�debt�discount�and�debt
issuance �costs �will �be �amortized �to �interest �expense �using �the �effective �interest �rate �method �over �the �seven-year �contractual �life �of �the �Convertible �Notes. �The
effective�interest�rate�on�the�liability�component�of�the�Convertible�Notes�was�11.2%�at�the�date�of�loan�origination.
Based �on�this,�the�Convertible �Notes�were�recorded �at�a�debt�discount �with�an�initial �carrying�value�of�$237.5 �million,�with�the �residual�$54.7�million
recognized�within�additional�paid-in�capital�on�the�Company's�consolidated�balance�sheet.�This�equity�component�will�not�be�remeasured�as�long�as�it�continues�to
meet�the�conditions�for�equity�classification.�Based�on�the�closing�price�of�the�Company’s�common�stock�as�of�December�31,�2020,�the�"if-converted"�value�of�the
Convertible�Notes�exceeds�its�principal�amount�by�$5.5�million.
The�Convertible�Notes�consist�of�the�following:
(In�thousands)
Principal
Less:�Unamortized�discounts
Less:�Unamortized�issuance�cost
1
Net�carrying�amount�of�Convertible�Notes
2
Equity�component
December�31,�2020
310,000�
(66,755)
(2,358)
240,887�
54,689�
$
$
$
1
�Recorded�within�long-term�debt,�net�on�our�consolidated�balance�sheet.
Represents �the�proceeds �allocated�to�the �conversion�option, �or�debt�discount, �recorded�within �additional�paid-in�capital�on�the �consolidated�balance �sheet.�Additional�paid-in �capital�on �the
2�
consolidated�balance�sheet�is�further�reduced�by�$0.6�million�of�issuance�costs�and�$13.6�million�in�taxes�associated�with�the�equity�component.
The�following�table�sets�forth�total�interest�expense�recognized�for�the�Convertible�Notes:
(In�thousands)
Interest�on�6.5%�coupon
Amortization�of�debt�discount�and�debt�issuance�costs
Debt�Issuance�Costs����
Year�Ended�December�31,�2020
10,019�
3,414�
13,433�
$
$
During�the�year�ended�December�31,�2020,�the�Company�completed�four�amendments�(the�Eighth,�Ninth,�Tenth�and�Eleventh�Amendments)�to�the�2016
Credit�Agreement,�largely�in�connection�with�its�acquisition�of�eNett�and�Optal.�The�Eighth�Amendment�was�superseded�by�the�Ninth�Amendment�(other�than�with
respect �to �the �consent �fees �payable �in �connection �with �the �Eighth �Amendment) �and �the �Eleventh �Amendment �modified �terms �that �were �only �applicable �if �the
Company�was�required�to�finance�the�acquisition�of�eNett�and�Optal.�However,�the�Ninth�Amendment,�among�other�things,�amended�certain�provisions�of�the�2016
Credit�Agreement�relating�to�financial�maintenance�covenants�and�pricing�terms�and�the�Tenth�Amendment�increased�the�commitments�under�the�Revolving�Credit
Facility �by �$50.0 �million. �The �Company �accounted �for �the �Ninth, �Tenth �and �Eleventh �Amendments �as �debt �modifications. �As �part �of �these �transactions, �the
Company�incurred�and�expensed�an�insignificant�amount�of�third�party�costs,�which�are�classified�within�general�and�administrative�expenses�in�our�consolidated
statements �of �operations. �In �association �with �the �Ninth �Amendment, �the �Company �incurred �and �capitalized �$4.3 �million �of �lender �fees. �Consent �fees�incurred
pursuant�to�the�Eighth�Amendment�and�payable�upon�a�consummation�of�the�eNett�and�Optal�acquisition�of�$2.9�million�were�capitalized�during�December�2020.
����During�the�year�ended�December�31,�2019,�the�Company�entered�into�the�Fifth,�Sixth�and�Seventh�Amendments�to�the�2016�Credit�Agreement.�The�Company
accounted�for�the�Fifth�Amendment�to�the�2016�Credit�Agreement�as�a�debt�modification.�The�Company�accounted�for�the�Sixth�Amendment�to�the�2016�Credit
Agreement,�which�was�completed�in�2019,�as�both�a�debt�modification�and�a�partial�debt�extinguishment,�and�consequently�recorded�a�loss�on�extinguishment�of
debt�of�$1.3�million�related�to�the�write-off�of�unamortized�debt�issuance�costs�during�2019.�The�Company�incurred�and�expensed�$10.6�million�of�third�party�costs
associated�with�the�Fifth�and�Sixth�Amendments,�which�are�classified�within�general�and�administrative�expenses�in�the�consolidated�statements�of�income�during
2019.�We�expensed�as�incurred�an�insignificant�amount�of�costs�resulting�from�the�Seventh�Amendment�to�the�2016�Credit�Agreement.�During�2019,�the�Company
also
117
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
incurred �and �capitalized �lender �costs �of �$3.4 �million �associated �with �the �Fifth �Amendment �and �a �debt �discount �of �$11.0 �million �associated �with �the �Sixth
Amendment.
����During�the�year�ended�December�31,�2018,�the�Company�entered�into�the�Third�and�Fourth�Amendments�to�the�2016�Credit�Agreement.�The�Third�Amendment
was�accounted�for�as�both�a�debt�modification�and�partial�debt�extinguishment,�which�caused�us�to�record�a�loss�on�extinguishment�of�debt�of�$1.1�million�related
to�the�write-off�of�unamortized�debt�issuance�costs,�while�the�Fourth�Amendment�was�accounted�for�as�a�debt�modification.�The�Company�incurred�general�and
administrative�expenses�of�$3.8�million�related�to�third-party�costs�associated�with�the�Third�and�Fourth�Amendments.�The�loss�on�extinguishment�and�third-party
costs �are �reflected �as �financing �interest �expense �and �general �and �administrative �expenses, �respectively. �In �addition, �the �Company �incurred �and �capitalized �$5.8
million�of�new�debt�issuance�costs�related�to�the�Third�and�Fourth�Amendments.
����Debt�issuance�costs�incurred�and�capitalized�in�conjunction�with�the�2016�Credit�Agreement�and�its�amendments�are�being�amortized�into�interest�expense�over
the�remaining�term�of�the�Term�Loans�and�Revolving�Credit�Facility,�as�applicable,�using�the�effective�interest�method.
Debt�Covenants
� � � �The �2016 �Credit �Agreement �and �the �indenture �governing �the �Notes �contain �various �affirmative �and �negative �covenants �that, �subject �to �certain �customary
exceptions,�limit�the�Company�and�its�subsidiaries’�including,�in�certain�limited�circumstances,�WEX�Bank�and�the�Company’s�other�regulated�subsidiaries,�ability
to,�among�other�things�(i)�incur�additional�debt,�(ii)�pay�dividends�or�make�other�distributions�on,�redeem�or�repurchase�capital�stock,�or�make�investments�or�other
restricted �payments,�(iii)�enter �into�transactions�with�affiliates, �(iv)�dispose�of�assets �or�issue�stock�of�restricted �subsidiaries�or�regulated�subsidiaries, �(v)�create
liens �on �assets, �or �(vi) �effect �a �consolidation �or �merger �or �sell �all, �or �substantially �all, �of �the �Company’s �assets. �Additionally, �the �indenture �governing �the
Convertible�Notes�contains�customary�negative�and�affirmative�covenants�that,�subject�to�certain�customary�exceptions,�limit�the�Company�and�its�subsidiaries',�but
excluding �WEX �Bank �and �the �Company's �other �regulated �subsidiaries, �ability �to, �among �other �things, �incur �additional �debt. �These �covenants �are �subject �to
important�exceptions�and�qualifications.�At�any�time�that�the�Notes�are�rated�investment�grade,�which�is�not�currently�the�case,�and�subject�to�certain�conditions,
certain �covenants �will �be �suspended �with �respect �to �the �Notes. �WEX �Bank �and �the �Company’s �other �regulated �subsidiaries �will �not �be �subject �to �some �of �the
restrictive �covenants �in �the �Indenture �that �place �limitations �on �the �Company �and �its �restricted �subsidiaries’ �actions, �and �where �WEX �Bank�and �the �Company’s
regulated �subsidiaries �are �subject �to �covenants, �there �are �significant �exceptions �and �limitations �on �the �application �of �those �covenants �to �WEX �Bank �and �the
Company’s�regulated�subsidiaries.
The �2016 �Credit �Agreement �also �requires, �solely �for �the �benefit �of �the �lenders �of �the �Tranche �A �Term �Loan �and �lenders �under �the �Revolving �Credit
Facility,�that�the�Company�maintain�at�the�end�of�each�fiscal�quarter�the�following�financial�ratios:
•
•
a�Consolidated�Interest�Coverage�(as�defined�in�the�2016�Credit�Agreement)�of�no�less�than�2.75�to�1.00�at�December�31,�2020�and�through�March�31,
2021,�after�which�the�ratio�reverts�back�to�no�less�than�3.00�to�1.00;�and
a �Consolidated �Leverage�Ratio �(as�defined �in �the�2016 �Credit�Agreement) �of�no �more �than�7.50 �to�1.00 �through�March �31,�2021, �7.00�to �1.00�for �the
quarter�ending�June�30,�2021,�6.50�to�1.00�for�the�quarter�ending�September�30,�2021,�6.00�to�1.00�for�the�quarters�ending�December�31,�2021�through
September�30,�2022,�and�5.00�to�1.00�thereafter.
Australian�Securitization�Facility
� �� �The �Company �has �a �securitized �debt �agreement �with �MUFG �Bank �Ltd., �which �expires �in �April �2021. �Under �the �terms �of �the �agreement, �each �month, �on �a
revolving �basis, �the �Company �sells �certain �of �its �Australian �receivables �to �the �Company’s �Australian �Securitization �Subsidiary. �The �Australian �Securitization
Subsidiary,�in�turn,�uses�the�receivables�as�collateral�to�issue�asset-backed�commercial�paper�(“securitized�debt”)�for�approximately�85�percent�of�the�securitized
receivables.�The�amount�collected�on�the�securitized�receivables�is�restricted�to�pay�the�securitized�debt�and�is�not�available�for�general�corporate�purposes.
����The�Company�pays�a�variable�interest�rate�on�the�outstanding�balance�of�the�securitized�debt,�based�on�the�Australian�Bank�Bill�Rate�plus�an�applicable�margin.
The�interest�rate�was�0.97�percent�and�1.80�percent�as�of�December�31,�2020�and�2019,�respectively.�The�Company�had�securitized�debt�under�this�facility�of�$62.6
million�and�$78.6�million�as�of�December�31,�2020�and�2019,�respectively,�recorded�in�short-term�debt,�net.
118
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
European�Securitization�Facility
����The�Company�maintains �a�five-year�securitized �debt �agreement�with�MUFG�Bank�Ltd., �which�expires�in�April �2021.�Under�the�terms�of �the�agreement,�the
Company�sells�certain �of�its�receivables �from �selected �European �countries �to�its�European�Securitization �Subsidiary.�The�European�Securitization�Subsidiary,�in
turn,�uses�the�receivables�as�collateral�to�issue�securitized�debt.�The�amount�collected�on�the�securitized�receivables�is�restricted�to�pay�the�securitized�debt�and�is
not�available�for�general�corporate�purposes.�The�amount�of�receivables�to�be�securitized�under�this�agreement�is�determined�by�management�on�a�monthly�basis.
The�interest�rate�was�0.98�percent�and�0.63�percent�as�of�December�31,�2020�and�2019,�respectively.�The�Company�had�securitized�debt�under�this�facility�of�$23.4
million�and�$25.7�million�as�of�December�31,�2020�and�2019,�respectively,�recorded�in�short-term�debt,�net.
Participation�Debt
����From�time�to�time,�WEX�Bank�enters�into�participation�agreements�with�third-party�banks�to�fund�customers’�balances�that�exceed�WEX�Bank’s�lending�limit�to
individual�customers.�Associated�unsecured�borrowings�generally�carry�a�variable�interest�rate�of�1�month�to�3�month�LIBOR�plus�a�margin�of�225�basis�points.�����
����The�following�table�provides�the�amounts�outstanding�under�the�participation�debt�agreements�in�place:
December�31,�2020
December�31,�2019
(In�thousands)
Participation�debt
Average�interest�rate�on�participation�debt�outstanding
Amounts
1
Available
$
60,000�
Amounts�Outstanding
—�
Not�applicable
1
2
�Amounts�available�includes�up�to�$60�million�under�an�agreement�that�terminates�on�December�31,�2021.
�Amounts�outstanding�are�recorded�in�short-term�debt,�net.
Borrowed�Federal�Funds
Remaining
Funding�Capacity
60,000�
Amounts
Available
Amounts�Outstanding
2
Remaining
Funding
Capacity
$
80,000�
50,000�
$
30,000�
4.17� %
WEX �Bank �borrows �from �uncommitted �federal �funds �lines �to �supplement �the �financing �of �the �Company's �accounts �receivable. �Federal �funds �lines �of
credit �were �$376.0 �million �and �$355.0 �million, �respectively, �as �of �December �31, �2020 �and �2019. �There �were �$20.0 �million �and �$35.0 �million �of �outstanding
borrowings�as�of�December�31,�2020�and�2019,�respectively.�The�average�interest�rate�on�borrowed�federal�funds�was�1.01�percent�and�2.36�percent�for�the�years
ended�December�31,�2020�and�2019,�respectively.
WEX�Latin�America�Debt
����WEX�Latin�America�debt�was�comprised�of�credit�facilities�and�loan�arrangements�related�to�its�accounts�receivable,�which�had�a�35.04�percent�interest�rate�as
of�December�31,�2019.�The�Company�sold�WEX�Latin�America�on�September�30,�2020�and�no�longer�has�this�debt�obligation.
Other
����As�of�December�31,�2020,�WEX�Bank�pledged�$249.8�million�of�fleet�receivables�held�by�WEX�Bank�to�the�Federal�Reserve�Bank�as�collateral�for�potential
borrowings,�through �the�Federal�Reserve�Bank�Discount�Window.�Amounts�that�can�be�borrowed�are�based�on�the�amount�of�collateral�pledged�and�were�$188.4
million �as �of �December �31, �2020.�WEX �Bank �had �no�borrowings �outstanding �on �this �line�of �credit �through �the �Federal �Reserve�Bank �Discount �Window �as�of
December�31,�2020�and�December�31,�2019.
119
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Debt�Commitments
����The�table �below�summarizes�the�Company’s�annual�principal�payments�on�its�total�debt�for�each�of�the�next�five�years:
(1)
2021
2022
2023
2024
2025
$
$
$
$
$
170,556�
64,611�
1,188,598�
14,681�
14,681�
(1)�
Table�is�based�on�contractual�maturities�and,�therefore,�unadjusted�for�the�Company's�intention�to�early�redeem�its�Notes�during�March�2021,�as�discussed�further�in�Note�28,
Subsequent�Events.
17.
Tax�Receivable�Agreement
� � � �As�a �consequence �of �the �Company’s�separation �from �its �former �parent �company �in�2005, �the �tax �basis�of �the �Company’s �net �tangible �and�intangible �assets
increased,�reducing�the�amount�of�tax�that�the�Company�would�pay�in�the�future�to�the�extent�the�Company�generated�taxable�income�in�sufficient�amounts.�The
Company�is�contractually�obligated�to�remit�a�portion�of�any�such�cash�savings�to�a�third�party.�The�estimated�amounts�of�future�payments�owed�were�$2.0�million
at�December�31,�2020�and�$3.7�million�at�December�31,�2019,�which�are�included�within�other�current�liabilities�on�the�consolidated�balances�sheets�based�on�the
timing �of �payment. �There �has �been �a �reassessment �of �the �estimate �for �each �period �presented. �For �the �years �ended �December �31, �2020, �2019 �and �2018, �this
reassessment�resulted�in�an�insignificant�change�in�the�net�future�benefits�and�non-operating�expense.�In�addition,�the�liability�decreased�due�to�payments�of�$1.3
million�and�$8.9�million�made�during�the�years�ended�December�31,�2020�and�2019,�respectively.
18.
Employee�Benefit�Plans
����The�Company�sponsors�a�401(k)�retirement�and�savings�plan�for�U.S.�employees.�Eligible�employees�may�participate�in�the�plan�immediately.�The�Company’s
employees�who�are�at�least�18�years�of�age�and�have�completed�one�year�of�service�are�eligible�f����or�Company�matching�contributions�in�the�plan.�The�Company
matches �100 �percent �of �each �employee’s �contributions �up �to �a �maximum �of �6 �percent �of �each �employee’s �eligible �compensation. �All �contributions �vest
immediately.�WEX�has�the�right�to�discontinue�the�plan�at�any�time.�Contributions�to�the�plan�are�voluntary.�The�Company�contributed�$13.7�million,�$10.0�million
and�$8.0�million�in�matching�funds�to�the�plan�for�the�years�ended�December�31,�2020,�2019�and�2018,�respectively.
� � � �The �Company �also �sponsors �deferred �compensation �plans �for �certain �employees �designated �by �the �Company. �Participants �may �elect �to �defer �receipt �of
designated�percentages�or�amounts�of�their�compensation.�The�Company�maintains�a�grantor’s�trust�to�hold�the�assets�under�these�plans.�The�related�obligations
totaled �$9.6 �million �and �$8.0 �million �at �December �31, �2020 �and �2019, �respectively, �and �are �included �in �other �current �liabilities �and �other �liabilities �on �the
consolidated�balance�sheets.�The�assets�are�recorded�at�fair�value,�with�any�changes�recorded�to�earnings,�and�are�included�in�prepaid�expenses�and�other�current
assets�and�other�assets�on�the�consolidated�balance�sheets.�Refer�to�Note�19,�Fair�Value,�for�further�information.
����The�Company�has�defined�benefit�pension�plans�in�several�foreign�countries.�The�total�net�unfunded�status�for�the�Company’s�foreign�defined�benefit�pension
plans �was �$6.3 �million �and �$5.9 �million �as �of �December �31, �2020 �and �2019, �respectively. �These �obligations �are �recorded �in �other �current �liabilities, �accrued
expenses�and�other�liabilities�in�the�consolidated�balance�sheets.�The�Company�measures�these�plan�obligations�at�fair�value�on�an�annual�basis,�with�any�changes
recorded�to�earnings.�The�aggregate�cost�for�these�plans�was�insignificant�to�the�consolidated�financial�statements�for�all�periods�presented.
120
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
19.
Fair�Value
Assets�and�Liabilities�Measured�at�Fair�Value�on�a�Recurring�Basis
����The�following�table�presents�the�Company’s�financial�instruments�that�are�measured�at�fair�value�on�a�recurring�basis:
(In�thousands)
1
Financial�Assets:
Money�market�mutual�funds
Investment�securities
Municipal�bonds
Asset-backed�securities
Mortgage-backed�securities
Pooled�investment�fund�measured�at�net�asset�value
Fixed-income�mutual�fund
2
Total�investment�securities
Executive�deferred�compensation�plan�trust
Interest�rate�swaps
4
3
Liabilities:
Interest�rate�swaps
5
1�
The�fair�value�is�recorded�in�cash�and�cash�equivalents.
Fair�Value�Hierarchy
December�31,
2020
2019
1
2
2
2
1
1
2
2
$
$
$
$
$
$
335,449�
197�
210�
138�
9,000�
27,728�
37,273�
9,586�
—�
$
$
$
$
$
223,217�
302�
247�
174�
5,000�
24,737�
30,460�
7,965�
2,395�
44,938�
$
19,764�
2�
The�fair�value�of�this�security�is�measured�at�NAV�as�a�practical�expedient�and�has�not�been�classified�within�the�fair�value�hierarchy.�The�amounts�presented�in�this�table�are�intended�to�permit
reconciliation�of�the�fair�value�hierarchy�to�the�amounts�presented�in�the�consolidated�balance�sheets.
3�
The�fair�value�is�recorded�as�current�or�long-term�based�on�the�timing�of�the�Company's�executive�deferred�compensation�plan�payment�obligations.�At�December�31,�2020,�$0.9�million�and
$8.7 �million�in �fair �value �is �recorded �within �prepaid �expenses �and �other �current �assets �and�other �assets, �respectively. �At �December �31, �2019, �$0.9 �million �and �$7.0 �million �in �fair �value �is
recorded�within�prepaid�expenses�and�other�current�assets�and�other�assets,�respectively.
4
�The�fair�value�is�recorded�as�current�or�long-term �depending �on�the�timing�of�expected �discounted �cash�flows.�At�December�31,�2019,�$2.4�million�of�fair�value�is�recorded�within�prepaid
expenses�and�other�current�assets.
5�
The�fair�value�is�recorded�as�current�or�long-term�depending�on�the�timing�of�expected�discounted�cash�flows.�At�December�31,�2020,�$22.0�million�and�$22.9�million�of�fair�value�is�recorded
within �other �current �liabilities �and �other �liabilities, �respectively. �At �December �31, �2019, �$6.7 �million �and �$13.1 �million �of �fair �value �is �recorded �within �other �current �liabilities �and �other
liabilities,�respectively.
Money�Market�Mutual�Funds
����A�portion�of�the�Company’s�cash�and�cash�equivalents�are�invested�in�money�market�mutual�funds�that�primarily�consist�of�short-term�government�securities,
which�are�classified�as�Level�1�in�the�fair�value�hierarchy�because�they�are�valued�using�quoted�market�prices�in�an�active�market.
Investment�Securities
����When�available,�the�Company�uses�quoted�market�prices�to�determine�the�fair�value�of�investment�securities;�such�inputs�are�classified�as�Level�1�of�the�fair-
value�hierarchy.�These�securities�primarily�consist�of�an�open-ended�mutual�fund,�which�is�invested�in�fixed-income�securities�and�is�held�in�order�to�satisfy�the
regulatory�requirements�of�WEX�Bank.�For�mortgage-backed�and�asset-backed�debt�securities�and�municipal�bonds,�the�Company�generally�uses�quoted�prices�for
recent �trading �activity �of �assets �with �similar �characteristics �to �the �debt �security �or �bond �being �valued. �The �securities �and �bonds �priced �using �such �methods �are
generally�valued�using�Level�2�inputs.
Pooled�Investment�Fund
(In�thousands)
Fair�Value
Unfunded�Commitments
Redemption�Frequency
Redemption�Notice�Period
Pooled�investment�fund,�as�of�December�31,�2020
$
9,000�
—�
Monthly
30�days
121
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����The�pooled�investment�fund�is�a�Community�Reinvestment�Act-eligible�investment�fund,�which�seeks�to�provide�bank�investors�with�current�income�consistent
with�the �returns �available�in �adjustable-rate �government �guaranteed �financial �products �by �investing�in �Community �Development �loans�guaranteed �by �the�Small
Business�Administration.�The�fund�maintains�individual�capital�accounts�for�each�investor,�which�reflect�each�individual�investor’s�share�of�the�NAV�of�the�fund.
Executive�Deferred�Compensation�Plan�Trust
����The�investments�held�in�the�executive�deferred�compensation�plan�trust�are�classified�as�Level�1�in�the�fair�value�hierarchy�because�the�fair�value�is�determined
using�quoted�prices�for�identical�instruments�in�active�markets.
Interest�Rate�Swaps
����The�Company�determines�the�fair�value�of�its�interest�rate�swaps�based�on�the�discounted�cash�flows�of�the�difference�between�the�projected�fixed�payments�on
the�swaps�and�the�implied�floating�payments�using�the�current�LIBOR�curve,�which�are�Level�2�inputs�of�the�fair�value�hierarchy.
Assets�and�Liabilities�Measured�at�Fair�Value�on�a�Nonrecurring�Basis
� � � �The �Company �recorded �a �goodwill �impairment �charge �of �$53.4 �million �during �the �year �ended �December �31, �2020 �to �write �down �the �carrying �value �of �the
reporting �unit�to�fair�value�using�Level �3�inputs�as�of�the�annual�goodwill�impairment �test�date�of�October�1,�2020.�See�Note �9,�Goodwill�and�Other�Intangible
Assets,�for�a�description�of�the�valuation�techniques�and�inputs�used�for�the�fair�value�measurement.�See�Note�24,�Impairment�Charges,�for�assets�and�liabilities
measured�at�fair�value�on�a�non-recurring�basis�for�the�years�ended�December�31,�2020�and�2018�and�the�related�impairment�charges�recorded.
The�Company�had�no�other�assets�and�liabilities�measured�on�a�non-recurring�basis�during�the�years�ended�December�31,�2020�and�2019.
Assets�and�Liabilities�Measured�at�Carrying�Value,�for�which�Fair�Value�is�Disclosed
Notes�Outstanding
� � � �The �Company �determines �the �fair �value �of �the �Notes �based �on �market �rates �for �the �issuance �of �our �debt, �which �are �classified �as �Level �2 �in �the �fair �value
hierarchy.�As�of�both�December�31,�2020�and�2019,�the�carrying�value�of�the�Notes�approximated�fair�value.
2016�Credit�Agreement
����The�Company�determines�the�fair�value�of�the�amount�outstanding�under�its�2016�Credit�Agreement�based�on�the�market�rates�for�the�issuance�of�the�Company’s
debt,�which�are�Level�2�inputs�in�the�fair�value�hierarchy.�As�of�December�31,�2020�and�2019,�the�carrying�value�of�the�2016�Credit�Agreement,�including�both�the
tranche�A�and�tranche�B�term�loans,�approximated�fair�value.
Convertible�Notes
The �Company �determines �the �fair �value �of �the �Convertible �Notes �outstanding �using �our �stock �price �and �volatility, �the �conversion �premium �on �the
Convertible�Notes�and�effective�interest�rates�for�similarly�rated�credit�issuances,�all�of�which�are�Level�2�inputs�in�the�fair�value�hierarchy.�As�of�December�31,
2020,�the�fair�value�of�our�convertible�notes�is�$405.6�million.
Other�Assets�and�Liabilities
����The�Company's�financial�instruments,�other�than�those�presented�above,�include�cash,�cash�equivalents,�restricted�cash,�accounts�receivable,�accounts�payable,
accrued�expenses�and�other�liabilities.�The�carrying�values�of�such�assets�and�liabilities�approximate�their�respective�fair�values�due�to�their�short-term�nature.�The
carrying �values �of �certificates �of �deposit, �interest-bearing �brokered �money �market �deposits, �securitized �debt, �participation �debt �and �borrowed �federal �funds
approximate �their �respective �fair �values �as �the �interest �rates �on �these �financial �instruments �are �variable �market-based �rates. �All �other �financial �instruments �are
reflected�at�fair�value�on�the�consolidated�balance�sheets.
122
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
20.
Redeemable�Non-Controlling�Interest
� � ��On �March �5,�2019, �the �Company�acquired �Discovery �Benefits,�an �employee �benefits �administrator. �The�seller �of �Discovery�Benefits �obtained �a �4.9�percent
equity�interest�in�the�newly�formed�parent�company�of�WEX�Health�and�Discovery�Benefits�(the�“U.S.�Health�business”).�The�seller’s�4.9�percent�non-controlling
interest�in�the�U.S.�Health�business�was�initially�established�at�both�carrying�value�and�fair�value.�On�the�date�of�acquisition,�the�excess�of�the�fair�value�of�the�4.9
percent�equity�interest�in�WEX�Health�over�its�carrying�value�was�recognized�as�an�equity�transaction,�resulting�in�a�$41.4�million�increase�to�additional�paid-in
capital. �Remeasurement �of �the �equity �interest �to �fair �value �during �the �first �quarter �of �2019 �resulted �in �an �increase �to �redeemable �non-controlling �interest �of
$41.4�million�and�an�offsetting�decrease�to�retained�earnings�that�did�not�impact�earnings�per�share.
����The�agreement�provides�the�seller�with�a�put�right�and�the�Company�with�a�call�right�for�the�equity�interest,�which�can�be�exercised�no�earlier�than�seven�years
following �the �date �of �acquisition. �Upon �exercise �of �the �put �or �call �right, �the �purchase �price �is �calculated �based �on �a �revenue �multiple �of �peer �companies �(as
described�in�the�operating�agreement�for�the�U.S.�Health�business)�applied�to�trailing�twelve�month�revenues�of�the�U.S.�Health�business.�The�put�option�makes�the
non-controlling�interest�redeemable�and,�therefore,�the�non-controlling�interest�is�classified�as�temporary�equity�outside�of�stockholders’�equity.
The�Company�calculates�the�redemption�value�of�the�non-controlling�interest�on�a�quarterly�basis�using�revenue�multiples�as�determined�in�accordance
with�the�operating�agreement�for�the�U.S.�Health�business�and�described�above.�The�redeemable�non-controlling�interest�is�reported�at�the�higher�of�its�redemption
value �or �the �non-controlling �interest �holder’s �proportionate �share �of �the �U.S. �Health �business’ �net �carrying �value. �Any �resulting �change �in �the �value �of �the
redeemable�non-controlling�interest�will�be�offset�against�retained�earnings�and�impact�earnings�per�share.
����The�following�table�presents�the�changes�in�the�Company’s�redeemable�non-controlling�interest:
�(In�thousands)
Balance,�beginning�of�year
Acquisition�of�Discovery�Benefits�at�fair�value
Establishing�redeemable�non-controlling�interest�for�WEX�Health�at�carrying�value
Adjustment�to�redeemable�non-controlling�interest�to�reflect�WEX�Health�at�fair�value
Net�income�(loss)�attributable�to�redeemable�non-controlling�interest
Change�in�value�of�redeemable�non-controlling�interest
Balance,�end�of�year
21.
Commitments�and�Contingencies
Litigation
Year�Ended�December�31,
2020
2019
156,879� $
—�
—�
—�
652�
(40,312)
117,219� $
—�
25,757�
32,843�
41,400�
(436)
57,315�
156,879�
$
$
����The�Company�is�subject�to�legal�proceedings�and�claims�in�the�ordinary�course�of�business.�As�of�the�date�of�this�filing,�the�current�estimate�of�a�reasonably
possible �loss �contingency �from �all �legal �proceedings �is �not �material �to �the �Company’s �consolidated �financial �position, �results �of �operations, �cash �flows �or
liquidity.����
Extension�of�Credit�to�Customers
� � � �We �have �entered �into �commitments �to �extend �credit �in �the �ordinary �course �of �business. �We �had �$6.6 �billion �of �unused �commitments �to �extend �credit �at
December �31, �2020, �as �part �of �established �customer �agreements. �These �amounts �may �increase �or �decrease �during �2021 �as �we �increase �or �decrease �credit �to
customers,�subject�to�appropriate�credit�reviews,�as�part�of�our�lending�product�agreements.�Many�of�these�commitments�are�not�expected�to�be�utilized.�We�can
adjust�most�of�our�customers’�credit�lines�at�our�discretion�at�any�time.�Therefore,�we�do�not�believe�total�unused�credit�available�to�customers�and�customers�of
strategic�relationships�represents�future�cash�requirements.
The �unfunded �portion �of �an �extension �of �credit �to �customers �fluctuates �as �the �Company �increases �or �decreases �customer �credit �limits, �subject �to
appropriate �credit �reviews. �Given �that �the �Company �can �generally �adjust �its �customers’ �credit �lines �at �its �discretion �at �any �time, �the �unfunded �portion �of �loan
commitments�to�customers�is�unconditionally�cancellable�and�thus�the�Company�has�not�established�a�liability�for�expected�credit�losses�on�those�commitments.
123
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
Unfunded�Commitment
����As�a�member�bank,�we�have�committed�to�funding�a�maximum�of�$8.0�million�of�loans�to�a�nonprofit,�community�development�financial�institution�to�facilitate
their�offering�of�flexible�financing�for�affordable,�quality�housing�to�assist�Utah’s�low�and�moderate-income�residents.�As�of�December�31,�2020,�the�Company�has
funded�$2.3�million�of�its�commitment,�which�has�been�included�on�the�consolidated�balance�sheet�within�accounts�receivable.�The�Company’s�remaining�unused
commitment�as�of�December�31,�2020�is�$5.7�million.
Minimum�Volume�and�Spend�Commitments
����Two�of�the�Company’s�subsidiaries�are�required�to�purchase�a�minimum�amount�of�fuel�from�suppliers�on�an�annual�basis�through�2024.�Upon�failing�to�meet
these�minimum�volume�commitments,�a�penalty�is�assessed�as�defined�under�the�contracts.�The�Company�incurred�$3.6�million�of�shortfall�penalties�under�these
contracts�during�the�year�ended�December�31,�2020.�If�the�Company�does�not�purchase�any�fuel�under�these�commitments�after�December�31,�2020,�it�would�incur
penalties�totaling�$49.6�million�through�2024.�The�Company�considers�the�associated�risk�of�loss�to�be�remote�based�on�current�operations.
� � � �The �Company �is �subject �to �minimum �annual �spend �commitments �as �part �of �negotiated �contracts�for �certain �IT �and �non-IT �related �services �through �2023.
Minimum�spend�commitments�under�these�contracts�as�of�December�31,�2020�total�$15.7�million,�with�commitments�of�$8.3�million�in�2021,�$6.7�million�in�2022
and�$0.7�million�in�2023.
22.
Dividend�Restrictions
����The�Company�has�certain�restrictions�on�the�dividends�it�may�pay,�including�those�under�the�2016�Credit�Agreement.�The�2016�Credit�Agreement�does�allow�us
to�make�certain�restricted�payments�(including�dividends)�if�we�are�able�to�demonstrate�pro�forma�compliance�with�a�consolidated�leverage�ratio,�as�defined�in�the
2016�Credit�Agreement,�of�no�more�than�2.50�to�1.00�for�the�most�recent�period�of�four�fiscal�quarters�after�execution�of�a�restricted�payment.�Additionally,�as�long
as�the�Company�would�be�in�compliance�with�its�interest�charge�coverage�ratio�and�the�lower�of�a�consolidated�leverage�ratio�of�5.50�to�1.00�and�its�maximum
permitted�consolidated�leverage�ratio�for�such�period�under�the�2016�Credit�Agreement�after�giving�pro�forma�effect�to�such�restricted�payment,�the�Company�may
pay �$50 �million �per �annum �for �restricted �payments, �including �dividends, �of �which �100% �of �unused �amounts �may �be �carried �over �into �subsequent �years. �The
Company�has�not�declared�any�dividends�on�its�common�stock�since�it�commenced�trading�on�the�NYSE�on�February�16,�2005.
����Dividends�paid�by�WEX�Bank�have�provided�a�substantial�part�of�the�Company’s�operating�funds�and�for�the�foreseeable�future�it�is�anticipated�that�dividends
paid�by�WEX�Bank�will�continue�to�be�a�source�of�operating�funds�to�the�Company.�Capital�adequacy�requirements�serve�to�limit�the�amount�of�dividends�that�may
be�paid�by�WEX�Bank.�WEX�Bank�is�chartered�under�the�laws�of�the�State�of�Utah�and�the�FDIC�insures�its�deposits.�Under�Utah�law,�WEX�Bank�may�only�pay�a
dividend�out�of�net�profits�after�it�has�(i)�provided�for�all�expenses,�losses,�interest�and�taxes�accrued�or�due�from�WEX�Bank�and�(ii)�transferred�to�a�surplus�fund
10�percent�of�its�net�profits�before�dividends�for�the�period�covered�by�the�dividend,�until�the�surplus�reaches�100�percent�of�its�capital�stock.�For�purposes�of�these
Utah�dividend�limitations,�WEX�Bank’s�capital�stock�is�$5.3�million�and�its�capital�surplus�exceeds�100�percent�of�capital�stock.
����Under�FDIC�regulations,�WEX�Bank�may�not�pay�any�dividend�if,�following�the�payment�of�the�dividend,�WEX�Bank�would�be�“undercapitalized,”�as�defined
under�the�Federal�Deposit�Insurance�Act�and�applicable�regulations.�The�FDIC�also�has�the�authority�to�prohibit�WEX�Bank�from�engaging�in�business�practices
that�the�FDIC�considers�to�be�unsafe�or�unsound,�which,�depending�on�the�financial�condition�of�WEX�Bank,�could�include�the�payment�of�dividends.
����WEX�Bank�complied�with�the�aforementioned�dividend�restrictions�for�each�of�the�years�ended�December�31,�2020,�2019�and�2018.
23.
Stock-Based�Compensation
����On�May�9,�2019,�our�stockholders�approved�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(the�“Plan”),�which�replaced�our�2010�Equity�and�Incentive�Plan�(the
“Prior�Plan”).�Upon�the�expiration�of�the�Prior�Plan�on�May�20,�2020,�all�then�outstanding�awards�will�remain�in�effect,�but�no�additional�awards�may�be�made
under�the�Prior�Plan.�The�Plan�permits�the�grant�of�stock�options,�stock�appreciation�rights,�restricted�stock,�restricted�stock�units�and�other�stock-based�or�cash-
based�awards�to�non-employee�directors,�officers,�employees,�advisors�or�consultants.�The�Plans�permit�the�Company�to�grant�a�total
124
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
number�of�shares�which�is�the�sum�of;�(i)�3.7�million�shares�of�common�stock;�plus�(ii)�such�additional�number�of�shares�of�common�stock�(up�to�1.5�million)�as�is
equal�to�the�number�of�shares�of�common�stock�subject�to�awards�granted�under�the�Prior�Plan.�There�were�3.6�million�shares�of�common�stock�available�for�grant
for�future�equity�compensation�awards�under�the�Plan�at�December�31,�2020.
��� �As�of �December �31,�2020, �the�Company �had�four �stock-based�compensation �award �types,�which �are�described �below.�The �compensation �cost�that �has�been
recorded �as �an�expense �for�these �programs�totals �$63.9�million, �$45.6�million �and �$33.9�million �for�2020, �2019�and �2018,�respectively. �In�connection �with�the
Noventis�acquisition, �the�Company�recognized�an�additional�$5.5�million�of�compensation�cost�for�2019.�Refer�to�Note�4,�Acquisitions,�for�further�information.
The�associated�tax�benefit�related�to�these�costs�was�$11.5�million,�$9.9�million�and�$8.0�million,�for�2020,�2019�and�2018,�respectively.
Restricted�Stock�Units
����The�Company�periodically�grants�RSUs,�a�right�to�receive�a�specific�number�of�shares�of�the�Company’s�common�stock�at�a�specified�date,�to�non-employee
directors �and �certain �employees. �RSUs �granted �to �non-employee �directors �vest �12 �months �from �the �date �of �grant, �or �upon �termination �of �board �service �if �the
director �elects �to�defer �receipt. �RSUs �issued �to �certain �employees �generally �vest �evenly �over �up �to �three �years �and �provide�for �accelerated �vesting �if �there �is �a
change�of�control�(as�defined�in�the�Plan).�The�fair�value�of�each�RSU�award�is�based�on�the�closing�market�price�of�the�Company’s�stock�on�the�day�of�grant�as
reported�by�the�NYSE.
����The�following�is�a�summary�of�RSU�activity�during�the�year�ended�December�31,�2020:
(In�thousands�except�per�share�data)
Unvested�at�January�1,�2020
Granted
Vested,�including�17�shares�withheld�for�tax
Forfeited
Unvested�at�December�31,�2020
1
Units
Weighted-Average�
Grant-Date�
Fair�Value
260�
309�
(74)
(23)
472�
$
$
181.23�
119.78�
160.30�
150.11�
145.77�
1
�The �Company �withholds �shares �of �common �stock �to �pay �the �minimum �required �statutory �taxes �due �upon �RSU �vesting. �Cash �is �then �remitted �by �the �Company �to �the �appropriate �taxing
authorities.
��� �As�of �December �31, �2020,�there�was �$42.2�million �of�total �unrecognized �compensation�cost �related�to �RSUs.�That �cost�is �expected �to �be�recognized �over�a
weighted-average�period�of�1.2�years.�The�total�grant-date�fair�value�of�RSUs�granted�was�$37.0�million,�$34.0�million�and�$16.8�million�during�2020,�2019�and
2018,�respectively.�The�total�fair�value�of�RSUs�that�vested�during�2020,�2019�and�2018�was�$11.9�million,�$7.6�million�and�$9.2�million,�respectively.
Performance-Based�Restricted�Stock�Units
The�Company�periodically�grants�PBRSUs�to�employees.�A�PBRSU�is�a�right�to�receive�stock�based�on�the�achievement�of�both�performance�goals�and
continued�employment�during�the�vesting�period.�In�a�PBRSU,�the�number�of�shares�earned�varies�based�upon�meeting�certain�performance�goals.�PBRSU�awards
generally�have�performance�goals�spanning�one�to�three�years,�depending�on�the�nature�of�the�performance�goal.�The�fair�value�of�each�PBRSU�award�is�based�on
the�closing�market�price�of�the�Company’s�stock�on�the�grant�date�as�reported�by�the�NYSE.
Market-Based�Restricted�Stock�Units�(TSR�awards)
Given �the �economic �uncertainty �and �business �disruption �created �by �the �COVID-19 �pandemic, �effective �June �23, �2020, �the �Company's �Compensation
Committee�approved�certain�modifications�to�performance-based�restricted�stock�units�previously�granted�on�March�16,�2020�and�March�20,�2019.�Such�changes
included�replacing�Company�performance�metrics�with�TSR�metrics�for�the�March�16,�2020�awards,�and�for�the�March�20,�2019�awards,�adding�a�relative�TSR
modifier�to�scale�the�payment�up�or�down�by�+/-�15�percent.�Additionally,�the�Company�granted�certain�employees�new�TSR�awards�on�June�24,�2020.
Attainment�of�the�Company's�TSR�awards�is�tied�to�WEX's�TSR�relative�to�the�S&P�400�from�the�time�of�modification�(for�awards�modified�on�June�23,
2020)�or�grant�date�(for�awards�granted�on�June�24,�2020).�Given�that�these�are�market-based�performance�awards,�the�fair�value�is�calculated�by�the�Monte�Carlo
simulation�valuation�model.
125
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
The�key�inputs�for�the�fair�values�and�other�relevant�information�by�grant�date�are�outlined�below:
Grant�date
6/24/2020
6/24/2020
3/16/2020
3/20/2019
Grantee(s)
Number�of�grantees�affected
Modification�date
Risk-free�rate
1
Stock�price
Volatility
Performance�period
Shares�at�target
2
Fair�value�per�share
Non-CEO
134
N/A
0.21%
$160.14
47.72%
June�24,�2020�–�
June�23,�2023
110,467
CEO
1
N/A
0.21%
$160.14
47.72%
June�24,�2020�–�
June�23,�2023
28,101
All
332
6/23/2020
0.20%
$173.15
51.32%
June�23,�2020�–�December
31,�2022
199,870
All
215
6/23/2020
0.18%
$173.15
62.29%
June�23,�2020�–�December
31,�2021
86,845
$264.17
$240.55
$280.93
$188.21
Total�incremental�compensation�cost
3
$11.5�million
$2.3�million
$21.8�million
$1.3�million
1�
At�the�date�of�grant�or�modification�date,�whichever�is�applicable.
2�
At�the�date�of�grant�or�modification�date,�whichever�is�applicable.�The�CEO's�June�24,�2020�award�has�a�one-year�post-vesting�holding�period.
3
�For�the�Company's�awards�that�were�modified�on�June�23,�2020,�the�final�attainment�for�recipients�other�than�executive�officers�will�be�based�on�the�greater�of�the�payout�under�the�original
awards�performance�metrics�or�the�modified�metrics�as�described�above.�As�a�result,�the�Company�is�required�to�assess�which�payout�is�more�likely�and�adjust�the�expense�accordingly.�If�the
original�awards'�performance�metrics�are�expected�to�result�in�a�higher�number�of�shares�vesting,�then�the�expense�recorded�will�be�based�on�awards�expected�to�vest�at�the�grant-date�stock�price.
Alternatively,�if�the�modified�metrics�are�expected�to�result�in�a�higher�number�of�shares�vesting,�then�the�expense�recorded�will�be�based�on�the�fair�value�calculated�using�the�Monte�Carlo
simulation�valuation�model.�As�of�December�31,�2020,�the�expense�associated�with�the�awards�in�the�table�above�is�calculated�using�the�Monte�Carlo�modification-date�fair�value.
����The�following�is�a�summary�of�TSR�awards�and�PBRSU�activity�during�the�year�ended�December�31,�2020:
TSR�awards�and�PBRSUs
(In�thousands�except�per�share�data)
Unvested�at�January�1,�2020
Granted
Forfeited
Vested,�including�52�shares�withheld�for�tax
Performance�adjustment
Unvested�at�December�31,�2020
2
1
Shares
Weighted-Average�
Grant-Date�
Fair�Value
449�
343�
(21)
(203)
14�
582�
$
$
140.58�
170.71�
150.40�
107.77�
81.21�
170.05�
1
�The �Company�withholds �shares �of�common �stock�to �pay�the�minimum �required�statutory �taxes�due�upon �PBRSU�vesting. �Cash�is�then �remitted�by �the�Company �to �the�appropriate �taxing
authorities.
2�
Reflects�adjustments�to�the�number�of�shares�of�PBRSUs�expected�to�vest�based�on�the�change�in�performance�attainment�during�the�year�ended�December�31,�2020.
As �of �December�31, �2020,�there �was �$74.1�million �of�unrecognized �compensation �cost�related �to �the�TSR �awards �and�PBRSUs �that�is �expected�to �be
recognized �over �a �weighted-average �period �of �2.0 �years. �The �total �grant-date �fair �value �of �PBRSUs �and �TSRs �granted �during �2020, �2019 �and �2018 �was �$58.5
million,�$19.0�million�and�$18.3�million,�respectively.�The�total�grant-date�fair�value�of�PBRSUs�that�vested�during�2020,�2019�and�2018�was�$21.7�million,�$9.3
million�and�$12.0�million,�respectively.
Stock�Options
Market�Performance-Based�Stock�Options
����In�May�2017,�the�Company�granted�market�performance-based�stock�options�with�a�contractual�term�of�ten�years�to�certain�members�of�senior�management.�The
options�contain�a�market�condition�that�requires�the�closing�price�of�the�Company’s�stock�to�meet�or�exceed�certain�price�thresholds�for�twenty�consecutive�trading
days�(“Stock�Price�Hurdle”)�in�order
126
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
for�shares�to�vest.�The�options�also�contain�a�service�condition�that�requires�the�award�recipients�to�be�continually�employed�from�the�grant�date�until�such�date�that
the�Stock�Price�Hurdle�is�satisfied�in�order�for�shares�to�vest.�The�Stock�Price�Hurdle�began�operating�in�May�2020,�on�the�third�anniversary�of�the�grant�date.�As�of
December�31,�2020,�75�percent�of�the�shares�had�vested�as�a�result�of�the�Company's�stock�exceeding�the�applicable�Stock�Price�Hurdle.�The�Stock�Price�Hurdle
condition�ends�five�years�from�the�date�of�grant,�and�therefore�the�remaining�25�percent�of�awards�may�still�vest.
����The�grant�date�fair�value�of�these�options�was�estimated�on�the�date�of�the�grant�using�a�Monte-Carlo�simulation�model�used�to�simulate�a�distribution�of�future
stock�price �paths�based�on�historical�volatility�levels.�The�Company�expensed�the�total�grant�date�fair�value �of�these�options�on�a�graded�basis�over�the�derived
service�period�of�approximately�three�years.
����The�table�below�summarizes�the�assumptions�used�to�calculate�the�fair�value:����
Exercise�price
Expected�stock�price�volatility
Risk-free�interest�rate
Weighted�average�fair�value�of�market�performance-based�stock�options�granted
Service-Based�Stock�Options
$
$
99.69�
31.14�%
2.18�%
28.69�
����The�Company�periodically�grants�stock�options�to�certain�officers�and�employees�under�the�Plan,�which�generally�become�exercisable�over�three�years�(with
approximately�33�percent�of�the�total�grant�vesting�each�year�on�the�anniversary�of�the�grant�date)�and�expire�10�years�from�the�date�of�grant.�All�service-based
stock�option�grants�provide�for�an�option�exercise�price�equal�to�the�closing�market�value�of�the�common�stock�on�the�date�of�grant�as�reported�by�the�NYSE.
����Based�on�the�Company’s�lack�of�historical�option�exercise�experience�and�granting�of�stock�options�with�“plain�vanilla”�characteristics,�the�Company�uses�the
simplified �method �to �estimate �the �expected �term �of �its �employee �stock �options. �The �fair �value �of �each �option �award �is �estimated �on �the �grant �date �using �the
following�assumptions�and�a�Black-Scholes-Merton�option-pricing�model.�The�expected�term�assumption�as�it�relates�to�the�valuation�of�the�options�represents�the
period �of �time �that �options �granted �are �expected �to �be �outstanding. �The �Company �estimates �expected �stock �price �volatility �based �on �historical �volatility �of �the
Company’s�common�stock�over�a�period�matching�the�expected�term�of�the�options�granted.�The�option-pricing�model�also�includes�a�risk-free�interest�rate�for�the
period�matching�the�expected�term�of�the�option�and�is�based�on�the�U.S.�Treasury�yield�curve�in�effect�at�the�time�of�the�grant.�We�have�never�paid�nor�do�we
expect�to�pay�any�cash�dividends�on�our�common�stock;�therefore,�we�assume�that�no�dividends�will�be�paid�over�the�expected�terms�of�option�awards.�
����The�table�below�summarizes�the�assumptions�used�to�calculate�the�fair�value�by�year�of�grant:
Weighted�average�grant�date�fair�value
Weighted�average�expected�term�(in�years)
Weighted�average�exercise�price
Expected�stock�price�volatility
Risk-free�interest�rate
$
$
2020
2019
2018
$
$
35.13�
6
109.66�
32.37�%
0.58�%
$
$
58.28�
6
184.81�
27.21�%
2.37�%
51.27�
6
158.23�
27.35�%
2.69�%
127
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����The�following�is�a�summary�of�all�stock�option�activity�during�the�year�ended�December�31,�2020:�
Stock�Options
(In�thousands,�except�per�share�data)
Outstanding�at�January�1,�2020
Granted
Exercised
Forfeited�or�expired
Outstanding�at�December�31,�2020
Exercisable�on�December�31,�2020
Vested�and�expected�to�vest�at�December�31,�2020
Shares
Weighted-Average
Exercise�Price
Weighted-Average
Remaining�Contractual
Term�(in�years)
Aggregate�Intrinsic
Value
892�
262�
(96)
(15)
1,043�
559�
476�
$
$
$
$
115.82�
109.66�
96.55�
138.52�
115.72�
110.49�
121.90�
7.2 $
6.4 $
8.2 $
91,603�
52,036�
38,844�
����As �of�December�31, �2020,�there �was�$9.6�million �of�total �unrecognized �compensation �cost�related�to �options.�That �cost�is�expected �to�be�recognized �over�a
weighted-average�period�of�1.1�years.�The�total�intrinsic�value�of�options�exercised�during�the�years�ended�December�31,�2020,�2019�and�2018�was�$8.7�million,
$5.7�million�and�$1.9�million,�respectively.�The�total�grant-date�fair�value�of�options�granted�during�2020,�2019�and�2018�was�$9.3�million,�$7.2�million,�and�$5.2
million,�respectively.
Deferred�Stock�Units
����Non-employee�directors�may�elect�to�defer�their�cash�fees�and�RSUs�in�the�form�of�DSUs.�The�Company�grants�fully�vested�DSUs�to�non-employee�directors.
These�awards�are�distributed�as�common�stock�200�days�immediately�following�the�date�upon�which�such�director’s�service�as�a�member�of�the�Company’s�Board
of�Directors�terminates�for�any�reason.�There�were�approximately�54�thousand�and�63�thousand�DSUs�outstanding�as�of�December�31,�2020�and�2019,�respectively.
DSU�activity�is�included�in�the�RSU�table�above.�Unvested�DSUs�as�of�December�31,�2020�and�2019�were�not�material.
24.
Impairment�Charges
����During�2020,�the�Company�recorded�a�$53.4�million�non-cash�goodwill�impairment�charge�related�to�the�WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel
Card �acquisition). �See �Note �9, �Goodwill �and �Other �Intangible �Assets, �for �further �information. �The �Company �did �not �record �any �impairment �charges �during �its
annual �goodwill�assessment�completed�in �the�fourth�quarter�of�2019.�In�the �fourth�quarter�of�2018,�a�goodwill �impairment�charge�of�$3.2�million �was�recorded
related�to�the�Brazil�fleet�reporting�unit.�Management�also�impaired�$2.4�million�of�computer�software�in�2018,�which�was�determined�to�provide�no�future�benefit.
25.
Segment�Information
� � � �The �Company �determines �its �operating �segments �and �reports �segment �information �in �accordance �with �how �the �Company’s �chief �operating �decision �maker
(“CODM”)�allocates�resources�and�assesses�performance.�The�Company’s�CODM�is�its�Chief�Executive�Officer.�The�operating�segments�are�aggregated�into�the
three�reportable�segments�described�below.����
•
•
•
Fleet�Solutions�provides�customers�with�payment�and�transaction�processing�services�specifically�designed�for�the�needs�of�commercial�and�government
fleets.�This�segment�also�provides�information�management�services�to�these�fleet�customers.
Travel�and�Corporate�Solutions�focuses�on�the�complex�payment�environment�of�B2B�payments,�providing�customers�with�payment�processing�solutions
for�their�corporate�payment�and�transaction�monitoring�needs.
Health �and �Employee �Benefit �Solutions� provides �healthcare �payment �products �and �SaaS �consumer �directed �platforms. �Prior �to �the �sale �of �WEX �Latin
America,�this�operating�segment�additionally�provided�payroll�related�benefits�to�customers.
128
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����The�following�tables�present�the�Company’s�reportable�segment�revenues:
(In�thousands)
Payment�processing�revenue
Account�servicing�revenue
Finance�fee�revenue
Other�revenue
Total�revenues
Interest�income
(In�thousands)
Payment�processing�revenue
Account�servicing�revenue
Finance�fee�revenue
Other�revenue
Total�revenues
Interest�income
(In�thousands)
Payment�processing�revenue
Account�servicing�revenue
Finance�fee�revenue
Other�revenue
Total�revenues
Interest�income
����
Fleet�Solutions
Travel�and�Corporate
Solutions
Health�and�Employee
Benefit�Solutions
Total
Year�Ended�December�31,�2020
404,843�
153,823�
197,307�
162,337�
918,310�
$
$
229,144�
41,927�
1,079�
5,690�
277,840�
4,326�
$
272�
$
$
$
64,904�
253,706�
137�
44,972�
363,719�
1,252�
Year�Ended�December�31,�2019
Fleet�Solutions
Travel�and�
Corporate�Solutions
Health�and�
Employee�Benefit
Solutions
457,244�
164,735�
245,082�
171,334�
1,038,395�
$
$
303,385�
43,293�
2,086�
19,062�
367,826�
$
$
64,963�
205,524�
150�
46,833�
317,470�
$
$
$
$
$
698,891�
449,456�
198,523�
212,999�
1,559,869�
5,850�
Total
825,592�
413,552�
247,318�
237,229�
1,723,691�
6,249�
$
1,521�
$
1,534�
$
9,304�
Fleet�Solutions
Travel�and�
Corporate�Solutions
Health�and�
Employee�Benefit
Solutions
Total
Year�Ended�December�31,�2018
464,980�
162,662�
190,528�
156,970�
975,140�
3,503�
$
$
$
203,289�
37,262�
1,391�
61,402�
303,344�
958�
$
$
$
55,722�
108,172�
16,708�
33,553�
214,155�
11,706�
$
$
$
723,991�
308,096�
208,627�
251,925�
1,492,639�
16,167�
$
$
$
$
$
$
$
$
$
No�one�customer�accounted�for�more�than�10�percent�of�the�total�consolidated�revenue�in�2020,�2019�or�2018.����
����The�CODM�evaluates�the�financial�performance�of�each�segment�using�segment�adjusted�operating�income,�which�excludes:�(i)�unallocated�corporate�expenses;
(ii)�acquisition�and�divestiture�related�items�(including�acquisition-related�intangible�amortization);�(iii)�legal�settlement;�(iv)�impairment�charges;�(v)�loss�on�sale
of �subsidiary; �(vi) �debt �restructuring �costs; �(vii) �stock-based �compensation; �and �(viii) �other �costs. �Additionally, �we �do �not �allocate �foreign �currency �gains �and
losses, �financing �interest �expense, �unrealized �and �realized �gains �and �losses �on �financial �instruments �and �non-cash �adjustments �related �to �the �tax �receivable
agreement�to�our�operating�segments.
129
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
����The�following�table�reconciles�total�segment�adjusted�operating�income�to�(loss)�income�before�income�taxes:
��
(In�thousands)
Segment�adjusted�operating�income
Fleet�Solutions
Travel�and�Corporate�Solutions
Health�and�Employee�Benefit�Solutions
Total�segment�adjusted�operating�income
Reconciliation:
Total�segment�adjusted�operating�income
Less:
Unallocated�corporate�expenses
Acquisition-related�intangible�amortization
Other�acquisition�and�divestiture�related�items
Legal�settlement
Impairment�charges
Loss�on�sale�of�subsidiary
Debt�restructuring�costs
Stock-based�compensation
Other�costs
Operating�(loss)�income
Financing�interest�expense
Net�foreign�currency�loss
Non-cash�adjustments�related�to�tax�receivable�agreement
Net�unrealized�(loss)�gain�on�financial�instruments
(Loss)�income�before�income�taxes
����Assets�are�not�allocated�to�the�segments�for�internal�reporting�purposes.
Geographic�Data
����Revenue�by�principal�geographic�area,�based�on�the�country�in�which�the�sale�originated,�was�as�follows:
��
(In�thousands)
United�States
Other�international
1
Total�revenues
2020
Year�ended�December�31,
2019
2018
383,502�
62,096�
96,769�
542,367�
$
$
485,539�
168,786�
80,283�
734,608�
$
$
459,646�
135,379�
44,931�
639,956�
542,367�
$
734,608�
$
639,956�
62,938�
171,144�
57,787�
162,500�
53,378�
46,362�
535�
65,841�
13,555�
(91,673) $
(157,080)
(25,783)
491�
(27,036)
(301,081) $
67,982�
159,431�
37,675�
—�
—�
—�
11,062�
47,511�
25,106�
385,841�
(134,677)
(926)
932�
(34,654)
216,516�
$
$
58,095�
138,186�
4,143�
—�
5,649�
—�
4,425�
35,103�
13,717�
380,638�
(105,023)
(38,800)
(775)
2,579�
238,619�
2020
Year�ended�December�31,
2019
1,401,144�
158,725�
1,559,869�
$
$
1,535,985�
187,706�
1,723,691�
$
$
2018
1,287,405�
205,234�
1,492,639�
$
$
$
$
$
$
$
1
�No�single�country�within�made�up�more�than�5�percent�of�total�revenues�for�any�of�the�years�presented.
����Net�property,�equipment�and�capitalized�software�is�subject�to�geographic�risks�because�it�is�generally�difficult �to�move�and�relatively�illiquid.�Net�property,
equipment�and�capitalized�software�by�principal�geographic�area�was�as�follows:
(In�thousands)
United�States
1
International
Net�property,�equipment�and�capitalized�software
2020
Year�ended�December�31,
2019
2018
$
$
176,348�
11,992�
188,340�
$
$
200,101�
12,374�
212,475�
$
$
176,111�
11,757�
187,868�
1
�No�single�country�within�made�up�more�than�5�percent�of�total�net�property,�equipment�and�capitalized�software�for�any�of�the�years�presented.
130
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
26.
Supplementary�Regulatory�Capital�Disclosure
����The�Company’s�subsidiary,�WEX�Bank�is�subject�to�various�regulatory�capital�requirements�administered�by�the�FDIC�and�the�Utah�Department�of�Financial
Institutions.�Under�capital�adequacy�guidelines�and�the�regulatory�framework�for�prompt�corrective�action,�WEX�Bank�must�meet�specific�capital�guidelines�that
involve �quantitative �measures �of �WEX �Bank’s �assets, �liabilities �and �certain �off-balance �sheet �items. �WEX �Bank’s �capital �amounts �and �classification �are �also
subject�to�qualitative�judgments�by�the�regulators�about�components,�risk�weightings�and�other�factors.�Failure�to�meet�minimum�capital�requirements�can�initiate
certain�mandatory�and�possible�additional�discretionary�actions�by�regulators�that,�if�undertaken,�could�limit�business�activities�and�have�a�material�effect�on�the
Company's�business,�results�of�operations�and�financial�condition.
� � � �Quantitative �measures �established �by �regulation �to �ensure �capital �adequacy �require �WEX �Bank �to �maintain �minimum �amounts �and �ratios �as �defined �in �the
regulations.�As�of�December�31,�2020,�the�most�recent�FDIC�exam�report�categorized�WEX�Bank�as�“well�capitalized”�under�the�regulatory�framework�for�prompt
corrective�action.�There�are�no�conditions�or�events�subsequent�to�that�examination�report�that�management�believes�have�changed�WEX�Bank’s�capital�rating.
����The�following�table�presents�WEX�Bank’s�actual�and�regulatory�minimum�capital�amounts�and�ratios:
�
�
�
�
�
Actual�Amount
Ratio
Minimum�for
Capital�Adequacy
Purposes�Amount
Ratio
Minimum�to�Be
Well�Capitalized
Under�Prompt
Corrective�Action
Provisions�Amount
Ratio
$
$
$
$
$
$
$
$
299,136�
287,570�
287,570�
287,570�
329,276�
314,466�
314,466�
314,466�
15.04�% $
12.71�% $
14.46�% $
14.46�% $
13.54� % $
10.88� % $
12.93� % $
12.93� % $
159,148�
90,514�
89,521�
119,361�
194,566�
115,583�
109,443�
145,925�
8.00�% $
4.00�% $
4.50�% $
6.00�% $
8.00� % $
4.00� % $
4.50� % $
6.00� % $
198,935�
113,143�
129,308�
159,148�
243,208�
144,479�
158,085�
194,566�
10.00�%
5.00�%
6.50�%
8.00�%
10.00� %
5.00� %
6.50� %
8.00� %
(In�thousands)
December�31,�2020
Total�Capital�to�risk-weighted�assets
Tier�1�Capital�to�average�assets
Common�equity�to�risk-weighted�assets
Tier�1�Capital�to�risk-weighted�assets
December�31,�2019
Total�Capital�to�risk-weighted�assets
Tier�1�Capital�to�average�assets
Common�equity�to�risk-weighted�assets
Tier�1�Capital�to�risk-weighted�assets
27.
Related�Party�Transaction
Bell�Bank�Revolving�Credit�Agreement����
The �seller �of�Discovery �Benefits, �Bell�Bank, �holds�a �4.9 �percent �equity �interest �in�the �Company's �U.S.�Health �business �and�is �a�revolving �loan �lender
under�the�Company's�2016�Credit�Agreement.�As�of�December�31,�2020�and�2019,�there�were�no�amounts�outstanding,�with�available�capacity�of�$50.0�million.
Warburg�Pincus�Convertible�Notes
On�July�1,�2020,�the�Company�closed�on�a�private�placement�with�an�affiliate�of�funds�managed�by�Warburg�Pincus�LLC,�pursuant�to�which�the�Company
issued�convertible�senior�unsecured�notes�due�in�2027�in�an�aggregate�principal�amount�of�$310�million�and�577,254�shares�of�common�stock,�with�gross�proceeds
in�respect�of�the�common�stock�of�$90�million.�After�giving�effect�to�the�purchase�of�the�common�stock�and�convertible�notes,�on�an�as-converted�basis,�Warburg
Pincus�owned�approximately �4.7%�of �the�Company's �outstanding�common �stock�on �the�closing�date �of�the �private�placement. �Refer�to�Note �16,�Financing �and
Other�Debt,�for�more�information�regarding�the�convertible�senior�notes.
A�member�of�the�Company’s�board�of�directors�(“related�person”),�is�a�managing�director�at�Warburg�Pincus�LLC.�The�Company�has�a�written�policy
regarding�entering�certain�transactions�in�which�any�member�of�the�board�of�directors�has�a�direct�or�indirect�material�interest.�Pursuant�to�this�policy,�the�private
placement�was�approved�by�the�Corporate�Governance�Committee�of�the�Company’s�board�of�directors,�after�it�had�reviewed�and�considered�all�relevant�facts�and
circumstances,�including,�but�not�limited�to,�whether�the�transaction�was�entered�into�on�terms�no�less�favorable�to�the�Company�than�terms
131
WEX�INC.
NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued)
that �could �have �been �reached �with �an �unrelated �third �party �and �the �interest �of �the �related �person �in �the �transaction. �Following �approval �by �the �Corporate
Governance�Committee�of�the�board�of�directors,�the�private�placement�was�approved�by�the�disinterested�members�of�the�Company’s�board�of�directors.
28.
Subsequent�Events
HSA�Purchase�Agreement
On�February�11,�2021,�the�Company�entered�into�an�asset�purchase�agreement�with�Bell�Bank�to�acquire�certain�HSA�assets,�including�the�custodial�rights
for�certain�HSAs�from�Bell�Bank's�HealthcareBank�division,�the�custodian�bank�for�customers�of�the�U.S.�Health�business.�We�believe�the�acquisition�will�allow
the�Company�to�better�capture�the�economics�from�those�HSAs,�leverage�our�investments�to�provide�customers�with�market-leading�HSA�solutions,�and�align�with
our�growth�strategy.�The�transaction�is�expected�to�close�in�the�second�quarter�of�2021,�subject�to�regulatory�approvals�and�other�customary�closing�conditions.
Pursuant �to �the �purchase �agreement, �the �Company �will �pay �Bell �Bank �initial �cash �consideration �of �approximately �$200 �million, �and �two �additional
deferred�cash�payments�of�$25�million�in�July�2023�and�January�2024,�contingent�upon�closing�of�the�transaction.�The�agreement�also�includes�potential�additional
consideration�payable,�over�the�ten�years�subsequent�to�the�closing�date,�that�is�contingent�on,�and�calculated�based�on,�any�future�increases�in�the�Federal�Funds
rate. �Potential �additional �consideration �may �not �exceed �$225 �million �in �the �aggregate �over �the �ten �year �period �and �will �not �adversely �impact �the �Company’s
adjusted�net�income�or�financial�position�as�net�revenues�earned�on�the�acquired�HSA�assets�will�increase�in�the�event�the�Federal�Funds�rate�increases�in�the�future.
Notes�Redemption�Notice
On�February�11,�2021,�the�Company�provided�irrevocable�notice�to�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.,�the�trustee�for�the�Notes,�of�its
intent �to �redeem �its �outstanding �$400 �million �4.75% �Senior �Secured �Notes �due �February �1, �2023 �on �March �15, �2021. �The �redemption �price �of �the �Notes �is
$400�million�plus�accrued�and�unpaid�interest�through�the�proposed�redemption�date.�The�redemption�is�expected�to�be�funded�from�cash.
132
ITEM�9.�CHANGES�IN�AND�DISAGREEMENTS�WITH�ACCOUNTANTS�ON�ACCOUNTING�AND�FINANCIAL�DISCLOSURE
Not�applicable.�
ITEM�9A.�CONTROLS�AND�PROCEDURES
Evaluation�of�Disclosure�Controls�and�Procedures
����Our�management,�under�the�supervision�and�with�the�participation�of�the�principal�executive�officer�and�principal�financial�officer�of�WEX�Inc.,�evaluated�the
effectiveness �of �the �Company’s �disclosure �controls �and �procedures �as �of �December �31, �2020. �“Disclosure �controls �and �procedures” �are �controls �and �other
procedures �of �a �company �that �are �designed�to �ensure �that �information �required �to �be�disclosed �by �the �company �in �the�reports �that �it �files �or �submits �under�the
Securities�Exchange�Act�of�1934,�or�the�Exchange�Act,�is�recorded,�processed,�summarized�and�reported�within�the�time�periods�specified�in�the�SEC’s�rules�and
forms.�Disclosure�controls�and�procedures�include,�without�limitation,�controls�and�procedures�designed�to�ensure�that�information�required�to�be�disclosed�by�a
company �in �the �reports �it �files �or �submits �under �the �Exchange �Act, �is �accumulated �and �communicated �to �the �company’s �management, �including �its �principal
executive �officer �and �principal�financial �officer, �as�appropriate �to �allow�timely �decisions �regarding �required�disclosure. �Based �on�their �evaluation, �the�principal
executive�officer�and�principal�financial�officer�of�WEX�Inc.�concluded�that�the�Company’s�disclosure�controls�and�procedures�were�effective�as�of�December�31,
2020.
Management’s�Annual�Report�on�Internal�Control�Over�Financial�Reporting
� � � �WEX �Inc.’s �management �is �responsible �for �establishing �and �maintaining �adequate �internal �control �over �financial �reporting. �Internal �control �over �financial
reporting �is �defined �in �Rule �13a-15(f) �promulgated �under �the �Exchange �Act �as �a �process �designed �to �provide �reasonable �assurance �regarding �the �reliability �of
financial �reporting �and �the �preparation �of �financial �statements �for �external �purposes �in �accordance �with �accounting �principles �generally �accepted�in �the �United
States�of�America.�Internal�control�over�financial�reporting�includes�maintaining�records�that�in�reasonable�detail�accurately�and�fairly�reflect�our�transactions�and
disposition�of�assets;�providing�reasonable�assurance�that�transactions�are�recorded�as�necessary�for�preparation�of�our�financial�statements;�providing�reasonable
assurance�that�receipts�and�expenditures�are�made�only�in�accordance�with�management�and�Board�authorizations;�and�providing�reasonable�assurance�regarding
prevention�or�timely�detection�of�unauthorized�acquisition,�use�or�disposition�of�our�assets�that�could�have�a�material�effect�on�our�financial�statements.�Because�of
its�inherent�limitations,�internal�control�over�financial�reporting�is�not�intended�to�provide�absolute�assurance�that�a�misstatement�of�our�financial�statements�would
be�prevented�or�detected.�Also,�projections�of�any�evaluation�of�effectiveness�to�future�periods�are�subject�to�the�risk�that�controls�may�become�inadequate�because
of�changes�in�conditions�or�that�the�degree�of�compliance�with�policies�or�procedures�may�deteriorate.
����Under�the�supervision�of�and�with�the�participation�of�management,�including�the�principal�executive�officer�and�principal�financial�and�accounting�officer,�an
evaluation�was�conducted�of�the�effectiveness�of�our�internal�control�over�financial�reporting�based�on�the�framework�in�Internal�Control�-�Integrated�Framework
(2013)�issued�by�The�Committee�of�Sponsoring�Organizations�of�the�Treadway�Commission.�Based�on�management’s�evaluation�under�the�framework�in�Internal
Control�-�Integrated�Framework�(2013),�management�concluded�that�WEX�Inc.’s�internal�control�over�financial�reporting�was�effective�as�of�December�31,�2020.
� � � �The �Company �acquired �eNett �and �Optal �on �December �15, �2020. �Management �excluded �these �businesses �from �its �assessment �of �the �effectiveness �of �the
Company’s �internal�control �over�financial �reporting�as�of �December�31, �2020.�These�exclusions �were�in�accordance �with�Securities �and�Exchange�Commission
guidance �that �an �assessment �of �a �recently �acquired �business’s �internal �control �over �financial �reporting �may �be �omitted �from �management’s �report �on �internal
control�over�financial�reporting�in�the�year�of�acquisition�of�the�business.�These�businesses�represented,�in�aggregate,�9.5%�of�the�Company’s�total�consolidated
assets�and�less�than�1%�of�total�consolidated�revenues,�as�of�and�for�the�year�ended�December�31,�2020.
� � � �The �effectiveness �of �our �internal �control �over �financial �reporting �as �of �December �31, �2020, �has �been �audited �by �Deloitte �& �Touche �LLP, �an �independent
registered�public�accounting�firm,�as�stated�in�their�report,�which�is�included�herein.
Changes�in�Internal�Control�Over�Financial�Reporting
����There�has�been�no�change�in�our�internal�control�over�financial�reporting�during�the�fiscal�quarter�ended�December�31,�2020�that�has�materially�affected,�or�is
reasonably �likely �to �materially �affect, �our �internal �control �over �financial �reporting. �We �have �not �experienced �any �material �impact �to �our �internal �control �over
financial�reporting�despite�the�fact�that�most�of�our
133
employees�are�working�remotely�due�to�the�COVID-19�pandemic.�We�are�continually�monitoring�and�assessing�the�COVID-19�situation�on�our�internal�control�to
minimize�the�impact�on�their�design�and�operating�effectiveness.
134
REPORT�OF�INDEPENDENT�REGISTERED�PUBLIC�ACCOUNTING�FIRM
To�the�Shareholders�and�the�Board�of�Directors�of�WEX�Inc.
Opinion�on�Internal�Control�over�Financial�Reporting
We�have�audited�the�internal�control�over�financial�reporting�of�WEX�Inc.�and�subsidiaries�(the�“Company”)�as�of�December�31,�2020,�based�on�criteria
established�in�Internal�Control�—�Integrated�Framework�(2013)�issued�by�the�Committee�of�Sponsoring�Organizations�of�the�Treadway�Commission�(COSO).�In
our�opinion,�the�Company�maintained,�in�all�material�respects,�effective�internal�control�over�financial�reporting�as�of�December�31,�2020,�based�on�criteria
established�in�Internal�Control�—�Integrated�Framework�(2013)�issued�by�COSO.
We�have�also�audited,�in�accordance�with�the�standards�of�the�Public�Company�Accounting�Oversight�Board�(United�States)�(PCAOB),�the�consolidated�financial
statements�as�of�and�for�the�year�ended�December�31,�2020,�of�the�Company�and�our�report�dated�March�1,�2021,�expressed�an�unqualified�opinion�on�those
financial�statements.
As�described�in�Management’s�Annual�Report�on�Internal�Control�Over�Financial�Reporting,�management�excluded�from�its�assessment�the�internal�control�over
financial�reporting�at�eNett�and�Optal,�which�were�acquired�on�December�15,�2020,�and�whose�financial�statements�constitute�9.5%�of�total�assets�and�less�than�1%
of�total�revenues�of�the�consolidated�financial�statements�amounts�as�of�and�for�the�year�ended�December�31,�2020.�Accordingly,�our�audit�did�not�include�the
internal�control�over�financial�reporting�at�eNett�and�Optal.
Basis�for�Opinion
The�Company’s�management�is�responsible�for�maintaining�effective�internal�control�over�financial�reporting�and�for�its�assessment�of�the�effectiveness�of�internal
control�over�financial�reporting,�included�in�the�accompanying�Management’s�Annual�Report�on�Internal�Control�Over�Financial�Reporting�appearing�at�Item�9A.
Our�responsibility�is�to�express�an�opinion�on�the�Company’s�internal�control�over�financial�reporting�based�on�our�audit.�We�are�a�public�accounting�firm
registered�with�the�PCAOB�and�are�required�to�be�independent�with�respect�to�the�Company�in�accordance�with�the�U.S.�federal�securities�laws�and�the�applicable
rules�and�regulations�of�the�Securities�and�Exchange�Commission�and�the�PCAOB.
We�conducted�our�audit�in�accordance�with�the�standards�of�the�PCAOB.�Those�standards�require�that�we�plan�and�perform�the�audit�to�obtain�reasonable�assurance
about�whether�effective�internal�control�over�financial�reporting�was�maintained�in�all�material�respects.�Our�audit�included�obtaining�an�understanding�of�internal
control�over�financial�reporting,�assessing�the�risk�that�a�material�weakness�exists,�testing�and�evaluating�the�design�and�operating�effectiveness�of�internal�control
based�on�the�assessed�risk,�and�performing�such�other�procedures�as�we�considered�necessary�in�the�circumstances.�We�believe�that�our�audit�provides�a�reasonable
basis�for�our�opinion.
Definition�and�Limitations�of�Internal�Control�over�Financial�Reporting
A�company’s�internal�control�over�financial�reporting�is�a�process�designed�to�provide�reasonable�assurance�regarding�the�reliability�of�financial�reporting�and�the
preparation�of�financial�statements�for�external�purposes�in�accordance�with�generally�accepted�accounting�principles.�A�company’s�internal�control�over�financial
reporting�includes�those�policies�and�procedures�that�(1)�pertain�to�the�maintenance�of�records�that,�in�reasonable�detail,�accurately�and�fairly�reflect�the
transactions�and�dispositions�of�the�assets�of�the�company;�(2)�provide�reasonable�assurance�that�transactions�are�recorded�as�necessary�to�permit�preparation�of
financial�statements�in�accordance�with�generally�accepted�accounting�principles,�and�that�receipts�and�expenditures�of�the�company�are�being�made�only�in
accordance�with�authorizations�of�management�and�directors�of�the�company;�and�(3)�provide�reasonable�assurance�regarding�prevention�or�timely�detection�of
unauthorized�acquisition,�use,�or�disposition�of�the�company’s�assets�that�could�have�a�material�effect�on�the�financial�statements.
Because�of�its�inherent�limitations,�internal�control�over�financial�reporting�may�not�prevent�or�detect�misstatements.�Also,�projections�of�any�evaluation�of
effectiveness�to�future�periods�are�subject�to�the�risk�that�controls�may�become�inadequate�because�of�changes�in�conditions,�or�that�the�degree�of�compliance�with
the�policies�or�procedures�may�deteriorate.
/s/�Deloitte�&�Touche�LLP
Boston,�Massachusetts
March�1,�2021
135
ITEM�9B.�OTHER�INFORMATION
Not�applicable.
PART�III
ITEM�10.�DIRECTORS,�EXECUTIVE�OFFICERS�AND�CORPORATE�GOVERNANCE
See �the �information �in �the �Company’s �definitive �proxy �statement �to �be �delivered �to �stockholders �in �connection �with �the �2021 �Annual �Meeting �of
Stockholders�(the�“2021�Proxy�Statement”)�set�forth�under�the�captions�“Governance”�and�the�related�subsections�including�“The�Board�of�Directors”,�“Executive
Officers,”�and�“Delinquent�Section�16(a)�Reports,”�if�applicable,�which�information�is�incorporated�herein�by�reference.
Website�Availability�of�Corporate�Governance�and�Other�Documents
The �following �documents �are �available �on �the �Corporate �Governance �page �of �the �investor �relations �section �of �the �Company’s �website,
www.wexinc.com:�(1)�WEX�Code�of�Business�Conduct�and�Ethics,�which�covers�all�employees,�officers�and�our�board�of�directors,�(2)�the�Company’s�Corporate
Governance �Guidelines �and �(3) �key �Board �Committee �charters, �including �charters �for �the �Audit, �Corporate �Governance �and �Compensation �Committees.
Stockholders �also �may �obtain �printed �copies �of �these �documents �by �submitting �a �written �request �to �Investor �Relations, �WEX �Inc., �97 �Darling �Avenue, �South
Portland, �Maine �04106. �The �Company �intends �to �post �on �its �website, �www.wexinc.com, �all �disclosures �that �are �required �by �law �or �NYSE �listing �standards
concerning�any�amendments�to,�or�waivers�from,�the�Code�of�Business�Conduct�and�Ethics.
ITEM�11.�EXECUTIVE�COMPENSATION
See�the�information�in�the�2021�Proxy�Statement�set�forth�under�the�captions�“Executive�Compensation”�and�the�related�subsections�and�“Governance”�and
related �subsections �including �“Director �Compensation” �and �“Compensation �Committee �Interlocks �and �Insider �Participation”, �which �information �is �incorporated
herein�by�reference.
ITEM�12.�SECURITY�OWNERSHIP�OF�CERTAIN�BENEFICIAL�OWNERS�AND�MANAGEMENT�AND�RELATED�STOCKHOLDER�MATTERS
See �the �information �in �the �2021 �Proxy �Statement �set �forth �under �the �caption �“Information �About �Stock �Ownership” �and �related �subsections �including
“Securities�Authorized�for�Issuance�Under�Equity�Compensation�Plans”�and�“Principal�Stockholders”,�which�information�is�incorporated�herein�by�reference.
ITEM�13.�CERTAIN�RELATIONSHIPS�AND�RELATED�TRANSACTIONS,�AND�DIRECTOR�INDEPENDENCE
See�the�information�in�the�2021�Proxy�Statement�set�forth�under�the�caption�“Governance”�and�related�subsections�including�“Director�Independence”�and
“Certain�Relationships�and�Related�Transactions,”�which�information�is�incorporated�herein�by�reference.
ITEM�14.�PRINCIPAL�ACCOUNTING�FEES�AND�SERVICES
See�the�information�in�the�2021�Proxy�Statement�set�forth�under �the�caption�“Auditor�Selection�and�Fees,”�which�information�is�incorporated �herein�by
reference.
136
PART�IV
ITEM�15.�EXHIBITS�AND�FINANCIAL�STATEMENT�SCHEDULES
The�following�documents�are�filed�as�part�of�this�report:
1.�Financial�Statements�(see�Index�to�Consolidated�Financial�Statements�on�page�73).
2.�Financial�statement�schedules�have�been�omitted�since�they�are�either�not�required�or�not�applicable�or�the�information�is�otherwise�included
herein.
3.�The�exhibit�index�attached�to�this�Annual�Report�on�Form�10–K�is�hereby�incorporated�by�reference.
ITEM�16.�FORM�10–K�SUMMARY
None.
�
Exhibit��No.
��
EXHIBIT�INDEX
Description
2.1
2.2
��
��
��
��
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
Unit�Purchase�Agreement,�dated�October�18,�2015,�by�and�among�WEX�Inc.,�Mustang�HoldCo�1�LLC,�Warburg�Pincus�Private�Equity�(E&P)�XI�-�B,�L.P.,
Warburg�Pincus�Private�Equity�XI‑C,�L.P.,�WP�XI�Partners,�L.P.,�Warburg�Pincus�Private�Equity�XI‑B,�L.P.,�WP�Mustang�Co‑Invest‑B,�L.P.,�WP�Mustang
Co‑Invest‑C�L.P.,�Warburg�Pincus�XI�(E&P)�Partners‑B,�L.P.,�Warburg�Pincus�(E&P)�XI,�L.P.,�WP�Mustang�Topco�LLC�and�Warburg�Pincus�Private
Equity�XI�(Lexington),�LLC�(incorporated�by�reference�to�Exhibit�2.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�October�19,�2015,�File�No.
001-32426)
Share�Purchase�Agreement,�dated�January�24,�2020,�by�and�among�WEX�Inc.,�eNett�International�(Jersey)�Limited,�a�Jersey�limited�company,�Optal�Limited,
a�private�company�limited�by�shares�incorporated�in�England�and�Wales,�Travelport�Limited,�a�Bermuda�exempted�company,�Toro�Private�Holdings�I,�Ltd.,�a
private�company�limited�by�shares�incorporated�in�England�and�Wales,�Optal�Limited,�in�its�capacity�as�trustee�of�the�PSP�Group�DESOP�Discretionary�Trust
established�by�way�of�discretionary�trust�deed�dated�28�October�2008,�as�amended�from�time�to�time,�and�the�other�shareholders�of�eNett�and�Optal�set�forth
therein�(incorporated�herein�by�reference�to�Exhibit�No.�2.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�24,�2020,�File�No.�001-32426)
Certificate�of�Incorporation�(incorporated�by�reference�to�Exhibit�No.�3.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�March�1,�2005,�File�No.
001-32426)
Certificate�of�Ownership�and�Merger�merging�WEX�Transitory�Corporation�with�and�into�Wright�Express�Corporation�(incorporated�by�reference�to�Exhibit
No.�3.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�October�30,�2012,�File�No.�001-32426)
Amended�and�Restated�By-Laws�of�WEX�Inc.,�as�amended�and�restated�as�of�April�16,�2019�(incorporated�by�reference�to�Exhibit�3.1�to�our�Current�Report
on�Form�8-K�filed�with�the�SEC�on�April�22,�2019,�File�No.�001-32426)
Indenture,�dated�as�of�January�30,�2013,�among�WEX�Inc.,�the�Guarantors�named�therein,�and�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.
(incorporated�by�reference�to�Exhibit�No.�4.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�February�1,�2013,�File�No.�001-32426)
Supplemental�Indenture,�dated�as�of�July�1,�2016�to�the�Indenture,�dated�as�of�January�30,�2013�among�WEX�Inc.,�the�additional�subsidiary�guarantors
thereto�and�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.�(incorporated�by�reference�to�Exhibit�No.�4.1�to�our�Current�Report�on�Form�8-K�filed�with
the�SEC�on�July�1,�2016,�File�No.�001-32426)
U.S.�Security�Agreement,�made�by�WEX�Inc.,�and�the�certain�of�its�subsidiaries,�as�pledgors,�assignors�and�debtors�dated�as�of�July�1,�2016,�in�favor�of�Bank
of�America,�as�collateral�agent�for�the�Lenders�(incorporated�by�reference�to�Exhibit�No.�4.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,
2016,�File�No.�001-32426)
Description�of�WEX�Inc.’s�Securities�Registered�under�Section�12�of�the�Exchange�Act�(incorporated�by�reference�to�Exhibit�4.4�to�our�Annual�Report�on
Form�10-K�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-32426)
Indenture,�dated�as�of�July�1,�2020,�by�and�between�WEX�Inc.�and�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.,�as�trustee�(incorporated�by
reference�to�Exhibit�4.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2020,�File�No.�001-32426)
137
4.6
10.1
10.2
10.3
10.4
10.5
10.6
��
��
��
��
��
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
Form�of�6.50%�Convertible�Senior�Notes�due�2027�(included�in�Exhibit�4.1)�(incorporated�by�reference�to�Exhibit�4.2�to�our�Current�Report�on�Form�8-K�filed
with�the�SEC�on�July�1,�2020,�File�No.�001-32426)
Form�of�director�indemnification�agreement�(incorporated�by�reference�to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�June�8,
2009,�File�No.�001-32426)
Tax�Receivable�Agreement,�dated�as�of�February�22,�2005,�by�and�between�Cendant�Corporation�and�Wright�Express�Corporation�(incorporated�by�reference�to
Exhibit�No.�10.3�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�March�1,�2005,�File�No.�001-32426)
Tax�Receivable�Prepayment�Agreement�dated�June�26,�2009�by�and�between�Wright�Express�Corporation�and�Realogy�Corporation�(incorporated�by�reference
to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�2,�2009,�File�No.�001-32426)
Ratification�Agreement�dated�June�26,�2009�by�and�among�Wright�Express�Corporation,�Realogy�Corporation,�Wyndham�Worldwide�Corporation�and�Avis
Budget�Group,�Inc.�(incorporated�by�reference�to�Exhibit�No.�10.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�2,�2009,�File�No.�001-32426)
Guarantee,�dated�as�of�June�26,�2009,�by�Apollo�Investment�Fund�VI,�L.P.,�Apollo�Overseas�Partners�VI,�L.P.,�Apollo�Overseas�Partners�(Delaware)�VI,�L.P.,
Apollo�Overseas�Partners�(Delaware892)�VI,�L.P.�and�Apollo�Overseas�Partners�(Germany)�VI,�L.P.�in�favor�of�Wright�Express�Corporation�(incorporated�by
reference�to�Exhibit�No.�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on�July�30,�2009,�File�No.�001-324426)
Investors�Rights�Agreement,�dated�as�of�July�1,�2016,�by�and�among�WEX�Inc.,�Mustang�HoldCo�1�LLC,�Warburg�Pincus�Private�Equity�(E&P)�XI‑�B,�L.P.,
Warburg�Pincus�Private�Equity�XI�–�C,�L.P.,�WP�XI�Partners,�L.P.,�Warburg�Pincus�Private�Equity�XI�–�B,�L.P.,�WP�Mustang�Co-Invest�–�B�L.P.,�WP�Mustang
Co-Invest�–�C�L.P.,�Warburg�Pincus�XI�(E&P)�Partners�–�B,�L.P.,�Warburg�Pincus�(E&P)�XI,�L.P.,�WP�(Lexington)�Holdings�II,�L.P.,�Warburg�Pincus�Private
Equity�(Lexington)�XI�–�A,�L.P.,�Warburg�Pincus�XI�(Lexington)�Partners�–�A�,�L.P.,�WP�Mustang�Co-Invest�LLC�and�the�other�investors�party�thereto
(incorporated�by�reference�to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2016,�File�No.�001-32426)
Credit�Agreement�among�WEX�Inc.,�certain�of�its�subsidiaries�as�borrowers,�WEX�Card�Holding�Australia�Pty�Ltd.,�as�designated�borrower,�Bank�of�America,
N.A.,�as�Administrative�Agent,�Swing�Line�Lender�and�L/C�Issuer,�and�the�other�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�No.�10.2�to�our
Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2016,�File�No.�001-32426)
First�Amendment�to�Credit�Agreement�dated�July�3,�2017,�between�WEX�Inc.,�Wright�Express�International�Holdings�Limited,�WEX�Card�Holdings�Australia
Pty�Ltd.�and�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�3,�2017,�File�No.�001-
32426)
Second�Amendment�to�Credit�Agreement�dated�October�30,�2017,�between�WEX�Inc.,�Wright�Express�International�Holdings�Limited,�WEX�Card�Holdings
Australia�Pty�Ltd.,�Bank�of�America�and�Santander�Bank,�N.A.�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the
SEC�on�November�3,�2017,�File�No.�001-32426)
Third �Amendment �to �Credit �Agreement �dated �January �17, �2018, �between �WEX �Inc., �Wright �Express �International �Holdings �Limited, �WEX �Card �Holdings
Australia�Pty�Ltd.,�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�18,�2018,�File
No.�001-32426)
Fourth�Amendment�to �Credit �Agreement �dated�August �24, �2018, �between�WEX �Inc., �Wright �Express�International �Holdings �Limited, �WEX �Card�Holdings
Australia�Pty�Ltd.,�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�August�24,�2018,�File
No.�001-32426)
Fifth�Amendment�to�Credit�Agreement�dated�January�18,�2019,�between�WEX�Inc.,�Wright�Express�International�Holdings�Limited,�WEX�Card�Holdings
Australia�Pty�Ltd.,�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�22,�2019,�File
No.�001-32426)
Sixth�Amendment�to�Credit�Agreement�dated�as�of�May�17,�2019,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�the�lenders�party
thereto�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC
on�May�20,�2019,�File�No.�001-32426)
Seventh�Amendment�to�Credit�Agreement�dated�as�of�November�19,�2019,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bell
Bank,�as�the�incremental�revolving�loan�lender,�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current
Report�on�Form�8-K�filed�with�the�SEC�on�November�25,�2019,�File�No.�001-32426)
Eighth�Amendment�to�Credit�Agreement�dated�February�10,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bank�of�America,
N.A.,�as�administrative�agent,�and�the�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on
February�13,�2020,�File�No.�001-32426)
138
†10.16
��
†10.17
Wright�Express�Corporation�Amended�2010�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�99.1�to�our�Current�Report�on�Form�8-K�filed
with�the�SEC�on�May�21,�2010,�File�No.�001-32426)
WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�May�15,
2019,�File�No.�001-32426)
†�10.18
Form�of�WEX�Inc.�Restricted�Stock�Unit�Agreement�under�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.18�to
our�Annual�Report�on�Form�10-k�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-324426)
†�10.19
Form�of�WEX�Inc.�Performance-Based�Restricted�Stock�Unit�Agreement�under�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to
Exhibit�No.�10.19�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-324426)
†�10.20
Form�of�WEX�Inc.�Nonqualified�Stock�Option�Agreement�under�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.
10.20�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-324426)
†10.21
��
†10.22
†�10.23
†�10.24
†�10.25
†�10.26
†�10.27
†�10.28
†�10.29
†�10.30
†�10.31
†���10.32
�†�10.33
��
��
��
��
��
��
��
��
��
Wright�Express�Corporation�Amended�and�Restated�Non-Employee�Directors�Deferred�Compensation�Plan�(incorporated�by�reference�to�Exhibit�No.�10.2�to
our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�7,�2009,�File�No.�001-32426)
2014�Form�of�Annual�Restricted�Stock�Unit�Agreement�(incorporated�by�reference�to�Exhibit�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC
on�April�30,�2014,�File�No.�001-32426)
Form�of�2014�Growth�Grant�-�Performance-Based�Restricted�Stock�Unit�Agreement�(incorporated�by�reference�to�Exhibit�10.4�to�our�Quarterly�Report�on
Form�10-Q�filed�with�the�SEC�on�April�30,�2014,�File�No.�001-32426)
2015�Section�162(m)�Performance�Incentive�Plan�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�May
21,�2015,�File�No.�001-32426)
WEX�Inc.�Executive�Severance�Pay�and�Change�in�Control�Plan�dated�March�5,�2018�(incorporated�by�reference�to�Exhibit�No.�10.18�to�our�Annual�Report�on
Form�10-K�filed�with�the�SEC�on�March�18,�2019,�File�No.�001-32426)
Form�of�Employment�Agreement�for�David�Maxsimic�and�Melissa�Smith�(incorporated�by�reference�to�Exhibit�No.�10.6�to�our�Current�Report�on�Form�8-K
filed�with�the�SEC�on�January�7,�2009,�File�No.�001-32426)
Form�of�Employment�Agreement�for�Robert�Cornett,�Hilary�Rapkin�and�Jamie�Morin�(incorporated�by�reference�to�Exhibit�No.�10.7�to�our�Current�Report�on
Form�8-K�filed�with�the�SEC�on�January�7,�2009,�File�No.�001-32426)
Form�of�Long�Term�Incentive�Program�Award�Agreement�under�the�Amended�and�Restated�Wright�Express�Corporation�2005�Equity�and�Incentive�Plan
(incorporated�by�reference�to�Exhibit�No.�99.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�April�6,�2006,�File�No.�001-32426)
Form�of�Non-Employee�Director�Long�Term�Incentive�Program�Award�Agreement�under�the�Amended�and�Restated�Wright�Express�Corporation�2005�Equity
and�Incentive�Plan�(for�grants�received�prior�to�December�31,�2006)�(incorporated�by�reference�to�Exhibit�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed
with�the�SEC�on�August�5,�2008,�File�No.�001-32426)
Form�of�Wright�Express�Corporation�Long�Term�Incentive�Program�2010�Growth�Grant�Stock�Non-Statutory�Stock�Option�Award�Agreement�under�the
Amended�and�Restated�Wright�Express�Corporation�2005�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.5�to�our�Quarterly�Report�on
Form�10-Q�filed�with�the�SEC�on�April�30,�2010,�File�No.�001-32426)
Form�of�Wright�Express�Corporation�Option�Agreement�under�the�Wright�Express�Corporation�2010�Equity�and�Incentive�Plan�(incorporated�by�reference�to
Exhibit�No.�10.29�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2011,�File�No.�001-32426)
2015�Form�of�WEX�Inc.�Long�Term�Incentive�Program�Non-Statutory�Stock�Option�Award�Agreement�(incorporated�by�reference�to�Exhibit�10.1�to�our
Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on�May�1,�2015,�File�No.�001-32426)
Form�of�Wright�Express�Corporation�Non-Employee�Director�Compensation�Plan�Award�Agreement�under�the�Wright�Express�Corporation�2010�Equity�and
Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.31�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2011,�File�No.�001-
32426)
139
�†�10.34
�†�10.35
�†�10.36
†�10.37
†�10.38
†�10.39
†�10.40
†�10.41
10.42�
10.43�
10.44�
10.45�
10.46�
10.47�
10.48�
†�10.49
†�10.50
10.51�
Offer�Letter�dated�November�3,�2015�between�WEX�Inc.�and�Mr.�Simon�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed
with�the�SEC�on�November�5,�2015,�File�No.�001-32426)
Severance�and�Restricted�Covenant�Agreement�between�Roberto�Simon�and�WEX�Inc.,�dated�March�3,�2016�(incorporated�by�reference�to�Exhibit�10.1�to�our
Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on�April�28,�2016,�File�No.�001-32426)
Form�of�Non�Employee�Director�Compensation�Plan�effective�September�21,�2016�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on�Form
10-Q�filed�with�the�SEC�on�August�9,�2017,�File�No.�001-32426)
Form�of�Non�Employee�Director�Compensation�Plan�effective�October�1,�2017�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on�Form�10-
Q�filed�with�the�SEC�on�November�8,�2017,�File�No.�001-32426)
Employment�Agreement�for�Scott�Phillips�dated�October�16,�2015�(incorporated�by�reference�to�Exhibit�10.29�to�our�Annual�Report�on�Form�10-K�filed�with
the�SEC�on�March�1,�2018,�File�No.�001-32426)
Noncompetition,�Nonsolicitation,�Confidentiality,�and�Inventions�Agreement�for�Scott�Phillips�dated�October�16,�2015�(incorporated�by�reference�to�Exhibit
10.30�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�March�1,�2018,�File�No.�001-32426)
First�Amendment�to�Employment�Agreement�for�Scott�Phillips�dated�November�1,�2017�(incorporated�by�reference�to�Exhibit�10.31�to�our�Annual�Report�on
Form�10-K�filed�with�the�SEC�on�March�1,�2018,�File�No.�001-32426)
First�Amendment�to�Noncompetition,�Nonsolicitation,�Confidentiality,�and�Inventions�Agreement�for�Scott�Phillips�dated�November�1,�2017�(incorporated�by
reference�to�Exhibit�10.32�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�March�1,�2018,�File�No.�001-32426)
Southern�Cross�WEX�2015-1�Trust�-�Receivables�Acquisition�and�Servicing�Agreement�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on
Form�10-Q�filed�with�the�SEC�on�July�31,�2015,�File�No.�001-32426)
Southern�Cross�WEX�2015-1�Trust�-�Guarantee�and�Indemnity�(incorporated�by�reference�to�Exhibit�10.2�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the
SEC�on�July�31,�2015,�File�No.�001-32426)
Southern�Cross�WEX�2015-1�Trust�General�Security�Agreement�(incorporated�by�reference�to�Exhibit�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the
SEC�on�July�31,�2015,�File�No.�001-32426)
Southern�Cross�WEX�2015-1�Trust�Class�A�Facility�Deed�(incorporated�by�reference�to�Exhibit�10.4�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC
on�July�31,�2015,�File�No.�001-32426)
Southern�Cross�WEX�2015-1�Trust�Class�B�Facility�Deed�(incorporated�by�reference�to�Exhibit�10.5�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC
on�July�31,�2015,�File�No.�001-32426)
Commitment�Letter,�dated�as�of�October�18,�2015,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�Merrill�Lynch,�Pierce,�Fenner�&�Smith�Incorporated,
SunTrust�Bank,�SunTrust�Robinson�Humphrey�and�MUFG�Union�Bank,�N.A�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K
filed�with�the�SEC�on�October�19,�2015,�File�No.�001-32426)
Consent�and�Amendment�Under�Credit�Agreement,�dated�as�of�February�27,�2019,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�the
lenders�party�thereto�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed
with�the�SEC�on�March�1,�2019,�File�No.�001-32426).
Form�of�Non-Employee�Director�Compensation�Plan�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on
November�8,�2019,�File�No.�001-32426)
Form�of�Non-Employee�Director�Equity�Ownership�Guideline�(incorporated�by�reference�to�Exhibit�10.2�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the
SEC�on�November�8,�2019,�File�No.�001-32426)
Commitment�Letter,�dated�as�of�January�24,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�and�BofA�Securities,�Inc.�(incorporated�by�reference�to
Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�24,�2020,�File�No.�001-32426)
140
10.52�
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
Amended�and�Restated�Commitment�Letter,�dated�as�of�February�10,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�BofA�Securities,�Inc.,�Citizens
Bank,�N.A.,�MUFG�Bank,�Ltd.,�SunTrust�Robinson�Humphrey,�Inc.,�Truist�Bank,�Wells�Fargo�Securities,�LLC,�Wells�Fargo�Bank,�N.A.,�Bank�of�Montreal,
BMO�Capital�Markets�Corp.,�Santander�Bank,�N.A.,�KeyBank�National�Association,�KeyBanc�Capital�Markets�Inc.,�Regions�Capital�Markets,�a�division�of
Regions�Bank,�Deutsche�Bank�AG�Cayman�Islands�Branch,�Deutsche�Bank�AG�New�York�Branch,�Deutsche�Bank�Securities�Inc.�and�Fifth�Third�Bank,
National�Association�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�February�13,�2020,�File�No.�001-
32426)
Second�Amended�and�Restated�Commitment�Letter,�dated�as�of�June�26,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�BofA�Securities,�Inc.,
Citizens�Bank,�N.A.,�MUFG�Bank,�Ltd.,�Sun�Trust�Robinson�Humphrey,�Inc.,�Truist�Bank,�Wells�Fargo�Securities,�LLC,�Wells�Fargo�Bank,�N.A.,�Bank�of
Montreal,�BMO�Capital�Markets�Corp.,�Santander�Bank,�N.A.,�KeyBank�National�Association,�KeyBanc�Capital�Markets�Inc.,�Regions�Capital�Markets,�a
division�of�Regions�Bank,�Deutsche�Bank�AG�Cayman�Islands�Branch,�Deutsche�Bank�AG�New�York�Branch,�Deutsche�Bank�Securities�Inc.�and�Fifth�Third
Bank,�National�Association�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�June�29,�2020,�File�No.�001-
32426)
Third�Amended�and�Restated�Commitment�Letter,�dated�as�of�August�20,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�BofA�Securities,�Inc.,
Citizens�Bank,�N.A.,�MUFG�Bank,�Ltd.,�Truist�Securities,�Inc.,�Truist�Bank,�Wells�Fargo�Securities,�LLC,�Wells�Fargo�Bank,�N.A.,�Bank�of�Montreal,�BMO
Capital�Markets�Corp.,�Santander�Bank,�N.A.,�KeyBank�National�Association,�KeyBanc�Capital�Markets�Inc.,�Regions�Capital�Markets,�a�division�of�Regions
Bank,�Deutsche�Bank�AG�Cayman�Islands�Branch,�Deutsche�Bank�AG�New�York�Branch,�Deutsche�Bank�Securities�Inc.�and�Fifth�Third�Bank,�National
Association�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�August�21,�2020,�File�No.�001-32426)
Ninth�Amendment�to�Credit�Agreement,�dated�as�of�June�26,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bank�of�America,
N.A.,�as�administrative�agent,�and�the�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on
June�29,�2010,�File�No.�001-32426)
Tenth�Amendment�to�Credit�Agreement,�dated�as�of�July�29,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�Tenth�Amendment�to�Credit
Agreement,�dated�as�of�July�29,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Mizuho�Bank,�Ltd.,�as�the�incremental
revolving�loan�lender,�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed
with�the�SEC�on�August�3,�2020,�File�No.�001-32426)�therein,�Mizuho�Bank,�Ltd.,�as�the�incremental�revolving�loan�lender,�and�Bank�of�America,�N.A.,�as
administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�August�3,�2020,�File�No.�001-32426)
Eleventh�Amendment�to�Credit�Agreement,�dated�as�of�August�20,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bank�of
America,�N.A.,�as�administrative�agent,�and�the�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current�Report�on�Form�8-K�filed�with
the�SEC�on�August�21,�2020,�File�No.�001-32426)
WEX�Inc.�Common�Stock�and�6.50%�Convertible�Senior�Notes�Due�2027�Purchase�Agreement,�dated�as�of�June�29,�2020,�by�and�between�WEX�Inc.�and�WP
Bronco�Holdings,�LLC�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2020,�File�No.�001-32426)
Registration�Rights�Agreement,�dated�as�of�July�1,�2020,�by�and�between�WEX�Inc.�and�WP�Bronco�Holdings,�LLC�(incorporated�by�reference�to�Exhibit�10.2
to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2020,�File�No.�001-32426)
Form�of�Letter�to�Holders�of�a�Performance-Based�Restricted�Stock�Unit�Agreement�(2020�Grant)�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current
Report�on�Form�8-K�filed�with�the�SEC�on�June�29,�2020,�File�No.�001-32426)
Form�of�Letter�to�Holders�of�a�Performance-Based�Restricted�Stock�Unit�Agreement�(2019�Grant)�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current
Report�on�Form�8-K�filed�with�the�SEC�on�June�29,�2020,�File�No.�001-32426)
Form�of�June�2020�Performance�Share�Unit�Agreement�(incorporated�by�reference�to�Exhibit�10.3�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on
June�29,�2020,�File�No.�001-32426)
Deed�of�Settlement,�made�as�of�December�15,�2020,�between�the�parties�listed�in�Schedule�A�thereto,�the�parties�listed�in�Schedule�B�thereto,�WEX�Inc.,�eNett
International�(Jersey)�Limited,�Optal�Limited,�Toro�Private�Holdings�I,�Ltd.�and�Optal�Limited,�in�its�capacity�as�trustee�of�the�PSP�Group�Employee�Share
Trust,�and�including�the�Amended�Purchase�Agreement�attached�as�Schedule�D�thereto�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on
Form�8-K�filed�with�the�SEC�on�December�15,�2020,�File�No.�001-32426).
†�*�10.64
Offer�Letter�dated�September�9,�2019�between�WEX�Inc.�and�Mr.�Deshaies.
†�*�10.65
Offer�Letter�dated�November�6,�2015�between�WEX�Inc.�and�Mr.�Dearborn.
*���21.1 ��
Subsidiaries�of�the�registrant
*���23.1 ��
Consent�of�Independent�Registered�Accounting�Firm�–�Deloitte�&�Touche�LLP
141
*���31.1 ��
Certification�of�Chief�Executive�Officer�of�WEX�INC.�pursuant�to�Rule�13a-14(a)�promulgated�under�the�Securities�Exchange�Act�of�1934,�as�amended
*���31.2 ��
Certification�of�Chief�Financial�Officer�of�WEX�INC.�pursuant�to�Rule�13a-14(a)�promulgated�under�the�Securities�Exchange�Act�of�1934,�as�amended
*���32.1
*���32.2
��
��
Certification�of�Chief�Executive�Officer�of�WEX�INC.�pursuant�to�Rule�13a-14(b)�promulgated�under�the�Securities�Exchange�Act�of�1934,�as�amended,
and�Section�1350�of�Chapter�63�of�Title�18�of�the�United�States�Code
Certification�of�Chief�Financial�Officer�of�WEX�INC.�pursuant�to�Rule�13a-14(b)�promulgated�under�the�Securities�Exchange�Act�of�1934,�as�amended,�and
Section�1350�of�Chapter�63�of�Title�18�of�the�United�States�Code
*���101.INS ��
Inline�XBRL�Instance�Document
*���101.SCH ��
Inline�XBRL�Taxonomy�Extension�Schema�Document
*���101.CAL ��
Inline�XBRL�Taxonomy�Calculation�Linkbase�Document
*���101.LAB ��
Inline�XBRL�Taxonomy�Label�Linkbase�Document
*���101.PRE ��
Inline�XBRL�Taxonomy�Presentation�Linkbase�Document
*���101.DEF ��
Inline�XBRL�Taxonomy�Extension�Definition�Linkbase�Document
*�104
Cover�Page�Interactive�Data�File�(formatted�as�Inline�XBRL�with�applicable�taxonomy�extension�information�contained�in�Exhibits�101)
*
†
Filed�with�this�report.
Denotes�a�management�contract�or�compensatory�plan�or�arrangement�required�to�be�filed�as�an�exhibit�pursuant�to�Item�15(b)�of�this�Form�10-K.
Pursuant�to�the�requirements�of�Section�13�or�15(d)�of�the�Securities�Exchange�Act�of�1934,�the�Registrant�has�duly�caused�this�report�to�be�signed�on�its�behalf�by
the�undersigned,�thereunto�duly�authorized.
�
SIGNATURES
�
March�1,�2021
WEX�INC.
�
By:
/s/��Roberto�Simon�������������������������������������������������
Roberto�Simon
Chief�Financial�Officer�(principal�financial�officer�and�principal
accounting�officer)
142
Pursuant�to�the�requirements�of�the�Securities�Exchange�Act�of�1934,�this�Report�has�been�signed�below�by�the�following�persons�on�behalf�of�the�Registrant�and�in
the�capacities�and�on�the�dates�indicated.
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
March�1,�2021
/s/��Melissa�D.�Smith
Melissa�D.�Smith
President,�Chief�Executive�Officer�and�Chair
(principal�executive�officer)
/s/��Roberto�Simon
Roberto�Simon
Chief�Financial�Officer
(principal�financial�and�accounting�officer)
/s/��Jack�A.�VanWoerkom
Jack�A.�VanWoerkom
Vice�Chairman�and�Lead�Director
/s/�John�E.�Bachman
John�E.�Bachman
Director
/s/��Daniel�Callahan
Daniel�Callahan
Director
/s/��Shikhar�Ghosh
Shikhar�Ghosh
Director
/s/��James�Groch
James�Groch
Director
/s/��James�C.�Neary
James�C.�Neary
Director
/s/�Stephen�Smith
Stephen�Smith
Director
/s/��Susan�Sobbott
Susan�Sobbott
Director
/s/��Regina�O.�Sommer
Regina�O.�Sommer
Director
��
��
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��
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143
DIRECTORS
MELISSA D. SMITH
Chair and
Chief Executive Officer, WEX
JACK VANWOERKOM
Vice Chairman and
Lead Director, WEX
Former Executive Vice President and
General Counsel, The Home Depot
JOHN (JEB) E. BACHMAN
Former Partner, PwC
DANIEL (DON) CALLAHAN
Former Global Head of Operations and
Technology, Citigroup
SHIKHAR GHOSH
Professor, Harvard Business School
JAMES (JIM) GROCH
Former Global Group President and
Chief Investment Officer,
CBRE Group, Inc
CORPORATE HEADQUARTERS
WEX
1 Hancock Street
Portland, ME 04101
(207) 773-8171
Email: newsroom@wexinc.com
www.wexinc.com
TRANSFER AGENT
American Stock Transfer
and Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
(800) 937-5449
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
(617) 437-2000
JAMES NEARY
Managing Director, Warburg Pincus
JOEL (JAY) DEARBORN
President, Corporate Payments
STEPHEN (STEVE) SMITH
President and Chief Executive Officer,
L.L.Bean
ROBERT DESHAIES
President, Health
SUSAN SOBBOTT
Former President of Global Commercial
Services, American Express
REGINA O. SOMMER
Financial and Business Consultant
EXECUTIVE OFFICERS
MELISSA D. SMITH
Chair and
Chief Executive Officer
DAVID COOPER
Chief Technology Officer
ANN (ANNIE) DREW
Chief Risk and Compliance Officer
SCOTT PHILLIPS
President, Global Fleet
HILARY A. RAPKIN
Chief Legal Officer
ROBERTO SIMON
Chief Financial Officer
MELANIE TINTO
Chief Human Resources Officer
ATTORNEYS
Wilmer Cutler Pickering Hale
and Dorr LLP
60 State Street
Boston, MA 02109
(617) 526-6000
STOCKHOLDERS’ MEETING
Date: June 4, 2021
Time: 8:00 a.m. ET
Location:
Virtual meeting details to be provided
in Notice and Proxy Statement
TICKER SYMBOL
NYSE: WEX
INVESTOR RELATIONS
Steve Elder
Senior Vice President, Global Investor Relations
(207) 523-7769
Steve.Elder@wexinc.com
FORM 10-K
A copy of the Company’s Form 10-K,
filed with the Securities and Exchange
Commission, is available without charge
upon written request to: WEX
Investor Relations, 1 Hancock Street
Portland, ME 04101; by calling
(866) 230-1633; or by emailing
investors@wexinc.com.
P W E R I N G
THROUGH PAYMENTS
1 hanc ock str eet / por tla nd, ma ine 04101 / (207) 773.8171
newsroom@wexinc.com / www.wexinc.com
2 0 2 0 A N N U A L R E P O R T