WEX
#It's both.
If you look across the businesses ---+ and part of what I like about this quarter is you can actually really see the organic growth coming through in each of the lines of business that we have.
And that's driven largely by a lot of work that's going on the front end just to progress business through the pipeline.
So I'd say that it continues to look really good.
And as you get into this part of the year, you certainly have much more visibility into what's going to play out towards the end of the year.
So we feel good about that.
In terms of the M&A pipeline, there's always going to be big ---+ there's a lot of opportunity.
For us, we're obviously spending our focus delevering the Business, but we will continue to look at M&A opportunities, regardless of what's happening within the marketplace because we want to make sure that we are participating.
I will take those in reverse.
If you look at the Travel segment, the biggest impact that happened with Travel ---+ we talked about this ---+ was we had one large customer that signed a new contract in April of last year.
So that's anniversarying in.
And at the same time we also had some customers hit higher tier levels, just because the spend volume has been really strong ---+ stronger than what we anticipated.
So we've got the impact of both of those things affecting this quarter.
And they will ---+ if you're looking for more of a forward view, we think that the impact of that is reflected in this quarter.
And that's what you would expect to see as the baseline going forward.
A piece of that is the hybrid contracts that we have in the business.
So as fuel prices have dropped, it makes the rate go up, and a piece of it is just blended mix across the portfolio.
So there's nothing really that's novel that's happening.
<UNK>, hi, this is <UNK>.
At the top of our range, EPS guidance, if you remember, was $4.10 in February.
We have move it, you are correct, to $4.37 for the full-year 2016.
As you also said, domestic [PPG] for February was $1.97, and now we are raising it to $2.14.
We are maintaining in the 2016 [meet for] guidance, the revenue is about 10% growth and 20% on earnings, assuming constant currencies and also the matched fuel prices and no impact on hedging.
What I would tell you also is that there are a lot of puts and takes, and that the majority of the EPS increase is due to changing domestic fuel prices, as you mentioned.
But we have a portion of the first quarter [profitability], and so more that is more anticipated contraction in the spreads and volume in the US.
Thank you.
Yes, same-store sales were down 4%.
It's actually a little bit worse sequentially than it was in the fourth quarter.
And I would say similar trends, though, when you really get into it ---+ it's largely driven by oil and gas, a little bit more affected by large fleets than smaller fleets.
Transportation ---+ actually still down.
And in construction ---+ is a little bit softer this quarter than it has been.
So if there was a standout from quarter to quarter, construction is probably it.
It's not quite as strong as it had been in the previous couple of quarters.
I would think of this as the normalized rate.
So what we reported in the first quarter is something you would see as the baseline as you go through the year.
The pieces that affect the rate are mixed.
As transactions occur geographically, there's obviously significant differences on rates.
But there's also typically corresponding differences in rebates.
While it has an impact, it's not as large as you might think.
The other thing that affects it is customer blend, and as a customer hits their different spend levels, then that can affect the overall rate.
Generally, I think that you're going to see a little bit of a downtick in Q2 and Q3 because there's just a seasonal mix to travel.
But you shouldn't see the same type of decline you saw from Q4 to Q1.
Again, think of this ---+ what we're reporting this quarter ---+ as more of the baseline going forward.
Not to get too customer specific, the larger customers in our portfolio had some pretty significant spend volume increases.
And that's a piece of it.
And that travel happens everywhere.
It's truly global.
And then we've had a customer ramping in Europe.
It's more than one, but the one that's notable enough that it's actually affecting the volume mix.
That's a trend that we are expecting to continue as well.
As I mentioned, the win with Ctrip, which we're really excited about, is still in the very early stages and it's kind of too early to know what the ramp is going to look like.
But it's a customer we're obviously really excited about having into the mix and could affect the future results.
The 9% positive is payment processing transactions.
I would bridge it more ---+ if you look at the total transaction number, it's probably a better bridge.
And then you add the negative 4% to that to think about how we're actually growing organically.
That's what ---+ we still believe it's going to be breakeven this year.
On an operating income basis, and we're progressing well on that front.
The key pieces to that, that we've talked about, are continue to grow the portfolio, making sure that the pricing is set at market.
And then working on operational efficiencies, and the team in Europe is doing a great job of progressing on all of those fronts.
I'd say it's very much on track, if not ahead of where we expected it to be.
We had said that on $0.10 of fuel price movement would translate into $0.16 of EPS.
That was unhedged, so the underlying presumption is you're looking at the Business unhedged.
We also had said that's domestic US only.
And so the pieces that affect fuel price movements ---+ you still can get some movement in Australia; you just can't translate it to the NYMEX.
And in addition to that, in Europe you've got the counter to that with ---+ you've got movement in spreads.
And then so in this quarter, when we're giving an update on guidance, <UNK> talked about the fact that we're expecting fuel prices to go from $1.97, which we gave on the last call, to $2.14, based on the NYMEX curve on the full year.
So you're getting the benefit of that, but we're also getting ---+ we're anticipating that's going to have some effect on fuel price spreads in Europe.
That's where we're kind of buffering those two things together when we're looking at our full-year guidance number.
I think that has been a trend in the US.
We have signed ---+ when you think about transaction processing, for us, it's largely ---+ it's just a technology play where people are outsourcing the technology.
And over time, we tend to build confidence in the fact that they can move from just the technology to some of the other areas of expertise that we have around ---+ the whole host of products from a credit perspective all the way up to ---+ in some cases, we're doing sales.
We're doing that more and more, where we're actually the front end for a lot of the oil companies, because we have an inherent competency in that area.
So I would say that it has been a trend we've seen over the years.
And it is something that we ---+ when we look at a business, we're interested in doing the whole host of services.
And obviously from our perspective, the relationship is deeper when you're doing more than just processing the transaction.
I don't know that I would generalize; I think in this case, that was true.
It depends largely on the portfolio and how it's been managed historically.
It's something that we were able to do, and it was part of how we thought about the portfolio.
It was a piece of how ---+ when we talked about moving it to operating margin breakeven, it was a piece of the plan in doing that all along.
I put that in the longer-term category in my mind.
There's nothing really new to talk about.
There's still RFPs that are in process and kind of making their way through the path.
I think it has more to do with the ---+ the mix isn't really the right word ---+ but some of the contract renewals that we've gone through, that mix of moving one other portfolio into ---+ from that transaction processing relationship to payment processing relationship.
All of those things are coming together that are affecting the rate in this quarter.
So it's not really anything that's new other than a normal process that we're going through and renegotiating with our customer base.
There's about $70 billion worth of spend, if you look at US, Europe, Asia PAC and LatAm.
So we're about 28% of that, so if you kind of do the math on our spend, comparatively.
You asked about the merchant model versus agency model, so we're playing heavily in the merchant model, which is where we get involved in making the payment on behalf of the online travel agency, as opposed to the consumer making the payment directly to the hotel.
And typically, the spend volume is roughly half and half.
I haven't seen anything that's really updated that, nor have we seen trends that would make me think that's changed much.
Yes.
Mathematically, that's probably right.
Yes, we had set long-term growth targets of revenue 10% to 15%, and earnings 15% to 20%.
And we actually, with the exception of fuel prices, I'd say we've largely been on track with that.
When we think about the Business over the longer term, part of what we've been trying to do is diversify the Business away from the fuel price exposure.
We thought hedging was an okay strategy for a shorter period of time.
But over the longer term, the intention was to increase the other parts of the Business in areas that we thought we had expertise that would also reduce that exposure.
And so I would still stand by the numbers, as we think about the Business on a longer-term basis that we're seeing that represent in the quarter.
If you take out the impact of fuel prices and FX, we grew 12% top line and 16% on an ANI basis, again, adjusted for fuel prices and FX.
Underlying the Business, you're still seeing that level of strength.
We've gotten to the point where we're starting to see fuel prices, hopefully, lift again.
But regardless of whether that happens or not, we're making sure that we're gearing the Business on a longer-term basis so that there isn't as much sensitivity longer term to fuel prices.
You were right in using the US calculation, but as a contra to what we're picking up in the US.
You're saying that $0.27 is largely based on the fuel price changes happening in US fuel prices.
We're expecting to see some contraction in spreads in Europe.
So we're buffering some of the expectations we're going to have in fuel prices, because what typically happens is you get a little bit of an offset to that.
And at the same time, we're pushing through the piece of favorability we saw in the first quarter that wasn't timing related.
There's a little bit that was timing, but the majority of it, we actually are including in increasing the guidance.
You asked about Ctrip, and I think it's kind of early for us in that stage to really know what that's going to ramp to be.
Something like that, we typically are anticipating a ramp of new signings when we give out guidance.
Something that's larger like that, and unpredictable ---+ we won't necessarily factor in until we have better insight into what that's going to look like.
If you were to normalize ---+ <UNK> had said this earlier ---+ but if you normalize for those factors, the mid-point of our revenue guidance is a little bit more than 10% and mid-point of our earnings guidance is a little ahead of 20%.
It's a little bit better than what we had said on the last call, but pretty comparable.
Thank you, Raquel, and thank you, everyone, for joining us this quarter.
We look forward to talking to you next quarter.
