Good morning. My name is Dana and I will be your conference operator today. At this time, I would like to welcome everyone to the WEX Incorporated fourth quarter 2013 financial results conference call. (Operator Instructions) I would now like to turn the conference over to Vice President, Investor Relations and Treasurer, Micky Thomas. Please go ahead.

Thank you, Dana. Good morning. With me today is our new CEO and President, Melissa Smith; and our CFO Steve Elder. The press release we issued earlier this morning is posted in the Investor Relations section of our website at wexinc.com. A copy of the release has also been included in an 8-K we submitted to the SEC. As a reminder, we will be discussing a non-GAAP metric, specifically, adjusted net income, during our call. For the last year's fourth quarter, adjusted net income excludes unrealized losses on fuel price derivatives, amortization of acquired intangible assets, the adjustments attributed to non-controlling interests, a non-cash adjustments related to the tax receivable agreement, and the tax impact of these items. Please see Exhibit 1 included in the press release for an explanation and reconciliation of adjusted net income to GAAP net income. I would also like to remind you that we will discuss forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed on our press release; and the risk factors identified in our Annual Report filed on Form 10-K, filed with the SEC on March 1, 2013 and subsequent filings. While we may update forward-looking statements in the future, we disclaim any obligations to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. With that, I'll turn the call over to Melissa Smith.

Good morning, everyone, and thanks for joining us. Before discussing our fourth quarter and fiscal 2013 achievements, I want to take a moment to thanks Mike Dubyak for his years of dedication and leadership at WEX. I look forward to working with Mike in his new role as Executive Chairman of the Board. Earlier today, WEX reported strong results for the fourth quarter and full year 2013. For the fourth quarter, both revenue and adjusted net income came in ahead of our expectations with revenue increasing 8% over the prior year to $182.3 million and adjusted net income per share increased 6% to $1.13 per diluted share. Better than expected results were driven by acceleration in our fleet volumes, virtual card volumes and late fee revenues. The fourth quarter represents the continuation of noteworthy momentum we experienced throughout the year. I am pleased to report that for the full year 2013, revenue increased 15% to $717.5 million and adjusted net income increased 10% to $173.9 million. Our Fleet Payment segment performed well in 2013, continuing its track record of consistent growth. During 2013, we added approximately 700,000 new fleet cards globally. Additionally, we continue to benefit from revenue in cost synergies associated with the Fleet One acquisition. We hit all of our key integration milestones and the integration will be completed by yearend, which is ahead of our original schedule. We ended 2013 on a high note, announcing our intention to acquire ExxonMobil's Esso commercial card portfolio. Esso will be a key strategic addition that we anticipate will build out our fleet presence in Europe, which has been a critical element to our international expansion strategy. I will touch on this further in just a moment. Our virtual business continues to generate strong growth, both domestically and internationally. In fact,…

Thank you, Melissa. For the fourth quarter of 2013, we reported total revenue of $182.3 million, an increase of $13.3 million from the prior year period and above the high-end of our guidance range of $173 million to $178 million. This performance compared to our guidance was driven primarily by volume growth, late fees and slightly favorable fuel prices. Net income attributed to common shareholders on a GAAP basis for the fourth quarter was $34.5 million or $0.88 per diluted share. Our non-GAAP adjusted net income increased to $44.1 million or $1.13 per diluted share. This compares to our guidance of $1.04 to $1.12 per diluted share and $1.07 per diluted share reported in Q4 last year on an adjusted net income basis. For the full year 2013, revenue increased 15% to $717.5 million from $623.2 million in 2012. On a GAAP basis, net income was $3.82 per diluted share in 2013 compared to $2.48 per diluted share in 2012. On an adjusted net income basis, earnings increased 10% to $4.45 per share from $4.06 per share last year. Taking a look at some key performance metrics for the quarter, consolidated payment processing transactions increased 4% quarter-over-quarter, which was ahead of four expectation. For the full year, consolidated payment processing transactions increased 12% over the prior year. About half of the total increase for the year was due to the acquisition of Fleet One, while the other half represented new fleet win. Consolidated net payment processing rate for Q4 2013 was 1.4%, which was flat compared to Q4 2012 and to the third quarter of 2013. However, a drop in fuel prices versus last year caused payment processing revenue in the Fleet segment to come in flat to last year. Finance fee revenue in the Fleet segment increased $2.3 million…

(Operator Instructions) Your first question comes from the line of Bob Napoli with William Blair.

Lot's of information there on Melissa's first conference call. Just a question on the growth guidance, I guess the long-term, not guidance, but targets, I guess if you would. Putting out those targets that certainly are very attractive and challenging, what prompted that? And maybe a little bit of thought behind what would be organic versus M&A related?

Yes, I think that actually the whole thing fits together. When we're talking about the business, and as I laid out how we think about the business strategically, the financials are an element to that, and so we just wanted to make sure that we're tying all those pieces together.

And then maybe some color, is the organic revenue growth in mid-to-high single digits and then M&A on top of that?

Essentially I'm trying to talk about this on the long-term basis. And they are intended to be long-term growth rates that I'm shooting for and using to drive the business. And I know that in some years we'll fall outside of those ranges, but it's intentionally including both organic and inorganic activity.

Then just on the virtual card business. Now the very strong growth that you saw this quarter following the further acceleration from last quarter, what is embedded within your guidance for the volume growth, and I guess the take rate or the net interchange rate for 2014? And how of that acceleration is international versus your key U.S. partners?

There is pieces of it, of all the things that you mentioned in there. We are expecting another very strong year in the volume growth, both domestically, internationally. The investment that we made last year to go to the locally issued countries is paying off. We saw an acceleration in the fourth quarter of the total volumes that were issued locally. The customers that Melissa mentioned in her section, like Globalia and Grupo Transhotel are ramping up. We have others that have signed and are ramping up as well that we haven't mentioned. And we will continue to benefit from just the domestic OTAs as well. I think the one thing that I do want to throw out there, so not everyone is surprised is we've been saying all year along that we have benefited from these incentives that we have received, that are customer-specific and that will go away and that will drop our interchange rate next year. So when that comes in the first quarter, I don't want anyone to be surprised by that. But we are expecting another very strong internet segment.

We expected that, just trying to find out kind of how much it would drop?

This year, I'd say it befitted us somewhere in the range of 7 basis points to 8 basis points.

And so you have that 7 basis points to 8 basis points, plus the interchange settlement on top of that and with the card settlement?

Yes.

Last question just on Europe and strategy, with Esso having decided and obviously selling their business to you and outsourcing to you, is this potentially open up? You obviously have been working on Europe for a long time. It's been a key strategy of yours as you mentioned, but does this first major oil company going to an outsource model? Has it accelerated conversation with other oil companies, either in Europe or in other markets?

I think that the marketplace itself is in its time for change, and the announcement with Exxon is a great example of that. There is definitely more interest in the marketplace, and I would say that those processes tend to be very formal and long-term in nature. So with a caveat surrounding it, but yes, I do think it is starting interest in the market.

Your next question comes from the line of Tien-tsin Huang.

I guess, just a macro question. How does the environment feel? Maybe you can just summarize the key countries, go into little bit more detail, what the expectations are for '14 on the macro side?

You've had it at the very beginning of that.

And I was just asking, just thinking about same-store growth, and we saw the vehicle count growth, but I'm thinking about just same-store macro, the key countries, anything to call out or just anything to consider?

For us, the level of business that we have in some of those countries is still relatively small, so it shouldn't affect the overall growth trajectory of the business at this point in time, anything we're adding is for the most part new, with the exception of the Australian marketplace. And that isn't something that we're as concerned with. In the U.S. we're seeing the markets relatively flat. It's maybe down 1%, but really when we thought about our guidance, we're thinking about the markets is generally flat. Any growth that we're projecting is coming from adding new business.

And then on the payment processing metric, I think it was up 4%. Steve, I think you said that was in line, mostly one anniversaried. What should we be thinking of the range for 2014 and has the CITGO business cut over yet and when would that happen?

So the 4% growth in transactions, that is a reported number. I would point out that on the schedule and the press release, each transaction was a little bit bigger and this is probably my own personal theory, but as fuel prices were dropping, we think people kind of waited an extra day or two to buy their fuel. So each transaction got a little bit bigger. And if you look at the number of gallons of fuel purchased, it's actually was very much in line with what we saw in Q2, Q3. So going forward and getting back to the rest of your question, I mean we're looking at those kind of mid-single digit growth rates on that segment in general, I'd say. As Melissa said, it's all organic and mostly in the U.S., but that's kind of where we're expecting it to be.

You asked about CITGO, we actually have cut the cards for them that would be included in the growth that we had in 2013, but we're actually just starting to see the migration of volume and we expect that to be done by the end of the first quarter.

So that will roll in, sort of fully ramped in market by end of Q1?

Yes.

Just last one, just I heard the comments on M&A and acquisitions, but just in general capacity for M&A, both financially and from a resource standpoint, are there any new rules we should consider for or criteria for deal accretion, dilution, size, things like that?

I'd say, in terms of capacity we've got about $300 million cash on the balance sheet. A lot of that is at our bank subsidiary and not really available for acquisitions. But at the corporate level, there's well over $100 million in cash that's available and we have the revolving credit facility, which is $700 million, which is untapped at this point, so plenty of capacity to do more deals.

And in terms of how we're thinking about transactions, sort of thinking about it in risk adjusted returns, I don't think that's necessarily new. Just the part that I added on top of that is the concept that we're looking at the opportunity cost, such to the extent that we're spending time and effort on something that it needs to have a big enough return holistically. And that gets to your question on human capital, part of why we extended the group and added people in from the external basis, just to make sure that we have the capacity to do everything that we want to do. And so that's an element of it. But also we're looking at transactions, just thinking through how does that tie up our resources, that we consider to be very valuable, and is that the best use of our time allocation.

Your next question comes from the line of Phil Stiller with Citi.

Just wanted to round up the discussion on M&A. It seems like most of the focus is on the fleet side. Can you talk about the types of acquisitions there? Should we expect something similar to the Esso deal that you guys recently signed? And I guess, does that lengthened conversion impact your ability to do deals in the meantime before that deal is converted?

And I would think of the Esso deal as very unique in respect that it's a piece that's acquisition, but there is a piece that's also an investment. And so if it was a pure acquisition, the financial aspects would look different. You wouldn't see as much dilution as we have because of the investment period. So you've got to slip that on the side, and say, that's kind of an unusual transaction. When we're looking at the rest of the marketplace, the reason why we said, it's predominantly free dish just because it's a more mature market, so when you do a global scan, there are more market opportunities in terms of just of size of capital deployment in the fleet industry. We are also looking at other markets, specifically the travel market, it is something that we'd be interested in. The benefit to us is that it's still a relatively new marketplace, and so that doesn't lead to lots of acquisition opportunities, it leads us more to organic growth. But it is an area that we'll continue to look at. And so capital allocations, we largely slated towards fleet just because of the dynamics in the marketplace. And in terms of types of acquisitions, we've always said, we'd be interested in the things that consolidate the market, that give us scale, that we think are adventitious to the customer base. That we're interested in things that will extend our product offerings and we talked about the fleet Telematics offerings, is an area of data analytics, it's something that we're looking at in the marketplace. And so those are two focuses of ours.

One question on the sales pipeline. You guys had a lot of good signings in both segments in 2013? Can you characterize for us how the sales pipeline looks going into 2014 for both segments?

Sure. I mean, if you look across, and I'd say, all parts of our business, we spent quite a bit of time focusing on what's in the sales pipeline. And so we feel confident going into 2014 of what we've got for new business adds. Some of that is just ramping of existing customer signings. So as a piece of it where we have visibility where we know at least sign a customer, we just need to see the ramp. And then on top of that what we intend to sign during the course of 2014 and we're feeling pretty good about that.

Last one from me, just a model question. I think, Steve, you may have referenced higher late fee rates in the fleet segment. Was that something where you guys changed the structure of your contracts that occurred in the fourth quarter? I am just wondering if that flows forward into '14.

It is something where we changed the structure of the contract. We actually did it in the third quarter. And typically what happens when you do that is people get to notice that their rate is changing and so they pay you very much on time for few months and then they kind of slip into old habits again. So we kind of got the benefit in the fourth quarter, but it will be continuing in the 2014.

Your next question comes from the line of Sanjay Sakhrani with KBW.

I guess, my first question is on the targets you mentioned for 2014, and specific to some of the goals you mentioned on scale. I guess, when we think about the progression of operating margins going forward, can you just dimensionalize how you're thinking about it going forward over the short-term and long-term?

Yes, actually, I'd start over the long-term. When I gave out the long-term targets using the margin expansion, because you're seeing earnings growth faster than revenue growth. So that's an element of how we're thinking about the business on the longer-term basis, and recognizing the fact that '14 is being affected pretty heavily by the investments and the ExxonMobil European business. So I think we are doing a lot of work foundationally to make sure that we can reach those longer-term targets. We factored that into the guidance that we gave out for '14. That we know that it's affected by the investments with ExxonMobil Europe, but we do expect to see that occur over the next several years and that's part of what we considered in long-term targets.

And then when we think about the payment solutions purchase volume growth trajectory, Steve. I mean is it safe to assume that we're probably going to be above that 20% kind of goal that you guys have as we look out to 2014, because it seems like there's some pretty decent momentum from all the stuff you talked about?

I think there is great momentum. I think, we would say, that the target is still around that 20% mark. We have been above that in the last couple of years. As you get bigger, it gets a little harder every year. So I think we'd stick with that 20% target though.

Is that what's contemplated in your guidance?

Pretty close to that. Yes.

And then the tax rate, how should we think about the in move up of this specific quarter, I know it was FX driven, but assuming FX impacts remain a little bit of a headwind, should we expect the tax rates to be higher as well?

Yes. I mean it can move around a little bit. I mean there is a corky thing in our Australian business where change in the Australian dollar versus the Great British Pound affected our tax rate. It's not something that typically happens to us. So it sticks with the 36% to 37% is what we're shooting for and what we expect, but you can't get these little corky things. Even last year, it was 37.2% for the full year, so not too far off even with the little blip at the end of the year.

I guess my final question is on Expedia, because I know they're big Other Payment Solutions partner. I guess there has been some chatter that they might be moving towards the agency model, and I was just wondering if you guys had seen anything or heard anything about that and whether or not you guys thought it was an impact at some point?

I don't know whether I'd want a comment specifically on Expedia. I would say, in general, there is a loop in the U.S. marketplace for both. And I think we are looking at deploying both as options. So when we thought about the growth that we're going to have in the business, we've contemplated what that impact would be overall to the business and included that in our guidance.

Your next question comes from the line of David Togut with Evercore.

Question on ExxonMobil's Esso card portfolio that you're buying, is that an EMV-enabled portfolio or is that still magstripe?

Still magstripe, David.

And do you have any plans to convert that to EMV-card portfolio?

Well, it's something that we're working with them on. And it's still going to be their point of sale, but we're doing the authorization on. So it will depend on their interest in adoption.

And then what would be the change in economics if you move that portfolio to EMV-enabled?

It typically doesn't have a significant change in the [indiscernible], the question really is the cost of conversion for them.

And just a quick final question, do you have any plans to introduce a direct universal card in Europe for your fleets?

Actually when we were contemplating entering the European market, the private label offering if is that piece of how we intended to enter the markets for these relationships. But longer-term we would like to see a direct universal product there.

Do you have any time table on introducing that product?

We don't. I mean this is something we talk about in the marketplace for a number of years. And so it really depends on the degree of willingness for people to get label-free data within that marketplace, but we are definitely at the door asking the question and highly interested in it.

Your next question comes from the line of Tom McCrohan with Janney.

I just have two questions. One is on the investment spending. So given the $10 million to $30 million after tax fall out on the Esso European expansion, so the overall level of investment spending this year is the way to think about it? The OTA investment you made in 2013, whatever the level that was continues this year and on top of that you're adding kind of the European investment?

I would say, we do still plan to invest in the OTA marketplace and primarily that's around expanding the geographies that recover in the issuing and settling capability. It will probably be less than what we spent in 2013. The other big lever in there is integration cost with the Fleet One acquisition with over a year ago now. So that will come down as well. And then as you said, as you pointed out we'll add in the Exxon European costs.

So it's just a trajectory overall, Steve, like investment spending out of put and takes is. Are we in a year or two of a multi-year initiative to globalize the company? Just trying to get a sense for, this next year is going to be more investment spending or about the same level? Just trying to understand where we are in the cycle?

The cycle is obviously is higher in 2014 than '13 without any question. What goes on beyond 2014 and '15, '16, whatever, we'll get through the conversion of the Exxon portfolio in Europe. That's going to come again with some cost in 2015. I don't think we're ready to quantify those just yet, but we're going to be converting systems. We're going to be running those systems, based on how we do things in the U.S. and making the processes more efficient. So it's a lot of time between now and then. And I don't think we're quite ready to quantify exactly what we'll be spending there. But there will be definitely some dollar spent.

And its sounds like you're already getting some returns, the money spent in 2013 on the OTA side?

And definitely some of the integration side with Fleet One as well.

And then last question just on the Asia-Pacific, Melissa, you mentioned in your prepared remarks, further expansion in that territory, talking about Hong Kong, Singapore, I think Thailand. Is there any other country that you're targeting now?

We are primarily targeting Southeast Asia in that marketplace. And we talked about entering that in the virtual card product offering last year, which we have done and will continue to expand that. Hong Kong is another country, as an example, that we're expanding into. But then on top of that, since we've already established the ability to do business there on the virtual card products, we're looking at expanding into fleet as well.

Your next question comes from the line of Mike Grondahl with Piper Jaffray.

In the OTA kind of international rollout, are there any countries to call out that have done a lot better than maybe what you anticipated or been even a little bit slower?

I'd actually say on the whole, we've been pretty consistent with what we had expected. We spent a lot of money that we had expected and the timing of the revenue has been a little bit later than we expected, and for those two things, I never doubt. But in general, Thailand, it was a pretty big are focus of ours, but it's important to our existing customers, and so that's been pretty big. Australia, actually, has been very significant for us in terms of getting return for the amount works that we've done there. So I would say those two regions standout right now. Within Europe though, we've had some pretty big signings toward the end of the year, which we are looking at is ramping into 2014.

And then, the healthcare opportunity that you mentioned, is that something you see beginning to have a little more traction in '14 or '15 or what's sort of a timing there?

We presumed very little traction in our guidance for 2014. We want to wait until we actually see more adoptions, just so we factor that in. So I think of that as a longer-term play for us. We are really testing our theories in within the healthcare market right now to make sure that we fully understand where we can ramp up the value prop, seeking increased adoption. I think of that as a longer-term play for us. And I said it took us five years in fleet, and probably one more in another same fleet and five with in travel. So it's an area that we are spending time and effort, and making sure that we're looking at, because we think that there is a big enough market, and there is similar enough dynamics that they could be significant for us. So we're not planning on that this year.

Your next question comes from the line of Tim Willi with Wells Fargo.

Couple of questions here. Steve, just going back to guidance, just want to clarify a couple of things. Number one, is there any, and if you said this, I apologize, but is there any assumption about headwinds from the Australian dollar, any other currencies we should think about in that guidance range around revenue or earnings?

We're presuming that OpEx rate basically stay in line with where they are.

Second, can you remind us what the incremental, I guess, the stock comp that you are adding in '14 versus '13, is that around $0.15 or $0.16, can you clarify that again?

Last year it was above $0.15 of EPS.

Is that generally what you're approximating for this year as well?

I think that's going to be dependent on what ends up happening at the board level, and what kind of stock grants are made typically towards the end of the first quarter. So we'll see.

And then just last question I had I guess around the business and some of the strategic stuff you talked about, Melissa. Are there any other I guess adjacent markets out, so you talked about all virtual card, talked about fleets and product or geographic expansion. Are there any other big markets whether it be, you've got a small PayCard business, as an example, or other types of payment type products that end up with themselves would be a distinctive business unit, that you potentially see out there in terms of acquisitions and a part of those growth goals you laid out or it really all sort of be on the back of fleet and virtual card?

Well, I think there is two pieces of that. But on the short-term, we do continue to grow the PayCard offerings. We have opened in United States, we actually have a business in Brazil as well, where we have a 51% ownership stake. And so when we classify those businesses in the benefits category, so when we start to think about it as an industry, we think of it as employee benefits. So that's an area that we're continuing to expand. It's had very significant growth, but also a low base, so that business has been growing over 50%. And so we expect that to continue to grow in 2014. It hasn't been an area that we have put a lot of capital allocation in terms of M&A activity. And it is a place we'll continue to explore, but it just hasn't been a place so far that we've put a significant capital in. I think it's more geared in the way that we think about it and some of the emerging markets potentially, which is why we've seen pretty good success in Brazil.

And then just one more if I could. In terms of sort of same customer fueling, I think you got into this maybe a little bit, Steve, earlier in the Q&A. But I guess that metric is sort have been bouncing around, give or take flat year-over-year in terms of same customer activity. Was there anything that you noticed in 4Q relative to sort of the prior quarters experienced with customer fueling and sort of seeing customer growth?

It was relatively flat. It's a little bit up in construction year-over-year. And then a lot of other things that were down that were offsetting it. But in our mind it really hasn't had much of an impact in terms of their performance, not helping us. So I don't think it's really hurting us either.

You have a follow-up question from Bob Napoli with William Blair.

A question on your Telematics product, you mentioned growth of 45% last quarter, you announced that you signed the GSA, a big contract with Telematics. Is your Telematics strategy adjusting, I mean I think you've kind of worked on an outsourced model with a number of different Telematics providers, has that changed or is that an area you would look to acquire?

So today, we've actually operated largely through reseller. And longer-term, our ability to integrate those data elements and really aggregate all the information together is something that's important to us. So, yes, we would be interested in something that really grounds at that product offering on a longer-term basis.

And the growth rate of that business, where are those revenues with line item?

It's mostly in the account servicing line. It's a monthly fee, where we make most of the revenue. And then depending on how it split out, either the hardware or the other revenue is where the cost of the actual device shows up in revenue.

Can you give us a feel for how much revenue you're generating there?

About $15 million last year.

And that doesn't include the GSA I would assume?

Correct.

And then jut on Brazil, I mean it seems like you have some good momentum in Brazil, but if you can give an update on your strategy there? I know you were close to being able to issue, I know you're able to issue I think cards out there with the various pieces of your business with the fleet business, the PayCard business and the travel business. What's the outlook for Brazil over the next few years?

The company that we're working within Brazil has done a number of things, it's called Unique. And they've expanded their products offerings to include a series of prepaid offerings. And that came in association with their MasterCard issuing essence to work with. So they've developed and rounded at the product side. They are actually having early success in selling those products within the marketplace. They did a small acquisition at the end of last year to pick up ability to operate in the freight marketplace down there, which gives us an over-the-road offering. So we've really been focused on rounding out the products, and '14 will be a year of selling those enhanced products as well growing the existing base of the business. So I'd say, yes, it's been a good acquisition for us.

And just last question, I was looking out at the polar vortex in Chicago, and just wondered, I don't normally hate weather as an excuse for anything, but are you seeing effects on your business this year January and into February from the weather? I'd imagine you must be seeing some of that kind of build into your guidance?

I mean, obviously, we're pretty confident in our January volumes, given that we know them. So all built into the guidance, yes.

But you haven't seen much of an effect from the weather, you don't feel like you've been much affected?

Not really much at all. Usually its just very, very big storms like hurricane Sandy or something like that that really impact us.

I would now like to turn the call over to Vice President, Investor Relations and Treasurer, Mickey Thomas, for closing remarks.

Thank you all for joining us. That concludes our call. Thanks again. Thank you, operator, as well.