WEX Inc

Previous wording

The following table presents a summarized view of selected results for the three and six months ended June 30, 2024, shown comparative to the prior year periods. Net cash (used for) provided by operating activities and adjusted free cash flow are presented on a year to-date basis, and shown comparative to the prior year to-date. The other key metric included below provides enhanced information and data underlying our financial results. A recurring, more extensive list of key performance indicators is included by segment within the Results of Operations section later in this MD&A.

Current wording

The following table presents a summarized view of selected results for the three and nine months ended September 30, 2024, shown comparative to the prior year periods. Net cash (used for) provided by operating activities and adjusted free cash flow are presented on a year to-date basis, and shown comparative to the prior year to-date. The other key metric included below provides enhanced information and data underlying our financial results. A recurring, more extensive list of key performance indicators is included by segment within the Results of Operations section later in this MD&A.

Previous wording

(2)Total volume across the Company, which includes purchases on WEX-issued accounts as well as purchases issued by others using a WEX platform.

Current wording

(2)Total volume across the Company includes purchases on WEX-issued accounts as well as purchases issued by others using a WEX platform.

Previous wording

(1)Lower domestic fuel prices decreased revenue by $5.4 million and $25.9 million for the three and six months ended June 30, 2024.

Current wording

(1)Lower domestic fuel prices decreased revenue by $21.2 million and $47.2 million for the three and nine months ended September 30, 2024.

Previous wording

(2)Our net payment processing rate for the three and six months ended June 30, 2024 has primarily benefited from higher rates earned from merchant contract renewals at favorable terms, lower average domestic fuel prices, and the impact of interest rate escalator clauses contained in various merchant contracts, partly offset by negative European fuel price spreads.

Current wording

(2)Our net payment processing rate for the three and nine months ended September 30, 2024 has benefited from lower average domestic fuel prices and higher rates earned from merchant contract renewals at favorable terms.

Previous wording

Total Mobility revenue increased $19.4 million for the second quarter of 2024 and increased $16.0 million for the first half of 2024 as compared to the same periods in the prior year. The increases resulted from higher rates earned under favorable contract renewals, greater revenues as a result of the Payzer Acquisition, and the impact of interest rate escalator clauses contained in various merchant contracts.

Current wording

Total Mobility revenue increased $7.1 million for the third quarter of 2024 and increased $23.0 million for the nine months ended September 30, 2024 as compared to the same periods in the prior year. The net increases resulted primarily from higher rates earned under favorable contract renewals and the impact of the Payzer Acquisition. Partly offsetting these increases were lower average domestic fuel prices and a charge for operational issues impacting certain finance fee calculations.

Previous wording

Finance income increased $1.0 million for the second quarter of 2024 and decreased $8.7 million for the first half of 2024 as compared to the same periods in the prior year. The decrease in the first half of 2024 finance income compared to the prior year period was primarily due to a decline in the number of late fee instances, reflective of the tighter credit policies we put in place during mid-2023, offset in part by an increase in contractual late fee rates charged. 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 the three and six months ended June 30, 2024 and 2023.

Current wording

Finance income decreased $7.4 million for the third quarter of 2024 and decreased $16.0 million for the nine months ended September 30, 2024 as compared to the same periods in the prior year. The decrease in finance income for the three and nine months ended September 30, 2024 compared to the prior year periods was driven by a decline in the number of late fee instances, reflective of the tighter credit policies we put in place during mid-2023, and by lower domestic fuel prices, offset in part by increases in contractual late fee rates charged during the three and nine months ended September 30, 2024, as compared to the same periods in the 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 the three and nine months ended September 30, 2024 and 2023.

Previous wording

The primary source of factoring fee revenue is calculated as a negotiated percentage fee of the receivable balance that we purchase. Factoring fee revenue for the second quarter and first half of 2024 remained consistent with that of the same periods in the prior year.

Current wording

The primary source of factoring fee revenue is calculated as a negotiated percentage fee of the receivable balance that we purchase. Factoring fee revenue for the third quarter and nine months ended September 30, 2024 remained consistent with that of the same periods in the prior year.

Previous wording

(2)Segment adjusted operating income margin is calculated by dividing segment adjusted operating income by segment revenue. The three and six months ended June 30, 2024 saw a decrease in segment adjusted operating income margin from the prior year comparable periods, primarily reflecting the decline in average fuel prices.

Current wording

(2)Segment adjusted operating income margin is calculated by dividing segment adjusted operating income by segment revenue.

Previous wording

Provision for credit losses, which includes estimates for both credit and fraud losses, decreased by $2.9 million and $27.0 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year. Stabilization in the over-the-road trucking market, tighter credit policies put in place to reduce losses, and lower than expected charge-offs from macroeconomic factors have all contributed to the reduction in the provision year over year. We generally measure our loss performance by calculating fuel-related losses as a percentage of total fuel expenditures on payment processing transactions. This metric for provision for credit losses was 13.5 and 14.4 basis points of fuel expenditures for the three and six months ended June 30, 2024, respectively. For the three and six months ended June 30, 2023, provision for credit losses was 15.4 and 23.6 basis points of fuel expenditures, respectively.

Current wording

Provision for credit losses, which includes estimates for both credit and fraud losses, decreased $4.4 million and $31.3 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year. Stabilization in the over-the-road trucking market, tighter credit policies put in place to reduce losses, and lower than expected charge-offs from macroeconomic factors have all contributed to the reduction in the provision for the three and nine months ended September 30, 2024, as compared to the same periods in the prior year. We generally measure our loss performance by calculating fuel-related losses as a percentage of total fuel expenditures on payment processing transactions. This metric for provision for credit losses was 5.8 and 11.6 basis points of fuel expenditures for the three and nine months ended September 30, 2024, respectively. For the three and nine months ended September 30, 2023, provision for credit losses was 6.8 and 17.8 basis points of fuel expenditures, respectively.

Previous wording

Operating interest increased $5.8 million for the second quarter of 2024 and increased $14.8 million for the first half of 2024 as compared to the same periods in the prior year, primarily reflective of higher interest rates on operating debt balances in support of working capital needs.

Current wording

Operating interest increased $3.9 million for the third quarter of 2024 and increased $18.7 million for the nine months ended September 30, 2024 as compared to the same periods in the prior year, primarily reflective of higher interest rates on operating debt balances in support of working capital needs.

Previous wording

Depreciation and amortization increased $3.6 million and $6.5 million for the three and six months ended June 30, 2024, respectively, compared to the prior year comparable periods due in part to increased capital expenditures to support growth, and the amortization of intangible assets obtained as part of the Payzer Acquisition.

Current wording

Depreciation and amortization increased $4.5 million and $11.0 million for the three and nine months ended September 30, 2024, respectively, compared to the prior year comparable periods due in part to the amortization of intangible assets obtained as part of the Payzer Acquisition and increased capital expenditures to support growth.

Previous wording

Sales and marketing expenses increased $10.3 million for the second quarter of 2024 and increased $15.3 million for the first half of 2024 as compared to the same periods in the prior year primarily due to increased employee costs as a result of the Payzer Acquisition along with an increase in costs targeted at driving growth.

Current wording

Sales and marketing expenses increased $14.6 million for the nine months ended September 30, 2024 as compared to the same periods in the prior year primarily due to increased employee costs as a result of the Payzer Acquisition along with an increase in costs targeted at driving growth.

Previous wording

(1)Our net interchange rate has decreased during the three and six months ended June 30, 2024 compared to the same periods of the prior year, primarily due to changes in customer mix.

Current wording

(1)Our net interchange rate has increased during the third quarter of 2024 and decreased during the nine months ended September 30, 2024 compared to the same periods of the prior year, primarily due to changes in customer mix.

Previous wording

Total Corporate Payments revenue increased $12.2 million for the second quarter of 2024 and increased $29.9 million for the first half of 2024 as compared to the same periods in the prior year. These increases were primarily driven by volume growth in both travel and corporate payments. Other revenue increased for the first half of 2024 compared to the prior year period due to higher interest revenue earned during the first quarter on restricted cash balances as a result of a rise in interest rates and average balances coinciding with increased travel volumes.

Current wording

Total Corporate Payments revenue decreased $8.3 million for the third quarter of 2024 and increased $21.6 million for the nine months ended September 30, 2024 as compared to the same periods in the prior year. The decrease during the third quarter of 2024 as compared to the same period of the prior year was due primarily to a reduction in purchase volume. The increase for the nine months ended September 30, 2024, as compared to the same period of the prior year, was primarily driven by greater purchase volumes in both travel and corporate payments and higher interest revenue earned during the first quarter on restricted cash balances as a result of a rise in interest rates and average balances.

Previous wording

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 during the three and six months ended June 30, 2024 and 2023.

Current wording

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 during the three and nine months ended September 30, 2024 and 2023.

Previous wording

As a result of owning all of our technology and issuing capabilities, our Corporate Payments segment has a highly scalable and relatively fixed cost base resulting in largely comparable expenses year to year. As a result, the increase in revenues during the three and six months ended June 30, 2024, as compared to the prior year comparable periods, has also contributed to the increased operating income, segment adjusted operating income and segment adjusted operating income margin for the three and six months ended June 30, 2024. Instances in which our expenses for the second quarter and first half of 2024 did not remain comparable to those of the comparable 2023 periods are described hereafter.

Current wording

As a result of owning all of our technology and issuing capabilities, our Corporate Payments segment has a highly scalable and relatively fixed cost base resulting in largely comparable expenses year to year. As a result, changes in revenue similarly impact operating income, segment adjusted operating income and segment adjusted operating income margin. Instances in which our expenses for the third quarter and nine months ended September 30, 2024 did not remain comparable to those of the comparable 2023 periods are described hereafter.

Previous wording

General and administrative expenses decreased $5.6 million and $7.3 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year due primarily to higher professional services expense in the prior year periods in support of increasing operating efficiencies.

Current wording

General and administrative expenses decreased $1.5 million and $8.8 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year due primarily to higher professional services expense in the prior year periods.

Previous wording

Total Benefits revenue increased $20.6 million for the second quarter of 2024 and increased $46.9 million for the first half of 2024 as compared to the same periods in the prior year. A rise in average HSA deposit balances held by WEX Bank and interest rates earned on the investment of such balances, as reflected within other revenue, coupled with increased revenues due to the Ascensus acquisition, substantially contributed to the increase in total revenues for the three and six months ended June 30, 2024 as compared to the prior year comparable periods.

Current wording

Total Benefits revenue increased $15.4 million for the third quarter of 2024 and increased $62.3 million for the nine months ended September 30, 2024 as compared to the same periods in the prior year. A rise in average HSA deposit balances held by WEX Bank and interest rates earned on the investment of such balances, as reflected within other revenue, coupled with increased revenues due to the Ascensus Acquisition, substantially contributed to the increase in total revenues for the three and nine months ended September 30, 2024 as compared to the prior year comparable periods.

Previous wording

(2)Segment adjusted operating income margin is calculated by dividing segment adjusted operating income by segment revenue. Revenue earned on HSA assets is highly accretive to earnings and is the primary driver of the increase in segment adjusted operating income margin for the three and six months ended June 30, 2024 as compared to the prior year comparable periods.

Current wording

(2)Segment adjusted operating income margin is calculated by dividing segment adjusted operating income by segment revenue. Revenue earned on HSA assets is highly accretive to earnings and is the primary driver of the increase in segment adjusted operating income margin for the three and nine months ended September 30, 2024 as compared to the prior year comparable periods.

Previous wording

Processing costs increased by $10.4 million for the second quarter of 2024 and increased $21.2 million for the first half of 2024 as compared to the same periods in the prior year, primarily due to increased employee costs as a result of the Ascensus Acquisition along with higher technology costs incurred in support of volume growth.

Current wording

Processing costs increased $17.5 million for the nine months ended September 30, 2024 as compared to the same period in the prior year, primarily due to increased employee costs as a result of the Ascensus Acquisition, along with higher technology costs incurred in support of volume growth.

Previous wording

Service fees increased by $2.8 million for the second quarter of 2024 and increased $5.4 million for the first half of 2024, as compared with the same periods in the prior year, in conjunction with the associated growth in revenues and in part due to the Ascensus Acquisition.

Current wording

Service fees increased by $2.5 million for the third quarter of 2024 and increased $7.9 million for the nine months ended September 30, 2024, as compared with the same periods in the prior year, in conjunction with the associated growth in revenues.

Previous wording

General and administrative expense decreased $3.9 million for the second quarter of 2024 and decreased $4.5 million for the first half of 2024 as compared to the same periods in the prior year, due primarily to higher professional services expense in the prior year periods in support of increasing operating efficiencies.

Current wording

General and administrative expense decreased $4.7 million for the third quarter of 2024 and decreased $9.3 million for the nine months ended September 30, 2024 as compared to the same periods in the prior year, due primarily to higher professional services expense in the prior year periods.

Previous wording

Depreciation and amortization increased $4.5 million for the second quarter of 2024 and increased $9.1 million for the first half of 2024 as compared to the prior year periods, primarily due to the amortization of intangible assets obtained as part of the Ascensus Acquisition.

Current wording

Depreciation and amortization increased $3.4 million for the third quarter of 2024 and increased $12.5 million for the nine months ended September 30, 2024 as compared to the prior year periods, primarily due to the amortization of intangible assets obtained as part of the Ascensus Acquisition.

Previous wording

During the three months ended June 30, 2024, unallocated corporate expenses increased $4.9 million as compared to the same period of the prior year primarily due to increased headcount and related compensation expense, including stock compensation.

Current wording

During the three months ended September 30, 2024, unallocated corporate expenses decreased $5.4 million as compared to the same period of the prior year due primarily to a reduction in variable compensation and higher professional costs incurred in the prior year period in connection with the Ascensus Acquisition.

Previous wording

During the three and six months ended June 30, 2023, the Company benefited from net gains on interest rate swap financing instruments, which reduced financing interest expense, net of financial instruments. Increased borrowings under our Revolving Credit Facility, coupled with higher interest rates, offset in part by a reduction in interest due to the repurchase and cancellation of our Convertible Notes during the third quarter of 2023, further contributed to the increase in expense during the three and six months ended June 30, 2024, as compared to the same periods in the prior year.

Current wording

During the three and nine months ended September 30, 2023, the Company benefited from net gains on interest rate swap financing instruments. In addition, increased borrowings under our Revolving Credit Facility, coupled with higher interest rates, offset in part by a reduction in interest due to the repurchase and cancellation of our Convertible Notes during the third quarter of 2023, further contributed to the increase in expense during the three and nine months ended September 30, 2024, as compared to the same periods in the prior year.

Previous wording

Our foreign currency exchange exposure is primarily related to the remeasurement of our cash, receivable and payable balances, including intercompany transactions that are denominated in foreign currencies. The loss incurred during the first half of 2024 resulted from the weakening of certain foreign currencies in which we transact, including the Euro, and the Australian and Canadian dollars, relative to the U.S. dollar.

Current wording

Our foreign currency exchange exposure is primarily related to the remeasurement of our cash, receivable and payable balances, including intercompany transactions that are denominated in foreign currencies. Losses incurred during the nine months ended September 30, 2024 resulted from the weakening of certain foreign currencies in which we transact, including the Euro, and the Australian and Canadian dollars, relative to the U.S. dollar over the course of the year. However, during the three months ended September 30, 2024, we experienced a gain attributable to the rebound of certain foreign currencies, particularly the Euro and Canadian dollar, relative to the U.S. dollar.

Previous wording

The increase in income tax provision for the three and six months ended June 30 2024 as compared to the prior year comparable periods is due primarily to an increase in the Company’s effective tax rates. The Company’s effective tax rates for the three and six months ended June 30, 2024 were 27.5 percent and 27.2 percent, respectively, compared to 19.1 percent and 24.4 percent for the three and six months ended June 30, 2023, respectively. See Part I – Item 1 – Note 14, Income Taxes, to our condensed consolidated financial statements for more information regarding the drivers behind our effective tax rates.

Current wording

The increase in income tax provision for the three and nine months ended September 30, 2024 as compared to the prior year comparable periods is due primarily to an increase in the Company’s taxable income, offset in part by a decrease in our effective tax rates. The Company’s effective tax rates for the three and nine months ended September 30, 2024 were 27.1 percent and 27.2 percent, respectively, compared to 58.6 percent and 30.2 percent for the three and nine months ended September 30, 2023, respectively. See Part I – Item 1 – Note 14, Income Taxes, to our condensed consolidated financial statements for more information regarding the drivers behind our effective tax rates.

Previous wording

Adjusted net income, which similarly excludes the impact of all items excluded in segment adjusted operating income except unallocated corporate expenses, further excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, debt issuance cost amortization, tax related items, and certain other non-operating items, as applicable depending on the period presented.

Current wording

Adjusted net income, which similarly excludes the impact of all items excluded in total segment adjusted operating income except unallocated corporate expenses, further excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, debt issuance cost amortization, tax related items, and certain other non-operating items, as applicable depending on the period presented.

Previous wording

•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;

Current wording

•Debt restructuring and debt issuance cost amortization, which for the three and nine months ended September 30, 2023 includes the loss on extinguishment of Convertible Notes, 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;

Previous wording

(1)The dilutive impact of the Convertible Notes was calculated under the ‘if-converted’ method for the periods through which they were outstanding. Under the ‘if-converted’ method, interest expense, net of tax, associated with our Convertible Notes of $3.8 million and $7.7 million was added back to adjusted net income for the three and six months ended June 30, 2023, respectively. For the three and six months ended June 30, 2023, 1.6 million shares of the Company’s common stock associated with the assumed conversion of the Convertible Notes (prior to repurchase and cancellation) was included in the calculation of adjusted net income per dilutive share as the effect of including such adjustments was dilutive. For further information about the Convertible Notes and their repurchase and cancellation, see Note 10, Financing and Other Debt. The total number of shares used in calculating adjusted net income per diluted share for the three and six months ended June 30, 2024 was 42.0 million and 42.2 million, respectively. The total number of shares used in calculating adjusted net income per diluted share for the three and six months ended June 30, 2023 was 44.9 million and 45.0 million, respectively.

Current wording

(1)The dilutive impact of the Convertible Notes was calculated under the ‘if-converted’ method for the periods through which they were outstanding. Under the ‘if-converted’ method, interest expense, net of tax, associated with our Convertible Notes of $1.8 million and $9.5 million was added back to adjusted net income for the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2023, 0.7 million and 1.3 million shares of the Company’s common stock associated with the assumed conversion of the Convertible Notes (prior to repurchase and cancellation) was included in the calculation of adjusted net income per dilutive share, respectively, as the effect of including such adjustments was dilutive. For further information about the Convertible Notes and their repurchase and cancellation, see Note 10, Financing and Other Debt. The total number of shares used in calculating adjusted net income per diluted share for the three and nine months ended September 30, 2024 was 40.8 million and 41.7 million, respectively. The total number of shares used in calculating adjusted net income per diluted share for the three and nine months ended September 30, 2023 was 44.1 million and 44.7 million, respectively.

Previous wording

The Company’s non-GAAP adjusted free cash flow is calculated as cash flows from operating activities, adjusted for net purchases of current investment securities, capital expenditures, net funding activity including the change in net deposits, net advances from the FHLB, and changes in borrowings under the BTFP and borrowed federal funds, and certain other adjustments which, for the six months ended June 30, 2024 and 2023, reflects an adjustment for contingent and deferred consideration paid to sellers in excess of acquisition-date fair value. Although non-GAAP adjusted free cash flow is not calculated in accordance with GAAP, WEX believes that adjusted free cash flow is a useful measure for investors to further evaluate our results of operations because (i) adjusted free cash flow indicates the level of cash generated by the operations of the business, which excludes consideration paid on acquisitions, after appropriate reinvestment for recurring investments in property, equipment and capitalized software that are required to operate the business; (ii) net funding activity includes fluctuations in deposits and other borrowings primarily used as part of our accounts receivable funding strategy; and (iii) purchases of current investment securities are made as a result of deposits gathered operationally. However, because adjusted free cash flow is a non-GAAP measure, it should not be considered as a substitute for, or superior to, operating cash flow as determined in accordance with GAAP. In addition, adjusted free cash flow as used by WEX may not be comparable to similarly titled measures employed by other companies.

Current wording

Although non-GAAP adjusted free cash flow is not calculated in accordance with GAAP, WEX believes that adjusted free cash flow is a useful measure for investors to further evaluate our results of operations because (i) adjusted free cash flow indicates the level of cash generated by the operations of the business, which excludes consideration paid on acquisitions, after appropriate reinvestment for recurring investments in property, equipment and capitalized software that are required to operate the business; (ii) net Funding Activity includes fluctuations in deposits and other borrowings primarily used as part of our accounts receivable funding strategy; (iii) purchases of current investment securities are made as a result of deposits gathered operationally; and (iv) WEX Bank cash balances may be increased or decreased for reasons other than matching operating activity. However, because adjusted free cash flow is a non-GAAP measure, it should not be considered as a substitute for, or superior to, operating cash flow as determined in accordance with GAAP. In addition, adjusted free cash flow as used by WEX may not be comparable to similarly titled measures employed by other companies.

Previous wording

We fund our business operations primarily via cash on hand, cash generated from operations, the issuance of deposits, and borrowings under our Amended and Restated Credit Agreement. As of June 30, 2024, we had cash and cash equivalents of $682.6 million, including Corporate Cash of $143.4 million, and remaining borrowing availability of $804.4 million under the Revolving Credit Facility along with access to various sources of funds, including uncommitted federal funds lines of credit from other banks.

Current wording

We fund our business operations primarily via cash on hand, cash generated from operations, the issuance of deposits, and borrowings under our Amended and Restated Credit Agreement. As of September 30, 2024, we had cash and cash equivalents of$535.4 million, including Corporate Cash of$123.2 million, and remaining borrowing availability of$606.3 million under the Revolving Credit Facility along with access to various sources of funds, including uncommitted federal funds lines of credit from other banks.

Previous wording

(1)During May 2024, the Company entered into the Fifth Amendment to the Amended and Restated Credit Agreement, which increased commitments under the Revolving Credit Facility to $1.6 billion, increased the size of the tranche A term loan facility to $900.0 million, repriced the applicable interest margin for the tranche A term loans and Revolving Credit Facility and extended the maturity date to May 2029 for both the tranche A term loans and Revolving Credit Facility. Under our Amended and Restated Credit Agreement, as of June 30, 2024 the Company had outstanding term loan principal borrowings of $2,283.9 million, borrowings of $756.3 million on the Revolving Credit Facility and letters of credit of $39.3 million drawn against the Revolving Credit Facility. See Part I – Item 1 – Note 10, Financing and Other Debt, to our condensed consolidated financial statements for more information regarding our Amended and Restated Credit Agreement.

Current wording

(1)During May 2024, the Company entered into the Fifth Amendment to the Amended and Restated Credit Agreement, which increased commitments under the Revolving Credit Facility to $1.6 billion, increased the size of the tranche A term loan facility to $900.0 million, repriced the applicable interest margin for the tranche A term loans and Revolving Credit Facility and extended the maturity date to May 2029 for both the tranche A term loans and Revolving Credit Facility. Under our Amended and Restated Credit Agreement, as of September 30, 2024 the Company had outstanding term loan principal borrowings of$2,269.3 million, borrowings of$954.3 million on the Revolving Credit Facility and letters of credit of$39.4 million drawn against the Revolving Credit Facility. See Part I – Item 1 – Note 10, Financing and Other Debt, to our condensed consolidated financial statements for more information regarding our Amended and Restated Credit Agreement.

Previous wording

(2)WEX Bank’s regulatory status enables it to raise capital to fund the Company’s working capital requirements by issuing deposits, subject to various regulatory capital requirements administered by the FDIC and the UDFI. Additionally, WEX Bank holds deposits for the benefit of WEX Inc.’s HSA customers subject to the terms of a deposit agreement. As of June 30, 2024, we had $4,288.8 million in total deposits. See Part I – Item 1 – Note 9, Deposits, to our condensed consolidated financial statements for more information regarding our deposits.

Current wording

(2)WEX Bank’s regulatory status enables it to raise capital to fund the Company’s working capital requirements by issuing deposits, subject to various regulatory capital requirements administered by the FDIC and the UDFI. Additionally, WEX Bank holds deposits for the benefit of WEX Inc.’s HSA customers subject to the terms of a deposit agreement. As of September 30, 2024, we had$4,461.5 million in total deposits. See Part I – Item 1 – Note 9, Deposits, to our condensed consolidated financial statements for more information regarding our deposits.

Previous wording

(3)The Company utilizes securitized debt agreements to finance a portion of our receivables, lower our cost of borrowing and more efficiently utilize capital. The Company had $100.4 million of securitized debt under these facilities as of June 30, 2024. We also utilize off-balance sheet factoring and securitization arrangements to sell certain of our accounts receivable to unrelated third-party financial institutions in order to accelerate the collection of the Company’s cash and reduce internal costs. Available capacity is dependent on the level of our trade accounts receivable eligible to be sold and the financial institutions’ willingness to purchase such receivables. However, the Company is not dependent on them to maintain its liquidity and capital resources. See Part I – Item 1 – Notes 10, Financing and Other Debt and 11, Off-Balance Sheet Arrangements, to our condensed consolidated financial statements for further information about the Company’s securitized debt and off-balance sheet arrangements.

Current wording

(3)The Company utilizes securitized debt agreements to finance a portion of our receivables, lower our cost of borrowing and more efficiently utilize capital. The Company had$96.5 million of securitized debt under these facilities as of September 30, 2024. We also utilize off-balance sheet factoring and securitization arrangements to sell certain of our accounts receivable to unrelated third-party financial institutions in order to accelerate the collection of the Company’s cash and reduce internal costs. Available capacity is dependent on the level of our trade accounts receivable eligible to be sold and the financial institutions’ willingness to purchase such receivables. However, the Company is not dependent on them to maintain its liquidity and capital resources. See Part I – Item 1 – Notes 10, Financing and Other Debt and 11, Off-Balance Sheet Arrangements, to our condensed consolidated financial statements for further information about the Company’s securitized debt and off-balance sheet arrangements.

Previous wording

(4)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. There was $27.0 million borrowed against these participation agreements as of June 30, 2024.

Current wording

(4)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. There was$57.2 million borrowed against these participation agreements as of September 30, 2024.

Previous wording

(5)WEX Bank borrows from short-term uncommitted federal funds lines of credit from time to time to supplement the financing of the Company’s accounts receivable. There were no outstanding borrowings under these lines of credit as of June 30, 2024. The Bank is also a member of the FHLB of Des Moines, which provides them collateralized short-term funding. As of June 30, 2024, WEX Bank had $300.0 million of advances outstanding, secured by $360.4 million of investment securities. See Part I – Item 1 – Note 10, Financing and Other Debt, to our condensed consolidated financial statements for more information regarding these facilities.

Current wording

(5)WEX Bank borrows from short-term uncommitted federal funds lines of credit from time to time to supplement the financing of the Company’s accounts receivable. There were $150.0 million of outstanding borrowings under these lines of credit as of September 30, 2024. The Bank is also a member of the FHLB of Des Moines, which provides them collateralized short-term funding. As of September 30, 2024, WEX Bank had$370.0 million of advances outstanding, secured by$420.5 million in fair value of investment securities. See Part I – Item 1 – Note 10, Financing and Other Debt, to our condensed consolidated financial statements for more information regarding these facilities.

Previous wording

On March 12, 2023, the Federal Reserve Board announced the BTFP, which provided liquidity to U.S. depository institutions. This program allowed bank loans for up to one year in length, collateralized by the par value of qualifying assets, including U.S. treasuries and mortgage-backed securities. Advances were available for a one-year period until March 11, 2024, at which time the BTFP ceased making new loans. WEX Bank accessed $760.0 million of temporary, low-cost capital under the BTFP as of June 30, 2024, pledging held investment securities with a par value of $790.6 million and market value of $699.2 million as collateral.

Current wording

On March 12, 2023, the Federal Reserve Board announced the BTFP, which provided liquidity to U.S. depository institutions. This program allowed bank loans for up to one year in length, collateralized by the par value of qualifying assets, including U.S. treasuries and mortgage-backed securities. Advances were available for a one-year period until March 11, 2024, at which time the BTFP ceased making new loans. WEX Bank accessed$710.0 million of temporary, low-cost capital under the BTFP as of September 30, 2024, pledging held investment securities with a par value of$721.1 million and market value of $663.4 million as collateral.

Previous wording

WEX Bank has the ability to borrow funds from the Federal Reserve Bank Discount Window. Borrowing limits fluctuate based on pledged assets, and as of June 30, 2024, the Company could borrow up to a maximum amount of $141.6 million. WEX Bank had no borrowings outstanding on this line of credit as of June 30, 2024. See Part I – Item 1 – Note 10, Financing and Other Debt, to our condensed consolidated financial statements for more information regarding this borrowing arrangement.

Current wording

WEX Bank has the ability to borrow funds from the Federal Reserve Bank Discount Window. Borrowing limits fluctuate based on pledged assets, and as of September 30, 2024, the Company could borrow up to a maximum amount of$167.0 million. WEX Bank had no borrowings outstanding on this line of credit as of September 30, 2024. See Part I – Item 1 – Note 10, Financing and Other Debt, to our condensed consolidated financial statements for more information regarding this borrowing arrangement.

Previous wording

(1)The Company’s non-GAAP adjusted free cash flow is calculated as cash flows from operating activities, adjusted for net purchases of current investment securities, capital expenditures, net funding activity including the change in net deposits, net advances from the FHLB, and changes in borrowings under the BTFP and borrowed federal funds, and certain other adjustments which, for the six months ended June 30, 2024, reflects an adjustment for contingent consideration paid to sellers in excess of acquisition-date fair value. For a reconciliation to net cash provided by operating activities, the most closely comparable GAAP measure, and the reasons why we believe this is an important financial measure, please refer to the section titled Non-GAAP Financial Measures That Supplement GAAP Measures.

Current wording

(1)The Company’s non-GAAP adjusted free cash flow has historically been calculated as cash flows from operating activities adjusted for net purchases of current investment securities, capital expenditures, net Funding Activity, and certain other adjustments including contingent and deferred consideration paid to sellers in excess of acquisition-date fair value. Such calculation has historically been based on the principle that the net activity in accounts receivable, accounts payable, and investment of HSA deposits would be offset by WEX Bank Funding Activity, however, due to the nature of WEX Bank cash balances, they may be increased or decreased for reasons other than matching operating activity. As a result, beginning with the third quarter of 2024, adjusted free cash flow also includes an adjustment to reflect the change in WEX Bank cash balances and the applicable prior periods have similarly been adjusted to conform to the current presentation. For an updated definition of adjusted free cash flow and a reconciliation to net cash provided by operating activities, the most closely comparable GAAP measure, and the reasons why we believe this is an important financial measure, please refer to the section titled Non-GAAP Financial Measures That Supplement GAAP Measures.