WEX Inc.

The stable outlook over the next 12 months reflects our expectation that WEX will sustain leverage of 5.0x-6.5x. Our outlook also considers the company's modest market position and adequate liquidity, as well as our expectation for continued, albeit slower, growth in revenue and EBITDA over the next 12 months. We could lower the rating over the next 12 months if we expect net debt to EBITDA to rise above 6.5x or EBITDA coverage of interest to fall below 6.0x on a sustained basis. Large debt-financed acquisitions that meaningfully increase debt or deplete surplus cash could also lead to a downgrade. Over time, we could raise the rating if the company maintains its market position, sustains EBITDA interest coverage well above

...Our rating on WEX Inc. reflects the company's strong operating performance and large portfolio of high-quality securities, balanced by high gross debt. WEX's performance has sharply rebounded since COVID-19-related lows in 2020. The company posted revenue growth of 18.6%, 27.0%, and 8.4% in 2021, 2022, and 2023 respectively, with its S&P Global Ratings-adjusted EBITDA more than doubling to $1.2 billion for the rolling 12 months ended June 30, 2024, from $538.4 million in 2020. Balancing S&P Global Ratings' view of WEX's strong performance is the large increase in deposit-based funding on the company's balance sheet. We include WEX's on-balance-sheet deposits--used to fund its fleet receivables and growing investment portfolio--in our gross debt calculation. We think WEX's expanding investment portfolio may help offset interest rate risk associated with the company's debt. WEX's short-term deposit liabilities amounted to about $4.3 billion as of June 30, 2024. The bulk of these (about $3.3...

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