Wex Inc. announced its succession plan today, naming Melissa Smith, a 16-year employee of Wex, as president of the company. She will take over as CEO in January 2014.
"While looking for a successor with leadership capabilities, everywhere possible she's been stepping up," says Michael Dubyak, current CEO of Wex.
Smith, 44, was previously chief financial officer in charge of operations and president of the Americas. Beginning in January she will continue to be president, take over as CEO and have a seat on the board of directors.
Dubyak, 62, will assume the newly created role of executive chairman. He's stepping down after 15 years as CEO and 27 years with the company.
Although Dubyak says the company has been contemplating succession planning for some time, Janney Capital Markets analysts Thomas McCrohan and Leonard DeProspo said in a research note that the news was surprising.
Smith took an interim role on the international side of the business, driving the virtual card program strategy, all while handling the Americas, which accounts for 95% of the business, says Dubyak.
Expanding the virtual card program globally is a key strategy for Wex for the rest of 2013. The company has been working with online travel players in Australia, and recently announced partnerships in Brazil, including buying 51% interest in UNIK SA. Last year it acquired CorporatePay Ltd. in the U.K.
"We've done the research and know where our current partners are looking to expand … and we want to be in those markets for them," Dubyak says.
But because of a temporary slow-down in this online travel segment, McCrohan and DeProspo maintain a neutral rating on the company. As the company expands outside the U.S., the situation will resolve this year, they write in their report. Wex posted better than anticipated 1Q results, they say.
Its net income in the first quarter rose 24% to $28.7 million from the same period a year earlier. Total revenue increased by 18% from to $165.4 million in the first quarter.
"It's a really great time in the company; we thrive on change," Smith says. "Right now we're poised for continued growth. With the virtual card program it's exciting to think about the global prospects."
About a third of the business volume is recurring outside the U.S. "I'll be making sure that we're building on the foundation that's already been set," says Smith.
Wex will lower guidance and in turn see revenue reduction in the coming quarters because of Visa Inc. and MasterCard Corp.'s move to reduce rates for merchants by 10 basis points for eight months, Dubyak says. The guidance also reflects lower gas prices, he says.