Good morning. My name is Lance, and I will be your conference operator today. At this time, I would like to welcome everyone to the WEX Second Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. Mr. Steve Elder, Senior Vice President of Global Investor Relations, you may begin your conference.
Thank you, operator, and good morning, everyone. With me today is Melissa Smith, our President and CEO and our CFO, Roberto Simon. The press release we issued earlier this morning and a slide deck to walk through our prepared remarks have been posted to the Investor Relations section of our website at wexinc.com. A copy of the release and the slide deck have also been included in 8 ks's we submitted to the SEC. As a reminder, we will be discussing non GAAP metrics, specifically adjusted net income attributable to shareholders, which we refer to as adjusted net income or ANI and adjusted operating income margin during our call.
Adjustments for this year's Q2 to arrive at these metrics include unrealized losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition related intangible amortization, other acquisition and divestiture related items, stock based compensation, other costs, debt restructuring and debt issuance cost amortization, ANI adjustments attributable to non controlling interests and certain tax related items as applicable. The company provides revenue guidance on a GAAP basis and earnings guidance on a non GAAP basis as we are unable to predict certain elements that are included in reported GAAP results. Please see Exhibit 1 of the press release for an explanation and reconciliation of adjusted net income to GAAP net income attributable to shareholders and Slide 18 of the deck for a reconciliation of GAAP operating income margin to adjusted operating income margin. 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 in our press release and the risk factors identified in our annual report on Form 10 ks filed with the SEC on March 18, 2019 and subsequent SEC 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 thank you for joining us today. I'm pleased to announce another quarter of strong execution and robust growth across all of our segments. We expect 2019 will be another significant milestone year as we capitalize on the extraordinary progress we've made in recent years and build on our strong foundation for sustainable growth. Our recent strategic acquisitions, significant new wins in the conversion of both the Shell and Chevron portfolios position us well to accelerate our growth and profitability throughout the remainder of the year and beyond. Turning to our 2nd quarter performance.
Revenue grew 19% compared to last year's Q2, reaching $441,800,000 driven by double digit growth in all of our segments. As expected, we have a number of moving parts that impacted our overall results this quarter, including approximately 10% revenue growth from acquisitions, partially offset by negative 2% from macro impacts of fuel prices and foreign exchange rates. The combination of these factors resulted in an 8% increase to our reported revenue growth rate. The remaining 11% of our growth in the quarter came through our existing partners and customers, the addition of new customer and partner contracts and very high retention rates. GAAP net income attributable to shareholders was $0.32 per diluted share and adjusted net income was $2.28 per diluted share, which is up 10% over the prior year.
This was a sequential improvement from Q1 and illustrates the benefit we're getting from the ramp of the Shell and Chevron portfolios, where we added costs in preparation for customer conversion. Turning to Slide 4. Our business is driven by our team's successful execution of our strategic pillars: growth, leading through superior technology, execution and continued emphasis on our culture. You'll note double digit growth across each of our segments volume metrics, which is illustrative of the business ramp we're continuing to generate. In addition, we're in various stages of integration with Noventis, Discovery Benefits and EG's Go Fuel Card European Card portfolio.
We remain steadfast in maintaining our momentum as we integrate these important acquisitions throughout the remainder of 2019 beyond. After a tremendous amount of work, I'm pleased to announce that the conversion of the Chevron portfolio is now complete and fully ramped. This follows the successful conversion of the Shell portfolio in the Q1. Both portfolios were converted as planned, achieving the objectives we set at the beginning of 2019. We have a proven track record of growing partner portfolios and looking forward, we have a great deal of opportunity to continue this trend.
We continue to differentiate WEX as an employer through our culture and commitment to invest in talent. We held our 4th Annual Leadership Summit this past quarter with a focus on leadership training and development. Events like this are increasingly important as we strive to retain and attract top talent and the summit provides a forum for our top global management to connect, ideate, collaborate and grow the business. Slide 5 highlights some of our significant new business wins and contract renewals in each of our segments. In Fleet Solutions, we generated revenue growth of 11%, driven by transaction volume and higher late fees, partially offset by lower fuel prices.
Approximately half of this growth is a result of the Shell and Chevron portfolios. Both of these portfolios will start contributing their full expected conversion volumes in Q3. We're now through the implementation process and we look forward to seeing margins improve through the rest of 2019. Earlier this year, we completed the acquisition of the European fuel card business from EG Group. The Go Fuel Card brand has approximately 200,000 cards in circulation in the Netherlands, France, Belgium and Luxembourg.
This acquisition will strengthen our existing presence in the European market. Turning to our new wins during the quarter. We signed Brock Group and PASCAL Truck Lines to new contracts and continuing our strong track record of renewals with Quanta Services, Rollins, Ferguson Enterprises and our private label partner Phillips 66. Shifting gears, Travel and Corporate Solutions performed very well once again during the Q2 with strong revenue growth of 21% year over year. We saw robust growth in this segment, including international markets and corporate payments, as well as contributions from the Noventis acquisition.
Purchase volume growth this quarter was 13%. Travel volumes were generally in line with our expectations with some impact from unfavorable FX rates. The North American corporate payments volume grew by an impressive 51%. This relates largely to our AP offering and emerging interest in this market segment. WEX continues to lead in the marketplace and is well positioned to benefit from sustained growth in corporate payments as the migration away from paper checks as a form of payment continues.
I'm very pleased with the progress we've made diversifying our business with our different channels and partners serving numerous sectors and industries. During the Q2, we signed new customers, including a large U. S. Healthcare chain and a Chinese online travel agency. In addition, we renewed our agreement with getaroom.com, Regence Financial and a large European OTA.
Lastly, our Health and Employee Benefits Solutions segment also generated very strong top line growth of 55% year over year. On a standalone basis, our U. S. Healthcare business saw revenue growth of 72% year over year and an 18% organic growth rate. The primary driver of our growth beyond the contributions of Discovery Benefits was the 17% increase year over year in the average number of SaaS accounts.
Also contributing to the quarterly growth were the addition and renewal of partners, including Medical Mutual and Surrency. WEX's U. S. Health division continues to capitalize on the momentum of the healthcare savings account market with growth of accounts and assets. We now have more than 5,500,000 HSA accounts on the WEX Health cloud, which is more than any other platform in the country.
We have benefited from a strong enrollment season and also in the performance of Discovery Benefits, which is trending up 23% in revenue. In addition, the integration of Discovery Benefits is progressing well and we remain confident that we'll achieve our previously mentioned $15,000,000 synergy goal on schedule. Staying on Slide 5, our industry leading products and technology continue to fuel our robust growth engine. Within fleet, this includes the smooth and complete integration of the Shell and Chevron portfolios onto our proprietary platform. In addition, we're continuously enhancing and expanding our offerings and developing new products and capabilities.
An example of this is expanding the coverage of our mobile payment app, Driver Dash to more than 25,000 fuel locations, including ExxonMobil and Shell. Our ClearView data analytics platform now has more than 8,000 users, including a rollout to ExxonMobil's fleet in Q2. These are great examples of how WEX keeps the customer at the center and improves our offerings to meet the customer's self-service needs. From an internal perspective, we're making investments in digital marketing optimization, which will allow us to broaden our digital marketing channels and provide us more dynamic ways to reach customers, including text, email and online. In tandem with our investments, we're seeing a significant increase in the percentage of new applications that we've now fully onboarded digitally.
Internationally, we've implemented the portfolio of Zenergy based in New Zealand and we're now live with Chevron in Hong Kong. In the travel and corporate payments segment, we optimized the user interface for mobile and are now able to manage customer credit lines on various schemes, platforms and legal entities. We're issuing Visa branded commercial virtual cards in the U. S. And UK, in U.
S. Dollars, pounds and euros with more currencies in the pipeline. By offering a global payment solution with Visa, we're providing our customers with even more choices and the ability to streamline and simplify transactions across the globe, boosting options for global merchant acceptance. In addition, we've also made great strides in migrating transaction volume onto our internal processing platform and have now increased our run rate volume to more than $2,800,000,000 annually. Our U.
S. Health business continues to be the industry leader in innovation. The June 2019 product release includes updates and enhancements that help improve the consumer experience, including CDH mobile app quick receipt upload and a new COBRA member portal open enrollment tool, as well as business intelligence enhancements to the administrator dashboard. In summary, I'm once again very pleased with our performance in the Q2 of 2019 as we build a stronger foundation for accelerating growth and profitability throughout this year and beyond. We're capitalizing on the extraordinary growth and progress we made in 2018 to deliver sustained growth in each of our core verticals, while continuing to successfully integrate our recent strategic acquisitions.
Our enhanced growth engine built for our strategic investments over the past few years will carry our momentum forward through the remainder of this year and beyond. I'll turn the call over to Roberto now. Roberto?
Good morning, everyone. As you've heard from Melissa, the financial results in the quarter were extremely positive and as expected. On a sequential basis, we more than doubled the revenue growth rate with excellent execution on the Shell and Chevron portfolio compressions as well as continued progress on the integration of the recent acquisitions DBI and Noventis. The performance was driven by double digit top line growth from each of the segments with notable strength in several areas. The Shell and Chevron portfolios in the fleet segment, the U.
S. Corporate Payments business and the U. S. Health Business. Each of them had significant growth versus prior year and surpassed projections for this quarter.
Additionally, the Noventis and Discovery Benefits acquisitions continue to meet expectations. From an earnings point of view, we continue to benefit from revenue growth, which was offset by the continued ramp up costs for Shell and Chevron, lower fuel prices than Q2 2018 and negative impact from FX rates. Now let's take a look at the results on Slide number 7. Total revenue for the 2nd quarter was $441,800,000 a 19% increase over the prior year. GAAP net income attributable to shareholders was 13,800,000 dollars Non GAAP adjusted net income was $99,600,000 or $2.28 per diluted share.
Slide 8 shows the overall revenue performance broken down by segments. As I just mentioned, total revenue growth was over 19%. Breaking it down, health and employee benefit solutions led the growth with 55%. Travel and Corporate Solutions posted a 21% increase. And finally, the Fleet segment had a strong 11% growth rate.
Now let's move to segment results, starting with Fleet on Slide number 9. The Fleet Solutions segment achieved $267,300,000 in revenue, an increase of 11% when compared to the prior year quarter. Payment processing revenue was up 7% and finance fee revenue was up 38%. As we expected, the net late fee rate was 54 basis points of extend volume this quarter compared to 38 basis points in Q2 2018. The increase in basis points was due to the Shell and Chevron portfolio conversions, a mix of new business wins and small rate increases.
We project the rate to grow for the second half of the year. The net payment processing rate was up 5 basis points from Q2 2018 due to higher diesel fuel spreads in the U. S, which we do not expect to continue and lower fuel prices. This was offset by the implementation of Shell and Chevron. Looking at the fleet revenue in detail, the highlights for the quarter include 18% growth in the legacy WEX fleet business fueled by Chevron Chevron, 11% growth in the over the road business driven by customer wins and very strong growth in the Asia Pac region.
Lower fuel prices and the tax rate reduced the revenue growth by almost 2 percentage points versus prior year. The average domestic fuel price in Q2 was $2.91 versus $3.02 in Q2 2018. Similar to last quarter, we continue to see positive trends, including solid organic transaction growth of 10%, at low attrition rates. Finally, in this segment, as Melissa noted, the Shell and Chevron implementations are fully completed, and we have already started to see the benefits of higher revenue growth. Looking forward, we expect this trend to continue in the 3rd and 4th quarters.
Turning to Travel and Corporate Payments segment on Slide number 10. Total revenue for the quarter increased 21% to 91,400,000 dollars due primarily to the U. S. Corporate payment business, lower scheme fees, which are now contra revenue and benefits from the Noventis acquisition, which added approximately $9,500,000 in revenue. We continue to see solid growth internationally in Asia Pac, Europe and Latin America.
In North America, the corporate payment business posted excellent revenue growth of 59%. Purchase volume issued by WEX reached $10,000,000,000 This equates to a 13% growth versus prior year. As expected, volume growth rates have more than doubled from Q1 2019, thanks to the ramp up of new business sign ins. Looking forward, we continue to expect full year volume to accelerate and grow double digits. To conclude this segment, the net interchange rate was 77 basis points, which was up 20 basis points from Q2 last year.
Similar to prior quarter, the increase in the rate is due to a combination of factors. First, the acquisition of Noventis. 2nd, a renegotiation of 1 of the OTA contracts that resulted in a move of revenue from other to payment processing. This move had no impact on the economics. 3rd, the strong performance in the U.
S. Corporate Payments business driven by growth in the partner channel. This also increased sales and marketing expense as part of the revenue recognition standard changes. And lastly, domestic and international spend mix within the travel business. Moving on to Slide 11.
For Health and Employee Benefit Solutions, revenue for the quarter was up an impressive 55% compared to last year. Within the U. S. Sales business, which includes the legacy business plus Discovery benefit, revenue grew 72%. Breaking this down, organic growth was a substantial 18% and the acquisition of Discovery Benefit added $25,000,000 in revenue.
The average number of sales accounts was up 17% relative to 2018, reflecting a robust enrollment season. We had a good start to the year. And as we progress, we expect the outsized performance to continue throughout 2019. In the long term, we believe the fundamentals are in place for our continued mid to high teens growth trajectory. From an integration point of view, in 2019, we expect to deliver $5,000,000 in run rate synergies from the Discovery Benefits acquisition and another $10,000,000 by the end of 2020.
Changing gears to expenses on Slide number 12. For the quarter, total cost of service expense was $160,800,000 up from $135,100,000 in Q2 last year. And total SG and A, depreciation and amortization expenses were 186,300,000 dollars which is up $51,000,000 versus 2018. Breaking down the line items within these categories, processing costs increased $22,000,000 primarily due to the DBI and Noventis acquisitions as well as service operations cost to handle the increased volumes. Service fees were essentially flat compared to prior year.
This was mainly due to higher costs in the Health and Employee Benefit Solutions segment and offset by moving volume to the internal transaction platform in the Travel and Corporate Payments segment. Credit loss on a consolidated basis was $14,800,000 Q2 last year was 13,600,000 dollars In the fleet segment, credit loss was 13.9 basis points of spend volume, which is slightly higher than the 11.2 basis points for the same period last year. Operating interest expense was $10,700,000 This is in line with expectations and was at $1,200,000 compared to 2018 due primarily to higher interest rate and volume growth. G and A expenses increased 28,700,000 dollars versus the prior year quarter. The biggest increases come from stock compensation, primarily due to the performance of the company, the Noventis and the Discovery Benefits acquisitions, debt related costs and M and A fees.
Lastly, the sales and marketing line increased $15,100,000 driven by partner rebates, the recent acquisitions and the Chevron Chevron costs. Now for taxes on Slide number 13. On a GAAP basis, the effective tax rate was 28% compared to 24.2% for the Q2 of 2018. On an ANI basis, the tax rate was 25.2 percent for the quarter and 25.1% for Q2 last year. Looking now to the balance sheet on Slide number 14.
We ended the quarter with $768,000,000 in cash, up from $541,000,000 as compared to the cash position at the end of Q4 2018. On the corporate cash side, the balance was 357,000,000 dollars This increase in the cash balance was used to fund the Goldfield card transaction on July 1. There were no borrowings under the company's revolving credit agreement at the end of Q2 between access to corporate cash and the available revolver, we had immediate access to more than $1,000,000,000 in capital. During the quarter, we increased term borrowings by $150,000,000 and improved the flexibility of the credit agreement, while also extending the maturity date from 2023 to 2026. We had an outstanding cash flow generation for the quarter and reduced the financing debt balance by nearly $50,000,000 At quarterend, we had a total balance of $2,800,000,000 on the revolving line of credit, term loans and notes.
The leverage ratio, as defined in the credit agreement, stands at approximately 3.8 times, up from 3.1 times at year end. As expected, the increase in leverage ratio from Q4 of last year reflects the acquisitions we completed during Q1 this year. We continue to expect to delever half a turn to 3 quarters of a turn per year. Finally, as of today, we have approximately 5% of the financing debt essentially at fixed rates. This largely mitigates the exposure to LIBOR rates.
To close out the call, let's move on to guidance on Slide number 15. The Q1 of the year set a solid foundation. The 2nd quarter marked the successful completion of the Chevron Chevron conversions as well as continued integration of the DBI and Noventis. Moving forward, we expect progressively better results in the second half of the year, driven by organic growth, the contributions from the Shell and Chevron portfolios and the recent acquisitions, which now include the Gold Fuel Card transaction. We also expect the macro environment to be weaker with lower fuel prices and unfavorable exchange rate when compared to last guidance.
The impact of these macro factors is approximately $0.15 of ANI EPS, and the updated full year guidance reflects these changes. For the full year, we expect revenue to be in the range of $1,720,000,000 to EUR 1,750,000,000 and adjusted net income in the range of EUR 399,000,000 to EUR410,000,000. Dollars On an EPS basis, we expect ANI to be in the range of $9.10 to $9.35 per diluted share. For the Q3, we expect to report revenue in the range of $455,000,000 to $465,000,000 and adjusted net income in the range of $110,000,000 to $115,000,000 On an EPS basis, we expect adjusted net income to be between $2.52 $2.62 per diluted share. Now let me walk you through a few more assumptions.
Exchange rates are based as of the end of June 2019. Domestic fuel prices will average $2.72 per gallon in the 3rd quarter and in the full year. The assumption for the U. S. Fuel prices is based on the NYMEX future price from last week.
The fleet credit loss will be between 13 18 basis points for the 3rd quarter and for the full year. The adjusted net income tax rate is expected to be between 24.5 percent 25.5 percent, both for the Q3 and the full year. And finally, we are assuming there are approximately 43,800,000 shares outstanding. To conclude, we are proud with the performance year to date and the projected guidance for the remainder of the year. And with that, operator, please open the line for questions.
Your first question comes from the line of Ramsey El Assalff from Barclays. Your line is now open.
Hi, guys, and thanks for taking my question. I wanted to ask you to give us a little more color on the outperformance on corporate Payments volume growth. Can you parse that out for us in terms of underlying industry verticals or products or any other incremental drivers there would be
helpful. Sure, and good morning.
Good morning.
A couple
of things I'd say on that front. One of the things that we've talked about over the last few calls is the diversification that we've seen in that part of the business. So it's now gotten to the point where about 40% of the revenue is coming outside of travel. And as a result, you're seeing really good lift in some of these new products that we're in. So we saw we talked about having 59% revenue up in U.
S. Corporate payments. We also performed really well in travel in Europe. We were up 35% on a same basis, meaning excluding the impact of FX. And so if you kind of look across the portfolio, we're seeing benefit in each of the regions.
Travel is still the majority of the revenue. And so when we looked at the volumes that are coming through, we really saw incremental improvement in some of the parts of the business that are outside of travel, but we came in line with what we expected in travel volume as well.
And remind us again of the delta between volume growth and revenue growth in the broader segment. Remind us again about the drivers of why volume comes in lower than revenues in terms of the growth rate?
Hi, good morning. This is Roberto. So as I said during the call today, the fact that we have now Noventis, which obviously comes with a much higher interchange rate. The other thing we did also is on the interchange rate by moving from other revenue into payment processing, we renegotiated a contract with 1 of the big OTAs, which obviously had no change in the overall economics, but has a move between revenue lines also improved the net interchange rate. And then as Melissa said, the U.
S. Corporate payment business, which has a much higher interchange rate, so revenue was up 59% and volume was up 51%. So also that piece contributed. And finally, the mix on the travel business that Melissa also mentioned between domestic and international has also driven not a higher growth on the revenue side.
I see. So truly it's mix related, it's not price related
or anything else. Correct.
Yes, exactly.
Let me
sneak one last one and then I'll hop in the queue. Just some color on your same store sales verticals and fleet and then I'll hop back in the queue here. Thanks.
Sure. Same store sales were down slightly sequentially. So if you look both sequentially and year over year, which is one of the trends that we're paying attention to. We've seen over the last several years it being either slightly positive or slightly negative, and then Q2 was slightly negative.
Thanks so much.
Your next question comes from the line of Sanjay Sakhrani from KBW. Your line is open.
Thanks. Good morning. Roberto, I wanted to just go a little bit more into the guidance. You mentioned the $0.15 macro impact, but maybe you could just go through some of the other various impacts that are affecting the range like M and A and FX and how significantly different they are versus the initial plan? And then I guess also when I think about the revenues, the revenue guidance for the year went up, but the EPS guidance on the top end went down.
So I just wanted to make sure I understood why that was happening. Thanks.
Of course. Good morning. So let me start with revenue and then we can jump into EPS. So when we guided in Q1, at the midpoint, I will talk for you. So revenue was at 1.73 dollars and we increased it $5,000,000 to $1735,000,000 The reason for this increase, there are a couple of them.
So number 1, obviously, we closed on the EG Go FieldCard transaction on July 1. This will give us a boost in revenue on the second half. We also have better performance on the U. S. Corporate payment partner channel, which if you remember when we changed the rev rec last year, obviously you get more revenue, but you record the expense on the sales and marketing line.
And finally, we had in this quarter particularly higher diesel spreads. So this put all together boost our revenue from previous guidance. On the flip side, we have headwinds both on PPG. We reduced PPG on a full year basis $0.06 which more or less drive 14 $1,000,000 $50,000,000 in revenue combined with the FX rates that have deteriorated in the past quarter. So all in all, as I said to you, revenue at the midpoint is up $5,000,000 Moving to EPS, obviously, the difference between the revenue outperformance versus the macroeconomic headwinds, as I said on the call, the macro headwinds are adding $0.15 of EPS negative and at midpoint, we are going from 9.30 to 9.225.
So really, we are covering half of the macroeconomic deterioration. And we feel good so far in the year, and we have out there big goals for the full year. So let's don't forget that if I look on a full year basis and we exclude the macroeconomic factors, I mean, we are expecting to grow A and IPS on the 17%, 18%, which I think is a very solid number for the full
year. Okay.
Thank you. And then Melissa, I know that this is a great year. There's a lot of things pulling up, including Chevron and Shell and all these deals that you've done. But is it fair to assume like a lot of the investments have been made now and what's in front of us are the benefits associated with all of these initiatives? And I mean, I think that speaks just for itself in terms of the acceleration, but maybe how should we dimensionalize it?
Thanks.
Yes. It's something that we've been talking about for the last two quarters, because we want to make sure it's clear. We invested, particularly with Shell and Chevron. We made investments in advance of the conversion, which is something that we normally do with a private label portfolio. It's just the size of those two portfolios stacked 1 on top of each other made it much more obvious.
And so the Q1, you saw that drag on earnings, the impact of that as we were going through the initial portfolio conversion. 2nd quarter, you're starting to see the lift as a result of Shell having been ramped through the quarter. And now Chevron will start to be fully ramped through the Q3. And so each quarter you're seeing sequential improvement in what we're giving out in guidance. And a lot of that is driven based on those two portfolios.
And so as we continue to see the revenue benefit of that plus the implementation of
some of the contracts that we've added in the mix,
we've talked about that we're in implementation mode. That's part of what you're seeing come through in the future revenue guidance and then the earnings lift in Q3 and Q4.
And I'm sorry, just one clarification there. In terms of a full run rate for Chevron Shell, that will be within this year in the second half?
Yes.
Revenue wise? Okay.
Yes. Now we have a history of growing portfolios and so our expectation is that baseline we're going to continue to grow from there. But yes, you will see the conversion benefit coming through in the second half of the year.
Sanjay, if you remember, last quarter also we said that. So we were expecting very little revenue in Q1, more revenue in Q2 and fully run for the second half of the year. So that's the expectation.
Okay, great. Good to hear things are running as planned. Thank you.
Your next question comes from the line of Darrin Peller from Wolfe Research. Your line is now open, sir.
All right. Thanks, guys. We saw the finance fee growth and fuel step up a bit after the increase in late fee range in I think Q1. Are there any other just talk about pricing more broadly, if you don't mind. So are there any other levers you can expect from pricing standpoint over the next several months or quarters?
How is the environment feeling around your ability to take price in certain scenarios?
One of the things that's impacting that, if you look at it again sequentially, is some of the portfolios that we're bringing on, we have a discussion with the oil partner on how they want that to be presented into the marketplace and what type of fees they want associated with that as part of the initial onboarding. And so you're seeing a mix effect of some of the choices that they've made rolling through our numbers Q1, Q2, Q3. And again, you'll start to see that normalize as you get later in the year. Okay. So that's one piece of what you're saying.
The second just kind of relate to your second question around fees. If you go across our portfolio, we have made choices around fees around implementing fees that people can largely avoid. And you saw the biggest benefit of that happened a couple of years ago. It's a place that we just continue to look at across the business to make sure that what we're doing is in line with market and that there's a value proposition that's happening with our customers. So we've made tweaks along the way into those fees and I think that's just a steady state for us as opposed to thinking this is one big macro change.
Okay. All right. Let me just follow-up. I mean, I know the EG Group, we saw that you that went in Europe. I think you just referenced it before also, Roberto.
But it's 200,000 cards. Can you just try to help us size it in terms of either transaction or revenue opportunity? And then where are you guys also in Europe in the I think you had won a large OTA in Europe recently. Where are you in the run rate for that? Thanks guys.
So, yes, so we did talk about winning Etraveli in Europe and we are in ramp process with them, which started in the beginning of the year. So I think that is ramping. And related to your second question, e. G. Fuels, we haven't disclosed the revenue associated with that.
Roberto did talk about adding it into the guidance numbers, so it's part of why we're seeing a revenue lift in this year. And we're, I'd call that early stages for that customer. We know that it operates on a spread model. Think of that like the rest of the business that we have in the European fleet marketplace. And so similar type of pricing model, similar type of business is an extension of acceptance.
And it's a partner that we're really pleased to be working with. It's someone that we think we'll do more of outside of Europe and other parts of the world as well.
Okay. Thanks, guys.
Your next question comes from the line of Jim Schneider from Goldman Sachs. Your line is now open, sir.
Good morning. Thanks for taking my question. I was wondering if you can maybe just kind of give us a little bit of color about the onboarding and ramping of the Shell and Chevron contracts in Q2 relative to what you had planned? And then I guess as you head into the back half of the year, at what point do you expect those to be accretive to your overall corporate margins?
So I'll start and as Roberto is eager, I can tell to add on to that. So Shell, we actually had fully converted by the end of the Q1. So you saw that at full ramp in Q2. Chevron, we were converting throughout the course of the second quarter with the last of that happening towards the end of the second quarter, very much according to what we had laid out early in the year of our plan and our expectations associated with those contracts. So conversion timing, very much on plan.
And what we've seen come through from a revenue perspective and Roberto talking about it being a little ahead of what we expected in the second quarter. That's relating to us getting background around what's the portfolio performance going to look like. As we have more time with that, then we'll get more predictable than what the behavior looks like, but it did a little better than we expected in the Q2.
And what I will add to you, if you think on a for the second half of the year on a run rate basis, We have talked a couple of times about the number of gallons that these two portfolios were going to bring into WEX and converted those gallons at the current fuel prices, we are talking between $60,000,000 $70,000,000 in revenue on a run rate basis. Obviously, as Melissa said before, expecting not that in the future we grow those portfolios. But if you take the $60,000,000 to $70,000,000 we'll give you an idea on the second half of the year what to expect on a revenue side.
Thanks. That's helpful. And then maybe as a follow-up. In terms of the margin front, I apologize if I missed it, but in Q2, what was the operating margin drag from acquisitions in the quarter? And how much of that do you expect to be remediated by the synergies you expect through the end of the year, say, exiting Q4?
So there's a lot of moving pieces on the operating margins and particularly with the Ignor on the M and A transactions. What I can tell you is that following on what Melissa said before, not related to the investments we have done in the first half of the year. On a full year basis, 2019, we expect excluding the macroeconomic factors to improve operating income margins at WEX level, inclusive of the acquisition. Some of them, obviously, when you buy a company like DBI that has lower margins, it could impact the overall, but we are expecting to improve those margins significantly. Now when you break the pieces into the first half and the second half, as Melissa said, we have no all the investments on Shell and Chevron.
The acquisitions, obviously, as they ramp up in revenue, will improve margins on the second half of the year. And also particularly in 2019, we were aggressive on the first half of the year on the legacy U. S. Health business in terms of investment, and we are going to be capitalizing on the operating margins on the second half. If you saw Q1 on the health side, revenue was up 15% and on the second half, on the second quarter 18%.
And we expect that to continue as we move into the second half of the year. Great. Thank you.
Your next question comes from the line of Ryanair Carey from Bank of America Merrill. Your line is now open. Merr.
Growth in Travel and Corporate Solutions. It seems like growth ex Noventis decelerated a little from the Q1 and was below the full year range of kind of double digit organic growth. So thinking about the full year, could we see kind of organic growth accelerate and is double digit organic growth still the right way to kind of think about it?
Hi, this is Roberto. If you remember, when we guided early in the year on the corporate payment side, we guided on the 10% to 15% organic. And obviously those numbers always exclude FX fluctuation, which in this quarter were almost 2% on the total revenue. We grew double digit exactly to be precise. If you take out Noventis and you take out also the FX impact, we grew 10% in the quarter.
So we were on the low end of the range, but on a full year basis, we still expect to be within the 10% to 15% growth rate for the full year in this segment. From an organic point of view, obviously, we expect Noventis to add on that as well.
Got it. Okay. And I was hoping you could provide some more color on the Brazil business for employee services, kind of how we trended throughout the quarter. I believe we lapped the accounting changes in Brazil in the Q3. So I'm assuming that in itself should help ease some of the headwinds.
Could we also see some benefit from a recovery in the underlying business as well?
Yes. So just to put Brazil in perspective, it's less than 1% of our total revenue. It's less than 5% of that segment. So it's a relatively small part of the business. And a lot of the focus we had initially, and continues to be is around making sure we're shoring up the control environment.
There's been like a keen eye to that. Now at the same time, we've been looking at the business itself. We've changed out the management team. You're going to see an announcement later today about the new MD that we're putting in place in that business. And we're starting to see the benefit of the changes we've been making to the business model as well as the idea that you're going to lap some of the changes that we started making at the end of last year.
So we do think you'll see sequential improvement from Q2 to Q3 around that part of the business, but it is a really small part of the overall company.
Got it. Thanks for taking my questions.
Your next question comes from the line of Peter Christiansen from Citi. Your line is now open, sir.
Good morning. Thanks for taking my question. Nice execution. Melissa, I was wondering if you could speak to there's been some notable signs of stress, particularly in the OTR trucking segment. Shippers have been under a lot of pressure this year.
I'm wondering if you've seen any or you're watching closely any issues as it relates to just the growth there, but also perhaps credit issues? And it would be helpful perhaps if you can remind us what is WEX's overall exposure now to the OTR segment? Thank you.
Sure. So that part of the business, so one of the things we were looking at, again, a little bit more detail this week was same store sales and any trends specifically within that part of the business. And it's pretty consistent with the rest of the marketplace. So it's slightly down year over year. And at the same time, there has been more pressure around we have a small part of that business where we're factoring for our customers and say that that has had seen some pressure as, so there's been rate impacts within that part of the marketplace, so loads are less.
But we really haven't seen any change in credit profile in our population. And just kind of keep in mind that part of the business is paying quickly on average. It's got a shorter payment term, more likely to have a deposit associated with account. And so we don't tend to have long credit lines for those customers. They tend to be really quick payment terms.
And so there's no real change or impact that I would call out, 2nd quarter versus what we've seen in the past.
Thank you. Helpful.
The next question comes from the line of Mr. Bob Napoli from William Blair. Your line is now open, sir.
Thank you. And great quarter, good numbers, so much going on, and you guys are executing. Just on the healthcare business, the Discovery Benefits acquisition, that HSA business, is there an opportunity to significantly increase the interest income that off of the HSA balances? I mean, are you holding those on balance sheet or are you who are you partnering with?
We don't hold them on our balance sheet. We do have partners and kind of if you go across the board and think about that business in totality, we work with a number of different banks and to the extent we were working with the banking partners, they're going to hold those deposits and they're going to get the benefit of the interest rate changes. And what we're providing is technology for them. In places where we are we have the relationship more directly or we're working with a partner who is interested in us in helping direct that, then we direct that into some partner relationships. And so we are seeing a little bit of a lift in that revenue stream.
It's really small when you think about the size of the segment and then the size of that revenue to that segment. It's immaterial to the company, but we are seeing a little bit of lift associated with that. And as we see growth in our business that is outside of our relationships with our FIs, then we do think you'll continue to see some benefit of that.
Thank you. And the Travel and Corporate Solutions segment, how much of that revenue is the old, say, old travel business, if you would, the legacy travel business versus the corporate payments business? And that growth rate of 50 over 50% is what percentage of revenue? And that excludes the travel portion, correct?
It does. So if you think about the segment and start to break it down, about 60% of the segment's travel, about 40% relates outside of travel. The corporate payments piece that we were talking about is the AP products that we are selling into the marketplace either through our partner channels or directly that's grown over 50%. And so if you kind of you take that business and split into pieces, you've got travel, you've got corporate payments related to AP, you've got Bill Pay, which think of that as the Noventis acquisition. And we have relationships with FIs, which are out marketing our technology on our behalf and on their behalf on a white label basis.
So all of those are different channels and aggregate up to the total part of that business.
Now the AP piece, how big is the AP piece and that's growing because that I mean it's such a huge market?
AP, when you think about it again directly and through our partner channels, it's about 15% of the segment. When you start to aggregate it and then add on FIs and then bill pay, that's when you get up to the 40%.
Okay. And last question real quick. On Go Fuel, the EG Fuel, the purchase price for that was looked like about 10 times revenue. Is that right? Is that I mean, that looks like a pretty high purchase price.
Is that business growing really fast And maybe I'm off on the purchase price.
We haven't disclosed the purchase price.
We have not disclosed the numbers, Bob. What I can tell you is that we pay as when we go through potential acquisitions, we always look at the market. And what we can tell you is we pay a multiple either on revenue or on EBITDA that was in line with the market. And obviously, with expectations that we are going to be growing that business once it's in our hands.
And that's about a $25,000,000 revenue?
Yes. I would put it in the context though to in the aspect of the growth profile of it, it was a piece of EG and part of what was appealing to us is that it was an asset that we felt as we carve it out that we had an ability to do more with. And they would say the same thing that they think that it was something they just didn't have time or it wasn't their focus. So adding on to our existing business, adding on to the network we already have, we believe that we have more opportunity to grow than what they've seen historically.
Thanks. Congratulations on strong results.
Thank you. Thanks.
Presenters, I turn the call over back to you.
Yes. Thank you. That's all the time we have for questions today, but we thank everyone for joining us today and we'll look forward to talking with you again next quarter.