Going forward, the Company intends to hedge approximately 60% of its domestic fuel-price-related earnings exposure in every quarter on a rolling basis.
The instruments are designed to enhance the visibility and predictability of the Company’s future earnings. The program uses instruments that create a “costless collar” based upon both the U.S. Department of Energy’s weekly diesel fuel price index and NYMEX unleaded gasoline contracts.
The February purchase locked in a fuel price range of approximately $3.39 to $3.45 per gallon.
The following table states the approximate range of the collar and percentage of fuel-price-related earnings exposure:
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2015 | 2015 | 2015 | |||||||||||||||||
Average low end of range | $3.38 | $3.36 | $3.37 | $3.34 | $3.34 | $3.36 | $3.39 | ||||||||||||||||
Average top end of range | $3.44 | $3.42 | $3.43 | $3.40 | $3.40 | $3.42 | $3.45 | ||||||||||||||||
Approximate % locked in | 60% | 60% | 60% | 60% | 60% | 40% | 20% | ||||||||||||||||
For more information about WEX, please visit http://www.wexinc.com.