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FleetCor Reports Third Quarter 2012 Financial Results

Adjusted Net Income Increases 52% Versus Prior Year

FleetCor Raises 2012 Guidance

NORCROSS, Ga.--(BUSINESS WIRE)--Nov. 8, 2012-- FleetCor Technologies, Inc. (NYSE: FLT), a leading independent global provider of fuel cards and workforce payment products to businesses, today reported financial results for its third quarter ended September 30, 2012.

"The third quarter was another excellent quarter for FleetCor, which included revenue growth of 39% and adjusted net income growth of 52% over the third quarter of 2011," said Ron Clarke, chairman, and chief executive officer, FleetCor Technologies, Inc. "Our results were again driven by strong organic growth in the U.S. and the impact of acquisitions closed over the last year. Integration of our recent acquisitions in Brazil and Russia remains on track.”

Financial results for the third quarter of 2012:

GAAP Results

  • Total revenues, net in the third quarter of 2012 increased 39% to $186.9 million compared to $134.2 million in the third quarter of 2011
  • Net income in the third quarter of 2012 increased 47% to $59.6 million, or $0.69 per diluted share, compared to $40.5 million, or $0.48 per diluted share in the third quarter of 2011

Non-GAAP Results

  • Adjusted revenues1 (revenues, net less merchant commissions) in the third quarter of 2012 increased 44% to $174.0 million compared to $120.9 million in the third quarter of 2011
  • Adjusted net income1 in the third quarter of 2012 increased 52% to $71.6 million, or $0.83 per diluted share, compared to $47.2 million, or $0.56 per diluted share in the third quarter of 2011

Subsequent Events:

FleetCor announced that on November 7th, 2012, that it had increased the size of its credit facility by $500 million. The increased credit facility totals $1.4 billion and consists of a $550 million term loan facility and an $850 million revolving credit facility. The interest rates on the upsized facility remain unchanged.

FleetCor anticipates using the increased facility primarily to help fund future acquisitions, for working capital and other general corporate purposes, including to potentially fund share repurchases from certain of its significant legacy investors.

Updated 2012 Outlook:

“Our continued strong performance this quarter together with a strong first half of the year gives us confidence to again increase our guidance for 2012,” said Eric Dey, chief financial officer, FleetCor Technologies, Inc. “We are now expecting revenue growth of approximately 31% and adjusted net income growth of approximately 37% for 2012. In addition, we believe the upsized credit facility provides us with plenty of dry powder to execute our corporate strategies”.

FleetCor Technologies, Inc. is raising its financial guidance for 2012 as follows:

  • Revenues, net between $678 million and $682 million, up from our previous guidance range of $665 million to $675 million
  • Adjusted net income1 between $248 million and $251 million, up from our previous guidance range of $235 million to $240 million; and
  • Adjusted net income1 per diluted share between $2.89 and $2.91, up from our previous guidance range of $2.74 to $2.78

The assumptions included in the guidance are as follows:

  • Fuel prices flat to current levels
  • Market spreads at their historic normal levels
  • A slight decrease in our effective tax rate from 30.1% in 2011 to 29.8% in 2012
  • Foreign exchange rates to remain at current levels
  • Fully diluted shares outstanding of 86.2 million shares
  • No impact related to future acquisitions or material new partnership agreements

Conference Call

The Company will host a conference call to discuss third quarter of 2012 financial results today at 5:00pm ET. Hosting the call will be Ron Clarke, chief executive officer, and Eric Dey, chief financial officer. The conference call can be accessed live over the phone by dialing 888-846-5003, or for international callers 480-629-9856. A replay will be available one hour after the call and can be accessed by dialing 877-870-5176 or 858-384-5517 for international callers; the conference ID is 4572983. The replay will be available until Thursday, November 15, 2012. The call will be webcast live from the Company's investor relations website at investor.fleetcor.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about FleetCor's beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as "anticipate," "intend," "believe," "estimate," "plan," "seek," "project" or "expect," "may," "will," "would," "could" or "should," the negative of these terms or other comparable terminology. Examples of forward-looking statements in this press release include statements relating to revenue and earnings guidance, assumptions underlying financial guidance, expectations regarding the benefits of the upsized credit facility and potential uses of proceeds from the upsized credit facility. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement, such as delays or failures associated with implementation; fuel price and spread volatility; changes in credit risk of customers and associated losses; the actions of regulators relating to payment cards or resulting from investigations; failure to maintain or renew key business relationships; failure to maintain competitive offerings; failure to maintain or renew sources of financing; failure to complete, or delays in completing, anticipated new partnership arrangements or acquisitions and the failure to successfully integrate or otherwise achieve anticipated benefits from such partnerships or acquired businesses; failure to successfully expand business internationally; the impact of foreign exchange rates on operations, revenue and income; the effects of general economic conditions on fueling patterns and the commercial activity of fleets, as well as the other risks and uncertainties identified under the caption "Risk Factors" in FleetCor's Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 29, 2012. FleetCor believes these forward-looking statements are reasonable; however, forward-looking statements are not a guarantee of performance, and undue reliance should not be placed on such statements. The forward-looking statements included in this press release are made only as of the date hereof, and FleetCor does not undertake, and specifically disclaims, any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

About Non-GAAP Financial Measures

Adjusted revenues, net are calculated as revenues less merchant commissions. Adjusted net income is calculated as net income, adjusted to eliminate (a) non-cash stock-based compensation expense related to share-based compensation awards, (b) amortization of deferred financing costs and intangible assets, (c) amortization of the premium recognized on the purchase of receivables and, (d) loss on the early extinguishment of debt. EBITDA is calculated as net income as reflected in our income statement, adjusted to eliminate (a) interest expense, (b) tax expense, (c) depreciation of long-lived assets, and (d) amortization of intangible assets. The company uses adjusted revenues as a basis to evaluate the company’s revenues, net of the commissions that are paid to merchants to participate in our card programs. The commissions paid to merchants can vary when market spreads fluctuate in much the same way as revenues are impacted when market spreads fluctuate. The company believes this is a more effective way to evaluate the company’s revenue performance. The company uses EBITDA as a basis to evaluate our operating performance net of the impact of certain items during the period. We believe that EBITDA may be useful to investors to understanding our operating performance on a consistent basis. We prepare adjusted net income to eliminate the effect of items that we do not consider indicative of our core operating performance. Adjusted revenues and adjusted net income are supplemental measures of operating performance that do not represent and should not be considered as an alternative to revenues, net, net income or cash flow from operations, as determined by U.S. generally accepted accounting principles, or U.S. GAAP, and our calculation thereof may not be comparable to that reported by other companies. We believe it is useful to exclude non-cash stock-based compensation expense from adjusted net income because non-cash equity grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time and stock-based compensation expense is not a key measure of our core operating performance. We also believe that amortization expense can vary substantially from company to company and from period to period depending upon their financing and accounting methods, the fair value and average expected life of their acquired intangible assets, their capital structures and the method by which their assets were acquired; therefore, we have excluded amortization expense from our adjusted net income. We also exclude loss on the early extinguishment of debt from adjusted net income, as this expense is non-cash and is one-time in nature and does not reflect the ongoing operations of the business.

Management uses adjusted revenues and adjusted net income:

  • as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis;
  • for planning purposes, including the preparation of our internal annual operating budget;
  • to allocate resources to enhance the financial performance of our business; and
  • to evaluate the performance and effectiveness of our operational strategies.

We believe adjusted revenues and adjusted net income are key measures used by the Company and investors as supplemental measures to evaluate the overall operating performance of companies in our industry. By providing these non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

About FleetCor

FleetCor is a leading global provider of fuel cards and workforce payment products to businesses. FleetCor’s payment programs enable businesses to better control employee spending and provide card-accepting merchants with a commercial customer base that can increase their sales and customer loyalty. FleetCor serves commercial accounts in North America, Latin America, and Europe. For more information, please visit www.fleetcor.com.

1 Reconciliations of GAAP results to non GAAP results are provided in Exhibit 1 attached. Additional supplemental data is provided in Exhibit 2 and segment information is provided in Exhibit 3.

 
FleetCor Technologies, Inc. and subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
                   
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Revenues, net $ 186,932 $ 134,213 $ 504,917 $ 379,431
 
Expenses:
Merchant commissions 12,930 13,347 40,974 36,505
Processing 30,568 20,878 83,161 58,585
Selling 12,790 9,484 33,239 26,274
General and administrative 31,219 19,729 78,866 59,718
Depreciation and amortization   13,591     9,052     36,920   26,247  
Operating income   85,834     61,723     231,757   172,102  
Other (income) expense, net (3 ) (518 ) 519 (608 )
Interest expense, net 3,246 3,130 9,627 9,944
Loss on extinguishment of debt   -     -     -   2,669  
Total other expense   3,243     2,612     10,146   12,005  
Income before income taxes 82,591 59,111 221,611 160,097
Provision for income taxes   22,943     18,597     65,483   50,534  
Net income $ 59,648   $ 40,514   $ 156,128 $ 109,563  
 
Basic earnings per share $ 0.71 $ 0.50 $ 1.88 $ 1.36
Diluted earnings per share $ 0.69 $ 0.48 $ 1.82 $ 1.31
 
Weighted average shares outstanding:
Basic shares 84,002 80,819 83,260 80,305
Diluted shares 86,224 83,649 85,681 83,526
 
       
FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except share and par value amounts)
       
 
September 30, December 31,
2012

20111

(Unaudited)
Assets
 
Current assets:
Cash and cash equivalents $ 300,061 $ 285,159
Restricted cash 52,186 55,762
Accounts receivable (less allowance for doubtful accounts of $19,995 and $15,315, respectively) 578,818 481,791
Securitized accounts receivable - restricted for securitization investors 355,000 280,000
Prepaid expenses and other current assets 25,608 15,416
Deferred income taxes   6,296     4,797  
Total current assets   1,317,969     1,122,925  
Property and equipment 117,008 93,380
Less accumulated depreciation and amortization   (70,466 )   (60,656 )
Net property and equipment 46,542 32,724
Goodwill 923,715 756,597
Other intangibles, net 465,785 385,607
Other assets   88,110     45,834  
 
Total assets $ 2,842,121   $ 2,343,687  
 
Liabilities and Stockholders’ Equity
 
Current liabilities:
Accounts payable $ 533,113 $ 478,882
Accrued expenses 60,697 41,565
Customer deposits 177,952 180,269
Securitization facility 355,000 280,000
Current portion of notes payable and other obligations   228,639     140,354  
Total current liabilities   1,355,401     1,121,070  
 
Notes payable and other obligations, less current portion 278,863 278,429
Deferred income taxes   172,789     132,752  
Total noncurrent liabilities   451,652     411,181  
 
Commitments and contingencies
 
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized, 116,266,406 shares issued and 84,384,736 shares outstanding at September 30, 2012; and 475,000,000 shares authorized, 113,741,883 shares issued and 81,860,213 shares outstanding at December 31, 2011 116 114
Additional paid-in capital 525,056 466,203
Retained earnings 690,626 534,498
Accumulated other comprehensive loss (5,067 ) (13,716 )
 
Less treasury stock, 31,881,670 shares at September 30, 2012 and December 31, 2011   (175,663 )   (175,663 )
Total stockholders’ equity   1,035,068     811,436  
Total liabilities and stockholders’ equity $ 2,842,121   $ 2,343,687  

 

1Certain prior period amounts have been recast in connection with ASC 805, Business Combinations.
 
 
FleetCor Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
       
Nine Months Ended September 30,
2012 2011
Operating activities
Net income $ 156,128 $ 109,563
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
Depreciation 9,831 8,477
Stock-based compensation 14,287 15,622
Provision for losses on accounts receivable 16,788 13,600
Amortization of deferred financing costs 1,596 1,351
Amortization of intangible assets 23,044 13,969
Amortization of premium on receivables 2,449 2,450
Deferred income taxes 2,501 (863 )
Loss on extinguishment of debt - 2,669
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash 3,576 4,942
Accounts receivable (178,715 ) (140,491 )
Prepaid expenses and other current assets (4,352 ) 14,732
Other assets (45,291 ) (81 )
Excess tax benefits related to stock-based compensation (23,177 ) (8,170 )
Accounts payable, accrued expenses and customer deposits   54,466     32,747  
Net cash provided by operating activities   33,131     70,517  
 
Investing activities
Acquisitions, net of cash acquired (189,819 ) (21,933 )
Purchases of property and equipment   (13,634 )   (8,408 )
Net cash used in investing activities   (203,453 )   (30,341 )
 
Financing activities
Excess tax benefits related to stock-based compensation 23,177 8,170
Borrowings on securitization facility, net 75,000 6,000
Deferred financing costs paid (796 ) (7,839 )
Proceeds from issuance of common stock 21,391 5,066
Principal payments on notes payable (23,492 ) (335,215 )
Borrowings on notes payable - 300,000
Payments on revolver (250,000 ) -
Borrowings from revolver 330,000 -
Borrowings on swing line of credit, net 1,000 -
Other   (129 )   (179 )
Net cash provided by (used in) financing activities   176,151     (23,997 )
   
Effect of foreign currency exchange rates on cash   9,073     6,301  
 
Net increase in cash and cash equivalents 14,902 22,480
Cash and cash equivalents, beginning of period 285,159 114,804
   
Cash and cash equivalents, end of period $ 300,061   $ 137,284  
 
Supplemental cash flow information
Cash paid for interest $ 10,858   $ 11,213  
 
Cash paid for income taxes $ 29,428   $ 35,171  
 
 
Exhibit 1
RECONCILIATION OF NON-GAAP MEASURES
(In thousands, except per share amounts)
(Unaudited)
                                   
The following table reconciles revenues, net to adjusted revenues:
                     
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
 
Revenues, net $ 186,932 $ 134,213 $ 504,917 $ 379,431
Merchant commissions   12,930     13,347     40,974     36,505  
Total adjusted revenues $ 174,002   $ 120,866   $ 463,943   $ 342,926  
 
                                   
The following table reconciles net income to EBITDA:
 
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
 
Net income $ 59,648 $ 40,514 $ 156,128 $ 109,563
Provision for income taxes 22,943 18,597 65,483 50,534
Interest expense, net 3,246 3,130 9,627 9,944
Depreciation and amortization   13,591     9,052     36,920     26,247  
EBITDA $ 99,428   $ 71,293   $ 268,158   $ 196,288  
 
                                   
The following table reconciles net income to adjusted net income and adjusted net income per diluted share:
 
Three Months Ended September 30, Nine Months Ended September 30, Year Ended
2012 2011 2012 2011 2011
Net income $ 59,648 $ 40,514 $ 156,128 $ 109,563 $ 147,335
 
Stock based compensation 6,494 3,639 14,287 15,622 21,743
Amortization of intangible assets 8,687 4,782 23,044 13,969 19,590
Amortization of premium on receivables 816 816 2,449 2,450 3,266
Amortization of deferred financing costs 545 508 1,596 1,351 1,864
Loss on extinguishment of debt   -     -     -     2,669     2,669  
Total pre-tax adjustments 16,542 9,745 41,376 36,061 49,132
 
Income tax impact of pre-tax adjustments at the effective tax rate (4,595 ) (3,066 ) (12,226 ) (11,383 ) (14,805 )
         
Adjusted net income $ 71,595   $ 47,193   $ 185,278   $ 134,241   $ 181,662  
Adjusted net income per diluted share $ 0.83 $ 0.56 $ 2.16 $ 1.61 $ 2.17
 
Diluted shares 86,224 83,649 85,681 83,526 83,654
 
   
Exhibit 2
Key Operating Metrics
(In thousands, except revenues, net per transaction and adjusted revenues per transaction)
(Unaudited)
                           

Transaction Volume, Revenues and Adjusted Revenue, Per Transaction and by Segment

 
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 Change % Change 2012 2011 Change % Change
 

NORTH AMERICA

- Transactions 41,203 39,884 1,319 3.3 % 117,204 114,667 2,537 2.2 %
- Revenues, net per transaction $ 2.46 $ 2.33 $ 0.13 5.6 % $ 2.49 $ 2.25 $ 0.24 10.8 %
- Revenues, net $ 101,495 $ 92,995 $ 8,500 9.1 % $ 291,593 $ 257,444 $ 34,149 13.3 %
 

INTERNATIONAL

- Transactions2 38,058 14,276 23,782 166.6 % 108,170 36,196 71,974 198.8 %
- Revenues, net per transaction2 $ 2.24 $ 2.89 $ (0.65 ) -22.5 % $ 1.97 $ 3.37 $ (1.40 ) -41.5 %
- Revenues, net $ 85,437 $ 41,218 $ 44,219 107.3 % $ 213,324 $ 121,987 $ 91,337 74.9 %
                                                 
 

FLEETCOR CONSOLIDATED REVENUES

- Transactions2 79,261 54,160 25,101 46.3 % 225,374 150,863 74,511 49.4 %
- Revenues, net per transaction2 $ 2.36 $ 2.48 $ (0.12 ) -4.8 % $ 2.24 $ 2.52 $ (0.28 ) -11.1 %
- Revenues, net $ 186,932 $ 134,213 $ 52,719 39.3 % $ 504,917 $ 379,431 $ 125,486 33.1 %
                                                 
                                                 
 

FLEETCOR CONSOLIDATED ADJUSTED REVENUES1

- Transactions2 79,261 54,160 25,101 46.3 % 225,374 150,863 74,511 49.4 %
- Adjusted Revenues per transaction2 $ 2.20 $ 2.23 $ (0.04 ) -1.6 % $ 2.06 $ 2.27 $ (0.21 ) -9.4 %
- Adjusted Revenues $ 174,002 $ 120,866 $ 53,136 44.0 % $ 463,943 $ 342,926 $ 121,017 35.3 %
                                                 
 
1Adjusted revenues is a non-GAAP financial measure defined as revenues, net less merchant commissions. The Company believes this measure is a more effective way to evaluate the Company's revenue performance. Refer to Exhibit 1 for a reconciliation of revenues, net to adjusted revenues.
 

Sources of Revenue2

Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 Change % Change 2012 2011 Change % Change
Revenue from customers and partners

 

50.8

%

50.6 % 0.2 % 0.4 % 46.2 % 50.9 % -4.7 % -9.2 %
Revenue from merchants and networks 49.2 % 49.4 % -0.2 % -0.4 % 53.8 % 49.1 % 4.7 % 9.6 %
 
Revenue tied to fuel-price spreads 14.0 % 19.6 % -5.6 % -28.6 % 17.6 % 19.4 % -1.8 % -9.3 %
Revenue influenced by absolute price of fuel 21.7 % 24.0 % -2.3 % -9.6 % 20.8 % 24.0 % -3.2 % -13.3 %
Revenue from program fees, late fees, interest and other

 

64.3

%

56.4 % 7.9 % 14.0 % 61.6 % 56.6 % 5.0 % 8.8 %
 
2Expressed as a percentage of consolidated revenue.
 
   
Exhibit 3
GAAP Segment Results
(In thousands)
(Unaudited)
           
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Revenues, net:
North America $ 101,495 $ 92,995 $ 291,593 $ 257,444
International1   85,437   41,218   213,324   121,987
$ 186,932 $ 134,213 $ 504,917 $ 379,431
 
Operating income:
North America $ 49,273 $ 43,070 $ 140,984 $ 114,387
International1   36,561   18,653   90,773   57,715
$ 85,834 $ 61,723 $ 231,757 $ 172,102
 
Depreciation and amortization:
North America $ 5,046 $ 4,990 $ 15,064 $ 14,821
International1   8,545   4,062   21,856   11,426
$ 13,591 $ 9,052 $ 36,920 $ 26,247
 
Capital expenditures:
North America $ 1,153 $ 1,142 $ 5,749 $ 3,975
International1   4,050   1,350   7,885   4,433
$ 5,203 $ 2,492 $ 13,634 $ 8,408

 

1The results from our Mexican business acquired during the third quarter of 2011, Allstar business acquired during the fourth quarter of 2011, Russian business acquired in the second quarter of 2012 and CTF Technologies, Inc. acquired during the third quarter of 2012 are reported in our International segment.

Source: FleetCor Technologies, Inc.

FleetCor
Investor Relations:
770-729-2017
investor@fleetcor.com



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