FleetCor Reports First Quarter 2015 Financial Results
Adjusted Net Income Per Share Grows 29% Year-Over-Year
Raises 2015 Guidance
“We reported good first quarter results, despite a pretty unfavorable macro-environment. Importantly, our fundamentals were strong, organic revenue growth was approximately 9% in the quarter, on a constant fuel price, currency, and spread basis,” said
Financial Results for First Quarter 2015:
GAAP Results
- Total revenues increased 64% to
$416.2 million compared to$253.9 million in the first quarter of 2014. - The Company reported GAAP net income1 of
$94.2 million or$1.00 per diluted share in the first quarter of 2015 compared to GAAP net income of$75.1 million or$0.88 per diluted share in the first quarter of 2014.
Non-GAAP Results
- Adjusted revenues1 (revenues, net less merchant commissions) increased 65% to
$388.8 million compared to$236.3 million in the first quarter of 2014. - Adjusted net income1 increased 41% to
$135.9 million compared to$96.1 million in the first quarter of 2014. - Adjusted net income per diluted share1 increased 29% to
$1.45 compared to$1.12 in the first quarter of 2014.
Fiscal Year 2015 Outlook:
“The first quarter of 2015 was another strong quarter for the Company despite the significant macro- economic headwinds around foreign exchange rates and declining fuel prices. In the aggregate, these macro-economic headwinds impacted our business in the first quarter by approximately
For fiscal year 2015
- Total revenues between
$1,600 million and $1,650 million , no change from the prior guidance; - Adjusted net income between
$565 million and $585 million , up from the previous guidance range of between$560 million and $580 million ; - Adjusted net income per diluted share between
$6.00 and $6.20 , up from the previous guidance range of between$5.95 and $6.15 .
The Company's fiscal-year guidance assumptions for 2015 are as follows:
- Weighted fuel prices up slightly to
$2.59 average for the balance of the year in the U.S. compared to$2.58 in the prior guidance and compared to$3.56 per gallon average in the U.S. in 2014, down approximately 30%. - Market spreads assumptions remain approximately the same as the prior guidance.
- Foreign exchange rates equal to the average of
April 1 through April 13 th, a negative impact to revenue of approximately$20 million and to adjusted net income of approximately$0.08 in adjusted net income per diluted share compared to previous guidance. - SVS business is retained for the entire second quarter of 2015.
- Full year tax rate of 31.8% versus 32.1% in previous guidance.
- Fully diluted shares outstanding of 94.3 million shares.
- No impact related to acquisitions or material new partnership agreements not already disclosed.
Conference Call
The Company will host a conference call to discuss first quarter 2015 financial results today at
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
About Non-GAAP Financial Measures
Adjusted revenue is calculated as revenues, net 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, (d) loss on the early extinguishment of debt, (e) our proportionate share of amortization of intangible assets at our equity method investment, and (f) other non-cash adjustments. 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. 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
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) | ||||||||||||
Three Months Ended March 31, | ||||||||||||
2015 | 2014 | |||||||||||
(Unaudited) | (Unaudited) | |||||||||||
Revenues, net | $ | 416,166 | $ | 253,908 | ||||||||
Expenses: | ||||||||||||
Merchant commissions | 27,326 | 17,623 | ||||||||||
Processing | 81,356 | 36,856 | ||||||||||
Selling | 26,331 | 17,414 | ||||||||||
General and administrative | 69,297 | 43,461 | ||||||||||
Depreciation and amortization | 48,082 | 24,418 | ||||||||||
Operating income | 163,774 | 114,136 | ||||||||||
Other expense, net | 1,860 | 544 | ||||||||||
Equity method investment loss | 2,700 | - | ||||||||||
Interest expense, net | 19,566 | 5,461 | ||||||||||
Total other expense | 24,126 | 6,005 | ||||||||||
Income before income taxes | 139,648 | 108,131 | ||||||||||
Provision for income taxes | 45,495 | 33,022 | ||||||||||
Net income | $ | 94,153 | $ | 75,109 | ||||||||
Basic earnings per share | $ | 1.03 | $ | 0.91 | ||||||||
Diluted earnings per share | $ | 1.00 | $ | 0.88 | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic shares | 91,750 | 82,737 | ||||||||||
Diluted shares | 93,934 | 85,695 |
FleetCor Technologies, Inc. and subsidiaries | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
(In thousands, except share and par value amounts) | ||||||||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||
(Unaudited) | ||||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 379,393 | $ | 477,069 | ||||||||||
Restricted cash | 129,562 | 135,144 | ||||||||||||
Accounts receivable (less allowance for doubtful accounts of $21,969 and $23,842, respectively) | 773,474 | 673,797 | ||||||||||||
Securitized accounts receivable - restricted for securitization investors | 679,000 | 675,000 | ||||||||||||
Prepaid expenses and other current assets | 70,198 | 74,889 | ||||||||||||
Deferred income taxes | 77,638 | 101,451 | ||||||||||||
Total current assets | 2,109,265 | 2,137,350 | ||||||||||||
Property and equipment | 137,608 | 135,062 | ||||||||||||
Less accumulated depreciation and amortization | (65,542 | ) | (61,499 | ) | ||||||||||
Net property and equipment | 72,066 | 73,563 | ||||||||||||
Goodwill | 3,761,378 | 3,808,262 | ||||||||||||
Other intangibles, net | 2,369,922 | 2,440,967 | ||||||||||||
Equity method investment | 124,086 | 141,933 | ||||||||||||
Other assets | 68,007 | 72,431 | ||||||||||||
Total assets | $ | 8,504,724 | $ | 8,674,506 | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 775,929 | $ | 716,676 | ||||||||||
Accrued expenses | 151,974 | 178,375 | ||||||||||||
Customer deposits | 451,588 | 492,257 | ||||||||||||
Securitization facility | 679,000 | 675,000 | ||||||||||||
Current portion of notes payable and other obligations | 657,108 | 749,764 | ||||||||||||
Other current liabilities | 40,680 | 84,546 | ||||||||||||
Total current liabilities | 2,756,279 | 2,896,618 | ||||||||||||
Notes payable and other obligations, less current portion | 2,139,704 | 2,168,953 | ||||||||||||
Deferred income taxes | 794,381 | 815,169 | ||||||||||||
Other noncurrent liabilities | 34,186 | 40,629 | ||||||||||||
Total noncurrent liabilities | 2,968,271 | 3,024,751 | ||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
Common stock, $0.001 par value; 475,000,000 shares authorized, 119,900,971 shares issued and 91,791,859 shares outstanding at March 31, 2015; and 475,000,000 shares authorized, 119,771,155 shares issued and 91,662,043 shares outstanding at December 31, 2014 | 120 | 120 | ||||||||||||
Additional paid-in capital | 1,878,383 | 1,852,442 | ||||||||||||
Retained earnings | 1,498,058 | 1,403,905 | ||||||||||||
Accumulated other comprehensive loss | (249,990 | ) | (156,933 | ) | ||||||||||
Less treasury stock, 28,109,112 shares at March 31, 2015 and December 31, 2014 | (346,397 | ) | (346,397 | ) | ||||||||||
Total stockholders’ equity | 2,780,174 | 2,753,137 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 8,504,724 | $ | 8,674,506 |
FleetCor Technologies, Inc. and Subsidiaries | |||||||
Consolidated Statements of Cash Flows | |||||||
(In Thousands) | |||||||
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
(Unaudited) | (Unaudited) | ||||||
Operating activities | |||||||
Net income | $ | 94,153 | $ | 75,109 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 7,498 | 4,801 | |||||
Stock-based compensation | 16,951 | 10,612 | |||||
Provision for losses on accounts receivable | 8,145 | 5,554 | |||||
Amortization of deferred financing costs | 1,744 | 531 | |||||
Amortization of intangible assets | 39,771 | 18,272 | |||||
Amortization of premium on receivables | 813 | 814 | |||||
Deferred income taxes | (18,738 | ) | 603 | ||||
Equity method investment loss | 2,700 | - | |||||
Other operating gain | (425 | ) | - | ||||
Changes in operating assets and liabilities (net of acquisitions): | |||||||
Restricted cash | 5,580 | 1,404 | |||||
Accounts receivable | (114,385 | ) | (153,184 | ) | |||
Prepaid expenses and other current assets | 1,695 | (7,111 | ) | ||||
Other assets | (1,835 | ) | 545 | ||||
Excess tax benefits related to stock-based compensation | (6,418 | ) | (16,126 | ) | |||
Accounts payable, accrued expenses and customer deposits | 30,154 | 109,670 | |||||
Net cash provided by operating activities | 67,403 | 51,494 | |||||
Investing activities | |||||||
Acquisitions, net of cash acquired | (851 | ) | (19,292 | ) | |||
Purchases of property and equipment | (8,105 | ) | (5,584 | ) | |||
Net cash used in investing activities | (8,956 | ) | (24,876 | ) | |||
Financing activities | |||||||
Excess tax benefits related to stock-based compensation | 6,418 | 16,126 | |||||
Proceeds from issuance of common stock | 2,571 | 4,512 | |||||
Borrowings on securitization facility, net | 4,000 | 44,500 | |||||
Deferred financing costs paid | - | (521 | ) | ||||
Principal payments on notes payable | (25,875 | ) | (6,875 | ) | |||
Payments on revolver- A Facility | (120,736 | ) | (134,803 | ) | |||
Payments on foreign revolver- B Facility | - | (3,601 | ) | ||||
Payments on swing line of credit, net | 30,865 | 15 | |||||
Payment of contingent consideration | (39,808 | ) | - | ||||
Fair value adjustment for contingent consideration arrangements | (76 | ) | (246 | ) | |||
Net cash used in financing activities | (142,641 | ) | (80,893 | ) | |||
Effect of foreign currency exchange rates on cash | (13,482 | ) | (456 | ) | |||
Net decrease in cash and cash equivalents | (97,676 | ) | (54,731 | ) | |||
Cash and cash equivalents, beginning of period | 477,069 | 338,105 | |||||
Cash and cash equivalents, end of period | $ | 379,393 | $ | 283,374 | |||
Supplemental cash flow information | |||||||
Cash paid for interest | $ | 21,290 | $ | 6,264 | |||
Cash paid for income taxes | $ | 15,992 | $ | 20,865 |
Exhibit 1 | |||||||||
RECONCILIATION OF NON-GAAP MEASURES AND PRO FORMA INFORMATION | |||||||||
(In thousands, except shares and per share amounts) | |||||||||
(Unaudited) | |||||||||
The following table reconciles revenues, net to adjusted revenues: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Revenues, net | 416,166 | 253,908 | |||||||
Merchant commissions | 27,326 | 17,623 | |||||||
Total adjusted revenues | $ | 388,840 | $ | 236,285 | |||||
The following table reconciles net income to adjusted net income and adjusted net income per diluted share: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Net income | $ | 94,153 | $ | 75,109 | |||||
Stock based compensation | 16,951 | 10,612 | |||||||
Amortization of intangible assets | 39,771 | 18,272 | |||||||
Amortization of premium on receivables | 813 | 814 | |||||||
Amortization of deferred financing costs | 1,744 | 531 | |||||||
Amortization of intangibles at equity method investment | 2,705 | - | |||||||
Total pre-tax adjustments | 61,984 | 30,229 | |||||||
Income tax impact of pre-tax adjustments at the effective tax rate | (20,193 | ) | (9,232 | ) | |||||
Adjusted net income | $ | 135,943 | $ | 96,106 | |||||
Adjusted net income per diluted share | $ | 1.45 | $ | 1.12 | |||||
Diluted shares | 93,934 | 85,695 |
Exhibit 2 | ||||||||||||||||
Transaction Volume, Revenues and Adjusted Revenue, Per Transaction and by Segment | ||||||||||||||||
(In thousands except revenues, net per transaction and adjusted revenues per transaction) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||
2015 | 2014 | Change | % Change | |||||||||||||
NORTH AMERICA |
||||||||||||||||
- Transactions2 | 384,544 | 40,425 | 344,119 | 851.3 | % | |||||||||||
- Revenues, net per transaction | $ | 0.78 | $ | 3.13 | $ | (2.35 | ) | -75.1 | % | |||||||
- Revenues, net | $ | 298,813 | $ | 126,375 | $ | 172,438 | 136.4 | % | ||||||||
INTERNATIONAL |
||||||||||||||||
- Transactions | 46,778 | 47,192 | (414 | ) | -0.9 | % | ||||||||||
- Revenues, net per transaction | $ | 2.51 | $ | 2.70 | $ | (0.19 | ) | -7.2 | % | |||||||
- Revenues, net | $ | 117,353 | $ | 127,533 | $ | (10,180 | ) | -8.0 | % | |||||||
FLEETCOR CONSOLIDATED REVENUES |
||||||||||||||||
- Transactions2 | 431,322 | 87,617 | 343,705 | 392.3 | % | |||||||||||
- Revenues, net per transaction | $ | 0.96 | $ | 2.90 | $ | (1.93 | ) | -66.7 | % | |||||||
- Revenues, net | $ | 416,166 | $ | 253,908 | $ | 162,258 | 63.9 | % | ||||||||
FLEETCOR CONSOLIDATED ADJUSTED REVENUES1 |
||||||||||||||||
- Transactions2 | 431,322 | 87,617 | 343,705 | 392.3 | % | |||||||||||
- Adjusted Revenues per transaction | $ | 0.90 | $ | 2.70 | $ | (1.80 | ) | -66.6 | % | |||||||
- Adjusted Revenues | $ | 388,840 | $ | 236,285 | $ | 152,555 | 64.6 | % | ||||||||
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. | ||||||||||||||||
2Includes approximately 301 million transactions related to our SVS business acquired with Comdata in 2014. | ||||||||||||||||
Sources of Revenue3 |
||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||
2015 | 2014 | Change | % Change | |||||||||||||
Revenue from customers and partners | 62.5 | % | 56.1 | % | 6.4 | % | 11.4 | % | ||||||||
Revenue from merchants and networks | 37.5 | % | 43.9 | % | -6.4 | % | -14.6 | % | ||||||||
Revenue tied to fuel-price spreads | 14.0 | % | 13.8 | % | 0.2 | % | 1.4 | % | ||||||||
Revenue influenced by absolute price of fuel | 12.7 | % | 18.0 | % | -5.3 | % | -29.4 | % | ||||||||
Revenue from program fees, late fees, interest and other | 73.3 | % | 68.2 | % | 5.1 | % | 7.5 | % | ||||||||
3Expressed as a percentage of consolidated revenue. |
Exhibit 3 | |||||||
Segment Results | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Revenues, net: | |||||||
North America | $ | 298,813 | $ | 126,375 | |||
International | 117,353 | 127,533 | |||||
$ | 416,166 | $ | 253,908 | ||||
Operating income: | |||||||
North America | $ | 109,766 | $ | 56,197 | |||
International | 54,008 | 57,939 | |||||
$ | 163,774 | $ | 114,136 | ||||
Depreciation and amortization: | |||||||
North America | $ | 31,922 | $ | 6,636 | |||
International | 16,160 | 17,782 | |||||
$ | 48,082 | $ | 24,418 | ||||
Capital expenditures: | |||||||
North America | $ | 4,224 | $ | 1,996 | |||
International | 3,881 | 3,588 | |||||
$ | 8,105 | $ | 5,584 |
Source:
Investor Relations
investor@fleetcor.com
770-729-2017