Release Details

Adjusted Net Income Per Share Grows 32% in the Fourth Quarter

Profit Outlook for 2014 up 22% at Midpoint of Guidance Range

NORCROSS, Ga.--(BUSINESS WIRE)--Feb. 5, 2014-- FleetCor Technologies, Inc. (NYSE:FLT), a leading global provider of fuel cards and workforce payment products to businesses, today reported financial results for its fourth quarter and year ended December 31, 2013.

"We are pleased to announce a strong finish to 2013 with adjusted net income per diluted share growth of 32% for the fourth quarter and 35% for the year. We also had a tremendous business development year as we completed seven acquisitions and signed six partnership deals all over the globe leading to further geographic and product diversification,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc.

Financial Results for Fourth Quarter 2013:

GAAP Results

• Total revenues increased 26% to $255.5 million compared to $202.6 million in the fourth quarter of 2012;
• Net income increased 13% to $68.1 million compared to $60.1 million in the fourth quarter of 2012;
• Net income per diluted share increased 14% to $0.80 compared to $0.70 in the fourth quarter of 2012.

Non-GAAP Results

• Adjusted revenues¹ (revenues, net less merchant commissions) increased 28% to $237.7 million compared to $185.0 million in the fourth quarter of 2012;
• Adjusted net income¹ increased 30% to $92.1 million compared to $70.7 million in the fourth quarter of 2012;
• Adjusted net income per diluted share¹ increased 32% to $1.08 compared to $0.82 in the fourth quarter of 2012.

Financial Results for Fiscal Year 2013:

GAAP Results

• Total revenues increased 27% to $895.2 million compared to $707.5 million in 2012;
• Net income increased 32% to $284.5 million compared to $216.2 million on 2012;
• Net income per diluted share increased 33% to $3.36 compared $2.52 per diluted share in 2012.

Non-GAAP Results

• Adjusted revenues¹ (revenues, net less merchant commissions) in 2013 increased 27% to $827.0 million compared to $649.0 million in 2012;
• Adjusted net income¹ for 2013 increased 34% to $342.7 million compared to $256.0 million in 2012;
• Adjusted net income per diluted share increased 35% to $4.05 compared to $2.99 in 2012.

Fiscal Year 2014 Outlook:

For fiscal year 2014 FleetCor Technologies, Inc. is expecting the following:

• Total revenues between $1,070 million and $1,090 million;
• Adjusted net income between $418 million and $428 million;
• Adjusted net income per diluted share between $4.90 and $5.00.

The Company's fiscal-year guidance assumptions for 2014 are as follows:

• Fuel prices and market spreads at the 2013 average
• FX rates equal to current levels
• Tax rate of 30.6%
• Fully diluted shares outstanding of 85.6 million shares
• No impact related to acquisitions or material new partnership agreements not already disclosed

“We have great momentum heading into 2014 and are projecting another double-digit revenue and profit growth year despite expected headwinds in interest expense and tax rates. Our guidance produces a 21% revenue and 22% adjusted net income per share growth rate, at the midpoint of our guidance range, versus 2013,” said Eric Dey, chief financial officer FleetCor Technologies, Inc.

Conference Call

The Company will host a conference call to discuss fourth quarter 2013 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 (877) 941-8416, or for international callers (480) 629-9808. 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 4664950. The replay will be available until February 12, 2014. 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," "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, and expectations regarding recent deals. 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, 2012, filed with the Securities and Exchange Commission on March 1, 2013. 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 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, 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 (d) amortization of intangible assets and (e) other (income) expense, net. 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 for 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, adjusted net income, and EBITDA:

• 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, adjusted net income and EBITDA 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, Europe, Australia and New Zealand. 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)
								Three Months Ended December 31,						Year Ended December 31,
								2013			2012			2013			2012
								(Unaudited)			(Unaudited)			(Unaudited)
Revenues, net								$	255,501		$	202,617		$	895,171		$	707,534
Expenses:
	Merchant commissions								17,783			17,599			68,143			58,573
	Processing								38,604			32,285			134,030			115,446
	Selling								18,397			13,190			57,346			46,429
	General and administrative								50,509			31,256			142,283			110,122
	Depreciation and amortization								24,158			15,116			72,737			52,036
Operating income									106,050			93,171			420,632			324,928
	Other expense, net								472			602			602			1,121
	Interest expense, net								5,501			3,390			16,461			13,017
Total other expense									5,973			3,992			17,063			14,138
Income before income taxes									100,077			89,179			403,569			310,790
Provision for income taxes									31,957			29,108			119,068			94,591
Net income								$	68,120		$	60,071		$	284,501		$	216,199
Basic earnings per share								$	0.83		$	0.72		$	3.48		$	2.59
Diluted earnings per share								$	0.80		$	0.70		$	3.36		$	2.52
Weighted average shares outstanding:
Basic shares									82,388			83,378			81,793			83,328
Diluted shares									85,277			85,750			84,655			85,736

FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except share and par value amounts)
								December 31, 2013				December 31, 20121
								(Unaudited)
Assets
Current assets:
	Cash and cash equivalents							$	338,105			$	283,649
	Restricted cash								48,244				53,674
	Accounts receivable (less allowance for doubtful accounts of $22,416 and $19,463, respectively)								573,351				525,441
	Securitized accounts receivable - restricted for securitization investors								349,000				298,000
	Prepaid expenses and other current assets								40,062				28,126
	Deferred income taxes								4,750				6,464
Total current assets									1,353,512				1,195,354
Property and equipment									111,100				93,902
Less accumulated depreciation and amortization									(57,144	)			(48,706	)
Net property and equipment									53,956				45,196
Goodwill									1,552,725				926,609
Other intangibles, net									871,263				463,864
Other assets									144,808				90,847
Total assets								$	3,976,264			$	2,721,870
Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable							$	467,201			$	418,609
	Accrued expenses								114,870				75,812
	Customer deposits								182,541				187,627
	Securitization facility								349,000				298,000
	Current portion of notes payable and other obligations								662,439				141,875
	Other current liabilities								132,846				20,299
Total current liabilities									1,908,897				1,142,222
Notes payable and other obligations, less current portion									474,939				485,217
Deferred income taxes									249,504				180,609
Other noncurrent liabilities									99,030				-
Total noncurrent liabilities									823,473				665,826
Commitments and contingencies
Stockholders’ equity:
	Common stock, $0.001 par value; 475,000,000 shares authorized, 118,206,262 shares issued and 82,471,770 shares outstanding at December 31, 2013; and 475,000,000 shares authorized, 116,772,324 shares issued and 81,037,832 shares outstanding at December 31, 2012								117				116
	Additional paid-in capital								631,667				542,018
	Retained earnings								1,035,198				750,697
	Accumulated other comprehensive loss								(47,426	)			(3,346	)
	Less treasury stock, 35,734,492 shares at December 31, 2013 and December 31, 2012								(375,663	)			(375,663	)
Total stockholders’ equity									1,243,893				913,822
Total liabilities and stockholders’ equity								$	3,976,263			$	2,721,870
1Certain prior period amounts have been reclassified for consistent presentation with the current year.

FleetCor Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
	Year Ended December 31,
	2013				2012
	(Unaudited)
Operating activities
Net income	$	284,501			$	216,199
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		16,885				14,116
Stock-based compensation		26,676				19,275
Provision for losses on accounts receivable		18,867				21,896
Amortization of deferred financing costs		3,276				2,279
Amortization of intangible assets		49,313				32,376
Amortization of premium on receivables		3,263				3,265
Deferred income taxes		(5,453	)			(3,337	)
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash		5,430				2,088
Accounts receivable		(45,005	)			(71,102	)
Prepaid expenses and other current assets		(74	)			(6,847	)
Other assets		38,906				(46,553	)
Excess tax benefits related to stock-based compensation		(32,535	)			(29,355	)
Accounts payable, accrued expenses and customer deposits		11,635				(18,840	)
Net cash provided by operating activities		375,685				135,460
Investing activities
Acquisitions, net of cash acquired		(728,343	)			(190,447	)
Purchases of property and equipment		(20,785	)			(19,111	)
Net cash used in investing activities		(749,128	)			(209,558	)
Financing activities
Excess tax benefits related to stock-based compensation		32,535				29,355
Repurchase of common stock		–				(200,000	)
Proceeds from issuance of common stock		30,438				27,187
Borrowings on securitization facility, net		51,000				18,000
Deferred financing costs paid		(1,970	)			(3,776	)
Principal payments on notes payable		(28,125	)			(30,414	)
Proceeds from notes payable		-				250,000
Borrowings from U.S. revolver		575,000				455,000
Payments on U.S. revolver		(250,000	)			(480,000	)
Borrowings from foreign revolver		911,025				–
Payments on foreign revolver		(705,715	)			–
Payments on swing line of credit, net		–				(1,874	)
Payments on acquired debt		(164,083	)			–
Other		(14,380	)			(1,490	)
Net cash provided by financing activities		435,725				61,988
Effect of foreign currency exchange rates on cash		(7,826	)			10,600
Net increase (decrease) in cash and cash equivalents		54,456				(1,510	)
Cash and cash equivalents, beginning of year		283,649				285,159
Cash and cash equivalents, end of year	$	338,105			$	283,649
Supplemental cash flow information
Cash paid for interest	$	25,886			$	14,760
Cash paid for income taxes	$	99,308			$	38,169

Exhibit 1
RECONCILIATION OF NON-GAAP MEASURES
(In thousands, except shares and per share amounts)
(Unaudited)
	The following table reconciles revenues, net to adjusted revenues:
			Three Months Ended December 31,								Year Ended December 31,
				2013				2012				2013				2012
Revenues, net			$	255,501			$	202,617			$	895,171			$	707,534
Merchant commissions				17,783				17,599				68,143				58,573
Total adjusted revenues			$	237,718			$	185,018			$	827,028			$	648,961
	The following table reconciles net income to EBITDA:
			Three Months Ended December 31,								Year Ended December 31,
				2013				2012				2013				2012
Net income			$	68,120			$	60,071			$	284,501			$	216,199
Provision for income taxes				31,957				29,108				119,068				94,591
Interest expense, net				5,501				3,390				16,461				13,017
Depreciation and amortization				24,158				15,116				72,737				52,036
Other expense, net				472				602				602				1,121
EBITDA			$	130,208			$	108,287			$	493,369			$	376,964
	The following table reconciles net income to adjusted net income and adjusted net income per diluted share:
			Three Months Ended December 31,								Year Ended December 31,
				2013				2012				2013				2012
Net income			$	68,120			$	60,071			$	284,501			$	216,199
Stock based compensation				14,235				4,988				26,676				19,275
Amortization of intangible assets				17,778				9,332				49,313				32,376
Amortization of premium on receivables				815				816				3,263				3,265
Amortization of deferred financing costs				842				683				3,276				2,279
Total pre-tax adjustments				33,670				15,819				82,528				57,195
Income tax impact of pre-tax adjustments at the effective tax rate				(9,712	)			(5,163	)			(24,349	)			(17,408	)
Adjusted net income			$	92,078			$	70,727			$	342,680			$	255,986
Adjusted net income per diluted share			$	1.08			$	0.82			$	4.05			$	2.99
Diluted shares				85,277				85,750				84,655				85,736

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 December 31,																Year Ended December 31,
				2013				2012			Change				% Change					2013				2012			Change				% Change
	NORTH AMERICA
	- Transactions			42,262				39,663				2,599			6.6	%				164,953				156,868				8,085			5.2	%
	- Revenues, net per transaction		$	2.97			$	2.74			$	0.23			8.4	%			$	2.79			$	2.55			$	0.24			9.5	%
	- Revenues, net		$	125,359			$	108,571			$	16,788			15.5	%			$	460,705			$	400,164			$	60,541			15.1	%
	INTERNATIONAL
	- Transactions			47,817				38,725				9,092			23.5	%				162,563				146,894				15,669			10.7	%
	- Revenues, net per transaction		$	2.72			$	2.43			$	0.29			12.1	%			$	2.67			$	2.09			$	0.58			27.7	%
	- Revenues, net		$	130,142			$	94,046			$	36,096			38.4	%			$	434,466			$	307,370			$	127,096			41.3	%
	FLEETCOR CONSOLIDATED REVENUES
	- Transactions			90,079				78,388				11,691			14.9	%				327,516				303,762				23,754			7.8	%
	- Revenues, net per transaction		$	2.84			$	2.58			$	0.25			9.7	%			$	2.73			$	2.33			$	0.40			17.3	%
	- Revenues, net		$	255,501			$	202,617			$	52,884			26.1	%			$	895,171			$	707,534			$	187,637			26.5	%
	FLEETCOR CONSOLIDATED ADJUSTED REVENUES1
	- Transactions			90,079				78,388				11,691			14.9	%				327,516				303,762				23,754			7.8	%
	- Adjusted Revenues per transaction		$	2.64			$	2.36			$	0.28			11.8	%			$	2.53			$	2.14			$	0.39			18.2	%
	- Adjusted Revenues		$	237,718			$	185,018			$	52,700			28.5	%			$	827,028			$	648,961			$	178,067			27.4	%
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 December 31,																Year Ended December 31,
				2013				2012			Change				% Change					2013				2012			Change				% Change
	Revenue from customers and partners			56.8	%			48.6	%			8.2	%		16.9	%				53.6	%			46.9	%			6.7	%		14.3	%
	Revenue from merchants and networks			43.2	%			51.4	%			-8.2	%		-16.0	%				46.4	%			53.1	%			-6.7	%		-12.6	%
	Revenue tied to fuel-price spreads			13.6	%			17.4	%			-3.8	%		-21.8	%				15.7	%			17.5	%			-1.8	%		-10.3	%
	Revenue influenced by absolute price of fuel			18.3	%			20.2	%			-1.9	%		-9.4	%				19.6	%			20.7	%			-1.1	%		-5.3	%
	Revenue from program fees, late fees, interest and other			68.1	%			62.4	%			5.7	%		9.1	%				64.7	%			61.8	%			2.9	%		4.7	%
2Expressed as a percentage of consolidated revenue, net.

Exhibit 3
Segment Results
(In thousands)
(Unaudited)
			Three Months Ended December 31,						Year Ended December 31,
			2013			2012			2013			2012
Revenues, net:1
	North America		$	125,359		$	108,571		$	460,705		$	400,164
	International			130,142			94,046			434,466			307,370
			$	255,501		$	202,617		$	895,171		$	707,534
Operating income:1
	North America		$	51,904		$	55,692		$	220,526		$	196,677
	International			54,146			37,479			200,106			128,251
			$	106,050		$	93,171		$	420,632		$	324,928
Depreciation and amortization:1
	North America		$	6,669		$	5,225		$	22,267		$	20,289
	International			17,489			9,891			50,470			31,747
			$	24,158		$	15,116		$	72,737		$	52,036
Capital expenditures:1
	North America		$	1,834		$	1,986		$	6,132		$	7,735
	International			3,603			3,492			14,653			11,376
			$	5,437		$	5,478		$	20,785		$	19,111
1The results from our Russian business acquired in the second quarter of 2012, CTF Technologies, Inc. in Brazil acquired during the third quarter of 2012, Australian business acquired during the first quarter of 2013, New Zealand business acquired during the second quarter of 2013, VB business in Brazil acquired during the third quarter of 2013, DB business in Brazil and Epyx business in the UK acquired during the fourth quarter of 2013, are reported in our International segment. The results from Telenav acquired during the first quarter of 2013 and Nextraq acquired during the fourth quarter of 2013, both US telematics businesses, are reported in our North American segment.

 

Source: FleetCor Technologies, Inc.

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