FleetCor Reports Fourth Quarter and Fiscal-Year 2015 Financial Results

February 4, 2016

Fourth Quarter and Fiscal-Year 2015 Adjusted Net Income Per Share Grows 22% Year-Over-Year

NORCROSS, Ga.--(BUSINESS WIRE)--Feb. 4, 2016-- 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 ended December 31, 2015.

“We posted another 20% plus adjusted net income growth quarter, despite a pretty challenging macro environment,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc. “For full year 2015, total revenue grew 42%, organic revenue grew approximately 10%, and adjusted net income per share grew 22%.”

Financial Results for Fourth Quarter 2015:

GAAP Results

Total revenues increased 14% to $430.6 million in the fourth quarter of 2015 compared to $376.7 million in the fourth quarter of 2014.
GAAP net income¹decreased 52% to $52.8 million or $0.56 per diluted share in the fourth quarter of 2015 compared to GAAP net income of $109.5 million or $1.21 per diluted share in the fourth quarter of 2014. Included in GAAP net income for the quarter was a $40.0 million non-cash impairment charge related to our minority investment in Masternaut and a $34.4 million increase in non-cash stock based compensation expense compared to 2014.

Non-GAAP Results

Adjusted revenues¹ (revenues, net less merchant commissions) increased 17% to $403.1 million in the fourth quarter of 2015 compared to $343.4 million in the fourth quarter of 2014.
Adjusted net income¹ increased 27% to $160.2 million in the fourth quarter of 2015 compared to $125.8 million in the fourth quarter of 2014.
Adjusted net income per diluted share¹ increased 22% to $1.70 in the fourth quarter of 2015 compared to $1.39 in the fourth quarter of 2014.

Financial Results for Fiscal-Year 2015:

GAAP Results

Total revenues increased 42% to $1,702.9 million in 2015 compared to $1,199.4 million in 2014.
GAAP net income¹decreased 2% to $362.4 million or $3.85 per diluted share in 2015 compared to GAAP net income of $368.7 million or $4.24 per diluted share in 2014. Included in GAAP net income in 2015 was a $40.0 million non-cash impairment charge related to a minority investment in Masternaut and a $52.5 million increase in non-cash stock based compensation expense compared to 2014.

Non-GAAP Results

Adjusted revenues¹ (revenues, net less merchant commissions) increased 45% to $1,594.6 million in 2015 compared to $1,103.1 million in 2014.
Adjusted net income per diluted share¹ increased 22% to $6.30 in 2015 compared to $5.15 in 2014.

____________

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.

Fiscal Year 2016 Outlook:

“For 2016, we again have a number of macro-economic headwinds impacting our business, primarily foreign exchange rates and fuel prices,” said Eric Dey, chief financial officer FleetCor Technologies, Inc. “In aggregate, we are estimating that the macro-economic environment creates an approximate $100 million revenue headwind and an approximate $0.70 adjusted net income per diluted share headwind versus 2015. Despite these headwinds, we like our fundamentals, and are guiding to year-over-year organic revenue growth of approximately 10% at constant fuel prices, currency, and market spreads. Our adjusted net income per share guidance at the midpoint of the range of $6.50 would have been approximately $7.20 for 2016 at constant fuel price, currency, and markets spread margins.”

For fiscal-year 2016, FleetCor Technologies, Inc. financial guidance and assumptions are as follows:

Total revenues between $1,730 million and $1,780 million;
Adjusted net income¹ between $605 million and $625 million; and
Adjusted net income per diluted share¹ between $6.40 and $6.60.

FleetCor’s fiscal-year guidance assumptions for 2016 are as follows:

Weighted fuel prices equal to $1.91 per gallon average for 2016 in the U.S. compared to $2.56 per gallon average in the U.S. in 2015, down approximately 25%.
Market spreads returning to normalized levels for 2016, down approximately $15 million versus 2015.
Foreign exchange rates equal to the seven day average ended January 15, 2016.
SVS business is retained for 2016.
Continued weakness in the Company’s Brazilian and Russian businesses
Fully diluted shares outstanding of 94.7 million shares.
Full year tax rate of approximately 32.2%.
No impact related to acquisitions or material new partnership agreements not already disclosed.

Conference Call

The company will host a conference call to discuss fourth quarter and fiscal-year 2015 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) 407-0784, or for international callers (201) 689-8560. 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 13629029. The replay will be available until February 11, 2016. 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 macro- economic conditions and estimated impact of these conditions on our operations and financial results, revenue and earnings guidance and assumptions underlying financial guidance. 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 fuel price and spread volatility; 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; 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, 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, 2014, filed with the Securities and Exchange Commission on March 2, 2015. 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, (d) loss on the early extinguishment of debt, (e) our proportionate share of amortization of intangible assets at our equity method investment, (f) non-cash impairment charges, and (g) 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 and impairment charges from adjusted net income, as these expenses are non-cash and are one-time in nature and do not reflect the ongoing operations of the business. Reconciliations of GAAP results to non-GAAP results are provided in the attached Exhibit 1.

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 high volume customer base that can increase their sales and customer loyalty. FleetCor serves commercial accounts in North America, Latin America, Europe, and Australia/New Zealand. For more information, please visit www.FLEETCOR.com.


FleetCor Technologies, Inc. and subsidiaries
Unaudited Consolidated Statements of Income
(In thousands, except per share amounts)

	Three Months Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
	(Unaudited)			(Unaudited)			(Unaudited)

Revenues, net	$	430,601		$	376,697		$	1,702,865		$	1,199,390

Expenses:
Merchant commissions		27,480			33,290			108,257			96,254
Processing		84,194			56,185			331,073			173,337
Selling		28,064			22,642			109,075			75,527
General and administrative		100,938			83,659			297,715			205,963
Depreciation and amortization		48,018			37,800			193,453			112,361
Other operating, net		(4,242	)		(29,501	)		(4,242	)		(29,501	)
Operating income		146,149			172,622			667,534			565,449
Equity method investment loss		43,742			4,897			57,668			8,586
Other expense (income), net		178			(1,570	)		2,523			(700	)
Interest expense, net		16,521			13,228			71,339			28,856
Loss on early extinguishment of debt		-			15,764			-			15,764
Total other expense		60,441			32,319			131,530			52,506
Income before income taxes		85,708			140,303			536,004			512,943
Provision for income taxes		32,878			30,763			173,573			144,236
Net income	$	52,830		$	109,540		$	362,431		$	368,707

Basic earnings per share	$	0.57		$	1.25		$	3.94		$	4.37
Diluted earnings per share	$	0.56		$	1.21		$	3.85		$	4.24

Weighted average shares outstanding:
Basic shares		92,321			87,877			92,023			84,317
Diluted shares		94,350			90,240			94,139			86,982


FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except share and par value amounts)

	December 31, 2015			December 31, 2014
	(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	447,152		$	477,069
Restricted cash		167,492			135,144
Accounts receivable (less allowance for doubtful accounts of $21,903 and $23,842, respectively)		637,539			673,797
Securitized accounts receivable - restricted for securitization investors		614,000			675,000
Prepaid expenses and other current assets		58,066			74,889
Deferred income taxes		8,913			101,451

Total current assets		1,933,162			2,137,350

Property and equipment		163,569			135,062
Less accumulated depreciation and amortization		(82,809	)		(61,499	)

Net property and equipment		80,760			73,563

Goodwill		3,721,518			3,811,862
Other intangibles, net		2,268,320			2,437,367
Equity method investment		76,568			141,933
Other assets		70,334			72,431

Total assets	$	8,150,662		$	8,674,506

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	669,528		$	716,676
Accrued expenses		156,277			178,375
Customer deposits		507,233			492,257
Securitization facility		614,000			675,000
Current portion of notes payable and other obligations		261,647			749,764
Other current liabilities		44,936			84,546

Total current liabilities		2,253,621			2,896,618

Notes payable and other obligations, less current portion		2,061,415			2,168,953
Deferred income taxes		733,593			815,169
Other noncurrent liabilities		31,942			40,629

Total noncurrent liabilities		2,826,950			3,024,751

Commitments and contingencies

Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized, 120,539,041 shares issued and 92,376,334 shares outstanding at December 31, 2015; and 475,000,000 shares authorized, 119,771,155 shares issued and 91,662,043 shares outstanding at December 31, 2014		121			120
Additional paid-in capital		1,988,917			1,852,442
Retained earnings		1,766,336			1,403,905
Accumulated other comprehensive loss		(330,767	)		(156,933	)
Less treasury stock, 28,162,706 and 28,109,112 shares at December 31, 2015 and 2014, respectively		(354,516	)		(346,397	)

Total stockholders’ equity		3,070,091			2,753,137

Total liabilities and stockholders’ equity	$	8,150,662		$	8,674,506


FleetCor Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(In Thousands)

	Year Ended December 31,
	2015			2014
	(Unaudited)
Operating activities
Net income	$	362,431		$	368,707
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		30,462			21,097
Stock-based compensation		90,122			37,649
Provision for losses on accounts receivable		24,629			24,412
Amortization of deferred financing costs and discounts		7,049			2,796
Loss on extinguishment of debt		-			15,764
Amortization of intangible assets		159,740			86,149
Amortization of premium on receivables		3,250			3,259
Deferred income taxes		(30,626	)		(41,716	)
Equity method investment loss		57,668			8,586
Other non-cash operating expenses		(4,242	)		(27,501	)
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash		(32,348	)		6,625
Accounts receivable		72,406			246,465
Prepaid expenses and other current assets		(6,391	)		2,820
Other assets		(1,602	)		12,455
Excess tax benefits related to stock-based compensation		(26,427	)		(56,790	)
Accounts payable, accrued expenses and customer deposits		47,099			(102,443	)
Net cash provided by operating activities		753,220			608,334


Investing activities
Acquisitions, net of cash acquired		(57,539	)		(2,567,017	)
Purchases of property and equipment		(41,875	)		(27,070	)
Net cash used in investing activities		(99,414	)		(2,594,087	)


Financing activities
Excess tax benefits related to stock-based compensation		26,427			56,790
Proceeds from issuance of common stock		19,926			29,641
Borrowings on securitization facility, net		(61,000	)		326,000
Deferred financing costs paid		-			(43,943	)
Proceeds from notes payable		-			2,320,000
Principal payments on notes payable		(103,500	)		(546,875	)
Borrowings from revolver- A Facility		-			807,330
Payments on revolver- A Facility		(486,818	)		(783,600	)
Payments on foreign revolver- B Facility		-			(7,337	)
Net (payments) borrowings on swing line of credit		(546	)		4,990
Payment of contingent consideration		(42,177	)		-
Other		(377	)		(731	)
Net cash (used in) provided by financing activities		(648,065	)		2,162,265

Effect of foreign currency exchange rates on cash		(35,658	)		(37,548	)

Net (decrease) increase in cash and cash equivalents		(29,917	)		138,964
Cash and cash equivalents, beginning of period		477,069			338,105
Cash and cash equivalents, end of period	$	447,152		$	477,069

Supplemental cash flow information
Cash paid for interest	$	72,537		$	29,098

Cash paid for income taxes	$	83,380		$	79,124


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 December 31,							Year Ended December 31,
	2015				2014			2015			2014

Revenues, net	$	430,601			$	376,697		$	1,702,865		$	1,199,390
Merchant commissions		27,480				33,290			108,257			96,254
Total adjusted revenues	$	403,121			$	343,407		$	1,594,608		$	1,103,136


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,
	2015				2014			2015			2014
Net income	$	52,830			$	109,540		$	362,431		$	368,707

Stock based compensation		45,735				11,357			90,122			37,649
Amortization of intangible assets		39,685				30,412			159,740			86,149
Amortization of premium on receivables		811				814			3,250			3,259
Amortization of deferred financing costs and discounts		1,754				1,197			7,049			2,796
Amortization of intangibles at equity method investment		2,261				2,824			10,665			7,982
Loss on extinguishment of debt		-				15,764			-			15,764
Other non-cash adjustments		-				(28,869	)		-			(28,869	)
Impairment of equity method investment		40,000				-			40,000			-

Total pre-tax adjustments		130,246				33,499			310,826			124,730

Income tax impact of pre-tax adjustments at the effective tax rate		(22,874	)	¹		(17,217	)		(80,632	)		(45,767	)

Adjusted net income	$	160,201			$	125,822		$	592,625		$	447,670
Adjusted net income per diluted share	$	1.70			$	1.39		$	6.30		$	5.15

Diluted shares		94,350				90,240			94,139			86,982

¹Effective tax rate utilized excludes the impact of a one time tax benefit recognized during the three months and year ended December 31, 2015 of approximately $0.8 million, as well as adjustments related to our equity method investment. Furthermore, the effective tax rate used to calculate the income tax impact of pre-tax adjustments during the three months and year ended December 31, 2014 excludes the impact of a $9.5 million discrete tax benefit, as well as other non-cash adjustments and their related income tax expense.


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,
		2015		2014		Change			% Change		2015		2014		Change			% Change

	NORTH AMERICA
	- Transactions²		522,275		331,242		191,033		57.7	%		1,667,534		459,955		1,207,579		262.5	%
	- Revenues, net per transaction	$	0.60	$	0.74	$	(0.14	)	-19.4	%	$	0.74	$	1.45	$	(0.71	)	-49.2	%
	- Revenues, net	$	313,624	$	246,749	$	66,875		27.1	%	$	1,231,957	$	668,328	$	563,629		84.3	%

	INTERNATIONAL
	- Transactions		45,816		48,623		(2,807	)	-5.8	%		183,856		192,489		(8,633	)	-4.5	%
	- Revenues, net per transaction	$	2.55	$	2.67	$	(0.12	)	-4.5	%	$	2.56	$	2.76	$	(0.20	)	-7.2	%
	- Revenues, net	$	116,977	$	129,948	$	(12,971	)	-10.0	%	$	470,908	$	531,062	$	(60,154	)	-11.3	%


	FLEETCOR CONSOLIDATED REVENUES
	- Transactions²		568,091		379,865		188,226		49.6	%		1,851,390		652,444		1,198,946		183.8	%
	- Revenues, net per transaction	$	0.76	$	0.99	$	(0.23	)	-23.6	%	$	0.92	$	1.84	$	(0.92	)	-50.0	%
	- Revenues, net	$	430,601	$	376,697	$	53,904		14.3	%	$	1,702,865	$	1,199,390	$	503,475		42.0	%



	FLEETCOR CONSOLIDATED ADJUSTED REVENUES¹
	- Transactions²		568,091		379,865		188,226		49.6	%		1,851,390		652,444		1,198,946		183.8	%
	- Adjusted revenues per transaction	$	0.71	$	0.90	$	(0.19	)	-21.5	%	$	0.86	$	1.69	$	(0.83	)	-49.1	%
	- Adjusted revenues	$	403,121	$	343,407	$	59,714		17.4	%	$	1,594,608	$	1,103,136	$	491,472		44.6	%

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 429 million and 270 million transactions for the three months ended December 31, 2015 and 2014, respectively, and 1.3 billion and 270 million transactions for the years ended December 31, 2015 and 2014, respectively, related to our SVS business acquired with Comdata in the fourth quarter of 2014.

Sources of Revenue³	Three Months Ended December 31,				Year Ended December 31,
	2015	2014	Change	% Change	2015	2014	Change	% Change
Revenue from customers and partners	66.0%	54.8%	11.2%	20.4%	64.8%	54.9%	9.9%	18.0%
Revenue from merchants and networks	34.0%	45.2%	-11.2%	-24.8%	35.2%	45.1%	-9.9%	-22.0%

Revenue directly tied to fuel-price spreads	12.3%	19.7%	-7.4%	-37.6%	12.4%	16.5%	-4.1%	-24.8%
Revenue directly influenced by absolute price of fuel	14.6%	14.6%	0.0%	0.0%	15.1%	17.0%	-1.9%	-11.2%
Revenue from program fees, late fees, interest and other	73.1%	65.7%	7.4%	11.3%	72.5%	66.5%	6.0%	9.0%

³Expressed as a percentage of consolidated revenue.


Exhibit 3
Segment Results
(In thousands)
(Unaudited)

	Three Months Ended December 31,				Year Ended December 31,
	2015		2014		2015		2014
Revenues, net:
North America	$	313,624	$	246,749	$	1,231,957	$	668,328
International		116,977		129,948		470,908		531,062
	$	430,601	$	376,697	$	1,702,865	$	1,199,390

Operating income:
North America	$	90,274	$	83,992	$	442,052	$	287,303
International		55,875		88,630		225,482		278,146
	$	146,149	$	172,622	$	667,534	$	565,449

Depreciation and amortization:
North America	$	31,663	$	19,628	$	127,863	$	39,275
International		16,355		18,172		65,590		73,086
	$	48,018	$	37,800	$	193,453	$	112,361

Capital expenditures:
North America	$	5,373	$	4,010	$	19,883	$	9,407
International		6,976		4,781		21,992		17,663
	$	12,349	$	8,791	$	41,875	$	27,070

View source version on businesswire.com: http://www.businesswire.com/news/home/20160204006331/en/

Source: FleetCor Technologies, Inc.

FleetCor Technologies, Inc.
Investor Relations
770-729-2017
investor@fleetcor.com

Release Details

FleetCor Reports Fourth Quarter and Fiscal-Year 2015 Financial Results