Release Details

FleetCor Reports Second Quarter 2014 Financial Results

July 31, 2014

Adjusted Net Income Per Share Grows 28% Year-Over-Year

Raises 2014 Guidance

NORCROSS, Ga.--(BUSINESS WIRE)--Jul. 31, 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 second quarter ended June 30, 2014.

“We are pleased with our results for the quarter which included adjusted net income per diluted share growth of 28% and adjusted revenue growth of 26%,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc. “These results were driven by strong organic growth in the U.S. and the impact of acquisitions closed over the last year. Integration of our recent acquisitions remains on track.”

Financial Results for Second Quarter 2014:

GAAP Results

  • Total revenues increased 24% to $273.5 million compared to $220.9 million in the second quarter of 2013;
  • Net income increased 21% to $88.5 million compared to $73.1 million in the second quarter of 2013;
  • Net income per diluted share increased 19% to $1.03 compared to $0.87 in the second quarter of 2013.

Non-GAAP Results

  • Adjusted revenues1 (revenues, net less merchant commissions) increased 26% to $253.2 million compared to $201.3 million in the second quarter of 2013;
  • Adjusted net income1 increased 30% to $108.9 million compared to $84.0 million in the second quarter of 2013;
  • Adjusted net income per diluted share1 increased 28% to $1.27 compared to $1.00 in the second quarter of 2013.

Fiscal Year 2014 Outlook:

For fiscal year 2014 FleetCor Technologies, Inc. is raising its financial guidance for 2014 as follows:

  • Total revenues between $1,082 million and $1,097 million, up from our previous guidance range of $1,075 million and $1,095 million;
  • Adjusted net income between $432 million and $438 million, up from our previous guidance range of $422 million and $432 million;
  • Adjusted net income per diluted share between $5.04 and $5.10, up from our previous guidance range of $4.97 and $5.07.

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

  • Continued weakness in our Russian business
  • A start up investment related to the implementation of the Shell contract in Germany of approximately $2 million
  • Fuel prices and market spreads at the year to date average
  • FX rates equal to current levels
  • Full year tax rate of 30.7%
  • Fully diluted shares outstanding of 86 million shares
  • No impact related to acquisitions or material new partnership agreements not already disclosed

“We have reported another strong quarter and are again raising our financial guidance for 2014. We are now expecting a 22% growth in revenue and 25% 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 second quarter 2014 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 13586369. The replay will be available until August 7, 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 integration of 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, 2013, filed with the Securities and Exchange Commission on March 3, 2014. 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 and (e) our proportionate share of amortization of intangible assets at our equity method investment. Adjusted 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, (e) other (income) expense, net and (f) gains and losses at equity method investment. 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 adjusted EBITDA as a basis to evaluate our operating performance net of the impact of certain items during the period. We believe that adjusted 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 adjusted 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 adjusted 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)
(Unaudited)
                             
                Three Months Ended June 30,   Six Months Ended June 30,
                2014   2013   2014   2013
                             
Revenues, net       $ 273,502     $ 220,869     $ 527,410   $ 414,520
                             
Expenses:                        
  Merchant commissions     20,327       19,555       37,950     33,416
  Processing         38,845       32,010       75,701     61,953
  Selling           17,521       13,386       34,935     25,090
  General and administrative     37,896       30,954       81,357     60,215
  Depreciation and amortization     24,429       15,890       48,847     30,519
Operating income       134,484       109,074       248,620     203,327
  Other (income) expense, net     (268 )     (6 )     276     286
  Interest expense, net     5,308       3,756       10,769     7,204
  Equity method investment loss     1,489       -       1,489     -
Total other expense       6,529       3,750       12,534     7,490
Income before income taxes     127,955       105,324       236,086     195,837
Provision for income taxes     39,406       32,225       72,428     58,076
Net income         $ 88,549     $ 73,099     $ 163,658   $ 137,761
                             
Basic earnings per share   $ 1.07     $ 0.90     $ 1.97   $ 1.69
Diluted earnings per share   $ 1.03     $ 0.87     $ 1.91   $ 1.64
                             
Weighted average shares outstanding:                
Basic shares           82,996       81,573       82,867     81,398
Diluted shares         85,817       84,461       85,757     84,212
FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except share and par value amounts)
 
                June 30, 2014   December 31, 2013
                (Unaudited)    
Assets                
                     
Current assets:          
  Cash and cash equivalents   $ 297,642     $ 338,105  
  Restricted cash     46,153       48,244  
  Accounts receivable (less allowance for doubtful accounts of $22,754 and $22,416, respectively)   688,527       573,351  
  Securitized accounts receivable - restricted for securitization investors     424,400       349,000  
  Prepaid expenses and other current assets     61,917       40,062  
  Deferred income taxes     4,415       4,750  
                     
Total current assets     1,523,054       1,353,512  
                     
Property and equipment     125,195       111,100  
Less accumulated depreciation and amortization     (68,695 )     (57,144 )
                     
Net property and equipment     56,500       53,956  
                     
Goodwill             1,572,930       1,552,725  
Other intangibles, net     848,635       871,263  
Equity method investment     162,383       -  
Other assets         89,863       100,779  
                     
Total assets         $ 4,253,365     $ 3,932,235  
                     
Liabilities and Stockholders’ Equity        
                     
Current liabilities:        
  Accounts payable   $ 573,482     $ 467,202  
  Accrued expenses     124,027       114,870  
  Customer deposits     193,604       182,541  
  Securitization facility     424,400       349,000  
  Current portion of notes payable and other obligations     596,749       662,439  
  Other current liabilities     115,726       132,846  
                     
Total current liabilities     2,027,988       1,908,898  
                     
Notes payable and other obligations, less current portion     450,207       474,939  
Deferred income taxes     245,984       249,504  
Other noncurrent liabilities     53,666       55,001  
                     
Total noncurrent liabilities     749,857       779,444  
                     
Commitments and contingencies        
                     
Stockholders’ equity:        
  Common stock, $0.001 par value; 475,000,000 shares authorized, 118,785,091 shares issued and 83,050,599 shares outstanding at June 30, 2014; and 475,000,000 shares authorized, 118,206,262 shares issued and 82,471,770 shares outstanding at December 31, 2013   118       117  
  Additional paid-in capital     676,876       631,667  
  Retained earnings     1,198,856       1,035,198  
  Accumulated other comprehensive loss     (24,667 )     (47,426 )
  Less treasury stock, 35,734,492 shares at March 31, 2014 and December 31, 2013   (375,663 )     (375,663 )
                     
Total stockholders’ equity     1,475,520       1,243,893  
                     
Total liabilities and stockholders’ equity   $ 4,253,365     $ 3,932,235  
FleetCor Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
 
  Six Months Ended June 30,
  2014   2013
Operating activities      
Net income $ 163,658     $ 137,761  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation   9,673       8,054  
Stock-based compensation   18,299       8,059  
Provision for losses on accounts receivable   11,783       9,199  
Amortization of deferred financing costs   1,062       1,593  
Amortization of intangible assets   36,482       19,239  
Amortization of premium on receivables   1,630       1,632  
Deferred income taxes   2,032       (2,598 )
Equity method investment loss   1,488      
Changes in operating assets and liabilities (net of acquisitions):      
Restricted cash   2,092       5,199  
Accounts receivable   (197,167 )     (190,998 )
Prepaid expenses and other current assets   (8,285 )     1,392  
Other assets   (388 )     39,322  
Excess tax benefits related to stock-based compensation   (18,634 )     (12,016 )
Accounts payable, accrued expenses and customer deposits   133,996       56,874  
Net cash provided by operating activities   157,721       82,712  
       
       
Investing activities      
Acquisitions, net of cash acquired   (189,850 )     (156,956 )
Purchases of property and equipment   (11,552 )     (10,108 )
Net cash used in investing activities   (201,402 )     (167,064 )
       
       
Financing activities      
Excess tax benefits related to stock-based compensation   18,634       12,016  
Proceeds from issuance of common stock   8,277       12,511  
Borrowings on securitization facility, net   75,400       104,000  
Deferred financing costs paid   (546 )     (1,967 )
Principal payments on notes payable   (13,750 )     (14,375 )
Payments on revolver- A Facility   (262,377 )     (70,000 )
Borrowings on revolver- A Facility   142,330       55,000  
Payments on foreign revolver- B Facility   (7,337 )     (13,821 )
Borrowings on foreign revolver- B Facility   -       26,895  
Borrowings from swing line of credit, net   41,522        
Other   (371 )     (175 )
Net cash provided by financing activities   1,782       110,084  
       
Effect of foreign currency exchange rates on cash   1,436       (16,476 )
       
Net (decrease) increase in cash and cash equivalents   (40,463 )     9,256  
Cash and cash equivalents, beginning of period   338,105       283,649  
Cash and cash equivalents, end of period $ 297,642     $ 292,905  
       
Supplemental cash flow information      
Cash paid for interest $ 12,797     $ 8,262  
       
Cash paid for income taxes $ 52,697     $ 60,120  
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 June 30,   Six Months Ended June 30,
      2014   2013   2014   2013
                   
Revenues, net   $ 273,502     $ 220,869     $ 527,410     $ 414,520  
Merchant commissions     20,327       19,555       37,950       33,416  
Total adjusted revenues   $ 253,175     $ 201,314     $ 489,460     $ 381,104  
                   
                   
  The following table reconciles net income to adjusted EBITDA              
                   
      Three Months Ended June 30,   Six Months Ended June 30,
      2014   2013   2014   2013
                   
Net income   $ 88,549     $ 73,099     $ 163,658     $ 137,761  
Provision for income taxes     39,406       32,225       72,428       58,076  
Interest expense, net     5,308       3,756       10,769       7,204  
Depreciation and amortization     24,429       15,890       48,847       30,519  
Other (income) expense, net     (268 )     (6 )     276       286  
Equity method investment loss     1,489       -       1,489       -  
Adjusted EBITDA   $ 158,913     $ 124,964     $ 297,467     $ 233,846  
                   
                   
  The following table reconciles net income to adjusted net income and adjusted net income per diluted share:        
                   
      Three Months Ended June 30,   Six Months Ended June 30,
      2014   2013   2014   2013
Net income   $ 88,549     $ 73,099     $ 163,658     $ 137,761  
                   
Stock based compensation     7,687       3,897       18,299       8,059  
Amortization of intangible assets     18,210       10,217       36,482       19,239  
Amortization of premium on receivables     816       816       1,630       1,632  
Amortization of deferred financing costs     531       833       1,062       1,593  
Amortization at equity method investment     2,149       -       2,149       -  
                   
Total pre-tax adjustments     29,393       15,763       59,622       30,523  
                   
Income tax impact of pre-tax adjustments at the effective tax rate   (9,052 )     (4,823 )     (18,291 )     (9,052 )
                   
Adjusted net income   $ 108,890     $ 84,039     $ 204,989     $ 159,232  
Adjusted net income per diluted share   $ 1.27     $ 1.00     $ 2.39     $ 1.89  
                   
Diluted shares     85,817       84,461       85,757       84,212  
                                 
                                 
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 June 30,     Six Months Ended June 30,
        2014       2013     Change   % Change     2014       2013     Change   % Change  
                                     
 

NORTH AMERICA

                                 
  - Transactions     42,717       41,138       1,579     3.8 %       83,142       79,400       3,742     4.7 %
  - Revenues, net per transaction   $ 3.25     $ 2.90     $ 0.35     11.9 %     $ 3.19     $ 2.77     $ 0.42     15.1 %
  - Revenues, net   $ 138,861     $ 119,486     $ 19,375     16.2 %     $ 265,236     $ 220,080     $ 45,156     20.5 %
                                     
 

INTERNATIONAL

                                 
  - Transactions     47,524       37,836       9,688     25.6 %       94,282       73,734       20,548     27.9 %
  - Revenues, net per transaction   $ 2.83     $ 2.68     $ 0.15     5.7 %     $ 2.78     $ 2.64     $ 0.14     5.4 %
  - Revenues, net   $ 134,641     $ 101,383     $ 33,258     32.8 %     $ 262,174     $ 194,440     $ 67,734     34.8 %
                                     
                                     
 

FLEETCOR CONSOLIDATED REVENUES

                                 
  - Transactions     90,241       78,974       11,267     14.3 %       177,424       153,134       24,290     15.9 %
  - Revenues, net per transaction   $ 3.03     $ 2.80     $ 0.23     8.4 %     $ 2.97     $ 2.71     $ 0.27     9.8 %
  - Revenues, net   $ 273,502     $ 220,869     $ 52,633     23.8 %     $ 527,410     $ 414,520     $ 112,890     27.2 %
                                     
                                     
                                     
 

FLEETCOR CONSOLIDATED ADJUSTED REVENUES1

                                 
  - Transactions     90,241       78,974       11,267     14.3 %       177,424       153,134       24,290     15.9 %
  - Adjusted Revenues per transaction   $ 2.81     $ 2.55     $ 0.26     10.1 %     $ 2.76     $ 2.49     $ 0.27     10.8 %
  - Adjusted Revenues   $ 253,175     $ 201,314     $ 51,861     25.8 %     $ 489,460     $ 381,104     $ 108,356     28.4 %
                                     
                                     
                                     
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 June 30,     Six Months Ended June 30,
        2014       2013     Change   % Change     2014       2013     Change   % Change  
  Revenue from customers and partners     55.1 %     50.9 %     4.2 %   8.3 %       55.6 %     51.1 %     4.5 %   8.8 %
  Revenue from merchants and networks     44.9 %     49.1 %     -4.2 %   -8.6 %       44.4 %     48.9 %     -4.5 %   -9.2 %
                                     
  Revenue tied to fuel-price spreads     14.5 %     18.7 %     -4.2 %   -22.5 %       14.2 %     17.4 %     -3.2 %   -18.4 %
  Revenue influenced by absolute price of fuel     18.7 %     19.6 %     -0.9 %   -4.6 %       18.4 %     20.1 %     -1.7 %   -8.5 %
  Revenue from program fees, late fees, interest and other     66.8 %     61.7 %     5.1 %   8.3 %       67.4 %     62.5 %     4.9 %   7.8 %
                                     
2Expressed as a percentage of consolidated revenue.
Exhibit 3
Segment Results
(In thousands)
(Unaudited)
                   
      Three Months Ended June 30,   Six Months Ended June 30,
      2014   2013   2014   2013
Revenues, net:                
  North America   $ 138,861   $ 119,486   $ 265,236   $ 220,080
  International     134,641     101,383     262,174     194,440
      $ 273,502   $ 220,869   $ 527,410   $ 414,520
                   
Operating income:                
  North America   $ 68,317   $ 60,103   $ 124,514   $ 109,529
  International     66,167     48,971     124,106     93,798
      $ 134,484   $ 109,074   $ 248,620   $ 203,327
                   
Depreciation and amortization:                
  North America   $ 6,376   $ 5,267   $ 13,012   $ 10,439
  International     18,053     10,623     35,835     20,080
      $ 24,429   $ 15,890   $ 48,847   $ 30,519
                   
Capital expenditures:                
  North America   $ 1,840   $ 1,292   $ 3,836   $ 2,356
  International     4,128     4,054     7,716     7,752
      $ 5,968   $ 5,346   $ 11,552   $ 10,108

 

Source: FleetCor Technologies, Inc.

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