Release Details

FleetCor Reports Third Quarter 2013 Financial Results

October 30, 2013

Adjusted Net Income Per Share Grows 30%

Raises 2013 Guidance

NORCROSS, Ga.--(BUSINESS WIRE)--Oct. 30, 2013-- FleetCor Technologies, Inc. (NYSE:FLT), a leading global provider of fuel cards and workforce payment products to businesses, today reported financial results for its third quarter ended September 30, 2013.

"We are pleased to report another quarter of strong results, which include adjusted net income per diluted share growth of 30%,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc. “We are also delighted to announce the closing of two new acquisitions in October, Epyx in the U.K. and Nextraq in the U.S., along with the closing of the DB Trans acquisition in Brazil, which was previously announced.”

Financial Results for Third Quarter 2013:

GAAP Results

  • Total revenues increased 20% to $225.2 million compared to $186.9 million last year
  • Net income increased 32% to $78.6 million compared to $59.6 million last year
  • Net income per diluted share increased 35% to $0.93 compared to $0.69 last year

Non-GAAP Results1

  • Adjusted revenues1 (revenues, net less merchant commissions) increased 20% to $208.2 million compared to $174.0 million last year
  • Adjusted net income1 increased 28% to $91.4 million compared to $71.6 million last year
  • Adjusted net income per diluted share1 increased 30% to $1.08 compared to $0.83 last year

Included in GAAP net income and adjusted net income for the third quarter of 2013 was the impact of a one-time income tax benefit of $3.8 million or $0.05 per share that resulted from UK legislation passed in the quarter.

2013 Outlook:

FleetCor Technologies, Inc. is raising its financial guidance for 2013 as follows:

  • Revenues, net between $875 million and $880 million;
  • Adjusted net income between $339 million and $341 million;
  • Adjusted net income per diluted share between $4.01 and $4.03.

The Company's full-year guidance assumptions for the remainder of 2013 are as follows:

  • Fuel prices and foreign exchange rates at current levels
  • Market spreads equal to historical average
  • Full year tax rate of 30%
  • Fully diluted shares outstanding of 84.7 million shares
  • Approximately $0.02 of adjusted net income per diluted share related to the Nextraq and Epyx acquisitions announced today, net of deal and integration expenses in the fourth quarter
  • No impact related to acquisitions or material new partnership agreements not already disclosed

“Given the strong performance in the third quarter and recently completed acquisitions, we are raising our 2013 full year adjusted net income per share guidance by $0.12 from $3.90 to $4.02 at the midpoint,” said Eric Dey, chief financial officer, FleetCor Technologies, Inc. "Our full year guidance includes the impact of the acquisitions just announced, net of deal and integration expenses that we expect to incur in the fourth quarter, and a one-time tax benefit of $0.05 recorded in the third quarter related to a reduction in the U.K. corporate tax rate.”

_____________________________

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.

Conference Call

The Company will host a conference call to discuss third 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) 941-2068, or for international callers (480) 629-9712. 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 4645522. The replay will be available until November 6, 2013. 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.

                     
FleetCor Technologies, Inc. and subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
                       
    Three Months Ended September 30,     Nine Months Ended September 30,
      2013         2012       2013     2012
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
                       
Revenues, net   $ 225,150       $ 186,932       $ 639,670     $ 504,917
                       
Expenses:                      
Merchant commissions     16,944         12,930         50,360       40,974
Processing     33,473         30,568         95,426       83,161
Selling     13,859         12,790         38,949       33,239
General and administrative     31,559         31,219         91,774       78,866
Depreciation and amortization     18,060         13,591         48,579       36,920
Operating income     111,255         85,834         314,582       231,757
Other (income) expense, net     (156 )       (3 )       130       519
Interest expense, net     3,756         3,246         10,960       9,627
Total other expense     3,600         3,243         11,090       10,146
Income before income taxes     107,655         82,591         303,492       221,611
Provision for income taxes     29,035         22,943         87,111       65,483
Net income   $ 78,620       $ 59,648       $ 216,381     $ 156,128
                       
Basic earnings per share   $ 0.96       $ 0.71       $ 2.65     $ 1.88
Diluted earnings per share   $ 0.93       $ 0.69       $ 2.56     $ 1.82
                       
Weighted average shares outstanding:                      
Basic shares     81,974         84,002    

 

  81,592       83,260
Diluted shares     84,905         86,224    

 

  84,446       85,681
                       
             
FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except share and par value amounts)
                   
            September 30, 2013     December 31, 2012*
            (Unaudited)      
Assets                  
                   
Current assets:            
Cash and cash equivalents     $ 345,689       $ 283,649  
Restricted cash       50,008         53,674  
Accounts receivable (less allowance for doubtful accounts of $20,240 and $19,463 respectively)       661,901         525,441  
Securitized accounts receivable - restricted for securitization investors       394,000         298,000  
Prepaid expenses and other current assets       32,988         28,126  
Deferred income taxes       5,938         6,464  
                   
Total current assets       1,490,524         1,195,354  
                   
Property and equipment       108,288         93,902  
Less accumulated depreciation and amortization       (59,491 )       (48,706 )
                   
Net property and equipment       48,797         45,196  
                   
Goodwill             1,241,969         926,609  
Other intangibles, net       643,938         463,864  
Other assets       49,877         90,847  
                   
Total assets     $ 3,475,105       $ 2,721,870  
                   
Liabilities and Stockholders’ Equity            
                   
Current liabilities:            
Accounts payable     $ 567,420       $ 418,609  
Accrued expenses       69,054         75,812  
Customer deposits       177,511         187,627  
Securitization facility       394,000         298,000  
Current portion of notes payable and lines of credit       260,890         141,875  
Other current liabilities       128,085         20,299  
                   
Total current liabilities       1,596,960         1,142,222  
                   
Notes payable and other obligations, less current portion       479,082         485,217  
Deferred income taxes       225,161         180,609  
                   
Total noncurrent liabilities       704,243         665,826  
                   
Commitments and contingencies            
                   
Stockholders’ equity:            
                     
Common stock, $0.001 par value; 475,000,000 shares authorized, 117,898,939 shares issued and 82,164,447 shares outstanding at September 30, 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       601,577         542,018  
Retained earnings       967,078         750,697  
Accumulated other comprehensive loss       (19,207 )       (3,346 )
             
Less treasury stock, 35,734,492 shares at September 30, 2013 and December 31, 2012       (375,663 )       (375,663 )
Total stockholders’ equity       1,173,902         913,822  
                   
Total liabilities and stockholders’ equity     $ 3,475,105       $ 2,721,870  
                   
*Derived from the audited December 31, 2012 Balance Sheet.
 
             
FleetCor Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
       
      Nine Months Ended September 30,
        2013         2012  
      (Unaudited)      
Operating activities            
Net income     $ 216,381       $ 156,128  
             
Adjustments to reconcile net income to net cash provided by operating activities:            
                     
Depreciation       12,162         9,831  
Stock-based compensation       12,441         14,287  
Provision for losses on accounts receivable       14,069         16,788  
Amortization of deferred financing costs       2,434         1,596  
Amortization of intangible assets       31,535         23,044  
Amortization of premium on receivables       2,448         2,449  
Deferred income taxes       (4,524 )       2,501  
Changes in operating assets and liabilities (net of acquisitions):            
Restricted cash       3,666         3,576  
Accounts receivable       (184,367 )       (178,715 )
Prepaid expenses and other current assets       (1,774 )       (4,352 )
Other assets       38,580         (45,291 )
Excess tax benefits related to stock-based compensation       (24,319 )       (23,177 )
Accounts payable, accrued expenses and customer deposits       89,279         54,466  
Net cash provided by operating activities       208,011         33,131  
             
             
Investing activities            
Acquisitions, net of cash acquired       (376,971 )       (189,819 )
Purchases of property and equipment       (15,348 )       (13,634 )
Net cash used in investing activities       (392,319 )       (203,453 )
             
             
Financing activities            
Excess tax benefits related to stock-based compensation       24,319         23,177  
Proceeds from issuance of common stock       22,800         21,391  
Borrowings on securitization facility, net       96,000         75,000  
Deferred financing costs paid       (1,970 )       (796 )
Principal payments on notes payable       (21,250 )       (23,492 )
Payments on US revolver       (155,000 )       (250,000 )
Borrowings from US revolver       280,000         330,000  
Borrowings on swing line of credit, net               1,000  
Borrowings from foreign revolver       53,494          
Payments on foreign revolver       (44,533 )        
Other       (255 )       (129 )
Net cash provided by financing activities       253,605         176,151  
             
Effect of foreign currency exchange rates on cash       (7,257 )       9,073  
             
Net increase in cash and cash equivalents       62,040         14,902  
Cash and cash equivalents, beginning of year       283,649         285,159  
Cash and cash equivalents, end of year     $ 345,689       $ 300,061  
             
Supplemental cash flow information            
Cash paid for interest     $ 13,041       $ 10,858  
             
Cash paid for income taxes     $ 84,695       $ 29,428  
                     
                           
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 September 30,     Nine Months Ended September 30,
            2013         2012         2013         2012  
                             
Revenues, net       $ 225,150       $ 186,932       $ 639,670       $ 504,917  
Merchant commissions         16,944         12,930         50,360         40,974  
Total adjusted revenues       $ 208,206       $ 174,002       $ 589,310       $ 463,943  
                             
                             
The following table reconciles net income to EBITDA:                          
                             
          Three Months Ended September 30,     Nine Months Ended September 30,
            2013         2012         2013         2012  
                             
Net income       $ 78,620       $ 59,648       $ 216,381       $ 156,128  
Provision for income taxes         29,035         22,943         87,111         65,483  
Interest expense, net         3,756         3,246         10,960         9,627  
Depreciation and amortization         18,060         13,591         48,579         36,920  
Other (income) expense, net         (156 )       (3 )       130         519  
EBITDA         $ 129,315       $ 99,425       $ 363,161       $ 268,677  
                             
                             
The following table reconciles net income to adjusted net income and adjusted net income per diluted share:
                             
          Three Months Ended September 30,     Nine Months Ended September 30,
            2013         2012         2013         2012  
Net income       $ 78,620       $ 59,648       $ 216,381       $ 156,128  
                             
Stock based compensation         4,382         6,494         12,441         14,287  
Amortization of intangible assets         12,296         8,687         31,535         23,044  
Amortization of premium on receivables         816         816         2,448         2,449  
Amortization of deferred financing costs         841         545         2,434         1,596  
                             
Total pre-tax adjustments         18,335         16,542         48,858         41,376  
                             
Income tax impact of pre-tax adjustments at the effective tax rate         (5,596 )       (4,595 )       (14,639 )       (12,226 )
                             
Adjusted net income       $ 91,359       $ 71,595       $ 250,600       $ 185,278  
Adjusted net income per diluted share       $ 1.08       $ 0.83       $ 2.97       $ 2.16  
                             
Diluted shares         84,905         86,224         84,446         85,681  
                                           
                                     
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 September 30,     Nine Months Ended September 30,
        2013       2012     Change   % Change       2013       2012     Change   % Change  
                                     

NORTH AMERICA

                                   
- Transactions       43,291       41,203       2,088     5.1 %       122,691       117,204       5,487     4.7 %
- Revenues, net per transaction     $ 2.66     $ 2.46     $ 0.20     8.1 %     $ 2.73     $ 2.49     $ 0.25     9.9 %
- Revenues, net     $ 115,266     $ 101,495     $ 13,771     13.6 %     $ 335,346     $ 291,593     $ 43,753     15.0 %
                                     

INTERNATIONAL

                                   
- Transactions       41,012       38,058       2,954     7.8 %       114,747       108,170       6,577     6.1 %
- Revenues, net per transaction     $ 2.68     $ 2.24     $ 0.43     19.4 %     $ 2.65     $ 1.97     $ 0.68     34.5 %
- Revenues, net     $ 109,884     $ 85,437     $ 24,447     28.6 %     $ 304,324     $ 213,324     $ 91,000     42.7 %
                                     
                                     

FLEETCOR CONSOLIDATED REVENUES

                                   
- Transactions       84,303       79,261       5,042     6.4 %       237,438       225,374       12,064     5.4 %
- Revenues, net per transaction     $ 2.67     $ 2.36     $ 0.31     13.2 %     $ 2.69     $ 2.24     $ 0.45     20.3 %
- Revenues, net     $ 225,150     $ 186,932     $ 38,218     20.4 %     $ 639,670     $ 504,917     $ 134,753     26.7 %
                                     
                                     
                                     

FLEETCOR CONSOLIDATED ADJUSTED REVENUES1

                                   
- Transactions       84,303       79,261       5,042     6.4 %       237,438       225,374       12,064     5.4 %
- Adjusted Revenues per transaction     $ 2.47     $ 2.20     $ 0.27     12.5 %     $ 2.48     $ 2.06     $ 0.42     20.6 %
- Adjusted Revenues     $ 208,206     $ 174,002     $ 34,204     19.7 %     $ 589,310     $ 463,943     $ 125,367     27.0 %
                                     
                                     
                                     
1Adjusted revenues is a non-GAAP financial measure defined as revenues, net less merchant commissions. The Company believes this measure is a more effective way to evaluate the Company's revenue performance. Refer to Exhibit 1 for a reconciliation of revenues, net to adjusted revenues.
                                     

Sources of Revenue2

                                   
      Three Months Ended September 30,     Nine Months Ended September 30,
        2013       2012     Change   % Change       2013       2012     Change   % Change
Revenue from customers and partners       54.4 %     50.8 %     3.6 %   7.1 %       52.3 %     46.2 %     6.1 %   13.2 %
Revenue from merchants and networks       45.6 %     49.2 %     -3.6 %   -7.3 %       47.7 %     53.8 %     -6.1 %   -11.3 %
                                     
Revenue tied to fuel-price spreads       14.8 %     14.0 %     0.8 %   5.7 %       16.5 %     17.6 %     -1.1 %   -6.2 %
Revenue influenced by absolute price of fuel       20.0 %     21.7 %     -1.7 %   -7.8 %       20.1 %     20.8 %     -0.7 %   -3.4 %
Revenue from program fees, late fees, interest and other       65.2 %     64.3 %     0.9 %   1.4 %       63.4 %     61.6 %     1.8 %   2.9 %
                                     
2Expressed as a percentage of consolidated revenue.      
       
                         
Exhibit 3
Segment Results
(In thousands)
(Unaudited)
                         
      Three Months Ended September 30,     Nine Months Ended September 30,
      2013     2012     2013     2012
Revenues, net:                        
North America     $ 115,266     $ 101,495     $ 335,346     $ 291,593
International1       109,884       85,437       304,324       213,324
      $ 225,150     $ 186,932     $ 639,670     $ 504,917
                         
Operating income:                        
North America     $ 59,093     $ 49,273     $ 168,622     $ 140,984
International1       52,162       36,561       145,960       90,773
      $ 111,255     $ 85,834     $ 314,582     $ 231,757
                         
Depreciation and amortization:                        
North America     $ 5,159     $ 5,046     $ 15,598     $ 15,064
International1       12,901       8,545       32,981       21,856
      $ 18,060     $ 13,591     $ 48,579     $ 36,920
                         
Capital expenditures:                        
North America     $ 1,942     $ 1,153     $ 4,298     $ 5,749
International1       3,298       4,050       11,050       7,885
      $ 5,240     $ 5,203     $ 15,348     $ 13,634
                         

1The results from our Russian business acquired in the second quarter of 2012, CTF Technologies, Inc. acquired during the third quarter of 2012, our Australian business acquired during the first quarter of 2013, New Zealand business acquired during the second quarter of 2013 and VB business acquired during the third quarter of 2013 are reported in our International segment.

 

Source: FleetCor Technologies, Inc.

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