FleetCor Reports Third Quarter 2014 Financial Results
Adjusted Net Income Per Share Grows 27% Year-Over-Year
Raises 2014 Guidance
“We are pleased with our results for the quarter, which included adjusted net income per diluted share growth of 27% and adjusted revenue growth of 30%.
Financial Results for Third Quarter 2014:
GAAP Results
- Total revenues increased 31% to
$295.3 million compared to$225.2 million in the third quarter of 2013; - Net income increased 21% to
$95.5 million compared to$78.6 million in the third quarter of 2013; - Net income per diluted share increased 19% to
$1.11 compared to$0.93 in the third quarter of 2013.
Non-GAAP Results
- Adjusted revenues1 (revenues, net less merchant commissions) increased 30% to
$270.3 million compared to$208.2 million in the third quarter of 2013; - Adjusted net income1 increased 29% to
$117.6 million compared to$91.4 million in the third quarter of 2013; - Adjusted net income per diluted share1 increased 27% to
$1.37 compared to$1.08 in the third quarter of 2013.
Fiscal Year 2014 Outlook:
“The third quarter was another strong quarter for the Company. While our business momentum remains strong, as we enter the fourth quarter we are experiencing headwinds in foreign exchange rates that will impact our Q4 2014 revenue and net income, assuming exchange rates remain at current levels,” said
For fiscal year 2014
- Total revenues between
$1,100 million and $1,110 million , up from the previous guidance range of$1,082 million and$1,097 million ; - Adjusted net income between
$434 million and $440 million , up from the previous guidance range of$432 million and$438 million ; - Adjusted net income per diluted share between
$5.07 and $5.11 , up from the previous guidance range of$5.04 and$5.10 .
The Company's fiscal-year guidance assumptions for 2014 are as follows:
- Fuel prices equal to current levels for the fourth quarter
- Market spreads slightly better than average levels
- Foreign exchange rates equal to current levels
- Continued weakness in the Company’s Russian business
- Full year tax rate of 30.4%,excludes any year-end adjusting entries
- Fully diluted shares outstanding of 86 million shares
- No impact related to Comdata or other acquisitions or material new partnership agreements not already disclosed
_____________________________
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 2014 financial results today at
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about
About Non-GAAP Financial Measures
Adjusted revenue is calculated as revenues, net less merchant commissions. Adjusted net income is calculated as net income, adjusted to eliminate (a) non-cash stock-based compensation expense related to share-based compensation awards, (b) amortization of deferred financing costs and intangible assets, (c) amortization of the premium recognized on the purchase of receivables, 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 Technologies, Inc. and subsidiaries | |||||||||||||||||
Consolidated Statements of Income | |||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues, net | $ | 295,283 | $ | 225,150 | $ | 822,693 | $ | 639,670 | |||||||||
Expenses: | |||||||||||||||||
Merchant commissions | 25,014 | 16,944 | 62,964 | 50,360 | |||||||||||||
Processing | 41,451 | 33,473 | 117,152 | 95,426 | |||||||||||||
Selling | 17,950 | 13,859 | 52,885 | 38,949 | |||||||||||||
General and administrative | 40,947 | 31,559 | 122,304 | 91,774 | |||||||||||||
Depreciation and amortization | 25,714 | 18,060 | 74,561 | 48,579 | |||||||||||||
Operating income | 144,207 | 111,255 | 392,827 | 314,582 | |||||||||||||
Other expense (income), net | 594 | (156 | ) | 870 | 130 | ||||||||||||
Interest expense, net | 4,859 | 3,756 | 15,628 | 10,960 | |||||||||||||
Equity method investment loss | 2,200 | - | 3,689 | - | |||||||||||||
Total other expense | 7,653 | 3,600 | 20,187 | 11,090 | |||||||||||||
Income before income taxes | 136,554 | 107,655 | 372,640 | 303,492 | |||||||||||||
Provision for income taxes | 41,045 | 29,035 | 113,473 | 87,111 | |||||||||||||
Net income | $ | 95,509 | $ | 78,620 | $ | 259,167 | $ | 216,381 | |||||||||
Basic earnings per share | $ | 1.14 | $ | 0.96 | $ | 3.12 | $ | 2.65 | |||||||||
Diluted earnings per share | $ | 1.11 | $ | 0.93 | $ | 3.02 | $ | 2.56 | |||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic shares | 83,611 | 81,974 | 83,118 | 81,592 | |||||||||||||
Diluted shares | 86,134 | 84,905 | 85,688 | 84,446 | |||||||||||||
FleetCor Technologies, Inc. and subsidiaries | ||||||||||
Consolidated Balance Sheets | ||||||||||
(In thousands, except share and par value amounts) | ||||||||||
September 30, 2014 | December 31, 2013 | |||||||||
(Unaudited) | ||||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 304,109 | $ | 338,105 | ||||||
Restricted cash | 42,348 | 48,244 | ||||||||
Accounts receivable (less allowance for doubtful accounts of $23,291 and $22,416, respectively) | 715,662 | 573,351 | ||||||||
Securitized accounts receivable - restricted for securitization investors | 393,600 | 349,000 | ||||||||
Prepaid expenses and other current assets | 45,512 | 40,062 | ||||||||
Deferred income taxes | 3,444 | 4,750 | ||||||||
Total current assets | 1,504,675 | 1,353,512 | ||||||||
Property and equipment | 127,340 | 111,100 | ||||||||
Less accumulated depreciation and amortization | (71,156 | ) | (57,144 | ) | ||||||
Net property and equipment | 56,184 | 53,956 | ||||||||
Goodwill | 1,557,011 | 1,552,725 | ||||||||
Other intangibles, net | 865,116 | 871,263 | ||||||||
Equity method investment | 147,512 | - | ||||||||
Other assets | 93,942 | 100,779 | ||||||||
Total assets | $ | 4,224,440 | $ | 3,932,235 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 612,691 | $ | 467,202 | ||||||
Accrued expenses | 109,258 | 114,870 | ||||||||
Customer deposits | 180,131 | 182,541 | ||||||||
Securitization facility | 393,600 | 349,000 | ||||||||
Current portion of notes payable and other obligations | 526,345 | 662,439 | ||||||||
Other current liabilities | 106,665 | 132,846 | ||||||||
Total current liabilities | 1,928,690 | 1,908,898 | ||||||||
Notes payable and other obligations, less current portion | 434,820 | 474,939 | ||||||||
Deferred income taxes | 233,695 | 249,504 | ||||||||
Other noncurrent liabilities | 68,428 | 55,001 | ||||||||
Total noncurrent liabilities | 736,943 | 779,444 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders’ equity: | ||||||||||
Common stock, $0.001 par value; 475,000,000 shares authorized, 119,544,837 shares issued and 83,810,345 shares outstanding at September 30, 2014; and 475,000,000 shares authorized, 118,206,262 shares issued and 82,471,770 shares outstanding at December 31, 2013 | 120 | 117 | ||||||||
Additional paid-in capital | 733,131 | 631,667 | ||||||||
Retained earnings | 1,294,365 | 1,035,198 | ||||||||
Accumulated other comprehensive loss | (93,146 | ) | (47,426 | ) | ||||||
Less treasury stock, 35,734,492 shares at September 30, 2014 and December 31, 2013 | (375,663 | ) | (375,663 | ) | ||||||
Total stockholders’ equity | 1,558,807 | 1,243,893 | ||||||||
Total liabilities and stockholders’ equity | $ | 4,224,440 | $ | 3,932,235 |
FleetCor Technologies, Inc. and Subsidiaries | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
(In Thousands) | ||||||||||
(Unaudited) | ||||||||||
Nine Months Ended September 30, | ||||||||||
2014 | 2013 | |||||||||
Operating activities | ||||||||||
Net income | $ | 259,167 | $ | 216,381 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation | 14,780 | 12,162 | ||||||||
Stock-based compensation | 26,292 | 12,441 | ||||||||
Provision for losses on accounts receivable | 18,109 | 14,069 | ||||||||
Amortization of deferred financing costs | 1,599 | 2,434 | ||||||||
Amortization of intangible assets | 55,737 | 31,535 | ||||||||
Amortization of premium on receivables | 2,445 | 2,448 | ||||||||
Deferred income taxes | (1,280 | ) | (4,524 | ) | ||||||
Equity method investment loss | 3,689 | - | ||||||||
Changes in operating assets and liabilities (net of acquisitions): | ||||||||||
Restricted cash | 6,109 | 3,666 | ||||||||
Accounts receivable | (137,942 | ) | (184,367 | ) | ||||||
Prepaid expenses and other current assets | (3,036 | ) | (1,774 | ) | ||||||
Other assets | 460 | 38,580 | ||||||||
Excess tax benefits related to stock-based compensation | (53,251 | ) | (24,319 | ) | ||||||
Accounts payable, accrued expenses and customer deposits | 124,614 | 89,279 | ||||||||
Net cash provided by operating activities | 317,492 | 208,011 | ||||||||
Investing activities | ||||||||||
Acquisitions, net of cash acquired | (261,919 | ) | (376,971 | ) | ||||||
Purchases of property and equipment | (18,279 | ) | (15,348 | ) | ||||||
Net cash used in investing activities | (280,198 | ) | (392,319 | ) | ||||||
Financing activities | ||||||||||
Excess tax benefits related to stock-based compensation | 53,251 | 24,319 | ||||||||
Proceeds from issuance of common stock | 21,922 | 22,800 | ||||||||
Borrowings on securitization facility, net | 44,600 | 96,000 | ||||||||
Deferred financing costs paid | (546 | ) | (1,970 | ) | ||||||
Principal payments on notes payable | (20,625 | ) | (21,250 | ) | ||||||
Payments on revolver-A Facility | (381,385 | ) | (155,000 | ) | ||||||
Borrowings on revolver-A Facility | 182,330 | 280,000 | ||||||||
Payments on foreign revolver-B Facility | (7,337 | ) | (44,533 | ) | ||||||
Borrowings on foreign revolver-B Facility | - | 53,494 | ||||||||
Borrowings from swing line of credit, net | 52,059 | – | ||||||||
Other | (462 | ) | (255 | ) | ||||||
Net cash provided by financing activities | (56,193 | ) | 253,605 | |||||||
Effect of foreign currency exchange rates on cash | (15,097 | ) | (7,257 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | (33,996 | ) | 62,040 | |||||||
Cash and cash equivalents, beginning of period | 338,105 | 283,649 | ||||||||
Cash and cash equivalents, end of period | $ | 304,109 | $ | 345,689 | ||||||
Supplemental cash flow information | ||||||||||
Cash paid for interest | $ | 19,238 | $ | 13,041 | ||||||
Cash paid for income taxes | $ | 63,553 | $ | 84,695 | ||||||
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, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Revenues, net | $ | 295,283 | $ | 225,150 | $ | 822,693 | $ | 639,670 | ||||||||||||
Merchant commissions | 25,014 | 16,944 | 62,964 | 50,360 | ||||||||||||||||
Total adjusted revenues | $ | 270,269 | $ | 208,206 | $ | 759,729 | $ | 589,310 | ||||||||||||
The following table reconciles net income to adjusted EBITDA | ||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Net income | $ | 95,509 | $ | 78,620 | $ | 259,167 | $ | 216,381 | ||||||||||||
Provision for income taxes | 41,045 | 29,035 | 113,473 | 87,111 | ||||||||||||||||
Interest expense, net | 4,859 | 3,756 | 15,628 | 10,960 | ||||||||||||||||
Depreciation and amortization | 25,714 | 18,060 | 74,561 | 48,579 | ||||||||||||||||
Other (income) expense, net | 594 | (156 | ) | 870 | 130 | |||||||||||||||
Equity method investment loss | 2,200 | - | 3,689 | - | ||||||||||||||||
Adjusted EBITDA | $ | 169,921 | $ | 129,315 | $ | 467,388 | $ | 363,161 | ||||||||||||
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, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Net income | $ | 95,509 | $ | 78,620 | $ | 259,167 | $ | 216,381 | ||||||||||||
Stock based compensation | 7,993 | 4,382 | 26,292 |
|
12,441 | |||||||||||||||
Amortization of intangible assets | 19,255 | 12,296 | 55,737 | 31,535 | ||||||||||||||||
Amortization of premium on receivables | 815 | 816 | 2,445 |
|
2,448 | |||||||||||||||
Amortization of deferred financing costs | 537 | 841 | 1,599 | 2,434 | ||||||||||||||||
Amortization of intangibles at equity method investment | 3,021 | - | 5,158 | - | ||||||||||||||||
Total pre-tax adjustments | 31,621 | 18,335 | 91,231 | 48,858 | ||||||||||||||||
Income tax impact of pre-tax adjustments at the effective tax rate | (9,505 | ) | (5,596 | ) | (27,781 | ) | (14,639 | ) | ||||||||||||
Adjusted net income | $ | 117,625 | $ | 91,359 | $ | 322,617 | $ | 250,600 | ||||||||||||
Adjusted net income per diluted share | $ | 1.37 | $ | 1.08 | $ | 3.77 | $ | 2.97 | ||||||||||||
Diluted shares | 86,134 | 84,905 | 85,688 | 84,446 | ||||||||||||||||
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, | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | Change | % Change | 2014 | 2013 | Change | % Change | |||||||||||||||||||||||||||||||
NORTH AMERICA |
||||||||||||||||||||||||||||||||||||||
- Transactions | 45,252 | 43,291 | 1,961 | 4.5 | % | 128,394 | 122,691 | 5,703 | 4.6 | % | ||||||||||||||||||||||||||||
- Revenues, net per transaction | $ | 3.45 | $ | 2.66 | $ | 0.79 | 29.8 | % | $ | 3.28 | $ | 2.73 | $ | 0.55 | 20.1 | % | ||||||||||||||||||||||
- Revenues, net | $ | 156,343 | $ | 115,266 | $ | 41,077 | 35.6 | % | $ | 421,579 | $ | 335,346 | $ | 86,233 | 25.7 | % | ||||||||||||||||||||||
INTERNATIONAL |
||||||||||||||||||||||||||||||||||||||
- Transactions | 49,150 | 41,012 | 8,138 | 19.8 | % | 143,866 | 114,747 | 29,119 | 25.4 | % | ||||||||||||||||||||||||||||
- Revenues, net per transaction | $ | 2.83 | $ | 2.68 | $ | 0.15 | 5.5 | % | $ | 2.79 | $ | 2.65 | $ | 0.14 | 5.1 | % | ||||||||||||||||||||||
- Revenues, net | $ | 138,940 | $ | 109,884 | $ | 29,056 | 26.4 | % | $ | 401,114 | $ | 304,324 | $ | 96,790 | 31.8 | % | ||||||||||||||||||||||
FLEETCOR CONSOLIDATED REVENUES |
||||||||||||||||||||||||||||||||||||||
- Transactions | 94,402 | 84,303 | 10,099 | 12.0 | % | 272,260 | 237,438 | 34,822 | 14.7 | % | ||||||||||||||||||||||||||||
- Revenues, net per transaction | $ | 3.13 | $ | 2.67 | $ | 0.46 | 17.1 | % | $ | 3.02 | $ | 2.69 | $ | 0.33 | 12.2 | % | ||||||||||||||||||||||
- Revenues, net | $ | 295,283 | $ | 225,150 | $ | 70,133 | 31.1 | % | $ | 822,693 | $ | 639,670 | $ | 183,023 | 28.6 | % | ||||||||||||||||||||||
FLEETCOR CONSOLIDATED ADJUSTED REVENUES1 |
||||||||||||||||||||||||||||||||||||||
- Transactions | 94,402 | 84,303 | 10,099 | 12.0 | % | 272,260 | 237,438 | 34,822 | 14.7 | % | ||||||||||||||||||||||||||||
- Adjusted Revenues per transaction | $ | 2.86 | $ | 2.47 | $ | 0.39 | 15.9 | % | $ | 2.79 | $ | 2.48 | $ | 0.31 | 12.4 | % | ||||||||||||||||||||||
- Adjusted Revenues | $ | 270,269 | $ | 208,206 | $ | 62,063 | 29.8 | % | $ | 759,729 | $ | 589,310 | $ | 170,419 | 28.9 | % | ||||||||||||||||||||||
1 Adjusted 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, | |||||||||||||||||||||||||||||||||||||
2014 |
2013 | Change | % Change | 2014 | 2013 | Change | % Change | |||||||||||||||||||||||||||||||
Revenue from customers and partners | 53.8 | % | 54.4 | % | -0.6 | % | -1.1 | % | 54.9 | % | 52.3 | % | 2.6 | % | 5.0 | % | ||||||||||||||||||||||
Revenue from merchants and networks | 46.2 | % | 45.6 | % | 0.6 | % | 1.3 | % | 45.1 | % | 47.7 | % | -2.6 | % | -5.5 | % | ||||||||||||||||||||||
Revenue tied to fuel-price spreads | 16.7 | % | 14.8 | % | 1.9 | % | 12.8 | % | 15.1 | % | 16.5 | % | -1.4 | % | -8.5 | % | ||||||||||||||||||||||
Revenue influenced by absolute price of fuel | 17.8 | % | 20.0 | % | -2.2 | % | -11.0 | % | 18.2 | % | 20.1 | % | -1.9 | % | -9.5 | % | ||||||||||||||||||||||
Revenue from program fees, late fees, interest and other | 65.5 | % | 65.2 | % | 0.3 | % | 0.5 | % | 66.7 | % | 63.4 | % | 3.3 | % | 5.2 | % | ||||||||||||||||||||||
2 Expressed as a percentage of consolidated revenue. |
Exhibit 3 | ||||||||||||
Segment Results | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Revenues, net: | ||||||||||||
North America | $ | 156,343 | $ | 115,266 | $ | 421,579 | $ | 335,346 | ||||
International | 138,940 | 109,884 | 401,114 | 304,324 | ||||||||
$ | 295,283 | $ | 225,150 | $ | 822,693 | $ | 639,670 | |||||
Operating income: | ||||||||||||
North America | $ | 78,797 | $ | 59,093 | $ | 203,311 | $ | 168,622 | ||||
International | 65,410 | 52,162 | 189,516 | 145,960 | ||||||||
$ | 144,207 | $ | 111,255 | $ | 392,827 | $ | 314,582 | |||||
Depreciation and amortization: | ||||||||||||
North America | $ | 6,635 | $ | 5,159 | $ | 19,647 | $ | 15,598 | ||||
International | 19,079 | 12,901 | 54,914 | 32,981 | ||||||||
$ | 25,714 | $ | 18,060 | $ | 74,561 | $ | 48,579 | |||||
Capital expenditures: | ||||||||||||
North America | $ | 1,561 | $ | 1,942 | $ | 5,397 | $ | 4,298 | ||||
International | 5,166 | 3,298 | 12,882 | 11,050 | ||||||||
$ | 6,727 | $ | 5,240 | $ | 18,279 | $ | 15,348 |
Source:
FleetCor
Investor Relations
770-729-2017
investor@fleetcor.com