FleetCor Reports Third Quarter 2015 Financial Results

November 4, 2015

Adjusted Net Income Per Share Grows 22% Year-Over-Year

NORCROSS, Ga.--(BUSINESS WIRE)--Nov. 4, 2015-- 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, 2015.

“We reported solid third quarter results, despite the continuation of an unfavorable macro-environment. Importantly, our fundamentals were strong, organic revenue growth was approximately 9% in the quarter, on a constant fuel price, spread and foreign exchange rate basis, excluding SVS,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc. “We are maintaining our full year 2015 guidance range of $6.18 - $6.26 in adjusted net income per share.”

Financial Results for Third Quarter 2015:

GAAP Results

Total revenues increased 53% to $451.5 million in the third quarter of 2015 compared to $295.3 million in the third quarter of 2014.
GAAP net income¹ increased 22% to $116.8 million or $1.24 per diluted share in the third quarter of 2015 compared to GAAP net income of $95.5 million or $1.11 per diluted share in the third quarter of 2014.

Non-GAAP Results

Adjusted revenues¹ (revenues, net less merchant commissions) increased 55% to $419.8 million in the third quarter of 2015 compared to $270.3 million in the third quarter of 2014.
Adjusted net income¹ increased 34% to $157.6 million in the third quarter of 2015 compared to $117.6 million in the third quarter of 2014.
Adjusted net income per diluted share¹ increased 22% to $1.67 in the third quarter of 2015 compared to $1.37 in the third quarter of 2014.

Fiscal Year 2015 Outlook:

“During the third quarter of 2015, unfavorable macro-economic headwinds negatively impacted our business by approximately $0.28 in adjusted net income per diluted share compared to the third quarter of last year. Also, in the third quarter we recorded a net favorable tax adjustment which added approximately $0.06 to $0.07 in adjusted net income per diluted share on top of our previous guidance for the third quarter,” said Eric Dey, chief financial officer, FleetCor Technologies, Inc. “Our fiscal year 2015 guidance assumes that the impact of declining fuel prices and foreign exchange rates will continue in the fourth quarter and provide an additional unfavorable impact of approximately $0.05 to $0.07 in adjusted net income per diluted share versus the guidance we provided on the second quarter earnings call.”

For fiscal year 2015, FleetCor Technologies, Inc. financial guidance and assumptions are as follows:

Total revenues between $1,680 million and $1,720 million;
Adjusted net income between $580 million and $590 million; and
Adjusted net income per diluted share between $6.18 and $6.26;

FleetCor’s fiscal-year guidance assumptions for 2015 are as follows:

Weighted average fuel prices of approximately $2.45 for the fourth quarter of 2015 in the U.S. compared to approximately $3.30 per gallon average in the U.S. in the fourth quarter of 2014, down approximately 25%.
Market spreads lower in the fourth quarter of 2015 compared to the record spreads in the fourth quarter of 2014.
Foreign exchange rates equal to the October 1 through October 12 average, a negative impact to revenue of approximately $15 million to $18 million compared to the fourth quarter of 2014.
SVS business is retained for the remainder of the year.
Fully diluted shares outstanding of 94.3 million shares.
Full year tax rate of approximately 31.5% to 32.0%.
No impact related to acquisitions or material new partnership agreements not already disclosed.

Conference Call

The company will host a conference call to discuss third quarter 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 13623462. The replay will be available until November 11, 2015. 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 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 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, 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, and (f) 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 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 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.

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
Unaudited Consolidated Statements of Income
(In thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014

Revenues, net	$	451,493		$	295,283	$	1,272,264	$	822,693

Expenses:
Merchant commissions		31,726			25,014		80,777		62,964
Processing		90,959			41,451		246,879		117,152
Selling		27,383			17,950		81,011		52,885
General and administrative		64,439			40,947		196,777		122,304
Depreciation and amortization		48,526			25,714		145,435		74,561
Operating income		188,460			144,207		521,385		392,827
Equity method investment loss		6,108			2,200		13,926		3,689
Other (income) expense, net		(168	)		594		2,345		870
Interest expense, net		17,163			4,859		54,818		15,628
Total other expense		23,103			7,653		71,089		20,187
Income before income taxes		165,357			136,554		450,296		372,640
Provision for income taxes		48,587			41,045		140,695		113,473
Net income	$	116,770		$	95,509	$	309,601	$	259,167

Basic earnings per share	$	1.27		$	1.14	$	3.37	$	3.12
Diluted earnings per share	$	1.24		$	1.11	$	3.29	$	3.02

Weighted average shares outstanding:
Basic shares		92,110			83,611		91,923		83,118
Diluted shares		94,157			86,134		94,069		85,688

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

	September 30, 2015			December 31, 2014
	(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	422,390		$	477,069
Restricted cash		129,446			135,144
Accounts receivable (less allowance for doubtful accounts of $22,543 and $23,842, respectively)		731,957			673,797
Securitized accounts receivable - restricted for securitization investors		665,000			675,000
Prepaid expenses and other current assets		51,669			74,889
Deferred income taxes		33,081			101,451

Total current assets		2,033,543			2,137,350

Property and equipment		154,987			135,062
Less accumulated depreciation and amortization		(79,127	)		(61,499	)

Net property and equipment		75,860			73,563

Goodwill		3,712,326			3,811,862
Other intangibles, net		2,270,524			2,437,367
Equity method investment		125,176			141,933
Other assets		67,704			72,431

Total assets	$	8,285,133		$	8,674,506

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	760,413		$	716,676
Accrued expenses		178,974			178,375
Customer deposits		461,958			492,257
Securitization facility		665,000			675,000
Current portion of notes payable and other obligations		336,624			749,764
Other current liabilities		38,290			84,546

Total current liabilities		2,441,259			2,896,618

Notes payable and other obligations, less current portion		2,086,664			2,168,953
Deferred income taxes		759,871			815,169
Other noncurrent liabilities		34,768			40,629

Total noncurrent liabilities		2,881,303			3,024,751

Commitments and contingencies

Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized, 120,323,916 shares issued and 92,161,210 shares outstanding at September 30, 2015; and 475,000,000 shares authorized, 119,771,155 shares issued and 91,662,043 shares outstanding at December 31, 2014		120			120
Additional paid-in capital		1,935,262			1,852,442
Retained earnings		1,713,506			1,403,905
Accumulated other comprehensive loss		(332,610	)		(156,933	)
Less treasury stock, 28,162,706 and 28,109,112 shares at September 30, 2015 and December 31, 2014, respectively		(353,707	)		(346,397	)

Total stockholders’ equity		2,962,571			2,753,137

Total liabilities and stockholders’ equity	$	8,285,133		$	8,674,506

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

	Nine Months Ended September 30,
	2015			2014

Operating activities
Net income	$	309,601		$	259,167
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		22,941			14,780
Stock-based compensation		44,387			26,292
Provision for losses on accounts receivable		18,287			18,109
Amortization of deferred financing costs and discounts		5,295			1,599
Amortization of intangible assets		120,055			55,737
Amortization of premium on receivables		2,439			2,445
Deferred income taxes		(27,640	)		(1,280	)
Equity method investment loss		13,926			3,689
Other non-cash operating expenses		(4,739	)		-
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash		5,697			6,109
Accounts receivable		(71,310	)		(137,942	)
Prepaid expenses and other current assets		2,724			(3,036	)
Other assets		(3,297	)		460
Excess tax benefits related to stock-based compensation		(24,455	)		(53,251	)
Accounts payable, accrued expenses and customer deposits		108,278			124,614
Net cash provided by operating activities		522,189			317,492


Investing activities
Acquisitions, net of cash acquired		(17,021	)		(261,919	)
Purchases of property and equipment		(29,526	)		(18,279	)
Net cash used in investing activities		(46,547	)		(280,198	)


Financing activities
Excess tax benefits related to stock-based compensation		24,455			53,251
Proceeds from issuance of common stock		13,977			21,922
Borrowings on securitization facility, net		(10,000	)		44,600
Deferred financing costs paid		-			(546	)
Principal payments on notes payable		(77,625	)		(20,625	)
Borrowings from revolver- A Facility		-			182,330
Payments on revolver- A Facility		(411,818	)		(381,385	)
Payments on foreign revolver- B Facility		-			(7,337	)
Borrowings on swing line of credit, net		(601	)		52,059
Payment of contingent consideration		(40,310	)		-
Other		1,921			(462	)
Net cash used in financing activities		(500,001	)		(56,193	)

Effect of foreign currency exchange rates on cash		(30,320	)		(15,097	)

Net decrease in cash and cash equivalents		(54,679	)		(33,996	)
Cash and cash equivalents, beginning of period		477,069			338,105
Cash and cash equivalents, end of period	$	422,390		$	304,109

Supplemental cash flow information
Cash paid for interest	$	55,959		$	19,238

Cash paid for income taxes	$	47,339		$	63,553

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,
	2015				2014			2015			2014

Revenues, net	$	451,493			$	295,283		$	1,272,264		$	822,693
Merchant commissions		31,726				25,014			80,777			62,964
Total adjusted revenues	$	419,767			$	270,269		$	1,191,487		$	759,729


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,
	2015				2014			2015			2014
Net income	$	116,770			$	95,509		$	309,601		$	259,167

Stock based compensation		13,887				7,993			44,387			26,292
Amortization of intangible assets		39,869				19,255			120,055			55,737
Amortization of premium on receivables		812				815			2,439			2,445
Amortization of deferred financing costs and discounts		1,778				537			5,295			1,599
Amortization of intangibles at equity method investment		3,032				3,021			8,404			5,158

Total pre-tax adjustments		59,378				31,621			180,580			91,231

Income tax impact of pre-tax adjustments at the effective tax rate		(18,579	)	(1)		(9,505	)		(57,758	)		(27,781	)

Adjusted net income	$	157,570			$	117,625		$	432,424		$	322,617
Adjusted net income per diluted share	$	1.67			$	1.37		$	4.60		$	3.77

Diluted shares		94,157				86,134			94,069			85,688

¹ Effective tax rate utilized excludes the impact of a one time tax benefit recognized during the three months ended September 30, 2015 of approximately $7.9 million.

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,
		2015			2014			Change			% Change		2015			2014			Change			% Change

	NORTH AMERICA
	- Transactions²		371,518			45,252			326,266		721.0	%		1,145,259			128,394			1,016,865		792.0	%
	- Revenues, net per transaction	$	0.90		$	3.45		$	(2.55	)	-73.9	%	$	0.80		$	3.28		$	(2.48	)	-75.6	%
	- Revenues, net	$	334,944		$	156,343		$	178,601		114.2	%	$	918,333		$	421,579		$	496,754		117.8	%

	INTERNATIONAL
	- Transactions		45,588			49,150			(3,562	)	-7.2	%		138,041			143,866			(5,825	)	-4.0	%
	- Revenues, net per transaction	$	2.56		$	2.83		$	(0.27	)	-9.6	%	$	2.56		$	2.79		$	(0.22	)	-8.0	%
	- Revenues, net	$	116,549		$	138,940		$	(22,391	)	-16.1	%	$	353,931		$	401,114		$	(47,183	)	-11.8	%


	FLEETCOR CONSOLIDATED REVENUES
	- Transactions²		417,106			94,402			322,704		341.8	%		1,283,300			272,260			1,011,040		371.4	%
	- Revenues, net per transaction	$	1.08		$	3.13		$	(2.05	)	-65.4	%	$	0.99		$	3.02		$	(2.03	)	-67.2	%
	- Revenues, net	$	451,493		$	295,283		$	156,210		52.9	%	$	1,272,264		$	822,693		$	449,571		54.6	%



	FLEETCOR CONSOLIDATED ADJUSTED REVENUES¹
	- Transactions²		417,106			94,402			322,704		341.8	%		1,283,300			272,260			1,011,040		371.4	%
	- Adjusted revenues per transaction	$	1.01		$	2.86		$	(1.86	)	-64.8	%	$	0.93		$	2.79		$	(1.86	)	-66.7	%
	- Adjusted revenues	$	419,767		$	270,269		$	149,498		55.3	%	$	1,191,487		$	759,729		$	431,758		56.8	%


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 274 million and 872 million transactions for the three and nine months ended September 30, 2015, respectively, related to our SVS business acquired with Comdata in the fourth quarter of 2014.

Sources of Revenue³		Three Months Ended September 30,											Nine Months Ended September 30,
		2015			2014			Change			% Change		2015			2014			Change			% Change
	Revenue from customers and partners		64.8	%		53.8	%		11.0	%	20.4	%		64.5	%		54.9	%		9.6	%	17.5	%
	Revenue from merchants and networks		35.2	%		46.2	%		-11.0	%	-23.8	%		35.5	%		45.1	%		-9.6	%	-21.3	%

	Revenue tied to fuel-price spreads		13.0	%		16.7	%		-3.7	%	-22.2	%		12.4	%		15.1	%		-2.7	%	-17.9	%
	Revenue influenced by absolute price of fuel		15.1	%		17.8	%		-2.7	%	-15.2	%		15.2	%		18.2	%		-3.0	%	-16.5	%
	Revenue from program fees, late fees, interest and other		71.9	%		65.5	%		6.4	%	9.8	%		72.4	%		66.7	%		5.7	%	8.5	%

³Expressed as a percentage of consolidated revenue.

Exhibit 3
Segment Results
(In thousands)
(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues, net:
North America	$	334,944	$	156,343	$	918,333	$	421,579
International		116,549		138,940		353,931		401,114
	$	451,493	$	295,283	$	1,272,264	$	822,693

Operating income:
North America	$	132,428	$	78,797	$	351,778	$	203,311
International		56,032		65,410		169,607		189,516
	$	188,460	$	144,207	$	521,385	$	392,827

Depreciation and amortization:
North America	$	32,257	$	6,635	$	96,200	$	19,647
International		16,269		19,079		49,235		54,914
	$	48,526	$	25,714	$	145,435	$	74,561

Capital expenditures:
North America	$	6,493	$	1,561	$	14,510	$	5,397
International		6,799		5,166		15,016		12,882
	$	13,292	$	6,727	$	29,526	$	18,279

View source version on businesswire.com: http://www.businesswire.com/news/home/20151104006560/en/

Source: FleetCor Technologies, Inc.

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

Release Details

FleetCor Reports Third Quarter 2015 Financial Results