SEC Filing | Corpay, Inc.

FleetCor Technologies, Inc.

February 5, 2014

/s/ Eric R. Dey

Eric R. Dey

Chief Financial Officer

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8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 5, 2014

FleetCor Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-35004

72-1074903

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

5445 Triangle Parkway, Suite 400,

Norcross, Georgia

30092

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (770) 449-0479

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On February 5, 2014, FleetCor Technologies, Inc. issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2013. A copy of the press release is attached as Exhibit 99.1, which is incorporated by reference in its entirety. The information in this item, including Exhibit 99.1, is being furnished, not filed. Accordingly, the information in this item will not be incorporated by reference into any registration statement filed by FleetCor Technologies, Inc. under the Securities Act of 1933, as amended, unless specifically identified as being incorporated into it by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. 99.1 FleetCor Technologies, Inc. press release dated February 5, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit Index


Exhibit No.		Description

99.1		FleetCor Technologies, Inc. press release dated February 5, 2014.

EX-99.1

Exhibit 99.1

FleetCor Reports Fourth Quarter and Fiscal Year 2013 Financial Results

Adjusted Net Income Per Share Grows 32% in the Fourth Quarter

Profit Outlook for 2014 up 22% at Midpoint of Guidance Range

NORCROSS, Ga., February 5, 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 fourth quarter and year ended December 31, 2013.

“We are pleased to announce a strong finish to 2013 with adjusted net income growth of 32% for the fourth quarter and 35% for the year. We also had a tremendous business development year as we completed seven acquisitions and signed six partnership deals all over the globe leading to further geographic and product diversification,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc.

Financial Results for Fourth Quarter 2013:

GAAP Results

•

Total revenues increased 26% to $255.5 million compared to $202.6 million in the fourth quarter of 2012;

•

Net income increased 13% to $68.1 million compared to $60.1 million in the fourth quarter of 2012;

•

Net income per diluted share increased 14% to $0.80 compared to $0.70 in the fourth quarter of 2012.

Non-GAAP Results

•

Adjusted revenues¹ (revenues, net less merchant commissions) increased 28% to $237.7 million compared to $185.0 million in the fourth quarter of 2012;

•

Adjusted net income¹ increased 30% to $92.1 million compared to $70.7 million in the fourth quarter of 2012;

•

Adjusted net income per diluted share¹ increased 32% to $1.08 compared to $0.82 in the fourth quarter of 2012.

Financial Results for Fiscal Year 2013:

GAAP Results

•

Total revenues increased 27% to $895.2 million compared to $707.5 million in 2012;

•

Net income increased 32% to $284.5 million compared to $216.2 million on 2012;

•

Net income per diluted share increased 33% to $3.36 compared $2.52 per diluted share in 2012.

Non-GAAP Results

•

Adjusted revenues¹ (revenues, net less merchant commissions) in 2013 increased 27% to $827.0 million compared to $649.0 million in 2012;

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.

•

Adjusted net income¹for 2013 increased 34% to $342.7 million compared to $256.0 million in 2012;

•

Adjusted net income per diluted share increased 35% to $4.05 compared to $2.99 in 2012.

Fiscal Year 2014 Outlook:

For fiscal year 2014 FleetCor Technologies, Inc. is expecting the following:

•

Total revenues between $1,070 million and $1,090 million;

•

Adjusted net income between $418 million and $428 million;

•

Adjusted net income per diluted share between $4.90 and $5.00.

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

•

Fuel prices and market spreads at the 2013 average

•

FX rates equal to current levels

•

Tax rate of 30.6%

•

Fully diluted shares outstanding of 85.6 million shares

•

No impact related to acquisitions or material new partnership agreements not already disclosed

“We have great momentum heading into 2014 and are projecting another double-digit revenue and profit growth year despite expected headwinds in interest expense and tax rates. Our guidance produces a 21% revenue and 22% 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 fourth 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) 941-8416, or for international callers (480) 629-9808. 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 4664950. The replay will be available until February 12, 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 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.

Contact:

Investor Relations

investor@fleetcor.com

(770) 729-2017

FleetCor Technologies, Inc. and subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)


	Three Months Ended December 31,				Year Ended December 31,
	2013		2012		2013		2012
	(Unaudited)		(Unaudited)		(Unaudited)
Revenues, net	$	255,501	$	202,617	$	895,171	$	707,534

Expenses:
Merchant commissions		17,783		17,599		68,143		58,573
Processing		38,604		32,285		134,030		115,446
Selling		18,397		13,190		57,346		46,429
General and administrative		50,509		31,256		142,283		110,122
Depreciation and amortization		24,158		15,116		72,737		52,036

Operating income		106,050		93,171		420,632		324,928

Other expense, net		472		602		602		1,121
Interest expense, net		5,501		3,390		16,461		13,017

Total other expense		5,973		3,992		17,063		14,138

Income before income taxes		100,077		89,179		403,569		310,790
Provision for income taxes		31,957		29,108		119,068		94,591

Net income	$	68,120	$	60,071	$	284,501	$	216,199

Basic earnings per share	$	0.83	$	0.72	$	3.48	$	2.59
Diluted earnings per share	$	0.80	$	0.70	$	3.36	$	2.52

Weighted average shares outstanding:
Basic shares		82,388		83,378		81,793		83,328
Diluted shares		85,277		85,750		84,655		85,736

FleetCor Technologies, Inc. and subsidiaries

Consolidated Balance Sheets

(In thousands, except share and par value amounts)


	December 31, 2013			December 31, 2012¹
	(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	338,105		$	283,649
Restricted cash		48,244			53,674
Accounts receivable (less allowance for doubtful accounts of $22,416 and $19,463, respectively)		573,351			525,441
Securitized accounts receivable — restricted for securitization investors		349,000			298,000
Prepaid expenses and other current assets		40,062			28,126
Deferred income taxes		4,750			6,464

Total current assets		1,353,512			1,195,354

Property and equipment		111,100			93,902
Less accumulated depreciation and amortization		(57,144	)		(48,706	)

Net property and equipment		53,956			45,196
Goodwill		1,552,725			926,609
Other intangibles, net		871,263			463,864
Other assets		144,808			90,847

Total assets	$	3,976,264		$	2,721,870

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	467,201		$	418,609
Accrued expenses		114,870			75,812
Customer deposits		182,541			187,627
Securitization facility		349,000			298,000
Current portion of notes payable and other obligations		662,439			141,875
Other current liabilities		132,846			20,299

Total current liabilities		1,908,897			1,142,222

Notes payable and other obligations, less current portion		474,939			485,217
Deferred income taxes		249,504			180,609
Other noncurrent liabilities		99,030			—

Total noncurrent liabilities		823,473			665,826

Commitments and contingencies

Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized, 118,206,262 shares issued and 82,471,770 shares outstanding at December 31, 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		631,667			542,018
Retained earnings		1,035,198			750,697
Accumulated other comprehensive loss		(47,426	)		(3,346	)

Less treasury stock, 35,734,492 shares at December 31, 2013 and December 31, 2012		(375,663	)		(375,663	)

Total stockholders’ equity		1,243,893			913,822

Total liabilities and stockholders’ equity	$	3,976,263		$	2,721,870

¹	Certain prior period amounts have been reclassified for consistent presentation with the current year.

FleetCor Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)


	Year Ended December 31,
	2013			2012
	(Unaudited)
Operating activities
Net income	$	284,501		$	216,199

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation		16,885			14,116
Stock-based compensation		26,676			19,275
Provision for losses on accounts receivable		18,867			21,896
Amortization of deferred financing costs		3,276			2,279
Amortization of intangible assets		49,313			32,376
Amortization of premium on receivables		3,263			3,265
Deferred income taxes		(5,453	)		(3,337	)
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash		5,430			2,088
Accounts receivable		(45,005	)		(71,102	)
Prepaid expenses and other current assets		(74	)		(6,847	)
Other assets		38,906			(46,553	)
Excess tax benefits related to stock-based compensation		(32,535	)		(29,355	)
Accounts payable, accrued expenses and customer deposits		11,635			(18,840	)

Net cash provided by operating activities		375,685			135,460

Investing activities
Acquisitions, net of cash acquired		(728,343	)		(190,447	)
Purchases of property and equipment		(20,785	)		(19,111	)

Net cash used in investing activities		(749,128	)		(209,558	)

Financing activities
Excess tax benefits related to stock-based compensation		32,535			29,355
Repurchase of common stock		—			(200,000	)
Proceeds from issuance of common stock		30,438			27,187
Borrowings on securitization facility, net		51,000			18,000
Deferred financing costs paid		(1,970	)		(3,776	)
Principal payments on notes payable		(28,125	)		(30,414	)
Proceeds from notes payable		—			250,000
Borrowings from U.S. revolver		575,000			455,000
Payments on U.S. revolver		(250,000	)		(480,000	)
Borrowings from foreign revolver		911,025			—
Payments on foreign revolver		(705,715	)		—
Payments on swing line of credit, net		—			(1,874	)
Payments on acquired debt		(164,083	)		—
Other		(14,380	)		(1,490	)

Net cash provided by financing activities		435,725			61,988

Effect of foreign currency exchange rates on cash		(7,826	)		10,600

Net increase (decrease) in cash and cash equivalents		54,456			(1,510	)
Cash and cash equivalents, beginning of year		283,649			285,159

Cash and cash equivalents, end of year	$	338,105		$	283,649

Supplemental cash flow information
Cash paid for interest	$	25,886		$	14,760

Cash paid for income taxes	$	99,308		$	38,169

Exhibit 1

RECONCILIATION OF NON-GAAP MEASURES

(In thousands, except shares and per share amounts)

(Unaudited)

The following table reconciles revenues, net to adjusted revenues:


	Three Months Ended December 31,				Year Ended December 31,
	2013		2012		2013		2012
Revenues, net	$	255,501	$	202,617	$	895,171	$	707,534
Merchant commissions		17,783		17,599		68,143		58,573

Total adjusted revenues	$	237,718	$	185,018	$	827,028	$	648,961

The following table reconciles net income to EBITDA:


	Three Months Ended December 31,				Year Ended December 31,
	2013		2012		2013		2012
Net income	$	68,120	$	60,071	$	284,501	$	216,199
Provision for income taxes		31,957		29,108		119,068		94,591
Interest expense, net		5,501		3,390		16,461		13,017
Depreciation and amortization		24,158		15,116		72,737		52,036
Other expense, net		472		602		602		1,121

EBITDA	$	130,208	$	108,287	$	493,369	$	376,964

The following table reconciles net income to adjusted net income and adjusted net income per diluted share:


	Three Months Ended December 31,						Year Ended December 31,
	2013			2012			2013			2012
Net income	$	68,120		$	60,071		$	284,501		$	216,199

Stock based compensation		14,235			4,988			26,676			19,275
Amortization of intangible assets		17,778			9,332			49,313			32,376
Amortization of premium on receivables		815			816			3,263			3,265
Amortization of deferred financing costs		842			683			3,276			2,279

Total pre-tax adjustments		33,670			15,819			82,528			57,195

Income tax impact of pre-tax adjustments at the effective tax rate		(9,712	)		(5,163	)		(24,349	)		(17,408	)

Adjusted net income	$	92,078		$	70,727		$	342,680		$	255,986

Adjusted net income per diluted share	$	1.08		$	0.82		$	4.05		$	2.99

Diluted shares		85,277			85,750			84,655			85,736

Exhibit 2

Transaction Volume, Revenues and Adjusted Revenue, Per Transaction and by Segment

(In thousands except revenues, net per transaction and adjusted revenues per transaction)

(Unaudited)


	Three Months Ended December 31,									Year Ended December 31,
	2013		2012		Change		% Change			2013		2012		Change		% Change
NORTH AMERICA
-Transactions		42,262		39,663		2,599		6.6	%		164,953		156,868		8,085		5.2	%
-Revenues, net per transaction	$	2.97	$	2.74	$	0.23		8.4	%	$	2.79	$	2.55	$	0.24		9.5	%
-Revenues, net	$	125,359	$	108,571	$	16,788		15.5	%	$	460,705	$	400,164	$	60,541		15.1	%

INTERNATIONAL
-Transactions		47,817		38,725		9,092		23.5	%		162,563		146,894		15,669		10.7	%
-Revenues, net per transaction	$	2.72	$	2.43	$	0.29		12.1	%	$	2.67	$	2.09	$	0.58		27.7	%
-Revenues, net	$	130,142	$	94,046	$	36,096		38.4	%	$	434,466	$	307,370	$	127,096		41.3	%

FLEETCOR CONSOLIDATED REVENUES
-Transactions		90,079		78,388		11,691		14.9	%		327,516		303,762		23,754		7.8	%
-Revenues, net per transaction	$	2.84	$	2.58	$	0.25		9.7	%	$	2.73	$	2.33	$	0.40		17.3	%
-Revenues, net	$	255,501	$	202,617	$	52,884		26.1	%	$	895,171	$	707,534	$	187,637		26.5	%

FLEETCOR CONSOLIDATED ADJUSTED REVENUES¹
-Transactions		90,079		78,388		11,691		14.9	%		327,516		303,762		23,754		7.8	%
-Adjusted Revenues per transaction	$	2.64	$	2.36	$	0.28		11.8	%	$	2.53	$	2.14	$	0.39		18.2	%
-Adjusted Revenues	$	237,718	$	185,018	$	52,700		28.5	%	$	827,028	$	648,961	$	178,067		27.4	%

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 December 31,												Year Ended December 31,
	2013			2012			Change			% Change			2013			2012			Change			% Change
Revenue from customers and partners		56.8	%		48.6	%		8.2	%		16.9	%		53.6	%		46.9	%		6.7	%		14.3	%
Revenue from merchants and networks		43.2	%		51.4	%		-8.2	%		-16.0	%		46.4	%		53.1	%		-6.7	%		-12.6	%

Revenue tied to fuel-price spreads		13.6	%		17.4	%		-3.8	%		-21.8	%		15.7	%		17.5	%		-1.8	%		-10.3	%
Revenue influenced by absolute price of fuel		18.3	%		20.2	%		-1.9	%		-9.4	%		19.6	%		20.7	%		-1.1	%		-5.3	%
Revenue from program fees, late fees, interest and other		68.1	%		62.4	%		5.7	%		9.1	%		64.7	%		61.8	%		2.9	%		4.7	%

²	Expressed as a percentage of consolidated revenue, net.

Exhibit 3

Segment Results

(In thousands)

(Unaudited)


	Three Months Ended December 31,				Year Ended December 31,
	2013		2012		2013		2012
Revenues, net:¹
North America	$	125,359	$	108,571	$	460,705	$	400,164
International		130,142		94,046		434,466		307,370

	$	255,501	$	202,617	$	895,171	$	707,534

Operating income:¹
North America	$	51,904	$	55,692	$	220,526	$	196,677
International		54,146		37,479		200,106		128,251

	$	106,050	$	93,171	$	420,632	$	324,928

Depreciation and amortization:¹
North America	$	6,669	$	5,225	$	22,267	$	20,289
International		17,489		9,891		50,470		31,747

	$	24,158	$	15,116	$	72,737	$	52,036

Capital expenditures:¹
North America	$	1,834	$	1,986	$	6,132	$	7,735
International		3,603		3,492		14,653		11,376

	$	5,437	$	5,478	$	20,785	$	19,111

The results from our Russian business acquired in the second quarter of 2012, CTF Technologies, Inc. in Brazil acquired during the third quarter of 2012, Australian business acquired during the first quarter of 2013, New Zealand business acquired during the second quarter of 2013, VB business in Brazil acquired during the third quarter of 2013, DB business in Brazil and Epyx business in the UK acquired during the fourth quarter of 2013, are reported in our International segment. The results from Telenav acquired during the first quarter of 2013 and Nextraq acquired during the fourth quarter of 2013, both US telematics businesses, are reported in our North American segment.