FleetCor Reports Fourth Quarter and Fiscal Year 2013 Financial Results

Source:
FLEETCOR Technologies, Inc.

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

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

NORCROSS, Ga.--(BUSINESS WIRE)--Feb. 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 per diluted share 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;
  • Adjusted net income1 for 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.

1 Reconciliations of GAAP results to non GAAP results are provided in Exhibit 1 attached. Additional supplemental data is provided in Exhibit 2 and segment information is provided in Exhibit 3.

FleetCor Technologies, Inc. and subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
           
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  
 
 

1Certain 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 %
                                     
 
 
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 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 %
 
2Expressed 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
 
1The 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.

Source: FleetCor Technologies, Inc.

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


FLEETCOR Technologies, Inc.

Investor Relations
investor@fleetcor.com
Media Relations
press@fleetcor.com
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