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8-K - FORM 8-K - FLEETCOR TECHNOLOGIES INCd719473d8k.htm

Exhibit 99.1

FleetCor Reports First Quarter 2014 Financial Results

Adjusted Net Income Per Share Grows 25% Year-Over-Year

Raises 2014 guidance

NORCROSS, Ga., May 1, 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 first quarter ended March 31, 2014.

“2014 is off to a great start with revenue growth of 31% and adjusted net income per diluted share growth of 25%,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc. “Today we also announced that we signed a contract to acquire Shell’s SME fuel card customer portfolio in Germany and also announced our contract with Chevron International Pte Ltd to process fuel cards in six Asia-Pac markets, plus South Africa. Both of these announcements demonstrate our commitment to further diversify our business geographically.”

Financial Results for First Quarter 2014:

GAAP Results

    Total revenues increased 31% to $253.9 million compared to $193.7 million in the first quarter of 2013;
    Net income increased 16% to $75.1 million compared to $64.7 million in the first quarter of 2013;
    Net income per diluted share increased 14% to $0.88 compared to $0.77 in the first quarter of 2013.

Non-GAAP Results

    Adjusted revenues1 (revenues, net less merchant commissions) increased 31% to $236.3 million compared to $179.8 million in the first quarter of 2013;
    Adjusted net income1 increased 28% to $96.1 million compared to $75.2 million in the first quarter of 2013;
    Adjusted net income per diluted share1 increased 25% to $1.12 compared to $0.90 in the first quarter of 2013.

Fiscal Year 2014 Outlook:

For fiscal year 2014 FleetCor Technologies, Inc. is raising its financial guidance for 2014 as follows:

 

    Total revenues between $1,075 million and $1,095 million, up from our previous guidance range of $1,070 million and $1,090 million;
    Adjusted net income between $422 million and $432 million, up from our pervious guidance range of $418 million and $428 million;
    Adjusted net income per diluted share between $4.97 and $5.07, up from our previous guidance range of $4.90 and $5.00.

 

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.


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 30.5%
    Fully diluted shares outstanding of 86 million shares
    No impact related to acquisitions or material new partnership agreements not already disclosed

“Given our strong first quarter results, we are raising our financial guidance for 2014. We are now expecting a 21% growth in revenue and 24% 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. “A number of our businesses are off to a strong start this year, which we anticipate will more than offset the economic weakness in our Russian business and expected unfavorable foreign exchange rates in Russia and Brazil over the balance of the year.”

Conference Call

The Company will host a conference call to discuss first quarter 2014 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 13580953. The replay will be available until May 8, 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, 2013, filed with the Securities and Exchange Commission on March 3, 2014. 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 March 31,  
     2014      2013  
     (Unaudited)      (Unaudited)  

Revenues, net

   $ 253,908       $ 193,651   

Expenses:

     

Merchant commissions

     17,623         13,861   

Processing

     36,856         29,943   

Selling

     17,414         11,704   

General and administrative

     43,461         29,261   

Depreciation and amortization

     24,418         14,629   
  

 

 

    

 

 

 

Operating income

     114,136         94,253   
  

 

 

    

 

 

 

Other expense, net

     544         292   

Interest expense, net

     5,461         3,448   
  

 

 

    

 

 

 

Total other expense

     6,005         3,740   
  

 

 

    

 

 

 

Income before income taxes

     108,131         90,513   

Provision for income taxes

     33,022         25,851   
  

 

 

    

 

 

 

Net income

   $ 75,109       $ 64,662   
  

 

 

    

 

 

 

Basic earnings per share

   $ 0.91       $ 0.80   

Diluted earnings per share

   $ 0.88       $ 0.77   

Weighted average shares outstanding:

     

Basic shares

     82,737         81,222   

Diluted shares

     85,695         83,960   


FleetCor Technologies, Inc. and subsidiaries

Consolidated Balance Sheets

(In thousands, except share and par value amounts)

 

     March 31, 2014     December 31, 2013  
     (Unaudited)        

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 283,374      $ 338,105   

Restricted cash

     46,840        48,244   

Accounts receivable (less allowance for doubtful accounts of $21,763 and $22,416, respectively)

     682,753        573,351   

Securitized accounts receivable - restricted for securitization investors

     393,500        349,000   

Prepaid expenses and other current assets

     60,684        40,062   

Deferred income taxes

     4,258        4,750   
  

 

 

   

 

 

 

Total current assets

     1,471,409        1,353,512   
  

 

 

   

 

 

 

Property and equipment

     118,458        111,100   

Less accumulated depreciation and amortization

     (63,567     (57,144
  

 

 

   

 

 

 

Net property and equipment

     54,891        53,956   

Goodwill

     1,561,530        1,552,725   

Other intangibles, net

     860,898        871,263   

Other assets

     87,989        100,779   
  

 

 

   

 

 

 

Total assets

   $ 4,036,717      $ 3,932,235   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 578,507      $ 467,202   

Accrued expenses

     111,275        114,870   

Customer deposits

     174,683        182,541   

Securitization facility

     393,500        349,000   

Current portion of notes payable and other obligations

     532,868        662,439   

Other current liabilities

     119,260        132,846   
  

 

 

   

 

 

 

Total current liabilities

     1,910,093        1,908,898   
  

 

 

   

 

 

 

Notes payable and other obligations, less current portion

     459,916        474,939   

Deferred income taxes

     248,066        249,504   

Other noncurrent liabilities

     52,462        55,001   
  

 

 

   

 

 

 

Total noncurrent liabilities

     760,444        779,444   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity:

    

Common stock, $0.001 par value; 475,000,000 shares authorized, 118,671,070 shares issued and 82,936,578 shares outstanding at March 31, 2014; and 475,000,000 shares authorized, 118,206,262 shares issued and 82,471,770 shares outstanding at December 31, 2013

     118        117   

Additional paid-in capital

     662,917        631,667   

Retained earnings

     1,110,307        1,035,198   

Accumulated other comprehensive loss

     (31,499     (47,426

Less treasury stock, 35,734,492 shares at March 31, 2014 and December 31, 2013

     (375,663     (375,663
  

 

 

   

 

 

 

Total stockholders’ equity

     1,366,180        1,243,893   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,036,717      $ 3,932,235   
  

 

 

   

 

 

 


FleetCor Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

 

     Three Months Ended March 31,  
     2014     2013  
     (Unaudited)        

Operating activities

    

Net income

   $ 75,109      $ 64,662   

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

    

Depreciation

     4,801        4,031   

Stock-based compensation

     10,612        4,162   

Provision for losses on accounts receivable

     5,554        4,460   

Amortization of deferred financing costs

     531        760   

Amortization of intangible assets

     18,272        9,022   

Amortization of premium on receivables

     814        816   

Deferred income taxes

     603        (1,012

Changes in operating assets and liabilities (net of acquisitions):

    

Restricted cash

     1,404        4,327   

Accounts receivable

     (153,184     (192,483

Prepaid expenses and other current assets

     (7,111     3,194   

Other assets

     545        40,113   

Excess tax benefits related to stock-based compensation

     (16,126     (5,843

Accounts payable, accrued expenses and customer deposits

     109,670        50,101   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     51,494        (13,690
  

 

 

   

 

 

 

Investing activities

    

Acquisitions, net of cash acquired

     (19,292     (94,773

Purchases of property and equipment

     (5,584     (4,762
  

 

 

   

 

 

 

Net cash used in investing activities

     (24,876     (99,535
  

 

 

   

 

 

 

Financing activities

    

Excess tax benefits related to stock-based compensation

     16,126        5,843   

Proceeds from issuance of common stock

     4,512        5,256   

Borrowings on securitization facility, net

     44,500        87,000   

Deferred financing costs paid

     (521     (1,830

Principal payments on notes payable

     (6,875     (7,500

Payments on revolver- A Facility

     (134,803     (25,000

Payments on foreign revolver- B Facility

     (3,601     —     

Payments on swing line of credit, net

     15        —     

Other

     (246     (178
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (80,893     63,591   
  

 

 

   

 

 

 
    
  

 

 

   

 

 

 

Effect of foreign currency exchange rates on cash

     (456     (9,402
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (54,731     (59,036

Cash and cash equivalents, beginning of period

     338,105        283,649   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 283,374      $ 224,613   
  

 

 

   

 

 

 

Supplemental cash flow information

    

Cash paid for interest

   $ 6,264      $ 3,863   
  

 

 

   

 

 

 

Cash paid for income taxes

   $ 19,654      $ 38,426   
  

 

 

   

 

 

 


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 March 31,  
     2014      2013  

Revenues, net

     253,908         193,651   

Merchant commissions

     17,623         13,861   
  

 

 

    

 

 

 

Total adjusted revenues

   $ 236,285       $ 179,790   
  

 

 

    

 

 

 

The following table reconciles net income to EBITDA:

 

     Three Months Ended March 31,  
     2014      2013  

Net income

   $ 75,109       $ 64,662   

Provision for income taxes

     33,022         25,851   

Interest expense, net

     5,461         3,448   

Depreciation and amortization

     24,418         14,629   

Other expense (income), net

     544         292   
  

 

 

    

 

 

 

EBITDA

   $ 138,554       $ 108,882   
  

 

 

    

 

 

 

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

 

     Three Months Ended March 31,  
     2014     2013  

Net income

   $ 75,109      $ 64,662   

Stock based compensation

     10,612        4,162   

Amortization of intangible assets

     18,272        9,022   

Amortization of premium on receivables

     814        816   

Amortization of deferred financing costs

     531        760   
  

 

 

   

 

 

 

Total pre-tax adjustments

     30,229        14,760   

Income tax impact of pre-tax adjustments at the effective tax rate

     (9,232     (4,216
  

 

 

   

 

 

 

Adjusted net income

   $ 96,106      $ 75,206   
  

 

 

   

 

 

 

Adjusted net income per diluted share

   $ 1.12      $ 0.90   

Diluted shares

     85,695        83,960   


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 March 31,  
     2014      2013      Change      % Change  

NORTH AMERICA

           

- Transactions2

     40,425         38,262         2,163         5.7

- Revenues, net per transaction

   $ 3.13       $ 2.63       $ 0.50         18.9

- Revenues, net

   $ 126,375       $ 100,594       $ 25,781         25.6

INTERNATIONAL

           

- Transactions2

     47,192         35,898         11,294         31.5

- Revenues, net per transaction

   $ 2.70       $ 2.59       $ 0.11         4.2

- Revenues, net

   $ 127,533       $ 93,057       $ 34,476         37.0

FLEETCOR CONSOLIDATED REVENUES

           

- Transactions2

     87,617         74,160         13,457         18.1

- Revenues, net per transaction

   $ 2.90       $ 2.61       $ 0.29         11.0

- Revenues, net

   $ 253,908       $ 193,651       $ 60,257         31.1

FLEETCOR CONSOLIDATED ADJUSTED REVENUES1

           

- Transactions2

     87,617         74,160         13,457         18.1

- Adjusted Revenues per transaction

   $ 2.70       $ 2.42       $ 0.27         11.2

- Adjusted Revenues

   $ 236,285       $ 179,790       $ 56,495         31.4

 

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.
2  The presentation of prior quarters presented herein has been conformed to the current period presentation that eliminates certain intercompany transactions.

 

Sources of Revenue3

                        
     Three Months Ended March 31,  
     2014     2013     Change     % Change  

Revenue from customers and partners

     56.1     51.4     4.7     9.1

Revenue from merchants and networks

     43.9     48.6     -4.7     -9.7

Revenue tied to fuel-price spreads

     13.8     15.9     -2.1     -13.2

Revenue influenced by absolute price of fuel

     18.0     20.8     -2.8     -13.5

Revenue from program fees, late fees, interest and other

     68.2     63.3     4.9     7.7

 

3  Expressed as a percentage of consolidated revenue.


Exhibit 3

Segment Results

(In thousands)

(Unaudited)

 

     Three Months Ended March 31,  
     2014      2013  

Revenues, net:

     

North America

   $ 126,375       $ 100,594   

International

     127,533         93,057   
  

 

 

    

 

 

 
   $ 253,908       $ 193,651   
  

 

 

    

 

 

 

Operating income:

     

North America

   $ 56,197       $ 49,426   

International

     57,939         44,827   
  

 

 

    

 

 

 
   $ 114,136       $ 94,253   
  

 

 

    

 

 

 

Depreciation and amortization:

     

North America

   $ 6,636       $ 5,172   

International

     17,782         9,457   
  

 

 

    

 

 

 
   $ 24,418       $ 14,629   
  

 

 

    

 

 

 

Capital expenditures:

     

North America

   $ 1,996       $ 1,064   

International

     3,588         3,698   
  

 

 

    

 

 

 
   $ 5,584       $ 4,762