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8-K - FORM 8-K - FLEETCOR TECHNOLOGIES INCd769386d8k.htm

Exhibit 99.1

FleetCor Reports Second Quarter 2014 Financial Results

Adjusted Net Income Per Share Grows 28% Year-Over-Year

Raises 2014 Guidance

NORCROSS, Ga., July 31, 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 second quarter ended June 30, 2014.

“We are pleased with our results for the quarter which included adjusted net income per diluted share growth of 28% and adjusted revenue growth of 26%,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc. “These results were driven by strong organic growth in the U.S. and the impact of acquisitions closed over the last year. Integration of our recent acquisitions remain on track.”

Financial Results for Second Quarter 2014:

GAAP Results

 

    Total revenues increased 24% to $273.5 million compared to $220.9 million in the second quarter of 2013;

 

    Net income increased 21% to $88.5 million compared to $73.1 million in the second quarter of 2013;

 

    Net income per diluted share increased 19% to $1.03 compared to $0.87 in the second quarter of 2013.

Non-GAAP Results

 

    Adjusted revenues1 (revenues, net less merchant commissions) increased 26% to $253.2 million compared to $201.3 million in the second quarter of 2013;

 

    Adjusted net income1 increased 30% to $108.9 million compared to $84.0 million in the second quarter of 2013;

 

    Adjusted net income per diluted share1 increased 28% to $1.27 compared to $1.00 in the second 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 $1,082 million and $1,097 million, up from our previous guidance range of $1,075 million and $1,095 million;

 

    Adjusted net income between $432 million and $438 million, up from our previous guidance range of $422 million and $432 million;

 

    Adjusted net income per diluted share between $5.04 and $5.10, up from our previous guidance range of $4.97 and $5.07.

 

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.

 

1


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

 

    Continued weakness in our Russian business

 

    A start up investment related to the implementation of the Shell contract in Germany of approximately $2 million

 

    Fuel prices and market spreads at the year to date average

 

    FX rates equal to current levels

 

    Full year tax rate of 30.7%

 

    Fully diluted shares outstanding of 86 million shares

 

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

“We have reported another strong quarter and are again raising our financial guidance for 2014. We are now expecting a 22% growth in revenue and 25% 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 second 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 13586369. The replay will be available until August 7, 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 integration of 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.

 

2


About Non-GAAP Financial Measures

Adjusted revenue is calculated as revenues, net less merchant commissions. Adjusted net income is calculated as net income, adjusted to eliminate (a) non-cash stock-based compensation expense related to share-based compensation awards, (b) amortization of deferred financing costs and intangible assets, (c) amortization of the premium recognized on the purchase of receivables, and (d) loss on the early extinguishment of debt and (e) our proportionate share of amortization of intangible assets at our equity method investment. Adjusted EBITDA is calculated as net income as reflected in our income statement, adjusted to eliminate (a) interest expense, (b) tax expense, (c) depreciation of long-lived assets (d) amortization of intangible assets, (e) other (income) expense, net and (f) gains and losses at equity method investment. The Company uses adjusted revenues as a basis to evaluate the company’s revenues, net of the commissions that are paid to merchants to participate in our card programs. The commissions paid to merchants can vary when market spreads fluctuate in much the same way as revenues are impacted when market spreads fluctuate. The Company believes this is a more effective way to evaluate the company’s revenue performance. The Company uses adjusted EBITDA as a basis to evaluate our operating performance net of the impact of certain items during the period. We believe that adjusted EBITDA may be useful to investors for understanding our operating performance on a consistent basis. We prepare adjusted net income to eliminate the effect of items that we do not consider indicative of our core operating performance. Adjusted revenues and adjusted net income are supplemental measures of operating performance that do not represent and should not be considered as an alternative to revenues, net, net income or cash flow from operations, as determined by U.S. generally accepted accounting principles, or U.S. GAAP, and our calculation thereof may not be comparable to that reported by other companies. We believe it is useful to exclude non-cash stock-based compensation expense from adjusted net income because non-cash equity grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time and stock-based compensation expense is not a key measure of our core operating performance. We also believe that amortization expense can vary substantially from company to company and from period to period depending upon their financing and accounting methods, the fair value and average expected life of their acquired intangible assets, their capital structures and the method by which their assets were acquired; therefore, we have excluded amortization expense from our adjusted net income. We also exclude loss on the early extinguishment of debt from adjusted net income, as this expense is non-cash and is one-time in nature and does not reflect the ongoing operations of the business.

Management uses adjusted revenues, adjusted net income, and adjusted EBITDA:

 

    as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis;

 

    for planning purposes, including the preparation of our internal annual operating budget;

 

    to allocate resources to enhance the financial performance of our business; and

 

    to evaluate the performance and effectiveness of our operational strategies.

We believe adjusted revenues, adjusted net income and adjusted EBITDA are key measures used by the Company and investors as supplemental measures to evaluate the overall operating performance of companies in our industry. By providing these non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

About FleetCor

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.

 

3


Contact:

Investor Relations

investor@fleetcor.com

(770) 729-2017

 

4


FleetCor Technologies, Inc. and subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014      2013  

Revenues, net

   $ 273,502      $ 220,869      $ 527,410       $ 414,520   

Expenses:

         

Merchant commissions

     20,327        19,555        37,950         33,416   

Processing

     38,845        32,010        75,701         61,953   

Selling

     17,521        13,386        34,935         25,090   

General and administrative

     37,896        30,954        81,357         60,215   

Depreciation and amortization

     24,429        15,890        48,847         30,519   
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

     134,484        109,074        248,620         203,327   
  

 

 

   

 

 

   

 

 

    

 

 

 

Other (income) expense, net

     (268     (6     276         286   

Interest expense, net

     5,308        3,756        10,769         7,204   

Equity method investment loss

     1,489        —          1,489         —     
  

 

 

   

 

 

   

 

 

    

 

 

 

Total other expense

     6,529        3,750        12,534         7,490   
  

 

 

   

 

 

   

 

 

    

 

 

 

Income before income taxes

     127,955        105,324        236,086         195,837   

Provision for income taxes

     39,406        32,225        72,428         58,076   
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income

   $ 88,549      $ 73,099      $ 163,658       $ 137,761   
  

 

 

   

 

 

   

 

 

    

 

 

 

Basic earnings per share

   $ 1.07      $ 0.90      $ 1.97       $ 1.69   

Diluted earnings per share

   $ 1.03      $ 0.87      $ 1.91       $ 1.64   

Weighted average shares outstanding:

         

Basic shares

     82,996        81,573        82,867         81,398   

Diluted shares

     85,817        84,461        85,757         84,212   


FleetCor Technologies, Inc. and subsidiaries

Consolidated Balance Sheets

(In thousands, except share and par value amounts)

 

     June 30, 2014     December 31, 2013  
     (Unaudited)        

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 297,642      $ 338,105   

Restricted cash

     46,153        48,244   

Accounts receivable (less allowance for doubtful accounts of $22,754 and $22,416, respectively)

     688,527        573,351   

Securitized accounts receivable - restricted for securitization investors

     424,400        349,000   

Prepaid expenses and other current assets

     61,917        40,062   

Deferred income taxes

     4,415        4,750   
  

 

 

   

 

 

 

Total current assets

     1,523,054        1,353,512   
  

 

 

   

 

 

 

Property and equipment

     125,195        111,100   

Less accumulated depreciation and amortization

     (68,695     (57,144
  

 

 

   

 

 

 

Net property and equipment

     56,500        53,956   

Goodwill

     1,572,930        1,552,725   

Other intangibles, net

     848,635        871,263   

Equity method investment

     162,383        —     

Other assets

     89,863        100,779   
  

 

 

   

 

 

 

Total assets

   $ 4,253,365      $ 3,932,235   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 573,482      $ 467,202   

Accrued expenses

     124,027        114,870   

Customer deposits

     193,604        182,541   

Securitization facility

     424,400        349,000   

Current portion of notes payable and other obligations

     596,749        662,439   

Other current liabilities

     115,726        132,846   
  

 

 

   

 

 

 

Total current liabilities

     2,027,988        1,908,898   
  

 

 

   

 

 

 

Notes payable and other obligations, less current portion

     450,207        474,939   

Deferred income taxes

     245,984        249,504   

Other noncurrent liabilities

     53,666        55,001   
  

 

 

   

 

 

 

Total noncurrent liabilities

     749,857        779,444   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity:

    

Common stock, $0.001 par value; 475,000,000 shares authorized, 118,785,091 shares issued and 83,050,599 shares outstanding at June 30, 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

     676,876        631,667   

Retained earnings

     1,198,856        1,035,198   

Accumulated other comprehensive loss

     (24,667     (47,426

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

     (375,663     (375,663
  

 

 

   

 

 

 

Total stockholders’ equity

     1,475,520        1,243,893   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,253,365      $ 3,932,235   
  

 

 

   

 

 

 


FleetCor Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

 

     Six Months Ended June 30,  
     2014     2013  

Operating activities

    

Net income

   $ 163,658      $ 137,761   

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

    

Depreciation

     9,673        8,054   

Stock-based compensation

     18,299        8,059   

Provision for losses on accounts receivable

     11,783        9,199   

Amortization of deferred financing costs

     1,062        1,593   

Amortization of intangible assets

     36,482        19,239   

Amortization of premium on receivables

     1,630        1,632   

Deferred income taxes

     2,032        (2,598

Equity method investment loss

     1,488     

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

    

Restricted cash

     2,092        5,199   

Accounts receivable

     (197,167     (190,998

Prepaid expenses and other current assets

     (8,285     1,392   

Other assets

     (388     39,322   

Excess tax benefits related to stock-based compensation

     (18,634     (12,016

Accounts payable, accrued expenses and customer deposits

     133,996        56,874   
  

 

 

   

 

 

 

Net cash provided by operating activities

     157,721        82,712   
  

 

 

   

 

 

 

Investing activities

    

Acquisitions, net of cash acquired

     (189,850     (156,956

Purchases of property and equipment

     (11,552     (10,108
  

 

 

   

 

 

 

Net cash used in investing activities

     (201,402     (167,064
  

 

 

   

 

 

 

Financing activities

    

Excess tax benefits related to stock-based compensation

     18,634        12,016   

Proceeds from issuance of common stock

     8,277        12,511   

Borrowings on securitization facility, net

     75,400        104,000   

Deferred financing costs paid

     (546     (1,967

Principal payments on notes payable

     (13,750     (14,375

Payments on revolver- A Facility

     (262,377     (70,000

Borrowings on revolver- A Facility

     142,330        55,000   

Payments on foreign revolver- B Facility

     (7,337     (13,821

Borrowings on foreign revolver- B Facility

     —          26,895   

Borrowings from swing line of credit, net

     41,522        —     

Other

     (371     (175
  

 

 

   

 

 

 

Net cash provided by financing activities

     1,782        110,084   
  

 

 

   

 

 

 
    
  

 

 

   

 

 

 

Effect of foreign currency exchange rates on cash

     1,436        (16,476
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (40,463     9,256   

Cash and cash equivalents, beginning of period

     338,105        283,649   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 297,642      $ 292,905   
  

 

 

   

 

 

 

Supplemental cash flow information

    

Cash paid for interest

   $ 12,797      $ 8,262   
  

 

 

   

 

 

 

Cash paid for income taxes

   $ 52,697      $ 60,120   
  

 

 

   

 

 

 


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 June 30,      Six Months Ended June 30,  
     2014      2013      2014      2013  

Revenues, net

   $ 273,502       $ 220,869       $ 527,410       $ 414,520   

Merchant commissions

     20,327         19,555         37,950         33,416   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total adjusted revenues

   $ 253,175       $ 201,314       $ 489,460       $ 381,104   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table reconciles net income to adjusted EBITDA

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014      2013  

Net income

   $ 88,549      $ 73,099      $ 163,658       $ 137,761   

Provision for income taxes

     39,406        32,225        72,428         58,076   

Interest expense, net

     5,308        3,756        10,769         7,204   

Depreciation and amortization

     24,429        15,890        48,847         30,519   

Other (income) expense, net

     (268     (6     276         286   

Equity method investment loss

     1,489        —          1,489         —     
  

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $ 158,913      $ 124,964      $ 297,467       $ 233,846   
  

 

 

   

 

 

   

 

 

    

 

 

 

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

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Net income

   $ 88,549      $ 73,099      $ 163,658      $ 137,761   

Stock based compensation

     7,687        3,897        18,299        8,059   

Amortization of intangible assets

     18,210        10,217        36,482        19,239   

Amortization of premium on receivables

     816        816        1,630        1,632   

Amortization of deferred financing costs

     531        833        1,062        1,593   

Amortization at equity method investment

     2,149        —          2,149        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total pre-tax adjustments

     29,393        15,763        59,622        30,523   

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

     (9,052     (4,823     (18,291     (9,052
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 108,890      $ 84,039      $ 204,989      $ 159,232   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per diluted share

   $ 1.27      $ 1.00      $ 2.39      $ 1.89   

Diluted shares

     85,817        84,461        85,757        84,212   


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 June 30,     Six Months Ended June 30,  
    2014     2013     Change     % Change     2014     2013     Change     % Change  

NORTH AMERICA

               

- Transactions

    42,717        41,138        1,579        3.8     83,142        79,400        3,742        4.7

- Revenues, net per transaction

  $ 3.25      $ 2.90      $ 0.35        11.9   $ 3.19      $ 2.77      $ 0.42        15.1

- Revenues, net

  $ 138,861      $ 119,486      $ 19,375        16.2   $ 265,236      $ 220,080      $ 45,156        20.5

INTERNATIONAL

               

- Transactions

    47,524        37,836        9,688        25.6     94,282        73,734        20,548        27.9

- Revenues, net per transaction

  $ 2.83      $ 2.68      $ 0.15        5.7   $ 2.78      $ 2.64      $ 0.14        5.4

- Revenues, net

  $ 134,641      $ 101,383      $ 33,258        32.8   $ 262,174      $ 194,440      $ 67,734        34.8

FLEETCOR CONSOLIDATED REVENUES

               

- Transactions

    90,241        78,974        11,267        14.3     177,424        153,134        24,290        15.9

- Revenues, net per transaction

  $ 3.03      $ 2.80      $ 0.23        8.4   $ 2.97      $ 2.71      $ 0.27        9.8

- Revenues, net

  $ 273,502      $ 220,869      $ 52,633        23.8   $ 527,410      $ 414,520      $ 112,890        27.2

FLEETCOR CONSOLIDATED ADJUSTED REVENUES1

               

- Transactions

    90,241        78,974        11,267        14.3     177,424        153,134        24,290        15.9

- Adjusted Revenues per transaction

  $ 2.81      $ 2.55      $ 0.26        10.1   $ 2.76      $ 2.49      $ 0.27        10.8

- Adjusted Revenues

  $ 253,175      $ 201,314      $ 51,861        25.8   $ 489,460      $ 381,104      $ 108,356        28.4

 

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 June 30,     Six Months Ended June 30,  
     2014     2013     Change     % Change     2014     2013     Change     % Change  

Revenue from customers and partners

     55.1     50.9     4.2     8.3     55.6     51.1     4.5     8.8

Revenue from merchants and networks

     44.9     49.1     -4.2     -8.6     44.4     48.9     -4.5     -9.2

Revenue tied to fuel-price spreads

     14.5     18.7     -4.2     -22.5     14.2     17.4     -3.2     -18.4

Revenue influenced by absolute price of fuel

     18.7     19.6     -0.9     -4.6     18.4     20.1     -1.7     -8.5

Revenue from program fees, late fees, interest and other

     66.8     61.7     5.1     8.3     67.4     62.5     4.9     7.8

 

2  Expressed as a percentage of consolidated revenue.


Exhibit 3

Segment Results

(In thousands)

(Unaudited)

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2014      2013      2014      2013  

Revenues, net:

           

North America

   $ 138,861       $ 119,486       $ 265,236       $ 220,080   

International

     134,641         101,383         262,174         194,440   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 273,502       $ 220,869       $ 527,410       $ 414,520   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income:

           

North America

   $ 68,317       $ 60,103       $ 124,514       $ 109,529   

International

     66,167         48,971         124,106         93,798   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 134,484       $ 109,074       $ 248,620       $ 203,327   
  

 

 

    

 

 

    

 

 

    

 

 

 

Depreciation and amortization:

           

North America

   $ 6,376       $ 5,267       $ 13,012       $ 10,439   

International

     18,053         10,623         35,835         20,080   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 24,429       $ 15,890       $ 48,847       $ 30,519   
  

 

 

    

 

 

    

 

 

    

 

 

 

Capital expenditures:

           

North America

   $ 1,840       $ 1,292       $ 3,836       $ 2,356   

International

     4,128         4,054         7,716         7,752   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 5,968       $ 5,346       $ 11,552       $ 10,108