FleetCor Reports Fourth Quarter and Fiscal Year 2012 Financial Results

Fourth Quarter Revenue and Profits Grow Over 45%

Profit Outlook for 2013 up 22% at Midpoint of Guidance Range

NORCROSS, Ga.--()--FleetCor Technologies, Inc. (NYSE: FLT), a leading independent global provider of fuel cards and workforce payment products to businesses, today reported financial results for its fourth quarter and fiscal year ended December 31, 2012.

"2012 was another excellent year for FleetCor, which included revenue growth of 36% and adjusted net income growth of 41% over 2011. We also completed developing market acquisitions in Brazil and Russia, and went live with our GFN platform in Asia for Shell during the fourth quarter,” said Ron Clarke, chairman, and chief executive officer, FleetCor Technologies, Inc. “We are also well positioned to kick off 2013 as we have nearly $1 billion in liquidity to continue our global business development efforts.”

Financial Results for Fourth Quarter 2012:

GAAP Results

  • Total revenues, net, in the fourth quarter of 2012 increased 45% to $202.6 million compared to $140.2 million in the fourth quarter of 2011
  • Net income in the fourth quarter of 2012 increased 59% to $60.1 million, or $0.70 per diluted share, compared to $37.8 million, or $0.45 per diluted share in the fourth quarter of 2011

Non-GAAP Results

  • Adjusted revenues1 (revenues, net less merchant commissions) in the fourth quarter of 2012 increased 47% to $185.0 million compared to $125.5 million in the fourth quarter of 2011
  • Adjusted net income1 in the fourth quarter of 2012 increased 49% to $70.7 million, or $0.82 per diluted share, compared to $47.3 million, or $0.56 per diluted share in the fourth quarter of 2011

Financial Results for Fiscal Year 2012:

GAAP Results

  • Total revenues, net in 2012 increased 36% to $707.5 million compared to $519.6 million in 2011
  • Net income in 2012 increased 47% to $216.2 million, or $2.52 per diluted share, compared to $147.3 million, or $1.76 per diluted share in 2011

Non-GAAP Results

  • Adjusted revenues1 (revenues, net less merchant commissions) in 2012 increased 39% to $649.0 million compared to $468.4 million in 2011
  • Adjusted net income1 for 2012 increased 41% to $256.0 million, or $2.99 per diluted share, compared to $181.7 million, or $2.17 per diluted share in 2011

2013 Outlook:

FleetCor Technologies, Inc. is introducing initial financial guidance for fiscal year 2013:

  • Revenues, net, between $790 million and $810 million
  • Adjusted Net Income between $300 million and $310 million
  • Adjusted Net Income per diluted share between $3.61 and $3.69

The assumptions included in the guidance are as follows:

  • Fuel prices equal to the 2012 average
  • Market spreads equal to the 2012 average
  • Foreign exchange rates equal to the 2012 average
  • Fully diluted shares outstanding of 84.2 million shares
  • No impact related to future acquisitions or material new partnership agreements

“We have great momentum heading into 2013 and we are projecting another double-digit revenue and profit year despite uncertainty around the macroeconomic environment including fuel prices, fuel price spreads and FX rates. Our guidance produces a 13% revenue and 22% adjusted net income per share growth rate, at the midpoint of our guidance range, versus 2012,” said Eric Dey, chief financial officer FleetCor Technologies, Inc.

Conference Call

The Company will host a conference call to discuss fourth quarter and fiscal year 2012 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 4592455. The replay will be available until February 14, 2013. 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" or "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, expectations regarding entering new markets and building on existing assets in emerging markets. 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, 2011, filed with the Securities and Exchange Commission on February 29, 2012. 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, and (d) amortization of intangible assets. 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 and adjusted net income:

  • as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis;
  • for planning purposes, including the preparation of our internal annual operating budget;
  • to allocate resources to enhance the financial performance of our business; and
  • to evaluate the performance and effectiveness of our operational strategies.

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

About FleetCor

FleetCor is a leading global provider of fuel cards and workforce payment products to businesses. FleetCor’s payment programs enable businesses to better control employee spending and provide card-accepting merchants with a commercial customer base that can increase their sales and customer loyalty. FleetCor serves commercial accounts in North America, Latin America, and Europe. 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,
2012 2011 2012   2011  
(Unaudited) (Unaudited) (Unaudited)
 
Revenues, net $ 202,617 $ 140,160 $ 707,534 $ 519,591
 
Expenses:
Merchant commissions 17,599 14,694 58,573 51,199
Processing 32,285 25,931 115,446 84,516
Selling 13,190 10,332 46,429 36,606
General and administrative 31,256 25,047 110,122 84,765
Depreciation and amortization   15,116   9,924   52,036   36,171  
Operating income   93,171   54,232   324,928   226,334  
Other expense (income), net 602 19 1,121 (589 )
Interest expense, net 3,390 3,433 13,017 13,377
Loss on extinguishment of debt       -   2,669  
Total other expense   3,992   3,452   14,138   15,457  
Income before income taxes 89,179 50,780 310,790 210,877
Provision for income taxes   29,108   13,008   94,591   63,542  
Net income $ 60,071 $ 37,772 $ 216,199 $ 147,335  
 
Basic earnings per share $ 0.72 $ 0.46 $ 2.59 $ 1.83
Diluted earnings per share $ 0.70 $ 0.45 $ 2.52 $ 1.76
 
Weighted average shares outstanding:
Basic shares 83,378 81,512 83,328 80,610
Diluted shares 85,750 84,035 85,736 83,654
 
       
FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except share and par value amounts)
       
December 31, 2012 December 31, 20111
(Unaudited)
Assets
 
Current assets:
Cash and cash equivalents $ 283,649 $ 285,159
Restricted cash 53,674 55,762
Accounts receivable (less allowance for doubtful accounts of $19,463 and $15,315, respectively) 525,441 481,791
Securitized accounts receivable - restricted for securitization investors 298,000 280,000
Prepaid expenses and other current assets 28,126 15,416
Deferred income taxes   6,464     6,140  
 
Total current assets   1,195,354     1,124,268  
 
Property and equipment 93,902 93,380
Less accumulated depreciation and amortization   (48,706 )   (60,656 )
 
Net property and equipment 45,196 32,724
 
Goodwill 926,609 760,736
Other intangibles, net 463,864 385,607
Other assets   90,847     45,834  
 
Total assets $ 2,721,870   $ 2,349,169  
 
Liabilities and Stockholders’ Equity
 
Current liabilities:
Accounts payable $ 418,609 $ 478,882
Accrued expenses 75,812 41,565
Customer deposits 187,627 180,269
Securitization facility 298,000 280,000
Current portion of notes payable and other obligations   162,174     145,836  
 
Total current liabilities   1,142,222     1,126,552  
 
Notes payable and other obligations, less current portion 485,217 278,429
Deferred income taxes   180,609     132,752  
 
Total noncurrent liabilities   665,826     411,181  
 
Commitments and contingencies
 
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized, 116,772,324 shares issued and 81,037,832 shares outstanding at December 31, 2012; and 475,000,000 shares authorized, 113,741,883 shares issued and 81,860,213 shares outstanding at December 31, 2011 116 114
Additional paid-in capital 542,018 466,203
Retained earnings 750,697 534,498
Accumulated other comprehensive loss (3,346 ) (13,716 )

Less treasury stock, 35,734,492 shares at December 31, 2012 and 31,881,670 shares at December 31, 2011

(375,663 ) (175,663 )
   
Total stockholders’ equity   913,822     811,436  
 
Total liabilities and stockholders’ equity $ 2,721,870   $ 2,349,169  
 
 
1Certain prior period amounts have been recast in connection with ASC 805, Business Combinations.
 
       
FleetCor Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
 
Year Ended December 31,
  2012     2011  
(Unaudited)
Operating activities
Net income $ 216,199 $ 147,335
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 14,116 11,451
Stock-based compensation 19,275 21,743
Provision for losses on accounts receivable 21,896 19,226
Amortization of deferred financing costs 2,279 1,864
Amortization of intangible assets 32,376 19,590
Amortization of premium on receivables 3,265 3,266
Deferred income taxes (3,337 ) (2,920 )
Loss on extinguishment of debt 2,669
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash 2,088 6,579
Accounts receivable (71,102 ) (80,024 )
Prepaid expenses and other current assets (6,847 ) 17,581
Other assets (46,553 ) (1,935 )
Excess tax benefits related to stock-based compensation (29,355 ) (13,727 )
Accounts payable, accrued expenses and customer deposits   (18,840 )   126,927  
Net cash provided by operating activities   135,460     279,625  
 
 
Investing activities
Acquisitions, net of cash acquired (190,447 ) (333,763 )
Purchases of property and equipment   (19,111 )   (13,454 )
Net cash used in investing activities   (209,558 )   (347,217 )
 
 
Financing activities
Excess tax benefits related to stock-based compensation 29,355 13,727
Repurchase of common stock (200,000 )
Proceeds from issuance of common stock 27,187 8,477
Borrowings on securitization facility, net 18,000 136,000
Deferred financing costs paid (3,776 ) (7,839 )
Principal payments on notes payable (30,414 ) (338,965 )
Proceeds from notes payable 250,000 425,000
Payments on revolver (480,000 )
Borrowings from revolver 455,000
Payments on swing line of credit, net (1,874 )
Other   (1,490 )   (179 )
Net cash provided by financing activities   61,988     236,221  
   
Effect of foreign currency exchange rates on cash   10,600     1,726  
 
Net (decrease) increase in cash and cash equivalents (1,510 ) 170,355
Cash and cash equivalents, beginning of year   285,159     114,804  
Cash and cash equivalents, end of year $ 283,649   $ 285,159  
 
Supplemental cash flow information
Cash paid for interest $ 10,889   $ 14,961  
 
Cash paid for income taxes $ 29,579   $ 49,205  
 
               
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 December 31, Year Ended December 31,
  2012     2011     2012     2011  
 
Revenues, net $ 202,617 $ 140,160 $ 707,534 $ 519,591
Merchant commissions   17,599     14,694     58,573     51,199  
Total adjusted revenues $ 185,018   $ 125,466   $ 648,961   $ 468,392  
 
                           
The following table reconciles net income to EBITDA:
 
Three Months Ended December 31, Year Ended December 31,
  2012     2011     2012     2011  
 
Net income $ 60,071 $ 37,772 $ 216,199 $ 147,335
Provision for income taxes 29,108 13,008 94,591 63,542
Interest expense, net 3,390 3,433 13,017 13,377
Depreciation and amortization 15,116 9,924 52,036 36,171
Other expense (income), net 602 19 1,121 (589 )
Loss on extinguishment of debt   -     -     -     2,669  
EBITDA $ 108,287   $ 64,156   $ 376,964   $ 262,505  
 
                           
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,
  2012     2011     2012     2011  
Net income $ 60,071 $ 37,772 $ 216,199 $ 147,335
 
Stock based compensation 4,988 5,912 19,275 21,743
Amortization of intangible assets 9,332 5,621 32,376 19,590
Amortization of premium on receivables 816 816 3,265 3,266
Amortization of deferred financing costs 683 514 2,279 1,865
Loss on extinguishment of debt - - - 2,669
       
Total pre-tax adjustments 15,819 12,863 57,195 49,133
 
Income tax impact of pre-tax adjustments at the effective tax rate (5,163 ) (3,295 ) (17,410 ) (14,805 )
       
Adjusted net income $ 70,727   $ 47,340   $ 255,984   $ 181,663  
Adjusted net income per diluted share $ 0.82 $ 0.56 $ 2.99 $ 2.17
 
Diluted shares 85,750 84,035 85,736 83,654
 
                               
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,
  2012     2011   Change % Change   2012     2011   Change % Change
 

NORTH AMERICA

- Transactions 39,663 37,636 2,027 5.4 % 156,868 152,700 4,168 2.7 %
- Revenues, net per transaction $ 2.74 $ 2.43 $ 0.31 12.8 % $ 2.55 $ 2.28 $ 0.27 11.7 %
- Revenues, net $ 108,571 $ 91,340 $ 17,231 18.9 % $ 400,164 $ 348,784 $ 51,380 14.7 %
 

INTERNATIONAL

- Transactions 38,725 25,906 12,819 49.5 % 146,894 62,121 84,773 136.5 %
- Revenues, net per transaction $ 2.43 $ 1.88 $ 0.54 28.9 % $ 2.09 $ 2.75 $ (0.66 ) -23.9 %
- Revenues, net $ 94,046 $ 48,820 $ 45,226 92.6 % $ 307,370 $ 170,807 $ 136,563 80.0 %
                                                 
 

FLEETCOR CONSOLIDATED REVENUES

- Transactions 78,388 63,542 14,846 23.4 % 303,762 214,821 88,941 41.4 %
- Revenues, net per transaction $ 2.58 $ 2.21 $ 0.38 17.2 % $ 2.33 $ 2.42 $ (0.09 ) -3.7 %
- Revenues, net $ 202,617 $ 140,160 $ 62,457 44.6 % $ 707,534 $ 519,591 $ 187,943 36.2 %
                                                 
                                                 
 

FLEETCOR CONSOLIDATED ADJUSTED REVENUES1

- Transactions 78,388 63,542 14,846 23.4 % 303,762 214,821 88,941 41.4 %
- Adjusted Revenues per transaction $ 2.36 $ 1.97 $ 0.39 19.5 % $ 2.14 $ 2.18 $ (0.04 ) -2.0 %
- Adjusted Revenues $ 185,018 $ 125,466 $ 59,552 47.5 % $ 648,961 $ 468,392 $ 180,569 38.6 %
                                                 
 
 
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,
  2012     2011   Change % Change   2012     2011   Change % Change
Revenue from customers and partners 48.6 % 52.7 % -4.1 % -7.8 % 46.9 % 51.4 % -4.5 % -8.8 %
Revenue from merchants and networks 51.4 % 47.3 % 4.1 % 8.7 % 53.1 % 48.6 % 4.5 % 9.3 %
 
Revenue tied to fuel-price spreads 17.4 % 18.3 % -0.9 % -4.9 % 17.5 % 19.1 % -1.6 % -8.4 %
Revenue influenced by absolute price of fuel 20.2 % 22.9 % -2.7 % -11.8 % 20.7 % 23.7 % -3.0 % -12.7 %
Revenue from program fees, late fees, interest and other 62.4 % 58.8 % 3.6 % 6.1 % 61.8 % 57.2 % 4.6 % 8.0 %
 

2Expressed as a percentage of consolidated revenue.

 
               
Exhibit 3
Segment Results
(In thousands)
(Unaudited)
 
Three Months Ended December 31, Year Ended December 31,
2012 2011 2012 2011
Revenues, net:
North America $ 108,571 $ 91,340 $ 400,164 $ 348,784
International1   94,046   48,820   307,370   170,807
$ 202,617 $ 140,160 $ 707,534 $ 519,591
 
Operating income:
North America $ 55,692 $ 38,362 $ 196,677 $ 153,687
International1   37,479   15,870   128,251   72,647
$ 93,171 $ 54,232 $ 324,928 $ 226,334
 
Depreciation and amortization:
North America $ 5,225 $ 5,024 $ 20,289 $ 19,845
International1   9,891   4,900   31,747   16,326
$ 15,116 $ 9,924 $ 52,036 $ 36,171
 
Capital expenditures:
North America $ 1,986 $ 2,865 $ 7,735 $ 6,840
International1   3,492   2,181   11,376   6,614
$ 5,478 $ 5,046 $ 19,111 $ 13,454
 

 

1The results from our Mexican business acquired during the third quarter of 2011, Allstar business acquired during the fourth quarter of 2011, Russian business acquired in the second quarter of 2012 and CTF Technologies, Inc. acquired during the third quarter of 2012 are reported in our International segment.

Contacts

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

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Contacts

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