FLEETCOR TECHNOLOGIES INC - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - FLEETCOR TECHNOLOGIES INC	d297427d8k.htm

Exhibit 99.1

FleetCor Reports Fourth Quarter and Full Year 2011 Financial Results

Provides Outlook for Fiscal Year 2012

NORCROSS, Ga., February 8, 2012 — FleetCor Technologies, Inc. (NYSE: FLT), a leading independent global provider of fuel cards and specialized payment products to businesses, today reported financial results for its fourth quarter and full year ended December 31, 2011.

“Our Q4 results were very good, helping us to a nice finish to 2011. For full year 2011, revenue grew approximately 20% and adjusted net income grew over 30% on a pro forma basis. Strategically, we completed two meaningful international acquisitions, and delivered a major new processing contract with Shell. All and all, a very successful first year as a public company,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc.

Financial results for the fourth quarter of 2011:

GAAP Results

•

Total revenues, net, in the fourth quarter of 2011 increased 32% to $140.2 million compared to $106.5 million in the fourth quarter of 2010

•

Net income in the fourth quarter of 2011 increased 116% to $37.8 million, or $0.45 per diluted share, compared to $17.5 million, or $0.22 per diluted share in the fourth quarter of 2010

Non-GAAP Results

•

Adjusted revenues¹ (revenues, net less merchant commissions) in the fourth quarter of 2011 increased 29% to $125.5 million compared to $97.0 million in the fourth quarter of 2010

•

Adjusted net income¹ in the fourth quarter of 2011 increased 28% to $47.3 million, or $0.56 per diluted share, compared to $37.1 million, or $0.44 per diluted share in the fourth quarter of 2010 on a pro forma basis (to reflect the impact of public company expenses, non-cash compensation expense, increase in the effective tax rate during the fourth quarter of 2011, and fully diluted shares effective in the fourth quarter of 2011, as if these changes had occurred during the fourth quarter of 2010)

Financial results for the full year of 2011:

GAAP Results

•

Total revenue in 2011 increased 20% to $519.6 million compared to $433.8 million in 2010

•

Net income in 2011 increased 37% to $147.3 million, or $1.76 per diluted share, compared to $107.9 million, or $1.34 per diluted share in 2010

Non-GAAP Results

•

Adjusted revenues¹ (revenues, net less merchant commissions) in 2011 increased 22% to $468.4 million compared to $384.8 million in 2010

•

Adjusted net income¹ for 2011 increased 31% to $181.7 million, or $2.17 per diluted share, compared to $139.0 million, or $1.66 per diluted share in 2010 on a pro forma basis (to reflect the impact of public company expenses, non-cash compensation expense, loss on extinguishment of debt, increase in the effective tax rate during 2011, and fully diluted shares in 2011, as if these changes had occurred during 2010)

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

2012 Outlook

FleetCor Technologies, Inc. is introducing initial financial guidance for full year 2012:

•

Revenues, net between $615 million and $625 million

•

Adjusted Net Income between $217 million and $222 million

•

Adjusted Net Income per diluted share between $2.55 and $2.60

The Company’s full-year 2012 guidance assumes the following:

•

Fuel prices flat to 2011 average fuel price

•

A 0.2% increase in our effective tax rate from 30.1% in 2011 to 30.3% in 2012

•

An increase of 1.5 million average diluted shares outstanding, from 83.7 million shares in 2011 to 85.2 million shares in 2012

•

No impact from future acquisitions or material new partnership agreements

“The full year guidance produces a 19% full year 2012 revenue and adjusted net income per share growth rate at the midpoint of our guidance range versus 2011. We have strong business momentum entering 2012 but we also believe a conservative outlook is appropriate at the current time considering the macroeconomic environment, including fuel price spreads and foreign exchange rates,” said Eric Dey, chief financial officer FleetCor Technologies, Inc.

Conference Call

The Company will host a conference call to discuss fourth quarter and full year 2011 financial results today at 4:30pm 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 877-941-2068, or for international callers 480-629-9712. 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 4509416. The replay will be available until Wednesday, February 15, 2012. 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, economic outlook, assumptions underlying financial guidance, and management’s plans for 2012 and confidence in prospects for growth. 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; 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, 2010, filed with the Securities and Exchange Commission on March 25, 2011. 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 revenues are calculated as revenues less merchant commissions. Adjusted net income is calculated as net income, adjusted to eliminate (a) 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. 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. 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 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 expenses 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 used by 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 specialized payment products to businesses. FleetCor’s payment programs enable businesses to better control employee spending and provide card-accepting merchants with a high volume 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.

Contact:

Investor Relations

investor@fleetcor.com

770-729-2017

FleetCor Technologies, Inc. and subsidiaries

Consolidated Balance Sheets

(In thousands, except share and par value amounts)


	December 31, 2011			December 31, 2010
	(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	285,159		$	114,804
Restricted cash		55,762			62,341
Accounts receivable (less allowance for doubtful accounts of $15,315 and $14,256, respectively)		481,791			260,163
Securitized accounts receivable - restricted for securitization investors		280,000			144,000
Prepaid expenses and other current assets		15,416			33,191
Deferred income taxes		4,797			4,484

Total current assets		1,122,925			618,983

Property and equipment		93,380			83,013
Less accumulated depreciation and amortization		(60,656	)		(56,195	)

Net property and equipment		32,724			26,818

Goodwill		823,549			601,666
Other intangibles, net		299,460			193,861
Other assets		45,834			42,790

Total assets	$	2,324,492		$	1,484,118


Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	478,882		$	177,644
Accrued expenses		42,242			49,176
Customer deposits		180,269			78,685
Securitization facility		280,000			144,000
Current portion of notes payable and other obligations		140,354			11,617

Total current liabilities		1,121,747			461,122


Notes payable and other obligations, less current portion		278,429			313,796
Deferred income taxes		112,880			83,255

Total noncurrent liabilities		391,309			397,051


Commitments and contingencies

Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized, 113,741,883 shares issued and 81,860,213 shares outstanding at December 31, 2011; and 475,000,000 shares authorized, 111,522,354 shares issued and 79,655,213 shares outstanding at December 31, 2010		114			112
Additional paid-in capital		466,203			421,991
Retained earnings		534,498			387,163
Accumulated other comprehensive loss		(13,716	)		(8,101	)
Less treasury stock, 31,881,670 shares at December 31, 2011 and 31,867,141 shares at December 31, 2010		(175,663	)		(175,220	)

Total stockholders’ equity		811,436			625,945

Total liabilities and stockholders’ equity	$	2,324,492		$	1,484,118

FleetCor Technologies, Inc. and subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)


	Three Months Ended December 31,					Year Ended December 31,
	2011		2010			2011			2010
	(Unaudited)		(Unaudited)			(Unaudited)

Revenues, net	$	140,160	$	106,547		$	519,591		$	433,841

Expenses:
Merchant commissions		14,694		9,501			51,199			49,050
Processing		25,931		17,079			84,516			69,687
Selling		10,332		9,576			36,606			32,731
General and administrative		25,047		38,110			84,765			78,135

		64,156		32,281			262,505			204,238
Depreciation and amortization		9,924		8,507			36,171			33,745

Operating income		54,232		23,774			226,334			170,493

Other expense (income), net		19		(552	)		(589	)		(1,319	)
Interest expense, net		3,433		4,181			13,377			20,532
Loss on extinguishment of debt		—		—			2,669			—

Total other expense		3,452		3,629			15,457			19,213

Income before income taxes		50,780		20,145			210,877			151,280
Provision for income taxes		13,008		2,632			63,542			43,384

Net income		37,772		17,513			147,335			107,896
Calculation of income attributable to common shareholders:
Convertible preferred stock accrued dividends		—		(322	)		—			(1,488	)

Income attributable to common shareholders for basic earnings per share	$	37,772	$	17,191		$	147,335		$	106,408


Basic earnings per share	$	0.46	$	0.43		$	1.83		$	3.00
Diluted earnings per share	$	0.45	$	0.22		$	1.76		$	1.34

Weighted average shares outstanding:
Basic shares		81,512		39,612			80,610			35,434
Diluted shares		84,035		80,931			83,654			80,752

FleetCor Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)


	Year Ended December 31,
	2011			2010
	(Unaudited)
Operating activities
Net income	$	147,335		$	107,896
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		11,451			11,261
Stock-based compensation		21,743			26,755
Provision for losses on accounts receivable		19,226			18,883
Amortization of deferred financing costs		1,865			2,016
Amortization of intangible assets		19,590			17,205
Amortization of premium on receivables		3,266			3,263
Deferred income taxes		(2,920	)		(3,952	)
Loss on extinguishment of debt		2,669			—
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash		6,579			5,639
Accounts receivable		(80,024	)		(38,960	)
Prepaid expenses and other current assets		17,581			(3,506	)
Other assets		(1,936	)		63
Excess tax benefits related to stock-based compensation		(13,284	)		(10,710	)
Accounts payable, accrued expenses and customer deposits		119,088			3,902

Net cash provided by operating activities		272,229			139,755


Investing activities
Acquisitions, net of cash acquired		(326,035	)		(10,022	)
Purchases of property and equipment		(13,454	)		(11,194	)

Net cash used in investing activities		(339,489	)		(21,216	)


Financing activities
Net proceeds from initial public offering		—			9,560
Excess tax benefits related to stock-based compensation		13,284			10,710
Borrowings (payments) on securitization facility, net		136,000			(74,000	)
Deferred financing costs paid		(7,839	)		(1,067	)
Payment of dividends on convertible preferred stock		—			(7,634	)
Proceeds from issuance of common stock		8,477			538
Principal payments on notes payable		(338,965	)		(24,634	)
Proceeds from notes payable		425,000			—
Principal payments on other obligations		111			(17	)
Other		(179	)		—

Net cash provided by (used in) financing activities		235,889			(86,544	)



Effect of foreign currency exchange rates on cash		1,726			(1,892	)


Net increase in cash and cash equivalents		170,355			30,103
Cash and cash equivalents, beginning of year		114,804			84,701

Cash and cash equivalents, end of year	$	285,159		$	114,804


Supplemental cash flow information
Cash paid for interest	$	14,961		$	21,409


Cash paid for income taxes	$	48,333		$	45,998


Adoption of new accounting guidance related to asset securitization facility		—		$	218,000

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,
	2011		2010		2011		2010

Revenues, net	$	140,160	$	106,547	$	519,591	$	433,841
Merchant commissions		14,694		9,501		51,199		49,050

Total adjusted revenues	$	125,466	$	97,046	$	468,392	$	384,791

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,
	2011			2010			2011			2010
Net income	$	37,772		$	17,513		$	147,335		$	107,896

Stock based compensation		5,912			24,302			21,743			26,755
Amortization of intangible assets		5,621			4,456			19,590			17,205
Amortization of premium on receivables		816			816			3,266			3,263
Amortization of deferred financing costs		514			536			1,865			2,016
Loss on extinguishment of debt		—			—			2,669			—


Total pre-tax adjustments		12,863			30,110			49,133			49,239

Income tax impact of pre-tax adjustments at the effective tax rate		(3,295	)		(3,934	)		(14,805	)		(14,121	)


Adjusted net income	$	47,340		$	43,689		$	181,663		$	143,014

Adjusted net income per diluted share	$	0.56		$	0.54		$	2.17		$	1.77

Diluted shares		84,035			80,931			83,654			80,751

For the periods presented below, the following table reconciles 2010 actual results to 2010 pro forma results, which reflects the impact of stock-based compensation expense related to share-based compensation awards, public company expenses, a decrease in the effective tax rate and an increase in diluted shares outstanding, effective during 2011, as if these changes had occurred in 2010:


	Three Months Ended December 31, 2010			QTD Q4 2011 Changes¹			Pro forma QTD December 31, 2010			Year Ended 2010			2011 Changes²			Pro forma 2010

Income before income taxes	$	20,145		$	18,042		$	38,187		$	151,280		$	732		$	152,012
Provision for income taxes		2,632			7,150			9,782			43,384			2,421			45,805

Net income		17,513			10,892			28,405			107,896			(1,689	)		106,207

Stock based compensation		24,302			(18,390	)		5,912			26,755			(5,012	)		21,743
Amortization of intangible assets		4,456			—			4,456			17,205			—			17,205
Amortization of premium on receivables		816			—			816			3,263			—			3,263
Amortization of deferred financing costs		536			—			536			2,016			—			2,016
Loss on extinguishment of debt		—			—			—			—			2,669			2,669


Total pre-tax adjustments		30,110			(18,390	)		11,720			49,239			(2,343	)		46,896

Income tax impact of pre-tax adjustments at the effective tax rate		(3,934	)		932			(3,002	)		(14,121	)		(10	)		(14,131	)


Adjusted net income	$	43,689		$	(6,567	)	$	37,122		$	143,014		$	(4,042	)	$	138,972

Adjusted net income per diluted share	$	0.54					$	0.44		$	1.77					$	1.66

Diluted shares		80,931						84,035			80,751						83,654

Q4 QTD December 31, 2011 changes include approximately $0.7 million in incremental cash operating costs for public company expenses, $3.8 million of non-cash compensation expenses associated with our stock plan, $23.0 million of non-cash compensation expense associated with our IPO, and a 12.5% increase in our effective tax rate from 13.1% for the QTD ended December 31, 2010 to 25.6% for the QTD ended December 31, 2011. Additionally, QTD December 31, 2011 reflects an increase of 3.1 million diluted shares outstanding, from 80.9 million for the QTD December 31, 2010 to 84.0 million for the QTD December 31, 2011.

2011 changes include approximately $2.0 million in incremental cash operating costs for public company expenses, $2.7 million in losses on the extinguishment of debt, $18.0 million of non-cash compensation expenses associated with our stock plan, $23.0 million of non-cash compensation expense associated with our IPO, and a 1.4% increase in our effective tax rate from 28.7% in 2010 to 30.1% in 2011. Additionally, 2011 reflects an increase of 2.9 million diluted shares outstanding, from 80.8 million at in 2010 to 83.7 million in 2011.

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,
	2011		2010		Change			% Change			2011		2010		Change			% Change

NORTH AMERICA
- Transactions		37,636		36,640		996			2.7	%		152,700		148,570		4,130			2.8	%
- Revenues, net per transaction	$	2.43	$	1.87	$	0.56			30.1	%	$	2.28	$	1.94	$	0.35			17.9	%
- Revenues, net	$	91,340	$	68,347	$	22,993			33.6	%	$	348,784	$	287,794	$	60,990			21.2	%

INTERNATIONAL¹
- Transactions³		25,906		11,012		14,894			135.3	%		62,121		41,841		20,280			48.5	%
- Revenues, net per transaction³	$	1.88	$	3.47	$	(1.58	)		-45.7	%	$	2.75	$	3.47	$	(0.72	)		-20.8	%
- Revenues, net	$	48,820	$	38,188	$	10,632			27.8	%	$	170,807	$	145,188	$	25,619			17.6	%

FLEETCOR CONSOLIDATED REVENUES¹
- Transactions³		63,542		47,652		15,890			33.3	%		214,821		190,411		24,410			12.8	%
- Revenues, net per transaction³	$	2.21	$	2.24	$	(0.03	)		-1.3	%	$	2.42	$	2.27	$	0.14			6.4	%
- Revenues, net	$	140,160	$	106,535	$	33,625			31.6	%	$	519,591	$	432,982	$	86,609			20.0	%

FLEETCOR CONSOLIDATED ADJUSTED REVENUES^1,2
- Transactions³		63,542		47,652		15,890			33.3	%		214,821		190,411		24,410			12.8	%
- Adjusted Revenues per transaction³	$	1.97	$	2.04	$	(0.06	)		-3.0	%	$	2.18	$	2.02	$	0.16			8.1	%
- Adjusted Revenues	$	125,466	$	97,034	$	28,432			29.3	%	$	468,392	$	383,932	$	84,460			22.0	%

Calculation of revenue per transaction for our International segment and on a consolidated basis for the three months and year ended December 31, 2010 excludes the impact of a non-renewed partner contract in Europe, inherited from an acquisition, which we chose not to renew. This non-renewed contract contributed approximately 0.01 million transactions and $0.01 million in revenues, net to our International segment in the three months ended December 31, 2010; and approximately 3.6 million transactions and $0.9 million in revenues, net to our International segment in the year ended December 31, 2010. This contract had a high number of transactions and very little revenue and had a $0.03 and $0.25 negative impact on our International segment revenue per transaction in the three months and year ended December 31, 2010, respectively. We believe that excluding the impact of this contract is a more effective measure for evaluating the Company’s revenue performance of its continuing business. Revenues, net, excluding the impact of a non-renewed partner contract in Europe for our International segment and on a consolidated basis are supplemental non-GAAP financial measures of performance. The results from our Mexican prepaid fuel card and food voucher business acquired during the third quarter of 2011 are reported in our International segment.

²	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.

³	The presentation of prior quarters presented herein has been conformed to the current period presentation that eliminates certain intercompany transactions.

Exhibit 3

Segment Results

(In thousands)

(Unaudited)


	Three Months Ended December 31,				Year Ended December 31,
	2011		2010		2011		2010
Revenues, net:
North America	$	91,340	$	68,347	$	348,784	$	287,794
International¹		48,820		38,200		170,807		146,047

	$	140,160	$	106,547	$	519,591	$	433,841


Operating income:
North America	$	38,362	$	11,102	$	153,687	$	106,745
International¹		15,870		12,672		72,647		63,748

	$	54,232	$	23,774	$	226,334	$	170,493


Depreciation and amortization:
North America	$	5,024	$	4,969	$	19,845	$	20,220
International¹		4,900		3,538		16,326		13,525

	$	9,924	$	8,507	$	36,171	$	33,745


Capital expenditures:
North America	$	2,865	$	2,031	$	6,840	$	6,891
International¹		2,181		2,089		6,614		4,303

	$	5,046	$	4,120	$	13,454	$	11,194

¹	The results from our Mexican prepaid fuel card and food voucher business acquired during 2011 are reported in our International segment.

FLEETCOR TECHNOLOGIES INC - FORM 8-K - EX-99.1 - PRESS RELEASE - February 8, 2012

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FLEETCOR TECHNOLOGIES INC Reports