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

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8-K - FORM 8-K - FLEETCOR TECHNOLOGIES INC	d436122d8k.htm

Exhibit 99.1

FleetCor Reports Third Quarter 2012 Financial Results

Adjusted Net Income Increases 52% Versus Prior Year

FleetCor Raises 2012 Guidance

NORCROSS, Ga., November 8, 2012 — 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 third quarter ended September 30, 2012.

“The third quarter was another excellent quarter for FleetCor, which included revenue growth of 39% and adjusted net income growth of 52% over the third quarter of 2011,” said Ron Clarke, chairman, and chief executive officer, FleetCor Technologies, Inc. “Our results were again driven by strong organic growth in the U.S. and the impact of acquisitions closed over the last year. Integration of our recent acquisitions in Brazil and Russia remains on track.”

Financial results for the third quarter of 2012:

GAAP Results

•

Total revenues, net in the third quarter of 2012 increased 39% to $186.9 million compared to $134.2 million in the third quarter of 2011

•

Net income in the third quarter of 2012 increased 47% to $59.6 million, or $0.69 per diluted share, compared to $40.5 million, or $0.48 per diluted share in the third quarter of 2011

Non-GAAP Results

•

Adjusted revenues¹ (revenues, net less merchant commissions) in the third quarter of 2012 increased 44% to $174.0 million compared to $120.9 million in the third quarter of 2011

•

Adjusted net income¹ in the third quarter of 2012 increased 52% to $71.6 million, or $0.83 per diluted share, compared to $47.2 million, or $0.56 per diluted share in the third quarter of 2011

Subsequent Events:

FleetCor announced that on November 7th, 2012, that it had increased the size of its credit facility by $500 million. The increased credit facility totals $1.4 billion and consists of a $550 million term loan facility and an $850 million revolving credit facility. The interest rates on the upsized facility remain unchanged.

FleetCor anticipates using the increased facility primarily to help fund future acquisitions, for working capital and other general corporate purposes, including to potentially fund share repurchases from certain of its significant legacy investors.

Updated 2012 Outlook:

“Our continued strong performance this quarter together with a strong first half of the year gives us confidence to again increase our guidance for 2012,” said Eric Dey, chief financial officer, FleetCor

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.

Technologies, Inc. “We are now expecting revenue growth of approximately 31% and adjusted net income growth of approximately 37% for 2012. In addition, we believe the upsized credit facility provides us with plenty of dry powder to execute our corporate strategies”.

FleetCor Technologies, Inc. is raising its financial guidance for 2012 as follows:

•

Revenues, net between $678 million and $682 million, up from our previous guidance range of $665 million to $675 million

•

Adjusted net income¹ between $248 million and $251 million, up from our previous guidance range of $235 million to $240 million; and

•

Adjusted net income¹ per diluted share between $2.89 and $2.91, up from our previous guidance range of $2.74 to $2.78

The assumptions included in the guidance are as follows:

•

Fuel prices flat to current levels

•

Market spreads at their historic normal levels

•

A slight decrease in our effective tax rate from 30.1% in 2011 to 29.8% in 2012

•

Foreign exchange rates to remain at current levels

•

Fully diluted shares outstanding of 86.2 million shares

•

No impact related to future acquisitions or material new partnership agreements

Conference Call

The Company will host a conference call to discuss third quarter of 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 888-846-5003, or for international callers 480-629-9856. 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 4572983. The replay will be available until Thursday, November 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, assumptions underlying financial guidance, expectations regarding the benefits of the upsized credit facility and potential uses of proceeds from the upsized credit facility. 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 revenues, net are calculated as revenues 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 to 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.

Contact:

Investor Relations

investor@fleetcor.com

770-729-2017

FleetCor Technologies, Inc. and subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012		2011
Revenues, net	$	186,932		$	134,213		$	504,917	$	379,431

Expenses:
Merchant commissions		12,930			13,347			40,974		36,505
Processing		30,568			20,878			83,161		58,585
Selling		12,790			9,484			33,239		26,274
General and administrative		31,219			19,729			78,866		59,718
Depreciation and amortization		13,591			9,052			36,920		26,247

Operating income		85,834			61,723			231,757		172,102

Other (income) expense, net		(3	)		(518	)		519		(608	)
Interest expense, net		3,246			3,130			9,627		9,944
Loss on extinguishment of debt		—			—			—		2,669

Total other expense		3,243			2,612			10,146		12,005

Income before income taxes		82,591			59,111			221,611		160,097
Provision for income taxes		22,943			18,597			65,483		50,534

Net income	$	59,648		$	40,514		$	156,128	$	109,563


Basic earnings per share	$	0.71		$	0.50		$	1.88	$	1.36
Diluted earnings per share	$	0.69		$	0.48		$	1.82	$	1.31

Weighted average shares outstanding:
Basic shares		84,002			80,819			83,260		80,305
Diluted shares		86,224			83,649			85,681		83,526

FleetCor Technologies, Inc. and subsidiaries

Consolidated Balance Sheets

(In thousands, except share and par value amounts)


	September 30, 2012			December 31, 2011¹
	(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	300,061		$	285,159
Restricted cash		52,186			55,762
Accounts receivable (less allowance for doubtful accounts of $19,995 and $15,315, respectively)		578,818			481,791
Securitized accounts receivable - restricted for securitization investors		355,000			280,000
Prepaid expenses and other current assets		25,608			15,416
Deferred income taxes		6,296			4,797


Total current assets		1,317,969			1,122,925


Property and equipment		117,008			93,380
Less accumulated depreciation and amortization		(70,466	)		(60,656	)


Net property and equipment		46,542			32,724

Goodwill		923,715			756,597
Other intangibles, net		465,785			385,607
Other assets		88,110			45,834


Total assets	$	2,842,121		$	2,343,687


Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	533,113		$	478,882
Accrued expenses		60,697			41,565
Customer deposits		177,952			180,269
Securitization facility		355,000			280,000
Current portion of notes payable and other obligations		228,639			140,354


Total current liabilities		1,355,401			1,121,070


Notes payable and other obligations, less current portion		278,863			278,429
Deferred income taxes		172,789			132,752


Total noncurrent liabilities		451,652			411,181


Commitments and contingencies

Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized, 116,266,406 shares issued and 84,384,736 shares outstanding at September 30, 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		525,056			466,203
Retained earnings		690,626			534,498
Accumulated other comprehensive loss		(5,067	)		(13,716	)

Less treasury stock, 31,881,670 shares at September 30, 2012 and December 31, 2011		(175,663	)		(175,663	)

Total stockholders’ equity		1,035,068			811,436


Total liabilities and stockholders’ equity	$	2,842,121		$	2,343,687

¹	Certain 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)

(Unaudited)


	Nine Months Ended September 30,
	2012			2011
Operating activities
Net income	$	156,128		$	109,563

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

Depreciation		9,831			8,477
Stock-based compensation		14,287			15,622
Provision for losses on accounts receivable		16,788			13,600
Amortization of deferred financing costs		1,596			1,351
Amortization of intangible assets		23,044			13,969
Amortization of premium on receivables		2,449			2,450
Deferred income taxes		2,501			(863	)
Loss on extinguishment of debt		—			2,669
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash		3,576			4,942
Accounts receivable		(178,715	)		(140,491	)
Prepaid expenses and other current assets		(4,352	)		14,732
Other assets		(45,291	)		(81	)
Excess tax benefits related to stock-based compensation		(23,177	)		(8,170	)
Accounts payable, accrued expenses and customer deposits		54,466			32,747

Net cash provided by operating activities		33,131			70,517


Investing activities
Acquisitions, net of cash acquired		(189,819	)		(21,933	)
Purchases of property and equipment		(13,634	)		(8,408	)

Net cash used in investing activities		(203,453	)		(30,341	)


Financing activities
Excess tax benefits related to stock-based compensation		23,177			8,170
Borrowings on securitization facility, net		75,000			6,000
Deferred financing costs paid		(796	)		(7,839	)
Proceeds from issuance of common stock		21,391			5,066
Principal payments on notes payable		(23,492	)		(335,215	)
Borrowings on notes payable		—			300,000
Payments on revolver		(250,000	)		—
Borrowings from revolver		330,000			—
Borrowings on swing line of credit, net		1,000			—
Other		(129	)		(179	)

Net cash provided by (used in) financing activities		176,151			(23,997	)



Effect of foreign currency exchange rates on cash		9,073			6,301


Net increase in cash and cash equivalents		14,902			22,480
Cash and cash equivalents, beginning of period		285,159			114,804

Cash and cash equivalents, end of period	$	300,061		$	137,284


Supplemental cash flow information
Cash paid for interest	$	10,858		$	11,213

Cash paid for income taxes	$	29,428		$	35,171

Exhibit 1

RECONCILIATION OF NON-GAAP MEASURES

(In thousands, except per share amounts)

(Unaudited)

The following table reconciles revenues, net to adjusted revenues:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011

Revenues, net	$	186,932	$	134,213	$	504,917	$	379,431
Merchant commissions		12,930		13,347		40,974		36,505

Total adjusted revenues	$	174,002	$	120,866	$	463,943	$	342,926

The following table reconciles net income to EBITDA:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011

Net income	$	59,648	$	40,514	$	156,128	$	109,563
Provision for income taxes		22,943		18,597		65,483		50,534
Interest expense, net		3,246		3,130		9,627		9,944
Depreciation and amortization		13,591		9,052		36,920		26,247

EBITDA	$	99,428	$	71,293	$	268,158	$	196,288

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended
	2012			2011			2012			2011			2011
Net income	$	59,648		$	40,514		$	156,128		$	109,563		$	147,335

Stock based compensation		6,494			3,639			14,287			15,622			21,743
Amortization of intangible assets		8,687			4,782			23,044			13,969			19,590
Amortization of premium on receivables		816			816			2,449			2,450			3,266
Amortization of deferred financing costs		545			508			1,596			1,351			1,864
Loss on extinguishment of debt		—			—			—			2,669			2,669

Total pre-tax adjustments		16,542			9,745			41,376			36,061			49,132

Income tax impact of pre-tax adjustments at the effective tax rate		(4,595	)		(3,066	)		(12,226	)		(11,383	)		(14,805	)


Adjusted net income	$	71,595		$	47,193		$	185,278		$	134,241		$	181,662

Adjusted net income per diluted share	$	0.83		$	0.56		$	2.16		$	1.61		$	2.17

Diluted shares		86,224			83,649			85,681			83,526			83,654

Exhibit 2

Key Operating Metrics

(In thousands, except revenues, net per transaction and adjusted revenues per transaction)

(Unaudited)

Transaction Volume, Revenues and Adjusted Revenue, Per Transaction and by Segment


	Three Months Ended September 30,										Nine Months Ended September 30,
	2012		2011		Change			% Change			2012		2011		Change			% Change

NORTH AMERICA
- Transactions		41,203		39,884		1,319			3.3	%		117,204		114,667		2,537			2.2	%
- Revenues, net per transaction	$	2.46	$	2.33	$	0.13			5.6	%	$	2.49	$	2.25	$	0.24			10.8	%
- Revenues, net	$	101,495	$	92,995	$	8,500			9.1	%	$	291,593	$	257,444	$	34,149			13.3	%

INTERNATIONAL
- Transactions²		38,058		14,276		23,782			166.6	%		108,170		36,196		71,974			198.8	%
- Revenues, net per transaction²	$	2.24	$	2.89	$	(0.65	)		-22.5	%	$	1.97	$	3.37	$	(1.40	)		-41.5	%
- Revenues, net	$	85,437	$	41,218	$	44,219			107.3	%	$	213,324	$	121,987	$	91,337			74.9	%

FLEETCOR CONSOLIDATED REVENUES
- Transactions²		79,261		54,160		25,101			46.3	%		225,374		150,863		74,511			49.4	%
- Revenues, net per transaction²	$	2.36	$	2.48	$	(0.12	)		-4.8	%	$	2.24	$	2.52	$	(0.28	)		-11.1	%
- Revenues, net	$	186,932	$	134,213	$	52,719			39.3	%	$	504,917	$	379,431	$	125,486			33.1	%

FLEETCOR CONSOLIDATED ADJUSTED REVENUES¹
- Transactions²		79,261		54,160		25,101			46.3	%		225,374		150,863		74,511			49.4	%
- Adjusted Revenues per transaction²	$	2.20	$	2.23	$	(0.04	)		-1.6	%	$	2.06	$	2.27	$	(0.21	)		-9.4	%
- Adjusted Revenues	$	174,002	$	120,866	$	53,136			44.0	%	$	463,943	$	342,926	$	121,017			35.3	%

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 September 30,												Nine Months Ended September 30,
	2012			2011			Change			% Change			2012			2011			Change			% Change
Revenue from customers and partners		50.8	%		50.6	%		0.2	%		0.4	%		46.2	%		50.9	%		-4.7	%		-9.2	%
Revenue from merchants and networks		49.2	%		49.4	%		-0.2	%		-0.4	%		53.8	%		49.1	%		4.7	%		9.6	%

Revenue tied to fuel-price spreads		14.0	%		19.6	%		-5.6	%		-28.6	%		17.6	%		19.4	%		-1.8	%		-9.3	%
Revenue influenced by absolute price of fuel		21.7	%		24.0	%		-2.3	%		-9.6	%		20.8	%		24.0	%		-3.2	%		-13.3	%
Revenue from program fees, late fees, interest and other		64.3	%		56.4	%		7.9	%		14.0	%		61.6	%		56.6	%		5.0	%		8.8	%

²	Expressed as a percentage of consolidated revenue.

Exhibit 3

GAAP Segment Results

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Revenues, net:
North America	$	101,495	$	92,995	$	291,593	$	257,444
International¹		85,437		41,218		213,324		121,987

	$	186,932	$	134,213	$	504,917	$	379,431


Operating income:
North America	$	49,273	$	43,070	$	140,984	$	114,387
International¹		36,561		18,653		90,773		57,715

	$	85,834	$	61,723	$	231,757	$	172,102


Depreciation and amortization:
North America	$	5,046	$	4,990	$	15,064	$	14,821
International¹		8,545		4,062		21,856		11,426

	$	13,591	$	9,052	$	36,920	$	26,247


Capital expenditures:
North America	$	1,153	$	1,142	$	5,749	$	3,975
International¹		4,050		1,350		7,885		4,433

	$	5,203	$	2,492	$	13,634	$	8,408

The 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.

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