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/ FleetCor Reports First Quarter 2014 Financial Results

FleetCor Reports First Quarter 2014 Financial Results

25/05/2015

NORCROSS, Ga.--(BUSINESS WIRE)--May 1, 2014-- FleetCor Technologies, Inc. (NYSE:FLT), a leading global provider of fuel cards and workforce payment products to businesses, today reported financial results for its first quarter ended March 31, 2014.

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

Financial Results for First Quarter 2014:

GAAP Results

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

Non-GAAP Results

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

Fiscal Year 2014 Outlook:

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

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

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

  • Fuel prices and market spreads at the 2013 average
  • FX rates equal to current levels
  • Tax rate of 30.5%
  • Fully diluted shares outstanding of 86 million shares
  • No impact related to acquisitions or material new partnership agreements not already disclosed

“Given our strong first quarter results, we are raising our financial guidance for 2014. We are now expecting a 21% growth in revenue and 24% adjusted net income per share growth rate, at the midpoint of our guidance range, versus 2013,” said Eric Dey, chief financial officer FleetCor Technologies, Inc. “A number of our businesses are off to a strong start this year, which we anticipate will more than offset the economic weakness in our Russian business and expected unfavorable foreign exchange rates in Russia and Brazil over the balance of the year.”

Conference Call

The Company will host a conference call to discuss first quarter 2014 financial results today at 5:00pm ET. Hosting the call will be Ron Clarke, chief executive officer, and Eric Dey, chief financial officer. The conference call can be accessed live over the phone by dialing (877) 407-0784, or for international callers (201) 689-8560. A replay will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 13580953. The replay will be available until May 8, 2014. The call will be webcast live from the Company's investor relations website at investor.fleetcor.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about FleetCor's beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as "anticipate," "intend," "believe," "estimate," "plan," "seek," "project," "expect," "may," "will," "would," "could" or "should," the negative of these terms or other comparable terminology. Examples of forward-looking statements in this press release include statements relating to revenue and earnings guidance, assumptions underlying financial guidance, and expectations regarding recent deals. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement, such as delays or failures associated with implementation; fuel price and spread volatility; changes in credit risk of customers and associated losses; the actions of regulators relating to payment cards or resulting from investigations; failure to maintain or renew key business relationships; failure to maintain competitive offerings; failure to maintain or renew sources of financing; failure to complete, or delays in completing, anticipated new partnership arrangements or acquisitions and the failure to successfully integrate or otherwise achieve anticipated benefits from such partnerships or acquired businesses; failure to successfully expand business internationally; the impact of foreign exchange rates on operations, revenue and income; the effects of general economic conditions on fueling patterns and the commercial activity of fleets, as well as the other risks and uncertainties identified under the caption "Risk Factors" in FleetCor's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission on March 3, 2014. FleetCor believes these forward-looking statements are reasonable; however, forward-looking statements are not a guarantee of performance, and undue reliance should not be placed on such statements. The forward-looking statements included in this press release are made only as of the date hereof, and FleetCor does not undertake, and specifically disclaims, any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

About Non-GAAP Financial Measures

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

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

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

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

About FleetCor

FleetCor is a leading global provider of fuel cards and workforce payment products to businesses. FleetCor’s payment programs enable businesses to better control employee spending and provide card-accepting merchants with a commercial customer base that can increase their sales and customer loyalty. FleetCor serves commercial accounts in North America, Latin America, Europe, Australia and New Zealand. For more information, please visit www.fleetcor.com.

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 March 31,








2014
2013








(Unaudited)
(Unaudited)










 
Revenues, net
$ 253,908
$ 193,651










 
Expenses:







Merchant commissions

17,623

13,861

Processing


36,856

29,943

Selling



17,414

11,704

General and administrative

43,461

29,261

Depreciation and amortization
  24,418
  14,629
Operating income
  114,136
  94,253

Other expense, net

544

292

Interest expense, net
  5,461
  3,448
Total other expense
  6,005
  3,740
Income before income taxes

108,131

90,513
Provision for income taxes
  33,022
  25,851
Net income


$ 75,109
$ 64,662










 
Basic earnings per share
$ 0.91
$ 0.80
Diluted earnings per share
$ 0.88
$ 0.77










 
Weighted average shares outstanding:



Basic shares



82,737

81,222
Diluted shares


85,695

83,960
FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except share and par value amounts)
 
   





March 31, 2014   December 31, 2013








(Unaudited)

Assets

















 
Current assets:





Cash and cash equivalents
$ 283,374

$ 338,105

Restricted cash

46,840


48,244

Accounts receivable (less allowance for doubtful accounts of $21,763 and $22,416, respectively)
682,753


573,351

Securitized accounts receivable - restricted for securitization investors

393,500


349,000

Prepaid expenses and other current assets

60,684


40,062

Deferred income taxes
  4,258  
  4,750  










 
Total current assets
  1,471,409  
  1,353,512  










 
Property and equipment

118,458


111,100
Less accumulated depreciation and amortization
  (63,567 )
  (57,144 )










 
Net property and equipment

54,891


53,956










 
Goodwill





1,561,530


1,552,725
Other intangibles, net

860,898


871,263
Other assets


  87,989  
  100,779  










 
Total assets



$ 4,036,717  
$ 3,932,235  










 
Liabilities and Stockholders’ Equity













 
Current liabilities:




Accounts payable
$ 578,507

$ 467,202

Accrued expenses

111,275


114,870

Customer deposits

174,683


182,541

Securitization facility

393,500


349,000

Current portion of notes payable and other obligations

532,868


662,439

Other current liabilities
  119,260  
  132,846  










 
Total current liabilities
  1,910,093  
  1,908,898  










 
Notes payable and other obligations, less current portion

459,916


474,939
Deferred income taxes

248,066


249,504
Other noncurrent liabilities
  52,462  
  55,001  










 
Total noncurrent liabilities
  760,444  
  779,444  










 
Commitments and contingencies













 
Stockholders’ equity:




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


117

Additional paid-in capital

662,917


631,667

Retained earnings

1,110,307


1,035,198

Accumulated other comprehensive loss

(31,499 )

(47,426 )

Less treasury stock, 35,734,492 shares at March 31, 2014 and December 31, 2013
(375,663 )

(375,663 )








 
 
Total stockholders’ equity
  1,366,180  
  1,243,893  










 
Total liabilities and stockholders’ equity
$ 4,036,717  
$ 3,932,235  
FleetCor Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
 

Three Months Ended March 31,

2014   2013

(Unaudited)

Operating activities


Net income $ 75,109

$ 64,662
Adjustments to reconcile net income to net cash provided by operating activities:


Depreciation
4,801


4,031
Stock-based compensation
10,612


4,162
Provision for losses on accounts receivable
5,554


4,460
Amortization of deferred financing costs
531


760
Amortization of intangible assets
18,272


9,022
Amortization of premium on receivables
814


816
Deferred income taxes
603


(1,012 )
Changes in operating assets and liabilities (net of acquisitions):


Restricted cash
1,404


4,327
Accounts receivable
(153,184 )

(192,483 )
Prepaid expenses and other current assets
(7,111 )

3,194
Other assets
545


40,113
Excess tax benefits related to stock-based compensation
(16,126 )

(5,843 )
Accounts payable, accrued expenses and customer deposits   109,670  
  50,101  
Net cash provided by (used in) operating activities   51,494  
  (13,690 )



 



 
Investing activities


Acquisitions, net of cash acquired
(19,292 )

(94,773 )
Purchases of property and equipment   (5,584 )
  (4,762 )
Net cash used in investing activities   (24,876 )
  (99,535 )



 



 
Financing activities


Excess tax benefits related to stock-based compensation
16,126


5,843
Proceeds from issuance of common stock
4,512


5,256
Borrowings on securitization facility, net
44,500


87,000
Deferred financing costs paid
(521 )

(1,830 )
Principal payments on notes payable
(6,875 )

(7,500 )
Payments on revolver- A Facility
(134,803 )

(25,000 )
Payments on foreign revolver- B Facility
(3,601 )


Payments on swing line of credit, net
15



Other   (246 )
  (178 )
Net cash (used in) provided by financing activities   (80,893 )
  63,591  

 
 
Effect of foreign currency exchange rates on cash   (456 )
  (9,402 )



 
Net decrease in cash and cash equivalents
(54,731 )

(59,036 )
Cash and cash equivalents, beginning of period   338,105  
  283,649  
Cash and cash equivalents, end of period $ 283,374  
$ 224,613  



 
Supplemental cash flow information


Cash paid for interest $ 6,264  
$ 3,863  



 
Cash paid for income taxes $ 19,654  
$ 38,426  
Exhibit 1
RECONCILIATION OF NON-GAAP MEASURES AND PRO FORMA INFORMATION
(In thousands, except shares and per share amounts)
(Unaudited)
           
  The following table reconciles revenues, net to adjusted revenues:




 



Three Months Ended March 31,



2014
2013





 
Revenues, net

253,908


193,651
Merchant commissions
  17,623  
  13,861  
Total adjusted revenues
$ 236,285  
$ 179,790  





 
           

The following table reconciles net income to EBITDA:





 



Three Months Ended March 31,



2014
2013





 
Net income
$ 75,109

$ 64,662
Provision for income taxes

33,022


25,851
Interest expense, net

5,461


3,448
Depreciation and amortization

24,418


14,629
Other expense (income), net
  544  
  292  
EBITDA
$ 138,554  
$ 108,882  





 
           

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





 



Three Months Ended March 31,



2014
2013
Net income
$ 75,109

$ 64,662





 
Stock based compensation

10,612


4,162
Amortization of intangible assets

18,272


9,022
Amortization of premium on receivables

814


816
Amortization of deferred financing costs

531


760



 
 
Total pre-tax adjustments

30,229


14,760





 
Income tax impact of pre-tax adjustments at the effective tax rate
(9,232 )

(4,216 )



 
 
Adjusted net income
$ 96,106  
$ 75,206  
Adjusted net income per diluted share
$ 1.12

$ 0.90





 
Diluted shares

85,695


83,960
Exhibit 2
Transaction Volume, Revenues and Adjusted Revenue, Per Transaction and by Segment
(In thousands except revenues, net per transaction and adjusted revenues per transaction)
(Unaudited)
 
 
 
 
 



Three Months Ended March 31,



2014
2013
Change
% Change









 

NORTH AMERICA










- Transactions2

40,425


38,262


2,163

5.7 %

- Revenues, net per transaction
$ 3.13

$ 2.63

$ 0.50

18.9 %

- Revenues, net
$ 126,375

$ 100,594

$ 25,781

25.6 %









 

INTERNATIONAL










- Transactions2

47,192


35,898


11,294

31.5 %

- Revenues, net per transaction
$ 2.70

$ 2.59

$ 0.11

4.2 %

- Revenues, net
$ 127,533

$ 93,057

$ 34,476

37.0 %
                   









 

FLEETCOR CONSOLIDATED REVENUES










- Transactions2

87,617


74,160


13,457

18.1 %

- Revenues, net per transaction
$ 2.90

$ 2.61

$ 0.29

11.0 %

- Revenues, net
$ 253,908

$ 193,651

$ 60,257

31.1 %
                   
                   









 

FLEETCOR CONSOLIDATED ADJUSTED REVENUES1










- Transactions2

87,617


74,160


13,457

18.1 %

- Adjusted Revenues per transaction
$ 2.70

$ 2.42

$ 0.27

11.2 %

- Adjusted Revenues
$ 236,285

$ 179,790

$ 56,495

31.4 %
                   









 









 
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.









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









 

Sources of Revenue3












Three Months Ended March 31,



2014
2013
Change
% Change

Revenue from customers and partners

56.1 %

51.4 %

4.7 %
9.1 %

Revenue from merchants and networks

43.9 %

48.6 %

-4.7 %
-9.7 %









 

Revenue tied to fuel-price spreads

13.8 %

15.9 %

-2.1 %
-13.2 %

Revenue influenced by absolute price of fuel

18.0 %

20.8 %

-2.8 %
-13.5 %

Revenue from program fees, late fees, interest and other

68.2 %

63.3 %

4.9 %
7.7 %









 
3Expressed as a percentage of consolidated revenue.
Exhibit 3
Segment Results
(In thousands)
(Unaudited)
 
 
 



Three Months Ended March 31,



2014
2013
Revenues, net:




North America
$ 126,375
$ 100,594

International
  127,533
  93,057



$ 253,908
$ 193,651





 
Operating income:




North America
$ 56,197
$ 49,426

International
  57,939
  44,827



$ 114,136
$ 94,253





 
Depreciation and amortization:




North America
$ 6,636
$ 5,172

International
  17,782
  9,457



$ 24,418
$ 14,629





 
Capital expenditures:




North America
$ 1,996
$ 1,064

International
  3,588
  3,698



$ 5,584
$ 4,762

Source: FleetCor Technologies, Inc.

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

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