FleetCor Reports Fourth Quarter and Full Year 2011 Financial Results

NORCROSS, Ga.-( Business Wire )-

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)

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.

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.

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 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 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
1 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.
 
2 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 REVENUES1,2

– 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 %
                                                       
1Calculation 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.
 
2Adjusted 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.
 
3The 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
 

1The results from our Mexican prepaid fuel card and food voucher business acquired during 2011 are

reported in our International segment.

FleetCor Technologies, Inc.Investor Relations770-729-2017investor@fleetcor.com

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