Raises 2016 Guidance
FleetCor Technologies, Inc. (NYSE:FLT), a leading global
provider of fuel cards and workforce payment products to
businesses, today reported financial results for its third quarter
ended September 30, 2016.
“We delivered a solid quarter, slightly ahead of our
expectations. Adjusted net earnings per share grew 15% on a
reported basis, and 25% on a macro neutral basis, ahead of our
stated target”, said Ron Clarke, Chairman and CEO, FleetCor
Technologies, Inc. “We also completed the STP and Travelcard
acquisitions during the third quarter, and are beginning our
transformation work with both assets.”
Financial Results for Third Quarter 2016:
GAAP Results
- Total revenues increased 7% to $484.4
million in the third quarter of 2016 compared to $451.5 million in
the third quarter of 2015.
- GAAP net income increased 11% to $129.6
million in the third quarter of 2016 compared to $116.8 million in
the third quarter of 2015.
- GAAP net income per diluted share
increased 10% to $1.36 in the third quarter of 2016 compared to
$1.24 per diluted share in the third quarter of 2015.
Non-GAAP Results1
- Adjusted revenues1 (revenues, net less
merchant commissions) increased 9% to $456.2 million in the third
quarter of 2016 compared to $419.8 million in the third quarter of
2015.
- Adjusted net income1 increased 16% to
$183.3 million in the third quarter of 2016 compared to $157.6
million in the third quarter of 2015.
- Adjusted net income per diluted share1
increased 15% to $1.92 in the third quarter of 2016 compared to
$1.67 in the third quarter of 2015.
“We believe macro-economic headwinds impacted our business in
the third quarter by approximately $28 million in revenue or
approximately $0.16 in adjusted net income per diluted share on a
year over year basis,” said Eric Dey, chief financial officer
FleetCor Technologies, Inc. “We are raising our guidance to reflect
our third quarter results compared to our expectations.”
Fiscal Year 2016 Outlook:
- Total revenues between $1,810 million
and $1,830 million;
- GAAP net income1 between $469 million
and $477 million;
- GAAP net income per diluted share1
between $4.94 and $5.02;
- Adjusted net income1 between $648
million and $654 million; and
- Adjusted net income per diluted share1
between $6.82 and $6.90.
FleetCor’s fiscal-year guidance assumptions for the fourth
quarter of 2016 are as follows:
- Weighted average fuel price of $2.29
for the fourth quarter of 2016 compared to the $2.31 assumption
used in our prior guidance and approximately $2.35 per gallon
average in the fourth quarter of 2015.
- Market spreads lower in the fourth
quarter of 2016 compared to the fourth quarter of 2015 and
unchanged from assumptions used in the last earnings call.
- Foreign exchange rates equal to the
seven day average ended October 13, 2016. The impact of the pound
negatively impacts prior guidance for the fourth quarter by
approximately $2 million.
- Same store sales softness in the fourth
quarter of approximately 3%.
- Continued weakness in the Company’s
Brazilian and Russian businesses.
- Fully diluted shares outstanding of
approximately 95.2 million shares.
- Fourth quarter tax rate of
approximately 30.0%.
_____________________
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. A reconciliation of GAAP guidance to non-GAAP guidance
is provided in Exhibit 4 .
Conference Call
The company will host a conference call to discuss third quarter
2016 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 13647922. The replay
will be available until November 8, 2016. 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 macro- economic
conditions and estimated impact of these conditions on our
operations and financial results, revenue and earnings guidance and
assumptions underlying financial guidance. 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 fuel price and
spread volatility; 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; 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, 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, 2015, filed
with the Securities and Exchange Commission on February 29, 2016.
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, discounts and intangible assets, (c)
amortization of the premium recognized on the purchase of
receivables, (d) our proportionate share of amortization of
intangible assets at our equity method investment and (e) a
non-recurring net gain at our equity method investment. The company
uses adjusted revenue’s 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 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 believe one-time non-recurring gains do not
necessarily reflect how our equity method investment and business
is performing. Reconciliations of GAAP results to non-GAAP results
are provided in the attached exhibit 1. A reconciliation of GAAP to
non-GAAP guidance is provided in the attached exhibit 4.
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, adjusted net income, and adjusted
net income per diluted share 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 high volume customer base
that can increase their sales and customer loyalty. FleetCor serves
commercial accounts in North America, Latin America, Europe, and
Australia/New Zealand. For more information, please visit
www.FLEETCOR.com.
FleetCor Technologies,
Inc. and subsidiaries Unaudited Consolidated Statements of
Income (In thousands, except per share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
20161
2015
20161
2015 Revenues, net $ 484,426 $ 451,493
$ 1,316,593 $ 1,272,264 Expenses: Merchant commissions
28,214 31,726 78,755 80,777 Processing 96,233 90,959 256,738
246,879 Selling 34,180 27,383 92,680 81,011 General and
administrative 77,904 66,142 209,084 199,252 Depreciation and
amortization 57,084 48,526 141,848 145,435 Other operating, net
(244 ) (1,703 ) (690 ) (2,475 )
Operating income 191,055 188,460
538,178 521,385 Equity method investment loss
(income) 2,744 6,108 (2,247 ) 13,926 Other expense (income), net
293 (168 ) 1,056 2,345 Interest expense, net 17,814
17,163 49,905 54,818
Total other expense 20,851 23,103
48,714 71,089 Income before income
taxes 170,204 165,357 489,464 450,296 Provision for income taxes
40,586 48,587 132,503
140,695 Net income $ 129,618 $ 116,770
$ 356,961 $ 309,601 Basic earnings per share $
1.40 $ 1.27 $ 3.85 $ 3.37 Diluted earnings per share $ 1.36 $ 1.24
$ 3.75 $ 3.29 Weighted average shares outstanding: Basic
shares 92,631 92,110 92,604 91,923 Diluted shares 95,307 94,157
95,204 94,069
1 Reflects the impact of the Company's adoption of Accounting
Standards Update 2016-09, Compensation-Stock Compensation (Topic
718): Improvements to Employee Share-Based Payment Accounting, to
simplify several aspects of the accounting for share-based
compensation, including the income tax consequences.
FleetCor Technologies, Inc. and
subsidiaries Consolidated Balance Sheets (In
thousands, except share and par value amounts)
September 30, 2016 December 31, 2015
(Unaudited) Assets Current assets: Cash and
cash equivalents $ 405,435 $ 447,152 Restricted cash 199,319
167,492 Accounts receivable (less allowance for doubtful accounts
of $30,072 and $21,903, at September 30, 2016 and December 31,
2015, respectively) 1,354,306 638,954 Securitized accounts
receivable - restricted for securitization investors 656,000
614,000 Prepaid expenses and other current assets 80,837 68,113
Deferred income taxes 8,879 8,913 Total
current assets 2,704,776 1,944,624
Property and equipment 251,394 163,569 Less accumulated
depreciation and amortization (106,908 ) (82,809 )
Net property and equipment 144,486 80,760 Goodwill 4,183,981
3,546,034 Other intangibles, net 2,758,877 2,183,595 Equity method
investment 79,717 76,568 Other assets 63,837
58,225 Total assets $ 9,935,674 $ 7,889,806
Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable $ 1,230,339 $ 669,528 Accrued
expenses 226,006 150,677 Customer deposits 595,405 507,233
Securitization facility 656,000 614,000 Current portion of notes
payable and other obligations 727,763 261,100 Other current
liabilities 39,080 44,936 Total
current liabilities 3,474,593 2,247,474
Notes payable and other obligations, less current portion
2,552,357 2,059,900 Deferred income taxes 692,221 713,428 Other
noncurrent liabilities 37,982 38,957
Total noncurrent liabilities 3,282,560
2,812,285 Commitments and contingencies
Stockholders’ equity: Common stock, $0.001 par value;
475,000,000 shares authorized, 121,188,761 shares issued and
92,765,739 shares outstanding at September 30, 2016; and
120,539,041 shares issued and 92,376,335 shares outstanding at
December 31, 2015 121 121 Additional paid-in capital 2,057,562
1,988,917 Retained earnings 2,123,297 1,766,336 Accumulated other
comprehensive loss (612,150 ) (570,811 ) Less treasury stock,
28,423,022 and 28,162,706 shares at September 30, 2016 and December
31, 2015, respectively (390,309 ) (354,516 )
Total stockholders’ equity 3,178,521 2,830,047
Total liabilities and stockholders’ equity $
9,935,674 $ 7,889,806
FleetCor Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows (In
Thousands) Nine Months Ended September 30,
2016 2015 Operating
activities Net income $ 356,961 $ 309,601 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation 25,706 22,941 Stock-based compensation 50,025
44,387 Provision for losses on accounts receivable 24,512 18,287
Amortization of deferred financing costs and discounts 5,568 5,295
Amortization of intangible assets 112,455 120,055 Amortization of
premium on receivables 3,687 2,439 Deferred income taxes (23,566 )
(27,640 ) Equity method investment (income) loss (2,247 ) 13,926
Other non-cash operating income (690 ) (2,476 ) Changes in
operating assets and liabilities (net of acquisitions): Restricted
cash (28,744 ) 5,697 Accounts receivable (529,268 ) (71,310 )
Prepaid expenses and other current assets (1,291 ) 2,724 Other
assets (9,115 ) (3,297 ) Excess tax benefits related to stock-based
compensation - (24,455 ) Accounts payable, accrued expenses and
customer deposits 420,293 108,278 Net
cash provided by operating activities 404,286
524,452
Investing activities
Acquisitions, net of cash acquired (1,331,079 ) (9,239 ) Purchases
of property and equipment (41,877 ) (29,526 ) Other 1,411
(7,782 ) Net cash used in investing activities
(1,371,545 ) (46,547 )
Financing
activities Excess tax benefits related to stock-based
compensation - 24,455 Proceeds from issuance of common stock 18,620
13,977 Repurchase of common stock (35,492 ) - Borrowings (payments)
on securitization facility, net 42,000 (10,000 ) Deferred financing
costs paid (2,272 ) - Borrowings from notes payable 600,000 -
Principal payments on notes payable (85,125 ) (77,625 ) Borrowings
from revolver- A Facility 1,105,107 - Payments on revolver- A
Facility (670,940 ) (411,818 ) Borrowings (payments) on swing line
of credit, net 5,188 (601 ) Payment of contingent consideration -
(40,310 ) Other (673 ) (342 ) Net cash provided by
(used in) financing activities 976,413
(502,264 ) Effect of foreign currency exchange rates
on cash (50,871 ) (30,320 ) Net decrease in
cash and cash equivalents (41,717 ) (54,679 ) Cash and cash
equivalents, beginning of period 447,152
477,069 Cash and cash equivalents, end of period $ 405,435
$ 422,390
Supplemental cash flow
information Cash paid for interest $ 48,525 $ 55,959
Cash paid for income taxes $ 79,599 $ 47,339
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
September 30, Nine Months Ended September 30,
2016 2015 2016
2015 Revenues, net $ 484,426 $
451,493 $ 1,316,593 $ 1,272,264 Merchant commissions 28,214
31,726 78,755 80,777
Total adjusted revenues $ 456,212 $ 419,767 $
1,237,838 $ 1,191,487
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,
20162
2015
20162
2015 Net income $ 129,618 $ 116,770 $ 356,961
$ 309,601 Stock based compensation 17,405 13,887 50,025
44,387 Amortization of intangible assets 46,341 39,869 112,455
120,055 Amortization of premium on receivables 1,348 812 3,687
2,439 Amortization of deferred financing costs and discounts 1,917
1,778 5,568 5,295 Amortization of intangibles at equity method
investment 2,406 3,032 7,533 8,404 Non recurring net gain at equity
method investment - - (10,845 ) - Total
pre-tax adjustments 69,417 59,378 168,423 180,580 Income tax
impact of pre-tax adjustments at the effective tax rate* (15,726 )
(18,579 )
1
(46,705 ) (57,758 )
1
Adjusted net income $ 183,310 $
157,570 $ 478,679 $ 432,424 Adjusted net
income per diluted share $ 1.92 $ 1.67 $ 5.03 $ 4.60 Diluted
shares 95,307 94,157 95,204 94,069
1 Effective tax rate utilized excludes the impact of a one time
tax benefit recognized during the three months ended September 30,
2015 of approximately $7.9 million.
2 Reflects the impact of the Company's adoption of Accounting
Standards Update 2016-09, Compensation-Stock Compensation (Topic
718): Improvements to Employee Share-Based Payment Accounting, to
simplify several aspects of the accounting for share-based
compensation, including the income tax consequences.
* Excludes the results of our equity method investment on our
effective tax rate, as results from our equity method investment
are reported within the Consolidated Income Statements on a
post-tax basis and no tax-over-book outside basis differences
related to our equity method investment reversed during 2016.
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 September 30,
Nine Months Ended September 30, 2016 2015
Change % Change 2016 2015 Change
% Change
NORTH
AMERICA
- Transactions2 371,198 371,518 (320 ) -0.1 % 1,217,292 1,145,259
72,033 6.3 % - Revenues, net per transaction $ 0.93 $ 0.90 $ 0.03
3.4 % $ 0.78 $ 0.80 $ (0.02 ) -2.6 % - Revenues, net $ 345,868 $
334,944 $ 10,924 3.3 % $ 950,542 $ 918,333 $ 32,209 3.5 %
INTERNATIONAL
- Transactions 127,390 45,588 81,802 179.4 % 233,340 138,041 95,299
69.0 % - Revenues, net per transaction $ 1.09 $ 2.56 $ (1.47 )
-57.5 % $ 1.57 $ 2.56 $ (1.00 ) -38.8 % - Revenues, net $ 138,558 $
116,549 $ 22,009 18.9 % $ 366,051 $ 353,931 $ 12,120 3.4 %
FLEETCOR
CONSOLIDATED REVENUES
- Transactions2 498,588 417,106 81,482 19.5 % 1,450,632 1,283,300
167,332 13.0 % - Revenues, net per transaction $ 0.97 $ 1.08 $
(0.11 ) -10.2 % $ 0.91 $ 0.99 $ (0.08 ) -8.5 % - Revenues, net $
484,426 $ 451,493 $ 32,933 7.3 % $ 1,316,593 $ 1,272,264 $ 44,329
3.5 %
FLEETCOR
CONSOLIDATED ADJUSTED REVENUES1
- Transactions2 498,588 417,106 81,482 19.5 % 1,450,632 1,283,300
167,332 13.0 % - Adjusted revenues per transaction $ 0.92 $ 1.01 $
(0.09 ) -9.1 % $ 0.85 $ 0.93 $ (0.08 ) -8.1 % - Adjusted revenues $
456,212 $ 419,767 $ 36,445 8.7 % $ 1,237,838 $ 1,191,487 $ 46,351
3.9 %
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.
2 Includes approximately 270 million and 274 million
transactions for the three months ended September 30, 2016 and
2015, respectively, and 924 million and 872 million for the nine
months ended September 30, 2016 and 2015, respectively, related to
our SVS business acquired with Comdata in the fourth quarter of
2014.
Sources of
Revenue3
Three Months Ended September 30, Nine Months Ended
September 30, 2016 2015
Change % Change 2016
2015 Change
% Change Revenue from customers and partners 57.0 % 53.3 %
3.7 % 6.9 % 55.3 % 52.5 % 2.8 % 5.3 % Revenue from merchants and
networks 43.0 % 46.7 % -3.7 % -7.9 % 44.7 % 47.5 % -2.8 % -5.9 %
Revenue tied to fuel-price spreads 11.2 % 13.0 % -1.8 %
-13.8 % 11.2 % 12.4 % -1.2 % -9.7 % Revenue influenced by absolute
price of fuel 14.0 % 15.3 % -1.3 % -8.5 % 14.3 % 15.5 % -1.2 % -7.7
% Revenue from program fees, late fees, interest and other 74.8 %
71.7 % 3.1 % 4.3 % 74.5 % 72.1 % 2.4 % 3.3 %
3 Expressed as a percentage of
consolidated revenue.
Exhibit 3 Segment Results (In thousands)
(Unaudited) Three Months Ended September 30,
Nine Months Ended September 30, 2016 2015
2016 2015 Revenues, net: North America $ 345,868 $
334,944 $ 950,542 $ 918,333 International 138,558
116,549 366,051 353,931 $ 484,426 $ 451,493 $
1,316,593 $ 1,272,264 Operating income: North America $
135,760 $ 132,428 $ 367,221 $ 351,778 International 55,295
56,032 170,957 169,607 $ 191,055 $ 188,460 $
538,178 $ 521,385 Depreciation and amortization: North
America $ 32,739 $ 32,257 $ 96,351 $ 96,200 International
24,345 16,269 45,497 49,235 $ 57,084 $ 48,526
$ 141,848 $ 145,435 Capital expenditures: North America $
11,980 $ 6,493 $ 28,501 $ 14,510 International 5,140
6,799 13,376 15,016 $ 17,120 $ 13,292 $ 41,877 $
29,526
Exhibit 4RECONCILIATION OF NON-GAAP
GUIDANCE MEASURES(In millions, except per share
amounts)(Unaudited)
The following table reconciles 2016
financial guidance for net income to adjusted net income and
adjusted net income per diluted share, at both ends of the
range:
2016 GUIDANCE Low*
High* Net income $ 469 $ 477 Net income per diluted share $
4.94 $ 5.02 Stock based compensation 66 66 Amortization of
intangible assets, premium on receivables, deferred financing costs
and discounts 186 186 Amortization of intangibles at equity method
investment 10 10 Non recurring net gain at equity method investment
(11 ) (11 ) Total pre-tax adjustments 252 252
Income tax impact of pre-tax adjustments at the effective tax
rate** (74 ) (74 ) Adjusted net income $ 648 $
654 Adjusted net income per diluted share $ 6.82 $ 6.90
Diluted shares 95 95
* Columns may not calculate due to impact of rounding.
** Excludes the results of our equity method investment on our
effective tax rate, as results from our equity method investment
are reported within the Consolidated Income Statements on a
post-tax basis and no tax-over-book outside basis differences
related to our equity method investment reversed during 2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161101006686/en/
FleetCorInvestor Relations770-729-2017investor@fleetcor.com
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