FLEETCOR Technologies, Inc. (NYSE:FLT), a leading global
provider of commercial payment solutions, today reported financial
results for its second quarter of 2018.
“Our second quarter revenues and profits once again finished
above our expectations, with adjusted net income per diluted share
growth of 29%. We delivered another solid organic revenue growth
quarter of 9% overall, driven by growth rates of more than 20% in
the Lodging, Corporate Payments and Tolls business lines.
Additionally, we were delighted to join the S&P 500 index, and
to be recognized for our consistent performance over a long period
of time,” said Ron Clarke, chairman and chief executive officer,
FLEETCOR Technologies, Inc.
Financial Results for Second Quarter of 2018:
GAAP Results
- Total revenues, including the impact of
the new revenue recognition standard ASC 606, increased 8% to
$585.0 million in the second quarter of 2018, compared to $541.2
million in the second quarter of 2017.
- Net income increased 35% to $176.9
million in the second quarter of 2018, compared to $131.0 million
in the second quarter of 2017.
- Net income per diluted share increased
37% to $1.91 in the second quarter of 2018, compared to $1.39 per
diluted share in the second quarter of 2017.
On January 1, 2018, the Company adopted FASB ASC Topic 606,
"Revenue from Contracts with Customers" ("ASC 606") and related
cost capitalization guidance, using the modified retrospective
method by recognizing the cumulative effect of initially applying
ASC 606 as an adjustment to opening retained earnings at January 1,
2018. As such, the Company is not required to restate comparative
financial information prior to the adoption of ASC 606 and,
therefore, such information for the three months ended June 30,
2017 continues to be reported under FASB ASC Topic 605, "Revenue
Recognition" ("ASC 605"). The adoption of ASC 606 did not
materially impact the Company’s financial position. For the three
months ended June 30, 2018, the adoption of ASC 606 reduced revenue
by $23.3 million and increased operating income by $0.7 million.
The adoption of ASC 606 did not have a material impact on net
income or net income per diluted share for the three months ended
June 30, 2018. A comparison of the current presentation under ASC
606 to the prior presentation under ASC 605 is provided below:
2018 Reportedunder ASC
606
2018 Impact ofASC
606
2018 ExcludingImpact of
Adoptionof ASC 606
(millions)
Revenue $585.0 $23.3 $608.3
Operating
Expense $320.2 $24.1 $344.3
Operating Income
$264.8 ($0.7) $264.0 The above table presents the U.S. GAAP
financial measures of Revenue, Operating Expense and Operating
Income as reported, as well as the impact of the adoption of ASC
606 on these measures for the period presented. The impact of the
adoption of ASC 606 on net income and net income per diluted share
was not material.
Non-GAAP Results1
- Revenues under ASC 605 increased 12% to
$608.3 million in the second quarter of 2018, compared to $541.2
million in the second quarter of 2017.
- Adjusted net income1 increased 27% to
$237.8 million in the second quarter of 2018, compared to $187.0
million in the second quarter of 2017.
- Adjusted net income per diluted share1
increased 29% to $2.57 in the second quarter of 2018, compared to
$1.99 per diluted share in the second quarter of 2017.
Fiscal-Year 2018 Outlook:
“We are raising our 2018 guidance to reflect our strong second
quarter results compared to our original outlook, despite the
unfavorable macro that we now expect to realize for the remainder
of the year. We believe that negative movements in foreign exchange
rates, will more than offset the impact of favorable fuel prices,
producing an overall unfavorable impact on second half revenue of
approximately $30 to $40 million,” said Eric Dey, chief financial
officer, FLEETCOR Technologies, Inc. “We currently expect to offset
this impact through continued over performance in some of our
businesses, lower expenses, and the impact from a lower share count
in the second half of the year.”
For fiscal 2018, FLEETCOR Technologies, Inc. updated financial
guidance is as follows:
- Revenues including the adoption of ASC
606, between $2,365 million and $2,415 million;
- Net income between $720 million and
$740 million;
- Net income per diluted share between
$7.75 and $7.95;
- Revenues under ASC 605 between $2,470
million and $2,520 million;
- Adjusted net income1 between $960
million and $980 million; and
- Adjusted net income per diluted share1
between $10.32 and $10.52.
FLEETCOR’s guidance assumptions for 2018 are as follows:
- Weighted fuel prices equal to $2.88 per
gallon average in the U.S. for those businesses sensitive to the
movement in the retail price of fuel for the balance of the
year;
- Market spreads equal to the 2017
average;
- Foreign exchange rates equal to the
seven-day average as of July 1, 2018;
- Interest expense of $135 million;
- Fully diluted shares outstanding of
approximately 93 million shares;
- A tax rate of 22 to 24%; and
- No impact related to acquisitions or
material new partnership agreements not already disclosed.
_______________________________________
1 Reconciliations of GAAP results to non-GAAP results are
provided in Exhibit 1 attached. Additional supplemental data is
provided in Exhibits 2-3 and 5, and segment information is provided
in Exhibit 4. A reconciliation of GAAP guidance to non-GAAP
guidance is provided in Exhibit 6. A reconciliation of the impact
of the adoption of ASC 606 is provided in exhibit 7.
Conference Call
The Company will host a conference call to discuss second
quarter 2018 financial results today at 5:00 pm ET. Hosting the
call will be Ron Clarke, chief executive officer, Eric Dey, chief
financial officer and Jim Eglseder, investor relations. 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 (844) 512-2921 or (412) 317-6671 for
international callers; the conference ID is 13681872. The replay
will be available until Thursday, August 9, 2018. The call will be
webcast live from the Company's investor relations website at
http://investor.fleetcor.com. Prior to the conference call, the
Company will post supplemental financial information that will be
discussed during the call and live webcast.
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, expected organic growth rates, impact of the new Tax
Act, and estimated impact of these conditions on our operations and
financial results, the impact of new asset initiatives, revenue and
earnings guidance and assumptions underlying financial guidance,
and statements regarding the unauthorized access to the Company’s
systems, including the assumptions with respect to the
investigation of the incident to date. 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 customer arrangements or
acquisitions and the failure to successfully integrate or otherwise
achieve anticipated benefits from such customer arrangements or
acquired businesses; failure to successfully expand business
internationally, risks related to litigation: risks related to the
unauthorized access to systems and information; 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, 2017 and FLEETCOR’s quarterly report on form
10-Q for the three months ended March 31, 2018. 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
except as specifically stated in this press release or to the
extent required by law.
About Non-GAAP Financial Measures
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, amortization of
the premium recognized on the purchase of receivables, and our
proportionate share of amortization of intangible assets at our
equity method investment, (c) other non-recurring items, including
the impact of the Tax Reform Act, restructuring costs, and the
unauthorized access impact. We calculate adjusted net income to
eliminate the effect of items that we do not consider indicative of
our core operating performance. Adjusted net income is a
supplemental measure of operating performance that does not
represent and should not be considered as an alternative to 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, losses, and impairment
charges do not necessarily reflect how our investments and business
are performing. Reconciliations of GAAP results to non-GAAP results
are provided in the attached exhibit 1. A reconciliation of GAAP to
non-GAAP product revenue organic growth calculation is provided in
the attached exhibit 5. A reconciliation of GAAP to non-GAAP
guidance is provided in the attached exhibit 6. Furthermore, a
reconciliation of the impact of the Company’s adoption of the new
revenue standard, ASC 606, is provided in exhibit 7, along with its
impact on 2018 guidance in exhibit 6.
Management uses adjusted net income:
- as measurement of operating performance
because it assists 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 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 Technologies (NYSE: FLT) is a leading global provider
of commercial payment solutions. The Company helps businesses of
all sizes better control, simplify and secure payment of their
fuel, toll, lodging and other general payables. With its
proprietary payment acceptance networks, FLEETCOR provides
affiliated merchants with incremental sales and loyalty. FLEETCOR
serves businesses, partners and merchants in North America, Latin
America, Europe, and Australasia. 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 June 30, Six Months Ended June 30,
2018(1)
2017 2018(1)
2017 Revenues, net
$ 584,985 $ 541,237 $ 1,170,484 $ 1,061,670 Expenses:
Merchant commissions - 30,619 - 55,003 Processing 111,201 103,322
227,686 205,146 Selling 44,009 38,957 91,120 77,794 General and
administrative 96,382 87,587 186,696 183,041 Depreciation and
amortization 68,610 64,709 140,112
129,575 Operating income 264,783 216,043
524,870 411,111 Investment loss - 2,354 -
4,731 Other expense (income), net 458 (551 ) 161 1,645 Interest
expense, net 33,150 23,851 64,215
46,978 Total other expense 33,608 25,654
64,376 53,354 Income before income taxes
231,175 190,389 460,494 357,757 Provision for income taxes
54,323 59,402 108,705 103,077 Net
income $ 176,852 $ 130,987 $ 351,789 $ 254,680 Basic
earnings per share $ 1.98 $ 1.42 $ 3.93 $ 2.77 Diluted earnings per
share $ 1.91 $ 1.39 $ 3.78 $ 2.70 Weighted average shares
outstanding: Basic shares 89,169 92,013 89,466 92,060 Diluted
shares 92,702 94,223 92,970 94,392 1 Reflects the impact of
the Company's adoption of Accounting Standards Update 2014-09,
Revenue from Contracts with Customers (Topic 606) ("ASC 606") and
related cost capitalization guidance, which was adopted by the
Company on January 1, 2018 using the modified retrospective
transition method. The adoption of ASC 606 resulted in an
adjustment to retained earnings in our consolidated balance sheet
for the cumulative effective of applying the standard, which
included costs incurred to obtain a contract, as well as
presentation changes in our statements of income, including the
classification of certain amounts previously classified as merchant
commissions and processing expense net with revenues. As a result
of the application of the modified retrospective transition method,
the Company's prior period results within its Form 10-K and
quarterly reports on Form 10-Q will not be restated to reflect ASC
606. See exhibit 7 for a reconciliation of the impact of adoption
of ASC 606.
FLEETCOR Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (In thousands, except share
and par value amounts) June 30,
20181 December 31, 2017 (Unaudited)
Assets Current assets: Cash and cash equivalents $
919,662 $ 913,595 Restricted cash 265,776 217,275 Accounts and
other receivables (less allowance for doubtful accounts of $48,245
at June 30, 2018 and $46,031 at December 31, 2017, respectively)
1,716,937 1,420,011 Securitized accounts receivable - restricted
for securitization investors 939,000 811,000 Prepaid expenses and
other current assets 207,832 187,820
Total current assets 4,049,207
3,549,701 Property and equipment, net 179,096 180,057
Goodwill 4,556,206 4,715,823 Other intangibles, net 2,515,232
2,724,957 Investments 39,859 32,859 Other assets 145,533
114,962 Total assets $ 11,485,133
$ 11,318,359
Liabilities and Stockholders’
Equity Current liabilities: Accounts payable $ 1,532,741
$ 1,437,314 Accrued expenses 214,682 238,472 Customer deposits
852,617 732,171 Securitization facility 939,000 811,000 Current
portion of notes payable and lines of credit 976,685 805,512 Other
current liabilities 85,789 71,033
Total current liabilities 4,601,514
4,095,502 Notes payable and other obligations, less
current portion 2,832,316 2,902,104 Deferred income taxes 498,918
518,912 Other noncurrent liabilities 113,300
125,319 Total noncurrent liabilities 3,444,534
3,546,335 Commitments and contingencies
Stockholders’ equity: Common stock, $0.001 par value;
475,000,000 shares authorized; 122,551,794 shares issued and
88,376,611 shares outstanding at June 30, 2018; and 122,083,059
shares issued and 89,803,982 shares outstanding at December 31,
2017 123 122 Additional paid-in capital 2,277,227 2,214,224
Retained earnings 3,357,962 2,958,921 Accumulated other
comprehensive loss (870,688 ) (551,857 ) Less treasury stock,
34,175,183 shares at June 30, 2018 and 32,279,077 shares at
December 31, 2017 (1,325,539 ) (944,888 ) Total
stockholders’ equity 3,439,085 3,676,522
Total liabilities and stockholders’ equity $
11,485,133 $ 11,318,359 1 Reflects the impact
of the Company's adoption of ASC 606 and related cost
capitalization guidance, which was adopted by the Company on
January 1, 2018 using the modified retrospective transition method.
The adoption of ASC 606 resulted in an adjustment to retained
earnings in our consolidated balance sheet for the cumulative
effective of applying the standard, which included costs incurred
to obtain a contract, as well as presentation changes in our
statements of income, including the classification of certain
amounts previously classified as merchant commissions and
processing expense net with revenues. As a result of the
application of the modified retrospective transition method, the
Company's prior period results within its Form 10-K and quarterly
reports on Form 10-Q will not be restated to reflect ASC 606. See
exhibit 7 for a reconciliation of the impact of adoption of ASC
606.
FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows (In
thousands) Six Months Ended June 30, 2018(1)
2017(1)
Operating activities Net income $
351,789 $ 254,680 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation 25,033 21,593
Stock-based compensation 33,505 44,243 Provision for losses on
accounts receivable 26,495 27,648 Amortization of deferred
financing costs and discounts 2,678 3,800 Amortization of
intangible assets 112,540 104,894 Amortization of premium on
receivables 2,539 3,088 Deferred income taxes (6,473) (32,660)
Investment loss - 4,731 Other non-cash operating income (104) -
Changes in operating assets and liabilities (net of acquisitions):
Accounts and other receivables (519,527) (380,196) Prepaid expenses
and other current assets (20,440) (18,778) Other assets (15,418)
(15,050) Accounts payable, accrued expenses and customer deposits
282,472 189,750 Net cash provided by operating
activities 275,089 207,743
Investing
activities Acquisitions, net of cash acquired (3,811) (3,580)
Purchases of property and equipment (34,614) (32,600) Other
(11,192) (6,327) Net cash used in investing activities
(49,617) (42,507)
Financing
activities Proceeds from issuance of common stock 29,498 16,432
Repurchase of common stock (380,651) (52,393) Borrowings on
securitization facility, net 128,000 150,000 Principal payments on
notes payable (69,000) (66,725) Borrowings from revolver 774,019
90,000 Payments on revolver (600,109) (215,901) Borrowings on swing
line of credit, net 13,632 10,245 Other (149) 537 Net
cash used by financing activities (104,760) (67,805)
Effect of foreign currency exchange rates on cash
(66,144) 24,416 Net increase in cash and cash
equivalents and restricted cash 54,568 121,847 Cash and cash
equivalents and restricted cash, beginning of period
1,130,870 643,770 Cash and cash equivalents and restricted
cash, end of period $ 1,185,438 $ 765,617
Supplemental
cash flow information Cash paid for interest $ 73,303 $ 68,431
Cash paid for income taxes $ 112,982 $ 188,157 1
Reflects the impact of the Company's adoption of Accounting
Standards Update 2016-18, Statement of Cash Flows (Topic 230),
which was adopted by the Company on January 1, 2018 and applied
retrospectively to results for 2017. The adoption of Topic 230
resulted in the statement of cash flows presenting the changes in
the total of cash, cash equivalents and restricted cash. As a
result, the Company will no longer present transfers between cash
and cash equivalents and restricted cash in the statement of cash
flows.
Exhibit 1 RECONCILIATION OF NON-GAAP MEASURES
(In thousands, except shares and per share amounts)
(Unaudited)
The following table reconciles net
income to adjusted net income and adjusted net income per diluted
share:
Three Months Ended June 30,
Six Months Ended June 30, 2018 2017
2018 2017 Net income $ 176,852 $
130,987 $ 351,789 $ 254,680 Stock based compensation 19,102
21,150 33,505 44,243 Amortization of intangible assets, premium on
receivables, deferred financing costs and discounts 57,313 58,587
117,757 117,158 Restructuring costs 1,506 - 3,435 - Unauthorized
access impact 1,743 - 1,743
- Total pre-tax adjustments 79,664 79,737
156,441 161,401 Income tax impact of pre-tax adjustments at
the effective tax rate (18,720 ) (23,675 ) (1) (36,927 ) (44,055 )
(1) Adjusted net income $ 237,796
$ 187,049 $ 471,303 $ 372,026 Adjusted
net income per diluted share $ 2.57 $ 1.99 $ 5.07 $ 3.94
Diluted shares 92,702 94,223 92,970 94,392
(1)Excludes the results of the Company's
Masternaut investment on our effective tax rate, as results from
our Masternaut investment are reported within the consolidated
statements of income on a post-tax basis and no tax-over-book
outside basis differences related to our equity method investment
reversed during 2017.
Exhibit 2 Transaction Volume and Revenues Per Transaction
by Segment and by Product Category, on a GAAP Basis
and Pro Forma and Macro
Adjusted
(In millions except revenues, net per transaction)
(Unaudited)
The following table presents revenue and
revenue per transaction, by segment.
As Reported As Reported and Pro
Forma for Impact of
Adoption of ASC 606
Three Months Ended June 30, Three Months Ended June
30, 2018(1)
2017 Change %
Change 2018(1) 2017(1)
Change % Change
NORTH
AMERICA
- Transactions 426.9 429.7
(2.8 ) (1 %) 426.9 429.7
(2.8 ) (1 %) - Revenues, net per transaction $ 0.87 $ 0.80 $ 0.07 9
% $ 0.87 $ 0.73 $ 0.13 18 % - Revenues, net $ 370.9 $ 343.0 $ 28.0
8 % $ 370.9 $ 315.7 $ 55.3 18 %
INTERNATIONAL
- Transactions 2
264.2 265.5 (1.3 ) (1 %) 264.2 265.5 (1.3 ) (1 %) - Revenues, net
per transaction $ 0.81 $ 0.75 $ 0.06 9 % $ 0.81 $ 0.73 $ 0.08 11 %
- Revenues, net $ 214.0 $ 198.2 $ 15.8 8 % $ 214.0 $ 193.5 $ 20.6
11 %
FLEETCOR
CONSOLIDATED REVENUES
- Transactions 691.1 695.3 (4.1 ) (1 %) 691.1 695.3 (4.1 ) (1 %) -
Revenues, net per transaction $ 0.85 $ 0.78 $ 0.07 9 % $ 0.85 $
0.73 $ 0.11 16 % - Revenues, net $ 585.0
$ 541.2 $ 43.7 8 % $
585.0 $ 509.1 $ 75.9 15 %
The following table presents revenue and revenue per
transaction, by product category.
As Reported Pro Forma
and Macro Adjusted4 Three Months Ended June 30,
Three Months Ended June 30, 2018(1)
2017
Change % Change 2018(1) 2017(1)
Change %
Change
FUEL5
- Transactions 122.1 116.8 5.3 5 % 122.1 118.5 3.6 3 % - Revenues,
net per transaction $ 2.22 $ 2.38 $ (0.16 ) (7 %) $ 2.15 $ 2.10 $
0.04 2 % - Revenues, net $ 270.8 $ 278.2 $ (7.4 ) (3 %) $ 261.9 $
249.4 $ 12.5 5 %
CORPORATE
PAYMENTS
- Transactions 11.8 10.4 1.5 14 % 11.8 10.6 1.2 11 % - Revenues,
net per transaction $ 8.44 $ 4.85 $ 3.59 74 % $ 8.35 $ 7.70 $ 0.65
8 % - Revenues, net $ 99.6 $ 50.2 $ 49.4 98 % $ 98.5 $ 81.7 $ 16.9
21 %
TOLLS
- Transactions 2
209.3 216.7 (7.4 ) (3 %) 209.3 216.7 (7.4 ) (3 %) - Revenues, net
per transaction $ 0.39 $ 0.35 $ 0.04 11 % $ 0.44 $ 0.35 $ 0.09 24 %
- Revenues, net $ 81.5 $ 76.0 $ 5.6 7 % $ 91.3 $ 76.0 $ 15.3 20 %
LODGING
- Transactions 4.7 3.4 1.4 40 % 4.7 3.9 0.9 23 % - Revenues, net
per transaction $ 9.40 $ 8.57 $ 0.84 10 % $ 9.40 $ 9.08 $ 0.32 4 %
- Revenues, net $ 44.6 $ 29.0 $ 15.7 54 % $ 44.6 $ 35.2 $ 9.5 27 %
GIFT
- Transactions 324.5 328.3
(3.9 ) (1 %) 324.5 328.3
(3.9 ) (1 %) - Revenues, net per transaction $ 0.10 $ 0.13 $ (0.02
) (18 %) $ 0.10 $ 0.13 $ (0.02 ) (18 %) - Revenues, net $ 33.3 $
41.3 $ (8.0 ) (19 %) $ 33.3 $ 41.3 $ (8.0 ) (19 %)
OTHER3,5
- Transactions 18.7 19.7 (1.0 ) (5 %) 18.7 19.3 (0.6 ) (3 %) -
Revenues, net per transaction $ 2.94 $ 3.37 $ (0.43 ) (13 %) $ 2.96
$ 2.80 $ 0.16 6 % - Revenues, net $ 55.1 $ 66.6 $ (11.5 ) (17 %) $
55.5 $ 54.1 $ 1.4 3 %
FLEETCOR
CONSOLIDATED REVENUES
- Transactions 691.1 695.3 (4.1 ) (1 %) 691.1 697.3 (6.2 ) (1 %) -
Revenues, net per transaction $ 0.85 $ 0.78 $ 0.07 9 % $ 0.85 $
0.77 $ 0.08 10 % - Revenues, net $ 585.0 $ 541.2 $ 43.7 8 % $ 585.2
$ 537.5 $ 47.6 9 %
1 Reflects the impact of the Company's
adoption of ASC 606 and related cost capitalization guidance, which
was adopted by the Company on January 1, 2018 using the modified
retrospective transition method. The adoption of ASC 606 resulted
in an adjustment to retained earnings in our consolidated balance
sheet for the cumulative effective of applying the standard, which
included costs incurred to obtain a contract, as well as
presentation changes in our statements of income, including the
classification of certain amounts previously classified as merchant
commissions and processing expense net with revenues. As a result
of the application of the modified retrospective transition method,
the Company's prior period results within its Form 10-K and
quarterly reports on Form 10-Q will not be restated to reflect ASC
606. For purposes of comparability, 2017 revenue has been recast in
this exhibit and is reconciled to GAAP in Exhibit 5, which includes
certain estimates and assumptions made by the Company for the
impact of ASC 606 on 2017 revenues, as the Company did not apply a
full retrospective adoption.
2 Reflects adjustments from previously
disclosed amounts for the prior period to conform to current
presentation.
3 Other includes telematics, maintenance, food, and transportation
related businesses. 4 See Exhibit 5 for a reconciliation of Pro
forma and Macro Adjusted revenue by product, non gaap measures, to
the gaap equivalent. 5 Fuel Cards product category further refined
to Fuel, to reflect different ways that fuel is paid for by our
customers and as a result, reflects immaterial reclassifications
from previously disclosed amounts for the prior period.
Exhibit 3Revenues by Geography,
Product and Source(In millions)(Unaudited)
Revenue by
Geography*
Three Months Ended June 30, Six Months Ended June
30, 2018(1)
% 2017
% 2018(1)
% 2017
% US $ 348 59 % $ 343 63% $ 691 59 % $ 673 63%
Brazil 96 16 % 93 17% 203 17 % 186 18% UK 65 11 % 58 11% 130 11 %
112 11% Other 76 13 % 47 9% 146
12 % 90 8% Consolidated Revenues, net $ 585
100 % $ 541 100% $ 1,170 100 % $ 1,062 100% * Columns
may not calculate due to rounding.
Revenue by
Product Category*
Three Months Ended June 30, Six Months Ended June 30,
2018(1)
% 2017 % 2018(1)
%
2017 % Fuel $ 271 46 % $ 278 51% $ 529 45 % $
539 51% Corporate Payments 100 17 % 50 9% 194 17 % 97 9% Tolls 82
14 % 76 14% 173 15 % 153 14% Lodging 45 8 % 29 5% 84 7 % 53 5% Gift
33 6 % 41 8% 82 7 % 90 8% Other 55 9 % 67 12%
108 9 % 131 12% Consolidated Revenues,
net $ 585 100 % $ 541 100% $ 1,170 100 % $ 1,062 100%
* Columns may not calculate due to rounding.
Major Sources of
Revenue*
Three Months Ended June 30, Six Months Ended June 30,
2018(1)
% 2017 % 2018(1)
%
2017 % Processing and Program Revenue2 $ 299
51 % $ 248 46% $ 611 52 % $ 493 46% Late Fees and Finance Charges3
36 6 % 34 6% 72 6 % 71 7% Miscellaneous Fees4 39 7 % 33 6% 74 6 %
65 6% Discount Revenue (Fuel)5 85 15 % 74 14% 170 15 % 146 14%
Discount Revenue (NonFuel)6 46 8 % 44 8% 89 8 % 85 8% Tied to
Fuel-Price Spreads7 29 5 % 62 12% 55 5 % 112 11% Merchant Program
Revenue8 51 9 % 47 9% 101 9 %
91 9% Consolidated Revenues, net $ 585 100 % $ 541
100% $ 1,170 100 % $ 1,062 100% 1 Reflects the impact
of the Company's adoption of ASC 606 and related cost
capitalization guidance, which was adopted by the Company on
January 1, 2018 using the modified retrospective transition method.
The adoption of ASC 606 resulted in an adjustment to retained
earnings in our consolidated balance sheet for the cumulative
effective of applying the standard, which included costs incurred
to obtain a contract, as well as presentation changes in our
statements of income, including the classification of certain
amounts previously classified as merchant commissions and
processing expense net with revenues. As a result of the
application of the modified retrospective transition method, the
Company's prior period results within its Form 10-K and quarterly
reports on Form 10-Q will not be restated to reflect ASC 606. See
exhibit 7 for a reconciliation of the impact of adoption of ASC
606. 2 Includes revenue from customers based on accounts, cards,
devices, transactions, load amounts and/or purchase amounts, etc.
for participation in our various fleet and workforce related
programs; as well as, revenue from partners (e.g., major retailers,
leasing companies, oil companies, petroleum marketers, etc.) for
processing and network management services. Primarily represents
revenue from North American trucking, lodging, prepaid benefits,
telematics, gift cards and toll related businesses. 3 Fees for late
payment and interest charges for carrying a balance charged to a
customer. 4 Non-standard fees charged to customers based on
customer behavior or optional participation, primarily including
high credit risk surcharges, over credit limit charges, minimum
processing fees, printing and mailing fees, environmental fees,
etc. 5Interchange revenue directly influenced by the absolute price
of fuel and other interchange related to fuel products. 6
Interchange revenue related to nonfuel products. 7 Revenue derived
from the difference between the price charged to a fleet customer
for a transaction and the price paid to the merchant for the same
transaction. 8 Revenue derived primarily from the sale of
equipment, software and related maintenance to merchants. * We may
not be able to precisely calculate revenue by source, as certain
estimates were made in these allocations. Columns may not calculate
due to rounding.
Exhibit 4 Segment Results (In
thousands) (Unaudited)
Three Months Ended June 30, Six Months Ended June
30, 2018(1)
2017 2018(1)
2017 Revenues, net:
North America $ 370,949 $ 342,995 $ 735,218 $ 672,943 International
214,036 198,242 435,266
388,727 $ 584,985 $ 541,237 $ 1,170,484 $ 1,061,670
Operating income: North America $ 161,376 $ 134,926 $
317,326 $ 255,898 International 103,407 81,117
207,544 155,213 $ 264,783 $ 216,043 $
524,870 $ 411,111 Depreciation and amortization:
North America $ 38,317 $ 33,384 $ 76,992 $ 66,561 International
30,293 31,325 63,120
63,014 $ 68,610 $ 64,709 $ 140,112 $ 129,575
Capital expenditures: North America $ 11,685 $ 12,102 $ 20,096 $
21,734 International 7,715 5,702 14,518
10,866 $ 19,400 $ 17,804 $ 34,614 $
32,600 1 Reflects the impact of the Company's
adoption of ASC 606 and related cost capitalization guidance, which
was adopted by the Company on January 1, 2018 using the modified
retrospective transition method. The adoption of ASC 606 resulted
in an adjustment to retained earnings in our consolidated balance
sheet for the cumulative effective of applying the standard, which
included costs incurred to obtain a contract, as well as
presentation changes in our statements of income, including the
classification of certain amounts previously classified as merchant
commissions and processing expense net with revenues. As a result
of the application of the modified retrospective transition method,
the Company's prior period results within its Form 10-K and
quarterly reports on Form 10-Q will not be restated to reflect ASC
606. See exhibit 7 for a reconciliation of the impact of adoption
of ASC 606.
Exhibit 5 Reconciliation of Non-GAAP Revenue
and Transactions by Product to GAAP (In millions)
(Unaudited)
Revenue
Transactions Three Months Ended June 30, Three
Months Ended June 30, 2018* 2017*
2018* 2017*
FUEL
Pro forma and macro adjusted $ 261.9 $ 249.4 122.1 118.5 Impact of
acquisitions/dispositions - (2.2 ) - (1.7 ) Impact of fuel
prices/spread 6.3 - - - Impact of foreign exchange rates 2.6 - - -
Impact of adoption of ASC 606 - 31.0 -
- As reported $ 270.8 $ 278.2 122.1 116.8
CORPORATE
PAYMENTS
Pro forma and macro adjusted $ 98.5 $ 81.7 11.8 10.6 Impact of
acquisitions/dispositions - (32.1 ) - (0.3 ) Impact of fuel
prices/spread 0.2 - - - Impact of foreign exchange rates 0.9 - - -
Impact of adoption of ASC 606 - 0.6 - -
As reported $ 99.6 $ 50.2 11.8 10.4
TOLLS
Pro forma and macro adjusted $ 91.3 $ 76.0 209.3 216.7 Impact of
acquisitions/dispositions - - - - Impact of fuel prices/spread - -
- - Impact of foreign exchange rates (9.8 ) - - - Impact of
adoption of ASC 606 - - - - As
reported $ 81.5 $ 76.0 209.3 216.7
LODGING
Pro forma and macro adjusted $ 44.6 $ 35.2 4.7 3.9 Impact of
acquisitions/dispositions - (6.2 ) - (0.5 ) Impact of fuel
prices/spread - - - - Impact of foreign exchange rates - - - -
Impact of adoption of ASC 606 - - - -
As reported $ 44.6 $ 29.0 4.7 3.4
GIFT
Pro forma and macro adjusted $ 33.3 $ 41.3 324.5 328.3 Impact of
acquisitions/dispositions - - - - Impact of fuel prices/spread - -
- - Impact of foreign exchange rates - - - - Impact of adoption of
ASC 606 - - - - As reported $
33.3 $ 41.3 324.5 328.3
OTHER1
Pro forma and macro adjusted $ 55.5 $ 54.1 18.7 19.3 Impact of
acquisitions/dispositions - 12.0 - 0.4 Impact of fuel prices/spread
- - - - Impact of foreign exchange rates (0.4 ) - - - Impact of
adoption of ASC 606 - 0.5 - - As
reported $ 55.1 $ 66.6 18.7 19.7
FLEETCOR
CONSOLIDATED REVENUES
Pro forma and macro adjusted $ 585.2 $ 537.5 691.1 697.3 Impact of
acquisitions/dispositions - (28.4 ) - (2.0 ) Impact of fuel
prices/spread 6.4 - - - Impact of foreign exchange rates (6.6 ) - -
- Impact of adoption of ASC 606 - 32.1
- - As reported $ 585.0 $ 541.2 691.1 695.3
* Columns may not calculate due to rounding. 1 Other
includes telematics, maintenance and transportation related
businesses.
Exhibit 6 RECONCILIATION OF NON-GAAP GUIDANCE
MEASURES (In millions, except per share amounts)
(Unaudited) The
following table reconciles 2018 financial guidance for revenues,
net to revenues prior to the adoption of ASC 606 and net income to
adjusted net income and adjusted net income per diluted share, at
both ends of the range:
2018 GUIDANCE
Low* High* Revenues, net $ 2,365 $ 2,415
Impact of adoption of ASC 606 105 105
Revenues, net prior to adoption of ASC 606 $ 2,470 $ 2,520
Net income $ 720 $ 740 Net income per diluted share $
7.75 $ 7.95 Stock based compensation 72 72 Amortization of
intangible assets, premium on receivables, deferred financing costs
and discounts 236 236 Restructuring costs 3 3 Unauthorized access
impact 2 2 Total pre-tax adjustments
313 313 Income tax impact of pre-tax adjustments at the
effective tax rate (73 ) (73 ) Adjusted net income $
960 $ 980 Adjusted net income per diluted share $
10.32 $ 10.52 Diluted shares 93 93 * Columns may not
calculate due to rounding.
Exhibit 7 Reconciliation of
Impact of Adoption of ASC 606 to the Consolidated Statement of
Income (In thousands) (Unaudited)
Three Months Ended June 30,
2018 As Reported1 Impact of ASC 606
2018 Prior toAdoption
Revenues, net $ 584,985 $ 23,336 $ 608,321 Expenses:
Merchant commissions - 26,387 26,387 Processing 111,201 (2,713 )
108,488 Selling 44,009 397 44,406 General and administrative 96,382
- 96,382 Depreciation and amortization 68,610 - 68,610
Operating income 264,783 (735 ) 264,048 Total other
expense 33,608 - 33,608 Income before
income taxes 231,175 (735 ) 230,440 Provision for income taxes
54,323 (91 ) 54,232 Net income $ 176,852 $
(644 ) $ 176,208 1 Reflects the impact of the Company's
adoption of ASC 606 and related cost capitalization guidance, which
was adopted by the Company on January 1, 2018 using the modified
retrospective transition method. The adoption of ASC 606 resulted
in an adjustment to retained earnings in our consolidated balance
sheet for the cumulative effective of applying the standard, which
included costs incurred to obtain a contract, as well as
presentation changes in our statements of income, including the
classification of certain amounts previously classified as merchant
commissions and processing expense net with revenues. As a result
of the application of the modified retrospective transition method,
the Company's prior period results within its Form 10-K and
quarterly reports on Form 10-Q will not be restated to reflect ASC
606.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180802005712/en/
Investor RelationsJim Eglseder,
770-417-4697Jim.Eglseder@fleetcor.com
FleetCor Technologies (NYSE:FLT)
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