Adjusted Net Income Increases 29% Versus Prior Year
NORCROSS, Ga.--(BUSINESS WIRE)--May. 9, 2012-- 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 first quarter ended March 31, 2012.
"We are very pleased with our first quarter results which include reported revenue growth of 32% and adjusted net income growth of 29%," said Ron Clarke, chairman, and chief executive officer, FleetCor Technologies, Inc. "Our strong first quarter results were helped by two key strategic acquisitions at the end of last year which included a new served segment for FleetCor in the UK and entry into the Latin American market in Mexico. In addition, we have just announced that we signed an arrangement agreement to acquire CTF Technologies, the leading fuel payment platform provider in Brazil. This acquisition is consistent with our global acquisition strategy of identifying attractive assets with performance upside, particularly in emerging markets."
Financial results for the first quarter of 2012:
Total revenues, net in the first quarter of 2012 increased 32% to $146.2 million compared to $111.0 million in the first quarter of 2011
Net income in the first quarter of 2012 increased 30% to $42.1 million, or $0.49 per diluted share, compared to $32.3 million, or $0.39 per diluted share in the first quarter of 2011
Adjusted revenues1 (revenues, net less merchant commissions) in the first quarter of 2012 also increased 32% to $135.8 million compared to $102.7 million in the first quarter of 2011
Adjusted net income1 in the first quarter of 2012 increased 29% to $50.8 million, or $0.60 per diluted share, compared to $39.2 million, or $0.47 per diluted share in the first quarter of 2011
2012 Outlook:
FleetCor is guiding to the high end of its previously reported guidance range, excluding the impact of the pending CTF acquisition:
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 assumptions remain unchanged with the exception of the following:
An increase in the average diluted shares outstanding, from 85.2 million shares in the prior guidance to 85.9 million shares. The increase in diluted shares is primarily due to the increase in the Company's share price in the first quarter.
The remaining assumptions are unchanged, and are as follows:
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
Foreign exchange rates materially consistent with those prevailing at the time we initially provided guidance
No impact from future acquisitions or material new partnership agreements
"We expect the pending acquisition of CTF Technologies to be accretive to both revenue and profit in 2012 and expect the acquisition to add $0.04 to $0.05 in adjusted net income per diluted share, including deal and restructuring costs and assuming a close date of June 30," said Eric Dey, chief financial officer, Fleetcor Technologies, Inc. "We will incorporate the CTF impact into our overall guidance, once we close the CTF transaction."
The Company will host a conference call to discuss first quarter of 2012 financial results May 9th 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 877-941-2068, 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 4534714. The replay will be available until Wednesday, May 16, 2012. The call will be webcast live from the Company's investor relations website at investor.fleetcor.com.
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, the anticipated consummation of the CTF acquisition, 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, 2011, filed with the Securities and Exchange Commission on February 29, 2012. FleetCor believes these forward-looking statements are reasonable; however, forward-looking statements are not a guarantee of performance, and undue reliance should not be placed on such statements. The forward-looking statements included in this press release are made only as of the date hereof, and FleetCor does not undertake, and specifically disclaims, any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.
Adjusted revenues, net are calculated as revenues less merchant commissions. Adjusted net income is calculated as net income, adjusted to eliminate (a) non-cash stock-based compensation expense related to share-based compensation awards, (b) amortization of deferred financing costs and intangible assets, (c) amortization of the premium recognized on the purchase of receivables and, (d) loss on the early extinguishment of debt. 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 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 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:
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.
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.
GAAP Consolidated Statements of Income
Merchant commissions 10,393 8,277
Selling 10,175 7,787
Depreciation and amortization 11,720 8,607
Other expense (income), net 588 (34 )
Income before income taxes 60,324 47,158
Property and equipment 99,479 93,380
Accumulated other comprehensive loss (4,644 ) (13,716 )
Total stockholders' equity 883,041 811,436
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation 3,834 4,141
Deferred income taxes (17 ) (340 )
Restricted cash (1,447 ) (3,978 )
Prepaid expenses and other current assets (1,889 ) (3,035 )
Other assets (37,821 ) (1,114 )
Excess tax benefits related to stock-based compensation (8,883 ) (787 )
Accounts payable, accrued expenses and customer deposits 57,508 84,165
Net cash used in operating activities (113,934 ) (8,794 )
Acquisitions, net of cash acquired (10 ) –
Net cash used in investing activities (3,573 ) (2,594 )
Excess tax benefits related to stock-based compensation 8,883 787
Borrowings (payments) on securitization facility, net 61,000 10,000
Deferred financing costs paid (681 ) (550 )
Proceeds from issuance of common stock 7,737 484
Borrowings from revolver and swing line of credit, net 38,960 –
Net cash provided by financing activities 112,149 8,992
Effect of foreign currency exchange rates on cash 7,318 7,371
Net increase in cash and cash equivalents 1,960 4,975
Cash paid for income taxes $ 6,004 $ 3,103
RECONCILIATION OF NON-GAAP MEASURES
Three Months Ended March 31, Year Ended
Net income $ 42,079 $ 32,335 $ 147,335
Stock based compensation 3,834 4,141 21,743
Amortization of intangible assets 7,276 4,600 19,590
Amortization of premium on receivables 816 816 3,266
Amortization of deferred financing costs 510 466 1,864
Loss on extinguishment of debt - - 2,669
Total pre-tax adjustments 12,436 10,023 49,132
Income tax impact of pre-tax adjustments at the effective tax rate (3,761 ) (3,150 ) (14,805 )
Adjusted net income $ 50,754 $ 39,208 $ 181,662
Adjusted net income per diluted share $ 0.60 $ 0.47 $ 2.17
Diluted shares 85,164 83,378 83,654
Key Operating Metrics
(In thousands, except revenues, net per transaction and adjusted revenues per transaction)
- Transactions 36,665 36,157 508 1.4 %
- Revenues, net $ 82,812 $ 71,585 $ 11,227 15.7 %
- Transactions2 35,760 10,811 24,949 230.8 %
- Revenues, net per transaction2 $ 1.77 $ 3.65 $ (1.88 ) -51.4 %
FLEETCOR CONSOLIDATED REVENUES2
FLEETCOR CONSOLIDATED ADJUSTED REVENUES1,2
- Adjusted Revenues per transaction2 $ 1.87 $ 2.19 $ (0.32 ) -14.3 %
1 Adjusted revenues is a non-GAAP financial measure defined as revenues, net less merchant commissions. The Company believes this measure is a more effective way to evaluate the Company's revenue performance. Refer to Exhibit 1 for a reconciliation of revenues, net to adjusted revenues.
2 The presentation of prior quarters presented herein has been conformed to the current period presentation that eliminates certain intercompany transactions.
Revenue from customers and partners 48.8 % 55.5 % -6.7 % -12.1 %
Revenue from merchants and networks 51.2 % 44.5 % 6.7 % 15.1 %
Revenue tied to fuel-price spreads 15.1 % 16.4 % -1.3 % -7.9 %
3 Expressed as a percentage of consolidated revenue.
GAAP Segment Results
International1 63,353 39,420
International1 6,726 3,665
$ 11,720 $ 8,607
1 The results from our Mexican business acquired during the third quarter of 2011 and Allstar business acquired during the fourth quarter of 2011 are reported in our International segment.