FleetCor Reports Fourth Quarter and Full Year 2010 Financial Results
NORCROSS, Ga.—(BUSINESS WIRE)— FleetCor Technologies, Inc. (NYSE: FLT), a leading independent global provider of specialized payment products and services to businesses, commercial fleets, major oil companies, petroleum marketers and government fleets, today reported financial results for its fourth quarter and full year ended December 31, 2010.
“We are very pleased with our accomplishments in 2010. We achieved record financial performance, completed a successful initial public offering, and continued to make significant progress executing on our global growth initiatives,” said Ron Clarke, chairman, president and chief executive officer, FleetCor Technologies, Inc. “Our recent success in winning new commercial fleet fuel cards business in Europe and Asia is clear evidence of our progress in executing on our global initiatives. The ability to leverage our GFN platform – our global industry standard fuel card system – meaningfully contributed to our ability to secure this important mandate.”
The GAAP financial results below include the impact of the one-time compensation charge booked in the fourth quarter of 2010 associated with the initial public offering.
Financial results for the fourth quarter of 2010:
GAAP Results
•
Total revenue in the fourth quarter of 2010 increased 9.5% to $106.5 million compared to $97.3 million in 2009
•
Net income in the fourth quarter of 2010 decreased 29.8% to $17.5 million, or $0.22 per diluted share, compared to $24.9 million, or $0.31 per diluted share in 2009
Non GAAP Results
•
Total revenue in the fourth quarter of 2010 increased 3.3% to $106.5 million compared to $103.2 million in 2009 (which reflects the adoption of 2010 authoritative accounting guidance related to our asset securitization facility in 2009 results)
•
Adjusted net income in the fourth quarter of 2010 increased 37.4% to $40.0 million, or $0.49 per diluted share, compared to $29.1 million, or $0.36 per diluted share in 2009
“We are extremely pleased by our results for the first quarter as a public company,” said Eric Dey, chief financial officer FleetCor Technologies, Inc. “We ended the year on a strong note and look forward to continuing our success in 2011.”
Financial results for the full year of 2010:
GAAP Results
•
Total revenue in 2010 increased 22.5% to $433.8 million compared to $354.1 million in 2009
•
Net income in 2010 increased 21.2% to $107.9 million, or $1.34 per diluted share, compared to $89.1 million, or $1.13 per diluted share in 2009
Non GAAP Results
•
Total revenue in 2010 increased 13.8% to $433.8 million compared to $381.3 million in 2009 (which reflects the adoption of 2010 authoritative accounting guidance related to our asset securitization facility in 2009 results)
•
Adjusted net income in 2010 increased 38.1% to $143.6 million, or $1.78 per diluted share, compared to $103.9 million, or $1.32 per diluted share in 2009
Reconciliations of GAAP results to non GAAP results are provided in exhibit 1 attached. Additional supplemental data is provided in exhibit 2.
Recent Business Highlights
FleetCor completed its initial public offering in December 2010. The Company sold 430,961 shares of common stock in the offering and 14,145,289 shares were sold by certain of FleetCor’s stockholders, including 1,901,250 shares pursuant to the underwriters’ exercise of their over-allotment option.
On February 17, 2011 FleetCor announced that Shell, one of the world’s leading fuel card issuers, has selected FleetCor to migrate Shell’s fuel card system to a new processing platform in partnership with Logica, a leading technology and business service company. The project will extend across 35 countries in Europe and Asia.
“This win validates our ambition to provide the world’s oil companies with a fuel card industry platform” said Mr. Clarke. “The benefits of scale and global learnings are anticipated to accrue to early adopters of the system. We are delighted Shell has chosen us and we will work closely with Logica to improve the performance of the Shell fuel card portfolio. While this contract is not expected to have a material impact on FleetCor’s consolidated results of operations in the near term, we believe it is strategically very important, creating a partnership with Shell, and providing a live and scalable reference point for other outsourcing opportunities worldwide”
2011 Outlook
FleetCor Technologies, Inc. is introducing initial financial guidance for full year 2011.
•
Revenue between $460 million to $480 million
•
Adjusted net income between $155 million to $165 million
•
Adjusted net income per diluted share between $1.83 to $1.95
The Company’s full year 2011 guidance includes the following:
•
Approximately $2 million of incremental cash operating costs for public company expenses
•
A 1.9% increase in our effective tax rate from 28.7% in 2010 to 30.6% in 2011
•
An increase of 3.9 million diluted shares outstanding from 80.8 million shares in 2010 to 84.7 million shares in 2011
If these incremental costs and shares had been incurred in 2010, the Company’s full year 2010 Adjusted Net Income would have been $138.3 million, or $1.63 per diluted share.
The Company’s full year 2011 guidance is presented on a constant currency basis and assumes similar macroeconomic and business conditions exist in 2011 as did in 2010. This guidance does not reflect the impact of any future acquisitions or material new partnership agreements.
Conference Call
The Company will host a conference call to discuss fourth quarter and full year 2010 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) 941-1427, or for international callers (480) 629-9664. 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 4413916. The replay will be available until Wednesday, March 2, 2011. The call will be webcast live from the Company’s investor relations website athttp://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, assumptions underlying financial guidance, acceptance and implementation of the GFN platform, the anticipated benefits of the GFN system, the anticipated financial and operational impact of the Shell relationship, and management’s plans for 2011 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 successfully integrate 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 Registration Statement filed on Form S-1 with the Securities and Exchange Commission on November 30, 2010. 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
EBITDA is calculated as net income before the provision for income taxes, interest expense, net and depreciation and amortization. Adjusted EBITDA is calculated as EBITDA adjusted for the incremental interest expense attributable to our securitization facility and adjusted to exclude the impact of the onetime compensation charge booked in the fourth quarter of 2010 associated with our initial public offering. 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 and (c) amortization of the premium recognized on the purchase of receivables. We prepare adjusted net income to eliminate the effect of items that we do not consider indicative of our core operating performance. EBITDA, adjusted EBITDA and adjusted net income are supplemental measures of operating performance that do 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 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 the one-time non-cash compensation expense associated with the IPO does not adequately reflect the company’s true results of operations, therefore, we have also presented results that exclude this charge from operating expenses, adjusted EBITDA, income before income taxes, provision for income tax, and net income. 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.
Management uses EBITDA, adjusted EBITDA 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 EBITDA, Adjusted EBITDA 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, The Global Fleet Card Company, is a leading independent global provider of specialized payment products and services to businesses, commercial fleets, major oil companies, petroleum marketers and government entities. FleetCor’s payment programs enable businesses to better manage and 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 18 countries in North America, Europe, Africa and Asia. For more information, please visitwww.fleetcor.com.
FleetCor Technologies, Inc. and subsidiaires
GAAP Consolidated Statements of Income
(In thousands, except earnings per share amounts)
4th Qtr December 31
Unaudited Unaudited Unaudited Audited
2010 2009 2010 2009
Revenues, net $ 106,547 $ 97,312 $ 433,841 $ 354,073
Expenses:
Merchant commissions 9,502 10,849 49,050 39,709
Processing 17,078 14,898 69,687 57,997
Selling 9,576 9,109 32,731 30,579
General and administrative 38,111 13,124 78,135 51,375
- - - - - - - - - - -
32,280 49,332 204,238 174,413
Depreciation and amortization 8,506 8,133 33,745 28,368
- - - - - - - - - - -
Operating income 23,774 41,199 170,493 146,045
- - - - - - - - - - -
Other income, net (553 ) (564 ) (1,319 ) (933 )
Interest expense, net 4,181 4,340 20,532 17,363
- - - - - - - -
Total other expense 3,628 3,776 19,213 16,430
- - - - - - - -
Income before income taxes 20,146 37,423 151,280 129,615
Provision for income taxes 2,632 12,475 43,384 40,563
- - - - - - - -
Net income $ 17,514 $ 24,948 $ 107,896 $ 89,052
= = = = = = = =
Diluted earnings per share $ 0.22 $ 0.31 $ 1.34 $ 1.13
Diluted shares 80,931 81,575 80,751 78,854
FleetCor Technologies, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2010 2009
Assets
Current assets:
Cash and cash equivalents $114,804 $84,701
Restricted cash 62,341 67,979
Accounts receivable 258,452 163,461
Securitized accounts receivable - restricted for securitization investors 144,000 -
Prepaid expenses and other current assets 33,191 24,113
Deferred income taxes 4,484 6,988
- -
Total current assets 617,272 347,242
- -
Property and equipment 83,013 72,091
Less accumulated depreciation and amortization (56,195 ) (44,868 )
Net property and equipment 26,818 27,223
Goodwill 596,115 590,336
Other intangibles, net 193,861 197,430
Other assets 42,790 47,314
- -
Total assets $1,476,856 $1,209,545
= =
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $177,644 $175,578
Accrued expenses 41,914 46,746
Customer deposits 78,685 75,796
Securitization facility 144,000 -
Current portion notes payable and other obligations 11,617 22,621
- -
Total current liabilities 453,860 320,741
- -
Notes payable and other obligations, less current portion 313,796 328,930
Deferred income taxes 83,255 85,825
- -
Total noncurrent liabilities 397,051 414,755
- -
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock - 330,654
Preferred stock - -
Common stock 111 66
Additional paid-in capital 421,992 94,996
Retained earnings 387,163 235,726
Accumulated other comprehensive loss (8,101 ) (12,173 )
Less treasury stock (175,220 ) (175,220 )
- -
Total stockholders’ equity 625,945 474,049
- -
Total liabilities and stockholders’ equity $1,476,856 $1,209,545
= =
Exhibit 1
RECONCILIATION OF NON-GAAP MEASURES
(In thousands, except earnings per share amounts)
Managed Revenue
Although bad debt and interest associated with our securitization facility were reported in revenue for the periods
prior to January 1, 2010, we monitored these costs on a managed basis. The following table presents certain
statement of income items adjusted for the impact of the new accounting guidance related to our
securitization facility.
4th Quarter 2010 4th Quarter 2009 Year Ended 2010 Year Ended 2009
Adjust- Adjust- Adjust- Adjust-
As Reported ments As Adjusted As Reported ments As Adjusted As Reported ments As Adjusted As Reported ments As Adjusted
Net revenues $106,547 $- $106,547 $97,312 $5,849 $103,161 $433,841 $- $433,841 $354,073 $27,200 $381,273
Processing expense 17,078 - 17,078 14,898 4,605 19,503 69,987 - 69,987 57,997 21,900 79,897
Interest expense, net 4,181 - 4,181 4,340 1,244 5,584 20,532 - 20,532 17,363 5,300 22,663
- -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Adjusted for one time non cash charge associated with initial public offering and impact of the new accounting guidance related to our securitization facility
4th Quarter 2010 4th Quarter 2009 Year Ended 2010 Year Ended 2009
Adjust- Adjust- Adjust- Adjust-
As Reported ments As Adjusted As Reported ments As Adjusted As Reported ments As Adjusted As Reported ments As Adjusted
Operating
expenses1 $74,267 $(23,771 ) $50,496 $47,980 $4,605 $52,585 $229,603 $(23,771 ) $205,832 $179,660 $21,900 $201,560
Income before income
taxes 20,146 23,771 43,917 37,423 - 37,423 151,280 23,771 175,051 129,615 - 129,615
Provision for income
taxes 2,632 8,245 10,877 12,475 - 12,475 43,384 8,245 51,629 40,563 - 40,563
Net income 17,514 15,526 33,040 24,948 - 24,948 107,896 15,526 123,422 89,052 - 89,052
1Operating expense is calculated as the sum of merchant commissions, processing, selling, and general and administrative expenses
- -- -
The following table reconciles net income to EBITDA and adjusted EBITDA:
4th Quarter 4th Quarter Year Ended Year Ended
2010 2009 2010 2009
Net income $17,514 $24,948 $107,896 $89,052
Provision for income taxes 2,632 12,475 43,384 40,563
Interest expense, net 4,181 4,340 20,532 17,363
Depreciation and amortization 8,506 8,133 33,745 28,368
- - - -
EBITDA 32,833 49,896 205,557 175,346
Incremental interest expense - 1,244 - 5,300 (a)
One time stock compensation booked in Q4 associated with initial public offering 23,771 23,771 (a)
- - - -
Adjusted EBITDA $56,604 $51,140 $229,328 $180,646
= = = =
(a) Adjusted EBITDA is calculated as EBITDA adjusted for the incremental interest expense attributable to our securitiziation facility and a one-time non cash stock compensation charge associated with the initial public offering.
The following table reconciles net income to adjusted net income:
4th Quarter 4th Quarter Year Ended Year Ended
2010 2009 2010 2009
Net income $17,514 $24,948 $107,896 $89,052
Stock based compensation 25,093 667 27,546 2,666
Amortization of intangible assets 4,453 4,118 17,203 13,900
Amortization of premium on receivables 816 815 3,263 3,257
Amortization of deferred financing costs 536 673 2,016 1,842
- - - -
Total pre-tax adjustments 30,898 6,273 50,028 21,665
Income tax impact of pre-tax adjustments at the effective tax rate (8,395 ) (2,090 ) (14,340 ) (6,779 )
- - - -
Adjusted net income $40,017 $29,131 $143,584 $103,938
= = = =
Adjusted net income per diluted share $0.49 $0.36 $1.78 $1.32
Diluted shares 80,931 81,575 80,751 78,854
The following table reconciles provision for bad debt to managed provision for bad debt:
4th Quarter 4th Quarter Year Ended Year Ended
2010 2009 2010 2009
Provision for bad debt included in:
Processing expense $3,782 $2,569 $18,882 $10,693
Revenues, net - 4,600 - 21,900
- - - -
Managed provision for bad debts 3,782 7,169 18,882 32,593
Managed provision for bad debts as a percentage of gross billed revenue 0.21 % 0.43 % 0.31 % 0.56 %
The following table reconciles 2010 actuals to 2010 proforma:
Year Ended 2011 Proforma
2010 Changes 1 2010
-
Income before income taxes $151,280 $(14,000 ) $137,280
Provision for income taxes 43,384 (1,376 ) 42,008
- -
Net income 107,896 (12,624 ) 95,272
Stock based compensation 27,546 12,000 39,546
Amortization of intangible assets 17,203 - 17,203
Amortization of premium on receivables 3,263 - 3,263
Amortization of deferred financing costs 2,016 - 2,016
- - -
Total pre-tax adjustments 50,028 12,000 62,028
Income tax impact of pre-tax adjustments at the effective tax rate (14,340 ) (4,641 ) (18,981 )
- - -
Adjusted net income $143,584 $(5,265 ) $138,318
= =
Adjusted net income per diluted share $1.78 $1.63
Diluted shares 80,751 84,700
12011 changes include approximately $2m in incremental cash operatings costs for public company expenses, $12 million of non-cash compensation expenses associated with our new plan, and a 1.9% increase in our effective tax rate from 28.7% in 2010 to 30.6% in 2011. Additionally, 2011 will show an increase of 3.9 million diluted shares outstanding, from 80.8 million in 2010 to 84.7 million in 2011.
Exhibit 2
Transaction Volume, Revenue Per Transaction and Revenue by Segment
(in thousands except revenue per transaction)
4th Quarter
Year Ended
2010
20091
Delta
%Delta
2010
20091
Delta
%Delta
-
-
-
-
North America
- Transactions
36,640
36,388
252
0.7
%
147,259
143,545
3,714
2.6
%
- Revenue per transaction
$
1.87
$
1.82
0.05
2.5
%
$
1.95
$
1.77
0.18
10.2
%
- Revenue
$
68,347
$
66,215
2,132
3.2
%
$
287,794
$
254,573
33,221
13.0
%
International
- Transactions
12,211
12,781
(570
)
-4.5
%
48,858
49,678
(820
)
-1.7
%
- Revenue per transaction
3.13
2.89
0.24
8.2
%
2.99
2.55
0.44
17.2
%
- Revenue
38,200
36,941
1,259
3.4
%
146,047
126,700
19,347
15.3
%
Total
- Transactions
48,851
49,168
(317
)
-0.6
%
196,117
193,223
2,894
1.5
%
- Revenue per transaction
$
2.18
$
2.10
0.08
3.9
%
$
2.21
$
1.97
0.24
12.1
%
- Revenue
$
106,547
$
103,156
3,380
3.3
%
$
433,841
$
381,273
52,568
13.8
%
International (excluding non-renewed contract)
- Transactions
12,132
11,080
1,052
9.5
%
45,210
42,803
2,407
5.6
%
- Revenue per transaction
3.15
3.31
(0.16
)
-4.8
%
3.21
2.93
0.28
9.6
%
- Revenue
38,188
36,625
1,563
4.3
%
145,208
125,436
19,772
15.8
%
Total
- Transactions
48,773
47,468
1,305
2.7
%
192,468
186,348
6,120
3.3
%
- Revenue per transaction
$
2.18
$
2.17
0.02
0.8
%
$
2.25
$
2.04
0.21
10.3
%
- Revenue
$
106,534
$
102,851
3,683
3.6
%
$
432,999
$
380,017
52,982
13.9
%
12009 revenue reflects revenue on a managed basis, see Exhibit 1 for reconciliation
Contacts FleetCor Technologies, Inc. Investor Relations 770-729-2017 investor@fleetcor.com
Source: FleetCor Technologies, Inc.
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