FleetCor Reports Fourth Quarter 2014 Financial Results

FleetCor Technologies, Inc. (NYSE:FLT), a leading global provider of fuel cards and workforce payment products to businesses, today reported financial results for its fourth quarter ended December 31, 2014.

“Our fourth quarter results were very strong and helped complete a terrific 2014,” said Ron Clarke, chairman and chief executive officer, FleetCor Technologies, Inc. “For full year 2014, total revenue grew 34%, organic revenue grew approximately 13%, and adjusted net income grew 31%. We had a number of new oil partner wins, we entered Germany, we added some new executive talent, and we completed the Comdata deal, so a very good 2014.”

Financial Results for Fourth Quarter 2014:

GAAP Results

• Total revenues increased 47% to $376.7 million compared to $255.5 million in the fourth quarter of 2013. Comdata, which was acquired on November 14, 2014, contributed approximately 27 percentage points of the revenue growth in the quarter, or $70 million to the fourth quarter of 2014.
• The Company reported GAAP net income1 of $109.5 million or $1.21 per diluted share in the fourth quarter of 2014 compared to GAAP net income of $68.1 million or $0.80 per diluted share in the fourth quarter of 2013. Included in GAAP net income in the fourth quarter of 2014 was an estimated loss of approximately $19 million related to the Comdata acquisition (including all deal related expenses), and approximately $29 million gain in unusual items reflecting adjustments to purchase accounting entries for contingent consideration and tax indemnifications for the company’s 2013 acquisitions of DB and VB in Brazil.

Non-GAAP Results

• Adjusted revenues1 (revenues, net less merchant commissions) increased 44% to $343.4 million compared to $237.7 million in the fourth quarter of 2013. Comdata contributed approximately 29 percentage points of revenue growth, or $70 million to the fourth quarter of 2014 results.
• Adjusted net income1 increased 37% to $125.8 million compared to $92.1 million in the fourth quarter of 2013;
• Adjusted net income per diluted share1 increased 29% to $1.39 compared to $1.08 in the fourth quarter of 2013. Included in adjusted net income per diluted share for the fourth quarter of 2014 was an estimated loss of approximately $0.06 per diluted share related to the Comdata acquisition (including all deal related expenses).

Fiscal Year 2015 Outlook:

“For 2015 we have a number of macro-economic headwinds affecting our business, primarily foreign exchange rates, market fuel spreads, and fuel prices,” said Eric Dey, chief financial officer FleetCor Technologies, Inc. “In aggregate, we are estimating that these three macro-economic factors create approximately $160 million revenue headwind and approximately $1.00 adjusted net income per diluted share headwind versus the 2014 averages. Despite these headwinds we like our fundamentals, and expect year-over-year adjusted net income per diluted share growth of 17% at the midpoint of our guidance range. Also, in constant currency our adjusted net income per diluted share guidance would have been approximately $6.40 at the midpoint of the range and with normalized spreads and fuel prices at the 2014 average our guidance would have been approximately $7.00 in adjusted net income per diluted share.”

For fiscal year 2015 FleetCor Technologies, Inc. is expecting the following:

• Total revenues between $1,600 million and $1,650 million
• Adjusted net income between $560 million and $580 million
• Adjusted net income per diluted share between $5.95 and $6.15

The Company's fiscal-year guidance assumptions for 2015 are as follows:

• Weighted fuel prices equal to $2.58 per gallon average for 2015 in the U.S. compared to $3.56 per gallon average in the U.S. in 2014, down approximately 30%
• Market spreads slightly better than prior year in the first quarter of 2015, neutral in the second quarter, and worse in the third and fourth quarters compared to 2014
• Foreign exchange rates equal to the seven day average ended January 13, 2015
• SVS business for the entire first quarter of 2015
• Continued weakness in the Company’s Russian business
• Full year tax rate of 32.1%
• Fully diluted shares outstanding of 94.3 million shares
• No impact related to acquisitions or material new partnership agreements not already disclosed

Conference Call

The Company will host a conference call to discuss fourth quarter 2014 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 13599700. The replay will be available until February 12, 2015. 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 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 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 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; 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, 2013, filed with the Securities and Exchange Commission on March 3, 2014. 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 and intangible assets, (c) amortization of the premium recognized on the purchase of receivables, (d) loss on the early extinguishment of debt, (e) our proportionate share of amortization of intangible assets at our equity method investment, and (f) other non-cash adjustments. Adjusted EBITDA is calculated as net income as reflected in our income statement, adjusted to eliminate (a) interest expense, (b) tax expense, (c) depreciation of long-lived assets, (d) amortization of intangible assets, (e) other (income) expense, net, (f) gains and losses at equity method investment, and (g) loss on 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. The Company uses adjusted EBITDA as a basis to evaluate our operating performance net of the impact of certain items during the period. We believe that adjusted EBITDA may be useful to investors for understanding our operating performance on a consistent basis. 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 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, adjusted net income, and adjusted EBITDA:

• 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 EBITDA 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 commercial customer base that can increase their sales and customer loyalty. FleetCor serves commercial accounts in North America, Latin America, Europe, Australia and New Zealand. For more information, please visit www.fleetcor.com.