FLEETCOR Reports Second Quarter 2017 Financial Results

NORCROSS, Ga.--()--FLEETCOR Technologies, Inc. (NYSE:FLT), a leading global provider of commercial payment solutions, today reported financial results for its second quarter ended June 30, 2017.

“We reported another very good quarter, with adjusted net income per diluted share growth of 26%, and organic revenue growth of approximately 9% in the quarter, on a constant fuel price, currency, and spread basis”

“We reported another very good quarter, with adjusted net income per diluted share growth of 26%, and organic revenue growth of approximately 9% in the quarter, on a constant fuel price, currency, and spread basis,” said Ron Clarke, chairman and chief executive officer, FLEETCOR Technologies, Inc. “We recently completed the sale of our Nextraq business, we announced the upsizing of our senior credit facility, and accelerated share repurchase (ASR) agreement.”

Financial Results for Second Quarter of 2017:

GAAP Results

  • Total revenues increased 29.5% to $541.2 million in the second quarter of 2017 compared to $417.9 million in the second quarter of 2016.
  • GAAP net income increased 12.7% to $131.0 million in the second quarter of 2017 compared to $116.3 million2 in the second quarter of 2016.
  • GAAP net income per diluted share increased 13.9% to $1.39 in the second quarter of 2017 compared to $1.22 per diluted share2 in the second quarter of 2016.

Non-GAAP Results1

  • Adjusted revenues1 (revenues, net less merchant commissions) increased 29.1% to $510.6 million in the second quarter of 2017 compared to $395.6 million in the second quarter of 2016.
  • Adjusted net income1 increased 24.7% to $187.0 million in the second quarter of 2017 compared to $150.0 million2 in the second quarter of 2016.
  • Adjusted net income per diluted share1 increased 26% to $1.99 in the second quarter of 2017 compared to $1.57 per diluted share2 in the second quarter of 2016.

Fiscal-Year 2017 Outlook:

“We are raising our guidance to reflect our second quarter results compared to our expectations. We also are estimating that the impact of the sale of the Nextraq business, the acquisition of Cambridge, and impact of the ASR will have a neutral impact on our rest of year results, but will be cumulatively accretive on an annual basis.” said Eric Dey, chief financial officer, FLEETCOR Technologies, Inc.

For 2017, FLEETCOR Technologies, Inc. financial guidance is as follows:

  • Total revenues between $2,195 million and $2,245 million;
  • GAAP net income between $545 million and $565 million;
  • GAAP net income per diluted share between $5.80 and $6.00;
  • Adjusted net income1 between $775 million and $795 million; and
  • Adjusted net income per diluted share1 between $8.24 and $8.44.

FLEETCOR’s guidance assumptions for 2017 are as follows:

  • Weighted fuel prices equal to $2.43 per gallon average in the U.S. for those businesses sensitive to the movement in the retail price of fuel for 2017.
  • Market spreads returning to historical levels.
  • Foreign exchange rates as of June 30, 2017. A slight improvement from prior guidance.
  • SVS business is retained for 2017.
  • Interest expense of $108 million in 2017.
  • Fully diluted shares outstanding of 94 million shares. This assumes an approximate 600,000 share impact from the ASR for the balance of the year.
  • Full year tax rate of 29.2%.
  • The Nextraq business was sold on July 17, 2017 and is not included in the Company’s rest of year guidance. The impact of removing Nextraq is an approximate reduction of $0.08 in adjusted net income per diluted share. The Company estimates it will recognize a net gain on sale of Nextraq of approximately $90 million or $0.95 per diluted share, which is not included in guidance.
  • The Company assumes that the Cambridge Global Payments acquisition will close by September 1, and is included in guidance. The impact of the Cambridge acquisition in the Company’s second half guidance is approximately $0.04 to $0.05 in adjusted net income per diluted share, net of deal related expenses.3
  • No impact related to acquisitions or material new partnership agreements not already disclosed.

The Company’s volumes build throughout the year and new asset initiatives gain momentum throughout the year resulting in higher earnings per share in the third and fourth quarters. For the third quarter, the Company is expecting adjusted net income per diluted share to be in the range of $2.09 to $2.16.

_________________________________________
1 Reconciliations of GAAP results to non-GAAP results are provided in Exhibit 1 attached. Additional supplemental data is provided in Exhibit 2-3 and 5-6, and segment information is provided in Exhibit 4. A reconciliation of GAAP guidance to non-GAAP guidance is provided in Exhibit 7.

2 Reflects the impact of the Company’s adoption of Accounting Standard’s 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. See Exhibit 6 for a reconciliation to previously issued results.

3 There can be no assurance that the Cambridge acquisition will close on September 1. The actual 2017 impact will depend on the actual date of closing.
 

Conference Call

The Company will host a conference call to discuss second quarter 2017 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 (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 13667017. The replay will be available until August 10, 2017. 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, expected timing of acquisitions and dispositions, 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 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, our ability to complete an accelerated share repurchase, 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, 2016, filed with the Securities and Exchange Commission on March 1, 2017. 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 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, (e) a non-recurring net gain at our equity method investment and (f) impairment of our equity method investment. The Company uses adjusted revenue 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 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 and impairment charges 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 product revenue organic growth calculation is provided in the attached exhibit 5. A reconciliation of the impact of the adoption of ASU 2016-09 to GAAP and non-GAAP results is provided in the attached exhibit 6. A reconciliation of GAAP to non-GAAP guidance is provided in the attached exhibit 7.

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 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,
2017

20161

2017

20161

 
Revenues, net $ 541,237 $ 417,905 $ 1,061,670 $ 832,167
 
Expenses:
Merchant commissions 30,619 22,308 55,003 50,541
Processing 103,322 80,691 205,146 160,505
Selling 38,957 31,947 77,794 58,500
General and administrative 87,569 63,586 183,003 131,180
Depreciation and amortization 64,709 48,436 129,575 84,764
Other operating, net   18     (231 )   38   (446 )
Operating income   216,043     171,168     411,111   347,123  
Equity method investment loss (income) 2,354 (7,184 ) 4,731 (4,991 )
Other (income) expense, net (551 ) 104 1,645 763
Interest expense, net   23,851     15,900     46,978   32,091  
Total other expense   25,654     8,820     53,354   27,863  
Income before income taxes 190,389 162,348 357,757 319,260
Provision for income taxes   59,402     46,095     103,077   91,917  
Net income $ 130,987   $ 116,253   $ 254,680 $ 227,343  
 
Basic earnings per share $ 1.42 $ 1.25 $ 2.77 $ 2.46
Diluted earnings per share $ 1.39 $ 1.22 $ 2.70 $ 2.39
 
Weighted average shares outstanding:
Basic shares 92,013 92,665 92,060 92,591
Diluted shares 94,223 95,279 94,392 95,137
 

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. See Exhibit 6 for a reconciliation to previously issued results.

 
 

FleetCor Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets
(In thousands, except share and par value amounts)
 
    June 30, 2017   December 31, 2016
(Unaudited)
Assets
 
Current assets:
Cash and cash equivalents $ 564,578 $ 475,018
Restricted cash 201,039 168,752

Accounts and other receivables (less allowance for doubtful accounts of $47,836 at
June 30, 2017 and $32,506 at December 31, 2016)

1,429,563 1,202,009
Securitized accounts receivable - restricted for securitization investors 741,000 591,000
Prepaid expenses and other current assets   109,178     90,914  
 
Total current assets   3,045,358     2,527,693  
 
Property and equipment, net 154,278 142,504
Goodwill 4,212,523 4,195,150
Other intangibles, net 2,562,326 2,653,233
Investments 40,845 36,200
Other assets   86,381     71,952  
 
Total assets $ 10,101,711   $ 9,626,732  
 
Liabilities and Stockholders’ Equity
 
Current liabilities:
Accounts payable $ 1,240,766 $ 1,151,432
Accrued expenses 206,073 238,812
Customer deposits 688,574 530,787
Securitization facility 741,000 591,000
Current portion of notes payable and lines of credit 702,444 745,506
Other current liabilities   40,169     38,781  
 
Total current liabilities   3,619,026     3,296,318  
 
Notes payable and other obligations, less current portion 2,394,621 2,521,727
Deferred income taxes 637,162 668,580
Other noncurrent liabilities   45,402     56,069  
 
Total noncurrent liabilities   3,077,185     3,246,376  
 
Commitments and contingencies
 
Stockholders’ equity:

Common stock, $0.001 par value; 475,000,000 shares authorized, 121,712,973 shares
issued and 91,878,784 shares outstanding at June 30, 2017; and 121,259,960 shares
issued and 91,836,938 shares outstanding at December 31, 2016

122 121
Additional paid-in capital 2,136,913 2,074,094
Retained earnings 2,473,401 2,218,721
Accumulated other comprehensive loss (610,049 ) (666,403 )
Less treasury stock, 29,834,189 shares at June 30, 2017 and 29,423,022 shares at December 31, 2016 (594,887 ) (542,495 )
   
Total stockholders’ equity   3,405,500     3,084,038  
 
Total liabilities and stockholders’ equity $ 10,101,711   $ 9,626,732  
 
 
FleetCor Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(In thousands)
     
Six Months Ended June 30,
2017

20161

 
Operating activities
Net income $ 254,680 $ 227,343
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 21,593 16,311
Stock-based compensation 44,243 32,620
Provision for losses on accounts receivable 27,648 13,729
Amortization of deferred financing costs and discounts 3,800 3,651
Amortization of intangible assets 104,894 66,114
Amortization of premium on receivables 3,088 2,339
Deferred income taxes (32,660 ) (9,248 )
Equity method investment loss (income) 4,731 (4,991 )
Other non-cash operating income - (446 )
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash (28,739 ) 13,555
Accounts and other receivables (380,196 ) (392,545 )
Prepaid expenses and other current assets (18,778 ) (4,636 )
Other assets (15,050 ) (9,362 )
Accounts payable, accrued expenses and customer deposits   189,750     257,608  
Net cash provided by operating activities   179,004     212,042  
 
 
Investing activities
Acquisitions, net of cash acquired (3,580 ) (5,299 )
Purchases of property and equipment (32,600 ) (24,757 )
Other   (6,327 )   (7,868 )
Net cash used in investing activities   (42,507 )   (37,924 )
 
 
Financing activities
Proceeds from issuance of common stock 16,432 7,964
Repurchase of common stock (52,393 ) (26,037 )
Borrowings on securitization facility, net 150,000 99,000
Principal payments on notes payable (66,725 ) (51,750 )
Borrowings from revolver- A Facility 90,000 140,000
Payments on revolver- A Facility (215,901 ) (290,000 )
Borrowings on swing line of credit, net 10,245
Other   537     (666 )
Net cash used in financing activities   (67,805 )   (121,489 )
 
Effect of foreign currency exchange rates on cash   20,868     (6,696 )
 
Net increase in cash and cash equivalents 89,560 45,933
Cash and cash equivalents, beginning of period   475,018     447,152  
Cash and cash equivalents, end of period $ 564,578   $ 493,085  
 
Supplemental cash flow information
Cash paid for interest $ 68,431   $ 30,361  
 
Cash paid for income taxes $ 188,157   $ 64,345  
 

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. See Exhibit 6 for a reconciliation to previously issued results.

 
 
Exhibit 1
RECONCILIATION OF NON-GAAP MEASURES
(In thousands, except per share amounts)
(Unaudited)
                   
The following table reconciles revenues, net to adjusted revenues:
         
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
 
Revenues, net $ 541,237 $ 417,905 $ 1,061,670 $ 832,167
Merchant commissions   30,619     22,308     55,003     50,541  
Total adjusted revenues $ 510,618   $ 395,597   $ 1,006,667   $ 781,626  
 
                   
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,
2017

20161

2017

20161

Net income $ 130,987 $ 116,253 $ 254,680 $ 227,343
 
Stock based compensation 21,150 17,434 44,243 32,620
Amortization of intangible assets 52,240 38,752 104,894 66,114
Amortization of premium on receivables 1,544 1,349 3,088 2,339
Amortization of deferred financing costs and discounts 1,886 1,829 3,800 3,651
Amortization of intangibles at equity method investment 2,917 2,824 5,376 5,127
Non recurring net gain at equity method investment - (10,845 ) - (10,845 )
       
Total pre-tax adjustments 79,737 51,343 161,401 99,006
 
Income tax impact of pre-tax adjustments at the effective tax rate2 (23,675 ) (17,635 ) (44,055 ) (30,699 )
       
Adjusted net income $ 187,049   $ 149,960   $ 372,026   $ 295,650  
Adjusted net income per diluted share $ 1.99 $ 1.57 $ 3.94 $ 3.11
 
Diluted shares 94,223 95,279 94,392 95,137
 
* Columns may not calculate due to impact of rounding.
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. See Exhibit 6 for a reconciliation to previously issued results.
2 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 or are expected to reverse in 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
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 Change % Change 2017 2016 Change % Change
 

NORTH AMERICA

- Transactions 430.7 411.6 19.1 5 % 904.7 846.1 58.6 7 %
- Revenues, net per transaction $ 0.80 $ 0.73 $ 0.06 9 % $ 0.74 $ 0.71 $ 0.03 4 %
- Revenues, net $ 343.0 $ 301.1 $ 41.9 14 % $ 672.9 $ 604.7 $ 68.3 11 %
 

INTERNATIONAL

- Transactions 271.3 53.4 217.9 408 % 542.2 106.0 436.3 412 %
- Revenues, net per transaction $ 0.73 $ 2.19 $ (1.46 ) (67 %) $ 0.72 $ 2.15 $ (1.43 ) (67 %)
- Revenues, net $ 198.2 $ 116.8 $ 81.5 70 % $ 388.7 $ 227.5 $ 161.2 71 %
                                     
 

FLEETCOR CONSOLIDATED REVENUES

- Transactions 702.0 465.0 237.0 51 % 1,446.9 952.0 494.9 52 %
- Revenues, net per transaction $ 0.77 $ 0.90 $ (0.13 ) (14 %) $ 0.73 $ 0.87 $ (0.14 ) (16 %)
- Revenues, net $ 541.2 $ 417.9 $ 123.3 30 % $ 1,061.7 $ 832.2 $ 229.5 28 %
                                     
 
                                     
The following table presents revenue and revenue per transaction, by product category.*
As Reported Pro Forma and Macro Adjusted2
Three Months Ended June 30, Three Months Ended June 30,
2017 2016 Change % Change 2017 2016 Change % Change
 

FUEL CARDS

- Transactions 117.3 108.1 9.1 8 % 117.3 111.3 5.9 5 %
- Revenues, net per transaction $ 2.37 $ 2.23 $ 0.15 7 % $ 2.24 $ 2.18 $ 0.06 3 %
- Revenues, net $ 278.2 $ 240.7 $ 37.5 16 % $ 263.0 $ 242.9 $ 20.0 8 %
 

CORPORATE PAYMENTS

- Transactions 10.4 9.9 0.5 5 % 10.4 9.9 0.5 5 %
- Revenues, net per transaction $ 4.85 $ 4.54 $ 0.31 7 % $ 4.84 $ 4.54 $ 0.30 7 %
- Revenues, net $ 50.2 $ 44.8 $ 5.4 12 % $ 50.1 $ 44.8 $ 5.3 12 %
 

TOLLS

- Transactions 222.5 9.6 212.9 2211 % 222.5 223.6 (1.0 ) (0 %)
- Revenues, net per transaction $ 0.34 $ 0.25 $ 0.09 37 % $ 0.31 $ 0.27 $ 0.04 14 %
- Revenues, net $ 76.0 $ 2.4 $ 73.6 3063 % $ 69.6 $ 61.3 $ 8.3 13 %
 

LODGING

- Transactions 3.4 3.3 0.1 2 % 3.4 3.3 0.1 2 %
- Revenues, net per transaction $ 8.57 $ 7.50 $ 1.06 14 % $ 8.57 $ 7.50 $ 1.06 14 %
- Revenues, net $ 29.0 $ 24.9 $ 4.1 16 % $ 29.0 $ 24.9 $ 4.1 16 %
 

GIFT

- Transactions 328.3 312.8 15.5 5 % 328.3 312.8 15.5 5 %
- Revenues, net per transaction $ 0.13 $ 0.12 $ 0.01 5 % $ 0.13 $ 0.12 $ 0.01 5 %
- Revenues, net $ 41.3 $ 37.4 $ 3.9 11 % $ 41.3 $ 37.4 $ 3.9 11 %
 

OTHER1

- Transactions 20.1 21.3 (1.1 ) (5 %) 20.1 21.3 (1.1 ) (5 %)
- Revenues, net per transaction $ 3.31 $ 3.18 $ 0.12 4 % $ 3.34 $ 3.18 $ 0.16 5 %
- Revenues, net $ 66.6 $ 67.7 $ (1.1 ) (2 %) $ 67.3 $ 67.7 $ (0.4 ) (1 %)
                                     
 

FLEETCOR CONSOLIDATED REVENUES

- Transactions 702.0 465.0 237.0 51 % 702.0 682.2 19.9 3 %
- Revenues, net per transaction $ 0.77 $ 0.90 $ (0.13 ) (14 %) $ 0.74 $ 0.70 $ 0.04 6 %
  - Revenues, net     $ 541.2   $ 417.9   $ 123.3     30 %   $ 520.2   $ 479.1   $ 41.1     9 %
 
* Columns may not calculate due to impact of rounding.
1 Other includes telematics, maintenance, food, and transportation related businesses.
2 See Exhibit 5 for a reconciliation of pro forma and macro adjusted revenue by product, non-GAAP measures, to the GAAP equivalent.
 
 
Exhibit 3
Revenues by Geography, Product and Source
(In millions)
(Unaudited)
                                       

Revenue by Geography*

    Three Months Ended June 30,     Six Months Ended June 30,
  2017   %   2016   % 2017   %   2016   %
 
US $ 343 63 % $ 301 72 % $ 673 63 % $ 605 73 %
UK 58 11 % 61 14 % 112 11 % 119 14 %

Brazil

93 17 % 19 4 % 186 18 % 35 4 %
Other   47 9 %   38 9 %   90 8 %   73 9 %
 
Consolidated Revenues, net $ 541 100 % $ 418 100 % $ 1,062 100 % $ 832 100 %
* Columns may not calculate due to impact of rounding.
 

Revenue by Product Category*

Three Months Ended June 30, Six Months Ended June 30,8
2017 % 2016 % 2017 % 2016 %
 
Fuel Cards $ 278 51 % $ 241 58 % $ 539 51 % $ 483 58 %
Corporate Payments 50 9 % 45 11 % 97 9 % 86 10 %
Tolls 76 14 % 2 1 % 153 14 % 5 1 %
Lodging 29 5 % 25 6 % 53 5 % 46 5 %
Gift 41 8 % 37 9 % 90 8 % 80 10 %
Other   67 12 %   68 16 %   131 12 %   133 16 %
 
Consolidated Revenues, net $ 541 100 % $ 418 100 % $ 1,062 100 % $ 832 100 %
* Columns may not calculate due to impact of rounding.
 
 

Major Sources of Revenue*

Three Months Ended June 30, Six Months Ended June 30,8
2017 % 2016 % 2017 % 2016 %
Customer
Processing and Program Revenue1 $ 248 46 % $ 173 42 % $ 493 46 % $ 345 41 %
Late Fees and Finance Charges2 34 6 % 27 6 % 71 7 % 55 7 %
Miscellaneous Fees3   33 6 %   31 7 %   65 6 %   59 7 %
  314 58 %   231 55 %   629 59 %   459 55 %
Merchant
Discount Revenue (Fuel)4 74 14 % 66 16 % 146 14 % 126 15 %
Discount Revenue (NonFuel)5 44 8 % 39 9 % 85 8 % 76 9 %
Tied to Fuel-Price Spreads6 62 12 % 41 10 % 112 11 % 93 11 %
Program Revenue7   47 9 %   40 10 %   91 9 %   78 9 %
227 42 % 187 45 % 433 41 % 373 45 %
               
Consolidated Revenues, net $ 541 100 % $ 418 100 % $ 1,062 100 % $ 832 100 %
 
1 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.
2 Fees for late payment and interest charges for carrying a balance charged to a customer.
3 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.
4 Interchange revenue directly influenced by the absolute price of fuel and other interchange related to fuel products.
5 Interchange revenue related to nonfuel products.
6 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.
7 Revenue derived primarily from the sale of equipment, software and related maintenance to merchants.
8Amounts shown for the six months ended June 30, 2017 and 2016 reflect immaterial corrections in estimated allocation of revenue by product and sources of revenue from previously disclosed amounts for the prior period.
* 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 impact of rounding. This table reflects how management views the sources of revenue and may not be consistent with prior disclosure.
 
 
Exhibit 4
Segment Results
(In thousands)
(Unaudited)
                 
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Revenues, net:
North America $ 342,995 $ 301,126 $ 672,943 $ 604,674
International   198,242   116,779   388,727   227,493
$ 541,237 $ 417,905 $ 1,061,670 $ 832,167
 
Operating income:
North America $ 134,926 $ 117,611 $ 255,898 $ 231,461
International   81,117   53,557   155,213   115,662
$ 216,043 $ 171,168 $ 411,111 $ 347,123
 
Depreciation and amortization:
North America $ 33,384 $ 32,180 $ 66,561 $ 63,612
International   31,325   16,256   63,014   21,152
$ 64,709 $ 48,436 $ 129,575 $ 84,764
 
Capital expenditures:
North America $ 12,102 $ 8,579 $ 21,734 $ 16,521
International   5,702   4,439   10,866   8,236
$ 17,804 $ 13,018 $ 32,600 $ 24,757
 
 
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,
2017   2016 2017   2016
 

FUEL CARDS

Pro forma and macro adjusted2,3 $ 263.0 $ 242.9 117.3 111.3
Impact of acquisitions/dispositions - (2.3 ) - (3.2 )
Impact of fuel prices/spread 19.5 - - -
Impact of foreign exchange rates   (4.3 )   -   - -  
As reported $ 278.2   $ 240.7   117.3 108.1  
 

CORPORATE PAYMENTS

Pro forma and macro adjusted2,3 $ 50.1 $ 44.8 10.4 9.9
Impact of acquisitions/dispositions - - - -
Impact of fuel prices/spread 0.1 - - -
Impact of foreign exchange rates   -     -   - -  
As reported $ 50.2   $ 44.8   10.4 9.9  
 

TOLLS

Pro forma and macro adjusted2,3 $ 69.6 $ 61.3 222.5 223.6
Impact of acquisitions/dispositions - (58.9 ) - (213.9 )
Impact of fuel prices/spread - - - -
Impact of foreign exchange rates   6.4     -   - -  
As reported $ 76.0   $ 2.4   222.5 9.6  
 

LODGING

Pro forma and macro adjusted2,3 $ 29.0 $ 24.9 3.4 3.3
Impact of acquisitions/dispositions - - - -
Impact of fuel prices/spread - - - -
Impact of foreign exchange rates   -     -   - -  
As reported $ 29.0   $ 24.9   3.4 3.3  
 

GIFT

Pro forma and macro adjusted2,3 $ 41.3 $ 37.4 328.3 312.8
Impact of acquisitions/dispositions - - - -
Impact of fuel prices/spread - - - -
Impact of foreign exchange rates   -     -   - -  
As reported $ 41.3   $ 37.4   328.3 312.8  
 

OTHER1

Pro forma and macro adjusted2,3 $ 67.3 $ 67.7 20.1 21.3
Impact of acquisitions/dispositions - - - -
Impact of fuel prices/spread - - - -
Impact of foreign exchange rates   (0.7 )   -   - -  
As reported $ 66.6   $ 67.7   20.1 21.3  
                     
 

FLEETCOR CONSOLIDATED REVENUES

Pro forma and macro adjusted2,3 $ 520.2 $ 479.1 702.0 682.2
Impact of acquisitions/dispositions - (61.2 ) - (217.1 )
Impact of fuel prices/spread 19.7 - - -
Impact of foreign exchange rates   1.4     -   - -  
As reported $ 541.2   $ 417.9   702.0 465.0  
 
* Columns may not calculate due to impact of rounding.
1 Other includes telematics, maintenance, food, and transportation related businesses.
2 2016 is pro forma to include acquisitions and exclude dispositions, consistent with 2017 ownership.

3 2017 is adjusted to remove the impact of changes in the macroeconomic environment to be consistent with the same period of prior year, using constant fuel prices, fuel price spreads and foreign exchange rates.

 
 
Exhibit 6
Reconciliation of the Impact of the Company's Adoption of Accounting Standards Update 2016-09
(In thousands, except per share amounts)
(Unaudited)
                         

The following table reconciles the impact of retrospectively applying ASU 2016-09 to the previously issued consolidated statements of
income for the three and six month periods ended June 30, 2016:*

           
Three Months Ended June 30, 2016 Six Months Ended June 30, 2016

As Previously
Reported

Adjustments As Recast1

As Previously
Reported

Adjustments As Recast1
Income before income taxes $ 162,348 $ - $ 162,348 $ 319,260 $ - $ 319,260
Provision for income taxes   48,163     (2,068 )   46,095     95,103     (3,186 )   91,917  
Net income $ 114,185 $ 2,068 $ 116,253 $ 224,157 $ 3,186 $ 227,343
Earnings per share:

Basic earnings per share

$ 1.23 $ 0.02 $ 1.25 $ 2.42 $ 0.04 $ 2.46
Diluted earnings per share $ 1.21 $ 0.01 $ 1.22 $ 2.37 $ 0.02 $ 2.39
 
Weighted average common shares outstanding:
Basic 92,665 - 92,665 92,591 - 92,591
Diluted 94,549 729 95,279 94,437 700 95,137
                         

The following table reconciles the impact of retrospectively applying ASU 2016-09 to the previously disclosed calculation of adjusted net income and
adjusted net income per diluted share for the three and six month periods ended June 30, 2016:*

 
Three Months Ended June 30, 2016 Six Months Ended June 30, 2016

As Previously
Reported

Adjustments As Recast1

As Previously
Reported

Adjustments As Recast1
Adjusted net income and adjusted net income per diluted share:
Net Income $ 114,185 $ 2,068 $ 116,253 $ 224,157 $ 3,186 $ 227,343
 
Total pre-tax adjustments 51,343 - 51,343 99,006 - 99,006
 
Income tax impact of pre-tax adjustments at the effective tax rate2 (18,427 ) 791 (17,635 ) (31,809 ) 1,110 (30,699 )
       
Adjusted net income $ 147,101   $ 2,859   $ 149,960   $ 291,354   $ 4,296   $ 295,650  
Adjusted net income per diluted share $ 1.56 $ 0.01 $ 1.57 $ 3.09 $ 0.02 $ 3.11
 
Diluted shares 94,549 729 95,279 94,437 700 95,137
                         

The following table reconciles the impact of retrospectively applying ASU 2016-09 to the consolidated statement of cash flows for the six months ended June 30, 2016:*

 
Six Months Ended June 30, 2016

As Previously
Reported

Adjustments As Recast1
 
Net cash provided by operating activities $ 208,856 $ 3,186 $ 212,042
Net cash used in investing activities (37,924 ) - (37,924 )
Net cash used in financing activities (118,303 ) (3,186 ) (121,489 )
Effect of foreign currency exchange rates on cash (6,696 ) - (6,696 )
     

Net increase in cash

$ 45,933   $ -   $ 45,933  
 
* Columns may not calculate due to impact of rounding.
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.
2 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 or are expected to reverse in 2017.
 
 
Exhibit 7
RECONCILIATION OF NON-GAAP GUIDANCE MEASURES
(In millions, except per share amounts)
(Unaudited)
         
The following table reconciles 2017 financial guidance for net income to adjusted net income and adjusted net income per diluted share, at both ends of the range:
  2017 GUIDANCE
Low*   High*
Net income $ 545 $ 565
Net income per diluted share $ 5.80 $ 6.00
 
Stock based compensation 84 84
Amortization of intangible assets, premium on receivables, deferred financing costs and discounts 229 229
Amortization of intangibles at equity method investment 11 11
   
Total pre-tax adjustments 324 324
 
Income tax impact of pre-tax adjustments at the effective tax rate** (95 ) (95 )
   
Adjusted net income $ 775   $ 795  
Adjusted net income per diluted share $ 8.24 $ 8.44
 
Diluted shares 94 94
* 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 are expected to reverse during 2017.

 
 

Contacts

FLEETCOR Technologies, Inc.
Investor Relations
770-729-2017
investor@fleetcor.com

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