FLEETCOR Technologies, Inc. (NYSE:FLT), a leading global
provider of commercial payment solutions, today reported financial
results for its third quarter of 2018.
“Our third quarter revenues and profits once again finished
above our expectations, with adjusted net income per diluted share
growth of 23%. We delivered another solid organic revenue growth
quarter of 11% overall, driven primarily by strong double digit
growth rates in our Corporate Payments, Tolls, and Lodging
categories,” said Ron Clarke, chairman and chief executive officer,
FLEETCOR Technologies, Inc. “Also we continue to advance our beyond
tolls strategy in Brazil by recently signing Estapar, the largest
parking facility operator in Brazil, and McDonald’s to provide
acceptance at their drive-thru’s. We believe both of these
agreements will be supportive of our growth in 2019 and
beyond.”
Financial Results for Third Quarter of 2018:
GAAP Results
- Total revenues, including the impact of
the new revenue recognition standard ASC 606, increased 7% to
$619.6 million in the third quarter of 2018, compared to $577.9
million in the third quarter of 2017.
- Net income decreased 22% to $157.7
million in the third quarter of 2018, compared to $202.8 million in
the third quarter of 2017. Included in the third quarter of 2017
was a net benefit of approximately $65 million from the sale of the
Nextraq business, partially offset by changes in our investment
arrangement in Masternaut that caused a change in our accounting
for the investment from the equity method to cost method.
- Net income per diluted share decreased
21% to $1.71 in the third quarter of 2018, compared to $2.18 per
diluted share in the third quarter of 2017, due to the reason
discussed above.
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 September
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 September 30, 2018, the adoption of ASC 606 reduced
revenue by $28.0 million and increased operating income by $1.3
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 September 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 $619.6 $28.0 $647.5
Operating
Expense $338.5 $29.3 $367.8
Operating Income
$281.1 ($1.3) $279.8
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
$647.5 million in the third quarter of 2018, compared to $577.9
million in the third quarter of 2017.
- Adjusted net income1 increased 22% to
$246.6 million in the third quarter of 2018, compared to $202.8
million in the third quarter of 2017.
- Adjusted net income per diluted share1
increased 23% to $2.68 in the third quarter of 2018, compared to
$2.18 per diluted share in the third quarter of 2017.
Fiscal-Year 2018 Outlook:
“We are raising our full year 2018 guidance to reflect our third
quarter results compared to our prior guidance. In the quarter we
successfully offset approximately $20 million of unfavorable macro
through solid execution across our businesses,” said Eric Dey,
chief financial officer, FLEETCOR Technologies, Inc. “We expect the
macro in the fourth quarter to be similar to the third quarter and
expect to again offset this negative impact, through revenue over
achievement in our businesses and expense control.”
For fiscal 2018, FLEETCOR Technologies, Inc. updated financial
guidance is as follows:
- Total revenues including the adoption
of ASC 606 to be between $2,390 million and $2,420 million;
- Net income to be between $695 million
and $705 million;
- Net income per diluted share to be
between $7.50 and $7.60;
- Revenues excluding the impact of ASC
606 to be between $2,495 million and $2,525 million;
- Adjusted net income to be between $960
million and $970 million; and
- Adjusted net income per diluted share
to be between $10.40 and $10.50.
FLEETCOR’s guidance assumptions for the remainder of 2018 are as
follows:
- Weighted fuel prices equal to $2.95 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 October 7, 2018;
- Interest expense of $140 million;
- Fully diluted shares outstanding of
approximately 93 million shares;
- An adjusted 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 third 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 13684086. The replay will be available until
Tuesday, November 6, 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 growth opportunities and strategies, and
estimated impact of these conditions on our operations and
financial results, 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: 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 reports on Form
10-Q for the three months ended March 31, 2018 and June 30, 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, impairment charges, restructuring
costs, gains due to disposition of business, loss on extinguishment
of debt, 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 September 30, Nine
Months Ended September 30,
20181
2017
20181
2017
Revenues, net $ 619,586 $ 577,877 $ 1,790,070 $ 1,639,547
Expenses: Merchant commissions - 27,687 - 82,690 Processing
128,400 111,283 356,086 316,429 Selling 44,806 45,060 135,926
122,854 General and administrative 98,023 92,054 284,718 275,095
Depreciation and amortization 67,267 69,156
207,379 198,731 Operating income
281,090 232,637 805,961
643,748 Investment loss 7,147 47,766 7,147 52,497
Other expense (income), net 303 (175,271 ) 465 (173,626 ) Interest
expense, net 36,072 29,344 100,287 76,322 Loss on extinguishment of
debt - 3,296 -
3,296 Total other expense (income) 43,522
(94,865 ) 107,899 (41,511 ) Income
before income taxes 237,568 327,502 698,062 685,259 Provision for
income taxes 79,874 124,679
188,579 227,756 Net income $ 157,694 $
202,823 $ 509,483 $ 457,503 Basic
earnings per share $ 1.78 $ 2.23 $ 5.72 $ 4.99 Diluted earnings per
share $ 1.71 $ 2.18 $ 5.50 $ 4.87 Weighted average shares
outstanding: Basic shares 88,456 90,751 89,126 91,619 Diluted
shares 92,081 93,001 92,671 93,923 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)
September 30, 20181 December 31, 2017
(Unaudited) Assets Current assets: Cash and
cash equivalents $ 924,442 $ 913,595 Restricted cash 264,108
217,275
Accounts and other receivables (less
allowance for doubtful accounts of $55,022 atSeptember 30, 2018 and
$46,031 at December 31, 2017, respectively)
1,811,339 1,420,011 Securitized accounts receivable - restricted
for securitization investors 931,000 811,000 Prepaid expenses and
other current assets 202,102 187,820
Total current assets 4,132,991
3,549,701 Property and equipment, net 184,979 180,057
Goodwill 4,517,348 4,715,823 Other intangibles, net 2,438,627
2,724,957 Investments 33,032 32,859 Other assets 143,913
114,962 Total assets $ 11,450,890
$ 11,318,359
Liabilities and Stockholders’
Equity Current liabilities: Accounts payable $ 1,616,949
$ 1,437,314 Accrued expenses 252,069 238,472 Customer deposits
825,371 732,171 Securitization facility 931,000 811,000 Current
portion of notes payable and lines of credit 768,548 805,512 Other
current liabilities 90,531 71,033
Total current liabilities 4,484,468
4,095,502 Notes payable and other obligations, less
current portion 2,773,378 2,902,104 Deferred income taxes 506,310
518,912 Other noncurrent liabilities 124,486
125,319 Total noncurrent liabilities 3,404,174
3,546,335 Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value;
475,000,000 shares authorized; 122,823,669 sharesissued and
88,648,486 shares outstanding at September 30, 2018; and
122,083,059shares issued and 89,803,982 shares outstanding at
December 31, 2017
123 122 Additional paid-in capital 2,316,753 2,214,224 Retained
earnings 3,515,657 2,958,921 Accumulated other comprehensive loss
(944,746 ) (551,857 )
Less treasury stock, 34,175,183 shares at
September 30, 2018 and 32,279,077 shares atDecember 31, 2017
(1,325,539 ) (944,888 ) Total stockholders’ equity
3,562,248 3,676,522 Total
liabilities and stockholders’ equity $ 11,450,890 $
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) Nine Months Ended
September 30,
20181
20171
Operating activities Net income $ 509,483 $ 457,503
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 38,174 35,096 Stock-based
compensation 54,207 68,897 Provision for losses on accounts
receivable 43,520 35,949 Amortization of deferred financing costs
and discounts 4,035 5,411 Amortization of intangible assets 165,002
158,897 Amortization of premium on receivables 4,202 4,738
Loss on extinguishment of debt
- 3,296 Deferred income taxes (6,334 ) (38,092 ) Investment loss
7,147 52,497 Gain on sale - (174,984 ) Other non-cash operating
income (140 ) (49 ) Changes in operating assets and liabilities
(net of acquisitions): Accounts and other receivables (640,859 )
(440,011 ) Prepaid expenses and other current assets (19,618 )
(86,648 ) Other assets (19,922 ) (15,378 ) Accounts payable,
accrued expenses and customer deposits 416,483
364,473 Net cash provided by operating activities
555,380 431,595
Investing
activities Acquisitions, net of cash acquired (3,799 ) (602,298
) Purchases of property and equipment (56,312 ) (49,459 ) Proceeds
from disposal of a business - 316,501 Other (11,192 )
(6,327 ) Net cash used in investing activities (71,303 )
(341,583 )
Financing activities
Proceeds from issuance of common stock 48,322 20,192 Repurchase of
common stock (380,651 ) (402,392 ) Borrowings on securitization
facility, net 120,000 203,000 Deferred financing costs paid and
debt discount (166 ) (11,230 ) Proceeds from notes payable -
780,656 Principal payments on notes payable (103,500 ) (388,656 )
Borrowings from revolver 834,019 845,000 Payments on revolver
(897,861 ) (804,808 ) Borrowings on swing line of credit, net
23,735 7,800 Other (230 ) 537 Net cash (used
in) provided by financing activities (356,332 )
250,099 Effect of foreign currency exchange rates on
cash (70,065 ) 34,390 Net increase in
cash and cash equivalents and restricted cash 57,680 374,501 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 $ 1,188,550 $
1,018,271
Supplemental cash flow information
Cash paid for interest $ 113,785 $ 79,144 Cash
paid for income taxes $ 162,563 $ 257,349 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 September 30, Nine Months Ended
September 30, 2018 2017
2018 2017 Net
income $ 157,694 $ 202,823 $ 509,483 $ 457,503 Stock based
compensation 20,702 24,654 54,207 68,897 Amortization of intangible
assets, premium on receivables, deferred financing costs and
discounts 55,482 60,229 173,239 177,387 Impairment of investment
7,147 44,600 7,147 44,600 Net gain on disposition of business -
(109,205 ) - (109,205 ) Loss on extinguishment of debt - 3,296 -
3,296 Non recurring loss due to merger of entities - 2,028 - 2,028
Restructuring costs 481 - 3,917 - Unauthorized access impact
322 - 2,065 -
Total pre-tax adjustments 84,134 25,602 240,575 187,003
Income tax impact of pre-tax adjustments at the effective tax rate1
(17,977 ) (25,656 ) (54,904 ) (69,711 ) Impact of tax reform 22,731
- 22,731 - Adjusted net income $ 246,582
$ 202,769 $ 717,885 $ 574,795 Adjusted
net income per diluted share $ 2.68 $ 2.18 $ 7.75 $ 6.12
Diluted shares 92,081 93,001 92,671 93,923
1 Excludes the results of the Company's
investments on our effective tax rate, as results from our
investments are reported within the consolidated statements of
income on a post-tax basis and no tax-over-book outside basis
differences related to our investments reversed during 2017.
Excludes impact of tax reform adjustments during the period
included in our effective tax rate. Also excludes the net gain
realized upon our disposition of Nextraq, representing a pretax
gain of $175.0 million and tax on gain of $65.8 million. The tax on
the gain is included in "Net gain on disposition of business".
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 and
Pro Forma for Impact of As Reported Adoption of ASC
606 Three Months Ended September 30, Three Months
Ended September 30,
20181
2017
Change
% Change
20181
20171
Change
% Change
NORTH
AMERICA
- Transactions 380.8 398.4 (17.6 ) (4%)
380.8 398.4 (17.6 ) (4%) - Revenues, net per
transaction $ 1.08 $ 0.92 $ 0.16 17% $ 1.08 $ 0.86 $ 0.22 26% -
Revenues, net $ 412.8 $ 368.0 $ 44.8 12% $ 412.8 $ 343.9 $ 68.9 20%
INTERNATIONAL
- Transactions2 277.8 275.9 1.9 1% 277.8 275.9 1.9 1% - Revenues,
net per transaction $ 0.74 $ 0.76 $ (0.02 ) (2%) $ 0.74 $ 0.74 $
0.00 0% - Revenues, net $ 206.8 $ 209.9 $ (3.1 ) (1%) $ 206.8 $
205.0 $ 1.8 1%
FLEETCOR
CONSOLIDATED REVENUES
- Transactions 658.6 674.3 (15.7 ) (2%) 658.6 674.3 (15.7 ) (2%) -
Revenues, net per transaction $ 0.94 $ 0.86 $ 0.08 10% $ 0.94 $
0.81 $ 0.13 16% - Revenues, net $ 619.6
$ 577.9 $ 41.7 7%
$ 619.6 $
548.9 $ 70.7 13%
The following table presents revenue
and revenue per transaction, by product category.
As
Reported Pro Forma and Macro Adjusted4 Three
Months Ended September 30, Three Months Ended September
30,
20181
2017 Change % Change
20181
20171
Change % Change
FUEL5
- Transactions 122.9 119.3 3.6 3% 122.9 121.1 1.9 2% - Revenues,
net per transaction $ 2.25 $ 2.32 $ (0.07 ) (3%) $ 2.15 $ 2.07 $
0.08 4% - Revenues, net $ 276.0 $ 276.2 $ (0.3 ) (0%) $ 263.8 $
250.5 $ 13.3 5%
CORPORATE
PAYMENTS
- Transactions 13.1 10.9 2.2 20% 13.1 11.1 2.0 18% - Revenues, net
per transaction $ 8.05 $ 6.63 $ 1.42 21% $ 8.10 $ 7.52 $ 0.59 8% -
Revenues, net $ 105.5 $ 72.2 $ 33.3 46% $ 106.2 $ 83.2 $ 23.0 28%
TOLLS
- Transactions2 221.9 226.1 (4.2 ) (2%) 221.9 226.1 (4.2 ) (2%) -
Revenues, net per transaction $ 0.35 $ 0.37 $ (0.02 ) (4%) $ 0.44 $
0.37 $ 0.07 19% - Revenues, net $ 77.8 $ 82.9 $ (5.2 ) (6%) $ 97.0
$ 82.9 $ 14.1 17%
LODGING
- Transactions 4.5 4.1 0.4 11% 4.5 4.6 (0.1 ) (3%) - Revenues, net
per transaction $ 10.64 $ 8.14 $ 2.49 31% $ 10.64 $ 8.53 $ 2.10 25%
- Revenues, net $ 48.0 $ 33.2 $ 14.8 45% $ 48.0 $ 39.6 $ 8.4 21%
GIFT
- Transactions 277.6 294.1 (16.5 ) (6%) 277.6 294.1 (16.5 ) (6%) -
Revenues, net per transaction $ 0.20 $ 0.19 $ 0.02 10% $ 0.20 $
0.19 $ 0.02 10% - Revenues, net $ 56.7 $ 54.8 $ 1.9 4% $ 56.7 $
54.8 $ 1.9 4%
OTHER3,5
- Transactions 18.6 19.7 (1.2 ) (6%) 18.6 19.7 (1.1 ) (6%) -
Revenues, net per transaction $ 3.00 $ 2.97 $ 0.03 1% $ 3.13 $ 2.84
$ 0.29 10% - Revenues, net $ 55.7 $ 58.5 $ (2.9 ) (5%) $ 58.1 $
55.8 $ 2.3 4%
FLEETCOR
CONSOLIDATED REVENUES
- Transactions 658.6 674.3 (15.7 ) (2%) 658.6 676.7 (18.1 ) (3%) -
Revenues, net per transaction $ 0.94 $ 0.86 $ 0.08 10% $ 0.96 $
0.84 $ 0.12 14% - Revenues, net $ 619.6 $ 577.9 $ 41.7 7% $ 629.8 $
566.8 $ 63.0 11%
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 3 Revenues by Geography, Product and
Source (In millions) (Unaudited)
Revenue by
Geography*
Three Months Ended September 30, Nine Months Ended
September 30,
20181
% 2017 %
20181
%
2017
% US $ 391 63% $ 358 62% $ 1,082 60% $ 1,031 63%
Brazil 92 15% 101 17% 296 17% 287 17% UK 63 10% 61 11% 192 11% 174
11% Other 73 12% 58 10% 220 12% 148 9%
Consolidated Revenues, net $ 620 100% $ 578 100% $ 1,790
100% $ 1,640 100% * Columns may not calculate due to
rounding.
Revenue by
Product Category*
Three Months Ended September 30, Nine Months Ended
September 30,
20181
% 2017 %
20181
% 2017 % Fuel $ 276 45% $ 276 48% $ 805
45% $ 815 50% Corporate Payments 105 17% 72 12% 300 17% 150 9%
Tolls 78 13% 83 14% 250 14% 236 14% Lodging 48 8% 33 6% 132 7% 86
5% Gift 57 9% 55 9% 139 8% 144 9% Other 56 9% 59 10%
164 9% 209 13% Consolidated Revenues, net $
620 100% $ 578 100% $ 1,790 100% $ 1,640 100% * Columns may
not calculate due to rounding.
Major Sources of
Revenue*
Three Months Ended September 30, Nine Months Ended
September 30,
20181
% 2017 %
20181
% 2017 % Processing and Program
Revenue2 $ 322 52% $ 288 50% $ 932 52% $ 781 48% Late Fees and
Finance Charges3 38 6% 34 6% 109 6% 105 6% Miscellaneous Fees4 39
6% 32 5% 113 6% 97 6% Discount Revenue (Fuel)5 87 14% 77 13% 257
14% 223 14% Discount Revenue (NonFuel)6 51 8% 45 8% 139 8% 130 8%
Tied to Fuel-Price Spreads7 31 5% 53 9% 86 5% 165 10% Merchant
Program Revenue8 53 9% 49 8% 154 9% 139
8% Consolidated Revenues, net $ 620 100% $ 578 100% $ 1,790
100% $ 1,640 100% 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.
5 Interchange 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 September 30, Nine
Months Ended September 30,
20181
20172 20181 20172
Revenues, net: North America $ 412,816 $ 368,006 $ 1,148,034 $
1,040,949 International 206,770 209,871
642,036 598,598 $ 619,586 $ 577,877 $ 1,790,070 $ 1,639,547
Operating income: North America $ 177,769 $ 138,480 $
495,095 $ 394,378 International 103,321 94,157
310,866 249,370 $ 281,090 $ 232,637 $ 805,961 $ 643,748
Depreciation and amortization: North America $ 39,049 $
38,399 $ 116,041 $ 104,960 International 28,218
30,757 91,338 93,771 $ 67,267 $ 69,156 $ 207,379 $
198,731 Capital expenditures: North America $ 12,604 $ 9,167
$ 32,700 $ 30,901 International 9,094 7,692
23,612 18,558 $ 21,698 $ 16,859 $ 56,312 $ 49,459 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 The results from our Cambridge business
acquired in the third quarter of 2017 are reported in our North
America segment. As we have concluded that this business is part of
our North America segment, the results for this business have been
recast into our North America segment for the three and nine month
periods ended September 30, 2017.
Exhibit 5 Reconciliation of Non-GAAP
Revenue and Transactions by Product to GAAP (In
millions) (Unaudited)
Revenue Transactions Three Months Ended September
30, Three Months Ended September 30, 2018*
2017* 2018* 2017*
FUEL
Pro forma and macro adjusted $ 263.8 $ 250.5 122.9 121.1 Impact of
acquisitions/dispositions - (2.3 ) - (1.8 ) Impact of fuel
prices/spread 16.8 - - - Impact of foreign exchange rates (4.6 ) -
- - Impact of adoption of ASC 606 - 28.0
- - As reported $ 276.0 $ 276.2
122.9 119.3
CORPORATE
PAYMENTS
Pro forma and macro adjusted $ 106.2 $ 83.2 13.1 11.1 Impact of
acquisitions/dispositions - (11.5 ) - (0.2 ) Impact of fuel
prices/spread 0.2 - - - Impact of foreign exchange rates (0.9 ) - -
- Impact of adoption of ASC 606 - 0.5 -
- As reported $ 105.5 $ 72.2 13.1
10.9
TOLLS
Pro forma and macro adjusted $ 97.0 $ 82.9 221.9 226.1 Impact of
acquisitions/dispositions - - - - Impact of fuel prices/spread - -
- - Impact of foreign exchange rates (19.2 ) - - - Impact of
adoption of ASC 606 - - - -
As reported $ 77.8 $ 82.9 221.9 226.1
LODGING
Pro forma and macro adjusted $ 48.0 $ 39.6 4.5 4.6 Impact of
acquisitions/dispositions - (6.4 ) - (0.5 ) Impact of fuel
prices/spread - - - - Impact of foreign exchange rates - - - -
Impact of adoption of ASC 606 - - -
- As reported $ 48.0 $ 33.2 4.5
4.1
GIFT
Pro forma and macro adjusted $ 56.7 $ 54.8 277.6 294.1 Impact of
acquisitions/dispositions - - - - Impact of fuel prices/spread - -
- - Impact of foreign exchange rates - - - - Impact of adoption of
ASC 606 - - - - As
reported $ 56.7 $ 54.8 277.6 294.1
OTHER1
Pro forma and macro adjusted $ 58.1 $ 55.8 18.6 19.7 Impact of
acquisitions/dispositions - 2.2 - 0.1 Impact of fuel prices/spread
- - - - Impact of foreign exchange rates (2.4 ) - - - Impact of
adoption of ASC 606 - 0.5 - - As
reported $ 55.7 $ 58.5 18.6 19.7
FLEETCOR
CONSOLIDATED REVENUES
Pro forma and macro adjusted $ 629.8 $ 566.8 658.6 676.7 Impact of
acquisitions/dispositions - (18.0 ) - (2.4 ) Impact of fuel
prices/spread 17.0 - - - Impact of foreign exchange rates (27.2 ) -
- - Impact of adoption of ASC 606 - 29.0
- - As reported $ 619.6 $ 577.9
658.6 674.3 * 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 toadjusted net income and
adjusted net income per diluted share, at both ends of the
range:
2018 GUIDANCE Low* High*
Revenues, net $ 2,390 $ 2,420 Impact of adoption of ASC 606
105 105 Revenues, net prior to adoption of ASC
606 $ 2,495 $ 2,525 Net income $ 695 $ 705 Net
income per diluted share $ 7.50 $ 7.60 Stock based
compensation 74 74 Amortization of intangible assets, premium on
receivables, deferred financing costs and discounts 228 228
Impairment of investment 7 7 Restructuring costs 4 4 Unauthorized
access impact 2 2 Total pre-tax
adjustments 315 315 Income tax impact of pre-tax adjustments
at the effective tax rate (72 ) (72 ) Impact of tax reform
23 23 Adjusted net income $ 960 $ 970
Adjusted net income per diluted share $ 10.40 $ 10.50
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
September 30, 2018 As Reported1 Impact of ASC
606
2018 Prior to Adoption
Revenues, net $ 619,586 $ 27,958 $ 647,544 Expenses:
Merchant commissions - 30,909 30,909 Processing 128,400 (2,498 )
125,902 Selling 44,806 875 45,681 General and administrative 98,023
- 98,023 Depreciation and amortization 67,267 - 67,267
Operating income 281,090 (1,328 ) 279,762 Total other
expense 43,522 - 43,522 Income before
income taxes 237,568 (1,328 ) 236,240 Provision for income taxes
79,874 (498 ) 79,376 Net income $ 157,694 $
(830 ) $ 156,864 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/20181030006079/en/
FLEETCOR Technologies, Inc.Investor RelationsJim Eglseder,
770-417-4697Jim.Eglseder@fleetcor.com
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