FLTX Fleetmatics Grp. Plc Ordinary Shares

- Company Reaffirms Outlook for 2016 -

• Q1 Revenue of $78.9 million, up 21% year-over-year
• Q1 GAAP EPS of $0.14; Non-GAAP1 adjusted EPS of $0.35
• Q1 Adjusted EBITDA1 of $24.3 million, or 30.8% of total revenue
• Q1 Cash flow from operations of $23.5 million
• Q1 Free cash flow of $13.7 million, or 17.4% of total revenue
• Active vehicles under subscription increases to 737,000

Fleetmatics Group PLC (NYSE: FLTX), a leading global provider of mobile workforce solutions for service-based businesses of all sizes delivered as software-as-a-service (SaaS), today announced financial results for its first quarter ended March 31, 2016.

“We’re pleased to report strong first quarter results which were highlighted by solid revenue and subscriber growth and improved free cash flow margins,” said Jim Travers, Chairman and Chief Executive Officer of Fleetmatics. “Our results continue to reflect our expanding leadership position in North America, our growing presence in international markets and our ability to deliver innovative applications that meet the needs of our rapidly growing customer base. Looking ahead, we remain well positioned to execute on our strategic growth plans.”

Results for the First Quarter of 2016

Total revenue for the first quarter of 2016 was $78.9 million, an increase of 21% compared to $65.5 million for the first quarter of 2015. GAAP net income for the first quarter of 2016 was $5.6 million, or $0.14 per diluted share, compared to $11.8 million, or $0.30 per diluted share, for the first quarter of 2015. Non-GAAP1 adjusted earnings for the first quarter of 2016 was $13.9 million, or $0.35 per diluted share, compared to $12.7 million, or $0.33 per diluted share, for the first quarter of 2015. Adjusted EBITDA1 for the first quarter of 2016 was $24.3 million, an increase of 15% compared to $21.2 million for the first quarter of 2015. Adjusted EBITDA1 margin for the first quarter of 2016 was 30.8% compared to 32.4% for the first quarter of 2015. As of March 31, 2016, the Company had cash of $186.2 million compared to $177.1 million at December 31, 2015. During the first quarter of 2016, the Company generated $23.5 million in net cash from operations and invested $9.8 million in purchases of property and equipment and capitalization of internally developed software, resulting in free cash flow of $13.7 million. During the first quarter of 2015, the Company generated $17.3 million in net cash from operations and invested $10.1 million in purchases of property and equipment and capitalization of internally developed software, resulting in free cash flow of $7.2 million.

Company Issues Second Quarter Guidance and Reaffirms Full Year 2016 Outlook

The Company today issued guidance for the second quarter of 2016 and reaffirmed its full year 2016 outlook. The Company’s guidance is based on the current indications for its business, which may change at any time.

• Second Quarter 2016 Guidance: The Company expects total revenue to be in the range of $82.5 million to $84.0 million. Adjusted EBITDA1 is expected to be in the range of $26.0 million to $27.0 million. Non-GAAP1 adjusted earnings per share is expected to be in the range of $0.39 to $0.41 based on approximately 39.8 million weighted average diluted shares outstanding.
• Full Year 2016 Guidance: The Company expects total revenue to be in the range of $342.0 million to $346.0 million. Adjusted EBITDA1 is expected to be in the range of $113.0 million to $117.0 million. Non-GAAP1 adjusted earnings per share is expected to be in the range of $1.72 to $1.80 based on approximately 40.5 million weighted average diluted shares outstanding.

Company to Host Live Conference Call and Webcast

The Company’s management team plans to host a live conference call and webcast at 5:00 p.m. Eastern Time today to discuss the financial results as well as management’s outlook for the business and other matters. The conference call may be accessed in the United States by dialing 1.800.230.1059 and using access code “FLTX”. The conference call may be accessed outside of the United States by dialing +1.612.288.0337 and using access code “FLTX”. The conference call will be simultaneously webcast on the Company’s investor relations website, which can be accessed at http://ir.fleetmatics.com. A replay of the conference call will be available approximately two hours after the call by dialing 1.800.475.6701 or +1.320.365.3844 and using access code 390358 or by accessing the webcast replay on the Company’s investor relations website. The Company has used, and intends to continue to use, the investor relations portion of its website as a means of disclosing material non-public information and for complying with disclosure obligations under Regulation FD.

About Fleetmatics Group PLCFleetmatics Group PLC is a leading global provider of mobile workforce solutions for service-based businesses of all sizes delivered as software-as-a-service (SaaS). Our solutions enable businesses to meet the challenges associated with managing local fleets, and improve the productivity of their mobile workforces, by extracting actionable business intelligence from real-time and historical vehicle and driver behavioral data. Fleetmatics Group's intuitive, cost-effective Web-based solutions provide fleet operators with visibility into vehicle location, fuel usage, speed and mileage, and other insights into their mobile workforce, enabling them to reduce operating and capital costs, as well as increase revenue. An integrated, full-featured mobile workforce management product provides additional efficiencies related to job management by empowering the field worker and speeding the job completion process – quote through payment. As of March 31, 2016, Fleetmatics served approximately 37,000 customers and approximately 737,000 subscribed vehicles worldwide. To learn more about Fleetmatics, visit www.fleetmatics.com.

1Non-GAAP Financial MeasuresIn this release, Fleetmatics’ non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP adjusted earnings, non-GAAP diluted adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margin are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of results of operations. Non-GAAP gross profit and non-GAAP gross margin exclude share-based compensation and amortization of intangible assets. Non-GAAP operating income excludes share-based compensation; amortization of intangible assets; certain non-recurring litigation and settlement costs; certain acquisition-related transaction costs; and contingent consideration expense. Non-GAAP adjusted earnings and non-GAAP diluted adjusted earnings per share exclude share-based compensation; amortization of intangible assets; foreign currency transaction (gain) loss; certain non-recurring litigation and settlement costs; certain acquisition-related transaction costs; loss on extinguishment of debt; contingent consideration expense; the tax effects related to these items; and the tax reserve component of the income tax provision.

Adjusted EBITDA is defined as net income (loss) plus provision for (benefit from) income taxes; interest (income) expense, net; foreign currency transaction (gain) loss, net; depreciation and amortization of property and equipment; amortization of capitalized in-vehicle devices owned by customers; amortization of intangible assets; share-based compensation; certain non-recurring litigation and settlement costs; loss on extinguishment of debt; contingent consideration expense; and certain acquisition-related transaction costs.

Management presents these non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the Company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the Company's financial and operational performance. However, these non-GAAP financial measures have limitations as an analytical tool and are not intended to be an alternative to financial measures prepared in accordance with GAAP. We intend to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Forward-Looking StatementsThis press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our continued leadership position, extending our international presence, and our ability to develop innovative products and our expected financial results for the second quarter of 2016, the full year of 2016 and beyond. These forward-looking statements include, but are not limited to: plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, risks associated with the fluctuations of foreign currency exchange rates and the impact on our revenue and expenses; risks associated with our ability to effectively and efficiently attract, sell to and retain customers; our ability to continue to compete in a highly fragmented market and the risk of future competitors by way of recent and future acquisitions or otherwise; our ability to retain and increase sales to our existing customers; our ability to successfully attract customers on a cost-effective basis; our dependence on enterprise customers and their renewal of their agreements with us; our dependence on various lead generation programs; our ability to successfully complete and integrate acquisitions; expectations regarding the widespread adoption of fleet management solutions; our ability to expand the sales of our products in new geographies using our current lead generation and sales model; the effect of fluctuations in foreign currency exchange rates; our ability to integrate and sell our products through indirect sales channels; our ability to maintain high levels of performance of our software offering; our ability to keep up with the rapid technological change required to remain competitive in our industry; our ability to migrate customers to newer technologies; the impact of adverse economic conditions on information technology spending by our target customers; and collection of our accounts receivable and other risks set forth under the caption “Risk Factors” in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2016, as updated by our subsequently filed quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

 

FLEETMATICS GROUP PLCCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share data)(Unaudited)

       

Three Months EndedMarch 31,

2016 2015 Subscription revenue $ 78,947 $ 65,471 Cost of subscription revenue   20,943     17,185     Gross profit   58,004     48,286     Operating expenses: Sales and marketing 29,423 23,269 Research and development 6,839 4,597 General and administrative   16,080     11,685     Total operating expenses   52,342     39,551     Income from operations 5,662 8,735 Interest income (expense), net (237 ) (269 ) Foreign currency transaction gain (loss), net (2,795 ) 4,969 Loss on extinguishment of debt   —     (107 )   Income before income taxes 2,630 13,328 Provision for (benefit from) income taxes   (2,931 )   1,577     Net income $ 5,561   $ 11,751     Net income per share: Basic $ 0.14   $ 0.31     Diluted $ 0.14   $ 0.30     Weighted average ordinary shares outstanding: Basic   38,768,333     37,989,086     Diluted   39,599,032     39,025,216      

FLEETMATICS GROUP PLCCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)

       

March 31,2016

December 31,2015   (Unaudited) Assets Current assets: Cash $ 186,223 $ 177,083 Restricted cash 142 135 Accounts receivable, net of allowances of $2,237 and $2,233 at March 31, 2016 and December 31, 2015, respectively 20,748 20,971 Prepaid expenses and other current assets   16,354   14,430   Total current assets 223,467 212,619 Property and equipment, net 105,490 104,506 Goodwill 54,250 54,178 Intangible assets, net 13,804 14,889 Deferred tax assets, net 6,686 6,573 Other assets   10,046   9,630   Total assets $ 413,743 $ 402,395     Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 10,084 $ 7,853 Accrued expenses and other current liabilities 25,700 24,447 Deferred revenue   21,650   22,339   Total current liabilities 57,434 54,639 Deferred revenue 8,231 7,951 Accrued income taxes 832 3,739 Long-term debt, net of discount of $673 and $717 at March 31, 2016 and December 31, 2015, respectively 23,077 23,033 Other liabilities   9,835   10,856   Total liabilities   99,409   100,218   Total shareholders’ equity   314,334   302,177   Total liabilities and shareholders’ equity $ 413,743 $ 402,395    

FLEETMATICS GROUP PLCCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)

        Three Months EndedMarch 31, 2016 2015 Cash flows from operating activities: Net income $ 5,561 $ 11,751 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 9,298 6,566 Amortization of capitalized in-vehicle devices owned by customers — 426 Amortization of intangible assets 1,010 585 Amortization of deferred commissions, other deferred costs and debt discount 2,991 2,486 Provision for accounts receivable allowances 1,444 503 Unrealized foreign currency transaction (gain) loss 2,793 (5,045 ) Loss on disposal of property and equipment and other assets 836 559 Share-based compensation 8,267 4,543 Change in excess tax benefits from share-based awards (621 ) (1,063 ) Loss on extinguishment of debt — 107 Changes in operating assets and liabilities: Accounts receivable (1,042 ) (4,396 ) Prepaid expenses and other current and long-term assets (4,678 ) (3,028 ) Accounts payable, accrued expenses and other current liabilities 959 1,485 Accrued income taxes (2,906 ) 423 Deferred revenue   (441 )   1,392     Net cash provided by operating activities   23,471     17,294     Cash flows from investing activities: Purchases of property and equipment (8,071 ) (9,091 ) Capitalization of internal-use software costs (1,679 ) (982 ) Payment for businesses acquired, net of cash acquired (72 ) (7,673 ) Net increase in restricted cash   —     (149 )   Net cash used in investing activities   (9,822 )   (17,895 )   Cash flows from financing activities: Payments of borrowings under Revolving Credit Facility — (23,750 ) Proceeds from borrowings under Credit Facility — 22,541 Proceeds from exercise of stock options 151 1,303 Taxes paid related to net share settlement of equity awards (5,316 ) (2,551 ) Change in excess tax benefits from share-based awards 621 1,063 Payments of capital lease obligations (533 ) (174 ) Payments of notes payable   —     (210 )   Net cash used in financing activities   (5,077 )   (1,778 )   Effect of exchange rate changes on cash   568     (848 )   Net increase (decrease) in cash 9,140 (3,227 ) Cash, beginning of period   177,083     175,400     Cash, end of period $ 186,223   $ 172,173     Supplemental disclosure of cash flow information: Cash paid for interest $ 173 $ 231 Cash paid (refunds received), net for income taxes $ 204 $ 129 Supplemental disclosure of non-cash financing and investing activities: Acquisition of property and equipment and software through capital leases and note payable $ 631 $ 494 Additions to property and equipment included in accounts payable or accrued expenses at the balance sheet dates $ 1,730 $ 2,410  

 

RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT AND OPERATING INCOME(In thousands)(Unaudited)

        Three Months EndedMarch 31, 2016 2015   Gross Profit GAAP $ 58,004 $ 48,286 Share-based compensation 410 251 Amortization of intangible assets   371     300     Gross Profit Non-GAAP $ 58,785   $ 48,837       Subscription revenue $ 78,947 $ 65,471   Gross Margin Percentages: GAAP 73.5 % 73.8 % Non-GAAP 74.5 % 74.6 %             Three Months EndedMarch 31, 2016 2015   Operating income GAAP $ 5,662 $ 8,735 Share-based compensation 8,267 4,543 Amortization of intangible assets 1,010 585 Litigation and settlements 97 172 Acquisition-related transaction costs   —   157   Operating income Non-GAAP $ 15,036 $ 14,192    

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA(In thousands)(Unaudited)

        Three Months EndedMarch 31, 2016 2015 Reconciliation of Net Income to Adjusted EBITDA: Net income $ 5,561 $ 11,751 Provision for (benefit from) income taxes (2,931 ) 1,577 Interest (income) expense, net 237 269 Foreign currency transaction (gain) loss, net 2,795 (4,969 ) Depreciation and amortization of property and equipment 9,298 6,566 Amortization of capitalized in-vehicle devices owned by customers — 426 Amortization of intangible assets 1,010 585 Share-based compensation 8,267 4,543 Litigation and settlements 97 172 Acquisition-related transaction costs — 157 Loss on extinguishment of debt   —     107     Adjusted EBITDA $ 24,334   $ 21,184       Subscription revenue $ 78,947 $ 65,471   Adjusted EBITDA margin 30.8 % 32.4 %  

 

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS AND EPS(In thousands, except share and per share data)(Unaudited)

        Three Months EndedMarch 31, 2016 2015   Net income $ 5,561 $ 11,751 Amortization of intangible assets 1,010 585 Share-based compensation 8,267 4,543 Foreign currency transaction (gain) loss, net 2,795 (4,969 ) Litigation and settlements 97 172 Acquisition-related transaction costs — 157 Loss on extinguishment of debt — 107 Tax effect of non-GAAP adjustments above at 8% (973 ) (48 ) Tax reserve component of income tax provision   (2,905 )   423     Adjusted earnings $ 13,852   $ 12,721       Weighted average ordinary shares outstanding — diluted 39,599,032 39,025,216 Non-GAAP adjusted EPS $ 0.35   $ 0.33      

FLEETMATICS GROUP PLCRECONCILIATION TO NON-GAAP INCOME(In thousands)(Unaudited)

    Three Months Ended March 31, 2016     2015 Cost of subscription revenue Share-based compensation $ 410 $ 251 Amortization of intangible assets   371     300     Subtotal cost of subscription revenue 781 551

Sales and marketing

Share-based compensation 2,900 1,824 Amortization of intangible assets   639     285     Subtotal sales and marketing 3,539 2,109

Research and development

Share-based compensation   1,237     673     Subtotal research and development 1,237 673

General and administrative

Share-based compensation 3,720 1,795 Litigation and settlements 97 172 Acquisition-related transaction costs   —     157     Subtotal general and administrative 3,817 2,124   Foreign currency transaction (gain) loss, net 2,795 (4,969 ) Loss on extinguishment of debt — 107 Tax effect of non-GAAP adjustments, net of tax reserve component of income tax provision   (3,878 )   375     Total expense add-backs $ 8,291   $ 970    

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Fleetmatics Group PLCInvestor Relations:Brian Norris, +1-781-250-3829Vice President of Investor Relationsbrian.norris@fleetmatics.comorPublic Relations:Juli Burda, +1-847-378-4398Director of Public Relationsjuli.burda@fleetmatics.com