NORCROSS, Ga.--(BUSINESS WIRE)--May 1, 2017-- FLEETCOR Technologies, Inc. (NYSE:FLT), a leading global provider of fuel cards and workforce payment products to businesses, today reported financial results for its first quarter ended March 31, 2017.
"We reported good first quarter results, driven by strong fundamentals, and organic revenue growth of approximately 10% in the quarter, on a constant fuel price, currency, and spread basis," said Ron Clarke, chairman and chief executive officer, FLEETCOR Technologies, Inc. "We also announced our intention to acquire Cambridge Global Payments, a leading B2B international payments provider, expanding our presence in the global corporate payments space."
Total revenues increased 26% to $520.4 million in the first quarter of 2017 compared to $414.3 million in the first quarter of 2016.
GAAP net income increased 11% to $123.7 million in the first quarter of 2017 compared to $111.1 million in the first quarter of 2016.
GAAP net income per diluted share increased 12% to $1.31 in the first quarter of 2017 compared to $1.17 per diluted share in the first quarter of 2016.
Adjusted revenues1 (revenues, net less merchant commissions) increased 29% to $496.0 million in the first quarter of 2017 compared to $386.0 million in the first quarter of 2016.
Adjusted net income1 increased 27% to $185.0 million in the first quarter of 2017 compared to $145.7 million in the first quarter of 2016.
Adjusted net income per diluted share1 increased 28% to $1.96 in the first quarter of 2017 compared to $1.53 in the first quarter of 2016.
"The first quarter of 2017 was another strong quarter for the Company. In the aggregate, the macro-economic environment was mostly neutral versus prior year and in line with our 2017 expectations," said Eric Dey, chief financial officer, FLEETCOR Technologies, Inc. "We are raising our guidance to reflect our first quarter results compared to our expectations. Although foreign exchange rates are trending a little better than the first quarter average, fuel prices and spreads are in line with our expectation, we are maintaining our prior macro guidance unchanged until more of a trend can be established."
Adjusted net income per diluted share1 between $8.21 and $8.41.
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 6, and segment information is provided in Exhibit 4. A reconciliation of GAAP guidance to non-GAAP guidance is provided in Exhibit 5.
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 compared to $2.15 per gallon average in the U.S. in 2016, up approximately 13%. No change from prior guidance.
Market spreads returning closer to historical levels, up slightly from the 2016 average. No change from prior guidance.
Foreign exchange rates equal to the seven-day average ended January 22, 2017. No change from prior guidance. Although FX rates are trending favorably since the end of the first quarter, we would like to see more of a trend before we update guidance.
Interest expense of $100 million compared to $72 million in 2016. No change from prior guidance.
Fully diluted shares outstanding of 95 million shares.
We are assuming a 29.5% per quarter tax rate for the rest of the year which is consistent with prior guidance. The result is a full year tax rate of approximately 28.8%.
No impact related to the closing of the Cambridge Global Payments acquisition.
For the second quarter, we are expecting adjusted net income per diluted share to be approximately the same as the first quarter. The second quarter assumes improving revenue and operating performance versus the first quarter offset by the expected higher tax rate which is in line with our prior guidance. As a reminder, the Company's volumes build throughout the year and our new asset initiatives gain momentum throughout the year resulting in higher earnings per share in the third and fourth quarters.
The company will host a conference call to discuss first quarter 2017 financial results today at 5:00pm ET. Hosting the call will be Ron Clarke, chairman and chief executive officer, Eric Dey, chief financial officer, Todd House, president of North America fuel cards and John Coughlin, executive vice president of global corporate development. 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 13658183. The replay will be available until May 8, 2017. The call will be webcast live from the company's investor relations website at investor.fleetcor.com.
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, 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, 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.
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 guidance is provided in the attached exhibit 5. A reconciliation of GAAP to non-GAAP product revenue organic growth calculation is provided in the attached exhibit 6.
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.
2 See Exhibit 6 for a reconciliation of pro forma and macro adjusted revenue by product, non-GAAP measures, to the GAAP equivalent.
* 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.
** 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.