EX-99.1 2 ex991q32018.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
FLEETCOR Reports Third Quarter 2018 Financial Results



PEACHTREE CORNERS, Ga., October 30, 2018 — 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 to change 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 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:

(millions)
2018 Reported under ASC 606

2018 Impact of ASC 606

2018 Excluding Impact of Adoption of ASC 606
 





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.

______________________________
1Reconciliations 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 organic growth rates, impact of the new Tax Act, and estimated impact of these conditions on our operations and financial results, the impact of new asset initiatives, 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.

Contact
Investor Relations
Jim Eglseder, 770-417-4697
Jim.Eglseder@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

1Reflects 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 at September 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 shares issued and 88,648,486 shares outstanding at September 30, 2018; and 122,083,059 shares 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 at December 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 disposition of business
 

 
(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

As Reported and Pro Forma for Impact of 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

 
$

 
 %
'- 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
)

 %

$
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.
6Interchange 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

1Reflects 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.
2The 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.



1Other 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 to adjusted 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


1Reflects 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.