FleetCor Technologies' CEO Discusses Q4 2011 Results - Earnings Call Transcript

FleetCor Technologies, Inc. (FLT)

Q4 2011 Earnings Conference Call

February 8, 2012 16:30 ET

Executives

Eric Dey – Chief Financial Officer

Ron Clarke – Chairman Chief Executive Officer

Analysts

Tien-Tsin Huang – JPMorgan

Wayne Johnson – Raymond James

Phil Stiller – Citi

Presentation

Operator

» FleetCor Technologies CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Fleetcor Technologies CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Virgin Media's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Good day ladies and gentlemen and thank you for standing by. Welcome to the FleetCor Technologies, Incorporated Fourth Quarter 2011 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for your questions. (Operator Instruction)

I would now like to turn the conference over to Mr. Eric Dey, Chief Financial Officer. Please go ahead, Sir.

Eric Dey – Chief Financial Officer

Good afternoon, everyone, and thank you for joining us today. By now, everyone should have access to our fourth quarter and full year 2011 press release. It can also be found at www.fleetcor.com under the Investor Relations section.

Throughout this conference call, we will be presenting non-GAAP financial information, including adjusted revenues and adjusted net income. This information is not calculated in accordance with GAAP and maybe calculated differently than other companies similarly titled non-GAAP information. Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and on our website as described previously. Also, we are reviewing 2011 guidance on a non-GAAP basis.

Finally, before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. These include forward-looking statements about our 2011 guidance. They are not guarantees of future performance and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's 8-K filed with the Security and Exchange Commission. Others are discussed in our Form 10-K, which is available at www.sec.gov.

With that out of the way, I would like to turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Ron Clarke – Chairman and Chief Executive Officer

Okay, Eric. Thanks. Hello everyone, and thanks for joining us today. I thought I cover three subjects in my opening remarks. First, our Q4 results, second, our 2011 full year results and then finally our 2012 guidance and give you bit of a bridge.

So, first off, our Q4 results; if you had a chance to see our earnings release you will see the Q4 was a very good quarter for us. We reported revenue of $140 million and all time quarterly high since the founding of the company. We also reported adjusted net income of $47 million and adjusted EPS of $0.56 per share. All of these results were beat against our own internal plan. And from a growth perspective, our Q4 revenue grew over 30% and adjusted net income more than 25%. So, we finished comfortably ahead of our 10% and 20% targets.

Now let me shift in to some of the drivers of this Q4 performance, one, we continued rapid growth of our universal card products, our CLC hotel card products and our Russia business. Together these three businesses grew revenue a combined 40% for the quarter. So, they continue to grow really, really quickly. Second, the environment continued to help us. Fuel prices were well above prior year levels and US market spreads way above normal for the quarter, adding $3 million to $4 million of incremental revenue.

Third, the addition of our Mexico and AllStar acquisitions contributed meaningfully to our Q4 revenue, but doing a little to our Q4 earnings. And then finally we booked a favorable tax rate for the quarter at 26% as we confirmed a couple of tax rulings that reduced our full year tax liability.

Our fourth quarter also produced particularly strong sales finish. Our U.S. sales grew 40% for the quarter and 25% for the full year. In the non-field channels, things like web and mail grew almost 50% versus the prior year. We also got some sales traction from a new sales partnership with FleetMatics, a GPS tracking company, who recently began selling their own branded version of our universal card. They are adding the fuel card to new sales of their GPS tracking services and we expect this new partnership to add approximately 5% to our 2012 overall U.S. sales.

Now let me transition to our second subject, our full year 2011 results, and let me begin by reminding you of what we set out to do in 2011. We targeted 10 and 20, that is 10% revenue growth and 20% earnings growth for the year. That led to initial revenue guidance of $460 million to $480 million, and we reported approximately $520 million, so $50 million above our midpoint.

Our initial adjusted EPS guidance was $1.83 to $1.95 and we reported $2.17. So we finished 15% above our midpoint. So, our initial 10% and 20% has turned into 20% and 30% for 2011. These results were driven by executing what we call our three by three strategy; namely we build, we buy and we partner. On the bill front, we grow assets, we own group of volume and rate per transaction and for 2011 transactions grew 12% and revenue per train grew 8%.

Next we tried to sign meaningful outsourcing partners. In 2011, we signed Shell, a portfolio measured in volume roughly the size of our entire company and lastly, we buy assets that we know and we can improve. We bought both the Mexican prepaid fuel card company and the AllStar fuel card business in the UK, which we announced in December. Note both the yields are outside of North America, where we said we would focus and both diversify our revenue way from fuel price sensitivity, as they rely on fee-based models. So, you will see us continue to focus our acquisition efforts on emerging markets and on businesses we know.

Read the rest of this transcript for free on seekingalpha.com