FleetCor Technologies' CEO Presents At Goldman Sachs Financial Technology Conference (Transcript)

FleetCor Technologies, Inc. (FLT)

Goldman Sachs Financial Technology Conference

September 13, 2012 09:10 am ET

Executives

Eric Dey - Chief Financial Officer

Analysts

Roman Leal - Goldman Sachs

Presentation

Roman Leal - Goldman Sachs

Hi, everyone. I am Roman Leal. I am part of the IT Services Team, [Kantaros], primarily focused on campaign and processors, so hello for everyone I haven't been met personally. It's a delight to be here with Eric Dey, CFO of FleetCor, a specialized processing model, focused in a very vertical in payments of the fuel segment, and actually one we used as a segue kick off with the in short to the FleetCor business model, but what is your end market like? What's the value proposition of FleetCor, and perhaps your competitive positioning?

Eric Dey

Okay. For those of you who don't know, let me start out with giving you just a very brief overview of kind of what FleetCor is and how we go-to-market. Today, we are a leading global provider of fuel cards and workforce payment product of the businesses.

Our products are primarily designed to help businesses better control employee spending and provide merchants with the loyal customer base. Today, approximately 90% of our revenue is derived from our fuel card related products and 10% of our revenue or so is derived from our other complementary products, such as we have a hotel card product in the United States for the business called CLC. We also have a telematics product that we are offer in Europe, and we have a food card and voucher business that we offer today effectively in Mexico.

We market our products to effectively businesses of all shapes and sizes around the world and governmental entities. We have operations in 23 countries around the world today, but primarily really we are in about six countries, where the majority of our revenue is. We are in places like the United States. We are in the U.K. We're in the Czech Republic. We are in Russia, and more recently, we are in Mexico and Brazil.

Over the last seven or eight years, our company has experienced a tremendous amount of growth. Since 2003, our revenues have grown at a compounded annual growth rate of approximately 28%, and our adjusted net income or cash flow has grown around 41% compounded annual growth rate over that same period of time, and half the growth or so has come from organic means, and the other half of our growth really has come through acquisitions that we've completed over that period of time. Since 2002, I think, we've completed what has now been about 50 different acquisitions around the world, so we are very acquisitive company.

We've been able to grow our company, primarily by using a three-pronged growth strategy. We always like to this kind of internally. We build, we buy and we partner. We build the businesses that we own by investing in sales and marketing and growing the businesses the old fashion way organically. We also buy businesses that have very attractive business models similar to our other businesses, and more recently we like to buy businesses that are in more attractive geographies like the emerging markets. Again, as evidenced by some of the recent acquisitions that we've done in Russia, Mexico and Brazil of late. Then finally, we like to partner with major oil companies. I mean today, we have significant strategic relationships in the United States as an example with merchants like BP and Chevron, where they've outsourced the management of their commercial card portfolios to companies like ours, and more recently with Euroshell.

We've got a very diversified business model. 60% or so of our revenue is derived from our businesses in the United States and 40% or so of our revenue is derived from our businesses that we own internationally. We also get about 55% of our revenue from our merchant relationships and 45% or so of our revenue comes from our relationships with all of our customers. We also have very, very low customer and merchant concentration, so if anyone of our customers or merchant left us today, it would have very little impact on our business.

Our financial model today, we also believe is tremendous. We have a transaction-based model. Our revenues are recurring in nature. We have to sell very little amounts of our revenue from year-to-year in order to continue on with our revenue stream kind of from year-to-year, and we have very attractive margin profile. We have over 50% EBITDA margins today.

Roman Leal - Goldman Sachs

I guess, I would start from a bird's eye view. You are in a lot of markets. What are the key differences perhaps in those geographies, maybe variations in your business model, how you go to market in these geographies and the competitive position.

Eric Dey

You know what's interesting is? We market our products using every mean possible. I mean, we have feet on the street. We use telemarketing, we use direct mail, we use the web. We go to third-party partners to help market our products.

Today, we don't use all of those means in every country, because we are relatively new into some of these countries, but it's our objective basically to introduce those other marketing techniques as we get in and start to implement some of the businesses that we are into.

Roman Leal - Goldman Sachs

If we stick to North America, and dig a little bit deeper, is this still a growth market or are the certain verticals are still growing faster than others, or are you at market share gain point?

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