FleetCor Overseas Push Fuels Faster Growth

Investor's Business Daily

Fuel-card issuer FleetCor Technologies (FLT) late Thursday reported accelerating earnings growth on overseas acquisitions and sharply higher revenue per fill-up. The fuel card provider also raised 2013 guidance over forecasts based on its new Australia and New Zealand acquisitions.

Shares rose 9% after hours, following a regular-session gain of 3% to 77.20, a new high.

FleetCor's adjusted first-quarter earnings per share leapt 50% to 90 cents, and 7 cents more than analysts surveyed by Thomson Reuters expected. It was the strongest growth in at least nine quarters.

Total revenue climbed 32% to $193.7 million, topping analysts' expectations for $182.4 million.

Adjusted revenue — backing out merchant commissions — climbed 32% to $179.8 million.

"They're very underpenetrated markets for fuel cards, which should drive growth," said David Togut, an analyst with Evercore Partners, on FleetCor's growth prospects outside the U.S.

And in the U.S., the Norcross, Ga.-based firm has double-digit growth potential from its co-branded cards on the MasterCard (MA) network — which give corporate users wider spending latitude — Togut said.

FleetCor raised full-year EPS guidance to $3.70 to $3.80. Analysts expect $3.67. It forecast revenue of $810 million to $820 million, vs. analysts' views for $812.6 million.

The guidance includes gains of about 4 cents per share from two acquisitions that closed in Q1: GE Capital's Fuel Card Business in Australia and the CardLink business in New Zealand.

It's consolidating those operations and sees opportunities to sign on large oil companies there looking to develop fueling card programs.

"Now that we have operational presence there, we may be a viable alternative for them," CEO Ron Clarke said in a post-earnings call with analysts.

International growth has been a key focus in recent years. FleetCor bought payment businesses in Russia and Brazil in 2012. It entered Mexico and Great Britain in 2011.

North American transactions climbed 4.1%, with revenue per swipe up 16.9% to $2.63. Internationally, transactions climbed 2%. But revenue per transaction surged 43.9% to $2.59. The company cited new-customer additions who signed on for higher-revenue products.

U.S. growth also benefited from a hotels card and other card options it's been adding.

"We're very, very bullish on the continued performance of those products," CFO Eric Dey said on the call.

Fuel costs were neutral in the quarter. FleetCor doesn't expect fuel or currency swings to meaningfully affect 2013 results.

Earlier this week, credit card giants Visa (V) and MasterCard topped earnings forecasts. Visa shares rose 6% to a new high Thursday. MasterCard fell 2% Wednesday after warning of a "dodgy" Q2.

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