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FleetCor Reports Mixed Quarter

Zacks Equity Research

FleetCor Technologies, Inc.’s (FLT) third quarter 2012 adjusted earnings came in at 83 cents per share, surpassing the Zacks Consensus Estimate by 20.1%. Results shot up 48% from 56 cents earned in the year-ago quarter. Adjusted earnings improved 52% year over year to $71.6 million.

The company fared better riding on the back of strong organic growth in the U.S. and accretion from the acquisitions.

FleetCor reported net income of $59.6 million, or 69 cents per share, comparing favorably with $40.5 million or 48 cents per share in the third quarter of 2011. Net income in the reported quarter includes the combined impact of $11.9 million or 14 cents per share from stock based compensation, amortization of intangible assets, amortization of premium on receivables and amortization of deferred financing costs.

Operational Update

Revenues for the third quarter stood at $186.9 million, improving 32% over the prior-year quarter. Adjusted revenue, which excludes Merchant commissions, increased almost 44% year over year to $174 million. Revenue improved on the back of solid contribution from both International (soaring 107.3% year over year) and North America (increasing 9.1% year over year) segment.

However, adjusted revenues missed the Zacks Consensus Estimate of $176 billion.

The magnitude of increase in revenue more than offset the magnitude of increase in total expense, thereby driving operating income higher over the year-ago numbers. Operating income increased 39% year over year.

Segment wise, operating income at International surged 96% year over year to $36.6 million while at North America, it augmented 14% over the prior-year quarter.

Earnings before interest, tax, depreciation and amortization (:EBITDA) increased 39.5% year over year to $99.4 million.

Financial Position

FleetCor exited the quarter with cash and cash equivalents of $300.1 million; increasing 5.2% from $285.2 million at 2011 end.

Net cash flow from operating activities in the first nine months of 2012 was $33.1 million, deteriorating 53% from the year-ago period.

FleetCor’s capital expenditures escalated 62% year over year to $13 million in the first nine months of 2012.

Credit Facility

Early November, FleetCor announced the increase in the size of its credit facility by $500 million. It currently totals $1.4 billion, consisting of $550 million term loan facility and an $850 million revolving credit facility.


FleetCor raised the lower end of its revenue while it nudged down the higher end to guide 2012 revenue to a range of $678 million and $682 million. It had previously guided revenue between $665 million to $675 million.  

It projects adjusted income to be between $248 million to $251 million, up from previous guidance of $235 million to $240 million.

Bottom line is thus estimated to be in the range of $2.89 and $2.91, up from the prior guidance of $2.74 to $2.78.

At the Peer

WEX Inc. (WXS), which directly competes with FleetCor, posted earnings of $1.08 per share, falling short of the Zacks Consensus Estimate by 4.4% but bettering the year-ago earnings by 7.1%.

Revenue was $161 million, improving nearly 6% year over year and exceeding the expectation by 2.2%.

Zacks Rank

FleetCor currently carries a Zacks #3 Rank, implying a short term Hold rating. WEX Inc. also shares the same Zacks rank.

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