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FleetCor Reports Strong 1Q Earnings

Zacks Equity Research

FleetCor Technologies, Inc.’s (FLT) first-quarter adjusted earnings of 90 cents breezed past the Zacks Consensus Estimate of 77 cents. Results were up 50% year over year from 60 cents earned in the year-ago quarter.

Including the negative impact of $10.5 million or 13 cents per share from stock based compensation, amortization of intangible assets, amortization of premium on receivables and amortization of deferred financing costs, FleetCor reported net income of $64.7 million or 77 cents per share in the first quarter of 2013, up 54% year over year.

Quarterly Operational Update

Operating revenues increased 32% year over year to $179.8 million in the reported quarter, surpassing the Zacks Consensus Estimate of $178 billion.

Including merchant commissions, revenues came in at $193.7 million, up 32% year over year. The year-over-year improvement was driven by solid contribution from both the international (up 46.9% year over year) and North America (increasing 21.5% year over year) segment.

Total expenses in the quarter increased 21.7% year over year to $99.4 million.

The magnitude of increase in revenues more than offset the magnitude of increase in total expense, thereby driving FleetCor’s operating income higher over the year-ago numbers. Operating income increased 46.2% year over year to $94.3 million.

Segment wise, operating income at International surged 70% year over year to $44.8 million, while at North America it increased 29.7% year over year to $49.4 million in the fourth quarter.

Earnings before interest tax, depreciation and amortization (:EBITDA) increased 42.9% year over year to $108.9 million in the first quarter of 2013.

Financial Position

FleetCor exited the reported quarter with cash and cash equivalents of $224.6 million, down 20.8% year over year.

As of Mar 31, 2013, notes payable and other obligations net current portion were $492 million, up 1.4% from $485 million as of Dec 31, 2012. FleetCor’s total assets and shareholder equity were $2.89 billion and $983 million, respectively, as of Mar 31, 2013.

Net cash outflow from operating activities in the reported quarter was $13.7 million, improving from $113.9 million in the year-ago quarter.

2013 Guidance

FleetCor expects revenues for 2013 in the range of $810–$820 million.

The company projects adjusted income in the range of $310–$320 million or $3.70–$3.80 per share.

Zacks Rank

FleetCor currently carries a Zacks Rank #3 (Hold). Other companies in the miscellaneous financial services industry that are worth considering are Daiwa Securities Group Inc. (DSEEY), Grupo Financiero Banorte, S.A.B. de C.V. (GBOOY) and Euronet Worldwide Inc. (EEFT), all of which carry a Zacks Rank #2 (Buy).

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