"I'm a travelin' man," Ricky Nelson warbled in 1961. "I've
made a lot of stops all over the world."
If he'd had access to the services ofFleetCor Technologies (
), he might have saved money on those worldly travels.
FleetCor provides fuel cards and payment services designed to
help customers track and control costs. Its operating model is
pretty simple: Truck fleets need fuel, and service stations need
to be paid. FleetCor links the two with cards and card processing
services that free drivers from relying on cash or personal
The company charges trucking firms a monthly fee and the gas
stations a usage fee when drivers fill up. The cards also help
truckers track vehicle locations, monitor fuel consumption
patterns and identify fueling locations.
In The Fast Lane
Demand for these services has helped FleetCor deliver a
years-long run of double-digit revenue and profit growth and
given it the financial juice to keep expanding into new
During the first quarter, it reported 31.1% year-over-year
growth in U.S. net revenue and 37% growth in the international
arena. The company has seen its annual revenue more than double
over the past four years.
Meanwhile, FleetCor's stock price is trading at record highs
amid talk that it might be poised for even more growth. On
Wednesday morning, its shares rose 3% to an all-time high of
138.19 after reports surfaced that it is looking to buy Comdata,
a corporate payment-processing company, for more than $3
Comdata provides payment solutions for companies in the
construction, health care and fleet industries.
According to a report from Reuters, other suitors for Comdata
include private equity firmsCarlyle Group (
) and Silver Lake Partners.
FleetCor, which has remained mum on the reports, is no
stranger to buyouts. It set the tone in 2000, the year of its
founding, when it acquired the U.S. fuel card platform Fuelman
and launched the ARCO fleet card.
The company now operates in 43 countries, has around 5,100
global employees, serves more than half a million commercial
accounts and boasts millions of cardholders.
Its partners range from major oil companies such as
ARCO,Royal/Dutch Shell (RDSA),BP (
) andChevron (
) to one-outlet fuel suppliers.
FleetCor's business is now split about evenly between the U.S.
and elsewhere. Analyst Philip Stiller of Citi Investment Research
reckons the growth rate of FleetCor's international segment will
eventually outstrip the domestic component.
"The longer-term opportunities emphasize the international
prospects," Stiller told IBD in a phone interview.
FleetCor has grown its international operation through a
combination of partnerships and acquisitions. Over the last
couple of years alone it has made a handful of deals to expand
its footprint overseas.
Its most recent deal came in May, when it bought part of
Shell's SME fuel card customer portfolio in Germany. One benefit
of the deal is that FleetCor will have exclusive rights to sell
new fuel card accounts to specific fleet segments in Germany,
which should help boost its business there.
Last year FleetCor entered Australia via the acquisition of GE
Capital's Fleet Card, a multibranded fuel card business that lets
drivers use any of about 6,000 stations offering multiple fuel
brands throughout the country.
FleetCor also established a presence in neighboring New
Zealand in 2013 by acquiring CardLink, a fuel-card issuing and
payment processing company.
Other 2013 acquisitions expanded FleetCor's operation in
Brazil, the UK and Russia.
Strong Organic Growth
During the first quarter, FleetCor's international revenue
rose to $127.5 million from $93.1 million the previous year. The
international business accounted for 50% of total revenue during
the quarter, up from 48% a year earlier.
"Results in our International business were positively
impacted by strong organic growth in our UK businesses, which
posted double-digit revenue growth over last year," Eric Dey,
FleetCor's chief financial officer, said on a Q1 conference call
FleetCor officials did not respond to requests for comment for
During the May 1 call, Dey also downplayed the impact that
regulatory changes and U.S. sanctions have had, or could have, on
the company's business in Russia, saying FleetCor "does not
appear to be adversely affected" by those developments.
"However, we are affected indirectly as the Russian economy is
softening, and we are experiencing a slowdown in volumes," Dey
said. "Our international business has also been impacted by
unfavorable foreign exchange rates in Russia as well as
Analyst Stiller noted that Russia accounts for only 5% of
FleetCor's overall revenue during the first quarter climbed
31% from the previous year to $253.9 million. It was the second
straight quarter of accelerated top-line growth. Earnings rose
24% to $1.12 a share, topping estimates for $1.01.
FleetCor is slated to report Q2 results after the close
Thursday. Analysts polled by Thomson Reuters expect EPS of $1.25,
up from $1 a year earlier. Revenue is seen climbing 24% to $273.7
Full-year earnings are expected to rise 25% in 2014 and
another 17% in 2015.
FleetCor has "traditionally delivered on the upside," said
Stiller, who looks for even more upside in the third and fourth
He added that few companies in FleetCor's sector enjoy its
margins, and that the company has "very consistently" improved
its margin outlook over time -- testimony to its strong