Propelled by the completion of two international acquisitions and a major processing contract with Royal Dutch Shell’s European unit, fleet card provider Fleetcor Technologies Inc. on Feb. 8 reported sizable gains in fourth quarter revenue and income. The company also anticipates a boost in U.S. revenue this year from a deal with a provider of GPS tracking services.
In December, Fleetcor acquired AllStar Business Solutions Ltd. from United Kingdom-based leasing company The Arval Group for $304 million (see story).
The acquisition not only solidified FleetCor’s foothold in the UK, but it also bolstered its global acquisition strategy, including recent deals in Mexico that analysts said boosted the company’s third-quarter performance (see story).
“The addition of our Mexico and AllStar acquisitions contributed meaningfully to our Q4 revenue but very little to our Q4 earnings,” Ron Clarke, FleetCor chairman, president and CEO, told analysts during a Feb. 8 conference call to discuss the quarter’s earnings, noting AllStar’s contribution in total revenue was in the “single-digit millions.”
“Both deals are outside of North America where we said we would focus, and both diversify our revenue away from fuel-price sensitivity, as they rely on fee-based models. So you'll see us continue to focus our acquisition efforts on emerging markets and on businesses we know,” he said. “We like markets with a model set up well, not only your payments early in the cycle, but the model in terms of basically where the economics work, particularly in Brazil, [is] pretty attractive. So I'd say both Mexico, which we talked about [in the third-quarter earnings call], and South America are interesting to us.”
Fleetcor expects a recent deal reached with FleetMatics, a GPS tracking company, to add approximately 5% of overall U.S. sales this year. The Ireland-based company, whose U.S. headquarters is in Wellesley Hills, Mass., recently began selling its own branded version of Fleetcor’s Universal Card, and it is adding the fuel card to new sales if OF? its GPS tracking services, Clarke said.
Company revenues for the quarter totaled $140.2 million, up 31.6% from $106.5 million during the same period ended Dec. 31 the previous year. Net income was up 116%, to $37.8 million from $17.5 million.
Regionally, North American customers used the company’s cards to initiate 37.6 million transactions. At $2.43 per transaction, net revenues in the region totaled $91.3 million. That compares with $68.3 million earned from 36.6 million transactions that earned an average of $1.87 each a year earlier, Norcross Ga.-based Fleetcor noted in its earnings release.
The company’s international segment earned $48.8 million on 25.9 million transactions that generated $1.88 each, which compared with $38.2 million earned from 11 million transactions earning $3.47 each in the previous year’s fourth quarter, Fleetcor said.
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