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FleetCor Technologies has “better-than-expected” Q4

FleetCor Technologies Inc. on Wednesday reported fourth-quarter revenue of $883.6 million, a 10% year-over-year increase compared to 2021.

Net income for the quarter was $225.3 million, compared with $225 million for the same period last year. Adjusted earnings per share was $4.04, a 9% y/y increase compared to 2021.

FleetCor beat Wall Street quarterly revenue and earnings estimates of $873.4 million and $3.91 per share.

“Our Q4 results, which exceeded the top end of our guidance range, [were] better than we expected,” Ron Clarke, chairman and CEO, said during a call with analysts after the market closed on Wednesday. “Organic revenue growth came in at 7% overall; inside of that, our corporate payments business was super good, growing 20% in the quarter against the prior year.”

FleetCor (NYSE: FLT) is an Atlanta-based provider of fuel card and payment products for businesses, including the commercial transportation industry.

The company reported fuel transaction revenue of $324 million in the fourth quarter, a 2% y/y increase compared to the same year-ago period. About 40% of FleetCor’s revenue comes from its fuel segment.

In addition to its fuel segment, FleetCor operates divisions in corporate payments, lodging and toll.

Clarke said the company is seeing “rising delinquencies” in its U.S. fuel business. The U.S. market accounts for 61% of FleetCor’s revenue. The company also provides fuel payment solutions in Canada, Europe and Latin America.

“We did make the decision in Q4 to slow what we call our new micro digital [fuel] sales, … our very smallest accounts,” Clarke said. “We also began tightening terms on our existing small and medium-sized business (SMB) accounts, both of those things, really a cautionary move to try to control bad debt expense here and 2023.”

Alissa Vickery, FleetCor’s interim chief financial officer, said the 2% growth in its fuel segment came largely from international sales and was offset by softness in its “U.S. micro SMB customer segment.”

“By micro, we mean companies with less than five vehicles, so the smallest of the small,” Vickery said. “The economic cost of higher fuel prices, inflation and in the case of micro SMB trucking, lower spot rates have negatively affected their ability to manage expenses, including their fuel bills, which has resulted in higher bad debt.”

Vickery said the company is also seeing a shift of “higher-margin independent trucking volume moving to lower-margin volume as those drivers move to the larger contract carriers.” 

FleetCor’s first-quarter outlook for 2023 calls for revenue between $875 million and $890 million and adjusted net income per diluted share between $3.55 and $3.75.

Despite the rising delinquency of fuel payments in its micro SMB segment, Clarke said FleetCor is not seeing signs of a global recession.

“We’ve been talking about macro and recession for six months now, and we study and look everywhere and we just don’t see it,” Clarke said. “We don’t see it in volumes. We don’t see it in sales.”

FleetCor Technologies Q4/22 Q4/21 Y/Y % Change
Total revenue $883.6M $802.3M 10%
Fuel revenue $323.7M $318.1M 2%
Fuel transactions 119.7M 117.9M 2%
Fuel net revenue/transactions $2.70 $2.70  —
Adjusted net income per diluted share $4.04 $3.72 9%
FleetCor’s key fourth-quarter performance indicators.

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