FleetCor’s Q4 revenue and profit rise y/y but miss analysts’ estimates

“Fourth-quarter revenue did finish a bit weaker than we outlooked 90 days ago, but fortunately our earnings flow through was quite a bit better than expected,” Clarke said during a call with analysts on Wednesday. “These kind of weak spots, soft spots are either timing-related, weather-related, and we’ve kind of reached the end of, kind of bottomed out as we head into our 2024 guide. So hopefully, not surprising us again.”

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

The company reported fleet transaction revenue of $108 million in the fourth quarter, a 19% y/y decrease. Officials said they were affected by delays in gift card shipments, softness in lodging and corporate payments, and lighter late fees across the North America fleet segment.

“In the U.S., softness in small fleets and the impact from our shift away from micro clients continue to affect our sales and revenue results,” Tom Panther, FleetCor’s chief financial officer, said during the call. “The shift to higher credit quality clients also impacted late fees, which were down 38% from the fourth quarter of 2022. While the decline in late fees is a drag on our revenue growth, it has resulted in a similar decline in bad debt expense, so essentially a wash.”

The company’s vehicle payments segment recorded net fourth-quarter revenue of $497.8 million, a 4.4% y/y increase.

The U.S. generated 56% of FleetCor’s revenue during the quarter at $525 million, followed by Brazil at $143 million and the United Kingdom at $108 million. 

The company’s full-year 2023 revenue was $3.8 billion, a 10% y/y increase compared to 2022. Net income increased 3% y/y to $981.9 million in 2023, while adjusted EPS increased 6% y/y to $13.20.

Full-year earnings before interest, taxes, depreciation and amortization was up 13% y/y to $2 billion.

“From an economic perspective, we are not assuming a recession nor meaningful economic improvement in overall business activity,” Panther said. “Our forecast for the year is based on the consensus economic outlook in our markets, which generally calls for modest economic growth and lower interest rates in the second half of the year. We expect fuel prices to be a headwind in the first quarter.”

Panther said the company expects fuel prices to average $3.65 per gallon, which is a blend for the prices of diesel and unleaded.

FleetCor’s 2024 full-year guidance calls for revenue of $4.08 billion and EBITDA of $2.2 billion.

FleetCor will be rebranded to Corpay in March. Officials also expect recently introduced products such as its fuel and business card offerings Corpay One, Comdata Connect Card and Corpay Complete to drive revenue growth this year.

“The key is what’s the reception? Does the market like these three or four things that we’ll put in front of them?” Clarke said.

During the fourth quarter, FleetCor repurchased about 600,000 shares at an average price of $2.54 per share or $143 million. For the year, the company repurchased 2.6 million shares for $690 million.

Clarke said in 2024 FleetCor expects to repurchase $800 million shares of the company throughout the year.

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