Welcome to the FleetCor Technologies, Inc., First Quarter Earnings Conference Call. [Operator Instructions] At this time, I'd like to turn the conference over to Eric Dey, Chief Financial Officer.

Good afternoon, everyone, and thank you for joining us today. By now, everyone should have access to our first quarter 2012 press release. It can also be found at www.fleetcor.com under the Investor Relations section. Throughout this conference call, we will be presenting non-GAAP financial information, including adjusted revenues and adjusted net income. This information is not calculated in accordance with GAAP and may be calculated differently than other companies' similarly-titled non-GAAP information. Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and on our website, as described previously. Also, we are reviewing 2012 guidance on a non-GAAP basis. Finally, before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. This includes forward-looking statements about our 2012 guidance. They are not guarantees of future performance, and therefore you should not put any undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's 8-K filed with the Securities and Exchange Commission. Others are discussed in our Form 8-K, which is available at www.sec.gov. With that out of the way, I would like to turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Thanks, Eric. I thought I'd cover just a couple of subjects here in my opening remarks. First, I'll provide a little more color on our Q1 results. And second, I'll provide just a bit of an update on our acquisition and partnership initiatives. I don't plan to comment specifically on our pending CTF, Brazil, acquisition because we spoke about it at some length last week, but of course we're happy to take questions you might have once we get to that section of the call. Onto Q1. Our Q1 results were very good. We reported revenue of $146 million, up 32%. We reported cash EPS of $0.60, up 27%. So $146 million and $0.60. Obviously, growth well ahead of our 10% and 20% stated growth targets. The environment in Q1 was a bit of a mixed bag for us. Market spreads, which effect our Fuelman and KeyFuels businesses were below planned levels and below historic levels. So not great. FX rates were unfavorable versus last year. But on the good news front, fuel prices were favorable to both our plan and to last year. So net-net, we'd say the environment was probably neutral in terms of its impact on our Q1 performance. In terms of our U.S. businesses, all were up in Q1. Our U.S. Direct Business revenue grew over 20% for the quarter, driven by further MasterCard penetration and, really, record sales. Our U.S. partner business, that's our business that serves major oils, leasing companies and independent marketers, was also up due to continuous adoption of our extended network cards. And CLC, our hotel cards business, continued its growth mostly driven by further penetration of its check-in direct product, which is targeted at small and mid-sized businesses. On the Europe front, our U.K. and Czech businesses mostly treaded water…

Thanks, Ron. For the first quarter of 2012, we reported revenue of $146.2 million, an increase of 31.7% from the first quarter of 2011. Revenue from our North American segment increased 15.7% to $82.8 million in the first quarter of 2012 from $71.6 million in the first quarter of 2011. And revenue from our international segment increased 60.7% to $63.4 million in the first quarter of 2012 from $39.4 million in the first quarter of 2011. For the first quarter, GAAP net income increased 30.1% to $42.1 million from $32.3 million in the first quarter of 2012 or $0.49 per diluted share compared to $0.39 per diluted share in the first quarter of 2011. The other financial metrics that we routinely use to measure our business are adjusted revenues and adjusted net income, which we sometimes also refer to as cash net income. Adjusted revenues equal our GAAP revenues less merchant commission. We use adjusted revenues as a basis to evaluate the company's revenue net of the commissions that are paid to merchants who participate in certain card programs. Commissions paid to merchants can vary when market spreads fluctuate in much the same way some of our revenues can vary when market spreads fluctuate. For this reason, we believe that the adjusted revenue financial metric is a more effective way to evaluate the company's performance. The reconciliation of adjusted revenues and adjusted net income to our GAAP numbers are provided in Exhibit 1 of our press release. Adjusted net income is GAAP net income adjusted to eliminate non-cash stock-based compensation expense related to share-based compensation awards, amortization of deferred financing costs and intangible assets, amortization of the premium recognized in the purchase of receivables, the loss and early extinguishment of debt and adjusted for the income tax effect of such.…

[Operator Instructions] Our first question is from the line of Philip Stiller with Citi.

I wanted to ask first about the M&A contributions in the quarter. Eric or Ron, can you quantify perhaps the revenue contributions from the 2 acquisitions you completed last year?

Hi Phil, this is Eric. Let me comment a little bit on the overall organic growth of the business for the quarter. You can see in our press release our North American segment was up approximately 16% for the quarter and our international segment was up about 60% for the quarter 2012 over 2011. The majority of the international increase was driven by the 2 acquisitions.

If we look at the transaction growth rate in North America, it's been hanging around kind of low-single digits. A lot of the revenue growth there has been driven by higher revenue per transaction. Is that something that we should look to continue? Can you get the transaction growth rate improving without any additional help from the economic environment?

Phil, it's Ron. Again, it's mostly mix. So inside of that North America number is a couple of very large books of business that don't grow that have low revenue per tran. And so we're spending all of our money on the businesses that have higher revenue per tran. So that weights down effectively the businesses that are growing faster and it's a very, very big piece of the total trans. So the answer is because of that structurally, the answer is yes. You're going to continue to see on an aggregate basis lower tran growth and higher revenue per tran because of mix.

On the cash flow in the quarter, you guys had a big spike in receivables. I was just wondering if you could provide some color on that and what your expectations for cash flow are this year.

Nothing unusual happened in the quarter from a receivable perspective. Obviously, fuel prices were rising in the quarter and our receivables can be impacted by a couple of things: one, obviously the rising fuel price; and secondly, by the day of the month that the closing actually occurs. But nothing unusual there at all. From a cash flow perspective for 2012, again, we provided adjusted net income guidance of between $217 million and $222 million, and that's effectively our cash flow.

Our next question comes from the line of Glenn Fodor with Morgan Stanley.

Just reconciling the guidance increase to the results in the quarter. There was some upside to the expectations, but your texture on Europe and the U.S. was that things that are just kind of trucking along and flat, but that you closed the quarter with very positive sales. Was that the driver for what appears to be maybe a little outsize increase versus the performance in the quarter?

I wouldn't say the sales had a big impact on the quarter, Glenn. I mean, sales certainly impact the business over the long term. But I would say over the short term, in Q1 as Ron indicated and like I said in my section of the call, basically all businesses kind of performed according to plan. So we were very pleased with the performance everywhere. The U.S. business was up about 16% organically kind of year-over-year and effectively beat our internal expectations. At the international level, obviously our revenue was up kind of 60%, driven to a large degree by the performance of our acquisitions. But again, I would say that all of our businesses performed well. And if you go back to the fourth quarter earnings call, we actually guided to $0.55 to $0.59. So we actually beat our guidance pretty handily in the first quarter. So I think overall, we're pretty pleased with the $0.60. From an overall perspective, obviously that beat in the first quarter obviously factored into our overall guidance perspective on the full year. Now we're guiding toward the high end of the range. It's also early in the year for us, Glenn. So I think you'll have more color on our full year guidance as we kind of get further into the year.

Are these things, we should imagine, like a Shell-type deal--or maybe not that size, but along those lines of terms and conditions?

We're active in 2 RFPs now in Europe, and they're both significant, large, well-known companies. Large, well-known companies.

Our next question comes from the line of Roman Leal with Goldman Sachs.

As a follow-up to the RFP question, in general, it seems like in Europe with the acquisitions and the potential partnerships and with the Shell partnership rolling out, is it safe to assume that the revenue per transactions trends will continue to be basically downward, obviously offset by the transaction growth, or is there something that you can do or any strategy to offset that?

Roman, it's Ron. On a line of business basis, they are all increasing. So you guys are looking at some aggregates or North American, international aggregate. If you unpeeled down to our lines of business, every line of business has revenue per tran growing. So the only reason that the aggregate is declining is mix. We buy a big book of business that's got half the revenue per tran, that obviously brings the average down. So the answer is, we've said it repeatedly, we're investing in the businesses that have higher revenue per tran. We're acquiring businesses that start off with lower revenue per tran, and we're increasing all of them.

On the 2 acquisitions in Mexico and Europe, can you describe the margin profile of those acquisitions? I thought you said that the margins were healthy, but the revenue per tran I guess was less than the overall. So any color on the margin profile there would be very helpful.

The margins of the 2 acquisitions obviously are very, very good, but they're a little bit lower than the FleetCor average. Again, we like to buy attractive assets in attractive markets, and to a large degree we like to buy under-performing assets that we can improve. And we believe like other acquisitions that we've had in the past, these are acquisitions that we believe that we can improve over time. Certainly they have very, very healthy margins and kind of in line with the rest of our businesses, but they are below kind of the line average. And then again, to your point on revenue per transaction, these are just lower revenue per transaction products. So as Ron indicated in his comment, when you factor in those businesses to our other businesses in the international segment, the mix of those businesses will cause the overall revenue per tran to decrease. But again, we manage the business on a business-by-business basis, not on the aggregate of just the international as a whole.

The last question is on seasonality. You mentioned that sequentially EPS should get stronger this year. Is that just a function of the timing of these acquisitions and the Shell transaction front on board, because it's been usually very kind of skewed towards the third quarter in the past?

Generally, seasonality-wise, the second and third quarters are better than the first and fourth because of basically holidays and weather in the markets that we're in. But underlying that is, we have a bunch of businesses that are growing and they grow quarter-to-quarter. So if you took out seasonality, every business that we have would either be the same or higher as you get into the fourth quarter than the first. And so that's underlying, Roman, the trends for the year. Glenn's question about if you did $0.60, how are you going to get to what, we said $2.55 to $2.60. The answer is that Q2 and Q3, you get free lift for seasonality and the businesses that are growing have more revenue and profits in Q3 and Q4 than they do in Q1.

Our next question comes from the line of Tien-Tsin Huang with JPMorgan.

Just curious, now that you've owned AllStar and the Mexico asset, if you've seen or identified any sort of quick synergies or upside to some of your original synergy targets?

Tien-Tsin, it's Ron. As you know, we've spent a fair amount of time. We probably worked on the Mexico deal for 9 months-plus and the AllStar deal we've known for 4 or 5 years. So I'd say our thesis prior to close was relatively thorough in terms of what we thought we could do. There is a few things, but I'd say generally whatever, 4, 5 months in AllStar and 6 or 7 months in Mexico, it's setting up as we thought. The business is kind of a bit ahead of what we'd planned for both of them. And I think we remain very confident that we'll put our thesis into action and get more money out of those next year.

And then just international transaction contribution from Mexico and AllStar, is there a way for us to get a review of what transaction looked like excluding that, Eric?

I would say, Tien-Tsin, that if you exclude Mexico and AllStar that our transaction growth on the international segment is kind of in line with where it's been running historically.

That's what I figured you would say. Europe, given what's going on over there, I get the question a lot, just how cyclical can some of the transaction growth be? It sounds like it's pretty stable. I think you said Czech and U.K. was in line, Ron, but could we see things get a little bit worse? Have you seen any signs of that?

No, I'd say again, Tien-Tsin, that it seems kind of steady, steady as she goes. And again, I think maybe it's the markets again that we're in, we've got a big position in the U.K. and in Czech. And I'd say in both of those cases starting a 1.5 years ago, they stabilized and we're seeing nothing to change that view.

[Operator Instructions] And our next question is from the line of Wayne Johnson with Raymond James.

Just following up on the previous questions regarding AllStar and the Mexican acquisition. How long do you expect, in terms of timeline, will it take to bring those margins up to the corporate average? I mean what's your target for that?

Wayne, it's Ron. I would say you would see us getting the kind of line average probably middle, late next year.

And that would be the same for both?

Yes. I'd say we're a little farther ahead on the Mexico thing, because we obviously acquired it sooner and we worked on it a bit longer. But I'd say 12 months to 24 months into these things we've kind of put in place what we're looking to do.

Longer term, how should we think about the mix of U.S. revenues compared to rest of world? Do you guys have a target in mind for that?

Yes, more. I hope if my comments weren't clear that I can make them clear. We're about getting positions in attractive places where the penetration rates and the growth rates of vehicles and fuel in the business models are being prepaid and you can get money from both sides. We're all about getting into places where it's good to be in fuel card. So it's not surprising that we've spent time on Russia, Mexico and Brazil and are focused on those markets. And so I would say you guys should be looking for more of the same. The pipeline that we're working on, again, tends to be outside of here. And we're about it, because we're about trying to get positions in places that can go fast.

I appreciate that. Have you seen any change in the competitive dynamics domestically?

Not really. Again, I think we've spoken, Wayne, a bit about this before that there is a lot of segments in the U.S. and kind of the over the road and the big local national account business, the UPS business, those things are pretty mature and we're kind of not in them and they're kind of slugging along with some rate compression. But the small and mid-size that are really distribution-intensive, you've got to have a distribution capability to get up those. That thing is still decent and you can make decent money in it. So I'd say the competition in that last space is not with other fuel card guys. It's with credit cards and cash and other kinds of functional payments. So I'd say in the U.S. we continue to like the segment that we play in, which is why we're growing 15%. We're not signing up big wins like UPS or Coke. We're signing up, as I said, in the sales opening thousands and thousands of 15 vehicle accounts, which we like because we like the margin dynamics of those accounts.

Ladies and gentlemen, this does conclude the FleetCor Technologies, Inc., First Quarter Earnings Conference Call. We'd like to thank you very much for your participation and you may now disconnect.