Corpay, Inc. (CPAY) Q3 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Welcome to the FleetCor Technologies Inc. Third Quarter 2013 Earnings Conference Call. [Operator Instructions] At this time, I would now like to turn the conference over to Eric Dey, Chief Financial Officer. Please go ahead.

Good afternoon, everyone, and thank you for joining us today. By now, everyone should have access to our third quarter 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, adjusted net income and EBITDA. 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 previously described. Also, we are providing 2013 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 2013 guidance, new products and fee initiatives and potential business development and acquisitions. They are not guarantees of future performance and, therefore, you should not put 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 press release and Form 8-K filed with the Securities and Exchange Commission. Others are discussed in our annual report on Form 10-K. These documents are available on our website as previously described and 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.

Okay. Eric, thanks. Good afternoon, everyone, and appreciate you joining the call today. I'm going to plan to cover just a couple of subjects upfront here. First, I'll comment on our Q3 results and our full year guidance. And then second, I'll discuss a bit the 2 newest acquisitions announced today, NexTraq and Epyx. Okay. So on to the quarter. Really a very good quarter for FleetCor. We reported profit growth of 30% on $1.08 in cash EPS and 20% revenue growth on $225 million of revenue. So 20% top line, 30% bottom line. And over the last 3 quarters, our profit growth, measured in cash EPS, has been, for Q1, it was 50%; for Q2, it was 35%; and this quarter, 30%. So 50%, 35% and 30%. So back to Q3. The drivers for the performance were really fourfold. So first, the U.S. organic growth this quarter of 14%, and really the same story driven by our universal products and our CLC business. International growth was also strong, led by our U.K. businesses, which grew 30% for the quarter. Third, we got help from our acquisitions, the Australia/New Zealand deals in the spring, along with a couple of months of our VB acquisition in Brazil. Just a reminder there, our NKT Russia deal and our CTF Brazil deal actually rolled off this quarter. And the fourth driver is a one-time happy from a favorable U.K. tax law change. That reduced our Q3 taxes by about $4 million, which increased cash EPS $0.05 for the quarter. So without this one-time tax happy, Q3 cash EPS would have been $1.03 instead of $1.08. And then lastly, offsetting these 4 positive drivers, we did have a bit of a headwind in FX, which reduced Q3 revenue in the range of $2 million to $3 million. So in conclusion, the quarter had strong U.S. results, strong U.K. results, some lift from our Down Under and our VB acquisitions, a one-time tax happy, all offset by a bit of unfavorable FX. But by all accounts, for us, again, a very, very good quarter. So let me now transition over to guidance for the balance of the year. So today, we're raising guidance to $4.02 of cash EPS at the midpoint. This is the result of our Q3 prints and our 2 newest acquisitions, NexTraq and Epyx, which together will add about $0.02 of incremental cash EPS to the balance of 2013. And just as a reminder, we started out 2013 outlooking cash EPS of $3.65 at the midpoint. We raised guidance $0.10 in May to $3.75. We raised guidance again $0.10 in August to $3.85. We raised guidance again $0.05 in September to $3.90, as a result of the Brazil transactions. And we're raising guidance again today $0.12 to $4.02 at the midpoint. So we've been able to execute successfully this year on both our organic initiatives and our acquisition efforts, which have driven guidance up each quarter, again from when we outlooked $3.65 at the beginning of the year to $4.02 today. Okay. Let me now transition over to these 2 newest deals, NexTraq and Epyx, both of which we closed this month, October. Okay. So first off is NexTraq, which is an Atlanta-based telematics company. And NexTraq clients are also FleetCor clients. That is, they're predominantly small and midsized commercial fleets. The NexTraq service basically helps companies monitor their mobile workforce, knows their location, dispatches them more effectively, helps companies just generally get more productivity out of their mobile workforce. The team there has really done a great job of building the company. They've grown it into one of the top providers in the U.S. and recently reached 100,000 active subscribers. So our rationale for buying NexTraq is simple. We want to see if we can sell NexTraq services to our fuel card client base faster and more efficiently than the other providers. And, obviously, we've got a big advantage with our built-in client base. We have done some early testing on this marketing front and do have some positive results. But with this deal now, we plan to scale up our sales efforts to ultimately see how effective we can be. We like the idea of deepening our relationship with our fuel card clients and believe that joint clients, those on both fuel cards and telematics, should ultimately stay longer with us. We plan to keep the NexTraq management team in charge of the business, but at the same time, more fully integrate their sales efforts into our sales and service organization. If we're successful in kind of cracking the marketing and acquisition in this business, we've got the opportunity to export this to other markets like the U.K. and Brazil, that have enjoyed pretty good success with telematics thus far. Okay. Let me transition over now to our second acquisition, which is a company called Epyx, which is a U.K.-based fleet management provider. Again, Epyx clients are also FleetCor clients. So in this case, it's both vehicle leasing companies and commercial fleets that use Epyx service to simplify the admin of routine maintenance and vehicle repairs. So Epyx developed an Internet-based system that links their leasing company and commercial fleet clients to approximately 9,000 service garages in the U.K. that also use a version of the Epyx software. So Epyx has been able to sign up a number of the U.K.'s largest vehicle leasing companies and they help to manage over 2 million commercial cars and trucks along with millions of annual maintenance and repair incidents. They earn a transaction fee when their system is used to support a service transaction, making the Epyx revenue quite predictable. So our rationale here is straightforward. We've been looking for ideas to extend beyond fleet fueling into fleet maintenance because it's another very large expense area for our clients. And Epyx has obviously developed a system and an approach that helps leasing companies and commercial fleets better administer maintenance, really over the entire vehicle's life cycle. And we think there's a big demand for this. So for us, Epyx represents a really exciting idea, again to help us extend beyond fleet fueling. So in conclusion, look, we had a very good Q3, with 30% profit growth. We're outlooking a very good full year 2013, roughly 34% annual profit growth if we hit the $4.02 guidance that we're giving out today. We've assembled a large number of new assets this year, the most in FleetCor history. 2013 deals included the Australia/New Zealand transactions in the spring, the series of Brazil transactions we announced in September and our 2 newest, NexTraq and Epyx, acquisitions that we have announced today. So we think we're really well positioned heading into 2014. We've got both solid earnings momentum, along with a number of new assets here that we think we can more fully develop. So all in all, 2014's setting up really well. So with that, let me turn the call back over to Eric to provide some additional commentary on the quarter and on our guidance. Eric?

Thank you, Ron. For the third quarter of 2013, we reported revenue of $225.2 million, an increase of 20% from the third quarter of 2012. Revenues from our North American segment increased 13.6% to $115.3 million from $101.5 million in the third quarter of 2012. Revenue from our international segment increased 28.6% to $109.9 million from $85.4 million in the third quarter of 2012. For the third quarter of 2013, GAAP net income increased 32% to $78.6 million or $0.93 per diluted share from $59.6 million or $0.69 per diluted share in the third quarter of 2012. 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 or cash EPS. Adjusted revenues equal our GAAP revenues, less merchant commissions. We use adjusted revenues as a basis to evaluate the company's revenues, net of the commissions that are paid to merchants who participate in certain card programs. The reconciliations of adjusted revenues and adjusted net income to our GAAP numbers are provided in Exhibit 1 of our press release. Adjusted revenues in the third quarter of 2013 increased 20% to $208.2 million compared to $174 million in the third quarter of 2012. Adjusted net income for the third quarter of 2013 increased 28% to $91.4 million or $1.08 per diluted share compared to $71.6 million or $0.83 per diluted share in the third quarter of 2012. Included in our net income for the third quarter was the impact of a one-time income tax benefit that resulted from legislation that was passed in the U.K. in the third quarter of 2013, which resulted in the U.K. statutory income tax rates being reduced. The lower statutory rates were applied to our deferred tax items, which are payable in future periods. As a result of the reduction in the statutory rates, our income tax expense was reduced by $3.8 million in the third quarter of 2013. The impact of this one-time income tax benefit on adjusted net income per share was approximately $0.05 per share in the quarter. Without this one-time adjustment, our adjusted net income per diluted share would have been $1.03 in the third quarter of 2013. For the third quarter of 2013, transaction volumes increased 6.4% to 84.3 million transactions compared to 79.3 million transactions in the third quarter of 2012. North American segment transactions grew 5.1%, driven primarily by organic growth in our U.S. businesses and the small telematics business we acquired in April. Transactions volumes in our international segment grew 7.8% and were positively impacted by acquisitions closed in 2013. Revenue per transaction for the third quarter of 2013 increased 13.2% to $2.67 from $2.36 in the third quarter of 2012. Revenue per transaction can vary based on geography, the relevant merchant and customer relationship, the payment product utilized and the types of products or services purchased, a mix of which will be influenced by our acquisitions, organic growth in the business and fluctuations in the macroeconomic environment. Revenue per transaction for the third quarter was up in both North America and the international segments. Revenue per transaction was up 8.1% in North America, due primarily to the positive mix impact of signing up customers which use higher revenue per transaction products than the average, organic growth in many other lines of business and favorable fuel spread margins during the quarter. In the international segment, revenue per transaction increased 19.4%, which was due primarily to organic revenue growth in many of our lines of business, particularly in the U.K., and acquisitions closed in 2012 and 2013, many of which had products at a higher overall revenue per transaction versus our line average. When we talk about the macroeconomic environment, we are referring to the impact of market spread margin, fuel prices, foreign exchange rates and the economy in general can have on our business. During the third quarter, the decrease in the wholesale cost of fuel resulted in slightly higher fuel spread margin. And although we cannot precisely calculate the impact this decrease has on revenue, we believe it positively impacted our revenues by approximately $1 million to $2 million, the majority of which was in the U.S. Changes in foreign exchange rates were mixed, and overall, we believe, negatively impacted our revenues by approximately $2 million during the quarter. The foreign exchange rates that had the most negative impact on FX rates during the quarter were the British pound and the Brazilian real. The Brazilian real had the largest impact as it traded at an average of 0.44 versus 0.49 in the third quarter of 2012. The British pound traded at an average of 1.55 versus 1.58 to the U.S. dollar in the third quarter of 2012. And finally, changes in fuel prices were down slightly in most markets and, we believe, had a slightly negative impact on revenue. Now let's shift over and discuss some of the other drivers of our third quarter performance. First, in our North American segment. Most of our lines of businesses performed well, resulting in an approximate 13.6% revenue growth rate in the quarter versus prior year. Some of the positive drivers in North American revenue during the quarter were similar to last quarter, including the continued exceptional performance of our direct business, with increases in both our Fuelman product driven primarily by gains in both volume and favorable market spread margins, and our MasterCard product, which had revenue growth of approximately 19% year-over-year for the quarter. The CLC Group, provider of lodging management programs, had another solid quarter with 21% revenue growth over the third quarter of 2012. This revenue growth was driven primarily by increases in room nights in our CheckINN Direct product. Results in our international business were again positively impacted by strong organic growth in our AllStar business in the U.K., which posted very strong double-digit revenue growth over last year measured in local currency. The Mexican prepaid fuel and food business continues to perform well with revenues also up double digits in local currency. Results for our international business were also positively impacted by acquisitions closed in 2013, which included GE Capital's fuel card business in Australia in March and CardLink in New Zealand in April, and VB in Brazil, which was closed in August. And finally, the macroeconomic environment was not helpful to our international business in the third quarter, as I mentioned earlier, as fuel prices were down slightly in most international markets and foreign exchange rates were unfavorable in 2 of our largest markets, the U.K. and Brazil. And moving down the income statement. Total operating expenses for the third quarter were $113.9 million compared to $101.1 million in the third quarter of 2012, an increase of 12.7%. As a percentage of total revenues, operating expenses decreased to 50.6% of revenue compared to 54.1% in the third quarter of 2012. Included in operating expenses are merchant commissions, processing expenses, bad debt, selling and general and administrative expenses, and depreciation and amortization expense. The increase in operating expenses was primarily due to the additional expenses related to the acquisitions closed in March, April and August of 2013. Also included in operating expenses was approximately $2.2 million of one-time deal-related expense. Credit losses were $4.9 million for the quarter or 11 basis points compared to $5.8 million or 15 basis points in the third quarter of 2012. The improvement in credit losses was primarily due to the continued improved performance in many business lines and the impact of acquisitions closed in 2012 and 2013, which had products with historically lower bad debt as a percentage of billed revenue. Depreciation and amortization increased 33% to $18.1 million in the third quarter of 2013 from $13.6 million in the third quarter of 2012. The increase was primarily due to the impact of amortization of intangible assets related to the acquisitions closed in 2013. Our effective tax rate decreased slightly to 27% compared to 27.8% for the third quarter of 2012. Included in income tax expense in the third quarter of both 2012 and 2013 were the impacts of income tax benefits that resulted from legislation that passed in the U.K. in the third quarters of 2012 and 2013 that reduced income tax rates. The lower statutory rates were applied to our deferred tax items, which are payable in future periods. As a result of the reductions in the statutory rates, our income tax expense was reduced by $3.5 million in the third quarter of 2012 and by $3.8 million in the third quarter of 2013. Excluding the impact of these one-time adjustments, our income tax rates would have been 31.7% in the third quarter of 2012 and 30.5% in 2013. Now turning to the balance sheet. We ended the quarter with approximately $396 million in total cash, $50 million of which is restricted and are primarily customer deposits. The company also has a $500 million accounts receivable securitization facility. At the end of the quarter, we had approximately $394 million borrowed against the facility. We also had $504 million outstanding on our term loan and $233 million drawn on our revolver. As of September 30, our leverage ratio was 1.63x EBITDA, well below our covenant level of 3.25x EBITDA. We intend to use our free cash flow to temporarily pay down the balance in our revolving credit facility and securitization facility and maintain liquidity for acquisitions and other corporate purposes. Finally, we are not a capital-intensive business as we spent approximately $5.2 million on CapEx during the third quarter of 2013. Today, we also announced that in the month of October, we have closed the DB Trans acquisition in Brazil that was previously announced. And we also announced 2 new acquisitions: Epyx, a U.K.-based service maintenance and repair network company; and NexTraq, a U.S.-based telematics company. In total, we spent approximately $400 million on these 2 acquisitions in October. Now on to our outlook for 2013. Given our strong third quarter results and acquisitions recently announced, we are updating our guidance for the remainder of 2013. We now expect revenue to be between $875 million and $880 million, up from our previous guidance range of $850 million to $860 million, adjusted net income to be between $339 million and $341 million, up from our previous guidance range of $327 million to $332 million, and adjusted net income per diluted share to be between $4.01 and $4.03, up from our previous guidance range of $3.87 to $3.92. As a reminder, included in our net income for the third quarter was the impact of a one-time income tax benefit of $3.8 million or $0.05 per share that resulted from U.K. legislation passed in the third quarter of 2013. Without this one-time income tax benefit, our full year guidance would have been $3.96 to $3.98, and we expect income tax rates to return to normal levels in the fourth quarter. Based on our full year revised guidance, our fourth quarter adjusted net income per diluted share guidance is between $1.03 and $1.05, which includes income tax rates returning to normal levels, and approximately $0.01 to $0.02 related to the Epyx and NexTraq acquisitions, which are net of deal expenses and integration expenses expected to be incurred in the fourth quarter. Also, our acquired business in the U.K., Epyx, charges annual fees to customers, which are deferred and recognized ratably over the 12-month service period of the contract. Purchase accounting rules limit the recording of opening balance sheet deferred revenue to the future costs that will be incurred to service the related contracts, plus the normal margin. As such, we are unable to recognize approximately $1.3 million in revenues in 2013, which would ordinarily be recognizable if the fees were paid monthly instead of annually by the customer. This decrease in revenue is included in our Q4 guidance. And finally, just to remind everyone, our business is subject to some seasonality and the fourth quarter is historically one of our slower quarters of the year due primarily to holidays and, in some cases, poor weather. Our guidance assumptions for the remainder of 2013 also include fuel prices and FX rates at current levels, market spread equal to the historical average, fully diluted shares outstanding of approximately 84.7 million shares, and a full year tax rate of approximately 30%. And as always, no impact is included related to acquisitions or material new partnership agreements that we have not already disclosed. And with that said, operator, we'll open it up for questions.

[Operator Instructions] And our first question comes from the line of Phil Stiller with Citi.

I just wanted to check the details of the acquisitions. Eric, I think you said you spent $400 million on the acquisitions. Was that just for the 2 that were announced today, or does that include the DB deal that closed here in October?

Hey, Phil. This is Eric. Yes, that was just for the 2 new deals, so it did not include DB.

Okay. And should we look at the $0.02 accretion in the fourth quarter as a run rate as to what these might contribute as we look forward? Or -- I know there's the deferred revenue headwind and some integration costs, or should we be thinking about a higher number next year?

Higher, Phil. It's Ron. Higher.

Yes, clearly, some of those -- I mean, the deal-related costs are going to spin out and eventually, we're going to lap the accounting adjustment we had to make in the Epyx deal because of deferred revenue issue, and that will fall off kind of as we get into the third quarter next year.

Okay. Are you guys willing to share how material the acquisitions were in terms of the revenue guidance adjustment for the full year?

Phil, we don't disclose specifics around each of the deals, Phil. I mean, as you can imagine, it's very sensitive information as we're a very acquisitive company. And disclosing that information certainly is not helpful when we have conversations with other people. So we really don't disclose specific metrics around each deal. But you could probably assume that from a purchase price perspective, I mean, the multiples would be in line with what we paid in other transactions for the most part.

Okay. That's helpful. And then last question for me. Obviously, you guys have done a lot of acquisitions here recently. Has this cleaned out the pipeline near term? Are you guys -- have enough on your plate to integrate here? Or should we be thinking about more deals as we move forward?

Phil, still busy, Phil. We've got a few small deals on the M&A side, and we've got a couple of, I'd say, material deals still in front of us on the partner side. So I'd say we continue to screen stuff.

How much financial ...

But you're right, we do now have a lot as of today on our plate.

And how much financial capacity will you have after these deals?

Hey, Phil. We still have pretty substantial liquidity. After giving effect of the deals we close in October, we probably have in the neighborhood of a couple of hundred million on the revolver and, obviously, we've got a fairly significant amount of cash around the world as well. And in addition to that, we also have the ability to draw an accordion feature that we have on our existing term facility. So from our perspective, I think we're in pretty good shape.

And we generate $400 million a year free cash flow. So I'd say, Phil, if you think out 6 months, those 3 or 4 things Eric named would give us all of the money we would certainly need next year.

Our next question comes from the line of Smitti from Morgan Stanley.

This is Danyal Hussain in for Smitti. So I just wanted to follow up on Phil's question, that if you look at the acquisitions you've done so far, you're almost at that $1 billion target that I think you laid out before. So is there a new amount that you guys think we should be thinking about between now and in 2015?

Yes, I would say the answer is we have that financial target of kind of $300 million to $400 million in terms of task in our deal team. But as you can imagine, deals are bumpy and so we did do a lot. But I would say it's still a good target to think about next year and the following in that same kind of $300 million to $400 million range.

Okay. And then for NexTraq, is that something you'd be able to scale up pretty much immediately throughout the U.S.?

I'd say our first priority is not necessarily to "scale it up." As I mentioned, in my opening remarks, the job 1 there is to prove or disprove whether we can sell that product line to our clients in a more effective way. So I'd say we'll spend probably the first 6 months proving that out. And if it's successful, if our clients want this set of services, which we think they will, then we'll step on the gas at that point.

Okay. And then my last question is just on Shell Europe. I'm just wondering if you guys have gone live in any more markets in the last quarter?

We haven't, although they've got a -- the SI in this case, a company called CGI, it's got a number of markets kind of queued up. So from our perspective, our app is kind of ready to go into a bunch more and we're just waiting for them to give the go-ahead.

Our next question comes from the line of Adam Carron with Barclays.

I guess first question was, in terms of these acquisitions that you guys announced, should we be thinking about these as kind of the way you've approached acquisitions historically in terms of the doubling the profitability over the first 1 to 2 years? Or do these kind of fall more in line with what we saw in Brazil where it's more of a longer-term strategic play?

I'd say the first thing, Adam, that you said. I think our thesis on these was twofold. One, that we could dramatically improve profit performance, which we believe we can. And then two, that they're big cross-selling opportunities because both of them share the same client base as ours. So that was the 1-2 punch.

Great. That's helpful. And then just a question for my own clarification. In terms of the NexTraq acquisition, I mean, how similar is this business to the business that you bought from Telenav? And kind of what's going to be the strategy in terms of combining both solution sets going forward, and how you'll look to go to market?

That's a really good question. The short answer is they're quite different. So this NexTraq deal, today's deal is what I'll call a traditional, kind of gidget-based, vehicle-based solution, kind of the traditional solution, that we look like a lot of other people in the marketplace with that solution. And the Telenav deal, which we announced in the spring, is really a handset, a phone-based solution where, again, our idea there is to create a FleetCor app that we could basically give to all of our clients and their drivers on their phone, basically not going into their gidgets. And so, they're pretty different in terms of what our objectives are, Adam, with the 2 businesses.

Great. That's helpful. And then just a last one for me. Do you guys have on-hand the organic growth for both North America and international during the quarter?

Yes, Smitti. The organic growth in North America -- oh, I'm sorry -- is mostly -- it's all organic in the U.S. effectively with the exception of the small Telenav acquisition, so it's just north of 10% in the U.S. And similarly, the international organic growth is in that kind of 10%, 11% kind of range as well when you factor out the acquisition.

Our next question comes from the line of David Togut with Evercore Partners.

The CLC had very strong revenue growth, 21% in the quarter, very consistent with Q2. On the Q2 call, you talked about introducing a new branded product for CLC. Can you give us an update on that?

Yes, David. It's Ron. Still no big contribution in this quarter from that. I think it's still a bit in the kitchen, that product. So Q3 was a repeat really of Q2. This CheckINN Direct, what we call our product for kind of small, midsized accounts was just, again, just selling out. We just sold a ton of that product again. So the growth in that business is taking this product that was originally designed for very, very large accounts and dialing it down to fit the needs of a 10-person company, and that's who's buying it.

Got it. And then when do you expect to introduce the new branded product?

It's kind of in test now. I'd say we'd probably start to see some impact Q1 next year.

Okay. Got it. And then direct MasterCard growth slowed to 19%, obviously still a very strong number, but down from low-30s in Q2. How should we think about or kind of model out the growth rate of that business? And, in particular, how much sales resources are you putting behind it over the next 12 months?

Yes, another good question. So I'd say that although we don't provide them, the volume dynamics looked similar this quarter to prior quarters, so the thing is still growing well volume-wise. We had a little bit of a rate hiccup, kind of fuel prices went south. And we took the gas off to get some more volume on some of the rate things. So I'd say that the volume grew faster historically than the rate here. And we actually just had a budget review this afternoon. We're going to keep investing more money, call it another 20% increment in 2014, to keep that line of business growing. So, again, there's almost unlimited demand geographically for the size accounts that we're going after. So it's really just a function of our sales investment.

Got it. And then you alluded to a possible launch at some point of a direct universal card in Europe and possibly tying a platform-based acquisition into doing that. Any update on the timing of such a new product?

Stay tuned. Not far away. Stay tuned, we'll be back to you.

Okay. And just, new Shell card in the U.S., when should we expect that launch?

It's live. It went live -- what are we now? The end of October? I think kind of the middle of September, David. They're boarding their first few clients. They're selling predominantly targeting larger clients on that product. They've done some kind of marketing launch. Their salespeople are basically in the market. They've built a pipeline. And we're literally putting the first few clients on that product as we speak.

I see. And final question for me, I think you alluded to the partner pipeline in your comments. When should we expect to see some of these larger partner deals be completed?

Yes, again, on the partner side, my comment is we've got a couple of what I would call material partner things and another handful of kind of processing-related opportunities. All international, every one of these opportunities is international. I would say you'll probably hear back from us before we break for the holidays.

[Operator Instructions] Our next question comes from the line of Tim Willi with Wells Fargo.

I just had 2 questions here. First is just from a modeling prospective. This seems to happen every year. I don't think I've asked this question before, but sequentially, your rev per tran in North America dips down from 2Q to 3Q. Is that just something seasonal, or is there something around mix or what have you to better understand that?

Hey, Tim. This is Eric. It's really nothing specific around that sequential drop. Effectively, if you look back at the last couple of years, Q2 in 2012 and Q2 in 2013 were both very good spread quarters versus the third quarter of last year and this year. So effectively, it's just that. So there's no real issue to it. [indiscernible] just kind of dropping between the quarters.

Yes. Got you. It makes sense. The other question was just sort of thinking about customer activity. I guess you're asked this, I think, on every call. I'll do it this time. But just anything around like same customer trends to sort of gauge the health of the economy in terms of what you're seeing in North America? And then maybe, I know you talked about the U.K. being up pretty dramatically on the revenue side. Just curious about same customer activity in that economy as well. Anything to point out?

Hey, Tim. It's Ron. I'd say it's marginally better, I guess would be my comment. It's not going backward anywhere now. It's obviously not "roaring." I'd say it obviously varies by market, but I'd say, it's kind of from flat to kind of low single-digits. We might get a couple of points of same-store growth now in a couple of markets. But our core tran growth, volume growth metric is still adding more clients, right, than we lose, adding more transactions basically than we lose is still the key to our volume growth. And although we didn't comment on it, we had a record quarter of what we call sales, which are new clients that we board in the quarter. The U.S. was up, I think I have it in front of me, 20% to 25%. Our Russia business was up 25%. Our CLC business was up like 40%. So we've had a great, really a great sales quarter and a great sales year, which although we don't talk about it because it's not in your guys' models is, again, I think a leading indicator of the health, that the core health of the company -- it says that the marketplace likes our products. So I'd say that that's what's driving most of our growth is new adds versus same store.

Thank you. And I'm showing no further questions in the queue at this time. Ladies and gentlemen, this does conclude our conference for today. Thank you for your participation. You may now disconnect.