Greetings, and welcome to the FleetCor Technologies, Inc. Fourth Quarter 2016 Earnings Conference Call. As a reminder, this conference is being recorded. I would now turn the conference over to our host, Mr. Eric Dey, Chief Financial Officer of FleetCor Technologies. Thank you, Mr. Dey. You may now begin.

Good afternoon, everyone, and thank you for joining us today. By now, everyone should have access to our fourth quarter press release. It can 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 adjusted net income per diluted share. 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 2017 guidance on both a GAAP and a non-GAAP basis with a reconciliation of the 2. 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 2017 guidance, new products and fee initiatives and expectations regarding business development and acquisitions. They are not guarantees of future performance, and therefore, you should not put undue reliance on them. These results 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 on Form 8-K and in our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. These documents are available on our website, as previously discussed, 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. Hi, everyone, and thanks for joining the call today. Up front here, I'll plan to cover 4 subjects. First, I'll comment on Q4 results. Second, I'll review our full year 2016 results and our progress there. Third, I'll provide our initial 2017 guidance. And then last, I'll update you on our business development activity. Okay. So on to the quarter. We reported a good quarter with Q4 revenue of $515 million, up 20% and cash EPS of $1.90, up 12%. So 20% top, 12% bottom. Our organic revenue growth in the quarter was 8%, in line with our expectations. And not surprisingly, the Q4 macro environment was unfavorable again. During the quarter, fuel prices did finally rise higher than last year, but spreads compressed; FX was challenged. So on a combined basis, the overall macro negatively impacted our revenue in the quarter by about $19 million and our cash EPS by about $0.15 compared to the prior period. So on a constant macro or like-for-like basis, Q4 revenue growth would have been 24% and cash EPS growth, 21%. We had a great Q4 sales performance. Global sales were up 32% versus Q4 last year and up 20% for full year 2016. So very, very healthy sales growth. Some of the drivers of Q4 performance included a full quarter of both the STP and Travelcard acquisitions, with STP revenue growth of 14%. Uber's volume tripled. CLC rebounded, up 15%; Shell Europe revenues were great, up 50%; Mexico, up 15%; and our MasterCard revenue in the U.S. continued strong, up 16%. So lots of good performance is helping the quarter. So look, in summary, we're pleased with Q4 revenue and cash EPS, both finished above the high end of our recent guide, and our new sales bookings recovered quite…

Thank you, Ron. For the fourth quarter of 2016, we reported revenue of $515 million, up 20% compared to $430.6 million in the fourth quarter of 2015. The revenue from our North American segment increased 4.8% to $328.6 million from $313.6 million in the fourth quarter of 2015. Revenue from our International segment increased 59.3% to $186.4 million from $117 million in the fourth quarter of 2015. For the fourth quarter of 2016, GAAP net income increased 81% to $95.4 million or $1 per diluted share from $52.8 million or $0.56 per diluted share in the fourth quarter of 2015. Included in GAAP net income in the fourth quarter of 2016 and 2015 were noncash impairment charges related to our minority investment of $36 million and $40 million, respectively. Also included in GAAP net income in the fourth quarter of 2016 and 2015 were noncash stock-based compensation expenses of $14 million and $46 million, respectively. Adjusted revenues in the fourth quarter of 2016 were $489.4 million, up 21% compared to $403.1 million in the fourth quarter of 2015. Adjusted net income for the fourth quarter of 2016 increased 13% to $180.5 million or $1.90 per diluted share compared to $160.2 million or $1.70 per diluted share in the fourth quarter of 2015. Fourth quarter results reflect the impact of the macroeconomic environment, which continues to be unfavorable versus prior year. When we talk about the macroeconomic environment, we are referring to the impact that market fuel spread margins, fuel prices and foreign exchange rates have on our business. Changes in foreign exchange rates from the fourth quarter of 2015 were mixed and overall negatively impacted revenue during the quarter by approximately $10 million. Fuel prices have finally started to stabilize and were mostly neutral versus the fourth quarter of 2015,…

[Operator Instructions] And with that, our first question is from David Togut of Evercore.

Nice to see the acceleration in CLC revenue growth up to 15% from 8% in the third quarter. Can you talk a little bit more about the drivers behind that acceleration and what those drivers look like in '17?

Yes, David, it's Ron. It's mostly just again lapping that big account business that we've talked about. They haven't recovered, but basically, we lapped most of it. So the small account growth rate is shining through more. And I think we have that business, I think we say something about it in Eric's script that we're planning that thing 13% to 15%, David, for '17.

Got it. And then just as a quick follow-up, 14% revenue growth at STP, very strong in the fourth quarter, and I'm glad to hear you're looking for 20% in '17. How are you able to power through some of the macro weakness in Brazil?

I think it's what we've said before. I mean, it's just a great company and a great brand, and we're doing, as we told you, a bunch of things that the prior owners weren't focused on, right, because they ran concessionaires. And so sales investment, pricing, new products. We've been working for 6 months on this transformation plan. We've got some of it already in market, so we think that's the additional lift.

The next question is from Ashish Sabadra of Deutsche Bank.

My question was about the global sales. Global sales was really strong in the fourth quarter, up 32%. I was just wondering if you could give some more color around what parts of the business were doing well on that front.

Yes, Ashish, it's Ron. I'd say again as we've said it before, that number is a little bit bumpy by quarter, so we disclosed, I think, a 7% number last quarter. So some of that is just kind of it rolling into this quarter. So if you think about the full year number, 20%, I say that's a more useful metric for you guys to understand. But I think generally, and on the page in front of me, I think the performance was good literally virtually everywhere. I think the only kind of soft spot I can recall was Brazil. But other than that, I think every business was way up, particularly the Comdata businesses they were way, way up from a year ago.

That's great to hear. And then just a quick follow-up on the European oil [indiscernible] opportunity. I was wondering if there's any update on that front.

Yes. I think I tried to say in the script, we've got 2 active deals that tell us they're going to make decisions this year. I mean, I hate to say we've been told that before, but we are working hard on 2 things and hope to be able to say something about it this calendar year.

The next question is from Ramsey El-Assal of Jefferies.

I wanted to ask about the same-store sales metric. It showed some nice improvement. Can you give us a little more color on what drove that? Was it the energy vertical, which was sort of the big drag kind of perking up? Was it other products or other geographies?

Ramsey, this is Eric. I think really a lot of it is we're basically lapping a year ago when we first started seeing the majority of the weakness, particularly in that energy sector and some of our fuel card businesses and even at CLC, where we saw 2 or 3 of our largest accounts experience significant softness. So we're effectively just lapping that for the most part. So we had basically under 1% same-store sales softness for the quarter.

Okay. And as a follow-up to one of the questions that came before me, the STP growth rate of 14%, obviously, that's some acceleration versus the full year number last year. I'm just trying to get a better sense of, is that acceleration due to you guys now implementing your plan there as opposed to any type of just uptick in the business? I know you mentioned Brazil in general for the macro front was still quite soft. Is this to say that you really are already on the ground there and these tests you're talking about are -- you're starting to implement some revenue opportunity there?

Yes, Ramsey, it's Ron. I wouldn't give it that much credit. I think I said before, we bought it because it's a terrific business and it's got a great team. So they did have some things in stride when we bought it that we've kind of pushed along. And I'd say our impact so far would be small, maybe a point or so of that. But the important thing is that we're in market with a variety of things. So it gives me confidence that we can push those things into the numbers this year. So I'd say no, not a lot in the number in Q4, but a lot of learning.

The next question is from Jim Schneider of Goldman Sachs. And the next question is from Oscar Turner of SunTrust.

I was just wondering if you could provide an update on the rollout of the open loop card in Europe.

Yes, Oscar, it's Ron. I'd say there, unfortunately, not too much to update. I think we spent most of last year testing. We had a product in market. We've been reworking it. We've had a team or 2 selling it. We've got in the hundreds, not in the thousands, of clients using it. So I would say we actually had a big review a week or so ago. I'd say we're still retooling. We're learning a bunch of things about what we need to make the product; b, to get it to compete well against the private-label cards there. So I'd say still working it. I mean, the good news is if we get it figured out, we've been working it for a while, it's going to be hard to get chased because it's pretty complicated. But no, not a lot of progress yet.

Okay. And then I think you mentioned exploring opening your MasterCard and Visa fleet cards to nonfuel spend. I was just looking for more color into that. Would this be in every geography? And then also, how long do you think that would take to implement?

That's a great question. I'd say strategically, this is one of the kind of big ideas for the company and a big upside for the core fuel card business because obviously, it's the big part of the business with hundreds of thousands of clients. So as we've gone from proprietary fuel cards running in proprietary networks to MasterCard here in the U.S. and Visa in the U.K., we've now gotten through the technical and certification and regulatory gates and have been in the market here for, I think about a year now. And so it's working. We're finding that certain clients want some additional controlled spending, for example, like construction clients. We open it up and let them buy construction supplies plus fuel. And so what we're going to do is go back not only into the client base, but as we're prospecting and start to reposition the card a bit, it's just a controlled card that could buy fuel plus mobility things, like public transportation or tolls or vertical things like construction supplies. And so if we can get that right, the leverage and incremental spend in revenue against the same client base is good; and b, I think it gives us a pretty advantaged value prop against others. There's not many others that have that. So we're on that point.

The next question is from Tien-tsin Huang of JPMorgan.

I really like the new disclosures. I just wanted to ask how we should focus or analyze some of those lines. I know it's fresh for all of us. So should we look at the product categories and then the transaction growth versus revenue per tran? Just any tips would be great.

Tien-tsin, this is Eric. Ask and you shall receive.

We love data, so we've got to figure out how to use it.

I understand. Well, you've got a lot of it now. I think the reality is listen, I mean, there's a lot of numbers bouncing around when compare '15 to '16. Some of the business, obviously, has some kind of macro in it, so they're kind of some of them are hard to look at. Some of the businesses, like toll as an example, really didn't exist prior to 2016, so you've got to really look at it really in 2017 because we only owned STP for effectively 4 months. So some of those categories are going to be new. And then some of them that we've owned for multiple years, like fuel card as an example, the trend is going to be more consistent with kind of where it is today. So between '15 and '16, fuel card was impacted by the macro. But between '16 and '17, obviously, the macro is mostly kind of neutralized. So it'll be both, right? I mean, when we grow our business organically, it is through some combination of new sales. We talked about that, so call it, to pick a round a number, about half of our organic growth comes from our new sales for the year, and then kind of the other half comes from some combination of new rate initiatives and new product initiatives. So it comes -- it's going to come in both of the lines.

Yes, Tsien, let me just add because I do want to make sure you get some return from this. So a couple of tips, to use your word. One is, don't miss the diversification point, right? So in '14, 75% of the company, fuel cards. In '17, 55%, 56%, so almost half the company is nonfuel cards. Second tip is 10% organic growth plan for '17 don't miss the fuel cards, which are half the company, is planned at 10%. So people out there that think oh, oh, they have to diversify to grow the business 10%, don't miss that. And then don't miss that the second group of products, call them Corporate Payment products, are all growing more than 10%, which means the bucket of other is growing less than 10%, and we may do something with that bucket, as I've said previously. So we're trying to get the company positioned as we deemphasize that "other category". The mix will by its very nature, improve the growth rate going forward. So that would be my second tip, I think.

Okay. That's good to see the portfolio, obviously. So I guess, as my follow-up, maybe just more of a clarification. Maybe 2 clarifications, if that's okay. The 20% sales and the strong fourth quarter, what sort of the new sales outlook for 2017? I think I heard a 15% figure in your prepared remarks.

You got it.

Okay. So that is that. And then the second one was just was just the macro flow-through, the $30 million in the $0.12 translation. I guess, it doesn't seem to be as favorable as the drag was in previous quarter. Is there a difference in the sensitivity on the up versus down with the macro or am I just splitting hairs?

Yes. I think again, maybe we confused. We use the word macro, Tien-tsin, forever to be fuel price, fuel spreads and FX, those 3 things. So we're saying today that we're assuming and going to church that '17 is quite positive against those 3 things to the tune of $30 million in revenue lift, so call it 1 point to 2 of growth, right, just from that. But the 2 things that are kind of also quasi-macro, interest in the tax compare are going the wrong way. So the benefit of the first 3 against the negative of the second 2 ends up at about was it $0.12?

$0.12 negative.

Negative. But here's what I'd say to everybody. We're sick of macro, probably like everyone else. So call it even. We're just happy to be looking at a year where it's tiny in terms of what the impact would be from the world to us.

Our next question is from Bob Napoli of William Blair.

On the Corporate Payments business, just looking at for the full year, you had transaction growth of 20%, revenue growth of 10%. What it is the mix in there that's causing that? And what type of trends are you looking for as far as transaction versus revenue in Corporate Payments 2017?

Hey, Bob. This is Eric. As we've called out for several quarters now, we've seen some softness in the health care vertical in virtual cards. And it really is health care kind of dragging it down from a rate perspective. There's been a couple of large accounts that kind of opted out that were relatively profitable. We've also renegotiated a few contracts from a rate standpoint, so a little bit lower than where they are now. So that's been kind of impacting the rate versus the volume. Now I want to make sure you're kind of clear. I mean, we are selling that product in bushel barrels. So I mean, we are -- we're going to grow that business basically from a volume perspective going forward, and that's what's driving the favorability.

Okay. And then just on your balance sheet, fixed -- I mean, you have -- I don't know if you have any fixed rate debt. In an environment where rates are likely -- more likely than not to go up from here, why not at this point, even today, where different rates go, you have some very attractive fixed rate debt out there, why not fix a chunk of your debt?

Bob, we've looked at that historically, and we're still looking at it. We've had a lot of conversations about it internally. I think that we've obviously had some hedges in place in the past. We've never come out ahead in a hedge. And given our relatively low, low leverage today and the room that we have under our covenant, it really isn't a necessity for us. And we actually don't believe we can come out ahead of it. If you look at it over the next kind of 3 years and the analysis we've done, it just -- we just don't believe it's really a situation we come out ahead.

The next question is from Darrin Peller of Barclays.

I just want to touch on the outlook, it's -- having covered you guys for a number of years now, if you go back a few years ago or even 2 years ago, you've had a precedent of being fairly conservative, I think, in your outlook with regard to different assumptions that you left room for, whether it's accretion from deals or other variables. Macro headwinds made that a little challenging last year. Your growth seems to be really now reaccelerating. Is there elements of that in this outlook? Anywhere we can keep in mind that's sort of conservative versus baseline? How should we really think about that?

Darren, it's Ron. I would say -- I don't know if those adjectives work for us. We tried to get -- give numbers we can make. We always have. And I'd say this year is no different. And b, we only include what we own. We don't build in things we're working on in the pipeline or buybacks we haven't done. So I would say, to your point, one of the reasons we beat our opening guidance for most of the year is just generally we actually do something during the year that's accretive that's obviously not in our plan today, the 1st of February. So that's how we'd say it. I wouldn't say, oh this is a sandbag. But we are trying to give you a number we can get.

Okay. And I mean, do you think there are things that could potentially be done this year that are not in the plan yet in terms of whether it's M&A or other partnerships that could happen in 2017, specifically?

Yes. That's why I tried to call out hey, we're -- we've got a couple on each side on the partner outsourcing side and on the deal side. Whether we'll pull the trigger, like always, we try to be smart, not get rushed by people. But there's certainly activity and opportunity to pull the trigger.

All right. That's great. And then just one follow-up on the -- just looking at the new disclosure, if we think about your guidance, I mean, it was helpful to get your disclosure and all the growth channels. Specifically, the fuel cards breakdown, you had about 1% growth in the overall revenues in '16, and a lot of that was really just fuel prices, I think, right? If we look at that growth rate and also look at the Corporate Payments, I just wanted to get more color on that, too. I mean, I think you mentioned just given the bookings growth, that could be pretty material again in 2017. What's actually happening in that business with regard to incremental industry verticals being added? I know construction was an area you guys are always good. Give us a little more color because it seems like a really strong opportunity long term.

Yes, it's Ron again, Darrin. I'd say on the fuel cards, I don't know if it was in Eric's comments, but that penciled out about 9% organic if you throw out the fuel price and the spreads for '16. And we have that planned at 10% for 2017. Corporate Payments was kind of mid-double-digits, and we're now looking, again, mid, call it, say mid-double-digits. I think the answer is, which is a good one is, that there's not a lot of hurt in your head on Corporate Payments. We've got a good product, a lot of referenceable clients, a huge market. You mentioned construction. It's about 1/4 of our direct business there, and we have 3% of the market. So this is a game of just getting at it. We put 60 people on the streets from 5 2 years ago, and they're getting trained and getting the pipeline. And we doubled the sales last year from the year before. So I think the way to think about it is just chasing what we're doing and then getting the stuff onboard it is going to grow that business certainly over the next 2 to 3 years. So we are trying not to overcomplicate it. We're trying to just get at what's working.

The next question is from Danyal Hussain of Morgan Stanley.

I just want to clarify something on the organic growth. So I think same-store improved pretty dramatically from the third quarter to the fourth quarter. That's the key ingredient, obviously, for the organic growth. But you didn't really see much of an uptick, so just wondering if you could bridge that for us.

Danyal, this is Eric. Again, we kind of compare that. Is it really a quarter-to-quarter comparison as much as it's a year-over-year comparison? So I would say, first of all, so you guys understand, the organic growth really came in exactly kind of there we thought it was going to be. In the third quarter, I think it was down about 2.5%. In this quarter, it was down kind of under 1%. But again, you compare it to the prior year really as in a quarter-to-quarter kind of thing. And again, this year, we were really lapping a lot of softness that really started to materialize a year ago in kind of the energy sector, both on the rail side and on the fuel side. So we are kind of getting back to more of a normal same-store sales kind of a growth area. And I think our business is going to -- as we've been talking about in the call, is going to reaccelerate next year from an organic growth perspective. We ended this year at around, if you average all 4 quarters, around 8%, and we're going to accelerate to around 10% next year. And again, we're going to see double-digit growth rates in fuel cards, Corporate Payments, tolls and lodging next year. So again, I think we're going to be in a pretty good place.

Okay. And then just to clarify, the organic growth for next year, that's 10% for the full year. And if Speedway is kicking in, I think you said at the beginning of the second quarter, and it probably takes a couple of quarters to ramp. Would that suggest maybe you're starting off the year closer to 8% and exiting a couple points higher than 10%?

Yes, I don't know if I'd use the word 8%, but for sure, it will build as we layer in the things that we talked about -- Speedway, STP, pricing, the onboarding of the Corporate Payments thing, MasterCard raised its interchange starting April. There are 3 or 4 things that will become additive as we walk through the year. So our exit will certainly be higher than 10%, and our entry will be a bit lower than 10%.

Ladies and gentlemen, we have time for one more question. It comes from the line of Sanjay Sakhrani of KBW.

Most of my questions have been answered, and good quarter. Maybe just on Speedway. Could you just talk about how much of Speedway actually gets factored into this year. And is it more of it gets accounted for the following?

Yes, Sanjay. I'm not exactly sure of the question, but the short answer is yes, we -- there's a card portfolio Speedway's built up over x period of time, and we've done IT and are converting, right, sending cards out or issuing cards to bring people across. That's happening as we're on this call. And so call it sometime in Q2, all of that business will be running on our systems. And then we will start to kind of treat that portfolio as you walk through kind of Q3 and Q4. So it costs money, I'd say to have that thing in the first quarter, and it starts to kind of create some money in the fourth quarter. So the exit rate of revenue into '18 will be dramatically higher than the full year number for '17.

And do we have a sense of kind of how to dimensionalize that?

I don't know. I think we told you guys that it's the fifth largest fuel retailer and that their card portfolio is commensurate to larger than their retail side. So in English, their card portfolio is probably in the top 4. So it's a big piece of business. But because of confidentiality, we don't say much more.

Got it. And final question, just obviously we've heard a lot about the political landscape and how it's reinvigorated kind of business optimization. Are you seeing any of that kind of flow through into your end markets?

I would say that's too early to call. At this point, obviously, it's kind of just beginning. I mean, from our perspective, it would be coming in improved volumes, so it's just too early for us to kind of see whether same-store sales are actually going to improve. Ask me in 12 months and maybe we'll have a different sentiment. And then we're all keeping our fingers crossed from a tax perspective that we're going to see lower tax rates going forward, but we'll have to wait and see what happens.

And how would that tax, when we think about those tax implications, could you maybe just talk about how those flow through for you guys?

Well, I mean, yes, they lower the corporate tax rate. I mean, obviously, they'll have a direct impact on our bottom line. But until we see what the exact plan is and spend some time evaluating what the plan is, we just -- we won't know. But certainly, everybody believes that it's going to be lower than where it is today.

Yes, we'd also like to repatriate the cash too if you guys want to call Washington. That would be another [indiscernible].

Thank you. I would now like to turn the conference back over to management for any closing remarks.

It's a wrap, I think. Thanks, guys. Appreciate it.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.