Corporate Payments Growth Fuels FLEETCOR Q4 Earnings

Fuel and commercial payments company FLEETCOR published its Q4 2018 earnings data on Wednesday (Feb. 6). Chairman and Chief Executive Officer Ron Clarke is pleased with the results.

“All in all, Q4 may be one of our best quarters ever,” he said during the company’s earnings call Wednesday evening.

The company surpassed expectations, with an 11 percent year-over-year revenue increase to $679.9 million for the quarter, and 120,000 new corporate customers being onboarded to FLEETCOR services in 2018 overall. Earnings-per-share (EPS) landed at $2.78, surpassing Zacks Investment Research expectations for $2.71 per share.

Fuel remains a key driver of growth for the firm, with organic fuel card revenue growth rising to 9 percent during the quarter. However, it was FLEETCOR’s corporate payment operations that saw the greatest quarterly increase, with net revenues rising by 24 percent year over year.

The healthcare and construction industries are among the strong points of FLEETCOR’s corporate payment operations, particularly with 2018 being the first full year with Cambridge Global Payments under the FLEETCOR belt after closing the acquisition in 2017 — a business that showed a “rocking” performance in 2018, said Clarke.

Clarke also noted that the company’s partnership with AvidXchange to launch its automated accounts payable (AP) solution ASAP is on path to become “a big, big deal” for the company. Other partners in corporate payments, including Bill.com working with FLEETCOR-owned Comdata, have contributed an estimated 30 percent to the company’s corporate payment revenues, the CEO noted.

Moving forward, Clarke emphasized the company’s continued focus on mergers and acquisitions (M&A) to drive growth, with several “active deals” on FLEETCOR’s M&A roadmap. The company will also look to expand into Asia.

FLEETCOR expects to book between 9 percent and 11 percent organic revenue growth for 2019. Yet, Chief Financial Officer Eric Dey warned that factors on a macro level will be largely unfavorable for the firm, as gas prices drop, interest rates rise and foreign exchange rates become driven by a stronger U.S. dollar.

“Our 2019 outlook this year is quite challenging,” Clarke noted on the macro headwinds. Still, he added, the company is “pretty bullish on the future.”