FleetCor Technologies, Inc. (FLT) · 2. Major Oil Partnerships develop fuel card programs with FleetCor in exchange for an increase in customer volume and consistency of transactions

August 5, 2014 Baird Equity Research Business Process Outsourcing

We are initiating coverage of FLT with an outperform rating and an 18-24 month price target of $157. FleetCor has solid positioning within their North American payments segment, and they continue to attack new growth opportunities in the telematics industry. They continue to pursue new geographic regions, mainly focusing in Europe, Latin America, and Asia. With organic growth in the high single to low double digit range, a newly acquired contract with Shell Europe in Germany, and many recent M&A transactions completed in 2013, FleetCor is well positioned to post strong numbers for 2014 and beyond. EXECUTIVE SUMMARY ! FleetCor provides fuel cards and other workforce payment products

to businesses. o Relationships with merchants and networks (46% of 2013 revenue)

include business from gas stations, hotels etc. Revenue is generated from fuel price spreads, as a percentage of transaction or on a fixed fee basis.

o Relationships with customers and partners (54% of 2013 revenue) include business from vehicle fleets and major oil companies. Revenue is generated from customer on late fees, interest, card fees and more, and from partners on discounted fuel prices.

! We expect 15-20% revenue growth over the next several years. o Organic growth of 10% plus. Ongoing recurring revenue from

installed base should generate 2-4% unit growth, 2-4% price increases annually in addition to 3-5% from cross-selling initiatives.

o Growth from acquisitions should generate an additional 4-6% revenue growth, and due to operating leverage potentially 10% earnings accretion. European and other international markets provide ample room for additional M&A that will continue to drive International revenue north of 50%

o Management target $1B-$2B for M&A spending over the next 3 years on a base of just $1.1B in 2014 companywide revenue

! Superior financials. o Adjusted EBITDA margins of 59% o 2012-2013 YOY Revenue growth of 27% o Approximately 2.16x Adjusted EBITDA leverage (with 3.25x upper

target threshold) o 2014E > $400mil in FCF (~$5/share)

! We have a $157 price target. o This is based upon 25.84x 2015E EPS of $5.84. Our estimates do

not include significant cross-selling or future accretive acquisitions. o Upside to our 2015 estimates could yield an additional .50¢ -.75¢ to

EPS. This could take our target up an additional $15-$20/share.

INITIATING COVERAGE Estimates FY Dec 2013 2014E 2015E Q1 0.77 0.88 1.12 Q2 0.86 1.06 1.24 Q3 0.86 1.1 1.27 Q4 0.74 1.14 1.33 Fiscal EPS 4.17 5.07 5.84 Fiscal P/E 31.41x 25.84x 22.4x

Stock Data Rating: Outperform Suitability: Average Price Target: $157 Price (8/4/2014): $131.07 Market Cap (Bil): 10.88 Shares Out (Mil): 81.8 Average Vol (3m): 628,006 Dividend Yield: N/A FOR INTERNAL USE ONLY

Trevor P. Hoy [email protected] (414) 298-7491

FleetCor Technologies, Inc. (FLT) Initiating Coverage with an Outperform Rating

August 5, 2014 FleetCor Technologies

Robert W. Baird & Co. INTERNAL USE ONLY I 2

Investment Thesis We are initiating coverage of FLT with an outperform rating and a $157 price target. FleetCor is a payment processor with a proprietary network that provides fuel cards and other workforce payment products to businesses. They have great positioning within North America, and continue to attack new growth opportunities in the telematics industry. Additionally, they are pursuing acquisitions and greenfield opportunities in new geographic regions abroad, mainly focusing on Europe, Latin America, and Asia. With organic growth in the high single to low double digit area, a newly acquired contract with Shell Europe in Germany, and multiple M&A transactions in 2013, FleetCor should continue to post strong numbers for 2014 and beyond.

! New opportunities in both the North American and International segments. FleetCor currently is one of the leading payment processors of fuel cards, which are charge cards used by vehicle fleets to better track and control spending on fuel. In North America these fuel cards have a strong presence, while the international markets remain largely untapped. With diverse language capabilities, a broad set of technology interfaces and a business platform that can function across diverse markets, FleetCor has a unique competitive advantage. These advantages allow them to penetrate the European market, which in the aggregate is much larger than the U.S. At the same time, FleetCor will be able to cross-sell and expand its services and offerings in the U.S. to its existing customers. FleetCor is also well positioned to be a share taker.

! Scale and a proprietary network reach provide a competitive moat. Successful execution of M&A has provided FleetCor with an extensive network and success in penetrating a large number of fleets within the transportation segment. Similarly, their strategic partnerships with major oil companies allow them to leverage established brand names and further extend their acceptance reach. These relationships coupled with specific technology and distribution requirements create significant barriers to entry. FleetCor enjoys in excess of 90% customer retention rate, which illustrates their market dominance.

! Strong seasoned management. CEO and Chairman of the Board, Ronald F. Clarke, has experience being a Chief Marketing Officer, Chief Operating Officer and President of multiple companies prior to FleetCor. Ronald has been FleetCor’s CEO for 14 years, and Chairman of the Board for 11 years.

! Proven acquirer. Since 2002, FleetCor has acquired over 60 companies and commercial account portfolios. There are large fragmented markets to continue to acquire in other geographic areas such as: Europe, Latin America and Asia. Historically, FleetCor has proven to double profitability of the acquired companies within a few years after acquisition. Other service and product markets provide further opportunities for acquisitions. Management, on a recent conference call, acknowledged only one integration disappointment out of the 60 acquisitions.

! Strong financial performance. From 2003-2013, FleetCor has experienced 29% aggregate revenue growth and 40% adjusted net income growth for the same period. With approximately 70% fixed costs, low CAPEX that amounts to 2.3% of revenue and 59% adjusted EBITDA margins, FleetCor has strong operating leverage. Coupled with their operating leverage, the company targets future organic growth of 10%.

! Diversified revenue streams. FleetCor is able to generate revenue from multiple relationships and from multiple business segments. Not a single one of their relationships with major oil companies represents more than 10% of consolidated revenues.

! Initiating coverage with an outperform rating and a price target of $157.



Company Background and Overview Headquartered in Norcross, Georgia, FleetCor provides fuel cards and workforce payment products primarily to commercial fleets, oil companies and petroleum marketers. FleetCor’s fuel cards act similarly to a credit or debit card, and allow companies to more efficiently control their drivers’ spending. In addition to their fuel cards, FleetCor has been expanding their scope of products and services by offering prepaid cards, hotel and food cards, and telematics services. Operating in 43 countries with over 500,000 commercial accounts, FleetCor has an extensive global presence and operates under various private label brand names. They partner with companies who in return receive increases in client business volumes. In 2000, the company acquired domestic fleet card platform Fuelman, and launched ARCO fleet card. Through numerous other acquisitions FleetCor has globalized and expanded to become a leader in specialized workforce payments. FleetCor consummated its initial public offering of 12.7 million shares at a price of $23/share on December 15, 2010. Go To Market Strategy – Four Key Areas

1. Fleet Operator Business includes the direct relationships and fuel card services that FleetCor maintains with fleets of all sizes. The fuel card process is broken down into two fundamental steps: driver specific pin numbers and manual odometer entry to accurately track mileage and gas usage. These two requirements ensure maximum protection from misuse of company resources, and provide data for improving routes and vehicle efficiency. A customer presents the card to purchase fuel; FleetCor authorizes the transaction and covers the cost short-term. In this sense, FleetCor acts as a credit service in the short term and because of this has to hedge against credit loss by instituting fee penalties. FleetCor generates revenue from program fees, transaction fees, late fees and other.

2. Major Oil Partnerships develop fuel card programs with FleetCor in exchange for an

increase in customer volume and consistency of transactions. By purchasing fuel at a wholesale cost, FleetCor is able to save fleet users money and increase demand for oil companies, while profiting on margin price differences. Partnering with major oil companies significantly expands FleetCor’s network, and they benefit from doing business under well-recognized brand names. Revenue is generated on a per-transaction basis and from fuel-price spreads.

3. Petroleum Marketer Services provide instant network growth for FleetCor, and serve

as another outlet in which FleetCor is able to provide products and services to its customers. In exchange for established networks and brand recognition, FleetCor provides and manages fleet card programs that broadens the marketer’s customer base and increases their transaction volumes.

4. Specialty Payment and Other Services broadens and diversifies FleetCor’s offered

products and services, which in turn helps to diversify their revenue streams. These extra services allow customers payment services for lodging, food, prepaid cards and other telematics services. This diversification allows FleetCor to penetrate new markets and to provide users with greater control for employee spending.



Acquisition Review FleetCor has been highly acquisitive, consummating over 60 transactions since 2002. FleetCor has shown great historical success in acquiring companies, and foreign markets provide great opportunities for further acquisitions. Internationally, major oil companies dominate the fleet card industry due to variations in languages and business processes. However, FleetCor possesses the abilities to services those fragmented areas, acting as a major catalyst for future M&A. Below is a timeline of the primary acquisitions over the past four years. 2013 –$848.2 million of acquisitions

! Fleet Card (March 25) – FleetCor acquired specific assets of GE’s Custom Fleet

leasing business and is part of the fleet operator segment. Fleet Card acts as one of Australia’s independent, multi-branded fuel cards, which utilizes comprehensive card programs to enable companies to better manage fuel and vehicle expenditures. It is accepted at more than 5,000 multi-branded fuel outlets and 7,000 motor dealerships and repair centers in Australia.

! Cardlink (April 29) – Part of the fleet operator segment, Cardlink is the leading multi-branded fuel card in New Zealand, with over 90% network acceptance at fuel stations, including all major oil company brands. CardLink has depth and experience with more than 30 years of experience and a client base exceeding 10,000 companies. They provide card issuing, partner services to major oil companies, loyalty & payment systems and fleet management expertise.

! VB Servicos (August 26) – VB Servicos is a provider of transportation cards in Brazil and part of the specialty payment and other services segment. In Brazil, employers are required to provide certain employees with prepaid public transportation cards to subsidize their commuting expenses. VB serves over 35,000 business clients and supports approximately 800 transportation agencies across Brazil, with about one million employees.

! Epyx (October 1) – Epyx is a provider of technology solutions for the automotive sector that allows for better management of sourcing, e-procurement and transaction processing, and is part of the specialty payments and other services segment. Epyx provides a SaaS system and roughly 9,000 vehicle repair garages in the UK.

! DB Trans (October 15) – DB Trans is a provider of payment solutions for drivers of heavy goods vehicles in Brazil and is part of the fleet operator segment. DB serves shippers, transporters and independent truckers in multiple segments of the Brazilian industry, and by using an integrated intelligent portal DB’s clients can control and manage their toll, freight and fueling costs.

! NexTraq (October 17) – NexTraq is a GPS fleet management solution based in Atlanta, and is in the specialty payments and other services segment. NexTraq provides a SaaS telematics solution that enhances productivity and controls costs by implementing real time vehicle tracking, route optimization, job dispatch and fuel usage monitoring.

2012 –$207.4 million of acquisitions

! Russian Company (June) – FleetCor purchased all of the outstanding stock of a fuel card company in Russia. This expands FleetCor’s presence in Russia, as they are a leading company in the fuel card market serving major oil clients and other independent issuers.



! CTF (July) – FleetCor purchased all outstanding stock of CTF, a fuel payment processor located in Brazil for $156 million. This acquisition extends FleetCor’s payment services to road fleets, ships, mining equipment and railroads in Brazil.

2011 –$333.8 million of acquisitions

! Efectivale (August) – Acquired all outstand stock of Efectivale, which extends

FleetCor’s prepaid cards and food voucher services in Mexico, and is part of the specialty payment and other services segment. Efectivale services over 10,000 businesses and exemplifies FleetCor’s attempt to penetrate emerging payment markets.

! Allstar (December) – Allstar is a fleet card company in the United Kingdom and part of the fleet operator business segment. With over 30,000 customers and an extensive network, Allstar provides 100% access to all major fuel brands.

Source: FleetCor SEC 10-k



FLEETCOR

Oil Companies

Gas Stations

Vehicle Fleets

Provides wholesale fuel price discount

Sells fuel at mark-up price

FLT manage fleet card programs

FLT takes fee for every transaction

Fleet card programs increase foot traffic

FLT charges a mark-up price

Provides fleet card services and locations

FLT charges interest, fixed fees, card fees and other fees

Sources of Revenue FleetCor generates revenue from three key sources. Below is a diagram illustrating FleetCor’s key relationships with oil companies, merchants (gas stations, hotels etc.) and vehicle fleets.

FleetCor generates revenue in two defined segments – North America and International. Originally, FleetCor was largely a U.S.-based operating company, but since 2010 operations have expanded and revenue has gone from approximately 30% international to over 50% today. Inside both segments, FleetCor services commercial fleets, major oil companies, petroleum marketers and offers other payment services.



68.6 82.8 126.4

35.6

63.4

127.5

0

50

100

150

200

250

300

$ M

illio

ns

North America Revenue International Revenue

0%

10%

20%

30%

40%

50%

60%

70%

80%

North America International

From Customers

and Partners 54%

From Merchants and

Networks 46%

NORTH AMERICAN REVENUES COMPARED TO INTERNATIONAL REVENUES Segment revenue comparison

In aggregate, opportunities in foreign markets are larger than the United States and provide ample opportunity to gain market share. In 2013, international revenues increased 41.3% primarily due to organic growth and the realization of revenues from acquisitions that year and in 2012. While these acquisitions contributed roughly $85 million of revenue for 2013, lower fuel prices internationally and unfavorable foreign exchange affected revenue adversely.

REVENUES BY CUSTOMER SEGMENT

" % of Spend " Fixed Fee " Spread-based

" Program Fees " Other Fees

FleetCor Receives: FleetCor Receives:

Businesses such as gas stations pay FleetCor and provide discounts on fuel in exchange for increased foot traffic. FleetCor also operates under private label names, which increases brand recognition and loyalty.

FleetCor’s fuel cards and other products and services help vehicle fleet customers control costs, while also managing major oil companies’ fleet programs and increasing their customer volumes.

Exhibit 1

Exhibit 2



16% 20%

65%

0%

10%

20%

30%

40%

50%

60%

70%

Tied to fuel-price spreads Influenced by absolute price of fuel From program fees, transaction fees, late fees and other

REVENUES BY SERVICE OFFERING

FleetCor advances customer payments and collects late fees from those who have delay payment.

FleetCor profits from discounts and mark-ups on fuel prices from merchants

Fuel prices are volatile, and when prices change FleetCor is susceptible to increases or decreases in revenue

FleetCor is able to customize programs and services to generate revenue in multiple ways

Exhibit 3



18,887

3,195 2,807 2,105 1,513 1,136

- 2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000 20,000

Uni

ted

Sta

tes

Rus

sia

Bra

zil

Mex

ico

Uni

ted

Kin

gdo

m

Aus

tral

ia

Dai

ly O

il C

onsu

mpt

ion

(Tho

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d B

arre

ls/D

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- 2,000 4,000 6,000 8,000

10,000 12,000

Dai

ly O

il C

onsu

mpt

ion

(Tho

usan

d B

arre

ls/D

ay)

CURRENT AND NEW MARKET OPPORTUNITIES Nascent international markets

With FleetCor’s language capabilities offer significant competitive advantage. Internationally, fleet cards are largely controlled by major oil companies. However, Euro Shell recently agreed to let FleetCor implement fuel cards in Germany. This is an important stepping stone into these unpenetrated markets.

Revenue concentration is not a concern with FleetCor as they have a well-diversified customer base. Their top three strategic relationships with major oil companies are continually decreasing as a percentage of consolidated revenues. For years ending 2013, 2012 and 2011 the aggregate total for these three oil companies was 13%, 16% and 21% respectively, and not a single one had more than 10% of consolidated revenue for 2013 or 2012.

FleetCor currently produces revenue from these regions

Regions where FleetCor can continue expansion

Exhibit 4



Investment Risks

A decline in retail fuel prices could negatively affect FLT’s revenue and operating results. FLT’s products and services are closely tied to the purchase of fuel, which is historically subject to volatility. In 2013, roughly 20% of FleetCor’s revenue is tied to charging customers a fee based on the amount of fuel purchased. Therefore, if fuel prices decline, customers are spending less on fuel leading to less revenue. With less absolute money being spent on fuel, FleetCor’s collected fees would also decrease. A contraction in fuel price spreads could negatively affect FLT’s revenue. Revenue derived from fuel price spreads are calculated by the price FleetCor charges customers for fuel subtracted from the price they pay for fuel from the merchant. Contractions in these spreads occur for two reasons. When the merchant’s wholesale cost increases quicker than the prices charged to the customers by FleetCor a contraction occurs, or when FleetCor’s price to customers decrease quicker than the rate of the merchant’s wholesale cost. In 2013, 16% of revenue came from fuel price spreads. If credit risk from FLT’s customers are not appropriately monitored an increase in credit loss could occur. FleetCor implements numerous screening methods to hedge against credit risk, but it always remains a possibility, as they cannot always predict fraudulently completed applications. The small to mid-sized businesses are the main source of credit risk. Changes in industry, fuel prices and the economic environment can all cause periodic peaks in customer credit and spending, which increase credit losses. If not carefully monitored, credit risk could increase bad debt and adversely affect FLT’s financials. If FLT does not compete effectively in their competitive markets the business will be adversely affected. FleetCor’s products and services operate in an extremely competitive market ranging from competitors of all sizes. Due to FleetCor’s broad range of product and service features they experience competition in multiple separate markets. This complicates prioritization and pricing as many of these services are intertwined. Additionally, some current competitors are much larger in size, acting with greater flexibility, brand recognition, larger customer bases and more. This size advantage allows them to adapt quicker and add a broader range of services and products to their already existing businesses. There are several key relationships and renewal is not guaranteed. The major oil companies and petroleum marketers whom FTL have strategic relationships with are referred to as “partners.” In 2013, roughly 13% of consolidated revenue came from FleetCor’s top three strategic relationships. Success is contingent upon their ability to maintain and add to their strategic relationships, and also contingent upon those partners maintaining their own brand image as FleetCor operates under the partner’s brand names. Merchant relationships must be continually built-upon and maintained. In order for FleetCor to service their customer base they must have relationships with merchants in the locations where customers are using their products and services. There are no guarantees for maintaining and growing merchant relationships – contractual agreements with fuel



merchants typically included initial terms of one year and automatically renew on a year-to-year basis. Inability to expand and the potential for unsuccessful future M&A’s. Expansion and M&A’s have served a critical role in FleetCor’s success, entering into new territories and new areas of business. However, continued success and execution of expansion and of future M&A’s is not guaranteed. Underperforming in these areas could adversely affect their financial success. Uncontrolled risk and exposure to foreign exchange risks. As a result of such a large international presence, FleetCor is inherently exposed to changes in currency rates and restrictions on realizing revenue generated across borders. In 2013, approximately 49% of revenue was generated from currencies other than the U.S. dollar. Therefore, changes in currency rates would directly affect revenue, and restrictions of the conversion of currencies could limit access to the cash generated.

Networks FleetCor provides their products and services through two forms of networks: closed-loop and experienced third-party networks. By operating under many different brand names, FleetCor’s market penetration is widespread and has extremely high retention rates in the majority of its markets. Acquiring major oil and petroleum marketer partners has given FleetCor instant access to already established networks; building upon their proprietary closed-loop networks in both the North American and International segments.

North American Proprie tary Closed-Loop Networks

Fuelman network FleetCor’s main proprietary fleet card network in the United States, with more than 12,500 merchants and 50,000 fueling sites, and roughly 28,000 maintenance sites.

Corporate Lodging Consultants network (CLC)

FleetCor’s lodging network in the United States and Canada, covering more than 17,800 hotels.

Commercial Fueling Network (CFN)

Fueling site in the United States and Canada with a “members only” feature and remains unattended. Includes roughly 2,630 fueling sites and about 260 petroleum marketers.

Marcus Provides fleet telematics services in United States and Canada to over 100,000 users.

Internat iona l Propr i e tary Closed -Loop Networks

Allstar network Fleet card network in the United Kingdom with about 3,800 merchants and more than 7,500 fueling sites.

CCS network Fleet card network in Czech Republic and Slovakia, with about 1,600 merchants, over 2,500 fueling sites and 1,400 other sites that accept FleetCor’s cards.

Keyfuels network Fleet card network in the United Kingdom, with about 480



merchants and over 2,290 fueling sites.

Petrol Plus Region (PPR) network

Fleet card network in Russia, Poland, Ukraine, Belarus, Lithuania, Estonia, Latvia and Kazakhstan, with roughly 725 merchants and about 11,600 fueling sites.

Efectivale network

Provides fuel, food card and voucher networks in Mexico, with about 8,400 merchants, 5,900 fueling sites and 67,000 food sites.

CTF network

Fuel control network in Brazil in accordance with BR Distribuidora and Ipiranga Distribuidora (retail oil distributors), working at more than 1,000 highway fueling sites.

1link service network

A maintenance and repair network in the United Kingdom processing greater than 5,700 suppliers with approximately 8,900 service centers.

Auto Expresso network A toll network in Brazil processing about 90% of toll roads in Brazil.

VB Distribution system Transportation cards distributor in Brazil servicing more than 900 public transportation agencies.

Third Par ty Networks

MasterCard network

Allows FleetCor to implement corporate cards within the United States and Canada, which function under MasterCard’s system and cover roughly 185,000 fuel sites and 492,000 maintenance locations.

Major oil and fuel marketer networks

Major oil companies and petroleum marketers located in North America and internationally, and leverage the already existing brands of these partners.

UTA network UNION TANK works with European transportation services with more than 48,000 points of acceptance over 39 European countries with roughly 33,000 fueling sites.

DKV network DKV works with European transportation services accepting fleet cards at more than 54,000 locations in 42 countries with approximately 38,000 fueling sites.

Carnet networks Provides a fuel and food cards network in Mexico with roughly 9,300 fueling sites and 84,700 food locations.



Three Step Growth Strategy Acquisitions are a core piece of FleetCor’s success and growth. They target companies with established business models in under-penetrated markets with growing GDP’s – as FleetCor does not favor the “greenfield” approach. Having already established a successful practice of purchasing and acquiring businesses in North America and Europe, FleetCor will be looking to repeat this process in Asia and South America. Previously in this report the key major acquisitions are described, and in 2013 alone FleetCor spent $848.2 million on acquiring companies and expanding their reach. This serves as a primary source of growth, and they plan on continuing to spend $1B-$2B over the next three years on mergers and acquisitions. The process for selecting companies to acquire is based on: (1) being able to bring efficiencies and scale to the current business and thus improve the margin profile overall; (2) exercising economies to scale by buying in geographies near already existing FleetCor presence, and by implementing FleetCor’s technology and infrastructure; (3) their historic trend has shown FleetCor double the acquired businesses’ profitability within the first few years post acquisition. Partnering with major oil companies provides FleetCor with extended network reach, diversified products and revenue streams, and the ability to leverage already existing brand names. In the United States they already have relationships with BP, ARCO, Chevron and more. Europe continues to remain very much untapped. FleetCor’s only relationship with a European oil company is Shell Europe. However, in Europe major oil companies largely control the fleet card industry due to the language barriers limiting independent suppliers from doing business. This is an area in which FleetCor has a huge advantage because they do have the language skills and technology to perform in Europe. Innovation provides FleetCor with a source of organic growth. Sales and marketing is a catalyst for leveraging pre-existing relationships but also provides opportunities for new customers. By 2013, FleetCor increased their S&M expenses by 27.7% from $46.4 million to $57.4 million, and they plan on continuing to invest in this area. Not only is FleetCor increasing the volume of their S&M, but they are also diversifying. Approximately 65% of sales are generated by methods that were not implemented three or four years ago, leading to new sources of organic growth. Additionally, organic growth has been achieved by increasing their revenue per transaction margins via new product and service offerings, such as telematics, increased network acceptance, lodging, tolls and more. -



72

55.6

127.6

32.3 23

55.3

0

20

40

60

80

100

120

140

Local OTR Total

$ B

illio

ns

Other Fleet Card

SALES AND MARKETING Via proprietary and third-party networks, FleetCor is able to categorize and strategically identify potential customers. Both domestically and internationally, FleetCor implements in-person presentations targeting fleets with 15 plus vehicles or cards, and telesales employees managing fleets with 15 or less vehicles or cards. They also deploy direct marketing campaigns through emails, point-of-sale marketing to extend the brand, and internet marketing. Strategic relationships represent a large portion of sales and marketing with over 800 oil companies, petroleum marketers, card marketers and leasing companies that FleetCor is able to leverage. COMPETITION & MARKET LANDSCAPE FleetCor experiences competition geographically and from the multiple segments of products and services that they offer. Competition against FleetCor’s biggest product, fleet cards, includes other fleet card providers such as Wright Express, USB/Voyager, and Comdata. FleetCor also sees direct competition from oil companies or other institutions issuing fleet cards. Travel agencies and other travel related services produce the greatest competition for hotel cards. The telematics industry is also rapidly growing and becoming a strong competitive threat.

U.S. Registered Commercial Truck Fuel Purchases Payment Method Comparison – 2011 Data

According to data collected by the Mercator Advisory Group and by the American Truck Association, the U.S. market for fleet cards is rather unsaturated. The graph above breaks down the market into local and “over the road” categories and illustrates the total fuel purchases within the United States were $182.8 billion with roughly $55.3 billion (30.2%) using fleet cards.

Based on Mercator Advisory Group & American Truck Association Data

Fleet Cards account for 30.2% of all commercial truck fuel purchases

Exhibit 5



341,053 354,073 433,841

519,591

707,534

895,171

2008 2009 2010 2011 2012 2013

Revenue (000's)

97,282 89,052 107,896

147,335

216,199

284,501

2008 2009 2010 2011 2012 2013

Net Income (000's)

Financial Position/Highlights FleetCor’s financial position is relatively predictable. The company has established a proven track record of generated revenue and net income, and they are generating a solid line of free cash flow, with 2014 estimates of $400 mil FCF. Additionally, they have little CapEx requirements, which helps increase investment into their M&A pipeline. With less than 20% of revenue correlated to the volatility of fuel prices and low credit risk, FleetCor’s bad debt has been kept to approximately 10 basis points.

REVENUE TRACK RECORD High growth model

With For years 2012-2013, FleetCor has fostered a high growth business model experiencing YOY growth of roughly 27% on the top and 32% on the bottom. Not only does their diversification of revenue streams contribute to this success, but FleetCor has maintained extremely high customer retention numbers. Approximately 90% of customers are returning year after year before they sign and recruit new customers.

Exhibit 6

YOY Growth 2012-2013 27%

YOY Growth 2012-2013 32%



9.7 11.2

13.5

19.1 20.8

2.1%

2.2%

2.3%

2.4%

2.5%

2.6%

2.7%

2.8%

0

5

10

15

20

2009 2010 2011 2012 2013

$ M

illio

ns

CAPEX % Revenue

182.2 175.5 204.2

262.5

376.9

493.4 47.4%

55.1%

-0.1

0

0.1

0.2

0.3

0.4

0.5

0.6

0

100

200

300

400

500

600

2008 2009 2010 2011 2012 2013

$ M

illio

ns

EBITDA

Growth

% Revenue

OPERATING LEVERAGE & FREE CASH FLOW EBITDA and EBITDA margin compared to yearly revenue streams

EBITDA margins of approximately 55% coupled with an easily leveraged cost structure of roughly 70% fixed costs provide FleetCor with meaningful operating leverage. From 2008 to 2013, EBITDA has increased over 170% through organic growth and strategic acquisitions, but FleetCor at the same time continued to increase its margins compared to revenue. Other factors contributing to this success include increasing revenue per transaction margins and consistently low CapEx. This leveraging opportunity acts as a catalyst for organic growth.

CASH FLOW CapEx spending and CapEx margins compared to revenue

While CapEx has increased over the years FleetCor has been able to keep its margins consistently low – 2.3% for 2013. This allows FLT to continue organic growth of the business, but also pursue acquisitions giving them access to new networks, products and services, customers and markets.

EBITDA Growth 2008-2013 170.8%

Exhibit 7

Exhibit 8



MANAGEMENT TEAM Biographies

Ronald F. Clarke (Chief Executive Officer & Chairman of the Board of Directors) Prior to FleetCor Clarke served as a principal with Booz Allen Hamilton from 1987 to 1990, was the chief marketing officer and ultimately division president of Automatic Data Processing, Inc., from 1990-1998, and from 1999 to 2000 he was President and COO of AHL Services Inc. Starting in August 2000 Clarke served as CEO of FleetCor, and three years later became Chairman of the Board in 2003. Eric R. Dey (Chief Financial Officer) Prior to FleetCor, Dey worked for Pepsi Inc., for ten years until 1994, became Corporate Controller for Excel Communications until 1999 and then became CFO of Leisure Time Technology until October 2000. For two more years, through October 2002, Dey served as CFO with NCI Corporation, until becoming the CFO of FleetCor in November of 2002. Andrew R. Blazye (President – International Corporate Development) Prior to FleetCor, Blazye worked for Shell International Ltd., from 1980 to 2006 when he became Group Director for Dunnhumby Ltd., until 2007, and he then joined FleetCor as CEO of FleetCor Europe. Blazye served as CEO of the European segment through May 2012 when he became President of International Corporate Development – his current position. John S. Coughlin (Executive Vice President – Global Corporate Development) Prior to FleetCor, Coughlin was a Snior Partner and founder of The Parthenon Group in San Francisco from 1994 to 2005, when he became CEO of NCDR LLC., for one year through 2006. Coughlin then became Managing Director of PCG Capital partners from 2007 to 2010 when he joined FleetCor as Executive Vice President of Global Corporate Development in September. Todd W. House (President – U.S. Direct Business) Prior to FleetCor, from 1993 to 2005, House served as Vice President of Credit Risk Management at Capital One Financial Corp when he joined Carmax, Inc., as Chief Credit Officer through July 2007. He then transitioned to Axiant, LLC, and became CFO until they filed for bankruptcy in 2009, and then later in 2009 joined FleetCor as Chief Operating Officer and then served as President of U.S. Direct Business in 2010. As of November 2013, House now serves as President of North America Fuel Cards. John A. Reed (Chief Information Officer) Prior to FleetCor, Reed served various leadership roles in technology departments at Unisys, Zurich Insurance and MBNA, Bank of America from 1997 to 2009. From 2009 to 2013, he became the Senior Vice President of Global Architecture and Technology at First Data Corporation, when he then joined FleetCor as the Global Chief Information Officer of product development and IT operations.

Documents

FleetCor Technologies, Inc. (FLT) · 2. Major Oil Partnerships develop fuel card programs with FleetCor in exchange for an increase in customer volume and consistency of transactions