Corpay Inc (CPAY) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the FleetCor Technologies fourth-quarter earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions). This conference is being recorded today, Wednesday, February 23, 2011.

I would now like to turn the conference over to our host, Mr. Eric Dey, CFO of FleetCor Technologies.

Good afternoon, everyone, and thank you for joining us today. My name is Eric Dey and I am the CFO of FleetCor Technologies. By now, everyone should have access to our fourth-quarter 2010 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 EBITDA and adjusted net income. This information is not calculated in accordance with GAAP and may be calculated differently than other companies similarly titled non-GAAP information. Quantitative reconciliations of our non-GAAP financial information to the most directly comparable GAAP financial information appears in today's press release and on our website, as described above. Also we are providing 2011 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. These include forward-looking statements about our 2011 guidance. 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 8-K filing with the Securities and Exchange Commission. Others are discussed in the final prospectus for our initial public offering, both of which are available at www.SEC.gov.

The results that we will discuss on this call will assume that the income statement treatment of our asset securitization agreement was consistent in all periods for the new accounting guidance adopted in 2010 and our results of operations exclude the impact of a one-time compensation charge booked in the fourth quarter of 2010 associated with our initial public offering. We have provided reconciliations of these non-GAAP numbers in our schedules to the press release.

But first, I would like to turn the call over to Ron Clarke, our Chairman, President, and CEO. Ron?

Good afternoon, everyone. Thanks for joining us on the FleetCor call. Let me just start off by saying how pleased we are with our 2010 financial results both for the fourth quarter and for the full year. We in fact finished 2010 reporting full-year revenue growth of 14% and profit growth of 38%, so all in all really a terrific year.

Since this is our first call since completing our IPO, I thought it may make sense to rewind and just briefly revisit FleetCor's business, our strategy, and some of our long-term objectives.

So in terms of description, most of you should know we are a global fuel card company, a program to help businesses, non consumers purchase fuel and we provide significant control and savings benefits along the way. And in that vein, we serve two distinct kinds of customers.

One, end businesses or what we call fleet operators. And two, partners who tend to be fuel retailers who issue cards really for the purpose of driving loyalty back to their location.

Currently about two-thirds of FleetCor's revenue is in North America, one-third is international, although our expectation is that that international piece will grow significantly. And I guess kind of finally, we're really overjoyed with our track record since we assembled the management team 10 years ago. We generated on average a 37% annual growth rate. So all in all, very happy with the track record.

So let a move on to the FleetCor strategy, which I think is quite simple. We call it our three by three. [We have] three primary growth levers. One, organic where we grow the assets that we have through a combination of both transaction growth and revenue per transaction growth. Two, we target partner outsourcing deals, generally large partners that already have meaningful card portfolios. And third is acquisitions. We work hard to consolidate a relatively fragmented category and our emphasis of current times is on rest of world.

We basically chase these three levers against three geographic regions -- North America, Europe, and rest of world. We have actually organized our company around these three geographies. So that gives us lots of pressure basically on signing new outsourcing deals and acquisitions outside of North America.

And in terms of objectives, there are really two parts. One is to grow our existing businesses 10 and 20, which means 10% on the top and 20% on the bottom. And again, we do this through a combination of transaction growth and revenue per transaction.

But secondly, we augment our existing businesses with new major outsourcing signings and strategic acquisitions. So it's really this combination, this one/two combination that has contributed to over 30% earnings growth historically. So that's the basic rewind on FleetCor.

What I would now like to do is transition over to some more recent results and covers three subjects. One, our Q4 results and some of the key drivers. Two, review highlights for the fourth quarter. And then three, discuss our outlook for 2011.

So in terms of Q4, adjusted net income grew 37% in Q4 to $40 million. Revenue for the quarter finished at $106 million and the main drivers of our earnings performance in the quarter were again higher revenue per tran along with some expense favorability in the form of lower credit losses and lower interest expense as we rolled off of a hedge.

I expect Eric will expand that quite a bit more on these Q4 numbers in his section.

Let me now move over to some highlights from the fourth quarter. It was really a quite exciting quarter for the Company.

So first off, we signed three big brand wide merchant deals, which means three new merchants, Chevron, Flying J, which is a truckstop chain, and TA, which is a truckstop chain, all agreed to add our fuel cards to their network. Those three additions will add more than 15,000 additional accepting sites for our product which we expect will enhance the value [profit] of our product. And as cardholders become aware of those additional sites, should lead to higher volume.

Two, a second highlight is our Universal MasterCard program. We launched that program four years ago but it continues a very rapid growth rate. So for the quarter, that product line grew 60% over last year and we're expecting this line of business to grow in the range of 50% again for 2011.

Third is our partner, Universal conversion program. So for two or three of our large US major oil partners, Chevron, Citgo, and BP, we developed a secondary card where that card is used not only as a partnered brand but virtually in every other gas station in the United States.

And so as we convert their larger accounts over to these Universal card programs, we expect transactions to grow because these additional sites that cardholders will be able to go to.

As importantly, we enjoy some very favorable economics I think revenue per tran when purchases occur outside of our partners' network.

Kind of the fourth highlight was the Company's IPO. We successfully completed our IPO on December 15. We raised approximately $335 million, selling just under 20% of our existing shareholders positions. And we are hopeful that this new public visibility will aid in our global expansion efforts certainly as potential outsourcing target and acquisition targets are afforded greater transparency into the Company.

And then lastly in terms of Q4 highlights is Shell. So we just couldn't be more delighted with our recent announcement of the Shell Europe Asia 10-year contract win. The Shell fuel card portfolio is the world's largest and most complex and there were a number of bidders for that assignment and the evaluation process lasted in excess of one year.

So we think this is a big deal. It's a big, big time reference win that will be vitally important as other major oils make their future selection.

So lastly, let me segue over into our 2011 outlook, which is 9% revenue growth and 20% [TBD] growth this year. That is with a relatively conservative view of the overall macro environment. The guidance does not include any new outsourcing agreements, nor any acquisitions that may come online this year.

I also want to remind people that we are well into implementation of our 2011 growth initiative to produce higher revenue per tran.

And finally, with our recent IPO now behind us, the Company is squarely focused on our global growth initiatives. So the number one priority in the Company is to build business outside of North America. And we will obviously keep you apprised of our progress on those fronts.

So at this point, let me now turn the call back over to Eric, who will discuss our financials in more detail.

Thanks, Ron. Before I discuss our Q4 results, let me provide a high-level overview of our revenue categories and some business metrics we monitor. We operate in two business segments which we refer to as our North American and international segments. In both our segments, we derive revenue from transactions and related revenue per transaction.

Revenue from transactions is derived from our merchant and network relationships as well as our customers and partners. We also earn revenue from our customers and partners through program fees and charges. Our revenue is reported net of the wholesale cost for underlying products and services.

From our merchant and network relationships, we derive revenue from the difference between the price charged to a customer for a transaction and the price paid to the merchant or network for the same transaction. The difference between the price we pay to a merchant and the merchant's wholesale costs for the underlying products and services is considered a merchant commission and is recognized as an expense.

From our customers and partners, we derive revenue from a variety of program fees including transaction fees, card fees, network fees, and report fees. Our payment programs include other fees and charges associated with late payments and based on customer credit risk.

The results that I'm about to discuss assume that the income statement treatment of our asset securitization agreement was consistent in all periods per the new accounting guidance adopted in 2010, which moves the securitization facility back onto the balance sheet.

And our results of operations exclude the impact of a one-time compensation charge booked in the fourth quarter of 2010 associated with the initial public offering. We have provided reconciliations of these non-GAAP numbers in our schedules to the press release.

For the fourth quarter of 2010, we reported revenue of $107 million, an increase of 3.2% from the prior-year period. For the fourth quarter, net income increased to $33 million or an increase of 32% from the prior-year period excluding the impact of the one-time non-cash stock compensation charge booked in conjunction with the IPO or $0.41 per dilute share compared to $0.31 per diluted share in 2009.

The other financial metric that we routinely use to measure our business is adjusted net income. Adjusted net income is GAAP net income adjusted to eliminate non-cash stock-based compensation expense related to share-based compensation awards, amortization of deferred financing costs, and intangible assets and amortization of the premium recognized on the purchase of receivables.

Adjusted net income for the fourth quarter of 2010 increased 37.4% to $40 million or $0.49 per diluted share, compared to $29.1 million or $0.36 per diluted share in 2009. For the full year of 2010, revenue grew 14% to $434 million from $381 million in 2009.

Net income in 2010 increased 39% to $123 million or $1.53 per diluted share compared to $89 million or $1.13 per diluted share in 2009. Adjusted net income for 2010 increased 38% to $144 million or $1.78 per diluted share compared to $104 million or $1.32 per diluted share in 2009.

For the fourth quarter of 2010, transaction volume increased 2.7% to 48.8 million transactions from 47.5 million transactions in 2009. For the full year of 2010, transaction volume increased 3.3% to 192 million transactions from 186 million transactions in 2009.

However, I want to note that the fourth-quarter and full-year transaction volumes have been adjusted for the wind down of a partner contract in Europe inherited from an acquisition which we chose not to renew. This partner had a high number of transactions and very little revenue.

Revenue per transaction for the fourth quarter of 2010 increased to $2.18 from $2.17 in 2009 and on a full-year basis, increased 10% to $2.25 from $2.04 in 2009. Revenue per transaction is derived from the various revenue types discussed earlier and can vary based on geography, the relevant merchant relationship, the payment product utilized, and the types of products or services purchased, the mix of which would be influenced by our acquisitions, organic growth in our business, and fluctuations in foreign currency exchange rates. Revenue per transaction per customer increases as the level of services we provide to a customer increases.

The revenue per transaction in the international segment runs higher than the North America segment, due primarily to higher margins and higher fuel prices in our international product lines.

Moving down the income statement, total operating expenses for the fourth quarter were $50.5 million, compared to $52.6 million in 2009, a decrease of 4%. Included in operating expenses are merchant commissions, processing expenses including bad debt, selling expenses, and general and administrative expense. The decrease in operating expense in the fourth quarter of 2010 was primarily due to lower credit losses.

Credit losses were 21 basis points for the quarter compared to 43 basis points in the fourth quarter of 2009 and on a full-year basis, credit losses were 31 basis points compared to 56 basis points in 2009. The improvement in credit losses was primarily due to the improvement in the economy and a shift in our marketing and sales strategy towards slightly larger fleet prospects.

One of the financial metrics that we use to measure our business is adjusted EBITDA, which is EBITDA adjusted for the incremental interest expense attributable to our securitization facility and adjusted to exclude the impact of a one-time compensation charge booked in the fourth quarter of 2010 associated with our initial public offering.

Adjusted EBITDA was $56.6 million compared to $51.1 million in the fourth quarter of 2009 and our adjusted EBITDA margin increased to 53.1% in the fourth quarter of 2010 from 49.6% in 2009. The increase in margin was primarily due to the increase in revenue and corresponding decrease in operating expenses discussed earlier.

Depreciation and amortization increased 4.6% to $8.5 million in the fourth quarter of 2010 from $8.1 million in the fourth quarter of 2009. The increase was primarily due to the impact of the amortization of intangible assets related to two small acquisitions completed during 2010.

Interest expense decreased 25% in the quarter to $4.2 million from $5.5 million in 2009 due to the expiration of an interest-rate hedge in November.

Our income tax expense decreased to 24.8% of pretax income in the fourth quarter of 2010 from 33.3% of pretax income in 2009. The decrease in the effective tax rate for the fourth quarter of 2010 as compared to 2009 was primarily due to an increase in foreign nontaxable earnings and a reduction in our reserve for uncertain tax positions.

Now turning to the balance sheet, we ended the quarter with $177 million of total cash, $62 million of which is customer deposits in our Czech Republic business and is restricted. The Company also had $323 million of term debt outstanding and an undrawn $50 million revolver. Our term debt carries an interest rate of LIBOR plus 225 basis points.

The Company also has a $500 million accounts receivable securitization facility in place to help fund the timing difference between when we receive money from our customers and when we pay our merchants. The facility is a 364-day facility and carries an interest rate of CP plus 115 basis points. We had an outstanding balance of $144 million at year-end. The current facility expires at the end of February and we are in the final stages of renewing the facility for a new 364-day term at what we believe will be more attractive economics.

The Company intends to use its free cash flow to temporarily pay down the securitization facility balance and maintain liquidity for acquisitions and other corporate purposes.

As we look forward, we intend to provide guidance on an annual basis for reported revenue, adjusted net income, and adjusted earnings per share. We will begin by providing our outlook for these metrics for 2011.

Our guidance includes revenue between $460 million to $480 million, adjusted net income between $155 million to $165 million, and adjusted net income per diluted share between $1.83 to $1.95.

The Company's full-year 2011 guidance includes approximately $2 million of incremental cash operating costs in 2011 for public Company costs that did not exist in 2010. They also include a 1.9% increase in our effective tax rate from 28.7% of pretax profit in 2010 to 30.6% of pretax profit in 2011.

It also includes an increase of 3.9 million diluted shares outstanding from 80.8 million shares in 2010 to 84.7 million shares in 2011. If these incremental costs and shares had been incurred in 2010, the Company's full year 2010 adjusted net income would have been $138 million or $1.63 per diluted share.

And for those who are looking at GAAP numbers in 2011, please keep in mind that we will have $12 million of additional non-cash compensation expense associated with our new option plan.

The Company's full-year 2011 guidance is presented on a constant currency basis and assumes similar macro economic and business conditions exist in 2011 as did in 2010. This guidance does not reflect the impact of any future acquisitions or material new partnership agreements.

With that said, operator, we will open it up to questions.

(Operator Instructions) Adam Frisch, Morgan Stanley.

Good afternoon. This is Glenn Fodor for Adam. Congratulations on the first quarter out of the gate. I just want to ask a few questions on the Shell contract. When you think about how the European market was developed with this outsourced model, does the structure of the contract reflect how we should expect further wins to transpire such as a processor like yourself with a consulting, integrator type company involved?

Then second point, is it safe to say that at some point down the road you'd like to take on more of Logica's responsibilities and are there conditions in the contract that would allow you to do this?

Glenn, it's Ron. The answer is it will vary account by account and number two, is yes, we want to use IT services companies to do the migration work. In the Shell case, we are going to do migration in 35 different countries and there's a lot of languages and a lot of bodies to do the data conversion. So we are always delighted to outsource that kind of work to an IT services specialist.

Okay. Then when you look at this contract -- when you mention the European opportunity in the past, you said you'll start with making a very low yield, maybe a fraction of a penny per transaction and then you will raise it over time. The way this contract stands now, are we at the low end of the spectrum, middle? How would you characterize the yields you are going to make on this (inaudible)?

I'm sure this question will come up over and over, but the summary here is this is a single-digit millions annual contract for FleetCor.

So single-digit millions in '12 or '13?

Ongoing.

Kind of single-digit millions annually for the contract.

Okay. Thank you and again, congratulations.

Tien-Tsin Huang, JPMorgan.

Great, thanks, Ron and Eric. Good afternoon and congrats on the IPO and the Shell win. I wanted to ask about Shell as well as a follow-on to Glenn. Just the P&L impact for '11, are there any ramp up costs we need to consider in our model or would most of that be borne by Logica as they get ready for the conversion?

The latter. Most of the grindy stuff is going to be done by Logica.

Good, and then given that some of your resources will be tied to this, I'm curious about the pipeline of international deals now. How has that sort of evolved since we last spoke around the time of the IPO? Can you maybe just give us an update on how that pipeline looks?

Yes, I would characterize it as very active. We told you when we saw you in November and December that there were a number of active RFPs and there still are, and those are moving along. So we would expect decisions kind of three to six to nine month timeframe, depending on their pace. But it's active, I would say.

Good, then just from a resource standpoint, your capacity to do that kind of work given your obligations here to Shell, has that had any influence on how you think about competing or being aggressive on going after some of those transactions?

I think that's really a great question. I think if you think about it, virtually all of these European deals are proprietary where the oil company is the card company and they are doing not only all the IT work themselves but also all the program management work. And so a big part of our strategy is to keep FleetCor out of what you guys and we guys would think of as IT or the grindy data conversion migration kinds of work.

And so for us, the work is obviously in the BD side and then it will be to the extent that the clients choose program management, helping transition these relationships from really a system relationship into more of a program management relationship.

I think we've got pretty good capacity we approach it the same way with others.

I think it's a good model. Obviously with putting that risk on the transition onto the IT services provider and then you have to do the classic processing, that's a good outcome in our eyes.

Last one from me then I'll let others jump on. Just the credit losses were pretty low, as you highlighted, Eric. What's the expectation for fiscal '11? I know you said that the macro assumption is basically stable, but can you give us a little more detail on what you are expecting for '11?

Yes, we are expecting basically the Q4 run rate to run out through 2011. So continued good performance and hopefully it will be better than that but our expectation is to continue at the Q4 rate.

Let me just add, we briefed you a little bit on this, so the macro wins obviously are helping just in terms of defaults generally, but I think we told you a little over a year ago we made a fundamental structural change in approach to get away from the very, very smallest accounts, I think one and two card accounts which were gigantic contributors to our historic losses.

So as we continue to evolve the business, which we have begun, away from those very smallest accounts, the mix alone will improve losses rolling forward. So it's a twofer. It's macro and its structural change in what we are doing.

Understood. Good stuff. Thanks a lot, guys.

John Williams, Goldman Sachs.

Good evening, guys. How are you? A couple quick questions. Number one, certainly you had talked a lot during the process of the IPO about transitioning some of the customers over to Universal card, and that seems to be a key piece of the growth story. So I just wanted to get a sense of how that transition is going versus your expectations that you had outlined a few months back.

This is Ron again, John. I would say it is kind of on expectation. We built a plan that kicked off kind of beginning of Q4 to run approximately nine months to complete this coming June. And I would say I just had a review of it last week that the thing is tracking basically to our expectations.

Okay, that's helpful. The second question was thinking about the background and turmoil in oil prices that you have really started to see in the last week or so, what sort of discussions do have internally? I know it's not the kind of thing that you guys feel particularly over exposed to, but certainly for your customers, there's got to be a tipping point between where fuel prices are call it manageable versus not manageable. How do you guys think about that? Does it come up? Just generally, what are the two or three things you're focused on relating to the macro backdrop now?

John, this is Eric. First, as you know, if you recall back from the IPO, effectively only about 20% of our business is directly impacted by the movement in the retail price of fuel. And as fuel prices go up again some pieces of our business are effectively positively impacted and some of our pieces of our businesses effectively are not. So if you look at the fourth quarter as an example, we believe that the rise in the retail price of fuel didn't have a material impact one way or another on the Company's results of operations.

As we look into 2011, obviously as fuel prices continue to go up and market margins actually stabilize, it will have somewhat of a positive impact on the Company's results.

John, it's Ron. The short answer is we don't know, but we do have some history. We had a chance a year and a half ago to see US fuel prices hit -- crest at $4 a gallon and obviously those same high prices were in Europe. And looking back at the data then I would say demand only came down slow cycle digits, so I would say we've got another kind of 25% rise at least before we hit the tipping point. And then beyond that, I'd say we've got no data points.

The only other point I'd make is the government again I think you know this, but in a number of the European markets, there's a different view of government control and obviously government taxation in the price of fuel. I know it seems unimaginable, but actually their tax rates per liter there are actually higher than ours here. And so the governments there could decide obviously to moderate fuel price and/or tax levels in those countries if they wanted to kind of cushion the rise.

That's actually really helpful. I guess the last question that we have is in terms of transaction growth, I know you are never going to be a 20% year-over-year transaction grower. It's still in the single digits, not unique to FleetCor. But it implies to us almost that there's still a lot of runway ahead in terms of both penetrating the market and just getting the transaction growth rates up a little bit. Where do you think that can go over time? Are you ever going to be 10% or is it more like a 7% number would be really, really good? It seems more the latter.

Yes, again, the problem which I think you picked up with other processors is the overhang of the same-store client base, right? Historically companies like us would grow 4%, 5%, 6% kind of tran growth, of which half of that would come from their clients growing. GDP growing 3%, 4%, 5% and even as late as the fourth quarter, globally we've seen virtually none. If it's anything, it's probably at the 1% level.

And so we are getting still for two full years now zero benefit from the client bases that we have growing. So to the extent that there is actually a recovery where companies grow again, employment grows and vehicles grow in that 3% to 4% range, I would say that we would be kind of in the 5%, 5% to 6% kind of range.

And again, I know it's hard -- we told you this in the pre-roadshow conversations that there is so much mix going on in our business. It's hard for you to see what the real tran growth is, so we have lines of business that are growing double-digit because we are focused on them and others like Eric said that are declining or actually we are getting rid of because we are a Company that is interested in getting paid by clients.

And so I think when that mix starts to settle down now, you will see a little bit better balance in our Company between volume growth and revenue per, which is getting clouded a bit with the mix.

Excellent. That's super helpful. Thanks for the color, guys, and congrats on the first quarter. I look forward to many more.

I appreciate it, John.

Tim Willi, Wells Fargo.

Thanks. Good afternoon. Just a question on the transaction growth you referenced the loss of a customer that sort of hurt that optic. Could tell us if we exclude the impact of that customer just to sort of think about what a normalized run rate would have looked like for 4Q and for the full year. I apologize if I missed that, but I didn't recall you saying anything around those comments.

Tim, this is Eric. If you look at the attachment that we provided to the earnings release, we actually provided the statistic with and without that particular client. So you can actually see what the fourth-quarter number was.

Okay, all right. I appreciate that. I'm on the road, so I hadn't had a chance to look at that yet (multiple speakers)

I can go ahead and read it to you. As an example, in our international transaction business in the fourth quarter, we did 48.9 million transactions compared to 49 million basically in the same period in the prior year in our international business, so it was basically kind of flat. But when we exclude that transaction, I'm sorry, I'm talking that the total number.

In the international business, we did 12.2 million transactions in Q4 compared to effectively a little slightly higher, 12.8 million in the prior year. Excluding that customer, we did 12.1 versus 11 in the prior year. So it was a growth rate of approximately 10% quarter-over-quarter.

Okay, helpful. Thank you. Second, is just I guess from sort of a competitive standpoint, what are you seeing -- I mean there has obviously been some competitors come and go. There have been some losses in terms of customers of the bigger guys like maybe the U.S. Bank operation, Voyager losing some larger customers, some levered customers around the private equity -- you are now out from under that umbrella.

When you look at competition, first of all, do you see anything different over the last couple of quarters? And second, given your new public ownership structure, do you sense any kind of enhanced ability to compete relative to those that still may be reasonably levered and under private equity ownership?

It's Ron. I think it's a scale game. Again, if you are talking about Europe, where most of this opportunity is the biggest portfolios, but only of an incredibly large portfolios in terms of their size and their breadth. But they sit inside obviously gigantic global companies and I think the decision-making is appropriately cautious in those kind of companies. And so I think one of the reasons that most of those companies have not made a change historically is there weren't any suppliers that were Europe-based that had the scale and thus could win the confidence of these very large, cautious companies.

And so I would say to me the Shell announcement is a breakthrough there that other companies will see that Shell has decided we have sufficient scale and we built a system big enough basically and fast enough to run gigantic portfolios.

And so I think the game, Tim, is narrowing. I think the players that can win now are on a shorter list. And I think it's just risk aversion. I just can't imagine one of those gigantic oil companies risking a loyalty program that's that important to their retail operations to a subscale company. So I think the list is narrowing.

Okay, great. Thank you very much.

Wayne Johnson, Raymond James.

I just wanted to follow up on a competitive landscape concept here. When an investor or when a potential customer asks FleetCor what's the difference in kind of the data reporting and the control between FleetCor and Wright Express or the fuel card management system? How do they differ on that basis, leaving all things outside of it, outside that answer for the time being, if I can kind of drill into the particulars of kind of a compare and contrast?

Wayne, it's Ron. Who were you asking from -- a big outsourcing contract or just a little business, a little direct business account?

Right, thank you for the follow-up -- both.

I'd say generally on what we call the first class of account, the end business, I would say that that does not come up very often there. Their selection criteria, if you were running the fleet operation of a Company with 50 vehicles, the selection of card company is going to be based on different characteristics of the card product, where it's accepted, what the price is, what the point-of-sale controls are, etc.

And I think on the major oil side, it is going to be even farther down the list. They are much more about reliability and complexity, the ability to deal with 40 tax jurisdictions. And so I think that that particular point of difference is pretty far down the food chain in the selection process.

Okay, that's helpful. Also on more of a macroeconomic question, and I'm really hoping that this does not happen, but if oil is -- remains kind of above $100 here, $110 somewhere in that range for an extended period of time, have you guys thought about, talked about what kind of impact that has on the macro outlook for your customer base in the US? I know you get a benefit internationally for a certain percentage of the sales, but just on the domestic business, is there kind of a threshold or a warning level that you say, oh oh, this is going to hurt?

Yes, I will start and then, Eric, maybe you can jump on again. I would say, Wayne, that we have kind of been there before right if you wind the clock back, so we have some set of data points around how customers respond, how those wholesale prices translate into retail and how customers respond.

B, we obviously have an understanding of the implications to us, the incremental revenue that we get, the spread compression, the credit issues. So I would say again if it stays in the territory that it is at, I'd say it's probably still all good for FleetCor.

What I really don't have a clear view is if it ticked up another 25%, did that strike some tipping point because we haven't seen that level before. I don't think we have a clear view of that.

Terrific, thank you.

Thank you. There are no further questions at this time. I would now like to turn the call back over to Mr. Clarke for closing remarks.

Well, I would just like to again thank everyone for joining and hope you are pleased because we are with kind of the first report and look forward to bringing you more progress along the way. So again, many thanks for the time.

Ladies and gentlemen, this concludes the FleetCor Technologies fourth-quarter earnings conference call. Thank you for your participation. You may now disconnect.