Corpay Inc (CPAY) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Fleetcor Technologies Incorporated Fourth Quarter Conference Call.

At this time I'd like to turn the conference call over to Eric Dey, Chief financial Officer. Please go ahead.

Good afternoon, everyone, and thank you for joining us today. By now everyone should have access to our first quarter press release. It can also be found at www.fleetcor.com under the Investor Relation section.

Throughout this conference call we will be presenting non-GAAP financial information including adjusted revenues, adjusted net income and EBITDA. This information is not calculated in accordance with GAAP and may be calculated differently than other companies similarly titled non-GAAP information.

Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and in our website as previously described. Also, we are providing 2013 guidance on a non-GAAP basis.

Finally, before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. This includes forward-looking statements about our 2013 guidance, new product and fee initiatives and potential business development and acquisitions. They are not guarantees of future performance and therefore you should not put undue reliance on them.

These statements are subjected to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's press release and Form 8-K filed with the Securities and Exchange Commission. Others are discussed in our annual report on Form 10-K. These documents are available on our website as previously described and at www.sec.gov.

With that out of the way, I would like to turn the call over to Ron Clarke, our Chairman and CEO.

Okay, Eric, thanks. Hi to everyone and thanks for joining today. In my opening here I'm going to comment on just a couple of things; first Q1 and our 2013 guidance and then second speak a bit about our recently completed deals along with our pipeline.

So over to Q1, you may have seen our press release for just a bit earlier in which we reported very, very good results. We reported 50% profit growth on $0.90 in cash EPS and 32% revenue growth on $194 million in revenue, so 32% on top and 50% on the bottom.

These numbers, we did get some lift from market spreads probably in the range of $3 million to $4 million versus last year, but actually probably only half of that against kind of our normal historical levels.

In terms of the rest of the environment I'd say the macro economy, fuel prices and FX were really generally neutral in terms of impact on our numbers. In terms of the various areas of the Company, every line of business was up with the exception of [Czech].

Our US business grew 21%, all organic mostly on the strength of our extended network cards, and our CLC business posted a 25% revenue gain for the quarter.

Internationally our UK, Russia and Mexico businesses all grew double digits and of course we got additional lift from our newest Russia and Brazil deals, which as a reminder we did not own in Q1 last year, so really very, very solid performance.

Our sales performance, sales being new clients, brand new clients, that we add and on board in the quarter, was really good. In the US across all channels sales were up 36% versus the prior year and Russia up 50% and even our Mexico and Brazil sales were well above our internal plan, so obviously bodes well when new clients are liking our products.

But let me now comment just a bit on our newest assets, our four newest assets or newest businesses. Those would be effect of [Alley] in Mexico, AllStar in the UK, NKT in Russia and CTF in Brazil.

So as a combo, these four newest assets in Q1 pro forma revenue growth that exceeded 35% for the quarter. So the four of them collectively grew over 35% for the quarter and we believe, based on what we're working on, there could be literally continued upside throughout this year and in the next. So, obviously really strong new asset performance but let me now transition over to thoughts on full-year guidance.

We're raising full-year cash EPS guidance at the midpoint $0.10 so now to $3.75. That's based on our Q1 beat against guidance and the two new Australia-New Zealand deals. We're also raising full-year revenue guidance at the midpoint $15 million, so to 815 and I'd say our confidence in these revised guidance numbers is high assuming that the key environmental factors stay in place.

As always, we also mention that we could have further upside of the number. That would be related to any of these late innings business development deals that we're working on.

Let me now shift gears and talk just a bit about our most recently completed acquisitions, so three of them. Telenav, which is a mobile tracking company, the GE Fleet Car business in Australia and CardLink, which is our most recent fuel card deal in New Zealand.

So first off, Telenav, Telenav is a mobile tracking Company that serves businesses or commercial accounts, basically the same customers that Fleetcor serves and the Telenav Service tracks driver location and also provides a related set of tools aimed at enhancing productivity. But our reason for the acquisition is simple; we want mobile capabilities that help us extend our card programs. So beyond plastic and paper, we want to bring mobile features to our fleet operator and drivers and we're working now on a Fleetcor specific application that we would offer back to our existing 500,000 clients, so very, very exciting development for the Company.

Now let me comment on our GE Fleet Card in Australia and CardLink acquisitions down under. So what's interesting is both of these transactions provide us with a universal multi-branded network and those kind of networks are difficult to establish. And when you get universal networks you can create pretty good products so we expect to be offering market-leading products in those geographies.

We think there's tremendous opportunity to grow both of these businesses, as both were dramatically under invested in terms of sales and marketing. There's obvious synergy between the two businesses beyond them being in decent proximity. GE's business actually uses CardLink's technology today and we decided to install one management team that will run both markets or both businesses for us, so some clear expense synergies. As usual, we've identified a number of ways to increase profits in those businesses with ideas to obviously increase revenue longer term.

And finally, we think there's some additional opportunity down under, specifically with the major oils. A number of the major oils in the regions are evaluating new ways, new options for running their fuel card programs and now that we'll have operational presence there we may be a viable alternative for them, so some opportunity there.

So lastly beyond these three completed 2013 acquisitions, we are continuing to work on new things, new partner and new acquisition opportunities. Some of those are actually nearing decision time so we will revert if appropriate with any news on that front.

So in closing, obviously we're pleased with the Q1 results and our start to the year. We're pleased that our newest assets that we've acquired are growing fast, 35% for the quarter. I'd say we're confident about the revised guidance that we provided. We're excited about these three newest deals that we just completed and we're optimistic about our prospects to keep developing new partner relationships and winning new acquisitions.

So with that, let me turn the call back over to Eric to provide some additional details on Q1 and on our 2013 guidance. Eric?

Thanks, Ron. For the first quarter of 2013 we reported revenue of $193.7 million, an increase of 32% from the first quarter of 2012. Revenue from our North American segment increased 21% to $100.6 million from $82.8 million in the first quarter of 2012.

Revenue from our International segment increased 47% and $93.1 million from $63.4 million in the first quarter of 2012. For the first quarter of 2013 GAAP net income increased 54% to $64.7 million or $0.77 per diluted share from $42.1 million or $0.49 per diluted share in the first quarter of 2012.

The other financial metric that we routinely use to measure our business are adjusted revenues and adjusted net income, which we sometimes also refer to as cash net income. Adjusted revenues equal our GAAP revenues less merchant commissions.

We use adjusted revenues as a basis to evaluate the Company's revenues, net of the commissions that are paid to merchants who participate in certain card programs. The reconciliations of adjusted revenues and adjusted net income to our GAAP numbers are provided in Exhibit One of our press release.

Adjusted revenues in the first quarter of 2013 increased 32% to $179.8 million compared to $135.8 million in the first quarter of 2012.

Adjusted net income for the first quarter of 2013 increased 48% to $75.2 million or $0.90 per diluted share compared to $50.8 million or $0.60 per diluted share in the first quarter of 2012.

For the first quarter of 2013, transaction volume increased 3.1% to 74.2 million transactions compared to 72 million transactions in the first quarter of 2012.

North American segment transactions grew 4.1% and were all from organic growth, while transactions volumes in our International segment grew 2% and were positively impacted by acquisitions closed in 2012.

Adjusted revenue per transaction for the first quarter of 2013 increased 28% to $2.42 from $1.89 in the first quarter of 2012. Adjusted revenue per transaction can vary based on geography, the relevant merchant and customer relationship, the payment product utilized and the types of products or services purchased a mix of which will be influenced by our acquisitions, organic growth in the business and fluctuations in the macroeconomic environment.

When we talk about the macroeconomic environment, we are referring to the impact of market spread margins, fuel prices, foreign exchange rates and the economy in general can have on our business.

During the first quarter, the decrease in the wholesale cost of fuel resulted in higher fuel spread margins and, although we cannot precisely calculate the impact this increase has on revenue, we believe it positively impacted our revenues by approximately $3 million, the majority of which was in the North American segment.

Changes in foreign exchange rates were mixed and overall had a slightly unfavorable impact on our business during the quarter. And finally, changes in fuel prices were mostly neutral in the US and Europe and we believe had a minimal impact on revenue.

Adjusted revenue per transaction for the fourth quarter was up in both the North American and International segments. Revenue per transaction was up 16.9% in North America due primarily to the positive mix impact of signing up customers, which use higher revenue per transaction products than the average, favorable spread margin and organic revenue growth in most other lines of business.

In the International segment, revenue per transaction increased 43.9% which was due primarily to organic revenue growth in most lines of business and acquisitions closed in 2012, which had product at a higher overall revenue per transaction versus our line average.

Now let's shift over and discuss some other drivers of our first quarter performance. First, in our North American segment most of our lines of business performed well resulting in a 21.5% organic revenue growth rate in the quarter versus prior year.

Included in the North American segment revenue was a favorable impact from market spread margins, as I mentioned earlier.

Some of the other positive drivers of North American revenue during the quarter were similar to last year and included the continued exceptional performance of our direct market MasterCard product, which has revenue growth of 47% year-over-year.

The CLC group provider of lodging management programs continued to perform well in another solid quarter with 26% revenue growth over the first quarter of last year. This revenue growth was driven primarily by increases in room nights and our check-in direct product.

Results for our International business were positively impacted by two acquisitions closed in 2012, CTF in Brazil and NKT in Russia. In addition, our independent fuel card provider based in Russia, PPR, continued to grow with revenues of double digit over last year measured in local currency.

Our UK business performed well during the quarter with revenue growing organically by approximately 22% in local currency driven primarily by the performance of our AllStar business, which was acquired in December of 2011. Also, the Mexican prepaid fuel and food business continues to perform well with revenues also up double digits in local currency.

The macroeconomic environment was generally neutral in the International segment during the first quarter and, although we cannot precisely calculate the impact of changes in fuel spread and fuel price, we believe they had minimal impact on revenues.

And finally, the two recently announced acquisitions in Australia and New Zealand will have a positive impact on our International segment revenue and profit for the balance of the year. To remind everyone, in late March we announced that we acquired Fleet Card, which is a business that includes certain fuel card assets from GE Capital, Australia's custom fleet leasing business.

Fleet Card is a multi-branded fuel card product with acceptance in over 6,000 fuel outlets and over 7,000 automotive service and repair centers across Australia. Through this transaction we acquired the fleet card product, brand, acceptance network contracts, supplier contracts and approximately one-third of the GE customer relationship with regards to fuel cards.

Also on April 30th we announced that we have acquired CardLink, fuel card issuing and payment processing Company based in Auckland, New Zealand. CardLink provides a market-leading proprietary fuel card program with virtually universal acceptance at retail fueling stations across New Zealand. The Company markets its fuel cards directly to mostly small to mid-sized businesses and provides processing outsourcing services to oil companies and other partners.

Now moving down the income statement, total operating expenses for the first quarter were $99.4 million compared to $81.7 million in the first quarter of 2012, an increase of 22%. Included in operating expenses are merchant commissions, processing expenses, bad debt, selling and general and administrative expenses and depreciation and amortization expense. The increase in operating expenses was primarily due to the additional expenses related to acquisitions closed in June and July of 2012.

As a percentage of total revenues, operating expenses decreased to 51.3% of revenue compared to 55.9% in the first quarter of 2012.

Credit losses were nine basis points for the quarter compared to 13 basis points in the first quarter of 2012. The improvement in credit losses was primarily due to improved performance in many business lines and the impact of acquisitions closed in 2012, which have products with historically lower bad debt as a percentage of billed revenue.

Depreciation and amortization increased 24.8% to $14.6 million in the first quarter of 2013 from $11.7 million in the first quarter of 2012. The increase was primarily due to the impact of amortization of intangible assets related to two acquisitions in 2012.

Our effective tax rate decreased to 28.6% compared to 30.2% for the first quarter of 2012. The decrease in the first quarter of 2013 tax rate was due primarily to the reversal of $1.9 million of tax booked in the fourth quarter of 2012 related to the controlled foreign corporation look-through exclusion expiring for Fleetcor on December 1st, 2012.

The exclusion was retroactively extended in January 2013. However, on December 31st, 2012 the retroactive extension had not been passed so we had to book taxes as of December 31st, 2012 based on the law in effect at that time before the extension was passed. Since the extension was passed in 2013, we reversed these additional taxes in the first quarter of 2013, which resulted in a lower overall tax rate. Taxes for the remainder of the year should return to historic normal levels.

Now turning to the balance sheet, we ended the quarter with approximately $274 million of total cash, $49 million of which is restricted and are primarily customer deposits.

The Company also has a $500 million accounts receivable securitization facility. At the end of the quarter we had approximately $385 million borrowed against the facility. On February 4th we amended and extended our facility termination date until February 4th, 2014.

The renewal included a reduction in the facility's interest rate from CP plus 75 basis points to CP plus 67.5 basis points and also included a reduction in our unused line fee. The current purchase limit remains at $500 million.

We also had $518 million outstanding on our term loan and $75 million drawn on our revolver. On March 20th we amended our term loan facility to extend the term back to a five-year term and modified certain provisions of the agreement. The facility was expected to terminate in June 2016 and we have extended to March 2018.

We have over $900 million in liquidity to continue our global business development efforts and for general working capital purposes today.

As of March 31st our leverage ratio was 1.36 times EBITDA compared to 1.57 times at the end of the first quarter of 2012. Our leverage ratio remains well below our covenant level of 3.25 times EBITDA.

We intend to use our free cash flow to temporarily pay down the balance on the revolving credit facility and securitization facility and maintain liquidity for acquisitions and other corporate purposes.

Finally, we are not a capital intensive business as we spent approximately $4.8 million on CapEx during the first quarter of 2013. Now on to our outlook for 2013.

Given our favorable results in the first quarter of the year as well as our recently announced acquisitions of fuel card companies in Australia and New Zealand, we are updating our guidance for the remainder of 2013. We now expect revenue to be between $810 million and $820 million, up from our previous guidance range of $790 million to $810 million; adjusted net income to be between $310 million and $320 million, up from our previous guidance range of $300 million to $310 million and adjusted net income per diluted share to be between $3.70 and $3.80, up from our previous guidance range of $3.61 to $3.69.

As a result, our guidance at the adjusted net income per share midpoint of the range of 375 represents a 25% growth rate over 2012. Our guidance assumptions for the remainder of 2013 are as follows. We expect our two recent acquisitions in Australia and New Zealand to be accretive to adjusted net income by approximately $0.04 per diluted share over the remainder of the year, fuel prices and FX rates at current levels, market spreads equal to the historical average, fully diluted shares outstanding of approximately 84.2 million shares, our full-year tax rate of approximately 30.6% and, as always, no impact related to acquisitions or material new partnership agreements that we have not already disclosed.

And, with that said, operator, we'll open it up for questions.

Thank you, sir. Ladies and gentlemen, we'll now begin the question and answer session. (Operator Instructions). Our first question is from the line of Phil Stiller with Citi.

Congratulations on the good results. I wanted to ask about the US segment to begin with. You had acceleration in growth rates sequentially. You talked about CLC and the MasterCard products opportunity. I just wanted to get a sense; I mean you saw a bit of a higher transaction growth rate than what you saw for most of 2012. How much of the recent growth acceleration do you think is sustainable as we look towards the back half of the year?

Hey, Phil, this is Eric. You know, I mean it's if you look at our business in North America, we have three primary businesses. We've got a direct business, a partner business and our hotel lodging business and all three of the businesses continue to grow at better than historical levels and our growth rate was primarily driven again by our MasterCard product, which is up kind of 48% year-over-year and our hotel card product was again kind of over 20% again. So I think that we're very, very bullish on the continued performance of those products and we think they're going to continue to perform well over the balance of the year, so we'll kind of see how it goes.

Phil, it's Ron. I would add a couple things. One, I think the grow over was bit easier in the quarter. The spreads were not great in Q1 of the prior year so I think that gave us a few points in this quarter so I would probably guide you to 15% kind of range probably the balance of the year.

Okay that's helpful and for CLT in particular, what's been driving that growth? It's been up the last couple quarters.

It's really a lot of things. I mean the small account product, as I think we've mentioned to you guys, continues to tear. I mean that thing is up, way up, and I think you know the rate on that is four or five X our large account product so revenue growth obviously fast in transactions. We got help if you can believe it from the [disasters] in the fourth quarter last year.

Yes it was Hurricane Sandy so we have an emergency product at CLC and we continue to get some revenue out of that so I think it added about a million dollars in revenue in the first quarter.

We've added more hotels, I'd say literally every part, Phil, of that business is working. The large account, large accounts that we have there are healthy. They're growing a bit. The small account is going great so I'd say all pieces of that business are working.

Okay great and the last question for me, the international margins spiked up a bit here in the first quarter and were almost equal to your North America margins despite some of the amortization costs you guys have there. I mean how much of that is a reflection of where you are in terms of the synergies that you're trying to extract from these recent acquisitions?

Well, Phil, there's a couple of things kind of driving the revenue per transaction. I mean one, the acquisitions themselves, meaning CTF and NKT, have both higher revenue per transaction products so the mix impact of those two acquisitions drove up the average. And, in addition to that, if you look at the organic growth in the rest of the International segment I think we were probably up around 20% organically as well and again, driven primarily by our performance in the UK, performance in our legacy Russian business, PPR, and both effective Vale and CTF also continue to perform kind of very well, so a little bit of everything.

Okay great, thanks, guys.

Tien-Tsin Huang, JPMorgan.

Hey thanks, good quarter again. I wanted to ask about Australia just kind of I know that WEX is obviously there as well and, Ron, you mentioned there's some oil business to be won there. What's the competitive sort of environment like there and do you have what you need to be competitive in your mind?

Yes it's mostly proprietary, Tien-Tsin. It's the same kind of set of players you'd see in Europe. BP is there. Shell is there. Exxon is Mobil brand is in New Zealand. Caltex is there and virtually all of those with the exception I think of Mobil are proprietary and so just like continental Europe they're all looking at different ways that they can take your programs forward so for us having this GFN system, which we can obviously use there, and now having people on the ground right that can talk in the same time zone as those clients, we think will be helpful to our prospects there.

Got it. What is still the underlying market growth in Australia? I mean, do you need to win some of the business to sort of justify the acquisitions or is there enough business development that you can do without securing some of the bigger stuff?

Yes I'd say no. I'd say there like always we would rate these being polite as somewhat under managed so we think there's, like always, lots of opportunity initially and then same at the US. There's a big opportunity and yes in the e segment there.

It's on other kinds of programs, not on fuel card programs so I'd say it's three things. It's the standard fix the business. It's grow the small segment with a universal card and then the upside would be some of these partners.

You said -- you talked about the four assets growing 35. That's pretty impressive obviously. Is there a way to sort of just for us to better understand it? Is it equal across the four? I mean there are some that are way over outperforming the others? I am just curious if you would of course rank them how that would look.

Yes that's a good question. I've actually got the page in front of me and what I would add I guess to the earlier commentary is every one of those four, their lowest one still grew over 20% the quarter.

So remember I think I would just to make sure you guys are clear, when we get new assets, you know, T minus zero, our game plan over 12 to 24 months is to obviously move the numbers in the business so I don't want to imply that two years from today these four companies are going to be growing organically 35%. What I am trying to highlight is we're good at acquiring businesses and we think running them better and so we wanted to give an actual data point of things that have been acquired in the last year, year and a half, to make it clear to people that even in recent times we're able to do that.

No that's great. No that's great. Last two quick housekeeping questions and I'll jump off. The I guess international transaction growth in light of some of that commentary there, I thought would have been a little bit higher. Was there some attrition underneath the base that was maybe (inaudible)? And the second one is got to ask the question about so that given the MasterCard growth what the litigation impact would be with the 10 bit pulled back around the settlement. Thanks.

Tien-Tsin, this is Eric. I'll answer the second question first. You know, the MasterCard settlement, we've estimated the impact of that to be around $2 million over the 10-month period of time so that will be spread out over six months in 2013 and a little bit in2014 so from our perspective it's fairly immaterial.

Moving over to your first question regarding the international transaction growth, obviously we've got a lot of different businesses across Europe. Some of those businesses are performing kind of better than others. Some of the businesses are still being impacted by the economy. As an example, our Czech Republic business is still nose down from a business perspective so still being pretty much impacted by the economy.

Our UK business I would say the transaction volumes are a little bit down there as well and then all of the kind of the emerging market businesses, the transaction volumes are mostly kind of up. And when you net it all together it adds to kind of the 2% transaction growth that you see here.

Great thanks.

Julio Quinteros, Goldman Sachs.

Hey, guys, it's [Roman Leone] for Julio.

A few follow-ups to questions that were previously asked, first in North America can you actually -- can you help us, tell us maybe what percentage of the North America revenue comes from CLC today? It feels like that's obviously a big contributor to not only the growth but the revenue per transaction there.

Hey, Roman, this is Eric. You know, unfortunately we don't disclose the revenue of individual business lines because we have quite a few of them around the world. I would say of the three big businesses we have in the United States, meaning the direct business, the partner business and the CLC business, that business would be the smaller of the three, just so you have from a kind of you can size perspective but again, we don't specifically disclose revenue.

Okay and then maybe the second half of that is how would you describe the -- how would you say the revenue per transaction in CLC versus the other two major channels there?

If you had to look at CLC it's going to have higher revenue per tran than all of the other businesses and just because of the nature of what the product is, so of the three businesses in the US again that would be the highest revenue per tran business, probably followed by the direct business and then the partner business.

Got it, that's actually helpful. And then in International I guess we're always trying to reset the bar there and trying to figure out what's the normal level of revenue per transaction there. Maybe these two new acquisitions that seemed to really move the needle for you this quarter, how much above the average international revenue per transaction are those two acquisitions?

You know, there's kind of two different businesses there. Our CTF business in Brazil is kind of higher. I would say it's not dramatically higher than where the average ended up for the quarter. Our NKT business historically is a different kind of business because historically it was a business that earned revenue based on the sale of cars and the sale of software so the transaction count there is a little bit lower and it's a little bit more kind of lumpy but it is kind of higher than the average and it's based on just happens to be what is purchased in the quarter.

Got it and--

But it is both of those are higher than the average.

Okay and last one just a follow-up to Tien-Tsin's question on in the UK you said maybe transactions growth was a little south there or modest but AllStar revenue growth was pretty strong so was there a something like a pricing or anything else to call out there?

Yes, Roman, it's Ron. We introduced some price on some segments of the market in AllStar and we also have managed through a pretty bumpy conversion in the first quarter so both of those things moved volume down a bit and I think our question is is it temporary or is it longer term? But I'd say that business still performed well so it's not -- you don't see it in the Q1 numbers but we did bump through some conversion issues with accounts, which wasn't great, and we, like always, are testing pricing in some areas.

Got it, thank you.

Darrin Peller, Barclays.

This is actually [Adam Caratolean] for Darrin. Just a quick question in North America to start, you mentioned that the sales during the quarter were up somewhere around 36% or so in the US specifically. I mean, when we think about the sales is it -- I know you guys have traditionally said it's been about 50/50 between the extended network cards versus the traditional cards. I mean, is that kind of the mix that you saw during the quarter as well?

Adam, it's Ron. I mean the main reason the US sales are up are we're spending more. Like we said, to invest in growth we had a higher spend in the quarter and then B, we're getting more productivity. Some of the new channels like our telesales group is aging so they're producing more for the same dollars. So the first thing I would say is the thing is up really because of investment and productivity. I'd say again we don't disclose the mix but that's not far off. We still sell some fair amount of our proprietary products so I'd think 50/50 is a fair estimate.

That's helpful and then secondly, you mentioned that you could see some upside to the 35% growth from these four acquisitions that you saw here in the first quarter and maybe you could provide a little bit more clarity in terms of what types of synergies you could recognize to help get you there and I think one of the things maybe from AllStar, given the fact that you did have to wait for OFT clearance to start kind of recognizing a lot of the synergies. Maybe we could also get a better understanding in terms of where you're at in terms of what inning you're at recognizing the synergies from each of those acquisitions.

Yes so what I'd like to make clear is there's a big difference between point-to-point or grow over versus sequential so when I comment about hey, these four deals have more juice so those four deals had revenue of X in Q1, what I am trying to convey is that Q2, three, four and next year we believe the revenue, the absolute revenue in each of those businesses, will keep rising. Again, be careful on the grow over because we've moved those up a lot since we've owned them and so we're going to lap a place here where we're not going to have that kind of growth in those four new assets so I wanted to make that point first.

But I'd say that the answer is on every one of these new deals we do kind of the quick fix work as we develop the thesis and put that in the first six to 12 months and now the stuff that will be additive are kind of new products or new channel ideas so I think I mentioned we've got a new universal product in Mexico and we've introduced telesales there that they never had before. I think we've built that up a lot.

In AllStar we had zero people in telesales. We built that team to I think 20 to 25 people now over the last six months. We've got some new partner conversation going on in one of the businesses so I'd say that in every situation there are things happening that we believe can cause the revenue in each of those businesses to increase on a sequential basis, but again not 35% because we'll lap some of the early improvements as we get into the latter half of the year.

Got it, very helpful. Great quarter, guys.

(Operator Instructions). David Togut, Evercore Partners.

Just starting off, what was the organic international transaction growth in the quarter?

No the organic growth, growth for the transactions isn't in there for internationally. The revenue grew organically at just over 20% but I don't have the exact number for the transactions in front of me, David.

Got you. Can you -- well, can you ballpark for us maybe give us a range of what the revenue per trans growth was organically international?

Again, it would probably be in line with the amount of the revenue organic growth so there was two things that happened during the quarter. One is obviously we bought two acquisitions that have higher than the average revenue per transaction so there's a favorable mix impact associated with adding those two businesses in. And then the remainder was driven by a 20% kind of organic growth in the International segment so around 20% would be the answer from an organic perspective.

Got it and then on the direct MasterCard, another high 40s revenue growth quarter for you, what types of growth rates are sustainable for this product over the next 12 to 24 months?

David, it's Ron. I think again the answer is just literally a function of what we want to spend so the reason again that product is growing at those rates is a relationship between the sales, right, the amount of new sales we're selling. The earlier question too, the size of the base, and because we've increased our sales investment and from my comments on sales we're producing more total sales, as long as we continue to increase investment relative to that base, we think it is a 30%, 40% grower for a while as there's not limit on the market again in the interest in the product. It's really just a marketing and reach and investment question from our perspective.

Thank you. That helps. You referenced in your comments, Ron, partnerships you're working on acquisitions. Do these skew more toward mature markets or emerging markets?

Emerging.

Got it. Great, well thanks so much, appreciate it.

Glenn Fodor, Autonomous.

Thanks for taking my question. Just going back to one of your first points about the sales performance, the US was 36% and Russia was up 50, just pardon my ignorance but what is this metric? Is this expected revenues over the next year from clients you've won this quarter, like what exactly is this?

Yes it's Ron, Glenn. That's a good question. So basically we run a metric alongside of revenue that we call sales in the Company and the methodology to calculation is if you sign up let's say Ron's Plumbing on January 1st, we basically look at that account over a month and decide okay what's Ron's Plumbing going to produce in the 12-month period from January 1 to December 31st and if we're wrong 13 weeks later we adjust it if it's running higher or lower. So we basically create pretty accurate estimates of every new account, what it's going to produce on a 12-month basis so it's a proxy really for annual revenue of the account.

So that's helpful, thank you. And then so we have these metrics of 36 and 50. Just for frame of reference, what were those for your similar calculation what you would have posted in the fourth quarter? I don't know if you disclosed it but do you have that there?

I unfortunately don't have it but I would say that we grew sales clearly double-digit, Glenn, last year and again it's really a function of investment. The reason I wanted to call it out is I wanted to again make this point about the maturity or lack thereof of our business and our products and make the point that when you sell a bunch and you sell more than you did before, obviously there's an interest in your product line and so we though disclosing this would be, again, just another indicator to people listening that we have a product line that people want and it's being reflected in the amount of new business that's being added. And, as you guys model things, that obviously rolls into revenue, right, the more we sell obviously that will move forward revenue rate so that was the message.

That's great color to have so thank you for that. Just an extension of David's question, I mean I know you don't have in front of you the organic transaction growth but this 2% for the quarter how does that feel to you versus just without pinning it down to exact numbers, how does that feel versus where it has been, again, ex acquisitions for the last couple years? And then how do you expect this excluding acquisitions, how should we expect it to trend for the rest of the year? Is this 2% about where it should be, again, ex acquisitions for the rest of '13?

Yes to not sound trite, I mean the problem is I'd say it feel irrelevant. Again, the metrics we look at are the growth rate again of the businesses that we're trying to grow and, as I repeatedly say, we're growing those much, much faster. And so the problem with the averages that are quoted is it's not how we run the Company or look at the Company and so what I'd say again is of the products and the businesses that we're investing in they're all growing double-digit and that -- and we track revenue.

We're trying to focus on organic revenue growth so I'd say that the only way we could get at that is if we were to unbundle for you all the various product lines and show you that the ones that have higher revenue per tran and that were interested and we're spending behind are growing much, much faster than the couple of percent. And, again, that's what's driving. It's not pricing. It's what's driving again the revenue growth being much higher than the tran growth. It's the businesses that are more attractive growing at much, much faster rates.

All right thanks, Ron, appreciate it.

Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes Fleetcor Technologies, Incorporated first quarter 2013 earnings conference call. Thank you for your participation. You may now disconnect.