Corpay Inc (CPAY) 2016 Q1 法說會逐字稿

Greetings, and welcome to the FleetCor Technologies Inc first-quarter 2016 earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Eric Dey, Chief Financial Officer with FleetCor Technologies Inc. Thank you. You may begin.

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

Throughout this conference call, we will be presenting non-GAAP financial information, including adjusted revenues, adjusted net income, adjusted net income per diluted share, and adjusted EBITDA. This information is not calculated in accordance with GAAP and may be calculated differently than other Company's similarly titled non-GAAP information. Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable information appears into today's press release and on our website as previously described. Also, we are providing 2016 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 2016 guidance, new products and fee initiatives, and expectations regarding business development and acquisition. They are not guarantees of future performance, and therefore, you should not put undue reliance on them.

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

Eric, thanks, and thanks to each of you for joining the call today. Up front here, I will plan to cover three subjects. First, I will comment on our Q1 results. Second, I will discuss our 2016 guidance and finally I will update you on our Company's strategic progress.

Okay, so onto the quarter. We are delighted to report Q1 revenue of $414 million versus for $416 million last year. So essentially flat. We reported Q1 cash EPS of $1.53. That is versus $1.45 last year, so up 6%. That earnings result is a bit better than our guidance.

On a macro neutral basis, that is adjusted for fuel price, fuel spreads, and FX, revenues actually grew 10%. That is excluding SVS and cash EPS grew 20%. So growth of 10% on the top and 20% on the bottom on a constant macro basis. We called the macro environment right for the quarter. Fuel prices and FX came in virtually on our plan. Fuel spreads were a bit worse than planned because fuel prices started to rise in mid-March, but basically, as we planned.

There were five primary drivers of growth in Q1. So first, the MasterCard business. A great quarter. Volume was up 17% helped by Uber. And revenue was up 48% on a constant macro basis for the quarter. So that product continues to have legs.

Second, Comdata was solid. Comdata trucking fuel car business up 11% in the quarter. And corporate payments business up 13%, excluding healthcare. So a good Comdata quarter.

Pac Pride, a business we acquired about a year and a half ago doubled revenue in the quarter versus last year; a good result. The Shell Europe outsourcing business was up 150% for the quarter. Mostly due to the rollout of additional markets so. a lot of help from Shell.

And then lastly we enjoyed lower interest expense as we de-levered and a lower tax rate than last year both of those adding to our earnings growth. Sales we had a really good sales result in Q1. Our new sales booking dollars, the way we look at new business, was up 27% versus the prior-year. Increases, really, across the board. New sales are the best indicator of market demand or market receptivity for our products so it suggests our offerings continue to be quite relevant.

So look, in summary for the quarter, we are basically out of the blocks here where we expected to be. We are delighted to see Comdata in double-digit territory. Happy to see the macro environment trending up at the end of the quarter and pleased with our underlying growth fundamentals, staying around the 10% mark for the quarter.

Let me transition now over to our 2016 guidance. We are revising full-year guidance today to $6.53 in cash EPS at the midpoint. That reflects the $0.03 beat we had in the first quarter.

We are keeping our rest-of-the-year guidance intact for now, despite the fact that fuel prices and FX have improved in recent weeks. The trend is quite short. So we're not prepared to extend those current levels for the full-year. We will look to make adjustments as we see more data.

Obviously, there is upside to the $6.53 full-year cash EPS guidance. Probably in the range of $0.20 to $0.25, if macro factors were to continue to hold where they are today and we complete the STP acquisition in Q3. So, some upside there.

Okay, let me shift gears and provide a bit of an update on FleetCor's overall strategic progress. So first off, number one, our portfolio. That's the product lines and the geographies that we serve. So we signed STP to Brazil Toll Company deal in Q1. That put FleetCor into a new category, electronic toll payments, and the Shell Europe outsourcing deal has helped us enter 7 new European markets, bringing our total markets served to 12 of the world's top 20. So now actively in, generating business in 12 of the world's top 20 markets. So as we continue to extend our market potential, that extends the Company's opportunity to grow as we enter these new product categories and serve yet new geographies. We clearly like the diversification and the added ratability that it brings.

Second, our build strategy, organic growth. We continue to make investments in organic growth. Our 2016 plan calls for $15 million of additional sales and marketing spend, along with the addition of 250 salespeople. We're also going live testing outsourced telesales. We are doing that both in our Comdata corporate payments business and a couple of our European businesses, looking for new ways to scale sales faster.

We are busy testing lots of new products. First off, Builder Pro, it's a purchasing card for the construction industry. It let's clients buy fuel and construction supplies in a controlled manner.

We are reselling Kabbage lending products to our existing clients to further leverage our client relationships. We are live with our Comdata hotel card program. That is a rebranding of our CLC program, but targeted to Comdata trucking clients. We're big users of mid priced hotel rooms.

And we're also bundling something called fuel tax compliance along with our new Comdata trucking card sales. And we are getting over half of the new accounts to take that bundle. So the summary is, we are working hard to keep our products fresh everywhere.

Third, partner strategy. We have reorganized our partner group to put even more pressure against our global partner business. That focus has resulted in a number of new partner wins over the last couple of years. Including two new relationships in Canada.

So although it's been slow, we remain very bullish on the long-term partner opportunities. We are actively chasing a couple of partner RFPs right now and expecting decisions sometime here in 2016. So, still believe in the upside there.

And fourth area, acquisitions, we announced the $1 billion acquisition of STP in March. We started our planning work for that business and hoping to get antitrust approval in Q3, along with continuing to work on a couple of additional acquisition targets. So overall, we're making good strategic progress.

We are expanding our portfolio, and the opportunity set in which we play. We are investing in more sales, we are investing in more new products, we are winning new partners, we are signing up new deals. We are continuing to build by and partner strategy we outlined five years ago when we went public, and it's working.

So with that, I me turn the call back over to Eric. He will provide some additional detail on the quarter, and our outlook. Eric?

For the first quarter of 2016, we reported revenue of $414.3 million, relatively flat to the $416.2 million in the first quarter of 2015. The revenue from our North American segment increased 1.6% to $303.5 million from $298.8 million in the first quarter of 2016. Revenue from our international segment was down 5.7% to $110.7 million from $117.4 million in the first quarter of 2016.

For the first quarter of 2016, GAAP net income increased 16.8% to $110 million, or $1.17 per diluted share, from $94.2 million or $1 per diluted share in the first quarter of 2015. The other financial metrics that we routinely use are adjusted revenues and adjusted net income, which we sometimes also refer to as cash net income or cash EPS.

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 a certain card programs. We prepare adjusted net income to eliminate the effects of non-cash items that we do not consider indicative of our core operating performance. A reconciliation of adjusted revenues and adjusted net income to GAAP numbers are provided in exhibit one of our press release.

Adjusted revenues in the first quarter of 2016 of $386 million were relatively flat compared to $388.8 million in the first quarter of 2015. Adjusted net income for the first quarter of 2016 increased 6% to $144.3 million, or $1.53 per diluted share, compared to $135.9 million or $1.45 per diluted share in the first quarter of 2015.

Included in the first quarter results was the impact of the macroeconomic environment, which continue to be unfavorable versus the prior year. When we talk about the macroeconomic environment, we are referring to the impact that market fuel spread margins, fuel prices, and foreign exchange rates can have on our business. Changes in foreign exchange rates were unfavorable in most geographies for the quarter, and overall we believe negatively impacted revenue during the quarter by approximately $13 million.

Fuel prices and spreads were also unfavorable during the quarter. And although we cannot precisely calculate the impact of these changes, we believe negatively impacted revenues by approximately $25 million. In total, the impact of these changes negatively impacted our revenues by approximately $38 million in the first quarter and adjusted net income per diluted share by approximately $0.21. On a constant macro basis, revenues would have been up approximately 9% and adjusted net income per diluted share would have been up approximately 20%.

For the first quarter of 2016, transaction volumes increased 13% to 487 million transactions compared to 431.3 million transactions in the first quarter of 2015. North American segment transactions grew 13% driven primarily by growth in the MasterCard and SVS businesses. Transaction volumes in our international segment grew 12% and were primarily impacted by the addition of new Shell markets in 2015 and a small tuck-in acquisition in the first quarter of 2016.

For a discussion on revenue per transaction, we are going to exclude the impact of the SVS business, which had approximately 342 million transactions in the quarter at a very low revenue per transaction. Revenue per transaction for the first quarter of 2016, excluding the SVS business, decreased 10.6% to $2.56 from $2.87 in the first quarter of 2015. Revenue per transaction can vary based on the geography, the relevant merchant and customer relationship, the payment product utilized, and the types of products or services purchased.

The revenue mix is influenced by our acquisitions, organic growth in the business, and fluctuations in the macroeconomic environment. Revenue per transaction, excluding SVS, decreased 8% in North America due primarily to the impact of lower fuel prices during the quarter and lower fuel spread margins versus prior-year. And although we cannot precisely calculate the impact of these changes, we believe they negatively impacted our revenues by approximately $24 million in the first quarter. On a constant macro basis, revenue per transaction in North America segment would have been approximately $3.09 versus $3.07 in 2015.

In the international segment, revenue per transaction decreased 16%, due primarily to unfavorable foreign-exchange rates in most of our geographies. Foreign-exchange rates impacted revenues unfavorably by approximately $13 million in the quarter. On a constant macro basis, and excluding the small tuck-in acquisition, which had transactions at a very low revenue per transaction, revenue per transaction in the international segment would've been approximately $2.72 versus $2.51 in 2015.

Now let's shift over and discuss some other drivers of our first quarter performance. For our North American segment, most of our lines of business performed well, resulting in approximately 10% organic growth rate in the quarter at a constant fuel price, spread, and foreign-exchange rate basis. Some of the positive drivers in North America revenue during the quarter were similar to the last several quarters, including the exceptional performance of our MasterCard product, which had revenue growth of approximately 48% over the first quarter of 2015, assuming constant fuel prices.

The CLC Group, provider of our lodging card programs, had another solid quarter with 7% revenue growth over the first quarter of 2015. This revenue growth was driven primarily by increases in our CheckINN Direct product which targets smaller accounts. Partially offset by softness in some of our larger accounts that primarily do business in the Oil and Gas sector.

Our Comdata business performed well in the quarter. The trucking business was up about 11% in the quarter, and growth in the corporate payments business was also up 13%, excluding health care. Our PacPride business is off to a great start, and we have already nearly doubled the revenue of the business since we acquired it in 2014.

International segment revenue was down approximately 6% in the first quarter of 2016 versus the first quarter of 2015. This decrease was driven primarily by unfavorable foreign-exchange rates in most geographies, which negatively impacted revenues by approximately $13 million in the quarter versus last year. On a constant currency and fuel price basis, organic growth was approximately 6% for the first quarter.

Results in our international business were impacted by the continued conversion of the Shell Small Business portfolio. We are now in a total of seven markets, with a plan to convert the remaining markets during the remainder of 2016. On the downside, the economies in Brazil and Russia continue to struggle and are impacting revenues in those markets.

Now, moving down the income statement. Total operating expenses for the first quarter were $238.3 million compared to $252.4 million in the first quarter of 2015, a decrease of 5.6%. As a percentage of total revenues, operating expenses decreased to 57.5% of revenue compared to 60.6% in the first quarter of 2015. Included in operating expenses are merchant commissions, processing expenses, bad debt, selling and general administrative expense, depreciation and amortization expense, and other operating net.

Included in the first quarter 2016 operating expense were favorable impacts resulting from foreign-exchange rates being down in most of our foreign businesses, which resulted in an approximately $10 million favorable adjustment to amortization and a $6 million adjustment in other expense lines. Also, stock-based compensation expense in the first quarter of 2016 was $15.9 million compared to $17.7 million in the first quarter of 2015.

Credit losses were $6.8 million for the quarter compared to $8.1 million in the first quarter of 2015. The decrease in bad debt was primarily due to lower bad debt in some of our US businesses in the quarter. Interest expense decreased 17% to $16.2 million in the first quarter of 2016 from $19.6 million in the first quarter of 2015. The decrease in interest expense was due primarily to the impact of de-levering from the first quarter of 2015 through the first quarter of 2016.

Our effective tax rate for the first quarter of 2016 was 29.9%, compared to 32.6% for the first quarter of 2015. The decrease in the effective tax rate was primarily due to certain favorable discrete items booked in the first quarter of 2016 of approximately $3 million, and an overall lower tax rate related to tax planning initiatives that were implemented late in 2015. The 2016 tax benefit booked in the first quarter, related to tax planning initiatives, was approximately $1.2 million.

Now, turning to the balance sheet. We ended the quarter with approximately $545 million in total cash. Approximately $145 million of which are restricted and are primarily customer deposits. As of March 31, 2016, we had approximately $1.894 billion outstanding on our term A loan, $247 million outstanding on our term B loan, and $90 million drawn on our revolver, leaving approximately $945 million of undrawn availability. We had approximately $551 million borrowed against our securitization facility.

As of March 31, 2016, our leverage ratio was 2.35 times EBITDA, which is well below our covenant level of 4 times EBITDA. We intend to use our free cash flow to temporarily pay down the balance on our revolving credit facility and securitization facility and maintain liquidity for acquisitions and other corporate purposes.

To remind everyone, on February 4, 2016, our Board of Directors authorized a repurchase of up to $500 million of FleetCor's common stock during an 18 month period ending August 1, 2017. During the first quarter of 2016, the Company did not repurchase any stock as our trading window did not open due to the impending announcement of the STP transaction.

Our intention is to implement a 10b5-1 share buyback plan when the window opens in the next few weeks. There's no guarantee as to the number of shares that will be repurchased and the stock repurchase program may be extended, suspended, or discontinued at any time without notice at FleetCor's discretion. Any repurchases are expected to be funded by available cash flow from the business and undrawn revolver. And finally, we are not a capital-intensive business and we spent only $12 million on CapEx during the first quarter of 2016.

Now, onto our outlook for the remainder of 2016. Before I begin our discussion on guidance, I want to update you on our latest thinking about the macroeconomic environment. Although foreign exchange rates and fuel prices are trending a little better than our 2016 assumptions we provided on the January call, we are keeping our prior macro guidance unchanged until more of a trend can be established. We don't know how the environment will actually play out in 2016, but if it stays anywhere where it is today or continues to improve, some of the headwind we have been experiencing may come back as a tailwind.

For the balance of the year, we are keeping our prior macro guidance intact, and we're estimating that foreign exchange rates will negatively impact revenue by approximately $32 million for the next three quarters, compared to the 2015 average for the same period. And the absolute price of fuel is expected to be a headwind to revenue of approximately $32 million for the last three quarters versus the 2015 average over the comparable period.

In addition, we believe market spreads will be better than historic levels, but contribute approximately $7 million less revenue than 2015 spreads for the balance of the year. In aggregate, we believe the macroeconomic environment creates approximately $70 million in revenue headwind and approximately a $0.50 cash EPS headwind for the rest of the year versus the 2015 averages.

That being said, we expect total revenues to be between $1.730 billion and $1.780 [million], adjusted net income to be between $608 million and $628 million and adjusted net income per diluted share to be between $6.43 and $6.63, or $6.53 at the midpoint.

Some of the assumptions we have made in preparing this guidance include the following: weighted fuel prices equal to $1.91 per gallon average for 2016 compared to $2.56 per gallon average in 2015, a reduction of approximately 25%; market spreads returning to more historical levels for the rest of 2016, down approximately $7 million versus 2015; foreign exchange rates equal the seven-day average ending January 15, 2016; the SVS business is retained for all of 2016; continued weakness in the Company's Russian and Brazilian businesses; a full-year tax rate of 31.9%; fully diluted shares outstanding of 94.7 million shares, and no impact related to acquisitions or material new partnership agreements.

We have also not included any impact related to the previously announced STP acquisitions. We may have upside to this guidance in the range of $0.20 to $0.25 in adjusted net income per diluted share if we close STP as expected in the third quarter and the macro stays where it is today. As we stated on the STP call in March, we expect that an STP closing in the third quarter could add approximately $0.10 in incremental adjusted net income per diluted share.

Also, if the macro stays where it is today, we could expect incremental revenue of approximately $20 million to $25 million, and adjusted net income per diluted share of approximately $0.10 to $0.15. For those of you that are looking for guidance for the second quarter, I want to remind everyone that our business has some seasonality and the macro will have an impact on the second quarter as I previously discussed. For the second quarter, we are expecting adjusted net income per diluted share to be approximately the same as the first quarter.

Finally, to remind everyone, our volumes build throughout the year and our new asset initiatives gain momentum throughout the year, resulting in a much higher earnings per share in the third and fourth quarters. Traditionally, our third and fourth quarters earnings tend to be quite similar. We have no plans for to provide quarterly guidance going forward, but rather to update our annual guidance each quarter.

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

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session.

(Operator Instructions)

James Schneider, with Goldman Sachs.

Good afternoon. Thanks for taking my question. Good performance in the Comdata fleet business again. I think 12% growth you called out versus 13% growth last quarter.

That's improvement after you acquired it, clearly, but as we go into the back half of the year, how would you expect that business to trend? Would we see a deceleration there down to the high single-digits or 10% range, or is that a little bit too aggressive?

James, hey. It's Ron. I would say if you looked at our plan, we will probably step it up a point or 2, as we have through the year.

Okay. That's fair enough, and then maybe you could just update us on the same-store sales trend that you saw on the quarter. I don't think you broke it out, but you did last quarter. And the improvement in any of the verticals that you touched on last quarter that was driving headwinds, or is it pretty much same old, same old there?

I'd say it's a little better. I think our consolidated number for Q1 is kind of minus 1%. So, still a bit of a headwind.

But I'd say it's more pocketed. They're places that are okay to good and then some other places, like CLC with the railroads and Russia, Brazil, there are still quite bad. 7%, 8% negative.

So it's not kind of an average across the board. It's quite pocketed.

And then just one last one if I could. Can you maybe just comment on the overall pricing landscape with respect to your different customer segments? Do feel that you are sort of maxed out there in terms of what you are able to achieve in terms of pricing actions, or do you feel there is a little more in some areas that you can do?

James, there is always more. It is just a decision of, like we say, how -- where to push and how to push? I'd say we are pretty comfortable where we are, but I would say there is always more opportunity.

Thank you very much.

Sanjay Sakhrani with Keefe, Bruyette & Woods.

Hi this is Steven Kwok, filling in for Sanjay. First question is around STP. What are the next steps that you need to take in order to close the deal?

Steven, hey. It's Ron. There is some set of closing conditions, a handful of closing conditions with the primary one being antitrust approval. So we have filed that a few weeks back.

And you know are, quote, in that process. Our best estimate again is early Q3. I'd say that's probably the long pole.

Got it, and then just if you could comment around same-store sales trends? Have you seen any diverging trends within whether it is the US or the rest of the world?

Yes. That was the comment I made. I'd say, again, on a weighted consolidated basis, we were minus 1%.

But if you looked across our 15 or 20 businesses or geographies, there were a number that were in the plus column. Some that were kind of flat, and then the few that I called out were still quite negative. Brazil, Russia, the CLC railroads, 7%, 8% softness. So mixed bag on same-store.

Got it, and then last question just around the M&A landscape. Any particular areas you are looking at? Thanks.

Yes, I mean, I think we sound like a bit of a broken record. I'm actually looking at our deal pipeline page sitting here on the call. So I would repeat, again, that we have a number. So more than two things that are, quote, active in our pipeline beyond STP.

And I would say, looking at the list, it runs the gamut. We've got a couple, two, three kind of tuck-in, smaller things that are in markets we are in. A couple things that get us into a new geography. So, again, I'd say it's a range of different opportunities.

Great thanks for taking my questions.

David Togut, with Evercore ISI.

Thank you. Good afternoon. Could you comment on Allstar performance in the quarter?

You been rolling out a chip card with Allstar through Visa. I'm wondering if that is affecting same-store transactions at all, and/or are you seeing any incremental revenue per transaction as you upgrade from magstripe to chip card?

Hey, David. It is Ron. I'd say it's probably still on the disappointing side. Not much different than I think when we spoke last.

I don't have it in front of me, but I would say the UK was probably South of 5% organic for the quarter, and it's mostly just pace. I think it's the same comments from the last call. That the pace of conversions, we have about half the book converted.

And then getting people to use the card properly, that gives us the advantaged economics is a bit of a learning, and then again getting the incremental salespeople to sell more of that product. So it's the combination of the two or three things that will create lift are still get worked. I would hope, and our plans here that thing will trend up as we move through the year.

Got it, and then staying on international. Could you comment on the big oil pipeline a bit? Whether you are seeing any movement in that, and what are some of the big oil looking for in Europe to make a decision to outsource?

Yes, I think we mentioned, although this thing is glacial, there are actually a couple opportunities, partner opportunities that have moved from RFI to RFP, and I would say that we think could be at least a couple, two, partner decisions that would happen in this year in 2016. So we will obviously it back to you, but I would say the good news, like there were a couple over the last couple of years, it appears that at least a couple have moved far enough ahead that they are going to make a decision.

And would those be more in the SME portfolio like Shell, or could you see some of the larger fleet business being outsourced?

There is actually a couple of flavors in the two. There is one that is more traditional take the program, and there's another one that looks more like the Exxon and Shell model.

And then just a quick final question on Uber. I think you or Eric called out Uber as a growth driver. Could you put some numbers around that so we can understand how substantial that is and what the outlook might be?

Eric, you might have the numbers. I'd say David, the thing is again is rocking. We introduced it not quite a year ago, and both the adoption of drivers and usage has been high, and then Uber has continued because people like it, drivers like it, to extend the offer to more drivers.

So the thing is literally building sequentially. It is -- I would say it is probably one of the top three or four largest clients that we have now in terms of volume in North America already. And it's not a year old.

And obviously, as you know, although not agreed or whatever, the opportunity to take that thing beyond the US is still another huge opportunity if Uber gives a call for that.

David, this is Eric. Just to add on to that. Although Uber does have a lot of gallons and it is progressing very, very nicely it is a lower revenue per tram product, just so you are clear. So it's not as revenue intensive as some of the other products that we have.

Got it. Thank you very much.

Good to talk to you.

Danyal Hussain, with Morgan Stanley.

Hi, Ron and Eric, thanks for taking the question. It sounds like macro is in line, so were there any surprises in the quarter on a fundamental basis versus your expectations, or is growth broadly in line? Thanks.

Yes, Danyal. It's Ron. I'd say of the key macros, again, fuel price and FX was spot on our plan. We did a little bit of headwind, I think call it $4 million or $5 million lower than our plan on spreads. Because fuel prices ticked up starting mid-March.

That obviously contracted spreads a bit, so I'd say that's the only macro thing in the quarter. Then I'd say again if you looked at our plan versus the consolidated thing, I'd say most, virtually all businesses are where we expected. So I'd say in the past few years, this was about is ratable a period as we've had. In terms of our expectations against actuals.

Got it. And you called out being in now 12 of the top 20 fuel markets. Can you give some color or examples of what the other 8 are and if those countries even have fuel cards, or what the path might look like to penetrate those markets?

Yes, I mean the first thing I'd say is to have started the first seven years in the Company being in the US and to be in 12 of the top 20 and, said repeatedly, of those 12, 6 of them were just barely in. So the first point is there is enormous runway in the 12 served.

But of the eight not served, the biggest block would be obviously Asia. The first three to come to mind would be China, Japan, South Korea. So we are not in those three. Obviously two of those are huge.

And then in Continental Europe, the couple that jump off to me are Italy and Spain that we are not in. I think Turkey as well is a top 20 that we are not in, and then the last one that comes to mind that is huge that we are not in is India, which I think is a lot farther way.

I would say that we are chasing hard the couple of European geographies that we are not in. And I'd say the Asia ones probably a bit difficult.

Got it. And Eric, maybe you can just clarify the tax benefit in the quarter? It sounded like it was $3 million of total benefit, and is it of which $1.2 million was planned and might recur over the course of the year? Maybe you can just give us some guidance on what the full-year rate looks like?

Yes, I think you are correct the way you said it. We worked on a couple of tax projects last year and those tax projects concluded toward the end of the year last year. We did have some carryover effect to a couple of the projects where we booked some favorability into the first quarter. That really pertained to last year.

It was a couple of -- or $3 million that we called out. And in addition to that, the tax projects will have an ongoing favorable impact to our tax rate of about, call it, $1 million or so per quarter, which we called out as well, and that will be ongoing. The balance of the year tax rate, expect something in the 31.9% range.

Perfect, thank you.

Tim Willi, with Wells Fargo.

Hi, thanks. Good afternoon. A couple questions. First, just going back to CLC. I think that 7% number is probably one of the lowest at least I can recall in a while, and I know you called out oil, sort of the energy markets as a drag.

Could you maybe, if you were to separate that vertical or those industries, what would the rest of CLC look like on an underlying basis? Just approximation, if you don't have it exactly?

Yes, Tim. It is Ron. The short story on CLC, which was running mid-teens, mid-to-high teens. So this softness started, call it, Q3 last year.

So three quarters in, Q3, Q4, Q1. And basically again, CLC is a business with two portfolios. One, it's got 25, 30 big clients. Been around a long time, do huge volumes that include railroads, trucking firms, some oil companies, et cetera, and then it's got thousands and thousands of SMB that got 10, 15 cards.

So the problem is in the first group, where that group is quite soft and causing about 8% softness versus Q1 the prior-year. So effectively if those accounts were doing the volumes they were a year ago, that business would be at 15% again organic for the quarter.

The other half of the book is growing high teens in revenue, close to 20%, and the large account book is obviously not growing much. Because it is negative 8% softness.

Okay, a follow-up on this and then I had one more. I can't remember if this was asked on a prior call, but within those large enterprises and thinking about the Comdata customer base. Can you just refresh our memory if you talked about it before if cross-sell opportunity -- are they there, or a lot of these big Comdata customers already CLC customers?

That's a great question. We actually -- I think I did mention this. We private labelled or Comdata labeled the CLC program starting in Q4.

So we took the CLC thing, we created a way to use the Comdata card at the hotels. We trained up the Comdata sales group, and they have been out selling to both big and small accounts.

In the last review I had a couple of weeks ago, I think we'd onboarded 300 new accounts in the first whatever, 90, 120 days. So yes, we've had trucking -- CLC has had trucking clients before we owned Comdata, but now we've package the product for Comdata and targeted our salespeople back to the Comdata base.

So the early views are great. The clients like that we have something else to offer them that's got some value, and a bunch of them are taking us up on it.

Great and then I had -- my last one, just going to the corporate payment side of SVS. I know you referenced the growth rate ex-healthcare. Just curious now that you have had that asset, I guess, for a little but over a year now. 15 months, give or take.

Have any new specialized verticals emerged for that application, in terms of growth opportunities or anything around the sales side, just generally speaking, around corporate payments? Where you are making the investments and maybe were on the cusp of some things happening, or is it going to be more just a steady-as-she-goes kind of performance there, ex-healthcare?

Are you on SVS or are you on corporate payments, Tim?

I'm on corporate payments. The corporate payments business.

The corporate payments business, again, is a bit of a tale of two cities. The healthcare thing continues to be soft. You know the couple of big accounts we called out a year ago. One of those has gone for good and the other one is kind of slowly coming back.

We've got a bit of it, but we will see more as we exit the year. So that business is really down. That little subsegment. But the rest of the business is up crazy amounts.

The construction business is up 20% to 25%. The reseller business is up 30%. So we are -- I think I mentioned, we are pouring -- I think we've doubled the sales headcount in that business in the last six months in terms of people literally on the street today. So the, quote, business without healthcare is growing well and I would say the sales which are the lead indicator for revenue are quite good. So again I think we like it a lot, other than the stub we had in healthcare.

Great that's all I had. Thanks so much.

Thanks Tim.

Ramsey El-Assal, with Jefferies.

Hi guys. The growth in your MasterCard offering has been -- was obviously incredibly impressive in the quarter and has been helpful for a long time. Can you once again help us think through the drivers of that growth? Maybe have those drivers changed over time.

And also just a little bit of color on the sustainability of the growth? I know you mentioned Uber was a contributor this time around, but should we expect this kind of healthy revenue growth in this product category to just continue as far as the eye can see, or what are your thoughts there?

Yes, Ramsey. It is Ron. So I would say no to 48%. I think we sound a little bit like Google with that. But I would say we are super bullish on that thing being a high teens, low twenties grower for as far as we can see.

Because it's a product that just fits everybody. Every geography, every size group, so it's really we dial that product in to be a really attractive product. The drivers of it are sales, we poured sales into it so the volume, I think I quoted up 17%.

Some of that Uber and some of that is just, again, the sales investment. It is mix, again. We are pouring money into digital, so we are going down market a bit. And some of that volumes we are getting obviously much better rates as the mix keeps getting smaller in that portfolio.

And then lastly, we did pour some rate stuff in Q1 of 2015 when we saw the fuel prices tank. So we are at a point here where we have that rate sitting in Q1 of 2016 and it didn't sit on a much in Q1 of 2015. And so I'd say that the 48% is a bit artificially high for those couple of reasons, but again this is a long-term grower for us.

Great, that's super helpful. A couple of quick ones on Sem Parar. How did the company do in the quarter?

You know it's funny, we reviewed that. I'd say it was exactly on expectations. So as part of our acquisition and thesis, the company had a budget and we, FleetCor, built a model and what they've shared with us is basically spot on what we thought, which was quite comforting.

And last one, also on Sem Parar. Any changes in the financing terms on that transaction? If I'm not mistaken it seems like spreads have gotten a little more favorable since you announced the deal? I'm not sure if that's the case or not, but any incremental view on financing costs, there?

No, it's about the same, but we're existing that transaction through our existing debt facilities. So rates are effectively fixed in that facility. So expect to see something a LIBOR plus 1.75%, from a rate standpoint on the deal.

That's all for me, thank you.

Tien-tsin Huang with JPMorgan.

Great. My name was terrifying for the operator, I'm sure. (Laughter)

So a lot of good detail, as always, guys. The sales, the booking dollars I think, Ron, you said up 27%. Where are you seeing some of that good sales performance?

Is it more international, domestic? Is it in the same areas or maybe some new areas? Just trying to understand that better.

Yes, Tien-tsin, it's literally almost across-the-board. I've got the page here in front of me.

The US numbers were up big, particularly because they didn't have as good a quarter a year ago. The Comdata bookings are way, way up because we made big investments both in the trucking line of business and in the corporate payments business.

Shockingly, even our Russia sales are way up, as that thing has started to stabilize a little bit. The people have stabilized. The sales are way up.

I would say, other than Brazil, most other areas of the CLC business had a rocking, up 34% over the prior year. So it's -- I don't know investors are not as focused because it doesn't make its way into the P&L, but for us, it's the single best indicator of health, right? Shop your stuff today, and do people want it? And so it's quite encouraging for us to be up that much.

Sure, and I know it sets the stage for growth to come, which is why want to ask on the international side. Organic growth I think, Eric, you said was 6%? With some of the new sales and sales and marketing going into different areas, can we see that improve or is it really going to be more of a macro, cyclical thing that drives it?

Yes, hey Tien-tsin. It's going to be a little of both. Obviously, the macro impacted a lot of our international segments pretty dramatically in the quarter and same as last year. The good news is -- we are building some sales momentum in some of those geographies that we are investing more money in.

As Ron called out Russia as an example, we are pouring more money into places like the UK and hope to see some better results as we look for the rest of the year. And I would say if we had one spot where we need to improve, again, it's kind of Brazil. Where we are seeing a bigger macro impact. But all in all, their sales were really good in the quarter and those will eventually translate into revenue as we move along.

That's great. Thank you guys.

Thank you. Ladies and gentlemen, that's all the time we have for questions today. This does conclude today's teleconference. I'd like to -- you may disconnect your lines at this time. Thank you for your participation.