WEX Inc (WEX) 2010 Q4 法說會逐字稿

Good morning, my name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wright Express fourth quarter and year-end 2010 financial results conference call. All lines have been placed on mute to prevent any background noise. (Operator Instructions) Mr. Steve Elder, Vice President of Investor Relations, you may begin your conference.

Good morning. With me today is our CEO, Mike Dubyak, and our CFO, Melissa Smith. The financial results press release we issued earlier this morning is posted in the Investor Relations section of our website at wrightexpress.com. A copy of the release has also been included in an 8-K we submitted to the SEC. As a reminder, we will be discussing a non-GAAP metric, specifically adjusted net income during our call.

For this year's fourth quarter adjusted net income excludes non-cash mark-to-market adjustments on our fuel related derivative instruments and the amortization of acquired intangible assets, as well as the related tax impacts. Please see exhibit one included in the press release for an explanation and reconciliation of adjusted net income to GAAP net income. I also want to spend a moment discussing our future reporting segments. When we file our annual report, we will have two reporting segments. Fleet payment solutions, and Other payment solutions. The Fleet payment solutions segment will include what we have historically reported in the Fleet segment as well as the Australian fuel business we recently acquired. Other payment solutions segment will include our MasterCard business as well as the Australian Prepaid business.

I would also like to remind you that we will discuss forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed in our press release, most recent Form 10-K, and other SEC filings. While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not rely on these forward-looking statements after today. With that, I will turn the call over to Mike Dubyak.

Good morning, everyone. Thanks for joining us. Let me begin by saying that I'm extremely pleased with our 2010 full year results. We finished 2010 in a very strong position, reporting full year revenue growth of 24%, and adjusted net income growth of 26% compared to the prior year. The growth was fueled by improving trends within our core Fleet business, exceptional growth in our MasterCard business and the addition of Wright Express Australia. During my prepared remarks this morning, I will focus on a few key areas.

First, I will briefly review some highlights for the fourth quarter, including key performance metrics and trends. Second, I will talk about some of the recent advancements we have made in our long-term strategy to diversify our business and drive long-term growth. And finally, I will wrap up with our outlook for 2011.

Revenue in the quarter exceeded the high end of our guidance range, while earnings met the top end of our range. Total revenue for the fourth quarter rose to $114.9 million from $83 million in the prior year quarter, primarily driven by stronger growth in our MasterCard revenue, transaction growth, fuel prices, and a full quarter of revenue from our Australian businesses which was $17.4 million, and in-line with our expectations. As you recall, Wright Express Australia is comprised of the recently acquired assets from Retail Decisions.

For the quarter, we also reported adjusted net income of $28.8 million, or $0.74 per diluted share. Looking at our core Domestic Fleet business, as we noted last quarter, trends continue to show improvement with Fleet fueling volume in our installed base, or same-store sales, growing 2.0% over the prior year. Payment processing transactions trended higher, posting 14% growth year-over-year, which included our Australian fuel business. In addition, this was our best quarter of growth domestically since 2008, and our third consecutive quarter of year-over-year growth.

We also saw the number of vehicles serviced during the quarter continue to rise. We ended the year with the total number of vehicles serviced at 5.4 million, an increase of 17% over Q4 last year. This healthy improvement was driven by both domestic and international growth. Our domestic sales force added over 500,000 gross new vehicles in 2010, with key wins including ConocoPhillips, and the state of Florida. On the International front, we added 320,000 vehicles with the purchase of the Australian business, and BP came online in New Zealand in September.

Our commitment to customer service continues to pay off. We believe that our ability to assess customer credit risk and our focus on proactive conversations with our customers has led to increased customer satisfaction and lower credit losses than historical levels. As a result, we saw total attrition decrease to 4.1%, with voluntary attrition at a low of 1.4% for the year. Essentially, these numbers reflect our long-term customer centric focus and strategy.

Our MasterCard product has been a significant driver of growth over the last 12 months, and we expect it will continue to be a significant growth engine in 2011. MasterCard spend volume in the fourth quarter increased 54% year-over-year to $1.2 billion, driven in large part by our single-use electronic payment product. We are focused on expanding the customer base and have experienced some strength in other verticals such as insurance.

Moving to our International business, during 2010, we've substantially expanded our capabilities to provide both payment processing and card issuance services. As we noted earlier, BP New Zealand is live, and we are in the final stages of bringing BP Australia online this quarter. In addition, the acquisition of Wright Express Australia has proven successful, with this business showing solid traction and growth since we closed in mid-September. In fact, in just three months, total vehicles serviced in Australia has grown to 320,000, which was primarily driven by the initiation of their first private label program.

The hiring of Gareth Gumbley, which we announced last month, is another important step in executing on our global expansion strategy. Gareth joins the Company as Executive Vice President for Wright Express International. Gareth's expertise in the payment and processing businesses will surely bolster our capabilities on the international front. Additionally, David Howe, Managing Director of Wright Express Australia fuel cards will be broadening his role to Fleet Card operations in the Asia Pacific region.

Now I would like to take some time to go over our general thoughts for the upcoming year. I am very confident about our prospects into 2011, and I expect this to be another year of impressive growth with adjusted net income growing roughly 20%. Over the course of 2011, our strategy remains unchanged. We will continue to capitalize on the multiple avenues of growth we have in front of .

One, extend our leadership position in North America and grow our core Fleet segment. Two, grow MasterCard purchase volume, and pursue new Prepaid products. Three, further build on our successes internationally. In Domestic Fleet we plan to build off the front end growth that we achieved in 2010 as we target in excess of 400,000 gross new vehicles for 2011. We will also start to see the impact from recent customer signings late last year such as the ConocoPhillips portfolio. In addition, we expect to drive organic growth in our existing customer base by leveraging our competitive advantages. Attractive credit terms, unique financing model, and unrelenting focus on customer satisfaction. We will continue to explore new strategies that bring innovative new products to market.

And finally, we expect further lift as the macro environment continues to improve. Our Other payment solutions continues to be a growth engine for us. To support the opportunity we see for the MasterCard business, we plan to expand our sales force, and are targeting additional verticals for our single-use electronic payment product. We will also further explore new platforms. In the Prepaid card space, such as payroll cards, and Incentive and Loyalty programs, which we can leverage our current client base. Lastly, building off the success we have had with Wright Express Australia, we will focus on bolstering our international business. We will look for additional opportunities to expand our international business that leverage our competitive strengths, and open new avenues of growth through both acquisitions and organic opportunities.

To summarize, in 2011, we are focused on delivering solid growth by continuing to expand to our existing customer base, diversify our business with new products, and build out our international capabilities. We plan on leveraging the Company's financial strength and flexibility to take advantage of opportunities for acquisitions and alliances in the marketplace, which will further support our strategy to drive substantial long-term growth for Wright Express. With that, let me turn the call over to Melissa to discuss our financials in more detail and to provide our guidance for

Thanks, Mike. And good morning, everyone. To echo Mike's comments, we had another great quarter with better than expected results, and continued improvement in several key performance metrics. For Q4, the acquisition of Wright Express Australia, growth in MasterCard purchase volume, higher fuel prices, and payment processing transaction growth favorably contributed to our results compared to Q4 2009. The improving trends reinforced our confidence that the positive momentum that we have seen over the past few quarters will carry over into 2011, and is reflected in our guidance.

For the fourth quarter of 2010, we reported total revenue of $114.9 million, an increase of $31.9 million for the prior year period. This compares to our guidance range of $107 million to $112 million. For the fourth quarter, revenue from Wright Express Australia was $17.4 million. For the fourth quarter net income to common shareholders on a GAAP basis was $18.5 million, a $0.47 per diluted share, compared with $12.1 million, or $0.31 per diluted share in Q4 last year. Our non-GAAP adjusted net income increased to $28.8 million, or $0.74 per diluted share, which met the high end of our guidance range.

For the full year 2010, revenue grew 24% to $390 million from $315 million in 2009. On a GAAP basis, net income was $2.25 per share in 2010 compared to $3.55 per share last year, per diluted share in 2009. On an adjusted net income basis, earnings grew 26% to $2.75 per share, versus $2.18 per share last year.

As you referred to exhibit two in our press release, beginning with this quarter, you will see statistics include our international business. Our net payment processing rate for Q4 2010 was 1.73% which was down 2 basis points versus Q4 2009, and down 5 basis points from the third quarter of 2010. The biggest driver of this sequential decrease in the rate was higher fuel prices. In addition, as we discussed last quarter, Wright Express Australia has a slightly lower net payment processing rate than the domestic business.

MasterCard purchase volume was up 54% from Q4 last year, to $1.2 billion, which was in line with our expectations. Revenue from MasterCard was up by 57% year-over-year to $15.9 million. The MasterCard net interchange rate for Q4 was 1.01%, down 11 basis points year-over-year, primarily due to higher foreign spend which, as you know, has a low interchange rate.

Moving down the income statement, total operating expenses on a GAAP basis were $72 million for the fourth quarter. We continue to focus on tightly controlling our underlying cost structure while making incremental investments in growth initiatives including research, marketing, and international business development. Salary and other personnel costs for Q4 were $23.6 million, compared to $20.3 million in Q4 last year. The majority of the increase is due to the Australian acquisition.

Domestic Fleet credit loss was 19 basis points for the fourth quarter, compared with 20 basis points in the prior year period, and within our guidance assumption of 17 to 22 basis points. In total, credit loss for the fourth quarter was $7.2 million compared with $5.2 million in Q4 last year. Total charge-offs in the quarter were $4.2 million, and recoveries were $1 million. Our effective tax rate for Q4 on a GAAP basis was 37.6% compared with 40.9% in the fourth quarter of last year. Our adjusted net income tax rate this quarter was 37.5%, compared with 39.1% for Q4 a year ago. The decrease in the rate is due to a mix of international earnings. We expect our A&I tax rate will be between 37% and 38% for 2011.

Turning to our derivatives program, during the fourth quarter 2010, we've recognized realized cash loss of $1 million before taxes on these instruments and an unrealized loss of $10 million. This concluded the quarter with a net derivative liability of $11 million. As previously reported, we have hedged approximately 80% of our domestic exposure through the fourth quarter of 2011. Including our purchase in December, we've also hedged 53% of our North American exposure for the first quarter of 2012, and approximately 27% of our exposure for the second quarter of 2012. For the first quarter of 2011, we've locked in a price range of $2.77 to $2.83 per gallon.

For the full year, the average price we've locked in at the top end of our collar is $2.95 per gallon, and increases quarterly as we move through the year. By hedging in an environment of increasing fuel prices, the Company's average hedge price of fuel continues to rise, while protecting the Company against the volatility of short-term fuel prices. In addition, the unhedged portion of our fuel business should experience the positive impact of higher fuel prices. As a reminder, on a go-forward basis, we do not plan to hedge our fuel price exposure specific to Australia, as the exposure is more limited and has not historically fluctuated to the degree it has in the United States. We will continue to target hedging 80% of our fuel price exposure in the US on a rolling basis, which will effectively cover 65% to 70% of our overall exposure.

Turning to the balance sheet, we ended Q4 2010 with a balance of $332 million on a revolving line of credit. And $75 million on our new term loan. The line of credit carries an interest rate of LIBOR plus 70 basis points, while the term loan carries an interest rate of LIBOR plus 250 basis points. At the end of the year, our leverage ratio was 1.9 times EBITDA compared with 0.9 at the end of Q4 last year. As we noted last quarter, our near-term priority will be to pay down debt, while we continue to explore acquisitions.

In the fourth quarter, capital expenditures were $7 million. For 2011, we expect CapEx to be in the range of $28 million to $35 million compared to $28 million in 2010. Again, this is comprised of ongoing investments in new products, efficiency initiatives, and international investments which comprised the majority of the year-over-year increase.

Now to our guidance for 2011, which reflect our views as of today, and are made on a non-GAAP basis. For the first quarter of 2011, we expect to report revenues in the range of $113 million to $118 million, and adjusted net income in the range of $24 million to $27 million, or $0.63 to $0.69 per diluted share. These figures assume normal seasonality trends in the MasterCard and Prepaid businesses, and credit losses.

For the full year 2011, we expect revenues in the range of $497 million to $517 million, and adjusted net income for the full year of 2011 in the range of $123 million to $131 million, or $3.17 to $3.37 per diluted share. Our guidance assumes Domestic Fleet credit loss for the first quarter will be between 20 and 25 basis points, and the full year is expected to be in the range of 15 to 20 basis points.

The fuel price assumptions for the US are based on the applicable NYMEX futures price. For the first quarter, we expect fuel prices to be $3.20 per gallon. For the full year, we expect fuel prices to be $3.19 per gallon. We are also assuming the exchange rates for the Australian dollar will remain at parity for the year. Now we will be happy to take your questions. Tamika, can you proceed with the Q&A session, please?

(Operator Instructions) Your first question comes from the line of Tien-Tsin Huang with JPMorgan.

Hi. Thanks. Good morning. Great quarter. A few questions, I guess. First, just a high level question for you, Mike. Maybe just thinking about the pipeline. 2010 obviously was a great year for new wins. I'm curious, how does 2011 look now in relation to '10 in terms of the pipeline and award potential?

Well, we clearly are saying that we are targeting in the range of 400,000 vehicles. We feel very confident where our pipelines are today. Both from small Fleet to large Fleet, we see great production. We are seeing better results today than we were a year ago on the marketing side to generate leads, search engine marketing, online apps. All of that is working well on the small side. We have taken on two new private labels over the last year and a half. They have added sales reps that we manage.

So on the small size we feel very bullish. We are expanding up market. We had great wins last year. We have great opportunities in the pipeline this year. MasterCard still has, as we are seeing, great runway in front of it. We are getting the macro improvements on the economy. We see our annuity growing the same-store sales. So just from our core business, let alone start talking about International, we feel very bullish going into this year.

Terrific. And then I guess, maybe the International side. How does that qualified pipeline look today?

As we said, it's more long-term. We are going to roll out BP Australia in the first quarter, so that will come online. We have talked about signing an agreement with them on an international basis, so it doesn't mean we automatically win other business, but we have the ability now to work with them on a global basis. And we are pursuing some others. I think for us, it's always about, can we build something long-term with some of these people, in terms of offering operational services.

So in Australia we know we can do that. David Howes' promotion is all about that, we think he's a strong leader. And there's no reason why he shouldn't be now trying to get fully operational services for his operation with the oil companies that were doing business with. So we will continue to try to do that around the globe to build the operations capability either through acquisitions or alliances. So that pipeline is being worked, and we are hoping for successes this year that we can announce.

Great. I guess Australia ReD that came in a little better than we expected, I'm curious to hear it there have been any surprises with Australia right now that you own it, and separately with some of the floods that are happening there. Any impact, plus or minus, to talk about?

There's no surprises. We did well on the year. I would say the Prepaid business was down slightly, their fourth quarter as you know on Prepaid, is all about the month of December. It's pretty much about all ten days before and after Christmas. They have some dynamics in their marketplace that depressed gift cards sales, where a lot of the retailers were doing sales before the holidays, so people were actually going to stores to take advantage of that versus buying gift cards and getting the sale prices after the holidays. But again, that was down slightly. We're still bullish about that business growing this year.

The Fleet Card business was up slightly, so together they came in pretty much on the expectations we expected. We talked about a private label piece of business that was brought on since we have owned them. That is the first that they have done. We hope there will be more of those, since we do that, as you know, in the US.

The Queensland situation, it's still hard to say. We are building some of that into our plan this year, so we have already downward adjusted to some extent, and we are being careful also on how we're projecting bad debt. But just like Katrina, we are going to do the same things with our business down there.

When Katrina hit and the Mississippi Coast and New Orleans was hit, we worked with our small fleets and fleets of all sizes to work out payment schedules versus shutting them off, and well be doing the same thing in Queensland, to work with these small businesses. They will come back, they're just going to have a cash flow problem for a while. So I do think we're taking an initial downward hit, what we don't know is how much of an upside hit on the rebuilding we'll get.

One other thing to note is that the revenue came in a little higher than the range we'd given out, but that's just conforming to our reporting conventions. The business came in line with our expectations.

Good to know, Melissa. Maybe just one more housekeeping and then I will get off, maybe I missed it. If you gave it, I'm sorry. The Australia ReD impact on transaction growth, in the quarter, did you provide that?

You can see in exhibit two, you can actually do the math, because we provide the fuel price split out, so you can see gallons both for the Domestic business as well as the International business, and you can calculate from that that the Domestic business grew 7% in Q4. So you can actually do the math on the other side too.

Perfect. I'm punching in a calculator. Thanks a lot.

Your next question comes from the line of Greg Smith with Duncan Williams.

Hi, good morning. The account servicing fees were way up, was there anything unusual in that number this quarter?

The Australian Fleet business had significantly higher account servicing fees per month per vehicle than we do here in the US. A little bit less on payment processing revenue. So that's really driving the bulk of the growth.

Okay, so it was just purely Australia in the mix?

Yes.

Okay. And then, what is your diesel gas mix at this point? I guess the average fuel price was a little higher. Is it creeping up any towards diesel in the overall mix?

It's about 30%.

Diesel?

Yes, 30% diesel, and that's been relatively consistent.

Melissa, was there any movement on the wholesale retail spread this quarter?

There was nothing significant, no.

Okay. And then just the single-use payment product that's obviously growing very nicely, can you just remind us of the margin profile of that business? What does it look like relative to the rest of the business?

Typically when we are talking online travel, especially since there's not much, if you will, customer interface. We've rebated a higher level than we would on, say, a purchasing card program, or some of the other single-use programs were there might be more interface. So, as those transactions and that growth continues, it does bring down the overall net payment processing rate, because we are rebating a lot back to the customer or the partner.

In terms of margins, there pretty equivalent. It's a little bit lower, but not significantly lower, because they are paying us more rapidly and the credit exposure's minimal.

Yes, your only credit exposure is to the corporation, essentially?

Correct.

Great. That's all I had. Thanks, guys.

Thanks.

Your next question comes from the line of Bob Napoli with Piper Jaffray.

Thank you. Good morning, and nice job. I just wanted to make sure that your $0.10 question on the domestic transaction growth was 7%?

Gallon growth. Payment processing gallons, and you can get that from exhibit two in the press release.

Okay, and what was the transaction growth in the US?

It was approximately 5%.

And what was that -- can you give me a January number? How did that trend through the quarter? It seems like an important driver for 2011.

We haven't seen any significant changes. I guess I would say that. The business still looks strong going into the first quarter so far.

So January is around 5%?

I wouldn't be that specific, but I'd say so far the trends are still looking positive in the first quarter.

I will just add on a normal basis, we are seeing a little bit of impact from the weather. You can almost see when some of those storms hit, but then they bounces back. So it's a little choppy, but I still think we feel good about the trends. When there is no storms, we see very strong trends.

Being in Chicago you must have gotten crushed last week anyway.

Not a lot of traffic moving.

Let's see, the BP Australia, is that bigger than the New Zealand piece? And when does that come on board?

It is larger. It is scheduled to come on in the first quarter.

Any feel for size of transactions?

It is larger, I would say, significantly larger than New Zealand, rough order, maybe double.

Okay. And then, you'd mentioned payroll cards. What are your thoughts around -- how much work have you done on -- I assume you're talking about US, the Prepaid business you acquired is in Australia, I don't know how you would leverage a gift card business in Australia to a Payroll card in the US. So I would say you're probably not. But what are your thoughts around a payroll card, and how much -- is it something that's a few years away, or is it something you have done material work on?

We have done material work on it. So we have a partnership with somebody today that is already doing Payroll cards and is working with us to help us penetrate our customer base. So we will be launching a Payroll card program this year. We aren't expecting a lot of growth. It's probably slightly dilutive just because of the investments you make on the front end with sales reps, and some of the product before you start to see the pay back.

Our sales reps are being trained in this quarter. They at least can start talking to their prospects, some of our national account managers can talk to our current customers, and then marketing will gear up to start also trying to penetrate the 285,000 businesses that we have that might be candidates for Payroll cards, because we anticipate in that 285,000 that there's probably 30 million or 40 million employees. Some of those may be and un-banked, and may be candidates for payroll cards.

So we want to take advantage of that. We think we have great relationships with our Fleets. So, again, we are saying it's slightly dilutive this year, but it's an asset we should be leveraging, and it is a product that we're ready to launch this year.

Last question. Just on -- you are deleveraging, you are going to deleverage at a pretty good clip. Are you looking at other transactions internationally? Other M&A deals? You are in Australia, and obviously you're looking at processing transactions organically, but are you looking -- are there potential for other M&A deals? Obviously your largest competitor has grown through numerous deals. I don't think that's your mode but--.

I think I can say that we're active in the marketplace both domestically and internationally. I think that we still feel the synergy potential is there for what we did in Australia with David Howe is now taking on a broader role. One of the first things he will be looking at is, how do we start to plan looking at different platforms down there? How do we, then, use that [foul] platform to be more aggressive in the Asia Pacific market, as we can do in Europe now that we are hosting the foul platform in Vienna?

If there are acquisitions that we can layer in that will help us with some of the fully operational services, that's where we want to drive these relationships. So if it has already a base of business, if it's a good business like Australia and it can bring the other synergies, we will look at that. Maybe even other payment solutions.

Gareth Gumbley with his background is looking at, how can we use our MasterCard capabilities internationally? Are there acquisitions potentially? We will look at that as well. It's going to be both International and Domestic. I don't think we're going to be doing a lot of transactions, but I think we are going to look strategically at what can help us on the international capabilities, or strategies, and what can help us domestically.

Great, thank you.

Your next question comes from the line of Tom McCrohan with Janney.

Hi, everyone. Most of my questions have been asked. I just have a couple modeling-related questions. The average number of gallons, which was down a little bit sequentially, how much should we assume was the result of December's bad weather?

It was really flat. That was mostly the impact of layering in the Australian business.

Oka,y so weather didn't really have an impact?

No.

Okay. And the reason it's lower in Australia is people don't drive so far? Or what's the -- anything on that?

It's a different mix of vehicles that are just geared toward smaller transaction sales on average.

Smaller, okay. What assumptions, if any, are you baking in in your guidance for 2011, Melissa, regarding funding costs? Are you baking in an increase, flat, down? How should we think about that?

We are looking at the forward curve which has got slight increases in there.

Okay, but do you have anything rolling over into potentially lower-cost deposits this year?

We were actually very low this year. So we don't think that that's going to be a benefit for us in 2011.

Okay. My last question, have you folks had time to review that fed document on the regulatory guidance surrounding non-bank banks? I read it, but I couldn't really figure out how it applies to you. I wonder if you had a better feel for it?

No. I think -- I'm not sure I'm aware of what you're talking about, so we can check to see if it does have any application. We don't know of any application.

Thank you.

You're not talking the Dodd bill?

Yes, yes, there was some guidance that was published earlier in the week that would determine which types of institutions would be subject to fed oversight, but it wasn't really clear when I read--.

The bill that really affected us, in effect is the fact that they are doing a moratorium for three years, and they'll do a study. We'll just wait for that to come out. That will basically talk specifically about ILCs.

Great. Thanks, Mike.

The next question comes from the line of John Williams with Goldman Sachs.

Good morning, guys. Thanks for taking my question. A lot of them have actually been answered. I did have a question for you, though. On the average price per gallon that you seem to be expecting for next year is a little bit higher than where we were, and I'm just curious, if it's a function of the mix shift, because, I mean, Australia just seems to be generally a lot higher than the US on a dollar basis. So is that part of the reason why you are expecting in the $3.20 range?

That $3.20 range does not include Australia, that's just the US price. It's being skewed a little bit higher because of diesel prices, which are higher. So that is impacting it somewhat. About 30% of the mix.

That's helpful. There was not a cash flow statement in the release, is that just a function of the fact that your K is coming versus the Q? Or should we expect to see that soon?

You're right. It's going to come with the K. It's really more results of the complexity introduced to the consolidation of (inaudible) Australia into our financial results so that it will be -- it will be coming shortly.

I guess the last question is, I am curious to dig a little bit deeper into Europe, specifically, as an opportunity for you, and if -- you've given some helpful updates on previous calls. I was wondering, Mike, if you could just give us an update on what you are seeing there, knowing your biggest competitor out there, on the public side at least, talks a lot about that. So I'm just curious to get your sense of what's going on.

It's a big market. I don't think we expect to win all of the opportunities. But we are looking at opportunities that we think fit us in terms of longer-term providing fully operational services. Clearly, we are talking to BP, because we have an international contract signed, and we are talking to others that we think we still have great opportunities with. But there is competition, not just from them, but from others as well. So we are still in the marketplace, and still looking at pursuing those opportunities. That's why I said we think there could be announcements later this year, but these will be longer-term as well in terms of their growth capabilities.

Mike, do you think the fact that you are new there maybe changes the dynamics when you are talking to potential partners a little bit? Do you get pushback to that effect, or is that not an issue? Is it sort of, the kind of thing that ramps up pretty quickly for you unless you compete quickly as well?

I think that not having business today in the European market, the good news is we are now processing in New Zealand and Australia. It's proving that the platform is working, and working well. Then it is just building out some of the key functionality for Europe or the other parts of the world to bring our processing system and fully operational capabilities to those oil companies or partners.

Thanks, appreciate it.

You bet.

Your next question comes from the line of David Parker with Lazard Capital Markets.

Thank you and good morning. Just building off that prior question. For the last year, you have talked about doing some development work with oil companies over in Europe. Is that still ongoing? That hasn't -- you're still seeing momentum in that business? Are you now talking about new business that you might be getting because of Australian, and that acquisition that you made?

No, the opportunities in Europe, there are still opportunities that we are pursuing. Sometimes it's the oil companies who change their timelines. So some of them have, for different reasons, delayed making decisions. So we get caught up in that as well. We have no control over that even though, initially, we thought they would be making decisions earlier and some of them have decided to make decisions later.

So it's a little bit of that. But we still see opportunities in Europe, and we will be pursuing, just by the fact David Howe is going to be looking at Asia Pacific, we have a general manager in Europe, he will continue to work that. And we'll continue to look at other opportunities on the globe.

So it's not business that you've lost or costs that have been sunk and you're not going to recoup later on? It's just that the oil companies are taking longer than expected to make a decision?

It's mostly that. There are pieces of business out there that we have been competing for. But we're not going to win all those pieces of business.

Okay. And then just looking at the same-store sale growth, it looked like it was tracking at 4% over the last two quarters, and then it slipped to around 2% this quarter. Any color you can provide or add to that?

I would say that it was only 2%. I think we were talking more like 3% the last two quarters. But when we look at it, what is interesting, public administration was one that was down, pretty much going to flat from over 2% before, which probably makes sense with some of the stimulus money coming off in the third and fourth quarter. We saw some areas grow, but some other areas, like Wholesale Trade was pretty much the same as the previous quarter. Manufacturing was down, which was surprising from the third quarter.

So a little bit of bumpiness. What was good for us was, construction was strong, it was up. The months of October and November, for some reason, were weaker, and December was very strong. So we take that as a positive sign moving into this year. So there's a little bit of bumpiness, even with some things like manufacturing. You hear the news about manufacturing, and again, they got stronger in December, but October and November were down for them.

And does your guidance assume that it's going to continue to be around 2% for the full year?

We are presuming it is going to be positive for the year. Marginally positive, how about that?

That works. Then just final question. You mentioned with your single-use MasterCard payment product that you are seeing some strength in the insurance vertical. Can you just add some more color on that?

We have been at that now for a little -- probably about a year, and it is now making up about 5% of our revenue. So we feel positive that we are getting traction there. We have been researching some other verticals that we are not comfortable talking about, because we want to make sure we have some traction in those markets before others find out about it. But at this point, we feel very good about the insurance and warranty business and how that is tracking. We feel bullish, and that is why we are adding basically 12 new people this year on the sales and support side for the MasterCard business.

Great. Thank you.

Your next question comes from the line of Robert Dodd with Morgan Keegan.

Hi guys. Just two questions. When will the US, this year -- you added -- last year you added about 500,000 gross vehicles. This year you're looking to add 400,000. How can you -- can you give a little bit more color on that given a lower number this year, yet you feel more bullish in general? Is it just the consequences of some large deals that came on last year? Or is their more behind that 400,000 this year?

Robert, usually we're right around the 400,000 mark. I think the ConocoPhillips was kind of a step function for us. I'm not saying there aren't other opportunities in the pipeline, but some of those until you win, you can't really build it into your forward-looking numbers. So, I think of 400,000 is something we go into the year saying that's what we are targeting, and if we can maintain that on a year-in, year-out basis, we feel very good about the ability to take market share and continue to grow our business.

Following up on International again, looking obviously, you have a lot of traction in Asia, Oceana and Europe with the Vienna platform. We're still, as you talked about, waiting for the deal. Can you give any color on the meaningful difference in kind of the pitch approach, or the sales process for European oil versus a US private label operator?

I think the difference is that in Europe, they historically have done it all themselves, primarily, at least funding receivables, for example, in some cases doing some of the customer contact. They may use others to provide a system, but a lot of it has been them on a proprietary basis managing their programs. In the US, back in the '90s, people started to outsource everything, including funding receivables.

So in the US, pretty much when you win a book of business, you're at least doing all the operational services, and in many cases you're funding the receivables, as we do with ConocoPhillips and the Sunoco win, and people like Exxon Mobil. I think it's more of a gradual transition process with some of the oils. They talk about looking at fully operational over time, but in some cases, some may want to do it right away, some may want to do it in a transition phase. So that's probably the biggest difference for us.

Thank you.

Clearly, we are going in showing what we can do on a fully operational basis, and trying to make sure they understand that our long-term goal is to try to get that place with them, with our value proposition.

Thanks.

(Operator Instructions) Your next question comes from the line of [Sanjay Sahn] with (inaudible).

Hello?

-- Capital allocation. Can you hear me Melissa?

We missed the first part of what you are saying.

I was just saying that I wanted to get your thoughts on capital allocation a little bit more. When I add back the tax asset, the free cash flow per share is somewhere near $4 per share, sort of like a 13 multiple here that the Company's that. I know that you want to delever, and I know it that you -- you're patient with your acquisitions and you take your time with that, which is all smart. But given that Fleet core is trading up near 17, 18 times, which is probably a reasonable multiple, definitely, for your business too. Do you think about, maybe you might want to do a little bit of buybacks too in addition to deleveraging? Or how do you think about -- you just want to delever and then wait for the right thing to buy?

Well, buybacks will still be something we would consider, I think in the short-term. We will be paying down debt, mostly because we do see some opportunities on the acquisition side, but we still have the ability to buy shares and we will still look at doing that.

Okay, great. Thanks and congratulations on a great year.

Thank you.

(Operator Instructions) At this time, there are no further questions. We would like to thank you for joining in on today's conference call. You may now disconnect your lines at this time.