Oct 30, 2014
Executives
Eric R. Dey - Chief Financial Officer, Chief Accounting Officer and Secretary Ronald F.
Clarke - Chairman, Chief Executive Officer, President and Chairman of Executive & Acquisitions Committee
Analysts
Ramsey El-Assal - Jefferies LLC, Research Division David Togut - Evercore Partners Inc., Research Division Smittipon Srethapramote - Morgan Stanley, Research Division James Schneider - Goldman Sachs Group Inc., Research Division Philip Stiller - Citigroup Inc, Research Division
Operator
Greetings, and welcome to the FleetCor Technologies Third Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Eric Dey, Chief Financial Officer for FleetCor Technologies. Thank You.
Mr. Dey, you may begin.
Eric R. Dey
Thank you, operator. Good afternoon, everyone, and thank you for joining us today.
By now, everyone should have access to our third 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 EBITDA. This information is not calculated in accordance with GAAP and may be calculated differently than other companies’ similarly titled non-GAAP information.
Quantitative reconciliation of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and on our website as previously described. Also, we are providing 2014 and preliminary 2015 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 2014 and 2015 guidance, new products and fee initiatives, and expectations regarding business development and acquisitions.
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 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.
Ronald F. Clarke
Okay, Eric. Thanks, and good afternoon, everyone, and as always, appreciate you joining the call.
Upfront here, I'll plan to cover 2 subjects: first, I'll comment on our Q3 results and our 2014 full year guidance; and then second, I'll provide an update on the Comdata acquisition along with our outlook for 2015. Okay.
So onto the quarter. Well, let me start by saying we're very pleased with our Q3 results.
We reported earlier Q3 revenue of $295 million, up 31%; and cash EPS of $1.37, up 27%. So 31%, top line; 27%, bottom line.
There's quite a lot going on in the macro environment this quarter. Although on balance, we'd say that the environment was effectively neutral in terms of its impact on our results.
We did get a lot of help from above-average market spreads in the range of $5 million, but that was all offset by lower U.S. fuel prices, higher interest rates and an unfavorable tax compare.
This Q3, our tax rate was 30% versus last year, 27%. That again reduces our earnings growth rate by about 6%, so again, reporting 27% earnings growth versus 33% at constant tax rate.
The drivers of our Q3 performance were quite similar to our previous quarters. So first, organic growth.
Consolidated, we had organic growth of 13% in Q3, and that has accelerated from earlier in the year. Inside of that, our U.S.
business was even better with organic growth of 19%, and that's driven by the above-average market spreads, continued 27% volume growth at our MasterCard products and continued mid-20s CLC growth. Second driver, acquisitions.
We were helped by our 3 largest 2013 acquisitions, which is NexTraq here in the U.S., Epyx in the U.K. and VB in Brazil.
So collectively, these 3 deals accounted for about half of the revenue growth for the quarter. Lastly, our Russia business continues to hang in, and we did report positive growth in local currency for the quarter.
So hanging in there. We did have a few highlights as well in Q3.
We announced last month that we went live with Shell in Germany and we've now fully converted their SME portfolio onto our systems and operations, and this one market will contribute approximately $10 million of incremental revenue in 2015. Shell is quite happy with this initial conversion, and thus, we expect to convert Shell market #2, which will be Austria, hopefully, before year end.
Our second highlight in the quarter: we did acquire Pac Pride on August 1, so this is a nice tuck-in acquisition for us that has, we think, bright prospects for next year. We also went live with our new Voyager universal card project, so we finished up the testing and we're now fully operational with this second universal product.
So again, a great alternative for us to our universal MasterCard product. And then lastly, we progressed quite a bit with our Husky Canada and Ultramar Canada, new partner conversions, and we expect both of these new partners to be fully converted by year end.
So a pretty exciting set of developments this quarter. Okay.
Let me transition over to Q4 and our 2014 full year guidance. So today, we are raising guidance again.
We're taking cash EPS guidance up from $5.07 at the midpoint to $5.09 at the midpoint for full year 2014. This implies $1.33 in Q4 cash EPS.
So assumed in this Q4 guidance is approximately $0.05 of FX headwind. That's if our major currencies stay kind of at the current levels.
So obviously, we would have guided to $1.38 in Q4 had we been at constant currency. For the quarter, we're expecting lower U.S.
fuel prices to continue, but that will be offset by above average market spreads in Q4, and again, really that's a natural hedge for us. So if we achieve the $1.33 in Q4 EPS and $5.09 in full year 2014 cash EPS, that would result in 26% cash EPS growth versus 2013.
And if you look back at FleetCor's cash EPS earnings history, since our December 2010 IPO, we could report 4 years of cash EPS profit growth well in excess of our 20% annual target. So in 2011, 31% profit growth; '12, it was 38%; last year, 35%; and as I mentioned, we're outlooking 26% here in 2014.
So look, we're quite pleased with the consistency of our profit growth since we've gone public. Okay.
Let me transition over to Comdata and give you an update on that transaction. So since we spoke to you last in mid-August, we've been working quite hard on our integration plans and our financial forecast for that business, and we can now report that we have officially cleared HSR and completed our new credit facility raise.
So we are now in a position to close the Comdata transaction this quarter, Q4. We don't expect any cash EPS profit contribution in the quarter as integration costs, deal costs and severance costs will likely offset any Comdata contribution.
We must tell you, though, that we are feeling very good about the transaction today, probably even better than when we signed the deal. We really like this corporate payments business and its long-term growth potential.
We've got more confidence in the synergy opportunities within the Comdata fleet business, and it looks like our financing costs will be favorable to our original model as we have achieved a higher mix of pro rata facilities versus term B facilities. I also want to tell you that the Comdata people have been terrific.
They've embraced this transaction. They've been incredibly cooperative.
They've been excited about the new ideas that we floated, and they're also accepting all the necessary changes that will be required to combine the companies and deliver the cost synergies that we anticipate. So really just great attitude.
So okay. Let's talk about what all this means then relative to our 2015 outlook.
So let me start off by saying that we haven't finished our 2015 budgeting process and still need to close the Comdata transaction. But with that, we are reconfirming today $6.35 in cash EPS guidance at the midpoint for 2015, and we're maintaining this guidance despite an expected $0.15 to $0.20 cash EPS headwind in our FleetCor business, and this is a result of unfavorable FX and expected lower U.S.
fuel prices. But on the Comdata side, we are now expecting stronger earnings next year, and that's driven by 3 things: one, the company's better second half performance than we were expecting, so better exit rate; two, our confidence to realize more synergy sooner than we had originally planned; and then three, again, this lower expected financing cost due to the more favorable mix of our credit facilities.
So in total, we plan to stick with this preliminary 2015 cash EPS guidance of $6.35, again, despite pretty unfavorable macro conditions. The $6.35 cash EPS guidance would result in 25% earnings growth over our 2014 $5.09 full year guidance, which could potentially give us 5 consecutive years of 20% plus earnings growth.
So with that, let me turn the call back over to Eric, so that he can provide some additional color on the quarter. Eric?
Eric R. Dey
Thank you, Ron. For the third quarter of 2014, we reported revenue of $295.3 million, an increase of 31% from the third quarter of 2013.
Revenue from our North American segment increased 35.6% to $156.3 million from $115.3 million in the third quarter of 2013. Revenue from our International segment increased 26.4% to $138.9 million from $109.9 million in the third quarter of 2013.
For the third quarter of 2014, GAAP net income increased 21% to $95.5 million or $1.11 per diluted share from $78.6 million or $0.93 per diluted share in the third quarter of 2013. 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 commission. We use adjusted revenues as a basis to evaluate the company's revenues, net of the commissions that are paid to merchants to participate in certain card programs.
A reconciliation of adjusted revenues and adjusted net income to GAAP numbers are provided in Exhibit 1 of our press release. Adjusted revenues in the third quarter of 2014 increased 30% to $270.3 million compared to $208.2 million in the third quarter of 2013.
Adjusted net income for the third quarter of 2014 increased 29% to $117.6 million or $1.37 per diluted share compared to $91.4 million or $1.08 per diluted share in the third quarter of 2013. However, to remind everyone, in the third quarter of 2013 was the impact of a onetime income tax benefit of approximately $0.05 per share due to the reduction in the tax rate in the U.K.
Without this onetime adjustment, our adjusted net income per diluted share would have been $1.03 in the third quarter of 2013, and our year-over-year growth rate would have been approximately 33%. For the third quarter of 2014, transaction volumes increased 12% to 94.4 million transactions compared to 84.3 million transactions in the third quarter of 2013.
North America segment transactions grew 4.5%, driven primarily by organic growth in our U.S. businesses and the telematics acquisition we completed in October of 2013.
Transaction volumes in our International segment grew 19.8% and were positively impacted by acquisitions closed in 2013. Adjusted revenue per transaction for the third quarter of 2014 increased 15.9% to $2.86 from $2.47 in the third quarter of 2013.
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.
When we talk about the macroeconomic environment, we are referring to the impact that market spread margins, fuel prices, foreign exchange rates and the economy in general can have on our business. Revenue per transaction for the third quarter was up in both North America and the International segment.
The revenue per transaction was up 29.8% in North America due primarily to higher fuel spread margins during the quarter. The positive mix impact of signing up customers who use higher revenue per transaction products than the average, organic growth in many of our higher margin products and acquisitions completed in 2013 that have higher revenue per transaction products than the average.
These positive factors were partially offset by the impact of lower fuel prices in the quarter. In the International segment, revenue per transaction increased 5.5% due primarily to organic revenue growth in several lines of business, particularly in the U.K.
and acquisitions closed in 2013, some of which have products with a higher overall revenue per transaction versus our line average. In addition, foreign exchange rates in the quarter were mixed, but overall, had a slightly positive impact on International revenue per transaction.
As previously stated, higher fuel spread margins in the U.S. resulted in a favorable impact to revenues in the third quarter.
And although, we cannot precisely calculate the impact of these changes, we believe it positively impacted our revenues in the North America segment by approximately $5 million for the quarter. Changes in foreign exchange rates were mixed, and overall, we believe positively impacted revenue during the quarter by approximately $1 million to $2 million.
And foreign exchange rates were favorable in the U.K. and neutral to down in most other geographies.
Now let's shift over and discuss some of the other drivers of our third quarter performance. For our North American segment, most of our lines of business performed well, resulting in a 35.6% revenue growth in the quarter versus prior year.
Approximately 19% of this growth was organic growth in the quarter. 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 a revenue growth of approximately 36% over the third quarter of 2013, driven primarily by increases in volume.
The CLC Group, provider of our lodging and card programs, had another solid quarter with 27% revenue growth over the third quarter of 2013. This revenue growth was driven primarily by increases in our CheckINN Direct product, which targets smaller accounts.
The third quarter also benefited from our acquisition of NexTraq, a telematics business acquired in October of 2013. And finally, the decrease in the wholesale cost of fuel resulted in an increase in fuel spread margins, and we believe positively impacted our revenue for the quarter by approximately $5 million as I mentioned earlier.
Results in our International business were impacted by strong organic growth in our U.K. business, which posted double-digit revenue growth over last year.
Results for International businesses were also positively impacted by acquisitions in Brazil and the U.K. in 2013.
I am sure a number of you are wondering how our business in Russia has been performing. As of now, not much has changed since the second quarter.
The economy in Russia remains soft and foreign exchange rates continue to get worse. However, in spite of these headwinds, our business in Russia is actually up slightly from the prior year.
As most of you know, the dollar has been strengthening against most foreign currencies over the last month. And if this continues at the current rate, we believe it will have an unfavorable impact on our revenue and results in the fourth quarter.
I'll discuss this in greater detail when I discuss full year guidance. Now moving down the income statement.
Total operating expenses for the third quarter were $151.1 million compared to $113.9 million in the third quarter of 2013, an increase of 32.7%. As a percentage of total revenues, operating expenses increased to 51.1% of revenue compared to 50.6% in the third quarter of 2013.
Included in operating expenses are merchant commissions, processing expenses, bad debt, selling and general administrative expenses and depreciation and amortization expense. Included in the third quarter operating expense was approximately $2.6 million of mostly onetime costs related to the Shell Germany start-up, deal-related expenses, severance and other miscellaneous items versus approximately $2.2 million of mostly deal expenses in the third quarter of 2013.
There were also $9.9 million of stock compensation expense in the third quarter of 2014 versus $5 million in 2013. Credit losses were $5.8 million for the quarter or 12 basis points compared to $4.9 million or 11 basis points in the third quarter of 2013.
The slight increase in bad debt was primarily due to additional bad debt booked in our Russia business due to the slowdown in their economy. Depreciation and amortization increased 42% to $25.7 million in the third quarter of 2014 from $18.1 million in the third quarter of 2013.
The increase was primarily due to amortization of intangible assets on acquisitions closed in 2013. We also have a line in our P&L related to our equity method investment, which represents the loss reported on our minority investment in Masternaut for the third quarter.
Our loss was driven primarily by additional amortization booked in purchase accounting related to this investment. The Masternaut investment had a slightly positive impact on adjusted net income for the quarter.
Our effective tax rate for the third quarter of 2014 was 30.1% compared to 27% for the third quarter of 2013. The increase in the effective tax rate was due primarily to the decrease in the U.K.
rate in the third quarter of 2013 that I discussed earlier. Now turning to the balance sheet.
We ended the quarter with approximately $346.5 million in total cash, approximately $42 million of which is restricted and are primarily customer deposits. The company also has a $500 million accounts receivable securitization facility, which was amended on February 3, 2014 to a new maturity date of February 2, 2015.
At September 30, we had approximately $394 million borrowed against the facility. We also had $476 million outstanding on our term loan and $478 million drawn on our revolver, leaving $372 million of undrawn availability.
As of September 30, 2014, our leverage ratio was 1.62x EBITDA, down from the 1.86x in the second quarter due primarily to the pay down from the free cash flow generated in the business. The 1.62x EBITDA is well below our covenant level of 3.25x 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. Finally, we are not a capital-intensive business, and we spent only $6.7 million on CapEx during the third quarter of 2014.
On October 24, the company signed documents to enter into a new $3,335,000,000 credit facility consisting of a Term A loan of $2,020,000,000, a revolving credit facility of $1,035,000,000 and a Term Loan B facility of $300 million. These new bank facilities will be used to refinance our existing Term Loan A and revolving credit facility and help finance the Comdata acquisition.
These facilities will close in conjunction with the closing of the acquisition. At the time of closing, the rate on the Term Loan A and revolving credit facility will be LIBOR plus 200 basis points, and the rate on the Term Loan B facility will be LIBOR plus 300 basis points with a floor of 75 basis points.
Now on to our outlook for 2014. We are increasing our guidance as follows: we expect total revenues to be between $1,100,000,000 and $1,110,000,000, up from our previous guidance range of $1,082,000,000 and $1,097,000,000; adjusted net income to be between $434 million and $440 million, up from our previous guidance range of $432 million and $438 million; adjusted net income per diluted share to be between $5.07 and $5.11, up from our previous guidance range of $5.04 to $5.10.
Our adjusted net income per diluted share guidance at the midpoint of the range represents a 25.7% growth rate over the $4.05 per diluted share reported in 2013. Also, to remind everyone, our 2013 results included approximately $5.7 million or $0.07 per diluted share from 2 favorable nonrecurring income tax items.
So using a more normalized tax rate in 2013, our growth rate is projected to be approximately 28%. As we enter the fourth quarter, we have headwinds in foreign exchange rates that were not accounting for in the guidance given during our second quarter call.
Our guidance for the fourth quarter reflects foreign exchange rates at current levels, which will have an unfavorable impact on our result of approximately $0.05 per share in the fourth quarter versus our previous assumption. As a result, our revised guidance assumes a $1.33 in adjusted net income at the midpoint for the fourth quarter.
Without this headwind, we would've guided to around $1.38 for the quarter. Some of the other assumptions that we have made in preparing this guidance include the following: continued weakness in our Russia business, fuel prices at current levels and market spreads slightly better than the year-to-date average as the decrease in the wholesale cost of fuel should result in more favorable fuel spread margins.
We expect that the decrease in fuel price will mostly offset more favorable fuel spread margins. We are also assuming fully diluted shares outstanding of approximately 86 million shares and a full year effective tax rate of 30.4%.
This tax rate assumption does not include any potential year-end tax adjustments, and as always, no impact related to future acquisitions or material new partnership agreements not already announced. We have also not included any impact related to the closing of the Comdata acquisition in our guidance.
As Ron mentioned earlier, we have cleared HSR and have secured the financing for the transaction. As a result, we now believe that we will close the Comdata acquisition around December 1.
However, given the significant amount of closing cost we will incur in the acquisition, we believe that the Comdata acquisition will have no impact to our bottom line in the fourth quarter. Now I am sure you are all wondering about 2015.
While we are not done with our internal budget process, we did want to offer the following observations related to comments previously made about 2015. There are a few unexpected headwinds, primarily foreign exchange rates and fuel prices that we are seeing now, and we expect to continue into 2015.
At current levels, these are estimated to negatively impact our bottom line by approximately $0.15 to $0.20 in adjusted net income for the year. However, as we continue to work toward wrapping up the Comdata acquisition, the business is performing better than our expectation, and we are growing more confident around the synergies we can achieve from the combined organizations.
In addition, our cost to finance the acquisition is lower than we originally anticipated. As a result, we believe these will net each other out and believe the $6.35 adjusted net income estimate for 2015, we gave you previously in conjunction with the Comdata announcement, is still reasonable.
We are planning to talk in more detail about 2015 on our fourth quarter earnings call. And with that said, operator, we'll open it up for questions.
Operator
[Operator Instructions] The first question comes from Ramsey El-Assal with Jefferies.
Ramsey El-Assal - Jefferies LLC, Research Division
When you do close Comdata, will the percentage of your overall revenues that are exposed to fuel price volatility go up or change in any measurable way?
Ronald F. Clarke
Yes. Ramsey, it's Ron.
They'll go down slightly. Comdata is in the kind of 15% affected by fuel price, and I think our number is right around 20%.
Eric R. Dey
That's correct. So in total, we're about 17% give or take combined.
Ramsey El-Assal - Jefferies LLC, Research Division
Okay. And any update on divesting the SVS gift card asset that you'd mentioned previously?
Ronald F. Clarke
Yes. Not yet.
We, again, we don't own the company so I'd say we'd done some additional evaluation work and kind of prepping things but not much progress on that.
Ramsey El-Assal - Jefferies LLC, Research Division
Is that still something that strategically you're pretty intent on doing? Or could you change your mind on that depending on how the market receives the asset?
Ronald F. Clarke
Yes. The latter.
Again, it's a good business, Ramsey. For us, it's a fit question about, we're good at what we're good at.
So if people like it more than we do, then we would unload it, and if not, we'll work with it.
Ramsey El-Assal - Jefferies LLC, Research Division
Okay. Last one for me, and I think you may have commented on this earlier, and I just -- I can't quite remember.
But the incremental markets you're rolling out with Shell, the costs associated with the rolling out of those markets has largely been expended in developing the platform for Germany. Is that correct?
Or are there incremental costs that you'll need to incur to roll the additional countries out?
Ronald F. Clarke
Yes. They'll be incremental, so our early plan is in the kind of 4 to 5 additional markets next year in '15.
And if you think about it, there's separate from the platform, there's conversion. You got to go into the specific market and convert data.
There's incremental staffing to handle, those languages, those services and stuff. So I'd say that we've modeled the thing probably at a push.
It will probably add $4 million to $5 million of incremental revenue and probably cost us about the same next year.
Ramsey El-Assal - Jefferies LLC, Research Division
Okay. And all that's contemplated in the guidance, I'm assuming?
Ronald F. Clarke
Yes, it is.
Operator
Our next question comes from David Togut with Evercore.
David Togut - Evercore Partners Inc., Research Division
If I heard correctly, Ron, I thought you said MasterCard volume growth was up 27%. And Eric, you cited 36% revenue growth for the MasterCard product?
Eric R. Dey
Ron quoted volume and I quoted revenue. So our volume was up 27%, but revenue was up 36%.
David Togut - Evercore Partners Inc., Research Division
So did you put through a significant price increase? Or did you just have higher average ticket in the quarter?
Ronald F. Clarke
Yes. David, it's Ron.
So kind of 2 things. One, I'd say, again, that it's some mix.
When we started that product, we started up by selling kind of more in the middle market, where we get lower fees, and we're selling a pile of that. So we're selling more smaller accounts, where we kind of get more fees.
So the first one, I think, is mix. And then second, we've added a few transaction fees selectively, so we've done a little bit of rate work as well.
David Togut - Evercore Partners Inc., Research Division
I see. And as a result, is the mid-30s revenue growth rate for this product sustainable?
Eric R. Dey
I don't have it in front of me, but I'd say probably our model for next year is high-20s, maybe 30% in revenue at constant fuel price.
David Togut - Evercore Partners Inc., Research Division
Got it. And CLC was up mid-20s in the quarter.
Anything to call out there in terms of what drove the growth? And is that growth sustainable?
Ronald F. Clarke
Yes. Again, I'd say, as we've commented before, it's really, David, across the board.
Our -- that new product that we talked about that's kind of targeted at kind of the middle-sized traveler group is off on a tear. And then our small account, we call it CheckINN Direct, that thing is, again, just -- we're just selling a pile of it.
So I'd say the best thing about that business is it's growing the right way, which is demand for it, and we're selling a lot of it. So again, we modeled that thing to be up plus 20% again next year.
David Togut - Evercore Partners Inc., Research Division
Got it. And Ron, you called out the introduction of a new universal card product, the Voyager product.
Can you tell us a little bit about that? And how that will be marketed relative to direct MasterCard?
Ronald F. Clarke
The way we think about this thing, David, it's probably like the banks. So you think about the Chase, the BofA, the Wells Fargo guys, they have a primary network, let's say, MasterCard, but they keep Visa for 10% or 20%.
And then they package the products in terms of offers and marketing in certain ways, and they keep both guys because it helps them obviously negotiate. I'd say, that's exactly how we think about it.
We think about the product as another very good alternative that fundamentally works the same way as the same universal network. We'll package, market and price it basically the same way, and we've already been doing that.
We've got a large number of our sales people selling it. So for us, again, it's good to have that option, that alternative.
Again, it mutes interchange risk, pricing risk from MasterCard, so we like having it. And depending on how those couple of guys play with us, we'll move either more volume one way or the other.
But customers like it, I'd say, probably about the same as they do the MasterCard product.
David Togut - Evercore Partners Inc., Research Division
Got it. And then just shifting to the U.K.
Any update on the rollout of the new AllStar Visa chip card?
Ronald F. Clarke
That's a great question. It's funny.
We literally, last week, went live in what we call our customer pilot, and I'll make up the number, but call it, 100 of our existing accounts went live last week with the product, and I saw some of the email stream, which is good. A few people going, "Wow.
Finally, an easy card to use." Because it works like the consumer card.
So that thing is officially live and out of the blocks, and we'll start converting large group of accounts probably in Q1.
David Togut - Evercore Partners Inc., Research Division
Understood. And then just shifting over to Comdata cost savings, I think, Eric, you called out expecting more cost savings sooner.
Can you ballpark for us what the cost savings as a whole might be for 2015?
Eric R. Dey
Yes. David, yes, we haven't really quantified that at this time.
I mean, as you know, we haven't closed the acquisition yet. And we do believe we'll probably close that transaction before or around December 1.
So we'll have obviously a lot more to talk about on the Q4 earnings call, and we can have a discussion about that more then.
David Togut - Evercore Partners Inc., Research Division
Understood. Just a quick final one for me.
On the macro for 2015, you called out pressure from FX and lower fuel prices. Do you expect any benefit next year from higher fuel price spreads?
Ronald F. Clarke
Yes. David, it's Ron.
So the answer to that is no, we haven't planned it. As you know, spreads come about due to volatility.
You have to -- the fuel prices have to move basically to create spreads going one way or the other. And so the worst situation for us would be low fuel prices just staying low, nothing happening.
And what that would cause is we'd lose on the business models that are sensitive to absolute fuel price, and we'd probably run kind of what we call average market spreads, and so it's the volatility price, that's seesawing up and down, that create the spread opportunity.
Operator
Our next question comes from Smitty Srethapramote with Morgan Stanley.
Smittipon Srethapramote - Morgan Stanley, Research Division
Just wondering if you could give us a high-level -- your latest thoughts on telematics now that you've had NexTraq and Masternaut for some time. Can you talk about where you see the opportunity in the space in the U.S.
and outside the U.S.?
Ronald F. Clarke
Yes. Smitty, I'd say we're getting a bit smarter.
Our original thesis is we like the space, right? Because it nests so close to what we do, and I think we've learned a lot since we acquired the NexTraq business about a year ago, so there's been a lot of learnings about -- as the value in our customer relationships or as the value in our sales relationships.
And so for example, on that one, we've learned that the sales and the money we spend and the contacts we make and the window that those people are in, is actually more valuable to help them sell telematics than "cross-selling" to our existing customers. So I guess I'd say that we're still in the evaluation phase of the business in terms of deciding whether we want to play in it in a big way or not.
But I would add that we're delighted with the -- this NexTraq company that we bought. The numbers are up.
The profits are up, what? 3x.
Eric R. Dey
Correct.
Ronald F. Clarke
3x, I'd say over the quarter a year ago, and the thing is performing well. There's good growth, much better profitability.
So I'd say from the one that we own, although it's not very big, we like what we see so far.
Smittipon Srethapramote - Morgan Stanley, Research Division
Got it. And maybe you can give us also an update on the Chevron Asia?
And where the rollout stands at the moment?
Ronald F. Clarke
Yes. So the 2 big GFN or processing deals we announced was Caltex in Australia and then 5 or 6 markets for Chevron in Asia.
We got a big relationship with Chevron here in North America. And the target date for both of those projects is basically go-live next summer.
So we are in the middle of kind of customizing our product to meet the specific requirements of those clients and dialoguing with them. And as we get into the early spring, we'll get into the testing and the training and stuff.
So I'd say we're kind of halfway through those projects and are on track to go live next summer.
Smittipon Srethapramote - Morgan Stanley, Research Division
Got it. And then the final question from our side is just regarding the increase in confidence on the synergy opportunity in the Comdata.
I'm just wondering what you've seen that gives you the increased confidence and then tracking [ph] synergies.
Ronald F. Clarke
Yes, I think the short answer is it's just getting closer, right? So when you're doing diligence with a company and requesting data, we're kind of math guys at FleetCor so we kind of -- we have a bunch of ideas, and we did what we did.
But once we signed definitive documents and got -- working closer with their people, we get into, I'll call it, another level of detail, and we've kind of done this before. So I'd say that the ideas we have, the fact base we have, gives us just higher confidence that we can do things and get the money that we planned.
Smittipon Srethapramote - Morgan Stanley, Research Division
And can you comment on whether you're getting more confidence in synergies on the revenue side or on the cost side?
Ronald F. Clarke
Yes, I'd say it's both. I mean, the issue for us on the cost side is really going to be timing, so we've obviously identified the low hanging fruit, the things that are clearly overlapping that are easy.
But some large amount, I'll say, 1/3 of all Comdata's spending is around the technology area, which is a big number and a much bigger number than at FleetCor. And so the systems planning and the systems integration part of this thing and the vendors around IT are a bigger part of that cost takeout equation.
So I'd say the cycle time on that is going to be longer, so we'll take some of the cost money kind of right away, and then I'd say the IT timing is still not certain yet.
Operator
Our next question comes from Jim Schneider with Goldman Sachs.
James Schneider - Goldman Sachs Group Inc., Research Division
I was wondering if you could talk longer term about the deal pipeline that you're seeing right now. I think you mentioned before that you still have other things you're considering actively.
So can you maybe talk about the activity levels in terms of negotiations and discussions you might be having? And in terms of what areas?
Is it more international? Is it more North America?
Is it more traditional fleet or other spaces?
Ronald F. Clarke
Yes, I'd say it's kind of same old, same old here. We've got a big group of people, and again, we know all the people, Jim, and so we've got a pipeline of things that we're working on.
And as I look at the list here in front of me, they're mostly in other places outside of the U.S., and it's the same thing. A couple of them are large and a couple of them kind of not so large, so it's -- I'd say it looks like our pipeline kind of looks all the time.
We're out there, and we're rattling the bushes and finding stuff. And so that with the financing approach we took leaves us, what, about a half -- $500 million basically of liquidity, Eric?
Eric R. Dey
Yes, at least. At least.
Ronald F. Clarke
So we -- our target, Jim, again, is to kind of invest $500 million a year on average, $1.5 billion over the forecast. So we've got money even at the close of this thing to chase these things down in the pipeline.
So I'd say we're probably in the same place that we normally are.
James Schneider - Goldman Sachs Group Inc., Research Division
That's helpful. And then just as a follow-up.
You mentioned the revenue transaction grew very nicely in the quarter, and I understand that a decent chunk of that is increased fuel price spreads. But can you maybe talk about the contribution you saw from cross-sell telematics or across all of other services into the existing customer base?
Ronald F. Clarke
Yes, I would say there's probably not a lot of that. Again, we're still kind of in the testing mode on the cross-sell.
I think it's just, fundamentally, a kind of healthy asset. So in the U.S., the Mastercard thing we quoted the numbers has grown crazy.
We brought online. We think we told you a bunch of new partners that finally contributed to revenue that hadn't shown up before.
I mentioned the NexTraq thing. We like that's grown high-double digits since we bought it.
The CLC thing is rocking. So all the U.S.
businesses, it's not really about cross-sell. They're just healthy.
Some of the new things we bought like the Epyx business is way up. We put a bunch of programs in that.
Our Mexico business is way up. So I think, generally, our Down Under businesses are way up.
So I think it's more just the programs that we have in place and the sales that we have in place are just basically working in the businesses, and then we just got a couple of headwinds. Russia is not great because of the environment, and Brazil is not as great with their economy, and the Czech business.
So we got 2 or 3 places that are kind of soft mostly because of the environment. But I'd say the rest of them, Jim, are just -- they're just working.
Operator
[Operator Instructions] Our next question comes from Philip Stiller with Citi.
Philip Stiller - Citigroup Inc, Research Division
I guess I wanted to ask about Brazil. You haven't talked too much about it so far.
Just an update on how your businesses are performing down there.
Eric R. Dey
Phil, this is Eric. I would say first, our business there is being impacted somewhat by the economy and the election that was taking place, so I'd say some of our volumes are softer than what we originally anticipated.
But what I would say in addition to that is we're still very, very bullish on the prospects of that geography. We've got a bunch of new products that are in the beginning stages of being rolled out.
We partnered with a company called Good Card last year, and we're now going to be reselling what is the #1 small to mid-sized fleet card in Brazil. We also partnered with a company called Edenred, and we're going to be cross-selling their food card products as well to our own customer base.
We're also in the process of finalizing the rollout of a new national toll tag technology, so that hopefully will be ready to be rolled out as we get into the first quarter next year. So I would say it's a couple of things: one is, the economy is a little bit softer than we had originally anticipated, impacting our volumes; but we're kind of well-positioned as we move forward kind of into the next year and the years beyond with a bunch of new products that we're going to help to grow much bigger business down in that geography over time.
Philip Stiller - Citigroup Inc, Research Division
Okay. That's helpful.
Could you guys perhaps comment on the partner pipeline both in the U.S. and internationally?
Ronald F. Clarke
Yes. Phil, it's Ron.
I'd say we're probably early innings. We've got some conversations going on both here in the U.S.
and Canada, and we've got some conversations going on in Europe. But I'd say we're early in a lot of those.
I think some of these conversations, particularly the Europe ones have come as a result of the Shell and the Exxon announcements in the last year or 2. So I'd say nothing imminent, but again, I think more of the oil companies are taking notice of this outsourcing idea, and I think frankly, waiting for the kind of news that we're reporting today on the Germany, for example, that we've gone into a country and it's been quiet and it's worked and all that, so -- but more proof that outsourcing is good for these clients, I think, is what the doctor ordered.
Philip Stiller - Citigroup Inc, Research Division
Okay. Great.
And then last question. I think when you originally gave the preliminary 2015 guidance, you talked about like a 10% organic revenue growth number, and I assume that still holds excluding the impact of the fuel and FX.
But just wondering, it seems like you have a lot of good momentum exiting the year. The organic growth was better this quarter.
You have some partner deals ramping; you have new products rolling out. I guess how conservative is that 10% number as we look out to next year?
Ronald F. Clarke
Yes. I mean, the first thing I'd say, Phil, is that it's still early days here at whatever we are.
Late October, we actually start what we call pass 2 of budgets next week, so ask me a different day. But I'd say the early view is yes, so in our early passes here, we could reconfirm with you that our global organic target is in constant FX, in constant fuel price, which is how we set the thing up at the 10% or 10% plus.
So we feel good about the overall health. And I think one of the questions for us in the budget process is do we want to -- what do we want to do on the expense and the investment side?
Do we want to spend more money in IT and more money in sales, particularly behind some of these Europe markets and some of our new cards there and same in Brazil? We like the business we have, okay, but I love the product line that we -- this new product line.
So I think one of the big open questions for us communicating with you guys again is: are we going to spend any money? Or are we going to continue to kind of run at these margins?
And also there's a wildcard here, obviously, on the FX and the fuel price. This is almost a 30-day phenomenon, right, in terms of what's happened to both of those metrics, so I'd say we're like you.
We're watching both of those pretty closely.
Operator
Ladies and gentlemen, that's all the questions we have today. All parties may disconnect.
Have a good evening. Thank you.