Nov 2, 2016
Executives
Eric Richard Dey - FleetCor Technologies, Inc. Ronald F.
Clarke - FleetCor Technologies, Inc.
Analysts
David Mark Togut - Evercore Group LLC Ramsey El-Assal - Jefferies LLC Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc. James Schneider - Goldman Sachs Oscar Turner - SunTrust Robinson Humphrey, Inc.
Danyal Hussain - Morgan Stanley & Co. LLC Reginald Lawrence Smith - JPMorgan Securities LLC Brian D.
Hogan - William Blair & Co. LLC
Operator
Greetings and welcome to the FleetCor Technologies, Incorporated Third Quarter 2016 Earnings Conference Call. 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 of FleetCor Technologies.
Thank you. You may begin.
Eric Richard Dey - FleetCor Technologies, Inc.
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 and adjusted net income per diluted share.
This information is not calculated in accordance with GAAP, and may be calculated differently than other companies' similarly titled non-GAAP information. Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable information appears in today's press release and on our website, as previously described.
Also, we are providing 2016 guidance on both a GAAP and non-GAAP basis with a reconciliation of the two. 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 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, which 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, and on our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.
Others are described in our Annual Report on Form 10-K. These documents are available on our website, as previously discussed, 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 - FleetCor Technologies, Inc.
Okay, Eric. Hi, everyone, and thanks for joining the call today.
Upfront, here I'll plan to cover three subjects. First, I'll comment on our Q3 results.
Second, I'll update you on your acquisition and business development progress, and lastly, I'll provide updated 2016 guidance. Okay.
So, on to the quarter. We reported Q3 revenue of $484 million and cash EPS of $1.92.
That represents 7% top line and 15% bottom line on a reported basis. The macro environment continues to challenge our performance.
During the quarter, lower fuel prices and weaker FX negatively impacted revenue by about $28 million, and cash EPS by about $0.16 compared to the prior period. On a macro-neutral or like-for-like basis, revenue growth would have been 13%, and cash EPS growth 25%.
So 13% top, 25% bottom, better than our stated targets. It appears, fortunately, that we're finally beginning to lap the challenging macro conditions over the last couple of years, with the environment potentially setting up to be at least neutral in 2017.
Okay. So, on to the drivers of Q3 growth, really three things: organic revenue growth, the STP acquisition, and tax favorability drove the majority of Q3 top and bottom line growth.
So first off, we had organic or like-for-like growth of 8% in Q3. It was a bit of a mixed bag, but we got strong performances from our MasterCard product, up 28%; our Comdata businesses, up about 10%; our Shell Europe outsourcing business, up 80%; and our Mexico business, up 13%, so a number of good performances.
Our Brazilian and Russian businesses continue to drag on our performance along with same-store sales. Same-store revenues continued quite soft again in Q3, down approximately 2.5% versus the prior year.
Second driver in the quarter, the STP and Travelcard deals. They both contributed to our Q3 growth.
STP came in about where we expected, and its revenue up double-digits year-to-date. Lastly, we got help from the implementation of our new stock option accounting policy, and some tax work that contributed to a significantly lower tax rate in the quarter.
In terms of new sales for the quarter, bookings grew 7% versus the prior year, but we did have some really good sales performance inside of that. A number of our businesses grew new sales in excess of 50% in the quarter.
Those included Mexico, Comdata trucking, Comdata corporate payments, CLC, and Shell Europe, all grew sales 50%-plus in the quarter, so quite good. So, look, in summary, Q3 was slightly better than we had expected, and above our August guidance.
The tax work and some early SVS card orders contributed to a stronger Q3 than we had outlooked, a few cents of which will come out of our Q4 estimate. All right.
Let me transition over to our acquisition and business development update. Most significant, STP.
We closed STP on September 1, so we own it for about two months now. We continue to like that business a lot.
We developed a comprehensive transformation plan, outlining a number of ways, in which we can accelerate STP's profit growth. We've got the STP management team involved, and the CEO committed to drive this transformation agenda.
We're adding some resources, both new management and outside help, to support these initiatives. We continue to like the significant cross-sell opportunities that we see along with the upside in both digital and telesales channels that are things in FleetCor's wheelhouse.
STP continues to perform quite well in its own right. Revenues up about 10% year-to-date, and its profit contribution in September roughly on our forecast.
So we'll continue to update you on our progress at STP, as we begin to test some of these new ideas, and get a better fix on the expected 2017 contribution. Next update, the Shell Europe outsourcing project, that conversion is now complete.
So, last market was converted in August from a program that started about two years ago. We converted 11 Continental European markets in total to our systems and our back office.
The Shell program will now exit 2016 at a higher revenue run-rate as a result of all 11 markets now being online, and of note, I'd say slightly above our internal expectations, when we first signed up the program. So now the priority shifts to selling and growth and delivering volume for Shell.
Lastly, we continue to work a couple of European oil RFPs, along with a couple additional plant the flag acquisition opportunities. Getting a stronger foothold in Continental Europe, and getting after that large opportunity set continues to be a top priority for us.
Our goal is to make Continental Europe the region, a major revenue contributor to FleetCor over the mid-term, through more acquisitions, more major oil outsourcing contracts, and eventually more penetration of the FleetCor universal fuel card. So, again, we believe that region will be a significant contributor over time.
Finally, let me transition over to guidance. So today, we're increasing our full year 2016 cash EPS guidance from $6.83 to $6.86 at the midpoint.
That flows through our Q3 beat, which again included some accelerated tax benefits, and SVS card orders that we're expecting in Q4. In addition, in that guidance, we're assuming a bit weaker Q4 macro than we guided to last time.
So in summary, a good Q3, slightly better than expected, 13% top line, 25% bottom line growth on a macro-neutral basis, 7% new sales growth, STP closed and contributing per expectation, the Shell Europe conversion complete, Speedway's initial conversions beginning, and a few interesting transactions still in front of us, and another guidance raise to $6.86. So all in all, a very good place to be.
So with that, let me turn the call back over to Eric. He'll provide some additional detail on the quarter and our guidance.
Eric?
Eric Richard Dey - FleetCor Technologies, Inc.
Thank you, Ron. For the third quarter of 2016, we reported revenue of $484.4 million, up 7.3% compared to $451.5 million in the third quarter of 2015.
The revenue from our North American segment increased 3.3% to $345.9 million from $334.9 million in the third quarter of 2015. Revenue from our International segment increased 18.9% to $138.6 million from $116.5 million in the third quarter of 2015.
For the third quarter of 2016, GAAP net income increased 11% to $129.6 million or $1.36 per diluted share, from $116.8 million or $1.24 per diluted share in the third 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 certain card programs.
We prepare adjusted net income to eliminate the effects of non-cash or non-recurring 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 1 of our press release.
Adjusted revenues in the third quarter of 2016 were $456.2 million, up 8.7% compared to $419.8 million in the third quarter of 2015. Adjusted net income for the third quarter of 2016 increased 16.3% to $183.3 million or $1.92 per diluted share compared to $157.6 million or $1.67 per diluted share in the third quarter of 2015.
Third quarter results reflect the impact of the macroeconomic environment, which continued to be unfavorable versus 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 have on our business.
Changes in foreign exchange rates from the third quarter of 2015 were primarily negative and, overall, we believe negatively impacted revenue during the quarter by approximately $10 million. Fuel prices and spreads were also unfavorable during the quarter.
And although we cannot precisely calculate the impact of these changes, we believe they negatively impacted revenues by approximately $18 million. In total, the impact of these changes negatively impacted our third quarter revenues by approximately $28 million, and adjusted net income per diluted share by approximately $0.16.
On a macro-adjusted basis, revenue was up 13%, and adjusted net income would have been up approximately 25%. On a constant macro basis, organic revenue growth was approximately 8% for the quarter.
For the third quarter of 2016, transaction volumes increased 19.5% to 498.6 million transactions, compared to 417.1 million transactions in the third quarter of 2015. Transaction volumes, excluding SVS, were up approximately 5% in the North American segment, due primarily to growth in our MasterCard and corporate payments businesses.
SVS transactions can fluctuate between quarters and negatively impacted the third quarter comparison. Also, the SVS business has a significant amount of transactions at a very low revenue per transaction, so fluctuations in SVS transactions can have a meaningful impact on the segment.
Transaction volumes in our International segment grew 179%, and were primarily impacted by the addition of new Shell markets in 2015 and 2016, a small tuck-in acquisition in the first quarter of 2016, and the STP acquisition, which closed on August 31, 2016. Revenue per transaction can vary based on the geography, the relevant merchant and the 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. In discussing revenue per transaction in the North American segment, we typically exclude the impact of the SVS business, which had approximately 270 million transactions in the quarter at a very low revenue per transaction.
Revenue per transaction in the North American segment for the third quarter of 2016, excluding the SVS business, decreased 2% to $2.83 from $2.89 in the third quarter of 2015, due primarily to the impact of lower fuel prices during the quarter, and lower fuel spread margins versus prior year. Adjusting for the impact of the macroeconomic environment in SVS, revenue per transaction increased approximately 4% in North America.
In the International segment, revenue per transaction decreased 57%, due primarily to unfavorable foreign exchange rate, and the mix impact of the STP acquisition, a small tuck-in acquisition in Brazil, and Travelcard in the Netherlands, which have transactions and much lower revenue per transaction than the historical average. Foreign exchange rates impacted revenues unfavorably by approximately $10 million in the quarter.
Excluding the impact of the acquisitions, and adjusting for foreign exchange rate, revenue per transaction would have been $2.62 versus $2.56 in the third quarter of 2015. Now, let's shift over and discuss other drivers of our third quarter performance.
For our North American segment, most of our lines of business performed well, resulting in approximately 9% organic growth in the quarter on a constant fuel price and spread basis. Many of the positive drivers in North America during the quarter were similar to the last several quarters, including our MasterCard product, which had revenue growth of approximately 28% over the third quarter of 2015.
Our Comdata business also performed well in the quarter and, on a constant macro basis, was up approximately 10% in the quarter. Also, our Pac Pride business continues to perform well with revenue up approximately 29% in the third quarter of 2016 versus the third quarter of 2015.
International segment revenue was up approximately 27% on a constant macro basis in the third quarter of 2016 versus the third quarter of 2015. This increase was driven primarily by the STP and Travelcard acquisitions.
The Shell outsourcing business up 82% and Mexico up 13%. On the downside, the economies in Brazil and Russia continue to struggle, negatively impacted revenues in those markets.
Now, moving down the income statement, total operating expenses for the third quarter were $293.4 million compared to $263 million in the third quarter of 2015, an increase of 11.5%. As a percentage of total revenues, operating expenses increased to 60.6% of revenue compared to 58.3% in the third quarter of 2015.
Included in operating expenses are merchant commissions, processing expenses, bad debt, selling and general and administrative expense, depreciation and amortization expense and other operating net. Included in the third quarter 2016 operating expense were ongoing expenses related to the acquisitions closed in the quarter, and a favorable impact of approximately $2 million, resulting from lower foreign exchange rates in our foreign businesses.
Also, stock-based compensation expense in the third quarter of 2016 was $18.1 million compared to $15 million in the third quarter of 2015. Deal-related expenses in the quarter were approximately $3 million compared to only $300,000 in the third quarter of 2015.
Credit losses were $10.8 million for the third quarter or 7 basis points, compared to $5.3 million or 3 basis points in the third quarter of 2015. The increase in bad debt was primarily due to bad debt inherent in the acquired STP business, the addition of new euroShell locations and normal quarterly fluctuations in certain businesses in the quarter.
Interest expense increased 3.8% to $17.8 million, compared to $17.2 million in the third quarter of 2015. The increase in interest expense was due primarily to the impact of additional borrowings for the STP and Travelcard acquisitions in the quarter.
Equity and method investment loss of $2.7 million, decreased from a loss of $6.1 million in the third quarter of 2015. The prior year loss was impacted by costs incurred to restructure the operations of the business.
Our effective tax rate for the third quarter of 2016 was 23.9%, compared to 29.4% for the third quarter of 2015. The decrease in our effective tax rate was primarily due to the early adoption of the new guidance on accounting for share-based payments to employees in the third quarter, and the impact of a reduction in the UK tax rate.
In summary, we reported $1.92 in adjusted net income per diluted share, about $0.06 above our expectation. And as I just mentioned, there were a number of puts and takes in the quarter such as: the macro was a little worse than what we previously projected; same-store sales softness came in at approximately 3%, worse than our expectation; and on the positive side, SVS revenue came in a little better than we thought; and we realized more tax savings than we previously projected.
Now, turning to the balance sheet. We ended the quarter with approximately $605 million in total cash, approximately $200 million is restricted and consists of primarily customer deposits.
As of September 30, 2016, we had approximately $2.4 billion outstanding on Term A loan, $246 million outstanding on our Term B loan, and $597 million drawn on our revolver, leaving approximately $138 million (22:30) of undrawn availability. We had approximately $656 million borrowed in our securitization facility at the end of the quarter.
As of September 30, 2016, our leverage ratio was 2.98 times EBITDA, which is below our covenant level of 4 times EBITDA as calculated under our credit agreement. We intend to use our future excess 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, spending approximately $17.1 million on CapEx during the third quarter of 2016. Now, on to our outlook for the remainder of 2016.
First, I want to update you on our latest thinking about the macroeconomic environment. We believe the macro will negatively impact adjusted revenues by approximately $3 million to $4 million, and adjusted net income per diluted share by approximately $0.02 to $0.03 versus assumptions for the fourth quarter in our prior guidance.
Foreign exchange rate movements have been a bit mixed lately with Brazil favorable, but the UK pound trending much lower. In total, we believe that FX rate will have an approximately $2 million unfavorable impact compared to assumptions used for the fourth quarter in our prior guidance.
We believe market spread margins are mostly in line with our prior guidance. And, finally, fuel prices have continued to be mixed since the last earnings call.
And as a result, we have updated our guidance to reflect a slightly lower fuel price. For the fourth quarter, our assumptions negatively impacted revenue by approximately $1 million to $2 million versus last quarter's guidance Versus prior year actuals, the macroeconomic environment guidance assumptions represent approximately a $10 million to $12 million revenue headwind, and approximately a $0.06 to $0.07 cash EPS headwind for the fourth quarter versus the same period in 2015.
That being said, our financial guidance is as follows. Total revenues to be between $1.810 billion and $1.830 billion.
GAAP net income to be between $469 million and $477 million. GAAP net income per diluted share to be $4.94 and $5.02.
Adjusted net income to be between $648 million and $654 million, and adjusted net income per diluted share to be between $6.82 and $6.90, or $6.86 at the midpoint. This guidance represents, on a macro-adjusted basis, approximately a 13% growth in revenue, and 18% growth in adjusted net income per diluted share for the year at the mid-point of the range.
Some of the assumptions we have made in preparing this guidance include the following: weighted average fuel price of $2.29 for the fourth quarter of 2016, compared to the $2.31 assumption used in our prior guidance, and approximately $2.35 per gallon average in the fourth quarter of 2015; market spreads lower in the fourth quarter of 2016 compared to the fourth quarter of 2015 and unchanged from assumptions used in the last earnings call; foreign exchange rate equal to the seven-day average ended October 13; the impact of the pound negatively impacts prior guidance for the fourth quarter by approximately $2 million; same-store sales softness in the fourth quarter of approximately 3%; continued weakness in the company's Brazilian and Russian businesses; fully diluted shares outstanding of approximately 95.2 million shares, and a fourth quarter tax rate of approximately 30%. And with that said, operator, we'll open it up for questions.
Operator
Thank you. Our first question comes from David Togut from Evercore ISI.
Please go ahead.
David Mark Togut - Evercore Group LLC
Thanks. Good afternoon, Ron and Eric.
Ronald F. Clarke - FleetCor Technologies, Inc.
Hey, David, how are you?
David Mark Togut - Evercore Group LLC
Doing well. Thanks.
Could you just update us on CLC revenue growth, trends you saw in the third quarter, and any underlying drivers?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah, David, it's Ron. So, a little softer in Q3 on under 10% quarter, and that was driven by the same thing I told you last time.
The top 25 biggest accounts in the quarter were down 16% versus the prior year. So that pulled again the growing portions of the business down.
But the good news is, we'll have fundamentally have lapped that finally, so as we head into this quarter and forward, we'll be passed hopefully that reset of those big accounts.
David Mark Togut - Evercore Group LLC
Got it. And when you say under 10%, the number I recall for Q2 was 9%, was it below 9%?
Ronald F. Clarke - FleetCor Technologies, Inc.
It was.
Eric Richard Dey - FleetCor Technologies, Inc.
Yeah. It was just a little below that, David, but again, as Ron indicated, if you adjusted for the same-store sales softness with those larger accounts, I mean, the growth rate for the smaller accounts, which is where the growth has been coming for that business, was mostly in line with where it's been in the past.
David Mark Togut - Evercore Group LLC
Got it. And then, if you could update us on the growth you saw in AllStar, and how far through the Visa chip conversion you are?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. So the second part of your question, we're about 75% to 80%, David, through.
And the latest word is, we'll be finished half way through Q1, so little bit more this year, and then laps into the beginning. That thing was kind of mid-to-high single digits for the quarter.
David Mark Togut - Evercore Group LLC
Okay. So, in line with what you saw for the second quarter?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. Similar to the second quarter and, again, I think I said it repeatedly, we both need, A, those cards to get implemented, and then, B, we need users to use them the right way.
And if they get those two things, revenues will lift, so first things first.
David Mark Togut - Evercore Group LLC
Understood. And then, on new sales bookings, you called out 7% growth for the quarter, and 50%-plus growth in a number of areas.
What were the areas of bookings that were on the soft side that get you down to 7%?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. They're obviously had to be some of those to end up in plus 7%, right?
But I'd say, off the top of my head, Brazil, again, not only revenues but new sales continued to be quite soft. I think our Telematics business was quite soft.
I think our Russia business probably, against the prior year, again was probably quite soft, so those are the first three that come to mind.
David Mark Togut - Evercore Group LLC
Got it. And just finally is, the growth you're seeing in MasterCard which continues to be very high.
Is this a sustainable level?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. I think I mentioned last time, David, in that, I think we called out 28% kind of fuel price adjusted.
I'd say again that's probably, 60-40 volume/price would be my guesstimate of that 28%. So we still have some price from a year-plus ago in that number.
So I'd say it's a 10% to 20% per year grower based on how much we invest in sales.
David Mark Togut - Evercore Group LLC
Got it. Quick final question, if I could.
Eric, on the FX impact, you said $10 million revenue negative, $2 million benefit to expenses. Are virtually all of the AllStar expenses in the UK for the AllStar business denominated in pounds?
Eric Richard Dey - FleetCor Technologies, Inc.
They are, yes.
David Mark Togut - Evercore Group LLC
Okay. Thank you very much.
Ronald F. Clarke - FleetCor Technologies, Inc.
Thanks, David.
Operator
Our next question is from Ramsey El-Assal from Jefferies. Please go ahead.
Ramsey El-Assal - Jefferies LLC
Hi, guys. On organic growth, it feels like North America performance was solid, even factoring in Telematics and CLC, as you just talked about, but Brazil and Russia just pulled the total company organic growth rate sort of down.
Can you comment on the trajectory on those markets? Are there any signs of stability or lapping tough comps or are those just kind of in something akin to sort of free-fall?
Eric Richard Dey - FleetCor Technologies, Inc.
If I knew, Ramsey, the answer to that question, I'd say, in Brazil, which was negative, it's still the formal employment problems. Not only is the market and the economy soft, but the formal employment portion, which is we use as our products fall faster, if you will, than the total.
So those were both negative. And I would say, there's no clear view that they're going to get a lot better soon.
Ramsey El-Assal - Jefferies LLC
Okay.
Eric Richard Dey - FleetCor Technologies, Inc.
They're just both getting quite small, I guess, would be the one comment I'd make is that you are into – they clearly are well below 5%. So the good news is, although they're not performing well, they're not super important to the total.
Ronald F. Clarke - FleetCor Technologies, Inc.
Hey, Ramsey, if you believe the economists in Brazil, they all believe that the economy is starting to turn, and we'll actually have positive GDP in the next year or two. So hopefully, the worst is behind us, and it's going to stabilize and move a little bit forward.
So that's what most people are tending to believe, but we'll see.
Ramsey El-Assal - Jefferies LLC
Okay. On STP and the realization of synergies from that deal, can you talk a little bit about your plan in terms the timing of the realization of those synergies?
I know you're just sort of getting started, but is that something that would be sort of flow in over time or will we see sort of a step function with some very low-hanging fruit type synergies realized in one fell swoop in a particular quarter.
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah, so, we have a, I'd say, Ramsey, very early view of the thing and yes, we start getting some synergies as early as Q1 that kind of grow during the year. But I'd say most of it's going to depend on the testing.
So we've identified, kind of, seven areas to create improved performance, and we're literally, as soon as this month and next, in-market testing some of those things, so depending on how they test out will drive the pace in which we implement some of them. So, again, I think when we talk again in 90 days and have baked our plan, we will have a much clearer answer for you.
Ramsey El-Assal - Jefferies LLC
Okay. And are your M&A efforts right now focused at all on similar electronic toll type deals globally?
I mean, I guess how big of an opportunity is this for the company, kind of, going forward in terms of this being a focus area for new deals?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah, I mean, I think we like it a lot. So we got to learn a lot, right, in the last two years of diligencing the company and I think I mentioned in a prior call that some of the owners' concessionaires, toll operators, that owned STP are large global and European operators.
So obviously, we've made that connection, and have studied the Europe setup in some detail. So I'd say that, yes, it increases our opportunity set, and, yes, we are going to see, if we can do similar things in Europe.
Ramsey El-Assal - Jefferies LLC
Are these markets – are there many markets structured like Brazil, where it sort of an open competitive environment? I mean I know electronic tolls in some geographies are relatively monopolistic, and maybe not necessarily available for purchase.
Ronald F. Clarke - FleetCor Technologies, Inc.
Yes, so the models are different. Obviously, you've got lots of countries.
Some are more kind of government-controlled, where the suppliers are more BPO kind of oriented, and you have other big markets that look a bit more like Brazil. But I'd say, yes, there are targets and there are owners that we know in the space, and so what we're trying to make sure we know a lot about it, before we take up a lot of big steps.
But, yes, that will be in our acquisition sights going forward.
Ramsey El-Assal - Jefferies LLC
Okay. Last quick one for me, and then I'll hop back into the queue.
Just an update on European RFP, you'd mentioned previously you expected maybe some resolution this year, is that still a viable outcome or possible outcome rather? Or any thoughts there would be helpful.
Thanks a lot.
Ronald F. Clarke - FleetCor Technologies, Inc.
So we're working on actually a couple, and the one that I mentioned, I guess, in the last call, reported back two weeks ago, that's a hit (36:49) decision to Q1. So maybe not surprising for you guys on the call, but we did get that notice a couple of weeks ago, so we'll see.
They've obviously worked on the thing for quite some period of time, so we're hopeful they'll land.
Ramsey El-Assal - Jefferies LLC
All right. Got it.
Thanks a lot, guys.
Ronald F. Clarke - FleetCor Technologies, Inc.
Thanks.
Operator
Our next question comes from Sanjay Sakhrani from KBW. Please go ahead.
Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.
Thanks. Just had a quick clarification on the guidance.
At the high end of the range, the revenues are obviously lower by like $40 million, and you kind of went through some of the impacts. Could you just talk about other impacts that might be causing the delta, Eric?
Eric Richard Dey - FleetCor Technologies, Inc.
Yeah, I mean, there was a couple of things that we talked a little bit about in the quarter. One is a little bit of a macro.
The macro came in the third quarter a little bit worse than we thought. I think we called out about $3 million or $4 million.
And it's a similar number kind of in the fourth quarter. We think the macro is going to be a little bit worse.
A lot of that is driven by FX rates, because of the decrease in the UK pound, and then a little bit in fuel price. So, again, call it, $7 million, $8 million, $9 million, $10 million of kind of macro.
We've got some same-store sales softness that it looks like it's going to be a little bit higher than we had thought it was, it's been kind of running in the 1% to 2% range. It looks like it's going to be around 3%.
So that extra, kind of, percentage or two is going to impact revenue a little bit in the third quarter, and a little bit, kind of, in the fourth quarter. And I would say the last thing that's going to impact revenue a little bit is – I think Ron touched on this, but we're running a little slower to implement some of the new initiatives that we thought were going to be implemented by kind of the middle of the third quarter.
Looks like it will probably be delayed till hopefully the beginning of next year. So the combination of those three things are kind of impacting revenue.
Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.
And then, when we think about what's bridging it, it's the tax benefit, to some extent. Obviously, it's not recurring, but as we look forward into next year, how do we bridge that gap that's created by this benefit?
Eric Richard Dey - FleetCor Technologies, Inc.
Well, I would say – I think Ron said some things on the call. Again, I would say the organic growth is a little softer.
In the second half of the year, we were 8% kind of in Q3, and we'll see some similar softness kind of in the fourth quarter. But, again, we've got some pretty good momentum heading into 2017.
I mean, think of, A, couple of acquisitions that we closed and the organic growth that is going to come around those deals. We've got a full year of euroShell locations, we've got the implementation of Speedway, and then we've got the normal organic growth in the business again.
So I think the combination of those things lets us step up into a pretty good place. So...
Ronald F. Clarke - FleetCor Technologies, Inc.
...given the split between one-time tax versus kind of forward tax.
Eric Richard Dey - FleetCor Technologies, Inc.
Yeah. I mean, from a tax perspective, we called out on – just so we're clear, on the last earnings call, that we were implementing this new guidance for stock option accounting.
That was planned for the third quarter. So, our tax rate in the third quarter ended up being a little bit more favorable than we thought it was going to be.
We got a little bit more benefit out of that change in accounting in the third quarter than we had built into our forecast. And then, the UK effectively decreased – they announced they were decreasing their corporate tax rate by 1%, which impacted the tax rate there as well.
So that had a little bit more favorable impact in the third quarter than we had originally projected.
Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.
So, is there an ongoing benefit to the tax rate by that 1 percentage point in the UK, or...
Eric Richard Dey - FleetCor Technologies, Inc.
There is. There is.
So, we are going to – they decreased the rate from 18% to 17%, so that'll obviously have a favorable impact going forward for that business. And then, the stock option accounting is a little more, more bumpy, but that is the new GAAP guidance, and it's going to require us to do that more cash accounting on the exercise of stock option.
So that will be a little bumpy from kind of quarter-to-quarter, but we would expect the impact of that to be less as we go forward.
Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.
Got it.
Ronald F. Clarke - FleetCor Technologies, Inc.
But if employees sell, Sanjay, it'll – we'll get benefit in 2017.
Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.
Got it, got it. And one final question, I was just wondering – I know there is a lot of moving parts, but is there a way to help us just think about the lapping of the FX and gas price impacts going forward to the growth rate?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. I mean I think a simple way to look at the thing is to look at the trend for calendar 2016.
So if you took fuel price, Q1, Q2, Q3, Q4, and created an average for 2016, and then compared that to today's step-off, that's how we think about all of the environmental things. So what's cooked into our full year 2016 numbers, and how does that full-year average compare to today's step-off.
So in the case of fuel price, it looks like it is stepping off kind of around or a few cents better than our year-to-date average. Same with FX, although to Eric's point, depending where the pound settles here, it may still be a bit worse, but my – in my comments, Sanjay, I said that, if we look at all of the macro factors and how they set up today, which obviously doesn't mean they are going to stay there, but if you look at all of them combined, we're kind of neutral, finally, looking forward, versus the year-to-date this year.
Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.
All right. Thanks, guys.
Operator
Our next question is from Jim Schneider from Goldman Sachs. Please go ahead.
James Schneider - Goldman Sachs
Good afternoon. Thanks for taking my question.
I think you said Comdata was up 10% in the quarter. I don't think you gave the split-up between trucking and corporate.
Can you maybe give us a color on what trucking did? And then, just more broadly, can you maybe talk about what same-store sales in the U.S.-only did and as we go forward how to think about that?
Are we going to be in a situation where you're just going to get into the middle of 2017 and lap that and things will turn positive again, or do you think there are some macro factors that are going to swing that one way or the other?
Ronald F. Clarke - FleetCor Technologies, Inc.
So, Jim, it's Ron. They're about the same.
They're kind of within a point of each other for the quarter. And in terms of softness, I'd say, those two businesses probably look a bit better than some of the other ones that we called out to get to the 2.5% total.
So they're probably closer to kind of 1% that Eric called out.
James Schneider - Goldman Sachs
Got it. And then, in terms of – I mean, are we going to need anything more on the macro side to see improvement into 2017, once we lap those effects on the same-store sales weakness?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. Again, in the Comdata businesses, there is not a lot.
It's less than FleetCor, Inc., and I'd say our forward view of those businesses based on our early plans are both double-digit for 2017.
James Schneider - Goldman Sachs
That's helpful. Thank you.
And then, one quick follow-up is, you talked about the one European outsourcing RFP kind of pushing into Q1, are there now others that you see in the hopper, and you have visibility into kind of materializing in 2017 at some point?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yes. That's why I mentioned the word, two.
Yes, there are, Jim.
James Schneider - Goldman Sachs
Okay. Got it.
Thank you very much.
Ronald F. Clarke - FleetCor Technologies, Inc.
Yes.
Operator
Our next question is from Oscar Turner from SunTrust Robinson Humphrey. Please go ahead.
Oscar Turner - SunTrust Robinson Humphrey, Inc.
Good afternoon. Thanks a lot for all the color.
That was extremely helpful. So, in the past, you've talked about a 10% constant macro organic revenue growth target for both geographics.
And the 13% growth this quarter was moderately ahead of that. Just wondering is there a chance you continue to grow above that 10% target in the medium term, given the strong bookings growth year-to-date?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah, this is Ron. I'd say, again, we try to plan the business again to grow 10%, so we look at statistics of softness and loss rates and try to tee up our sales plan to deliver 10% growth.
So, although we're kind of half-way through our 2017 budget, my expectation is that we will plan 2017 probably right around that same number.
Oscar Turner - SunTrust Robinson Humphrey, Inc.
When you say the same number, the 10%?
Ronald F. Clarke - FleetCor Technologies, Inc.
Correct.
Oscar Turner - SunTrust Robinson Humphrey, Inc.
Okay. And then just on Europe, can you provide an update on the projected timeline for rollout of the European universal card?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah, we're still – I think I've commented previously that we're still kind of retooling. We've started and stopped and retooled and started and stopped, and we're actually re-launching something new that we think is quite a bit better.
So we are putting clients on. We have a couple of sales teams selling the product, and we are trying to, quote, make the product better.
So I'd say that we've not stepped on the gas in terms of selling in a big way until we think we've got the product right. So, still some work to do.
Oscar Turner - SunTrust Robinson Humphrey, Inc.
Okay. And then, finally, just a big picture question.
Recently, there has been a lot of news on self-driving cars and trucks, and just wondering have you guys thought about this, and how do you assess the long-term potential threat or opportunity from this technology?
Eric Richard Dey - FleetCor Technologies, Inc.
Yeah. Hey, this is Eric.
That's mostly captured in kind of same-store sales. So I think if you look at fuel efficiency or vehicle efficiency over some period of time, there is vehicle efficiency that's kind of built into our number that comes in terms of same-store sales softness.
And then, typically, in a normal year, you'd have GDP growth, and that GDP growth effectively mostly offsets any softness from vehicle efficiency. So same-store sales historically has run around neutral.
Now, is this going to be a bigger impact down the road? I mean, we'll have to wait and see.
But certainly, we don't believe it's any time soon.
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. Just a couple of adds, I think, our view is it's a really, really long cycle.
And, two, that we have been on and continue to be on diversifying the company. So I think if you look at our kind of Q3 numbers now, we're 40-ish percent non-fuel cards heading higher.
So it would be, A, we think kind of a long cycle to get there; and, B, we'll be a different looking company as we get there.
Oscar Turner - SunTrust Robinson Humphrey, Inc.
Okay. Thank you.
Operator
Our next question is from Danyal Hussain from Morgan Stanley. Please go ahead.
Danyal Hussain - Morgan Stanley & Co. LLC
Hi. Thanks for taking the question.
Just wondering if you could provide any more color on STP's contribution either revenue or maybe the organic growth, I think if it had decelerated into the second quarter, just wondering how it looks like in the third? Thanks.
Eric Richard Dey - FleetCor Technologies, Inc.
Yeah. I would say, in general, STP's contribution was in line with our expectation both from a revenue and a profit perspective.
And the organic growth in the business was also in line with our expectation. And I think Ron indicated that, on a year-to-date basis, it's kind of running around 10%.
So I would say we're off to a pretty good start with that.
Danyal Hussain - Morgan Stanley & Co. LLC
Got it. Thanks.
And, for Shell, you gave the run-rate a while back, I think, when you were still expecting it to be 12 or 13 countries. Since then, things have changed.
I think you lost one country, but you've also built out the business a bit. So I was just wondering, if you could provide a new run-rate for the business, and an organic growth rate on a like-for-like basis just out of Shell.
Thanks.
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. A couple of comments.
So, no, I won't give client-specific. But I will say that the exit rate and the plan for 2017, again, is higher than when we, quote, set the program up.
And that's mostly because, although there is a couple less markets, we took on an international – a cross-border piece of business that made the volume actually higher, which is part of the reason. And then, two, in terms of going forward, I think, the best news I actually saw earlier this week is, although it's a relatively small sized client base because, by design, Shell gave us their small account, the loss rate is low and, in fact, incredibly low, high-single digits, which for an average three or four card account.
It's a very, very low rate when you include credit. So I would say that given the sales investment, that thing will be again a teens kind of grower going forward.
Danyal Hussain - Morgan Stanley & Co. LLC
Perfect. And then, last one just on M&A.
You gave some color on now potentially looking at a business like STP. But a while back, you had given some commentary about corporate payments being a potential avenue for M&A, and that you have to learn a bit more about the business.
Is that still something you're thinking about? And do you see opportunity in the pipeline there?
Thanks.
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. I mean the short answer is, yes, I think, as we again diversify into these related categories like food cards and toll and corporate payments, we want to make sure that we're smart or close to equally smart.
But, yes, we've been looking and meeting with targets in every one of those new lines of business. And so, the expectation ought to be that, yes, we will be buying businesses in those categories over time.
Danyal Hussain - Morgan Stanley & Co. LLC
Great. Thank you.
Operator
Our next question comes from Tien-Tsin Huang from JPMorgan. Please go ahead.
Reginald Lawrence Smith - JPMorgan Securities LLC
Hey, guys. Thanks for taking the questions.
It's actually Reggie filling in for Tien-Tsin. I only had a few.
I hear you guys, you talked about the softness in Brazil at least in your legacy business. I guess could you kind of frame the effect that softness could have or is having on STP, and how should we think about that in the context of what you guys – how you're planning on squeezing out synergies, revenue synergies, and things like that at STP?
Ronald F. Clarke - FleetCor Technologies, Inc.
Hey, Reggie, it's Ron. That's actually a really, really good question.
So, the headline is that the existing or legacy businesses we have in Brazil are more employment benefit related things. And so, they're affected a bit more by this formal employment thing, whereas the STP, which has, a consumer side as well to it, is really just, let me call it just more pure GDP affected.
So I'd say the good news is that business sets up to be just a bit less impacted by the Brazil macro. And then, two is, it's just a great business.
I mean, it's a – you don't grow a business 30% top line for 15 years, being kind of okay. So I'd say the quality of that asset and that brand and that distribution model is just quite good.
And so I think it sets up, importantly, given its strong position and its brand and that you let people like us loose, we – you can imagine we've got some good ideas for improvement. So we want to make sure we're right, and if we are, we'll deliver a lot of synergies.
Reginald Lawrence Smith - JPMorgan Securities LLC
Understood. If I can get one more question in, I guess you called out 50% booking growth in corporate payments in Comdata and trucking.
And I guess what's kind of driving that. Is it new product?
Is it a bigger sales force? I mean that seems like a pretty meaningful increase in sales power.
So, just curious what those are.
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. Again, I think another good question.
So, the short answer there is, yes, if you take Comdata in particular, which is the trucking business, and the corporate payments business, both of those grew their new bookings, the new accounts they acquired over 50%. Looking at one of them, one grew 180% and one grew 155%.
So the majority of that, Reg, is incremental sales head count investment, and the seasoning finally of those people. If you recall, back when we bought the company, they had fundamentally hardly any sales people, right?
They had a lot of account people, but not many, kind of, hunters hunting for new business. So we've ramped up the head count in both of those businesses, but I think there are now more and more people becoming productive in those ranks, and so it's turning into more production.
And again, I think the encouraging news to David's opening is that that will help bridge revenue growth right into 2017, so you think about corporate payments with a six to nine month lead time from sale to revenue, that's one of the drivers that will create a bit of bounce back in organic as we head into next year.
Reginald Lawrence Smith - JPMorgan Securities LLC
Okay. Thanks for taking the question.
Operator
Our next question comes from Brian Hogan from William Blair. Please go ahead.
Brian D. Hogan - William Blair & Co. LLC
All right. Thanks.
Question on the provision for losses. You mentioned in the prepared remarks, STP acquisition drove that kind of an increase from the prior quarter, prior year.
Is that a one-time item or should we – is that a higher loss business? How should we, kind of, think about the provision for credit losses?
Eric Richard Dey - FleetCor Technologies, Inc.
Yeah, it's just typically a little higher loss business. I mean, they do have a consumer piece to the business, so it runs a little bit higher from a bad debt perspective.
But I would expect the certainly now the bad debt to kind of start off where it is, but we're obviously looking at the policies of the business and the practices of the business to see if we can improve those as well. So that's one of our synergy opportunities, putting our practices in place.
But certainly, as we start out 2017, I would use the current run rate as the bad debt number for the business as a whole.
Ronald F. Clarke - FleetCor Technologies, Inc.
But, Brian, hey, let me just add. It's Ron, I'd add to that, that most of the billing there has been kind of indifferent to risk levels, so it's been historically a business with kind of 30-day pay, which obviously when you look through a risk lens, there will be some changes to either weekly or prepaid.
And then, B, almost all of the actual payments of the invoices is through direct debit, and so, again, there's opportunities to tag some of the higher risk people to credit card to kind of move the risk. So I'd say that of the seven areas that we're looking at reworking, this is quite ripe, to Eric's point, in terms of putting in our practices and taking that number down.
Brian D. Hogan - William Blair & Co. LLC
Right. You've done that very well in your other businesses.
Eric, your consolidated revenue, excluding SVS, did you – that's per transaction, did you give that number?
Eric Richard Dey - FleetCor Technologies, Inc.
I did. I gave it for the each of the segments.
I thought that was going to be a little more relevant. So, I gave it for the North America segment.
Brian D. Hogan - William Blair & Co. LLC
And that was a $2.83 number?
Eric Richard Dey - FleetCor Technologies, Inc.
I'm sorry.
Brian D. Hogan - William Blair & Co. LLC
That was a $2.83 number? Is that...
Eric Richard Dey - FleetCor Technologies, Inc.
I'll look it up really quick. Yeah, it was $2.83, excluding SVS, in the North America segment.
Brian D. Hogan - William Blair & Co. LLC
And do you have it for the consolidated?
Eric Richard Dey - FleetCor Technologies, Inc.
And that was pre-macro adjusted. I mean, I did not calculate it on a consolidated level.
Brian D. Hogan - William Blair & Co. LLC
Okay.
Eric Richard Dey - FleetCor Technologies, Inc.
I have it, I just don't have it without SVS.
Brian D. Hogan - William Blair & Co. LLC
All right. And actually – go ahead.
Eric Richard Dey - FleetCor Technologies, Inc.
Go ahead, I'm sorry.
Brian D. Hogan - William Blair & Co. LLC
Yeah. I was going to – the thoughts on the SVS business, with it being a little lumpy, I mean, do you still want to retain that business?
What are your thoughts about that?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah, so we've – it's Ron, again. So, I'd say that, like all of these businesses, we've gotten a little clearer of what the thing is and is not, and we've got a really good guy running the business.
So the performance with us has been a bit better than we thought. But I'd say, again, if we found, a home that we liked more, we'll kind of keep chasing at that.
But in the meantime, we've asked people to go get the clients and go get the numbers. So, no news, no update beyond that.
Brian D. Hogan - William Blair & Co. LLC
Right. And you started the ramp the Speedway contract or agreement.
How long do you think you'll get up to being fully ramped? I mean, does it take three months, six months?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah, it's probably, I think in our plans, again, we've literally just started in the last week or two. I'd say it's about a six-month process from kind of first set of clients to last, that's – so call it, kind of, April, we should have the majority of the book across.
Brian D. Hogan - William Blair & Co. LLC
And can you give us some – like, last quarter, you kind of quantified a little bit in, remember, your third largest U.S. customer, does that still fair?
Can you kind of put some directions around the size of that business?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yeah. Again, we don't necessarily give revenue for individual contracts but, again, it's the fifth largest U.S.
retailer. It's even higher than that in terms of its commercial card program.
So, it's one of the top three or four commercial card programs. And we've got two of them with BP and Chevron, and so it's large, and it's the same model as those other couple of accounts.
So, it will be – once, it's kind of fully up and operating in kind of getting similar to those size accounts.
Brian D. Hogan - William Blair & Co. LLC
Sure. And then, the number of transactions from STP, just back of the envelope guess, you had it for one month ownership, was it about $70 million?
Is that fair and should we just kind of annualize that number?
Ronald F. Clarke - FleetCor Technologies, Inc.
Yes. That's a good guess.
$800 million and change is a good number for 12 months, so $70 million is a good number.
Brian D. Hogan - William Blair & Co. LLC
All right. And then, the revenue per transaction of that business, it's dropped the International and down pretty low, is that – what should we assume going forward there do you think?
Eric Richard Dey - FleetCor Technologies, Inc.
Yeah, what we are going to – I'd think we are going to level set the expectations for revenue per tran as we go into 2017. So we basically break that revenue per transaction out into some different metrics that actually makes some more sense.
But the STP business, as you can imagine, because it is toll based individual transaction base is relatively low on revenue per tran basis.
Brian D. Hogan - William Blair & Co. LLC
Great. All right.
That's enough for me for now. Thanks.
Ronald F. Clarke - FleetCor Technologies, Inc.
All right. Thanks.
Operator
Thank you. That's all the time we have for questions today.
And with that, this does conclude today's teleconference. Thank you for your participation.
You may disconnect your lines at this time.