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Executives

Eric Dey – CFO

Ron Clarke – Chairman and CEO

Analysts

Romano Leo [ph] – Goldman Sachs

Glenn Fodor – Morgan Stanley

Kim Gen Wang [ph] – JPMorgan

Tim Lilly [ph] – Wells Fargo

Adam Karen [ph] – Barclays Capital

Fleetcor Technologies, Inc. (FLT) Q2 2011 Earnings Call August 4, 2011 5:00 PM ET

Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Fleetcor Technologies, Inc. second quarter 2011 earnings conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator instructions) This conference is being recorded today Thursday, August 4 of 2011. And I would now like to turn the conference over to Eric Dey, Chief Financial Officer. Please go ahead, sir.

Eric Dey

Good afternoon, everyone and thank you for joining us today. My name is Eric Dey, and I’m the Chief Financial Officer of Fleetcor Technologies.

By now, everyone should have access to our second quarter 2011 press release. It can also 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 and adjusted net income. This information is not calculated in accordance in GAAP and may be calculated differently than other companies similarly titled non-GAAP information. Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today’s press release and on our website as described above.

Also, we are reviewing 2011 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. These include forward-looking statements about our 2011 guidance. They are not guarantees of future performance and therefore, you should not put any undue reliance on them.

These statements 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 8-K with the Securities and Exchange Commission; others are discussed in our Form 10-K which is available 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. Ron?

Ron Clarke

Hi, everyone and thanks for joining the call today. I plan to cover three subjects here in my opening remarks. So first off, our Q2 results. In a nutshell, our Q2 results were very good. In fact, we set all-time record highs in both revenue and net income. So, for the quarter, we reported revenue of $134 million, adjusted net income of $48 million and adjusted EPS $0.57. All of these results were (inaudible) against our general plan.

From a growth perspective, we’ve set organic growth targets of 10 and 20, that is 10% revenue growth and 20% adjusted net income growth. And for the quarter, revenue grew 21% and adjusted net income grew 37%. So, on both fronts, we were well ahead of our targets.

Let me cover some of the reasons for this strong Q2 performance. First off, the environment continued to help us. We enjoyed unusually high market spreads which contributed probably over $3 million to $4 million above normalized levels. High fuel prices and favorable FX rates also helped our performance. The one exception on the environment side would be the UK and Czech economies. Both are still very weak and together, they put downward pressure on our transaction growth.

Second, we enjoyed higher revenue per tran in the quarter. We continue to upgrade our clients to our Standard Network Cards and our mix continued positive as well, with clients such as, Shell contributing revenue with no transaction volume.

Lastly, our performance was relatively balanced across the company, two of our business performed exceptionally well. Our Russia business grew over 80% in the quarter and our US Universal MasterCard Business grew 70%. So, needless to say we are pretty pleased with the quarter overall.

Let me now move on to the implication of our full-year guidance. Based on this very good first half and our current run rates, we are increasing our 2011 guidance. We now expect full-year 2011 to finish with revenue of $480 million to $490 million; adjusted net income of $160 million to $173 million; and adjusted EPS of $2 to 2.05 [ph].

Although we recorded $1.04 of Adjusted of EPS in the first half, I would say $0.04 or so was the result of unusually favourably environmental conditions and particularly the higher the normal market spreads I mentioned. As always, this guidance does not include the impact of any future acquisitions or material partnership agreements that we may enter into. Lastly, let me provide just the bit of a strategic update.

First, we continue to chase new partner signings and accretive acquisitions, primarily outside of North America and Europe. We are making fairly good progress and expect to announce something concrete probably in our next earnings call. And we really are working on some very exciting new developments

Second, we recently closed a new five-year $900 million term loan. This facility, along with our existing cash, gives us over $800 million of liquidity to pursue acquisitions. And even with that, I believe our Q2 leverage ratio is approximately 1.2 times which is at its lowest level in years.

Finally, I want to update you on our partnership with MasterCard. MasterCard created a program for business cardholders called the MasterCard Easy Savings Plan. This plan allows business cardholders to enrol and enjoy automatic discounts with 30 or merchants, both our Fuelman Fuel Network of approximately 19,000 sites and our CLC Hotel Network of roughly 10,000 sites are part of the MasterCard Program. So, this partnership provides incremental savings to MasterCard’s business cardholders, incremental volume to our participating merchants and incremental revenue to Fleetcor.

So, we are very excited about the long-term prospects of this relationship. So, in closing, I got to say we are really pleased with the quarter and we are pleased with the strategic progress we are making and we will look forward to updating again in the fall. So with that, let me turn the call back over to Eric to provide some additional color on our earnings release. Eric?

Eric Dey

Thanks, Ron. For the second quarter of 2011, we reported revenue of $134.2 million, an increase of 20.4% from the second quarter of 2010. For the second quarter net income increased 24% to $36.7 million from $29.6 million in the second quarter of 2010, or $0.44 per diluted share compared to $0.37 per diluted share in the second quarter of 2010.

The other financial metrics that we routinely use to measure our business are adjusted revenues and adjusted net income. Adjusted revenue equals our GAAP revenues less merchant commissions. We use adjusted revenues as a basis to evaluate the company’s revenues, net of the commission that are paid to merchants who participate in certain Card Programs. The commissions paid to merchants can vary when market spreads fluctuate in much the same way. Some of our revenues can vary when market spreads fluctuate.

We believe this financial metric is a more effective way to evaluate company’s revenue performance. Adjusted net income is GAAP net income adjusted to eliminate to non-cash stock based compensation expense related to share-based compensation awards, amortization of deferred financing costs, intangible assets, amortization of the premium recognized on the purchase of receivables and losses on the early extinguishment of debt.

Adjusted revenues in the second quarter of 2011 increased 22.8% to $119.3 million compared to $97.2 million in the second quarter of 2010. Adjusted net income for the second quarter of 2011 increased 37% to $47.8 million or $0.57 per diluted share compared to $34.9 million or $0.42 per diluted share in the second quarter of 2010 on a pro forma basis. 2010 adjusted net income on a pro form basis includes the public company expenses incurred in the second quarter of 2011.

Additional non-cash compensation expense related to our new option plan, loss on early extinguishment of debt, decrease in the effective tax rate to equal the effective rate in the second quarter of 2011 and fully diluted shares equal to those in the second quarter of 2011, each of which are described in Exhibit 1 to this press release. For the second quarter of 2011, transaction volume increased 2.8% to 50.3 million transactions from 49 million transactions in the second quarter of 2010.

Adjusted revenues per transaction for the second quarter of 2011 increased 19.7% to $2.37 from a $1.97 in the second quarter of 2010. Adjusted revenues are defined as reported revenues less the commissions paid to merchants participating in certain of our card programs.

I also want to note that the second quarter of 2010 transaction volume and revenues have been adjusted for the wind-down of a partner contract in Europe inherited from an acquisition which we chose not to renew. This partner had a high number of transactions and very little revenue.

A reconciliation for this contract wind-down is contained in Exhibit 2 to the press release. In light of the company’s exception performance in the second quarter, I would like to give some examples of how we are able to achieve this performance. But first, there are three business lines that are performing exceedingly well this year. They are our Universal MasterCard Program, our Russian business, PPR, and our Hotel Card Business, CLC.

In 2006, we started issuing Corporate Card that utilize the MasterCard Payment Network which includes approximately 165,000 fuel sites and 400,000 maintenance locations across the country. We market these cards to customers who require card acceptance beyond our proprietary merchant locations. The MasterCard Network delivers the ability to capture value added transaction data at the point of sale. It allows us to provide customers with fleet controls in reporting comparables to those of our proprietary Fleet Card Networks.

The revenue generated from our direct market MasterCard products for the second quarter of 2011 go approximately 70% compared to the second quarter of 2010. This increase was primarily driven by strong new customer sales and existing customer same store growth resulting in higher transaction volumes, as well as the effect of higher fuel prices over the prior year.

In July, 2008, we completed the acquisition of Petrol Plus Region which we refer to internally as PPR, an independent fuel card provider based in Russia. As a result of this acquisition, we have become the leading independent fuel card company in Russia with additional operations in Poland, Lithuania (inaudible) and Estonia.

We have negotiated card acceptance and settlement terms with over 700 individual merchants providing the PPR network with approximately 7000 fueling sites across the region. For the quarter, their product line revenues also grew approximately 70% over last year in local currency. This increase was driven primarily by an increase in same-store sales and strong new customer sales, resulting in higher transaction volume, as well as the impact of higher fuel prices.

And finally, in April 2009, we completed the acquisition of CLC Group, a provider of lodging management programs based in Wichita, Kansas. CLC is the company proprietary lodging network in the United States and Canada. The CLC network covers more than 17,000 hotels across the United States and Canada.

For the quarter, CLC’s revenues grew approximately 20% over last year. This increase was primarily driven by an increase in same-store sales. Higher sales volumes and our higher margin products and higher revenues due to the restructuring of certain customer contracts.

Secondly, in certain of our businesses, a portion of our revenue involves transactions where we derive revenue from fuel price spreads which is the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction.

In these transactions, the price paid to the merchant is typically based on the wholesale cost of fuel. We experienced fuel price spread contraction typically when the wholesale cost of fuel increases at a faster rate than the fuel price we charge our customers. In our first quarter earnings call, we noted that this exact scenario happened which caused our fuel price spread based revenue made [ph] negatively impacted by approximately $3.5 million in the first quarter of 2011 compared to the first quarter of 2010 which was primarily offset by the impact of higher fuel prices in the first quarter in certain of our businesses. However, during the second quarter of 2011, the wholesale price of fuel dropped at a faster rate than the price charged to our customers which caused favorable fuel price spread variance of approximately $3.8 million.

A combination of favorable fuel spreads and higher fuel prices positively impacted our revenues in the second quarter. Now, moving down the income statement, total operating expenses for the second quarter were $65.7 million compared to $52.6 million in the second quarter of 2010, an increase of 24.9%. Included in operating expenses are merchant commissions, processing expenses, including bad debt, selling expenses, and general and administrative expenses. The increase in operating expense in the second quarter of 2011 is due primarily to additional non-cash compensation expense related to our new stock option plan. Incremental public company related costs and additional costs support the growth of our business.

Credit losses were 25 basis points for the quarter compared to 32 basis points in the second quarter of 2010. The improvement in credit losses was primarily due to the improvement in the economy and a shift in our marketing and sales strategy towards slightly larger fleet prospects. Depreciation and amortization increased 4% to $8.6 million in the second quarter of 2011 from $8.3 million in the second quarter of 2010. The increase was primarily due to the impact of amortization of intangible asset related to two small acquisitions completed during 2010.

Interest expense decreased 37.6% in the second quarter to $3.5 million from $5.5 million in the second quarter of 2010, due primarily to the expiration of an interest rate hedge in November of 2010, resulting in a much slower interest rate and lower principal balances during the quarter.

In June, the company refinanced its existing term loan facilities in the US and the Czech Republic with a new $900 million credit facility in the United States. As a result, the company recognized a $227 million loss on early extinguishment of debt. I will discuss the new credit facility later in my remarks.

Our effective tax rate decreased to 31.8% of pre-tax income in the second quarter of 2011 from 34.3% of pre-tax income in the second quarter of 2010. The decrease in the effective tax rate was primarily due to the unfavorable impact on the prior-year exclusion which expired in December of 2009 and was not extended until December of 2010 and retroactive back to the beginning of 2010.

Now, turning to the balance sheet, we ended the quarter with a $164 million of total cash, $63 million of which is customer deposits in our Czech Republic business and is restricted. In June, we announced that entered into a new five-year $900 million credit facility. This new multi-currency credit facility consists of $300 million term loan and a $600 undrawn revolver. And as terms provide Fleetcor greater flexibility while reducing administrative burdens which will allows us to focus on growth.

Proceeds were used to retire outstanding amounts under Fleetcor’s existing credit facilities in the aggregate amount of approximately $329.3 million. We also amended our securitization facility which removed a compliance certification reporting requirement and certain financial covenant requirements.

The company intends to continue to use its free cash flow to temporarily pay down the securitization facility down and maintain liquidity for acquisitions and other (inaudible).

Now, turning to financial guidance, given our strong first half of 2011 results and improving economic environment and our progress on our organic growth initiatives, we are increasing our financial guidance for 2011. Our revised guidance for 2011 is now as follows. Revenue between $480 million and $490 million, up from our previous guidance range of $460 million to $480 million. Adjusted net income between a $168 million and $173 million, up from our previous guidance range of $155 million to $165 million. And adjusted net income per diluted share between $2 and $2.05, up from our previous guidance range of between $1.83 to $1.95.

As a reminder, the company full year 2011 guidance includes approximately $2 million incremental cash operating cost in 2011 for public company costs that did not exist in 2010. Also, a 2.1% increase in our effective tax rate from 28.7% our pre-tax profit in 2010 to 30.8% of pre-tax profit in 2011. It also includes an increase of 3.3 million diluted shares outstanding from 80.8 million shares in 2010 to 84.1 million shares in 2011. The increase in diluted shares was primarily due to stock vesting in conjunction with the IPO.

If these incremental costs and shares had been incurred in 2010, the company’s full-year 2010 adjusted net income would have been a $138 million, or $1.64 per diluted share. And finally, for those who are looking at GAAP numbers in 2011, please keep in mind that we will have an additional $17.9 million of non-cash compensation expense associated with our new option plans.

The company’s full-year 2011 guidance assumes similar macroeconomic and business conditions exist in 2011 as did in 2010 and assumes current foreign exchange rate. The guidance does not reflect the impact of any future acquisitions or material new partnership agreements. And with that said, operator, we’ll open it up to questions.

Operator

Thank you. We will now begin the question-and-answer session. (Operator instructions) Your first question comes from the line of Romano Leo [ph] with Goldman Sachs. Please go ahead.

Romano Leo – Goldman Sachs

Thank you. I first want to ask a question on your under larger fleets being one of gyros here on the credit performance, just when I compare (inaudible) said that they were interested in moving to the kind of smaller fleet segment and now you are saying that you are kind of interest in that larger fleet segment, what drives you to move more towards larger fleet, is that just more than the strategy or do you see that segment performing a little bit better?

Eric Dey

Yes, hey, Roman, this is Eric. What we are really referring to there is moving away from the very smallest of fleets, meaning that the fleets probably have one to three sort of vehicles which contribute the majority of our bad debt to fleets that are larger than that. So concentrating on fleets that have fleet size of a minimum of five, six, seven vehicles and greater than that to help to reduce bad debt. We are not referring to going from small to mid-size fleets to large national accounts, that’s not what I was referring to.

Ron Clarke

It’s Ron. Let me just add to that there is an R-Square [ph] between client size, if they’re one or two person vehicles to, let’s say, a 100 or 150 basis point loss with one and two, 50 at five, 30 at 15, 20 at 50. So the mix, your size mix drives your credit average.

Romano Leo – Goldman Sachs

Understood.

Ron Clarke

Honestly [ph], the larger average you have, the better credit performance you’ll have.

Romano Leo – Goldman Sachs

Got it. On the MasterCard Easy Savings Plan, why was that rolled out and was there any impact this quarter from that program?

Ron Clarke

Yes, there is two parts I mentioned, one is the fuel part which is called our Fuelman Network that’s been rolled out probably, what, a year-and-a-half ago. And we just rolled out the hotel products. I would say there – it’s has got a single-digit millions from the Fuelcard and would expect probably some single-digit millions more as the Hotel Card takes flight over the next quarter or so. It’s been good program for us.

Romano Leo – Goldman Sachs

Great. I’m just curious, how big is the Russian business, I mean, what’s kind of driving the (inaudible) (24:54) growth there?

Ron Clarke

Yes, this is Ron again. We don’t disclose, Romano, the size of the business. The growth is what we call relative investment. So, in other words, if you had a business that was, let’s say, $50 million in revenue and we spent $20 million in sales, so relative sales investment to the base of the business is what causes that business to grow. So we are spending a lot and selling kind of 30% to 40% of the base. So, obviously if you are losing, let’s say, 10%, you are going to have fantastic volume growth. So – because the opportunity is so big, we’re investing a lot on the sale side.

Romano Leo – Goldman Sachs

Got it. Thank you.

Operator

Thank you. Our next question comes from the line of Glenn Fodor with Morgan Stanley. Please go ahead.

Glenn Fodor – Morgan Stanley

Hi, good afternoon. Thanks for taking my question and congratulations on a good quarter. Very good to see the increase in revenue yields. Is it correct to assume that a lot of this sustainable as we look over the next couple of quarters, because you are (inaudible) new product sales and the MasterCard sales, so those customers are going to be with you presumably [ph] for the near term, so should we expect any sort of pullback in that or continue to forecast that to be up over the next couple of quarters?

Ron Clarke

Yes, Glenn. It’s Ron. So I would say what we always say which is we are going to keep continuing to increase revenue per tran. So our mix of these extended network cards are going keep continuing to grow our mix, and like we’ve told you repeatedly that we are spending money in the businesses that already have a higher revenue per tran versus the businesses that don’t, so that mix effect basically will continue. And then I think we did mention we’re starting to market some additional add-on kinds of things. So, when you put those three things together, our expectation is it’s going to continue to rise.

Glenn Fodor – Morgan Stanley

Okay. Give us update, where you are up and ramping up and how is it going, any near term (inaudible) or certain data points to watch out for near term?

Ron Clarke

Yes, I think it’s going good. I mean, obviously, it’s a gigantic town and we’ve got a massive team in place working on the accounts where I would say the relations are good. We are hitting the early milestones that we set out for both GAAP closure in terms of the system and the early testing, basically the system. So, I would say, so far so good and obviously, as I think we mentioned in the last call that win, Glenn, has helped a lot in terms of the interest from other oils in Europe where I guess they saw that announcement and have referenced into that account. So I think it’s been good on both fronts for us.

Glenn Fodor – Morgan Stanley

And last question, given the turmoil going on in Europe to the point you just brought up on other conversations with other big oil, but has the economic situation now over there, has anything towards changed with that, the text of your conversations or the sentiment from these other guys, you are (inaudible)?

Ron Clarke

I don’t think so. I mean generally industry as you know is incredibly healthy. So I would say though the clients that we are in conversations with and the individuals are still pretty focused on what they are trying to accomplish. So, I would say no. I would say the people we are talking to are still quite interested in our offer.

Glenn Fodor – Morgan Stanley

Okay. Great. Thank you very much. I appreciate it.

Operator

Thank you. Our next question comes from the line of Kim Gen Wang [ph] of JPMorgan. Please go ahead.

Kim Gen Wang – JPMorgan

Okay. Thanks. (inaudible) at the airport. Good quarter here. I also want to ask like, I want to ask about the revenue per transaction, I actually want to ask about it sequentially, assuming market spreads are stable and I think they are stable, is there any reason why revenue per tran wouldn’t be stable on a sequential basis just from a modeling perspective?

Ron Clarke

Yes, Kim Gen, it’s Ron again. I would say we expect that to continue to creep up right from both again the product upgrades and these mix changes that we are making. So, I think even on a sequential basis, you should assume that still going north.

Eric Dey

Yes, hey, Kim, this is Eric. Yes, the only thing I would add on that is in Q2, we did have a bit of a favourability in market spread, so that clearly would have added to the revenue per tran that we earned in the second quarter and we expect the – our spread revenue to kind of be back at the line average for the rest of the year.

Kim Gen Wang – JPMorgan

Right. So, basically assume that constant. Did you give the FX revenue in the quarter, as a housekeeping question?

Ron Clarke

You mean, how much did the FX rate impact our revenue in the second quarter?

Kim Gen Wang – JPMorgan

Correct.

Ron Clarke

Probably, it was approximately $4 million on the revenue side, but if you take a look at costs, obviously a higher FX rate to impact cost negatively. So, probably about $2 million of incremental costs resulted. So, net about $2 million.

Kim Gen Wang – JPMorgan

Okay. That makes sense. And then just on the same-store side, I heard the commentary on the UK which has been weak. I’m curious about the US and what you are seeing on the same-store basis given all the fun we are seeing in the markets?

Ron Clarke

Yes, it’s actually good, Kim, for us. I’ve seen other commentary from other companies. Our US direct business, I don’t think we reported that, that was up high single digit, volume 9% there, I think, kind of our – and the fleet business. So, our kind of US clients, I would say, are generally healthy. Again, it’s not a recovery from the glory days, if you will, but it’s sliding backward for us now. It’s sliding backwards I mentioned in that UK, that market is just in the complete ditch, the UK market, but the US I would say is still on the plus side.

Kim Gen Wang – JPMorgan

Got it. Okay. And I guess as we look into the back half of the year then, Ron, just looking at the puts and takes, assuming a sort of a stable (inaudible) growth, you still have a pretty high level of confidence that will see some large deals whether it be organic or inorganic sources still come through based on what you’ve gained for the last three months?

Ron Clarke

I try to say a little bit, I would say we are, as always, Kim, comfortable with the second half, because we’ve got good visibility right into our run rate. So, as long as the environment kind of hangs, we think we’ll learn the same or a little bit more, what I would say was a, nickel, Eric in the first half.

Eric Dey

Yes, approximately.

Ron Clarke

So, we’ll earn $1 or $1.5 I think in the second half. And I was trying to say that although a number of these accounts are big, they are cautious and kind of slow-moving. We’ve really made a lot of progress in since the last call. And I would say we are expecting to be able to actually say some concrete things to you, instead of telling you we are making good progress. So, we are making good progress.

Kim Gen Wang – JPMorgan

Excellent. Glad to hear. You nicely said that. Thanks.

Operator

Thank you. Our next question comes from the line of Tim Lilly [ph] with Wells Fargo. Please go ahead.

Tim Lilly – Wells Fargo

Hi, thanks. I had a housekeeping question and a couple of questions on CLC, first on housekeeping, Eric, could you just walk us back to the discussion of the impact on the hedge, I wasn’t able to (inaudible) everything down that you sort of talked about – relative to that?

Eric Dey

Yes, we had an interest rate hedge in place last year that expired in November of last year. And effectively, we are interest rate hedged at around 4.25%, approximately. Obviously, we were very, very happy to see that go away given where today’s interest rates were. So, obviously it had a favorable impact on the quarter from an interest rate standpoint. We have about 5 to 600 [ph] a month, Tim.

Tim Lilly – Wells Fargo

Okay. Great. And then on CLC, I guess I’ve never really a lot of questions about that business relative to fleet, but in terms of growth there and the investor, (inaudible) next quarter, I am curious to what degree signing up more properties and geographic penetration, is that all part of the story here, or is that much more about just signing up more card carrying customers through, let’s say, sort of the existing footprint of properties?

Ron Clarke

Tim, it’s Ron. I mean, the first comment I would make is we are really delighted with that business we closed early ’09 in the world’s worst conditions, and that business this year will double – profitability from the year we bought it, so we will double earning in the business in three years which is good. And the reason for that is a bunch of things, there is very healthy customers. We’ve got railroads that have come back, a bunch in that business, outside kind of service and merchandising brooks [ph] that are healthy. We made a bunch of product changes. We’ve targeted the small market where we get three times as much per tran. So, kind of across the board, the core of the sales, the new products, basically it’s kind of all working right now in that business.

Tim Lilly – Wells Fargo

Okay. And then within your customer base, I think there has been part of the story there, it’s been around changing contractual terms and sort of the spread, I guess, you get (inaudible), to what degree have you moved through that process you think when you look at your customer base or the property base?

Ron Clarke

Yes, we are on the other side of that now.

Tim Lilly – Wells Fargo

Okay. Okay, that’s all I had thanks so much.

Ron Clarke

Thanks.

Operator

(Operator instructions) Our next question comes from the line of Darren Talo [ph] with Barclays Capital.

Adam Karen – Barclays Capital

Hey, guys, how are you. This is actually Adam Karen [ph] here for Darren.

Ron Clarke

Hey, Adam.

Adam Karen – Barclays Capital

Just had a quick question for you guys in terms of when you think about kind of some kind of strategic loop here in the second half of the year and you guys mentioned that you have about $800 million or so in liquidity, did you also mention that your leverage ratio is only at about 1.2 times, is there a specific size that you guys are looking at per deal and could this leverage ratio possibly increase if necessary?

Eric Dey

We are looking at all different size deals. We look at deals that may range as small as $4 million, $5 million in purchase price to as large as perhaps a couple of hundred million or so. Obviously, if we buy one of these companies, we are going to tap into our revolver to help pay for the purchase price. So it would impact our leverage to some degree.

Adam Karen – Barclays Capital

Okay, that’s helpful. And then I just had one quick housekeeping question, Eric, you mentioned that $17.9 million in stock-based comp, was that for the year or for the remainder for the year?

Eric Dey

That’s for the entire year.

Adam Karen – Barclays Capital

Okay, got it. Thanks, guys.

Operator

Thank you. Ladies and gentlemen, that concludes the Fleetcor Technologies, Inc. second quarter 2011 earnings conference call. We thank you for your participation and you may disconnect.

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