FLEETCOR® Upsizes Credit Facility by $600 million; Establishing 10b5-1 Plan to Repurchase Shares
- Successful amendment to credit facilities resulting in a $600 million increase in capacity
- Increased revolver from $1.5 billion to $1.775 billion and borrowings under Term Loan A by $325 million
- Leverage neutral transaction with consistent interest rate and maturity terms
- Anticipated use of increased debt facility to drive earnings growth through M&A and stock repurchasing in 2024
- None.
Insights
The recent amendment to FLEETCOR Technologies' credit facilities, resulting in a $600 million increase in capacity, is a strategic financial maneuver that could potentially strengthen the company's position for future growth. The upsizing of the revolver credit from $1.5 billion to $1.775 billion, along with the additional $325 million in Term Loan A, provides FLEETCOR with a significant liquidity boost. This liquidity is vital as it gives the company the flexibility to pursue growth strategies, such as mergers and acquisitions (M&A), which could lead to an increase in market share and revenue streams.
Moreover, the use of these proceeds to pay down the revolver balance is a prudent approach to manage debt effectively. The unchanged interest rate and maturity terms indicate a stable borrowing cost, which is beneficial for long-term financial planning. For investors, this financial restructuring suggests that FLEETCOR is actively managing its capital structure to optimize its cost of capital and maintain a solid balance sheet.
From a market perspective, FLEETCOR's decision to increase its debt capacity may signal confidence in its future earnings potential. The company's plan to use the additional funds for both M&A activities and stock repurchases in 2024 could be a catalyst for earnings growth, potentially leading to a positive market reaction. Stock repurchase programs often convey a message that the company believes its stock is undervalued and can also serve to increase earnings per share by reducing the number of shares outstanding.
However, it is essential to monitor how effectively FLEETCOR deploys this capital. Successful integration of acquisitions and wise stock repurchases can enhance shareholder value, whereas poor M&A decisions or overpaying for share buybacks can have the opposite effect. The market will also be observing the company's leverage ratios post-transaction to ensure that the increased debt does not adversely affect the company's financial health.
In the realm of mergers and acquisitions, the additional liquidity afforded by the upsized credit facilities could position FLEETCOR as a more aggressive player. The company's ability to fund potential acquisitions without the need for immediate equity financing can provide a strategic advantage in competitive bidding situations. Additionally, this financial flexibility may allow FLEETCOR to target larger or more strategic acquisitions that could provide synergies and drive transformational growth.
It is important to evaluate the sectors and companies FLEETCOR might consider for M&A, assessing how these moves could complement or diversify their current offerings. The impact of these acquisitions on the company's competitive positioning, as well as the integration risks and potential for cost savings, will be critical factors in determining the success of such growth strategies.
FLEETCOR anticipates using the increased debt facility to drive earnings growth through both M&A and repurchasing FLEETCOR stock in 2024.
“We’re very pleased with the broad participation and demand for our credit facility, resulting in
“These upsized credit facilities are reflective of the high demand for our credit as a result of our strong balance sheet and the significant free cash flow the Company consistently generates,” said Tom Panther, chief financial officer, FLEETCOR Technologies, Inc.
Bank of America, N.A. is the Administrative Agent and BOFA Securities, Inc., PNC Capital Markets, LLC, TD Securities (
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about FLEETCOR’s beliefs, assumptions, expectations and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or other comparable terminology.
These forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements. We have based these forward-looking statements largely on preliminary information, internal estimates and management assumptions, expectations and plans about future conditions, events and results. Forward-looking statements are subject to many uncertainties and other variable circumstances, such as the impact of macroeconomic conditions, including any recession that has occurred or may occur in the future, and whether expected trends, including retail fuel prices, fuel price spreads, fuel transaction patterns, electric vehicle, and retail lodging price trends develop as anticipated and we are able to develop successful strategies in light of these trends; our ability to successfully execute our strategic plan, manage our growth and achieve our performance targets; our ability to attract new and retain existing partners, fuel merchants, and lodging providers, their promotion and support of our products, and their financial performance; the failure of management assumptions and estimates, as well as differences in, and changes to, economic, market, interest rate, interchange fees, foreign exchange rates, and credit conditions, including changes in borrowers’ credit risks and payment behaviors; the risk of higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to successfully manage our credit risks and the sufficiency of our allowance for expected credit losses; our ability to securitize our trade receivables; the occurrence of fraudulent activity, data breaches or failures of our information security controls or cybersecurity-related incidents that may compromise our systems or customers’ information; any disruptions in the operations of our computer systems and data centers; the international operational and political risks and compliance and regulatory risks and costs associated with international operations; the impact of international conflicts, including between
About FLEETCOR®
FLEETCOR Technologies (NYSE: FLT) is a leading global business payments company that simplifies the way businesses manage and pay their expenses. The FLEETCOR portfolio of brands help companies automate, secure, digitize and control payments on behalf of, their employees and suppliers. FLEETCOR serves businesses, partners and merchants in
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Investor Relations
Jim Eglseder, 770-417-4697
Jim.Eglseder@fleetcor.com
Media Relations
Chad Corley, 770-729-5021
Chad.corley@fleetcor.com
Source: FLEETCOR Technologies, Inc.
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