Good afternoon, ladies and gentlemen. (Operator instructions) Welcome to FleetCor Technologies, Inc. Second Quarter Earnings Conference Call. Following the presentation, the conference will be opened for questions. At this time, I would like to turn the conference over to Mr. Eric Dey, CFO.

Good afternoon, everyone, and thank you for joining us today. By now, everyone should have access to our second quarter 2012 press release. It can also be found at www.fleetcor.com under the Investor Relation 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 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 GAAP information appears in today's press release and on our website as described previously. Also, we are reviewing 2012 guidance on a non-GAAP basis. Finally, before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. This includes forward-looking statements about our 2012 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 filed 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?

Okay, Eric, thanks and hello, everyone, and thanks, as always, for joining our call today. I'll plan to cover three subjects here in my opening remarks. First, I'll provide a little color on our Q2 results, second, I'll update you on our global business development efforts and, finally, I'll comment on our full year guidance and the implied growth rates. So, first off, to Q2. The Q2 results we reported were terrific. Record-breaking, in fact. The company set new all-time highs in both revenue and profit. We reported Q2 revenue of $172 million, up 28%, and cash EPS of $0.73, also up 28%. The macro environment was a mixed bag in terms of its impact on our Q2 performance. Fuel prices were generally neutral across all of our markets, but market spreads were incredibly helpful this quarter contributing approximately $4 million of incremental revenue and approximately $0.03 of cash EPS above normalized levels. FX rates were really the opposite, were not good. In fact, quite unfavorable and depressed our revenue approximately $4 million versus constant currency. So, really a mixed bag. In terms of our line of business performance, our North America results were very, very good. Revenue grew 15%, all organic and the continued growth of our universal cards drove most of that performance. In fact, in total our set of universal card transaction growth exceeded 30% quarter-over-quarter. So this new product line continues to perform well. Europe came in, basically, on our internal plan. Our Czech and U.K. businesses stayed pretty much in neutral. Our Russia business continued its rapid growth and we got a big contribution from new full court of AllStar. So, obviously, that helped. So, in summary, our Q2 results exceeded our expectations and did so almost across the board. Let me step back now…

Thanks, Ron. For the second quarter of 2012 we reported revenue of $171.8 million, an increase of 28% from the second quarter of 2011. Revenue from our North American segment increased 15.5% to $107.3 million in the second quarter of 2012 from $92.9 million in the second quarter of 2011. And revenue from our international segment increased 56.1% to $64.5 million in the second quarter of 2012 from $41.3 million in the second quarter of 2011. For the second quarter, GAAP net income increased 48% to $54.4 million from $36.7 million in the second quarter of 2012, for $0.63 per diluted share compared to $0.44 per diluted share in the second quarter of 2011. The other financial metrics that we routinely used to measure our business are adjusted revenues and adjusted net income, which we sometimes also refer to as cash net income. Adjusted revenues equal our GAAP less merchant commission. We use adjusted revenues as a basis to evaluate the company's revenue net of the commissions that are paid to merchants who participate in certain card programs. Commissions paid to merchants can vary when market spreads fluctuate in much the same way some of our revenue can vary when markets spreads fluctuate. For this reason, we believe the adjusted revenue financial metric is a more effective way to evaluate the company's performance. The reconciliation of adjusted revenues and adjusted net income to our GAAP numbers are provided in Exhibit 1 of our press release. Adjusted net income is GAAP net income adjusted to eliminate non-cash stock-based compensation expense related to share-based compensation awards. Amortization of deferred financing costs and intangible assets, amortization of the premium recognized and the purchase of receivables, a loss on early extinguishment of debt and adjusted for the income tax affect of such. Adjusted revenues…

Thank you, sir. We will now begin the question and answer session. (Operator instructions). Our first question comes from the line of Glenn Fodor with Morgan Stanley. Please go ahead.

Hi. Thanks for taking my question. Congratulations on another good quarter. Just on the reorg, you guys have never seemed to have a problem with acquisitions or integrations in the past or operations in general. Is there something more to the reorg within business development that you care to expand on?

Glenn, hey it’s Ron. Not really, it’s just about pressure. We’re trying to cover a lot of geography. The world is a big place, and we’ve got some people that are particularly skilled at B.D., in relationship building. So, we decided to kind of offload their day-to-day, and get them and their teams just kind of exclusively on it. It was really just a way to assure that we keep the pressure up on a bigger playing field.

Okay, so more opportunistic than anything else?

Yeah, we’ve got a lot going on, I think is the flip side of that. We’re active, so there’s a lot to do.

Okay, then investments for the Shell build-out, I forgot if these are being capitalized or not, but if they’re not can you quantify the impact on margins we’re seeing maybe in basis point terms, and how we should expect the margins to expand as you put those behind you and the business starts to ramp?

Yeah, it’s Ron again. So, I think a simple way, Glenn, to think about this is we’re in this development and implementation mode, for call it a year and a half, with Shell. So, the revenue that we’re receiving is in some ways related to that “work” that we’re doing. By its very nature, that kind of work is not particularly profitable, if you look at the traditional kind of tech company margins. So, I think what you’ll see is as we transition out of that type of work and into transaction processing, although the revenues won’t move in a material way, obviously the margins will. Because we won’t be doing that same kind of obviously development and conversion work.

Okay, great. Thanks a lot. I appreciate it.

Our next question is from the line of Phil Stiller with Citi. Please go ahead.

Hi, guys. Congratulations on a good quarter. I just wanted to ask about the revenue guide that you guys raised about $15 million. It seems like you beat by a little more than $10 million in the quarter. How much of the incremental increase that you guys did for the revenue guidance is attributable to acquisitions that you recently completed?

Hey, Phil, this is Eric. Obviously we had a very good quarter, and some of the reasons behind the beat for the quarter were just good organic performance in our existing businesses. From a revenue guidance perspective, I would say in addition to the revenue beat in the first half of the year, I would say the remainder of that or a significant portion of the remainder of that was due to the acquisitions that we closed on the first half of the year.

Okay. Then, I guess on the ETS, you also provided some color on what those acquisitions are contributing. But there’s also a fairly significant increase on top of that. Is that related to the first half beat, or are you expecting better profitability in the second half from the existing business?

Yeah, Phil, it’s Ron. Both, right? So, you’ve got to think about the guidance that we gave before, which was what, 255 to 260?

255 to 260.

So, let’s say, Phil, you use the midpoint of the guidance we gave, kind of 258. You add the beat, was what, $0.08?

$0.07, $0.08.

You add with the guidance we gave, $0.06 to $0.07. I think you come up into the low 270’s, 272-ish. We’re guiding, obviously, kind of 276 at the midpoint, so I’d say it’s those things plus another kind of $0.03 or $0.04 of better performance that we expect.

Okay. Then, just the last question for me, again, to talk about some of the investments that you’re making, some of these recent, and you’re also absorbing some deal costs and restructuring costs associated with those deals. Can you quantify what those investments are for the full year, and what the benefits we should see from those as we get into next year and beyond?

Yeah, let me comment on the first part, and then I’ll give the deal part to Eric. I’d say the way to think about the first part is it’s structural. It won’t go away. So, in other words, although we’ve done some fair number of deals and we’re spending millions predominantly in IT, I’d say that our expectation is that we’re kind of always going to be in that mode still, and that we’re going to build plans that reflect kind of that level of spend, of technology spend. The question will just be, what is it we’re spending it on? The projects will simply change probably more than getting some [happy in expense].

Okay, great. Thanks.

Then, hey Phil, this is Eric. To answer the second part of your question, how much have we spent in deal related costs, in the second quarter, I think we’ve got about $1 million worth of deal related expenses in the quarter that are one-time in nature.

Okay, great. Thank you.

Thanks, Phil.

Thank you. The next question is from the line of Tien-Tsin Huang with JPMorgan. Please go ahead.

Hey. Thanks so much. Good afternoon. I wanted to ask first, just on the domestic revenue per tran, other than spread, what drove that increase and is it sustainable? Because that was quite a bit higher than what we had modeled.

Yeah, Tien-Tsin, it’s mix again, right? It’s back to low single-digit tran in total. But again, a bunch of lines of business that were double-digit in volume growth. Those again, the ones we’re investing in that have the higher revenue per tran, so again, if you peeled it back, what’s happening is we’re just increasing faster lines of business that have higher revenue per tran. Then, B) it’s continued card upgrading as I mentioned in my comments. We continue to keep moving the mix to universal cards that basically have a higher revenue per tran. We’ve started now, just in the second quarter, started to layer some of these add-ons that we’ve been speaking about. So, it’s basically business mix, it’s card upgrades, and it’s the start of our add-ons.

Okay. Good, good. Now, that $4 million in spread benefit, is that pretty much all U.S.? Or does some of that come into the international side as well?

I’d say 80% or 85% here.

Okay. Good. That’s good for us to know. Then, just on credit losses, I think U.S. is trending obviously very favorably. What’s the outlook there? It looks like it’s performing way under the norm.

Hey, Tien-Tsin, this is Eric.

Hey, Eric.

I’d say it’s kind of more of the same, Tien-Tsin. We’re really not projecting it to go too far from where it is right now. A lot of the favorability that we experienced over the last couple of quarters was because we bought a couple businesses that have lower bad debt as a percentage of their build revenue. So, that mix of those new businesses has helped that overall basis point decrease. So, we would expect that number to be relatively consistent over the balance of the year.

Okay. You don’t see anything there. Okay, good. Last question, just on the MasterCard piece, with the litigation settlement there, with the ten bid reduction interchange, would that apply to FleetCor, in terms of interchange cut?

Yeah. I don’t think we have a clue, Tien-Tsin. I think we’re kind of in a wait and see mode, like you guys are.

Right.

We’ve obviously seen it. We’ve obviously spoken to MasterCard, and frankly I don’t think we really understand it yet.

Yeah. I wish I could say I fully understood it as well. All right, I appreciate it. I’ll figure that out. Thanks so much.

Hey, Tien-Tsin, just to add on to that, even if it did it’s not very material.

All right.

We have kind of modeled what the impact of that might be and it looks like a couple $3 million over the period of time that that would go into effect, some part of that in ’13 and some part of that in ’14. So, it’s not very material at all.

Okay, so $2 to $3 million net impact over the eight months (inaudible) goes through as is worse case. Okay, thank you.

Good talking to you.

(Operator instructions) Our next question is from the line Darrin Peller with Barclays. Please go ahead.

Hey, guys. How are you? This is Adam Carron here for Darrin.

Hey, Adam.

Great quarter, I just had a quick question for you on the margin trajectory over the second half of the year, obviously margins were very strong in the second quarter and a lot of that could be attributed to, I guess, the outperformance kind of seen in North America. Just to kind of help us get our heads around this, obviously, with the two new acquisitions coming on in the second half as well as what seems to be somewhat of a sustainable trend here in North America and Mexico, kind of performing maybe a little bit better than your expectations. How should we think about the trajectory in the margins as we exit the year here?

Hey, Adam. I would say that our margin, again all things being equal, are going to continue to perform extremely well and should start increasing. Our business in the United States should continue to grow organically at pretty attractive rates. Obviously we buy businesses that have been underperforming and we basically increase and enhance the performance of those businesses. So, we would expect to see certainly the margins of those businesses start to improve over time, which would impact the overall margin profile of the company.

Right. So, even as we bring on these two acquisitions here over the second half, we shouldn’t necessarily expect much of a material adverse impact just given the way the rest of the business is performing?

Yeah. I’d say it will be down a bit, Adam, in totals if you kind of the run rate businesses Eric’s comment is we expected to be “better”. Still in the second half and the first, we said in the prior call, particularly the Brazil business has a much worse margin than the FleetCor line average. All that revenue and profit will hit for the first time here in the second half. So, that will be a wait. I’m not sure we have that page in front of us, but the underlying business without that will continue its margin improvement for the reasons that I mentioned to Tien-Tsin about fundamentally mixing and add-ons. We’re just generating more revenue per piece of work than we were before, which is great for a margin.

Understood, much appreciated.

Thank you. Our next question is from the line of Julio Quinteros with Goldman Sachs. Please go ahead.

Great. Hey, guys. Real quickly on the assumptions for revenue for transaction, not sure by business upfront, but when you think about revenue per transaction going forward, both in the North America and International and overlaying the two new acquisitions of the international side. How do we think about that in terms of your expectations for the revenue per tran.

Well, Julio, this is Eric, the revenue per tran in the United States, we would expect that to continue to increase overtime because we expect obviously the business in the U.S. to continue to perform well for the reasons Ron described earlier in the call. At the international level, revenue per tran is going to continue to be impacted by the integration of the acquisitions. CTF, which we purchased on July 3 of this year, obviously has a lower revenue per tran product, so that’ll impact revenue per tran internationally, as does AllStar. In addition to that, as we begin to roll out Shell, that is a significantly lower revenue per transaction product, so that will impact revenue per tran at the international level as well. So, we’ll have to have some further conversations about how we’re going to look at that going forward to get into that.

But I say, Julio, I think again, for our (inaudible) 5% to 10% point-to-point in terms of incremental revenue per tran over the baseline. Again, we get it from mix and card enhancements and add-ons. We’ll get it particularly on the international front from virgin assets. We’re buying assets that in our eyes are “underperforming” in terms of margin, which creates even greater opportunities initially for revenue per tran increases. So, you should think that we’re going to plan to increase off of these baselines once you sort these new pieces of portfolio in the 5% to 10% range.

Okay, got it. Then, just in terms of international exposure, macro headwinds, thinking about any contingencies on the margin side, what would you be looking for at this point, relative to flat or neutral European exposure at this point within sort of Czech and UK. If it were to get worse than where it currently is right now, what potential levers do you guys still have to think about in terms of protecting some of the margin structure there?

I’m not sure again, against big macro things, Julio. We’ve got all that many levers. I’d only say that look, we’ve been living all of us, not just FleetCor, in a world of kind of no growth here for years and we’re still growing earnings 25%. So, I think we’re kind of getting used to the world as it sits. To your point, if suddenly Europe got softer by two or three points, it will have a tiny - it’s not going to take our business down, because the globe engine in the company obviously is not relying on GDP or same store growth. We’re getting no help from the health of our clients. We’re lucky if they’re all flat. So, the engine of this company really doesn’t rely on it. With that said, if we went back to the ’08 stuffed down, double-digit, and then help the companies, and then solvencies go. That’s a problem. That would be a problem for us. But it would have to go, again, pretty deep, like it did three or four years ago to be more than a blip for us.

Our next question is from the line of Tim Willi with Wells Fargo. Please go ahead.

Thanks and good afternoon. I apologize if you get rushed, as I just hopped on. But I was wondering if you could first talk about… We’re a couple quarters now into AllStar, and I think part of that transaction was investing in product (inaudible) and I think the outbound sales efforts and adding some other marketing channels. Just wondering if you could comment to any progress or how you feel about those efforts and the payback as you continue to integrate that acquisition. Then, I had one follow-up.

Yeah, Tim, it’s Ron. I’d say it’s still early. If you recall we had this OFT review for the first kind of five months, where we were kind of hands-off. So, I’d say we’re slower out of the block. But call it with two or three months in, I think we’ve got a good plan that’s pretty clear, in place to improve margins. We’re going to change out their system over the next three or four months, which is a big deal. We started just in the last couple of weeks, the piloting of the other FleetCor sales approaches, with that AllStar product. So, I’d say when we get to kind of next quarter, I’ll have a better answer. But I’d say our view is still very positive on that asset at this point.

Okay. Then, my follow-up was around the (inaudible) in business. I think I caught a comment about how that continued to do well. I guess I was curious about further expansion of the footprint of properties or customers that use the card. Is there anything going on, on either of those channels that’s worth noting out. Then, anything we should think about with that product we’ll see in the next year or two around the European marketplace, or any plans there that should be considered?

Yeah. I think that’s a good question. So, let me give you stat you might find interesting. So, in that hotel card business we serve kind of two types of clients, the big, big account like a railroad that has a million room nights a year and Ron’s tree-cutting company that has five rooms a month. So, we’ve been very focused on the second thing because that’s what we do with FleetCor. So, that business, the “small hotel card business”, our revenue in July, this month that we just had, was equal to the revenue of that line of business when we bought the company three years ago. So, obviously we’ve gotten much better at building that. So, when you say, where are we going to focus, there are a ton of these Ron tree-cutting companies that are looking for the kind of proposition that we’re offering and it’s a much higher revenue per tran and that’s driving some of this double-digit. The second question, which I thought was a good one, is yeah, we’ve got a fast-hitting product idea. So, in that business it looks like some of our proprietary businesses where they went out to a network and signed up Tim’s Hotel, and then Eric’s Hotel, and then Ron’s Hotel, and (inaudible) kind of 20,000 different hotels together and got these deep discounts. Well, the good news about that is customers like that because when they go there, they get huge amounts off. What customers don’t like about that is they’re not sure which hotels are in that network. So, much like our private label oil brand products and fuel cards, we’re going to create a private label product in the hotel card business. So, you, the Jim’s tree-cutting would have not only this deep discount network, but you might also have four or five hotel brands that you’re familiar with. Let’s say like Windham Hotel, and you could stay in any of those five brands anywhere in the country for still a pretty good discount. So, in the research that we’ve done, that seems to be a very, very appealing add-on to this group of customers.

Okay, great. I appreciate the color. Thanks a lot.

Yep.

That’s all the questions we have for today. We’d like to thank you for your participation, and you may now disconnect.