01—Abstract
Summary
Summary of the 10-K filed March 1, 2017. Cited figures are marked; the original filing is the authoritative source.
Corpay, Inc. (formerly FleetCor Technologies, Inc.), as reported in its March 1, 2017, 10-K filing, demonstrated robust revenue growth driven by strategic acquisitions and organic expansion.
The company, a global leader in workforce payment products, saw its revenue increase by 7.6% year-over-year to $1.83 billiona in 2016, supported by strong performance in its International segment, which grew by 17.3%, and a more modest 3.8% increase in North America. This growth was primarily attributed to the acquisition of STP and other businesses, alongside organic growth in payment programs. Despite macro-economic headwinds that impacted revenue by approximately $109 million, the company managed its expenses effectively, leading to a 24.8% increase in net income to $452.4 million and a 13.0% rise in operating income.
The company's diversified product portfolio includes fuel cards, corporate payments, toll products, lodging cards, and gift cards, serving a broad customer base across various industries. Corpay's business model relies on proprietary networks and third-party networks to facilitate transactions, providing customers with enhanced control over spending, fraud prevention, and valuable data analytics. The company's commitment to technology investment, including over $150 millionb in 2016 for operating, protecting, and enhancing its technology infrastructure, underpins its competitive advantage and ability to support a large volume of transactions.
02—Key points
Key Highlights
- Corpay (FLT) reported a 7.6% increase in consolidated revenue to $1.83 billion for fiscal year 2016, up from $1.70 billion in 2015.
- Net income saw a significant increase of 24.8%, reaching $452.4 million in 2016, compared to $362.4 million in 2015, with diluted EPS growing to $4.75 from $3.85.
- The International segment was a key growth driver, with revenue increasing by 17.3% year-over-year, largely due to the acquisition of STP and other strategic acquisitions.
- North America segment revenue grew by 3.8%, driven by organic growth and acquisitions, though negatively impacted by macroeconomic factors like lower fuel prices and spreads.
- The company processed approximately 2.2 billion transactions in 2016, reflecting its scale and operational capacity, aided by the acquisition of Comdata which added approximately 1.3 billion transactions.
- Corpay continued its aggressive acquisition strategy, completing over 70 acquisitions since 2002, including significant ones in 2016 like STP for approximately $1.23 billion.
- The company maintained strong financial discipline, with operating income increasing by 13.0% to $754.2 million, and an operating margin of 41.2% in 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Corpay, Inc. kept $0.25.
- Revenue$1.83B100.0%
- Cost of revenue−$91.6M5.0%
- Gross profit$1.74B95.0%
- Operating costs−$985.8M53.8%
- Operating income$754.2M41.2%
- Interest, other & tax−$301.8M16.5%
- Net income$452.4M24.7%
Where FY2016 revenue went
$1.83B- Operating costs: $985.8M, 54% of revenue
- Net income: $452.4M, 25% of revenue
- Interest, other & tax: $301.8M, 16% of revenue
- Cost of revenue: $91.6M, 5.0% of revenue
Kept 25% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 1, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $1.83B$1.70B | +7.6% |
| Cost of Revenue | $91.60M$84.10M | +8.9% |
| Gross Profit | $1.74B$1.62B | +7.5% |
| Operating Income | $754.15M$667.53M | +13.0% |
| Net Income | $452.38M$362.43M | +24.8% |
| EPS (Basic) | $4.89$3.94 | +24.1% |
| EPS (Diluted) | $4.75$3.85 | +23.4% |
| Shares Outstanding (Basic) | 92.60M92.02M | +0.6% |
| Shares Outstanding (Diluted) | 95.21M94.14M | +1.1% |
05—Questions
Frequently Asked Questions
What is Corpay's primary business and revenue model?
Corpay is a global provider of workforce payment products, with its core business revolving around fuel card payments, corporate payments, toll products, lodging cards, and gift cards. Its revenue is primarily derived from transaction fees, card fees, network fees, and late payment/finance charges. Corpay also generates revenue from the margin between the price charged to customers and the price paid to merchants for transactions.
How did acquisitions impact Corpay's financial performance in 2016?
Acquisitions were a significant driver of Corpay's financial performance in 2016. The company completed over 70 acquisitions since 2002, including the substantial acquisition of STP for approximately $1.23 billion in August 2016. These acquisitions contributed approximately $87 million in additional revenue and significantly expanded its transaction volumes, particularly in the International segment.
What were the main risks identified by Corpay in its 2017 10-K filing?
Corpay identified several key risks, including the potential adverse impact of declining retail fuel prices on revenue, the risk of increased credit losses due to inadequate customer risk assessment, intense competition within the payment processing industry, dependence on strategic relationships with major partners (like oil companies), and significant debt obligations. Fluctuations in foreign currency exchange rates and compliance with extensive regulations were also highlighted as considerable risks.
How does Corpay manage its debt and capital resources?
Corpay utilizes a combination of cash flow from operations, a credit facility (which was significantly expanded and amended in 2014 and 2016), and a securitization facility for its accounts receivable to manage its liquidity. The company's principal liquidity requirements include servicing its substantial debt, funding acquisitions, and meeting working capital needs. As of December 31, 2016, total debt stood at approximately $3.86 billion.
06—Continue