10-QPeriod: Q2 FY2011

CORPAY, INC. Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 15, 2011For Securities:CPAY

Summary

FleetCor Technologies, Inc. (CPAY) reported a solid second quarter for 2011, demonstrating robust revenue growth and improved net income compared to the prior year. Total revenue increased by 20.4% to $134.2 million for the quarter and by 13.7% to $245.2 million for the first six months of the year, driven by organic growth, higher fuel prices, and favorable foreign exchange rates. Net income saw a significant increase of 23.9% to $36.7 million for the quarter and 21.2% to $69.0 million for the first six months. This improvement was achieved despite a notable increase in General and Administrative expenses, largely due to higher non-cash stock compensation and public company costs. The company also successfully refinanced its debt, entering into a new $900 million credit facility, which was used to retire older debt. This strategic move reduced interest expenses and improved the company's financial flexibility.

Financial Highlights

46 data points
Beta

Revenue

$134.21M

51.0% Gross Margin

Net Income

$36.72M

27.4% Net Margin

EPS (Diluted)

$0.44

Total Assets

$1.62B

Cash & Equivalents

$101.20M

Free Cash Flow

$7.93M

Financial Statements
Beta
Revenue$134.21M
Gross Profit$68.48M
Operating Income$59.89M
Net Income$36.72M
EPS (Basic)$0.46
EPS (Diluted)$0.44
Shares Outstanding (Basic)80K
Shares Outstanding (Diluted)84K

Key Highlights

  • 1Consolidated revenue increased by 20.4% year-over-year to $134.2 million in Q2 2011, and by 13.7% to $245.2 million for the six months ended June 30, 2011.
  • 2Net income grew by 23.9% year-over-year to $36.7 million in Q2 2011, and by 21.2% to $69.0 million for the six months ended June 30, 2011.
  • 3Operating income increased by 18.5% to $59.9 million for the quarter, and by 13.0% to $110.4 million for the six months.
  • 4The company successfully entered into a new $900 million credit facility in June 2011, which was used to retire existing debt, leading to a decrease in interest expense.
  • 5General and administrative expenses increased significantly by 65.0% for the quarter and 51.1% for the six months, primarily due to higher stock-based compensation and public company costs.
  • 6The North American segment continues to be the largest contributor to revenue, accounting for 69.2% of Q2 revenue and 67.0% of year-to-date revenue.
  • 7Revenue per transaction showed a healthy increase, rising 17.6% to $2.67 for the quarter and 10.6% to $2.51 for the six months on a consolidated basis, excluding the impact of a non-renewed partner contract.

Frequently Asked Questions

FleetCor's revenue growth was driven by several factors, including organic growth in its payment programs, higher average retail fuel prices compared to the prior year, increased spread revenue due to favorable fuel cost dynamics, and the weakening of the U.S. dollar which resulted in favorable foreign exchange rates.

The new $900 million credit facility, entered into in June 2011, is significant as it allowed FleetCor to retire its older debt obligations (2005 Credit Facility and CCS Credit Facility). This refinancing is expected to reduce interest expenses, provide greater financial flexibility, and support future working capital needs, acquisitions, and general corporate purposes.

The substantial increase in General and Administrative expenses, particularly for the quarter (65.0%) and year-to-date (51.1%), was primarily attributed to higher non-cash stock-based compensation expense related to the company's stock incentive plans and increased public company costs associated with compliance and reporting requirements.

Both segments showed solid growth. The North American segment remained the larger contributor to revenue. However, the International segment experienced strong revenue growth (16.9% for the quarter and 13.8% year-to-date) and reported higher operating margins (47.0% for the quarter) than North America (43.6% for the quarter), benefiting from favorable foreign exchange rates and higher fuel prices.