10-QPeriod: Q3 FY2011

CORPAY, INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 14, 2011For Securities:CPAY

Summary

FleetCor Technologies, Inc. (CPAY) reported its quarterly results for the period ending September 30, 2011. The company demonstrated strong top-line growth, with revenues increasing by 20.2% year-over-year for the third quarter and 15.9% for the first nine months. This growth was driven by robust performance in both its North America and International segments, fueled by organic growth, favorable fuel prices, and positive foreign exchange rates. The company also successfully integrated its recent acquisition in Mexico. Profitability also saw a significant increase, with net income rising by 21.3% for the quarter and 21.2% for the nine-month period. This improved profitability was supported by revenue growth, although partially offset by increased general and administrative expenses, including higher stock-based compensation and public company costs. The company also benefited from lower interest expenses due to debt refinancing and the maturity of an interest rate swap. FleetCor's financial position remains solid, with significant cash and cash equivalents and available borrowing capacity, positioning it well for continued growth and potential future acquisitions.

Financial Statements
Beta
Revenue$134.21M
Gross Profit$70.78M
Operating Income$61.72M
Interest Expense$3.13M
Net Income$40.51M
EPS (Basic)$0.50
EPS (Diluted)$0.48
Shares Outstanding (Basic)81K
Shares Outstanding (Diluted)84K

Key Highlights

  • 1Consolidated revenues increased by 20.2% to $134.2 million for the three months ended September 30, 2011, compared to $111.7 million in the prior year period.
  • 2Net income grew by 21.3% to $40.5 million for the three months ended September 30, 2011, compared to $33.4 million in the prior year period.
  • 3The company successfully refinanced its debt, entering into a new $900 million Credit Facility, which led to a decrease in interest expense.
  • 4Acquisition of a prepaid fuel card and food voucher company in Mexico was completed and is contributing to the International segment's revenue.
  • 5Strong organic growth was observed in both North America and International segments, supported by favorable fuel prices and foreign exchange rates.
  • 6General and administrative expenses increased significantly (45.5% for the quarter), primarily due to higher non-cash stock compensation expense and public company costs.
  • 7The company maintains a healthy liquidity position with $137.3 million in unrestricted cash and cash equivalents and substantial available borrowing capacity.

Frequently Asked Questions

FleetCor's revenue growth was driven by a combination of organic growth in its payment programs, higher average retail fuel prices leading to increased spread revenue, and favorable foreign exchange rates due to the weakening U.S. dollar. The acquisition of the Mexican prepaid card business also contributed to the International segment's revenue.

The substantial increase in general and administrative expenses was primarily due to higher non-cash stock compensation expense related to the company's stock incentive plans, increased public company costs associated with compliance and reporting, and one-time transaction-related costs.

The refinancing of debt, including the retirement of the 2005 Credit Facility and CCS Credit Facility and the establishment of a new $900 million Credit Facility, led to a significant decrease in interest expense. This was partly due to lower interest rates on the new facility and the maturity of an interest rate swap that had previously contributed to interest expense.

The accounts receivable securitization facility is a key source of liquidity, allowing FleetCor to finance a significant portion of its domestic fuel card receivables. It provides the necessary cash flow to fund merchant payments before customer collections, thereby optimizing working capital management. The facility was amended to remove financial covenants and has a termination date of February 23, 2012.