10-QPeriod: Q1 FY2012

CORPAY, INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 10, 2012For Securities:CPAY

Summary

FleetCor Technologies, Inc. (CPAY) reported strong top-line growth in its first quarter of 2012, with revenues increasing by 31.7% year-over-year to $146.2 million. This growth was driven by both organic expansion and the strategic acquisitions of its Mexican business and Allstar Business Solutions completed in 2011. The International segment showed particularly robust growth, with revenues up 60.7%, though the acquisitions also led to a lower consolidated revenue per transaction. Net income also saw a significant increase of 30.1% to $42.1 million. While overall operating margin slightly decreased due to the impact of lower-margin acquisitions, the North America segment's operating margin improved. The company's liquidity remains strong, supported by existing cash balances, an undrawn credit facility, and a securitization facility, enabling continued investment in growth and potential future acquisitions.

Financial Highlights

48 data points
Beta

Revenue

$146.16M

Net Income

$42.08M

28.8% Net Margin

EPS (Diluted)

$0.49

Total Assets

$2.56B

Cash & Equivalents

$287.12M

Free Cash Flow

-$117.50M

Financial Statements
Beta
Revenue$146.16M
Operating Income$64.47M
Interest Expense$3.56M
Net Income$42.08M
EPS (Basic)$0.51
EPS (Diluted)$0.49
Shares Outstanding (Basic)82.56M
Shares Outstanding (Diluted)85.16M

Key Highlights

  • 1Revenue increased by 31.7% to $146.2 million for the three months ended March 31, 2012, compared to $111.0 million in the prior year period.
  • 2Net income grew by 30.1% to $42.1 million, or $0.49 per diluted share.
  • 3The International segment experienced a significant revenue jump of 60.7% due to recent acquisitions.
  • 4Consolidated revenue per transaction decreased by 14.6% primarily due to the integration of lower-revenue-per-transaction acquired businesses.
  • 5Operating income increased by 27.7% to $64.5 million, though operating margin slightly contracted to 44.1% from 45.5%.
  • 6The company extended its accounts receivable Securitization Facility to February 4, 2013.
  • 7Cash used in operating activities increased significantly to $(113.9) million, largely due to changes in working capital driven by increased receivables.

Frequently Asked Questions

Revenue growth was primarily driven by a combination of organic growth in existing payment programs and the recent acquisitions of the Mexican business (in Q3 2011) and Allstar Business Solutions (in Q4 2011). The International segment, in particular, saw substantial revenue increases due to these acquisitions.

While the acquisitions contributed to overall revenue and operating income growth, they also resulted in a lower consolidated revenue per transaction and a slight contraction in the overall operating margin. This is because the acquired businesses typically have lower-margin products compared to FleetCor's other operations. However, the North America segment's operating margin improved.

The company's liquidity remains strong, with $287.1 million in unrestricted cash and cash equivalents at the end of the quarter. Additionally, they have significant availability under their credit facilities and securitization program. Management believes these resources, along with cash from operations, are sufficient to meet liquidity needs for at least the next twelve months, excluding major acquisition opportunities.

Yes, FleetCor is currently involved in an investigation by the Office of Fair Trading in the United Kingdom concerning its Keyfuels product line, focusing on potential market dominance and exclusive dealings. The company is awaiting conclusions from this investigation, which could potentially lead to contract reforms and fines. Additionally, the company notified the Office of Fair Trading about its acquisition of Allstar Business Solutions Limited, which is also under review and could potentially require remedial action if deemed to substantially lessen competition.