01—Abstract
Summary
Summary of the 10-Q filed November 9, 2015. Cited figures are marked; the original filing is the authoritative source.
CORPAY, INC. (CPAY), formerly known as FleetCor Technologies, Inc., reported strong revenue growth for the nine months ended September 30, 2015, driven significantly by the acquisition of Comdata Inc. in late 2014.
Total revenue increased by 54.6% to $1.27 billiona compared to the same period in the prior year. This growth was primarily fueled by the North America segment, which saw its revenue more than double due to the Comdata acquisition. Despite the substantial revenue increase, operating margins saw a slight decrease year-over-year, impacted by increased operating expenses related to the Comdata acquisition, including higher depreciation and amortization.
Net income grew by 19.5% to $309.6 millionb. The company also generated strong operating cash flow, demonstrating its ability to fund operations and investments. Investors should note the continued reliance on acquisitions for growth, as well as the impact of fuel prices and foreign exchange rates on future performance.
02—Key points
Key Highlights
- Total revenue increased by 54.6% to $1.27 billion for the nine months ended September 30, 2015, largely driven by the Comdata acquisition.
- North America segment revenue more than doubled, increasing by 117.8% to $918.3 million, primarily due to the Comdata acquisition.
- International segment revenue saw a decline of 11.8% to $353.9 million, largely attributed to unfavorable foreign exchange rates and lower fuel prices.
- Net income grew by 19.5% to $309.6 million for the nine months ended September 30, 2015, compared to $259.2 million in the prior year.
- Operating cash flow increased significantly, from $317.5 million to $524.5 million for the nine months ended September 30, 2015, indicating robust operational performance.
- Operating margins experienced a slight decrease year-over-year, impacted by increased expenses related to the Comdata acquisition, including amortization of intangible assets.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed November 9, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $451.49M$295.28M | +52.9% |
| Operating Income | $188.46M$144.21M | +30.7% |
| Net Income | $116.77M$95.51M | +22.3% |
| EPS (Basic) | $1.27$1.14 | +11.4% |
| EPS (Diluted) | $1.24$1.11 | +11.7% |
| Shares Outstanding (Basic) | 92.11M83.61M | +10.2% |
| Shares Outstanding (Diluted) | 94.16M86.13M | +9.3% |
05—Questions
Frequently Asked Questions
How did the Comdata acquisition impact CORPAY's financial performance?
The acquisition of Comdata Inc. in November 2014 was a significant driver of CORPAY's financial performance for the nine months ended September 30, 2015. It led to a substantial increase in total revenue (up 54.6%) and particularly in the North America segment (up 117.8%). However, it also increased operating expenses, including depreciation and amortization, which put pressure on operating margins.
What is the impact of fuel prices on CORPAY's revenue?
Fuel prices have a notable impact on CORPAY's revenue. Lower fuel prices can negatively affect revenue through reduced transaction values and related fees. Conversely, higher fuel price spreads (the difference between wholesale and retail fuel costs) can positively influence revenue. The company notes that lower fuel prices and foreign exchange rates negatively impacted consolidated revenue in the nine months ended September 30, 2015, partially offset by higher fuel spread margins.
How is CORPAY managing its debt and liquidity?
CORPAY maintains a significant amount of debt, much of which was incurred to finance acquisitions. At September 30, 2015, the company had total debt obligations of approximately $3.09 billion. Liquidity is supported by unrestricted cash of $422.4 million, an accounts receivable securitization facility, and a $3.355 billion credit agreement. The company believes its current cash, borrowing capacity, and operational cash generation are sufficient to meet its liquidity needs for at least the next twelve months. They were also in compliance with all debt covenants.
What is the significance of 'Adjusted Revenues' and 'Adjusted Net Income' reported by CORPAY?
CORPAY reports non-GAAP financial measures like 'Adjusted Revenues' (revenues less merchant commissions) and 'Adjusted Net Income' (net income excluding items like stock-based compensation and amortization). The company presents these measures to provide a view of performance that it believes is more indicative of its core operating results and to allow for a more consistent comparison across periods, as these adjustments remove the impact of items that can fluctuate significantly or are non-cash.
06—Continue