10-QPeriod: Q3 FY2015

CORPAY, INC. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 9, 2015For Securities:CPAY

Summary

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 billion 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 million. 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.

Financial Highlights

48 data points
Beta

Revenue

$451.49M

Net Income

$116.77M

25.9% Net Margin

EPS (Diluted)

$1.24

Total Assets

$8.29B

Cash & Equivalents

$422.39M

Free Cash Flow

$312.75M

Financial Statements
Beta
Revenue$451.49M
Operating Income$188.46M
Net Income$116.77M
EPS (Basic)$1.27
EPS (Diluted)$1.24
Shares Outstanding (Basic)92.11M
Shares Outstanding (Diluted)94.16M

Key Highlights

  • 1Total revenue increased by 54.6% to $1.27 billion for the nine months ended September 30, 2015, largely driven by the Comdata acquisition.
  • 2North America segment revenue more than doubled, increasing by 117.8% to $918.3 million, primarily due to the Comdata acquisition.
  • 3International segment revenue saw a decline of 11.8% to $353.9 million, largely attributed to unfavorable foreign exchange rates and lower fuel prices.
  • 4Net 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.
  • 5Operating cash flow increased significantly, from $317.5 million to $524.5 million for the nine months ended September 30, 2015, indicating robust operational performance.
  • 6Operating margins experienced a slight decrease year-over-year, impacted by increased expenses related to the Comdata acquisition, including amortization of intangible assets.

Frequently Asked Questions

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.

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.

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.

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.