10-QPeriod: Q2 FY2016

CORPAY, INC. Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 9, 2016For Securities:CPAY

Summary

FleetCor Technologies, Inc. (CPAY) reported solid financial results for the six months ended June 30, 2016, demonstrating revenue growth and increased net income compared to the prior year. Total revenues grew 1.4% to $832.2 million, while net income saw a significant 16.2% increase to $224.2 million. This growth was driven by organic expansion in payment programs, although partially offset by macroeconomic headwinds such as lower fuel prices and unfavorable foreign exchange rates, which collectively impacted revenues by approximately $62 million. Despite these challenges, the company maintained strong operating income and margins, particularly in its North America segment. Management highlighted strategic initiatives, including a pending acquisition in Brazil (STP) expected to close in Q3 2016, which is anticipated to strengthen its market presence. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders. Overall, FleetCor appears to be navigating a complex economic environment effectively, with a focus on strategic growth and operational efficiency.

Financial Highlights

48 data points
Beta

Revenue

$417.90M

Net Income

$116.25M

27.8% Net Margin

EPS (Diluted)

$1.22

Total Assets

$8.27B

Cash & Equivalents

$493.08M

Free Cash Flow

$199.02M

Financial Statements
Beta
Revenue$417.90M
Operating Income$171.17M
Net Income$116.25M
EPS (Basic)$1.25
EPS (Diluted)$1.22
Shares Outstanding (Basic)92.67M
Shares Outstanding (Diluted)95.28M

Key Highlights

  • 1Total revenues increased by 1.4% to $832.2 million for the six months ended June 30, 2016, compared to $820.8 million in the prior year.
  • 2Net income grew significantly by 16.2% to $224.2 million for the six months ended June 30, 2016, up from $192.8 million in the prior year.
  • 3The company announced a significant acquisition of Serviços e Tecnologia de Pagamentos S.A. (STP) in Brazil, valued at approximately $1.36 billion, expected to close in Q3 2016.
  • 4Operating income increased by 4.3% to $347.1 million for the six months ended June 30, 2016.
  • 5The company repurchased $26.0 million of its common stock during the three months ended June 30, 2016, under a $500 million repurchase program.
  • 6Despite revenue growth, consolidated revenue per transaction decreased due to macroeconomic factors, including lower fuel prices and foreign exchange rate fluctuations.
  • 7The North America segment continued to be the primary revenue driver, showing a 3.6% increase in revenue for the six-month period.

Frequently Asked Questions

For the first six months of 2016, FleetCor reported total revenues of $832.2 million, a 1.4% increase from $820.8 million in the same period of 2015. This growth was primarily driven by organic expansion in its payment programs, although it was partially impacted by macroeconomic factors like lower fuel prices and unfavorable foreign exchange rates.

FleetCor demonstrated strong profitability, with net income increasing by 16.2% to $224.2 million for the six months ended June 30, 2016, compared to $192.8 million in the prior year. This growth in net income, along with a 4.3% increase in operating income, indicates effective cost management and operational efficiency.

A major strategic development is the pending acquisition of Serviços e Tecnologia de Pagamentos S.A. (STP), an electronic toll payments company in Brazil, for approximately $1.36 billion. The company also continued its share repurchase program, buying back $26 million in common stock in the second quarter of 2016, signaling a commitment to shareholder returns.

The company highlighted the impact of macroeconomic factors, particularly lower fuel prices and lower fuel spread margins in the U.S., which negatively affected revenues by approximately $40 million for the six-month period. Additionally, unfavorable foreign exchange rate fluctuations impacted revenues by approximately $23 million internationally. These factors contributed to a decrease in consolidated revenue per transaction.