10-QPeriod: Q3 FY2016

CORPAY, INC. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 9, 2016For Securities:CPAY

Summary

Corpay, Inc. (formerly FleetCor Technologies, Inc.) reported solid revenue growth in the third quarter and first nine months of 2016, driven by both acquisitions and organic expansion. Total revenues increased by 7.3% and 3.5% for the respective periods, reaching $484.4 million and $1.32 billion. Net income also saw significant increases, up 11.0% and 15.3%, respectively, reflecting improved profitability. A major strategic move was the acquisition of STP in Brazil for $1.25 billion, significantly expanding the company's international footprint and contributing to revenue growth in the International segment. Despite macroeconomic headwinds, including fluctuating fuel prices and foreign exchange impacts that presented challenges, the company demonstrated resilience through effective management of expenses and a focus on adjusted profitability metrics.

Financial Highlights

48 data points
Beta

Revenue

$484.43M

Net Income

$129.62M

26.8% Net Margin

EPS (Diluted)

$1.36

Total Assets

$9.92B

Cash & Equivalents

$405.44M

Free Cash Flow

$52.50M

Financial Statements
Beta
Revenue$484.43M
Operating Income$191.06M
Net Income$129.62M
EPS (Basic)$1.40
EPS (Diluted)$1.36
Shares Outstanding (Basic)92.63M
Shares Outstanding (Diluted)95.31M

Key Highlights

  • 1Total revenues for the three months ended September 30, 2016 increased by 7.3% to $484.4 million, compared to $451.5 million in the prior year period. For the nine months ended September 30, 2016, revenues increased by 3.5% to $1.32 billion.
  • 2Net income for the third quarter of 2016 increased by 11.0% to $129.6 million, with diluted earnings per share rising to $1.36 from $1.24 in the prior year.
  • 3Significant acquisition activity, most notably the $1.25 billion acquisition of STP in Brazil, contributed substantially to the growth in the International segment.
  • 4Total assets grew to $9.9 billion from $7.9 billion, primarily driven by acquisitions, while total liabilities also increased to $6.7 billion from $5.1 billion.
  • 5Operating income saw a modest increase of 1.4% to $191.1 million for the third quarter, and a 3.2% increase to $538.2 million for the nine-month period, demonstrating continued operational strength.
  • 6The company initiated a $500 million stock repurchase program, repurchasing $35.5 million of shares in the first nine months of 2016.
  • 7Despite macroeconomic challenges such as fuel price volatility and foreign exchange fluctuations, the company managed to grow net income and demonstrate strong operational performance.

Frequently Asked Questions

Revenue growth was driven by a combination of acquisitions, notably the acquisition of STP in Brazil, and organic growth in existing payment programs. Acquisitions contributed approximately $25 million in additional revenue for the third quarter.

The acquisition of STP for approximately $1.25 billion in August 2016 significantly expanded Corpay's international presence, particularly in Brazil. It contributed positively to the International segment's revenue growth for the period it was included.

Corpay faced challenges including macroeconomic headwinds such as fluctuating fuel prices and fuel spread margins, which negatively impacted revenues, particularly in the North America segment. Changes in foreign exchange rates also presented a headwind for the International segment.

Total debt, including notes payable, credit agreements, and securitization facilities, increased significantly from $2.9 billion at December 31, 2015 to $3.9 billion at September 30, 2016. This increase was primarily to finance the STP acquisition.