10-QPeriod: Q2 FY2017

CORPAY, INC. Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 8, 2017For Securities:CPAY

Summary

Corpay, Inc.'s (CPAY) Q2 2017 10-Q filing reveals a strong performance with significant revenue growth driven by strategic acquisitions and organic expansion. Total revenues increased by 29.5% year-over-year for the quarter, reaching $541.2 million, bolstered by a substantial 69.8% revenue jump in the International segment, largely due to the acquisition of STP. The North America segment also showed healthy growth of 13.9% in revenue. Net income saw a 12.7% increase to $131.0 million for the quarter. The company continues to focus on expanding its payment solutions portfolio, with plans to acquire Cambridge Global Payments. Despite increased operating expenses, particularly in processing, selling, and general/administrative due to acquisitions and stock-based compensation, Corpay demonstrated robust operating income growth of 26.2% quarter-over-quarter. The company also announced an accelerated share repurchase agreement for $250 million, signaling confidence in its financial position and commitment to shareholder returns.

Financial Highlights

48 data points
Beta

Revenue

$541.24M

Net Income

$130.99M

24.2% Net Margin

EPS (Diluted)

$1.39

Total Assets

$10.10B

Cash & Equivalents

$564.58M

Free Cash Flow

$116.44M

Financial Statements
Beta
Revenue$541.24M
Operating Income$216.04M
Net Income$130.99M
EPS (Basic)$1.42
EPS (Diluted)$1.39
Shares Outstanding (Basic)92.01M
Shares Outstanding (Diluted)94.22M

Key Highlights

  • 1Consolidated revenues increased 29.5% to $541.2 million in Q2 2017 compared to Q2 2016.
  • 2International segment revenue grew significantly by 69.8%, driven by acquisitions, while North America segment revenue increased by 13.9%.
  • 3Net income rose 12.7% to $131.0 million for the quarter, with diluted EPS at $1.39.
  • 4Operating income increased by 26.2% to $216.0 million, though operating margin slightly decreased from 41.0% to 39.9%.
  • 5Corpay announced a definitive agreement to acquire Cambridge Global Payments for approximately $690 million.
  • 6The company repurchased $52.4 million of its common stock during the first six months of 2017 and entered into an accelerated share repurchase agreement for $250 million.
  • 7Non-GAAP adjusted revenues increased 29.3% to $510.6 million, and adjusted net income increased 24.7% to $187.0 million for the quarter.

Frequently Asked Questions

The primary drivers of Corpay's revenue growth in Q2 2017 were the impact of acquisitions made in 2016, particularly the STP acquisition which significantly boosted the International segment's revenue, and robust organic growth across both segments stemming from increased transaction volumes and revenue per transaction.

The acquisition of STP in 2016 has been a significant contributor to the International segment's revenue growth. The planned acquisition of Cambridge Global Payments for $690 million indicates a continued strategy to expand Corpay's corporate payments footprint and global reach.

Corpay has an active stock repurchase program. During the first six months of 2017, the company repurchased $52.4 million of its common stock. Furthermore, they entered into an accelerated share repurchase agreement for $250 million, demonstrating a commitment to returning capital to shareholders.

Operating expenses increased due to factors like merchant commissions, processing, selling, and general & administrative expenses, largely driven by the recent acquisitions and increased stock-based compensation. While consolidated operating income grew, the operating margin slightly compressed year-over-year due to these increased expenses, particularly higher amortization and depreciation from acquisitions.