01—Abstract
Summary
Summary of the 10-Q filed August 8, 2017. Cited figures are marked; the original filing is the authoritative source.
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 milliona, 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 millionb, signaling confidence in its financial position and commitment to shareholder returns.
02—Key points
Key Highlights
- Consolidated revenues increased 29.5% to $541.2 million in Q2 2017 compared to Q2 2016.
- International segment revenue grew significantly by 69.8%, driven by acquisitions, while North America segment revenue increased by 13.9%.
- Net income rose 12.7% to $131.0 million for the quarter, with diluted EPS at $1.39.
- Operating income increased by 26.2% to $216.0 million, though operating margin slightly decreased from 41.0% to 39.9%.
- Corpay announced a definitive agreement to acquire Cambridge Global Payments for approximately $690 million.
- The 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.
- Non-GAAP adjusted revenues increased 29.3% to $510.6 million, and adjusted net income increased 24.7% to $187.0 million for the quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2017filed August 8, 2017Financial Statements
Q2 FY2017 against Q2 FY2016
| Line item | Q2 FY2017Q2 FY2016 | Change |
|---|---|---|
| Revenue | $541.24M$417.90M | +29.5% |
| Operating Income | $216.04M$171.17M | +26.2% |
| Net Income | $130.99M$116.25M | +12.7% |
| EPS (Basic) | $1.42$1.25 | +13.6% |
| EPS (Diluted) | $1.39$1.22 | +13.9% |
| Shares Outstanding (Basic) | 92.01M92.67M | −0.7% |
| Shares Outstanding (Diluted) | 94.22M95.28M | −1.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Corpay's revenue growth in Q2 2017?
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.
How did the acquisition of STP and the planned acquisition of Cambridge Global Payments impact the company's financial strategy?
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.
What is the company's stance on share repurchases?
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.
How did operating expenses change, and what is the outlook for margins?
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.
06—Continue