10-QPeriod: Q3 FY2018

CORPAY, INC. Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 8, 2018For Securities:CPAY

Summary

FLEETCOR Technologies, Inc. (CPAY) reported its third quarter results for the period ending September 30, 2018. The company demonstrated revenue growth driven by organic expansion and strategic acquisitions, though net income saw a decrease compared to the prior year period. This decrease in net income was significantly influenced by the prior year's substantial gain from the sale of the NexTraq business and an investment impairment charge. The company also adopted new revenue recognition standards (ASC 606), which impacted the presentation of revenues and expenses, requiring careful consideration when comparing current and prior period results. Key operational drivers included growth in its North America segment, which continues to be the larger contributor to revenue. The company also managed its liquidity effectively, with significant cash balances and available credit facilities. Despite a challenging macroeconomic environment and unfavorable foreign exchange rates impacting international operations, FLEETCOR maintained operational efficiencies and demonstrated resilience in its core business segments. The company also continued its share repurchase program, indicating a commitment to returning value to shareholders.

Financial Highlights

49 data points
Beta

Revenue

$619.59M

Net Income

$157.69M

25.5% Net Margin

EPS (Diluted)

$1.71

Total Assets

$11.45B

Cash & Equivalents

$924.44M

Free Cash Flow

$258.59M

Financial Statements
Beta
Revenue$619.59M
Operating Income$281.09M
Net Income$157.69M
EPS (Basic)$1.78
EPS (Diluted)$1.71
Shares Outstanding (Basic)88.46M
Shares Outstanding (Diluted)92.08M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2018, increased by 9.2% to $1.79 billion compared to the same period in 2017.
  • 2North America segment revenue grew by 10.3% year-over-year for the first nine months of 2018, driven by organic growth and acquisitions.
  • 3Net income for the nine months ended September 30, 2018, increased by 11.4% to $509.5 million compared to the prior year period.
  • 4The company reported $555.4 million in net cash provided by operating activities for the first nine months of 2018, an increase from $431.6 million in the prior year.
  • 5Adoption of ASC 606 impacted revenue and expense presentation, with a reported reduction in net revenues by approximately $28 million for the third quarter and $76 million for the nine months of 2018.
  • 6The company's cash and cash equivalents totaled $1.19 billion as of September 30, 2018, with approximately $630.2 million held by foreign subsidiaries.
  • 7A share repurchase program remains active, with $629.2 million authorized for future repurchases as of the reporting date.

Frequently Asked Questions

The adoption of ASC 606 (Revenue from Contracts with Customers) on January 1, 2018, changed the presentation of revenues and expenses. Specifically, certain amounts previously classified as merchant commissions and processing expenses are now netted against revenues. This resulted in a reported reduction of revenues, net by approximately $28 million for the three months ended September 30, 2018, and $76 million for the nine months ended September 30, 2018, compared to prior periods where these were shown as separate expenses. The company did not restate prior period results.

For the nine months ended September 30, 2018, net income increased by 11.4% to $509.5 million compared to $457.5 million in the same period of 2017. However, for the three months ended September 30, 2018, net income decreased by 22.3% to $157.7 million from $202.8 million in the prior year. This decrease in the quarterly net income was largely due to the significant pre-tax gain on the sale of the NexTraq business in the prior year's third quarter and a large investment impairment charge in the prior year's third quarter, which did not recur in the current period.

As of September 30, 2018, FLEETCOR maintained a strong liquidity position with cash and cash equivalents totaling $1.19 billion, of which approximately $264.1 million was restricted. The company also had approximately $675 million available under its Credit Facility. Management believes these resources, along with operating cash flow, are sufficient to meet liquidity needs for at least the next twelve months.

Revenue growth was primarily driven by organic growth across its payment programs, contributing approximately 11% in the third quarter and 10% for the nine-month period, calculated on a comparable basis. Acquisitions completed in 2017, notably Cambridge and CLS, also contributed significantly to revenue increases, adding approximately $20 million in the third quarter and $96 million for the first nine months. The North America segment was a key contributor to this growth.