10-QPeriod: Q3 FY2019

CORPAY, INC. Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 12, 2019For Securities:CPAY

Summary

Corpay, Inc. (CPAY) reported solid performance for the nine months ended September 30, 2019. Total revenues increased by 8.9% year-over-year to $1.95 billion, driven by consistent organic growth across its segments and strategic acquisitions. Net income saw a significant boost of 29.5% to $659.6 million, largely due to a substantial tax benefit realized from an investment sale and a lower effective tax rate. The company's operating income also grew by 13.0% to $910.6 million, demonstrating effective cost management and operational efficiency. Key to this performance was strong organic growth, particularly in its Corporate Payments and Tolls segments, alongside successful integration of recent acquisitions. The company's liquidity position remains robust, supported by significant cash reserves and available borrowing capacity, enabling continued investment in growth initiatives and shareholder returns through its share repurchase program. Despite some headwinds from foreign currency fluctuations and a challenging macroeconomic environment, Corpay demonstrates a resilient business model and effective execution.

Financial Highlights

49 data points
Beta

Revenue

$681.05M

Net Income

$225.81M

33.2% Net Margin

EPS (Diluted)

$2.49

Total Assets

$11.91B

Cash & Equivalents

$1.06B

Free Cash Flow

$224.41M

Financial Statements
Beta
Revenue$681.05M
Operating Income$329.14M
Net Income$225.81M
EPS (Basic)$2.61
EPS (Diluted)$2.49
Shares Outstanding (Basic)86.66M
Shares Outstanding (Diluted)90.52M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2019, increased by 8.9% to $1.95 billion compared to the same period in 2018.
  • 2Net income for the nine months increased by 29.5% to $659.6 million, benefiting from a tax gain related to an investment sale.
  • 3Operating income grew by 13.0% to $910.6 million for the nine months, showcasing strong operational performance.
  • 4The company completed several acquisitions in 2019, including NvoicePay, contributing to revenue growth.
  • 5Strong organic growth was reported across key segments, driven by increased transaction volumes and revenue per transaction.
  • 6Consolidated operating margin improved to 46.7% for the nine months ended September 30, 2019, up from 45.0% in the prior year.
  • 7The company maintained a strong liquidity position with $1.47 billion in cash and cash equivalents and restricted cash as of September 30, 2019.

Frequently Asked Questions

The significant increase in net income was primarily driven by a tax benefit of $65 million recognized in the second quarter of 2019 due to the final disposition of the Masternaut investment. This allowed the company to carry back a capital loss to offset a previously recorded capital gain, resulting in a substantial reduction in income taxes paid.

Acquisitions played a key role in driving revenue growth. In 2019, Corpay completed several acquisitions, including NvoicePay, which contributed approximately $15 million in additional revenue for the nine-month period. These acquisitions are being integrated to expand the company's product offerings and market reach.

Corpay acknowledged that macroeconomic challenges, including unfavorable foreign currency fluctuations, particularly in Brazil and the UK, had a negative impact on consolidated revenue. For the nine months ended September 30, 2019, this impact was approximately $52 million. The company continues to monitor these factors and aims to mitigate their effects through its diversified business model and strategic hedging activities.

The company maintains a robust liquidity position with approximately $1.47 billion in cash and cash equivalents and restricted cash as of September 30, 2019. It utilizes a $1.2 billion accounts receivable securitization facility and has approximately $1.285 billion available under its Credit Facility. The company's principal liquidity needs are met through operating cash flow, available borrowing capacity, and its share repurchase program.