01—Abstract
Summary
Summary of the 10-Q filed May 10, 2021. Cited figures are marked; the original filing is the authoritative source.
CORPAY, INC. (CPAY) reported its first quarter 2021 financial results on May 10, 2021.
The company experienced a decrease in consolidated revenues of 7.9% year-over-year, primarily attributed to the ongoing impacts of the COVID-19 pandemic on transaction volumes and the macroeconomic environment. Despite the revenue decline, net income saw a significant increase of 25.3% to $184.2 milliona, largely due to a substantial reduction in processing expenses, including a significant year-over-year decrease from a large customer receivable write-off in the prior year's comparable period. The company also benefited from lower interest expenses and strategic acquisitions.
Management highlighted continued strategic progress, including the acquisition of Roger (CorpayOne) to enhance its accounts payable solutions. Looking ahead, CORPAY is focused on navigating the economic recovery, managing foreign exchange fluctuations, and integrating its recent acquisitions. The company maintains a strong liquidity position and is proceeding with its planned acquisition of Associated Foreign Exchange (AFEX), expected to close in the second quarter of 2021.
02—Key points
Key Highlights
- Consolidated revenues decreased by 7.9% to $608.6 million in Q1 2021 compared to Q1 2020, impacted by COVID-19 and macroeconomic conditions.
- Net income increased by 25.3% to $184.2 million, driven by significant reductions in processing expenses and a lower year-over-year comparison due to a large receivable write-off in Q1 2020.
- Processing expenses saw a substantial decrease of 50.2%, largely due to the absence of a significant customer receivable write-off from the prior year.
- Interest expense decreased by 20.0% due to lower borrowings and LIBOR rates, partially offset by increased use of the securitization facility.
- The company completed the acquisition of Roger (CorpayOne) in January 2021, strengthening its accounts payable solutions.
- CORPAY is progressing with the acquisition of Associated Foreign Exchange (AFEX), anticipated to close in Q2 2021.
- The company maintained a strong liquidity position with approximately $1.96 billion in total liquidity at the end of Q1 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed May 10, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $608.62M$661.09M | −7.9% |
| Operating Income | $265.96M$200.98M | +32.3% |
| Net Income | $217.95M$147.06M | +48.2% |
| EPS (Basic) | $2.21$1.73 | +27.7% |
| EPS (Diluted) | $2.15$1.67 | +28.7% |
| Shares Outstanding (Basic) | 83.47M84.90M | −1.7% |
| Shares Outstanding (Diluted) | 85.76M88.20M | −2.8% |
05—Questions
Frequently Asked Questions
What was the primary reason for the year-over-year decrease in revenue?
The primary reason for the decrease in consolidated revenues by 7.9% to $608.6 million in the first quarter of 2021 was the ongoing impact of the COVID-19 pandemic on transaction volumes and the broader macroeconomic environment. Acquisitions completed in 2020 provided a partial offset.
Why did net income increase despite lower revenues?
Net income increased by 25.3% to $184.2 million primarily due to a significant reduction in processing expenses. This reduction was largely influenced by the absence of a large customer receivable write-off that occurred in the first quarter of 2020. Additionally, lower interest expenses and a favorable comparison against prior period legal settlement costs contributed to the net income growth.
What is the status of the pending acquisition of Associated Foreign Exchange (AFEX)?
CORPAY signed a definitive agreement to acquire Associated Foreign Exchange (AFEX) for approximately $450 million in September 2020. The transaction is expected to close in late the second quarter of 2021, subject to regulatory approval and customary closing conditions.
How did foreign exchange rates impact the company's results?
Foreign exchange rates had an unfavorable impact of approximately $11 million on consolidated revenues and approximately $8 million on Brazil segment operating income during the first quarter of 2021 compared to the prior year. However, favorable foreign exchange movements positively impacted the International segment revenues by approximately $5 million. The company actively hedges its foreign currency exposures from customer contracts.
06—Continue