Corpay, Inc.(US:CPAY)2022-03-01 21:28Financial Performance - FLEETCOR reported a significant annual spending of approximately $125 trillion by businesses, highlighting the need for effective payment solutions [20]. - The company achieved over 99.9% uptime for authorizations globally in 2021, demonstrating strong operational reliability [60]. - For the year ended December 31, 2021, the company's bad debt expense was $37.9 million, representing 3 basis points of total billings, compared to $158.5 million or 15 basis points in 2020 [129]. - Late fees and finance charges accounted for 4% of the company's consolidated revenue for the year ended December 31, 2021 [130]. - Approximately 12% of the company's consolidated revenue for the year ended December 31, 2021, was directly influenced by the absolute price of fuel [138]. - The company generated approximately 5% of its consolidated revenue during the year ended December 31, 2021, from transactions tied to fuel price spreads [138]. - Approximately 37% of the company's revenue for the year ended December 31, 2021, was denominated in currencies other than the U.S. dollar [147]. Business Operations - The company serves hundreds of thousands of business customers with millions of cardholders making payments to millions of vendors globally [23]. - FLEETCOR's proprietary networks provide better economics and richer data, contributing to high EBITDA margins and predictable revenue models [26]. - The Corporate Payments solutions streamline back-office operations, enabling businesses to save time and cut costs associated with outgoing payments [35]. - FLEETCOR's Virtual Card solution operates solely on the Mastercard network, providing enhanced security and reconciliation advantages [38]. - The Cross-Border solution facilitates payments to over 200 countries in 145 currencies, focusing on technology and personalized service [40]. - FLEETCOR's Lodging solutions offer access to discounted hotel networks across 136 countries, providing significant savings for businesses [32]. - The company actively expands its proprietary networks in electric vehicle (EV) charging, accommodating the transition to mixed fleets [30]. - FLEETCOR's multi-channel go-to-market strategy includes digital channels, direct sales forces, and strategic partnerships to enhance customer reach [49]. - The company provides payroll card solutions in North America, allowing employees to access their wages without paper checks [45]. Technology and Innovation - In 2021, the company invested approximately $250 million in capital and operating expenses to enhance its technology infrastructure [55]. - The company operates application development centers in multiple countries, including the U.S., U.K., and Brazil, to support its technology function [57]. - The company’s technology platforms consist of four key components: core processing platform, specialized software, integrated network capabilities, and cloud-based architecture [56]. - The company’s IT transformation initiatives focus on digital strategy, core systems modernization, and data management to enhance customer experience [58]. - The company must continuously develop and implement new technology and products to maintain its competitive position in a rapidly changing market [119]. Risk Management - The company employs various tools to manage credit risk, including billing frequency, payment terms, and fraud detection programs [52]. - The company is subject to various U.S. and international regulations governing money transmission and payment instruments, which may affect its operations [66]. - The company faces risks from software defects and system errors that could damage customer relationships and profitability [112]. - The company is subject to various cybersecurity risks that could lead to unauthorized access to sensitive customer data, potentially harming its reputation [114]. - The company faces competitive pressures that may require it to increase customer incentives or decrease solution prices, potentially affecting operating results [134]. - The company is exposed to risks related to volatility in foreign currency exchange rates, which could impact revenue and profit from international operations [147]. - The company faces risks related to fraudulent use of its payment solutions, which could lead to substantial losses without adequate insurance coverage [158]. Regulatory Environment - The electronic payments industry is subject to increasing regulations, which may impose compliance obligations and affect operating activities [169]. - Changes in regulatory environments, including those related to anti-money laundering, could significantly impact the company's business operations [170]. - The company is subject to various federal and state laws and regulations regarding prepaid card programs, including the CARD Act and CFPB's Regulation E [82]. - The company is subject to various laws and regulations related to government contracts, which may result in penalties or suspension of contracts if not complied with [180]. - The company is subject to evolving regulations regarding greenhouse gas emissions, which could adversely affect its partners and operations [177]. Workforce and Culture - As of December 31, 2021, FLEETCOR employed approximately 9,700 associates across more than 15 countries, with about 3,900 based in the U.S. [87]. - Female representation in FLEETCOR's global workforce was approximately 53%, while minorities comprised about 42% of the domestic workforce as of December 31, 2021 [90]. - The employee engagement score in 2021 remained consistent, only 1 point lower than the 2020 results, with a participation rate of approximately 75% in the annual survey [94]. - FLEETCOR's talent development programs include high-quality learning opportunities aimed at closing skill gaps and enhancing workforce capabilities [93]. - The company’s culture emphasizes innovation, execution, integrity, people, and collaboration as core values guiding employee behavior and interactions [88]. - The company is committed to fostering a diverse and inclusive environment, with dedicated councils and employee resource groups to support these initiatives [91]. - The company’s benefits programs focus on physical and mental well-being, offering free online fitness classes and access to employee assistance programs [92]. Legal and Compliance Issues - The company is currently involved in a Federal Derivative Action alleging false and misleading statements, with a pending appeal in the Eleventh Circuit [199]. - The FTC filed a lawsuit against the company alleging violations of the FTC Act, seeking injunctive relief and consumer redress [202]. - The company believes the FTC's claims are without merit and that these matters will not materially affect its financial performance [202]. - The company has incurred legal fees related to the FTC complaint, with potential costs including legal fees, redress, and penalties [202]. - The company intends to vigorously defend against the allegations in the derivative complaints [200]. Financial Strategy - The company has repurchased a total of 20,068,498 shares for an aggregate purchase price of $4.4 billion since the beginning of the stock repurchase program [209]. - The stock repurchase program was increased by $1.0 billion to a total of $6.1 billion as of January 25, 2022 [210]. - In 2021, the company repurchased 5,451,556 shares totaling $1.4 billion [209]. - The company has never declared or paid any dividends on its common stock and does not anticipate doing so in the foreseeable future [208]. - The company had approximately $6.0 billion of debt outstanding under its Credit Facility and Securitization Facility as of December 31, 2021 [188]. - Goodwill and intangible assets represent approximately 55% of the company's total assets as of December 31, 2021 [191]. - The transition from LIBOR to alternative benchmark rates could adversely affect the company's borrowing costs and expose it to various financial risks [190]. - The company may incur substantial additional indebtedness in the future, which could limit its operational flexibility and financial performance [189].