Corpay, Inc.(CPAY) - 2025 Q1 - Quarterly Report

Part I - Financial Information Financial Statements Corpay's Q1 2025 financial results show revenue and net income growth, asset expansion, and negative operating cash flow Consolidated Balance Sheets Total assets increased to $18.55 billion by March 31, 2025, driven by receivables and goodwill, with equity also growing - Total assets increased by $590.8 million from December 31, 2024, to March 31, 2025[11] - Goodwill increased from $5.98 billion to $6.19 billion during the quarter, reflecting recent acquisition activity[11] - Total debt (current and noncurrent notes payable, lines of credit, and securitization facility) increased from $7.99 billion to $8.17 billion[11] Consolidated Statements of Income Q1 2025 revenues grew 7.5% to $1.006 billion, with operating income and net income also increasing significantly Income Statement Item | Income Statement Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Revenues, net | $1,005,667 | $935,251 | | Operating Income | $427,124 | $397,338 | | Net Income Attributable to Corpay | $243,233 | $229,769 | | Diluted EPS | $3.40 | $3.12 | Consolidated Statements of Comprehensive Income Total comprehensive income for Q1 2025 significantly increased to $351.2 million, primarily due to positive foreign currency translation gains - Foreign currency translation gains were $153.6 million in Q1 2025, compared to losses of $96.1 million in Q1 2024[14] Consolidated Statements of Cash Flows Q1 2025 saw a $74.2 million net cash outflow from operations, increased investing cash use for acquisitions, and cash provided by financing activities Cash Flow Activity | Cash Flow Activity (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(74,151) | $350,184 | | Net cash used in investing activities | $(183,918) | $(102,344) | | Net cash provided by (used in) financing activities | $142,297 | $(158,551) | - Cash used for acquisitions was $153.7 million in Q1 2025, up from $56.3 million in Q1 2024[19] - Cash used for common stock repurchases decreased significantly to $58.7 million in Q1 2025 from $288.8 million in Q1 2024[19] Notes to Unaudited Consolidated Financial Statements Notes detail accounting policies, revenue by segment, the $153.7 million Gringo acquisition, debt amendments, derivatives, and post-quarter strategic investments Revenue by Segment | Revenue by Segment (Q1 2025) | Amount (in millions) | % of Total | | :--- | :--- | :--- | | Vehicle Payments | $487.1 | 48% | | Corporate Payments | $352.7 | 35% | | Lodging Payments | $110.2 | 11% | | Other | $55.7 | 6% | - In February 2025, the Company acquired 100% of Gringo, a Brazil-based vehicle compliance payment company, for approximately $153.7 million[50] - Subsequent to quarter-end, the company announced a strategic partnership with Mastercard, including a $300 million investment by Mastercard for a 2.8% interest in Corpay's Cross-Border business, and a $550 million minority investment in the acquisition of AvidXchange[98][99][100] Financial Metric | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues, net | $1,005.7M | $935.3M | +7.5% | | Operating Income | $427.1M | $397.3M | +7.5% | | Net Income Attributable to Corpay | $243.2M | $229.8M | +5.9% | | Diluted EPS | $3.40 | $3.12 | +9.0% | Balance Sheet Item | Balance Sheet Item | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $18,547.8M | $17,957.0M | | Total Liabilities | $15,053.7M | $14,811.0M | | Total Equity | $3,494.1M | $3,146.0M | Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported strong Q1 2025 results with 7.5% consolidated revenue growth, driven by 9% organic growth, despite macroeconomic headwinds, maintaining robust liquidity Non-GAAP Metric | Non-GAAP Metric (Q1 2025) | Amount (in millions) | Change vs. Q1 2024 | | :--- | :--- | :--- | | Adjusted Net Income | $322.9 | +7.2% | | Adjusted EBITDA | $555.4 | +7.5% | | Adjusted EBITDA Margin | 55.2% | Flat | - Organic revenue growth was 9%, driven by increases in spend and transaction volumes, and new sales initiatives[137] - Macroeconomic headwinds, primarily unfavorable foreign exchange rates of ~$42 million, negatively impacted consolidated revenues by approximately $51 million[138][139] Results of Operations Q1 2025 consolidated revenue grew 7.5% to $1.006 billion, driven by 32.9% surge in Corporate Payments, while Vehicle and Lodging Payments saw declines Segment Performance | Segment Performance (Q1 2025 vs Q1 2024) | Revenue Change | Operating Income Change | | :--- | :--- | :--- | | Vehicle Payments | -1.4% | +2.0% | | Corporate Payments | +32.9% | +29.8% | | Lodging Payments | -1.0% | -8.5% | | Other | -13.7% | -10.2% | - Corporate Payments growth was driven by a 19% increase in spend volume and approximately $36 million in revenue from recent acquisitions[151] - Vehicle Payments revenue was negatively impacted by $36 million from unfavorable FX rates and $9 million from the disposition of the merchant solutions business[149] Liquidity and Capital Resources Corpay maintained $2.8 billion in liquidity, increased Term Loan B by $750 million, used cash for acquisitions and repurchases, and announced future strategic investments - Total liquidity stood at approximately $2.8 billion at quarter-end[157] - In February 2025, the company amended its Credit Agreement to increase Term Loan B commitments by $750 million, using the proceeds to pay down the revolving credit facility[165] - The company has a stock repurchase program with $1.2 billion of remaining authorization as of March 31, 2025[179] Management's Use of Non-GAAP Financial Measures This section defines and reconciles non-GAAP metrics like Adjusted Net Income ($322.9 million) and Adjusted EBITDA ($555.4 million), used to assess core performance and organic growth Reconciliation to Adjusted Net Income | Reconciliation to Adjusted Net Income (Q1 2025, in thousands) | Amount | | :--- | :--- | | Net income attributable to Corpay (GAAP) | $243,233 | | Stock-based compensation | $18,366 | | Amortization | $66,066 | | Integration and deal related costs | $11,389 | | Other adjustments | $11,488 | | Income tax effect of adjustments | $(27,616) | | Adjusted net income attributable to Corpay (Non-GAAP) | $322,926 | Reconciliation to Adjusted EBITDA | Reconciliation to Adjusted EBITDA (Q1 2025, in millions) | Amount | | :--- | :--- | | Net income (GAAP) | $243.9 | | Provision for income taxes | $83.6 | | Interest expense, net | $93.9 | | Depreciation and amortization | $92.2 | | Other adjustments | $5.7 | | EBITDA (Non-GAAP) | $519.3 | | Stock-based compensation | $18.4 | | Other addbacks | $17.7 | | Adjusted EBITDA (Non-GAAP) | $555.4 | Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk profile were reported as of March 31, 2025, compared to the 2024 Form 10-K disclosures - There have been no material changes to the company's market risk from that disclosed in the 2024 Form 10-K[203] Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a material weakness in IT general controls, with a remediation plan underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025[204] - The ineffectiveness is due to a material weakness in IT general controls related to user access management over certain IT systems[205] - A remediation plan is underway, focusing on enhancing IT compliance oversight, training, documentation, and system controls. The material weakness will not be considered remediated until the new controls have operated effectively for a sufficient period[208][209] Part II - Other Information Legal Proceedings A shareholder derivative lawsuit was dismissed, while an ongoing FTC lawsuit regarding marketing practices is under appeal, with no estimable loss range - A consolidated shareholder derivative lawsuit was dismissed on April 1, 2025, and as of the filing date, no appeal had been filed[215] - The FTC lawsuit, alleging unfair and deceptive practices, is ongoing. The case is under appeal in the Eleventh Circuit following a district court's summary judgment ruling that found liability but denied the FTC's claim for monetary relief[216][217] - The company is currently unable to predict the outcome or estimate the possible losses resulting from the ongoing legal proceedings[219] Risk Factors No material changes in the company's risk factors were reported from those disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes in risk factors from those disclosed in the company's 2024 Annual Report on Form 10-K[220] Unregistered Sales of Equity Securities and Issuer Purchases of Equity Securities In Q1 2025, the company repurchased 157,234 shares for $58.7 million to satisfy employee tax obligations, with $1.2 billion remaining in its repurchase program - In Q1 2025, the company withheld 157,234 shares to satisfy employee tax obligations, effectively repurchasing them for a total of approximately $58.7 million[223] - As of March 31, 2025, $1.2 billion remained available for future repurchases under the company's publicly announced stock repurchase program[221] Defaults Upon Senior Securities This section is not applicable for the current reporting period Mine Safety Disclosures This section is not applicable for the current reporting period Other Information No director or executive officer adopted, modified, or terminated a Rule 10b5-1 trading plan during the quarter - No director or executive officer adopted, modified, or terminated a Rule 10b5-1 trading plan during the reported period[225] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and certifications