Corpay, Inc.(CPAY) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for the three and six months ended June 30, 2025, including balance sheets, income statements, and cash flow statements, along with detailed notes on accounting policies, acquisitions, debt, and contingencies, highlighting increases in total assets, revenues, and net income driven by acquisitions and organic growth Consolidated Balance Sheets Consolidated Balance Sheet Highlights | Balance Sheet Highlights | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $20,435,226 | $17,957,031 | | Cash and cash equivalents | $2,192,849 | $1,553,642 | | Goodwill | $6,334,018 | $5,984,667 | | Total Liabilities | $16,468,047 | $14,811,042 | | Total current liabilities | $9,639,769 | $8,707,881 | | Notes payable and other obligations | $5,869,083 | $5,226,106 | | Total Equity | $3,967,179 | $3,145,989 | Unaudited Consolidated Statements of Income Unaudited Consolidated Statements of Income Highlights (In Thousands, Except Per Share) | Income Statement Highlights | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $1,102,030 | $975,710 | $2,107,697 | $1,910,961 | | Operating income | $479,390 | $433,339 | $906,514 | $830,677 | | Net income attributable to Corpay | $284,168 | $251,625 | $527,401 | $481,394 | | Diluted earnings per share | $3.98 | $3.52 | $7.38 | $6.64 | Unaudited Statements of Cash Flows Unaudited Statements of Cash Flow Highlights (In Thousands) | Cash Flow Highlights | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,066,096 | $891,105 | | Net cash used in investing activities | ($222,640) | ($146,613) | | Net cash provided by (used in) financing activities | $78,355 | ($239,238) | | Net increase in cash and cash equivalents and restricted cash | $1,075,013 | $405,761 | Notes to Unaudited Consolidated Financial Statements - In February 2025, the Company acquired 100% of Gringo, a Brazil-based vehicle compliance payment company, for approximately $153.7 million, net of cash acquired, included in the Vehicle Payments segment[50] - In April 2025, the Company expanded its strategic partnership with Mastercard, which includes a $300 million investment by Mastercard for a 2.8% interest in Corpay's Cross-Border business[53] - The Company is party to an $8.25 billion Credit Agreement, with total debt under the Credit Agreement and Securitization Facility approximately $8.1 billion as of June 30, 2025[66][67] - Subsequent to the quarter end, in July 2025, the Company announced its intention to acquire Alpha Group International plc for an enterprise value of approximately $2.2 billion and to divest a legacy fuel card portfolio for approximately $60 million[100][104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting a 12.9% increase in net revenues for Q2 2025, driven by 11% organic growth and contributions from recent acquisitions, with the Corporate Payments segment being a key growth driver with a 35.9% revenue increase, covering segment performance, macroeconomic impacts, liquidity, capital resources, and recent strategic activities Results of Operations Q2 2025 vs Q2 2024 Financial Highlights | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues, net | $1,102.0 M | $975.7 M | 12.9% | | Operating Income | $479.4 M | $433.3 M | 10.6% | | Net Income Attributable to Corpay | $284.2 M | $251.6 M | 12.9% | - Q2 2025 consolidated revenue growth was driven by 11% organic growth and 5% from acquisitions, partially offset by a negative macroeconomic impact of approximately $19 million due to unfavorable FX, fuel price spreads, and fuel prices[142][143] Segment Revenue (Q2 2025 vs Q2 2024) | Segment Revenue (Q2 2025 vs Q2 2024) | Revenue (M) | % Change | | :--- | :--- | :--- | | Vehicle Payments | $525.5 | 3.0% | | Corporate Payments | $391.9 | 35.9% | | Lodging Payments | $119.8 | (2.1)% | - For the six months ended June 30, 2025, consolidated revenues increased 10.3% to $2.11 billion, while the negative impact from the macroeconomic environment was estimated at approximately $70 million[164][165] Liquidity and Capital Resources - As of June 30, 2025, the company had approximately $3.5 billion in total liquidity, comprising $1.4 billion available under its Credit Facility and $2.2 billion in unrestricted cash[184] - Net cash from operating activities increased to $1.07 billion for the first six months of 2025, up from $891.1 million in the prior-year period, primarily due to changes in working capital[188] - The company's stock repurchase program has $1.2 billion of remaining authorization available as of June 30, 2025[207] Acquisitions, Investments and Dispositions - In July 2025, the company announced a cash offer to acquire Alpha Group International plc for an enterprise value of approximately $2.2 billion, expected to close in Q4 2025[136] - In May 2025, Corpay and TPG formed a partnership to acquire AvidXchange, with Corpay expecting to invest approximately $550 million for a 34% equity stake[137][136] - In February 2025, the company acquired Gringo, a Brazilian vehicle compliance payment company, for approximately $153.7 million[137] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk profile from the information disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the company's market risk since the end of fiscal year 2024[235] Item 4. Controls and Procedures Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective due to a previously identified material weakness in internal control related to ineffective information technology general controls (ITGCs) in user access management, with remediation efforts currently in progress - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025[236] - The ineffectiveness is due to a material weakness in internal control related to IT general controls (ITGCs) for user access management over certain IT systems[237] - Remediation actions are being implemented, including enhancing IT compliance oversight, developing training programs, and improving documentation and testing of ITGCs[241] PART II—OTHER INFORMATION Item 1. Legal Proceedings This section details the company's legal matters, including the dismissal of consolidated shareholder derivative lawsuits on April 1, 2025, with no appeal, and the ongoing Federal Trade Commission (FTC) lawsuit concerning advertising and marketing practices, for which the company is currently unable to estimate the potential financial impact - The consolidated shareholder derivative lawsuits against the company and certain directors and officers were dismissed by the court on April 1, 2025, and the plaintiffs did not appeal[247] - The lawsuit filed by the Federal Trade Commission (FTC) in 2019 regarding advertising and marketing practices is ongoing, with an appeal argued in the Eleventh Circuit on January 21, 2025[248][249] - The company is unable to predict the ultimate outcome or reasonably estimate a range of possible losses resulting from the FTC litigation[251] Item 1A. Risk Factors The company reports no material changes to its risk factors from those previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in the company's risk factors from those disclosed in the 2024 Annual Report on Form 10-K[252] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchase of Equity Securities This section details the company's stock repurchase activities, noting that the Board-approved program authorizes up to $9.1 billion in repurchases through February 4, 2026, with $1.2 billion remaining under this authorization as of June 30, 2025 - The company's stock repurchase program has a total authorization of $9.1 billion and an expiration date of February 4, 2026[253] - As of June 30, 2025, the company has repurchased an aggregate of $7.9 billion in shares, with $1.2 billion remaining available for future repurchases under the program[253]