Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and related notes appearing elsewhere in this report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences include, but are not limited to, those identified below and those described in Item 1A "Risk Factors" appearing in our Annual Report on Form 10-K for the year ended December 31, 2023. All foreign currency amounts that have been converted into U.S. dollars in this discussion are based on the exchange rate as reported by Oanda for the applicable periods.

The following discussion and analysis of our financial condition and results of operations generally discusses the three and six months ended June 30, 2024 and 2023, with period-over-period comparisons between these periods. A detailed discussion of 2023 items and period-over-period comparisons between the three and six months ended June 30, 2023 and 2022 that are not included in this Quarterly Report on Form 10-Q can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.

Executive Overview

Effective March 25, 2024, FLEETCOR Technologies, Inc. changed its corporate name to Corpay, Inc. At that time, we ceased trading under the ticker symbol "FLT" and began trading under our new ticker symbol, "CPAY," on the New York Stock Exchange ("NYSE") effective March 25, 2024. Corpay is a global corporate payments company that helps businesses and consumers better manage, pay, and control their expenses. Corpay's suite of modern payment solutions help customers better manage vehicle-related expenses (e.g., fueling, tolls and parking), lodging expenses (e.g., hotel and extended stay bookings) and corporate payments (e.g., multi-card and domestic and international vendors). This results in our customers saving time and ultimately spending less. Since its incorporation in 2000, Corpay's payment and spend management solutions have been delivered in a variety of ways depending on the needs of the customer. From physical payment cards to software that includes customizable controls and robust payment capabilities, we provide businesses with a better way to pay.

Businesses spend an estimated $135 trillion each year in transactions with other businesses. In many instances, businesses lack the proper tools to monitor what is being purchased, and employ manual, paper-based, disparate processes and methods to both approve and make payments for their business-to-business purchases. This often results in wasted time and money due to unnecessary or unauthorized spending, fraud, receipt collection, data input and consolidation, report generation, reimbursement processing, account reconciliations, employee disciplinary actions, and more.

Corpay’s vision is that every payment is digital, every purchase is controlled, and every related decision is informed. Digital payments are faster and more secure than paper-based methods such as checks, and provide timely and detailed data that can be utilized to effectively reduce unauthorized purchases and fraud, automate data entry and reporting, and eliminate reimbursement processes. Combining this payment data with analytical tools delivers insights, which managers can use to better run their businesses. Our wide range of modern, digitized solutions generally provides control, reporting, and automation benefits superior to many of the payment methods businesses often use such as cash, paper checks, general purpose credit cards, as well as employee pay and reclaim processes.

Impact of Geo-Political Events on Our Business

The current military conflicts between Russia and Ukraine, as well as within the Middle East continue to create substantial uncertainty about the global economy in the future. Although the length, impact and outcome of the ongoing military conflicts are highly unpredictable, these conflicts could lead to significant market and other disruptions. We exited the Russia market via the disposition of our Russia business, which closed in the third quarter of 2023 (see "Russia Disposition" section below), and we do not have material operations in Israel or Gaza. We cannot predict how and the extent to which these conflicts will affect our customers, operations or business partners or the demand for our products and our global business.

We are actively monitoring the situations and assessing the impact on our business. The extent, severity, duration and outcome of the military conflicts, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time. Any such disruptions may also magnify the impact of other risks described herein and in our Annual Report on Form 10-K.

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Russia Disposition

We completed the sale of our Russia business on August 15, 2023. The sale included the entirety of our operations in Russia and resulted in a complete exit from the Russia market. Our business in Russia accounted for approximately $49.8 million of our consolidated income before income taxes for the six months ended June 30, 2023. The Russia business was historically reported within our Vehicle Payments segment.

Results

Revenues, net, Net Income Attributable to Corpay and Net Income Per Diluted Share Attributable to Corpay. Set forth below are revenues, net, net income attributable to Corpay and net income per diluted share attributable to Corpay for the three and six months ended June 30, 2024 and 2023, (in millions, except per share amounts).

Three Months Ended June 30,Six Months Ended June 30,
(Unaudited)2024202320242023
Revenues, net$975.7$948.2$1,911.0$1,849.5
Net income attributable to Corpay$251.6$239.7$481.4$454.5
Net income per diluted share attributable to Corpay$3.52$3.20$6.64$6.08

Adjusted Net Income Attributable to Corpay, Adjusted Net Income Per Diluted Share Attributable to Corpay, EBITDA and EBITDA margin. Set forth below are adjusted net income, adjusted net income per diluted share, EBITDA and EBITDA margin for the three and six months ended June 30, 2024 and 2023 (in millions, except per share amounts).

Three Months Ended June 30,Six Months Ended June 30,
(Unaudited)2024202320242023
Adjusted net income attributable to Corpay$325.0$314.3$626.3$597.3
Adjusted net income per diluted share attributable to Corpay$4.55$4.19$8.64$7.99
EBITDA$517.7$497.1$1,000.1$957.2
EBITDA margin53.1%52.4%52.3%51.8%

Adjusted net income attributable to Corpay, adjusted net income per diluted share attributable to Corpay, EBITDA and EBITDA margin are supplemental non-GAAP financial measures of operating performance. See the heading entitled "Management’s Use of Non-GAAP Financial Measures" for more information and a reconciliation of the non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with U.S. generally accepted accounting principles, or GAAP. We use adjusted net income attributable to Corpay, adjusted net income per diluted share attributable to Corpay, EBITDA and EBITDA margin to eliminate the effect of items that we do not consider indicative of our core operating performance on a consistent basis. These non-GAAP measures are presented solely to permit investors to more fully understand how our management assesses underlying performance and are not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial measures.

Sources of Revenue

Corpay offers a variety of payment solutions that simplify, automate, secure, digitize and effectively control the way businesses and consumers manage and pay their expenses. We provide our payment solutions to our business, merchant, consumer and payment network customers in more than 150 countries around the world today, although we operate primarily in three geographies, with 82% of our revenues generated in the U.S., Brazil, and the U.K. Our customers may include commercial businesses (obtained through direct and indirect channels) and partners for whom we manage payment programs, as well as consumers.

We manage and report our operating results through three reportable segments: Vehicle Payments, Corporate Payments, and Lodging Payments. The remaining results are included within Other, which includes our Gift and Payroll Card businesses. These segments align with how the Chief Operating Decision Maker (CODM) allocates resources, assesses performance and reviews financial information.

Our revenue is generally reported net of the cost for underlying products and services purchased. In this report, we refer to this net revenue as “revenue" or "revenues, net." See “Results of Operations” for additional segment information.

Revenues, net, by Segment. For the three and six months ended June 30, 2024 and 2023, our segments generated the following revenue (in millions).

Three Months Ended June 30,Six Months Ended June 30,
(Unaudited)2024202320242023
Revenues by Segment*Revenues, net% of Total Revenues, netRevenues, net% of Total Revenues, netRevenues, net% of Total Revenues, netRevenues, net% of Total Revenues, net
Vehicle Payments$510.352%$509.654%$1,004.353%$1,005.154%
Corporate Payments288.530%246.026%553.929%472.226%
Lodging Payments122.413%136.614%233.712%258.914%
Other54.66%56.06%119.16%113.36%
Consolidated revenues, net$975.7100%$948.2100%$1,911.0100%$1,849.5100%

*Columns may not calculate due to rounding. Other includes our Gift and Payroll Card businesses.

We generate revenue in our Vehicle Payments segment through a variety of program fees, including transaction fees, card fees, network fees and charges, as well as from interchange. These fees may be charged as fixed amounts, costs plus a mark-up, based on a percentage of the transaction purchase amounts, or a combination thereof. Our programs also include other fees and charges associated with late payments and based on customer credit risk. We also generate float revenue earned on invested customer funds in jurisdictions where permitted.

In our Corporate Payments segment, our payables business primarily earns revenue from the difference between the amount charged to the customer and the amount paid to the third party for a given transaction, as interchange or spread revenue. Our programs may also charge fixed fees for access to the network and ancillary services provided. In our cross-border payments business, the majority of revenue is from exchanges of currency at spot rates, which enables customers to make cross-currency payments. Our cross-border payments business also derives revenue from our risk management business, which aggregates foreign currency exposures arising from customer contracts and economically hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Revenues from risk management products and foreign exchange payment services are primarily comprised of the difference between the exchange rate we set for the customer and the rate available in the wholesale foreign exchange market. We also generate float revenue earned on invested customer funds in jurisdictions where permitted.

In our Lodging Payments segment, we primarily earn revenue from the difference between the amount charged to the customer and the amount paid to the hotel for a given transaction or based on commissions paid by hotels. We may also charge fees for access to the network and ancillary services provided.

The remaining revenues represent other solutions in our Gift and Payroll card businesses. In these businesses, we primarily earn revenue from the processing of transactions. We may also charge fees for ancillary services provided.

Revenues, net, by Geography*.* Revenues, net by geography for the three and six months ended June 30, 2024 and 2023, were as follows (in millions):

Three Months Ended June 30,Six Months Ended June 30,
(Unaudited)2024202320242023
Revenues by Geography*Revenues, net% of Total Revenues, netRevenues, net% of Total Revenues, netRevenues, net% of Total Revenues, netRevenues, net% of Total Revenues, net
United States$528.554%$534.756%$1,033.254%$1,048.457%
Brazil149.115%126.113%297.516%247.813%
United Kingdom124.513%111.212%245.813%218.912%
Other173.618%176.219%334.417%334.418%
Consolidated revenues, net$975.7100%$948.2100%$1,911.0100%$1,849.5100%

*Columns may not calculate due to rounding.

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Revenues, net by Key Performance Metric and Organic Growth*.* Revenues, net by key performance metric and organic growth by segment for the three months ended June 30, 2024 and 2023, were as follows (in millions except revenues, net per key performance indicator)*:

As ReportedPro Forma and Macro Adjusted****2
Three Months Ended June 30,Three Months Ended June 30,
(Unaudited)20242023Change% Change20242023Change% Change
VEHICLE PAYMENTS
'- Revenues, net$510.3$509.6$0.7—%$518.3$492.0$26.35%
'- Transactions207.3153.953.435%207.3193.713.67%
'- Revenues, net per transaction$2.46$3.31$(0.85)(26)%$2.50$2.54$(0.04)(2)%
'- Tag transactions321.419.71.79%21.419.71.79%
'- Parking transactions63.0—63.0NM63.056.86.211%
'- Fleet transactions112.9128.4(15.6)(12)%112.9111.41.41%
'- Other transactions10.05.74.375%10.05.74.375%
CORPORATE PAYMENTS
'- Revenues, net$288.5$246.0$42.517%$289.6$246.0$43.618%
'- Spend volume$42,879$36,033$6,84619%$42,879$36,033$6,84519%
'- Revenue, net per spend $0.67%0.68%(0.01)%(1)%0.68%0.68%(0.01)%(1)%
LODGING PAYMENTS
'- Revenues, net$122.4$136.6$(14.2)(10)%$122.5$136.6$(14.1)(10)%
'- Room nights8.79.3(0.6)(6)%8.79.3(0.6)(6)%
'- Revenues, net per room night$13.99$14.65$(0.66)(5)%$14.00$14.65$(0.65)(4)%
OTHER****1
'- Revenues, net$54.6$56.0$(1.4)(3)%$54.7$56.0$(1.3)(2)%
'- Transactions349.3296.552.818%349.3296.552.818%
'- Revenues, net per transaction$0.16$0.19$(0.03)(17)%$0.16$0.19$(0.03)(17)%
CORPAY CONSOLIDATED REVENUES, NET
'- Revenues, net$975.7$948.2$27.53%$985.1$930.6$54.56%
1 Other includes Gift and Payroll Card operating segments.
2 See heading entitled "Management's Use of Non-GAAP Financial Measures" for a reconciliation of pro forma and macro adjusted revenue by product and metric non-GAAP measures to the comparable financial measure calculated in accordance with GAAP. The calculated change represents organic growth rate.
3 Represents total tag subscription transactions in the period. Average monthly tag subscriptions for 2024 is 7.1 million
* Columns may not calculate due to rounding.
NM = Not Meaningful

Revenue per relevant key performance indicator (KPI), which may include transactions, spend volume, room nights, or other metrics, is derived from the various revenue types as discussed above and can vary based on geography, the relevant merchant relationship, the payment product utilized and the types of products or services purchased, the mix of which would be influenced by our acquisitions, organic growth in our business, and the overall macroeconomic environment, including fluctuations in foreign currency exchange rates, fuel prices and fuel price spreads. Relevant KPI is derived by broad product type and may differ from how we describe the business. Revenue per KPI per customer may change as the level of services we provide to a customer increases or decreases, as macroeconomic factors change and as adjustments are made to merchant and customer rates. See “Results of Operations” for further discussion of transaction volumes and revenue per transaction.

Organic revenue growth is a supplemental non-GAAP financial measure of operating performance. Organic revenue growth is calculated as revenue growth in the current period adjusted for the impact of changes in the macroeconomic environment (to include fuel price, fuel price spreads and changes in foreign exchange rates) over revenue in the comparable prior period adjusted to include or remove the impact of acquisitions and/or divestitures and non-recurring items that have occurred subsequent to that period. See the heading entitled "Management’s Use of Non-GAAP Financial Measures" for more information and a reconciliation of the non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP. We believe that organic revenue growth on a macro-neutral, one-time item, and consistent acquisition/divestiture/non-recurring item basis is useful to investors for understanding the performance of Corpay.

Sources of Expenses

We incur expenses in the following categories:

*•*Processing—Our processing expense consists of expenses related to processing transactions, servicing our customers and merchants, credit losses and cost of goods sold related to our hardware and card sales in certain businesses.

  • Selling—Our selling expenses consist primarily of wages, benefits, sales commissions (other than merchant commissions) and related expenses for our sales, marketing and account management personnel and activities.

  • General and administrative—Our general and administrative expenses include compensation and related expenses (including stock-based compensation and bonuses) for our employees, finance and accounting, information technology, human resources, legal and other administrative personnel. Also included are facilities expenses, third-party professional services fees, travel and entertainment expenses, and other corporate-level expenses.

  • Depreciation and amortization—Our depreciation expenses include depreciation of property and equipment, consisting of computer hardware and software (including proprietary software development amortization expense), card-reading equipment, furniture, fixtures, vehicles and buildings and leasehold improvements related to office space. Our amortization expenses include amortization of intangible assets related to customer and vendor relationships, trade names and trademarks, software and non-compete agreements. We are amortizing intangible assets related to business acquisitions and certain private label contracts associated with the purchase of accounts receivable.

*•*Other operating, net—Our other operating, net includes other operating expenses and income items that do not relate to our core operations or that occur infrequently.

  • Other expense (income), net—Our other expense (income), net includes gains or losses from the following: sales of assets or businesses, foreign currency transactions, extinguishment of debt, and investments. This category also includes other miscellaneous non-operating costs and revenue. Certain of these items may be presented separately on the Consolidated Statements of Income.

  • Interest expense, net—Our interest expense, net includes interest expense on our outstanding debt, interest income on cash balances and interest on our interest rate and cross-currency swaps.

  • Provision for income taxes—Our provision for income taxes consists of corporate income taxes related primarily to profits resulting from the sale of our products and services on a global basis.

Factors and Trends Impacting our Business

We believe that the following factors and trends are important in understanding our financial performance:

  • Global economic conditions—Our results of operations are materially affected by conditions in the economy generally, in North America, Brazil, the U.K., and in other locations internationally, including the current conflict between Russia and Ukraine and other geopolitical events in the Middle East, as discussed elsewhere in this Quarterly Report on Form 10-Q. Factors affected by the economy include our transaction volumes, the credit risk of our customers and changes in tax laws across the globe. These factors affected our businesses in each of our segments.

  • Foreign currency changes—Our results of operations are significantly impacted by changes in foreign currency exchange rates; namely, by movements of the Australian dollar, Brazilian real, British pound, Canadian dollar, Czech koruna, euro, Mexican peso, New Zealand dollar and Russian ruble (for periods prior to the disposition of our Russian business), relative to the U.S. dollar. Approximately 54% and 57% of our revenue in the six months ended June 30, 2024 and 2023, respectively, was derived in U.S. dollars and was not affected by foreign currency exchange rates. See "Results of Operations" for information related to foreign currency impact on our total revenue, net.

Our cross-border foreign risk management business aggregates foreign currency exposures arising from customer contracts and economically hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. These contracts are subject to counterparty credit risk and liquidity risk from collateral calls.

We further manage the impact of economic changes in the value of certain foreign-denominated net assets by utilizing cross currency interest rate swaps. See "Liquidity and capital resources" below for information regarding our cross currency interest rate swaps.

  • Fuel price volatility—Our Vehicle Payments customers use our products and services primarily in connection with the purchase of fuel. Accordingly, our revenue is affected by fuel prices, which are subject to significant volatility. A change in retail fuel prices could cause a decrease or increase in our revenue from several sources, including fees paid to us based on a percentage of each customer’s total purchase. Changes in the absolute price of fuel may also impact unpaid account balances and the late fees and charges based on these amounts. We estimate approximately 8% and

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11% of revenues, net were directly impacted by changes in fuel price in the six months ended June 30, 2024 and 2023, respectively. See "Results of Operations" for information related to the fuel price impact on our total revenues, net.

  • Fuel-price spread volatility—A portion of our revenue involves transactions where we derive revenue from fuel price spreads, which is the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction. In these transactions, the price paid to the merchant is based on the wholesale cost of fuel. The merchant’s wholesale cost of fuel is dependent on several factors including, among others, the factors described above affecting fuel prices. The fuel price that we charge to our customer is dependent on several factors including, among others, the fuel price paid to the merchant, posted retail fuel prices and competitive fuel prices. We experience fuel price spread contraction when the merchant’s wholesale cost of fuel increases at a faster rate than the fuel price we charge to our customers, or the fuel price we charge to our customers decreases at a faster rate than the merchant’s wholesale cost of fuel. The inverse of these situations produces fuel price spread expansion. We estimate approximately 5% of revenues, net were directly impacted by fuel price spreads in the six months ended June 30, 2024 and 2023. See "Results of Operations" for information related to the fuel price spread impact on our total revenues, net.

  • Acquisitions—Since 2002, we have completed over 95 acquisitions of companies and commercial account portfolios. Acquisitions have been an important part of our growth strategy, and it is our intention to continue to seek opportunities to increase our customer base and diversify our service offering through further strategic acquisitions. The impact of acquisitions has, and may continue to have, a significant impact on our results of operations and may make it difficult to compare our results between periods.

  • Interest rates—From January 1, 2022 to July 27, 2023, the U.S. Federal Open Market Committee increased the target federal funds rate eleven times for a total rate increase of 5.25%. Additional rate changes are possible in future periods. We are exposed to market risk changes in interest rates on our debt, particularly in rising interest rate environments, which is partially offset by incremental interest income earned on cash and restricted cash. As of June 30, 2024, we have a number of receive-variable SOFR, pay-fixed interest rate swap derivative contracts with a cumulative notional U.S. dollar value of $4.0 billion. The objective of these contracts is to reduce the variability of cash flows in the previously unhedged interest payments associated with variable rate debt, the sole source of which is due to changes in SOFR benchmark interest rate.

See "Liquidity and capital resources" section below for additional information regarding our derivatives.

  • Expenses—Over the long term, we expect that our expenses will decrease as a percentage of revenues as our revenues increase, except for expenses related to transaction volume processed. To support our expected revenue growth, we plan to continue to incur additional sales and marketing expense by investing in our direct marketing, third-party agents, internet marketing, telemarketing and field sales force.

  • Taxes—We pay taxes in various taxing jurisdictions, including the U.S., most U.S. states and many non-U.S. jurisdictions. The tax rates in non-U.S. taxing jurisdictions are different than the U.S. tax rate. Consequently, as our earnings fluctuate between taxing jurisdictions, our effective tax rate fluctuates. Our effective tax rate is also subject to fluctuations driven by the impact of discrete tax items.

The Organization for Economic Co-operation and Development (“OECD”), continues to put forth various initiatives, including Pillar Two rules which include the introduction of a global minimum tax at a rate of 15%. European Union member states agreed to implement the OECD’s Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025, for different aspects of the directive and most have already enacted legislation. A number of other countries are also implementing similar legislation. As of June 30, 2024, based on the countries in which we do business that have enacted legislation effective January 1, 2024, the impact of these rules to our financial statements was not material. This may change as other countries enact similar legislation and further guidance is released. We continue to closely monitor regulatory developments to assess potential impacts.

Acquisitions, Investments and Dispositions

2024

  • In March 2024, we acquired 70% of Zapay, a Brazil-based digital mobility solution for paying vehicle-related taxes and compliance fees, for approximately $59.5 million, net of cash. As part of the agreement, we have the right to acquire the remainder of Zapay in four years. The majority investment in Zapay further scales our Vehicle Payments business in Brazil.

  • In July 2024, we acquired 100% of Paymerang, a U.S. based leader in accounts payables automation solutions, for approximately $469 million, net of cash. The acquisition expands our presence in several market verticals, including education, healthcare, hospitality and manufacturing. The results of Paymerang will be reflected in our Corporate Payments segment and financial statements during the third quarter of 2024.

  • In May 2024, we signed a definitive agreement to sell certain non-core assets within the U.S. division of our Vehicle Payments segment to a third-party. We anticipate the transaction will close during the fourth quarter of 2024, subject to certain customary closing conditions. The disposal group was classified as held for sale during the second quarter of 2024.

  • In June 2024, we signed a definitive agreement to acquire 100% of GPS Capital Markets, LLC ("GPS") for approximately $725 million. GPS provides business-to-business cross-border and treasury management solutions to upper middle market companies, primarily in the U.S. The transaction is expected to close in early 2025, subject to regulatory approval and standard closing conditions. Upon closing, the results of GPS will be reflected in our Corporate Payments segment.

2023

  • In January 2023, we acquired Global Reach, a U.K.-based cross-border payments provider, for approximately $102.9 million, net of cash. Results from Global Reach Group are reported in our Corporate Payments segment.

  • In February 2023, we acquired the remainder of Mina Digital Limited, a cloud-based electric vehicle ("EV") charging software platform, and we also acquired Business Gateway AG, a European-based vehicle maintenance provider, for a total of approximately $23.8 million, net of cash. Results from Mina Digital Limited and Business Gateway AG are reported in our Vehicle Payments segment.

  • In September 2023, we acquired PayByPhone Technologies, Inc., a global mobile parking payment application, for approximately $301.9 million, net of cash. Results from PaybyPhone are reported in our Vehicle Payments segment.

  • In the third quarter of 2023, we disposed of our Russian business for $197.0 million, net of cash disposed and net of a $5.6 million foreign exchange loss upon the conversion of the ruble-denominated proceeds to U.S. dollars. Results from our Russian business were previously included in our Vehicle Payments segment.

Each of the 2023 acquisitions provide incremental geographic expansion of our products, with PayByPhone specifically intended to progress our broader strategy to expand our vehicle payments business into the consumer market.

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Results of Operations

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

The following table sets forth selected unaudited consolidated statements of income for the three months ended June 30, 2024 and 2023 (in millions, except percentages)*.

(Unaudited)Three Months Ended June 30, 2024% of Total Revenues, netThree Months Ended June 30, 2023% of Total Revenues, netIncrease (decrease)% Change
Revenues, net:
Vehicle Payments$510.352.3%$509.653.7%$0.60.1%
Corporate Payments288.529.6%246.025.9%42.517.3%
Lodging Payments122.412.5%136.614.4%(14.2)(10.4)%
Other54.65.6%56.05.9%(1.4)(2.5)%
Total revenues, net975.7100.0%948.2100.0%27.52.9%
Consolidated operating expenses:
Processing209.221.4%205.321.6%3.91.9%
Selling95.09.7%86.49.1%8.610.0%
General and administrative153.815.8%159.416.8%(5.6)(3.5)%
Depreciation and amortization84.38.6%83.78.8%0.70.8%
Other operating, net—NM0.80.1%(0.8)NM
Operating income433.344.4%412.743.5%20.75.0%
Investment gain—NM—NM—NM
Other expense (income), net4.50.5%(2.4)(0.3)%6.9NM
Interest expense, net94.79.7%88.59.3%6.27.0%
Provision for income taxes82.58.5%86.99.2%(4.3)(5.0)%
Net income251.725.8%239.725.3%12.05.0%
Less: Net income attributable to noncontrolling interest—NM——%—NM
Net income attributable to Corpay$251.625.8%$239.725.3%$11.95.0%
Operating income by segment:
Vehicle Payments$242.0$232.5$9.54.1%
Corporate Payments120.695.724.926.0%
Lodging Payments56.468.2(11.8)(17.3)%
Other14.416.2(1.8)(11.1)%
Total operating income$433.3$412.7$20.65.0%

NM = Not Meaningful

*The sum of the columns and rows may not calculate due to rounding.

Consolidated Results

Consolidated revenues, net

Consolidated revenues were $975.7 million in the three months ended June 30, 2024, an increase of 2.9% compared to the prior period. The increase in consolidated revenues was due primarily to organic growth of 6%, driven by increases in spend and transaction volumes, implementation and ramping of new sales, and business initiatives. Consolidated revenues also grew 2% from acquisitions completed in 2023 and 2024, but were negatively impacted by approximately $32 million, or 3%, from the disposition of our Russia business in August 2023 and the impact of the macroeconomic environment.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our consolidated revenues for the three months ended June 30, 2024 over the comparable period in 2023, driven primarily by unfavorable foreign exchange rates of approximately $9 million mostly in our Brazil business. The impact of slightly lower fuel price spreads was offset by the impact of slightly higher fuel prices.

Consolidated operating expenses

Processing. Processing expenses were $209.2 million in the three months ended June 30, 2024, an increase of 1.9% compared to the prior period. Increases in processing expenses were primarily due to approximately $7 million of expenses related to acquisitions completed in 2023 and 2024, higher variable expenses driven by increased transaction volumes and investments to drive future growth. The increases were partially offset by lower bad debt of $6 million due to our shift away from micro-SMB (small-medium business) clients in the U.S., the favorable impact of foreign exchange rates of approximately $2 million and the impact of the disposition of our Russia business of approximately $2 million.

Selling. Selling expenses were $95.0 million in the three months ended June 30, 2024, an increase of 10.0% from the prior period. Increases in selling expenses were primarily due to increased commissions from higher sales volume and approximately $3 million of expenses related to acquisitions completed in 2023 and 2024. These increases were partially offset by the impact of the disposition of our Russia business of approximately $2 million and the slightly favorable impact of foreign exchange rates.

General and administrative. General and administrative expenses were $153.8 million in the three months ended June 30, 2024, a decrease of 3.5% from the prior period. The decrease in general and administrative expenses was primarily due to lower overhead expense due to disciplined expense management, lower stock-based compensation expense of approximately $6 million, the impact of the disposition of our Russia business of approximately $2 million and the slightly favorable impact of foreign exchange rates. These decreases were partially offset by the impact of acquisitions completed in 2023 and 2024 of approximately $6 million.

Depreciation and amortization. Depreciation and amortization expenses were $84.3 million in the three months ended June 30, 2024, a slight increase of 0.8% from the prior period. Depreciation and amortization expenses increased due to incremental investments in capital expenditures and acquisitions completed in 2023 and 2024. These increases were offset by the impact of the disposition of our Russia business.

Consolidated operating income

Consolidated operating income was $433.3 million in the three months ended June 30, 2024, an increase of 5.0% compared to the prior period. The increase in operating income was primarily due to the reasons discussed above, resulting in EBITDA margin expansion of 63 basis points over the prior period.

Other expense (income), net. Other expense (income), net was $4.5 million in the three months ended June 30, 2024, which primarily represents the impact of fluctuations in foreign exchange rates on non-functional currency balances.

Interest expense, net. Interest expense, net was $94.7 million in the three months ended June 30, 2024, an increase of $6.2 million from the prior period. The increase in net interest expense was primarily due to higher interest rates on increased borrowings and lower interest income due to the sale of our Russia business. The following table sets forth the average interest rates paid on borrowings under our Credit Facility, excluding the related unused facility fees and swaps.

Three Months Ended June 30,
(Unaudited)20242023
Term loan A6.80%6.46%
Term loan B7.17%6.80%
Revolving line of credit A & B (USD)6.80%6.47%
Revolving line of credit B (GBP)6.60%5.71%

We have a portfolio of interest rate swaps, which are designated as cash flow hedges and cross-currency interest rate swaps, which are designated as net investment hedges. During the three months ended June 30, 2024, as a result of these swap contracts and net investment hedges, we recorded a benefit to interest expense of $15.6 million.

Provision for income ta****xes. The provision for income taxes and effective tax rate were $82.5 million and 24.7%, respectively, for the three months ended June 30, 2024, compared to $86.9 million and 26.6%, respectively, for the prior period. Income tax expense is based on an estimated annual effective rate, which requires us to make our best estimate of annual pretax accounting income or loss before consideration of tax or benefit discretely recognized in the period in which such occur. Our effective income tax rate for the three months ended June 30, 2024 differs from the U.S. federal statutory rate due primarily to the unfavorable impact of state taxes net of federal benefits, additional taxes on undistributed foreign-sourced income, and foreign withholding taxes on interest income from intercompany notes. For the three months ended June 30, 2024, the effective tax rate decreased compared to the prior period of $7 million mainly attributable to adjustments of state tax apportionment percentages for prior years.

Net income attributable to Corpay. For the reasons discussed above, our net income attributable to Corpay increased to $251.6 million, or 5.0%, from the prior period, during the three months ended June 30, 2024.

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Segment Results

Vehicle Payments

Vehicle Payments revenues were $510.3 million in the three months ended June 30, 2024, a slight increase of 0.1%. Revenues were negatively impacted by the disposition of our Russia business in August 2023, which lowered revenue by approximately $32 million and the negative impact of the macroeconomic environment of approximately $8 million, driven primarily by unfavorable changes in foreign exchange rates on revenue of $8 million. Offsetting this decrease was organic revenue growth of 5% driven by new sales growth in our international markets, as well as the impact of acquisitions, which contributed approximately $15 million in revenue.

Vehicle Payments operating income was $242.0 million in the three months ended June 30, 2024, an increase of 4.1% compared to the prior period, despite the impact of the disposition of our Russia business, which resulted in lower operating income of approximately $25 million. This impact of this disposition was more than offset by organic revenue growth described above, as well as lower bad debt of approximately $11 million, as we shifted away from micro-SMB clients to higher credit quality customers in the U.S. in 2023.

Corporate Payments

Corporate Payments revenues were $288.5 million in the three months ended June 30, 2024, an increase of 17.3%, from the prior period. Corporate Payments revenues increased primarily due to organic revenue growth of 18%, driven by 19% growth in spend volume and strong new sales in our payables and cross-border solutions.

Corporate Payments operating income was $120.6 million in the three months ended June 30, 2024, an increase of 26.0% from the prior period. Corporate Payments operating income and margin increased primarily due to organic revenue growth, operating leverage and integration synergies, as revenues grew faster than expenses, partially offset by higher selling expenses incurred to grow the business.

Lodging Payments

Lodging Payments revenues were $122.4 million in the three months ended June 30, 2024, a decrease of 10.4% from the prior period. The decrease in Lodging Payments revenues was primarily due to a 6% decline in room nights as compared to the prior year, as well as insurance commissions recognized in the prior year that did not recur in 2024.

Lodging Payments operating income was $56.4 million in the three months ended June 30, 2024, a decrease of 17.3% from the prior period. Lodging Payments operating income and margin declined due to the reasons discussed above.

Other

Other revenues were $54.6 million in the three months ended June 30, 2024, a decrease of 2.5% from the prior period, primarily due to lower volume in our payroll card business.

Other operating income was $14.4 million in the three months ended June 30, 2024, a decrease of 11% from the prior period, with the decrease primarily due to a decline in the payroll card revenue.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

The following table sets forth selected unaudited consolidated statements of income for the six months ended June 30, 2024 and 2023 (in millions, except percentages)*.

(Unaudited)Six months ended June 30, 2024% of Total Revenues, netSix months ended June 30, 2023% of Total Revenues, netIncrease (decrease)% Change
Revenues, net:
Vehicle Payments$1,004.352.6%$1,005.154.3%$(0.8)(0.1)%
Corporate Payments553.929.0%472.225.5%81.717.3%
Lodging Payments233.712.2%258.914.0%(25.2)(9.7)%
Other119.16.2%113.36.1%5.85.1%
Total revenues, net1,911.0100.0%1,849.5100.0%61.53.3%
Consolidated operating expenses:
Processing416.621.8%410.222.2%6.41.6%
Selling189.29.9%168.09.1%21.212.6%
General and administrative305.016.0%314.017.0%(9.0)(2.9)%
Depreciation and amortization169.18.8%167.99.1%1.20.7%
Other operating, net0.3NM1.50.1%(1.2)(80)%
Operating income830.743.5%787.842.6%42.95.4%
Investment gain(0.2)NM(0.2)NM—NM
Other expense (income), net7.60.4%(1.7)(0.1)%9.3NM
Interest expense, net183.89.6%168.39.1%15.59.2%
Provision for income taxes158.08.3%166.99.0%(8.9)(5.3)%
Net income481.525.2%454.524.6%27.05.9%
Less: Net income attributable to noncontrolling interest0.1NM——%0.1NM
Net income attributable to Corpay$481.425.2%$454.524.6%$26.95.9%
Operating income by segment:
Vehicle Payments$467.7$456.0$11.72.6%
Corporate Payments225.3176.149.227.9%
Lodging Payments103.7122.8(19.1)(15.6)%
Other34.033.01.03.0%
Total operating income$830.7$787.8$42.85.4%

NM = Not Meaningful

*The sum of the columns and rows may not calculate due to rounding.

Consolidated Results

Consolidated revenues, net

Consolidated revenues were $1,911.0 million in the six months ended June 30, 2024, an increase of 3.3% compared to the prior period. The increase in consolidated revenues was due primarily to organic growth of 6%, driven by increases in spend and transaction volumes, implementation and ramping of new sales, and business initiatives. Consolidated revenues also grew 1% from acquisitions completed in 2023 and 2024, but were negatively impacted by approximately $64 million, or 3%, from the disposition of our Russia business in August 2023 and the negative impact of the macroeconomic environment.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our consolidated revenues for the six months ended June 30, 2024 over the comparable period in 2023, driven primarily by unfavorable fuel price spreads of approximately $7 million and the unfavorable impact of fuel prices of approximately $3 million, partially offset by favorable foreign exchange rates of approximately $4 million, mostly in our U.K. and Mexico businesses.

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Consolidated operating expenses

Processing. Processing expenses were $416.6 million in the six months ended June 30, 2024, an increase of 1.6% compared to the prior period. Increases in processing expenses were primarily due to approximately $12 million of expenses related to acquisitions completed in 2023 and 2024, higher variable expenses driven by increased transaction volumes and investments to drive future growth. The increases were partially offset by lower bad debt of $21 million due to our shift away from micro-SMB (small-medium business) clients in the U.S. and the impact of the disposition of our Russia business of approximately $3 million.

Selling. Selling expenses were $189.2 million in the six months ended June 30, 2024, an increase of 12.6% from the prior period. Increases in selling expenses were primarily due to increased commissions from higher sales volume and approximately $6 million of expenses related to acquisitions completed in 2023 and 2024. The increases were partially offset by the impact of the disposition of our Russia business of approximately $4 million.

General and administrative. General and administrative expenses were $305.0 million in the six months ended June 30, 2024, a decrease of 2.9% from the prior period. The decrease in general and administrative expenses was primarily due to lower overhead expense due to disciplined expense management, lower stock-based compensation expense of approximately $7 million and the impact of the disposition of our Russia business of approximately $5 million. These decreases were partially offset by the impact of acquisitions completed in 2023 and 2024 of approximately $12 million.

Depreciation and amortization. Depreciation and amortization expenses were $169.1 million in the six months ended June 30, 2024, an increase of 0.7% from the prior period. Depreciation and amortization expenses increased due to incremental investments in capital expenditures and acquisitions completed in 2023 and 2024. These increases were offset by the impact of the disposition of our Russia business.

Consolidated operating income

Operating income was $830.7 million in the six months ended June 30, 2024, an increase of 5.4% compared to the prior period. The increase in operating income was primarily due to the reasons discussed above, resulting in EBITDA margin expansion of 58 basis points over the prior period.

Other expense (income), net. Other expense (income), net was $7.6 million in the six months ended June 30, 2024, which primarily represents the impact of fluctuations in foreign exchange rates on non-functional currency balances.

Interest expense, net. Interest expense, net was $183.8 million in the six months ended June 30, 2024, an increase of $15.5 million from the prior period. The increase in interest expense was primarily due to higher interest rates on increased borrowings and lower interest income due to the sale of our Russia business. The following table sets forth the average interest rates paid on borrowings under our Credit Facility, excluding the related unused facility fees and swaps.

Six Months Ended June 30,
(Unaudited)20242023
Term loan A6.81%6.22%
Term loan B7.18%6.54%
Revolving line of credit A & B (USD)6.80%6.22%
Revolving line of credit B (GBP)6.60%5.40%

We have a portfolio of interest rate swaps, which are designated as cash flow hedges and cross-currency interest rate swaps, which are designated as net investment hedges. During the six months ended June 30, 2024, as a result of these swap contracts and net investment hedges, we recorded a benefit to interest expense, net of $30.4 million.

Provision for income taxes. The provision for income taxes and effective tax rate were $158.0 million and 24.7% for the six months ended June 30, 2024, compared to $166.9 million and 26.9% for the prior period. Income tax expense is based on an estimated annual effective rate, which requires us to make our best estimate of annual pretax accounting income or loss before consideration of tax or benefit discretely recognized in the period in which such occur. The decrease in the provision for income taxes for the six months ending June 30, 2024 over the comparable period in 2023 was primarily due to more excess tax benefit on stock option exercises and decreases in state taxes due to adjustments of state tax apportionment percentages for prior years.

Net income attributable to Corpay. For the reasons discussed above, our net income attributable to Corpay increased to $481.4 million in the six months ended June 30, 2024, an increase of 5.9% from the prior period.

Segment Results

Vehicle Payments

Vehicle Payments revenues were relatively flat at $1,004.3 million in the six months ended June 30, 2024. Revenues were negatively impacted by the disposition of our Russia business in August 2023, which lowered revenue by approximately $64 million and the negative impact of the macroeconomic environment of approximately $6 million, The negative macroeconomic environment was driven primarily by unfavorable fuel price spreads of approximately $7 million and unfavorable fuel prices of $3 million, partially offset by favorable changes in foreign exchange rates on revenue of $4 million. Offsetting this decrease was organic revenue growth of 4% driven by new sales growth in our international markets and the impact of acquisitions, which contributed approximately $26 million in revenue.

Vehicle Payments operating income was $467.7 million in the six months ended, an increase of 2.6% from the prior period due to the reasons discussed above, as well as lower bad debt of approximately $25 million, as we shifted away from micro-SMB clients to higher credit quality customers in the U.S. in 2023.

Corporate Payments

Corporate Payments revenues were $553.9 million in the six months ended June 30, 2024, an increase of 17.3%, from the prior period. Corporate Payments revenues increased primarily due to organic revenue growth of 17%, driven by a 10% growth in spend volume and strong new sales in our payables and cross-border solutions.

Corporate Payments operating income was $225.3 million in the six months ended June 30, 2024, an increase of 27.9% from the prior period due to the reasons discussed above.

Lodging Payments

Lodging Payments revenues were $233.7 million in the six months ended June 30, 2024, a decrease of 9.7% from the prior period. The decrease in Lodging Payments revenues was primarily due to a 10% decline in room nights, as well as insurance commissions recognized in the prior year that did not recur in 2024.

Lodging Payments operating income was $103.7 million in the six months ended June 30, 2024, a decrease of 16% from the prior period. Lodging Payments operating income and margin declined from the prior period due to the reasons discussed above.

Other

Other revenues were $119.1 million in the six months ended June 30, 2024, an increase of 5.1% from the prior period, driven by the timing of gift card sales and increases in gift card transaction volume, partially offset by lower volume in our payroll card business.

Other operating income was $34.0 million in the six months ended June 30, 2024, an increase of 3% from the prior period due to the reasons discussed above.

Liquidity and capital resources

Our principal liquidity requirements are to service and repay our indebtedness, make acquisitions of businesses and commercial account portfolios, repurchase shares of our common stock and meet working capital, tax and capital expenditure needs.

Sources of liquidity. We believe that our current level of cash and borrowing capacity under our Credit Facility and Securitization Facility (each defined below), together with expected future cash flows from operations, will be sufficient to meet the needs of our existing operations and planned requirements for at least the next 12 months and into the foreseeable future, based on our current assumptions. At June 30, 2024, we had approximately $2.2 billion in total liquidity, consisting of approximately $0.9 billion available under our Credit Facility and unrestricted cash of $1.4 billion, a portion of which includes customer deposits or is required for working capital and regulatory purposes. Restricted cash primarily represents customer deposits repayable on demand held in certain geographies with legal restrictions, customer funds held for the benefit of others, collateral received from customers for cross-currency transactions in our cross-border payments business, which is restricted from use other than to repay customer deposits and secure and settle cross-currency transactions, and collateral posted with banks for hedging positions in our cross-border payments business.

We also utilize the Securitization Facility to finance a portion of our domestic receivables, to lower our cost of borrowing and more efficiently use capital. Accounts receivable collateralized within our Securitization Facility relate to trade receivables resulting primarily from charge card activity in Vehicle Payments and receivables related to our Lodging Payments business in the U.S. We also consider the available and undrawn amounts under our Securitization Facility and Credit Facility as funds available for working capital purposes and acquisitions. At June 30, 2024, we had no additional liquidity under our Securitization Facility.

We have determined that outside basis differences associated with our investments in foreign subsidiaries would not result in a material deferred tax liability, and, consistent with our assertion that these amounts continue to be indefinitely invested, have not recorded incremental income taxes for the additional outside basis differences.

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Cash flows

The following table summarizes our cash flows for the six month periods ended June 30, 2024 and 2023 (in millions).

Six Months Ended June 30,
(Unaudited)20242023
Net cash provided by operating activities$891.1$1,099.0
Net cash used in investing activities$(146.6)$(201.2)
Net cash used in financing activities$(239.2)$(241.8)

Operating activities. Net cash provided by operating activities was $891.1 million in the six months ended June 30, 2024, compared to $1,099.0 million in the comparable prior period. The decrease in operating cash flows was primarily driven by an increase in restricted cash and corresponding impact to customer deposits during 2023 that did not repeat in 2024, and changes in working capital.

Investing activities. Net cash used in investing activities was $146.6 million in the six months ended June 30, 2024 compared to $201.2 million in the comparable prior period. The reduction in cash used for investing activities was primarily due to less spending on acquisitions completed in 2024, compared to 2023. Our capital expenditures were $85.3 million in the six months ended June 30, 2024, an increase of $6.4 million, or 8%, from $78.9 million in the comparable prior period due to the impact of acquisitions and continued investments in technology.

Financing activities. Net cash used in financing activities was $239.2 million in the six months ended June 30, 2024, relatively unchanged, compared to $241.8 million in the comparable prior period. Incremental inflows due to net borrowings on our Credit Facility and Securitization Facility of $904.9 million over the comparable period in 2023,were offset by outflows from increased repurchases of common stock of $935.1 million in the six months ended June 30, 2024 over the comparable period in 2023.

Credit Facility

Corpay Technologies Operating Company, LLC, and certain of our domestic and foreign owned subsidiaries, as designated co-borrowers (the "Borrowers"), are parties to a $7.0 billion Credit Agreement (the "Credit Agreement"), with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, and a syndicate of financial institutions (the "Lenders"), which has been amended multiple times. The Credit Agreement provides for senior secured credit facilities (collectively, the "Credit Facility") consisting of a revolving credit facility in the amount of $1.775 billion, a term loan A facility in the amount of $3.325 billion and a term loan B facility in the amount of $1.9 billion. The revolving credit facility consists of (a) a revolving A credit facility in the amount of $1.275 billion, with sublimits for letters of credit and swing line loans and (b) a revolving B facility in the amount of $500 million with borrowings in U.S. dollars, euros, British pounds, Japanese yen or other currency as agreed in advance, and a sublimit for swing line loans. Proceeds from the credit facilities may be used for working capital purposes, acquisitions, and other general corporate purposes. The maturity date for the term loan A and revolving credit facilities A and B is June 24, 2027. The term loan B has a maturity date of April 30, 2028.

At June 30, 2024, the interest rate on the term loan A was 6.82%, the interest rate on the term loan B was 7.19%, the interest rate on the revolving A and B facilities (USD borrowings) was 6.82%, and the interest rate on the revolving B facility (GBP borrowings) was 6.61%. The unused credit facility fee was 0.25% at June 30, 2024.

At June 30, 2024, we had $3.2 billion in borrowings outstanding on the term loan A, net of discounts and debt issuance costs, $1.8 billion in borrowings outstanding on the term loan B, net of discounts and debt issuance costs and $0.9 billion outstanding on the revolving facilities. We have unamortized debt issuance costs of $4.1 million related to the revolving facilities as of June 30, 2024 recorded within other assets in the Unaudited Consolidated Balance Sheets. We have unamortized debt discounts and debt issuance costs of $18.3 million related to our term loans at June 30, 2024 recorded in notes payable and other obligations, net of current potion within the Unaudited Consolidated Balance Sheets.

During the six months ended June 30, 2024, we made borrowings of $325.0 million on the term loans, principal payments of $51.1 million on the term loans and net borrowings of $232.8 million on the revolving facilities.

As of June 30, 2024, we were in compliance with each of the financial and non-financial covenants under the Credit Agreement.

Securitization Facility

We are party to a $1.7 billion receivables purchase agreement among FLEETCOR Funding LLC, as seller, PNC Bank, National Association as administrator, and various purchaser agents, conduit purchasers and related committed purchasers parties thereto. The Securitization Facility matures on August 18, 2025. At June 30, 2024, the interest rate on the Securitization Facility was 6.37%.

The Securitization Facility provides for certain termination events, which includes nonpayment, upon the occurrence of which the administrator may declare the facility termination date to have occurred, may exercise certain enforcement rights with respect to the receivables, and may appoint a successor servicer, among other things.

We were in compliance with all financial and non-financial covenant requirements related to our Securitization Facility as of June 30, 2024.

Cross-Border Facilities

We carefully monitor and manage initial and variation margin requirements for our cross-border solutions, which can result in transitory periods of elevated liquidity needs in cases where the currency market experiences disruption. In order to help mitigate that liquidity risk, we have recently entered into facilities intended to provide additional means to manage working capital needs for our cross-border solutions.

We have three unsecured overdraft facilities with a combined capacity of $135.0 million, which may be accessible via written request and corresponding authorization from the applicable lenders. There is no guarantee the uncommitted capacity will be available to us on a future date. Interest on drawn balances accrues under the agreements at either (a) at a fixed rate equal to the lender's reference rate or the Federal Funds Effective Rate (as defined in the respective agreements) plus 1% or (b) SOFR plus 1.25%. As of June 30, 2024, we had no borrowings outstanding under the uncommitted credit facilities.

We also have a 364-day committed revolving credit facility with a total commitment of $40.0 million, which matures on October 10, 2024. Borrowings under this facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR (as defined in the agreement) plus 1.25% or (b) the Base Rate (determined by reference to the greatest of (i) the Federal Funds Effective Rate, at that time, plus 0.50%, (ii) the Prime Rate, at that time, and (iii) Term SOFR (as defined in the agreement) at such time plus 1.00%). As of June 30, 2024, we had no borrowings outstanding under the committed credit facility.

Cash Flow Hedges

As of June 30, 2024, we had the following outstanding interest rate swap derivatives that qualify as hedging instruments within designated cash flow hedges of variable interest rate risk (in millions):

Notional AmountFixed RatesMaturity Date
$2504.01%7/31/2025
$2504.02%7/31/2025
$5003.80%1/31/2026
$2503.71%7/31/2026
$2503.72%7/31/2026
$1004.35%7/31/2026
$2504.40%7/31/2026
$2504.40%7/31/2026
$4004.33%7/31/2026
$2504.29%1/31/2027
$2504.29%1/31/2027
$2504.19%7/31/2027
$2504.19%7/31/2027
$1503.87%1/31/2027
$503.83%1/31/2027
$503.85%1/31/2027
$1254.00%1/31/2028
$1253.99%1/31/2028

The purpose of these contracts is to reduce the variability of cash flows in interest payments associated with $4.0 billion of unspecified variable rate debt, the sole source of which is due to changes in the SOFR benchmark interest rate. For each of these swap contracts, we pay a fixed monthly rate and receive one month SOFR.

Our cash flow hedges resulted in a $25.2 million reduction in interest expense, net during the six months ended June 30, 2024.

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Net Investment Hedges

We enter into cross-currency interest rate swaps that are designated as net investment hedges of our investments in foreign-denominated operations. Such contracts effectively convert the U.S. dollar equivalent notional amounts to obligations denominated in the respective foreign currency, and partially offset the impact of changes in currency rates on such foreign-denominated net investments. These contracts also create a positive interest differential on the U.S. dollar-denominated portion of the swaps, resulting in interest rate savings on the USD notional.

At June 30, 2024, we had the following cross-currency interest rate swaps designated as net investment hedges of our investments in foreign-denominated operations:

U.S. dollar equivalent notional (in millions)Fixed RatesMaturity Date
Euro (EUR)$5001.85%4/15/2027
Canadian Dollar (CAD)$5000.602%5/7/2027
British Pound (GBP)$7500.317%5/8/2028

Hedge effectiveness is tested based on changes in the fair value of the cross-currency swaps due to changes in the USD/foreign currency spot rates. We anticipate perfect effectiveness of the designated hedging relationships and records changes in the fair value of the cross-currency interest rate swaps associated with changes in the spot rate through accumulated other comprehensive loss. Excluded components associated with the forward differential are recognized directly in earnings as interest expense, net. We recognized a benefit of $5.1 million in interest expense, net for the six months ended June 30, 2024 related to these excluded components.

Stock Repurchase Program

On February 4, 2016, we announced that our Board approved a stock repurchase program (as updated from time to time, the "Program") authorizing us to repurchase our common stock from time to time until February 4, 2025. On January 25, 2024, the Board authorized an increase to the aggregate size of the Program by $1.0 billion to $8.1 billion. Since the beginning of the Program through June 30, 2024, 32,129,909 shares have been repurchased for an aggregate purchase price of $7.5 billion, leaving us up to $0.6 billion of remaining authorization available under the Program for future repurchases of shares of our common stock.

Under the Program, any stock repurchases may be made at times and in such amounts as deemed appropriate by management. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information we may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and debt.

Acquisitions

In July 2024, we acquired 100% of Paymerang, a U.S.-based leader in accounts payables automation solutions, for approximately $469 million, net of cash. The acquisition expands Corpay's presence in several market verticals, including education, healthcare, hospitality and manufacturing. The acquisition of Paymerang closed on July 1, 2024, and thus the preliminary acquisition accounting has not yet been completed. The results of Paymerang will be reflected in our Corporate Payments segment and financial statements during the third quarter of 2024.

Further, in June 2024, we signed a definitive agreement to acquire 100% of GPS Capital Markets, LLC for approximately $725 million. GPS provides business-to-business cross-border and treasury management solutions to upper middle market companies, primarily in the U.S. The transaction is expected to close in early 2025, subject to regulatory approval and standard closing conditions.

Assets Held for Sale

In May 2024, we signed a definitive agreement to sell certain non-core assets within the U.S. division of our Vehicle Payments segment to a third-party. We anticipate the transaction will close during the fourth quarter of 2024, subject to certain customary closing conditions. We determined that the disposal group met all of the required criteria to be classified as held for sale during the second quarter of 2024.

The disposal group's fair value, based upon the estimated sales price less anticipated costs to sell, exceeds its carrying value. As such, the related assets and liabilities were recorded at their carrying value. In determining the carrying value of the disposal group, which represents a portion of one of our reporting units, goodwill of approximately $58.2 million was allocated to the disposal group based on a relative fair value analysis.

At June 30, 2024, the carrying value of the assets held for sale consists of current assets of approximately $20.4 million and goodwill of $58.2 million. We are in the process of estimating the impact of this transaction on its financial results, but expect to recognize a pre-tax gain on disposal.

Critical accounting policies and estimates

In applying the accounting policies that we use to prepare our consolidated financial statements, we necessarily make accounting estimates that affect our reported amounts of assets, liabilities, revenues and expenses. Some of these estimates require us to make assumptions about matters that are highly uncertain at the time we make the accounting estimates. We base these assumptions and the resulting estimates on historical information and other factors that we believe to be reasonable under the circumstances, and we evaluate these assumptions and estimates on an ongoing basis. In many instances, however, we reasonably could have used different accounting estimates and, in other instances, changes in our accounting estimates could occur from period to period, with the result in each case being a material change in the financial statement presentation of our financial condition or results of operations. We refer to estimates of this type as critical accounting estimates.

Accounting estimates necessarily require subjective determinations about future events and conditions. During the three months ended June 30, 2024, we have not adopted any new critical accounting policies that had a significant impact upon our consolidated financial statements, have not changed any critical accounting policies and have not changed the application of any critical accounting policies from the year ended December 31, 2023. For critical accounting policies, refer to the Critical Accounting Estimates in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023 and our summary of significant accounting policies in Note 1 of our Notes to the Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Management’s Use of Non-GAAP Financial Measures

We have included in the discussion above certain financial measures that were not prepared in accordance with GAAP. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. Below, we define the non-GAAP financial measures, provide a reconciliation of each non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP, and discuss the reasons that we believe this information is useful to management and may be useful to investors. Because our non-GAAP financial measures are not standardized measures, they may not be directly comparable with the non-GAAP financial measures of other companies using the same or similar non-GAAP financial measures. Although management uses these non-GAAP measures to set goals and measure performance, they have no standardized meaning prescribed by GAAP. These non-GAAP measures are presented solely to permit investors to more fully understand how our management assesses underlying performance. These non-GAAP measures are not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial statements and financial measures. As a result, such non-GAAP measures have limits in their usefulness to investors.

Organic Revenues, net by KPI. Organic revenue growth is calculated as revenue in the current period adjusted for the impact of changes in the macroeconomic environment (to include fuel price, fuel price spreads and changes in foreign exchange rates) over revenue in the comparable prior period adjusted to include or remove the impact of acquisitions and/or divestitures and non-recurring items that have occurred subsequent to that period. We define the pro forma and macro adjusted revenue as revenue, net as reflected in our statement of income, adjusted to eliminate the impact of the macroeconomic environment and the impact of acquisitions and dispositions. The macroeconomic environment impact includes the impact that market fuel price spreads, fuel prices and foreign exchange rates have on our business. We use pro forma and macro adjusted revenue and transactions to evaluate the organic growth in our revenue and the associated transactions. We believe that organic revenue growth is useful to investors for understanding the performance of Corpay.

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Set forth below is a reconciliation of pro forma and macro adjusted revenue and key performance metric by segment, used to calculate organic revenue growth, to the most directly comparable GAAP measure, revenue, net and key performance metric (in millions):*

Revenues, netKey Performance Metric
Three Months Ended June 30, 2024Three Months Ended June 30, 2024
(Unaudited)2024202320242023
VEHICLE PAYMENTS - TRANSACTIONS
Pro forma and macro adjusted$518.3$492.0207.3193.7
Impact of acquisitions/dispositions—17.6—(39.8)
Impact of fuel prices/spread(0.1)———
Impact of foreign exchange rates(7.9)———
As reported$510.3$509.6207.3153.9
CORPORATE PAYMENTS - SPEND
Pro forma and macro adjusted$289.6$246.0$42,879$36,033
Impact of acquisitions/dispositions————
Impact of fuel prices/spread————
Impact of foreign exchange rates(1.2)———
As reported$288.5$246.0$42,879$36,033
LODGING PAYMENTS - ROOM NIGHTS
Pro forma and macro adjusted$122.5$136.68.79.3
Impact of acquisitions/dispositions————
Impact of fuel prices/spread————
Impact of foreign exchange rates(0.1)———
As reported$122.4$136.68.79.3
OTHER1- TRANSACTIONS
Pro forma and macro adjusted$54.7$56.0349.3296.5
Impact of acquisitions/dispositions————
Impact of fuel prices/spread————
Impact of foreign exchange rates(0.1)———
As reported$54.6$56.0349.3296.5
CORPAY CONSOLIDATED REVENUES, NET
Pro forma and macro adjusted$985.1$930.6Intentionally Left Blank
Impact of acquisitions/dispositions—17.6
Impact of fuel prices/spread2(0.1)—
Impact of foreign exchange rates2(9.3)—
As reported$975.7$948.2
* Columns may not calculate due to rounding.
1 Other includes Gift and Payroll Card operating segments.
2 Revenues reflect an estimated negative impact of movements in foreign exchange rates of approximately $9 million.

Adjusted net income attributable to Corpay and adjusted net income per diluted share attributable to Corpay. We have defined the non-GAAP measure adjusted net income attributable to Corpay as net income attributable to Corpay as reflected in our statement of income, adjusted to eliminate (a) non-cash stock based compensation expense related to share based compensation awards, (b) amortization of deferred financing costs, discounts, intangible assets, and amortization of the premium recognized on the purchase of receivables, (c) integration and deal related costs, and (d) other non-recurring items, including the impact of certain discrete tax items, the impact of business dispositions, impairment charges, asset write-offs, restructuring and related costs, loss on extinguishment of debt, and legal settlements and regulatory-related legal fees. We adjust net income for the tax effect of adjustments using our effective income tax rate, exclusive of certain discrete tax items. We calculate adjusted net income and adjusted net income per diluted share to eliminate the effect of items that we do not consider indicative of our core operating performance.

We have defined the non-GAAP measure adjusted net income per diluted share attributable to Corpay as the calculation previously noted divided by the weighted average diluted shares outstanding as reflected in our statement of income.

Adjusted net income attributable to Corpay and adjusted net income per diluted share attributable to Corpay are supplemental measures of operating performance that do not represent and should not be considered as an alternative to net income, net income per diluted share or cash flow from operations, as determined by GAAP. We believe it is useful to exclude non-cash

share based compensation expense from adjusted net income because non-cash equity grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time and share based compensation expense is not a key measure of our core operating performance. We also believe that amortization expense can vary substantially from company to company and from period to period depending upon their financing and accounting methods, the fair value and average expected life of their acquired intangible assets, their capital structures and the method by which their assets were acquired; therefore, we have excluded amortization expense from our adjusted net income. Integration and deal related costs represent business acquisition transaction costs, professional services fees, short-term retention bonuses and system migration costs, etc., that are not indicative of the performance of the underlying business. We also believe that certain expenses, certain discrete tax items, gains on business disposition, impairment charges, asset write-offs, restructuring and related costs, losses on extinguishment of debt, and legal settlements and regulatory-related legal fees do not necessarily reflect how our business is performing. We adjust net income for the tax effect of each of these adjustments using our effective income tax rate during the period, exclusive of certain discrete tax items.

Management uses adjusted net income attributable to Corpay, adjusted net income per diluted share attributable to Corpay, organic revenue growth and EBITDA:

  • as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis;

  • for planning purposes, including the preparation of our internal annual operating budget;

  • to allocate resources to enhance the financial performance of our business; and

  • to evaluate the performance and effectiveness of our operational strategies.

Set forth below is a reconciliation of adjusted net income attributable to Corpay and adjusted net income per diluted share attributable to Corpay to the most directly comparable GAAP measure, net income attributable to Corpay and net income per diluted share attributable to Corpay (in thousands, except shares and per share amounts)*:

Three Months Ended June 30,Six Months Ended June 30,
(Unaudited)2024202320242023
Net income attributable to Corpay$251,625$239,702$481,394$454,537
Net income per diluted share attributable to Corpay$3.52$3.20$6.64$6.08
Stock-based compensation27,10834,74852,08760,844
Amortization156,88157,704114,739117,743
Integration and deal related costs7,1289,58011,36315,465
Restructuring and related costs21,8729606,2541,579
Other2,34,433(1,415)8,045(392)
Total pre-tax adjustments97,422101,577192,488195,239
Income taxes4(24,064)(27,020)(47,579)(52,436)
Adjusted net income attributable to Corpay$324,983$314,259$626,303$597,340
Adjusted net income per diluted share attributable to Corpay$4.55$4.19$8.64$7.99
Diluted shares71,49775,00172,51674,763
1 Includes amortization related to intangible assets, premium on receivables, deferred financing costs and debt discounts.
2 Certain prior period amounts have been reclassified to conform with current period presentation.
3 Includes losses and gains on foreign currency transactions, legal expenses, and removes the amortization attributable to the Company's noncontrolling interest.
4 Represents provision for income taxes of pre-tax adjustments
*Columns may not calculate due to rounding.

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EBITDA and EBITDA margin. EBITDA is defined as earnings before interest, income taxes, interest expense, net, other expense (income), net, depreciation and amortization, investment gain and other operating, net.

The following table reconciles EBITDA and EBITDA margin to net income (in millions)*:

Three Months Ended June 30,Six Months Ended June 30,
(Unaudited)2024202320242023
Net income from operations$251.7$239.7$481.5$454.5
Provision for income taxes82.586.9158.0166.9
Interest expense, net94.788.5183.8168.3
Other expense (income), net4.5(2.4)7.6(1.7)
Investment (gain) loss——(0.2)(0.2)
Depreciation and amortization84.383.7169.1167.9
Other operating, net—0.80.31.5
EBITDA$517.7$497.1$1,000.1$957.2
Revenues, net$975.7$948.2$1,911.0$1,849.5
EBITDA margin53.1%52.4%52.3%51.8%
* Columns may not calculate due to rounding.

Special Cautionary Notice Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about Corpay’s beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as "anticipate," "intend," "believe," "estimate," "plan," "seek," "project" or "expect," "may," "will," "would," "could" or "should," the negative of these terms or other comparable terminology.

These forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements. We have based these forward-looking statements largely on our current expectations and projections about future events. Forward-looking statements are subject to many uncertainties and other variable circumstances, including those discussed in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 29, 2024, many of which are outside of our control, that could cause our actual results and experience to differ materially from any forward-looking statement.

Forward-looking statements may not be realized due to a variety of factors, including, without limitation:

  • our ability to successfully execute our strategic plan and portfolio review, manage our growth and achieve our performance targets;

  • regulatory measures, voluntary actions, or changes in consumer preferences, that impact our transaction volume;

  • adverse changes in program fees or charges we may collect, whether through legal, regulatory or contractual changes;

  • the impact of macroeconomic conditions, including any recession that has occurred or may occur in the future, and whether expected trends, including retail fuel prices, fuel price spreads, fuel transaction patterns, electric vehicle, and retail lodging price trends develop as anticipated and we are able to develop successful strategies in light of these trends;

  • the international operational and political risks and compliance and regulatory risks and costs associated with international operations, including the impact of the global military conflicts between Russia and Ukraine and in the Middle East, on our business and operations;

  • our ability to attract new and retain existing partners, fuel merchants, and lodging providers, their promotion and support of our products, and their financial performance;

  • the failure of management assumptions and estimates, as well as differences in, and changes to, economic, market, interest rate, interchange fees, foreign exchange rates, and credit conditions, including changes in borrowers’ credit risks and payment behaviors;

  • the risk of higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings;

  • our ability to successfully manage our credit risks and the sufficiency of our allowance for expected credit losses;

  • our ability to securitize our trade receivables;

  • the occurrence of fraudulent activity, data breaches or failures of our information security controls or cybersecurity-related incidents that may compromise our systems or customers’ information;

  • any disruptions in the operations of our computer systems and data centers;

  • our ability to develop and implement new technology, products, and services;

  • any alleged infringement of intellectual property rights of others and our ability to protect our intellectual property;

  • the regulation, supervision, and examination of our business by foreign and domestic governmental authorities, as well as litigation and regulatory actions, including the lawsuit filed by the Federal Trade Commission (FTC);

  • the impact of regulations and related requirements relating to privacy, information security and data protection; derivative contracts and hedging activities; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering (AML) and anti-terrorism financing laws;

  • changes in our senior management team and our ability to attract, motivate and retain qualified personnel consistent with our strategic plan;

  • tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations;

  • the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions;

  • our ability to remediate material weaknesses and the ongoing effectiveness of internal control over financial reporting;

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  • our restatement of prior quarterly financial statements discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 may affect investor confidence and raise reputational issues and may subject us to additional risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings and regulatory inquiries; and

  • the other factors and information in our Annual Report on Form 10-K and other filings that we make with the Securities and Exchange Commission (SEC) under the Exchange Act and Securities Act. See "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 29, 2024.

Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. We do not undertake, and specifically disclaim, any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

You may get Corpay’s SEC filings for free by visiting the SEC web site at www.sec.gov.

This report includes non-GAAP financial measures, which are used by Corpay and investors as supplemental measures to evaluate the overall operating performance of companies in our industry. By providing these non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives. See "Management’s Use of Non-GAAP Financial Measures" elsewhere in this Quarterly Report on Form 10-Q for additional information regarding these GAAP financial measures and a reconciliation to the nearest corresponding GAAP measure.

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