Q4 2023 Fleetcor Technologies Inc Earnings Call

Operator: Hello and welcome to the Fleetcor Technologies Inc. 4th Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode.

Hello, and welcome to the fleet core Technologies, Inc. Fourth quarter 2023 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one on your telephone keypad.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw from the question queue. Please press Star then two.

Operator: To withdraw from the question queue, please press star, then two. I would now like to hand the call over to Jim Eglseder, Investor Relations. Please go ahead. Good afternoon, everyone, and thank you for joining us today for our fourth quarter and full year 2023 earnings call. With me today are Ron Clarke, our chairman and CEO, and Tom Panther, our CFO. Following the prepared comments, the operator will announce that the queue will open for the Q&A session. It is only then that you can get in line for questions.

I would now like to hand, the call over to Jim Eglseder Investor Relations. Please go ahead.

Good afternoon, everyone and thank you for joining us today for our fourth quarter and full year 2023 earnings call.

James P. Eglseder: With me today are Ron Clarke, our chairman and CEO and Tom Panther, our CFO.

Jim Eglseder: Following the prepared comments, the operator will announce the queue will open for the Q&A session. It.

Jim Eglseder: It is only then they can get a line for questions.

James P. Eglseder: Please note, our earnings release and supplement can be found under the investor relations section on our website at Fleetcor.com. Now, throughout this call, we will be covering Organic Revenue Group. As a reminder, this metric neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices, and fuel spread. It also includes pro forma results for acquisitions and divestitures or scope changes closed during the two years being compared. We will also be covering non-GAAP financial metrics, including revenues, net income, and net income per dilute share, all on an adjusted basis. These measures are not calculated in accordance with GAAP and may be calculated differently than at other companies.

Please note our earnings release and supplement can be found under the Investor Relations section on our website absolutely core dotcom.

Jim Eglseder: Throughout this call, we will be covering organic revenue growth.

Jim Eglseder: As a reminder, this metric neutralizes the impact of year over year changes in foreign exchange rates fuel prices and fuel spreads.

Jim Eglseder: It also includes pro forma results for acquisitions and divestitures were scope changes closed during the two years being deferred.

Jim Eglseder: We will also be covering non-GAAP financial metrics, including revenues net income and net income per diluted share all on an adjusted basis.

Jim Eglseder: These measures are not calculated in accordance with GAAP and may be calculated differently than other companies reckon.

James P. Eglseder: Reconciliations of the historical non-GAP to the most directly comparable GAP information can be found in today's press release and on our website. I also need to remind everyone that part of our discussion today may include forward-looking statements, which reflect the best information we have as of today.

Jim Eglseder: Reconciliations of the historical non-GAAP to the most directly comparable GAAP information can be found in today's press release and on our website.

Jim Eglseder: I also need to remind everyone that part of our discussion today may include forward looking statements.

Jim Eglseder: These statements reflect the best information, we have as of today.

James P. Eglseder: All statements about our outlook, new products, and expectations regarding business development and future acquisitions are based on that information. They are not guarantees of future performance, and you should not put undue reliance upon them. We undertake no obligation to update any of these statements.

Jim Eglseder: All statements about our outlook, new products and expectations regarding business development of future acquisitions or based on that information they.

Jim Eglseder: They are not guarantees of future performance and you should not put undue reliance upon them. We undertake no obligation to update any of these statements.

James P. Eglseder: Now, the expected results are subject to numerous uncertainties and risks, which could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's press release on Form 8K and in our annual report on Form 10K, filed with the Securities and Exchange Commission. These documents are available on our website and at scc.gov. So with that out of the way, I will turn the call over to Ron Clark, our Chairman and CEO. Ron?

Jim Eglseder: Now do you expect the results are subject to numerous uncertainties and risks, which could cause actual results to differ materially from what we expect.

Jim Eglseder: Some of those risks are mentioned in today's press release on form 8-K and in our annual report on Form 10-K filed with the Securities and Exchange Commission.

Jim Eglseder: These documents are available on our website and at SCC that Gov. So.

Jim Eglseder: With that out of the way I will turn the call over to Ron Clarke, our chairman and CEO Rod.

Ronald F. Clarke: Okay, Jim, thanks. Good afternoon, everyone, and thanks for joining our Q4 2023 earnings call. Up front here, I'll plan to cover four subjects. First, I will provide my take on both Q4 and full year 2023 results. Second, I'll share our 2024 priorities and guidance, and third, give you a bit of an update on the status of our strategic review. And then lastly, I'll highlight a few pretty exciting new products that we've recently launched. Okay, let me begin with our Q4 results, which were frankly a bit mixed. We reported revenue of $937 million, up 6%, cash EPS of $444 million, up 10%, and EBIT DA of approximately $500 million, up 11%. Q4 revenue did finish a bit weaker than we had forecasted 90 days ago, but fortunately, our earnings flow through was quite a bit better than expected. That was helped mainly by credit losses finishing at about half the level of last year. However, revenue weakness in the quarter showed up in a few areas. First, gift cards.

Ronald F. Clarke: Okay. Jim Thanks, Good afternoon, everyone and thanks for joining our Q4 2023 earnings call.

Ronald F. Clarke: Upfront here I'll plan to cover four subjects first I'll provide my take on both Q4 and full year 2023 results.

Ronald F. Clarke: Second I'll share, our 'twenty 'twenty four priorities and guidance.

Ronald F. Clarke: Third give you a bit of an update on the status of our strategic review.

Ronald F. Clarke: And then lastly highlight a few pretty exciting new products that we've recently launched.

Ronald F. Clarke: Okay. Let me begin with our Q4 results, which frankly were a were a bit mixed we reported revenue of 937 billion up 6% cash.

Ronald F. Clarke: Cash EPS of $4 44 up 10% and EBIT da of approximately $500 million are up 11%.

Ronald F. Clarke: Q4 revenue did finish a bit weaker than we outlook 90 days ago, but Fortunately our earnings flow through was quite a bit better than expected that was helped mainly by credit losses.

Ronald F. Clarke: Finishing at about half the level of last year.

Ronald F. Clarke: The revenue weakness in the quarter showed up in a few areas.

Ronald F. Clarke: First our gift cards. So we had some delays and gift card shipments that had been pushed out here into Q1 and lodging, we had a pretty soft distressed.

Ronald F. Clarke: So we had some delays in gift card shipments that have been pushed here into Q1. In lodging, we had a pretty soft, distressed passenger vertical in the quarter, mostly because airline cancellations were at a record low level. North America fleet late fees were pretty light. That, again, is a continuation of exiting a lot of micro-accounts that we started about a year ago when we tightened credit terms. You know, again, fortunately, the late fee reduction was essentially washed away by the improvement in credit losses. And then the last year is our corporate payments or payables business with a channel partner business finishing even softer than we had expected. Fortunately, there, we think it's bottomed out. So these kind of weak spots, soft spots are either timing related, weather related, or have kind of reached the end, have kind of bottomed out as we head into our 2024 guide, so hopefully, they won't surprise us again.

Passenger vertical in the quarter, mostly because airline cancellations.

Ronald F. Clarke: We're at a record low level.

Ronald F. Clarke: North America fleet late fees pretty light that again is a continuation of exiting a lot of micro accounts.

Ronald F. Clarke: And then we started about a year ago. When we tightened credit terms you know again Fortunately the late fee reduction was essentially.

Ronald F. Clarke: Washed away by the improvement in credit losses in the last year is our corporate payments or payables business, where the channel partner business, finishing even softer.

Ronald F. Clarke: Then we had outlook Fortunately there we think it's bottomed out.

Ronald F. Clarke: So these kind of weak spots soft spots are either timing related weather related or if kind of reached the end of kind of bottomed out as we head into our 'twenty 'twenty four guide so hopefully not surprising us again.

Ronald F. Clarke: The organic revenue growth in Q4, 7% overall, again impacted by these soft spots I just called out. The vehicle payments organic revenue growth, 5% for the quarter. Corporate payments revenue growth, 15%, but 20% if you exclude the partner channel. Sales in Q4 were also a bit mixed. Retention was quite good, improved slightly to 92%.

Ronald F. Clarke: The organic revenue growth in Q4, a 7% overall again impacted by the soft spots I just called out.

Ronald F. Clarke: The vehicle payments organic revenue growth, 5% for the quarter.

Ronald F. Clarke: Corporate payments revenue growth of 15%.

Ronald F. Clarke: But 20% if you exclude the partner channel.

Ronald F. Clarke: Trends in Q4 also a bit mixed retention are quite good improved slightly to 92%.

Ronald F. Clarke: Sales grew 12% overall with a terrific performance in corporate payments, sales there were up over 40%, and what we call same-store sales finished 3% down. Again, we saw weakness in the workforce lodging and the airline lodging business and a bit in the UK.

Ronald F. Clarke: Sales grew 12% overall with a terrific performance in corporate payments sales they are up over 40%.

Ronald F. Clarke: And what we call same store sales are finished.

Ronald F. Clarke: Finished 3% down again, we saw the weakness in the workforce lodging.

Ronald F. Clarke: And the airline lodging business and a bit in the U K.

Ronald F. Clarke: Okay, let me make the turn to our full year 2023 results, which reached record levels. 2023 revenue of $3.8 billion, up 10%. EBITDA of approximately $2 billion, up 13%, and Cash EPS of $16.92, up 5%. Trends for full year 2023 are quite good.

Speaker Change: Okay, Let me make the churn.

Speaker Change: Two our full year 'twenty twenty-three results, which reached a record levels.

Speaker Change: 2023 revenue of $3 8 billion.

Speaker Change: Up 10%.

Speaker Change: <unk> EBITDA of approximately $2 billion up 13% and.

Speaker Change: And cash EPS of $6 92 up 5% of trends for full year 2023 are quite good sales for the full year up 20% overall and again inside of that corporate payments sales up about 50%.

Ronald F. Clarke: Sales for the full year were up 20% overall and again inside of that, corporate payment sales were up about 50%. We did sell 100,000 new B2B clients in 2023. In terms of organic revenue growth, full year 10%, so that makes three consecutive years of 10% plus organic revenue growth. And again, retention is stable at 92%. Additionally, we did advance a number of important strategic initiatives in the year, progressing EV and our understanding of the relative economics of EV versus ICE, so promising results there. We did clean up the Russia and FTC issues.

Speaker Change: We did sell 100000, new b to B clients in 2023.

Speaker Change: In terms of organic revenue growth full year, 10%. So that makes three consecutive years of 10% plus organic revenue growth and again retention stable at 92%.

Speaker Change: Additionally, we did advance a number of important strategic initiatives in the year progressed E V and our understanding of the relative economics of E V versus I C E. So promising results there.

Speaker Change: We did clean up.

Speaker Change: A rusher and F T C issues.

Speaker Change: We did introduce this transformation idea for our fleet business envisioning. It really is a broader a vehicle payments related business. We did close a couple of important acquisitions are one in cross border, which we fully integrated and one in parking.

Ronald F. Clarke: We did introduce this transformation idea for our fleet business, envisioning it really as a broader vehicle payments-related business. We did close a couple of important acquisitions, one in cross-border, which we fully integrated, and one in parking, really to jump-start our consumer vehicle payments initiative. So, all in all, a pretty successful year.

Speaker Change: [noise] really to jumpstart, our consumer vehicle our payments initiative. So look all in all a pretty successful year.

Ronald F. Clarke: Okay, let me make the transition to our 2024 guidance and start out by outlining our major objectives for the year. So a few things first, as always, to deliver financial performance that's consistent with our midterm objectives. Second, we hope to deepen our position in corporate payments through some new acquisitions in that space. Third, we hope to build out our vehicle payments business with proof of successful cross-selling and accelerate revenue growth throughout the year. And then lastly, to succeed with some new product launches and confirm market acceptance for that.

Speaker Change: Okay, Let me make the transition to our 'twenty 'twenty four.

Speaker Change: <unk> and start out by outlining our major objectives for the year.

Speaker Change: So a few things first as always to deliver financial performance. This consistent with our mid term objectives.

Speaker Change: Second are we hope to deepen our position in corporate payments.

Speaker Change: Through some new acquisitions in that space.

Speaker Change: Third we hope to build out our vehicle our payments business with.

Speaker Change: With proof of successful cross selling and accelerate revenue growth throughout the year.

Speaker Change: Then lastly to succeed our with some new product launches.

Speaker Change: And confirm market acceptance for them.

Ronald F. Clarke: So on to our 2024 financial guide. So revenue at the midpoint of 4 billion 80, that's up 9% on a print basis or 11% excluding Russia. EBITDA of $2.2 billion, that's up 11% or 14% excluding Russia. And finally, cash EPS at the midpoint of $19.40, up 15% on a print basis and up 18% excluding Russia.

Speaker Change: So onto our 'twenty 'twenty four financial guide so revenue at the midpoint of 4 billion 80 Ah.

Speaker Change: That's up 9% on a print basis or 11% excluding Russia.

Speaker Change: EBITDA of 2.2 billion, that's up 11% or 14%, excluding Russia, and finally cash EPS at the midpoint of 1940 up 15% rent and up 18%, excluding Russia. So let me just say that again planning.

Ronald F. Clarke: So let me just say that again, planning 24 profits and cash EPS growth of 18% this year, excluding Russia. We are expecting good earnings flow through to EPS. One, you know, revenue will grow faster throughout the year than expenses, so that operating leverage will help, and we do expect fewer shares, better FX, and a slightly lower tax rate. In terms of revenue and organic growth, we're obviously helped by our Q4 exit rate and the sales from last year growing here into 2024. We are expecting higher sales levels here in 2024, which will add to revenue. And then we do have a number of cross-sell initiatives planned for our client base this year. For example, in the fleet business, selling business cards, EV, parking, and breakdown services back to the fleet clients. And in Brazil, the toll business is selling insurance, parking, and fuel back into the toll base.

Speaker Change: Twenty-four profits cash EPS growth of 18% this year, excluding Russia.

Speaker Change: We are expecting good earnings flow through to our E. P. S.

Speaker Change: One you know revenue will grow faster throughout the year, then expense so that operating leverage will help and we do expect to have fewer shares are better FX and a slightly lower tax rate.

Speaker Change: In terms of revenue and organic growth were obviously helped by.

Speaker Change: Our Q4 exit rate and the sales from last year growing here into 2024, we are expecting higher sales levels here in 2024, which will add to revenue and then we do have a number of cross sell initiatives planned into our client base.

Speaker Change: This year so in the fleet business.

Speaker Change: Selling business cards E V parking breakdown services back into the fleet clients.

Speaker Change: In Brazil, the toll business selling insurance parking fuel are back into the end of the toll base.

Ronald F. Clarke: Tom, in a bit, will provide some more specifics on the 2024 guide and how it rolls out across the year. We also plan to mark the next chapter of the company with a rebranding of Fleetcor to Corpay, and that's scheduled for March. Okay, let me turn to our strategic review. So, just as a reminder, we did initiate a formal strategic review of our portfolio last spring and initially focused on the question of whether separating our fleet business from our corporate payments business could unlock value for shareholders. We have run a pretty rigorous process over the last 11 months with a lot of help, particularly from Goldman Sachs. We fielded numerous inbounds, looked at lots of alternatives, and explored some combinations with dance partners.

Speaker Change: Tom and a bit we'll provide some more specifics on the.

Speaker Change: The 'twenty 'twenty four guide and how it how it rolls out across the year. We also plan to Mark the the next chapter of the company with the rebranding of fleet core to core PE and that's scheduled for March.

Tom Panther: Okay, Let me make the turn to our strategic review.

Tom Panther: As a reminder, we did initiate a formal strategic review of our portfolio last spring.

Tom Panther: And initially focused on the question of whether separating our fleet business.

Tom Panther: From our corporate payments business could unlock value for shareholders.

Tom Panther: We have run a pretty rigorous process.

Tom Panther: Over the last 11 months with a lot of help particularly from Goldman Sachs. We fielded numerous in bound.

Tom Panther: Looked at lots of alternatives and explored some combinations with dance partners.

Ronald F. Clarke: I got to say, the review process was quite helpful for us in exploring some really new structures for the company and spotlighted the value creation potential of transitioning our fleet business into a broader vehicle payments business that will serve both businesses and consumers. So, that's a super high priority for us. So, look, we're announcing today the conclusion of the review process, at least for the time being. We've determined that keeping our fleet business and corporate payments together is the best way forward.

Tom Panther: I've got to say the review process was quite helpful for.

Tom Panther: For us in exploring some really some new structures for the company and spotlighted the value creation potential of the of transitioning really our fleet business.

Tom Panther: Into a broader vehicle payments business that will serve both businesses and consumers. So that's a super high priority for US is look we're announcing really the conclusion today of the review process at least for the time being we determined that keeping our fleet business in corporate payments together is the best way forward.

Ronald F. Clarke: Obviously, we remain open to reconsidering various options to unlock value down the road, but right now, we are squarely focused on repositioning the vehicle payments business. Okay, my last subject up front is new products. We've released four new products into the marketplace this year, and each has really terrific potential.

Tom Panther: Obviously, we remain open to to reconsidering, our various options to unlock value down the road, but right now squarely focused on repositioning the vehicle payments business.

Tom Panther: Okay, and my last subject upfront here as our new products, we released four new new products into the marketplace. This year.

Tom Panther: Each was really terrific potential so first what we call our core pay one a business card a fuel card and virtual card in one.

Ronald F. Clarke: So first, what we call our Corp A1 business card, fuel card, and virtual card in one. That's targeted to field-based businesses where the solution includes a business card for the owner, fuel cards for the field drivers, and even replaces paper checks with virtual cards. That's all in one account and all in one user interface.

Tom Panther: That's targeted to field based businesses, where the solution includes a business card for the owner.

Tom Panther: <unk> cards for the field drivers.

Tom Panther: And even replaces paper checks with virtual cards, that's all in one account and all in one UI so pretty exciting.

Ronald F. Clarke: So pretty exciting. The second product we call it the Comdata Connect Card. It's targeted to small trucking companies, so it connects the Comdata truck stop fuel discounts and reporting to the companies, using the trucking companies' existing business credit cards. So trucking firms here would really get the best of both worlds. They continue to get the credit and rewards from their existing business cards but combine that with the fuel discounts and reporting of a truck stop card.

Tom Panther: Second product, we call the Comdata connect card.

It's targeted to small trucking companies. So it connects the comdata truckstop fuel discounts.

Tom Panther: And reporting to the companies the trucking companies existing business credit card. So trucking firms here would really get the best of both worlds they continue to get the credits.

Tom Panther: And rewards from their existing business card, but combine that with the fuel discounts and reporting of a of a truck stop card look that's also helps us in.

Ronald F. Clarke: Look, this also helps us in terms of the credit challenge with small trucking companies. So hopefully, we can bring on lots of small trucking firms without the credit risk. Third up is a product that we call Corpay Complete. It's our newest corporate payments product targeted to mid-sized businesses. And again, this is really a platform build.

Tom Panther: In terms of the credit challenge with.

Tom Panther: Small trucking companies. So hopefully we can bring on lots of small trucking firms without the credit risk third up as a product that we call core pay complete it's our newest corporate payments product targeted to mid sized businesses and again this is really a platform.

Tom Panther: Build so we've combined what we call walk around solutions business cards in fuel cards really with the central kind of AP automation solution again packaged all in one platform all in one mobile app. So really we think kind of the modern way.

Ronald F. Clarke: So we've combined what we call walk-around solutions, business cards, and fuel cards, really with a central kind of AP automation solution, again, packaged all in one platform, all in one mobile app. So really, we think this is the modern way for businesses to manage their all-around business expenses and spend less. And lastly, in lodging, we have a new product called CLC Choice. So it's really a workforce lodging solution for employers who want a really more friendly and flexible employee travel solution with the idea of more choice for travelers. In this case, travelers could choose virtually any hotel, any room type, and even keep rewards points from their favorite hotel brand.

Tom Panther: Really for businesses to manage.

Tom Panther: They're all around our business expenses and spend less.

Tom Panther: And lastly in lodging, we have a new product called CLC choice.

Tom Panther: So it's really a workforce lodging solution.

Tom Panther: For employers, who want really a more friendly and flexible employee travel solution, where the idea of being more choice for travelers. So in this case travelers could choose virtually any hotel any room type and even keep rewards Paul.

Tom Panther: <unk> from their our their favorite hotel brand.

Ronald F. Clarke: So we think the choice and solution will complement, you know, really our current control solution and widen the market opportunity there. So look, we're super excited about these new products that have been in the kitchen for quite a while and hopeful that this new set of products will accelerate revenue, you know, 1% to 2% over time. Okay, so look, in conclusion today, 2023, really a record year, record revenue, record earnings, organic revenue growth for the full year up 10%, sales super good, up 20%, stable retention at 92%, made some good moves to position the company better for the midterm, EV progress, and our new go forward vehicle payment strategy. 2024.

Tom Panther: So we think the choice.

Tom Panther: Our solution will complement really our current control solution.

Tom Panther: And why is the market opportunity there. So look we're super excited about these new products have been in the kitchen for quite a while and hopeful that this new set of products will accelerate revenue, 1% to 2% overtime.

Speaker Change: Okay. So look in conclusion today 20, twenty-three really a record year a record revenue record earnings and.

Speaker Change: Organic revenue growth for the full year up 10% sales super good at 20% stable retention at 92% are made some good moves to position the company better for the midterm.

Speaker Change: V progress and our new go forward vehicle payment strategy.

Speaker Change: 2024 hour planning profits or cash EPS up 18% excluding.

Tom Panther: We're planning profits or cash EPS up 18% excluding Russia, and that's on really an assumption of flat interest expense. Launching a set of new products that we have high hopes for, and then beginning really the next chapter for the company as we move to rebrand the company to Corpay in March. So with that, let me turn the call back over to Tom to provide some additional detail on the quarter.

Speaker Change: Excluding Russia, and that's on really of an assumption of flat interest expense.

Speaker Change: Launching a set of new products that we have high hopes for and then beginning really the next chapter for the company as we move to rebrand the company to core pay in March So with that let me turn the call back over to Tom to provide some additional detail on the quarter Tom.

Tom Panther: Thanks, Ron, and good afternoon, everyone. Here are some additional details related to the quarter and the full year. Organic revenue growth was 7%, the same as the fourth quarter of last year. However, revenue growth was slightly below our expectations due to pockets of softness, mostly in U.S. vehicle payments and lodging, while our corporate payments and international businesses continue to perform well. The revenue weakness was mostly offset by strong expense discipline, continued improvements in bad debt expense, and a lower tax rate, which delivered $4.44 per share in cash EPS, within our guidance and up 10% versus last year. Looking at the full year, Organic Revenue grew 10%, and EBIT increased 13%, which are both in line with our midterm targets. We also absorbed nearly $200 million of incremental interest expense during the year due to the rate hikes and still posted cash EPS growth of 5%. Normalizing for the higher interest expense, adjusted earnings would have grown 16% for the full year 2023. Now, turning to our segment performance and the underlying drivers of our revenue growth. Corporate payments revenue was up 15% during the quarter and increased 19% for the full year.

Tom Panther: Thanks, Ron and good afternoon, everyone here are some additional details related to the quarter and the full year organic.

Tom Panther: Organic revenue growth was 7% the same as the fourth quarter of last year.

Tom Panther: Growth was slightly below our expectations due to pockets of softness mostly in U S vehicle payments in lodging, our corporate payments and international businesses continued to perform well.

Tom Panther: The revenue weakness was mostly offset by strong expense discipline continued improvements in bad debt expense and a lower tax rate, which delivered $4 44 per share and cash EPS.

Tom Panther: Our guidance and up 10% versus last year.

Tom Panther: Looking at the full year organic revenue grew 10% and EBITDA increased 13%, which are both in line with our midterm targets. We also absorbed nearly $200 million of incremental interest expense during the year due to the rate hikes and still posted cash EPS growth of 5%.

Tom Panther: Normalizing for the higher interest expense adjusted earnings would have grown 16% for the full year of 2023.

Tom Panther: Now turning to our segment performance and the underlying drivers of our revenue growth.

Tom Panther: Corporate payments revenue was up 15% during the quarter and increased 19% for the full year.

Tom Panther: For the quarter, our direct business grew 19% and was again led by growth in full AP. Our full suite of high-quality payment solutions continues to sell extremely well, with sales up 27% this quarter as we sign up customers who are looking to modernize their AP operations. I'd note that the drag from lower partner channel volumes accelerated in the quarter, with channel revenue declining 31%. Excluding the partner channel, revenue grew 20%, and spend volumes increased 27% in the quarter. So, quite strong on a core basis.

Tom Panther: For the quarter, our direct business grew 19% and was again led by growth in full AP, our full suite of high quality payment solutions continues to sell extremely well with sales up 27%. This quarter as we signed up customers, who are looking to modernize their AP operations.

Tom Panther: I'd note that the drag from lower partner channel volumes accelerated in the quarter with channel revenue declining 31%, excluding the partner channel revenue grew 20% and spend volumes increased 27% in the quarter.

Tom Panther: So quite strong core basis.

Tom Panther: We believe partner channel volumes have bottomed, and volumes and revenue are expected to be flat in 2024. However, cross-border revenue was up 21%, sales grew 51%, and recurring client transaction activity was robust. We've now fully matched all the revenue synergies from the GRG acquisition in January 2023. But more importantly, our best-in-class technology, service, and products allow us to have market-leading retention and client acquisition, which you can see in our results. We continue to make significant investments in this business through increased sales and marketing resources, as well as new product capabilities. Over the last few years, we have transformed this business into becoming the largest non-bank provider of B2B FX payment solutions in the world. Turning to vehicle payments, recall that this is the new segment that we introduced on our last earnings call.

Tom Panther: We believe the partner channel volumes have bottomed.

Tom Panther: And volumes and revenue are expected to be flat in 2024.

Tom Panther: Cross border revenue was up 21% sales grew 51% and recurring client transaction activity was robust.

Tom Panther: We've now fully lapped all of the revenue synergies from the <unk> acquisition in January 2023.

More importantly, our best in class technology service and products allow us to have market, leading retention and client acquisition, which you can see in our results.

Tom Panther: We continued to make significant investments in this business through increased sales and marketing resources as well as new product capabilities over.

Tom Panther: Over the last few years, we have transformed this business into becoming the largest non bank provider of BTB FX payment solutions in the world.

Tom Panther: Turning to vehicle payments recall. This is the new segment that we introduced on our last earnings call.

Tom Panther: It reflects the combination of our fleet and Brazil businesses, along with our new consumer vehicle initiative. Consistent with our goal of creating a simpler company, we have now put all vehicle-related payment solutions in one segment that operates across North America, Brazil, and Europe, offering a full suite of vehicle-related solutions to both businesses and consumers. You'll note that we defined the new segment's KPI as transactions, but given the different products that comprise the segment, we've provided transaction counts by product type, such as fleet, tags, and parking. We have also realigned our executive team to support this new segment, with Armando Neto serving as the Group President of North America and Brazil, and Alan King as the Group President of International Fuel, EV, and Parking. Vehicle payments organic revenue increased 5% during the quarter, with particular strength in Brazil and international fuel markets.

Tom Panther: It reflects the combination of our fleet in Brazil businesses, along with our new consumer vehicle initiative.

Tom Panther: Consistent with our goal of creating a simpler company. We have now put all vehicle related payment solutions in one segment that operates across North America, Brazil, and Europe offering a full suite of vehicle related solutions to both businesses and consumers.

Tom Panther: You'll note that we've defined the new segments K P I as transactions, but given the different products that comprised the segment. We've provided transaction counts by product type such as fleet tags and parking.

Tom Panther: We've also realigned our executive team.

Tom Panther: To support this new segment with Armando Neto, serving as the group President of North America, and Brazil, and Alan King as the group President over international fuel EV and parking.

Tom Panther: Vehicle payments organic revenue increased 5% during the quarter with particular strength in Brazil and international fuel markets.

Tom Panther: In the U K more than 30% of all new sales involve a non fuel product, namely EV or vehicle maintenance.

Tom Panther: In the UK, more than 30% of all new sales involve a non-fuel product, namely EV or vehicle maintenance. Our EV strategy in the UK is clearly winning, as our 3-in-1 product, fuel, on-road charging, and at-home charging, All in one app, has more than doubled from a year ago. The results speak for themselves, with both EV cards and EV revenue continuing to increase. In addition, we're having great success selling our at-home charging solution with a 30% attachment rate on all new sales. Our charging network also continues to expand, and we now offer charging at over 600,000 charge points in Europe, and by the end of March, we will have coverage of nearly 80% of the rapid chargers in the UK, including Tesla, which we signed in the fourth quarter.

Tom Panther: Our EV strategy in the U K is clearly winning as our three in one product fuel.

Tom Panther: On road charging an at home charging.

Tom Panther: All in one app has more than doubled from a year ago. The results speak for themselves with both E V cards, and EDI revenue continuing to increase in.

Tom Panther: In addition, we're having great success selling our at home charging solution with a 30% attachment rate to all new sales.

Tom Panther: Our charging network also continues to expand and we now offer charging at over 600000 charge points in Europe and by the end of March we will have coverage of nearly 80% of the rapid Chargers in the U K, including Tesla, which we signed in the fourth quarter.

Tom Panther: In Brazil, we ended the year with nearly 6,000 extended network locations, including 2,500 gas stations, 2,900 parking locations, 750 drive-thru restaurants, and 270 condos. Total tags were up 7% year-over-year to nearly $7 million, and approximately 37% of customer spend was on our BeyondToll network. Sales of insurance policies are up four-fold when we launched in Q4'22 to nearly $200,000 in Q4'23, so from $0 to $200,000 per quarter in five quarters and now total over 1 million. Our success in Brazil is a tangible proof point of our broader vehicle payments vision to leverage and anchor a product used by a large customer base and to then add additional services via a mobile app, driving incremental revenue growth. We are leveraging our We have begun selling the parking network that we acquired in the third quarter via pay-by-phone to our business customers.

Tom Panther: In Brazil, we ended the year with nearly 6000 extended network locations, including 2500 gas stations 2900 parking locations 750 drive through restaurants, and 270 condos totaled.

Tom Panther: Total tags were up 7% year over year to nearly $7 million and approximately 37% of customer spend was from our beyond toll network.

Tom Panther: <unk> of insurance policies are up four fold when we launched in Q4 'twenty two to nearly 200000 in Q4 'twenty three so from zero to 200000 per quarter in five quarters and now total over 1 million policies. Our success in Brazil, as a tangible proof point of our broader V.

Tom Panther: Nickel payments vision to leverage an anchor product used by our large customer base and to then add additional services via mobile app driving incremental revenue growth.

Tom Panther: We are leveraging our strong success in the U K to launch our consumer vehicles payment solution in the market. We have begun selling the parking network that we acquired in the third quarter would be a pay by phone to our business customers and we're building the integrations to be able to offer to the over 2 million pay by phone consumer users in the U K access.

Tom Panther: And we're building the integrations to be able to offer the over 2 million pay-by-phone consumer users in the UK access to our proprietary fuel, EV, insurance, toll, and maintenance network. In the U.S., softness in small fleets and the impact from our shift away from micro clients continue to affect our sales and revenue results. Our digital and field sales efforts are improving as we continue to see growth in applications, approvals, and starts. As we mentioned last quarter, the shift to higher-credit-quality clients also impacted late fees, which were down 38% from Q4-22.

Our proprietary fuel EV insurance toll and maintenance networks.

Tom Panther: In the U S softness in small fleet and the impact from our shift away from micro clients continue to affect our sales and revenue results.

Tom Panther: Our digital and field sales efforts are improving as we continue to see growth in applications approvals and starts as we mentioned last quarter the shift to higher credit quality clients also impacted late fees, which were down 38% from Q4 'twenty two.

Tom Panther: While the decline in late fees is a drag on our revenue growth, it has resulted in a similar decline in bad debt expenses. So, essentially, a wash. Logic Gravity was flat in Q4 2022, and for the year, the business grew 12% This quarter was affected by continued softness in our existing workforce customers, which appears to have now stabilized. Certain verticals within the business, like airline and insurance, can have quarterly revenue growth fluctuations driven by weather and natural disasters.

Tom Panther: While the decline in late fees is a drag on our revenue growth. It has resulted in a similar decline in bad debt expense.

Tom Panther: So essentially a wash.

Tom Panther: <unk> revenue was flat Q4, 2022 and for the year the business grew 12%.

Tom Panther: This quarter was affected by continued softness in our existing workforce customers, which appears to have now stabilized certain verticals within the business like airline and insurance can have quarterly revenue growth fluctuations driven.

Tom Panther: Driven by weather and natural disasters recall in Q4 of last year, there were significant weather events and airline cancellations, which benefited the airline and the insurance verticals by comparison there were no major weather events in Q4 of this year.

Tom Panther: Recall, in Q4 of last year, there were significant weather events and airline cancellations, which benefited the airline and the insurance vertical. By comparison, there were no major weather events in Q4 of this year, and, in fact, according to the Department of Transportation, 2023 flight cancellations were the lowest in the decade, and in the fourth quarter, cancellations were down approximately 90% from Q4-22. We're experiencing similar results related to insurance claims, which were down approximately 20% in the quarter. Despite the recent soft quarters, we are confident that this business can return to low double-digit growth over the coming quarters. We recently launched new product capabilities that will extend our customer experience and drive new sales. Additionally, we're excited to welcome Joff Romolf as the new group president of Logi, replacing the retiring Ron Rogers. Joff has extensive hospitality and lodging experience that will be a strong asset to the business.

Tom Panther: And in fact, according to the Department of Transportation 2023 flight cancellations were the lowest in a decade and in the fourth quarter cancellations were down approximately 90% from Q4 'twenty two.

Tom Panther: We're experiencing similar results related to insurance claims, which were down approximately 20% in the quarter. Despite.

Tom Panther: Despite the recent soft quarters, we are confident that this business can return to low double digit growth over the coming quarters.

Tom Panther: We recently launched new product capabilities that will extend our customer experience and drive new sales.

Tom Panther: Additionally, we're excited to welcome Jos Roma as the New group President of lodging, replacing the retiring Ron Rogers.

Tom Panther: John has extensive hospitality and lodging experience there will be a strong asset to the business.

Tom Panther: In summary, we're proud of the performance we delivered in 2023. It clearly demonstrates the growth of our diversified business and the strength of our business model, which generated over a billion and a quarter of free cash flow. Now, looking down the income statement. Q4 operating expenses of $513 million were flat versus Q4 of last year.

Tom Panther: In summary, we're proud of the performance we delivered in 2023, it clearly demonstrates the growth of our diversified business and the strength of our business model that generated over 1 billion in a quarter of free cash flow.

Tom Panther: Now looking down the income statement Q.

Tom Panther: Q4 operating expenses of $513 million were flat versus Q4 of last year expenses from acquisitions higher transaction and sales activities and investments to drive future growth were offset by lower bad debt expense and the sale of our Russia business.

Tom Panther: Expenses from acquisitions, higher transaction and sales activities, and investments to drive future growth were offset by lower bad debt expense and the sale of our Russia business. Bad debt expense declined to $19 million, or nearly 50% from last year to $22 million, or three basis points of spend. Most of the decline was in vehicle payments, which were down $17 million year-over-year, as we realized the benefit from our lower exposure to U.S. microclients. EBITDA margin in the quarter was 54.2%, a 220 basis point improvement from the fourth quarter of last year. This positive operating leverage is driven by solid revenue growth, lower bad debt expense, disciplined expense management, and synergies realized from recent acquisitions. Interest expenses for the quarter increased $18 million year over year, and the impact of higher interest rates resulted in an approximate 27 cent drag on Q4 adjusted EPS, partially offset by lower debt balances year over year. Our effective tax rate for the quarter was 23.3% versus 24.2% last year; the lower rate is related to specific tax planning items.

Tom Panther: That expense declined $19 million or nearly 50% from last year to $22 million or three basis points of spend.

Tom Panther: Most of the decline was in vehicle payments, which was down $17 million year over year as we realize the benefit from our lower exposure to U S micro clients.

Tom Panther: EBITDA margin in the quarter was 54, 2%, a 220 basis point improvement from the fourth quarter of last year. This positive operating leverages driven by solid revenue growth lower bad debt expense disciplined expense management and synergies realized from recent acquisitions.

Tom Panther: Interest expense this quarter increased $18 million year over year and the impact of higher interest rates resulted in an approximate 27 cent drag on Q4, adjusted EPS, partially offset by lower debt balances year over year.

Tom Panther: Our effective tax rate for the quarter was 23, 3% versus 24, 2% last year, the lower rate related to specific tax planning items.

Tom Panther: Now, turning to the balance sheet, we are entering 2024 with the balance sheet in excellent shape. We ended the quarter with $1.4 billion in unrestricted cash, up $300 million from 90 days ago, and we had over $800 million available on our revolver. We have 5.4 billion dollars outstanding on our credit facilities, and we had $1.4 billion borrowed under our securitization facility. As of year end, our leverage ratio was 2.4 times trailing 12 months EBITDA, which is at the lower end of our target range. In January, we upsized our Term Loan A and Revolver A credit facilities by $600 million, with no rate concessions and no change in maturity.

Tom Panther: Now turning to the balance sheet, we are entering 2024 with the balance sheet in excellent shape. We ended the quarter with $1 4 billion and unrestricted cash of $300 million from 90 days ago, and we had over $800 million available on our revolver.

Tom Panther: We have $5 $4 billion outstanding on our credit facilities.

Tom Panther: And we had $1 4 billion borrowed under our securitization facility.

Tom Panther: As of year end, our leverage ratio was two four times trailing 12 months EBITDA, which is at the lower end of our target range.

Tom Panther: In January we Upsized, our term loan a and revolver credit facilities by $600 million with no rate concessions and no change in the maturity. This added capital will provide incremental capacity and flexibility for both deals in share buybacks in 2024, which I'll elaborate on in a few minutes.

Tom Panther: This added capital will provide incremental capacity and flexibility for both deals and share buybacks in 2024, which I'll elaborate on in a few minutes. Our capital allocation in 2023 was once again balanced as we deployed $1.6 billion. In the quarter, we repurchased roughly 600,000 shares at an average price of $254 per share, or $143 million. For the year, we repurchased 2.6 million shares for $690 million.

Tom Panther: Our capital allocation in 2023 was once again balanced as we deployed $1 $6 billion in the quarter, we repurchased roughly 600000 shares at an average price of $254 per share or $143 million for the year, we repurchased two 6 million shares for $690 million.

Tom Panther: We spent $545 million on acquisitions during the year, improving our position in EB, the consumer vehicle payment space, and cross borders. The remaining excess cash flows were used for debt amortization and reducing our revolver balance. As I previously mentioned, our 2024 capital allocation plan is supported by our significant cash and liquidity position. We have $1.4 billion in unrestricted cash and have increased our capacity under our revolver by $600 million, and we expect to generate $1.4 billion in free cash flow during 2024. Our first priority remains M&A, and the M&A pipeline is robust.

Tom Panther: <unk>.

We spent $545 million on acquisitions during the year, improving our position in the consumer vehicle payment space and cross border. We used the remaining excess cash flows for debt amortization and reducing our revolver balance.

Tom Panther: As I previously mentioned, our 2024 capital allocation plan is supported by our significant cash and liquidity position, we have $1 4 billion in unrestricted cash and increased our capacity on our revolver by $600 million and we expect to generate $1 $4 billion in free cash flow during 2024 are.

Tom Panther: First priority remains M&A and the M&A pipeline is robust we will look to acquire businesses that deepen our position in our three core operating segments. We're also allocating capital for share buybacks. During 2024 in January the board increased our repurchase authorization by $1 billion, we now have over $1 $6 billion.

Tom Panther: We'll look to acquire businesses that deepen our position in our three core operating segments. We are also allocating capital for share buybacks during 2024. In January, the board increased our repurchase authorization by $1 billion. We now have over $1.6 billion authorized for share repurchase. We expect to repurchase $800 million of shares throughout the year.

Tom Panther: <unk> per share repurchases, we expect to repurchase $800 million of shares throughout the year.

Tom Panther: We plan to purchase these shares through the open market and will establish a 10B51 plan later this month. Any residual cash flows from earnings will be used to reduce our revolver or build our cash position. Generating so much cash is a high-class problem, and we plan to leverage this strength to systematically support our EPS growth through M&A and buybacks in 2024. Now, let me share some thoughts on our 2024 full year and Q1 outlook. From an economic perspective, we are not assuming a recession nor any meaningful economic improvement in overall business activity. Our forecast for the year is based on the consensus economic outlook in our markets, which generally calls for modest economic growth and lower interest rates in the second half of the year. We expect fuel prices to be a headwind in the first quarter, and for the full year, we're anticipating U.S. fuel prices to average $3.65 per gallon, which is a blend of diesel and unleaded.

Tom Panther: We plan to purchase these shares through the open market and will establish attendee five one plan later this month.

Tom Panther: Any residual cash flows from earnings will be used to reduce our revolver or build our cash position.

Tom Panther: Generating so much cash is a high class problem and we plan to leverage this strength to systematically support our EPS growth through M&A and buybacks in 2024.

Speaker Change: Now, let me share some thoughts on our 2020 for full year and Q1 outlook.

Speaker Change: From an economic perspective, we are not assuming a recession, nor meaningful economic improvement in overall business activity.

Speaker Change: Our forecast for the year is based on the consensus economic outlook in our markets, which generally calls for modest economic growth and lower interest rates in the second half of the year.

Speaker Change: We expect fuel prices to be a headwind in the first quarter and for the full year, we're anticipating U S fuel prices to average $3 65 per gallon, which is a blend of diesel and unleaded.

Speaker Change: In 2024, we expect cash EPS to grow between 14, and 16%, which is inclusive of the planned buybacks I mentioned previously.

Tom Panther: In 2024, we expect cash EPS to grow between 14 and 16%, which is inclusive of the planned buybacks I mentioned previously. Revenue growth is projected to be between 8 and 10 percent, and EBITDA is expected to increase 10 to 12 percent, with margin expanding to approximately 54 percent. Keep in mind, these growth rates are inclusive of our Russia business through mid-August of last year. Excluding Russia, cash EPS is growing 17 to 19 percent, revenue is up 10 to 12 percent, and EBITDA is increasing 13 to 15 percent. All slightly above are the mid-term growth targets. We have provided these details in our earnings supplement on page 20. Net interest expense is projected to be between $340 and $370 million, which includes the replacement of a $500 million interest rate swap that matured in December.

Speaker Change: Revenue growth is projected to be between eight and 10% and EBITDA is expected to increase 10% to 12% with margin expanding to approximately 54% keep in mind. These growth rates are inclusive of our Russia business through mid August of last year, excluding Russia cash EPS is growing 17% to 19%.

Speaker Change: Revenue was up 10% to 12% and EBITDA, increasing 13% to 15% all slightly above our mid term growth targets. We've provided these details in our earnings supplement on page 20.

Net interest expense is projected to be between 340 and $370 million, which includes the replacement of a 500 million dollar interest rate swap that matured in December.

Tom Panther: Roughly 80% of our credit facility is now fixed utilizing swaps, and the blended swap rate is 4.1%. Also, recall that our securitization is a variable rate facility. And finally, our tax rate is expected to be between 25% and 26%. From a segment perspective, we expect the following organic revenue growth rates: vehicle payments in the mid-single digits, corporate payments approximately 20%, and lodging payments in the high single digit

Speaker Change: Roughly 80% of our credit facility is now fixed utilizing swaps and the blended swap rate is four 1%.

Speaker Change: Also recall that our securitization is a variable rate facility and.

Speaker Change: And finally, our tax rate is expected to be between 25 and 26%.

Speaker Change: From a segment perspective, we expect the following organic revenue growth rates.

Speaker Change: Vehicle payments in the mid single digits corporate payments, approximately 20% lodging payments in the high single digits.

Tom Panther: Related to the quarters, we expect revenue growth in the first half of the year to be below our full-year average due to the continued pockets of softness, a tough comp that includes Russia, as well as a challenging operating environment, including lower fuel prices. We expect revenue growth to accelerate in the back half of the year as the economic outlook becomes clearer, we complete the divestiture of Russia, and we realize the benefits of our growth initiatives and new sales. For the first quarter, we're expecting revenue to grow between 3% and 5% and cash EPS to increase between 6% and 8%, which also reflects higher interest rates. Normalizing for Russia, revenue and cash EPS growth at the midpoint would be 7% and 13%, respectively.

Speaker Change: Related to the quarters, we expect revenue growth in the first half of the year to be below our full year average due to the continued pockets of softness.

Speaker Change: Top comp that includes Russia, as well as a challenging operating environment, including lower fuel prices, we expect revenue growth to accelerate in the back half of the year as the economic outlook becomes clearer we lap the divestiture, Russia, and we realize the benefits of our growth initiatives and new sales.

Speaker Change: For the first quarter, we're expecting revenue to grow between three and 5% and cash EPS to increase between six and 8%, which also reflects higher interest rates.

Speaker Change: Normalizing for Russia revenue and cash EPS growth at the midpoint would be 7% and 13% respectively.

Tom Panther: The rest of our assumptions can be found in our press release and supplement. Before completing my prepared remarks, I would like to extend our gratitude to our more than 10,000 employees around the world who helped us deliver such a great year and who will be the driving force to even greater heights throughout 2024. Thank you for your interest in our company. And now, Operator, we'd like to open the line to questions. Thank you very much. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: The rest of our assumptions can be found in our press release and supplement.

Speaker Change: Before completing my prepared remarks, I would like to extend our gratitude to our more than 10000 employees around the world, who helped us deliver such a great year, and who will be the driving force to even greater heights throughout 2024.

Thank you for your interest in our company and now operator, we'd like to open the line for questions.

Speaker Change: Thank you very much we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys to.

Operator: If you're using a speakerphone, please pick up your handset before pressing the button. To withdraw your question, you may press star then 2. In the interest of time, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Peter Christiansen with Citi. Please go ahead. Thank you. Good evening.

Speaker Change: To withdraw your question you May Press Star then two.

In the interest of time, please limit yourself to one question and one follow up at this time, we will pause momentarily to assemble our roster.

Speaker Change: Today's first question comes from Peter Christiansen with Citi. Please go ahead.

Peter Corwin Christiansen: Thank you good evening.

Peter Corwin Christiansen: Two questions for you, Ron. Just curious, you perform pretty well on the credit loss side. How are you thinking about, at least tactically, about extending credit in 2024 versus last year, particularly after improving the mix of your mid-sized mid-market clients? Hey, good question. I'd say looser.

Peter Corwin Christiansen: Two questions for you Ron just curious.

Peter Corwin Christiansen: I'm pretty well on the credit loss side, how are you thinking about at least tactically about extending credit in 2024 versus last year, particularly after improving the mix of your of your mid size mid market clients.

Ron: Yeah. Good question I would say so.

Ronald F. Clarke: So the model that we've used has gotten, you know, a bit better over the last 12 months. And I think I called out, you know, credit loss is coming in literally about half of the prior year. So I'd say we're going to kind of open the spigot, you know, carefully.

Ron: The model that we've used has gotten a bit.

Ron: Matter.

Ron: Over the last 12 months.

Ron: I called out kind of losses coming in literally about half of the prior year. So I'd say, we're going to we're going to kind of open the spigot.

Ron: Carefully and then second again that were pointing.

Ronald F. Clarke: And then second, again, that we're pointing, you know, to larger prospects, which generally have better credit. So my guess is we have the full-year plan just a smidge lower than full-year 23, but it should help on revenue. That's helpful.

Ron: Larger prospects, which generally have better credit. So I guess, we have a full year plan just a smidge lower.

Ron: In full year 'twenty, three but it should help on the revenue side.

Speaker Change: That's helpful.

Peter Corwin Christiansen: And then, Ron, I guess I'm now exiting the strategic review. How should we think about, at least your M&A priorities going forward? Any particular areas, horizontal, vertical, just want to get your fresh sense on that.

Speaker Change: And then Ron I guess now exiting the strategic review.

Speaker Change: How should we think about it.

Speaker Change: At least your your acquisition M&A priorities going forward.

Speaker Change: Any particular areas well horizontal vertical.

Ron: Just wanted to get your fresh sense on.

Ron: Fleet core soon to be core pace M&A priorities going forward.

Ronald F. Clarke: Fleetcor, soon to be Corpay's M&A priorities going forward. Yep, another good question. Glad to be back at kind of the basic, you know, buying company. So the primary focus is on corporate payments. We've got a pipeline of a couple interesting things in that space.

Speaker Change: Yes. Another good question glad to be back at kind of the basic.

Ron: Buying companies so.

Ron: The primary.

Ron: <unk> is on corporate payments.

Ron: So we've got a pipeline of a couple of interesting.

Ron: Things in that space.

Ronald F. Clarke: And then the one other area that we're kind of on is this consumer capability, this idea, again, of getting a big block of consumers that we can market, you know, all of our networks to. So I would say those would be the two short-term things. Great. Thank you, Ron.

Ron: And then the one other area that we're kind of on us this consumer.

Consumer capability. This idea again of getting a big block of consumers that we can market all of our networks too. So I would say those would be the two short term things to watch.

Speaker Change: Great. Thank you Ron and very helpful.

Peter Corwin Christiansen: Very helpful. All right, it's good to talk. The next question comes from Ramsey El-Assal from Barclays. Please go ahead.

Speaker Change: I was just talking.

Speaker Change: The next question comes from Ramsey El <unk> from Barclays. Please go ahead, hi, Ron.

Ramsey El: Hi Ron and Tom, thank you for taking my question this evening. I wanted to ask about some of the Q4 headwinds that you called out and, just maybe, ask you to give us a little more color on what was going on. And the degree to which you're confident that they'll represent sort of transient headwinds rather than more permanent sorts of impacts. I know you implied that as we get deeper into 24, you could see some improvement, but I'm just curious if you could give us a little more color on what sort of happened in the quarter. Yeah, I mean, in a nutshell, Ransey, I call it the story of the quarter, same store So I call that, you know, it was minus 3%, and if you went back to our prior transcripts, Q4 of 22 would have been plus 2. So in that 12-month period, it basically went from plus 2 to minus 3, so obviously that's five points of organic growth.

Ramsey El: Tom Thank you for taking my question this evening.

Ramsey El: I wanted to ask about some of the Q4 headwinds that you called out.

Ramsey El: And just maybe ask you to give us a little more color on on on what was going on.

Ramsey El: And and the degree to which you're confident that they'll represent sort of transient headwinds rather than more permanent sort of impacts I know you implied that as we get deeper into 'twenty for that that you could see some improvement, but I'm. Just curious if you could give us a little more color on what sort of happened in the quarter.

Speaker Change: Yes, I mean in a nutshell Ramsey policy. The story of the quarter were same store sales. So I called out it was minus 3% and if you went back to a prior trends scripts Q4, 'twenty two would have been plus two.

Speaker Change: So in that.

Speaker Change: 12 month period, basically went from plus two to minus three so obviously, that's five points of organic growth.

Ronald F. Clarke: So, that's the whole story. You know, retention was good, sales were good, defense controls, credit below the line, everything effectively in Q4, through my lenses, was kind of in line, fans that one call out. And so, I tried to kind of go through it. They were obviously surprising to me since I looked through the guy pretty carefully.

Speaker Change: That's the whole story retention was good sales were good expense controls credit below the line everything effectively in Q4 for them through my lens is was kind of.

Sam: Hi, Sam.

Sam: And that that one call so.

Sam: I tried to kind of go through with a biopsy was surprising to me says.

Sam: I've lived through the guide pretty carefully.

Ronald F. Clarke: Really, it's just two or three pockets that are not new. If you go back and look at what we communicated on 23, we would have talked about, you know, lodging, having some softness, you know, in the Bay. The partner channel and payables, you know, having some softness. The Pivot for Microaccounts, you know, which had a bunch of late fees and, unfortunately, credit losses. And so basically, I'd say those three things that I called out were just heavier, you know, weightier on the downside, say we're looking at kind of one to two percent. Mine is the same store, and it came in at three. And so So the thought process that we have is that we climb out of the same store sales, almost the reverse pattern. So minus three, minus two, basically getting that thing back to positive because that book of business basically flatlines at 24. So that's basically the perspective.

Sam: Really it's just two or three pockets that are not new if you go back and look at what we've communicated in 'twenty three we would've talked about la.

Sam: Lodging habits.

Sam: Yes.

Sam: And the base the partner channel and payables you don't have it.

And is the pivot from micro accounts, which had a bunch of late fees, Unfortunately credit losses, and so basic.

Sam: Basically I would say those three things that I called out were just happier Wade here on the downside and say, we're looking at kind of 1% to 2%.

Sam: Same store it came in at three and so.

Sam: That's really the story of the quarter and so the good news if there is any.

Sam: Is it all three of those cases.

Sam: Deals like the data showing even through January it looks like we've hit the bottom.

Sam: So the thought process that we have is that we climb out of the same store sales almost the reverse pattern. So minus three minus two basically getting that thing back to positive because that book of business basically flat lines into 'twenty four.

Sam: So.

Sam: That's basically the perspective.

Ronald F. Clarke: So it's really no new things; it's things that we have seen that basically we're a bit heavier in the quarter than we are. Okay, a follow-up from me. I was wondering if you could kind of comment on the closure of the strategic alternatives process and just kind of revisit what you know, kind of a post-mortem in a sense. Why was it so difficult to find the strategic alternatives to you know, execute on? Was it the lack of attractive partners?

Sam: So it's really no new things as things that we have seen that basically were a bit heavier in the quarter than we all hoped.

Sam: Okay.

Speaker Change: A follow up for me I was wondering if you could.

Speaker Change: Kind of comment on the closure of the strategic alternatives process, and just kind of revisit what you know kind of a postmortem in a sense why was it so difficult to find the strategic alternatives.

Speaker Change: To execute on was it lack of attractive partners was it evaluation.

Ramsey El: Was it evaluation? You know, hang up? Was it rates? Was you know where the friction in the process that kind of prevented you guys from, you know, executing on that sort of monetization strategy? Look, it's a super complicated question, right, which is why we spent 11 months on it, so I don't want to get too quick with an answer here.

Speaker Change: Hang up was it rates was where was the friction in the process of kind of prevented you guys from from.

Speaker Change: Executing on that sort of monetization strategy.

Speaker Change: Well look it's super.

Speaker Change: Obligated question right, which is why we spend 11 months.

[laughter] quickly with an answer here.

Speaker Change: The main thing against just the Straits and go I think we said was.

Ronald F. Clarke: But look, the main thing against just a straight FinCo, I think we said, was uncertainty about the trading range of Romainco. It wasn't so much, yeah, we've got a great corporate payments business. It was really... What's the multiple on the Maine coast?

Speaker Change: Certainty of the trading range of Romaine call wasn't so much and we've got a great corporate payments business, it's really.

Speaker Change: What's the multiple on the main cause I think.

Speaker Change: That that caused us to pivot into this dance partner.

Ronald F. Clarke: You know that causes the pivot into this dance partner to if we were going to separate things. The short answer to that is we engaged with three or four different partners, and it's a combination of either the synergies didn't pan out to be as good as we thought, or we couldn't agree on relative valuation, or in one case, maybe social issues around it. So these kinds of combinations, as you guys know, are always quite difficult. But I did say it seriously; we've learned a lot, we've looked at a lot of structures, we've met a bunch of people, and so we will continue to look. The focus now is back on buying things in our lane and obviously rebuilding this vehicle business, but we are open on a different day to re-examining it again. So it's kind of closed for now, but not forever. I got it. Thank you so much.

Speaker Change: If we were going to separate things to do something that would have scale and synergies and so the short answer to that is we engaged.

Speaker Change: With three or four different partners and it's a combination of either the synergies didn't pan out to be as good as we thought.

Speaker Change: We couldn't agree relative valuation or one case, maybe social issues around.

Speaker Change: These kinds of combinations as you guys know, we're always quite difficult, but I did say it seriously we've learned a lot we've looked at a lot of structures.

Speaker Change: We met with met a bunch of people and so what we will continue to look.

Speaker Change: Now it's back on.

Speaker Change: Thanks, Alain and honestly rebuilding this vehicle business.

Speaker Change: We are open a different day to really looking at it to get to kind of close for now but.

Speaker Change: Okay.

Speaker Change: Got it thank you so much.

Ramsey El: The next question comes from Tenjin Wong with J.P. Morgan. Please go ahead. Hey, thanks so much. Good afternoon.

Speaker Change: The next question comes from Tien Tsin Huang with Jpmorgan. Please go ahead.

Speaker Change: Hey, Thanks, so much good afternoon, I was just thinking on the on the new product side.

Trevor Williams: I was just thinking about the new product side that you're going that you laid out here to enhance growth. I think you mentioned around one to two points over time. How quickly do you think that can convert?

Speaker Change: Knowing.

Speaker Change: But you laid out here to enhance growth I think you mentioned around one to two points over time, how quickly do you think that can convert.

Speaker Change: And two in your sales do you have the <unk>.

Speaker Change: Sales engine humming already just curious where you are with that.

Ronald F. Clarke: into your sales. Do you have the, you know, the sales engine humming already? Just curious where you are with that. Yeah, hey tension. Good to hear your voice.

Speaker Change: Yeah, Hey, Tien tsin good good to hear your voice so I mean, the headline why call. This out is.

Speaker Change: Over the last two or three years, we've done a fair amount of what I would term capability acquisitions.

Speaker Change: And it really behind the scenes those have been some.

Ronald F. Clarke: So, I mean, the headline of why I called us out is... Um, you know, over the last two or three years, we've done a fair amount of what I term capability acquisition. And really, behind the scenes, those have been some tech capability acquisitions, right? For example, with Corp A1, we bought an AP platform, a software platform called Crulify at the front end.

Speaker Change: Capability acquisitions right the core pay one we bought up.

Speaker Change: And AP platform.

Speaker Change: Software platform called approval to buy at the front end, we bought a European workforce business.

New platform and so the tech that we got allowed us to spin up kind of some I call them internally kind of nexgen products that I described at the time.

Speaker Change: So more out selling them now we've got a pretty robust sales planned for them. So I would say the third would be next year.

Ronald F. Clarke: We bought a European workforce business with a brand new platform. And so the tech that we got allowed us to spin up kind of some, I call them internally kind of next-gen products that I described at the top. So we're outselling them now. We've got a pretty robust sales plan for them. So I would say the conversion would be next year.

Speaker Change: The key thing for US to report this year three is sales of those products and then obviously next year as those roll in.

Media revenue basically we would expect the acceleration. So the key is you know what's the what's the reception.

Ronald F. Clarke: The key thing for us to report to you this year is sales of those products. And then obviously, next year, as those roll into end-year revenue, basically we'd expect an acceleration. So the key is, what's the reception?

Speaker Change: Just a market like these the three or four things that we're putting in front of us.

Got it got it and then just my follow up maybe for you again, Ron just thinking about visibility into revenue growth and 24 versus prior years. It feels like there's a little bit more reliance on new products and initiatives.

Trevor Williams: Does the market like these three or four things that we're putting out front? Got it. Got it.

Speaker Change: And initiatives are no cross sell is something you've always done.

Ron: Macro is always what it is but how would you consider the visibility this year versus recent years.

Ronald F. Clarke: And then just my follow up, maybe for you again, Ron, just thinking about visibility into revenue growth in 24 versus prior years, it feels like there's a little bit more reliance on new products and initiatives. I know cross-selling is something you've always done. Macro is always what it is, but how would you consider the visibility this year versus recent years? Yeah, that's not a really good question. I'd say something like, like most things, some things stay the same, and some things are different. So the most important thing for us, as you know, is sales, which is why I call out the growth rate. And I think I called out for the full year last year, too.

Ron: Yeah, that's not a stupid question on a satellite like those things some things stay the same and some things are different so.

Ron: Most important thing for us as you know as sales, which is why I call out the.

Ron: The growth rate and I think I called out for the full year last year 'twenty. That's our target again for 2024, obviously off of a bigger base. So the first thing is we've had success selling and expect.

Ron: Hey here in 'twenty four two is the retention is getting a bit better and as we flush those micro accounts last year structurally that should help retention. So when you take those two things those underpinned as you know the basic right.

Ronald F. Clarke: That's our target again for 2024, obviously off of a bigger base. The first thing is, we've had success selling and expect, you know, the same year in twenty-four. Two is retention; it's getting a bit better.

Ron: New business versus losses is the key to a recurring business. So the wildcard that that here has been the softest, which again.

Ron: <unk> entered the year and in the past column and then ended the year in the minus column. So that's a tiny.

Trevor Williams: And as we flushed those micro accounts last year, structurally, that should help retention. So you take those two things, those underpin, as you know, the basic, right? New business versus loss is the key to a recurring business. So the wild card, the bet here, has been the softest thing, which again, you know, entered the year in the plus column and then ended the year in the minus column. So that thing turning or getting tension back to flat, I think, is the most important thing, www.fleetcore.com. Rooms and lodging are different for someone walking into a hotel than someone who pre-books three weeks in advance. Not super different than the Fleetcore.com. Got it. No, that's helpful. And I think getting a strategic view out of the way might help with the focus, too, I would think, but I appreciate the update, Ron. Go to the back, get back to the basics, it's your thing.

Ron: Getting.

Ron: Back to flat I think is the most important.

Ron: And the acceleration, but then on top of that we've got some super new pricing ideas around the technology is so new dynamic pricing for example, where we could price.

Ron: Rooms, and lodge, a different for someone walking into a hotel and Simon who pre books three weeks ago. Instead of a platform that doesn't let us differentiate we've got a few new partners that we've signed that we havent announced that will come on and then to your point, we've got a big plan around cross sell you know, adding a box.

Ron: You know for vehicle insurance every time people park, if they wanted to basically allay the fear something happened to their car. When they are so it's a pretty balanced I would say, it's not super different than the past, but I would say that the new products and some of the cross sell should be a little more supportive.

Ron: Historically.

Speaker Change: Got it no that's helpful.

Speaker Change: It gives a strategic view at the way also might help with the focus to I would think but I appreciate the update.

Speaker Change: So does that get back to the basics as you think.

Darrin Peller: The next question comes from Darrin Peller with Wolf Research. Please go ahead. Hey guys, thanks. Ron, maybe just go back to, it's a bit of a follow-up to Tingen's question just now, but when we think of the vehicle segment and the, you know, aspirations for being mid-single, I'm sorry, double-digit, low double-digit growth from what we're now guiding to a mid-single-digit year, maybe just talk a little bit And it does look like you're having a lot of success, obviously now, with whether it's EV or obviously in Brazil, so I'm assuming it's a combination of all those factors, but any more color on that?

Speaker Change: The next question comes from Darrin Peller with Wolfe Research. Please go ahead.

Darrin Peller: Hey, guys. Thanks, Ron maybe just go back to it's a bit of a follow up to Tien Tsin question, just now, but when we think of the vehicle segment and the aspiration for being mid single I'm, sorry, double digit low double digit growth from what we're now guiding to a mid single digit year maybe.

Speaker Change: Maybe just talk a little bit about the initiatives that you feel are going to really drive that strength and it does look like you are having a lot of success, obviously now with whether it's E V or obviously in Brazil. So I'm, assuming it's a combination of all those factors, but any more color on that and just a quick follow up would also be fourth quarter. I know you had some headwinds on certain variables like you mentioned on the call.

Speaker Change: Credit in.

Speaker Change: It just seems like you would have a better growth in 'twenty for the fourth quarter, just as some of those abate, but yet you're guiding a similar rate of growth for vehicles. So just a little more color on that.

Ronald F. Clarke: And just a quick follow-up on the fourth quarter, I know you had some headwinds on certain variables, like you mentioned on the call, you know, credit and so on. It just seems like you would have better growth in 24 than in the fourth quarter, just as some of those abate, but yet you're guiding a similar rate of growth for vehicles. So just a little more. Say the last part, Dan, before you go.

Speaker Change: So let's say the last part that we're guiding to $1 24, yeah for vehicles segment mid single digit growth I would've thought it'd be a little bit better comparing it to a fourth quarter, which I know has some headwinds in it.

Speaker Change: Yes, So let me take that last part and then I went back to the beginning of your question. So yes. If you look inside our quarterly roll that thing will go from kind of low mid single digits up to 10%.

Darrin Peller: I'm guiding to 1 and 24. Yeah, for the vehicle segment, mid-single-digit growth, I would have thought it would be a little bit better compared to the fourth quarter, which I know has some headwinds. Yeah, so let me take that last part and then work my way back to the beginning of your question. So yes, if you looked inside our quarterly roll, that thing would go from kind of a low mid-single digit to 10%. So the internal plan we have is exactly what you said, for the vehicle organic growth rate to accelerate. So the two drivers of that, beyond the normal things of retention, which should get better again structurally because we've kicked out the micro-accounts, and obviously, sales being good, are the new products that I just talked about, right? Some extensions in both the core fuel car business and in the trucking business, and Bob Iverson.

Speaker Change: So the internal plan, we have is exactly what you said to the vehicle.

Speaker Change: Organic growth rate to accelerate so the two drivers of that beyond the normal things up retention, which should get better again structurally because we've kicked out the micro accounts and honestly sales being good is the new products that I just talked about right some extensions in both.

Speaker Change: <unk>.

Speaker Change: The core fuel card business and in the trucking business and to your point the EDI thing working with the second one is silver.

Speaker Change: Yeah. It was just all incremental so to the extent that we can take you know two.

Speaker Change: 2 million people.

Speaker Change: In the U K and another couple of million people, which will talk about soon in Brazil and add on three or four services that we already have is just every dollar there is incremental and pretty profitable. So those are really those really the two drivers the base.

Ronald F. Clarke: You know, same-store sales, retention, and new sales, which we have a good handle on, and then a couple of new things for the new product. So look, we're bullish on it. Obviously, we've had a pivot on this vehicle thing, and then... We all got a little distracted working on this restructuring, but I think where we're headed now is super clear. And Darrin, one thing I'd add before I run to your other question about longer-term vehicles, keep in mind that the first half of last year had the elevated late fees from the S&B micro clients that we still have on the platform. So we don't start lapping that until you get into late Q2, so that creates a little bit of a grow-over challenge when you look at it on an annual basis.

Speaker Change: Same store sales retention and new sales, which we have a good handle on and then a couple of new things. So the new products to the consumers. So we're bullish on it obviously, we've had a pivot in this vehicles and then.

Speaker Change: A bit distracted.

Speaker Change: Honest restructuring, but I think where were headed now is it's super clear again, one thing I would add.

Speaker Change: To your other question about longer term vehicle keep in mind, the first half of last year and the elevated late fees from F&B micro.

Speaker Change: Clients that we still have on the on the platform. So we don't start lapping that until you get into late Q2, so that creates a lot of a grow over challenge when you look at it on an annual basis and it's one of the reasons. There was someone sent me is on tax.

Tom Panther: And it's one of the reasons, Darren, why someone sent me some text message saying, hey, the revenue looks a little light. And we've effectively taken, you know, $20 million, $30 million of late fee revenue out and $20 million or $30 million of credit loss. It's been basically kind of a one-for-one swap, which people out there may not like, but I like the rateability of having lower credit loss. And so, to Tom's point, that portfolio shift kind of moved both, you know, revenue and, That's really helpful. I don't know if there's time for a quick follow-up just very quickly on Corpay. I just want to understand a little bit more on the channel business bottoming out here, and you know, maybe you can explain a little more of what the dynamic is and the underlying drivers if it's around a channel, you know, one of the partners if that's finished or it's virtual card adoption or anything. Thanks again. Let me take that one.

Speaker Change: The revenue looks a little light and we've effectively taken 20 30 million late fee revenue and 20 of $30 million of credit losses out it's been basically kind of a one for one swap which people out there who may not like but I like I like the rate ability that a lower credit losses.

Speaker Change: And so to Tom's point that portfolio shift kind of move both revenue and expense.

Speaker Change: That's really.

Speaker Change: That's helpful. I don't know if there is time for a quick follow up just very quickly on core pay I just wanted to understand a little bit more on the channel business bottoming out here and maybe you can explain a little more of what the dynamic is and the underlying drivers if it's around a channel you know one of the partners. If that's finished or its virtual card adoption or anything else guys. Thanks again.

Speaker Change: Let me take that one Bob that's another good question. So if you think about what we call the channel business at some third party, who has customers where we provide you know virtual.

Bob: Virtual card processing in the basic trend, which started two years ago as those partners effectively moving from an exclusive relationship with us to non exclusive so hi, Ron I used to use you for 100% of my processing solid told me. This is a good idea and have two provider so over time.

Darrin Peller: Another good question. So, if you think about what we call a channel business, it's some third party who has customers where we provide, you know, virtual card processing. And the basic trend, which started two years ago, is those partners effectively moving from an exclusive relationship with us to non-exclusive. So, hi, Ron, I used to use you for 100% of my processing.

I'm going to kind of give you half the business or I'm going to try to haircut youre right. So effectively over the last few years Darrin, we've gone from having you know call. It 15 really important partners that we were exclusively to having 15 partners. We're not exclusive so the good news on this one is we have.

Bob: The contracts now.

Bob: For 24 that have us flat with 23.

Ronald F. Clarke: Someone told me it was a good idea to have two providers. So, over time, I'm going to kind of give you half the business, or I'm going to try to cut your rate. So effectively, over the last two years, Darrin, we've gone from having, you know, call it 15 really important partners that we were exclusive with to having 15 partners who are non-exclusive. So the good news on this one is we have the contracts now. 424 that have us flat with 23. So our print for that business, which, you know, moved its way down during the course of 23, we're out looking effectively at flat revenue in that. Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com. All of you have been very helpful.

Bob: So our trends for that business, which.

Bob: It's way down during the course of 'twenty, three where outlook and effectively flat revenue in that business across into 24. So instead of every quarter, saying all the corporate payments business was great, but hey, the channel business was crummy.

Bob: Hopefully you'll hear me say that the answer will be it'll be.

Speaker Change: Okay, Alright very helpful. Thanks, guys.

Speaker Change: The next question comes from Nathan Benson with Deutsche Bank. Please go ahead.

Nathan Benson: Hi, guys. Thanks for the question. So Darrin is actually leads right into what I wanted to ask on corporate payments very first off very nice to hear about the outlook for 20% growth in 2024, I wanted to ask because in the past you've talked about sort of a stickiness and Brazilians that you see with regards to suppliers continued to accept virtual card payments.

Nathan Benson: Despite the challenging macro so maybe can you give us an update on how that sort of resilience has trended since we last spoke three months ago anything changing with the decision process with your suppliers or any update there would be great.

Darrin Peller: Thanks, guys. The next question comes from Nate Sensen with Deutsche Bank. Please go ahead.

Nate Sensen: Hi guys, thanks for the question. Darren's question actually leads right into what I wanted to ask about corporate payments. First off, it's very nice to hear about the outlook for 20% growth in 2024. I wanted to ask you something about the stickiness and resilience that you see with regards to suppliers continuing to accept virtual card payments, you know, despite the challenging macro. So maybe can you give us an update on how that sort of resilience has trended since we last spoke three months ago? Is it changing with the decision process with your suppliers or any other update? That would be great.

Nathan Benson: Yes.

Ron: It's Ron I'd say.

Ron: <unk> change so.

Speaker Change: I think we said it before the.

Speaker Change: Acceptance or non acceptance of a virtual card turns really more on the profile of merchants.

Speaker Change: Merchants that have obviously higher margins for example are more accepting.

Speaker Change: Merchants more need of cash flow because they're paid sooner. So I'd say, there's really not been super now.

Speaker Change: Opt out rate. If you will has been pretty steady and again, who takes the car is really a function of kind of who the merchant is so so nothing new.

Speaker Change: Actually same park penetration levels pick up a little bit so at the end of the day. It kind of comes down to the amount of spend and that's on a card and that's moved up as you look at it over a quarterly trend.

Ronald F. Clarke: And I guess, Ron, I'd say not much change, so... I think we've said it before that... Acceptance or non-acceptance of a virtual card turns really more on the profile of merchants. You know, merchants that have obviously higher margins, for example, are more accepting, or merchants more in need of cash flow because they're paid sooner. So I'd say there's really nothing super new. The opt-out rate, if you will, has been pretty steady, and again, who takes the card is really a function of kind of who the merchant is. So, nothing new, and we've actually seen card penetration levels pick up a little bit. So at the end of the day, it kind of comes down to the amount of spend that's on a card. That's great to hear about the penetration levels, which I know there was a lot of talk about new products throughout the call. One I kind of wanted to dig deeper into was the new Corpay Complete products.

Speaker Change: That's great to hear about the penetration levels until I know theres been a lot of talk about new products throughout the call.

Speaker Change: I kind of wanted to dig deeper on was the new core pay complete products I know there was a press release that came out at the end of January. So maybe you can talk about the go to market motion, there, where youre seeing the sort of synergy potentials between the full AP offering cross border etcetera within within that core pay complete.

Speaker Change: Yeah, that's a good.

Speaker Change: A good question I mean simplistically.

Speaker Change: Nate we used to do not.

Speaker Change: On a mid size company.

Speaker Change: My CFO and Hey, we've got some great expense management.

Our products here and mostly the pitch was kind of.

Speaker Change: Menu based or Ala Carte, you know hey, it looks like you've got some drivers we've got your car. It looks like you need a better control business card given some of the expenses that are common and the one that's got automated expense reimbursement. So historically, that's how we've presented things and so.

Nate Sensen: I know there was a press release that came out at the end of January, so maybe you can talk about the go-to-market motion there, where you're seeing the sort of synergy potential between the full AP offering, cross-border, etc. within that Corpay Complete. Thanks. Yeah, that's another good question. I mean, simplistically... Nate, we used to do knock-knock on a mid-sized company, the high CFO, and hey, we've got some great expense management products, and mostly the pitch was kind of, "menu-based or a la carte." You know, hey, looks like you got some drivers.

Speaker Change: The idea was to be able to have kind of a wrap of rebate or look at the start of the whole company. So not I CFO, you've got walk around and you've got a piece then I can combine all of that and give you you know 100 basis points back half a million a month back and make your life easier how does that sound.

Speaker Change: So we finally have a platform where all of those things go walk around stuff and the AP automation stuff is literally brought together.

Ronald F. Clarke: We've got fuel cards. Looks like you need a better control business card, given some of the expenses that are coming in, or one that's got automated expense reimbursement.

Speaker Change: Colin in terms of one report one one credit underwriting system and stuff and so that's the idea that we could present now to accompany effectively.

Ronald F. Clarke: So, historically, that's how we presented things. And so, the idea was to be able to have kind of a wrap or rebate or look at the spend of the whole company. So, not a high CFO. You've got walk-around spend.

Speaker Change: Package deal if you will instead of an Ala carte deal. So we just literally been underway call. It just what you said call it a month or so where the first set of first at least.

Speaker Change: Clearly, it's going to be the future. My hope is even if we sell someone a card the first day that.

Ronald F. Clarke: You've got AP spend. I can combine all of that and give you, you know, a hundred basis points back, half a million a month back and make your life easier. How does that sound? So, we finally have a platform where all those things, the walk-around stuff and the AP automation stuff are literally brought together. You know, think of it in terms of one report, one credit underwriting system and stuff.

Speaker Change: They're on our railroad it's easier to go back they've learned how to use the UI. They know once we have an account we credit.

Speaker Change: Written them and stuff and so we think it certainly led us to.

Speaker Change: You know better add on sales over time.

Speaker Change: Great to hear and what that can be tracking progress there. Thanks.

Speaker Change: The next question comes from Sanjay <unk> with K B W. Please go ahead.

Ronald F. Clarke: And so, that's the idea that we could present now to a company effectively a package deal, if you will, instead of an a la carte deal. So, we've just literally been underway. Call it just what you said.

Sanjay: Thanks, Good evening, sorry, I hopped on a little bit late I apologize if you've answered these questions, but just on the macro assumptions that you guys are using for the year, what kind of macro are you guys assuming sort of.

Nate Sensen: Call it a month or so with the first set of leads in it, but clearly, it's gonna be the future. My hope is even if we sell someone a la carte the first day that they're on the railroad, you know, it's easier to go back. They've learned how to use the UI. They know us.

Sanjay: At the beginning and ending of the year.

Speaker Change: Sure Hey, Sanjay just.

Sanjay: Thinking big picture macro and I'll start there and then we can talk a little bit in terms of the more detailed macro.

Ronald F. Clarke: We have an account. We credit, you know, underwrite them and stuff. And so, we think it certainly lends to, you know, better add-on sales over time. Great to hear, and we'll definitely be tracking progress there. Thanks. The next question comes from Sanjay Sakhrani with KBW. Please go ahead. Thanks, good evening.

Sanjay: The specifics are probably the big picture macro we're expecting an economic outlook to stay relatively consistent completely in line with the broad economic guide when you look at our three major markets of Brazil U S and U K.

Sanjay: We expect it and all of those markets to see relatively stable, maybe slightly improving economy as rate cuts in those various markets occur, but we're not expecting any kind of recession and certainly we're not expecting a GDP kind of gang Buster type.

Sanjay Sakhrani: Sorry, I hopped on a little bit late; apologize if you've answered these questions, but just on the macro assumptions that you guys are using for the year, what kind of macro are you guys assuming, sort of, beginning and ending of the year. Big picture macro, we're expecting an economic outlook to stay relatively consistent. Fleetcore, if I think about it in terms of a couple of categories, first, fuel.

Sanjay: With respect to the more narrow macro.

Sanjay: FX fleet core kind of think about it in terms of a couple of categories first fuel.

Tom Panther: Fuel price, average fuel price, diesel and unleaded combined at $365, that's a little below where we are today, if you just kind of look at where we are through 2024, we're probably closer to a blended rate of around $340, so that's one of the call outs that we had in terms of the Q1 growth challenge. But we're not prognosticators of oil and the pull through to fuel, we just look at EIA and other providers of those things, and that was the consensus view of how the year would play out. I think as demand increases from a seasonal perspective, you would see that increase. Spreads generally consistent with last year, that's really hard to predict, it's more based on volatility of fuel price, not just absolute, so that's kind of anybody's guess, but we've looked at historical trends, www.plastics-car.com Facts, a little bit of a tailwind, if the dollar and rate cuts continue, if the projection is correct and the dollar doesn't strengthen up to have a little bit of strength, Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com.

Sanjay: Fuel price average fuel price diesel and unleaded combined at 365, that's a little below where we are today could you just kind of look at where we are through 2024, probably closer to a blended rate of around $3 40. So that's one of the callouts that we had in terms of the Q1 growth challenge.

Sanjay: But we're not prognosticators of of oil in the poultry to fuel, we just look at EIA and other providers of those days and that was the consensus view of how the year would play out I think as demand increases from a seasonal perspective, you would see that increase.

Sanjay: <unk> generally consistent with last year, that's really hard to predict it's more based on volatility of fuel price.

Sanjay: Absolutely.

Sanjay: That's kind of if you looked at it.

Sanjay: Historical trends.

Sanjay: The model.

Sanjay: Yeah.

FX, a little bit of a tailwind.

Sanjay: And rate cuts.

Sanjay: The project is.

Sanjay: And the dollar doesn't strengthen up the hell of a strengthening over the last week or so, but but longer term, we expect the dollar to be.

Sanjay: Be a little weaker and so that will help.

Sanjay: FX side of our business.

Sanjay: Okay.

Sanjay: We think overall that.

Sanjay: It'll be a slight tailwind to us.

Sanjay: <unk>.

Sanjay: Generally kind of.

Sanjay: Neutral to better.

Sanjay: We have modeled out.

Sanjay: Great curve based on today's rate curve out there. So we think rates will be a little bit better.

Ronald F. Clarke: That'll be a slight tailwind; rates are generally kind of, you know, neutral to better. We have modeled out the rate curve based on the latest rate curve out there. So we think rates will be a little bit better, certainly interest expense lapping the headwind from this year in terms of the growth over, and then, I guess, finally, taxes, we think, would be, you know... Please see the complete disclaimer at https://sites.google.com or at www.google.com. Hey, Sanjay, it's Ron.

Sanjay: Certainly interest expense lapping.

Sanjay: <unk> from this year in terms of the growth in 'twenty two.

Sanjay: Benefit to us and then I guess finally taxes, we think would be generally consistent with the full year tax rate in 2023. So overall, we characterize the macro.

Speaker Change: True to.

Speaker Change: From a macro perspective, big big macro perspective.

Speaker Change: And kind of a slight benefit to us.

Speaker Change: With with respect to kind of the things that affect us directly.

Speaker Change: Hey, it's Ron I got to jump in because that's clearly the opt in this year playing off of Tom and I would say, it's all it's shiny days right living through 2023, with a $200 million interest expense boat anchor.

Sanjay Sakhrani: I've got to jump in because I'm clearly the optimist here, playing off of Tom, but I'd say it's all, it's sunshiny days, right? Living through 2023 with a $200 million interest expense boat anchor and sitting here, you know, at the beginning of the year with happy FX and declining interest rates. It feels super great to get earnings prints back to 15 or 18 percent that we can print instead of whatever we printed last year. So I would say that it's setting up at this moment to be super positive for us, and I'm very happy. Yeah, I'll keep my fingers crossed.

Speaker Change: Here at the beginning of the year with happy FX and declining interest rates.

Speaker Change: It feels super rate to get earnings print back 15, or 18% that we could trend instead of whatever we printed last year. So I would say that it's setting up at this moment to be Super positive, we're super happy with it.

Speaker Change: I'll keep my fingers crossed.

Speaker Change: Just just.

Ronald F. Clarke: Just a follow-up. Ron, you mentioned sort of the cross-sell initiatives in your prepared remarks. How much of that can happen over 2024? Is there anything baked in?

Speaker Change: A follow up.

Speaker Change: Ron you mentioned sort of the cross sell initiatives in your prepared remarks, how much of that could have.

Speaker Change: Happen over 2024 and is there anything baked in and then you know.

Sanjay Sakhrani: And then, you know, when can we actually get the contribution in a significant way? Yeah, I mean, it's happening in different places. I think you, you know, we've called it out before, probably 20% of the Brazil sales now in the company are taking add-on products there and selling them back to the core base. We're underway with that, as I said, with the parking app, because we've got millions of consumers. We're back reselling something back into the base of corporate payments, back into the fuel card base, so it's clearly in our sales plan. I'd say it's probably a relatively significant number as we get through the year in terms of what we're expecting there, so it's been a core part of the idea that we've got, as you know, 800,000 business clients, and some number of them are pretty big, and So I think it's especially meaningful this year.

Speaker Change: When can we actually get the contribution in a significant way.

Ron: Yeah, I mean, it's happening in different places I think we've called out before it's probably 20%.

Ron: Cent of the Brazil sales now in the company are taking.

Ron: Add on products, there and selling them back to the core base.

Ron: We're underway with that as I said with the parking app, because we've got millions of consumers.

Ron: We're back reselling something back into the base with what repayments back into the fuel card base. So it is clearly in our sales plan I would say its a probably relatively significant number as we get through the year in terms of what we're expecting there. So it's been a core part of the idea that we've got as you know.

Ron: 800000 business clients in some number of them are pretty big and so having more things to offer them has always been part of the idea. So I think it's it's it's meaningful this year.

Speaker Change: Thank you.

Ronald F. Clarke: Thank you. The next question comes from Sharit Kumar with Evercore ISI. Please go ahead. Hey, hi, everyone.

Rayna Kumar: The next question comes from <unk> Kumar with Evercore ISI. Please go ahead.

Rayna Kumar: Oh, Hey, hi, everyone. Thanks for taking the question.

Rayna Kumar: Thanks for taking the question. I was looking at slide 37. And I can see that the corporate payments take rate has increased in 2023. So just wanted to get some context as to, you know, what's the pricing power over here? And can we expect the same trajectory? I think that's the function of the adjustments that you have made by the segments. So just to get some insights on that. Just re-do your page number again. It's the 27... 37. Yeah, so a lot of that has to do with the channel mix.

Rayna Kumar: I was looking at slide 37, and I can see that the corporate payments take rate has increased in 2020.

Rayna Kumar: Trees. So I just wanted to get some context as to you know whats the pricing power with your and can we expect that same tragic tree I think that's the function of all the adjustments that you have done by the segments.

Speaker Change: So just to get some insights on that.

Speaker Change: Sure to your page number again.

Speaker Change: Seven.

Speaker Change: 37.

Speaker Change: 30, okay.

Speaker Change: Yes.

Speaker Change: So a lot of that has to do with the channel mix. So as Ron mentioned earlier in terms of the way the amount of take rate, we have on channel versus the direct business as.

Tom Panther: So, as Ron mentioned earlier, in terms of the amount of take rate we have on the channel versus the direct business, as we saw the channel volume fluctuate in the quarter, that's what's causing the fluctuation, and the take rate related to it. Thank you. And my follow-up is on the margins. We see that margins have been grinding higher across all the segments, and especially within vehicle payments and corporate payments.

Speaker Change: As we saw the channel volumes fluctuate in the quarter, that's what's causing the fluctuation.

Speaker Change: And the take rate related.

Speaker Change: Corporate payments.

Speaker Change: Got it. Thank you and my follow up is on the margins, we see that the margins have been grinding higher across all the segments and especially within the way cause payments and corporate payments. So just to get a sense as to you know what could be the biggest driver in margins in 2020 for like which segment do you expect to be.

Rayna Kumar: So just to get a sense as to what could be the biggest driver of margins in 2024? Like which segment do you expect to make a meaningful contribution? Yeah, I don't think it's kind of disproportionate one way or another, just to kind of round it out.

Speaker Change: A meaningful contributor.

Speaker Change: Yeah, I don't think it's kind of a disproportionate one way or another just to kind of round. It out just to summarize for the year, we were at 53% we're exiting.

Around 54% and we guided for the full year 2024 to be at 54%, probably exiting a little bit higher than that as you would expect and so it's not really one one there's not a lot of change there you're talking about give or take 100 150 basis points.

Tom Panther: For the year, we were at 53%, and we were exiting at around 54%. And we've guided for the full year 2024 to be at 54%. I'm probably leaving a little bit higher than that, as you would expect. And so it's not really one, one. There's not a lot of change there. You're talking about, give or take 100, 150 pages.

Speaker Change: And secondly, I think it's more of the structure of the business, that's driving the margin not necessarily something.

Speaker Change: That we're doing necessarily inside the business to modify the existing biz.

Speaker Change: Our business model and the structure. So just as we grow at the levels at which each of the businesses are growing from a revenue and sales perspective, and the amount of fixed cost or just kind of get this natural operating leverage benefit from from margin, where youll see that rotate up so and at the same time, we also want to continue doing that right.

Rayna Kumar: And secondly, I think it's more of the structure of the business that's driving the margin, not necessarily, www.fleetcorporate.com. Yeah, I guess, yeah, fair point. Yeah, credit is coming down a little bit, uh, 23 to 24. It would also help, uh, the margin. Please see the complete disclaimer at https://sites.google.com or at www.sites.google.com, and many more, growth levels that we've historically had. Thank you so much; I appreciate it with William Blair. Please go ahead.

Speaker Change: Yes.

Speaker Change: Credit is coming down a little bit 23 to 24. It would also help the margin.

But the.

Speaker Change: Yeah, I think just from the standpoint of just investment we continue to make significant investments in the company, particularly around sales and marketing and so we are mindful in terms of the amount of spend that we're putting back into the company to make sure that our sales engine and continue to generate.

Speaker Change: Got it.

Speaker Change: Gross levels that we've historically generated.

Speaker Change: Thank you so much appreciate it.

Speaker Change: The next question comes from Chris Kennedy with William Blair. Please go ahead.

Operator: Good evening, thanks for taking the question. I know you give the UK as an example of the unit economics of your EV business, but can you just talk broadly about that, how that's evolved over time, and your confidence going forward in that. Yeah, hey, Chris, it's Ron.

Chris Kennedy: Good evening. Thanks for taking the question I know you give the sample of the UK or unit economics of your business, but can you just talk broadly about that how that's evolved over time and your confidence.

Chris Kennedy: Going forward in that.

Chris Kennedy: Yeah, Hey, Chris it's Ron So look I.

Chris: So look, I preface it with, you know, it's still early days, I guess. We've been running this analysis for, what, eight quarters or something and have..., three or four hundred accounts in it. So, um, look, we. We know a fair amount.

Ron: It's still early.

Ron: Early days I guess, we've been running this analysis for what eight quarters or something that have three or 400 accounts on it so.

Ron: What we do.

Ronald F. Clarke: We have real customers that are paying real bills and paying us more. I'd say to you that, conceptually, the reason that I think we can get paid the same or more, just to me, in a simple way, is there are just more merchants. So in the fuel business, let's say, in the UK, there are 9,000 gas stations.

Ron: We know what are our real customers that are paying real pills and paying us more I would say to you that conceptually. The reason that I think we can get paid the same or more just amazed simplistically is there's just more.

Ron: Merchants so in the in the fuel business, let's say in the U K. It is 9000 gas stations.

Ronald F. Clarke: We have a million drivers there, so someday, when every guy or gal has an EV, there's going to be a million incremental charge points, way more than 9,000 public charging points. And so the ability, again, to help a company make the transition from some old-fashioned gas stations to some public charging stations for the million at home, bring that all together and keep it simple, is useful, and in the scope of what they pay for charging and fuel, our fees are peanuts. And so it feels to me like we know what we're doing, and more importantly, we have products that they like. Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com/policies.appreciate it.

Ron: We have a million drivers there so someday whenever you guy or Gal has an EDI, there's gonna be a million incremental charge points, there's way more than 9000 public charging points and so the ability again to to help a company make the transition.

Ron: From some old fashion gas stations to some public charging to the million at home bring that all together and keep it simple it's useful and the scope of what they pay for charging and fuel our rfps are peanuts and so it feels to me like we know what we're doing and more importantly, we.

Products that they like.

Ron: I think it doubled.

Ron: Year over year, so I feel better about we've got the right solution clients like it and clients are paying for it and the math shows you that paying more now than the old fashioned things. So I'd say stop ran the Frigging fire alarm.

Chris: Thank you. The next question is from Trevor Williams with Defi. Go ahead. Great, thanks a lot. I want to ask about lodging. Any more detail you can give on some of the different components within the segment?

Ron: My comments that people hey, there's a lot of time in front of us, but I would not be super afraid you know sitting here today.

Speaker Change: Right appreciate it.

Speaker Change: Thank you.

Speaker Change: The next question is from Trevor Williams with Jefferies. Please go ahead.

Great. Thanks, a lot I wanted to ask on lodging and any more detail you can give on some of the different components within the segment. It sounds like most of the incremental weakness was on the airline side, but any more color on the other pieces workforce managed services insurance, just how those dead, especially relative to Q3 would be helpful.

Trevor Williams: It sounds like most of the incremental weakness was on the airline side, but any more color on the other pieces, workforce, managed services, insurance, just how those did, especially relative to Q3, would be helpful. Thanks. Sure, Trevor. It's Tom again.

Speaker Change: Thanks.

Speaker Change: Sure Trevor.

Speaker Change: It's Tom again, so yes.

Tom Panther: So, the lodging business, as we mentioned in our prepared remarks, did experience some of that. But where our biggest surprise was for the quarter was really more on the airline and the insurance piece. We actually saw the workforce piece come in about where we had anticipated. And a lot of the expected growth that we had forecast in the fourth quarter was from what we had seen historically with the level of flight cancellations related to our distress product, where you typically would see a seasonal uptick. There are lots of people in the air with holidays and things like that, and that just didn't come to fruition.

Tom Panther: Lodging business.

Tom Panther: We mentioned in our prepared remarks, it did experience some softness where our biggest surprise was for the quarter.

Tom Panther: It was really more on the airline and the insurance piece, we actually saw.

Tom Panther: The workforce piece came in about where we had anticipated.

Tom Panther: And a lot of the expected growth that we have.

Tom Panther: Had forecast in the fourth quarter was from what we've seen historically with the level of flight cancellations related to our distressed product.

Tom Panther: Typically we would see a seasonal uptick with lots of people in the air with holidays and things like that.

Tom Panther: And that just didn't come to fruition. Similarly on the insurance side, we saw the decline.

Tom Panther: Similarly, on the insurance side, we saw the decline on www. Fleetcorporate.com. Workforce, you know, we continue to see, you know, a little bit of softness there, but as Ron had indicated, we feel like that has dropped out. Please see the complete disclaimer at https://sites.google.com or at www.fleecore.com. Okay, now that's helpful, thanks.

Tom Panther: And overall insurance.

Tom Panther: Decline quarter over quarter, and lodging was really more directed towards those two businesses, where those types of episodic type things that occurred in the fourth quarter just didn't materialize workforce.

Tom Panther: <unk> see.

Tom Panther: A little bit of softness there, but as Ron indicated we feel like that is Bob.

Speaker Change: Do you expect that.

Speaker Change: Or based on new sales and introducing the introduction of some of the new products.

Bob: Okay. No. That's helpful. Thanks, and then just to put a finer point on the <unk>.

Trevor Williams: And then just to put a finer point on the assumptions for the macro-neutral or the organic guide, in terms of cadence, is the expectation that growth will accelerate progressively over the course of the year, so like you were saying with the vehicle where the Q1 low point, 4Q exit rate for 24 should be the high point of organic growth for the year, or anything else to call out? Thanks. Yeah, Trevor, let me take that, and then Tom can add to it.

Bob: Assumptions for the macro neutral or the organic guide in terms of cadence is the expectation that growth will accelerate progressively over the course of the year. So like you were saying with vehicle, where Q1 low point <unk> exit rate for the 24 should be the high point of organic growth for the year or anything else to call out. Thanks.

Speaker Change: Yeah, Charles Let me let me.

Speaker Change: Take that and then Tom can add to it. So I mean conceptually. The main reason is the same store sales. So if you think about math right of how to get to get to 10% right, we lose business right 8%.

Ronald F. Clarke: So, I mean, conceptually, the main reason is the same store sale. So if you think about math, right, of how to get to 10%, right, we lose business, right, 8%, we make sales, and then we have the same store sale. And so the bet that we have, which we're seeing in the trends, is that the same store that was plus 2 four quarters ago and was minus 3 this past quarter will head back to being flat. And if that does, obviously, in that example, it lifts the organic thing by 3 points.

Speaker Change: We make sales in that way at the same store sales. So the best that we have which we're seeing and the trends is that the same store that was plus two four quarters ago and was minus three this past quarter will head back to flat and if that does obviously in that example, it lifts the organically by three points.

Ronald F. Clarke: So that's A. B. We think the retention will again likely tick up because of this microflush. When you have more bigger accounts, you structurally just have better retention. And then third, our corporate payments business is growing faster, and it has higher retention rates than our fuel card business. So those two things, as we model it, will help the back half. And then hopefully, the set of new products and the cross-sell stuff, which we're pouring out now, that will start to build. Those add-ons will start to build in the back half. So that's what makes up the curve as we run.

Speaker Change: So that's a b, we think the retention again will likely tick up because of this micro flush when you have more bigger accounts you structurally just have better retention and then third our corporate payments business is growing faster and it has higher retention rates than our fuel card business. So those two.

Speaker Change: Two things as we model it will help the back half and then Uh huh.

Speaker Change: Hopefully are set.

Speaker Change: A set of new products and the cross sell stuff, which we are pouring out now that will start to build those add ons will start to build in the back half. So that's what makes up the curve as we run through the year.

David Mark Togut: Got it. Thank you. The next question is from David Koning with Baird. Please go ahead. Hey guys, just a couple of things. I guess on the corporate line, you called out the yield mix improvement, but corporate volumes were down about 15% sequentially. It must have been low yielding volumes that fell off, but what is the mix, or what was the fall off in volume? Yeah, it's just that channel thing that I said before.

Speaker Change: Got it thank you.

Speaker Change: The next question is from David Koning with Baird. Please go ahead.

David Mark Togut: Yeah, Hey, guys.

David Mark Togut: Just a couple of things I guess on the corporate line you called out the yield mix improvement, but corporate volumes were down about 15% sequentially. It must've been low yielding volumes fell off but what what is the mix of what what was the falloff in volumes to them.

David Mark Togut: It's just that channel thing that I've said before I mean that literally was the point of our same store sales reduction we would have been two of that business was flat. So again, it's just a big partner that gives us lots of volume and no money goes dates around that goes nonexclusive, and so hey, we lose a little bit of revenue when we lose a lot of volume.

Tom Panther: I mean, that literally was the point of our same store sales reduction. We would have been two if that business was flat. So again, it's just a big partner that gives us lots of volume and no money goes around, dates around, and goes non-exclusive. And so, hey, we lose a little bit of revenue, and we lose, you know, a lot of volume. But the take rate goes up because, obviously, that's a lot of low margin business that we weren't getting. We also know that excluding channels, the spin level was north of 25%, so it's really a channel story that's driving both the volume and the take rate noise. But again, just to put a finer point on the thing, I want to make sure people have heard that we have the business now contracted, right, for 24, so that helps us relay to you guys that we've hit rock bottom there. Because when I look at what's effectively contracted inside of the minimums that we have, we're kind of done with that dating around. There's no more dating. If you date one or two people, you can't have any more of that.

David Mark Togut: But the take rate goes up because obviously, that's a lot of low margin business that we weren't.

We're getting.

We also noted that excluding channel the spend level was north of 25%. So it's really a channel story, that's driving both the volume and the take rate noise that you may be seen but again just to.

David Mark Togut: Put a finer point on the thing I want to make sure people have heard that we have the business to have contracted right for 24, so that that helps us related to you guys that we would hit the bottom there because when I look at what's effectively contracted inside of the minimums. We have we're kind of done with that data around.

David Mark Togut: No more data if you're doing one or two at the beginning of any more of that that's that's where it is so that if there's any good news. That's the good news here kind of belt and suspenders. It with also some minimums as well so that we also got some protection.

David Mark Togut: That's where it is. So if there's any good news, that's where it is. It kind of belted and suspended it with some minimums as well, so that we also got some protection that while we're under contract, we also have commitment from a minimum perspective. Gotcha. Thanks. And just a quick follow-up: bad debt expense. You called it out. I mean, it's the lowest, $22 million lowest in eight quarters or so. Is your 2024 guidance for that to remain low? And if so, is anything related to reversals?

David Mark Togut: While we are under contract. We also have some commitments from a government perspective too.

Speaker Change: Got you Thanks, and just a quick follow up bad debt expense you called it out I mean, its lowest $22 million lowest in eight quarters or so.

Speaker Change: Is your 2024 guidance for that to remain low and if so is anything related to reversals like is it unsustainably low in 2024 or just normalized.

Tom Panther: Like, is it unrealistically low in 2024 or just normalized? Yeah, I mean, I'd say it's fairly normalized. Obviously, it's going to fluctuate from a dollar perspective as the business grows. You know, we think of it more in terms of basis points of spend or percentage of revenue because as the business grows, you'd expect the bad debt dollar amount to grow, but not necessarily that rate to necessarily grow. So I think we'll continue to see good performance in 2024. We, plus the microclient, as Ron said, we've tuned some of our models, we've gotten to a point where I think we've learned a lot over the last, call it six quarters, and I think we'll be in a position where we can be a bit more opportunistic in terms of how we manage credit. Thanks, guys. Thanks, guys. Yeah. Yeah, it's really bad.

Yeah, I mean, I'd say, it's fairly normalize obviously, it's going to fluctuate from a dollar perspective as the business grows.

Speaker Change: We think of it more in terms of basis points spend or percentage of revenue because as the business grows you would expect that that dollar amount to grow but not necessarily that rate to necessarily grow.

Speaker Change: So I think we'll continue to see good performance in our.

Speaker Change: 2024.

Speaker Change: Plus the micro clients.

Speaker Change: Clients.

Speaker Change: Ron said, we've tuned some of our models, we've gone to a point, where I think we've learned a lot over the last.

Speaker Change: Call it six quarters.

Speaker Change: Thank you we'll be in a position, where we can be a bit more opportunistic in terms of how we manage credit.

Speaker Change: Got it thanks, guys Yeah, just at the point it helps the flow through into earnings right. Although it looks like revenue was light when you take those late these out because you take it out.

David Mark Togut: The point is it helps the flow through into earnings, right, although it looks like revenue is light when you take those late fees out because you take out credit loss expense, basically, you have you know you have a decent flow through down to EPS, so that's one of the reasons that the profit flow through remains pretty good. Yeah, great. Thanks, guys. The next question... This is a production of WPSU.

Speaker Change: Credit loss expense basically you have decent.

Speaker Change: Decent flow through down to down to EPS. So that's one of the reasons that the the profit flow through remained pretty good.

Speaker Change: Yeah, great. Thanks, guys.

Speaker Change: The next question comes from James Fawcett with Morgan Stanley. Please go ahead.

Operator: Thank you. Thank you. Go ahead. Yeah, hi, it's Michael Infante on for James. Thanks for taking our question. Just one quick one for me.

Speaker Change: Yeah, Hi, it's Michael in Fontana on for James Thanks for taking our question just one quick one for me on the buyback.

Michael Infante: On the buyback, anything that we should be mindful of just in terms of cadence there? Do you think it'll be fairly evenly distributed based on, you know, seasonal free cash flow generation? Or will it be weighted to any particular quarter? Thanks. Yeah, Michael. It's Tom.

Michael: And that we should be mindful of just in terms of cadence. There do you think it'll be fairly evenly distributed based on seasonal free cash flow generation or will it be weighted to any particular quarter. Thanks.

Yeah, Hey, Michael It's Tom I think we're gonna be mindful in terms of market conditions, and we like where the stock price is as I mentioned, we're flush with liquidity both on the balance sheet and then when we upsized the revolver, we have another $600 million.

Tom Panther: I think we're going to be mindful in terms of market conditions, and we like where the stock price is. As I mentioned, we're flush with liquidity, both on the balance sheet, and then when we upsize the revolver, we have another $600 million of liquidity. Obviously, we want to use some of that liquidity for M&A, but you add it all up, we probably have up to $2.5-$3 billion worth of cash that we want to put to work, and we want to put it to work as quickly as possible. So I think the timing is just going to be predicated on the market, the amount of floating stock, and those types of things. But I think we will be, you know, looking to be in the market over the course of this quarter. And then we'll see how market conditions are in your place. Thank you, ladies. Please, as well as Email now to BF-WATCH TV 2021 BF-WATCH TV 2021

Tom Panther: Liquidity, obviously, we want to use some of that liquidity for M&A, but you add it all up we have.

Tom Panther: Up to $253 billion worth of cash that we want to put to work and we want to put it to work as quickly as possible. So I think the timing is just going to be predicated upon the market the amount of float in the stock and those types of things but.

Tom Panther: I think we will be.

Tom Panther: Looking to to be in the market.

Tom Panther: Over the course of this quarter and then we'll see how market conditions are peer plays out.

Speaker Change: Ladies and gentlemen, this concludes our question and answer session as well as the conference.

Speaker Change: You for your participation you may now disconnect your line.

Speaker Change: [music].