Q1 2024 Corpay Inc Earnings Call

Operator: Good day everyone, and welcome to today's Corpay First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Good day, everyone and welcome to today's core pay first quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. Later, you'll have the opportunity to ask questions. During the question and answer session. You May Register asking a question at any time, but personally star.

Operator: Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2.

Operator: And one on your telephone keypad, you may withdraw yourself from the queue by pressing star. Two. Please note. This call is being recorded I'll be standing by if you should need any assistance is now my pleasure to turn the call over to Jim and Wooster. Please go ahead Sir.

Operator: Please note this call is being recorded. I'll be standing by if you should need any assistance. It is now my pleasure to turn the call over to Jim Edwister. Please go ahead. Good afternoon, and thank you for joining us today for our first quarter 2024 earnings call. With me today are Ron Clark, our chairman and CEO, and Tom Pantner, our CFO. Following the prepared comments, the operator will announce that the queue will open for the Q&A session.

Jim Edwister: Today's documents, including our earnings release and supplement, can be found under the Investor Relations section of our website at corpay.com. Throughout this call, we will be covering organic growth. As a reminder, this metric neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices, and spreads, and it also includes proforma results for acquisitions and divestitures, or scope changes, closed during the two years being compared. We will also be covering other non-GAAP financial metrics, including revenues, net income, and net income per diluted share, all on an adjusted basis. These measures are not calculated in accordance with GAAP and may be calculated differently than at other companies.

James P. Eglseder: Good afternoon, and thank you for joining us today for our first quarter 2024 earnings call with me today are Ron Clarke, our chairman and CEO and Tom Panther our CFO.

Jim Edwister: 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. It's important to understand that part of our discussion today may include forward-looking statements. These statements reflect the best information we have of today, and 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 Edwister: These expected results are subject to numerous risks and uncertainties, 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. These documents are available on our website and at sec.gov. With that out of the way, I will turn the call over to Ron Clark, our chairman and CEO.

Ron Clark: Okay, Jim. Thanks. Good afternoon, everyone, and welcome to our Q1 2024 earnings call, our first as Corpay, the corporate payments company. So, up front here, I'll plan to cover three subjects.

Ronald F. Clarke: Following the prepared comments, the operator will announce that the queue will open for the Q&A session.

Ron Clark: First, I'll provide my take on Q1 results and share our updated 2024 guidance. Second, I'll cover conclusions from our recent three-year strategy off-site regarding the way forward for the company. And then lastly, I'll highlight a couple developments since we last spoke. Okay. Let me begin with our Q1 results, which finished really right in line with our expectations. We reported revenue of $935 million.

Ron Clark: That's up 8%, excluding Russia. And cash EPS of $410. That's up 14%, excluding Russia.

Ron Clark: Todays documents, including our earnings release and supplement can be found under the Investor Relations section of our website at Corp, Hey, Dot com.

Ron Clark: Overall organic revenue growth, 6% for the quarter, although against a pretty tough comp. We are pleased with our corporate payments business. Revenue growth there was up 17% overall, but up 21% if you exclude the channel partners. Trends in Q1 were quite good, retention, overall retention remains stable at 91%, sales, or new bookings up 11% year over year, and same store sales were a soft negative 2% for the quarter driven primarily by lodging, although same store sales did improve one point sequentially from minus 3 to minus 2 this quarter. For sure, we're dealing with a couple of problem children here in Q1.

Ron Clark: Throughout this call we will be covering organic rats as a reminder, this metric neutralizes the impact if you ever even changes in foreign exchange rates fuel prices and spreads and it also includes pro forma results for acquisitions and divestitures or scope changes closed during the two years being competitive.

Ron Clark: We will also be covering other non-GAAP financial metrics, including revenues net income and net income per diluted share all on an adjusted basis. These measures are not calculated in accordance with GAAP and maybe calculated differently than other companies reconcile.

Ron Clark: 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.

Speaker Change: It is important to understand that part of our discussion today may include forward looking statements. These statements reflect the best information, we have today and all statements about our outlook new products and expectations regarding business development or future acquisitions are based on that information. They are not guarantees of future performance and you should not put undue reliance upon that we undertake no obligations to update any of these.

Ron Clark: <unk>.

Ron Clark: These expected results are subject to numerous risks and uncertainties, which could cause actual results to differ materially from what we expect.

Ron Clark: Some of those risks are mentioned in today's press release on form 8-K and in our annual report on Form 10-K. These documents are available on our website and at SEC Gov.

Ron Clark: With that out of the way I will turn the call over to Ron Clarke, our chairman and CEO, Brian Okay. Jim. Thanks, Good afternoon, everyone and welcome to our Q1 <unk>.

Ron Clark: Our North America vehicle business, as you'll recall, is making the pivot away from low-quality micro-accounts to S&B accounts. We are increasing the sales ramp there with incremental digital and a new kind of upmarket field sales channel to drive the pivot, but it is taking a bit longer than expected. But I do want to say we are for sure making progress.

Ron Clark: 'twenty 'twenty four earnings call, our first as core pay the corporate payments company.

Ron Clark: So upfront here I'll plan to cover three subjects first I'll provide my take on Q1 results and.

Ron Clark: And share our updated 2020 for guidance.

Ron Clark: Second I'll cover conclusions from my recent three year strategy off site.

Ron Clark: Regarding the way forward for the company and then lastly, I'll highlight a couple of developments since we last spoke.

Ron Clark: Okay. Let me begin with our Q1 results, which finished really write down right in line with our expectations.

Ron Clark: We reported revenue of $935 million.

Ron Clark: Up 8%, excluding Russia, and Kashi P. S at 410.

Ron Clark: That's up 14% excluding Russia.

Ron Clark: Overall organic revenue growth of 6% for the quarter, although against a pretty tough comp.

Ron Clark: Pleased with our corporate payments business, our revenue growth, they're up 17% overall.

Ron Clark: But up 21% if you exclude the channel partners.

Ron Clark: Trends in Q1 are quite good retention overall retention remained stable at 91%.

Ron Clark: Sales or new bookings up 11% year over year.

Ron Clark: And same store sales.

Ron Clark: Soft a negative 2% for the quarter driven primarily by lodging.

Ron Clark: Those same store sales did improve a one point sequentially from.

Ron Clark: From minus three to minus two this quarter.

Ron Clark: For sure we're dealing with a couple problem children here in Q1.

Ron Clark: Our North America vehicle business as you will recall, making the pivot away from low quality.

Ron Clark: Like ROE accounts to SMB accounts.

Ron Clark: We are increasing the sales ramp there with incremental digital.

Ron Clark: And a new kind of up market field sales channel to drive the pivot, but are taking a bit longer than than expected, but I do want to say, where we are for sure making progress.

Ron Clark: Our workforce lodging business continues to experience continued softness, that's from a combo of macro weakness and a couple of areas there along with issues in converting to a new IT system. Fortunately, we've now converted the majority of the client base across to the new IT system and we've introduced a brand new employee-friendly solution we call Choice, hoping these enhancements will harden the base. Good news, the early look at April volume in lodging does suggest that the softness is stabilizing.

Ron Clark: Our workforce lodging business continuing to experience continued softness.

Ron Clark: That's from a combo of macro weakness.

Ron Clark: And a couple of areas there along with the issues in converting two to a new it system.

Ron Clark: Fortunately, we've now converted the majority of the client base.

Ron Clark: Across to the new it system and we've introduced a brand new employee friendly solution, we call choice.

Ron Clark: Hoping these are these enhancements will harden the base.

Ron Clark: Good news the early look at April volume.

Ron Clark: In lodging does suggest that the softness is stabilizing.

Ron Clark: We're looking to return both the North America vehicle business and the workforce lodging business to positive organic growth in Q4. So, in summary, for the quarter, no real surprises and numbers coming in really on expectation. All right, let me make the turn to our updated 2024 full-year guidance. Really, there are two major differences today in our outlook for the year versus 90 days ago. So first, FX has moved against us, and interest rates look to be holding higher for longer. So both of these macro factors, unfortunately, will depress our print for the rest of the year.

Ron Clark: We're out looking both the North America vehicle business and the workforce lodging business to return to positive organic growth in Q4.

Ron Clark: So look in summary for the quarter, no real surprises and numbers coming in really an expectation.

Ron Clark: And as I said, we're expecting our lodging client softness to hang around longer, thereby reducing our full-year lodging revenue forecast. On the good news front, we do have greater visibility now around our high-performing businesses, corporate payments, international vehicle, and Brazil, and their ability to over-deliver the rest of the year. So as a result of these updated assumptions, we're reducing our full-year 2024 revenue guide at the midpoint from $4.8 billion to $4 billion, so down $80 million.

Ron Clark: Alright, let me make the turn to our updated 2024, our full year guidance.

Ron Clark: Really two major differences today and our outlook for the year versus 90 days ago. So first the FX has moved against us.

Ron Clark: And interest rates looked to be holding higher for longer. So so both of these macro factors. Unfortunately will depress our print rest of the year. Additionally.

Ron Clark: Additionally.

Ron Clark: As I said, we're expecting our lodging a client softness to hang around longer, thereby reducing our full year lodging revenue forecast.

Ron Clark: On the good news front, we do have greater visibility now around our high performing businesses corporate payments international vehicle, and Brazil, and their ability to over deliver our rest of the year.

Ron Clark: So as a result of these updated assumptions, we're reducing our full year 'twenty 'twenty four revenue guide at the midpoint from 4 billion 82, 4 billion. So down $80 million that consists of 40 million of lower FX translation.

Ron Clark: That consists of $40 million of lower FX translation, and then second, $40 million of incremental lodging revenue softness. We're also reducing full-year 24-cash EPS at the midpoint from $19.40 to $19.00. This is 100 percent the result of the macro.

Ron Clark: And then second 40 million of incremental lodging revenue softness.

Ron Clark: We're also reducing our full year 'twenty for Kashi P. S. At the midpoint from 1940 to 19.

Ron Clark: This is 100% are the result of the macro we do plan to absorb the profit impact from the 40 million lodging revenue did that through a combination of expense reductions currency swaps and some tax planning.

Ron Clark: We do plan to absorb the profit impact from the $40 million lodging revenue divot through a combination of expense reductions, currency swaps, and some tax planning. So despite the bit softer full-year outlook, we're still expecting a very strong Q4 exit, with organic revenue there well above 10% and cash EPS above $5. Okay, moving on, let me shift gears and share some of our conclusions from our recent midterm strategy off-site

Ron Clark: So despite the bit softer full year outlook, we're still expecting a very strong Q4 exit.

Ron Clark: With organic revenue there.

Ron Clark: Well above 10%.

Ron Clark: And cash EPS above $5.

Ron Clark: Okay, Yeah, I'm moving on let me shift gears and share some of our conclusions from our recent mid term strategy off site, that's where we lay out plans for the next three years. So first off in terms of objectives, we aspire to be a top quartile grew.

Ron Clark: That's where we lay out our plans for the next three years. So, first off, in terms of objectives, we aspire to be a top quartile growth company within the S&P 500. We're committed to 10% plus organic revenue growth and 15% plus earnings growth. And that's a pretty small club.

Ron Clark: Both company and within the S&P 500, we're committed do 10% plus organic revenue growth and 15% plus earnings growth and that's a pretty small club.

Ron Clark: Second, deeper not wider. We've concluded to go deeper in each of our three core segments, vehicle, corporate payments, and lodging, and not to expand into new segments, at least for now. Our research across the three core segments confirms that we've got plenty of TAM and plenty of sales expansion opportunities in each major business such that we can achieve our growth objectives without going wider. Third, in terms of acquisition strategy, our focus will be on corporate payments and consumer vehicle businesses. Think pay by phone.

Ron Clark: Second a deeper not wider we've concluded to go deeper in each of our three core segments.

Ron Clark: <unk> corporate payments and lodging and not to expand into new segments at least for now.

Ron Clark: Our research across the three core segments confirms that we've got plenty of Tam.

Ron Clark: And plenty of sales expansion opportunity in each major business.

Ron Clark: Such that we can achieve our growth objectives without going wider.

Ron Clark: Third in terms of acquisition strategy, our focus will be on corporate payments.

Ron Clark: And consumer vehicle businesses think pay by phone.

Ron Clark: We're going to focus on wheelhouse or accretive deals rather than capability deals that we've executed recently. And then lastly, from the offsite, in each of our major businesses, we plan to sell what we call a flagship product most of the time, so that more and more of our scale will be built on a single product in each line of business. And then, over time, we'd convert existing clients off of other products onto the flagship product. This will result in a narrower set of SKUs over time.

Ron Clark: We're going to focus on wheel house or accretive deals rather than capability deals that we've executed recently.

Ron Clark: Then lastly from the off site and each of our major businesses, we plan to sell what we call our flagship product most of the time.

Ron Clark: So that more and more of our scale will be built on a single product.

Ron Clark: Each line of business and then over time, we'd convert existing clients off of other products onto the flagship product. This will result in a narrower set of skus overtime.

Ron Clark: So look, we believe that this more focused way forward will result in a much easier company to manage and grow. Okay, lastly, let me make the turn to talk about two recent developments. First, our brand and ticker change. We did make our overall company brand change to Corpay, the corporate payments company, in March, at the same time changing the ticker symbol to CPay. We are planning to use the Corpay brand as a go-to-market brand here in the U.S. We already go-to-market as Corpay in our corporate payments business, and we've now launched the Corpay One Universal Fleet Card and Business Card in our vehicle payment segment.

Ron Clark: So look we believe that this more focused a way forward will result in a much easier company to manage and grow.

Ron Clark: And we're soon to relaunch CLC as Corpay Lodging. So in this case, we'll have one single Corpay go-to-market brand across payables, lodging, and vehicle. So sure to help us on the cross-selling front. Second, acquisitions. We've been pretty active on the acquisition front. We did announce earlier this year that we closed the majority investment in Zappay, which is a vehicle payments business in Brazil with 3 million monthly active users. You might recall the idea there is to add Zappay's vehicle registration renewals and payments of vehicle tickets or fines to our overall Brazil consumer vehicle bundle.

Ron Clark: Okay. Lastly, let me make the turn to talk about two two recent developments.

Ron Clark: First our brand and ticker change.

Ron Clark: We did make our overall company brand change to core pay the corporate payments company in March.

Ron Clark: At the same time changing the ticker symbol to see pay.

Ron Clark: We are planning to use the core pay brand as a go to market brand here in the U S.

Ron Clark: We already go to market as core of pay in our corporate payments business.

Ron Clark: We've now launched the core pay one universal fleet card and business card and.

Ron Clark: In our vehicle payment segment, and we're soon to relaunch C. L. C S.

Ron Clark: As as core pay lodging.

Ron Clark: So in this case will have one single core pay our go to market brand.

Ron Clark: Across payables lodging and vehicle so sure to help us on the cross selling front.

Ron Clark: Second our acquisitions, we've been pretty active on the acquisition front.

Ron Clark: We did announce earlier this year that we closed the majority investment in Zappei.

Ron Clark: Thats a vehicle a payments business in Brazil, with 3 million monthly active users you might recall the idea there is to add zap pays vehicle registration renewals.

Ron Clark: And payments of I.

Ron Clark: Vehicle tickets or fines to our overall, Brazil consumer vehicle bundle. The business is doing great is that pay revenue grew over 50% in Q1.

Ron Clark: The business is doing great; Zappay revenue grew over 50% in Q1. We did announce earlier today signing Paymarang, that's a full AP corporate payments company that runs about $50 million in annual revenue. We like the deal; it'll strengthen our corporate payments, AP automation business, and four new verticals. We're expecting the deal to close here in Q2, pending regulatory approval, and expect it to be accretive to both revenue growth and EPS growth next year. We see lots of synergies to chase.

Ron Clark: We did announce earlier today signing pay meringue.

Ron Clark: That's a full AP corporate payments company runs about 50 million in annual revenue.

Ron Clark: We liked the deal it'll strengthen our corporate payments AP automation business and.

Ron Clark: And for new verticals, we're expecting the deal to close here in Q2 are pending regulatory approval and.

Ron Clark: And expect it to be accretive to both revenue growth.

Ron Clark: And EPS growth next year.

Ron Clark: We see lots of synergies to chase.

Ron Clark: Okay, so in conclusion, Q1 out of the blocks, kind of per our expectations, the rest of the year outlook unfortunately a bit of a mixed bag, now expecting unfavorable macro and lodging softness for longer, offset by strong performance in corporate payments, international vehicle, and Brazil. We have refined our three-year growth plan. It calls for a narrower, simpler company that we can manage and compound that's got plenty of growth potential. So we like the way forward.

Ron Clark: Okay. So in conclusion Q1 out of the blocks are kind of per our expectations.

Ron Clark: Our rest of year outlook are unfortunately, a bit of a mixed bag.

Ron Clark: Now expecting on favorable macro.

Ron Clark: In lodging a softness for longer offset by strong performance in corporate payments international vehicle and Brazil.

Ron Clark: We have refined our three year growth plan it calls for a narrower a simpler company.

Ron Clark: We can manage and compound that has got plenty of growth potential. So we like the way forward.

Ron Clark: Finally, we're excited about these latest acquisitions, Zapay and Paymarang, along with the active pipeline in front of us. We expect these wheelhouse deals to be accretive to 2025 revenue and earnings growth. So with that, let me turn the call back over to Tom to provide some additional detail on the quarter.

Ron Clark: Finally, we're excited about these latest acquisitions.

Tom: Zap, a payment rang along with the active pipeline in front of US. We expect these wheelhouse deals to be accretive to two.

Tom: 2025 revenue and earnings growth.

Ron Clark: So with that let me turn the call back over to Tom to provide some additional detail on the quarter Tom.

Tom Pantner: Thanks, Ron, and good afternoon, everyone. Here are some additional details related to the quarter. Overall, results were in line with our expectations. Print revenue was $935 million, which was consistent with our guide, despite a $7 million macro headwind from both Fuel and FX.

Tom: Thanks, Ron and good afternoon, everyone.

Thomas E. Panther: Here are some additional details related to the quarter.

Thomas E. Panther: Overall results were in line with our expectations print revenue was $935 million, which was consistent with our guide despite a $7 million of macro headwind from both fuel and FX.

Tom Pantner: Organic revenue growth was 6%, as 17% growth in corporate payments was partially offset by softness in lodging. Reported revenue growth was 4%, but if you exclude the impact of the sale of our Russia business, revenue growth was 8%. Strong expense discipline and another quarter of lower bad debt produced positive operating leverage. Combined with a lower tax rate, we delivered $4.10 per share in cash EPS, three cents above the midpoint of our guidance, up 8% versus last year, and excluding the impact of the sale of our Russia business, cash EPS increased 14%. Now turning to our segment performance and the underlying drivers of our revenue growth. Corporate payments revenue increased 17% during the quarter, while our direct business grew 27%.

Thomas E. Panther: Organic revenue growth was 6% and 17% growth in corporate payments was partially offset by softness in lodging.

Tom Pantner: Reported revenue growth was 4%, but if you exclude the impact from the sale of our Russia business revenue growth was 8%.

Tom Pantner: Drawing expense discipline and another quarter of lower bad debt produced positive operating leverage.

Tom Pantner: Combined with a lower tax rate, we delivered $4 10 per share in cash EPS.

Tom Pantner: <unk> <unk> above the midpoint of our guidance.

Tom Pantner: Up 8% versus last year, and excluding the impact from the sale of our Russia business cash EPS increased 14%.

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

Tom Pantner: Corporate payments revenue increased 17% during the quarter within which our direct business grew 27%.

Tom Pantner: Our direct business exhibited strong underlying performance with solid growth across spend volume, transactions, and customers. In addition, higher revenue per transaction rates further contributed to the revenue growth. Cross-border revenue increased 18%, and sales grew 25% despite the low FX volatility during the quarter.

Tom Pantner: Our direct business exhibited strong underlying performance with solid growth across spend volume transactions and customers.

Tom Pantner: In addition, higher revenue per transaction rates further contributed to the revenue growth.

Tom Pantner: Cross border revenue increased 18% and sales grew 25% despite the low FX volatility during the quarter.

Tom Pantner: Client acquisition and spend volume activity was robust, as nearly every geography was up double digits, with particular strength in Asia-Pacific. We continue to make significant investments in this business through increased sales and marketing resources. Turning to vehicle payments, organic revenue grew 4% during the quarter, with the increase driven by Brazil and the international fleet.

Tom Pantner: Client acquisition and spend volume activity was robust as nearly every geography was up double digits with particular strength in Asia Pac.

Tom Pantner: We continue to make significant investments in this business through increased sales and marketing resources.

Tom Pantner: Turning to vehicle payments organic revenue grew 4% during the quarter with the increase driven by Brazil and International Fleet. Our International Fleet business continues to perform very well led by double digit revenue growth in Europe, Australia, and our maintenance business.

Tom Pantner: Our international fleet business continues to perform very well, led by double-digit revenue growth in Europe, Australia, and our maintenance business. In the UK, the soft economy impacted volumes in specific industry sectors, but we're confident that they will rebound as economic growth resumes given our strong market position, which includes 75% of the UK's top 200 fleet companies. During the quarter, we continued to build on our market-leading position in EV, with customer accounts nearly doubling, which includes our 3-in-1 ChargePass product and home charging sales. We're also excited to report that the ChargePass product won the Innovation in EV Technology Award at the 2024 Great British Fleet Awards.

Tom Pantner: In the U K, the soft economy impacted volumes in specific industry sectors, but we're confident that we'll rebound as economic growth resumes given our strong market position, which includes 75% of the Uk's top 200 fleet companies.

Tom Pantner: During the quarter, we continued to build on our market leading position in E V with customer accounts, nearly doubling which includes our three in one charge pass product and home charging sales.

Tom Pantner: We're also excited to report that the charge pass product one the innovation and EV Technology Award at the 'twenty 'twenty four great British Fleet awards, a prestigious and longstanding event across the automotive and fleet community.

Tom Pantner: This is a prestigious and long-standing event across the automotive and fleet community. Our EV success is further reinforced with over 40% of the top 200 fleet companies using our ChargePass product. Related to our expansion into the UK consumer vehicles market, we are making progress developing the integrations between our proprietary fuel, EV, and vehicle networks into the pay-by-phone app. We expect this functionality to be in place by the third quarter of this year. In Brazil, business performance was extremely strong, led by tag growth of 9%.

Tom Pantner: R. E V success is further reinforced with over 40% of the top 200 fleet companies using our charge pass product.

Tom Pantner: Related to our expansion into the U K consumer vehicles market, we are making progress developing the integrations between our proprietary fuel E V and vehicle networks into the pay by phone.

Tom Pantner: We expect this functionality to be in place by the third quarter of this year.

Tom Pantner: And Brazil business performance was extremely strong led by tag growth of 9%.

Tom Pantner: Now totaling over 7 million tag users. Our B2C extended network revenue was double compared to Q1 of 2023, and now over 30% of total revenue is non-toll. Also, sales growth continued to be strong across the TAG and insurance products. In March, we closed on the majority investment of ZAP Pay, which has over 3 million customers that use the ZAP Pay solution to pay for vehicle registration and compliance fees. The addition of ZapPay further advances our consumer vehicle payment strategy in Brazil and allows us to capitalize on the attractive two-way cross-sell opportunity. We are now beginning to cross-sell ZAP PAYS solutions to our existing 7 million drivers and, conversely, cross-selling our existing suite of vehicle payment products to the ZAP PAYS client base.

Tom Pantner: Now totaling over 7 million tag users, our BDC extended network revenue was double compared to Q1 of 2023 and now over 30% of total revenue is non toll.

Tom Pantner: Also sales growth continued to be strong across the tag and insurance products.

Tom Pantner: In March we closed on the majority of investment of that pain, which has over 3 million customers that use the zap pay solution to pay for vehicle registration and compliance fees.

Tom Pantner: The addition of that paid further advances our consumer vehicle payment strategy in Brazil, and allows us to capitalize on the attractive two way cross sell opportunity.

Tom Pantner: We are now beginning to cross sell that paid solutions to our existing 7 million drivers and Conversely cross selling our existing suite of vehicle payment products does that pace client base.

Tom Pantner: In the U.S., the impact of our shift away from microclimates continues to impact our sales and revenue results. Our upmarket 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 has impacted late fees, which were down $8 million compared to Q1 of 2023.

Tom Pantner: In the U S. The impact from our shift away from Microclimates continues to impact our sales and revenue results, our upmarket 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.

Tom Pantner: Has impacted late fees, which were down $8 million compared to Q1 of 2023. However, we've seen a $15 million reduction in bad debt expense, yielding a positive earnings trade.

Tom Pantner: However, we've seen a $15 million reduction in bad debt expense, yielding a positive earnings trade. Lodging revenue was down 9% against 26% organic growth in Q1 2023, so a pretty tough comp. Recall that last year we had a significantly high number of weather-driven distressed passenger volume and insurance claims. We continue to see softness in the base, particularly related to smaller field services companies that are deploying fewer workers as a result of the uncertain macro environment.

Tom Pantner: Lodging revenue was down 9% against 26% organic growth in Q1, 2023, so a pretty tough comp recall that last year, we had significant high weather driven distressed passenger volume and insurance claims we continue to see softness in the base, particularly related to small.

Tom Pantner: <unk> field services companies that are deploying fewer workers as a result of the uncertain macro environment.

Tom Pantner: We've recently completed some IT enhancements that will strengthen our value proposition to both existing and new customers, which translated into 16% growth in Q1 sales compared to a year ago. Now, looking further down the income statement, our Q1 operating expenses of $538 million were up 2% versus Q1 of last year. Expense growth from acquisitions and sales investments was offset by lower bad debt expense and the sale of our Russia business. That debt expense declined $14 million, or 35%, from last year to $25 million, or five basis points of total spend.

Tom Pantner: We've recently completed some I T enhancements that will strengthen our value proposition to both existing and new customers, which translated into 16% growth in Q1 sales compare to a year ago.

Tom Pantner: Now looking further down the income statement, our Q1 operating expenses of $538 million were up 2% versus Q1 of last year.

Tom Pantner: Expense growth from acquisitions and sales investments were offset by lower bad debt expense and the sale of our Russia business bad debt expense declined $14 million or 35% from last year to $25 million or five basis points of total spend.

Tom Pantner: Substantially all of the decline was in U.S. vehicle payments as we realized the benefit from our lower exposure to U.S. micro-clients. EBITDA margin in the quarter was 51.6%, a 53 basis point improvement from the first quarter of last year. The positive operating leverage was driven by solid revenue growth, lower bad debt expense, and disciplined expense management. Excluding our Russia business sold in 2023, EBITDA margin increased approximately 160 basis points. Interest expense for the quarter increased $9 million year-over-year due to a decline in interest income from the sale of our Russia business and the impact of higher interest rates, which were partially offset by a lower debt balance. Our effective tax rate for the quarter was 24.7% versus 27.1% last year. The lower tax rate was primarily driven by tax benefits from the exercise of stock options.

Tom Pantner: Substantially all of the decline was in U S vehicle payments as we realized the benefit from our lower exposure to U S micro clients.

Tom Pantner: EBITDA margin in the quarter was 51, 6% a 53 basis point improvement from the first quarter of last year. The positive operating leverage was driven by solid revenue growth lower bad debt expense and disciplined expense management.

Tom Pantner: Excluding our Russia business sold in 2023, EBITDA margin increased approximately 160 basis points.

Tom Pantner: Interest expense for the quarter increased $9 million year over year due a decline in interest income from the sale of our Russia business and the impact of higher interest rates, which were partially offset by lower debt balances.

Tom Pantner: Our effective tax rate for the quarter was 24, 7% versus 27, 1% last year. The lower tax rate was primarily driven from tax benefits from the exercises of stock options.

Tom Pantner: Now turning to the balance sheet, we ended the quarter with $1.3 billion in unrestricted cash, and we had nearly $1.5 billion available on our revolver. We had $5.4 billion outstanding on our credit facilities, and we had $1.4 billion borrowed under our securitization facilities. As of the end of the quarter, our leverage ratio was 2.4 times trailing 12-month EBITDA, which is at the lower end of our target range. Our strong liquidity and debt capacity, coupled with our ability to generate over $300 million in quarterly free cash flow positions us well to actively deploy capital during the year.

Tom Pantner: Now turning to the balance sheet, we ended the quarter with 1.3 billion in unrestricted cash and we had nearly 1.5 billion available on our revolver.

Tom Pantner: We have $5 4 billion outstanding on our credit facilities, and we had $1 4 billion borrowed under our securitization facility.

Tom Pantner: As of the end of the quarter, our leverage ratio was 2.4 times trailing 12 month, EBITDA, which is at the lower end of our target range, our strong liquidity and debt capacity, coupled with our ability to generate over $300 million in quarterly free cash flow positions us well to actively deploy capital.

Tom Pantner: During the year.

Tom Pantner: We have ample capacity to support M&A as well as to continue to buy back our stock. As related to our $800 million buyback program we announced in February, to date, we've repurchased approximately 2.4 million shares for $700 million.

Tom Pantner: We have ample capacity to support M&A as well as to continue to buyback our stock.

Tom Pantner: Related to our 800 million dollar buyback program, we announced in February to date, we've repurchased approximately two 4 million shares for $700 million we've.

Tom Pantner: We view $800 million as the floor, not a ceiling, and will continue to evaluate additional buybacks over the course of the year. In addition to Ron's comments regarding guidance, let me provide some additional detail on our full-year guidance and some thoughts on our Q2 outlook. For the economic outlook, we are not assuming either a recession or meaningful economic improvement in overall business activity across our market. We have updated our macro forecast to reflect the latest fuel, FX, and interest rate projections.

Tom Pantner: We view $800 million as a floor not a ceiling and we'll continue to evaluate additional buybacks over the course of the year.

Tom Pantner: In addition to Ron's comments regarding guidance, let me provide some additional detail on our full year guidance and some thoughts on our Q2 outlook.

Tom Pantner: For the economic outlook, we are not assuming either a recession or meaningful economic improvement in overall business activity across our markets.

Tom Pantner: We have updated our macro forecast to reflect the latest fuel FX and interest rate projections. The fuel related macro assumptions are essentially unchanged. However, the higher for longer expectation related to interest rates. The gained traction in April caused the U S dollar to significantly strengthen and the forward curve to inch.

Tom Pantner: The fuel-related macro assumptions are essentially unchanged, however, the higher-for-longer expectation-related interest rates that gained traction in April caused the U.S. dollar to significantly strengthen and the forward curve to increase approximately 90 basis points as of year-end. The impact of FX is approximately a $40 million reduction in revenue, and higher interest rates result in an additional $14 million of interest expense.

Tom Pantner: <unk> approximately 90 basis points as of year end.

Tom Pantner: The impact from FX is approximately a $40 million reduction in revenue.

Tom Pantner: And higher interest rates result, in an additional $14 million of interest expense.

Tom Pantner: Additionally, we are lowering our revenue guidance by $40 million due to the softness and lodging. However, we are executing specific actions to reduce expenses that offset this reduction in revenue, so that it doesn't flow through to earnings. In the supplement, we outline the impact of these changes in macro and operating performance on revenue EBITDA and adjusted EPS. In summary, for the full year, we now expect revenue growth of 5 to 7 percent and organic revenue growth of 7 to 9 percent.

Tom Pantner: Additionally, we are lowering our revenue guidance $40 million due to the softness in lodging.

Tom Pantner: However, we are executing specific actions to reduce expenses that offset this reduction in revenue.

Tom Pantner: So that it doesn't flow through to earnings.

Tom Pantner: In the supplement we outline the impact of these changes in the macro and operating performance to revenue EBITDA and adjusted EPS.

Tom Pantner: In summary for the full year, we now expect GAAP revenue growth of 5% to 7% and organic revenue growth of 7% to 9%.

Tom Pantner: EBITDA growth of 7-9% as well, with margin expanding 100 basis points, and adjusted net income for diluted share growth of 11 to 13 percent. Excluding the impact from the sale of a Russia business, we're expecting cash EPS growth of 15 to 17 percent. I'll emphasize that these estimates exclude the impact from our pending acquisition of PayMarine.

Tom Pantner: EBITDA growth of 7% to 9% as well with margin expanding 100 basis points in.

Tom Pantner: And adjusted net income per diluted share growth of 11% to 13%.

Tom Pantner: Excluding the impact from the sale of our Russia business, we're expecting cash EPS growth of 15% to 17%.

Tom Pantner: I'll underscore that these estimates exclude the impact from our pending acquisition of <unk>.

Operator: For Q2, we're expecting revenue to grow 1% to 3% on a gap basis and 4% to 6% organically and cash EPS to grow 6% to 8%. Excluding the impact of the sale of our Russia business, we're expecting Q2 cash EPS to grow 12-14%. This reflects roughly $13 million of expected revenue macro headwinds from FX and $3 million of additional interest expense versus the outlook we provided in Looking forward into the second half of the year, we anticipate revenue and adjusted net income growth to accelerate as we realize the benefits from the implementation of new sales, improved retention in U.S. vehicle payments, and specific business initiatives.

Tom Pantner: For Q2, we're expecting revenue to grow 1% to 3% on a GAAP basis, and 4% to 6% organically and cash EPS to grow 6% to 8%.

Operator: Excluding the impact of the sale of our Russia business, we're expecting Q2 cash EPS to grow 12% to 14%.

Operator: This reflects roughly $13 million of expected revenue macro headwinds from FX and $3 million of additional interest expense versus the outlook. We provided in February.

Operator: Looking forward into the second half of the year, we anticipate revenue and adjusted net income growth to accelerate as we realize the benefits from the implementation of new sales improved retention in U S vehicle payments and specific business initiatives.

Operator: The rest of our assumptions can be found in our press release and supplement. Thank you for your interest in Corpay, and now, operator, please open the line for questions. Yes, sir. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.

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

Speaker Change: Thank you for your interest in core pain and now operator, please open line for questions.

Speaker Change: Yes, Sir at this time, if you'd like to ask a question. Please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question.

Tianjin Wang: Once again, that is star question one to ask. Our first question comes from Tianjin Wang, JP Morgan. Hey, good afternoon.

Tianjin Wang: Yeah.

Tianjin Wang: Our first question comes from Tien Tsin Huang.

Tianjin Wang: J P Morgan.

Tianjin Wang: Hey, good afternoon.

Ron Clark: And Ron and Tom, I just want to ask about the lodging. Maybe to start with that, I don't think I fully caught some of it; it was macro, and there was an I.T. cutover. Maybe that drove some attrition, but it didn't look like the retention was off either. So, just trying to get a little bit more detail and what we might expect in the next 2 to 3 quarters before it turns positive again in the fourth. It's Ron.

Tianjin Wang: And Ron and Tom I, just wanted to ask on the on the lodging maybe to start with that.

Ron Clark: I don't think I fully caught some of it was macro and there was the it cutover maybe that drove some attrition, but it didn't look like the retention was off either so I'm just trying to get a little bit more detail and what we might expect for the next two to three quarters before it turns positive again in the fourth.

Ron Clark: You mostly got it right. Basically, last year we put in an upgraded IT system, kind of the foundation, but we waited until this first quarter to try to convert it. So we've created a few bumps and created a divot with kind of a set of clients, kind of softness with a set of clients. But fortunately, from watching it, it hasn't gotten any wider.

Ronald F. Clarke: Hey, Tien tsin.

Speaker Change: Ron you, mostly got it right so.

Ron Clark: Basically last year, we put in.

Ron Clark: Right.

Ron Clark: System.

Ron Clark: But wait until this first quarter or two.

Speaker Change: So great.

Ron Clark: A few bumps and created agenda with kind of a set of clients.

Ron Clark: This with a set of clients.

Ron Clark: Unfortunately from watching it it hasn't got any wider.

Ron Clark: I think we stuck a page, Tom, in the document. Page 16, the tension in the supplement basically shows the softness is still sitting there in Q1 that we reported, but off the press in April, it's kind of stabilized, business is flattening, and so the hope that we have is, as we lap the divot here in Q2 and Q3, that basically, again, the retention's good, and the new sales are good. Sales actually were up, what, 16% in Q1.

Ron Clark: I think we stuck a page.

Ron Clark: Is it.

Ron Clark: Thanks.

Ron Clark: Page 16, Tien tsin.

Ron Clark: It basically shows the softness is still sitting there in Q1 that we reported.

Ron Clark: Hot off the press and April was kind of stabilized.

Ron Clark: This is flat.

Ron Clark: The hope that we have is as we lapped.

Ron Clark: Even here in Q2 and Q3 basically again the retention is good and the new sales are good sales actually were up about 16% in Q1.

Ron Clark: It will be on the other side of it, so hopefully it's a blip, you know, with a select set of clients that we can get to the other side. I see. Okay, so you're basically just rebasing off of a...

Ron Clark: It will be on the other side of it so hopefully it's.

Speaker Change: It's a blip.

Ron Clark: With a select set of clients that.

Ron Clark: Can we can get to the other side.

Ron Clark: I see okay. So you basically you re basing off of.

Tianjin Wang: I think I understand it; thanks for the slide; I missed it. On the pay meringue acquisition, what stood out about this one, Ron? Was it the verticals, something around the tech specifically? I'm curious, what drew you to it.

Speaker Change: After a tough set of clients coming off and you're seeing growth from that okay. I think I I think I get it. Thanks for the slide I missed it on the payment pay meringue acquisition what stood out about this one.

Tianjin Wang: Ron was it the the vertical.

Tianjin Wang: Something around the tech specifically I'm curious what.

Tianjin Wang: What drew you to it.

Ron Clark: Yeah, I mean, the first thing, Injun, is it's the kind of business we like. So inside of corporate payments, our favorite piece of business is what we call full AP, where we take literally 100% of the client's invoices, right, no matter how we pay them. So we like that the most because it gives us the most control.

Ronald F. Clarke: Yes, I mean, the first thing to mention is the kind of business we like.

Ron Clark: So inside of corporate payments, our favorite piece of business is what we call full AP, where we take literally 100% of the client's invoices. So that no matter, how we pay them. So we'd like to have the most because it gives us the most control we have the best retention with it.

Ron Clark: We have the best retention rate with it. Clients like it the most. So that's the first. But yeah, the appeal to us is that you pick up three or four verticals that we're not in. We have no, you know, referenceable clients, one, two vendors that are kind of in those verticals, or three like ERPs or other partners, so you pick up wherever the 10 or 15 years that the company's been building those up, and suddenly, we're set up now to go bigger in those spots. And then lastly, obviously, because it's so super adjacent to what we do, the synergies are, as you'd expect Really, super meaningful.

Ron Clark: So that's the first one.

Ron Clark: The appeal to us should pick up three or four verticals that were not we have no.

Ron Clark: Yes.

Ron Clark: <unk> clients one two vendors that are kind of in those verticals, where three like ERP partners.

Ron Clark: Wherever the 15 years that company has been building those up.

Ron Clark: Suddenly we're set up now to go bigger than that.

Ron Clark: Spot so and then lastly, honestly because its so super adjacent to what we do.

Ron Clark: The synergies as you would expect quite sick.

Ron Clark: For me.

Ron Clark: So, yeah, with the things we kind of got through the first few months here, the model we had was it'll be quite creative in twenty five. Yeah, I'm sure that's the case. Thank you, guys. Our next question comes from Sanjay Sagaram with KB. Ron, could you talk about the North America vehicle business? It sounded like... It's performing a little bit weaker than you'd like.

Ron Clark: So yes, the things kind of as we get through the first few months here. The model. We have is it will be quite accretive.

Ron Clark: Five.

Sanjay Harkishin Sakhrani: Yes, I'm sure. That's the case, thank you guys.

Speaker Change: Our next question comes from Sam So we.

Ron Clark: Okay.

Ron Clark: Hi.

Sanjay Harkishin Sakhrani: Ron could you talk about the North America vehicle business. It sounded like it's performing a little bit weaker than you would like I mean are you guys expecting that to inflect as we move through the year and so what's going to drive that.

Sanjay Sagaram: I mean, are you guys expecting that to inflect as we move through the year? And so what's going to drive it? Yeah, hey, good question. So I think the story is a little bit old now.

Ron Clark: Yeah.

Sanjay Harkishin Sakhrani: Good question, So I think the.

Sanjay Harkishin Sakhrani: Story is a little bit.

Sanjay Sagaram: Now what.

Ron Clark: Whatever, a year and a half ago, we made the pivot. We flushed 40,000 micro-accounts that gave us revenue and late fees but also a ton of bad debt. So as we worked that through, both stopping new micro-accounts coming in and then second, tamping down on terms and credit lines in the first half of last year, we were successful in exiting a lot of that business. And so now we have a cleaner business with a steadier kind of 80,000, call it, bigger clients that have a steadier late fee mix, you know, volume mix, you know, loss characteristics, and

Sanjay Harkishin Sakhrani: Whatever a year and a half ago, we made the pivot we flashed whatever 40000.

Ron Clark: Micro accounts that gave us revenue and late fees, but I would also comment that debt. So as we work that through both stopping new micro accounts coming in and then second tamping down on terms and credit lines in the first half last year.

Ron Clark: We were successful in exiting.

Ron Clark: Lot of that and so now we have a cleaner.

Ron Clark: That's where the stand youre kind of 80000 call it.

Ron Clark: Clients that have a steadier late feedbacks volume mix loss.

Ron Clark: Characteristics to stop and so we're lapping kind of that prior periods. So now it's really just.

Ron Clark: And so we're lapping kind of that prior period. So now it's really just the addition of some of the new products there and the new sales snowballing enough to kind of build off of the base. And so like every pivot or change in the business, it's gone a bit slower than I would have hoped, but internally, I've got that thing well into the positive as we exit the year. So as we lap the thing, and we head into the back half of Q4. So I would say that.

Ron Clark: Sure.

Ron Clark: Kind of some of the new products, there and the new sales snowball with enough to kind of build off of the base. So like every pivot or change in the business, it's gone a bit slower than I would hope but.

Speaker Change: Got it.

Ron Clark: Well Linda the positive as we exit the year, so as we lap the thing and we head into the back half in Q4.

Ron Clark: I would say that.

Ron Clark: You know, structurally, you get a retention benefit, right? Whenever you have a base and you flush super micro accounts, a lot of them become insolvent, you have a lot of involuntary, you know, attrition. So we'll get structural improvement both in base hardness and in retention. So really, it's just waiting for a couple of these new sales channels to layer on, and we'll be back where we were. That's the basics.

Ron Clark: Structurally you get retention benefit right whenever you have a base.

Ron Clark: Can you flush supermicro accounts that are a lot of them become insolvent you have a lot of involuntary attrition.

Ron Clark: Attrition, so well it's structural improvement.

Ron Clark: As hardness Andrew retention, so really it's just waiting.

Ron Clark: A couple of these diverse sales channels to layer on and we like back will be.

Ron Clark: That's the basic outlook, it's a little painful I'm guessing here, but we like to wait for a couple of proof points on that in the first quarter, we actually saw sales growth of about 12%.

Ron Clark: So a little pain from getting here, but we like the way forward from what we saw on a quarterly basis last year. We've also seen approval rates go back to 2021 levels. So we've been doing some things on the credit side, tuning our models, and approval rates are back to where we were prior to the pivot into the digital channel. And on late fees, we've actually seen those bottom out and start to slightly rebound, line of sight into the things that caused the drag over the last three or four quarters to be laughing and, It's just, Jeff Sanchez, just on top of Tom's comment, the approval rate's up about 50% from September.

Ron Clark: Yes.

Ron Clark: Improved from what we saw on a quarterly basis last year.

Ron Clark: Also seeing approval rates back to 2021.

Ron Clark: Great.

Ron Clark: Our models and approval rates are back to.

Ron Clark: Where we were prior to that.

Ron Clark: The digital channel.

Ron Clark: On late fees, we've actually seen those bottom out and start to slightly rebalance I think there's line of sight into the things that caused the drag over the last three or four quarters to be.

Ron Clark: Lapping and normalizing.

Ron Clark: Yes.

Speaker Change: Just on top of John Thomas the approval rates up about 50% from September So we track it monthly so all the stuff that comes to us.

Ron Clark: So, we track it monthly, so all the stuff that comes to us, so we're pointing, you know, marketing, if you will, at higher quality prospects or better applications now that we can approve. So, it makes it an easier business to run. Okay.

Jeff Sanchez: Marketing, if you will and higher quality prospects are better applications now that we can approve so that makes it easier business to run.

Speaker Change: Okay, Great and then just a follow up question on <unk>.

Sanjay Sagaram: Great. And just a follow-up question on Paymorang. I understand it's sort of full AP automation, but how does it fit into what you have right now?

Sanjay Sagaram: I understand that sort of full AP automation, but how does it fit into what you have right now and how long have you guys been looking at this business and then just final one Tom are you, including the revenues associated with the acquisition I know Ron you mentioned, it's probably not going to be accretive until next year, but maybe you could just talk about that too. Thank you.

Ron Clark: And how long have you guys been looking at this business? And then this final one, Tom, like, are you including the revenues associated with the acquisition? I know Ron, you mentioned it's probably not going to be accretive until next year, but maybe you could just talk about that too. Thank you.

Speaker Change: So let me try to take the order of those questions. So how long I guess, we've known the business for a few years.

Ron Clark: So how long have we known the business for a few years, and we've visited and stuff. And so I've reached out to the principal directly to make this transaction. Second question: is it included?

Ron Clark: Sure.

Ron Clark: And so.

Ron Clark: I have reached out to the to the principal directly to <unk>.

Ron Clark: We will make this transaction.

Ron Clark: Question visit included no we signed but we haven't closed.

Ron Clark: No, we've signed, but we haven't closed. So basically, when we close, which we expect to be certainly this quarter, when we talk again in 90 days, we'll roll that in. So call it $25 to $30 million in incremental revenue, assuming we close in the next couple of months. And how it fits is that, again, we're in the exact same business. We do exactly the same thing, but we generally do it for different kinds of companies and different verticals. And as people have pointed out, there's a bit of a breeder reaction.

Ron Clark: So basically when we close which we expect to be certainly this quarter and when we talk again in 90 days, we'll roll that in so call it $25 million to $30 million.

Ron Clark: Incremental assuming the close in the next couple of months.

Ron Clark: How it fits this again, we're in the exact same business.

Ron Clark: And the same thing, but we generally do it for different kinds of companies in different verticals.

Ron Clark: And as people pointed out.

Ron Clark: A bit of a green or react to once you get into a protocol.

Ron Clark: Once you get into a vertical, you know, your brand becomes known, you have clients in the area, you pay the vendors of those clients, you have ERP and other kinds of partners. And so the thing works in a way where you can build a business better via verticals than you can geographically. So although we do exactly the same things, we don't do those things in those verticals.

Ron Clark: Brand becomes no you have clients in the area you pay the vendors of those clients <unk> ERP and other kinds of partners and so this thing works in a way basically where you can build the business better via verticals that you can't geographically.

Ron Clark: Well, we do exactly the same things we don't do those things in those verticals. So effectively we will use obviously a lot of our back office and some of our advantage contracts and stuff like that and some of our sales techniques to got it.

Ron Clark: So effectively, we will. We'll use obviously a lot of our back office and some of our advantage contracts and stuff like that, and some of our sales techniques to kind of basically build up the business that they have in those verticals and get obviously a bunch of synergies along the way. So it's super attractive, you know; it's what we call a wheelhouse deal. We know it's super cold.

Ron Clark: Basically build up the business that they have in those verticals and get obviously, a bunch of synergies along the way.

Ron Clark: So it's a super attractive.

Ron Clark: What we call the wheelhouse deal we know it should recall, we started the company well and we're super clear on what we're going to do with it.

Ron Clark: We studied the company well, and we're super clear on what we're going to do. It's right in our sweet spot where we're getting both customers, 1,300 customers, and expanding our merchant portfolio by 250,000 merchants. So we've talked a lot about customers and networks as our two competitive modes out there, and this is right in that spot where we gain those things with this acquisition, and then, as Ron said, we can germinate it from here into something bigger. And I'm sorry, they won't make money until next year, or will they make money? Yeah, they make money now, but we need them to make a lot more money.

Ron Clark: Alright.

Ron Clark: Yes.

Ron Clark: It's right in our sweet spot, where we're getting both customers 1300 customers and expanding our merchant portfolio by 250000 merchants. So we've talked a lot about customers and networks are at.

Ron Clark: Two competitive moats out there and this is right in that spot, where we gain those things with this acquisition and then as Ron said, we can germinate it from here into something bigger.

Ron Clark: And I'm, sorry, they won't make money until next year or do they make money now.

Ron Clark: Yes.

Ron Clark: Now, we need them to make a lot more money.

Speaker Change: Got it thank you.

Ron Clark: Yes.

Sanjay Sagaram: Thank you. Our next question comes from Ramsey Elazzle with Barclays. Hi guys.

Speaker Change: Our next question comes from Ramsey El Paso.

Ramsey Clark El: At Barclays.

Ramsey Elazzle: Thanks for taking my question this evening. I wanted to ask again about lodging and just maybe ask you to comment on your visibility in that business right now. I mean, April. It was great to see April stabilize.

Ramsey Clark El: Hi, guys. Thanks for taking my question this evening.

Ramsey Clark El: I wanted to ask again about lodging and just maybe ask you to comment on on your visibility in that business right. Now I mean April it was great to see April stabilize do you feel like the recovery in lodging is kind of pretty much locked in at this point or are there still.

Ramsey Elazzle: Do you feel like the recovery in lodging is kind of pretty much locked in at this point, or are there still, you know, variables that you're, you know, having to worry about? Yeah. Hey, Ramsey. It's Ron.

Ronald F. Clarke: Variables that you're having to worry about.

Ronald F. Clarke: Just kind of get from point a to point B there.

Ramsey Elazzle: Yeah.

Ron Clark: It's a good question. So I think locked in is, you know, a pretty, pretty strong word. What I'd say is, what we can see that's super clear is what caused the divot in the D cell, which is soft.

Ramsey Elazzle: Yeah, Hey, Ramsey, it's Ron it's a good question. So I think locked in is.

Ronald F. Clarke: Pretty pretty strong word, but I would say is.

Ronald F. Clarke: What we can see that Super clear is what caused the debit in the T cell, which is softness so yes, we've got 15000 clients or something in that business.

Ron Clark: So yeah, we've got, I don't know, 15,000 clients or something in that business, and a select group of clients went soft on us starting Q2, Q3 last year. So the good news is, other than that select group that went soft, the others didn't.

Ron Clark: Select group of clients went soft on us starting Q2 Q3 last year and so the good news is.

Ron Clark: Other than that select group with the.

Ron Clark: The others.

Ron Clark: So the other clients didn't go soft, and neither did retention. Did we have any kind of big spike in retention? So effectively, kind of once we've lapped this select group of clients that went soft, the key to the thing reaccelerating again is just sales. It's a high retention business generally, and so as long as the sales that we have in the plan come to fruition and we get those implemented, then we'll grow basically over that lapping. So again, a little bit of your seeing of that is we've started to catch it a little bit here in April.

Ron Clark: So the other clients didn't go soft and neither did the retention did we have any kind of big spike in retention, so effectively kind of once we lap. This select group of clients that went off the ciena. The thing re accelerating again is just sales it's a high retention business.

Ron Clark: Generally and so as long as the sales.

Ron Clark: And the plan come to fruition and we get those implemented then will grow basically over that lab base. So again, a little bit are you seeing that as we started to catch it a little bit here in April. So we think really the turn in the business would be Q3, where if we said hey, what's the soft.

Ron Clark: So we think really the turning point in the business would be Q3, where if we said, hey, what's the softness? I think it was still 10%, 11%, 12% in Q1, and we had 2% as a company overall. My estimate would be by Q3, that thing would be close to zero. So the softness would be, if you will, the client base would be relatively flat.

Ron Clark: I think it was still down a 11, 12% in Q1, and we had 2% as a company overall my estimate would be by Q3 that thing would be close to zero. So the softness would be if you will client base would be relatively flat.

Ramsey Elazzle: So, and again, the good news is there's no more IT boogeyman. We spent a year and a half, two years building the thing. We've converted the base. It's a new, great feature. So the product is actually better. So we're going to get the benefit this year forward of the pain, effectively, that we inflicted last year. So that's a positive, that there was some benefit, basically, in the journey on IT, a very structured campaign where we're calling those customers, talking to them, giving them the value proposition of the improvements that we've made, and understanding why they maybe are using us less.

Ron Clark: So and again the good news is there is no more Boogie man.

Ramsey Elazzle: We spend a year and a half two years building. This thing we converted the pace of new great feature. So the product is actually better so we're going to get the benefits this year forward.

Ramsey Elazzle: Effectively that we.

Ramsey Elazzle: Inflicted last year, so that that's a positive.

Ramsey Elazzle: There was some benefit basically the journey on it.

Ramsey Elazzle: Hey, Ramsey what I'd add is we've kind of taken this beyond the analytics, we've actually got it.

Ramsey Elazzle: Very structure campaign, where we're calling those customers talking to them, giving them the value proposition of the improvements that we've made understanding why they may be using as labs, we're gaining really good insights into that so I would agree not locked in but we've taken this beyond the math are really doing.

Ramsey Elazzle: We're gaining really good insights into that, so I would agree, not locked in, but we've taken this beyond the math and are really doing it at a customer level, which has given us a lot of additional insights over the last month. That's perfect, thanks.

Ramsey Elazzle: The data at a customer level, which just given us a lot of additional insights over the last month or so.

Tom Pantner: And a quick follow-up from me, I noticed that the stock repurchases seem to have accelerate in the last 30 days, meaning you did more repurchases in the last month than you did in the entire first quarter. Should we expect you to kind of lean more aggressively into buybacks when it comes to capital deployment? It's not entirely a fair question because you're also announcing deals that you're doing, so I'm just curious if you can comment on the balance there and what we should expect.

Speaker Change: That's perfect. Thanks.

Tom Pantner: And a quick follow up for me.

Tom Pantner: I noticed that the stock repurchases seemed to accelerate in the last 30 days, we needed more repurchases in the last month than you did in the entire first quarter. It is or should we expect you to kind of lean more aggressively into buybacks. When it comes to capital deployment not entirely a fair question because youre also announcing deals that youre doing so I'm just curious if you can.

Tom Pantner: Comment on the balance there and what we should expect.

Tom Pantner: I think it's kind of comparing a little bit of an apple and an orange there because in the first quarter, it was really just the month of March when we got started in terms of the buybacks. We waited until we got our K filed and started the buybacks. You're really only seeing one month in the month of March and then, obviously, the month of April.

Thomas E. Panther: Yeah, Greg it's Tom.

Tom Pantner: Just kind of comparing a little bit of an apple and an orange there because in the first quarter was really just the month of March was when we got started in terms of the buybacks. We waited until we got our K file and start the buyback Youre only seeing one month in the month of March and then basically obviously the month of April so they're fairly evenly split across that 700.

Tom Pantner: So they're fairly evenly split across that 700 in terms of how that played out. During that period, we did a 10B51 plan so that we could continue to be in the market during the blackout period. So, nothing there other than just timing. We were pretty much even in the market over those 60 days, if you will. And as I said in my prepared remarks, I think we're at around the 700 marks to touch under it, and we'll finish up the 800 we would expect in the month of May, and we still have ample liquidity notwithstanding the pay meringue acquisition. As we sit here today, we've got over a billion dollars on the revolver outstanding, and we have additional liquidity should we want to be in the market above the 800.

Tom Pantner: In terms of how that played out.

Tom Pantner: The period, we did at <unk> five one plan so that we could continue to be in the market during the blackout period. So nothing there other than just timing we were pretty much in the market over those 60 days, if you will and as I said in my prepared remarks, I think we're at around the 700, Mark just to touch under it.

Tom Pantner: And we'll finish up the 800, we would expect in the month of May and we still have ample liquidity notwithstanding the papering acquisition.

Tom Pantner: As we sit here today, we've got over $1 billion on the revolver outstanding and we have additional liquidity should we want to be in the market above.

Tom Pantner: Andre.

Tom Pantner: And as we also look at our business there could be other sources of capital that we're able to create over the course of the year as well that give us additional liquidity if theres some noncore assets that we end up divesting.

Tom Pantner: I played out.

Tom Pantner: And as we also look at our business, there could be other sources of capital that we're able to create over the course of the year as well that give us additional liquidity if there are some non-core assets that we end up divesting of if that plays out. A. Ramsey, it's Ron, so I did mention at the top that we have a pipeline, so we're working on some additional transactions, so my answer, on top of Tom's, would be, I would expect us to do both of those things.

Tom Pantner: Hey, Ramsey, it's Ron So I did mention at the top of it.

Ronald F. Clarke: We have a pipeline. So we're working on some additional transaction. So my answer on top with Tom's would be I would expect us to do both of those things likely buy more companies this year and depending on where our stock price is.

Tom Pantner: I will likely buy more companies this year, and depending on where our stock price is, buy back more stock. And so between the liquidity that we have, the leverage ratio, and then we're getting close on a couple divestitures, that gets us capital. That's great, thanks. That's the power of the model. Appreciate it.

Tom Pantner: Back more stock and still between the liquidity that we have the leverage ratio and then we're getting close on a couple of divestitures.

Tom Pantner: This is capital we feel like that well, obviously plenty of liquidity to do both of those things rest of the year.

Speaker Change: That's great. Thanks, that's the power of the model I appreciate it.

Tom Pantner: Alright.

Speaker Change: Got it.

Nate Swenson: Yep. There you go. Our next question comes from Nate Swenson with Deutsche Bank. Hey, guys, thanks for the question. Maybe kind of following up on that repurchase question, can you talk a little bit more about the corporate actions you're taking to offset that soft? What are you doing to lower OPEX, and then, you know, related to the repurchase question, I think on one of the slides you talked about increasing repurchases, so how does that tie in versus the $800 million plan and what was incorporated into GUIDE previously? And I guess the Sure, Nate.

Tom Pantner: Our next question comes from Nate Swenson with Deutsche Bank.

Nate Swenson: Okay.

Nate Swenson: Hey, guys. Thanks for the question, maybe kind of following up on that repurchase question can you talk a little bit more about the corporate actions, you're taking to offset that softness that youre seeing lodging. So I guess, specifically what are you doing to lower Opex and then related to the repurchase question I think I'm one of the slides you talked about increasing repurchases. So how does that tie end versus 800 million.

Nate Swenson: Our plan and what was incorporated into the guide previously and I guess the follow up is how much of these actions have already been completed and is there any risk in executing these that may weigh on results.

Tom Pantner: I think that's one of the things that's good about the company and the way it's structured and the levers we have. We'll do a variety of things related to the OpEx side that is just kind of just good old-fashioned belt tightening. We'll look at some things, maybe some projects that we could delay, some T&E that we could avoid, you know, things like that that are more, I would say, structural.

Speaker Change: Yes sure.

Tom Pantner: It's a range of options that's one of the thing that's good about.

Tom Pantner: The company and the way, it's structured and the levers we have.

Tom Pantner: We'll do a variety of things related to the Opex side. It was just kind of just good old fashion.

Tom Pantner: Belt tightening, we'll look at some things maybe some projects that we could delay from TD that we could avoid.

Tom Pantner: Things like that that are more I would say structural we don't want to do anything to infringe upon the go forward.

Tom Pantner: We don't want to do anything to infringe upon the go-forward power of the company from a sales and marketing perspective, so I think that's fairly sacred ground. But there are always some things that we can do to adjust for some fixed costs that come out. Plus, there'll be some natural variable costs that come out as well. Below the EBITDA line, there are some things that we've already executed related to some cross-currency swaps that allow us to do that. [inaudible] still low relative to how you think about the overall company.

Tom Pantner: Power of the company from a sales and marketing perspective, So I think that's fairly sacred ground, but there are there are always some things that we can do to adjust.

Tom Pantner: Just on some some fixed cost that come out plus there will be some natural variable costs come out as well.

Tom Pantner: Below the EBITDA line there are some things that we've already executed related to some cross currency swaps. It allows us.

Tom Pantner: So essentially convert a portion of our debt we had already done a euro denominated we've done a sterling and the Canadian so that causes our debt to be about 25% converted to foreign which is still low relative to how you think about it.

Tom Pantner: Overall company and then we've had in the queue for a while just a variety of tax planning ideas.

Tom Pantner: And then we've had in the queue for a while just a variety of tax planning ideas that we would have executed with or without the softness and lodging, but those are coming together at a fortuitous time where that can also be offset from an earnings perspective. So I would say there's a good line of sight into those company actions, the no Hail Mary's in there, and now it's just about executing, which I think we've got some pretty good evidence of, But no additional stock repurchases are in that recovery. So we said, hey, $0.19.40 was our guide price. Hey, $0.19 because of the FX and the interest rates. Hey, we'll get the $0.40 back. Stay at $0.19.

Tom Pantner: We would've executed with or without the softness lodging, but those are coming together to fortuitous time, where that can also offset from an earnings perspective. So I would say theres. Good line of sight into those company actions Noelle marries in there.

Tom Pantner: And now it's just about executing which I think we've got some pretty good demonstrated performance of being able to execute and deliver on those.

Tom Pantner: But no additional.

Tom Pantner: Stock repurchases are in that recovery. So we said hey, 1940, with our was our Guy a 19 because of the FX and the interest rates. He will get to 40 cents backstage 19 that doesn't assume any incremental buybacks above the 800, which.

Nate Swenson: That doesn't assume any incremental buybacks above $800, which we may do, depending on the stock. Got it. That's helpful, Cole.

Nate Swenson: We may do depending on stock price.

Ron Clark: And I guess for my follow-up, Ron, in your prepared remarks, you mentioned, as a positive for the four years, that you had greater visibility into some of your high-performing businesses. So I guess, namely, corporate payments, and the international vehicle in Brazil. So maybe you can talk about what you're seeing across those businesses, what gives you that confidence about the greater visibility, and then maybe gross expectations across each of those three for the four-year. Yeah, I mean, when you lay out a plan and the businesses, You know, volume rate, and revenue are tracking, and the initiatives that you've laid out are tracking.

Speaker Change: Got it that's helpful color and I guess for my follow up Ron in your prepared remarks, you mentioned.

Ron Clark: For a positive for the full year that you had greater visibility into some of your high performing businesses. So I guess, maybe with corporate payments international vehicle in Brazil. So maybe you could talk about what you're seeing across those businesses is what gives you that confidence at the greater visibility than maybe growth expectations across each of those three for the full year.

Ron Clark: Yeah, I mean, I'll always Nate when you lay out a plan and the business is.

Ron Clark: Volume rate revenue was tracking in the initiatives that you've laid out are tracking so for example in corporate payments.

Ron Clark: And so, for example, in corporate payments... You know, I don't know how many times we've mentioned it over the last couple of years, the channel partners. Oh, shit, you know, the growth is where we said, hey, it's 17% at the print for 21 without channel partners. And I think we went on record really in the last call last year and said, hey, that thing's turning.

Ron Clark: I don't know how many times.

Ron Clark: We've mentioned that over the last couple of years the channel partner so shed.

Ron Clark: The growth is wherever we said hey, it's 17% at the plan for 'twenty, one without channel partners and I think we went on record really in the last call last year, and said, Hey, dad things, turning we've kind of reduced staff with some existing partners and science to do one so some of that thing declining.

Ron Clark: We've kind of renewed some stuff with some existing partners and signed some new ones. So instead of that thing declining, it's going to actually turn around and start increasing. And so we have those contracts, you know, signed, and we're starting to put some of that volume through. So that'd be like an example of sitting here now on the other side of that. I can see another big partner we signed up for there in the last, I don't know, 45 days.

Ron Clark: Actually turn and start increasing and so we have those contracts.

Ron Clark: Fine and we're starting to put some of that volume through so that would be like an example of sitting here now on the other side of that ice can see.

Ron Clark: And then another big partner, we sign up there too in the last 45 days, so that would be an example.

Ron Clark: So that would be an example of. Things have actually happened that are in the rear view mirror that will create that acceleration the rest of the year. In Brazil, I'd say, it's just the power of distribution. You know, we have 10 ways to sell tags and fuel and parking and insurance there, and they're just rocking. They're just...

Ron Clark: Things have actually happened as they were in the rear view that will create that acceleration throughout the rest of the year in Brazil, I'd say, it's just the power of the distribution you know we have 10 ways to sell you know tags and fuel and parking in insurance, there and they're just rocket.

Ron Clark: The bank channel thing we launched a couple of years ago with Santander and Kasha, they're selling a lot, like 10, 15% of all of our new tags now are coming through that brand new channel. The cross sell is working. I think we've sold a million insurance policies.

Ron Clark: The Bank Channel thing, we launched a couple of years ago, and they're Pasha. They are selling a pile like 10, 15% of all of our new tags now coming through that brand New channel. The cross sell is working I think we sold a million insurance policies. We bought this at a thing which is super you'd need to add.

Ron Clark: We bought the Zappay thing, which is super unique to add, you know, obviously this demand grew at 50% in the quarter. So the things that we plan for the businesses to make the businesses go, we're seeing real evidence in this first, whatever, four months that that stuff's working, and the materials that we need to get the full, what numbers are clear, obviously there are fewer months left. So I just say that they're beating the plan we put together for the first four months, and the progress suggests to me that they'll beat the plan for the remaining eight. So it's good to have, you know, those guys in the bullpen. Thanks, Rob. I appreciate the call.

Ron Clark: Obviously as demand with 50% in the quarter. So the things that we planned in the business is to make the businesses. So we're seeing real evidence in his first whatever four months that that that's working.

Ron Clark: And the materials that we need to get the full with numbers are clearer honestly, there's less miles less so I'd, just say that they're beating the plan we put together for the first four months and the progress suggests to me that they will be the plan.

Ron Clark: So it's good to have those guys in the bullpen.

Speaker Change: Thanks, Rob I appreciate the color.

Chris Kennedy: Our next question comes from Chris Kennedy, with William. Thanks for taking the question. Ron, you talked about narrowing the focus of the business. You also alluded to some potential divestitures. Can you just frame what you're thinking about and the relative size of these initiatives?

Ron Clark: Our next question comes from Chris Kennedy with William Blair.

Chris Kennedy: Good afternoon. Thanks for taking the question Ron you talked about narrowing the focus of the business you also alluded to some potential divestitures.

Chris Kennedy: Stitcher is can you just kind of frame what you're thinking about the relative size of these initiatives.

Ron Clark: Chris, are you asking first about the size of the divestitures? The size of the divestitures, and then you also talked about narrowing the focus of the business. So just I'm trying to get how big of a narrowing of the focus of the business you are thinking. How material is that?

Chris Kennedy: Christy are you asking me first about the size of the divestitures.

Ron Clark: The size of the divestitures and then you also talked about narrowing the focus.

Ron Clark: The business. So I, just I'm trying to get how big of a narrow the focus of the business are you thinking here how material is that.

Ron Clark: Let me start with the second part of the question and then go back to the more important first part. As part of the strategic review, we identified a couple of smallish columns in the $200-$300 million range as the market price for the assets. One in our vehicle business, really both in and around our vehicle business. We're well along on those things with counterparty. Those transact, as I said before, will have a simpler company and will redeploy that capital.

Chris Kennedy: Yeah. So let me start with the second.

Ron Clark: Part of the question is when I go back to the more important first part so yeah, we as part of the strategic review.

Ron Clark: Identified a couple of kind of smallish column in the $2 million to $300 million range kind of market price for the assets one.

Ron Clark: One in our.

Ron Clark: Vehicle business really both in around our vehicle business and so.

Ron Clark: We're well along on those things with counterparty so with those those transactions as I've said before we will have a simpler company and we'll redeploy that capital, but all the more important question I think.

Ron Clark: But on the more important question, I think we spent the last year studying the company and said the most important thing to great value in the company was the fleet transformation and the redefinition of our fleet business to be a broader vehicle business right across the U.S., Brazil, and Europe, and then even adding the consumer leg right to that business. Those three segments, vehicle, corporate payments, and lodging, are where we're headed.

Ron Clark: Spent the last year study in the company and said the most important thing to create value in the company with the fleet transformation as a redefinition of our fleet business to be a broader vehicle business right across the U S, Brazil, and Europe, and so and then even adding the consumer.

Ron Clark: Leg right to that business and so those three segments vehicle corporate payments and lodging are where we're headed there is obviously plenty and plenty of Tam in coverage for us to go get new products in all three of them and so the conclusion from all of US going through this thing is let's just.

Ron Clark: There's obviously plenty of TAM and coverage for us to go get. We have new products in all three of them. The conclusion from all of us going through the process is, let's just double down there.

Ron Clark: Double down.

Ron Clark: We did all this friggin' Humpty Dumpty work the last five years to assemble this company in these segments, buying stuff, stitching it, fixing it. We finally have, I think, super-advantaged products in these segments. We're really in the marketing and sales phase, just basically selling more stuff in these three areas. The reason I like it is that it's just an easier company to manage.

Ron Clark: We did all of this frigging Humpty dumpty work the last five years to assemble this company in these segments by and stuff stitching it fixing it.

Ron Clark: We finally have I think super advantage products and in these segments and so we're really in the marketing and sales.

Ron Clark: Phase right, just basically sell more stuff in these three areas and the reason I like it is it's just an easier company to manage Theres last kind of call. It hockey dumped the figure. It out work you know connect stop work, it's more kind of just basic sell stuff and then.

Chris Kennedy: There's less call it Humpty Dumpty, figure it out work, connect stuff work. It's more just basic, sell stuff, and then add related stuff like the Pay Morang thing or the Zappay thing. Add stuff that's in the three segments. We're going to be on that course for a while, just chasing to grow these three segments. Thanks for taking the question. Our next question comes from Pete Christensen with Citigroup. Thank you. Good evening.

Peter Corwin Christiansen: <unk> related stuff like the pain meringue thing or you know the does that pacing add stop its in the three segments so where.

Peter Corwin Christiansen: We're going to be on that course for awhile just chasing to grow. These three segments that may be making acquisitions in those three segments.

Peter Corwin Christiansen: Great. Thanks for taking the question.

Peter Corwin Christiansen: Our next question comes from Pete Christiansen with Citigroup.

Peter Corwin Christiansen: Thank you good evening, thanks for the question.

Pete Christensen: Thanks for the question. Ron, I certainly appreciate the deeper versus wider approach, product homogenization, all that. Just curious... as you're looking out the next three years.

Peter Corwin Christiansen: I think I certainly appreciate the deeper versus wider.

Peter Corwin Christiansen: Our approach and our.

Peter Corwin Christiansen: Product Homogenates and all that.

Peter Corwin Christiansen: Just curious.

Peter Corwin Christiansen: As you're looking out the next three years.

Ron Clark: Are you considering, you know, making any changes to, like, the margin versus growth kind of trade-off, that algorithm? Do you see opportunities there to kind of invest more and maybe spur growth a bit harder? Yeah, hey Pete, it's a good question.

Peter Corwin Christiansen: Are you considering making any changes to what the margin versus growth kind of trade off that algorithm do you see opportunities there to kind of invest more maybe spur growth.

Ronald F. Clarke: A bit harder.

Ronald F. Clarke: Yeah, Hey, Pete.

Ronald F. Clarke: It's a good question I think you probably have heard a bit of the answer you know I like that right, it's an idea or even if it you know.

Ron Clark: I think you probably have heard a bit of the answer. You know, I like that, right, as an idea, or even if it, you know... Trends, if you will, margins for a while if you can see the return, but I think I've said this to you repeatedly, you know, we're in profitable growth, and so the incremental marketing and sales investment, you know, has to be productive. You know, I don't want to spend another $50 million, and it doesn't, right, produce anything, and so, as you know, with people, these things take some time to build, and so you're better off, you know, let's say you spent $300 million last year to spend $300, $350, $400, $450 over the next three years rather than, hey, watch me go from $300 to $400 to $500.

Ron Clark: Trends, if you will margins for a while if you could see the return, but I think I said this to you repeatedly.

Ron Clark: We're into profitable growth and so the incremental marketing and sales investments.

Ron Clark: Has to be productive you know I don't want to spend another 50 million and it doesn't right produce anything and so as you know.

Ron Clark: With people these things take some time to build and so you're better off let's.

Ron Clark: Let's say, you're spending $300 million last year to spend $303 50, $404 50 over the next three years rather than Hate-watch V. Go from 300 to 400 to 500.

Ron Clark: You'll have a lot more waste, in those bigger steps, you know, way more newbies, way less productivity, and obviously, you'll eat more profits. And so, with that balance in mind, if we saw things, particularly on the digital front, where we could spend more that was productive, we would do that and probably take some costs out of other places. But look, it's working.

Ron Clark: You'll have a lot more waste and those baker steps in a way more new people way less productivity and obviously youll eat more profits and so I'd say what that balance in mind, if we saw things, particularly around the digital front, where we could spend more than it was productive we would do that and probably take take some cost out of.

Ron Clark: Other places but.

Ron Clark: We're selling enough of the businesses we have. We're planning to be up 20% again. I think we finished, guys, at 20% last year in sales. And so if we can keep compounding sales at 20%, a kind of growing marketing and sales investment, that's all we need, Pete, to compound the top at 10, right? 20 minus 10% retention, right?

Ron Clark: It's working we're selling enough of the businesses. We have we're planning to be up 20% again, we finished what guy said, 20% last year and sales and so if we can keep comp Audi sales at 20% and kind of growing marketing and sales investment that that's all we need P to compound the top 10 right.

Ron Clark: 20, minus 10% retention right sorry.

Pete Christensen: Sorry, attrition is 10% growth. And so that's really the model. Just stay on that, make productive sales, and keep profits growing at the same time. Thanks, thanks. I appreciate that. And then on the Pamering deal, talking about revenue synergies, obviously, scaling it versus Corpay's infrastructure is, [inaudible] Yeah, for sure. I mean, I think I did mention there are both revenue synergies and, to your point, obvious cost synergies. So one, for example, which we do in all these transactions is, Tom mentioned the merchant network. So that company has 250,000 merchants. We have about a million, and each of us pays some amount of money to that merchant network with virtual cards.

Ron Clark: Sorry attrition in this 10% growth and so that's that's really the model just stay on that productive sales keep profits for all at the same time.

Speaker Change: Okay. Thanks.

Pete Christensen: I appreciate that and then on the Perm or tamarac deal.

Pete Christensen: Talking about revenue synergies, obviously scaling it versus our core pays infrastructures as.

Pete Christensen: <unk> is an obvious opportunity there.

Speaker Change: I'm just curious if you believe there's any any cross selling opportunities here on the synergy side.

Pete Christensen: Perhaps layering those those new verticals versus other product categories that that you may be selling.

Speaker Change: Yeah for sure.

Pete Christensen: And then I did mentioned Theres, both revenue synergies and to your point obvious cost synergies. So one for example, which we do in all of these transactions as Tom mentioned the merchant network. So that company is 250000 versus we have about a $1 million and each of us pay some of that.

Pete Christensen: Of those merchant network with virtual cards, so as part of the diligence we run an overlap where each of us could find merchants that we have that the other guys staying with a virtual card.

Ron Clark: So as part of the diligence, we run an overlap where each of us could find merchants that we have that the other guy's paying with a virtual card that we're not, and vice versa. So obviously, we're going to go right back and try to put each guy's respective merchants, if you will, on virtual cards. That's great. They have contracts with banks and processes that are six times as expensive as us because of their scale.

Ron Clark: We're not and vice versa. So obviously, we're going to go right back and try to put each guys respected merchants. If you will on virtual card that grades lift.

Ron Clark: We have contracts with banks and processes that are.

Ron Clark: Six times Pete is expensive.

Ron Clark: <unk> because of their scale, that's all contra revenue so for a dollar of spend we bring way more of it to the revenue line. For example, you know the nature and then there's the whole.

Ron Clark: That's all contra revenue. So for a dollar of spend, we bring way more of it to the revenue line, for example, than they do. And then there's the whole car business. All they have, basically, is full AP. They help companies with what we call invoice automation, fix the process and the workflow, and then payment automation or outsourcing pay all the bills.

Ron Clark: Car business you know all of that basically is full AP right. They help companies with what we call invoice automation.

Ron Clark: Fix the process and the workflow and then payment automation or outsourcing pay all the bills. We have issued our big car business walk around cards business cards fuel cards, even standalone virtual cards.

Ron Clark: What we have is a big car business, walk-around cars, business cars, fuel cars, even standalone virtual cars that they don't have because they're not in the car business, they're not an issuer, they're not a processor. And so clearly, we've looked at that as well, you know, bringing some of our sales guys to their base to sell our cars. So yeah, there's not only clear cost synergies, but there's a bunch of revenue too.

Ron Clark: Don't have because they're not in the card business, they're not an issue where they're not a processor and so clearly we've looked at that as well as.

Ron Clark: Bringing put some of our sales guys against their base to sell a car. So yeah. There's there's not only clearer past synergies. There is a bunch of revenue synergies. So we expect to think it's already growing I don't know 20 or 30% on its own. It's a great business, it's super Duper, good people, which I want to call out.

Ron Clark: So we expect to think it's already growing, I don't know, 20 or 30% on its own. It's a great business. It's got super-duper good people, which I want to call out as an asset, too. You can't run companies without people.

Ron Clark: Does that asset to the camera companies without people. So when you add our silver adjacent capabilities.

Ron Clark: So when you add our super-adjacent capabilities, you know, the thing, we think the thing will perform really well. That's super helpful. Thank you. Sounds really interesting. And it's not a many-up with Pete.

Ron Clark: The thing, we think that they will perform really well.

Ron Clark: That's super helpful. Thank you it sounds very really interesting. Thank you.

Speaker Change: And there's not many of them would be yes.

Pete Christensen: The other thing is they're scarce, right? There's only a handful that we're aware of any kind of sizable people that do what we call full AP in the middle market, really, of any size, and obviously, we know that that's true, very true. Our next question comes from Trevor Williams with Jeff. Great. Thanks. I want to go back to fleet and just how you guys are thinking about the shape of the year.

Ron Clark: Hello.

Ron Clark: So there's only a handful really they were aware of any kind of sizable people, who do what we call full AP in the middle market really of any size and obviously, we know them all.

Trevor Ellis Williams: And that's true very true.

Pete Christensen: Our next question comes from Trevor Williams with Jefferies.

Pete Christensen: Yeah.

Trevor Williams: I think the prior guide for vehicles assumed fleet would get backed up back to the high single digits or so by the end of the year. Just if that still holds and the level of visibility you have into the acceleration on your mentioning late fees, retention, anything there would be helpful. Thanks. Yeah. Hey, hey, Trevor.

Trevor Ellis Williams: Great. Thanks, I wanted to go back to fleet and just how you guys are thinking about the shape of the year I think the prior guide for vehicle had assumed fleet, we'd get backed up back up to the high single digits or so by the end of the year, just if that still holds and the level of visibility you have into the acceleration on you were mentioning late fees retention.

Speaker Change: Anything there would be helpful. Thanks.

Ron Clark: It's Ron again. So you called it right. So if you take our vehicle business and you look at our internal documents of how we build into the end of the second half, you're right. We show the vehicle business in total exiting in the high single digits, both in q3 and q4. So, again, part of that is the laughing of the pivot in North America and the other two businesses you know that are sitting inside the vehicle are performing fine and well in compounding. And so that's the view that we'd go from kind of low mid single digits for vehicle to high single digits as we actually... Okay, I got it.

Trevor Williams: Yeah, Hey, Trevor it's Ron again, so you called it right. So if you took our vehicle.

Ron Clark: Is this and you looked at our internal documents, how we build into the end of the second half Youre right. We show the vehicle business in total exiting in the in the high single digits.

Ron Clark: Both in Q3 into Q4, so again part of that is the lapping of the pit in North America and the other two businesses.

Ron Clark: Sitting inside vehicle are performing fine and well.

Ron Clark: And compounding and so that that's the view that we'd go from kind of low mid single digits for vehicle to high single digits as we exit the year.

Tom Pantner: And then on corporate payments, Tom, I think you called out higher revenue per transaction being a tailwind on the direct piece. Should we think, you know, going forward, on top of the new sales growth, that's kind of how we've been oriented to think about growth in the business, you know, that pricing could maybe be a bigger lever for growth across both direct and cross-border? Thanks.

Speaker Change: Okay got it and then on corporate payments, Tom I think you called out higher Rev per transaction being a tailwind on the direct piece.

Tom Pantner: Should we think going forward on top of the new sales growth that's kind of how we've been oriented to think about growth in the business you know that pricing could maybe be a bigger lever for growth across both direct and cross border.

Tom Pantner: Yeah, Trevor, I went over it with him and said the pricing piece, obviously, we'll always look to price competitively. I think what you're seeing in our trend line of rev per trend is just a mixed variance there in terms of where channel was a bigger proportion. First quarter of last year, you also see that in our spend numbers, where they were dominating spend numbers, kind of diluted the overall year over year, but sequentially, you see 10% growth.

Tom Pantner: Thanks.

Speaker Change: Yes, Trevor I wouldn't overemphasize the pricing, obviously, we'll always look to price competitively I think what you're seeing in our trend line of Rev per Tran, it's just a mix.

Tom Pantner: Variance there in terms of where channel was a bigger portion.

Tom Pantner: First quarter of last year, you also see that in our spend numbers, where they were dominating spend numbers kind of diluted the overall year over year, but sequentially you see 10% growth that also translated into the take rate. So I think what you see as a run rate take rate, it's pretty good well again, we will look for opportunities to <unk>.

Tom Pantner: That also translated into the take rate. So I think what you see is a run rate take rate that's pretty good. Again, we'll look for opportunities to optimize on any kind of pricing or monetization strategies, but it's more of a mix. [inaudible] employed

Tom Pantner: Optimize on any kind of.

Tom Pantner: Pricing or monetization strategies, but but it's more of a mix.

Tom Pantner: When youre looking in a rearview mirror than it is some kind of over a pricing strategy that we've deployed that's true also within cross border.

Tom Pantner: That's true also within cross-border. I know we focus a lot on payables, but the cross-border business as well, the mix of that business, has also been toward products where we earn more; we're doing more sophisticated FX transactions on behalf of our customers, and because of that, we're getting paid. That too is factoring into that overall trend and the shift in mix from the basic stuff, the commoditized kind of stuff, to the more specialized. [inaudible] I spend $1,000,000 a month, and I can get 20% on, and that's $1,000,000 a month.

Tom Pantner: We focus a lot on payables, but the cross border business as well as the mix of that business is also up.

Tom Pantner: <unk> products, where we earn more or doing more sophisticated type FM.

Tom Pantner: FX transactions on behalf of our customers and because of that we're getting paid and that's about all that to us is factoring into that overall trend shift in mix from kind of the basic stuff commoditized kind of stuff to the more specialized sophisticated stuff that we're bringing our customers.

Tom Pantner: Trevor It's Ron let me make sure you guys.

Tom Pantner: Get clearer on this pricing and how we can be can be advantaged, let's say simplistically that.

Tom Pantner: We're managing spend for you and there's 250 basis points of interchange and we agreed to split the thing I'll give you a rebate of 125 basis points and I'll keep a 125 as you know is key for me for revenues for me.

Tom Pantner: The pitch to get more price isn't just the split of the 250, it's how much of your spend I can get on virtual car. So if you spend a million dollars a month and I can get 20% on and someone else can all I get 10, I don't necessarily have to meet the 102.

Trevor Williams: If someone else can only get 10, I don't necessarily have to meet the 125 basis point rebate because I'm going to return you way more absolute money. So we're able to effectively capture a better price, a better key price, than banks, which are, you know, I'd say the main competition, because of our merchant network and technology allows us to, and people. We get way more of the client's spend on card programs, thus generating a bigger pool, and so we can effectively keep more money than other people and still have better value to the client.

Trevor Williams: 25 basis points rebate, because I'm going to return your way more absolute money.

Trevor Williams: So we're able to capture a effectively a better price or better keep price than banks, which are you know I'd say the main competition because of our merchant network intact allows us to and people, we get way more of our clients' spend on card programs, thus generating a bigger pool.

Trevor Williams: And so we can effectively keep more money than other people and still a better value to the client.

Trevor Williams: So I just want to pick up on Tom's comment that although it's not kind of a pure price, it does result in a price advantage for us. Good. Thanks. I appreciate all that. Our next question comes from James Fawcett with Morgan. Thank you very much, and I appreciate you guys. [inaudible] It's as simple on an incremental basis as mixed sleet is growing: share more broadly, or is there something else? Yeah, hey Chase, it's Ron.

Speaker Change: So I just wanted to pick up on Tom's comment that although it's not kind of pure price. It does result in a price advantage for us.

James Eugene Faucette: Great. Thanks, I appreciate all that.

Trevor Williams: Our next question comes from James Fawcett.

James Eugene Faucette: With Morgan Stanley.

Speaker Change: Thank you very much.

Speaker Change: Got it.

James Eugene Faucette: Delved into a lot of different topics I wanted to just quickly I guess in the interest of completeness go back to the E V and you provided some interesting comments there and certainly appreciate the detail on the U K E B economics, but I'm just wondering if you can unpack what's driving the increased penetration of E V cards.

James Eugene Faucette: Relative to fuel cars I mean, just simply on an incremental basis is mixed fleet is growing and share more broadly or is there something else going on there.

James Fawcett: So, the exhibits in the supplement, again, I think what we're trying to say there is, of a sample of whatever, three or four hundred clients that we've had for, you know, some period of time, the chart shows that they're incrementally, you know, adding EV relative to, you know, combustion, right? So, the percentage of total vehicles among that pool of clients is becoming more EV. I think the main point we're trying to say is that because we do not only, you know, on the road but also at home with a super high attach rate, we can actually get more revenue per vehicle for an EV vehicle than we can from the old-fashioned combustion vehicle. So that's the point we're really trying to make to everybody is, oh, woe is me, when the world goes to more EV, you know, Fleet or Corpay will be hurt by it.

Ronald F. Clarke: Yeah, Hey, Jason it's.

James Fawcett: It's Ron so the exhibits in the supplement again I think what we're trying to say there is a lot of a sample of whatever three or 400 clients that we've had for some period of time. The chart shows that they are incrementally you know, adding EV relative to you know combustion.

James Fawcett: Right. So the percentage of total vehicles among their pool of clients is becoming more E. D. I think the main point, we're trying to say is that because we do not only you know on the road, but also at home with a super high attach rate, we can actually get more rare.

James Fawcett: <unk> per vehicle.

James Fawcett: For EV vehicles than we can for the old fashion combustion vehicles. So that's the point, we're really trying to make everybody is Oh Woe is me when the world goes to more EV.

James Fawcett: Now fleet or core pay will be hurt by it we're trying to make the point that doesn't even know clients are willing to pay for this mixed solution. We have it on the road and at home and even as they grow to a higher and higher share of EV vehicles to total we keep getting paid more not less.

Ron Clark: We're trying to make the point that, no, no, no, no, no, clients are willing to pay for this mixed solution we have on the road and at home, and even as they grow to a higher and higher share of EV vehicles, the total, we keep getting paid more, not less. That's really what we're trying to show you there. And it's really just a share of the wallet.

Ron Clark: That's really what we're trying to show you there that's really just the share of wallet, we're keeping obviously the ice.

Tom Pantner: We're keeping, obviously, the ICE business, and the fuel, but as they evolve their fleet to EV, we're getting that business as well, so it's incremental business. That's great. Appreciate that. And then I just wanted to get one last point here.

Tom Pantner: This is the fuel, but as they evolve their fleet to E V. We're getting that business as well so it's incremental business for us.

Speaker Change: That's great I appreciate that and then I just wanted to to get one last point here.

James Fawcett: Like you, I think you've broken down kind of the growth expectations for corporate payments and talked about pricing and some of those things. I just want to make sure I understand is, are we close to channel drag being over and that stopping being kind of a headwind? Or, or how should we think about the timing of that? What does channel drag mean?

James Fawcett: Like you I think you've broken down kind of the growth expectations for corporate payments and talked about pricing and some of those things I just want to make sure I understand is are we close to channel drag being over and that stopping being kind of a headwind or how should we think about the timing of that.

Speaker Change: Well what is channel drag much Shannon.

Ron Clark: The channel or channel partners. Oh, the channel partners. Yeah, so again, yes is the short answer. I'd say for sure by Q3 and then again, point to point, the channel itself is actually higher. I think when we get to Q3, Q4, so yes. I'd say maybe the quarter we're sitting in is the last time.

Speaker Change: Okay, Oh, all of the channel partners.

Ron Clark: Yeah, Yeah. So again, it's yes is the short answer I'd say for sure by Q3, and then again the thing.

Ron Clark: Point to point the channel that's how it was actually higher I think when we get to Q3 Q4. So so yes, I'd say, maybe the quarter. We're sitting at is the last time hopefully we'll have to talk about this and again I said earlier, our confidence my confidence is high and it because the stuff that's full which is literally contracted so we just have to.

James Fawcett: Hopefully, we'll have to talk about that. And again, I said it earlier, our confidence, my confidence is high in it because the stuff that's forward is literally contracted, so we just have to make sure we... Got it. I hope this is the last time we answer, James. Yes, I appreciate that. Thanks so much. Our next question comes from Daniel Cripps with Wolf Research. Hi, this is Daniel on behalf of Darren.

Daniel Cripps: To make sure we implement it.

James Fawcett: Got it.

Daniel Cripps: A lot of time, we answered James' hope it [laughter] yeah I appreciate that thanks, so much.

James Fawcett: Okay.

Daniel Cripps: Our next question comes from Daniel Crimped.

Daniel Cripps: With Wolfe research.

Daniel Cripps: Hi, This is Daniel on for Darren Thanks for taking my question wanted to unpack some of the drivers the fleet transaction growth down 12% year over year also primarily driven by the loss of the microbes.

Daniel Cripps: Thanks for taking the question. I wanted to unpack some of the drivers of fleet transaction growth down 12% year over year. Is this also primarily driven by the loss of the micro fleet? It seems like maybe a bigger impact than we would have expected. I think you're looking at the print there, and that would be Russia where we would have Russia in the prior year. I think if you look at the organic, it's probably where we referenced the pro forma macro adjusted, which is a better indication.

Daniel Cripps: Like maybe a bigger impact than we would've expected.

Daniel Cripps: Yeah, I think you'll see a print there and that would be Russia, where we would have Russia in the prior year I mean, if you look at the organic is probably where we were we referenced the pro forma macro adjusted.

Daniel Cripps: It is a better indication you see transactions up 7% and then we kind of break that down based on just some of the different types of transactions that now flow through the whole vehicle payment segment.

Tom Pantner: You see, transactions are up 7%, and then we kind of break that down based on some of the different types of transactions that now flow through the whole vehicle payment segment. Okay, I got it. That will be an issue moving forward. Then, maybe, as a follow-up on Corpay, could you speak to the performance across the FX business versus the full AP business? Any material delta between the two in terms of revenue or volume growth there? Thank you. Yeah, hey, Terrence, Ron, no, they're kind of the same.

Speaker Change: Okay got it and that will be an issue moving forward and maybe as a follow up on core bank could you speak to the performance across the FX versus the full AP business any material delta between the two in terms of revenue or volume growth. There. Thank you.

Ron Clark: They're both growing in the high teens to 20%. So it is not a big difference. The cross-border business is a bit bigger, call it, I don't know, 30% bigger, won't be quite as big after we close this pay meringue, but no, they're quite similar. The one thing I will point out between the two businesses, though, just to remind everybody, is the cross-border business has a massive TAM because we originate customers in five geographies, so only about a quarter of that business is US origination; the other 75% of it is Canada, UK, Europe, Australia, and so you've got a lot of companies and prospects to basically fish in the pond in that business because they sit in lots of geography

Speaker Change: Yeah, Hey, Jarvis Ron no, they're there they're kind of the same they both grow at high teens to 20%. So that's not a big difference the cross border business is a bit bigger call. It 30% bigger won't be quite as big as we get to be closest pay meringue, but no. There they are quite similar.

Ron Clark: The one.

Ron Clark: Thing I will point out between the two businesses.

Ron Clark: To remind everybody is the cross border business has a massive tam because we originate customers in five geographies. So only about a quarter of that business is U S origination the other 75% of it is Canada.

Ron Clark: UK Europe, Australia, and so you've got way a number of companies and prospects to basically fish in the pond.

Ron Clark: And that business, because they sit and and lots of geographies.

Ron Clark: Yeah.

Dave Koenig: Our next question comes from Dave Koenig with Baird. Yeah, hey guys, thank you. And I guess one follow-up on just the channel drag question: are we still gonna see for a couple more quarters kind of flattish corporate payment volume? You know, we're gonna keep seeing that, and then by Q4 it re-accelerates when you hit the easier comps. Is that a fair way to think about it? Yes, it is. Because the channel, remember, is lots of spend at no rate, and the direct is obviously less spend at a decent rate.

Ron Clark: Our next question comes from Dave Koning with Baird.

David John Koning: Yeah, Hey, guys. Thank you.

Dave Koenig: I guess, one follow up on just the channel.

Craig: Craig Good question.

Dave Koenig: Are we still going to see for a couple more quarters kind of flattish corporate payment volume, we're going to keep seeing that and then by Q4. It accelerates when you hit the easier comp is that a fair way to think about that.

Dave Koenig: It is because of the channel remember is lots of spend that no rate and the direct is obviously less than that at a decent rates of what you. Just said is right. Once the channel gets cleaned up effectively it is on its own is higher than the prior period that that'll that'll wash away.

Ron Clark: So what you just said is right. Once the channel gets cleaned up effectively and is on its own, and is higher than the prior period, that'll wash away. Yeah, and you accelerated corporate, which was great even with the transactions decelerating. So that was good. My follow-up quick question: share count was flat sequentially despite big buybacks in Q1. Was that just timing in March?

Ron Clark: Yeah, and you accelerated corporate.

Ron Clark: Which was great even with the transactions would be salary and so that was good my follow up quick.

Ron Clark: Share count was flat sequentially, despite big Big buybacks in Q1 was that just timing in March so we'll see a lot more than in Q2.

Tom Pantner: So we'll see a lot more in Q2. Yeah, David, a little bit of that is also the stock price. So when the stock price goes up, there's more dilution on the options and restricted stock that's outstanding. So that kind of counterbalances some of the actions that were taken on the buyback front.

Speaker Change: Yeah, David it's a little bit of that it also stock price. So when stock price goes up there's more dilution on the options and restricted stock with outstanding so that kind of counterbalance some of the actions that were taken on the on the buyback front, so there's a little bit.

Dave Koenig: So there's a little bit of a... [inaudible] Yeah, gotcha. Thanks, guys. Our final question comes from Rufus Hoang with BMO Capital Marks. Hey guys, thanks for the question. Just wanted to ask about same store sales, and I know you mentioned it improved a percentage point sequentially to minus two this quarter. I guess what's the path and the timeline for getting that back to flat?

Rufus Hone: Headwind when it comes to that but with the buybacks as you said back end loaded to Q1, and then active in that first month of Q2, there'll be a bit of a bigger benefit when we print Q2.

Rufus Hone: Yeah got you thanks, guys.

Dave Koenig: Okay.

Dave Koenig: Yes.

Rufus Hone: Our final question comes from roofing at home.

Rufus Hone: On the capital markets.

Rufus Hoang: Is that a 2Q goal or more like something around year end? Thanks. Yeah, I would say it's probably close to the year-end. A lot of it turns, again, on this lodging thing, which I mentioned was, you know, call it 10 or 11 percent, and the big period there is Q3. The other one I think I called out, or if I didn't the last time, the UK, you know, as an economy, has been a bit soft in the last year, and so that would be the other dragger. I'd say the rest of them are, you know, improving.

Rufus Hone: Hey, guys. Thanks for the question just wanted to ask on the same store sales and I know you've mentioned, it's proved a percentage points sequentially to minus two this quarter I guess, what's the path and the timeline for getting that back to flat is that a two key goal or more like something around year end. Thanks.

Rufus Hoang: Yeah, I would say, it's probably closer to year end a lot of it turns again in this lodging thing, which I mentioned was you know call it 10 or 11%.

Rufus Hoang: And the Big period, there is Q3 on the other one I think I did call out power if I didn't the last time the U K it's in.

Rufus Hoang: The economy has been a bit soft in.

Rufus Hoang: In the last year, and so that that would be the other drag or I'd say the rest of them are improving.

Rufus Hoang: So I think part of our plan would be the minus three to minus two that that thing gets gets back to close to flat by Q4.

Ron Clark: Great. Thank you. We have no further questions at this time. This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change: Great. Thank you.

Ron Clark: Yeah.

Speaker Change: We have no further questions at this time. This does conclude today's program. Thank you for your participation you may disconnect at anytime.

Ron Clark: Yeah.

Ron Clark: Mhm.

Ron Clark: Yeah.

Ron Clark: Yeah.

Ron Clark: Okay.

Speaker Change: Uh huh.

Operator: [inaudible] I'm not a poet. I'm just a guy. I'm not a poet. I'm just a guy.

Operator: [music].

Operator: Hum.

Operator: Yes.

Operator: Okay.

Operator: [music].

Operator: Yeah.

Operator: Yeah.

Operator: [music].

Operator: Hum.

Operator: [music].