Q4 2024 Corpay Inc Earnings Call

Greetings and welcome to the core pay fourth quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone.

Operator: Greetings and welcome to the Corpay 4th Quarter 2024 Earnings Conference.

Operator: At this time, all participants are in Question and Answer Session will follow If anyone should require operator star zero on your telephone.

Speaker Change: Pat as.

James Eglseder: As a reminder, this Now my pleasure to introduce.

Speaker Change: As a reminder, this conference is being recorded it is now my pleasure to introduce your host Jim Ethical fighter Investor Relations. Thank you Jim you may begin.

James Eglseder: James Eglseder, Investor Relations Thank you, Jim. Good afternoon, and thank you for joining us today for our earnings call to discuss the 2024 results, both fourth quarter and full year. With me today are Ron Clarke, our Chairman and CEO, and Tom Panther, our CFO.

Speaker Change: Good afternoon, and thank you for joining us today for earnings call to discuss the 'twenty 'twenty four results, both fourth quarter and full year with me today are Ron Clarke, our chairman and CEO and Tom Panther our CFO.

James Eglseder: Following the prepared comments, the operator will announce that the queue will open for the Q&A session. Today's documents include our earnings release and supplement, which can be found under the investor relations section of our website at corpay.com. Throughout this call now, we will be covering several non-GAAP financial metrics, including revenues, net income, net income per diluted share, all on an adjusted basis. We will also be covering organic revenue growth. This metric neutralizes the impact of year-over-year changes in FX rates, fuel prices, and fuel spreads. It also includes pro forma results for acquisitions and divestitures or scope changes closed during the two years being compared.

Speaker Change: Following the prepared comments, the operator will announce to the queue will open for the Q&A session.

Speaker Change: Todays documents include our earnings release, and supplement which can be found under the Investor Relations section of our website at Corp, <unk> com.

Speaker Change: Throughout this call now we will be covering several non-GAAP financial metrics, including revenues net income net income per diluted share all on an adjusted basis.

Speaker Change: We will also be covering organic revenue growth. This metric neutralizes the impact of year over year changes in FX rates fuel prices and fuel spreads at.

Speaker Change: It also includes pro forma results for acquisitions and divestitures, our scope changes closed during the two years being compared.

James Eglseder: None of these measures are calculated in accordance with GAAP, so may be different than at other companies.

Speaker Change: None of these measures are calculated in accordance with GAAP, so maybe different than at other companies 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.

James Eglseder: Reconciliations of the historical non-GAAP to the most directly comparable GAAP information can be found in today's press release and on our website. 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. All statements about our outlook, expected macroenvironment, 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. These expected results are also subject to numerous uncertainties and risks, which could cause actual results to differ materially from what we expect.

Speaker Change: It's important to understand that part of our discussion today may include forward looking statements. These statements reflect the best information we have as of today.

Speaker Change: All statements about our outlook expected macro environment, new products and expectations regarding business felt any future acquisitions or 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.

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

James Eglseder: Some of those risks are mentioned in today's press release in Form 8K and in our annual report in Form 10K. These documents are also available on our website and at sec.gov.

Speaker Change: Some of those risks are mentioned in today's press release and form 8-K and in our annual report on Form 10-K. These documents are also available on our website and it does he see that Gov.

James Eglseder: So now we'll turn the call over to Ron Clarke, our chairman and CEO, Ron.

Speaker Change: So now I'll turn the call over to Ron Clarke, our chairman and CEO Rod.

Ron Clarke: Okay, Jim, thanks.

Okay. Jim Thanks, Good afternoon, everyone and thanks for joining our Q4.

Ron Clarke: Good afternoon, everyone. And thanks for joining our Q4 2024 earnings call. Up front here, I'll plan to cover four subjects. First, provide my take on Q4 results. Second, I'll hit the highlights for full year 2024. Third, I'll share our 2025 guidance along with the major priorities for the year. And then lastly, I'll provide a bit of an M&A update.

Speaker Change: 'twenty 'twenty four earnings call.

Speaker Change: Upfront here I'll plan to cover four subjects are first.

Speaker Change: Ill provide my take on Q4 results.

Speaker Change: Second I'll hit the highlights for full year 'twenty 'twenty four.

Speaker Change: Third I'll share our 2025 guidance.

Speaker Change: Along with the major priorities for the year, and then lastly, I'll provide a bit of an M&A update.

Ron Clarke: Okay, let me begin with our Q4 results. We reported Q4 revenue of $1,034,000,000. That's up 10% and cash EPS of $536,000. That's up 21%. Overall, the results really in line with our expectation. Each of our core businesses pretty much coming in as planned with accelerating revenue. The macro turned unfavorable during Q4, compressing our print revenue by about $20 million, but fortunately a favorable tax rate effectively offset the unfavorable FX, really landing us back at our expected Q4 EPS print. Kind of the same thing on the revenue front, we did pick up some unplanned GPS acquisition revenue in the quarter, but that was offset by some delayed gift card shipment.

Speaker Change: Okay. Let me begin with our Q4 results. We reported Q4 revenue of 1 billion 34.

Speaker Change: That's up 10% and Kashi P. S. At 536, that's up 21% overall the results really in line with our expectation.

Speaker Change: Each of our core business is pretty much coming in as planned with accelerating revenue.

Speaker Change: The macro I turned unfavorable during Q4 compressing our print revenue by about $20 million.

Speaker Change: But fortunately a favorable tax rate effectively offset the unfavorable FX are really landing us back at our expense.

Speaker Change: Spec did Q4, our E. P. S print kind of the same thing on the revenue front, we did pick up some unplanned G. P. S acquisition revenue in the quarter.

Speaker Change: But that was offset by some delayed a gift card shipments.

Ron Clarke: I'm organic revenue growth accelerating quite nicely in Q4 coming in at 12% overall inside and had our corporate payments line of business finishing at 26% organic revenue growth. Quite importantly, the trends improved significantly in the quarter. Same store sales finished positive, up 1%. That compares to minus 3% in Q4 last year. Sales growth crazy good, accelerated to 36%, really impressive. That did include some elephant sales in the quarter. And retention remained steady at 92%. So look, the wrap on the quarter, the underlying businesses really spot on, our expectations, the environment both giveth and taketh, and kind of zeroing out in the quarter.

Speaker Change: Organic revenue growth accelerating quite nicely in Q4 coming in at 12% overall.

Speaker Change: Overall, our inside of had our corporate payments line of business, finishing at 26% organic revenue growth.

Speaker Change: Quite importantly, the trends improve.

Speaker Change: Improved significantly in the quarter, our same store sales I finished positive up 1%.

Speaker Change: That compares to minus 3% in Q4 last year.

Speaker Change: Sales grows crazy good accelerated to 36% a really impressive that did include some elephant sales in the quarter.

Speaker Change: And retention remained steady at 92% so look the wrap on the quarter.

Speaker Change: The underlying business is really a spot on our expectations.

Speaker Change: The environment, both give us and take us and kind of zeroing out in the quarter and then importantly, our revenue our same store sales and sales or new bookings trends are improving really quite materially in the quarter.

Ron Clarke: And then importantly, our revenue, same store sales, and sales or new bookings trends, improving really quite materially in the quarter.

Ron Clarke: Okay, let me make the turn and call out a few highlights for full year 2024. I characterize it overall as really quite successful. Cash EPS of $19 was up over $2 on a print basis and up 16% versus last year, excluding Russia. We did rebrand and simplify the company, now Corpay, the corporate payments company. We scaled our corporate payments line of business, adding two acquisitions. Again, sales growth for the full year, over 20%. We managed credit losses to extremely low levels, lower than 2023. We progressed our vehicle payments add-on idea, seeing real success with that in Brazil.

Speaker Change: Okay, Let me make the turn and call out a few highlights for full year 'twenty 'twenty four.

Speaker Change: I characterize it overall is really quite successful.

Speaker Change: Kashi P S of $19 was up.

Speaker Change: Over $2 on a print basis.

Speaker Change: And up 16% versus last year, excluding Russia, we did rebrand and simplify the company are now core pay the corporate payments company.

Speaker Change: We scaled our corporate payments line of business, adding two acquisitions.

Speaker Change: Again sales growth for the full year over 20%, we manage credit losses to extremely low levels are lower than 2023 we progressed our vehicle payments add an idea seen real success with that in Brazil.

Ron Clarke: We have hired a world-class USA sales leadership team to take us forward. We have begun the slow turn of our two problem children businesses back in a positive territory.

Speaker Change: We have hired a world class I USA sales leadership team I had to take US forward and we have begun the slow turn off of our two problem children businesses.

Speaker Change: Back into positive territory. So I'm all in all we think a pretty good performance.

Ron Clarke: All in all, we think a pretty good performance.

Ron Clarke: Okay, let me transition to our 2025 guidance along with our major priorities for the year. So today we're providing full year 2025 guidance at the midpoint of $4.4 billion in revenue and $21 of cash EPS. So both of those numbers up 11%. The guidance reflects pretty strong underlying business fundamentals. So within the guide, we anticipate organic revenue growth at the midpoint of 11%. That's up a bit from our view 90 days ago. We're planning a full year overall sales or new bookings growth of 20% here in 2025. And we're planning macro neutral cash EPS growth of 17% which is in line with our midterm earnings target.

Speaker Change: Okay, Let me transition to our 2025 guidance.

Speaker Change: Along with our major priorities for the year. So today, we're providing full year 'twenty twenty-five guidance at the midpoint of our 4.4 billion in revenue and $21 of cash E. P. S. So both of those numbers are up 11%.

The guidance reflects pretty strong underlying business fundamentals and so within the guide we anticipate organic revenue growth at the midpoint of 11%.

Speaker Change: That's up a bit from our view 90 days ago I, We're planning a full year overall sales or new bookings growth of 20% here in 2025, and we're planning macro neutral a cash EPS growth of 17% which is.

Speaker Change: In line with our midterm earnings target.

Ron Clarke: Unfortunately, we are out looking a very unfavorable macro at the moment, a combination of weak international currencies along with a much higher tax rate. So taken together, we expect our print revenue to be compressed by over $100 million and our cash EPS to be compressed by about $1.20. Obviously FX and SOFR forward curves can change, but we're using the January forecasts that are out there.

Speaker Change: Unfortunately, we are out looking a very unfavorable macro at the moment.

Speaker Change: A combination of weak international.

Speaker Change: As you know currencies, along with a much higher tax rate so taken together we expect.

Speaker Change: Our print revenue to be compressed by over 100 million.

Speaker Change: And our cash EPS to be compressed by about $1 20.

Speaker Change: Obviously, FX and sulfur forward curves can change, but we're using the January our forecast that are out there.

Tom Panther: Tom will provide some additional details on the guidance math along with specific Q1 guidance when we get to his prepared remarks.

Speaker Change: Tom will provide some additional details on the guidance math, along with specific Q1 guidance when we get to his prepared remarks.

Ron Clarke: In terms of priorities, we have four major priorities here in 2025, with an emphasis on expanding our corporate payments business. So first priority, our portfolio, we'll continue to simplify our portfolio, we'll go deeper versus wider. We will look to shed some additional non-core assets, and we'll look to add more corporate payment assets. So already quite active on this front. Second, USA Sales, we are planning a step change improvement in USA Sales production this year. We plan to invest more in the Corpay brand, scale our field in Zoom sales teams, and progress our dedicated cross-sell team.

Speaker Change: In terms of our priorities, we have four major priorities here in 2025.

Speaker Change: With an emphasis on expanding our corporate payments business. So first our priority our portfolio will.

Speaker Change: We will continue to simplify our portfolio will go deeper versus wider we will look to shed.

Speaker Change: Some additional non core assets are and we'll look to add more corporate payment asset. So are already quite active on this front.

Speaker Change: Second our USA sales, we are planning a step change improvement in USA sales production. This year, we plan to invest more in the core pay brand our scale, our field and zoom sales teams.

And progress our dedicated.

Speaker Change: Cross sell team.

Ron Clarke: Third, on the payables front, we'll take our payables business upmarket to the enterprise segment. That's in addition to our core middle market focus. We have secured our first big enterprise win, so quite exciting. Additionally, we're going to expand our payables business into Europe this year and launch our Corpay complete payables product in the UK. We do have lots of UK assets to help us get going there. And then finally, the priority and cross-border, we'll expand our MCA or multi-currency account product. That holds multiple currencies for our clients as deposits, really making it easier for clients to expand the countries that they participate in.

Speaker Change: Third on the payables front, we'll take our payables business upmarket to the enterprise segment.

Speaker Change: That's in addition to our core middle market focus we have secured our first big enterprise win so a quite exciting.

Speaker Change: Additionally, I'm, we're going to expand our payables business into Europe. This year and launch our core pay complete our payables product in the U K, we do have lots of U K assets to to help us get going there and then finally, the priority and cross.

Speaker Change: Border I will expand.

Speaker Change: Our M C a or multi currency account a product that holds multiple currencies for our clients as deposits are really making it easier for clients to.

Speaker Change: To expand the countries are that they participate in that.

Ron Clarke: This could be really a game changer to help us compete with banks on the cross-border front.

Speaker Change: This could be really a game changer to help us compete.

Speaker Change: With banks on the cross border front, so all in all a pretty exciting set of initiatives planned this year.

Ron Clarke: So all in all, a pretty exciting set of initiatives planned this year.

Ron Clarke: Okay, last up, let me run through just a brief M&A update. So first, our two 2024 corporate payment acquisitions, Paymorang and GPS, well underway, integrating both of those businesses into our tech environment and executing on our synergy plans. We're still on track to deliver a 50 cents of cash EPS accretion from these two deals here in 2025. A second, Gringo, it's our second Brazil mobile payments acquisition. We announced that on Monday. So this acquisition, along with last year's Zapay acquisition, gives us entry into a pretty big Brazil payments dam. It's in fact about three times larger than our toll TAM and quite early days in terms of its digital penetration.

Speaker Change: Okay last up let me run through just a brief M&A update.

Speaker Change: First our two 'twenty 'twenty four corporate payment acquisitions.

Speaker Change: Hey, Meringue and G. P. S are well underway integrating both of those businesses into our tech environment and executing on our synergy plans, we're still on track to deliver our 50 cents of a cash EPS accretion.

Speaker Change: From these two deals are here in 2025.

Speaker Change: Our second gringo it it's our second Brazil mobile payments acquisition.

Speaker Change: We announced that on Monday.

Speaker Change: So this acquisition along with last year's Zappei acquisition gives us entry into a pretty big Brazil, a payments Tam.

Speaker Change: It's in fact about three times larger than our total Tam and quite early.

Speaker Change: Days in terms of its digital penetration. So taken together. These these couple of deals will add 5 million active monthly digital users all of whom become potential buyers for our vehicle our payment solutions, including a toll.

Ron Clarke: So taken together, these couple of deals will add 5 million active monthly digital users, all of whom become potential buyers for our vehicle payment solutions, including toll, parking, insurance, and even fueling. Lastly, we do have a pretty active pipeline of corporate payment acquisitions opportunities here in front of us.

Speaker Change: Parking.

Speaker Change: Insurance and even fueling lastly, our we do have a pretty active pipeline of corporate payment acquisitions opportunities here in front of US are the goal obviously to increase our corporate payment mix.

Ron Clarke: The goal obviously to increase our corporate payment mix, which could lead to revenue acceleration.

Which could lead to revenue acceleration.

Ron Clarke: So, in conclusion today, again, Q4, again, kind of finishing in line with expectations, although revenue and profit growth accelerating quite nicely, 2024, we think quite successful. We grew profits, but importantly, we did simplify and better position the company for the midterm. Our 2025 macro-neutral guidance calls for 11% organic revenue growth, 17% cash EPS growth, both of those consistent with our midterm targets, although we do expect, again, our print results to be negatively impacted by macro headwinds. Finally, we do expect some upside in 2025 from our capital allocation and corporate development activities as we work our way through the year.

Speaker Change: So so in conclusion today again, Q4, again kind of finishing in line.

Speaker Change: With expectations, although our revenue and profit growth accelerating quite nicely.

Speaker Change: 'twenty 'twenty four we think quite successful we grew profits, but importantly, we did simplify and better position the company for the midterm.

Speaker Change: Our 2025 macro neutral guidance.

Speaker Change: Calls for 11% organic revenue growth a.

Speaker Change: 17% cash EPS growth are both of those consistent with our mid term targets. Although we do expect again, our print ourselves to be negatively impacted.

Speaker Change: By macro headwinds.

Speaker Change: Finally, we do expect some upside in 2025 from our capital allocation.

Speaker Change: And corporate development activities as we are as we work our way through the year. So with that let me turn the call back over to Tom who will provide some additional details on the quarter and on our 2025 guidance Tom.

Tom Panther: So, with that, let me turn the call back over to Tom. He'll provide some additional details on the quarter and on our 2025 guidance.

Tom Panther: Tom. Thanks, Ron, and good afternoon, everyone. Here's some additional details related to the quarter and the full year. It was a very good quarter with all of our businesses exhibiting strong organic revenue growth. For the quarter, organic revenue grew 12%, a smidge under our guide due to gift card shipments falling a bit short of our expectations. From a housekeeping perspective, the net benefit from our December acquisition and divestiture activity was offset by a slight shortfall in gifts. Our print revenue of $1,034,000,000 was impacted by approximately $20,000,000 of negative macro compared to our November guide, primarily FX, resulting from the stronger dollar post the U.S.

Tom Panther: Thanks, Ron and good afternoon, everyone.

Tom Panther: Here are some additional details related to the quarter and the full year.

Tom Panther: It was a very good quarter with all of our business is exhibiting strong organic revenue growth.

Tom Panther: For the quarter organic revenue grew 12% a smidge under our guide due to gift card shipments falling a bit short of our expectations.

Tom Panther: From a housekeeping perspective, the net benefit from our December acquisition and divestiture activity was offset by a slight shortfall in gift.

Tom Panther: Our print revenue of $1.034 billion was impacted by approximately $20 million of negative macro compared to our November guide, primarily FX, resulting from the stronger dollar post the U S presidential election.

Tom Panther: presidential election. Normalizing for macro, revenue would have been $1,055,000,000, which is in line with our guide. Digging deeper into our revenue results, during the quarter we were encouraged to see our same store sales turn 1% positive compared to a 3% drag in Q4'23. Looking down the P&L, we overcame the stiff macro headwind through strong expense management and a lower tax rate, contributing to the $5.36 per share in cash EPS that we are reporting. Cash EPS increased 21% versus last year. Looking at the full year, Organic Revenue grew 8% and Cash EPS grew 12%. Excluding our Russia business, which we sold in 2023, Cash EPS increased 16%, despite $65 million of negative revenue macro in 2024.

Tom Panther: Normalizing for macro revenue would have been $1.055 billion, which is in line with our guide.

Tom Panther: Digging deeper into our revenue results during the quarter. We were encouraged to see our same store sales turned 1% positive compared to a 3% drag in Q4 23.

Tom Panther: Looking down the P&L, we overcame the stiff macro headwind through strong expense management, and a lower tax rate contributing to the $5 36 per share and cash EPS that we're reporting.

Tom Panther: Cash EPS increased 21% versus last year.

Tom Panther: Looking at the full year organic revenue grew 8% and cash EPS grew 12%.

Tom Panther: Excluding our Russia business, which we sold in 2023 cash EPS increased 16% despite $65 million of negative revenue macro in 2024.

Tom Panther: These strong year-over-year results are further reinforced by the healthy, consistent, sequential quarterly growth in revenue, EBITDA, adjusted EBITDA margin, and Cash EPS throughout 2024, which positions us well entering 2025. Continuing with our performance highlights, new sales during the quarter and full year were exceptional, increasing 36% in Q4 and 22% for the year. For the quarter, corporate payments and vehicle payment sales increased almost 40%. And for the year, these two segments grew sales a little over 20%. There is no better testament to the quality and value of our products than to be able to consistently generate sales to new customers.

These strong year over year results are further reinforced by the healthy consistent sequential quarterly growth in revenue EBITDA, adjusted EBITDA margin and cash EPS throughout 'twenty, 'twenty, four which positions us well entering 2025.

Tom Panther: Continuing with our performance highlights new sales during the quarter and full year were exceptional increasing 36% in Q4 and 22% for the year for the quarter corporate payments and vehicle payments sales increased almost 40% and for the year. These two segments grew sales a little over 20%.

Tom Panther: There's no better testament to the quality and value of our products and to be able to consistently generate sales to new customers.

Tom Panther: To sum it up, 2024 was a great year as we were able to generate strong top and bottom line growth, increase margins and significantly grow sales. Turning to our segment performance and the underlying drivers of our revenue growth, corporate payments revenue was up 26% during the quarter and increased 20% for the year. As expected, some one-time deal-related synergies contributed four points of growth to the corridor. During the quarter, our direct business grew 28 percent, excluding the one-time synergy, led by growth in full AP. Our full suite of high-quality payment solutions continue to sell extremely well, with sales up 29 percent this quarter.

Tom Panther: To sum it up 2024 was a great year as we were able to generate strong top and bottom line growth increase margins and significantly grow sales.

Tom Panther: Turning to our segment performance and the underlying drivers of our revenue growth corporate payments revenue was up 26% during the quarter and increased 20% for the year.

Tom Panther: As expected some onetime deal related synergies contributed four points of growth to the quarter.

Tom Panther: During the quarter, our direct business grew 28%, excluding the onetime synergy led by growth in full AP.

Tom Panther: Our full suite of high quality payment solutions continue to sell extremely well with sales up 29% this quarter.

Tom Panther: I want to take a minute to highlight that we won the full AP business of a large global enterprise client that was already using our vehicle payment solution. This is a terrific example of capturing the overlap in our customer base. In addition, up to now, our focus has been selling our full AP solutions to middle market customers. But the addition of this enterprise customer has the potential to unlock additional TAM for us in the enterprise segment. Lastly, the business's KPI fundamentals remain solid, with spend volumes increasing 22% in the quarter and card penetration remaining stable.

Tom Panther: I want to take a minute to highlight that we won the full AP business of a large global enterprise client that was already using our vehicle payment solutions.

Tom Panther: This is a terrific example of capturing the overlap in our customer base. In addition up to now our focus has been selling our full AP solutions to mid market customers, but the addition of this enterprise customer has the potential to unlock additional Tam for us in the enterprise segment.

Tom Panther: Lastly, the business's kpis fundamentals remain solid with spend volumes, increasing 22% in the quarter and card penetration remaining stable.

Tom Panther: Cross-border revenue is up 20% for the quarter and the year, which was led by sales growing 43% for the quarter and 33% for the year. We closed the GPS transaction in December, and we continue full steam ahead with those integration plans. The cross-border space continues to attract more investor attention, and we clearly have a great position in this massive global marketplace. We compete almost exclusively with banks which control 90 plus percent of all international payment flows. We primarily focus on the global middle market where we have better technology, superior sales and customer service, and a proprietary network that allows us to have a very high win rate.

Tom Panther: Cross border revenue was up 20% for the quarter and the year, which was led by sales growing 43% for the quarter and 33% for the year. We closed the G. P. S transaction in December and we continue full steam ahead with those integration plans.

Tom Panther: The cross border space continues to attract more investor intention and we clearly have a great position in this massive global marketplace.

Tom Panther: We compete almost exclusively with banks, which control 90 plus percent of all international payment flows.

Tom Panther: We primarily focus on the global middle market, where we have better technology superior sales and customer service and a proprietary network that allows us to have a very high win rate.

Tom Panther: We continue to develop new products for our clients and open up new geographies to capture more of the large addressable market. Turning to vehicle payments, organic revenue increased 8% during the quarter, which is a four-point improvement from Q3, and for the year, revenue grew 5%. In Brazil, for the quarter, toll tax increased 9% year-over-year, with more than a third of our customer revenue coming from our extended network. Insurance revenue was up over 130%, and we sold nearly 300,000 insurance policies in Q4 alone. We also recently announced signing definitive agreements to acquire Gringo, which is our second deal in the car debt segment.

Tom Panther: We continue to develop new products for our clients and open up new geographies to capture more of the large addressable market.

Tom Panther: Turning to vehicle payments organic revenue increased 8% during the quarter, which is a four point improvement from Q3 and for the year revenue grew 5%.

Tom Panther: In Brazil for the quarter toll tags increased 9% year over year with more than a third of our customer revenue coming from our extended network insurance revenue was up over 130% and we sold nearly 300000 insurance policies in Q4 alone.

Tom Panther: We also recently announced the signing of definitive agreements to acquire Gringo, which is our second deal in the car that segment Gringos Super App in National Network helped consumer and business drivers pay for vehicle taxes registration and tickets.

Tom Panther: Gringo's super app and national network help consumer and business drivers pay for vehicle taxes, registration, and tickets. The card debt market is three times the size of the toll market and significantly less penetrated so it gives us enormous runway to grow. The acquisition is expected to close early Q2 and allows us to efficiently use our cash in Brazil in a leveraged neutral manner. We continue to develop and grow our vehicle payment strategy in Brazil by selling more tags and providing use cases related to vehicles, all delivered via a comprehensive app. Our strategies and execution are working as evidenced by organic revenue growing 20% for the quarter and 18% for the year.

Tom Panther: The car deaths market is three times the size of the toll market and significantly less penetrated so it gives us enormous runway to grow.

Tom Panther: The acquisition is expected to close early Q2, and it allows us to efficiently use our cash in Brazil in a leverage neutral manner.

Tom Panther: We continue to develop and grow our vehicle payment strategy in Brazil by selling more tags and providing use cases related to vehicles all delivered via comprehensive at.

Tom Panther: Our strategies and execution are working as evidenced by organic revenue growing 20% for the quarter and 18% for the year, our brand sales coverage and value added products enable the business to be a meaningful driver of total vehicle payments growth going forward.

Tom Panther: Our brand, sales coverage, and value-added products enable the business to be a meaningful driver of total vehicle payments growth going forward. In international vehicle payments, revenue grew 12% for the quarter and 11% for the year. This business has been a consistent performer despite some pockets of recent economic softness in Europe. Our consistent strong sales, array of products and channels, and geographic diversification drives these consistent results. In the U.S., our digital and field sales efforts are improving as we continue to see growth in applications, approvals, and starts. During the quarter, sales increased over 60%, which includes significantly expanding our service offering with a large corporate customer.

Tom Panther: And international vehicle payments revenue grew 12% for the quarter and 11% for the year.

Tom Panther: This business has been a consistent performer despite some pockets of recent economic softness in Europe.

Tom Panther: Our consistent strong sales array of products and channels and geographic diversification drives these consistent results.

Tom Panther: In the U S. Our digital and field sales efforts are improving as we continue to see growth in applications approvals and starts.

Tom Panther: During the quarter sales increased over 60%, which includes significantly expanding our service offering with a large corporate customer.

Tom Panther: We've now lapped the drag from lower late fees, allowing these new sales to flow through into revenue. Lodging organic revenue for the quarter improved to 1% compared to down 5% in Q3. This quarter benefited from an improvement in same-store sales in our workforce business, a trend we expect to continue throughout 2025. During the quarter, room nights increased 23 percent, led by the workforce business, which was particularly active in response to Hurricanes Helene and Milton. Certainly a significant topic of interest is the impact to our business from the California wildfires that began in early January. We are supporting the FEMA activation in our workforce business and the needs of displaced policyholders through our insurance business.

Tom Panther: We've now lapped the drag from lower late fees, allowing these new sales to flow through into revenue.

Tom Panther: Largely inorganic revenue for the quarter improved to 1% compared to down 5% in Q3.

Tom Panther: This quarter benefited from an improvement in same store sales and our workforce business a trend we expect to continue throughout 2025.

Tom Panther: During the quarter room nights increased 23%.

Tom Panther: Led by the workforce business, which was particularly active in response to Hurricanes Helene and Milton certainly a.

Tom Panther: A significant topic of interest is the impact to our business from the California wildfires that began in early January we were supporting the FEMA activation and our workforce business and the needs of displaced policyholders through our insurance business.

Tom Panther: In January alone, we provided approximately 42,000 rooms to emergency workers and displaced homeowners. It's too soon to estimate the impact this catastrophe may have on 2025's results. However, we are focused on making sure our network is able to support the recovery efforts. And we extend our support to all of those impacted by this tragic event.

Tom Panther: In January alone, we provided approximately 42000 rooms to emergency workers and displaced homeowners.

Tom Panther: It's too soon to estimate the impact this catastrophe may have on 2020 fives results. However, we are focused on making sure our network is able to support the recovery efforts.

Tom Panther: And we extend our support to all of those impacted by this tragic event.

Tom Panther: In summary, we're super pleased with the performance of our business in 2024. Earlier in the year, we called out our problem children, lodging and vehicle payments, and those businesses are continuing to improve. Meanwhile, our corporate payments, cross-border Brazil and international vehicle payments businesses performed exceptionally well, which demonstrates our durable earnings growth and cash flow generation. Now, looking further down the income statement, fourth quarter operating expenses of $546 million increased 6% versus Q4 of last year. There were a handful of unusual items recognized in the quarter that essentially met out against each other that I'll quickly tick through.

Tom Panther: In summary, we're super pleased with the performance of.

Tom Panther: Of our business in 2024.

Tom Panther: Earlier in the year, we called out our problem children lodging and vehicle payments and those businesses are continuing to improve.

Tom Panther: Meanwhile, our corporate payments cross border, Brazil, and international vehicle payments businesses performed exceptionally well, which demonstrates our durable earnings growth and cash flow generation.

Tom Panther: Now looking further down the income statement fourth quarter operating expenses of $546 million increased 6% versus Q4 of last year.

Tom Panther: There were a handful of unusual items recognized in the quarter that essentially net out against each other that I'll quickly tick through <unk>.

Tom Panther: First, during the quarter, we recognized $120 million pre-tax gain on the sale of our merchant solutions business. Second, in connection with our annual goodwill impairment analysis as required under GAAP, we recorded a $90 million non-cash impairment charge related to the pay card business, which is part of the other segment. Third, we recognized $11 million in deal termination fees. And finally, we recorded a $10 million one-time stock comp charge. Note that the after-tax impacts of all of these unusual items are excluded from cash EPS. In addition to these unusual items, this year's acquisition and divestitures added approximately $30 million of net new operating expenses in the quarter.

Tom Panther: First during the quarter, we recognized $120 million pre tax gain on the sale of our merchant solutions business.

Tom Panther: In connection with our annual goodwill impairment analysis as required under GAAP, we recorded a $90 million noncash impairment charge related to the pay card business, which is part of the other segment.

Tom Panther: Third we recognized $11 million in deal termination fees and finally, we recorded a $10 million one time stock comp charge note that the after tax impacts of all of these unusual items are excluded from Kashi P. S.

Tom Panther: In addition to these unusual items this year's acquisition and divestitures added approximately $30 million of net new operating expenses in the quarter.

Tom Panther: Excluding the unusual items in the M&A activity and after normalizing for the lower FX rates, operating expenses increased approximately 5% versus Q4 of last year. The increase was driven by higher transaction and sales activities to drive future growth. Bad debt expense was flat versus last year at $22 million or four basis points of spend. Adjusted EBITDA margin in the quarter was 55.2% up 100 basis points compared to Q4 2023. On a full year basis, adjusted EBITDA margin increased 120 basis points excluding our Russian business. Despite the adverse macroenvironment, we are able to generate significant positive operating leverage driven by solid revenue growth, disciplined expense management, and synergies realized from acquisitions.

Tom Panther: Excluding the unusual items in the M&A activity and after normalizing for the lower FX rates operating expenses increased approximately 5% versus Q4 of last year the.

The increase was driven by higher transaction and sales activities to drive future growth bad debt expense was flat versus last year at $22 million or four basis points of spend.

Tom Panther: Adjusted EBITDA margin in the quarter was 55, 2% up 100 basis points compared to Q4 2023 on a full year basis, adjusted EBITDA margin increased 120 basis points, excluding our Russia business.

Tom Panther: Despite the adverse macro environment, we're able to generate significant positive operating leverage driven by solid revenue growth disciplined expense management and synergies realized from acquisitions.

Tom Panther: Interest expense this quarter increased 3% year-over-year due to higher balances related to capital deployed during the year, partially upset by lower interest rates. A reported effective tax rate for the quarter was 36.4%. The effective tax rate is approximately 15% higher due to the aforementioned goodwill impairment and sale of our merchant solutions business. as well as the non-cash discrete tax provision related to a prior tax plan strategy. Normalizing for these items, our effective tax rate for the quarter was 21% versus 23% in Q4 of last year, with the decline driven primarily by stock option exercises and tax planning strategies.

Tom Panther: Interest expense this quarter increased 3% year over year due to higher balances related to capital deployed during the year, partially offset by lower interest rates.

Tom Panther: Our reported effective tax rate for the quarter was 36, 4% the effective tax rate is approximately 15% higher due to the aforementioned goodwill impairment and sale of our merchant solutions business.

Tom Panther: As well as a noncash discrete tax provision related to a prior tax planning strategy.

Tom Panther: Normalizing for these items, our effective tax rate for the quarter was 21% versus 23% in Q4 of last year with the decline driven primarily by stock option exercises and tax planning strategies.

Tom Panther: Now, turning to the balance sheet, we ended 2024 with a balance sheet in excellent shape and a leverage ratio of 2.75 times, which is flat sequentially despite the acquisition of GPS in December. In January, we expanded our securitization facility to $1.8 billion and extended the maturity by three years with slightly better pricing. We are also in the process of raising another $500 million of term loan B debt, which we are structuring to be interest expense and leverage neutral by using the proceeds to pay down the revolver. Our capital allocation in 2024 was once again balanced, and we deployed $2.6 billion during the year, which is comprised of $1.3 billion for the repurchase of 4.2 million shares, and $1.3 billion related to acquisitions, improving our position in payables, cross-border, and Brazil.

Tom Panther: Now turning to the balance sheet, we ended 2024 with the balance sheet in excellent shape and our leverage ratio of 2.75 times, which is flat sequentially. Despite the acquisition of G. P. S. In December.

Tom Panther: In January we expanded our securitization facility to $1 $8 billion and extended the maturity by three years with slightly better pricing.

Tom Panther: We are also in the process of raising another $500 million of term loan b debt, which we are structured would be interest expense and leverage neutral by using the proceeds to pay down the revolver.

Tom Panther: Our capital allocation in 2024 was once again balanced and we deployed $2 $6 billion during the year, which is comprised of $1 $3 billion for the repurchase of $4 2 million shares and $1 $3 billion related to acquisitions, improving our position in payables cross border and Brazil.

Tom Panther: Looking forward into 2025, our first priority remains M&A, and the M&A pipeline is robust. We'll look to acquire businesses that deepen our position in our three core operating segments, with a particular focus on corporate payments. We have nearly $1.3 billion authorized for share repurchases, which provides ample capacity to repurchase shares.

Tom Panther: Looking forward into 2025, our first priority remains M&A and the M&A pipeline is robust we will look to acquire businesses that deepen our position in our three core operating segments with a particular focus on corporate payments.

Tom Panther: We have nearly 1.3 billion authorized for share repurchases, which provides ample capacity to repurchase shares.

Tom Panther: Now, let me share some additional information on our 2025 full year and Q1 outlook. We established the fuel FX and interest rate macro assumptions based on the respective forward curves when previewing our 2025 earnings on our November earnings call. The January forward curves have significantly worsened since that call. Specifically, fuel prices are approximately 8% lower, interest rates are approximately 25% higher, and the U.S. dollar is significantly higher, as evidenced by the Brazil FX rate being 10% lower. To help gauge the magnitude of these recent moves, if the macro ends up being consistent with the October forward curves, annual revenue would increase $136 million, and cash EPS would increase $1.19 per share.

Tom Panther: Now, let me share some additional information on our 2025 full year and Q1 outlook.

Tom Panther: We established the fuel FX and interest rate macro assumptions.

Tom Panther: Based on the respective forward curves when previewing our 2025 earnings on our November earnings call.

Tom Panther: The January forward curve has significantly worsened since that call specifically fuel prices are approximately 8% lower interest rates are approximately 25% higher in the U S. Dollar is significantly higher as evidenced by the Brazil, FX rate being 10% lower do.

Tom Panther: Do you up gauge the magnitude of these recent moves if the macro ends up being consistent with the October forward curves annual revenue would increase $136 million and Kashi P. S would increase of $1 19 per share.

Tom Panther: While the current lower macro assumptions may be transient as markets adjust to the policies of incoming government administrations in the U.S. and internationally, We maintained our process for estimating the macro by using the January forward curves. Consequently, our outlook in 2025 projects both print and organic revenue growth of 10 to 12%. We're estimating cash EPS to also grow 10-12%, which is $21 per share at the midpoint. Normalizing both revenue and cash EPS for the macro headwind I just described, we'd be at our November preview. So to sum it up, the only thing that has changed since our last call is that the macro has gotten significantly worse.

Tom Panther: While the current lower macro assumptions may be transient as markets adjust to the policies of incoming government administrations in the U S and internationally.

Tom Panther: We maintained our process for estimating the macro by using the January forward curves.

Tom Panther: Consequently, our outlook in 2025 projects, both print and organic revenue growth of 10% to 12%.

Tom Panther: We're estimating Kashi P. S to also grow 10% to 12%, which is $21 per share at the midpoint.

Tom Panther: Normalizing, both revenue and cash EPS for the macro headwind I just described we'd be at our November preview.

Tom Panther: So to sum it up the only thing that has changed since our last call is that the macro has gotten significantly worse, but on a positive note our confidence around our core business performance has increased which is why we're maintaining our initial financial estimates excluding the macro.

Tom Panther: But on a positive note, our confidence around our core business performance has increased, which is why we're maintaining our initial financial estimates, excluding the macro. Below EBITDA, we're expecting net interest expense to be between $350 million and $380 million, the tax rate to be between 25.5% and 26.5%, and weighted average shares to be flat year-over-year. Related to capital allocation, our forecast assumes that approximately $1.5 billion of free cash flow is used to pay down debt, which provides some earnings upside opportunity should we deploy capital for M&A or buyback. From a segment perspective, we are expecting the following revenue growth rates, corporate payments High 20s Print and High Teens Organic, Vehicle Payments, Low Single Digits Print and High Single Digits Organic, Lodging, Low Single Digits Print and Organic.

Tom Panther: Below EBITDA were expecting net interest expense to be between $350 million and $380 million the tax rate to be between 25.5, and 26, 5% and weighted average shares to be flat year over year.

Tom Panther: Related to capital allocation, our forecast assumes that approximately $1.5 billion of free cash flow is used to pay down debt, which provide some earnings upside opportunities should we deploy capital for M&A or buybacks.

Tom Panther: From a segment perspective, we're expecting the following revenue growth rates corporate payments.

Tom Panther: High twenties print and high teens organic.

Tom Panther: Vehicle payments low single digits print and high single digits organic lodging low single digits print and organic.

Tom Panther: Related to the first quarter, we expect print revenue to grow 7 to 9 percent, organic revenue to grow 8 to 10 percent, and cash EPS to increase 9 to 11 percent. On a constant year-over-year macro basis, revenue is growing 13% and cash EPS is increasing 17% at the midpoint compared to the first quarter of last year. We're projecting revenue growth to increase in the remaining quarters as we execute our business plans and lap the higher FX rates from the first half of last year. In addition, first quarter revenue growth is impacted by a tough comp related to last year's gift revenue.

Tom Panther: Related to the first quarter, we expect print revenue to grow 7% to 9% organic revenue to grow 8% to 10% and cash EPS to increase 9% to 11% on.

On a constant year over year macro basis revenue is growing 13% and Kashi P. S is increasing 17% at the midpoint compared to the first quarter of last year.

Tom Panther: We're projecting revenue grocery increase in the remaining quarters as we execute our business plans and lap the higher FX rates from the first half of last year.

Tom Panther: In addition, first quarter revenue growth is impacted by a tough comp related to last year's gift revenue.

Tom Panther: I'll also note that the volatility in FX rates so far this year creates some uncertainty regarding the ultimate macro for the quarter. We've provided additional details regarding our full year and first quarter outlook in our press release and earnings supplement.

Tom Panther: I'll also note that the volatility and volatility and FX rates. So far this year creates some uncertainty regarding the ultimate macro for the quarter.

Tom Panther: We've provided additional details regarding our full year and first quarter outlook in our press release and earning supplement.

Operator: So now, operator, we'd like to open the lines for questions.

Tom Panther: So now operator, we'd like to open the lines for questions. Thank you.

Aaron: Thank you. Aaron. Thank you. Hey, thanks a lot.

Tom Panther: Thank you.

Tom Panther: We will now be conducting a question and answer session.

Tom Panther: As a reminder.

Tom Panther: To ask a question. Please press star one on your telephone keypad.

Tom Panther: Your line is in the question queue.

Tom Panther: You May press Star two if you would like to remove your question from the queue.

Tom Panther: Speaker.

Tom Panther: It may be necessary to pick up your handset before.

Tom Panther: Okay.

Tom Panther: One moment please.

Tom Panther: Yes.

Tom Panther: Hum.

Tom Panther: Okay.

Tom Panther: Thank you.

Tom Panther: Our first question.

Tom Panther: Ken.

Tom Panther: With J P. Morgan.

Tom Panther: Proceed.

Tom Panther: Hey, Thanks, a lot.

Unknown Executive: And I'll say up front, Tom, all the best on the on the transition to your next role here. On the on the on my questions, it sounds like not a lot of surprise organically really just gift A little bit of a push out if I heard that correctly, but across the segments in 2025, it looks like you're looking for a nice acceleration in vehicle payments to the high single digits from the mid single digits in 24. So what's driving that? How much visibility do you have? I know sales has been good, but just hoping you could break that down for us a little bit.

Tom Panther: The tariffs.

Tom Panther: And say upfront Tom all the best on the on the transition to your next role here on the on the on my questions. It sounds like not a lot of surprise organically really just gift.

Speaker Change: Little bit of a pushout, if I heard that correctly.

Speaker Change: But across the segments in 2025, it looks like Youre looking for a nice acceleration in vehicle payments to the high single digits from the mid single digits and.

Speaker Change: In 24, so what what's driving that how much visibility do you have I know sales have been good but just hoping you could break that down for us a little bit.

Ron Clarke: Pay attention, Ron.

Speaker Change: Hey, Tien Tsin Roz good good to hear your voice Yeah, you got it right the guide.

Ron Clarke: Good to hear your voice. Yeah, you got it right. The guy assumes high single digits, and it's really two things. One, Brazil feels super strong. And two, we kind of turn the corner on the U.S. vehicle payment. So that's gotten a stitch better, so it inches up over last year. Okay, good. Good to know.

Speaker Change: High single digits and it was really two things one.

Speaker Change: Brazil still super strong and to be kind of turned the corner on the U S equivalence.

Speaker Change: That's gotten stage battery so it inches up over last year.

Speaker Change: Okay. Good good to know and then really quick one gringo an interesting deal of triples. Your Tam as you said.

Ron Clarke: And then really quickly on Gringo, interesting deal, it triples your TAM, as you said. What more can you tell us about the financial profile of this business? I think you talked about a 30% grower on the release, but any other details you can share here? Yeah, it's a decent size if you combine it, Tingen, which we will with the thing called BAPE from last year, together the revenue will be a little over 10% of Brazil in total, obviously growing, you know, much faster. So, so that's what we do. The exciting thing is both the growth rate and the early days.

Speaker Change: What more can you tell us about.

Speaker Change: The the financial profile of this business I think you've talked about a 30% grower on the release, but any other details you can share here.

Speaker Change: Yeah.

Speaker Change: In fact, if you combine it.

Speaker Change: Engine, which can go with it.

Speaker Change: Last year together with a rabbit it'll be a little over 10% with Brazil in total obviously growing.

Speaker Change: Much faster so so that's 0.1.

Speaker Change: Excitingly, both the growth rate.

Speaker Change: Early days.

Speaker Change: Okay.

Unknown Executive: I think it's the 5-7% penetration rate of people digitally basically updating registrations and paying for fines. So the runway is super early innings. So the size of it, the early innings, you know, to the decent businesses, if you will, trying to do the thing. And then the last one is there's 5 million active users per month. So the ability to kind of show them the rest of our stuff is super exciting to us. So it's what we think of a big upside to Brazil. Yeah, that sounds like a good fit. Thanks for taking my question.

Speaker Change: By 7%.

Speaker Change: Operationally our people did.

Speaker Change: Italy, basically updating registration to pay.

Speaker Change: So the runway it's super early so.

The size of it.

Speaker Change: Literally gains.

Speaker Change: To do that.

Speaker Change: You will find it uses a day and then the last one 5 billion.

Speaker Change: Users per month, so the ability to kind of show them the rest of our stuff is.

Speaker Change: It's super exciting.

Speaker Change: Well we did.

Speaker Change: The big upside.

Speaker Change: Yeah.

Speaker Change: Yeah that sounds like a good thing thanks for taking me, yes. Thanks for taking my question.

Speaker Change: Thank you.

Sanjay: Our next question comes from the line of Sanjay.

Sanjay: With K B W. Please proceed.

Unknown Executive: Thank you.

Speaker Change: Thank you maybe just to follow up on Tien tsin.

Sanjay Sakhrani: Maybe just to follow up on Tinge's line of questioning, appreciate like the macro is sort of weighing against the results, but maybe we could just talk about what could drive the upside from here. You know, I know you guys mentioned buyback M&A, but is Gringo in the guide now for 2025? And just any contributions from some of these priorities or initiatives that you you mentioned, Ron?

Speaker Change: Questioning appreciate it like the macro is sort of weighing against the results, but maybe we could just talk about what could drive the upside from here.

Speaker Change: I know you guys mentioned buyback M&A, but it is gringo in the guide now for 2025 and just any contributions from some of these priorities or initiatives that you mentioned Ron.

Ron Clarke: Yeah, you know, Sanjay, hey, so no, no is the answer to Gringo. It's not closed. So it's not in, in the numbers yet. So I think you're right. I think the upside here would either be the macro pivots, again, like it did in the last 60 days, or your second point of capital allocation. So the guy, we have assumed you're just paying down debt, which we ultimately won't do that. So I think those would be the three things of adding Ringo, the macro pivoting back a bit our way and us using capital to buy earnings or stock.

Speaker Change: Yeah, Sanjay Hey, so no no is the answer to acquaint, though it's not close.

Speaker Change: So not yet.

Speaker Change: And the boundaries, yet so I think youre right I think the the outside here would either be the macro.

Speaker Change: But again like it did in the lab.

Dave: Thank you Dave.

Dave: Or your second point of capital allocation is a guy who has really just paying down debt.

Dave: We won't do that so I think there won't be the three things, we're adding ranga all.

Dave: The macro pivoting back a bit either way in using capital to buy earnings.

Ron Clarke: I mean, one thing I'd also add, we've been conservative on the same sort of sales assumptions, and I just assuming that it's flat. So one of the reasons why the dollar is so high and inflation is sticky is because the economy has been strong. So that's also something that if we saw sales in those single digits, like we did here in Q4, maybe that's additional upside. Right.

Dave: And what they announced.

Dave: And conservative on the same store sales assumption.

Dave: That is flat.

Dave: There wasn't really $1, so how sticky.

Dave: He is because the economy is strong so that's also impacting that.

Dave: <unk> engine sales in the low single digits like we did here in Q4.

Dave: Initial upside as well.

Dave: Great and then just to follow up maybe on corporate payments.

Sanjay Sakhrani: And then just to follow up, maybe on corporate payments. I know, Ron, you talked about there's still some work to be done in terms of pruning.

Dave: Ron you talked about there's still some work to be done in terms of pruning, maybe if you could talk about kind of where where that would might occur or how that could impact the business and then.

Ron Clarke: Maybe we could talk about like sort of where that would might occur, how that could impact the business. And then, you know, these initiatives seem really exciting, especially this, the multi-currency account product. I'm just curious, like, when does it fully scale to a run rate that's material? Thank you. On the pruning question, not shockingly, would be smaller non-core assets that don't sit in corporate payments. So I don't want to call them out Sanjay's folks, but we have two or three assets that we're looking at that may go. And the second thing is the priorities of things that we're on are super exciting.

Speaker Change: These initiatives seem really exciting, especially the multi currency account product I'm just curious like when when does it fully scale to a run rate.

Dave: Material.

Thank you.

Dave: Yes.

Dave: The pruning question.

Dave: They would be.

Dave: Smaller non core assets that don't fit and corporate payments, So I don't want to call them outside James.

Dave: So we had two or three assets that we're looking at it may go.

Dave: And the second thing is.

Dave: The priorities of things around our super exciting.

Ron Clarke: We're live with that MCA, multi-currency account product. We've got it across a bunch of currencies and stuff now and we're selling it. So I think as we get through this year and the exit, it could be a big deal. Not only in terms of revenue acceleration, right, because we're on flow. on the deposit. But again, I think it, it could attract, you know, different kinds of clients. So for example, like institutional clients, right, that invest, you know, large amounts of money and run operating funds, for example, internationally. So so not only is it good to maybe go back to our base, collectively, but I think it opens up some related segments that we, you know, that we haven't done well with so far.

Dave: With that.

Dave: N C. A multi policy of al product, we've got it across a bunch of currencies and stuff now are solid and so I think as we as we get through this year.

Dave: It could be a big deal not only in terms of revenue acceleration rifles or long quote.

Dave: On the deposit, but again I think it they couldn't attract different kinds of clients.

Dave: So for example, like institutional clients like that.

Dave: You have large amounts of money as an operating partner.

Dave: A handful internationally so not only.

Dave: Is it good to maybe go back a lot of pain.

Dave: So rapidly and I think that's the laser segment.

Dave: We hadn't gone wrong.

Unknown Executive: So pretty exciting. Great, thank you. Thank you.

Dave: So pretty exciting.

Dave: Great. Thank you.

Dave: Thank you.

Andrew: Our next question comes from the line of Andrew. with Citi Global Markets. Please proceed.

Speaker Change: Our next question comes from the line of Andrew Schmidt with Citi Global markets. Please proceed.

Andrew Jeffrey: Hey, Ron. Hey, Tom. Thanks for having me on the call here. Great to see the new sales momentum. I was wondering if you're seeing any benefit from some of the sales changes you've made, you know, the reorg, the rebranding, obviously hiring a CRO, you know, those things are relatively recent, but has there been any benefit there? Or is it sort of existing business momentum that's driving things and more to come? I know you mentioned doubling down the US, it seems additive, but just curious on the sales initiatives. Thanks so much.

Andrew Schmidt: Hey, Brian Hey, Tom Thanks for having me on the call here.

Andrew Schmidt: Great to see the new sales momentum I was wondering if you're seeing any benefit from some of the sales changes you've made you know the re org to rebranding them, obviously hiring zero Avi you know those things are relatively recent but but has there been any benefit there or is it sort of existing business momentum, that's driving things and more to come I know you.

Andrew Schmidt: You mentioned doubling down the U S. It seems that it is but just curious on the sales initiatives. Thanks, so much.

Ron Clarke: Yeah, hey, that's a that's a good question. I'd like to give credit, but I would say no, I would say still early days, the contribution so far from our new guy has really been the team and staffing he's already brought across, you know, three or four, I think kind of pros that manage kind of zoom sales and field and and rev ops and stuff. So kudos really to to upgrading, I think our staff, the, the big acceleration, the thirty six percent number actually was kind of, you know, normally we target kind of twenty, the budget problem for the quarter was twenty.

Andrew Schmidt: Yeah, Hey.

Andrew Schmidt: That's a good question I'd like to give credit.

Andrew Schmidt: I would say no I would say it's still early days.

Andrew Schmidt: The contribution so far from our new Guy has really been on the team and staff and he's already brought across three or four I think kind of throws advantage that assumed sales and heal.

Andrew Schmidt: Boston stuff sells kudos really to operating I think our staff.

Andrew Schmidt: Acceleration of 36% number actually was kind of.

Andrew Schmidt: Normally we target kind of twice the budget problems in the quarter was 20, we actually have three all of that.

Ron Clarke: We actually had three elephant sales that happened in Q4 that you can tell were quite significant. You know, one of them I called out of my script was in the payables. Business. We contracted, we signed our first enterprise payables account, which was a pretty big deal and sale. And I was kidding before we get on to tell people that that single new account will have spent equal to the size of our entire Tamarack business that we paid four or five hundred million dollars for. So some of the elephant that we got in the quarter were quite big.

Andrew Schmidt: Sales that happened in Q4.

Andrew Schmidt: We are quite significant.

Andrew Schmidt: One of them I call that a nice breakfast in the payables.

Andrew Schmidt: We contracted designed our first.

Andrew Schmidt: Enterprise AR payables account, which was a pretty big E mail and Seo.

Andrew Schmidt: Before we get on to tell people that that single dealer count well has been equal to the size of our entire team oriented business.

Andrew Schmidt: Four of $500 million.

So.

Andrew Schmidt: Some of the alloy.

Andrew Schmidt: And we got it.

Andrew Schmidt: Quite good quite big.

Unknown Executive: No, that's great to hear. Maybe I could double click on that. The tables enterprise win. To go after that enterprise TAM, are there product adjustments or go to market motions that need to be updated? Maybe walk us through if there are things that need to happen to access that TAM, because I know sometimes capabilities can differ between different, you know, size clients. I'm just curious there. Thanks a lot.

Speaker Change: No that's great to hear maybe you could double click on that the the tables enterprise win to go after that enterprise Tam or their product adjustments or go to market motions that that need to be updated maybe walk us through that if there are things that need to happen to access that Tim because I know sometimes capabilities can differ.

Speaker Change: Between different sized clients I'm just curious there thanks a lot.

Ron Clarke: It's kind of a two-part answer. On the product or platform side, no, we're kind of okay. The product and capability we have will work fine for enterprise.

Speaker Change: Good question too so it's kind of a two part answer on that.

Speaker Change: <unk> to our platform side do.

Speaker Change: Got it okay.

Speaker Change: The product and capability, we have a war.

Speaker Change: On the go to market motion, yes.

Ron Clarke: On the go-to-market, the market motion, yes. We're going to rely on some kind of big partners, things like SIs or some big consulting firms to walk us into kind of the senior management and some of those enterprise accounts, which is how we basically got this initial one contracted. So yeah, we've got a couple of relationships that are making introductions now into these super-duper big accounts and us coming in saying that we've got a solution ready to go. Got it.

Speaker Change: We're going to rely on some kind of a partner's statewide.

Speaker Change: There are some big consulting firms to walk us into kind of the senior management at some of those enterprise accounts.

Speaker Change: Is how do we basically got this initial one contracted so so yes will we got a couple of relationships there, making introductions now these super Duper big accounts to us coming in saying that we've got.

Speaker Change: Our solution.

Speaker Change: Yeah.

Speaker Change: Got it thanks, so much.

Unknown Executive: Thanks so much, Ron. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you our.

Andrew Jeffrey: Our next question comes from the line of Andrew Jeffrey with William Hi, good afternoon, guys. Appreciate you taking the question. Ron, a couple questions actually on on corporate payments. First of all, Can you talk a little bit about sort of your view of Corpay's right to win among enterprise customers? I understand the deal he signed this quarter was with an existing customer and sort of just from a go-to-market, competitive, you mentioned banks and an economic standpoint.

Speaker Change: Our next question comes from the line of Andrew Jeffrey with William Blair. Please proceed.

Andrew Jeffrey: Hi, Good afternoon, guys I appreciate taking the question.

Speaker Change: Ron a couple of questions actually on on corporate payments first of all.

Speaker Change: Can you talk a little bit about sort of your view of core pays right to win among enterprise customers I understand the deal you signed this quarter was with an existing customer.

Speaker Change: And sort of just from a go to market competitive you mentioned banks and an economic standpoint can you frame up for us what.

Ron Clarke: Can you frame up for us what, you know, further wins and or investments in that business might mean for the long term growth trajectory of corporate payments, top and bottom line? Yeah, it's also a good question. I mean, the TAM, you know, is are crazy to size. When I quote for you that this single new enterprise contract has a spend profile equal to a business that took 20 years to build and has, I think, 1,500 customers. So a handful of these super giant enterprise accounts would be crazy. But the win thing really comes from, I think, a couple of things that were advantageous.

Speaker Change: Further wins and more investments in that business might mean for the long term growth trajectory of corporate payments top and bottom line.

Speaker Change: Yeah. It's it's also a good question Andy.

Speaker Change: Pam.

Speaker Change: This is Chris.

Speaker Change: Crazy to size like when I quote to you that this single enterprise contract.

Speaker Change: Patent spend profile equal to.

Speaker Change: This is it took 20 years to build and has I think 50 50 or so.

Speaker Change: A handful of these.

Speaker Change: Super Giant enterprise accounts.

Speaker Change: It would be crazy.

Speaker Change: Same thing really comes from I think a couple of things that were advantage that one again is the right Bill.

Ron Clarke: One again is the tech, right, that we built really an advantaged way to pay all these different modalities. And then second is really, again, the virtual card network that monetizes, that creates money for both sides here. And so we're just way ahead because we've been at it a long time in terms of the size and the quality of that network. And we can basically promise, if you will, these new prospects that we can monetize more of their spend than other people can. And so when you've got tech that works and you've got an economic advantage, and then last, remember, we have dedicated people just selling this, right, banks focus, as you know, on lending and treasury and stuff.

Speaker Change: You know an advantaged way to pay all of these different modality.

Speaker Change: And then second is really again, the virtual card network.

Speaker Change: Monetize it creates money right for both sides here so.

Way ahead, because we are adding a long time in terms of the size and the quality of that network and make it basically.

Speaker Change: Is it you will these prospects that we can monetize more of their stand and other people and so when you've got tax. It works you've got an economic advantage in Atlanta, and I believe the dedicated people just Sally.

Speaker Change: Focus as you know on lending and treasury and stuff and so having that.

Ron Clarke: And so having grown-up senior people that can go in and articulate why us, I'd say, would be the third plank. So a big advantage.

Speaker Change: Senior people.

Speaker Change: Particularly.

Speaker Change: Why else I'd say would be the sort of like so big advantage.

Speaker Change: Okay look forward to learning more about that and then could you give us an update and I apologize if I missed it Tommy said it as to what portion of the full stack a P businesses card attached today, and maybe talk about plans to monetize a C H and maybe those plans or even.

Andrew Jeffrey: Okay, look forward to learning more about that. And then, could you give us an update, and I apologize if I missed it, Tommy has said it, as to what portion of the Fullstack AP business is card attached today, and maybe talk about plans to monetize ACH, and maybe those plans are even more pronounced now as you move up the market in enterprise customers, just thinking about longer term, how that business monetizes even better in instance.

Speaker Change: More pronounced now as you move up the market and enterprise customers, just thinking about longer term, how how that business monetize is even better than it is today.

Speaker Change: Yeah.

Unknown Executive: Andrew, if we caught the question, I think you're asking about what's the penetration level within the car penetration level within full AP? Yeah, exactly. It has stayed consistent right around that 10-11 percent. The average is a high degree of variability. Averages can sometimes be dangerous when there's a fair amount of variability. There's some customers that it's 2-3x that, and then there's other customers that are smaller than that. It just depends on the nature of their AP and how it aligns with our merchant network. But on average, it's right around that 10-11 percent range and has stayed steady.

Andrew: Hey, Andrew.

Speaker Change: Couple of questions.

Speaker Change: And you can get data.

Speaker Change: I think you're asking about what sort of penetration level.

Speaker Change: Card penetration levels.

Yeah exactly.

Speaker Change: Hum.

Speaker Change: And it stayed consistent right around that 10 or 11%.

Speaker Change: That's it.

Speaker Change: However, even with the high degree of variability averages okay.

Speaker Change: Dangerous.

Speaker Change: There's a fair amount of variability there's some customers that is two to three X that and then there's other customers that are smaller than that just depends on the nature of their AP and how it aligns with our merchant network, but on average it's right around that 10% range.

Speaker Change: Okay.

Ron Clarke: And just from a monetization standpoint, and we could talk about this offline, too, if it's more appropriate, just trying to how you pay you monetize better going forward. Unknown. Car. Yeah, I mean, the good news on that one is there's a model, right, of getting paid, right, for ACH or ACH Plus, where we share, you know, more data or actually move money more quickly. And same on the subscription side, our product is pretty good now that we've had for a couple of years, we call it Corpay Complete. And so having software that actually is helpful, particularly in the front end, right, of automating the process, like getting, you know, approvals and digitizing invoices so you don't get lost, a lot of that.

Speaker Change: And just from a monetization standpoint, and we could talk about some offline too if it's more appropriate just trying to understand how you how you monetize better going forward around non card in particular.

Speaker Change: Yeah, I mean, that's the good news on that one is there's a model right getting paid right for AC age or AZ age plus where we share more data or actually moved.

Speaker Change: Many more quickly and same on the subscription side our product.

Speaker Change: It's pretty good that we've had for a couple of years call. It core pay complete.

Speaker Change: And so having software that actually is helpful, particularly in the front end right automating the process like getting through approvals and digitizing invoice you don't get lost a lot of that.

Speaker Change:

Unknown Executive: workflow value basically we don't get paid for it so we're testing our way into getting paid more for both of those things both of those things obviously have value to clients and we've historically done very well with penetrating so we've got plenty of money but I think you'll see us do more of that. Thank you, appreciate it. Thank you.

Speaker Change: We're low value basically if you don't get paid so we're testing our way into getting paid more for both of those things both of those things obviously have value to clients and we have historically done very well penetrated.

I think you'll see us do more of that.

Speaker Change: Thank you appreciate it.

Speaker Change: Thank you.

Darrin Peller: Our next question comes from the line of Darrin Peller with Wolf Research. Hey, guys. Thanks. Maybe just on me.

Speaker Change: Next question comes from the line of Darrin Peller with Wolfe Research. Please proceed.

Darrin Peller: Hey, guys. Thanks, maybe just on the I wanted to follow up.

Darrin Peller: I want to follow up with another question on the corporate gaming side for a minute, just because he's such a big contributor. Number one, I mean, I know he was asked about divestitures before, but in terms of having the right mix of assets, you know, Ron, number one, are you where you want to be? And then number two, maybe just give us a little more granularity on what you expect the building blocks to this strong growth rate to be for the year. When you think of whether it's, you know, the AP businesses or the cross border businesses, or the T&E, etc.

Speaker Change: And another question on the corporate payment side for a minute just because this is a big contributor.

Speaker Change: Number one I mean, I know he was asking about divestiture of before but in terms of having the right mix of assets.

Speaker Change: Number one are you where you want to be.

Speaker Change: And then number two maybe just give us a little more granularity on what you expect the building blocks to the strong growth rate to be for the year.

Speaker Change: Think about whether it's the P databases of the cross border businesses or the tuning et cetera.

Darrin Peller: Help us understand a little more of a sort of sub segment level expectation, and where you see yourself winning most in that segment. If we could start there.

Speaker Change: Help us understand a little more of a sort of sub segment level expectation.

Speaker Change: And where do you see yourself, winning most in that segment, if we could start there.

Ron Clarke: Yeah, hey, Darin. So kind of on the two part question, are they the mix of assets? I think I said, you know, that we're kind of there. I'd say that one thing that we called out today is this MCA, this multi currency account product and cross border. I mean, simplistically, that business has been a disbursement business, right? We move client funds, right, to beneficiaries. So this idea of effectively, you know, depositing and holding, you know, in the native currency deposits is an advantage makes it a better product, right? For clients who don't have to go to Germany and open up some local bank account, we can just hold the currency for you, right in the market that you're in.

Darrin Peller: Yeah, Hey, Darrin.

Speaker Change: So kind of on the on the two part question.

Speaker Change: Are they the mix of assets I think I've said to you that we're kind of there let's say, there's one thing that we called out today is this.

Speaker Change: <unk> multi currency account product and cross border.

Specifically that business has been a disbursement business right we move clients.

Speaker Change: <unk> six share he said this idea of effectively depositing in holding.

Speaker Change: The native currency deposits.

Speaker Change: Is it advanced face and a better product by declines in North Dakota, Germany, and open up some local bank account, we can just hold the currency for you right. There in the market that you're in so I think that that would be kind of the only.

Ron Clarke: So I think that that would be kind of the only significant product that we're looking for. On the on the outlook for the business, again, you know, we had a pretty good Q4. We're guiding that thing again, to high teens, you know, approaching 20% again, here in 2025. I think both businesses are in that neighborhood. It's not like one of them is carrying the other. So I'd say they're pretty, pretty similar in terms of the growth rate. And the great news in the thing is, it's not hard to model for us is we've sold a lot of the business already back in, you know, 24.

Speaker Change: Again chronic.

Speaker Change: That will look at.

Speaker Change: On the on the outlook.

Speaker Change: Again.

Speaker Change: Crazy Good Q4.

Speaker Change: We're guiding that thing again to high teens approaching 20% again here in 2025, I'd say, both businesses or in that neighborhood, it's all right.

Speaker Change: One of them is carry the others I would say, it's pretty pretty similar in terms of the growth rate and the great News and the thing is it's not hard to model for US is we sold a lot of it is this already back in 24, it's going to get hit with added in 25.

Ron Clarke: It's going to get implemented in 25. And so, you know, the visibility that we have in the forward growth in that business is pretty good. And then B, the retention rate, as you know, in that business are a bit above our 92% line average, they're probably in the 95% kind of retention rate. So, like, the opportunity to make the business 2, 3, 4 times bigger, you know, that's what we're chasing.

Speaker Change: And so you know the visibility that we had in the old World is pretty good and then the the retention rate as you know in that business are a bit above our.

Speaker Change: 92% line average that probably in the 95% kind of retention rate. So so look it's a pretty predictable business and thank.

Speaker Change: Thank you.

Brian: Hey, Brian it's like there's just so many prospects right.

Speaker Change: Got a $600 million U S payables.

Brian: <unk> thousand mid market clients.

Brian: 250000 in our sales prospect database.

Brian: They like the opportunity to make the business 234 times bigger.

Jason: Hello, Jason.

Ron Clarke: There's nothing in the pruning or the vestiture category that's in the corporate payment space. I think maybe Sanjay also had similar questions. We just want to make sure there's no confusion there.

Speaker Change: And it's fair to say.

Speaker Change: There's nothing in the pruning or divestiture cabinet.

Speaker Change: I think.

Speaker Change: Maybe Sanjay I'll say similar question, so just to make sure there's no confusion there.

Ron Clarke: The comments are all stated outside of corporate payments. makes sense.

Speaker Change: Right.

Speaker Change: Oh, sorry, okay.

Unknown Executive: All right.

Speaker Change: Alright, and just my quick follow up would just be on margins for a minute.

Ron Clarke: And just my quick follow up would just be on margins for a minute. When considering just the US sales effort, and the build out and the investments. I mean, is there any implication of that limiting margin expansion? Maybe just give us a little color on what you're expecting for the margins over the next year or two to come as you build that in. Well, let me start and then Tom can jump on. So we're kind of planning relatively flat in 25 on a print basis. And a little bit of that is the macro compression, right?

Speaker Change: When considering just the U S sales effort.

Speaker Change: And to build on the investments I mean is there any implication about limiting margin expansion, maybe just give us a little color on what you're expecting for EBITDA margins over the next year or two to one.

Speaker Change: As you both of them.

Well, let me start and then Tom can jump on so we're kind of planning.

Speaker Change: Relatively flat in 25 on a print basis get a little bit of that is the the macro compression right. The currency taken a 100 billion.

Tom Panther: The currency taking 100 billion, you know, revenue level kind of presses things. Two is we're absorbing two, three big acquisitions that have lower, certainly lower than our line average, which means our core business outside of those is actually coming a little bit better. And then third, we, I, we just decided to spend a bit more money on sales and marketing to try to make sure we can get the growth, we can get the sales, which we're planning to be up another 20% this year. So we just felt that it was the best balance. I mean, if you, if you, you were me, Darren, and go to a macro neutral, where the world is the same, and 25 is 24, you know, the print that we're sharing is 13 to 17.

Rather it allow kind of pressing too is we're absorbing two three big acquisitions that have lower certainly lower than our line average, which means our core business.

Speaker Change: Those has actually come in a little bit better and then third we I, we just decided to sound a bit more money on sales and marketing.

Try to make sure we can get the growth we can get the sales, which we're planning to be up another 20.

Speaker Change: This year. So we just felt that it was the best talent.

Darrin Peller: If you if you humour me Darren and go to a macro neutral where the world is the same at $45 24.

They were sharing is 13 70 yeah.

Darrin Peller: you know 13 and 17. So it does get lost a little bit with this wave of crummy macro but kind of underneath it the headline is the business is really just performing and out looking to perform you know pretty well.

Darrin Peller: 13, and Saturday so it does get lost a little bit with this wave of crummy macro but kind of underneath the headline is the businesses.

Darrin Peller: Warming and outlook to perform pretty well.

Tom Panther: I think the only thing I would add to that is what we see is the quarterly acceleration of the margin. Some of that is as we lap some of the negative macro that Ron referred to, it's also as we start to harvest some of the synergies from the two acquisitions, particularly GPS, late 2024. And as we also see some acceleration as lodging and vehicle payments start to get further into the black. So all of those things kind of give us accelerating margins of 2025 based on our current market.

Darrin Peller: The only thing I would add to that is what we see.

Darrin Peller: Or does the acceleration of the margin on some of that is as we lap some of the negative macro.

Darrin Peller: It is also as we start to harvest some of the synergies from the two acquisitions, particularly the GPS.

Darrin Peller: Or.

Darrin Peller: And we also see some acceleration as lodging and vehicle payments.

Darrin Peller: It starts to get further into into the black So all of those things kind of give us.

Darrin Peller: Salary margins throughout 2025.

Darrin Peller: Sure.

Darrin Peller: Okay.

Unknown Executive: Thanks guys, appreciate it.

Darrin Peller: Awesome. Thanks, guys appreciate it.

Darrin Peller: Right.

Darrin Peller: Yeah.

Unknown Executive: Thank you.

Speaker Change: Thank you. Our next question comes from David Koning with Baird. Please proceed.

David: Our next question comes from David. with Baird. Please proceed.

David Koning: Yeah, hey guys, first of all, just a question on the lodging business. I was just looking at yield the last seven quarters, the yields have kind of been in the 13 to $15 per room night in this quarter was 1140. And I'm sure it has to do with the mix. But maybe describe that a little bit in then how you kind of see the mix in the yield into 2025. Dave, you hit it. I mentioned in my prepared remarks in terms of the impact of Hurricane Pauline and Milton. That draws a fair amount of what we call FEMA activation business, which has been a very low spread for us, and so that's what drove the overall yield down.

Speaker Change: Yeah, Hey, guys first of all just a question on the lodging business I was just looking at yields the last seven quarters. The yields have kind of been in the 13 to $15 per room night. In this quarter was 11 40 and I'm sure. It has to do with the mix, but maybe describe that a little bit and then how you kind of see the mix and the yield is.

Speaker Change: 2025.

Speaker Change: Okay.

Speaker Change: You hit it I mentioned in my prepared remarks in terms of the impact Hurricane we open that draws a fair amount.

Speaker Change: FEMA activation business, which has been a barrier.

Speaker Change: Spread for us and so that's what drove the overall yield.

Tom Panther: We'll see a little bit of yield compression as we now support the California wildfires. The hurricane support has actually declined quite a bit here in January, but that's being replaced, and then some, by the California wildfire support, both within the FEMA activation as well as within the insurance business. The insurance business has a bit higher take rate, and so the overall impact may not be as high. There wasn't as much insurance business associated with the hurricanes as more of the FEMA piece, but it's mixed, as you said. I said going forward, once that normalizes out, I think you see it back to the line average of what you saw in the first three quarters of 2024.

Speaker Change: Yields down, we'll see a little bit of yield compression as we now support.

Speaker Change: California wildfires.

Speaker Change: The hurricane support has actually declined quite a bit here in January.

Speaker Change: That's being replaced.

Speaker Change: By the California wildfires.

Speaker Change: But then the FEMA activation as well as bad debt.

Speaker Change: Insurance business interest isn't that a bit higher take rate.

Speaker Change: The overall impact may not be a title insurance business associated with Hurricanes, it's more.

Speaker Change: But it's it's mix is as you said I think going forward once that normalizes out.

Speaker Change: I think you see us back to the line averages of what you saw in the first three quarters of 2024.

Ron Clarke: Yeah, okay, thanks. And just quick follow up. I know you mentioned some kind of one-off benefits in corporate that helped to drive the 26%. But maybe bridge kind of from 26% Q4 down to high teens, the next few quarters. Yeah, David, hey, it's Ron. So it's really two things. Think of that as kind of a normalized high teen 20% business, the two happies in the 26 was a big kind of one time synergy. and the second was the channel, the comp and the prior year and the infamous channel business that was always a detractor, turned quite positive.

Speaker Change: Yeah, Okay. Thanks, and just quick follow up I know you mentioned, some kind of one off benefits in corporate that helped to drive the 26%, but maybe bridge kind of from 26% in Q4 down to high teens in the next few quarters.

Speaker Change: Yeah, David Hey, it's Ron So it's really two things to think of that as kind of a normalized high teens, 20% business. The two happy since 2006 was a big kind of one time synergy.

Speaker Change: <unk>.

Speaker Change: Pizza ready that we negotiated in the second was the channel.

Speaker Change: The comp in the prior year and the infamous channel business that was always a detractor.

Speaker Change: The tractor.

And quite positive we I think we said that we are going to turn the channel business and in fact, we did so those two things accounted for the vast majority of the lift of about 20%.

Ron Clarke: I think we said that we aren't going to turn the channel business, and in fact we did. So those two things accounted for the vast majority of the list of up-22s.

Unknown Executive: Thanks, guys.

Got you thanks, guys.

Ramsey El-Assad: Thank you. Our next question comes from Ramsey El-Assad with Barker. Please proceed.

Speaker Change: Thank you. Our next question comes from Ramsey El <unk> with Barclays. Please proceed.

Ron Clarke: Hi guys, thanks for taking my question. I wanted to also ask about lodging, and which is recovering nicely, the 25 expectations are still below the longer term segment kind of growth profile and trend. I'm just wondering if we should expect that lodging business to revert over time back up to the normalized historical growth rate, or has there anything changed in that business in terms of mix or growth algorithm, which might cause it to grow slower than historical present? Yeah.

Speaker Change: Hi, guys. Thanks for taking my question this evening.

Speaker Change: I wanted to also ask about lodging and the which is recovering nicely.

Speaker Change: Twenty-five expectations are still below the longer term segment kind of growth profile and trend I'm. Just wondering if we should expect that lodging business to revert over time back up to the normalized historical growth rate or is there any anything changed in that business in terms of mix or growth algorithm, which might cause it to.

Speaker Change: Slower than historical precedent.

Speaker Change: Yeah, Hey, Ramsey that's a that is a good question. So the first thing is just how the the lodging business kind of get bad. So let me just try to either got bad basically the same store sales, we had a swath of clients basically kind of used up a lot.

Ron Clarke: Hey, Ramsey, that is a good question. So the first thing is just how did the lodging business kind of get bad? So let me just start there. It got bad basically via same-store sales. We had a swath of clients basically kind of use us a lot less. And so it took that volume and revenue out and stuff. And second, what it did is it drew a bunch of our sales people effectively to, you know, to run over and try to resell and help those clients and stuff. So anyway, that's the problem statement. The recovery in both Q4 and our guide is the same-store sales had basically flattened.

Speaker Change: Lasse and so it took that volume and rapid rollout and second what it did is it true identify our sales people effectively too.

Speaker Change: To run over an entire resale and help those clients and stuff and so.

Speaker Change: So anyway, that's the problem statement the recovery.

Speaker Change: Both Q4, and our guide is the same store sales as basically flat. It was kind of minus 10% in Q4 up 23, and it's gotten basically back to flat in Q4 of 24. So as we thought as I had hoped it was it was transient.

Ron Clarke: It was kind of minus 10 percent in Q4 of 23, and it's gotten basically back to flat in Q4 of 24. So as we thought, as I had hoped, it was transient with a swath of clients. And so now we're back into, okay, let's, you know, student body, right, let's get the sales people back getting new clients and building volume at the top of the puddle. So that's the assignment. Like, it's an incredible service, unique service that's less than free to companies. And so I continue to believe if we can go tell, you know, new businesses that, they'll take the service.

Speaker Change: With a slot declines and so now we're back into okay, let's student body right, let's get the salespeople back getting new clients and building volume.

Speaker Change: So that's the assignment so.

Speaker Change: Assuming we don't have another fire drill for same store sale and the salespeople can take this very useful valuable offer we have out we would expect acceleration as we run through our <unk> five and I've said it before it may be the single best.

Speaker Change: Or we have in the company like for these workforce people. Its just a killer offer stay anywhere in the hotels they want to stay at 25% on the lowest available price don't worry about how your people pay for or will handle the employee the traveler and then give it back to you.

Speaker Change: I will report on it reconciles.

Speaker Change: It is an incredible service you need service, there's less than free to the company and so I continue to believe the cow.

Speaker Change: New business is that they'll bill payment service.

Okay very helpful. Thanks, Ron.

Unknown Executive: Thanks Ron.

Ramsey El-Assad: And follow up from me on the expanding payables business into Europe. Similar question as one before about moving into enterprise with corporate payments. What do you need to do there? I know you've got assets in Europe. Do you have to hire? Do you have to build out technology? Can you cross sell to existing customers? Just a little more color on the build out to get that product overseas.

Speaker Change: And a follow up from me on the expanding payables business into Europe.

Speaker Change: Similar question as one before about moving into enterprise with with corporate payments, what do you need to do there I know you've got assets in Europe.

Speaker Change: Do you have to hire or do you have to build that technology can you cross sell to existing customers just a little more color on the on the build out to get that product overseas. Thanks.

Ron Clarke: Another good question. This is super exciting, right? We're trying to take one of our go-forward businesses and get it beyond the USA. And so logically for us, the UK and Europe is the place to go because we have assets there. So the good news is the new cloud tech, front-end tech that we've created for payables works already. It works. We actually have some clients already on the platform in the UK. So the major piece of product work we're doing is we're connecting that to our cross-border product because we want, I want to make sure we can offer, you know, disbursements that are obviously, you know, cross-border as well as in-country because way higher percent of businesses there, right, move money across borders.

Speaker Change: The other another good question. This is super exciting right, we're trying to take.

Speaker Change: One of our go forward businesses.

Speaker Change: And get it beyond the USA and so logically for us.

Speaker Change: The U K and Europe is a place to go because we have assets. There. So the good news is the new cloud Tech front end tech that we've created for payables works already.

Speaker Change: For us we actually had some client I'm already on the platform in the U K. So the major piece of product work. We're doing is we're connecting that to our cross border product because we want I want to make sure we could offer.

Speaker Change: You have disbursements that are there, obviously cross border as well as in country, because way higher percent of businesses there right move money across borders and so that's kind of the product is take a product we have it works and attach really across border to it so the real time.

Ron Clarke: And so that's kind of the product is take a product we have that works and attach really our cross-border to it. So the real assignment is to go to market. So we're going to use a combination of our clients and some of our people there and stand up a team of specialists to go take this product just like we do here in the US to the clients there. So I'd say by the turn, Ramsey, this summer, we'll have some feedback on whether we can make a business go, a payables business go in the UK like we have here in the US.

Speaker Change: It is.

Speaker Change: The go to market. So we're going to use a combination of our clients in some of our people there and stand up a team of specialists to go take this product just.

Speaker Change: Just like we do here in the U S to two declines there. So I'd say by the term Ramsey. This summer we'll have some feedback on whether we can make a business though.

Speaker Change: Handles business go in the UK like we have here in the U S.

Tom Panther: Thanks, So much and best of luck to you Tom.

Unknown Executive: Thank you so much, and best of luck to you, Tom. Thank you, Randy.

Speaker Change: Nice working with you.

Tom Panther: Thank you Jeremy.

Unknown Executive: Thank you.

Speaker Change: Thank you. Our next question comes from neat seven cents.

Nate Svensson: Our next question comes from Nate Svensson with Deutsche Bank. Hey guys, thanks for squeezing me in here.

Speaker Change: We kept bank. Please proceed.

Speaker Change: Hey, guys. Thanks for squeezing me in here a few questions on lodging. So figure I'd ask you about the other problem child, So North American fleet I know last quarter, we talked about that.

Nate Svensson: A few questions on lodging, so if you're all right to ask about the other problem child, so North American Fleet. I know the last quarter we talked about that business returning to positive growth this year, and Ron, I think earlier on the call you mentioned that U.S. vehicle payments has started to turn the corner. I guess the other thing that stood out was that U.S.

Speaker Change: That business returning to positive growth this year and Ron I think earlier on the call you mentioned that U S. Vehicle payments has started the corner or started to turn the corner I guess the other thing that stood out with that U S sales number in vehicle payments, which I think was 60% in <unk>, but I guess, just taking that altogether, hoping for an update on your thoughts and visibility on that business as we sit here in February but the rest of the year.

Ron Clarke: sales number in vehicle payments, which I think was 60 percent in 4Q, but I guess just taking that all together, hoping for an update on your thoughts and visibility on that business as we sit here in February for the rest of the year. Yeah, hey, Nate. Thanks for bringing up the second problem, child. Yeah, look, the good news is we're kind of done with the drama, you know, that we took you guys through from two years ago, and the wall was made. So that that's, fortunately, all behind us. And so the assignment at this point is simple.

Nate: Yeah, Hey, Nate.

Speaker Change: Thanks for bringing up the second problem child.

Speaker Change: Yeah look the good news is we're kind of done with the drama that way.

Speaker Change: Took you guys through from two years ago, and they will always needs of that as well.

Speaker Change: All behind Us and so the assigned that at this point is simple it's just make sales the products work well the clients are happy with improving retention in the business. The credit's been control. So it's as simple as okay, whereas at baseline and so the guide that we have you looked at it quarterly sequentially.

Ron Clarke: It's just make sales, the products work well, the clients are happy with improving retention in the business, the credit's in control. So it's as simple as okay, we're at this baseline. And so the guide that we have, if you look at it quarterly, sequentially, has that business kicking up, I think, I don't know if in front of me, it's exiting at five or 6% in Q4 of this year, 25. And so the single question to ask is just, okay, Ron, how are you adding sales and starts as you run through the quarters? And the answer is, if we do, which is why I hired a guy that knows how to make sales to oversee this.

Speaker Change: Has that business picking up I think Friday is exiting at five or 6% in Q4 of this year 25, and so the single question to ask is just okay. Ron how are you, adding sales and starts as you run through the quarters and the.

Speaker Change: The answer is if we do which is why I hired a guy that knows how to make sales to oversee this if we do that business will recover because we'll have dramatically more sales and losses. So.

Ron Clarke: If we do, that business will recover because we'll have dramatically more sales and losses. And so the good news is the assignment is like. Simple, straightforward, clear.

Speaker Change: The good news is the assignment is light.

Speaker Change: Simple straightforward clear.

Ron Clarke: Now we need to just go.

Speaker Change: Now we need to just go execute it.

Unknown Executive: got it that's that's very helpful um i know there was a question earlier about gringo i think that's a an interesting acquisition um so so i don't want to ask about that again but maybe i can use that topic to segue maybe into a broader update on the consumer vehicle opportunity that we've talked about obviously you got a ton of things going on in the business these days but you know still think that consumer vehicle opportunity is an exciting one so maybe an update on how things are going in the uk with with pay by phone and then with a roadmap for for that um sort of new business opportunity looks like for from here for expansion of the uk and the us But that's a good follow up.

Speaker Change: Got it that's that's very helpful.

Speaker Change: I know there was a question earlier about Green Dot I think that's an interesting acquisition.

Speaker Change: Don't want to ask you about that again, but maybe I can use that topic segue maybe into a broader update on the consumer vehicle opportunity that we've talked about obviously you got a ton of things going on in the business. These days, but you know still think that consumer would be a opportunity that exciting ones. So maybe an update on how things are going in the U K with pay by phone and maybe with a roadmap for for that.

Speaker Change: Sort of new business opportunity looks like for from here for expansion of the U K and the U S.

Speaker Change: That's a good follow up so I think it's probably pretty consistent with what we reported 90 days ago, which is.

Ron Clarke: So I think it's probably pretty consistent with with what we reported 90 days ago, which is Brazil is just doing crazy great. Like, if you look at our budget for 25 in Brazil, half of the revenue growth, so if you took the growth from 24 to 25 in Brazil and revenue is from non-toll growth. So even though we're planning 9% tag or toll volume growth, the driver of that thing being high teens, half now of that frigging growth is non kind of core product toll is the other product. So then we add these assets that effectively double the number of users, customers that can use the full suite of stuff.

Speaker Change: Brazil is just doing <unk>.

Speaker Change: Raisi right like if you looked at our budget.

Speaker Change: Budget for 'twenty five in Brazil.

Speaker Change: <unk> of the revenue growth. So if you took the growth from 'twenty four 'twenty five in Brazil. Our revenue is from non toll growth. So even though we're planning 9% tag or toll volume grow the driver of that thing being high teens half now of that Brigham growth is.

Speaker Change: Non core products told is the other products. So then when you add these assets that effectively double the number of users customers. They can use the full suite of stuff I'd say.

Ron Clarke: I'd say my report would be it's better, dramatically better than we thought it could go. Conrad, that the UK, I say, it's still slow and super early days. The tech bill took us longer and simplistically, you think about it, what we needed to do there was take the pay by phone 2 million digital users and get that app connected to the various networks. So, like the fuel network, the ED network, et cetera, the maintenance network. The registration network. So we spent an awful lot of time in the kitchen making the product work so that when we went out to the pay-by-phone users, we actually had a product that actually did a bunch of stuff.

Speaker Change: My report will be better dramatically better than we than we thought it could go hungry are that the U K I'd say, it's still slow and Super early days the Tech Bill took.

Took us longer than Simplistically, if you think about it what we need to do there was take the pay by phone 2 million digital users and get that app connected to the various networks.

Speaker Change: Sort of like the if you will that were B E D network etcetera, the maintenance network.

Speaker Change: The registration networks, we spent an awful lot of time in the kitchen, making.

Speaker Change: On the product.

Speaker Change: We went out to the pay by phone users, we actually had a product that actually did did a bunch of stuff and so.

Ron Clarke: And so not a ton to report on the market side. So I'd say same thing. Give us, call it, till the term this summer and we'll have a better fix of whether, you know, there's a take. Again, we have great results in one place and make us believe we could get them in the second place, but we don't have them yet.

Speaker Change: Not not a time to report on the market size, let's say same day and get US call. It kill the tumor this summer and we'll have a better fix on whether there.

Speaker Change: There's a take again, we had great results in one place. It makes us believe we can get them in place, but we don't have them yet.

Ron Clarke: Does anyone want to add on Gringo that I thought of after Ronald answered that initial question? The question on price wasn't asked, but we're going to disclose that in our 10K, so we might as well just kind of comment on it here. We paid around $140 million USD. which is a little less than 4 times forward revenue, which we think is pretty attractive. But it was all in Brazilian, essentially almost all in Brazilian currency, which we had in markets. It was a really efficient way, particularly with the currency depressed, for us to use that cash down there rather than bring it back and it gets evaporated on us just because of the decline in overall FX.

Speaker Change: Maybe one add on of Green go down after a run at Angela official question.

Speaker Change: Cost of off price wasn't asked but.

Speaker Change: <unk> disclosed that in our 10-K, you might as well just kind of comment on it here, we paid around $140 million USD.

Speaker Change: A little less than four times forward revenue, which we think is pretty attractive, but it was all in Brazilian essentially all almost all of the Brazilian currency, which we had in markets. It was a really efficient way, particularly with the currency to brands for us to use that cash down there rather than bring it back in again.

Speaker Change: <unk> operated all of this.

Speaker Change: Just because of the decline in overall FX rates.

Tom Panther: You know, from that standpoint, it was something that we thought was pretty attractive, not only just the business purpose and strategy that Ron described, but also the price of the transaction and the efficient use of our free cash flow.

Speaker Change: Standpoint.

Speaker Change: Okay.

Speaker Change: Pretty attractive.

Speaker Change: The business purpose and strategy.

Speaker Change: Scott.

The price of.

Speaker Change: The transaction and the efficient use of our.

Speaker Change: Free cash flow down there.

Unknown Executive: Thanks for the card, guys. Best of luck, Tom.

Speaker Change: Thanks for the car guys best of luck, Tom we'll Miss you.

Unknown Executive: We'll miss you.

Speaker Change: Yeah.

Andrew Baum: Thank you. Our next question comes from Andrew Baum with Wells Fargo. Please proceed.

Andrew Bowe: Thank you. Our next question comes from Andrew Bowe with Wells Fargo. Hey guys, thanks for taking the question.

Speaker Change: Yeah.

Hey, guys. Thanks for taking the question I know that you've called out and you made very clear the macro impacts to the EPS number, but maybe if we can kind of just separate.

Andrew Bowe: I know that you've called out and you've made very clear the macro impacts of the EPS number, but maybe if we can kind of just separate fuel and FX rates, things like business activity, confidence amongst your client base, bookings, how would you characterize what you're seeing today and what you saw in the fourth quarter? Because there's various data points that suggest optimism is picking up, and I'm just wondering how that kind of translates to your outlook. Yeah, hey, Andrew. So we get at that and think about that through the trends that we call out. So I don't, I don't want you or others to miss that.

Speaker Change: Fuel and FX rates things like business activity confidence amongst your client base bookings, how would you characterize what youre seeing today and what you saw in the fourth quarter.

Speaker Change: Because you know there's various data points to suggest optimism is picking up and I'm just wondering how that can kind of translate to your your outlook.

Speaker Change: Yeah, Hey, Andrew So we get at that and think about that through the the trends that we call out. So I don't I don't want you or others to Miss that.

Ron Clarke: The best news in Q4 was really the improving trends sequentially, right? That, that organic revenue, you know, got backed up right to 12% that same store sales and help our clients turn positive, right? And effectively the macro, like how the WEI or the pounds converts, it's kind of, in some ways for us, it's just an alphabet. We look at, you know, we look at what the numbers are and we, and we run the conversion. So you put that together with just the amount of sales that we have in 24, of which we get more than half of the benefit from those in 2025, you, you, you've got, you know, half of your, your growth effectively already there, kind of already happening, exiting and, and filling in the 25.

Speaker Change: That's news in Q4 was really the improving trends sequentially right that that organic revenue you know got backed up right to 12% same store sales and health of our clients turn positive at plus one.

Speaker Change: Sales growth was in sales production record, we've never sold as much in a quarter as we sold in Q4 and retention.

Speaker Change: Stay so that's the math.

Speaker Change: This is a very complicated business if you sell a lot and you keep a lot and your clients stay healthy you grow and so the headline for you guys is that's that's what it's spilling into running here into 2025, which allows US we took our organic growth.

Speaker Change: Holiday 211 at.

Speaker Change: At the midpoint it because we think we've got decent visibility.

Speaker Change: Into those into those trends and effectively the macro like how do we either the pounds converts is kind of in some ways for us. It's just an asset that we would look at we look at what the numbers are only if they were on the conversions. So you put that together with just the amount of sales that we have in 24 of which we get more than half.

Speaker Change: The benefit from those in 2025, you've got half of your growth effectively already there kind of already happening exiting and drilling into 25. So look the things that happened, but I'd say our confidence in the basic business is pretty hot yeah, one of the things Andrew.

Tom Panther: So look, things could happen, but I'd say our confidence in the, in the basic businesses is pretty high. Yeah, one of the things Andrew, just be careful when we talk about macro and negative macro, it's a very narrow definition of macro. We're not talking about the broader economy in terms of what we're seeing in terms of spend volume and, and, and card activity and, and things like that. It's really our, our definition of the macro that we normalize for. And if you dig into it even further, it's FX. And if you double click into that, it's the Brazilian currency.

Speaker Change: Be careful when we talk about the macro.

Speaker Change: The negative macro it's a very narrow definition of macro we're not talking about the.

Water economy in terms of what we're seeing just the spend volume.

Speaker Change: <unk> and <unk>.

Speaker Change: Card activity and things like that.

It's really our our definition of the macro that we normalize or and if you dig into it even further.

Speaker Change: And if you double click into that is the Brazilian currency is down 9% year over year. So it is not.

Tom Panther: It's down 9% year over year. So it's not a spillover in terms of business activity that we're seeing out there. It's really just a function of, of some very kind of, kind of, Unique and isolated things in terms of how we're defining the map.

Speaker Change: Not a spillover in terms of business activity that we're seeing out there.

Speaker Change: Really just a function of.

Speaker Change: Awesome very kind of.

Speaker Change: Got it.

Speaker Change: Unique an isolated thing Georgia power.

Speaker Change: You bet.

Speaker Change: Yes of course.

Andrew Bowe: Of course, and I'm aiming to kind of separate the two.

Speaker Change: Just kind of separate the two.

Andrew Bowe: Just one housekeeping note, the M&A contributions you're calling out in 25, $131 million in the bridge, if we look back at the deck when we did our M&A call in the summer, I know that you're pointing to $200 million of revenues for GPS and Pamering. Actually I think Pamering had roughly $25 million I think we were calling out for 24. Just trying to make sure if that $200 million kind of pie-in-the-sky goal is still the right number for those two assets. It is, and I wouldn't say it would be pie in the sky. I'd say it's the number we're going to get.

Speaker Change: And just one housekeeping note.

Speaker Change: The M&A contributions you're calling out in 25 131 million in the bridge.

Speaker Change: If we look back at the Jack when we did our M&A call in the summer I know that you were you're pointing to $200 million of revenues for for GPS and pay Marine obviously, I think jeep or pay marine had roughly 25 million I think we were calling out for 24, just trying to make sure if that $200 million kind of.

Speaker Change: Pie in the Sky goal is still the right number for those two assets.

Speaker Change: It is and I would just say it would be pie in the Sky I'd say number one we're going to get to that that is the Andrew is the gross.

Ron Clarke: So that is the, Andrew, is the gross number. So if you look at the print this year for those two businesses, they will print over $200 million in revenue. The net against that is we dispose of a business, a merchant digit business, and we got the benefit of six months of pay meringue in 24. So really it's a net number, right? Call it 200 minus the two things I just named, you know, basically takes the thing out of whatever you said, 130.

Speaker Change: So if you looked at the print this year for those two businesses they will grant over $200 million of revenue.

Speaker Change: Net against that as we dispose of the business.

Speaker Change: Merchant business and we got the benefit of six months and paint rang in 'twenty four so really it's the net nominal call. It 200 minus the two things that I just named.

Speaker Change: Yeah, basically takes the thing out of wherever you said.

Speaker Change: Alrighty.

Unknown Executive: Great.

Speaker Change: Great well good luck Tom Thank you.

Unknown Executive: Good luck, Tom.

Unknown Executive: Thank you.

Operator: Again, Thank you.

Speaker Change: Hey, Ken.

Speaker Change: Thank you that concludes your allotted type questions I would like to turn the floor back over to Jim for closing remarks.

James Eglseder: That concludes the allotted time for questions. I would like to turn the floor back over to Jim for closing. Yeah, hey guys, thanks for for your interest. There's still some questionnaires who we didn't get to given the timing, but you know where to find us. Let me know what you need. I'll be around tonight. Thanks guys.

Speaker Change: Yeah, Hey, guys. Thanks for your interest and there's still some question as to why we didn't get to.

Speaker Change: But you know where to find US let me know what you need help me around today.

Speaker Change: Thanks, guys.

Speaker Change: Yeah.

Operator: This concludes today's teleconference. you may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Okay.

Speaker Change: Yeah.

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Unknown Executive: which is thegren who dads unicorn Tyrannosaurus rex That's pretty good. Prosser, © BF-WATCH TV 2021 Thanks for watching.

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Unknown Executive: Alright, Event Programs. Twitter, Facebook & Instagram Will ninguém me mostrar como utilizar Mrft.com para criar sus videoclips, after viewing them? Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

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Unknown Executive: We're All Alive Buh-bye. I really appreciated every one of you. Have a wonderful day.

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Unknown Executive: We'll see you next Friday.

Unknown Executive: in Honda Mm-hmm But of course, we're going to do our warm I don't care. Lyndese Odoak-Remey © BF-WATCH TV 2021

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