Corpay, Inc.

Greetings. Welcome to the Fleet Corps Technologies Inc. Third Quarter 2021 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 keypad. Please note that this conference is being recorded. I will now turn the conference over to your host, Jim Egglesetter, Head of Investor Relations. You may begin. Jim.

Good afternoon, everyone, and thank you for joining us today for our third quarter 2021 earnings call. With me today are Ron Clark, our chairman and CEO, and Charles Freund, our CFO. Following the prepared comments, the operator will announce the queue will open for the Q&A session. It is only then that you can get in line for questions. Please note, our earnings release and supplement can be found under the investor relations section of our website at FleetCorps.com. Now, throughout this call, we will be presenting non-GAAP financial information including adjusted revenues, adjusted net income, and adjusted net income per diluted share. This information is not calculated in accordance with GAAP and may be calculated differently than non-GAAP information at other companies. Reconciliation of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and on our website as previously described. I do need to remind everyone 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 recovery, outlook, new products and acquisitions, 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 do not undertake any obligation to update any of these statements. These expected results are subject to numerous uncertainties and risks, which could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's press release and on Form 8K. and in our annual report in Form 10-K filed with the Securities and Exchange Commission. These documents are available on our website and at sec.gov. So with that out of the way, I will turn the call over to Ron Clark, our Chairman and CEO.

Ron? Okay, Jim. Thanks. Good afternoon, everyone, and thanks for joining our Q3 earnings call. So up front here, I'd like to run through four subjects. First, give you my take on our Q3 results along with the rest of your outlook. Second, take you into a bit deeper dive into our sales results. Third, give you an update on the three acquisitions that we've completed year to date. And then lastly, an early preview of 2022 and beyond. All right, so let me make the turn to our Q3 results. We reported Q3 revenue of $755 million, up 29%, and cash EPS of $352, up 25%. So both of those all-time record highs for the company. Also, the Q3 results annualized finally above $3 billion, so past the $3 billion mark in revenue and $14 in cash EPS. Organic revenue for the quarter up 17% and inside of that corporate payments business grew 22% organically. The trends in Q3 are quite good. Sales finishing at record levels up over 50% versus Q3 last year and over 30% against the baseline of Q3 19. Retention steady as she goes at 93% for the quarter. And again, our global fuel card business inside of that also coming at 93%. Same store sales strengthened plus 5% for the quarter, which further adds to the same store sales rebound we saw in Q2. Credit losses low again at three basis points. continuing to run below historic levels. You may notice our tax rate kind of four points higher than last year. That did shave about 20 cents off the 352 that we reported for the quarter. So look, overall, pretty pleased with the quarter. So in terms of rest of year, we're raising guidance today. So revenue... Guidance at the midpoint now $2,795,000. That's up $30 million from August. Cash EPS at the midpoint to $1,305. That's up $0.15 from August. This raise versus last time reflects obviously these Q3 results are beat. The ALE acquisition, which closed September 1, and a bit more favorable fuel prices. All of those offset just a bit by slower than planned COVID recovery. If you look at the Q4 on its own, it anticipates revenue and profit growth up about 20% versus Q4 last year and about 10% against Q4 2019. All right, let me make the transition into a bit deeper dive into our sales results. So as I mentioned, new sales or bookings reach record levels in the quarter and are up sequentially, significantly, and up dramatically over the prior periods. So as I'm sure you're aware, sales reflect the market demand for our solutions, but are also really the best leading indicator of of our future prospects. And so crazy record this quarter, we signed up almost 50,000 new business clients globally in Q3. So 50,000 new accounts joined the fold, so a record. Over 50% of all of our global fuel card sales now come to us through our digital channels. So great because it's very low cost. We continue to increase our digital advertising spend, and we're enjoying record levels of prospects visiting our websites. Interest in EV solutions increasing, so a number of large accounts signing on to our EV solution. So that included Hertz, Volkswagen USA, Union Pacific, LeasePlan Europe, and Siemens. Brazil toll sales rocked in the quarter. Our urban sales or kind of the city dwellers that are lower frequency toll users represented 23% of all new sales in the quarter. So programs, whatever, two or three years old, now almost a quarter. And the active tags for the quarter reached a new milestone, 6 million. So 6 million active paying tags now in Brazil. We are planning to launch our new bank, JV, this month with the largest bank in Brazil who will be helping to promote our products. We don't talk about it much, but our customer acquisition cost is really quite attractive, runs about 65%. of the sales new revenue. So really super important for profitable growth. So let me shift gears and talk a little bit about the three acquisitions that we've closed year to date and how they're doing. So Roger, first up, we've now rebranded Roger to be Corp A1, which is our entry into the corporate payments SMB space. So we're underway now adding new SMB bill pay clients through digital channels and accounting channels and have some early returns on cross-selling bill pay into our fuel card base. So super early, but it looks like about 10% of our fuel card clients that pay their bills with our new CorePay One platform are choosing to pay a second's non-fleet core bill with us. So effectively becoming bill pay customers. We're looking at somewhere around 10 to 20,000 SMB bill pay clients coming online in 2022. And also interesting, we plan to launch what we call our two-in-one solution before year end that will combine our smart business cards with our bill pay platform into one interface. So an SMB client could potentially pay all of their non-payroll expenses with us on a single platform. Second deal this year, AFEX, which is a cross-border provider, very similar to our Cambridge business, super performance in 21, pro forma revenue growing mid-teens, EBITDA up almost 50% versus prior year. well along on integration. We've already combined the management teams into one group and are about halfway through migrating the AFEX customers onto the Cambridge IT platform. So hope to retire most of the AFEX IT system by year end. Last deal up is ALE. That's the lodging extension for the insurance vertical. It helps homeowner insurance place policyholders into hotels and temporary housing. So we closed that September 1. About 3.5 million incremental annual hotel rooms will be added to our lodging business. Underway with the synergy work and early view is about 20 cents accretive to 2022. So, so far so good really across all three transactions this year. All right, so lastly, let me share our view, early view of 2022 and speak a little bit to the beyond 22 prospects of the company. So for next year, encouraged by a few things. First, the run rate. We're exiting 21 with about $3 billion of annualized revenue and $14 of cash EPS. So nose of the plane is up. Sales, again, running at record levels, which will drive incremental revenue into 22. We also expect sales to grow again next year about 20%. Macro's on our side, helping us. Obviously, fuel prices are high. FX is generally holding, so setting up well there. And then I mentioned the acquisitions, particularly... Apex and ALE together contributing probably about 50 cents of incremental accretion next year. So look, taken together, the early 2022 setup is quite good. If we look just a little farther out into the midterm, we're kind of also encouraged there for a couple reasons. So first, we've expanded via our beyond strategy the market segments of the serve market segments in each of our five major lines of business. So that's laid out on, I think, page 14 of the of the earnings supplement. So, for example, in Corpay, our corporate payments business, we've added cloud based AP solutions to our original virtual card business. So we did that a couple of years ago in the middle market with invoice pay. And then obviously this year, in the SMB market with Rogers. So, look, much, much better positioned now to attack the corporate payments TAM. And then, again, if you look, our lodging business initially focused only on workforce or blue-collar travelers going to economy hotels. Since we've added two new segments, the airline crew business and now the insurance policyholder business of the fold, that really triples the opportunity in terms of room nights for the lodging business. A second thing is we're on a path, as I mentioned, to combine our card business with our payables business into a single platform, which would do two things. First, give us differentiation in the marketplace where we can help clients pay all their non-payroll expenses with us, both walk-around purchases and supplier payables from a single account And second, could help us turn our fuel card business into a corporate payments business by cross-selling our bill pay services to our hundreds of thousands of fuel card clients. So as I mentioned, underway there. So look, the combination of expanding our served market segments in our existing five businesses, along with this idea of joining up our cards and bill pay onto a single platform is encouraging for us. So look, in closing, just a few final wrap-up thoughts. So again, a really good quarter, record revenue and profits for Q3, good trends, same store sales up, new sales up and retention steady. Again, record sales and very attractive cost of acquisition of new accounts. three acquisitions on track against our thesis, and our early 22 setup attractive. So look, all in all, it feels like we're in a pretty good place. So with that, let me turn the call back over to Chuck to provide some additional details on the quarter. Chuck?