Corpay, Inc.

Good day and thank you for standing by. Welcome to Fleet Corps First Quarter 2022 Earnings Conference Call. At this time, all participants line are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the call over to your speaker today, Mr. Ron Clark. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for our first quarter 2022 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 that 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 fleacore.com. Throughout this call, we will be covering organic revenue growth. As a reminder, this metric neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices, and fuel spreads. It also includes pro forma results for acquisitions closed during the two years being compared. We will also be covering non-GAAP financial metrics, including revenues, net income, and net income per duty to share, all on an adjusted basis. These measures are not calculated in accordance with GAAP and may be calculated differently 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. I need to remind everyone that part of our discussion today may include forward-looking statements. These statements reflect the best information we have as of today. All statements about our outlook, new products, and expectations regarding business development and feature acquisitions are based on that information. They are not guarantees of future performance and you should not put under reliance upon them. We undertake no 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 these risks are mentioned in today's press release on Form 8K and in our annual report on Form 10K filed with the Securities and Exchange Commission. These documents are available on our website and at sec.gov. Now 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 Q1 2022 earnings call. Up front here, I'll plan to cover four subjects. So first, give you my take on Q1. Second, lay out our updated rest of year 2022 guidance. Third, give you a brief update on our Russia business. And then lastly, I'll share some new things, some good things happening in the company. Okay, let me make the turn to our Q1 results. Terrific, really, really great performance. We reported revenue of $789 million, up 30%, and cash EPS of $365, up 29%. Revenue came in very strong, about 40 million above our Q1 midpoint guide with only 12 million of that beat macro related. So a lot of very good fundamental over performance in the quarter. Organic growth overall 15% for Q1 and each of our four major lines of business all growing organically double digits. Trends in Q1, excellent. Sales up 39 percent versus last year. We added about 50,000 new clients to the fold sold in Q1. And over 50 percent of all of our new global fuel card clients came to us digitally. So a terrific sales quarter. Steady revenue retention of 93% and healthy same-store sales for the quarter at plus 7%. So Q1, really one of the best quarterly performances that I can recall. All right, let me shift to our updated rest-of-year 2022 guidance. So first off, we're expecting a bit of a mixed macro rest-of-year. So on the positive side, our clients are healthier, spending more, which we can see in the volumes. Fuel prices are at record levels. And the Brazil currency has rebounded some since the start of the year. On the not-so-good side, we're outlooking higher interest expense, really depending on the pace of the rate hikes, and likely higher bad debt expense. The real wild card, we think, for rest of year is the Brazil FX, as it's continued to be quite volatile year to date. Fortunately, we're enjoying pretty strong fundamentals exiting Q1. We've got healthy volumes. We've got record sales. We've got steady retention. So all the things that set up well for us for rest of year. So with that, we're revising our 2022 full-year guidance today up as follows. So revenue to $3,360,000,000 at the midpoint, that's up $140,000,000. And cash EPS of $1,560,000, that's up $0.35 from our initial guide. So a much stronger full year 2022 outlook today than we had 90 days ago. Assuming we achieve today's guidance, it would imply a full year 22 revenue growth of 19% and full year 22 cash EPS growth of 18%. So that would be back-to-back years post-COVID 2021, and 2022, in which Fleet Corps would compound earnings by 18%. I do want to remind everyone we are outlooking still meaningful sequential improvement in the guide as we run through the year, with our Q4 revenue expected to be up about $90 million versus our Q1 print. Okay, let me shift gears and give you just a brief update on our Russia business. So I'll start by reminding you that Russia represents a very small part of the company, about 3% of revenue. So on a 2022 annualized basis, Russia will contribute about $85 million in revenue and approximately $0.77 in cash EPS. The Russia business is really a pure fleet card business. It runs very standalone, and we employ about 600 local employees. As you can imagine, we've been quite busy since the start of the conflict. We've been taking actions to de-risk the business. We've been complying with the ever-evolving sanctions. and we continue to weigh the various options that we have. We're certainly being super cautious to take care of the well-being of our employees. So look, we'll continue to keep you updated as the situation evolves. Okay, so last up today, I'd like to run through some good things that are happening in the company. So first, some new wins. So we've got A fair number of notable new wins and client renewals in the quarter. So just a couple examples. Speedway, one of our largest North America retail partners, recently extended their relationship with us. Delighted with that. Amazon awarded us their middle mile trucking fleet, which has grown like a weed. We won the Eclipse leasing business contract in Australia, a pretty big piece of business for us in the region. Second, cross-sell. We really like the cross-sell opportunity in front of us. We're still exploring selling our corporate payment products into our fuel card base, and we're progressing. selling our add-ons to our total customers. You've heard us talk about selling fueling. We're also testing now selling insurance and even lodging. We did reach 1.7 million add-on fueling transactions in the quarter to our total customer base, so progressing quite well. Third, EV, we're going on offense. previously about building capabilities to serve our fleet use case and protect the customers we have and the revenue we have, we've now identified a couple of new customer segments that we can repurpose, we think, our EV assets like our network to and generate incremental revenue beyond the fleet business. So potentially here some incremental revenue upside to the energy transition. And lastly, we had our growth off-site meeting last month and set the internal goal of selling $1 billion of new business annually within the forecast period. So pretty excited to aspire to $1 billion in new business. We've concluded we have the product set now and the TAM to do it, And we think we've built the marketing, credit, and digital underlying capabilities to do it. So super excited about chasing a bigger number. So look, taken together, new wins, cross-sell opportunities, EV on offense, and selling more, pretty exciting for us. So look, in conclusion today, just a few final thoughts. So one, our Q1 results were terrific. clearly better than we had expected. Our rest of year or full year 2022 performance expected to be much better than we envisioned 90 days ago and lots of good things, new things happening in the company. So all in all, 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?