Corpay, Inc.

Good afternoon and welcome to the Fleet Core Technologies Incorporated second quarter 2022 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this call is being recorded. I would now like to turn the conference over to Jim Eglesetter, Head of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for our second quarter 2022 earnings call. With me today are Ron Clark, our Chairman and CEO, and Charles Freund, our CFO. Following their 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. Now, 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 diluted share, all on an adjusted basis. These measures are not calculated in accordance with GAAP and may be calculated differently than at other companies. 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 do need to remind everyone that part of our discussion today may include forward-looking statements. These statements reflect the best information we have today. All statements about our outlook, new products, and expectations regarding business development and future acquisitions are based on that information. They are not guarantees of future performance, and you should not put undue reliance upon them. We undertake no obligations 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 on Form 8K, and in our annual report on Form 10-K, 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 Q2 2022 earnings call. Up front here, I'll plan to cover just three subjects. First, give you my take on Q2 results. Second, I'll share our updated rest-of-year guidance and the assumptions underlying it. And then lastly, I'll share just a few reasons to like our prospects over the midterm. Okay, let me turn to our Q2 results, which were, frankly, outstanding across the board. We reported revenue of $861 million. That's up 29% versus last year, or $194 million increase. Of that, about $28 million was a macro benefit, about $45 million from acquisitions, and the remainder, $121 million from organic growth. So that puts organic growth for the quarter up 17%, and that's on the back of 15% growth in Q1. Revenue finished well above our expectations for the quarter, about 35 million above the top of our guidance range. Profitability, we reported cash EPS of 417 for the quarter. That represents an all-time quarterly profit record for the company. So delighted with that. That's up 32% versus last year and about 27 cents above the top of our Q2 guidance range. Trends in the quarter, quite good. Same store sales came in at plus 4%. We're seeing continued recovery in both our corporate payments and lodging, client base. and basically flat same store volume in our fleet client base as they manage through these record high fuel prices. Sales, Q2 sales excellent, up 36% for the quarter versus last year. Digital sales way, way up. And we continue to increase the number of new accounts that join us end-to-end digitally with no human intervention. In total, globally, over 50,000 new accounts on the books in Q2. And lastly, retention remained basically steady as she goes at 92%. I do want to call out just a few pretty exciting wins and renewals since we spoke last. So first is Delta Airlines. They selected our new distressed passenger mobile app, and that automates passenger hotel booking in the event of a canceled flight. So no more, you know, queuing up at the gate, you know, or waiting to get accommodations. You get an alert and you get booked. We did win one of the largest global food chains. They did select us to manage their gift card program, so a big win there. And then BP. We're delighted that BP North America extended its relationship with us, so we will continue to manage their commercial card program through the midterms. So look, in conclusion for the quarter, you know, our business fundamentals are in a really good place. You know, we continue to satisfy and retain clients, obviously adding lots of new accounts. So you put those together and it results in faster organic growth. Okay, let me shift gears and turn to our updated second half guidance. So first off, we're expecting... The second half revenue macro impacts to be roughly net neutral to the company versus our view 90 days ago. Fuel price clearly better now. We think spreads better, but FX significantly worse. So taken together, we think it's about a push. On the below the line factors, similar view we have of a net neutral impact rest of year. We're out looking higher interest expense, but mostly offset by a lower share count. So despite kind of these puts and takes, the second half macro is looking to be an overall wash. I do want to point out that in terms of the quarters, we're expecting macro help here in Q3 and then macro hurt in Q4. So we will reflect that in the quarterly guidance. So look, with these assumptions, we're revising a full year 2022 guidance up today to revenue to $3.4 billion at the midpoint, cash EPS to $15.95 at the midpoint. Our preliminary July results support this rest of year guide, and our results show no macro weakness at this time. Assumed in this revised full-year 2022 guidance is a 100% flow-through of our Q2 overperformance and basically a second-half revenue and profit guide where we're staying put, again, as we assume that the macro is basically a wash with last time. Assuming we achieve this new higher full year 22 guidance, it implies full year 22 revenue growth of 20% and full year 22 cash EPS growth of 21%. So 20% top, 21% bottom. I do want to point out that this would reflect a 70 cent increase in cash EPS from our initial guide in February. Okay, so last up today is a look forward to the company's prospects over the midterm. I do want to provide a reminder to those that might be new to the company today that Fleet Corps' purpose is pretty straightforward, which is to help businesses, small, medium, and large, whether here or around the world, to spend less on their non-payroll expenses. So we do that by providing solutions, expense management payment solutions that help clients really just better control employee purchases and also better control and schedule AP payments. You all know that global non-payroll business expenses represent a very big number and thus a very big TAM for us to target. So let me just tick through a few reasons to maybe like our prospects over the midterm. So first up is really recovery. So our company has recovered quite significantly since the onset of COVID. 22 earnings now expected to be up 44% versus 2020. And again, our client's much healthier. Two is momentum. Fundamentals, very good in the company. Trends, good. Retention, still above 90%. We're selling a lot of business, so clearly business growing organically. Three is the moat. We think the moats to our business are high, particularly the proprietary gas station, hotel, toll, and virtual card networks that we operate. We get more data and deeper discounts than our general purpose competitors, so both big advantages. Our volumes are super significant that run through these networks, so it makes them extremely difficult to replicate. Next up, EV. We do believe our fleet business can make the EV transition with our clients. We're really in a pretty unique spot to help them. We spent the last year or two assembling EV assets like public charge point acceptance networks, at-home charging software applications, and are pleased to report that we've got about 4,000 EV clients now in Europe. We also hope to share our plans over the coming weeks for how we're going to go on EV offense. More to come there. Next up, corporate payments. You know, our plan is to make our corporate payments business a much, much bigger business than today. We'll acquire more scale in our cross-border business. A reminder that we have an acquisition teed up to close here in Q4. Announcement today that we've added invoice automation capability to our corporate payments business with today's accrualify feature. acquisition, delighted with that. We've also pointed our corporate payments business at the SMB segment to increase the TAM, and that's in addition to our middle market core focus. Recession, you know, our company may not be recession-proof, but we are recession-resilient. We view our products as more necessity than discretionary. take fuel, fuel price literally almost doubled, and really our same store, you know, fuel volumes basically pretty flat, pretty steady, so points to a pretty necessary product. And last up is acquisitions. We do expect to make acquisitions over the forecast period, and we're hopeful to have about $6 to $8 billion of incremental capital at our disposal at today's leverage ratio. We are good at deals. We're even better at improving acquired company performance. So we think some upside here. So look, taken together, we think these factors give us a good chance to sustain our growth over the midterm. So in conclusion today, again, we reported exceptional record results in Q2. We're raising full year 22 guidance quite significantly, and we believe we're positioned pretty well to compete and expand our business over the midterm. So with that, let me turn the call back over to Chuck to provide some additional details on the quarter. Chuck?