Corpay, Inc.

Good day, everyone, and welcome to today's CorePay Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. Please note that this call will be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's call over to Head of Investor Relations, Jim Atkinson, EGLE Center, please go ahead.

Good afternoon, and thank you for joining us today for our third quarter 2024 earnings call. With me today are Ron Clark, our chairman and CEO, and Tom Panther, our CFO. Following the prepared comments, the operator will announce that the queue will open for the Q&A session. Today's documents, including our earnings release and supplement, can be found under the investor relations section on our website at corpay.com. Now, throughout this call, we will be covering several non-GAAP financial metrics, including revenues, net income, and 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. None of these measures are 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. It is important to understand that part of our discussion may include forward-looking statements. These statements reflect the best information we have as of today. All statements about our outlooks, new product, 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 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 10K. These documents are available on our website and at sec.gov. Now I'll turn the call over to Ron Clark, our chairman and CEO.

Ron? Okay, Jim. Thanks. Good afternoon, everyone, and welcome to our Q3 2024 earnings call. Up front here, I'll plan to cover three subjects. First, provide my take on Q3 results, share our Q4 guidance, along with a 2025 preview. Second, I'll discuss our USA opportunity and our recent sales reorganization. And then lastly, I'll provide an update on our M&A activities. Okay, let me begin with our Q3 results, starting with We surpassed $1 billion in quarterly revenue for the very first time, so quite a big milestone for us. We reported revenue of $1.29 billion, up 7% excluding Russia, and cash EPS of $5, up 14% excluding Russia. The results really in line with our expectations, both revenue and earnings finishing on the high side of our guidance range. EBITDA margins in Q3, 54.2%. That's up about 100 basis points sequentially. Our trends in Q3, really quite good. Same store sales remained essentially flat, and that's consistent with Q2. Retention improved slightly to a bit above 92% for the quarter. That's a return to record levels. Sales are what we call new bookings growth, 14% inside of that corporate payment sales growth leading the way with a 28% sales growth on the quarter. And payables, spend monetization levels remaining steady sequentially. Organic revenue growth finishing at 6% overall. Again, strong growth in corporate payments. Brazil and international fleet, and a continued drag from North America fleet and lodging, although lodging did show signs of improvement in the quarter. So the wrap on Q3, really no surprises here. Lodging a bit better, North America fleet a bit worse, but more importantly, trends, same-store sales, retention, sales, and spend monetization all stable or improving. So really a good result. Okay, let me make the turn to Q4 and full year 2024 guidance. So we're outlooking a very strong Q4 finish. We're expecting organic revenue growth to accelerate to 13%. An early view of our October revenue flash supports this acceleration. Outlooking EBITDA margins of 55.6%, which would be up about another 140 basis points sequentially. Cash EPS of 535 at the midpoint, up 21%, and hopeful for Q4 sales growth, coming in above 20%. So really firing on all cylinders. A couple additional positives. We expect lodging revenue growth to turn positive here in Q4. And the infamous corporate payments channel segment expected to finally grow again here in Q4. So both of these things support our overall revenue growth acceleration. So as I said back in August, our expected arrival to a better place is now, Q4. For full year 2024, we're staying put with $19 of full year cash EPS at the midpoint. That implies 16% year-over-year EPS growth, excluding Russia. So really in line with our 15% to 20% mid-term earnings growth target. Okay, let me transition to a 2025 preview. Obviously, early days, but we think it's setting up quite well. In terms of organic revenue growth, we're outlooking 9% to 11% driven by recovery of our North America fleet and lodging businesses, both moving into positive territory next year. Corporate payments in Brazil maintaining mid to high teens growth rates. Even our gift business outlooking double-digit growth next year. We do expect an incremental 3% of print revenue growth. That's above organic from the combination of the two corporate payments acquisitions. Planning our 2025 sales growth around 20% next year. That's driven by the demand for our new products along with incremental investment in sales coverage. So taken together, we're targeting 2025 cash EPS at a $22 per share ballpark. Still lots to work through. The couple big assumptions behind the 2025 cash EPS will be FX assumptions, particularly the Brazil REI, along with the net impact of lower interest rates offset by higher 2025 tax rates. So look, net-net, we're outlooking a pretty good 2025 setup. Okay, let me make the turn to our USA sales opportunity, along with a recent decision to reorganize U.S. sales. and appoint a new CRO. So recently our U.S. sales growth has not been as good as our international sales growth and particularly our North America fleet and lodging solutions. We see the U.S. opportunity for all of our lines to be enormous. Take for example our payables business. We've got about a 2 or 3 percent share of the mid-market. Recall that's a business of about $500 million of annualized revenue, and yet there's a couple hundred thousand prospects to convert, and we've got two to three percent. So look, a big opportunity. So to get at this opportunity more urgently, we've taken the following actions. We've established a consolidated U.S. sales organization. with the associated marketing and sales support functions, reporting into one new CRO exec. His name is Mike Jeffrey. We've rebranded sections of the vehicle, lodging and payables, lines of business to Corpay to leverage the brand. And we've established a dedicated cross-sell team that will take each of our solutions back to our existing client base to drive sales. So lots of energy, focus, and urgency around selling more here in the U.S. Okay. Finally, I'll move to my last subject, which is an M&A update. So quite busy in 2024 on the M&A front. Four deals finalized, a couple still in the pipeline. So first, Paymerang, the AP automation company, we closed that July 1st. Good news, it's tracking closely to our second half plan, and we're seeing significant synergies here in Q4. GPS, a cross-border business that we signed up this summer. still on track to close at the end of the year. Through Q3, the business is performing at forecast, so good news there. So we'll be excited to bring that business across. Taken together, these two corporate payment deals should contribute about $0.50 of cash EPS accretion in 2025. Third is our Zap Pay Brazil deal, which is a vehicle car debts company, helps drivers pay for registration renewals and tickets. We acquired that business in the spring. It gave us entry to really a new payments TAM that is five times the size of the toll TAM, so pretty big. And the ZAPE business year-to-date, up 45% in revenue. We've also signed up 90,000 Sembrar toll users to using the ZAPE solutions in the first six months. So good start. Lastly, the Comdata Merchant Solutions business. It's a POS solutions business for truck stop merchants. It's being sold to a PE-backed company, planning that sale to close by year-end. You might recall this divestiture is tied to the strategic review from last spring and meant to simplify the company. We do have a couple of active deals now that we're still working, and although relatively small, if we do proceed, we will close those early next year. So look, in conclusion today, Q3 again, results finishing on the high side of our guidance range, stable or improving same-store sales, retention and spend monetization trends, outlooking meaningful revenue growth acceleration here in Q4, along with record earnings, early take on 2025 good, Outlooking revenue and earnings growth kind of in line with our stated midterm objectives. And lastly, very pleased with our 2024 M&A activity, the two corporate payment acquisitions, tracking, and the business really just positioned better overall for faster growth. So with that, let me turn the call over to Tom to provide some additional detail on the quarter. Tom?