Corpay Inc to Acquire Cross-Border Payments Company Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ramsey El-Assal - Barclays Corporate & Investment Bank - Analyst : Hi, thanks. So much for taking my question. Ron, can you expand on some of the synergies on both the revenue and cost side that you're expecting from the deal, what types of synergies are you looking at here?

Question: Ramsey El-Assal - Barclays Corporate & Investment Bank - Analyst : Great. Great. And then a follow-up from me. How should we think about the mix of the corporate payment business segment rather as we move forward? Over time, it started to tilt quite a bit towards cross border and FX sort of away from virtual card and AP, do you think that over time you might see an even greater concentration coming from the FX side of the business and less from virtual card, how are you thinking about that?

Question: Ramsey El-Assal - Barclays Corporate & Investment Bank - Analyst : That's great. Congratulations. Appreciate it.

Question: Andrew Bauch - Wells Fargo - Analyst : Hey. Thanks for taking the question. Just wondering if we could put a finer point on the revenue synergies. If we take the $100 million for GPS of revenue in the $50 million for Paymerang growing 20%. That gets us to $180 million, is the gap between the $180 million and the $200 million is that revenue synergies? Or is that something else?

Question: Andrew Bauch - Wells Fargo - Analyst : And then I guess maybe if you could just talk about a little bit like operationally what those synergies imply or what are you actually doing to kind of create those cross-sell opportunities or other synergies that you're calling out on the revenue side.

Question: Andrew Bauch - Wells Fargo - Analyst : Really interesting. Congrats on the deal.

Question: Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc. - Analyst : Thank you. Ron, you mentioned that the deal would be accretive to 2025. Is that an earnings accretion? Or maybe you could just define that for us? And maybe how much, if anything?

Question: Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc. - Analyst : Okay. Great. I guess like as we think about the cross border business in the middle market, maybe you could just give us a sense of sort of a lay of the land and where you guys fit in and where the growth opportunity? I mean, I know this business has been growing quite rapidly, over the last several years. So can it continue that kind of growth trajectory? And then maybe you could just also talk about the core business and what you think the growth there could sustain for the next several years.

Question: Sanjay Sakhrani - Keefe, Bruyette, & Woods, Inc. - Analyst : Okay, great. Thank you.

Question: Peter Christiansen - Citigroup Inc. - Analyst : Good evening. Thanks for the questions. Congratulations, Ron. Sounds super interesting acquisition here. I was just wondering, the margin profile sounds pretty exciting here, and I know you've talked about the incremental margin on the corporate payments -- I'm sorry, on the cross-border business being super high, I think it was like 70% or 80%. It sounds like with this acquisition, the additional scale that those incremental margins actually could improve a little bit more than what they were previously. Just wondering if you could elaborate a little bit on that. And I just had a quick follow-up.

Question: Peter Christiansen - Citigroup Inc. - Analyst : Super interesting. And then I just wanted to ask in terms of the business mix of GPS trading versus client servicing and should we think -- do we need to think about the risk profile any differently than we typically have for the cross-border business, the existing business.

Question: Peter Christiansen - Citigroup Inc. - Analyst : That sounds very interesting. Thank you. Good color.

Question: Nate Svensson - Deutsche Bank - Analyst : Hey, guys. Congrats on the acquisition. Really exciting to see this coupled with Paymerang and the trajectory of the corporate payments business going forward. You did talk about the opportunity to potentially upsize the credit facility, if you identified any attractive M&A targets next year. So I'm maybe you could just build on that by doing a little bit of lay of the land and what you're seeing across the rest of the market, maybe outside of GPS, are there any areas you think look, particularly attractive or I guess on the other side of the coin in areas where there may be still a disconnect between public and private market valuations.

Question: Nate Svensson - Deutsche Bank - Analyst : Got it. That's all really helpful color. And I guess for my follow-up. So obviously, you talked a little bit about the client profile at GPS being attractive, but you also kind of briefly mentioned this FX netting technology they have. So maybe you can talk about that or maybe any other products within their portfolio that you don't have and that differentiate them in the market that maybe you can cross on to the rest of your base. I know you talked about some of the core products you can sell into the GPS base, but I guess just maybe the inverse of that coin.

Question: Nate Svensson - Deutsche Bank - Analyst : Super interesting, and congrats again on the acquisitions.

Question: Trevor Williams - Jefferies - Analyst : Great, thanks. I have got two and I'll just ask them upfront. First just on the buybacks, you've done the $900 million year to date. Is there any more capacity or willingness to keep buying back any more stock this year? And then the second Ron, I think you alluded to having some proceeds from divestiture in the vehicle business. If you could just give us some more color on what that asset is? Thanks.

Question: Trevor Williams - Jefferies - Analyst : Got it. Okay. Thank you.

Question: Dave Koning - Baird & Co - Analyst : Hey, guys. Thank you. Congrats. I guess first of all, the yield in corporate payments for the last couple of quarters, I think low to mid 70 basis points on volume, when Paymerang comes on in Q3 and then GPS in Q1, how how do yields move kind of back half of this year with the first one and then into next year with the second one?

Question: Dave Koning - Baird & Co - Analyst : Yeah. Okay. Thank you. And then I guess just follow up, you reiterated or you said midpoint of Q2 guide for Q2. But then any comment just on the rest of the year, I guess, the back half of '24, that should be in line, too?

Question: Dave Koning - Baird & Co - Analyst : Sounds great. Thanks, guys.

Question: Daniel Krebs - Wolfe Research - Analyst : Thanks. This is Daniel on for Darrin Peller. I was wondering if we could just take a step back and if you could lay out how you see the growth algorithm for these FX businesses longer term and maybe how much is driven by physical payment volume growth versus new sales? And then the typical churn rates here. Thank you.

Question: Daniel Krebs - Wolfe Research - Analyst : Bravo. Thank you.

Question: Andrew Polkowitz - JP Morgan Chase & Co. - Analyst : Hey, good afternoon, guys. I just wanted to ask a question on go to market. Obviously, Paymerang is more of a verticalized asset that you mentioned in the last earnings call. I mean, the FX business, more horizontal So wanted to know if you could just talk through your go to market on each of them two acquired companies.

Question: Andrew Polkowitz - JP Morgan Chase & Co. - Analyst : Got it. That's great. Thank you. I just had one quick follow up. I just wanted to hear if there's any color you could share on how the GPS deal came to be. Is this a competitive deal or something that you guys went out and source directly?

Question: Andrew Polkowitz - JP Morgan Chase & Co. - Analyst : Great. Sounds good. Thank you, guys.