Corpay Inc Q4 2024 Earnings Call Transcript

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

Question: Tien-Tsin Huang - JP Morgan - Analyst : Hey, thanks a lot, good to hear, and I'll say up front, Tom, all the best on the transition to your next role here. On the -- on my questions, it sounds like not a lot of surprise organically, really just gift, a little bit of a push-out if I heard that correctly. But across the segments in 2025, it looks like you're looking for a nice acceleration in Vehicle Payments to the high-single-digits from the mid-single-digits in 2024. So what's driving that? How much visibility do you have? I know sales has been good, but just hoping you could break that down for us a little bit. Thanks.

Question: Tien-Tsin Huang - JP Morgan - Analyst : Okay. Good. Good to know. And then, really quickly on Gringo, interesting deal triples your TAM, as you said. What more can you tell us about the financial profile of this business? I think you talked about a 30% grower on the release, but any other details you can share here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 10:00PM, CPAY.N - Q4 2024 Corpay Inc Earnings Call

Question: Tien-Tsin Huang - JP Morgan - Analyst : Yes. No, it sounds like a good fit. Thanks for taking me. Thanks for taking my question.

Question: Sanjay Sakhrani - KBW - Analyst : Thank you. Maybe just to follow-up on Tien-Tsin line of questioning. Appreciate like the macro is sort of weighing against the results, but maybe we could just talk about what could drive the upside from here. I know you guys mentioned buyback M&A, but is Gringo in the guide now for 2025 and just any contributions from some of these priorities or initiatives that you mentioned, Ron?

Question: Sanjay Sakhrani - KBW - Analyst : Great. And then, just a follow-up, maybe on Corporate Payments. I know Ron, you talked about there's still some work to be done in terms of pruning. Maybe we could talk about like sort of where that would might occur, how that could impact the business? And then these initiatives seem really exciting, especially the Multi-Currency Account product. I'm just curious like when does it fully scale to a run rate that's material. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 10:00PM, CPAY.N - Q4 2024 Corpay Inc Earnings Call

Question: Sanjay Sakhrani - KBW - Analyst : Great. Thank you.

Question: Andrew Schmidt - Citigroup - Analyst : Hey, Ron. Hey, Tom. Thanks for having me on the call here. Great to see the sales momentum. I was wondering if you're seeing any benefit from some of the sales changes you've made the reorg, the rebranding, obviously hiring a CRO. Those things are relatively recent. But has there been any benefit there? Or is it sort of existing business momentum that's driving things and more to come? I know you mentioned doubling down in the US that seems additive. But just curious on the sales initiatives. Thanks so much.

Question: Andrew Schmidt - Citigroup - Analyst : No, that's great to hear. Maybe I could double-click on that. The Payables Enterprise win, to go after that enterprise TAM, are there product adjustments or go-to-market motions that, that need to be updated, maybe walk us through if there are things that need to happen to access that TAM, I know sometimes capabilities can differ between different sized clients. I'm just curious there. Thanks a lot.

Question: Andrew Schmidt - Citigroup - Analyst : Got it. Thanks so much, Ron.

Question: Andrew Jeffrey - William Blair - Analyst : Hi, good afternoon, guys. Appreciate taking the questions. Ron, a couple of questions actually on Corporate Payments. First of all, can you talk a little bit about sort of your view of Corpay's right to win among enterprise customers? I understand the deal you signed this quarter was with an existing customer. And sort of just from a go-to-market competitive, you mentioned banks and economic standpoint. Can you frame up for us what further wins and/or investments in that business might mean for the long-term growth trajectory of Corporate Payments top and bottom line?

Question: Andrew Schmidt - Citigroup - Analyst : Okay. Look forward to learning more about that. And then, could you give us an update, and I apologize if I missed it, Tom, has said it. As to what portion of the full stack AP business is card attached today? And maybe talk about plans to monetize ACH and maybe those plans are even more pronounced now as you move up market in enterprise customers. Just thinking about longer-term, how that business monetizes even better than it is today.

Question: Andrew Schmidt - Citigroup - Analyst : Yes, exactly.

Question: Andrew Jeffrey - William Blair - Analyst : Okay.

Question: Andrew Schmidt - Citigroup - Analyst : And just from a monetization standpoint and we could talk about off-line, too, if it's more appropriate just trying to understand how you monetize better going forward around non-card in particular?

Question: Andrew Schmidt - Citigroup - Analyst : Thank you. Appreciate it.

Question: Darrin Peller - Wolfe Research - Analyst : Hey guys, thanks. Maybe just on the -- I want to follow-up on another question on the corporate gaming side for a minute, just because this is a big contributor. Number one, I mean, I know it was asked about divestitures before, but in terms of having the right mix of assets, Ron, number one, are you where you want to be? And then, number two, maybe just give us a little more granularity on what you expect the building blocks to this strong growth rate to be for the year. When you think of whether it's the AP businesses or the Cross-Border businesses or the T&E, et cetera. Help us understand a little more of a sort of sub segment level expectation and where you see yourself winning most in that segment if we could start there?

Question: Darrin Peller - Wolfe Research - Analyst : Makes sense. All right. And just my quick follow-up would just be on margins for a minute. When considering just the US sales effort and the build-out on the investments, I mean, is there any implication about limiting margin expansion? Maybe just give us a little color on what you're expecting for EBITDA margins over the next year or two to then as you build that in.

Question: Darrin Peller - Wolfe Research - Analyst : Fair enough, Tom. Thanks, guys. Appreciate it.

Question: David Koning - Baird - Analyst : Yes. Hey, guys. First of all, just a question on the Lodging business. I was just looking at yields. The last seven quarters, the yields have kind of been in the $13 to $15 per room night. In this quarter, it was $11.40. And I'm sure it has to do with the mix, but maybe describe that a little bit and then how you kind of see the mix in the yield into 2025. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 10:00PM, CPAY.N - Q4 2024 Corpay Inc Earnings Call

Question: David Koning - Baird - Analyst : Yes. Okay. Thanks. And just a quick follow-up. I know you mentioned some kind of one-off benefits in Corporate that helped to drive the 26%, but maybe bridge kind of from 26% in Q4 down to high-teens in the next few quarters.

Question: David Koning - Baird - Analyst : Got you. Thanks guys.

Question: Ramsey El-Assal - Barclays - Analyst : Hi guys, thanks for taking my question this evening. I wanted to also ask about Lodging and the -- which is recovering nicely. The 2025 expectations are still below the longer-term segment kind of growth profile and trend. I'm just wondering if we should expect that Lodging business to revert over time back up to the normalized historical growth rate. Or has there anything changed in that business in terms of mix or growth algorithm, which might cause it to grow slower than historical precedent?

Question: Ramsey El-Assal - Barclays - Analyst : Super helpful. Thanks, Ron. And a follow-up for me on the expanding payables business into Europe. Similar question as one before about moving into enterprise with Corporate Payments. What do you need to do there? I know you've got assets in Europe do you have to hire? Do you have to build that technology? Can you cross-sell to existing customers? Just a little more color on the build-out to get that product overseas. Thanks.

Question: Ramsey El-Assal - Barclays - Analyst : Thanks so much, and best of luck to you, Tom. Nice working with you.

Question: Nate Svensson - Deutsche Bank - Analyst : Hey guys, thanks for squeezing me in here. A few questions on Lodging. So I figured I'd ask about the other problem trials for North American fleet. I know the last quarter; we talked about that business returning to positive growth this year. And Ron, I think earlier on the call; you mentioned that U.S. Vehicle Payments has started the corner or started to turn the corner. I guess the other thing that set out with that U.S. sales number in Vehicle Payments, which I think was 60% in 4Q. But I guess, just taking that all together, hoping for an update on your thoughts and visibility on that business as we sit here in February for the rest of the year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 10:00PM, CPAY.N - Q4 2024 Corpay Inc Earnings Call

Question: Nate Svensson - Deutsche Bank - Analyst : Got it. That's very helpful. I know there was a question earlier about Gringo. I think that's an interesting acquisition. So I don't want to ask about that again. But maybe I can use that topic to segue maybe a broader update on the consumer vehicle opportunity that we've talked about. Obviously, you've got a ton of things going on in the business these days, but I still think that consumer would be of an opportunity is an exciting one. So maybe update on how things are going in the UK with pay-by-phone and maybe with the road map for that sort of new business opportunity looks like from here for expansion in the UK and the US.

Question: Nate Svensson - Deutsche Bank - Analyst : Thanks for the question guys. Best of luck, Tom, we'll miss you.

Question: Andrew Bauch - Wells Fargo - Analyst : Hey guys, thanks for taking the question. I know that you've called out and you made very clear the macro impacts to the EPS number. But maybe if we can kind of just separate fuel and FX rates, things like business activity confidence amongst your client base bookings, how would you characterize what you're seeing today, what you saw in the fourth quarter because there's various data points that suggest optimism is picking up. And I'm just wondering how that could kind of translate to your outlook?

Question: Andrew Bauch - Wells Fargo - Analyst : Yes. Of course meaning kind of separate the two, just one housekeeping note. The M&A contributions you're calling out in '25, $131 million in the bridge. If we look back at the deck when we did our M&A call in the summer, I know that you're pointing to $200 million of revenues for GPS and Paymerang. Obviously, I think Paymerang had roughly $25 million, I think; we were calling out for 2024. Just trying to make sure if that $200 million kind of pie in the sky goal is still the right number for those two assets?

Question: Andrew Bauch - Wells Fargo - Analyst : Alright, great, good luck Tom. Thank you.