FLT - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to the FLEETCOR Technologies, Incorporated Second Quarter 2018 Earnings Conference Call.

As a reminder, this conference is being recorded. I would like to turn the conference over to our host, Mr. Jim Eglseder, Head of Investor Relations for FLEETCOR Technologies. Thank you, sir.

begin. may You

James P. Eglseder

on share. and This we now calculated than everyone, and companies' income to income, quarter a with updated basis, diluted for providing us of described. not release information, comparable Throughout revenues, be information joining release be non-GAAP the may on on adjusted www.fleetcor.com, Good Relations including be GAAP Investor should thank guidance press financial and XXXX adjusted presenting non-GAAP today's have and directly non-GAAP and reconciliations per By previously section. found can which you GAAP Also, is supplemental GAAP conference second net our website access with today. we net at accordance and under in call, in reconciliations. afternoon, along this as both presentation, you information Quantitative calculated our are information will other to differently adjusted press most financial our historical appears the information. website non-GAAP

fee differ not what therefore, are and should actual the expect. They results to materially XXXX business everyone unauthorized new are to-date. numerous begin you statements access includes we remind risks investigation undue not need forward-looking them. to company's statements. discussion incident part about assumptions the include of future we could remarks, including development our statements and uncertainties our of I acquisitions, before our to today of performance, and This regarding formal products will respect from cause Finally, to systems, initiatives, and the regarding that expectations forward-looking guidance, and with to reliance the results subject guarantees which These put upon

Chairman are today's I the Some XX-K documents on of on would Exchange those on to turn Annual the at www.sec.gov. out with and our are X-K of Ron our way, CEO. Report call that over and With Commission. and filed the Ron? Form our These in available and website to press release Securities Form mentioned Clarke, on like risks

Ronald F. Clarke

Okay. Jim, subjects. and today. call Upfront to for everyone the thanks thanks here, cover plan I two joining

I'll about second, that the in the along progress guidance quarter we're perspective talk positioning And I'll for updated long provide first, XXXX. the FLEETCOR So making with my term. on for some

Okay.

So on adjust We quite revenue million, QX revenue and expectations our reporting both quarter, that's XXXX if the to XXX. ASC you QX our results per good. were in outperformed up of earnings, internal $XXX XX%,

was Our up XX%. QX EPS cash $X.XX,

top So, XX% line. line, XX% bottom

cash XX%, profit So, XX%. XX% been now three EPS the growth of have quarters and last

not not versus bad. particularly our expectations. So, macro The quarter helpful this

spreads good rates So effective tax although worsened a bit the rose quarter, worse rate considerably, a interest than FX we enjoyed planned. and pretty even narrowed in in prices our fuel came bit,

revenue in resulted and quarter our of macro total, factors about of million in guidance. these in negative the cash negative $X.XX So impact versus $XX approximately EPS impact

So, the macro results bit. our hurting a

penciled me run Let and organic aggregate, quarter, in X% in the growth to out which just through revenue at that. turn

was growth growth card fuel grew QX. Inside that, XX%. card X%. improved to X% from International organic in So X% first, of fuel Russia

fuel business business America, North grew in Here cardlock trucking up. our way XX%,

direct up up Cambridge our posted XX%, XX%, way GFN business, that, good virtual up our there partner way, XX%. negatively good remains the payroll of the quarter, Unfortunately, Chevron and vertical mid-teens business offset card our business Corporate So, lots conversion local core Inside very card last still card Payments, of fuel U.S. by the impacted up. growth. weakening business year's the performances. portfolio. construction and

impact the sales the higher for The helped So quarter, XX% spend store quarter, transactions by driven healthy. along did there. tags X% hotel booking in tool. remained customers. little average driven new with Toll over our up from plus digital which above depress by hotel there, basis Lodging was up on really QX, grew revenue very the and last subscription SMB was Corporate over prices rocked And volume, The terrific, solid year. higher quarter because over was good, up very large of That the strike tuck-in The QX the Payments. in XX% The XX%. that in higher-usage last in segment by summer our Toll Toll, truckers but or had room same X%. volume, X% XX%.

cylinders. all on firing Lodging So,

business, card quarter. XX% decline gift the not posted in a Our so good,

the processing Fortunately, the are which and in and year. ratable, core transaction come prior with revenue, volume plan flat did on

the QX. of decline, big got all some card to all orders So, that the softness was attributable into of pushed

is year of view SVS full year is flat basically just timing the a XXXX. our the that XXXX really for decline full and So, be with should issue

In in the positive. trends terms quarter, quite of

customer our makes XXXX New XX%, of again than of since XX% card sales plus. $X before, We of X%. card $XXX about growth repurchase plus the in more Customer at that That sales, consecutive new above to the business, quarter. versus up ever XX year. a And prior Same-store retention, fuel brings new repurchases inside did stock record level positive quarters fuel that, million about XX% of sales. FLT billion. so

to another $XXX a named recognized Our good Feels to also We're S&P delighted our work increased buyback performance for a of and Index. meeting our hard authorization million. board last of in the time. long period XXX consistent be over really lot to be by

quarter, good card look, improving trends, good profit the and good really organic fuel sales and retention. the revenue growth, good of story and growth So

Okay.

Let over me year guidance. to transition of rest our

the midpoint to EPS So, $X.XX today we're raising guidance year cash our $XX.XX. by full at XXXX

So, profit price. had macro Important than guidance result a quite million note to rates, approximately negative macro, weaker now the performance that will XXXX. the year. $XX assumes growth the both rest in interest fuel to offset would a rest impact pretty environment unfavorable bit days year this year $XX Despite estimating sound, though, ago. more updated XX% FX, second the revenue XX weaker full updated which thought, half guidance say, We're for in should of full the $XX.XX of we predominantly more fundamental year, the of by than of of million be driven the favorable worsening bit

expect some lap growth We accelerate X% QX likely expect overall to non-fuel and and organic about revenue of contract XXXX number. growth the by lines year the into to in second pricing range and organic QX in growth X% moderate and fuel card our a QX, year, to the X% We do mid-teens XX% half as some of absorb full to likely renewals. rest big business they organic

Okay.

long-term talk the growth. about gears and bit for positioning me shift Let a really of FLEETCOR sustainable

areas. few a So,

portfolio in we which sandbox up is the or play. first the So

you started most a look more of as business out diversified So, company. now provider pure and know, payments a we as fuel card like

and even a and business whole cards fuel food, commuter networks; So, addition to in hotel, really line specialized initially, expense cards. parking, of so payroll, fuel, now cards toll,

we've and of then And the even or second, AP. payables spend pay variety international Payments a categories. general digital So, automate with entered space Corporate to AP offerings

a new So, that a much, and sandbox market this the certainly obviously, newer has runway. well areas, potential larger a much in categories. gives doing We're, diversified bigger creates longer the company

We that of lines could for overall hope got play, explore company's the still over continue to business Continental non-fuel do. accelerate portfolio three and We to specifically growth. we work more And Our a which geographies new SVS XX% help we Europe in idea in Asia. to the year-to-date. extend the do growing

So and look, company. structuring diverse lots more a progress, of bigger, broader

Second building global of machine. a in area is progress sales

doing spending in us, third-party through hundreds and is selling investment pretty and sales beach good efficiency company digital millions sales good investments partners, soften companies. of merchant also sales insurers about in explore and pretty of channels; think selling in big were now of business $XXX to partners. fuel demonstrates will million for field making we're that ways sales the to of like management easier. this we digital through dollars reps, asset we rotated built So, And pretty most-important hard machine. year, also our travel We're a make approximately even are retailers substantially. host the each Those new pretty telesales We're a And that it We're new a winning. global a single to to of sales a year is including card getting variety ours, all group really reps, year. this We've productivity, enablement. and from of so that In channel, from acquirers, sales new digital. new the with XX% channel sales new channels, that. investing QX, up We're sales opportunities

it asset really we're the line developed and impressive build making to we're in And front continuing progress front, So of going and every on pretty look, have then business. experience out. and initiatives customer good new lastly, sales product a on virtually we've pretty

our offerings local gaining and beyond in OnRoad in construction form take trucking, we talked our trucking fuel, they and about the accounts from AP are our now fuel general of Those programs, Both BuilderPro Card. So, have. business. literally we of We're that That's those and AP program; and our fuel quite traction companion revenue customer, card a clients exciting. or just launching payable the so an to call would spend designed what capture doubled card. our the

we've a technology card In and implemented campaigning and customers card here take of refueling Brazil, before program simple non-toll to XXX,XXX in the the for I UI are First. we've which toll for is So, about segment our target on parking, UK us. really big for mentioned a unserved rates Fuel early and launched users, That's to new take repurpose good. that our and it fuel

process So, acceptance building fuel we're in the network. out the of

we're locations. and payments. a on So, working double testing accepting stations food we've starting lot the We're fast got parking out even and Shell plan we're now to XXX Petrobras to build acceptance, our

AP growing Pay, every big have we've our the users, that Corporate ASAP, In business, and so hotel, all quarter. opportunity. for did outsourcing service out small tool target that hotel payable for booked, So, our fully is has. of complete rooms rolled now bill networks every SMB officially so a the the a automated toll is idea responsible to launch non-toll In beyond company solution, we third digital booking of extended

potential again product unserved market so, all to segments. customer initiatives And the these us of serve allow and expand

So new of company big them. expense acquisitions, clearly the yes, at look, segments. finding we're cards host We're introducing our buying products core, and building machine business at line also in we're pretty networks, and to global a pretty specialized card revenue, a of a but good closing, of expanding them still fuel. fuel customer We're still them, up open XX% beyond we're our consolidated and improving selling about

So, these and better, sustainable a aimed are activities we stronger go. all company more bigger, at of building as

think All we well. right. that So bodes

Eric call quarter. let back with So Eric? turn to that, over me pick to the on the up

Eric Richard Dey

Thanks.

via XXX numbers, I of the modified on has remind new did that discussion want to I Under started not XXXX. my method recognition quarter, the ASC get I a to restated. everyone company X, In adopted January I as in this last Topic two follow, revenue method will revenue ways. effective about retrospective XXXX are Before adoption standard talk revenue the results

ASC a compare revenues prior the using XXXX using as the way XXXX new using we never have compares standard. And XXXX historically revenue will First, convention, XXXX XXX XXX it. presented adopted, and discuss the so for to standard was if I GAAP can which ASC new then you

on Now quarter. the to

million $XXX For second under the to XXXX. the revenue of quarter standard, quarter $XXX.X compared of the basis up a XXXX we X.X% million, of ASC GAAP on second reported XXX in

of in certain second As a standard. now resulted and of commissions prior versus $XX third-party are million approximately expenses a processing in revenue the XXXX quarter which the reminder, against netted reduction in merchant revenue,

XXXX net ASC prior in revenue revenue of provided the quarter X or also net For $X.XX of income and compared as standard the million second $XXX income to XX.X% to the share income, revenue to quarter in $XXX.X numbers impact compared press of net or periods net increased provide discussing for of GAAP cash million, XXXX. income compared XX% comparable increased XXXX, we'll were revenues $X.XX release the income quarter XXXX. $XXX is net to share net XXXX income Non-GAAP between the excluding we million increased second adjusted and sometimes Adjusted to GAAP adjusted $X.XX the of XXX metrics per per per or $XXX.X up X Revenues in $XXX.X the the income share second XXX diluted million new of excluding cash the that amounts EPS. our refer to new diluted the net quarter XXXX. the convention of diluted $X.XX our to $XXX.X provided using diluted XX.X%, impact in of adjusted GAAP standard quarter second share and from ASC be quarter reconciliation in to A per Exhibit are second million press financial million XXX which of ASC of adjusted is in to to of release. Exhibit in XX.X% second

reflect Fuel were in negative foreign environment particularly million. results of prices by compared favorable precisely We impacted a spreads And negative a impact the impact the impacted the quarter, about fuel quarter million. exchange we $X and end Movements quarter. of mixed the quarter had with mostly negatively approximately XXXX. of impact revenue $XX million were second Second the in the primarily believe, towards macroeconomic revenues these the finally, during cannot we calculate by changes, quarter the it although approximately positively $X of believe during rates quarter.

exchange of our second quarter categories negatively movements major the during impacted product We Most compared growth, approximately X% the during driven second Relative well $XX our mostly to by solid by primarily in delivered performed our million with quarter prior of of revenues in unfavorable overall. up in part in changes guidance, our second were foreign revenue So those the quarter. of the the to neutral macro organic quarter. XXXX. approximately quarter latter rates, quarter, Brazil another the total,

if X% approximately impact quarter. and Our of of the not a XXXX fuel and issue in have negative X% the to growth been portfolio rebounded MasterCard Chevron in or the card business would the portion conversion for

of lapping XXXX the by well growth are range of second the year. the our As to on of upper-single-digit way and end the expected, the normal issue started quarter the at we of end conversion

in driven by category which Payments produce our to well Payments Corporate Our good and very during Corporate XX% continues was to and growth quarter. organically Cambridge perform both results. up was The continued Comdata the businesses,

throughout up and XX% a at business primarily XXXX of XXXX growth Toll number implemented was due STP. Our to organically initiatives

rooms to Lodging impact Our in nights card finally, of of down room and XX% timing up orders And the FEMA our growth. business increase impact XXXX, business of second received in primarily FEMA of due primarily we receive organically number card X% In The approximately a continued of hurricanes. the about XX% from driven gift was quarter the the which quarter third in by contributed was an the orders. XXXX. to to due quarter expect we the

you our revenue revenue of calculate assuming businesses. very organic calculated summary, ASC growth organic growth nonfuel implemented has in in good in So, another was consistent a quarter that been XXXX for remind XXX both periods. I would that standard to January in using order

XXX Included total Now second in million of second the of moving certain approximately XXXX compared of against revenue. the income $XXX.X XXXX. of $XX down the the quarter were for quarter $XXX.X and the was to statement, in commission impact netted quarter second million ASC which operating merchant expenses processing expenses million

second half would been the in to due X.X%. completed expenses was XXXX. operating of approximately impact, this Excluding have primarily The acquisitions increase up

of Additionally, with previously conjunction the access. we in incurred expenses announced $X.X unauthorized million

to was quarter XX% of the XXXX $XX.X in in and XXXX. amortization expense $XX.X expenses $XX.X $XX.X Credit million revenues, compared total XX.X% operating increase of the ASC Interest second primarily quarter XXXX. expense basis X the quarter the of completed percentage in second million of increased increased XXXX. million second quarter would to to were percentage have X% in $XX.X of the to XXX, in quarter XXXX. XX.X% of the acquisitions excluding The due The a in were second to points borrowing impact quarter points XX.X% for approximately from second second the in basis additional compared XXXX. total to increases been revenue expense second Depreciation interest Again, and as the and $XX.X or the million acquisition was to compared LIBOR XXXX. primarily losses quarter million increase expenses or X Cambridge buybacks. of due in share million for operating As a of in

Our U.S. for effect which X, to XXXX. rate compared to quarter second XXXX XX.X% on due the for quarter reform, effective the the of tax of XXXX. second The tax into in effect primarily the was went XX.X% January reduction of was rate tax

reduced the income result resulting tax The to XX%. the statutory taxes partially to of tax reform. XX% U.S. tax tax the rate both in to rate GILTI new from reduction due tax from by As was a higher U.S. the effective was income in offset reform, federal federal our taxes rate change higher federal U.S. statutory related state and

the is balance consists ended primarily we quarter the in million of total $XXX to with Now, and approximately turning customer cash, $X,XXX restricted sheet, deposits. million

on we XX, undrawn had and revolver outstanding of term million our June of availability. XXXX, $XXX and million $X,XXX approximately As loans

also quarter buyback of stock We million the securitization an in facility second had quarter. in approximately in our purchased $XXX X,XXX,XXX million total and $XXX share board We increase the million. authorization authorized at capacity. million approximately have common now for The borrowed we $XXX $XXX the the in of shares end has additional

leverage ratio credit our maintain As pay calculated was cash times and excess the our acquisitions flow of below liquidity as on XXXX revolving future level corporate June EBITDA our EBITDA, under facility to We is down our securitization credit X agreement. for X.XX times well XX, other which and facility of and to our temporarily intend purposes. balance covenant use

capital-intensive a of quarter Finally, spending on XXXX. we approximately are business, CapEx million during not $XX.X second the

for XXXX. the Now on for update to outlook the

million macro favorable more expect will approximately reflected year. full year over-performance raising on than second is overall updated quarter $XX movements remainder $XX we results news of even We in guidance. to offset The unfavorable to foreign we through prices the Brazil offset macro the reflect revenue second the which million, to of revenue in the during rates exchange in continued guidance is the believe the negative mostly good our an half our impact in of can outlook expected impact producing regarding count lower with quarter second our guidance. of expenses the fuel to that unfavorable Please lower prior strong in call and part latter that our information believe now refer businesses, unfavorable additional for We are supplement some compared earnings quarter second the from impact XXXX our share our second the a half. we for

and be be between $X.XX So ASC million million; the to $XXX income and of XXX adoption $X,XXX to $X,XXX is XXX $XX.XX. our and to adjusted between way, the revenue revenues million impact share of between follows: $X.XX; net of million million and be net guidance be and with adjusted net be total to the diluted that million; and $XXX ASC out and $XXX $X,XXX excluding per net as between including income to be $X,XXX between million; diluted between income per income million; $XX.XX share to $XXX

equal shares; no XX% exchange tax shares expense rate the outstanding July XXXX or average; diluted average not weighted XXXX; of Some acquisitions rate of to seven-day in a the the XX%; to equal million to preparing in the the related equal to include fuel million; of agreements and foreign have businesses material we the following: prices market interest in fully price the to year; per average $X.XX XX fuel new for spreads disclosed. partnership as the the for approximately balance U.S. retail movement assumptions gallon X, guidance average impact already to those of $XXX of made of the sensitive of

the I sequentially profit fourth everyone third fourth and the In remind in year, builds want and guidance revenue profits higher that quarters. normally terms the resulting in and and to third company's of revenue throughout the quarters, for

expecting be last Solutions income quarter, unauthorized $X.XX. business. we reported the update to an I of involved Stored that share you range want the access adjusted diluted give to in the the to primarily And on quarter finally, third net For are company's $X.XX per Value

known enhancement contacted activity. technology in has findings the on As open access. investigation reported what a took further the prevent to and forensics engaged concluded. future With to we company law report be counsel been action also it terminate affected. assist we was The and earlier. prompt and merchants company external of reminder, federal And the The based a do for we'll investigation, now the We through enforcement information to have the of to that unauthorized not up company that was investigate remediation our and investigation access unauthorized properly experts limited expect can on the and systems of The to operations. material access the said, unauthorized questions. believe to company's impact operator, the results unauthorized the

Operator

be Thank we this will session. you. At conducting question-and-answer time, the

William coming Please is question proceed with Bob from line first Napoli of the Blair. your with question. Our

Robert Paul Napoli

outperform afternoon. you the macro? expectations Good adjustments, your guidance to you adjust Good you. versus despite job on quarter. Thank the fundamentally did the to enable The where guidance negative

Eric Richard Dey

a rates Hey, FX obviously, the are macro. unfavorable some Brazil, Partially half Yeah. number Eric. bit things heard causing mostly talk driving Bob. which the of in in that's is offsetting million revenue One, $XX a it's Obviously, over-performance us – macro the of about million This it's second continued you $XX about over-performance in to to by of through guidance. so couple We're Effectively, to little help that headwind, addition is offset to have – specifically that perform well our Payments the businesses, and businesses going businesses, performed half. the we're our expect the half. our lower a those second of to the continue in going Toll expenses. that, we like first Then some of Corporate well to that businesses see have to impact more macro.

revenue rates. mean, impact by our rates, by because are being I favorably is If recall, our FX impacted unfavorable FX expenses you unfavorable

effectively lower that's expenses our in second driving the So half.

lower little half – lower the in of share unfavorability about share as we're of other revenue half areas have to finally then in we'll the the expenses expense FX in from well. And back buyback. some going And then because claw in second again, in second the half. count spending So a a

Ronald F. Clarke

Ron. it's Bob, Hey,

the in just me of Let about it's quarters. add, $X.XX. next about macro two We're $X.XX absorbing

Robert Paul Napoli

term, segment, around we and revenue guess, make And if if faster, longer the And further what growing I look versus organic thoughts down it Okay. just a on guess? your expand growth just And you the follow-up Thank thoughts break forward to was to are the wanted by non-fuel? to difficult I growth. fuel question, non-fuel by, it but XXXX organic margins, as would that you.

Ronald F. Clarke

Yeah.

of at I digits of think if the better you last the in Bob, obviously, high-single in kind non-fuel. and, look fuel years, couple been we've

And so, in my teens we it, to earlier, comments expect said mid the the in non-fuel I into call three lines. moderate,

and that So, our yet, think I we traction these started haven't think forward. mix like more we some plans upside. SVS business, material would could going up And XXXX assume again if add-on with I second, those that we new some lift. ideas traction, And get have. would but to the then sooner, If be this another upsides could be I get come solution we that

digits some fuel, the acceleration the I'd from say, then high-single So wildcard. for three, programs, maybe and for the teens pre-budget, new other SVS is

Robert Paul Napoli

Great. Thank it. you. Appreciate

Operator

question. ISI. Evercore next coming is proceed David with the Thank of your Togut with line you. from Please The question

David Mark Togut

Thanks. Good afternoon.

Eric Richard Dey

Hey, David.

Ronald F. Clarke

David. Hey,

David Mark Togut

at for Pretty Europe what then announcement, through M&A? with look organically Europe, significant calling growth wondering Europe you Shell. both the I'm you've and Ron, major Asia. plan But as out and the and Asia, then beachhead are opportunities a Continental major expansion got

Ronald F. Clarke

months in Asia, in the say seeing build. via of put versus get Yeah, or feedback. on but I'd greenfield to we're nine not is in same last six David, difference the partners, energy more drill, positions better we're we've acquisitions, only to trying kind right, either messaging the a

that of just I'm our minds the world forgotten haven't and may put break So, that part on that people's we way in to that side. something trying

– did I'd nine looks, a months the is Asia more think, I the six activity or ago. that's So, than bit say it difference favorable

David Mark Togut

organic M&A mostly And is or through that growth? opportunity

Ronald F. Clarke

a M&A partner an not organic, either deal. or It's it'd be so deal

David Mark Togut

had virtual for work to And in MasterCard been. in curious, I'm make with payments, standpoint networks I Visa be as been seems the in then of negotiating you WEX historically think have it. a to bring Corporate does with as you it Payments virtual a Visa from push WEX bigger announcement just payments? principally just Got with both making the sense you and

Ronald F. Clarke

Visa. is Yeah. the Actually, friend mine good a of of CFO

a deal. it's with have. we're the I MasterCard the say pretty would with we that relationship, happy people, So, relationship with that the

never say I'd say So, never.

obviously MasterCard. in the with pretty we're them. one So, same conversations happy But end, with

virtual I of we're commercial cards MasterCard's issuer look, about all every largest second last, MasterCard product half U.S. business. the card across I think of we're think And of line.

us we're side. because relatively the they think I them important on to commercial like So,

David Mark Togut

Got fully final do a lap where topic, year? it you year on a exit question from become it. point MasterCard ago is you even the card tailwind there MasterCard Quick conversion when as the and the could a

Ronald F. Clarke

Hey, it's Ron again. Yeah.

that So, slide. looking at I'm actually

– page said say that QX be looking I'd So, And a QX. a negative was in QX. still it positive I'm in turn it is we it negative that reported. a in It'll will at that

the turn the the is boat anchor is that So, making that from plus part of in QX minus to the reason we're outlooking, it, finally plus call X% organic column. fuel into that

David Mark Togut

you Understood. Thank much. very

Ronald F. Clarke

you. to talk to Good

Operator

coming JPMorgan. Thank the with you. Please is proceed question. your Tien-Tsin line The question from with of next Huang

Tien-Tsin Huang

some afternoon. to good performance, Hello, want non-fuel guys. – I Good obviously.

down much Toll again, tied how again. of but XX%-plus See is to were So, on the Toll business front, transactions volume that subscription? revenue versus the is

been question to better trying model that because just So, we've getting that lot. a

Ronald F. Clarke

it's Tien-Tsin, Ron. Yeah,

tag not the but again, So all, there majority majority, the of based. the model is

You pay a fixed amount for for tag a a month.

And out QX. in prior that tags for I versus our we X% the active QX so, called grew is bill that what

X% at your So, said, a I best print is think, to transaction And a negative but in to I volume. transactions, were get, base count. do think had impact call metric about sensitive the we the now for that's strike, down our bit, transactions. revenue it, of XX% the point, With mentioned, that I

X% toll not X%, a revenue So, parking selling. – we from it, think growth, then, which is tag grown, incremental and really transactions the and more stuff. call couple trans up picked is would obviously, have obviously addition in fuel, to And which

parking to it, to be call fuel increment number And particularly high revenues. put that. spend revenue pick then say, is a then the the tran, we've the that we again the incremental more the get was that, spend of a a money product half some I'd paid out a And XX% call use and put place of incremental other for So balance X% and lot program it, month from and the bit a in would trucking XX on times couple basically clients tags, usage, is get the program.

Tien-Tsin Huang

Yeah.

that. for Thanks Okay.

up durable with macro – it's your I how about and has just aside thing to but outlook more hard But appetite it inorganically? level pretty what's that in describing. organically to Brazil, has your changed? – FX situation, outlook higher that say election So, what's on given aside mix there changed? it's to you're the and your FX Brazil, know into or bring going do And there with a the

Ronald F. Clarke

mean don't I it's I And X% or a it bit big million the I that plus But the everything a you guess election year. think still on it's it's think economy we're zero that frozen, difficult. Yeah. day's for and when I'd do. times it way X% I a said in front fall. full plus I early a things to we back, in say still is the right, of are have step but payments with long still I've it. market question. for me, good the

are. Half One in ours Edenred. their and of of are profits is not market our half that comps kind of

side the instability. I'd So, like because say others, like we Tien-Tsin, the of it hope we can still other this lot that and get of a to potential,

Tien-Tsin Huang

quarter, a which to how that from one, XX%. said over tool, booking room you here? third great. up last just that work. (XX:XX)... to the going here, curious benefit question That's you sorry but up Is improve sustainable Could Okay. just take beginning? The that digital was was I'm volume last SMB One actually mentioned

Ronald F. Clarke

the rooms fascinating of think even for to years XX% question. group to themselves the been which tool. one-third that product, the And a them for The those – booked example, the we've Of this another XX,XXX now great with QX, in. I fascinating long accounts, signed this is companies tool. trained that or part in small all mean, is I walk use up brand-new time, SMB that's were around how the use of booking Yeah. is call

use get-go the that people new it from the more. So, hear it

customer to, alone then lift. I we get thing think, as the the quote, So, it second, is, keep the first it more marketing we'll will increase sequentially. mix And base, old

XX% a my out So, with tool. all roll that or of be at year, guess, be XX% SMB you will booked you'll as

Tien-Tsin Huang

the Thanks All update. for right. That's great.

Ronald F. Clarke

to Good you. to talk

Operator

is you. with Oscar Turner coming Robinson with Humphrey. proceed SunTrust the line of The Please next question Thank from question. your

Oscar Turner

Good guys. evening, Hey.

Eric Richard Dey

Oscar. Hey,

Oscar Turner

and can like can fuel how first incremental customers My question to you of to used that on to any many on color growth? then, do is of be you use initiative fuel. them beyond date? card And segment's When what adoption, give the it have it are eligible revenue percent think

Ronald F. Clarke

say I could. Oscar, wish it's I very Yeah, that, I'd it's days. early Ron. I'd say again, still

XX% cards So, company of got right, if about we've XX our – world. around the it, businesses, call fuel right, is you think and, it,

we're of so, different in this different introducing And versions flavors, beyond different places. fuel

business. different So, we than business have have local we our U.S. in business things we our in here U.S. happening UK have trucking than our in

for beyond I different to out, which on trying is encouraging. first good was – call headline is the the are But the is is news what say, depending of approach line fuel a So, are I'd early the the specific reactions business. bit

selling BuilderPro taking are teams four up or companion customers three got card. the We've So, construction still card. this AP

that's to get I So, is question the as of another could back plans, bet. the pace we Bob's point, and have growth be turn end faster. that enough that thing yet. we drive it vector But stuff us. think a I'd model The to the should year of the clearer a into certain materialize for the build if could closer XXXX and not to we're or into faster we long me – the again, our ask two, say, thing. or to want people that three that of earlier, for That's would delta problem

Oscar Turner

Okay. margin the just profit on Thanks color. is for And outlook. the second long-term

which you're have guys growth outlined on, number a of out some You force that building executing acceptance networks. initiatives of sales required or

margin profit we you ability about current as towards maintain these So, even your levels, initiatives? reinvest growth how think should the to

Ronald F. Clarke

We Yeah. of chances those our inching like up.

not business. in profitable press in release enough. I growth the us We're business. well you think know We're the charity

So onboard money. we we can that business try make to, obviously,

fixed. XX%, are; that just would I'd the We so, higher operating have the of have things cause to XX% relatively the company's structures And leverage. still cost A, say us margins

up back going many clients. that same margins, for have us. carry we them these are brought better B, So, because then of sold And to earlier that add-on you things the

of obviously, the its And by so, servicing thus and add-on selling costs the add-on is, and an costs nature, higher. lower margins are

decide investment So, right, innovation the way, sales if I higher other for just or we even to think And growth step investment IT goes I'd say then, up those bode well pace or investment. two things more and margins. of

few if say, ticking the be bit. would two, I'd positive years up forecast next keep it you a So, to those our over net

Oscar Turner

you. Thank Okay.

Operator

with is the Ashish proceed question line your with question. Deutsche next Our coming Sabadra Bank. of Please from

Ashish Sabadra

Thanks.

from in and solid growth fuel pretty growth X% the X% business for fourth about quarter. card the talking to you're X% So

think talk coming as just traction If seen this in can revamped specifically? that on the win, And on headwinds then, you how that the but should effort about the Thanks. What you've same – could the you obviously, we about win? you've really – also talk sales card, you fuel the here also about off, light, are drove sales it? Casey can if

Ronald F. Clarke

Yeah.

on Ashish, the quarter outlooking for question, said, which is, our you is we're say was I'd print acceleration okay, X%. in first mostly the this part what X% confidence of the the and

other turn ago, impact I are the think I David plans to and for me QX asked it in negative said a that about GFN, bit and was a asked way. our

just of ever of this ever So, that level card moving it. past than quarter X% X% that fuel a is sold business aside. of in hope With the more that I you acceleration we boat said, didn't globally – company, literally the record a lot to the from miss history anchor

our kind obviously, of attrition And of fuel is, help of retention where incremental about so, assuming thing the stays adding or it XX%, X%. that retention sales lift will

it's and beyond beyond which about fuel Casey, the get to attractive think or size, an the thing take. Oscar's On fuel, comment Those are did your the then clean; both? three question, again anchor or plans, if aside number. up timing boat the quarter; the part the the asked you b, I get in you – will, we two So to the back to to growth volume, pick third, sales is get so us,

Ashish Sabadra

for what was in criteria like that – the win? drove product the looking what that drove also drove that What and Casey Both, your that win? was

Ronald F. Clarke

got I you.

people first Can have hey, So not a the of partner/private to us, there's able actually it? of I screen. these why all I operate think have on thing? systems a, few you and you label up. think it the be So, the can things us do and similar have goof that They to the a do it

So they that have of would or other systems work. volume can us sell we they can two that we that believe do work. three SLAs Then the look is, And then, reference is obviously, partners, selling our at that growth we can the that price.

I'd say three criteria. main those are And so, the

I them whatever proposal so, the in us price did two Obviously, grow and probably the Citibank pick the or that was be others us. that cards. our to checked people things our other And think one. versus on volume of box the think do I the the then, WEX view first caused to space, that would can ability And

revenues, beginning give although starting year. that annualized and a into In contract. terms the single-digit we QX And I'd looking you millions in of running tell don't client conversion next at individual of we're timing, it's

Ashish Sabadra

much. very for you the Thank Thanks color.

Operator

question KBW. your with question. next proceed from is the The line of you. coming Please Thank with Sanjay Sakhrani

Sanjay Sakhrani

you partnership on closer front and M&A guys question the are to A anything fronts? new on or Thanks. and getting whether those not

Ronald F. Clarke

again. Ron, Yes.

think were on the decided we mentioned on. M&A five yard line the last on I something front, the no with a call, actually that on So I we

are of kind what the use term the the works out. or I'm at list in three now. front But So, say something in closed, of that I got was I'd we've that that we active, kicked looking they're me. four deals

I'll $XXX to million size they're, is one call about them, them, there deal. larger million-ish and in at $XXX then Looking

next So that that on I'd going nothing the announce but say things amid right to in layer now. we're we're and XX days, getting

that partner of forecasting But U.S. here me. We've I'd those. say, that interest of maybe even I've again, got for three you timing this many page front, will same. to have appears give in it's a an year. got again got we've probably but late so couple We've in times I've that a enough the We've the something be things wrong been it guys in that four steer not the Europe. something, or got me something got it On doing the in partners Brazil. front in

Sanjay Sakhrani

Brazilian follow-up on, Tien-Tsin's the those of sort guess, penetration of the look tags on how market the your to response what's much When there? opportunity tags to tag, at – market have of it. Ron, Got question I your your STP. has and growth that we Brazilian just rate vehicles into what's And

Ronald F. Clarke

money that's think collect. have of the collected or but that I to take there's terms of Brazil toll around I me, number at we and toll I so us. think So, look look spend, real collected much all total front of thing in booth a in it. total don't the couple process ways in do by year – toll We XX% what's of from at in every it's then is And in a how the annually

QX. We ones in moving new X that So, the active here per million million about tags down got We we're about per new year. curve. sell Again, about we've X I'd million say holders X year. sell

anyone I'd highway toll our say moving have that month we're on the on lighter the are curve times So, going down a of the that Obviously, users. XXX already tag.

someone more likely or so, that's three we're And to next. going times times five get

go million just the XX like park the don't vehicles on to that stations. go So, the the well and we communicated go technology take idea but that to have go garages the and relationships and parking, Shell with and Petrobras say that cities and around the and idea, which highway, big don't I'd there I other know it enough is stations the if in to – fueling big, big I've

that, on go yet only So like paying for guys mall when at that and toll there look are people to the not company's early highway. parking they stopping when and to people the and returns the a we that far offer service so are on that it go

going company. So to the a or to be a going was not payment We're toll toll when company, we're idea be company. we technology bought our

telling to massive built And again, users message that ought so, fuel times the that got want X,XXX are parking, now. we guys times field start that a users on they've is, in if that on selling. system, XX potential toll We've I'm can third-party in almost retail the you to X of people cue And distribution we you add works, it's fast how And the to not and digital. their particular. the We've to market use built. thing turned

have we, country. the relationships so, with the FLEETCOR station, And fueling gas in three biggest retailers

we bring thing this fair so, chasing amount to a And down.

growth. that's the the That's growth. So,

Sanjay Sakhrani

sense. makes Thank That you.

Operator

next the of is coming Darrin Research. you. your question. of from with Wolfe Please proceed line Peller question The Thank

Darrin Peller

Thanks, guys.

plus MasterCard and you first clear, shouldn't break would fuel should growth or show pent-up on Thanks there in or expect reaccelerate guess quarter, in And plus now we the just be element that to the if some excluding can now (XX:XX) down Just second I GFN product being in the the the swing quarter? kind rate of be this issue quarter have X% Chevron wasn't in QX? (XX:XX) held full up growth from (XX:XX) that, to up off the third I guys. of you during demand X% would be – process again would saying the there been it will flowing were Just (XX:XX). think, X% through

Eric Richard Dey

Chevron, the Hey, card exclude GFN growth organically. category would around of conversion issue have Yeah, the impact grown the we if Yeah. X% Darrin. fuel and

the a have in we're We'll growth quarter we with as that quarter QX. rates or it's exiting space. so accelerating we're previously going to year. again, cleaner GFN particularly So get line – rate to exit that going the of we start And are again, that clear start the the at growth as guidance kind gave X% to in going last we to issue, a in

Darrin Peller

Okay.

Ronald F. Clarke

or you (XX:XX) toe did got so stubbing with impacted We sales our for retail, GFN, on my not time the were bunch oh, of five again, God, the had Yeah, door clients part question a thing coming service – – sold four that say, it's but Ron they bunch was months Darrin, to productivity stopped. that months, closed big yeah, the reps hurt of hey, – don't broken six hot turned only help force. people I'd the got know of customers where we hey, to trying a on I lines the of and you've – you the beard in. GFN of, four at two them into

longer group number And so, to of B, it's that only platform. platform been be And then people of back, products of a that going was way built on getting we A. recovery GFN platform, a the ran we the because thought had new

go the So, back not had. we I that that those platform, forward and put platform to on but to made with the them decision put new on old products

four that So, that or to in. didn't kind have took selling new months us another reengineer they confidence adding three things salespeople, of that, so up

new bank, view a people brand I opened that hadn't the to that people telesales that of in a lived really here wanted through couple not a been away it. people we brands a group and quarter, pain that Phoenix mostly get And really recovery center this clean I – hundred so, a as finally through. demand. new from past pent-up it's it

think every building should volume be now from from is way that you year ago. the getting that farther away a and product quarter need MasterCard to say about problem we I'd it So, sales that for

Darrin Peller

Thanks. All right.

we're that takes pipeline I The fair? Just I guess Corporate just to you but why obviously that. a mid-teens. a if strong even XX%, quick about it that tougher area wouldn't pricing, to follow-up, continues there. sales the still about. and have Am Payments thinking breather quick then so wondering in I'll this business leave I'm I know go be on (XX:XX) it even at an back comps excited

Ronald F. Clarke

Yeah.

category, think fans started huge talking are, think it. and of because I that you you with since we're this been I that size a we've the about we of of

structure thing. I think issue the of for the the was us, biggest Darrin,

in I bought third. it It we of it, two So we quarter amount its had fair a XX% it size partners whatever which it the business revenue. of it another had third of was, a resellers parts bought and had business when healthcare, was, or don't know, big pretty to that when initially, it; and call

going business it's up, on or two volume the of in segments of keep wrong sits that big was three XX%-plus. even smaller. partners, re-priced we even So, healthcare less to was it business even minus, reseller And the second, money. more we of the the although get so renewals Still inside keep getting later, though so that. years XX% healthcare way, QX, those the Well, continues decline goes

is So, a is XX%, to pick what probably and non-healthcare growing I'd number. to the say business just non-partner you

obviously, what to that two saying I'd at my were taking is the away so, construction, from like, were that say are like running we media these general that business favorites – I'm AP. me the verticals we just things where, not and guy And

ring get going us non-healthcare of piece side year see, long this, next be other that It'll would your be the and kind And non-reseller to to the business so, smaller forward. you'll the sometime thing part through out? once ironed will of and How my point, plus a completely be guess. we XX% it's in going take to

doing. So, it's is we're effectively remaking that flight business what in

Darrin Peller

Make Thanks, sense. Ron.

Operator

Jim Goldman you. coming question Schneider Thank The with of Sachs. proceed your question. the from line Please with is next

James Schneider

maybe Thanks of taking question. trends kind I same-store can sales the address you afternoon. was if seen. Good wondering you've for my

go puts industries as up, where you takes talk that's and kind Can in I going, within or you sideways, in think we X% you terms quarter. do the think talked about forward maybe and that? any up maybe of about down of

Ronald F. Clarke

just been this in Pay have had like I'd up those say, of or not at finished, we same-store column. U.S. terms have we and super were of base. the of and Lodging, again. existing GDP that seen, way quarters certainly but that always and three Yeah, terms growth least in in in in stuff, three row now, forecasting a Jim, space in Russia, it's in of the we're Corporate health super-smart the say, QX customer And we plus Ron in the four

modeled I our rest for of thinking what super that's Eric in to the easy and year. been, of it's I really again, gave So, forecast. and kind we the again, to But metric X% a we're of plans X%, things you, not the kind is it's guidance think, the where

James Schneider

with market, it's have whether accounts Completely kind might approach to in that more of portfolio as whether color. the perspective, forward, of And satisfied understand, to think a rearview AP been then, but either talk terms want from you about so payable acquisition then almost Thanks. that overall follow-up. Can year your helpful here, maybe business M&A actually bolster maybe the with kind just going in an you add a Cambridge else? far? you your how – to you size the mirror or assets And of anything of

Ronald F. Clarke

but know earlier a are maybe payments, year players even of I this week love I reason don't That's really well, there good the for delighted. up on as that lots some this done so the slow start, bit a some on we business. international of Maybe CEO people, them to we're Yeah. out call, that got FX bought way happy had the question. XX% coming his off haven't good a growth. there's through of that. got a they grown They've up, I too way, prior many the we up plus couple their outlooking are sales really It over working because things, are company, company. The XX%, mid-teens year. last on told quarters, but

two, from new pay expecting Cambridge people, say of sales happy at are exit see this from the some international tune million of highest Number starting million we to we're our really space. $X we're the people. we're Comdata or the synergies to cross-selling the we as I'd So, in level, year that $X selling the

international the makes along us clients, relatedness AP me, that of about the So, businesses feel that the too, domestic with good obviously, pay Cambridge AP.

automating vendors. we think of structure the you I'd to say those. and the this think on half half fact digitizing in years, at I people whole – And is, massive almost is opportunity. is is so, we're then And that last worked just planet ADP thing and AP, XX And it I both for the we and like other a expense AP,

in And it lot. (X:XX:XX) the theme as the we building ADP coming take will a in we bigger AP is positions have probably company the, the We quote, over space that years. like a so,

James Schneider

Thank Super helpful. Ron. you,

Operator

you. Thank

next Our with with your line coming Please from question Citibank. is Peter question. the of proceed Christiansen

Peter Christiansen

fitting for in. you. Thanks me Thank

Just two quick ones.

little relates competitor with you into pushed as this to us you're First, transition, was like looks factoring bit how off be playing it – your that our remind Chevron might outlook? at well, bit shipping the guidance morning least little there. a a Can timing the just

Eric Richard Dey

have that Yeah. is Yeah, thinking portfolio remainder now XXXX. probably Hey, This we're Pete. the Eric. we'll of for

of of that We built it the to have in. third we've probably, we'll originally from transition we it away next kind mostly fourth were We'll, the So, kind year. mostly as it through now into quarter. forecasting have quarter. through get Then

Peter Christiansen

Lodging is or then on side the either we're in on fuel and the Lodging trucker to comments general helpful. improvements on That's business And all, And if be seeing more on the seems card just the any there the not U.S. articles doing – commentary the you're on fantastic. but shortage Lodging business any at here seeing impacting any It side? more

Eric Richard Dey

portfolio. mean, clearly, side, the the volume I all on we're Lodging increases Well, seeing in over

where smaller As on, traditionally sold down we're area we've in. has business there more in early market, that not focusing are where fleets, said

extremely very been we've So, space. an underpenetrated area successful. in that's And the it's

new lot bit truckers now use as to of a even the starting the we're tool, it's to that of business a more tool a success. So, we incremental of And that we've business going digital rooms to lot booking gaining has and their to of that tool used past. book to And now, lose in we reservations. are lot kind little think continue the adding see a seen to success we're

business bullish forward. very of So, we're very, the going success continued on that

Peter Christiansen

for in. Great. fitting you Thank me

Operator

Thank you.

is question line Research. proceed coming next with of question. Our O'Neill with from Matthew your Autonomous Please the

Matthew O'Neill

hoping details channels partners, was Who and opportunity Ron, just was in is with working you on are sales of guys. remarks like And other new your a any could made Thanks. I the and could acquirers. there? thanks, merchant I that. on around I you curious together? kind you working follow-up Hi, Yeah. what how prepared comment provide

Ronald F. Clarke

Yeah. good question. That's a really

Global I think friends of Sloan I'm – and with Frank. Jeff

guys So I businesses. know their and those of both

they of the last those think over have or of house is, or signed news years a and I XX it, think a kind us, an card going they accounts businesses, transactions. a than card they're way a not And fuel super-important us now call more companies person out new to be could with volumes run low, to construction for super-important accounts paid more billing. the getting of plumbing five up but service So, instead are buy they because because to acquirer, their credit relatively

their So, the businesses I'd leveraging to say the products. of some of base kind in exploring take of existing client opportunity we're service-centric that and our their channel is kinds that's card

our bars And and customers. for fit of kind working, and stuff. some with quite used banks both partner and of to So, work example, obviously, products companies are of their and those ISOs,

And maybe in so, think with work us. I it's their like right wheelhouse to someone

customers and – of the line put So, that's good idea channels, in. product and use some and is to our relationships maybe their

Matthew O'Neill

the working, premature? potentially, well, very you opposite as about the that And think would direction they Thank is much. it. in relationship Got or

Ronald F. Clarke

and that ways Peter I guess, reciprocal idea mean, stuff. both people that them. nameplate talk some They would. and of said they They a call point, are I in help guys just this about and on the lot talked – we about had we some ideas last could smart winning

remind accounts XX,XXX businesses joined to our QX, in sold Just people, new portfolio. we XX,XXX new business

more our people a make selling our buck make for word is selling leave a that new the diversified and ever company. who is business to us you you I name long to business we're this winning, name have, that's winning, call of us, view It'd can want that idea. for not in on than a sure so, be but And winning a list

an FYI. just So,

Matthew O'Neill

much. you Thank very Great.

Operator

time. questions this you. and we and appears additional disconnect thank no today's Thank for And this this lines teleconference. your It have Ladies at participation conclude we you may does at time. gentlemen, your you

Corpay (CPAY) 3 Aug 182018 Q2 Earnings call transcript