FleetCor(FLT) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q4 2023 revenue of $937 million, up 6$4.44 million, up 10%, and EBITDA of approximately $500 million, up 11$3.8 billion, up 10%, with EBITDA of approximately $2 billion, up 13$16.92, up 5% [14][17] - Organic revenue growth for the full year was 10%, marking three consecutive years of 10% plus organic revenue growth [14] Business Line Data and Key Metrics Changes - Corporate payments revenue grew 15% in Q4 and 19% for the full year, with direct business growing 19% and full suite payment solutions sales up 27% [33] - Vehicle payments organic revenue increased 5% during the quarter, with strong performance in Brazil and international fuel markets [18] - Lodging revenue was flat in Q4 2023 but grew 12% for the year, affected by softness in workforce customers and fluctuations in airline and insurance verticals [19] Market Data and Key Metrics Changes - The company ended Q4 with $1.4 billion in unrestricted cash, up$300 million from the previous quarter, and had over $800 million available on its revolver [20] - The leverage ratio was 2.4 times trailing 12 months EBITDA, at the lower end of the target range [20] - The company expects US fuel prices to average$3.65 per gallon in 2024, which may present a headwind in Q1 [36] Company Strategy and Development Direction - The company is focusing on deepening its position in corporate payments and building out its vehicle payments business through successful cross-selling initiatives [29] - A formal strategic review concluded that keeping the fleet and corporate payments businesses together is the best way forward, with a focus on repositioning the vehicle payments business [16] - The company plans to rebrand from FLEETCOR to Corpay in March 2024, marking a new chapter [30] Management's Comments on Operating Environment and Future Outlook - Management characterized the macro environment as neutral, with slight benefits from FX and interest rates expected to improve [2] - For 2024, the company projects revenue growth of 8% to 10% and EBITDA growth of 10% to 12%, with cash EPS growth between 14% and 16% [36] - Management expressed confidence in the vehicle payments segment, anticipating mid-single-digit growth driven by new products and consumer initiatives [49] Other Important Information - The company launched four new products aimed at enhancing its service offerings, including a comprehensive business card and fuel card solution [31] - The company repurchased approximately 600,000 shares in Q4 2023 and plans to repurchase $800 million of shares throughout 2024 [60] Q&A Session Summary Question: How is the company thinking about extended credit in 2024? - Management indicated a cautious approach to extending credit, focusing on larger prospects with better credit profiles [22] Question: Can you provide more color on the Q4 headwinds? - Management noted that Q4 headwinds were primarily timing and weather-related, with expectations for improvement as the year progresses [28] Question: What are the expectations for revenue growth in 2024? - Management expects sales growth to remain strong, with a target of 20% growth in corporate payments, supported by improved retention and new product initiatives [44]