CORPAY, INC. Q3 FY2024 earnings call

1. Q3 Results: Surpassed $1 billion in quarterly revenue, reporting $1.29 billion, up 7%, cash EPS of $5, up 14% excluding Russia. EBITDA margins 54.2%, up 100 basis points sequentially. Same-store sales flat, retention improved to above 92%, new bookings growth 14%, corporate payments sales growth 28%, payables spend monetization steady. 2. Q4 and Full Year 2024 Guidance: Expect organic revenue growth to accelerate to 13%, EBITDA margins 55.6%, cash EPS $5.35 at midpoint, sales growth above 20%. Lodging revenue growth to turn positive in Q4, Corporate Payments to grow again. Full year 2024 cash EPS at midpoint $19, 16% year-over-year growth excluding Russia. 3. 2025 Preview: Organic revenue growth 9%-11% driven by recovery of North America fleet in lodging, Corporate Payments in Brazil mid-high teens growth, gift business double-digit growth, incremental 3% print revenue from Corporate Payments acquisitions. Target 2025 cash EPS $22 per share, assumptions include FX rates, interest rates, tax rates. 4. USA Sales Opportunity and Reorganization: U.S. sales growth not as good as international, reorganized U.S. sales with new CRO Mike Jeffrey, consolidated U.S. sales organization, rebranded lines of business to Corpay, dedicated cross-sell team. 5. M&A Update: 2024 M&A activity includes Paymerang, GPS Capital Markets, Zapay Brazil, Comdata Merchant Solutions divestiture. Two Corporate Payment acquisitions tracking well, expected to contribute $0.50 cash EPS accretion in 2025.

Corporate Payments revenue was up 18%, driven by 7% growth in spend volume and stable card penetration rates. Direct business grew 21% led by strong growth in full AP, with the Paymerang deal contributing $14 million in the quarter. Cross-border revenue was up 21%, led by 40% sales growth. Vehicle Payments organic revenue increased 4%, driven by a 7% increase in transactions and higher revenue per transaction across all businesses and geographies, with Brazil and international fleet growing double-digits. Lodging revenue decreased 5%, but room nights increased 10% due to improvement in same-store sales and storm-related emergency services, with the softness appearing to have bottomed and expecting slight growth in the fourth quarter.

1. Q4: Expect organic revenue growth to accelerate to 13%, EBITDA margins 55.6%, cash EPS $5.35 at midpoint, sales growth above 20%. Lodging revenue growth to turn positive in Q4, Corporate Payments to grow again. 2. Full Year 2024: Cash EPS at midpoint $19, 16% year-over-year growth excluding Russia. 3. 2025: Organic revenue growth 9%-11%, target 2025 cash EPS $22 per share, assumptions include FX rates, interest rates, tax rates.

Uncertainties and risks related to forward-looking statements, including factors like FX rates, fuel prices, interest rates, tax regulations, and potential impacts of acquisitions/divestitures.

Q: Break down retention by segment and how much is from Corporate Payments becoming a larger part.

A: Ron Clarke says retention improvement is core retention improving within businesses vs mix story.

Q: Size of FEMA contribution to lodging payments in Q3 and further tailwind from disaster relief.

A: Tom Panther says about $1 million each, maybe $1 million this quarter.

Q: New sales performance in Q3 vs plan and how quickly new sales reorg and CRO produce results.

A: Ron Clarke says Corporate Payments was strong in Q3, NAF soft, outlook low to mid-20s Q4, full year around 20%, hope for leverage from reorg.

Q: Visibility into 2025 growth, comparing to 90 days ago.

A: Ron Clarke says better due to acceleration in Q4, mix helping, confidence higher.

Q: North American fleet trends and 2025 outlook.

A: Ron Clarke says same-store sales flat, retention improved, expecting low single-digit growth in 2025.

Q: Impact of lower interest rates, float revenue, and tax rate on 2025 guidance.

A: Tom Panther says benefit from lower interest rates on rate-sensitive debt, float has minimal impact, tax rate affected by global minimum tax and discrete items.

Q: Difference in Q4 growth vs 2025 and comps.

A: Ron Clarke says Q4 acceleration due to Brazil, Corporate Payments, gift business, comps, 2025 growth from problem children turning positive.

Q: M&A pipeline and capital allocation between buybacks and acquisitions.

A: Ron Clarke says focused on corporate payments and consumer vehicle M&A, priority is attractive earnings and assets, buybacks if stock price favorable.

Q: Risk in Q4 numbers and confidence in 2025 margin.

A: Ron Clarke says gifting a risk, Tom Panther says confidence from sequential increases and operating leverage.

Q: Cross-sell in Corporate Payments and organic growth in 2025.

A: Ron Clarke says high teens organic growth in Corporate Payments, leverage from deals and platform.