Good morning. Welcome to day two of Citi FinTech 13. My name is Pete Christiansen. I'm on Citi's payments, processors, and IT services team. Great to have Tom, Tom Panther, CFO of FLEETCOR, join us. Yep, great to be here. Today, let's get right into it. I want to start off a little bit of, thinking about the last year. You're coming up to your first year. Yep, almost an anniversary coming. Exactly. And, I'd love to hear, like, what maybe how some of your perceptions of the business, how they've evolved in the last year. Maybe let's touch upon the opportunities that you have available to you. Yep. Sense of asset quality, even even the culture itself. Yeah. Would be great. One question, and I just get to talk for 35 minutes, basically. Why not? All right. No, it's been a great journey, starting at FLEETCOR in April of last year. I came from the acquiring side, so I saw more of the enabling retail companies, predominantly in a B2C environment, helping collect cash and collect receivables, whereas FLEETCOR is much more on the spend management, helping companies spend money across a multiple of modalities and use cases, and more on the issuing side. And prior to being at EVO, I was at SunTrust Banks, where I got into the credit side and into things that was more on the issuer side. So I was a bit more able to kind of play all of my experience a little bit better at FLEETCOR. What I would say is what I've been particularly impressed by at FLEETCOR is the sales culture. The sales culture is very much ingrained. It is culture. You know, sometimes you just kind of throw that word around, but it really is culture. And it starts with Ron. Ron is very sales-oriented. But it's not just, "Hey, you know, I want more sales." It's more because that's easy to say, but it's harder to do. It's really about he and we really get focused around how we do it, whether it's new products, whether it's our proven methodology of sales and marketing spend, whether it's how we go to market with digital versus field versus outbound. It's really. I wouldn't call it scientific because that sounds maybe a little bit too hardened and institutionalized, but it is something where we really focus on those inputs that drive that sales culture. And then it's the reporting, and that's something that my team is responsible for. It's the reporting of those sales. It's holding people accountable. It's our commission plans. I mean, all of those things are things that I've been impressed clearly that existed at the other companies that I've been associated with. You don't survive if you don't sell. Right. But you see, companies that excel are generally excellent at sales, and I think this company excels at sales. You know, every year we typically do our transactionality trip down to FLEETCOR HQ, and our meeting with Ron is one of our favorites of the whole year, just on that, as he digs into a lot of the components. You know, it's a lot more than just throwing money at the problem. But you know, I would imagine, you know, coming from EVO, totally different type of strategy setup, the way you attack the market. FLEETCOR is a lot more P&Ls to manage, a lot of niche businesses, great position, but still niche onto their own. Like, how do you think about, as a from the CFO perspective, managing that? Sure. You know, thinking about coordinating all those P&Ls together to put together, you know, that fleet formula, 10% top. Yeah, 10, 13, 19, 10, 13, 19. I heard 10, 13, 19 during the recruiting process here repeatedly. We can unpack that a little bit if you want, in terms of what I mean, if others aren't familiar with it. But well, listen, it starts with a team. So I was fortunate to come in and have a team that was experienced, knew the company well. They've been patient with me. They've been good teachers, starting with Jim here, who's been great in terms of teaching me some of the history of the company and the way things work. But our model is one where I think of the organization as kind of these global shared services, functional leaders, and then a decentralized local empowerment on execution. That's not just I'm describing the finance organization or the HR organization, but I'm also describing the company that way. We have group presidents over each of those businesses. Regardless of the matrix of the organization or of the org chart, they have end-to-end responsibility and control over their businesses. So we run them, not by any means decentralized, because the mothership is very involved in their business. But we do give them that local empowerment and that enablement to be successful that kind of brings the maybe the span, the geographic span from Australia all the way to São Paulo, Brazil, and everything in between of FLEETCOR under a little bit more control, and then the products a little bit more under control. And then we've done a lot, and this preceded even the big, you know, strategic review, but we have done a lot around messaging and simplification and telling our story in a way that you can actually get it out in an elevator before you have to get off. And before, that didn't happen. Again, it precedes me. I'm trusting the feedback that I've received from others. But before, that didn't happen. And now I can tell you we're a spend management company that predominantly supports B2B companies, and we help make payments easier and more efficient for them. Boom. That's what we do. And we do it in a bunch of geographies, and we do it with a bunch of products. Other than that, we're moving billions of dollars around the globe every day in a trillion in a multi-trillion dollar business. Fantastic. Now you jump right into my next question. Next month, the artist formerly known as FLEETCOR becomes Corpay. Yes, that's right. That's right. It speaks to the transformation that you're going through in recharacterizing the business. You know, just walk us through. What are some of the changes that we should expect, at least to your external clients? What are they going to see that maybe is different? And perhaps let's have a quick overview of the motivation behind the change. Yeah. Yeah. I mean, we're excited about it. We're excited with the name change. We think it gives, you know, the company kind of this opportunity, kind of have this fresh branding opportunity, fresh marketing opportunity. It better describes what we do. Right now, less than 35% of our revenue comes from fuel-related products. Well, when you walk around and say, "I'm at FLEETCOR," well, what is that? Well, you know, we do all this stuff around corporate payments and lodging and other types of vehicle-related payments other than fuel. That's 65% of the business, and our name doesn't really reflect that. So a lot of it is just another way. It's not a silver bullet. It's just another way of many for us to get our to get our story out. So we're excited about that, that we'll be coming out in in March. Our ticker will be changing from FLT to CPAY. So we're excited about the ticker change. At some point, we're probably going to get back up here and do a little bell ringing and celebration. So we'll get that on the calendar with the NYSE. In terms of what does it mean, it's predominantly an enterprise name change. It's our local market names, names that those of you who follow us would know, Sem Parar in Brazil, Allstar in the UK, CCS in Prague, those have tremendous brand equity, and those aren't changing. Now, over time, we may introduce a little bit of our brand and name underneath, you know, a division of Corpay and things like that. But we'll continue to go to market in those local markets with a brand that has a tremendous power. So it's really a messaging to investors, you know, you, to prospective investors, to employees. But it also resonates with our customers because there is a lot of relatedness in our business, and we're going to market in a very relatedness way. And now we can talk about the breadth of our business in a way that, you know, before, it it was just a little awkward. It wasn't impossible. I mean, obviously, we've been successful and put up good numbers, so it's not like it's been a headwind. This is just more of letting the ball roll downhill, where it's just it just works better. I can now go to cocktail parties and tell people what I do, and the and people get it. Now, before FLEETCOR, what the heck is FLEETCOR? Yeah. No, I can hear that. You get payments in the name as well. But Ron's having a real FLEETCOR withdrawals, I'll tell you. Oh, yeah? Yeah. I can understand that. You can imagine. Yeah, I can understand that. I mean, it's been his child for so long. And the success that the business had has just been tremendous. I do want to take a quick lap around 4Q and some of the things that we saw in the business that quarter. I do want to hit on some of the softer points. You know, first of all, it comes up in most of our conversations, the channel business within corporate payments. It's we know it's 5% of the segments, $50 million. You got all the Xs in that. It's kind of small. But I think what was interesting about what's happening there is what it says for a lot of your partners and that category itself, but at least from the function and the service that Corpay provides. I have to get used to that. Well, that business has been Corpay for over a year. Right. Right. So you're spot on. Yeah. But how should we think about, you know, the flattish volume growth they're expecting? Is that transaction activity? Is that new contracts that you've implemented? If you could just kind of go through that. And then how should we think about commoditization in that space and the strategy on the channel? Yeah. Well, you know, it is unfortunate that a business of $50 million on a $4 billion business got so much attention, but it is what it is. But I would say about 2023 and what manifested in 2024, if there's a word to leave you with, it's transition. That business was going through a bit of transition in 2023. It kind of culminated in that fourth quarter, year-over-year decline that we referenced. It's a business that has, give or take, 10 or 15 major customers. We do the processing for them. And some of those customers were going through transition in 2023. What does that mean? It may mean that they were buying other companies that gave them the opportunity to bring a service in-house. Hey, listen, more power to you. You just spent a bunch of capital. You better use it. And so that created some either minimization or displacement of some of our volume. Some of it was, you know, they decided to get a cheaper rate and, you know, save a penny. And we're not into, you know, take rates and spreads that are ridiculously low. I mean, it's a high-margin business because there's very little incremental cost that comes with it. But at some level, that becomes a race to the bottom, and we've got more important and more interesting things to spend our finite resources on. So it was just going through a transition in 2023. We're confident that 2024 will be stable relative to our run rate. There will be some continued growover issues in terms of the comparable and things like that, depending on when customers' volume subsided. But it is a business that, you know, I would say is not one that we're overly clearly focused on and growing. We're focused on the 95%, not the 5%. Yes, people wake up every day and cultivate those relationships and want to continue to provide good service and also grow the business. So I'm not saying that. But that's not what that's not the business that fueled our growth in the past, and it's not the growth the business that's going to fuel our growth going forward. It just on the increment, when you're dealing with not the total revenue, but the incremental revenue, it was the piece of the increment that caused the overall segment to come off of its 19%-21% growth rate and have a little bit of a hiccup at 15% in Q4. No, fair enough. No, I think the reason why it is grabbing attention, so people can back it out and see the success rate that you're seeing in the 95% of the segment. And we'll get to that in a sec. I don't want to spend too much more time on 4Q, but lodging comes up a lot in conversations. This was a mid-teens grower, you know, several years ago. And then we've seen a lot of changes, a lot of acquisitions. You've gotten into new verticals, so on and so forth. And then some of these verticals are exposed to things like weather and what's going on with the airlines. How should we think about normalized growth for this segment now? I mean, obviously, there's going to be some comparables issues this year. Particularly the first half. Yeah. Right. For the air crew business and the insurance side. But the underlying workforce business, how should we think about that? Yeah. I mean, we're still very bullish on the business. We still think it can be a double-digit grower. We think it exits the year as a double-digit grower. So we think there's a need, a demand for the business in the marketplace. Why? Because employers are always going to need to be sending their employees out into the field. And we service that need for a variety of types of employers. Not employers like the ones that, you know, people here work for, but people who are actually doing more manual labor, field services kinds of things. So we think there's strong demand. We like our product set, and we think we're unique in that we provide a full suite of services to that employer. We're not just helping them make a payment. We're helping them manage the booking. We're helping them control the spend and have visibility and controls around the spend. Yes, we're helping them with making the payment and doing that all in one-stop shop type things. We're giving them access to 40,000 hotels in our proprietary hotel network, 15 of which are proprietary, 40 or more, the other 35,000 or 25,000 are fill-ins. And then we're providing reporting. So we support an end-to-end process for the company. We think there's strong demand there. You know, the business coming out of COVID, it was I think the last couple of years, it's been about, how do I find my footing? How do I find my footing coming out of COVID? You know, you had the obviously, the comparable from 2021 to 2020 was impacted directly by COVID. Then the 2022 to 2021 was impacted by a springback. Then 2023 to 2022. You know, it's just like, how do you find your footing? And so I think, you know, we have found, I think, an environment now where the business has found its footing. There have been some softness in some of the smaller customers that we have that were just taking a bit of a pause on some of their spend. They're like, listen, you know, we would see that they were using us less and in the summer months when it's particularly the peak season where they've got people out into the field. And we'd pick up the phone and say, you know, why are you using us less? Is there something that you don't like, or is there something that we can do differently? And a lot of it is, listen, we're weathering the same economic environment. I would say it clearly wasn't a bad environment, but it's just cloudy outlook. How many more rate hikes? You know, that type of thing. So I think as we exit the first quarter, we get into the seasonal period where that business does better. We're expecting it to rebound as well. We've got a new leader in there who brings a lot of lodging experience. Nothing against Ron Rogers. He's a terrific leader of the business for a number of years. But it's also nice to get some fresh perspectives and somebody who's got his own network of contacts with a lot of our hotel providers. So we'll keep investing modestly in the business because we think it's got a nice fit. It fits nicely within our portfolio. It's about 15% of the company. Right. I want to ask one more about 4Q then. Let's go into some more deeper questions revolving the strategic review. The product portfolio is quite vast at Corpay. And yes, we just kind of talked about two areas where there was some softness for one reason or another. I want to take the flip side of that. What were some areas of the business that maybe surprised you to the upside or you're starting to see some real momentum? Yeah. The international fleet business last year was outstanding. It performed exceptionally well. Low double-digit grower, great margins, very good. Is this the partner business? Like, think of like your relationship with Shell, or is this more independent? All of the above. So when I think of our international fleet business, it's got a partner business. It's got the U.K., where it's the All-Star brand. It's got our EV business. It's got our business in Prague. It also even has Australia. So all of those. Australia – it had Russia until August the 15th of last year. So it was all of those has our maintenance business where we have relationships with over 10,000 garages where fleet managers can direct their drivers to take their vehicles for maintenance purposes. So it's that whole business has just done exceptionally well. And so that was one that regardless of a little bit of an unsettled economic environment in some of those regions of Europe, it's done quite well. The U.K. economy was one that had a bit of a tougher go over the last, call it, 12-18 months, and it still weathers through that. It's still held up. Right. It's our brands. Our brands are just so strong in those markets. They really are. And so the sales engine, the base, all of those things just performed really well. So I feel really good about that business. I do feel good about the payables business and what I mean, Cross-Border had an outstanding year, whether it's sales and the sales that they were able to put up and then translate that into revenue, the Cross-Border business and our direct payables business, but channel aside, you know, had a great business, terrific sales numbers, outstanding retention, and also some good success on some new products that help keep the product lineup modern and fresh. And Brazil, I know sometimes people are like, oh, it's south of the equator. It's a toll tag business. Well, that business today is anything kind of but a toll tag business. You know, 35% of our sales and our revenue and stuff like that is coming from non-tag-related services. That's amazing. I can remember it was, it was two years ago. It was like one point of growth or two points of growth. Now 35% of sales. Of sales. That's just amazing. Yeah. Even in the UK, over 30% of the sales are in non-fuel-related sales today in terms of the things that we're doing in the UK, in terms of diversifying that. In Brazil, we're now interfacing customers in our networks, not just through a toll tag, which is really just kind of a little sticky, you know, sticker that they put on their windshield, but they're using it on their phone with the app and the QR code. They're using a credit card that we've launched in the market that runs on the Visa rails that has a ubiquitous network. So now we're finding ways. This is our, this is kind of our secret sauce, our competitive differentiator of customers and networks. Millions of customers, some B2B, some B2C, and proprietary networks, and finding ways for those customers and networks to interface. They feed one another. What do customers want? Networks. What do networks want? Customers. So it's this constant, you know, seesaw between us growing. When you think about where are we going strategically, whether it's organically or inorganically, it's really with a big focus on how do we grow those two core pillars of our organization. I remember, obviously, parking was a first use case, the whole Beyond Tolls opportunity, fast food restaurants. I remember McDonald's calling it out. It was a big efficiency play. But then, you know, there was some CapEx drive. It took a little bit of time, but you started building out that fueling network, pay by fuel tag, whatever. And that seems to have really caught fire. All of those are doing well. But is that enabling, you know, like, so I'm comfortable now using my toll tag to fuel. Am I going to start using that at fast food? Am I going to start using that more at parking? Is that? Yes, yes, and yes. And of our 6 million toll tags, we have 3 million people using the app every day. Wow! This is an app that has one of the highest of all the mobility apps. Think of like Uber and Lyft, but in Brazil, this has one of the highest utilization levels of mobility apps in the market. The Sem Parar brand is huge. It really is. And so those 3 million users are getting all kinds of information on this app that they look at every day. And now we're also able to reduce our CapEx spend instead of buying the fuel with a camera that reads the RFID barcode. Right through the app. Go right through the app. Yeah! So I can now reduce my CapEx spend dramatically. Now if they're not on the app, we can also give them a credit card. Credit card works all over the place. But what I would add, Pete, to that lineup of products that has just gone like hotcakes and we think is a great use case for elsewhere is insurance. That insurance market is almost a $20 million business in what, two or three years, Jim? Yeah. Yeah. So, yes, the insurance regulatory market is different in Brazil than it is here in the U.S. But for the most part, the insurance that we're providing is not collision. It's more add-on type products, roadside assistance, maintenance, those types of things. And so, just to be clear, so people don't think we're an insurance company, we're just in the middle. We're middleman. Somebody else is the insurer. We're just getting a commission for selling the insurance. We think this is something, as we think about our consumer strategy and what we did with Pay By Phone, is something that has a tremendous amount of opportunity. It's a strategy that clearly still has to be proven. But Pay By Phone does over 220 million transactions a year. Here are people who are parking their car, and they may be parking in an area that may not be the best area in the city that they're parking it. Not only can we. They're sitting there looking at their phone and putting in their license plate or, you know, that type of thing. We can have something pop up for two more GBP or $2 more or 2 more EUR. Would you, because we know you're going to be there because we know when you come, we know when you go. Would you be willing to pay two more of that, you know, dollar to ensure your car such that if it's broken in while you're parked at a football game, you're we'll cover your deductible for you? How many people would take that? Right? And now again, not all 220 million transactions are people sitting there parking in areas. But even if you could get a fraction of 220 million transactions doing things that allow us to be able to reach consumers in points of needs with unique solutions. Again, customers and networks feeding one another. So. It's like a Giants fan going to Philly, right? There you go. Can you imagine how many people would take that? They'd take it all day long. A little extra protection there. There we charge them at least $5, not $2. I do want to talk about the strategic review. No major changes in terms of, you know, asset allocation or product portfolio changes. But you did come out of it with a I feel from Ron's characterization with a new appreciation for some opportunities, like and particularly in-vehicle payments, corporate payments as well. Like, what was it about that process that reinvigorated, like, the vision there? We kind of knew you were bullish there, but like, what about that process got, you know, seems like you've doubled down? Yeah. I think that's it, no question, we are a more clear-minded, strategically laser-focused organization today than we were a year ago. And the company was always very focused on that. I know that even though I wasn't there, I know that just from talking to people and the stuff I read and see and all of those types, it's patterns, it's rhythms within the organization. So we are better for it. It gave us an opportunity for deeper introspection, I think, is what I would say. Always very introspective, always very strategic. But this just put an added emphasis on that and gave us some opportunities to talk to people, advisors, or people in the industry, companies in the industry that just enriched our thinking and our knowledge. It convinced us, as we did some of the parts math, that the number one way for value creation and we were focused on value creation before, clearly. I mean, there was a lot of frustration in the sector about multiple compression and why and what's causing it. And is it Russia? Is it FTC? I mean, all of these storm clouds now gone. But it allowed us to be, you know, even more focused on, you know, how do we move forward? And what the math told us was we've got to get that fleet now vehicle payments business to a point where we and our investors recognize its value, its durability, its growth potential so that a multiple can be assigned to that business that people recognize is something that is a lasting business. I think the EV overhang, we've done a lot to deal with the EV overhang. The marketplace has done a lot to kind of contain, I will say, what EV is and what will it be. So I think that's been helpful. And so not only did we come out of it with just laser focus that we got to get vehicle payments and that 50%-ish% of our business, you know, in the right spot and continue to invest in it, but we also learned a lot in terms of potential business combination structures going forward. We talked to a lot of people that it would have been awkward to talk to in the past in terms of, you know, creating the wrong signals and things like that. So what I hear Ron talk about is he's never been more convinced that we're working on the right things than right now in his 20+ years of running this company. Wow. That's compelling. As it relates to the vehicle payments business, you know, the company has spent $150 million on EV investment. You talked a lot about unit economics for mixed fleets, Pay By Phone acquisition certainly, and consumer, which is a bit of a divergence from the company's past. Should we think of as maybe not on a product level, but at least from an opportunity or a structural level, is Brazil the right analog for Corpay to repeat that success, whether in the U.S. or Europe? Take us through that where that happened? It's an excellent analog right in that you started with a core product, a toll tag that was just, as I said, a sticker that you'd put up on your windshield and turned that into this network of multiple use cases that at first used just the toll tag to execute those. And then we got these other modalities. And but it's not always going to be that same product. And it's not, you know, always going to be those same networks. We're going to cater it to the environment. But the notion of an anchor product, particularly tied to an app, because this is how we I mean, we're glued to these things. We keep these things within three feet of us at all times. And so that way of interacting with customers through an app and then bringing them together, those customers and those networks onto that app, allows them to interface in ways that they haven't been able to interface in the past. And we think whether it's a consumer or an individual or whether it's an employee in a B2B arrangement, we think we can simplify their environment, their experience. We can put on one app where to charge, where to fuel, where to park, insurance, where to go get your tires changed, where to go get your oil changed. There are so many use cases around a vehicle that we just kind of are a little bit numb to at times. I mean, even Brazil created an API into car washes. When a guy drives up to the car wash to get his car washed, the RFID reads it and says, "Boop, let's. Have that myself. Yeah. Yeah. Subscription. Yeah. It's just and then registration. You know, think about, you know, being able to connect potentially on the compliance side and ticketing and in and in eco areas where there's, you know, environmental limitations in terms of what regions in Europe you can drive in, you know, those types of things. There's so many different things that and how can we penetrate those? How do we have the leverage to make those connections? Because we bring a massive customer base to those companies, agencies, whatever it may be that says, "Yeah, I want access." I mean, that's what that's what's been our success on the EV side. Our network in the UK is got over 80% coverage, 60,000 charge points, added Tesla in the fourth quarter to our footprint in Europe. Why? Because we can go to a charge point operator who's invested millions of dollars in hardware and software and say, "Would you like access to our 1 million drivers in the U.K.?" Absolutely. I want access. And I'll pay an MDR to get access because why? I need cash flow. Right? And so it's one thing to build software, but not to have anything to connect it to or customers on it. We're, as I mentioned on kind of our M&A strategy, it's how do we buy things that bring heft? And that's really what we're focused on. That anchor technology, that anchor network, that anchor product. That's just been so back to your original question. Brazil is a great analog. It'll just be a different series, different anchor product, different networks. Different approach to each market. We're not going to do fast food. I mean, fast food in Brazil, you know, is just a completely different experience. There's only one or two even fast food providers in Brazil. Here you go to, you know, fast food everywhere. It's, you know, maybe it says something about it. Really? No. So fast food isn't going to be our network that we're going to be building out in the U.K. We're almost on time here, but back on the strategic review, I think you've laid out the case for investing more particularly inorganically on corporate payments. You know, I don't think it's as much about capabilities there. It's about building scale and, you know, getting more clients onboarded. I think that is simple to understand, relevant. But on the vehicle side, like, what's that algorithm, at least from an M&A perspective, the capabilities out there? Some. I'd put it in the minor to modest category, probably more minor than even modest. But if there are networks, particularly that allow us to enhance that strategy of introducing customers and networks together, Pay by Phone was a great example. We actually got a two-fer. It was a both. We got six million customers on three different continents, and we got a network of parking locations. So we were able to get both, and we're working to cross-sell that across our B2B. So I think that would be the prototype, probably not of that scale. We spent $300 million for that business, not to that scale, but it gave us something to kind of say, "Hey, we're serious about this transition to B2C. We've got 6 million customers in the bag, and now let's use that toehold to be able to move forward." I think as we think about vehicle in general, it would be things that were add-on capabilities that brought both customers and/or networks and allowed for a lot of cross-selling. Wow. Very exciting. Well, Tom, thank you so much. Great to have you. Yep. Thanks. Really exciting to see how this develops over the next couple of quarters. Good. Appreciate the opportunity, Pete. Thank you very much. Yep. Thanks.