Greetings, and welcome to the FLEETCOR Technologies Fourth Quarter 2020 Earnings Conference Call. As a reminder, this conference call is being recorded. I would like to turn the call over to our host, Mr. Jim Eglseder, Head of Investor Relations for FLEETCOR Technologies. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us today for our fourth quarter and full year 2020 earnings call. With me today are Ron Clarke, our Chairman and CEO; and Charles Freund, our CFO. Following the prepared comments, the operator will announce that the queue will open for the Q&A session. It is only then that you can get in line for questions. Please note, our earnings release and supplement can be found under the Investor Relations section of our website at fleetcor.com. Now throughout this call, we will be presenting non-GAAP financial information, including adjusted revenues, adjusted net income and adjusted net income per diluted share. This information is not calculated in accordance with GAAP and may be calculated differently than non-GAAP information at other companies. Reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appear in today's press release and on our website, as previously described. Now before we begin our formal remarks, I need to remind everybody that part of our discussion today may include forward-looking statements. These statements reflect the best information we have as of today. All statements about our recovery, outlook, new products and acquisitions and expectations regarding business development and future acquisitions are based on that information. They are not guarantees of future performance, and you should not put undue reliance upon them. These expected results are subject to numerous risks and uncertainties, which could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's press release on Form 8-K and in our annual report on Form 10-K filed with the SEC and available at sec.gov. With that out of the way, I would like to turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Okay. Good afternoon, everyone, and thanks for joining our Q4 earnings call. Upfront here, I'll plan to cover four subjects: First, I'll provide my take on our Q4 finish; second, I'll put a bow on full year 2020; third, I'll share our 2021 outlook; and lastly, provide a bit of an update on our transformation plan, which is intended to accelerate the company's growth. Okay. Let me turn to our Q4 results. So today, we reported revenue of $617 million, that's down 12%, and cash EPS of $3.01, that's down 5% versus last year. These results were both better than anticipated. Volume recovered a bit more in the quarter than we forecasted, and we did manage our operating expenses down 14% against the prior year. Organic revenue growth overall was minus 8%. But most importantly, the trends in Q4 are really quite good; sales strengthened to over 90% of last year's level. Same-store sales or client volume softness improved to minus 6%. Credit loss of $6 million, although helped by a reserve release, and retention continued steady at 92%. We did have a fantastic highlight in Brazil in the quarter. We added 175,000 new urban users in Q4. That represents 30% of all the new tags we sold in the quarter. It demonstrates there's real demand among the non-toll segment in Brazil for this RFID purchasing network, including fueling, parking, and now even fast-food locations. So look, the conclusion of Q4 shows really strong sequential trends for the business. If you look at Page 7 of our earnings supplement, you can see that every Q4 metric is improving from the Q2 low: Revenue up from $525 million to $617 million; cash EPS up from $2.28 to $3.01; sales up from 55% to now over 90% of last year's level; same-store sales volume improving from minus 17% to minus 6%; credit losses from $21 million to $6 million; and retention holding steady at 92%. To us, this is evidence that the business continues to recover from the earlier lows of the year. Okay. Over to 2020. So from a financial perspective, 2020 was not our best year. Revenue finished at approximately $2.4 billion, down 10% versus 2019, and cash EPS finished at $11.09, down 6% against 2019. COVID and the shutdowns vanquished over $400 million of revenue that we planned in 2020, really in three ways. First, client softness; we had a number of COVID-impacted clients that used less of our services. COVID reset the macro environment in Q2, driving down fuel prices and weakening international currencies. And then third, for a while, COVID reduced our 2020 new sales mostly due to the market being distracted. The good news is despite the ongoing challenges of COVID, the financial impacts on us appear to be lessening. So we've now recovered in Q4 about half of the client softness and revenue loss that we experienced in Q2. Post the macro reset, we've seen relative stability in fuel prices and FX rates. Lastly, demand for our services is clearly recovering as sales reach 90% of prior year levels. So despite not having the greatest financial performance in 2020, we achieved several things. I'm particularly delighted with our credit performance in 2020. We managed expenses down over 10% in Q2, 3, and 4. We signed four acquisitions in 2020. Our IT team ran exceptionally well, achieving the best overall system uptime in the history of the company. Lastly, we were able to replan the business in the second half. We conducted a replanning exercise in the summer, and the actuals came in slightly better than the replan, reminding us again that fleet is a business you can plan. I want to give a shout-out to all FLEETCOR people who hung in there and kept the company going through these unsettling times. Okay. Let me transition to our initial guidance for 2021 and outline the assumptions behind it. Clearly, we are seeing a higher beta in our 2021 numbers, but our setup is generally positive. First, volume and revenue trends strengthened throughout 2020, and we anticipate that will continue into 2021. Sales production is improving, thus increasing the amount we expect to get in-year revenue from new business. As mentioned, we see very solid client retention and credit trends. We're hopeful for additional recovery in client softness in 2021, although we admit that this is hard to forecast. In our guidance, we're planning to recover about one-third of our Q4 exit revenue softness that's still outstanding now, which would provide about a 4% to 5% incremental revenue lift in the second half. So with that, our guidance for 2021 would be as follows: Revenue of $2.650 billion at the midpoint, reflecting an 11% increase. Overall organic revenue is in the same range, kind of 9% to 13%. I want to emphasize that this assumes a 3% to 4% recovery from today's level. We're anticipating significant sales growth of over 30% this year, which would be a record for the company. The profit guide at the midpoint is $12.40 of cash EPS for the core business, which factors in about $0.10 of dilution from the Roger acquisition. This would put our consolidated number at $12.30 at the midpoint. Assuming now a May 1 close for the AFEX acquisition, accretion could be approximately $0.20 for the year. If that happens on time, it could take consolidated cash EPS to $12.50. Chuck will provide additional insights on how the guidance translates across the quarters. I want to point out that our guidance outlooks for Q2, 3 and 4, indicate revenue and profit growth will be back into the high teens. Let me transition to my final subject regarding the company's transformation plan. Our transformation plan is intended to accelerate growth by focusing on two aspects: first, the portfolio, deciding what businesses we want to be in and not be in, continuously evolving to have a more diverse set of faster-growing businesses; and second, enhancing our Beyond strategy, which we utilize across all of our major existing businesses. In this Beyond strategy, we're trying to identify new market segments that we can extend the business into, and second, we identify additional or adjacent services we can cross-sell back to our client base. If you look at Page 11 of our earnings supplement, you'll see the current Beyond initiatives for each of our four businesses. We continue to make progress against our Beyond strategy. For example, in our lodging business in 2020, we settled 25% of all proprietary hotel payments with our virtual card, which earns us interchange. This is up from literally 0 a few years ago. Today, we begin implementation of perhaps our most exciting Beyond initiative with the acquisition of Roger. This marks the move of our corporate payments business into the SMB space, alongside the opportunity to offer comprehensive online bill pay to our global SMB fuel card base. You can see that on Pages 11 and 12 of our supplement. This single bill pay initiative has the potential to dramatically accelerate growth rates in both our corporate pay and fuel card businesses. We feel we are in a unique position due to our special asset set, including a large global SMB client base numbering in the hundreds of thousands, working SMB sales channels historically acquiring 30,000 new clients per quarter, scaled virtual card processing capability with over $30 billion in annualized spend last year, a comprehensive merchant database for monetizing the virtual card, and modern cloud software providing bill pay functionality with an appealing user interface. In conclusion, I aim to provide a few key takeaways: although Q4 was not our best quarter from an absolute perspective, it showed clear signs of improving trends in the business. We performed better as 2020 progressed and learned valuable strategies for managing credit, expenses, IT, and even sales in a remote environment. We believe our setup for 2021 looks promising, with only slight unfavorable macro conditions but improving trends as we enter the year, along with the wildcard of potential incremental softness recovery. Finally, our Beyond strategy is progressing and provides traction, with today's online SMB bill pay initiative potentially being the most significant of all. With that, let me turn the call back over to Chuck for additional details on the quarter and our outlook. Chuck?

Thanks, Ron. For the fourth quarter of 2020, we reported revenue of $617 million, down 12%, GAAP net income down 11% to $210 million and GAAP net income per diluted share down 6% to $2.44. The quarter was again affected by COVID-related business slowdowns, although we showed improvement over last quarter in most of our businesses. Adjusted net income for the fourth quarter of 2020 decreased 10% to $258 million, and adjusted net income per diluted share decreased 5% to $3.01. We continue to manage expenses in line with revenue performance. Please see Exhibit 1 of our press release for a reconciliation of all non-GAAP financial metrics. Organic revenue in the quarter was down 8% overall, mainly due to same-store sales being down 6% year-over-year. Organic revenue neutralizes year-over-year changes in foreign exchange rates, fuel prices, and fuel spreads, and includes pro forma results for acquisitions closed mid-period. Our fuel category was down organically about 10% versus Q4 last year. Our domestic fuel businesses became stable to improving in the quarter, whereas the international fuel businesses were affected by renewed COVID-related closures, especially in Western Europe. The corporate payments category was down approximately 6% in the fourth quarter. Approximately 6 points of decline was again driven by the 100 most affected customers we discussed in the last quarter. Lower spending on our T&E product drove another 2 points of organic drag. Virtual card volumes were up 12% for the quarter, an improvement from flat last quarter, as continued political spend and the benefit of new customers offset the drag from the most affected customers. Cross-border or FX-related volumes were down 1% as payment volumes continue to be affected by lower invoice levels in manufacturing and wholesale trade. Full AP performed very well, with volume up 14%. New sales of full AP were robust, as full year 2020 sales amounted to more than double 2019's results. We continue to invest here and enabled 10 new ERP integrations in 2020 with plans for another 10 or so in 2021. Tolls remained our most resilient business, growing organically 7% in the fourth quarter, up 4% from last quarter. Active toll tags were up 6% in the quarter, with urban tags accounting for 25% of all new tags sold during 2020. The lodging category was down 25% organically in the fourth quarter, with 20 points of drag caused by the inclusion of acquired airline lodging businesses from the previous year's period. Our workforce lodging business has improved, with volumes down in the mid-single digits. Airline lodging volumes have also improved in line with flight activity but remain well below last year's levels. Looking further down the income statement, our total operating expenses were down 14% for the fourth quarter of 2020, amounting to $323 million. We performed in line with the high end of our target reduction compared with the fourth quarter of 2019. The decrease was primarily due to lower volume-related costs, reduced employee-related costs including headcount, sales commissions, bonuses, and stock compensation. We also observed lower T&E expenses, in addition to the impact of foreign exchange rates. As a percentage of total revenues, operating expenses were approximately 52.4%, representing a roughly 240-basis-point improvement from last quarter. Bad debt expense in the fourth quarter of 2020 was $6 million or 2 basis points, which includes a reserve release of $5 million. Bad debt only reached 4 basis points when excluding the reserve release. Our bad debt levels remain good, and our aging roll rates stay very favorable. There is still uncertainty surrounding the timing, level, and duration of government stimulus and various responses to increasing COVID cases worldwide, so that remains a consideration for our reserve. Interest expense decreased 13% to $30.3 million, driven primarily by decreases in LIBOR related to the unhedged portion of our debt. This was partially offset by the impact of additional borrowing for share buybacks earlier in the year. Our effective tax rate for the fourth quarter of 2020 was 20.3%, a reduction from last year driven primarily by incremental excess tax benefit from stock option exercises. Now turning to the balance sheet. As of December 31, 2020, we have approximately $1.9 billion of total liquidity, which consists of available cash on the balance sheet and our undrawn revolver at quarter-end. We ended the quarter with nearly $1.5 billion in total cash, of which approximately $542 million is restricted and primarily consists of customer deposits. We had $3.6 billion outstanding on our credit facilities and $700 million borrowed in our securitization facility. We remain committed to a consistent capital allocation strategy, using our free cash flow for acquisitions and buybacks. In the quarter, we repurchased roughly 181,000 shares in connection with employee sales. Overall, for 2020, we spent $850 million on share buybacks. We believe we have ample liquidity to pursue any near-term M&A opportunities while still opportunistically buying back shares as it makes sense. In the quarter, we incurred approximately $23.4 million in capital expenditures, and finished with a leverage ratio of 2.67x trailing 12-month EBITDA as of December 31. Now let me share some thoughts on our outlook. Looking ahead, we expect Q1 2020 adjusted net income per share to be between $2.60 and $2.80, which at the midpoint is approximately $0.31 or 10% lower than what we reported in Q4 of 2020. About half of this difference is attributable to revenue seasonality. While some of our businesses like gift cards experience seasonally strong fourth quarters, most of our businesses have seasonally weak first quarters. Naturally, volume-related expenses will release any impact stemming from this revenue seasonality. Roughly one-third of the difference is due to the normalization of certain expenses. For example, in Q4 of 2020, we released $5 million of our bad debt reserve, which we do not expect to repeat in Q1. As sales performance has continued to recover throughout 2020, we anticipate that bad debt will gradually increase sequentially as those customer balances mature. Additionally, when the impact of COVID-related shutdowns became clearer in 2020, we proactively reduced our annual incentive target payouts by 50% and accrued to those lower targets for the remainder of the year. Given our business's recovery, we plan to return incentive targets to their normal levels in 2021. We also expect our effective tax rate in Q1 of 2021 to be about 80 to 100 basis points higher than the rate reported in Q4 of 2020. Lastly, the acquisition of Roger and incremental sales and marketing investments are slightly dilutive to the quarter sequentially. Now looking beyond Q1 for the full year 2021, it's important we help you understand our outlook and provide some ranges around possible outcomes, even if those ranges are wider than they have been in the past. For 2021, we're guiding revenues to be between $2.6 billion and $2.7 billion, with adjusted net income per diluted share expected to be between $11.90 and $12.70, inclusive of the Roger acquisition. We continue to face substantial uncertainty regarding the pace of economic recovery and the impact it will have on our financial performance. Notwithstanding, we've developed a 2021 budget that incorporates everything we know now, including revenue and expense run rates, current macroeconomic factors, and expected sales contributions and attrition impacts. Additionally, our guidance assumes a continued rollout of vaccines that will enable gradual volume and revenue improvement in the first half of the year, with an acceleration in the back half as client softness and new sales performance improve sequentially. As mentioned earlier, we expect several expense lines to normalize higher in 2021 compared to 2020. As our business recovers, stock and bonus accruals as well as sales commission expenses will be higher. T&E will increase as our sales teams resume travel, and volume-related expenses will also rise with the uptick in business activity. We expect bad debt expense to normalize, as we've reopened credit and our sales performance continues to improve. We're also making incremental investments in sales, marketing, and IT to support our growth aspirations and to deliver a 2021 sales production plan that's over 30% higher than that of 2020. We are extremely excited about the Roger acquisition, and a significant share of our incremental sales and marketing investments will direct towards that business. Consequently, the fully loaded acquisition will be an estimated $0.10 drag to adjusted net income per diluted share in 2021. As demonstrated repeatedly, we maintain a balanced approach to expenses and will adjust as necessary if we see revenues deviate from expectations. Lastly, we continue to navigate the approvals on AFEX, which have been hindered by Brexit and virus-related shutdowns. While we still expect the deal to be accretive in 2021, we now believe it will close more likely in Q2, as opposed to our initial expectation of Q1. Just for clarity, AFEX is not included in the guidance ranges I provided earlier.

[Operator Instructions] Our first question is from Sanjay Sakhrani with KBW.

Thanks for all the color on the trends and the guidance. But just to drill down on the guidance a little bit. When I think about the ranges on the extreme ends, could you maybe, Charles, just talk about sort of what's baked into one end versus the other?

Yes. I appreciate you joining, and thanks for the question. Regarding the high end, that would be a perfect scenario, right? As Ron mentioned, we're assuming recovery in terms of the COVID softness that we've experienced. The timing and magnitude of that is tough to predict. If everything returns rapidly, if our sales were perfect, we might be able to reach that point. The range is wide for that reason. On the downside, the uncertainties surrounding COVID remain, so if nothing comes back, it could create problems. We think we're being reasonably optimistic given everything the news is reporting about the economy, the vaccines, and the Biden administration aiming for a return to normality by Q3.

Sanjay, it's Ron. Let me just add to Chuck's comment. The second aspect is regarding sales. We've set a steep sales plan increase for 2021, and the amount we’re able to achieve in year-in revenue, which includes our backlog and the pace at which it comes in, will significantly impact the range we provided.

Got it. And then Ron, you guys are obviously flush with quite a bit of liquidity. As you sit here and think about the next year, how do you envision utilizing it?

Yes. I think our philosophy is kind of steady as she goes, right? Our first use is for accretive acquisitions, and today we have three or four interesting active deals in the pipeline. That's always our first and highest use. And then second, given our leverage ratio, if our stock doesn't trade where we think it should, we'll consider buying back shares.

I want to say, I guess, the new sales were encouraging. Your reinstating guidance, that's also encouraging. Any way to think about the level of conservatism in the outlook? I understand the range and I think I get it. But I'm just thinking there could be some pent-up demand on new sales. The trends are clearly improving. You're excited about this SMB bill pay, which makes sense. So I'm just trying to understand conservatism versus maybe excitement about the chance to achieve double-digit growth here.

Tien-Tsin, it's Ron. We aim to build these plans based on what we call the most likely outcomes and then determine how wide the range around that will be. Our confidence comes from reviewing the trends in Q2, 3, and 4. We've effectively recaptured half of the lost softness from Q2 to Q4, which is substantial, despite the fact it's still a sizeable number when we look at the total loss throughout 2020. Therefore, we provide ranges to try to keep it centered on the midpoint, acknowledging the wildcard of softness recovery. So while we lack precision, I would indicate that our midpoint guide reflects the most likely scenario.

Yes, I mean, it's a great question. The first two focuses are: one, cross-selling that product back to our North America base; and then I would say that in about 90 days, we should be ready to launch with our own channels, our own digital, our own deals, and sales teams to market it to new prospects. By the time we talk next, we hope to share some news.

Maybe just following up on Tien-Tsin's question on Roger and the investment. Could you speak to the timing for the investment? It seems it might be somewhat front-loaded. How are you planning for that dilution relative to the first quarter guide versus full year? What do you expect the potential contribution from Roger to look like in 2022?

Yes. Some of the costs are definitely deal-related. We onboarded their entire team of 50 people, so we have some immediate dilution. We're also currently investing at the corporate level to support the acquisition while building those sales channels. As for next year's contribution, we have not fully modeled it yet. It is expected to be a bit dilutive for now as we scale up our channels, and we want to assess what works before committing more investment. To clarify, it's a small acquisition, generating only a couple million in revenue, and still has room for considerable growth. We're investing now to retain the team that's been instrumental in developing this product.

Yes, Steven, it's Ron. The corporate payments and layering into the fuel business will be key areas of focus going into the future. While lodging is intriguing, I think you were right to point out that this is not the traditional lodging business, it's predominantly focused on blue-collar workforces. We're aiming for stability and growth. Though the lodging business still needs to prove itself, we will explore additional verticals beyond our typical offerings.

I wanted to ask about Brazil; the new user statistics were quite impressive. How well are you positioned in terms of merchant acceptance? Are there sufficient new merchants in the pipeline that could further enhance your involvement in Brazil?

Ramsey, that's a great question. We're focused on the three or four city locations we mentioned: fueling, parking, fast food, and making accessibility better for people returning to the cities. We've allocated significant capital to our 2021 plan to build out our fueling capabilities, as it represents the largest Total Addressable Market because the expenditure on fuel is massive. The slight delays we've faced stem from the improvements we’ve made to our hardware and software for fueling setups, optimizing reliability. I anticipate a robust increase in transaction counts as we continue supporting growth in the second half of this year. Another good question. We initially took significant measures to mitigate risks when COVID emerged, which unfortunately decreased our revenue... We've now reported on our credit loss levels and can note that they’re as low as we've ever seen, with long-term favorable trends continuing. For our fuel card sector, we are back to fully operational credit policies. In the corporate payment segment, however, we remain cautious due to client risks, especially in certain affected industries. We anticipate more positive credit environments as these particular sectors continue recovering through 2021.

Just following up on your comments about corporate payments, could you provide some insight into your projections for T&E card activities in 2021? It seems to be a significant potential swing factor.

Yes, David. Good question. Overall, our corporate pay business, including T&E cards, aligns with our guidance, sitting at high-teens. Inside that spectrum, T&E card usage currently sits in the mid to high single digits. That said, we've successfully diversified our corporate pay revenues, with only 20% linked to T&E now. Yes. The short answer is yes; our gift card business suffered due to 2020's retail impact, but it surprisingly rebounded. With many consumers ordering gift cards, the digital dimension has surged. We recently acquired a business that equips our retailers for online services, which has proven to be timely. We'll reassess the business' value as we progress into this year, with expectations that it should improve over the past year's low points.

I'd love to hear about the timeline and goals for your key IT initiatives. Have you considered potentially accelerating those investments during this recovery year?

Yes, Pete, it's Ron. We aren't accelerating our recovery investments. We're focusing on investments that will yield growth. Thus, we've increased our capital plans a bit, perhaps by $15 million to $20 million over last year. We decided to allocate more toward IT modernizations, consolidating and updating existing systems. So we are proactively simplifying our technology landscape while also continuing to invest in digital and other growth initiatives like Roger. Yes. The conversations happening around electric vehicles (EVs) are quite interesting, especially with major automakers making huge announcements. However, this shifts the focus away from our fuel card services. We see a long-term opportunity with EV transactions as exciting. Even if traditional combustion vehicles will still dominate the landscape for a while, there's an emerging demand for services related to charging and reimbursement as businesses transition to mixed fleets.

Congrats on strong results amidst the tough macro setup. I wanted to discuss sales – a significant acceleration back to 92%, with full AP sales doubling. What can you tell us about the performance in other segments? As you look to next year, especially with the target for a 30%+ sales increase versus this year, can you provide more detail on the segments you're finding strength in?

Sure, Ashish. As Ron mentioned, we concluded Q4 at over 90% of the prior year's sales performance. There were mixed results; Brazil had an extraordinary year, registering approximately 15% growth over last year. Yet some areas, like the North America fuel business, are gradually recovering but not quite at the desired pace, while lodging has met expectations relative to last year. Overall, we're optimistic about 2021, with a massive sales plan aiming for a 30% increase from 2020.

Adding to Chuck's comments, part of our trajectory stems from the market’s return to normalcy. Many of the gains we're reporting in Q4 can be linked to businesses adapting and moving forward. As this trend continues, we believe our service offerings will attract more attention. We're also preparing for larger revenue opportunities by investing further in digital initiatives, enhancing our teams, and launching new products. We have particularly low sales in Q2 last year, providing favorable comparisons as we push forward.

Yes, remember that when COVID hit, we pulled back on many plans because of market distractions. Now, we're resuming aggressive investments as market conditions improve.

I appreciate the insights shared, Ron. Are the increased sales investments one-time events or do they form part of an ongoing strategy to accelerate growth by focusing on high-growth product lines?

Yes, my short answer is yes. The increment is recurring. If you look at our three-year plans, you’ll notice a similar trend of 15%+ sales growth in our 2022 forecasts. This is driven by both increased scale, with more outbound callers, field agents, and digital marketing efforts, as well as investments in early funnel engagement that we've tested successfully.

Regarding expenses, Charles, regardless of final organic revenue, can we expect expense growth to mirror our top-line growth or might there be room for higher operating leverage, particularly if we see significant volume increases in the latter half of the year?

Certainly. Our Q1 guidance anticipates some resetting of specific line items, owing to elements like the normalization of bad debt reserves and anticipated sales recovery. As revenue rebounds, we expect an increase in expenses related to travel, bonuses, and commissions that nervously parallel with improved sales. We've planned for balanced systems as we progress through the year.

It’s Ron. Our capital allocation assumes a consistent debt repayment strategy. If our financial flow allows it, acquisitions and share buybacks may also be considered as we move forward in a managed way, depending on opportunities.

Thanks, everybody. Apologies if we missed your questions but don’t hesitate to reach out with any follow-up inquiries. We look forward to collaborating in the next quarter.

This concludes today’s conference. You may disconnect your lines at this time, and thank you for your participation.