FLEETCOR Technologies, Inc.

Q4 revenue was $937 million, up 6%, cash EPS was $4.44 per share, up 10%, and EBITDA was approximately $500 million, up 11%. Organic revenue growth was 7% in the quarter and 10% for full-year 2023. Full-year 2023 revenue was $3.8 billion, up 10%, EBITDA was about $2 billion, up 13%, and cash EPS was $16.92, up 5%. Q4 EBITDA margin was 54.2%, up 220 basis points year over year, and bad debt expense fell to $22 million, down about 50% from last year. For 2024, management guided to revenue of $4.080 billion at the midpoint, EBITDA of $2.2 billion, and cash EPS of $19.40; excluding Russia, that is 11% revenue growth, 14% EBITDA growth, and 18% cash EPS growth. Tom Panther also guided first-quarter revenue growth of 3% to 5% and cash EPS growth of 6% to 8%, or 7% and 13% at the midpoint excluding Russia.

Ron Clarke said the quarter was mixed because revenue came in a bit light, but earnings flow-through was better than expected thanks mainly to lower credit losses. He framed 2023 as a record year and said the company has three consecutive years of 10% plus organic revenue growth, while also making progress on EV, cleaning up Russia and FTC issues, and integrating acquisitions. Strategically, he emphasized a shift toward a broader vehicle payments platform, a rebrand to Corpay in March, and a focus on new products and cross-sell to lift growth over time.

Tom Panther said Q4 organic revenue grew 7%, EBITDA margin reached 54.2%, and bad debt expense declined $19 million to $22 million, or 3 basis points of spend. He noted the company absorbed nearly $200 million of incremental interest expense in 2023, yet still grew cash EPS 5%, and said normalized for higher interest expense, adjusted earnings would have grown 16% for the year. For 2024, he laid out revenue growth of 8% to 10%, EBITDA growth of 10% to 12%, margin around 54%, net interest expense of $340 million to $370 million, and a tax rate of 25% to 26%. He also said the company ended the quarter with $1.4 billion in unrestricted cash, over $800 million available on the revolver, leverage of 2.4x EBITDA, and expects $1.4 billion of free cash flow in 2024, with $800 million of share repurchases planned and M&A still the first priority.

Analysts focused on the Q4 revenue softness, credit losses, the end of the strategic review, and how management expects new products and cross-sell to affect 2024 growth. Ron Clarke said the weak quarter was mainly the same-store sales story, with softness in lodging, the partner channel, and the move away from micro accounts, and added that those issues appear to have bottomed. On the strategic review, he said the company explored several alternatives and partnerships but concluded that keeping fleet and corporate payments together is best for now, while remaining open to revisiting options later. On new products and growth visibility, he said the products are being sold now, with revenue contribution more likely next year, while 2024 should benefit from better retention, corporate payments strength, and cross-sell.