Darrin Peller: Ron, maybe just go back to — it’s a bit of a follow-up to Tien-Tsin’s question just now. But when we think of the vehicle segment and the aspirations for being low double digit growth from what we’re now guiding to a mid single digit year, maybe just talk a little bit about the initiatives that you feel are going to really drive that strength? And it does look like you’re having a lot of success, obviously, now with whether it’s EV or obviously in Brazil. So I’m assuming it’s a combination of all those factors, but any more color on that? And just a quick follow-up, but also the fourth quarter, I know you had some headwinds on certain variables like you mentioned on the call, credit and it just seems like you would have a better growth in ’24 than fourth quarter, just as some of those abate, but yet you’re guiding a similar rate of growth for vehicles. So just a little more color on that.
Ron Clarke: Say the last part, Darrin, where you go on guiding to what is in 24…
Darrin Peller: Yes, for vehicle segment, mid single digit growth, I would have thought it’d be a little bit better comparing it to a fourth quarter, which I know has some headwinds in it.
Ron Clarke: So let me take that last part and then my way back to the beginning of your question. So yes, if you looked inside our quarterly role that thing would go from kind of low mid single digit up to 10%. So the internal plan we have is exactly what you said to the vehicle organic growth rate to accelerate. So the two drivers of that beyond the normal things of retention, which should get better again structurally because we kicked out the micro accounts. And obviously, sales being good is the new products that I just talked about, right, some extensions in both the core fuel card business and in the trucking business, and to your point, the EV thing working. But the second one is this consumer, it’s just all incremental.
So to the extent that we can take 2 million people in the UK and another couple of million people, which we’ll talk about soon in Brazil, and add on three or four services that we already have, it’s just every dollar there is incremental and pretty profitable. So those are really the two drivers. The base, same store sales, retention and new sales, which we have a good handle on and then the couple of new things on the new products and the consumers. So look, we’re bullish on it. Obviously, we had a pivot in this vehicle thing and then a bit distracted working on this restructuring. But I think where we’re headed now is super clear.
Tom Panther: And Darrin, one thing I’d add before Ron get to your other question about longer term vehicle. Keep in mind, the first half of last year had the elevated late fees from the SMB micro clients that we still have on the platform. So we all start lapping that until you get into late Q2. So that creates a little bit of a grow over challenge when you look at it on an annual basis.
Ron Clarke: And it’s one of the reasons, Darrin, someone send me some text, hey, the revenue looks a little light. And we’ve effectively taken $20 million, $30 million of late fee revenue out and $20 million to $30 million of credit losses out. So it’s been basically kind of a one-for-one swap, which people out there may not like, but I like the ratability of having lower credit losses. And so to Tom’s point, that portfolio shift kind of moved both revenue and expense.
Darrin Peller: I don’t know if there’s time for a quick follow-up. Just very quickly on Corpay. I just want to understand a little bit more on the channel business bottoming out here. And maybe you can explain a little more of what the dynamic is and the underlying drivers, if it’s around the channel — one of the partners if that’s finished or its virtual card adoption or anything else, guys?
Ron Clarke: So if you think about what we call a channel business, it’s some third party US customers where we provide virtual card processing. And the basic trend, which started two years ago, is those partners effectively moving from an exclusive relationship with us to nonexclusive. So I, Ron are used to use you for 100% of my processing, someone told me it’s a good idea to have two providers. So over time, I’m going to kind of give you half the business or I’m going to try to haircut your rate. So effectively, over the last two years, Darrin, we’ve gone from having, call it, 15 really important partners that we were exclusive with to having 15 partners we’re not exclusive with. So the good news on this one is we have the contracts now four ’24 that have us flat with ’23.
So our print for that business, which moved its way down during the course of ’23, we’re out looking effectively flat revenue in that business across into ’24. So instead of every quarter saying oh, the Corporate Payments business was great, but hey, the channel business was crummy, hopefully, you’ll hear me say that in ’24. The answer will be it will be flat.
Operator: The next question comes from Nate Svensson with Deutsche Bank.
Nate Svensson: So Darrin actually leads right into what I wanted to ask on Corporate Payments. First off very nice to hear about the outlook for 20% growth in 2024. I wanted to ask — because in the past, you’ve talked about sort of a stickiness and resilience that you see with regards to suppliers continuing to accept virtual card payments despite the challenging macro. So maybe can you give us an update on how that sort of resilience has trended since we last spoke three months ago? Anything changing with the decision process with your suppliers, or any update there would be great?
Ron Clarke: I’d say not much change. So I think we said it before that acceptance or not acceptance of a virtual card turns really more on the profile of merchants. Merchants that have obviously higher margins, for example, are more accepting or merchants more need a cash flow because they’re paid sooner. So I’d say there’s really nothing super new. Kind of the opt-out rate, if you will, has been pretty steady. And again, who takes the car is really a function of kind of who the merchant is. So nothing new.
Tom Panther: And Nate, we’ve actually seen card penetration levels tick up a little bit. So at the end of the day, it kind of comes down to the amount of spend that’s on a card, and that’s moved up as you look at it over a quarterly trend.
Nate Svensson: That’s great to hear about the penetration levels. And so I know there’s been a lot of talk about new products throughout the call. One, I kind of wanted to dig deeper on was the new Corpay Complete products? I know there was a press release that came out at the end of January. So maybe you can talk about the go-to-market motion there, where you’re seeing the sort of synergy potential between the full AP offering, cross border, et cetera, within that Corpay Complete?
Ron Clarke: I mean, simplistically, Nate, we used to do not knock on a midsized company, hi CFO and hey, we’ve got some great expense management products here. And mostly, the pitch was kind of menu based or a la carte. Hey, it looks like you got some drivers, we’ve got fuel cards. Looks like you need a better control business card, given some of the expenses that are coming in or one that’s got automated expense reimbursement. So historically, that’s how we presented things. And so the idea was to be able to have kind of a wrap or rebate or look at the spend of the whole company. So knock knock, hi CFO, you’ve got walk around spend, you’ve got AP spend. I could combine all of that and give you 100 basis points back, 0.5 million a month back and make your life easier.
How does that sound? So we finally have a platform where all those things, the walk around stuff and the AP automation stuff is literally brought together, call it, in terms of one report, one credit underwriting system and stuff. And so that’s the idea that we could present now to a company effectively a package deal, if you will, instead of an a la carte deal. So we just literally been underway, call it, just what you said, call it, a month or so with the first set of leaves in it. But clearly, it’s going to be the future. My hope is even if we sell someone a la carte the first day that they’re on the railroad, it’s easier to go back, they’ve learned how to use the UI, they know once we have an account we credit underwritten them and stuff.
And so we think it certainly lends to better add-on sales over time.
Operator: The next question comes from Sanjay Sakhrani with KBW.
Sanjay Sakhrani: I hopped on a little bit late, I apologize if you’ve answered these questions. But just on the macro assumptions that you guys are using for the year, what kind of macro are you guys assuming sort at the beginning and ending of the year?
Tom Panther: So I think in big picture macro, let’s start there, and then we can talk a little bit in terms of more detailed macro as it relates to specific to our company. But big picture macro, we’re expecting an economic outlook to stay relatively consistent, completely in line with the broad economic guide. When you look at our three major markets of Brazil, US and UK, we expect in all of those markets to see relatively stable, maybe slightly improving economy as rate cuts in those various markets occur. But we’re not expecting any kind of recession and certainly, we’re not expecting a GDP kind of gangbuster type year. With respect to the more narrow macro that affects FLEETCOR, and I think about it in terms of a couple of categories, first, fuel price, average fuel price, diesel and unleaded combined to 3.65, that’s a little below where we are today.
