Q1 2024 Corpay Inc Earnings Call

Participants

James P. Eglseder; Head of IR; Corpay, Inc.

Ronald F. Clarke; Chairman, President & CEO; Corpay, Inc.

Thomas E. Panther; CFO; Corpay, Inc.

Christopher Nathaniel Svensson; Research Analyst; Deutsche Bank AG, Research Division

Cristopher David Kennedy; Research Analyst; William Blair & Company L.L.C., Research Division

Daniel Krebs; Research Analyst; Wolfe Research, LLC

David John Koning; Associate Director of Research & Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division

James Eugene Faucette; MD; Morgan Stanley, Research Division

Peter Corwin Christiansen; VP and Analyst; Citigroup Inc., Research Division

Ramsey Clark El-Assal; Research Analyst; Barclays Bank PLC, Research Division

Rufus Hone; VP & Analyst; BMO Capital Markets Equity Research

Sanjay Harkishin Sakhrani; MD; Keefe, Bruyette, & Woods, Inc., Research Division

Tien-Tsin Huang; Senior Analyst; JPMorgan Chase & Co, Research Division

Trevor Ellis Williams; Senior Analyst; Jefferies LLC, Research Division

Presentation

Operator

Good day, everyone, and welcome to today's Corpay First Quarter 2024 Earnings Conference Call. (Operator Instructions) Please note this call is being recorded. (Operator Instructions)
It is now my pleasure to turn the call over to Jim Eglseder. Please go ahead, sir.

James P. Eglseder

Good afternoon, and thank you for joining us today for our first quarter 2024 earnings call. With me today are Ron Clarke, our Chairman and CEO; and Tom Panther, our CFO. Following the prepared comments, the operator will announce that the queue will open for the Q&A session. Today's documents, including our earnings release and supplement can be found under the Investor Relations section of our website at corpay.com.
Throughout this call, we will be covering organic growth. As a reminder, this metric neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices and spreads. And it also includes pro forma results for acquisitions and divestitures or scope changes closed during the 2 years being compared. We will also be covering other non-GAAP financial metrics, including revenues, net income and net income per diluted share, all on an adjusted basis. These measures are not calculated in accordance with GAAP and may be calculated differently than at other companies. Reconciliations of the historical non-GAAP to the most directly comparable GAAP information can be found in today's press release and on our website.
It's important to understand that part of our discussion today may include forward-looking statements. These statements reflect the best information we have as of today and all statements about our outlook, new products 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. We undertake no obligation to update any of these statements.
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. These documents are available on our website and at sec.gov.
With that out of the way, I will turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Ronald F. Clarke

Okay, Jim. Thanks. Good afternoon, everyone, and welcome to our Q1 2024 earnings call, our first as Corpay, the Corporate Payments company. So upfront here, I'll plan to cover 3 subjects: first, provide my take on Q1 results and share our updated 2024 guidance. Second, I'll cover conclusions from our recent 3-year strategy offsite regarding the way forward for the company. And then lastly, I'll highlight a couple of developments since we last spoke.
Okay. Let me begin with our Q1 results, which finished really right in line with our expectations. We reported revenue of $935 million, that's up 8%, excluding Russia and cash EPS of $4.10, that's up 14%, excluding Russia. Overall, organic revenue growth, 6% for the quarter, although against a pretty tough comp. Pleased with our Corporate Payments business, revenue growth there, up 17% overall, but up 21% if you exclude the channel partners.
Trends in Q1, quite good. Retention -- overall retention remains stable at 91%. Sales or new bookings, up 11% year-over-year. In same-store sales, soft negative 2% for the quarter, driven primarily by lodging, although same-store sales did improve 1 point sequentially from minus 3 to minus 2 this quarter.
For sure, we're dealing with a couple problem children here in Q1, our North America Vehicle business as you'll recall, making the pivot away from low-quality micro accounts to SMB accounts. We are increasing the sales ramp there with incremental digital and a new kind of upmarket field sales channel to drive the pivot, but taking a bit longer than expected. But I do want to say we are, for sure, making progress.
Our workforce lodging business continuing to experience continued softness. That's from a combo of macro weakness and a couple of areas there, along with the issues in converting to a new IT system. Fortunately, we've now converted the majority of the client base across to the new IT system. And we've introduced a brand-new employee-friendly solution, we call choice, hoping these enhancements will harden the base.
Good news, the early look at April volume in lodging does suggest that the softness is stabilizing. We're out looking both the North America Vehicle business and the workforce lodging business to return to positive organic growth in Q4. So look, in summary, for the quarter, no real surprises and numbers coming in really on expectation.
All right. Let me make the turn to our updated 2024 full year guidance. Really 2 major differences today in our outlook for the year versus 90 days ago.
So first, FX has moved against us and interest rates look to be holding higher for longer. So both of these macro factors, unfortunately, will depress our print rest of the year. Additionally, as I said, we're expecting our lodging client softness to hang around longer, thereby reducing our full year lodging revenue forecast.
On the good news front, we do have greater visibility now around our high-performing businesses, our Corporate Payments, international vehicle in Brazil and their ability to over-deliver our rest of the year. So as a result of these updated assumptions, we're reducing our full year 2024 revenue guide at the midpoint from $4.80 billion to $4 billion, so down $80 million. That consists of $40 million of lower FX translation and then second, $40 million of incremental lodging revenue softness. We're also reducing full year '24 cash EPS at the midpoint from $19.40 to $19. This is 100% the result of the macro.
We do plan to absorb the profit impact from the $40 million launching revenue through a combination of expense reductions currency swaps and some tax planning. So despite the bit softer full year outlook, we're still expecting a very strong Q4 exit with organic revenue there, well above 10% and cash EPS above $5.
Okay. Moving on, let me shift gears and share some of our conclusions from our recent mid-term strategy off-site, that's where we lay out plans for the next 3 years. So first off, in terms of objectives, we aspire to be a top quartile growth company within the S&P 500. We're committed to 10% plus organic revenue growth and 15%-plus earnings growth, and that's a pretty small club. Second, deeper, not wider. We've concluded to go deeper in each of our 3 core segments: Vehicle, Corporate Payments and Lodging and not to expand in the new segments, at least for now.
Our research across the 3 core segments confirms that we've got plenty of TAM and plenty of sales expansion opportunity in each major business such that we can achieve our growth objectives without going wider. Third, in terms of acquisition strategy, our focus will be on corporate payments and consumer vehicle businesses, I think, Pay by Phone. We're going to focus on wheelhouse or accretive deals rather than capability deals that we've executed recently.
And then lastly, from the off-site in each of our major businesses, we plan to sell what we call a flagship product most of the time so that more and more of our scale will be built on a single product in each line of business. And then over time, we convert existing clients off of other products on the flagship product. This will result in a narrower set of SKUs over time. So look, we believe that this more focused way forward will result in a much easier company to manage and grow.
Okay. Lastly, let me make the turn to talk about 2 recent developments. First, our brand and ticker change. We did make our overall company brand change to Corpay, the Corporate Payments company, in March at the same time, changing the ticker symbol to CPAY. We are planning to use the Corpay brand as a go-to-market brand here in the U.S. We already go to market as Corpay in our Corporate Payments business.
We've now launched the Corpay One universal fleet card and business card in our Vehicle Payments segment. And we're soon to relaunch CLC as Corpay Lodging. So in this case, we'll have one single Corpay go-to-market brand across payables, lodging and vehicle. So sure to help us on the cross-selling front.
Second, acquisitions. We've been pretty active on the acquisition front. We did announce earlier this year that we closed the majority investment in Zapay, that's a Vehicle Payments business in Brazil with 3 million monthly active users. You might recall the idea there is to add Zapay's vehicle registration renewals and payments of vehicle tickets or fines to our overall Brazil consumer vehicle bundle. The business is doing great. Zapay revenue grew over 50% in Q1.
We did announce earlier today signing Paymerang. That's a full AP Corporate Payments company, runs about $50 million in annual revenue. We like the deal. It will strengthen our Corporate Payments, AP automation business and 4 new verticals. We're expecting the deal to close here in Q2 pending regulatory approval and expect it to be accretive to both revenue growth and EPS growth next year. We see lots of synergies to chase.
Okay. So in conclusion, Q1 out of the blocks kind of per our expectations. Rest of year outlook, unfortunately, a bit of a mixed bag, now expecting unfavorable macro and lodging softness for longer, offset by strong performance in Corporate Payments, international vehicle and Brazil. We have refined our 3-year growth plan. It calls for a narrower simpler company that we can manage and compound that's got plenty of growth potential. So we like the way forward.
Finally, we're excited about these latest acquisitions, Zapay and Paymerang along with the active pipeline in front of us. We expect these wheelhouse deals to be accretive to 2025 revenue and earnings growth.
So with that, let me turn the call back over to Tom to provide some additional detail on the quarter. Tom?

Thomas E. Panther

Thanks, Ron, and good afternoon, everyone. Here are some additional details related to the quarter. Overall, results were in line with our expectations. Print revenue was $935 million, which was consistent with our guide despite a $7 million macro headwind from both fuel and FX. Organic revenue growth was 6% as 17% growth in Corporate Payments was partially offset by softness in lodging. Reported revenue growth was 4%. But if you exclude the impact from the sale of our Russia business, revenue growth was 8%.
Strong expense discipline and another quarter of lower bad debt produced positive operating leverage. Combined with a lower tax rate, we delivered $4.10 per share in cash EPS, $0.03 above the midpoint of our guidance, up 8% versus last year and excluding the impact from the sale of our Russia business, cash EPS increased 14%.
Now turning to our segment performance and the underlying drivers of our revenue growth. Corporate Payments revenue increased 17% during the quarter, within which our direct business grew 27%. Our direct business exhibited strong underlying performance with solid growth across spend volume, transactions and customers. In addition, higher revenue per transaction rates further contributed to the revenue growth.
Cross-border revenue increased 18% and sales grew 25% despite the low FX volatility during the quarter. Client acquisition and spend volume activity was robust, as nearly every geography was up double digits, with particular strength in Asia Pac. We continue to make significant investments in this business through increased sales and marketing resources.
Turning to Vehicle Payments. Organic revenue grew 4% during the quarter with the increase driven by Brazil and international fleet. Our international fleet business continues to perform very well led by double-digit revenue growth in Europe, Australia and our maintenance business. In the U.K., the soft economy impacted volumes in specific industry sectors but we're confident that we'll rebound as economic growth resumes given our strong market position, which includes 75% of the U.K.'s top 200 fleet companies.
During the quarter, we continued to build on our market-leading position in EV with customer accounts nearly doubling, which includes our 3-in-1 Chargepass product and home charging sales. We're also excited to report that the Chargepass product won the Innovation in EV Technology Award at the 2024 Great British Fleet Awards, a prestigious and long-standing event across the automotive and fleet community. Our EV success is further reinforced with over 40% of the top 200 fleet companies using our Chargepass product.
Related to our expansion into the U.K. consumer vehicles market, we are making progress developing the integrations between our proprietary fuel, EV and vehicle networks into the PayByPhone app. We expect this functionality to be in place by the third quarter of this year.
In Brazil, business performance was extremely strong, led by tag growth of 9%, now totaling over 7 million tag users. Our B2C extended network revenue was double compared to Q1 of 2023. And now over 30% of total revenue is non-toll. Also, sales growth continued to be strong across the tag and insurance products.
In March, we closed on the majority investment of Zapay, which has over 3 million customers that use the Zapay solution to pay for vehicle registration and compliance fees. The addition of Zapay further advances our consumer Vehicle Payments strategy in Brazil and allows us to capitalize on the attractive 2-way cross-sell opportunity. We are now beginning to cross-sell Zapay solutions to our existing 7 million drivers and conversely, cross-selling our existing suite of Vehicle Payment products to Zapay's client base.
In the U.S., the impact from our shift away from micro climates continues to impact our sales and revenue results. Our upmarket digital and field sales efforts are improving as we continue to see growth in applications, approvals and starts. As we mentioned last quarter, the shift to higher credit quality clients has impacted late fees, which were down $8 million compared to Q1 of 2023. However, we've seen a $15 million reduction in bad debt expense, yielding a positive earnings trade.
Lodging revenue was down 9% against 26% organic growth in Q1 2023. So a pretty tough comp. Recall that last year, we had significant high weather-driven distressed passenger volume and insurance claims. We continue to see softness in the base, particularly related to smaller field services companies that are deploying fewer workers as a result of the uncertain macro environment. We've recently completed some IT enhancements that will strengthen our value proposition to both existing and new customers, which translated into 16% growth in Q1 sales compared to a year ago.
Now looking further down the income statement. Our Q1 operating expenses of $538 million were up 2% versus Q1 of last year. Expense growth from acquisitions and sales investments were offset by lower bad debt expense and the sale of our Russia business. Bad debt expense declined $14 million or 35% from last year to $25 million or 5 basis points of total spend. Substantially all of the decline was in U.S. Vehicle Payments as we realized the benefit from our lower exposure to U.S. micro clients.
EBITDA margin in the quarter was 51.6%, a 53 basis point improvement from the first quarter of last year. The positive operating leverage was driven by solid revenue growth, lower bad debt expense and disciplined expense management. Excluding our Russian business sold in 2023, EBITDA margin increased approximately 160 basis points.
Interest expense for the quarter increased $9 million year-over-year due to a decline in interest income from the sale of our Russia business and the impact of higher interest rates, which were partially offset by lower debt balances. Our effective tax rate for the quarter was 24.7% versus 27.1% last year. The lower tax rate was primarily driven from tax benefits from the exercises of stock options.
Now turning to the balance sheet. We ended the quarter with $1.3 billion in unrestricted cash, and we had nearly $1.5 billion available on our revolver. We have $5.4 billion outstanding on our credit facilities, and we had $1.4 billion borrowed under our securitization facility.
As of the end of the quarter, our leverage ratio was 2.4x trailing 12-month EBITDA, which is at the lower end of our target range. Our strong liquidity and debt capacity, coupled with our ability to generate over $300 million in quarterly free cash flow positions us well to actively deploy capital during the year. We have ample capacity to support M&A as well as to continue to buy back our stock.
Related to our $800 million buyback program we announced in February, to date, we've repurchased approximately 2.4 million shares for $700 million. We view $800 million as the floor, not a ceiling, and we'll continue to evaluate additional buybacks over the course of the year.
In addition to Ron's comments regarding guidance, let me provide some additional detail on our full year guidance and some thoughts on our Q2 outlook. For the economic outlook, we are not assuming either a recession or meaningful economic improvement in overall business activity across our markets. We have updated our macro forecast to reflect the latest fuel FX and interest rate projections. The fuel-related macro assumptions are essentially unchanged. However, the higher for longer expectation related to interest rates that gained traction in April caused the U.S. dollar to significantly strengthen and the forward curve to increase approximately 90 basis points as of year-end. The impact from FX is approximately a $40 million reduction in revenue and higher interest rates result in an additional $14 million of interest expense.
Additionally, we are lowering our revenue guidance $40 million due to the softness in lodging. However, we are executing specific actions to reduce expenses that offset this reduction in revenue, so it doesn't flow through to earnings. In the supplement, we outlined the impact of these changes in the macro and operating performance to revenue, EBITDA and adjusted EPS.
In summary, for the full year, we now expect GAAP revenue growth of 5% to 7% and organic revenue growth of 7% to 9%. EBITDA growth of 7% to 9% as well with margin expanding 100 basis points and adjusted net income per diluted share growth of 11% to 13%. Excluding the impact from the sale of our Russia business, we're expecting cash EPS growth of 15% to 17%. I'll underscore that these estimates exclude the impact from our pending acquisition of Paymerang.
For Q2, we're expecting revenue to grow 1% to 3% on a GAAP basis and 4% to 6% organically and cash EPS to grow 6% to 8%. Excluding the impact of the sale of our Russia business, we're expecting Q2 cash EPS to grow 12% to 14%. This reflects roughly $13 million of expected revenue macro headwinds from FX and $3 million of additional interest expense versus the outlook we provided in February.
Looking forward into the second half of the year, we anticipate revenue and adjusted net income growth to accelerate as we realize the benefits from the implementation of new sales, improved retention in U.S. Vehicle Payments and specific business initiatives. The rest of our assumptions can be found in our press release and supplement. Thank you for your interest in Corpay.
And now operator, please open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from Tien-Tsin Huang, JPMorgan.

Tien-Tsin Huang

Ron and Tom, I just wanted to ask on the lodging maybe to start with that, I don't think I fully caught. Some of it was macro and there was an IT cutover, maybe that drove some attrition, but it didn't look like the retention was off either. So just trying to get a little bit more detail in what we might expect for the next 2 to 3 quarters before it turns positive again in the fourth.

Ronald F. Clarke

Tien-Tsin, it's Ron. You mostly got it right. So basically, last year, we put in an upgraded IT system kind of the foundation, but weighted till this first quarter to try to convert it. So we've created a few bumps and created [divot] with kind of a set of clients, kind of softness with a set of clients. But fortunately, from watching it, it hasn't gotten any wider.
I think we stuck a page, Tom, in the document. Page 16, Tien-Tsin, in the supplement basically shows the softness is still sitting there in Q1 that we reported. But part of the press in April is kind of stabilized, kind of the business is flattening. And so the hope that we have is as we lap the divot here in Q2 and Q3 that basically, again, the retention is good, and the new sales were good. Sales actually were up by 16% in Q1. That will be on other side of it. So hopefully, it's a blip with a select set of clients that we can get to the other side on.

Tien-Tsin Huang

I see. Okay. So you're basically -- you're rebasing off of a -- of the set of clients coming off and you're seeing growth from that. Okay. I think, I get it. Thanks for [the side]. I missed it. On the Paymerang acquisition, what stood out about this one? Ron, was it the verticals, something around the tech specifically? I'm curious what are you to it?

Ronald F. Clarke

Yes. I mean the first thing, Tien-Tsin, is it's the kind of business we like. So inside of Corporate Payments, our favorite piece of business is what we call full AP, where we take literally 100% of the clients' invoices, right, no matter how we pay them. So we like that the most because it gives us the most control. We have the best retention with it. I like it the most. So that's the first one.
But yes, the appeal to us as you pick up 3 or 4 verticals that we're not in, we have no referenceable clients, one; two, vendors that are kind of in those verticals; or three, like ERPs or other partners. So you pick up whatever the 10 or 15 years that company has been building those up, suddenly, we're set up now to go bigger in those spots. And then lastly, obviously, because it's so super adjacent to what we do, the synergies as you'd expect, quite significant, super meaningful to us. So yes, with the things kind of we get through the first few months here, the model we had is it will be quite accretive in '25.

Operator

Our next question comes from Sanjay Sakhrani with KBW.

Sanjay Harkishin Sakhrani

Ron, could you talk about the North America Vehicle business? It sounded like it's performing a little bit weaker than you'd like. I mean are you guys expecting that to inflect as we move through the year? And sort of what's going to drive that?

Ronald F. Clarke

Sanjay, it's a good question. So I think the story is a little bit full now of whatever 1.5 years ago, we made the pivot. We flushed whatever 40,000 micro accounts that gave us revenue and late fees, but also a ton of bad debt. So as we work that through both stopping new micro accounts coming in and then second, camping down on terms of credit lines in the first half last year, we were successful in exiting a lot of that business.
And so now we have a cleaner business with a steadier kind of 80,000, call it, bigger clients that have a steadier late fee mix, volume mix, loss characteristics and stuff. And so we're lapping kind of that prior period. So now it's really just the addition of the -- kind of some of the new products there and the new sales, snowballing enough to kind of build off of the base.
And so like every pivot or change in the business, it's gone a bit slower than I would hope. But internally, I've got that thing well into the positive as we exit the year. So as we lap the thing and we head into the back half into Q4. So I would say that structurally, you get retention benefit, right? Whenever you have a base and you flush super micro accounts that a lot of them become insolvent, you have a lot of involuntary attrition. So we'll get structural improvement, both in base hardness and retention.
So really, it's just waiting a couple of these new sales channels to layer on, and we like back where we'll be. That's the basic outlook. It's a little pain we'll get to hear, but we like the way forward.

Thomas E. Panther

Sanjay, just some couple of proof points on that. In the first quarter, we actually saw sales growth up 12%. So that was improved from what we saw on a quarterly basis last year. We've also seen approval rates back to 2021 level. So we've been doing some things on the credit side, tuning our models and approval rates are back to where we were prior to the dividend into the digital channel. And on late fees, we've actually seen those bottom out and start to slightly rebalance. So I think there's line of sight into the things that caused the drag over the last 3 or 4 quarters to be lapping and normalizing.

Ronald F. Clarke

Sanjay, just on top of Tom's comment, the approval rate is up about 50% from September. So we track it monthly. So all the stuff that comes to us. So we're pointing marketing, if you will, and higher-quality prospects or better applications now that we can improve. So it makes it an easier business to run.

Sanjay Harkishin Sakhrani

And just a follow-up question on Paymerang. I understand it's sort of full AP automation, but how does it fit into what you have right now? And how long have you guys been looking at this business? And then just final one, Tom. Like are you including the revenues associated with the acquisition? I know, Ron, you mentioned it's probably not going to be accretive until next year, but maybe you could just talk about that, too.

Ronald F. Clarke

So let me try to take the order of those questions. So how long? I guess we've known the business for a few years, have visited and stuff. And so I've reached out to the principal directly to make this transaction.
Second question, does it included? No, we signed, but we haven't closed. So basically, when we close, which we expect to be certainly this quarter, when we talk again in 90 days, we'll roll that in, so call it $25 million to $30 million incremental assuming we close in the next couple of months.
And how it fits is? Again, we're in the exact same business. We do exactly the same thing, but we generally do it for different kinds of companies in different verticals. And as people pointed out, there's a bit of a [breather reaction]. Once you get into a vertical, your brand becomes known, you have clients in the area, you pay the vendors of those clients. You have ERP and other kinds of partners. And so the thing works in a way, basically where you can build the business better via verticals than you can geographically.
So although we do exactly the same things, we don't do those things in those verticals. So effectively, we will. We'll use, obviously, a lot of our back office and some of our advantage contracts and stuff like that, and some of our sales techniques to kind of basically build up the business that they have in those verticals and get obviously a bunch of synergies along the way. So it's a super attractive. It's what we call a wheelhouse deal. We know it. Super cool. We studied the company well, and we're super clear on what we're going to do with it.

Thomas E. Panther

Sanjay, it's right in our sweet spot where we're getting both customers, 1,300 customers and expanding our merchant portfolio by 250,000 merchants. So we've talked a lot about customers and networks as our kind of 2 competitive moats out there, and this is right in that spot where we gain those things with this acquisition. And then as Ron said, we can terminate it from here into something bigger.

Sanjay Harkishin Sakhrani

And I'm sorry, they won't make money until next year? Or do they make money now?

Ronald F. Clarke

They make money now, but we needed to make a lot more money.

Operator

Our next question comes from Ramsey El-Assal with Barclays.

Ramsey Clark El-Assal

I wanted to ask again about lodging. And just maybe ask you to comment on your visibility in that business right now. I mean April -- it was great to see April stabilized. Do you feel like the recovery in lodging is kind of pretty much locked in at this point? Or are there still variables that you're having to worry about to kind of get from point A to point B there?

Ronald F. Clarke

Yes. Ramsey, it's Ron. It's a good question. So I think locked in is a pretty strong word. What I'd say is, what we can see that super clear is, what cost the [divot] and the decel, which is softness. So yes, we've got, I don't know, 15,000 clients or something in that business, and a select group of clients went soft on a starting Q2, Q3 last year.
And so the good news is other than that select group that went soft, the others didn't. So the other clients didn't go soft and neither did the retention did we have any kind of big spike in retention. So effectively, kind of once we lap the select group of clients that went soft, the key to the thing reaccelerating again is just sales. It's a high retention business generally. And so as long as the sales that we have in the plan come to fruition and we get those implemented, then we'll grow basically over that lap base.
So again, a little bit you're seeing of that is, we started to catch it a little bit here in April. So we think really the turn in the business would be Q3, where if we said, hey, what's the softest, I think it was still 10%, 11%, 12% in Q1, and we had 2% as a company overall. My estimate would be by Q3, that thing would be close to 0. So the softness would be, if you will, client base would be relatively flat.
So -- and again, the good news is there's no more IT bogeyman. We spent 1.5 years, 2 years building the thing. We converted the base. It's a new great feature. So the product is actually better. So we're going to get the benefits this year forward of the pain effectively that we inflicted last year. So that's a positive. There was some benefit basically in the journey on IT.

Thomas E. Panther

And Ramsey, what I'd add is we've kind of taken beyond the analytics. We've actually got a very structured campaign where we're calling those customers, talking to them, giving them the value proposition of the improvements that we've made, understanding why they maybe are using us less. We're gaining really good insights into that. So I would agree, not locked in, but we've taken this beyond the math and are really doing it at a customer level, which has given us a lot of additional insights over the last month or so.

Ramsey Clark El-Assal

That's perfect. And a quick follow-up from me. I noticed that the stock repurchases seemed to accelerate in the last 30 days, meaning you did more repurchases in the last month than you did in the entire first quarter. Should we expect you to kind of lean more aggressively into buybacks when it comes to capital deployment? Not entirely a fair question because you're also announcing deals that you're doing. So I'm just curious if you can comment on the balance there and what we should expect.

Thomas E. Panther

Ramsey, it's Tom. So I think it kind of compare a little bit of an apple and orange there because in the first quarter, it was really just the month of March was when we got started in terms of the buybacks. We waited until we got our K filed and started to buy back. You're only seeing one month in the month of March and then basically, obviously, the month of April. So they're fairly evenly split across that $700 million in terms of how that played out. In the period, we did a 10b5-1 plan so that we could continue to be in the market during the blackout period. So nothing there other than just timing. We were pretty much evenly in the market over those 60 days, if you will.
And as I said in my prepared remarks, I think right around the $700 million marks to touch under it, and we'll finish up the $800 million we would expect in the month of May and we still have ample liquidity, notwithstanding the Paymerang acquisition. As we sit here today, we've got over $1 billion on the revolver outstanding, and we have additional liquidity should we want to be in the market above the $800 million. And as we also look at our business, there could be other sources of capital that we're able to create over the course of the year as well that give us additional liquidity, if there's some noncore assets that we end up divesting of, if that played out.

Ronald F. Clarke

Ramsey, it's Ron. So I did mention at the top that we have a pipeline, so we're working on some additional transactions. So -- but my answer on top of Tom's would be, I would expect us to do both of those things likely buy more companies this year. And depending on where our stock price is, buy back more stock. And so between the liquidity that we have, the leverage ratio and then we're getting close on a couple of divestitures that gives us capital. We feel we've got obviously, plenty of liquidity to do both of those things rest of the year.

Ramsey Clark El-Assal

That's great. That's the power of the model. I appreciate it.

Thomas E. Panther

Power of the model. Power of the model. Yes, there you go.

Operator

Our next question comes from Nate Swanson with Deutsche Bank.

Christopher Nathaniel Svensson

Maybe kind of following up on that repurchase question. Can you talk a little bit more about the corporate actions you're taking to offset that softness that you're seeing in Lodging. So I guess, specifically, what are you doing to lower OpEx? And then related to the repurchase question, I think on one of the slides you talked about increasing repurchases. So how does that tie in versus the $800 million plan? And what was incorporated into guide previously?
And I guess the follow-up is how much of these actions have already been completed? And is there any risk in executing these that may weigh on results as we move through the year?

Thomas E. Panther

Yes. Sure, Nate. I think it's a range of options. That's one of the things that's good about the company and the way it's structured and the levers we have. We'll do a variety of things related to the OpEx side that is just kind of just good old fashion belt tightening. We'll look at some things, maybe some projects that we could delay, some T&E that we could avoid things like that, that are more, I would say, structural. We don't want to do anything to infringe upon the go-forward power of the company from a sales and marketing perspective. So I think that's fairly sacred ground.
But there are always some things that we can do to adjust on some fixed costs that come out, plus there will be some natural variable costs that come out as well. Below the EBITDA line of some things that we've already executed related to some cross-currency swaps that allowed us to essentially convert a portion of our debt. We've already done a euro-denominated. We've done in sterling and a Canadian. So that causes our debt to be about 25% converted to foreign, which is still low relative to how you think about the overall company.
And then we've had in the queue for a while, just a variety of tax planning ideas, that we would have executed with or without the softness in Lodging, but those are coming together fortuitous time where that can also offset from an earnings perspective. So I would say there's good line of sight into those company actions, no Hail Marys in there. And now it's just about executing, which I think we've got some pretty good demonstrated performance of being able to execute and deliver on those.

Ronald F. Clarke

But no additional stock repurchases are in that recovery. So we said, "Hey, $19.40 was our guide. Hey, $19 because of the FX and the interest rates. Hey, we'll get the $0.40 back stay at $19." That doesn't assume any incremental buybacks above the $800 million which we may do depending on the stock price.

Christopher Nathaniel Svensson

Got it. That's helpful color. And I guess for my follow-up, Ron, in your prepared remarks, you mentioned for a positive for the full year that you had greater visibility into some of your high-performing businesses. So I guess, namely Corporate Payments, international vehicle in Brazil. So maybe you can talk about what you're seeing across those businesses? What gives you that confidence into the greater visibility and then maybe growth expectations across each of those 3 for the 4 year?

Ronald F. Clarke

Yes. I mean I always, Nate, when you lay out a plan in the businesses volume rate revenue is tracking and the initiatives that you've laid out are tracking. And so for example, in Corporate Payments, I don't know how many times we've mentioned that over the last couple of years, the channel partners. The growth is wherever we said, "Hey, it's 17% of the print, the 21% without channel partners."
And I think we went on record really in the last call last year and said, "Hey, that thing is turning." We've kind of renewed some stuff with some existing partners and signed some new ones. So instead of that thing declining it's going to actually turn and start increasing. And so we have those contracts signed, and we're starting to put some of that volume through. So that would be like an example of sitting here now. On the other side of that, I can see and another big partner we signed up there, too, in the last, I don't know, 45 days. So that would be an example of things have actually happened, they're in the rearview that will create that acceleration in the rest of the year.
In Brazil, I'd say it's just the power of the distribution. We have 10 ways to sell tags and fuel and parking and insurance there and they're just rocking. They just -- the bank channel thing we launched a couple of years ago with Santander and Caixa. They're selling a pile like 10%, 15% of all of our new tags now coming through that brand-new channel. The cross-sell is working. I think we've sold million insurance policies. We bought this Zapay thing, which is super unique to add, obviously, this demand, it grew 50% in the quarter.
So the things that we planned in the businesses to make the businesses go we're seeing real evidence in this first whatever 4 months that, that stuff is working and the materials that we need to get the full with numbers are clear. Obviously, there's less -- months less. So I just say that they're beating the plan we put together for the first 4 months and the progress suggests to me that they'll meet the plan, the remaining age. So it's good to have those guys in the bullpen.

Operator

Our next question comes from Cris Kennedy with William Blair.

Cristopher David Kennedy

Ron, you talked about narrowing the focus of the business. You also alluded to some potential divestitures. Can you just kind of frame what you're thinking about and the relative size of these initiatives?

Ronald F. Clarke

Cris, are you asking first about the size of divestitures?

Cristopher David Kennedy

The size of the divestitures, and then you also talked about narrowing the focus of the business. So just I'm trying to get how big of an a narrow the focus of the business are you thinking here? How material is that?

Ronald F. Clarke

Yes. Let me start with the second part of the question and then go back to the more important first part. So yes, as part of the strategic review, we identified a couple of kind of smallish column in the $200 million to $300 million range kind of market price for the assets, one in our Vehicle business really both in and around our vehicle business. And so we're well along on those things with counterparties.
So with those transact, as I said before, we'll have a simpler company and we'll redeploy that capital. But on the more important question, I think, we spent the last year studying the company and said the most important thing to create value in the company was the fleet transformation and the redefinition of our fleet business to be a broader Vehicle business right across the U.S., Brazil and Europe. And so -- and then even adding the consumer leg right to that business.
And so those 3 segments, Vehicle, Corporate Payments and Lodging are where we're headed. There's obviously plenty and plenty of TAM and coverage for us to go get. We have new products in all 3 of them. And so the conclusion from all of us going through the thing is, let's just double down there. We did all this frigging Humpty-Dumpty work the last 5 years to assemble this company in these segments, buying stuff, stitching it, fixing it. So we finally have a, I think, super advantaged products in these segments. And so we're really in the marketing and sales phase, right, just basically sell more stuff in these 3 areas.
And the reason I like it is it's just an easier company to manage there's less kind of, call it, Humpty-Dumpty figure-it-out work, connect stuff work. It's more kind of just basic sell stuff and then add related stuff like the Paymerang thing or the ad paying thing, ad stuff that's in the 3 segments. So we're going to be on that course for a while just chasing to grow these 3 segments and maybe making acquisitions in those 3 segments.

Operator

Our next question comes from Pete Christiansen with Citigroup.

Peter Corwin Christiansen

I think I certainly appreciate the deeper versus wider approach product [homologation], all that. Just curious, as you're looking out the next 3 years, are you considering making any changes to like the margin versus growth kind of trade-off that algorithm? Do you see opportunities there to kind of invest more and maybe spur growth a bit harder?

Ronald F. Clarke

Yes. Pete, it's a good question. I think you probably have heard a bit of the answer. I like that right as an idea, even if it trends, if you will, margins for a while, if you could see the return. But I think I said this to you repeatedly, we're into profitable growth. And so the incremental marketing and sales investment has to be productive. I don't want to spend another $50 million and it doesn't, right, produce anything. And so as you know, with people, these things take some time to build. And so you're better off, let's say, you're spending $300 million last year to spend $300 million, $350 million, $400 million, $450 million over the next 3 years. Rather than, hey, watch we go from $300 million to $400 million to $500 million. You'll have a lot more waste in those bigger steps, way more newbie people, way less productivity, and obviously, you'll need more profits.
And so I'd say with that balance in mind, if we saw things, particularly around the digital front, where we could spend more that was productive, we would do that and probably take some costs out of other places. But look, it's working, we're selling, announcing the businesses we have, we're planning to be up 20% again. I think we finished, what, I said 20% last year in sales.
And so if we can keep compounding sales at 20% and kind of growing marketing and sales investment, that's all we need, Pete, to compound the top of 10, right, 20% minus 10% retention right? Sorry, attrition, is 10% growth. And so that's really the model. Just stay on that, make productive sales, keep profits growing at the same time.

Peter Corwin Christiansen

I appreciate that. And then on the Paymerang deal, talking about revenue synergies, obviously, scaling it versus Corpay pays infrastructure is an obvious opportunity there? I'm just curious if you believe there's any cross-selling opportunities here on the synergy side, perhaps layering those new verticals versus other product categories that you may be selling.

Ronald F. Clarke

Yes, for sure. I mean I think I did mention there's both revenue synergies and to your point, obvious cost synergies. So one, for example, which we do in all these transactions, as Tom mentioned, the merchant network. So that company has 250,000 merchants. We have about 1 million and each of us pay some amount of those merchant network with virtual cards.
So as part of the diligence, we run an overlap where each of us could find merchants that we have that the other guys staying with a virtual card that were not and vice versa. So obviously, we're going to go right back and try to put each guy's respective merchants, if you will, on virtual card, and that creates lift.
They have contracts with banks and processes that are 6x, Pete, is expensive is us because of their scale. That's all contra revenue. So for $1 of spend, we bring way more of it to the revenue line, for example, than they do. And then there's the whole car business. All they have basically is full AP, right? They help companies with what we call invoice automation, fix the process and the workflow and then payment automation or outsourcing pay all the bills.
But we have issued now a big card business, walk around cards, business cards, fuel cards, even stand-alone virtual cards that they don't have because they're not in the card business, they're not an issuer, they're not a processor. And so clearly, we've looked at that as well as putting some of our sales guys against their base to sell our cards.
So yes, there's not only clear cost synergy, there's a bunch of revenue synergies. So we expect to think it's already growing, I don't know, 20% to 30% on its own. It's a great business, at super-duper good people, which I want to call out as an asset, too. You can't run companies without people. So when you add our super adjacent capabilities, the thing -- we think the thing will perform really well.
And there's not many of them, Pete. The other thing is they're scarce, right? There's only a handful really that we're aware of any kind of sizable people that do what we call full AP in the middle market really of any size. And obviously, we know them all.

Operator

Our next question comes from Trevor Williams with Jefferies.

Trevor Ellis Williams

I want to go back to fleet and just how you guys are thinking about the shape of the year. I think the prior guide for vehicle had assumed fleet would get back up to the high single digits or so by the end of the year. Just if that still holds and the level of visibility you have into the acceleration on -- you're mentioning late fees, retention? Anything there would be helpful.

Ronald F. Clarke

Yes. Trevor, it's Ron again. So if you called it right, if you took our Vehicle business and you looked at our internal documents on how we build into the second half, you're right, we show the vehicle business in total, exiting in the high single digits, both in Q3 and in Q4. So again, part of that is the lapping of the pivot in North America and the other 2 businesses that are sitting inside vehicle are performing fine and well and compounding. And so that's the view that we'd go from kind of low mid-single digits for vehicle to high single digits as we exit the year.

Trevor Ellis Williams

Okay. Got it. And then on Corporate Payments, Tom, I think you called out higher rev per transaction being a tailwind on the direct piece. Should we think going forward on top of the new sales growth, that's kind of how we've been oriented to think about growth in the business that pricing could maybe be a bigger lever for growth across both direct and cross-border?

Thomas E. Panther

Yes. Trevor, I wouldn't overemphasize the pricing piece. Obviously, we'll always look to price competitively. I think what you're seeing in our trend line of RevPAR trend is just a mix variance there in terms of where channel was a bigger portion of the first quarter of last year. You also see that in our spend numbers where they were dominating the spend numbers kind of diluted the overall year-over-year, but sequentially, you see 10% growth. That also translated into the take rate.
I think what you see is run rate take rate is pretty good. Again, we'll look for opportunities to optimize on any kind of pricing or monetization strategies. But it's more of a mix when you're looking in the rearview mirror than it is some kind of over pricing strategy that we've deployed.
That's true also within cross-border. I know we focus a lot on payables, but the cross-border business as well as the mix of that business has also been toward products where we earn more. We're doing more sophisticated-type FX transactions on behalf of our customers. And because of that, we're getting paid. And so that too is factoring into that overall trend and the shift in mix from kind of the basic stuff, commoditized kind of stuff to the more specialized, sophisticated stuff that we're bringing to our customers.

Ronald F. Clarke

Trevor, it's Ron. Let me make sure you guys get clear on this price thing and how we can be advanced. Let's say, simplistically that we're managing spend for you, and there's 250 basis points of interchange and we agreed to split the thing. I'll give you a rebate of 125 basis points, and I'll keep 125, keep for me, for revenue for me. The pitch to get more price isn't just the split of the 250, it's how much of your spend I can get on virtual card. So if you spend $1 million a month, and I can get 20% on and someone else can only get 10%, I don't necessarily have to meet the 125 basis point rebate because I'm going to return you way more absolute money.
So we're able to capture effectively a better price, a better keep price than banks, which are, I'd say, the main competition because of our merchant network and tech allows us to -- and people we get way more of the clients spend on card programs, thus generating a bigger pool. And so we can effectively keep more money than other people and still have better value to the client. So I just want to pick up on Tom's comment that although it's not kind of pure price, it does result in a price advantage for us.

Operator

Our next question comes from James Faucette with Morgan Stanley.

James Eugene Faucette

You guys have delved into a lot of different topics. I want to -- just quickly in -- I guess, in the interest of completeness, go back to the EV, you provided some interesting comments there and certainly appreciate the detail on the U.K. EV economics. But I'm just wondering if you can unpack what's driving the increased penetration of EV cards relative to fuel cards. I mean is this a simple on an incremental basis as mix fleet is growing in share more broadly? Or is there something else going on there?

Ronald F. Clarke

James, it's Ron. So the exhibits in the supplement, again, I think what we're trying to say there is, (inaudible) a sample of whatever, 300 or 400 clients that we've had for some period of time. The chart shows that they're incrementally adding EV relative to combustion, right? So the percentage of total vehicles among that pool of clients is becoming more EV.
I think the main point we're trying to say is that because we do not only, on the road, but also at home with a super high attach rate, we can actually get more revenue per vehicle for EV vehicle than we can from the old fashion combustion vehicles. So that's the point we're really trying to make to everybody is, oh, well, it's me when the world goes to more EV fleet or Corpay will be hurt by, we're trying to make the point that no, no, no, clients are willing to pay for this mixed solution we have and on the road and at home. And even as they grow to a higher and higher share of EV vehicles to total, we keep getting paid more, not less. That's really what we're trying to show you there.

Thomas E. Panther

That's really just a share of wallet. We're keeping obviously, the ICE business, the fuel. But as they evolve their fleet to EV, we're getting that business as well. So it's incremental business for us.

James Eugene Faucette

That's great. I appreciate that. And then I just wanted to get one last point here. Like -- I think you've broken down kind of the growth expectations for Corporate Payments and talked about pricing and some of those things. I just want to make sure I understand, are we close to channel drag being over and that's stopping being kind of a headwind? Or how should we think about the timing of that?

Ronald F. Clarke

What does channel drag means?

Thomas E. Panther

Our channel margins.

Ronald F. Clarke

Oh, the channel margins. Yes. So again, yes is the short answer. I'd say, for sure, by Q3 and then, again, the thing, point-to-point the channel has helped us actually higher, I think when we get to Q3 and Q4. So yes. I'd say maybe the quarter was sitting in the last time, hopefully, we'll have to talk about this. And again, I said it earlier, our confidence, my confidence is high in it because the stuff that's full, what is literally contracted. So we just have to make sure we implement it. I hope this is the last time we answered, James. I hope it.

Operator

Our next question comes from Daniel Krebs with Wolfe Research.

Daniel Krebs

This is Daniel on for Darrin. I wanted to unpack some of the drivers of fleet transaction growth down 12% year-over-year. Is this also primarily driven by the loss of the micro fleet? It seems like maybe a bigger impact than we would have expected.

Thomas E. Panther

Daniel, I think you're looking at the print there, and that would be Russia where we would have Russia in the prior year. I think if you look at the organic, it's probably where we referenced the pro forma macro adjusted is a better indication. You see transactions up 7% and then we kind of break that down based on some of the different types of transactions that now flow through the whole Vehicle Payments segment.

Daniel Krebs

Okay. Got it. So that wouldn't be an issue moving forward? And maybe as a follow-up on Corpay, could you speak to the performance across the FX versus the full AP business? Any material delta between the 2 in terms of revenue or volume growth there?

Ronald F. Clarke

Daniel, it's Ron. No. They're kind of the same. They're both growing high teens to 20%. So not a big difference across border. Business is a bit bigger, call it, I don't know, 30% bigger, won't be quite as big as we get to close this Paymerang. But no, they're quite similar. The one thing I will point out between the 2 businesses, though, just to remind everybody is, the cross-border business has a massive TAM because we originate customers in 5 geographies. So only about 1/4 of that business is U.S. origination. The other 75% of it is Canada, U.K., Europe, Australia. And so you've got way number of companies and prospects to basically fish in the pond in that business because they sit in lot of geographies.

Operator

Our next question comes from Dave Koning with Baird.

David John Koning

And I guess one follow-up on just the channel drag question. Are still going to see for a couple more quarters kind of flattish Corporate Payment volume. We're going to keep seeing that. And then by Q4, it reaccelerates when you hit the easier comp. Is that a fair way to think about that?

Ronald F. Clarke

It is because the channel, remember, is lots of spend at no rate and the direct is obviously less spend at a decent rate. So what you just said is right. Once the channel gets cleaned up effectively, it is on its own. It's higher than the prior period that will wash away.

David John Koning

And you accelerated Corporate which was great even with the transaction of decelerating. So that was good. My follow-up quick share count was flat sequentially despite big buybacks in Q1. Was that just timing in March, so we'll see it a lot more in Q2.

Thomas E. Panther

Yes, Dave, it's a little bit of that. It's also stock price. So when stock price goes up, there's more dilution on the options than restricted stock that's outstanding. So that kind of counterbalance some of the actions that we're taking on the buyback front. So there's a little bit of a headwind when it comes to that. But with the buybacks, as you said, back-end loaded to Q1 and then active in the first month of Q2, there'll be a bigger benefit when we print Q2.

Operator

Our final question comes from Rufus Hone with BMO Capital Markets.

Rufus Hone

Just wanted to ask on the same-store sales. And I know you mentioned it's improved 1 percentage point sequentially to minus 2% this quarter. I guess what's the path and the time line for getting that back to flat? Is that a 2Q goal or more like something around year-end?

Ronald F. Clarke

Yes, I would say it's probably close to the year-end, a lot of it turns again on this lodging thing, which I mentioned was, call it, 10% or 11%. And the big period there is Q3. The other one I think I did call out or if I did in the last time, the U.K. as an economy has been a bit soft in the last year. And so that would be the other drag. I'd say the rest of them are improving. So I think part of our plan would be the minus 3, the minus 2 that I think gets back to close to flat by Q4.

Operator

We have no further questions at this time. This does conclude today's program. Thank you for your participation. You may disconnect at any time.