FleetCor Technologies, Inc. (FLT) Q2 2019 Earnings Call Transcript

FleetCor Technologies, Inc. (CPAY -1.74%)
Q2 2019 Earnings Call
August 6, 2019, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings. And welcome to the FleetCor Technologies second quarter 2019 earnings conference call. As a reminder, this conference call is being recorded. I would like to turn the conference over to our host, Mr. Jim Eglseder, Head of Investor Relations for FleetCor Technologies. Thank you. You may begin, sir.

Jim Eglseder -- Head of Investor Relations

Good afternoon, everyone. And thank you for joining us today for our second quarter 2019 earnings call. With me today are Ron Clarke, our chairman and chief executive officer and Eric Dey, our chief financial officer. Following comments from Ron and Eric, the operator will announce your opportunity to get into the queue for the Q&A session. It is only then that the queue will open for questions. Our earnings release and supplement can be found under the Investor Relations section of our website at fleetcor.com. Throughout this conference 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.

Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press releases and on our website, as previously described. We are also providing updated 2019 guidance on both a GAAP and non-GAAP basis along with reconciliations. Finally, before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. This includes forward-looking statements about our guidance and outlook, new products and fee initiatives, and expectations regarding business development and acquisitions. They are not guarantees of future performance. And therefore, you should not put undue reliance upon them.

These 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 on our annual report on Form 10-K filed with the Securities and Exchange Commission. These documents are available on our website and 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?

Ron Clarke -- Chairman & Chief Executive Officer

Okay, Jim. Thanks. Good afternoon, everyone. And thanks for joining our second quarter earnings call. Upfront here, I'll plan to cover four subjects. First, I'll provide my perspective on our Q2 results. Second, I'll preview our outlook for the second half. Third, I'll report a bit on the continued progress of our Beyond strategy. And lastly, I'll comment on the acquisition front. Okay. So, onto Q2. We reported Q2 revenue of $647 million, up 11% and $2.85 in cash EPS, also up 11%. On a constant macro and constant scope basis, or what we call like for like basis, revenue was up 13%, and cash EPS approximately up 13%. Both revenue and cash EPS results topped our expectations. Revenue coming in about $7 million better than planned and cash EPS $0.06 higher than the midpoint of our guidance range. Notably, our overall organic revenue growth accelerated nicely to 13% in Q2. That marks the highest organic revenue growth quarter since we started reporting like for like revenue in 2016.

So, quite pleased. Inside of that, our fuel card organic revenue growth was 9%. Our three non-fuel lines of business, all exceptional. Lodging up 13%, toll up 17%, corporate pay up 26%. The volume growth in each of those three non-fuel lines of business, quite good. In lodging, our SMV room nights were up 15%. In toll, our active tags, which drive revenue, up 7%. In corporate pay, our virtual card spend up 20%. So, very strong volume growth. Our trends in the quarter continued quite good. Our new sales or new bookings up 18% versus prior year. Our client or business retention continued steady at 92%. Our same-store sales came in at minus-1% but largely due to softness among the large retailers in our gift segment. Excluding gift, same-store would have been a push. Our balance sheet in a very good place. Q2 leverage finished about two times. And our July term loan upsizing of $700 million brings our revolver liquidity now to over $1 billion.

So, we're well-positioned to allocate capital to either acquisitions or buybacks in the second half. So, in summary, Q2 probably one of the best quarters in quite some time. Record organic revenue growth of 13%. Very strong volume growth in our three non-fuel businesses. Continued positive sales growth and retention trends and Q2 profits above the top of our guidance range. Okay. Let me transition to our outlook for the second half. So, today, we're confirming overall revenue growth guidance of 9% to 11% rest of the year and fuel card organic revenue growth in that same range. We're raising full-year 2019 cash EPS guidance to $11.68 at the midpoint. That reflects our $0.06 Q2 beat to guidance. There are a number of assumptions or moving parts rest of year. We're expecting a bit more unfavorable macro than when we spoke last time and a slightly higher share count than when we spoke last time.

But those will be offset by lower interest expense going forward and likely better acquisition contribution driven by the SOLE deal going forward. So, look, when you take all these items together, they effectively net to zero in terms of rest of year impact. Also, as a reminder, our rest of year guidance anticipates pretty big increases sequentially in both revenues of profits. Okay. Let me transition over to an update of our Beyond strategy. As a reminder, the idea quite simple: to offer our existing fuel, lodging, and toll clients the opportunity to spend more with us by opening up the network or adding locations in which they can purchase things. This increases the utility of our card programs to our clients and results in incremental spend and revenues for us. So, Beyond Fuel, here in the US, we added 2,000 new Beyond Fuel clients in Q2. That brings our active Beyond Fuel client count to about 6,700. This set of Beyond Fuel clients contributed approximately 1% to 2% of our incremental revenue growth in the quarter.

So, starting to be helpful. Still lots to do. We're targeting about half of the 100,000 eligible existing fuel clients and continue to monitor credit trends quite carefully. But it seems clear to us that our fuel card clients do like the idea of making adjacent mobility and supplier purchases on a single business account with us. Lodging. In our Beyond Lodging initiative, we added about 10,000 new hotel locations to our 15,000 proprietary network a couple of months ago. And in June, we captured about 3% of our overall room nights coming from the expanded network. So, based on our forecasts, we're hopeful that the expanded network could add about 2% of incremental revenue growth to our SMB lodging business by year-end. In terms of Beyond Toll, our Brazil initiative, we've now nearly tripled our parking, gas station, and drive through network from about 1,000 locations at the time of acquisition in 2016 to over 2,700 locations today. And the adoption in the expanded network is growing.

At McDonald's, for instance, we had 65,000 transactions in March. That grew to 135,000 transactions in June. And we're expecting approximately 250,000 McDonald's transactions as we exit December. So, a big pickup. Very importantly, sales of our new non-toll, or what we call urban users are also growing. We added approximately 18,000 new urban user tags in Q2. That's up significantly from 3,500 that we signed in Q1. So, the conclusion is our Beyond strategy is gaining traction. Adoption's accelerating. And the new revenue contribution in every business growing. Okay. Last up is acquisitions. I'll touch on the two transactions that we recently closed, Nvoicepay and SOLE. And I'll also provide a brief update on our acquisition pipeline. So, Nvoicepay. We were delighted to announce that acquisition on our last earnings call. The primary rationale again for that deal, strengthen our position in full AP or integrated payables in which we helped clients pay 100% of their monthly supplier invoices.

And that's via every payment modality, card, ACH, even paper check. So, we've made good progress in the first 90 days that we've owned Nvoicepay. We've advanced the synergy that we outlined at close, and we expect Nvoicepay to transition from approximately $0.03 diluted in Q2 to accretive in Q4. SOLE. We closed the SOLE payroll card acquisition on July 1st. SOLE is a payroll card tuck-in. It's about one quarter the size of our existing payroll card business and has historically grown revenue about 30% annually. So, we like it as an add-on for a couple reasons. First, it's complementary to our existing business in that it focuses on SMB accounts. And it's developed a pretty ratable partner distribution channel with payroll processors to sell more or further penetrate that SMB segment. And then second, we expect significant synergies via the combination as we consolidate our tech lab form and our existing bank and network relationships.

So, expect SOLE to be accretive in 2020. In terms of pipeline, our acquisition pipeline, still active. We've got three close tuck-in opportunities, one each in our fuel, lodging, and corporate pay businesses. And as I mentioned earlier, we've got plenty of liquidity to pursue that. So, in closing, again, a very good Q2 with revenues and profits ahead of our expectations. Our rest of year outlook is good. We're planning sequential step-ups in revenues and profits. Our Beyond strategy's starting to take hold. Client adoption accelerating. And the revenue contribution becoming more meaningful. Integration of our two recent acquisitions also progressing nicely. We're capturing synergies and expect both of those deals to be accretive to 2020 earnings. So, with that, let me turn the call back over to Eric to provide some additional details on the quarter. Eric?

Eric Dey -- Chief Financial Officer

Thank you, Ron. And good afternoon, everyone. For the second quarter of 2019, we reported revenue of $647.1 million, up 11% compared to $585 million in the second quarter of 2018. GAAP net income increased 48% at $261.7 million from $176.9 million. And GAAP net income per diluted share increased 52% to $2.90 from $1.91 in the second quarter of 2018. Both of these reported numbers include the impact of a tax benefit associated with the sale of our Masternaut investment, which was a benefit to GAAP net income of $65 million and GAAP net income per diluted share of $0.72 per share. The sale of our investment in Masternaut allowed the company to offset the capital loss recognized against the previously recorded capital gain from the sale of NexTraq in the third quarter of 2017. Non-GAAP financial metrics that we'll be discussing are adjusted net income and adjusted net income per diluted share, for which the reconciliation to GAAP numbers is provided in exhibit one of our press release.

Adjusted net income for the second quarter of 2019 increased 8% to $256.7 million compared to $237.8 million in the same period last year. And adjusted net income per diluted share increased 11% to $2.85 compared to $2.57 in adjusted net income per diluted share in the second quarter of 2018. Second-quarter results reflect a negative year-over-year impact from the macroeconomic environment of approximately $10 million in revenue in line with our expectations. The negative macro impact was primarily due to lower foreign exchange rates when compared with the second quarter of 2018, which we believe negatively impacted revenue by approximately $17 million, due primarily to unfavorable rates in Brazil and the UK. Fuel prices were slightly better year-over-year in the second quarter. And although we cannot precisely calculate the impact of these changes, we believe it was a positive $1 million to the quarter. And finally, fuel spreads had about a $6 million favorable impact to the quarter.

Organic revenue growth after adjusting out the impact of a macroeconomic environment and the Chevron D conversion was approximately 13% for the second quarter of 2019. And all major product categories performed well during the quarter. Organic growth in our fuel card business was 9% driven by solid growth in most of our fuel card businesses. Our Beyond Fuel initiatives contributed about two points of growth. The corporate payments category continues to perform well and was up 26% organically during the quarter. The growth in corporate payments was driven by both our cross border business, which grew an excess of 30% in the quarter and our virtual card business, which grew approximately 20%. Our toll business was up 17% organically, driven primarily by new toll tax sales, rate initiatives, and more Beyond toll revenue. Our lodging business was up 13% on a print basis and would have been up approximately 16% if you adjust out the roughly $1 million in emergency-related revenue from the second quarter of 2018.

So, all in all, another very good quarter for our non-fuel business resulting in very strong organic growth performance in the quarter. Now, moving down the income statement, total operating expenses were up 9.2% for the second quarter of 2019 to $349.8 million compared with $320.2 million in the second quarter of 2018. The increase was primarily due to acquisitions and normal growth in our operations. As a percentage of total revenues operating expenses were approximately 54.1% compared to 54.7% in the second quarter of 2018 including in operating expenses our credit losses of $18 million for the second quarter of 2019 or seven basis points compared to $14.5 million or six basis points in the second quarter of 2018. The higher than normal credit losses were due primarily to fraud losses in our US fuel card businesses. Fuel card fraud should improve as US fuel stations begin transitioning to chip and PIN technology in late 2019 and 2020.

Appreciation and amortization expense increased 3% to $70.9 million in the second quarter of 2019 from $68.6 million in the second quarter of 2018. The increase was primarily due to acquisitions completed in 2019. Interest expense increased 19% to $39.5 million compared to $33.2 million in the second quarter of 2018. The increase in interest expense was due primarily to the impact of additional borrowing or share buybacks throughout 2018, recent acquisitions, and increases in live war. Our effective tax rate for the second quarter of 2019 was a negative 1.7% compared to 23.5% for the second quarter of 2018. And if you adjust out the tax benefit-related to the sale of Masternaut, our effective tax rate would have bene 23.6%. now turning to the balance sheet, we ended the quarter with $1.49 billion in total cash. Approximately $318 million is restricted and consists primarily of customer deposits.

As of June, the 30th, 2019, we had $3.614 billion outstanding on our term loans and revolver and approximately $478 million in undrawn availability. We also had $974 million borrowed in our securitization facility at the end of the quarter. Subsequent to the end of the quarter, we completed a $700 million upsizing of our term A loan facility. We will initially use the additional funds to pay down the revolving credit facility and securitization facility. And we now have approximately $1.2 billion in availability. We plan to use these funds for acquisitions or future share repurchases of our stock. As of June, the 30th, 2019, our leverage ratio was 2.1 times EBITDA, which is well below our covenant level of four times EBITDA as calculated under our credit agreement. We intend to use our future excess cash flow to temporarily pay down the balance on our revolving credit facility and securitization facility and maintain liquidity for acquisitions and other corporate purposes.

Finally, we spend approximately $17.5 million on capex during the second quarter of 2019. Now onto the update for the outlook for 2019. First, we are raising our full-year revenue guidance $20 million at the midpoint to reflect our second-quarter outperformance and the acquisition of SOLE Financial, which closed in early July. We are also raising our GAAP net income and GAAP net income per diluted share guidance to reflect our second-quarter beat and the impact of the Masternaut-related tax benefit in the quarter in addition to the acquisition of SOLE Financial. We are also raising our adjusted net income per diluted share guidance by $0.06 to $11.68 at the midpoint to reflect our second-quarter results compared to our expectations. Also, we expect a few moving parts in our balance of the year guidance. For the balance of the year, we expect the macro impact to be slightly worse than our prior guidance due primarily to lower fuel prices and unfavorable foreign exchange rates.

We also expect a slightly higher share count due primarily to an increase in our share price, which impacts the calculation of fully diluted shares. Partially offsetting these impacts will be favorable interest expense due primarily to interest planning initiatives implemented and lower liable rates and the impact of acquisitions, which will be slightly accretive over the balance of the year. So, taken in total, these puts and takes net to zero in terms of financial impact on our balance of year guidance. Please refer to our second quarter earnings call supplement for additional information regarding our guidance. So, with that out of the way, our guidance is as follows: Total revenues to be between $2,625,000,000 and $2,676,000,000 net income to be between $865 million and $895 million, net income per diluted share to be between $9.60 and $9.90, adjusted net income to be between $1,040,000,000 and $1,070,000,000, and adjusted net income per diluted share to be between $11.53 and $11.83.

Some of the assumptions we have made in preparing the guidance includes the following: Weighted fuel prices equal to $2.75 per gallon average in the US for the balance of the year for those businesses sensitive to the movement in the retail price of fuel, market spread slightly below the 2018 average, foreign exchange rates equal to the seven-day average as of July the 28th, 2019, interest expense of between $150 million to $160 million, approximately $90.3 million fully diluted shares outstanding, a tax rate of 23% to 24%, and no impact related to acquisitions or material new partnership agreements not already disclosed. And finally, for the third quarter of 2019, we are expecting adjusted net income per diluted share to be in the range of $3.00 to $3.10. And with that said, Operator, we'll open it up for questions.

Questions and Answers:

Operator

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * key. One moment please while we poll for questions. Our first question comes from the line of David Togut with Evercore ISI. Please proceed with your question.

David Togut -- Evercore ISI -- Analyst

Thank you. Congratulations on the acceleration in organic revenue growth. With 13% organic revenue growth for Q2 and with your 2019 guidance staying at 9% to 11%, is that just conservatism, or are you expecting some deceleration in organic revenue growth in the back half of the year?

Eric Dey -- Chief Financial Officer

Hey, David. This is Eric. Yeah. It's a couple things. 1) Obviously, we expect our businesses to continue to perform, actually accelerate as we get into the second half. It's more like we have tougher comps. So, last year, the second half of the year, our businesses accelerated as well. So, we're expecting, again, accelerated growth overall. But just tougher comps from a organic growth perspective.

Ron Clarke -- Chairman & Chief Executive Officer

Hey, David. It's Ron. We've also got the gift in the other, which we don't call out outlooking. Those could be not super great in the second half. So, probably still double-digits for the non-fuel lines, within that 9% to 11% number.

David Togut -- Evercore ISI -- Analyst

Got it. And then any specific assumption on corporate payments in the back half? It seems like you're just starting to benefit from the cross-border growth there up 30%.

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. They could probably still start with the two in Q3 and 4.

David Togut -- Evercore ISI -- Analyst

Got it. And then what was the growth rate for the Mastercard fuel card in the second quarter?

Ron Clarke -- Chairman & Chief Executive Officer

Hold on one second. We'll have to look that up, David. I think it was in the low 20-percentages if I -- no.

Eric Dey -- Chief Financial Officer

David, we'll get back to you.

Ron Clarke -- Chairman & Chief Executive Officer

The combo, David, we call it our local business. I'm looking at the local business was up 13% for Q2, which includes our fuel man business and Mastercard. I don't have the split in front of me. But it's in that range.

David Togut -- Evercore ISI -- Analyst

Got it. Just a quick final question. The 18% growth in new sales bookings in the second quarter, any key drivers of that acceleration from what we saw in Q1?

Eric Dey -- Chief Financial Officer

I'm looking at the sales page. All were pretty good. The corporate payments again was -- Blockbuster was up almost 40% over prior year. And the Brazil, I think I mentioned the reduced sales channel there that we launched two or three years ago. We're just rocking again. So, that brings us way, way up. So, I'd say those are the two polling arrests.

David Togut -- Evercore ISI -- Analyst

Got it. Congrats on the strong results.

Operator

Our next question comes from the line of Tien-Tsin Huang with JPMorgan. Please proceed with your question.

Tien-Tsin Huang -- JPMorgan -- Analyst

Hey. Good afternoon. So, with the revenue accelerating and, Ron, like you said, a high since you started reporting that organic metric, I'm curious if you can attribute it to anything. It seems like you're hitting on a lot of the right areas. Is it fair to just say it's greater focused across the broader organization with new sales up, retention up, organic growth accelerating? What would you point us to there?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. I think it's a good question, Tien-Tsin. I'd say a couple things. One is it's mix, obviously. So, having bigger businesses here that have bigger camps makes the non-fuel lines grow. And then second to your point, we have had starting to be more focused on the knitting because we've done less big deals in the last 12 to 24 months. So, I think both of those things have brought more focus in base business.

Tien-Tsin Huang -- JPMorgan -- Analyst

Cool. Good to know. And then on the bookings front, I know David just asked, and I'm curious. How much of the bookings could we assign to your Beyond initiative? You're at 2% now. Do you have a target for maybe exit rate? Could that get much better?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. We don't actually bookkeep our sales or do booking, per se, into the Beyond buckets yet. It's a bit of a manual kind of system. But I'd say again, the hope is for those things to step up, call it, another point over the next, call it, few quarters. So, they're building, like I mentioned. In the Beyond Fuel, we're still chasing the first 50,000 clients here. We're up to just under 7,000. We're gonna turn our attention to the other 50,000 as we start to move through the second half. So, stay tuned. Hopefully more. Same on the Beyond Tolls. Same on the Beyond Lodging. So, it's definitely picking up. I try to get a few stats of that progress. But clearly, as those bases keep getting bigger, it should contribute more.

Tien-Tsin Huang -- JPMorgan -- Analyst

Okay. No. That's useful. Then last one, just quickly on payroll. You're going back to your roots a little bit there, Ron. I'm curious. Is that a bigger focus potentially for the company? Or is it really just enhancing your corporate payments outlook? Thanks.

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. It might be. We like that base because again, it's another employee payment product. We're not in payroll products and saying I'll have ADP. And there's a number of independent assets given all this consolidation. So, obviously, I've been keen to bid into that, that there may be some assets that could get loose here. But we like it. This one we pulled the trigger on. We liked it because it's really 100% SMB, which we like, Tien-Tsin. And it's got a sales model to work with payroll processors. So, we like the idea of building that payroll card business more in the SMB space than in the mid or large. So, we just liked it a lot. And we could afford it really because of the synergies that we could bring being in the business. So, it's a nice little add-on. It helps us head in the direction that we like.

Tien-Tsin Huang -- JPMorgan -- Analyst

Okay. Thanks. Well done on the results. Appreciate it.

Operator

As a reminder, if you would like to ask a question, please press *1 on your telephone keypad. Please limit to one question and one follow-up in the essence of time. One moment please while we poll for more questions. Our next question comes from the line of Jim Schneider with Goldman Sachs. Please proceed with your question.

Jim Schneider -- Goldman Sachs -- Analyst

Good afternoon. Thanks for taking my question. I was wondering if you could maybe throw a little more statistical color on the progress for Beyond Fuel. I believe you said it was two points compared to last quarter. I think this quarter you said it was one-two points. Can you give us any kind of sense in terms of the acceptance of the clients that have taken you up on the offer, the uplift on spend relative to the 40% metrics you provided last quarter? And just to confirm that additional point or so of acceleration, is that a statement about exiting this year or more of a statement about 2020? Thanks.

Eric Dey -- Chief Financial Officer

Yeah. Hey, Jim. This is Eric. We continue to add more customers to the base of the Beyond Fuel bucket. So, as an example, remember from last call, I think we said we had about 5,000 clients that were actually using the Beyond Fuel capability. We've accelerated the acceptance to about 7,000 clients at the end of Q2. And again, we're still looking at accelerating the acceptance of that to about 100,000 customers eventually. So, we're slowly getting to do that. So, I think as we get into 2020, you'll see that Beyond Fuel category accelerate by another point or so. At least, that's our goal at this point.

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. Hey, it's Ron. Just to add to it. So, when we use the term Beyond Fuel, I think we've mentioned before that there's some different use cases that we stick under that umbrella. So, for example, we call internally the companion card when we go back to fuel card clients we already have and try to add a card that would let them buy ADP. We have a different thing when we try to go to a construction vertical and sell a two-for product, one that buys fuel and construction supplies. And we even have third use case when we go out to trucking clients and have the trucking company put the payroll of the driver literally on the card and then use it as a debit card. So, every one of those use cases creates incremental spend by the client, incremental utility to the client, obviously incremental revenue. And so, the liftoff amount, the 40% I referenced in the last call, they vary, if you will, by those applications.

So, the companion card probably is in the 25% range. The construction card's probably 50% or 60%. And the payroll card probably in that 40% range. So, it varies basically by use case. But the message I think we're trying to leave everybody with is it's working. We're adding clients. We're keeping clients. Each one of the use cases is building. And so, Eric's point, there's a lot of compares to the prior period. But I think the headline is that this idea is now working. And it's growing. And it's actually adding, like we're saying, a couple of points to growth. And my comment was as you get into, call it, Q1 of next year, we should think about it going up "another" point.

Jim Schneider -- Goldman Sachs -- Analyst

That's great color. Thank you. And then maybe you can comment on the overall corporate payments side of things and particularly the sales activity you're seeing there. And maybe comment specifically on the kind of sales and lead generation you're seeing through some of your partner software channels versus the invoice pay channel itself. And maybe just talk about whether you see the opportunity or do you have the desire to acquire additional software assets in that space. Thanks.

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. I think they're all working, our own directiveness. We're getting much better I think on the marketing side. So, we're teeing up more soft on more leads. So, that's one of the reasons our direct business is growing. I think our channel partners, some of the ones that you guys know that are private area really doing super. They're investing lots of money in their respective channels. So, we're getting the benefit of their growth. Same thing on our FX business. We doubled down on the sales investment and went after larger accounts. So, we're seeing that now in our sales numbers that even if the new account is the same, the dollars per account are way up.

So, I'd say that the corporate pay selling machine is working almost across the board. And this model that we have of working with ERPs, which is part of the whole invoice pay idea there, their core business leveraged the old ADP accounting stuff of car dealers and a couple of big construction packages. And so, this idea of working with ERP partners in an integrated fashion to serve our joint clients is working quite well. So, it's literally, Jim, across the board, the selling is working there.

Jim Schneider -- Goldman Sachs -- Analyst

Good to hear. Thanks so much.

Operator

Our next question comes from the line of Bob Napoli with William Blair. Please proceed with your question.

Bob Napoli -- William Blair -- Analyst

Thank you. A follow-up on the corporate payments business, the Nvoicepay. Ron, I guess knowing you, not that surprised that Nvoicepay is gonna be accretive sooner than you thought at the end of the year. To me, it seems like that opportunity is so large should it be accretive by the end of the year. The AP automation piece, how big can that be? And are you investing to the level that you should be to drive that business to multiples of what it currently is?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. So, I would say, Bob, back, don't presume that the version from dilutive to accretive is based on clipping sales or marketing or even IT investment. It's not. We're actually spending more as we move into the second half. It's simple lay-down synergies around contracts, for example, that they have and merchant acceleration where we can take our five or six hundred thousand merchants and get their card penetration up. It's easy low-hanging fruit money that we're grabbing more than it is that we're trying to govern or dial back on the investment. So, that's point one. Point two is yeah, really, of all the areas, the TAM, and trying to monetize this payable turning AEP, which is, again, half of the business spend into something that's cardable or we can get a per tran, see if it's ACH or something. You know this. The opportunity is massive. So, you shouldn't read any comments about accretion into us not understanding that or us not investing a lot in that.

Bob Napoli -- William Blair -- Analyst

Okay. Thank you. Then you mentioned three acquisitions that are in the pipeline that are obviously not guaranteed to close. On the M&A side, should we expect larger transactions? Do you have visibility on -- do you expect some of those sales to close before the end of the year? Or would you be buying back stock?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. So, again, when we try to comment on our pipeline, there's a number of dimensions. There's the size of the deal. There's the timing. Are they now or later? There's the categories that they're in. So, we try to just provide a little bit of flavor around the near in things, things where we signed term sheets and we're far along in them. So, my comment on the pipeline is we have three, what I would call, close in things that we'll either close in the next 90 days probably or not that are in the tuck-in size. Hundreds of millions of dollars. Not a billion. Not 50. And then as always, we have some larger transformational things that we're exploring that are not as near in. So, the headline is we've got a couple -- like three, Eric, year-to-date?

[Crosstalk]

Eric Dey -- Chief Financial Officer

Yeah. Three tuck-ins.

Ron Clarke -- Chairman & Chief Executive Officer

I would think you should think that probably one or two more of those kind of things would happen in the second half. And as you know, given our leverage ratio and enhanced liquidity, we're obviously in a good spot to go after something live here. So, we're getting to a place. We've had time to focus on the knitting and the basic business. And we're game to try stuff, buy businesses and improve them. So, you should expect that we're continuing to try to do that.

Bob Napoli -- William Blair -- Analyst

Great. Thanks, Ron. Thanks, Eric and Jim. Appreciate it.

Operator

Our next question comes from the line of Ramsey El-Assal with Barclays. Please proceed with your question.

Ramsey El-Assal -- Barclays -- Analyst

Hi, guys. Good evening. And thanks for taking my question. I wanted to ask about the Beyond Toll performance in Brazil. The statistics you threw out about McDonald's, effectively, were really impressive. In that subsegment of that offering, just the drive-through QSR business, how should we think about the addressable market there? Those are incredibly impressive results with McDonald's. How unique is McDonald's as a partner in that market? And is this the type of thing where we could think of over time that you had multiple merchants like McDonald's ramping like that?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah, Ramsey. Hey. It's Ron. I think you're thinking about it the right way. So, the press that we've had on this idea is hey, we've got these 5 million users. And parking and fueling and drive-through are obviously merchants that are pretty interested in our customer base. And so, I think of it as these first three years that we've owned the thing has been fundamentally piloting. We've added whatever I mentioned, a couple thousand incremental locations of parking, fueling, and McDonald's.

And not shockingly, there's more people lined up in every one of those categories. So, in parking, we signed up the next biggest parking operator. I think we've added three or four more. In fueling, we've added care for. And in drive through, we've got two more things that are teed up that have decent drive through footprints. We've even signed a thing which we haven't announced but we've signed with Nissan where we're gonna factory install the stickers on all their new vehicles. And as soon as we signed that and started to talk about it, we now have other manufacturers that are reaching out on the same idea. So, I think this proof of concept, when you can relay what's happening at a gas station or at a McDonald's to the next set of drive through people is the key to getting that thing built. So, we're trying to give you the message that it's really early. But it's working. And we expect to keep rolling the thing out.

Ramsey El-Assal -- Barclays -- Analyst

Great. That's terrific. I wanted to ask a completely separate question about -- there's been a lot of movement in the industry in terms of alternative networks. You've got the fed announcement. You've got Mastercard and Visa both moving into alternative rails. Obviously, all the mega mergers are talking a on-us type of capability meaning FIFs and fly servant and, potentially even global payments to some degree. You've alluded in the past that there might be some capability that you have in terms of the assets that you possess to run alternative network paths, maybe particularly on the corporate payment side. Can you comment on your most updated thinking along those lines?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. I think we've said this from the beginning that we wanna get merchants digital. And so, when we sign up a business, and they've got a thousand merchants to pay, and we realize that only 200 of those are cardable, let's say, on the Mastercard network, we scratch our heads a bit and say, "Okay. What could we do to digitize some of the other 800?" So, this idea of what we call internally ACH-plus or creating some rails that provide some incremental data to merchants and maybe some earlier funding and stuff to merchants is something that we're exploring. We built a bit of a network. And I think what we've said is it's a land grab, Ramsey, now. So, we're mostly focused on signing up clients and getting the first 200 merchants cardable. But you should think about us over time and particularly with invoice pay going back and trying to digitize with our own network more of those merchants that are really unserved by Visa or Mastercard.

Ramsey El-Assal -- Barclays -- Analyst

Great. Terrific. That's all for me. Thanks.

Operator

Our next question comes from the line of Oscar Turner with SunTrust Robinson Humphrey. Please proceed with your question.

Oscar Turner -- SunTrust -- Analyst

Hey, guys. Good afternoon. My question's on fuel. Are the Beyond Fuel-related cards typically replacing other cards? And then just wondering if you're seeing existing Beyond Fuel customers shift more spend to those cards over time.

Ron Clarke -- Chairman & Chief Executive Officer

Yeah, Oscar. It's Ron. So, on the first part of the question, it's no. So, generally, we simply toggle open the card. So, we have control parameters on the card program. So, if you're a boss, and you want us to open up five of your 10 employee cards to buy construction supplies, we can flip a switch and open up five of them and keep the other five locked down. Or B) we can give you a new card for your AP ed to use to put AP purchases and leave the same 10 cards that are out in the field. So, the answer is we tend not to replace the cards. We either "open them up" or add new cards.

Oscar Turner -- SunTrust -- Analyst

Okay. Thanks. And then just as far as the -- are you seeing existing customers shift more spend?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. That's I think the comment of earlier of the different use cases we have. We're picking up anywhere from 25% to 50% incremental spend with the account as they buy or put payroll on or put construction supplies or put AP. So, the total amount of business that we're doing with a client is growing in the 25% to 50% range.

Oscar Turner -- SunTrust -- Analyst

Okay. That's helpful. And the follow-up is a high-level question about growth and margins just given some of the longer-term initiatives you're working toward. Do you think any of those initiative are attractive enough -- maybe it's Beyond Fuel or tolls -- that you would think about stepping up the marketing spend significantly?

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. I think it's a really good question. So, let me give a two-part answer. The first one is if anything, the guidance that Eric gave for the second half anticipates a faster profit growth. So, if you look at our first-half print, I think our cash EPS print as 9%. And I think our macro adjusted profit print's 13%. We expect in the guidance that Eric gave, the $11.68, both of those numbers to go up. I think our print outlook is 13%, which is a step up. And our macro neutral cash EPS grows to 17%. So, the first headline is that fitting inside the guidance we gave you, there's an implied acceleration in our profits and our margins. That's point one.

Point two: Would we spend more if we thought we could sell more? The answer is yes, we would inside of a couple constraints. 1) Trying to lever some profit growth. And No. 2, the practicality of how we could spend the money and how productive the incremental money can be. We're not interested in just spending money and it obviously not producing anything. And so, some forms of our marketing investment you could push a button on like search words and emails and things like that. And then other ones that are people-intensive like tele-sales or field take longer to build. You can't just hire 100 brand new people in a quarter. So, I think the answer is it'll probably be somewhere in between. Every year, we step up our sales and marketing investment. We step it up faster in corporate pay. And to the extent that we can get this AEP thing going better, I think we'll continue to step it up. But again, we won't go overboard I guess is my message.

Oscar Turner -- SunTrust -- Analyst

Okay. That's helpful. Thanks.

Operator

Our next question comes from the line of Ryan Cary with Bank of America Merrill Lynch. Please proceed with your question.

Ryan Cary -- Bank of America Merrill Lynch -- Analyst

Hi, guys. Thanks for taking my question. I wanted to ask on the toll business, when we look at the 17% organic growth in the quarter, is there a way to parse out the contribution from the legacy toll business versus contribution from Beyond Toll initiatives? Well, obviously, Beyond Toll is still early. I'm just trying to get a sense of it as large enough to move the needle.

Eric Dey -- Chief Financial Officer

Can you repeat the question again? I'm sorry. You broke up on us.

Ryan Cary -- Bank of America Merrill Lynch -- Analyst

Yeah. I'm just trying to a sense if although there's all this great momentum behind Beyond Toll if the growth rate there is large enough to move the needle for overall toll organic revenue growth and if it's not, when we could potentially see it being large enough to be a needle mover.

Eric Dey -- Chief Financial Officer

Yeah. We're stepping up our investment continuously in the Beyond toll category as Ron indicated earlier. We now have I think over a million people that have toll tags that can actually use those cards to buy other things like fuel, as an example. And we're also marketing that product to people that are using the toll product as a other than toll-first sort of thing, meaning they wanna buy fuel, but they don't really spend a lot in the toll roads. Or they wanna buy fast food. Or they wanna buy parking. So, we've got a different universe of customers. And as Ron indicated, we're starting to partner with a major car brand, Nissan, who's starting to install the toll tags directly into the vehicle as it's manufactured, which is obviously gonna be a boon for us as well. So, we're gonna start seeing some accelerated growth as acceptance increases over time and as our investment in sales and marketing steps up over time. So, we're starting to sell to more customers. So, we're very bullish on the prospects for that beyond toll category.

Ron Clarke -- Chairman & Chief Executive Officer

Ryan, it's Ron. I'd just add to what Eric said. I'd say if you said, "Hey, in Q2..." I'd say it's probably less than 1%. And the reason again, simplistically, is the company there has really 100% of all the toll locations. It's been around 15-20 years. And it covers fundamentally every toll booth in the land. And yet, we don't have every parking, obviously ever gas station or every drive through. We have tiny percentages of gas stations and drive throughs. So, I think the question earlier today is the right way to think about it, which is this is almost a pilot period where we're showing that these other networks can matter and can get used and are liked by the clients.

And if those build, and we get larger percentages of drive-through restaurants and gas stations, that growth rate will become obviously way more material. So, I'd say this thing will be a bit slower build because we've gotta build the network, whereas in Beyond Fuel, we have the Mastercard network. It can go up a bit faster because the network's already there. We just have to get clients to spend on it. This one is we're actually a network builder, which I hope everyone gets. It's a super sustainable thing once you get it up. And it creates a great barrier to other people trying to copy us. "Hey, I have your dad's toll company now. I'm glad you have that build because we built that plus these five things." And so, that's the game. We're in a race to build a way more interesting network to these mobility people.

Ryan Cary -- Bank of America Merrill Lynch -- Analyst

Got it. And then switching to the corporate payments side of the business, clearly growth of both Comdata and Cambridge were very strong in the quarter. Was there any contribution to the growth rate of either from Nvoicepay, which I believe is either been integrated into both or is in the process of being integrated? Or was this more just strong performance of the stand-alone assets?

Eric Dey -- Chief Financial Officer

Well, that thing grew like a weed. The problem is it's small. So, against the other two businesses you talked about, it's tiny. But now that I'm in front of it, that thing grew 50% or 100%. So, as a stand-alone business -- and obviously, we've got way more selling capability to help it. So, that thing is growing both top and bottom quickly. It was already growing quickly, by the way, before we bought it. But it's growing faster now. But I'd say most of the headline numbers we're quoting you were coming from the two core things that you called out just because they're bigger.

Ryan Cary -- Bank of America Merrill Lynch -- Analyst

Got it. And I know you're integrating Nvoicepay. It wasn't do to the integration that caused the growth rates to expand or accelerate for either the Comdata or Cambridge assets?

Eric Dey -- Chief Financial Officer

No. Some of it is. It is both. Again, I think we told you that there's some things we've done like on the merchant side and some things we've done with our ERP people and the sales rates. So, we put a number of things in already. The thing has moved from, I think I said minus-three to flat to plus-two over the course of sequential quarter. So, it's moving quite nicely, top and bottom. It's just not rising the overall 26% number that we called it.

Ryan Cary -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks for taking my questions.

Operator

Our next question comes from the line of Peter Christiansen with Citibank. Please proceed with your question.

Peter Christiansen -- Citibank -- Analyst

Thank you. Good afternoon. Nice outperformance, guys. I have two questions. First, Ron, you talked quite a bit the last couple quarters about shifting a lot of marketing toward digital. Just wanted to see if you had an update on what kind of productivity or efficiency gains that you're seeing on that front. And could you extend that strategy onto some of the Beyond initiatives as well?

Ron Clarke -- Chairman & Chief Executive Officer

That's a great question, Peter. Yeah. Inside of our sales results, which were up 18%, we had another record global digital contribution. I think digital has now in the US surpassed 40%. I think it's 42% or 44% of all of our new sales in the US are coming digital. And then B) we started to crunch the digital thing into seamless applications. The whole process becomes digital. So, I'd say that we're still early in it. But between enabling digital outreach and then digital applications as well as the science around the landing pages and the clickthrough, I think that our sophistication in B to B is up dramatically over the last two or three years. And I'd say there's still way -- to your question -- way more room to go. And I think we're still trying to sort how we can invest more in that because unlike the people thing, you can step on that faster and still keep it productive. So, getting better and more sophisticated. It's producing more. But I think there's still more runway there.

Peter Christiansen -- Citibank -- Analyst

That's helpful. And then there's been some negative press lately on some of the truckers, particularly on the shipping side. Just wondering what you guys are seeing on your OTR? And any pockets of weakness there? That would be helpful.

Ron Clarke -- Chairman & Chief Executive Officer

Yeah. It's for sure soft. I'd say we saw some of it in Q1. I'd say we saw more of it here in Q2 and partly because we have the Beyond Fuel initiative, what we call on-road initiative there. It's helped out revenue growth in that segment. But I think the underlying same-store sales in our trucking business has actually gone negative. I quoted 1% same-store negative globally for our business. Or call it a push. Call it zero if you take out our gift card business. Inside of that, I think our trucking was, call it, minus-one or minus-two. So, we're seeing really the same kind of softness that the industry is.

Peter Christiansen -- Citibank -- Analyst

Thank you.

Operator

Ladies and gentlemen, that's all the time we have for questions. Sorry. And this ends the call. Everyone have a great day.

Duration: 63 minutes

Call participants:

Jim Eglseder -- Head of Investor Relations

Ron Clarke -- Chairman & Chief Executive Officer

Eric Dey -- Chief Financial Officer

David Togut -- Evercore ISI -- Analyst

Tien-Tsin Huang -- JPMorgan -- Analyst

Jim Schneider -- Goldman Sachs -- Analyst

Bob Napoli -- William Blair -- Analyst

Ramsey El-Assal -- Barclays -- Analyst

Oscar Turner -- SunTrust -- Analyst

Ryan Cary -- Bank of America Merrill Lynch -- Analyst

Peter Christiansen -- Citibank -- Analyst

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