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FleetCor Technologies Inc (NYSE:FLT)
Q1 2021 Earnings Call
May 5, 2021, 5:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to FLEETCOR Technologies First Quarter 2021 Earnings Conference Call. [Operator Instructions] [Operator Instructions]

I will now turn the conference over to your host, Jim Eglseder. Thank you. You may begin.

James P. Eglseder -- Investor Relations

Good afternoon, everyone, and thank you for joining us today for our first quarter 2021 earnings call. With me today are Ron Clarke, our Chairman and CEO; and Charles Freund, our CFO. Following their prepared comments, the operator will announce that the queue will open for the Q&A session. It is only then that you can get in the line for questions.

Please note that our earnings release and supplement can be found under the Investor Relations section of our website at fleetcor.com. Now throughout this call, we will be presenting non-GAAP financial information, including adjusted revenues, adjusted net income and adjusted net income per diluted share. This information is not calculated in accordance with GAAP and may be calculated differently than non-GAAP information at other companies.

Reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and on our website, as previously described. I do need to remind everybody that part of our discussion today may include forward-looking statements. These statements reflect the best information we have as of today. All statements about our recovery, outlook, new products and acquisitions and expectations regarding business development and future acquisitions are based on that information.

They are not guarantees of future performance and you should not put undue reliance upon them. We do not undertake any obligation to update any of these statements. These expected results are subject to numerous uncertainties and risks, 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. Before we begin, I would like to make you aware that over the last few weeks, we posted two short videos to the Investor Relations website. The first is around our approach and strategy for electric vehicles as discussed by Alan King, who is the head of the U.K., Europe and ANZ for fuel and heading up that effort for us. The second is a video providing some insight into our downmarket full AP product so you can get a feel for what it is and how it works. We had mentioned that we would likely spend some more time on these topics in the future, and this is an interim step while we continue to work on those efforts.

So now with that out of the way, I will turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Okay. Jim, thanks. Hi, everyone, and thanks for joining our first quarter 2021 earnings call. So upfront here, three subjects: first, my view of Q1 results; second, I'll share our rest of year outlook; and then third, talk a bit about how we're positioned for growth over the midterm. Okay, let me turn to Q1 results. So we reported Q1 revenue of $609 million, really kind of spot on our expectations.

Reported cash EPS of $2.82. That's a bit better than our guide, mostly helped by lower credit losses and fewer outstanding shares. The macro, not much of a factor. We really call the macro pretty well versus our guidance. We did have higher fuel prices but a bit lower spreads and so really no impact there. Against the prior year, we reported a revenue decline of 8% and organic revenue decline of 6%. Unfavorable Brazil FX hurting our prints and continued weak same-store client volume softness impacting our organic growth.

All right, let me make a turn to the trends in the quarter and share with you what we're seeing. So volume, sequential volume in Q1 versus Q4, pretty stable, as we expected, but we are now beginning to see a bit of an uptick here in April, so early signs of volume recovery. Same-store sales or what we call client softness really stuck at approximately minus 6%. This continues to reflect a small segment of our client base that is struggling to recover but fortunately still trying.

Retention, really terrific in Q1. We reported 93% overall retention. That's our best result in years. Credit losses, very low for the quarter, $2 million. That was helped by a $6 million recovery and again, lower sales rolling into this year. But the real story of Q1 is sales, so Q1 sales results, nothing -- really nothing short of fantastic. Consolidated sales finished 7% ahead of last year. Yes, 7% ahead of last year, so finally growing again. If you rewind sales over the last four quarters, so sales versus prior year, 55%, 81%, 92% and now 107%. Inside of that, our fuel card businesses, both here and international, coming in ahead of the prior year, driven mostly by record digital sales.

So for Q1, we signed 35,000 new business clients worldwide, 35,000. So again, a terrific result. So the summary for Q1, I'd call it an in-line result for volume, revenue and cash EPS, and I call it an outstanding result for credit performance, retention performance and most importantly, sales performance. Okay. Let me transition to our rest of year 2021 outlook, along with the assumptions behind that. Included in our Q1 earnings supplement on page 12, you'll see our updated guidance for the year.

So full year '21 revenue expectations at the midpoint, $2,650,000,000. That's unchanged from last time. Reasons that we're staying put are: one, Q1 revenue, again, coming in kind of on plan; two, we've built in significant sequential revenue step-up in the forward quarters, probably in the range of $100 million up from Q1 to Q4. So our Q2, Q3, Q4 revenue guidance now assumes revenue growth in the high teens. In terms of the COVID recovery in our outlook, I'd say it's a bit mixed. U.S. and U.K. look maybe better than our planned outline.

But in our case, the Brazil COVID situation, worse, and so a pushback there in terms of recovery. On the cash EPS front, we will flow through our $0.12 Q1 beat. We'll raise full year '21 cash EPS guidance at the midpoint to $12.42, so $12.42 for the base business. In terms of the AFEX acquisition, hopeful now to close that deal on June 1. Initially, we thought May 1. So as a result of the one month delay, we're going to take the expected in-year AFEX accretion at the midpoint to $0.18 versus $0.20 previously.

If you combine the base business and AFEX, our consolidated EPS outlook at the midpoint would be $12.60, $12.60 for the full year. I do want to add, we feel very good about the AFEX cross-border deal. They had a great Q1 performance and their management is really holding steady their rest of year forecast. All right. Let me make a turn over to our last subject today, which is how is FLEETCOR positioned for growth in '22 and beyond. So I do want to highlight just a few factors that give us confidence in sustainable growth.

So one is the exit rate. So if we hit this rest of year guidance, our Q4 step-off will be quite strong heading into '22. And if we hit our rest of year sales plan, again, that will pour in-year revenues into 2022. Digital, I can't say enough about digital and the investments we're making in digital selling, digital UIs and customer experience, new ways of underwriting credit, and so the digital transformation making a big impact on the company. Third is EV.

We're actually embracing EV, particularly in Europe. Early feedback really, really positive there that we may actually be advantaged in selling because of our integrated mix lead experience as well as this at-home recharging opportunity. It looks real. It looks like clients will pay subscriptions to basically measure and reimburse employee recharging at home. So potentially a new meaningful revenue opportunity that is nonexistent today.

Fourth factor, our Beyond strategy or our entry into new segments. So as we've discussed before, we're extending into new customer segments really in each of our major lines of business. So in corporate pay, the Roger deal helped us enter the SMB space. In lodging, a couple of deals last year helped us enter the airline accommodation space. And in Brazil, we've entered what we call the urban driver space. So in each of these cases, basically, we're extending our businesses, extending our TAM and obviously extending our longer-term sales opportunity.

Fifth factor is brand. We've just introduced our new Corpay brand aimed at unifying all of our various corporate payment assets. So this single brand will help our corporate payment business go to market with a single identity and hopefully give us an advantage with this broader bundle that we've got. And then last factor is capital. Our balance sheet's in terrific shape. Leverage ratio 2.5 times, liquidity approaching $2 billion. Again, our plan is to generate $1 billion-plus of annual free cash flow.

We had the ability to lever up to three times target, which would produce circa $8 billion in capital to invest in either M&A or buybacks over the forecast period. So obviously, upside for us via capital allocation. So look, the takeaways from today: so one, Q1, I'd say again, an in-line Q1 financial performance but an outstanding Q1 sales performance. Rest of year, again, we're raising rest of year cash EPS at the midpoint to $12.42. That's excluding acquisitions, and the $12.60 at the midpoint, that's including AFEX, so tracking to deliver that, although again, fully aware of the uncertainties.

And then lastly, in terms of positioning, we really do feel well positioned to grow the company next year and beyond. Again, we expect a strong exit, which will pour into '22. We're extending each of our businesses into bigger TAMs, and we've got the available capital to drive incremental returns if we manage it well.

So with that, let me turn the call back over to Chuck to provide some additional details on the quarter.

Charles Freund -- Chief Financial Officer

Thanks, Ron. For Q1 of 2021, we reported revenue of $609 million, down 8%; GAAP net income up 25% to $184 million, and GAAP net income per diluted share up 29% to $2.15. Included in our Q1 2020 results was the impact of the $90 million onetime loss related to a customer receivable in our cross-border payments business, which equated to $0.74 per diluted share, as reported last year.

Adjusted net income for the quarter decreased 8% to $242 million, and adjusted net income per diluted share decreased 6% to $2.82 as we continue to feel the effects of COVID on our businesses. Organic revenue growth improved two points sequentially to down 6% on a year-over-year basis. We saw improvement in every category except tolls as Brazil continues to grapple with incremental COVID-related shutdowns.

As a reminder, organic revenue neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices and fuel spreads and includes pro forma results for acquisitions closed during the two years being compared. Our fuel category was down organically about 6% year-over-year, which was a 4-point improvement from Q4. The international fuel business growth was a bit better than North American growth as those international markets shut down earlier in the quarter last year, so had easier comps.

The corporate payments category was down 5% in the first quarter, one point better than Q4, as improvements in virtual card and full AP were offset by FX, which was lapping a very strong Q1 last year. Full AP growth accelerated 14 points sequentially to 21% growth year-over-year, powered by continued strong new sales. Tolls was up 3% compared with last year but down four points from Q4 of 2020 due to the aforementioned shutdowns in Brazil.

Looking longer term, compared with Q1 of 2019, revenue was up 13% organically. The lodging category was down 14%, which was an improvement from down 25% last quarter, with domestic airline activity recovering faster than we expected. Gift showed organic growth of 2% year-over-year as that business felt the effects of COVID earlier in Q1 of 2020 than most of our other businesses. That said, we've seen real traction in digital card sales and in our B2B sales efforts where we are selling gift cards to businesses for use as incentives.

Recognizing that the comps to 2020 may not be very helpful, we did add some comparisons to 2019 for organic revenue growth and sales, so you can see how we are trending compared with the most recent pre-COVID or "normal year". That's available in the supplement we provided today. looking further down the income statement. Total operating expenses were down 7% to $343 million, excluding the impact of the onetime loss in our cross-border payments business last year.

The decrease was primarily due to better bad debt expense, lower expenses in Brazil due to the currency translation impact and lower T&E costs as travel and the associated expenses are much lower than last year. As a percentage of total revenues, operating expenses excluding the onetime loss were stable compared with Q1 of 2020 at approximately 56%. In the quarter, bad debt was only $2.5 million or one basis point, as it included the benefit of a $6 million recovery for credit loss recorded in the first quarter of last year.

Credit continues to be a bright spot, but we expect our bad debt to normalize as our new sales levels recover and grow. Interest expense decreased 20% to $29 million due to lower borrowings on our revolver and decreases in LIBOR related to the unhedged portion of our debt. Our effective tax rate for the first quarter was 21.8%. Excluding the impact of the onetime loss in our cross-border payments business last year, our effective tax rate in Q1 of 2020 was 18.9%.

The increase over last year's adjusted tax rate was due primarily to the level of excess tax benefit on employee stock option exercises relative to pre-tax income. Now turning to the balance sheet. We ended the quarter with $958 million of unrestricted cash, and we also had approximately $1 billion of undrawn availability on our revolver. In total, we had $3.5 billion outstanding on our credit facilities and $915 million borrowed on our securitization facility. As of March 31, our leverage ratio was 2.48 times trailing 12-month adjusted EBITDA, as calculated in accordance with our credit agreement.

We refinanced our securitization facility at the end of the first quarter, less than six months after our last refi. Recall that our normal three year term expired last fall when credit markets were unfavorable, so we entered into a one year note at LIBOR plus 125 basis points with a 37.5 basis point floor, expecting to refinance again when conditions improve. Our new securitization has a duration of three years at LIBOR plus 100 basis points with a floor of 0, so our effective all-in rate is approximately 50 basis points better, given the current level of LIBOR.

We've also just completed a refinance of our Term B credit facility, upsizing it to $1.15 billion for a new term of seven years and maintaining the rate of LIBOR plus 175 basis points. We used the proceeds to pay off our existing Term B note, pay down the revolver, funded the AFEX acquisition and improve our liquidity position for future capital actions. We repurchased approximately 640,000 shares during the quarter for $170 million at an average price of $266 per share, and we have approximately $836 million in repurchase capacity remaining under our current authorization.

Now let me share some thoughts on our outlook. We are maintaining our full year revenue guidance of between $2.6 billion and $2.7 billion as improvements in some businesses such as domestic airline lodging are being offset by other places like Brazil and Europe. They're experiencing incremental virus flare-ups and associated lockdowns. As we explained last quarter, our full year guidance assumes we recover about 1/3 of our Q4 exit revenue softness during calendar 2021.

And that this recovery would account for about four to five percentage points of revenue growth in the second half. Within that expectation, there is very little recovery impact assumed for Q1, a modest amount for Q2 and then an acceleration into the back half of the year. While we are seeing some puts and takes between businesses, our overall outlook remains intact. You can see our full updated guidance and assumptions in both our press release and our earnings supplement, so I won't reiterate them here.

We are raising the midpoint of our adjusted net income per diluted share guidance $0.12 to $12.42 to reflect our first quarter results compared to our expectations. Looking ahead, we are expecting Q2 2021 adjusted net income per diluted share to be in the range of $2.80 to $3 per share. Volumes should build throughout the year with the COVID recovery and our new growth initiatives gaining momentum.

As for AFEX, the closing is taking longer than we had hoped, but we still believe the deal will close by the end of the second quarter as we're nearing the finish line with all of the approvals we need from the various regulators globally. Because of the delay, the in-year benefit will be slightly less than what we expected in February. But the upside is that we've had more time to refine our integration plans, so we'll hit the ground running at full speed once we do close.

With that said, operator, we'll open it up for questions.

Questions and Answers:

Operator

[Operator Instructions] And our first question is from Ramsey El-Assal with Barclays. Please proceed.

Ramsey El-Assal -- Barclays -- Analyst

Hi. Thanks for taking question this evening. I was wondering if you could provide us with a little more detail on the Corpay initiative. Is this more of kind of a branding exercise? Or is there sort of tech integration and kind of organizational changes and sort of unifying the sales strategy underneath it all? Maybe if you could also just comment on Roger and your go-to -- the progress with your go-to-market efforts with that product, that would be great.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Ramsey, it's Ron. It's mostly trying to unify the middle market corporate pay assets, but we're also going to rebrand the Roger SMB Corpay. So basically from small to middle market, we'll have one brand.

Ramsey El-Assal -- Barclays -- Analyst

Okay. All right. I also wanted to ask about the pace of the recovery at the enterprise versus SMB level. I know that's something that you've called out in the past. Are you starting to see a more even recovery evolve across the business or is it really still the large customers that are driving some of the recovery?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

That's a great question. The answer is it is becoming more even. We're seeing more recovery now among the SMB group, which is obviously helpful. So our revenues are improving a bit faster than our volume recovery. So it's good news.

Ramsey El-Assal -- Barclays -- Analyst

Starting to smooth out. All right. Fantastic. Thanks for taking my questions, so I appreciate it.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Good to talk to you.

Operator

Our next question is from Pete Christiansen from Citigroup. Please proceed.

Pete Christiansen -- Citigroup -- Analyst

Good evening. Hi, gentlemen. Nice push on the sales. I was wondering if you could provide us a bit of a breakdown on new sales in the corporate payments segment. What's the ear to the ground on there right now, I guess, ahead of launching this go-to-market with Corpay? And then my follow-up is along the lines of Ramsey's question is, how should we think about the main go-to-market push here with Corpay? Is this aligned with the whole UCX execution strategy in the back end? Just a sense of timing there would be helpful.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. In terms of the first part of the question, the sales, the answer is yes, kind of all the segments. I think I called out the fuel card businesses were ahead of the prior year, so was the corporate payments business. So really strength virtually everywhere, except, I'd say, Brazil. Brazil was a bit softer than we had outlook mostly because of the COVID situation. So with that exception, really, the sales were super terrific. Yes. On the Corpay question, again, the answer is yes.

I mean, again, as I mentioned earlier, it's unifying all of the products, which helps in a lot of ways, to your point. It helps not only with the UI in terms of being able to cross-sell and showcase but it also helps at the top of the funnel, being able to promote a broader line of things to prospective clients that are earlier in the cycle because who knows, per se, which product may be interesting at that moment?

So we think there'll be benefits both engaging prospects at the top of the funnel. And then once we've got a client on one of the products, it would facilitate our ability to cross-sell it. So -- and then again, the comment I mentioned earlier that we're going to use the same brand kind of down market and SMB land is in the middle market. So it will look, we hope, as we put this thing out, pretty seamless to whoever is looking at it.

Pete Christiansen -- Citigroup -- Analyst

Thanks, Ron.

Operator

Our next question is from Ken Suchoski with Autonomous Research. Please proceed.

Ken Suchoski -- Autonomous Research -- Analyst

Hi. Good evening. Thanks for taking my question. I just wanted to ask about the corporate payments segment as well. I guess can you just talk about your ability to go direct to corporate payment customers in the SMB channel because we've heard that churn rates are higher there, so the unit economics might not make sense unless you kind of have that strong brand and history operating in that segment. So I'm just curious if you could talk about the opportunity there. Or is this really a cross-sell play into the existing base?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. Ken, it's Ron again. It's a good question. I'd say that it is both. We're super excited about being able to take a bill pay product back to the hundreds of thousands of clients, both here and in Europe, and we've actually come up with some creative ways, we think, to get that product in front of our existing accounts. So that's one. But then the second one, to your point is, yes, we'll go out directly to SMB prospects. And clearly, digital has now become, I don't think 60% of our fuel card sales.

We're getting lots of new smaller accounts via that channel. And we have a lot of other assets in corporate pay to be able to monetize it, for example, in the back end with our merchant network in terms of putting some of the payments through virtual cards. So we think that we can go out with pretty attractive proposals, if you will, out to the prospective accounts and still make a bunch of money, if you will, on the back end. So we'll go out both ways, both to existing clients and to prospective ones.

Ken Suchoski -- Autonomous Research -- Analyst

Okay, that's really helpful. And I guess maybe just as a quick follow-up. I think you mentioned that there was some lower T&E expense in the quarter. I mean, what's the expectation to put some of those expenses back into the P&L now that sales are bouncing back?

Charles Freund -- Chief Financial Officer

Yes, Ken, this is Charles. What I'd say is that as always, we balance our investment with expenses with revenue. So as we continue to perform and grow, we'll be adding some of that expense back. We'll be reopening travel fairly soon here, so that will start to flow through, all of it, mostly to support sales and growth. And then as the volume does recover, there will be some throughput of that on the expense side and processing.

Ken Suchoski -- Autonomous Research -- Analyst

Okay. Thank you.

Operator

Our next question is from John Coffey with Susquehanna Financial Group. Please proceed.

John Coffey -- Susquehanna Financial Group -- Analyst

My, I guess, is the fourth or fifth question on corporate payments but it's a short one. When I see your revenues in the quarter, it looks like you actually had sequential growth in corporate payments. And I was wondering, I think in the call last quarter, you mentioned there was a lot of political-driven spend in Q4, which probably would have seemed like a bit of a onetime thing that would have really elevated Q4's revenues a bit, and I guess I thought maybe you would have seen a little bit of a decline there going into Q1. Is there any like one factor you would say that really drove this sequential growth in corporate payments?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. John, it's Ron. That's a super good question. Yes is the short answer. Everything you said was right. We did have a nice spike in Q4 from the political. It's really this full AP. If you recall, we bought a company just about two years ago called Nvoicepay that does AP automation, kind of full AP outsourcing, if you will, payments. And so that business, it's just going gangbusters is the short answer.

We've, I think going back to the baseline of 2019, more than doubled the spend and revenue in that business. And I think we've got a plan to sell this year in '21 like 60% or 70% of the base of that business. So that business was picking over $50 million. We've got a plan to sell $35 million or $40 million. So we've got more of our sales energy and people basically against that particular product line. So that's what's creating the delta.

John Coffey -- Susquehanna Financial Group -- Analyst

Okay. Great. And by the way, as far as corporate payments go, with that being said about Nvoicepay, is there a good way to think of the cadence of revenues throughout the year?

Charles Freund -- Chief Financial Officer

Specifically for corporate pay?

John Coffey -- Susquehanna Financial Group -- Analyst

Yes.

Charles Freund -- Chief Financial Officer

Yes. So we're looking at that business, which I'd also add to Ron's comments that the sales there are also quite good. The sales were up 18% year-over-year. If we look at then the sequential growth in full AP -- just one second. Yes. I mean, normally, I wouldn't give out too specific but I'd say it's going up circa 15% sequentially each quarter.

John Coffey -- Susquehanna Financial Group -- Analyst

All right. Perfect. Thank you very much.

Operator

Our next question is from David Koning with Baird. Please proceed.

David Koning -- Baird -- Analyst

Oh yeah. Hey guys, thank you. I guess, my first question, just on the fuel segment itself, historically, I think sequentially, it would often be up about 5% or so. I guess I'm wondering, are we back to kind of normal seasonality? I know on a year-over-year basis, I guess, the one thing to think about spreads benefited $26 million, I think, last Q2. So just putting those two things in perspective, I guess, sequentially, maybe up 5% normally again and then the spread impact, are we thinking of that right?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

David, I'm not -- It's Ron. I'm not sure I got the question. Are you asking, "Hey, as we exit this COVID time frame, do we think that the fuel card business is a 5% kind of normalized grower if you kick out spreads and COVID?" Is that the question?

David Koning -- Baird -- Analyst

Yes. I'm actually just asking more just sequentially. I think in Q2, you used to grow, give or take, 5% sequentially, just kind of typical seasonal patterns. And are we back to kind of a little more normal seasonal pattern now sequentially in Q2? And then separately, just thinking about the spread impact.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. On the first part, I would say, even through COVID, we saw very similar seasonal patterns, to your point. Historically, there's more work days in Q2 and Q3, and obviously, the busier time certainly here in the U.S. and stuff vis-A -vis holiday. So yes, the answer to seasonality is it's kind of same old, same old. And yes, it would be in our guidance and stuff reflected the way that you just said. In terms of spreads, Chuck, do you want to take that one?

Charles Freund -- Chief Financial Officer

Yes, I'd say our view of spreads going into Q2 sequentially is relatively flat, maybe slightly improved as fuel prices are leveling out. To your point, year-over-year, they're going to be way down. Q2 of 2020 have kind of record spreads. In terms of the seasonality and sequential revenue within fuel, what I'd say is I'd remind you that we do have some COVID recovery planned in our forecast.

So assuming that, that comes back, we should get a little bit higher than normal in terms of sequential growth in that business. But again, a lot of that recovery is still back half focused but we have some plan for Q2. And we're seeing early, early signs in April. But as Ron mentioned, it's still early.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. Dave, just to jump one last thing on what Chuck said. Your comment is right. Obviously, if you looked at the fuel prices in Q1, they were generally upticking kind of throughout the quarter, which obviously pressures spreads a bit. So as we were exiting the quarter and obviously, we've seen April, what you said is true, we'll have a bit better overall quarter if fuel prices stabilized because spreads have kind of normalized, to Chuck's point. So you're right that this quarter would be better than the full Q1. But if fuel prices stay the same, then we'd expect spreads to kind of stay normalized the balance of the year.

David Koning -- Baird -- Analyst

Got you. And just one quick follow-up. The provisions you called out, I saw in the cash flow statement the $2 million of credit provisions. Should we get back to the more $15 million to $20 million per quarter type range in the future or might it stay pretty low for a while?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. Let me start and then Chuck can pick up. I'd say that probably short term, kind of this quarter, maybe in the next, it will probably continue to run a bit lower. And that's a function of a couple of things. One, the credit policies we had in place a lot in 2020, right, to be protective of the assets of the company. And then two, unfortunately, the amount of due sales we had in 2020 were lower than normal and lower than planned and they carry higher losses.

So when you have a mix of less new to existing, you'll have lower credit losses. So those couple of things will make it a bit better. But I think as you roll forward, I think we would probably anticipate we get back more, David, to normalized levels because we've opened the credit patches, if you will, now, and again, our sales are way up as we said. So maybe a little bit kind of short term and then normalizing as you head to the back of the year.

David Koning -- Baird -- Analyst

Got you. Thank you, guys.

Operator

Our next question is from Tien-Tsin Huang from JPMorgan. Please proceed.

Tien-Tsin Huang -- JPMorgan -- Analyst

Hey. Thank you so much. Ron, I want to ask about acquisitions and your appetite there. And any update, we've seen some of your peers pick up, I guess, in M&A activity and definitely did some capital raising going on as well on the private side. So where's your head at there?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. Tien-Tsin, good to hear your voice. Better, I'd say, probably like the peers that you call out. We were telling someone earlier today, we've actually gone back to real in-person meetings. I actually did a real-life M&A call a couple of weeks ago. We met the principals in real life, so that's kind of nice to actually see people. So yes, I mean, obviously, one of the reasons that we did the refi and upsize the thing is we do have a pipeline of deals.

Like I mentioned, we're looking to close upon this AFEX thing here in a few weeks. And we have a couple of other things closed in that we like. And so that was the basis for kind of lift in that liquidity. So it feels better to me. I mean, I don't say it's back to normal, but we've got things in the categories we like. We've got some accretive deals, which we tend to really like. So yes, we're in a -- I feel like we're back in really a better place, feeling comfortable, if you will, with some of the transactions in front of us.

Tien-Tsin Huang -- JPMorgan -- Analyst

Okay. Good. No, that's encouraging to hear. And I think on the -- just as a quick follow-up. I think you guys mentioned same-store was sort of still hovering in that down 6% level. I'm curious, because I get this question, on the client side, like how much of that is cyclical versus maybe structural? I know your client base is somewhat diversified, but any observations there on when they'll get back up to speed on the recovery?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. It's a super good question. So two comments, Tien-Tsin, back on that. The first one, which I think I mentioned in my opening comment, is we have the luxury of seeing April volume. So I'd say the first thing is we're actually seeing the thaw, if you will, in some of that same-store stuff, so some recovery literally already in some of the lines in April. And so our expectation -- my expectation is Q2 here is going to be the thawing that will move off of that 6% kind of flat line and see less of that, right, in this quarter.

And then the second one, to your point, is we studied it to death here and it's just a super narrow set of clients again. So when we go in and look at the, call it, that 6% overall or consolidated softness and you run the distribution, you've got one decile that accounts for 100% of it. It's just -- there's a narrow set of clients that are in super impacted, movie theater companies, cruise line companies, you name it, we've got clients that are in super hurt businesses. And so we're seeing, again, some that aren't that impacted already coming back in April. And my -- our sense, which is kind of built a bit into our guidance, is that some of those that are still significantly down will start to rebound here in the second half.

Tien-Tsin Huang -- JPMorgan -- Analyst

I always appreciate your analysis Ron. Thank you.

Operator

Our next question is from Sanjay Sakhrani with KBW. Please proceed.

Sanjay Sakhrani -- KBW -- Analyst

Thanks. Good evening. I know, Ron, you mentioned that the U.S., U.K. are ahead of expectation, Brazil behind. But on the reopenings happening, anything that you're seeing that sort of stands out to you, especially relative to pre-pandemic trends as they come back?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Nothing other than it's just incredibly pocketed, I guess, is what I'd say. I did call out the U.K., but as you know, we do have broader businesses in more countries over there. We're on the continent in four or five countries. We're in Russia. We're in Australia, New Zealand. And so to me, the fascinating thing is just how different the recovery and the softness is across those five, six, seven countries would be the first call out, like Russia is kind of -- I don't know if they had COVID, is booming again.

And Australia and New Zealand are celebrating. They'd rid the thing. We see huge rebounds there. The U.K., the thawing is happening here in the second quarter. The Czech is going backwards. So the first comment is it's just incredibly kind of pocketed by place. And then the second one is really the comment I made to Tien-Tsin, which is it's incredibly, in our case, narrowly focused on a very, very small set of clients that again are causing the overall number, right, the consolidated number to be negative. And so those are the two things we see.

And I did mention, and I think we're super surprised by the Brazil thing, probably like others, we didn't anticipate that coming into the year that, that thing would get worse and that they would raise the restrictions and stuff. So that one, I'd say, is the one thing that's really mostly the surprise to us.

Sanjay Sakhrani -- KBW -- Analyst

Okay. And then maybe just to follow up on Tien-Tsin's question and your answers on the M&A. You also talked about the significant amount of liquidity or dry powder you have. I guess, how much of that dry powder do you think these deals that you're contemplating would eat up? And how long do you envision sort of having this much dry powder around? I mean, what -- would you consider stepping up the buyback if you felt like the inorganic opportunities weren't there?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. I mean, this particular situation, we have some transactions. Obviously, we announced publicly the AFEX thing at what, $450 million, Chuck, $450 million. And as I mentioned, we do have a few, call it, three deals that are quite late. And so the combination of those two things is what caused us to basically upsize the facility now. So that's kind of the short-term thing that we try to obviously prepare our liquidity situation for the pipeline that we see. But I think longer term, we really don't think about it that way. Deals are bumpy.

Sometimes you spend a lot of money in a year. Sometimes we don't spend a lot, and we'd have enormous opportunities for liquidity based on where our leverage ratio is and the cash that we generate. So we really, I think, try to think about it short term, when we see a situation where we've got some stuff lined up. And then longer term, we really just focus it, honestly, on the M&A side.

We look for super attractive things we have conviction in and then back our way into how to pay for it versus the other way around. But on your other comment, if we don't like our stock price, which obviously, there's been times we don't, we'll obviously increase liquidity and buy back shares. So again, I think the headline to you guys is we start by looking out at attractiveness of deals and how we feel about the price of our stock and then work our way back into what liquidity we need.

Sanjay Sakhrani -- KBW -- Analyst

And I guess just one -- I'm sorry, one quick follow-up. Just the types of deals that you're looking at, are they pretty much bolt-on or are they getting into different verticals?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

We're actually looking at both. We've got a couple of deals, to use your word, bolt-ons. We call them in-category, so they're transactions that fit inside the four or five categories that we articulate to you guys that we like because they're super accretive. And we've got one thing in particular we're looking at that's kind of an adjacent, kind of not right in the middle of those four or five and kind of midsized $0.5 billion kind of sized deal. So it's a very interesting set of things in front of us.

Sanjay Sakhrani -- KBW -- Analyst

Okay. Thank you.

Operator

Our next question is from Georgios Mihalos with Cowen and Company. Please proceed.

Philip -- Cowen and Company -- Analyst

Hi, This is Philip [Phonetic] on for George. So I think you talked at the beginning of the call about your investment in the U.K. EV company, Mina. And you talked about the new subscription at-home option. I was just wondering, does that give you more confidence that the economics around EV in the future will be more comparable to the current fuel card business? Or what is giving you confidence around your ability to compete in EV vehicles in the future?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes, it does, Philip. It's a good question. So the headline answer is it does. And it does because we have actual real client. And to your point, we actually have a real software solution that we're implementing. And so if you run a company in the U.K. and have gone to some mixed fleet, you've added 20 EV vehicles and you want us to help measure and reimburse that.

And we talked to you about how we're going to get paid for it, the fact that real clients are paying meaningful amounts of subscription does help equalize, to your point, the economics of this thing as this thing converts. In addition, obviously, I try to say it on the call is during this transition time, I really love our chances because it creates an advantage, right, as the company adds 10 new EV things, it's hard for anyone who doesn't already have the incumbency position and data on all the vehicles to go sell a guy some kind of phone, mobile solution or something to deal with the 10.

Like why would they ever want that when we made our card and mobile programs work at all the public EV recharging places as well as at home? And so in a kind of a really interesting twist here, the old-fashioned fuel car guy actually has the advantage because you can't link and change out the installed base of all the vehicles in a day without obviously flushing a lot of value. So I'd say, as this thing has manifested itself, we're feeling better and better about the economic model of the future.

Philip -- Cowen and Company -- Analyst

Okay. Great. That's great color. And then just on a follow-up. With an infrastructure build being bandied around at the federal level in Washington, do you have any initial thoughts on how that might help your customers? I know you have a pretty decent exposure to construction customers. Is that something that you're thinking about impacting '21, '22 growth or not contemplated yet?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. I mean, who knows, to your point, where that bill goes? But the answer is yes to your question. I mean, we saw it in spades in this last bailout, the ability of a lot of our clients to be able to pay their invoices, and we got scared and credit and found out it was one of our best collection years ever. So obviously, stimulus money does find its way back.

And to your point, a large part of our business, both here in Europe, call it, circa 30% is in various forms of construction. So to the extent that the stimulus actually goes to that versus, I guess, some of the other things that are in the bill, it has to help us, to your point. It has to make the existing clients we have busier and obviously results in more revenue to us. So yes, it would be happy going into next year, for sure.

Operator

Our next question is from Trevor Williams with Jefferies. Please proceed.

Trevor Williams -- Jefferies -- Analyst

Hey, guys. Good afternoon. Thanks for taking the question. On new sales, so it's good to see the step-up in the first quarter getting back above 2019. So if you just thinking if you continue to see that ramp throughout the year and especially in fuel, I mean, how quickly could you see some of those sales start to layer onto revenue? Just thinking about whether there could be some benefit even to numbers this year. And if there could be, if there's any impact embedded in the guide, or if we should be thinking more about the bulk of new sales as being a 2022 leading indicator.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. I'd say, Trevor, it's Ron, that it's mostly the second thing. So we've got a lot of experience in the company by category of the translation of what we call new bookings or sales will start to roll call, right, the recognition of a new account. And when it converts, to your point, into in-year revenue, and that conversion rate varies a tremendous amount by the products we have. So for example, in fuel cards, it's probably 50%. If you sold $100 million, you'd get $50 million in-year. Or Brazil, if you sold $100 million, you might get $60 million or $70 million.

But if you sold corporate pay in the middle market, you might get $20 million. So the conversion rates vary tremendously by the product category. But what I would say is, clearly, we're good at math, and so we built our '21 plan and guidance anticipating good sales. These sales were above what we did plan. But generally, that's all cooked into the plan and the guidance that we have.

And so the biggest help is what I said, if we make this plan, which would be up over 30%, right? As you go into the next quarter, it's like we'll probably double Q2 sales because it was pretty low, but hopefully, be up over 30% for the full year. You've got lots of those categories like corporate pay where that revenue pours into '22. So people should listen carefully to the sales numbers, which I did try to call out. They really are an early leading indicator really of '22 revenue.

Trevor Williams -- Jefferies -- Analyst

Okay. No, that's really helpful. And then, Ron, you mentioned you're seeing some uptick in April, it sounds like. I mean, any way you guys could give us a sense of how things are trending quarter-to-date in April or even exited Q1 relative to 2019? The slide in the deck is really helpful, but just I'm curious if at any of the segments, if any of them either exited Q1 or quarter-to-date in April are trending higher relative to '19 than they did for Q1, just to see where we might get some kind of meaningful sequential acceleration in Q2.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. That's another really good question. So again, it's super early. The data has got hot off the press. But what I mentioned is, selectively, we see areas where sequentially, the volumes are starting to come back to par, if you will. And even against the base period of 2019, we're seeing growth. So just to call out one, like in our international fuel card business, for example, which we kind of break into four markets, the U.K., Russia, Central Europe and Australia, three of those, the volumes in April are higher than they were in April of '19.

And the one that's not is Central Europe, where again, the COVID restrictions are still in place. So we're seeing same in corporate pay. We see areas like the virtual card business that's way ahead of its baseline from April. The full AP, I think, I mentioned is more than double. The cross-border business is up. So a lot of the businesses are now, in April, ahead of their '19 baseline. There's a handful of stubborn ones that I mentioned that are more COVID-impacted like again, Central Europe, like the T&E card, which requires people like us to travel.

Like the airline lodging business that we bought, it's coming back, but it's still soft against the prior period. So there's a handful three or four areas that are pretty stubborn and then the 10 areas that we're seeing that didn't come back. So as I said, our view is we're going to see a change in same-store this quarter, Q2. And then we plan a pretty significant recovery again in Q3 and Q4, which will pour revenue and, more importantly, profit dollars into the second half.

Trevor Williams -- Jefferies -- Analyst

Okay. Got it. No, that's good color. Thanks, Ron. Appreciate it.

Operator

Our next question is from Bob Napoli with William Blair. Please proceed.

Bob Napoli -- William Blair -- Analyst

Thank you. Ron, a question on the corporate payments business in the long term. And your thoughts on balancing growth with margins, and you have a number of high-growth public and private companies that are investing very aggressively and looking at margins down the road where you're generating strong margins today. Do you have thoughts of aggressive -- and given the TAM and investing more aggressively at the expense of margins to accelerate growth, is that something that you've considered or would consider?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. Bob, it's Ron. It's a terrific question. We actually had our Board meeting last week and actually covered this particular subject, competing in this strange time that we're in. And I think the couple of comments I'd give you is, one, we tried to build plans to invest more -- differentially more in that business than some of our others to try to target that business closer to 20% on the top versus kind of 10%, if you will, for the consolidated company.

So that's point one that inherent in our base plans, our overall profit plan, there's incremental investment to grow faster already. And then second, I think the conclusion that we got to coming out of the Board meeting on this is it depends on the investment. So if there's a clear investment we can make that's got an attractive return profile, we'll be back to you in the buy side with, "Hey, look, we're going to slow earnings a bit, whatever, if we think we can make some great return." But again, it's got to be a return we can execute.

So hey, to hire 100 people, I've told you a bunch of times, that's hard to add all those people execution-wise and make it work versus if we could pour money into the top of the funnel of the digital thing, which is one of the lot -- reasons we did this Corpay unification, that might be a basis, right, where we could spend money effectively and see good returns. So I'd say nothing staring us in the face now. We've got lots of money, incremental capital. I think we're spending $20 million, $25 million of incremental capital above last year in IT. Half of that's in corporate pay. We're spending more in sales. And so if we got the right kind of investment, I think the answer is we would do it.

Bob Napoli -- William Blair -- Analyst

That's helpful. And then a question on the lodging business, and I don't think we really touched too much on that. I was wondering just your thoughts on -- that business, I know, has been a very attractive return business. You've been investing in it over the years. What are you seeing in that business sequentially like through the first quarter into April? And then your thoughts on the opportunities to invest in that business over the longer term because I do think you drive some of your higher margins there.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Yes. It's a super business, to your point, because again, we're pretty specialized, right? We're in the workforce segment, think blue collar people that drive off and cut trees and then in the airline accommodation where we're connected literally into the airline's systems. So we know that the two of us pilots are going to show up somewhere tomorrow.

So the answer is, obviously, it's recovering. It was one of those businesses hurt really the most a year ago. So we've gotten a lot of it back already in the workforce side. And I'd say we're probably half of the way back. In fact, it's the one area that outperformed the COVID recovery in the first quarter. For each line of business, we plan a certain amount of softness, if you will, coming back, and the airline business actually came back faster than we planned.

So I think it's on track, depending on what happens over the next couple of months, to have a huge recovery, right, in the second half. And we're selling a lot. Like I'm looking at the sales, we continue to sell a lot in that business. We've got some attractive adjacencies in the business. It's probably our highest margin business. So to your point, there's a lot to like about it, and people should keep their eyes open. We're probably going to do more of it.

Bob Napoli -- William Blair -- Analyst

Thank you. Appreciate it.

Operator

And our final question is from David Togut with Evercore ISI. Please proceed.

David Togut -- with Evercore ISI -- Analyst

Thank you. Appreciate your squeezing me in. On a normalized basis, post-COVID, do you expect to resume FLEET's historic growth model of high single to low double-digit organic revenue growth plus a couple of points of acquisition growth and/or share repurchase, driving 15% to 20% EPS growth? And if so, when do you expect to reestablish that growth model?

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

David, it's Ron. It's a great question. I think if I've been repetitive on something that's been 10%, 13, 19, 10%, 13, 19, which is if we can grow revenues organically 10%, we can grow operating EBITDA, if you will, fast because of the operating leverage and then use the $1 billion of capital to either buy earnings or buy shares. So we've proven, I guess, Chuck, over 20 years, we've compounded, David, at over 20%. So the reminder to you and others out there is, I think for full year calendar '18 and full year calendar '19, the business grew 10% organically in those two most recent years until we hit COVID here in 2020.

And so my expectation is that we will be back there in -- certainly in '22. And part of it is, again, the setup is just so good in terms of the exit rate that if we get this recovery in the second half and we make the sales that we're making, the exit rate pouring into '22 will obviously be super attractive. And then to your point, the deal we've announced and a couple we're working on will be, as I've mentioned before, quite accretive. And so it all points, I try to say it in the thing, I think the business, because of the pain we took last year, is particularly well set up to get a good number in '22.

And then what I'd say to you is we like our chances after that because we're diversifying the space, right, in the businesses, the fuel card, bank chase and EV and launching, chasing new categories and getting into SMB and corporate payments. We're not sitting still just kind of twiddling the places that we're in, David. And so I think it's -- I think we sit here more optimistic about the future because we're coming out. We're freaking coming out, finally coming out of the woods here and can kind of see the other side, and that sets up well for us. So I'd say, '22 will be better and then we like our chances after that.

David Togut -- with Evercore ISI -- Analyst

Thanks so much. Appreciate the detailed insights.

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Always good to talk to you.

Operator

[Operator Closing Remarks]

Duration: 66 minutes

Call participants:

James P. Eglseder -- Investor Relations

Ron Clarke -- Chief Executive Officer and Chairman of the Board of Directors

Charles Freund -- Chief Financial Officer

Ramsey El-Assal -- Barclays -- Analyst

Pete Christiansen -- Citigroup -- Analyst

Ken Suchoski -- Autonomous Research -- Analyst

John Coffey -- Susquehanna Financial Group -- Analyst

David Koning -- Baird -- Analyst

Tien-Tsin Huang -- JPMorgan -- Analyst

Sanjay Sakhrani -- KBW -- Analyst

Philip -- Cowen and Company -- Analyst

Trevor Williams -- Jefferies -- Analyst

Bob Napoli -- William Blair -- Analyst

David Togut -- with Evercore ISI -- Analyst

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