Greetings, and welcome to the FLEETCOR Technologies Fourth Quarter 2020 Earnings Conference Call. As a reminder, this conference call is being recorded. I would like to turn the call over to our host, Mr. Jim Eglseder, Head of Investor Relations for FLEETCOR Technologies. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us today for our fourth quarter and full year 2020 earnings call. With me today are Ron Clarke, our Chairman and CEO; and Charles Freund, our CFO. Following the 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 line for questions. Please note, 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 appear in today's press release and on our website, as previously described. Now before we begin our formal remarks, I 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. These expected results are subject to numerous risks and uncertainties, which could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's press release on Form 8-K and in our annual report on Form 10-K filed with the SEC and available 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?

Okay. Good afternoon, everyone, and thanks for joining our Q4 earnings call. Upfront here, I'll plan to cover 4 subjects: First, I'll provide my take on our Q4 finish; second, I'll put a bow on full year 2020; third, I'll share our 2021 outlook; and lastly, provide a bit of an update on our transformation plan, which is intended to accelerate the company's growth. Okay. Let me turn to our Q4 results. So today, we reported revenue of $617 million, that's down 12%, and cash EPS of $3.01, that's down 5% versus last year. These results, both better than anticipated. Volume recovered a bit more in the quarter than we forecasted, and we did manage our operating expenses down 14% against the prior year. Organic revenue growth overall, minus 8%. But most importantly are the trends in Q4, really quite good sales strengthened to over 90% of last year's level. Same-store sales or client volume softness improved to minus 6%. Credit loss of $6 million, although helped by a reserve release, and retention continued steady at 92%. We did have a fantastic beyond highlight in Brazil in the quarter. We added 175,000 new urban or city users in Q4. That represents 30% of all the new tags we sold in the quarter. So it demonstrates there's real demand among the non-toll segment in Brazil for this RFID purchasing network, including fueling, parking and now even fast-food locations. So look, the conclusion of Q4 is really in the sequential trends of the business. If you look at Page 7 of our earnings supplement, you can see that every Q4 metric is improving from the Q2 low: Revenue up from $525 million to $617 million; cash EPS up $2.28 to $3.01; sales up from 55% to now over 90% of last year's…

Thanks, Ron. For the fourth quarter of 2020, we reported revenue of $617 million, down 12%, GAAP net income down 11% to $210 million and GAAP net income per diluted share down 6% to $2.44. The quarter was again affected by COVID-related business slowdowns, although we showed improvement over last quarter in most of our businesses. Adjusted net income for the fourth quarter of 2020 decreased 10% to $258 million, and adjusted net income per diluted share decreased 5% to $3.01. We continue to manage expenses in line with revenue performance. Please see Exhibit 1 of our press release for a reconciliation of all non-GAAP financial metrics. Organic revenue in the quarter was down 8% overall, primarily due to same-store sales being down 6% year-over-year. 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 mid-period. Our fuel category was down organically about 10% versus Q4 last year. Our domestic fuel businesses were stable to improving in the quarter, whereas the international fuel businesses were affected by the renewed COVID-related closures, especially in Western Europe. The corporate payments category was down approximately 6% in the fourth quarter. Approximately 6 points of decline was again driven by the 100 most affected customers we discussed last quarter. Lower spending on our T&E product drove another 2 points of organic drag. Virtual card volumes were up 12% for the quarter, which was an improvement from flat last quarter as continued political spend and the benefit of new customers offset the drag from the highly affected customers. Cross-border or FX-related volumes were down 1% as payment volumes are still being affected by lower invoice levels, specifically in manufacturing and wholesale trade. Full AP continued to perform very well with…

[Operator Instructions] Our first question is from Sanjay Sakhrani with KBW.

Thanks for all the color on the trends and the guidance. But just to drill down on the guidance a little bit. When I think about the ranges on the extreme ends, could you maybe, Charles, just talk about sort of what's baked into one end versus the other?

Yes. So appreciate you joining, and thanks for the question. So in terms of the high end, I'd say that, that would be a perfect scenario, right? So as Ron mentioned, we are assuming recovery in terms of the COVID softness that we've experienced. The timing and the magnitude of that is super hard to suggest. If it all came roaring back, if our sales were perfect, we maybe could get there. So it's a pretty broad range, as you can see. On the downside, I mean, who knows what's going to happen with COVID, right? So if things weren't to come back, it could be a problem. We just think -- we think that we're being reasonably optimistic in that regard given everything that the news says: The economy, the vaccines, the Biden administration mentioning things will be back in by Q3. So we're optimistic in that regard, but I'd say that the range is broad because we just really don't know.

Sanjay, it's Ron. Let me just add on to Chuck's comment, which -- the second thing would be the sales. So we've got a pretty steep sales plan increase for '21. And so the amount of that, that we get in year in revenue, both the backlog and the pace at which that comes in, that will also have a pretty big swing on the range we gave.

Got it. And then Ron, you guys are obviously flushed with quite a bit of liquidity. I mean, as you sit here and you think about the next year, how do you envision utilizing it?

Yes. I think our philosophy, Sanjay, is kind of steady as she goes, right? Our first use is accretive acquisitions, and we're sitting here today with 3 or 4 interesting active deals in the pipeline. So that's always our first and highest use. And then to your point, given the leverage ratio and stuff, if our stock doesn't trade where we think it should, obviously, we've indicated we'll buy stock back. So acquisitions, one; and stock buybacks, depending on the price, two.

Our next question is from Tien-Tsin Huang with JPMorgan.

I want to say, I guess, the new sales were encouraging. Your reinstating guidance, that's also encouraging. Any way to think about the level of conservatism in the outlook? Kind of like what Sanjay was asking about the range, I think I understand it. But just I'm thinking there could be some pent-up demand on new sales. The trends are clearly improving. You're excited about this SMB bill pay, which makes some sense. So I'm just trying to understand conservatism versus maybe excitement about the chance to get back to double-digit plus growth here.

Tien-Tsin, it's Ron. I'd say that we try to build these plans to what we call the most likely, right, and then figure out how wide a range around it. And so I think the confidence part comes from looking at the trends Q2, 3 and 4. I don't know if you picked it up in my remarks, but we've literally gotten half of it back between Q2 and Q4, which is obviously quite significant. And it's still a pretty big number, right, when you look at the total softness we had for all of 2020. So I'd say that there's no precision in this. We -- I think we caveat-ed this as many ways as we could about the wildcard of softness recovery. So I'd say that we provide ranges to try to keep it in the midpoint. So we don't know, but I'd say kind of at the midpoint guide are the most likely.

Okay. And you talked about with Roger bill pay being potentially pretty big from an opportunity standpoint. So what's the timetable or the steps to get to a point where it becomes needle-moving? What steps need to take place? What should we be tracking?

Yes. I mean, it's a great question. I'd say we'll probably -- they're obviously in the market on a stand-alone basis and even here in the U.S. So the first 2 things that we're on is: one, cross-selling that product back to our North America base; and then I'd say in 90 days, we should be launched with our own channels, our own digital, our own deal and phone people selling it to new prospects. So by the time we talk next time, we'll hopefully have some news for you.

Our next question is from Steven Wald with Morgan Stanley.

Maybe just following up on Tien-Tsin's question on Roger and thinking about the investment. I was just curious if you could speak to the timing for the investment. It sounds like it might be somewhat front-loaded. And how you're thinking about that dilution as it's planned over -- I guess, relative to 1Q guide versus the full year? And then what that envisions for 2022, if you're able to sort of frame out the potential contribution from Roger?

Yes. So some of it is just obviously deal-related, right? We picked up their people, 50. So we've got some dilution happening immediately. We are investing, even in advance now, at the corporate level to support that acquisition as well as building out those sales channels. So we'll see that ramp up. In terms of the contribution for next year, I'd say we haven't fully modeled it yet. But it's roughly going to be still a little dilutive to kind of flat until we fully scale the channels. So we want to obviously see what works before we pour too much in. But nonetheless, I'd say that the things about -- it is a very small acquisition, $1 million-some-odd, a couple of million in terms of revenue. So it's got a long way to go, but we're pouring a lot of sales and marketing kind of upfront to get it going. It's a real bet for us. It was a real deal. We're investing to retain the people that are there because they've helped to build this product, and we're going to need their help to continue. So we've built some extra cost in there as well. So in terms of the magnitude of what it could be next year, it's really going to depend on how much more we pour into the investments.

I appreciate that. And then maybe just switching gears towards some of the things you outlined on Slide 11 and 12 with the Beyond strategies. I know you talked through a few of the main -- the key areas that you're directing investment. But clearly, it seems like the corporate payments and then layering that into the fuel business are a couple of the main areas beyond the toll business that has its own growth plan. I'm curious how you're thinking about the lodging business and investment dollar priorities coming out of the pandemic. Clearly, there are going to be some permanent behavior shifts, and I guess that one strikes me as probably the most obvious area. But I'm curious if you could sort of stack rank for us how you're thinking about Beyond as it relates to investment priorities. You've got a lot of liquidity, as has been pointed out. But certainly, there's got to be some level of priority that you guys are thinking of.

Yes. Steven, it's Ron again. So yes, I think you called it out right. Clearly, corporate pay would be one, and fuel would be 2 because of the size of the business, but it's still 40%, 50% of the company. In lodging, the one thing I would say is, remember, our FLEETCOR lodging business is workforce: Translation, blue-collar utility guys going to a new city, tree cutters cleaning up. And so that thing is way back. I mean, I looked at the January volume numbers earlier today, and I believe month-to-month, that thing is down 3% to 5% now year-over-year. And so that lodging business looks completely different than the kind of lodging business we people on this call are thinking about. So the airline part of that is a completely different call. To your point, that thing is running kind of 50% of volumes of a year ago. But that's the one, I'd say, has the snap, bounce back possibility. So we've cut -- took a ton of money out of that business, particularly out of the airline portion of the business, to kind of wait here to see if it's going to snap back. But it would be number three, but we still like it. I think we lay out on that Page 11, there's a couple of interesting verticals beyond workforce and beyond airline that we're looking at that we like a lot, that leverage everything we have, the systems, the network and stuff. So I want to be clear, we like that business, and we will keep investing. And we may buy some additional things in the business. Let me be clear: It's not white-collar T&E kind of a lodging business.

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

I wanted to ask about Brazil, and that was a pretty impressive statistic in terms of how many new users you're signing up. I wanted to ask about the merchant acceptance side of that equation. Do you kind of have what you need now to basically continue building out that product? Or is there a pipeline of new merchants or verticals in Brazil that you could see yourselves kind of getting involved with, along the lines of McDonald's or Petrobras or these other merchants you have great partnerships with?

Yes. Ramsey, that's a good question. I think we're mostly focused on the 3 or 4 city locations that we mentioned: fueling, parking, fast food and then condos, effectively access right for people back in the city. And so the plan, we put a fair amount of capital actually in the '21 plan to build out particularly the fueling footprint there because it's the biggest TAM, right? The dollars spent on fuel are massive. And so the bit of the delay was not only COVID, but our guys tinkered and came up with 2 or 3 different hardware-software configurations for the fueling locations that improve reliability like super high. So the car gets in, the thing knows it's the right car and doesn't make mistakes and to dramatically reduce the cost. And so that business is going to be on a super-duper, hurry-up drill even now, even in the first half of the year, trying to add stations across the board. So we should see those transaction counts, usage of the thing, grow a lot as we move into the second half.

Okay. And then on a separate topic, I wanted to ask generally about the kind of credit aperture across your business and whether it's sort of opened back up again. I mean, obviously, it has to some degree. But was there a revenue headwind in the quarter from sort of tighter credit standards, given we're still in a challenging kind of macro environment? And how should we think about that in terms of maybe potentially even opening further as we go forward? Or is that largely -- kind of narrative largely sort of played out?

Another good question. So I'll start the answer to that one of we overreacted, right? So when the thing happened, we kind of pulled pretty far back, which clearly reduced revenue. We even pulled back on existing accounts, right, trimming lines, accelerating payment terms and stuff. So we went at it pretty hard. And now we've reported out for the year. And I think Chuck even mentioned the forward roll rates, so we've got the, I think, the lowest credit loss, as low as I can remember, and certainly as the base is against spend. And so we rotated back. I'd say in the fuel card business, we are 100% back. So whatever credit policies we had pre-COVID, I'd say, if you went and looked at our fuel card businesses, we are right back to fully open, still balanced, but fully open. I'd say the one place where we're still being a little cautious is in the corporate pay. And the reason is the spend per client there is so significant, if you think about it. And so we're still being careful. There's certain industries sitting in the corporate pay space that have been pretty impacted. So I'd say we've moved that one back but still not all the way back because it's more high line, what we call internally, high-line risk of a couple of BKs for some significant amount of money. So I think there's still upside as we roll through '21, as those 3 or 4 industries were cautious on kind of come back.

Our next question is from David Togut with Evercore ISI.

Just following up, Ron, on your comments on corporate pay. Can you give us some sense of the ranges you're thinking about for the T&E card for 2021? That seems to be the biggest swing factor within that business since most of the other categories are holding up reasonably well.

Yes. David, good question. So the overall corporate pay business sitting inside the guidance we gave is high teens. So if you take the entire line of business sitting in our plans, we're out looking at high teens for that. I think inside of that, the T&E, which has now shrunk down, is probably in the mid- to high single digits. And if you remember, what we call kind of the multicard, kind of walk around plastics there that buy supplies, even fuel, and they're even used as P-Cards as a form of vendor payables, that line of business, that plastics or multicard, I think the last time I looked, is down to about 20% of it now being white-collar T&E, like us. And so fortunately, kind of 80% of that business is kind of okay. It's buying fuels. It's buying supplies. It's paying vendors. And so it's not going to decline, if you will. It's not going to drag down really the growth rate as much because it shrunk down in 2020. So fortunately, it will have less impact on the total corporate pay business this year.

Got it. And then just a final question on the gift card business. Is the view that you're going to hang on to that for quite some time, just given the cash that you generate from it, even though it appears to be a declining business?

Yes. I'd say the short answer to that is yes. So obviously, retail as a category was super impacted in 2020, brought our gift card business pretty far down at the opening kind of in Q2. Surprisingly, the thing has come back quite well. People still, obviously, if you look for the word gift cards, are still ordering gift cards. And the digital portion of those, David, has gone way crazy high. And we bought a business a year ago to help our retailers manage online, pretty timely as they've rotated over to more online sales. So surprisingly, that business is getting healthier from some of those digital initiatives. And so what I'd say is we'll kind of see how this year goes. Their plan is actually up, obviously, off of the softness for '21. So I think we're probably taking another peek at the business as we get late into this year.

Our next question is from Pete Christiansen with Citigroup.

I'm just thinking through the incremental investment on some of the IT initiatives here. Can you give us some of the time tables for your key goals here? And have you considered whether or not, given that we are in a recovery year, that -- possibly accelerating some of those investments?

Yes. Pete, it's Ron. I'm not sure that we're accelerating through the recovery year. I think we're doing 2 things. One, we're trying to invest in projects that drive growth. So we've kept the capital plan kind of up a bit, $15 million, $20 million, Chuck, I think, over the prior year. And then second, we made a decision, Pete, to pour more money into, what we call, IT transformation or modernization, whatever the word is. So we're pretty hard on the trail of consolidating some of the apps, updating obviously some of the hardware and software and stuff. And so we're pouring money into simplifying kind of our technology footprint, while we're obviously still making investments in digital and things like Roger, new analytics packages, new mobile interfaces. So we're spending money on things that we should be but also on the transformation side.

That's helpful. And then, Ron, a little bit of a longer-term question here. The drumbeat on EVs has kind of picked up recently with Ford and GM making some announcements and the Biden administration looking to switch over the federal fleet. I mean, does this change how you think about the fuel card business longer term and perhaps on how FLEETCOR intends to manage any broader changes industry-wise there?

Yes. I mean, I think, Pete, a bit, I think we've been on for all kinds of reasons, not only EV but just TAM and growth rate and long-term potential of the company of diversifying things that we do that share the same model. And so I don't know where we're at, 60% now, I guess. So we're moving anyway. But I said a little bit in the call the last time on the EV thing that our perspective on the thing is: a, it's way farther out, even if the acceleration of EV sales is pretty dramatic because of the size of the installed base and the useful life. Our models show the same number of commercial vehicles, the combustion engine vehicles in 10 years here in the U.S. and in the U.K., our 2 biggest markets in 10 years as today because of the growth rate of sales and again over the life. But the more important point I mentioned last time is, it's less about the fuel card buying fuel or the fleet card buying electricity. I think what we're learning, particularly in Europe and in the U.K., is we're getting paid by our clients as they move to some EV. They're paying us card fees, for example, for the EV vehicle the same way. And there's this new opportunity of, we're going from, call it, 150,000 gas stations in the United States to having millions of charging points at employees' homes. And so the employers look like they want us to play a role in the hardware and software and the measuring of all of those new charge points and all the reimbursement. And so it's early days. But I'd say to you guys that doing what we do of measuring and helping pay and reimburse employee expenditures in and around vehicles, we think we're still going to get paid a fair amount of money both in the transition to mixed fleet and even when people get over to EV. So we're going to have a little bit of a teach-in maybe in 90 days on this subject, with the takeaway hopefully being: a, it's way long or out there for the old combustion engine; and b, what FLEETCOR's economics may look like even in a pure EV world.

Our next question is from Ashish Sabadra with Deutsche Bank.

Congrats on a pretty good result, considering the difficult macro environment we are in. My question was on the sales front, pretty good acceleration there, going back to 92%. You called out full AP sales doubled. I was wondering if you can also talk about the sales growth in other segments. And also, as we think about next year on a 30% -- expectation for a 30% higher sales compared to this year, areas where we can see more strength. I guess SMB bill pay will definitely be one of the areas, but any incremental color will be helpful.

Ashish, this is Charles. So yes, in terms of the sales performance, as Ron had mentioned, we exited Q4 at over 90% of the prior year. It is mixed. So I'd say Brazil had an unbelievable sales year. Overall, in the fourth quarter, really outperformed versus prior year. So they were well up -- well above, call it, 15-or-so-percent above last year. There's still a couple of the businesses that are lagging a bit. And particularly, our North America fuel business is still catching up. It's on an upward swing, but it just hasn't recovered quite as quickly. Our lodging business has actually come in kind of right around last year. So that's performed okay. So it's mixed, I'd say. But nonetheless, they've all kind of come back from Q2 through Q3 and exiting Q4 at a better place. And looking forward to next year, we've got pretty robust ambitions and plans. We're going to have the -- we have the biggest sales plan in the company's history, and we're planning to be up 30% versus where we finished this year. So we've got a lot to do. We're pretty excited about the possibility there.

Ashish, it's Ron. Just to jump on to what Chuck said. One of the things helping us is the market is kind of coming back, right? We study surges of the categories. And so some of the results we're reporting Q4 is the world just kind of getting used to this and kind of getting on with things. And so we think as that keeps moving our way, where businesses are interested in the kind of things we do, that, that helps. And then, b, of course, we're going to invest more, right? We're going to have more FTEs, more digital spend. We've got some new products that we've talked about. So we're super excited. I mean, first of all, we've got super soft comps in Q2 when sales almost closed down. And so to Chuck's point, this is a super big deal for '22. I know most people on the call are interested in this year, in '21. But my headline to you guys is that if we make the sales plan, which is super big, both against the prior year and absolute, it's -- that will pour all kinds of revenue into '22, which is part of the softness that we're dealing with here in '21, right, that we basically took a 1.5 quarters out of selling. And so you don't get the same wave of revenue rolling into the forward year. So I just don't want people to miss the importance of the sales plan for next year.

I'd also just comment that when COVID hit and we took our foot off the accelerator in certain areas, right, because we weren't going to pour incremental sales investment when the market wasn't listening and they were distracted, so we slowed down some of those incremental investments. We're shifting gears now in preparation for a big year next year and the reopening of the economy, fingers crossed. And so we're investing ahead of that. And I think that's also putting a little pressure on our forward guidance in terms of earnings, right? Because we're making sales investments again in a big way. So I think we should be mindful of that.

Yes. No, that's very helpful color. Sorry. Just maybe a follow-up question on the SMB bill pay opportunity. Obviously, that's a large opportunity. A lot of players are going after it. And congrats on the Roger AI acquisition. So I was just -- maybe a follow-up question to earlier questions there. You obviously have a very warm lead, which positions you much better. But can you just talk about how long are those sales cycles, implementation times? And how do you plan to leverage your existing sales force and the warm leads that you have to maybe accelerate and double down on that opportunity?

Yes. Ashish, another super good question. So one of the attractive things about the SMB bill pay is what you said, it's the instamatic sale and sign up and get going. The card business that we have today, which is in the middle market, has a pretty prolonged kind of implementation cycle. It's almost like a project to get a $200 million company to connect with you and get the merchants in place and all that kind of stuff. And so the first good news is that sales and revenue will be more connected in the SMB corporate pay business than they are in the middle market. And I think the point that -- the question you asked, the point that we make is a super good one, which is the missing capability, I think Napoli asked me this in the last call, but I couldn't tell them, "Hey, Ron, what are you missing to really be a gorilla here in corporate pay?" And I didn't want to say, the answer is an SMB killer software app that works for the little company because we have the rest of the stuff. We acquire tons of clients with our sales channels. We've got capital. We've got processing capability. We've got the merchant networks to monetize. So we -- obviously, clients, the sell-up they do, they'll listen to us. And so unlike Roger, when I met the principals there who were kind of on the road with a super good product kind of hanging out on their own, you take their super good product and you embed it into these sets of things we have. I mean, we are -- I said it, half kiddingly in the remarks that this could be kind of the biggest deal of all because finally, we have a product that matches up with some of our capabilities. I mean, no one ever asked me before, but how funny that FLEETCOR built the corporate payments business in the middle market when the whole company was an SMB company. And so it just took us a while to pair up the corporate payments business with the business that we built over the last 20 years. And so the headline is, we've arrived. We have it. So I think without getting way over the skis here that this is a super big deal directionally for the company over the next 3 to 5 years of just building this thing out, where both walk-around plastic and payables sit inside the same client, where we stitch together effectively our fuel card business and our corporate payments business in the same client. It's not a small idea in our mind. It's a big idea.

Our next question is from Bob Napoli with William Blair.

Appreciate the call-out there, Ron. Just a quick question, I know we're getting at the end here. But the sales -- the increase in sales investment that you're making in, is this something that is onetime in nature? Or is the idea here in conjunction with your transformation to accelerate growth, increase investment in sales that will ramp up the sales growth rate over the long term and in line with the transformation, focusing on the higher growth product lines?

Yes is the short answer. The increment is recurring. And then if you looked at our 3-year plans, you'd see a similar kind of increase, 15% plus in sales in our '22 plans. So yes, it's recurring. And I'd say the second part is it does come in a couple of forms. It comes in: a, the old fashion form of just more scale, so more outbound phone callers, more field people, more digital, Google search keywords. But I'd say that the nuance that's different is we're going to make more investments kind of in digital, kind of at the top of the funnel. So we're going to spend more money to create more engagement as we have this broader product set now. And so having more things to sell, I think, allows us to spend some money earlier in people's decision cycle than at the end. So we tested that in Q4 last year, and it's working. And so that's some decent part of the step-up in '21, kind of a different kind of spend, Bob, for us than historically.

Our next question is from Trevor Williams with Jefferies.

I just wanted to ask on expenses. So just maybe for Charles, regardless of where you end up in the organic range, I mean, should we expect expense growth really to look similar to whatever you end up doing on the top line? Or could there be a level at which you might start to see a little bit more op leverage? So I'm just trying to think about how much we could see flow through to earnings if you do get a big snapback in volumes in the second half.

Yes. So I think when you look at our Q1 guidance, you see a bit of a reset of certain line items, whether it's the bad debt reserve or our anticipation of bad debt kind of eking out through the quarters and commensurate with our sales performance. Some of the snapback in terms of T&E, right? When the world opens up, are people going to travel like others do? Our bonus accruals and such. There's kind of like a re-level-set in this Q1 and then moving forward from there. So that's part of it. To your point, though, when the volume does come back that's COVID-related and that revenue does pour in, it will come in at a higher margin level. But offsetting that are some of these incremental investments that Ron mentioned, right? We're layering in more sales and marketing for our core products. We're hiring in a lot of sales and marketing for Roger and our cross-sell efforts. So I'd say it's going to be pretty balanced in my view as we go through the quarters of the year.

Okay. Got it. That's really helpful. And then just a quick clarification on the guide. I mean, it looks like you're implying the share count to be roughly flat year-over-year, so really no buybacks baked in, at least to the earnings guide. So just curious if there's any reason in particular why we shouldn't expect you to be buying back stock next year? Or if there's just some element of conservatism that's baked in there?

Yes. It's Ron. So clearly, we build plans in terms of our capital allocation as though we're going to basically retire debt, right, take the principal down. And so to your point, to the extent the capital allocation results in another transaction, another acquisition where we buy earnings, or b, we buy back stock, to your point, the capital allocation can take up our earnings. So the guidance that we have now assumes that the roughly $1 billion of cash flow would basically retire debt during the year, which my guess is that I'm hoping to a year from today, Trevor, that's not what we do, to your point, the next 12 months. But since those 2 decisions are in the future, we plan what we know, which is to pay down debt.

I believe this concludes the question-and-answer session. I would like to turn it back over to management for closing remarks.

Yes. Thanks, everybody. Apologize if we didn't get to your question, but let us know if you have any incremental questions. And we look forward to working together in the quarter. That's all.

This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.