The famous adage, the path to success is not a straight line, could easily apply to Charles Freund, CFO, of Atlanta-based FLEETCOR, after his two-decade-long career at the global corporate payments company.
“When I joined FLEETCOR 21 years ago, I never imagined a career path to CFO,” Freund says.
“I was apprehensive about taking the role initially, even suggesting we consider outside candidates with deeper accounting experience. [CEO] Ron Clarke explained he wanted a strategist in the role, and I came to realize my broad background and deep company and industry knowledge would allow me to effectively lead my team.”
Freund’s extensive company and industry knowledge stems from the various roles he’s held at FLEETCOR, following a stint at a human resource consulting firm in New Jersey to start his career.
“I’ve been thrust into a variety of roles and challenges at FLEETCOR, which helped prepare me for the CFO job,” Freund says. "When I became director of business development in 2000, we were a regional fuel card company with $30 million in annual revenue and losing $1 million per month. We knew we needed private equity, but we obviously had to fix some things first," he adds.
During the next two decades, Freund played an integral role helping FLEETCOR transform into an S&P 500 company that helps more than 800,000 business customers worldwide spend less, by managing both expenses and payments with digital solutions that enable and control the process.
In the Beginning
Early in his tenure, Freund contributed to strategic contract changes with fleet card issuing partners, customers and merchants that brought the company to breakeven within a year.
"The company was nearly bankrupt, so we needed to generate cash flow quickly. We changed credit policies, collection practices, as well as payment and pricing terms, all while balancing between FLEETCOR’s financial needs and the value we were delivering to partners, customers and merchants," he says.
In 2002, FLEETCOR recapitalized the company with a private equity investment of $45 million and then used the money to buy back the licensed operations of its card issuing partners.
"The licensees all ran subscale operations with redundant functions such as credit, collections, service, card production, invoice fulfillment, etc. Paying attractive EBITDA multiples, we grabbed 26 of the 30 licensees within two years," Freund says. "This allowed us to consolidate overlapping operations, implement consistent practices and processes, which created greater scale and efficiency. The combination of improvements generated three to four times the profit immediately, while improving expense management for our customers. We also realized we now had extremely expansive and reliable data at our fingertips, which in turn improved our management of the business."
This model proved to be so successful that the Harvard Business School would later publish a case study directed to aspiring private equity investors which highlighted the attractiveness of the business and licensee roll-up opportunity. It also became part of the FLEETCOR DNA that has driven its meteoric rise and consistent growth over the years.
After five years in that role – and 5x top-line revenue growth – Freund was ready to take on new and different challenges within the company. He met with Clarke to decide what to do next.
"We could either pursue new payment opportunities in the U.S. or focus on expanding our business around the world," he says. "After doing some research, we decided to target acquisitions in Europe that leveraged our knowledge and capability in expense management as well as our relationships with global merchants.
Freund spent two years in the UK, making highly successful acquisitions, actively buying licensee portfolios and tripling profits. He returned to the U.S. in early 2009 to help FLEETCOR expand its expense management business beyond fuel cards.
In April 2009, the company acquired CLC Lodging, raising $100 million in the middle of the global financial crisis to complete the deal. Lodging may not seem like a complementary business at first glance, but the business model was the same as in the fuel card business. It served business customers, consisted of highly recurring volumes and revenues, had proprietary technology and a merchant network that created differentiation, and had an attractive margin profile and cash flow.
“It wasn't our easiest acquisition given the global crises, but we got it done," Freund says. "It was our first large foray outside of the fuel industry, and put us into a new spend category of expense management. It remains a very profitable part of our business today which we continue to grow organically and through accretive acquisitions."
In 2010 the company went public, with an initial valuation of $2 billion at $23 per share. Today, the company's market cap is near $20 billion, and the stock price is about $240 per share. Freund was a key player in ushering FLEETCOR through its successful IPO process. “Preparing for, and participating in, the IPO process, which included pitching the company to investors during the two-week roadshow, remains one of the highlights of my career,” he says.
Going Global and Diversification
In 2011, Clarke outlined his vision for a bigger global footprint. "We decided to start building businesses outside of our established geographies by looking for deals around the world," Freund says. "We targeted companies with established customer bases and business models that aligned well with our existing product portfolio, and where we could easily find opportunities for consolidation and scale.”
During a four-year stint as president for developing markets, Freund oversaw the company’s expansion into Latin America and APAC, acquiring related businesses in Brazil, Mexico, Australia and New Zealand. By the end of 2014, the company’s revenue reached nearly $1.2 billion.
Late in 2014, FLEETCOR completed its largest acquisition, the $3.4 billion purchase of Comdata, which transformed the Company into a global B2B payments company. To date, FLEETCOR has executed nearly 100 deals with about 75% of acquisitions doubling in profit within two years.
Despite FLEETCOR’s success in acquiring and integrating businesses around the world, investor feedback prompted the company to shift its focus slightly. "The Street was pushing us to invest time and resources to bolster our organic growth. Investors wanted to know that FLEETCOR could grow without relying on acquisitions,” Freund says.
It was then that Freund transitioned out of general management and into strategy, serving as a trusted advisor to FLEETCOR’s CEO and senior leadership team on a slew of initiatives including product development, revenue management, digital marketing, demand generation and IT reorganization, while also shepherding the company’s midterm growth planning process.
During the next few years, he continued to support M&A efforts diversifying FLEETCOR into a more comprehensive corporate payments company, while strengthening key profit centers. This included the acquisitions of Sem Parar, a Brazilian toll business, and Cambridge Global Payments, an international cross-border payments provider.
FLEETCOR continues to build on its base businesses with recent acquisitions like ALE, a provider of temporary housing for people displaced by disaster, and AFEX, a cross-border payments company that expands the company’s geographic coverage. The company also is embracing new opportunities like electric vehicles (EV) with investments in Europe and North America and the small business market with the acquisition of a digital bill pay solution.
Going Forward as CFO
Although Freund didn’t have the typical CFO background, Clarke tapped him to replace the retiring CFO in 2020. In his new role, Freund was part of the senior leadership team that successfully navigated the pandemic.
Freund now leads a global organization of approximately 600 team members, who are all focused on continuing to deliver the impressive performance the Company is known for. His responsibilities span finance, accounting, tax, legal, human resources, investor relations, and credit.
"The secret to FLEETCOR’s success goes back to our great products, expansive networks, specialized technology, robust selling systems, and proven M&A execution and integration capabilities,” he says. “We're super effective at seeing opportunities and capitalizing on them, either through product development and sales or through acquisition. My teams in the back office play an essential role in supporting and enabling our front office teams to execute and deliver results.”
Coming off a full-year earnings per share result of $13.21, up 19%, and well ahead of its initial 2021 guidance, FLEETCOR is thriving. "One thing I can tell you with confidence is we are very bullish about our ability to embrace the future and continue growing,” Freund explains.
While Freund is proud of his role in helping shape FLEETCOR over the past two decades, he is more excited about the company’s prospects as the journey continues down a path that like his professional career may not be straight, but is heading in the best possible direction.