Comdata’s New Chief Looks to Acquisitions To Spur Growth

Fresh on the heels of a payment-processing initiative and a new branding campaign, the new chief executive of prepaid and fleet card specialist Comdata Corp.'s parent company told investors on Thursday that Comdata is in the acquisitions market. “The Comdata business is posting strong results driven by a proven, effective management team,” said Kathryn V. Marinello, who only last Friday joined Bloomington, Minn.-based Ceridian Corp. as president and chief executive. “I plan to work with the Comdata team and perhaps encourage them to find ways to employ capital to grow the business even more rapidly … I have a lot of experience in making large acquisitions that might be applicable to their situation.” Asked by analysts for more details about possible Comdata acquisitions, Marinello spoke generally. “I think we have a very positive appetite for acquisitions given what a healthy market this is and how strong the margins are, so I think it's a matter of looking at who the players are there, where it would make sense to join us and to go after them,” she said. “We love the business and will be very aggressive in growing the business.” Ceridian's biggest business is human-resources outsourcing services, but Brentwood, Tenn.-based Comdata is more profitable and in the midst of an expansion drive. Last year it bought Tranvia, a Rock Island, Ill.-based independent sales organization whose platform is now the foundation of Comdata's drive to establish a big-league merchant-processing business (Digital Transactions News, Sept. 27). Comdata also is one of the nation's largest fleet card processors and, through a subsidiary formerly known as Stored Value Systems, a top provider of prepaid cards. Comdata this month unified its various business units under the Comdata brand. Marinello came to Comdata from General Electric Co.'s GE Commercial Finance Fleet Services subsidiary, where she headed a company with nearly 3,000 employees and 1.3 million vehicles under lease or service management. But she also has deep payments-industry experience, having worked in senior positions at GE's card unit, processor First Data Corp., and First Bank System, now U.S. Bancorp. She also has worked at Chemical Bank, now JPMorgan Chase & Co., and at Citigroup Inc.'s Citibank. Comdata posted revenues of $123.8 million in the third quarter, up 13.1% from $109.5 million a year earlier, and operating earnings of $39.1 million, up10.1% from the year-earlier quarter's $35.5 million. Comdata posted operating margins of 31.6% compared with 7.5% for the Human Resource Solutions (HRS) unit. In all, Ceridian reported net income of $45.6 million, up 77.4% from $25.7 million a year earlier in part because of a recovery in HRS, Comdata's contribution, and a one-time tax gain. Revenues of $386.5 million were up 6.2% from $364.1 million in 2005's third quarter. New Comdata customers in transportation services, which includes the fleet card business, include Daimler Chrysler AG, convenience-store chain Mapco Express Inc., and trucking company Mason Dixon Lines Inc. The retail unit, which includes prepaid cards, booked a number of high-profile names, including Tommy Hilfiger Licensing LLC, NASCAR, and The Stride Rite Corp. Marinello succeeded Ronald L. Turner, who retired after nearly seven years as CEO.