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MarketScreener Homepage  >  Equities  >  Nyse  >  FLEETCOR Technologies, Inc.    FLT

FLEETCOR TECHNOLOGIES, INC.

(FLT)
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FLEETCOR TECHNOLOGIES : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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08/10/2020 | 04:40pm EDT
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the unaudited consolidated
financial statements and related notes appearing elsewhere in this report. In
addition to historical information, this discussion contains forward-looking
statements that involve risks, uncertainties and assumptions that could cause
actual results to differ materially from management's expectations. See "Special
Cautionary Notice Regarding Forward-Looking Statements".
This management's discussion and analysis should also be read in conjunction
with the management's discussion and analysis and consolidated financial
statements and related notes included in our Annual Report on Form 10-K for the
year ended December 31, 2019.
Impact of COVID-19 on Our Business
On March 11, 2020, the World Health Organization declared the novel strain of
coronavirus (COVID-19) a global pandemic and recommended containment and
mitigation measures worldwide. The pandemic and these containment and mitigation
measures have led to adverse impacts on the U.S. and global economies. The
COVID-19 pandemic has impacted our business operations and results of operations
for the first six months of 2020 as described in more detail under "Results of
Operations" below, due to a significant reduction in the level of business
activity across industries worldwide, which reduced the volume of payment
services provided to our customers and revenue generated beginning during the
second half of the last month of the first quarter.
The evolving COVID-19 pandemic is having, and could continue to have an adverse
impact on our results of operations and liquidity; the operations of our
suppliers, vendors and customers; and on our employees as a result of
quarantines, facility closures, and travel and logistics restrictions. We expect
that our business operations and results of operations, including our net
revenues, earnings and cash flows, will be negatively impacted by a multitude of
factors including, but not limited to:
•changes in business and consumer confidence and spending habits, including
negative trends in our customers' purchasing patterns due to decreased levels of
business activity, credit availability, high debt levels and financial distress;
•lower fuel prices;
•slowdowns in commercial trucking;
•fluctuations in the dollar compared to other currencies around the world;
•reduction in the level of business travel;
•decreased productivity due to travel bans, work-from-home policies or
shelter-in-place orders;
•slowdown in the U.S. and global economies, and an uncertain global economic
outlook or a potential credit crisis; and
•customers experiencing financial distress or declaring bankruptcy, including
seeking extended payment terms, which would create incremental credit loss
expense.
If the COVID-19 pandemic continues to impact the world economy and our
customers, in particular, by restricting day-to-day operations and business
activity generally, our revenues throughout the year will ultimately be
adversely impacted. The extent to which the COVID-19 pandemic impacts our
business operations, financial results, and liquidity will depend on numerous
evolving factors that we may not be able to accurately predict or assess,
including the duration and scope of the pandemic; our response to the impact of
the pandemic; the negative impact it has on global and regional economies and
general economic activity, including the duration and magnitude of its impact on
unemployment rates and business spending levels; its short- and longer-term
impact on the levels of consumer confidence; the ability of our suppliers,
vendors and customers to successfully address the impacts of the pandemic;
actions governments, businesses and individuals take in response to the
pandemic; and how quickly economies recover after the COVID-19 pandemic
subsides.
We have been taking steps to mitigate the potential risks related to the
circumstances and impacts of COVID-19. We are focused on addressing these recent
challenges with preemptive actions designed to protect our employees, provide
uninterrupted service to our customers, and meet our near term liquidity needs.
Such actions include, but are not limited to:
•Safety: ensuring the safety of our 8,000 employees worldwide by transitioning
the vast majority of our employees to work from home;
•Business Continuity: ensuring that our systems and payment products continue to
operate efficiently for our customers;
•Liquidity: consolidating cash to the United States from around the world and
increasing our credit line under our existing credit facilities;
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•Expenses: slowing discretionary sales and technology spending, furloughing
contractors, and the executive team taking pay cuts; and
•Credit: tightening customer credit lines and payment terms, including closing
inactive lines, reducing unused capacity, and reducing payment terms in selected
distressed verticals.

These efforts may not be enough to offset anticipated impact of the COVID-19
pandemic. See "The extent to which the outbreak of the novel strain of the
coronavirus (COVID-19) and measures taken in response thereto impact our
business, results of operations and financial condition will depend on future
developments, which are highly uncertain and are difficult to predict." in Part
II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.

General Business
FLEETCOR Technologies, Inc. and its subsidiaries (the Company) is a leading
global business payment solutions company that simplifies the way businesses
manage and pay their expenses. The FLEETCOR portfolio of brands help companies
automate, secure, digitize and control payments on behalf of their employees and
suppliers. The Company serves businesses, partners, merchants and consumers and
payment networks in North America, Latin America, Europe, and Asia Pacific.
As previously described in our Annual Report on Form 10-K for the year ended
December 31, 2019, we have historically managed and reported our operating
results through two reportable segments, defined by geographic region: North
America and International. In the first quarter of 2020, we evaluated the
identification of our operating and reportable segments based upon changes in
business models, management reporting, and how the Chief Operating Decision
Maker (CODM) is currently allocating resources, assessing performance and
reviewing financial information. We determined that this change caused the
composition of our reportable segments to change and that Brazil represented a
third operating and reportable segment, which was previously reported in the
International segment. We now manage and report our operating results through
three operating and reportable segments defined by geographic region: North
America, Brazil and International, which aligns with how the CODM allocates
resources, assesses performance and reviews financial information.
FLEETCOR solutions are comprised of payment products, networks and associated
services. Our payment products generally function like a charge card, prepaid
card, one-time use virtual card and electronic RFID (radio-frequency
identification), etc. While the actual payment mechanisms vary from category to
category, they are structured to afford control and reporting to the end
customer. We group our payment solutions into five primary categories: Fuel,
Lodging, Tolls, Corporate Payments and Gift. Additionally, we provide other
complementary payment products including fleet maintenance, employee benefits
and long haul transportation-related services. Our payment solutions are used in
more than 100 countries around the world, with our primary geographies being the
U.S., Brazil and the United Kingdom, which combined accounted for approximately
87% of our revenue in 2019.
We use both proprietary and third-party networks to deliver our payment
solutions. FLEETCOR owns and operates proprietary networks with well-established
brands throughout the world, bringing incremental sales and loyalty to
affiliated merchants. Third-party networks are used to broaden payment product
acceptance and use.
FLEETCOR markets its products directly through multiple sales channels,
including field sales, telesales and digital marketing, and indirectly through
our partners, which include major oil companies, leasing companies, petroleum
marketers, value-added resellers (VARs) and referral partners.
Executive Overview
Our revenue is generally reported net of the cost for underlying products and
services purchased through our payment products. In this report, we refer to
this net revenue as "revenue". See "Results of Operations" for additional
segment information.
Revenues, net, by Segment. The presentation of segment information has been
recast for prior quarters to align with segment presentation for the three and
six months ended June 30, 2020. For the three and six months ended June 30, 2020
and 2019, our North America, Brazil and International segments generated the
following revenue (in millions).
                                                                   Three Months Ended June 30,                                                                                                                                Six Months Ended June 30,
                                                     2020                                                                2019                                                                                     2020                                2019
                                                                % of                                               % of                                                     % of                                             % of
                                                                Total                                             Total                                                     Total                                            Total
(Unaudited)                        Revenues, net            Revenues, net            Revenues, net            Revenues, net                   Revenues, net             Revenues, net            Revenues, net           Revenues, net
North America$     357.4                         68.1  %       $      417.9                         64.6  %             $       792.1                        66.8  %       $       814.8                    64.2  %
Brazil                                   75.1                         14.3  %              103.6                         16.0  %                     174.1                        14.7  %               209.3                    16.5  %
International                            92.6                         17.6  %              125.6                         19.4  %                     220.0                        18.5  %               244.8                    19.3  %
                                  $     525.1                        100.0  %       $      647.1                        100.0  %             $     1,186.2                       100.0  %       $     1,268.9                   100.0  %



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Revenues, net, Net Income and Net Income Per Diluted Share. Set forth below are
revenues, net, net income and net income per diluted share for the three and six
months ended June 30, 2020 and 2019 (in millions, except per share amounts).
                                                                                                                 Six Months Ended June
                                                       Three Months Ended June 30,                                        30,
(Unaudited)                                              2020                  2019               2020                 2019
Revenues, net                                      $       525.1$   647.1$ 1,186.2$   1,268.9
Net income                                         $       158.5$   261.7$   305.5$     433.8
Net income per diluted share                       $        1.83$    2.90$    3.50$      4.84



Adjusted Net Income and Adjusted Net Income Per Diluted Share. Set forth below
are adjusted net income and adjusted net income per diluted share for the three
and six months ended June 30, 2020 and 2019 (in millions, except per share
amounts).
                                                                                                           Six Months Ended June
                                                Three Months Ended June 30,                                         30,
(Unaudited)                                       2020                  2019               2020                  2019
Adjusted net income                         $       197.4$   256.7$   461.9$      495.2
Adjusted net income per diluted share       $        2.28           $    

2.85 $ 5.29$ 5.52



Adjusted net income and adjusted net income per diluted share are supplemental
non-GAAP financial measures of operating performance. See the heading entitled
"Management's Use of Non-GAAP Financial Measures" for more information and a
reconciliation of the non-GAAP financial measure to the most directly comparable
financial measure calculated in accordance with GAAP. We use adjusted net income
and adjusted net income per diluted share to eliminate the effect of items that
we do not consider indicative of our core operating performance on a consistent
basis.
Sources of Revenue
FLEETCOR offers a variety of business payment solutions that help to simplify,
automate, secure, digitize and effectively control the way businesses manage and
pay their expenses. We provide our payment solutions to our business, merchant,
consumer and payment network customers in more than 100 countries around the
world, although we operate primarily in 3 geographies, with approximately 87% of
our business in the U.S., Brazil and the U.K. Our products help our customers
pay their suppliers and manage spend related to their employees more
efficiently. We have a variety of products that help our customers achieve these
goals, primarily in five product categories: fuel, corporate payments, toll,
lodging and gift. Our customers may include commercial businesses (obtained
through direct and indirect channels), partners for whom we manage payment
programs, as well as individual consumers (for tolls).
Fuel represents approximately 47% of our revenues.  Our fuel cards and products
help businesses monitor and control fuel spend across multiple fuel networks,
providing online analytical reporting to help customers managing the efficiency
of their vehicles and drivers, while offering potential discounts from the
retail price of fuel. We generate revenue in our fuel products through a variety
of program fees, including transaction fees, card fees, network fees and
charges, as well as from interchange.  These fees may be charged as fixed
amounts, costs plus a mark-up, or based on a percentage of the transaction
purchase amounts, or a combination thereof. Our programs also include other fees
and charges associated with late payments and based on customer credit risk.
Corporate payments represents approximately 18% of our revenues. Our products
help streamline business to business ("B2B") payments for vendors and employees,
both domestically and internationally. Our corporate payments products include
virtual card solutions for invoice payments, corporate card programs, a
fully-outsourced accounts payable solution, as well as a cross-border payments
product to facilitate customers making payments across differing currencies. In
our corporate payments products, a primary measure of volume is spend, the
dollar amount of payments processed on behalf of customers through our various
networks. In corporate payments, we primarily earn revenue from the difference
between the amount charged to the customer and the amount paid to the third
party for a given transaction as interchange revenue. Our programs may also
charge fixed fees for access to the network and ancillary services provided.
Tolls represents approximately 12% of our revenues. Our toll product is
primarily delivered via an RFID sticker affixed to the windshield of a customer
vehicle in Brazil. This RFID technology enables customers to utilize toll roads,
toll parking lots, pay for gas at partner stations and pay for drive-through
food, via automated access and payment upon scan while remaining in the vehicle.
In our toll product, the relevant measure of volume is average monthly tags
active during the period. We primarily earn revenue from fixed fees for access
to the network and ancillary services provided. We also earn interchange on
certain services provided.
Lodging represents approximately 8% of our revenues. Our lodging products
provide customers with a proprietary network of hotels with discounted room
rates, centralized billing and robust reporting to help customers manage and
control costs. In our lodging products, we define a transaction as a hotel room
night purchased by a customer. In our lodging products, we primarily
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earn revenue from the difference between the amount charged to the customer and
the amount paid to the hotel for a given transaction. Our products may also
charge fees for access to the network and ancillary services provided.
Gift represents approximately 5% of our revenues. We provide fully integrated
gift card product management and processing services via plastic and digital
gift cards to our customers. We primarily earn revenue from the processing of
gift card transactions sold by our customers to end users, as well as from the
sale of the plastic cards. Our products may also charge fixed fees for ancillary
services provided.
The remaining 10% of revenues represents other products, which include
telematics, maintenance, food, a payroll card solution for employers to
distribute wages, and transportation related offerings.
The following table presents revenue and revenue per key performance metric by
product for the three months ended June 30, 2020 and 2019 (in millions).*
                                                                      As Reported                                                                                            Pro Forma and Macro Adjusted3
                                                              Three Months Ended June 30,                                                                                     Three Months Ended June 30,
(Unaudited)                                  2020              2019             Change             % Change             2020              2019             Change             % Change
FUEL
'- Revenues, net                          $  249.8$  295.1$  (45.3)                 (15) %       $  243.8$  291.3$  (47.5)                  (16) %
'- Transactions                               99.7             125.3             (25.6)                 (20) %           99.7             124.5             (24.9)                  (20) %

'- Revenues, net per transaction $ 2.51$ 2.36

  $   0.15                    6  %       $   2.45$   2.34$   0.11                     5  %
CORPORATE PAYMENTS
'- Revenues, net1                         $   92.6$  112.2$  (19.7)                 (18) %       $   93.7$  112.2$  (18.6)                  (17) %
'- Spend volume                           $ 13,671$ 20,244$ (6,573)                 (32) %       $ 13,670$ 20,244$ (6,574)                  (32) %
'- Revenue, net per spend $                   0.68  %           0.55  %           0.12  %                22  %           0.69  %           0.55  %           0.13  %                 24  %
TOLLS
'- Revenues, net                          $   64.8$   86.2$  (21.4)                 (25) %       $   88.7$   86.2$    2.4                     3  %
'- Tags (average monthly)                      5.3               5.0               0.3                    5  %            5.3               5.0               0.3                     5  %
'- Revenues, net per tag                  $  12.19$  17.08$  (4.89)                 (29) %       $  16.68$  17.08$  (0.40)                   (2) %
LODGING
'- Revenues, net                          $   40.6$   50.2$   (9.6)                 (19) %       $   40.7$   64.9$  (24.2)                  (37) %
'- Room nights                                 4.6               4.3               0.3                    8  %            4.6               6.8              (2.2)                  (33) %
'- Revenues, net per room night           $   8.82$  11.75$  (2.93)                 (25) %       $   8.83$   9.51$  (0.68)                   (7) %
GIFT
'- Revenues, net                          $   26.5$   35.7$   (9.2)                 (26) %       $   26.5$   35.7$   (9.2)                  (26) %
'- Transactions                              188.2             284.1             (95.9)                 (34) %          188.2             284.1             (95.9)                  (34) %

'- Revenues, net per transaction $ 0.14$ 0.13

  $   0.02                   12  %       $   0.14$   0.13$   0.02                    12  %
OTHER2
'- Revenues, net1                         $   50.8$   67.6$  (16.8)                 (25) %       $   53.7$   71.8$  (18.1)                  (25) %
'- Transactions1                               9.0              14.3              (5.3)                 (37) %            9.0              14.3              (5.3)                  (37) %

'- Revenues, net per transaction $ 5.65$ 4.73

   $   0.92                   19  %       $   5.97$   5.02$   0.95                    19  %
FLEETCOR CONSOLIDATED REVENUES, NET
'- Revenues, net                          $  525.1$  647.1$ (121.9)                 (19) %       $  547.1$  662.1$ (115.1)                  (17) %



1 Reflects certain reclassifications of revenue between product categories as the Company
realigned its Corporate Payments business, resulting in reclassification of payroll paycard
revenue from Corporate Payments to Other.
2 Other includes telematics, maintenance, food, transportation and payroll card related
businesses.
3 See heading entitled "Managements' Use of Non-GAAP Financial Measures" for a reconciliation of
pro forma and macro adjusted revenue by product and metric non-GAAP measures to the comparable
financial measure calculated in accordance with GAAP.
* Columns may not calculate due to rounding.


Revenue per relevant key performance indicator ("KPI"), which may include
transaction, spend volume, monthly tags, room nights, or other metrics, is
derived from the various revenue types as discussed above and can vary based on
geography, the relevant merchant relationship, the payment product utilized and
the types of products or services purchased, the mix of which would be
influenced by our acquisitions, organic growth in our business, and the overall
macroeconomic environment,
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including fluctuations in foreign currency exchange rates, fuel prices and fuel
spread margins. Revenue per KPI per customer may change as the level of services
we provide to a customer increases or decreases, as macroeconomic factors change
and as adjustments are made to merchant and customer rates. See "Results of
Operations" for further discussion of transaction volumes and revenue per
transaction.
Sources of Expenses
We incur expenses in the following categories:
•Processing-Our processing expense consists of expenses related to processing
transactions, servicing our customers and merchants, credit loss expense and
cost of goods sold related to our hardware sales in certain businesses.
•Selling-Our selling expenses consist primarily of wages, benefits, sales
commissions (other than merchant commissions) and related expenses for our
sales, marketing and account management personnel and activities.
•General and administrative-Our general and administrative expenses include
compensation and related expenses (including stock-based compensation) for our
executives, finance and accounting, information technology, human resources,
legal and other administrative personnel. Also included are facilities expenses,
third-party professional services fees, travel and entertainment expenses, and
other corporate-level expenses.
•Depreciation and amortization-Our depreciation expenses include depreciation of
property and equipment, consisting of computer hardware and software (including
proprietary software development amortization expense), card-reading equipment,
furniture, fixtures, vehicles, buildings and leasehold improvements related to
office space. Our amortization expenses include amortization of intangible
assets related to customer and vendor relationships, trade names and trademarks,
software and non-compete agreements. We are amortizing intangible assets related
to business acquisitions and certain private label contracts associated with the
purchase of accounts receivable.
•Other operating, net-Our other operating, net includes other operating expenses
and income items that do not relate to our core operations or that occur
infrequently.
•Investment (gain) loss-Our investment results primarily relate to impairment
charges related to our investments and unrealized gains and losses related to a
noncontrolling interest in a marketable security.
•Other expense (income), net-Our other expense (income), net includes gains and
losses from the sale of assets, foreign currency transactions, and other
miscellaneous costs and revenue.
•Interest expense, net-Our interest expense, net includes interest expense on
our outstanding debt, interest income on our cash balances and interest on our
interest rate swaps.
•Provision for (benefit from) income taxes-Our provision for income taxes
consists primarily of corporate income taxes related to earnings resulting from
the sale of our products and services on a global basis.
Factors and Trends Impacting our Business
We believe that the following factors and trends are important in understanding
our financial performance:

•Global economic conditions-Our results of operations are materially affected by
conditions in the economy generally, both in North America and internationally,
including the ultimate impact of the COVID-19 pandemic. Factors affected by the
economy include our transaction volumes, the credit risk of our customers and
changes in tax laws across the globe. These factors affected our businesses in
our North America, Brazil and International segments.
•Foreign currency changes-Our results of operations are significantly impacted
by changes in foreign currency exchange rates; namely, by movements of the
Australian dollar, Brazilian real, British pound, Canadian dollar, Czech koruna,
Euro, Mexican peso, New Zealand dollar and Russian ruble, relative to the U.S.
dollar. Approximately 62% and 60% of our revenue in the six months ended June
30, 2020 and 2019, respectively, was derived in U.S. dollars and was not
affected by foreign currency exchange rates. See "Results of Operations" for
information related to foreign currency impacts on our total revenue, net.
Our cross-border foreign currency trading business aggregates foreign exchange
exposures arising from customer contracts and economically hedges the resulting
net currency risks by entering into offsetting contracts with established
financial institution counterparties. These contracts are subject to
counterparty credit risk arising from movements in foreign currency exchange
rates.
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•Fuel prices-Our fleet customers use our products and services primarily in
connection with the purchase of fuel. Accordingly, our revenue is affected by
fuel prices, which are subject to significant volatility. A change in retail
fuel prices could cause a decrease or increase in our revenue from several
sources, including fees paid to us based on a percentage of each customer's
total purchase. Changes in the absolute price of fuel may also impact unpaid
account balances and the late fees and charges based on these amounts. We
believe approximately 11% and 13% of revenues, net were directly impacted by
changes in fuel price in the three months ended June 30, 2020 and 2019,
respectively. We believe approximately 11% and 13% of revenues, net were
directly impacted by changes in fuel price in the six months ended June 30, 2020
and 2019, respectively.
•Fuel-price spread volatility-A portion of our revenue involves transactions
where we derive revenue from fuel-price spreads, which is the difference between
the price charged to a fleet customer for a transaction and the price paid to
the merchant for the same transaction. In these transactions, the price paid to
the merchant is based on the wholesale cost of fuel. The merchant's wholesale
cost of fuel is dependent on several factors including, among others, the
factors described above affecting fuel prices. The fuel price that we charge to
our customer is dependent on several factors including, among others, the fuel
price paid to the merchant, posted retail fuel prices and competitive fuel
prices. We experience fuel-price spread contraction when the merchant's
wholesale cost of fuel increases at a faster rate than the fuel price we charge
to our customers, or the fuel price we charge to our customers decreases at a
faster rate than the merchant's wholesale cost of fuel. The inverse of these
situations produces fuel-price spread expansion. We believe approximately 11%
and 5% of revenues, net were directly impacted by fuel-price spreads in both the
three months ended June 30, 2020 and 2019, respectively. We believe
approximately 9% and 5% of revenues, net were directly impacted by fuel-price
spreads in both the six months ended June 30, 2020 and 2019, respectively.
•Acquisitions-Since 2002, we have completed over 80 acquisitions of companies
and commercial account portfolios. Acquisitions have been an important part of
our growth strategy, and it is our intention to continue to seek opportunities
to increase our customer base and diversify our service offering through further
strategic acquisitions. The impact of acquisitions has, and may continue to
have, a significant impact on our results of operations and may make it
difficult to compare our results between periods.
•Interest rates-Our results of operations are affected by interest rates. We are
exposed to market risk changes in interest rates on our cash investments and
debt. On January 22, 2019, the Company entered into three swap contracts. The
objective of these swap contracts is to reduce the variability of cash flows in
the previously unhedged interest payments associated with $2.0 billion of
variable rate debt, the sole source of which is due to changes in the LIBOR
benchmark interest rate. For each of these swap contracts, we will pay a fixed
monthly rate and receive one month LIBOR.
•Expenses-Over the long term, we expect that our general and administrative
expense will decrease as a percentage of revenue as our revenue increases. To
support our expected revenue growth, we plan to continue to incur additional
sales and marketing expense by investing in our direct marketing, third-party
agents, internet marketing, telemarketing and field sales force.
•Taxes-We pay taxes in various taxing jurisdictions, including the U.S., most
U.S. states and many non-U.S. jurisdictions. The tax rates in certain non-U.S.
taxing jurisdictions are different than the U.S. tax rate. Consequently, as our
earnings fluctuate between taxing jurisdictions, our effective tax rate
fluctuates.

Acquisitions and Investments
During 2019, we completed acquisitions with an aggregate purchase price of
approximately $416 million.
•On April 1, 2019, we completed the acquisition of NvoicePay, a provider of full
accounts payable automation for businesses in the U.S. The aggregate purchase
price of this acquisition was approximately $208 million, net of cash acquired.
•On April 1, 2019, we completed the acquisition of r2c, a fleet maintenance,
compliance and workshop management software provider in the U.K.
•On July 8, 2019, we completed the acquisition of SOLE Financial, a payroll card
provider in the U.S.
•On October 1, 2019, we completed the acquisition of Travelliance, an airline
lodging provider in the U.S. The preliminary aggregate purchase price of this
acquisition was approximately $110 million, net of cash acquired, which remains
subject to working capital adjustments.
We report our results from our 2019 U.S. acquisitions in our North America
segment from the dates of acquisition. We report our results from our 2019 U.K.
acquisition in our International segment from the date of acquisition.

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Disposition

As part of the Company's plans to exit the telematics business, we sold our
investment in Masternaut to Michelin Group during the second quarter of 2019. We
impaired our investment in Masternaut by an additional $15.6 million during
2019, resulting in no gain or loss when the investment was sold. We recorded
cumulative impairment losses associated with our former investment in Masternaut
of $136.3 million.

Results of Operations
Three months ended June 30, 2020 compared to the three months ended June 30,
2019
The following table sets forth selected unaudited consolidated statements of
income and selected operational data for the three months ended June 30, 2020
and 2019 (in millions, except percentages)*.
                                                                                        Three Months
                                  Three Months Ended            % of Total             Ended June 30,              % of Total              Increase
(Unaudited)                         June 30, 2020             Revenues, net                 2019                 Revenues, net            (decrease)           % Change
Revenues, net:
North America                     $      357.4                          68.1  %       $     417.9                          64.6  %       $   (60.5)                (14.5) %
Brazil                                    75.1                          14.3  %             103.6                          16.0  %           (28.4)                (27.5) %
International                             92.6                          17.6  %             125.6                          19.4  %           (33.0)                (26.3) %
Total revenues, net                      525.1                         100.0  %             647.1                         100.0  %          (121.9)                (18.8) %
Consolidated operating
expenses:
Processing                               121.3                          23.1  %             120.5                          18.6  %             0.8                   0.7  %
Selling                                   42.4                           8.1  %              51.9                           8.0  %            (9.5)                (18.3) %
General and administrative                86.7                          16.5  %             106.8                          16.5  %           (20.0)                (18.8) %
Depreciation and
amortization                              62.2                          11.8  %              70.9                          11.0  %            (8.7)                (12.3) %
Other operating, net                      (0.2)                            -  %              (0.2)                            -  %               -                   0.4
Operating income                         212.8                          40.5  %             297.3                          45.9  %           (84.5)                (28.4) %
Investment (gain) loss                   (33.7)                         (6.4) %                 -                             -  %           (33.7)                      NM
Other expense, net                         2.5                           0.5  %               0.5                           0.1  %             2.0                       NM
Interest expense, net                     32.4                           6.2  %              39.5                           6.1  %            (7.1)                (18.0) %

Provision for (benefit
from) income taxes                        53.1                          10.1  %              (4.4)                         (0.7) %            57.5                       NM
Net income                        $      158.5                          30.2  %       $     261.7                          40.4  %       $  (103.2)                (39.4) %
Operating income for
segments:
North America                     $      133.2$     184.3$   (51.1)                (27.8) %
Brazil                                    29.4                                               42.3                                            (12.8)                (30.4) %
International                             50.2                                               70.8                                            (20.5)                (29.0) %
Operating income                  $      212.8$     297.3$   (84.5)                (28.4) %
Operating margin for
segments:
North America                             37.3     %                                         44.1     %                                       (6.8) %
Brazil                                    39.1     %                                         40.8     %                                       (1.7) %
International                             54.3     %                                         56.4     %                                       (2.1) %
Total                                     40.5     %                                         45.9     %                                       (5.4) %


NM = Not Meaningful
*The sum of the columns and rows may not calculate due to rounding.

Revenues, net
Our consolidated revenues were $525.1 million in the three months ended June 30,
2020, a decrease of $121.9 million or 18.8%, from $647.1 million in the three
months ended June 30, 2019. Consolidated revenues declined primarily due to
decreases in volume as a result of the COVID-19 pandemic. Organically,
consolidated revenues were down approximately
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17%. In addition, the second quarter of 2020 results reflect the impact of the
negative quarter over quarter impact of the macroeconomic environment.
Although we cannot precisely measure the impact of the macroeconomic
environment, in total we believe it had a negative impact on our consolidated
revenues for the three months ended June 30, 2020 over the comparable period in
2019 of approximately $22 million. Foreign exchange rates had an unfavorable
impact on consolidated revenues of approximately $35 million, primarily due to
unfavorable changes in foreign exchange rates in Brazil, and lower fuel prices
had an unfavorable impact on revenues of approximately $13 million. These
decreases were partially offset by the impact of favorable fuel spread margins
of approximately $26 million and acquisitions completed during 2019.

North America segment revenues, net
North America segment revenues were $357.4 million in the three months ended
June 30, 2020, a decrease of $60.5 million or 14.5%, from $417.9 million in the
three months ended June 30, 2019. North America revenues declined primarily due
to decreases in volume as a result of the COVID-19 pandemic. Organically, North
America segment revenues were down approximately 20%.
This decrease was partially offset by the impact of acquisitions completed
during 2019, as well as the favorable impact of fuel spread margins. Although we
cannot precisely measure the impact of the macroeconomic environment, in total
we believe it had a positive impact on our North America segment revenues in the
three months ended June 30, 2020 over the comparable period in 2019 of
approximately $12 million, driven primarily by favorable fuel spread margins of
approximately $26 million, partially offset by lower fuel prices of
approximately $13 million.

Brazil segment revenues, net
Brazil segment revenues were $75.1 million in the three months ended June 30,
2020, a decrease of $28.4 million or 27.5%, from $103.6 million in three months
ended June 30, 2019. Brazil revenues declined primarily due to decreases in
volume as a result of the COVID-19 pandemic and the unfavorable impact of
foreign exchange rates. Organically, Brazil segment revenues were down
approximately 1%. We believe unfavorable foreign exchange rates negatively
impacted Brazil segment revenues for the three months ended June 30, 2020 over
the comparable period in 2019, by approximately $28 million.

International segment revenues, net
International segment revenues were $92.6 million in the three months ended June
30, 2020, a decrease of $33.0 million or 26.3%, from $125.6 million in the three
months ended June 30, 2019. International revenues declined primarily due to
decreases in volume as a result of the COVID-19 pandemic and the unfavorable
impact of foreign exchange rates. Organically, International segment revenues
were down approximately 21%. We believe unfavorable foreign exchange rates had a
negative impact on International segment revenues for the three months ended
June 30, 2020 over the comparable period in 2019 of approximately $7 million,
mostly in Russia and Mexico.

Revenues, net by geography and product category. Set forth below are further breakdowns of revenues, net by geography and product category for the three months ended June 30, 2020 and 2019 (in millions).

                                                                                Three Months Ended June 30,
Revenues, net by Geography*                                      2020                                                                 2019
                                                                          % of Total                                            % of Total
(Unaudited)                                  Revenues, net               Revenues, net              Revenues, net              Revenues, net
United States                              $         335                               64  %       $         389                            60  %
Brazil                                                75                               14  %                 104                            16  %
United Kingdom                                        49                                9  %                  70                            11  %
Other                                                 66                               13  %                  85                            13  %
Consolidated revenues, net                 $         525                              100  %                 647                           100  %


* Columns may not calculate due to rounding.

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                                                                           Three Months Ended June 30,
Revenues, net by Product
Category*1                                                  2020                                                                 2019
                                                                                                                           % of Total
(Unaudited)                             Revenues, net         % of Total Revenues, net         Revenues, net              Revenues, net
Fuel                                  $         250                               47  %       $         295                            46  %
Corporate Payments                               93                               18  %                 112                            17  %
Tolls                                            65                               12  %                  86                            13  %
Lodging                                          41                                8  %                  50                             8  %
Gift                                             27                                5  %                  36                             6  %
Other                                            51                               10  %                  68                            10  %
Consolidated revenues, net            $         525                              100  %       $         647                           100  %



1 Reflects certain reclassifications of revenue between product categories as the Company
realigned its Corporate Payments business, resulting in reclassification of payroll paycard
revenue from Corporate Payments to Other.
*Columns may not calculate due to rounding.


Consolidated operating expenses
Processing. Processing expenses were $121.3 million in the three months ended
June 30, 2020, an increase of $0.8 million or 0.7%, from $120.5 million in the
comparable prior period. Increases in processing expenses were primarily due to
acquisitions completed in 2019 of approximately $10 million, an increase in
credit loss expense of approximately $2 million and an increase in severance
costs of approximately $3 million due to headcount reductions. These increases
were partially offset by the favorable impact of fluctuations in foreign
exchange rates of approximately $9 million.
Selling. Selling expenses were $42.4 million in the three months ended June 30,
2020, a decrease of $9.5 million or 18.3%, from $51.9 million in the comparable
prior period. Decreases in selling expenses were primarily due to lower
commissions and other variable costs due to reduced sales volumes and the
favorable impact of fluctuations in foreign exchange rates of approximately $2
million, partially offset by expenses related to acquisitions completed in 2019
of approximately $1 million.
General and administrative. General and administrative expenses were $86.7
million in the three months ended June 30, 2020, a decrease of $20.0 million or
18.8% from $106.8 million in the comparable prior period. The decrease in
general and administrative expenses was primarily due to decreased stock based
compensation expense of approximately $11 million, decreased discretionary
spending and the favorable impact of fluctuations in foreign exchange rates of
approximately $4 million. These decreases were partially offset by an increase
in other professional fees of approximately $4 million and the impact of
acquisitions completed in 2019 of approximately $3 million.

Depreciation and amortization. Depreciation and amortization expenses were $62.2
million in the three months ended June 30, 2020, a decrease of $8.7 million or
12.3%, from $70.9 million. Decreases in depreciation and amortization expenses
were primarily due to the favorable impact of fluctuations in foreign exchange
rates of approximately $5 million and assets being fully amortized, partially
offset by expenses related to acquisitions completed in 2019 of approximately $2
million.

Investment gain. Investment gain of $33.7 million in the three months ended June
30, 2020 relates to market value gains on our investment in bill.com during the
second quarter of 2020.

Interest expense, net. Interest expense, net was $32.4 million in the three
months ended June 30, 2020, a decrease of $7.1 million or 18.0%, from $39.5
million in the comparable prior period. The decrease in interest expense was
primarily due to decreases in LIBOR, partially offset by the impact of
additional borrowings to repurchase our common stock. The following table sets
forth the average interest rates paid on borrowings under our Credit Facility,
excluding the related unused facility fees and swaps.
                                                                         Three Months Ended June 30,
(Unaudited)                                                           2020                        2019
Term loan A                                                                 2.01  %                     3.97  %
Term loan B                                                                 2.26  %                     4.47  %
Revolving line of credit A, B & C USD Borrowings                            2.06  %                     3.97  %
Revolving line of credit B GBP Borrowings                                   1.69  %                     2.23  %
Foreign swing line                                                          1.56  %                     2.17  %


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There were no borrowings on the revolving D facility in 2020. The average unused
facility fee for the Credit Facility excluding the revolving D facility was
0.30% in the three month period ended June 30, 2020. The fixed unused facility
fee for the revolving D facility was 0.375% for the three month period ending
June 30, 2020.
On January 22, 2019, we entered into three interest rate swap cash flow
contracts. The objective of these interest rate swap contracts is to reduce the
variability of cash flows in the previously unhedged interest payments
associated with $2 billion of variable rate debt, tied to the one month LIBOR
benchmark interest rate. During the three months ended June 30, 2020, as a
result of these swap contracts, we incurred additional interest expense of $10.4
million or 2.05% over the average LIBOR rates on $2 billion of borrowings.
Provision for (benefit from) income taxes. The provision for income taxes and
effective tax rate in the three months ended June 30, 2020 were $53.1 million or
25.1%, respectively, as compared to a benefit from income taxes and effective
tax rate of $4.4 million or (1.7)%, respectively, in the three months ended June
30, 2019. We provide for income taxes during interim periods based on an
estimate of our effective tax rate for the year. Discrete items and changes in
the estimate of the annual tax rate are recorded in the period they occur. The
provision for income taxes in the three months ended June 30, 2020 included a
$9.8 million increase in a reserve for uncertain tax positions related to prior
years and the tax impact from a gain of $34 million resulting from market value
gains on our investment in trading securities. The second quarter of 2019
included an income tax benefit of $65 million due to the final disposition of
our remaining interest in Masternaut, which allowed us to carryback the capital
loss on our investment in Masternaut and offset it against a previously recorded
capital gain from the sale of Nextraq in 2017. Excluding these discrete tax
items, income tax expense would be $24.4 million lower in the three months ended
June 30, 2020 than the comparable period in 2019, primarily due to a decrease in
pre-tax earnings. Excluding these discrete items, our tax rate in the second
quarter of 2020 would have been 20.3%. compared to 23.5% in 2019. The decrease
in the adjusted tax rate was due primarily to additional excess tax benefit on
stock option exercises in 2020 over the comparable period in 2019.
Net income. For the reasons discussed above, our net income decreased to $158.5
million in the three months ended June 30, 2020, a decrease of $103.2 million or
39.4%, from $261.7 million in the three months ended June 30, 2019.
Operating income and operating margin
Consolidated operating income. Operating income was $212.8 million in the three
months ended June 30, 2020, a decrease of $84.5 million or 28.4%, from $297.3
million in the comparable prior period. Our operating margin was 40.5% and 45.9%
for the three months ended June 30, 2020 and 2019, respectively. These decreases
were driven primarily by decreases in volume as a result of the COVID-19
pandemic, unfavorable movements in the foreign exchange rates of approximately
$15 million, lower fuel prices of approximately $13 million and the negative
impact of acquisitions completed in 2019. These decreases were partially offset
by the favorable impact of fuel spread margins of approximately $26 million and
lower stock based compensation expense.
For the purpose of segment operating results, we calculate segment operating
income by subtracting segment operating expenses from segment revenues, net.
Segment operating margin is calculated by dividing segment operating income by
segment revenues, net.

North America segment operating income. North America operating income was
$133.2 million in the three months ended June 30, 2020, a decrease of $51.1
million or 27.8%, from $184.3 million in the comparable prior period. North
America operating margin was 37.3% and 44.1% for the three months ended June 30,
2020 and 2019, respectively. These decreases were primarily driven by decreases
in volume as a result of the COVID-19 pandemic, lower fuel prices of
approximately $13 million and the negative impact of acquisitions completed in
2019. These decreases were partially offset by the favorable impact of fuel
spread margins of approximately $26 million and lower stock based compensation
expense.

Brazil segment operating income. Brazil operating income was $29.4 million in
the three months ended June 30, 2020, a decrease of $12.8 million or 30.4%, from
$42.3 million in the comparable prior period. Brazil operating margin was 39.1%
and 40.8% for the three months ended June 30, 2020 and 2019, respectively. The
decrease in operating income was primarily driven by decreases in volume as a
result of the COVID-19 pandemic and the unfavorable impact of foreign exchange
rates of approximately $11 million.
International segment operating income. International operating income was $50.2
million in the three months ended June 30, 2020, a decrease of $20.5 million or
29.0%, from $70.8 million in the comparable prior period. International
operating margin was 54.3% and 56.4% for the three months ended June 30, 2020
and 2019, respectively. These decreases were driven primarily by decreases in
volume as a result of the COVID-19 pandemic and the unfavorable impact of the
macroeconomic environment of approximately $4 million, driven primarily by
unfavorable movements in foreign exchange rates.

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Six months ended June 30, 2020 compared to the six months ended June 30, 2019
The following table sets forth selected unaudited consolidated statements of
income data for the six months ended June 30, 2020 and 2019 (in millions, except
percentages)*.
                                  Six Months Ended             % of Total             Six Months Ended             % of Total               Increase
(Unaudited)                        June 30, 2020              Revenues, net             June 30, 2019             Revenues, net            (decrease)            % Change
Revenues, net:
North America                    $      792.1                           66.8  %       $     814.8                           64.2  %       $   (22.7)                  (2.8) %
Brazil                                  174.1                           14.7  %             209.3                           16.5  %           (35.2)                 (16.8) %
International                           220.0                           18.5  %             244.8                           19.3  %           (24.8)                 (10.1) %
Total revenues, net                   1,186.2                          100.0  %           1,268.9                          100.0  %           (82.7)                  (6.5) %
Consolidated operating
expenses:
Processing                              355.0                           29.9  %             249.6                           19.7  %           105.4                   42.2  %
Selling                                  98.2                            8.3  %             101.1                            8.0  %            (2.9)                  (2.9) %
General and administrative              192.8                           16.3  %             199.6                           15.7  %            (6.7)                  (3.4) %
Depreciation and
amortization                            126.6                           10.7  %             138.4                           10.9  %           (11.7)                  (8.5) %
Other operating, net                     (0.3)                             -  %              (1.2)                          (0.1) %             0.9                  (77.4) %
Operating income                        413.8                           34.9  %             581.5                           45.8  %          (167.7)                 (28.8) %
Investment (gain) loss                  (31.3)                          (2.6) %              15.7                            1.2  %           (47.0)                       NM
Other (income) expense,
net                                      (6.9)                          (0.6) %               0.7                            0.1  %            (7.6)                       NM
Interest expense, net                    68.1                            5.7  %              78.6                            6.2  %           (10.5)                 (13.4) %

Provision for income taxes               78.4                            6.6  %              52.7                            4.2  %            25.6                   48.6  %
Net income                       $      305.5                           25.8  %       $     433.8                           34.2  %       $ 
(128.2)                 (29.6) %
Operating income for
segments:
North America                    $      218.9$     356.7$  (137.8)                 (38.6) %
Brazil                                   68.9                                                84.4                                             (15.6)                 (18.4) %
International                           126.0                                               140.4                                             (14.4)                 (10.2) %
Operating income                 $      413.8$     581.5$  (167.7)                 (28.8) %
Operating margin for
segments:
North America                            27.6     %                                          43.8     %                                       (16.1) %
Brazil                                   39.5     %                                          40.3     %                                        (0.8) %
International                            57.3     %                                          57.4     %                                        (0.1) %
Consolidated                             34.9     %                                          45.8     %                                       (10.9) %



NM = Not Meaningful
*The sum of the columns and rows may not calculate due to rounding.

Revenues, net
Our consolidated revenues were $1,186.2 million, in the six months ended June
30, 2020, a decrease of $82.7 million, or 6.5%, from $1,268.9 million in the six
months ended June 30, 2019. Consolidated revenues declined primarily due to
decreases in volume as a result of the COVID-19 pandemic. Organically,
consolidated revenues were down approximately 6%. In addition, the first half of
2020 results reflect the impact of the negative period over period impact of the
macroeconomic environment.
Although we cannot precisely measure the impact of the macroeconomic
environment, in total we believe it had a negative impact on our consolidated
revenues for the six months ended June 30, 2020 over the comparable period in
2019 of approximately $28 million. Foreign exchange rates had an unfavorable
impact on consolidated revenues of approximately $56 million, due to unfavorable
fluctuations in foreign exchange rates primarily in Brazil and the U.K., and
lower fuel prices had an unfavorable impact of $13 million. These decreases were
partially offset by the impact of favorable fuel spread margins of approximately
$41 million and acquisitions completed during 2019.
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North America segment revenues, net
North America segment revenues were $792.1 million in the six months ended June
30, 2020, a decrease of $22.7 million, or 2.8%, from $814.8 million in the six
months ended June 30, 2019. North America revenues declined primarily due to
decreases in volume as a result of the COVID-19 pandemic. Organically, North
America segment revenues were down approximately 9%.
This decrease was partially offset by the impact of acquisitions completed
during 2019, as well as the favorable impact of fuel spread margins. Although we
cannot precisely measure the impact of the macroeconomic environment, in total
we believe it had a positive impact on our North America segment revenue in the
six months ended June 30, 2020 over the comparable period in 2019 of
approximately $26 million, driven primarily by favorable fuel spread margins of
approximately $41 million, partially offset by lower fuel prices of
approximately $13 million and the unfavorable impact of foreign exchange rates
in Canada of $2 million.

Brazil segment revenues, net
Brazil segment revenues were $174.1 million in the six months ended June 30,
2020, a decrease of $35.2 million or 16.8%, from $209.3 million in six months
ended June 30, 2019. Brazil revenues declined primarily due to decreases in
volume as a result of the COVID-19 pandemic and the unfavorable impact of
foreign exchange rates. We believe unfavorable foreign exchanges rates
negatively impacted Brazil segment revenues for the six months ended June 30,
2020 over the comparable period in 2019, by approximately $45 million. These
decreases were partially offset by organic growth in Brazil segment revenues of
approximately 5%.

International segment revenues, net
International segment revenues were $220.0 million in the six months ended June
30, 2020, a decrease of $24.8 million, or 10.1%, from $244.8 million in the six
months ended June 30, 2019. International revenues declined primarily due to
decreases in volume as a result of the COVID-19 pandemic and the unfavorable
impact of foreign exchange rates. Organically, International segment revenues
were down approximately 7%. We believe unfavorable foreign exchange rates had a
negative impact on our International segment revenues for the six months ended
June 30, 2020 over the comparable period in 2019 of approximately $9 million.
These decreases were partially offset by the impact of an acquisition completed
in 2019.

Revenues, net by geography and product category. Set forth below are further
breakdowns of revenue by geography and product category for the six months ended
June 30, 2020 and 2019 (in millions).
                                                                                Six Months Ended June 30,
Revenues, net by Geography*                                      2020                                                               2019
                                                                         % of total                                           % of total
(Unaudited)                                 Revenues, net               revenues, net              Revenues, net             revenues, net
United States                              $        733                               62  %       $        760                            60  %
Brazil                                              174                               15  %                209                            16  %
United Kingdom                                      123                               10  %                137                            11  %
Other                                               157                               13  %                163                            13  %
Consolidated revenues, net                 $      1,186                              100  %       $      1,269                           100  %


* Columns may not calculate due to rounding.

                                                                           Six Months Ended June 30,
Revenues, net by Product
Category*1                                                  2020                                                              2019
                                                                                                                        % of total
(Unaudited)                                                  % of total revenues, net                                  revenues, net
Fuel                                  $        542                               46  %       $       578                            46  %
Corporate Payments                             212                               18  %               209                            16  %
Tolls                                          148                               12  %               175                            14  %
Lodging                                         98                                8  %                92                             7  %
Gift                                            69                                6  %                84                             7  %
Other                                          118                               10  %               131                            10  %
Consolidated revenues, net            $      1,186                              100  %       $     1,269                           100  %


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1 Reflects certain reclassifications of revenue between product categories as
the Company realigned its Corporate Payments business, resulting in
reclassification of payroll paycard revenue from Corporate Payments to Other.
* Columns may not calculate due to rounding.
Consolidated operating expenses
Processing. Processing expenses were $355.0 million in the six months ended June
30, 2020, an increase of $105.4 million, or 42.2%, from $249.6 million in the
comparable prior period. Increases in processing expenses were primarily due to
a write-off of a significant customer receivable in our foreign currency trading
business of approximately $90 million in the first quarter of 2020, acquisitions
completed in 2019 of approximately $20 million and an increase in credit loss
expense of approximately $11 million. These increases were partially offset by
the favorable impact of fluctuations in foreign exchange rates of approximately
$18 million.
Selling. Selling expenses were $98.2 million in the six months ended June 30,
2020, a decrease of $2.9 million, or 2.9%, from $101.1 million in the six months
ended June 30, 2019. Decreases in selling expenses were primarily due to lower
commissions and other variable costs due to reduced sales volumes and the
favorable impact of fluctuations in foreign exchange rates of approximately $4
million, partially offset by expenses related to acquisitions completed in 2019
of approximately $4 million.
General and administrative. General and administrative expenses were $192.8
million in the six months ended June 30, 2020, a decrease of $6.7 million, or
3.4% from $199.6 million in the comparable prior period. The decrease was
primarily due to decreased stock based compensation expense of approximately $7
million, decreased discretionary spending and the favorable impact of
fluctuations in foreign exchange rates of approximately $6 million. These
decreases were partially offset by the impact of acquisitions completed in 2019
of approximately $10 million and professional fees of $6 million over the
comparable prior period.

Depreciation and amortization. Depreciation and amortization expenses were
$126.6 million in the six months ended June 30, 2020, a decrease of $11.7
million, or 8.5% from $138.4 million in the comparable prior period. The
decrease was primarily due to the favorable impact of foreign exchange rates of
approximately $8 million and assets being fully amortized, partially offset by
expenses related to acquisitions completed in 2019 of approximately $7 million.

Investment (gain) loss. Investment gain of $31.3 million in the six months ended
June 30, 2020 relates to market value gains on our investment in bill.com. The
loss in 2019 was due to a non-cash impairment charge of $16 million recorded to
a cost method investment.

Other (income) expense, net. Other income, net was $6.9 million in the six
months ended June 30, 2020, compared to other expense, net of $0.7 million in
the six months ended June 30, 2019. Other income in 2020 includes a credit of
approximately $7 million related to a purchase price settlement in our Cambridge
acquisition.

Interest expense, net. Interest expense, net was $68.1 million in the six months
ended June 30, 2020, a decrease of $10.5 million, or 13.4%, from $78.6 million
in the comparable prior period. The decrease in interest expense is primarily
due to decreases in LIBOR, partially offset by the impact of additional
borrowings to repurchase our common stock. The following table sets forth the
average interest rates paid on borrowings under our Credit Facility, excluding
the related unused facility fees and swaps.
                                                             Six Months Ended June 30,
 (Unaudited)                                                      2020                 2019
 Term loan A                                                              2.51  %     3.99  %
 Term loan B                                                              2.84  %     4.49  %
 Revolving line of credit A, B & C USD Borrowings                         

2.60 % 3.99 %

 Revolving line of credit B GBP Borrowings                                1.86  %     2.23  %
 Foreign swing line                                                       1.83  %     2.18  %


There were no borrowings on the revolving D facility in 2020. The average unused
facility fee for the Credit Facility excluding the revolving D facility was
0.30% in the six month period ended June 30, 2020. The fixed unused facility fee
for the revolving D facility was 0.375% for the six month period ending June 30,
2020.
On January 22, 2019, we entered into three interest rate swap contracts. The
objective of these interest rate swap contracts is to reduce the variability of
cash flows in the previously unhedged interest payments associated with $2
billion of variable rate debt, tied to the one month LIBOR benchmark interest
rate. During the six months ended June 30, 2020, as a result of these
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swaps, we incurred additional interest expense of approximately $14.7 million or 1.47% over the average LIBOR rates on $2 billion of borrowings.


Provision for income taxes. The provision for income taxes and effective tax
rate was $78.4 million or 20.4% in the six months ended June 30, 2020, an
increase of $25.6 million, or 48.6%, from $52.7 million or 10.8% in the
comparable prior period. We provide for income taxes during interim periods
based on an estimate of our effective tax rate for the year. Discrete items and
changes in the estimate of the annual tax rate are recorded in the period they
occur. The provision for income taxes in the six months ended June 30, 2020
included a $9.8 million increase in a reserve for uncertain tax positions
related to prior years and the tax impact from a gain of $34 million resulting
from market value gains on our investment in trading securities. The comparable
period of 2019 included an income tax benefit of $65 million due to the final
disposition of our remaining interest in Masternaut, which allowed us to
carryback the capital loss on our investment in Masternaut and offset it against
a previously recorded capital gain from the sale of Nextraq in 2017. Excluding
these discrete tax items, income tax expense would be $53.0 million lower in the
first half of 2020 than the comparable period in 2019, primarily due to a
decrease in pre-tax earnings. Excluding these discrete items, our tax rate for
the second half of 2020 would have been 17.4% compared to 23.5% in 2019. The
decrease in the adjusted tax rate was primarily due to additional excess tax
benefit on stock option exercises in 2020 over the comparable period in 2019.
Net income. For the reasons discussed above, our net income was $305.5 million
in the six months ended June 30, 2020, a decrease of $128.2 million, or 29.6%
from $433.8 million in the six months ended June 30, 2019.
Operating income and operating margin
Consolidated operating income. Operating income was $413.8 million in the six
months ended June 30, 2020, a decrease of $167.7 million, or 28.8%, from $581.5
million in the comparable prior period. Our operating margin was 34.9% and 45.8%
for the six months ended June 30, 2020 and 2019, respectively. These decreases
were primarily driven by the write-off of a significant customer receivable in
our cross border payments business of approximately $90 million, decreases in
volume as a result of the COVID-19 pandemic, unfavorable movements in foreign
exchange rates of approximately $20 million, lower fuel prices of approximately
$13 million and the negative impact of acquisitions completed in 2019. These
decreases were partially offset by the favorable impact of fuel spread margins
of $41 million.
For the purpose of segment operating results, we calculate segment operating
income by subtracting segment operating expenses from segment revenue. Segment
operating margin is calculated by dividing segment operating income by segment
revenue.

North America segment operating income. North America operating income was
$218.9 million in the six months ended June 30, 2020, a decrease of $137.8
million, or 38.6%, from $356.7 million in the comparable prior period. North
America operating margin was 27.6% and 43.8% and for the six months ended June
30, 2020 and 2019, respectively. These decreases were due primarily to the
write-off of a significant customer receivable in our cross border payments
business of approximately $90 million, decreases in volume as a result of the
COVID-19 pandemic and the negative impact of acquisitions completed in 2019.
These decreases were partially offset by the favorable impact of the
macroeconomic environment of approximately $31 million, primarily driven by the
impact of favorable fuel spread margins.

Brazil segment operating income. Brazil operating income was $68.9 million in
the six months ended June 30, 2020, a decrease of $15.6 million, or 18.4%, from
$84.4 million in the comparable prior period. Brazil operating margin was 39.5%
and 40.3% for the six months ended June 30, 2020 and 2019, respectively. These
decreases were due primarily by decreases in volume as a result of the COVID-19
pandemic and the unfavorable impact of the unfavorable impact of foreign
exchange rates of $18 million.

International segment operating income. International operating income was
$126.0 million in the six months ended June 30, 2020, a decrease of $14.4
million, or 10.2%, from $140.4 million in the comparable prior period.
International operating margin was 57.3% and 57.4% for the six months ended June
30, 2020 and 2019, respectively. These decreases were primarily due to decreases
in volume as a result of the COVID-19 pandemic and the unfavorable impact of the
macroeconomic environment of approximately $5 million, primarily driven by
unfavorable movements in foreign exchange rates.

Liquidity and capital resources
Our principal liquidity requirements are to service and repay our indebtedness,
make acquisitions of businesses and commercial account portfolios, repurchase
shares of our common stock and meet working capital, tax and capital expenditure
needs.
Sources of liquidity. We believe that our current level of cash and borrowing
capacity under our Credit Facility and Securitization Facility (each defined
below), together with expected future cash flows from operations, will be
sufficient to meet the needs of our existing operations and planned requirements
for the foreseeable future, based on our current assumptions. At June 30, 2020,
we had approximately $1.9 billion in total liquidity, consisting of availability
under our Credit
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Facility (defined below) and cash. At June 30, 2020, we had approximately $1.1
billion available under our Credit Facility and available cash of $766 million,
net of restricted cash. Restricted cash represents customer deposits in the
Czech Republic and in our Comdata business in the U.S., as well as collateral
received from customers for cross-currency transactions in our Cambridge
business, which are restricted from use other than to repay customer deposits,
as well as to secure and settle cross-currency transactions.
We also utilize an accounts receivable Securitization Facility to finance a
majority of our domestic receivables, to lower our cost of borrowing and more
efficiently use capital. We generate and record accounts receivable when a
customer makes a purchase from a merchant using one of our card products and
generally pay merchants before collecting the receivable. As a result, we
utilize the Securitization Facility as a source of liquidity to provide the cash
flow required to fund merchant payments while we collect customer balances.
These balances are primarily composed of charge balances, which are typically
billed to the customer on a weekly, semimonthly or monthly basis, and are
generally required to be paid within 14 days of billing. We also consider the
undrawn amounts under our Securitization Facility and Credit Facility as funds
available for working capital purposes and acquisitions. At June 30, 2020, we
had no additional liquidity under our Securitization Facility.
Additionally, we have immaterial outside basis differences in our investments in
foreign subsidiaries and have not recorded incremental income taxes for any
additional outside basis differences, as these amounts continue to be
indefinitely reinvested in foreign operations.
We cannot assure you that our assumptions used to estimate our liquidity
requirements will remain accurate due to the unprecedented nature of the
disruption to our operations and the unpredictability of the COVID-19 global
pandemic. As a consequence, our estimates of the duration of the pandemic and
the severity of the impact on our future earnings and cash flows could change
and have a material impact on our results of operations and financial condition.
The following have impacted or may impact our liquidity:
•The negative impact of the COVID-19 global pandemic on our business as
discussed above under "Impact of COVID-19 on Our Business".
•In April 2020, we amended the Credit Agreement to add a $250 million revolving
D 364 day facility. As of August 10, 2020, there are no amounts drawn under this
revolving D facility. We view this revolving facility as a precautionary measure
to provide us with additional financial flexibility to manage our business with
a safety-first emphasis during the unknown duration and impact of the COVID-19
global pandemic.
•We have principal and interest obligations under our debt and ongoing financial
covenants under those debt facilities.
•During the second quarter, we repurchased approximately 127,000 shares in
connection with employee stock sales for $32.2 million, as employees forfeited
shares to cover taxes. At June 30, 2020, we had approximately $294.1 million
remaining repurchase authorization under our current share repurchase program.
•We have never declared or paid any dividends on our common stock and do not
anticipate paying cash dividends to holders of our common stock in the
foreseeable future.
•While we intend to employ a disciplined and highly selective approach, we may
pursue strategic business acquisitions in the future.
•We intend to balance discretionary spending and hiring with revenue and volume
trends.
Cash flows
The following table summarizes our cash flows for the six month periods ended
June 30, 2020 and 2019 (in millions).
                                                          Six Months Ended 

June 30,

   (Unaudited)                                           2020                      2019
   Net cash provided by operating activities       $      802.2$ 550.0
   Net cash used in investing activities                  (37.4)                 (282.9)
   Net cash used in financing activities               (1,032.4)                 (151.5)


Operating activities. Net cash provided by operating activities was $802.2
million in the six months ended June 30, 2020, an increase from $550.0 million
in the comparable prior period. The increase in operating cash flows was
primarily due to favorable working capital adjustments primarily due to the
timing of cash receipts and payments in the six months ended June 30, 2020 over
the comparable period in 2019.
Investing activities. Net cash used in investing activities was $37.4 million in
the six months ended June 30, 2020 compared to $282.9 million in the six months
ended June 30, 2019. The decrease was primarily due to the decrease in cash paid
for acquisitions in the six months ended June 30, 2020 over the comparable
period in 2019.
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Financing activities. Net cash used in financing activities was $1,032.4 million
in the six months ended June 30, 2020, compared to $151.5 million in the six
months ended June 30, 2019. The increased use of cash is primarily due to an
increase in repurchases of our common stock of $553 million and decreased net
borrowings on our Securitization Facility of $405 million in the six months
ended June 30, 2020 over the comparable period in 2019.
Capital spending summary
Our capital expenditures were $36.9 million in the six months ended June 30,
2020, a decrease of $4.9 million or 15.3%, from $32.0 million in the comparable
prior period due to a reduction in discretionary spending as a result of the
COVID-19 pandemic.
Credit Facility
FLEETCOR Technologies Operating Company, LLC, and certain of our domestic and
foreign owned subsidiaries, as designated co-borrowers (the "Borrowers"), are
parties to a $5.11 billion Credit Agreement (the "Credit Agreement"), with Bank
of America, N.A., as administrative agent, swing line lender and local currency
issuer, and a syndicate of financial institutions (the "Lenders"), which has
been amended multiple times. The Credit Agreement provides for senior secured
credit facilities (collectively, the "Credit Facility") consisting of a
revolving credit facility in the amount of $1.535 billion, a term loan A
facility in the amount of $3.225 billion and a term loan B facility in the
amount of $350 million as of June 30, 2020. The revolving credit facility
consists of (a) a revolving A credit facility in the amount of $800 million,
with sublimits for letters of credit and swing line loans, (b) a revolving B
facility in the amount of $450 million for borrowings in U.S. dollars, euros,
British pounds, Japanese yen or other currency as agreed in advance, and a
sublimit for swing line loans, (c) a revolving C facility in the amount of $35
million for borrowings in U.S. dollars, Australian dollars or New Zealand
dollars, and (d) a revolving D facility in the amount of $250 million for
borrowings in U.S. dollars. The Credit Agreement also includes an accordion
feature for borrowing an additional $750 million in term loan A, term loan B,
revolving A or revolving B facility debt and an unlimited amount when the
leverage ratio on a pro forma basis is less than 3.00 to 1.00. Proceeds from the
credit facilities may be used for working capital purposes, acquisitions, and
other general corporate purposes. On April 24, 2020, we entered into the eighth
amendment to the Credit Agreement to add a $250 million revolving D facility.
The maturity date for the term loan A and revolving credit facilities A, B and C
is December 19, 2023. The revolving D facility maturity date is April 23, 2021.
The maturity date for the term loan B is August 2, 2024.
Interest on amounts outstanding under the Credit Agreement (other than the term
loan B and the revolving D facility) accrues based on the British Bankers
Association LIBOR Rate (the "Eurocurrency Rate"), plus a margin based on a
leverage ratio, or our option, the Base Rate (defined as the rate equal to the
highest of (a) the Federal Funds Rate plus 0.50%, (b) the prime rate announced
by Bank of America, N.A., or (c) the Eurocurrency Rate plus 1.00%) plus a margin
based on a leverage ratio. Interest on the term loan B facility accrues based on
the Eurocurrency Rate plus 1.75% for Eurocurrency Loans or the Base Rate plus
0.75% for Base Rate Loans. Interest on the revolving D facility accrues based on
the Eurocurrency Rate plus a margin of 2.25% through July 23, 2020, 2.75% from
July 24, 2020 through October 21, 2020, 3.25% from October 22, 2020 through
January 19, 2021 and 3.75% thereafter, or at our option, the Base Rate plus a
margin of 1.25% through July 23, 2020, 1.75% from July 24, 2020 through October
21, 2020, 2.25% from October 22, 2020 through January 19, 2021 and 2.75%
thereafter. The Eurocurrency rate has a 0% floor for term loans and revolving A,
B and C facility loans and a floor of 1% for the revolving D facility. In
addition, we pay a quarterly commitment fee at a rate per annum ranging from
0.25% to 0.35% of the daily unused portion of the Credit Facility (excluding the
revolving D facility) and a fixed rate per annum of 0.375% of the daily unused
portion of the revolving D facility.
At June 30, 2020, the interest rate on the term loan A was 1.68%, the interest
rate on the term loan B was 1.93%, the interest rate on the revolving A facility
was 1.68%, and the interest rate on the revolving B facility was 1.68% for USD
borrowings and 1.59% for GBP borrowings. The unused credit facility fee was
0.30% for revolving A, B and C facilities and 0.375% for the revolving D
facility at June 30, 2020.
The term loans are payable in quarterly installments and are due on the last
business day of each March, June, September, and December with the final
principal payment due on the respective maturity date. Borrowings on the
revolving line of credit are repayable at our option of one, two, three or six
months after borrowing, depending on the term of the borrowing on the facility.
Borrowings on the foreign swing line of credit are due no later than twenty
business days after such loan is made.
The Credit Facility contains representations, warranties and events of default,
as well as certain affirmative and negative covenants, customary for financings
of this nature. These covenants include limitations on the ability to pay
dividends and make other restricted payments under certain circumstances and
compliance with certain financial ratios. As of June 30, 2020, we were in
compliance with each of the covenants under the Credit Facility.
Our Credit Agreement contains a number of negative covenants restricting, among
other things, limitations on liens (with exceptions for our Securitization
Facility) and investments, incurrence or guarantees of indebtedness, mergers,
acquisitions, dissolutions, liquidations and consolidations, dispositions,
dividends and other restricted payments and prepayments of other indebtedness.
In particular, we are not permitted to make any restricted payments (which
includes any dividend or other
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distribution) except that we may declare and make dividend payments or other
distributions to our stockholders so long as (i) on a pro forma basis both
before and after the distribution the consolidated leverage ratio is not greater
than 3.25 to 1.00 and we are in compliance with the financial covenants and
(ii) no default or event of default shall exist or result therefrom. The Credit
Agreement also contains customary events of default. The Credit Agreement
includes financial covenants where the Company is required to maintain a
consolidated leverage ratio of less than or equal to 4.00 to 1.00 as of the end
of any fiscal quarter provided that in connection with any Material Acquisition
the leverage ratio may be increased to 4.25 to 1.00 for the quarter in which the
Material Acquisition is consummated and the next three fiscal quarters; and a
consolidated interest coverage ratio of no less than 4.00 to 1.00.
The obligations of the Borrowers under the Credit Agreement are secured by
substantially all of the assets of FLEETCOR and its domestic subsidiaries,
pursuant to a security agreement and includes a pledge of (i) 100% of the issued
and outstanding equity interests owned by us of each Domestic Subsidiary and
(ii) 66% of the voting shares of the first-tier foreign subsidiaries, but
excluding real property, personal property located outside of the U.S., accounts
receivables and related assets subject to the Securitization Facility and
certain investments required under money transmitter laws to be held free and
clear of liens.
At June 30, 2020, we had $3.0 billion in borrowings outstanding on the term loan
A, net of discounts and $338.9 million in borrowings outstanding on the term
loan B, net of discounts. We have unamortized debt issuance costs of $6.6
million related to the revolving facilities as of June 30, 2020 recorded within
other assets in the Unaudited Consolidated Balance Sheet. We have unamortized
debt discounts and debt issuance costs related to the term loans of $8.4 million
and $1.0 million at June 30, 2020, respectively.
During the six months ended June 30, 2020, we made principal payments of $82.4
million on the term loans, $726.6 million on the revolving facilities, and $55.9
million on the swing line revolving facility. In addition, we made principal
payments on a notes payable related to an acquisition of $10.6 million.
Cash Flow Hedges
On January 22, 2019, we entered into three swap contracts. The objective of
these swap contracts is to reduce the variability of cash flows in the
previously unhedged interest payments associated with $2.0 billion of variable
rate debt, the sole source of which is due to changes in the LIBOR benchmark
interest rate. These swap contracts qualify as hedging instruments and have been
designated as cash flow hedges. For each of these swap contracts, we will pay a
fixed monthly rate and receive one month LIBOR. We reclassified approximately
$14.7 million of losses from accumulated other comprehensive income into
interest expense during the six months ended June 30, 2020 as a result of these
hedging instruments.
Securitization Facility
We are party to a $1.0 billion receivables purchase agreement among FLEETCOR
Funding LLC, as seller, PNC Bank, National Association as administrator, and
various purchaser agents, conduit purchasers and related committed purchasers
parties thereto, which was amended and restated for the fifth time as of
November 14, 2014. We refer to this arrangement as the Securitization Facility.
There have been several amendments to the Securitization Facility. The
Securitization Facility expires on November 14, 2020 and contains customary
financial covenants. On April 24, 2020, we reduced our Securitization Facility
commitment from $1.2 billion to $1.0 billion.
There is a program fee equal to one month LIBOR plus 0.90% or the Commercial
Paper Rate plus 0.80%. The program fee was 0.26% plus 0.88% and 1.80% plus 0.88%
as of June 30, 2020 and December 31, 2019, respectively. The unused facility fee
is payable at a rate of 0.40% per annum as of June 30, 2020 and December 31,
2019, respectively. We have unamortized debt issuance costs of $0.3 million and
$0.7 million related to the Securitization Facility as of June 30, 2020 and
December 31, 2019, respectively, recorded within other assets in the Unaudited
Consolidated Balance Sheet.
The Securitization Facility provides for certain termination events, which
includes nonpayment, upon the occurrence of which the administrator may declare
the facility termination date to have occurred, may exercise certain enforcement
rights with respect to the receivables, and may appoint a successor servicer,
among other things.
We were in compliance with the financial covenant requirements related to our
Securitization Facility as of June 30, 2020.
Stock Repurchase Program
The Company's Board of Directors has approved a stock repurchase program (as
updated from time to time, the "Program")
authorizing the Company to repurchase its common stock from time to time until
February 1, 2023. On October 22, 2019, our
Board increased the aggregate size of the Program by $1 billion, to $3.1
billion. Since the beginning of the Program, 13,435,651 shares have been
repurchased for an aggregate purchase price of $2.8 billion, leaving the Company
up to $294.1 million available under the Program for future repurchases in
shares of its common stock.
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Any stock repurchases may be made at times and in such amounts as deemed
appropriate. The timing and amount of stock repurchases, if any, will depend on
a variety of factors including the stock price, market conditions, corporate and
regulatory requirements, and any additional constraints related to material
inside information the Company may possess. Any repurchases have been and are
expected to be funded by a combination of available cash flow from the business,
working capital and debt.

On December 18, 2019, the Company entered an accelerated stock repurchase
agreement ("2019 ASR Agreement") with a third-party financial institution to
repurchase $500 million of its common stock. Pursuant to the 2019 ASR Agreement,
the Company delivered $500 million in cash and received 1,431,989 shares based
on a stock price of $285.70 on December 18, 2019. The 2019 ASR Agreement was
completed on February 20, 2020, at which time the Company
received 175,340 additional shares based on a final weighted average per share
purchase price during the repurchase period of $311.08.

We accounted for the 2019 ASR Agreement as two separate transactions: (i) as
shares of reacquired common stock for the shares delivered to the Company upon
effectiveness of each ASR agreement and (ii) as a forward contract indexed to
the Company's common stock for the undelivered shares. The initial delivery of
shares was included in treasury stock at cost and results in an immediate
reduction of the outstanding shares used to calculate the weighted average
common shares outstanding for basic and diluted earnings per share. The forward
contracts indexed to the Company's own common stock met the criteria for equity
classification, and these amounts were initially recorded in additional paid-in
capital.

Critical accounting policies and estimates
In applying the accounting policies that we use to prepare our consolidated
financial statements, we necessarily make accounting estimates that affect our
reported amounts of assets, liabilities, revenues and expenses. Some of these
estimates require us to make assumptions about matters that are highly uncertain
at the time we make the accounting estimates. We base these assumptions and the
resulting estimates on historical information and other factors that we believe
to be reasonable under the circumstances, and we evaluate these assumptions and
estimates on an ongoing basis. In many instances, however, we reasonably could
have used different accounting estimates and, in other instances, changes in our
accounting estimates could occur from period to period, with the result in each
case being a material change in the financial statement presentation of our
financial condition or results of operations. We refer to estimates of this type
as critical accounting estimates.
Accounting estimates necessarily require subjective determinations about future
events and conditions. During the three months ended June 30, 2020, we have not
adopted any new critical accounting policies that had a significant impact upon
our consolidated financial statements, have not changed any critical accounting
policies and have not changed the application of any critical accounting
policies from the year ended December 31, 2019. For critical accounting
policies, refer to the Critical Accounting Estimates in Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in our Annual Report on Form 10-K for the year ended December 31, 2019
and our summary of significant accounting policies in Note 1 of our Notes to the
Unaudited Consolidated Financial Statements in this Quarterly Report on
Form 10-Q.
Management's Use of Non-GAAP Financial Measures
We have included in the discussion above certain financial measures that were
not prepared in accordance with GAAP. Any analysis of non-GAAP financial
measures should be used only in conjunction with results presented in accordance
with GAAP. Below, we define the non-GAAP financial measures, provide a
reconciliation of each non-GAAP financial measure to the most directly
comparable financial measure calculated in accordance with GAAP, and discuss the
reasons that we believe this information is useful to management and may be
useful to investors.

Pro forma and macro adjusted revenue and key performance metric by product. We
define the pro forma and macro adjusted revenue as revenue, net as reflected in
our statement of income, adjusted to eliminate the impact of the macroeconomic
environment and the impact of acquisitions and dispositions. The macroeconomic
environment includes the impact that market fuel spread margins, fuel prices and
foreign exchange rates have on our business. We use pro forma and macro adjusted
revenue and transactions to evaluate the organic growth in our revenue and the
associated transactions. Set forth below is a reconciliation of pro forma and
macro adjusted revenue and transactions to the most directly comparable GAAP
measure, revenue, net and transactions (in millions):
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                                                           Revenues, net                                                              Key Performance Metric
                                                       Three Months Ended June 30,                                                                   Three Months Ended June 30,
(Unaudited)                                          2020*                 2019*                       2020*                      2019*
FUEL - TRANSACTIONS
Pro forma and macro adjusted                   $       243.8$    291.3                           99.7                        124.5
Impact of acquisitions/dispositions                        -                  3.8                              -                          0.7
Impact of fuel prices/spread                            13.1                    -                              -                            -
Impact of foreign exchange rates                        (7.2)                   -                              -                            -
As reported                                    $       249.8$    295.1                           99.7                        125.3

CORPORATE PAYMENTS - SPEND
Pro forma and macro adjusted                   $        93.7$    112.2                         13,670                       20,244
Impact of acquisitions/dispositions                        -                    -                              -                            -
Impact of fuel prices/spread                            (0.2)                   -                              -                            -
Impact of foreign exchange rates                        (0.9)                   -                              1                            -
As reported                                    $        92.6$    112.2                         13,671                       20,244
TOLLS - TAGS
Pro forma and macro adjusted                   $        88.7$     86.2                            5.3                          5.0
Impact of acquisitions/dispositions                        -                    -                              -                            -
Impact of fuel prices/spread                               -                    -                              -                            -
Impact of foreign exchange rates                       (23.9)                   -                              -                            -
As reported                                    $        64.8$     86.2                            5.3                          5.0
LODGING - ROOM NIGHTS
Pro forma and macro adjusted                   $        40.7$     64.9                            4.6                          6.8
Impact of acquisitions/dispositions                        -                (14.6)                             -                         (2.5)
Impact of fuel prices/spread                               -                    -                              -                            -
Impact of foreign exchange rates                           -                    -                              -                            -
As reported                                    $        40.6$     50.2                            4.6                          4.3
GIFT - TRANSACTIONS
Pro forma and macro adjusted                   $        26.5$     35.7                          188.2                        284.1
Impact of acquisitions/dispositions                        -                    -                              -                            -
Impact of fuel prices/spread                               -                    -                              -                            -
Impact of foreign exchange rates                           -                    -                              -                            -
As reported                                    $        26.5$     35.7                          188.2                        284.1
OTHER1- TRANSACTIONS
Pro forma and macro adjusted                   $        53.7$     71.8                            9.0                         14.3
Impact of acquisitions/dispositions                        -                 (4.2)                             -                            -
Impact of fuel prices/spread                               -                    -                              -                            -
Impact of foreign exchange rates                        (2.9)                   -                              -                            -
As reported                                    $        50.8$     67.6                            9.0                         14.3

FLEETCOR CONSOLIDATED REVENUES, NET
Pro forma and macro adjusted                   $       547.1           $    

662.1

Impact of acquisitions/dispositions                        -                

(15.0)

Impact of fuel prices/spread                            12.9                    -                           Intentionally Left Blank
Impact of foreign exchange rates                       (34.9)               

-

As reported                                    $       525.1           $    

647.1

* Columns may not calculate due to rounding. 1Other includes telematics, maintenance, food, transportation and payroll card related businesses.



Adjusted net income and adjusted net income per diluted share. We have defined
the non-GAAP measure adjusted net income as net income as reflected in our
Statement of Income, adjusted to eliminate (a) non-cash stock based compensation
expense related to share based compensation awards, (b) amortization of deferred
financing costs, discounts and intangible assets, amortization of the premium
recognized on the purchase of receivables, and our proportionate share of
amortization of intangible assets at our equity method investment, (c)
integration and deal related costs, and (d) other non-recurring items, including
unusual losses occurring due largely to COVID-19, the impact of discrete tax
items, impairment charges, asset write-offs, restructuring costs, gains due to
disposition of assets and a business, loss on extinguishment of debt, legal
settlements, and the unauthorized access impact.
We have defined the non-GAAP measure adjusted net income per diluted share as
the calculation previously noted divided by the weighted average diluted shares
outstanding as reflected in our Statements of Income.
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We use adjusted net income to eliminate the effect of items that we do not
consider indicative of our core operating performance. We believe it is useful
to exclude non-cash stock based compensation expense from adjusted net income
because non-cash equity grants made at a certain price and point in time do not
necessarily reflect how our business is performing at any particular time and
stock based compensation expense is not a key measure of our core operating
performance. We also believe that amortization expense can vary substantially
from company to company and from period to period depending upon their financing
and accounting methods, the fair value and average expected life of their
acquired intangible assets, their capital structures and the method by which
their assets were acquired. Therefore, we have excluded amortization expense
from adjusted net income. We also believe non-recurring expenses, gains, losses,
and impairment charges do not necessarily reflect how our investments and
business are performing. We have also excluded a write-off of a customer
receivable due to their liquidation as a result of the impact of COVID-19 to
their business. We believe that adjusted net income and adjusted net income per
diluted share are appropriate supplemental measures of financial performance and
may be useful to investors in understanding our operating performance on a
consistent basis. Adjusted net income and adjusted net income per diluted share
are not intended to be a substitute for GAAP financial measures and should not
be used as such.
Set forth below is a reconciliation of adjusted net income and adjusted net
income per diluted share to the most directly comparable GAAP measure, net
income and net income per diluted share (in thousands, except per share
amounts)*:
                                                                                                                             Six Months Ended June
                                                                   Three Months Ended June 30,                                        30,
(Unaudited)                                                          2020                  2019               2020                 2019
Net income                                                     $     158,488$ 261,651$ 305,548$   433,758
Stock based compensation                                               8,989              18,306             23,164               30,847
Amortization of intangible assets, premium on
receivables, deferred financing costs and discounts                   47,875              56,623             97,917              110,141
Investment (gain) loss                                               (33,709)                  -            (31,338)              15,660
Integration and deal related costs1                                    5,902                   -              9,267                    -
Restructuring and related costs                                        4,727                   -              4,727                    -
Legal settlements/litigation                                             944               3,474             (5,037)               3,474

Write-off of customer receivable                                           -                   -             90,058                    -

Total pre-tax adjustments                                             34,727              78,403            188,758              160,122
Income tax impact of pre-tax adjustments at the
effective tax rate2                                                   (5,638)            (18,435)           (42,233)             (33,846)
Impact of discrete tax item3                                           9,848             (64,880)             9,848              (64,880)
Adjusted net income                                            $     197,425$ 256,739$ 461,922$   495,154
Adjusted net income per diluted share                          $        2.28$    2.85$    5.29$      5.52
Diluted shares                                                        86,570              90,131             87,380               89,694



1 Beginning in the first quarter of 2020, the Company included integration and deal
related costs in its definition to calculate adjusted net income and adjusted net income
per diluted share. Prior period amounts were approximately $1.3 million and $2.8 million
for the three and six months ended June 30, 2019, which we consider immaterial.
2Excludes the results of the Company's investment in the six months ended June 30, 2019,
on our effective tax rate, as results from Masternaut investment are reported within the
consolidated Statements of Income on a post-tax basis and no tax-over-book outside basis
difference prior to disposition.
3 Represents the impact of a discrete tax reserve adjustment related to prior year tax
positions in 2020 and tax reform in 2019.
*Columns may not calculate due to rounding.





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Table of Contents


Special Cautionary Notice Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the
federal securities laws. Statements that are not historical facts, including
statements about FleetCor's beliefs, expectations and future performance, are
forward-looking statements. Forward-looking statements can be identified by the
use of words such as "anticipate," "intend," "believe," "estimate," "plan,"
"seek," "project" or "expect," "may," "will," "would," "could" or "should," the
negative of these terms or other comparable terminology.
These forward-looking statements are not a guarantee of performance, and you
should not place undue reliance on such statements. We have based these
forward-looking statements largely on preliminary information, internal
estimates and management assumptions, expectations and plans about future
conditions, events and results. Forward-looking statements are subject to many
uncertainties and other variable circumstances, such as the impact of global,
political, market, health and other conditions, including the impact of the
coronavirus (COVID-19); regulatory measures or voluntary actions, including
social distancing, shelter-in-place, shutdowns of nonessential businesses and
similar measures imposed or undertaken in an effort to combat the spread of the
coronavirus (COVID-19); adverse outcomes with respect to current and future
legal proceedings, including, without limitation, the FTC lawsuit, or actions of
governmental or quasi-governmental bodies or standards or industry organizations
with respect to our payment cards; delays or failures associated with
implementation of, or adaption to, new technology; fuel price and spread
volatility; changes in credit risk of customers and associated losses; the
actions of regulators relating to payment cards or resulting from
investigations; failure to maintain or renew key business relationships; failure
to maintain competitive product offerings; failure to maintain or renew sources
of financing; failure to complete, or delays in completing, anticipated new
partnership and customer arrangements or acquisitions and to successfully
integrate or otherwise achieve anticipated benefits from such partnership and
customer arrangements or acquired businesses; failure to successfully expand
business internationally; other risks related to our international operations,
including the potential impact to our business as a result of the United
Kingdom's referendum to leave the European Union; the impact of foreign exchange
rates on operations, revenue and income; the effects of general economic and
political conditions on fueling patterns and the commercial activity of fleets;
risks related to litigation; the impact of new tax regulations and the
resolution of tax contingencies resulting in additional tax liabilities; as well
as the other risks and uncertainties identified under the caption "Risk Factors"
in our Annual Report on Form 10-K for the year ended December 31, 2019 filed
with the Securities and Exchange Commission on March 2, 2020 and this Quarterly
Report. These factors could cause our actual results and experience to differ
materially from any forward-looking statement. The forward-looking statements
included in this presentation are made only as of the date hereof. We do not
undertake, and specifically disclaim, any obligation to update any such
statements as a result of new information, future events or developments, except
as specifically stated or to the extent required by law. You may get FLEETCOR'sSecurities and Exchange Commission ("SEC") filings for free by visiting the SEC
web site at www.sec.gov.
This report includes non-GAAP financial measures, which are used by the Company
and investors as supplemental measures to evaluate the overall operating
performance of companies in our industry. By providing these non-GAAP financial
measures, together with reconciliations, we believe we are enhancing investors'
understanding of our business and our results of operations, as well as
assisting investors in evaluating how well we are executing strategic
initiatives. See "Management's Use of Non-GAAP Financial Measures" elsewhere in
this Quarterly Report on Form 10-Q for additional information regarding these
GAAP financial measures and a reconciliation to the nearest corresponding GAAP
measure.

© Edgar Online, source Glimpses


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