Corpay 10Q 2023 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

FORM 10-Q

_________________________________________________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35004

__________________________________________________________

FLEETCOR Technologies, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________________________


Delaware			72-1074903
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3280 Peachtree Road, Suite 2400	Atlanta	Georgia	30305
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (770) 449-0479

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FLT	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at May 2, 2023
Common Stock, $0.001 par value						73,834,200

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FLEETCOR TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q

For the Three Months Ended March 31, 2023

INDEX


		Page
PART I—FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS

	Consolidated Balance Sheets at March 31, 2023 (unaudited) and December 31, 2022	1

	Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022	2

	Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	3

	Unaudited Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2023 and 2022	4

	Unaudited Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	5

	Notes to Unaudited Consolidated Financial Statements	6

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37

Item 4.	CONTROLS AND PROCEDURES	37

PART II—OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	38

Item 1A.	RISK FACTORS	39

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	39

Item 3.	DEFAULTS UPON SENIOR SECURITIES	39

Item 4.	MINE SAFETY DISCLOSURES	39

Item 5.	OTHER INFORMATION	39

Item 6.	EXHIBITS	40

SIGNATURES		41

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

FLEETCOR Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share and Par Value Amounts)


	March 31, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,272,456	$	1,435,163
Restricted cash	996,945		854,017
Accounts and other receivables (less allowance for credit losses of $160,588 at March 31, 2023 and $149,846 at December 31, 2022)	2,369,235		2,064,745
Securitized accounts receivable—restricted for securitization investors	1,284,000		1,287,000
Prepaid expenses and other current assets	436,336		465,227

Total current assets	6,358,972		6,106,152
Property and equipment, net	310,390		294,692

Goodwill	5,380,050		5,201,435
Other intangibles, net	2,197,587		2,130,974
Investments	67,587		74,281
Other assets	273,337		281,726
Total assets	$	14,587,923	$	14,089,260
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,907,841	$	1,568,942
Accrued expenses	404,942		351,936
Customer deposits	1,481,004		1,505,004
Securitization facility	1,284,000		1,287,000
Current portion of notes payable and lines of credit	813,066		1,027,056
Other current liabilities	312,692		303,517
Total current liabilities	6,203,545		6,043,455
Notes payable and other obligations, less current portion	4,700,550		4,722,838
Deferred income taxes	544,682		527,465
Other noncurrent liabilities	257,286		254,009
Total noncurrent liabilities	5,502,518		5,504,312
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized; 128,312,636 shares issued and 73,819,827 shares outstanding at March 31, 2023; and 127,802,590 shares issued and 73,356,709 shares outstanding at December 31, 2022	128		128
Additional paid-in capital	3,109,065		3,049,570
Retained earnings	7,425,604		7,210,769
Accumulated other comprehensive loss	(1,434,016)		(1,509,650)
Less treasury stock, 54,492,809 shares at March 31, 2023 and 54,445,881 shares at December 31, 2022	(6,218,921)		(6,209,324)
Total stockholders’ equity	2,881,860		2,541,493
Total liabilities and stockholders’ equity	$	14,587,923	$	14,089,260


See accompanying notes to unaudited consolidated financial statements.

FLEETCOR Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)


	Three Months Ended March 31,
	2023		2022
Revenues, net	$	901,333	$	789,241
Expenses:

Processing	204,967		174,194
Selling	81,592		76,889
General and administrative	154,684		143,522
Depreciation and amortization	84,232		76,802
Other operating, net	663		113
Operating income	375,195		317,721
Other expenses:
Investment (gain) loss	(190)		152
Other expense, net	746		869
Interest expense, net	79,795		22,030

Total other expense	80,351		23,051
Income before income taxes	294,844		294,670
Provision for income taxes	80,009		76,718
Net income	$	214,835	$	217,952

Basic earnings per share	$	2.92	$	2.80
Diluted earnings per share	$	2.88	$	2.75
Weighted average shares outstanding:
Basic shares	73,521		77,737
Diluted shares	74,483		79,286

See accompanying notes to unaudited consolidated financial statements.

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FLEETCOR Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Comprehensive Income

(In Thousands)


	Three Months Ended March 31,
	2023		2022
Net income	$	214,835	$	217,952
Other comprehensive income:
Foreign currency translation gains, net of tax	81,107		182,949
Net change in derivative contracts, net of tax	(5,473)		18,230
Total other comprehensive income	75,634		201,179
Total comprehensive income	$	290,469	$	419,131

See accompanying notes to unaudited consolidated financial statements.

FLEETCOR Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Stockholders’ Equity

(In Thousands)


	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Balance at December 31, 2022	$	128	$	3,049,570	$	7,210,769	$	(1,509,650)	$	(6,209,324)	$	2,541,493
Net income	—		—		214,835		—		—		214,835
Other comprehensive income, net of tax	—		—		—		75,634		—		75,634
Acquisition of common stock	—		—		—		—		(9,597)		(9,597)
Share-based compensation	—		26,096		—		—		—		26,096
Issuance of common stock	—		33,399		—		—		—		33,399


Balance at March 31, 2023	$	128	$	3,109,065	$	7,425,604	$	(1,434,016)	$	(6,218,921)	$	2,881,860


	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Balance at December 31, 2021	$	127	$	2,878,751	$	6,256,442	$	(1,464,616)	$	(4,804,124)	$	2,866,580
Net income	—		—		217,952		—		—		217,952
Other comprehensive income, net of tax	—		—		—		201,179		—		201,179
Acquisition of common stock	—		—		—		—		(422,736)		(422,736)
Share-based compensation	—		32,631		—		—		—		32,631
Issuance of common stock	—		8,810		—		—		—		8,810
Balance at March 31, 2022	$	127	$	2,920,192	$	6,474,394	$	(1,263,437)	$	(5,226,860)	$	2,904,416

See accompanying notes to unaudited consolidated financial statements.

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FLEETCOR Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

(In Thousands)


	Three Months Ended March 31,
	2023		2022
Operating activities
Net income	$	214,835	$	217,952
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	25,980		21,140
Stock-based compensation	26,096		32,631
Provision for credit losses on accounts and other receivables	39,270		25,478
Amortization of deferred financing costs and discounts	1,787		1,968
Amortization of intangible assets and premium on receivables	58,252		55,662


Deferred income taxes	(499)		1,900
Investment (gain) loss	(190)		152
Other non-cash operating expense, net	663		113
Changes in operating assets and liabilities (net of acquisitions):
Accounts and other receivables	370,962		(818,969)
Prepaid expenses and other current assets	40,099		20,921
Derivative assets and liabilities, net	(28,223)		6,677

Other assets	25,141		(1,146)

Accounts payable, accrued expenses and customer deposits	(446,508)		323,268
Net cash provided by (used in) operating activities	327,665		(112,253)
Investing activities
Acquisitions, net of cash acquired	(126,691)		(35,864)
Purchases of property and equipment	(36,737)		(31,387)

Other	4,401		—
Net cash used in investing activities	(159,027)		(67,251)
Financing activities
Proceeds from issuance of common stock	33,399		8,810
Repurchase of common stock	(9,597)		(422,736)
Borrowings on securitization facility, net	(3,000)		318,000
Deferred financing costs	—		(337)

Principal payments on notes payable	(23,500)		(45,063)
Borrowings from revolver	1,964,000		490,000
Payments on revolver	(2,490,000)		(400,000)
Borrowings on swing line of credit, net	310,719		1,505

Other	264		—
Net cash used in financing activities	(217,715)		(49,821)
Effect of foreign currency exchange rates on cash	29,298		68,068
Net decrease in cash and cash equivalents and restricted cash	(19,779)		(161,257)
Cash and cash equivalents and restricted cash, beginning of period	2,289,180		2,250,695
Cash and cash equivalents and restricted cash, end of period	$	2,269,401	$	2,089,438
Supplemental cash flow information
Cash paid for interest	$	104,650	$	33,967
Cash paid for income taxes	$	35,442	$	72,296



See accompanying notes to unaudited consolidated financial statements.

FLEETCOR Technologies, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

March 31, 2023

1. Summary of Significant Accounting Policies

Basis of Presentation

Throughout this Quarterly Report on Form 10-Q, the terms "our," "we," "us," and the "Company" refers to FLEETCOR Technologies, Inc. and its subsidiaries. The Company prepared the accompanying unaudited interim consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited interim consolidated financial statements reflect all adjustments considered necessary for fair presentation. These adjustments consist of normal recurring accruals and estimates that impact the carrying value of assets and liabilities. Actual results may differ from these estimates.

The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. These financial statements were prepared using information reasonably available to us as of March 31, 2023 and through the date of this Quarterly Report. The accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results may differ from these estimates due to the uncertainty around the ongoing conflict between Russia and Ukraine, the impact of changes to monetary policy, as well as other factors.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the rates of exchange in effect at period-end. The related translation adjustments are recorded to accumulated other comprehensive loss. Income and expenses are translated at the average monthly rates of exchange in effect during the year. Gains and losses from foreign currency transactions of these subsidiaries are included in net income. The Company recognized foreign exchange losses, which are recorded within other expense, net in the Unaudited Consolidated Statements of Income, for the three months ended March 31, 2023 and 2022 as follows (in millions):


	Three Months Ended March 31,
	2023		2022
Foreign exchange losses	$	0.7	$	0.4

The Company recorded foreign currency gains on long-term intra-entity transactions included as a component of foreign currency translation gains, net of tax, in the Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022 as follows (in millions):


	Three Months Ended March 31,
	2023		2022
Foreign currency gains on long-term intra-entity transactions	$	4.9	$	146.0

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. Restricted cash primarily represents customer deposits repayable on demand, as well as collateral received from customers for cross-currency transactions in our cross-border payments business, which are restricted from use other than to repay customer deposits, as well as secure and settle cross-currency transactions, and collateral posted with banks for hedging positions in our cross-border payments business. Based on our assessment of the current capital market conditions and related impact on our access to cash, we have reclassified all cash held at our Russian businesses of $224.4 million to restricted cash as of March 31, 2023.

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Revenue

The Company provides payment solutions to our business, merchant, consumer and payment network customers. Our payment solutions are primarily focused on specific commercial spend categories, including Fuel, Corporate Payments, Tolls, Lodging, as well as Gift solutions (stored value cards and e-cards). The Company provides solutions that help businesses of all sizes control, simplify and secure payment of various domestic and cross-border payables using specialized payment products. The Company also provides other payment solutions for fleet maintenance, employee benefits and long haul transportation-related services. Revenues from contracts with customers, within the scope of ASC 606, "Revenue Recognition", represent approximately 88% of total consolidated revenues, net, for the three months ended March 31, 2023. The Company accounts for revenue from late fees and finance charges, in jurisdictions where permitted under local regulations, primarily in the U.S. and Canada in accordance with ASC 310, "Receivables". Such fees are recognized net of a provision for estimated uncollectible amounts, at the time the fees and finance charges are assessed and services are provided and represent approximately 5% of total consolidated revenues, net for the three months ended March 31, 2023. In addition, in its cross-border payments business, the Company writes foreign currency forward and option contracts for its customers to facilitate future payments in foreign currencies. Revenues related to these contracts represent approximately 7% of total consolidated revenues, net for the three months ended March 31, 2023. Our revenue is generally reported net of the cost for underlying products and services purchased through our payment solutions. In this report, we refer to this net revenue as "revenue".

Disaggregation of Revenues

The Company provides its services to customers across different payment solutions and geographies. The Company's solutions have been merged to align with its segments. Revenue by solution (in millions) for the three months ended March 31, was as follows:


Revenues, net by Solution*	Three Months Ended March 31,
	2023		%		2022		%
Fleet	$	372.7	41	%	$	351.6	45	%
Corporate Payments	227.2		25	%	183.8		23	%
Lodging	122.3		14	%	94.6		12	%
Brazil	121.7		14	%	102.5		13	%
Other	57.3		6	%	56.8		7	%
Consolidated revenues, net	$	901.3	100	%	$	789.2	100	%

*Columns may not calculate due to rounding.

Revenue by geography (in millions) for the three months ended March 31, was as follows:


Revenues, net by Geography*	Three Months Ended March 31,
	2023		%		2022		%
United States	$	513.6	57	%	$	471.8	60	%
Brazil	121.7		14	%	102.5		13	%
United Kingdom	107.7		12	%	94.6		12	%
Other	158.2		18	%	120.3		15	%
Consolidated revenues, net	$	901.3	100	%	$	789.2	100	%


*Columns may not calculate due to rounding.

Contract Liabilities

Deferred revenue contract liabilities for customers subject to ASC 606 were $54.2 million and $57.7 million as of March 31, 2023 and December 31, 2022, respectively. We expect to recognize approximately $35.8 million of these amounts in revenues within 12 months and the remaining $18.4 million over the next five years as of March 31, 2023. Revenue recognized in the three months ended March 31, 2023 that was included in the deferred revenue contract liability as of December 31, 2022 was approximately $16.9 million.

Spot Trade Offsetting

The Company uses spot trades to facilitate cross-currency corporate payments in its cross-border payments business. The Company applies offsetting to our spot trade assets and liabilities associated with contracts that include master netting agreements, as a right of setoff exists, which the Company believes to be enforceable. As such, the Company has netted spot trade liabilities against spot trade receivables at the counter-party level. The Company recognizes all spot trade assets, net in accounts receivable and all spot trade liabilities, net in accounts payable, each net at the customer level, in its Consolidated Balance Sheets at their fair value. The following table presents the Company’s spot trade assets and liabilities at their fair value at March 31, 2023 and December 31, 2022 (in millions):


	March 31, 2023						December 31, 2022
	Gross		Offset on the Balance Sheet		Net		Gross		Offset on the Balance Sheet		Net
Assets
Accounts Receivable	$	4,116.9	$	(3,974.7)	$	142.2	$	2,409.8	$	(2,266.0)	$	143.8


Liabilities
Accounts Payable	$	4,114.2	$	(3,974.7)	$	139.5	$	2,332.5	$	(2,266.0)	$	66.5

Reclassifications and Adjustments

Certain disclosures for prior periods have been reclassified to conform with current year presentation, including the breakout of derivatives assets and liabilities, net within the Consolidated Statements of Cash Flows, and the presentation of disaggregated revenues by solution to align with our revenues by segment presentation.

2. Accounts and Other Receivables

The Company's accounts and securitized accounts receivable include the following at March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023		December 31, 2022
Gross domestic accounts receivable	$	1,121,954	$	985,873
Gross domestic securitized accounts receivable	1,284,000		1,287,000
Gross foreign receivables	1,407,869		1,228,718
Total gross receivables	3,813,823		3,501,591
Less allowance for credit losses	(160,588)		(149,846)
Net accounts and securitized accounts receivable	$	3,653,235	$	3,351,745

The Company maintains a $1.7 billion revolving trade accounts receivable securitization facility (as amended from time to time, the "Securitization Facility"). Accounts receivable collateralized within our Securitization Facility primarily relate to trade receivables resulting from charge card activity in the U.S. Pursuant to the terms of the Securitization Facility, the Company transfers certain of its domestic receivables, on a revolving basis, to FLEETCOR Funding LLC (Funding), a wholly-owned bankruptcy remote subsidiary. In turn, Funding transfers, without recourse, on a revolving basis, an undivided ownership interest in this pool of accounts receivable to multi-seller banks and asset-backed commercial paper conduits (Conduit). Funding maintains a subordinated interest, in the form of over-collateralization, in a portion of the receivables sold. Purchases by the Conduit are financed with the sale of highly-rated commercial paper.

The Company utilizes proceeds from the securitized assets as an alternative to other forms of financing to reduce its overall borrowing costs. The Company has agreed to continue servicing the sold receivables for the financial institution at market rates, which approximates the Company’s cost of servicing. The Company retains a residual interest in the transferred asset as a form of credit enhancement. The residual interest’s fair value approximates carrying value due to its short-term nature. Funding determines the level of funding achieved by the sale of trade accounts receivable, subject to a maximum amount.

The Company’s Consolidated Balance Sheets and Statements of Income reflect the activity related to securitized accounts receivable and the corresponding securitized debt, including interest income, fees generated from late payments, provision for losses on accounts receivable and interest expense. The cash flows from borrowings and repayments associated with the securitized debt are presented as cash flows from financing activities.

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A rollforward of the Company’s allowance for credit losses related to accounts receivable for the three months ended March 31, 2023 and 2022 is as follows (in thousands):


	2023		2022
Allowance for credit losses beginning of period	$	149,846	$	98,719
Provision for credit losses	39,270		25,478
Write-offs	(34,128)		(15,417)
Recoveries	2,444		2,847
Impact of foreign currency	3,156		7,284
Allowance for credit losses end of period	$	160,588	$	118,911

3. Fair Value Measurements

A three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:

•Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

•Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

The following table presents the Company’s financial assets and liabilities which are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 (in thousands):


	Fair Value		Level 1		Level 2		Level 3
March 31, 2023
Assets:
Repurchase agreements	$	521,253	$	—	$	521,253	$	—
Money market	37,427		—		37,427		—
Certificates of deposit	172		—		172		—
Interest rate swaps	12,773		—		12,773		—

Foreign exchange contracts	273,327		—		273,327		—
Total assets	$	844,952	$	—	$	844,952	$	—
Cash collateral for foreign exchange contracts	$	53,882
Liabilities:
Interest rate swaps	$	8,847	$	—	$	8,847	—
Cross-currency interest rate swap	5,104		—		5,104		—
Foreign exchange contracts	202,912		—		202,912		—
Total liabilities	$	216,863	$	—	$	216,863	$	—
Cash collateral obligation for foreign exchange contracts	$	198,431

December 31, 2022
Assets:
Repurchase agreements	$	444,216	$	—	$	444,216	$	—
Money market	37,821		—		37,821		—
Certificates of deposit	181		—		181		—
Interest rate swaps	11,953		—		11,953		—
Foreign exchange contracts	266,917		—		266,917		—
Total assets	$	761,088	$	—	$	761,088	$	—
Cash collateral for foreign exchange contracts	$	56,103
Liabilities:

Foreign exchange contracts	224,725		—		224,725		—
Total liabilities	$	224,725	$	—	$	224,725	$	—
Cash collateral obligation for foreign exchange contracts	$	148,167

The Company has highly-liquid investments classified as cash equivalents, with original maturities of 90 days or less, included in our Consolidated Balance Sheets. The Company utilizes Level 2 fair value determinations derived from directly or indirectly observable (market based) information to determine the fair value of these highly liquid investments. The Company has certain cash and cash equivalents that are invested in highly liquid investments, such as, repurchase agreements, money markets and certificates of deposit, with maturities ranging from overnight to 90 days or less. The value of overnight repurchase agreements is determined based upon the quoted market prices for the securities associated with the repurchase agreements. The value of money market instruments is determined based upon the financial institutions' month-end statement, as these instruments are not tradable and must be settled directly by us with the respective financial institution. Certificates of deposit are valued at cost, plus interest accrued. Given the short-term nature of these instruments, the carrying value approximates fair value. Foreign exchange derivative contracts are carried at fair value, with changes in fair value recognized in the Consolidated Statements of Income. The fair value of the Company's derivatives is derived with reference to a valuation from a derivatives dealer operating in an active market, which approximates the fair value of these instruments. The fair value represents the net settlement if the contracts were terminated as of the reporting date. Cash collateral received for foreign exchange derivatives is recorded within customer deposits in our Consolidated Balance Sheet at March 31, 2023 and December 31, 2022. Cash collateral deposited for foreign exchange derivatives is recorded within restricted cash in our Consolidated Balance Sheet at March 31, 2023 and December 31, 2022.

The level within the fair value hierarchy and the measurement technique are reviewed quarterly. Transfers between levels are deemed to have occurred at the end of the quarter. There were no transfers between fair value levels during the periods presented for March 31, 2023 and December 31, 2022.

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The Company’s assets that are measured at fair value on a nonrecurring basis or are evaluated with periodic testing for impairment include property, plant and equipment, investments, goodwill and other intangible assets. Estimates of the fair value of assets acquired and liabilities assumed in business combinations are generally developed using key inputs such as management’s projections of cash flows on a held-and-used basis (if applicable), discounted as appropriate, management’s projections of cash flows upon disposition and discount rates. Accordingly, these fair value measurements are in Level 3 of the fair value hierarchy.

The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates, commodity rates or other financial indices. The Company's derivatives are over-the-counter instruments with liquid markets.

The Company regularly evaluates the carrying value of its investments. The carrying amount of investments without readily determinable fair values was $67.6 million at March 31, 2023.

The fair value of the Company’s cash, accounts receivable, securitized accounts receivable and related facility, prepaid expenses and other current assets, accounts payable, accrued expenses, customer deposits and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The carrying value of the Company’s debt obligations approximates fair value as the interest rates on the debt are variable market based interest rates that reset on a quarterly basis. These are each Level 2 fair value measurements, except for cash, which is a Level 1 fair value measurement.

4. Stockholders' Equity

The Company announced on February 4, 2016 that its Board of Directors (the "Board") 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, 2024. On October 25, 2022, the Company announced the Board increased the aggregate size of the Program by $1.0 billion to $7.1 billion. Since the beginning of the Program through March 31, 2023, 26,327,835 shares have been repurchased for an aggregate purchase price of $5.9 billion, leaving the Company up to $1.2 billion of remaining authorization available under the Program for future repurchases in shares of its common stock.

5. Stock-Based Compensation

The following table summarizes the expense recognized within general and administrative expenses in the Unaudited Consolidated Statements of Income related to share-based payments recognized in the three months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,
	2023		2022
Stock options	$	8,950	$	17,837
Restricted stock	17,146		14,794
Stock-based compensation	$	26,096	$	32,631

The tax benefits recorded on stock-based compensation and upon the exercises of options were $4.4 million and $17.8 million for the three months ended March 31, 2023 and 2022, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock based compensation as of March 31, 2023 (cost in thousands):


	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	43,979	2.41
Restricted stock	90,216		1.14
Total	$	134,195

Stock Options

The following summarizes the changes in the number of shares of common stock under option for the three months ended March 31, 2023 (shares/options and aggregate intrinsic value in thousands):


	Shares	Weighted Average Exercise Price		Options Exercisable at End of Period	Weighted Average Exercise Price of Exercisable Options		Weighted Average Fair Value of Options Granted During the Period		Aggregate Intrinsic Value
Outstanding at December 31, 2022	5,301	$	188.12	3,512	$	159.46			$	113,681
Granted	124	200.41					$	67.32
Exercised	(297)	146.69							$	18,487
Forfeited	(52)	244.23
Outstanding at March 31, 2023	5,076	$	190.27	3,402	$	163.91			$	178,730
Expected to vest as of March 31, 2023	824	$	225.92

The aggregate intrinsic value of stock options exercisable at March 31, 2023 was $176.0 million. The weighted average remaining contractual term of options exercisable at March 31, 2023 was 3.8 years.

Restricted Stock

The following table summarizes the changes in the number of shares of restricted stock awards and restricted stock units for the three months ended March 31, 2023 (shares in thousands):


	Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022	435	$	237.68
Granted	324	212.36
Issued	(213)	241.28
Cancelled	(7)	189.90
Outstanding at March 31, 2023	539	$	221.10

6. Acquisitions

2023 Acquisitions

During the three months ended March 31, 2023, the Company acquired Global Reach Group, a UK-based global cross-border provider, Mina Digital Limited, a cloud-based electric vehicle charging software platform, and Business Gateway AG, a service, maintenance and repair technology provider. The aggregate purchase price of these acquisitions was approximately $135.1 million (inclusive of $8.5 million previously-held equity method investment in Mina), net of cash of $104 million. The Company financed the acquisitions using a combination of available cash and borrowings under its existing credit facility. Any noncompete agreements signed in conjunction with these acquisitions were accounted for separately from the business acquisition.

Acquisition accounting is preliminary as the Company is still completing the valuation for goodwill, intangible assets, income taxes, working capital, and contingencies.

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The following table summarizes the preliminary acquisition accounting, in aggregate, for the business acquisitions noted above (in thousands):


Trade and other receivables	$	683,901
Prepaid expenses and other current assets	1,544
Other long term assets	5,084
Goodwill	132,774
Intangibles	109,298
Accounts payable and accrued expenses	(739,803)
Other current liabilities	(37,249)
Other noncurrent liabilities	(20,413)
Aggregate purchase price	$	135,136

2022 Acquisitions

During 2022, the Company acquired Levarti, an airline software platform company reported in the Lodging segment; Accrualify, an accounts payable (AP) automation software company reported in the Corporate Payments segment; Plugsurfing, a European EV software and network provider reported in the Fleet segment; and Roomex, a European workforce lodging provider reported in the Lodging segment. The aggregate purchase price of these acquisitions was approximately $197.6 million, net of cash. The Company financed the acquisitions using a combination of available cash and borrowings under its existing credit facility. In connection with one of these acquisitions, the Company signed noncompete agreements of $1.1 million with certain parties affiliated with the business for which the Company is still completing the valuation. These noncompete agreements were accounted for separately from the business acquisition.

Acquisition accounting is preliminary (with the exception of Levarti) as the Company is still completing the valuation for goodwill, intangible assets, income taxes, working capital, and contingencies.

The following table summarizes the preliminary acquisition accounting, in aggregate, for the business acquisitions noted above (in thousands):


Trade and other receivables	$	13,725
Prepaid expenses and other current assets	4,007
Other long term assets	1,192
Goodwill	161,343
Intangibles	50,145
Accounts payable and accrued expenses	(18,598)
Other current liabilities	(4,960)
Other noncurrent liabilities	(9,282)
Aggregate purchase price	$	197,572

The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):


	Useful Lives (in Years)	Value
Trade Names and Trademarks	2 - Indefinite	$	4,705
Proprietary Technology	5 - 10	11,646
Lodging / Supplier Network	10 - 20	1,402
Customer Relationships	5 - 20	32,392
		$	50,145

7. Goodwill and Other Intangibles

A summary of changes in the Company’s goodwill is as follows (in thousands):


	December 31, 2022		Acquisitions		Acquisition Accounting Adjustments		Foreign Currency		March 31, 2023






Goodwill	$	5,201,435	$	132,774	$	2,171	$	43,670	$	5,380,050

As of March 31, 2023 and December 31, 2022, other intangibles consisted of the following (in thousands):


		March 31, 2023						December 31, 2022
	Weighted- Avg Useful Lives (Years)	Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	16.7	$	3,049,204	$	(1,396,086)	$	1,653,118	$	2,922,586	$	(1,332,542)	$	1,590,044
Trade names and trademarks—indefinite lived	N/A	424,684		—		424,684		419,270		—		419,270
Trade names and trademarks—other	2.0	49,370		(10,931)		38,439		47,939		(9,111)		38,828
Software	6.1	285,447		(223,076)		62,371		278,460		(216,858)		61,602
Non-compete agreements	4.4	80,965		(61,990)		18,975		80,098		(58,868)		21,230
Total other intangibles		$	3,889,670	$	(1,692,083)	$	2,197,587	$	3,748,353	$	(1,617,379)	$	2,130,974

Changes in foreign exchange rates resulted in a $15.8 million increase to the net carrying values of other intangibles in the three months ended March 31, 2023. Amortization expense related to intangible assets for the three months ended March 31, 2023 and 2022 was $57.7 million and $54.9 million, respectively.

8. Debt

The Company is party to a $6.4 billion Credit Agreement (the "Credit Agreement"), with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, and a syndicate of financial institutions (the "Lenders"). The Credit Agreement includes term loan A, term loan B, and a revolving credit facility. As noted in footnote 2, the Company is also party to a Securitization Facility.

The balances of the Company’s debt instruments under the Credit Agreement and the Securitization Facility are as follows (in thousands):


	March 31, 2023		December 31, 2022
Term Loan A note payable, net of discounts	$	2,937,692	$	2,956,053
Term Loan B note payable, net of discounts	1,851,983		1,855,891
Revolving line of credit facilities	720,675		935,000



Other obligations	3,266		2,950
Total notes payable and credit agreements	5,513,616		5,749,894
Securitization Facility	1,284,000		1,287,000
Total notes payable, credit agreements and Securitization Facility	$	6,797,616	$	7,036,894
Current portion	$	2,097,066	$	2,314,056
Long-term portion	4,700,550		4,722,838
Total notes payable, credit agreements and Securitization Facility	$	6,797,616	$	7,036,894

On May 3, 2023, the Company entered into the thirteenth amendment to the Credit Facility. The amendment replaced LIBOR on the term B loan with the Secured Overnight Financing Rate ("SOFR"), plus a SOFR adjustment of 0.10%.

The Company was in compliance with all financial and non-financial covenants under the Credit Agreement and Securitization Facility at March 31, 2023.

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9. Income Taxes

The Company's effective tax rate was 27.1% and 26.0% for the three months ended March 31, 2023 and 2022, respectively. Income tax expense is based on an estimated annual effective rate, which requires the Company to make its best estimate of annual pretax accounting income or loss before consideration of tax or benefit discretely recognized in the period in which such occur. Our effective income tax rate for the three months ended March 31, 2023 differs from the U.S. federal statutory rate due primarily to the unfavorable impact of state taxes net of federal benefits, additional taxes on undistributed foreign-sourced income, and foreign withholding taxes on interest income from intercompany notes. For the three months ended March 31, 2023, the effective tax rate was increased by discrete items of $1.6 million incurred from an uncertain tax position related to previous years and tax benefits arising from stock-based compensation previously recorded in pretax income.

10. Earnings Per Share

The Company reports basic and diluted earnings per share. Basic earnings per share is computed by dividing net income attributable to shareholders of the Company by the weighted average number of common shares outstanding during the reported period. Diluted earnings per share reflect the potential dilution related to equity-based incentives using the treasury stock method. The calculation and reconciliation of basic and diluted earnings per share for the three months ended March 31, 2023 and 2022 is as follows (in thousands, except per share data):


	Three Months Ended March 31,
	2023		2022
Net income	$	214,835	$	217,952
Denominator for basic earnings per share	73,521		77,737
Dilutive securities	962		1,549
Denominator for diluted earnings per share	74,483		79,286
Basic earnings per share	$	2.92	$	2.80
Diluted earnings per share	$	2.88	$	2.75

Diluted earnings per share for the three months ended March 31, 2023 and 2022 excludes the effect of 2.4 million and 2.1 million shares, respectively, of common stock that may be issued upon the exercise of employee stock options because such effect would be anti-dilutive. Diluted earnings per share also excludes the effect of an immaterial amount of performance-based restricted stock for which the performance criteria have not yet been achieved for the three month periods ended March 31, 2023 and 2022.

11. Segments

The Company reports information about its operating segments in accordance with the authoritative guidance related to segments. In the second quarter of 2022, in order to align with recent changes in the organizational structure and management reporting, the Company updated its segments structure into Fleet, Corporate Payments, Lodging, Brazil and Other, which includes our Gift and Payroll Card businesses. We manage and report our operating results through these four reportable segments which aligns with how the Chief Operating Decision Maker (CODM) allocates resources, assesses performance and reviews financial information. The presentation of segment information has been recast for the prior period to align with this segment presentation for the three months ended March 31, 2023.

The Company’s segment results are as follows for the three month periods ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,
	20231		2022
Revenues, net:
Fleet	$	372,712	$	351,592
Corporate Payments	227,206		183,769
Lodging	122,334		94,576
Brazil	121,744		102,538
Other2	57,337		56,766
	$	901,333	$	789,241
Operating income:
Fleet	$	173,532	$	167,845
Corporate Payments	75,513		58,207
Lodging	54,563		39,779
Brazil	54,817		37,328
Other2	16,770		14,562
	$	375,195	$	317,721
Depreciation and amortization:
Fleet	$	35,086	$	34,706
Corporate Payments	20,871		16,349
Lodging	11,398		10,534
Brazil	14,553		13,121
Other2	2,324		2,092
	$	84,232	$	76,802

1Results from Global Reach Group acquired in the first quarter of 2023 are reported in the Corporate Payments segment.

2Other includes Gift and Payroll Card operating segments.

12. Commitments and Contingencies

In the ordinary course of business, the Company is involved in various pending or threatened legal actions, arbitration proceedings, claims, subpoenas, and matters relating to compliance with laws and regulations (collectively, "legal proceedings"). Based on our current knowledge, management presently does not believe that the liabilities arising from these legal proceedings will have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal proceedings could have a material adverse effect on our results of operations and financial condition for any particular period.

Derivative Lawsuits

On July 10, 2017, a shareholder derivative complaint was filed against the Company and certain of the Company’s directors and officers in the United States District Court for the Northern District of Georgia ("Federal Derivative Action") seeking recovery from the Company. The District Court dismissed the Federal Derivative Action on October 21, 2020, and the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal on July 27, 2022, ending the lawsuit. A similar derivative lawsuit that had been filed on January 9, 2019 in the Superior Court of Gwinnett County, Georgia (“State Derivative Action”) was likewise dismissed on October 31, 2022.

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incentive pay and stock compensation. On January 24, 2023, the previous Federal Derivative Action plaintiffs filed a similar new derivative lawsuit, Jerrell Whitten, derivatively on behalf of FleetCor Technologies, Inc. v. Ronald F. Clarke and Eric R. Dey, against Mr. Clarke and Mr. Dey in Gwinnett County, Georgia. The defendants dispute the allegations in the derivative complaints and intend to vigorously defend against the claims.

FTC Investigation

In October 2017, the Federal Trade Commission ("FTC") issued a Notice of Civil Investigative Demand to the Company for the production of documentation and a request for responses to written interrogatories. After discussions with the Company, the FTC proposed in October 2019 to resolve potential claims relating to the Company’s advertising and marketing practices, principally in its U.S. direct fuel card business within its North American Fuel Card business. The parties reached impasse primarily related to what the Company believes are unreasonable demands for redress made by the FTC.

On December 20, 2019, the FTC filed a lawsuit in the Northern District of Georgia against the Company and Ron Clarke. See FTC v. FLEETCOR and Ronald F. Clarke, No. 19-cv-05727 (N.D. Ga.). The complaint alleges the Company and Clarke violated the FTC Act’s prohibitions on unfair and deceptive acts and practices. The complaint seeks among other things injunctive relief, consumer redress, and costs of suit. The Company continues to believe that the FTC’s claims are without merit. On April 17, 2021, the FTC filed a motion for summary judgment. On April 22, 2021, the United States Supreme Court held unanimously in AMG Capital Management v. FTC that the FTC does not have authority under current law to seek monetary redress by means of Section 13(b) of the FTC Act, which is the means by which the FTC has sought such redress in this case. FLEETCOR cross-moved for summary judgment regarding the FTC’s ability to seek monetary or injunctive relief on May 17, 2021. On August 13, 2021, the FTC filed a motion to stay or to voluntarily dismiss without prejudice the case pending in the Northern District of Georgia in favor of a parallel administrative action under Section 5 of the FTC Act that it filed on August 11, 2021 in the FTC’s administrative process. Apart from the jurisdiction and statutory change, the FTC’s administrative complaint makes the same factual allegations as the FTC’s original complaint filed in December 2019. The Company opposed the FTC’s motion for a stay or to voluntarily dismiss, and the court denied the FTC’s motion on February 7, 2022. In the meantime, the FTC’s administrative action is stayed. On August 9, 2022, the District Court for the Northern District of Georgia granted the FTC's motion for summary judgment as to liability for the Company and Ron Clarke, but granted the Company's motion for summary judgment as to the FTC's claim for monetary relief as to both the Company and Ron Clarke. The Company intends to appeal this decision after final judgment is issued. On October 20-21, 2022, the court held a hearing on the scope of injunctive relief. At the conclusion of the hearing, the Court did not enter either the FTC’s proposed order or the Company’s proposed order, and instead suggested that the parties enter mediation. Following mediation, both parties have filed proposed orders with the Court. The Company has incurred and continues to incur legal and other fees related to this complaint. Any settlement of this matter, or defense against the lawsuit, could involve costs to the Company, including legal fees, redress, penalties, and remediation expenses.

Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where, as here, the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from, the matters described above.

13. Derivative Financial Instruments and Hedging Activities

Foreign Currency Derivatives

The Company uses derivatives to facilitate cross-currency corporate payments by writing derivatives to customers within its cross-border solution. The Company writes derivatives, primarily foreign currency forward contracts, option contracts, and swaps, mostly with small and medium size enterprises that are customers and derives a currency spread from this activity.

Derivative transactions associated with the Company's cross-border solution include:

•Forward contracts, which are commitments to buy or sell at a future date a currency at a contract price and will be settled in cash.

•Option contracts, which give the purchaser the right, but not the obligation, to buy or sell within a specified time a currency at a contracted price that may be settled in cash.

•Swap contracts, which are commitments to settlement in cash at a future date or dates, usually on an overnight basis.

The credit risk inherent in derivative agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. Concentrations of credit and performance risk may exist with counterparties, which includes customers and banking partners, as the Company is engaged in similar activities with similar economic characteristics related to fluctuations in foreign currency rates. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the concentration of its contracts with any individual counterparty against limits at the individual counterparty level. The Company anticipates that the counterparties will be able to

fully satisfy their obligations under the agreements, but takes action when doubt arises about the counterparties' ability to perform. These actions may include requiring customers to post or increase collateral, and for all counterparties, if the counterparty does not perform under the term of the contract, the contract may be terminated. The Company does not designate any of its foreign exchange derivatives as hedging instruments in accordance with ASC 815, "Derivatives and Hedging".

The aggregate equivalent U.S. dollar notional amount of foreign exchange derivative customer contracts held by the Company as of March 31, 2023 and December 31, 2022 (in millions) is presented in the following table:


	Notional
	March 31, 2023		December 31, 2022
Foreign exchange contracts:
Swaps	$	155.1	$	160.9
Futures and forwards	19,178.9		15,159.4
Written options	15,302.7		13,701.9
Purchased options	12,228.7		11,474.2
Total	$	46,865.4	$	40,496.4

The majority of customer foreign exchange contracts are written in currencies such as the U.S. dollar, Canadian dollar, British pound, euro and Australian dollar.

The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (in millions):


	March 31, 2023
	Fair Value, Gross				Fair Value, Net
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Derivatives - undesignated:
Foreign exchange contracts	$	613.5	$	543.1	$	273.3	$	202.9
Cash collateral	53.9		198.4		53.9		198.4
Total net of cash collateral	$	559.6	$	344.7	$	219.4	$	4.5


	December 31, 2022
	Fair Value, Gross				Fair Value, Net
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Derivatives - undesignated:
Foreign exchange contracts	$	582.2	$	540.0	$	266.9	$	224.7
Cash collateral	56.1		148.2		56.1		148.2
Total net of cash collateral	$	526.1	$	391.8	$	210.8	$	76.5

The fair values of derivative assets and liabilities associated with contracts, which include netting terms that the Company believes to be enforceable, have been recorded net within the Consolidated Balance Sheets. The Company receives cash from customers as collateral for trade exposures, which is recorded within cash and cash equivalents and customer deposits in the Consolidated Balance Sheets. The customer has the right to recall their collateral in the event exposures move in their favor, they perform on all outstanding contracts and have no outstanding amounts due to the Company, or they cease to do business with the Company. The Company has trading lines with several banks, most of which require collateral to be posted if certain mark-to-market (MTM) thresholds are exceeded. Cash collateral posted with banks is recorded within restricted cash and can be recalled in the event that exposures move in the Company’s favor or move below the collateral posting thresholds. The Company does not offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral. The following table presents the fair value of the Company’s derivative assets and liabilities, as well as their classification on the accompanying Consolidated Balance Sheets, as of March 31, 2023 and December 31, 2022 (in millions):

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		March 31, 2023		December 31, 2022
	Balance Sheet Classification	Fair Value

Derivative Assets	Prepaid expenses and other current assets	$	204.8	$	204.9
Derivative Assets	Other assets	$	68.6	$	62.0
Derivative Liabilities	Other current liabilities	$	164.3	$	184.1
Derivative Liabilities	Other noncurrent liabilities	$	38.6	$	40.6

Cash Flow Hedges

On January 22, 2019, the Company entered into three interest rate swap cash flow contracts (the "swap contracts"). One contract (which matured in January 2022) had a notional value of $1.0 billion, while the two remaining contracts each have a notional value of $500 million. 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. At inception, the Company designated these contracts as hedging instruments in accordance with ASC 815, "Derivatives and Hedging." As of March 31, 2023, only one LIBOR-based interest rate swaps remains, with a receive-variable one month LIBOR and a pay-fixed monthly rate of 2.55% based on a notional amount of $500 million and a maturity date of December 19, 2023. On May 4, 2023, the Company amended the remaining LIBOR-based swap. The amendment replaced LIBOR on the swap with one-month term SOFR resulting in a pay-fixed monthly rate of 2.50%, without further changes to the terms of the swap.

During January 2023, the Company entered into five receive-variable, pay-fixed interest rate swap derivative contracts with U.S. dollar notional amounts as follows (in millions):


Notional Amount	Fixed Rates	Maturity Date
$250	4.01%	7/31/2025
$250	4.02%	7/31/2025
$500	3.80%	1/31/2026
$250	3.71%	7/31/2026
$250	3.72%	7/31/2026

The purpose of these contracts is to reduce the variability of cash flows in interest payments associated with the Company's unspecified variable rate debt, the sole source of which is due to changes in the SOFR benchmark interest rate. The Company has designated these derivative instruments as cash flow hedging instruments, which are expected to be highly effective at offsetting changes in cash flows of the related underlying exposure. As a result, changes in fair value of the interest rate swaps are recorded in accumulated other comprehensive loss. For each of these swap contracts, the Company pays a fixed monthly rate and receives one month SOFR. The Company reclassified $5.1 million from accumulated other comprehensive loss to interest expense, net for the three months ended March 31, 2023 related to these interest rate swap contracts.

For derivatives accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. The Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in cash flows of the related underlying exposures.

The following table presents the fair value of the Company’s interest rate swap contracts, as well as their classification on the accompanying Consolidated Balance Sheets, as of March 31, 2023 and December 31, 2022 (in millions). See Note 3 for additional information on the fair value of the Company’s swap contracts.


		March 31, 2023		December 31, 2022
	Balance Sheet Classification	Fair Value
Derivatives designated as cash flow hedges:
Swap contracts	Prepaid expenses and other current assets	$	8.3	$	12.0
Swap contracts	Other assets	$	4.4	$	—

Swap contracts	Other noncurrent liabilities	$	(8.8)	$	—

The estimated net amount of the existing gains expected to be reclassified into earnings within the next 12 months is approximately $20.1 million at March 31, 2023.

Net Investment Hedge

In February 2023, the Company entered into a cross currency interest rate swap that is designated as a net investment hedge of our investments in euro-denominated operations. This contract effectively converts $500 million of U.S. dollar equivalent to an obligation denominated in euro, and partially offsets the impact of changes in currency rates on our euro denominated net investments. This contract also creates a positive interest differential on the U.S. dollar-denominated portion of the swap, resulting in a 1.96% interest rate savings on the USD notional.

Hedge effectiveness is tested based on changes in the fair value of the cross currency swap due to changes in the USD/euro spot rate. The Company anticipates perfect effectiveness of the designated hedging relationship and records changes in the fair value of the cross currency interest rate swap associated with changes in the spot rate through accumulated other comprehensive loss. Excluded components associated with the forward differential are recognized directly in earnings as interest expense, net. The Company recognized a benefit of $1.5 million in interest expense, net for the three months ended March 31, 2023 related to these excluded components. The cross currency interest rate swap designated as a net investment hedge is recorded in Other current liabilities at a fair value of $5.1 million as of March 31, 2023.

14. Accumulated Other Comprehensive Loss (AOCL)

The changes in the components of AOCL for the three months ended March 31, 2023 and 2022 are as follows (in thousands):


	March 31, 2023
	Cumulative Foreign Currency Translation		Unrealized (Losses) Gains on Derivative Instruments		Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2022	$	(1,518,640)	$	8,990	$	(1,509,650)
Other comprehensive income (loss) before reclassifications	81,107		(3,640)		77,467
Amounts reclassified from AOCL	—		(5,089)		(5,089)
Tax effect	—		3,256		3,256
Other comprehensive income (loss)	81,107		(5,473)		75,634
Balance at March 31, 2023	$	(1,437,533)	$	3,517	$	(1,434,016)


	March 31, 2022
	Cumulative Foreign Currency Translation		Unrealized (Losses) Gains on Derivative Instruments		Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2021	$	(1,441,505)	$	(23,111)	$	(1,464,616)
Other comprehensive income before reclassifications	182,949		16,094		199,043
Amounts reclassified from AOCL	—		8,148		8,148
Tax effect	—		(6,012)		(6,012)
Other comprehensive income	182,949		18,230		201,179
Balance at March 31, 2022	$	(1,258,556)	$	(4,881)	$	(1,263,437)

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Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

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. Factors that could cause such differences include, but are not limited to, those identified below and those described in Item 1A "Risk Factors" appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 and in Part II, Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q. All foreign currency amounts that have been converted into U.S. dollars in this discussion are based on the exchange rate as reported by Oanda for the applicable periods.

The following discussion and analysis of our financial condition and results of operations generally discusses the three months ended March 31, 2023 and 2022, with period-over-period comparisons between these periods. A detailed discussion of 2022 items and period-over-period comparisons between the three months ended March 31, 2022 and 2021 that are not included in this Quarterly Report on Form 10-Q can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

Executive Overview

FLEETCOR is a leading global business payments company that helps businesses spend less by enabling them to better manage their expense-related purchasing and vendor payments processes. FLEETCOR’s smarter payment and spend management solutions are delivered in a variety of ways depending on the needs of the customer. From physical payment cards to software that includes customizable controls and robust payment capabilities, we provide businesses with a better way to pay. FLEETCOR has been a member of the S&P 500 since 2018 and trades on the New York Stock Exchange under the ticker FLT.

Businesses spend an estimated $135 trillion each year with other businesses. In many instances, they lack the proper tools to monitor what is being purchased, and employ manual, paper-based, disparate processes and methods to both approve and make payments for their purchases. This often results in wasted time and money due to unnecessary or unauthorized spending, fraud, receipt collection, data input and consolidation, report generation, reimbursement processing, account reconciliations, employee disciplinary actions, and more.

FLEETCOR’s vision is that every payment is digital, every purchase is controlled, and every related decision is informed. Digital payments are faster and more secure than paper-based methods such as checks, and provide timely and detailed data that can be utilized to effectively reduce unauthorized purchases and fraud, automate data entry and reporting, and eliminate reimbursement processes. Combining this payment data with analytical tools delivers powerful insights, which managers can use to better run their businesses. Our wide range of modern, digitized solutions generally provides control, reporting, and automation benefits superior to many of the payment methods businesses often use such as cash, paper checks, general purpose credit cards, as well as employee pay and reclaim processes.

Impact of Russia's Invasion of Ukraine on Our Business

The current conflict between Russia and Ukraine is creating substantial uncertainty about the role Russia will play in the global economy in the future. Although the length, impact and outcome of the ongoing military conflict between Russia and Ukraine is highly unpredictable, this conflict could lead to significant market and other disruptions. The escalation or continuation of this conflict presents heightened risks and has resulted and could continue to result in volatile commodity markets, supply chain disruptions, increased risk of cyber incidents or other disruptions to information systems, heightened risks to employee safety, significant volatility of the Russian ruble, limitations on access to credit markets, increased operating costs (including fuel and other input costs), the frequency and volume of failures to settle securities transactions, inflation, potential for increased volatility in commodity, currency and other financial markets, safety risks, and restrictions on the transfer of funds to and from Russia. We cannot predict how and the extent to which the conflict will affect our customers, operations or business partners or the demand for our products and our global business. Depending on the actions we take or are required to take, the ongoing conflict could also result in loss of cash, assets or impairment charges. Additionally, we may also face negative publicity and reputational risk based on the actions we take or are required to take as a result of the conflict, which could damage our brand image or corporate reputation.

The extent of the impact of these tragic events on our business remains uncertain and will continue to depend on numerous evolving factors that we are not able to accurately predict, including the extent, severity, duration and outcome of the conflict. We are actively monitoring the situation and assessing its impact on our business, analyzing options as they develop, and are continuing to refine our business continuity plan, which may include the potential disposition of our Russian operations, and crisis response materials designed to mitigate the impact of disruptions to our business. We have signed definitive documents to sell our Russia business, subject to Russian government approval. Although we expect the sale to close near the end of the second quarter of 2023, there is risk that the current sale could be denied or that current terms of the sale could change. There can be no assurance that our plan will successfully mitigate all disruptions. To date we have not experienced any material

interruptions in our infrastructure, technology systems or networks needed to support our operations. The extent, severity, duration and outcome of the military conflict, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time. Any such disruptions may also magnify the impact of other risks described herein and in our Annual Report on Form 10-K.

Our business in Russia accounted for approximately 3.5% and 9.0% of our consolidated net revenues and net income for the three months ended March 31, 2023, respectively and accounted for approximately 3.3% and 7.2% of our consolidated net revenues and net income for the year ended December 31, 2022, respectively. Our assets in Russia were approximately 2.9% and 3.2% of our consolidated assets at March 31, 2023 and December 31, 2022, respectively. The net book value of our assets in Russia at March 31, 2023 was approximately $234.6 million, of which $224 million is restricted cash. We currently have not recognized any impairment charges related to the assets of our Russian business. However, the extent, severity, duration and outcome of the conflict between Russia and Ukraine and related sanctions could potentially impact the value of our assets in Russia as the conflict continues. Our Russian business is part of our Fleet segment.

Impact of Recent Bank Failures

Recent failures of several financial institutions, including Silicon Valley Bank, have created uncertainty in the global financial markets and a greater focus on the potential failure of other banks in the future. Although we did not experience losses as a result of these failures, we regularly maintain cash balances with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit or the equivalent outside the U.S. A disruption in financial markets could impair our banking partners, which could affect our ability to access our cash or cash equivalents; our ability to provide services to our customers; and our customers' ability to access their cash to fulfill their payment obligations to us, their vendors, and other third parties. The occurrence of these events could negatively affect our business, financial condition and results of operations.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022.

Results

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 months ended March 31, 2023 and 2022, (in millions, except per share amounts).


	Three Months Ended March 31,
(Unaudited)	2023		2022
Revenues, net	$	901.3	$	789.2
Net income	$	214.8	$	218.0
Net income per diluted share	$	2.88	$	2.75

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 months ended March 31, 2023 and 2022 (in millions, except per share amounts).


	Three Months Ended March 31,
(Unaudited)	2023		2022
Adjusted net income	$	283.1	$	289.7
Adjusted net income per diluted share	$	3.80	$	3.65

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. These non-GAAP measures are presented solely to permit investors to more fully understand how our management assesses underlying performance and are not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial measures.

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 150 countries around the world today, although we operate primarily in three geographies, with 82% of our revenues generated in the U.S., Brazil, and the U.K. Our customers may include

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commercial businesses (obtained through direct and indirect channels), partners for whom we manage payment programs, as well as individual consumers.

In the second quarter of 2022, in order to align with recent changes in the organizational structure and management reporting, we updated our segment structure. The presentation of segment information has been recast for the prior years to align with this segment presentation for 2022. We manage and report our operating results through the following reportable segments, Fleet, Corporate Payments, Lodging, Brazil and Other, which aligns with how the Chief Operating Decision Maker (CODM) allocates resources, assesses performance and reviews financial information.

To help facilitate an understanding of our expansive range of solutions around the world, we describe them in two solution-driven categories: Vehicle and Mobility solutions and Corporate Payments solutions. Our Vehicle and Mobility solutions are purpose-built to enable our business and consumer customers to pay for vehicle and mobility-related expenses, while providing greater control and visibility of employee spending when compared with less specialized payment methods, such as cash or general-purpose credit cards. Our Vehicle and Mobility solutions include fuel, lodging, tolls and other complementary products. Our Corporate Payments solutions simplify and automate vendor payments and are designed to help businesses streamline the back-office operations associated with making outgoing payments. Companies save time, cut costs, and manage B2B payment processing more efficiently with our suite of corporate payment solutions, including AP automation, virtual cards, cross-border, and purchasing and T&E cards. We provide other payments solutions that are not considered within our Vehicle and Mobility and Corporate Payments solutions, including gift and payroll card.

Our revenue is generally reported net of the cost for underlying products and services purchased. In this report, we refer to this net revenue as “revenue". See “Results of Operations” for additional segment information.

Revenues, net, by Segment. For the three months ended March 31, 2023 and 2022, our segments generated the following revenue (in millions).


	Three Months Ended March 31,
	2023				2022
(Unaudited)*	Revenues, net		% of Total Revenues, net		Revenues, net		% of Total Revenues, net
Fleet	$	372.7	41	%	$	351.6	45	%
Corporate Payments	227.2		25	%	183.8		23	%
Lodging	122.3		14	%	94.6		12	%
Brazil	121.7		14	%	102.5		13	%
Other	57.3		6	%	56.8		7	%
Consolidated revenues, net	$	901.3	100	%	$	789.2	100	%

*Columns may not calculate due to rounding. Other includes our Gift and Payroll Card

businesses.

Segment and solutions reporting have converged to be the same. The Fuel solution is now included with the Fleet segment, with the exception of Brazil fuel which is included in the Brazil segment. Vehicle maintenance, telematics, and Mexico benefits were included in the Other solution category previously, and are now included in the Fleet segment. The Brazil segment includes Brazil benefits from the Other solution category and the Tolls solution category. The Gift and Payroll card solution categories are now included in the Other segment.

Revenues, net by Geography. Revenue by geography for the three months ended March 31, 2023 and 2022, was as follows (in millions):


	Three Months Ended March 31,
(Unaudited)	2023				2022
Revenues, net by Geography*	Revenues, net		% of Total Revenues, net		Revenues, net		% of Total Revenues, net
United States	$	513.6	57	%	$	471.8	60	%
Brazil	121.7		14	%	102.5		13	%
United Kingdom	107.7		12	%	94.6		12	%
Other	158.2		18	%	120.3		15	%
Consolidated revenues, net	$	901.3	100	%	$	789.2	100	%

*Columns may not calculate due to rounding.

We generate revenue in our Fleet segment 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, 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.

In our Corporate Payments segment, the primary measure of volume is spend, the dollar amount of payments processed on behalf of customers through our various networks. 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 or spread revenue. Our programs may also charge fixed fees for access to the network and ancillary services provided. In our cross-border payments business, the majority of revenue is from exchanges of currency at spot rates, which enables customers to make cross-currency payments. Our performance obligation in our foreign exchange payment services is providing a foreign currency payment to a customer’s designated recipient and therefore, we recognize revenue on foreign exchange payment services when the underlying payment is made. Revenues from foreign exchange payment services are primarily comprised of the difference between the exchange rate we set for the customer and the rate available in the wholesale foreign exchange market.

In our Lodging segment, we primarily earn revenue from the difference between the amount charged to the customer and the amount paid to the hotel for a given transaction and commissions paid by hotels. We may also charge fees for access to the network and ancillary services provided.

In our Brazil segment, we primarily earn revenue from fixed fees for access to the network and ancillary services provided. We also earn interchange and merchant discounts on certain non-toll products. The primary measure of volume is average monthly tags active during the period.

The remaining revenues represent other solutions in our Gift and Payroll card businesses. In these businesses, we primarily earn revenue from the processing of transactions. We may also charge fixed fees for ancillary services provided.

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The following table presents revenue per key performance metric by segment for the three months ended March 31, 2023 and 2022 (in millions except revenues, net per key performance metric).*


	As Reported				Pro Forma and Macro Adjusted2
	Three Months Ended March 31,				Three Months Ended March 31,
(Unaudited)	2023	2022	Change	% Change	2023	2022	Change	% Change
FLEET
'- Revenues, net	$372.7	$351.6	$21.1	6%	$364.6	$352.8	$11.8	3%
'- Transactions	118.6	116.6	2.0	2%	118.6	116.8	1.8	2%
'- Revenues, net per transaction	$3.14	$3.01	$0.13	4%	$3.07	$3.02	$0.05	2%
CORPORATE PAYMENTS
'- Revenues, net	$227.2	$183.8	$43.4	24%	$234.8	$197.4	$37.3	19%
'- Spend volume	$36,526	$27,435	$9,091	33%	$36,526	$29,971	$6,556	22%
'- Revenue, net per spend $	0.62%	0.67%	(0.05)%	(7)%	0.64%	0.66%	(0.02)%	(2)%
LODGING
'- Revenues, net	$122.3	$94.6	$27.8	29%	$122.8	$97.5	$25.3	26%
'- Room nights	9.4	9.0	0.4	4%	9.4	9.1	0.2	2%
'- Revenues, net per room night	$13.07	$10.54	$2.53	24%	$13.13	$10.67	$2.45	23%
BRAZIL
'- Revenues, net	$121.7	$102.5	$19.2	19%	$121.0	$102.5	$18.5	18%
'- Tags (average monthly)	6.5	6.1	0.4	7%	6.5	6.1	0.4	7%
'- Revenues, net per tag	$18.63	$16.74	$1.89	11%	$18.51	$16.74	$1.77	11%
OTHER1
'- Revenues, net	$57.3	$56.8	$0.6	1%	$58.2	$56.8	$1.4	2%
'- Transactions	298.0	293.0	5.0	2%	298.0	293.0	5.0	2%
'- Revenues, net per transaction	$0.19	$0.19	$—	(1)%	$0.20	$0.19	$—	1%
FLEETCOR CONSOLIDATED REVENUES, NET
'- Revenues, net	$901.3	$789.2	$112.1	14%	$901.4	$807.1	$94.3	12%


1 Other includes Gift and Payroll Card operating segments.
2 See heading entitled "Managements' Use of Non-GAAP Financial Measures" for a reconciliation of pro forma and macro adjusted revenue by solution and metric non-GAAP measures to the comparable financial measure calculated in accordance with GAAP.
* Columns may not calculate due to rounding.

Organic revenue growth is a supplemental non-GAAP financial measure of operating performance. Organic revenue growth is calculated as revenue growth in the current period adjusted for the impact of changes in the macroeconomic environment (to include fuel price, fuel price spreads and changes in foreign exchange rates) over revenue in the comparable prior period adjusted to include or remove the impact of acquisitions and/or divestitures and non-recurring items that have occurred subsequent to that period. 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 believe that organic revenue growth on a macro-neutral, one-time item, and consistent acquisition/divestiture/non-recurring item basis is useful to investors for understanding the performance of FLEETCOR.

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, including fluctuations in foreign currency exchange rates, fuel prices and fuel price spreads. 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 losses and cost of goods sold related to our hardware and card 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 and bonuses) for our employees, 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 and 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.

•Other expense (income), net—Our other expense (income), net includes gains or losses from the following: sales of assets, foreign currency transactions, extinguishment of debt, and investments. This category also includes other miscellaneous non-operating costs and revenue. Certain of these items may be presented separately on the Consolidated Statements of Income.

•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 income taxes—Our provision for income taxes consists of corporate income taxes related primarily to profits 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, in North America, Brazil, and in other locations internationally, including the current conflict between Russia and Ukraine, as discussed elsewhere in this Quarterly Report on Form 10-Q. 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 each of our 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 57% and 60% of our revenue in the three months ended March 31, 2023 and 2022, 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 impact 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.

•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 estimate approximately 12% of revenues, net were directly impacted by changes in fuel price in both the three months ended March 31, 2023 and 2022, 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

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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 estimate approximately 5% of revenues, net were directly impacted by fuel price spreads in both the three months ended March 31, 2023 and 2022, respectively.

•Acquisitions—Since 2002, we have completed over 95 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—From January 1, 2022 to May 3, 2023, the U.S. Federal Open Market Committee has increased the benchmark rate ten times for a total rate increase of 5.00%. Additional increases are possible in future periods. We are exposed to market risk changes in interest rates on our cash investments and debt, particularly in rising interest rate environments. 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. For each of these swap contracts, we pay a fixed monthly rate and receive one month LIBOR. In January 2022 and 2023, $1.0 billion and $500 million, respectively, of our interest rate swaps matured. In January 2023, we entered into five additional swap contracts. The objective of these swap contracts is to reduce the variability of cash flows in the previously unhedged interest payments associated with $1.5 billion of variable rate debt, the sole source of which is due to changes in the SOFR interest rate. For each of these swap contracts, we pay a fixed monthly rate and receive one-month term SOFR.

•Expenses—Over the long term, we expect that our expense will decrease as a percentage of revenue as our revenue increases, except for expenses related to transaction volume processed. 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

2023

•In January 2023, we acquired Global Reach, a U.K.-based cross-border payments provider, for approximately $102.9 million.

•In February 2023, we acquired the remainder of Mina Digital Limited, a cloud-based EV charging software platform, and we also acquired Business Gateway AG, a European-based vehicle maintenance provider.

2022

•In November 2022, we completed the acquisition of Roomex, a European workforce lodging provider serving the U.K. and German markets for approximately $56.8 million.

•In September 2022, we made an investment of $6.1 million in a U.K. based electric vehicle (EV) search and pay mapping service.

•In September 2022, we completed the acquisition of Plugsurfing, a European EV software and network provider, for $75.8 million.

•In August 2022, we completed the acquisition of Accrualify, an accounts payable (AP) automation software company, for $41.2 million.

•In March 2022, we completed the acquisition of Levarti, a U.S.-based airline software platform company, for $23.7 million.

•In February 2022, we made an investment of $7.8 million in Mina Digital Limited, an EV charging payments business and $5.0 million in an EV data analytics business.

Results from our Levarti acquisition are included in our Lodging segment, results from our Accrualify and Global Reach acquisitions are reported in our Corporate Payments segment, and results from our Plugsurfing, Business Gateway AG, and Mina acquisitions are reported in our Fleet segment, from the date of acquisition.

Results of Operations

Three months ended March 31, 2023 compared to the three months ended March 31, 2022

The following table sets forth selected unaudited consolidated statements of income for the three months ended March 31, 2023 and 2022 (in millions, except percentages)*.


(Unaudited)	Three Months Ended March 31, 2023		% of Total Revenues, net		Three Months Ended March 31, 2022		% of Total Revenues, net		Increase (decrease)		% Change
Revenues, net:
Fleet	$	372.7	41.4	%	$	351.6	44.5	%	$	21.1	6.0	%
Corporate Payments	227.2		25.2	%	183.8		23.3	%	43.4		23.6	%
Lodging	122.3		13.6	%	94.6		12.0	%	27.8		29.3	%
Brazil	121.7		13.5	%	102.5		13.0	%	19.2		18.7	%
Other	57.3		6.4	%	56.8		7.2	%	0.6		1.0	%
Total revenues, net	901.3		100.0	%	789.2		100.0	%	112.1		14.2	%
Consolidated operating expenses:
Processing	205.0		22.7	%	174.2		22.1	%	30.8		17.7	%
Selling	81.6		9.1	%	76.9		9.7	%	4.7		6.1	%
General and administrative	154.7		17.2	%	143.5		18.2	%	11.2		7.8	%
Depreciation and amortization	84.2		9.3	%	76.8		9.7	%	7.4		9.7	%
Other operating, net	0.7		0.1	%	0.1		—	%	(0.6)		NM
Operating income	375.2		41.6	%	317.7		40.3	%	57.5		18.1	%
Investment loss	(0.2)		—	%	0.2		—	%	(0.3)		NM
Other expense, net	0.7		0.1	%	0.9		0.1	%	(0.1)		NM
Interest expense, net	79.8		8.9	%	22.0		2.8	%	57.8		262.2	%

Provision for income taxes	80.0		8.9	%	76.7		9.7	%	3.3		4.3	%
Net income	$	214.8	23.8	%	$	218.0	27.6	%	$	(3.1)	(1.4)	%

Operating income by segment:
Fleet	$	173.5			$	167.8			$	5.7	3.4	%
Corporate Payments	75.5				58.2				17.3		29.7	%
Lodging	54.6				39.8				14.8		37.2	%
Brazil	54.8				37.3				17.5		46.9	%
Other	16.8				14.6				2.2		15.2	%
Total operating income	$	375.2			$	317.7			$	57.5	18.1	%

NM = Not Meaningful

*The sum of the columns and rows may not calculate due to rounding.

Consolidated revenues, net

Consolidated revenues were $901.3 million in the three months ended March 31, 2023, an increase of 14.2% compared to the prior period. Consolidated revenues increased primarily due to organic growth of 12% driven by increases in transaction volumes and new sales growth and the impact of acquisitions completed in 2022 and 2023 of approximately $18 million.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a neutral impact on our consolidated revenues for the three months ended March 31, 2023 over the comparable period in 2022, driven primarily by the favorable impact of fuel prices of approximately $2 million and favorable fuel price spreads of approximately $9 million. These increases were partially offset by unfavorable foreign exchange rates of approximately $11 million, mostly in our U.K. and European businesses.

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Consolidated operating income

Operating income was $375.2 million in the three months ended March 31, 2023, an increase of 18.1% compared to the prior period. The increase in operating income was primarily due to organic growth driven by increases in transaction volume, acquisitions completed in 2023 and 2022, the favorable impact of fuel prices of $2 million and the favorable fuel price spreads of approximately $9 million. The increase in operating income was partially offset by additional bad debt of $14 million in the second quarter of 2022 over the comparable prior period and unfavorable movements in foreign exchange rates of $3 million.

Consolidated operating expenses

Processing. Processing expenses were $205.0 million in the three months ended March 31, 2023, an increase of 17.7% compared to the prior period. Increases were primarily due to higher variable expenses driven by larger transaction volumes, incremental bad debt of $14 million and approximately $8 million of expenses related to acquisitions completed in 2022 and 2023. Bad debt expense has increased as customer spend increased due to higher fuel prices and new sales, which tend to have a higher loss rate and higher losses among micro-SMB (small-medium business) customers more severely impacted by negative economic conditions.

Selling. Selling expenses were $81.6 million in the three months ended March 31, 2023, an increase of 6.1% from the prior period. Increases in selling expenses were primarily associated with approximately $5 million of expenses related to acquisitions completed in 2022 and 2023.

General and administrative. General and administrative expenses were $154.7 million in the three months ended March 31, 2023, an increase of 7.8% from the prior period. Increases in general and administrative expenses were primarily due to the impact of acquisitions completed in 2022 and 2023 of approximately $11 million and other increases associated with the growth of our business over the comparable prior period. These increases were partially offset by $6 million of lower stock based compensation expense.

Depreciation and amortization. Depreciation and amortization expenses were $84.2 million in the three months ended March 31, 2023, an increase of 9.7% from the prior period. Increases in depreciation and amortization expenses were primarily due to incremental investments in capital investment expenses, as well as approximately $4 million due to acquisitions completed in 2022 and 2023.

Interest expense, net. Interest expense, net was $79.8 million in the three months ended March 31, 2023, an increase of $57.8 million from the prior period. The increase in interest expense was primarily due to rising interest rates on our borrowings partially offset by benefit of higher cash balances in certain foreign jurisdictions. 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 March 31,
(Unaudited)	2023		2022
Term loan A	5.98	%	1.64	%
Term loan B	6.28	%	1.89	%
Revolving line of credit A & B (USD)	6.01	%	1.65	%
Revolving line of credit B (GBP)	5.13	%	1.92	%

We have a portfolio of interest rate swaps which are designated as cash flow hedges and one cross-currency interest rate swap, which is designated as a net investment hedge. During the three months ended March 31, 2023, as a result of these swap contracts, we recorded a benefit to interest expense, net of $6.6 million.

Provision for income taxes. The provision for income taxes and effective tax rate were $80.0 million and 27.1% in the three months ended March 31, 2023, an increase of 4.3% and 4.2%, respectively, from the prior period. Income tax expense is based on an estimated annual effective rate, which requires us to make our best estimate of annual pretax accounting income or loss before consideration of tax or benefit discretely recognized in the period in which such occur. Our effective income tax rate for the three months ended March 31, 2023 differs from the U.S. federal statutory rate due primarily to the unfavorable impact of state taxes net of federal benefits, additional taxes on undistributed foreign-sourced income, and foreign withholding taxes on interest income from intercompany notes. For the three months ended March 31, 2023, the effective tax rate was increased by discrete items of $1.6 million incurred from an uncertain tax position related to previous years and tax benefits arising from stock-based compensation previously recorded in pretax income.

Net income. For the reasons discussed above, our net income decreased to $214.8 million in the three months ended March 31, 2023, a decrease 1.4% from the prior period.

Segment Results

Fleet

Fleet revenues were $372.7 million in the three months ended March 31, 2023, an increase of 6.0% from the prior period. Fleet operating income was $173.5 million in the three months ended March 31, 2023, an increase of 3.4% from the prior period. Fleet revenues and operating income increased primarily due to organic growth of 3% driven by increases in transaction volumes and new sales growth and the impact of acquisitions, which contributed approximately $1 million in revenue, as well as the positive impact of the macroeconomic environment.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a positive impact on our Fleet revenues and operating income in the three months ended March 31, 2023 over the prior period of approximately $8 million and $10 million, respectively. This impact was driven primarily by the favorable impact of fuel prices on revenue and operating income of approximately $2 million and favorable fuel price spreads of approximately $9 million, over the comparable prior period. These increases were partially offset by unfavorable changes in foreign exchange rates on revenues and operating income of approximately $3 million and $1 million, respectively, mostly in our U.K. and European businesses, as well as incremental bad debt expense of $17 million.

Corporate Payments

Corporate Payments revenues were $227.2 million in the three months ended March 31, 2023, an increase of 23.6%, from the prior period. Corporate Payments operating income was $75.5 million in the three months ended March 31, 2023, an increase of 29.7% from the prior period. Corporate Payments revenues and operating income increased primarily due to organic growth of 19%, with strong new sales in our AP and cross-border solutions, higher spend volume, as well as the impact of acquisitions which contributed approximately $14 million in revenue. These increases were partially offset by the negative 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 Corporate Payments revenues and operating income in the three months ended March 31, 2023 over the comparable prior period of approximately $8 million and $3 million, respectively, driven primarily by unfavorable foreign exchange rates.

Lodging

Lodging revenues were $122.3 million in the three months ended March 31, 2023, an increase of 29.3% from the prior period. Lodging operating income was $54.6 million in the three months ended March 31, 2023, an increase of 37.2% from the prior period. Lodging revenues and operating income increased primarily due to organic growth of 26% driven in our workforce and airline verticals, as well as the impact of acquisitions, which contributed $3 million in revenue.

Brazil

Brazil revenues were $121.7 million in the three months ended March 31, 2023, an increase of 18.7% from the prior period. Brazil operating income was $54.8 million in the three months ended March 31, 2023, an increase of 46.9% from the prior period. Brazil revenues and operating income increased primarily due to organic growth of 18% driven by increases in toll tags sold and expanded product utility, with the differentiated value proposition of our products.

Other

Other revenues were relatively flat at $57.3 million in the three months ended March 31, 2023. Other operating income was $16.8 million in the three months ended March 31, 2023, an increase of 15.2% from the prior period, driven by organic growth in our gift segment, as well as due to the timing of card sales.

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 next 12 months and the foreseeable future, based on our current assumptions. At March 31, 2023, we had approximately $2.1 billion in total liquidity, consisting of approximately $0.8 billion available under our Credit Facility (defined below) and unrestricted cash of $1.3 billion. Based on our assessment of the current capital market conditions and related impact on our access to cash, we have reclassified all cash held at our Russian businesses of $224 million to restricted cash as of March 31, 2023. Restricted cash represents primarily customer deposits in our corporate payments businesses in the U.S., cash held in our Russian businesses, as well as collateral received

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from customers for cross-currency transactions in our cross-border payments 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 portion of our domestic receivables, to lower our cost of borrowing and more efficiently use capital. Accounts receivable collateralized within our Securitization Facility relate to trade receivables resulting primarily from charge card activity in the U.S. We also consider the available and undrawn amounts under our Securitization Facility and Credit Facility as funds available for working capital purposes and acquisitions. At March 31, 2023, we had no additional liquidity under our Securitization Facility.

We have determined that outside basis differences associated with our investments in foreign subsidiaries would not result in a material deferred tax liability, and, consistent with our assertion that these amounts continue to be indefinitely invested, have not recorded incremental income taxes for the additional outside basis differences.

Cash flows

The following table summarizes our cash flows for the three month periods ended March 31, 2023 and 2022 (in millions).


	Three Months Ended March 31,
(Unaudited)	2023		2022
Net cash provided by (used in) operating activities	$	327.7	$	(112.3)
Net cash used in investing activities	$	(159.0)	$	(67.3)
Net cash used in financing activities	$	(217.7)	$	(49.8)

Operating activities. Net cash provided by operating activities was $327.7 million in the three months ended March 31, 2023, compared to net cash used in operating activities of $112.3 million in the comparable prior period. The increase in operating cash flows was primarily due to favorable movements in working capital in the three months ended March 31, 2023 over the comparable period in 2022.

Investing activities. Net cash used in investing activities was $159.0 million in the three months ended March 31, 2023 compared to $67.3 million in the comparable prior period. The increased use of cash was primarily due to larger acquisitions completed in 2023 over the comparable period in 2022.

Financing activities. Net cash used in financing activities was $217.7 million in the three months ended March 31, 2023, compared to $49.8 million in the comparable prior period. The increase in net cash used by financing activities was primarily due to an increase in net repayments on our credit facility and securitization facility of $606 million, offset by a decrease in repurchases of common stock of $413 million in the three months ended March 31, 2023 over the comparable period in 2022.

Capital spending summary

Our capital expenditures were $36.7 million in the three months ended March 31, 2023, an increase of $5.4 million or 17.0%, from $31.4 million in the comparable prior period due to the impact of acquisitions and continued investments in technology.

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 $6.4 billion Credit Agreement (the "Credit Agreement"), with Bank of America, N.A., as administrative agent, swing line lender and letter of credit 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 $1.5 billion, a term loan A facility in the amount of $3.0 billion and a term loan B facility in the amount of $1.9 billion. The revolving credit facility consists of (a) a revolving A credit facility in the amount of $1 billion, with sublimits for letters of credit and swing line loans and (b) a revolving B facility in the amount of $500 million with borrowings in U.S. dollars, euros, British pounds, Japanese yen or other currency as agreed in advance, and a sublimit for swing line loans. 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 3.75 to 1.00. Proceeds from the credit facilities may be used for working capital purposes, acquisitions, and other general corporate purposes. The maturity date for the term loan A and revolving credit facilities A and B is June 24, 2027. The term loan B has a maturity date of April 30, 2028.

On May 3, 2023, we entered into the thirteenth amendment to the Credit Facility. The amendment replaced LIBOR on the term B loan with the Secured Overnight Financing Rate ("SOFR"), plus a SOFR adjustment of 0.10%.

At March 31, 2023, the interest rate on the term loan A was 6.28%, the interest rate on the term loan B was 6.59%, the interest rate on the revolving A and B facilities (USD borrowings) was 6.28%, and the interest rate on the revolving B facility (GBP borrowings) was 5.58%. The unused credit facility fee was 0.25% at March 31, 2023.

At March 31, 2023, we had $2.9 billion in borrowings outstanding on the term loan A, net of discounts, and $1.9 billion in borrowings outstanding on the term loan B, net of discounts and debt issuance costs. We have unamortized debt issuance costs

of $4.4 million related to the revolving facilities as of March 31, 2023 recorded within other assets in the Unaudited Consolidated Balance Sheet. We have unamortized debt discounts and debt issuance costs of $22.7 million related to our term loans at March 31, 2023 recorded in notes payable and other obligations, net of current potion within the Unaudited Consolidated Balance Sheet.

During the three months ended March 31, 2023, we made principal payments of $23.5 million on the term loans and net repayments of $215.3 million on the revolving facilities.

As of March 31, 2023, we were in compliance with each of the covenants under the Credit Agreement.

Cash Flow Hedges

On January 22, 2019, we entered into three swap contracts. One contract (which matured in January 2022) had a notional value of $1.0 billion, one contract (which matured in January 2023) had a notional value of $500 million and the remaining contract, which will mature on December 19, 2023, has a notional value of $500 million. 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 pay a fixed monthly rate and receive one month LIBOR. On May 4, 2023, we amended the remaining LIBOR-based swap. The amendment replaced LIBOR on the swap with one-month term SOFR resulting in a pay-fixed monthly rate of 2.50%, without further changes to the terms of the swap.

During January 2023, we entered into five receive-variable, pay-fixed interest rate swap derivative contracts with U.S. dollar notional amounts as follows (in millions):


Notional Amount	Fixed Rates	Maturity Date
$250	4.01%	7/31/2025
$250	4.02%	7/31/2025
$250	3.80%	1/31/2026
$250	3.71%	7/31/2026
$250	3.72%	7/31/2026

We reclassified approximately $5.1 million of gains from accumulated other comprehensive loss into interest income during the three months ended March 31, 2023 related to our cash flow hedges.

Net Investment Hedge

In February 2023, we entered into a cross currency interest rate swap that we designate as a net investment hedge of our investments in euro-denominated operations. This contract effectively converts $500 million of U.S. dollar equivalent to an obligation denominated in euro, and partially offsets the impact of changes in currency rates on our euro denominated net investments. This contract also creates a positive interest differential on the U.S. dollar-denominated portion of the swap, resulting in a 1.96% interest rate savings on the USD notional.

Hedge effectiveness is tested based on changes in the fair value of the cross currency swap due to changes in the USD/euro spot rate. We anticipate perfect effectiveness of the designated hedging relationship and record changes in the fair value of the cross currency interest rate swap associated with changes in the spot rate through accumulated other comprehensive loss. Excluded components associated with the forward differential are recognized directly in earnings as interest expense, net. We recognized a benefit of $1.5 million in interest expense, net for the three months ended March 31, 2023 related to these excluded components. The cross currency interest rate swap designated as a net investment hedge is recorded in other current liabilities at a fair value of $5.1 million as of March 31, 2023.

Securitization Facility

We are party to a $1.7 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. We refer to this arrangement as the Securitization Facility. The Securitization Facility matures on August 18, 2025. At March 31, 2023, the interest rate on the Securitization Facility was 5.85%.

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 all financial and non-financial covenant requirements related to our Securitization Facility as of March 31, 2023.

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Stock Repurchase Program

On February 4, 2016, we announced that our Board approved a stock repurchase program (as updated from time to time, the "Program") authorizing us to repurchase our common stock from time to time until February 1, 2024. On October 25, 2022, we announced the Board increased the aggregate size of the Program by $1.0 billion to $7.1 billion. Since the beginning of the Program through March 31, 2023, 26,327,835 shares have been repurchased for an aggregate purchase price of $5.9 billion, leaving us up to $1.2 billion of remaining authorization available under the Program for future repurchases in shares of our common stock.

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 we 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.

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 March 31, 2023, 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, 2022. 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, 2022 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. Because our non-GAAP financial measures are not standardized measures, they may not be directly comparable with the non-GAAP financial measures of other companies using the same or similar non-GAAP financial measures. Although management uses these non-GAAP measures to set goals and measure performance, they have no standardized meaning prescribed by GAAP. These non-GAAP measures are presented solely to permit investors to more fully understand how our management assesses underlying performance. These non-GAAP measures are not, and should not be viewed as, a substitute for GAAP measures, and should be viewed in conjunction with our GAAP financial statements and financial measures. As a result, such non-GAAP measures have limits in their usefulness to investors.

Pro forma and macro adjusted revenue and transactions by segment. 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 price spreads, 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.

Organic revenue growth is calculated as revenue growth in the current period adjusted for the impact of changes in the macroeconomic environment (to include fuel price, fuel price spreads and changes in foreign exchange rates) over revenue in the comparable prior period adjusted to include or remove the impact of acquisitions and/or divestitures and non-recurring items that have occurred subsequent to that period. We believe that organic revenue growth on a macro-neutral, one-time item, and consistent acquisition/divestiture/non-recurring item basis is useful to investors for understanding the performance of FLEETCOR.

Set forth below is a reconciliation of pro forma and macro adjusted revenue and key performance metric by segment to the most directly comparable GAAP measure, revenue, net and key performance metric (in millions)*:


	Revenues, net				Key Performance Metric
	Three Months Ended March 31,				Three Months Ended March 31,
(Unaudited)	2023		2022		2023		2022
FLEET - TRANSACTIONS
Pro forma and macro adjusted	$	364.6	$	352.8	118.6		116.8
Impact of acquisitions/dispositions	—		(1.3)		—		(0.2)
Impact of fuel prices/spread	10.9		—		—		—
Impact of foreign exchange rates	(2.8)		—		—		—
As reported	$	372.7	$	351.6	118.6		116.6






CORPORATE PAYMENTS - SPEND
Pro forma and macro adjusted	$	234.8	$	197.4	$	36,526	$	29,971
Impact of acquisitions/dispositions	—		(13.7)		—		(2,536)
Impact of fuel prices/spread	—		—		—		—
Impact of foreign exchange rates	(7.5)		—		—		—
As reported	$	227.2	$	183.8	$	36,526	$	27,435
BRAZIL - TAGS
Pro forma and macro adjusted	$	121.0	$	102.5	6.5		6.1
Impact of acquisitions/dispositions	—		—		—		—
Impact of fuel prices/spread	—		—		—		—
Impact of foreign exchange rates	0.7		—		—		—
As reported	$	121.7	$	102.5	6.5		6.1
LODGING - ROOM NIGHTS
Pro forma and macro adjusted	$	122.8	$	97.5	9.4		9.1
Impact of acquisitions/dispositions	—		(2.9)		—		(0.2)
Impact of fuel prices/spread	—		—		—		—
Impact of foreign exchange rates	(0.5)		—		—		—
As reported	$	122.3	$	94.6	9.4		9.0
OTHER1- TRANSACTIONS
Pro forma and macro adjusted	$	58.2	$	56.8	298.0		293.0
Impact of acquisitions/dispositions	—		—		—		—
Impact of fuel prices/spread	—		—		—		—
Impact of foreign exchange rates	(0.8)		—		—		—
As reported	$	57.3	$	56.8	298.0		293.0

FLEETCOR CONSOLIDATED REVENUES, NET
Pro forma and macro adjusted	$	901.4	$	807.1	Intentionally Left Blank
Impact of acquisitions/dispositions	—		(17.9)
Impact of fuel prices/spread2	10.8		—
Impact of foreign exchange rates2	(10.9)		—
As reported	$	901.3	$	789.2

* Columns may not calculate due to rounding.
1 Other includes Gift and Payroll Card operating segments.
2 Revenues reflect an estimated $2 million positive impact from fuel prices and approximately $9 million positive impact from fuel price spreads, partially offset by the negative impact of movements in foreign exchange rates of approximately $11 million.

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, intangible assets, and amortization of the premium recognized on the purchase of receivables, (c) integration and deal related costs, and (d) other non-recurring items, including the impact of discrete tax items, impairment charges, asset write-offs, restructuring and related costs, loss on extinguishment of debt, and legal settlements and regulatory-related legal fees. We adjust net income for the tax effect of adjustments using our effective income tax rate, exclusive of discrete tax items. We calculate 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.

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 statement of income.

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Adjusted net income and adjusted net income per diluted share are supplemental measures of operating performance that do not represent and should not be considered as an alternative to net income, net income per diluted share or cash flow from operations, as determined by GAAP. We believe it is useful to exclude non-cash share 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 share 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 our adjusted net income. Integration and deal related costs represent business acquisition transaction costs, professional services fees, short-term retention bonuses and system migration costs, etc., that are not indicative of the performance of the underlying business. We also believe that certain expenses, discrete tax items, impairment charges, asset write-offs, restructuring and related costs, losses on extinguishment of debt, and legal settlements and regulatory-related legal fees do not necessarily reflect how our business is performing. We adjust net income for the tax effect of each of these adjustments using our effective income tax rate during the period, exclusive of discrete tax items.

Management uses adjusted net income, adjusted net income per diluted share and organic revenue growth:

•as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis;

•for planning purposes, including the preparation of our internal annual operating budget;

•to allocate resources to enhance the financial performance of our business; and

•to evaluate the performance and effectiveness of our operational strategies.

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 shares and per share amounts)*:


	Three Months Ended March 31,
(Unaudited)	2023		2022
Net income	$	214,835	$	217,952
Net income per diluted share	$	2.88	$	2.75
Stock-based compensation	26,096		32,631
Amortization1	60,039		57,630

Integration and deal related costs	5,885		6,253
Legal settlements/litigation	344		435
Restructuring, related and other2 costs	1,298		—



Total pre-tax adjustments	93,662		96,949
Income taxes	(25,416)		(25,241)

Adjusted net income	$	283,081	$	289,660
Adjusted net income per diluted share	$	3.80	$	3.65
Diluted shares	74,483		79,286


1 Includes amortization related to intangible assets, premium on receivables, deferred financing costs and debt discounts.
2 Includes impact of foreign currency transactions; prior amounts were not material (0.4 million) for recast.
*Columns may not calculate due to rounding.

Special Cautionary Notice Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 our current expectations and projections about future events. Forward-looking statements are subject to many uncertainties and other variable circumstances, including those discussed in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 28, 2023, many of which are outside of our control, that could cause our actual results and experience to differ materially from any forward-looking statement.

Forward-looking statements may not be realized due to a variety of factors, including, without limitation:

•our ability to successfully execute our strategic plan and portfolio review, manage our growth and achieve our performance targets;

•regulatory measures, voluntary actions, or changes in consumer preferences, that impact our transaction volume, including impacts to supply chain, workforce or other impacts of the coronavirus (including any variants thereof, “COVID-19”); adverse changes in program fees or charges we may collect, whether through legal, regulatory or contractual changes;

•the impact of macroeconomic conditions and the current inflationary environment and whether expected trends, including retail fuel prices, fuel price spreads, fuel transaction patterns, electric vehicle, and retail lodging price trends develop as anticipated and we are able to develop successful strategies in light of these trends;

•the international operational and political risks and compliance and regulatory risks and costs associated with international operations, including the impact of the conflict between Russia and Ukraine on our business and operations;

•our ability to attract new and retain existing partners, fuel merchants, and lodging providers, their promotion and support of our products, and their financial performance;

•the failure of management assumptions and estimates, as well as differences in, and changes to, economic, market, interest rate, interchange fees, foreign exchange rates, and credit conditions, including changes in borrowers’ credit risks and payment behaviors;

•the risk of higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings;

•our ability to successfully manage our credit risks and the sufficiency of our allowance for expected credit losses;

•our ability to securitize our trade receivables;

•the occurrence of fraudulent activity, data breaches or failures of our information security controls or cybersecurity-related incidents that may compromise our systems or customers’ information;

•any disruptions in the operations of our computer systems and data centers;

•our ability to develop and implement new technology, products, and services;

•any alleged infringement of intellectual property rights of others and our ability to protect our intellectual property;

•the regulation, supervision, and examination of our business by foreign and domestic governmental authorities, as well as litigation and regulatory actions, including the lawsuit filed by the Federal Trade Commission (FTC);

•the impact of regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering (AML) and anti-terrorism financing laws;

•changes in our senior management team and our ability to attract, motivate and retain qualified personnel consistent with our strategic plan;

•tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations;

•the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; and

•the other factors and information in our Annual Report on Form 10-K and other filings that we make with the Securities and Exchange Commission (SEC) under the Exchange Act and Securities Act. See "Risk Factors" in our Annual Report on

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Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 28, 2023.

Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. We do not undertake, and specifically disclaim, any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

You may get FLEETCOR’s 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 FLEETCOR 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.


Item 3.			Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2023, there have been no material changes to our market risk from that disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.


Item 4.			Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2023, management carried out, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


Item 1.			Legal Proceedings

Derivative Lawsuits

On January 20, 2023, the previous State Derivative Action plaintiffs filed a new derivative lawsuit in the Superior Court of Gwinnett County, Georgia. The new lawsuit, City of Aventura Police Officers’ Retirement Fund, derivatively on behalf of FleetCor Technologies, Inc. v. Ronald F. Clarke and Eric R. Dey, alleges that the defendants breached their fiduciary duties by causing or permitting the Company to engage in unfair or deceptive marketing and billing practices, making false and misleading public statements concerning the Company’s fee charges and financial and business prospects, and making improper sales of stock. The complaint seeks approximately $118 million in monetary damages on behalf of the Company, including contribution by defendants as joint tortfeasors with the Company in unfair and deceptive practices, and disgorgement of incentive pay and stock compensation. On January 24, 2023, the previous Federal Derivative Action plaintiffs filed a similar new derivative lawsuit, Jerrell Whitten, derivatively on behalf of FleetCor Technologies, Inc. v. Ronald F. Clarke and Eric R. Dey, against Mr. Clarke and Mr. Dey in Gwinnett County, Georgia. The defendants dispute the allegations in the derivative complaints and intend to vigorously defend against the claims.

FTC Investigation

On December 20, 2019, the FTC filed a lawsuit in the Northern District of Georgia against the Company and Ron Clarke. See FTC v. FLEETCOR and Ronald F. Clarke, No. 19-cv-05727 (N.D. Ga.). The complaint alleges the Company and Clarke violated the FTC Act’s prohibitions on unfair and deceptive acts and practices. The complaint seeks among other things injunctive relief, consumer redress, and costs of suit. The Company continues to believe that the FTC’s claims are without merit and these matters are not and will not be material to the Company’s financial performance. On April 17, 2021, the FTC filed a motion for summary judgment. On April 22, 2021, the United States Supreme Court held unanimously in AMG Capital Management v. FTC that the FTC does not have authority under current law to seek monetary redress by means of Section 13(b) of the FTC Act, which is the means by which the FTC has sought such redress in this case. FLEETCOR cross-moved for summary judgment regarding the FTC’s ability to seek monetary or injunctive relief on May 17, 2021. On August 13, 2021, the FTC filed a motion to stay or to voluntarily dismiss without prejudice the case pending in the Northern District of Georgia in favor of a parallel administrative action under Section 5 of the FTC Act that it filed on August 11, 2021 in the FTC’s administrative process. Apart from the jurisdiction and statutory change, the FTC’s administrative complaint makes the same factual allegations as the FTC’s original complaint filed in December 2019. The Company opposed the FTC’s motion for a stay or to voluntarily dismiss, and the court denied the FTC’s motion on February 7, 2022. In the meantime, the FTC’s administrative action is stayed. On August 9, 2022, the District Court for the Northern District of Georgia granted the FTC's motion for summary judgment as to liability for the Company and Ron Clarke, but granted the Company's motion for summary judgment as to the FTC's claim for monetary relief as to both the Company and Ron Clarke. The Company intends to appeal this decision after final judgment is issued. On October 20-21, 2022, the court held a hearing on the scope of injunctive relief. At the conclusion of the hearing, the Court did not enter either the FTC’s proposed order or the Company’s proposed order, and instead suggested that the parties enter mediation. Following mediation, both parties have filed proposed orders with the Court. The Company has incurred and continues to incur legal and other fees related to this complaint. Any settlement of this matter, or defense against the lawsuit, could involve costs to the Company, including legal fees, redress, penalties, and remediation expenses.

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Item 1A.			Risk Factors

The information presented below supplements the risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2022. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 and Part II, Item 1A, "Risk Factors" in other reports we file with the Securities and Exchange Commission, from time to time, all of which could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those disclosed under the caption "Item 1A. Risk factors" to our annual report on Form 10-K for the year ended December 31, 2022.


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

The Company announced on February 4, 2016 that its Board 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, 2024. On October 25, 2022, the Company announced the Board increased the aggregate size of the Program by $1.0 billion to $7.1 billion. Since the beginning of the Program through March 31, 2023, 26,327,835 shares have been repurchased for an aggregate purchase price of $5.9 billion, leaving the Company up to $1.2 billion of remaining authorization available under the Program for future repurchases in shares of its common stock.

The following table presents information as of March 31, 2023, with respect to purchases of common stock of the Company made during the three months ended March 31, 2023 by the Company as defined in Rule 10b-18(a)(3) under the Exchange Act.


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publicly Announced Plan	Maximum Value that May Yet be Purchased Under the Publicly Announced Plan (in thousands)
January 1, 2023 through January 31, 2023	27,621	$	200.24	26,308,529	$	1,240,183
February 1, 2023 through February 28, 2023	248	$	210.95	26,308,777	$	1,240,131
March 1, 2023 through March 31, 2023	19,058	$	210.66	26,327,835	$	1,236,116


Item 3.			Defaults Upon Senior Securities

Not applicable.


Item 4.			Mine Safety Disclosures

Not applicable.


Item 5.			Other Information

Not applicable.

Item 6. Exhibits



Exhibit No.
3.1						FLEETCOR Technologies, Inc. Amended and Restated Bylaws, adopted June 9, 2022 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, File No. 001-35004, filed with the SEC on June 14, 2022)

10.1						Cooperation Agreement, dated as of March 15, 2023, by and among FLEETCOR Technologies, Inc., D.E. Shaw Oculus Portfolios, L.L.C. and D.E. Shaw Valence Portfolios, L.L.C. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, File No. 001-35004, filed with the SEC on March 20, 2023)

10.2*						Offer letter, dated February 24, 2023, between FLEETCOR Technologies, Inc. and Tom Panther

10.3*						Thirteenth Amendment to the Credit Agreement, dated as of May 3, 2023 among FLEETCOR Technologies Operating Company, LLC, as the Company, FLEETCOR Technologies, Inc., as the Parent, Cambridge Mercantile Corp. (USA) as the additional borrower, Bank of America, N.A., as administrative agent, a domestic swing line lender, the foreign swing line lender and the L/C issuer, and the other lenders party hereto

31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended
31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended

32.1*						Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*						Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*						The following financial information for the Registrant formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Income, (iii) the Unaudited Consolidated Statements of Comprehensive Income; (iv) the Unaudited Consolidated Statements of Cash Flows and (v) the Notes to Unaudited Consolidated Financial Statements

104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed Herein

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, in their capacities indicated on May 10, 2023.

FLEETCOR Technologies, Inc.

(Registrant)

Signature

Title

/s/ Ronald F. Clarke

President, Chief Executive Officer and Chairman of the Board of Directors (Duly Authorized Officer and Principal

Executive Officer)

Ronald F. Clarke

/s/ Tom Panther

Chief Financial Officer (Principal Financial Officer)

Tom Panther

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