SEC Filing | FLEETCOR Technologies, Inc

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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, 2021


☐			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	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 April 16, 2021
Common Stock, $0.001 par value						83,349,560

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FLEETCOR TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q

For the Three Months Ended March 31, 2021

INDEX


		Page
PART I—FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS

	Consolidated Balance Sheets at March 31, 2021 (unaudited) and December 31, 2020	1

	Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 2021 and 2020	2

	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020	3

	Unaudited Consolidated Statements of Stockholder's Equity for the Three Months Ended March 31, 2021 an d 2020	4

	Unaudited Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	5

	Notes to Unaudited Consolidated Financial Statements	6

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40

Item 4.	CONTROLS AND PROCEDURES	40

PART II—OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	41

Item 1A.	RISK FACTORS	41

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	42

Item 3.	DEFAULTS UPON SENIOR SECURITIES	42

Item 4.	MINE SAFETY DISCLOSURES	42

Item 5.	OTHER INFORMATION	42

Item 6.	EXHIBITS	43

SIGNATURES		44

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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, 2021		December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	958,322	$	934,900
Restricted cash	473,200		541,719
Accounts and other receivables (less allowance for credit losses of $87,902 at March 31, 2021 and $86,886 at December 31, 2020)	1,590,624		1,366,775
Securitized accounts receivable—restricted for securitization investors	915,000		700,000
Prepaid expenses and other current assets	348,227		412,924

Total current assets	4,285,373		3,956,318
Property and equipment, net	200,161		202,509

Goodwill	4,693,469		4,719,181
Other intangibles, net	2,050,919		2,115,882
Investments	11,857		7,480
Other assets	185,695		193,209
Total assets	$	11,427,474	$	11,194,579
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,348,983	$	1,054,478
Accrued expenses	278,663		282,681
Customer deposits	1,118,965		1,175,322
Securitization facility	915,000		700,000
Current portion of notes payable and lines of credit	449,165		505,697
Other current liabilities	203,202		250,133
Total current liabilities	4,313,978		3,968,311
Notes payable and other obligations, less current portion	3,081,955		3,126,926
Deferred income taxes	501,302		498,154
Other noncurrent liabilities	233,740		245,777
Total noncurrent liabilities	3,816,997		3,870,857
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized; 126,759,124 shares issued and 83,336,476 shares outstanding at March 31, 2021; and 126,448,078 shares issued and 83,666,163 shares outstanding at December 31, 2020	127		126
Additional paid-in capital	2,794,991		2,749,900
Retained earnings	5,601,184		5,416,945
Accumulated other comprehensive loss	(1,481,019)		(1,363,158)
Less treasury stock, 43,422,648 shares at March 31, 2021 and 42,781,915 shares at December 31, 2020	(3,618,784)		(3,448,402)
Total stockholders’ equity	3,296,499		3,355,411
Total liabilities and stockholders’ equity	$	11,427,474	$	11,194,579


See accompanying notes to unaudited consolidated financial statements.

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FLEETCOR Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)


	Three Months Ended March 31,
	2021		2020
Revenues, net	$	608,623	$	661,093
Expenses:

Processing	116,428		233,703
Selling	52,082		55,859
General and administrative	108,362		106,110
Depreciation and amortization	65,729		64,476
Other operating, net	57		(38)
Operating income	265,965		200,983
Investment (gain) loss	(9)		2,371
Other expense (income), net	1,743		(9,366)
Interest expense, net	28,551		35,679

Total other expense	30,285		28,684
Income before income taxes	235,680		172,299
Provision for income taxes	51,441		25,239
Net income	$	184,239	$	147,060

Basic earnings per share	$	2.21	$	1.73
Diluted earnings per share	$	2.15	$	1.67
Weighted average shares outstanding:
Basic shares	83,475		84,902
Diluted shares	85,764		88,205


See accompanying notes to unaudited consolidated financial statements.

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FLEETCOR Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)


	Three Months Ended March 31,
	2021		2020
Net income	$	184,239	$	147,060
Other comprehensive loss:
Foreign currency translation losses, net of tax	(129,157)		(575,118)
Net change in derivative contracts, net of tax	11,296		(44,541)
Total other comprehensive loss	(117,861)		(619,659)
Total comprehensive income (loss)	$	66,378	$	(472,599)

See accompanying notes to unaudited consolidated financial statements.

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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, 2020	$	126	$	2,749,900	$	5,416,945	$	(1,363,158)	$	(3,448,402)	$	3,355,411
Net income	—		—		184,239		—		—		184,239
Other comprehensive loss, net of tax	—		—		—		(117,861)		—		(117,861)
Acquisition of common stock	—		—		—		—		(170,382)		(170,382)
Share-based compensation	—		17,747		—		—		—		17,747
Issuance of common stock	1		27,344		—		—		—		27,345


Balance at March 31, 2021	127		$	2,794,991	$	5,601,184	$	(1,481,019)	$	(3,618,784)	$	3,296,499


	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Balance at December 31, 2019	$	124	$	2,494,721	$	4,712,729	$	(972,465)	$	(2,523,493)	$	3,711,616
Net income	—		—		147,060		—		—		147,060
Other comprehensive loss, net of tax	—		—		—		(619,659)		—		(619,659)
Acquisition of common stock	—		75,000		—		—		(605,237)		(530,237)
Share-based compensation	—		14,175		—		—		—		14,175
Issuance of common stock	1		73,273		—		—		—		73,274
Balance at March 31, 2020	125		$	2,657,169	$	4,859,789	$	(1,592,124)	$	(3,128,730)	$	2,796,229

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,
	2021		2020
Operating activities
Net income	$	184,239	$	147,060
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	17,624		15,788
Stock-based compensation	17,747		14,175
Provision for losses on accounts and other receivables	2,477		117,746
Amortization of deferred financing costs and discounts	1,471		1,354
Amortization of intangible assets and premium on receivables	48,105		48,688


Deferred income taxes	7,992		(7,322)
Investment (gain) loss	(9)		2,371
Other	57		(38)

Changes in operating assets and liabilities (net of acquisitions/dispositions):
Accounts and other receivables	(468,593)		156,052
Prepaid expenses and other current assets	59,269		(45,149)
Other assets	4,609		(3,046)

Accounts payable, accrued expenses and customer deposits	202,862		(27,646)
Net cash provided by operating activities	77,850		420,033
Investing activities
Acquisitions, net of cash acquired	(43,727)		(467)
Purchases of property and equipment	(19,526)		(18,257)
Proceeds from disposal of a business	9		—

Net cash used in investing activities	(63,244)		(18,724)
Financing activities

Proceeds from issuance of common stock	27,345		73,274
Repurchase of common stock	(162,041)		(530,237)
Borrowings (payments) on securitization facility, net	215,000		(151,973)

Principal payments on notes payable	(41,188)		(51,722)
Borrowings from revolver	330,000		573,500
Payments on revolver	(353,851)		(204,460)
Payments on swing line of credit, net	(33,311)		(22,741)

Other	1,467		(92)
Net cash used in financing activities	(16,579)		(314,451)
Effect of foreign currency exchange rates on cash	(43,124)		(209,859)
Net decrease in cash and cash equivalents and restricted cash	(45,097)		(123,001)
Cash and cash equivalents and restricted cash, beginning of period	1,476,619		1,675,237
Cash and cash equivalents and restricted cash, end of period	$	1,431,522	$	1,552,236
Supplemental cash flow information
Cash paid for interest	$	27,732	$	40,394
Cash paid for income taxes	$	32,041	$	32,939



See accompanying notes to unaudited consolidated financial statements.

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FLEETCOR Technologies, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

March 31, 2021

1. Summary of Significant Accounting Policies

Basis of Presentation

Throughout this Current 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 Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“GAAP”). 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, 2020.

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 as of March 31, 2021 and through the date of this 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 magnitude and duration of the COVID-19 pandemic, 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 income. 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) gains, which are recorded within other (income) expense, net in the Unaudited Consolidated Statements of Income for the three months ended March 31 as follows (in millions):


	Three Months Ended March 31,
	2021	2020
Foreign exchange (losses) gains	(1.2)	2.0

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


	Three Months Ended March 31,
	2021		2020
Foreign currency losses on long-term intra-entity transactions	$	(66.3)	$	(164.1)

Derivatives

The Company uses derivatives to minimize its exposures related to changes in interest rates and to facilitate cross-currency corporate payments by writing derivatives to customers.

The Company is exposed to the risk of changing interest rates because its borrowings are subject to variable interest rates. In order to mitigate this risk, the Company utilizes derivative instruments. Interest rate swap contracts designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments

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over the life of the agreements without exchange of the underlying notional amount. The Company hedges a portion of its variable rate debt utilizing derivatives designated as cash flow hedges.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded to the derivative assets/liabilities and offset against accumulated other comprehensive income (loss), net of tax. Derivative fair value changes that are recorded in accumulated other comprehensive income (loss) are reclassified to earnings in the same period or periods that the hedged item affects earnings, to the extent the derivative is effective in offsetting the change in cash flows attributable to the hedged risk. The portions of the change in fair value that are either considered ineffective or are excluded from the measure of effectiveness are recognized immediately within earnings.

In the Company's cross-border payments business, the majority of revenue is from exchanges of currency at spot rates, which enables customers to make cross-currency payments. In addition, the Company writes foreign currency forward and option contracts for its customers to facilitate future payments. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its foreign exchange exposures arising from customer contracts, including forwards, options and spot exchanges of currency, as necessary, and economically hedges the net currency risks by entering into offsetting derivatives with established financial institution counterparties. The changes in fair value of these derivatives are recorded in revenues, net in the Unaudited Consolidated Statements of Income.

The Company recognizes current cross-border payments derivatives in prepaid expense and other current assets and other current liabilities and derivatives greater than one year in other assets and other noncurrent liabilities in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Unaudited Consolidated Statements of Cash Flows. Refer to Note 13.

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 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.

Financial Instruments-Credit Losses

The Company accounts for financial assets' expected credit losses in accordance with ASC 326. The Company’s financial assets subject to credit losses are primarily trade receivables. The Company utilizes a combination of aging and loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool, based on product, size of customer and historical losses. Expected credit losses are estimated based upon an assessment of risk characteristics, historical payment experience, and the age of outstanding receivables, adjusted for forward-looking economic conditions. The allowances for remaining financial assets measured at amortized cost basis are evaluated based on underlying financial condition, credit history, and current and forecast economic conditions. The estimation process for expected credit losses includes consideration of qualitative and quantitative risk factors associated with the age of asset balances, expected timing of payment, contract terms and conditions, changes in specific customer risk profiles or mix of customers, geographic risk, economic trends and relevant environmental factors.

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 Corporate Payments, Fuel, Lodging, Tolls, as well as Gift (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 solutions. 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, represent approximately 75% of total consolidated revenues, net, for the three months ended March 31, 2021. The Company accounts for revenues comprised of 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. The Company also writes foreign currency forward and option contracts for its customers to facilitate future payments in foreign currencies, and recognizes revenue in accordance with authoritative fair value and derivatives accounting (ASC 815, "Derivatives").

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Disaggregation of Revenues

The Company provides its services to customers across different payment solutions and geographies. Revenue by solution (in millions) for the three months ended March 31 was as follows:


Revenues, net by Solution Category*	Three Months Ended March 31,
	2021		%		2020		%
Fuel	$	262	43	%	$	292	44	%
Corporate Payments	116		19	%	120		18	%
Tolls	69		11	%	83		13	%
Lodging	59		10	%	57		9	%
Gift	43		7	%	42		6	%
Other	59		10	%	67		10	%
Consolidated revenues, net	$	609	100	%	$	661	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,
	2021		%		2020		%
United States	$	370	61	%	$	398	60	%
Brazil	82		13	%	99		15	%
United Kingdom	76		12	%	74		11	%
Other	81		13	%	91		14	%
Consolidated revenues, net	609		100	%	661		100	%


*Columns may not calculate due to rounding.

Contract Liabilities

Deferred revenue contract liabilities for customers subject to ASC 606 were $66.7 million and $73.0 million as of March 31, 2021 and December 31, 2020, respectively. We expect to recognize approximately $41.7 million of these amounts in revenues within 12 months and the remaining $25.0 million over the next five years as of March 31, 2021. Revenue recognized in the three months ended March 31, 2021 that was included in the deferred revenue contract liability as of December 31, 2020 was approximately $18.1 million.

Spot Trade Offsetting

The Company uses spot trades to facilitate cross-currency corporate payments in its cross-border payments business. In accordance with ASC Subtopic 210-20, "Offsetting," the Company applies offsetting to 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, 2021 and December 31, 2020 (in millions):


	March 31, 2021						December 31, 2020
	Gross		Offset on the Balance Sheet		Net		Gross		Offset on the Balance Sheet		Net
Assets
Accounts Receivable	$	975.7	$	(879.4)	$	96.3	$	521.5	$	(478.2)	$	43.3


Liabilities
Accounts Payable	$	919.1	$	(879.4)	$	39.7	$	527.5	$	(478.2)	$	49.3

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Adoption of New Accounting Standards

Income Taxes

On December 18, 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which removes certain exceptions to the general principles of ASC 740 and simplifies other areas. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this guidance on January 1, 2021, which did not have a material impact on the Company's results of operations, financial condition, or cash flows.

Pending Adoption of Recently Issued Accounting Standard

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"), which provides optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients and are retained through the end of the hedging relationship. The amendments in this update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. If elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant ASC Topic or Industry Subtopic that contains the guidance that otherwise would be required to be applied. The amendments in this update were effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is evaluating the effect of ASU 2020-04 on interest rate swap contracts. Cross currency derivatives are not impacted by this ASU.

2. Accounts and Other Receivables

The Company's accounts and securitized accounts receivable include the following at March 31, 2021 and December 31, 2020 (in thousands):


	March 31, 2021		December 31, 2020
Gross domestic accounts receivable	$	844,760	$	719,675
Gross domestic securitized accounts receivable	915,000		700,000
Gross foreign receivables	833,766		733,986
Total gross receivables	2,593,526		2,153,661
Less allowance for credit losses	(87,902)		(86,886)
Net accounts and securitized accounts receivable	$	2,505,624	$	2,066,775

The Company maintains a $1 billion revolving trade accounts receivable securitization facility (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 transferred 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.

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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. On March 29, 2021 the Company entered into the eighth amendment to the Securitization Facility. The amendment included a new three year maturity date, reduced the LIBOR floor to 0 bps, improved margins, and increased the swing line from $100 million to $250 million. The maturity date for the Company's Securitization Facility is March 29, 2024.

The Company recorded a $90.1 million provision for credit losses and write-off related to a customer receivable in our foreign currency trading business during the three months ended March 31, 2020. The Company's estimated expected credit losses as of March 31, 2021 included estimated adjustments for economic conditions related to COVID-19. A rollforward of the Company’s allowance for credit losses related to accounts receivable for the three months ended March 31 is as follows (in thousands):


	2021		2020
Allowance for credit losses beginning of period	$	86,886	$	70,890
Provision for credit losses	2,477		117,746
Write-offs	(5,963)		(108,444)
Recoveries1	8,264		2,222
Impact of foreign currency1	(3,762)		(7,586)
Allowance for credit losses end of period	$	87,902	$	74,828

1Comparable disclosure provided to conform with 2021 presentation. Activity previously included within write-offs.

3. Fair Value Measurements

Fair value is a market-based measurement that reflects assumptions that market participants would use in pricing an asset or liability. GAAP discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

As the basis for evaluating such inputs, 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.

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The following table presents the Company’s financial assets and liabilities which are measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020, (in thousands):


	Fair Value		Level 1		Level 2		Level 3
March 31, 2021
Assets:
Repurchase agreements	$	365,808	$	—	$	365,808	$	—
Money market	43,991		—		43,991		—
Certificates of deposit	182		—		182		—


Foreign exchange contracts	115,184		—		115,184		—
Total assets	$	525,165	$	—	$	525,165	$	—
Cash collateral for foreign exchange contracts	$	16,368	$	—	$	—	$	—
Liabilities:
Interest rate swaps	$	73,004	$	—	$	73,004	—
Foreign exchange contracts	92,863		—		92,863		—
Total liabilities	$	165,867	$	—	$	165,867	$	—
Cash collateral obligation for foreign exchange contracts	$	—	$	—	$	—	$	—

December 31, 2020
Assets:
Repurchase agreements	$	446,116	$	—	$	446,116	$	—
Money market	48,227		—		48,227		—
Certificates of deposit	188		—		188		—

Foreign exchange contracts	155,846		—		155,846		—
Total assets	$	650,377	$	—	$	650,377	$	—
Cash collateral for foreign exchange contracts	$	18,229	$	—	$	—	$	—
Liabilities:
Interest rate swaps	$	87,873	$	—	$	87,873	$	—
Foreign exchange contracts	140,272		—		140,272		—
Total liabilities	$	228,145	$	—	$	228,145	$	—
Cash collateral obligation for foreign exchange contracts	$	38,569	$	—	$	—	$	—

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 on an overnight basis in repurchase agreements, money markets and certificates of deposit. The value of overnight repurchase agreements is determined based upon the quoted market prices for the treasury 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 Unaudited Consolidated Balance Sheet at March 31, 2021. Cash collateral deposited for foreign exchange derivatives is recorded within restricted cash in our Unaudited Consolidated Balance Sheet at March 31, 2021.

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, 2021 and December 31, 2020.

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

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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.

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. Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings. The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates.

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 is $11.9 million at March 31, 2021.

The fair value of the Company’s 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.

4. Stockholders' Equity

The Company's Board of Directors (the "Board") has approved a stock repurchase program (as updated from time to time, the "Program") authorizing the Company to repurchase its common stock from time to time until February 1, 2023. On October 22, 2020, the Board increased the aggregate size of the Program by $1 billion, to $4.1 billion. Since the beginning of the Program, 15,257,675 shares have been repurchased for an aggregate purchase price of $3.3 billion, leaving the Company up to $836.3 million available under the Program for future repurchases in shares of its 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 the Company may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and debt.

5. Stock-Based Compensation

The Company has a Stock Incentive Plan (the "Plan") which permits the Company’s Board of Directors to grant share based payment awards to employees and directors.

The table below summarizes the expense related to share-based payments recognized in the three months ended March 31 (in thousands):


	Three Months Ended March 31,
	2021		2020
Stock options	$	4,590	$	7,020
Restricted stock	13,157		7,155
Stock-based compensation	$	17,747	$	14,175

The tax benefits recorded on stock based compensation were $14.1 million and $17.1 million for the three months ended March 31, 2021 and 2020, respectively.

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The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of March 31, 2021 (cost in thousands):


	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	41,503	2.53
Restricted stock	64,380		2.34
Total	$	105,883

Stock Options

Stock options are granted with an exercise price estimated to be equal to the fair market value on the date of grant as authorized by the Company’s Board of Directors. Options granted have vesting provisions ranging from one to five years and vesting of the options is generally based on the passage of time or performance. Stock option grants are subject to forfeiture if employment terminates prior to vesting.

The following summarizes the changes in the number of shares of common stock under option for the three months ended March 31, 2021 (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, 2020	4,964	$	146.69	3,994	$	130.37			$	626,107
Granted	164	264.85					$	73.15
Exercised	(283)	94.72							49,124
Forfeited	—	—
Outstanding at March 31, 2021	4,845	$	153.72	3,801	$	134.85			$	556,757
Expected to vest as of March 31, 2021	1,044	$	222.43

The aggregate intrinsic value of stock options exercisable at March 31, 2021 was $508.5 million. The weighted average remaining contractual term of options exercisable at March 31, 2021 was 4.7 years.

The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions for grants or modifications during the three months ended March 31, 2021 and 2020:


	March 31,
	2021		2020
Risk-free interest rate	0.35	%	0.41	%
Dividend yield	—		—
Expected volatility	34.66	%	30.29	%
Expected life (in years)	4.0		3.8

Restricted Stock

Awards of restricted stock and restricted stock units are independent of stock option grants and are subject to forfeiture if employment terminates prior to vesting. The vesting of shares granted is generally based on the passage of time, performance or market conditions, or a combination of these. Shares vesting based on the passage of time have vesting provisions of one to four years.

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the three months ended March 31, 2021 (shares in thousands):

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	Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020	174	$	265.29
Granted	200	272.68
Vested	(29)	267.88
Canceled or forfeited	(23)	288.54
Outstanding at March 31, 2021	322	$	268.02

6. Acquisitions

2021 Acquisitions

On January 13, 2021, the Company completed the acquisition of Roger, rebranded CorpayOne, a global accounts payable (AP) cloud software platform for small businesses, for $38.6 million. The Company financed the acquisition using a combination of available cash and borrowings under its existing credit facility. The results from the acquisition are reported in the North America segment. In connection with this acquisition, the Company signed noncompete agreements with certain parties affiliated with the business with an estimated fair value of $770 thousand. These noncompete agreements were accounted for separately from the business acquisition. Acquisition accounting for Roger is preliminary as the Company is still completing the valuation for goodwill, intangible assets, income taxes, working capital, and evaluation of acquired contingencies.

The following table summarizes the preliminary acquisition accounting for Roger (in thousands):


Accounts and other receivables	$	110
Prepaid expenses and other current assets	37

Other assets	28
Goodwill	34,188
Other intangibles	6,900
Current liabilities	(925)

Deferred income taxes	(1,691)
Aggregate purchase price	$	38,647

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
Proprietary Technology	10	$	5,600


Customer Relationships	9	1,300


		$	6,900

2020 Acquisitions

On August 10, 2020, the Company completed the acquisition of a business in the lodging space in the U.S. The results from the acquisition are reported in the North America segment. On November 30, 2020, the Company completed the acquisition of a fuel card provider in New Zealand. The results from the acquisition are reported in the International segment. The aggregate purchase price of these acquisitions was approximately $77.9 million, net of cash acquired. The Company financed these acquisitions using a combination of available cash and borrowings under its existing credit facility. The Company signed noncompete agreements with certain parties affiliated with the lodging business with an estimated fair value of $3.8 million. These noncompete agreements were accounted for separately from the business acquisitions.

The following table summarizes the preliminary acquisition accounting (in thousands):

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Accounts and other receivables	$	5,487
Prepaid expenses and other current assets	930
Property and equipment	3,178
Other assets	1,049
Goodwill	27,059
Other intangibles	42,144
Current liabilities	(1,147)
Deferred income taxes	(782)
Aggregate purchase price	$	77,918

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 Name and Trademarks	5	$	2,161
Licensed Software and Technology	10	4,400
Proprietary Technology	5	8,400
Supplier Network	10	783
Customer Relationships	16	26,400


		$	42,144

The accounting for these acquisitions is preliminary as the Company is still completing the valuation of certain goodwill, intangible assets, income taxes and working capital adjustments.

Other

On September 17, 2020, the Company signed a definitive agreement to acquire Associated Foreign Exchange (AFEX), a U.S. based, cross-border payment solutions provider, for approximately $450 million. The transaction is expected to close late in the second quarter of 2021, subject to regulatory approval and closing conditions.

7. Goodwill and Other Intangibles

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


	December 31, 2020		Acquisitions		Acquisition Accounting Adjustments		Foreign Currency		March 31, 2021
Segment
North America	$	3,400,772	$	34,188	$	(581)	$	1,975	$	3,436,354
Brazil	585,861		—		—		(53,900)		531,961
International	732,548		—		(1,294)		(6,100)		725,154
	$	4,719,181	$	34,188	$	(1,875)	$	(58,025)	$	4,693,469

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As of March 31, 2021 and December 31, 2020, other intangibles consisted of the following (in thousands):


		March 31, 2021						December 31, 2020
	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	16.8	$	2,564,502	$	(1,034,876)	$	1,529,626	$	2,671,104	$	(1,105,702)	$	1,565,402
Trade names and trademarks—indefinite lived	N/A	445,888		—		445,888		475,376		—		475,376
Trade names and trademarks—other	11.4	6,757		(3,239)		3,518		7,041		(3,431)		3,610
Software	6.0	241,835