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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2022
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | 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 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, 2021. 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 September 30, 2022 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 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 income (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 and nine months ended September 30, 2022 and 2021 as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Foreign exchange (losses) | $ | (1.9) |  |  | $ | (1.2) |  |  | $ | (4.1) |  |  | $ | (2.9) |
The Company recorded foreign currency gains (losses) on long-term intra-entity transactions included as a component of foreign currency translation gains (losses), net of tax, in the Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021 as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Foreign currency gains (losses) on long-term intra-entity transactions | $ | 27.8 |  |  | $ | (46.0) |  |  | $ | 184.1 |  |  | $ | (20.2) |
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. 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 $246.6 million to restricted cash as of September 30, 2022. Financial Instruments - Credit Losses The Company accounts for financial assets' expected credit losses in accordance with Accounting Standards Codification (ASC) 326, "Financial Instruments - Credit Losses". 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 forward-looking 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 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 75% of total consolidated revenues, net, for the three and nine months ended September 30, 2022. 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. 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. 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. Revenue by solution (in millions) for the three and nine months ended September 30, was as follows:
Revenues, net by Solution* | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | % |  | 2021 |  | % |  | 2022 |  | % |  | 2021 |  | %
Fuel | $ | 361.8 |  |  | 41 | % |  | $ | 306.8 |  |  | 41 | % |  | $ | 1,027.2 |  |  | 40 | % |  | $ | 863.8 |  |  | 43 | %
Corporate Payments | 196.9 |  |  | 22 | % |  | 168.7 |  |  | 22 | % |  | 570.4 |  |  | 22 | % |  | 425.5 |  |  | 21 | %
Tolls | 88.6 |  |  | 10 | % |  | 79.0 |  |  | 10 | % |  | 264.7 |  |  | 10 | % |  | 219.4 |  |  | 11 | %
Lodging | 126.0 |  |  | 14 | % |  | 85.2 |  |  | 11 | % |  | 337.4 |  |  | 13 | % |  | 206.5 |  |  | 10 | %
Gift | 52.0 |  |  | 6 | % |  | 48.6 |  |  | 6 | % |  | 147.2 |  |  | 6 | % |  | 124.3 |  |  | 6 | %
Other | 67.7 |  |  | 8 | % |  | 67.2 |  |  | 9 | % |  | 196.6 |  |  | 8 | % |  | 192.1 |  |  | 9 | %
Consolidated revenues, net | $ | 893.0 |  |  | 100 | % |  | $ | 755.5 |  |  | 100 | % |  | $ | 2,543.5 |  |  | 100 | % |  | $ | 2,031.5 |  |  | 100 | %
*Columns may not calculate due to rounding.
Revenue by geography (in millions) for the three and nine months ended September 30, was as follows:
Revenues, net by Geography* | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | % |  | 2021 |  | % |  | 2022 |  | % |  | 2021 |  | %
United States | $ | 558.3 |  |  | 63 | % |  | $ | 488.2 |  |  | 65 | % |  | $ | 1,557.7 |  |  | 61 | % |  | $ | 1,271.5 |  |  | 63 | %
Brazil | 108.6 |  |  | 12 | % |  | 94.9 |  |  | 13 | % |  | 322.9 |  |  | 13 | % |  | 262.5 |  |  | 13 | %
United Kingdom | 90.4 |  |  | 10 | % |  | 81.9 |  |  | 11 | % |  | 278.4 |  |  | 11 | % |  | 241.0 |  |  | 12 | %
Other | 135.8 |  |  | 15 | % |  | 90.5 |  |  | 12 | % |  | 384.5 |  |  | 15 | % |  | 256.5 |  |  | 13 | %
Consolidated revenues, net | $ | 893.0 |  |  | 100 | % |  | $ | 755.5 |  |  | 100 | % |  | $ | 2,543.5 |  |  | 100 | % |  | $ | 2,031.5 |  |  | 100 | %
*Columns may not calculate due to rounding.
Contract Liabilities Deferred revenue contract liabilities for customers subject to ASC 606 were $56.1 million and $73.7 million as of September 30, 2022 and December 31, 2021, respectively. We expect to recognize approximately $34.2 million of these amounts in revenues within 12 months and the remaining $21.9 million over the next five years as of September 30, 2022. Revenue recognized in the nine months ended September 30, 2022 that was included in the deferred revenue contract liability as of December 31, 2021 was approximately $38.0 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 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 September 30, 2022 and December 31, 2021 (in millions):
| September 30, 2022 |  | December 31, 2021
| Gross |  | Offset on the Balance Sheet |  | Net |  | Gross |  | Offset on the Balance Sheet |  | Net
Assets |  |  |  |  |  |  |  |  |  |  |
Accounts Receivable | $ | 3,789.6 |  |  | $ | (3,615.6) |  |  | $ | 174.0 |  |  | $ | 1,185.9 |  |  | $ | (1,057.7) |  |  | $ | 128.2 |
Liabilities |  |  |  |  |  |  |  |  |  |  |
Accounts Payable | $ | 3,697.1 |  |  | $ | (3,615.6) |  |  | $ | 81.5 |  |  | $ | 1,199.5 |  |  | $ | (1,057.7) |  |  | $ | 141.8 |
Reclassifications and Adjustments During 2021, the Company identified and corrected an immaterial error in the presentation of deferred income taxes and changes in accounts payable, accrued expenses and customer deposits, both presented within net cash provided by operating activities, in our prior year Consolidated Statement of Cash Flows. The impact of this correction for the nine months ended September 30, 2021 was a decrease to the adjustment to reconcile net income to net cash provided by operating activities related to deferred income taxes of $6.2 million, with a corresponding increase to changes in accounts payable, accrued expenses and customer deposits in operating activities of $6.2 million. There was no impact to net cash provided by operating activities in the Unaudited Consolidated Statement of Cash Flows. Additionally, certain disclosures for prior periods have been reclassified to conform with current year presentation. Adoption of New Accounting Standards Reference Rate Reform In March 2020, the FASB issued Accounting Standards Update (ASU) No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (ASU 2020-04). The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was 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's adoption of this ASU 2020-04 on January 1, 2022 did not have a material impact on the Company's consolidated financial statements. The Company transitioned from LIBOR to the Sterling Overnight Index Average Reference Rate ("SONIA") plus a SONIA adjustment of 0.0326% for sterling borrowings, the Euro Interbank Offered Rate ("EURIBOR") for term euro borrowings, the Euro Short Term Rate ("ESTR") plus an ESTR adjustment of 0.085% for swingline euro borrowings, and the Tokyo Interbank Offered Rate ("TIBOR") for yen borrowings. In addition, the Company transitioned from LIBOR to the Secured Overnight Financing Rate ("SOFR") plus a SOFR adjustment of 0.10% for USD borrowings under the Securitization Facility (as defined below), revolving credit facility and the term loan A. The Company has availed itself of available benefits arising from changes in the reference rate related to our debt and interest rate swaps. Cross currency derivatives are not impacted by this ASU. Accounting for Contract Assets and Contract Liabilities from Contracts with Customers In October 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805)" (ASU 2021-08), which requires an acquirer to account for revenue contracts acquired in a business combination in accordance with ASC 606 as if it had originated the contracts. The acquirer may assess how the acquiree applied ASC 606 to determine what to record for the acquired contracts. This update also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. Adoption during an interim period requires retrospective application to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application. The Company's adoption of this ASU on January 1, 2022 did not have a material impact on the Company's consolidated financial statements.

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- Definition The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI https://asc.fasb.org/topic&trid=2122369 + Details
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