Greetings, and welcome to the Fleetwood Technologies First Quarter 2020 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Jim Eaglesetter, Head of Investor Relations for FLEETCOR Technologies. Thank you.
You may begin.
Good afternoon, everyone, and thank you for joining us today for our Q1 2020 earnings call. With me today are Ron Clark, our Chairman and CEO and Eric Day, our CFO. Following comments from both Ron and Eric, the operator will announce your opportunity to get into the queue for Q and A session. It is only then that the queue will open for questions. Please note, our earnings release and supplement can be found under the Investor Relations section of our website fleetcor.com.
Throughout this call, we will be presenting non GAAP financial information, including adjusted revenues, adjusted net income and adjusted net income per diluted share. This information is not calculated in accordance with GAAP and may be calculated differently than non GAAP information at other companies. Reconciliations of historical non GAAP financial information to the most directly comparable GAAP information appear in today's press release and on our website as previously described. Now before we begin our formal remarks, I need to remind everybody that part of our discussion today will include forward looking statements. This includes forward looking statements about new products and key initiatives and expectations regarding business development and acquisitions.
They are not guarantees of future performance and therefore you should not put undue reliance upon them. Results are subject to numerous risks and uncertainties, which could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's press release on Form 8 ks and on our annual report
on Form 10 ks filed with
the Securities and Exchange Commission. These documents are available on our website and at www.sec.gov. With that out of the way, I would like to turn the call over to Ron Clark, our Chairman and CEO. Ron?
Good afternoon, everyone, and thanks for joining our first quarter earnings call. I'll plan to cover 4 subjects at the opening here. First, I'll comment on COVID and our response to the crisis. 2nd, I'll share my perspective on Q1 results. 3rd, I'll speak to the trends that we're seeing in our businesses in April.
And lastly, I'll cover our framework for resetting priorities in the company. Okay. Let me begin with some remarks about the COVID situation and what we're doing in response. So like many companies, we've taken a number of actions over the last couple of months. Safety, so first to ensure the safety of our 8,000 plus worldwide employees, We quickly transitioned the majority of our employees to work from home.
I'd say that we're working our way through the new work from home model, trying to establish a new cadence for running the company, more teleconferences, more Zoom, more general employee communications, really relooking at people's priorities. Second thing, we focused on business continuity to assure our systems and payment products continue to work through this period. Pleased to report that in Q1, we delivered the highest system uptime and fewest client incidents in quite some time. So good news there. 3rd, we focused on and shored up our liquidity.
We consolidated cash. We raised a bridge loan, and we've taken our liquidity to about 1,500,000,000 dollars And lastly, credit. We tightened credit lines and payment terms. We've shut down inactive lines, reduced unused line capacity, selectively reduced payment terms for distressed clients or industries, and we've repurposed staff to step up our collections intensity. So in this initial response phase, we've had some success managing the situation and learning how to operate within it.
Okay. Let me shift gears and talk a bit about our Q1 results. So we reported Q1 revenue of $661,000,000 up 6% and cash EPS of $3 up 12%. Our Q1 revenue finished about 10,000,000 dollars lower than our expectations, as our businesses began to contract in the second half of March, when the shelter in place orders took effect. January revenue grew 8%, February revenue 8% and our March revenue 3%, leading to overall print revenue growth of 6% for the quarter.
In terms of organic revenue growth or what we call like for like revenue growth, Q1 finished at 5% overall. Inside of that, fuel coming in at 2%, corporate pay quite good at 20%, toll at 10%, and lodging at 5%. All of our businesses were impacted by the sudden volume declines in late March, bringing our growth rates for the quarter below target. Despite the softer slightly softer revenue in the quarter, our profits actually came in at the high end of our expectations, helped there by a lower tax rate and fewer outstanding shares. Operating trends in Q1 also affected by COVID.
Our same store sales declined 2%, again related predominantly to the late March softening. Our new sales grew 2% versus last year. Again, the market began to get distracted in late March, but thankfully our client retention remained stable at 91%. So look, given everything, a pretty good financial print for Q1, A good start in January February helped us hold on to the Q1 performance. Okay.
Let me make a turn to the trends we're seeing in April and run through each of our businesses and the COVID impact on each. So first up is fuel. So here in North America, our fuel volumes are 20% to 25% behind last year in April, trucking business holding up a bit better than our local. Because many of our North America fuel businesses are essential services, it looks like our volume declines are leveling off. Our North America fuel revenue will be helped quite a bit by spreads in April as the fuel margins remain very wide.
In our international fuel car business, volume weaker than it is here. Business is down 25% to 50%, depending on the particular market, mostly because the Europe shutdown was earlier than here in the U. S. And also because in the U. K, in particular, there's a greater proportion of white collar cardholders who have been more impacted by shelter in place orders.
Generally, we expect both North America and international fuel revenue in April to be a bit better than the volumes. And that's because fuel revenues or fees, some of them are fixed in nature, think card fees, which tends to have revenue be a bit better than volume. Okay, next up on corporate pay. So in corporate pay, our virtual card volumes off about 20% in April versus prior year. Again, we're expecting probably volumes to level off there as loss of our client AP is fixed.
Some good news with our full service, full AP Automation and Outsourcing business, which we expect to be up in April. The remote capability, the ability to process AP outside of the office, it's resonating. And our cross border business continuing to hold up and grow a bit in April, mostly due to the ongoing currency volatility. We did take an extraordinary loss credit loss in the cross border business, which Eric will cover in some detail in his remarks. Turning to our lodging business, we expect our core workforce business to be down about 25% versus prior year in April.
Our rail truckers, construction workers continue to need rooms even in this environment. And just as a reminder, most of our workforce lodging travelers drive to their hotels. They don't fly to their hotels. Our new travel alliance airline or crew lodging business will be way down in April, somewhere in the 75% plus range as airlines canceled most of their flights. Fortunately a much, much smaller part of our lodging business.
Brazil, Brazil toll a bright spot for us. So despite toll transactions being down in April, we expect toll revenue to be roughly flat or even slightly up. And that's primarily because toll revenues are subscription based. Lastly, our gift card business expected to be down about 50% in April, as many of our brick and mortar retail clients are temporarily closed, moving much of the activity in that business to digital redemption. So a few conclusions here.
Our April volume and revenue impacts vary quite a bit by business. So some of our business not impacted much, some impacted in the down 25% range, and some impacted down to the 50% or 50% plus range. Fortunately, the businesses most affected, most impacted by COVID represent a smaller proportion of our overall business. We do expect April revenue to come in 20% to 25% behind the prior year. We do expect volumes to begin to flatten.
We see it sequentially as we look through April. And because many of our cardholders are essential workers, 1st responders, healthcare workers, truckers, rail, construction, they keep right on doing what they do. Also important, most of our volume decline thus far is client softness, not client loss. So good news that it can come back on the other side. And lastly, we're a 50% EBITDA business.
So we can continue to make money and generate cash, even at these distressed levels of volume. Okay. Let me transition over now to the company's priorities and how we're framing things. So we've basically looked at a reset here of priorities based on the changing environment. So Phase 1, the response phase, which I outlined earlier.
We've taken again 4 actions already, safety, business continuity, liquidity and credit, initially here to respond to the situation. And again, I think we've had decent success and report we're well underway here. Phase 2, the shutdown phase, the place we're at now, where volumes are down and all of us are wanting new behaviors. The priorities in this phase are expenses. So we're working to get our expenses down and better aligned to current volumes.
We're cutting where we can, where it makes sense, but protecting particularly the selling system and technology capabilities that we'll need when we come out the other side. Selling, we're changing, modifying how we sell, targeting different prospects, surge industries, moving almost exclusively to digital contact, repositioning our message. So, lots of work to progress selling. Projects, we're reevaluating our project work, pushing projects that we can control and that makes sense, while delaying other projects that rely on others to a different day. And then lastly, we look forward to a future to a phase where businesses begin to reopen and things begin to recover.
So message here is we'll be ready. In that phase, the recovery phase, we'll plan to chase acquisitions that maybe just maybe weren't there before. We also may get some benefit from COVID's new behaviors
that we can take advantage of on
the other side. So for example, the emphasis on touchless transactions, think electronic tolls versus cash, think distressed passenger mobile applications versus visiting gate agents, I think payroll cards versus paper payroll checks. And then even remote working, think about our AP, automation and outsourcing service to pay bills when you're outside of the office. So the hope is that we may be better positioned in some of our businesses when we get to the recovery side. So look, in closing, we've never been in a place like this before.
We're continuing to operate the business and to serve our essential clients, many of which continue to work through the crisis. We're in process of replanning things, our priorities, our expense levels, our project plans, our sales and go to market approaches in an effort to make the best of the situation. And like you, we're hopeful normal as we progress through the year. But I can tell you, we will be ready. So with that, let me turn the call back over to Eric to provide some additional details on the quarter.
Eric?
Thank you, Ron. I'll be going through my regular remarks for the Q1 results as quickly as I can to allow for some additional discussion about the Q2 expectations and your Q and A. For the Q1 of 2020, we reported revenue of 661,100,000 dollars up 6% compared to $621,800,000 in the Q1 of 2019. GAAP net income decreased 15 percent to $147,100,000 from $172,100,000 and GAAP net income per diluted share decreased 14% to $1.67 from $1.93 in the Q1 of 2019. Included in the Q1 2020 results was the impact of a 90,100,000 dollars or $0.74 per diluted share one time loss related to a customer receivable in our foreign currency trading business.
Due to the extraordinary impact of the COVID-nineteen pandemic, our Cambridge business experienced a very large one off bad debt loss in the Q1, resulting from a large client in the agricultural commodity space entering voluntary liquidation. The details are in the earnings supplement, so I won't go through all of them again here. I'd remind you that approximately 30% of our Cambridge revenue comes from hedging or as approximately 70% comes from making international payments. I'd also note that Cambridge does not take FX risk. Our books and or positions are covered by back to back offsetting transactions with banks.
This is a credit loss due to a customer's bankruptcy and inability to cover their AP margin calls. While we do believe there was a chance of some recovery through the liquidation process, we have determined it appropriate to take a provision for the full band debt loss of 90,000,000 dollars on the customer due to uncertainty of any future recovery. We view this as truly a one off event as this business has experienced less than 1.5% bad debt loss as a percentage of revenue for as far back as we have data, including periods prior to our acquisition of Cambridge in the Q3 of 2017. Please see our earnings supplement for a detailed overview of this one time loss. Also included in the Q1 of 2019 was the impact of a $15,700,000 or $0.17 per diluted share impairment charge related to our minority investment in the telematics business.
Excluding the impact of the one time customer loss and impairment charge, net income increased 13% and net income per diluted share increased 15% in the Q1 of 2020 versus the Q1 of 2019. Non GAAP financial metrics that we will be discussing are adjusted net income and adjusted net income per diluted share. And the reconciliation to GAAP numbers is provided in Exhibit 1 of our press release. Adjusted net income for the Q1 of 2020 increased 11% to $264,500,000 compared to $238,400,000 in the same period last year. And adjusted net income per diluted share increased 12% to $3 compared to $2.67 in adjusted net income per diluted share in the Q1 of 2019.
Q1 of 2020 results reflect a negative year over year impact from the macroeconomic environment of approximately $6,000,000 in revenue. The negative macro was driven mostly by lower foreign exchange rates, specifically the Brazilian reais and UK pound when compared with the Q1 of 2019. We believe FX negatively impacted revenue by approximately $21,000,000 Fuel prices were down slightly year over year for the full quarter. And although we cannot precisely calculate the impact of these changes, we believe it was mostly neutral to the quarter. And finally, fuel spreads had about a $15,000,000 favorable impact in the quarter.
Now moving down the income statement. Excluding the impact of the one time loss in our foreign currency trading business, total operating expenses were up 10% for the Q1 of 2020 to $370,100,000 compared with $337,600,000 in the Q1 of 2019. The increase was primarily due to acquisitions and bad debt expense. As a percentage of total revenues, operating expenses excluding the one time loss were approximately 56% compared to 54.3% in the Q1 of 2019. Excluding the impact of a one time customer loss, bad debt expense in the Q1 of 2020 was $27,700,000 or 9 basis points compared to $22,200,000 or 8 basis points in the Q1 of 2019.
Included in the Q1 was a reserve of $10,000,000 associated with expected additional credit losses around the world due to the impact of COVID-nineteen. Depreciation and amortization expense decreased 4% to $64,500,000 in the Q1 of 2020 from $67,400,000 in the Q1 of 2019. The decrease was primarily due to the impact of foreign exchange rates. Interest expense decreased 9% to $35,700,000 compared to $39,100,000 in the Q1 of 2019. The decrease in interest expense was due primarily to decreases in LIBOR related to the unhedged portion of our debt, partially offset by the impact of additional borrowing for share buybacks.
Our effective tax rate for the Q1 of 2020 was 14.6% compared to 24.9% for the Q1 of 2019. Excluding the one time customer loss and the impact of the impairment charge in the Q1 of 2019, Our effective tax rate was 18.9 percent for the Q1 of 2020 compared to 23 point 3% in the Q1 of 2019. The decrease in the effective tax rate was due primarily to additional compensation expense booked for tax purposes on stock option exercises. Now turning to the balance sheet. We ended the quarter with $1,552,000,000 in total cash.
Approximately $482,000,000 is restricted and consists primarily of customer deposits. We also have approximately $352,000,000 of undrawn availability on our revolver and closed on a $250,000,000 bridge loan in April in order to maximize the company's liquidity. So in total, we believe we have adequate liquidity to weather the COVID storm. As of March 31, 2020, we had $4,323,000,000 outstanding on our credit facilities and $819,000,000 borrowed in our securitization facility. We purchased approximately 2,000,000 shares in the first quarter for $530,000,000 at an average price of $2.63 We have approximately $326,000,000 in repurchase capacity remaining under our current authorization.
As of March 31, 2020, our leverage ratio was 2.75 times EBITDA, which is well below our covenant level of 4 times EBITDA as calculated under our credit agreement. Finally, we spent approximately $18,000,000 on CapEx during the Q1 of 2020. Now turning to the outlook for the Q2 and down for the year. First, I want to remind everyone that although our businesses are very resilient, our businesses have all been impacted by COVID-nineteen, some more than others. As a reminder, our business models are primarily recurring revenue in nature.
We have a very broad customer base and diversified businesses across industries and geographies. 2nd, we are suspending our full year guidance. There is simply too much uncertainty regarding the resumption of business activity around the world to accurately predict our volumes could be in the Q2 and rest of the year. Some revenue trending data for the Q1 in April are as follows. Revenues in January February were tracking at or ahead of our expectations before the impact of COVID-nineteen in March.
Through the 1st 2 months of the year, revenue was approximately 8% 8% ahead of prior year respectively. In March, our volumes were impacted mid month. And as a result, March revenue was only up approximately 3% versus prior year. And for the quarter, revenue was 6% ahead of prior year. Our expectations are for volume to hit their respective floors in April and begin to recover gradually as the world starts to reopen.
April revenue is expected to be down approximately 20% versus prior year. We expect that the 2nd quarter will be the lowest in terms of volume and revenue. And as the economy starts to recover, volume should build throughout the year resulting in higher revenue and earnings per share in the 3rd 4th quarters. With that said, operator, we'll open it up for questions.
Thank you, We'll now take a question from Tien Tsin Huang with JPMorgan.
Hi, good afternoon. Thanks for all the info and I know a lot to digest here. I'll start by just asking on the expense outlook here and what you can control, what are you thinking about levers on the cost side that you might do here to protect the bottom line from some of the macro pressures you called out?
Jinja, it's Ron. I'd say we're probably a target of about 5% and it would be on volume related things, things that flex versus selling system or tech things. We'll probably also clip the capital plan a bit. But in our business, you can't you know, as you can't save your way to profitability, our profits turn on revenues. And so we're going to be quite careful to not over dial that.
Yes. I respect that. And then you mentioned M and A with world changing valuations maybe opens up the opportunity set a little bit. Just your appetite run to do deals here, are we in a wait and see mode? Or are you willing to pull the trigger on some deals?
I'm telling you, Tien Tsin, I'd say never hire. We think I think this is a game changer. You've heard our complaints ongoing the last few years about people in the space driving up prices and seller expectations and free money and stuff. I think lots of companies are heard, companies that have assets we're interested in are heard. I think there'll be some impact obviously to valuations.
I think people that compete with us for deals will have more problems on the credit side. So I'd say to you, probably as high that's a really long time and we're spending lots of time on what I'll call kind of new deal thinking. There's 5 or 6 assets that we've coveted for some period of time that I personally think may have some chance of opening. So I would say high.
Got it. Thank you. Stay well, guys.
We'll now take our next question from Ryanair Carey with Bank of America.
Hi, guys. Appreciate you taking my question. I hope you're well. Just following up a little bit on Tien Tsin's question, it sounds like most of the cost saves are more on the volume variable side rather than on the investment side. So are you still planning on the step up in sales and IT expenses you just discussed last quarter?
And I think you called out expectations from incremental IT spend in the $200 plus 1,000,000 ish range in 2020. Is that still on track? Yes, Ryan, it's Ron. So that's right. We build sales plans to try to grow sales production, call it, circa 15%.
We tend to grow sales expense a little slower, call it, 10%, 12%. So yes, we built a plan to do that. Some of it takes care of itself, right? If people don't reach the production goals, you get some of that money back in the form of lower commissions. I'd also say we pull back on some kinds of marketing in lead gen, obviously, all physical trade shows and stuff like that.
But with that said, I think we're being super cautious on the headcount side, takes a long time to build, really good field group and a really good telesales group. And so I think we're quite reluctant to reduce that and honestly not to even kind of refill or replace as we move through the year. So we're clearly trying to play the long game on selling. Got it. And can you tell us some of the trends you saw in the toll business in the quarter?
I was also surprised the organic growth slowed to 10%. Was there anything particularly worth calling out? And anything you can say about growth of new urban tool users in the quarter? Thanks. Yes.
So first of all, I'd call it a it's a really good result. In this second half of March to still pencil that thing out of 10%. We're quite happy with it. But the reason it's not close to the mid teens will be a couple of things. First, the transactions did soften and we do get paid a bit on spend, particularly on the P2P side there.
So the COVID clipped a couple of points at the end. And then the other thing is the guy that leads that thing pushed me, pushed to offer some free tags build our tag volume at the end of the year to compete with the banks. And so we have we'll be rolling off kind of in the next month or 2. We probably have another couple of percent of what I'll call 3 tags sitting in our Q1 results. So those would be kind of a 2 nicks on the number.
And anything you can say about the growth in new urban tolls in the quarter or just trends that you're seeing? Can you say you broke up a bit, Brian? I apologize. Anything around the new Urbandag Toll users in the quarter or any metrics around usage there? Yes, I don't have that handy.
I mean, it's down. I think we targeted some kind of number, call it, dollars 4,000 to $5,000 a quarter. I'll have to get back to you, but I don't have an answer.
Andy. We'll now take our next question from Sanjay Sakhrani with KBW.
Thanks. Appreciate all the disclosures and I'm glad you guys are well. I guess the first question is on the comments on the Q2 being the weakest. Ron, you mentioned you have some defensive mix of business inside of your business. Can you just talk about how much of the volume is from these defensive areas versus the more cyclical stuff?
And what gives you the confidence that we're going to inflect in the second quarter?
Yes. I mean, I think the confidence comes from the sequential analysis, right? So we have a bit more texture than we sent out. We've got daily reports. And I think from what we put in the supplement, it appears to us that virtually all of our businesses are planning, bottoming, if you will, at this point.
And we've done another week, I think, of learning. We've set a big review yesterday. So I think what you guys haven't seen, but if anything, we're starting to actually see a few of the business tick up a tiny bit. So the comment is our best guess is we're bottoming and that we, Eric, I think probably that May June, it will be a smidge better than what we said in April. I think we reported April around 20% -ish off of the prior year.
So if in fact the tick up is happening and clearly Q3, if the world reopens will be better. So our best guess is Q2 will be the worst.
Okay. And you also mentioned, Ron, like the health of the portfolio is pretty strong given the defensive mix. Can you just talk about how you feel about the general health? I mean, do you feel that certain areas of your portfolio might be at risk if there's a prolonged economic downturn?
Yes. I mean, I think we tried, Sanjay, with that chart to get into the haves and the have nots. So I think like every business that you guys follow, some are in fact, none, some and a lot. And I think that's the same thing inside the FLEETCOR portfolio. And so we have businesses on that page that we think are the weakest and probably would have the longest troughs.
So for example, I gave that page in front of you, but we called out our It's Page 10, Sanjay, in the earnings supplement? Yes. So the couple, Sanjay, it would be I think the softest, the longest would be the recent lodging airline acquisition we did that fundamentally relies on planes flying and crew flying. So that thing is off, I don't know, 75% and would be off for a while. And then the gift card business, to the extent that brick and mortar retail stays closed or some of those go BK, some of those go out of business, I'd say those couple of businesses I think will be weakest.
But the other ones, I think if I could leave out one message today is the impact is softness. So it's a fuel car client with 10 drivers driving 2 thirds of what they used to drive versus he's fired 3 of Warcraft. And so the ability for the thing to kind of come back if the clients kind of come back, we come back. And so I'd say the rest of the businesses, obviously, we've got a few that are in the green that are kind of happy days and then we've got the rest that are kind of sitting there waiting for the clients to get healthy again. So I think other than a couple that I call up and I say have a longer curve to kind of come back, a couple I call up, I think the rest should be on their way back because of the essential service nature of our workforce.
Great. Thank you, guys.
We'll now take our next question from Trevor Williams with Jefferies.
Hi, thanks. Good afternoon, guys. On corporate payments, I wanted to ask more on the sales side that, Ron, you alluded to in your prepared remarks, just with most people working remotely now, I'm wondering how that's impacted the selling process in that business. Because my assumption, and please correct me if I'm wrong, is that these are fairly long sales cycles and implementation periods. So as we think about you guys pre booking a lot of next year's revenue growth in the prior year, just how much of that we should be expecting to come from new customers signed in 2020 and just what the progress looks like there?
Yes, Trevor, you're totally right on current year. I think we've called off before that in the corporate pay business, particularly in the core virtual card business, most of the revenue for new accounts was sold the prior year, call it, over 80% to 90%. So the revenue in 2020 is driven off of sales contracted, but not implemented from 2019. So on your second question, I'd say we're still finding our way, right? So this thing surprised all of us in March.
We have a marketing and sales plan and closing plan, and it got changed, right? You can't have trade shows and we're not visiting large accounts like we used to. So I'd say there's been a repositioning of how to sell, what marketing to do, how to contact people. And I'd say if anything, the receptivity seems high, like people have taken the calls, taken the appointments. What I think is still unclear is can we close, right?
We'll call it 30 days into this and probably people have more time on their hands or they're just being kinder in these times, but the contact rates are kind of okay. So I'd say probably in 60 days, we'll have a fix on whether sales can kind of be where we thought just done in a different way or whether sales are going to be softer. I'd say we just don't know yet. Okay. No, that's really helpful.
And then just on credit, Eric, I appreciate your comments in your prepared remarks, but I was just hoping to get some more color on how credits trended in April, maybe month to date, whether that's either delinquencies or actual losses starting to come through more in earnest, just as we think about where we may need to expect losses to flex up to as we work through the trough in Q2? And then just wondering if you've seen any change in payment patterns after the PPP loans hit, especially with some of the smaller fleet customers. Yes, Trevor, it's Ron. Let me take the first part, and then I'll let Eric on the second part. I would say it's the most surprising thing to us so far.
It's surprising in a good way. So when this thing hit, you can imagine we did student body right to work on credit and liquidity and collections. And so we've got a monitoring system that looks at TripWorks rates, people going delinquent and then roll rates aging. And so I'd say that it's up. So we have benchmarked in all of our businesses.
I'd say it's up, but it's not up in any kind of meaningful way. So too early to call that, hey, we've gotten through this between the stimulus money and stuff, hey, we're going to kind of be okay. But if you said to me now, how does it look? Sand, this Phoenix thing, it looks pretty good. And the last point on it is we actually get a benefit from the lower volumes and the lower fuel prices.
That the fact that spend and effectively AR, new AR balances are dropping, obviously, it makes the collections assignment smaller and the credit risk smaller. So I think on this one, Sands, the Phoenix thing so far so good. Yes. And Trevor, just to add to that, it's Derek. Obviously, we're when we take a look at the agents very closely and we track it week to week, obviously, exactly what the progress is in some of these aging buckets.
And as Ron indicated, we have been surprised that they really haven't changed a whole lot. We've seen a little bit of tick up in some of the aging buckets, particularly in the fuel category in the U. S, particularly in the SMB category. So it's a little worse. And we've seen a little bit of tick up in Brazil as well, kind of a little worse.
But again, nothing dramatic, nothing kind of to the magnitude that we thought it was going to be. We look at our AR balances a lot. I mean, if you look at our AR balance at the end of the year, we had about $2,600,000,000 in AR, which moved to about 2 point $1,000,000,000 kind of at the end of March. And then at the end of April, we're down to about $1,800,000,000 So the risk profile of the remaining AR is also getting better just because of the sheer amount of the outstanding AR that we have. So all in all, I think we're in a pretty good shape.
I think we were pretty conservative to take a bit of the reserve that we did at the end of the Q1 and we're keeping a close eye on it. We've changed a lot of practices and we do some things, done some things to collect some of our money sooner. So I think we're off to an okay place. And let me just add, Trevor, one thing. We don't compete on terms like we compete with banks and other people.
So we've got we've had flaws. It's for a long time in this company to compete on products and on the tech and on the convenience of the products. And so we have tons of daily, daily, tons of short terms, weekly. In Europe, we have half of our book, I think, is insured. So we carve through, we have tons internationally on direct debit collect, where we basically pull the money.
And so in those cases, you've got trip rates in the 2% range, very, very small kinds of delinquency. So when we study our whole book again intently, a month ago when they started, I think we feel pretty good structurally of how we got the things set up. No, it's really helpful. Thank you, guys. Appreciate the color.
We'll now take our next question from Stephen Mould with Morgan Stanley.
Yes. Thanks for taking my question and good evening. Maybe just on a high level starting with corporate payments. Ron, you talked about never been higher in terms of watching for opportunities in the M and A side here. But if we start in corporate payments, maybe you could expand this out to some of the other areas.
Could you maybe talk about as you're looking at opportunities or as you're looking at your own offering today and disruptions and what you can solve for, what sort of changed or if it has changed at all, in terms of where you want to be in the landscape of the corporate payments B2D opportunity since we caught up 3 months ago and maybe you could expand it out to the other areas. Are there any areas that you serve across your offerings that you maybe feel less inclined to be in actively or expanding?
No, it's a good question. I mean in the context of COVID and sheltering and the trends that we might expect over the next year or 2, this payables or corporate payments business, it's a great place. And the reason is that lots of AP, lots of the spend is fixed. I think leases or IT contracts and stuff. And so bills have to get paid or services get turned off.
And so I'd say if anything, we liked its corporate pay business for 5 years and we built a bunch of stuff and added to it and invested in it. I'd say if anything, we like it even more. I think it's probably a little bit more defensive going forward versus the kind of the mobility stuff, maybe mobility stays depressed a bit worse, kind of AP stays where it is. So I'd say, I'd say anything that probably elevates that segment even a notch higher for us.
Understood. Maybe just in terms of a quick follow-up. I was looking to your slide, I think Slide 8, you guys talk about the corporate payments growth bouncing back to 20%. But I think you also disclosed that you pulled the payroll card segment out of there and that was the area that you called out last quarter with a little bit of trouble from the prior from last year's disruption to services. What was the growth looking like ex those adjustments?
It doesn't I don't know if you restated that product in the prior quarters or not?
Eric, do you know? Yes, I'm looking for that. I don't know if we can get a schedule. Yes, I know, Trevor, on hand, it's the payroll charges. This was in the circa 30% down in volume for April.
So if you second on that chart, the track the rest of the business, it would have brought it down some. And I think the 20% number is a revenue number. I don't see the payroll target revenue, but my guess is probably off in the 30% range.
Stephen, I'll get back to you with what
it was in the Q1.
Okay, great. Thank you.
We'll now take our next question from Pete Christiansen with Citi.
Good evening, guys. Good to hear from you and thanks for the great product. Fantastic job there. Ron, I was wondering, I know Seacro is a completely different company 10 plus years ago, but at least from the small fleet side, I was just wondering if you could share some of the experiences that you had back in the last downturn in terms of, I guess, attrition and perhaps credit on the small fleet side, I think that would be helpful.
Hey, Pete. This is Eric. If you go back to 2,008 and 2,009, I mean, to your point, we are a completely different company today than we were back in 2008 and 2009, but I'll comment a little bit on the fuel business, which is mostly what we had back then. So when we were into that downturn, we did see volumes soften pretty significantly. So we saw same store sales softness kind of in the mid single digits.
So it was pretty high. Bad debt, it kind of squeaked up a little bit. We kind of ran I don't remember the exact numbers, but probably the mid to high teens from basis point standpoints in bad debt back then. And it has escalated to probably in the 40, 45 basis point range at its peak in 2,008 and 2009. So volumes down kind of in the high single digits that, call it, kind of doubled over in the fuel card segment.
And that's the kind of the business that we have there.
Right. That's helpful. And then as I look at the gift card business, there's been a couple of high profile retailers filing lately. Can you walk us through what happens if you have a partner that does that? Are there changes in like breakage or availability of funds?
Anything of that would be helpful.
Yes, Keith. It's Ron. So mostly in our chip business, we don't take much credit risk because we don't really move money, right. We're really an accounting system, will, for retailers and a program manager. So the one place where there's credit risk in that is in car shipments.
So if you're at Macy's or Dick's Sporting Goods and we you give us a card order and we go to the card maker and take the stock and make it for you, put the Macy's logo on it and then send it to you, that would be the one place, right, if we ship it to you, whatever, March 15 and then supposed to pay us on March 31 and you don't. And so the good news on that is that our guy that runs that business, I had to chase all that stuff pretty hard when this thing hits. So right now, we have very, very little exposure fortunately. And I put them on notice that we're not doing many of those kind of things again. We're going to do a lot card shipments to challenged retailers, at least not short term.
So I'd say we're probably in a pretty good place there.
And
we'll take our next question from Ramsey El Assal with Barclays.
Hi, guys. And thanks for taking my question this evening. Ron, if you look across the business today, given everything that's going on, are you reassessing or thinking through where you will invest in the future? Are there is this crisis kind of teaching any lessons in terms of changing priorities that you might have in terms of business investment that could be product line, that could be geography? I know it's a very broad question, but do you feel sort of like it's just time to hunker down with what we have today and
it will come out on the
other end relatively intact? Or are there some more longer term changes that you might kind of contemplate in terms of where you place your bets in the marketplace? That's a really good question, Ramsey. I'd say, yes, I think like all of us on this call, we're processing what a future could be, what will the world look like in 3 months, 6 months. But for sure, I think there'll be changes.
So on the portfolio side, I'd say we're super happy with the kind of the 4 categories that we've got, the 3 employee card things, fuel, lodging and toll. And then obviously, we like the payable things. So there's nothing in the 4 businesses where we go, oh, I feel like I'm going to like those glasses. I said in some of my comments, I think some of those categories will actually be held by this thing. My sense is that a lot of our changes are going to be on the functional side.
And what I mean by that is, our constructs and our policies around like credit, our approach is around selling, our approach is around part time, full time. I think we're going through all kinds of thinking now of if this world stays this way or there's some things we've learned in this world that we might stick with even if the world goes back to the way it was. I think it's going to be a lot of them. I'd say it's still early. If you ask me that question again in 90 days, I think we'll have a better answer.
But for sure, it will be a bunch of stuff we do different, for sure.
Okay.
And I was wondering also, and forgive me if I missed this before, but could you parse out a little bit of the same store sales performance just in terms of sometimes you can give us incremental color on underlying verticals within some of your businesses on the same store sales Yes, Eric, it's a little different, but I'll tell you that obviously the 2% drop has got all right the last 2 weeks. And I think it's going to drop like a rock, obviously, given the April data that we showed. So I want to just prepare people that softness is what's taking our volume down. So you're going to hear a much different number in Q2. But do you want to Yes.
I mean just to give you a little color, Ramsey, what we saw was, as you can imagine, Ron indicated a lot of the softness that we saw happen in the last 2, 3 weeks of the month of March. But fuel was a little bit soft, probably came in 3%, 4% soft overall and then lodging overall was a bit soft. But don't forget that includes the TA business as well. That was kind of in the 4% to 5% range. That was offset by strength that we saw in our corporate payments business, which was actually up and also strength in our Brazil business, which was also up until a bit because of the clients that we have there and the additional products that we've added.
So it was a bit of a mixed bag, but the softness was kind of where you would think it would be and the strength is kind of where you thought it would be as well. That's terrific. Thanks so much guys. Be well.
And we'll take our next question from David Togut with Evercore ISI.
Thank you and thanks for squeezing me in. I appreciate it. Ron, the high customer revenue retention historically of 91% to 92% has been a strength of the business. You closed the Q1 at 90.7%. As you look into Q2, which you've called as the likely trough, can you maintain customer revenue retention in the 90% to 92 percent range?
Hey, David, it's a good question. I'd say, we don't know. I think it's going to be a function bit of the health of clients honestly and what the casualty rate is and the BK rate among our client base. And so a lot of the retention aggregate number is a function of mix. We have businesses that have very different kinds of retention rates based on size, enterprise versus small and then even type of business like payables grows because spend grows at clients.
So I don't know the answer. I guess it will probably be lower because we'll likely have more casualties in our client base where the businesses go out of business, which is already represent and then credit. So again, if you simplistically said, hey, we lose 9% or 10% of our revenue per year, a third half of that is the business getting bad, the business getting weak, the business closing, the business not having the creditworthiness to be a client. So yes, my guess is that's probably going to go up some in the quarter. Now again, once you get to that base, we get through this thing that there's nothing structural that concerns me that will take us lower.
I see. Understood. Just as a quick final question, and I apologize if you addressed this earlier, but looking at capital allocation priorities, you bought back $530,000,000 of stock in the Q1, so you're very active. You have $326,000,000 left in the repurchase authorization. Will you be deploying cash towards share repurchase in this environment, possibly looking more at acquisitions, the seller expectations come down or will you be more in the mode of husbanding capital?
Yes, Dan, another good question. I'll let Eric comment too. But I'd say we're in a preserve mode. We are I told the Board, we're agreed with the Board, we are in a precaution. We want the max liquidity.
We want a company that's got all kinds of cushion till we see the other side of this and see the heartbeat on the other side. So we will not be buying back shares over the next quarter or 2. On the other side, I think on the deal side, like I said, if there's something unique that comes out of this, we might blow the trigger a little bit sooner than later. But I'd say we're probably in a bit of a whole pattern for a while. Understood.
Thanks and stay safe and healthy. You too pal.
And there are no further telephone questions at this time. I'd like to turn the conference back over to our presenters for any additional or closing remarks.
Hi, guys. Thanks for opening up the call. Let's see if you have any additional questions, if you need anything else, happy
And once again, that does conclude today's presentation. We thank you all for your participation. You may now disconnect.