Ladies and gentlemen, thank you for standing by, and welcome to the WEX first quarter 2020 earnings call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. Now, I would like to hand the conference over to your speaker today, Mr. Steven Elder. Thank you. Please go ahead, sir.
Thank you, operator, and good morning, everyone. With me today is Melissa Smith, our CEO, and our CFO, Roberto Simon. The press release we issued early this morning and a slide deck to walk through our prepared remarks have been posted to the investor relations section of our website at wexinc.com. A copy of the release and the slide deck have also been included in the 8-Ks we submitted to the SEC. As a reminder, we will be discussing non-GAAP metrics, specifically adjusted net income attributable to shareholders, which we refer to as adjusted net income or ANI during our call. Adjustments for this year's first quarter to arrive at these metrics include unrealized losses on financial instruments, net foreign currency remeasurement losses, acquisition-related intangible amortization, other acquisition-related items, stock-based compensation, other costs, debt restructuring and debt issuance cost amortization, ANI adjustments attributable to non-controlling interests, and certain tax-related items.
Please see Exhibit 1 of the press release for an explanation and reconciliation of adjusted net income to GAAP net income attributable to shareholders. I would also like to remind you that we will discuss forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed in our press release and the risk factors identified in our annual report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020, and subsequent SEC filings. While we may update forward-looking statements in the future, we disclaim any obligations to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. With that, I'll turn the call over to Melissa Smith.
Good morning, everyone. Thank you for joining us today. I'll open the call with a brief overview of our Q1 performance before jumping into how we're navigating the current unprecedented environment due to the COVID-19 pandemic, including what we're seeing as we progress further into the second quarter. Roberto will provide more details on the first quarter results, as well as some balance sheet and liquidity highlights before we take your questions. I want to start by saying that our thoughts and prayers are with the individuals and communities directly impacted by COVID-19, including the healthcare workers on the front line and all essential workers who are keeping the world running. Many of these people are our customers.
First responders, police officers, and ambulance drivers, federal agencies, and truckers who are keeping the supply chain moving, as well as people who are using HSA, FSA, and COBRA products to pay for their healthcare needs. It's been incredible to watch the country and the world come together during these extraordinary times. Understanding that our customers and partners are relying even more heavily on WEX in order to continue their day-to-day operations, we remain committed to providing the best-in-class products and services that they have come to expect without compromising the well-being and safety of our employees, which remains our top priority. I'm proud of the entire company's effort over these past difficult months to come together and support each other, as well as communities we serve throughout the world. Turning quickly to some first-quarter performance highlights on slide three.
Revenue grew 13% versus the prior year quarter to $432 million. The quarter started off very strong as we expected, like many other businesses, slowed significantly toward the end as the effects of stay-at-home orders and restrictions of non-essential businesses went into place. Even with the slowdown, we had strong results in our corporate payments and US health businesses for the quarter. From a profitability standpoint, GAAP net income was a loss of $0.37 per diluted share, and adjusted net income was $1.81 per diluted share, up 5% year-over-year. This was driven by top-line performance, as I just mentioned, and was partially offset by higher-than-expected credit losses in our fleet and travel businesses. Roberto will expand upon this shortly.
Starting with the fleet segment, revenue was up 7% year-over-year, benefiting primarily from solid transaction volumes early in the quarter in our North American and European fleet businesses and good performance in our Shell and Chevron portfolios. Same-store sales for the quarter were down 4% compared to last year as we started the year off well but experienced an 11% decline in March. Construction was the only notable industry to show gains in the quarter. On the product front, we're launching WEX EDGE into the market this week. WEX EDGE provides access to highly curated, discounted offers that are typically only available to large companies. These offers include pre-negotiated fuel discounts to customers at participating locations nationwide, an integrated online tire purchasing experience with competitive pricing at over 2,200 Bridgestone Retail Operations locations, and access to an integrated hotel booking service in partnership with Hotels.com.
Our Travel and Corporate Solutions segment was the most severely impacted by the pandemic and related travel restrictions. Segment revenue increased by 3% year-over-year, while travel-related businesses in this segment were down 8%, and corporate payments-related businesses were up 18%. For this quarter, it was nearly 50/50 split of revenue between Travel and Corporate Solutions. The travel-related business began to see the effect of the pandemic on travel volumes starting in mid to late February and accelerated through the end of the quarter. This resulted in purchase volumes for the whole segment down 4% from the first quarter of 2019. The Corporate Solutions businesses continued to post impressive results, particularly in the partner channel, through the quarter. Growth in this area continues to be driven by the ongoing migration to virtual payments and increasing usage of our accounts payable products.
On a positive note, we entered into a new long-term agreement with Mastercard, which greatly expands our relationship. As I said earlier, the healthcare segment posted a solid quarter in line with our expectations at the beginning of the year. Revenue for the segment was up 45% as we continued to benefit from the DBI acquisition and solid growth in the consumer-directed healthcare market. Turning to slide four. Recognizing the unprecedented operating environment in which we find ourselves, we took decisive action to protect the safety and well-being of our people while ensuring business continuity. This included implementing a work-from-home policy and putting the necessary tools and processes in place to effectively support a remote workforce. We began phasing in our work-from-home program in early March, and all of our workforce, with a handful of exceptions, is currently working remotely.
On the customer technology side, I'm proud to say that all of our technology and cloud platforms have remained fully up and running. On a side note, although it's a small percentage of overall transactions, we've seen a dramatic increase in DriverDash contactless transaction volumes since the middle of March. Furthermore, we continue to innovate to bring best-in-class products to our customers and to the market first. Of note this quarter, in response to the COVID-19 pandemic, our U.S. healthcare business announced SpeedLift, a rapid response solution set containing a timely bundling of offerings and resources to help employers and consumers offset unexpected costs. These offerings include limited purchase accounts for COVID-19 costs, temporary dependent care accounts, and special purpose accounts for work-from-home related employee expenses, and many others. Initial partner response to SpeedLift has been very positive.
Additionally, WEX's support services remain in place, ready and available as usual to meet the needs of our customers. Over the last couple of months, we reviewed all of our strategic priorities and how we will allocate resources going forward, which are highlighted on slide five. We plan to continue investing in all parts of our business, although at a slower pace than we had originally anticipated in some areas. We're specifically continuing to invest in our U.S. healthcare business at original levels. At the same time, we have rescaled portions of the business to better align with the current operating environment. These cost containment actions include cutting discretionary costs and eliminating most open positions in the organization. In April, we also made the difficult decision to permanently reduce our U.S. workforce by 2%.
We also furloughed an additional 3% of U.S. employees in positions where work is slowing down due to the pandemic. We currently anticipate these employees returning to work in early August. We're also in the process of taking similar actions in many of our international locations as well. At the same time, we decided to voluntarily reduce executive salaries by 10%-20%, while the board of directors has taken a 10% reduction in their cash compensation for a period of time. The total savings resulting from these changes are expected to be approximately $60 million-$65 million compared to our original guidance. We also expect additional savings on variable costs. Additionally, we're being more selective with our CapEx deployment, focusing on investments where we continue to grow, which is our U.S. health business. We plan to reduce capital expenditures this year by approximately $20 million versus our original budget.
While these actions will help to ensure we successfully navigate the current environment, we will continue to be flexible with our approach and will calibrate our future actions to the pace and magnitude of the global economic recovery. I want to spend a few minutes looking ahead to the second quarter and beyond on slide six. As the world is still working to minimize the spread of the COVID-19 pandemic. We expect the government policies, stay-at-home orders, and restrictions on business that have impacted our travel and fleet volumes thus far to continue to have an impact through the second quarter. In the fleet segment, payment processing transactions are down approximately 20% in the month of April from the year ago.
Our North American Fleet Solutions business is down about 25%, with the OTR businesses seeing more moderate volume declines of about 11%, and the international business, which is the smallest piece, has been the hardest hit at nearly 50% decline. While Fleet Solutions volumes are currently down, the segment's core business remains solid and is seeing a stabilization at these volume levels. In our Travel and Corporate Solutions business, global spend volumes are down approximately 90% in April from the same period last year.
Our Asia-Pacific Travel and Corporate Solutions business was hardest hit first in mid-February, followed by declines in European Travel and Corporate Solutions volumes, which accelerated through March into April. Our North American volumes followed the same path over the past two months and now are similarly challenged. We do not know, as a consequence to the COVID-19 pandemic, when purchase volumes will rebound, but we remain well positioned to recapture volume once market recovery begins.
Our corporate payment spend volumes declined 5% in April, reflecting a drop in business spending. On the other hand, our U.S. health business remains strong and is expected to continue to perform well through the rest of the year. While elective healthcare spending has slowed, demand for our healthcare products remains strong, and our pipeline continues to be solid. In particular, we're seeing increased demand for our COVID products. In each area of the business, we're working to ensure that we effectively manage through this period and are well positioned to quickly ramp up again once the pandemic subsides. I'll touch quickly on the eNett and Optal acquisition. When we began discussions last fall, the strategic rationale for entering into this transaction was very strong.
We've concluded that the pandemic and the conditions arising in connection with it have had and continue to have a material adverse effect on the businesses of eNett and Optal. It was a lot of hard work to get the deal signed, this is obviously not the situation that any of us wanted or expected to be in back in January. This is not a decision we have taken lightly. WEX has never walked away from a signed deal. We have been analyzing this situation closely with a lot of work done by specialist advisors to reach this conclusion. Because of this material adverse effect, we have advised eNett and Optal that WEX is not required to close the transaction pursuant to the terms of the purchase agreement. Finally, just a few words in conclusion before I turn the call over to Roberto.
As we look ahead, we remain committed to ensuring the resilience of our business and strengthening our balance sheet and liquidity position. These priorities keep us focused on weathering the storm without sacrificing our long-term growth potential. I'm proud of the work we have done throughout the organization to adapt our business in order to better support our customers as they navigate these same challenging times with us. I want to thank the entire WEX team for continuing to do what they do best, bringing best-in-class technology and solutions to the market first, providing unparalleled service, and anticipating the emerging needs of our customers and partners. The products we offer are integral to our customer operations, and we expect the volumes will return as the economy improves.
While it's difficult to gauge the magnitude and the duration of COVID-19 pandemic, the resilience and diversification of the WEX portfolio, coupled with market-leading positions in each of our segments and our strong balance sheet positions us well to navigate through these challenging times. With that, I will turn it over to Roberto.
Thank you, Melissa, and good morning, everyone. While we continue to maneuver a difficult environment, in the first quarter, we delivered solid results by continuing to execute on the strategic pillars and building upon 2019 tailwinds. Revenue grew 13%, about 8% came from acquisitions, and 5% from organic growth. The net impact from fuel prices and FX rates was negligible. Now, let's take a look at the results on slide number nine. For the first quarter, total revenue was $431.7 million, a 13% increase year-over-year. GAAP net income attributable to shareholders was a loss of $16.3 million. Non-GAAP adjusted net income was $79.7 million, or $1.81 per diluted share. Slide 10 shows the overall revenue performance by segment. Breaking down the revenue growth, Health and Employee Benefit Solutions grew 45%.
The Fleet segment had a 7% growth rate, finally, Travel and Corporate Solutions posted a 3% increase. Moving to segment results, starting with Fleet on slide number 11. Fleet Solutions achieved $249.8 million in revenue, a 7% growth versus prior year, driven by an increase in payment processing revenue of 6% and finance fee revenue of 21%. Segment results were boosted by new customer wins and renewals. Fleet volumes remained largely on track through mid to late February, at which point the impact of COVID-19 started to accelerate. Shipping activity slowed down, followed by the stay-at-home orders in all of the countries where we have operations. Despite this headwind, payment processing transactions were up 5% when compared to the prior year, with North American Fleet up 5% and over-the-road up 3%. We also had some benefits from the Go Fuel Card acquisition, which was completed in July 2019.
The net payment processing rate was up eight basis points from Q1 2019 to 135 basis points. The year-over-year increase was due primarily to the acquisition just mentioned and positive spreads in Europe. It was offset by other minor changes. The net late fee rate increased this quarter to 56 basis points in comparison to the 44 basis points in Q1 2019. The increase was due to the addition of the Shell and Chevron portfolios, the mix of new business wins, and small rate increases implemented a year ago. The average domestic fuel price in Q1 2020 was $2.57 versus $2.67 in Q1 2019. Although fuel prices in the U.S. were $0.10 lower than last year, we had favorable spreads in Europe, which largely neutralized the U.S. impact. Turning to Travel and Corporate Solutions on slide number 12.
Total segment revenue for the quarter increased 3% to $84.4 million, boosted by the U.S. corporate payment business, which helped ease the impact that COVID-19 had on the travel industry. Corporate payments grew revenue 18%, driven by the partner channel customers. Compared to last year, travel revenue was down 8%. Purchase volume issued by WEX was down 4% to $8 billion. Similar to fleet volumes, travel purchase volume remained in line with expectations through mid to late February. Finally, in this segment, the net interchange rate was 87 basis points, which was up 16 basis points from Q1 last year. The increase was primarily due to the growth in corporate payments and a contract change with a sizable travel customer that was made about a year ago.
Turning on to slide 13, the Health and Employee Benefit Solutions segment finished the quarter strong, with revenue up an impressive 45% compared to last year. In the U.S. health business, revenue grew 48%. As Melissa mentioned, we added and renewed key partners. Also, we saw a large benefit from the DBI acquisition completed in March 2019. WEX continued to capitalize on the momentum of the HSA market, including more than six million HSA accounts on the WEX Health Cloud. From a volume point of view, healthcare spending was impacted by COVID-19 restrictions in the second half of March. We expect to see spending recover in the second half of the year as restrictions are lifted. Finally, in this segment, the number of such accounts was up 14% relative to 2019. Now, let's move to expenses on slide number 14.
For the quarter, total cost of service expense was $185.8 million, up from $153.2 million in Q1 last year. Total SG&A depreciation and amortization expenses were $171 million, which is up $11.3 million versus 2019. Breaking down the line items within these categories, processing cost increased $13.8 million, primarily due to the acquisition completed in 2019. Service fees decreased slightly. Credit loss on a consolidated basis was $34 million versus $17.8 million in Q1 last year. This amount includes approximately $9 million for the adoption of CECL. In the Fleet segment, credit loss was 23.6 basis points of spent volume, compared to 15.7 basis points in Q1 2019. As expected, we continue to see some weakness in the over-the-road business. Additionally, we booked a $3 million expense for the adoption of CECL, which impacted the rate approximately three basis points.
In the travel segment, credit loss was $13 million, which is significantly higher than any past quarters. This reflects the state of the travel industry and includes approximately $6 million due to the adoption of CECL. At the end of the quarter, account receivable balance declined by more than $500 million when compared to the end of prior year. This decrease has continued into the second quarter. Specifically in travel, AR has gone down from more than $500 million at year-end to less than $40 million as of today. Operating interest expense was $8.4 million, down about $1.2 million from the prior year quarter. This is mainly due to lower interest rates on the deposit balances. G&A expenses decreased $2.4 million versus the prior year quarter, mostly due to reductions in M&A, restructuring, and other costs.
Lastly, the sales and marketing line increased $4.7 million, driven by partner rebates primarily in the corporate payment business. Let's discuss taxes on slide number 15. On a GAAP basis, the effective tax rate was 31.7%, compared to 26.4% for the first quarter of 2019. On an ANI basis, the tax rate was 25.6% for the quarter and 25.4% for Q1 last year. Changing gears now to slide number 16, let's look at the metrics on our balance sheet. Even in this environment, it is very healthy with robust levels of liquidity. We ended the quarter with $861 million in cash, up from $811 million compared to the cash position at the end of Q4 2019. From a liquidity perspective, the corporate cash balance was over $500 million.
This balance increased more than $125 million from Q4 2019, thanks to exceptionally strong cash flow during the quarter. As Melissa just reinforced, we have sharpened our capital allocation priorities and implemented tighter working capital plans. Additionally, there is $769 million of available borrowings under the company's credit agreement. This gives us immediate access to more than $1.2 billion in capital. We believe that we have adequate funds to meet the operating, investing, and financial needs in the current environment. At the end of the first quarter, we had a total balance of $2.8 billion on the revolving line of credit, term loans, and notes. The leverage ratio, as defined in the credit agreement, stands at approximately 3.5 x, which is unchanged from year-end. On the financing debt side, we have approximately 2/3 at essentially fixed rates.
During April, we extended $935 million of the interest rate swaps for another year. This reduced the fixed rates by approximately 40 basis points. To conclude this section, we continue to evaluate the market to determine if there are opportunities to enhance our balance sheet and liquidity position even more. We are working closely with our bank group to provide us with additional flexibility in the future, and we will provide an update on actions taken when appropriate. To close out the call, while we experienced a tough macro environment in the first quarter, we were able to deliver both revenue and earnings growth. We cannot assess the financial impact of COVID-19 due to the speed at which the situation is evolving.
However, we have provided some metrics on our April volumes on page number six of the presentation to show you the trends we are seeing in the market right now. At this time, we are not in a position to provide guidance for the second quarter, and we are withdrawing our previously announced guidance for full-year 2020. We will provide updated guidance figures as soon as reliable estimates can be determined. Now, we will open the line for questions.
As a reminder, to ask a question, you will need to press star one on your telephone keypad. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sanjay Sakhrani. Your line is now open.
Good morning, and I'm glad you guys are doing well. Melissa, can you elaborate a little bit on your decision to exercise the MAC on eNett Optal, your level of confidence that on the move and that it'll sustain itself, and then maybe just outline the process going forward, because I know eNett and Optal are out suggesting they don't believe that it's appropriate. Thanks.
Yeah, sure. Good morning. I now have a lot more to say about that, but what I'd say is that we determined that an MAE exists, and we went through obviously a whole lot of work to get to that point. We wanted to be absolutely sure of our position before we took the step of notification. We've been scrutinizing matters very critically and closely with our advisors and with the board. We reached the conclusion based on our contract that's in place. In terms of next steps, we provided notification to the seller to make sure that we're fulfilling our obligation.
Does it typically go through a litigation process? How long does that process take?
Well, our obligation right now is to make sure that we were providing notification around the MAE. We fulfilled our part of that obligation. In terms of next steps, I think that that is yet to play out, and I don't really want to talk about hypotheticals right now.
Okay, great. I've got a follow-up question on Travel and Corporate. Roberto, maybe you can help us think about the go forward here. I know you guys aren't providing guidance, when I think about that net interest rate, that actually went up nicely or has held in quite strong. When we think about mix, you mentioned 50/50 Travel Corporate in the first quarter. When we think about the update you provided on that slide six, should we apportion those growth rates to the previous percentage in contributions from each of those? Could you just help us think about what the trends would be if you looked at it based on the April trends? Thanks.
Good morning. I think you asked several questions in one. Let me give you a bit of the breakdown on the volume for the quarter, and then we can go through the interchange rate, and hopefully I answered everything that you wanted to get. In the quarter, the corporate payments business was over $2 billion of spend. The total volume for the quarter was $8 billion, so we are talking around approximately 25% of the volume. Obviously, it grew double digit while the travel volume was down. We cannot predict what is going to happen in the future. That's why we withdraw our guidance. We wanted not to provide, and Melissa mentioned that, we wanted to provide visibility into the last six weeks of the year, just to give you some color on where the things are trending.
On the interchange side, Sanjay, if you recall last year, we make an amendment to one of the OTA's contract, and this is why the rate has been increasing since Q1 2019. Obviously, as we move into Q1, if the mix between travel and corporate payments is changing into the corporate payments side, obviously the rate overall is going to also increase. Again, going forward, we cannot predict now what the rate is going to be.
Okay. Thank you.
Your next question comes from the line of Ramsey El-Assal from Barclays. Your line is now open.
Hi, good morning. This is Damian in for Ramsey. Thanks for taking my question. I wanted to ask maybe about the end market in that Fleet Solutions segment. Maybe you can just break down by vertical. I know you called out construction being the only vertical that was positive in the quarter. Can you just discuss any of the other end markets for your customers in that Fleet Solutions segment and just what you're seeing there?
Yeah, sure. We saw a lot of disparity based on geographic regions. I'm talking specifically right now about our North American fleet volume. When we saw changes happen where volume was starting to move down, the East Coast and West Coast, which were shut down sooner, had a deeper impact than the Midwest and the Gulf Coast, which were on the lesser trend. All being impacted. East Coast, West Coast being much more heavily impacted with the Gulf Coast and Midwest less so. That was also if you got into geographies, Washington and New York were harder hit. Texas and Georgia were less so.
When you got into industries, it actually wasn't as much variation based on industries you might expect, with the exception that construction had positive trends. If you combine those two things together, if you looked at the construction in the Gulf Coast region, it looked really strong. Construction in East and West Coast still looks better than other industries. When you started to look across the other areas of the business, they were down pretty comparably.
Okay, that's helpful. I think maybe related to that, and also including the travel business, I'm shifting now to the credit losses. Obviously, a lot of the increase in the quarter related to CECL, but maybe you can talk about any sort of stress that you may be seeing in your book, either on the fleet or on the travel side, and any sort of expectation that you have for increased credit losses for the rest of the year.
Hi, let me give you some more color on the adoption of CECL and on the quarter trend on the credit loss. CECL had two impacts. On one hand, we changed slightly the methodology on how we calculate the regular credit losses. That impact was immaterial, I would say. On the other side, due to the CECL and the qualitative reserve, when you look on the macroeconomic indicators, as I said on the call, we took an additional $9 million credit loss that was broken down between $3 million in North American fleet and $6 million in the travel business. I also want to share with you, correlated to that, the movement of our account receivable balance. From year-end, the receivable balance has gone down almost $500 million at the end of the quarter.
If we look at the end of April, that number is another $400+ million down. Overall, from December 2019 to the end of April, we have reduced the account receivable balance almost $1 billion. Obviously, we feel good about that. From a credit loss point of view, we have been able to work with our customers and manage the challenging times, especially on the travel industry. If you get a bit more specific in the fleet segment, the credit losses were just slightly higher than last year in Q1, excluding CECL. North American fleet was almost flat to Q4 2019 and to Q1 2019. On the other side, our over-the-road business was slightly higher, continuing the trend we saw last year in Q3 and Q4.
Helpful. Thank you very much.
Your next question comes from the line of Steven Wald. Your line is now open.
Thank you. Good morning. I hope you guys are all safe and well. Thanks for providing what you could around the eNett and Optal deal. Maybe just a follow-up to what Sanjay was sort of getting at around the segments. It seems like if you're approaching this from a material adverse side of things, that it would seem to have the similar impact on your legacy travel business. I guess I was wondering if you could talk about how you're thinking about the strategy for growth in the legacy travel business, and has this shifted your thinking around where you'd like to grow and diversify long- term?
Yeah. Sure. Our legacy travel business, we showed you volume trends over the last several weeks, so you get a pretty good snapshot of what's happening in terms of spend. In terms of our customer base, we continue to work with our customers. We want to be there to support them and make sure that we are positioned for when you see a rebound in that market. We do think that that market will be slower to move back, compared to if you look across WEX, we're a financial service technology provider. We're doing business in many different verticals. Travel compared to anything else that we're doing is having a longer tail, we think, in terms of recovery. Doesn't change our view.
Got it. Thanks.
If you're asking about travel, the market over a long-term basis is something.
Exactly. Yeah
We're continuing to be interested in, and we want to make sure that we're there supporting our customers and meeting their needs as they get through this challenging time.
Okay, thanks. Maybe just switching gears towards the cost-cutting initiatives and the CapEx tail down that you guys mentioned. If we were to take the deal off to the side and just put it over here and just say, okay, thinking about the cost-cutting, would you say that that is going to get you to a place where you have a significant level of extra comfort around your standalone leverage? I think you guys alluded to potentially more actions to come. Is that sort of, you're weighing it every step as you go? Can you maybe talk through how you're thinking about that?
Hi. You asked several things on one. On the cost actions that we have taken, Melissa has explained the rationale and what we have done. Obviously, our business is expected, and you saw the numbers for April. Obviously, we are managing and maneuvering all this challenging environment. What I would say to you is, if you look at our leverage position today. We closed the year in 2019 at 3.5 x. We are unchanged in Q1 this year. I think I want to make sure that you get one thing that is very important compared to where we were in the past, especially when we did the EF. Today, we have more than $500 million of corporate cash on hand, and obviously, that gives us a lot of comfort, and we have a solid position from a liquidity point of view.
Additionally, we have the $750 million access on the revolver. When you look at the leverage ratio, although it's 3.5 x, the fact that we have the corporate cash on hand of over half a billion, we can only utilize $125 million of that corporate cash towards our gross debt. To give you an idea, for every $125 million of corporate cash, it's approximately a quarter of a turn on leverage ratio. When you put in perspective the cash that we have on hand, our leverage ratio from a net basis point of view is below 3 x today. We feel good where we are. As Melissa said too, the cost containment is to protect the short- term, but also to make sure that when the things come back, we are ready to grow again and to serve our customers.
I just add to that what I had mentioned about further actions were internationally. We were going through very methodically understanding the rule changes that were happening on a global basis and being thoughtful about those changes as we were making changes within our cost structure. That's just been a process for us. We had made the decision what we're going to do, and we're actually just going through methodically and making those changes throughout the world.
That's very much appreciated. Thanks for the color there.
Your next question comes from the line of Bob Napoli. Your line is now open.
Thank you. Good morning. Good to talk to you guys. Quick question on the Mastercard deal that you guys did. I was just trying to understand the potential benefits, why you made that change. Mastercard, their rebates and incentives line is going up quite a bit. I'm wondering if you guys are benefiting from that as part of this deal. Just generally strategically, why did you shift so much more of your business towards Mastercard? What benefits do you get?
It's Melissa, make sure I clarify. With Mastercard, what we did is extend a contract with them. It takes advantage of the size that we are relative to Mastercard. Over a number of years, we've grown our business and portfolio with them, it's just representative of the position that we're in now. We've had a long-standing relationship with them. We continue to have also a contract in place with Visa. My mention of it is the idea that we're extending the relationship with Mastercard. We've had a really good relationship with them. We want to make sure that we continue to build upon that. It was timely for that to happen and kind of the life that we've had and evolutions that we've had in growth.
Okay. Maybe a follow-up then on just on page six of the volume trends. Looking at the gallon volume, first of all, are you seeing any significant differences in markets and areas of the country that are starting to open up a little bit? Would it be fair to assume that the transaction trends are right in line with those gallon volume growth trends?
If you look at the graph on page six, you can see that we're having what appears to be a little bit of an increase in volume that's coming through. That's primarily from the North American fleet business. It's a little bit internationally, too, a little bit better as it kind of seemed to have bottomed out. I think if you were an optimist, you'd say you're starting to see the benefit as some of the states are moving out of lockdown. It's a pretty small lift that we've seen over the last few weeks. You can tell if you look at our data again, that the states that have been locked down have been harder hit.
I think that there's an argument around the fact you're going to see some of that getting a little bit better as they move out of these full lockdown states.
Thanks. Last question on-
Yeah, like New York and Washington, I said before, they were down over 30% each.
Okay. The corporate payments business declined, payment volume declined 5%, or it was a run rate of a decline of 5%, I think you were saying. What was the shift in the trend on the corporate payments volume? Are you seeing any benefits from customers on the top of the funnel and adding new customers because of the need to electronify B2B payments? Just a little more.
Yeah, it's a really good point. We have seen an increase in implementation from our partners. We're seeing more demand, more pushing through in the pipeline for our AP products, particularly through our partners. What we also saw in April was a pretty dramatic shift in spend from a business spend perspective from the first quarter into what we saw in April. We are feeling good about the pipeline. We're feeling good about the prospects we have and what we're seeing coming in through the front end of the funnel. We are aware of the fact that we saw a difference in business spend, at least in the month of April.
Okay, how much of a shift in business spend, if you could, in April?
Well, you can see that we're up 18% in the first quarter and down 5% in April.
Okay. That's fine
pretty dramatic.
Okay, got it. Yeah, thanks. Okay.
Bob, the other thing I would say that when you look just on a particular month, you could have last year we implement somebody, as Melissa was saying, we are doing a lot of implementation. You could have one customer or two customers that brought more volume last year, and then now they are on a run-rate basis. I wouldn't call it like a trend where we went from 18 to -5 . Obviously we wanted to be transparent now with all the information that we have as of today, to make sure you get the best picture possible.
Thank you. Appreciate it.
Your next question comes from the line of Darrin Peller. Your line is now open.
All right. Hey, thanks, guys. Glad to hear you're doing okay. If you can give us a little bit more color on the volume trends that you're seeing in fleet today versus perhaps what you would see in a more "normal recession," but what's really discretionary versus non-discretionary in your business? Melissa, any thoughts on the survival rate you would expect to see through some of your client base? Maybe thinking about SMBs versus not and the types of businesses you're servicing would be helpful.
Yes. Let me talk a little bit about the types of businesses that sit in each of these portfolios. I think that might give a little bit of color. On the over-the-road marketplace, we talked about being down less there. There's been obviously a need to make sure that products were getting moved across the country. We've continued to see some stability there, even though there have been periods of weakness, particularly in some versions of retail transport. When you look at the North American fleet business, those type of customers, they're filled with people that are continuing to work in this environment, which have first responders, we've got state governments, we have in there ambulance drivers police officers, you kind of hit the spectrum.
You also have construction trade across many different trades, lots of small businesses that sit in there, as well as some of the really large companies that just happen to have vehicles that they're moving as a byproduct of their business. We've seen while it is down, and more than what we saw in 2008, it is really being driven based on industry, individual state rules, and the combination of those factors are what we're seeing with volume trends. If you're in oil and gas as an example, you're going to see that that volume is down in some of the retail industries, that they're down. Construction still has continued to be up, then it really depends on the geo.
As we are seeing some of the states lift those restrictions, we think you're going to see at least a little bit of benefit of that. I think that's for us still unknown how much and how quickly we're going to see that. Then internationally, we believe that what's happening in Europe, because Europe has been the hardest hit, and remember, the international part of fleet is only just a little bit over 10% of total revenue. That's been hardest hit in the fleet segment, we think because your borders are closed across a lot of Europe. The ability to move from region to region has been even more restrictive in Europe than it has been in the U.S. Australia, less so. Australia's looking a little bit more what we're seeing in trends in the U.S.
All right. In a typical recession, you would expect what type of transaction trends on the fleet side versus, obviously these kinds of lockdown modes?
In the 2008/20 09 recession, we saw almost like a check where people stopped traveling quite as much because they just didn't have as many deliveries to make or service calls to make. It was down around 10%. From that point forward, you saw actually kind of steady improvement. It's almost like a restart of the base.
Okay. All right. That's helpful.
It's a very different environment.
No, totally. Look, just bigger picture question is, when we think about the valuations you guys should be creating at longer term, we're all trying to figure out structurally who's coming out of this pandemic with different changes in the model. Look, the B2B and the corporate side could clearly benefit to some degree as I think businesses realize they need to be more electronic in payment. What do you think about the other sectors? I think health, you probably have some of that element where there's more of a need, but maybe even on the fleet side, what are your thoughts across the business on structural changes? Thanks, guys.
Yeah. I'm going to put travel aside for a minute. If you talk about the rest of the verticals that we service, I would say that we had a little bit of an adjustment of how to sell into the marketplace virtually, really small. We've seen a continuation of interest in the products, and in some cases, we've got larger pipelines than we had a year ago. The products still resonate in the marketplace. The needs that we fill continue to be there. What we're leaning into are as we see changes in needs of customers, like I talked about the fact that DriverDash is being much more utilized. That's a product we have in the marketplace. It's something that we can put our weight behind. I don't expect to see large shifts in the base of what we're doing in our fleet business.
To your point, B2B, we're seeing actually a pickup in interest. When you get into our healthcare business, same thing. We're seeing a lift in demand. Right now, a lot of interest in where there are prospects and customers or employers who are looking for ways that they can help support employees. The interest in SpeedLift products that we have, but also COBRA-related products that we have in the marketplace. You're not seeing large shifts in terms of either demand interest in the product. In some cases, interest is increasing in the product set. I put travel aside because I think that's different, that the type of customers that we have there are ultimately leisure travelers, and we do expect that they're going to see behavior changes in that marketplace.
Okay. All right. Thanks, guys.
The next question comes from the line of Kent Kim Wong. Your line is now open.
Oh, yeah. Thanks. A lot of good questions asked already. The travel and the fleet business, and maybe corporate finance as well, can you help us think about incremental or decremental margins and how much of the change in revenue here flows through to the bottom line? I know there's some offsets with rebates and some other variable costs to consider, so anything interesting there?
This is Roberto. Let me give you some color on what we have seen in the corporate payment business or segment in Q2. Our travel business, obviously, the margin profile is much higher than the corporate payment one, especially as we are growing on the corporate payments through the partner channel. That's because if you recall when we adopted a couple of years ago, the new revenue recognition standard. You report all the gross revenue as a net revenue, and then you have a partner rebate commission on the sales and marketing.
If I put the two business aside, if the business of corporate payments, especially through the partner channel, continues to grow faster than the rest of the travel and the other pieces of the corporate payments, your margin, although incrementally dollar-wise, is going to continue improving from a margin point of view, you may see a reduction. However, at the same time, as you know, we have been doing a lot of different things to improve our cost base. Obviously, when you look at the past two years, even though we have been growing significantly in the corporate payments segment or business, including the partner channel, the margin of the overall segment has been improving, too.
Got you. That's good to know. Then on the credit losses is my follow-up. Similar what Darrin was asking about comparing it to the financial crisis. What indicators should we be tracking here? More on the fleet side, whereby we might see a little bit of a step up in your reserve provisions here. Just know timing-wise, when we might start to see some bankruptcies or delinquencies picked up.
Let me give you some color on the quarter and the credit losses, and then we can go from there and give you also as well what happened in the 2008/ 2009, where Steve always reminds me what happened. I will start with the latter. In 2008/2009, the peak of the credit losses in the fleet segment was in Q4 2008, where we had 45 basis points of the credit losses. For the full-year, on average, we were at 25 basis points. The business is different than it was obviously years ago. We have grown on the small fleet businesses. We share on another wins. At the same time, we also incorporated EFS from an overall point of view. The business is fundamentally different, but at least I give you know what happened at the time.
If you look at what are the different indicators that could trigger a credit loss increase or bankruptcy, obviously, we model our agents. If you look at the end of the quarter and into April, although we took through CECL, a qualitative reserve of $3 million on the fleet side, we have not seen a significant deterioration on our agent. Even another indicator is the late fees. In the quarter, late fees, whereas we were expecting and in line with just below what we had in the last two quarters. For now, we have not seen any other indicator, and we feel that the position we had at the end of the quarter is adequate.
That's great. Thank you.
We are running out of time. There will be no more questions. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.