Greetings, and welcome to the FLEETCOR Technologies, Inc. Second Quarter 2018 Earnings Conference Call. As a reminder this conference is being recorded. I would like to turn the conference over to our host, Mr. Jim Eglseder, Head of Investor Relations for FLEETCOR Technologies. Thank you, sir. You may begin.

Good afternoon, everyone, and thank you for joining us today. By now you should have access to our second quarter press release and supplemental presentation, which can be found on our website at www.fleetcor.com under the Investor Relations section. Throughout this conference 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 other companies' non-GAAP information. Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and on our website, as previously described. Also, we are providing updated 2018 guidance on both a GAAP and non-GAAP basis, along with reconciliations. Finally, before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. This includes forward-looking statements about our 2018 guidance, new products and fee initiatives, expectations regarding business developments and acquisitions and statements regarding the unauthorized access to the company's system, including assumptions with respect to the investigation of the incidents to date. They are not guarantees of future performance, and therefore, you should not put undue reliance upon them. These 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-K and on our annual report on Form 10-K 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 Clarke, our Chairman and CEO. Ron?

Okay, Jim, thanks, and thanks, everyone, for joining the call today. Upfront here, I'll plan to cover 2 subjects. So first, I'll provide my perspective on the quarter along with some updated guidance for 2018. And second, I'll talk about the progress that we're making in positioning FLEETCOR for the long-term. Okay. So onto the quarter. Our Q2 results were quite good. We outperformed our internal expectations in both revenue and earnings, reporting Q2 revenue of $585 million, up 15%, that's if you adjust 2017 for ASC 606. Our Q2 cash EPS was $257 million, up 29%. So 15% top line, 29% bottom line. So the last 3 quarters of cash EPS profit growth have been 28%, 28% and now 29%. So not bad. The macro not particularly helpful this quarter versus our expectations. So although we enjoyed pretty good fuel prices in the quarter, FX worsened considerably, spreads narrowed a bit, interest rates rose and even our effective tax rate came in a bit worse than planned. So in total, these macro factors resulted in approximately $10 million of negative revenue impact and about $0.05 of negative cash EPS impact in the quarter versus our guidance. So the macro hurting our results a bit. Let me turn to organic revenue growth in the quarter, which penciled out at 9% in aggregate and just run through that. So first, fuel card organic growth improved to 5% from 1% in Q1. International fuel card growth was 8%. Inside of that, Russia grew 29%. Here in North America, our trucking fuel business grew 20%. Card lock business way up. So lots of good fuel card performances. Unfortunately, the offset remains our U.S. local and partner business still impacted negatively by last year's GFN conversion and the weakening Chevron portfolio. Corporate Payments, very…

Thanks. Before I get started on the numbers, I want to remind everyone that the company has adopted a new revenue recognition standard ASC Topic 606 via the modified retrospective method of adoption effective January 1, 2018. Under this method, 2017 results are not restated. In my revenue discussion to follow, as I did last quarter, I will talk about revenue in 2 ways. First, using a new GAAP convention, which compares 2018 using the new ASC 606 standard to 2017 using the prior standard. And then I will discuss revenue for 2018 and 2017 as if ASC 606 was never adopted, so you can compare revenues the way we have historically presented it. Now on to the quarter. In the second quarter of 2018, on a GAAP basis under the ASC 606 standard, we reported revenue of $585 million, up 8.1% compared to $541.2 million in the second quarter of 2017. As a reminder, merchant commissions and certain third-party processing expenses are now netted against revenue, which resulted in a reduction in revenue of approximately $23 million in the second quarter of 2018 versus the prior standard. For the second quarter of 2018, GAAP net income increased 35% to $176.9 million or $1.91 per diluted share from $131 million or $1.39 per diluted share in the second quarter of 2017. Non-GAAP financial metrics that we are -- we were discussing are revenues excluding the impact of the new ASC 606 standard to provide comparable revenue amounts between periods and adjusted net income, which we sometimes also refer to as cash net income or cash EPS. A reconciliation of GAAP revenue using the new ASC 606 standard to the prior revenue convention is provided in Exhibit 7 of our press release, and adjusted net income to GAAP numbers is provided…

[Operator Instructions] Our first question is coming from the line of Bob Napoli with William Blair.

The guidance adjustments, where did you outperform fundamentally versus your expectations to enable you to adjust the guidance despite the negative macro?

Bob, this is Eric. Effectively, it's a number of things that's driving the second half revenue guidance. One, obviously, you heard us talk a little bit about the macro. Obviously, it's mostly FX rates in Brazil, which are causing the macro headwinds, so about $30 million to $40 million of unfavorable macro. Partially offsetting that is some over performance -- continued over performance in a couple of our businesses, more specifically like our Corporate Payments and our toll businesses, some of the businesses that have performed well through the first half. We're going to expect to see those businesses to continue to perform well in the second half. Then in addition to that, we're going to help offset the impact of that by -- we have lower expenses. If you recall, because our revenue is being impacted by unfavorable FX rates, our expenses are favorably impacted by unfavorable FX rates. So effectively, that's driving our expenses lower in the second half. So again, some -- about half of the favorability in revenue from FX, we're going to clawback in expenses in the second half. And then a little lower expense -- spending in some other areas as well. And then finally, we'll have a lower share count in the second half because of the share buyback.

Bob, it's Ron. Let me just add, it's about $0.15. We're absorbing about $0.15 of macro in the next 2 quarters.

Okay. And just a follow-up question. As we look forward to 2019 and longer term, what are your thoughts around the organic growth by, I guess, fuel versus nonfuel? Or -- and if you wanted to break it down further by segment, but just thoughts on the organic revenue growth. And if nonfuel was growing faster, would that make it difficult to expand margins, I guess?

Yes. I think if you look at the last couple of years, Bob, we've been kind of high single digits in fuel and obviously better in the nonfuel. And so my comments earlier, I said we expect to moderate, call it, into the mid-teens in the 3 nonfuel lines. So we haven't started our '19 plans yet, but I would assume some mix like that going forward. And I think the upside could be these new add-on ideas that we have. If those get traction, a material traction sooner, we could get more lift. And then second, I think if we come up with some solution again to this SVS business, that would be another upside. So pre-budget, I'd say high single digits for fuel, teens for the other 3, maybe some acceleration from the new programs and then SVS is a wildcard.

The next question is coming from the line of David Togut with Evercore ISI.

Pretty major announcement, Ron, calling out a significant expansion plan for Europe and in Asia. Europe, you've got the beachhead with Shell. But I'm wondering, as you look at Continental Europe and Asia, what are the major growth opportunities, both organically and then through M&A?

Yes, David, we're kind of on the same drill of trying to get positioned either via partners or acquisitions, right, versus a greenfield build. I'd say the difference in messaging is we put not only more energy in the last 6 to 9 months in Asia, but we're seeing better feedback. So I'm trying to just put in people's minds that we haven't forgotten that part of the world, and that something may break our way on that side. So that's, I'd say, the difference is the Asia activity looks, I think, a bit more favorable than it did 6 or 9 months ago.

And is that mostly through M&A opportunity or organic growth?

It's not organic, so it'd either be a partner deal or an M&A deal.

Got it. And then Visa seems to be making a bigger push in Corporate Payments with the announcement with WEX, and I think historically, WEX have been principally MasterCard virtual payments as you had been. I'm just curious, does it make sense for you to bring in Visa just from a negotiating standpoint as you work with both of the networks in virtual payments?

Yes. Actually, a good friend of mine is the CFO of Visa, so it's a relationship that we have. I would say that we're pretty happy with the MasterCard people with the relationship with the deal. So I'd say, never say never. So we're obviously in conversations with them. But on the same imprint, pretty happy with MasterCard. I think last I looked, we're about half of all of MasterCard's U.S. virtual card business. And I think, we're the second-largest MasterCard issuer of commercial cards across every product line. So I think they like us because we're relatively important to them on the commercial side.

Got it. Quick final question. On the MasterCard topic, when do you fully lap the MasterCard card conversion from a year ago? And is there a point where it could even become a tailwind as you exit the year?

Yes. It's Ron again. So I'm actually looking at that slide. So I'd say that it is still -- it was a negative in Q2 that we reported. It'll be a negative in Q3. And I'm looking at a page that says it'll turn positive in Q4. So part of the reason that we're outlooking, call it, plus 8% organic in the fuel in Q4 is that, that boat anchor is finally making the turn from the minus to the plus column.

The next question is coming from the line of Tien-tsin Huang with JPMorgan.

I want to -- some good nonfuel performance, obviously. So on the toll front, how much of the business is tied to volume versus subscription? I see that toll transactions were down again, but revenues 20 plus again. So I was just trying to better model that, we've been getting that question a lot.

Yes, Tien-tsin. It's Ron. So again, the majority, not all, but the majority of the model there is tag-based. You pay a fixed amount for a tag for a month. And so what I called out is that our active tags that we bill for grew 5% in Q2 versus the prior Q2. So that's our best metric for volume. With that said, we do now get, call it, 20% of the revenue base is sensitive to transaction. And to your point, transactions, I think, that the prints were down a bit, but the strike, I think I mentioned, had about a 5% negative impact in transaction count. So we think trans would have grown, call it, a couple 2%, 3% in addition to the tag growth, which is really more selling. And then we obviously picked up incremental revenue from parking and fuel, which obviously is not total transactions and stuff. So I'd say, call it, half to pick a number out of 20, call it, 5 tags, a couple with tran and we get some revenue from that. And then the increment would be incremental fuel spend and incremental parking revenues. And then the other bounce is basically the program we put in place to get paid a bit more money from the high usage, particularly the trucking clients that use the product 80x a month and put a lot of spend on the program.

Yes. Okay. So it's pretty durable given that mix that you're describing. But how about -- just to bring it up at a higher level into Brazil. Has your outlook changed FX aside? I know it's hard thing to say in Brazil. But FX aside, what's going on with the election and the macro situation, has your outlook there changed? And what's your appetite to do more there organically or inorganically?

Yes. I mean, it's a good question. I guess it's still difficult. I don't have it in front of me, but I think the economy is still 0 to plus 1 or plus 1 for the full year. And I think things are a bit frozen, right, with the election in the fall. But I'd say we're still long on it. I've said it a million times that when you step way back, it's a big and early days payments market for everything that we do. One of our kind of comps is Edenred. Half their profits are in that market and not half of ours are. So I'd say that we still like it a lot because of the potential, Tien-tsin, and like others, hope we can get to the other side of this instability.

Okay. That's great. One last one. Sorry to take up a third question here. But SMB volume, you said was up over 30. The digital booking tool, which you mentioned last quarter was going to work. Could that -- is just the beginning? Could that actually improve from here? I'm just curious how sustainable that benefit was.

Yes. I mean, I think the fascinating -- that's another great question, the fascinating part is we've trained those 10,000 small companies for years now how to use the product, which is to call themselves or walk in. And even that group that's been around a long time, 1/3 of them use the booking tool. Of the brand-new accounts, for example, that signed up in Q1, 70% of all the SMB rooms were booked with the tool. So the new people that hear it from the get-go use it more. So the first thing is the mix alone will increase it sequentially. And then second, I think as we keep marketing it to the "old" customer base, we'll get more lift. So my guess as you roll out a year, you'll be at 50% or 60% of all SMB will be booked with that tool.

The next question is coming from the line of Oscar Turner with SunTrust Robinson Humphrey.

My first question is on beyond fuel. When do you think that initiative can be incremental to the segment's revenue growth? And then can you give any color on adoption, like what percent of fuel card customers are eligible to use it? And how many of them have used it to date?

Yes, Oscar, it's Ron. I'd say I wish I could. I'd say that again, it's still a very early day. So if you think about it, we've got like 45% of our company is fuel cards and, call it, 10 businesses right around the world. And so we're introducing different flavors, different versions of this beyond fuel in different places. So we have different things happening here in our U.S. local business than we have in our U.S. trucking business, than we have in our U.K. business. So the first headline is the approaches for beyond fuel are a bit different depending on the specific line of business. But I'd say what the good news is, which I was trying to call out is, the early reactions are encouraging. So customers are taking up this AP companion card. We've got 3 of 14 still selling the BuilderPro construction card. So the problem is we're not long enough into the thing to turn it into a certain model yet. I'd say as we get closer to the end of the year and we build our '19 plans, ask me again and we should have a clearer thing. But that would be, back to Bob's question earlier, I think that's the delta for people that want to bet. That's the vector for us -- the pace of that could drive another point or 2 or 3 faster growth if that stuff could materialize faster.

Okay. And second is just on the long-term profit margin outlook. You guys have outlined a number of growth initiatives that you're executing on, some of which required building out sales force or accepted networks. So how should we think about the ability to maintain your current profit margin levels even as you reinvest towards these growth initiatives?

Yes. We like our chances of those inching up. I think you know us well enough. We're not in the charity press release business. We're in the profitable growth business. So we try to obviously onboard business that we can make money. And so I'd say the things that would cause us to have higher margins are; a, just the operating leverage. We still have 30%, 40% of the company's cost structure is relatively fixed, so we have that going for us. And then, b, these add-on things that you brought up earlier carry better margins because many of them are sold back to the same clients. And so obviously, the selling costs and servicing costs of an add-on is, by its nature, lower, and thus the add-on margins are higher. So I'd say those 2 things bode well for higher margins. And then I think just pace of growth and investment goes the other way, right? If we decide to step up sales investment or even more IT or innovation investment. So I'd say, if you net those 2, our forecast over the next few years would be to keep ticking it up positive a bit.

[Operator Instructions] Our next question is coming from the line of Ashish Sabadra with Deutsche Bank.

To bring solid growth in the fuel card business from 1% to 5% and you're talking about 8% growth for the fourth quarter, if you could just -- obviously, the headwinds are coming off, but can you also talk about the sales traction that you've seen here? Like we run the same [ circuit ] on this, on the fuel card specifically. And then also, in the same light, if you can talk about the Casey run, how should we think about it? What really drove that win?

Yes. Ashish, on the first part of the question, I'd say our confidence in the acceleration is mostly what you said, which is, okay, the print for this quarter was 5% and we're outlooking 8%. I think David asked a bit ago -- asked me about GFN and I said it was a negative impact in Q2 and our plans are for that to turn the other way. So a lot of the acceleration from 5% to 8% is literally just moving that boat anchor aside. With that said, I hope you didn't miss that we sold more fuel card business globally this past quarter than ever, ever in the history of the company, a record level of it. And so assuming our retention or attrition stays kind of where it is, retention of 90%, obviously, the adding of incremental fuel sales will help lift that thing above 8%. So to us, it's get the boat anchor aside so the growth is clean; b, pick up the sales volume, which we did again in the quarter; and then third, Oscar's comment about the beyond fuel, get the beyond fuel to take. Those are the 3 plans, if you will, to get this thing back to an attractive number. On Casey's, your part 2 question, I think you asked timing or size or both?

Both and also what drove the -- what drove that win? What are the criteria that Casey was looking for in your product that drove that win?

I got you. So first on the why us. I think all of these partner private label things have a similar screen. They have a, "Hey! Can you do it? Can you operate the thing?" So I think, there's a few of us that have the systems and the people to actually be able to do it and not goof it up. So they would look at SLAs of our other partners, reference us that we can do the work. Then two is volume or growth that they believe that we can sell, that we have selling systems that can work. And then three is obviously the price. And so I'd say those are the 3 main criteria. And so I think us versus others that did probably check the box on the first one. Obviously, other people in the space, WEX or Citibank can do cards. And then I think that the view of our ability to grow the volume and whatever our price proposal was would be the 2 things that caused them to pick us. In terms of timing, we're looking at that conversion starting in Q4 and running into the beginning of next year. And although we don't give individual client revenues, I tell you, it's a single-digit millions annualized contract.

The next question is coming from the line of Sanjay Sakhrani with KBW.

A question on the M&A and new partnership front and whether or not you guys are getting closer to anything on those fronts.

Yes. Ron again. So on the M&A front, I think I mentioned on the last call. We're actually -- we were on the 5-yard line with something we decided no on, so something that was close we kind of kicked out. But I'm looking at the list in front of me. I'd say that we've got 3 or 4 deals that are active, what I use the term, they're in the works now. Looking at them, they're call them, $200 million to $400 million-ish in size, and then there's one larger deal. So I'd say that nothing we're going to announce in the next 30 days, but things that were mid and getting layered on right now. On the partner front, probably the same. I got that page in front of me. We've got a couple of things here in the U.S. We've got something in Europe. We've even got something in Brazil. But again, I've been wrong so many times forecasting the timing of those. I'd say it appears again that we've got 3 or 4 partners that have an interest in maybe doing something, but it's not late enough for me to give you guys a steer that it will be this year.

Got it. And just to follow up on, Ron, your response to Tien-tsin's question on STP. When we look at how much of the Brazilian market has your tags, I guess Brazilian vehicles have your tag, what's the penetration rate of those tags into that market? And so what's the growth opportunity there?

So there's a couple of ways to look at it. We look at the thing in terms of total toll spend, so what's the total take from every toll booth in Brazil annually in real and then how much do we process or collect. And I think, that number in front of me, but I think it's around 60% of all the toll money that's collected in a year is collected by us. So I'd say that we're moving down the curve. We sell about a million new tags per year. Again, we've got about 5 million active holders here in Q2. We sell about a million new ones per year. So I'd say that we're moving down the curve of lighter users. Obviously, anyone on the toll, on the highway, they're going 100 times a month already have our tag. And so we're more likely to get someone that's going 5x or 3x next. So I'd say the big idea, which I don't know if I communicated it well or not, but the big, big idea there is to take that technology and the relationships we have with fueling and parking and go to the other 35 million vehicles that don't go on the highway, that just go around the cities and like park in the garages and go to Shell stations and Petrobras stations. So when we look at that and the early returns on it are people like not stopping and paying for parking when they go to a mall there and yet the companies only offer that service so far to people that are toll guys that go on the highway. So when we bought the company, our idea was we're not going to be a toll company. We're going to be a toll technology or payment company. So the message you guys ought to queue on is, how fast can we start to add users that are not toll users, that want to use fuel and parking in particular. And I'm telling you, if that works, it's 5 to 10x the market potential of the thing that they built. And again, we built a massive distribution system, almost 2,000 people in the field selling. We've turned on the digital. We've got third-party retail now. And so we've have relationships with the 3 biggest gas station fueling retailers in the country. And so we bring a fair amount to chasing this thing down. That's the growth. That's the growth.

The next question is coming from the line of Darrin Peller of Wolfe Research.

Just first on the second quarter, if you can break down again the 5% fuel growth has been, excluding the GFN issue and Chevron in the [indiscernible]. And just to be clear, wasn't there some element of pent-up demand flowing through now or shouldn't there be from the MasterCard product being kind of held off during this process that I would think would show up in full swing in Q3? Just you were saying now that the growth rate would reaccelerate up to 8% plus or I guess should we expect 8% plus in third quarter?

Darrin, yes, if we exclude the impact of the GFN conversion issue and Chevron, the fuel card growth category would have grown around 8% organically. So again, it's in line with the guidance that we previously gave last quarter that growth rates are going to start accelerating in the space. And again, we're going to start exiting at a -- we're going to clear the GFN issue particularly as we get to Q4, we'll have a cleaner kind of 8% or so growth rate in that quarter as we exit the year.

Darrin, it's Ron on the part 2 question. Hey, you got a bunch of closer retail, so you got a bunch of hot bread lines with people at the door coming in. I'd say again that toe stubbing we did with GFN, not only impacted the customers that were on GFN, but hurt the productivity big time of our sales force. We've turned them into service reps for, oh, my God, I don't know, 4 or 5 months, yes, 4 to 6 months, trying to help clients they had sold when the thing was broken and stopped. And so it's been a way longer recovery of getting that group of people back, a. And then, b, because we thought the GFN platform was going to be the platform, a number of the new products we had built only ran on that platform. So I made the decision not to go forward with that and put those new products on that platform but to put them back on the old platform we had, so that took us another 3 or 4 months to kind of reengineer that, so adding the salespeople selling new things that they didn't have confidence in. And so it's not really a pent-up demand. I really view it as a recovery that finally, we opened a brand-new telesales center in Phoenix this past quarter mostly to get away from that pain that the people -- a couple hundred people here lived through. I wanted a clean, brand-spanking-new group of people that hadn't been through it. So I'd say that the way you should think about it is every quarter from now, we need to be building sales volume for that MasterCard product and getting farther away from that problem a year ago.

All right. Just a quick follow-up and then I'll leave it at that. Corporate Payments is still an area that we're obviously excited about. The sales pipeline continues to be so strong there. I know you have tougher comps in pricing, but I guess I just wonder why that business wouldn't go back to even 20% even if it takes a quick breather in the mid-teens. Is that -- am I thinking about this fair?

Yes. I think you are, and I think we've been with you since we started talking about this that we're huge fans of that category because of the size of it. I think the biggest issue for us, Darrin, was the structure of the thing. So when we bought that business initially, whatever size it was, it had 2 pretty big parts of its revenue. It had health care, which was a 1/3 or 40% of the business when we bought it, and it had a fair amount of partners and resellers in it, call it another quarter or third, so 50% or more of the business was that. Will those 2 segments keep going the wrong way even 3 years later. The health care business continues to decline even in Q2, and so it sits inside of that 20% plus. Still, health care was minus, although it was smaller. And second, we kept getting repriced on renewals of the big reseller partner. So even though the volume goes up, we get less money. So what I'd say to you is, the non-health care and non-partner business is probably growing 35% just to pick a number. And so what I'd say is we are -- we're obviously -- the guy running, and we were taking the business away from these 2 things that I'm saying that were not my favorites to verticals that we like, like construction, media and just general AP. And so once we kind of ring through the other side of this, the non-health care or non-reseller piece will be smaller parts, and you'll see to your point a 20% plus business going forward. How long it's going to take us to get that thing completely ironed out, it'll be sometime in the next year would be my guess. So it's effectively, remaking that business in flight is what we're doing.

The next question is coming from the line of Jim Schneider with Goldman Sachs.

I was wondering if you can maybe kind of address the same-store sales trends you've seen. I think you talked about up 2 in the quarter. Can you maybe talk about where you think that's kind of going up, down or sideways as we go forward and maybe any puts and takes in terms of industries within that?

Yes. Jim, it's Ron again. I'd say like we always say, we're not super smart in terms of the forecasting of same-store and GDP and stuff, but we have seen certainly in the U.S. now at least 3 or 4 quarters in a row that have been in the plus column. And this Q2 that just finished, we had super health in lodging, in corporate pay stays and in Russia, those 3 were way up in terms of growth of the existing customer base. So again, in our plans and the guidance we gave you, we're thinking the things kind of where it's been, kind of 1% to 2%, I think is what Eric and I modeled for the rest of the year. But again, it's not a metric that's really super easy to forecast.

Completely understand, but it's helpful color. And then maybe, as a follow-up. Can you maybe just talk about kind of with Cambridge in almost a year in the rearview mirror, your overall approach to the accounts payable market, whether your -- kind of how satisfied have you been with that acquisition so far? And then going forward, from an M&A perspective, what do you think you might want to actually add more assets to bolster that AP portfolio either in terms of the size of business or anything else?

Yes. That's a really good question. I know lots of people maybe even on this call for some reason don't love the international payments FX business. Maybe there're some players out there that haven't done as well, but we're delighted. I told the CEO earlier this week coming up on a year that we are so happy we bought his company, their company. It got off to a bit of a slow start because I'm working on really too many things, but they got through that. They've grown mid-teens plus the last couple of quarters. Our outlook in good growth. The sales are way, way up, 25%, 30% up over the prior year. So I'd say at the highest level, we are really happy that we're in the space. Number two, we're starting to see some synergies from the cross-selling to the tune of $4 million or $5 million of new sales, we're expecting as we exit this year from our Comdata people selling the Cambridge International pay people. So that makes me -- us feel good about the relatedness of the businesses that the Cambridge clients obviously pay domestic AP too, along with international AP. And so we like the fact that we're in both of those. And then last thing I'd say is this whole AP automating and digitizing AP, we think -- I think, it's just -- it is a massive opportunity. And I worked at ADP for almost 10 years and half the expense structure on the planet is people and the other half is vendors. And so building the "ADP of AP" is a theme we have in the company that we probably will take bigger positions in this space over the coming years. We like it a lot.

Our next question is coming from the line of Peter Christiansen with Citibank.

Just 2 quick ones. First, your competitor this morning was shipping -- well, at least playing with our guidance a little bit as it relates to the Chevron transition. Looks like timing might be pushed off a little bit there. Can you just remind us, how you're factoring that into the outlook?

Yes. Peter, this is Eric. Yes, we're now thinking we'll probably have that portfolio for the remainder of 2018. So we've kind of built that in. We originally were forecasting to have it kind of mostly through the third quarter. We'll probably now have it mostly through the fourth quarter, then we'll transition away from it as we get in the next year.

That's helpful. And then the lodging business is doing fantastic. And just maybe commentary on -- we're seeing more and more articles on this -- on the trucker shortage here in the U.S. It seems to not be impacting the lodging business at all, but any general comments on if you're seeing any improvements there, either on the fuel card side or in the lodging side.

Well, on the lodging side, I mean, clearly, we're seeing increases in volume all over the portfolio. As we said early on, we're focusing more downmarket where there are smaller fleets in an area where that business has traditionally not sold in. So we've been extremely successful, and it's an area that's very underpenetrated in this space. So we've seen a lot of success, and we think we're going to continue to see a lot of success. And now adding the digital tool, booking tool now added even more incremental rooms to the business as truckers are starting to use that tool a lot to book their new reservations and it's business that we're gaining that we used to, kind of, lose a little bit of in the past. So we're very, very bullish on the continued success of that business going forward.

Our next question is coming from the line of Matthew O'Neill with Autonomous Research.

Ron, I was hoping I could follow-up on a comment you made in your prepared remarks around sales channels and working with new partners like merchant acquirers. I was just curious kind of what the opportunity is there, who and how are you working together and any other details you could provide on that?

Yes. That's a really good question. I think that I'm friends with Jeff Sloan of Global and Frank, so I know both of those guys and their businesses. So I think the new news for us is, call it, over the last 5 or 10 years, those companies have signed up way more kind of service businesses, think of a plumbing or construction person going out to a house and getting paid with a card now instead of billing. And they're not super important accounts to an acquirer because their volumes are relatively low, but they could be super important accounts to us because they buy more fuel than they run credit card transactions. So I'd say the opportunity that we're exploring is kind of leveraging their channel in their existing client base that's in the service-centric kinds of businesses to take some of our card products. So our products fit some of their customers, and both of those companies are quite used to partner work and kind of working obviously, for example, with banks and ISOs and bars and stuff. So I think it's right in their wheelhouse to maybe work with someone like us. So that's the idea, is to use of their relationships and customers and channels and maybe put some of our product line in.

Got it. And would they think about working the relationship in the opposite direction as well potentially? Or is that premature?

They would. They both are smart guys, and they had some reciprocal ideas of some ways that we could help them. I mean, on that point, just this idea we talked and I guess, Peter said in the last call about winning and people talk a lot about nameplates and stuff, this is to remind people. We sold 30,000 new business accounts in Q2, 30,000 new businesses joined our portfolio. And so for us, this word winning is not a name of a company. It'd be a long list for us to name who we're winning, but I want to make sure people leave the call that in our view, that's winning, selling more new business than you ever had and selling diversified business that you can make a buck on is our idea, so just an FYI.

It appears we have no additional questions at this time, and this does conclude today's teleconference. Ladies and gentlemen, we thank you for your participation, and you may disconnect your lines at this time.