World Fuel Services Corporation (NYSE: INT)
Second-Quarter 2021 Highlights
- Total gross profit of $183.9 million, down 14%
year-over-year
- GAAP net income of $17.6 million, or $0.28 per diluted
share
- Adjusted net income of $25.0 million, or $0.39 per diluted
share
- Adjusted EBITDA of $59.8 million
“As travel and economic activity continue to recover, we have
seen volumes improve across our businesses and are optimistic about
increasing demand for the balance of the year,” stated Michael J.
Kasbar, chairman and chief executive officer of World Fuel Services
Corporation. “We have also been positioning ourselves to best serve
the needs of our customers as they navigate the ongoing evolution
of energy consumption.”
For the second quarter, our aviation segment generated gross
profit of $87.4 million, a decrease of 5% year-over-year,
principally driven by a reduction in our government-related
activity in Afghanistan and lower average margins as a result of
returning to a more normalized core business mix. Our marine
segment generated gross profit of $22.7 million, a decrease of 39%
year-over-year, principally attributable to lower profitability as
compared to the second quarter of 2020, which benefited from
volatility arising from the implementation of the IMO 2020
regulations, as well as competitive market conditions and limited
price volatility. Our land segment generated gross profit of $73.8
million, a decrease of 13% year-over-year, principally related to
the sale of the MultiService payment solutions business in
September 2020, partially offset by increased demand in North
America and World Kinect.
“Our disciplined focus on cost and working capital management
has positioned us well for growth, which should enable us to drive
increased returns to our shareholders,” said Ira M. Birns,
executive vice president and chief financial officer. “The
continued strength of our balance sheet and liquidity profile will
enable us to capitalize on future organic and strategic investment
opportunities.”
COVID-19 Update
Throughout 2020, the COVID-19 pandemic had a significant impact
on the global economy as a whole, and the transportation industries
in particular, which has continued into 2021. Many of our customers
in these industries, especially commercial airlines, have
experienced a substantial decline in business activity arising from
the various measures enacted by governments around the world to
contain the spread of the virus. While travel and economic activity
has begun to improve in certain regions, activity in many parts of
the world continues to be negatively impacted by travel
restrictions and lockdowns. The ultimate global recovery from the
pandemic will be dependent on, among other things, actions taken by
governments and businesses to contain and combat the virus,
including any variant strains, the speed and effectiveness of
vaccine production and global distribution, as well as how quickly,
and to what extent, normal economic and operating conditions can
resume on a sustainable basis globally.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures
(collectively, the “Non-GAAP Measures”), including adjusted net
income, adjusted diluted earnings per share, and adjusted earnings
before interest, taxes, depreciation and amortization (“EBITDA”).
The Non-GAAP Measures exclude acquisition and divestiture related
expenses, restructuring costs, impairments, gains or losses on the
extinguishment of debt and gains or losses on business dispositions
primarily because we do not believe they are reflective of our core
operating results.
We believe that the Non-GAAP Measures, when considered in
conjunction with our financial information prepared in accordance
with GAAP, are useful to investors to further aid in evaluating the
ongoing financial performance of the Company and to provide greater
transparency as supplemental information to our GAAP results.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. In addition, our presentation of
the Non-GAAP Measures may not be comparable to the presentation of
such metrics by other companies. Non-GAAP diluted earnings per
common share is computed by dividing non-GAAP net income
attributable to World Fuel Services and available to common
shareholders by the sum of the weighted average number of shares of
common stock, stock units, restricted stock entitled to dividends
not subject to forfeiture and vested restricted stock units
outstanding during the period and the number of additional shares
of common stock that would have been outstanding if our outstanding
potentially dilutive securities had been issued. Investors are
encouraged to review the reconciliation of these Non-GAAP Measures
to their most directly comparable GAAP financial measures in this
press release and on our website.
Information Relating to Forward-Looking
Statements
This release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding our beliefs and expectations about
increasing demand for the balance of the year, our competitive
position and growth opportunities, our expectations about our
ability to capitalize on future organic and strategic investment
opportunities, our beliefs and expectations about our ability to
increase returns to our shareholders, as well as the ultimate
impact of the coronavirus pandemic on us. These forward-looking
statements are qualified in their entirety by cautionary statements
and risk factor disclosures contained in the Company’s Securities
and Exchange Commission (“SEC”) filings, including the Company’s
most recent Annual Report on Form 10-K filed with the SEC. Actual
results may differ materially from any forward-looking statements
due to risks and uncertainties, including, but not limited to: our
ability to effectively manage the effects of the COVID-19 pandemic,
the extent of the impact of the pandemic on ours and our customers'
sales, profitability, operations and supply chains due to actions
taken by governments and businesses to contain the virus, such as
restrictions on travel, the speed and effectiveness of vaccine
development and distribution, customer and counterparty
creditworthiness and our ability to collect accounts receivable and
settle derivative contracts, particularly for those customers most
significantly impacted by the pandemic, sudden changes in the
market price of fuel or extremely high or low fuel prices that
continue for an extended period of time, the loss of, or reduced
sales to a significant government customer, such as the North
Atlantic Treaty Organization as a result of the ongoing troop
withdrawal in Afghanistan, the availability of cash and sufficient
liquidity to fund our working capital and strategic investment
needs, adverse conditions in the markets or industries in which we
or our customers and suppliers operate such as the current global
economic environment as a result of the coronavirus pandemic, our
failure to comply with restrictions and covenants in our senior
revolving credit facility and our senior term loans, including our
financial covenants, our ability to effectively utilize the
proceeds from the sale of the Multi Service business and derive the
expected benefits, our ability to manage the changes in supply and
other market dynamics in the regions where we operate, our ability
to successfully execute and achieve efficiencies, our ability to
achieve the expected level of benefit from any restructuring
activities and cost reduction initiatives, our ability to
successfully implement our growth strategy and integrate acquired
businesses and recognize the anticipated benefits, unanticipated
tax liabilities or adverse results of tax audits, assessments, or
disputes ,our ability to capitalize on new market opportunities,
risks related to the complexity of U.S. Tax Cuts and Jobs Act and
any subsequently issued regulations and our ability to accurately
predict the impact on our effective tax rate and future earnings,
our ability to effectively leverage technology and operating
systems and realize the anticipated benefits, potential liabilities
and the extent of any insurance coverage, actions that may be taken
under the new administration in the U.S. that increase costs or
otherwise negatively impact ours or our customers and suppliers
businesses, the outcome of pending litigation and other
proceedings, the impact of quarterly fluctuations in results,
particularly as a result of seasonality, supply disruptions, border
closures and other logistical difficulties that can arise when
sourcing and delivering fuel in areas that are actively engaged in
war or other military conflicts, our failure to effectively hedge
certain financial risks associated with the use of derivatives,
uninsured losses, the impact of climate change and natural
disasters, adverse results in legal disputes, and other risks
detailed from time to time in our SEC filings. In addition, other
current or potential risks and uncertainties related to the
coronavirus pandemic include, but are not limited to: disruptions
resulting from office and facility closures, reductions in
operating hours, and changes in operating procedures, including
additional cleaning and disinfecting procedures, possible
infections or quarantining of our employees which could impact our
ability to service our customers or operate our business, notices
from customers, suppliers and other third parties asserting force
majeure or other bases for their non-performance, losses on hedging
transactions with customers arising from the decline in fuel prices
and their inability to benefit from the reduced cost of fuel due to
substantial reductions in their operations, heightened risk of
cybersecurity issues as digital technologies may become more
vulnerable and experience a higher rate of cyber-attacks in a
remote connectivity environment, reduction of our global workforce
to adjust to market conditions, including increased costs
associated with severance payments, retention issues, and an
inability to hire employees when market conditions improve, the
impact of asset impairments, including any impairment of the
carrying value of our goodwill in our aviation and land segments,
as well as other accounting charges if expected future demand for
our products and services materially decreases, a structural shift
in the global economy and its demand for fuel and related products
and services as a result of changes in the way people work, travel
and interact, or in connection with a global recession. New risks
emerge from time to time and it is not possible for management to
predict all such risk factors or to assess the impact of such risks
on our business. Accordingly, we undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, changes in expectations, future
events, or otherwise, except as required by law.
About World Fuel Services
Corporation
Headquartered in Miami, Florida, World Fuel Services is a global
energy management company involved in providing energy procurement
advisory services, supply fulfillment and transaction and payment
management solutions to commercial and industrial customers,
principally in the aviation, marine and land transportation
industries. World Fuel Services sells fuel and delivers services to
its clients at more than 8,000 locations in more than 200 countries
and territories worldwide.
For more information, call 305-428-8000 or visit
www.wfscorp.com.
-- Some amounts in this press release may not
add due to rounding. All percentages have been calculated using
unrounded amounts --
WORLD FUEL SERVICES
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited - In millions, except
per share data)
June 30, 2021
December 31, 2020
Assets:
Current assets:
Cash and cash equivalents
$
742.7
$
658.8
Accounts receivable, net of allowance for
credit losses of $36.1 million and $53.8 million as of June 30,
2021 and December 31, 2020, respectively
1,835.0
1,238.4
Inventories
426.5
344.3
Prepaid expenses
74.4
51.1
Short-term derivative assets, net
81.1
66.4
Other current assets
199.0
280.4
Total current assets
3,358.6
2,639.3
Property and equipment, net
334.2
342.6
Goodwill
858.9
858.6
Identifiable intangible and other
non-current assets
698.1
659.8
Total assets
$
5,249.8
$
4,500.3
Liabilities:
Current liabilities:
Current maturities of long-term debt
$
30.1
$
22.9
Accounts payable
1,844.8
1,214.7
Customer deposits
153.4
155.8
Accrued expenses and other current
liabilities
364.2
290.6
Total current liabilities
2,392.6
1,684.0
Long-term debt
491.6
501.8
Non-current income tax liabilities,
net
216.8
215.5
Other long-term liabilities
199.1
186.1
Total liabilities
3,300.1
2,587.4
Commitments and contingencies
Equity:
World Fuel shareholders' equity:
Preferred stock, $1.00 par value; 0.1
shares authorized, none issued
—
—
Common stock, $0.01 par value; 100.0
shares authorized, 63.3 and 62.9 issued and outstanding as of June
30, 2021 and December 31, 2020, respectively
0.6
0.6
Capital in excess of par value
211.3
204.6
Retained earnings
1,858.4
1,836.7
Accumulated other comprehensive loss
(124.1
)
(132.6
)
Total World Fuel shareholders' equity
1,946.2
1,909.3
Noncontrolling interest
3.5
3.6
Total equity
1,949.7
1,912.9
Total liabilities and equity
$
5,249.8
$
4,500.3
WORLD FUEL SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited – In millions, except
per share data)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2021
2020
2021
2020
Revenue
$
7,085.5
$
3,158.3
$
13,043.4
$
11,173.5
Cost of revenue
6,901.6
2,944.5
12,667.9
10,700.9
Gross profit
183.9
213.9
375.5
472.6
Operating expenses:
Compensation and employee benefits
87.9
95.9
180.3
198.3
General and administrative
57.4
84.4
116.8
168.2
Asset impairments
4.7
18.6
4.7
18.6
Restructuring charges
3.0
3.1
5.1
4.8
Total operating expenses
153.0
202.0
306.9
389.9
Income from operations
30.9
11.9
68.6
82.7
Non-operating income (expenses), net:
Interest expense and other financing
costs, net
(10.0
)
(10.0
)
(18.7
)
(25.3
)
Other income (expense), net
(1.4
)
(4.9
)
(2.6
)
(2.7
)
Total non-operating income (expenses),
net
(11.4
)
(14.9
)
(21.3
)
(28.1
)
Income (loss) before income taxes
19.6
(3.0
)
47.2
54.6
Provision for income taxes
2.0
7.7
10.8
23.7
Net income (loss) including noncontrolling
interest
17.6
(10.7
)
36.4
31.0
Net income (loss) attributable to
noncontrolling interest
(0.1
)
(0.4
)
(0.1
)
(0.2
)
Net income (loss) attributable to World
Fuel
$
17.6
$
(10.2
)
$
36.5
$
31.2
Basic earnings (loss) per common share
$
0.28
$
(0.16
)
$
0.58
$
0.49
Basic weighted average common shares
63.4
63.3
63.2
64.1
Diluted earnings (loss) per common
share
$
0.28
$
(0.16
)
$
0.57
$
0.48
Diluted weighted average common shares
63.8
63.3
63.6
64.4
Comprehensive income:
Net income (loss) including noncontrolling
interest
$
17.6
$
(10.7
)
$
36.4
$
31.0
Other comprehensive income (loss):
Foreign currency translation
adjustments
4.8
5.1
0.8
(27.9
)
Cash flow hedges, net of income tax
benefit of $2.9 and $7.2 for the three months ended June 30, 2021
and 2020, respectively, and net of income tax expense of $2.7 and
$0.2 for the six months ended June 30, 2021 and 2020,
respectively
(8.6
)
(21.0
)
7.8
0.7
Other comprehensive income (loss)
(3.8
)
(16.0
)
8.5
(27.2
)
Comprehensive income (loss) including
noncontrolling interest
13.7
(26.7
)
44.9
3.7
Comprehensive income (loss) attributable
to noncontrolling interest
(0.1
)
—
(0.1
)
—
Comprehensive income (loss) attributable
to World Fuel
$
13.8
$
(26.7
)
$
45.0
$
3.7
WORLD FUEL SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited - In millions)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2021
2020
2021
2020
Cash flows from operating activities:
Net income (loss) including noncontrolling
interest
$
17.6
$
(10.7
)
$
36.4
$
31.0
Adjustments to reconcile net income
including noncontrolling interest to net cash provided by operating
activities:
Depreciation and amortization
20.7
22.3
40.5
44.2
Provision for credit losses
(1.1
)
24.7
2.4
34.6
Share-based payment award compensation
costs
3.3
2.3
12.0
0.6
Deferred income tax expense (benefit)
(8.6
)
6.4
(15.4
)
(5.3
)
Foreign currency (gains) losses, net
4.0
22.8
(8.9
)
3.0
Other
16.0
41.1
10.5
0.2
Changes in assets and liabilities, net of
acquisitions and divestitures:
Accounts receivable, net
(161.9
)
562.3
(600.7
)
1,462.6
Inventories
(88.3
)
37.5
(77.4
)
282.8
Prepaid expenses
(21.3
)
(14.2
)
(24.3
)
6.4
Short-term derivative assets, net
(37.7
)
78.9
39.6
(110.4
)
Other current assets
(7.4
)
(0.5
)
61.9
17.2
Cash collateral with counterparties
29.1
54.5
24.7
17.6
Other non-current assets
(24.9
)
11.0
(28.9
)
(18.4
)
Accounts payable
211.6
(469.6
)
605.9
(1,527.1
)
Customer deposits
20.1
(6.0
)
(2.7
)
(2.3
)
Accrued expenses and other current
liabilities
40.4
(126.7
)
41.1
(25.2
)
Non-current income tax, net and other
long-term liabilities
25.6
(0.6
)
23.8
33.7
Total adjustments
19.6
246.3
104.2
214.1
Net cash provided by (used in)
operating activities
37.2
235.6
140.6
245.1
Cash flows from investing activities:
Acquisition of business, net of cash
acquired
—
(0.1
)
—
(130.6
)
Capital expenditures
(12.2
)
(15.5
)
(14.2
)
(32.9
)
Other investing activities, net
(4.8
)
(4.2
)
(5.4
)
(5.3
)
Net cash provided by (used in)
investing activities
(17.0
)
(19.8
)
(19.7
)
(168.7
)
Cash flows from financing activities:
Borrowings of debt
0.1
348.0
0.3
2,080.0
Repayments of debt
(4.4
)
(452.4
)
(8.9
)
(1,613.7
)
Dividends paid on common stock
(7.5
)
(6.5
)
(13.6
)
(13.0
)
Repurchases of common stock
—
—
—
(55.6
)
Other financing activities, net
(3.1
)
(1.2
)
(13.5
)
(2.8
)
Net cash provided by (used in)
financing activities
(14.9
)
(112.1
)
(35.7
)
394.9
Effect of exchange rate changes on cash
and cash equivalents
2.1
4.9
(1.4
)
(11.6
)
Net increase (decrease) in cash and
cash equivalents
7.3
108.6
83.9
459.6
Cash and cash equivalents, as of the
beginning of the period
735.3
537.0
658.8
186.1
Cash and cash equivalents, as of the
end of the period
$
742.7
$
645.7
$
742.7
$
645.7
WORLD FUEL SERVICES
CORPORATION
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - In millions, except
per share data)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
Non-GAAP financial measures and
reconciliation:
2021
2020
2021
2020
Net income (loss) attributable to World
Fuel
$
17.6
$
(10.2
)
$
36.5
$
31.2
Acquisition and divestiture related
expenses
0.5
1.2
2.9
2.2
Asset impairments
4.7
18.6
4.7
18.6
Restructuring charges
3.0
3.1
5.1
4.8
Income tax impacts
(0.9
)
(4.5
)
(3.6
)
(5.1
)
Adjusted net income (loss) attributable to
World Fuel
$
25.0
$
8.1
$
45.7
$
51.7
Diluted earnings (loss) per common
share
$
0.28
$
(0.16
)
$
0.57
$
0.48
Acquisition and divestiture related
expenses
0.01
0.02
0.05
0.03
Asset impairments
0.07
0.29
0.07
0.29
Restructuring charges
0.05
0.05
0.08
0.07
Income tax impacts
(0.01
)
(0.07
)
(0.06
)
(0.08
)
Adjusted diluted earnings (loss) per
common share
$
0.39
$
0.13
$
0.72
$
0.80
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
Non-GAAP financial measures and
reconciliation:
2021
2020
2021
2020
Income from operations
$
30.9
$
11.9
$
68.6
$
82.7
Depreciation and amortization
20.7
22.3
40.5
44.2
Acquisition and divestiture related
expenses
0.5
1.2
2.9
2.2
Asset impairments
4.7
18.6
4.7
18.6
Restructuring charges
3.0
3.1
5.1
4.8
Adjusted EBITDA (1)
$
59.8
$
57.1
$
121.8
$
152.5
(1)
The Company defines adjusted EBITDA as
income from operations, excluding the impact of depreciation and
amortization, and items that are considered to be non-operational
and not representative of our core business, including those
associated with acquisition and divestiture related expenses, asset
impairments, and restructuring charges.
WORLD FUEL SERVICES
CORPORATION
BUSINESS SEGMENTS
INFORMATION
(Unaudited - In millions)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
Revenue:
2021
2020
2021
2020
Aviation segment
$
2,805.8
$
1,020.6
$
4,900.8
$
4,784.8
Land segment
2,457.2
1,197.6
4,645.4
3,303.6
Marine segment
1,822.4
940.2
3,497.1
3,085.2
Total revenue
$
7,085.5
$
3,158.3
$
13,043.4
$
11,173.5
Gross profit:
Aviation segment
$
87.4
$
91.9
$
164.1
$
185.0
Land segment
73.8
84.8
163.3
191.0
Marine segment
22.7
37.2
48.2
96.6
Total gross profit
$
183.9
$
213.9
$
375.5
$
472.6
Income from operations:
Aviation segment
$
34.0
$
9.0
$
57.0
$
38.1
Land segment
8.1
9.7
40.9
35.3
Marine segment
4.8
13.3
11.1
47.2
Total segment income from operations
46.9
32.0
109.0
120.6
Corporate overhead - unallocated
(15.9
)
(20.1
)
(40.5
)
(37.9
)
Total income from operations
$
30.9
$
11.9
$
68.6
$
82.7
SALES VOLUME SUPPLEMENTAL
INFORMATION
(Unaudited - In millions)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
Volume (Gallons):
2021
2020
2021
2020
Aviation Segment
1,373.8
688.1
2,517.1
2,532.8
Land Segment (1)
1,288.5
1,168.3
2,591.5
2,549.3
Marine Segment (2)
1,211.4
1,056.8
2,328.8
2,347.9
Consolidated Total
3,873.6
2,913.2
7,437.5
7,430.0
(1)
Includes gallons and gallon equivalents of
British Thermal Units (BTU) for our natural gas sales and Kilowatt
Hours (kWh) for our World Kinect power business.
(2)
Converted from metric tons to gallons at a
rate of 264 gallons per metric ton. Marine segment metric tons were
4.6 and 8.8 for the three and six months ended June 30, 2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729006152/en/
World Fuel Services Corporation Ira M Birns, 305-428-8000
Executive Vice President & Chief Financial Officer
Glenn Klevitz, 305-428-8000 Vice President, Treasurer &
Investor Relations
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