World Fuel Services Corporation (NYSE: INT)
Third-Quarter 2021
Highlights
- Total gross profit of $197.5 million, down 8%
year-over-year
- GAAP net income of $21.7 million, or $0.34 per diluted
share
- Adjusted net income of $22.7 million, or $0.36 per diluted
share
- Adjusted EBITDA of $63.4 million
“A strengthening economy combined with easing global travel
restrictions contributed to another strong year-over-year increase
in aviation activity,” stated Michael J. Kasbar, chairman and chief
executive officer. “Despite lingering effects of the pandemic and
ongoing supply chain disruptions, we are well positioned to drive
growth in our core business activities while serving the evolving
energy requirements of our customers.”
For the third quarter, our aviation segment generated gross
profit of $113.0 million, an increase of 16% year-over-year,
principally related to increased volumes driven by the continued
recovery in demand for travel, partially offset by a reduction in
our government-related activity in Afghanistan which concluded in
the quarter. Our marine segment generated gross profit of $21.9
million, a decrease of 32% year-over-year, driven by a decline in
average margins in the core resale business. Our land segment
generated gross profit of $62.6 million, a decrease of 26%
year-over-year, principally related to the sale of the MultiService
payment solutions business last year.
“Despite steadily increasing fuel prices, we generated $83
million of cash flow from operations during the third quarter and
$223 million during the first nine months of the year,” said Ira M.
Birns, executive vice president and chief financial officer. “Our
solid balance sheet enables us to fund today’s announced
acquisition of Flyers Energy, while still maintaining significant
liquidity to support future growth and deliver long-term
shareholder value.”
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 attributable to World Fuel Services, adjusted diluted
earnings per common 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. Adjusted diluted earnings per
common share is computed by dividing adjusted 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
our position to drive growth in our core business activities, our
ability to support future growth and deliver long term shareholder
value, 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 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 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 the U.S.
and foreign tax legislation 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: 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 volatility in fuel prices, 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)
September 30, 2021
December 31, 2020
Assets:
Current assets:
Cash and cash equivalents
$
796.0
$
658.8
Accounts receivable, net of allowance for
credit losses of $25.4 million and $53.8 million as of September
30, 2021 and December 31, 2020, respectively
2,032.5
1,238.4
Inventories
439.3
344.3
Prepaid expenses
76.1
51.1
Short-term derivative assets, net
121.8
66.4
Other current assets
227.6
280.4
Total current assets
3,693.2
2,639.3
Property and equipment, net
334.3
342.6
Goodwill
854.7
858.6
Identifiable intangible and other
non-current assets
662.1
659.8
Total assets
$
5,544.3
$
4,500.3
Liabilities:
Current liabilities:
Current maturities of long-term debt
$
30.1
$
22.9
Accounts payable
2,024.3
1,214.7
Short-term derivative liabilities, net
211.1
50.9
Customer deposits
163.3
155.8
Accrued expenses and other current
liabilities
267.6
239.8
Total current liabilities
2,696.5
1,684.0
Long-term debt
484.2
501.8
Non-current income tax liabilities,
net
208.2
215.5
Other long-term liabilities
231.7
186.1
Total liabilities
3,620.5
2,587.4
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, 62.6 and 62.9 issued and outstanding as of
September 30, 2021 and December 31, 2020, respectively
0.6
0.6
Capital in excess of par value
190.2
204.6
Retained earnings
1,872.6
1,836.7
Accumulated other comprehensive income
(loss)
(143.6
)
(132.6
)
Total World Fuel shareholders' equity
1,919.7
1,909.3
Noncontrolling interest
4.1
3.6
Total equity
1,923.8
1,912.9
Total liabilities and equity
$
5,544.3
$
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
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Revenue
$
8,350.9
$
4,482.7
$
21,394.2
$
15,656.2
Cost of revenue
8,153.4
4,268.7
20,821.3
14,969.6
Gross profit
197.5
214.0
573.0
686.6
Operating expenses:
Compensation and employee benefits
93.5
91.4
273.9
289.8
General and administrative
60.6
80.9
177.4
249.1
Asset impairments
—
—
4.7
18.6
Restructuring charges
1.7
2.9
6.8
7.7
Total operating expenses
155.8
175.2
462.7
565.1
Income from operations
41.7
38.8
110.2
121.5
Non-operating income (expenses), net:
Interest expense and other financing
costs, net
(10.4
)
(8.7
)
(29.2
)
(34.1
)
Other income (expense), net
1.0
77.7
(1.6
)
75.0
Total non-operating income (expense),
net
(9.4
)
69.0
(30.7
)
41.0
Income (loss) before income taxes
32.3
107.8
79.5
162.4
Provision for income taxes
10.0
25.4
20.8
49.0
Net income (loss) including noncontrolling
interest
22.3
82.4
58.7
113.4
Net income (loss) attributable to
noncontrolling interest
0.6
0.5
0.5
0.2
Net income (loss) attributable to World
Fuel
$
21.7
$
82.0
$
58.2
$
113.1
Basic earnings (loss) per common share
$
0.34
$
1.29
$
0.92
$
1.77
Basic weighted average common shares
63.0
63.4
63.1
63.9
Diluted earnings (loss) per common
share
$
0.34
$
1.29
$
0.92
$
1.76
Diluted weighted average common shares
63.3
63.6
63.6
64.1
Comprehensive income:
Net income (loss) including noncontrolling
interest
$
22.3
$
82.4
$
58.7
$
113.4
Other comprehensive income (loss):
Foreign currency translation
adjustments
(11.3
)
15.1
(10.6
)
(12.9
)
Cash flow hedges, net of income tax
expense (benefit) of ($2.8) and $2.1 for the three months ended
September 30, 2021 and 2020, respectively, and net of income tax
expense (benefit) of ($0.2) and $2.3 for the nine months ended
September 30, 2021 and 2020, respectively
(8.2
)
6.1
(0.5
)
6.8
Total other comprehensive income
(loss)
(19.5
)
21.2
(11.0
)
(6.0
)
Comprehensive income (loss) including
noncontrolling interest
2.8
103.6
47.7
107.3
Comprehensive income (loss) attributable
to noncontrolling interest
0.6
—
0.5
—
Comprehensive income (loss) attributable
to World Fuel
$
2.2
$
103.6
$
47.2
$
107.3
WORLD FUEL SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited - In millions)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2021
2020
2021
2020
Cash flows from operating activities:
Net income (loss) including noncontrolling
interest
$
22.3
$
82.4
$
58.7
$
113.4
Adjustments to reconcile net income
including noncontrolling interest to net cash provided by operating
activities:
Depreciation and amortization
19.7
22.1
60.2
66.3
Provision for credit losses
0.4
23.3
2.8
57.9
Share-based payment award compensation
costs
3.4
1.9
15.4
2.5
Deferred income tax expense (benefit)
(2.7
)
(2.6
)
(18.1
)
(7.9
)
Foreign currency (gains) losses, net
(1.7
)
(2.9
)
(10.6
)
0.2
Loss (gain) on sale of business
1.7
(80.0
)
1.7
(80.0
)
Other
6.0
12.2
16.5
12.4
Changes in assets and liabilities, net of
acquisitions and divestitures:
Accounts receivable, net
(207.2
)
(179.0
)
(807.9
)
1,283.6
Inventories
(15.1
)
16.6
(92.5
)
299.4
Prepaid expenses
(2.6
)
16.1
(26.9
)
22.5
Short-term derivative assets, net
(100.6
)
42.1
(61.0
)
(68.3
)
Other current assets
(16.0
)
55.2
46.0
72.3
Cash collateral with counterparties
83.1
28.3
107.8
45.8
Other non-current assets
(61.5
)
10.9
(90.4
)
(7.6
)
Accounts payable
178.1
205.5
784.0
(1,321.6
)
Customer deposits
10.8
(8.2
)
8.1
(10.6
)
Accrued expenses and other current
liabilities
110.6
(6.3
)
151.7
(31.5
)
Non-current income tax, net and other
long-term liabilities
54.0
8.0
77.9
41.8
Total adjustments
60.4
163.1
164.6
377.2
Net cash provided by (used in)
operating activities
82.7
245.5
223.3
490.6
Cash flows from investing activities:
Acquisition of business, net of cash
acquired
—
2.0
—
(128.6
)
Proceeds from sale of business, net of
divested cash
25.0
268.4
25.0
268.4
Capital expenditures
(14.1
)
(12.6
)
(28.3
)
(45.5
)
Other investing activities, net
(1.1
)
(2.2
)
(6.5
)
(7.5
)
Net cash provided by (used in)
investing activities
9.8
255.6
(9.8
)
86.9
Cash flows from financing activities:
Borrowings of debt
—
15.0
0.3
2,095.0
Repayments of debt
(7.5
)
(589.1
)
(16.5
)
(2,202.8
)
Dividends paid on common stock
(7.6
)
(6.3
)
(21.2
)
(19.3
)
Repurchases of common stock
(24.4
)
—
(24.4
)
(55.6
)
Other financing activities, net
4.9
(3.3
)
(8.5
)
(6.0
)
Net cash provided by (used in)
financing activities
(34.6
)
(583.7
)
(70.3
)
(188.8
)
Effect of exchange rate changes on cash
and cash equivalents
(4.6
)
9.7
(6.0
)
(2.0
)
Net increase (decrease) in cash and
cash equivalents
53.3
(72.9
)
137.2
386.7
Cash and cash equivalents, as of the
beginning of the period
742.7
645.7
658.8
186.1
Cash and cash equivalents, as of the
end of the period
$
796.0
$
572.7
$
796.0
$
572.7
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - In millions, except
per share data)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
Non-GAAP financial measures and
reconciliation:
2021
2020
2021
2020
Net income (loss) attributable to World
Fuel
$
21.7
$
82.0
$
58.2
$
113.1
Acquisition and divestiture related
expenses
0.3
0.5
3.2
2.7
Gain on sale of business
(0.7
)
(80.0
)
(0.7
)
(80.0
)
Asset impairments
—
—
4.7
18.6
Restructuring charges
1.7
2.9
6.8
7.7
Income tax impacts
(0.3
)
15.4
(3.9
)
10.3
Adjusted net income (loss) attributable to
World Fuel
$
22.7
$
20.7
$
68.4
$
72.4
Diluted earnings (loss) per common
share
$
0.34
$
1.29
$
0.92
$
1.76
Acquisition and divestiture related
expenses
0.01
0.01
0.05
0.04
Gain on sale of business
(0.01
)
(1.26
)
(0.01
)
(1.25
)
Asset impairments
—
—
0.07
0.29
Restructuring charges
0.03
0.05
0.11
0.12
Income tax impacts
(0.01
)
0.24
(0.06
)
0.16
Adjusted diluted earnings (loss) per
common share
$
0.36
$
0.33
$
1.08
$
1.13
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
Non-GAAP financial measures and
reconciliation:
2021
2020
2021
2020
Income from operations
$
41.7
$
38.8
$
110.2
$
121.5
Depreciation and amortization
19.7
22.1
60.2
66.3
Acquisition and divestiture related
expenses
0.3
0.5
3.2
2.7
Asset impairments
—
—
4.7
18.6
Restructuring charges
1.7
2.9
6.8
7.7
Adjusted EBITDA (1)
$
63.4
$
64.3
$
185.1
$
216.8
(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
September 30,
For the Nine Months Ended
September 30,
Revenue:
2021
2020
2021
2020
Aviation segment
$
3,579.7
$
1,596.2
$
8,480.5
$
6,381.0
Land segment
2,670.4
1,645.2
7,315.8
4,948.8
Marine segment
2,100.7
1,241.2
5,597.8
4,326.4
Total revenue
$
8,350.9
$
4,482.7
$
21,394.2
$
15,656.2
Gross profit:
Aviation segment
$
113.0
$
97.6
$
277.1
$
282.6
Land segment
62.6
84.3
225.9
275.4
Marine segment
21.9
32.0
70.0
128.6
Total gross profit
$
197.5
$
214.0
$
573.0
$
686.6
Income from operations:
Aviation segment
$
57.0
$
29.2
$
114.0
$
67.3
Land segment
3.7
18.8
44.5
54.1
Marine segment
3.6
8.2
14.8
55.4
Corporate overhead - unallocated
(22.6
)
(17.4
)
(63.1
)
(55.3
)
Total income from operations
$
41.7
$
38.8
$
110.2
$
121.5
SALES VOLUME SUPPLEMENTAL
INFORMATION
(Unaudited - In millions)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
Volume (Gallons):
2021
2020
2021
2020
Aviation Segment
1,655.6
1,017.4
4,172.8
3,550.2
Land Segment (1)
1,293.7
1,241.6
3,885.2
3,790.8
Marine Segment (2)
1,258.8
1,151.2
3,587.7
3,499.1
Consolidated Total
4,208.2
3,410.1
11,645.6
10,840.1
(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
4.8 and 13.6 for the three and nine months ended September 30,
2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028006191/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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