World Fuel Services Corporation (NYSE: INT) today reported
second quarter net income of $29.9 million or $0.42 diluted
earnings per share compared to $48.2 million or $0.68 diluted
earnings per share in the second quarter of 2014. Non-GAAP net
income and diluted earnings per share for the second quarter,
excluding share-based compensation and amortization of acquired
intangible assets were $37.9 million and $0.53, respectively,
compared to $57.9 million and $0.81 in 2014, which also excluded an
executive non-renewal charge.
“While we posted record volumes in all segments, seasonality in
Watson Fuels and low prices coupled with reduced volatility in
marine, significantly impacted profitability,” stated Michael J.
Kasbar, chairman and chief executive officer of World Fuel Services
Corporation. “We expect a significant rebound in our results in the
second half of the year and remain optimistic about our long-term
growth prospects.”
The company’s aviation segment generated gross profit of $85.0
million, an increase of $2.1 million or 3% sequentially and $3.2
million or 4% year-over-year. The company’s marine segment
generated gross profit of $41.8 million, a decrease of $12.1
million or 23% sequentially and $7.0 million or 14% year-over-year.
The company’s land segment posted gross profit of $63.6 million, a
decrease of $15.0 million or 19% sequentially, but an increase of
$2.7 million or 4% year-over-year.
“Despite the decline in consolidated earnings this quarter, our
balance sheet has strengthened and we generated $71 million of cash
flow from operations, marking the twelfth consecutive quarter of
positive cash flow, totaling nearly $800 million over that period,”
said Ira M. Birns, executive vice president and chief financial
officer. “Our cash balance increased to nearly $500 million this
quarter, reducing our net debt-to-EBITDA to 0.8x. Our solid
financial profile will serve us well as we deploy capital resources
to fund organic growth initiatives and strategic investments.”
Non-GAAP Financial Measures
The non-GAAP financial measures exclude costs associated with
share-based compensation, amortization of acquired intangible
assets, deferred revenue purchase accounting adjustments, expenses
related to the acquisition of Watson Petroleum Limited (now known
as WFL (UK) Limited) (“Watson Petroleum”), the termination of an
employment agreement and the executive non-renewal charge primarily
because we do not believe they are reflective of the Company’s core
operating results. We believe the exclusion of share-based
compensation from operating expenses is useful given the variation
in expense that can result from changes in the fair value of our
common stock, the effect of which is unrelated to the operational
conditions that give rise to variations in the components of our
operating costs. Also, we believe the exclusion of the amortization
of acquired intangible assets, the expenses related to the
acquisition of Watson Petroleum, the termination of an employment
agreement and the executive non-renewal charge are useful for
purposes of evaluating operating performance of our core operating
results and comparing them period over period. In accordance with
the fair value provisions applicable to the accounting for business
combinations, acquired deferred revenue is often recorded on the
opening balance sheet at an amount that is lower than the
historical carrying value. Although this acquisition accounting
requirement has no impact on our business or cash flows, it
adversely impacts our reported GAAP revenue in the reporting
periods following an acquisition. We believe that the exclusion of
the deferred revenue purchase accounting adjustment is useful to
investors as an additional means to reflect trends of our business
and provides investors with financial information that facilitates
comparison of both historical and future results. We believe that
these non-GAAP financial 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
non-GAAP net income and non-GAAP diluted earnings per common share
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 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 RSUs
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.
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 expectations about our
performance during the second half of the year and our growth
prospects, initiatives and strategy. 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
Annual Report on Form 10-K filed with the SEC on February 12, 2015.
Actual results may differ materially from any forward-looking
statements due to risks and uncertainties, including, but not
limited to: our ability to effectively integrate and derive
benefits from acquired businesses, our ability to capitalize on new
market opportunities, potential liabilities and the extent of any
insurance coverage, the outcome of pending litigation and other
proceedings, the impact of quarterly fluctuations in results, the
creditworthiness of our customers and counterparties and our
ability to collect accounts receivable, fluctuations in world oil
prices or foreign currency, changes in political, economic,
regulatory, or environmental conditions, adverse conditions in the
markets or industries in which we or our customers and suppliers
operate, our failure to effectively hedge certain financial risks
associated with the use of derivatives, non-performance by
counterparties or customers on derivatives contracts, loss of, or
reduced sales, to a significant government customer, uninsured
losses, the impact of natural disasters, adverse results in legal
disputes, unanticipated tax liabilities, our ability to retain and
attract senior management and other key employees and other risks
detailed from time to time in the company’s SEC filings. 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.
About World Fuel Services
Corporation
Headquartered in Miami, Florida, World Fuel Services is a global
fuel logistics, transaction management and payment processing
company, principally engaged in the distribution of fuel and
related products and services 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.
The company's global team of market makers provides deep domain
expertise in all aspects of aviation, marine and land fuel
management. Aviation customers include commercial airlines, cargo
carriers, private aircraft and fixed base operators (FBOs), as well
as the United States and foreign governments. World Fuel Services'
marine customers include international container and tanker fleets,
cruise lines and time-charter operators, as well as the United
States and foreign governments. Land customers include petroleum
distributors, retail petroleum operators, and industrial,
commercial, residential and government accounts. The company also
offers transaction management services which consist of card
payment solutions and merchant processing services to customers in
the aviation, marine and land transportation industries. For more
information, call 305-428-8000 or visit www.wfscorp.com.
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED - IN MILLIONS)
As of June 30, December 31, 2015 2014 Assets: Current
assets: Cash and cash equivalents $ 489.7 $ 302.3 Accounts
receivable, net 2,358.2 2,307.4 Inventories 450.8 437.6 Prepaid
expenses and other current assets
583.8
627.1 Total current assets 3,882.5 3,674.4
Property and equipment, net 212.4 203.4 Goodwill,
identifiable intangible and other non-current assets
1,007.6 1,002.3 Total
assets
$ 5,102.5 $
4,880.1 Liabilities and equity: Liabilities:
Current liabilities: Short-term debt $ 22.2 $ 17.9 Accounts payable
1,897.4 1,850.1 Accrued expenses and other current liabilities
396.5 371.4 Total
current liabilities 2,316.1 2,239.4 Long-term debt 751.6
672.0 Other long-term liabilities
134.7
103.8 Total liabilities
3,202.4
3,015.2 Equity: World Fuel shareholders'
equity 1,890.6 1,855.4 Noncontrolling interest equity
9.5 9.5 Total equity
1,900.1 1,864.9 Total
liabilities and equity
$ 5,102.5
$ 4,880.1 WORLD FUEL
SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED - IN MILLIONS, EXCEPT EARNINGS
PER SHARE DATA) For the Three
Months ended For the Six Months ended June 30, June 30, 2015 2014
2015 2014 Revenue $ 8,496.4 $ 11,342.5 $ 15,837.1 $
21,893.4 Cost of revenue
8,306.0
11,151.0 15,431.3
21,513.9 Gross profit
190.4 191.5
405.8 379.5
Operating expenses: Compensation and employee benefits 87.5 77.4
176.2 148.4 Provision for bad debt 2.3 1.2 3.6 2.3 General and
administrative
59.0
53.1 113.0
104.7 Total operating expenses
148.8 131.7
292.8 255.4
Income from operations 41.6 59.8 113.0 124.1 Non-operating
expenses, net
(8.0 )
(3.2 ) (15.0
) (5.7 )
Income before income taxes 33.6 56.6 98.0 118.4 Provision for
income taxes
5.2
10.2 15.1
21.5 Net income including noncontrolling
interest 28.4 46.4 82.9 96.9 Net loss attributable to
noncontrolling interest
(1.5 )
(1.8 ) (2.6
) (2.1 ) Net
income attributable to World Fuel
$ 29.9
$ 48.2 $
85.5 $ 99.0
Basic earnings per common share
$
0.42 $ 0.68
$ 1.21 $
1.40 Basic weighted average common
shares
70.7 70.8
70.7 70.8
Diluted earnings per common share
$
0.42 $ 0.68
1.20 1.39
Diluted weighted average common shares
71.2 71.4
71.3 71.4
WORLD FUEL SERVICES
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED - IN MILLIONS) For the Three Months
ended For the Six Months ended June 30, June 30, 2015 2014 2015
2014 Cash flows from operating activities: Net income
including noncontrolling interest
$ 28.4
$ 46.4 $
82.9 $ 96.9
Adjustments to reconcile net income including noncontrolling
interest to net cash provided by operating activities: Depreciation
and amortization 15.1 14.7 28.5 27.1 Provision for bad debt 2.3 1.2
3.6 2.3 Share-based payment award compensation costs 4.2 3.7 8.4
7.7 Other 18.8 (0.1 ) 10.3 4.4 Change in cash collateral with
financial counterparties 105.6 8.9 149.2 (1.2 ) Changes in assets
and liabilities, net of acquisitions (103.5 ) (64.4 )
(105.1 ) (35.2 ) Total
adjustments 42.5 (36.0 )
94.9 5.1 Net cash provided by
operating activities
70.9 10.4
177.8 102.0
Cash flows from investing activities: Acquisition of businesses,
net of cash acquired and other investments (2.8 ) (10.2 ) (6.5 )
(164.2 ) Capital expenditures (8.8 ) (11.1 ) (21.9 ) (20.0 ) Escrow
payment related to an assumed obligation of an acquired business -
- - (21.7 ) Other (0.9 ) (0.9 ) 4.4
(0.9 ) Net cash used in investing activities (12.5 )
(22.2 ) (24.0 ) (206.8 ) Cash flows
from financing activities: Borrowings of debt, net 73.8 (35.3 )
80.5 216.9 Dividends paid on common stock (4.3 ) (2.7 ) (6.9 ) (5.3
) Other (32.4 ) (1.1 ) (38.9 ) (3.4 )
Net cash provided by (used in) financing activities 37.1
(39.1 ) 34.7 208.2
Effect of exchange rate changes on cash and cash equivalents
3.2 1.0 (1.1 ) 1.1
Net increase (decrease) in cash and cash equivalents 98.7 (49.9 )
187.4 104.5 Cash and cash equivalents, as of beginning of
period
391.0 446.5
302.3 292.1
Cash and cash equivalents, as of end of period
$ 489.7 $
396.6 $ 489.7
$ 396.6
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES (UNAUDITED - IN MILLIONS, EXCEPT EARNINGS PER SHARE
DATA) For the Three Months ended For the Six Months ended
June 30, June 30, 2015 2014 2015 2014 Non-GAAP financial
measures and reconciliation: GAAP net income attributable to
World Fuel $ 29.9 $ 48.2 $ 85.5 $ 99.0 Share-based compensation
expense, net of income taxes (1) 2.9 1.8 5.2 4.4 Intangible asset
amortization expense, net of income taxes (2) 5.1 4.9 8.8 8.8
Deferred revenue purchase accounting adjustment, net of income
taxes (3) - - 1.1 - Expenses related to acquisition of Watson
Petroleum - - - 1.1 Termination of employment agreement, net of
income taxes (4) - - 2.3 - Executive non-renewal charge, net of
income taxes (5) - 3.0 - 3.0 Non-GAAP
net income attributable to World Fuel $ 37.9 $ 57.9 $ 102.9 $ 116.3
GAAP diluted earnings per common share $ 0.42 $ 0.68 $ 1.20
$ 1.39 Share-based compensation expense, net of income taxes (1)
0.04 0.02 0.07 0.06 Intangible asset amortization expense, net of
income taxes (2) 0.07 0.07 0.12 0.12 Deferred revenue purchase
accounting adjustment, net of income taxes (3) - - 0.02 - Expenses
related to acquisition of Watson Petroleum - - - 0.02 Termination
of employment agreement, net of income taxes (4) - - 0.03 -
Executive non-renewal charge, net of income taxes (5) -
0.04 - 0.04 Non-GAAP diluted earnings per
common share $ 0.53 $ 0.81 $ 1.44 $ 1.63
(1) The pre-tax amount of
share-based compensation expense was $4.2 and $2.6 million for the
three months ended June 30, 2015 and 2014, respectively, and $7.6
and $6.5 for the six months ended June 30, 2015 and 2014
respectively.
(2) The pre-tax amount of
intangible asset amortization expense was $6.8 and $7.2 million for
the three months ended June 30, 2015 and 2014, respectively, and
$12.2 and $13.1 for the six months ended June 30, 2015 and 2014,
respectively.
(3) The pre-tax amount of the
deferred revenue purchase accounting adjustment was $1.5 million
for the six months ended June 30, 2015.
(4) The pre-tax amount of the
termination of employment agreement was $3.8 million for the six
months ended June 30, 2015.
(5) The pre-tax amount of the
executive non-renewal charge was $4.8 million for the three months
ended and six months ended June 30, 2014.
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES BUSINESS SEGMENTS INFORMATION (UNAUDITED -
IN MILLIONS) For the Three Months ended For the Six Months
ended June 30, June 30, 2015 2014 2015 2014 Revenue: Aviation
segment $ 3,185.3 $ 4,436.5 $ 6,082.3 $ 8,686.4 Marine segment
2,805.4 3,532.8 5,126.1 7,013.0 Land segment
2,505.7 3,373.2
4,628.7 6,194.0 $
8,496.4 $ 11,342.5 $
15,837.1 $ 21,893.4 Gross profit: Aviation segment $ 85.0 $
81.8 $ 167.9 $ 150.7 Marine segment 41.8 48.8 95.7 96.7 Land
segment
63.6 60.9
142.2 132.1 $
190.4 $ 191.5 $
405.8 $ 379.5 Income
from operations: Aviation segment $ 26.0 $ 37.2 $ 53.8 $ 67.2
Marine segment 13.6 20.9 39.7 42.0 Land segment
16.5 14.4 48.3
40.9 $ 56.1 $ 72.5 141.8 150.1 Corporate
overhead - unallocated
14.5
12.7 28.8 26.0
$ 41.6 $ 59.8
$ 113.0 $ 124.1
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version on businesswire.com: http://www.businesswire.com/news/home/20150730006616/en/
World Fuel Services CorporationIra M. Birns, Executive Vice
President &Chief Financial OfficerorGlenn KlevitzVice
President, Assistant Treasurer305-428-8000
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