Generated $139 million of Operating Cash Flow
in the First Quarter
World Fuel Services Corporation (NYSE: INT) today reported first
quarter net income of $52.4 million or $0.75 diluted earnings per
share compared to $55.6 million or $0.78 diluted earnings per share
in the first quarter of 2015. Excluding the impact of certain
non-recurring expenses, adjusted first quarter net income was $53.6
million or $0.77 adjusted diluted earnings per share compared to
$59.0 million or $0.83 diluted earnings per share in the first
quarter of 2015. Non-GAAP net income and diluted earnings per share
for the first quarter, excluding share-based compensation,
amortization of acquired intangible assets and certain
non-recurring expenses, were $63.1 million and $0.91, respectively,
compared to $65.0 million and $0.91 in 2015.
“While results were impacted this quarter by the unseasonably
warm weather in the U.K. and U.S. and continued weakness in the
marine markets, our aviation and land segments performed well, with
our overall volumes up 6% year-over-year,” stated Michael J.
Kasbar, chairman and chief executive officer of World Fuel Services
Corporation. “Despite the disruption in energy markets and
continued global economic weakness, we remain confident in the
ability of our diversified logistics, transaction and energy
management business model to deliver near and long-term
growth.”
The company’s aviation segment generated gross profit of $91.0
million, an increase of $8.1 million or 10% year-over-year. The
company’s land segment posted gross profit of $93.6 million, an
increase of $15.1 million or 19% year-over-year. The company’s
marine segment generated gross profit of $39.2 million, a decrease
of $14.8 million or 27% year-over-year.
“We generated $139 million of operating cash flow during the
quarter, further strengthening our balance sheet and providing us
with additional liquidity to invest in organic growth initiatives
and strategic investment opportunities,” said Ira M. Birns,
executive vice president and chief financial officer. “Our ability
to consistently generate healthy levels of operating cash flow has
contributed to improved returns on invested capital and reduced our
level of net debt to just over $100 million.”
Non-GAAP Financial Measures
The non-GAAP financial measures exclude costs associated with
share-based compensation, amortization of acquired intangible
assets, expenses related to acquisitions and other related charges,
deferred revenue purchase accounting adjustments, and termination
of employment agreement 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 acquisitions and other related
charges, and termination of employment agreement expenses 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 growth
initiatives, investment opportunities, and the ability of our
business model to drive growth. 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 16, 2016. 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.
--- Some amounts in this press release may not
add due to rounding. All percentages have been calculated using
unrounded amounts ---
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED - IN MILLIONS)
As of March 31, December 31,
2016 2015 Assets: Current assets: Cash and cash
equivalents $ 689.7 $ 582.5 Accounts receivable, net 1,673.2
1,812.6 Inventories 333.7 359.1 Prepaid expenses and other current
assets
414.1 500.4
Total current assets 3,110.6 3,254.6 Property and equipment,
net 229.2 225.6 Goodwill, identifiable intangible and other
non-current assets
1,079.9
1,069.2 Total assets
$
4,419.7 $ 4,549.4
Liabilities and equity: Liabilities: Current liabilities:
Short-term debt $ 28.8 $ 25.5 Accounts payable 1,158.2 1,349.6
Accrued expenses and other current liabilities
368.1 387.7 Total current
liabilities 1,555.0 1,762.8 Long-term debt 776.5 746.7 Other
long-term liabilities
115.0
118.5 Total liabilities
2,446.5
2,628.0 Equity: World Fuel shareholders'
equity 1,962.0 1,911.4 Noncontrolling interest equity
11.2 10.0 Total equity
1,973.2 1,921.4 Total
liabilities and equity
$ 4,419.7
$ 4,549.4
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED - IN MILLIONS,
EXCEPT EARNINGS PER SHARE DATA) For the Three Months
ended March 31, 2016 2015
Revenue $ 5,192.6 $ 7,340.7 Cost of revenue 4,968.8
7,125.3 Gross profit 223.8
215.4 Operating expenses: Compensation and
employee benefits 95.9 88.6 Provision for bad debt 1.5 1.3 General
and administrative 63.1 54.0
Total operating expenses 160.5 143.9
Income from operations 63.3 71.5 Non-operating expenses, net
(6.3 ) (7.0 ) Income before income taxes 57.1
64.5 Provision for income taxes 4.8 9.9
Net income including noncontrolling interest 52.3 54.6 Net
loss attributable to noncontrolling interest (0.1 )
(1.0 ) Net income attributable to World Fuel $ 52.4 $
55.6 Basic earnings per common share $ 0.75 $
0.79 Basic weighted average common shares 69.5
70.7 Diluted earnings per common share
$ 0.75 $ 0.78 Diluted weighted average common
shares 70.0 71.4
Adjusted diluted earnings per common share was $0.77 and $0.83
for the three months ended March 31, 2016 and 2015, respectively.
Please see the reconciliation of GAAP to Non-GAAP Financial
Measures for a reconciliation of GAAP diluted earnings per common
share to Adjusted diluted earnings per common share.
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED - IN
MILLIONS) For the Three Months ended March 31,
2016 2015 Cash flows from
operating activities: Net income including noncontrolling interest
$ 52.3 $
54.6
Adjustments to reconcile net income
including noncontrolling interest to net cash provided by operating
activities:
Depreciation and amortization 18.4 13.4 Provision for bad debt 1.5
1.3 Share-based payment award compensation costs 4.1 4.2 Other 9.2
(8.5 ) Change in cash collateral with financial counterparties 54.0
43.6 Changes in assets and liabilities, net of acquisitions
(1.0 ) (1.7 ) Total adjustments 86.2
52.3 Net cash provided by operating activities 138.5
106.9 Cash flows from investing
activities: Acquisition of businesses, net of cash acquired and
other investments (45.3 ) (3.7 ) Capital expenditures (14.1 ) (13.1
) Other investing activities, net 6.9 5.3
Net cash used in investing activities (52.5 )
(11.5 ) Cash flows from financing activities: Borrowings of
debt, net 25.0 6.7 Dividends paid on common stock (4.2 ) (2.6 )
Other financing activities, net (1.1 ) (6.5 ) Net
cash provided by (used in) financing activities 19.7
(2.4 ) Effect of exchange rate changes on cash and
cash equivalents 1.5 (4.3 ) Net
increase in cash and cash equivalents 107.2 88.7 Cash and
cash equivalents, as of beginning of period 582.5
302.3 Cash and cash equivalents, as of end of period
$ 689.7 $ 391.0
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
March 31, 2016 2015 Non-GAAP financial
measures and reconciliation: GAAP net income attributable to
World Fuel $ 52.4 $ 55.6
Expenses related to the acquisitions and
other related charges, net of income taxes (1)
1.2 -
Deferred revenue purchase accounting
adjustment, net of income taxes (2)
- 1.1 Termination of employment agreement, net of income taxes (3)
- 2.3 Adjusted net income attributable to World Fuel
$ 53.6 $ 59.0 Share-based compensation expense, net of income taxes
(4) 2.8 2.3 Intangible asset amortization expense, net of income
taxes (5) 6.7 3.7 Non-GAAP net income attributable to
World Fuel $ 63.1 $ 65.0 GAAP diluted earnings per common
share $ 0.75 $ 0.78 Expenses related to the acquisitions and other
related charges, net of income taxes 0.02 - Deferred revenue
purchase accounting adjustment, net of income taxes - 0.02
Termination of employment agreement, net of income taxes -
0.03 Adjusted diluted earnings per common share $ 0.77 $
0.83 Share-based compensation expense, net of income taxes 0.04
0.03 Intangible asset amortization expense, net of income taxes
0.10 0.05 Non-GAAP diluted earnings per common share
$ 0.91 $ 0.91
(1)
The pre-tax amount of expenses related to
acquisitions and other related charges was $1.5 for the three
months ended March 31, 2016.
(2)
The pre-tax amount of deferred revenue
purchase accounting adjustment was $1.5 for the three months ended
March 31, 2015.
(3)
The pre-tax amount of the termination of
employment agreement was $3.8 for the three months ended March 31,
2015.
(4)
The pre-tax amount of share-based
compensation expense was $4.1 and $3.4 for the three months ended
March 31, 2016 and 2015, respectively.
(5)
The pre-tax amount of intangible asset
amortization expense was $8.4 and $5.4 for the three months ended
March 31, 2016 and 2015, respectively.
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS INFORMATION (UNAUDITED - IN MILLIONS)
For the Three Months ended March 31, 2016 2015
Revenue: Aviation segment $ 2,221.1 $ 2,897.0 Land segment 1,695.0
2,123.0 Marine segment 1,276.5 2,320.7 $ 5,192.6 $
7,340.7 Gross profit: Aviation segment $ 91.0 $ 82.9 Land
segment 93.6 78.6 Marine segment 39.2 53.9 $ 223.8 $
215.4 Income from operations: Aviation segment $ 36.3 $ 27.8
Land segment 34.0 31.8 Marine segment 11.4 26.1 $
81.7 $ 85.7 Corporate overhead - unallocated 18.4
14.2 $ 63.3 $ 71.5
SALES VOLUME
SUPPLEMENTAL INFORMATION
(UNAUDITED - IN MILLIONS)
For the Three Months ended March 31, 2016 2015 Volume
(Gallons): Aviation segment 1,626.4 1,449.9 Land segment 1,213.1
1,117.6
Marine segment (1)
2,022.6 2,021.6 Consolidated Total 4,862.2
4,589.1
(1)
Converted from metric tons to gallons at a
rate of 264 gallons per metric ton. Marine segment metric tons were
7.7 for the three months ended March 31, 2016 and 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005896/en/
World Fuel Services CorporationIra M. Birns,
305-428-8000Executive Vice President &Chief Financial
OfficerorGlenn Klevitz, 305-428-8000Vice President, Assistant
Treasurer
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