Generates $137 million of Cash Flow from
Operations
Completes Acquisition of ExxonMobil On-Airport
Fueling Operations
World Fuel Services Corporation (NYSE: INT) today reported first
quarter 2017 net income of $31.3 million or $0.45 diluted earnings
per share. Excluding the impact of certain one-time items, adjusted
first quarter net income was $34.6 million or $0.50 adjusted
diluted earnings per share. In the first quarter of 2016, net
income as adjusted for one-time items was $53.0 million or $0.76
adjusted diluted earnings per share. Non-GAAP net income and
diluted earnings per share for the first quarter of 2017, excluding
share-based compensation, amortization of acquired intangible
assets and other one-time items were $44.5 million and $0.64,
respectively, compared to $62.5 million and $0.90 in 2016.
“In the first quarter, we witnessed continued strength in the
aviation segment and closed the final phases of the ExxonMobil
transaction, while remaining focused on integrating and
streamlining overall operations in order to reduce operating costs
and gain identified efficiencies,” stated Michael J. Kasbar,
Chairman and Chief Executive Officer of World Fuel Services
Corporation. “We remain focused on executing our strategy of
building a ubiquitous global energy management, fulfillment and
payments business, while driving improved levels of profitability
as the year progresses.”
The company’s aviation segment generated gross profit of $100.0
million, an increase of $11.3 million or 12.7% year-over-year. The
company’s marine segment generated gross profit of $33.6 million, a
decrease of $5.5 million or 14.2% year-over-year. The company’s
land segment generated gross profit of $97.8 million, an increase
of $4.2 million or 4.5% year-over-year.
“During the first quarter, we generated $137 million of cash
flow from operations, further strengthening our balance sheet,
increasing the total cash generated over the past five years to
$1.3 billion,” said Ira M. Birns, Executive Vice President and
Chief Financial Officer. “We repurchased $11 million of our common
stock in the first quarter and we expect to repurchase additional
shares over the course of the year, delivering incremental value to
our shareholders.”
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures,
including Non-GAAP and adjusted net income and diluted earnings per
share (“EPS”) for the three months ended March 31, 2017 and 2016
(collectively, the “2017 Non-GAAP Measures”). The 2017 Non-GAAP
Measures exclude costs associated with share-based compensation,
amortization of acquired intangible assets, acquisition related
charges, severance and other restructuring-related costs 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, acquisition related charges,
severance and other restructuring-related costs are useful for
purposes of evaluating operating performance of our core operating
results and comparing them period over period. We believe that the
2017 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
Non-GAAP and adjusted net income and Non-GAAP and adjusted diluted
earnings per common share may not be comparable to the presentation
of such metrics by other companies. Non-GAAP and adjusted diluted
earnings per common share is computed by dividing non-GAAP net
income and adjusted net income, respectively, 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 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 executing on
our strategy, reducing costs and gaining identified efficiencies,
as well as our expectations about improving our level of
profitability. 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 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, particularly as a result of
seasonality, 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
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.
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, except per share
data)
As of March 31, December 31,
2017 2016 Assets: Current assets: Cash and
cash equivalents $ 619.3 $ 698.6 Accounts receivable, net 2,209.1
2,344.0 Inventories 460.0 458.0 Prepaid expenses 46.4 46.5
Short-term derivative assets, net 50.0 58.9 Other current assets
204.4 230.6 Total current assets 3,589.2 3,836.6
Property and equipment, net 317.3 311.2 Goodwill 883.4 835.8
Identifiable intangible and other non-current assets 473.6
429.1 Total assets $ 5,263.6 $ 5,412.6
Liabilities: Current liabilities: Short-term debt $ 17.1 $ 15.4
Accounts payable 1,729.5 1,770.4 Customer deposits 98.5 90.8
Accrued expenses and other current liabilities 249.6 306.0
Total current liabilities 2,094.7 2,182.7 Long-term debt
1,065.8 1,170.8 Non-current income tax liabilities, net 88.5 84.6
Other long-term liabilities 39.0 34.5 Total
liabilities 3,288.0 3,472.6 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, 69.6 and
69.9 issued and outstanding as of March 31, 2017 and December 31,
2016, respectively 0.7 0.7 Capital in excess of par value 391.8
399.9 Retained earnings 1,706.5 1,679.3 Accumulated other
comprehensive loss (138.1 ) (154.8 ) Total World Fuel shareholders'
equity 1,960.8 1,925.0 Noncontrolling interest equity 14.8
15.0 Total equity 1,975.6 1,940.0 Total
liabilities and equity $ 5,263.6 $ 5,412.6
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited – In millions, except per share
data)
For the Three Months Ended March 31,
2017 2016 Revenue $ 8,194.3 $ 5,190.8 Cost of
revenue 7,962.9 4,969.3 Gross profit 231.4
221.5 Operating expenses: Compensation and employee benefits
104.5 95.9 Provision for bad debt 2.5 1.5 General and
administrative 74.1 63.1 181.1 160.5
Income from operations 50.3 61.0 Non-operating
expenses, net: Interest expense and other financing costs, net
(12.7 ) (7.6 ) Other (expense) income, net (1.6 ) 1.3
(14.3 ) (6.3 ) Income before income taxes 36.1 54.8 Provision for
income taxes 5.0 3.1 Net income including
noncontrolling interest 31.1 51.6 Net loss attributable to
noncontrolling interest (0.3 ) (0.1 ) Net income attributable to
World Fuel $ 31.3 $ 51.8 Basic earnings per
common share $ 0.46 $ 0.74 Basic weighted
average common shares 68.7 69.5 Diluted
earnings per common share $ 0.45 $ 0.74
Diluted weighted average common shares 69.2 70.0
Comprehensive income: Net income including noncontrolling
interest $ 31.1 $ 51.6 Other comprehensive income (loss): Foreign
currency translation adjustments 6.4 1.3 Cash Flow hedges, net of
income tax benefit of $6.5 for the three months ended March 31,
2017 10.5 (0.2 ) Other comprehensive income 16.9 1.0
Comprehensive (loss) income including noncontrolling
interest 48.0 52.7 Comprehensive (loss) income attributable to
noncontrolling interest (0.1 ) 1.5 Comprehensive income
attributable to World Fuel $ 48.0 $ 51.2
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited - In millions)
For the Three Months Ended March 31,
2017 2016 Cash flows from operating
activities: Net income including noncontrolling interest $ 31.1
$ 51.6 Adjustments to reconcile net income including
noncontrolling interest to net cash provided by operating
activities: Depreciation and amortization 22.6 18.4 Provision for
bad debt 2.5 1.5 Share-based payment award compensation costs 4.1
4.1 Deferred income tax (benefit) provision (6.3 ) 1.8
Extinguishment of liabilities, net (1.0 ) (1.8 ) Foreign currency
losses (gains), net (3.0 ) 6.2 Other 0.1 1.4 Changes in assets and
liabilities, net of acquisitions: Accounts receivable, net 129.5
142.9 Inventories 0.7 26.1 Prepaid expenses (0.2 ) 11.7 Short-term
derivative assets, net 10.1 85.1 Other current assets 21.0 (12.8 )
Cash collateral with financial counterparties 15.8 54.0 Other
non-current assets 4.1 7.1 Accounts payable (44.7 ) (191.2 )
Customer deposits 7.3 (23.6 ) Accrued expenses and other current
liabilities (54.6 ) (37.3 ) Non-current income tax, net and other
long-term liabilities (2.1 ) (6.7 ) Total adjustments 105.9
86.9
Net cash provided by operating activities 137.0
138.6 Cash flows from investing activities:
Acquisition of businesses, net of cash acquired and other
investments (88.1 ) (45.3 ) Capital expenditures (10.0 ) (14.1 )
Other investing activities, net 0.2 6.9
Net cash
used in investing activities (97.9 ) (52.6 ) Cash flows from
financing activities: Borrowings of debt 818.8 689.6 Repayments of
debt (922.5 ) (664.6 ) Dividends paid on common stock (4.1 ) (4.2 )
Purchases of common stock (11.1 ) — Purchases of common stock
tendered by employees to satisfy the required withholding taxes
related to share-based payment awards (1.2 ) (0.9 ) Other financing
activities, net (0.1 ) (0.2 )
Net cash (used in) provided by
financing activities (120.2 ) 19.6 Effect of exchange
rate changes on cash and cash equivalents 1.8 1.5
Net (decrease) increase in cash and cash equivalents (79.3 )
107.2 Cash and cash equivalents, as of beginning of period 698.6
582.5
Cash and cash equivalents, as of end of
period $ 619.3 $ 689.7
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES
(Unaudited - In millions, except per share
data)
For the Three Months Ended March 31,
Non-GAAP financial measures and reconciliation: 2017
2016 GAAP net income attributable to World Fuel $
31.3 $ 51.8 Acquisition related charges, net of income taxes (1)
2.1 1.2 Severance and other restructuring-related costs, net of
income taxes (2) 1.2 — Adjusted net income attributable to
World Fuel $ 34.6 $ 53.0 Share-based compensation expense, net of
income taxes (3) 2.7 2.8 Intangible asset amortization expense, net
of income taxes (4) 7.2 6.7 Non-GAAP net income attributable
to World Fuel $ 44.5 $ 62.5 GAAP diluted earnings per
common share $ 0.45 $ 0.74 Acquisition related charges, net of
income taxes (1) 0.03 0.02 Severance and other
restructuring-related costs, net of income taxes (2) 0.02 —
Adjusted diluted earnings per common share $ 0.50 $ 0.76
Share-based compensation expense, net of income taxes (3) 0.04 0.04
Intangible asset amortization expense, net of income taxes (4) 0.10
0.10 Non-GAAP diluted earnings per common share $ 0.64
$ 0.90 (1)
The pre-tax amount of acquisition related charges was $2.9 million
and $1.5 million for the three months ended March 31, 2017 and
2016, respectively. (2) The pre-tax amount of severance and other
restructuring-related costs was $1.9 million for the three months
ended March 31, 2017 (3) The pre-tax amount of share-based
compensation expense was $4.1 million and $4.1 million for the
three months ended March 31, 2017 and 2016, respectively. (4) The
pre-tax amount of intangible asset amortization expense
attributable to World Fuel Services was $9.7 million and $8.4
million for the three months ended March 31, 2017 and 2016,
respectively.
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES
BUSINESS SEGMENTS INFORMATION
(Unaudited - In millions)
For the Three Months Ended March 31,
Revenue:
2017 2016 Aviation segment $ 3,317.4
$ 2,219.4 Land segment 2,783.4 1,695.0 Marine segment 2,093.5
1,276.5 $ 8,194.3 $ 5,190.8 Gross
profit: Aviation segment $ 100.0 $ 88.7 Land segment 97.8 93.6
Marine segment 33.6 39.2 $ 231.4 $ 221.5
Income from operations: Aviation segment $ 40.4 $ 34.0 Land
segment 21.4 34.0 Marine segment 8.3 11.4 70.1 79.4
Corporate overhead - unallocated (19.8 ) (18.4 ) $ 50.3
$ 61.0
SALES VOLUME SUPPLEMENTAL
INFORMATION
(Unaudited - In millions)
For the Three Months Ended March 31,
Volume (Gallons):
2017 2016 Aviation Segment
1,831.0 1,626.4 Land Segment 1,497.1 1,213.1 Marine Segment (1)
1,803.6 2,022.9 Consolidated Total 5,131.7 4,862.4
(1) Converted from metric tons
to gallons at a rate of 264 gallons per metric ton. Marine segment
metric tons was 6.8 for the three months ended March 31, 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170427006681/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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