Generated $107 million of Operating Cash Flow
in the First Quarter
World Fuel Services Corporation (NYSE: INT) today reported first
quarter net income of $55.6 million or $0.78 diluted earnings per
share compared to $50.7 million or $0.71 diluted earnings per share
in the first quarter of 2014. Excluding the impact of the
previously disclosed retirement of our former aviation segment
president and a deferred revenue purchase accounting adjustment,
adjusted first quarter net income was $59.0 million or $0.83
diluted earnings per share. Non-GAAP net income and diluted
earnings per share for the first quarter, excluding share-based
compensation, amortization of acquired intangible assets, costs
associated with the aforementioned retirement and deferred revenue
adjustments were $65.0 million and $0.91, respectively, compared to
$58.5 million and $0.83 in 2014.
“The strength of our business model and the diversity of our
markets served us well as we posted a solid result in the first
quarter,” stated Michael J. Kasbar, chairman and chief executive
officer of World Fuel Services Corporation. “We continue to develop
our global energy, logistics, transaction management and payment
processing platform within our existing markets and products and
expand into adjacencies that will provide us with sustainable
growth.”
The company’s aviation segment generated gross profit of $82.9
million, an increase of $8.3 million or 11% sequentially and $14
million or 20% year-over-year. The company’s marine segment
generated gross profit of $53.9 million, a decrease of $5.6 million
or 9% sequentially, but an increase of $6.1 million or 13%
year-over-year. The company’s land segment posted gross profit of
$78.6 million, a decrease of $6.7 million or 8% sequentially, but
an increase of $7.3 million or 10% year-over-year.
“We generated $107 million of operating cash flow in the first
quarter, which marks the eleventh consecutive quarter of positive
cash flow from operations and totals more than $700 million over
this period,” said Ira M. Birns, executive vice president and chief
financial officer. “We continue to drive operational excellence
across all of our business segments, while delivering solid returns
to our shareholders.”
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 and the termination
of an 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 the acquisition of Watson Petroleum
and the termination of an employment agreement 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 expansion
and sustainable 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 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 March 31, December 31, 2015 2014 Assets: Current
assets: Cash and cash equivalents $ 391.0 $ 302.3 Accounts
receivable, net 2,202.3 2,307.9 Inventories 421.9 437.6 Prepaid
expenses and other current assets
580.4
627.1 Total current assets 3,595.6 3,674.9
Property and equipment, net 203.9 202.7 Goodwill,
identifiable intangible and other non-current assets
988.5 1,002.4 Total assets
$ 4,788.0 $
4,880.0 Liabilities and equity: Liabilities:
Current liabilities: Short-term debt $ 21.4 $ 17.9 Accounts payable
1,736.2 1,850.1 Accrued expenses and other current liabilities
355.2 373.3 Total
current liabilities 2,112.8 2,241.3 Long-term debt 679.4
672.0 Other long-term liabilities
113.6
101.8 Total liabilities
2,905.8
3,015.1 Equity: World Fuel shareholders'
equity 1,871.5 1,855.4 Noncontrolling interest equity
10.7 9.5 Total equity
1,882.2 1,864.9 Total
liabilities and equity
$ 4,788.0
$ 4,880.0 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, 2015 2014
Revenue $ 7,340.7 $ 10,550.9 Cost of revenue
7,125.3 10,362.9
Gross profit
215.4
188.0 Operating expenses: Compensation
and employee benefits 88.6 71.1 Provision for bad debt 1.3 1.1
General and administrative
54.0
51.5 Total operating expenses
143.9 123.7
Income from operations 71.5 64.3 Non-operating expenses, net
(7.0 ) (2.5
) Income before income taxes 64.5 61.8
Provision for income taxes
9.9
11.3 Net income including noncontrolling
interest 54.6 50.5 Net loss attributable to noncontrolling interest
(1.0 ) (0.2
) Net income attributable to World Fuel
$ 55.6 $
50.7 Basic earnings per common share
$ 0.79 $
0.72 Basic weighted average common
shares
70.7 70.7
Diluted earnings per common share
$
0.78 $ 0.71
Diluted weighted average common shares
71.4 71.4 WORLD
FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED - IN MILLIONS)
For the Three Months ended March 31, 2015 2014
Cash flows from operating activities: Net income including
noncontrolling interest
$ 54.6
$ 50.5 Adjustments to reconcile
net income including noncontrolling interest to net cash provided
by operating activities: Depreciation and amortization 13.4 12.4
Provision for bad debt 1.3 1.1 Share-based payment award
compensation costs 4.2 4.0 Other (8.5 ) 4.5 Change in cash
collateral with financial counterparties 43.6 (10.1 ) Changes in
assets and liabilities, net of acquisitions
(1.7 ) 29.2 Total
adjustments
52.3 41.1 Net
cash provided by operating activities
106.9
91.6 Cash flows from investing
activities: Acquisition of businesses, net of cash acquired and
other investments (3.7 ) (154.0 ) Capital expenditures (13.1 ) (8.9
) Escrow payment related to an assumed obligation of an acquired
business - (21.7 ) Other 5.3 - Net cash
used in investing activities (11.5 ) (184.6 )
Cash flows from financing activities: Borrowings of debt, net 6.7
252.2 Dividends paid on common stock (2.6 ) (2.6 ) Other
(6.5 ) (2.3
) Net cash (used in) provided by financing activities
(2.4 ) 247.3
Effect of exchange rate changes on cash and cash
equivalents
(4.3 )
0.1 Net increase in cash and cash
equivalents 88.7 154.4 Cash and cash equivalents, as of
beginning of period
302.3
292.1 Cash and cash equivalents, as of
end of period
$ 391.0
$ 446.5 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, 2015 2014 Non-GAAP financial measures and
reconciliation: GAAP net income attributable to World Fuel $
55.6 $ 50.7 Share-based compensation expense, net of income taxes
(1) 2.3 2.7 Intangible asset amortization expense, net of income
taxes (2) 3.7 4.0 Deferred revenue purchase accounting adjustment,
net of income taxes (3) 1.1 - Expenses related to the acquisition
of Watson Petroleum, net of income taxes - 1.1 Termination of
employment agreement, net of income taxes (4) 2.3 -
Non-GAAP net income attributable to World Fuel $ 65.0 $ 58.5
GAAP diluted earnings per common share $ 0.78 $ 0.71 Share-based
compensation expense, net of income taxes (1) 0.03 0.04 Intangible
asset amortization expense, net of income taxes (2) 0.05 0.06
Deferred revenue purchase accounting adjustment, net of income
taxes (3) 0.02 - Expenses related to the acquisition of Watson
Petroleum, net of income taxes - 0.02 Termination of employment
agreement, net of income taxes (4) 0.03 - Non-GAAP
diluted earnings per common share $ 0.91 $ 0.83
(1)
The pre-tax amount of share-based compensation expense was $3.4 and
$4.0 million for the three months ended March 31, 2015 and 2014,
respectively.
(2)
The pre-tax amount of intangible asset amortization expense was
$5.4 and $6.0 million for the three months ended March 31, 2015 and
2014, respectively.
(3)
The pre-tax amount of deferred revenue purchase accounting
adjustment was $1.5 million for the three months ended March 31,
2015.
(4)
The pre-tax amount of the termination of employment agreement was
$3.8 million for the three months ended March 31, 2015.
WORLD
FUEL SERVICES CORPORATION AND SUBSIDIARIES BUSINESS SEGMENTS
INFORMATION (UNAUDITED - IN MILLIONS) For
the Three Months ended March 31, 2015 2014 Revenue: Aviation
segment $ 2,897.0 $ 4,249.8 Marine segment 2,320.7 3,480.2 Land
segment
2,123.0 2,820.9
$ 7,340.7 $
10,550.9 Gross profit: Aviation segment $ 82.9
$ 68.9 Marine segment 53.9 47.8 Land segment
78.6 71.3 $
215.4 $ 188.0 Income
from operations: Aviation segment $ 27.8 $ 30.1 Marine segment 26.1
21.0 Land segment
31.8 26.5
$ 85.7 $ 77.6 Corporate overhead - unallocated
14.2 13.3 $
71.5 $ 64.3
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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