World Fuel Services Corporation (NYSE:INT), a leading global
fuel logistics company, principally engaged in the marketing, sale
and distribution of aviation, marine and land fuel and related
products and services, today reported second quarter net income of
$48.2 million or $0.68 diluted earnings per share. Excluding
expenses related to an executive non-renewal charge, net income was
$51.2 million or $0.72 diluted earnings per share. This compares to
$51.0 million or $0.71 diluted earnings per share in the second
quarter of 2013. Non-GAAP net income and diluted earnings per share
for the second quarter, excluding share-based compensation,
amortization of acquired intangible assets and an executive
non-renewal charge were $57.9 million and $0.81, respectively,
compared to $57.5 million and $0.80 in 2013.
“Our quarterly results demonstrated the strength of our
diversified business model and our continued commitment to
executing on our business plan,” stated Michael J. Kasbar, chairman
and chief executive officer. “We remain well positioned to
capitalize on a growing set of strategic opportunities
worldwide.”
The company’s aviation segment generated gross profit of $81.8
million, an increase of $12.9 million or 19% sequentially and $5.8
million or 8% year-over-year. The company’s marine segment
generated gross profit of $48.8 million, an increase of $1.0
million or 2% sequentially, but a decrease of $3.5 million or 7%
year-over-year. The company’s land segment posted gross profit of
$60.9 million, a decrease of $10.4 million or 15% sequentially, but
an increase of $0.8 million or 1% year-over-year.
“Our effective balance sheet management and strong cash flow
generation has allowed us to continue to invest in both organic and
acquisition related opportunities as evidenced by the Colt
International acquisition,” said Ira M. Birns, executive vice
president and chief financial officer. “Our solid liquidity profile
provides a platform for growth as we look to maximize value for our
customers, suppliers and shareholders.”
Non-GAAP Financial Measures
This press release includes selected financial information that
has not been prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”). This information
includes non-GAAP net income and non-GAAP diluted earnings per
share. The non-GAAP financial measures exclude costs associated
with share based compensation, amortization of acquired intangible
assets, expenses related to the acquisition of Watson Petroleum
Limited 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, as well as the expenses related to the
acquisition of Watson Petroleum Limited 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. 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 opportunities
for growth and our ability to maximize value. 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 14, 2014.
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
leading global fuel logistics company, principally engaged in the
marketing, sale and distribution of aviation, marine and land fuel
products and related services on a worldwide basis. 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, 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 THOUSANDS)
As of June 30, December
31, 2014 2013 Assets: Current assets: Cash and cash
equivalents $ 396,591 $ 292,061 Accounts receivable, net 2,921,830
2,538,642 Inventories 702,617 655,046 Prepaid expenses and other
current assets
386,068
329,752 Total current assets 4,407,106
3,815,501 Property and equipment, net 197,357 129,685
Goodwill, identifiable intangible and other non-current assets
934,067 794,091
Total assets
$ 5,538,530 $
4,739,277 Liabilities and equity: Liabilities:
Current liabilities: Short-term debt $ 14,940 $ 14,647 Accounts
payable 2,567,656 2,210,427 Accrued expenses and other current
liabilities
389,314 289,441
Total current liabilities 2,971,910 2,514,515
Long-term debt 678,592 449,064 Other long-term liabilities
103,248 96,804 Total liabilities
3,753,750 3,060,383
Equity: World Fuel shareholders' equity 1,779,892 1,673,898
Noncontrolling interest equity
4,888
4,996 Total equity
1,784,780
1,678,894 Total liabilities and equity
$ 5,538,530 $
4,739,277 WORLD FUEL SERVICES CORPORATION
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
For the Three Months ended For the Six
Months ended June 30, June 30, 2014
2013 2014 2013
Revenue $ 11,342,475 $ 10,479,604 $ 21,893,371 $ 20,663,633
Cost of revenue
11,150,959
10,291,146 21,513,823
20,292,796 Gross profit
191,516 188,458
379,548
370,837 Operating expenses: Compensation
and employee benefits 77,363 72,745 148,438 142,174 Provision for
bad debt 1,186 2,709 2,340 3,812 General and administrative
53,155 44,268
104,654 89,174
Total operating expenses
131,704
119,722 255,432
235,160 Income from
operations 59,812 68,736 124,116 135,677 Non-operating expenses,
net
(3,205 )
(4,771 ) (5,703
) (8,310 )
Income before income taxes 56,607 63,965 118,413 127,367 Provision
for income taxes
10,223
11,608 21,523
23,899 Net income including
noncontrolling interest 46,384 52,357 96,890 103,468 Net (loss)
income attributable to noncontrolling interest
(1,842 ) 1,341
(2,063 ) 3,727
Net income attributable to World Fuel
$
48,226 $ 51,016
$ 98,953 $
99,741 Basic earnings per common share
$ 0.68 $
0.71 $ 1.40
$ 1.40 Basic weighted
average common shares
70,842
71,516 70,768
71,483 Diluted earnings per common share
$ 0.68 $
0.71 $ 1.39
$ 1.38 Diluted weighted
average common shares
71,419
72,018 71,380
72,099 WORLD FUEL SERVICES
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED - IN THOUSANDS)
For the Three Months
ended For the Six Months ended June 30, June 30, 2014
2013 2014 2013
Cash flows from operating activities: Net income including
noncontrolling interest
$ 46,384
$ 52,357 $
96,890 $ 103,468
Adjustments to reconcile net income including noncontrolling
interest to net cash provided by operating activities: Depreciation
and amortization 14,610 11,439 27,067 22,287 Provision for bad debt
1,186 2,709 2,340 3,812 Share-based payment award compensation
costs 3,701 4,325 7,669 8,197 Other 4,734 197 9,158 (49 ) Change in
cash collateral with financial counterparties 8,906 (1,286 ) (1,190
) (723 ) Changes in assets and liabilities, net of acquisitions
(69,108 )
(26,961 ) (39,928
) 15,298 Total adjustments
(35,971 )
(9,577 ) 5,116
48,822 Net cash provided by operating
activities
10,413
42,780 102,006
152,290 Cash flows from investing
activities: Acquisitions and other investments, net of cash
acquired (10,242 ) (25,415 ) (164,205 ) (25,415 ) Capital
expenditures (11,142 ) (11,695 ) (20,014 ) (24,644 ) Escrow payment
related to an assumed obligation of an acquired business - -
(21,724 ) - Purchase of investments (1,130 ) (21,588 ) (1,130 )
(21,588 ) Proceeds from the sale of short-term investments - 21,588
- 21,588 Other
288 -
288 -
Net cash used in investing activities
(22,226
) (37,110 )
(206,785 ) (50,059
) Cash flows from financing activities:
(Repayments) borrowings of debt, net (35,371 ) 74,446 216,925
(29,205 ) Dividends paid on common stock (2,656 ) (2,675 ) (5,300 )
(5,342 ) Other
(1,135 )
(3,671 ) (3,459
) (6,406 ) Net cash
(used in) provided by financing activities
(39,162 ) 68,100
208,166
(40,953 ) Effect of exchange rate
changes on cash and cash equivalents
1,067
(890 )
1,143 (1,538 )
Net (decrease) increase in cash and cash equivalents (49,908
) 72,880 104,530 59,740 Cash and cash equivalents, as of
beginning of period
446,499
159,600 292,061
172,740 Cash and cash
equivalents, as of end of period
$
396,591 $ 232,480
$ 396,591 $
232,480 WORLD FUEL SERVICES
CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES (UNAUDITED - IN THOUSANDS, EXCEPT
EARNINGS PER SHARE DATA) For the
Three Months ended For the Six Months ended June 30, June
30, 2014 2013 2014 2013
Non-GAAP financial measures and reconciliation: GAAP
net income attributable to World Fuel $ 48,226 $ 51,016 $ 98,953 $
99,741 Share-based compensation expense, net of income taxes (1)
1,785 2,918 4,451 5,461 Intangible asset amortization expense, net
of income taxes (2) 4,861 3,576 8,809 7,308 Expenses related to the
acquisition of Watson Petroleum Limited - - 1,140 - Executive
non-renewal charge, net of income taxes (3) 2,994 -
2,994 - Non-GAAP net income attributable to World
Fuel $ 57,866 $ 57,510 $ 116,347 $ 112,510 GAAP diluted
earnings per common share $ 0.68 $ 0.71 $ 1.39 $ 1.38 Share-based
compensation expense, net of income taxes (1) 0.02 0.04 0.06 0.08
Intangible asset amortization expense, net of income taxes (2) 0.07
0.05 0.12 0.10 Expenses related to the acquisition of Watson
Petroleum Limited - - 0.02 - Executive non-renewal charge, net of
income taxes (3) 0.04 - 0.04 - Non-GAAP
diluted earnings per common share $ 0.81 $ 0.80 $ 1.63 $ 1.56
(1)
The pre-tax amount of share-based compensation expense was $2,599
and $4,325 for the three months ended June 30, 2014 and 2013,
respectively, and $6,567 and $8,197 for the six months ended June
30, 2014 and 2013, respectively.
(2)
The pre-tax amount of intangible asset amortization expense was
$7,116 and $5,594 for the three months ended June 30, 2014 and
2013, respectively, and $13,091 and $11,439 for the six months
ended June 30, 2014 and 2013, respectively.
(3)
The pre-tax amount of the executive non-renewal charge was $4,751
for the three and six months ended June 30, 2014.
WORLD
FUEL SERVICES CORPORATION AND SUBSIDIARIES BUSINESS SEGMENTS
INFORMATION (UNAUDITED - IN THOUSANDS)
For the Three Months ended For the Six Months
ended June 30, June 30, 2014 2013 2014
2013 Revenue: Aviation segment $ 4,436,505 3,745,070 $ 8,686,308 $
7,675,658 Marine segment 3,532,817 3,967,109 7,013,034 7,684,248
Land segment
3,373,153
2,767,425 6,194,029
5,303,727 $ 11,342,475
$ 10,479,604 $
21,893,371 $ 20,663,633
Gross profit: Aviation segment $ 81,824 $ 76,041 $ 150,745 $
153,025 Marine segment 48,841 52,332 96,683 94,014 Land segment
60,851 60,085
132,120 123,798 $
191,516 $ 188,458
$ 379,548 $
370,837 Income from operations: Aviation
segment $ 37,152 $ 33,873 $ 67,223 $ 68,753 Marine segment 20,945
24,062 41,970 39,321 Land segment
14,382
21,122 40,912
48,502 72,479 79,057 150,105 156,576 Corporate
overhead - unallocated
12,667
10,321 25,989
20,899 $ 59,812
$ 68,736 $
124,116 $ 135,677
World Fuel Services CorporationIra M. Birns,
305-428-8000Executive Vice President & Chief Financial
Officer
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