World Fuel Services Corporation (NYSE: INT) today reported third
quarter 2017 net loss of $38.5 million or $0.57 diluted loss per
share, which includes a non-cash accounting charge of $76.9 million
relating to a U.S. deferred tax valuation allowance (“DTA”).
Excluding the DTA and certain other one-time items, adjusted third
quarter net income was $40.9 million or $0.60 adjusted diluted
earnings per share. In the third quarter of 2016, net income as
adjusted for one-time items was $45.1 million or $0.65 adjusted
diluted earnings per share. Non-GAAP net income and diluted
earnings per share for the third quarter of 2017, excluding
share-based compensation, amortization of acquired intangible
assets and other one-time items were $52.0 million and $0.77,
respectively, compared to $57.2 million and $0.82 in 2016.
“In the third quarter, we were pleased with our performance
despite the challenges brought by an unprecedented series of
hurricanes,” stated Michael J. Kasbar, chairman and chief executive
officer of World Fuel Services Corporation. “We have a solid
pipeline of initiatives to accelerate organic growth and remain
committed to our long-term strategy of leveraging our comprehensive
energy management, omni-channel fulfillment and payments
platform.”
The company’s aviation segment generated gross profit of $123.9
million, an increase of $12.3 million or 11.0% year-over-year. The
company’s marine segment generated gross profit of $30.5 million, a
decrease of $6.8 million or 18.2% year-over-year. The company’s
land segment generated gross profit of $85.5 million, a decrease of
$2.3 million or 2.6% year-over-year.
“Despite operational disruptions during the quarter, our
strategically diversified business model delivered a solid
financial result,” said Ira M. Birns, executive vice president and
chief financial officer. “We repurchased an additional $30 million
of our common stock during the quarter, taking year-to-date
repurchases to $62 million, delivering on our commitment to return
further 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 and nine months ended
September 30, 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, valuation allowance against
the net U.S. deferred tax assets, 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, valuation allowance against
the net U.S. deferred tax assets, 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
the 2017 Non-GAAP Measures 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 restricted stock units
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 2017 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 accelerating
organic growth and executing on our long-term 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 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 leverage
technology and operating systems and realize the anticipated
benefits, our ability to successfully execute and achieve
efficiencies and other benefits related to our transformation
initiatives, our ability to effectively integrate and derive
benefits from acquired businesses, our ability to capitalize on new
market opportunities and changes in supply and other market
dynamics in the regions where we operate, 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.
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 September 30, December
31, 2017 2016 Assets: Current assets: Cash
and cash equivalents $ 546.0 $ 698.6 Accounts receivable, net
2,583.4 2,344.0 Inventories 522.7 458.0 Prepaid expenses 55.3 46.5
Short-term derivative assets, net 30.6 58.9 Other current assets
287.3 230.6 Total current assets 4,025.3 3,836.6
Property and equipment, net 332.1 311.2 Goodwill 901.1 835.8
Identifiable intangible and other non-current assets 464.6
429.1 Total assets $ 5,723.1 $ 5,412.6
Liabilities: Current liabilities: Current maturities of long-term
debt and capital leases $ 23.6 $ 15.4 Accounts payable 2,041.0
1,770.4 Customer deposits 99.4 90.8 Accrued expenses and other
current liabilities 302.2 306.0 Total current
liabilities 2,466.3 2,182.7 Long-term debt 1,128.1 1,170.8
Non-current income tax liabilities, net 149.7 84.6 Other long-term
liabilities 43.2 34.5 Total liabilities 3,787.3
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, 67.7 and 69.9 issued and outstanding as of
September 30, 2017 and December 31, 2016, respectively 0.7 0.7
Capital in excess of par value 349.3 399.9 Retained earnings
1,693.9 1,679.3 Accumulated other comprehensive loss (124.8 )
(154.8 ) Total World Fuel shareholders' equity 1,919.0 1,925.0
Noncontrolling interest equity 16.8 15.0 Total equity
1,935.8 1,940.0 Total liabilities and equity $
5,723.1 $ 5,412.6
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited – In millions, except per share
data)
For the Three Months Ended For the Nine Months
Ended September 30, September 30,
2017 2016 2017 2016
Revenue $ 8,543.0 $ 7,399.8 $ 24,823.4 $ 19,223.6 Cost of revenue
8,303.1 7,163.1 24,121.1 18,546.9 Gross
profit 239.9 236.7 702.3 676.7
Operating expenses: Compensation and employee benefits 107.6 106.6
314.5 306.2 Provision for bad debt 2.4 1.5 6.3 5.4 General and
administrative 68.6 70.3 218.7 200.2
178.6 178.4 539.5 511.9 Income
from operations 61.3 58.2 162.8 164.8
Non-operating expenses, net: Interest expense and other financing
costs, net (15.8 ) (10.3 ) (42.2 ) (26.0 ) Other income (expense),
net (0.9 ) 0.5 (5.0 ) 1.2 (16.7 ) (9.8 ) (47.3
) (24.8 ) Income before income taxes 44.6 48.4 115.6 140.1
Provision for income taxes 82.6 5.4 92.2 15.7
Net income (loss) including noncontrolling interest (37.9 )
43.0 23.4 124.4 Net income attributable to noncontrolling interest
0.6 0.3 0.6 0.1 Net income (loss)
attributable to World Fuel $ (38.5 ) $ 42.7 $ 22.8 $
124.3 Basic earnings per common share $ (0.57 ) $
0.62 $ 0.33 $ 1.79 Basic weighted
average common shares 67.9 69.1 68.3 69.4
Diluted earnings per common share $ (0.57 ) $ 0.61
$ 0.33 $ 1.78 Diluted weighted average
common shares 68.2 69.5 68.6 69.9
Comprehensive income: Net income (loss) including
noncontrolling interest $ (37.9 ) $ 43.0 $ 23.4 $ 124.4 Other
comprehensive income (loss): Foreign currency translation
adjustments 12.2 (14.6 ) 29.8 (27.9 ) Cash Flow hedges, net of
income tax benefit of $5.5 and income tax expense of $1.1 for the
three and nine months ended September 30, 2017, respectively (8.7 )
(7.7 ) 1.8 (2.8 ) Other comprehensive income (loss): 3.5
(22.4 ) 31.6 (30.7 ) Comprehensive income (loss)
including noncontrolling interest (34.4 ) 20.7 55.0 93.7
Comprehensive income attributable to noncontrolling interest 1.1
1.4 2.2 1.9 Comprehensive income (loss)
attributable to World Fuel $ (35.5 ) $ 19.3 $ 52.8 $
91.9
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited - In millions)
For the Three Months Ended
For the Nine Months Ended September 30, September
30, 2017 2016 2017
2016 Cash flows from operating activities: Net income (loss)
including noncontrolling interest $ (37.9 ) $ 43.0 $ 23.4
$ 124.4 Adjustments to reconcile net income including
noncontrolling interest to net cash provided by operating
activities: Depreciation and amortization 20.7 21.7 64.1 58.4
Provision for bad debt 2.4 1.5 6.3 5.4 Valuation allowance against
the net U.S. deferred tax assets 76.9 — 76.9 — Gain on sale of held
for sale assets and liabilities — — — (3.8 ) Share-based payment
award compensation costs 6.0 5.7 15.3 14.5 Deferred income tax
benefit 7.2 (14.7 ) (0.8 ) (14.5 ) Extinguishment of liabilities,
net — (3.5 ) (2.2 ) (5.2 ) Foreign currency losses (gains), net
14.9 (14.1 ) 8.4 (18.3 ) Other (0.6 ) (0.2 ) (0.2 ) 2.6 Changes in
assets and liabilities, net of acquisitions: Accounts receivable,
net (364.9 ) 17.8 (256.3 ) (212.3 ) Inventories (84.7 ) (79.1 )
(69.5 ) (89.3 ) Prepaid expenses (10.2 ) (12.6 ) (9.8 ) (0.2 )
Short-term derivative assets, net 14.2 17.9 28.4 192.5 Other
current assets (52.7 ) 26.2 (49.7 ) (30.4 ) Cash collateral with
financial counterparties (9.7 ) 15.8 (15.6 ) 128.8 Other
non-current assets (6.9 ) 6.8 (19.3 ) 13.6 Accounts payable 241.0
23.2 253.7 213.2 Customer deposits 7.3 5.4 6.4 (10.5 ) Accrued
expenses and other current liabilities 52.3 (43.3 ) (20.4 ) (144.5
) Non-current income tax, net and other long-term liabilities 14.1
1.8 5.9 (4.0 ) Total adjustments (72.7 ) (23.8
) 21.8 95.9
Net cash (used in) provided by
operating activities (110.6 ) 19.3 45.2 220.3
Cash flows from investing activities: Acquisition of
businesses, net of cash acquired and other investments (6.1 )
(216.7 ) (94.6 ) (266.4 ) Proceeds from sale of business — — 29.3
Capital expenditures (6.3 ) (5.6 ) (37.8 ) (28.9 ) Other investing
activities, net (0.1 ) — (0.5 ) 6.9
Net cash (used
in) investing activities (12.6 ) (222.4 ) (133.0 ) (259.2 )
Cash flows from financing activities: Borrowings of debt 1,508.3
1,233.1 3,500.1 2,810.6 Repayments of debt (1,381.5 ) (893.8 )
(3,492.6 ) (2,451.1 ) Dividends paid on common stock (4.1 ) (4.2 )
(12.3 ) (12.5 ) Purchases of common stock (30.0 ) — (61.9 ) (18.4 )
Federal and state tax benefits resulting from tax deductions in
excess of the compensation cost recognized for share-based payment
awards — 1.6 — 1.6 Purchases of common stock tendered by employees
to satisfy the required withholding taxes related to share-based
payment awards (0.1 ) (0.3 ) (4.0 ) (4.2 ) Other financing
activities, net (1.6 ) — (2.0 ) (0.2 )
Net cash provided
by (used in) financing activities 91.0 336.3
(72.7 ) 325.7 Effect of exchange rate changes on cash and
cash equivalents 2.6 1.9 7.8 3.0
Net
(decrease) increase in cash and cash equivalents (29.6 ) 135.2
(152.6 ) 289.9 Cash and cash equivalents, as of beginning of period
575.6 737.2 698.6 582.5
Cash and
cash equivalents, as of end of period $ 546.0 $ 872.3
$ 546.0 $ 872.3
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 For the Nine Months
Ended September 30, September 30, Non-GAAP
financial measures and reconciliation: 2017
2016 2017 2016 GAAP net income (loss)
attributable to World Fuel $ (38.5 ) $ 42.7 $ 22.8 $ 124.3
Acquisition related charges, net of income taxes (1) 1.0 2.3 4.9
8.3 Severance and other restructuring-related costs, net of income
taxes (2) 1.5 — 5.0 — Valuation allowance against the net U.S.
deferred tax assets 76.9 — 76.9 — Adjusted net
income attributable to World Fuel $ 40.9 $ 45.1 $ 109.6 $ 132.6
Share-based compensation expense, net of income taxes (3) 4.2 4.0
10.3 9.9 Intangible asset amortization expense, net of income taxes
(4) 6.9 8.2 21.6 21.0 Non-GAAP net income
attributable to World Fuel $ 52.0 $ 57.2 $ 141.5
$ 163.5 GAAP diluted earnings per common share $
(0.57 ) $ 0.61 $ 0.33 $ 1.78 Acquisition related charges, net of
income taxes (1) 0.01 0.03 0.07 0.12 Severance and other
restructuring-related costs, net of income taxes (2) 0.02 — 0.07 —
Valuation allowance against the net U.S. deferred tax assets 1.13
— 1.12 — Adjusted diluted earnings per common
share $ 0.60 $ 0.65 $ 1.60 $ 1.90 Share-based compensation expense,
net of income taxes (3) 0.06 0.06 0.15 0.14 Intangible asset
amortization expense, net of income taxes (4) 0.10 0.12
0.31 0.30 Non-GAAP diluted earnings per common share
$ 0.77 $ 0.82 $ 2.06 $ 2.34 (1) The
pre-tax amount of acquisition related charges was $1.3 million and
$2.6 million for the three months ended September 30, 2017 and
2016, and $6.8 million and $10.0 million for the nine months ended
September 30, 2017 and 2016, respectively. (2) The pre-tax amount
of severance and other restructuring-related costs was $2.1 million
and $7.1 million for the three and nine months ended September 30,
2017, respectively. (3) The pre-tax amount of share-based
compensation expense was $6.0 million and $5.8 million for the
three months ended September 30, 2017 and 2016, and $15.2 million
and $14.5 million for the nine months ended September 30, 2017 and
2016, respectively. (4) The pre-tax amount of intangible asset
amortization expense attributable to World Fuel Services was $9.9
million and $10.3 million for the three months ended September 30,
2017 and 2016, , and $30.1 million and $26.8 million for the nine
months ended September 30, 2017 and 2016, respectively.
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES BUSINESS SEGMENTS INFORMATION
(Unaudited - In millions)
For the Three Months Ended For the Nine Months
Ended September 30, September 30, Revenue:
2017 2016 2017 2016
Aviation segment $ 3,705.8 $ 2,969.2 $ 10,531.6 $ 7,810.2 Land
segment 2,770.5 2,509.8 8,117.9 6,375.9 Marine segment 2,066.7
1,920.7 6,173.9 5,037.5 $ 8,543.0
$ 7,399.8 $ 24,823.4 $ 19,223.6 Gross
profit: Aviation segment $ 123.9 $ 111.7 $ 334.8 $ 298.9 Land
segment 85.5 87.8 270.5 261.7 Marine segment 30.5 37.2
97.0 116.0 $ 239.9 $ 236.7 $
702.3 $ 676.7 Income from operations: Aviation
segment $ 61.6 $ 52.6 $ 151.7 $ 123.8 Land segment 13.1 13.9 46.7
64.0 Marine segment 4.3 10.3 19.9 32.8
79.1 76.8 218.4 220.5 Corporate overhead - unallocated (17.8 )
(18.6 ) (55.5 ) (55.7 ) $ 61.3 $ 58.2 $ 162.8
$ 164.8
SALES VOLUME SUPPLEMENTAL
INFORMATION
(Unaudited - In millions)
For the Three Months Ended
For the Nine Months Ended September 30,
September 30, Volume (Gallons):
2017
2016 2017 2016 Aviation Segment 2,059.2
1,892.8 5,921.7 5,242.4 Land Segment 1,497.4 1,421.7 4,466.8
3,878.6 Marine Segment (1) 1,799.5 2,071.3 5,388.6
6,262.9 Consolidated Total 5,356.2 5,385.8
15,777.1 15,383.9
(1) Converted from metric tons to gallons
at a rate of 264 gallons per metric ton. Marine segment metric tons
were 6.8 and
20.4 for the three and nine months ended September 30, 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171026006582/en/
World Fuel Services CorporationIra M Birns,
305-428-8000Executive Vice President & Chief Financial
OfficerorGlenn Klevitz, 305-428-8000Vice President, Assistant
Treasurer & Investor Relations
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