--- Provides Earnings Guidance for 2017 ---
--- Announces Additional $20 million of Cost
Savings ---
World Fuel Services Corporation (NYSE: INT) today reported full
year 2016 net income of $126.5 million or $1.81 diluted earnings
per share. Excluding the impact of certain one-time items, adjusted
full year net income was $146.9 million or $2.11 adjusted diluted
earnings per share. For 2015, net income as adjusted for one-time
items was $180.9 million or $2.56 adjusted diluted earnings per
share. Non-GAAP net income and diluted earnings per share for the
full year 2016, excluding share-based compensation, amortization of
acquired intangible assets and other one-time items were $188.8
million and $2.70, respectively, compared to $212.7 million and
$3.01 in 2015.
For the fourth quarter of 2016, net income was $2.2 million or
$0.03 diluted earnings per share. Excluding the impact of one-time
items, adjusted fourth quarter 2016 net income was $14.3 million or
$0.21 adjusted diluted earnings per share. In the fourth quarter of
2015, net income as adjusted for one-time items was $50.8 million
or $0.73 diluted earnings per share. Non-GAAP net income and
diluted earnings per share for the fourth quarter of 2016,
excluding share-based compensation and amortization of acquired
intangible assets and one-time items were $25.2 million and $0.36,
respectively, compared to $60.2 million and $0.86 in the fourth
quarter of 2015.
“While 2016 was a challenging year in many of the markets we
serve, we remain committed to executing on our short and long-term
growth plans while increasing operational efficiency,” stated
Michael J. Kasbar, chairman and chief executive officer of World
Fuel Services Corporation. “We are optimistic about our prospects
for 2017 and are focused on executing on our long-term strategy of
becoming a global leader in the areas of energy management,
fulfillment, payments and transaction management.”
For the full year, the company’s aviation segment generated
gross profit of $401.0 million, an increase of $39.1 million or
10.8% year-over-year. The company’s marine segment generated gross
profit of $149.5 million, a decrease of $40.1 million or 21.1%
year-over-year. The company’s land segment posted gross profit of
$348.5 million, an increase of $39.0 million or 12.6%
year-over-year.
“We remain committed to driving cost efficiencies in our
business and we have identified $20 million of additional
annualized cost savings across the business, which should help
deliver a stronger result in 2017,” said Ira M. Birns, executive
vice president and chief financial officer. “Considering our
organic growth opportunities and the continued integration of our
recent acquisitions, combined with the benefit of driving further
cost efficiencies, we expect adjusted diluted earnings per share to
be between $2.55 and $2.90 for the full year.”
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 full year and fourth quarter ended December
31, 2016 (collectively, the “2016 Non-GAAP Measures”), as well as
the Company’s outlook for Adjusted EPS for 2017. The 2016 Non-GAAP
Measures exclude costs associated with share-based compensation,
amortization of acquired intangible assets, acquisition related
charges, severance and other restructuring-related costs and costs
related to the divestiture of crude oil joint venture interest
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
and costs related to the divestiture of crude oil joint venture
interest are useful for purposes of evaluating operating
performance of our core operating results and comparing them period
over period. We believe that the 2016 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 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.
With regard to the Company’s outlook for 2017, reconciliation of
Adjusted EPS to the most directly comparable GAAP measure is not
available without unreasonable efforts on a forward-looking basis
due to the high variability and complexity with respect to the
charges excluded from this non-GAAP measure, including expenses
associated with acquisitions and divestitures, and other unusual
gains and losses, which we are unable to predict without
unreasonable efforts due to their inherent uncertainty.
Consequently, any attempt to disclose such reconciliation would
imply a degree of precision that could be confusing or misleading
to investors. While we do not expect the variability of the above
charges to have a significant impact on our future GAAP financial
results, there can be no assurance that they will not materially
affect our future GAAP financial results. The expected 2017
adjusted EPS range assumes the following: (i) weighted-average
outstanding shares of approximately 70 million; (ii) a full-year
effective tax rate in a range of 15 to 18 percent; (iii) the
integration and realization of anticipated financial and
operational contributions from acquisitions announced in 2016, but
does not contemplate the impact of any potential future
acquisitions; (iv) the realization of cost savings of approximately
$15 million in 2017; (v) performance consistent with management’s
current visibility into its annual operating performance, including
continued contributions from our government-related activities; and
(vi) traditional seasonal weather patterns in 2017.
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 long-term
strategy, growth plans and operating efficiencies, as well as our
expectations for driving cost-savings and our outlook for the 2017
adjusted EPS range. 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, that the
assumptions underlying our expected 2017 adjusted EPS are not
correct, 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
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,
except per share data) As of December
31, December 31, 2016
2015(1)
Assets: Current assets: Cash and cash equivalents $ 698.6 $ 582.5
Accounts receivable, net 2,344.0 1,812.6 Inventories 458.0 359.1
Prepaid expenses 46.5 57.9 Short-term derivative assets, net 58.9
220.4 Other current assets 230.6 208.0 Current assets held for sale
— 5.5 Total current assets 3,836.6 3,246.0
Property and equipment, net 311.2 225.6 Goodwill 835.8 675.8
Identifiable intangible and other non-current assets 429.1 341.4
Non-current assets held for sale — 36.5 Total
assets $ 5,412.6 $ 4,525.3 Liabilities: Current liabilities:
Short-term debt $ 15.4 $ 25.5 Accounts payable 1,770.4 1,349.6
Customer deposits 90.8 118.3 Accrued expenses and other current
liabilities 306.0 255.2 Current liabilities held for sale —
5.6 Total current liabilities 2,182.7 1,754.2
Long-term debt 1,170.8 746.7 Non-current income tax liabilities,
net 84.6 87.7 Other long-term liabilities 34.5 25.8 Non-current
liabilities held for sale — 5.0 Total
liabilities 3,472.6 2,619.4 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, 69.9 and 70.8 issued and
outstanding as of December 31, 2016 and December 31, 2015,
respectively 0.7 0.7 Capital in excess of par value 399.9 435.3
Retained earnings 1,679.3 1,569.4 Accumulated other comprehensive
loss (154.8 ) (109.5 ) Total World Fuel shareholders' equity
1,925.0 1,895.9 Noncontrolling interest equity 15.0 10.0
Total equity 1,940.0 1,905.9
Total liabilities and equity $ 5,412.6 $ 4,525.3
(1) Certain prior period amounts have been revised to reflect
the impact of adjustments made to the Company's provision for
income taxes and to correct the timing of previously recorded
out-of-period adjustments.
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited – In
millions, except per share data) For
the Three Months Ended For the Twelve Months Ended
December 31, December 31, 2016
2015 2016 2015(1) Revenue
$ 7,792.1 $ 6,733.6 $ 27,015.8 $ 30,381.4 Cost of revenue 7,569.9
6,503.4 26,116.8 29,520.4 Gross profit 222.3 230.2 899.0
861.0 Operating expenses: Compensation and employee benefits
107.1 95.4 413.3 365.8 Provision for bad debt 10.0 2.2 15.4 7.5
General and administrative 81.1 62.4 281.4 242.1
198.2 160.0 710.1 615.3 Income from operations 24.0 70.2
188.9 245.7 Non-operating expenses, net: Interest expense
and other financing costs, net (13.3) (8.4) (39.2) (29.9) Other
(expense) income, net (8.7) 1.4 (7.5) 2.0 (22.0)
(7.0) (46.7) (27.9) Income before income taxes 2.1 63.2
142.1 217.7 Provision for income taxes — 13.6 15.7 47.2 Net
income including noncontrolling interest 2.1 49.6 126.4 170.5 Net
loss attributable to noncontrolling interest (0.1) (0.3) — (3.9)
Net income attributable to World Fuel $ 2.2 $ 49.9 $ 126.5 $
174.5 Basic earnings per common share $ 0.03 $ 0.72 $
1.82 $ 2.49 Basic weighted average common shares 69.1
69.5 69.3 70.2 Diluted earnings per common share $
0.03 $ 0.71 $ 1.81 $ 2.47 Diluted weighted average
common shares 69.5 69.9 69.8 70.7 Comprehensive
income: Net income including noncontrolling interest $ 2.1 $ 49.6 $
126.4 $ 170.5 Other comprehensive (loss): Foreign currency
translation adjustments (27.1) (27.4) (40.4) (45.4) Cash Flow
hedges, net of income tax benefit of $2.4 and $4.1 for the three
and twelve months ended December 31, 2016 (3.8) (1.1) (6.6) (0.8)
Other comprehensive (loss) (30.9) — (47.0) (46.2)
Comprehensive (loss) income including noncontrolling interest
(28.9) 49.6 79.5 124.3 Comprehensive income (loss) attributable to
noncontrolling interest 1.1 (1.0) 1.6 (2.2) Comprehensive
(loss) income attributable to World Fuel $ (30.0) $ 43.3 $ 77.9 $
126.4
(1) Certain prior period amounts have been revised to reflect
the impact of adjustments made to the Company's provision for
income taxes and to correct the timing of previously recorded
out-of-period adjustments.
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - In
millions) For the Three Months Ended
For the Twelve Months Ended December 31, December
31, 2016 2015 2016
2015 Cash flows from operating activities: Net income
including noncontrolling interest $ 2.1 $ 49.6 $ 126.4 $ 170.5
Adjustments to reconcile net income including noncontrolling
interest to net cash provided by operating activities: Depreciation
and amortization 23.9 18.4 82.3 65.5 Provision for bad debt 10.0
2.2 15.4 7.5 Gain on sale of held for sale assets and liabilities —
— (3.8) — Share-based payment award compensation costs 4.7 3.9 19.2
17.0 Deferred income tax provision (benefit) (21.5) (1.6) (36.0)
5.3 Extinguishment of liabilities, net (1.8) (1.3) (7.0) (8.2)
Foreign currency losses (gains), net 6.5 (11.3) (11.8) (7.3) Other
0.7 0.9 3.3 3.2 Changes in assets and liabilities, net of
acquisitions: Accounts receivable, net (294.5) 223.1 (506.8) 485.0
Inventories 39.8 58.8 (49.5) 81.4 Prepaid expenses 7.9 20.7 7.7
10.8 Short-term derivative assets, net (28.8) (37.5) 163.7 81.5
Other current assets 10.0 149.6 (20.4) 34.0 Cash collateral with
financial counterparties 20.4 39.4 149.2 133.3 Other non-current
assets (9.2) (5.1) 4.4 (1.9) Accounts payable 210.2 (268.1) 423.4
(481.5) Customer deposits (15.8) (3.0) (26.3) (17.5) Accrued
expenses and other current liabilities 22.6 (122.7) (121.9) (141.9)
Non-current income tax, net and other long-term liabilities (2.4)
6.3 (6.4) 11.0 Total adjustments (17.1) 72.6 78.8 276.9
Net cash
(used in) provided by operating activities (15.1) 122.2 205.2
447.5 Cash flows from investing activities: Acquisition of
businesses, net of cash acquired and other investments (164.4)
(15.0) (430.8) (96.9) Proceeds from sale of business — — 29.0 —
Capital expenditures (7.2) (14.6) (36.1) (51.0) Other investing
activities, net 2.2 (1.2) 9.4 3.2
Net cash used in investing
activities (169.3) (30.7) (428.5) (144.8) Cash flows from
financing activities: Borrowings of debt
1,877.4
662.2
4,688.0
4,831.2 Repayments of debt
(1,829.2)
(774.3)
(4,280.3)
(4,752.0) Payments of senior revolving credit facility and senior
term loan facility loan costs (5.7) — (5.7) (3.4) Dividends paid on
common stock (4.1) (4.2) (16.6) (15.3) Purchases of common stock
(22.8) — (41.2) (70.5) Federal and state tax benefits resulting
from tax deductions in excess of the compensation cost recognized
for share-based payment awards — — 1.6 — Purchases of common stock
tendered by employees to satisfy the required withholding taxes
related to share-based payment awards (0.4) (0.5) (4.6) (7.3) Other
financing activities, net — — (0.3) 0.2
Net cash provided by
(used in) financing activities 15.2 (116.9) 340.9 (17.0) Effect
of exchange rate changes on cash and cash equivalents (4.5) (5.7)
(1.5) (5.5)
Net (decrease) increase in cash and cash
equivalents (173.8) (27.1) 116.1 280.2 Cash and cash
equivalents, as of beginning of period 872.3 609.6 582.5 302.3
Cash and cash equivalents, as of end of period $ 698.6 $
582.5 $ 698.6 $ 582.5
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 Twelve Months Ended December 31, December 31,
Non-GAAP financial measures and reconciliation: 2016
2015 2016 2015 GAAP net income
attributable to World Fuel $ 2.2 $ 49.9 $ 126.5 $ 174.5 Acquisition
related charges, net of income taxes (1) 4.4 0.9 11.0 4.1 Severance
and other restructuring-related costs, net of income taxes (2) 3.2
— 4.8 2.3 Costs related to the divestiture of crude oil joint
venture interest, net of income taxes (3) 4.6 — 4.6 — Adjusted net
income attributable to World Fuel $ 14.3 $ 50.8 $ 146.9 $ 180.9
Share-based compensation expense, net of income taxes (4) 3.3 2.9
13.2 11.4 Intangible asset amortization expense, net of income
taxes (5) 7.6 6.5 28.6 20.4 Non-GAAP net income attributable to
World Fuel $ 25.2 $ 60.2 $ 188.8 $ 212.7 GAAP diluted
earnings per common share $ 0.03 $ 0.71 $ 1.81 $ 2.47 Acquisition
related charges, net of income taxes (1) 0.06 0.01 0.16 0.06
Severance and other restructuring-related costs, net of income
taxes (2) 0.05 — 0.07 0.03 Costs related to the divestiture of
crude oil joint venture interest, net of income taxes (3) 0.07 —
0.07 — Adjusted diluted earnings per common share $ 0.21 $ 0.73 $
2.11 $ 2.56 Share-based compensation expense, net of income taxes
(4) 0.05 0.04 0.19 0.16 Intangible asset amortization expense, net
of income taxes (5) 0.11 0.09 0.41 0.29 Non-GAAP diluted earnings
per common share $ 0.36 $ 0.86 $ 2.70 $ 3.01
(1) The pre-tax amount of acquisition related charges was $6.2
million and $1.1 million for the three months ended
December 31, 2016 and 2015, respectively, and $14.0 million
and $5.6 million for the twelve months ended December 31, 2016
and 2015, respectively.
(2) The pre-tax amount of severance and other
restructuring-related costs was $4.2 million for the three months
ended December 31, 2016 and $6.4 million and $3.8 million for
the twelve months ended December 31, 2016 and 2015,
respectively.
(3) The pre-tax amount of costs related to the divestiture of
crude oil joint venture interest was $7.5 million for the three and
twelve months ended December 31, 2016.
(4) The pre-tax amount of share-based compensation expense was
$4.7 million and $3.9 million for the three months ended
December 31, 2016 and 2015, respectively, and $19.3 million
and $16.3 million for the twelve months ended December 31,
2016 and 2015, respectively.
(5) The pre-tax amount of intangible asset amortization expense
attributable to World Fuel was $11.8 million and $8.4 million for
the three months ended December 31, 2016 and 2015,
respectively, and $38.6 million and $27.3 million for the twelve
months ended December 31, 2016 and 2015, respectively.
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES BUSINESS
SEGMENTS INFORMATION (Unaudited - In millions)
For the Three Months Ended For the Twelve Months
Ended December 31, December 31, Revenue:
2016 2015 2016 2015
Aviation segment $ 3,104.2 $ 2,662.2 $ 10,914.4 $ 11,739.8 Land
segment 2,543.0 2,218.4 8,918.8 9,274.3 Marine segment 2,145.0
1,853.0 7,182.5 9,367.2 $ 7,792.1 $ 6,733.6 $ 27,015.8 $ 30,381.4
Gross profit: Aviation segment $ 102.0 $ 88.9 $ 401.0 $ 361.9 Land
segment 86.8 96.1 348.5 309.5 Marine segment 33.5 45.3 149.5 189.6
$ 222.3 $ 230.2 $ 899.0 $ 861.0 Income from operations: Aviation
segment $ 36.7 $ 33.1 $ 160.5 $ 132.2 Land segment 6.8 36.2 70.8
101.4 Marine segment (2.5) 15.7 30.2 73.0 41.0 85.0 261.5 306.5
Corporate overhead - unallocated (17.0) (14.8) (72.7) (60.9)
$ 24.0 $ 70.2 $ 188.9 $ 245.7
SALES VOLUME SUPPLEMENTAL
INFORMATION (Unaudited - In millions)
For the Three Months Ended For the Twelve Months
Ended December 31, December 31, Volume
(Gallons):
2016 2015 2016
2015 Aviation Segment 1,884.4 1,646.6 7,126.9 6,341.9 Land
Segment 1,487.3 1,382.1 5,366.0 4,932.7 Marine Segment (1) 2,015.6
2,116.9 8,278.5 8,619.0 Consolidated Total 5,387.4 5,145.5 20,771.3
19,893.7
(1) Converted from metric tons to gallons at a rate of 264
gallons per metric ton. Marine segment metric tons were 7.6 and
31.4 for the three and twelve months ended December 31,
2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170214006427/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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