World Fuel Services Corporation (NYSE: INT) today reported
second quarter 2017 net income of $30.0 million or $0.44 diluted
earnings per share. Excluding the impact of certain one-time items,
adjusted second quarter net income was $34.2 million or $0.50
adjusted diluted earnings per share. In the second quarter of 2016,
net income as adjusted for one-time items was $34.8 million or
$0.50 adjusted diluted earnings per share. Non-GAAP net income and
diluted earnings per share for the second quarter of 2017,
excluding share-based compensation, amortization of acquired
intangible assets and other one-time items were $45.1 million and
$0.66, respectively, compared to $44.0 million and $0.63 in
2016.
“Our aviation segment posted strong results in the second
quarter with solid growth coming from our core resale business, as
well as strong performance from our recently acquired international
fueling operations,” stated Michael J. Kasbar, Chairman and Chief
Executive Officer of World Fuel Services Corporation. “While
certain headwinds in our marine and land businesses persist, we
remain focused on achieving operational efficiencies which should
serve us well as we execute on our long-term growth strategy.”
The company’s aviation segment generated gross profit of $110.9
million, an increase of $12.3 million or 12.5% year-over-year. The
company’s marine segment generated gross profit of $32.9 million, a
decrease of $6.7 million or 17.0% year-over-year. The company’s
land segment generated gross profit of $87.2 million, an increase
of $6.9 million or 8.6% year-over-year.
“We generated $156 million of operating cash flow in the first
half of 2017, reduced our debt by approximately $120 million and
repurchased $32 million of our common stock, further strengthening
our balance sheet and driving incremental shareholder value,” said
Ira M. Birns, Executive Vice President and Chief Financial Officer.
“However, due to a weaker outlook for certain parts of our
business, we are lowering our 2017 full year guidance range to
$2.10 to $2.40 adjusted diluted earnings per share.”
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 six months ended June 30, 2017
and 2016 (collectively, the “2017 Non-GAAP Measures”) as well as
the Company's outlook for Adjusted EPS for 2017. 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
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.
With regard to the Company’s guidance 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 the Company's 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 executing on
our long-term strategy, and gaining operational efficiencies, as
well as our expectations about 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 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 June 30, December
31, 2017 2016 Assets: Current assets: Cash
and cash equivalents $ 575.6 $ 698.6 Accounts receivable, net
2,241.4 2,344.0 Inventories 441.8 458.0 Prepaid expenses 45.3 46.5
Short-term derivative assets, net 48.7 58.9 Other current assets
236.1 230.6 Total current assets 3,588.8 3,836.6
Property and equipment, net 328.0 311.2 Goodwill 887.9 835.8
Identifiable intangible and other non-current assets 481.4
429.1 Total assets $ 5,286.0 $ 5,412.6
Liabilities: Current liabilities: Short-term debt $ 21.7 $ 15.4
Accounts payable 1,794.4 1,770.4 Customer deposits 91.1 90.8
Accrued expenses and other current liabilities 221.4 306.0
Total current liabilities
2,128.5 2,182.7 Long-term debt 1,046.1 1,170.8 Non-current income
tax liabilities, net 76.3 84.6 Other long-term liabilities 40.7
34.5 Total liabilities 3,291.7 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, 68.6 and 69.9 issued and outstanding as of June 30,
2017 and December 31, 2016, respectively 0.7 0.7 Capital in excess
of par value 373.3 399.9 Retained earnings 1,732.4 1,679.3
Accumulated other comprehensive loss (127.8 ) (154.8 ) Total World
Fuel shareholders' equity 1,978.6 1,925.0 Noncontrolling interest
equity 15.7 15.0 Total equity 1,994.3 1,940.0
Total liabilities and equity $ 5,286.0 $ 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 For the Six Months
Ended June 30, June 30, 2017
2016 2017 2016 Revenue $ 8,086.2 $
6,633.0 $ 16,280.4 $ 11,823.9 Cost of revenue 7,855.2
6,414.5 15,818.0 11,383.9 Gross profit 231.0
218.5 462.4 440.0 Operating expenses:
Compensation and employee benefits 102.3 103.7 206.8 199.6
Provision for bad debt 1.5 2.5 3.9 3.9 General and administrative
76.0 66.8 150.1 129.9 179.7
173.0 360.9 333.4 Income from
operations 51.2 45.6 101.6 106.6
Non-operating expenses, net: Interest expense and other financing
costs, net (13.8 ) (8.1 ) (26.5 ) (15.7 ) Other (expense) income,
net (2.6 ) (0.6 ) (4.1 ) 0.7 (16.4 ) (8.7 ) (30.6 )
(15.0 ) Income before income taxes 34.9 36.9 70.9 91.6 Provision
for income taxes 4.6 7.1 9.6 10.3 Net
income including noncontrolling interest 30.3 29.8 61.3 81.3 Net
income (loss) attributable to noncontrolling interest 0.2
(0.2 ) — (0.3 ) Net income attributable to World Fuel $ 30.0
$ 30.0 $ 61.4 $ 81.6 Basic
earnings per common share $ 0.44 $ 0.43 $ 0.90
$ 1.17 Basic weighted average common shares 68.4
69.5 68.5 69.5 Diluted earnings
per common share $ 0.44 $ 0.43 $ 0.89 $ 1.17
Diluted weighted average common shares 68.7
70.0 68.9 70.0 Comprehensive income:
Net income including noncontrolling interest $ 30.3 $ 29.8 $ 61.3 $
81.3 Other comprehensive income (loss): Foreign currency
translation adjustments 11.2 (14.5 ) 17.6 (13.2 ) Cash Flow hedges,
net of income tax benefit of $6.6 for the six months ended June 30,
2017 — 5.2 10.5 5.0 Other comprehensive
income (loss): 11.2 (9.3 ) 28.1 (8.3 ) Comprehensive
income including noncontrolling interest 41.5 20.5 89.4 73.0
Comprehensive income (loss) attributable to noncontrolling interest
1.1 (1.0 ) 1.0 0.5 Comprehensive income
attributable to World Fuel $ 40.3 $ 21.5 $ 88.4
$ 72.5
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited - In millions)
For the Three Months Ended For the Six Months
Ended June 30, June 30, 2017
2016 2017 2016 Cash flows from
operating activities: Net income including noncontrolling interest
$ 30.3 $ 29.8 $ 61.3 $ 81.3 Adjustments
to reconcile net income including noncontrolling interest to net
cash provided by operating activities: Depreciation and
amortization 20.8 18.2 43.4 36.7 Provision for bad debt 1.5 2.5 3.9
3.9 Gain on sale of held for sale assets and liabilities — (3.8 ) —
(3.8 ) Share-based payment award compensation costs 5.2 4.7 9.2 8.8
Deferred income tax (benefit) provision (1.7 ) (1.5 ) (8.0 ) 0.2
Extinguishment of liabilities, net (1.2 ) 0.1 (2.2 ) (1.7 ) Foreign
currency gains, net (3.4 ) (10.5 ) (6.5 ) (4.2 ) Other 0.4 1.4 0.4
2.8 Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net (20.9 ) (373.1 ) 108.7 (230.1 )
Inventories 14.5 (36.3 ) 15.2 (10.2 ) Prepaid expenses 0.5 0.8 0.3
12.4 Short-term derivative assets, net 4.0 89.5 14.2 174.6 Other
current assets (18.0 ) (43.9 ) 3.1 (56.6 ) Cash collateral with
financial counterparties (21.7 ) 59.0 (5.9 ) 113.0 Other
non-current assets (16.4 ) (0.3 ) (12.4 ) 6.8 Accounts payable 57.4
381.2 12.8 190.0 Customer deposits (8.3 ) 7.7 (1.0 ) (15.9 )
Accrued expenses and other current liabilities (18.1 ) (63.8 )
(72.7 ) (101.2 ) Non-current income tax, net and other long-term
liabilities (6.0 ) 0.9 (8.1 ) (5.8 ) Total adjustments (11.4
) 32.8 94.5 119.7
Net cash provided by
operating activities 18.8 62.6 155.8 201.0
Cash flows from investing activities: Acquisition of
businesses, net of cash acquired and other investments (0.4 ) (4.4
) (88.4 ) (49.7 ) Proceeds from sale of business — 29.3 — 29.3
Capital expenditures (21.4 ) (9.2 ) (31.5 ) (23.3 ) Other investing
activities, net (0.6 ) — (0.4 ) 6.9
Net cash (used
in) provided by investing activities (22.4 ) 15.8 (120.4
) (36.8 ) Cash flows from financing activities: Borrowings of debt
1,173.0 888.0 1,991.8 1,577.5 Repayments of debt (1,188.6 ) (892.7
) (2,111.1 ) (1,557.3 ) Dividends paid on common stock (4.1 ) (4.2
) (8.2 ) (8.3 ) Purchases of common stock (20.8 ) (18.4 ) (31.9 )
(18.4 ) Purchases of common stock tendered by employees to satisfy
the required withholding taxes related to share-based payment
awards (2.7 ) (3.0 ) (3.9 ) (3.9 ) Other financing activities, net
(0.3 ) — (0.4 ) (0.2 )
Net cash used in financing
activities (43.5 ) (30.2 ) (163.7 ) (10.6 ) Effect of exchange
rate changes on cash and cash equivalents 3.4 (0.5 ) 5.2
1.1
Net (decrease) increase in cash and cash
equivalents (43.7 ) 47.7 (123.0 ) 154.7 Cash and cash
equivalents, as of beginning of period 619.3 689.7
698.6 582.5
Cash and cash equivalents, as of end
of period $ 575.6 $ 737.3 $ 575.6 $ 737.2
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 Six Months
Ended June 30, June 30, Non-GAAP financial
measures and reconciliation: 2017 2016
2017 2016 GAAP net income attributable to
World Fuel $ 30.0 $ 30.0 $ 61.4 $ 81.6 Acquisition related charges,
net of income taxes (1) 1.9 4.8 3.9 6.0 Severance and other
restructuring-related costs, net of income taxes (2) 2.3 —
3.5 — Adjusted net income attributable to World Fuel
$ 34.2 $ 34.8 $ 68.8 $ 87.6 Share-based compensation expense, net
of income taxes (3) 3.4 3.1 6.1 5.9 Intangible asset amortization
expense, net of income taxes (4) 7.5 6.1 14.6
12.8 Non-GAAP net income attributable to World Fuel $ 45.1 $
44.0 $ 89.5 $ 106.3 GAAP diluted earnings per
common share $ 0.44 $ 0.43 $ 0.89 $ 1.17 Acquisition related
charges, net of income taxes (1) 0.03 0.07 0.06 0.09 Severance and
other restructuring-related costs, net of income taxes (2) 0.03
— 0.05 — Adjusted diluted earnings per common
share $ 0.50 $ 0.50 $ 1.00 $ 1.26 Share-based compensation expense,
net of income taxes (3) 0.05 0.04 0.09 0.08 Intangible asset
amortization expense, net of income taxes (4) 0.11 0.09
0.21 0.18 Non-GAAP diluted earnings per common share
$ 0.66 $ 0.63 $ 1.30 $ 1.52 (1)
The pre-tax amount of acquisition related charges was $2.6 million
and $5.9 million for the three months ended June 30, 2017 and 2016,
and $5.5 million and $7.5 million for the six months ended June 30,
2017 and 2016, respectively. (2) The pre-tax amount of severance
and other restructuring-related costs was $3.1 million and $5.0
million for the three and six months ended June 30, 2017,
respectively. (3) The pre-tax amount of share-based compensation
expense was $5.1 million and $4.7 million for the three months
ended June 30, 2017 and 2016, and $9.2 million and $8.8 million for
the six months ended June 30, 2017 and 2016, respectively. (4)
The pre-tax amount of intangible asset
amortization expense attributable to World Fuel Services was $10.5
million and $8.1 million for the three months ended June 30, 2017
and 2016, and $20.3 million and $16.5 million for the six months
ended June 30, 2017 and 2016, respectively.
WORLD FUEL SERVICES CORPORATION AND
SUBSIDIARIES
BUSINESS SEGMENTS INFORMATION
(Unaudited - In millions)
For the Three Months Ended For the Six Months
Ended June 30, June 30, Revenue:
2017 2016 2017 2016
Aviation segment $ 3,508.4 $ 2,621.6 $ 6,825.8 $ 4,841.0 Land
segment 2,564.0 2,171.0 5,347.4 3,866.0 Marine segment 2,013.8
1,840.4 4,107.3 3,116.9 $ 8,086.2
$ 6,633.0 $ 16,280.4 $ 11,823.9 Gross
profit: Aviation segment $ 110.9 $ 98.6 $ 210.8 $ 187.3 Land
segment 87.2 80.2 185.0 173.9 Marine segment 32.9 39.7
66.6 78.8 $ 231.0 $ 218.5 $
462.4 $ 440.0 Income from operations: Aviation
segment $ 49.7 $ 37.2 $ 90.2 $ 71.2 Land segment 12.2 16.2 33.6
50.1 Marine segment 7.2 11.0 15.5 22.5
69.2 64.4 139.3 143.8 Corporate overhead - unallocated (17.9 )
(18.8 ) (37.7 ) (37.2 ) $ 51.2 $ 45.6 $ 101.6
$ 106.6
SALES VOLUME SUPPLEMENTAL
INFORMATION
(Unaudited - In millions)
For the Three Months Ended For the Six Months
Ended June 30, June 30, Volume (Gallons):
2017 2016 2017 2016
Aviation Segment 2,031.5 1,723.2 3,862.5 3,349.6 Land Segment
1,472.3 1,243.8 2,969.4 2,456.9 Marine Segment (1) 1,785.4 2,168.3
3,589.1 4,190.9 Consolidated Total 5,289.3 5,135.3 10,421.0 9,997.4
(1) Converted from metric tons to gallons at a rate
of 264 gallons per metric ton. Marine segment metric tons were 6.8
and 13.6 for the three and six months ended June 30, 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727006493/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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