World Fuel Services Corporation (NYSE: INT)
First-Quarter 2022
Highlights
- Total gross profit of $230.9 million, up 21%
year-over-year
- GAAP net income of $26.3 million, or $0.41 per diluted
share
- Adjusted net income of $26.8 million, or $0.42 per diluted
share
- Adjusted EBITDA of $74.9 million
“Our financial performance this quarter again demonstrates the
value of our diversified business model, where challenges in our
aviation business were counterbalanced by strong results in our
marine and land businesses,” stated Michael J. Kasbar, chairman and
chief executive officer. “We remain focused on delivering best in
class products and services to our customers worldwide, satisfying
their current energy requirements and their growing need for
sustainability-related products and services.”
For the first quarter, our aviation segment generated gross
profit of $64.2 million, a decrease of 16% year-over-year,
principally attributable to inventory losses driven by
unprecedented market dynamics during the quarter and the reduction
in our government-related activity in Afghanistan as a result of
the military withdrawal which concluded during the third quarter of
2021, partially offset by increased volumes from the continued
recovery in demand for air travel. Our marine segment generated
gross profit of $47.0 million, an increase of 85% year-over-year,
principally related to the impact of the rise in global oil prices
and the resulting constrained credit environment. Our land segment
generated gross profit of $119.8 million, an increase of 34%
year-over-year, principally related to the recent acquisition of
Flyers Energy, partially offset by the reduction in our
government-related activity in Afghanistan as well as a decline in
our natural gas activities relative to the exceptional results
during the first quarter of 2021, which benefited from extreme
weather conditions.
“The Flyers Energy business delivered very strong results in the
first quarter since we closed the transaction contributing to a
record level of quarterly gross profit in our Land segment and a
strong overall result,” said Ira M. Birns, executive vice president
and chief financial officer. “While higher fuel prices have driven
increased working capital requirements across the business in the
short-term, our balance sheet remains strong and we stand committed
to disciplined capital allocation in support of organic growth and
strategic opportunities that drive long-term value creation.”
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures
(collectively, the “Non-GAAP Measures”), including adjusted net
income attributable to World Fuel Services, adjusted diluted
earnings per common share, and adjusted earnings before interest,
taxes, depreciation and amortization (“EBITDA”). The Non-GAAP
Measures exclude acquisition and divestiture related expenses,
restructuring costs, impairments, gains or losses on the
extinguishment of debt and gains or losses on business dispositions
primarily because we do not believe they are reflective of our core
operating results. In addition, beginning with the period ending
March 31, 2022, the Non-GAAP Measures also exclude integration
costs associated with our acquisitions. No changes to the
comparable period were made as we did not incur integration costs
in 2021.
We believe that the 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 Non-GAAP Measures may not be comparable to the presentation of
such metrics by other companies. Adjusted diluted earnings per
common share is computed by dividing adjusted net income
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 Non-GAAP Measures
to their most directly comparable GAAP financial measures in this
press release and on our website.
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 beliefs and expectations about
our ability to capitalize on our sustainability solutions and meet
our customers' energy requirements, as well as our view of our
balance sheet and capital allocation to support organic growth and
strategic opportunities. 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 successfully implement our growth strategy and integrate
acquired businesses and recognize the anticipated benefits, our
ability to capitalize on new market opportunities, potential
liabilities, limited indemnities and the extent of any insurance
coverage, our ability to effectively manage the effects of the
COVID-19 pandemic, the extent of the impact of the pandemic on ours
and our customers' sales, profitability, operations and supply
chains due to actions taken by governments and businesses to
contain the virus, customer and counterparty creditworthiness and
our ability to collect accounts receivable and settle derivative
contracts, sudden changes in the market price of fuel or extremely
high or low fuel prices that continue for an extended period of
time, the availability of cash and sufficient liquidity to fund our
working capital and strategic investment needs, any global economic
impacts or other significant volatility that may arise from
geopolitical events, wars and other civil unrest, adverse
conditions in the markets or industries in which we or our
customers and suppliers operate, such as the current global
economic environment as a result of the coronavirus pandemic, our
ability to manage the changes in supply and other market dynamics
in the regions where we operate, our failure to comply with
restrictions and covenants in our senior revolving credit facility
and our senior term loans, including our financial covenants, our
ability to successfully execute and achieve efficiencies, our
ability to achieve the expected level of benefit from any
restructuring activities and cost reduction initiatives,
inflationary pressures and its impact on our customers or the
global economy, unanticipated tax liabilities or adverse results of
tax audits, assessments, or disputes, our ability to capitalize on
new market opportunities, risks related to the complexity of the
U.S. and foreign tax legislation and any subsequently issued
regulations and our ability to accurately predict the impact on our
effective tax rate and future earnings, our ability to effectively
leverage technology and operating systems and realize the
anticipated benefits, potential liabilities and the extent of any
insurance coverage, actions that may be taken under the current
administration in the U.S. that increase costs or otherwise
negatively impact ours or our customers and suppliers businesses,
the outcome of pending litigation and other proceedings, the impact
of quarterly fluctuations in results, particularly as a result of
seasonality, supply disruptions, border closures and other
logistical difficulties that can arise when sourcing and delivering
fuel in areas that are actively engaged in war or other military
conflicts, our failure to effectively hedge certain financial risks
associated with the use of derivatives, uninsured losses, the
impact of climate change and natural disasters, adverse results in
legal disputes, and other risks detailed from time to time in our
SEC filings. In addition, other current or potential risks and
uncertainties related to the coronavirus pandemic include, but are
not limited to: notices from customers, suppliers and other third
parties asserting force majeure or other bases for their
non-performance, losses on hedging transactions with customers
arising from the volatility in fuel prices, heightened risk of
cybersecurity issues as digital technologies may become more
vulnerable and experience a higher rate of cyber-attacks in a
remote connectivity environment, reduction of our global workforce
to adjust to market conditions, including increased costs
associated with severance payments, retention issues, and an
inability to hire employees when market conditions improve, the
impact of asset impairments, including any impairment of the
carrying value of our goodwill in our aviation and land segments,
as well as other accounting charges if expected future demand for
our products and services materially decreases, a structural shift
in the global economy and its demand for fuel and related products
and services as a result of changes in the way people work, travel
and interact, or in connection with a global recession. 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, except as required by law.
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 also offers natural gas and
electricity, as well as energy advisory services, including
programs for sustainability solutions and renewable energy
alternatives. 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, 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
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited - In millions, except
per share data)
March 31, 2022
December 31, 2021
Assets:
Current assets:
Cash and cash equivalents
$
266.2
$
652.2
Accounts receivable, net of allowance for
credit losses of $17.2 million and $26.1 million as of March 31,
2022 and December 31, 2021, respectively
3,510.2
2,355.3
Inventories
680.5
477.9
Prepaid expenses
59.3
59.2
Short-term derivative assets, net
293.8
169.2
Other current assets
215.3
305.9
Total current assets
5,025.3
4,019.7
Property and equipment, net
473.9
348.9
Goodwill
1,244.6
861.9
Identifiable intangible assets, net
369.5
189.1
Other non-current assets
854.7
522.8
Total assets
$
7,968.0
$
5,942.4
Liabilities:
Current liabilities:
Current maturities of long-term debt
$
15.0
$
30.6
Accounts payable
3,447.5
2,399.6
Short-term derivative liabilities, net
317.1
168.4
Customer deposits
234.9
205.5
Accrued expenses and other current
liabilities
398.0
292.7
Total current liabilities
4,412.5
3,096.7
Long-term debt
869.1
478.1
Non-current income tax liabilities,
net
208.4
213.9
Other long-term liabilities
532.5
236.8
Total liabilities
6,022.6
4,025.6
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, 63.0 and 61.7 issued and outstanding as of March
31, 2022 and December 31, 2021, respectively
0.6
0.6
Capital in excess of par value
206.7
168.1
Retained earnings
1,899.4
1,880.6
Accumulated other comprehensive income
(loss)
(165.4
)
(136.7
)
Total World Fuel shareholders' equity
1,941.4
1,912.7
Noncontrolling interest
4.1
4.1
Total equity
1,945.5
1,916.8
Total liabilities and equity
$
7,968.0
$
5,942.4
WORLD FUEL SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited – In millions, except
per share data)
For the Three Months Ended
March 31,
2022
2021
Revenue
$
12,459.4
$
5,957.9
Cost of revenue
12,228.4
5,766.3
Gross profit
230.9
191.6
Operating expenses:
Compensation and employee benefits
114.9
92.5
General and administrative
74.7
59.4
Restructuring charges
—
2.1
Total operating expenses
189.6
154.0
Income from operations
41.3
37.6
Non-operating income (expenses), net:
Interest expense and other financing
costs, net
(14.3
)
(8.7
)
Other income (expense), net
5.7
(1.2
)
Total non-operating income (expense),
net
(8.7
)
(10.0
)
Income (loss) before income taxes
32.6
27.6
Provision for income taxes
6.4
8.8
Net income (loss) including noncontrolling
interest
26.3
18.8
Net income (loss) attributable to
noncontrolling interest
(0.1
)
—
Net income (loss) attributable to World
Fuel
$
26.3
$
18.9
Basic earnings (loss) per common share
$
0.42
$
0.30
Basic weighted average common shares
63.4
63.0
Diluted earnings (loss) per common
share
$
0.41
$
0.30
Diluted weighted average common shares
63.7
63.6
Comprehensive income:
Net income (loss) including noncontrolling
interest
$
26.3
$
18.8
Other comprehensive income (loss):
Foreign currency translation
adjustments
(9.4
)
(4.0
)
Cash flow hedges, net of income tax
expense (benefit) of ($7.0) and $5.6 for the three months ended
March 31, 2022 and 2021, respectively
(19.3
)
16.4
Total other comprehensive income
(loss)
(28.7
)
12.4
Comprehensive income (loss) including
noncontrolling interest
(2.4
)
31.2
Comprehensive income (loss) attributable
to noncontrolling interest
(0.1
)
—
Comprehensive income (loss) attributable
to World Fuel
$
(2.3
)
$
31.2
WORLD FUEL SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited - In millions)
For the Three Months Ended
March 31,
2022
2021
Cash flows from operating activities:
Net income (loss) including noncontrolling
interest
$
26.3
$
18.8
Adjustments to reconcile net income
including noncontrolling interest to net cash provided by operating
activities:
Depreciation and amortization
27.2
19.8
Provision for credit losses
2.0
3.6
Share-based payment award compensation
costs
3.7
8.7
Deferred income tax expense (benefit)
(4.0
)
(6.8
)
Foreign currency (gains) losses, net
(3.7
)
(12.9
)
Other
(16.9
)
(5.5
)
Changes in assets and liabilities, net of
acquisitions and divestitures:
Accounts receivable, net
(1,051.3
)
(438.8
)
Inventories
(140.6
)
11.0
Prepaid expenses
3.1
(3.0
)
Short-term derivative assets, net
(210.6
)
77.3
Other current assets
72.3
69.3
Cash collateral with counterparties
56.3
(4.4
)
Other non-current assets
(108.9
)
(4.0
)
Accounts payable
996.7
394.3
Customer deposits
31.5
(22.8
)
Accrued expenses and other current
liabilities
158.3
0.8
Non-current income tax, net and other
long-term liabilities
86.6
(1.8
)
Total adjustments
(98.3
)
84.6
Net cash provided by (used in)
operating activities
(72.0
)
103.4
Cash flows from investing activities:
Acquisition of business, net of cash
acquired
(639.4
)
—
Capital expenditures
(16.7
)
(2.0
)
Other investing activities, net
(1.3
)
(0.6
)
Net cash provided by (used in)
investing activities
(657.3
)
(2.7
)
Cash flows from financing activities:
Borrowings of debt
1,745.8
0.2
Repayments of debt
(1,369.7
)
(4.5
)
Dividends paid on common stock
(7.4
)
(6.1
)
Repurchases of common stock
(13.7
)
—
Other financing activities, net
(11.3
)
(10.4
)
Net cash provided by (used in)
financing activities
343.7
(20.8
)
Effect of exchange rate changes on cash
and cash equivalents
(0.3
)
(3.5
)
Net increase (decrease) in cash and
cash equivalents
(386.0
)
76.5
Cash and cash equivalents, as of the
beginning of the period
652.2
658.8
Cash and cash equivalents, as of the
end of the period
$
266.2
$
735.3
WORLD FUEL SERVICES
CORPORATION
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - In millions, except
per share data)
For the Three Months Ended
March 31,
Non-GAAP financial measures and
reconciliation:
2022
2021
Net income (loss) attributable to World
Fuel
$
26.3
$
18.9
Acquisition and divestiture related
expenses
0.4
2.4
Integration costs
0.3
—
Restructuring charges
—
2.1
Income tax impacts
(0.2
)
(2.7
)
Adjusted net income (loss) attributable to
World Fuel
$
26.8
$
20.7
Diluted earnings (loss) per common
share
$
0.41
$
0.30
Acquisition and divestiture related
expenses
0.01
0.04
Integration costs
—
—
Restructuring charges
—
0.03
Income tax impacts
—
(0.04
)
Adjusted diluted earnings (loss) per
common share
$
0.42
$
0.33
For the Three Months Ended
March 31,
Non-GAAP financial measures and
reconciliation:
2022
2021
Net income (loss) including noncontrolling
interest
$
26.3
$
18.8
Interest expense and other financing
costs, net
14.3
8.7
Provision (benefit) for income taxes
6.4
8.8
Depreciation and amortization
27.2
19.8
Acquisition and divestiture related
expenses
0.4
2.4
Integration costs
0.3
—
Restructuring charges
—
2.1
Adjusted EBITDA(1)
$
74.9
$
60.7
(1)
The Company defines adjusted
EBITDA as net income (loss) excluding the impact of interest, tax
and depreciation and amortization, in addition to items that are
considered to be non-operational and not representative of our core
business, including those associated with acquisition and
divestiture related expenses, integration costs, asset impairments,
and restructuring charges. As the GAAP measure most comparable to
Adjusted EBITDA is net income, the reconciliation was updated in
the first quarter of 2022 to start with net income.
WORLD FUEL SERVICES
CORPORATION
BUSINESS SEGMENTS
INFORMATION
(Unaudited - In millions)
For the Three Months Ended
March 31,
Revenue:
2022
2021
Aviation segment
$
5,010.5
$
2,095.0
Land segment
4,458.2
2,188.2
Marine segment
2,990.6
1,674.7
Total revenue
$
12,459.4
$
5,957.9
Gross profit:
Aviation segment
$
64.2
$
76.7
Land segment
119.8
89.5
Marine segment
47.0
25.4
Total gross profit
$
230.9
$
191.6
Income from operations:
Aviation segment
$
7.5
$
23.0
Land segment
33.4
32.8
Marine segment
23.1
6.4
Corporate overhead - unallocated
(22.8
)
(24.5
)
Total income from operations
$
41.3
$
37.6
SALES VOLUME SUPPLEMENTAL
INFORMATION
(Unaudited - In millions)
For the Three Months Ended
March 31,
Volume (Gallons):
2022
2021
Aviation Segment
1,655.4
1,143.4
Land Segment (1)
1,582.6
1,303.0
Marine Segment (2)
1,238.3
1,117.5
Consolidated Total
4,476.3
3,563.9
(1)
Includes gallons and gallon
equivalents of British Thermal Units (BTU) for our natural gas
sales and Kilowatt Hours (kWh) for our World Kinect power
business.
(2)
Converted from metric tons to
gallons at a rate of 264 gallons per metric ton. Marine segment
metric tons were 4.7 and 4.2 for the three months ended March 31,
2022 and 2021, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428006193/en/
World Fuel Services Corporation Ira M Birns, 305-428-8000
Executive Vice President & Chief Financial Officer
Glenn Klevitz, 305-428-8000 Vice President, Treasurer &
Investor Relations
World Fuel Services (NYSE:INT)
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