World Fuel Services Corporation Reports Third Quarter Earnings
Record volume across all three business segments
Generated operating cash flow of
“We were pleased with our results this quarter as we experienced strong
seasonality in our aviation business as well as a rebound in both our
marine and land segments’ profitability,” stated
The company’s aviation segment generated gross profit of
“We posted strong cash flow from operations this quarter, bringing our
year-to-date total to more than
Non-GAAP Financial Measures
The non-GAAP financial measures exclude costs associated with share-based compensation, amortization of acquired intangible assets, deferred revenue purchase accounting adjustments, expenses related to the acquisitions, the termination of an employment agreement 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, the expenses related to the acquisitions, the termination of an employment agreement 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. In accordance with the fair value provisions applicable to the accounting for business combinations, acquired deferred revenue is often recorded on the opening balance sheet at an amount that is lower than the historical carrying value. Although this acquisition accounting requirement has no impact on our business or cash flows, it adversely impacts our reported GAAP revenue in the reporting periods following an acquisition. We believe that the exclusion of the deferred revenue purchase accounting adjustment is useful to investors as an additional means to reflect trends of our business and provides investors with financial information that facilitates comparison of both historical and future results. 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 our strategy on driving
growth and delivering value. These forward-looking statements are
qualified in their entirety by cautionary statements and risk factor
disclosures contained in the company’s
About
Headquartered in
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
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(UNAUDITED - IN MILLIONS) | ||||||
As of | ||||||
September 30, | December 31, | |||||
2015 | 2014 | |||||
Assets: | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 609.6 | $ | 302.3 | ||
Accounts receivable, net | 2,039.1 | 2,306.4 | ||||
Inventories | 414.0 | 437.6 | ||||
Prepaid expenses and other current assets | 638.0 | 627.1 | ||||
Total current assets | 3,700.7 | 3,673.4 | ||||
Property and equipment, net | 224.7 | 203.4 | ||||
Goodwill, identifiable intangible and other non-current assets | 1,047.5 | 1,003.7 | ||||
Total assets | $ | 4,972.9 | $ | 4,880.5 | ||
Liabilities and equity: | ||||||
Liabilities: | ||||||
Current liabilities: | ||||||
Short-term debt | $ | 23.2 | $ | 17.9 | ||
Accounts payable | 1,629.2 | 1,850.1 | ||||
Accrued expenses and other current liabilities | 453.6 | 371.3 | ||||
Total current liabilities | 2,106.0 | 2,239.3 | ||||
Long-term debt | 861.2 | 672.0 | ||||
Other long-term liabilities | 129.9 | 104.3 | ||||
Total liabilities | 3,097.1 | 3,015.6 | ||||
Equity: | ||||||
World Fuel shareholders' equity | 1,864.9 | 1,855.4 | ||||
Noncontrolling interest equity | 10.9 | 9.5 | ||||
Total equity | 1,875.8 | 1,864.9 | ||||
Total liabilities and equity | $ | 4,972.9 | $ | 4,880.5 | ||
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(UNAUDITED - IN MILLIONS, EXCEPT EARNINGS PER SHARE DATA) | ||||||||||||||||
For the Three Months ended | For the Nine Months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenue | $ | 7,810.7 | $ | 11,713.5 | $ | 23,647.8 | $ | 33,606.8 | ||||||||
Cost of revenue | 7,584.0 | 11,498.9 | 23,015.2 | 33,012.7 | ||||||||||||
Gross profit | 226.7 | 214.6 | 632.6 | 594.1 | ||||||||||||
Operating expenses: | ||||||||||||||||
Compensation and employee benefits | 94.2 | 85.2 | 270.5 | 233.6 | ||||||||||||
Provision for bad debt | 1.6 | 1.2 | 5.2 | 3.5 | ||||||||||||
General and administrative | 64.5 | 54.1 | 177.6 | 158.8 | ||||||||||||
Total operating expenses | 160.3 | 140.5 | 453.3 | 395.9 | ||||||||||||
Income from operations | 66.4 | 74.1 | 179.3 | 198.2 | ||||||||||||
Non-operating expenses, net | (6.0 | ) | (6.2 | ) | (21.0 | ) | (11.9 | ) | ||||||||
Income before income taxes | 60.4 | 67.9 | 158.3 | 186.3 | ||||||||||||
Provision for income taxes | 11.8 | 13.4 | 26.8 | 35.0 | ||||||||||||
Net income including noncontrolling interest | 48.6 | 54.5 | 131.5 | 151.3 | ||||||||||||
Net loss attributable to noncontrolling interest | (1.0 | ) | (1.2 | ) | (3.6 | ) | (3.3 | ) | ||||||||
Net income attributable to World Fuel | $ | 49.6 | $ | 55.7 | $ | 135.1 | $ | 154.6 | ||||||||
Basic earnings per common share | $ | 0.71 | $ | 0.79 | $ | 1.92 | $ | 2.18 | ||||||||
Basic weighted average common shares | 70.0 | 70.8 | 70.5 | 70.8 | ||||||||||||
Diluted earnings per common share | $ | 0.71 | $ | 0.78 | $ | 1.90 | $ | 2.17 | ||||||||
Diluted weighted average common shares | 70.3 | 71.3 | 71.0 | 71.3 | ||||||||||||
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, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income including noncontrolling interest | $ | 48.6 | $ | 54.4 | $ | 131.5 | $ | 151.3 | ||||||||
Adjustments to reconcile net income including | ||||||||||||||||
noncontrolling interest to net cash provided by | ||||||||||||||||
operating activities: | ||||||||||||||||
Depreciation and amortization | 16.5 | 14.8 | 44.9 | 41.9 | ||||||||||||
Provision for bad debt | 1.6 | 1.2 | 5.2 | 3.5 | ||||||||||||
Share-based payment award compensation costs | 4.8 | 3.6 | 13.2 | 11.3 | ||||||||||||
Other | (17.0 | ) | (8.8 | ) | (6.7 | ) | (4.4 | ) | ||||||||
Change in cash collateral with financial counterparties | (56.3 | ) | (29.7 | ) | 92.9 | (30.9 | ) | |||||||||
Changes in assets and liabilities, net of acquisitions | 149.2 | (8.4 | ) | 44.2 | (43.6 | ) | ||||||||||
Total adjustments | 98.8 | (27.3 | ) | 193.7 | (22.2 | ) | ||||||||||
Net cash provided by operating activities | 147.4 | 27.1 | 325.2 | 129.1 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Acquisition of businesses, net of cash acquired and other investments | (75.5 | ) | (66.5 | ) | (82.0 | ) | (230.7 | ) | ||||||||
Capital expenditures | (14.5 | ) | (17.1 | ) | (36.4 | ) | (37.1 | ) | ||||||||
Escrow payment related to an assumed obligation of an acquired business | - | - | - | (21.7 | ) | |||||||||||
Other | - | 0.2 | 4.4 | (0.7 | ) | |||||||||||
Net cash used in investing activities |
(90.0 | ) | (83.4 | ) | (114.0 | ) | (290.2 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Borrowings of debt, net | 110.9 | 65.6 | 191.4 | 282.5 | ||||||||||||
Dividends paid on common stock | (4.2 | ) | (2.6 | ) | (11.1 | ) | (7.9 | ) | ||||||||
Other | (41.5 | ) | (11.3 | ) | (80.4 | ) | (14.7 | ) | ||||||||
Net cash provided by financing activities | 65.2 | 51.7 | 99.9 | 259.9 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (2.7 | ) | (3.4 | ) | (3.8 | ) | (2.3 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | 119.9 | (8.0 | ) | 307.3 | 96.5 | |||||||||||
Cash and cash equivalents, as of beginning of period | 489.7 | 396.6 | 302.3 | 292.1 | ||||||||||||
Cash and cash equivalents, as of end of period | $ | 609.6 | $ | 388.6 | $ | 609.6 | $ | 388.6 | ||||||||
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES | ||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||
(UNAUDITED - IN MILLIONS, EXCEPT EARNINGS PER SHARE DATA) | ||||||||||||
For the Three Months ended | For the Nine Months ended | |||||||||||
September 30, | September 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Non-GAAP financial measures and reconciliation: | ||||||||||||
GAAP net income attributable to World Fuel | $ | 49.6 | $ | 55.7 | $ | 135.1 | $ | 154.6 | ||||
Share-based compensation expense, net of income taxes (1) | 3.3 | 2.5 | 8.5 | 7.0 | ||||||||
Intangible asset amortization expense, net of income taxes (2) | 5.1 | 6.0 | 13.9 | 14.8 | ||||||||
Expenses related to acquisitions, net of taxes (3) | 2.1 | 0.4 | 2.1 | 1.5 | ||||||||
Deferred revenue purchase accounting adjustment, net of income taxes (4) | - | - | 1.1 | - | ||||||||
Termination of employment agreement, net of income taxes (5) | - | - | 2.3 | - | ||||||||
Executive non-renewal charge, net of income taxes (6) | - | - | - | 3.0 | ||||||||
Non-GAAP net income attributable to World Fuel | $ | 60.1 | $ | 64.6 | $ | 163.0 | $ | 180.9 | ||||
GAAP diluted earnings per common share | $ | 0.71 | $ | 0.78 | $ | 1.90 | $ | 2.17 | ||||
Share-based compensation expense, net of income taxes (1) | 0.05 | 0.04 | 0.12 | 0.10 | ||||||||
Intangible asset amortization expense, net of income taxes (2) | 0.07 | 0.08 | 0.20 | 0.21 | ||||||||
Expenses related to acquisitions, net of taxes (3) | 0.03 | 0.01 | 0.03 | 0.02 | ||||||||
Deferred revenue purchase accounting adjustment, net of income taxes (4) | - | - | 0.02 | - | ||||||||
Termination of employment agreement, net of income taxes (5) | - | - | 0.03 | - | ||||||||
Executive non-renewal charge, net of income taxes (6) | - | - | - | 0.04 | ||||||||
Non-GAAP diluted earnings per common share | $ | 0.86 | $ | 0.91 | $ | 2.30 | $ | 2.54 | ||||
(1) The pre-tax amount of share-based compensation expense was $4.8 and $3.6 million for the three |
||||||||||||
months ended September 30, 2015 and 2014, respectively, and $12.4 and $10.2 for the nine months | ||||||||||||
ended September 30, 2015 and 2014 respectively. | ||||||||||||
(2) The pre-tax amount of intangible asset amortization expense was $6.7 million for the three |
||||||||||||
months ended September 30, 2015 and 2014, respectively, and $18.9 and $19.7 for the nine months | ||||||||||||
ended September 30, 2015 and 2014, respectively. | ||||||||||||
(3) The pre-tax amount of the expenses related to acquisitions was $3.0 and $0.6 million for the |
||||||||||||
three months ended September 30, 2015 and 2014, respectively, and $3.0 and $1.7 for the nine months | ||||||||||||
ended September 30, 2015 and 2014 respectively. | ||||||||||||
(4) The pre-tax amount of the deferred revenue purchase accounting adjustment was $1.5 million for |
||||||||||||
the nine months ended September 30, 2015. | ||||||||||||
(5) The pre-tax amount of the termination of employment agreement was $3.8 million for the nine |
||||||||||||
months ended September 30, 2015. | ||||||||||||
(6) The pre-tax amount of the executive non-renewal charge was $4.8 million for the nine months |
||||||||||||
ended September 30, 2014. | ||||||||||||
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, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Revenue: | ||||||||||||
Aviation segment | $ | 2,995.3 | $ | 4,675.6 | $ | 9,077.6 | $ | 13,361.8 | ||||
Marine segment | 2,388.1 | 3,725.6 | 7,514.3 | 10,738.6 | ||||||||
Land segment | 2,427.3 | 3,312.3 | 7,055.9 | 9,506.4 | ||||||||
$ | 7,810.7 | $ | 11,713.5 | $ | 23,647.8 | $ | 33,606.8 | |||||
Gross profit: | ||||||||||||
Aviation segment | $ | 106.8 | $ | 96.2 | $ | 274.8 | $ | 246.9 | ||||
Marine segment | 48.6 | 49.4 | 144.3 | 146.1 | ||||||||
Land segment | 71.3 | 69.0 | 213.5 | 201.1 | ||||||||
$ | 226.7 | $ | 214.6 | $ | 632.6 | $ | 594.1 | |||||
Income from operations: | ||||||||||||
Aviation segment | $ | 47.0 | $ | 47.3 | $ | 100.8 | $ | 114.5 | ||||
Marine segment | 17.5 | 20.9 | 57.3 | 62.9 | ||||||||
Land segment | 19.1 | 19.1 | 67.3 | 60.0 | ||||||||
$ | 83.6 | $ | 87.3 | 225.4 | 237.4 | |||||||
Corporate overhead - unallocated | 17.2 | 13.2 | 46.1 | 39.2 | ||||||||
$ | 66.4 | $ | 74.1 | $ | 179.3 | $ | 198.2 | |||||
SALES VOLUME SUPPLEMENTAL INFORMATION | ||||||||||||
(UNAUDITED - IN MILLIONS) | ||||||||||||
For the Three Months ended | For the Nine Months ended | |||||||||||
September 30, | September 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Volume (Gallons): | ||||||||||||
Aviation segment | 1,673.3 | 1,508.5 | 4,695.4 | 4,230.8 | ||||||||
Marine segment (1) | 2,263.4 | 1,705.5 | 6,501.1 | 4,891.6 | ||||||||
Land segment | 1,259.1 | 1,101.6 | 3,550.6 | 3,121.4 | ||||||||
Consolidated total | 5,195.8 | 4,315.6 | 14,747.1 | 12,243.8 | ||||||||
(1) Converted from metric tons to gallons at a rate of
264 gallons per metric ton. Marine segment metric tons |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20151028006712/en/
Source:
World Fuel Services Corporation
Ira M. Birns, Executive Vice
President &
Chief Financial Officer
or
Glenn Klevitz
Vice
President, Assistant Treasurer
305-428-8000