World Fuel Services Corporation Reports Second Quarter Results


The following excerpt is from the company's SEC filing.

MIAMI--(BUSINESS WIRE)--July 30, 2014--World Fuel Services Corporation (NYSE:INT), a leading global fuel logistics company, principally engaged in the marketing, sale and distribution of aviation, marine and land fuel and related products and services, today reported second quarter net income of $48.2 million or $0.68 diluted earnings per share. Excluding expenses related to an executive non-renewal charge, net income was $51.2 million or $0.72 diluted earnings per share. This compares to $51.0 million or $0.71 diluted earnings per share in the second quarter o f 2013. Non-GAAP net income and diluted earnings per share for the second quarter, excluding share-based compensation, amortization of acquired intangible assets and an executive non-renewal charge were $57.9 million and $0.81, respectively, compared to $57.5 million and $0.80 in 2013.

“Our quarterly results demonstrated the strength of our diversified business model and our continued commitment to executing on our business plan,” stated Michael J. Kasbar, chairman and chief executive officer. “We remain well positioned to capitalize on a growing set of strategic opportunities worldwide.”

The company’s aviation segment generated gross profit of $81.8 million, an increase of $12.9 million or 19% sequentially and $5.8 million or 8% year-over-year. The company’s marine segment generated gross profit of $48.8 million, an increase of $1.0 million or 2% sequentially, but a decrease of $3.5 million or 7% year-over-year. The company’s land segment posted gross profit of $60.9 million, a decrease of $10.4 million or 15% sequentially, but an increase of $0.8 million or 1% year-over-year.

“Our effective balance sheet management and strong cash flow generation has allowed us to continue to invest in both organic and acquisition related opportunities as evidenced by the Colt International acquisition,” said Ira M. Birns, executive vice president and chief financial officer. “Our solid liquidity profile provides a platform for growth as we look to maximize value for our customers, suppliers and shareholders.”

This press release includes selected financial information that has not been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). This information includes non-GAAP net income and non-GAAP diluted earnings per share. The non-GAAP financial measures exclude costs associated with share based compensation, amortization of acquired intangible assets, expenses related to the acquisition of Watson Petroleum Limited 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, as well as the expenses related to the acquisition of Watson Petroleum Limited 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. 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.

Headquartered in Miami, Florida, World Fuel Services is a leading global fuel logistics company, principally engaged in the marketing, sale and distribution of aviation, marine and land fuel products and related services on a worldwide basis. 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, 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.

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED - IN THOUSANDS)           As of June 30,   December 31, 2014 2013   Assets: Current assets: Cash and cash equivalents $ 396,591 $ 292,061 Accounts receivable, net 2,921,830 2,538,642 Inventories 702,617 655,046 Prepaid expenses and other current assets   386,068   329,752   Total current assets 4,407,106 3,815,501   Property and equipment, net 197,357 129,685   Goodwill, identifiable intangible and other non-current assets   934,067   794,091   Total assets $ 5,538,530 $ 4,739,277   Liabilities and equity: Liabilities: Current liabilities: Short-term debt $ 14,940 $ 14,647 Accounts payable 2,567,656 2,210,427 Accrued expenses and other current liabilities   389,314   289,441   Total current liabilities 2,971,910 2,514,515   Long-term debt 678,592 449,064 Other long-term liabilities   103,248   96,804 Total liabilities   3,753,750   3,060,383   Equity: World Fuel shareholders' equity 1,779,892 1,673,898 Noncontrolling interest equity   4,888   4,996 Total equity   1,784,780   1,678,894   Total liabilities and equity $ 5,538,530 $ 4,739,277  

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED - IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)         For the Three Months ended   For the Six Months ended June 30, June 30,   2014       2013     2014       2013       Revenue $ 11,342,475 $ 10,479,604 $ 21,893,371 $ 20,663,633 Cost of revenue   11,150,959     10,291,146     21,513,823     20,292,796     Gross profit   191,516     188,458     379,548     370,837     Operating expenses: Compensation and employee benefits 77,363 72,745 148,438 142,174 Provision for bad debt 1,186 2,709 2,340 3,812 General and administrative   53,155     44,268     104,654     89,174     Total operating expenses   131,704     119,722     255,432     235,160     Income from operations 59,812 68,736 124,116 135,677 Non-operating expenses, net   (3,205 )   (4,771 )   (5,703 )   (8,310 )   Income before income taxes 56,607 63,965 118,413 127,367 Provision for income taxes   10,223     11,608     21,523     23,899     Net income including noncontrolling interest 46,384 52,357 96,890 103,468 Net (loss) income attributable to noncontrolling interest   (1,842 )   1,341     (2,063 )   3,727     Net income attributable to World Fuel $ 48,226   $ 51,016   $ 98,953   $ 99,741     Basic earnings per common share $ 0.68   $ 0.71   $ 1.40   $ 1.40     Basic weighted average common shares   70,842     71,516     70,768     71,483     Diluted earnings per common share $ 0.68   $ 0.71   $ 1.39   $ 1.38     Diluted weighted average common shares   71,419     72,018     71,380     72,099    

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED - IN THOUSANDS)                     For the Three Months ended For the Six Months ended June 30, June 30,   2014     2013     2014     2013     Cash flows from operating activities: Net income including noncontrolling interest $ 46,384   $ 52,357   $ 96,890   $ 103,468   Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities: Depreciation and amortization 14,610 11,439 27,067 22,287 Provision for bad debt 1,186 2,709 2,340 3,812 Share-based payment award compensation costs 3,701 4,325 7,669 8,197 Other 4,734 197 9,158 (49 ) Change in cash collateral with financial counterparties 8,906 (1,286 ) (1,190 ) (723 ) Changes in assets and liabilities, net of acquisitions   (69,108 )   (26,961 )   (39,928 )   15,298   Total adjustments   (35,971 )   (9,577 )   5,116     48,822   Net cash provided by operating activities   10,413     42,780     102,006     152,290     Cash flows from investing activities: Acquisitions and other investments, net of cash acquired (10,242 ) (25,415 ) (164,205 ) (25,415 ) Capital expenditures (11,142 ) (11,695 ) (20,014 ) (24,644 ) Escrow payment related to an assumed obligation of an acquired business - - (21,724 ) - Purchase of investments (1,130 ) (21,588 ) (1,130 ) (21,588 ) Proceeds from the sale of short-term investments - 21,588 - 21,588 Other   288     -     288     -   Net cash used in investing activities   (22,226 )   (37,110 )   (206,785 )   (50,059 )   Cash flows from financing activities: (Repayments) borrowings of debt, net (35,371 ) 74,446 216,925 (29,205 ) Dividends paid on common stock (2,656 ) (2,675 ) (5,300 ) (5,342 ) Other   (1,135 )   (3,671 )   (3,459 )   (6,406 ) Net cash (used in) provided by financing activities   (39,162 )   68,100     208,166     (40,953 )   Effect of exchange rate changes on cash and cash equivalents   1,067     (890 )   1,143     (1,538 )   Net (decrease) increase in cash and cash equivalents (49,908 ) 72,880 104,530 59,740   Cash and cash equivalents, as of beginning of period   446,499     159,600     292,061     172,740     Cash and cash equivalents, as of end of period $ 396,591   $ 232,480   $ 396,591   $ 232,480    

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED - IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)           For the Three Months ended   For the Six Months ended June 30, June 30,   2014     2013   2014     2013   Non-GAAP financial measures and reconciliation:   GAAP net income attributable to World Fuel $ 48,226 $ 51,016 $ 98,953 $ 99,741 Share-based compensation expense, net of income taxes (1) 1,785 2,918 4,451 5,461 Intangible asset amortization expense, net of income taxes (2) 4,861 3,576 8,809 7,308 Expenses related to the acquisition of Watson Petroleum Limited - - 1,140 - Executive non-renewal charge, net of income taxes (3)   2,994   -   2,994   - Non-GAAP net income attributable to World Fuel $ 57,866 $ 57,510 $ 116,347 $ 112,510   GAAP diluted earnings per common share $ 0.68 $ 0.71 $ 1.39 $ 1.38 Share-based compensation expense, net of income taxes (1) 0.02 0.04 0.06 0.08 Intangible asset amortization expense, net of income taxes (2) 0.07 0.05 0.12 0.10 Expenses related to the acquisition of Watson Petroleum Limited - - 0.02 - Executive non-renewal charge, net of income taxes (3)   0.04   -   0.04   - Non-GAAP diluted earnings per common share $ 0.81 $ 0.80 $ 1.63 $ 1.56     (1)   The pre-tax amount of share-based compensation expense was $2,599 and $4,325 for the three months ended June 30, 2014 and 2013, respectively, and $6,567 and $8,197 for the six months ended June 30, 2014 and 2013, respectively.   (2)   The pre-tax amount of intangible asset amortization expense was $7,116 and $5,594 for the three months ended June 30, 2014 and 2013, respectively, and $13,091 and $11,439 for the six months ended June 30, 2014 and 2013, respectively.   (3)   The pre-tax amount of the executive non-renewal charge was $4,751 for the three and six months ended June 30, 2014.  

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES BUSINESS SEGMENTS INFORMATION (UNAUDITED - IN THOUSANDS)             For the Three Months ended For the Six Months ended June 30, June 30,   2014   2013   2014   2013 Revenue: Aviation segment $ 4,436,505 3,745,070 $ 8,686,308 $ 7,675,658 Marine segment 3,532,817 3,967,109 7,013,034 7,684,248 Land segment   3,373,153   2,767,425   6,194,029   5,303,727 $ 11,342,475 $ 10,479,604 $ 21,893,371 $ 20,663,633   Gross profit: Aviation segment $ 81,824 $ 76,041 $ 150,745 $ 153,025 Marine segment 48,841 52,332 96,683 94,014 Land segment   60,851   60,085   132,120   123,798 $ 191,516 $ 188,458 $ 379,548 $ 370,837   Income from operations: Aviation segment $ 37,152 $ 33,873 $ 67,223 $ 68,753 Marine segment 20,945 24,062 41,970 39,321 Land segment   14,382   21,122   40,912   48,502 72,479 79,057 150,105 156,576 Corporate overhead - unallocated   12,667   10,321   25,989   20,899 $ 59,812 $ 68,736 $ 124,116 $ 135,677

CONTACT:World Fuel Services CorporationIra M. Birns, 305-428-8000Executive Vice President & Chief Financial Officer

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here. World Fuel Services Corporation next reports earnings on July 30, 2014.

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Other recent filings from the company include the following:

World Fuel Services Corporation Reports Record Third Quarter Results - Oct. 30, 2014
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World Fuel Services: Regulation Fd Disclosure - Oct. 16, 2014

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