World Fuel Services Corporation Reports Record Fourth Quarter and Full Year Earnings

MIAMI--(BUSINESS WIRE)--Feb. 12, 2015-- World Fuel Services Corporation (NYSE: INT) today reported full year net income of $221.7 million or $3.11 diluted earnings per share. Excluding the impact of the previously announced sale of interests in the company’s crude oil joint ventures and certain one-time expenses, adjusted full year net income was $216.8 million or $3.04 diluted earnings per share. For 2013, net income as adjusted for one-time expenses was $204.9 million or $2.86 diluted earnings per share. Non-GAAP net income and diluted earnings per share for the full year, excluding share-based compensation, amortization of acquired intangible assets, gain from the sale of interests in the crude oil joint ventures and certain one-time expenses were $249.1 million and $3.49, respectively, compared to $230.5 million and $3.22 in 2013.

For the fourth quarter, net income was $67.1 million or $0.94 diluted earnings per share. Excluding the impact of the previously announced sale of interests in the company’s crude oil joint ventures and certain one-time expenses, adjusted net income was $57.6 million or $0.81 adjusted diluted earnings per share. In the fourth quarter of 2013, net income as adjusted for one-time expenses was $53.7 million or $0.76 diluted earnings per share. Non-GAAP net income and diluted earnings per share for the fourth quarter, excluding share-based compensation, amortization of acquired intangible assets, gain from the sale of interests in the crude oil joint ventures and certain one-time expenses were $68.1 million and $0.96, respectively, compared to $60.1 million and $0.85 in the fourth quarter of 2013.

“2014 was a strong year for World Fuel, as we delivered solid financial results while continuing to make strategic investments to grow our diverse intermodal platform of products and services,” stated Michael J. Kasbar, chairman and chief executive officer of World Fuel Services Corporation. “We remain focused on further strengthening our global competitive position in the coming year and taking advantage of a growing suite of opportunities that will enhance our growth strategy.”

For the full year, the company’s aviation segment generated gross profit of $321.6 million, a decrease of $5.6 million or 1.7% year-over-year. The company’s marine segment generated gross profit of $205.6 million, an increase of $28.6 million or 16.1% year-over-year. The company’s land segment posted gross profit of $286.4 million, an increase of $37.9 million or 15.2% year-over-year.

“Our solid execution and discipline contributed to a strong finish to 2014,” said Ira M. Birns, executive vice president and chief financial officer. “As we enter 2015, we are focused on aligning our resources to drive strategic priorities and deliver long-term shareholder value.”

Non-GAAP Financial Measures

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 both non-GAAP and adjusted net income and non-GAAP and adjusted diluted earnings per share. The non-GAAP financial measures exclude costs associated with share-based compensation, amortization of acquired intangible assets, expenses related to acquisitions, the gain on the sale of the crude oil joint venture interests (net of certain related operating expenses) 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 acquisitions, the gain on the sale of the crude oil joint venture interests (net of certain related operating) expenses 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 adjusted and non-GAAP net income and adjusted and non-GAAP diluted earnings per common share may not be comparable to the presentation of such metrics by other companies. Adjusted and Non-GAAP diluted earnings per common share is computed by dividing adjusted and 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 global competitive position and growth strategy. 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 Annual Report on Form 10-K filed with the SEC on February 12, 2015. 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, the outcome of pending litigation and other proceedings, the impact of quarterly fluctuations in results, 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.

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(UNAUDITED - IN THOUSANDS)

As of
December 31, 2014
 
December 31, 2013
 
Assets:
  
Current assets:
  
Cash and cash equivalents
$ 302, 264
 
$ 292, 061
 
Accounts receivable, net
2,307,852
 
2,538,642
 
Inventories
437,566
 
655,046
 
Prepaid expenses and other current assets
627,161
 
329,752
 
Total current assets
3,674,843
 
3,815,501
 
Property and equipment, net
202,716
 
129,685
 
Goodwill, identifiable intangible and other non-current assets
1,002,421
 
794,091
 
Total assets
$ 4,879,980
 
$ 4,739,277
 
Liabilities and equity:
  
Liabilities:
  
Short-term debt
$ 17,914
 
$ 14,647
 
Accounts payable
1,850,134
 
2,210,42
 
Accrued expenses and other current liabilities
373,306
 
289,441
 
Total current liabilities
2,241,354
 
2,514,515
 
Long-term debt
671,95
 
449,064
 
Other long-term liabilities
101,791
 
96,804
 
Total liabilities
3,015,099
 
3,060,383
 
Equity:
  
World Fuel shareholders' equity
1,855,358
 
1,673,898
 
Noncontrolling interest equity
9,523
 
4,996
 
Total equity
1,864,881
 
1,678,894
 
Total liabilities and equity
$ 4,879,980
 
$ 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 December 31
For the Year ended December 31
2014
 
2013
 
2014
 
2013
Revenue
$ 9,779,555
 
$ 10,404,653
 
$ 43,386,389
 
$ 41,561,947
Cost of revenue
9,560,089
 
10,209,073
 
42,572,767
 
40,809,189
Gross profit
219,466
 
195,580
 
813,622
 
752,758
Operating expenses:
   
Compensation and employee benefits
86,233
 
73,663
 
319,842
 
288,021
Provision for bad debt
224
 
6,070
 
3,757
 
11,745
General and administrative
62,080
 
51,369
 
220,875
 
188,634
Total operating expenses
148,537
 
131,102
 
544,474
 
488,400
Income from operations
70,929
 
64,478
 
269,148
 
264,358
Non-operating income (expenses), net
12,308
 
(3,668)
 
403
 
(17,693)
Income before income taxes
83,237
 
60,810
 
269,551
 
246,665
Provision for income taxes
16,180
 
7,415
 
51,144
 
39,505
Net income including noncontrolling interest
67,057
 
53,395
 
218,407
 
207,160
Net (loss) income attributable to noncontrolling interest
(77)
 
1,533
 
(3,340)
 
4,085
Net income attributable to World Fuel
$ 67,134
 
$ 51,862
 
$ 221,747
 
$ 203,075
Basic earnings per common share
$ 0.95
 
$ 0.73
 
$ 3.13
 
$ 2.85
Basic weighted average common shares
70,708
 
70,870
 
70,750
 
71,224
Diluted earnings per common share
$ 0.94
 
$ 0.73
 
$ 3.11
 
$ 2.83
Diluted weighted average common shares
71,297
 
71,459
 
71,323
 
71,800
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)

For the Three Months ended December 31
For the Year ended December 31
2014
 
2013
 
2014
 
2013
Cash flows from operating activities:
   
Net income including noncontrolling interest
$ 67,057
 
$ 53,395
 
$ 218,407
 
$ 207,160
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:
   
Depreciation and amortization
17,534
 
11,898
 
59,399
 
44,710
Provision for bad debt
224
 
6,070
 
3,757
 
11,745
Share-based payment award compensation costs
4,474
 
4,138
 
15,755
 
16,716
Other
(15,093)
 
(14,254)
 
(12,322)
 
(14,716)
Change in cash collateral with financial counterparties
(257,134)
 
(9,873)
 
(288,049)
 
9,920
Changes in assets and liabilities, net of acquisitions
195,033
 
(819)
 
144,213
 
(11,233)
Total adjustments
(54,962)
 
(2,840)
 
(77,247)
 
57,142
Net cash provided by operating activities
12,095
 
50,555
 
141,160
 
264,302
Cash flows from investing activities:
   
Acquisition of businesses, net of cash acquired and other investments
(42,934)
 
(36,542)
 
(273,649)
 
(76,954)
Capital expenditures
(13,051)
 
(32,430)
 
(50,153)
 
(82,716)
Escrow payment related to an assumed obligation of an acquired business
-
 
-
 
(21,274)
 
-
Proceeds from the sale of crude oil joint venture interests
43,000
 
-
 
43,000
 
-
Other
6,079
 
(14,421)
 
5,439
 
(14,890)
Net cash used in investing activities
(6,906)
 
(83,393)
 
(297,087)
 
(174,560)
Cash flows from financing activities:
   
Borrowings of debt, net
(76,832)
 
5,134
 
205,745
 
80,314
Dividends paid on common stock
(2,647)
 
(2,659)
 
(10,595)
 
(10,679)
Other
(10,936)
 
(11,695)
 
(25,635)
 
(40,126)
Net cash (used in) provided by financing activities
(90,415)
 
(9,220)
 
169,515
 
29,509
Effect of exchange rate changes on cash and cash equivalents
(1,054)
 
896
 
(3,385)
 
70
Net (decrease) increase in cash and cash equivalents
(86,280)
 
(41,162)
 
10,203
 
119,321
Cash and cash equivalents, as of beginning of period
388,544
 
333,223
 
292,061
 
172,740
Cash and cash equivalents, as of end of period
$ 302,264
 
$ 292,061
 
$ 302,264
 
$ 292,061
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 December 31
For the Year ended December 31
2014
 
2013
 
2014
 
2013
Non-GAAP financial measures and reconciliation:
   
GAAP net income attributable to World Fuel
$ 67,134
 
$ 51,862
 
$ 221,747
 
$ 203,075
Share-based compensation expense, net of income taxes (1)
2,965
 
2,812
 
9,942
 
11,182
Intangible asset amortization expense, net of income taxes (2)
7,564
 
3,639
 
22,401
 
14,448
Expenses related to acquisitions, net of income taxes (3)
358
 
1,822
 
1,894
 
1,822
Gain on the sale of the crude oil joint venture interests, net of certain related operating expenses and income taxes (4)
(9,879)
 
-
 
(9,879)
 
-
Executive non-renewal charge, net of income taxes (5)
-
 
-
 
2,994
 
-
Non-GAAP net income attributable to World Fuel
$ 68,142
 
$ 60,135
 
$ 249,099
 
$ 3.22
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES BUSINESS SEGMENTS INFORMATION
(UNAUDITED - IN THOUSANDS)

For the Three Months ended December 31
For the Year ended December 31
2014
 
2013
 
2014
 
2013
Revenue:
   
Aviation segment
$ 3,906,996
 
$ 4,232,935
 
$ 17,268,834
 
$ 16,087,611
Land segment
2,767,898
 
2,641,401
 
12,274,248
 
10,683,994
Marine segment
3,104,661
 
3,530,317
 
13,843,307
 
14,790,342
$ 9,779,55
 
$ 10,404,653
 
$ 43,386,389
 
$ 41,561,947
Gross profit:
   
Aviation segment
$ 74,616
 
$ 84,395
 
$ 321,596
 
$ 327,178
Land segment
85,325
 
68,370
 
286,414
 
248,528
Marine segment
59,525
 
42,815
 
205,612
 
177,052
$ 219,466
 
$ 195,580
 
$ 813,622
 
$ 752,758
Income from operations:
   
Aviation segment
$ 27,750
 
$ 41,131
 
$ 142,303
 
$ 150,886
Land segment
30,315
 
21,159
 
90,335
 
84,767
Marine segment
27,126
 
17,430
 
90,029
 
73,770
85,191
 
79,720
 
322,667
 
309,423
Corporate overhead - unallocated
14,262
 
15,242
 
53,519
 
45,065
$ 70,929
 
$ 64,478
 
$ 269,148
 
$ 264,358