World Fuel Services Corporation Reports Fourth Quarter and Full Year 2018 Results
Surpasses
Significantly Improves Operating Leverage
The corrected release reads:
WORLD FUEL SERVICES CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 2018 RESULTS
Surpasses
Significantly Improves Operating Leverage
Fourth-Quarter 2018 Highlights
-
Total gross profit of
$262.2 million , up 14% year-over-year -
Adjusted EBITDA of
$90.7 million , up 48% year-over-year -
GAAP net income of
$29.6 million , or$0.44 per diluted share -
Adjusted net income of
$33.7 million , or$0.50 per diluted share
Full-Year 2018 Highlights
-
Total gross profit of
$1.02 billion , up 9% year-over-year -
Adjusted EBITDA of
$360.3 million , up 20% year-over-year -
GAAP net income of
$127.7 million , or$1.89 per diluted share -
Adjusted net income of
$142.9 million , or$2.11 per diluted share
Fiscal Year 2018 Highlights
“2018 was a year of continuing transformation for World Fuel and our
actions advanced our value creation strategy of continuous cost
management and sharpening our portfolio to drive enhanced returns,”
stated
For the full year, our aviation segment generated gross profit of
“Our heightened focus and execution on cost management initiatives
resulted in a 425 basis point improvement in operating leverage in 2018
compared to the prior year,” said
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, including adjusted net income, adjusted diluted earnings per share, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), and net debt (collectively, the “Non-GAAP Measures”). The Non-GAAP measures exclude acquisition-related charges and severance and restructuring charges primarily because we do not believe they are reflective of the Company’s core operating results. 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. Non-GAAP diluted earnings per common share is computed by
dividing non-GAAP net income attributable to
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 value creation strategy, our beliefs and
expectations with respect to repositioning our land portfolio and
driving operating efficiencies and profitable growth in our global land
business in 2019, as well as our expectations about our liquidity,
organic growth and strategic investment opportunities. These
forward-looking statements are qualified in their entirety by cautionary
statements and risk factor disclosures contained in the Company’s
About
Headquartered in
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 | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited - In millions, except per share data) | ||||||||
| As of | ||||||||
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 211.7 | $ | 372.3 | ||||
| Accounts receivable, net | 2,751.3 | 2,705.6 | ||||||
| Inventories | 523.1 | 505.0 | ||||||
| Prepaid expenses | 65.7 | 64.4 | ||||||
| Short-term derivative assets, net | 155.2 | 51.1 | ||||||
| Other current assets | 279.6 | 241.9 | ||||||
| Total current assets | 3,986.7 | 3,940.4 | ||||||
| Property and equipment, net | 349.1 | 329.8 | ||||||
| Goodwill | 852.7 | 845.5 | ||||||
| Identifiable intangible and other non-current assets | 499.0 | 472.1 | ||||||
| Total assets | $ | 5,687.5 | $ | 5,587.8 | ||||
| Liabilities: | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt and capital leases | $ | 40.7 | $ | 25.6 | ||||
| Accounts payable | 2,404.5 | 2,239.7 | ||||||
| Customer deposits | 125.2 | 108.3 | ||||||
| Accrued expenses and other current liabilities | 376.9 | 344.9 | ||||||
| Total current liabilities | 2,947.3 | 2,718.6 | ||||||
| Long-term debt | 659.1 | 884.6 | ||||||
| Non-current income tax liabilities, net | 194.6 | 202.4 | ||||||
| Other long-term liabilities | 54.9 | 44.2 | ||||||
| Total liabilities | 3,855.9 | 3,849.8 | ||||||
| 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, 67.0 and 67.7 issued and outstanding as of December 31, 2018 and December 31, 2017, respectively |
0.7 | 0.7 | ||||||
| Capital in excess of par value | 340.4 | 354.9 | ||||||
| Retained earnings | 1,606.1 | 1,492.8 | ||||||
| Accumulated other comprehensive loss | (131.7 | ) | (126.5 | ) | ||||
| Total World Fuel shareholders' equity | 1,815.4 | 1,721.9 | ||||||
| Noncontrolling interest | 16.1 | 16.0 | ||||||
| Total equity | 1,831.6 | 1,738.0 | ||||||
| Total liabilities and equity | $ | 5,687.5 | $ | 5,587.8 | ||||
| WORLD FUEL SERVICES CORPORATION | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||||||||
| (Unaudited – In millions, except per share data) | ||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue | $ | 9,988.6 | $ | 8,872.0 | $ | 39,750.3 | $ | 33,695.5 | ||||||||
| Cost of revenue | 9,726.3 | 8,642.1 | 38,731.8 | 32,763.3 | ||||||||||||
| Gross profit | 262.2 | 229.9 | 1,018.5 | 932.2 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Compensation and employee benefits | 109.9 | 113.8 | 442.1 | 428.2 | ||||||||||||
| General and administrative | 84.2 | 81.9 | 299.6 | 306.9 | ||||||||||||
| Goodwill and other impairments | — | 91.9 | — | 91.9 | ||||||||||||
| Restructuring charges | 4.9 | 59.6 | 17.1 | 59.6 | ||||||||||||
| 199.0 | 347.2 | 758.8 | 886.6 | |||||||||||||
| Income from operations | 63.2 | (117.2 | ) | 259.7 | 45.6 | |||||||||||
| Non-operating expenses, net: | ||||||||||||||||
| Interest expense and other financing costs, net | (18.5 | ) | (18.1 | ) | (71.0 | ) | (60.3 | ) | ||||||||
| Other income (expense), net | (1.8 | ) | (1.3 | ) | (3.8 | ) | (6.4 | ) | ||||||||
| (20.3 | ) | (19.4 | ) | (74.8 | ) | (66.7 | ) | |||||||||
| Income (loss) before income taxes | 42.9 | (136.7 | ) | 184.9 | (21.1 | ) | ||||||||||
| Provision for income taxes | 13.2 | 57.0 | 55.9 | 149.2 | ||||||||||||
| Net income (loss) including noncontrolling interest | 29.8 | (193.7 | ) | 129.0 | (170.3 | ) | ||||||||||
| Net income (loss) attributable to noncontrolling interest | 0.1 | (0.6 | ) | 1.3 | (0.1 | ) | ||||||||||
| Net income (loss) attributable to World Fuel | $ | 29.6 | $ | (193.1 | ) | $ | 127.7 | $ | (170.2 | ) | ||||||
| Basic earnings per common share | $ | 0.44 | $ | (2.86 | ) | $ | 1.89 | $ | (2.50 | ) | ||||||
| Basic weighted average common shares | 67.1 | 67.4 | 67.4 | 68.1 | ||||||||||||
| Diluted earnings per common share | $ | 0.44 | $ | (2.86 | ) | $ | 1.89 | $ | (2.50 | ) | ||||||
| Diluted weighted average common shares | 67.4 | 67.4 | 67.7 | 68.1 | ||||||||||||
| Comprehensive income: | ||||||||||||||||
| Net income (loss) including noncontrolling interest | $ | 29.8 | $ | (193.7 | ) | $ | 129.0 | $ | (170.3 | ) | ||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | (4.3 | ) | 0.3 | (27.3 | ) | 30.1 | ||||||||||
| Cash flow hedges, net of income tax expense of $9.9 and income tax benefit of | ||||||||||||||||
| $1.3 for the three months ended December 31, 2018 and 2017, respectively, | ||||||||||||||||
| and net of income tax expense of $7.0 and income tax benefit of $0.3 for the | ||||||||||||||||
| twelve months ended December 31, 2018 and 2017, respectively | 29.4 | (2.1 | ) | 21.0 | (0.3 | ) | ||||||||||
| Other comprehensive income (loss): | 25.1 | (1.8 | ) | (6.3 | ) | 29.8 | ||||||||||
| Comprehensive income (loss) including noncontrolling interest | 54.8 | (195.5 | ) | 122.6 | (140.5 | ) | ||||||||||
| Comprehensive income (loss) attributable to noncontrolling interest | 0.1 | (0.1 | ) | (1.2 | ) | 1.5 | ||||||||||
| Comprehensive income (loss) attributable to World Fuel | $ | 54.8 | $ | (195.4 | ) | $ | 123.8 | $ | (142.0 | ) | ||||||
| WORLD FUEL SERVICES CORPORATION | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| (Unaudited - In millions) | ||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income (loss) including noncontrolling interest | $ | 29.8 | $ | (193.7 | ) | $ | 129.0 | $ | (170.3 | ) | ||||||
| Adjustments to reconcile net income including noncontrolling interest to net cash | ||||||||||||||||
| provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 22.2 | 21.9 | 81.5 | 86.0 | ||||||||||||
| Provision for bad debt | 17.5 | 3.0 | 25.1 | 9.3 | ||||||||||||
| Goodwill and other impairments | — | 91.9 | — | 91.9 | ||||||||||||
| Restructuring Charges | — | 25.7 | — | 25.7 | ||||||||||||
| Share-based payment award compensation costs | 0.3 | 6.0 | 8.3 | 21.2 | ||||||||||||
| Deferred income tax provision (benefit) | (1.5 | ) | 35.1 | (3.2 | ) | 13.9 | ||||||||||
| Foreign currency losses, net | 3.8 | (9.0 | ) | 8.7 | (0.6 | ) | ||||||||||
| Other | (2.5 | ) | (75.8 | ) | (3.3 | ) | (1.2 | ) | ||||||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||
| Accounts receivable, net (reduced by beneficial interests received in exchange | ||||||||||||||||
| for accounts receivables sold of $0.9 and $104.0 for the three months ended | ||||||||||||||||
| December 31, 2018 and 2017, respectively, and $353.9 and $343.3 for the | ||||||||||||||||
| twelve months ended December 31, 2018 and 2017, respectively) | 318.6 | (212.8 | ) | (456.9 | ) | (705.4 | ) | |||||||||
| Inventories | 165.3 | 25.6 | (11.8 | ) | (43.9 | ) | ||||||||||
| Prepaid expenses | 12.0 | (9.8 | ) | (5.3 | ) | (19.7 | ) | |||||||||
| Short-term derivative assets, net | (115.6 | ) | (28.6 | ) | (151.3 | ) | (0.2 | ) | ||||||||
| Other current assets | (16.5 | ) | 35.8 | (53.4 | ) | (13.9 | ) | |||||||||
| Cash collateral with financial counterparties | (10.8 | ) | (11.2 | ) | 29.2 | (26.7 | ) | |||||||||
| Other non-current assets | (22.2 | ) | (11.1 | ) | (61.5 | ) | (30.3 | ) | ||||||||
| Accounts payable | (376.3 | ) | 197.5 | 177.7 | 451.2 | |||||||||||
| Customer deposits | 19.9 | 7.1 | 18.8 | 13.4 | ||||||||||||
| Accrued expenses and other current liabilities | 79.2 | 77.7 | 72.7 | 77.7 | ||||||||||||
| Non-current income tax, net and other long-term liabilities | 11.2 | 82.5 | 14.4 | 88.4 | ||||||||||||
| Total adjustments | 104.6 | 251.3 | (310.4 | ) | 36.8 | |||||||||||
| Net cash provided by (used in) operating activities | 134.3 | 57.6 | (181.4 | ) | (133.5 | ) | ||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Cash receipts of retained beneficial interests in receivable sales | 12.3 | 102.5 | 369.8 | 338.8 | ||||||||||||
| Acquisition of businesses, net of cash acquired | (0.2 | ) | (26.1 | ) | (21.3 | ) | (120.7 | ) | ||||||||
| Capital expenditures | (25.5 | ) | (16.1 | ) | (70.7 | ) | (54.0 | ) | ||||||||
| Other investing activities, net | 2.5 | (4.9 | ) | 9.8 | (5.4 | ) | ||||||||||
| Net cash (used in) provided by investing activities | (10.7 | ) | 55.3 | 287.6 | 158.7 | |||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Borrowings of debt | 1,523.8 | 972.6 | 6,187.2 | 4,472.7 | ||||||||||||
| Repayments of debt | (1,567.6 | ) | (1,257.1 | ) | (6,408.8 | ) | (4,749.7 | ) | ||||||||
| Dividends paid on common stock | (4.0 | ) | (4.0 | ) | (16.2 | ) | (16.3 | ) | ||||||||
| Purchases of common stock | — | — | (20.0 | ) | (61.9 | ) | ||||||||||
| Other financing activities, net | 0.1 | (0.3 | ) | (2.1 | ) | (6.3 | ) | |||||||||
| Net cash (used in) provided by financing activities | (47.7 | ) | (288.9 | ) | (259.8 | ) | (361.6 | ) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents |
(5.5 |
) | 2.4 | (7.0 | ) | 10.3 | ||||||||||
| Net increase (decrease) in cash and cash equivalents | 70.1 |
(173.6 |
) | (160.6 | ) | (326.2 | ) | |||||||||
| Cash and cash equivalents, as of beginning of period | 142.1 | 546.0 | 372.3 | 698.6 | ||||||||||||
| Cash and cash equivalents, as of end of period | $ | 211.7 | $ | 372.3 | $ | 211.7 | $ | 372.3 | ||||||||
* The adoption of ASU 2016-15 resulted in operating cash flow decreases
and investing cash flow increases of
| WORLD FUEL SERVICES CORPORATION | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (Unaudited - In millions, except per share data) | ||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| Non-GAAP financial measures and reconciliation: | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income attributable to World Fuel | $ | 29.6 | $ | (193.1 | ) | $ | 127.7 | $ | (170.2 | ) | ||||||
| Goodwill and other impairments | — | 91.9 | — | 91.9 | ||||||||||||
| Acquisition related charges | 0.3 | 5.1 | 2.0 | 12.0 | ||||||||||||
| Severance and other restructuring-related costs | 4.9 | 59.6 | 17.1 | 66.6 | ||||||||||||
| Valuation allowance against the net U.S. deferred tax assets | — | (76.9 | ) | — | — | |||||||||||
| Income tax impacts | (1.1 | ) | (27.1 | ) | (4.0 | ) | (31.1 | ) | ||||||||
| Tax impact of the Tax Cuts and Jobs Act of 2017 | $ | — | $ | 157.4 | $ | — | $ | 157.4 | ||||||||
| Adjusted net income attributable to World Fuel | $ | 33.7 | $ | 17.0 | $ | 142.9 | $ | 126.6 | ||||||||
| Diluted earnings per common share | $ | 0.44 | $ | (2.86 | ) | $ | 1.89 | $ | (2.50 | ) | ||||||
| Goodwill and other impairments | — | 1.36 | — | 1.35 | ||||||||||||
| Acquisition related charges | — | 0.08 | 0.03 | 0.18 | ||||||||||||
| Severance and other restructuring-related costs | 0.07 | 0.88 | 0.25 | 0.98 | ||||||||||||
| Valuation allowance against the net U.S. deferred tax assets | — | (1.14 | ) | — | — | |||||||||||
| Income tax impacts | (0.02 | ) | (0.40 | ) | (0.06 | ) | (0.46 | ) | ||||||||
| Tax impact of the Tax Cuts and Jobs Act of 2017 | $ | — | $ | 2.33 | $ | — | $ | 2.31 | ||||||||
| Adjusted diluted earnings per common share | $ | 0.50 | $ | 0.25 | $ | 2.11 | $ | 1.86 | ||||||||
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| Non-GAAP financial measures and reconciliation: | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Income from operations | $ | 63.2 | $ | (117.2 | ) | $ | 259.7 | $ | 45.6 | ||||||
| Goodwill and other impairments | — | 91.9 | — | 91.9 | |||||||||||
| Depreciation and amortization | 22.2 | 21.8 | 81.5 | 86.1 | |||||||||||
| Acquisition-related charges | 0.3 | 5.1 | 2.0 | 11.2 | |||||||||||
| Severance and other restructuring-related costs | 4.9 | 59.6 | 17.1 | 66.0 | |||||||||||
| Adjusted EBITDA(1) | $ | 90.7 | $ | 61.2 | $ | 360.3 | $ | 300.8 | |||||||
(1) The Company defines adjusted EBITDA as income from operations, excluding the impact of depreciation and amortization, and items that are considered to be non-operational and are not representative of our core business, including those associated with severance, restructuring and acquisition-related costs.
| WORLD FUEL SERVICES CORPORATION | ||||||||||||||||
| BUSINESS SEGMENTS INFORMATION | ||||||||||||||||
| (Unaudited - In millions) | ||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| Revenue: | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Aviation segment | $ | 4,900.8 | $ | 4,006.7 | $ | 19,119.7 | $ | 14,538.2 | ||||||||
| Land segment | 2,705.7 | 2,840.1 | 11,381.1 | 10,958.0 | ||||||||||||
| Marine segment | 2,382.0 | 2,025.3 | 9,249.5 | 8,199.3 | ||||||||||||
| $ | 9,988.6 | $ | 8,872.0 | $ | 39,750.3 | $ | 33,695.5 | |||||||||
| Gross profit: | ||||||||||||||||
| Aviation segment | $ | 129.7 | $ | 105.7 | $ | 507.8 | $ | 440.5 | ||||||||
| Land segment | 91.1 | 95.3 | 364.9 | 365.8 | ||||||||||||
| Marine segment | 41.3 | 29.0 | 145.8 | 126.0 | ||||||||||||
| $ | 262.2 | $ | 229.9 | $ | 1,018.5 | $ | 932.2 | |||||||||
| Income from operations: | ||||||||||||||||
| Aviation segment | $ | 62.3 | $ | 41.2 | $ | 250.6 | $ | 192.9 | ||||||||
| Land segment | 10.1 | (54.7 | ) | 47.8 | (7.9 | ) | ||||||||||
| Marine segment | 7.0 | (77.7 | ) | 37.8 | (57.8 | ) | ||||||||||
| 79.4 | (91.3 | ) | 336.3 | 127.2 | ||||||||||||
| Corporate overhead - unallocated | (16.2 | ) | (26.1 | ) | (76.6 | ) | (81.6 | ) | ||||||||
| $ | 63.2 | $ | (117.2 | ) | $ | 259.7 | $ | 45.6 | ||||||||
| SALES VOLUME SUPPLEMENTAL INFORMATION | |||||||||||
| (Unaudited - In millions) | |||||||||||
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||
| December 31, | December 31, | ||||||||||
| Volume (Gallons): | 2018 | 2017 | 2018 | 2017 | |||||||
| Aviation Segment | 2,047.2 | 2,016.6 | 8,194.0 | 7,938.3 | |||||||
| Land Segment (1) | 1,356.4 | 1,473.5 | 5,591.8 | 5,940.4 | |||||||
| Marine Segment (2) | 1,607.4 | 1,619.3 | 6,261.3 | 7,007.9 | |||||||
| Consolidated Total | 5,011.0 | 5,109.4 | 20,047.1 | 20,886.6 | |||||||
(1) Includes gallons and gallon equivalents of British Thermal Units (BTU) for our natural gas sales and Kilowatt Hours (KwH) for our Kinect power business.
(2) Converted from metric tons to gallons at a rate of 264 gallons per
metric ton. Marine segment metric tons were 6.1 and 23.7 for the three
and twelve months ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20190221005973/en/
Source:
World Fuel Services Corporation
Ira M Birns, 305-428-8000
Executive
Vice President & Chief Financial Officer
Glenn Klevitz, 305-428-8000
Vice President, Treasury & Investor
Relations
