Marine and Aviation Segments Deliver Record Gross Profit
World Fuel Services Corporation, a global leader in the marketing and sale of marine, aviation and land fuel products and related services, today reported second quarter GAAP net income of $20.5 million, ($0.72 and $0.71 per share on a basic and diluted basis, respectively), compared to $17.0 million ($0.61 and $0.58 per share on a basic and diluted basis, respectively), in the second quarter of 2007. Non-GAAP net income for the second quarter, which excludes share-based compensation and amortization of acquired intangible assets, was $22.8 million ($0.79 and $0.78 per share on a basic and diluted basis, respectively), compared to $18.7 million, ($0.67 and $0.64 per share on a basic and diluted basis, respectively), in the second quarter of 2007. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
The company’s aviation segment generated record gross profit of $45.2 million, an increase of 29% from the prior quarter and an increase of 47% year-over-year. “During a quarter of significant market turmoil, our aviation segment delivered solid results. Our core aviation business as well as the recently acquired AVCARD business performed well despite a very difficult operating environment,” said Paul H. Stebbins, chairman and chief executive officer of World Fuel Services Corporation.
The company’s marine segment generated record gross profit of $44.4 million, an increase of 20% from the prior quarter and 76% year-over-year. “Our marine segment has now generated year-over-year increases in gross profit for fourteen out of the last fifteen quarters and again posted record results. In our land segment, we completed the Texor acquisition during the second quarter, which doubles our land volumes and significantly improves the financial profile of our land segment going forward,” stated Michael J. Kasbar, president and chief operating officer.
Non-GAAP Financial Measures
This press release includes selected financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP net income and non-GAAP basic and diluted earnings per share. The non-GAAP financial measures exclude costs associated with share-based compensation and amortization of acquired intangible assets, primarily because they are non-cash expenses that we do not believe are reflective of ongoing operating results. We believe that these non-GAAP financial measures allow for greater transparency in the review of our financial and operational performance and are useful for investors to evaluate our ongoing operating results and trends.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. As previously mentioned, a reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release.
Information Relating to Forward-Looking Statements
With the exception of historical information in this news release, this document includes forward-looking statements that involve risks and uncertainties, including, but not limited to, quarterly fluctuations in results, the management of growth, fluctuations in world oil prices or foreign currency, major changes in political, economic, regulatory, or environmental conditions, the loss of key customers, suppliers or key members of senior management, uninsured losses, competition, credit risk associated with accounts and notes receivable, and other risks detailed from time to time in the Company’s Securities and Exchange Commission filings. Actual results may differ materially from any forward-looking statements set forth herein.
About World Fuel Services Corporation
Headquartered in Miami, Florida, World Fuel Services Corporation is a global leader in the marketing and sale of marine, aviation and land fuel products and related services. World Fuel Services provides fuel and related services at more than 2,500 airports, seaports and tanker truck loading terminals in over 190 countries around the world. With 44 offices (including satellite offices) strategically located throughout the world, World Fuel Services offers its customers a value-added outsource service for the supply, quality control, logistical support and price risk management of marine, aviation and land fuel.
WORLD FUEL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
2008 2007 2008 2007
------------- ------------ ------------ -----------
Revenue $ 5,651,118 $3,273,359 $10,142,604 $5,975,568
Cost of revenue 5,556,796 3,215,371 9,974,473 5,866,412
------------- ------------ ------------ -----------
Gross profit 94,322 57,988 168,131 109,156
------------- ------------ ------------ -----------
Operating
expenses:
Compensation and
employee
benefits 35,380 21,843 64,878 44,528
Provision for
bad debt 8,147 (313) 10,057 (700)
General and
administrative 20,973 14,392 41,053 26,311
------------- ------------ ------------ -----------
64,500 35,922 115,988 70,139
------------- ------------ ------------ -----------
Income from
operations 29,822 22,066 52,143 39,017
Interest and
other income,
net (2,744) 1,552 (4,968) 2,325
------------- ------------ ------------ -----------
Income before
income taxes 27,078 23,618 47,175 41,342
Provision for
income taxes 6,502 6,506 10,704 9,345
------------- ------------ ------------ -----------
20,576 17,112 36,471 31,997
Minority interest
in income of
consolidated
subsidiaries 28 124 170 180
------------- ------------ ------------ -----------
Net income $ 20,548 $ 16,988 $ 36,301 $ 31,817
============= ============ ============ ===========
Basic earnings
per share $ 0.72 $ 0.61 $ 1.28 $ 1.14
============= ============ ============ ===========
Basic weighted
average shares 28,551 28,061 28,420 28,028
============= ============ ============ ===========
Diluted earnings
per share $ 0.71 $ 0.58 $ 1.26 $ 1.09
============= ============ ============ ===========
Diluted weighted
average shares 28,931 29,103 28,857 29,107
============= ============ ============ ===========
WORLD FUEL SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED - IN THOUSANDS)
As of
------------------------
June 30, December 31,
2008 2007
---------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 54,729 $ 36,151
Restricted cash 10,000
Short-term investments 8,100 8,100
Accounts receivable, net 1,858,732 1,370,656
Inventories 134,785 103,029
Short-term derivative instruments 179,168 86,531
Prepaid expenses and other current assets 85,590 50,841
---------- -------------
Total current assets 2,321,104 1,665,308
PROPERTY AND EQUIPMENT, NET 37,917 36,870
OTHER ASSETS 217,631 95,868
---------- -------------
$2,576,652 $ 1,798,046
========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 4,788 $ 53
Accounts payable 1,439,053 1,066,971
Short-term derivative instruments 172,477 88,302
Accrued expenses and other current
liabilities 118,703 75,785
---------- -------------
Total current liabilities 1,735,021 1,231,111
LONG-TERM LIABILITIES 301,332 83,058
SHAREHOLDERS' EQUITY 540,299 483,877
---------- -------------
$2,576,652 $ 1,798,046
========== =============
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,
-------------------------- ------------------------
2008 2007 2008 2007
------------- ------------ ------------- ----------
Cash flows from
operating
activities:
Net income $ 20,548 $ 16,988 $ 36,301 $ 31,817
------------- ------------ ------------- ----------
Adjustments to
reconcile net
income to net
cash provided by
operating
activities:
Provision for
bad debt 8,147 (313) 10,057 (700)
Depreciation and
amortization 3,028 1,430 5,898 2,762
Deferred income
tax benefit (5,632) (1,293) (6,132) (1,417)
Share-based
payment
compensation
costs for
employees and
non-employee
directors 2,212 1,828 3,885 3,657
Unrealized
(gains) losses
from
derivatives and
related hedged
items, net (2,140) (296) (3,552) 41
Other non-cash
operating
(credits)
charges (6) (138) 230 (187)
Changes in
assets and
liabilities,
net of
acquisitions:
Assets:
Accounts
receivable (202,866) (118,730) (469,353) (144,519)
Inventories (14,274) (21,305) (29,395) (10,148)
Short-term
derivative
instruments (89,999) 3,004 (86,600) (7,037)
Prepaid
expenses and
other current
assets (17,807) (8,209) (31,784) (14,488)
Long-term
derivative
instruments (14,175) - (14,093) -
Non-current
income tax
receivable
and other
assets (169) (916) (1,188) (1,389)
Liabilities:
Accounts
payable 97,038 155,021 358,862 166,138
Short-term
derivative
instruments 92,155 (2,980) 83,135 9,660
Customer
deposits 22,192 12,600 30,945 20,829
Accrued
expenses and
other current
liabilities 3,401 (783) 7,332 (14,014)
Long-term
derivative
instruments 14,527 - 14,527 -
Non-current
income tax
payable,
deferred
compensation,
and other
long-term
liabilities 640 (1,181) 2,330 295
------------- ------------ ------------- ----------
Total
adjustments (103,728) 17,739 (124,896) 9,483
------------- ------------ ------------- ----------
Net cash (used
in) provided
by operating
activities (83,180) 34,727 (88,595) 41,300
------------- ------------ ------------- ----------
Cash flows from
investing
activities:
Capital
expenditures (1,425) (4,526) (5,413) (7,130)
Purchase of short-
term investments - (5,002) - (20,060)
Proceeds from the
sale of short-
term investments - 32,510 - 32,560
Acquisition of
business, net of
cash acquired (93,366) - (93,366) -
------------- ------------ ------------- ----------
Net cash (used
in) provided by
investing
activities (94,791) 22,982 (98,779) 5,370
------------- ------------ ------------- ----------
Cash flows from
financing
activities:
Dividends paid on
common stock (1,065) (1,063) (2,150) (2,126)
Minority interest
distribution - (426) (147) (426)
Borrowings under
senior revolving
credit facility 725,000 - 1,379,000 -
Repayments under
senior revolving
credit facility (573,000) - (1,187,000) -
Proceeds from
exercise of stock
options 1,094 197 1,847 626
Purchases of stock
tendered by
employees to
satisfy the
required
withholding taxes
related to share-
based awards (133) (568) (387) (939)
Federal and state
tax benefits
resulting from
tax deductions in
excess of the
compensation cost
recognized for
share-based
awards 4,695 - 4,695 -
Restricted cash - - 10,000 (10,000)
Other 93 193 94 287
------------- ------------ ------------- ----------
Net cash provided
by (used in)
financing
activities 156,684 (1,667) 205,952 (12,578)
------------- ------------ ------------- ----------
Net increase in
cash and cash
equivalents (21,287) 56,042 18,578 34,092
Cash and cash
equivalents, at
beginning of
period 76,016 154,545 36,151 176,495
------------- ------------ ------------- ----------
Cash and cash
equivalents, at
end of period $ 54,729 $ 210,587 $ 54,729 $ 210,587
============= ============ ============= ==========
WORLD FUEL SERVICES CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
2008 2007 2008 2007
------------ ------------- ----------- ------------
Non-GAAP financial
measures and
reconciliation:
GAAP net income $ 20,548 $ 16,988 $ 36,301 $ 31,817
Stock-based
compensation
expense, net of
taxes 1,525 1,252 2,650 2,493
Intangible asset
amortization
expense, net of
taxes 705 437 1,273 735
------------ ------------- ----------- ------------
Non-GAAP net
income $ 22,778 $ 18,677 $ 40,224 $ 35,045
============ ============= =========== ============
GAAP earnings per
basic share $ 0.72 $ 0.61 $ 1.28 $ 1.14
Stock-based
compensation
expense, net of
taxes 0.05 0.04 0.09 0.09
Intangible asset
amortization
expense, net of
taxes 0.02 0.02 0.04 0.03
------------ ------------- ----------- ------------
Non-GAAP basic
earnings per
share $ 0.79 $ 0.67 $ 1.41 $ 1.26
============ ============= =========== ============
GAAP diluted
earnings per
share $ 0.71 $ 0.58 $ 1.26 $ 1.09
Stock-based
compensation
expense, net of
taxes 0.05 0.04 0.09 0.09
Intangible asset
amortization
expense, net of
taxes 0.02 0.02 0.04 0.03
------------ ------------- ----------- ------------
Non-GAAP diluted
earnings per
share $ 0.78 $ 0.64 $ 1.39 $ 1.21
============ ============= =========== ============
Source: World Fuel Services Corporation
Tags: fuel costs, profit rising, World Fuel Services Corporation