World Fuel Services Corporation Reports Fourth Quarter and Full Year 2017 Results
Fourth-Quarter 2017
-
GAAP net loss of
$193.1 million or$2.86 per diluted share, including a tax charge attributable to the enactment of the Tax Cuts and Jobs Act (“U.S. Tax Reform”), impairment and restructuring charges -
Adjusted net income was
$17.0 million , or$0.25 per diluted share -
Generated operating cash flow of
$160.0 million
Full-Year 2017
- Record total of 20.9 billion gallons of fuel sold
-
Record total gross profit of
$932.2 million -
Impairment charges of
$91.9 million primarily related to our marine segment -
Restructuring charges of
$59.6 million related to exiting non-core business lines and improving operating efficiencies -
One-time transition tax of
$144 million related to U.S. Tax Reform -
GAAP net loss of
$170.2 million , or$2.50 per diluted share -
Adjusted EBITDA of
$295.9 million -
Adjusted net income of
$126.6 million or$1.86 per diluted share
Fiscal Year 2017 Highlights
“We generated
For the full year, the company’s aviation segment generated gross profit
of
In conjunction with our annual goodwill and intangible asset impairment
tests, we recorded a non-cash impairment charge of
As a result of our continuing efforts to sharpen our portfolio of
business activities, we recorded a restructuring charge of
Our fourth quarter results reflect an income tax charge of approximately
“We are committed to restructuring all relevant parts of the company, in
terms of size and organizational design, to maximize our market
competitiveness and operational agility. We are focused on achieving a
more efficient operating model measured by the disciplined execution of
fundamentals to drive improvement in long-term operational and financial
performance,” said
LIQUIDITY AND CAPITAL
Operating cash flow amounted to
We repurchased 1.73 million shares for
Principally as a result of U.S. Tax Reform, we repaid
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 costs associated with goodwill and other impairments, severance and restructuring charges, the tax impact of the Tax Cuts and Jobs Act of 2017, the valuation allowance against the net U.S. deferred tax assets and acquisition-related charges, primarily because we do not believe they are reflective of the Company’s core operating results. We used a combination of qualitative and quantitative factors to review goodwill and identifiable intangible assets for impairment for all of our reporting units and as a result of performing these assessments, we recorded an impairment charge primarily attributable to the write-off of goodwill in our marine segment and intangible assets, mostly consisting of customer relationships in both the marine and land segments. Restructuring charges are related to an enterprise-wide restructuring plan that is designed to streamline the organization, and reallocate resources to better align our organizational structure and costs with our strategy. These non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. 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 beliefs and expectations to accelerate organic
growth, execute on our long-term growth strategy, our expectations
regarding our restructuring activities and additional cost saving
opportunities, our future operating results and its contributing
factors, our belief regarding our cash generating capabilities, our
intentions regarding use of our net operating losses and its impact on
future tax payment amounts, and the impact of the new corporate tax rate
on our investment returns. 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 AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited - In millions, except per share data) |
||||||||
| As of | ||||||||
| December 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 372.3 | $ | 698.6 | ||||
| Accounts receivable, net | 2,705.6 | 2,344.0 | ||||||
| Inventories | 505.0 | 458.0 | ||||||
| Prepaid expenses | 64.4 | 46.5 | ||||||
| Short-term derivative assets, net | 51.1 | 58.9 | ||||||
| Other current assets | 241.9 | 230.6 | ||||||
| Total current assets | 3,940.4 | 3,836.6 | ||||||
| Property and equipment, net | 329.8 | 311.2 | ||||||
| Goodwill | 845.5 | 835.8 | ||||||
| Identifiable intangible and other non-current assets | 472.1 | 429.1 | ||||||
| Total assets | $ | 5,587.8 | $ | 5,412.6 | ||||
| Liabilities: | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt and capital leases | $ | 25.6 | $ | 15.4 | ||||
| Accounts payable | 2,239.7 | 1,770.4 | ||||||
| Customer deposits | 108.3 | 90.8 | ||||||
| Accrued expenses and other current liabilities | 344.9 | 306.0 | ||||||
| Total current liabilities | 2,718.6 | 2,182.7 | ||||||
| Long-term debt | 884.6 | 1,170.8 | ||||||
| Non-current income tax liabilities, net | 202.4 | 84.6 | ||||||
| Other long-term liabilities | 44.2 | 34.5 | ||||||
| Total liabilities | 3,849.8 | 3,472.6 | ||||||
| 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, 67.7 and 69.9 issued and outstanding as of December 31, 2017 and December 31, 2016, respectively | 0.7 | 0.7 | ||||||
| Capital in excess of par value | 354.9 | 399.9 | ||||||
| Retained earnings | 1,492.8 | 1,679.3 | ||||||
| Accumulated other comprehensive loss | (126.5 | ) | (154.8 | ) | ||||
| Total World Fuel shareholders' equity | 1,721.9 | 1,925.0 | ||||||
| Noncontrolling interest | 16.0 | 15.0 | ||||||
| Total equity | 1,738.0 | 1,940.0 | ||||||
| Total liabilities and equity | $ | 5,587.8 | $ | 5,412.6 | ||||
|
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited – In millions, except per share data) |
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| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 8,872.0 | $ | 7,792.1 | $ | 33,695.5 | $ | 27,015.8 | ||||||||
| Cost of revenue | 8,642.1 | 7,569.9 | 32,763.3 | 26,116.8 | ||||||||||||
| Gross profit | 229.9 | 222.3 | 932.2 | 899.0 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Compensation and employee benefits | 113.8 | 107.1 | 428.2 | 413.3 | ||||||||||||
| General and administrative | 81.9 | 91.1 | 306.9 | 296.8 | ||||||||||||
| Goodwill and other impairments | 91.9 | — | 91.9 | — | ||||||||||||
| Restructuring charges | 59.6 | — | 59.6 | — | ||||||||||||
| 347.2 | 198.2 | 886.6 | 710.1 | |||||||||||||
| Income from operations | (117.2 | ) | 24.0 | 45.6 | 188.9 | |||||||||||
| Non-operating expenses, net: | ||||||||||||||||
| Interest expense and other financing costs, net | (18.1 | ) | (13.3 | ) | (60.3 | ) | (39.2 | ) | ||||||||
| Other income (expense), net | (1.3 | ) | (8.7 | ) | (6.4 | ) | (7.5 | ) | ||||||||
| (19.4 | ) | (22.0 | ) | (66.7 | ) | (46.7 | ) | |||||||||
| Income (loss) before income taxes | (136.7 | ) | 2.1 | (21.1 | ) | 142.1 | ||||||||||
| Provision for income taxes | 57.0 | — | 149.2 | 15.7 | ||||||||||||
| Net income (loss) including noncontrolling interest | (193.7 | ) | 2.1 | (170.3 | ) | 126.4 | ||||||||||
| Net (loss) attributable to noncontrolling interest | (0.6 | ) | (0.1 | ) | (0.1 | ) | — | |||||||||
| Net income (loss) attributable to World Fuel | $ | (193.1 | ) | $ | 2.2 | $ | (170.2 | ) | $ | 126.5 | ||||||
| Basic earnings (loss) per common share | $ | (2.86 | ) | $ | 0.03 | $ | (2.50 | ) | $ | 1.82 | ||||||
| Basic weighted average common shares | 67.4 | 69.1 | 68.1 | 69.3 | ||||||||||||
| Diluted earnings (loss) per common share | $ | (2.86 | ) | $ | 0.03 | $ | (2.50 | ) | $ | 1.81 | ||||||
| Diluted weighted average common shares | 67.4 | 69.5 | 68.1 | 69.8 | ||||||||||||
| Comprehensive income: | ||||||||||||||||
| Net income (loss) including noncontrolling interest | $ | (193.7 | ) | $ | 2.1 | $ | (170.3 | ) | $ | 126.4 | ||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | 0.3 | (27.1 | ) | 30.1 | (40.4 | ) | ||||||||||
| Cash Flow hedges, net of income tax benefit of $0.3 for 2017 | (2.1 | ) | (3.8 | ) | (0.3 | ) | (6.6 | ) | ||||||||
| Other comprehensive income (loss): | (1.8 | ) | (30.9 | ) | 29.8 | (47.0 | ) | |||||||||
| Comprehensive income (loss) including noncontrolling interest | (195.5 | ) | (28.9 | ) | (140.5 | ) | 79.5 | |||||||||
| Comprehensive income (loss) attributable to noncontrolling interest | (0.1 | ) | 1.1 | 1.5 | 1.6 | |||||||||||
| Comprehensive income (loss) attributable to World Fuel | $ | (195.4 | ) | $ | (30.0 | ) | $ | (142.0 | ) | $ | 77.9 | |||||
|
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - In millions) |
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| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income (loss) including noncontrolling interest | $ | (193.7 | ) | $ | 2.1 | $ | (170.3 | ) | $ | 126.4 | ||||||
| Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 21.9 | 23.9 | 86.0 | 82.3 | ||||||||||||
| Provision for bad debt | 3.0 | 10.0 | 9.3 | 15.4 | ||||||||||||
| Goodwill impairment and other chargeoffs | 91.9 | — | 91.9 | — | ||||||||||||
| Share-based payment award compensation costs | 6.0 | 4.7 | 21.2 | 19.2 | ||||||||||||
| Deferred income tax (benefit) provision | 34.4 | (21.5 | ) | 13.2 | (36.0 | ) | ||||||||||
| Foreign currency losses (gains), net | (9.0 | ) | 6.5 | (0.6 | ) | (11.8 | ) | |||||||||
| Other | (75.8 | ) | (1.1 | ) | (1.2 | ) | (7.5 | ) | ||||||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||
| Accounts receivable, net | (105.7 | ) | (294.5 | ) | (362.0 | ) | (506.8 | ) | ||||||||
| Inventories | 25.6 | 39.8 | (43.9 | ) | (49.5 | ) | ||||||||||
| Prepaid expenses | (9.8 | ) | 7.9 | (19.7 | ) | 7.7 | ||||||||||
| Short-term derivative assets, net | (28.6 | ) | (28.8 | ) | (0.2 | ) | 163.7 | |||||||||
| Other current assets | 56.8 | 10.0 | 7.1 | (20.4 | ) | |||||||||||
| Cash collateral with financial counterparties | (11.2 | ) | 20.4 | (26.7 | ) | 149.2 | ||||||||||
| Other non-current assets | (11.1 | ) | (9.2 | ) | (30.3 | ) | 4.4 | |||||||||
| Accounts payable | 197.5 | 210.2 | 451.2 | 423.4 | ||||||||||||
| Customer deposits | 7.1 | (15.8 | ) | 13.4 | (26.3 | ) | ||||||||||
| Accrued expenses and other current liabilities | 78.4 | 22.6 | 78.4 | (121.9 | ) | |||||||||||
| Non-current income tax, net and other long-term liabilities | 82.5 | (2.4 | ) | 88.4 | (6.4 | ) | ||||||||||
| Total adjustments | 353.7 | (17.1 | ) | 375.5 | 78.8 | |||||||||||
| Net cash provided by (used in) operating activities | 160.0 | (15.1 | ) | 205.2 | 205.2 | |||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Acquisition of businesses, net of cash acquired and other investments | (26.1 | ) | (164.4 | ) | (120.7 | ) | (430.8 | ) | ||||||||
| Capital expenditures | (16.1 | ) | (7.2 | ) | (54.0 | ) | (36.1 | ) | ||||||||
| Other investing activities, net | (4.9 | ) | 2.2 | (5.4 | ) | 38.4 | ||||||||||
| Net cash used in investing activities | (47.1 | ) | (169.3 | ) | (180.1 | ) | (428.5 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Borrowings of debt | 972.6 | 1,877.4 | 4,472.7 | 4,688.0 | ||||||||||||
| Repayments of debt | (1,257.1 | ) | (1,829.2 | ) | (4,749.7 | ) | (4,280.3 | ) | ||||||||
| Dividends paid on common stock | (4.0 | ) | (4.1 | ) | (16.3 | ) | (16.6 | ) | ||||||||
| Purchases of common stock | — | (22.8 | ) | (61.9 | ) | (41.2 | ) | |||||||||
| Other financing activities, net | (0.3 | ) | (6.1 | ) | (6.3 | ) | (9.0 | ) | ||||||||
| Net cash provided by (used in) financing activities | (288.9 | ) | 15.2 | (361.6 | ) | 340.9 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 2.4 | (4.5 | ) | 10.3 | (1.5 | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents | (173.6 | ) | (173.8 | ) | (326.2 | ) | 116.1 | |||||||||
| Cash and cash equivalents, as of beginning of period | 546.0 | 872.3 | 698.6 | 582.5 | ||||||||||||
| Cash and cash equivalents, as of end of period | $ | 372.3 | $ | 698.6 | $ | 372.3 | $ | 698.6 | ||||||||
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WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited - In millions, except per share data) |
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| For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| Non-GAAP financial measures and reconciliation: | 2017 | 2016 | 2017 | 2016 | |||||||||||
| GAAP net income (loss) attributable to World Fuel | $ | (193.1 | ) | $ | 2.2 | $ | (170.2 | ) | $ | 126.5 | |||||
| Goodwill and other impairments, net of income taxes | 82.0 | — | 82.0 | — | |||||||||||
| Severance and restructuring charges, net of income taxes (1) | 44.1 | 7.8 | 49.1 | 9.4 | |||||||||||
| Tax impact of the Tax Cuts and Jobs Act of 2017 (2) | 157.4 | — | 157.4 | — | |||||||||||
| Valuation allowance against the net U.S. deferred tax assets (3) | (76.9 | ) | — | — | — | ||||||||||
| Acquisition related charges, net of income taxes | 3.4 | 4.4 | 8.3 | 11.0 | |||||||||||
| Adjusted net income attributable to World Fuel | $ | 17.0 | $ | 14.3 | $ | 126.6 | $ | 146.9 | |||||||
| GAAP diluted earnings (loss) per common share | $ | (2.86 | ) | $ | 0.03 | $ | (2.50 | ) | $ | 1.81 | |||||
| Goodwill and other impairments, net of income taxes | 1.22 | — | 1.21 | — | |||||||||||
| Severance and restructuring charges, net of income taxes (1) | 0.65 | 0.11 | 0.72 | 0.14 | |||||||||||
| Tax impact of the Tax Cuts and Jobs Act of 2017 (2) | 2.33 | — | 2.31 | — | |||||||||||
| Valuation allowance against the net U.S. deferred tax assets (3) | (1.14 | ) | — | — | — | ||||||||||
| Acquisition related charges, net of income taxes | 0.05 | 0.06 | 0.12 | 0.16 | |||||||||||
| Adjusted diluted earnings per common share | $ | 0.25 | $ | 0.21 | $ | 1.86 | $ | 2.11 | |||||||
| (1) | The pre-tax amount of restructuring charges, including severance-related costs, was $59.6 million for the three and twelve months ended December 31, 2017. The pre-tax amount of severance-related expenses for the three and twelve months ended December 31, 2016 was $11.7 million and $13.9 million, respectively, and $7.1 million for the twelve months ended December 31, 2017, which was not otherwise included in the restructuring charges. | ||
| (2) | This amount includes the effects of the $143.7 million one-time transition tax on historical accumulated foreign earnings. | ||
| (3) | This amount represents the reversal of the valuation allowance recorded during the three months ended September 30, 2017. |
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| Non-GAAP financial measures and reconciliation: | 2017 | 2016 | 2017 | 2016 | |||||||||||
| GAAP net income (loss) attributable to World Fuel | $ | (193.1 | ) | $ | 2.2 | $ | (170.2 | ) | $ | 126.5 | |||||
| Provision for income taxes | 57.0 | — | 149.2 | 15.7 | |||||||||||
| Interest expense and other financing costs, net | 18.1 | 13.3 | 60.3 | 39.2 | |||||||||||
| Depreciation and amortization | 21.8 | 23.9 | 86.1 | 82.3 | |||||||||||
| Goodwill and other impairments | 91.9 | — | 91.9 | — | |||||||||||
| Severance and restructuring charges | 59.6 | 11.7 | 66.7 | 13.9 | |||||||||||
| Acquisition and other related charges | $ | 5.2 | $ | 6.2 | $ | 12.0 | $ | 14.0 | |||||||
| Adjusted EBITDA(1) | $ | 60.5 | $ | 57.3 | $ | 295.9 | $ | 291.6 | |||||||
| (1) | The Company defines adjusted EBITDA as net income (loss) excluding the impacts for the provision for income taxes, interest expense and other financing costs, depreciation and amortization, and non-recurring charges, including those associated with goodwill and other impairments, severance, restructuring and acquisition-related costs. |
|
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES BUSINESS SEGMENTS INFORMATION (Unaudited - In millions) |
||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| Revenue: | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Aviation segment | $ | 4,006.7 | $ | 3,104.2 | $ | 14,538.2 | $ | 10,914.4 | ||||||||
| Land segment | 2,840.1 | 2,543.0 | 10,958.0 | 8,918.8 | ||||||||||||
| Marine segment | 2,025.3 | 2,145.0 | 8,199.3 | 7,182.5 | ||||||||||||
| $ | 8,872.0 | $ | 7,792.1 | $ | 33,695.5 | $ | 27,015.8 | |||||||||
| Gross profit: | ||||||||||||||||
| Aviation segment | $ | 105.7 | $ | 102.0 | $ | 440.5 | $ | 401.0 | ||||||||
| Land segment | 95.3 | 86.8 | 365.8 | 348.5 | ||||||||||||
| Marine segment | 29.0 | 33.5 | 126.0 | 149.5 | ||||||||||||
| $ | 229.9 | $ | 222.3 | $ | 932.2 | $ | 899.0 | |||||||||
| Income from operations: | ||||||||||||||||
| Aviation segment | $ | 41.2 | $ | 36.7 | $ | 192.9 | $ | 160.5 | ||||||||
| Land segment | (54.7 | ) | 6.8 | (7.9 | ) | 70.8 | ||||||||||
| Marine segment | (77.7 | ) | (2.5 | ) | (57.8 | ) | 30.2 | |||||||||
| (91.2 | ) | 41.0 | 127.2 | 261.5 | ||||||||||||
| Corporate overhead - unallocated | (26.1 | ) | (17.0 | ) | (81.6 | ) | (72.7 | ) | ||||||||
| $ | (117.2 | ) | $ | 24.0 | $ | 45.6 | $ | 188.9 | ||||||||
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SALES VOLUME SUPPLEMENTAL INFORMATION (Unaudited - In millions) |
|||||||||||
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||
| December 31, | December 31, | ||||||||||
| Volume (Gallons): | 2017 | 2016 | 2017 | 2016 | |||||||
| Aviation Segment | 2,016.6 | 1,884.4 | 7,938.3 | 7,126.9 | |||||||
| Land Segment | 1,473.5 | 1,487.3 | 5,940.4 | 5,366.0 | |||||||
| Marine Segment (1) | 1,619.3 | 2,015.6 | 7,007.9 | 8,278.5 | |||||||
| Consolidated Total | 5,109.4 | 5,387.4 | 20,886.6 | 20,771.3 | |||||||
| (1) | Converted from metric tons to gallons at a rate of 264 gallons per metric ton. Marine segment metric tons were 6.1 and 26.5 for the three and twelve months ended December 31, 2017. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20180222006481/en/
Source:
World Fuel Services Corporation
Ira M Birns, 305-428-8000
Executive
Vice President & Chief Financial Officer
or
Glenn Klevitz,
305-428-8000
Vice President, Assistant Treasurer & Investor
Relations
