World Fuel Services Corporation Reports Solid Earnings for the Third Quarter of 2009

November 3, 2009 4:03 PM EST

Aviation Volume Increases 21% Sequentially

MIAMI--(BUSINESS WIRE)-- World Fuel Services Corporation (NYSE: INT), a global leader in the marketing and sale of marine, aviation and land fuel products and related services, today reported third quarter net income of $29.1 million or $0.97 diluted earnings per share compared to $40.1 million or $1.37 diluted earnings per share in the third quarter of 2008. Non-GAAP net income for the third quarter, which excludes share-based compensation and amortization of acquired intangible assets, was $31.4 million or $1.04 non-GAAP diluted earnings per share compared to $43.6 million or $1.49 non-GAAP diluted earnings per share in the third quarter of 2008. 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."

"Our aviation segment posted strong sequential volume growth, resulting in the first year-over-year increase in five quarters and achieving volumes not seen since the second quarter of 2008," said Paul H. Stebbins, chairman and chief executive officer of World Fuel Services Corporation. "We remain focused on aggressively managing risk, improving our customer offering and enhancing our global supply relationships."

"The marine business performed well despite challenging economic conditions," stated Michael J. Kasbar, president and chief operating officer. "Our land business delivered solid results for the second consecutive quarter," added Kasbar.

The company's aviation segment generated gross profit of $42.9 million in the third quarter of 2009, an increase of $3.1 million or 8% sequentially, but a decrease of 15% from last year's record third quarter. The marine segment generated third quarter gross profit of $40.2 million, flat sequentially and a decline of 37% from the record results achieved in the third quarter of last year. The company's land segment posted gross profit of $11.7 million in the third quarter, an increase of 2% sequentially and 15% year-over-year.

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 non-GAAP net income and non-GAAP diluted earnings per share. The non-GAAP financial measures exclude costs associated with share-based compensation and amortization of acquired intangible assets, primarily because we do not believe they are reflective of the company's core operating results. We believe that these non-GAAP financial measures, when considered in conjunction with our financial information prepared in accordance with GAAP, are useful for investors to evaluate our core 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. In addition, our presentation of non-GAAP net income and non-GAAP earnings per share may not be comparable to the presentation of such metrics by other companies. 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 creditworthiness of customers and counterparties and our ability to collect accounts receivable and settle derivatives contracts, 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 operate, our failure to effectively hedge certain financial risks associated with the use of derivatives, non-performance by counterparties or customers on derivatives contracts, the integration of acquired businesses, uninsured losses, our ability to retain and attract senior management and other key employees 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 is a global leader in the marketing and sale of marine, aviation and land fuel products, as well as related services. World Fuel Services sells fuel and delivers services to its clients at more than 6,000 locations in more than 190 countries, including airports, seaports, tanker truck loading terminals and other customer storage locations. With 44 strategically located global offices (including satellite offices), World Fuel Services offers its clients a value-added outsource service for the supply, quality control, logistical support and price risk management of marine, aviation and land fuel.

The Company's global team of market makers provides deep domain expertise in all aspects of marine, aviation and land fuel management. World Fuel Services' marine customers include international container and tanker fleets and time-charter operators, as well as the United States and foreign governments. Aviation customers include commercial airlines, cargo carriers and corporate clientele, as well as the United States and foreign governments. Land customers include petroleum distributors, retail petroleum operators, and industrial, commercial and government accounts. For more information, call 305-428-8000 or visit http://www.wfscorp.com.

WORLD FUEL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA)

                           For the Three Months ended  For the Nine Months ended

                           September 30,               September 30,

                           2009         2008           2009         2008

Revenue                    $ 3,202,653  $ 5,453,351    $ 7,749,936  $ 15,595,955

Cost of revenue              3,107,921    5,329,546      7,476,301    15,304,019

Gross profit                 94,732       123,805        273,635      291,936

Operating expenses:

Compensation and employee    32,359       35,503         101,231      100,381
benefits

Provision for bad debt       1,774        6,842          2,696        16,899

General and                  19,726       21,144         59,603       62,197
administrative

                             53,859       63,489         163,530      179,477

Income from operations       40,873       60,316         110,105      112,459

Interest and other           1,339        5,348          3,256        10,316
expense, net

Income before income         39,534       54,968         106,849      102,143
taxes

Provision for income         10,437       14,848         23,990       25,552
taxes

Net income including
noncontrolling

interest                     29,097       40,120         82,859       76,591

Less: net income
attributable to

noncontrolling interest      25           35             215          205

Net income attributable    $ 29,072     $ 40,085       $ 82,644     $ 76,386
to World Fuel

Basic earnings per share   $ 0.98       $ 1.38         $ 2.81       $ 2.65

Basic weighted average       29,578       29,123         29,433       28,778
common shares

Diluted earnings per       $ 0.97       $ 1.37         $ 2.78       $ 2.63
share

Diluted weighted average     30,081       29,307         29,766       29,083
common shares

WORLD FUEL SERVICES CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED - IN THOUSANDS)

                                                As of

                                                September 30,  December 31,

                                                2009           2008

Assets:

Current assets:

Cash and cash equivalents                       $ 348,504      $ 314,352

Short-term investments                            8,100          8,100

Accounts receivable, net                          864,562        676,100

Inventories                                       101,462        28,726

Short-term derivative assets, net                 19,255         72,260

Prepaid expenses and other current assets         50,778         72,612

Total current assets                              1,392,661      1,172,150

Property and equipment, net                       39,279         35,328

Other assets                                      238,476        197,148

Total assets                                    $ 1,670,416    $ 1,404,626

Liabilities and equity:

Current liabilities:

Short-term debt                                 $ 10,871       $ 23,840

Accounts payable                                  770,476        548,876

Short-term derivative liabilities, net            23,367         66,302

Customer deposits                                 53,235         40,961

Accrued expenses and other current liabilities    57,989         70,808

Total current liabilities                         915,938        750,787

Long-term debt                                    9,796          9,537

Other long-term liabilities                       46,412         36,156

Total liabilities                                 972,146        796,480

Equity:

World Fuel shareholders' equity                   698,247        607,887

Noncontrolling interest equity                    23             259

Total equity                                      698,270        608,146

Total liabilities and equity                    $ 1,670,416    $ 1,404,626

WORLD FUEL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED - IN THOUSANDS)

                           For the Three Months ended  For the Nine Months ended

                           September 30,               September 30,

                           2009         2008           2009         2008

Cash flows from operating
activities:

Net income including       $ 29,097     $ 40,120       $ 82,859     $ 76,591
noncontrolling interest

Adjustments to reconcile
net income including

noncontrolling interest
to net cash (used in)

provided by operating
activities:

Depreciation and             4,987        3,971          13,127       9,869
amortization

Provision for bad debt       1,774        6,842          2,696        16,899

Deferred income tax          2,732        2,280          5,916        (3,852  )
provision (benefit)

Share-based payment          869          2,923          4,471        6,808
compensation costs

Foreign currency
transaction (gains)

losses, net                  (1,479  )    2,010          (1,671  )    1,502

Other                        248          77             773          307

Changes in assets and
liabilities, net of

acquisitions                 (42,058 )    230,672        8,984        91,668

Total adjustments            (32,927 )    248,775        34,296       123,201

Net cash (used in)
provided by operating

activities                   (3,830  )    288,895        117,155      199,792

Cash flows provided by
(used in)

investing activities         3,256        (640     )     (57,216 )    (99,419 )

Cash flows (used in)
provided by financing        (5,296  )    (181,948 )     (28,179 )    24,004
activities

Effect of exchange rate
changes on cash and

cash equivalents             1,563        (2,010   )     2,392        (1,502  )

Net (decrease) increase
in cash and

cash equivalents             (4,307  )    104,297        34,152       122,875

Cash and cash
equivalents, at beginning

of period                    352,811      54,729         314,352      36,151

Cash and cash
equivalents, at end of     $ 348,504    $ 159,026      $ 348,504    $ 159,026
period

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 Nine Months Ended

                           September 30,               September 30,

                           2009      2008              2009      2008

Non-GAAP financial
measures and
reconciliation:

GAAP net income
attributable to World      $ 29,072  $ 40,085          $ 82,644  $ 76,386
Fuel

Share-based compensation     718       2,052             3,244     4,702
expense, net of taxes

Intangible asset
amortization expense, net    1,630     1,416             4,487     2,689
of taxes

Non-GAAP net income
attributable to World      $ 31,420  $ 43,553          $ 90,375  $ 83,777
Fuel

GAAP diluted earnings per  $ 0.97    $ 1.37            $ 2.78    $ 2.63
share

Share-based compensation     0.02      0.07              0.11      0.16
expense, net of taxes

Intangible asset
amortization expense, net    0.05      0.05              0.15      0.09
of taxes

Non-GAAP diluted earnings  $ 1.04    $ 1.49            $ 3.04    $ 2.88
per share

WORLD FUEL SERVICES CORPORATION

BUSINESS SEGMENT INFORMATION

(UNAUDITED - IN THOUSANDS)

                    For the Three Months ended    For the Nine Months ended

                    September 30,                 September 30,

                    2009           2008           2009           2008

Revenue:

Marine segment      $ 1,706,151    $ 2,925,300    $ 4,190,510    $ 8,386,490

Aviation segment      1,154,206      2,045,278      2,696,786      6,169,625

Land segment          342,296        482,773        862,640        1,039,840

                    $ 3,202,653    $ 5,453,351    $ 7,749,936    $ 15,595,955

Gross profit:

Marine segment      $ 40,190       $ 63,247       $ 127,629      $ 144,615

Aviation segment      42,892         50,451         114,657        130,762

Land segment          11,650         10,107         31,349         16,559

                    $ 94,732       $ 123,805      $ 273,635      $ 291,936

Income from
operations:

Marine segment      $ 22,058       $ 42,355       $ 74,039       $ 83,695

Aviation segment      21,204         23,906         50,603         54,075

Land segment          2,743          2,422          7,715          1,052

                      46,005         68,683         132,357        138,822

Corporate overhead    (5,132    )    (8,367    )    (22,252   )    (26,363    )

                    $ 40,873       $ 60,316       $ 110,105      $ 112,459

    Source: World Fuel Services Corporation

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