World Fuel Services Corporation Reports Fourth Quarter and Full Year 2020 Results
World Fuel Services Corporation (NYSE: INT)
Fourth-Quarter 2020 Highlights
• Total gross profit of $165.2 million, down 42% year-over-year
• GAAP net loss of $3.6 million, or $0.06 per diluted share
• Adjusted net income of $1.1 million, or $0.02 per diluted share
• Adjusted EBITDA of $44.6 million
Full Year 2020 Highlights
• Total gross profit of $851.8 million, down 23% year-over-year
• GAAP net income of $109.6 million, or $1.71 per diluted share
• Adjusted net income of $73.6 million, or $1.15 per diluted share
• Adjusted EBITDA of $261.4 million
“While the past year presented some of the most challenging conditions that our company and the market has ever experienced, our risk management capabilities and the resilience of our diversified business model has provided a number of near-term opportunities and our longer-term growth prospects remain strong,” stated Michael J. Kasbar, chairman and chief executive officer of World Fuel Services Corporation. “We are truly proud of our global team’s dedication and tenacity during this difficult time, delivering exceptional service to our customers in the midst of the global health and economic crisis.”
For the full year, our aviation segment generated gross profit of $352.9 million, a decrease of 36% year-over-year, driven by the decline in volume as a consequence of the depressed demand for air travel due to the coronavirus pandemic, together with a reduction in our government-related activity as a result of the drawdown of troops in Afghanistan. Our marine segment generated gross profit of $151.4 million, a decrease of 17% year-over-year, principally attributable to reduced global-economic activity as a result of the pandemic and lower average fuel prices throughout the year. Our land segment generated gross profit of $347.6 million, a decrease of 8% year-over-year, primarily due to the sale of our Multi Service business, coupled with a decline in our North American operations due to the pandemic and a reduction in government-related activity in Afghanistan.
“While the effects of COVID-19 significantly impacted our results this past year, we took swift action to reduce our costs to better align with current economic realities, mitigating the negative impact of the near-term decline in gross profit,” said Ira M. Birns, executive vice president and chief financial officer. “We also further strengthened our balance sheet by generating record operating cash flow, providing significant liquidity to fund organic growth as business activity accelerates and to make strategic investments in areas with the greatest opportunities for long-term growth and operating leverage.”
The coronavirus pandemic has had a significant impact on the general global economy, including the aviation, land and marine transportation industries, where many of our customers have experienced a substantial decline in demand arising from efforts around the world to contain the spread of the virus. Commercial passenger airlines and cruise lines have been particularly impacted by the travel restrictions and stay-at-home orders, while various other customers in each of our segments have also been adversely affected by such restrictions, as well as the extended shutdown of various businesses and schools in affected regions.
As a result, we experienced a sharp decline in sales volume and profitability across our aviation, land and marine segments beginning in the second quarter of 2020, which persisted throughout the balance of the year. Demand showed some moderate improvement through the second half of 2020, however, our results remained well below pre-pandemic levels. Since the level of activity in our business and that of our customers has historically been driven by the level of economic activity globally, we generally expect these negative impacts to continue through 2021. Any subsequent recovery will be dependent on, among other things, further actions taken by governments and businesses to contain and combat the virus, the speed and effectiveness of vaccine development and distribution, as well as how quickly, and to what extent, normal economic and operating conditions can resume on a sustainable global basis.
In light of the significant impacts of the COVID-19 pandemic, we took a number of actions throughout 2020 to ensure the safety of our employees and other stakeholders and initiated a number of initiatives related to cost reduction, liquidity and operating efficiencies. The ultimate magnitude and duration of the adverse effects of the pandemic on our business will depend on the timing and extent to which the global economy, and our customers in the aviation, land and marine transportation industries in particular, recover from the health crisis and global economic downturn. However, we will continue to seek additional opportunities to further enhance our operating efficiencies, reduce costs and support our customers throughout this crisis and the eventual recovery.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures (collectively, the “Non-GAAP Measures”), including adjusted net income, adjusted diluted earnings per share, and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”). The Non-GAAP Measures exclude acquisition and divestiture related expenses, restructuring costs, impairments, gains or losses on the extinguishment of debt and gains or losses on business dispositions primarily because we do not believe they are reflective of our core operating results. These changes were made to facilitate the evaluation of our current operating performance and comparisons to our past operating performance.
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 World Fuel Services 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 restricted stock units 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 in this press release and on our website.Full Report
Source: World Fuel Services Corporation