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World Fuel Services Corporation Reports Third Quarter 2020 Results

“Modest improvements in certain areas of our global business, as well as the continued focus on cost containment and portfolio refinement, enabled us to profitably execute in what continues to be a weak operating environment,” stated Michael J. Kasbar, chairman and chief executive officer of World Fuel Services Corporation. “We are continuing to focus on refining our portfolio, actively seeking opportunities to invest in activities such as our World Kinect energy management business to contribute to accelerating the transition to a low carbon world.”

For the third quarter, our aviation segment generated gross profit of $97.6 million, a decrease of 38% year-over-year, driven by the decline in volume as a consequence of the depressed demand for air travel due to the COVID-19 pandemic, together with a reduction in our government-related activity in Afghanistan as a result of the ongoing drawdown of troops. Our marine segment generated gross profit of $32.0 million, a decrease of 40% year-over-year, principally attributable to lower volume and profitability due to a decline in demand as a consequence of the pandemic and lower average fuel prices. Our land segment generated gross profit of $84.3 million, a decrease of 12% year-over-year, primarily resulting from a decline in our retail, commercial and industrial activities in North America and a reduction in our government-related activity in Afghanistan.

“Through continued focus on working capital management, we generated $246 million of cash flow from operations during the third quarter and have now generated nearly $500 million of cash flow from operations during the first nine months of the year,” said Ira M. Birns, executive vice president and chief financial officer. “Combined with the proceeds received from the sale of the Multi Service business, we significantly reduced our debt balance during the quarter, resulting in a record level of liquidity.”

COVID-19 Update

Beginning in the first quarter of 2020, the aviation, marine and land transportation industries, along with global economic conditions generally, have been significantly impacted by the coronavirus pandemic. A large number of our customers in these industries have experienced substantial reductions in their operations, especially commercial airlines and cruise lines, which have been particularly impacted by ongoing travel restrictions. Customers in our marine and land segments have also been adversely affected by these restrictions and the reduction in operations of various businesses in affected regions.

While the COVID-19 pandemic and associated impacts on economic activity had a limited adverse effect on our results of operations and financial condition in the beginning of 2020, we experienced a sharp decline in demand and related sales during the second quarter, as large sectors of the global economy were adversely impacted by the crisis. While demand showed some moderate improvement during the third quarter of 2020, 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 the balance of the year and into 2021 as the periodic increases in COVID-19 cases have caused delays in the full reopening of various economies around the world.

In addition to the actions we took during the first quarter in light of the unprecedented effects of the COVID-19 pandemic on the global economy, during the second and third quarters of 2020, we continued to focus on reducing costs and restructuring our operations to improve operating efficiencies. While the ultimate duration and impact of the pandemic on our business and our customers’ operations remains unclear, we will continue to seek additional opportunities to further enhance our operating efficiencies and reduce costs throughout the current crisis and eventual recovery.
Source: World Fuel Services Corporation

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