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World Fuel Services Corporation Reports Third Quarter Results

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MIAMI--(BUSINESS WIRE)--

World Fuel Services Corporation (NYSE: INT), a leading global fuel logistics company, principally engaged in the marketing, sale and distribution of aviation, marine and land fuel products and related services, today reported third quarter net income of $51.5 million or $0.72 diluted earnings per share compared to $52.7 million or $0.74 diluted earnings per share in the third quarter of 2011. Non-GAAP net income and diluted earnings per share for the third quarter, which exclude share-based compensation and amortization of acquired intangible assets, were $57.9 million and $0.81, respectively, compared to $59.3 million or $0.83 in 2011.

“Our market expertise and value-added service offerings continue to differentiate World Fuel as a solid counterparty to our customers and suppliers worldwide,” stated Michael J. Kasbar, president and chief executive officer of World Fuel Services Corporation. “We were pleased to complete the CarterEnergy acquisition and look to continue to grow our business across all of our segments organically and through further strategic investments.”

The company's marine segment generated gross profit of $54 million, an increase of approximately $2.2 million or 4% sequentially, and $3.9 million or 8% year-over-year. Our aviation segment generated gross profit of $84.2 million in the third quarter of 2012, an increase of $15 million or 22% sequentially, and flat year-over-year. The company's land segment posted gross profit of $42.6 million, a decrease of $8.6 million or 17% sequentially, but an increase of $5.8 million or 16% year-over-year.

“We continue to execute on our long-term growth strategy by capitalizing on organic growth opportunities and strategic investments such as CarterEnergy," said Ira M. Birns, executive vice president and chief financial officer. “Our strong balance sheet, solid liquidity profile and strong risk management discipline should continue to serve us well as we navigate the volatile global marketplace.”

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 diluted 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. 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, 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 leading global fuel logistics company, principally engaged in the marketing, sale and distribution of aviation, marine and land fuel products and related services on a worldwide basis. World Fuel Services sells fuel and delivers services to its clients at 6,000 locations in more than 200 countries and territories worldwide.

The company's global team of market makers provides deep domain expertise in all aspects of aviation, marine and land fuel management. Aviation customers include commercial airlines, cargo carriers, private aircraft and fixed base operators (FBO's), as well as the United States and foreign governments. World Fuel Services' marine customers include international container and tanker fleets, cruise lines and time-charter operators, 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 www.wfscorp.com.

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
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,
  2012   2011     2012   2011  
 
 
Revenue $ 9,911,673 $ 9,510,792 $ 29,009,525 $ 25,298,907
Cost of revenue   9,730,921   9,339,945     28,499,415   24,826,190  
 
Gross profit   180,752   170,847     510,110   472,717  
 
Operating expenses:
Compensation and employee benefits 65,843 57,215 176,553 159,161
Provision for bad debt 3,631 2,422 4,413 6,749
General and administrative   40,230   40,285     126,482   114,254  
 
Total operating expenses   109,704   99,922     307,448   280,164  
 
Income from operations 71,048 70,925 202,662 192,553
Non-operating expenses, net   (3,467 )   (6,434 )   (13,087 )   (14,268 )
 
Income before income taxes 67,581 64,491 189,575 178,285
Provision for income taxes   14,683   10,649     33,249     32,113  
 
Net income including noncontrolling interest 52,898 53,842 156,326 146,172
Net income attributable to noncontrolling interest   1,404   1,187     9,817   2,205  
 
Net income attributable to World Fuel $ 51,494 $ 52,655   $ 146,509 $ 143,967  
 
Basic earnings per common share $ 0.72 $ 0.74   $ 2.06 $ 2.04  
 
Basic weighted average common shares   71,216   70,939     71,128   70,593  
 
Diluted earnings per common share $ 0.72   $ 0.74   $ 2.04 $ 2.02  
 
Diluted weighted average common shares   71,816   71,587     71,791   71,415  
 
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED - IN THOUSANDS)
 
    As of
September 30,   December 31,
2012 2011
 
Assets:
Current assets:
Cash and cash equivalents $ 139,401 $ 205,415
Accounts receivable, net 2,380,451 2,160,561
Inventories 591,870 472,584
Prepaid expenses and other current assets   415,840   283,667
 
Total current assets 3,527,562 3,122,227
 
Property and equipment, net 101,742 90,710
 
Goodwill, identifiable intangible and non-current other assets   549,161   484,309
 
Total assets $ 4,178,465 $ 3,697,246
 
Liabilities and equity:
Liabilities:
Current liabilities:
Short-term debt $ 26,516 $ 17,800
Accounts payable 2,037,836 1,739,678
Accrued expenses and other current liabilities   299,424   268,664
 
Total current liabilities 2,363,776 2,026,142
 
Long-term debt 260,649 269,348
Other long-term liabilities   59,750   55,038
Total liabilities   2,684,175   2,350,528
 
Equity:
World Fuel shareholders' equity 1,472,038 1,332,961
Noncontrolling interest equity   22,252   13,757
Total equity   1,494,290   1,346,718
 
Total liabilities and equity $ 4,178,465 $ 3,697,246
 
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)
 
    For the Three Months ended   For the Nine Months ended
September 30, September 30,
  2012       2011     2012       2011  
 
Cash flows from operating activities:
Net income including noncontrolling interest

 

52,898   $ 53,842     156,326   $ 146,172  
Adjustments to reconcile net income including
noncontrolling interest to net cash provided by (used in)
operating activities:
Depreciation and amortization 9,132 10,371 26,800 29,111
Provision for bad debt 3,631 2,422 4,413 6,749
Share-based payment award compensation costs 4,384 2,541 10,341 8,199
Other (6,462 ) (6,655 ) (7,485 ) (2,775 )
Change in cash collateral deposits held by financial counterparties 134,999 355 6,941 (295 )
Changes in other assets and liabilities, net of acquisitions   (93,388 )   (142,040 )   (149,065 )   (404,024 )
Total adjustments   52,296     (133,006 )   (108,055 )   (363,035 )
Net cash provided by (used in) operating activities   105,194     (79,164 )   48,271     (216,863 )
 
Cash flows from investing activities:
Acquisitions and other investments, net of cash acquired (42,299 ) (6,302 ) (71,337 ) (112,315 )
Capital expenditures (9,170 ) (8,413 ) (18,737 ) (15,807 )
Other   (386 )   (2,706 )   (386 )   (2,706 )
Net cash used in investing activities   (51,855 )   (17,421 )   (90,460 )   (130,828 )
 
Cash flows from financing activities:
(Repayments) borrowings of debt, net (50,453 ) 107,558 (12,860 ) 239,435
Dividends paid on common stock (2,669 ) (2,655 ) (8,019 ) (7,949 )
Other   1,335     (845 )   (4,612 )   (1,110 )
Net cash (used in) provided by financing activities   (51,787 )   104,058     (25,491 )   230,376  
 
Effect of exchange rate changes on cash and
cash equivalents   1,173     (5,354 )   1,666     (3,724 )
 
Net increase (decrease) in cash and cash equivalents 2,725 2,119 (66,014 ) (121,039 )
 
Cash and cash equivalents, as of beginning of period   136,676     149,735     205,415     272,893  
 
Cash and cash equivalents, as of end of period $ 139,401   $ 151,854   $ 139,401   $ 151,854  
 
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
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,
2012   2011 2012   2011
 
Non-GAAP financial measures and reconciliation:
 
GAAP net income attributable to World Fuel $ 51,494 $ 52,655 $ 146,509 $ 143,967
Share-based compensation expense, net of taxes 2,475 1,738 6,583 5,626
Intangible asset amortization expense, net of taxes   3,953   4,870   10,537   14,103
Non-GAAP net income attributable to World Fuel $ 57,922 $ 59,263 $ 163,629 $ 163,696
 
GAAP diluted earnings per common share $ 0.72 $ 0.74 $ 2.04 $ 2.02
Share-based compensation expense, net of taxes 0.03 0.02 0.09 0.08
Intangible asset amortization expense, net of taxes   0.06   0.07   0.15   0.20
Non-GAAP diluted earnings per common share $ 0.81 $ 0.83 $ 2.28 $ 2.30
 
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(UNAUDITED - IN THOUSANDS)
 
    For the Three Months ended   For the Nine Months ended
September 30, September 30,
  2012     2011   2012     2011
Revenue:
Aviation segment $ 3,823,338 $ 3,540,503 $ 10,782,756 $ 9,551,924
Marine segment 3,630,094 4,045,176 11,301,429 10,577,578
Land segment   2,458,241   1,925,113   6,925,340   5,169,405
$ 9,911,673 $ 9,510,792 $ 29,009,525 $ 25,298,907
 
Gross profit:
Aviation segment $ 84,197 $ 83,966 $ 218,282 $ 236,121
Marine segment 53,960 50,069 160,785 140,958
Land segment   42,595   36,812   131,043   95,638
$ 180,752 $ 170,847 $ 510,110 $ 472,717
 
Income from operations:
Aviation segment $ 39,808 $ 41,228 $ 92,601 $ 117,022
Marine segment 27,296 24,899 82,672 68,017
Land segment   18,185   18,653   62,737   43,342
85,289 84,780 238,010 228,381
Corporate overhead - unallocated   14,241   13,855   35,348   35,828
$ 71,048 $ 70,925 $ 202,662 $ 192,553

World Fuel Services Corporation
Ira M. Birns, 305-428-8000
Executive Vice President & Chief Financial Officer

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