World Fuel Services Corporation Reports First Quarter 2019 Results

World Fuel Services Corporation (NYSE: INT)

First-Quarter 2019 Highlights

• Total gross profit of $251.1 million, up 3% year-over-year
• GAAP net income of $42.8 million, or $0.64 per diluted share
• Adjusted net income of $44.5 million, or $0.66 per diluted share
• Adjusted EBITDA of $94.8 million, up 17% year-over-year

“We are pleased to announce a solid start to the year with all three
segments delivering strong results,” stated Michael J. Kasbar, Chairman
and Chief Executive Officer of World Fuel Services Corporation. “The
actions we took during the past year are driving improvements in
operating leverage and profitability.”

Our aviation segment generated gross profit of $114.3 million in the
first quarter, an increase of 4% year-over-year, primarily driven by
strong results in our government-related and international fueling
operations. Our marine segment generated gross profit of $35.2 million,
an increase of 13% year-over-year, principally related to solid
performance in our core resale operations. Our land segment generated
gross profit of $101.5 million, essentially flat year-over-year due to a
decline in activity in the U.K. as a result of warm winter weather,
which was offset by higher profitability in our Kinect global energy
services platform, and our retail, commercial and industrial operations.

Our GAAP net income of $42.8 million, or $0.64 per diluted share,
includes a discrete tax benefit of $8.8 million which corrects a prior
period with respect to a foreign tax filing. Additionally, our results
include $3.4 million of operating income ($2.3 million after-tax) to
correct an item that should have also been recognized in a prior period.
Excluding these items, which we have determined were not material to
current or prior periods, our net income would have been $31.7 million,
or $0.47 per diluted share.

Excluding the items above and acquisition and restructuring-related
charges, our adjusted net income would have been $33.4 million, or $0.50
per diluted share.

“We have now delivered year-over-year increases in our adjusted EBITDA
for eight consecutive quarters,” said Ira M. Birns, executive vice
president and chief financial officer. “This demonstrates the
significant progress we have made in sharpening our portfolio and
controlling costs to drive enhanced returns.”

Additional Financial Information

Cash flow generated from operating activities was $21.9 million for the
first quarter of 2019 compared to a use of $228.8 million in the first
quarter of 2018, which had included approximately $120.0 million
resulting from a statement of cash flows accounting standard adopted in
2018.

Total operating expenses, excluding acquisition and
restructuring-related costs, were $178.8 million in the first quarter of
2019 and our operating expense ratio declined to 71.1% from 74.5% in the
first quarter of 2018.

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 acquisition related charges and restructuring
costs primarily because we do not believe they are reflective of the
Company’s core operating results. 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.

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 with respect to our
actions taken in the past year and their impact on operating leverage
and returns, as well as our expectations about our progress in
sharpening our portfolio and controlling costs to drive enhanced
returns. These forward-looking statements are qualified in their
entirety by cautionary statements and risk factor disclosures contained
in the Company’s Securities and Exchange Commission (“SEC”) filings,
including the Company’s most recent Annual Report on Form 10-K filed
with the SEC. Actual results may differ materially from any
forward-looking statements due to risks and uncertainties, including,
but not limited to: our ability to effectively leverage technology and
operating systems and realize the anticipated benefits, our ability to
successfully execute and achieve efficiencies and other benefits related
to our transformation initiatives, our ability to achieve the expected
level of benefit from our restructuring activities and cost reduction
initiatives, unanticipated tax liabilities or adverse results of tax
audits, assessments, or disputes, the loss of, or reduced sales, to a
significant government customer such as the North Atlantic Treaty
Organization, our ability to successfully implement our growth strategy,
our ability to effectively integrate acquired businesses and recognize
the anticipated benefits, risks related to the complexity of U.S. Tax
Reform and our ability to accurately predict its impact on our returns
and future earnings, our ability to capitalize on new market
opportunities and changes in supply and other market dynamics in the
regions where we operate, potential liabilities and the extent of any
insurance coverage, the outcome of pending litigation and other
proceedings, the impact of quarterly fluctuations in results,
particularly as a result of seasonality, the creditworthiness of our
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 and suppliers operate, supply disruptions, border closures and
other logistical difficulties that can arise when sourcing and
delivering fuel in areas that are actively engaged in war or other
military conflicts, our failure to effectively hedge certain financial
risks associated with the use of derivatives, non-performance by
counterparties or customers on derivatives contracts, uninsured losses,
the impact of natural disasters, adverse results in legal disputes, our
ability to retain and attract senior management and other key employees
and other risks detailed from time to time in our SEC filings. New risks
emerge from time to time and it is not possible for management to
predict all such risk factors or to assess the impact of such risks on
our business. Accordingly, we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, changes in expectations, future events, or otherwise,
except as required by law.

About World Fuel Services Corporation

Headquartered in Miami, Florida, World Fuel Services is a global energy
management company involved in providing energy procurement advisory
services, supply fulfillment and transaction and payment management
solutions to commercial and industrial customers, principally in the
aviation, marine and land transportation industries. World Fuel Services
sells fuel and delivers services to its clients at more than 8,000
locations in more than 200 countries and territories worldwide.

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 --

* The adoption of ASU 2016-15 resulted in operating cash flow decreases
and investing cash flow increases of $120.0 million for the three months
ended March 31, 2018.

(1) The Company defines adjusted EBITDA as income from operations,
excluding the impact of depreciation and amortization, and items that
are considered to be non-operational and are not representative of our
core business, including those associated with acquisition related
charges and restructuring costs.

(1) Includes gallons and gallon equivalents of British Thermal Units
(BTU) for our natural gas sales and Kilowatt Hours (KwH) for our Kinect
power business.

(2) Converted from metric tons to gallons at a rate of 264 gallons per
metric ton. Marine segment metric tons was 5.2 for the three months
ended March 31, 2019.

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