Second-Quarter 2020 Highlights
• Total gross profit of $213.9 million, down 20% year-over-year
• GAAP net loss of $10.2 million, or $0.16 per diluted share
• Adjusted net income of $8.1 million, or $0.13 per diluted share
• Adjusted EBITDA of $57.1 million
“The resilience of our diversified business model produced a respectable result for the quarter despite volumes across all of our operating segments being negatively impacted by the global shutdown due to the COVID-19 pandemic,” stated Michael J. Kasbar, chairman and chief executive officer of World Fuel Services Corporation. “The continued demonstration of our value to the global supply chain and energy and logistics industries during these uncertain times will serve us well as the world begins its recovery.”
For the second quarter, our aviation segment generated gross profit of $91.9 million, a decrease of 35% year-over-year, driven by a significant reduction in activity related to the global shutdown, which principally impacted our commercial aviation operations, together with a reduction in government-related activity. The marine segment generated gross profit of $37.2 million, an increase of 2% year-over-year, principally related to improved performance in our core resale business, offset by significantly lower volume due to a decline in activity in connection with the pandemic. Our land segment generated gross profit of $84.8 million, a decrease of 8% year-over-year, driven principally by a decline in retail, commercial and industrial activities in North America as a result of the pandemic, together with a reduction in government-related activity.
“Our continued focus on cost and liquidity management further strengthened our balance sheet during this extraordinary time,” said Ira M. Birns, executive vice president and chief financial officer. “We generated cash flows from operations of $236 million during the quarter and the expected proceeds from the announced sale of the Multi Service payment solutions business will provide additional capital to strategically invest in our core business portfolio.”
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 the travel restrictions and stay-at-home orders. Customers in our marine and land segments have also been adversely affected by these restrictions, as well as the extended shutdown 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 for the first quarter of 2020, we have since seen a sharp decline in demand and related sales as large sectors of the global economy have been adversely impacted by the crisis. Accordingly, our results of operations during the second quarter of 2020 were significantly impacted as a result of the effects of the pandemic. 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 third quarter as the recent increases in COVID-19 cases have further delayed the 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 quarter of 2020, we took additional steps and expanded the restructuring of our operations to include the rationalization of our global office footprint, including the transition of select offices to smaller or more cost-effective locations. 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.
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.
Source: World Fuel Corporation