World Kinect Corp 10-Q for FY2022 Q1

World Kinect Corp (WKC)

10-Q 2022-04-29 For: 2022-03-31

Added on April 11, 2026

About this 10-Q

World Kinect Corp filed this 10-Q on April 29, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.38B; up 107.8% from $5.96B a year earlier
Net income: $26.3M; up 39.2% from net income of $18.9M a year earlier
Diluted EPS: $0.41; up 36.7% from $0.30 a year earlier

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Part I.	Financial Information

	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	1
		Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2022 and 2021	2
		Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended March 31, 2022 and 2021	3
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	4
		Notes to the Condensed Consolidated Financial Statements	5

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

	Item 4.	Controls and Procedures	29

Part II.	Other Information

	Item 1.	Legal Proceedings	31



	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

	Item 6.	Exhibits	32

Signatures			33


	March 31, 2022		December 31, 2021
Assets:
Current assets:
Cash and cash equivalents	$	266.2	$	652.2
Accounts receivable, net of allowance for credit losses of $17.2 million and $26.1 million as of March 31, 2022 and December 31, 2021, respectively	3,510.2		2,355.3
Inventories	680.5		477.9
Prepaid expenses	59.3		59.2
Short-term derivative assets, net	293.8		169.2
Other current assets	215.3		305.9
Total current assets	5,025.3		4,019.7
Property and equipment, net	473.9		348.9
Goodwill	1,244.6		861.9
Identifiable intangible assets, net	369.5		189.1
Other non-current assets	854.7		522.8
Total assets	$	7,968.0	$	5,942.4
Liabilities:
Current liabilities:
Current maturities of long-term debt	$	15.0	$	30.6
Accounts payable	3,447.5		2,399.6
Short-term derivative liabilities, net	317.1		168.4
Customer deposits	234.9		205.5
Accrued expenses and other current liabilities	398.0		292.7
Total current liabilities	4,412.5		3,096.7
Long-term debt	869.1		478.1
Non-current income tax liabilities, net	208.4		213.9
Other long-term liabilities	532.5		236.8
Total liabilities	6,022.6		4,025.6

Equity:
World Fuel shareholders' equity:
Preferred stock, $1.00 par value; 0.1 shares authorized, none issued	—		—
Common stock, $0.01 par value; 100.0 shares authorized, 63.0 and 61.7 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	0.6		0.6
Capital in excess of par value	206.7		168.1
Retained earnings	1,899.4		1,880.6
Accumulated other comprehensive income (loss)	(165.4)		(136.7)
Total World Fuel shareholders' equity	1,941.4		1,912.7
Noncontrolling interest	4.1		4.1
Total equity	1,945.5		1,916.8
Total liabilities and equity	$	7,968.0	$	5,942.4


	For the Three Months Ended March 31,
	2022		2021
Revenue	$	12,382.0	$	5,957.9
Cost of revenue	12,151.1		5,766.3
Gross profit	230.9		191.6
Operating expenses:
Compensation and employee benefits	114.9		92.5
General and administrative	74.7		59.4

Restructuring charges	—		2.1
Total operating expenses	189.6		154.0
Income from operations	41.3		37.6
Non-operating income (expenses), net:
Interest expense and other financing costs, net	(14.3)		(8.7)
Other income (expense), net	5.7		(1.2)
Total non-operating income (expense), net	(8.7)		(10.0)
Income (loss) before income taxes	32.6		27.6
Provision for income taxes	6.4		8.8
Net income (loss) including noncontrolling interest	26.3		18.8
Net income (loss) attributable to noncontrolling interest	(0.1)		—
Net income (loss) attributable to World Fuel	$	26.3	$	18.9
Basic earnings (loss) per common share	$	0.42	$	0.30
Basic weighted average common shares	63.4		63.0
Diluted earnings (loss) per common share	$	0.41	$	0.30
Diluted weighted average common shares	63.7		63.6
Comprehensive income:
Net income (loss) including noncontrolling interest	$	26.3	$	18.8
Other comprehensive income (loss):
Foreign currency translation adjustments	(9.4)		(4.0)
Cash flow hedges, net of income tax expense (benefit) of ($7.0) and $5.6 for the three months ended March 31, 2022 and 2021, respectively	(19.3)		16.4
Total other comprehensive income (loss)	(28.7)		12.4
Comprehensive income (loss) including noncontrolling interest	(2.4)		31.2
Comprehensive income (loss) attributable to noncontrolling interest	(0.1)		—
Comprehensive income (loss) attributable to World Fuel	$	(2.3)	$	31.2


	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total World Fuel Shareholders' Equity		Noncontrolling Interest Equity		Total Equity
	Shares	Amount
Balance as of December 31, 2021	61.7	$	0.6	$	168.1	$	1,880.6	$	(136.7)	$	1,912.7	$	4.1	$	1,916.8
Net income (loss)	—	—		—		26.3		—		26.3		(0.1)		26.3
Cash dividends declared	—	—		—		(7.6)		—		(7.6)		—		(7.6)
Amortization of share-based payment awards	—	—		3.7		—		—		3.7		—		3.7
Issuance (cancellation) of common stock related to share-based payment awards	0.1	—		—		—		—		—		—		—
Issuance of common stock for acquisition of a business	1.8	—		50.0		—		—		50.0		—		50.0
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards	—	—		(1.3)		—		—		(1.3)		—		(1.3)
Purchases of common stock	(0.5)	—		(13.7)		—		—		(13.7)		—		(13.7)
Other comprehensive income (loss)	—	—		—		—		(28.7)		(28.7)		—		(28.7)

Balance as of March 31, 2022	63.0	$	0.6	$	206.7	$	1,899.4	$	(165.4)	$	1,941.4	$	4.1	$	1,945.5


	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total World Fuel Shareholders' Equity		Noncontrolling Interest Equity		Total Equity
	Shares	Amount
Balance as of December 31, 2020	62.9	$	0.6	$	204.6	$	1,836.7	$	(132.6)	$	1,909.3	$	3.6	$	1,912.9

Net income (loss)	—	—		—		18.9		—		18.9		—		18.8
Cash dividends declared	—	—		—		(7.5)		—		(7.5)		—		(7.5)
Amortization of share-based payment awards	—	—		8.7		—		—		8.7		—		8.7
Issuance (cancellation) of common stock related to share-based payment awards	0.1	—		—		—		—		—		—		—
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards	—	—		(2.4)		—		—		(2.4)		—		(2.4)

Other comprehensive income (loss)	—	—		—		—		12.4		12.4		—		12.4
Other	—	—		—		0.2		—		0.2		—		0.2
Balance as of March 31, 2021	63.0	$	0.6	$	210.8	$	1,848.3	$	(120.3)	$	1,939.5	$	3.5	$	1,943.0


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Total
Consideration:
Cash paid	$	642.7
Estimated working capital adjustment receivable from seller	(0.5)
Common stock issued to seller	50.0
Amount due to sellers	100.0
Total fair value of consideration	$	792.2

Assets acquired and liabilities assumed:
Cash	$	3.3
Accounts receivable	109.2
Inventory	50.9
Property, plant and equipment	126.6
Identifiable intangible assets subject to amortization (1)	162.9
Identifiable intangible assets not subject to amortization (2)	29.3
Accounts payable	(38.0)
Other assets and liabilities, net (3)	(39.0)
Net identifiable assets acquired	405.1
Goodwill (4)	387.1
Net assets acquired	$	792.2


(unaudited)	Three Months Ended March 31, 2021
Revenue	$	6,335.6
Net income attributable to World Fuel	$	20.2


	Aviation Segment		Land Segment		Total
As of December 31, 2021	$	400.1	$	461.8	$	861.9
2022 acquisition (1)	—		387.1		387.1
Foreign currency translation of non-USD functional currency subsidiary goodwill	(0.8)		(3.5)		(4.3)
As of March 31, 2022	$	399.3	$	845.4	$	1,244.6


		Gross Derivative Assets				Gross Derivative Liabilities
	Condensed Consolidated Balance Sheets Location	March 31,		December 31,		March 31,		December 31,
Derivative Instruments		2022		2021		2022		2021
Derivatives designated as hedging instruments
Commodity contracts	Short-term derivative assets, net	$	13.6	$	1.8	$	12.4	$	9.7

	Short-term derivative liabilities, net	0.4		0.1		1.4		0.4


Interest rate contracts	Short-term derivative assets, net	3.7		—		—		—
	Other non-current assets	13.3		5.4		—		—
	Short-term derivative liabilities, net	—		—		—		0.3

Total derivatives designated as hedging instruments		31.1		7.3		13.8		10.4

Derivatives not designated as hedging instruments
Commodity contracts	Short-term derivative assets, net	880.7		516.3		542.6		337.5
	Other non-current assets	270.8		112.2		116.2		27.6
	Short-term derivative liabilities, net	211.6		117.6		529.8		286.6
	Other long-term liabilities	51.8		15.5		192.5		82.1

Foreign currency contracts	Short-term derivative assets, net	2.2		3.8		0.6		1.7
	Other non-current assets	0.2		0.1		0.1		—
	Short-term derivative liabilities, net	5.3		0.8		11.1		2.6

Total derivatives not designated as hedging instruments		1,422.7		766.3		1,392.9		738.1
Total derivatives		$	1,453.8	$	773.6	$	1,406.8	$	748.5


Line item in the Consolidated Balance Sheets in which the hedged item is included	Carrying Amount of Hedged Assets/(Liabilities)				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset/(Liabilities)
	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Inventory	$	77.5	$	59.3	$	14.6	$	0.6


	For the Three Months Ended
	March 31, 2022						March 31, 2021
	Revenue		Cost of revenue		Interest expense and other financing costs, net		Revenue		Cost of revenue		Interest expense and other financing costs, net
Total amounts of income and expense line items in which the effects of fair value or cash flow hedged are recorded	$	12,382.0	$	12,151.1	$	14.3	$	5,957.9	$	5,766.3	$	11.1
Gains (losses) on fair value hedge relationships:
Commodity contracts:
Hedged item	—		28.6		—		—		12.0		—
Derivatives designated as hedging instruments	—		(41.2)		—		—		(8.4)		—

Gains (losses) on cash flow hedge relationships:
Commodity contracts:
Amount of gain (loss) reclassified from Accumulated other comprehensive income (loss) into net income	(33.0)		—		—		(11.7)		21.0		—
Interest rate contracts:
Amount of gain (loss) reclassified from Accumulated other comprehensive income (loss) into net income	—		—		(0.3)		—		—		(0.2)

Total amount of income and expense line items excluding the impact of hedges	$	12,415.0	$	12,138.6	$	14.0	$	5,969.6	$	5,791.0	$	10.8


Gain (Loss) Not Recorded in Accumulated other comprehensive income (loss) Due to Intra-Period Settlement		For the Three Months Ended March 31,
	Location	2022		2021
Commodity contracts	Revenue	$	(75.3)	$	(76.8)
Commodity contracts	Cost of revenue	$	1.4	$	7.2


Amount of Gain (Loss) Recognized in Accumulated other comprehensive income (loss), Net of Income Tax (Expense) Benefit	For the Three Months Ended March 31,
	2022		2021
Commodity contracts (Revenue)	$	(52.7)	$	(62.8)
Commodity contracts (Cost of revenue)	—		84.6
Interest rate contracts (Interest expense and other financing costs, net)	8.6		3.6
Total gain (loss)	$	(44.1)	$	25.5


	March 31, 2022		December 31, 2021
Net derivative liability positions with credit contingent features	$	11.0	$	3.3
Collateral posted and held by our counterparties	—		—
Maximum additional potential collateral requirements	$	11.0	$	3.3


	For the Three Months Ended March 31,
	2022		2021
Aviation	$	225.3	$	121.4
Land	48.6		5.6
Marine	1,145.4		718.8
Asia Pacific	1,419.3		845.7

Aviation	641.9		266.9
Land	1,038.4		609.9
Marine	831.0		487.2
EMEA	2,511.3		1,363.9

Aviation	953.2		349.1
Land	198.4		122.7
Marine	278.6		125.6
LATAM	1,430.1		597.3

Aviation	3,291.8		1,431.3
Land	3,049.6		1,460.5
Marine	559.4		255.6
North America	6,900.8		3,147.4

Other revenues (excluded from ASC 606) (1)	120.5		3.5

Total revenue	$	12,382.0	$	5,957.9


	For the Three Months Ended March 31,
Revenue:	2022		2021
Aviation segment	$	5,010.5	$	2,095.0
Land segment	4,380.8		2,188.2
Marine segment	2,990.6		1,674.7
Total revenue	$	12,382.0	$	5,957.9

Income from operations:
Aviation segment	$	7.5	$	23.0
Land segment	33.4		32.8
Marine segment	23.1		6.4
Corporate overhead - unallocated	(22.8)		(24.5)
Total income from operations	$	41.3	$	37.6


	For the Three Months Ended March 31,
	2022		2021		Change
Revenue	$	5,010.5	$	2,095.0	$	2,915.5

Gross profit	$	64.2	$	76.7	$	(12.5)
Operating expenses	56.7		53.7		3.0
Income from operations	$	7.5	$	23.0	$	(15.5)

Operational metrics:
Aviation segment volumes (gallons)	1,655.4		1,143.4		512.1
Aviation segment average price per gallon	$	2.91	$	1.72	$	1.20


		For the Three Months Ended March 31,
Derivative Instruments - Non-designated	Location	2022		2021
Commodity contracts	Revenue	$	76.9	$	(303.8)
	Cost of revenue	(6.4)		313.0
		70.5		9.2
Foreign currency contracts	Revenue	(0.6)		0.4
	Other (expense), net	(2.3)		3.3
		(2.9)		3.7
Total gain (loss)		$	67.6	$	12.9


	March 31, 2022		December 31, 2021
Credit Facility	$	424.8	$	—
Term loans	436.7		484.1
Finance leases	19.5		21.2
Other	3.2		3.3
Total debt	884.2		508.7
Less: Current maturities of long-term debt and finance leases (1)	15.0		30.6
Long-term debt	$	869.1	$	478.1


Balance as of	Foreign Currency Translation Adjustments		Cash Flow Hedges		Accumulated Other Comprehensive Income (Loss)
Balance as of January 1, 2022	$	(134.0)	$	(2.7)	$	(136.7)
Other comprehensive income (loss) before reclassifications	(9.4)		(44.1)		(53.5)
Amounts reclassified from accumulated other comprehensive income (loss)	—		24.8		24.8
Less: Net other comprehensive (income) loss attributable to noncontrolling interest	—		—		—
Balance as of March 31, 2022	$	(143.4)	$	(22.0)	$	(165.4)

Balance as of January 1, 2021	$	(120.3)	$	(12.3)	$	(132.6)
Other comprehensive income (loss) before reclassifications	(4.0)		25.5		21.5
Amounts reclassified from accumulated other comprehensive income (loss)	—		(9.1)		(9.1)
Less: Net other comprehensive (income) loss attributable to noncontrolling interest	—		—		—
Balance as of March 31, 2021	$	(124.3)	$	4.0	$	(120.3)


	Fair Value Measurements as of March 31, 2022
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Commodities contracts	$	873.0	$	547.9	$	8.1	$	1,429.0
Interest rate contract	—		17.0		—		17.0
Foreign currency contracts	—		7.7		—		7.7
Cash surrender value of life insurance	—		14.8		—		14.8
Total assets at fair value	$	873.0	$	587.4	$	8.1	$	1,468.5

Liabilities:
Commodities contracts	$	598.5	$	790.7	$	5.8	$	1,395.0

Foreign currency contracts	—		11.8		—		11.8
Total liabilities at fair value	$	598.5	$	802.5	$	5.8	$	1,406.8


	Fair Value Measurements as of December 31, 2021
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Commodities contracts	$	513.3	$	247.6	$	2.6	$	763.5
Interest rate contract	—		5.4		—		5.4
Foreign currency contracts	—		4.7		—		4.7
Cash surrender value of life insurance	—		14.6		—		14.6
Total assets at fair value	$	513.3	$	272.3	$	2.6	$	788.3

Liabilities:
Commodities contracts	$	361.5	$	378.6	$	3.8	$	743.9
Interest rate contract	—		0.3		—		0.3
Foreign currency contracts	—		4.3		—		4.3
Total liabilities at fair value	$	361.5	$	383.2	$	3.8	$	748.5


	Fair Value as of March 31, 2022
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Cash Collateral		Gross Amounts without Right of Offset		Net Amounts
Assets:
Commodities contracts	$	1,429.0	$	937.2	$	491.8	$	70.1	$	—	$	421.7
Interest rate contract	17.0		—		17.0		—		—		17.0
Foreign currency contracts	7.7		6.0		1.7		—		—		1.7
Total assets at fair value	$	1,453.8	$	943.3	$	510.5	$	70.1	$	—	$	440.5

Liabilities:
Commodities contracts	$	1,395.0	$	937.2	$	457.8	$	7.4	$	—	$	450.3

Foreign currency contracts	11.8		6.0		5.8		—		—		5.8
Total liabilities at fair value	$	1,406.8	$	943.3	$	463.5	$	7.4	$	—	$	456.1


	Fair Value as of December 31, 2021
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Cash Collateral		Gross Amounts without Right of Offset		Net Amounts
Assets:
Commodities contracts	$	763.5	$	513.1	$	250.4	$	7.6	$	—	$	242.8
Interest rate contract	5.4		—		5.4		—		—		5.4
Foreign currency contracts	4.7		2.6		2.1		—		—		2.1
Total assets at fair value	$	773.6	$	515.6	$	258.0	$	7.6	$	—	$	250.4

Liabilities:
Commodities contracts	$	743.9	$	513.1	$	230.8	$	3.2	$	—	$	227.7
Interest rate contract	0.3		—		0.3		—		—		0.3
Foreign currency contracts	4.3		2.6		1.7		—		—		1.7
Total liabilities at fair value	$	748.5	$	515.6	$	232.8	$	3.2	$	—	$	229.7


	March 31, 2022		December 31, 2021
Accounts receivable, net:
Aviation segment, net of allowance for credit losses of $9.6 and $18.4 as of March 31, 2022 and December 31, 2021, respectively	$	1,339.9	$	972.9
Land segment, net of allowance for credit losses of $4.6 and $3.8 as of March 31, 2022 and December 31, 2021, respectively	1,096.4		664.7
Marine segment, net of allowance for credit losses of $3.0 and $3.9 as of March 31, 2022 and December 31, 2021, respectively	1,073.9		717.7
Total accounts receivable, net	$	3,510.2	$	2,355.3

Total assets:
Aviation segment	$	2,719.5	$	2,305.6
Land segment	3,516.1		2,106.1
Marine segment	1,403.7		1,022.7
Corporate	328.7		507.9
Total assets	$	7,968.0	$	5,942.4


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
1/1/2022 - 1/31/2022	—	$	—	—	$	195,767
2/1/2022 - 2/28/2022	—	—		—	195,767
3/1/2022 - 3/31/2022	500	27.41		500	182,053
Total	500	$	27.41	500	$	182,053


Exhibit No.						Description
31.1						Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d — 14(a).

31.2						Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d — 14(a).

32.1						Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following materials from World Fuel Services Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in XBRL (Extensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income and Comprehensive Income, (iii) Condensed Consolidated Statements of Shareholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.

104						Cover page interactive file (formatted in Inline XBRL and contained in Exhibit 101).



Date: April 29, 2022			World Fuel Services Corporation


			/s/ Michael J. Kasbar
			Michael J. Kasbar
			Chairman, President and Chief Executive Officer


			/s/ Ira M. Birns
			Ira M. Birns
			Executive Vice President and Chief Financial Officer