World Kinect Corp 10-Q for FY2021 Q1

World Kinect Corp (WKC)

10-Q 2021-04-30 For: 2021-03-31

Added on April 11, 2026

About this 10-Q

World Kinect Corp filed this 10-Q on April 30, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.96B; down 25.7% from $8.02B a year earlier
Net income: $18.9M; down 54.3% from net income of $41.4M a year earlier
Diluted EPS: $0.30; down 52.4% from $0.63 a year earlier

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Part I.	Financial Information

	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	1
		Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2021 and 2020	2
		Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2021 and 2020	3
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	4
		Notes to the Condensed Consolidated Financial Statements	6

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

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

	Item 4.	Controls and Procedures	30

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


	As of
	March 31,		December 31,
	2021		2020
Assets:
Current assets:
Cash and cash equivalents	$	735.3	$	658.8
Accounts receivable, net of allowance for credit losses of $43.8 million and $53.8 million as of March 31, 2021 and December 31, 2020, respectively	1,669.2		1,238.4
Inventories	333.7		344.3
Prepaid expenses	53.2		51.1
Short-term derivative assets, net	58.9		66.4

Other current assets	214.1		280.4
Total current assets	3,064.5		2,639.3
Property and equipment, net	334.6		342.6
Goodwill	858.0		858.6
Identifiable intangible and other non-current assets	668.3		659.8

Total assets	$	4,925.4	$	4,500.3
Liabilities:
Current liabilities:
Current maturities of long-term debt	$	26.6	$	22.9
Accounts payable	1,619.3		1,214.7
Customer deposits	132.9		155.8

Accrued expenses and other current liabilities	313.4		290.6
Total current liabilities	2,092.2		1,684.0

Long-term debt	496.9		501.8
Non-current income tax liabilities, net	218.8		215.5
Other long-term liabilities	174.5		186.1

Total liabilities	2,982.3		2,587.4
Commitments and contingencies
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 62.9 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	0.6		0.6
Capital in excess of par value	210.8		204.6
Retained earnings	1,848.3		1,836.7
Accumulated other comprehensive loss	(120.3)		(132.6)
Total World Fuel shareholders' equity	1,939.5		1,909.3
Noncontrolling interest	3.5		3.6
Total equity	1,943.0		1,912.9
Total liabilities and equity	$	4,925.4	$	4,500.3


	For the Three Months Ended
	March 31,
	2021		2020
Revenue	$	5,957.9	$	8,015.2
Cost of revenue	5,766.3		7,756.4
Gross profit	191.6		258.7
Operating expenses:
Compensation and employee benefits	92.5		102.5
General and administrative	59.4		83.7
Restructuring charges	2.1		1.7
	154.0		187.9
Income from operations	37.6		70.8
Non-operating income (expenses), net:
Interest expense and other financing costs, net	(8.7)		(15.4)
Other income (expense), net	(1.2)		2.2
	(10.0)		(13.2)
Income (loss) before income taxes	27.6		57.6
Provision for income taxes	8.8		16.0
Net income (loss) including noncontrolling interest	18.8		41.6
Net income (loss) attributable to noncontrolling interest	—		0.2
Net income (loss) attributable to World Fuel	$	18.9	$	41.4

Basic earnings per common share	$	0.30	$	0.64

Basic weighted average common shares	63.0		64.9

Diluted earnings per common share	$	0.30	$	0.63

Diluted weighted average common shares	63.6		65.4

Comprehensive income:
Net income (loss) including noncontrolling interest	$	18.8	$	41.6
Other comprehensive income (loss):
Foreign currency translation adjustments	(4.0)		(33.0)
Cash flow hedges, net of income tax expense of $5.6 and expense of $7.4 for the three months ended March 31, 2021 and 2020, respectively	16.4		21.7
Other comprehensive income (loss)	12.4		(11.3)
Comprehensive income (loss) including noncontrolling interest	31.2		30.4
Comprehensive income (loss) attributable to noncontrolling interest	—		—
Comprehensive income (loss) attributable to World Fuel	$	31.2	$	30.4


	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total World Fuel Shareholders' Equity		Noncontrolling Interest Equity
	Shares	Amount												Total Equity
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 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


	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total World Fuel Shareholders' Equity		Noncontrolling Interest Equity
	Shares	Amount												Total Equity
Balance as of December 31, 2019	65.2	$	0.7	$	274.7	$	1,761.3	$	(146.3)	$	1,890.4	$	3.5	$	1,893.9
Cumulative effect of change in accounting principle	—	—		—		(11.1)		—		(11.1)		—		(11.1)
Net income (loss)	—	—		—		41.4		—		41.4		0.2		41.6
Cash dividends declared	—	—		—		(6.5)		—		(6.5)		—		(6.5)
Amortization of share-based payment awards	—	—		(1.8)		—		—		(1.8)		—		(1.8)
Issuance (cancellation) of common stock related to share-based payment awards	0.2	—		1.2		—		—		1.2		—		1.2
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards	—	—		(1.5)		—		—		(1.5)		—		(1.5)
Purchases of common stock	(2.2)	—		(55.6)		—		—		(55.6)		—		(55.6)
Other comprehensive income (loss)	—	—		—		—		(11.3)		(11.3)		—		(11.3)
Other	—	(0.1)		1.2		—		—		1.2		—		1.2
Balance as of March 31, 2020	63.2	$	0.6	$	218.2	$	1,785.1	$	(157.5)	$	1,846.4	$	3.7	$	1,850.1


☒			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
Balance as of December 31, 2020	$	57.3
Charges to allowance for credit losses	3.6
Write-off of uncollectible receivables	(13.8)
Recoveries of credit losses	0.4

Balance as of March 31, 2021	$	47.5


		Gross Derivative Assets				Gross Derivative Liabilities
		As of				As of
		March 31,		December 31,		March 31,		December 31,
		2021		2020		2021		2020
Derivative Instruments	Consolidated Balance Sheets location
Derivatives designated as hedging instruments
Commodity contracts	Short-term derivative assets, net	$	161.3	$	124.9	$	183.9	$	120.7

	Accrued expenses and other current liabilities	2.3		1.0		4.4		2.3
	Other long-term liabilities	—		0.1		—		0.5
		163.6		126.0		188.3		123.5


Interest rate contracts	Identifiable intangible and other non-current assets	2.8		—		—		—
	Accrued expenses and other current liabilities	—		—		1.3		1.3
	Other long-term liabilities	—		—		—		2.4

Total derivatives designated as hedging instruments		166.4		126.0		189.6		127.2

Derivatives not designated as hedging instruments
Commodity contracts	Short-term derivative assets, net	173.0		164.9		97.5		102.7
	Identifiable intangible and other non-current assets	31.4		32.1		8.9		7.9
	Accrued expenses and other current liabilities	27.8		30.5		76.5		68.4
	Other long-term liabilities	15.1		17.5		20.6		23.5
		247.3		245.0		203.6		202.5

Foreign currency contracts	Short-term derivative assets, net	8.4		—		2.4		—

	Accrued expenses and other current liabilities	1.0		7.5		5.0		19.6
	Other long-term liabilities	—		—		—		0.2
Total derivatives not designated as hedging instruments		256.8		252.5		211.0		222.3

Total derivatives		$	423.2	$	378.5	$	400.6	$	349.5


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)
	As of				As of
	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Inventory	$	34.9	$	44.5	$	5.9	$	4.9


		Location and Amount of Gain and (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
		For the Three Months Ended
		March 31, 2021						March 31, 2020
		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		$	5,957.9	$	5,766.3	$	11.1	$	8,015.2	$	7,756.4	$	16.2
Gains (Losses) on fair value hedge relationships:
Commodity contracts:
	Hedged Item	—		12.0		—		—		(23.2)		—
	Derivatives designated as hedging instruments	—		(8.4)		—		—		18.5		—

Gains (Losses) on cash flow hedge relationships:
Commodity contracts:
	Amount of Gain (Loss) Reclassified from AOCI into Income	(11.7)		21.0		—		14.0		(1.2)		—
Interest rate contracts:
	Amount of Gain (Loss) Reclassified from AOCI into Income	—		—		(0.2)		—		—		—

Total amount of income and expense line items excluding the impact of hedges		$	5,969.6	$	5,791.0	$	10.8	$	8,001.1	$	7,750.5	$	16.2


Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income	For the Three Months Ended				Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	For the Three Months Ended
	March 31,					March 31,
Derivative Instruments	2021		2020		Location	2021		2020

Commodity contracts	$	(62.8)	$	334.1	Revenue	$	(11.7)	$	14.0
Commodity contracts	84.6		(297.7)		Cost of revenue	21.0		(1.2)
Interest rate contracts	3.6		(1.5)		Interest expense and other financing costs, net	(0.2)		—
Total Gain (Loss)	$	25.5	$	34.9	Total Gain (Loss)	$	9.1	$	12.9


Amount of Realized and Unrealized Gain (Loss)		For the Three Months Ended
			March 31,
Derivative Instruments - Non-designated	Location		2021		2020
Commodity contracts
	Revenue		$	(303.8)	$	79.1
	Cost of revenue		313.0		15.4
			9.2		94.5
Foreign currency contracts
	Revenue		0.4		0.5
	Other (expense), net		3.3		18.5
			3.7		18.9
Total Gain (Loss)			$	12.9	$	113.5


	Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features
	As of March 31, 2021		As of December 31, 2020
Net derivative liability positions with credit contingent features	$	5.2	$	20.0
Collateral posted and held by our counterparties	—		—
Maximum additional potential collateral requirements	$	5.2	$	20.0


	Fair Value Measurements as of March 31, 2021
		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Commodities contracts		$	290.1	$	115.8	$	5.0	$	410.9
Foreign currency contracts		—		9.5		—		9.5
Interest rate contract		—		2.8		—		2.8
Cash surrender value of life insurance		—		12.5		—		12.5
Total assets at fair value		$	290.1	$	140.6	$	5.0	$	435.7

Liabilities:
Commodities contracts		$	277.3	$	109.6	$	5.0	$	391.9
Interest rate contract		—		1.3		—		1.3
Foreign currency contracts		—		7.4		—		7.4
Total liabilities at fair value		$	277.3	$	118.3	$	5.0	$	400.6

	Fair Value Measurements as of December 31, 2020
		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Commodities contracts		$	233.5	$	127.9	$	9.5	$	371.0
Foreign currency contracts		—		7.5		—		7.5
Cash surrender value of life insurance		—		11.4		—		11.4
Total assets at fair value		$	233.5	$	146.8	$	9.5	$	389.9

Liabilities:
Commodities contracts		$	223.0	$	96.8	$	6.3	$	326.0
Interest rate contract		—		3.7		—		3.7
Foreign currency contracts		—		19.8		—		19.8
Total liabilities at fair value		$	223.0	$	120.2	$	6.3	$	349.5


	For the Three Months Ended
	March 31,
	2021		2020
Aviation	$	121.4	$	252.3
Land	5.6		4.7
Marine	718.8		924.6
Asia Pacific	845.7		1,181.7

Aviation	266.9		638.9
Land	609.9		618.2
Marine	487.2		611.2
EMEA	1,363.9		1,868.3

Aviation	349.1		560.7
Land	122.7		130.4
Marine	125.6		233.3
LATAM	597.3		924.5

Aviation	1,431.3		2,126.8
Land	1,460.5		1,329.4
Marine	255.6		342.1
North America	3,147.4		3,798.3

Other revenues (excluded from ASC 606) (1)	3.5		242.3

	$	5,957.9	$	8,015.2


	For the Three Months Ended
	March 31,
Revenue:	2021		2020
Aviation segment	$	2,095.0	$	3,764.1
Land segment	2,188.2		2,106.0
Marine segment	1,674.7		2,145.0
	$	5,957.9	$	8,015.2

Gross profit:
Aviation segment	$	76.7	$	93.2
Land segment	89.5		106.3
Marine segment	25.4		59.3
	$	191.6	$	258.7








Income from operations:
Aviation segment	$	23.0	$	29.1
Land segment	32.8		25.7
Marine segment	6.4		33.9
	62.1		88.6
Corporate overhead - unallocated	(24.5)		(17.8)
	$	37.6	$	70.8


	For the Three Months Ended
	March 31,
	2021		2020		$ Change
Aviation segment	$	2,095.0	$	3,764.1	$	(1,669.1)
Land segment	2,188.2		2,106.0		82.2
Marine segment	1,674.7		2,145.0		(470.3)
	$	5,957.9	$	8,015.2	$	(2,057.3)


	For the Three Months Ended
	March 31,
	2021		2020		$ Change
Aviation segment	$	76.7	$	93.2	$	(16.5)
Land segment	89.5		106.3		(16.8)
Marine segment	25.4		59.3		(33.9)
	$	191.6	$	258.7	$	(67.2)


	Fair Value as of March 31, 2021
										Gross Amounts
		Gross Amounts		Gross Amounts		Net Amounts		Cash		without
		Recognized		Offset		Presented		Collateral		Right of Offset		Net Amounts
Assets:
Commodities contracts		$	410.9	$	339.9	$	71.0	$	—	$	—	$	71.0
Interest rate contract		2.8		—		2.8		—		—		2.8
Foreign currency contracts		9.5		3.5		6.0		—		—		6.0
Total assets at fair value		$	423.2	$	343.4	$	79.8	$	—	$	—	$	79.8

Liabilities:
Commodities contracts		$	391.9	$	339.9	$	52.0	$	2.0	$	—	$	50.0
Interest rate contract		1.3		—		1.3		—		—		1.3
Foreign currency contracts		7.4		3.5		3.9		—		—		3.9
Total liabilities at fair value		$	400.6	$	343.4	$	57.2	$	2.0	$	—	$	55.1


	Fair Value as of December 31, 2020
										Gross Amounts
		Gross Amounts		Gross Amounts		Net Amounts		Cash		without
		Recognized		Offset		Presented		Collateral		Right of Offset		Net Amounts
Assets:
Commodities contracts		$	371.0	$	287.1	$	83.9	$	1.2	$	—	$	82.7

Foreign currency contracts		7.5		7.5		—		—		—		—
Total assets at fair value		$	378.5	$	294.6	$	83.9	$	1.2	$	—	$	82.7

Liabilities:
Commodities contracts		$	326.0	$	287.1	$	38.9	$	2.3	$	—	$	36.6
Interest rate contract		3.7		—		3.7		—		—		3.7
Foreign currency contracts		19.8		7.5		12.3		—		—		12.3
Total liabilities at fair value		$	349.5	$	294.6	$	54.9	$	2.3	$	—	$	52.6


	As of
	March 31,		December 31
	2021		2020
Accounts receivable, net:
Aviation segment, net of allowance for credit losses of $31.0 and $41.2 as of March 31, 2021 and December 31, 2020, respectively	$	570.0	$	464.7
Land segment, net of allowance for credit losses of $4.6 and $5.0 as of March 31, 2021 and December 31, 2020, respectively	520.9		394.5
Marine segment, net of allowance for credit losses of $8.2 and $7.6 as of March 31, 2021 and December 31, 2020, respectively	578.4		379.2
	$	1,669.2	$	1,238.4
Total assets:
Aviation segment	$	1,868.5	$	1,789.5
Land segment	1,598.0		1,459.5
Marine segment	902.7		667.6
Corporate	556.1		583.7
	$	4,925.4	$	4,500.3


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)
1/1/2021 - 1/31/2021	—	$	—	—	$	246,258
2/1/2021 - 2/28/2021	4	34.30		—	246,258
3/1/2021 - 3/31/2021	—	—		—	246,258
Total	4	$	34.30	—	$	246,258


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, 2021, 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 30, 2021			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