World Kinect(WKC) - 2021 Q1 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section provides the unaudited Condensed Consolidated Financial Statements for Q1 2021 and 2020, encompassing balance sheets, income statements, equity, cash flows, and comprehensive explanatory notes Condensed Consolidated Balance Sheets Total assets increased to $4.93 billion by March 31, 2021, driven by a rise in accounts receivable, with total liabilities also growing due to increased accounts payable Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $3,064.5 | $2,639.3 | | Accounts receivable, net | $1,669.2 | $1,238.4 | | Total Assets | $4,925.4 | $4,500.3 | | Total Current Liabilities | $2,092.2 | $1,684.0 | | Accounts payable | $1,619.3 | $1,214.7 | | Total Liabilities | $2,982.3 | $2,587.4 | | Total Equity | $1,943.0 | $1,912.9 | Condensed Consolidated Statements of Income and Comprehensive Income Q1 2021 saw a significant year-over-year decline, with revenue decreasing by 25.7% to $5.96 billion and net income attributable to World Fuel dropping by 54.3% to $18.9 million Q1 2021 vs Q1 2020 Performance (in millions, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenue | $5,957.9 | $8,015.2 | | Gross Profit | $191.6 | $258.7 | | Income from Operations | $37.6 | $70.8 | | Net Income (attributable to World Fuel) | $18.9 | $41.4 | | Diluted Earnings Per Share | $0.30 | $0.63 | Condensed Consolidated Statements of Shareholders' Equity Total equity increased slightly to $1.94 billion by March 31, 2021, driven by net income and other comprehensive income, partially offset by cash dividends - Total equity rose to $1,943.0 million at the end of Q1 2021 from $1,912.9 million at the end of 2020[12] - The Board of Directors declared a quarterly cash dividend of $0.12 per common share, totaling $7.5 million, an increase from $0.10 per share ($6.5 million total) in the prior-year quarter[13] Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly improved to $103.4 million in Q1 2021, while investing activities used less cash and financing activities shifted from providing to using funds Cash Flow Summary (in millions) | Cash Flow Category | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $103.4 | $9.5 | | Net cash from investing activities | $(2.7) | $(149.0) | | Net cash from financing activities | $(20.8) | $507.0 | | Net increase in cash | $76.5 | $351.0 | Notes to the Condensed Consolidated Financial Statements These notes detail accounting policies, the COVID-19 impact, credit losses, derivatives, debt, taxes, and segment performance, providing context for the financial statements - The company's business continues to be impacted by the COVID-19 pandemic, particularly in transportation, leading to cost reduction, liquidity, and operating efficiency initiatives[26] - The allowance for credit losses decreased to $47.5 million as of March 31, 2021, from $57.3 million at year-end 2020, with write-offs of $13.8 million during the quarter[34][35] - The company is involved in several tax disputes, notably in Denmark, South Korea, and Brazil, which could materially adversely affect operating results if resolved unfavorably[57][63][65] - Restructuring initiatives, particularly focused on the land business in North America, incurred charges of $2.1 million in Q1 2021[69][70] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2021 performance, highlighting the pandemic's impact on aviation and marine segments, cost reductions, liquidity, and the expected decline in NATO sales in Afghanistan - The COVID-19 pandemic continues to significantly impact the global economy and transportation industries, leading to material volume declines in the company's commercial aviation business[81][84] - The company expects a material decline in sales to NATO in Afghanistan following the announcement of a final withdrawal of U.S. and NATO troops, which began on May 1, 2021[85] Q1 2021 vs Q1 2020 Key Metrics (in millions) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $5,957.9 | $8,015.2 | -26% | | Gross Profit | $191.6 | $258.7 | -26% | | Income from Operations | $37.6 | $70.8 | -47% | - Operating expenses decreased by 18% to $154.0 million, driven by ongoing cost-reduction initiatives, the sale of the MSTS business, and a 64% decrease in the provision for credit losses[98] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's exposures to commodity price, interest rate, or foreign currency risk have occurred since December 31, 2020 - The company reports no material changes to its market risk exposures, including commodity price, interest rate, or foreign currency risk, since the end of the previous fiscal year[130] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[133] - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2021[134] Part II. Other Information Item 1. Legal Proceedings The company is involved in various tax disputes in multiple countries with potentially material amounts, alongside other ordinary course claims not expected to be material - The company is under review by tax authorities in multiple jurisdictions, with potentially material amounts under controversy in Brazil, Denmark, South Korea, and the U.S[137] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased a negligible amount of common stock in Q1 2021, primarily for employee tax obligations, with $246.3 million remaining available for future repurchases - As of March 31, 2021, approximately $246.3 million remains available for future stock repurchases under the company's authorized programs[140] - No shares were repurchased during the quarter as part of the publicly announced plans or programs[139] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q report, including CEO and CFO certifications and financial statements in XBRL format - Exhibits filed with the report include CEO/CFO certifications (31.1, 31.2, 32.1) and XBRL data files (101, 104)[141] Signatures The Form 10-Q report was signed and authorized by CEO Michael J. Kasbar and CFO Ira M. Birns on April 30, 2021, on behalf of World Fuel Services Corporation - The Form 10-Q was signed on April 30, 2021, by CEO Michael J. Kasbar and CFO Ira M. Birns[144]