World Kinect(US:WKC)2021-10-29 19:46markdown [Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This part provides the unaudited financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, statements of shareholders' equity, and cash flow statements, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, at specific dates Condensed Consolidated Balance Sheets (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | Change ($) | Change (%) | | :----------------------------------- | :----------- | :----------- | :--------- | :--------- | | Total Assets | $5,544.3 | $4,500.3 | $1,044.0 | 23.2% | | Current Assets | $3,693.2 | $2,639.3 | $1,053.9 | 39.9% | | Cash and cash equivalents | $796.0 | $658.8 | $137.2 | 20.8% | | Accounts receivable, net | $2,032.5 | $1,238.4 | $794.1 | 64.1% | | Inventories | $439.3 | $344.3 | $95.0 | 27.6% | | Total Liabilities | $3,620.5 | $2,587.4 | $1,033.1 | 39.9% | | Current Liabilities | $2,696.5 | $1,684.0 | $1,012.5 | 60.1% | | Accounts payable | $2,024.3 | $1,214.7 | $809.6 | 66.7% | | Total Equity | $1,923.8 | $1,912.9 | $10.9 | 0.6% | [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Details the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Income (in millions, except per share data) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Revenue | $8,350.9 | $4,482.7 | $3,868.2 | 86.3% | | Gross profit | $197.5 | $214.0 | $(16.5) | -7.7% | | Income from operations | $41.7 | $38.8 | $2.9 | 7.5% | | Net income attributable to World Fuel | $21.7 | $82.0 | $(60.3) | -73.5% | | Diluted earnings per common share | $0.34 | $1.29 | $(0.95) | -73.6% | | Metric | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Revenue | $21,394.2 | $15,656.2 | $5,738.0 | 36.6% | | Gross profit | $573.0 | $686.6 | $(113.6) | -16.5% | | Income from operations | $110.2 | $121.5 | $(11.3) | -9.3% | | Net income attributable to World Fuel | $58.2 | $113.1 | $(54.9) | -48.5% | | Diluted earnings per common share | $0.92 | $1.76 | $(0.84) | -47.7% | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Outlines changes in the company's equity, reflecting net income, dividends, and stock transactions Shareholders' Equity Changes (in millions) | Metric | Dec 31, 2020 | Sep 30, 2021 | | :----------------------------------- | :----------- | :----------- | | Total World Fuel shareholders' equity | $1,909.3 | $1,919.7 | **Key Activities (9 Months Ended Sep 30, 2021):** * Net income: $58.2 million * Cash dividends declared: $(22.6) million (3 x $7.5M/$7.6M) * Amortization of share-based payment awards: $15.3 million * Purchases of common stock: $(24.4) million * Other comprehensive income (loss): $(11.0) million - The Company declared quarterly cash dividends of **$0.12** per common share for the nine months ended September 30, 2021, totaling **$22.6 million**, an increase from **$0.10** per common share (**$19.1 million** total) in the prior year period[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (9 Months Ended Sep 30, in millions) | Cash Flow Category | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Net cash provided by operating activities | $223.3 | $490.6 | $(267.3) | -54.5% | | Net cash used in investing activities | $(9.8) | $86.9 | $(96.7) | -111.3% | | Net cash used in financing activities | $(70.3) | $(188.8) | $118.5 | 62.8% | | Net increase in cash and cash equivalents | $137.2 | $386.0 | $(248.8) | -64.5% | | Cash and cash equivalents, end of period | $796.0 | $572.0 | $224.0 | 39.2% | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Basis of Presentation, New Accounting Standards, and Significant Accounting Policies](index=9&type=section&id=1.%20Basis%20of%20Presentation,%20New%20Accounting%20Standards,%20and%20Significant%20Accounting%20Policies) Explains the foundational principles, new accounting standards, and significant policies used in financial reporting - World Fuel Services Corporation is a global fuel services company distributing fuel and related products in aviation, land, and marine transportation industries, with an intention to become a leading global energy management company offering sustainability and renewable energy solutions[23](index=23&type=chunk) - The COVID-19 pandemic significantly impacted global economy and transportation industries, leading to a substantial decline in business activity for many customers, especially commercial airlines, though travel and economic activity have begun to improve in certain regions[26](index=26&type=chunk) - No accounting standards adopted in **2021** had a material impact on the financial statements The Company is evaluating the impact of Reference Rate Reform (LIBOR transition) but does not anticipate a material impact[27](index=27&type=chunk)[28](index=28&type=chunk) [2. Accounts Receivable](index=10&type=section&id=2.%20Accounts%20Receivable) Details the composition of accounts receivable and the allowance for expected credit losses Accounts Receivable and Allowance for Credit Losses (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------- | :----------- | :----------- | | Accounts receivable | $2,032.5 | $1,238.4 | | Allowance for expected credit losses | $29.2 | $57.3 | Allowance for Expected Credit Losses Activity (9 Months Ended Sep 30, in millions) | Activity | 2021 | 2020 | | :----------------------------------- | :----- | :----- | | Balance as of January 1 | $57.3 | $46.6 | | Charges to allowance for credit losses | $2.8 | $57.9 | | Write-off of uncollectible receivables | $(32.4) | $(53.1) | | Balance as of September 30 | $29.2 | $51.8 | - The Company sold receivables with an aggregate face value of **$6.8 billion** during the nine months ended September 30, 2021, compared to **$2.6 billion** in the same period of 2020, incurring fees of **$14.6 million** and **$6.8 million**, respectively[36](index=36&type=chunk) [3. Acquisitions and Divestitures](index=11&type=section&id=3.%20Acquisitions%20and%20Divestitures) Reports on significant business acquisitions and dispositions, including their financial impact - The Company entered into a definitive agreement on October 28, 2021, to acquire Flyers Energy Group for **$773 million**, with closing expected within **60** to **90** days[37](index=37&type=chunk) - In Q1 2020, the Company acquired the UVair fuel business for **$159.0 million**[38](index=38&type=chunk) - The sale of the Multi Service payment solutions business (MSTS) on September 30, 2020, generated gross cash proceeds of **$303.5 million** at closing and a pre-tax gain of **$80.0 million**[39](index=39&type=chunk) [4. Derivative Instruments](index=11&type=section&id=4.%20Derivative%20Instruments) Describes the company's use of derivative financial instruments for risk management purposes - The Company uses derivative instruments for risk management, including fair value hedges (inventory price risk), cash flow hedges (price and interest rate volatility), and non-designated derivatives (market price fluctuations, currency rate hedging)[40](index=40&type=chunk)[41](index=41&type=chunk) Gross Notional Values of Derivative Contracts (Sep 30, 2021, in millions) | Contract Type | Unit | Value | | :-------------------------- | :--- | :---- | | Commodity contracts (Long) | BBL | 54.8 | | Commodity contracts (Short) | BBL | (48.9) | | Foreign currency (Sell USD) | USD | (171.9) | | Foreign currency (Buy USD) | USD | 254.1 | | Interest rate swap | USD | 300.0 | Total Gross Fair Value of Derivative Instruments (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------- | :----------- | :----------- | | Total derivatives assets | $765.3 | $378.5 | | Total derivatives liabilities | $783.1 | $349.0 | [5. Debt, Interest Income, Expense, and Other Finance Costs](index=15&type=section&id=5.%20Debt,%20Interest%20Income,%20Expense,%20and%20Other%20Finance%20Costs) Outlines the company's outstanding debt, interest income, and related finance costs Outstanding Debt (in millions) | Debt Type | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------- | :----------- | :----------- | | Term loans | $490.5 | $503.2 | | Finance leases | $20.4 | $18.0 | | Other | $3.4 | $3.0 | | Total debt | $514.3 | $524.2 | | Long-term debt | $484.2 | $501.8 | Interest Income (Expense), Net (in millions) | Period | 2021 | 2020 | | :----------------------------------- | :----- | :----- | | 3 Months Ended Sep 30 | $(10.4) | $(8.7) | | 9 Months Ended Sep 30 | $(29.2) | $(34.1) | [6. Fair Value Measurements](index=15&type=section&id=6.%20Fair%20Value%20Measurements) Presents assets and liabilities measured at fair value and the methodologies used for valuation Total Assets at Fair Value (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------- | :----------- | :----------- | | Commodities contracts | $758.4 | $371.0 | | Foreign currency contracts | $4.5 | $7.5 | | Interest rate contract | $2.4 | $0.0 | | Total assets at fair value | $779.4 | $389.9 | Total Liabilities at Fair Value (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------- | :----------- | :----------- | | Commodities contracts | $777.8 | $326.0 | | Interest rate contract | $1.3 | $3.7 | | Foreign currency contracts | $4.0 | $19.8 | | Total liabilities at fair value | $783.1 | $349.5 | - The Company's individual over-the-counter (OTC) counterparty exposure is managed within predetermined credit limits As of September 30, 2021, two counterparties represented over **10%** of the credit exposure to OTC derivative counterparties, totaling **$51.9 million**[58](index=58&type=chunk) - An asset impairment of **$4.7 million** was recognized during the nine months ended September 30, 2021, related to certain long-lived assets within the land segment, measured using an income approach (Level 3 inputs)[59](index=59&type=chunk) [7. Revenue from Contracts with Customers](index=18&type=section&id=7.%20Revenue%20from%20Contracts%20with%20Customers) Provides a breakdown of revenue generated from contracts with customers by geographic area Revenue by Geographic Area (in millions) | Region | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Asia Pacific | $1,071.4 | $610.8 | $2,804.6 | $2,339.9 | | EMEA | $1,863.7 | $1,096.1 | $4,706.6 | $3,721.1 | | LATAM | $882.3 | $354.5 | $2,203.9 | $1,534.4 | | North America | $4,578.1 | $2,260.5 | $11,709.9 | $7,478.1 | | Other revenues (excluded from ASC 606) | $(44.7) | $160.8 | $(30.8) | $582.8 | | **Total Revenue** | **$8,350.9** | **$4,482.7** | **$21,394.2** | **$15,656.2** | [8. Income Taxes](index=18&type=section&id=8.%20Income%20Taxes) Details the company's income tax provision, effective tax rates, and significant tax contingencies Income Tax Provision and Effective Rate (in millions, except rates) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income tax provision | $10.0 | $25.4 | $20.8 | $49.0 | | Effective income tax rate | 30.9% | 23.5% | 26.1% | 30.2% | - The 3-month effective tax rate increased to **30.9%** in **2021** from **23.5%** in **2020**, primarily due to a **$1.1 million** net discrete tax benefit in **2021** compared to a **$16.1 million** tax expense on the MSTS sale and a **$2.7 million** net discrete tax expense in **2020**[62](index=62&type=chunk) - The Company is currently appealing tax assessments in Denmark (approx **$15.0 million** for **2015**) and South Korea (revised aggregate **$9.0 million** for **2011-2014**), believing them to be without merit[66](index=66&type=chunk)[67](index=67&type=chunk) [9. Business Segments](index=19&type=section&id=9.%20Business%20Segments) Reports financial performance and assets for the company's distinct operating segments Revenue by Reportable Segment (in millions) | Segment | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Aviation | $3,579.7 | $1,596.2 | $8,480.5 | $6,381.0 | | Land | $2,670.4 | $1,645.2 | $7,315.8 | $4,948.8 | | Marine | $2,100.7 | $1,241.2 | $5,597.8 | $4,326.4 | | **Total Revenue** | **$8,350.9** | **$4,482.7** | **$21,394.2** | **$15,656.2** | Gross Profit by Reportable Segment (in millions) | Segment | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Aviation | $113.0 | $97.6 | $277.1 | $282.6 | | Land | $62.6 | $84.3 | $225.9 | $275.4 | | Marine | $21.9 | $32.0 | $70.0 | $128.6 | | **Total Gross Profit** | **$197.5** | **$214.0** | **$573.0** | **$686.6** | Income from Operations by Reportable Segment (in millions) | Segment | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Aviation | $57.0 | $29.2 | $114.0 | $67.3 | | Land | $3.7 | $18.8 | $44.5 | $54.1 | | Marine | $3.6 | $8.2 | $14.8 | $55.4 | | Corporate overhead - unallocated | $(22.6) | $(17.4) | $(63.1) | $(55.3) | | **Total Income from Operations** | **$41.7** | **$38.8** | **$110.2** | **$121.5** | Total Assets by Reportable Segment (in millions) | Segment | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------- | :----------- | :----------- | | Aviation | $2,222.8 | $1,789.5 | | Land | $1,780.3 | $1,459.5 | | Marine | $981.2 | $667.6 | | Corporate | $560.1 | $583.7 | | **Total Assets** | **$5,544.3** | **$4,500.3** | [10. Earnings per Common Share](index=21&type=section&id=10.%20Earnings%20per%20Common%20Share) Calculates basic and diluted earnings per common share based on net income and outstanding shares Earnings per Common Share (in millions, except per share amounts) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to World Fuel | $21.7 | $82.0 | $58.2 | $113.1 | | Basic earnings per common share | $0.34 | $1.29 | $0.92 | $1.77 | | Diluted earnings per common share | $0.34 | $1.29 | $0.92 | $1.76 | | Weighted average common shares for basic EPS | 63.0 | 63.4 | 63.1 | 63.9 | | Weighted average common shares for diluted EPS | 63.3 | 63.6 | 63.6 | 64.1 | [11. Commitments and Contingencies](index=21&type=section&id=11.%20Commitments%20and%20Contingencies) Discloses the company's contractual obligations, legal claims, and potential liabilities - The Company is involved in various claims and proceedings in the ordinary course of business, including environmental, commercial, and governmental contract claims, for which loss provisions are established when probable and estimable[73](index=73&type=chunk) - The Company is under review by tax authorities in Brazil, Denmark, South Korea, and the U.S. for income and indirect tax matters, with material amounts under controversy, which the Company is appealing[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) [12. Restructuring](index=22&type=section&id=12.%20Restructuring) Details the company's restructuring initiatives, including their purpose and associated costs - The Company implemented a restructuring initiative in **2020**, heightened in **2021**, focusing on streamlining operations and rationalizing resource deployment, particularly in the North American land business[78](index=78&type=chunk) - The restructuring plan was expanded to finalize alignment of processes and platforms within the land segment for greater scalability and integration of new businesses, with an expected completion by Q1 **2022**[78](index=78&type=chunk) - Incremental restructuring charges of **$6.8 million** were incurred during the nine months ended September 30, 2021, primarily for consulting fees and severance costs, with an additional **$4.0 million** to **$6.0 million** expected by Q1 **2022**[79](index=79&type=chunk)[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including an overview of the business, segment performance, and a detailed comparison of financial results for the three and nine months ended September 30, 2021, against the prior year, along with discussions on liquidity, capital resources, and critical accounting estimates [Forward-Looking Statements](index=23&type=section&id=Forward-Looking%20Statements) Highlights statements about future expectations and potential risks that could affect actual results - The report contains forward-looking statements regarding future results, performance, or achievements, qualified by cautionary statements and risk factors disclosed in SEC filings[83](index=83&type=chunk) - Key factors that could cause actual results to differ materially include customer creditworthiness, the impact of the COVID-19 pandemic, adverse industry conditions, sudden changes in fuel prices, compliance with debt covenants, and changes in the political, economic, or regulatory environment[85](index=85&type=chunk)[87](index=87&type=chunk) [Business Overview](index=25&type=section&id=Business%20Overview) Provides a general description of the company's operations, industry, and strategic direction - World Fuel Services Corporation is a global fuel services company in aviation, land, and marine transportation, expanding into energy advisory, management, and fulfillment services, technology solutions, payment management, and sustainability offerings[88](index=88&type=chunk) - The COVID-19 pandemic significantly impacted the global economy and transportation industries, causing a sharp decline in demand and sales, particularly in commercial airlines, with demand remaining below pre-pandemic levels[89](index=89&type=chunk)[90](index=90&type=chunk) [Reportable Segments](index=25&type=section&id=Reportable%20Segments) Describes the performance and key developments within each of the company's operating segments [Aviation Segment](index=25&type=section&id=Aviation%20Segment) Focuses on the performance and market conditions impacting the company's aviation fuel services business - The aviation segment experienced a material volume decline in commercial aviation due to global travel restrictions and decreased demand from the COVID-19 pandemic, though some improvements in demand have begun[94](index=94&type=chunk) - Sales to government customers, particularly NATO in Afghanistan, materially declined in **2020** and **2021** due to troop reductions and final withdrawal in Q3 **2021**, impacting segment profitability[95](index=95&type=chunk) [Land Segment](index=26&type=section&id=Land%20Segment) Examines the performance and strategic initiatives within the company's land fuel distribution business - North American retail operations saw increased volumes in late **2020** and **2021** as economic activity resumed, while the UK home heating oil business experienced decreased demand in **2021**[96](index=96&type=chunk) - The land segment's restructuring initiative in North America was expanded to align processes and platforms for greater scalability and integration of new businesses, with an expected completion by Q1 **2022** and additional charges of **$4.0 million** to **$6.0 million**[97](index=97&type=chunk) [Marine Segment](index=26&type=section&id=Marine%20Segment) Reviews the performance and market dynamics affecting the company's marine fuel services business - The marine segment initially benefited from IMO **2020** regulations and price volatility in early **2020** but experienced a material decline in volume and profitability from late Q1 **2020** through **2021** due to the COVID-19 pandemic, uncertain demand from cruise lines, and competitive market conditions[98](index=98&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance over specific periods, comparing current to prior year results [Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020](index=26&type=section&id=Three%20Months%20Ended%20September%2030,%202021%20Compared%20to%20Three%20Months%20Ended%20September%2030,%202020) Compares the company's financial results for the third quarter of 2021 against the same period in the prior year Revenue (3 Months Ended Sep 30, in millions) | Segment | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Aviation | $3,579.7 | $1,596.2 | $1,983.5 | 124% | | Land | $2,670.4 | $1,645.2 | $1,025.2 | 62% | | Marine | $2,100.7 | $1,241.2 | $859.5 | 69% | | **Total Revenue** | **$8,350.9** | **$4,482.7** | **$3,868.1** | **86%** | Gross Profit (3 Months Ended Sep 30, in millions) | Segment | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Aviation | $113.0 | $97.6 | $15.4 | 16% | | Land | $62.6 | $84.3 | $(21.7) | -26% | | Marine | $21.9 | $32.0 | $(10.2) | -32% | | **Total Gross Profit** | **$197.5** | **$214.0** | **$(16.5)** | **-8%** | Income from Operations (3 Months Ended Sep 30, in millions) | Segment | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Aviation | $57.0 | $29.2 | $27.8 | 95% | | Land | $3.7 | $18.8 | $(15.1) | -80% | | Marine | $3.6 | $8.2 | $(4.6) | -56% | | Corporate overhead - unallocated | $(22.6) | $(17.4) | $(5.2) | 30% | | **Total Income from Operations** | **$41.7** | **$38.8** | **$2.9** | **7%** | - Total operating expenses decreased by **$19.4 million** (**11%**) to **$155.8 million**, primarily due to a **$22.9 million** (**98%**) decrease in the provision for credit losses, partially offset by increased compensation and employee benefits[106](index=106&type=chunk) - Net non-operating expenses were **$9.4 million** in Q3 **2021**, a decrease of **$78.4 million** compared to net non-operating income of **$69.0 million** in Q3 **2020**, primarily due to the gain on the sale of MSTS in the prior year[111](index=111&type=chunk) [Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020](index=28&type=section&id=Nine%20Months%20Ended%20September%2030,%202021%20Compared%20to%20Nine%20Months%20Ended%20September%2030,%202020) Compares the company's financial results for the first nine months of 2021 against the same period in the prior year Revenue (9 Months Ended Sep 30, in millions) | Segment | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Aviation | $8,480.5 | $6,381.0 | $2,099.6 | 33% | | Land | $7,315.8 | $4,948.8 | $2,367.0 | 48% | | Marine | $5,597.8 | $4,326.4 | $1,271.4 | 29% | | **Total Revenue** | **$21,394.2** | **$15,656.2** | **$5,738.0** | **37%** | Gross Profit (9 Months Ended Sep 30, in millions) | Segment | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Aviation | $277.1 | $282.6 | $(5.6) | -2% | | Land | $225.9 | $275.4 | $(49.5) | -18% | | Marine | $70.0 | $128.6 | $(58.6) | -46% | | **Total Gross Profit** | **$573.0** | **$686.6** | **$(113.6)** | **-17%** | Income from Operations (9 Months Ended Sep 30, in millions) | Segment | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Aviation | $114.0 | $67.3 | $46.7 | 70% | | Land | $44.5 | $54.1 | $(9.6) | -18% | | Marine | $14.8 | $55.4 | $(40.7) | -73% | | Corporate overhead - unallocated | $(63.1) | $(55.3) | $(7.7) | 14% | | **Total Income from Operations** | **$110.2** | **$121.5** | **$(11.3)** | **-9%** | - Total operating expenses decreased by **$102.4 million** (**18%**) to **$462.7 million**, driven by a **$55.1 million** (**95%**) decrease in the provision for credit losses and a **$15.9 million** (**5%**) decrease in employee compensation costs, partially offset by increased compensation and restructuring expenses[121](index=121&type=chunk) - Net non-operating expense was **$30.7 million** in the first nine months of **2021**, a decrease of **$71.7 million** compared to net non-operating income of **$41.0 million** in the prior year, primarily due to the gain on the sale of MSTS in **2020**[127](index=127&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's ability to meet its short-term and long-term financial obligations and funding sources - The Company's liquidity is influenced by customer receipts, supplier payments, fuel prices, and financial performance, which impacts availability under its Credit Facility[130](index=130&type=chunk) - Despite the adverse impact of COVID-19, the Company believes its cash, cash equivalents, and Credit Facility funds are sufficient for working capital and capital expenditures for at least the next twelve months[133](index=133&type=chunk) [Cash Flows](index=32&type=section&id=Cash%20Flows) Analyzes the sources and uses of cash from operating, investing, and financing activities Major Categories of Cash Flows (9 Months Ended Sep 30, in millions) | Cash Flow Category | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Net cash provided by operating activities | $223.3 | $490.6 | $(267.3) | -54.5% | | Net cash used in investing activities | $(9.8) | $86.9 | $(96.7) | -111.3% | | Net cash used in financing activities | $(70.3) | $(188.8) | $118.5 | 62.8% | - The decrease in operating cash flow was primarily due to a **$182.4 million** decrease in working capital (excluding cash) and a **$38.2 million** decrease in net income, net of noncash adjustments[135](index=135&type=chunk) - Investing cash flow decreased by **$96.7 million**, driven by business acquisition and divestiture activities in **2020** (MSTS sale proceeds of **$268.4M**, UVair acquisition of **$128.6M**) and a decrease in capital expenditures[136](index=136&type=chunk) [Other Liquidity Measures](index=32&type=section&id=Other%20Liquidity%20Measures) Presents additional metrics and resources available to manage the company's liquidity needs Key Liquidity Metrics (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :----------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $796.0 | $658.8 | | Term Loans outstanding | $490.5 | $503.2 | | Unused portion of Credit Facility | $1,300.0 | $1,300.0 | | Outstanding letters of credit & bank guarantees (other lines) | $383.0 | $328.4 | - The Company was in compliance with all financial covenants under its Credit Facility and Term Loans as of September 30, 2021[142](index=142&type=chunk) - Receivables purchase agreements (RPAs) allowed for the sale of **$6.8 billion** in receivables during the nine months ended September 30, 2021, compared to **$2.6 billion** in **2020**, with associated fees of **$14.6 million** and **$6.8 million**, respectively[144](index=144&type=chunk) [Contractual Obligations and Off-Balance Sheet Arrangements](index=33&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) Details the company's future payment commitments and significant off-balance sheet financial arrangements - Net derivative obligations were **$278.1 million** as of September 30, 2021, principally due within one year[147](index=147&type=chunk) - Fixed purchase commitments under derivative programs amounted to **$87.0 million**, with **$45.7 million** due within one year[147](index=147&type=chunk) - Issued letters of credit and bank guarantees totaled **$386.5 million** as of September 30, 2021, under the Credit Facility and other uncommitted credit lines[148](index=148&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) Identifies accounting policies requiring significant management judgment and their potential impact on financial results - Significant judgment is involved in impairment assessments of goodwill, long-lived assets, and equity investments, which are based on forecasted financial information and the current/future impact of COVID-19[151](index=151&type=chunk) - As of September 30, 2021, no material impairment of long-lived assets, intangibles, and equity method investments was recognized, and the fair value of land and aviation reporting units was not less than their carrying values[152](index=152&type=chunk) [Recent Accounting Pronouncements](index=34&type=section&id=Recent%20Accounting%20Pronouncements) Summarizes recently adopted or issued accounting standards and their expected impact on financial reporting - Information regarding new accounting pronouncements is included in Note **1**, indicating no material impact on the financial statements upon adoption[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States no material changes to the company's exposure to commodity price, interest rate, or foreign currency risk since December 31, 2020 - No material changes to exposures to commodity price, interest rate, or foreign currency risk have occurred since December 31, 2020[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Evaluates the effectiveness of disclosure controls and procedures and internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of September 30, 2021[157](index=157&type=chunk) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the three months ended September 30, 2021[158](index=158&type=chunk) [Part II. Other Information](index=35&type=section&id=Part%20II.%20Other%20Information) Presents additional disclosures not included in the financial statements, such as legal proceedings and equity sales [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Outlines the company's involvement in legal and tax disputes, assessing their potential financial impact - The Company is involved in various income and indirect tax matters under review by domestic and foreign tax authorities, including material disputes in Brazil, Denmark, South Korea, and the U.S[161](index=161&type=chunk) - The Company is also a party to ordinary course business claims (e.g., environmental, commercial contracts), but none are currently expected to have a material adverse effect on its business or financial condition[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on the company's common stock repurchase activities and remaining authorization Issuer Purchases of Equity Securities (3 Months Ended Sep 30, 2021, in thousands, except price) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Shares Purchased as Part of Publicly Announced Plans | Approximate Dollar Value Remaining Under Plans (in millions) | | :----------------------------------- | :--------------------- | :--------------------------- | :--------------------------------------------------------- | :--------------------------------------------------------- | | 7/1/2021 - 7/31/2021 | 250 | $30.62 | 250 | $238.6 | | 8/1/2021 - 8/31/2021 | 250 | $34.29 | 250 | $230.0 | | 9/1/2021 - 9/30/2021 | 250 | $32.68 | 250 | $221.9 | | **Total** | **750** | **$32.53** | **750** | **$221.9** | - As of September 30, 2021, approximately **$221.9 million** remains available for purchase under the Company's common stock repurchase programs, which have no expiration date[163](index=163&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Lists all supplementary documents and certifications filed as part of the report - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (**31.1**, **31.2**, **32.1**) and XBRL formatted financial statements (**101**, **104**)[165](index=165&type=chunk) [Signatures](index=37&type=section&id=Signatures) Authenticates the report with the formal endorsements of the company's principal executive and financial officers - The report is signed by Michael J. Kasbar, Chairman, President and Chief Executive Officer, and Ira M. Birns, Executive Vice President and Chief Financial Officer, on October 29, 2021[168](index=168&type=chunk)