World Kinect(WKC) - 2025 Q1 - Quarterly Results

First Quarter 2025 Results Overview Key Financial and Operational Highlights World Kinect Corporation reported a GAAP net loss of $21 million and diluted EPS of $(0.37) for Q1 2025, a significant decrease year-over-year, while adjusted net income was $27 million, or $0.48 per diluted share, showing a slight increase in adjusted EPS, with gross profit decreasing by 9% to $230 million and strong operating cash flow of $114 million - GAAP net loss of $21 million, or $0.37 per diluted share, a significant decrease of 178% and 182% respectively year-over-year[4][5] - Adjusted net income of $27 million, or $0.48 per diluted share, with adjusted diluted EPS increasing by 2% year-over-year[4][5] - Gross profit decreased by 9% to $230 million[4][5] - Generated $114 million of operating cash flow[4] - Repurchased $10 million of common stock[4] - Adjusted EBITDA of $80 million, a decrease of 6% year-over-year[4][5] Strategic Actions: Divestiture and Restructuring The company completed the sale of its U.K. land fuels business on April 9, 2025, resulting in a $44.5 million asset impairment charge and an expected additional pre-tax loss of $65 million in Q2 2025, while concurrently launching a restructuring initiative that incurred $15.0 million in charges, primarily for severance costs, to streamline operations and enhance efficiency - Completed the sale of U.K. land fuels business on April 9, 2025[4] - Recognized an asset impairment charge of $44.5 million related to the U.K. land fuels business sale[4] - Expected additional estimated pre-tax loss of $65 million from the U.K. land fuels business sale in Q2 2025, including reclassification of $55 million cumulative translation losses[4] - Recognized restructuring charges of $15.0 million during Q1 2025, primarily related to severance costs, as part of an initiative to streamline the operating model[4] Financial Summary (Table) The financial summary table for Q1 2025 shows a 14% decrease in revenue and a 9% decrease in gross profit year-over-year, with operating expenses increasing by 24%, leading to a significant shift from operating income to an operating loss, though adjusted operating expenses decreased by 6% Q1 2025 Financial Summary (YoY Comparison) | | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Volume (Millions of Gallons) | 4,177 | 4,414 | (5)% | | Revenue (Millions of Dollars) | $9,453 | $10,951 | (14)% | | Gross profit (Millions of Dollars) | $230 | $254 | (9)% | | Operating expenses (Millions of Dollars) | $237 | $191 | 24% | | Adjusted operating expenses (Millions of Dollars) | $178 | $190 | (6)% | | Income (loss) from operations (Millions of Dollars) | $(7) | $63 | (110)% | | Operating margin (%) | (3)% | 25% | | | Adjusted income from operations (Millions of Dollars) | $53 | $64 | (18)% | | Adjusted operating margin (%) | 23% | 25% | | | Net income (loss) including noncontrolling interest (Millions of Dollars) | $(21) | $27 | (178)% | | Adjusted EBITDA (Millions of Dollars) | $80 | $86 | (6)% | | Diluted earnings per common share ($) | $(0.37) | $0.45 | (182)% | | Adjusted diluted earnings per common share ($) | $0.48 | $0.47 | 2% | Management Commentary Management highlighted the Aviation business's outperformance and the Land business's challenges due to market conditions, emphasizing the U.K. Land divestiture as progress in streamlining the portfolio and commitment to financial goals, while also noting strong operating and free cash flow and a robust balance sheet for future investments - Aviation business outperformed expectations, while Land business faced headwinds due to challenging market conditions[5] - Divestiture of U.K. Land business marks continued progress in streamlining the Land portfolio and reinforces commitment to broader financial goals[5] - Continued to streamline the land business and right-size the cost structure, while delivering strong operating and free cash flow[5] - Company remains well-positioned with a strong balance sheet to navigate market dynamics and invest in core capabilities[5] Company Information and Non-GAAP Definitions About World Kinect Corporation World Kinect Corporation is a global energy management company based in Miami, Florida, providing fulfillment and related services to over 150,000 customers across aviation, marine, and land transportation sectors, also supplying natural gas and power in the U.S. and Europe, along with sustainability-related products and services - Global energy management company headquartered in Miami, Florida[7] - Serves over 150,000 customers in aviation, marine, and land-based transportation sectors[7] - Supplies natural gas and power in the U.S. and Europe, and offers sustainability-related products and services[7] Investor Relations and Contacts An investor conference call was scheduled for April 24, 2025, to discuss Q1 results, with a webcast replay available, and investor relations contacts are Ira M. Birns (EVP & CFO) and Braulio Medrano (Senior Director FP&A and Investor Relations) - Q1 2025 earnings conference call held on April 24, 2025, with webcast replay available[6] - Key investor contacts are Ira M. Birns (EVP & CFO) and Braulio Medrano (Senior Director FP&A and Investor Relations)[8] Non-GAAP Financial Measures Definitions The company uses non-GAAP financial measures to provide investors with supplemental information for evaluating ongoing financial performance, emphasizing that these should not be considered in isolation from GAAP results, and these measures exclude specific items like acquisition/divestiture expenses, restructuring charges, impairments, and certain gains/losses to reflect core operating results General Principles and Exclusions Non-GAAP measures offer transparency for ongoing financial performance but should not be isolated from GAAP results, excluding specific non-recurring items - Non-GAAP measures are useful for evaluating ongoing financial performance and providing greater transparency, but should not be considered in isolation from GAAP[8][9] - Non-GAAP measures exclude acquisition/divestiture related expenses, restructuring activities, impairments, gains/losses on debt extinguishment or business sales, integration costs, non-operating legal settlements, and costs from the Finnish bid error[10] Specific Non-GAAP Metric Definitions This section defines key non-GAAP metrics such as Adjusted net income, Adjusted diluted EPS, Adjusted EBITDA, Adjusted income from operations, and Free cash flow, detailing their specific exclusions and calculation methodologies - Adjusted net income: Net income excluding acquisition/divestiture expenses, restructuring, impairments, gains/losses on debt/sales, integration costs, non-operating legal settlements, and Finnish bid error costs[12] - Adjusted diluted earnings per common share (Adjusted EPS): Computed by dividing adjusted net income by adjusted weighted average shares, including convertible note hedges[12] - Adjusted EBITDA: Net income including noncontrolling interest, excluding interest, taxes, depreciation, amortization, and the same adjustments as adjusted net income[12] - Adjusted income from operations: Income (loss) from operations excluding acquisition/divestiture expenses, restructuring, impairments, integration costs, and Finnish bid error costs[15] - Free cash flow: Operating cash flow minus total capital expenditures[15] Forward-Looking Statements and Risk Factors Forward-Looking Statements This section highlights that the release contains forward-looking statements regarding future results, performance, and achievements, specifically mentioning expected financial impacts from the U.K. land fuels business sale, cost management initiatives, and developments in the Land business, all subject to cautionary statements and risk factor disclosures in SEC filings - Release includes forward-looking statements about future results, performance, or achievements[14] - Specifically, forward-looking statements cover expected financial impacts from the U.K. land fuels business sale, cost management initiatives, and developments in the Land business[14] - Forward-looking statements are qualified by cautionary statements and risk factor disclosures in SEC filings, including the most recent Form 10-K[14] Risk Factors Important factors that could cause actual results to differ materially from forward-looking statements include tariffs, trade restrictions, customer creditworthiness, changes in energy/commodity prices, adverse industry conditions, inability to mitigate financial risks, achieving benefits from restructuring, labor disputes, compliance with debt covenants, cyber incidents, political/economic/regulatory changes, environmental legislation, supplier/customer non-performance, integration of acquired businesses, cash flow, currency fluctuations, inflation, technology leverage, product specifications, environmental risks, reputational harm, high-risk locations, uninsured losses, seasonal variability, investment value, employee retention, tax law changes, litigation, and other risks detailed in SEC filings - Risks include effects of tariffs and trade restrictions, customer and counterparty creditworthiness, and changes in market prices of energy or commodities[14] - Operational risks involve inability to effectively mitigate financial risks, achieving expected benefits from restructuring, labor disputes, and compliance with debt covenants[14] - External factors include cyber incidents, changes in political, economic, or regulatory environments, greenhouse gas reduction programs, and other environmental/climate change legislation[14] - Other risks encompass supplier/customer non-performance, integration of acquired businesses, lower than expected cash flows, currency exchange fluctuations, inflationary pressures, and the ability to retain key employees[14][16] Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $6,589.1 million, a decrease from $6,731.8 million at December 31, 2024, primarily due to lower accounts receivable, while total liabilities also decreased from $4,775.8 million to $4,660.9 million, mainly driven by a reduction in accounts payable, and total equity slightly decreased to $1,928.3 million Condensed Consolidated Balance Sheets (Selected Items) | | March 31, 2025 (Millions of Dollars) | December 31, 2024 (Millions of Dollars) | | :--- | :--- | :--- | | Assets: | | | | Cash and cash equivalents | $456.4 | $382.9 | | Accounts receivable, net | $2,245.8 | $2,432.6 | | Inventories | $503.7 | $513.5 | | Total current assets | $3,829.9 | $3,959.2 | | Total assets | $6,589.1 | $6,731.8 | | Liabilities: | | | | Accounts payable | $2,529.7 | $2,726.5 | | Total current liabilities | $3,342.3 | $3,437.8 | | Total liabilities | $4,660.9 | $4,775.8 | | Equity: | | | | Total equity | $1,928.3 | $1,955.9 | Condensed Consolidated Statements of Income and Comprehensive Income For Q1 2025, the company reported a net loss attributable to World Kinect of $(21.1) million, a significant decline from a net income of $27.4 million in Q1 2024, with revenue decreasing by 14% to $9,452.5 million and gross profit falling by 9% to $230.4 million, while operating expenses increased substantially due to asset impairments and restructuring charges, leading to an operating loss of $(6.6) million compared to an income of $63.3 million in the prior year Condensed Consolidated Statements of Income (Q1 2025 vs Q1 2024) | | 2025 (Millions of Dollars) | 2024 (Millions of Dollars) | | :--- | :--- | :--- | | Revenue | $9,452.5 | $10,951.4 | | Cost of revenue | $9,222.1 | $10,697.3 | | Gross profit | $230.4 | $254.1 | | Operating expenses | $237.0 | $190.8 | | Income (loss) from operations | $(6.6) | $63.3 | | Net income (loss) attributable to World Kinect | $(21.1) | $27.4 | | Diluted earnings (loss) per common share ($) | $(0.37) | $0.45 | - Asset impairments of $44.5 million and restructuring charges of $15.0 million significantly impacted operating expenses in Q1 2025[22] - Total other comprehensive income (loss) improved from $(12.9) million in Q1 2024 to $10.0 million in Q1 2025, primarily due to foreign currency translation adjustments[22] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities increased slightly to $114.4 million in Q1 2025 from $110.2 million in Q1 2024, despite a net loss, driven by changes in working capital, particularly a significant decrease in accounts receivable, while net cash used in investing and financing activities also decreased, leading to a $73.5 million increase in cash and cash equivalents during the quarter Condensed Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | | 2025 (Millions of Dollars) | 2024 (Millions of Dollars) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $114.4 | $110.2 | | Net cash provided by (used in) investing activities | $(5.8) | $(16.9) | | Net cash provided by (used in) financing activities | $(32.4) | $(64.3) | | Net increase (decrease) in cash and cash equivalents | $73.5 | $17.1 | | Cash and cash equivalents, as of the end of the period | $456.4 | $321.3 | - Operating cash flow benefited from a $204.3 million decrease in accounts receivable, net, in Q1 2025[24] - Repurchased $10.0 million of common stock in Q1 2025, compared to none in Q1 2024[24] Business Segments and Sales Volume Information Business Segments Performance In Q1 2025, the Aviation segment showed strong performance with a 7% increase in gross profit and a 27.7% increase in income from operations, driven by improved airport locations and physical inventory business, while the Land segment experienced a 19% decrease in gross profit and shifted to an operating loss of $(45.3) million due to lower liquid fuel profit contribution, and the Marine segment also saw a 26% decrease in gross profit and a 44.8% decrease in operating income, impacted by lower bunker fuel prices and reduced demand Q1 2025 Segment Gross Profit and Income from Operations (YoY Comparison) | Segment | Gross Profit 2025 (Millions of Dollars) | Gross Profit 2024 (Millions of Dollars) | Gross Profit Change (%) | Income (Loss) from Operations 2025 (Millions of Dollars) | Income (Loss) from Operations 2024 (Millions of Dollars) | Income (Loss) from Operations Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Aviation | $115.7 | $108.4 | 7% | $56.2 | $44.0 | 27.7% | | Land | $79.0 | $97.3 | (19)% | $(45.3) | $18.5 | (344.9)% | | Marine | $35.7 | $48.4 | (26)% | $14.8 | $26.8 | (44.8)% | | Total Gross Profit | $230.4 | $254.1 | (9)% | | | | - Aviation segment's improved performance was primarily attributable to operated airport locations in Europe, physical inventory business, and business and general aviation activities[4] - Land segment's decline was due to lower profit contribution from liquid fuel business in North America, influenced by industry trends and reduced demand[4] - Marine segment's decrease was principally due to lower bunker fuel prices, reduced volatility, and lower demand/margins in resale and physical businesses[4] Sales Volume Supplemental Information Consolidated total sales volume decreased by 5% to 4,176.8 million gallons in Q1 2025 compared to Q1 2024, with the Aviation segment seeing a slight increase in volume, while both Land and Marine segments experienced decreases, and Marine had the largest percentage drop Q1 2025 Sales Volume by Segment (YoY Comparison) | Segment | Volume 2025 (Millions of Gallons) | Volume 2024 (Millions of Gallons) | Change (%) | | :--- | :--- | :--- | :--- | | Aviation Segment | 1,700.2 | 1,673.1 | 1.6% | | Land Segment | 1,494.3 | 1,598.1 | (6.5)% | | Marine Segment | 982.3 | 1,143.2 | (14.0)% | | Consolidated Total | 4,176.8 | 4,414.5 | (5.4)% | Reconciliation of GAAP to Non-GAAP Financial Measures Net Income (Loss) and Diluted Earnings Per Share Reconciliation The reconciliation shows a GAAP net loss of $(21.1) million and diluted EPS of $(0.37) for Q1 2025, which, after adjusting for asset impairments ($44.5 million), restructuring charges ($15.0 million), and income tax impacts ($(11.5) million), results in an adjusted net income of $27.3 million and adjusted diluted EPS of $0.48, contrasting with Q1 2024 where GAAP and adjusted figures were closer Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income | | 2025 Net Income (Loss) (Millions of Dollars) | 2025 Diluted EPS ($) | 2024 Net Income (Loss) (Millions of Dollars) | 2024 Diluted EPS ($) | | :--- | :--- | :--- | :--- | :--- | | GAAP measure | $(21.1) | $(0.37) | $27.4 | $0.45 | | (Gain) loss on sale of business | $0.4 | $0.01 | — | — | | Asset impairments | $44.5 | $0.78 | — | — | | Finnish bid error | — | — | $0.9 | $0.02 | | Restructuring charges | $15.0 | $0.26 | $0.2 | — | | Income tax impacts | $(11.5) | $(0.20) | $(0.2) | — | | Adjusted non-GAAP measure | $27.3 | $0.48 | $28.2 | $0.47 | - For Q1 2025, Adjusted diluted EPS calculation considers 0.5 million dilutive shares not included in GAAP due to the net loss position, resulting in a non-GAAP weighted average of 57.3 million shares[31] Adjusted EBITDA Reconciliation Adjusted EBITDA for Q1 2025 was $80.3 million, a decrease from $85.9 million in Q1 2024, with the reconciliation from GAAP net income (loss) including adjustments for interest, taxes, depreciation, amortization, and significant non-recurring items such as asset impairments ($44.5 million) and restructuring charges ($15.0 million) in 2025 Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA | | 2025 (Millions of Dollars) | 2024 (Millions of Dollars) | | :--- | :--- | :--- | | Net income (loss) including noncontrolling interest | $(21.3) | $27.2 | | Interest expense and other financing costs, net | $22.9 | $28.9 | | Provision (benefit) for income taxes | $(6.8) | $3.3 | | Depreciation and amortization | $25.6 | $25.3 | | EBITDA | $20.4 | $84.8 | | (Gain) loss on sale of business | $0.4 | — | | Asset impairments | $44.5 | — | | Finnish bid error | — | $0.9 | | Restructuring charges | $15.0 | $0.2 | | Adjusted EBITDA | $80.3 | $85.9 | Operating Expenses and Income (Loss) from Operations Reconciliation GAAP operating expenses for Q1 2025 were $237.0 million, leading to an operating loss of $(6.6) million, but after adjusting for asset impairments ($(44.5) million) and restructuring charges ($(15.0) million), adjusted operating expenses decreased to $177.5 million, resulting in an adjusted income from operations of $52.9 million, highlighting the impact of one-time charges on GAAP operating results Reconciliation of GAAP Operating Expenses and Income (Loss) from Operations to Adjusted Measures | | 2025 Operating Expenses (Millions of Dollars) | 2025 Operating Income (Loss) (Millions of Dollars) | 2024 Operating Expenses (Millions of Dollars) | 2024 Operating Income (Loss) (Millions of Dollars) | | :--- | :--- | :--- | :--- | :--- | | GAAP measure | $237.0 | $(6.6) | $190.8 | $63.3 | | Asset impairments | $(44.5) | $44.5 | — | — | | Finnish bid error | — | — | $(0.9) | $0.9 | | Restructuring charges | $(15.0) | $15.0 | $(0.2) | $0.2 | | Adjusted non-GAAP measure | $177.5 | $52.9 | $189.7 | $64.4 | Free Cash Flow Reconciliation Free cash flow for Q1 2025 increased to $99.2 million from $92.8 million in Q1 2024, an improvement driven by a slight increase in net cash provided by operating activities and a decrease in capital expenditures Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | | 2025 (Millions of Dollars) | 2024 (Millions of Dollars) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $114.4 | $110.2 | | Capital expenditures | $(15.2) | $(17.5) | | Free cash flow | $99.2 | $92.8 |