World Kinect(WKC) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Results Overview Second Quarter 2025 Highlights World Kinect Corporation reported $232 million total gross profit and a $339 million GAAP net loss in Q2 2025, driven by impairments and divestitures, with aviation gross profit up 8% Key Financial Metrics | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Change | | :--- | :--- | :--- | :--- | | Total Gross Profit | $232 | $245 | (5)% | | GAAP Net Loss | $(339) | $107 | (417)% | | Adjusted Net Income | $33 | $29 | 14% | | Adjusted EBITDA | $87 | $81 | 8% | | Diluted EPS (GAAP) | $(6.06) | $1.81 | (435)% | | Adjusted Diluted EPS | $0.59 | $0.48 | 23% | - The company recognized $367 million in non-cash intangible asset impairment within its land business, with $359 million related to goodwill and $8 million to other intangible assets[4] - The marine business recorded $32 million in asset impairment related to an underperforming physical inventory location[4] - The completed sale of the UK land fuels business resulted in an $82 million pre-tax loss in Q2, including $55 million in cumulative currency translation losses[4] - A global finance and accounting operations optimization project, part of the company's transformation plan, led to $6 million in restructuring charges recognized in Q2[4] Segment Gross Profit Performance | Business Segment | Q2 2025 Gross Profit (Million USD) | Q2 2024 Gross Profit (Million USD) | YoY Change | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Aviation | $138.0 | $127.7 | +8% | Increased contributions from European airport operations and commercial and general aviation activities | | Land | $67.0 | $80.8 | -17% | Sale of UK land business, exit from certain North American land businesses, and reduced North American liquid fuel demand | | Marine | $27.0 | $36.7 | -26% | Unfavorable transaction tax settlements and underperforming physical inventory locations | Management Commentary CEO Michael J. Kasbar highlighted strong aviation performance and land business reshaping, with CFO Ira M. Birns emphasizing efficient operations and shareholder value - CEO Michael J. Kasbar stated that the aviation business performed strongly in Q2, while the land business is being reshaped to focus on more resilient, predictable, and higher-return core activities[5] - CFO Ira M. Birns noted that recent divestitures and transformation initiatives demonstrate the company's commitment to building a more focused and efficient operating model[5] - The company enhanced shareholder value by increasing the quarterly dividend by 18% and repurchasing $35 million of common stock, reflecting confidence in the business and its cash flow generation capabilities[5] Company Information About World Kinect Corporation World Kinect Corporation is a global energy management company providing fuel and related services across aviation, marine, and land, plus natural gas, electricity, and sustainability solutions - World Kinect Corporation is a global energy management company, headquartered in Miami, Florida[7] - The company provides fuel and related services to customers in the aviation, marine, and land transportation sectors[7] - Its operations also include supplying natural gas and electricity in the U.S. and Europe, and offering a wide range of sustainability-related products and services[7] Investor Relations An investor conference call on July 31, 2025, will discuss Q2 results, with a webcast replay available, and investor relations contactable via email - An investor conference call will be held on July 31, 2025, at 5:00 PM ET to discuss Q2 results[6] - A webcast replay will be available shortly after the call[6] - Investors can contact investor relations at investor@worldkinect.com[8] Consolidated Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $6.054 billion, liabilities to $4.449 billion, and equity to $1.605 billion, reflecting significant goodwill impairment Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (Million USD) | Dec 31, 2024 (Million USD) | | :--- | :--- | :--- | | Assets: | | | | Cash and Cash Equivalents | 403.2 | 382.9 | | Accounts Receivable, Net | 2,143.3 | 2,432.6 | | Inventory | 474.9 | 513.5 | | Total Current Assets | 3,570.9 | 3,959.2 | | Goodwill | 825.8 | 1,181.7 | | Total Assets | 6,054.0 | 6,731.8 | | Liabilities: | | | | Accounts Payable | 2,536.4 | 2,726.5 | | Total Current Liabilities | 3,149.0 | 3,437.8 | | Long-Term Debt | 775.2 | 796.8 | | Total Liabilities | 4,449.2 | 4,775.8 | | Equity: | | | | Total World Kinect Stockholders' Equity | 1,598.6 | 1,948.7 | | Total Equity | 1,604.8 | 1,955.9 | - As of June 30, 2025, goodwill net decreased to $825.8 million from $1,181.7 million on December 31, 2024, primarily reflecting this quarter's impairment[19] Condensed Consolidated Statements of Income and Comprehensive Income Q2 2025 revenue declined 18% to $9.043 billion, gross profit fell 5% to $232.4 million, and operating expenses surged 189% to $577.5 million due to impairments, resulting in a $339.1 million net loss Condensed Consolidated Statements of Income and Comprehensive Income | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 9,043.3 | 10,965.2 | (18)% | | Cost of Sales | 8,810.9 | 10,720.0 | (18)% | | Gross Profit | 232.4 | 245.2 | (5)% | | Operating Expenses | 577.5 | 200.0 | 189% | | Income (Loss) from Operations | (345.1) | 45.2 | (864)% | | Net Income (Loss) Including Non-Controlling Interests | (339.1) | 106.9 | (417)% | | Net Income (Loss) Attributable to World Kinect | (339.4) | 108.3 | (413)% | | Diluted EPS (GAAP) | (6.06) | 1.81 | (435)% | - Goodwill and other asset impairment charges in Q2 2025 surged to $398.6 million from $2.4 million in the prior year, significantly contributing to the increase in operating expenses[21] Condensed Consolidated Statements of Cash Flows Q2 2025 net cash from operating activities was $28.3 million, investing activities provided $1 million (down due to lower business sale proceeds), and financing used $98.6 million for debt and stock repurchases Condensed Consolidated Statements of Cash Flows | Cash Flow Type | Q2 2025 (Million USD) | Q2 2024 (Million USD) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 28.3 | 67.9 | (58)% | | Net Cash Provided by Investing Activities | 1.0 | 180.7 | (99)% | | Net Cash Used in Financing Activities | (98.6) | (50.5) | (95)% | | Net Increase (Decrease) in Cash and Cash Equivalents | (53.2) | 203.2 | (126)% | | Cash and Cash Equivalents at End of Period | 403.2 | 524.6 | (23)% | - Net proceeds from the sale of businesses decreased from $200.4 million in Q2 2024 to $23.4 million in Q2 2025, leading to a significant reduction in investing cash flow[23] - The company repurchased $35 million of common stock and paid $9.6 million in common stock dividends during Q2[23] Business Segment Performance Segment Revenue All business segments (Aviation, Land, Marine) experienced year-over-year revenue declines in Q2 2025, with total revenue decreasing by 18% Segment Revenue | Business Segment | Q2 2025 Revenue (Million USD) | Q2 2024 Revenue (Million USD) | YoY Change | | :--- | :--- | :--- | :--- | | Aviation | 4,725.1 | 5,368.7 | (12)% | | Land | 2,425.0 | 3,292.4 | (26)% | | Marine | 1,893.2 | 2,304.1 | (18)% | | Total Revenue | 9,043.3 | 10,965.2 | (18)% | Segment Gross Profit In Q2 2025, Aviation gross profit increased 8% to $138 million, while Land and Marine segments saw declines of 17% and 26% respectively Segment Gross Profit | Business Segment | Q2 2025 Gross Profit (Million USD) | Q2 2024 Gross Profit (Million USD) | YoY Change | | :--- | :--- | :--- | :--- | | Aviation | 138.0 | 127.7 | 8% | | Land | 67.4 | 80.8 | (17)% | | Marine | 27.0 | 36.7 | (26)% | | Total Gross Profit | 232.4 | 245.2 | (5)% | Segment Income (Loss) from Operations Q2 2025 Aviation operating income grew to $71.7 million, but Land reported a $366.9 million operating loss due to impairment, and Marine recorded a $25.6 million operating loss Segment Income (Loss) from Operations | Business Segment | Q2 2025 Income (Loss) from Operations (Million USD) | Q2 2024 Income (Loss) from Operations (Million USD) | YoY Change | | :--- | :--- | :--- | :--- | | Aviation | 71.7 | 68.0 | 5% | | Land | (366.9) | (4.2) | (8636)% | | Marine | (25.6) | 10.4 | (346)% | | Corporate Management Expenses - Unallocated | (24.2) | (29.0) | 17% | | Total Income (Loss) from Operations | (345.1) | 45.2 | (864)% | - The land segment's operating loss was primarily impacted by the $367 million intangible asset impairment recognized this quarter[4][25] Sales Volume by Segment Aviation sales volume slightly increased in Q2 2025, while Land and Marine volumes decreased, leading to a 3% decline in consolidated total sales volume Sales Volume by Segment | Business Segment | Q2 2025 Sales Volume (Million Gallons) | Q2 2024 Sales Volume (Million Gallons) | YoY Change | | :--- | :--- | :--- | :--- | | Aviation | 1,856.0 | 1,825.0 | 2% | | Land | 1,343.3 | 1,449.2 | (7)% | | Marine | 1,020.7 | 1,098.4 | (7)% | | Consolidated Total | 4,219.9 | 4,372.6 | (3)% | Non-GAAP Financial Measures Definitions of Non-GAAP Measures Non-GAAP financial measures supplement GAAP results, aiding investors in assessing ongoing financial performance by excluding specific non-recurring or non-operating items - Non-GAAP financial measures aim to supplement GAAP information, providing a more transparent assessment of ongoing financial performance[8] - Common exclusions from non-GAAP measures include: acquisition and divestiture-related expenses, restructuring costs, impairments, gains or losses on sale of businesses, integration costs, non-operating legal settlements, and Finland bid error-related costs[10] - Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Operating Expenses, Consolidated and Land Adjusted Gross Profit, and Free Cash Flow are the primary non-GAAP measures used by the company[12][15] Reconciliation of GAAP to Adjusted Net Income and EPS Q2 2025 GAAP net loss was $339.4 million and diluted EPS $(6.06); after adjustments for divestitures, impairments, and restructuring, adjusted net income was $33.3 million and adjusted diluted EPS $0.59 Reconciliation of GAAP to Adjusted Net Income and EPS | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | | :--- | :--- | :--- | | GAAP Net Income (Loss) | (339.4) | 108.3 | | Gain (Loss) on Sale of Businesses Impact | 81.9 | (96.0) | | Goodwill and Other Asset Impairment | 398.6 | 2.4 | | Restructuring Charges | 6.0 | 5.6 | | Income Tax Impact | (113.9) | 8.0 | | Adjusted Net Income | 33.3 | 28.7 | | GAAP Diluted EPS | (6.06) | 1.81 | | Adjusted Diluted EPS | 0.59 | 0.48 | - In Q2 2025, GAAP diluted EPS was negative, so the impact of dilutive shares was considered when calculating adjusted diluted EPS, resulting in an adjusted weighted-average share count of 56.3 million shares[30] Reconciliation of GAAP to Adjusted EBITDA Q2 2025 GAAP net loss was $339.1 million, resulting in negative EBITDA of $399.2 million; adjusted EBITDA, after non-recurring items, increased 8% to $87.3 million Reconciliation of GAAP to Adjusted EBITDA | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | | :--- | :--- | :--- | | Net Income (Loss) Including Non-Controlling Interests | (339.1) | 106.9 | | Interest Expense and Other Financing Costs, Net | 25.7 | 27.5 | | Provision (Benefit) for Income Taxes | (109.6) | 9.7 | | Depreciation and Amortization | 23.8 | 24.4 | | EBITDA | (399.2) | 168.5 | | Gain (Loss) on Sale of Businesses | 81.9 | (96.0) | | Goodwill and Other Asset Impairment | 398.6 | 2.4 | | Restructuring Charges | 6.0 | 5.6 | | Adjusted EBITDA | 87.3 | 80.9 | Reconciliation of GAAP to Adjusted Operating Expenses and Income Q2 2025 GAAP operating expenses were $577.5 million, leading to an operating loss of $345.1 million; adjusted operating expenses were $172.8 million, yielding adjusted operating income of $59.6 million, up 11% Reconciliation of GAAP to Adjusted Operating Expenses and Income | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | | :--- | :--- | :--- | | GAAP Operating Expenses | 577.5 | 200.0 | | Goodwill and Other Asset Impairment | (398.6) | (2.4) | | Restructuring Charges | (6.0) | (5.6) | | Adjusted Operating Expenses | 172.8 | 191.6 | | GAAP Income (Loss) from Operations | (345.1) | 45.2 | | Goodwill and Other Asset Impairment | 398.6 | 2.4 | | Restructuring Charges | 6.0 | 5.6 | | Adjusted Income from Operations | 59.6 | 53.6 | Reconciliation of GAAP to Free Cash Flow Q2 2025 net cash from operating activities was $28.3 million; after $15 million in capital expenditures, free cash flow was $13.3 million, a significant decrease from prior year Reconciliation of GAAP to Free Cash Flow | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 28.3 | 67.9 | | Capital Expenditures | (15.0) | (14.6) | | Free Cash Flow | 13.3 | 53.3 | Forward-Looking Statements and Risk Factors Information Relating to Forward-Looking Statements This press release contains forward-looking statements about future performance and operations, subject to risks disclosed in SEC filings, where actual results may differ materially from expectations - This press release contains forward-looking statements regarding the company's future performance, financial and accounting operations optimization efforts, and cash flow generation[14] - Forward-looking statements are subject to cautionary statements and risk factors contained in the company's SEC filings, including its most recent Annual Report on Form 10-K[14] - Actual results may differ materially from future results, performance, or achievements expressed or implied by forward-looking statements[14] Risk Factors Significant factors that could cause actual results to differ from forward-looking statements include tariffs, credit risks, market price changes, industry conditions, financial hedging, restructuring benefits, and regulatory changes - Tariffs and other trade restrictions may lead to continued uncertainty and volatility in global financial and commodity markets, impacting fuel product demand[14] - Customer and counterparty credit risk, along with the company's ability to collect receivables and settle derivative contracts, are significant risks[14] - Changes in energy or commodity market prices, prolonged periods of extremely high or low fuel prices, and adverse conditions in customer industries can all affect company performance[14] - Other risks include: failure to effectively mitigate certain financial risks, inability to realize anticipated benefits from restructuring activities and cost reduction initiatives, labor disputes, non-compliance with debt covenants, cybersecurity incidents, changes in political, economic, or regulatory environments, greenhouse gas emission reduction programs, changes in supplier credit terms, non-performance by suppliers and customers, ability to integrate acquisitions, failure to meet financial forecasts, lower-than-expected cash flow and revenue, currency exchange rate fluctuations, inflationary pressures, utilization of technology and operating systems, product specification compliance, environmental risks, reputational damage, operations in high-risk regions, uninsured losses, seasonality, value of cash equivalents and investments, talent retention, changes in tax laws, deferred income tax assets, international conventions, and litigation and regulatory investigations[14][16]