World Fuel Services Corporation Reports Fourth Quarter and Full Year 2017 Results

MIAMI–(BUSINESS WIRE)–World Fuel Services Corporation (NYSE: INT)

Fourth-Quarter 2017

• GAAP net loss of $193.1 million or $2.86 per diluted share, including
  a tax charge attributable to the enactment of the Tax Cuts and Jobs
  Act (“U.S. Tax Reform”), impairment and restructuring charges
• Adjusted net income was $17.0 million, or $0.25 per diluted share
• Generated operating cash flow of $160.0 million

Full-Year 2017

• Record total of 20.9 billion gallons of fuel sold
• Record total gross profit of $932.2 million
• Impairment charges of $91.9 million primarily related to our marine
  segment
• Restructuring charges of $59.6 million related to exiting non-core
  business lines and improving operating efficiencies
• One-time transition tax of $144 million related to U.S. Tax Reform
• GAAP net loss of $170.2 million, or $2.50 per diluted share
• Adjusted EBITDA of $295.9 million
• Adjusted net income of $126.6 million or $1.86 per diluted share

Fiscal Year 2017 Highlights

“We generated $932 million in gross profit representing modest growth
over 2016. Strength in our aviation segment was meaningfully offset by
challenging market conditions in marine and parts of our land segment,”
stated Michael J. Kasbar, chairman and chief executive officer of World
Fuel Services Corporation. “We are optimistic about 2018 as we have
begun executing on an organizational redesign to drive greater operating
efficiencies. We continue to sharpen our portfolio of business
activities while executing on a solid pipeline of initiatives to
accelerate organic growth across the business, with opportunity for
selective strategic investments, as well.”

For the full year, the company’s aviation segment generated gross profit
of $441 million, an increase of $40 million or 10% year-over-year,
primarily driven by our government business and increased volume and
profitability in our international fueling operations. The company’s
marine segment generated gross profit of $126 million, a decrease of 16%
year-over-year, primarily driven by the continued weakness in the
maritime environment. The company’s land segment generated gross profit
of $366 million, up 5% year-over-year, primarily driven by the benefit
derived from recent acquisitions offset in part by pressures in supply
and trading activities in North America.

In conjunction with our annual goodwill and intangible asset impairment
tests, we recorded a non-cash impairment charge of $91.9 million, in the
fourth quarter, primarily related to our marine segment. This was
primarily a result of growing weakness in maritime markets over the last
year, along with a further decline in demand for price risk management
products and our decision to exit our marine business in certain
international markets. The goodwill impairment is a non-cash charge and
does not impact our current financial flexibility, and we believe our
overall cash generating capabilities remain strong.

As a result of our continuing efforts to sharpen our portfolio of
business activities, we recorded a restructuring charge of $59.6 million
in the fourth quarter, relating to the exit of two specific business
activities. As we heighten our focus on sharpening our portfolio, we
expect to identify additional opportunities to restructure our
operations, exit non-core assets or under-performing lines of business
in an effort to more effectively allocate resources to drive improved
profitability.

Our fourth quarter results reflect an income tax charge of approximately
$157 million, which includes a $144 million one-time transition tax
payable over eight years, as a result of U.S. Tax Reform. As we intend
to utilize our U.S. net operating losses, we expect to only pay
approximately $100 million over the eight-year payment period. Looking
ahead, the new 21% domestic corporate tax rate should offer the
potential for improved returns related to our large pipeline of
strategic investment opportunities in the U.S.

“We are committed to restructuring all relevant parts of the company, in
terms of size and organizational design, to maximize our market
competitiveness and operational agility. We are focused on achieving a
more efficient operating model measured by the disciplined execution of
fundamentals to drive improvement in long-term operational and financial
performance,” said Ira M. Birns, executive vice president and chief
financial officer. “Organic and strategic growth opportunities combined
with the benefit from recent restructuring activities and ongoing
efforts to identify additional cost saving opportunities, should drive
improved results in 2018, delivering greater value to our shareholders.”

LIQUIDITY AND CAPITAL

Operating cash flow amounted to $205 million for fiscal year 2017. Our
net debt to adjusted EBITDA ratio stood at 1.8x at December 31, 2017
down from 2.1x at September 30, 2017.

We repurchased 1.73 million shares for $61.9 million in 2017 and we have
$100.0 million remaining under the share repurchase program approved by
our Board of Directors in October 2017.

Principally as a result of U.S. Tax Reform, we repaid $242 million of
borrowings outstanding under our credit facility and term loan in the
fourth quarter. We also amended our credit facility in January 2018 to
facilitate additional repayments.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including
adjusted net income, adjusted diluted earnings per share, adjusted
earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and net debt (collectively, the “Non-GAAP Measures”). The
Non-GAAP measures exclude costs associated with goodwill and other
impairments, severance and restructuring charges, the tax impact of the
Tax Cuts and Jobs Act of 2017, the valuation allowance against the net
U.S. deferred tax assets and acquisition-related charges, primarily
because we do not believe they are reflective of the Company’s core
operating results. We used a combination of qualitative and quantitative
factors to review goodwill and identifiable intangible assets for
impairment for all of our reporting units and as a result of performing
these assessments, we recorded an impairment charge primarily
attributable to the write-off of goodwill in our marine segment and
intangible assets, mostly consisting of customer relationships in both
the marine and land segments. Restructuring charges are related to an
enterprise-wide restructuring plan that is designed to streamline the
organization, and reallocate resources to better align our
organizational structure and costs with our strategy. These
non-recurring items are excluded because, by their nature, they are not
indicative of our business or economic trends. We believe that the
Non-GAAP Measures, when considered in conjunction with our financial
information prepared in accordance with GAAP, are useful to investors to
further aid in evaluating the ongoing financial performance of the
Company and to provide greater transparency as supplemental information
to our GAAP results.

Non-GAAP financial measures should not be considered in isolation from,
or as a substitute for, financial information prepared in accordance
with GAAP. In addition, our presentation of the Non-GAAP Measures may
not be comparable to the presentation of such metrics by other
companies. Non-GAAP diluted earnings per common share is computed by
dividing non-GAAP net income attributable to World Fuel Services and
available to common shareholders by the sum of the weighted average
number of shares of common stock, stock units, restricted stock entitled
to dividends not subject to forfeiture and vested restricted stock units
outstanding during the period and the number of additional shares of
common stock that would have been outstanding if our outstanding
potentially dilutive securities had been issued. Investors are
encouraged to review the reconciliation of these Non-GAAP Measures to
their most directly comparable GAAP financial measures in this press
release and on our website.

Information Relating to Forward-Looking Statements

This release includes forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including
statements regarding our beliefs and expectations to accelerate organic
growth, execute on our long-term growth strategy, our expectations
regarding our restructuring activities and additional cost saving
opportunities, our future operating results and its contributing
factors, our belief regarding our cash generating capabilities, our
intentions regarding use of our net operating losses and its impact on
future tax payment amounts, and the impact of the new corporate tax rate
on our investment returns. These forward-looking statements are
qualified in their entirety by cautionary statements and risk factor
disclosures contained in the Company’s Securities and Exchange
Commission (“SEC”) filings, including the Company’s most recent Annual
Report on Form 10-K filed with the SEC. Actual results may differ
materially from any forward-looking statements due to risks and
uncertainties, including, but not limited to: our ability to effectively
leverage technology and operating systems and realize the anticipated
benefits, our ability to successfully execute and achieve efficiencies
and other benefits related to our transformation initiatives, our
ability to achieve the expected level of benefit from our restructuring
activities and cost reduction initiatives, the impact of impairments to
goodwill or intangible assets, our ability to successfully implement our
growth strategy, our ability to effectively integrate acquired
businesses and recognize the anticipated benefits, risks related to the
complexity of U.S. Tax Reform and our ability to accurately predict its
impact on our returns, our ability to capitalize on new market
opportunities and changes in supply and other market dynamics in the
regions where we operate, potential liabilities and the extent of any
insurance coverage, the outcome of pending litigation and other
proceedings, risks related to the complexity of U.S. Tax Reform and our
ability to accurately predict its impact on our future earnings, the
impact of quarterly fluctuations in results, particularly as a result of
seasonality, the creditworthiness of our customers and counterparties
and our ability to collect accounts receivable, fluctuations in world
oil prices or foreign currency, changes in political, economic,
regulatory, or environmental conditions, adverse conditions in the
markets or industries in which we or our customers and suppliers
operate, our failure to effectively hedge certain financial risks
associated with the use of derivatives, non-performance by
counterparties or customers on derivatives contracts, loss of, or
reduced sales, to a significant government customer, uninsured losses,
the impact of natural disasters, adverse results in legal disputes,
unanticipated tax liabilities, our ability to retain and attract senior
management and other key employees and other risks detailed from time to
time in the Company’s SEC filings. New risks emerge from time to time
and it is not possible for management to predict all such risk factors
or to assess the impact of such risks on our business. Accordingly, we
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, changes in
expectations, future events, or otherwise, except as required by law.

About World Fuel Services Corporation

Headquartered in Miami, Florida, World Fuel Services is a global energy
management company involved in providing energy procurement advisory
services, supply fulfillment and transaction and payment management
solutions to commercial and industrial customers, principally in the
aviation, marine and land transportation industries. World Fuel Services
sells fuel and delivers services to its clients at more than 8,000
locations in more than 200 countries and territories worldwide.

For more information, call 305-428-8000 or visit www.wfscorp.com.

— Some amounts in this press release may not add due to rounding. All
percentages have been calculated using unrounded amounts —

Contacts

World Fuel Services Corporation
Ira M Birns, 305-428-8000
Executive
Vice President & Chief Financial Officer
or
Glenn Klevitz,
305-428-8000
Vice President, Assistant Treasurer & Investor
Relations