WORLD KINECT CORP

Previous wording

This 10-Q Report and the information incorporated by reference in it, or made by us in other reports, filings with the U.S. Securities and Exchange Commission (the "SEC"), press releases, teleconferences, industry conferences or otherwise, contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "project," "could," "would," "will," "will be," "will continue," "plan," or words or phrases of similar meaning. Specifically, this 10-Q Report includes forward-looking statements regarding (i) expectations regarding inflation and its impact on us, (ii) trade-related uncertainty, (iii) conditions in the aviation, land, and marine markets and their impact on our business, (iv) growth in our core businesses, (v) the impact of fuel prices and our working capital, liquidity, and capital expenditure requirements, (vi) our expectations and estimates regarding tax, legal and accounting matters, including the impact on our financial statements, (vii) our hedging strategy, and (viii) estimates regarding the financial impact of our derivative and other trading contracts. These forward-looking statements are qualified in their entirety by cautionary statements and risk factor disclosures contained in our SEC filings.

Current wording

This 10-Q Report and the information incorporated by reference in it, or made by us in other reports, filings with the U.S. Securities and Exchange Commission (the "SEC"), press releases, teleconferences, industry conferences or otherwise, contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "project," "could," "would," "will," "will be," "will continue," "plan," or words or phrases of similar meaning. Specifically, this 10-Q Report includes forward-looking statements regarding (i) expectations regarding inflation and its impact on us, (ii) trade-related uncertainty, (iii) conditions in the aviation, land, and marine markets and their impact on our business, (iv) the impact of fuel prices and our working capital, liquidity, and capital expenditure requirements, (v) our expectations and estimates regarding tax, legal and accounting matters, including the impact on our financial statements, (vi) our hedging strategy, and (vii) estimates regarding the financial impact of our derivative and other trading contracts. These forward-looking statements are qualified in their entirety by cautionary statements and risk factor disclosures contained in our SEC filings.

Previous wording

•changes in the political, economic or regulatory environment generally and in the markets in which we operate, including as a result of the current conflicts in Eastern Europe and the Middle East and the actions of the U.S. presidential administration;

Current wording

•changes in the political, economic or regulatory environment generally and in the markets in which we operate, including as a result of geopolitical conflicts, including the current conflicts in Eastern Europe and the Middle East and the actions of the U.S. presidential administration;

Previous wording

•changes in U.S. or foreign tax laws, interpretations of such laws, changes in the mix of taxable income among different tax jurisdictions, or adverse results of tax audits, assessments, or disputes;

Current wording

•changes in U.S. or foreign tax laws, including changes resulting from the One Big Beautiful Bill Act, interpretations of such laws, changes in the mix of taxable income among different tax jurisdictions, or adverse results of tax audits, assessments, or disputes;

Previous wording

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended (the "Exchange Act").

Current wording

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Previous wording

Aligned with these efforts, during the first quarter of 2025, we began a company-wide transformation initiative designed to further streamline our operating model and enhance organizational efficiency and effectiveness. As part of this initiative, we undertook cost management actions in response to the current and projected business needs, including the elimination of certain open positions and the closure of other roles, to better align the workforce with our current strategic priorities. As a result, we recognized restructuring charges of $15.0 million during the three months ended March 31, 2025, composed principally of severance costs that could result in approximately $30 million in annualized compensation related savings. During 2025, we will continue to assess additional areas with the intent of completing the restructuring activities during the year. See Note 14. Restructuring and Exit Activities for additional information.

Current wording

Aligned with these efforts, during the first quarter of 2025, we began the 2025 Restructuring Plan, a company-wide transformation initiative designed to further streamline our operating model and enhance organizational efficiency and effectiveness. As part of this initiative, we undertook cost management actions in response to the current and projected business needs, including the closure of certain open positions and the elimination of other roles, to better align the workforce with our current strategic priorities. As a result, we recognized restructuring charges of $15.0 million during the three months ended March 31, 2025, composed principally of severance costs that could result in approximately $30 million in annualized compensation related savings.

Previous wording

In our land segment we continue to focus on improving asset utilization, leveraging the capabilities of our acquisitions, and realigning our operational platform. As discussed under "Restructuring and Exit Activities" above, in 2024 we decided to take actions to exit certain operations, including the rationalization of certain assets and associated personnel within our North American land business as well as the disposal of our operations in Brazil. Additionally, on April 9, 2025, we closed the Watson Fuels sale. In 2025, we launched an initiative designed to further streamline our operating model and enhance organizational efficiency and effectiveness.

Current wording

In our land segment, we continue to focus on improving capital efficiency by optimizing asset utilization, leveraging the capabilities of our acquisitions, and realigning our operational platform. As discussed under "Restructuring and Exit Activities" above, in 2024 we decided to take actions to exit certain operations, including the rationalization of certain assets and associated personnel within our North American land business as well as the disposal of our operations in Brazil. In 2025, we launched an initiative designed to further streamline our operating model and enhance organizational efficiency and effectiveness. Additionally, on April 9, 2025, we closed the Watson Fuels sale.

Previous wording

Revenue. Our consolidated revenue for the three months ended March 31, 2025 was $9.5 billion, a decrease of $1.5 billion, or 14%, compared to the three months ended March 31, 2024, attributable to decreased revenue of $551.2 million, $457.6 million, and $490.0 million in our land, marine, and aviation segments, respectively, as discussed further below.

Current wording

Revenue. Our consolidated revenue for the three months ended June 30, 2025 was $9.0 billion, a decrease of $1.9 billion, or 18%, compared to the three months ended June 30, 2024, attributable to decreased revenue of $867.5 million, $643.6 million, and $410.9 million in our land, aviation, and marine segments, respectively, as discussed further below.

Previous wording

Gross Profit. Our gross profit for the three months ended March 31, 2025 was $230.4 million, a decrease of $23.7 million, or 9%, compared to the three months ended March 31, 2024, attributable to decreased gross profit of $18.3 million and $12.7 million in our land and marine segments, respectively, partially offset by increased gross profit of $7.2 million in our aviation segment, as discussed further below.

Current wording

Gross Profit. Our gross profit for the three months ended June 30, 2025 was $232.4 million, a decrease of $12.8 million, or 5%, compared to the three months ended June 30, 2024, attributable to decreased gross profit of $13.4 million and $9.6 million in our land and marine segments, respectively, partially offset by increased gross profit of $10.2 million in our aviation segment, as discussed further below.

Previous wording

Operating Expenses. Total operating expenses for the three months ended March 31, 2025 were $237.0 million, an increase of $46.2 million, or 24%, compared to the three months ended March 31, 2024. The increase in operating expenses was primarily attributable to asset impairment charges recognized in connection with the Watson Fuels sale, as discussed in Note 3. Acquisitions and Divestitures, and restructuring charges recognized during the first quarter of 2025, as discussed under "Restructuring and Exit Activities" above, partially offset by the Avinode sale during the second quarter of 2024 and decreased compensation costs.

Current wording

Operating Expenses. Total operating expenses for the three months ended June 30, 2025 were $577.5 million compared to $200.0 million for the three months ended June 30, 2024. The increase in operating expenses was primarily attributable to goodwill and other asset impairment charges of $398.6 million recognized during the three months ended June 30, 2025, as discussed in Note 4. Goodwill and Note 6. Fair Value Measurements, partially offset by lower compensation and employee benefit costs and general and administrative expenses primarily driven by the sales of Avinode, Brazil, and Watson Fuels.

Previous wording

Income Taxes. For the three months ended March 31, 2025, we recognized an income tax benefit of $6.8 million, compared to income tax expense of $3.3 million for the three months ended March 31, 2024. The decrease of $10.2 million was primarily attributable to the reduction in income before income taxes as a result of asset impairments and restructuring charges as well as changes in the mix of our worldwide earnings, partially offset by a $5.6 million increase in net discrete tax expenses during the three months ended March 31, 2025 compared to three months ended March 31, 2024. See Note 11. Income Taxes for additional information.

Current wording

Income Taxes. For the three months ended June 30, 2025, we recognized an income tax benefit of $109.6 million, compared to income tax expense of $9.7 million for the three months ended June 30, 2024. The decrease of $119.3 million was primarily attributable to lower income before income taxes as well as changes in the mix of our worldwide earnings, and a net discrete tax benefit of $12.3 million compared to a net discrete tax expense of $4.9 million for the three months ended June 30, 2024. See Note 12. Income Taxes for additional information.

Previous wording

Revenues in our aviation segment were $4.7 billion for the three months ended March 31, 2025, a decrease of $490.0 million, or 10%, compared to the three months ended March 31, 2024. The decrease in revenue was driven by lower average prices, partially offset by an increase in volume. Average jet fuel price per gallon sold decreased by 13%. Total aviation volumes increased by 27.1 million gallons, or 2%, to 1.7 billion gallons driven primarily by growth in our North America bulk fuel business.

Current wording

Revenues in our aviation segment were $4.7 billion for the three months ended June 30, 2025, a decrease of $643.6 million, or 12%, compared to the three months ended June 30, 2024. The decrease in revenue was driven by lower average prices, partially offset by an increase in volume. Average jet fuel price per gallon sold decreased by 16%. Total aviation volumes increased by 31.0 million gallons, or 2%, to 1.9 billion gallons.

Previous wording

Aviation segment gross profit for the three months ended March 31, 2025 was $115.7 million, an increase of $7.2 million, or 7%, compared to the three months ended March 31, 2024. The increase in gross profit was primarily attributable to higher profit contribution from our operated airport locations in Europe, our physical inventory business, and our business and general aviation activities, partially offset by a decrease in gross profit attributable to the Avinode sale, which closed during the second quarter of 2024.

Current wording

Aviation segment gross profit for the three months ended June 30, 2025 was $138.0 million, an increase of $10.2 million, or 8%, compared to the three months ended June 30, 2024. The increase in gross profit was primarily attributable to higher profit contribution from our operated airport locations in Europe and our business and general aviation activities, partially offset by a decrease in gross profit attributable to the Avinode sale, which closed during the second quarter of 2024.

Previous wording

Income from operations in our aviation segment for the three months ended March 31, 2025 was $56.2 million, an increase of $12.2 million, or 28%, compared to the three months ended March 31, 2024, driven by the increase in gross profit discussed above and a decrease in operating expenses. The decrease in operating expenses was primarily attributable to lower compensation and general and administrative expenses associated with the Avinode sale, partially offset by an increase in restructuring charges during the first quarter of 2025, as discussed under "Restructuring and Exit Activities" above, and an increase in general and administrative costs.

Current wording

Income from operations in our aviation segment for the three months ended June 30, 2025 was $71.7 million, an increase of $3.7 million, or 5%, compared to the three months ended June 30, 2024, driven by the increase in gross profit discussed above, partially offset by an increase in operating expenses. The increase in operating expenses was primarily attributable to higher provision for credit losses compared to the three months ended June 30, 2024, which benefited from the recovery of a receivable previously written off as uncollectible, as well as increased restructuring charges as discussed under "Restructuring and Exit Activities" above, partially offset by lower compensation and general and administrative expenses associated with the Avinode sale.

Previous wording

Revenues in our land segment were $2.9 billion for the three months ended March 31, 2025, a decrease of $551.2 million, or 16%, compared to the three months ended March 31, 2024. The decrease in revenue was driven by lower average fuel prices and a decrease in volume. Average fuel prices decreased by 10%. Total volumes decreased by 103.8 million, or 6%, to 1.5 billion gallons or gallon equivalents, primarily attributable to the sale of our fuel business in Brazil as well as the rationalization of certain assets within our North American land business during the fourth quarter of 2024.

Current wording

Revenues in our land segment were $2.4 billion for the three months ended June 30, 2025, a decrease of $867.5 million, or 26%, compared to the three months ended June 30, 2024. The decrease in revenue was driven by lower average fuel prices and a decrease in volume. Average fuel prices decreased by 21%. Total volumes decreased by 106.0 million, or 7%, to 1.3 billion gallons or gallon equivalents, primarily attributable to the sale of Watson Fuels and our fuel business in Brazil.

Previous wording

Land segment gross profit for the three months ended March 31, 2025 was $79.0 million, a decrease of $18.3 million, or 19%, compared to the three months ended March 31, 2024. The decrease in gross profit was primarily attributable to lower profit contribution from our liquid fuel business in North America, as a result of industry trends and reduced demand driven by economic uncertainty.

Current wording

Land segment gross profit for the three months ended June 30, 2025 was $67.4 million, a decrease of $13.4 million, or 17%, compared to the three months ended June 30, 2024. The decrease in gross profit was primarily attributable to the Watson Fuels sale, which closed during the second quarter of 2025, the exit from certain North American land operations during the fourth quarter of 2024, and lower profit contribution from our liquid fuel business in North America principally as a result of reduced demand.

Previous wording

Revenues in our marine segment were $1.9 billion for the three months ended March 31, 2025, a decrease of $457.6 million, or 19%, compared to the three months ended March 31, 2024. The decrease in revenue was driven by lower average fuel prices and a decrease in volume. The average price per metric ton of bunker fuel sold decreased by 6%. Total volumes decreased by 0.6 million metric tons, or 14%, to 3.7 million primarily due to lower demand in our resale businesses driven in part by increasing market uncertainty with respect to international trade.

Current wording

Revenues in our marine segment were $1.9 billion for the three months ended June 30, 2025, a decrease of $410.9 million, or 18%, compared to the three months ended June 30, 2024. The decrease in revenue was driven by lower average fuel prices and a decrease in volume. The average price per metric ton of bunker fuel sold decreased by 12%. Total volumes decreased by 0.3 million metric tons, or 7%, to 3.9 million primarily due to lower demand in our resale businesses driven in part by continued market uncertainty with respect to international trade.

Previous wording

Non-Operating Income (Expense), net. For the three months ended March 31, 2025, we had net non-operating expense of $21.5 million compared to net non-operating expense of $32.8 million for the three months ended March 31, 2024. The decrease in non-operating expense of $11.3 million during the three months ended March 31, 2025 was primarily attributable to a decrease in interest expense, driven by a decrease in our average interest rates and daily borrowings, and an increase in foreign currency exchange gains.

Current wording

Non-Operating Income (Expense), net. For the six months ended June 30, 2025, we had net non-operating expense of $125.1 million compared to net non-operating income of $38.6 million the six months ended June 30, 2024. The increase in non-operating income of $163.8 million during the six months ended June 30, 2025 was primarily attributable to the $81.7 million loss on the sale of Watson Fuels during the six months ended June 30, 2025 compared to the $96.0 million gain recognized on the sale of Avinode during the six months ended June 30, 2024, as discussed in Note 3. Acquisitions and Divestitures, partially offset by a decrease in interest expense, driven by a decrease in our average interest rates and daily borrowings, and an increase in foreign currency gains.

Previous wording

Marine segment gross profit for the three months ended March 31, 2025 was $35.7 million, a decrease of $12.7 million, or 26%, principally due to to lower bunker fuel prices and further reduced volatility that had benefited prior year results, as well as reduced demand and lower margins in our resale and physical businesses as a result of increasing market uncertainty.

Current wording

Our marine segment gross profit for the six months ended June 30, 2025 was $62.8 million, a decrease of $22.3 million, or 26%, principally due to an unfavorable transaction tax settlement recognized in the second quarter of 2025 in addition to lower bunker fuel prices and further reduced volatility that had benefited prior year results, as well as reduced demand and lower margins in our resale and physical businesses as a result of market uncertainty.

Previous wording

Based on the information currently available, we believe that our cash and cash equivalents as of March 31, 2025 and available funds from our Credit Facility, together with cash flows generated by operations, are sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months after the financial statements are issued.

Current wording

Based on the information currently available, we believe that our cash and cash equivalents as of June 30, 2025 and available funds from our Credit Facility, together with cash flows generated by operations, are sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months after the financial statements are issued and the foreseeable future thereafter.

Previous wording

The following table reflects the major categories of cash flows for the three months ended March 31, 2025 and 2024 (in millions). For additional details, please see the unaudited Condensed Consolidated Statements of Cash Flows in this Quarterly Report on Form 10-Q.

Current wording

The following table reflects the major categories of cash flows for the six months ended June 30, 2025 and 2024 (in millions). For additional details, please see the unaudited Condensed Consolidated Statements of Cash Flows in this Quarterly Report on Form 10-Q.

Previous wording

Operating Activities. For the three months ended March 31, 2025, net cash provided by operating activities was $114.4 million, compared to $110.2 million net cash provided during the three months ended March 31, 2024. The $4.1 million increase in operating cash flows was principally due to increased cash provided by our RPA activity, as well as cash provided by the collection of transaction tax refunds during the three months ended March 31, 2025. These increases were offset by cash used in our derivative activities driven by increased collateral requirements as well a decrease in our net income adjusted for noncash items (see "Results of Operations" for further details of the drivers impacting our net income).

Current wording

Operating Activities. For the six months ended June 30, 2025, net cash provided by operating activities was $142.6 million, compared to $178.1 million net cash provided during the six months ended June 30, 2024. The $35.5 million decrease in operating cash flows was principally due to cash used in our derivative activities driven by increased collateral requirements, income tax payments, and a decrease in our net income adjusted for noncash items (see "Results of Operations" for further details of the drivers impacting our net income. These decreases were partially offset by increased cash provided by our RPA activity, as well as cash provided by the collection of transaction tax refunds during the six months ended June 30, 2025.

Previous wording

Investing Activities. For the three months ended March 31, 2025, net cash used in investing activities was $5.8 million, compared to net cash used of $16.9 million during the three months ended March 31, 2024. The net cash used in investing activities for the three months ended March 31, 2025 was primarily driven by capital expenditures of $15.2 million, partially offset by $9.3 million of cash received from the net repayment of notes receivable. Net cash used in investing activities for the three months ended March 31, 2024 was primarily driven by capital expenditures of $17.5 million.

Current wording

Investing Activities. For the six months ended June 30, 2025, net cash used in investing activities was $4.8 million, compared to net cash provided of $163.8 million during the six months ended June 30, 2024. The net cash used in investing activities for the six months ended June 30, 2025 was primarily driven by capital expenditures of $30.1 million and asset acquisitions of $13.0 million, partially offset by $23.4 million net proceeds from the Watson Sale and $18.0 million of cash received from the net repayment of notes receivable. Net cash provided by investing activities for the six months ended June 30, 2024 was primarily driven by net proceeds of $200.4 million from the Avinode sale, as discussed in Note 3. Acquisitions and Divestitures, partially offset by capital expenditures of $32.1 million.

Previous wording

Financing Activities. For the three months ended March 31, 2025, net cash used in financing activities was $32.4 million compared to net cash used of $64.3 million for the three months ended March 31, 2024. The net cash used in financing activities for the three months ended March 31, 2025 was principally attributable to repurchases of common stock of $10.0 million, dividend payments of $9.7 million, and net repayments under our Credit Facility of $6.3 million. Net cash used in financing activities for the three months ended March 31, 2024 was primarily attributable to payments of deferred consideration related to prior acquisitions of $50.7 million, dividend payments of $8.4 million, and net repayments under our Credit Facility of $3.1 million.

Current wording

Financing Activities. For the six months ended June 30, 2025, net cash used in financing activities was $131.1 million compared to net cash used of $114.7 million for the six months ended June 30, 2024. The net cash used in financing activities for the six months ended June 30, 2025 was principally attributable to net repayments of debt of $58.8 million driven by the repayment of secured borrowings associated with the transfer of transaction taxes as well as net repayments under our Credit Facility, repurchases of common stock of $45.0 million, and dividend payments of $19.2 million. Net cash used in financing activities for the six months ended June 30, 2024 was primarily attributable to payments of deferred consideration related to prior acquisitions of $50.9 million, repurchases of common stock of $29.1 million, dividend payments of $18.5 million, and net repayments under our Credit Facility of $9.4 million.

Previous wording

We assess accounting estimates that require consideration of forecasted financial information. Significant judgment is involved in performing these estimates. A reporting unit is considered at risk when its fair value does not exceed its carrying amount by more than 10%. While our aviation reporting unit is not currently considered at risk, our land reporting unit is considered to be at risk as of March 31, 2025.

Current wording

A reporting unit is considered at risk when its fair value does not exceed its carrying amount by more than 10%. While our aviation reporting unit is not currently considered at risk, our land reporting unit has been considered to be at risk since the fourth quarter of 2024. As discussed in Note 4. Goodwill, during the second quarter of 2025 we identified an triggering event with respect to our land reporting unit and determined that it was more likely than not that the fair value of the reporting unit was less than its carrying value. We performed a quantitative impairment test and concluded that the carrying value of the land reporting unit exceeded its estimated fair value.

Previous wording

The assumptions used in these assessments, particularly the expected growth rates, the profitability embedded in the projected cash flows provided by our legacy and newly acquired businesses, the discount rate and the market-based multiples, are defined based on available information as of the testing date considering current market volatility and geopolitical risks. When testing goodwill at our reporting units, we also consider the volatility in the Company's market capitalization and evaluate the potential impact that this volatility may have on the estimated fair value of our reporting units. As of March 31, 2025, the goodwill balances in our land and aviation reporting units were $831.9 million and $354.5 million, respectively.

Current wording

The assumptions used in these assessments, particularly the expected growth rates, the profitability embedded in the projected cash flows provided by our legacy and newly acquired businesses, the discount rate and the market-based multiples, are defined based on available information as of the testing date considering current market volatility and geopolitical risks. When testing goodwill at our reporting units, we also consider the volatility in the Company's market capitalization and evaluate the potential impact that this volatility may have on the estimated fair value of our reporting units. As a result, we recognized a goodwill impairment charge of $359.0 million, which represents a partial impairment of goodwill in our land reporting unit. As of June 30, 2025, the remaining goodwill balances in our land and aviation reporting units were $471.3 million and $354.5 million, respectively. If our actual results differ significantly from the assumptions used to determined the fair value of the reporting unit, such impact could potentially result in additional goodwill impairment charges in future periods.