WORLD KINECT CORP

Previous wording

•the impact of cyber and other information security related incidents;

Current wording

•the impact of cyber and other information technology or security related incidents on us, our customers or other parties;

Previous wording

•changes in the political, economic or regulatory environment generally and in the markets in which we operate, such as the current conflicts in Eastern Europe and the Middle East;

Current 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 upcoming 2024 U.S. presidential election;

Previous wording

•changes in multilateral conventions, treaties, tariffs or other arrangements between or among sovereign nations, including the U.K.'s exit from the E.U.;

Current wording

•changes in multilateral conventions, treaties, tariffs or other arrangements between or among sovereign nations;

Previous wording

In November 2023, we approved and began implementing a restructuring plan to realign our operational focus with the purpose of simplifying our business, enabling us to focus more clearly on growing our core businesses and our new sustainability-related activities, and improving our cost structure. As part of this plan, we identified open positions that were eliminated and other positions that were closed to better align the workforce necessary to execute the revised strategy. During the year ended December 31, 2023, we recognized restructuring charges of $7.2 million, composed of severance and other compensation costs. We estimate that the plan could result in approximately $15.6 million in annualized savings related to compensation. We also decided to shift future investments away from underperforming businesses and to continue assessing our global office footprint, resulting in impairment charges of $11.2 million during the fourth quarter of 2023.

Current wording

In November 2023, we approved and began implementing a restructuring plan to realign our operational focus with the purpose of simplifying our business, enabling us to focus more clearly on growing our core businesses and our new sustainability-related activities, and improving our cost structure. As part of this plan, we identified open positions that were eliminated and other positions that were closed to better align the workforce necessary to execute the revised strategy. During the year ended December 31, 2023, we recognized restructuring charges of $7.2 million, composed of severance and other compensation costs. We also decided to shift future investments away from underperforming businesses and to continue assessing our global office footprint, resulting in impairment charges of $11.2 million during the fourth quarter of 2023. During the first half of 2024, we continued to assess potential initiatives, resulting in additional severance and other compensation cost-related restructuring charges of $2.5 million. In addition, as part of the 2023 Restructuring Plan, within our marine segment we made the decision to cease operations at one of our subsidiaries in Brazil, resulting in the write-off of $3.3 million of VAT credits that are no longer recoverable. We estimate that the plan should result in approximately $21.9 million in annualized compensation-related savings. We completed the restructuring activities during the second quarter of 2024. See Note 15. Restructuring and Exit Activities for additional information.

Previous wording

Our aviation segment has benefited from growth in our fuel and related service offerings, as well as our enhanced logistics capabilities and the geographic expansion of our aviation fueling operations into additional international airport locations. During 2023, we successfully achieved higher returns in a high interest rate environment, driven in part by targeted improvements in working capital management consistent with our strategy to rationalize lower-return business activity. As part of our business strategy, we hold inventory in order to meet the needs of our customers. While we generally enter into financial derivative contracts to mitigate price risk exposure associated with our inventory, market pricing dynamics may still negatively impact our results.

Current wording

Our aviation segment has benefited from growth in our fuel and related service offerings, as well as our enhanced logistics capabilities and the geographic expansion of our aviation fueling operations into additional international airport locations. Since 2023, we have successfully achieved higher returns in a high interest rate environment, driven in part by targeted improvements in working capital management consistent with our strategy to rationalize lower-return business activity. As part of our business strategy, we hold inventory in order to meet the needs of our customers. While we generally enter into financial derivative contracts to mitigate price risk exposure associated with our inventory, market pricing dynamics may still negatively impact our results.

Previous wording

In connection with our efforts to sharpen our portfolio of businesses and accelerate growth in our core businesses, we have executed a definitive agreement to sell the Avinode Group and our portfolio of aviation FBO software products. See Note 3. Acquisitions and Divestitures for additional information.

Current wording

In connection with our efforts to sharpen our portfolio of businesses and accelerate growth in our core businesses, we completed our sale of the Avinode Group and our portfolio of aviation FBO software products (the "Avinode sale") during the second quarter of 2024. See Note 3. Acquisitions and Divestitures for additional information.

Previous wording

We continue to focus on supporting the energy transition by expanding our sustainability offerings, including renewable fuel products, as well as carbon management and renewable energy solutions. We are continuing to invest in talent in this area, which we believe will help accelerate growth in these activities.

Current wording

While our land segment faced several challenges during the three months ended June 30, 2024, we continue to focus on supporting the energy transition by expanding our sustainability offerings, including renewable fuel products, as well as carbon management and renewable energy solutions. We are continuing to invest in talent in this area, which we believe will help accelerate growth in these activities.

Previous wording

Revenue. Our consolidated revenue for the three months ended March 31, 2024 was $11.0 billion, a decrease of $1.5 billion, or 12%, compared to the three months ended March 31, 2023, primarily driven by lower fuel prices across the three segments and decreased volumes in our aviation segment, as discussed further below.

Current wording

Revenue. Our consolidated revenue for the three months ended June 30, 2024 was $11.0 billion, a decrease of $15.5 million compared to the three months ended June 30, 2023, attributable to decreased revenue of $349.8 million in our land segment, partially offset by increased revenue of $174.3 million and $160.0 million in our aviation and marine segments, respectively, as discussed further below.

Previous wording

Non-Operating Income (Expense), net. For the three months ended March 31, 2024, we had net non-operating expense of $32.8 million compared to net non-operating expense of $37.8 million for the three months ended March 31, 2023. The decrease of $5.1 million during the three months ended March 31, 2024 was primarily attributable to lower interest expense, driven by a decrease in our average interest rates and daily borrowings, as well as fees associated with sales of accounts receivable under our RPA.

Current wording

Non-Operating Income (Expense), net. For the three months ended June 30, 2024, we had net non-operating income of $71.4 million compared to net non-operating expense of $35.3 million for the three months ended June 30, 2023. The increase in non-operating income of $106.7 million during the three months ended June 30, 2024 was primarily attributable to the $96.0 million gain recognized on the Avinode sale, a decrease in interest expense of $5.7 million driven by a decrease in our average interest rates and daily borrowings, and lower foreign currency losses.

Previous wording

Income Taxes. For the three months ended March 31, 2024, we recognized an income tax expense of $3.3 million, compared to income tax expense of $4.2 million for the three months ended March 31, 2023. The decrease of $0.8 million was primarily attributable to differences in discrete tax items. See Note 12. Income Taxes for additional information.

Current wording

Income Taxes. For the three months ended June 30, 2024, we recognized an income tax expense of $9.7 million, compared to income tax expense of $9.8 million for the three months ended June 30, 2023. The decrease of $0.1 million was primarily attributable to lower pre-tax book income, excluding the gain recognized on the Avinode sale, and changes in the mix of our worldwide earnings, partially offset by higher net discrete tax expense, including an additional $9.1 million related to the Avinode sale. See Note 12. Income Taxes for additional information.

Previous wording

Aviation segment gross profit for the three months ended March 31, 2024 was $108.4 million, an increase of $7.9 million, or 8%, compared to the three months ended March 31, 2023. The increase in gross profit during the three months ended March 31, 2024 as compared to the prior period was primarily attributable to stronger performance in our inventory businesses, our focus on improving returns in an elevated interest rate environment, and growth at operated airport locations during the three months ended March 31, 2024. These increases were slightly offset by a decrease in bulk fuel activity.

Current wording

Aviation segment gross profit for the three months ended June 30, 2024 was $127.7 million, a decrease of $0.5 million compared to the three months ended June 30, 2023. The decrease in gross profit during the three months ended June 30, 2024 as compared to the prior year was primarily attributable to the Avinode sale during the second quarter of 2024, largely offset by our continued focus to improve returns, stronger performance in our inventory businesses, and growth at operated airport locations.

Previous wording

Revenues in our land segment were $3.4 billion for the three months ended March 31, 2024, a decrease of $0.5 billion, or 12%, compared to the three months ended March 31, 2023. The decrease in revenue was principally driven by lower average fuel prices, with average fuel prices decreasing by 14% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Total volumes increased by 33.4 million, or 2%, to 1.6 billion gallons or gallon equivalents in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily attributable to volume growth in our natural gas and power businesses offset by decreased volume in the U.K business as well as in our liquid fuel business in North America.

Current wording

Revenues in our land segment were $3.3 billion for the three months ended June 30, 2024, a decrease of $349.8 million, or 10%, compared to the three months ended June 30, 2023. The decrease in revenue was driven by lower average fuel prices and a decrease in volume. Average fuel prices decreased by 6% in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Total volumes decreased by 58.3 million, or 4%, to 1.4 billion gallons or gallon equivalents in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily attributable to our liquid fuel business in North America.

Previous wording

In our land segment, income from operations for the three months ended March 31, 2024 was $18.5 million, a decrease of $7.7 million, or 30%, compared to the three months ended March 31, 2023. The decrease in gross profit discussed above was partially offset by a decrease in operating expenses principally related to lower incentive compensation costs and a reduction in general and administrative expenses attributable to our focus on driving operating efficiencies.

Current wording

Income (loss) from operations in our land segment for the three months ended June 30, 2024 was a loss of $4.2 million, a decrease of $28.9 million, or 117%, compared to the three months ended June 30, 2023. The decrease in gross profit discussed above was partially offset by a decrease in operating expenses principally related to lower incentive compensation costs as well as lower general and administrative expenses due to our focus on driving operating efficiencies, partially offset by an increase in asset impairment charges compared to the prior year, and $0.9 million of restructuring charges recognized during the three months ended June 30, 2024.

Previous wording

Marine segment gross profit for the three months ended March 31, 2024 was $48.4 million, a decrease of $3.7 million, or 7%, compared to the three months ended March 31, 2023 principally due to a reduction in market volatility when compared to the heightened volatility experienced throughout 2022 and into the first quarter of 2023.

Current wording

Marine segment gross profit for the three months ended June 30, 2024 was $36.7 million, a decrease of $5.3 million, or 13%, principally due to reduced market volatility when compared with the three months ended June 30, 2023.

Previous wording

Gross Profit. Our gross profit for the three months ended March 31, 2024 was $254.1 million, a decrease of $8.6 million, or 3%, compared to the three months ended March 31, 2023, attributable to decreased gross profit of $12.8 million and $3.7 million in our land and marine segments, partially offset by increased gross profit of $7.9 million in our aviation segment, as discussed further below.

Current wording

Gross Profit. Our gross profit for the six months ended June 30, 2024 was $499.3 million, a decrease of $45.1 million, or 8%, compared to the six months ended June 30, 2023, attributable to decreased gross profit of $43.5 million and $9.0 million in our land and marine segments, respectively, partially offset by increased gross profit of $7.4 million in our aviation segment, as discussed further below.

Previous wording

Operating Expenses. Total operating expenses for the three months ended March 31, 2024 were $190.8 million, a decrease of $7.3 million compared to the three months ended March 31, 2023. The decrease in operating expenses was primarily driven by lower general and administrative expenses due to our focus on driving operating efficiencies and lower incentive compensation costs, partially offset by an increase in bad debt expense.

Current wording

Operating Expenses. Total operating expenses for the six months ended June 30, 2024 were $390.9 million, a decrease of $13.5 million compared to the six months ended June 30, 2023. The decrease in operating expenses was primarily driven by lower general and administrative expenses due to our continued focus on driving operating efficiencies and lower incentive compensation costs principally in our land segment. In addition, operating expenses decreased as a result of the Avinode sale during the second quarter of 2024, as discussed in Note 3. Acquisitions and Divestitures. These decreases were partially offset by $5.8 million of restructuring and exit activity charges recognized during the six months ended June 30, 2024 as discussed under "2023 Restructuring Plan" above as well as a $2.1 million increase in asset impairment charges compared to the prior year.

Previous wording

Revenues in our aviation segment were $5.1 billion for the three months ended March 31, 2024, a decrease of $1.1 billion, or 17%, compared to the three months ended March 31, 2023. The decrease in revenue was driven by lower average prices and a decrease in volume compared to the three months ended March 31, 2023. Average jet fuel price per gallon sold decreased by 13% in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Total aviation volumes decreased by 104.0 million gallons, or 6%, to 1.7 billion gallons driven primarily by a reduction in lower margin bulk fuel.

Current wording

Revenues in our aviation segment were $10.5 billion for the six months ended June 30, 2024, a decrease of $904.3 million, or 8%, compared to the six months ended June 30, 2023. The decrease in revenue was driven by lower average prices and a decrease in volume compared to the six months ended June 30, 2023. Average jet fuel price per gallon sold decreased by 5% in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Total aviation volumes decreased by 125.6 million gallons, or 3%, to 3.5 billion gallons, driven primarily by a reduction in lower margin bulk fuel.

Previous wording

Income from operations in our aviation segment for the three months ended March 31, 2024 was $44.0 million, an increase of $10.0 million, or 29%, compared to the three months ended March 31, 2023. In addition to the increase in gross profit discussed above, operating expenses decreased by $2.1 million primarily attributable to lower general and administrative expenses due to our focus on driving operating efficiencies.

Current wording

Income from operations in our aviation segment for the six months ended June 30, 2024 was $112.0 million, an increase of $19.9 million compared to the six months ended June 30, 2023. In addition to the increase in gross profit discussed above, operating expenses decreased by $12.5 million primarily attributable to lower general and administrative expenses resulting from our focus on driving operating efficiencies, and lower general and administrative expenses and compensation costs associated with the Avinode sale, in addition to a decrease in our provision for credit losses.

Previous wording

Our land segment gross profit for the three months ended March 31, 2024 was $97.3 million, a decrease of $12.8 million, or 12%, compared to the three months ended March 31, 2023. The decrease in gross profit was primarily driven by lower profit contribution from our natural gas and U.K. businesses, which were impacted by unfavorable weather conditions, as well as our sustainability-related offerings. These decreases were partially offset by higher profitability in our liquid fuel business in North America during the three months ended March 31, 2024.

Current wording

Our land segment gross profit for the six months ended June 30, 2024 was $178.1 million, a decrease of $43.5 million, or 20%, compared to the six months ended June 30, 2023. The decrease in gross profit was primarily driven by highly unfavorable market conditions in North America and Brazil, lower profit contribution from our natural gas business as a result of lower market volatility as well as our U.K. businesses, which were impacted by unfavorable weather conditions.

Previous wording

Our marine segment income from operations for the three months ended March 31, 2024 was $26.8 million, a decrease of $4.0 million, or 13%, compared to the three months ended March 31, 2023, primarily due to the decrease in gross profit discussed above.

Current wording

Income from operations in our marine segment for the six months ended June 30, 2024 was $37.2 million, a decrease of $13.4 million, or 27%, compared to the six months ended June 30, 2023, primarily due to the decrease in gross profit discussed above, as well as restructuring and exit activity charges recognized during the six months ended June 30, 2024.

Previous wording

Receivables Purchase Agreements. We also have accounts receivable programs under RPAs that allow us to sell a specified amount of qualifying accounts receivable and receive cash consideration equal to the total balance, less an associated fee, which varies based on the outstanding accounts receivable at any given time. The RPAs provide the constituent banks with the ability to add or remove customers from these programs in their discretion based on, among other things, the level of risk exposure the bank is willing to accept with respect to any particular customer. The fees the banks charge us to purchase the receivables from these customers can also be impacted for these reasons. During the second quarter of 2023, we amended one of our RPAs to, among other things, reduce the overall fee structure. See Note 2. Accounts Receivable for additional information.

Current wording

Receivables Purchase Agreements. We also have accounts receivable programs under RPAs that allow us to sell a specified amount of qualifying accounts receivable and receive cash consideration equal to the total balance, less an associated fee, which varies based on the outstanding accounts receivable at any given time. The RPAs provide the constituent banks with the ability to add or remove customers from these programs in their discretion based on, among other things, the level of risk exposure the bank is willing to accept with respect to any particular customer. The fees the banks charge us to purchase the receivables from these customers can also be impacted for these reasons. See Note 2. Accounts Receivable for additional information.

Previous wording

The following table reflects the major categories of cash flows for the three months ended March 31, 2024 and 2023 (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, 2024 and 2023 (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, 2024, net cash provided by operating activities was $110.2 million, compared to $143.0 million net cash provided during the three months ended March 31, 2023. The $32.7 million decrease in operating cash flows was principally due to relatively stable average fuel prices compared to the three months ended March 31, 2023, when lower fuel prices reduced our cost of inventory and decreased our accounts payable and accounts receivable. These decreases were offset by an increase in our net income (see

Current wording

Operating Activities. For the six months ended June 30, 2024, net cash provided by operating activities was $178.1 million, compared to $186.5 million net cash provided during the six months ended June 30, 2023. The $8.3 million decrease in operating cash flows was principally due to relatively stable average fuel prices during the six months ended June 30, 2024 compared to the lower fuel prices experienced during the six months ended June 30, 2023, which reduced our cost of inventory and decreased our accounts payable and accounts receivable, as well as a decrease in cash provided by our derivative activities. These decreases were offset by an increase in our net income (see "Results of Operations" for further details of the drivers impacting our net income) adjusted for noncash items and cash flows associated with income taxes and deferred revenue.

Previous wording

Investing Activities. For the three months ended March 31, 2024, net cash used in investing activities was $16.9 million, compared to net cash used of $23.5 million during the three months ended March 31, 2023. The net cash used in investing activities for the three months ended March 31, 2024 was primarily driven by capital expenditures of $17.5 million. Net cash used in investing activities for the three months ended March 31, 2023 was principally driven by capital expenditures of $18.8 million.

Current wording

Investing Activities. For the six months ended June 30, 2024, net cash provided by investing activities was $163.8 million, compared to net cash used of $56.1 million during the six months ended June 30, 2023. The 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. Net cash used in investing activities for the six months ended June 30, 2023 was principally driven by capital expenditures of $46.5 million.

Previous wording

Financing Activities. For the three months ended March 31, 2024, net cash used in financing activities was $64.3 million compared to net cash used of $192.8 million for the three months ended March 31, 2023. The 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. Net cash used in financing activities for the three months ended March 31, 2023 was primarily attributable to net repayments under our Credit Facility of $123.1 million, payments of deferred consideration related to prior acquisitions of $60.8 million, and dividend payments of $8.6 million.

Current wording

Financing Activities. For the six months ended June 30, 2024, net cash used in financing activities was $114.7 million compared to net cash used of $129.3 million for the six months ended June 30, 2023. The 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. Net cash used in financing activities for the six months ended June 30, 2023 was primarily attributable to net borrowings of $39.9 million, driven by proceeds of $350.0 million from the issuance of the Convertible Notes and proceeds of $40.3 million from secured borrowings associated with the transfer of transaction taxes, as discussed in Note 7. Debt, Interest Income, Expense, and Other Finance Costs, partially offset by $348.4 million of net repayments under our Credit Facility. In connection with the issuance of the Convertible Notes, we paid $70.5 million for the purchase of the convertible note hedges and $10.5 million for debt issuance costs, and received $40.0 million from the sale of warrants. In addition, net cash used in financing activities includes payments of deferred consideration related to prior acquisitions of $62.8 million, repurchases of common stock of $50.0 million, and dividend payments of $17.3 million.

Previous wording

We assess accounting estimates that require consideration of forecasted financial information. Significant judgment is involved in performing these estimates as they are developed based on forecasted assumptions. As of March 31, 2024, 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, were defined based on available information considering current market volatility and geopolitical risks. Management also considered the volatility in the Company's market capitalization and evaluated the potential impact that this volatility may have on the estimated fair value of our reporting units.

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 of June 30, 2024 the goodwill balances in our land and aviation reporting units were $838.0 million and $336.9 million, respectively.