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WK

WORLD KINECT CORP (WKC)·Q1 2025 Earnings Summary

Executive Summary

  • Adjusted EPS of $0.48 was above S&P Global consensus of $0.45, while revenue of $9.45B missed the $10.47B consensus; consolidated gross profit of $230.4M came in below prior guidance ($234–$241M), with management citing Land segment weakness and marine price/volatility normalization . EPS estimate: 0.448*, Revenue estimate: $10.472B*.
  • Aviation outperformed with gross profit up 7% YoY to $115.7M despite the Avinode divestiture; Land gross profit fell 19% and Marine fell 26% YoY, reflecting macro and market headwinds .
  • Strategic actions: completed sale of U.K. land fuels (asset impairment $44.5M) and recorded $15.0M restructuring charges; management expects portfolio streamlining and cost reductions to benefit H2 2025 .
  • Q2 2025 guidance: consolidated gross profit $235–$244M, adjusted OpEx $175–$179M, interest expense $24–$27M, and FY25 adjusted tax rate lowered to 22–24% (from 22–25%) .
  • Cash generation and capital returns remained solid: $114M operating cash flow, $99M free cash flow, and $10M share repurchases in Q1; balance sheet liquidity improved with cash up to $456.4M .

What Went Well and What Went Wrong

What Went Well

  • Aviation delivered a “healthy year-over-year increase” with volume up 2% and gross profit up 7% to $116M, driven by stronger operated airports in Europe, inventory performance, and general aviation; CEO: “Our Aviation business outperformed our expectations this quarter” .
  • Strong cash generation despite market uncertainty: operating cash flow $114.4M and free cash flow $99.2M; $10M of shares repurchased, underscoring shareholder return commitment .
  • Adjusted OpEx decreased 6% YoY to $178M; management executed restructuring expected to deliver ~$30M annualized savings, improving operating leverage in H2 2025 .

What Went Wrong

  • Consolidated gross profit of $230.4M missed prior guidance ($234–$241M) as Land segment underperformed; CFO: “we came up a bit short of expectations” .
  • Land gross profit fell 19% YoY to $79.0M, impacted by North American liquid fuels industry trends, demand uncertainty, and Brazil/U.S. exits; Marine gross profit down 26% YoY on lower bunker prices and reduced volatility .
  • Non-GAAP adjustments: $44.5M impairment tied to U.K. sale and $15.0M restructuring charges; GAAP diluted EPS was a loss of $(0.37), highlighting non-recurring drag on reported results .

Financial Results

Summary vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$10.491 $9.761 $9.453
Gross Profit ($USD Millions)$268.1 $258.9 $230.4
Adjusted Operating Expenses ($USD Millions)$195.0 $197.0 $178.0
Adjusted EBITDA ($USD Millions)$100.1 $95.0 $80.3
Operating Margin (% of Gross Profit)27% 12% (3)%
GAAP Diluted EPS ($)$0.57 $(1.77) $(0.37)
Adjusted Diluted EPS ($)$0.62 $0.62 $0.48

Actual vs S&P Global Consensus (Q1 2025)

MetricConsensusActual
Revenue ($USD Billions)$10.472*$9.453
Primary EPS ($)$0.448*$0.48
# of EPS Estimates5*—
# of Revenue Estimates4*—
Values retrieved from S&P Global.*

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentRevenue Q1 2024 ($MM)Revenue Q1 2025 ($MM)Gross Profit Q1 2024 ($MM)Gross Profit Q1 2025 ($MM)
Aviation$5,144.2 $4,654.2 $108.4 $115.7
Land$3,416.6 $2,865.4 $97.3 $79.0
Marine$2,390.5 $1,932.9 $48.4 $35.7
Total$10,951.4 $9,452.5 $254.1 $230.4

KPIs and Operating Metrics (Q1 2025)

KPIQ1 2025Q1 2024
Consolidated Volume (Billions of gallons)4.177 4.415
Operating Cash Flow ($MM)$114.4 $110.2
Free Cash Flow ($MM)$99.2 $92.8
Adjusted Operating Expenses ($MM)$178.0 $190.0
Interest Expense ($MM)$22.9 $28.9
Adjusted Effective Tax Rate (%)15% —

Non-GAAP reconciliation drivers in Q1 2025: impairments ($44.5M), restructuring ($15.0M), loss on sale ($0.4M), tax impacts ($(11.5)M), yielding adjusted net income $27.3M and adjusted EPS $0.48 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Gross Profit ($MM)Q2 2025—$235–$244 New
Adjusted Operating Expenses ($MM)Q2 2025—$175–$179 New
Interest Expense ($MM)Q2 2025Q1 2025: $22–$23 $24–$27 Raised vs prior quarter’s range
Adjusted Effective Tax Rate (%)FY 202522–25 22–24 Lowered
Consolidated Gross Profit ($MM)Q1 2025$234–$241 Actual: $230.4 Miss vs guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/data centers energy demandHyperscaler/data center engagement and nat gas implications discussed; SAF growth trajectory accelerating .Continued diversification; emphasis on last half‑mile solutions; no new AI‑specific metrics .Steady engagement; focus on platform execution.
Platform consolidation & costNorth American land migration to unified platform; operating margin target path to 30% discussed .$15M restructuring; ~$30M annualized savings; sharpened land portfolio post Brazil/U.K. .Accelerating execution; benefits expected H2 2025.
Tariffs/macro uncertaintyMarine margins sensitive to price volatility; broader macro noted .Trade/tariff policy uncertainty impacting marine and global shipping; Singapore bunker volumes down .Macro headwinds persist.
Aviation performanceSeasonal strength; overseas improvements (Europe/Asia) .Strong Europe airport operations and general aviation; 7% GP growth despite Avinode sale .Continued outperformance.
Marine market/regulatoryVolatility-driven margins; physical operations strategy .Anticipated near-term Mediterranean ECA change may cause imbalances/logistical challenges .Potential short-term upside; overall caution.
Regional trendsEurope/Asia strength; West Coast renewables shifting supply .West Coast renewables retooling pressuring traditional fuel supply; margins impacted; Europe aviation strong .Mixed: aviation up; land margins pressured.
M&APipeline steady; disciplined approach; tuck-ins in aviation .Ordinary course pipeline; potential execution in next 12 months; sensible seller expectations .Selective; disciplined.

Management Commentary

  • CEO: “Our Aviation business outperformed our expectations this quarter… The divestiture of our U.K. Land business marks continued progress in streamlining our Land portfolio” .
  • CEO: “We remain committed to our strategic and operational objectives… leveraging our demonstrated expertise in last half mile distribution solutions” .
  • CFO: “Consolidated gross profit… came up a bit short of expectations… adjusted consolidated operating expenses were $178 million… down 6% year-over-year” .
  • CFO: “Total one-time non-cash pretax charge associated with [the U.K. sale] will be approximately $110 million… ~$45 million recorded as an asset impairment in Q1 with the balance ~$65 million in Q2” .

Q&A Highlights

  • U.K. land sale: ~375M gallons annual volume; accretive exit as business was loss‑making; ~$50M cash proceeds to repay debt and boost liquidity for U.S. investments .
  • Land margin trajectory: Targeting progress toward 30% operating margin via divestitures and restructuring; meaningful improvement expected over 2025 .
  • Land drivers: East Coast cardlock customer churn; West Coast renewables‑driven supply shifts pressuring margins; optimization of trucks/routes to improve efficiency .
  • Marine outlook: Expect modest YoY GP decline in Q2 absent volatility; Mediterranean ECA change could create short‑term imbalances and upside .
  • Capital allocation: Ordinary-course M&A pipeline with more rational seller expectations; disciplined approach; potential deal in next 12 months .

Estimates Context

  • Q1 2025 comparison: Adjusted EPS $0.48 vs consensus $0.448* (beat); Revenue $9.45B vs consensus $10.47B* (miss). Values retrieved from S&P Global.*
  • Implications: Lower adjusted OpEx ($175–$179M) and reduced FY25 tax rate (22–24%) may support upward revisions to forward EPS, while Land weakness and marine volatility suggest caution on revenue trajectory .

Key Takeaways for Investors

  • Aviation strength offset Land and Marine headwinds; expect continued aviation resilience into Q2 given strong operated airport performance and general aviation momentum .
  • Portfolio sharpening and restructuring are advancing; ~$30M annualized cost savings plus exits (Brazil/U.K.) should underpin H2 margin improvement and ratability .
  • Q2 setup: GP guide $235–$244M and adjusted OpEx $175–$179M frame the near-term P&L; interest expense guided higher ($24–$27M), partially offset by lower FY tax rate (22–24%) .
  • Revenue caution: Marine remains exposed to lower bunker prices/volatility; Land margins pressured by renewables‑driven supply dynamics on the U.S. West Coast .
  • Cash flow remains a support: strong operating/free cash flow and continued buybacks signal capital return discipline through uncertainty .
  • Watch catalysts: Mediterranean ECA implementation impacts marine logistics; execution on U.S. land platform consolidation; potential tuck‑in M&A over the next 12 months .
  • Estimate bias: EPS has positive bias from lower OpEx/tax, but revenue estimates may need trimming given Q1 miss and macro commentary .

Appendix: Additional Quarter-to-Quarter Context

  • Prior quarter guidance vs outcome: Q4 call guided Q1 consolidated gross profit $234–$241M; actual $230.4M (miss) .
  • No additional Q1 2025 press releases located in the SEC filings catalog beyond the 8‑K and earnings materials in the requested window.