Shares of World Fuel Services (NYSE:INT) got smacked around on Friday afternoon, falling more than 12% by 2:30 p.m. EST. Fueling the sell-off was the company's poorly received third-quarter report.
World Fuel Services reported third-quarter net income of $42.7 million, or $0.61 per share. That's down from the year-ago quarter, when it earned $43.7 million, or $0.62 per share. That said, the company did record several non-recurring expenses in the quarter, which, if adjusted, lifted earnings to $45.1 million, or $0.65 per share. However, that was still $0.05 per share below analysts' expectations.
The culprit was continued weakness in the company's marine markets, where gross profit sank 23.4% year over year to $37.2 million. This decline, though, was more than offset by the solid performance of the company's other two businesses. The aviation segment delivered a record gross profit of $111.7 million, up 4.5% year over year, while the land segment recorded a 23.2% increase in gross profit to $87.8 million.
Despite the weakness in the marine segment, World Fuel Services generated positive free cash flow. Further, it was able to amend its revolving credit facility and term loan by $500 million, boosting its available capacity to $2.1 billion. Because of this, the company has ample liquidity to execute on its strategic growth initiatives to diversify its offerings.
World Fuel Services believes its diversified strategy will pay off over the long term as it continues to expand its service offerings and completes its long-term growth initiates. That said, the sinking marine market is clearly affecting the company's financial results. Given today's sell-off, investors do not see an improvement on the horizon.