World Fuel Services Corporation

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World Fuel Services Corporation

700 S. Royal Poinciana Boulevard, Suite 800
Miami Springs, Florida 33166
U.S.A.
Telephone: (305) 884-2001
Fax: (305) 883-0186
Web site: http://www.wfscorp.com

Public Company
Incorporated: 1984 as International Recovery Corp.
Employees: 181
Sales: $1.53 billion (2001)
Stock Exchanges: New York Pacific
Ticker Symbol: INT
NAIC: 422720 Petroleum and Petroleum Products Wholesalers (Except Bulk Stations and Terminals)

World Fuel Services Corporation (WFSC) is a leading downstream marketer of aviation and marine fuel products. It markets fuel products, acquired from the world’s major oil companies, at more than 1,100 airports and seaports for use in commercial and corporate vessels and aircraft. WFSC claims a 10 percent share of the global marine fuel market and less than 1 percent of the aviation fuel market.

WFSC’s operating companies in the aviation division are Baseops, AirData Services, and World Fuel Services, Inc. In the marine division, they are Trans-Tec Services, Bunkerfuels, and Pacific Horizon Petroleum Services. Through these subsidiaries, WFSC brokers fueling of ships, resells fuel, and provides hedging. WFSC launched a new fuel management division in early 2001 aimed at helping airlines manage their exposure to variations in jet fuel prices. The corporation has 27 offices in 12 countries.

The Aviation Fuel Services division specializes in servicing small and mid-sized carriers. World Fuel provides them needed trade credit. The Marine Fuel Services division helps shipping companies obtain the vital fuel they need every day from the highly fragmented world oil market. Whereas even major oil companies have limited geographical reaches, World Fuel prides itself on getting fuel to customers “anytime, anywhere.”

Origins

World Fuel began as a regional used oil recycling company with sales of $6 million a year. It was incorporated in Florida on July 20, 1984, as International Recovery Corp. Ralph Weiser and Jerrold Blair were cofounders of the company, which was based in Miami Springs. Blair became president and chief operating officer in January 1985. After trading over-the-counter under the symbol IRPC, International Recovery began listing on the American Stock Exchange in June 1987 under the symbol INT.

In 1986, International Recovery acquired a three-year-old aviation fuel company, Advance Petroleum, Inc. (later doing business as World Fuel Services of FL). Thus the company entered a promising new line of business, which was expanded into an international sales operation covering airports throughout the world. One of Advance Petroleum’s founders, Philip S. Bradley, was made CEO of World Fuel’s Aviation Fuel Services division.

International Recovery acquired another aviation fueling business, JCo Energy Partners, Ltd., in October 1989 and renamed it World Fuel Services, Inc. A new subsidiary, International Petroleum Corporation of Delaware, was formed in April 1993 upon the completion of an oil and water recycling plant in Wilmington. The business involved collecting waste oil, wastewater, and other petroleum-contaminated liquids from auto shops, utilities, and other generators. The recycled products were sold to industrial and commercial customers.

Making Waves in 1995

World Fuel entered the marine fuel business via the January 1995 acquisition of the Trans-Tec Services group of companies, based in New York, Costa Rica, the United Kingdom, and Singapore. Trans-Tec had been founded in 1985 by Paul H. Stebbins and Michael J. Kasbar; both became executives at World Fuel. The company changed its name from International Recovery Corp. to World Fuel Services Corporation in August 1995.

World Fuel’s revenues were about $500 million in fiscal 1996. The company had a presence at more than 1,100 airports and 1,000 seaports in more than 150 countries.

Late 1990s Acquisitions

World Fuel acquired Baseops, a Houston-based corporate aviation services company, in January 1998 for $3.5 million in cash and stock. Baseops had been formed seven years earlier by former employees of Air Routing International, which itself had been formed by former employees of Universal Weather and Aviation. According to the Houston Chronicle, these companies were the industry’s top three players, although Baseop’s annual sales ($15.3 million in 1997) were dwarfed by those of the other two (estimated at more than $150 million for Universal and $100 million for Air Routing). These companies provided weather information and flight plans for pilots and performed a variety of services for private jet owners.

The operations of the Bunkerfuels companies, a substantial marine fuel brokerage, were acquired in April 1999 in a deal worth $8.5 million. Bunkerfuels had 1998 earnings of $1.7 million on revenues of $84 million. Based in Cranbury, New Jersey, it had been founded in 1978 by Robert Fitzgerald, chairman, who was retiring. Bunkerfuels was credited as the first to establish a worldwide presence to serve international fleets. It was to operate independently from Trans-Tec Services. Combined with the other holdings, the acquisition made World Fuel the world’s largest marine fuels brokerage.

Plans to form a subsidiary in Indonesia, PT World Fuel Services, were announced in April 1999. Trans-Tec, which had alO percent share of the world bunker market, was opening an office in Tokyo, its 11th.

In August 1999, company officials reported an unusual act of piracy. A shipment of fuel to the Nigerian offshore oil industry did not reach its intended customers. World Fuel recorded a $3.3 million charge as a result and filed a claim with its insurance company. This was settled for $1 million in 2001. Earlier in 1999, the company had taken a $2.2 million charge related to bad debts, particularly in Ecuador.

In spite of the growth, World Fuel executives perceived the company’s stock to be undervalued. After hitting $22 per share earlier in the year, in April the stock was trading at slightly more than $11. One of the main difficulties was a lack of similar companies available for comparison by analysts. World Fuel weathered a stockholders’ class-action lawsuit that was dismissed in December 2000.

Exiting Oil Recycling in 2000

In February 2000, World Fuel exited the used oil recycling business by divesting its International Petroleum Corporation subsidiaries to the EarthCare Company of Dallas. Net income fell by a third to $9.6 million in fiscal 2000 on sales of $1.2 billion, up from 1999’s $720 million.

In December 2000, World Fuel entered an aviation fuel marketing joint venture called PAFCO (formerly Page Avjet Fuel Corporation) with Signature Flight Support Services Corporation. Signature, described as the world’s largest flight support operator and distribution network for business and commercial aviation services, was a subsidiary of the BBA Group.

Company President Jerrold Blair was named chairman and CEO in August 2000 upon the retirement of fellow cofounder Ralph R. Weiser. In the following few months, the company cut its staff by nearly 40 percent as part of a bid to make its financial performance less unpredictable.

President and COO Paul Stebbins, a cofounder of Trans-Tec (along with Michael J. Kasbar, CEO of the Marine Fuel Services division since 1995), explained the business to John T. Fakler of the South Florida Business Journal. The world fuel market was highly fragmented and unpredictable. World Fuel provided volume buying power, and its specialized staff tracked the many variables of market dynamics.

Great Results in 2001

Total revenues increased 27 percent to $1.5 billion for the fiscal year ending March 31, 2001. Net income rose 10 percent to $10.6 million. A rise in world fuel prices in the winter of 2000-01 helped send belt-tightening customers to the firm. World Fuel also was emphasizing the logistics side of the business, rather than the credit side, as it had in the past.

In March 2001 WFSC acquired the software company TransportEdge as it worked to move its business online. Two marine fuel brokerage companies, Norway-based Norse Bunker A.S. and Marine Energy of Dubai, also were acquired during the fiscal year. Both were located in vitally important seafaring areas.

WFSC launched a new fuel management division in spring 2001 aimed at helping airlines manage their exposure to variations in jet fuel prices. This promised to broaden its customer base to include larger commercial and corporate accounts, said Chairman Jerrold Blair.

Company Perspectives:

Our mission is to sustain long-term, profitable growth for shareholders and maintain a global leadership position in the downstream marketing and financing of aviation and marine fuel products and related services. We will accomplish this by providing exceptional value to customers and suppliers and maintaining a corporate environment that provides employees with opportunities for personal and professional advancement.

A decline in passenger airline traffic followed the terrorist attacks on the United States on September 11, 2001, yet cargo traffic, charters, and military support flights all posted an increase. One of World Fuel’s largest customers was the U.S. government. Analysts expected the increasing trend toward fractional ownership of business jets to continue, to the benefit of World Fuel. An agreement to acquire Rotterdam’s Oil Shipping Group was announced in December 2001.

Principal Subsidiaries

Advance Petroleum, Inc. d.b.a. World Fuel Services of FL; Baseops Europe Ltd. (U.K.); Baseops International, Inc.; Bunkerfuels (Del), Inc.; Bunkerfuels UK Limited; Casa Petro S.A. (Costa Rica); Pacific Horizon Petroleum Services, Inc.; PAFCO L.L.C. (50%); Trans-Tec International S.R.L. (Costa Rica); Trans-Tec Services, Inc.; Trans-Tec Services (U.K.) Ltd.; World Fuel ApS (Denmark); World Fuel International S.R.L. (Costa Rica); World Fuel Services, Inc.; World Fuel Services, Ltd. (U.K.); World Fuel Services (Singapore) PTE. Ltd.

Principal Divisions

Aviation Fuel Services; Fuel Management; Marine Fuel Services.

Principal Competitors

BP p.l.c; Caltex Corporation; Exxon Mobil Corporation; Mercury Air Group, Inc.; Royal Dutch/Shell Group.

Key Dates:

1986:: The company enters the aviation fuel business with purchase of Advance Petroleum.
1989:: JCo Energy Partners is acquired.
1998:: World Fuel acquires Baseops International, provider of ancillary aviation services.
2001:: PAFCO joint venture increases World Fuel’s involvement in corporate aviation.