World Fuel Services

The only Fortune 500 company that's grown faster than Apple

May 20, 2013: 10:38 AM ET

A big player in a low-profile business has outpaced the tech giant in both revenue growth and stock return.

By Brian O'Keefe, assistant managing editor

World Fuel Services sells fuel to cargo ships and tankers globally.

World Fuel Services sells fuel to cargo ships and tankers globally.

Fortune -- The growth of Apple (AAPL) over the past decade is one of the most extraordinary stories in American business history. Ten years ago, the computer giant ranked No. 300 on the Fortune 500 with $5.7 billion in revenues. This year -- millions of iPods, iPhones, and iPads later -- Apple is ranked No. 6 on the 500 with $156.5 billion in revenues.

And yet, Apple is not the fastest-growing company in the Fortune 500 over that span -- at least on a percentage basis.

That honor belongs to a company called World Fuel Services (INT), which ranks No. 74 on this year's 500 list with $38.9 billion in revenues. Over the past decade, World Fuel grew its revenues at a blistering annual rate of 39.8%, or just good enough to edge out Apple's average annual growth rate of 39.2%.

Here's another surprising fact about World Fuel Services: Its stock has easily trounced both Apple and the broader market over the past five years: In that span World Fuel shares have risen 230% vs. 131% for Apple and just 17% for the S&P 500 (SPX).

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From those numbers alone, it's pretty clear that the folks at World Fuel Services have been on top of their game. But doing what, exactly? I have to admit that I knew almost nothing about World Fuel's business (though I sensed that it involved selling fuel globally) until the other day when I decided to call the company and investigate.

World Fuel Services CEO Michael Kasbar called me back from Singapore. The company is based in Miami, but it has 60 offices around the world and operates in over 200 countries, and Kasbar says he spends about 50% of his time traveling. His reaction to being No. 1 in 10-year revenue growth in the 500? "Cool," he says. "It's nice to be No. 1 in something."

Actually, Kasbar is accustomed to being near the top in the markets where he competes. His company is a leading seller of fuel and logistics services to marine shipping, aviation, and trucking companies around the world -- basically all the businesses that move grain, ore, crude oil, consumer goods, and people from one place to another.

The company's business is incredibly diverseĀ in aviation alone. "Anything that flies, we're working with," says Kasbar. In addition to "all the household names" in passenger airlines, World Fuel sells to cargo operators, charter companies, military and government clients, and corporate aviation units. For the latter, they also provide services such as ground handling and international trip planning.

Shipping companies or airlines that send their ships and planes to hundreds of markets internationally like the comfort of having a known and reliable supplier wherever they operate -- one that knows the fees and taxes in each market. World Fuel fills that role. "We deal with all of the tedious, unglamorous aspects of logistics involved with ships, planes, delivery of jet fuel, marine fuel, diesel, and gasoline," says Kasbar. "It's labor intensive. Huge amounts of paperwork. It's very retail and very local."

It's also not a high-margin business. World Fuel made just $189 million in profit in 2012, or just 0.5% of its almost $39 billion in revenues. But Kasbar is proud of his company's "very solid and liquid balance sheet" and likes the way his business is set up. "It's an asset-light business model," he says. "Our net working capital is about $1 billion, but we only have about $100 million of fixed assets."

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Kasbar himself has been in the fuel business ever since he graduated from college in New York in 1978 and got a job at a firm selling "bunker" fuel to shipping companies. (The term bunker comes from the days when ships used to burn coal and store it in a bunker; the name stuck when the coal bunkers were converted to fuel tanks.) In 1985, he and partner Paul Stebbins formed their own marine fuel brokerage called Trans-Tec Services. Then, in 1995, the company was acquired by Miami-based International Recovery Corporation, which was in the aviation fuel supply business.

The combined company was renamed World Fuel Services (but kept International Recovery's INT ticker symbol) and Kasbar and Stebbins decided to stay on. Stebbins eventually served as CEO from 2002 to January 2012 and remains executive chairman. Kasbar served as president for a decade under Stebbins, and took over from him as CEO last January 1.

The rise of World Fuel has been enabled in part by a big oil and gas industry trend that has been playing out: The giant oil companies, which once dominated in marine fuel sales, have been divesting so-called downstream businesses, fragmenting the retail fuel market.

World Fuel has also boosted growth by making 17 significant acquisitions since 1998. The most recent was this past January when it completed the $137 million purchase of select assets of Multi Service, a transaction management company with a fuel card system for fleets that is accepted at 3,500 truck stops in the U.S. and Canada. Kasbar sees a lot of growth opportunity in trucking.

He points out that in the U.S. there are roughly 3.5 million trucks on the road and they're operated by about 500,000 different companies. About 50% of those trucks are owned by companies with 10 trucks or less. And Multi Service specializes in small fleets. "We're intending to grow that business," says Kasbar of Multi Service. "They do with technology what we do in the analog world, which is taking complicated transactions and creating order in the market."

Another acquisition a few years ago of a company called Western Petroleum put World Fuel in the railcar business. Now the company operates almost 2,000 railcars and is responsible for moving about 5% of the oil that is produced in North Dakota's Bakken Shale.

Does expanding into so many different businesses make it hard to focus? "We're doing a lot of stuff but it's all connected," says Kasbar. "I mean, we're not going to start selling toothpaste. Fuel is a big space."

Kasbar doesn't do much media. Nor does he want to dwell on World Fuel's past success. "We play it down," he says. But he will allow that outpacing Apple in revenue growth is worthy of some recognition. "It's not insignificant that we've reached this level of growth, and we've really done it without stumbling," he says. "Being able to scale your organization and take it global is a reasonable achievement." More than reasonable, I would say.

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