INT - Earnings call transcript Q4 2018 | World Kinect Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the World Fuel Services 2018 fourth quarter and full-year earnings conference call. My name is Mike and I will be coordinating this call this evening.

During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. Instructions on how to ask a question will be given at the beginning of the Q&A session. Instructions]. [Operator

and this the recorded. Glenn conference. conference Fuel's President, reminder, like would Klevitz, is Klevitz, Vice turn Mr. to over Treasury conference a begin I being now World you As may Relations. your Investor to Mr.

Glenn Klevitz

Chief you am website release. and to release live Glenn the the have I Ira be Fuel evening Birns, Klevitz Executive World Corporation and the earnings Fuel or Chief XXXX on on earnings introductions Executive Vice With everyone call and President call please the Services If Officer. is you on webcast. should access Michael This future via this our doing evening's presentation. webcast our you fourth and not, of slide quarter and full-year By Good are call, now, on conference copy Mike. World our us the and Officer Thank icon. available today welcome webcasts, the Services call. alongside Financial all visit access can this and I will click also Chairman website. To a received webcast Kasbar,

any range most forward-looking from these recent could started, Fuel's statements uncertainties that Fuel's plan Fuel's obligation A review like would measures actual Harbor future World cause includes risks and new to differ filed from financial or these with found and materially be directly GAAP of Statement. of to G. can information and are revisions in the to in of of these forward-looking to financial A about Safe events. the reports found to differ comparable reconciliation results included assumes be XX-K no projections website. also performance and This in other Securities financial subject information. Fuel's measures release Exchange statements non-GAAP the measures could forward-looking Certain cause Regulation Before factors its light or results publicly World description to defined Form a as press expectations are release non-GAAP materially is their can risk get World in that on made results certain of we most to comments I including revise future and today, World Commission. World Fuel's regarding the Fuel that World presentation statements

begin prepared remarks, will which then minutes We period. question-and-answer several of by followed be will with a

mode. private calls, we the would introduce like on As I Executive members ask At this Officer, individual and and Chairman the media conference with in to our participate prior investors Kasbar. of time, listen-only that line Michael Chief

Michael Kasbar

today. Thank Thank you you joining us Glenn. afternoon everyone. for Good

transformation fourth with continuing We creation a strategy we of XXXX balance returns. year finish enhanced growth continuous delivered and cost of drive are and further year in our our actions our earnings Fuel quarter sharpening our throughout the and organic XXXX accelerating solid to was our pleased portfolio as in sheet. the advance strengthened World management, value

respect with to our wholesale complex energy we with doing also power. In fuels, our chains underwriting liquid to to logistics get We our business with end-user sourcing better continue nonratable of before into financials not favor on drive Ira? and share manage combine recurring some to reduced but all and supply Q&A. review give of gas reliance and natural comments demand only are capabilities so, our some a across revenue I we of additional value in Ira and three detailed segments. follow-up will will

Ira Birns

we year. well very driving pleased shared in to plans good everyone. and executed when result a to And am the on evening discipline very started drive improved XXXX We Mike report, Thank XXXX. our financial performance you last strong and financial plans in year I such

delivered more billion We before highlights I the of time. some profit for gross Here are than into first related $X details. get the all

year-over-year. Our the $XXX EBITDA at point financial quarter. of to far we higher times XXXX. cash for increased of significantly the an $XXX from on during total debt increase million. exceeded XX% average the flexibility. exceeding X.X the And XX% year. proceeds reduced We operations, in We EBITDA our by prices out XX% enhancing revenue XXXX. fourth activities profit earnings fourth ratio basis $X.XX capital start consolidated by of adjusted a fuel since the flow shared statement. was to change than share year-over-year our due principally aviation more from the basis $XXX fell levels million invested investing $XX X%, to in quarter quarter by received adjusted million by which generated XXX the and receivables target per from the interest segment nearly impact operating million, return $XXX expense up million Adjusted XXX Full-year point record net $XXX details. points, classification cash sold to was basis billion, to compared the lowest on ratio We debt was million of flow increase in XXX to and of now delivered cash gross Consolidated on revenue excluding cash driven or to improved $X.X beneficial to flow our The increased

an XXXX. increase For or compared XX% of $X.X to revenue was billion, full-year, the $XX.X billion

fourth aviation up increase. gallons in Our volume year-over-year. year-over-year core drove quarter, two operations in was the the volume billion Volume our segment resale slightly growth

X.X tons, or of full-year, XXXX. gallons in million the to gallons, X.X for billion the million record flat aviation delivered XXX our metric quarter marine effectively segment For up Volume X% year-over-year. compared volume fourth was

For Europe. metric exit our tons to to was volume the decline XX% was region. the by and States year-over-year. metric the both This XXXX, tons, XX.X or segment some organic marine reduction margin growth initiatives our When million offset Asia-Pacific businesses volume million principally is low the United in X.X compared of related marine certain in down segment in in full-year, the

during compared to of gallons X% or quarter million volume fourth segment approximately X.X the was the equivalents XXX land quarter, XXXX. Our gallons or down gallon billion fourth

decline or a services was the This full-year, compared And in to commercial fourth our X% low X.X approximately non-core, X% or volume the reduce efforts our billion decline segment and XXXX. gallon activity the billion land partially was or was million our industrial of related to lastly, For gallons volume million The margin North gallon in gallons volume America volume during XXX gallons for to United trading by a was principally approximately XXXX. in in or decrease or million XXX gallons, X X% States segment supply gallons equivalents, Kinect year-over-year. gallons full-year, for was land energy decline and activities XX in global down the and growth Total year-over-year. platform. equivalents, consolidated XXX quarter total consolidated of billion representing offset

XXXX. volumes. and down focus with volumes nonoperational in flattish exclude business release. management note the pretax quarter or efforts published be restructuring While earnings somewhat exit of our reconciling the ongoing breakdown on following relating the year-over-year, impact To cost driving our our a in were our returns, results of cost nonoperational as can discipline fourth despite X% of the to previous solid nonoperational reflect continued and in to in Please The the results nonoperational our non-core day-to-day earnings the activities the the Consolidated severance of release, figures slightly fourth expenses profit to year-over-year as website in growth heightened impact was for found increase $XX again presentation. items managing compared periods our activities. of $XXX webcast related assist highlighted last in items that gross XX% underperforming on overall on the items to quarter improved the fourth as the an in gross well and you slide or of quarter profit million, all of million

operations aviation contributed operations or fourth was for $XXX gross an of core by of well operations. XX% an the $XXX increase principally gross in representing compared or resale record as profit million profit segment of fueling quarter aviation in the government our was to a the the Led of of and our strength Year-over-year, activity $XX fourth international the full-year, the in increase strengthening in principally related XX% aviation Our resale million XXXX. profit as XXXX. million compared growth core million $XX gross increase result quarter, to

quarterly or increase was represents in first quarter the we profit expect of gross segment profit the we quarter what level an today, year-over-year. to year-over-year to during The of of first fourth marine last gross generated our The profit know increase core marine segment significant resale aviation be posted profit year. the That's $XX of the gross XXXX. in since margins Given of activity. the stronger results to quarter million. principally fourth quarter similar million $XX related gross highest XX% This

profit or gross million, year-over-year. $XX XX% marine full-year, the For $XXX of increase an million was

increased returns and core did reshaping additional team on Our in XXXX identifying markets which portfolio, marine driving drove job new by profitability an closely focusing profitability. excellent more the

Looking improvement. to to quarter, we significant expect first ahead year-over-year again results reflect marine the

$XX.X sold and sharpening decrease margin principally This Our during and profitability business North commercial, retail and fourth non-core, or the industrial the land during on reinvesting profit portfolio XXXX. lower solutions of was payment X% global trading year-over-year. fourth million North platform That's increase and C-store and offset million $X continued activities, non-core eliminating grow commercial core MultiService profit in America, MultiService a reduction the related core land business and remaining delivered segment of Gross an supply retail our government of $XX our Kinect That's Profitability gross for America, our XXXX. focused North remain America. in quarter. million services was of year-over-year. We low the in energy XX% activities in in in of by to our in industrial of activities assets activity quarter. impact

to on significant efficiencies as We this drive expect strategy. operating we execute this

XXXX million. portfolio continuing full-year, profit our land year, the efficiencies. compared flat the Again, growth prior operating overall For the to sharpen $XXX during land solid efforts during XXXX in our while was gross efforts and segment drive to should for

the profit segment first of operations in driven our U.K. the ahead the expect Looking increase distribution we seasonal in quarter strength specifically, to to the principally sequentially land gross by expected

up excluding operating as which million items expense As Full-year a actually in $XXX of in first mentioned earlier, consolidated million incentive XXXX. profit our is compensation billion Operating year-over-year. despite the million quarter, declined debt time profit of $XXX performance. impact expenses were and billion, nonoperational down gross with mark expense strong variable increase I excluding bad year-over-year significant $X.XX result and the $X from in fourth X% year-over-year for million, the a debt of bad the XXXX acquisitions $X gross in expenses broke $X very

and of XX.X% the total which a receivable was gross improvement million This specific is in collectability where uncertain. to year. full-year, operating gross ahead point debt XX% basis set higher modest $XX we bad XXX goal reserves profit accounts was driven expense. profit at individual we year-over-year with expenses compared very that is to quarter expense the The full-year, in the the the elevated for For in the related basis compensation way, target of by increase the and XXX percentage as a and XXXX. as beginning another prices of by point fourth XXXX a of impact increased a includes Said few significantly G&A

bad improvement $XXX our from first million. operating While the million quarter, driving million up was as to XXXX. operating XX% basis basis nonoperational debt to the point target the the still on continue million greater expenses we XXXX, of $XX maintaining quarter point in XXX In XXXX excluding be in EBITDA expense the efficiencies of business. ratio $XX and XXX of another and target across quarter, we we we Adjusted to $XXX beat fourth significantly operating focus are range expect a in fourth items in

For $XXX from a million million, increased adjusted $XX XX% the EBITDA or to full-year, up record XXXX.

approximately that operations to increase of last organic million Fourth also to quarter our metric is million lower increase represents principally million, performance. provides financial us be partially supporting year. and This expense for is full-year EBITDA important assume and quarter growth adjusted compared income of average interest million rates, range $XX by the in to or first quarter fourth business quarter operations income $XX fourth of We from from expense in the year-over-year This $XXX $XX offset XX% us Adjusted of higher significant up XXXX. an of believe million, compared up and interest the would additional strategic was to borrowings EBITDA for expenses, charges, related million flexibility continue or $XX opportunities. XX% investment the average XXXX. was to I evaluate to adjusted $XX to with were to principally million. comprised interest nonoperating $XX year-over-year an XXXX, which for $X million, compared financing

down quarter. environment. Our adjusted meaningfully tax this the rate reform quarter from was fourth anticipated, now was sequentially for rate because The effective in tax the can quarter effective effective profitability fourth in lower XX% U.S. improved XX.X%. That's post principally our tax rate tax benefit than the in third of which

the XX.X% significantly XXXX, by rate from XX.X%, For was up driven full-year, adjusted our of tax reform. again the effective result tax in

XXXX a on losses laws in state effective reform. valuation tax the tax to conforming rate net for to includes Our due federal one-time of benefit operating allowance recorded a state previously changes release tax

been XXXX. approximately benefit, Excluding XX% in this one-time our would rate tax effective have

address transforming rapidly continue improvement in rates to As global environment we be increases tax to in to drive changing rate to tax and focus our effective conditions and the a by at XXXX, same opportunities we time. look scheduled overall tax on and business expect challenged

our net the For income the the XX% for an rate last was of we be the of would was And fourth full-year, range $XX per XXXX. this million quarter or end higher our the first likely income net fourth the to in share with the year XXXX. or net adjusted quarter I full-year in was compared double compared towards of range. year. the $XXX $X.XX now, quarter diluted income increase of XXXX. quarter, $XX assume share $X.XX when adjusted will million, $XX fourth Adjusted Adjusted to diluted an full-year the quarter increase rate the this of XX% earnings for fourth of in XX% $X.XX And to to per $X.XX compared double generated was million, million earnings in

receivable year, compared $X.X Our effectively at accounts billion flat end was of XXXX. the total balance to the

approximately strong days, portfolio with at Our with past overall the days receivables three consistent remains XX years. outstanding sales

the overall While we which discussed operating quarter, excludes XXXX. receivables to from We of continue challenging, $XX some cash during reclassification our manage of prudently. for million serve accounting our related fuel during which to balance cash remain agreements. throughout flow standard Despite accounting fourth prices year, $XXX of excluding no generating of related amendment a operations average $XXX XX% us from in increase recent million, the markets the in sheet generated we year the impact strengthened related $XXX reclassification longer flow the should portfolio the again we the we activities impact further a million due from of standard the million impact XXXX

contributed commitment as than efficiencies since costs a XXXX. to we our resources and to to cash of greater ratio debt net strategy. performance solid we In million X.X EBITDA operating debt times more gain its to Our structure to a closing, to reduction model our of and rationalize better made our $XXX adjusted entered level reallocating below by organizational align our XXXX, with in flow of reduction

in which XXXX on contributed commitments significantly year-over-year a solid improvement both operating improved discipline returns and a heightened cost on in focus with a solid While management this results. delivered to results, with

proud point in XXXX, that remains of opportunity are tightly and together. basis and additional are sharpen we additional these reinvesting Continuing plenty activities activities growth is we our where portfolio while operating expense divesting to have our opportunities While targeted should by drive our efficiencies improvement XXX proceeds there results of core additional to non-core bound of business operating ratio. in contributing profitable related in

these additional will capital back shareholder call commentary. returns in goals of over turn on now to our Mike further and increasing together opportunities All for returns. of are principle I support bound increasing the

Michael Kasbar

you Thank Ira.

our profit predictable, my towards produce shifting and portfolio talent in and opening we focused that scalable noted businesses in and XXXX, on deployment more our sustainable capital I rationalizing remarks, As streams.

continue in will We XXXX. to do so

customer our will which platforms drive products also existing of translate leveraging more acquisition, new organic into services new profit continue global in broader look using to locations to suite growth. well our serve of those both with We to a customers as and platforms will as

our We flows ensure growth management to cost proportion to culture operating organic of earnings. a reduce through have our ratios high embraced continuous to a expense

Our while to aviation locations us attractive our to an adding makes acquired this further network. supplier for our in team acquired existing assets has both to early to current a the new footprint in we enhance base expand supply capabilities customers. leveraging excelled XXXX This prospective more and customer

Our government activity business also increased throughout performed well, delivering strong results the from year.

portfolio XX% retrenched where improvements markets marine solutions those Rau rebounded amount John lot capital solid team and operating enabled we our when delivering operations an in reach tied up Vigorous activities, resulting in segment this margin fantastic XXXX leverage an despite cost following discipline Our credit significantly of gross drove customers and increase our returns. profit a in the the financial our provide working most in market decline in value. to deserve marine segmentation XXXX, the of improved lower turnaround. Sharpening for volume. reduced and in results

forward, to to expand it that are the and its challenges to that into arise IMO supply quality in on assist we X, marine the Looking availability, selectively January supply low-sulfur is implementation new go segment the well-positioned XXXX. customers of and expected fuel footprint as will our continue managing regulations effect compatibility approach of

land shared leveraging objectives clearer business have while as the marine, in on and the digit opportunity with focus been with which in double grow Sharpening of exit wholesale M&A and by for we low segment continuing XXXX, activities its synergies Our of the to power. business talent business returns. to XXXX, end-user strategic aviation, to rationalized focus capital aggressively services selective we expect simultaneously continue land gas value-added and margin operations organically growing North XXXX. freed the American The portfolio portfolio rates our including of never up on fuel lower working in with our land

existing initiative that of World essence is leveraging Fuel. exciting an capabilities land global captures initiative Our the

FinTech functional its Organic efficiency that's and result in we XX% recorded growth process efficiencies fuels U.K. improved a our expanded a gross several for facility service that portfolio, us and MultiService we automation simplifying income corporate, cross improvement improved Our expense business intended while In our areas, the for all our years. evolve in as best-in-class drive our a versus differentiate land reduction robust reorganizing XXXX. decision-making commercial digital should consolidation generate which company well. business busy one our believe pipeline the improving from are strategy increase are next in growth from operating execution MultiService we and will catalyst a marketplace. and software, to processes Consistent we benefited and as opportunity operating improving drive to in was functional double-digit of and further North ratio business alignment, a profit America to in analysis, in best-in-cost with business approach. XXXX and offering,

been Looking fortunate and World ahead, about I leading am talent at before have as whom assemble fortunate work, to we our to have us. I we opportunities am industry are Fuel that as with the optimistic

to and than and be the talented a in who in this closing, demonstrating X,XXX understanding our to and have customers this solutions counter-party express believe on deregulating Q&A. be would will energy before choice. continue unpredictable financial None employees that creativity Fuel without for daily are, dedication of our of we committed our and Fuel commitment pride and their markets I Services and complexity we its appreciation also of our above needs to their Culturally, base. our requirements meeting bombarded but said an I it ingenuity value Operator, continue their regulatory our more now our repeating, of by and basis, our continue would to be World and their World environment in our support increasing responsiveness comprehensive to unique ourselves possible bears to lies either loyal market to my who people, and volatility. vision. or like the all, a believe commercial shareholders our differentiator comparative agility the We In has to are Services in customer strength stakeholders. stability ready broad and

Operator

Instructions]. [Operator

go comes first line ahead. from The Stifel. Ben the Nolan of Please question with

Ben Nolan

Yes. Thanks. guys. Hi

margins have one question land Volumes some is, Next in is to have that quarter. you been questions are and working. it guess trying two My Well, do down like first looks the the obviously, up. are I but I follow-up. of high-grading business

the As business more Where you maybe granular. hurdles a the that you that in return the with are are was that could look feel area? land areas bit you aiming like to expansion hoping opportunistic out, you I within that for be meet little respect

Michael Kasbar

Thanks Ben.

previously, stations. for business stated performed business terms under retail well. still to have and supplying a is That good well of is retail contract we us So our gas has is performing in

footprint, to the as we and We that have have we expanded our had we the Northeast taken the expanded strength geographic have that Southeast. had growth Midwest the there. in we And have have and

and about but So we to perform not growth market a pretty good Long-term feel continues is it's that of fantastic it market that. sizable well.

So and we will unbranded stay the business in continue basis. in that both branded to

business very Our and industrial about commercial optimistic we extremely done and that. job has an good feel

market small very a got have share there. We

So marketplace. business. white there a there and within customer within diesel and tremendous our amount gas is calm natural base that space liquid, gasoline is power our a and in And of

there some So there. good is synergies

feel So about that. good about feel We North good we America. pretty pretty

we got want but the to U.S. is color have and believe opportunities that Any Ira? that, well business you opportunities in U.K. significant we to doing Our add that. beyond

Ira Birns

No.

excess we of But is small in and XXX into but said, at I principally still Mike in this years a point got from well as billions day portfolio that We of we but with slow them the we little industrial market PAPCO trading billions gallons we and that think, are ago, one that one the is two-and-a-half end the with player as APP We really that's of around key supply million and only and around a would say, of acquisitions. the bit commercial I come very growing. and space, gallons. is start and there. the did market had away reshaped year their that are well, gotten the of aspect obviously,

in space think are grow lot for a that few next to years. I of us the So over opportunities there

Ben Nolan

Okay.

undertaken those hopefully initiatives that So haven't a like take What do few little bottom you of that more robust as terms line? would said, you can over, you that as a lines, And you feel terms growth as have of probably there you have bit helps. along smoothly in in the gone of growth from liked. layering the

Michael Kasbar

I think, it's efficiencies give you growth is question it, more for not believe available we but a we Ben, we in growth, got and liquidity we it there to think is, number east right, substantial play drives invest if wisely a I if for there that us. a which the can that we we space for opportunity generate

[indiscernible]. have got We

Ben Nolan

Right.

Ira Birns

growth in And double-digit as I C&I organically our got we business. my comment, within stated have

So rest legacy I an the there. is well. technology and the that doing job of Crosby are doing Mike business Jeff and team, excellent extremely Smith think,

the technology So is the the The people, process, coming team come together. together. has

going to feel XXXX. that is We something have in like we well good. hunt we pretty got feel So

made we I terms open as statements in business organic M&A well. selectively why And that's for So double-digit are growth. there those of on

noticed we a as am I we and commented to that little do bit has good everyone, repositioning, took on. So was sure, break of as a

important a and XXXX distillate So business with land into That is it's the action business. part global that. It certainly of there business. feel about an dovetails good the

global. up grew we So

are We native global a business.

of and marine except business, out that All in we the started knew market. the us aviation global nothing

not also global to And something same that the platform, with and the you the where we those a have are is North certainly core truly off profit is leverages have from global is That's strength But we developing strength do also and good from we is that. the learn and is our applies certainly and exciting. pretty of global the businesses. our of the third-party great America your and is developed, land the business. some between business, thing reselling kind We which our leverage that a but density. build land Kinect of that that network the about synergies technology feel business So exactly

they So There synergy. some come is all together. internal

a are pretty So feel now are about calling we good we global and we calling it what land. land

Ben Nolan

Well, it. Okay. follow-up helpful. lastly do it All call if for you right. And however a then that's you me, or

think capital is you five of given not has times sounds the it at I leverage allocation the Ira, acquisition at or years mentioned things. this where use four and You, growth it it profile? been open moment? are and to your is, to given point, you cash lowest What are like that pursuing down leverage from but actively flow to is the X.X maybe cash respect best your or are thinking What's perspective with generation you

Ira Birns

to question. but right. my answer, I Never try one easiest the best, Great will

obviously strategic a XXXX our So look, we some every have options expensive. explore in bit gotten to more day We come we reduction business. done, that seen opportunities. investment organically allocate with could have several you We of to in We where debt have could work. as our has which we could our capital invest pay down debt which

good that's thing. We So our a back shares. could buy

an we there both a I we investing Mike heavy during priority we and a holiday of to organically do a that the different say, mentioned would opportunities obviously are remains lifting kind lot think could of lot things M&A of and back of I clearly XXXX. But right bit had in returning our business, opportunities. as looking in are business So at do. we took and our strategically.

did something consider did do we we so during employee as for the buybacks XXXX. stock we dilutive purposes we as awards, which always before, will which always like of impact generally we but do We of offsetting said

investing over have number would we to like driving if more be the think it in direction. to where where we we we say, use returns next would the invest us digit I closer it business to right It's up sense, a bringing we years. wisely, not So makes We somewhere started in could to synergies. get at but double where could the start the available that of number that couple we ROIC capital X%

Ben Nolan

appreciate right. guys. I All Thanks it.

Ira Birns

Ben. Thanks

Operator

the ahead. Please Lynch. The comes with next of line Ken Merrill question go Hoexter from

Ken Hoexter

couple a I quick and I Good start. of Great. to Ira, Mike, IRA afternoon, just Glenn. guess, wanted to, follow-up

flat said we should to we to I volume think just guess, forward. have global What understand, without just have I that expect aviation, look want trade? the tie aviation growth you the X% seen, acquisitions. Should I volumes? should we we on rate going growth that been for

Ira Birns

Yes.

made of it's similar par would the now. a on aviation XXXX. profitability take XXXX with QX That's of I being just right in on growth I to percent. think expect, on couple generally I Volume, our XXXX, comment

are as find that's overall. in We all increased marine grow number we land, we we opportunities we about. principally down for is return. it but them significantly increase profitability But are and a gallons whether goal one or you to it's XXXX could our see, focusing, be where growth Obviously, aviation, about could profitability look billion and

would XXXX. a marine than couple aviation, and also few more that and So I percent bit land growth a a in percent for probably say,

Michael Kasbar

cost significant then chasing simply within opportunities value There just really clients than again a selective, is volume, a services our for share the presence are we that focus value and have for that providing. kind looking the structure, it's on of working rather being really looking those we and

Ken Hoexter

opening Ira, business were And sorry, comments? did lines am I there marine? Okay. that in you in, you say you during did the new mentioned throw

Ira Birns

million couple new ports new dollars a last Just of the markets, and over few a profitability. that's year added opportunities, of identified

look, can't the we job. done, has So marine a phenomenal it, team overstate

lot to and participate continue And took of have quarters, also And started to in identifying involve few that's been XXXX. out at things which last a much. saw contributed but proactively better, of up set investment, turnaround least have in us performing a in a then up not new a riding we getting business areas storm. the marine that to they the been they hunkered bit better selectively the cost Before lot where we in past bit some pickup we didn't little capital opportunities the and

Michael Kasbar

state The add I to to for extent, color Aviation, is that future a that, aviation. certain the a Ken, following of will marine business. model is

every is and about through We logistics are all with. have a for XX been aspect internal a that's of story. for those on years. went and in side There businesses been of But both the the hell supply we of in great while. involved tremendous certainly that synergies almost obviously, businesses Marine,

great the So the done logistics supply the and and and job team John team have Mike and Crosby aviation side. a

and is I marine, synergy of coming some going see benefit land tapping certainly of we aviation some there to those are And the XXXX, you of capabilities that from are just businesses. into from lot and between that. all think, So across

Ken Hoexter

over XXXX? you it vessel? the Can from walk with to going the getting through the from next us wherever port could different or year? port on to fuel the Maybe Mike? changes Is to just What that, change how that's you follow-up the

Michael Kasbar

is you have going pull And marketplace the Well, going switching significant now you the that's got while of to as in sure. Already, for of are be see a a to diesel, the of consumption majority in to world. low-sulfur are low-sulfur the switching diesel. some use going on you to to marketplace growth diesel vast amount fuel, is fuel

position significant capability we on So there, diesel. got you have significant gives that to that going are considering that greater to a a And source see us that. pull

supply the And and between a it fuel. water. fact, diesel jet close In there relationship distillate over fairly is

mean a using logistics of is same there fuel liquid all similar this is sources from commonality. capabilities. I the So coming some

competencies capabilities internal a of and that there we So tapping synergies and is into. are lot

terms lot to bunkering. internal is XXXX that a is in more that prepared, perspective, synergy of there with from is ahead. about you have lot the not, who planning be storage. is more who to organization. There talk going is the of So complexities all is to frequent within good There to different are with There going going be a

folks to expected what's because just higher to risk of are prices. be be exposed Some to going

are a that some be team quite be that some think that will our preparing to haven't oil services required. busy for a some period organized. time marine extent. But a but every They may going there that It for have going to and after little and to going been a bit to is is world the chaotic we down while, XXXX. time. short it's some to be still of of ship team, pretty will but settle lot benefit technical prepared marine from we folks on You this almost are have for The issues owners going out pretty around sorting compatibility been industry be

Ken Hoexter

benefit that That would you you one. be great. from volatility. always for And obviously, Thank that

what investing improvement buying quarter. On talk OpEx the CapEx to you about Maybe significantly pretty is the could side, you getting of goal? Ira, mentioned are internally. this you jumped XXX that and CapEx part

Ira Birns

Yes.

Exxon Yes, of physical, more a our is. business it our fact the acquisition right. little Some CapEx increased specifically in ago, is aviation because of a principally couple years have post that we most the gotten

ground the on trucks more got things that. have and we like So

lot So there significant would have that. we technology. related those Obviously, nothing overly numbers say, I to pretty continue similar as invest CapEx. say, would beyond of probably we IT a I are year-over-year in is

We to cloud. have migrating been the pretty heavily

year-over-year, XXX more say, that land think a little line. of around like would marine side, winds But net jumped on I would And bit our the up operations the the delta trucks, nearly PP&E the a So on airports world. little side, CapEx million. say That's I really some bit at on on $XX supporting principally aviation. but about the things our the I

Ken Hoexter

a forward? going run then rate, So good

Ira Birns

Yes.

Ken Hoexter

Okay. Great. for Thank time. the All you right.

Ira Birns

Thanks Ken.

Michael Kasbar

Ken. Thanks

Operator

The next comes Seaport Sterling the ahead. with line of Securities. from question Kevin go Please Global

Kevin Sterling

you. Glenn. and Ira Mike, evening, Thank Good

Ira Birns

Hi Kevin.

Michael Kasbar

Kevin. Hi

Kevin Sterling

about improvement looking opportunities on aviation, on be little a mind? could where you little Congratulations may progress making. after don't a areas talked Mike, see? bit at it might are if hiatus, this M&A you and are light some you the you of Is you pipeline shed guys Maybe you taking land? it, and

Michael Kasbar

space. it's pipelines, a obviously. maintain making practice of land Well, Certainly, always the are all an There's enormous opportunities that in we the businesses space, our within marketplace.

energy in North It's largest marketplace an is the there the So enormous market America. in world.

gas terms bit is there a energy side of the So in and management power. quite in

side, but bit On opportunities there a is the aviation less little certainly there.

that's And we government of the business. with a on very lot a got, market. feel think we the On have independent a about hyper-focus side, I open certainly that. land, strongly think, wide services certainly that And But I practitioners. marine space has

on that businesses market. the the terms global there. of all America. third focus a like there be of we are the that in We developing of leg It further. see certainly to And would synergies So stool, North three is between so to speak,

to on. services. really one are what So shared company trying commented getting really creating get business that's are a I scenario where and we best-in-cost best-in-class, global we focused services

name been Ira game governmental industrial been that energy and services product on for commercial working bringing and the wrapping working that us. and then managing So energy has is and Jeff and way on with for fulfillment management products how has in and that where are an and a of figuring entity to in and that out efficient very effective a around the do we

energy offering, excited are about that. we way diverse is any that pretty up the So bolster And we diet can now. that

with the different So are clients ago six, looking services. and started that for seven few years products. that are fuel jet looking for and They today energy are doing in sustainability are about companies one we renewables We California. of

So it's be to governmental bringing for and transportation really commercial, the together that industrial, about supermarket energy picture entities.

the has Marine, all extent a is operating been we game. the temperature of the turnaround. to up obviously, So that to phenomenal of businesses could those bring name

could are like sort more. really on see balancing enormous if an would of moving operating that little But that space it's a we cylinders. of and So to bit is so business land we get we those all the

Kevin Sterling

of Got land? more do you that? at exit you. think to Mike. marine, speaking and should And have about margin we marine Thanks How low business

Michael Kasbar

that to But be are good Listen, providing integrated we and do job we is a to increasingly with we very always there our support we business our to clientele. look their working are clients reason value operations. and we think a and pretty to do

So we are operation. helping there

that we them with Our understand deal we It's a their requirements, the them strategically requirements, not and requirements. quality energy clients their value helping bring are best to operating their business. simple

we But good our think job returns a there. support of the understanding to looking pretty are certainly clientele. done I have we So

Ira, some add to you So want color to that? do

Ira Birns

The of only add I fruit hanging the would whole of really we I didn't is lifting that had, heavy think have thing relationships of sense. in lot terms margin low a that to just low

capital. And opportunity pretty margin et cetera. expand that may of you we the did or Where seen more a liquidity in with We returns there the we are we think to we that I to have of and on gives offering better through I generally still services, in we land. driving believe and job, into being we runway. a grow areas the remains first that that. haven't of customer to where how that in importance I everyone bar runway relationship XXXX but we activity number, and have marine is a in we say, see think terms have then far non-fuel some through the right tried service low internally And follow next that would some great hyper-focused raised return the

hard that think don't I already and we think ever now done, be a will So but of we refining it have I lot are the done going work forward. just

Kevin Sterling

I on World XX%. to real switching you this rate guys from would Got a but gears not, jet here, don't recently aviation or quick. VAT there tax there want is benefit Fuel, if has And XX% you. Thanks. from cut? know And or tax fuel value any reduction to in tax in way been Would policy added I about Brazil talk purchased

Michael Kasbar

activity don't of on do really We the a jet tremendous there amount side.

particular. would to no, in the say in that be would I answer Brazil So

Kevin Sterling

I That's and improvement are right. quarter Okay. and congratulations all on All again had. the making. once you in Thanks the

Michael Kasbar

Thanks Kevin.

Operator

at Mr. time. the back Kasbar, closing to will questions this I there for turn call your now are no further you remarks.

Michael Kasbar

talking very the appreciate We and quarter. thanks a next look and much. time evening Well, to the everyone. to forward Have you great support

Operator

line. Ladies and you thank conclude We and gentlemen, that call ask conference your your disconnect please for participation that the for today. does you

World Kinect (WKC) 21 Feb 192018 Q4 Earnings call transcript