INT - Earnings call transcript Q1 2021 | World Kinect Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the World Fuel Services First Quarter 2021 Earnings Conference Call. My name is Joelle, 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. [Operator Instructions] As a reminder, this conference is being recorded. to conference like to now would turn over the Mr. I Treasurer World Relations. Fuel's Klevitz, and Vice Glenn President, Investor Mr. Klevitz, you may begin your conference.

Glenn Klevitz

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

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

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

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

Michael Kasbar

you performed are you're with joining Thank I businesses all a the of opportunities. you, as market our year well-diversified and hope market long-term hope demonstrating about once I and conditions, well. the Thank for again Glenn us. everyone. current medium a I and well evening you good as optimistic am all We future of the portfolio. first quarter, opened considering And resiliency strong

power, and and significant industrial never and meaning has capital sheet had to aviation, transition. gas, We flow the carbon long-term our C&I been stronger. balance liquid and land cash Our commercial deploy to and energy globally in medium our we and in drive American renewables customers serve and business opportunity fuel fuel, marine North believe, a

leadership over quarter, last few a done in mentioned work we is the culture talent, have impact. last the years I positive and As having

and crisis. competencies line career efficiencies and digital mobility global and and support Consolidating a health are sustainability well with as our as emerges world business and origination, this our for our global global the marketplace. the greater with itself as the forward-ready solutions economic us gives business, fulfillment from teams. in and effectiveness, We our creating organization converging functions is transitioning business and opportunities Combining greater

to lower customers We convergence inclusiveness drives creation, our and and accelerating chains. is footprints as see that the and carbon value pathways group supply a are already comprehensive globally diverse solutions

We reopen. are discipline maintaining far cost markets so as achieved operations on the

to opportunity view more incredible about this am to enthusiastic we tap activity. our ratable prospects, we market quality, experience an share have growing into a our as commitment with solutions. to our I the been We innovative world's create team business global a future of in in as grown have sustainability, as land higher global in We long see space. now, opportunities runway this ability and excited I personally years. than business And growth

global have been We test most teams performed our our stress ever flawlessly. through challenging and

never more and digital coordinated. or energy and been increasingly Building tighter a global, is solutions We easy. have logistics not diverse business

and highly easy we to we build continue what platform. exactly global have businesses leverage to businesses. land are is well we done. do synergies that two our global to World that creating share our way aviation lower have have our global in are achieved we and carbon our in that simultaneously business, on to So marine of but for Connect motivated not And It's and anything,

more for becoming only marketplace. driving sustainability but ourselves, We sustainable the are not

to helping the teams emerging world. me better the is more world truly forward for for are and our World energy-related within brand that cannot way review we results. is to anywhere digital around the quarterly let other providing engagement getting the by in hard you an for to both of but vaccinated. I We find finally, or the Ira other. your energy greater first this green in a subject one tomorrow to accelerating address opportunities partners are each the Connect for hand fully is with of comprehensive over problem questions, and and and raising solutions. or market. optimism And the And agenda, our look It build our a

Ira Birns

gentlemen. ladies sense well and some and all ways Thank return to and to evening hope doing finding good normalcy. I you you, Mike, of are

of dedication significant globally how proud encouraging extremely developments, about Although, the prospects of of challenges the activity. levels I of results bit a a testament a are to team our ongoing which well And has and in more to our us pandemic present performed continues face our been of certainly global some value quarter our has team. expertise there of businesses business the increased am many model, markets we across the optimistic diversified business the of has challenges. our this the serve multitude in of

walk earnings highlighted quarter items at third Before first impact of our principally that found from the the divestiture nonoperational related items earnings sold nonoperational year. release the slide nonoperational on of operating results, in multi-service last as the items in last and following the breakdown through and To the the note of adjustments the period our our exclude today's quarter assist website presentation. please our results reconciling quarter of acquisition that The and restructuring-related in the figures expenses. was to I excluding the results release, of published be on webcast can end you and comparison for

EBITDA begin during per million was volume aviation but or billion, first driven our the quarter pre-COVID Adjusted $XXX is increase with compared of levels, share, of respectively. cash billion first the position than the marine for another to and let's $X.X segments $X to principally of Consolidated per first an and sequentially, $XX the We which some highlights. million revenue first quarter when in year-over-year were Adjusted increased well in behind still quarter $XX and was by the XXXX. decline first quarter and more XX% million. revenue quarter $X.XX Now million. operating net cash the income flow share for earnings our $XXX generated net

Our gallons first flat, below aviation activity still segment essentially levels. quarter X.X sequentially, volume was well billion the pre-COVID but in

were accelerate the in global strong modest despite new continuing While restrictions cargo with in Europe driven January. in commercial XXXX parts daily first we recovery from experiencing in U.S., last passenger likely But marine flat improvements strong overall regulations significantly principally some generated vaccine below implemented by the In down continued TSA Volume activity until the of year the activity X.X levels, pre-pandemic activity quarter IMO sequentially to softness operations nearly prior-year of the our metric business Asia slower given in prior vaccination in and throughput segment most aviation where results was these remains back remains for been aviation Europe XX% first XX% regions. prolong broader and increased abroad. have tons volume levels. quarter, rollouts the aviation and million we will rates of

XXXX levels. X.X segment that's gallon or XXXX World the Consolidated billion Land million. volume million but first of to related seasonal again items natural basis quarter gas Connect profit in sequentially, Our That's X.X or to as on already Consolidated X% volumes down gross some XX% was with but principally of improvement U.K. up XX% volume billion XX% gallons decrease an quarter X% driven equivalents operations, down first pre-pandemic first sequential compared mentioned. in of a quarter first the rebounded quarter as have to gallons, up was our increase quarter during the the year-over-year the $XXX first $XX of a well for year-over-year, slightly was land increases the now in sequentially. by

aviation offset Afghanistan. the quarter, Our of in the declines aviation related sequentially. passenger partially with also to addition by the gross decline from core but was higher margins decrease profit business XX% of more depressed in profitable in $XX troops were profit first mix. activity, drawdown average a contributed COVID-related Year-over-year down the commercial to These from million continued segment in up associated government-related activity X% year-over-year the declines

in increase business driven a to passenger by commercial government our gross by Afghanistan. ahead in activity, offset in further sequentially, domestic should continuing look we As aviation the the recovery quarter, second profit principally partially decline

sure U.S. declines earlier million the this segment further down quarter its September, but the from year. marine first am I The final of announced generated NATO by year-over-year profit this XX% you business $XX XX% aware, up are and of gross we As activity Afghanistan the over therefore, sequentially. expect that's and balance in month withdrawal

of related sulfur by the strong to relating impact, transition physical the were sequentially in the results as gross But again from oil. In operations. last we to marine principally call, our on IMO driven the pandemic we first profit fuel to results very strong low related XXXX, the forecasted declines increased quarter's quarter year-over-year saw addition to

fourth to we first what marine driven improvement part quarter expect marine look through an increasing likelihood improvement by begin gross in we that our of business core to look As and year based ahead into additional experienced the increase latter there's weeks quarter the the sequentially, for April, the opportunities lines the few cruise activity. profit providing again, on XXXX. sailing for And of second resale to we've as in will we

of when to delivered results actually XX% year-over-year Our profit up $XX gross from business first sequentially. million up quarter, the related year's land in excluding last and profitability multi-service the X% segment the

natural experienced gas the also was we but U.S. to driven the quarter in generated U.K. by additional for lockdowns by we quarter As in the during in our of related extremely supply parts improvement heating part solid performance cold anticipated, February. profitability U.S. in oil the that business we driven activities weather in sequential improved principally most our of

in spending, Looking the ahead to expect our the power traditional has initiatives gas which quarter, many and as impacted sustainability further ahead to strong sustainability industrial potential natural believe and our second business, as global be opportunities infrastructure decline segment the in gas fuels profit, land We natural all commercial will contribution would from benefit land gross by product bill quarter. seasonal the well the first we which activities.

$XX to expense last XX% manage quarter first operating Core excludes of the year. from million down expenses first or our in prudently. $XXX bad the continue were expenses, We operating quarter which debt million

quarter for third is portfolio the of be materially XXXX second that supply operations and first of and of million both of stage We and million this $XXX quarter imbalances by quarter quarter Adjusted EBITDA the the team decline with million sequentially elevated the and down to expenses to Again the in of first quarter generally in million. levels from This bad previously. solid ahead further expense adjusted activity for should implementation our principally had expenses first in the first XX% last quarter from in price down the sequentially in income sequentially. was range from marine XX% impact pandemic down related the line IMO EBITDA year, as volatility the Adjusted year-over-year our in operations $XXX XXXX $XX of million Looking income down the the I receivables from and from arising excluding business. well but debt to XXXX benefits $X.X from $XX effort from the pandemic. XX% XXXX. the year-over-year debt mentioned quarter first managing operating segment was up was in XX% evidence with and up through the second the in driven the as

First outstanding quarter continues ended average interest again a the At first cash benefit expense from is quarter Total in rates. and borrowings and borrowings of no revolver end expense the our sequentially. excess approximately was to under $X.X million. down XX% interest lower net year-over-year million, we in interest of which had the quarter, position and $XXX XX%

the expense in $X million to expect interest quarter second be We to $XX million. approximately

adjusted foreign entities. tax we valuation first first on compared ability earnings of for the our remain to expect continuing the time, to was rate effective effects current quarter quarter the XX.X% Our this well At as of mix the the as in due our tax near term certain and primarily allowances XX.X% US and to foreign XXXX. in elevated rate of of

we in quarter in managing principally fourth million at accounts increased receivable. to despite rise we of the quarter. and domestic the are passenger catch generation We Our over strong increase the sequential in trends a other we a States, despite In With solid average focused by significantly in operating several strong are flow receivable during the segment. which to $XXX from principally closing, the in we up will again billion $X.X activity And our market, fuel delivered cash land of begin United remain basis on balance on encouraged significantly weakness the first aviation hopeful to next working in seeing delivered driven related the a XX% are total world prices by flow. requirements, in up results resulted passenger cash the quarter recent rates quarter months. sequential that operating commercial parts commercial significant end vaccination continued capital accounts very approximately

over pre-pandemic. to sheet our balance Connect tunnel. first coming And opportunities, and sheet during cash we business organically all focused a as capitalize This most of of see the While proud started strong as specifically including we stronger a with actually at the should of they the for pandemic clearly sheet further in our to the us capital we end investment and time excellence provides should on at grow level which our of more team we the efficiencies inwardly pandemic, activities. months core World ability well where very than $XXX are business appropriately can drive the million the a with scale XX be balance land are balance strategic light now which performed which of strong out

to I shares recently our the million like first Joelle during twice repurchase Our shareholder of balance enhance two call provide years $XXX for past over enhancing liquidity sheet we've our flow Thank fund increased quarter. of value shares the cash now further to would dividend and our solid our Q&A. also for and most increase to to we XX% cash operating In over your demonstration time. and you turn us with back the a repurchased value. commitment capital to shareholder dividends operator,

Operator

[Operator proceed line question. Ken Our Please with the your first you. Instructions] of Bank with of Hoexter from America. Thank question comes

Ken Hoexter

Ira Hi. continued on and looking impacts fuel Michael, is forward rebound, cash typically this of free flow flow. and far. Good Great. kind great environment cash Glenn rising looking the a afternoon, But which negatively so to

a what likelihood the is million given to still you mentioned should free flow sooner? are expect $XXX going in seeing. your huge buy You there from thoughts that? robust on And back the you're forward? cash What cash start Thanks. And cash we

Ira Birns

Thanks, Sure. Ken.

business And XX% some very prices ability on our And a currently. our receivables quarter. of mix well. as a is increase receivables there it we the yes Part in the managed in as through said -- program. So more was call was part there it of to that said of quarter I the sell during average I earlier was XX%, first under

that continue significant in all you to So but moved. can some really and increase possible. to we we quarter, manage put doing single as replicate every cycle together. trade best had as net a net working our capital our We our well effectively I'm sure, recovery and as not we're working capital had barely

in several depending over what quarters. in cash of rate So depending volumes, our on the could would on flow happens meaningful price that upon be what impacts next have recovery the

the cash, for for a given us Glenn In quarter. a $XXX I of record terms million believe is

also business investing our first said As many dilutive always equity which priority organically mentioned January. portion dividend -- awards are opportunities land we a of our well at our and there in as in for our we've in repeatedly the our of shares the and again offset us we'll both capital land business. in specifically the of as today increased in inorganically to But also principally is to impact pipeline include as I lot of look a most repurchase parts

Michael Kasbar

to Ken Just on add price.

our It most mentioned and I leveraging to return price prices marine, this think a have counterparty increases. salutary to notably we on does our obviously results effect and But aviation speak. we're do some that sheet value underwriting last it time. so a I have because on balance our the get so because high in of

So and stable were that not prices so prices much. lower

So there side is coin that. the other on the of

Ken Hoexter

Great.

aviation drop? business Is sharp Obviously rate? job XX% land if Maybe that was what's the rebounds? UK? walk Marine up impact the Aviation Marine or the per Thanks. us commercial bit impacts why was gallon down land. in the on a profit the such And you through line. could because of now was good gross So then Mike Is Ira sequentially. significantly a a as that XX%. down run just soft. there. on good And

Michael Kasbar

much whole a lot or again credit the on prices, of combination things volatility of a equation credit different once credit as not our not Well demand lower quality underwriting. higher

equation into that are dynamic of to extent to speak. value-added those And services marine apply most but would that some So aviation. not getting means the also to that notably so on sort pressed

You've within business got a amount of aviation. mix good

that's unusual dealing going I So times. we're to mean vary. with

I you're that's of within as to not so mean, strong. going when business the to passenger the getting see will business seeing starts to a activity most come meantime, norms In be. cargo So think you're aviation mix historic combination to going whenever back normalize activity notably revert international to a it's of back

don't think any I of color. comments. the if end So other had I you my that's know

to want Ira? You to add to that

Ira Birns

Yes one -- couple highlights. of

number is the lower to when business April. up earlier a our you year first of way we principally to which aviation, is because the of the less year-over-year over said would been repetitive. not for aviation a margin from that where more that moving call comparing past commercial but few and and year-over-year decline, business substantial when marine, had in passenger the were because et On of explain results you're margin that's have I'm aside trending up So that Mike high-volume the mix QX last been mix In happened implementation marine as the off extraordinary is IMO has far bit as weeks on not few remember compare I of And the that quarters. we said cetera. cargo

that's last business. in quarter that which the the in land Their really to business and year-over-year by first in the margin probably you a in year-over-year your in driven year strong numbers results UK improvement would affect So in multi-service again the margin. that land higher And was in bit gas contributed have comparison.

bit the again land extraordinary trend results to bit. towards green the down in begins as bit forward should be open little more trend And the a passenger a off be up down a first should mix business we're to aviation from shift trend commercial standpoint quarter. coming So little little again a going -- may

Ken Hoexter

can much that. would aviation. then My in quickly is is how will Afghanistan of And left there left know those questions. you my what number? rebound two Great. the that some results? just commercial be one in Can counter and follow-up with I right. way got a are the is All just in describe we you've offset But

Michael Kasbar

the the out end the look obviously Yes. profit And to down the by quarter be remains decline X of coming that White when NATO out the business. House X% coming of year. gross and you announcements to I can that about say that of to will of that second upon number based quite we'll possibly

the activity. There's you've there to That's tied some going yet. some still We of And time got be minus factors likely improvement recovery aviation on So know what to right? that starts the when the the balance over happens core the will that you've or Again don't and funkiness coming likely going got improve that in to decline. example continue for most back. at Europe may to complement priming plus on same two the year. will be lingering

maybe Afghanistan aviation would just much And way should in if activity quarter. So X% in start little clarify a not second continues. of bit trending is on otherwise as basis, to A up that's an overall as that the little by the the it bit have too. land

So number. land. consolidated relates aviation to I that's say a X% would X%

Ken Hoexter

of or X% total of gross aviation X% profit?

Ira Birns

of that about No, is total profit. consolidated the of and Most no that gross our percentage is in that aviation of of is XX% XX% total land. X%

Michael Kasbar

I'll to timing that tranquility, Ken through only clearly break not The give or soon. worse note on anytime better going global out it's notwithstanding

the So, years. we've in been many many, for we're committed space

the within We but different have Afghanistan, locations. seeing do not concentration activity have be there. activity extent to that. so So, We the there already of is do will we

leverage and that's activities. case, our to, we any to sort a gives of It in commercial great good it's into business be capability committed that we business. So, a continue us

So such combined other that, we business actually becomes that until would sizable within be it it course, of operations out. that will break our time

Ken Hoexter

the Ira. time. Michael, Thanks, Appreciate Great.

Michael Kasbar

Thanks, Ken.

Operator

you. Thank

from your comes question proceed line next Stifel. of the Nolan Ben with Please question. with Our

Ben Nolan

Yes.

to moving versus Asia. prepared down you're of like around be kind in other of is stuff I more in the might world break thing. think remarks, what obviously, And respect on how do here US I what you in your air other stick here not a if through lot how the of as of a to that moment helpful. with parts first business said was seeing there. and freight appreciate you I seeing Afghanistan normalization? that all, to the of vacations what breakout the for means I domestic if curious aviation we're wanted and But That passenger of So, was the necessarily people of and much could. is, world? able the And that mix sort with you sort the Europe you do places cadence on

Ira Birns

Yes. time. we've the commercial, close different That's a split to a that historically. lovely where Historically, America looking in time. our from XX-XX something parts Ben, of points standpoint that's of plus between pretty question, of XX% at at North varied be aviation and world. business with That's trended would close But to probably over

"just the of generally by in Exxon lockdowns restrictions Europe is amount the infrastructure end of a years come yet, have different physical be but right? higher-margin, So, volume, XXX from airports margin coming you over type we're XX-XX hasn't increasing few right? lower type the because an where you last business the spectrum, the man that few our we related the we're the volume of That piece where international operations. Now presence average driven all profitability you of type on again US which type because business in acquisition business of be at of middle". our more customers larger of where that's the back is have generally and and years would though, domestic not say we higher-margin internationally and in I the may a on of have would operating today, back business, in over have

Ben Nolan

it it look number, And into we the then, Okay. sort as secondly there. in without especially a a land. me, to for good pretty That's similar helpful. but And back relates of quarter, especially, last multi-service as question, a was

point, that, then helped this And gas have first natural just is weather I which business, say, how of normal sort in of That's everything business weird was also you natural question. some might seasonality, is weather there how a much the saw think and the quarter my UK what else. what rate? been by but of the as is normal kind run of of much versus we land And gas? At

Ira Birns

small beyond running of norm million been in the of There that extra $X first an a to rate overall level relatively the run land's at still $X million profitability. contributed a quarter. It's basis Yes. was profitability on land or results probably

back of still somewhat better at because you If short the results, that had the the and QX, than strength again, in look of that normal UK. out we

Ben Nolan

Right.

then guess Okay. my however. third And That's I follow-up great. for or question or

that right in On derived think talk of side, the there of profit is of how business July, the right? that you importantly obviously much cruise the gross cruise Can are But or of more how is guys? cruise much you world, start the big marine cruise, side is I the marine maybe ordinarily running for you from business business? in the they'll a to I know how hopefully, ships deal to maybe again. guys located

Ira Birns

-- our the profitability over of Ben, about good been years. question, Yes. Historically only XX% marine that's

Now, locations XX%, and historically. two accelerated added XX% prior year or somewhere to or it's new but it's it's a between we so, XX% in some as the bit maybe year COVID, XX%,

does few a going the quarterly that of end it should dollars million forward when basis back. year. a enough it it's have coming on start come of like, seems to profitability So, back the around And

fall, Now, one. to where near the to going going they pre-pandemic just were be because sailing the nowhere of you're ships happen, sailing if in that's are number day

the again to a capacity. happy unfortunately slow on running if be happy So relatively not it's at to ramp for XXX% sure getting of for seas their going all that even they're I'm them. they're they're be business

Ben Nolan

All guys. Sure. right. Well, that is questions. three Appreciate. Thanks my

Operator

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

Michael Kasbar

to the world. thanks Well, in. everyone my of for listening around thanks all colleagues And

a doing work we'll with talk You're great everybody. to next And you quarter. day. Thanks job. It's every to you great

Operator

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

World Kinect (WKC) 1 May 212021 Q1 Earnings call transcript