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Operator: Thank you for standing by, and welcome to World Kinect Corporation's Third Quarter 2025 Earnings Conference Call. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. To remove yourself from the queue, you may press 11 again. I would now like to hand the call over to Braulio Medrano, Senior Director of FP&A and Investor Relations. Please go ahead.
Braulio Medrano: Thank you, Latif, and good evening, everyone. Welcome to World Kinect Corporation's third quarter 2025 earnings conference call, which will be presented alongside our live slide presentation. Today's presentation is also available via webcast and on our Investor Relations website. I'm Braulio Medrano, Senior Director of FP&A and Investor Relations. With us on the call today is Michael J. Kasbar, Chairman and Chief Executive Officer; Ira M. Birns, President and Chief Financial Officer; and Mike Dejada, Senior Vice President and Chief Accounting Officer. And now I'd like to review our safe harbor statements. Certain statements made today, including comments about our expectations regarding future plans and performance, are forward-looking statements that are subject to a range of uncertainties and risks that could cause actual results to materially differ. Factors that could cause results to materially differ can be found on our most recent Form 10-K and other reports filed with the Securities and Exchange Commission. We assume no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. This presentation also includes certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures is included in our press release and can be found on our website. We will begin with several minutes of prepared remarks, which will then be followed by a question and answer period. At this time, I would like to introduce our Chairman and Chief Executive Officer, Michael J. Kasbar.
Michael J. Kasbar: Thank you, Braulio. Earlier today, we announced a series of important leadership changes. The board has unanimously elected Ira M. Birns to become World Kinect Corporation's next CEO and join the board effective January 1, 2026. This is an important and positive milestone in our company's history for several reasons. The first is confidence in leadership. The board has full confidence in Ira's ability to efficiently allocate resources, accelerate our focus on core businesses, and aggressively drive growth and returns. And the second is the strength of the team. With John Royall's commercial and operational expertise and Mike Dejada's deep commodity, financial, and accounting acumen, we have a talented leadership lineup tested and ready to lead us forward. This transition has been years in the making. Over the past several years, our leadership team has taken on increasing responsibilities and gained invaluable experience. Equally important, this team has the temperament and skill to navigate cycles and events. Pandemics, wars, deglobalization, the disciplined judgment to evaluate risks and uncertainties prudently allocate capital, and maximize long-term value. They are well-seasoned to deliver. Most importantly, we have the right people in the right roles to drive our goals and future growth, demonstrating our commitment to talent development and organizational capabilities that will sustain success for years to come. With improved organizational strength, operational readiness, and a sharper portfolio, we are well-positioned for the future. The entrepreneurial spirit that built this company in fragmented markets is now complemented by the operational and financial discipline required to profitably scale in today's environment. I am incredibly proud of our transformational journey. Simple broker and reseller to a strategically important partner providing mission-critical supply to some of the largest and most important companies around the world. I couldn't be more proud. Turning to the business. Aviation delivered another solid quarter of double-digit earnings growth, driven by improved operating leverage in Europe, and profit growth in both business aviation and government activity. Our recent announcement to acquire Universal Trip Support Services expected to close in Q4 will add momentum and significantly expand our service offering to our core business and general aviation customer base. Marine faced a challenging quarter amid lower bunker prices and low volatility, but we see strong opportunities for greater cash generation when market conditions shift. Land rebounded significantly from Q2 and we are confident that our accelerating portfolio reshaping efforts will improve financial returns and earnings predictability as we move into 2026. We are nearly through our portfolio sharpening, and Ira, John, Mike, and the rest of our team have my full support to deliver on our strategic plan and drive the business forward. I'll now turn the call over to Ira for a financial review and his business comments.
Ira M. Birns: Thank you, Michael, and good evening, everyone. And be prepared. I unfortunately have a lot to say today. Mike, I want to begin by expressing my deep gratitude not just for your extraordinary leadership over the years, but for your unwavering commitment to our mission, our people, our customers, our suppliers, and our shareholders. Your vision and passion have shaped this company into what it is today, and I've been truly honored to work alongside you for so many years. I'm incredibly excited about the road ahead and the opportunities that lie before us. This next chapter builds on the strong foundation you've created, and I'm grateful that you'll continue to be part of our journey as executive chairman. Over the past several quarters, we've been sharpening our focus, as Mike just mentioned. Making deliberate decisions to exit non-core and underperforming businesses. While there is certainly still more work to be done, this is already enabling greater strategic clarity and is allowing us to concentrate more of our time, energy, and capital on the areas where we see the greatest opportunities for growth. Across our aviation, marine, and land platforms. As we move forward, executing on this strategy will continue to be a team effort. And I'm especially looking forward to continuing to work closely with John Royall, who will step into the role of president, and Mike Dejada, who will succeed me as CFO. Both bring tremendous expertise, drive, and integrity to their new roles. And I have every confidence in their leadership. With a strong foundation and a world-class team, I believe we're well-positioned to unlock greater value for our shareholders, our customers, and our employees throughout the world. Mike, again, I look forward to your continued support as executive chairman and I am excited about working alongside our exceptional leadership team and our board as we move into this next chapter. As Mike Dejada will be assuming the role of CFO after we file our 10-Q tomorrow, I will now take you through our quarterly financial results for the seventy-fifth and last time. Before we review our financials, please note that our non-GAAP results reflect approximately $5.8 million of non-GAAP adjustments this quarter, or $4.2 million after tax, principally associated with the finance transformation initiative we initiated last quarter where we continue to make progress. In line with our expectations. Reconciliations are as always on our IR website and in today's webcast presentation. So now let's turn to our third quarter non-GAAP results. On a consolidated basis, third quarter volume was 4.3 billion gallons, that's down 4% year over year. And consolidated gross profit declined 7% from last year's third quarter to $250 million. Although our gross profit did fall below guidance for the quarter, we were able to offset most of this impact by effectively reducing variable costs. This brought our operating expenses below expectations and resulted in operating income that was within our guidance range and very close to the midpoint. In the third quarter, our aviation volume was 1.8 billion gallons, down 4% year over year. While volume declined, aviation gross profit of $143 million increased $14 million or 11% year over year. Driven principally from continued strong results at our airport locations in Europe, an increase in government sales, and our business in general aviation activities. Speaking of business aviation, as Mike mentioned, in September, we entered into an agreement to purchase Universal Weather and Aviation's trip support service business. This business provides end-to-end operational support for business aviation flights worldwide covering everything from flight planning and overflight permits to on-the-ground coordination at more than 3,000 locations throughout the world. This transaction is expected to be approximately 7% accretive to adjusted earnings per share in the first twelve months with additional accretion from the realization of approximately $15 million of annual cost synergies within two years following the closing date of the transaction which we now expect to occur within the next two weeks. As we look to the fourth quarter, we anticipate Aviation's gross profit to again increase year over year supported by the expected contribution from the Trip Support acquisition in addition to continued momentum from our airport locations throughout Europe. In the third quarter, land volumes declined 8% year over year, mainly driven by the sale of our Brazilian business in last year's fourth quarter and the sale of our UK land business in the second quarter of this year. Land gross profit was $81 million, that's down 20% year over year. Principally due to continued unfavorable market conditions in part of our liquid fuel business in North America, most notably ongoing transportation inefficiencies tied to our fuel delivery business and the impact of our recent exits from the UK, Brazil, and certain operations in North America. For the fourth quarter, year over year gross profit is expected to decline again, primarily due to the impact of the various business exits over the past year and continued macroeconomic headwinds in parts of the business. While we've already taken significant steps to reshape our portfolio, exiting Brazil and the UK and select activities in North America, as I just mentioned, we are now sharpening our focus even further. Going forward, our priority will be to concentrate resources and capital on our core, most profitable land business activities. Those with the greatest potential for sustainable growth and earnings consistency. In the short term, this means working to quickly further streamline our portfolio while leveraging operational efficiencies across our core land business activities. These initiatives are designed to drive meaningful improvement in our land segment's performance, as we move into 2026 and beyond. Positioning us to deliver stronger overall shareholder returns. In Marine, while volumes increased 3% year over year, primarily driven by a recovery in the dry bulk markets, gross profit decreased 32% year over year. This decline is principally due to lower profit contributions from certain physical locations, as well as lower margins driven by low market volatility and a lower fuel price environment. As we have consistently communicated over the years, the spot nature of our marine business closely aligns performance with pricing environments and market volatility levels. While periods of lower prices and reduced volatility can impact profitability, as they certainly did this quarter, since Marine operates with modest capital requirements we generally generate cash in marine across cycles. We also remain focused on further strengthening the segment's resilience during cyclical troughs. While positioning Marine to best benefit when prices and volatility increase. While we anticipate some sequential improvement in our results for marine, in the fourth quarter, with market volatility and prices expected to remain low through the fourth quarter we expect marine gross profit to decline year over year in Q4. As we look to the fourth quarter, and with the backdrop of the related segment gross profit comments shared a moment ago, we expect consolidated gross profit to be in the range of $237 million to $245 million. Moving on to expenses. Consolidated operating expenses were $181 million, that's down 7% year over year. As mentioned earlier, this is well below guidance primarily driven by lower variable costs during the quarter. As always, we remain focused on disciplined expense management always focusing on additional opportunities to drive efficiencies across the business. As we look to the fourth quarter, we expect operating expenses to be in the range of $181 million to $187 million. This outlook reflects a partial quarter impact from the recently announced Trip Support acquisition again, expected to close within the next couple of weeks. Despite the additional expenses related to the acquisition, we still expect a year over year decline in operating expenses driven by the businesses recently exited and our continued focus on driving greater cost efficiencies throughout our platform. Interest expense was $26 million in the third quarter, up approximately 8% year over year, consistent with the guidance provided last quarter. For the fourth quarter, interest expense should be in the range of $25 million to $27 million. The anticipated increase in interest expense associated with funding the Trip Support acquisition is expected to be generally offset by the impact of declining interest rates. Our third quarter adjusted effective tax rate was 27%, slightly higher year over year but consistent with guidance provided last quarter. Looking at the fourth quarter, we expect our adjusted effective tax rate to be generally in line with the third quarter approximately 26% to 28% which should result in an adjusted full year effective tax rate of 20% to 22%. One highlight of the quarter, our cash flow generation remained strong. With $116 million of operating cash flow and $102 million of free cash flow generated in the third quarter. This increases our year-to-date operating and free cash flow to $259 million and $215 million respectively. In closing, I want to leave you with a few thoughts. Actually, several thoughts. Aviation results this quarter reflect the strength of our service network. Especially our European airport locations and our business and general aviation activities throughout the world. We're truly excited about the addition of the universal trip support business. Trip support services have always complemented our global fuel distribution activities. Now with this acquisition, our trip support business will triple in size. Further enhancing and expanding the value we deliver to our aviation customers alongside our fuel offering. Land results reflect the impact of our recent exits from the UK, Brazil, and certain operations in North America. As stated earlier, we are continuing to sharpen our focus in land with more activity underway which should result in meaningfully better results and returns for land in 2026. Marine performance was principally impacted by lower profit contribution from select physical locations, as well as broader impacts from the continued low price, low volatility environment. And we also continue to focus on driving greater operating efficiency in marine to enhance returns in this business. Operating expenses again came in below our guidance range under flexibility in our variable cost structure and our disciplined approach. To managing expenses. Our ability to generate strong operating cash flow is a testament to our level of excellence in working capital management. This quarter, again, we generated cash flow of $116 million operating cash flow. And free cash flow of $102 million. This lowered our net debt to adjusted EBITDA ratio to under one times enabling us to maintain our strong liquidity profile. We haven't talked about the targets we shared at our Investor Day event, a couple of years back. In a while. So it's a sensible time to provide an update as we approach 2026. Our cash flow generation to date remains in line with the five-year aggregate free cash flow target we had set. While we haven't yet reached our adjusted operating margin target of 30%, we remain focused on achieving this target before the end of next year. Driven in large part by many efficiency initiatives well underway. We have also been meeting or exceeding our targeted free cash flow allocated to buybacks and dividends as we remain focused on enhancing shareholder value through these programs. As a matter of fact, since the beginning of 2024, we have returned $214 million to shareholders through buybacks and dividends, representing more than 50% of free cash flow over that time period. Exceeding our Investor Day target of 40%. Regarding the EBITDA target we shared at our Investor Day event, progress has been affected by several factors. The impact of businesses we have exited, subdued M&A activity due to the persistent high-interest rate environment, which is now changing. And market weaknesses in certain segments. As we've discussed along the way. As a result, reaching this target will take longer than anticipated. Nonetheless, we remain focused on further improving operating efficiencies, generating strong cash flow, and boosting returns. All of which should pave the way for more meaningful EBITDA growth. With our strong financial profile and healthy balance sheet and liquidity profile, combined with declining interest rates, and more reasonable market multiples. We also see increasing opportunities to invest in our core business activities at more attractive returns. Finally, and, yes, finally, I'm almost done. As I prepare to take on my new role, I'm energized by the opportunities ahead and I am fully committed to leading our efforts to drive growth and enhance shareholder returns. I would like to thank all of you for your continued support and I look forward to spending more time with our customers, suppliers, employees, and the investment community in the months ahead. I'll now turn the call back to Latif, our operator, for Q&A.
Operator: Thank you. To ask a question, please press 11 on your telephone. To remove yourself from the queue, please press 11 again.
Ken Hoexter: Our first question comes from the line of Ken Hoexter of Bank of America. Please go ahead, Ken.
Adam Russkowski: Hi. Adam Russkowski on for Ken Hoexter. Michael, Ira, team, thanks for taking our questions. And, congrats on the promotion. Evan. Maybe I'll just you're welcome. Maybe I'll just start with land. I mean, you noted the sharpening focus in this segment, but also some unfavorable market conditions and some transportation inefficiencies. Maybe what is it gonna take on those last two points to maybe turn that around? What are you seeing over the next quarter, year or so? Curious how you view the market. Thanks.
Ira M. Birns: Yeah. We'll share a lot more about that next quarter, Adam. But, you know, in the short term, if you look at something like inefficiencies, we're looking at different strategies to manage delivery of product in North America in particular that could be significantly more cost-efficient. There may be some markets that may not make sense for us long term. So we're really digging into every piece of our North American business and even some of the activity in land overseas to figure out whether there are better strategies to drive greater returns or whether there are some parts of the business that may not make sense for us longer term similar to the storyline that we've shared for Brazil and the UK over the last twelve months. So we're working through that. I'm pretty confident that we'll have a lot more details to share as we get into the end of the year on the land business. Obviously, we've been disappointed with performance, but the team is really focusing on a lot of ways that we can make that business dramatically more profitable in a relatively short period of time, and we're spending a lot of time focusing on that.
Adam Russkowski: Got it. That's helpful. Thanks. Maybe going back to the latest acquisition, 7% earnings accretion in the first year. Broadly, do you have a thought on the cadence of how that flows in the first year? Does it ramp sort of at the tail end? Any thoughts?
Ira M. Birns: We've been conservative. So if we're just looking at the current run rate of business, we're again, we're not assuming any immediate synergies. So as we hopefully close at the very beginning in November, it should be fairly ratable on a monthly basis. There isn't material. There's maybe a little bit of summer seasonality in the private jet industry, but the numbers should be fairly ratable over the first twelve months. And then as we get beyond twelve months, we should start seeing some increase in their bottom line contribution from the achievement of synergies over about a two-year period after we complete the first year.
Adam Russkowski: Got it. And Michael noted that you're nearing the I think he said the nearly through the portfolio sharpening, but also noted that interest rates coming down that could spark some M&A opportunities. So maybe how are you balancing kind of further sharpening divestitures from here? And what you know, and potential M&A opportunities from here.
Ira M. Birns: Well, great question. So, obviously, we have a lot going on in the short term, which is, as I said, we'll share more in Q4, in terms of fixing restructuring some things, putting land in a much better position, and then also a lot of work to get the Universal acquisition integrated as quickly and as efficiently as we can. So that's a lot of work right there. But at the same time, with interest rates coming down, we're actively looking at opportunities beyond the universal transaction. I don't foresee any of that happening overnight. But, you know, we have a pipeline of opportunities that we're looking at. We have a much sharper focus on what makes sense versus what doesn't than we may have had several years ago. So the door is opening a bit wider. I wouldn't expect anything to happen tomorrow, but I think over the course of 2026, some more opportunities should hopefully materialize in our core where we know we could get synergies, we know we can integrate effectively and drive EPS growth through that mechanism.
Adam Russkowski: Got it. And know, got some support this quarter from the variable cost side. You spoke about some of the opportunities in land. Maybe just broadly, any other areas that you expect some runway? And if you could speak to any of those other kind of variable cost efficiencies you can have here.
Ira M. Birns: Yeah. So, you know, land is a big piece. So we've talked about a couple of times already. But we're every day, we're looking at every part of the business where there are opportunities to do things more cost-effectively. One of the things we talked about a little bit, had a charge this quarter associated with it is our global finance transformation initiative. Mike Dejada and I are actually heading overseas as part of that next week. And that, you know, that's only kicking off. It takes a while to ramp up one of those programs, but that will start paying dividends for us in '26 and even more so in '27. So, you know, that's one example of something we're doing within one function that'll generate several million dollars of benefit for us over time. And, you know, we're, of course, looking across all of our activities that are ratable, that have synergy opportunities, and then have potentially opportunities to operate under a more efficient cost structure. So the finance piece is one example. We've done a little bit of that in IT similar to the outsourcing initiative in finance. And we'll look at more opportunities of different flavors over time where we could drive efficiencies. And not only save money, but add more value to the business. Right? That's the goal as well. Right? To improve our back-office functions, make them more supportive of the business to help the business accelerate growth, make it easier for them to operate on a day-to-day basis. So there's a lot going on. There's one example, and over time, we'll share additional examples.
Adam Russkowski: Alright. I'll hand it off. Thanks so much for the time.
Ira M. Birns: Thanks, Adam. Appreciate the support.
Operator: Thank you. Once again, to ask a question, please press 11. I would now like to turn the conference back to Michael J. Kasbar for closing remarks.
Michael J. Kasbar: Okay. Well, thanks for joining us today. It's a quick call. I want to once again congratulate Ira, John, and Mike in the new roles. We look forward to speaking to you next quarter. So stay well. Stay safe. And, watch this space. Thanks very much. Take care, everybody. And thanks to our global team. As always. It's it is a great pleasure to work every day alongside each and every one of you. Take care. Bye-bye for now.
Ira M. Birns: Thanks, everybody.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.