World Kinect Corporation

Thank you for standing by and welcome to World Connect Corporation's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, please press star 1-1 again. I would now like to hand the call over to VP, Investor Relations and Communications, Elsa Ballard. Please go ahead.

Good evening, everyone, and welcome to WorldConnect's fourth quarter and full year 2023 earnings conference call, which will be presented alongside our live slide presentation. Today's presentation is also available via webcast on our Investor Relations website. I'm Elsa Ballard, VP of Investor Relations and Communications. With me on the call today is Michael Kasbar, Chairman and Chief Executive Officer, and Ira Burns, Executive Vice President and Chief Financial Officer. Before I get started, I'd like to review our Safe Harbor Statement. 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 results to materially differ. Factors that could cause results to materially differ can be found in our most recent Form 10-K and other reports filed with the Securities and Exchange Commission. WorldConnect assumes 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 measures. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure 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 Kaspar.

Thank you, Elsa, and good afternoon, everyone. As we plan for our upcoming Investor Day in a few weeks, I've been reflecting on where we have come from and where we are going. We all know the last 10 years have seen tremendous volatility in energy markets, commerce, geopolitics, and even natural disasters. Throughout this 10-year period, our customer base, particularly airlines and shipping companies, experienced significant financial stress. I'm proud to say that our company went through this period with tremendous skill, financial stability, and stewardship in the face of massive turbulence. Our team has navigated through these challenges and consistently mitigated risk while managing the impacts of market disruption on our customers and suppliers, demonstrating both our expertise and reliability as a counterparty. Today, we have a materially different business profile with a higher quality of earnings and a more predictable and synergistic portfolio. So resiliency, focus, momentum, and leverage are the words that resonate with me when I look back and look forward. And that's why I remain more enthusiastic and optimistic about our future than ever before. I believe we are better positioned with our common operating model, common business processes, and seasoned leadership team. We have the force multiplier of a focused and aligned global team intent on leveraging our core distribution platform that we have spent decades developing and refining. Our core distribution platform buys, moves, and sells energy directly and through a network of partners around the world to commercial, industrial, and governmental entities. We have deep domain expertise in global aviation and marine, and we are rapidly developing similar global expertise in land-based businesses and products, which represent a larger market opportunity. To be clear, we don't refine the products, but we do refine the service. Our global platform has been stress tested in unforeseeable ways and is demonstrably more resilient and wiser. We have incorporated our experience and learnings from these events into our operating model, becoming an ever stronger financial and commercially responsible counterparty. With each test, we are better equipped to address the next market challenge, delivering greater value to the marketplace and investors. From our humble beginnings as a broker and simple reseller, and secondary finance company to the global industrialized distribution business we are today, WorldConnect is a story of transformation, and our evolution and mission continues. Our aviation and marine segments are mature global businesses. Our decades of experience have enabled us to establish the sophisticated core distribution platform we operate today that delivers consistent performance. Our land business is evolving to resemble the aviation and marine distribution model, gaining momentum as we define and align our core national and global platforms. The winds are coming more regularly because our team is more focused on institutionalizing standard methodology across people, assets, processes, and tools. We have enriched the land leadership team by combining homegrown talent steeped in the understanding of our core model with proven talent from acquired companies as well as experienced industry professionals to deliver value to customers and suppliers. That's how we will achieve the cash flow, returns, and growth we know exists in this business. A foundational component of our land segment consists of fuel distribution to retail gas stations and sea stores. We have continued to expand our footprint by adding almost 300 new retail sites in 2023 to our customer base, most under traditional long-term contracts, which is a testament to our reputation in the space and the deep relationships with the supplier brands we represent. Next is our card lock network, card locks being unmanned retail stations for refueling light commercial vehicles. We also serve commercial and industrial consumers, otherwise known as CNI, to which we distribute fuel and lubricants as well as power and natural gas. And that strong, established, and market-leading core distribution platform is complemented by a growing sustainability and renewable energy business. We are focused on increasing the availability of renewable energy and lower carbon fuels. We play an important role in facilitating the development of renewable solutions by bringing financing, logistics, marketing, technical knowledge, and a myriad of services to facilitate the lower carbon solutions the market needs by supporting these pioneering innovators and startups that are solely focused on their mission. We also continue to expand our suite of complimentary energy management solutions across our other three business lines, deepening our relationships with customers and suppliers, with services like renewable energy solutions and emissions reporting and helping our customers achieve lower carbon and net zero goals. These are essential services that our customers need to better run their operations, and they have a high attachment rate to our other offerings. All of these are part and parcel of the energy transition in progress today and growing into the future. We are selecting the areas that are important to our customers and leverage our core distribution model. The strategy is exactly aligned to our customers' current and future needs. We are not only serving our customers' conventional energy needs today, but also enabling their energy management strategy going forward. While still a small percentage of our overall business, our renewable and energy management offerings continue to grow and will represent a greater contribution to revenue, profitability, and the industry over time. And while the solutions we are providing to our customers are specialized, Much of what we do is operationally common across our business activity. The vast majority of our business is derived from our core distribution model, our critical and unique ability to satisfy both customer and supplier needs. We are buying, moving, and selling the molecules and electrons that our customers need to transport their passengers and manufacture and distribute their products. As an example of the value of the World Connect network, We are assisting a number of our clients with alternative fueling options in response to the recent disruption to trade in the Red Sea. This is similar to the COVID period where dislocations in normal transportation patterns meant their customers had to rely more on our expertise and global supply capabilities. We saw the benefits of our core distribution platform in 2023. Although we experienced non-recurring financial impacts in the fourth quarter, which Ira will cover in his comments, we delivered solid core operating results with healthy adjusted EBITDA. This was on the back of especially strong growth within our aviation segment, which not only rebounded for the extreme backwardation in the prior year, but also benefited from improved operating leverage. Marine came off a record year in 2022 when bunker prices and market volatility were considerably higher, but still performed very well in 2023. And while our land business in North America experienced some weather-related challenges that affected results in the first half of the year, we drove continued growth in our natural gas and power and renewable energy solutions activities. And integration of the Flyers team and platform, when target, for the past few quarters, but there's only a piece of the story. As the global demand for energy continues to grow, we're intending to increase our market share, improve our operating efficiency, and continue to extend our value deeper into both our customer and supplier value chains as we've been doing for some time now. We've got a greater level of confidence in our ability to execute. We've got a much sharper focus. And I can feel the momentum building. And the demand for our services is as strong as it's ever been. And all through the change, our focus has remained constant. Our mission was then and still is now to meet our customers' energy needs in the most efficient manner possible and to provide our supply partners with the world's most reliable distribution platform. We work every day to improve access to and ensure the surety of energy supply through our core distribution platform. I look forward to sharing more about our strategy and our outlook at our upcoming Investor Day. But what you should take away is that we are better positioned than ever to drive sustainable long-term growth with a favorable market position and a clear strategy to capture opportunities across industries. our three businesses. Before I turn the call over to Ira for a review of our financial results, I want to thank my 5,330 colleagues who work every day to ensure the success of our customers, suppliers, and company. And to our investors, thank you for your support, and we look forward to seeing you on March 13th in New York City.