World Kinect Corporation

Thank you for standing by and welcome to World Connect Corporation's third quarter 2024 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, you may press star 1-1 again. I would now like to hand the call over to Braulio Medrano. Senior Director of FP&A and Investor Relations. Please go ahead.

Good evening, everyone, and welcome to World Connect's third quarter 2024 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 Braulio Medrano, Senior Director of FP&A and Investor Relations. With me on the call today is Michael Kasbar, Chief Chairman and Chief Executive Officer, and Ira Burns, Executive Vice President and Chief Financial Officer. I'd like to take a moment to announce that Elsa Ballard will be leaving WorldConnect after this earnings call. We would like to recognize and thank Elsa for the fantastic job that she has done with our investor relations efforts by improving communication channels, driving greater transparency, and improving the quality of our materials. As she moves on to new opportunities, we want to wish her the best in her future endeavors. Thank you, Elsa. And now, 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 actual results to materially differ. Factors that could cause results to materially differ can be found in our most recent form, 10K, and other reports filed with the Securities and Exchange Commissions. 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 Kasbar.

Thank you, Braulio, and thank you, Elsa, for all the great work that you did for us. We really appreciate it, and best wishes on all your future endeavors. Good evening, everyone. Last quarter, we spoke about challenging market conditions in our land business. And even though some of these headwinds persisted in the third quarter, our land segment rebounded from the second quarter as expected. Our overall business also performed in line with the guidance provided last quarter, highlighting our progress towards more predictable financial results. Consistent with my messaging in prior quarters, Our management team remains focused on implementing a more leverageable business model across all of our company's operations. Our capital allocation strategy remains consistent, prioritizing opportunities that drive more predictable returns within an acceptable risk profile, all while leveraging our last half-mile value-added energy distribution solution platform. That's a mouthful, but that's what we do. This disciplined approach to return, risk, and cost management is the key to achieving the operating efficiency targets we shared with you at our investor day earlier this year. Our commercial, business, and general aviation platform continues to be a great example of this strategy, and we marked another quarter of excellent momentum. This scalable platform of diversified, yet highly complementary offerings combined with robust summer demand in both the passenger and air cargo sectors propelled aviation to double-digit growth in operating margin. Operating margin aviation also benefited from the strategic sale of Avanode last quarter, as growth in core revenue contribution more than offset the income from Avanode, but with a lower expense profile. As we noted last quarter, we reallocated some of the proceeds from the Avanode sale to the acquisition of a tuck-in bulk aviation fuel distribution business, which was completed at the beginning of the fourth quarter and is expected to be fully integrated into our aviation platform by year-end, expanding our distribution network and customer base. While relatively small, this strategically complementary acquisition is a great example of the core investments we will prioritize to drive operating leverage, growth, and returns. Our global aviation business is well positioned to capitalize on the long-term growth trajectory in aviation. Although more cyclical than aviation, our marine business also operates on an efficient and highly scalable platform, delivering outsized financial results from small improvements in market conditions, while still creating value and contributing cash flow, even in less favorable economic environments. So in the third quarter, while Marine generated an 8% year-over-year increase in gross profit, Marine operating margin improved by 450 basis points, demonstrating the power of the platform to create operating leverage. Marine continues to represent a valuable diversification component of our portfolio, a business with minimal working capital requirements and significant potential upside under the right conditions. As I stated in my opening remarks, land rebounded significantly in the second quarter of this year as market conditions improved in our North American fuel business, as well as natural gas, where prices and volatility edged upward from the uncharacteristically low levels experienced in the second quarter. Ira will share more details in his comments. As discussed in New York in March, growing and scaling the more predictable offerings in our land business is our largest opportunity for value creation. In our North American liquid fuel business, we now have a clear path to improving operating efficiency and margins by consolidating and standardizing on a single technology and operating platform, much as we have done in our aviation and marine segments. We will be completing this migration over the course of 2025. Not only should this initiative increase the profitability of our existing North American fuels business, but it will establish a vehicle for effective integration and synergy capture. Rapid and efficient acquisition integration has been an effective growth strategy for aviation marine segments that will finally be replicated in our land business. Doing so in what is still a relatively fragmented land space, a market significantly larger than the combined marine and aviation markets, is a key driver, as we discussed at our investor day, to accelerate attainment of our medium-term operating margin target. And finally, as always, we wouldn't be here without our outstanding global team. It's their passion, innovation, and dedication to serve our customers, suppliers, and partners with the essential energy and logistics supply assurance that they require that makes us who we are and what we are. Thank you for what you do every day. It is truly a pleasure to serve with you. Ira will now provide a detailed financial and business update. Ira?